The document discusses the corporate restructuring of Max India Pvt. Ltd., which involved a demerger into three distinct entities to enhance operational clarity and investor appeal. The restructuring aimed to improve each business's focus and value, resulting in positive shareholder reactions and increased market capitalization. Key leadership played a significant role in facilitating communication and managing employee transitions during this complex process.

1. STRATEGIC
MANAGEMENT
Written by: Ankita Patil
Batch: BABM1
Student id:20077402

2. Introduction:
To be competent enough in the market companies have to be responsive to the market
fluctuations. There need to be changes done in the strategy, plans etc. to meet the desired
goal and most importantly to save the company from having a dip in its revenue when the
market is down. Hence to operate at the optimum level companies have to keep changing their
working methods and business processes and operating methods. It’s even possible for
businesses to begin a cycle of corporate restructuring before any income is lost or before
damage occurs to the business. Many leading companies prefer to do restructuring; because it
helps the company not only to spare the losses but also increases productivity.
There are a number of factors than can have a negative effect on a business and reduce
income like an increase in tax liability, recession, negative media attention and increased
competition etc. It is very important that businesses react quickly and effectively to such
issues. By undergoing corporate restructuring it is made sure that the business is set to survive
changes and can increase profits.
By accessing the services of corporate restructuring specialists, businesses can seek advice
regarding how best to restructure the company. There are many options available in the
process of corporate restructuring. According to the requirement of the company any of the
following options can be chosen: downsizing or reducing workforce, the merging of
departments, demerging departments, disposal of company assets etc. Restructuring requires
proper planning, administration and implementation. The corporate restructuring of India’s
leading company, Max India Pvt. Ltd., is analyzed in this report.
About the Company:
Max India Limited is listed company on the BSE and the NSE. Its founder sponsor Analjit Singh
holds 40.5% stake in the company. In the financial year 2014, the company recorded a
consolidated turnover of Rs 117 billion. It has a total customer base of around 8 million, over
300 offices spread across India and people strength of around 18,000 as on 31st March 2014.
Other shareholders include some of worlds best Institutional Investors such as Goldman Sachs,
Temasek, IFC (Washington), Fidelity and New York Life. (Max India annual report 2014)
Max India is a multi business corporate which solely focuses on providing service to the people.
It has an excellent presence in Healthcare, Health insurance and Life insurance sectors. The
vision of the company is to be the most desired corporate in the country for service excellence.
Why was corporate restructuring required?
Three major unrelated business that were operating under listed company Max India. This was
making it difficult for the investors to know the soul of the business and it was very difficult to
track the entire company as a whole and its progress. It was very confusing for the investors to

3. know the company position and the trust in the company could not be reinforced. As the
businesses grew, this problem kept becoming grave. In the mean while the company did take
small steps like keeping separate books for all the three business, separate leadership roles etc.
But since the source of revenue was one keeping track was becoming difficult.
The chairman also saw more potential in the three businesses as individual entities. Their
progress and revenue would increase if they were considered as different company. The basic
fact was that the intrinsic value of these businesses was high. They would attract more
potential long term investors.
The Demerger:
The board of Max India Pvt. Ltd, in its board meeting held on 27th
January 2015 approved a
Corporate Restructuring plan to vertically split the company through a demerger, into three
separate listed entities in the sector of Life Insurance, Health & Allied businesses and
Manufacturing Industries. Competition Commission of India (CCI) approved Max India’s
proposed corporate restructuring plan to vertically split the company through a demerger on
9th
April, 2015.
Analjit Singh, Chairman, Max India, said, “With this restructuring plan, we have cleaned up the
structure of Max India group. This will now give structural clarity to investors,”
The company was split into 3 listed entities – Max Financial Services Ltd. with the insurance
business, Max India Ltd. with the health and allied businesses, and Max Ventures and
Industries Ltd. with the specialty packaging films business. This was done with the view of
giving the investors specific and undiluted access to its diverse lines of businesses, provide
sharper focus to each underlying business, and unlock shareholder value. (Extracted from the
statement given by Max India’s spokesperson.)
Upon completion of the demerger, the existing company, Max India Limited was renamed
‘Max Financial Services Limited’ (MFS) and focused solely on the group’s flagship life insurance
activity, through its 72.1% shareholding in Max Life, making it the first Indian listed company
exclusively focused on life insurance.
The second vertical of Max India Limited, which continues to manage investments in the high
potential Health and Allied businesses, includes Max Healthcare, Max Bupa, Antara Senior
Living which is supported by a Corporate Management Services team.
The third vertical consists of the investment activity in the group’s manufacturing subsidiary,
Max Specialty Films which is an innovation leader in the Specialty Packaging Films business -
and is named Max Ventures and Industries Limited (MVIL). Set-up in 1989, the Specialty
Packaging Films business has been consistently profitable. It recorded revenues of Rs. 746 Cr.
and profit of Rs. 14 Cr in FY2014.
The gains for the shareholders:
Max India’s shareholders retained one equity share of Rs 2/- in Max Financial Services Limited
and will additionally got one equity share of Rs. 2/- each of Max India Limited for every one
equity share of Rs. 2/- each held in Max Financial Services, and one equity share of Rs. 10/-
each of Max Ventures and Industries Limited for every 5 equity shares of Rs. 2/- each held in
Max Financial Services.
Max India had cash reserves of Rs. 605 Cr. as at December 31, 2014. It was proposed to split
the cash reserves as on Appointed Date of April 1, 2015 between the 3 listed companies such

