Wednesday, June 24, 2009

Indians bailed out many US companies on the brink of closure

I am reading an article from
Indian companies made 143 acquisitions across various sectors in the United States over the last two years, bailed out many companies on the brink of closure and created some 30,000 jobs, according to a seminal new study.

In 2007-08 alone, 94 deals between the range of $0.8 million and $1,005 million were concluded with the disclosed value in 55 deals totalling $4,432 million, according to the joint study released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst and Young.

In 2008-09, Indian companies were involved in 49 US-bound acquisitions. Of these, deal values were disclosed in 24 cases and their value totalled $960 million. The size of the deals were in the range of $0.70 million and $172 million, the report noted.

Indian Ambassador to the US Meera Shankar released the study titled 'India Contributes to Employment, Capital Growth and Tax Revenues in the US - Direct Investment by Indian companies in 2007-2009' at a function at the East West Centre here Tuesday.

Speaking of a transformation that the India-US bilateral relationship had witnessed in recent years, Shankar highlighted the complementarities and convergences in the relationship.

The US being the largest economy in the world was naturally a key economic partner for India, she said pointing out the growing two-way investment between both countries.

FICCI President Harsh Pati Singhania and Secretary General Dr. Amit Mitra also spoke about the developing economic ties between India and the US and the numerous opportunities for further cooperation.

The study shows that IT&ITeS (information technology and information technology enabled service), consumer products, pharmaceutical and manufacturing are the key sectors where companies are active in outbound acquisitions.

However, the IT&ITeS sector is the sector where a majority of the deals took place. The IT&ITeS sector, in fact, accounted for 50 percent of the total number of deals in 2007-08 and 40 percent of the total number of deals in 2008-09.

The report attributed the rise in Indian outbound investments to the US to strong economic growth, and easy availability of debt finance for companies.

Several Indian multinationals are still looking at acquiring US companies, despite the economic downturn which has raised the cost of overseas acquisitions.

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