IndiaPost.com - India Inc goes on an acquisition spree

NEW YORK: India Inc has invested or committed more than $45 billion in overseas companies in the first quarter of this year alone, according to Bharat Wakhlu, President of Tata Inc, a New York-based company of the Tata Group.

Wakhlu was addressing a gathering of people from diverse backgrounds including investment banking, business, finance, law, import-export and the retail trade at a conference organized by the India-America Chamber of Commerce, at the Greenberg Traurig offices in Manhattan on March 20. He was speaking in the context of the recent $12.1 billion takeover of Corus by Tata Steel recently, which catapulted the Indian steel giant into the fifth position in global steel pecking order. Showcasing this phenomenon with a presentation titled

The Challenges before Indian Multinations, Wakhlu said that Indian multinationals are cultivating an increasing appetite for foreign entities and it is a trend that started in 2000. "Indian companies have acquired over 250 companies between January 2000 and December 2006. In the first 3 months of this year alone, India Inc, has invested or committed more than $45 billion dollars in overseas companies," Wakhlu noted.

Wakhlu has been with the Tata Group for over 27 years, of which he spent 23 years in India with various companies of the Tata Group, before moving to the US in 2003 where he now heads Tata Inc. "The buyout of Tetley Tea, a UK based company seven years ago set the trend of larger, complex acquisitions," said Wakhlu. "Until then, the foreign acquisitions by Indian multinationals were small." Rajiv Khanna, President, India-America Chamber of Commerce said, "The rising trend of Indian multinationals acquiring foreign entities is a tribute to Indian enterprise and industry and a clear sign that Indian companies are becoming increasingly competitive on the world stage."

Khanna added that continuing economic and regulatory reforms by the Indian government contributed to the rising trend of Indian multinationals acquiring foreign entities. On the subject of increasing trade relations between the United States and India, he noted, "India is one of the most pro-American countries in the world and is eager to work with American business."

In his presentation, Wakhlu listed the following deals as representative of the rising trend of Indian multinationals buying foreign entities:

• Tata Steel-Corus - $12.1 billion

• Ranbaxy-Merck Generics - $6 billion

• Suzlon Energy- REPower - 1.2 billion

• ONGC-Greater Nile Oil Project - $766.1 million

• Dr Reddy's-Betapharm Arzneimittel GmbH - $570 million

• VSNL-Teleglobe International Holdings - $254.3 million

• Taj-Ritz Carlton Boston - $170 million

• Tata-Tetley Tea - $431 million

• Tata Nat Steel-Vietnam Inc., $41 million • Hindalco-Novelis - $6 billion

• Reliance-Dow Chemicals/Carrefour - $30 billion

• ONGC-Greater Nile Oil Project - $766.1 million

• Dr Reddy's-Betapharm Arzneimittel GmbH - $570 million

• VSNL-Teleglobe International Holdings - $254.3 million

Wakhlu further elaborated on the various challenges that Indian multinationals need to take into account as part of their pre-acquisition groundwork, such as studying the market, focusing on sustainable value creation and a precise integration plan.

Alleviation of concerns of employees and senior management in both the acquired as well as acquiring companies was imperative, Wakhlu said. A prolific speaker and presenter, Wakhlu is also author of a book titled 'Total Quality - Excellence through Organization', published by Wheeler in 1994. He presented a copy of the book to Chamber President Rajiv Khanna as a token of his appreciation for the Chamber's efforts and contribution towards improving US-India relations.