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CS Professional · Corporate Restructuring, Valuation and Insolvency · Planning and Strategy

Ganga Pharma Ltd acquired Yamuna Labs Ltd and expected annual cost synergies of Rs 12 crore. In the first year, only Rs 5 crore was realised because duplicate plants were not consolidated. Which is the most appropriate post-merger review action?

The appropriate action is to compare actual synergies with the deal-case target, analyse the Rs 7 crore variance, and assign an owner and timeline for plant consolidation. Post-merger review is about tracking and correcting realisation, not hiding shortfalls by revising targets or waiting for auditors.

  1. ACompare actual synergies with the deal-case targets, identify the variance causes and set an owner and timeline for plant consolidationCorrect
  2. BWrite off the goodwill immediately and stop monitoring
  3. CRestate the original synergy target to Rs 5 crore so no variance appears
  4. DWait for the statutory auditor to raise the shortfall in the audit report

Explanation

Post-merger audit means tracking realised benefits against the business case. The shortfall of Rs 7 crore (12 - 5) arises from unconsolidated plants, so an accountable owner and timeline are needed. Lowering the target hides the issue, and immediate write-off is not a review step.

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