The Takeovers and Mergers

of Foreign Companies by
Indian Multinationals
An emergence of new
Indian Corporate Structure
 India Inc's "turnaround expert" story

 Wockhardt- Acquired loss-making Wallis Laboratories of the UK

in 1998 for $8 million and successfully managed to turn it
around in a year's time
 Packaging major Essel Propack, which acquired units of the UK
's Arista Tubes and Telecon Packaging and turned it around by
proper resource allocation
 GHCL Ltd (formerly, Gujarat Heavy Chemicals) acquired a
controlling stake of 65 per cent in Romanian soda ash firm SC
Bega Upsom for $19.50 millio. A month into the acquisition,
GHCL managed to ramp up production by 34 per cent.
 Continental Engines acquired loss-making European re-
manufactured engines firm Vege Motors in June 2005 and turned
it around within six months through better cost-control
 Bharat Forge has emerged the world's second-largest forging
company mainly by way of Mergers and Acquisitions like Carl
Dan Peddinghaus GmbH, CDP Aluminiumtechnik, Federal
Forge, Imatra Kilsta, along with its wholly-owned subsidiary
Scottish Stampings. And the forging major is reaping dividends
as a result
 Mr. Lakshmi Mittal acquired Arcelor to build the strongest steel
venture Mittal-Arcelor
 The Tata’s Journey of M&A
 Tata Tea acquired loss-making Tetley of the UK in 2000
and turned it to profits. Key- debt restructuring exercise
that reduced interest costs
 Tata group made several significant acquisitions, such
as US telecom network operator Tyco Global, Daewoo
Commercial Vehicles, and Boston 's Ritz Carlton hotel
 Tata Motors acquired the bankrupt commercial vehicles
unit of the Korean group Daewoo and made presence in
international market with and enhanced product
portfolio
 The Tata-Corus
 The $11 billion deal is a marker in the ground
 Pure cash deal- Confidence and aggressivess
 Financial and integration maturity
 Credibility to attract more bank financing
 Globally competitive
 An emergence of new Indian
Corporate Structure
 A new corporate structure with dynamic leadership of the
Indian Corporates is emerging
 Quality management
 Strong earnings performance
 Easily to raising money in the international capital market
 Identify the right business opportunities and grow them
further
 India Inc has established itself in these industries while it
is yet to prove its mettle in others in global
competitiveness
 India is emerging a vibrant player in the world of mergers
and acquisitions (M&A)
 Third most attractive research and development centre in
the world according to UNCTAD, 2005

Could anybody have imagined such a showing by Indian

entrepreneurs even a few years ago?
 Why M & As?
Mr D. S. Brar, Ranbaxy CEO

 Accessing new markets, maintaining

growth momentum
 Acquiring visibility and international
brands
 Buying cutting-edge technology
rather than importing it,
 Developing new product mixes
 Improving operating margins and
efficiencies
 Taking on the global competition
 The Changing scenario
 Share of global M&As by MNCs from developing
and transition countries
 1987- 4%
 2005- 13%
 Share in Greenfield and expansion projects
exceeded 15 per cent in 2005
 Most important benefit is increased competitiveness
 Strengthens the arms of local companies and of the
MNCs to survive in a competitive milieu
 More investment abroad implies more the benefits
to the home economy
 Eyebrows have been raised over the rapid growth in
India 's investments abroad, but that should be no
reason to curb them as the benefits they bring to
domestic industry are many and significant
 Merger and Acquisition news
 The Apollo Group of Hospitals is now in pursuit of a
UK-based hospital chain in partnership with private
equity players
 Birlas hit the M&A board
 Hindalco's announcement of the intention to acquire
Novelis, a US-based manufacturer of downstream
aluminium products with facilities spanning North
America , is a reconfirmation of Indian Inc's resolve
to foray abroad aggressively
 UB Group headed by Dr. Vijay Mallya is keen on
taking a "re-look" at its manufacturing activities as
part of the group's plan to become a global leader in
spirit business. It has an aggressive plan in the
spirits business. In fact, $1 billion have been
earmarked for overseas acquisition
 On the run
 Indian companies have successfully weathered the
pressures of global competition and are reaping the
benefit of superior returns on their investments
 Sustained boom in the stock market since the mid-
1990s implies ability to raise resources to sport
some of the healthiest balance-sheets in terms of
debt capital seen anywhere among countries
wedded to market economy
 A buoyant Indian economy translates into a higher
per capita consumption of practically all primary
goods be it steel, aluminium or cement
 Even a marginal improvement in standards of
consmption should translate into huge business
growth
 The Ongoing Race
 The acquisition boom began as a trickle
with software companies picking up small
information technology companies abroad
 Followed up by pharmaceutical and auto-
components outfits
 Now, a deluge with the Birlas now going
the Tatas' way, making a big ticket
acquisition.
 Proving its mettle on the global stage by
"exporting" its unique value-creating
management expertise
 Not just by zealously acquiring companies
overseas but by turning them around as
well
 The Final Say
 India 's outward FDI has touched $19 billion this
calendar year, up from $9.6 billion in 2005
 Since 2000, India Inc has made over 300 overseas
acquisitions
 Strong vote of confidence in Indian management,
with such companies as Tata Tea, Tata Motors,
Bharat Forge, Wockhardt, Essel Propack,
Continental Engines and a host of others,
leveraging their recently-acquired ability to work in
challenging business environment
 Almost 40 per cent of the top 50 companies have
made at least one overseas acquisition in the past
three years in varied industries
 Clearly, India Inc's wanderlust for newer
geographies has grown and Indian companies are
on a global hunting spree!