This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
AuSom Enterprise Ltd. (Formerly Known as Core Emballage Ltd.) is an Ahmedabad (Gujarat, India) based company engaged in manufacturing corrugated boxes and cartons. It was incorporated in 1984.
The company manufactures these boxes in different shapes and sizes and also with multi-color printing. It uses recycled paper to make environment friendly products. The manufacturing unit is located in the Kheda district of Gujarat with an installed capacity of 140 million corrugated boxes per annum. The products are used in packaging electronics, automobiles, food, pharma, and other products. It has put up Chrysalis, a 10,000 sq. ft. design studio which produces high quality graphics and advanced, scientific design with state-of-the-art design software, hardware, and prototyping facilities.
Due to huge loss the company demerged its manufacturing unit in the December 2008
and started trading activities in the year 2008 in precious metal, paper and scrape and wastepaper. From Jan 2009 onward company engaged in trading activity only. In August 2009 the Company has takeover by the Promoters of Zaveri Group with all the liabilities booked or not. The Flagship Company of Zaveri Group is Zaveri & Co. Pvt. Ltd has Jewellery Showrooms, Import and Export of Gold, Jewellery and Diamond, SEZ, and power generation. Due to its handsome achievements in export of Diamonds and Gold Jewellery in terms of quality and highly attractive artistic features it has not only earned the goodwill in the domestic market but also has acquired a substantial overseas market amongst the Indian jewellery exporters.
The registered office is located at AuSom Enterprise Limited
11-B, New Ahmedabad Industrial Estate, Village- Moraiya, Sarkhej-Bavla Road, Moraiya- 382 213. Dist:-Ahmedabad, Gujarat, India.
Boards of Directors are experienced people in the Precious Metal, jewellery trade and also from other relevant areas will manage AuSom Enterprise Limited. The Board of Directors will be responsible for all major decisions. They are most experienced people in the field of jewellery, precious metals and stones, commodities trading.
Mr. Hitesh Adeshara
Chairman -Non Executive &Independent Director
Mr. Kishor Pranjivandas Mandalia
Mr. Zaverilal Virjibhai Mandalia
Mr. Vipul Zaverilal Mandalia
Mr. Ghanshyambhai Akbari
Non Executive &Independent Director
Mr. Mukesh Adeshara
Non Executive &Independent Director
Source: (AuSom Enterprise Ltd., 2009)
Leadership and Change Management Theories
As the name suggests transformational leadership is the one in which the leader is behind the transformation of the company. They put passion and vision in everything.
Stages of working of the transformational leaders are:
Vision development: these leaders begin with a vision development which in turn develops a view of future which excites and convert the followers.
Selling the vision : next step is to constantly sell the vision which includes energy and commitment as few people get convinced early and few not that's why leaders have to work really hard in order to convince.
Discovering the way ahead: some transformational leaders know their way and want others to follow whereas some like don't have and they are happy finding their own ways.
Taking the lead: the final stage is to take the command while the change is going on, a transformational leader always leads and be at the center, through their attitude and behavior they show how other people should behave (B.M, 2002)
There are two types of work in organization:
The normal delivery process where the main business is done.
The change activities where necessary changes are made to the business and the way it is done.
Change can externally be about changing jobs, places, products, etc but it actually occurs first inside people's head and that's the problem when organization try to change without understanding the invisible element and that can result into drastic result and failure.
It is one thing to manage a normal activity in the organization and another thing to manage change externally or outside, here are some methods used:
accepting the brief : facilitating or managing the change
diagnosing change: understanding the need for change by investigating
stakeholders in change: managing stakeholder
planning for change: building a full proof change
managing change: making it in practice
organization design: creating the new organization
techniques of change: ways of creating change
4 dimensional framework: for managing change (B.M, 2002)
Lewin's Change Model
support outstanding performance
maintain status quo
3. Issues before Changes
The Target Company was doing production of high quality Corrugated Boxes with fully automated plant located in India. At the time of installation of plant there were only three such plants in India. Concept of Corrugated boxes was new before 10 yrs for the buyers, and as it was fully automated plant its cost was also very high. It also requires the high quality raw material and qualified staff to operate the machinery. Use of low quality raw material causes the machinery failure. Due to high cost the company was not able to get sufficient orders as per capacity of plant. So, it cause high revenue cost compare to others, resulting to the Capital loss. Shares prices were also declining due to heavy loss.
Board of Directors of the Company has considered the Scheme of Compromise with its Shareholders and Creditors in respect of Demerger of Manufacturing unit of the Company.
4. Pre-Condition of Acquisition
4.1 Legal Framework.
Following legal framework will be applied for Takeover of a listed company:
SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 issued by the Securities and Exchange Board of India (SEBI);
Companies Act, 1956; and
"Substantial acquisition of shares or voting Rights"- acquiring substantial quantity of shares or voting rights (sebi.gov.in, n.d.)
