BOMBAY STOCK EXCHANGE'S SENSEX WELCOMES UPA WITH HIGHEST SURGE THIS YEAR

India’s Dalal Street, home to the Bombay Stock Exchange was a busy address on Monday, May 18th creating history with euphoric investors leading the Sensex, the benchmark index to surge more than 17% or 2,099.21 points higher at 14,272.62, the highest ever increase in a day anywhere in the world, so much that the trading had to be halted for the day. The Sensex touched the upper limit twice, earlier opening at 10.73% or 1,305.97 points higher at 13,479.39.

“The overwhelming response on the first trading day following the verdict of the people in the General Elections for the 15th Lok Sabha or the House of the People, in favour of the Indian National Congress led United Progressive Alliance (UPA) is an affirmation of its economic policies of continued liberalization and the stock market’s vote for stability and continuity.” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, the India-focused cross-border advisory firm.

“India’s high gross domestic savings rate of 30.7% compared to the 1.8% in the U.S. and 1% in the U.K. is indicative of the lower propensity to invest among Indian households and hence signifies the scope of potential investments that can move in to the Indian Equity Markets if these households are assured stability and increased return on investments.” says Rangar

“Increasing Indian households exposure to the Stock markets along with the Foreign Institutional Investors (FIIs), who made net investments worth $74 million in equities so far this year and other investors could result in the BSE’s Sensex scaling new highs.” added Rangar

The first signs of the investors’ confidence in the expected outcome of the elections came on Friday, May 15, as Foreign Institutional Investors (FIIs) made a net investment of $205 million (Rs 983.86 crore) while domestic institutional investors made a net investment of $90 million (Rs 432.47 crore) in equities, taking the BSE's benchmark index to cross 12,000 level.

Both the Congress and BJP led governments have successfully accelerated India’s GDP growth rate to about 7% today from 1.4% in 1991-92. This momentum peaked at 9.7% in the fiscal year 2006-07, under the current Congress led government, before slowing down on account of the worldwide recession.

The outcome of the General Elections will usher a new wave of confidence globally in the Indian economy with expected ramp up in economic activity, brought about by the urgent need to develop world class infrastructure, globally competitive pharmaceutical sector, telecom and augmentation of power generation.

“The government will have its task cut out with more than $700 billion worth of investments to be channeled in to India’s infrastructure, power, telecom and pharma sectors over the next five years to provide the country a strong foundation to achieve the aspirational growth of 10%.

The General Elections this time witnessed a three-way contest between the Indian National Congress led United Progressive Alliance (UPA), Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) and Third Front, comprising of the Communist Parties and smaller regional parties, attempting to offer another alternative.

“The Government would be best served if it continued and augmented the ‘India Shining’ policies that currently sustain a Gross Domestic Product (GDP) growth of more than 7% as India continues to defy negative GDP growth seen in many Western economies.” says Rangar

Investment in Energy

India’s power deficit entails an estimated investment of up to $150 billion by 2012. To meet the growing demand, the government plans to add 90GW over the same period to its existing generation capacity of 145GW.

“India will become a lucrative market for nuclear energy equipment makers as soon as The United States-India Peaceful Atomic Energy Cooperation Act of 2006 between India and the U.S. starts to show the benefits of investments coming in to the country.” says Rangar

Nuclear energy makes up only 3% of total installed capacity in India and its domestic uranium reserves are also limited. India’s Atomic Energy Commission estimates that domestic resources could support only 10 GW of installed nuclear capacity, signifying the potential of a multifold ramp-up.

Favourable policy initiatives could see global energy companies such as Areva SA, Alstom SA and Électricité de France (EDF) of France; the U.S.-based General Electric Co., Russia's state-owned nuclear company Rosatom State Nuclear Energy Corporation and Toshiba Corp., a diversified Japanese conglomerate, among others vying to enter India’s nuclear energy market.

Infrastructure: Foundation of Growth

India's challenge is not only to augment its antiquated infrastructure, but also to build new infrastructure to keep up with its $1 trillion economy and the aspirations of its 1.2 billion population that grows by 16 million people each year.

