India M&A Dealscape Report Analysis

For private circulation only
M&A dealscape
July 2017 to June 2018
Deal dynamics in India

2
Contents
Section Page
1. Macro economic snapshot 3
2. Overall M&A deal activity 7
3. M&A deal activity – domestic vs cross border 8
4. M&A deal activity by sector 9
Appendix Page
A. Glossary 20
B. References 21
C. Disclaimer 22

3
Macro economic snapshot
Challenges
• Indian economy is presently facing headwinds in the form of higher
oil prices adversely impacting the current account deficit, a
devaluing rupee, fear of trade war amongst the larger economies,
volatile foreign inflows in the capital markets and possibility of a
higher fiscal deficit in run up to the general elections in the next year.
• Another major challenge for the economy is the twin balance sheet
problem owing to the rising bad loans and deteriorating health of the
public sector banks. However, Government’s initiatives in this
direction include re-capitalization and cleanup of banks’ balance
sheet, effective and timely insolvency resolution under the IBC, and
promoting an ecology for setting up of ARCs.
Summary
• Indian economy has depicted an improving trend over the last 12
months ended 30-Jun-18. The landmark Goods and Services Tax was
introduced with effect from 1-Jul-17, which brought in some initial
uncertainties and hiccups as businesses learnt to adjust to the new
regime. However, the economy seems to have got a hang of GST
and has started showing signs of optimism in domestic demand
backed by consumption and a revival in business activities.
• India’s jump from 130th rank to 100th rank on World Bank’s ease of
doing business index is a clear indicator of this optimism. Further,
the IMF has forecasted the Indian economy to grow by 7.3% during
2018 and by 7.5% during 2019 as compared to the historical growth
of 6.7% during 2017.
• Consequently, India may turn out to be the fastest growing major
economy in the world in the next calendar year. A recent report by
the World Bank has rated India as the 6th largest economy in the
world overtaking France in 2017. India is further slated to become
the 4th largest economy by 2022 as projected by the IMF.
Outlook
With a growing GDP backed by a relatively strong industrial production, exports and controlled inflation, India’s high growth prospects seem to be
achievable. Government’s focus on promoting manufacturing, exports and infrastructure development along with policy measures such as
liberalizing business regulations, privatization and encouraging foreign investments would act as catalyst to the economic growth. Further, rising
collections under GST also promises to ease off the fiscal pressure on the Government apart from making India an unified competitive market.

4
Foreign direct investment (FDI) - Equity inflows
• FDI has been a pillar of strength for India in the recent years. Whilst
FDI equity inflows increased from USD 10,408 Mn in Apr-Jun 2017
to USD 14,946 Mn in Jul-Sep 2018, FDI equity inflows depicted a
declining trend thereafter. Key reasons for the decline in FDI was the
rising interest rates in the US, fear of a global trade war and growth
in advanced economies pulling capital to such geographies.
• However, the Government is taking steps to promote investment by
making major sectors open to 100% FDI, focusing on sectors like
construction, defense, broadcasting, banking, retail, e-commerce,
pharma, insurance, etc. Further, regulatory and procedural aspects
around FDI are being liberalized and exit opportunities simplified.
Gross domestic product (GDP)
• India’s quarterly GDP growth rate has depicted a sequential rise over
the last 4 quarters increasing from 5.7% in Apr-Jun 2017 to 7.7% in
Jan-Mar 2018. Further, the World Bank has forecasted India’s annual
GDP growth rate at 7.3% for FY 2018-19.
• The strong growth was primarily led by improved performance in
the manufacturing and construction sectors backed by increase in
industrial output, private investment and domestic consumption
coupled with Government’s emphasis on infrastructure development.
Further, India’s infrastructure output growth, primarily comprising
of coal, crude oil and electricity, hit a seven-month high in Jun-18.
5.7%
6.3%
7.2%
7.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Apr-Jun'17 Jul-Sep'17 Oct-Dec'17 Jan-Mar'18
GDPgrowthrate
10,408
14,946
10,587
8,916
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Apr-Jun'17 Jul-Sep'17 Oct-Dec'17 Jan-Mar'18
USDMn

