Indian Companies are in Overseas Investment Mode
Posted : November 29, 2004 at 6:24 am [IST]
India’s overseas investments crossed $10-bn this year. It is surprising and interesting that the manufacturing sector especially pharmaceuticals dominates the overseas investment, though of late a good amount of investments have been in the IT sector too. While manufacturing accounted for 55% of the cumulative FDI of $10.8bn between 1996 and June ‘04, non-financial services particularly IT, accounted for only 36%. Is it a good sign showing the revival of manufacturing sector?
A distinct shift in the major destinations of these investments is also interesting. Earlier investments in ‘75-90 were in Nigeria, Kenya, Thailand, Sri Lanka and Malaysia or Hon Kong. Big industrial houses such as Birlas had investments in these countries. Since 2000, the destinations are almost going global in real sense- USA, UK, EU, Russia, and now China. It certainly shows the confidence level of the Indian entrepreneurs.
Simultaneously, the government has changed gears and opened up. Even PSUs are going for it. State-owned Oil and Natural Gas Commission (ONGC) bought a 25% stake in a Sudan oil field from Talisman Energy (Canada) for $720m. It has acquired a 20% stake in Sakhalin oil and gas field in the Russian Federation for $1.7 billion and also a 20% stake in a gas field in Myanmar. ONGC and IOC are investing overseas in big way to acquire stake in oil and gas sector to build a reliable energy security for the country. As a new trend, the richer companies are trying to invest overseas to strengthen their position financially, to serve the overseas customers better and to meet domestic economy down turn.
Some other big overseas investments by bigger Indian companies in recent times have been made to go global as strategy of the company. It will help them to become world class manufacturing source. Tata Motors acquired Daewoo Commercial Vehicle Company in South Korea in 2003 for $118m to enter China and other developed countries. Ranbaxy Technologies acquired RPG Aventis in France in 2003 for $70m to strengthen its market position in Europe and to access strategic assets. Another significant acquisitions by Tata’s was of Tetley Tea in 2000 for £271m for access to the Tetley brand name and its market for Tata Tea..
Many other companies also went for foreign acquisitions. Jindal Polyester acquired Rexor (France) a polyester producer for 10m euros. Sundaram Fasteners bought Dana Spicer Europe(United Kingdom), a precision forgings business, for £1.5m pounds; Dabur India acquired Redrock (United Kingdom) a cosmetic firm for market reasons. Hindalco acquired two copper mines in Australia.
Domestic IT firms made smaller investments. But their numbers are increasing fast, Ideas is to serve the customer from the nearest location and through their domestic units. As it is clear from an UNCTAD analysis, the top 15 Indian IT and ITeS companies have invested mostly in developed countries. Infosys creates Infosys Consulting in the United States. Wipro, Birlasoft and HCL Technologies are already having operations in the United Kingdom and United States. Satyam Computer Services has just launched its largest global development centre outside India in Australia.
Indian call centres and business process outsourcing (BPO) companies are setting up operations abroad. Daksh eServices, India’s largest BPO company has recently established a facility in the Philippines and MsourcE established a Spanish language centre in Tijuana, Mexico in ‘03; Datamatics Technologies had acquired CorPay Solutions (United States) for $9m in ‘03 and is planning to acquire more companies in the United States, Europe and Canada.
Is it not something great happening? You feel proud when you find more and more companies getting listed in NYSE, NASDAQ and LSE, when you come to know that India is the 8th largest investor in the UK. Today 30% of the Aditya Birla Group’s turnover comes from overseas. 50% of Ranbaxy sales are in the US and Europe. Wipro and Infosys have become respected global brands. India is on move and no one can stop it.
- Indra
Category: Industry/Management |
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