Mumbai, Sep 15: The Mahindras have snapped up as many as 28 assets worth USD 1.8 billion—varying from software to automobiles to aviation-in the past three-four years, but now feel that the same may slowdown due to the Competition Act, a senior company official said.
“In the past three-four years, we did 28 transactions aggregating around USD 1.8 billion. We are a very conservative group and we could close so many transactions because of the slowdown when valuations were low,” Mahindra Group Vice-president for Mergers & Acquisitions Vijay Paradkar said at the 5th Annual CFO India Forum here.
However, the M&A activity of the company may slowdown in the future due to the Competition Act, which will be more helpful to smaller companies than the larger ones like the Mahindras, Paradkar said.
The new competition rule came into effect from June 1, 2011, seeking to regulate acquisition of shares, voting rights, M & A deals which could cause adverse effect on competition in the country.
The regulations will be applicable to deals by companies with combined assets of Rs 1,500 crore or turnover of Rs 4,500 crore, and such deals will require CCI approval. But Paradkar urged corporates to go ahead, shop around and acquire companies in Europe.
“If you have cash in your books, this is the best time to go ahead-shop around and acquire companies particularly in Europe,” he said.
He also pointed out that corporates should not just go for sake of acquiring. It should see what M&A is going to do with that verticals in terms of organic or inorganic growth.
“The objective for acquisition should be right upfront strategically and it should be very clear as part of its game plan.”
Among the companies that Mahindras acquired during the period were the scandal-hit Satyam Computer, loss-making South Korean premium SUV maker Ssangyong, domestic two-wheeler maker Kinetic Motors and the Australian aviation firms Gippsland Aeronautics and GippsAero Australia, through which the group entered the aviation sector.
“We are successful in improving working of Punjab Tractors. And within two years we managed to achieve 11 percent market share in a very competitive scooter market for Kinetic Motors,” he said.
Of the 28 assets acquired, around 65 percent are outside the country, while the rest are domestic, Paradkar said adding “we are always looking for opportunities.” PTI
