Others in the running strengthened their global bases as ambassadors of 'brand India.'
Compared to the Tata's its archrivals, the Reliance group, had only one major acquisition in 2004 - Trevira Gmbh & Co KG, a German specialty polyester firm. Reliance bought the company from Deutsche Bank for 80 million euros. This was its second international acquisition and its first in the polyester sector. In 2003, Reliance had taken over Flag Telecom Ltd. According to Mukesh Ambani, Reliance Industries chairman and managing director, the acquisition would make Reliance the world's biggest polyester producer in terms of capacity.
Trevira's capacity is 130,000 metric tonne of polyester staple fibre (PSF), filament yarn (PFY) and chips from four locations in Europe - Bobingen and Guben in Germany, Silkeborg in Denmark, and Quevaucamps in Belgium. It had sales of euros 316 million in 2003 and had around 1,900 employees. The company makes specialty, value-added products with applications in the automotive and home textiles sectors, and is a leader in special fibres like flame-retardant fabrics and semi-technical textiles. Subodh Sapra, president, polyester business, Reliance, said, "The acquisition will help Trevira and Reliance to serve all customers in Europe and other world markets with even better supply chain services."
In November, General Electric (GE) had sold a 60 per cent stake in its BPO arm , GECIS, to two strategic partners - General Atlantic Partners and Oak Hill Capital Partners - for $500 million. Though the sale was to two global firms, it was made clear that Indians, including GECIS president and CEO Pramod Bhasin would head GECIS.
Industry sources say the acquisition is significant as the control is with Indians, which makes it an acquisition by India Inc, even though the equity is held by two global companies. "We have the best-in-class expertise of GE that global firms can benefit from. This gives us the financial strength to grow organically and through acquisitions," Pramod Bhasin said. GECIS started operations in India in 1997, attracted by immense cost-savings and India's huge educated workforce.
These led to massive export revenues, a 12,000-strong headcount and handsome profits - in less than a decade in India.
In October, confectionary major Candico (I) Ltd acquired a plant in Tanzania and unveiled its plans to set up another plant in Johannesburg with a $5 million investment as part of its strategy to enter the global market. Candico's executive director, Karan Gupta,had said at the time of the acquisition, "We have invested $1million in Tanzania and upgraded its capacity to 3,900 tonnes from 1,800 tonnes per annum. The Johannesburg plant, to be set up within a year, would cater to seven countries in southern Africa."
The Rs125 crore company expects to generate 50 per cent of its revenues from its overseas projects in the next five years, he said, adding that Candico was scouting for joint venture partners in northern and western Africa. Candico is also making plans for distribution agreements in South Asia and the Middle East, which he said, "…are flooded with Pakistani products. Our first container should leave for the Middle East by the end of this fiscal," Gupta added.
In November, the Pune-based Kirloskar Brothers Ltd (KBL), a Kirloskar group company in the business of providing fluid handling solutions, acquired some assets and businesses of the UK-based SPP Pumps Ltd, through a joint venture company. SPP Pumps, then a part of Thyssen Bornemiscza Group of UK, made pumps for construction, irrigation, fire-fighting, water supply and sewage with 2002 sales of £27 million.
Incidentally, the UK-based company had a 30-year relationship with Kirloskar for the supply of components required for pump manufacturing. "There is an explicit understanding between KBL and SPP Pumps that SPP will function as an independent company and all transactions between the two companies would be on an arm's length basis," Sanjay Kirloskar said.
In December last year, another Pune-based company, Bharat Forge Ltd (BFL), the flagship of the $1-billion Kalyani group, had acquired CDP Aluminiumtechnik GmbH & Co KG (CDP AT), a German company making aluminium forged components, for 6.30 million euros, in an all-cash deal funded through of 3.80 million euros in equity and 2.50 million euros in non-recourse debt.
Announcing the acquisition, BN (popularly known as Baba) Kalyani, chairman and managing director, BFL, said: "This is an important part of BFL's long-term business strategy. It marks the entry of the company into the aluminium auto component business." According to the veteran industrialist, the acquisition would enhance BFL's product range and technical capabilities, in both steel and aluminium, and enable BFL's existing customers to source the complete spectrum of forged auto components from a single source.
It was a step, emphasised Kalyani, towards attaining global leadership. CDP AT is located at Brand-Erbisdorf and is a profitable firm with annual sales of over Rs200 crore. Set up in 1997, its clients include BMW, Audi, Volkswagen and Ford. This is Bharat Forge's second German acquisition. Earlier, it had acquired the German operations of Carl Dan Peddinghaus GmbH & Co KG in 2003, later renamed CDP Bharat Forge GmbH.
In Bangalore, the hub of India's IT sector, Infosys Technologies Ltd's acquisition of the Australian firm, Expert Information Systems Pvt Ltd, in December 2003 for $22.9 million was completed in January 2004 . The purchase consideration was to be paid over three years starting from fiscal 2005, and included an upfront payment and escrow of about $14 million, earn-out money for achieving some targeted revenues and a transition bonus to retain key expert employees.
Indian automotive major, Mahindra and Mahindra Ltd (M&M) also boarded the buyout bus, signing a joint venture with Jiangling Motor Corporation group (JMCG) of China to acquire an 80 per cent stake in its subsidiary, Jaingling Tractor Company. According to the MoU signed in November, M&M would invest $8 million in the joint venture, which was valued at $10 million. This would help M&M expand its presence and strengthen its existing distribution network in China. Anjanikumar Choudhari, president, M&M (farm equipments,) said the transaction was subject to certain precedent conditions and regulatory approvals.
With 'trade related intellectual property rights' due from January 1, 2005, Indian pharmaceutical companies too went shopping for overseas businesses in 2004, mainly to expand overseas and gain access to virgin territories. In December, the Ajay Piramal-promoted Nicholas Piramal India Ltd (NPIL) signed an agreement to acquire the global inhalation anaesthetics business of the UK's Rhodia Organique Fine (Rhodia) for $14 million.
This acquisition will enable NPIL to create a significant presence in the niche global inhalation anaesthetics market by gaining access to Rhodia's manufacturing technology, plants, global sales and marketing rights for two inhalation anaesthetics products - Halothane and Isofluorane - which recorded sales of $14 million in 2003, as well as Rhodia's sales and marketing network of distributors in over 90 countries, including the US, Europe, Japan, Australia and emerging markets.
In December, pharmaceutical major Ranbaxy Laboratories Ltd initiated talks to acquire two firms - one in Germany and the other in the US - besides making plans to set up a manufacturing unit in Brazil. However, Brian Tempest, managing director and CEO, Ranbaxy Laboratories Ltd, did not provide any details of the proposed acquisitions. Analysts expect them to be finalised by the end of the first quarter of calendar year 2005.
Drug major Sun Pharmaceuticals also eyed selective acquisitions in the US and in India, to ramp up its product range. Company sources said that Sun Pharmaceuticals was eyeing international acquisitions in December, which would probably come through during the first half of 2005.
Meanwhile, public sector giant Oil and Natural Gas Corporation (ONGC) is eyeing the Yugansk petrochem facility formerly owned by Russian giant Yukos. Yugansk was auctioned off to Rosneft by the Russian government . The oil major's intention is to securing access to natural resources, which are vital for its growth in a highly competitive industry.
also see : Checkmating
60 per cent stake in BPO arm
The Tata Group leads India Inc's great
to buy China's Jiangling Tractor
acquires Australian face
Piramal to take over UK`s Rhodia