Elephants Flying Away With Indian Money ©
Though it was accurately predicted SEZ policy of Manmohan Singh flouting "Quack PhD" for four decades having commission agent background shall be total disaster in my messages but no one believed end would come so soon. You can't fool multinational companies to commit investment for a good project on flat disputed farmers land. Mukesh Ambani was handed over around 1700 acres for INR 360 crores by HUDA but a plot sold in auction nearby fetched INR 138 crores for two acres, how the GOI will justify such wide margin in sale price in Supreme Court?
Having failed in their criminal misconduct in undertaking world's lootest program, the business families who exploited India for many decades to over a century were quick to take flights and run away with Indian money.
In last seven months Indian corporate have invested over $15b or INR 70,000 crores with Manmohan Singh's connivance when a genuine businessmen can't takeout even $10,000 without GOI approval. At this rate over INR 1,20,000 crores of Indian money shall take flight by March end.
Round of a newly opened grocery stored revealed more than 30% of the items for sale were imported, another 40% were of foreign multinational brands leaving only 10% for Indian companies and rest for vegetables and fruits- even some fruits were imported.
It is absolutely cold-blooded exploitation and extortion of Indian farmers under Manmohan Singh regime that promised to be with common man but is actually and literally sleeping with few business families.
People familiar with real story will be able to unearth truth in the following Outlook story. Since story of Tatas in circulation following lines pointedly refer to Tatas but other business families to have identical story with different numbers.
Ratan Tata controlled Tata Sons owned only 3% share in the Tata Group companies, which through manipulations were now 30%. At this rate Ratan Tata or Tata Sons worth was $660 million but it managed to take out $3billion in a clandestine manner.
The companies running away with Indian money have artificially jacked up the stock market. People's money is used to speculate share market. World's most incompetent Prime Minister allows company A to take shares in company B with company money merely to jack up the stock market. There is no other commercial or technical reason for this practice.
Earlier promoters typically owned 10% equity, FII & Banks accounted for say 40% and retail investors owned 50% equity. In most companies retail investors have been completely edged out. CEO of ENRON Jeff Skilling was put in jail for 24 years for operating 3 or 4 fictitious companies - Mukesh Ambani controlled over 400 to pick up retail shares.
Indian Corporate Elephants are like real elephants over 50 years old with worn out teeth that consume 300 kg of grass and bushes and huge amount of dung. They consume huge quantity of raw materials and produce dung quality goods. Since they have worn out teeth they are to be fed "Bananas" and "Mangoes" by way of SEZs, tax concessions and flight of money.
Even in case of Indian companies started with Japanese collaboration there are few design and product innovations when competitors are hugely resourceful innovative and efficient. Most Elephants have little design and R&D facilities.
Elephants can't match competitors so the strategy devised is to take out as much money as they could and park them in England so that they can enjoy life without caring for Indian operations.
Except pharma deals where Indian companies have global competitive edge and takeovers come with patents and brands so boost exports performance, rest of the companies have little commercial justification.
The money taken out by the Elephants neither contributes in exports nor tax increase nor created any new jobs. But similar investment in agriculture would have taken out 700 million Indian farmers from the clutches of moneylenders improved food production substantially and generated tens of millions of new jobs.
Unfortunately no one taught such things to Manmohan Singh in 5 years at Oxford.
True to Indian traditions all kinds of mischief, lies are told to the people. When Indian exports are hardly $20b including exports of foreign multinationals, India embarked on 384 SEZs to invite EOU and claimed it shall overtake USA citing made to order BRICS report of Goldman Sachs by 2050 from $650b base to $20,000b the economic level USA may reach.
China on the other hand is balanced in its reporting which is misunderstood. I have not found a single false and boastful claim in its news. Here are two paragraphs that explain its concerns at absence of IPR and patents in the portfolio of Chinese companies. Though there are also reports of China introducing next generation IP6 that is much advanced and fast internet service. Similarly China has finalized standards for Mobile television, which means many developed countries will adopt Chinese standards.
[China's GDP is five percent of world GDP, yet it consumes 25-40percent of the world's crude coal, iron ore, steel, alumina and cement.
Only three out of 10,000 Chinese enterprises have intellectual property rights for their core technologies. 99 percent of Chinese firms have no patents and 60 percent do not have their own brands.
China will make more efforts to transform its economic growth mode during the five-year period from 2006 to 2010 by improving its industrial structure and developing science and education, said Zhang.] (Full message at the end.
