FINANCIAL MARKET REGULATIONS

UNIT 03:- RECONSTRUCTION, ACQUISITION, MERGER, AMALGAMATION OF COMPANIES

(A) Internal Reconstruction of Companies

‘Amalgamation of Companies’ where two companies are merged together or one company is purchased by another to
become a single company.

In this unit we shall discuss another type of administrative and financial arrangement by which the capital structure of
the company in question may be legally reconstructed.

This is generally called ‘Internal Reconstruction’ of company.

The term ‘Reconstruction’ implies the process followed for reorganization of a company with respect to its capital
structure including the reduction of claims of both the shareholders and the creditors of the company.

Reconstruction of a company is required when it faces acute financial problems due to over capitalization or
accumulation of operating losses.

MEANING OF” EXTERNAL RECONSTRUCTION” AND “INTERNAL RECONSTRUCTION”

A company can be reconstructed in any of the two ways. These are:

(i) ‘External’ Reconstruction and
(ii) ‘Internal’ Reconstruction.

(i) External Reconstruction: The term ‘External Reconstruction’ means the winding up of an
existing company and registering itself into a new one after a rearrangement of its financial
position. Thus, there are two aspects of ‘External Reconstruction’, one, winding up of an
existing company and the other, rearrangement of the company’s financial position. Such
arrangement shall be approved by its shareholders and creditors and shall be sanctioned by
the National Company Law Tribunal (NCLT). Such a step usually involves the writing off of a
debit balance on Profit and Loss Account, elimination of all fictitious assets if any from the
Balance Sheet, and the consequent readjustment of share capital.

(ii) Internal Reconstruction: Internal reconstruction means a recourse undertaken to make

necessary changes in the capital structure of a company without liquidating the existing
company. In internal reconstruction neither the existing company is liquidated, nor is a new
company incorporated. It is a scheme in which efforts are made to bail out the company from
losses and put it in profitable position. Internal reconstruction of a company is done through
the reorganization of its share capital. It is a scheme of reorganization in which all interested
parties in the capital structure volunteer to sacrifice. They are the company’s shareholders,
debenture holders, creditors etc. Under internal reconstruction, the accumulated trading
losses and fictitious assets are written off against the sacrifice made by these interest holders
in the form of reduction of paid up value of their interest.
SITUATIONS WHICH CALL FOR INTERNAL RECONSTRUCTION OF A COMPANY

The following situations are generally responsible for the internal reconstruction of a company
(i) When the capital structure of a company is complex and it is required to make it simple.
(ii) When there are huge accumulated losses and it is required to write off these losses to
depict a better position of the company.
(iii) When a part of the capital is not represented by available tangible assets.
(iv) When change is required in the face value of shares of the company so that they can
become attractive for future investors.
FORMS OF INTERNAL RECONSTRUCTION

Internal reconstruction of a company can be carried out in the following different ways. These
are as under:
(A) Alteration of Share Capital; and
(B) Reduction in Share Capital

Reduction in capital may be either involving sacrifice of shareholders only or involving sacrifice
from Shareholders and other stakeholders, viz., debenture holders and creditors.

Learners should note that the sacrifice is made either by the shareholders only or by the
shareholders and other stakeholders jointly. It never happens that sacrifice is made by the
creditors and debenture holders only.

(A)Alteration of Share Capital

Memorandum of Association contains capital clause of a company. Under Section 94 of the Companies Act 1956, a
company, limited by shares, can alter this capital clause, if is permitted by (i) the Articles of Association of the company;
and (ii) if a resolution to this effect is passed by the company in the general meeting.

A company can alter share capital in any of the following ways:

(a) The company may increase its capital by issuing new shares.
(b) It may consolidate the whole or any part of its share capital into shares of larger amount.
(c) It may convert shares into stock or vice versa.
(d) It may sub-divide the whole or any part of it’s share capital into shares of smaller amount.
(e) It may cancel those shares which have not been taken up and reduce its capital accordingly.

To alter capital by any of the above modes require a resolution at a general meeting, but does not require confirmation
by the National Company Law Tribunal. The company is required to give a notice to the Registrar within thirty days of
alteration.

The accounting treatment of the above five types of capital alteration is discussed below.

