SECTION - A

1. Define corporate management?

The process of leading, administrating and directing a company. Business tasks often performed
by corporate management might include strategic planning, as well as managing company
resources and applying them toward attaining the company's objectives.

2. Give some examples of MNC’s.

Corporations that maintain offices in more than one country are called multinational corporations.

Typical examples include: Apple, Microsoft, Facebook, TATA.

3. What is the difference between vertical merger & horizontal merger?

A horizontal merger takes place when two companies offering similar, or compatible, products or
services to the same market combine under single ownership.

The main aim of a vertical merger is not to increase revenue, but to improve efficiency or reduce
costs. A vertical merger takes place when two companies that previously sold to or bought from
each other combine under single ownership.

4. Define Turnaround?

When a company that has experienced a period of poor performance moves into a period of
financial recovery, it is called a turnaround. A turnaround may also refer to the recovery of a
nation or region's economy after a period of recession or stagnation.

5. What is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company
be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can be conscious of the kind of
impact they are having on all aspects of society, including economic, social, and environmental.

6. Who are strategists in corporate management?

Business strategists help determine targets for their organizations. They then prepare strategic
plans to ensure that those targets are met. Their work involves analyzing existing strategies and
practices, identifying areas for improvement and developing innovative strategies related to the
goals they help establish.

7. What is diversification?

Diversification is a risk management strategy that mixes a wide variety of investments within a
portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in
an attempt at limiting exposure to any single asset or risk.

8. Define MDA

Multiple discriminant analysis (MDA) is a statistician's technique used by financial planners to

evaluate potential investments when a number of variables must be taken into account.

9. What do you mean by turnaround management?

Turnaround management is the process of reviving a company that is struggling. Whether the
company is facing financial problems, or are just struggling to keep up with competition, there
may come a time when the company needs to put a turnaround management plan in place.
10. State one difference between vertical integration and horizontal integration?

In a horizontal integration, a company takes over another that operates at the same level of the
value chain in an industry. A vertical integration, on the other hand, involves the acquisition of
business operations within the same production vertical.

SECTION – B

Q. 2. State the roles and responsibilities of Board of Directors.?

The board of directors

The board of directors is appointed to act on behalf of the shareholders to run the day to day
affairs of the business. The board are directly accountable to the shareholders and each year the
company will hold an annual general meeting (AGM) at which the directors must provide a report
to shareholders on the performance of the company, what its future plans and strategies are and
also submit themselves for re-election to the board.

Roles of the board of directors

The roles of the board of directors include :-

Establish vision, mission and values

 Determine the company's vision and mission to guide and set the pace for its current
operations and future development.
 Determine the values to be promoted throughout the company.
 Determine and review company goals.
 Determine company policies

Set strategy and structure

 Review and evaluate present and future opportunities, threats and risks in the external
environment and current and future strengths, weaknesses and risks relating to the
company.
 Determine strategic options, select those to be pursued, and decide the means to
implement and support them.
 Determine the business strategies and plans that underpin the corporate strategy.

Delegate to management

 Delegate authority to management, and monitor and evaluate the implementation of

policies, strategies and business plans.
 Determine monitoring criteria to be used by the board.

Exercise accountability to shareholders and be responsible to relevant stakeholders

 Ensure that communications both to and from shareholders and relevant stakeholders
are effective.
 Understand and take into account the interests of shareholders and relevant
stakeholders.

Responsibilities of directors
Directors look after the affairs of the company, and are in a position of trust. They might abuse
their position in order to profit at the expense of their company, and, therefore, at the expense of
the shareholders of the company.

Directors are responsible for ensuring that proper books of account are kept.

In some circumstances, a director can be required to help pay the debts of his company, even
though it is a separate legal person. Directors are particularly vulnerable if they have acted in a
way which benefits themselves.

 The directors must always exercise their powers for a 'proper purpose' – that is, in
furtherance of the reason for which they were given those powers by the shareholders.
 Directors must act in good faith in what they honestly believe to be the best interests of
the company, and not for any collateral purpose. This means that, particularly in the
event of a conflict of interest between the company's interests and their own, the
directors must always favour the company.
 Directors must act with due skill and care.
 Directors must consider the interests of employees of the company.

Q. 3. What is the role of financial institutions in corporate.?

Q. 4. What is the role of SEBI in Corporate management?
Founded in 1988, the Securities and Exchange Board of India (SEBI) has the role to protect
investors and regulate the financial market. SEBI initiatives in corporate governance are based
on the Securities and Exchange Board of India Act and aim to prevent fraudulent practices. The
organization is responsible for enforcing rules and regulations to promote orderly development in
the stock market. As an investor, you must comply with these rules and follow the code of
conduct.