GOI ought to work in a transparent manner and explain to the people how much tax revenue it shall get from such flight of money and how many new jobs are created etc. People have a right to know.
A French economist has observed that largely oversees takeovers largely fail. But the prospects of success of most flying elephants are worse. Flying elephants don't have the capability to take advantage the advanced technologies and knowledge they acquire- most of it will be licensed from third parties who may prohibit India from acquiring it similarly some special metals technologies with defense applications too shall be in prohibited list.
So it was always preferred to invite foreign investments than promoting foreign takeovers.
But Manmohan Singh and India are different. They don't want Non Resident Indians money and technological skills who can invest just 1% in India.
Ravinder Singh October29, 2006
The Elephant's Hungry
India firms are on the prowl,
eyeing even developed markets
like the US and Europe
In 1991, after India took a sharp right turn and embarked on the reforms path, fear and loathing gripped the minds of leading Indian industrialists.
At several meetings in The Chambers, an exclusive millionaires' club at Mumbai's Taj Mahal hotel, and the city's Wellingdon Club, they discussed how they could save themselves from the onslaught of foreign MNCs, which were gobbling up Indian firms. The post-reforms period seemed like the end of the road for Indian promoters, whose choices lay between shutting shop or selling out. Led by Rahul Bajaj, L.M. Thapar, Keshub Mahindra and Harishankar Singhania, and dubbed the Bombay Club, the scared businessmen asked the government for protection against foreign capital and urged it to provide a "level-playing field" for domestic businessmen.
Fifteen years later, the pendulum has swung 180 degrees.
Not only have the Indian firms survived and thrived, they have turned the tables on the foreigners.
Fifteen years later, the pendulum has swung 180 degrees.
Not only have the Indian firms survived and thrived, they have turned the tables on the foreigners.
India Inc has spent thrice the money buying foreign firms compared to what the MNCs have acquired here.
The recent Tata-Corus and Videocon-Daewoo deals herald the advent of a new era, where Indians are shopping for bigger—and better—foreign companies. In fact, between January and October 2006, India Inc spent over three times more money to effect overseas acquisitions, compared to what their foreign counterparts spent to take over Indian firms. So today, there's a sense of adventure amongst Indians as they venture out to conquer the global corporate world. The Indian chieftains are excited and animated about the future, as the axis of corporate power shifts from the US and Europe to Asia (notably India and China). The Indians, it seems, are taking over—or buying out—the world.
The world is closely watching this titanic and tectonic drift.
Nothing epitomises this better than a banner headline in a British newspaper the day after Corus' board accepted the $8 billion Tata bid.
The world is closely watching this titanic and tectonic drift.
Nothing epitomises this better than a banner headline in a British newspaper the day after Corus' board accepted the $8 billion Tata bid.
"The Empire Strikes Back", it said, reminding us of the irony that British Steel, which had won two world wars for Britain and which merged with Dutch Hoogovens to create Corus in 1999, would be owned by a firm from a former colony. Paradoxically, it was British steel, if not British Steel, which provided the infrastructural backbone for the expansion of the English empire in the 18th and the 19th century, and up to the mid-1900s. The Corus' factory at Port Talbot, UK, had produced the steel used to build the sprawling railway network in India during the days of the Raj.
At the Tata-Corus press briefing in London, Ratan Tata, chairman, Tata group, was hounded by photographers. "You don't want to photograph me where I'm going," he joked as he stepped into the toilet. But increasingly, Indians are stepping out of their protective environment and scouting for acquisitions abroad. More importantly, Indian businessmen, who were till recently interested in smaller markets like Africa and Asia, are flexing their muscles in mature and developed ones (see chart). The Tata group, whose Corus deal was the largest by an Indian group, inked 14 others worth nearly $1.5 billion in 2005-06. Others like Suzlon Energy, Videocon group, M&M, Ranbaxy Labs and the AV Birla group have also invested huge sums. According to consultancy firm Grant Thornton, while Indian firms spent $4.3 billion in 2005 on outbound (overseas) deals, the figure has already crossed the $15 billion mark in this calendar year.
The average deal size has zoomed from $31.61 million in 2005 to over $100 million this year.
Globally, the image of Indian industrialists has changed.
Globally, the image of Indian industrialists has changed.
A recent report by Boston Consulting Group (May 2006) argued that "a revolution in global business is under way," and that companies based in rapidly developing economies (RDES) like India, China, Brazil and Russia "are expanding overseas and will radically transform industries and markets around the world".
