Govt to ensure firms don’t get picked up at throwaway prices: Finance Minister
The threat of hostile takeovers is certainly a worry and the government will ensure that Indian businesses do not get snapped up at throwaway prices, Finance Minister Nirmala Sitharaman said on Friday.
The outbreak of Covid-19 has hit industries across the world due to depressed demand caused by lockdowns. So, the market provides opportunities to players with deep pockets to buy companies in distress at a very cheap valuation, she said.
“That’s a reality but we have to take care that businesses which have been built by the sweat and toil of Indians, and which have had great brand value, cannot be allowed to be picked up by people who are just looking for an opportunity.
“So, that is a factor which all of us are worried about and that’s a factor on which we will certainly do something to ensure that Indian industries don’t get picked up at a throwaway price because we want them to be able to run the business once everything is normal,” Sitharaman told television channel WION in an interview.
Last month, the government decided to put restrictions on foreign direct investment (FDI) to clamp down on investors from countries like China buying Indian companies cheap. The amendments to the FDI rules were necessitated on concerns among officials as well as businesses about possible takeover attempts at a time when share prices are down due to the Covid-19 crisis.
Earlier on Friday, a finance ministry official said the government has not taken a call on putting curbs on foreign portfolio investment (FPI) from China. On the GDP growth figure for the March quarter, the finance minister said, “3.1 per cent for the last quarter of 2019-20, a quarter in which we thought we had started seeing green shoots, in September, October, November. That is one of the reasons why the budgetary estimates were made the way they were made.”
She said with the full support of the Prime Minister, the government will ensure everyone gets the required help. India’s economic growth slowed to 3.1 per cent in January-March and to an 11-year low of 4.2 per cent for the full fiscal 2019-20.
The Gross Domestic Product (GDP) growth stood at 5.7 per cent in the corresponding quarter of 2018-19, according to data released by the National Statistical Office (NSO) on Friday. During 2019-20, the Indian economy grew at 4.2 per cent as against 6.1 per cent in 2018-19. The economic growth was the lowest since 2008-09 when the economy had expanded at 3.1 per cent.
The government had imposed a lockdown to curb the spread of Covid-19 infections from March 25, 2020. However, the Indian economy also got impacted during the January-March quarter due slowing down of economic activities across the world.