It was the time for consolidation

Consolidation was the name of the game as the Birlas, the Tatas and the Ambanis went about proving that size matters.

Leading the pack was the Reliance group. In March, the much expected merger of Reliance Petroleum with Reliance Industries was announced creating a Rs 42,000 crore (Rs 420 billion) behemoth.

It catapulted Reliance to the second spot on the largest Indian company sweepstakes, behind Indian Oil Corporation.

Also, in March, the reverse merger of ICICI with ICICI Bank took shape, making it the largest private sector bank in India.

This financial powerhouse has an asset base of Rs 1,06,000 crore (Rs 1,060 billion) to become the second-largest commercial bank in the country after SBI.

The objective behind the reverse merger stems primarily from the fact that developmental financial institutions no longer have a role to play in the country.

Also, the new entity will have access to low cost short term funds denied to a financial institution.

The Rs 40,000 crore (Rs 400 billion) Tata group also announced recasting its hotel company -- Indian Hotels which runs the Taj group of hotels.

This will see the total number of subsidiaries whittled down to 28 from 60, and selling around seven-odd unremunerative hotels.

However, a mega-deal that fell through was the merger between Idea Cellular (formerly Birla-Tata-AT&T) and BPL Communications.

The consolidation would have created India's largest mobile telephony company, but Idea executives said there were major disagreements on the terms of the merger, and disclosures made by one of the partners.

The government's bid to privatise state-owned companies did throw up some acquisition opportunities. The outcome: Reliance acquired IPCL to become a nearly-monopoly in petrochemicals in India.

The Tatas acquired VSNL and IT company CMC. Tata Power bought a power distribution circle in Delhi, while BSES picked up another.

The year also saw a spate of open offers from several multinationals aimed at delisting their Indian arms from the local bourses and repatriating their entire profit.

The list includes Cadbury, Castrol, Reckitt Benckiser, Otis, Kodak, Carrier, Wartsila and Syngenta.

But the consolidation attempt of the Birlas, which made an open offer for engineering and cement major Larsen & Toubro -- the primary attraction being L&T's 16.5 million tonne cement business -- appears to have fallen flat on its face.

In comparison, it will be a cakewalk for Reliance, which announced a second open offer to take management control of Mumbai-based utility BSES.

As the new year begins, privatisation will once again be a big ticket item.

Leading the pack are Nalco, HPCL, and National Fertilisers. Smaller deals like SCI and Engineers India could also be put on the block.

2002: The Year That Was

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