Global Business Environment

Assignment -3

Submitted to- Submitted by-

Prof. Vivek Dabral Singh Aakash Singh
Course- PGDM-GLOBAL
ERP ID- 0191PGM115
 ASSIGNMENT – 3

“Submit a report after studying Indian Companies and their International

Strategic Alliances over the period of last 15 years.”

……………………………………………………………………………………….

• Company :- Reliance Industries Acquisition :- Trevira, Germany

• Price (in $ millions) :- 95

 vital stats about alliance :-

Reliance Industries is set to acquire German polyester company Trevira for €80
million (about Rs 443 crore at the current conversion rate), Chairman and
Managing Director Mukesh Ambani told shareholders at the company's annual
general meeting here yesterday. Ambani also announced a plan to add 1 million
tonnes of polyester capacity over the next two years. After the completion of the
Trevira deal and the expansion, Reliance's capacity for producing polyester fibre
and yarn would exceed 1.8 million tonnes, making it the largest player in the
world, Ambani said. Reliance now has an installed capacity of 1.1 million tonnes
and Trevira 130,000 tonnes. "I am delighted to announce that Reliance has
finalised the acquisition of Trevira GmbH, an erstwhile division of German giant
Hoechst AG, a leading polyester producer and a wellknown brand in Europe,"
Ambani said. The deal marks the second overseas acquisition in the last few
months by India's largest industrial house. In January this year Reliance Infocomm
acquired US-based FLAG Telecom for $311 million. The Trevira acquisition not
only gives Reliance an entry into Europe but also a chance to capture the Eastern
European market. The Trevira deal comes a year before the World Trade
Organisation dismantles textile trade quotas, which is expected to open up new
markets for the world textile industry.
 Synergies generated :-

The global economic downturn has hit India's most valued company Reliance
Industries, forcing it to today declare as insolvent its German unit Trevira, a
specialty polyester manufacturer. "Trevira filed an application with the Augsburg
Court in State of Bavaria, Germany, for the commencement of insolvency
proceedings with a restructuring plan," RIL said in a press statement Trevira,
which was part of German industrial conglomerate Hoechst AG before being
acquired by Reliance, manufactures high-value branded polyester fibers and
filament yarns for the automotive industries, home textiles as well as for technical
applications. The filing for insolvency follows attempts by the company to
overcome the impact of industrial slowdown in Europe, particularly of the
automotive and textile sectors to which it is an important supplier.

 Current Situation :-

The Trevira acquisition not only gives Reliance an entry into Europe but also a
chance to capture the Eastern European market. The Trevira deal comes a year
before the World Trade
Organisation dismantles textile trade quotas, which is expected to open up new
markets for the world textile industry.

• Company :- Tata Motors Acquisition :- Daewoo, Korea

• Price (in $ millions) :- 118

 vital stats about alliance :-

Tata Motors $102m takeover became the largest Indian acquisition in Korea. The
265bn won ($250m) DWCV clocked an operating profit of 16.5bn won and a net
profit of 6.6bn won ($6m) in the year ended December ’03. It intends on using
a three-pronged strategy in its new avatar, to improve capacity utilisation and grab
a greater market share.

 Synergies generated :-

Ravi Kant, executive director, commercial vehicles, Tata Motors, said the launch
of upgraded products in the pipeline, increased international sales through the Tata
network and the introduction of new products in the medium term, will collectively
improve DWCV market share in Korea and overseas. The company enjoys a 25%
share of the heavy truck market in Korea.
The new product development and capital expenditure will primarily be financed
by DWCV itself. Praveen Kadle, executive director, finance, Tata Motors, said,
Our objective is to grow revenue and profitability in DWCV and use these
resources for product development and growth. If despite that, the company needs
fresh infusion from Tata Motors, we will do so. But the top team has yet to decide
on the integration of capex and product development expenses between DWCV
and Tata Motors, Mr Kadle said.Thanks to the acquisition, Tata Motors will have
heavy vehicles and will be able to add medium and small vehicles to DWCV, Mr
Tata said.
Tata Motors is looking to capitalise on the complimentarity between its range and
that of
DWCV.