Accounting Entries on Capital Alteration:

(a) If the company has issued all of its authorised capital, then, for the purpose of raising fund by the issue of fresh
shares, it will have to increase its authorised capital first. For increasing the authorised capital, the Capital clause of
Memorandum of Association of the company is required to be altered and permission of S.E.B.I. is also required to be
obtained.
No accounting entry is necessary for increasing authorised share capital. The company will have to observe the
formalities prescribed under the Companies Act, 1956. After the increase in authorised capital, if the company issues
fresh shares to the public, necessary entries for the issue of shares shall have to be passed.

The learners are advised to recall and refer Unit 1 for accounting entries on issue of shares.

(b) The company may decide to change the shares of smaller denomination into larger denomination. This process is
called consolidation of shares. On account of consolidation, the total amount of capital of the company will not change
but the number of shares will decrease.
The following journal entry is required to be passed:
Share Capital A/c (Old Denomination) Dr.
To Share Capital A/c (New Denomination)
(Being the consolidation of..... Shares of Rs...... each into .......... Shares of Rs......... each as per General Meeting
Resolution No....... Dtd..........)

EXAMPLE 1
On 1.4.2009 Sun Ltd. passed a resolution consolidating 20,000 fully paid equity shares of Rs. 10 each into 4,000 fully paid
equity shares of Rs. 50 each.
Show entry for consolidation of shares.

Solution:
In the books of Sun Ltd.
Journal Entries

(c) A company, in order to alter its share capital, may convert all or any of its fully paid up shares into Stock or Stock into
fully paid up shares. In case, shares are converted into Stock, the members get a part of Stock Capital in place of shares.
By converting Shares into Stock, any amount of Stock Capital can be transferred to any other person. Following entry will
be passed on such conversion:

(1) Conversion of Shares into Stock:

EXAMPLE 2
Sun Ltd. has share capital of Rs. 50,000 divided into 5,000 equity shares of Rs. 10 each. On 1.4.2009 the company passed
a resolution converting the shares into stock.
Show necessary journal entry in the books of the company.

Solution :
In the books of Sun Ltd.
Journal Entries

EXAMPLE 3
Moon Ltd. passed a resolution in the general meeting held on 25th April, 2009 to convert its equity stock of Rs. 5,00,000
into 50,000 equity shares of Rs. 10 each fully paid up.
Pass necessary journal entry.

Solution:
In the books of Moon Ltd.
Journal Entries

(d) When the shares of a company are sub-divided in shares of small value, it is known as sub-division of shares. In sub-
division of shares, the face value of a share is converted into smaller denomination from larger denomination. The total
capital of the company remains unaffected by sub-division but the total number of shares increase.
The following entry is passed for effecting sub-division :

LET US KNOW
If the company sub-divides its partly paid up shares then after sub-division the ratio between paid-up value and face
value should not change.

EXAMPLE 4
Polar Ltd. decided on 01-04-2009 to sub-divide its 5,000 Equity Shares of Rs. 100 each fully paid up into Equity Shares of
Rs. 10 each fully paid up.
Pass the necessary journal entry.

Solution :
In the books of Polar Ltd.
Journal Entries
(e) Cancellation of capital may take the following form:
(i) Cancellation of unissued capital; and
(ii) Cancellation of uncalled capital .

(i) Cancellation of unissued capital: Cancellation of unissued capital means cancellation of unissued shares by a
company. It means that the part of the authorised capital which has not yet been issued to the public may be cancelled
by the company. This cancellation does not have any impact on the accounts of the company and hence no entry is
required to be passed for such cancellation. Only the capital clause in the memorandum of association of the company is
required to be altered and the altered (reduced) authorised capital is shown in the balance sheet of the company
prepared subsequent to the alteration. The alteration is required to be registered with the Registrar of companies.

(ii) Cancellation of uncalled capital : Cancellation of uncalled capital means cancellation of that part of the face value of
the share which has not yet been called by the company.

(B) Reduction of Share Capital

Sometimes there may be a genuine necessity for the reduction of capital. This power is, given by Section 100 of the
Companies Act, subject to the compliance of conditions.

According to this, a company may,

(1) extinguish or reduce the liability on any of its shares in respect of share capital not paid up
(2) cancel any paid-up share capital which is lost or is unrepresented by any available assets;
(3) pay off any paid-up share capital which is in excess of what is required by the company.
Conditions for effecting a reduction
Following conditions are required to be fulfilled by a company to reduce its share capital –
(a) The Articles of Association of the company must permit it to reduce its capital;
(b) The company in general meeting shall pass a special resolution to reduce its capital; and
(c) The approval of National Company Law Tribunal (previously Court) shall be obtained for the scheme of reduction in
share capital.
Methods of Reduction in Share Capital:
There are three ways to give effect to the scheme of Reduction in Share Capital. These are as follows:
(1) By extinguishing or reducing the liability on any of its shares.
(2) By paying off any paid-up share capital which is in excess of what is required by the company.
(3) By cancelling any paid- up capital which is lost or is unrepresented by any available assets.

