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Indian
companies primed for 'lift-off'
in 2007
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"We
came, we saw, we conquered" these
words from Napoleon seems to be
the new mantra for India Inc. with
some major acquisitions in the recent
past. Having rung the New Year bell
with two major acquisitions in the
metal space and that too in a row,
certainly speaks a lot about India
Inc's future intentions. Continuing
the acquisition spree, India Inc.
is set to execute more such deals
in near future with companies in
Europe being prime targets of their
shopping bonanza. Automotive, pharmaceutical
and IT services would be some of
the sectors propelling Indian globalisation
strategies. Cross-border mergers
and acquisitions analyst, IndusView,
predicts that European pharmaceutical,
automotive and IT services companies
will be prime targets for takeovers
this year as India's automotive,
pharmaceutical and IT services sectors
are poised to reach critical mass
this year and are set for lift-off.
According to M&A analyst, India
Inc's global expansion, primarily
in Europe this year, is expected
in the backdrop of growth projections
for pharma and IT sectors, which
are set to cross over $27.5 billion
in 2007. The growth in automotive
sector is also expected to be doubled
to $18.7 billion by 2009 and further
to about $40 billion by 2014. Going
gung ho on the pharmaceutical industry,
the analyst said the sector is expected
to grow by more than 13 percent
to $6.5 billion in 2007 and reach
a market size of $9.5 billion by
2010, surpassing the growth trends
of 9.5 percent recorded over the
last five years. "The progressive
trend in this sector is expected
to continue, due to increased integration
with global trade. India started
to recognise global patents and
the growing significance in terms
of contract research and clinical
trials," said Bundeep Singh Rangar,
chairman of IndusView. The ability
to produce high quality, low cost
drugs will see India's exports spike
over the coming months, he added.
Another significant growth would
be in the automotive industry, with
the auto component industry likely
to double its size. General Motors,
the world's largest automaker, has
made a clear commitment to ship
parts worth $1 billion from India
to its global production units by
2010. Other manufacturers, such
as, South Korea's Hyundai Motor
Co, Italy's largest maker Fiat SpA
as well as Japan's top car producers
Honda Motor Co. and Nissan Motor
Co., have also announced investments
in India, boosting the sector's
growth. IndusView has also forecasted
a continued growth in the IT services
sector. It expects the software
and related services to touch $21
billion in 2007, a growth of 21.6
percent and the business process
outsourcing is also expected to
increase by 34 percent to reach
at $12.6 billion in 2007. "We'll
no doubt see a global spotlight
on these industries as Indian companies
make headline-grabbing overseas
acquisitions to buy customer relationships
and intellectual property," Rangar
added. India's multinational companies
will continue to make huge strides.
However, it still has a long way
to go in the outsourcing/off-shoring
world as the country's attractiveness
increases on account of skilled
workforce, lower costs, industry
best-practice and increasing portability
of IT and back-office work.
Courtesy:
www.newindpress.com, February 22,
2007
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Bangalore
firm eyes top slot in global rose
market
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In
a bid to become the world's largest
rose grower, city-based Karuturi
Networks (KN) is looking at acquiring
a large rose farm in Africa. "We
are looking at acquiring a large
rose farm in Africa and hopefully
by March we will achieve closure
on the deal. This will make us the
largest rose grower in the world,"
Ramakrishna, the managing director
of KN, told PTI. Ramakrishna, who
did not reveal the name of the African
farm, said it was owned by a Dutch
national. The firm has raised $25
million through the issue of FCCB
(Foreign Currency Convertible Bonds)
by UTI Bank. "Apart from this, the
bank has given us an ECB (External
Commercial Borrowing) limit of $20
million," he said. KN, Ramakrishna
said, is also keen on acquiring
production facilities in Latin America,
Africa and Asia, and is looking
at verticals like plant propogation,
breeding, and horticulture cultivation
including flowers, ferns and foliage.
The firm, which has been cultivating
roses for the past 13 years, has
a 15 per cent share of the domestic
rose market estimated at about Rs
1,000 crore. This is "expected to
reach Rs 10,000 crore by 2017",
he said. Its main rose export markets
are the Middle East, Britain, Japan,
Australia, Singapore, Brunei and
Spain.
Courtesy:
www.hindu.com, February 19, 2007
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It's
a Super Sunday: Birla does a Tata
while Vodafone gets the call
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India
Inc stomped across the global stage
on Super Sunday, with two multi-billion
dollar deals being consummated within
a few hours of each other. Arun
Sarin, India-born CEO of Vodafone
plc, the world's largest mobile
phone company, won Hutchison Essar,
India's fourth largest mobile operator,
for $19 billion (Rs84,000 crore).
