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Globalising Indian companies

The decision of the Aditya Vikram Birla group's flagship company Hindalco Industries to acquire the U.S.-based aluminum products maker, Novelis Inc at an estimated $6 billion is an enormously significant development. Coming less than a fortnight after the Tatas closed their nearly $12 billion deal with Corus, the AV Birla group's move reinforces a trend that is making a large number of Indian companies world champions in their fields through acquisitions. The significance of Indian companies taking over quintessentially European and American companies and reaping substantial synergies in their global operations can hardly be overstated. It is a telling commentary on the willingness and ability of some Indian business groups to reap the rewards of globalisation. Having first met the challenges of fierce global competition with limited resources within the country, they are now taking the battle into the most advanced markets. While earlier many Indian companies were targets for takeovers from abroad, today they have become acquirers themselves. After the acquisition, Hindalco's turnover will almost double and the AV Birla group will be poised to enter the list of Fortune 500 companies. That would fit into the vision of the late Aditya Vikram Birla, who more than 35 years ago led his group into becoming the first truly Indian multinational.

From the outside, interest in the Indian economy continues to rule high and the British telecom giant Vodafone is all set to own a majority stake in Hutch-Essar, India's fourth largest mobile telephone company. The protracted battle to acquire the 67 per cent stake held by the Hong Kong-based Hutchison Telecom and the mind-boggling valuations — the Indian company has been estimated to have an enterprise value of $19 billion — speak of the attraction the size of the Indian market holds. Many of the industries and services that are today flourishing and defining the country's outward thrust did not exist in the pre-reform era. Mobile telephony has been one of the great success stories, with the number of connections — currently placed at round 156 million — expected to grow exponentially to reach 210 million by 2008. Opinions may differ on whether in both the transactions — Hindalco's as well as Vodafone's acquisitions — the price paid was right and whether the projected benefits will in fact accrue. Yet, the bigger picture should not be lost sight of. As Mr. Kumaramangalam Birla pointed out recently "India is back in the stream of global consciousness." A great deal of credit should go to the spirit of entrepreneurship of Indian businessmen and their willingness to think big.

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