5
Inflation (WPI) and Interest rates
Note: WPI% for May’18 and Jun’18 are provisional
• Wholesale price index has been under a controlled trajectory over
the last 12 months ended Jun-18. However, it depicted an increasing
trend over the last quarter. The increase was primarily driven by
increase in food and fuel prices and increased tariffs on imports.
Further, the Government’s move to increase minimum support prices
of crops will also contribute to an increase in inflation rates in the
near term.
• In response to the rising inflation, the RBI increased the repo rate by
25 basis points to 6.25% in Jun-18, leading to the first rate hike by
the central bank in over 4 years. This move would also help check
the devaluation of rupee and attract private and foreign investments.
Foreign exchange rate movement
• Value of Indian rupee against the US dollar has witnessed a decline
over the last 12 months, with a high of INR 63.35 per USD in Jan-18
and a low of INR 68.94 in Jun-18. The devaluation was primarily
instigated by higher oil prices, rising interest rates in the US and
increase in global trade barriers leading to a flight of foreign capital
out of India.
• However, a weaker rupee increases India’s export competitiveness
particularly in the current environment of increasing trade barriers.
Further, the Government is committed towards maintaining a
reasonable current account and fiscal deficits coupled with RBI’s
intervention in the forex markets to control the rupee’s downfall.
64.5
64.0
64.4
65.1 64.9
64.2
63.6
64.4
65.0
65.6
67.5 67.8
61
62
63
64
65
66
67
68
69
Jul'17
Aug'17
Sep'17
Oct'17
Nov'17
Dec'17
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
INR/USD
1.9%
3.2% 3.1%
3.7%
4.0%
3.6%
3.0% 2.7% 2.7%
3.6%
4.4%
5.8%
0%
1%
2%
3%
4%
5%
6%
7%
Jul'17
Aug'17
Sep'17
Oct'17
Nov'17
Dec'17
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
WPI%

6
Purchasing manager’s index (PMI)
• Manufacturing PMI has shown an expanding trend from Aug-17 to
Jun-18. The expansion was a consequence of higher industrial output
accompanied by a growth in employment in the manufacturing
sector and an improvement in export orders at a faster pace.
• Service sector PMI on the contrary depicted a skewed trend with
intermittent expansion and contraction. The factors leading to
contraction were a slowdown in demand, decrease in new business
due to implementation of GST during the initial months and a
slowdown in employment in the service sector. However, the
expansion in Jun-18 was primarily supported by improving demand.
Further, in response to the anticipated demand, service providers
have also raised their staff levels at a faster pace.
Index of industrial production (IIP)
Note: IIP growth % for May’18 is provisional
• IIP comprises of mining, electricity and manufacturing sectors.
Industrial growth recovered with a steady increase over the 12
months ended May-18. The spurt in IIP during Nov-17 to Feb-18
was primarily due to a lower base in the preceding year on the back
of the after effects of demonetization.
• However, there was a slowdown in IIP growth during Mar-18 to
May-18 primarily due to a slowdown in manufacturing activity
driven by deteriorating performance of capital goods, rise in input
prices and softening of demand. IIP is expected to rise in Jun-Jul
2018 due to a weak base in the previous year owing to the onset of
GST. Further, an expected normal monsoon and increase in
consumption is also expected to push the industrial production up.
-0.3%
1.0%
4.8%
4.1%
1.8%
8.5%
7.3% 7.5%
7.0%
4.6% 4.8%
3.2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
June'17
July'17
Aug'17
Sep'17
Oct'17
Nov'17
Dec'17
Jan'18
Feb'18
Mar'18
Apr'18
May'18
YoYIIPgrowth%
47.9
51.2 51.2
50.3
52.6
54.7
52.4 52.1
51.0 51.6 51.2
53.1
45.9
47.5
50.7
51.7
48.5
50.9
51.7
47.8
50.3
51.4
49.6
52.6
40
42
44
46
48
50
52
54
56
July'17
Aug'17
Sep'17
Oct'17
Nov'17
Dec'17
Jan'18
Feb'18
Mar'18
Apr'18
May'18
Jun'18
PMI
Manufacturing PMI Service PMI

