'We saw successful MNC consolidation this year'

K Balkrishnan

The successful privatisation of the some of the key PSU like IBP, VSNL, IPCL and HZL and initiation of the process in other key PSU like Nalco, BPCL and HPCL inspite of the various setbacks.

The market also saw the successful consolidation process of MNCs in high value stock through minority take-outs like Cadbury, Reckitt, Kodak, Astra etc. It also saw the consolidation process by the Indian Private Enterprise in the form of merger of RIL & RPL, re-organisation of the metal business by AV Birla Group and Reliance offer for BSES.

In a nutshell, GOI continues its process of privatisation, the domestic industrial group re-organising their business to concentrate on core competencies and the MNC consolidating their stake through de-listing thus setting the platform for more investments.

There was frenetic M&A activity

The highs 0f 2002 would be the frenetic M&A activity in the form of privatization of PSU, minority take-outs by MNC and consolidation activity by domestic industrial group which augers well for the investment banking business. The low would be the non-revival of the primary equity market, which is essential for the growth of business.

There will be more consolidation

Year 2002 was a reasonable year with M&A business focused more on privatization and consolidation in the form of minority take-outs by MNCs. In the next year too, there will be more consolidation, restructing (both business & financial, accelertion of privatisation process.) The government of India would continue its process of privatisation, consolidation of operation by MNC setting the platform for more investment and restructing and re-organisation of business by domestic Induatrial Group of their key business. Hopefully the primary market would also revive.

K Balkrishnan is Head, Corporate Finance & Advisory, HSBC Capital Markets (India) Private Limited. He spoke to Kanchana Suggu over e-mail.

2002: The Year That Was