Does anyone remember Erasmic shaving cream? It was a hotseller back in the 1970s but fell on hard times when the competition heated up. Now it’s coming back to India courtesy the Godrej group which has bought the worldwide rights for Erasmic and a string of other brands.

Cut to South Africa where Godrej is joining the fight against greyness. A few months ago Godrej Consumer Products snapped up Rapidol, a South African company that sells hair colouring products across Africa. “It’s a jumping off point for the rest of Africa. That’s a wonderful opportunity for us,” says Hoshidar K. Press, executive director and president, Godrej Consumer Products.

Or, on a larger scale, look at the Tata group which — despite the uncertainty over the deal to buy Anglo-Dutch steelmaker Corus — is spending billions of dollars and moving more quickly than its most ambitious dreams. “We’ve grown faster than we had expected when we started this process (of making overseas buys),” says Alan Rosling, executive director, Tata Sons.

This has been the year that India Inc. has been on the move globally — and it’s stepping on the accelerator. The country’s most ambitious corporations are reaching for their cheque books and spending more than ever before on big ticket purchases in any and every corner of the globe. “Perhaps it’s the Lakshmi Mittal effect,” suggests Ramdeo Agarwal, joint managing director, Motilal Oswal Securities, only half jokingly.

The deals have been coming swift and fast in 2006 and new records are constantly being set. If the $10-billion Corus deal goes through, the Tatas will, of course, leave everyone else in the shade.

At the helm: (from top:) Ratan Tata, Malvinder Singh, Vijay Mallya

But other companies are also spending big bucks and moving strongly on foreign markets. So you have Videocon’s bid to buy Daewoo Electricals which will cost an estimated $735 million. And there’s Dr Reddy’s which shelled out $571 million (Rs 2,250 crore) to buy German pharmaceutical company Betapharm.

Or how about little-known Pune-based Suzlon Energy which has stirred up a storm in the international arena. Suzlon, which seems to be powered by the wind energy it produces, blew away its rivals and bought Belgian company Hansen Transmissions International for $566 million.

The action has hotted up faster than anyone expected this year. In 2005 there were only two deals of over $100 million. That has climbed to 19 this year. “A hundred million dollars is when we start to get interested,” says Brooke Entwistle, managing director, Goldman Sachs.

Leading the way into the international corporate arena is Ratan Tata who has globe-straddling ambitions for his conglomerate. He’s hoping to turn the Tata group into a global colossus like Hyundai or Samsung or a combination of both, selling everything from trucks and steel to software and telecom services globally.

The Tatas have spread their tentacles in all directions. In the United States, Tata Tea swooped on Energy Brands, a company that makes Glaceau vitaminwater. The bill: $677 million. Vitaminwater is a fast growing and relatively new category in the US and the Tatas will face competitors like Pepsico which has a rival brand called Propel fitness water. Tata Tea was the first mover in the international sphere when it bought UK-based Tetley Tea back in 2000.

Also in the US, the smaller Tata Coffee made its debut in the acquisitions game by snapping up Eight ’Clock Coffee for $220 million. The buyout gives Tata Coffee a brand that it aims to sell in different parts of the world.

Spin the globe to South Africa where the Tata group has cornered two telecom companies and is hoping to become one of the country’s largest telecom providers. South Africa is a focus area for the group.

What has happened? Are Indian companies “on steroids” as one commentator has suggested? Even without the blockbuster Corus deal, Indian companies have spent over $8 billion which means more money has gone out of the country on deals than has come in.

Certainly, everyone is getting more ambitious and thinking in global terms. For Dr Reddy’s, the purchase of German company Betapharm Arzneimittal makes it a strong player in Europe’s largest economy. “Acquiring Betapharm Arzneimittal, the fourth-largest generics company in Germany, has given us a foothold in Germany. It is also a strategic move towards becoming a mid-sized global pharmaceutical company,” says Satish Reddy, managing director and chief operating officer, Dr Reddy’s.

The Tatas have a simple explanation for their moves. Says Rosling: “In many industries it is hard to remain a single country player if you seek long-term sustainability. You must scale up and grow and that means going overseas. Moreover, if you are sufficiently competitive in terms of cost and quality to grow overseas, then most often you have an obligation to do so.”

Ratan Tata also pointed out to a journalist some time ago that often going overseas means acquiring new markets — which in turn hedges against economic downturns in India. Tata Motors went through a prolonged sales dip in the years when the Indian economy was faring badly.

The Boston Consulting Group recently drew up a list of 100 fast-moving companies that had the ability to be global players in what it termed the “Rapidly Developing Economies” like China, India, Russia, Brazil and Mexico (see box). Its report said that for 88 of the 100, “the key motive for globalisation is gaining access to new profit pools”. Overseas markets can bring companies higher profit margins and revenue, as well as higher sales volumes, apart from access to raw materials, the report pointed out.

The Tatas have shown the way but today, newer players are setting off on the takeover trail with their pockets bulging. Back in the early 1990s, for instance, it looked as if Indian players in the paper business like Ballarpur Industries would be buried by powerful international rivals like the Indonesian Sinar Mas.

