DDHL and Blue dart:Blue Dart Express Ltd is one of the most popular and largest courier and

integrated air express companies, leading in efficient aviation infrastructure.The company started its operations in November 1983, and has been highly successful. It is headquartered at Mumbai.The company was in a joint venture with Fed ex, the global courier leader. However the contract with FedEx did not allow Blue Dart to carry any packages from other players such as TNT, UPS or DHL. DHL, the third largest company across the globe in logistics and express acquired blue dart in January 2005, India well renowned courier service. The company purchased 51% stake in Blue dart constituting 1.23 crores from 3 promoters of blue dart for Rs 423 crore and 17 per cent stake from Schroder Capital (40.29 lakh shares) for Rs 141 crore. DHL made a compulsary open offer for 20 per cent (47.40 lakh shares) to public shareholders, calling for investment of Rs 166 crore. The offer was announced at a 9.37 per cent premium to closing price on BSE on Monday. The important features of the merger were: Blue Dart's management will manage the firm on a standalone basis after the transaction. Both the companies will retain their origin brand name after this merger in January 2005 The company already had a sales alliance with DHL in Bangladesh, Nepal and Bhutan The share prices of Blue dart initially shot up on BSE by 5% on the news of merger. Reasons for mergers: To establish a foothold in India by DHL To realign blue dart with fed ex.

FINANCIAL PARAMETERS CHOSEN: 1. Net worth: Net worth is an important determinant of the value of the company, it
considers all the money that has been invested in the company since its inception. It also throws light on retained earnings during its course of operation. As it can be observed , the net worth of the company has increased drastically over the course of these six years from 163 to 541 million. It clearly depicts improvements in operations reduction in expenditure purchase of assets Positive cash flows for investments

2.Earnings per share : the EPS of a company depicts the net profits divided by the number of total shares outstanding. If the number of shares increase, In order to increase eps or keep it constant, net profits should increase proptionately. High EPS depicts that a company is prospering. The Eps of the organization is growing and has reached almost 40 rs. From 16 indicating successful generation of profits. 3.Working capital: the requirement of working capital has increased from 25 to 235 million indicating greater need of free cash for current operations and investments in trucks, human labor and other short term incomes. 4. Operating profit : The operating profits have continuously been increasing from the 2005

The company believs in prospector strategy. Proactive measures, like the

introduction of the aviation system, restructuring of the organisation implemented by the Company in prior years, rationalisation of operating costs, yield management and high quality service to Customers results in strong performance. The measure staken by effective workforce can be easily depicted in the results. 5. Current ratio: The current ratio has increased from 0.99 to 2.32 in these five years which indicates that the company has been able to maintain twice the current assets as compared to current liabilities which provides credibility and safety to short term creditors and ensures liquidity of the company.

6. Debt equity ratio: The debt equity ratio has reduced to zero. The earlier debt has been retired and due to nature of industry, no leveraging is used. 7.Net profits : Net profits are continuously increasing from 2005 to 2011.By reducing the fixed cost base, the incremental revenues of the Company has resulted in the Operating margins rising from 5% to 11% leading to increase in net profits.

Implications: The stock prices of Blue dart has been increasing over a course of time. The operating margins have nearly doubled Capital base has been increased three times. It has introduced a new e commerce system which has lead to cost savings of 27% post merger.

Case two: United spirits and Shaw Wallace tomar was doing it Case three: Covansys and future infotech- December 2005 Covansys corporation of USA took over Fortune infotech and converted it into its wholly owned subsidiary. The first step taken was to de list it from Indian stock exchanges. It was also converted into a private limited company from a public limited company. The company was interested in establishing full control over the target company which was not possible if it was not a private company. It earlier picked up 75% share which increased to 95%. Reasons for merger: Fortune infotechs core competency was financial outsourcing required by Covansys. Diversification by Covansys and easy access. Expanding capacity Availability of hardwares, infrastructure and human resource.

1. Net worth: The net worth has increased from 16 to 51 million due to massive increase in capital and huge investments by Covansys in the subsidiary. It gained access to many clients abroad which lead to increase in income drastically by increasing financial outsourcing. 2. EPS : the earnings per share have been increased from 16 to 40 because of the consistent increase in net profits. As the client base was growing in both India and abroad, new investments in technology was made. It lead to efficient client handling and reduction in cost.

3. Operating profit: as it is a financial outsourcing company, profits are largely dependent on the financial conditions such as economic growth, stability and number of clients dealt with. If we observe the trend the profits were high in initial years but reduced eventually due to recessionary conditions, increase in interest rates, reduced FDIs and other similar factors causing ripple effects. 4. current ratio: the current ratio is consistently above two which indicates that the current assets are twice of current liabilities, the liquidity position of the firm is strong and it is safe for short term creditors to invest in it. Adequate cash is also available in the firm to meet the working capital requirements. 5. Debt equity ratio: no debt. It trades with hundred percent equity. 6. Net profits: The net profits were initially increased but have now reduced due to internal control weaknesses, impact of changes in estimates on fixed price projects, variability of operating results, failure to recruit, train and retain skilled IT professionals, exposure to regulatory, political and general economic conditions in India and Asia, short term nature and termination provisions of contracts, competition in the IT services industry, economic conditions unique to clients in specific industries, the success of the company to negotiate contract renewals at comparable terms, decline in profitability of European operations, public sector budget constraints, limited protection of intellectual property rights, and risks related to merger, acquisition and strategic investment strategy. IMPLICATIONS:Fortune infotech has been performing really well with a global presence in 23 countries on its client base and 92,000 employees currently working for it. It deals in multiple segments of insurance, health services and software solutions. Both the companies have benefitted from the mergers as the distribution network of Covansys empowered with infrastructure and availability of human labor has lead to successful synergy leading to: Increase in capital employed by four times Return on net worth has increased three fold.