7
Overall M&A deal activity
Summary
• Overall M&A activity in value terms has been on the rise during the
last four quarters ended Jun-18. However, deal volumes declined
during Apr-Jun 2018 as compared to the preceding two quarters.
• Key factors contributing to the rising trend in M&A activity include
industry’s changing perception towards inorganic growth potential
achieved through M&A, improvement in business sentiment backed
by the ease of doing business in India, increase in cross border
transactions, and long gestation periods for greenfield projects that
makes M&A a more attractive option.
• Another major factor that has contributed and will continue to
contribute to the growth of M&A is the introduction of the
Insolvency and Bankruptcy Code in India. This has increased M&A
prospects across sectors that contribute to the stressed assets of
banks. With debt providers of stressed assets pushing for a change of
control, promoters of debt-laden entities will try to bring in financial
discipline and exit non-core assets to attain a sustainable level of
debt.
• Other catalysts for growth in M&A activity include factors such as a
need for consolidation owing to competition, debt reduction,
expansion of operations, exiting non-core businesses, PE/VC exits,
tax efficiencies and a desire to forge backward or forward
integration.
Overall M&A deal activity
1,839
12,658
24,737
31,755
96
135
148
106
0
20
40
60
80
100
120
140
160
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jul-Sep'17 Oct-Dec'17 Jan-Mar'18 Apr-Jun'18
USDMn
Quarterly deal activity
Value Volume

8
M&A deal activity – domestic vs cross border
• M&A landscape in India continues to be dominated by domestic
activity in terms of deal volumes. The spurt in deal values during
Jan-Mar 2018 was primarily owing to Tata Steel’s acquisition of
Bhushan Steel under the IBC for USD 7.5 Bn, and ONGC’s strategic
acquisition of majority stake in HPCL for USD 5.8 Bn. However,
deal value was skewed in favour of cross border transactions during
Apr-Jun 2018, primarily due to a few large ticket deals.
• Key sectors contributing to the higher domestic deal volumes were
consumer discretionary, financials, industrials and IT. Whereas,
financials, materials, telecom, energy and utilities primarily
contributed to the higher deal values in the domestic deal space.
M&A deal activity – domestic vs cross border
• The rise in cross border deal values was primarily attributable to the
rise in inbound deals, highlighting India’s continued attractiveness in
the eyes of foreign players. Inbound deals saw an upward trend
during Apr-Jun 2018 primarily owing to one mega deal i.e. Flipkart’s
acquisition by Walmart for USD 16 Bn. Further, Teleperformance
S.A.’s acquisition of 100% stake in Intelenet Global Services from
Blackstone for USD 1 Bn provided exit to the PE investor.
• Key sectors contributing to the higher cross border deal volumes
were consumer discretionary, healthcare, industrials and IT.
Whereas, consumer discretionary, financials, IT and utilities
primarily contributed to the higher deal values in the cross border
deal space.
1,149
3,351 2,970
20,122
36
42
40
33
-
5
10
15
20
25
30
35
40
45
-
5,000
10,000
15,000
20,000
25,000
USDMn
Cross border
Value Volume
690
9,306
21,767
11,633
60
93
108
73
-
20
40
60
80
100
120
-
5,000
10,000
15,000
20,000
25,000
USDMn
Domestic
Value Volume

