PROJECT REPORT ON

OPPORTUNITIES AND CHALLENGES OF HRM DURING

MERGERS AND ACQUISITIONS

Submitted for the partial fulfillment of the requirement

For the award of degree in

MASTERS OF BUSINESS ADMINISTRATION

IN

BUSINESS ANALYTICS

SUBMITTED TO: SUBMITTED BY:

DR. DEEPAL MEHROTRA JAGMEET AJMANI

ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my teacher Dr. Deepal
Mehrotra who gave me the golden opportunity to do this wonderful project of
HRM on "OPPORTUNITIES AND CHALLENGES OF HRM DURING
MERGER AND ACQUISATIONS",and Who also helped me in completing my
project. I came to know about so many new things I am really thankful to them.
Secondly i would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.

Jagmeet Ajmani.

DECLARATION
I hereby declare that my Project Report titled is a bonafide record of the project
work which I have submitted to Jagran Lakecity University in partial fulfillment of
the credit requirements for the degree of Master of Business Administration is my
authentic work. This project report has not been copied, duplicated or plagiarised
from any other paper, journal, document or book and has not been submitted to any
educational institute or otherwise for the award of any certificate, diploma, degree
or recognition.

This is an authentic piece of work and in case there is any query regarding the
same, I shall be held responsible for answering any queries in this regard.

Name of student: Jagmeet Ajmani

Date: 9/11/2023

COMPANY PROFILE AND STRUCTURE

FLIPKART:
Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal, both alumni of
the Indian Institute of Technology Delhi. They worked for Amazon.com, and left
to create their new company incorporated in October 2007 as Flipkart Online
Services Pvt. Ltd. The first product they sold was the book “Leaving Microsoft To
Change The World” to a customer from Hyderabad. Flipkart now employs more
than 33,000 people. Flipkart allows payment methods such as cash on delivery,
credit or debit card transactions, net banking, e-gift voucher and card swipe on
delivery.

After failure of its 2014 Big Billion Sale, Flipkart recently completed the second
edition of Big Billion Sale held between October 13 and 17. Where it is reported
that they saw a business turnover of 300 million in gross merchandise volume. The
company is registered in Singapore, but has its headquarters in Bangalore. Flipkart
has launched its own product range under the name "DigiFlip" with products
including tablets, USBs, and laptop bags.

In May 2014, Flipkart received $210 million from DST Global, in July 2014 it
raised $1 billion led by existing investors Tiger Global and South Africa's media
group Naspers and in May 2015 it raised $550 million from some of its existing
investors. Flipkart's last fundraising round in May 2015 had pegged its valuation at
$15 billion. In February 2016, Morgan Stanley, marked down its investment value
to $11 billion.

Acquisitions by Flipkart
  2010: WeRead, a social book discovery tool.
 2011: Mime360, a digital content platform company.
 2011: Chakpak.com, a Bollywood news site that offers updates, news,
photos and videos. Flipkart acquired the rights to Chakpak's digital
catalogue which includes 40,000 filmographies, 10,000 movies and close to
50,000 ratings. Flipkart has categorically said that it will not be involved
with the original site and will not use the brand name.
 2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought
the company for an estimated US$25 million.Letsbuy.com was closed down
and all traffic to Letsbuy has been diverted to Flipkart
 2014: Acquired Myntra.com in an estimated ₹ 20 billion (2,000 crore, about
US$319 million) deal.
 2015: Flipkart acquired a mobile marketing start-up Appiterate as to
strengthen its mobile platform. History of Myntra

Fundings
MYNTRA
Myntra is an Indian e-commerce company of fashion and casual lifestyle products,
headquartered in Bangalore. The company was founded in 2007 by Indian
Institutes of Technology graduates with a focus on personalisation of gift items.
By 2010, Myntra shifted its focus to the online retailing of branded apparel. In
May 2014, Myntra.com merged with Flipkart to compete against Amazon which
entered the Indian market in June 2013 and other established offline retailers like
Future Group, Aditya Birla Group and Reliance Retail.