Recognising that good infrastructure are a vital pre-requisite to build a strong nation, infrastructure development has been accorded key priority for the 11th Five-Year-Plan for the years 2007-2012 and the 12th plan period 2012-2017 with projected investment requirement of $500 billion and $1.5 trillion respectively by the Prime Minister's Committee on Infrastructure.

“The Interim Budget for the financial year 2009-10 announced in February by the Finance Minister of the ruling United Progressive Alliance (UPA), focused on infrastructure development, easing of Foreign Direct Investments (FDIs) norms and economic stimulus packages announced last year had set the ground for how the alliance was approaching the General Elections.” said Rangar

The government’s spotlight on Infrastructure Development heralds the importance it attaches to the sector as a means to counter the prevailing economic woes. The minister responded to an urgent demand for new infrastructure, announcing that 9% of the country’s GDP will be spent on infrastructure by 2014, from the current 5%. Estimates suggest that a third of this investment will come from private companies, paving the way for unprecedented investment opportunity

Telecom: Dial India For Growth

“India’s mobile telecommunication services sector has defied the economic recession. The incumbent mobile telecommunication service providers collectively add about 10 million new subscribers a month, which is more than the population of Finland, home country of largest mobile handset manufacturer Nokia Corp., taking the country’s total tally of wireless subscribers to 362 million.” explains Rangar

To ensure quality service to match the growing subscriber base and achieve the target of 45% tele-density, the telecom sector is estimated to need about $73 billion during the next five years.

The world's fastest-growing mobile telecom services market estimated to reach a subscriber base of about 650 million by 2012, exposes the growth potential for global mobile telecom service providers who are not yet present in India. Such service providers are missing out on opportunities to grab a share of the projected mobile services revenues of more than $37 billion by 2012 growing at a CAGR of 18%, while the profitability of their operations in saturated developed markets continue to be under pressure.

Of significance is the fact that the government has granted new licenses and spectrum to aspiring operators such as Datacom Solutions a subsidiary of one of India’s leading consumer durables company Videocon Industries Ltd; Loop Telecom, a BPL Mobile Communications group company; S Tel Ltd, joint venture between Skycity Foundations and Telecom Investments (Mauritius) Ltd; among others which are likely targets – but within the regulatory purview as an overseas entity’s stake in the domestic company cannot exceed 74%.

Indian Pharma: Prescription for Growth

The Indian Pharmaceutical sector is positioning itself to be among the top five centres of global innovation as the Department of Pharmaceuticals (DoP), Government of India outlines its roadmap for the sector up to the year 2020 (Vision 2020). It foresees investments of about $2 billion annually, under the public-private partnership model.

The initiative will open avenues of growth for global pharmaceuticals companies and fuel the next wave of mergers and acquisitions (M&As) in a market where consumer spending on healthcare increased to 7% in 2007 from 4% of the Gross Domestic Product (GDP) in 1995 and is expected to rise to 13% of GDP by 2015. India also offers the benefits of low cost research and development (R&D), a domain in which it is estimated to capture about 10%-20% share of the world’s R&D business by 2020 from less than 1% currently.

Expansion by global pharmaceutical companies in to emerging markets like India becomes imperative as about $103 billion worth of patented drugs will go off patent in the next few years. This will further hit the already sagging fortunes of global pharma companies which are trying to augment their revenues by acquiring or aligning with companies in the generics business.

With such sectoral growth indicators, the need of the hour is to take existing initiatives to the next level of implementation and completion, with enough scope of ramping up and innovation.

UPA TO CONTINUE IN GOVERNMENT: ADVANTAGE REFORMS AND DEVELOPMENT

--- Potential Investments Worth $700 billion To Go On Track

--- Power & Energy, Infrastructure, Telecommunication and Pharmaceuticals To Drive The Next Wave Of Investments

If the trends emerging from the counting of votes are to be believed in the General Elections for the 15th Lok Sabha or the House of the People, the Indian National Congress led United Progressive Alliance (UPA) will most likely be the victor that would be an affirmation of its economic policies of continued liberalization.

