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Indian companies
are on a shopping spree. Hindalco Industries
recently acquired the Canadian aluminum company
Novelis for $6 billion. That came on the heels
of an even larger acquisition: the takeover of
the Netherlands-based steel maker, Corus, by
India's Tata conglomerate for nearly $12
billion.
The two firms have led the way in large
takeovers over the last several years, as Indian
companies begin scouting for growth
opportunities
overseas.
The value of takeovers by Indian firms has risen
sharply, from less than $1 billion in 2000 to an
estimated $8 billion last year. Acquisitions in
the first six weeks of 2007 added up to more
than $18 billion.
D.H. Pai Panandiker, the head of New Delhi's
independent economic think tank, the RPG
Foundation, says more and more Indian
corporations are looking abroad for growth.
"Many of the companies are now loaded with
funds, and they want a quick expansion, and this
they can do only by acquiring other companies.
Now in the domestic market, it will be difficult
for them to acquire companies," he said. "So I
think cross-border acquisitions will be the
trend of the day."
The Indian companies' impressive buying power is
partly due to healthy profits made in a booming
economy, and partly because a surging stock
market has raised their valuations many times.
Panaindiker say companies going global are
seeking a variety of benefits, including
expansion, and securing export markets.
"One is [they want] instant increase in size.
Number two, they want to have also the latest
technology, which is not easily available,"
added Panaindiker. "The third reason is
acquiring a brand, and fourth, probably, is you
are in the international market for marketing."
Companies seeking a foothold overseas range from
information technology to pharmaceuticals to
manufacturing. The Tatas, for example, have also
bought a hotel in New York, pharmaceutical
companies have acquired small European firms,
and a Bangalore firm has made a bid for a
Scottish whisky distiller.
The size of most deals is still small by global
standards, averaging about $50 million, but the
recent takeovers signal that Indian businessmen
are ready to become major players in the field
of international acquisitions.
Industry watchers say Indian businessmen are
also fueled by new ambitions. The grand old man
of India's Information technology industry, N.R.
Narayana Murthy, the head of Infosys, recently
summed up the ruling sentiment in the boardrooms
of Indian corporations.
In his words," the mindset of Indian firms is
becoming increasingly globalized. It means the
entire globe is our playground." |
