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MANAGEMENT RESEARCH PROJECT

Submitted To: Prof. SPR Vittal Faculty Guide ICFAI Business School Hyderabad

Submitted By: Abhishek Surana 08BSHYD0029

FINAL REPORT ON Analysis of Merger and acquisitions in The Indian Banking Sector

SUBMITTED TO: Prof SPR Vittal

SUBMITTED BY: Abhishek Surana (O8BSHYD0029)

A Report submitted in partial fulfillment of the requirements of MBA Program

ACKNOWLEDGMENT

I would like to express my gratitude to all those who gave me the possibility for completion of my Management Research Project. I am deeply indebted to my faculty guide Prof SPR Vittal whose help, stimulating suggestions and encouragements helped me during all the time of research and completion of the project. Special thanks go to my friend, Mr. Subhankar Mitra for his valuable time and support. There timely suggestions helped me in keeping myself on the right track. Without their encouragement and guidance, I could not have finished this project on time.

CONTENTS
ACKNOWLEDGMENT ...................................................................................................................................................... 3 ABSTRACT ............................................................................................................................................................................ 5 INTRODUCTION................................................................................................................................................................. 6 Overview of Indian Banking Industry: ............................................................................................................. 7 What is Mergers And Acquisitions................................................................................................................... 10 Mergers And Acquisitions In Indian Banking Sector Since 1961 .................................................... 12 Scope of the Study .................................................................................................................................................... 14 Limitations Of The Study ...................................................................................................................................... 14 Literature Review.......................................................................................................................................................... 15 Global Literature ....................................................................................................................................................... 15 Financial Ratio Analysis ................................................................................................................................... 15 Event study analysis........................................................................................................................................... 17 Research on post-merger performance in India ...................................................................................... 19 Financial Ratios Analysis ................................................................................................................................. 19 Event study analysis........................................................................................................................................... 20 Research Gap .................................................................................................................................................................... 23 Objective of the study .................................................................................................................................................. 24 Methodology..................................................................................................................................................................... 25 Data .................................................................................................................................................................................. 25 Data Collection & description: ...................................................................................................................... 25 Market index .......................................................................................................................................................... 25 Models considered ................................................................................................................................................... 25 Event study ............................................................................................................................................................. 25 Financial Statement Analysis ........................................................................................................................ 27 Findings .............................................................................................................................................................................. 29 Return during estimation period...................................................................................................................... 29 DuPont ROE analysis............................................................................................................................................... 31 ATTACHMENTS .............................................................................................................................................................. 32 References ......................................................................................................................................................................... 40

ABSTRACT
In todays globalised economy, mergers and acquisitions (M&A) are being increasingly used the world over, for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce

business risk, for entering new markets and geographies, and capitalizing on economies of scale etc. In this paper we present a review of research done in the field of Mergers and Acquisitions (M&As) in the Indian banking sector. Using a sample of 20 M&As during the post-liberalization period 1993-2007 involving 32 banking firms, we analyze the impact of M&As on the shareholders return of the acquiring banks. It also contrast a measure of the mergers profitability based on event studies with one based on accounting data. We find positive and significant correlations between them when using a long window around the announcement date (Tomaso Duso, Klaus Gugler and Burcin Yurtoglu, 2006)1. The findings of the project states that M&A as an event does generate Average Abnormal Return (AAR) for acquirers (nearly 6.5%) for both the private and public banks. It created 3.56% and 10.45% of CAARs for public and private banks individually. The ROE and other Profitability ratios of the firm like ROA, net profit margin increases after the post merger period. Both the study creates sync between their results.

Is the Event Study Methodology Useful for Merger Analysis? A Comparison of Stock Market and Accounting Data.
1

INTRODUCTION
It is clear that you cannot stay in the top league if you only grow internally. You cannot catch up just by internal growth. If you want to stay in the top league, you must combine. -Daniel Vasella, Chief Executive Officer, Novartis, July 2002

Remaining small may be beautiful but becoming big would make you powerful is the underlying principle behind the Merger & Acquisitions (M&As) business strategy. Ever business strives for survival in this growing era of core competence. It is here M&As is looked upon as an immediate mode for external growth. This phenomena has been prevailing both in the developed and developing economies. But it is gaining more prominence in the present globalizing world. The banking sector which plays a very vital role in the economic development of India has been witnessing tremendous change. The various players in the banking arena have already begun to feel the heat of the intense competition M&A is one among the various modes of

restructuring restored by banks to ensure a better growth prospect. Some of the reasons for this growing tendency of adopting M&A tactics are due to: y y y y y Increasing needs to achieve economies of large scale. Brand building, Expanding branch networks over a wider geographical area, Mitigate the perils of Non Performing Assets (NPA), Acquire synergies of expert management and also to solve the problems associated with capital adequacy norms. It is believed that by undergoing such M&A deals banks will enable them

to emerge stronger, increase their earning capacity and strengthen their capital base.

The Indian banking industry has

been

seen steadily shifting away from

traditional sources of revenue like loan-making and towards nontraditional activities that generate fee income, service charges, trading revenue, and other types of noninterest income. It is not only the banks in the private sector that are making headway into diversifying their operations; it is also the public sector banks like Punjab National Bank, Bank of Baroda, Canara Bank etc which are aggressively looking for branch expansions in various countries.
2

(Mrs. Sangeeta Arora and Ms. Shubpreet Kaur 2006)

Currently foreign banks have also been permitted to buy stakes up to 74% in the Indian banks. This adds more oil to the spreading fire foreign banks would consider M&A as a quick method of inorganic growth. In order to expand their presence in the Indian scenario they would join hands with other Indian banks
3

(Chummar John Mathew and Dr. G. Raju 2002)

OVERVIEW OF INDIAN BANKING INDUSTRY: Banks in India may be broadly categorized based on ownership into three tiers44: y y y Scheduled commercial Banks (SCBs), Regional Rural Banks (not covered by SCBs) and Cooperative and special purpose Rural Banks.

