Several multinationals are betting big on the India growth story despite the growing skepticism about the current business environment and decelerating economic growth.
In the last six months, global giants including Anglo-Dutch consumer goods giant Unilever Plc, British telecom major Vodafone and UK-based pharma and consumer healthcare company GSK have made open offers for raising their stakes in their Indian subsidiaries by investing billions of dollars.
“We have been here for many years and we are used to fluctuations in India. We take a very long view on India. We think very positively on the prospects,” said David Redfern, chief strategic officer, GSK.
GSK, which on Monday announced an open offer for shares worth Rs. 6,400 crore to raise its stake to 75% from 51% in its pharmaceutical business in India, had early this year raised its stake in its consumer healthcare business in India by investing Rs. 5,222 crore. Unilever’s Rs. 19,222-crore open offer to pick 14% stake in Hindustan Unilever has been the biggest ever made by a global company in India so far.
In another instance, barely three months after the Cabinet cleared 100% foreign direct investment in telecom, telecom major Vodafone initiated the process of buying out its partners’ stake in India by spending more than Rs. 10,000 crore.
Analysts cited cheap global credit available in developed markets and the drastic depreciation of the rupee against the dollar as the main reasons for global firms’ interest in India.
“Strategic reasons include expanding in the Indian market where growth projections continue to be much higher than developed markets,” said Vinod Wadhwani, director, Ambit Corporate Finance.
“Despite cynicism, the Ind–ian demographic dividend and consumerism provide a great platform for growth-starved MNCs to expand,” he added.
“India as the world’s second-most populated country offers immense growth opportunity,” a Vodafone spokesperson said.
Maruti Suzuki, Nestle, Bosch, Colgate-Palmolive India and Procter & Gamble are some of the companies that may also raise stakes in Indian subsidiaries through open offers.