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India: Mergers, Acquisitions and Technology

Merger and acquisitions and technology dominated the topic of conversations in India. Just in the past couple of week Indian companies have been involved in multi-billion dollar deals, which is an usual situation for Indian companies. For many years Indian companies were stymied by stringent government rules that prevented them from competing at a global level.

Dominating the news for this week is the acquisition of Hutch Essar India's fourth largest mobile provider for about $19 billion by Britain's Vodafone. Om Malik of Gigaom writes:

Vodafone historically has been one of the worst telecom operators when it comes to mergers and acquisitions – bad deals, ill-timed exits and overpaying are part of company's legacy. By putting a valuation of close to $19 billion for Hutch Essar, the third largest mobile company in India, with about 24 million mobile subscribers, the British giant has ensured that legacy remains unchanged.

The big new prior to the Hutch Essar acquisition was the Tata acquisition of the Anglo-Dutch steel company Corus for about $12 billion. This was the first time in the history of corporate India that such a deal was executed. Understandably there was a lot of euphoria. But, Dhiraj Nayyar sounds a cautious note when he writes:

Can India possibly claim to be superpower, the new emperor, just because some of it's corporates are taking over firms abroad. Corporate might hasn't turned into well-being for the majority of the people who still languish in poverty, illiteracy, hunger: basically dismal human conditions. Even possessing a few nuclear weapons doesn't change this fact. And if half a country's population cannot read, feed or cloth itself, what does that say about the empire? Even the American empire seems hollow when it is estimated that one in six people in the US is functionally illiterate, a large number of them live in poverty, where poverty is often a function of race, and where hurricanes like Katrina leave the mighty government fumbling for solutions.

Here is a different perspective on the Tata-Corus deal from Govindaraj Ethiraj, an Indian journalist, who happened to be at the BBC office when the Tata-Corus deal was announced. Here is what he writes about how India is being perceived not only in newsrooms in the UK, but also in Germany.

I happened to be in London the day Tata's bid for Corus became public. I also happened to visiting some journalist-friends at the BBC's White City offices where BBC World is headquartered. Even as I was sitting in the now fully digital newsroom, the tickers began firing more and more takes on the possible deal. The BBC producers quickly realised that this was now the big story of the day. Not just for the Asia editions but also global bulletins.

Being a journalist from India and all that, they felt I might be able to provide some insights. So, I was asked, first, if this bid was for real. Second, they asked, what would now happen to Corus ? Yes, I said to the first, but I didn't know what to say to the second question. I mean, no one has ever asked me that one before. Its always been, what will happen to some poor unsuspecting Indian company. Not because of a takeover, because we've ensured that we don't really allow those but because of competition that we've fortunately allowed.

So there is India Inc, whose image outside is getting more and more menacing, so to speak. I was in Bavaria, Germany before I visited London and a German journalist friend mentioned how there was concern amongst some workers in local engineering firms particularly after Indian companies (like Bharat Forge, M&M) began snapping up assets here.

From the multi-billion merger deals we switch to technology. Yahoo! India went local and made its content available in seven different languages. However this move by Yahoo does not appear to have gone down well some some bloggers. Inje Peenu of Ginger and Mango writes:

Yahoo India launched a beta version of their Malayalam (an Indian Language) portal and what do they do to fill their pages? Lift content just straight from small web magazines and blogs without asking a word or adequately compensating for those. What a shame!

It looks like photoblogging has caught on in rural India. Kuffir of BlogBharti writes about one such photoblogging project in India.

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