Private sector banks dominate the Indian Banking System accounting for over

Internal Determinants for Diversification in Banks in India an Empirical Analysis by Mrs..Sangeeta Arora and Ms. Shubpreet Kaur (International Research Journal of Finance and Economics)
2 3 Mergers in the banking sector a case study of HDFC & Times Bank by Chummar John Mathew and Dr. G. Raju 4 Source banknetindia.com

70% of the assets of the SCBs in India (Report on Trends and Progress of Banking in India, 2005). The financial system in India in the first decade

following independence in 1947 was a liberal one. However, the first of two waves of nationalization occurred in 1969, and heralded a new system of tight regulatory control. The primary features of this system were high reserve ratios and an administered interest rate regime in which regulations dictated deposit and lending rates. Furthermore, certain economic sectors were designated Priority Sectors and banks were required to lend up to 40% of their total credit to these sectors. These policies were introduced in an effort to facilitate the spread of banking services to rural areas, mobilize savings, and channel credit towards the development of weaker but vital sectors of the economy such as the agricultural sector and the small-scale industry (Bhattacharya et al, 1997). As a result of the aforementioned policies, the PSBs began to dominate the Indian Banking System. Indeed, prior to economic liberalization in 1991, the PSBs accounted for 90.8% of aggregate deposits of SCBs. The financial system came to be characterized by y y y low profitability, high levels of Non-Performing Assets (NPAs), and A low capital base and high levels of operational inefficiency (Arun & Turner, 2002).

As noted by Mistry (1995), while the banking system was successful in mobilizing savings, it failed in efficient resource allocation. The reasons for this failure are not far to seek. In a market-oriented framework, banks would only undertake those loans which met stringent credit risk standards. Thus, scant regard to fundamental financial performance coupled with a rigid desire to meet quantitative objectives led to the permeation of operational inefficiency in the banking system triggering the need for economic reforms in 1991 to improve its strength, profitability, and efficiency. The recommendations of the Committee on Financial System and the Committee on Banking Sector Reforms (Narasimham Committees I and II) formed the

foundations of the economic reforms undertaken. The economic reforms brought about a comprehensive change in the competitive landscape of the Indian Banking System forcing many of the incumbent banks to adopt Mergers and Acquisitions with the objective of restructuring themselves in order to enhance their efficiency, profitability and competitive strength.

In addition, the Government introduced policy initiatives aimed at deregulation and encouragement of mergers with a view to increasing the size, profitability, and financial strength of Indian Banks thereby enhancing their capability to compete globally. This climate of relaxed merger regulations fostered an increase in the number of merger deals among Indian firms (Beena, 2000).

FIGURE 1:SCHEDULE BANKING STRUCTURE IN INDIA

Nationalized Banks(19) Public Sector Banks(27) State Banks & its Associates Old Private Sector Banks(21) Schedule Commercial Bank Private Sector Banks(30) New Private Sector Banks(9) Foreign Private Sector Banks(36) Schedule Banks in India Regional Rural Banks(196) Scheduled Urban Cooperative Bank(152) Scheduled State Cooperative Bank(19)

Schedule Cooperative Banks

WHAT IS MERGERS AND ACQUISITIONS Merger is a combination of two or more companies into one company. In India, mergers are called as Amalgamations, in legal parlance. The acquiring company also referred to as the amalgamated company or the merged company) acquires the assets and liabilities of the target company (or amalgamating company). Typically, shareholders of the amalgamating company get shares of the

amalgamated company in exchange for their existing shares in the target company. Merger may involve absorption or consolidation. A. Merger and amalgamation: The term merger and amalgamation refers to a combination of two or more corporate into a single entity. It may involve either:a) Absorption: one bank acquires the other Or b) Consolidation: Two or more banks combine to form a new entity. In India the legal term for merger is amalgamation B. Acquisitions: This may be defined as the act of acquiring effective control by one corporate over the assets or management of the other corporate without any combination of or both of them. It can be characterized in the following: y y The corporate remain independent They have a separate legal entity Under the monopolies and restrictive trade practices act,

C. Takeover:

takeover means acquisitions of not less than 25% of voting powers in a corporate.

MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR SINCE

1961
FIGURE 2

Number of M&A Deals before Nationalization


35 30 25 20 15 10 5 0 1961 1962 1963 1964 1965 1966 1967 1968 1969

The Figure 2 (above) shows a large number of deals took place in 1961 but after that it gradually declined to a very few in 1969. Between the year 1966-1968, there were no merger deals took place in the banking sector in India. Post Liberalization the M&A activities were there but only one or two activities per year.

Number of M&A Activities Post Nationalization


15

10

0 1970-79 1980-89 1990-99 2000-07

FIGURE 3

The above figure shows how the M&A activities have increased after nationalization of banks.
FIGURE 4

Major Banks involved in M&A


12 10 8 6 4 2 0

SCOPE OF THE STUDY The increased number of M&As raises the question about the outcomes of corporate mergers and acquisitions vis--vis the stockholders. A number of studies both, in the economies and strategic management literature, have attempted to identify the impacts of M&A on the shareholders return of the acquiring firms. Event study and pre & post merger analysis of financial ratios are some of such tools that tries to find the price performance of the stock and accounting based return respectively. Event study considers the stock prices and interprets the impact of M&A to calculate the abnormal return around the announcement date. The Accounting rate of return gives a fair understanding to the investors, as how the market reacts to the event. A positive or negative abnormal return gives an indication of the gains and losses for an investor in relation to the happening of the event.

LIMITATIONS OF THE STUDY 1. Time Factor: Since the project has to be completed within a prescribed time so it may fail to address other important issues which could have added value to the study 2. Error related to sample and the year considered for the study: It may not reflect true picture of the impact of Merger & Acquisitions on the shareholders return as return may have been influenced by some other event apart from M&As

LITERATURE REVIEW .
GLOBAL LITERATURE There have been numerous studies on mergers and acquisitions abroad, in the last four decades, and several theories have been proposed and tested for empirical validation. Researchers have studied the economic impact of mergers and acquisitions on y y y Industry consolidation, Returns to shareholders following mergers and acquisitions and The post-merger performance of companies.

