Many business landscapes have changed significantly due to rapid technological development, products, and competition. Traditional growth strategies like mergers and acquisitions, spinoffs, and takeovers are considered to be significant engines that help companies enter new markets. Corporate restructuring helps companies deal with poor performance and adopt new opportunities to strive and thrive in the competitive landscape. As per the Gartner Research Report, corporate restructuring can significantly help restore, conserve, and enhance the value of an organisation in India. Companies use restructuring as a solid business strategy to ensure their long-term viability and achieve certain goals, like becoming more competitive and responding to changes in the market.
One of the famous examples of corporate restructuring is ABB India Limited’s merger with Hitachi. The restructuring aimed to access technology, enhance core competencies, and reap the benefits of Hitachi’s innovation potential. According to Ulrich Spiesshofer, President and CEO of ABB Group, with corporate restructuring, they will fully empower their business to serve customers with less internal interface, more agility, and more speed. Many corporate entities modify their capital structure or operations significantly to enhance efficiency and competitiveness in the market. For some companies, restructuring may be a final effort to retain solvency when a firm is in financial trouble and has to restructure its debt with its creditors.
Mergers, acquisitions, and downsizing majorly influence the development and growth of corporations, which are governed by several laws and many sectoral regulators, such as the Central Government, SEBI, RBI, RoC, CCI, and many others. Corporate restructuring under the Competition Act 2002 offers information on the economic aspects of mergers and combinations. The act plays a key role in the expansion and development of Indian marketplaces so that businesses can operate effectively. Businesses must get professional and legal compliance to adhere to all the regulations to avoid facing severe fines for breaking the law in the future. Companies often opt for corporate restructuring when they believe fundamental changes are required in their capital structure or other operational aspects to remain competitive in the fast-growing business landscape.
