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Indian Investments Abroad

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Indian Investments Abroad

May, 2011

India Inc’s activities in the arena of mergers and acquisitions (M&A) have intensified in the past few years. Outward investment to the tune of US$ 80 billion has been made over the past decade (2000-2010), with the most favoured destinations being the UK and US.

Indian companies actually have helped save thousands of jobs in the US through acquisitions of local firms in the US during the past five years, according to a survey by industry body CII. The study has revealed that since 2005, nearly two-thirds of the Indian companies have added jobs to their US operations and more than 80 per cent workers at these companies were hired locally.

Investments by domestic companies in overseas joint ventures (JVs) and wholly-owned subsidiaries stood at US$ 10.3 billion during 2009-10, according to data from the Reserve Bank. In terms of destinations, Singapore, Mauritius, the Netherlands, the US and the British Virgin Islands accounted for 67 per cent of total outward foreign direct investment (FDI). Singapore and Mauritius remains top destinations with more than 48 per cent share of the investments during 2009-10.

Indian companies, which are well experienced in dealing with overseas M&A markets, are now back on the acquisition trail, with 40 per cent of those planning an acquisition in the next three years expecting their deals to be in foreign countries. Mahad Narayanamoni, M&A partner with Grant Thornton India, believes this reflects a coming of age for Indian businesses. According to Mr Narayanamoni, “Indian companies are now more experienced in dealing with overseas M&A transactions and are considered serious contenders for acquiring global businesses. Acquiring global brands, gaining access to overseas markets and leveraging new technologies for Indian markets are some of the key drivers for outbound acquisitions by Indian companies.”

Overseas Investments

  • Tata Chemicals has acquired 25.1 per cent stake in the ammonia-urea fertiliser complex at Gabon in Africa for US$ 290 million. The company acquired stake as a strategic investor in stream 1 and is likely to invest another US$ 170 million in the second phase (stream II) of expansion of the fertiliser complex at Gabon in Africa.
  • Fortis Malar Hospitals has taken over operations and management of cardiac centre at 170-bed Oasis Hospitals in Sri Lanka.The Colombo-based centre has been renamed as ‘Fortis Oasis Cardiac Centre’, Fortis Malar Hospitals said. The cardiac centre will be fully equipped to cover all aspects of cardiac care ranging from prevention, diagnosis, treatment and rehabilitated cardiac care.
  • Manipal Group’s home fragrance company Primacy Industries has acquired US-based Midwest-CBK, the manufacturers of household candle brands like Colonial Candle, Seasons of Cannon Falls and CBK, in an all-cash deal.Primacy declined to comment on the deal value.
  • Infosys Technologies is planting the seeds for a long-term IT services play in the African continent. The company is now laying the groundwork to expand its offerings to include Infosys's various offshore IT services that it offers in larger markets. This includes application services, infrastructure management, package implementation and architecture services.
  • Wind turbine maker Suzlon Energy is all set to acquire the residual stake in German company REpower, to get 100 per cent control of the company. It has notified the board of REpower to initiate squeeze-out proceedings with respect to minority shareholders.
  • IT firm Mahindra Satyam said it has bagged an order from Qatar University for implementing IT software solution to manage its business processes. The contract will be implemented over a nine-month period and will cover end-to-end implementation of IT solution.
  • Dr Reddy's Laboratories has opened its newly expanded Chirotech Technology Centre, a purpose-built facility to house its laboratories and offices, at the Cambridge Science Park, UK. “The facility will be a centre of excellence for chemistry and reinforces our commitment to building a leading edge research organisation to meet the innovation needs of our customers,” GV Prasad, Vice Chairman and CEO of the company, said.
  • Flexible packaging firm Uflex Ltd will be investing around US$ 180 million in phases to set up a green-field plant in Kentucky, US. The new manufacturing plant, to be operational by 2012, is part of Uflex's strategy to gain competitive advantage of increased proximity to the markets globally and million a broad portfolio of value-added products to its clients.
  • Bhilai Steel Plant (BSP), the flagship entity of the Steel Authority of India Limited (SAIL), has won a fresh order of exporting rails to Sri Lanka. The order of about 14,000 tonnes is for the UIC-60 grade of rails that BSP has been rolling since 1970s, company's spokesperson said.