Whether or not a merged company achieves the expected performance is the critical question that has been examined by most researchers. Several measures have been postulated for analyzing the success of mergers. A number of studies were done in developed capital markets of Europe, Australia, and the USA, on evaluation of corporate financial performance following mergers (Pramod Mantravadi and A Vidyadhar Reddy). FINANCIAL RATIO ANALYSIS 1. Lubatkin(1994) reviewed the findings of studies that have investigated either directly or indirectly the question, Do mergers provide real benefits to the acquiring firm? The review suggested that acquiring firms might benefit from merging because of technical, pecuniary and diversification synergies. 2. Healy, Palepu, and Ruback (1987) examined post-acquisition

performance for 50 largest U.S. mergers between 1979 and 1984 by measuring cash flow performance, and concluded that operating performance of merging firms improved significantly following

acquisitions, when compared to their respective industries. 3. Ghosh(2004) examined the question of whether operating cash flow performance improves following corporate acquisitions, using a design

that accounted for superior pre-acquisition performance, and found that merging firms did not show evidence of improvements in the operating performance following acquisitions. 4. Weston and Mansingka (2000) studied the pre and post-merger performance of conglomerate firms, and found that their earnings rates significantly underperformed those in the control sample group, but after 10 years, there were no significant differences observed in performance between the two groups. The improvement in earnings performance of the conglomerate firms was explained as evidence for successful achievement of defensive diversification. 5. Marina Martynova(1997), Sjoerd Oosting and Luc Renneboog investigated the long-term profitability of corporate takeovers in Europe, and found that both acquiring and target companies significantly outperformed the median peers in their industry prior to the takeovers, but the profitability of the combined firm decreased significantly following the takeover. However, the decrease became insignificant after controlling for the performance of the control sample of peer companies. 6. Katsuhiko Ikeda and Noriyuki Doi (1999) studied the financial

performances of 43 merging firms in Japanese manufacturing industry and found that the rate of return on equity increased in more than half the cases, but rate of return on total assets was improved in about half the cases. However, both profit rates showed improvement in

more than half the cases in the five-year test, suggesting that firm performances after mergers began to be improved along with the internal adjustment of the merging firms: there was a necessary gestation period during which merging firms learnt how to manage their new organizations. 7. Kruse, Park and Suzuki (1999) examined the long-term operating performance of Japanese companies using a sample of 56 mergers of manufacturing firms in the period 1969 to 1997. By examining the cash-flow performance in the five-year period following mergers, the

study found evidence of improvements in operating performance, and also that the preand post-merger performance was highly

correlated. The study concluded that control firm adjusted long-term operating performance following mergers in case of Japanese firms was positive but insignificant and there was a high correlation between pre-and post-merger performance. In summary, the few studies done on operating performance of acquiring firms, thus far, in other countries, have reported mixed results, with findings ranging from slightly positive to significantly negative impact on operating performance of acquiring companies, following mergers. EVENT STUDY ANALYSIS 8. Sara B. Moeller, Frederick P. Schlinge mann And M. Stulze

(2003) in their research paper firm size and acquisitions said that small

the gains from for their

firms are profitable

shareholders, but these firms make small acquisitions with small dollar gains. Large firms make large acquisitions that result in large dollar losses. Acquisitions thus result in losses for the shareholders in the aggregate because the losses incurred by large firms are much larger than the gains realized by smaller firms. It examines possible explanations for this size effect, defined as the difference between the abnormal returns of small acquirers and large

acquirers. First, roughly one quarter of firms acquiring public firms are small whereas half of the firms acquiring private firms are small. Second, small firms are more likely to pay for acquisitions with cash than equity. We find that the combined dollar return of the acquired and the target firms for acquisitions of the public firms is positive and significant for small firms but negative for large firms. 9. Mathew J. Clayton, Jay C. Hartzell, And Joshua V. Rosenberg (2003) studied the qualitative factor of CEO turnover which effect the price movement. In this paper The impact of CEO Turnover on

Equity volatility investigates an important consequence of a CEO turnover on equity volatility. The paper develops three hypotheses about how changes in CEO might affect stock price volatility, and test these hypotheses using a sample of 872 CEO turnovers over the 1979-95 periods. According to the study Volatility increases following a CEO turnover, even when the CEO leaves voluntarily and is replaced by someone from inside the firm. 10. Gary Gorton, Matthias Kahl And Richard Rosen (2005) in their paper Eat Or Be Eaten: A Theory Of Mergers And Merger Waves concluded that mergers occur in waves and the reason behind it can be traced to 2 scenarios. y y In the first scenario, only profitable acquisitions occur. In the second scenario, unprofitable acquisitions that preempt some profitable acquisitions occur. Which scenario arises depend on the incentives of the managers to make defensive acquisitions. If managers are less interested in remaining independent (and gaining the associated private benefits) than in maximizing shareholder value (because their compensation depends on it), there is no defensive merger pressure. 11. Andrei Shleifer, Robert W. Vishny (2002) in their paper Stock Market Driven Acquisitions focus on M&A based on stock market mi-valuations of the combining firms. The main idea of the paper is the relative valuations of the merging firms and the markets perception of the synergies from the combination. The paper explains who acquires whom, the choice of the medium of payment, the valuation consequences of mergers and merger waves. 12. Michael firth (1980) in his paper Takeovers, Shareholders Return and he Theory of the Firm examines recent merger anti-takeovers activity in UK. Specifically, the impact of takeovers on shareholders return and management benefits is analyzed, and some implications of the theory of the firm are drawn from the results. The research showed that

mergers and takeovers resulted in benefits to the target

firms

shareholders and to acquiring companies managers but losses were suffered by the acquiring companies shareholders. The results are consistent with the takeovers being motivated more by maximization of management utility rather than maximization of shareholders wealth.

RESEARCH ON POST-MERGER PERFORMANCE IN INDIA The research on post-merger performance following mergers and

acquisitions in India thus far has been limited. FINANCIAL RATIOS ANALYSIS 13. Surjit Kaur (2002) compared the pre and post-takeover performance for a sample of 20 acquiring companies during 1997-2000, using a set of eight financial ratios 3, during a 3-year period before and after merger, using t-test. The study concluded that both profitability and efficiency of targeted companies declined in post-takeover period, but the change in post-takeover performance was statistically not significant. 14. Beena (2000) analyzed the pre and post-merger performance of a sample of 115 acquiring firms in the manufacturing sector in India, between 1995-2000, using a set of financial ratios 4 and t-test. The study could not find any evidence of improvement in the financial ratios during the post-merger period, as compared to the pre-Merger period, for the acquiring firms. 15. Pawaskar (1998) analyzed the pre-merger and post-merger operating performance of 36 acquiring firms during 1992-95, using ratios 5 of profitability, growth, leverage, and liquidity, and found that the acquiring firms performed better than industry average in terms of profitability.

