Table Of ContentIndia: Acquiring its Way to a Global Footprint
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India: Acquiring its Way to
a Global Footprint
Edited by
Suseela Yesudian
Selection and editorial content © Suseela Yesudian 2012
Preface © Nirmalya Kumar 2012
Individual chapters © the contributors 2012
Softcover reprint of the hardcover 1st edition 2012 978-0-230-30063-7
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First published 2012 by
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Contents
List of Tables and Figures vii
Preface viii
Nirmalya Kumar
Acknowledgements xi
Notes on Contributors xii
1 The Tata–Corus Merger: A Visionary Deal or a
‘Winner’s Curse’? 1
Narender Lal Ahuja
2 United Phosphorus Ltd – Acquisition as a Business
Process 10
K. Balakrishnan
3 Videocon’s Strategic Acquisitions to become a Global
Player in Consumer Electronics 25
Rakesh Mohan Joshi
4 From Soaps to Software to Soaps – Wipro Acquires Unza
India Inc: Acquiring its Way to a Global Footprint 37
Monica Khanna
5 Tata–Corus: Spearheading India’s Global Drive to Growth 49
Krishna Kumar and Kishore Kumar Morya
6 Suzlon Energy Ltd: Making Foray Abroad 61
Debasis Pradhan
7 Hindalco vs. Novelis: A Case on Acquisition 76
Sadananda Prusty
8 Dr Reddy’s Global Strides – Will the Success Story
Continue? 91
Lekha Ravi
9 Tulsi Tanti – Suzlon’s Green Warrior 103
Dileep Saptarshi
v
vi Contents
10 Tata Group: The Benign Hunter 113
Munish Thakur and Rajeev Sharma
Bibliographyy 129
Index 139
List of Tables and Figures
Tables
1.1 The financing of the Tata–Corus deal 6
2.1 Acquisitions of Advanta India 15
2.2 Acquisitions – an integral part of business strategy 17
3.1 Videocon: Over the years 26
3.2 Videocon’s global business activities 35
4.1 WCCLG acquisitions (2003–7) 39
4.2 FMCG products penetration in India (2006) 41
4.3 Wipro Consumer Care and Lighting 47
5.1 Major steel deals (1997–2006) 54
5.2 Global steel ranking (2007) 54
6.1 Top ten total installed capacity (2008) 63
7.1 Production capacity: Hindalco vis-à-vis Novelis 78
7.2 Production, sales and market share of the major
aluminium companies in India 79
7.3 Major sources of funding 83
7.4 The world of Novelis 87
9.1 Acquisition rationale for Hansen and REpower 106
10.1 Market capitalization important group companies 114
10.2 Market share added by GCIP 120
Figures
2.1 Global agrochemical industry profile and trends 12
2.2 2007 agrochemical company sales (excluding
biotechnology revenues) 13
2.3 UPL growth model 14
9.1 Integrated business model 107
vii
Preface
As late as 2001, Indian outward investment was less than US $1 bil-
lion. Instead, India, like all developing countries, was actively court-
ing foreign investment into the country. By 2006, India had reached
the tipping point. For the first time, Indian outward investment of US
$10 billion had outstripped foreign investment into India. The spend-
ing spree continued unabated in 2007. Indian companies arranged or
concluded US $21 billion in 40 foreign investment deals in January
and February of 2007 alone. Moreover, Indian foreign investment in
the financial year closing 31 March 2007 exceeded the cumulative
total foreign investment by Indian companies in the 58 years between
its independence in 1947 and 2005!
In this valuable volume, Suseela Yesudian has done a remarkable
effort in pulling together the most interesting case studies that defined
the foreign acquisition spree of Indian firms during this period. These
case studies were written by academics in India as part of a case
competition organized by the Aditya Birla India Centre at London
Business School in 2008. This centre was funded by a generous grant
by Kumar Mangalam Birla in the memory of his father, who was one
of India’s pioneering global businessmen. One of the mandates of the
Aditya Birla India Centre is to encourage case studies that would be of
interest to a global audience.
The authors of these case studies are to be commended for taking
the initiative to write these successful vignettes. Research by business
academics based in India is still at the nascent stages and therefore
one is encouraged to see such a wide set of case studies. While com-
piling a volume of case studies may seem like a simple task, having
witnessed the making of this volume, I know that it is not. To get
disparate case studies written by different authors and to have a
consistent feel and look requires a rewriting effort that may be more
than simply producing them oneself. Suseela Yesudian has spent
countless hours in managing the case competition, helping authors
generate the case studies, and finally rewriting the case studies to
make this a coherent volume valuable to students and observers of
Indian business.
viii
Preface ix
The theme of foreign acquisitions by Indian firms is personally most
interesting to me as it formed a large basis of my book titled India’s
Global Powerhouses: How they are Taking Over the World, published
by Harvard Business Press in 2009. Therein I argued that the quest
by Indian companies to be globally competitive is the driving force
behind this accelerating foreign outward investment. With the open-
ing of the economy, and the easy entry of foreign players into the
Indian market, domestic Indian companies realize that they must scale
up to remain competitive. This is especially true for those companies
which operate in what are global industries, like aluminum, automo-
biles and steel, for example, Hindalco, Tata Motors, or Tata Steel.
As one can see, these large deals are relatively recent. It was unim-
aginable even a decade ago that any Indian company could pull off a
multibillion-dollar acquisition of a company in the developed world
or buy a prestigious luxury brand such as Jaguar. How have Indian
companies suddenly been able to pull off such large global deals?
The acquisitions reflect the rapid growth of the Indian economy
since 1991. When combined with the restructuring efficiencies wrought
by Indian companies over the past 15 years, this growth has resulted
in average profit margins of around 10 per cent, more than twice the
global average. Indian firms have been minting money. Growth and
profits have left the Indian corporate balance sheets in robust health,
with the consequent high-market capitalization. By one estimate,
60 per cent of India’s 200 leading companies are looking to spend
their newfound wealth on foreign acquisitions and investments.
The result is that Indians have already emerged as second only to
Americans as foreign employers of Britons!
Some of these purchases may have looked too expensive to onlook-
ers. A potential acquisition target firm in the developed market, bur-
dened with high operating costs and focused on a declining domestic
market, may not seem attractive to a Western or Japanese suitor,
but to an Indian company, the target can appear very different as it
may have brands, customers, or technology that an aspiring Indian
multinational covets. The current high operating costs of the target
company do not deter Indian firms because their vision is different.
The Indian global powerhouses have been large domestic players in
the Indian market for some time. However, until recently they never
had the confidence or the ability to be on the world stage. Forged
in India’s harsh environment, these companies are now increasingly