Established by Mukesh Bansal along with Ashutosh Lawania and Vineet Saxena,
Myntra was in the business of on-demand personalisation of gift items. It mainly
operated on the B2B (business to business) model during its initial years. Between
2007 and 2010, the online portal allowed customers to personalize products such
as T-shirts, mugs, mouse pads, calendars, watches, teddy bears, pendants, wine
glasses and jigsaw puzzles.

In 2011, Myntra expanded its catalogue to include fashion and lifestyle products
and moved away from personalisation. Myntra tied up with various popular
brands to retail a wide range of latest merchandise from these brands. Myntra
offered products from 350 Indian and International brands by 2012. Myntra also
had casual wear for men and women from brands. The website saw the launch of
Fastrack watches and of Being Human, the brand.

2014 saw the merging of Myntra with another Indian e-commerce giant
Flipkart.com in an estimated deal of RS 2000 crore (US$290 million), though
nothing in terms of value was officially disclosed by any of the company. Merger
was majorly influenced by two large common shareholders, Tiger Global and
Accel Partners. Myntra still continues to function and operate independently to
increase its market share from 50 to 70 per cent of the market share. In 2014,
Myntra's portfolio included about 1,50,000 products of over 1000 brands ranging
from international brands to designer brands and distribution area of around
9000 pin codes in India.
 In May 2015, Myntra moved on to app-only business model wherein customers
can only buy and transact in their site through smartphones. The move came after
the site claimed that 95 percent of Internet traffic on their site came mobile and
70 percent sales were generated through smartphones. The move to app-only
generated mixed reviews and saw 10% dip in sales initially.

However in February 2016, the company retracted its app-only model in an

attempt to win back lost customers. The company cited that the app-only strategy
had backfired and Myntra would re-launch its website.

MYNTRA FUNDING

In October 2007, Myntra got its underlying subsidizing from Erasmic Venture Fund
now known as Accel Partners, Sasha Mirchandani from Mumbai Angels and a
couple of different financial specialists. In November 2008, Myntra raised just
about $5 million from NEA-IndoUS Ventures, IDG Ventures and Accel Partners.
Myntra brought $14 million up in a Series B round of subsidizing. This round of
speculation was driven by Tiger Global, a private value firm; the current financial
specialists IDG Ventures and Indo-US Venture Partners likewise put in significant
sum towards subsidizing Myntra. Towards the end of 2011, Myntra.com brought
$20 million up in its third round of subsidizing, again drove by Tiger Global. In
February 2014, Myntra raised extra $50 Million (Rs.310 crore) subsidizing from
Premji Invest and couple of other Private Investors.
INTRODUCTION

The Indian e-commerce industry has witnessed a significant development with

the merger of two giants, Flipkart and Myntra. This strategic move aims to
strengthen their positions in the market and take on the challenges posed by
competitors like Amazon and the impending entry of Walmart.

Flipkart, founded in 2007, quickly rose to prominence as one of the leading

onlinemarketplaces in the country. It ottered a wide range of products across
various categories. including electronics, fashion, home appliances, and more.
Myntra, on the other hand, was established in 2007 as an online fashion retailer,
specializing in clothing, accessories, and footwear. The merger between these two
giants took place in 2014 and marked a significant milestone in the Indian e-
commerce landscape. The strategic alliance brought together their respective
strengths and expertise, creating a dominant force in the market.

Flipkart's extensive customer base and logistical capabilities combined with

Myntra's specialization in fashion retailing resulted in a formidable entity that
could cater to the diverse needs of consumers.

Understanding the Merger

The Drive Behind the Merger

 The merger between Flipkart and Myntra was driven by several key factors.
Firstly, both companies recognized the immense potential of the fashion
industry in the Indian market, which was largely untapped by Flipkart at the
time. By acquiring Myntra, Flipkart gained access to a market leader in the
fashion segment, allowing them to expand their product offerings and cater
to a wider range of customers.'
  Diversification played a crucial role in the decision to merge. Flipkart aimed
to expand its business beyond its existing categories and venture into the
fashion industry. Acquiring Myntra proved to be a cost-etticient strategy, as
building a similar fashion business from scratch would have been a more
time-consuming and expensive endeavor.
 The competitive landscape of the e-commerce industry played a significant
role. Myntra's success and competitive edge in the fashion industry made it
an attractive acquisition target for Flipkart. By merging with Myntra,
Flipkart became a dominant plaver in the fashion segment, allowing them
to compete more effectively with other e-commerce glants.