9
M&A deal activity by sector
Summary (contd.)
• IT sector contributed c. 9.5% of the total deal values primarily
comprising of deals in the software and services space. Deals were
primarily driven by investments in emerging technologies.
• Utilities sector contributed c. 9% to the total M&A deal values with
major activity in the electric utilities space, which primarily
included thermal and renewable power generation businesses.
• Financials contributed c. 9% to the total M&A deal values during
Jul-17 to Jun-18, wherein major activity was observed in the
consumer finance, real estate and insurance businesses.
• Energy sector that contributed c. 8.5% of the total deal values
primarily comprised of the deal representing ONGC’s strategic
acquisition of HPCL.
• Healthcare sector represented c. 6% of the total M&A deal values.
Major activity was observed in the healthcare services and
pharmaceuticals space.
• Industrials contributed c. 5% of the total M&A deal values during
the year ended Jun-18 with major activity witnessed in the
engineering, construction and capital goods space.
• Consumer staples contributed the least (c. 1%) to the M&A league
tables during Jul-17 to Jun-18. Major activity in this sector was
observed in the food products and food retail businesses.
Summary
• Consumer discretionary sector contributed c. 25% of the total M&A
deal values during Jul-17 to Jun-18. M&A activity was dominated
by cross border deals in the e-commerce space led by Walmart’s
acquisition of Flipkart.
• Materials sector contributed c. 16% of the total M&A deal values,
primarily led by deals in the steel and cement space.
• Telecom sector represented c. 11% of the total deal values during
Jul-17 to Jun-18 primarily due to consolidation and divestment in
the telecom tower and infrastructure businesses.
17,821
11,143
7,931
6,728 6,371 6,364 6,050
3,907 3,825
850
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Sector
USDMn
Consumer discretionary Materials Telecom
Information technology Utilities Financials
Energy Health Care Industrials
Consumer Staples

10
Consumer discretionary
Summary
• Consumer discretionary sector comprises of industries such as
consumer durables & apparel, consumer services, media, retailing,
and automobiles & components.
Key deals
• Walmart’s acquisition of Flipkart for USD 16 Bn gave Walmart a
much needed entry into the Indian retail space against its US arch
rival Amazon. The deal also provided a highly profitable exit to the
early stage PE/VC investors in Flipkart.
• Reliance integrated its digital music service JioMusic with music
app Saavn in a deal valued at USD 227 Mn. The deal is expected to
strengthen Jio’s position in the Indian streaming market.
• Motherson Sumi Systems acquired Reydel Automotive France for
USD 201 Mn with a view to bolster its offerings in the automotive
interiors space.
• Advertising technology firm InMobi acquired US based AerServ for
USD 90 Mn. Through this acquisition, InMobi aims to create world’s
largest programmatic video platform for mobile publishers.
• Infosys acquired US based digital creative and consumer insights
agency WongDoody for USD 75 Mn. The deal is expected to
enhance Infosys’ digital services ecosystem and also help expand its
worldwide network of digital studios.
Outlook
Increasing focus on digitization will further promote online transactions and provide a push to deal making in the e-retail space. Growing
expectations of customers and fast evolving lifestyles may force expansion and advancement in the consumer durables and appliances industry
leading to higher M&A activity. In addition, Government’s measures to promote foreign investment, in particular, the abolishment of Foreign
Investment Promotion Board makes FDI vide the approval route a smoother process, and liberalization of FDI norms will also act as a catalyst.
180 101 610
16,930
13
21
27
20
-
5
10
15
20
25
30
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
USDMn
Value Volume

