Even as global investors are rushing into India, Indian companies have been on a shopping spree abroad.
Since January 2003, Indian companies have announced at least 35 global acquisitions worth around $450 million.
If one adds Tata Motors' plan to buy Daewoo Commercial Vehicle Company in South Korea, the amount committed by Indian companies for overseas acquisitions could touch $600 million.
The figure is set to go up with many Indian companies eyeing overseas acquisitions or expansion.
|
Big Overseas Deals | ||
|
Acquirer |
Target company |
Deal size |
|
Hindalco |
Straits (Nifty) Pty |
79.80* |
|
Hindalco |
Mount Gordon Copper Mines |
21.00* |
|
Amtek Auto |
Smith Jones Inc |
20.00 |
|
Wipro |
NerveWire Inc |
18.70 |
|
United Phos |
Dow oryzalin Herbicide business |
21.30 |
|
Wockhardt |
CP Pharmaceuticals |
10.85 |
|
Reliance Infocom |
Flag Telecom |
207.00 |
|
(in $ million) *Australian $ | ||
For instance, after marketing lubricants in Nepal, the Indian Oil Corporation is planning to set up retail outlets in Sri Lanka.
Videsh Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd are tapping Nepal and Mauritius aggressively, while Essar Telecom wants a presence in Lebanon.
A few smaller outfits are also setting up bases overseas for manufacturing watches and fans.
Early this week, Tata Motors declared that it had emerged as the preferred bidder for Daewoo Commercial Vehicle Company in South Korea.
Although the group is tight-lipped about the investment involved, sources close to the development pegged it around $140 million.
The Reliance group last week announced that it had signed an agreement to buy the US-based Flag Telecom's global operations for $207 million, making it one of the world's largest owners of bandwidth.
Earlier, A V Birla firm Hindalco Industries bought two copper mines in Australia, for A$100 million, as did Sterlite in Zambia.
In the pharmaceutical sector, Wockhardt bought C P Pharma in the UK for $10.85 million, Aurobindo Pharma bought a drugs and pharmaceutical unit in China and Cadila Healthcare bought the formulations business of a French company.
Alembic forayed into Netherlands, while Dabur India and Marico Industries bought firms producing ayurvedic skin care products and cosmetics in the UK, UAE and Bangladesh.
United Phosphorus acquired Dow Agroscience's oryzalin herbicide business for $21.30 million.
Infotech major Wipro acquired US-based infotech consultancy company NerveWire Inc for $18.70 million, while Tata Consultancy Services set up over half a dozen development centres in Europe, Japan, Australia, South America and the US.
Merchant bankers said the appetite of Indian companies for global acquisitions had been whetted by their domestic success.
"Low interest rates and tariffs coupled with easy access to external commercial borrowings mean that companies have more cash for global acquisitions. This is especially true in knowledge-based sectors like pharmaceuticals and information technology," said Arjun Sawhney, director and head of corporate finance, ANZ Capital.
Raj Kataria, senior vice-president, DSP Merrill Lynch, said as companies increasingly became competent and confident, they expanded their presence abroad to get the advantage of a multi-locational facility.
"This is especially true of the software and automobile ancillary sectors," he added.
Amit Mukherjee, partner at Ambit Corporate Finance, pointed out that Indian companies had the competitive advantage and capabilities.
"The mindset is changing. They have not only protected their home turf but with the liberalisation in policies and financing options, Indian companies are looking for more overseas opportunities," he said.
The progressive liberalisation of the government's policies on overseas investments by Indian companies are also helping them to spread wings abroad.
Burgeoning foreign exchange reserves and a rising rupee are the other positive factors. With the rising rupee, Indian companies are required to spend less to acquire an overseas outfit.
"A lot of local companies are sitting on piles of liquidity. The deal street overseas is bound to hot up. India Inc is on the prowl. The new mantra is think global and act global," said the chief financial officer of a manufacturing company, who did not wish to be named.