The results so far indicate that the United Progressive Alliance (UPA) with 48% seats out of 543 will likely form the government with support from smaller regional parties. The outcome will usher a new wave of confidence globally in the Indian economy with expected ramp up in economic activity, brought about by the urgent need to develop world class infrastructure, globally competitive pharmaceutical sector, telecom and augmentation of power generation.

“The government will have its task cut out with more than $700 billion worth of investments to be channeled in to India’s infrastructure, power, telecom and pharma sectors over the next five years to provide the country a strong foundation to achieve the aspirational growth of 10%.” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, the India-focused cross-border advisory firm.

The General Elections this time witnessed a three-way contest between the Indian National Congress led United Progressive Alliance (UPA), Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) and Third Front, comprising of the Communist Parties and smaller regional parties, attempting to offer another alternative.

Both the Congress and BJP led governments have successfully accelerated India’s GDP growth rate to about 7% today from 1.4% in 1991-92. This momentum peaked at 9.7% in the fiscal year 2006-07 before slowing down on account of the worldwide recession.

“The Government would be best served if it continued and augmented the ‘India Shining’ policies that currently sustain a Gross Domestic Product (GDP) growth of more than 7% as India continues to defy negative GDP growth seen in many Western economies.” says Rangar

Investment in Energy

India’s power deficit entails an estimated investment of up to $150 billion by 2012. To meet the growing demand, the government plans to add 90GW over the same period to its existing generation capacity of 145GW.

“India will become a lucrative market for nuclear energy equipment makers as soon as The United States-India Peaceful Atomic Energy Cooperation Act of 2006 between India and the U.S. starts to show the benefits of investments coming in to the country.” says Rangar

Nuclear energy makes up only 3% of total installed capacity in India and its domestic uranium reserves are also limited. India’s Atomic Energy Commission estimates that domestic resources could support only 10 GW of installed nuclear capacity, signifying the potential of a multifold ramp-up.

Favourable policy initiatives could see global energy companies such as Areva SA, Alstom SA and Électricité de France (EDF) of France; the U.S.-based General Electric Co., Russia's state-owned nuclear company Rosatom State Nuclear Energy Corporation and Toshiba Corp., a diversified Japanese conglomerate, among others vying to enter India’s nuclear energy market.

Infrastructure: Foundation of Growth

India's challenge is not only to augment its antiquated infrastructure, but also to build new infrastructure to keep up with its $1 trillion economy and the aspirations of its 1.2 billion population that grows by 16 million people each year.

Recognising that good infrastructure are a vital pre-requisite to build a strong nation, infrastructure development has been accorded key priority for the 11th Five-Year-Plan for the years 2007-2012 and the 12th plan period 2012-2017 with projected investment requirement of $500 billion and $1.5 trillion respectively by the Prime Minister's Committee on Infrastructure.

“The Interim Budget for the financial year 2009-10 announced in February by the Finance Minister of the ruling United Progressive Alliance (UPA), focused on infrastructure development, easing of Foreign Direct Investments (FDIs) norms and economic stimulus packages announced last year had set the ground for how the alliance was approaching the General Elections.” said Rangar

The government’s spotlight on Infrastructure Development heralds the importance it attaches to the sector as a means to counter the prevailing economic woes. The minster responded to an urgent demand for new infrastructure, announcing that 9% of the country’s GDP will be spent on infrastructure by 2014, from the current 5%. Estimates suggest that a third of this investment will come from private companies, paving the way for unprecedented investment opportunity

Telecom: Dial India For Growth

“India’s mobile telecommunication services sector has defied the economic recession. The incumbent mobile telecommunication service providers collectively add about 10 million new subscribers a month, which is more than the population of Finland, home country of largest mobile handset manufacturer Nokia Corp., taking the country’s total tally of wireless subscribers to 362 million.” explains Rangar

To ensure quality service to match the growing subscriber base and achieve the target of 45% tele-density, the telecom sector is estimated to need about $73 billion during the next five years.

The world's fastest-growing mobile telecom services market estimated to reach a subscriber base of about 650 million by 2012, exposes the growth potential for global mobile telecom service providers who are not yet present in India. Such service providers are missing out on opportunities to grab a share of the projected mobile services revenues of more than $37 billion by 2012 growing at a CAGR of 18%, while the profitability of their operations in saturated developed markets continue to be under pressure.

