Critical Issues faced by Indian Logistics Sector:
Indian Logistic sector was a major contributor for the increasing GDP of the economy and it was contributing at around 13%. However, the Logistic sector was facing critical issues which include the problems related to the poor infrastructure and lack of capability to manage the expansion of growing economy of Logistics sector. This resulted in the increasing turnover, inefficiency and increasing cost of operations without proper management and control over it.
Two major categories of problems include the inefficiency due to the external factors and internal issues. However, inefficiency due to the external factors was the consequence of heavy traffics on roads, lack of adequate resources, ineffective warehouses and inefficient value chain functions. On the other hand, internal issues were related to the high cost of operations due to the selection of costly medium of transport i.e. road transport.
This resulted in high cost because the conditions of the roads were unfavorable due to heavy traffic and poor infrastructure and taking too much time in delivering the product which is known as transit time. Moreover, the other related problems were heavy consumption of fuel, excessive requirements of documentation, changing regulations of state and weak regulations of government to collect taxes which resulted in spending less on developing the infrastructure of the Indian economy. This also resulted in heavy freight costs due to the fragmented industry of India which was high as compared to the developed countries.
Significant Attributes:
Continuous growth in logistics network which was integrated by Aqua Logistics for leveraging the benefits and changing with the external environment made it a significant attribute in Aqua Company to get acquired in Logistics sector. It is followed by the global presence and better equity position of the company which attracts the acquirer to enjoy the benefits by consolidating with Aqua Limited.
Aqua Logistics Limited Harvard Case Solution & Analysis
Moreover, the strong base of its assets and the latest technology used for delivery system makes the company stand out in the industry which attracts the acquirer for merging with this company. This also leads to better relationship with its clients and increasing the customer base which will result in the economies of scale and this will lead to the synergy generated from the operations for both the companies.
This may result in the synergy of capabilities and strength in functional departments for both the companies with value addition in their services and making the services better and effective by use of effective medium of transport.
Value Drivers:
It is necessary for the acquirer to first look at the value drivers before acquiring the target company so that it may be able to forecast its estimated value for getting the maximum benefit from the deal. These value drivers show the financial impact on the forecasting of the future cash flows. However, the non-financial value drivers which may be considerable for the Acquirer such as infrastructure and taxation policies but these cannot be quantified for the calculation of discount cash flow valuation.............
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