Financial Daily from THE HINDU group of publications
Tuesday, Feb 21, 2006
Financial Daily from THE HINDU group of publications Tuesday, Feb 21, 2006 |
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Corporate Industry & Economy - Economy Corporate - New Projects MNCs stepping up investments in India — Buoyant economy, growing domestic consumption Rajesh Abraham
Mumbai , Feb. 20 AFTER going slow for long, multinational companies led by Siemens, MICO, ABB, Wartsila India, Denso Corporation are stepping up investments in India, buoyed by increased infrastructure spending and higher consumption from the rural sector. Most of the MNCs were resisting fresh investments for long, but have now changed course to announce big investments, seeing the immense potential, say analysts. "Thanks to the buoyant economy and huge potential in the infrastructure and engineering sector, there is a renewed interest in India by the MNCs," said Mr Deepak Jasani, Head of Retail Research, HDFC Securities. Some of the recent announcements include Rs 1,800 crore investment by the Bosch Group's Indian arm Motor India Company Ltd (MICO), while Siemens Ltd has acquired Hyderabad-based Elpro International's isolator (used in transmission and distribution lines) business and 50 per cent stake in Kharagpur-based Flender Ltd. Siemens has also announced the setting up of an industrial steam turbine factory at Vadodara, Gujarat. Engine maker Cummins India (where Cummins Inc of the US holds 51 per cent) is setting up an additional manufacturing facility in Pune at an investment of Rs 15 crore, while auto parts maker Bosch Chasis Systems (formerly Kalyani Brakes) has formed a joint venture with Brembo SpA of Italy for two-wheeler brakes. Similarly, Ciba Specialty Chemicals has announced a Rs 50-crore manufacturing plant at Goa and another Rs 70 crore investment in Gujarat through its fully-owned subsidiary Diamond Dye-Chem Ltd. Wartsila India, promoted by Wartsila Corporation of Finland, has also announced fresh investments in India. On the FMCG front, Nestle India's new factory at Pantnagar is expected to start commercial production in the second half of 2006. Hindustan Lever, meanwhile, is increasing its rural focus further. Procter & Gamble is also expanding in the country, though all the fresh investments are being done through its wholly-owned arm P&G Home Products. Data compiled by Business Line show that MNCs had been slowing down investment between 1996 and 2003 , while the scenario began to change from 2003. Mr Jasani said many new MNC players have made fresh investments in the Indian market and have done well, while the existing MNC players were found wanting as they postponed making g commitments in terms of investments and exposure. "Things have begun to change in recent times," he said. A senior research analyst with Edelweiss Capital said: "MNCs have not been on the news radar as these companies were focused on exports. However, with increased spend in the infrastructure front and the growing domestic consumption levels, the MNCs in infrastructure and the FMCG sectors are expanding and doing better." Analysts said that there is a "re-rating" of the share prices of MNCs happening at the moment, which will see investors willing to pay higher price for the shares of MNC firms in the stock markets.
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