When the funding winter of 2016 struck India, everyone expected it to send Venture Capitalists and other market players who dare dream of globalization scampering to the warmth of their chipped tile fireplace. While this did indeed happen, it only lasted for a year. The snow cleared sooner than anticipated and mergers and acquisitions have been the flavour of the year. In addition to this, a much greater force has been acting upon the economy. One that is very well capable of spelling trouble for the economy in the long-term. This year saw Walmart Inc, Berkshire Hathaway and ArcelorMittal on a buying spree, taking the total transaction value of private equity-led buyouts and corporate acquisitions over $100 billion. New unicorns such as Udaan and Freshworks were born while Flipkart took centre-stage with its controversy-riddled breakup coupled with a $16 billion acquisition by Walmart. Meanwhile, food delivery unicorns Zomato and Swiggy have taken the acquisition route to strengthen their fleet. Another high-profile deal has been the merger of Idea and Vodafone, one that was completed in August 2018 after a plethora of regulatory approvals. However, the merged entity posted a net loss of Rs. 4974 crore for the July-September quarter and key performance indicators have been dismal. Nonetheless, the merged entity has set FY 2023 as its deadline for completing merger synergies.
With all this activity going on, the fall of the rupee has had its own ramifications on the economy. Believed to have been triggered by a rise in the Fed rates, the rupees’ fall has had widespread consequences on the economy. Notwithstanding the uptick in foreign portfolio investor (FPI) inflows into the economy of late, the rupee is anticipated to maintain a low profile. This unfavourable trend could be attributed to a cut in oil production by OPEC and non-OPEC players by as much as 1.2 million barrels per day.
While the rupee has certainly shown signs of improvement from an all-time low of Rs. 74.6 and is following a somewhat sluggish uptrend, M&As have been slow to show the same vigour. Although the above trends spawn from very different economic ingredients, we believe that a tenacious approach should be followed; one that would help industries operate seamlessly as well as stabilize the domestic currency. With this background, we present few papers in this issue of TJEF. We hope that the readers of the journal benefit from the views and insights of the papers published.