Regression Analysis however, showed that there was no increase in the post-merger profits compared to main competitors of the acquiring firms. Thus, empirical testing of corporate performance following

mergers of Indian companies has been quite limited so far, with some studies that were focused on mergers in manufacturing sector, and study of mergers during short time intervals. E EVENT STUDY ANALYSIS

16. Anup Agarwal And Jeffrey F. Jaffe (2002) in their paper The Post-Merger performance Puzzle state that long run performance is negative following mergers, though performance is non-negative and perhaps even positive following tender offers.There may be several explanations for such under performance following a merger like: y y y y y Speed and price adjustment Short-run focus on EPS Method of payment Estimating performance Two explanations of underperformance (speed of price adjustment and short-term EPS focus) are not supported by the data, while two other explanations (Method of payment and Estimating performance) received greater support. 17. Mathew Rhodes-Kropf, S. Viswanathan (2004) state in their that paper private

Market valuation and merger waves

information on acquiring and target firms leads to increased stock merger activity that is correlated with market valuation. Managers of bidding firms have private information about the stand-alone value of their firms and the potential value of merging with a target firm. Both bidders and targets have market values that may not reflect the true value of their companies which leads to mergers and acquisitions. The target has limited information about the components of the misevaluation, and therefore has difficulty in assessing the synergies. The rational target knows whether their own firm is overvalued or

undervalued, so they are not easily fooled, but they cannot determine whether this misevaluation is a market effect, a sector effect, or a firm effect. 18. Anand M. Vijay And Ke Yang (2006) in their research paper The

Acquisition Performance Of S&P 500 Firms compared the acquisition performance of S&P 500 and non S&P 500 firms after controlling for differences in the firm characteristics. During 1980-2004, S&P 500 firms made a greater number and dollar value of acquisitions. y y They more often used cash payment and tender offers The market reacted less negatively (more favorably) to the announcement of their acquisitions. y y They were more likely to complete their deals. The target shareholders seemed to attach incremental value to joining with an S&P 500 firm and accepted a lower premium in stock deals. The S&P 500 acquirers also had stronger pre-acquisition operating performance, chose targets with stronger pre-acquisition performance, and realized significant gains in post-acquisition performance. We interpret the combined evidence as consistent with the efficiency hypotheses, which suggests that S&P 500 firms are more

efficiently managed firms and make better acquirers. 19. Bharat & Guojun (2005) in their paper Long Run Volatility And Risk Around Mergers And Acquisitions study the changes in

volatility and risk of acquirers around M&A and seek to understand the determinants of those changes. We find that there is a strong runup in volatility and risk beginning four years before the merger. This premerger run up is consistent with the hypotheses that M&As are a response to industry shocks. We find that for a period of one year after the merger the average volatility measures continue to increase. Beyond that the systematic volatility and beta began to decline. However, market specific volatility continues to increase for the next two years. volatility pattern is consistent with the risk of the The

post-merger

integration of the acquirer and the target firms that gets resolved slowly over time. The announcement effect of mergers, the diversification discount, and the long run underperformance of acquirers in M&A transactions. The key insight is that as we understand the volatility and risk dynamics better, we will be able to compute risk adjusted return\ more accurately. 20. Shavin Malhotra And Pengcheng Zhu(2008) Announcement in their paper

Effect & Price Pressure: An Empirical Study Of

Cross-Border Acquisitions examined the short term stock performance of a sample of Indian firms acquiring US firms in the period 1999-2005. The study showed that Indian market reacted positively to the acquisition announcement. The positive return lasted for only three days, after which return became negative. The study used mean adjusted method to calculate abnormal return on and around the announcement. The study also did cross sectional analysis using CAR as the dependent variable and cash. Size, private Vs public & related companies as independent variables. The study concluded the announcement effect in Indian cross border M&A were mainly due to price pressure effect rather than informational effect.

RESEARCH GAP
From the revive of literature (as mentioned above), we find that in order to analyze the impact of merger and acquisitions (as an event) on the return of the shareholders of the company, most of the researchers have concentrated on either of the two methodologies y y are Stock market based Event study or Accounting based financial ratio analysis

In principle, stock markets could help predicting the future profitability, since they forward looking. However, many economists, in particular industrial

organization economists, are skeptical about the markets ability to correctly anticipate mergers competitive effects. This paper tries to close the gap between the finance and industrial organization literatures by estimating both: 1. Pre and post merger announcement effects on share prices of the merging firms (-15,+15 days) and

2. Pre and post merger financial statement profit effects on merging firms (-3,+3years) 3. Create a contrast between the two of the above results

OBJECTIVE OF THE STUDY


The objective of this paper is to determine whether Mergers and Acquisitions (M&As) create any value for shareholders of the acquiring firm in the Indian banking sector market through 1. Studying the stock price impact of M&A transactions on both target and acquiring firms through event study methodology. 2. Analyzing the changes in the financial statements of the Acquiring firm post M&A by a. Using DuPont Return on Equity shareholders model (ROE model) and b. Employing ROA ratio, Net profit margin ratio, Asset Turnover ratio and Financial Leverage ratio (Pramod Mantravadi Vidyadhar Reddy, 2008) c. Analyzing the pre and post merger valuation of the equity shareholders of the acquiring firm using discounted cash flow model. 3. To check the reliability of both the above results by studying the correlation between them. and A

METHODOLOGY
DATA DATA COLLECTION & DESCRIPTION: The research report has used a sample of 20 mergers and acquisition deals took place in the banking sector of India from 1993-2007. We measure the abnormal returns for three portfolios of bank stocks: y y y Nationalized banks Private banks and Combined portfolio of all banks MARKET INDEX The S&P CNX Nifty is used as the market index. We exclude a firm if it has less than 240 days of data during the estimation period or less than thirty days of data during the event period.

MODELS CONSIDERED EVENT STUDY The project used Market Model. The market model assumes that there is a linear relationship between market return and the security price It tests if M&A as an event can generate abnormal returns for the shareholders. In order to quantify the effects, it calculates abnormal returns i.e., the differences between the actual stock return and a benchmark.

R= +
jt j

*R +
Mt

jt

Event Date: The date on which the company announces the merger is the event date. This date can be any day of the week. The event date has been extracted from the company press release. Trade Date: Trade day is the trading day of the stock after the announcement

date. The event date and trading day will be same, if the occurrence of the event is announced during the market hours of the trading sessions (i.e. between 10 am to 4 pm IST). If the event is announced after the trading hours (i.e. after 4 pm IST) the trade date will be the next immediate trading day. Estimating event window: The length of the window has not been clearly defined in any of the research papers (studied above). A period of 15 days preceding and following the event day (i.e., -15, +15) has been taken for the study period. Also, a combination of window size has been computed to see the change in the AAR. Evaluating Estimation Period: Estimation period is the period where we measure the relationship between the stock and the variables. Here the estimation period has been selected in such a way that it does not overlap with the event window to prevent the effect of the event to influence the normal performance of the stock. Considering this fact the estimation period for the project is taken as (Day -30 to -240).

