The Hindu Business Line : Indian cos on buying spree in UK, Europe

India now ranks among the first five largest investors in British companies and equities, spearheaded by the Tatas, who made ambitious purchase of Jaguar and Land Rover auto brands.

Many Indian companies are on “serious lookout” to acquire “strategically placed” British companies, including stock broking and financial firms in London, which is the heart of the European commerce and industry.

At the sane time, India, according to Geneva-based UNCTAD, has emerged as a “favourite spot” for European companies busy shifting service operations abroad to escape from high administrative and management costs. A European banker says “it is now a two-way traffic”.

Indian companies coming to Europe prefer to operate from London, as the city is seen as the “correct gateway” to oil-rich Middle East and commodities-rich African markets.

In African markets, some Indian companies benefit from the presence of well-established Indian business communities, particularly in Nigeria, East, Central and South Africa.

An Indian banker based in London stated that since March this year borrowing abroad has been made easier by the Reserve Bank of India and Indian companies can now borrow up to $ 50 million each for spending in rupees equivalent.

It is argued that while the RBI initiative may not translate into greater flows, it widens this field for Indian companies sourcing capital for business needs. Indian companies incorporated in the European Union countries also find it convenient to borrow from European banking institutions, at much lower rate of interest and extended repayment schedules.

The common sense strategy is to ensure that commitments are honoured diligently and on schedule.

Indian manufacturing and trading companies feel confident that with advent of more “intimate” globalisation, Indian companies have opportunities to “spread overseas”.

It is also argued that the days of “carrying catalogues and samples” are over with the increasing pace of global communication networks.

Hence, buys in developed and developing markets need “spot” decisions on price and delivery. For Indian manufacturing companies, it is essential to have a physical presence in key European metropolitan trading areas.

The goods need to be displayed or your sales force should be on the road all the time.

The Indian business community has enviable management and administrative skills, and European companies at the middle and lower levels are finding it hard to cope with rising capital and administrative costs.

This enables Indian companies to move on.

The latest Infosys deal to buy Axon Group is another chapter in the saga of Indian companies on a buying spree.