Of significance is the fact that the government has granted new licenses and spectrum to aspiring operators such as Datacom Solutions a subsidiary of one of India’s leading consumer durables company Videocon Industries Ltd; Loop Telecom, a BPL Mobile Communications group company; S Tel Ltd, joint venture between Skycity Foundations and Telecom Investments (Mauritius) Ltd; among others which are likely targets – but within the regulatory purview as an overseas entity’s stake in the domestic company cannot exceed 74%.

Indian Pharma: Prescription for Growth

The Indian Pharmaceutical sector is positioning itself to be among the top five centres of global innovation as the Department of Pharmaceuticals (DoP), Government of India outlines its roadmap for the sector up to the year 2020 (Vision 2020). It foresees investments of about $2 billion annually, under the public-private partnership model.

The initiative will open avenues of growth for global pharmaceuticals companies and fuel the next wave of mergers and acquisitions (M&As) in a market where consumer spending on healthcare increased to 7% in 2007 from 4% of the Gross Domestic Product (GDP) in 1995 and is expected to rise to 13% of GDP by 2015. India also offers the benefits of low cost research and development (R&D), a domain in which it is estimated to capture about 10%-20% share of the world’s R&D business by 2020 from less than 1% currently.

Expansion by global pharmaceutical companies in to emerging markets like India becomes imperative as about $103 billion worth of patented drugs will go off patent in the next few years. This will further hit the already sagging fortunes of global pharma companies which are trying to augment their revenues by acquiring or aligning with companies in the generics business.

With such sectoral growth indicators, the need of the hour is to take existing initiatives to the next level of implementation and completion, with enough scope of ramping up and innovation.

First Three Quarters Of Indian M&As Top $26 Billion

--- Cash rich Indian companies’ overseas acquisitions worth $14 billion outpace their global counterparts that made acquisitions worth $8 billion in India

--- Infrastructure Sector Dominates Deal Street with transactions worth $12 Billion

--- Power, Oil & Gas top grosser with merger & acquisitions (M&As) worth $5 billion; Ninth India-EU Summit sets ground for future deals in Nuclear Energy

--- Banking & Financial Services and Pharmaceutical sectors follow with M&A deal values of more than $3 billion each

--- Overall M&As highlight the India-Europe corridor that witnessed 52% share in total cross-border deals worth $22 billion

Cash rich acquisitive Indian companies are set to make new acquisitions as target companies are significantly cheaper now than just six months ago. The cache of cash as an acquisition currency has also increased as global recessionary trends have driven stock prices worldwide to historic lows.

The acquisition of Citigroup's captive Business Process Outsourcing (BPO) arm Citigroup Global Services (CGSL) for $505 million by India’s largest IT services exporter Tata Consultancy Services - the largest buyout of a foreign captive BPO in India; the acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s ONGC Videsh Ltd, a subsidiary of India’s biggest explorer Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion; the pending purchase of Axon Group Plc, the U.K.-based provider of SAP implementation consulting, that has invited rival bids from India’s second largest IT services company Infosys Technologies Ltd and HCL Technologies Ltd., are all manifestations of an M&A binge fueled by large cash reserves held by Indian companies.

Indian companies with a war chest of cash reserves, such as Infosys Technologies Ltd, India’s second largest IT services company, with reserves of about $2 billion; ONGC Ltd with similar reserves; Tata Sons, the holding company for all Tata Group’s investments, with reserves and surplus of more than $2.5 billion, among others, have become active acquirers in the market. This has happened as the US Standard & Poor's 500 Index has tumbled 33 percent in its worst yearly slump since 1937.

Infrastructure Dominates

Infrastructure-related industries dominated mergers and acquisitions (M&As), accounting for 45% of the deals at more than $11.8 billion of the total deal value of $26 billion this year to September.

“The traction in the infrastructure M&As is symbolic of the need for world class facilities, adoption of internationally applicable best practices, experienced global management expertise & technology applications to accelerate growth in the Indian economy. To get that resource base of incremental funds and expertise, part of the capital is expected to find its way in to mergers & acquisitions (M&As).” says Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, Europe’s fastest-growing Indian mergers and acquisitions firm.

