I.J.E.M.S., VOL.

3(3) 2012: 362-369

ISSN 2229-600X

POST MERGER AND ACQUISITION FINANCIAL PERFORMANCE ANALYSIS : A CASE STUDY OF SELECT INDIAN AIRLINE COMPANIES
Mahesh R. & Daddikar Prasad, Department of studies in Business Administration, University of Mysore, Mysore, India
ABSTRACT Mergers and Acquisitions are important corporate strategy actions that aid the firm in external growth and provide it competitive advantage. In todays globalized economy, mergers and acquisitions (M&A) are being increasingly used the world over, for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce business risk, for entering new markets and geographies, and capitalizing on economies of scale etc. This paper has focused on the performance of Indian Airline Companies after the consolidation of Airline sector in year 2007-08. The main objective of this paper is to analyze whether the Indian Airline Companies have achieved financial performance efficiency during the post merger & acquisition period specifically in the areas of profitability, leverage, liquidity, and capital market standards. Paired sample t-test has been performed to determine the significance differences in financial performance standards two year before and two year after the merger activity. In general, Airline Companies merger in India does not bring significance difference on the financial performance after the merger. The finding of this study shows that there is no improvement in surviving Companys return on equity, net profit margin, interest coverage, earning per share and dividend per share post-merger & acquisition. KEYWORDS: Mergers and Acquisitions, Airline Company, Profitability, Leverage, Liquidity, Capital Markets INTRODUCTION Financial performance metrics provide a relative basis for comparing a company with itself over time or with a company versus competitors within its industry. Financial performance metrics also know no international boundaries and are useful in assessing company performance throughout the world. It has often been said that financial statements are the language of business. The value of this approach is that quantitative relations can be used to diagnose strengths and weaknesses in a firms performance. Financial performance analysis must also include consideration of strategic and economic developments for the firms long-run success. Financial managers as well as general senior managers are demanding evaluative standards by which they can rapidly measure the firms performance and chart an appropriate course. These metrics should immediately provide actionable feedback to improve the operations of the firm. Managements intense interest in financial performance metrics has dramatically risen as more and more annual and long-term incentive compensation is tied to attaining acceptable levels of performance as measured by financial performance metrics. OBJECTIVES 1. To study post M&A influence on profitability standards of the surviving company in Indian Airline industry 2. To analyze post M&A effect on leverage standards of the surviving company in Indian Airline industry 3. To determine post M&A liquidity position of the surviving firm in Indian Airline industry 362 4. To ascertain post M&A improvement in capital market standards of the surviving company in Indian Airline industry

RESEARCH HYPOTHESES: 1. H0: Post-Merger and Acquisition, there is no significant improvement in profitability standards of the surviving company in Indian Airline industry 2. H0: Post-Merger and Acquisition, there is no significant improvement in leverage standards of the surviving company in Indian Airline industry 3. H0: Post-Merger and Acquisition, there is no significant improvement in liquidity position of the surviving firm in Indian Airline industry 4. H0: Post-Merger and Acquisition, there is no significant improvement in capital market standards of the surviving company in Indian Airline industry SCOPE OF THE STUDY The study has focused on Merger & Acquisition activities in Indian context with special reference to Airline Industry/Sector in particular to analyze post Merger & Acquisition financial performance based on case study methodology. RESEARCH METHODOLOGY In this paper we have tested influence of M&A on the financial performance of the surviving company by considering Pre and Post M&A financial ratios for the entire set of sample firms. For the present study relevant financial

Post merger and acquisition financial performance analysis ratios are identified and categorized into four broad groups. Each group is further classified into various important ratios for pre & post performance analysis and they are shown as follows:

Table 1 Profitability Standards Ratio Gross Profit Margin (%) Net Profit Margin (%) Return on Assets or ROI (%) Return on Equity (%) Return on Capital Employed (%) Description (Sales COGS) / Sales (NPAT / Sales) (NPAT/ Average Total Assets) (NPAT Preference Dividend / Average Shareholders Fund) EBIT / Avg. total Capital employed Table 2 Financial Leverage Standards Ratio Debt-to-Equity Total Capitalization Description (Total Debt / Equity Share Capital) (Total Debt / Total Capital) Table 3 Liquidity Standards Ratio Current Ratio Acid-Test Ratio Interest Coverage Description (Current Assets / Current Liabilities) (Quick Assets / Current Liabilities) (EBIT / Interest Charges) Table 4 Capital Market Standards Ratio Earnings Per Share Price/Earnings Ratio Price-to-Book Ratio Market Capitalization Description (PAT / No. of Equity Share) (Avg. stock price / EPS) (Avg. Stock Price / BV per share) Avg. Stock Price x Outstanding shares issued Standard High High High High Standard High High High Standard Low Low Standard High High High High High

SAMPLING TECHNIQUE Convenience sampling has been employed to select the sample companies for the study. Such a selection is undertaken as these units represent the sample in a better way and reflect better relationship with the other variable. SAMPLE SELECTION To perform the research study, we have selected a sample of three companies from Indian context. The sample units have been taken form Airline Industry. Further, we have analyzed two year data for both Pre and Post merger performance analysis. DATA COLLECTION The companies involved in Merger & Acquisition in Indian Airline sector from 2005-2010 are compiled from several sources like journals, investment web sites, and web sites of the BSE and NSE. Data on performance evaluation parameters for up to two years prior and two years after the M&A year for each acquiring company in the sample has been extracted from AGM reports & other related data sources. 363

STATISTICAL TOOLS & TECHNIQUES To analyze the data collected from sources and to prove hypotheses, various statistical tools and techniques have been applied in this study. Mean, Variance and standard deviation were used for descriptive statistics. The hypotheses are tested using Pearson Correlation, Paired Sample t-test, and regression. The data has been analyzed with the help of SPSS and MS-Excel. DATA ANALYSIS Pre and post-merger performance ratios are computed for the entire set of sample companies, which have gone through M&A during the selected period. The pre and post M&A performance ratios are compared to see if there is any statistically significant change in performance of acquirer firm after M&A, using paired sample t-test at confidence level of 0.01 or 99%. Also Pearson Correlation coefficient test has been employed to assess the significance level. LIMITATIONS OF THE STUDY 1. The study shall focus only on select Industry & company merger & acquisition in Indian context for a

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2.

3. 4. 5.

period of five years [2005-10] & did not consider other merger & acquisition took place during the period due to the inadequacy of time and resources The study has analyzed Pre and Post merger & acquisition performance results for only two years, which may not provide the true picture of improvements in financial performance. The study has ignored the impact of possible differences in the accounting methods adopted by different companies in the sample. The study has also not used any control groups for comparison (industry average or firms with similar characteristics). The small sample size of merger & acquisition in Airline Industry, which might bring in the question of statistical validity of the results

either targets or acquirers. The paper also provides evidence on changes in operating performance for the subsample of mergers involving banks. Pramod Mantravadi & A Vidyadhar Reddy (2008), in their empirical study Post-Merger Performance of Acquiring Firms from Different Industries in India , aimed to study the impact of mergers on the operating performance of acquiring corporates in different industries, by examining some pre- merger and post-merger financial ratios, with the sample of firms chosen as all mergers involving public limited and traded companies in India between 1991 and 2003. The results suggest that there are minor variations in terms of impact on operating performance following mergers, in different industries in India. Dr. Salma Ahmed & Yasser Mahfooz (2009) in their case study paper, Consolidation in the Sky - A Case Study on the Quest for Supremacy between Jetlite and Kingfisher Airlines, did an attempt to descriptively analyze the rationale for consolidation in the Indian airline industry. The paper also evaluates major changes in the business environment affecting the airline industry. Dr. Neena Sinha, Dr. K.P.Kaushik & Ms. Timcy Chaudhary (2010) in their research article on Measuring Post Merger and Acquisition Performance: An Investigation of Select Financial Sector Organizations in India, examines the impact of mergers and acquisitions on the financial efficiency of the selected financial institutions in India. The analysis consists of two stages. Firstly, by using the ratio analysis approach, we calculate the change in the position of the companies during the period 2000-2008. Secondly, we examine changes in the efficiency of the companies during the pre and post merger periods by using nonparametric Wilcoxon signed rank test. The result of the study indicate that M&A cases in India show a significant correlation between financial performance and the M&A deal, in the long run, and the acquiring firms were able to generate value. N. M. Leepsa & Chandra Sekhar Mishra (2012) in their research paper on Post Merger Financial Performance: A Study with Reference to Select Manufacturing Companies in India, intends to study the trend in merger and acquisition (M&A) particularly with reference to manufacturing companies. The present study is an attempt to find out the difference in post-merger performance compared with pre-merger in terms of profitability, liquidity and solvency. The statistical tools used are descriptive statistics, paired sample t-test LIMITATIONS OF THE PAST STUDIES AND RESEARCH DIMENSION The literature review survey highlights the following limitations of the various studied examined above and some of these issues are sought to be addressed in this paper. Number of merger cases analyzed by various studies is much less and have taken only mergers and leaving acquisitions. 364

