Indian acquisitions – some positive aspects


The swelling enthusiasm is being witnessed in the volumes of big-ticket acquisitions by Indian giants. Oil & Natural Gas Corporation’s (ONGC) $1.4 billion deal for a 15% stake in Brazilian oil giant Petrobras is one of the biggest deals so far, with the Tatas not far behind. With most corporations eyeing foreign markets, Indian companies are clearly gaining a foothold in global business, and gaining respect as employers and for their management abilities.

Leading Indian corporations already recognize the need to take a global view, and the Arcelor transaction has only strengthened it. Corporates believe that LN Mittal’s fight for Arcelor – a prolonged takeover battle that reportedly had racial hues, ended happily for Mittal – provided a real boost to the confidence of Indian companies and their determination to get out of China’s shadow.

Acquisitions add brand new markets and technical capabilities:

Cross-border acquisitions are on the rise worldwide and a buoyant corporate India isn’t to be left too far behind. Indian organizations are trying to leverage foreign acquisitions to get into more niche verticals and achieve more depth in their services. Foreign acquisitions also give them access to brand new markets and technical capabilities.

Director of Strategic Alliances & Communications of Nicholas Piramal India Limited, opined that after the Avecia acquisition, their company gained in technical expertise and scientific strength. The Morpeth acquisition also has a very good strategic fit with Nicholas. Their labs in Canada are highly reputed and work for biotechnology companies in N America. Nicholas also has 4 manufacturing sites in the UK and employ scientists from 22 countries.

Another objective of overseas acquisition is to expand quickly and offer value-added solutions to customers.

Diversified cultures:

While companies run through plenty of reports and compliance checks before they acquire a share in a foreign company, managing people belonging to different cultures is a completely different thing. It is necessary to mange those differences in order to quell insecurities about job-loss or working styles. There will always be cultural differences and initial integration problems, but accepting that these will occur and recognizing these as part of a learning curve is important.

Indian companies also rule out any reluctance on the part of employees of acquired companies to work under Indian management. The key, they say, is to build confidence and win over their trust. 3i Infotech, for example, showed their foreign employees how heads of acquired companies have obtained strategic positions on the acquirer’s management board. Company representatives also met with customers in order to assure them of the continued quality of service and delivery. And the company has been rewarded for its efforts with a 90% employee retention rate in all the companies that it has acquired.

According to experts, though the volumes in cross border acquisitions will keep growing rapidly, India inc. will largely go for smaller and medium sized deals in the immediate future since the integration process is easier in such cases. But its appetite for consolidation is astonishing.

Acquisition capital funding is more readily available today. India Inc. is looking towards foreign companies to acquire and the trend will surely grow, especially in more mature sectors. That, perhaps, is that prevailing mood everywhere. Indian companies are raring to play a major role on the global business stage and they’re going it responsibly, winning accolades and taking challenges and setbacks in their stride.