India M&A push undeterred by credit woes

By Tony Munroe and Himangshu Watts

MUMBAI (Reuters) - Armed with strong balance sheets, willing local lenders and unrelenting ambition, Indian companies are well positioned to navigate the credit crunch and maintain their global buying spree, but must be flexible on financing.

Turmoil in credit markets could even serve to open up opportunities for cash-rich Indian corporates looking globally to buy access to materials, technology, and distribution.

"Appetite continues to be there and continues to grow," Chanda Kochhar, joint managing director of ICICI Bank (ICBK.BO: Quote, Profile, Research, Stock Buzz), India's No. 2 lender, told the Reuters India Investment Summit. "The Indian corporate sector has a healthy balance sheet strength to be able to execute some of these large transactions."

Indian companies have announced $22.3 billion worth of outbound acquisitions this year, Thomson Financial data show, approaching last year's record $24 billion, which was fattened by Tata Steel's (TISC.BO: Quote, Profile, Research, Stock Buzz) blockbuster $12.9 billion takeover of Anglo-Dutch steelmaker Corus.

Indian companies looking to maintain growth trajectories fuelled by average economic expansion of 8.6 percent over the past four years are not shy about their acquisitive leanings.

"We would be looking at major acquisitions, that is no question," Atul Chandra, president of the international oil business for Reliance Industries Ltd (RELI.BO: Quote, Profile, Research, Stock Buzz) told the Reuters Summit. The firm is ready to spend as much as $15 billion on the right target in oil, gas or petrochemicals, he added.

Other sectors seen ripe for overseas M&A from India include steel, autos and pharmaceuticals.

Hindalco Industries (HALC.BO: Quote, Profile, Research, Stock Buzz), which paid $6 billion this year for Canada's Novelis, said last week it is keen to buy copper mines abroad. Pharmaceuticals maker Biocon Ltd (BION.BO: Quote, Profile, Research, Stock Buzz), meanwhile, said this week it too hopes to buy overseas.  Continued...