LITERATURE REVIEW Anup Agrawal Jeffrey F. Jaffe (1999), in their article The Post-merger Performance Puzzle, examines the literature on long-run abnormal returns following mergers. The paper also examines explanations for any findings of underperformance following mergers. We conclude that the evidence does not support the conjecture that underperformance is specifically due to a slow adjustment to merger news. We convincingly reject the EPS myopia hypothesis, i.e. the hypothesis that the market initially overvalues acquirers if the acquisition increases EPS, ultimately leading to long-run under-performance. Saple V. (2000) in his research thesis on Diversification, Mergers and their Effect on Firm Performance: A Study of the Indian Corporate Sector, finds that the target firms were better than industry averages while the acquiring firms had lower than industry average profitability. Overall, acquirers were high growth firms which had improved the performance over the years prior to the merger and had a higher liquidity. Ramaswamy and Waegelein (2003) in their article, Firm Financial Performance Following Mergers, studied the post-merger financial performance of 162 merging firms that occurred during 1975-1990 in the US. They used industryadjusted operating cash flow returns on market value of assets as the measure of performance & used only firms that had not gone in for any merger during the study period as part of their control sample, since they felt that only that would make the data incorruptible and the results more robust. The study found a significant increase of 12.7 per cent in firm performance after the merger had taken place. Jose Manuel Campa & Ignacio Hernando (2005), in their research paper M&A performance in the European Financial industry, they reports evidence on shareholders returns from mergers. Mergers announcements brought positive excess returns to the shareholders of the target company around the date of the announcement. Returns to shareholders of the acquiring firms were essentially zero around announcement. One year after the announcement, excess returns were not significantly different from zero for

Post merger and acquisition financial performance analysis From the survey of Indian M&As literature, it is mainly found that apart from growth and expansion, efficiency gains and market power are the two important motives for M&As. Apart from measuring post merger profitability of the merged entity, there have been no reported works on these issues in the Indian context. It is noticed that none of the studies dealt comprehensively on the post M&A performance analysis. sector with special reference to Air India, Kingfisher Airlines & Jet Airways By using financial and accounting data, an attempt has been made to investigate the impact of M&A on the performance of the select companies from Indian Airline sector.

With this back drop, here an attempt has been made to address some of the above issues on the Indian context which are as follows, The present paper has taken both M&As. Further, in order to carry out analysis of M&As in Indian Airline ANALYSIS OF PROFITABILITY STANDARDS

TESTING OF HYPOTHESIS: To test the hypotheses, Pre and Post M&A financial performance standards of surviving firms are compared to see if there are any statistically significant changes in the financial performance after M&A, using paired sample ttest at confidence level of 0.01 or 99% (df =1, ttab = 63.65 {2-tailed}) and also descriptive statistics analysis has been performed to ascertain the mean difference. The results are shown in the following tables related to the sample firms.