FINANCIAL STATEMENT ANALYSIS 1. DuPont ROE model

The Return on Shareholders Equity (ROE) Model

2. ROA ratio, Net profit margin ratio, Asset Turnover ratio and Financial Leverage ratio 3. Discounting cash flow model for valuation analysis post merger.

Tools Used:

SPSS 13.0 and Excel have been used in the project

FINDINGS
RETURN DURING ESTIMATION PERIOD The return has been calculated during estimation period (-30 to -240 days). The Relationship between the return and the market has been calculated using OLS regression model.
Return(During Estimation Period) r r Sbi,t r obc1,t r bob1,t r hdfc,t r icici1,t r bob2,t r r pnb,t r bob3,t r obc2,t R r fed,t r iob,t r icici2,t -.033 + .897mt .149 + 0.690mt -.047 + .594mt .439 + 0.898mt .047 + 1.240mt .113 + 1.164mt .079 + 1.277mt .052 + 0.941mt -.170 + .971mt .502 + 0.722mt .086 + 0.721mt -.029 + .508mt Relationship between return and market

Average Abnormal Returns (AARs)

Total Sample The result shows that AAR at day 0 i.e. on announcement date has been increased. The acquirer bank on average gains of 0.35%. On day 3 shareholders earn a maximum return of 2.81%. The sample also shows a polynomial trend of AAR during the window. From the figure 4 below, we can see that the AAR is continuously rising after

merger event creating a positive Abnormal Return for the shareholders of the acquiring banks.

AAR of Public & Private Banks


3 2 1 0 T-15 T-13 T-11 T-9 T-7 T-5 T-3 T-1 T+1 T+3 T+5 T+7 T+9 T+11 T+13 T+15 -1 -2 -3

Public Sector Banks The result shows that AAR at day 0 i.e. on announcement date has been increased. The acquirer bank on average gains of 0.92%. On day 13 shareholders earn a maximum return of 2.32%. However, public sector banks shareholders did not gain significant positive returns post merger. The sample also shows a polynomial trend of AAR during the event window. From the figure below, we can see that the AAR is rising after merger event creating a small positive Abnormal Return for the shareholders of the acquiring banks.

Private Sector Banks The result shows that AAR at day 0 i.e. on announcement date has been declined. The acquirer banks on average loss of -0.44%. On day 15 shareholders earn a maximum return of 1.23%.However, private sector banks shareholders did not gain significant positive returns post merger. The sample also shows an increasing polynomial trend of AAR during the event

window. From the figure 5 below, we can see that the AAR is rising after merger event creating a quite large positive Abnormal Return for the shareholders of the acquiring banks.

DUPONT ROE ANALYSIS All Mergers: Mean pre-merger and post-merger Ratios for merging firms
Ratios Net Profit Margin Asset Turnover Return on Assets (ROA) Financial Leverage Return on Equity (ROE) Pre-Merger (3 Years before) -7.638 0.077 -0.704 192.929 -121.876 Post-Merger (3 Years after) -7.163 0.07 -0.491 253.336 -92.511

The comparison of the pre-merger and post-merger financial ratios for the entire sample set of mergers showed that there was a decline only in the mean asset turnover (0.077% to 0.070%).However all other ratios Net Profit margin (-7.638% to -7.163%) and ROA (-0.704% to -0.491%), financial leverage (192.929% to 253.336%) and ROE (-121.876% to -92.511%) showed statistically significant increase in the post-merger period.

ATTACHMENTS
List of mergers and acquisitions of the Indian banks taken for study.
Name of Transferor Bank Bank Of Karad Ltd New Bank Of India Kashi Nath Seth Bank Ltd. Bari Doab Bank Ltd. Punjab Co-Operative Bank Ltd. Bareilly Corporation Bank Ltd. Sikkim Bank Ltd. Times Bank Ltd. Bank Of Madura Ltd. Banaras State Bank Ltd. Nedungadi Bank Ltd. South Gujarat Local Area Bank Global Trust Bank Ltd. Bank Of Punjab Ltd IDBI Bank Ltd. The Ganesh Bank Of Kurundwad United Western Bank Ltd. Bharat Overseas Bank The Sangli Bank Ltd Lord Krishna Bank Ltd. Name of Transferee Bank Bank Of India Punjab National Bank State Bank Of India Oriental Bank Of Commerce Oriental Bank Of Commerce Bank Of Baroda Union Bank Of India HDFC Bank Ltd. ICICI Bank Ltd. Bank Of Baroda Punjab National Bank Bank Of Baroda Oriental Bank Of Commerce Centurion Bank IDBI Ltd. The Federal Bank Limited IDBI Ltd. Indian Overseas Bank ICICI Bank Ltd. Centurion Bank Of Punjab Ltd. Date of Amalmagation 02.05.1992 04.09.1993 04.09.1993 08.04.1997 08.04.1997 03.06.1999 22.12.1999 26.02.2000 10.03.2001 20.06.2002 01.02.2003 25.06.2004 14.08.2004 01.10.2005 02.04.2005 02.09.2006 03.10.2006 31.3.2007 19.4.2007 29.8.2007

Cumulative Average Abnormal Return (CAAR)

CAAR of banks (private and public) from the period 1993-2007

Periods T-15 T-14 T-13 T-12 T-11 T-10 T-9 T-8 T-7 T-6 T-5 T-4 T-3 T-2 T-1 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T+11 T+12 T+13 T+14 T+15 CAA

SBI 3.86 -2.86 1.85 0.37 1.16 -1.74 1.91 0.94 0.22 -0.66 3.51 1.37 2.78 0.83 -2.97 0.01 -0.64 -1.65 -2.65 1.55 0.42 -0.6 2.03 -1.11 1.86 0.99 0.96 -0.41 -0.78 1.31 3.01 14.87

OBC1 -3.01 0.21 0.54 0.89 -0.84 1.63 0.36 0.5 -0.77 1.11 -4.98 0.82 0.42 -1.09 0.02 1.83 1.08 -3.42 0.73 0.95 2.68 1.36 0.1 -1.12 -1.05 -1.16 0.25 -2.06 3.44 -3.03 -1.44 -5.05

BOB1 1.14 6.96 -1.7 -6.13 -1.47 0.51 -2.04 -5.64 4.57 0.15 -4.1 -9.49 9.88 -0.63 1.52 1.88 3.35 5.8 7.15 1.97 -6.12 -3.6 -6.62 0.14 4.18 2.16 -4.67 3.34 9.99 -0.63 -0.05 11.80

