To continue with the theme of Indian corporates acquiring overseas companies, I read today Videocon Industries took over Daewoo Electronics and French Thompson for $1 billion. In an recent interview, the chairman of Videocon wants to double the turnover of his group to $10 billion in the next few years.
A study conducted in May 2006 by Boston Consulting Group identified 100 new global challengers in RDES (Rapidly Developing Economies) – and it included 21 Indian companies including Bharat Forge, Tata Steel, Mahindra, Hindalco and Ranbaxy.
Apparently, there was a 97% year to year increase in the money spent by Indian companies acquiring overseas companies between 2005 and 2006. If this growth rate holds in the next couple of years, it should be a very interesting 2007 indeed.
M&As especially cross-border ones are typically very difficult to execute. Apart from different market conditions, labor, regulatory and business laws, defining and executing merger synergies tend to be very difficult ( I happen to see one in execution at my current client and in this case, both companies are American – and its a hugely complex enterprise). So I am not sure if all the acquisions can go the Mittal Steel way. But the one thing Indian companies bring to the table is years of experience of working in a restrictive regulatory framework and thriving. And the experience of lean, cost effective operations.
We shall see how it goes – but very interesting times indeed. And proud ones for an Indian like me to see our companies go from being inward focussed to being so patently growth focussed.
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