RIL-BP $7.2 bn deal among largest FDIs in India

PTI

New Delhi: Reliance Industries' $7.2 billion mega deal with British major BP Plc is seen as the biggest the foreign direct investment into India so far.

Japanese pharma major Daiichi Sankyo's buyout of Ranbaxy Laboratories for $4.5 billion is the second biggest FDI.

Other proposal like South Korean Posco's USD 12 billion investment for a steel plant in Orissa though higher than RIL-BP deal in terms of value, is yet to take off. So is the case with ArcelorMittal's around USD 30 billion investment plans across India.

Another mega transaction worth USD 11 billion was between Vodafone and Hutchison-Essar. However, there was no direct participation of any domestic firm, as deal was between two foreign firms.

Unveiling one of the biggest transactions in the Indian energy space, Mukesh Ambani-led conglomerate today announced the sale of 30 per cent stake in its 23 blocks including the giant KG-D6 gas fields to UK's BP Plc for $7.2 billion.

"This is the single largest FDI in the history of India," RIL Chairman Mukesh Ambani said while announcing the deal in London.

Interestingly, Reliance Industries' failed attempt in 2010 to take control of petrochemicals major LyondellBasell, was valued at over USD 14 billion. If the transaction had materialised, it would have been the largest ever by an Indian entity.

Going by estimates, last year alone saw the announcement of more than 290 inbound transactions worth over USD 22 billion.

Among them were Vedanta Resources' planned USD 9.6 billion acquisition of a majority stake in Cairn India .

Abbott Laboratories' takeover of healthcare solutions business of Piramal Healthcare in a USD 3.7 billion deal and Japanese entity JFE Steel Corp's USD 1 billion investment in JSW Steel were among other big transactions.

The NTT DOCOMO-Tata Teleservices worth USD$2.70 billion also saw significant FDI inflows into India.

Among the top deals involving Indian entities are $10.7-billion Bharti-Zain transaction and Tata's USD 12 billion-buyout of Corus.

Other major transactions involving Indian entities are Hindalco's buyout of Novelis for $6 billion, ONGC -Imperial's USD 2.80 billion deal.

SBI plans to merge 5 subsidiaries in 12-18 months

NEW DELHI: State Bank of India proposes to merge its five remaining subsidiaries with itself over the next 12-18 months.

In its deposition before the Parliamentary Standing Committee on Finance, the country's largest lender said the consolidation exercise has been systemically planned as part of a logical step to bring in economies of scale, reduce administrative overheads, redeploy and channelise trained manpower to business development and, in the process, also reduce avoidable competition from different arms of the same group.

While the bank has already merged State Bank of Saurashtra and State Bank of Indore with itself, it would require a government go-ahead to merge the remaining five - State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Travancore and State Bank of Mysore.

SBI chairman O P Bhatt told the committee headed by former finance minister Yashwant Sinha that the merger of State Bank of Saurashtra with SBI "went as smooth as silk". As for State Bank of Indore's merger, an online poll of employees showed that over 90% were in favour of the merger, he said.

"A number of corporates are pushing growth opportunities abroad. All these require that SBI and a few other Indian banks grow in size and financial muscle to cater to the growing needs of such corporates, failing which such clientele and their business would be taken over by foreign banks," the government told the standing committee.

A merger of all associate banks has been in the works for several years but SBI is taking it one by one as it wants to build a consensus around it first. A major attraction for SBI subsidiary employees is the offer of getting a pension, in addition to provident fund benefits. SBI is the only public sector player in the country where employees get both the benefits. In addition, employees of the subsidiary banks are being given the same treatment that is available to SBI employees.

To make sure that the merger is not legally challenged, SBI has got the process legally vetted. SBI management is now contemplating getting a blanket approval from the government to merge all the banks and then decide the sequence. The merger will help SBI steal a march over its nearest rival ICICI Bank.

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