HDFC 5.15 2.03 -0.21 -0.69 -9.79 -1.27 2.13 3.12 4.12 -2.08 -3.83 -6.19 3.7 -3.43 3.26 -2.38 4.98 -1.84 10.82 10.4 -5.86 -1.58 8.07 -3.8 0.02 6.05 -1.04 -5.01 3.56 -1.42 -3.64 13.35

ICICI1 -5.04 -4.59 0.77 0.39 -2.05 0.4 -1.13 2.35 4.43 18.29 -0.6 -0.08 -3.89 1.88 1.27 -2.92 -7.4 -2.89 11.69 -4.43 0.89 0.49 3.08 -7.34 -2.57 0.72 3.1 3.74 3.04 2.62 3.59 17.81

BOB2 1.58 -0.51 2.23 2.02 4.18 -0.05 -1.41 5.71 7.02 3.53 -0.93 -2.45 3.18 -0.24 3.96 1.7 -2 0.05 0.13 -0.44 0.88 0.7 1.93 -4.54 -1.17 -0.9 -1.62 0.59 0.21 2 -0.54 24.80

PNB 1.87 -1.55 0.65 2 -2.03 2.56 4.02 -2.66 1.43 -0.45 -4.96 -2.61 1.84 -2.61 -5.28 2.7 5.57 -1.9 1.36 0.89 -1.1 -1.83 0.12 -1.25 2.09 3.72 3.25 -0.42 -0.59 1.37 1.9 8.10

BOB3 -5.48 0.64 0.45 3.17 -1.18 1.08 -1.71 -4.4 2.97 -1.27 6.55 -3.48 -4.95 2.43 -3.31 1.28 -1.42 -0.42 0.31 -0.39 1.04 -2.81 -2.94 0.48 1.67 -6.69 2.1 1.26 0.79 -0.73 0.05 -14.91

OBC2 1.46 -3.17 -4.25 -2.88 -2.26 -0.8 0.35 -1.81 0.46 1.98 -1.34 -0.27 1.07 -0.58 -1.68 1.21 -0.64 0.8 -2.85 0.46 -2.5 0.27 0.97 -0.58 1.65 -1.12 -0.48 0.04 1.14 -0.41 -0.18 -15.94

FED 0.4 1.62 4.89 4.88 0.23 3.36 3.67 -0.85 0.97 -2.44 -3.62 -2.34 0.77 -2.03 -3.6 1.49 6.2 -2.71 4.21 0.43 1.4 -2.1 -0.85 -0.67 0.44 4.85 3.73 -0.47 -1.73 1.77 2.08 23.98

IOB 3.32 -0.53 -0.35 0.98 0.32 0.75 -0.14 1.99 1.82 1.08 -0.82 -0.18 -0.02 0.81 -1.21 -1.55 0.13 -0.32 -0.4 -1.15 -1.51 0.22 -0.82 -1.02 -1.05 4.41 2.15 -0.92 1.43 -0.78 2.64 9.28

ICICI2 -0.71 -2.28 -1.75 0.07 -2.19 -1.71 5.32 -1.16 -0.18 -1.95 1.92 3.01 -2.06 -1.53 1.63 -1.1 1.66 -1.58 3.27 -0.14 2.07 -4.37 -6.97 1.04 -1.88 -1.17 -0.27 -0.67 0.91 -0.48 2.24 -11.01

AA 0.38 -0.34 0.26 0.42 -1.33 0.39 0.94 -0.16 2.26 1.44 -1.10 -1.82 1.06 -0.52 -0.53 0.35 0.91 -0.84 2.81 0.84 -0.64 -1.15 -0.16 -1.65 0.35 0.99 0.62 -0.08 1.78 0.13 0.81 6.42

CAAR of public banks from the period 1993-2007

Periods T-15 T-14 T-13 T-12 T-11 T-10 T-9 T-8 T-7 T-6 T-5 T-4 T-3 T-2 T-1 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T+11 T+12 T+13 T+14 T+15 CAA

SBI 3.86 -2.86 1.85 0.37 1.16 -1.74 1.91 0.94 0.22 -0.66 3.51 1.37 2.78 0.83 -2.97 0.01 -0.64 -1.65 -2.65 1.55 0.42 -0.6 2.03 -1.11 1.86 0.99 0.96 -0.41 -0.78 1.31 3.01 14.87

OBC1 -3.01 0.21 0.54 0.89 -0.84 1.63 0.36 0.5 -0.77 1.11 -4.98 0.82 0.42 -1.09 0.02 1.83 1.08 -3.42 0.73 0.95 2.68 1.36 0.1 -1.12 -1.05 -1.16 0.25 -2.06 3.44 -3.03 -1.44 -5.05

BOB1 1.14 6.96 -1.7 -6.13 -1.47 0.51 -2.04 -5.64 4.57 0.15 -4.1 -9.49 9.88 -0.63 1.52 1.88 3.35 5.8 7.15 1.97 -6.12 -3.6 -6.62 0.14 4.18 2.16 -4.67 3.34 9.99 -0.63 -0.05 11.80

BOB2 1.58 -0.51 2.23 2.02 4.18 -0.05 -1.41 5.71 7.02 3.53 -0.93 -2.45 3.18 -0.24 3.96 1.7 -2 0.05 0.13 -0.44 0.88 0.7 1.93 -4.54 -1.17 -0.9 -1.62 0.59 0.21 2 -0.54 24.80

BOB3 -5.48 0.64 0.45 3.17 -1.18 1.08 -1.71 -4.4 2.97 -1.27 6.55 -3.48 -4.95 2.43 -3.31 1.28 -1.42 -0.42 0.31 -0.39 1.04 -2.81 -2.94 0.48 1.67 -6.69 2.1 1.26 0.79 -0.73 0.05 -14.91

OBC2 1.46 -3.17 -4.25 -2.88 -2.26 -0.8 0.35 -1.81 0.46 1.98 -1.34 -0.27 1.07 -0.58 -1.68 1.21 -0.64 0.8 -2.85 0.46 -2.5 0.27 0.97 -0.58 1.65 -1.12 -0.48 0.04 1.14 -0.41 -0.18 -15.94

IOB 3.32 -0.53 -0.35 0.98 0.32 0.75 -0.14 1.99 1.82 1.08 -0.82 -0.18 -0.02 0.81 -1.21 -1.55 0.13 -0.32 -0.4 -1.15 -1.51 0.22 -0.82 -1.02 -1.05 4.41 2.15 -0.92 1.43 -0.78 2.64 9.28

A 0.41 0.11 -0.18 -0.23 -0.01 0.20 -0.38 -0.39 2.33 0.85 -0.30 -1.95 1.77 0.22 -0.52 0.91 -0.02 0.12 0.35 0.42 -0.73 -0.64 -0.76 -1.11 0.87 -0.33 -0.19 0.26 2.32 -0.32 0.50 3.55

