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Last Updated: Thursday, 16 August 2007, 05:35 GMT 06:35 UK
Indian firms move to world stage
By Karishma Vaswani
Business correspondent, BBC News, Mumbai

Steel being processed at Tata Steel plant
Tata Steel pulled off India's biggest foreign takeover
Sixty years after independence, Indian companies are now taking on the world. But will the wave of takeovers of foreign companies succeed?

It was a dramatic phone call in the early hours of Wednesday, 31 January that finally signalled a new era for Indian companies.

The call was from the chief communications officer at the Tata Group.

Something has changed in the psyche of the Indian businessman
Lakshman Vashdev, independent economist

"We won", she whispered, her voice faint with the exhaustion of being awake all night. "We won the bid. The Tata group now owns Corus."

It was too early for the newspapers, but Indian television went wild.

Record takeover

India's Tata Steel, run by the man so many in the Indian business community see as the superman of Indian business, Ratan Tata, had gained control of British steel maker Corus, the former British Steel.

Ratan Tata
Many thought this was an audacious move for an Indian company
Ratan Tata, chairman, Tata Group
It was, to date, India's largest ever foreign takeover.

It made the Tata Group the world's fifth largest steel maker, and catapulted them to the global league.

But perhaps more significantly, the winning of the bid symbolised the coming of age for Indian business, a fact Ratan Tata was well aware of when he spoke later that morning to the press and his executives at the Taj Mahal hotel in Mumbai

"Many thought this was an audacious move for an Indian company to takeover a British steel firm so much bigger than itself.

"For it has never been done before."

But alongside the elation was some caution.

Over-paid?

Many analysts said the Tatas had paid too much for Corus - a price tag of almost 6bn ($12bn).

Some chided the Tatas for putting national pride and emotion before financial sense and shareholder interest.

Shares of Tata Steel fell sharply that day.

Taj Mahal Hotel, Mumbai
The Tata Group owns hotels around the world

But the Tatas have a history of taking on challenges.

The hotel in which Ratan Tata announced his conquest to the world - the Taj Mahal hotel in Mumbai - had an unusual beginnings.

Legend has it that the founder of the Tata Group, Jamsetji Tata, was turned away from a European establishment during the time of the Raj because of his Indian roots.

According to the story, his pride was hurt, and he decided he'd build a hotel that anyone could walk into regardless of their race or colour.

Now Taj hotel flag flies in cities as far away as Boston, London and Sydney.

The Tata Group reportedly has set its sights on another conquest: British car brands Jaguar and Landrover, currently owned by Ford.

Aggressive expansion

But aggressive expansion for Indian companies seems to be the order of the day, according to the executive director of the Tata's international business, R Gopalakrishnan.

Ford car factory near Chennai
Foreign investment in India's car industry is rising fast

"What has changed the most about Indian businesses today is that we have more options to finance our overseas deals. Before, it was hard to raise the foreign exchange we needed for our plans," he says.

"Now the government has liberalised and loosened up a little - and it has become easier for us to raise the money we need."

In India's first five decades after independence, businesses had to jump through many hoops to get the required licences to set up shop, a practice that many observers felt allowed corruption and bribery to flourish.

The economy was finally opened up in the 1990s, and since then economic reforms have transformed the business environment.

Forced liberalisation

It was at the time of economic liberalisation, according to the boss of Mahindra and Mahindra, one of India's fastest growing auto firms, that Indian companies awakened from their slumber and began to look outwards.

Rural roads, near Chennai
The potential for expansion of car ownership in India is huge

Foreign investors were knocking on India's door - and Indian companies had to shape up, or ship out.

"The barbarians were at the gate", Anand Mahindra says.

"And frankly we knew we couldn't defend our turf at home if we weren't successful overseas."

Sixty years ago at the time of independence Mahindra & Mahindra was a humble tractor seller.

It now sells its sports utility vehicles as far away as South Africa and South America - and is also reportedly interested in bidding for Jaguar and Land Rover.

Psychological change

"Something has changed in the psyche of the Indian businessman," says Lakshman Vashdev, an independent economist.

"They have a belief in themselves that we've never seen before, thanks to the rapid growth in the economy. There's a desire to grow, and to expand, to fulfil the ambitions that laid dormant for so many decades."

Sixty years on, and Indian companies have come of age.

India has become too small for their global ambitions.

And they've now set their sights on conquering new territories.

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