Speaking at a seminar on corporate acquisitions, mergers and restructuring in Mumbai, Kotak outlined the rationale for corporate restructuring in India, saying that the succession issue has become one of the prime drivers for a recast.

While bank mergers are inevitable in the long run, Kotak said there existed several crucial obstacles to them in the current Indian scenario. "Although it will result in enormous cost savings, mergers are very difficult to implement in India, as the crucial aspect that has to be addressed is how to tackle the problem of surplus branches and people," Kotak said.

Kotak said the pressure of global competition is also forcing domestic companies to restructure. He cited the example of the investment banking industry, where the top players - JM Financial, DSP Merrill Lynch, and Kotak Mahindra,tied up with three US-based firms to achieve the global interface.

Besides, corporate developments abroad are also having an impact on the country's corporate scene. The decision by Bausch & Lomb, for example, to divest the Ray Ban brand globally, had a very adverse impact on the share prices of the local subsidiary. "Local players in the same business will now have to restructure and reposition their products to take the fullest advantage of the development," Kotak added.

According to Kotak, there has been a psychological shift among Indian promoters, as economic realities are prompting them to add value through restructring.

Speaking at the seminar, Ralph Heuwing of the Boston Consulting Group said that diversified conglomerates in India can be as competitive as the focussed companies. "Diversification does not inherently mean bad business practice," he said.