CAAR of private banks from the period 1993-2007

Periods T-15 T-14 T-13 T-12 T-11 T-10 T-9 T-8 T-7 T-6 T-5 T-4 T-3 T-2 T-1 T T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8 T+9 T+10 T+11 T+12 T+13 T+14 T+15 AA

DF 5.15 2.03 -0.21 -0.69 -9.79 -1.27 2.13 3.12 4.12 -2.08 -3.83 -6.19 3.7 -3.43 3.26 -2.38 4.98 -1.84 10.82 10.4 -5.86 -1.58 8.07 -3.8 0.02 6.05 -1.04 -5.01 3.56 -1.42 -3.64 13.35

I I I1 -5.04 -4.59 0.77 0.39 -2.05 0.4 -1.13 2.35 4.43 18.29 -0.6 -0.08 -3.89 1.88 1.27 -2.92 -7.4 -2.89 11.69 -4.43 0.89 0.49 3.08 -7.34 -2.57 0.72 3.1 3.74 3.04 2.62 3.59 17.81

PNB 1.87 -1.55 0.65 2 -2.03 2.56 4.02 -2.66 1.43 -0.45 -4.96 -2.61 1.84 -2.61 -5.28 2.7 5.57 -1.9 1.36 0.89 -1.1 -1.83 0.12 -1.25 2.09 3.72 3.25 -0.42 -0.59 1.37 1.9 8.10

FED 0.4 1.62 4.89 4.88 0.23 3.36 3.67 -0.85 0.97 -2.44 -3.62 -2.34 0.77 -2.03 -3.6 1.49 6.2 -2.71 4.21 0.43 1.4 -2.1 -0.85 -0.67 0.44 4.85 3.73 -0.47 -1.73 1.77 2.08 23.98

I I I2 -0.71 -2.28 -1.75 0.07 -2.19 -1.71 5.32 -1.16 -0.18 -1.95 1.92 3.01 -2.06 -1.53 1.63 -1.1 1.66 -1.58 3.27 -0.14 2.07 -4.37 -6.97 1.04 -1.88 -1.17 -0.27 -0.67 0.91 -0.48 2.24 -11.01

0.33 -0.95 0.87 1.33 -3.17 0.67 2.80 0.16 2.15 2.27 -2.22 -1.64 0.07 -1.54 -0.54 -0.44 2.20 -2.18 6.27 1.43 -0.52 -1.88 0.69 -2.40 -0.38 2.83 1.75 -0.57 1.04 0.77 1.23 10.45

Financial ratios of companies HDFC Bank Ltd. (26.02.2000)

ICICI Bank Ltd. (10.03.2001)


Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net Profit Margin Assets Turnover ROA Financial Leverage ROE Mar '98 Mar '99 Mar '00 Mar '01 Mar '02 612.66 Mar '03 616.4

196.82 9,072.55 544.05 97.74 425.51 33.78 557.03 -12.98 -2.39 0.06 -0.14 46.1 -6.59

196.82 12,072.62 852.87 141.36 666.95 108.52 916.83


-63.96

-7.5 0.07 -0.53 61.34 -32.5

196.82 19,736.60 1242.13 398.28 837.67 65.42 1301.37 -59.24 -4.77 0.06 -0.3 100.28 -30.1

220.36 104,109.93 2151.93 877.87 1558.92 31.5 2468.29


-316.36

106,811.95 9368.05 3802.49 7944


-425.79

-14.7 0.02 -0.3 472.45 -143.57

11320.7 -1952.65 -20.84 0.09 -1.83 174.34 -318.72

125,228.87 9002.39 3149.85 7015.25 265.11 10430.21 -1427.82 -15.86 0.07 -1.14 203.16 -231.64

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net Profit Margin Assets Turnover ROA Financial Leverage ROE

Mar '98 243.28 8.79 240.8 60.22 137.55 31.2 228.97 11.83 4.91 0.03 0.12 39.33 4.86

Mar '99 243.28 10568.34 376.08 83.1 229.18 34.45 346.73 29.35 7.8 0.04 0.28 43.44 12.06

Mar '00 243.28 11,656.14 679.87 209.63 374.28 74.81 658.72 21.15 3.11 0.06 0.18 47.91 8.69

Mar '01 243. 15,617.33 1259.46 376.18 753.75 104.94 1234.87 24.59 1.95 0.08 0.16 64.11 10.09

Mar '02 281.37 23,787.38 1702.99 537.12 1073.74 128.34 1739.2 -36.21 -2.13 0.07 -0.15 84.54 -12.87

Mar '03 282. 30,424.08 2022.97 733.26 1191.96 183.25 2108.47 -85.5 -4.23 0.07 -0.28 107.87 -30.31

Bank of Baroda (20.06.2002)

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net profit margin Assets turnover ROA Financial Leverage ROE

Mar '00 294.33 58,605.17 5220.19 1852.21 3506.63 5358.84 -138.65 -2.66 0.09 -0.24 199.11 -47.11

Mar '01 294.34 63,322.05 5757.34 2369.41 3819.55 6188.96 -431.62 -7.5 0.09 -0.68 215.13 -146.64

Mar '02 294.34 70,910.08 5955.54 2076.97 4076.11 249.71 6402.79 -447.25 -7.51 0.08 -0.63 240.91 -151.95

Mar '03 294.34 76,417.84 6097.55 2194.56 3994.19 397.72 6586.47 -488.92 -8.02 0.08 -0.64 259.62 -166.11

Mar '04 294.53 85,108.66 6146.99 2757.6 3575.48 565.92 6899 -752.01 -12.23 0.07 -0.88 288.96 -255.33

Mar '05 294.53 94,664.23 6431.41 3420.97 3452.15 186.28 7059.4 -627.99 -9.76 0.07 -0.66 321.41 -213.22

Punjab National Bank (01.02.2003)

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net profit margin Assets turnover ROA Financial leverage ROE

Mar '01 212.24 63505.1 5863.48 2242.38 3825.05 110.83 6178.26 -314.78 -5.37 0.09 -0.5 299.21 -148.31

Mar '02 212.24 72914.65 6647.87 2512.47 4352.58 198.15 7063.2 -415.33 -6.25 0.09 -0.57 343.55 -195.69

Mar '03 265.3 86221.81 7485.01 3190.44 4361.29 341.39 7893.12 -408.11 -5.45 0.09 -0.47 325 -153.83