Table 5 Paired Sample t-test for Profitability standards of Air India Mean Ratios GPM (%) NPM (%) ROA/ROI (%) ROE (%) ROCE (%) Pre 34.89 -1.57 -1.10 -97.36 -1.56 Post 17.50 -50.58 -19.52 -662.27 -.47 Std. Deviation Pre 6.56 3.71 4.74 176.83 .61 Post 9.69 11.62 7.69 157.19 .12 Mean Difference 17.39 49.01 18.42 564.92 -1.10 t-value p-value (2-tailed) .372 .139 .283 .252 .280

1.513 4.521 2.096 2.392 -2.126

Source: AIL various AGM reports & money control.com database Profitability ratios reflect the AIs ability to deliver air travel service at a high cost or a low price. All profitability ratios have declined post-merger, demonstrating negative impact of operating performance and lowering overall yield. Post-merger GPM has declined by 50% indicating inability of the management to control the COGS and unfavorable purchasing policies. Major contributing factor for lower gross profit is attributed to rising ATF prices and hike in airport fees. During past five years Indian airline industry had witnessed major downturn on account of global economic crisis, lower passenger count, rising fuel prices, fluctuations in foreign exchange rate, all these external environmental factors along with internal environmental factors like operational inefficiency, nonstrategic management decisions, higher overheads & financial charges influenced NPM negatively & resulted in greater losses. Post-merger period AI had shown highest losses that were greater than the reported losses of all the private airline companies operating in India on domestic routes. Positive Mean difference value of ROA/ROI indicates destruction of shareholders funds by bad management policies and intense competition in airline industry. AI did not utilize its assets to the full extent to generate higher sales revenue in spite of increased fleet size postmerger period. Pre & post-merger ROE has been negative which reflects greater financial leverage practices. Higher debt component in capital structure resulted into greater financial charges, expropriating shareholders value. The analysis reveals the negative relationship between profits actually earned and capital actually employed. ROCE had shown negative return over the years due to non-strategic investment decisions. Management team has failed to provide minimum return on capital employed on account of unsound financial investment decisions. Top management did not take strict measures to control the budgetary system that lead to imperfect borrowing policies. Leading financial institutions downgraded AIs creditworthiness due to lack of professional management practices & inefficiency to generate minimum required rate of return on the capital employed.

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Table 6 Paired Sample t-test for Profitability Ratios of KFA Ltd Mean Pre -19.07 -17.71 19.48 -109.18 -24.43 Post 7.49 -24.02 -114.50 33.99 13.04 Std. Deviation Pre 6.38 7.37 9.61 .16 4.53 Post 6.21 11.35 58.70 8.08 12.28 Mean Difference -26.56 6.31 133.98 -143.17 -37.47 p-value (2-tailed) .206 .267 .220 .025 .196

Ratios GPM (%) NPM (%) ROA / ROI (%) ROE (%) ROCE (%)

t-value -2.984 2.240 2.774 -25.542 -3.152

Source: KFA various AGM reports & money control.com database Profitability ratios reflect the KFAs capability to deliver luxury air travel service at a high cost. All profitability ratios have declined post-merger, demonstrating negative impact of operating performance, inefficient management policies and lower yield. Post-acquisition mean value of GPM has improved indicating managements control over the COGS and favorable purchasing policies. Major contributing factor for positive gross profit is attributed to route rationalization and commencement of international flights. During past five years Indian airline industry had witnessed major downturn on account of global economic crisis, lower passenger count, rising fuel prices, fluctuations in foreign exchange rate, all these external environmental factors along with internal environmental factors like non-strategic management decisions, higher overheads & financial charges influenced NPM negatively & resulted in greater losses. Post-merger period KFA had shown continual losses that were greater than the reported losses of pre-merger period losses. Post-acquisition mean value of ROA/ROI indicates erosion in shareholders funds by bad management policies and intense competition in airline industry. KFA did not utilize its assets to the best extent to generate higher sales revenue in spite of increased fleet size. Post-acquisition mean value of ROE has been positive which reflects greater reserves accumulation. Improved performance nullified previous losses and safeguarded shareholders value. The analysis reveals the negative relationship between profits actually earned and capital actually employed. ROCE had shown both negative & positive returns over the years due to non-strategic investment decisions. Management team has able to provide minimum return on capital employed on account of sound financial investment decisions. Though leading financial institutions downgraded KFAs creditworthiness on the basis of rising debt component in capital structure over the years assuming the possibility of financial risks.

