Indian MNCs with Overseas Acquisitions

In last few months, the domestic as well as foreign media are full with many stories about the arrival of India and its MNCs on global scene. Latest ‘India Today’ in November 4, issue published the cover story ‘Indian MNCs’ featuring how Indian companies of all sectors are hunting for assets abroad to acquire global scale. Madhukar Sabnavis’s article ‘The Indians are coming’ in Business Standard. And the other big news magazine ‘Outlook’ published ‘The Elephant’s Hungry’ in November 6, issue. Even ‘Business Week’ published on September 10, “India Companies: Shopping Abroad”.

Naturally all the stories start with the recent major Tata steel acquisition of Corus that has pushed Tata as the fifth largest steel manufacturer of the world. At $8.23 billion (Rs 37,858 crore), the recent Tata Steel’s Corus acquisition is the biggest cross-border deal for an Indian company was twice the FDI India received last year. But soon thereafter, Videocon $750 million bid for Daewoo Electronics too got materialized; (This was Dhoot’s second big bid after his takeover of electronics giant Thomson’s colour picture tube plants spread across four continents in 2005) and United Group’s Vijay Mallya had bid an undisclosed sum for Scottish giant Whyte & Mackay. And here are some prominent ones among many in global acquisition race:

TATA SONS: Since February 2000, companies across the group have bagged 21 overseas targets for over Rs 50,000 crore, many for undisclosed amounts. International Income amounts to Rs 29,017 cr. about 30% of the total income of the group.

VIDEOCON: has bid for Daewoo at $750 million. Bagged three manufacturing facilities abroad for Rs 4,643 cr since 2005. International Income is Rs 6,000 cr (50%).

M&M: has acquired assets in China, Europe and the US, where it is the fourth largest tractor maker. This year too, it is in the midst of bidding for a German company. International income is nearly Rs 4,000 cr, about 25% of the total income.

A.V. BIRLA: clinched five deals for undisclosed amounts last fiscal including a paper mill in Canada, copper mines in Australia and a VSF plant in China. International Income is Rs 8,500 cr (22% of the total)

RANBAXY: India’s largest pharma company has popped 14 companies for over $500 million since 2004 to enter the league of top eight global generic drug makers. International Income is Rs 3,907 cr (75%)

WIPRO: has bought nine companies for Rs 1,490.8 crore which have helped boost the company’s scale and income

WOCKHARDT: After it snapped up four foreign drug companies for $209 million, half of its sales come from Europe. International Income today is Rs 840 cr (60%)

DR REDDY’S: has been on the prowl right from Europe to North and South Americas where it has bought out four companies for $654 million. International income amounts to Rs 1,600 cr (66%)

BHARAT FORGE: has been buying assets overseas at a hectic pace. Has invested in five companies across Germany, the US, China and Sweden to gain both capacities and market access. Amtek Auto and Sona Koyo are another auto component companies that in buying spree abroad.

UB GROUP: After the no-show for champagne maker Tattinger, the drinks-to-airline conglomerate acquired a French wine maker for Rs 66 crore this year. UB has now bid to acquire Scottish whisky major Whyte and Mackay. International Income is Rs 1,500 cr (20%)

ASIAN PAINTS: Shopped from Sri Lanka to Australia and Fiji to Egypt having spent over Rs 100 crore for six companies over the last seven years. International income is Rs 3,021 cr (20%)

And the list is increasing fast. As was writing this story, I came to know of the global ambitions of Reliance Industries. As reported recently, Reliance Industries Limited (RIL) is all set make India’s first major acquisitions in the exploration and production, and the petrochemical sectors in Europe. And as usual, it will be big one.

Will those pessimists who were so vocal some months back after Lenovo of China acquired IBM business be happy now?

However, I still think all these companies particularly the ones from the manufacturing sector must have organic growth too. I keep giving the examples of the Japanese and South Koreans who have gone global after stabilizing their manufacturing in domestic market. Birlas were perhaps among the first few who set up manufacturing bases in African countries such as Nigeria and Kenya. I had a chance to visit some companies of Birla group in Thailand too.

These big business houses must also invest and expand in India in big way. And there I find Reliance doing the best. With the addition of the huge refining capacity at Jamnagar, perhaps the biggest in the world and all meant for export, Reliance is serving the nation in better way. I wish Tata Steel and Videocon must also invest in India in big way too along with competing the global race in its sector.

Reliance’s endeavour in retail sector is another big thing. It, as it promises, will provide better price for the farmers and sell at the most reasonable price to consumers too. And the huge employment at a better salary than those neighbourhood shops will serve the aspirations of the country’s large number of young men who fail to go for higher professional education.

PS Another Indian MNC in making: Suzlon targets 80% of income from abroad by ’10

India’s success story in global buyouts

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