WHAT LIES AHEAD?
SINCE the acquisition of British-based Tetley Tea by the Tata Group in 2000, corporate India has maintained a constant vigil for over- seas acquisitions. A booming domestic market, easy access to global credit and rapid liberalisation of the Indian economy saw the value of overseas
acquisitions by Indian companies increase year-on
year from 2003-2004 to 2007-2008. According to
Reserve Bank of India statistics, actual outward investment from India grew from US$1,495 million in
2003-2004 to US$17,454 million in 2007-2008.
The spotlight has undoubtedly been on the big-ticket acquisitions – ONGC’s takeover of Imperial
Energy, Tata Motors’ acquisition of Ford’s Jaguar and
Land Rover, Tata Steel’s acquisition of Corus, Suzlon
Energy’s stake in REpower, HCL’s takeover of Axon
(after out-bidding another Indian company, Infosys)
and Birla’s takeover of Canadian aluminium maker,
Novelis to name a few. However, overseas acquisitions were not the prerogative of the Indian corporate
giants. In fact, the majority of outbound transactions
were smaller ones, involving mid-tier corporates and
small and medium enterprises.
Indian corporates’ reasons for looking outward
were varied – for some it was tapping new markets,
for others natural resources, advanced technology,
access to sophisticated R&D and, indeed, in some
cases, simply a thirst for international recognition.
North America and Europe were the most popular
destinations of Indian investment.
Sandeep Katwala
Zebaysh Hirji
THE LAST TWO YEARS
India was not immune to the global economic crisis.
The effect on India was exacerbated by the terrorist
attacks in Mumbai in November 2008 and the uncer-
tainty around the outcome of the elections in May
2009. Together with continuing security concerns in
South Asia, particularly strained Indo-Pak relations,
there was, unsurprisingly, an overall decrease in deal
activity in India. Consequently, the value of out-
bound investment from India dropped in 2008 and
2009 recording a decrease of 11% in the first half of
2008 alone. In addition, a number of Indian corpo-
rates who had expanded overseas benefiting from
the credit boom, were struggling because of their
inability to fund or refinance acquisition debt.
EVALUATING FUTURE OPPORTUNITIES
India Inc. continues to evaluate opportunities in the
international market. Indian telecom major Bharti
Airtel’s attempt to merge with South African MTN to