Based on the results of the paired sample t-test analysis at 99% confidence level, the Hypothesis H0: Post-Merger and Acquisition, there is no significant improvement in profitability standards of the surviving company in Indian Airline industry was not rejected, since paired sample t-test failed to reveal a statistically reliable difference between the pre & post M&A mean values, SD, tcal value < ttab value and p-value > = 0.01 for all the select profitability standards in sample companies under study.

ANALYSIS OF FINANCIAL LEVERAGE STANDARDS Table 7 Paired Sample t-test for Financial Leverage standards of Air India Mean Ratios Debt-to-Equity Total Capitalization Pre 29.41 .95 Post 58.62 .98 Std. Deviation Pre 26.51 .05 Post 47.71 .02 Mean Difference -29.21 -.03 t-value -.557 -.600 p-value (2-tailed) .677 .656

Source: AIL various AGM reports & money control.com database Post-merger D/E ratio has doubled indicating the higher public at large. Every year GoI infuses additional capital leverage policy employed by AI instead of infusing into AI but this capital is devoted for long-term more equity funds in its capital structure. AI cannot investment purposes and acquisition of capital assets. access the capital markets for fund raising purpose on Thus, in order to fulfill working capital needs, AI had account of being a PSU and all equity shares are held by borrowed loan from leading Indian banks & financial president of India that are non-tradable or not issued to institutions on short-term basis. Over the years the debt 366

Post merger and acquisition financial performance analysis amount had increased on account of inefficient borrowing policies and at the same time low operating probability contributed limited funds to service the debt and amortization of the same. The analysis indicates that the claims of outsiders are more than the owner, lenders interests are not safe & they have to bear the probable future losses. Over the years total capitalization had shown increasing trend on account of more debt addition to the capital structure. The proportion of debt is high compared to equity funds reflecting use of over leveraging to fund the business operations. Post-merger AI had incurred losses & unable to create enough reserves for future investment purposes. To fulfill operating activities and strategic plans AI had dependent on debt financing as a result it is leading to debt trap wherein future earnings are not enough to meet the obligations and there is a likely possibility of default.

Table 8 Paired Sample t-test for Financial Leverage standards of KFA Ltd Ratios Debt-to-Equity Total Capitalization Mean Pre 6.82 .76 Post 8.90 1.84 Std. Deviation Pre .08 .08 Post 3.09 .18 Mean Difference -2.08 -1.08 t-value -.924 -5.832 p-value (2-tailed) .525 .108

Source: KFA various AGM reports & money control.com database Post-merger D/E ratio has increased indicating the higher leverage policy employed by KFA instead of infusing more equity funds in its capital structure. KFA accessed capital markets for fund raising purpose from public at large. The raised equity capital is devoted for long-term investment purposes and acquisition of capital assets. Thus, in order to fulfill working capital needs, KFA had borrowed loan from leading Indian banks & financial institutions on short-term basis. Over the years the debt amount had increased on account of inefficient borrowing policies and at the same time low operating probability contributed limited funds to service the debt and amortization of the same. The analysis indicates that the claims of lenders are more than the equity shareholders and their interests are not safe & they have to bear the probable future losses. Over the years total capitalization had shown increasing trend on account of more debt addition to the capital structure. The proportion of debt is high compared to equity funds reflecting use of over leveraging to fund the business operations. Post-acquisition KFA had incurred losses & unable to create enough reserves for future investment purposes. To fulfill operating activities and strategic plans KFA had dependent on debt financing as a result it is leading to debt trap wherein future earnings are not enough to meet the obligations and there is a likely possibility of default. Based on the results of the paired sample t-test analysis at 99% confidence level, the Null Hypothesis H0: Post-Merger and Acquisition, there is no significant improvement in leverage standards of the surviving company in Indian Airline industry was not rejected, since paired sample t-test failed to reveal a statistically reliable difference between the pre & post M&A mean values, SD, tcal value < ttab value and pvalue > = 0.01 for all the select leverage standards in sample companies under study.

