“Corporate Restructuring is the process of significantly changing a company's business model, management team or financial structure to address challenges and increase shareholders value. Elucidate the statement indicati

Corporate Restructuring is the process of significantly changing a company's business model, management team or financial structure to address challenges and increase shareholder value. Need and Scope of Corporate Restructuring: To enhance shareholders value. Deploying surplus cash from one business to finance profitable growth in another. Exploiting inter-dependence among present or prospective businesses. Risk reduction. Development of core-competencies. To obtain tax advantages by merging a loss-making company with a profit-making company. Revolution in information technology has made it necessary for companies to adopt new changes for improving corporate performances. To become globally competitive. To increase the market share. Convertibility of rupee has attracted medium-sized companies to operate in the global markets. Competitive business necessitated to have sharp focus on core business activities, to gain synergy benefits, to minimize the operating costs, to maximize efficiency in operation and to tap the managerial skill to the best advantage of the firm. By diversification of business activities, the minimization of business risk is possible and it enables the firm to achieve at least the minimum targeted rate of return. With the integration of sick unit into the successful unit, the adjustment of unabsorbed depreciation and write off of accumulated loss is possible and thereby the successful unit can have strategic tax planning. Restructuring aims at improving the competitive position of an individual business and maximizing its contribution to corporate objectives. It also aims at exploiting the strategic assets accumulated by a business i.e., monopolies, goodwill, exclusivity through licensing, etc. to enhance the competitiveness advantages. Thus, restructuring helps in bringing an edge over competitors. In highly competitive world, cost cutting and value addition are very important to get highlighted.