DEMERGER, A PANACEA FOR CORPORATE PROBLEMS - A CASE STUDY ON CROMPTON GREAVES LIMITED

Abstract

The research study focuses on the impact of demerger on the financial performance of Crompton Greaves Limited , now named as C G Power and Industrial Solutions Ltd. Various business environmental factors such as technological, political, social and competition which are internal and external to the corporate entities affect the business organization. These create threats as well as opportunities. In order to overcome various threats and to capitalize opportunities, the corporate entities resort to corporate restructuring. Demerger is one such form of corporate restructuring with the help of which, the company can separate its loss making division and can improve its overall performance. In this study, various statistical and financial tools such as, paired t- test , and financial ratios like, return on net worth/ equity, return on assets and asset turnover ratio are employed. The study concluded that, the demerger had no significant impact on return on net worth/ equity and return on assets but in case of asset turnover ratio, reverse was the situation.