It has become a habit with Videocon Chairman Venugopal Dhoot. Well, almost. When the then prime minister Atal Bihari Vajpayee visited Italy in 2000 he found Dhoot receiving him along with Italian industrialists, thanks to his acquisition of Nicci Compressori. Some months ago when Italian President Carlo Azeglio Ciampi visited India President A.P.J. Abdul Kalam thought Dhoot was standing on the wrong side when he found him with the Italian delegation till Ciampi intervened and introduced him as one of Italy's industrialists.

PICTURE SPEAK

$720 mn Venugopal Dhoot (centre), Chairman, Videocon Group The consumer durables group with interests in the petro sector has bought assets in China, Poland, Mexico and Italy. It has also invested in oil fields in Sudan and Jordan.

So when Dhoot met Prime Minister Manmohan Singh last week to inform him about the acquisition of Thomson's colour picture tube plants across four countries, he asked tentatively if he was visiting China by any chance. Even before the prime minister could respond the Videocon chairman said with pride that he should not be surprised if he found Dhoot among Chinese corporate heads receiving him, thanks to his Rs 1,250 crore acquisition of the Thomson plants-the largest Indian FDI in China.

Dhoot's acquisition, though, gets him more than a place at state receptions. The Thomson buyout puts Videocon among the top three global players in the television market along with Samsung and LG. What's more, the pay-out of Rs 1,250 crore has come back via Thomson's investments in the Videocon Group's oil ventures in India, Sudan and Jordan. The acquisition of the plants will deliver additional revenues of Rs 8,700 crore taking the group turnover to over Rs 17,500 crore.

It is not just Dhoot. India Inc is moving almost in concert across the globe. Outward investment by Indian companies has shot up from $50 million at the beginning of liberalisation to over $5 billion per year now (Rs 21,500 crore). Much of the growth happened in the past five years as the rupee strengthened and Indian corporates emerged from the shadow of doubt and debt through the restructuring process. Karl P. Sauvant, director, international investment division, UNCTAD, reasons that "the increasing competitiveness of Indian firms and their interest to expand globally is driving its outward FDI growth".

PICTURE SPEAK

$110 mn Kumar Mangalam Birla, Chairman, AV Birla Group The Indian transnational has acquired pulp mills in Canada, copper mines in Australia, a BPO outfit and invested in a carbon black plant in China.

It is not just the value but the volume of deals that is striking. Just in the pharmaceutical domain Indian companies have acquired 12 companies in 30 months. The acquisition of Belgian pharma giant Docpharma by Secunderabad-based Matrix Laboratories for $263 million is the biggest, affording Matrix access to hitherto untapped Belgian and southern European markets. Indeed, India Advisory partners reveal that total overseas acquisitions shot up from 28 just three years ago to 49 in 2003 and 60 in 2004. It is estimated that the first six months of the year have already seen over 30 new acquisitions by Indian companies. What is interesting is that contrary to popular perception the investments are not just in it but in manufacturing too, which accounted for 73, 71 and 55 per cent of total overseas investments in three years from 2002 to 2004.

Unlike Chinese companies, Indian corporates are not setting up shop overseas because competition is getting hotter at home. Mahindra and Mahindra Vice-Chairman and md Anand Mahindra, who spoke from Beijing shortly after inaugurating new facilities at his tractor plant in China, believes the Indian paradigm shift is unique. "Indian companies are going abroad not because they are being besieged but because they genuinely aspire to acquire a global scale," he says. "I can't stay home and be the biggest. The gladiatorial pit is now global and you need scale to succeed in the international market." Krishna Kumar, chairman of the Taj Group of Hotels, agrees. Kumar, who recently oversaw Taj Hotels' return to New York with the acquisition of The Pierre, forecasts that the trend will only widen and deepen. "Markets are merging and trade barriers will go down in the next stage of WTO negotiations. So if you are thinking about being a strong domestic player you can't but be a global player," he says. Also, in contrast to the middle kingdom, it is not state-funded ambition but Indian skills, entrepreneurial spirit and the ability to assimilate cultural diversity that is driving Indian players. True, they need to scale up on systems and get rid of what management schools call "seat-of-the-pants" management but, as of now, they are willing to bet on adaptability.

PICTURE SPEAK

$1,050 mn Ratan Tata, Chairman, Tata Sons The Tatas have acquired an array of assets, including Tetley Tea, Daewoo Trucks, Nat Steel, Tyco Global Network, auto designer Hispano Carrocera and New York luxury hotel The Pierre.

Perhaps, somewhere, the success of steel king L.N. Mittal (LNM) is also rubbing off and not just on his brothers P.K. Mittal and Vinod Mittal, who run Ispat India and have taken over assets producing over 12 million tonnes of steel in four countries. The mood among corporates is if LNM can, why can't we? Not surprisingly, the trend is already being recorded. A recent IBM Business Consulting Services survey of global CEOs said that "a new Indian MNC is emerging, characterised by a changing mindset, global ambition, new-found confidence from battling with global competition on local turf and a desire to benchmark against the best".