SUMMARY OF INTERNAL RECONSTRUCTION

 A company may be reconstructed in the event of acute financial problems.

 A company may be reconstructed in two ways-
a) External reconstruction, where a company is wound up and a new company is formed;
b) Internal reconstruction, where some changes are made in the capital structure of the company
without liquidating the company.
 Internal reconstruction of a company becomes necessary in various situations like, to change
the face value of the shares of the company, to write off accumulated losses etc.
 Internal reconstruction of a company can be carried out in two ways-
a) Alteration of share capital; and
b) Reduction in share capital.
 Accounting entries on alteration of share capital and reduction in share capital.

Difference between Internal and External Reconstruction

Reconstruction is a process of the company’s reorganization, concerning legal, operational,
ownership and other structures, by revaluing assets and reassessing the liabilities. There are
two methods of reconstruction which are internal reconstruction and external reconstruction.
The former is the method in which the reconstruction is undertaken without winding up the
company and forming a new one, while the latter, is one whereby the existing company loses
its existence, and a new company is set up to take over the business of the existing company.

Reconstruction is required when the company is incurring losses for many years, and the
statement of account does not reflect the true and fair position of the business, as a higher net
worth is depicted, than that of the real one. Here, in the given article, we are going to talk
about all the important differences between internal and external reconstruction.
Definition of Internal Reconstruction

Recourse undertook by the enterprise, in which substantial changes are made in the company’s capital structure,
without resorting to the liquidation of the existing company, is called internal reconstruction. In finer terms, it is
the inner rearrangement of the company’s financial structure, in which the company undergoing reconstruction
continues to exist.

Internal Reconstruction focuses on relieving the company from debts and losses by negotiating with the
creditors and reducing the outstanding amount towards them, so as to reach a favorable position. The methods
given below are generally employed to effect the internal reconstruction process:

 Alteration of Share Capital

 Sub-division and Consolidation of Shares
 Conversion of shares into stock or stock into shares.
 Variation of Shareholder’s rights
 Reduction of Share Capital
 Compromise/Arrangement
 Surrender of Shares.

In this process, the assets are restated, to represent fair values, and liabilities are restated to show the settable
amount, and thus the balance sheet shows a true picture. In this scheme, trading losses and fictitious assets are
written off, against the claim sacrificed by the debenture holders, creditors, etc.

Definition of External Reconstruction

External Reconstruction is a process in which the company’s financial affairs are wound up, and a new
company is formed to take over the assets and liabilities of the existing company, after the reorganization of the
financial position. It requires the approval of shareholders, creditors and National Company Law Tribunal
(NCLT).

In external reconstruction, the undertaking is being continued by the company but is in substance transferred to
a company which is not an external one, but another entity that comprises of almost same shareholders, to be
carried on by the transferee company. The accounting treatment of external reconstruction is same as the
amalgamation in the nature of the purchase.
Key Differences Between Internal and External Reconstruction

The following points are relevant on account of the differences between internal and external reconstruction:

1. Internal reconstruction can be defined as the reorganization of the company, without liquidating the existing
company and forming a new one. On the other hand, an external reconstruction is a form of corporate
restructuring wherein the existing company is liquidated to give birth to a new company, for continuing the
business of the existing one.
2. No new company is formed in internal reconstruction. Conversely, the new company is formed in the external
reconstruction, to take over the business of the existing company.
3. In internal reconstruction, the capital of the company is reduced, and external liabilities such as debenture
holders and creditors waive their claims by giving a discount. On the other hand, in external reconstruction,
there is no reduction in the capital of the company.
4. In internal reconstruction, court’s approval is mandatory, because the reduction in capital may affect the rights
of the shareholders, which requires confirmation from the court. As against, in external reconstruction, there is
no such approval required.
5. When the company undergoes internal reconstruction process, the Balance sheet prepared after the process
contains the terms, “And Reduced.” On the contrary, there are no specific terms used in the Balance Sheet in
the case of external reconstruction.
6. In internal reconstruction, since there is no new company is formed, there is no transfer of assets and liabilities.
Unlike, external reconstruction, assets, and liabilities of the old company are transferred to the new company.