And Kumar Mangalam Birla, 39-year-old
scion of the Aditya Birla Group,
emulated Ratan Tata's Corus acquisition
to wrap up a $6 billion (Rs26,400
crore) deal to buy Novelis Inc,
the world's largest aluminium rolled
products company. At day's end,
Li Ka-shing, the 78-year-old frugal
"Superman" from Hong Kong, would
have retired secure in the knowledge
that he will soon be collecting
the largest cheque of his lifetime
for the 67% stake his company, Hutchison
Telecom International Ltd, holds
in Hutchison Essar.
In
Hutchison Essar, though, it's not
only Li Ka-shing who will laugh
all the way to the bank. The Ruias
will also earn Rs25,000 crore or
more on an initial investment of
Rs4,000 crore. That is if they decide
to exit in 21 days, as they have
a right to under their agreement
with Li. Till late on Sunday, Vodafone
seemed coy about admitting victory,
having seen off formidable rivals
such as Reliance Communications
and the Hindujas. But Ravi Ruia,
vice-chairman of the Essar Group,
was more forthcoming. "Vodafone's
offer values Hutchison Essar at
around $19 billion," he said. "This
is a good price, which reflects
the premier position of Hutchison
Essar as India's leading operator.
Essar owns 33% of the company and
we are delighted that Hutchison
and Essar have together created
this value. We have been offered
by Vodafone to be their partner.
We are at the moment evaluating
all our options in the best interests
of the group." Reliance Communications,
the Anil Ambani Group company that
hogged the headlines by being a
prospective bidder, is understood
to have pegged its bid at a more
conservative $17 billion. The Hinduja
Group is believed to have made an
even higher bid at $19.3 billion.
But as a "non-binding bid", the
canny Li would have been happy to
shelve it. At the Aditya Birla news
conference in Mumbai, Kumar Birla
was savouring the prospect of becoming
the world's No 5 integrated aluminium
player after the acquisition of
Novelis goes through by June. "It's
(Novelis) a world leader... a market
leader in its business. One has
to pay a premium for it," he told
reporters who asked him about his
acquisition bill. He is paying $44.93
in cash to Novelis shareholders,
for a total of $3.55 billion. The
rest of the acquisition cost of
$2.4 billion is really the debt
on Novelis's books. Perhaps Vodafone's
acquisition logic also mirrored
Birla's cold logic. But dealmakers
expect Vodafone's bulge bracket
investment to pay off as Hutchison
Essar comes up with a long overdue
initial public offering, where it
recoups some of its monies. For
those interested in trivia, the
two deals saw UBS playing a major
role. It was the investment banker
for Vodafone and also for Birla's
Novelis acquisition.
Courtesy:
www.dnaindia.com, February 12, 2007
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India
has emerged as the most favoured
private equity destination attracting
$1,239.22 million worth investments
in January, surpassing Asian giants
like China and Japan, a study says.
India ranks top in terms of PE investments
in January-February and has left
behind Asian giants like China with
$ 609 million and Japan with USD
980 million, according to a report
by Asian Venture Capital Journal
(AVCJ). The report, on Asia-Pacific
emerging as the most attractive
region for investment said, the
total Asian private equity capital
under management rose by almost
30 per cent in 2006 to $158 billion
as compared to $122 billion in 2005.
"It was a watershed year for Asia
pacific (private equity)," KPMG
Partner and COO for Advisory in
Asia Paul Borough commented on the
PE investment trend in 2006. India
is also among the top 10 PE destinations
last year, with the country witnessing
a whopping growth of 252 per cent
with investment as high as $7,009
million for 2006 as against just
$1, 992 million in 2005, the report
said. The top 10 PE destinations
chart includes - Australia with
$24,934 million worth investments,
China $7,721 million and Japan $10,
350 million. Interestingly, in terms
of fund raising focused on specific
markets, India faired quite well,
while Australia and China were the
most popular. Fund raising for Australia
rose 88.9 per cent during the year
followed by China at 72.1 per cent,
it said. India posted decent increase
of 37.6 per cent.
Courtesy:
www.ibef.org, February 9, 2007
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India's
economy 'nears $1 trillion'
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If
we needed a reminder of India's
growing global economic presence,
we had it last week in the steel
industry when India's Tata won a
stock market auction for the European
company Corus. The result of putting
the two together will be the fifth-biggest
steel producer in the world. And
it is an Indian-born entrepreneur,
Lakshmi Mittal, who is the driving
force behind the biggest of all
in the industry, Arcelor Mittal.
