Titans of the new India
North American, European firms targeted by Indian buyers
John Greenwood, Financial Post
Published: Tuesday, February 13, 2007
The US$6-billion bid for Novelis Inc. by Hindalco Industries Ltd. of Mumbai, India, is the latest example of a North American or European company targeted by an Indian buyer, a trend that highlights that country's emergence as a global economic force.
On Jan. 31, Tata Steel, one of the world's most efficient producers, paid US$12-billion for Corus Group of the United Kingdom, the largest foreign deal ever by an Indian company. Last year, Mittal Steel, another Indian titan, bought Arcelor of Luxembourg to become the world's biggest steel producer. And here in Canada, Birla Group bought Minacs Worldwide, a call-centre operator, for US$125-million in June, 2006.
In a nutshell, India Inc. is stretching its wings. Helped by a booming economy at home, Indian companies are looking to add capacity and new markets overseas, analysts say. And they're bringing with them not just cash but also hard-won expertise on how to run a company in a super-competitive market.
"We have a new set of economic powerhouses in the form of large companies in India and they are using their economic clout to acquire companies abroad," said Peter Stanger, a senior vice-president and director at Boston Consulting Group. The acquisitions they are making are "a reflection of the success they've already experienced and I think we're going to see more of them."
Like other developing countries, India's economy has taken off in recent years and it is growing at about 9% annually. But unlike its peers, India's expansion is not focused only on exports. Instead, it is broadly based, with particular strength in knowledge industries such as technology and financial services.
"What you see in India is a very formidable talent base, a workforce that is highly skilled," Mr. Stanger said.
The powerful domestic economy has created an environment where companies can thrive without having to go abroad to find customers. And this has also enabled companies to develop and mature at home, so when the opportunity came to expand, they were ready for the transition. Now as they move overseas, profits they make in the domestic market are helping to fuel their new growth initiatives.
"We have seen some very heavy hitters in India who have been able to leverage off their strong domestic position to make foreign acquisitions," agreed Erik Nilsson, senior international economist at Bank of Nova Scotia.
Hindalco is the flagship of Aditya Birla Group, a sprawling conglomerate with operations across a swath of industries, including textiles, metals, fertilizer and wind power. By acquiring Novelis, which was spun off by Alcan Inc. two years ago, the group would beef up its presence in North and South America and Europe, and add General Motors Corp. and other automakers to its customer base.
Boston Consulting Group recently identified about 15 fast-growing Indian companies -- among them Hindalco and Tata Steel -- that are poised to "radically transform industries and markets around the world." Others include drugmaker Ranbaxy Pharmaceuticals, software developer Infosys Technologies and Bajaj Auto, an auto-parts supplier. Thanks to a good education system, the country has grown to become a global contender in the technology sector. One of the first signs of that was India's emergence as a focus of the call-centre industry, which opened the door to more lucrative opportunities.
Consider India's generic-drug industry. Industry insiders say it was only a week after the popular erectile dysfunction treatment Viagra was approved for U.S. sale that generic versions began showing up in India.
Analysts predict India's economy will keep charging ahead for at least a decade, surpassing the U.K. by 2015. Indeed, evidence of India's global ambitions has been apparent for those willing to look for it. According to Pat Koval, a lawyer at Torys LLP who is working for Birla Group on the Novelis deal, Indian companies have been quietly buying up Asian firms for years.
"It just hasn't showed up on our radar screens because we haven't been watching," she said. "For them to be looking at North America for acquisitions now is only logical."
http://www.canada.com/nationalpost/...=a7b68937-acdc-4e0b-9561-585454ef98db&k=17984
North American, European firms targeted by Indian buyers
John Greenwood, Financial Post
Published: Tuesday, February 13, 2007
The US$6-billion bid for Novelis Inc. by Hindalco Industries Ltd. of Mumbai, India, is the latest example of a North American or European company targeted by an Indian buyer, a trend that highlights that country's emergence as a global economic force.
On Jan. 31, Tata Steel, one of the world's most efficient producers, paid US$12-billion for Corus Group of the United Kingdom, the largest foreign deal ever by an Indian company. Last year, Mittal Steel, another Indian titan, bought Arcelor of Luxembourg to become the world's biggest steel producer. And here in Canada, Birla Group bought Minacs Worldwide, a call-centre operator, for US$125-million in June, 2006.
In a nutshell, India Inc. is stretching its wings. Helped by a booming economy at home, Indian companies are looking to add capacity and new markets overseas, analysts say. And they're bringing with them not just cash but also hard-won expertise on how to run a company in a super-competitive market.
"We have a new set of economic powerhouses in the form of large companies in India and they are using their economic clout to acquire companies abroad," said Peter Stanger, a senior vice-president and director at Boston Consulting Group. The acquisitions they are making are "a reflection of the success they've already experienced and I think we're going to see more of them."
Like other developing countries, India's economy has taken off in recent years and it is growing at about 9% annually. But unlike its peers, India's expansion is not focused only on exports. Instead, it is broadly based, with particular strength in knowledge industries such as technology and financial services.
"What you see in India is a very formidable talent base, a workforce that is highly skilled," Mr. Stanger said.
The powerful domestic economy has created an environment where companies can thrive without having to go abroad to find customers. And this has also enabled companies to develop and mature at home, so when the opportunity came to expand, they were ready for the transition. Now as they move overseas, profits they make in the domestic market are helping to fuel their new growth initiatives.
"We have seen some very heavy hitters in India who have been able to leverage off their strong domestic position to make foreign acquisitions," agreed Erik Nilsson, senior international economist at Bank of Nova Scotia.
Hindalco is the flagship of Aditya Birla Group, a sprawling conglomerate with operations across a swath of industries, including textiles, metals, fertilizer and wind power. By acquiring Novelis, which was spun off by Alcan Inc. two years ago, the group would beef up its presence in North and South America and Europe, and add General Motors Corp. and other automakers to its customer base.
Boston Consulting Group recently identified about 15 fast-growing Indian companies -- among them Hindalco and Tata Steel -- that are poised to "radically transform industries and markets around the world." Others include drugmaker Ranbaxy Pharmaceuticals, software developer Infosys Technologies and Bajaj Auto, an auto-parts supplier. Thanks to a good education system, the country has grown to become a global contender in the technology sector. One of the first signs of that was India's emergence as a focus of the call-centre industry, which opened the door to more lucrative opportunities.
Consider India's generic-drug industry. Industry insiders say it was only a week after the popular erectile dysfunction treatment Viagra was approved for U.S. sale that generic versions began showing up in India.
Analysts predict India's economy will keep charging ahead for at least a decade, surpassing the U.K. by 2015. Indeed, evidence of India's global ambitions has been apparent for those willing to look for it. According to Pat Koval, a lawyer at Torys LLP who is working for Birla Group on the Novelis deal, Indian companies have been quietly buying up Asian firms for years.
"It just hasn't showed up on our radar screens because we haven't been watching," she said. "For them to be looking at North America for acquisitions now is only logical."
http://www.canada.com/nationalpost/...=a7b68937-acdc-4e0b-9561-585454ef98db&k=17984