Conclusion

The primary objective of reconstruction of an entity is the reorganization of its capital which can be done by
canceling unrepresentative value of the assets of the business, settling creditors claim by taking the discount and
achieving economies in operations.
 External Reconstruction and Amalgamation
The upcoming discussion will update you about the difference between External Reconstruction and
Amalgamation.

From the point of view of an accountant, external reconstruction is similar to amalgamation in the nature of
purchase; the books of the transferor company are closed and in the books of the transferee company, the
purchase of the business is recorded.

But otherwise external reconstruction and amalgamation differ as follows:

(i) In external reconstruction, only one existing company is involved whereas in amalgamation, there are at least
two existing companies which amalgamate.

(ii) In external reconstruction, a new company is certainly formed whereas in amalgamation a new company
may be formed or in the alternative one of the exiting companies may take over the other amalgamating
company or companies and no new company may be formed.

(iii) The objective of external reconstruction is to reorganize the financial structure of the company. On the
other hand, the objective of amalgamation is to cut competition and reap the economies of large scale.

When a company is suffering losses for the past several years and facing financial crisis, the company can sell
its business to another newly formed company. Actually, the new company is formed to take over the assets and
liabilities of the old company. This process is called External Reconstruction.

In other words, external reconstruction refers to the sale of the business of existing company to another
company formed for the purposed. In external reconstruction, one company is liquidated and another new
company is formed.

The liquidated company is called "Vendor Company" and the new company is called "Purchasing Company".
Shareholders of vendor company become the shareholders of purchasing company.

Acquisition
What is Mergers & Acquisitions?

Mergers and acquisitions (M&A) are defined as consolidation of companies. Differentiating the two terms,
Mergers is the combination of two companies to form one, while Acquisitions is one company taken over by
the other. M&A is one of the major aspects of corporate finance world. The reasoning behind M&A generally
given is that two separate companies together create more value compared to being on an individual stand. With
the objective of wealth maximization, companies keep evaluating different opportunities through the route of
merger or acquisition.

Mergers & Acquisitions can take place:

• by purchasing assets
• by purchasing common shares

• by exchange of shares for assets

• by exchanging shares for shares

Types of Mergers and Acquisitions:

Merger or amalgamation may take two forms: merger through absorption or merger through consolidation.
Mergers can also be classified into three types from an economic perspective depending on the business
combinations, whether in the same industry or not, into horizontal ( two firms are in the same industry), vertical
(at different production stages or value chain) and conglomerate (unrelated industries). From a legal
perspective, there are different types of mergers like short form merger, statutory merger, subsidiary merger and
merger of equals.

Reasons for Mergers and Acquisitions:

• Financial synergy for lower cost of capital

• Improving company’s performance and accelerate growth

• Economies of scale

• Diversification for higher growth products or markets

• To increase market share and positioning giving broader market access

• Strategic realignment and technological change

• Tax considerations

• Under valued target

• Diversification of risk

Principle behind any M&A is 2+2=5

There is always synergy value created by the joining or merger of two companies. The synergy value can be
seen either through the Revenues (higher revenues), Expenses (lowering of expenses) or the cost of capital
(lowering of overall cost of capital).

Three important considerations should be taken into account:

• The company must be willing to take the risk and vigilantly make investments to benefit fully from the merger
as the competitors and the industry take heed quickly

• To reduce and diversify risk, multiple bets must be made, in order to narrow down to the one that will prove
fruitful
• The management of the acquiring firm must learn to be resilient, patient and be able to adopt to the change
owing to ever-changing business dynamics in the industry

Stages involved in any M&A:

Phase 1: Pre-acquisition review: this would include self assessment of the acquiring company with regards to
the need for M&A, ascertain the valuation (undervalued is the key) and chalk out the growth plan through the
target.

Phase 2: Search and screen targets: This would include searching for the possible apt takeover candidates.
This process is mainly to scan for a good strategic fit for the acquiring company.

Phase 3: Investigate and valuation of the target: Once the appropriate company is shortlisted through
primary screening, detailed analysis of the target company has to be done. This is also referred to as due
diligence.

Phase 4: Acquire the target through negotiations: Once the target company is selected, the next step is to
start negotiations to come to consensus for a negotiated merger or a bear hug. This brings both the companies to
agree mutually to the deal for the long term working of the M&A.

