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Mines shine in Indian M&As

Even as merger and acquisition (M&A) activity in mining and metals slowed down globally, it picked up in India during the downturn. India completed 16 deals worth $981 million (about Rs 4,500 crore) — up 45 per cent in deal count and 173 per cent in value, reports Sumant Banerji.

business Updated: Apr 12, 2010 21:19 IST
Sumant Banerji

Even as merger and acquisition (M&A) activity in mining and metals slowed down globally, it picked up in India during the downturn. India completed 16 deals worth $981 million (about Rs 4,500 crore) — up 45 per cent in deal count and 173 per cent in value. Globally, the number of deals increased 16 per cent but deal value fell 58 per cent.

While globally companies had a conservative outlook towards cash in the wake of the recession, more deals meant greater consolidation among smaller firms. With 1,859 deals, the number of small deals (below Rs 1,125 crore) was significantly higher than that recorded in the previous three years (1,572 in 2008, 1,644 in 2007). In contrast, high value deals nose-dived to the lowest ever in four years.

“In 2009, mining was a story of consolidation of small players, China’s continual thrust to seek assets offshore and a combination of distressed assets being sold and a level of caution by players who have historically been acquisitive,” said Tim Goldsmith, global mining leader, PriceWaterHouseCooper.

Though India performed better than most countries, with Sesa Goa’s Rs 1,700-crore acquisition of Dempo the biggest during the year, there were not many overseas acquisitions and cash-rich public sector undertakings like SAIL, Coal India Limited and NMDC continued to be dormant.

“A trend to watch for will be whether these companies make outbound acquisitions this year,” said Navin Vohra, partner and national leader, metals and mining, Ernst & Young. “2010 could be the year of Indian mining PSUs becoming multinational.”