Date:16/11/2005 URL: http://www.thehindubusinessline.com/2005/11/16/stories/2005111602451200.htm

Back `Indian cos' M&A deals may touch $17 b this fiscal'

Our Bureau

New Delhi , Nov. 15

FUELLED by banking, pharmaceutical, IT, media and telecom sectors, the mergers and acquisition (M&A) activities in India is estimated to touch the $17-billion mark during the current financial year, according to Assocham.

M&A deals worth $7 billion have already been concluded in the first half of the year, an Assocham study titled Eco Pulse said.

As per the study, boom in the financial markets, rising stock prices, persistently low interest rates and the overall economic resurgence are providing impetus to the M&A activity across these sectors. As a result, M&A deals, which were largely restricted to a few sectors such as IT earlier, have now spread across a multitude of sectors.

The value of deals announced in the first six months of 2005 stood at $6.9 billion against $2.9 billion clocked in the first half of 2004. In fact, the whole of 2004 witnessed M&A deals of about $5.2 billion, the study noted.

"Though the year 2005 did not start well for the pharma sector, which posted disappointing results mainly due to uncertainties with respect to VAT, the sector has of late realised the principle of `Survival of the Fittest'. Indian companies are now all set to take over companies in the global space," the study said citing the instance of Mumbai-based Nicholas Piramal India Ltd (NPIL) acquiring the UK's Avecia Pharmaceuticals.

Consolidation in IT and BPO sectors has largely been driven by the need to acquire scale. To provide better client interface, larger firms acquire smaller BPOs with expertise in niche areas, it said adding that such acquisitions also helped in providing access to new customers.

One of the recent examples of diversification in this sector is the Helios and Matheson Information Technology acquisition of vMoksha. While Helios and Matheson had expertise in networking and software, vMoksha had gained proficiency in the healthcare, banking and financial services segment. "The acquisition helped H&M expand its product portfolio in financial services and healthcare," it added.

On the banking sector, the merger deals of Bank of Punjab and Centurion Bank as well as the one of IDBI and IDBI Bank set the tone for the sector, the study pointed out. In the telecom sector, one of the largest deals was recently struck with Vodafone acquiring 10 per cent in Bharti Tele-venture.