Professor Prashant Kale examines the distinctive approach of Indian companies to managing their overseas acquisitions and why it has proved fairly successful thus far. However, in the face of changes in domestic and global conditions, and possibly in acquisition motivations as well, will the “India way” of managing acquisitions continue to be as effective and relevant?
During the last decade, Indian companies have sought to expand internationally as well as strengthen their position at home against growing competition from global rivals. Sometimes referred to as “emerging multinationals,” these companies have used overseas acquisitions as a key part of their internationalisation strategy. From a mere trickle in the year 2000, Indian companies’ overseas acquisitions activity peaked in 2007 when they spent almost US$35 billion on these transactions (Figure 1). Companies of large business groups such as Tata, Aditya Birla, Bharti, Mahindra, etc., have been at the forefront of internationalisation, but many single business and mid-sized Indian companies such as Marico, Bharat Forge and KPIT- Cummins have also joined the fray. Acquisition activity has been most pronounced in the automotive, metals, telecommunications, pharmaceuticals, consumer goods, engineering and information technology (IT) sectors.