A decade ago as the 21st century
had just dawned and as the entire world burst into jubilation, India Inc. was gearing up to embark on
a special journey, on a road never traveled before: creating Indian
multinationals through embracing the acquisitive growth strategy. On March 10,
2000, history was created as Tata Tea acquired Britain's marque tea
brand, Tetley in a deal worth £271 mn. The next few years saw a raft of
big-ticket cross-border acquisitions made by India Inc.'s who's who—from DRL's
multimillion deals in Germany and Romania to Bharat Forge's audacious buyouts
in the US, Germany, and Sweden. Even smaller IT and auto component
manufacturing firms rode the M&A bandwagon to create their own global
footprints. These acquisitions were seen as proof of growing confidence of
Indian businesses, their vast repertoire of superior managerial talents and so
on. What also fueled the globalization gambit of India Inc. was the
availability of myriads of funding options from ECBs to GDR/ADR to leveraged
financing to private equity etc. The deal mania seemed unstoppable and
reached its crescendo when Tatas acquired marque Jaguar and Land Rover
and laid their hands on the prestigious Corus group. Then suddenly global
financial crisis unfolded towards the end of 2008 and so unfolded the saga of
reversal in fortune for these Indian acquisition warriors. The financial
meltdown of 2008 exposed the pain points at some of the high profile acquisitions of
India Inc., notably Tata-Corus and Tata Motors-JLR. It was well reflected when
the legendary Ratan Tata quipped, "Both the acquisitions were made, I would
say at an inopportune time in the sense that they were near the top of the
market in terms of price." Tata Steel acquired British steel major in 2007
in one of the most expensive deals till date, paying £6.2 bn, which many
analysts believed quite high from valuation point of view, while it
purchased marque brands Jaguar and Land Rover a year later in June 2008 for £1.15 bn.
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