India Inc on overseas buying binge

The value of overseas acquisitions by Indian firms leapfrogged in the first half of 2004 with 24 buyovers valued an overall 938 mn, or roug...

The value of overseas acquisitions by Indian firms leapfrogged in the first half of 2004 with 24 buyovers valued an overall 938 mn, or roughly double the size of all last year8217;s acquisitions. BPO, IT and computer software firms fell back in the race to purchase foreign assets, though pharma continued to lead the pack in number terms with nine major announcements.

According to data from CMIE, in value terms, two big-ticket announcements in oil and gas until July 31 contributed 715 mn, or nearly double the size of all overseas deals announced this year. This data doesn8217;t include Tata Steel8217;s 486.4-million buyout of Singapore-based NatSteel Ltd8217;s steel business a few days ago.

A total investment of 938.36 mn will be made by Indian firms in buying foreign firms, their assets or brands as per 24 announcements from January-July this year, of which 17 have made the size of the deals public. Last year8217;s overseas acquisitions were worth 523.52 mn, though 32 of the 50 deals announced were for undisclosed amounts.

There has been no takeover of a foreign firm by an Indian BPO in 2004 thus far, though two were announced last year, including Infosys Technologies8217; takeover of Expert Information Systems for 31 mn last May. Among IT and computer software firms, this year has seen only five deals yet, valued at 6.49 mn compared to 254.28 mn in 2001 and 41.35 million in 2002.

Pharma and chemicals businesses, however, kept pace with the trend in previous years, continuing to lower their dependence on home markets with nine announcements in pharma and three in chemicals, compared with seven and five over all of last year. In value terms, international pharmaceutical deals for Indian pharma companies have boomeranged to 179.8 mn from 16.35 mn last year and 12.2 mn in 2002.

In a little over six months, three international acquisitions have already emerged from the auto and component manufacturers, with only one of the deals announced worth 5 mn.

Of the big-ticket announcements, a 50 per cent stake in offshore drilling in Angola8217;s Greater Plutino project by ONGC Videsh was the biggest acquisition valued at 600 mn, followed by two onshore exploration blocks in Sudan acquired this May for 115 mn.

Story continues below this ad

Reliance Industries8217; acquisition of German pharma company, Trevira GmbH for 80 mn in June was this year8217;s biggest yet for the chemicals business and Sun Pharma8217;s 16 per cent stake in US company Caraco Pharmaceuticals for 42 mn trailed after.

Auto parts, an industry increasingly focussing on quality to succeed in the overseas market, was led to the international market by Amtek Auto8217;s purchase of UK-based GKW automotive ancillary makers for pound 5 mn, still a far cry from Tata Motor8217;s acquisition of Daewoo8217;s Commercial Vehicle unit for 115 mn last December.