Phase 5:Post merger integration: If all the above steps fall in place, there is a formal announcement of the
agreement of merger by both the participating companies.

Reasons for the failure of M&A – Analyzed during the stages of M&A:

Poor strategic fit: Wide difference in objectives and strategies of the company

Poorly managed Integration: Integration is often poorly managed without planning and design. This
leads to failure of implementation

Incomplete due diligence: Inadequate due diligence can lead to failure of M&A as it is the crux of the entire
strategy

Overly optimistic: Too optimistic projections about the target company leads to bad decisions and failure of
the M&A

Example: Breakdown in merger discussions between IBM and Sun Microsystems happened due to disagreement
over price and other terms.
Mergers and Acquisitions Case Study:

Case Study 1: Sun Pharmaceuticals acquires Ranbaxy:

The deal has been completed: The companies have got the approval of merger from different authorities.

This is a classic example of a share swap deal. As per the deal, Ranbaxy shareholders will get four shares of
Sun Pharma for every five shares held by them, leading to 16.4% dilution in the equity capital of Sun Pharma
(total equity value is USD3.2bn and the deal size is USD4bn (valuing Ranbaxy at 2.2 times last 12 months
sales).

Reason for the acquisition: This is a good acquisition for Sun Pharma as it will help the company to fill in its
therapeutic gaps in the US, get better access to emerging markets and also strengthen its presence in the
domestic market. Sun Pharma will also become the number one generic company in the dermatology space.
(currently in the third position in US) through this merger.

Objectives of the M&A:

• Sun Pharma enters into newer markets by filling in the gaps in the offerings of the company, through the
acquired company

• Boosting of products offering of Sun Pharma creating more visibility and market share in the industry

• Turnaround of a distressed business from the perspective of Ranbaxy

This acquisition although will take time to consolidate, it should in due course start showing results through
overall growth depicted in Sun Pharma’s top-line and bottom-line reporting.

Case Study 2: CMC merges with TCS:

This is an example where there is a merger in the same industry (horizontal). It was done to consolidate the IT
businesses. The objective of this merger, as indicated by the management of CMC, was that the amalgamation
will enable TCS to consolidate CMC’s operations into a single company with rationalised structure, enhanced
reach, greater financial strength and flexibility. Further it also indicated that, it will aid in achieving economies
of scale, more focused operational efforts, standardisation and simplification of business processes and
productivity improvements.

Conclusion:

M&A’s are considered as important change agents and are a critical component of any business strategy. The
known fact is that with businesses evolving, only the most innovative and nimble can survive. That is why, it is
an important strategic call for a business to opt for any arrangements of M&A. Once through the process, on a
lighter note M&A is like an arranged marriage, partners will take time to understand, mingle, but will end up
giving positive results most of the times.
 Amalgamation
What is Amalgamation?

Amalgamation is defined as the combination of one or more companies into a new entity. It includes:

i. Two or more companies join to form a new company

ii. Absorption or blending of one by the other

Thereby, amalgamation includes absorption.

However, one should remember that Amalgamation as its name suggests, is nothing but two companies
becoming one. On the other hand, Absorption is the process in which the one powerful company takes control
over the weaker company.

Generally, Amalgamation is done between two or more companies engaged in the same line of activity or has
some synergy in their operations. Again the companies may also combine for diversification of activities or for
expansion of services

Transfer or Company means the company which is amalgamated into another company; while Transfer
Company means the company into which the transfer or company is amalgamated.

Existing companies A and B are wound up and a new company C is formed to take over the
Amalgamation
businesses of A and B

Existing company A takes over the business of another existing company B which is wound up Absorption

A New Company X is formed to take over the business of an existing company Y which is wound External
up. reconstruction

How is Amalgamation different from a Merger?

Amalgamation is different from Merger because neither of the two companies under reference exists as a legal
entity. Through the process of amalgamation a completely new entity is formed to have combined assets and
liabilities of both the companies.

Types of Amalgamation

i. Amalgamation in the nature of merger:

In this type of amalgamation, not only is the pooling of assets and liabilities is done but also of the
shareholders’ interests and the businesses of these companies. In other words, all assets and liabilities of
the transferor company become that of the transfer company. In this case, the business of the transfer or
company is intended to be carried on after the amalgamation. There are no adjustments intended to be
made to the book values. The other conditions that need to be fulfilled include that the shareholders of
the vendor company holding atleast 90% face value of equity shares become the shareholders’ of the
vendee company.

ii. Amalgamation in the nature of purchase:

 This method is considered when the conditions for the amalgamation in the nature of merger are not
satisfied. Through this method, one company is acquired by another, and thereby the shareholders’ of
the company which is acquired normally do not continue to have proportionate share in the equity of the
combined company or the business of the company which is acquired is generally not intended to be
continued.

