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In further expansion of Indian business with outward foreign direct investment (FDI), Wipro announced the acquisition of a Swedish hydraulic company and Tata Power announced plans to set up plants in South Africa, Nepal, Vietnam, and Bhutan.
Wipro’s USD 31 million (Rs. 142.6 crore) acquisition of Hydrauto Group is meant to gain market access and also develop complementary skills to develop hydraulic components and solutions. Hyrdrauto is a tier-I supplier primarily to OEMs of material handling equipment, forestry equipment, construction, and earth moving machinery. The acquisition of this profitable entity will provide Wipro a foothold into the European market and also serve as a launching board into the global USD 17 billion market for hydraulic components.
Tata Power is planning on a 4000 MW capacity expansion in India at a cost of Rs. 16,000 crore (USD 3.4 billion). In addition to creating its own captive 400 MW plants in African and Asian nations, Tata Power is also looking to buy existing Government-owned enterprises in African nations. The energy expansion plans seem to be part of an end-to-end diversification expansion in line with its steel plants in these countries. Tata Power is also trying to obtain licenses to develop captive coal mines or gas fields (in Africa) to feed their power plants. Further, Tata Power is also talking to Australian and Indonesian mining companies to pick up stakes in mines under control of those companies.
India ’s rapid economic reform, where the Government is out of the way, is helping many Indian companies to undertake bold expansion plans to develop core strengths, markets, and expertise. A couple of other interesting trends is outward FDI in European and American companies from India and expansion into Asian and African markets. With Prime Minister Manmohan Singh’s visit to Brazil , it is likely that expansion to South America will be expedited.
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