MUMBAI: India’s large to small companies have accelerated the pace of their investment, hiring and outsourcing plans, less than a month after a new government that won on a pro-reforms agenda took charge at the Centre.
The Piramal group, which sits on a pile of cash received from the sale of its pharma business, is close to tying up with foreign funds to raise its exposure in infrastructure and realty sectors.
“Things are looking better. We are increasing our exposure in real estate and infrastructure sectors,” said Ajay Piramal, chairman at Piramal group. “Foreign funds have evinced interest in forging partnerships after the emergence of a stable government.”
The organised retail sector, which was struggling to survive after consumers cut down spending, now seems to be getting its mojo back. Foreign luxury brands that considered India as a long-term market for investment are displaying a sense of urgency now to invest in the country.
“You know, internationally people felt that India is not a ‘running away market’ till last year. The mood has completely changed in the last few days. We have started talking to foreign brands for partnerships. There is a huge sense of urgency to be in India,” said Darshan Mehta, CEO at Reliance Brands.
Kishore Biyani’s Future Group will raise Rs 2,000 crore through a warrant issue to promoters to drive growth in its retail business. The group will raise another Rs 2,500 crore by selling its stake in non-core businesses.
The rise in business confidence has forced companies to speed up outsourcing of non-core activities. Thomas Cook, India’s biggest travel company, has outsourced its paperwork and administrative activities.
“The process of outsourcing noncore activities has gained momentum in the last one month. This is mainly to bring a sharp focus on our core business,” said Madhavan Menon, MD at Thomas Cook.
Large business houses as well as small entrepreneurs are increasingly trying to understand the best legal structure for doing business.
This is mainly to comply with laws prevalent in several international countries as Indian businesses are going global.
“Ever since the new government took charge, business houses have started discussing the possibility of incorporating the right legal framework for doing business. Since Indian companies have exposure to countries like the US, it is important that legal issues, which relate to a foreign jurisdiction, should be duly addressed,” said Rajesh Narain Gupta, managing partner, SNG & Partners, a Mumbai-based legal firm.
The anticipation of economic boom has already started revving up the market for mergers & acquisitions and fund raising.
Several deals, which were not happening due to valuation issues and lack of buyers, appear to be coming close to conclusion. Many firms and banks have already raised money through qualified institutional placements, cashing in on the record rise in stock markets.
“The good thing is that buyers are finally showing up and valuations have improved. Lots of people in India want to exit their businesses. You will see many deals in the coming days,” said Rajeev Gupta, MD, Arpwood Capital.
Investment banks are luring talent to grow in a competitive market. Singhi Advisors, a Mumbai-based investment banking firm, acquired Mumbai-based Pristine Capital last month. Akshay Sanghvi, the MIT-educated founder, director of the company, has joined Singhi as partner.