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Case 1: Total Industries
bhinav Kumar was totally unprepared for the news. And what
surprised the 34-year-old scion of the Kumar family – which had
interests in a range of industries including batteries, consumer
durables, soaps and oils, and switchgears – was that it was his
36-year-old Wharton School classmate, Rakesh Bhatia, who gave
him the scoop over their dinner meeting. Bhatia headed a small
engineering company in Phoenix, Arizona (US), but was remarkably
networked in the industry.
“I hear your competition just got bigger,” he ribbed Kumar.
“What do you mean?” Kumar asked, surprised.
“Haven’t you heard that PLT and Control Equipment are talking about a
merger?” The two switchgear companies were competitors of the Rs. 1,750-
crore switchgear division of Total Industries, Kumar’s diversified familymanaged
company.
Kumar almost choked on his soup when he heard that. Such a merger
would mean that Total would, overnight, lose its No.1 position in the industry,
its 23 per cent market share in switchgears would be eclipsed by the
combined 33 per cent share of PLT and Control.
“Who told you this?” Kumar asked.
“You are not going to believe this. It was a merchant banker sitting next to
me on my flight from New York. In fact, this guy was flying down to Mumbai
to meet the CEOs of the companies.”
“Switchgears is our most profitable business, Rakesh. I can’t afford to let
any competitors to muscle us out of the market.”
“That will happen if the merger happens. The new entity will have better
bargaining power with their suppliers and customers; they may take a lead
in product development, too.”
“That has been our strength so far. W ...