INDIA Inc, which at one time used to find it difficult to raise even $500 to fund the foreign trips of its top executives (thanks to the precarious foreign exchange position of the country, which resulted in restrictions) is on the prowl, acquiring international firms for billions of dollars.

On Saturday, the house of Tatas — the country’s premier industrial group — surprised the world of business by taking over Anglo-Dutch steel maker Corus for $8 billion.. Ratan Tata, the chairman, has steered the once conservative business group’s turnaround over the past 15 years, and has also led its audacious international forays.

Tata has been aggressively acquiring international companies for the past six years. The group, which has about a hundred companies with interests ranging from steel and automobiles, to telecommunications, IT, hotels and consumer goods, acquired Tetley Tea of the UK in 2000.

It has since then cast its net wide, acquiring firms in South Korea, South Africa, Europe and the US. But last week’s take-over for Corus was its boldest — and also the biggest — move, it will catapult the Tatas to the major league.

By acquiring Corus, Tata Steel has emerged as the sixth largest steel maker in the world, with total capacity of 23 million (up from its present 5 million tonnes).

Tata Steel had recently acquired steel firms in Asia — NatSteel of Singapore and Millennium Steel of Thailand.

A few months ago, another Indian entrepreneur — UK-based Lakshmi Mittal — paid a whopping $33 billion to acquire French steel giant Arcelor. The Mittal family now owns over 40 per cent of the merged entity, and controls 10 per cent of the global steel business. Internationally, the steel industry is consolidating rapidly, as companies go in for mergers.

Earlier, Tata’s bid for a company (Corus) that is six times bigger (in terms of revenue) and three times larger (in production) has not been received well by stock markets and analysts. Standard & Poor’s (S&P) cut its outlook on the company’s debt to negative from stable.

“The size of the acquisition and the potential cash outflow of about $10 billion…could have an adverse impact on its financial risk profile,” warned S&P. But it admitted that a successful acquisition could improve the business profile of the merged entity.

The Tatas plan to set up a special purpose vehicle (SPV), which would acquire Corus. Later, the SPV could be merged with Tata Steel, further straining its finances. The company has unveiled investment plans running into billions of rupees, for new steel plants, and expansion of its existing facilities.

Many analysts are also wondering what Tata Steel would gain by acquiring a company like Corus, which has low profit margins: four per cent, as against 18 per cent for Tata Steel. Like most other Indian steel makers, Tata Steel is also a low-cost producer. But Corus, just as other European steel firms, is a high-cost producer.

And unlike many Asian steel giants, Corus does not have control over significant iron ore mines. In India, there is a major battle raging, with Indian steel makers (including Tata) opposed to the export of iron ore. Steel giants like Posco of South Korea — which is putting up a multi-billion-dollar plant in Orissa — are eager to take control of iron ore mines, and want to export them.

Last year, India exported 90 million tonnes of iron ore, earning $4 billion in revenues. About 60 million tonnes was exported to China, equivalent to the consumption by domestic steel companies. India has iron ore capacity of nearly 25 billion tonnes, but about 10 billion tonnes are said to be of inferior quality.

A government committee had recently recommended the export of high-grade iron ore, but all the industry lobbies and domestic steel majors, have opposed this move. In fact, the steel industry has recommended a complete ban on the export of iron ore.

THE Tatas (group turnover: $22 billion), who have over the last three years, invested $3 billion in acquiring nearly 20 international companies, are way ahead of other Indian groups in the mergers and acquisitions business.

The group — which recently acquired US-based Eight O’Clock Coffee — has been expanding globally, including the US, Africa, Europe and the Far East. It plans to invest $25 billion over the next five years to expand both domestically and internationally.

A significant chunk of the investments ($15 billion) would be in steel — and more than half of it has now been be used for the acquisition of Corus. The Tatas have invested nearly $150 million in South Africa, and cumulatively have nearly $350 million of investments in the republic.

The group, which operates one of the country’s most prestigious hotel brands — the Taj chain of hotels — plans to invest about $180 million in three hotels in South Africa. Earlier this year, it also acquired a truck assembly unit from Nissan Motors in South Africa.

The group is also busy making acquisitions, or investing in other African countries, including Nigeria and Kenya.

But other companies and groups (including public sector units) have also been busy in acquiring overseas firms in recent years. If the Tata bid materialises, it would undoubtedly be the single largest foreign acquisition by an Indian company.

As of now, state-owned energy giant ONGC remains the largest acquirer of a foreign entity; it paid $1.7 billion to acquire a 20 per cent stake in a Russian oil and gas project. ONGC also paid $1.4 billion for a 15 per cent stake in an oil block of Brazilian giant Petrobras.

Last year, Indian companies spent $4.3 billion in overseas acquisitions; but this year alone they have invested over $6 billion in foreign acquisitions. Some of the large deals to have taken place include the Tatas’ acquisition of American beverage firm Energy Brands (for $677 million), Dr Reddy’s acquisition of German firm Betapharm (for $572 million), Suzlon’s acquisition (for $526 million) of a Belgian firm, the $454 million acquisition by Cambridge Solutions, the $445 million by Aban Lloyd of a Norwegian firm, and the acquisition by Ranbaxy Laboratories of Romanian firm Terapia (for $372 million).

Indian infotech majors (including TCS, Infosys and Wipro), automobile giants such as Mahindra & Mahindra, and pharmaceutical leaders (including Dr Reddy’s and Ranbaxy) have been among those making aggressive bids abroad.

International acquisitions have been on the rise in recent years after the Indian government liberalised rules governing such deals. Banks are also allowed to fund the overseas acquisitions of Indian groups, and many are also arranging for these deals.

Yes Bank, a new private sector bank, has done nearly $800 million worth of cross-border deals for its clients over the last one year.