M&A deals key to fundamental changes in automotive space: PwC

Automotive companies seeking long-term success would drive the deal market in 2010 by developing and executing strategies for sustainable growth and value creation

Mergers and acquisitions (M&A) activity is expected to drive fundamental changes necessary for long-term sustainability of the Indian automotive industry, a report by PricewaterhouseCoopers (PwC) has said, reports PTI.

According to the ‘Automotive M&A insights for 2009’ report by the global consultancy firm, the deal market will play a critical role as market participants pursue transactions with a focus on synergies, including cost savings and adding revenue to their business.

“Automotive companies with stronger operating models and cash positions are likely to leverage M&A to develop a competitive advantage through the consolidation of scale and expertise,” the report stated.

Automotive companies seeking long-term success would drive the deal market in 2010 by developing and executing strategies for sustainable growth and value creation.

“The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing. Some of the Indian original equipment manufacturers (OEMs) as well as component suppliers, in their quest to become global players, are on the lookout for opportunities in the global market,” PwC India leader for Automotive Practice Abdul Majeed said.

“Similarly, OEMs from other emerging markets will look for growth in the Indian market through more and more alliances,” Mr Majeed added.

The value of global automotive M&A deals soared to $121.9 billion in 2009, up over three-fold from $31.6 billion in 2008, driven mainly by an increase in activity in the US.



Is Piramal Healthcare in an exit mode?

The company says that it has no plans to exit the diagnostics space altogether. However, as we had earlier reported, its plans of acquiring smaller labs for growth does not seem to be working 

Piramal Diagnostic Services Private Ltd (PDSL), the diagnostics service unit of Piramal Healthcare Ltd, has shut down its diagnostics operations in Delhi. A few company officials say that this step is being taken due to losses the company has incurred over two to three years. Apparently, 60 people have also been retrenched with a compensation of three months’ salary at the Delhi unit. PDSL’s operations are estimated to be around Rs200 crore.

Moneylife had reported earlier (http://www.moneylife.in/article/8/4344.html) that the company’s strategy of buying a large number of smaller players (called ‘roll-ups’ in the US) might not be successful. PDSL had plans of acquiring 10 pathology labs across the country, from which it was targeting a minimum turnover of Rs5 crore each from these units.

Dr Swati Piramal, director, Piramal Healthcare, informed Moneylife, “The Delhi unit was located out of the way, which made it difficult for customers to access it. So we decided to close it.” However, she denied that the company had plans to exit the diagnostics space altogether. “We would like to clarify that the news appearing in certain sections of the media about the Piramal Group planning to close its diagnostics operations is completely baseless and untrue. We have expanded rapidly till 2009 and will continue to expand after consolidating and strengthening business processes.” 

Metropolis Healthcare and Piramal Healthcare are among the most competent players in the pharmaceutical space. Metropolis started its operations in 1981 and has 50 plus state-of-the-art laboratories across the globe. Ameera Patel, CEO and executive director, Metropolis Healthcare Ltd said that Piramal’s unit in Delhi was a greenfield project, which could be the reason for the closure.

“Greenfield projects in general are difficult as trust and credibility have to be established from scratch in that location,” Ms Patel told Moneylife.

Piramal Healthcare had recently acquired ‘I-Pill’, an emergency contraceptive pill brand from Cipla and the anesthetic product operations of Bharat Serums, a plasma derivatives manufacturer.

Sapna Jhawar, a pharmaceutical analyst from ShareKhan explained, “A lot of news has been on and off in the media about Piramal’s selling plans. Piramal has not been that aggressive with acquisitions lately—especially after their plans to acquire 5-10 path labs earlier. It (the diagnostics business) has been a steady source of income for Piramal; it could have made about Rs250-Rs300 crore by 2012. It doesn’t really make sense for Piramal to shut down its diagnostics operations until and unless it has got a good value for the business from a private player. Plus, even if this is the case, it will not affect Piramal’s business to a great extent, considering that it (the diagnostics business) is a small part of its (overall) business.” The Delhi unit contributed around less than 1% to Piramal Diagnostics’ revenues, and its closure is not expected to impact its overall operation in a significant way.


'Inflation to fall to 6%-7%; no need for capital controls'

The spike in inflation was led by food inflation that remained over 16% in April after crossing 20% in December

Chief economic advisor Kaushik Basu on Thursday said that inflation may come down to 6% to 7% in the next three months and that there was no need for any capital controls to check the inflows as they have been at a comfortable level, reports PTI.

"My expectation is inflation will be on a downward path, but fluctuating over the next three months, before a sharper downward decline. I expect it to be 6% to 7% within the next three months," Mr Basu said after releasing a UN report.

The wholesale price-based inflation for March was 9.9%, higher than the Reserve Bank of India's projection of 8.5%. The spike in inflation was led by food inflation that remained over 16% in April after crossing 20% in December.

Further, on the rise in capital inflows, Mr Basu said the inflows are at a comfortable level and do not call for any controls to check a possible overheating of the economy.

"Actually, there is no surge in capital inflows. It's flowing very comfortably. We have seen bigger inflows earlier into India. So, I don't think it is really a situation where you need to take any capital control (measures)," he said.

He added that the country already has a couple of capital controls that have served the economy well.

"I don't think it's really a kind of occasion where you need more on that. Right now the situation is not worrying because it's coming in very comfortably," he added.



R Balakrishnan

7 years ago

One wonders whether these economists turned babus know what they talk. There was Montek saying in October that inflation will come down in a month. Now he says he is afraid. The sad fact is that none of these babus go to the marketplace and see reality. Entire life is paid for by expense account or they make so much money that it does not matter.

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)