11
Materials
Summary
• Materials sector includes chemicals, construction materials,
containers & packaging, metals & mining, and paper & forest
products.
Key deals
• Tata Steel’s acquisition of debt-laden Bhushan Steel for USD 7.5 Bn
vide a resolution plan submitted in accordance with the guidelines
under the Insolvency and Bankruptcy Code of India was the largest
deal in this space.
• Ultratech acquired cement business of Century Textiles and
Industries Ltd for USD 1.3 Bn, providing Ultratech an opportunity to
strengthen its presence in the highly fragmented and competitive
cement market in India. The deal will also help achieve economies
of scale and synergies in procurement, logistics and distribution.
• Vedanta’s acquisition of Electrosteel Steels for USD 788 Mn was
also a fallout of the insolvency resolution process under the IBC.
• Avantha Group’s Ballarpur Industries sold its Malaysian industrial
plantation unit Sabah Forest Industries to Albukhary Group
(Malaysia) for USD 310 Mn with a view to reduce debt.
• Shree Cement acquired a controlling stake in Union Cement (UAE)
for USD 283 Mn. Union Cement produces clinker, a key ingredient
for cement, which gives Shree Cement an integration opportunity.
Outlook
Few larger deals are already under pipeline by virtue of insolvency resolution under the IBC in the metals space. With the construction materials
space getting more competitive, further consolidation is expected in the cement industry. Further, with Government’s push to infrastructure
development and real estate sectors, which are the biggest demand drivers for the materials industry, deals in this space are poised to grow.
136 326
8,048
2,6346
11
15
16
-
2
4
6
8
10
12
14
16
18
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
USDMn
Value Volume

12
Telecommunication
Summary
• This sector primarily includes wireless and telecommunication
services and related infrastructure.
Key deals
• Mobile tower firm Bharti Infratel is slated to merge with Indus
Towers to form the largest mobile tower operator outside China. The
combined entity will be jointly controlled by Airtel and Vodafone.
Erstwhile shareholders’ (Vodafone, Idea and Providence) 58% stake
in Indus Towers was valued at USD 6.2 Bn.
• Vodafone and Idea sold their standalone tower business to ATC
Telecom Infrastructure for USD 589 Mn and USD 612 Mn
respectively as a part of their strategy to exit non-core business to
strengthen the balance sheet by deleveraging it.
• Bharti Airtel’s acquisition of Tata Teleservices for USD 458 Mn
marks another deal towards consolidation in the Indian telecom
space. Airtel is expected to gain from the acquisition of additional
spectrum and Tata got a much awaited exit from the consumer
telecom business.
Outlook
Telecom sector is expected to witness more intensive consolidation activity going forward as a result of increased debt pressures for the mid and
small tier players and a highly competitive market with high spectrum costs and aggressive pricing.
7
1,665
24
6,234
2
4
1 1
-
1
1
2
2
3
3
4
4
5
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
USDMn
Value Volume

13
Information technology
Summary
• Information technology sector primarily includes software &
services, and technology hardware & equipment businesses.
Key deals
• Aricent Inc was acquired by Altran Technologies from a group of PE
investors in a deal valued at USD 2 Bn, creating a global leader in
engineering and R&D services by attaining strong expertise in key
technology domains and a superior global delivery supply chain.
• Acquisition of Intelenet Global Services’ BPO business by
Teleperformance (France) for USD 1 Bn provided an exit to
Blackstone.
• Merger of Birlasoft India with KPIT Technologies was valued at
USD 700 Mn, whereby the combined entity will later be split into
two companies with one entity focusing on automotive engineering
& mobility solutions and the other on enterprise digital business.
• IT sector witnessed a spurt in outbound deals totaling to c. USD 962
Mn as a result of multiple overseas acquisitions by IT giants like
HCL Technologies, Wipro and Cognizant.
Outlook
India has been one of the most preferred offshoring destination for IT companies across the world. Having proven its capabilities in delivering both
on-shore and off-shore services to global clients, emerging technologies offer new gamut of opportunities for top IT firms in India. Further, there has
been a heightened interest among PE/VC players in India’s IT and ITES sector. However, deals in the IT services sector may get clouded by adverse
visa policy promulgated by the US Government as the same will affect the cost competitiveness of Indian IT companies.
195
2,826
1,862 1845
18
35
28 23
-
5
10
15
20
25
30
35
40
-
500
1,000
1,500
2,000
2,500
3,000
USDMn
Value Volume