Today, the tables have been turned, and while Sinar Mas ran into severe financial trouble after the Asian Crisis, Ballarpur has just bought Malaysian company Sabah Forest Industries for $261 million. The deal ensures a steady supply of raw material for Ballarpur which has now become a muscular regional player.

Or look at Videocon which has plunked down an eye-popping $735 million to buy up South Korea’s Daewoo Electronics. For Videocon, which has in recent years moved from consumer electronics to the oil business, the move is one more step forward in its bid to go international. In 2005 it snapped up French company Thomson’s colour picture tube business for about $291 million.

What will Videocon do with Daewoo Electronics? Videocon points out that it inherits Daewoo’s network of dealers and customers around the world. Also, the company says that Daewoo’s household products range will be a good fit with its own consumer electronics products and it’s particularly keen to make a foray into the US . “It’s a good platform for global expansion,” says Atul Galande, advisor to the Videocon board.

Among the first Indian companies in the international arena were, of course, the fast-moving winners in sectors like software and pharmaceuticals where India has long had an edge of its own. Take a look at Ranbaxy’s non-stop buying spree. This year Ranbaxy has bought six pharmaceutical companies — four in Europe, one in the US and another in South Africa. It dipped deep into its pockets and bought Romanian firm Terapia for $324 million and South African firm Be-Tabs Pharmaceuticals for $70 million. “These companies usually come with a ready bag of local experience and strong brand equity along with a strong marketing and distribution reach,” says Ramesh Adige, executive director, Ranbaxy.

Also revving up and racing into the international racetrack are auto companies like Tata Motors and Mahindra & Mahindra and components firms like Bharat Forge — even though they haven’t made any big buys this year. Bharat Forge, particularly, has built its position internationally buying up distressed companies. It’s now the world’s second largest forgings company.

So what happens when an Indian company takes over another one in Latin America or even in the United Kingdom? The answer: not necessarily that much. Many Indian firms realise that they need local experience and work hard to keep it. The Tatas, for instance, kept the team at Tetley and said publicly that it would keep the Corus management in place if it took over the steel company. Similarly, Ranbaxy tries to work with existing people in companies that it swallows up. Says Adige: “Our philosophy is to draw the best local talent and integrate it with our operations. This enables us to adopt the best practices from all over the world.”

In 2006, Indian companies showed they were willing to move fearlessly into the world’s most competitive markets like the US and Europe. Seven of the year’s top 10 deals were struck in these regions (but that figure includes Corus). And you might say that UB’s Vijay Mallya moved into the Holy of Holies when he bought French wine company Bouvet Laudabay. Mallya spent only $15 million on the purchase but he has won a psychological victory by moving into the French wine-producing heartland. He will import the wine to India in bottles and also in bulk (which attracts lower duties).

At another level, Videocon is hoping to attack both developing and developed world markets with its purchase of Daewoo Electronics. Says Galande: “The focus is on developing countries but we also want to make a dent on developed markets, especially North America.”

What does the future look like? The answer is that India has just started out on the acquisition trail and a two-way process is beginning.

Firstly, Indians are looking at targets beyond Indian shores. Secondly, foreigners are suddenly looking at Indians as potential buyers. Says Goldman Sachs’ Entwistle: “People were not thinking of Indians as buyers. We’ve spent time telling people to get India on their A List.”

Will we see bigger takeovers in 2007? The answer, without a doubt, is yes. Ramdeo Agarwal, who’s sceptical about some would-be purchasers says: “This is going to have momentum till someone is sunk. Till a disaster strikes bigger and bigger deals will happen.”

Meet the world challengers

The Boston Consulting Group’s list of 100 global challengers includes 21 Indian companies. They include five Tata companies (Tata Motors, Tata Tea, Tata Consultancy Services, Tata Steel, Videsh Sanchar Nigam Ltd), Videocon, Bharat Forge, Cipla, Larsen & Toubro, the Reliance group, Hindalco, Infosys, Wipro, Ranbaxy and the state-owned Oil & Natural Gas Corporation.

While China and India are over-represented in the list, China is still far ahead of India with 44 companies on the list. Brazil is far behind with only 12.

Why now?

If Indian companies are now able to snap up companies abroad, it is in large measure because the government changed the policy environment. In 1978, a study by the Federation of Indian Chambers of Commerce & Industry notes, the government used to see overseas`investments by Indian companies as a means of promoting Indian exports, among other things. Accordingly, overseas investments were allowed only in the form of joint ventures, with the Indian partner holding a minority stake. The government was then paranoid about running out of foreign exchange reserves and did not allow companies to send cash for acquisitions abroad, except in rare cases.

In 1992, the government allowed automatic clearance for investments of up to $2 million. Over the years the limit has been relaxed. Investment in unrelated businesses has also been allowed. However, India Inc. isn’t taking too much money out of the country for its shopping spree. Large companies with a global presence are using the money available with their subsidiaries abroad. Indian firms are also finding it easier to borrow money abroad (it’s cheaper, anyway) as foreign lenders are more confident about lending to Indian companies, thanks to the Indian economy’s good performance and the robust performance of Indian firms.

— Seetha