Mar '04 Mar '05 Mar '06 265.3 315.3 315.3 102331.75 126241.28 145267.4 7778.94 8459.85 9584.15 3722.1 3776.81 3863.09 4154.99 4453.11 4917.39 660.79 495.49 595.52 8537.88 8725.41 9376 -758.94 -265.56 208.15 -9.76 -3.14 2.17 0.08 0.07 0.07 -0.74 -0.21 0.14 385.72 400.38 460.73 -286.07 -84.22 66.02

Oriental Bank of Commerce (14.08.2004)

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net profit margin Assets turnover ROA Financial leverage ROE

Mar '02 192.54 32262.94 3,040.47 876.55 2,068.40 248.88 3193.83 -153.36 -5.04 0.09 -0.48 167.56 -79.65

Mar '03 192.54 33987.63 3,294.69 1,010.21 2,089.94 278.56 3378.71 -84.02 -2.55 0.1 -0.25 176.52 -43.64

Mar '04 192.54 41006.57 3,300.54 1,031.91 1,844.74 459.53 3336.18 -35.64 -1.08 0.08 -0.09 212.98 -18.51

Mar '05 192.54 54069.46 3,571.90 1,195.88 2,048.22 72.19 3316.29 255.61 7.16 0.07 0.47 280.82 132.76

Mar '06 250.54 58937.37 4,118.92 1,192.94 2,513.85 161.74 3868.53 250.39 6.08 0.07 0.42 235.24 99.94

Mar '07 250.54 73936.27 5,164.90 1,241.47 3,473.58 226.3 4941.35 223.55 4.33 0.07 0.3 295.11 89.23

Bank of Baroda (25.06.2004)

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net profit margin Assets turnover ROA Financial leverage ROE

Mar '02 294.34 70910.08 5955.54 2076.97 4076.11 249.71 6402.79 -447.25 -7.51 0.08 -0.63 240.91 -151.95

Mar '03 294.34 76417.84 6097.55 2194.56 3994.19 397.72 6586.47 -488.92 -8.02 0.08 -0.64 259.62 -166.11

Mar '04 294.53 85108.66 6146.99 2757.6 3575.48 565.92 6899 -752.01 -12.23 0.07 -0.88 288.96 -255.33

Mar '05 294.53 94664.23 6431.41 3420.97 3452.15 186.28 7059.4 -627.99 -9.76 0.07 -0.66 321.41 -213.22

Mar '06 365.53 113392.53 7100 3302 3875.09 287.64 7464.73 -364.73 -5.14 0.06 -0.32 310.21 -99.78

Mar '07 365.53 143146.18 9212.64 3305.06 5426.56 627.79 9359.41 -146.77 -1.59 0.06 -0.1 391.61 -40.15

Centurion Bank (01.10.2005)

Particulars Equity Share Capital Total Assets Sales Turnover Total Expenses Interest Tax Total cost Net profit Net profit margin Assets turnover R A Financial leverage R E

Mar '03 152.47 3,385.47 371.34 207.25 269.3 0.03 476.58 -105.24 -28.34 0.11 -3.11 22.2 -69.02

Mar '04 56.75 3,548.87 333.79 265 203.82 33.09 501.91 -168.12 -50.37 0.09 -4.74 62.54 -296.25

Mar '05 101.32 4,611.68 346.09 217.23 168.21 -385.44 -39.35 -11.37 0.08 -0.85 45.52 -38.84

Mar '06 140.83 11,330.19 803.2 623.03 404.43 -0.69 1026.77 -223.57 -27.83 0.07 -1.97 80.45 -158.75

Mar '07 156.69 18,482.78 1268.53 791.45 698.95 62.19 1552.59 -284.06 -22.39 0.07 -1.54 117.96 -181.29

The Federal Bank Ltd. (02.09.2006)

Particulars Equity Share Capital Total Assets Sales Cost of sales Interest expenses Income taxes Total cost Net profit Net profit margin Assets turnover R A Financial leverage R E

Mar '04 21.76 15,114.27 1,192.06 508.33 770.29 75 1353.62 -161.56 -13.55 0.08 -1.07 694.59 -742.46

Mar '05 65.6 16,820.97 1,191.03 598.19 688.75 25.98 1312.92 -121.89 -10.23 0.07 -0.72 256.42 -185.81

Mar '06 85.6 20,642.92 1,436.53 535.98 836.73 55.56 1428.27 8.26 0.57 0.07 0.04 241.16 9.65

Mar '07 85.6 25,089.93 1,817.35 620.85 1084.96 105.5 1811.31 6.04 0.33 0.07 0.02 293.11 7.06

Mar '08 171.03 32,506.44 2,515.44 762.85 1647.43 132.1 2542.38 -26.94 -1.07 0.08 -0.08 190.06 -15.75

REFERENCES
1. Print materials a. K.R. Ferris and B.S. Pecherot Petit., 2002. Valuation avoiding the winners curse, Financial times Princeton hall. 2. Journals a. Patrick Beitel and Dirk Schiereck, 2006. market. The ICFAI University Press b. Fadzlan Sufian., 2000. Bank Mergers And Acquisitions: A non-scholastic frontier window event study approach to analyze the effects on efficiency c. Patrick Beitel, Dirk Schiereck and Mark Wahrenburg, 2004. Explaining the bank success in the European bank Mergers and Acquisitions d. Federica Angeli, Enrica Bolognesi and Laura Toschi. A Meta analytical answer to an old dilemma: Do Mergers and Acquisitions create value? Evidence from European banks e. Sumon Kumar Bhaumik & Ekta Selarka William Davidson. Impact of M&A on firm performance in India: Implications for concentration of ownership and insider entrenchment. f. Adrian Gourlay, Geetha Ravishankar, Tom Weyman-Jones. Non-Parametric Analysis of Efficiency Gains from Bank Mergers in India. g. Patrick Beitela, Dirk Schiereckb, and Mark Wahrenburg. Explaining M&A success in European bank mergers and acquisition h. Pramod Mantravadi and A. Vidyadhar Reddy. Post-Merger Performance of Acquiring Firms from different Industries in India. i. Steven J. Pilloff Anthony M. Santomero. The Value Effects of Bank Mergers and Acquisitions. Value creation by domestic and cross border M&A transactions in the European

3. Websites a. www.rbi.gov.in b. www.banknetindia.com c. http://www.economywatch.com/mergersacquisitions/international/banking-sector.html d. http://www.thehindubusinessline.com/2004/11/11/stories/20041111000 71000.html e. Prowess