4. that Max Financial Services Limited held Rs. 150 Cr., Max Ventures and Industries Limited held
Rs. 10 Cr. and the balance over Rs. 400 Cr was held by the Max India Limited
(Announced by the spokesperson of Max India post the demerger)
IMPACT OF ANNOUNCEMENT:
Following the announcement, Max India shares soared to hit a 52-week high of Rs. 505 per
share on the BSE on 27th
January, 2015.
In one day, the company added over Rs 1,000 crore in market capitalization to take it up to Rs
13,100 crore. The shares closed at Rs. 492.75 apiece on the BSE, up 8.40 percent.
Leaders and key managers:
Setting the context for the demerger, Analjit Singh, Chairman, Max India Ltd, said “The new
government is setting a rapid pace for economic reforms. This structural reconfiguration
readies us to capitalize on opportunities created by the anticipated all round growth
acceleration and to henceforth look at the wider world of business opportunities. Our bouquet
of businesses is diverse, but each has considerable value and growth potential. This demerger
will provide investors with a choice to continue to be associated with all these businesses, or
only specifically invest in the set of businesses that suit their respective investment philosophy.
For instance, the high growth healthcare business is poised to add significant additional
capacity in future. The health insurance and senior living business are less than 5 years in
operation and need significant focus, attention and capital, while the relatively mature
business of life insurance provides a balance of growth and profitability.”
Analjit Singh is the Chairman of the company. The top leadership of the Max group’s operating
companies are Rajesh Sud, MD and CEO of Max Life and Chairman, Max Bupa. Rajit Mehta,
DMD of Max Healthcare. Tara Singh Vachani, CEO of Antara, Jaideep Wadhwa, CEO of MSF.
Leadership Roles:
 The leaders kept the communication open and focused both on the employees and the
customers. They made the employees understand the need of the demerger and exact
working of the newly formed entities. They gave a clear of the new entities’ vision and
mission.
 They had to ensure and guarantee their customers that the separation will not only be
profitable to them but it will also help them understand their business in a very simple
manner.
 They motivatedand drove the employees to participate actively in the change and helped
them to settle in the new business environment.
 They also had to divide employees according to different business and hence the
employees were skeptical about being under some other company instead of their parent
company.
 The training of all level of managers had to be rigorous, as the working environment had
changed.
 They ensured all the decisions taken by the senior management reached the lowest
management clearly and no communication gap existed.
 They appointed special staff to take care of the restructuring and handle the problems
that rose because of it.