Critics say The success of global M&As is abysmal, less than a third add value to the acquiring company.
It identified 100 new global challengers in these RDES, which included 21 Indian companies (like Bharat Forge, Hindalco, M&M, Tata Steel and Videocon). Last year a McKinsey study found that "emerging markets...actually provide an invaluable springboard" for companies to go global.
It added that "emerging markets are seedbeds for distinctive capabilities" that enable local firms to succeed globally. In a sense, the future belongs to emerging corporate giants from these economies.
After the Tata-Corus deal, which made Tata Steel the fifth largest steel-maker in the world, a similar confidence is reflected in the attitude of Indian businessmen. Admits Subhash Menon, chairman, Subex Sytems, which purchased the UK-based Azure Solutions for $140 million, "After the deal, a couple of investment bankers and advisors, who had not taken me seriously earlier, are knocking at my door with two proposals a day." Adds Venugopal Dhoot, chairman, Videocon Industries, which took over the South Korean Daewoo Electronics and the French Thomson for a combined $1 billion in two separate deals, "There's a huge craze and curiosity about India and Indian companies. So, this is a good time to acquire foreign firms." A 2006 study by mape, an investment bank, noted that "the Indian MNC has finally come of age. Suddenly, Indian buyers have become a force to reckon with in many industries such as pharma, auto components and oil/gas."
The Indian promoter is ready to execute the deal of his lifetime. He's waiting for, as Ratan Tata puts it, "the defining moment" that'll catapult him into the big league.
After the Tata-Corus deal, which made Tata Steel the fifth largest steel-maker in the world, a similar confidence is reflected in the attitude of Indian businessmen. Admits Subhash Menon, chairman, Subex Sytems, which purchased the UK-based Azure Solutions for $140 million, "After the deal, a couple of investment bankers and advisors, who had not taken me seriously earlier, are knocking at my door with two proposals a day." Adds Venugopal Dhoot, chairman, Videocon Industries, which took over the South Korean Daewoo Electronics and the French Thomson for a combined $1 billion in two separate deals, "There's a huge craze and curiosity about India and Indian companies. So, this is a good time to acquire foreign firms." A 2006 study by mape, an investment bank, noted that "the Indian MNC has finally come of age. Suddenly, Indian buyers have become a force to reckon with in many industries such as pharma, auto components and oil/gas."
The Indian promoter is ready to execute the deal of his lifetime. He's waiting for, as Ratan Tata puts it, "the defining moment" that'll catapult him into the big league.
Fortunately, there are many opportunities to further such ambitions. Globalisation, which proved to be the bane of Indian managements in the 1990s, is impacting the Europeans and the Americans. Thanks to the benefits of outsourcing, operations in the developed economies are more expensive and hence, unviable, compared to the units in India or China. For example, the production costs at Corus' Port Talbot plant is twice that of Tata Steel's Jamshedpur unit. To survive, Corus had to either close down its plants in Europe and shift production to low-cost bases. Or cash out, which it did. Such firms have to react with passion, and as Corus chairman Jim Leng said, "with commercial passion."
This implies that many of them will be more than willing to sell out. Today, they get attractive offers because commodity prices are still riding on an upward crest despite the correction in May this year.
This implies that many of them will be more than willing to sell out. Today, they get attractive offers because commodity prices are still riding on an upward crest despite the correction in May this year.
Explains Aditya Sanghi, country head-investment banking, Yes Bank: "European firms have been slower at adapting to India and China, both in terms of the latter's low-cost production model as well as thinking of them as markets." They have also been unwilling to change, either because of management lethargy, strict regulations, strong trade unions, or nationalistic sentiments. It's a perfect setting for Indian firms which, says Frank Hancock of ABN Amro, "are both low cost and high skill, a unique combination."
Instantly, it gives them global scale, a portfolio of recognised brands and access to huge markets. Listen to Dhoot, who feels that size matters. "Our presence is now well-acknowledged because we have acquired companies that have their footprints across the world. In colour picture tubes, we have a fifth of the global marketshare and we're talking to LG-Philips to take over their picture tube operations. We're aggressively looking at the acquisition route and will follow it as our growth strategy," explains the Videocon chairman, who aims to nearly double his group's turnover to $10 billion in the next few years.
