Friday, March 9, 2007

Foreign Acquisitions by Indian Companies

Indian Companies and Their Foreign Acquisitions

Not Poor-cousins any more.

Poor Billionaire!

It seems strange that the world still consider India as a poor third world nation. Don’t blame them for that as India itself thinks in similar lines. Our external ministers argue for more favors to “poor” nations in the international forums and champion the cause of “impoverished” countries. It remains an irony that with a fat kitty of foreign exchange of 200 billions India still is being identified more with Somalia and Zaire instead of Brazil or Indonesia.

Party pooper!

During the previous “World Trade Organization”, India was virtually playing a party pooper, “championing” for the cause of undeveloped nations much for the discomfort of the other members. It seems even if India’s foreign exchange reserves rise to one thousand billions, India’s mind-set will be locked in the “impoverished zone”. Asking for more favors from others has become a habit; “give and take” is not yet catching up with India’s external affairs ministers. For them it seems World Trade Organization” is a charitable set up and demanding charity from them is something great.

Ironies unlimited.

The above paragraph signifies only the thinking of the “proletarian” government that is in power but captains of our Industries are not that proletarian or impoverished lot, they are scouting world-over for acquisitions with deep pockets. If these all seem to be ironies there is no surprise as India has always been the land of ironies! One after other, news flow about mega acquisitions made by Indian companies all made in hard cash deals.

The Asian attack!

It all started with the “hostile” takeover bid by Lakshmi N Mittal- the Indian born business tycoon (some call him “the scrap king”) one of the five richest men in the world who offered a 35% premium price to “Arcelor” shares. Arcelor is a French steel maker and there were a lot of melodramas that accompanied with the deal as some European Union members standing against such deals as they felt Asians “buying out” European assets” and Indian government was dragged in to the scene and had to lobby for Mr. Mittal. While media were busy in reporting views, the management of Arcelor was busy allotting bonus shares to existing share holders, laborers and themselves in a frenzy.

A mega serial.

Then there is another adventure from Ratan Tata who bid for “Corus” five times the size of Tata Steel. CSN the “Brazilian villain” poked its ugly head with a higher offer price, Tata smart as he is raised his offer price several times and had the last laugh. The events related to the deal had all the suspense of a TV serial. It was news in business circle that CSN- a cash strapped company- had the back support of one scrap king!

Distress selling.

Soon Kumaramangalam Birla the flag bearer of the Birla group of companies came up with sudden surprise news with the buy out of “Novelis” of Canada for an all cash deal for $ 5.95 billions. This deal was rather a silent one without much fanfare. It all looks like frogs swallowing snakes! The stock market was not amused of this deal and Hindalco shares were digging new depths ever since after the deal!

Sub 1000 levels!

Tulsi Tanti a business man came to limelight with the wind power generator company which grabbed the fancy of the stock markets with its shares were and still being traded in high price earning ratios, not even commanded by Tata companies. He is on the idea to buy “Re Power” another wind power plant. This deal which will most probably come through will make Suzlon the fifth largest wind-power maker in the world.

The take-over guru and the followers!

For Azim Premji acquisitions have become a habit and recently in a single day he acquired 3 foreign companies in a clean sweep. Gitanjali USA the American arm of Gitanjali Gems Ltd has just acquired “Tri Star Worldwide LLC” the owner of Canada brand diamonds it is said “Gitanali Gems” will be able to market “canada” brands through it existing networks.

Try it on Ford and GM – and turn them around if you can!

To a nation with deep pockets, is on the look out for “for sale” boards, as if it has got nothing to do creative in this country itself! There is one question from this author, “India has got a huge reserve of about $100 billions, why this ‘dead reserve” which keep on counting be used for some mega acquisitions- Ford or GM for example and revive them as model turn-around stories? If these companies are not for sale, hostile routs can be opted as a “shock and awe” therapy!

No patriotism!

The strange thing is Indian market is not amused of all these acquisitions and they punish the companies which return with trophies from abroad. Tata Steel – the most efficient steel maker in the world was beaten black and blue in the bourses. These investors seem to be an unpatriotic lot, otherwise they would not have punished those bold adventurers who make India proud by acquiring companies twice or more their real size!

All beaten black and blue!

Tulsi Tanti’s Suzlon was pushed to sub one thousand levels and Tata Steel is testing its lower supporting levels, where as Birla’s Hindalco is to kiss its all time lows! The prize of acquisitions seems to be a bit costly one, costlier than the price paid for the purchase.


RobySkizz said...

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RobySkizz said...