Current Situation :-

DWCV CEO Chae Kyong Ok suggested that the Tatas may want to continue
using the Daewoo brand since they gave such high value to it, while Mr Kant
added that for now, the Daewoo brand would continue both in Korea and overseas.
Coordination between the two companies would be handled by a small team, he
said.
When quizzed by the local media about the possibility of Tata Motors passenger
vehicles coming into Korea, Mr Tata said, Anything is possible. Although it was
too premature of talk of Indicas and Indigos in the Korean market, he said, there
was a market for Tata Motors cars in Korea, we would like to assemble them
locally with part shipments from India, instead of simply importing them.

• Company :- Infosys Technologies Acquisition :- Expert

Information Services, Australia
• Price (in $ millions) :- 3.1

 vital stats about alliance :-

 Total revenues of A$ 46.7 million (US$ 34.6 million*) for the fiscal year ended
June 30, 2003 and a net profit after tax of A$ 7.0 million (US$ 5.2 million). The
transaction value would be approximately A$ 31.0 million (US$ 22.9 million) and
would comprise payment in cash on completion of the transaction and earn-out on
achieving targeted financial conditions over a three-year period ending March 31,
2007.

 Synergies generated :-

Expert is one of Australia's leading IT service providers specializing in the design,

build and integration of business solutions and products to leading companies in
Australia. Its clients include medium and large enterprises, which span across
various industry verticals such as Telecom, Financial services, Retail, and
Government sector.

 Current Situation :-

"The merger with Infosys is a perfect fit with Expert's business strategy and we are
very excited about it," said Mr. Gary Ebeyan, Chief Executive Officer, Expert.
"The new entity will allow us to continue to deliver high-quality, leading edge
solutions to our existing and new customers with an extraordinary value
proposition based on the Global Delivery Model of Infosys."

• Company :- Aditya Birla Acquisition :- Dashiqiao Chem, China

• Price (in $ millions) :- 8.5

 vital stats about alliance :-

Takes a 70 % stake in the Viscose Fibre plant in China. Grasim's Stake to be a little
over 30% Capacity - 30,000 TPA, to ramp up to 60,000 TPA by December 2007.
  Synergies generated :-

The Aditya Birla Group, a premium global conglomerate and a worldwide leading
manufacturer of Viscose Staple Fibre (VSF), today announced that it has reached
an agreement with Hubei Jing Wei Chemical Fibre Company in China - a 30,000
TPA VSF manufacturer quartered in the Hubei Province of China.

 Current Situation :-

A US$ 8.3 billion conglomerate, with a market capitalization in excess of US$

12.5 billion, the
Aditya Birla Group is anchored by an extraordinary force of 82,000 employees
belonging to over 20 different nationalities. Over 30 per cent of its revenues flow
from its operations across the world. The Group's products and service offer
distinctive customer solutions. Its 72 state-of-theart manufacturing units and
sectoral services span India, Thailand, Indonesia, Malaysia, Philippines, Egypt,
Canada, Australia, Belgium and China.

• Company :- Wipro Acquisition

:- Nerve Wire Inc, US
• Price (in $ millions) :- 18.5

 vital stats about alliance :-

Wipro Limited (NYSE: WIT) announced today that it entered into a definitive
agreement to acquire NerveWire, Inc., a Newton, Massachusetts based Business
and IT Consulting company serving financial services clients, for approximately
$18.7 million in cash, subject to adjustments. Wipro expects the transaction to be
completed in the quarter ending June 2003.
  Synergies generated :-

In the Indian market, Wipro is a leader in providing IT solutions and services for
the corporate segment in India offering system integration, network integration,
software solutions and IT services. In the Asia Pacific and Middle East markets,
Wipro provides IT solutions and services for global corporations. Wipro also has
profitable presence in niche market segments of consumer products and lighting.

 Current Situation :-

The risks and uncertainties relating to these statements include, but are not limited
to, risks and uncertainties regarding our ability to integrate and manage acquired IT
professionals, our ability to integrate acquired assets in a cost effective and timely
manner, fluctuations in earnings, our ability to manage growth, intense competition
in IT services including those factors which may affect our cost advantage, wage
increases in India, our ability to attract and retain highly skilled professionals, time
and cost overruns on fixed-price, fixed-time frame contracts, client concentration,
restrictions on immigration, our ability to manage our international operations,
reduced demand for technology in our key focus areas, disruptions in
telecommunication networks, , liability for damages on our service contracts, the
success of the companies in which Wipro has made strategic investments,
withdrawal of fiscal governmental incentives, political instability, legal restrictions
on raising capital or acquiring companies outside India, unauthorized use of our
intellectual property and general economic conditions affecting our industry.