4.2 Some Important Definitions:
"Acquirer" is a person who directly or indirectly acquires or agrees to acquire shares or the voting rights in the Target Company or control over the target company either by himself or with any person acting in concert with the acquirer
"Target Company" means a listed company whose shares or voting rights or control is directly or indirectly acquired.
Persons acting in concert ("PAC") are the person established to have the common objective of buying a significant amount of shares or voting rights in a company.
The concept of PAC assumes significance in the context of takeovers:
acquisition made by the acquirer remains below the threshold limit
Taken together with the voting rights of persons acting in concert, the threshold may exceed.
5. Changes during Acquisition
5.1 Implementation of Change Management
The company has decided to achieve highest level of Corporate Governance as challenge. Corporate Governance is nothing but transparency, high level of disclosure and fairness and unbiased to the members of the company. For the achievement, the Company has developed a team of educated, experienced, qualified management team. The Board of directors of the Company effectively monitors the Management progress and corporate decision.
The Acquirers with the PCAs makes an Open Offer ("Offer") to the Shareholders (other than parties to the Share Purchase Agreement) of the Target Company to acquire fully paid up equity shares of Rs. 10/- each at the price of Rs. 10/- (Rupees Ten only) each representing 20% of its subscribed, paid up equity shares & voting capital of Target Company. The Offer is at a price of Rs. 10/- per fully paid up equity shares ("Offer Price") is payable in cash ("Offer") subject to terms and condition in PA (Public Announcement). Opening Date of Offer 2nd May 2009 and Closing date 21st May 2009. To existing promoters (covered under Share purchase agreement) the target company acquires fully paid up equity shares of Rs. 10 each at the price of Rs. 8/- each representing 57.99% of it subscribed, paid up equity & voting capital of Target Company. (bseindia.com, n.d.) (nseindia.com, n.d.). The Acquire take this decision to reduce the percentage of the shares in the market and create the strong position in the market for the shareholders.
The Acquirer changes their business from trading in corrugated boxes and Wastepaper to Wholesale Trading in Precious Metals (Gold, Silver, Platinum, diamond). Establish unit in Special Economic Zone (SEZ) for Import and Exports of Precious Metals, Manufacturing Jewellery. Acquirer will utilize the profit from to Trading of Precious Metals to develop a gold and silver refinery unit.
During the financial year 2009 - 10 after obtaining members consent, has change its name to AuSom enterprise Ltd. The necessary consent of the Central Government (ROC) as required under Companies Act, 1956 has been obtained and the new name became applicable with effect from 16th October 2009.
5.2 Opportunities and Threats.
The company has become totally debt free and now being run by well experienced promoters with having two decades of insightful knowledge of the industries. The identification of new segment (trading activity) has performed very well and there is a good scope of future growth and profitability. Experience people in the field of commodities/bullion trading will manage the trading activities.
Fluctuation in foreign currency, particularly Dollar & Pound, may create some problems in business activities. Due to instability in commodities and trading Markets the required target may not be able achieve. The Trading business is a new line of business for the Company.
6. After Change
The new Promoters have completed the procedure under takeover code after due compliances with SEBI and Stock Exchanges and with effect from 7th August 2009 the entire management of the Company has been taken over by them. The promoters are having enriched experience in the field of trading of Bullions, Commodities, Precious Metals and Stones, considering their experience in this line of activities after they being promoters of this Company started the activities of the Company in the similar field. This resulted into generation of profit by the Company almost after one and half decades.
The Company has carried out activity in the field of trading Gold, Silver and other Bullions. The Company has achieved a turnover a turnover of Rs. 143.26 Crores in the financial year 2009 - 10 as against the previous year Rs. 50.99 Crores; it means that the turnover has increased by 180.95%. Similarly, the Company after such a long period has generated profit amounting to Rs. 23.66 Lacs (Profit before Income Tax). (AuSom Enterprise Ltd., 2009)
7. Change in Vision and Mission
The new Vision of the Company is to become A Star Trading House and to open a Gold Refinery in India.
The new Mission of company is Wholesale Trading in Precious Metals (Gold, Silver, Platinum, and Diamond). Establish the unit in Special Economic Zone (SEZ) for Import and Export in Precious Metals. Manufacturing jewellery from precious metals. Acquirer wants to have an Export turnover of 2500 Crores in 3 years to become a Star Trading House. Utilization of Profit in refinery unit of Gold and Silver
Change is a very important part of an organization as seen in the case above can find that a company was going through a big loss and a merger and the changes along with it changed the whole scenario and the company slowly moved on and now the company is having a profit and has a bright future onwards.
Change can be for good as well as for bad but a good change management can provide with beneficial results and it needs to be applied properly by a proper management.