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New Delhi: Overseas acquisitions by Indian companies may rise to a record next year as a rallying rupee and a slowdown in the US provide funds and targets for Mahindra & Mahindra Ltd and Ranbaxy Laboratories Ltd, bankers said.
Tata Steel Ltd and Hindalco Industries Ltd have led almost $60 billion of takeovers in the past two years, matching all foreign direct investment into India since the nation opened up in 1991. The biggest gain in the rupee in three decades has made targets more affordable for Indian companies.
"Indian companies should be hunting," Tarun Jotwani, chairman of Lehman Brothers India, said in an interview at the World Economic Forum. "Yesterday if they liked an asset there, they should like it even more today. I think there will be big acquisitions."
US slowdown
Manufacturing in the US grew in November at the slowest pace in 10 months as the housing slump pushes the world's biggest economy toward recession, a report said on Monday.
The Institute for Supply Management's factory index fell to 50.8, matching economists' forecasts, from 50.9 the previous month, the Tempe, Ariz-ona-based group said. By contrast, India's nine per cent economic growth may be sustained for an unprecedented third year on prospects of bumper crops and a retreat in crude oil prices, Finance Minister Palaniappan Chidambaram said in an interview.
Morgan Stanley's Asia Chairman Stephen Roach said he's "very optimistic about India".
Impact: Expansion lifts profit
Record economic expansion has boosted profits at Indian companies, generating funds to make them less reliant on loans to finance acquisitions. India is probably more insulated to a slowdown in the US caused by the credit market contraction than "any other place on earth," Kotak Mahindra Bank Ltd. vice-chairman and managing director Uday S. Kotak said.
"You've got to keep in mind that there is going to be global distress. There will be global assets including assets in the US, which in distress will get very attractive," Kotak said.
- Bloomberg
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