November - December 2000 / January 2001



FROM THE PRESIDENT’S DESK

Dear Member,

The year 2000 has been a period of intense debate on the Auto Policy. We, ofcourse, continue our internal agenda of building international competitiveness within our industry.

I believe another important topic, which will engage our attention in the next few years, is Mergers and Acquisitions (M&A).

We have already seen the mega mergers and alliances between auto

majors across the globe.M & As are, also, taking place in the auto component industry. They are driven mostly by economies of scale, synergy in functional areas, growth ambitions, etc. The obvious result is, ofcourse, increase in the size of the new organization. This in turn enables the company to negotiate with customers and suppliers from a position of strength. It also dictates the ability of the company to invest in R & D.

We must, however, remember the process of an M & A is not all smooth and easy, particularly, if it is driven largely by ambition to grow in size. Cultural issues must be addressed with care; people related areas must be dealt with sensitivity. In a large organization decision-making is the first causality as, also, open communication with employees. Top line growth is often achieved at the cost of he bottom line.

For an M&A to succeed the partners must work for it; transparency in all transaction and maturity to keep the long term in perspective are imperatives.

What would be the trends in India?

Will restructuring and M&As on similar lines happen in our industry?

Are there any lessons to be learnt by studying these phenomena in the rest of the world?

I leave these thoughts with you and would appreciate your feedback on the subject.

L Ganesh
President