Corporate Restructuring

Himanshu Srivastava, Director, Business Advisory wrote an article on how one can harness opportunities during difficult times.

Corporates especially those in cross border jurisdictions are seeing increasing opportunities to restructure their businesses in India. Disruption in supply chains, workforce, business plans, due to the pandemic, inability to travel and meet, health hazards has changed the overall strategic theme. Managements are loaded with responsibility to take right decisions to navigate through the changed business ecosystem.

Key considerations for corporate restructuring involve financial impact, strategic impact (in terms of branding, goodwill etc) and costs measured in terms of reduction in operating costs. The choice of methods of corporate restructuring, depends on the management assessment of the goals and analysis of needs. Restructuring starts with defining the goals in measurable terms and then evaluating the options, fine tuning based on unique situations. Efficient utilization of capital is pre-requisite for shareholders’ wealth maximization. Specific measures such as reduction of capital, buyback, bonus and rights issue can be evaluated to achieve mission objectives. Merger, Demerger, insolvency, amalgamation, takeover can totally change the organizational character.

The operational challenges, dealt with through contract manufacturing, harnessing technology and technical assistance takes priority over organic expansion. The merger and acquisitions or joint venture are now more prevalent in India.

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