Instantly, it gives them global scale, a portfolio of recognised brands and access to huge markets. Listen to Dhoot, who feels that size matters. "Our presence is now well-acknowledged because we have acquired companies that have their footprints across the world. In colour picture tubes, we have a fifth of the global marketshare and we're talking to LG-Philips to take over their picture tube operations. We're aggressively looking at the acquisition route and will follow it as our growth strategy," explains the Videocon chairman, who aims to nearly double his group's turnover to $10 billion in the next few years.
Malvinder Singh, CMD, Ranbaxy, feels the same. "Overseas forays are meant to position yourself in new markets. There's a growing realisation that we've no option but to go global," he says. Ranbaxy has manufacturing bases in eight countries, and derives 80 per cent of its revenues from overeas units. Adds kpmg's Rohit Kapur, "The investments that Indian companies have made overseas were essential for them to become competitive on a global basis and increase visibility with customers." And G.V. Prasad, vice-chairman and CEO, Dr Reddy's Lab, which purchased German generics maker Betapharm for Euro 480 million, thinks the Indian market is not enough to "sustain our growth momentum."
A combination of reasons were responsible for Godrej Consumer Products' acquisition of Keyline, one of UK's leading FMCG firms. "Keyline has a strong portfolio of brands and a well-developed customers' base in numerous supermarket chains. Market access too was critical as the size of the UK market for hair colours, which contributes to 35 per cent of our turnover and 65 per cent of profits, is five times that of India," says Hoshi Press, executive director, Godrej Consumer Products. In fact, Godrej plans to shift some of Keyline's operations to India, where costs are 30-40 per cent lower than the UK. "Indian firms are following the model developed by the Japanese when they were playing the catch-up game with the West in the '70s and the '80s," says Joel Ruet of the London School of Economics.
What's aiding Indian businesses are the lessons they've learnt in the domestic market, and easy—almost unending—access to capital to finance the big buyouts. The McKinsey study pinpoints the advantages of the Indian experience. Ranbaxy earlier operated "under a unique patent regime that encouraged Indian companies to manufacture patent-protected drugs and make them affordable.... Thanks to that experience, Ranbaxy succeeded in becoming a leading generics producer in both the US and Europe." Asian Paints, which has a sizeable global presence, "had already reduced its working capital turns to levels below those of all but one of the world's leading paint companies...."
In some cases, the Indian market provides a cushion against takeover blunders.
In some cases, the Indian market provides a cushion against takeover blunders.
"Our domestic market is growing so strongly that it provides us with a safety net to look abroad. We can, therefore, take such risks and they can be sustainable because of our strengths in the Indian market," contends Tulsi Tanti, CMD, Suzlon Energy, which bought Hansen Transmissions this year. In Tanti's case, Hansen's takeover was technology-driven, as the Belgian firm was the second-largest manufactures of gearboxes, a critical component for Suzlon's turbines.
Obviously, it helps if you have money in your pocket, or banks are willing to lend huge sums to you. "There's abundant liquidity in the world today, and India and China are among the main beneficiaries of this boom cycle. Indians can now borrow in the international markets, and these have increased by 91 per cent in the second quarter of 2006," reveals Jean-Joseph Boillot, a French economist who's written a book on India. Adds Ranbaxy's Malvidner Singh: "Due to increased availability of capital and excellent financial performances by Indian firms, it's easier to access capital."
But that can also lead to crucial and debilitating mistakes. Boillot feels that several mergers can go wrong and, in fact, the "success rate of cross-border m&as is abysmally low and less than a third add value to the acquiring company." The reason: overestimation of the merger benefits and, hence, overpaying for the target company. Critics like Saikat Chaudhari of the Wharton School feel that the purchase price in the case of Tata-Corus deal was "on the higher side" (see interview on page 42). Sudip Nandy, chief strategy officer, Wipro Technologies, which has made several smaller m&as, thinks that "acquisitions are basically disruptive events which stall the business momentum."
What Nandy is referring to is the difficult integration process between differing management mindsets, stark cultural differences, and out-of-sync operational processes. "We have identified human resources, deriving value through organisational structures and navigating complex labour laws as the key challenges in any integration process," explains Mohit Rana, principal, AT Kearney. Adds Harish H.V., partner (corporate finance), Grant Thornton: "Acquired firms could find it hard to accept Indian managers. Indian managers will find it hard to manage businesses across time-zones and cultures."
