Automotive sector: Billion Dollar acquisition Club in Sight

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"The Indian automotive sector, characteristically driven by traditional and conservative business conglomerates is under-going a fundamental shift as companies set out to unlock the benefits of global scale of operations exhibited by the increasing merger & acquisition (M&A) deals in the sector worth more than $515 million from 17 deals so far this year, i.e. almost equal to the value and volume of deals done by the sector in the whole of last year." said Bundeep Singh Rangar, Chairman, IndusView Advisors, the India-focused cross-border advisory firm.

 

"The show of growing ambition by the companies in the sector mirrors the growing aspirational value among consumers in the Indian market - not only to own a car, but also associate with a brand and upgrade to a luxury car, a segment that is growing at 25% annually commanding a share of almost 27% in the current sales." added Rangar.

 

Such aspirations have seen more than 5,000 luxury cars added to the Indian roads in 2006, up from 3,000 in 2005 and just 1,000 in 2004, according to estimates. It's just a matter of time, expect the global luxury car brands Volkswagen, Lamborghini, Rolls Royce Phantom, Bentley, Porsche, Aston Martin and Ferrari roll out their India plans in full steam.

  

The bidding war round the corner for Jaguar and Land Rover, the U.K. based iconic marques owned by Ford Motor Company, the U.S. based world's third largest automaker, for an estimated price of $1.5 billion, which features Tata Motors Ltd, India's biggest automobile company, and Mahindra & Mahindra Ltd, tractor & utility vehicle manufacturer, among others is symbolic of the evolving Indian businesses making a mark in the global market place.

 

"Between Tata Motors and Mahindra & Mahindra, whoever walks away with the deal, the moment will be historic as it will mark the automotive sector's entry into the elite billion dollar acquisitions club." said Rangar

 

With the two cult luxury brands in its armory, the winner will see itself take the first steps in to the un-explored premium segment and expanding global market place, with niche patrons apart from a combined workforce of 20,000 and state-of-the-art engineering platforms.

 

The Indian partner on its part will bring on board the management expertise to save cost and improve production processes by virtue of coming from a country where economies of scale is the foundation of a profitable enterprise.

 

The other reason why this deal will be significant is that it will further reinforce the prominence of the Indo-U.K. merger & acquisitions deal activity which has already seen the country's two of the largest deals - the acquisition of Hutchison Essar Ltd India's second largest GSM mobile service provider 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.

 

India is the Second Largest Job Creator in Britain

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.  

 

Sourced From: IndusView Advisors Private Limited