The organization became autonomous and got the statutory status in 1992. Soon, it has
emerged as the regulator of stock markets in India, overseeing the activities of investors,
securities issuers and market intermediaries. SEBI is also responsible for carrying out investor
awareness and training programs and regulating major transactions. Furthermore, it monitors
credit rating agencies, custodians, bankers, brokers and other financial market players.

Several departments exist within SEBI, including but not limited to the Corporation Finance
Department (CFD), the Legal Affairs Department, the Market Regulation Department and the
Office of International Affairs. The CFD, for example, oversees all matters related to corporate
governance and accounting standards. The Office of Investor Assistance and Education (OIAE),
on the other hand, handles investors' complaints, such as those related to the transfer of shares.

SEBI Guidelines for Corporate Governance

Corporate governance encompasses the mechanisms, rules and practices by which companies
are operated and controlled. It aims to mitigate conflicts of interest between shareholders and
promote ethical decision-making, transparency and integrity at the executive level. The role of
SEBI in corporate governance is to ensure these rules are implemented and followed by all
parties.

It also regulates takeovers, listing agreements of stock exchanges, corporate restructurings and
more. SEBI guidelines for corporate governance are designed to provide a safe, transparent
environment for investors and prohibit fraudulent or unfair practices, like insider trading.

The role of SEBI in ensuring ethical standards among corporations became even more important
in 2018 when the organization imposed additional compliance conditions. Furthermore, listed
companies must disclose related-party transactions and hold a specific number of annual general
meetings.

Key Functions of SEBI

In addition to its role in corporate governance, SEBI has protective, regulatory and
developmental functions. The organization protects investors by prohibiting malpractices related
to securities and promoting fair trade practices. Additionally, it aims to educate them on money
management, trading and finances in general.

Its regulatory functions have the role to ensure that corporations and financial intermediaries
alike follow its guidelines and code of conduct. The end goal is to keep the financial market
running smoothly.

The developmental functions of SEBI aim to promote computerized trading and modernize the
market infrastructure. These initiatives have led to a reduction in fraud and unfair practices.

Q. 5. Explain mergers and acquisition with example?

Mergers and acquisitions (M&A) are defined as consolidation of companies. Differentiating the
two terms, Mergers is the combination of two companies to form one, while Acquisitions is one
company taken over by the other. M&A is one of the major aspects of corporate finance world.
The reasoning behind M&A generally given is that two separate companies together create more
value compared to being on an individual stand. With the objective of wealth maximization,
companies keep evaluating different opportunities through the route of merger or acquisition.

Mergers & Acquisitions can take place:

• by purchasing assets

• by purchasing common shares

• by exchange of shares for assets

• by exchanging shares for shares

Types of Mergers and Acquisitions:

Merger or amalgamation may take two forms: merger through absorption or merger through
consolidation. Mergers can also be classified into three types from an economic perspective
depending on the business combinations, whether in the same industry or not, into horizontal
( two firms are in the same industry), vertical (at different production stages or value chain) and
conglomerate (unrelated industries). From a legal perspective, there are different types of
mergers like short form merger, statutory merger, subsidiary merger and merger of equals.

Reasons for Mergers and Acquisitions:

  Financial synergy for lower cost of capital
 Improving company’s performance and accelerate growth
 Economies of scale
 Diversification for higher growth products or markets
 To increase market share and positioning giving broader market access
 Strategic realignment and technological change
 Tax considerations
 Under valued target
 Diversification of risk

Stages involved in any M&A:

 Phase 1: Pre-acquisition review

 Phase 2: Search and screen targets
 Phase 3: Investigate and valuation of the target
 Phase 4: Acquire the target through negotiations
 Phase 5: Post merger integration

Example:

Sun Pharmaceuticals acquires Ranbaxy:

The deal has been completed: The companies have got the approval of merger from
different authorities.

This is a classic example of a share swap deal. As per the deal, Ranbaxy shareholders will get
four shares of Sun Pharma for every five shares held by them, leading to 16.4% dilution in the
equity capital of Sun Pharma (total equity value is USD3.2bn and the deal size is USD4bn
(valuing Ranbaxy at 2.2 times last 12 months sales).

Reason for the acquisition: This is a good acquisition for Sun Pharma as it will help the
company to fill in its therapeutic gaps in the US, get better access to emerging markets and also
strengthen its presence in the domestic market. Sun Pharma will also become the number one
generic company in the dermatology space. (currently in the third position in US) through this
merger.