That story is merely a recent news
event that highlights India's rise.
It is a much wider phenomenon. Gerard
Walsh, Regional Director for Asia
at the Economist Intelligence Unit
in London, says India is already
close to being a $1 trillion economy.
And if you measure it using purchasing-power
parities - an alternative to exchange
rates which accounts for different
price levels between countries -
India is already the third-largest
economy in the world, behind only
the US and China.
Growing
impact
Most
economists expect India's recent
relatively rapid growth - an annual
average of about 7% over the last
four years - to continue. That alone
would ensure the country would make
a growing mark. But it has been
a relatively closed economy, with
barriers to foreign trade and investment.
Those barriers have been eased,
but many remain. The government
appears inclined to continue the
liberalisation process - and that
would make India's international
integration proceed even more quickly.
The World Bank has done a recent
study, called Dancing with Giants,
looking at the implications of the
rise of India and China. Alan Winters,
one of the authors, says that for
the most part, India's rise is good
news for the rest of us. India's
economic growth generates more of
the goods it produces and others
buy - and that will tend to push
prices down.
Competition
But
there may be some adverse consequences.
Demand for raw materials from growing
Indian industry will create upward
pressure on those prices. That's
also true for oil, although Mr Winters
emphasises that India is a small
part of what will determine the
global energy prices. In addition,
the increased competition as India
produces more goods and services
might hurt other countries in South
Asia, especially in the textiles
and clothing business. That is an
industry where low costs are one
of the keys to success. The same
is true of another sector where
India is already a big presence
on the world stage - medicines.
India's biggest is Ranbaxy, a name
we will probably hear more of in
the future. The company's chief
executive, Malvinder Mohan Singh,
says that 80% of revenue comes from
international markets and just 20%
from India. It divides half and
half between developed- and developing-country
markets.
More
sophisticated
Ranbaxy
is a company that makes so-called
generic medicines, cheap copies
of drugs developed by others. But
Mr Singh says they have ambitions
to develop their own patented therapies.
It would be a move into an area
that requires more high-level expertise,
and that is a characteristic of
other areas of India business life
- notably computer software.
Poverty
levels are still high in India
The
low-cost, high-volume manufacturing
will continue - at Ranbaxy and in
other Indian industries - but a
more sophisticated side is emerging.
Nonetheless, there is much in India
that remains pretty basic. Poverty
is deep and widespread. It is a
matter of controversy whether India's
economic growth has helped or not.
Some, including Indu Prakash Singh
of Actionaid in Delhi, say the rich
and middle classes have benefited,
but the poor have not. He says there
have been many cases of poor people
being displaced from urban areas
in the name of development to areas
where they have no housing and no
livelihood. The World Bank's Mr
Winters agrees that the wealthy
and middle-class clearly have gained.
But he also says the data suggests
that the distribution of income
hasn't changed much, so the poor
are benefiting from India's economic
growth. He says there is no reason
why they should not continue to
do so.
Courtesy:
http://news.bbc.co.uk, February
06, 2007
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India`s
first private textile park to come
up near Ahmedabad
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In
the next five years, India's first
privately-owned textile park will
take shape on the outskirts of the
city here at a cost of about Rs
1,200 crore. The foundation stone
of this project will be laid by
Gujarat Chief Minister Narendra
Modi today. Being set up by Pradip
Overseas Ltd, this park will have
a cloth production capacity of five
lakh meters per day and will cater
to large markets in United States
and Europe. The proposed park christined
as `Green Field Textile Park' will
be set up on 115 hectares of land
on the Bavala-Bagodara Highway about
50 km from Ahmedabad. "This will
be an integrated textile park where
all the activities related to home
textile starting from spinning,
weaving, processing, stitching,
packaging and dispatching will take
place from one location," said J
S Negi, director of the company,
while addressing mediapersons. "The
textile park will be developed in
a phased manner and will be completed
in the next five years and having
a production capacity of five lakh
meters per day," said Negi. The
park will be completely owned by
Pradip, he added. "The cloth produced
here will be largely exported to
the big markets in United States
and Europe," said the director of
the company which is a leading exporter
of household linens like flat sheets,
duvet covers, fitted sheets, pillowcases,
curtains and other items. Once fully
developed, the park will generate
employment avenues for about 20,000
skilled and unskilled workmen, Negi
added.
Courtesy:
www.zeenews.com, February 01, 2007
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