Abheek Singhi of Boston Consulting Group Addresses IIM-K Students at Horizons 2007

Abheek Singhi of Boston Consulting Group Addresses IIM-K Students at Horizons 2007

Growth Driven by M&As

Talking about the recent trend of M&As, Mr. Singhi explored the various reasons why this trend has suddenly emerged and has become so pervasive that something like Tata’s acquisition of Corus doesn’t seem incredible anymore. Indian companies acquiring foreign

companies much larger than they have almost become commonplace, giving examples of companies which have had multiple M&A successes he quoted examples like Vedanta, Wipro and Bharat Forge. Global consolidation is one of the factors, which have influenced Indian M&As. More specific to India are reasons like better government regulations, which facilitate M&As and liquidity due to the booming Indian economy with profits at a 15-year high. The demonstrated ability of Indian managers in creating value for the acquired company is also an important factor for the increased willingness of the acquired foreign companies to work with us. He explained how making one acquisition can improve the chances of the company to make several others. When an Indian company bids to acquire a foreign company with a very good reputation and healthy cash flows, its credit worthiness automatically increases manifold. Once the acquisition is made, the Indian company can leverage the equity of the foreign acquisition to get more credit from banks to finance another acquisition. This can continue as long as the company makes smart decisions about which company to acquire.

Comparing M&A to courting, Mr. Singhi pointed out how both companies are very optimistic before an M&A and tend to rush things. He stressed that similar backgrounds are very important for the companies to be able to work together after the Merger or Acquisition. Indian companies are at an advantage when it comes to this because we adapt easily and aren’t averse to allowing a foreign management to run a company. He extended the analogy of courting by saying that consultants are like marriage counsellors who help with the execution and details of an M&A.

Future of Indian Consulting

Answering the question as to how Indian consulting is going to evolve, Mr. Singhi compared it to that of the USA and said that it was more evolved in the USA where specific consulting firms dealt with specific segments like management, functional consulting, etc. Another notable difference is the presence of in-house consulting arms. Indian consulting is going to take a similar path as it evolves, he said. Another difference between Indian and American consulting is that companies in India perceive consultants as advisors unlike in the USA where they are seen as vendors of solutions. Indians would like to see demonstrated value of a consulting assignment and are more oriented towards solution implementation.

The session ended with Mr. Singhi mentioning how he drew inspiration from IIMK’s motto ‘Dream Innovate Achieve’ and saw that as the mantra which would take us to newer heights in the future.

Concluded.

Contributed by -
Ashish Thakur,
Media Cell,
IIM Kozhikode.

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