ANALYSIS OF LIQUIDITY STANDARDS Table 9 Paired Sample t-test for Liquidity Standards of Air India Ltd Ratios Current Ratio Acid-Test Ratio Interest Coverage Mean Pre 1.79 0.80 -4.50 Post 0.97 0.59 -2.18 Std. Deviation Pre .72 .18 14.76 Post .19 .16 1.25 Mean Difference .83 .21 -2.32 t-value 1.28 10.50 -0.24 p-value (2-tailed) .422 .060 .848

Source: AIL various AGM reports & money control.com database Post-merger current ratio decreased by 56% indicating scarcity of resources to pay its debts over the short-term period and difficulty meeting current obligations. Over the years relative increase in current liabilities is 367 greater than the addition in current assets on account of rising financial charges, creditors payments etc. A falling acid-test ratio indicates worsening liquidity positions of AI and failure to meet immediate current liabilities. It is also observed that acid-test ratio is much

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lesser than the current ratio suggesting current assets are highly dependent on inventory & sundry debtors. Over the years interest coverage had shown negative trend and AIs inability to honor its debt payments due to negative operating profit margin reported over past

five years. Post-merger the interest coverage had lowered its negative trend on account of GoI bailout and negotiation with creditors.

Table 10 Paired Sample t-test for Liquidity Standards of KFA Ltd Ratios Current Ratio Acid-Test Ratio Interest Coverage Mean Pre 1.37 1.58 32.64 Post 0.86 0.79 0.58 Std. Deviation Pre .42 .56 41.97 Post .14 .11 1.33 Mean Difference .51 .79 32.06 t-value 2.590 2.492 1.047 p-value (2-tailed) .235 .243 .485

Source: KFA various AGM reports & money control.com database Post-merger current ratio decreased by 35% indicating scarcity of resources to pay its debts over the short-term period and difficulty meeting current obligations. Over the years relative increase in current liabilities is greater than the addition in current assets on account of rising financial charges, creditors payments etc. A falling acid-test ratio indicates worsening liquidity positions of KFA and failure to meet immediate current liabilities. It is also observed that acid-test ratio is much lesser than the current ratio suggesting current assets are highly dependent on inventory & sundry debtors. Over the years interest coverage had shown declining trend and KFAs inability to honor its debt payments due to negative operating profit margin reported over past three years. Post-merger the interest coverage had lowered below industry standards indicating possibility of default to creditors. Based on the results of the paired sample t-test analysis at 99% confidence level, the Null Hypothesis H0: Post-Merger and Acquisition, there is no significant improvement in liquidity position of the surviving firm in Indian Airline industry was not rejected, since paired sample t-test failed to reveal a statistically reliable difference between the pre & post M&A mean values, SD, tcal value < ttab value and pvalue > = 0.01 for all the select leverage standards in sample companies under study.

ANALYSIS OF CAPITAL MARKET STANDARDS Table 11 Paired Sample t-test for Capital Market standards of Air India Ratios EPS Mean Pre -8.45 Post -297.46 Std. Deviation Pre Post 20.58 337.59 Mean Difference 289.02 t-value 1.141 p-value (2-tailed) .458

Source: AIL various AGM reports & money control.com database Post-merger EPS had indicated a negative trend due to Decline in EPS is attributed to higher operating continual losses incurred by the AI. Management team expenses, increasing interest payments, proportionate failed to provide bare minimum profit to equity holders. decrease in sales revenue on account of inefficient Fortunately, AIs equity is not traded in open market management practices and intense competition. otherwise investors would have lost their funds. Table 12 Paired Sample t-test for Capital Market Ratios of KFA Ltd Ratios Mean Std. Deviation Mean p-value t-value (2-tailed) Difference Pre Post Pre Post -22.41 -41.30 12.106 29.211 18.89 1.561 .363 EPS Price/Earnings Ratio -2.46 -.70 .014 .382 -1.76 -6.286 .100 Price-to-Book Ratio 8.97 2.06 10.324 1.471 6.91 .829 .560 Market Value 2150 1912.5 315.37 767.21 237.50 .743 .593 Source: KFA various AGM reports & money control.com database Post-acquisition EPS had indicated a negative trend due to continual losses incurred by the KFA since its inception. Management team failed to provide bare 368 minimum profit to equity holders. Unfortunately, KFAs equity shareholders have lost their funds. Decline in EPS is attributed to higher operating expenses,

