Right Time For Takeovers

Indian companies with surplus cash can go shopping for firms located in south-east Asia which are facing a liquidity problem but are solvent.

This suggestion was made by Shaun Browne, chief executive officer, HSBC Capital Markets India.

A large foreign exchange exposure has meant that the sharp depreciation in the south-east Asian currencies has wiped out many of these companies. The entities are looking for some form of funding and Indian companies wishing to set up base in south-east

Asia could possibly invest in such corporates.

On the issue of financing such takeovers, Y B Desai, managing director, Export Import Bank of India, indicated that his bank would be interested in funding Indian companies by providing term loans.

He indicated that till date no Indian corporates has approached the bank with any such proposal. He added that they would consider such projects favourably provided the companies in which investments were being planned was in line with the core business of the Indian company.

In his address, the Exim Bank chief also indicated that the bank would continue to play a key role in financing exporters while Browne advised that only those Indian companies with a natural foreign exchange hedge should be the ones which should borrow in foreign currency.

Deasi was also against competitive devaluation of the rupee as the deprecation of the south-east Asian countries have not led to any spurt in exports.

In fact, Malasia's exports have fallen five percent, so has Indonesia's. Korea and Thailand have seen a growth rate of two percent and seven percent respectively.