But Indian promoters are confident of making their m&as work. Ratan Tata feels there's potential for significant synergies after the Corus acquisition. Anand Mahindra of M&M, which bought over a German company and plans to buy another, thinks his group has the management bandwidth to make such m&as work. Kumar Mangalam Birla of the AV Birla group has made several takeovers without facing too many problems. And the Tata-Corus takeover may prove to be the turning point. This will encourage other Indian CEOs to aspire to be global leaders. It is just the beginning of the buying binge.
But that can also lead to crucial and debilitating mistakes. Boillot feels that several mergers can go wrong and, in fact, the "success rate of cross-border m&as is abysmally low and less than a third add value to the acquiring company." The reason: overestimation of the merger benefits and, hence, overpaying for the target company. Critics like Saikat Chaudhari of the Wharton School feel that the purchase price in the case of Tata-Corus deal was "on the higher side" (see interview on page 42). Sudip Nandy, chief strategy officer, Wipro Technologies, which has made several smaller m&as, thinks that "acquisitions are basically disruptive events which stall the business momentum."
What Nandy is referring to is the difficult integration process between differing management mindsets, stark cultural differences, and out-of-sync operational processes. "We have identified human resources, deriving value through organisational structures and navigating complex labour laws as the key challenges in any integration process," explains Mohit Rana, principal, AT Kearney. Adds Harish H.V., partner (corporate finance), Grant Thornton: "Acquired firms could find it hard to accept Indian managers. Indian managers will find it hard to manage businesses across time-zones and cultures."
But Indian promoters are confident of making their m&as work. Ratan Tata feels there's potential for significant synergies after the Corus acquisition. Anand Mahindra of M&M, which bought over a German company and plans to buy another, thinks his group has the management bandwidth to make such m&as work. Kumar Mangalam Birla of the AV Birla group has made several takeovers without facing too many problems. And the Tata-Corus takeover may prove to be the turning point. This will encourage other Indian CEOs to aspire to be global leaders. It is just the beginning of the buying binge.
What Are We Buying?
Oil and Gas $1,074 MN (17.41%)
Pharma & Healthcare $1,045 MN (16.94)
IT & ITES $803 MN (13.02%)
Food & Beverages $677 MN (10.98%)
Others Manufacturing $677 MN (10.98%)
India Inc's shopping spree in the last 12 months:
Tata Tea
Buys the food & beverage firm, Energy Brands, USA for $677 mn
Wipro
Buys three US-based companies, mPower, cMango, and Quantech, for a combined $58 mn
ONGC Videsh
Takes over Ominex, Colombia for $425 mn
Transworks
The AV Birla group purchases Minacs of Canada for $125 mn
Tata Steel
The $8 bn Corus deal is the largest by an Indian firm
Aban Lloyd
Buys the Norwegian oil major Sinvest for $425 mn
Dr Reddy's
Acquires Betapharm, Germany, for $571.77 mn
M&M
Takes over Jeco Holding, Germany, for ,140 mn
Suzlon Energy
Buys Hansen Transmission, Belgium, for $565 mn
Ranbaxy
Takes over Terapia, Romania, for $324 mn
Videocon
Buys Daewoo Electronics, South Korea, for $684.78 mn
Buys the CPT major Thomson, France, for, 240 mn
China's per capita GDP to reach 2,400 USD in 2010
www.chinaview.cn 2006-10-09 16:10:40
SHENYANG, Oct. 9 (Xinhua) -- China's average per capita GDP will reach 2,400 US dollars in 2010, said a senior official with the National Development and Reform Commission (NDRC) on Monday.
Addressing the ongoing 14th World Productivity Congress (WPC) held in Shenyang, capital of northeastern Liaoning Province, Zhang Xiaoqiang, Vice Minister of the NDRC, said that on current exchange rates, China's GDP will reach 3.2 trillion US dollars in 2010.
According to data from the National Bureau of Statistics (NBS),China's GDP exceeded 2.2 trillion US dollars in 2005, ranking fourth in the world, after the United States, Japan and Germany.
However, per capita GDP was only 1,703 US dollars last year, ranking a lowly 110th in the world.
Experts said that while it has a big GDP, China's economy is still facing problems such as low efficiency, a low technological level and low added value.
China's GDP is five percent of world GDP, yet it consumes 25-40percent of the world's crude coal, iron ore, steel, alumina and cement.
Only three out of 10,000 Chinese enterprises have intellectual property rights for their core technologies. 99 percent of Chinese firms have no patents and 60 percent do not have their own brands.
China will make more efforts to transform its economic growth mode during the five-year period from 2006 to 2010 by improving its industrial structure and developing science and education, said Zhang. Enditem
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