Deal Structure and Valuation

The deal between Flipkart and Myntra involved a 100% acquisition of Myntra by
Flipkart. While the exact financial details of the deal were not disclosed, Myntra
was valued at over $300 million at the time of the merger.' The deal was
structured in a way that allowed Myntra to retain its separate entity status. with
its management team and emplovee roles remaining unchanged.

Common Investors

One of the key factors that drew common investors to the Flipkart-Myntra merger
was the immense market potential of the combined entity. Both Flipkart and
Myntra had established themselves as leaders in their respective niches, with
Flipkart dominating the general e-commerce space and Myntra specializing in
fashion retailing. "By merging their strengths, they created a formidable force
that could challenge international players like Amazon and domestic rivals like
Snapdeal.

Common investors saw this merger as an opportunity to invest in a company that

had the potential to capture a signiticant share of the rapidly growing e-
commerce market in India. With a large population, increasing internet
penetration, and a growing middle class with disposable income. India presented
a lucrative market for e-commerce companies. The Flipkart-Myntra merger
allowed investors to gain exposure to this market and benefit from its growth.
Furthermore, the merger created synergies that made Flipkart and Myntra more
competitive in terms of product offerings and customer experience.

Myntra's specialization in fashion retailing complemented Flipkart's existing

product range. allowing them to provide a comprehensive shopping experience to
consumers This meant that customers could find a wide array of products and
services on a single platform, enhancing their shopping journey. Common
investors recognized the value of this expanded product range and the potential
for increased customer loyalty and market share.

The merger also had implications for market competition. The combined entity of
Flipkart and Myntra posed a significant threat to competitors, both domestic and
international.' The consolidation of resources, customer base, and logistical
capabilities allowed the merged company to offer competitive pricing, faster
delivery, and a wider product selection. This forced other lavers in the market to
step up their game and innovate to stay relevant. Common investors saw the
potential for market consolidation and the resulting benefits for the merged
entity. They recognized that a dominant player like Flipkart-Myntra could
negotiate better deals with suppliers, enjoy economies of scale, and invest in
technology and infrastructure to further enhance their competitive advantage.
This made the merged company an attractive investment opportunity for those
seeking long-term growth and returns.
LITERATURE REVIEW
I. Joydeep Biswas (2004), " Recent trend of merger in the Indian private
corporate sector". They research about Corporate restructuring in the form
M&A has become a natural and perhaps a desirable phenomenon in the
current economic environment. In the tune with the worldwide trend, M&A
have become an important conduit for FDI inflows in India in recent years.
In this paper it is argued that the Greenfiled FDI and cross-border M&As
are not alternatives in developing countries like India.
II. Vijay Shrimali and Karunesh Saxena's (2004), "Economic Advantages of
Merger and Acquision." due to the imminent implementation of WTO
Guidelines with effect from July 2005, it was become mandatory for
business organization to strengthen their R&D base. Consequently, the size
of the business organization matters most, merger and acquisition have,
therefore, become order of the day, an attempt has been made in the
paper to provide a theoretical framework of M&A, various examples of
merger and acquisition in the world market and finally, the economic
advantage of M&A have been outlined.
III. Vanitha. S (2007), "Mergers and Acquisition in Manufacturing Industry", she
analyzed the financial performance of the merged companies, share price
reaction to the announcement of merger and acquisition and the impact of
financial variables on the share price of merged companies. The author
found that the merged company reacted positively to the merger
announcement and also, few financial variables only influenced the share
price of the merged companies
IV. Vanitha. S and Selvam. M (2007), "Financial Performance of Indian
Manufacturing Companies during Pre and Post Merger, they analvzed the
pre and post merger performance of Indian manufacturing sector during
2000-2002 by using a sample of 17 companies out of 58 (thirty percent of
the total population). For financial performance analysis, they used ratio
 analysis. mean. standard deviation and t test. They found that the overall
financial performance of merged companies in respect of 13 variables were
not significantly different from the expectations.
V. Pramod Mantravadi and Vidyadhar Reddy(2007), "Relative size in Mergers
and Operating Performance" they explains that This research study aims to
study the impact of m & A on the operating performance of acquiring
corporate in different periods in India, by examining some pre and post
merger financial ratios with chosen sample firms and mergers between
1991-2003. The result suggests that there are minor variations in terms of
impact on operating performance following merger in different intervals of
time in India.
VI. Ryo Kawahara and Fumiko Takeda, (2007), "M & A and Corporate
Performance in Japan" This paper investigates how M & A affect corporate
performance for three years after their implementation. The corporate
performance of 162 M & A that took place in Japan from 2001-03 is
analyzed by using Wilcoxon signed rank test. They find that overall effects
of M & A on corporate performance are statistically insignificant, compared
to the corporate performance of other companies within the same industry
with similar pre-acquisition performance.
CHALLENGES AND OPPORTUNITIES

