,case: Paramount Enterprises Limited

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.Paramount Enterprises Limited was formed in 1985 as a result of amalgamation of Pount

Sales Limited and Sigma Industries Limited. Paramount Sales was promoted by S. Srinivas in 1978 to take up agency business in electrical fans. sewing machines. refrigerators. airconditioners, etc. Srinivas was an MBA with marketing major from a reputed university. Before forming Paramount Sales. he served as a sales manager in a large company ma,nufacturing and marketing refrigerators and other consumer durables. The agency business of Paramount Sales progressed at a very fast rate and the tlrm earned substantial profit. In 1995, Srinivas decided to enter manufacturing. However. it was felt that the firm Was primarily a mar'}{.eting organisation and, therefore. it was thought that undertaking manufacturing project through grass-root level was not advisable. Instead, it was decided to takeover controlling interest in Sigma Industries Limited which was engaged in manufacturing electrical fans of different types. While assesing the acquisition bid. criteria used were addition of managerial talent in manufacturing so as to have synergy with the xistlng marketinKfunctions. Paramount Sales and Sigma Industries Limited were merged and the new entity was ,named as Paramount Enterprises Limited. Paramount Enterprises expanded its business in other areas also such as entertainment electronics. This business expansion was through takeover route. In 2003. the company

-decided to takeover a ompany of a uJ:>stantial silie tometitsprt<nce fJt in b4EiJness field. Srtnivas as the chief eecJl!1ve of 1:l1e company constituted a t o(tPr!1top-level

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managers to identity suitable targets for takeover. The only criterion that waS laid dOWI1 I was the synergy that would result to Paramount through takeover. Finance was not a 1 limiting factor as the company was having
large cash surplus. The team evaluated several targets for takeover and arrived at a conclusion that Farna Electronics Limited manufacturing television sets and"Whitegoods'L1mited'manufacturing washing IDfchines wol11d be g9pd tiC:U:"efs, 80th tl1YPJ}lPflll1es.wr. Qavipg &oP technol!J'; hut did nQ do well.bcausG of poor marke1:ing .infrastructure. The team submitted the::
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report to Srinivas"ije tlJ.i,inlq;:fJ tJJ.e te meIp.bf;scJor d9.1ng fme.jQP pnq sfUd thth would like to go into th.d:taPofjJl@ I?mRqssidID.ci, :till\dGpt!9l!SPJ!,J,i:l,y. H. took the repoq to his., home.4fler ,rg.d.i.I:J:g,tJt.t;: rEgr:t;l1.G,,<Yfgss,d.1h. '!!lflttf.! ,IDth his wife Meenakshi. Meenakshi had done MBBS and was very fond of doing medic,p[:actice ,but 'I Srinivas persuade.ci.;hpr ,:qOt todo,so. Q:lltAe.,gtl{Rvr, maer.",be<,1J,ggted the Rver a pharmaceutical company as this business was evergreen. Srinivas was sl1ghtl){ perplexeg but ultimfl.tely agree9 foI: ;U1;;i.t, Th nmQming.Jp,tll'meetmg ,Qfiqp;m.c:L,gent. he put forward his proposal in these words. MGeQtlemen.lam proud{,of..y;ourgood work of suggesting takeover targets. Hqwever, J felth.t..tb1 PLoPQ&!ii;l.sl1,Quld,be,k? ptwabeyance. I pr.opoe that we should go for taking over a pharmaceuticalcompany:.Ov:er..the years. we hav developed very strong mareting c.apability w.hichdsessential,.for the success. of a . pharmaceutical bus41ss." qnthis PJ;"Oposql. ,the.wanagersJooked at,e.ach .other but not offer any comment. The meeting was adjourned.