Post merger and acquisition financial performance analysis increasing interest payments, proportionate decrease in sales revenue on account of inefficient management practices and intense competition. Over the years P/E ratio has indicated a negative trend reflecting lower price paid by the investors for reported low EPS. Investors expectations and market appraisal has been violated by KFA on account of deteriorating profitability. During past five years KFA did not reported any dividend payments which further worsened investors confidence. Post acquisition P/B ratio had declined but it did not support the concept of Fama and French, low P/B ratio results in higher equity returns. This contradictory outcome is attributed to decline in market price of equity share due to deteriorated investors confidence in KFAs future performance & quality of earnings. Post-acquisition market value had deteriorated by 11% and KFA eroded investors wealth year-on-year basis. Investors have lost their confidence in KFAs future earning quality and market analyst have given sell signal in order to recover the investment amount as early as possible so as protect against the further loses. Business Standard Text Books: Sudi Sudarsanam Value creation from M&A, Pearson Education 1/e 2003 Ravindhar Vadapalli M&A and business valuation, Excel Books 1/e 2007 Van Horne Financial Management 12/e Valuation for M&A, Buyouts & Restructuring Arzak Wiley Publications Restructurings for Growth John Michelson TMH Handbook of International M&A Gerard Picot Websites www.flykingfisher.com www.jetairways.com www.airindia.com www.bse-india.com www.nse-india.com www.moneycontrol.com www.icicidirect.com www.ssrn.in www.acexc.com www.indexmundi.com RESEARCH ARTICLES Anup Agrawal Jeffrey F. Jaffe (1999), The Post-merger Performance Puzzle, Journal of Corporate Finance, USA Saple (2000), Diversification, Mergers and their Effect on Firm Performance: A Study of the Indian Corporate Sector, Unpublished Ph.D. thesis submitted to IGIDR, Mumbai Ramaswamy, K P and Waegelein, J F (2003), Firm Financial Performance Following Mergers, Review of Quantitative Finance and Accounting Pramod Mantravadi & A Vidyadhar Reddy (2008) PostMerger Performance of Acquiring Firms from Different Industries in India, International Research Journal of Finance and Economics, ISSN 1450-2887 Dr. Salma Ahmed & Yasser Mahfooz (2009), Consolidation in the Sky - A Case Study on the Quest for Supremacy between Jetlite and Kingfisher Airlines Working paper series Aligarh Muslim University Dr. Neena Sinha, Dr. K.P.Kaushik & Ms. Timcy Chaudhary, (2010), Measuring Post Merger and Acquisition Performance: An Investigation of Select Financial Sector Organizations in India, International Journal of Economics and Finance Vol. 2, No. 4; November 2010 N. M. Leepsa & Chandra Sekhar Mishra, (2012), Post Merger Financial Performance: A Study with Reference to Select Manufacturing Companies in India, International Research Journal of Finance and Economics ISSN 14502887

Based on the results of the paired sample t-test analysis at 99% confidence level, the Null Hypothesis H0: PostMerger and Acquisition, there is no significant improvement in capital market standards of the surviving company in Indian Airline industry was not rejected, since paired sample t-test failed to reveal a statistically reliable difference between the pre & post M&A mean values, SD, tcal value < ttab value and p-value > = 0.01 for all the select leverage standards in sample companies under study. CONCLUSION The result shows that there is insignificant improvement in return on equity, expenses to income, earning per share and dividend per share post-merger. The result from paired sample t-test at significant level of 99% illustrated that there is no significance difference in the defined financial performance standards between pre-merger and post-merger due to the significance value is greater than 0.01. Hence, this study has not rejected the null hypotheses which consider that there are no significant improvements in surviving companys performance post-merger and acquisition and rejected the alternative hypothesis which considers that there is significance improvement in surviving companys performance post-merger and acquisition activity for the sample under consideration. BIBLIOGRAPHY Research Journals & Magazines Indian Journal of Finance India Management ICFAI Journal for Financial Management Business & Economics Frontline

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