CHALLENGES
1. Position of Mukesh Bansal and Ashutosh Lawania post-merger. Since the
merger was a 100% acquisition by Flipkart, the position of Mukesh Bansal
and Ashutosh Lawania the founders of Myntra after the merger was a big
question. The Merger will lead to placing these top most people of Myntra
below Sachin Bansal and Binny Bansal. If these people are expulsed
immediately, the chances of Myntra collapsing due to strong connection of
the Myntra employs with Mukesh Bansal is a problem.
2. Collapse of Myntra due to mass quitting. Mukesh has always maintained
an always approachable-man status throughout his employs. A friendly
boss's sudden exit from the organisation was viewed as mass follow on
resignations by key employs of Myntra.
3. Expulsion of few employs from Myntra. The merger was more treated as a
threat for the smaller group of Myntra employs. They viewed the merger as
possible loss of their job. Few key players/top management of Myntra like
Ganesh Subramanian, Chief Merchandising and Puja Gupta, HR-VP could
sense their immediate future.
4. . Placing of Ravi Vohra. SVP-Marketing Flipkart. It was likely that Mukesh
Bansal from Myntra would take over the marketing division of Flipkart. So
placement of Ravi Vohra was a problem at Flipkart.
SOLUTIONS

The merger and the barriers of merger were going to be true to a great extent and
turned out not to be rumours. The three Bansals have immediately announced that
no change in organisational structures of both firms are likely to happen. However,
this paper and the authors assume a strong indication of a hidden strategy followed
by the three Bansals and the common investors in resolving the barriers. This has
been deduced from the incidents followed over a period of time post-merger.

(a)Hidden Strategy. The fear of the merger among employs, demotivation of

employs and reduced interest in the organisation for Myntra was a major concern.
If Mukesh and Ashutosh Lawania, who are the core builders of Myntra move out
after making big deal of the sale of Myntra, the employs feared a breakdown of the
firm and a likely mass resignation of employs.

This would lead to loss of one of the main reasons of merger ie expertise of
domain at Myntra.

The strategy was to have a undisclosed and a gradual change in the organisational
structure rather than a sudden overnight change which would scare the Myntra
employs. So an announcement was made immediately after the deal was made.
The announcement stated that, both the firm would operate independentlv, there
would be no changes in organisational structures of both the firms and no exodus
of emplovs.

