The Hindu Business Line : `Focus on acquisitions in key verticals'

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Mumbai Feb. 7 Indian companies need to actively scout for acquisitions in key verticals such as telecom, manufacturing and BFSI to tap the robust demand in the European markets, according to speakers at a panel discussion on `Fuelling Indo-EU Trade and Investments: Build or Buy Challenge" at the Nasscom Leadership Summit 2007.

According to Mr Sudip Nandy, Chief Strategy Officer, Wipro Technologies, Indian companies should concentrate on acquisitions that are driven more for filling competence gaps by targeting particular countries that offer strong niche capabilities. "We see tremendous growth in telecom, manufacturing and BFSI verticals in different European countries that can be leveraged by Indian companies."

However, the challenge after acquiring a company would be in integrating it well and encouraging the workforce in the acquired entity to play an important role in the operations of the company, said Mr Bernard Bourigeaud, Chairman of the Management Board and CEO, Atos Origin.

Apart from the cultural barriers, another bottleneck in acquiring companies in continental Europe are the lower margins that these companies command. "Acquisitions in Europe would be earnings dilutive owing to lower margins. This is where private equity firms and buy-out players can play a pivotal role (in structuring a deal)," said Mr Stephan Goetz, Managing Partners, GoetzPartners Germany.

Reiterating this point, Mr Nandy added, "Going forward, we expect private equity funds to assist Indian companies in acquisitions in continental Europe."

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