Impact of Mergers and Acquisitions on Profitability: Evidence from Manufacturing Industry in India

Corporate restructuring consists of any significant change in a firm's fiscal structure, or ownership, or control, or corporate portfolio that is planned to increase the value of the firm. There are instances where the mergers and acquisitions (M&As) impact the profitability (P). Hence, the present paper is to analyse the impact of M&As on P of manufacturing firms in India. For this purpose, 39 manufacturing firms are selected based on the adequacy of data in the data source for a period of 10 years on year to year basis from 2001-2002 to 2011-2012 considering the firms, which had gone into the M&As process during the financial year 2006-07. Paired samples t-test is applied to study the mean difference in the P of the firms in the pre-and post-merger periods. The study proves that the M&As has significant effect on P for 38 out of 39 manufacturing firms in India in the post-merger period and therefore it reveals that the acquiring manufacturing firms in India have utilized their combined resources well in accelerating profit and enhancing shareholders' wealth after merger