(b)Mukesh Bansal and Ashutosh Lawania. Mukesh would be placed as the head of
Marketing and ecommerce and also head of Myntra independently. Ashutosh
Lawania was shifted into board of directors of Flipkart. Latter Mukesh was
gradually disconnected from Myntra and over a period of time shifted into brand
management of Flipkart. He was responsible for designing the most acclaimed new
buildings of Flipkart and Myntra. He resigned from Flipkart in Feb 2016. This
gradual exit of Mukesh was facilitated by the reason

on Binny Bansal being made the new CEO of Flipkart and Sachin raising himself
to the position or chairmen of the group.
(c)Ravi Vohra. SVP-Marketing. Flipkart. Ravi Vohra was made CEO of strategic
brands group. However, Ravi Vohra had to quit Flipkart in a span of nine months
post change in DOSITION.

(d)ESOPs to Myntra employs. Stopping mass quitting of employs from Myntra and
creating a belongingness of the firm was the need of hour before merger. All key
employs were given ESOPs options which made many of them richer over night by
few crores. Top management of Myntra like Ganesh Subramanian, Chief
Merchandising and Puja Gupta, HR-VP had to quit Myntra in few months, but
however they felt happy as they made good money out of ESOPs offered by
Flipkart.
MANAGEMENT THEORIES

The e-commerce industry in India has witnessed significant growth in recent

years, with many players vying for market share. Two of the major players in this
space are Flipkart and Myntra. In 2014, Flipkart acquired Myntra, and since then,
the company has been focusing on expanding its presence in the Indian market. In
this answer, we will discuss the management theories and strategies that Flipkart
and Myntra have employed during their merger and acquisition.

1. Synergy and Integration: One of the key strategies employed by Flipkart

and Myntra during their merger was to leverage each other’s strengths and
create synergy. Flipkart’s strong supply chain and logistics network was
combined with Myntra’s expertise in fashion and lifestyle products,
resulting in a more comprehensive offering for customers. The integration
of Myntra’s technology and data analytics capabilities also helped Flipkart
to enhance its customer engagement and personalization.
2. Diversification and Expansion: Another strategy employed by Flipkart was
to expand its product offerings beyond just books and electronics, which
were its core categories at the time of the acquisition. Myntra’s presence in
the fashion and lifestyle segment helped Flipkart to diversify its portfolio
and cater to a wider range of customers. Additionally, Flipkart’s strong
presence in the Tier-II and Tier-III cities helped Myntra to expand its reach
beyond the metros.
3. Cost Savings and Efficiency: The merger also led to significant cost savings
for both companies. By leveraging each other’s resources and
infrastructure, Flipkart and Myntra were able to reduce their overhead
costs and improve their operational efficiency. For example, Flipkart’s
strong logistics network helped Myntra to reduce its shipping costs, while
Myntra’s data analytics capabilities helped Flipkart to optimize its inventory
management.
4. Innovation and Adaptation: The merger also prompted both companies to
innovate and adapt to the changing market dynamics. For example, Flipkart
and Myntra introduced new features such as “Myntra Insider” and “Flipkart
Assisted Selling” to enhance customer experience and increase sales.
Additionally, the companies invested heavily in emerging technologies such
as artificial intelligence, machine learning, and data analytics to stay ahead
of the competition.
5. The merger also posed significant risks for both companies, such as the risk
of cannibalization, cultural integration, and retention of talent. However,
both companies managed these risks effectively by implementing a robust
risk management strategy. For example, Flipkart and Myntra established a
clear organizational structure and communication plan to ensure a smooth
transition, and they also invested in training and development programs to
retain key employees.
FINDINGS AND SUGGESTIONS
After the merger of Flipkart and Myntra in May 2014 there has been a reason to
cheer by the stake holders. The number of registered users have increased by
30.7%, Daily visits by 32.6%, the number of sellers on the platform by 3.2% and
team strength has increased by 16.6%. The revenue of the company after merger
has soared to 1.5 Billion USD. However, the financials of the company as a whole
after merger doesn't seems to be promising. PAT for the company as per 2015 is
836.51 Cr whereas the revenues have crossed 1 billion USD mark.
  Moreover, after the Flipkart and Myntra merger case study, they grabbed a
share of 50% in the Indian e-commerce online fashion category.

 But news reported that they targeted for a 65% share by the end of 2015 or
start of 2016 for which they had a plan.

