The Hindu Business Line : ‘Slowdown throws up opportunities for investment’

Mumbai, Dec. 25 Corporates may be telling employees to take a holiday, work with a non-government organisation or just work less days in a week, to cope with the economic slowdown.

But looking at it as a glass half full rather than empty is Mr Ajay Piramal, who says that the slowdown shows up many more opportunities to invest in, as valuations are much more attractive than they were six months ago.

Indicating that more companies could become vulnerable to acquisitions, he said the coming year would see more domestic consolidation, at least in the pharmaceutical segment. “Overall, yes, people are willing to take less risks than before. Consolidation could take place, as well. I think there will be some consolidation in the domestic space. I see that happening,” he said.

Looking for value

In fact, earlier this week, Piramal Healthcare had announced an acquisition, albeit an overseas one, of generic inhalation anaesthetics company Minrad for Rs 196 crore. And Piramal Healthcare will continue to look at acquisitions if the value proposition is “compelling”, he said.

“In this case also, this stock only last year was at dollar three-and-a-half, a few months before that it was $7 and now you are getting it at 12 cents. There are many such opportunities available,” he told Business Line a day after announcing this deal.

But the year ahead looks tough. “I am hopeful that the pharmaceutical industry will not be as affected as many other industries,” he said.

“The real slowdown began in the last quarter of 2008 and I think in 2009, things are not going to be so good. The financial crisis witnessed in the West is not yet over. Even in India, you are going to see some financial issues coming out on bad loans, which till now have not yet surfaced,” he said.

A big issue also facing the industry for the last few years has been the high turnover of people. “I think that will also come down now. Because demands are not as many, there are not as many jobs,” he said.

Managing economy

Of course, he adds, inflation has come down and so has oil and commodity prices, and that in some ways is good news. “But I think the deficit the government has incurred and the fact is, there is going to be elections and there is going to be more and more populism means that our management of the economy, in that sense, leaves a little to be desired,” he observes, as the year draws to a close.

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