Shopping time! Corporate India is on acquisition spree

acquisition_program.jpgAccording to KPMG The Tata Group lead the way in outbound M&A both in numbers and value, Other key players are Dr. Reddy’s – the second highest in terms of value of deals and United Phosphorus – second highest in terms of number of deals.

The shopping spree spans industries from information technology (IT) and outsourcing to liquor.

Over the last decade, Indian firms in various industries – most visibly in information technology but also in areas like auto components, the energy sector and food products – have been slowly building up to become emerging multinationals, says Wharton management professor Saikat Chaudhuri.

Factor spurring the acquisition spree

Indian firms are becoming more profitable – the result, in part, of an ever-booming economy — and can access significantly more capital than in the past. A number of Indian firms see global markets, not the domestic market, as their chief pathway to growth. If you are a large company, you have to have a good presence in the U.S.

In addition, regulatory changes in India have made it easier for firms to acquire overseas companies. For example, World Trade Organization rules governing quotas on the importation of textiles into developed countries were lifted in 2005, sparking an increase in the ability of Indian firms to produce apparel for non-Indian markets.

Yet another factor spurring the acquisition spree: Indian companies have greater power to raise money in U.S. capital markets because investors have grown more familiar with businesses in India, as India is one of the BRIC country.

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