5.  They successful established different departments for all the three entities, by ensuring
that the talent pool in all the three was equally divided.
 Planning the strategy of all the entities was a major part of the work that the senior
management managers had to fulfill.
 They targeted to gain maximum customer as well as employee loyalty for all their entities
through the demerger by polite
 The process and implementations are still in process. The exact outcome of the demerger
will be seen in the coming six to nine months.
According to independent HR consultant Gautam Ghosh, "A corporate spin-off is not
necessarily bad news for employees. The problem is that many organisations do not
communicate a demerger strategy to their employees proactively. In fact, in my experience,
even some MNCs, known otherwise for their professional management practices, fail to share
a clear roadmap with their country or regional offices making the whole process painful and
fraught with risks." Ghosh warns communication that is one-way is not good enough. "A
company that runs a global business should consult the leaders of all the countries to assess
the HR implications of tough business decisions. This will help them avoid bad press," adds
Ghosh.
The Demerged Entities:
Max India ‘Protects Life’ through Max Life Insurance; ‘Cares for Life’ through its Healthcare
company, Max Healthcare and ‘Improves Life’ through its Clinical Research business, Max
Neeman. The message that Max India works by and deploys is ’Enhancing Life’.
 Max Healthcare :
This company includes all the investment done by the country in the medicine and healthcare
industry. It has various institutes and hospital chains. The competency level of this set up is
greta as they train students and then employ them as doctors too; so its basically a win-win
situation for both the institutes and the hospitals, and the talent pool is not lost.
 MaxBupa:
Max Bupa Health Insurance Company Ltd. (Max Bupa) is a joint venture between Max India
Limited and the UK based healthcare services expert, Bupa. The Max India Group brings
expertise in both healthand insurance related services includinghospitals,clinicalresearch and
life insurance and hence it forms the perfect blend of global expertise and local knowledge in
both healthcare and insurance. Hence it enhances the quality of work and services offered at
MaxBupa which makes them a preferable choice.
Max Life Insurance:
Max Life Insurance is a joint venture between Max India Ltd. and Mitsui Sumitomo
Insurance Co. Ltd. Max India is an Indian multi-business corporate and Mitsui Sumitomo
Insurance is a member of MS&AD Insurance Group, a general insurer. Max Life Insurance offers
comprehensive life insurance and retirement solutions for long-term savings and protection. It
has a country-wide diversified distribution model including the country's leading agent
advisors, exclusive arrangement with Axis Bank and several other partners. The excellent
financial strength and human resource backup is the basis of this company. They have given

6. variety of plans that can actually be personalized according to the customer’s requirement.
There are spread across the country which is very comfortable for customers.
Max Specialty Films:
Max Specialty films packaging is a leading producer of over wraps, transparent and specialty
packing, polypaper and label, Metalized films, thermal lamination films and leather finishing
foils. The USP of the company is its special customization according to the customer’s
requirements. It is even open for joint ventures with a company for product development. It
customizes all the available products according to the desire of the potential buyer.
Conclusion:
The demerger decision by Max India aimed to give its long term investors structural clarity. The
demerger also provides its investors with choices for investment in all of its businesses or any
specific business that suits the investor’s mindset. It also helps the investors to have directed
access to all the diverse businesses.
It also helps the company to have sharper focus on each of its business. It gives the businesses
higher intrinsic value. It also helps the businesses to gain higher shareholders value. It also
helped the company to simplify its own structure and made it clear for the investors too.
They provide the investors with options to invest in diverse businesses. For example, if some
investor wants to focus on investment in manufacturing sector and he can exit from the
investment in life insurance or health and allied sector through an open offer to exit.
It is one of the major corporate restructuring that happened in India and is successful. But he
restructuring is not yet complete. Many reforms and changes are still under process. The
employees are still undergoing training. The company is hiring new employees to directly enter
the new environment. And sacking the old employees who are not adhere to the change or
who are not of much profit to the company. Due to this there are also chances that the
employees loose trust from the company. And to restore this there are another set of major
steps that the company is taking.
They are promoting employees who are efficient, open minded and hard working; so as to set
an example to other employees that the company values talent and hard work. The demerger
also gave a way to a great scope of progress for employees as the number of senior
management positions increased a lot and scope of the old employees bagging it was high.
Summing it up together; Max India took a wise decision of the demerger and helped to
increase the growth of the company in different fields. The profit maximization and capital
utilizationhas also increased. And up till now the stocks of all the three individual entities have
increased substantially. The only thing that Max India will have to take care is the after effects
of the demerger. It is just three months before that the demerger got approved and till now
the scenario looks pretty good. If the senior level managers carry on their roles and tasks in a
very planned and confident manner, in the long run, the demerger could be the best decision
of the board of Max India.

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