If the purchase consideration exceeds the net assets value then the excess amount is recorded as the goodwill,
while if it is less than the net assets value it is recorded as the capital reserves.

Why Amalgamate?

a. To acquire cash resources

b. Eliminate competition
c. Tax savings
d. Economies of large scale operations
e. Increase shareholders value
f. To reduce the degree of risk by diversification
g. Managerial effectiveness
h. To achieve growth and gain financially

Procedure for Amalgamation

1. The terms of amalgamation are finalized by the board of directors of the amalgamating companies.
2. A scheme of amalgamation is prepared and submitted for approval to the respective High Court.
3. Approval of the shareholders’ of the constituent companies is obtained followed by approval of SEBI.
4. A new company is formed and shares are issued to the shareholders’ of the transferor company.
5. The transferor company is then liquidated and all the assets and liabilities are taken over by the transferee
company.

Accounting of Amalgamation

A. Pooling of Interests Method:

Through this accounting method, the assets, liabilities and reserves of the transfer or company are
recorded by the transferee company at their existing carrying amounts.

B. Purchase Method:

In this method, the transfer company accounts for the amalgamation either by incorporating the assets
and liabilities at their existing carrying amounts or by allocating the consideration to individual assets
and liabilities of the transfer or company on the basis of their fair values at the date of amalgamation.

Computation of purchase consideration: For computing purchase consideration, generally two methods are
used:

1. Purchase Consideration using net asset method: Total of assets taken over and this should be at fair
values minus liabilities that are taken over at the agreed amounts.

Particulars Rs.
 Agreed value of assets taken over XXX

Less: Agreed value of liabilities taken over XXX

Purchase Consideration XXX

2. Agreed value means the amount at which the transfer or company has agreed to sell and the transferee
company has agreed to take over a particular asset or liability.
3. Purchase consideration using payments method: Total of consideration paid to both equity and
preference shareholders in various forms.

Example: A. Ltd takes over B. Ltd and for that it agreed to pay Rs 5,00,000 in cash. 4,00,000 equity
shares of Rs 10 each fully paid up at an agreed value of Rs 15 per share. The Purchase consideration will
be calculated as follows:

Particulars Rs.

Cash 5,00,000

4,00,000 equity shares of Rs10 fully paid up at Rs15 per share 60,00,000

Purchase Consideration 65,00,000

Advantages of Amalgamation

 Competition between the companies gets eliminated

 R&D facilities are increased
 Operating cost can be reduced
 Stability in the prices of the goods is maintained

Disadvantages of Amalgamation

 Amalgamation may lead to elimination of healthy competition

 Reduction of employees may take place
 There could be additional debt to pay
 Business combination could lead to monopoly in the market, which is not always positive
 The goodwill and identity of the old company is lost

Recently announced Amalgamation

One of the recent amalgamations announced on the corporate front is of PVR Ltd. Multiplex operator PVR Ltd
has approved an amalgamation scheme between Bijli Holdings Pvt Ltd and itself to simplify PVR’s
shareholding structure. As per the management, the purpose of the amalgamation is to simplify the shareholding
structure of PVR and reduction of shareholding tiers. It also envisages demonstrating Bijli Holdings’ direct
engagement with PVR. After the amalgamation, individual promoters will directly hold shares in PVR and there
will be no change in the total promoters’ shareholding of PVR.
Other examples of Amalgamations

1. Maruti Motors operating in India and Suzuki based in Japan amalgamated to form a new company called Maruti
Suzuki (India) Limited.
2. Gujarat Gas Ltd (GGL) is an amalgamation of Gujarat Gas Company Ltd (GGCL) and GSPC Gas.
3. Satyam Computers and Tech Mahindra Ltd
4. Tata Sons and the AIA group of Hongkong amalgamated to form Tata AIG Life Insurance.

Conclusion

Amalgamation is one of the tools that can help companies avoid

competition among them and add to the market offerings. It is for the
mutual advantage of the acquirer and acquired companies. It serves
as an apt method of corporate restructuring to bring about a change
for the better and make business environment competitive.