Indian corporates rope in KPMG for overseas expansion schemes

New Delhi, June 3: Management consultant KPMG on Sunday said several large-sized Indian companies have engaged it to devise their overseas expansion plans, since their capacity utilisation and market share growth potential within India have already reached optimal levels.

Managing director (corporate finance) of KPMG Ardeshir Contractor said several large-sized Indian companies were looking to foreign markets for future growth.

"They find the domestic market less attractive due to the optimal operational efficiency and have already achieved international standards," he said adding the emerging mantra for the corporate expansion were new ideas, production techniques and notably, new destinations.

He cited increased investments by Indian corporates in Britain, saying this figure touched 136 million dollars in 2000 against a mere 55 million dollars in the previous year.

Citing the recent acquisition of the UK Tetley by Tata Tea he said: "There also exists immense scope for mergers and acquisitions (M&As) for the Indian companies." Indian companies were already working in optimum capacity and were well-established in the domestic market, where the potential for capturing further marketshare remained low, he said.

Lauding government’s initiatives in further liberalising norms for outbound investments, including overseas listings, Mr Contractor said these would help many large companies to find markets abroad.
He urged Indian corporates, specially those in the textile business, to take advantage of the foreign tag on their products for higher market realisations and said it would make greater economic sense for them to set up manufacturing units abroad.

"One could also explore the possibility of setting up units for converting the semi-finished products and take advantage of the ‘made in ...(country)’ label for higher realisations," he said.

Initially the companies could not garner large foreign market share, but the potential lay in the smaller share since they could grow from there after establishing the root, he said pointing out that Indian investments in the US had more than doubled in the last one year.

Apart from the knowledge-based sectors like information technology (IT) and biotechnology, the potential areas that offered vast scope for Indian investments abroad were media, pharmaceutical, hospitality, textiles and even automotive sectors, he said.

"Both pharmaceuticals and software sectors were the key areas in the UK drawing major investments, he added. Even though pharmaceutical sector witnessed a drastic slowdown by growing by a meagre eight per cent in 2000 when compared to 24 per cent growth in 1998, he said, the pharma sector continued to be a high potential area for investments in the UK. (PTI)