Indian honchos eyeing global firms going cheap

Prakash Chawla
Paris, Oct 3 (PTI) As the troubled U.S. and European economies look at Asia with envy, India's top honchos are eyeing acquisition of global firms going cheap amidst a severe financial crisis.

Be it Bharat Forge Chairman Baba N Kalyani or M W Corp
Chairman Mukul Kasliwal or TCS Executive Director and Head of
Global Affairs Phiroze Vandrevala, they are all scouting for
distressed assets in Europe or North America.

With over 10 percent drop in the Dow Jones Industrial
Average and 20 percent erosion in the Nasdaq index only in
the last month, stocks of several of high-flying companies are
quoting at a much lower Price-to-Earning (P.E.) multiples.

"Automobile technology assets are available at 5-6 times
EBIDTA (earnings before interest, depreciation, tax,
amortisation)," Kalyani told PTI.

India's largest automotive component and forging firm
Bharat Forge has already established strong presence in
Germany, Sweden, Scotland U.K., the U.S.A. and China.

Kalyani, Kasliwal, Vandrevala were here early this week
along with F.I.C.C.I. Senior Vice President and Managing
Director of JK Paper Harsh Pati Singhania, K K Modi and Y K
Modi for the business Summit, coinciding with the annual
summit between India and the European Union. The summit saw
leading members of F.I.C.C.I. and C.I.I. building bridges with
their counterparts in M.E.D.E.F., Paris' elite business
chamber.

F.I.C.C.I. Secretary General Amit Mitra felt several
European and American companies can be acquired at dirt cheap
price. "Assets are under-valued and the Indian companies will
take advantage of it (situation)," Mitra said.

Kasliwal, who acquired an Italian textile firm KLOPMAN in
April this year, said there was a definite opportunity but
the decision must be well-calculated.

Will the valuation slip further? "That is why, I would
wait for three months... but there is an opportunity,"
Kasliwal said.

With credit becoming expensive and hard to come, it would
not be an easy going either. "You have an opportunity for
those Indian firms which are cash rich," said Hinduja Group
President Gopichand P Hinduja.

TCS Executive Director expects the unfolding scenario to
throw a lot of captive back office operations of big financial
firms on the block. "Captives will be up for play," said
Vandrevala.

During Janaury-August 2008, 17 Indian firms have acquired
businesses outside the country with announced value of 4.48
billion dollars. The big ticket outbound mergers and
acquisitions included Wipro-Gallagher Financial Systems Inc,
Essar group firm Aegis-PeopleSupport and Kirloskar Electric
-Lloyd Beteiligungs GmbH

Great Eastern Energy Corporation Chairman and CEO
Yogendra K Modi suggested setting up of sovereign wealth funds
which can look for assets abroad.

"This is the best time for the Government of India to
compete with China, Japan, South Korea, Abu Dhabi and Kuwait,"
Modi said. But the idea of soveign wealth fund did not excite
Kalyani or Vandravela who would rather like government-owned
firms like ONGC Videsh to aggressively buy the oil assets
abroad. PTI PC