The Indian government has responded to an urgent demand for new infrastructure targeting to spend 9% of the country’s GDP on infrastructure by 2012. Estimates suggest that a third of this investment will come from the private sector, presenting an unprecedented investment opportunity, with corresponding inorganic activity.

“The focus towards the sector is buoyed by the urgency to match global standards. This augmentation is expected to cost and attract investments to the tune of $500 billion over the next five years.” added Rangar

The power sector has been the main stay of the M&As this year within the infrastructure sector, which accounted for $5 billion, or 42% of the deal value in the infrastructure sector. The power sector commanded 19% share in the total M&A value of $26 billion this year compared with about $4 billion last year representing a 7.4% share of the total deal value of $51 billion.

The power sector witnessed two deals worth more than $1 billion – acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion; and the acquisition of InterGen NV, a Dutch power company by Indian infrastructure company, GMR Infrastructure Ltd.

“The recently concluded ninth India-European Union summit in Marseille, France is expected to further accelerate the M&A activity in the power sector as it’s focus turned towards the potential of nuclear energy to the growth in trade between the two regions, which is targeted to reach €100 billion ($140 billion) over the next five years.” added Rangar

Among the infrastructure sectors, the power sector was followed by telecommunication sector that emerged the second most consolidating sector with $3.75 billion, a share of 32% in the infrastructure sector deal value and 14% share in the overall M&A deal value.

The other sectors which have significantly contributed to the M&A activity are Banking & Financial Services and Pharmaceutical sectors with M&A deal values of more than $3 billion each. These sectors were followed by the Automotive Sector with deal value of about $2.5 billion.

Some of the big ticket deals during the year to September included, the acquisition of

· The U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd for $2.8 billion

· Jaguar and Land Rover, the U.K. based iconic marquees of the U.S.-based Ford Motor Company by India’s Tata Motors Ltd for $2.3 billion

· Tokyo-based pharmaceutical company Daiichi Sankyo Company Limited’s acquisition of Ranbaxy Laboratories Ltd, India’s largest pharma company for $2.4 billion

· HDFC Bank Ltd, one of India’s leading private sector banks acquisition of its domestic rival Centurion Bank of Punjab for $2.38 billion

· Investment $2 billion in Unitech Telecom, the telecom arm of India’s second largest real estate developer Unitech Ltd by Italy-based Telecom Italia SpA

Cross Border Deals

“Significant aspect of the M&A activity has been India Inc.’s eyes on global opportunities, which have become more prominent in the backdrop of the global recession.” explains Rangar

India Inc.’s overseas acquisitions (outbound) worth about $13.8 billion, outnumbering the value of acquisitions made by overseas companies in India (inbound) at more that $8.2 billion. Continuing the trend which peaked last year, cross border M&As this year too had a distinct European flavour.

Four of the big ticket overseas deals by Indian companies were in Europe. Acquisitions worth more than $2 billion were of Imperial Energy Plc and Jaguar & Landrover. The deals worth about $1 billion were acquisitions by Great Offshore, India's integrated offshore oilfield services provider of Cayman Island based SeaDragon Offshore Ltd; and the acquisition of InterGen NV, a Dutch power company by Indian infrastructure company, GMR Infrastructure Ltd.

Trade between India and Europe is expected to touch $100 billion by 2010 from current level of $80 billion, according to industry estimates. Acquisitions by Indian companies in Europe accounted for 58% of the total acquisitions made overseas. Europe also accounted for 45% of the inbound deals (deals by overseas companies in the country) in India, led by the acquisition of stake in Unitech Telecom by Telecom Italia.

The U.K. has been the main centre of investments with two of the big ticket deals of Imperial Energy Plc and Jaguar & Landrover by Indian companies. The third deal, that of Axon Group Plc, the U.K.-based provider of SAP implementation consulting, which features a competitive scenario between India’s second largest IT services company Infosys Technologies Ltd and its domestic rival HCL Technologies Ltd, is round the corner.

