M&A activity in India has reached USD 46.5 billion in 2017 and is predicted to hit USD 52.8 billion in 2019.[1] There are many reasons for this spike, and one important reason is consolidation among domestic players. The potential opportunities driving consolidation among domestic players are as follows:

  • Expansion of customer base

Post the proposed Vodafone-Idea merger, the combined subscriber count of the merged entity is expected to be around 39 crores with 35% of the market share, making the combined entity the largest operator in India and the second largest in the world.[2] Its nearest competitor, Bharti Airtel, currently has 24.21% of the market share.

The acquisition of BSS Microfinance by Kotak Mahindra Bank led to Kotak’s entry into the micro-lending sector and provided it access to approximately 271,000 customers of BSS.

In the pharma sector, the recent acquisition of Strides Shasuns’ drug brands in India by Eris Lifescience will enable Eris to break into the league of top 25 companies that have a market share of more than 1% in the pharmaceutical sector[3].

  • Elimination of competition

Sectors that are burdened with high operating costs and constant competition due to close pricing consolidate in an attempt to increase the size and scalability of their business venture, and tackle the threat of new competitors together.

Flipkart’s acquisition of eBay India was an attempt to increase their outreach and inventory to compete with Amazon’s fast paced growth and rising popularity in the Indian market.

The proposed mergers of Idea-Vodafone, and Airtel-Telenor in a fragmented telecom sector is an attempt to counter the threat of a relatively new player, Reliance Jio, which is disrupting the sector with its low prices and offers, and aggressive signing of subscribers. Further, the proposed purchase of certain assets of Reliance Communication by Reliance Jio will further propel Jio’s standing in the industry, making it a greater threat to the other telecom companies. Post these consolidations in the telecom space, there will only be around four to five key players remaining, and the smaller players will be eliminated.

  • Offloading debt and selling distressed assets

Reliance Cement Company Private Limited (the cement arm of Reliance Infrastructure) was sold to Birla Corporation to deal with Reliance Infrastructures’ overall debt of INR 15,500 crores.

Similarly, at the time of its sale to Greenko, US company SunEdison was filing for bankruptcy and was seeking to divest its assets in India.[4]

Further, at times, there are industry specific factors that lead to sluggish growth, forcing companies in certain sectors to consolidate. For example, it has been predicted that the agricultural inputs sector (that comprises of agrochemical and fertiliser companies) will have to consolidate because of unfavourable monsoon spells that have been affecting the businesses.

  • Access to better resources

The proposed mergers in the telecom sector are enabling all players to increase their spectrum holding, allowing them to provide better data services to their customers in a competitive industry.[5]

Similarly, Greenko now has the potential to double its renewable energy generation capacity in India by 2019, with assets acquired from SunEdison.[6]

In the pharma sector, acquisition of Unichem by Torrent Pharma provided Torrent Pharma access to over 120 brands of Unichem’s medicines in India, as well as a manufacturing plant in Sikkim. Similarly, Eris Lifescience will have access to 130 brands of Stride Shasun.

  • Digitisation

Axis Bank acquired Free Charge, a mobile transactions platform owned by Snapdeal for INR 385 crores. Similarly, Flipkart acquired a mobile payment company PhonePe for an undisclosed amount to integrate it with its mobile app. Flipkart is also raising further funding for PhonePe to compete with Paytm in the mobile wallet sector.

The past year also saw consolidation between e-commerce companies and those that provide payment gateways, with Infibeam Incorporation Limited acquiring digital payment player CCAvenue in 2017. Further, the Reserve Bank of India (RBI) has recently revised its Master Directions governing pre-paid instruments and wallets[7] and increased the positive net-worth of wallet operators from INR 5 crores to INR 15 crores (over a period of three years). This move is anticipated to increase M&A deal activity in the digital wallet space.


 The effects of domestic consolidation will eventually lead to a reduction in the total number of players in some sectors, which will increase competition amongst the surviving players. Such competition has the potential to result in advantages for customers. Consolidation among domestic players has a huge role to play in redesigning India’s M&A landscape and we can expect more industries to ride this wave in 2018.

* The author was assisted by Devyani Singh, Principal Associate and Chethana Venkataraghavan, Associate.

[1] http://www.livemint.com/Companies/UtcVbuEOKmJbBNfZ21wGxH/Value-of-India-MA-deals-in-2017-seen-at-465-bn-528-bn.html

[2] http://www.livemint.com/Industry/Im5MqJXxhcRlIlMVIOFWrL/VodafoneIdea-merger-expected-to-complete-in-2018.html

[3] http://www.thehindubusinessline.com/companies/eris-lifesciences-buys-strides-branded-generic-biz-for-rs-500-cr/article9966295.ece

[4] https://economictimes.indiatimes.com/industry/energy/sunedison-said-to-exit-india-with-sale-of-projects-to-greenko/articleshow/56435615.cms

[5] https://telecom.economictimes.indiatimes.com/news/cci-approves-airtel-telenor-merger/59013263

[6] http://www.livemint.com/Industry/SRq8CKEPfNPPZmGMngyZhN/Greenko-founder-says-SunEdison-India-assets-help-double-capa.html

[7] https://rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=11142