 Also, the founder of Myntra quoted that in mid-2014 they want to set up an
incubator in which 15+ people were assisted in sampling, supply chain,
manufacturing, etc, to develop private labels.

SUGGESTIONS

 Always facilitate gradual change in major restructuring of organisations so

that the employs do not receive a cultural and uncertainty shock.
 Employs should be provided and explained with a wIn-Win situation to
retain them.
 Enough time should be given to expulse wanted employs or relocate them
into new expansions of the business
REFERENCES
1] Determinants of the ex-post performance of mergers and acquisitions: a case
study Prof. Krishna Kumar Indian Institute of Management, Lucknow (India) Dr.
Manel Peiro ESADE, Barcelona

[2] TheReviewofFinancialandAccountingStudies ISSN 1450-2812 Issue 1 (2011) ©

Euro JournalsPublishing, Inc. 2011 http://www.eurojournals.com/REFAS.htm
Review of Literature Linking Corporate

[3] Abdulati A. Abdou Associate Professor of Accounting, Faculty of Commerce,

Cairo University, Egypt Radwa M. Annis Assistant Lecture of Accounting, Faculty of
Commerce, Cairo University, Egypt Effects of mergers on corporate performance:
An empirical evaluation using OLS and the epirical Bayesian methods
https://doi.org/10.1016/j.bir.2016.09.004Get rights and content

[4] I.J.E.M.S., VOL.3(3) 2012: 362-369 ISSN 2229- 600X 362 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.

[5] Organizational fit and acquisition performance: Effects of post‐acquisition

integration, Deepak K. Datta, First published: May 1991
https://doi.org/10.1002/smj.4250120404

[6] ThePerformanceManagementafterMergersand Acquisitions in high technology

manufacturing Business Yiannis Triantafyllopoulos1, Nikolaos Konstantopoulos2
and Damianos P. Sakas3 ISSN: 1662-9795, Vol. 495, pp171-175 doi:10.4028/
www.scientific.net/ KEM.495.171 © 2012 Trans Tech Publications, Switzerland.

[7] The post-acquisition performance of acquired companies: evidence from the

republic of serbia Slađana Savović* ECONOMIC ANNALS, Volume LXI, No. 209 /
April – June 2016 UDC: 3.33 ISSN: 0013-3264
OPPORTUNITIES

Mergers and acquisitions are strategic moves that companies make to achieve
their business goals, and they can be driven by various factors, including the
desire to increase market share, gain access to new markets or technologies, or
improve operational efficiency. In the case of Flipkart and Myntra, there were
several opportunity theories that drove their merger and acquisition.

1. Market Expansion:
One of the primary reasons for Flipkart’s acquisition of Myntra was to
expand its market share in the Indian e-commerce space. Myntra had a
strong presence in the fashion and lifestyle segment, which was a relatively
untapped market for Flipkart. By acquiring Myntra, Flipkart was able to tap
into this market and expand its customer base. Additionally, the acquisition
allowed Flipkart to diversify its product offerings and provide a wider range
of products to its customers.
2. Technological Advancement:
Another opportunity theory behind Flipkart’s acquisition of Myntra was to
gain access to Myntra’s advanced technology and expertise in the fashion
and lifestyle segment. Myntra had developed a robust technology platform
that enabled it to offer a personalized shopping experience to its
customers. By acquiring Myntra, Flipkart was able to leverage this
technology and improve its own offerings in the fashion and lifestyle
segment.
3. Cost Synergies:
The acquisition of Myntra also provided Flipkart with an opportunity to
achieve cost synergies. By integrating Myntra’s operations with Flipkart’s,
the combined entity was able to reduce costs in areas such as logistics,
marketing, and technology. This allowed Flipkart to improve its profitability
and increase its competitiveness in the market.
In conclusion, Flipkart’s acquisition of Myntra was driven by several opportunity
theories, including market expansion, technological advancement, and cost
synergies. The acquisition helped Flipkart to expand its market share, gain access
to new technologies, and improve its profitability.