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It is said that nothing is permanent except change. This is definitely true in case of the corporate world. Every day there are reports of new happenings in the international corporate world where the rule of the jungle - Survival of the Fittest - is followed ruthlessly. To remain fit or regain fitness, companies undertake restructuring which has become a major force in financial and economic environment.
A Restructuring or Revival Program is normally formulated for a sick industrial unit, but even a market leader has to continuously be alert to changing internal and external environment.

Restructuring involves Mergers, Acquisitions, Takeovers, Divestment and Disposal, Spin offs, Leveraged Buyouts and other such strategies, either to save a company from bankruptcy or to simply make it more competitive. At the end of the day, it should lead to substantial improvement in economic performance of the company and add to shareholder value.

Looking at the corporate scene in India at present, we can say we are in midst of a second phase of liberalization and globalization, which brings with it the opportunities and threats. Indian companies have to face intense domestic as well as global competition, concentrate on their core competencies, use innovative financial strategies, be technologically competitive, all this while focusing on the customer. Restructuring is undertaken for carrying out these activities, and more so, in these changing times. The burden on managers for delivering value to the shareholders has only increased with the increase in stock market volatility, major corporate accounting scandals and opening up of factor and product markets. It is important for management to understand the implications of restructuring, as restructuring is synonymous with change and change will always mean resistance, not only from employees but also from the management itself. There are also cases where national interest is at stake and government may also involve itself into them. E.g., the public sector banks or oil companies which want to consolidate but waiting for government clearances.

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* Contributed by: -
Aadarsh Himmatramka, an M.Com. from Mumbai University, worked as Marketing Asst. with Pentafab Textiles Pvt. Ltd. for a year and is currently a student of PGP1 at BIM, Trichy,
Article published in KRIYA, March 2006 Issue, BIM's monthly magazine.