“Indian companies with their acquisitions of companies in the U.K. are increasingly seeking to harness the size and scale of global operations on one hand and unlock the potential in emerging economies on the other, exhibited by the acquisition of Jaguar and Land Rover, the U.K. based iconic marquees of the U.S.-based Ford Motor Company by Tata Motors Ltd; and the acquisition of the U.K.’s Imperial Energy Plc, one of the leading oil companies with assets in Russia by India’s state owned oil company ONGC Videsh Ltd, subsidiary of Oil & Natural Gas Corporation (ONGC) Ltd.” said Rangar

The U.K. has been the country of choice for overseas investments by Indian companies that invested $6 billion in the country during the first half of 2008. The investments by India Inc. in Britain during the fiscal year 2007-08 has created 3,846 jobs, ahead of its rival economy China that was involved in creating only 898 jobs, according to the U.K.’s Department of Trade and Industry. In terms of the number of new projects, India ranked seventh with 75 new projects, out-numbering China with 59 new projects.

DEAL DONE, NOW FOR THE DEALS

From steam turbines to high-technology reactors, India’s power sector companies are set to reap a bonanza after the government, last weekend, won backing of the 45-nation Nuclear Suppliers Group to trade in atomic fuel and technology in the global market.

Companies like BHEL, NTPC, Tata Power and Larsen and Toubro are eyeing a raft of high-value contracts and joint ventures, the promise of which fuelled a stock rally on Monday. The Bombay Stock Exchange’s 30-share Sensex rose 461 points, or 3.2 per cent, on the back of a surge in stocks of power and equipment manufacturing companies.

Hindustan Times

Rs 65,000-CRORE MAKEOVER FOR DELHI

The capital city of Delhi is set to shed its old and ugly skin to give way to a shiny new world-class avatar for the Commonwealth Games. This is no cosmetic touch-up job but a multi-thousand crore rupees makeover, which will ensure that the 16 million-odd residents of the city forget that they ever faced any shortages of the basic kind (think power, water, transport, medical facilities) and instead enjoy the abundance of aesthetics.

Business Standard

Reliance Infra to hire 4,500 in three years

Reliance Infrastructure, part of the Anil Dhirubhai Ambani group (ADAG), will recruit more than 4,500 people in the next three years as the company develops its engineering and construction business as a major growth driver, apart from its existing power operations.

The Economic Times
http://economictimes.indiatimes.com/News/News_By_Industry/
Jobs/Reliance_Infra_to_hire_4500_in_three_years/
articleshow/3154510.cms

Morgan Stanley Seeks Piece of India Growth

Morgan Stanley is building a private-equity presence in India, the latest example of foreign investors gearing up for the chance to plow large sums into the country's growth story. The Wall Street firm said it was hiring 43-year-old Aluri Srinivasa Rao to scour India for deals. Joining Morgan Stanley from a local private-equity fund, Mr. Rao will have a $1.5 billion Asia-focused fund behind him. Morgan Stanley, which hasn't done private-equity deals in India before, will aim to deploy at least 20% of that fund into India.

The Wall Street Journal
http://online.wsj.com/article/SB120897707049738985.html
?mod=googlenews_wsj

Core and Infrastructure Sectors Dominate Deal Street in 2007; Garner Transactions Worth $40 billion with 78% Share

--- Core Sector Deal Street sets ground for 2008; Expected to lead the table in 2008 with deals worth $54 billion

--- Overall M&A highlight the India-Europe corridor that witnessed 63% share in cross-border deals at $30 billion

“India has a long way to go before Mumbai resembles Shanghai, or New Delhi rivals New York. India consistently under-spends on new infrastructure even as its existing patchwork of roads, railways, airports and power & energy providers struggle to cope with India’s burgeoning economy - and population.” says Bundeep Singh Rangar, Chairman of IndusView, the India-focused cross-border advisory firm.

The Year 2007 has gone down well as the year of ‘The Core and Infrastructure Sectors’ with the deal street transactions grossing about $40 billion from 89 deals, which is 10 times the value of deals in the sector in the whole of calendar year 2006. That represents 78% of the total value of $51 billion from 675 deals.

