Wednesday, March 28, 2007

Tata buys Chrysler for $1 March 25, 2007

‘Tata buys Chrysler’ was the headline in the online daily, The Globalist, on 23 February. Its author imagines a scenario in which Ratan Tata buys the Chrysler subsidiary from DaimlerChrysler for a dollar. The famous American car company is cheap because its employees’ health care and pension liability of $20 billion has bankrupted it. The story also has a message for Indians who don’t know quite what to make of the global ambitions of their companies.

When Ratan Tata bought Corus last month, he got the entire steel industry of Britain and Holland and earned the applause of an India bent on assuming a place in the world. He paid too much but he called it ‘a moment of great fulfilment for India’. Two weeks later, Kumar Birla bought Novelis to become the world leader in rolled aluminium from which cans of Coke and Pepsi and cars are made. Once again national pride was on display. Are these purchases smart business buys? Or is it about personal egos and national honour?
After the deals the shares of both companies fell 11% on stock markets. Standard & Poor’s placed Tata Steel’s long term rating on ‘credit watch’. What would Tatas do with 30,000 expensive European workers? Others asked how Birlas would discharge Novelis’ mountain of debt. The stock markets are telling the companies that their earnings will decline in the short term even though their acquisitions may be good and strategic in the long term. What matters now is that Tatas and Birlas bring their considerable skills to Corus and Novelis and run them better.
No one could have imagined even five years ago how quickly Indian companies would burst upon the global stage. For all the hype about China, it has only a handful of truly world-class companies. By contrast, India has a much deeper and broader stable. Indian companies have also been remarkably sensible in the way they have gone about buying assets abroad. They have ventured out from a position of strength after winning victories in the domestic market. They have usually bought smaller companies to gain access to new customers or technologies or to leverage their low Indian costs. Quite unlike the Chinese electronics firm, TCL, which was so influenced by the prideful ambitions of its government (rather than business logic) that it bought parts of two famous French companies, Alcatel and Thompson. It is in trouble today as the acquisitions have drained it of cash.

The Globalist headline is a warning to Indian companies to beware of hubris. The next time they raise their mighty chests to make a big foreign acquisition, they should remember that only one out of two acquisitions succeeds and the failure rate rises with size. Only four acquisitions did well out of all those made by the 15 largest Japanese firms between 1980 and 2001. This is a sobering lesson from McKinsey’s research department. A foreign target will always appear more attractive from far away Nariman Point, and a brand is up for sale precisely because it is in trouble.
India is still an enigmatic rope trick where great companies perform magic amidst unwashed masses, corrupt politicians and negative bureaucrats. We have the largest billionaires in Asia, but the point is they are creating untold wealth for India. One of them, Mukesh Ambani and his gas discoveries could reduce our dependence on foreign energy—something that the state failed to do. Indians only need good schools, health centres, and infrastructure from the state, and they will respond with amazing prosperity for all.


srjwebsolutions said...

We are leading responsive website designing and development company in Noida.
We are offering mobile friendly responsive website designing, website development, e-commerce website, seo service and sem services in Noida.

Responsive Website Designing Company in Noida
Website Designing Company in Noida
SEO Services in Noida
SMO Services in Noida

Unknown said... is online medical store pharmacy in laxmi nagar Delhi. You can Order prescription/OTC medicines online.
Cash on Delivery available. Free Home Delivery

Online Pharmacy in Delhi
Buy Online medicine in Delhi
Online Pharmacy in laxmi nagar
Buy Online medicine in laxmi nagar
Onine Medical Store in Delhi
Online Medical store in laxmi nagar
Online medicine store in delhi
online medicine store in laxmi nagar
Purchase Medicine Online
Online Pharmacy India
Online Medical Store

Unknown said...

We are uhe solid first platform for modeling newcomers to achieve there new dreams. The first to train and promote out models at our expense to avoid burden on them. Join the most popular agency if you modelling jobs in Delhi for female freshers, models, students, housewives aiming to start there modeling career. We are top modelling agency in Delhi offering modelling jobs in Delhi for upcoming female freshers or experienced models who want to join lingerie modeling agencies.

modeling agencies in Delhi
modeling agencies
modeling jobs
modeling auditions
model coordinators
modeling jobs in Delhi

Unknown said...

We are specialized in Mechanised cleaning of Underground and Overhead Water Tanks of all sizes. Door Step services across Delhi, Noida and Ghaziabad.

Water tank cleaning services in Noida
Water tank cleaning services in Ghaziabad
Water tank cleaning services in Delhi

Drain cleaning services in Noida

Drain cleaning services in Ghaziabad
Drain cleaning services in Delhi
Pipeline Cleaning Service in Noida

Pipeline cleaning services in Ghaziabad
Pipeline cleaning services in Delhi

Tank cleaning services in Noida

Tank cleaning services in Ghaziabad
Tank cleaning services in Delhi

Unknown said...

Battery Mantra Buy Car and Inverter battery online in India. BatteryMantra is Noida based India's No. 1 online battery store offering you genuine batteries of all the well-known battery brands at best prices.

Online Inverter Battery Store
Online Car Battery Store
Buy Inverter battery Dealer Noida
Buy battery online Noida
Online Inverter Battery Store
Buy car battery Noida