Significantly, for once the government and policy makers are in step with the corporates in this global tango. There has been a quantum leap in the limits of investment allowed. In January 2004, Vajpayee announced that Indian corporates would hereafter be freely permitted to make overseas investments up to 100 per cent of their net worth whether through an overseas joint venture or a wholly owned subsidiary. He said "this will enable Indian companies to take advantage of global opportunities and also acquire technological and other skills for adoption in India". A year later, Manmohan liberalised the provisions further by raising the ceiling for overseas investments to 200 per cent of the net worth. Money is available beyond the 200 per cent limit too but with the approval of the Centre.

Indeed, money is no longer an issue. With foreign investors taking up strategic stakes in companies, funds or leveraging of resources is not a constraint any more. As recently as last month, a Singapore-based investment fund offered to raise money for an Indian petrochemicals giant if it decided to bid for Unocal. ONGC Chairman Subir Raha says that the threat by Yukos to sue the public sector giant over a proposed bid for the Russian oil behemoth Yugansk is "proof of an altered perception that Indian companies are part of the M&A (merger and acquisition) landscape and are taken very seriously". In some ways, it shows that globally corporates have come to believe that Indians are capable of putting their money where their mouth is. And contrary to earlier fears expressed by mandarins in the North Block (and those managing India's forex coffers), India Inc has thought out of the box and engineered its strategy in its global march.

PICTURE SPEAK
$4,300 mn Subir Raha (right), Chairman & MD, ONGC The oil and gas exploration giant has invested in 15 assets in 13 countries spread across four continents to secure India's growing need for energy.	$263 mn N. Prasad, Chairman & CEO, Matrix Laboratories The acquisition of Docpharma by Matrix is the largest deal executed by an Indian pharma company. It affords Matrix access to the markets of Belgium and southern Europe.

The surge is marked by method and not by m&a madness. Indian companies are investing principally to access foreign markets, production facilities and international brand names, as well as to tap international systems and technology. While the lead was provided by it services and BPO operations which mastered the management of change and the methods of conducting international business, others caught up quickly. First off the block were pharma outfits like Wockhardt and Ranbaxy which leveraged their strengths to acquire market access and business share.

PICTURE SPEAK

$50 mn Anand Mahindra, Vice-Chairman & MD, Mahindra & Mahindra Besides selling SUVs in 25 countries, M&M has, in three years, acquired assets in China, from where it plans to export to Pakistan; the US, where it is the fourth largest tractor maker; and Europe.

Indeed, there is an interesting mix of method in the acquisition strategies. Consider the acquisitions by the Tata Group. Daewoo Trucks gives it access to south-east Asian markets for the sub-two tonne vehicles, allows it to source parts for Daewoo trucks from India and enables it to launch the larger Daewoo trucks in India. In fact, as New York-based director of Deutsche Bank Nilesh Navlakha says, Tata Motors' acquisition of Daewoo has turned out to be a phenomenal fit. It is not just Tata Motors that has leveraged synergy. Tata Group's $450 million acquisition of Tetley Tea got it a brand; Nat Steel, Singapore, got it a toehold in six asean markets; Indo Maroc Phosphore S.A. (IMACID), Morocco, gives access to critical raw inputs; while telecom giant Tyco is a perfect fit for long distance carrier VSNL and Indicom.

Ditto with acquisitions of other Indian companies. Ranbaxy acquired RPG Aventis to strengthen its market access in Europe, Sundaram Fasteners bought Dana Spicer Europe, a precision forgings business, to beef up its competitiveness, Reliance acquired Flag Telecom as a perfect match for its global voice and data ambitions while Hindalco bought two copper mines in Australia to tap critical natural resources and add price advantage to its growing copper clout.

PICTURE SPEAK

$46.5 mn Baba Kalyani, Chairman, Bharat Forge Kalyani has invested in assets in Germany and the US to gain both capacities and market access.

In fact, there is a public sector angle too. ONGC has been investing in oil fields across the globe (13 at last count) to meet the growing energy needs. Says Raha: "If India has to operate in the global market, energy sourcing too has to be organised in the global context." Not surprisingly, ONGC, along with Chinese petro giant CNPC, is among the foremost bidders for global oil assets.

Clearly, going global is not just a need or desire but an imperative. As Baba Kalyani, chairman of Bharat Forge, says, "The biggest challenge is to scale up facilities and abilities to global requirements. Any laxity in responding to this challenge will be capitalised upon by other global players. Scaling up capabilities and capacities is now key to survival." As global playing fields level and move towards what is being called a "flat world", only those who are willing to go places will survive.

-with Anil Padmanabhan in New York

Index