“The focus towards the sectors is buoyed by the growing demand for urban lifestyle and world class infrastructure facilities which have been under pressure to come up to global standards. This augmentation is expected to cost and attract investments to the tune of $500 billion over the next five years.” added Rangar

“The need for world class infrastructure to accelerate growth in the Indian economy to 10% will see the application of internationally applicable best practices, experienced global management expertise & technology and inflow of a resource base of incremental funds. A part of this capital resource is expected to find its way in to mergers & acquisitions (M&As) worth $54 billion in the core and infrastructure sectors in 2008, a growth of 35% compared to 2007.” said Rishi Sahai, Board Director, IndusView.

The combined spending on core and infrastructure sectors by both the public and private sectors accounted for about 5% of Gross Domestic Product (GDP). That pales in comparison with China that spends about 11% of its GDP for infrastructure development.

The Indian government has responded to an urgent demand for new infrastructure, announcing that 9% of the country’s GDP will be spent on infrastructure by 2012. Estimates suggest that a third of this investment will come from the private sector, presenting an unprecedented investment opportunity, with corresponding inorganic activity.

Among the core sectors, Metals & Alloys led M&As accounting for deals worth $22 billion and share of 43% in the total deal value, followed by Power and Oil & Gas sectors grossing $5 billion with a share of 9.8% of the deal value. Telecommunication sector emerged the second most consolidating sector with $11.3 billion and 22% of the total deal value. The other sectors which have significantly contributed to the M&A activity was Information Technology (IT) & IT enabled Services and pharmaceutical with deals worth $2.8 billion and $1.4 billion with 5.6% and 2.8% share in M&A deal values, respectively.

The key high value deals included Tata Steel’s acquisition of U.K.’s steel manufacturer Corus Group Plc for $12.2 billion, Hindalco’s acquisition of Novelis Inc for $6 billion and Vodafone’s acquisition of majority stake in Hutchisson Essar for a price of $10.8 billion topped the tables. These were followed by Suzlon Energy Ltd’s acquisition of German wind turbine company REpower Systems AG.; Algoma Steel Inc., Canada based an integrated primary steel producer, by India’s Essar Steel Ltd; and PT Kaltim Prima Coal, Indonesia's largest coal exporter by Tata Power Company Ltd, India’s largest private sector electricity generating company

Cross Border Deals

Significant aspect of the recent M&A activity has been India Inc.’s global ambitions which touched a new high with overseas acquisitions (outbound) worth more than $32 billion, which is twice the value of acquisition made by overseas companies in India (inbound). It also shows the exponential growth in cross-border deal activity at $48 billion in 2007, more than three times achieved in the whole of year 2006.

Trade between India and Europe is expected to multiply five times to $100 billion by 2010 from current level of $20 billion, according to industry estimates. Acquisitions by Indian companies in Europe accounted for 52% of the total acquisitions made overseas worth $16 billion, with the U.K. contributing about 39% of the overseas deal value, ahead of the U.S. at 32% amounting to about $12.5 billion and $10.5 billion, respectively.

Europe dominated the inbound deal activity as well, notching up a share of 89% of the inbound deal value of which the U.K. constituted about 80% of the deal value.

“Indian and the U.K. companies are seeking to unlock the potential in emerging economies on one hand and harnessing the size and scale of global operations on the other. The acquisition of Hutchison Essar Ltd by the U.K.’s Vodafone Group Plc and the acquisition of the U.K.’s largest steel maker Corus Group Plc by India’s Tata Steel Ltd are two such cases in point.” said Rangar

The investments by India Inc. in Britain during the fiscal year 2006-07 has created 5,130 jobs, second to the U.S., according to the U.K.’s Department of Trade and Industry. In terms of the number of new projects, India has been ranked third with 69 new projects, after 540 new projects of the U.S. and 95 new projects of France.

Indian investment in the U.K. had gone up 111% to 76 projects, creating almost 4,000 jobs during 2005-06. The Indian investment has contributed $67 million (£33 million) to the London economy in 2006-07, according to Think London, an agency promoting investment into the city.