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The Indian tiger is finally on the prowl............

Monday Buzz: The Indian tiger is finally on the prowl - Sify.com

Finally uncaged, this Asian tiger is on the prowl! On a shopping spree, India Inc picked over 35 foreign firms with over $ 750 million between January and November. There is no stopping it now. Last week saw Ranbaxy buy out RPG Aventis AG in France for 70 million euro - the third biggest purchase of corporate India ever.

Clearly the relaxations on offshore investments have come at an opportune moment. The IT companies are definitely making the most of the raising of the net worth ceiling on offshore investments from 50 per cent to 100 per cent. The government was strongly targeting the pharmaceutical and IT companies with its policy changes. But the transformation wrought on corporate India can be seen across other sectors as well.

Studies by the Centre for Monitoring Indian Economy (CMIE) have shown that India Inc is sitting on a pile of liquidity. Estimations are that between the top 24 companies, there was about $10 billion (from $7.6 billion in 2001-2002) in cash and equivalent in March 2003. This definitely needs to be expended… as the cash reserves are seen eroding real value.

All of this only brings to the fore that there is a challenge in offshore investments. The investors have to be wise not only on the price they are paying for their acquisitions but also understand income streams and the cultural mores that govern them. This is only a word of caution, as right now the Indians seem to be playing it right. The prices they are paying remains within modest reckoning. Well, India is on a high with even WEF ranking it 37 (out of 102) in terms of global competitiveness, which compares pretty well against China’s 46. The trick is in cashing in on this.