Like never before, cash-rich Indian companies are on an overseas acquisition spree. This has resulted into the value of the acquisitions doubling to $9.30 bn in 2004 from $4.5 bn the previous year.India Inc. has been expanding globally by acquiring facilities and brands abroad. Although it has been two years since India started its overseas acquisition drive, it is only now that the momentum has increased significantly from fearing foreign rivals to now willing to take the war to the foreign territories.
Reasons for this acquisition binge may vary from sector to sector or company to company, but one thing is clear, Indian companies have passed those days of fears from the FDI into the country and started investing in overseas. India Inc. is finally shedding inhibitions to show their mettle on global business landscape. In fact, Indian companies are targeting different geographies for different sectors. For pharma and auto components, Europe is the major destination. Metal and mineral sectors are being targeted in the Asia-Pacific region. IT&ITES and telecom space acquisitions are happening in the US markets. Motives behind the acquisitions are varying across sectors as some look for vertical integration and others look for growth. In certain cases, these companies may also scout for uninterrupted supply for the nation or to enter into new markets. Videocon has acquired Thomson picture tubes, which is spread over three countries, for Rs. 1,280 cr. Another example is a $519 mn bid by Tata Chemicals Ltd. to buy a fertilizer company in Egypt. The acquisition of Basell, a joint venture of BASF and SHELL Europe, by the Chatterjee-Haldia group is yet another example of the appetite of Indian corporates for acquisitions. |
