Mergers and Acquisitions in India’s Steel Sector: Evaluating Corporate and Shareholder Growth through VRIO

Abstract

This study examines whether domestic mergers and acquisitions (M&A) undertaken by listed Indian steel companies between 2010 and 2024 create shareholder and operational value, and how strategic resource complementarities influence outcomes. It integrates market reactions, post-merger performance, and VRIO-based synergies in a capital-intensive, cyclical industry. An event study with the NIFTY50 benchmark measures short-term market reactions. A matched difference-in-differences (DiD) framework evaluates three-year pre- and post-merger changes in return on assets, asset turnover, and sales growth. VRIO scoring, based on valuable, rare, inimitable, and well-organised resource attributes, assesses strategic fit. Robust standard errors and matched controls mitigate selection bias. Target firms earned +5.0% cumulative abnormal returns (CAR) over [−1, +1] days (p<0.01); acquirers posted 0.8–1.2% CAR (p<0.05). Post-merger, acquirers saw ROA rise by 1.1 percentage points (p=0.02), asset turnover by 0.18 (p=0.04), and sales growth by 3.5% (p=0.01). High-VRIO deals achieved an additional 0.55pp ROA improvement (p=0.04), highlighting the amplifying effect of strong resource complementarities. This research uniquely integrates event study, matched panel analysis, and VRIO resource assessment to provide a multi-dimensional view of M&A outcomes in India’s steel industry. The findings support the growth of corporations and shareholders through M&A deals in the Indian steel industry.