India’s Growth Fails to Enthuse Deal Activity

M&A activity has failed to ignite this year in India and has performed miserably compared to last year. Despite all the hoopla about India being second fasted growing economy in the world, the M&A activity this year hasn’t even been 50% compared to last year. Considering the fact that 2008 was written off financially, performance should have been better this year, a decline is certainly surprising. Last year, for first three quarters $30bn was spend on M&A activity in India and in comparison this year during first three quarters the figures were meager $13bn. The average deal value also fell by half to $33mn from $67mn last year.

Foreign acquires only accounted for just $3.9bn of all such deals this year, which is only 30% of the total deal value. Again this is lower than last year’s share of foreign acquirers in total deal value, which stood at $15.7bn, five times the present value. Last year, Asian countries had dominated the list of biggest acquirers, four out of ten. This year the figure fell to three out of ten.

Mauritius did the biggest turnaround from being at bottom of top ten foreign acquirers to number one this year with $1.2bn acquisition followed by France, which accounted for a quarter of all outside deals. The United States came third with $379mn worth of acquisitions of Indian companies. Japan which was the biggest foreign acquirer last year slid five places to sixth position this year.

This year, Infrastructure sector was the common target sector for both Indian and foreign acquirers, telecommunication and Electric, Gas & Water sector were in top five target sector for both domestic and foreign acquirers. Pharma sector, which was the biggest target sector for both foreign and domestic acquirers, retained its position but only for foreign acquirers, who invested $1bn this year. Indian acquirers made most of the acquisitions in Oil & Gas sector.

Retail food chain was the pick of foreign acquirers it hardly featured on the acquisition radar of domestic acquirers, but foreign acquirers made investment of $100mn. Similarly, domestic acquirers made acquisition worth $677mn in Business Services sector which was almost disregarded by foreign acquirers.

Clueless Congress Wins Election

Congress Party, which few days back was sulking for allies in post-poll environment and predicting its own lack of numbers to form next government, surprised everyone with election results. Congress party won 201 seats much above its own expectations.

At the end of fifth phase of polling Congress General Secretary Rahul Gandhi had made admission of his party’s impending failure and his desperation to form government with support from his opposition parties, he even went on to name his Andhra Pradesh opponent Mr Naidu as his next possible ally just before Andhra Pradesh went to elections and Rahul Gandhi hadn’t expected that his party will gain even 29 seats ( that it held in 2004) against 33 that Congress Party won in this election.

Confusion was not only about one state, Congress Party was unsure of its own gambit in Uttar Pradesh, it hadn’t imagined its wildest dreams that the party would end up winning 22 seats, Congress had even second thought about its own ally but was quite sure of stupendous performance by party’s opponents be it Mayawati in UP or Jayalalitha in Tamil Nadu.

Congress is now as much surprised at its win in several states like Tamil Nadu, Andhra Pradesh and W Bengal and as it is at the success of Rahul Gandhi’s strategy of going alone in UP. Congress in not basking the glory it hadn’t dreamed for long time.

The Rise and Illusion of Political Kingmakers

This nation of kings/rajas was replaced by the democratically elected representatives but now new political class is emerging all over India. This election has brought up hordes of politicians who now claim to be kingmaker for next government. Every party chief now seem to have become kingmaker in next government or so they claim.

It all started when the communist block leaders claimed that it will be they who will decide who will form the next government and who will be the next prime minister. Since then almost everyday one or the other head of a political party has started making such claims. First, it was Lalu Yadav, who claimed himself as kingmaker for being leader of the Fourth Front and decider of who will be prime minister. Then, it was turn of BJD leader Navin Patnayak, who claimed that he will become kingmaker in next government and it could be any one of his favorites –Prakash Karat or Sharad Pawar could be next PM, hurling more names to all ready overcrowded list of wannabe PMs in this country.

Later, JD(S) chief Deve Gowda felt the need to be in space of kingmakers, though not in condition to play kingmaker himself, Mr. Gowda asserted that his party along with communist parties will play decisive role in next government. Following his footsteps Mr Vaiko perfectly timed his statement with Tamil Nadu reeling under Lankan tamil issue, Mr Vaiko claimed that Tamil Nadu will play decisive role in formation of next government and he would like Ms Jayalalitha to be next PM.

Almost every party, which is in governance or sulking loss of power has suddenly realised that they would be the next kingmaker in Indian politics none the less they fail to realise how narcissist they have become, who continuously fail to recognise not only country’s problem but also to get their politics right.

Alliances and Fronts for Fortune and Political Bargain

As India goes for polls, political parties are vying for electorate and even more for opponent political parities. Ever since alliances gained prominence in national governance, national parties have weakened. In last five years all the national parties, with exception of BSP, have lost their foothold and political might. This political development has made them increasingly dependent on regional parties.

This election, regional parties have gained a new prominence and notoriety in forming alliances some time multiple and confusing alliances. What is more atrocious about these alliances unlike the previous alliance formations like NDA/UPA, is that they have no agenda and political vision for this country nor do they intend to present the electorate with any vision document.

Parties don’t want to emphasize their development agenda as they are totally unsure of which political block they belong to, political parties such has BJD has created totally new political ideological dimension of “center-right-left” party where as NCP and RJD are toying with both right and left. Parties such as TDP, DMK,AIADMK, and numerous smaller parties with suffixes such as ‘lok dal’, “rastrawadi” and “samajwadi” don’t mind which party governs the nation if they get their political cut.

Then there is Communist block and BSP, who don’t mind anything about any political party if they are non-Congress and non-BJP. They have nothing do with the political ideology of such parties if they are willing to support their next government. No body seems to mind even if alliance partners are fighting each other unless their egos are satisfied. In some states BJP/Congress have to beg smaller parties to be allowed and accommodated with a few seats in such regions for promise of backing government at center.

This election almost every political party is worried about future of the party but not the country. Smaller regional parties have no vision for national development and they are not bothered either as their primary interest lies in the cabinet berth and sops for their region. None of them are interest in socio-economic plan of this country for next five years, which will benefit the nation as a whole and will percolate down to every state and region.

Will TechMahindra’s Satyam be Sundaram?

Tech Mahindra has finally emerged as new owner of Satyam, after competing with Satyam’s biggest strategic investor- L&T infotech. Tech Mahindra’s emergence as new owner of the beleaguered firm is good news for all the stakeholders of the firm, but how good is it for TechMahindra? The bidding details are yet to be out, which makes it unclear about how much liability TechMahindra is going to shoulder about Satyam’s past. But, as the bid price of other major bidders such as Rs 49 of L&T and Rs 20 of Cognizant suggests that TechMahindra has over-bid its rivals in its zeal to enter big league.

At the outset deals propels TechMahindra into league of big information technology companies with vast human resources and big clients. The huge clientele base of Satyam will raise the expertise that TechMahindra has, which at present is largely confined to telecom space at present. TechMahindra will also get it hands on vast and diverse human resource of Satyam therefore boosting its experience in handling large clients and big projects.

This vast human resource pool will also be TechMahindra’s challenge as most of its employees will see it as case of reverse merger and plump posting going into hands of Satyam employee because of their expertise. Similarly, some clients will be wary of new owners who have little experience in non-telecom based projects. How L&T plays with its stake in Satyam will also impact TechMahindra’s success on this deal.