Kotak MD warns India Inc against takeover exuberance

Kotak Mahindra Bank's Managing Director Uday Kotak has warned against the 'exuberance' in overseas acquisitions by the domestic companies at a time when global financial markets are in a turmoil.

"The Indian system, government and business, to a certain extent did fall prey to exuberance which is now getting seriously affected," Kotak told British daily Financial Times in London.

While noting few top persons have dared to question the ambitions of the country's MNCs, the daily quoted Kotak as saying that he was worried about corporate India's over-reach amid a period of global financial turmoil.

Indian companies announced an estimated 240 outbound M&A deals in 2007 worth more than 32 billion dollars, up from less than 200 deals worth less than $10 billion in 2006 and not even $5 billion in 2005.

In comparison, there were just about 100 inbound M&A deals worth about $15 billion in 2007, up from such deals worth about $5 billion each in 2006 and 2005.

While the experts expect the total M&A volume to decline in 2008 in the midst of sluggish global market trends, still there have been a number of high-profile deals, totalling close to $10 billion, so far this year.

The FT report quoted Kotak as saying that the Tata-Corus deal worked out better than expected for the Indian buyer.

However, he indicated that the six-billion-dollar takeover of Canadian aluminium maker Novellis by Birla group's Hindalco had yet to prove to be a success, the report added.

Kotak also termed Tata Motors' $2.3-billion acquisition of Jaguar and Land Rover brands from Ford as 'a bold move'.