Showing posts with label FDI. Show all posts
Showing posts with label FDI. Show all posts

Sunday, October 14, 2012

Stuck in the Indian web!

After Cho’s failure to get the Orissa project up and running, Posco must look for an Indian CMD

A to-let signboard is hanging out side his rented house near Forest Park, his memorable words are still alive in the minds of his employees, but good ol’ Cho is not here to resound his words again. Soung-Sik Cho, the former Chairman-cum-Managing Director (CMD), POSCO India Private Limited (based in Orissa), a subsidiary of POSCO, has quit the coveted job out of the blue.

Indian business dynamics have often proven the nemesis for many globe trotting multi-national conglomerates. Failure to solve the riddle of the Indian work culture, government policies, people’s mind-set, et al has compelled many to give up on their ‘India’ dreams. Thus the obvious question that arises in corporate circles considering Posco’s travails in India so far, is whether Cho is the latest victim to succumb to the enigmatic Indian business environment?

Cho had been in the state since his company inked a MoU with the Orissa government for setting up of a 12 mtpa steel plant near Paradip with a whopping investment of Rs.510 billion (considered as the biggest FDI in India). “I hope we can swim with the positive tide and move closer to the shore with every stroke. If we diligently pursue our targets I am sure we can get our project well on its feet before this year end,” Cho had optimistically said to his employees on the occasion of the fourth foundation year of POSCO India on 23rd August 2008.

Optimism has been a scarce commodity, though, for Posco. The world’s third largest steel producer has been facing problems of all kinds from the very onset of its Indian journey. Currently reeling under delays in starting construction of the $12 billion plant, Asia’s biggest steelmaker by market value has been plagued with various issues, from irked environmentalists to tussles with the Oriya government over various land usage disputes. All these stand testimony to the South Korean steel makers’ India predicaments. Cho, who had earned name and fame across the globe for his acumen in setting up greenfield projects, was bestowed with the responsibilities of POSCO-India in 2006 to solve persisting problems, apart from ensuring smooth implementation of its various projects.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face

 
Posted by at
Labels: , , , , , , , , , , , , , , ,

Sunday, July 29, 2012

“Peaking Valuations may slow down M&A”

Anjan Sen, Director, Strategy & Operations, Deloitte India

B&E: With the growing health care market in India, Reckitt Benckiser recently bought Paras Pharmaceuticals for about $726 million. What is the scope of such deals in pharma sector in India?
Anjan Sen (AS): The market is currently worth roughly $12.6 billion and is growing at 14+% CAGR. If it keeps on its current growth path, it will achieve $22 billion by 2015. India is set to overtake Brazil and become the 10th biggest pharma market by value worldwide in 2012. The gap between volume and value figures (India is 3rd by volume and 11th by value) should be reduced through governmental intervention (regulations, pricing controls, et al). Post the recent deals, it is felt that valuations are very high in India and M&A activity may slow down unless true synergies can be obtained through acquisition.

The key trends and macro factors driving M&A activity in the pharma industry include the patent cliff ($160 billion sales drop expected in 2012 alone), increased cost pressures and corresponding demand for generics, and access, i.e. favourable government regulations in India. Through partnership or acquisition, pharma companies can strengthen core capabilities in R&D, manufacturing, marketing, and distribution. These trends point towards continued deals in the India pharma sector; however, it must also be noted that valuations are peaking and there is likely going to be a slowdown in the pace of M&A activity, unless more prospect target companies emerge.

B&E: The Indian pharmaceutical industry forms around 8% of world pharmaceutical production. The trend of Indian companies being increasingly targeted by multinationals (MNCs) for both collaborative agreements and acquisitions has been picking up over a couple of years. Does the sector environment favour consolidations in coming years?
AS: It is likely there will be more focus on product asset acquisition rather than corporates. As opposed to M&A, alliances or strategic partnerships are expected to increase in order to leverage core competency strengths in R&D, manufacturing, marketing and distribution.

A reverse trend will emerge, where Indian pharma companies will continue to acquire abroad. Currently, around $2 billion has been spent by Indian entities abroad and this trend is expected to continue with management willingness to globalize and leverage partners’ strengths in foreign markets.

It must also be noted that regulations are key and must continue efforts to make the market investment friendly, through increased focus on investment (FDI) allowances, transparency and patent/IP protection. Enhanced spending on infrastructure development and improved access through mass insurance schemes are also factors supporting collaborative agreements in the sector going forward.




 
Posted by at
Labels: , , , , , , , , , , , , ,
Subscribe to: Posts (Atom)