Reasons for Slow Progress of Combination
Progress of combination in India is observed to be less than that in western countries. The causes responsible for slow progress of combination movement in India are as follows:
1. Under-developed Industrial Structure: The industrial structure in India has been found to be backward in comparison to that in western countries tries. Under developed industrial structure prohibits combinations.
2. Individual Feelings: Most of the businessmen in India are hesitant and have individual feelings. That is why, they do not like to lose their ownership after making combination. This type of feelings resulted into slow progress of combination movement in India.
3. Lack of Industrial Policy: There was no industrial Policy in India before independence. The Britishers always liked to discourage Indian Industries. That is why combination movement could not get encouragement in India.
4. Lack of Combination: In India, demand for industrial products exceed the supply. There is a lack of cut-throat competition, which resulted into slow progress of combination movement in India.
5. Large-scale Industry: Some industries, like-Coal, Cotton Textile. Cement, Jute, etc., are automatically running on large-scale wherein combination is not required. As regards to the small-scale industries, they are found to be scattered which cannot be easily combined.
6. Industrial Policy towards Combination: The Indian Industrial policy has not encouraged the combination movement in India. Devoid of this necessary impetus, combinations are hard to come by.
7. Government’s Protection : Indian Industrial policy is observed to protect indigenous industries against foreign competition, which resulted into slow progress of combination movement in India.
Combinations in Indian Industries
1. Tata Steel-Corus : Tata Steel is one of the biggest ever Indian’s. steel company and the Corus is Europe’s second largest steel company. In 2007, Tata Steel’s takeover European steel major Corus for the price of $12.02 billion, making the Indian company, the world’s fifth-largest steel producer. Tata Sponge iron, which was a low-cost steel producer in the fast developing region of the world and Corus, which was a high-value product manufacturer in the region of the world demanding value products. The combination was intended to give Tata steel access to the European markets and to achieve potential synergies in the areas of manufacturing, procurement, R&D, logistics, and back office operations.
2. Vodafone Hutchison Essar : Vodafone India Ltd. is the second largest mobile network operator in India by subscriber base, after Airtel Group a Novelis is the world leader in aluminum rolling, producing an estimated 19 percent of the world’s flat-rolled aluminum products. The Hindalco Company entered into an agreement to acquire the Canadian company Novelis for $6 billion, making the combined entity the world’s largest rolled-aluminum Novelis operates as a subsidiary of Hindalco.
4. Ranbaxy – Daiichi Sankyo: Ranbaxy Laboratories Limited is an Indian multinational pharmaceutical company that was incorporated in India in 1961 and Daiichi Sankyo is a global pharmaceutical company, the second largest pharmaceutical company in Japan. In 2008, Daiichi Sankyo Co. Ltd., signed an agreement to acquire the entire shareholders of the promoters of Ranbaxy Laboratories Ltd, the largest pharmaceutical company in India. Ranbaxy’s sale to Japan’s Daiichi at the price of $ 4.5 billion.
5. Onge – Imperial Energy: Oil and Natural Gas Corporation Limited (ONGC), national oil company of India. Imperial Energy Group is part of the India National Gas Company, ONGC Videsh Ltd (OVL). Imperial Energy includes 5 independent enterprises operating in the territory of Tomsk region, including 2 oil and gas producing enterprises. Oil and Natural Gas Corp. Ltd. (ONGC) took control of Imperial Energy UK Based firm operating in Russia for the price of $1.9 billion in early 2009. This acquisition was the second largest investment made by ONGC in Russia.