14
Utilities
Summary
• This sector primarily comprises of electricity and power utilities.
Key deals
• Reliance Infrastructure sold its integrated business of generation,
transmission and distribution of power in Mumbai to Adani
Transmission for USD 2.9 Bn. The deal is a result of deleveraging by
Reliance Infrastructure so as to focus on asset-light EPC and defense
businesses.
• ReNew Power acquired Ostro Energy for USD 1.7 Bn, KCT
Renewable Energy for USD 175 Mn, Waaneep Solar for USD 92 Mn
and Rajasthan wind project of India Power Corporation for USD 10
Mn. These strategic acquisitions are seen to help ReNew Power
consolidate its position further in the fast-growing clean energy
sector in India.
• Greenko Energy’s acquisition of Orange Renewable for USD 922
Mn will put Greenko’s total renewable energy operational capacity
second only to ReNew Power.
Outlook
Government is taking initiatives to implement hydropower policies, promote clean energy, install biogas plants, promote LEDs and aims at achieving
ambitious renewable energy target. These initiatives include tax exemption for solar energy projects, restarting the stalled hydropower projects and
increasing wind energy production. To encourage private players to enter the segment, the Government is offering generation-based incentives,
capital and interest subsidies, viability gap funding and concessional finance. Presently, the renewable energy market is fragmented with a large
number of small players which will provide opportunities for consolidation in order to increase capacities inorganically.
244
3,148
2,030
949
5
3
7
5
-
1
2
3
4
5
6
7
8
-
500
1,000
1,500
2,000
2,500
3,000
3,500
USDMn
Value Volume

15
Financials
Summary
• Financials include banking, insurance, real estate and other
diversified financial services.
Key deals
• Bharat Financial Inclusion agreed to merge with IndusInd Bank in a
deal valued at USD 2.4 Bn. The merger would benefit both the
organizations from their complimentary networks, and customers &
products focused on financial inclusion.
• IDFC Bank acquired Capital First for USD 1.5 Bn pursuant to IDFC
Bank’s strategy of retailising its loan book and transforming itself
from a dedicated infrastructure financer to a diversified bank.
• Fortis Healthcare announced its outbound acquisition of RHT Health
Trust (Singapore) for USD 722 Mn in order to buy back the real
estate assets earlier sold to RHT with a view to deleverage its
balance sheet. The buy back was primarily aimed at having better
valuation from potential suitors seeking to acquire Fortis.
• Tokio Marine hiked its stake in general insurer IFFCO-Tokio from
26% to 49% by acquiring additional shares for USD 390 Mn. The
move was in response to the hike in FDI limit in the insurance sector
to 49%.
Outlook
The financial technology space has been buzzing with early stage investments due to the increased internet and mobile penetration in India that is
attracting companies to enter and expand in the digital payments business. Government’s measures to promote FDI and opening up capital markets
through the IPO route are the key catalysts for potential deals in the insurance space. Increased transparency after the enactment of RERA,
operationalizing REITs and Infrastructure Investment Trusts, and the Government’s increased focus on affordable housing segment will play a
significant role in deal making in the real estate space.
648
2,910
2,650
157
16
15
28
16
-
5
10
15
20
25
30
-
500
1,000
1,500
2,000
2,500
3,000
3,500
USDMn
Value Volume

16
Energy
Summary
• Energy sector primarily comprises of oil & gas and energy
equipments & services business.
Key deals
• One of the largest domestic deals in the oil & gas space includes the
acquisition of majority stake in HPCL by ONGC for USD 5.8 Bn,
making ONGC India’s first vertically integrated oil major with
presence across the entire value chain. The integrated business will
result in economies of scale and increase risk appetite to withstand
global oil market volatility. While ONGC is engaged in the
exploration and production of oil & gas, HPCL is engaged in refining
and marketing operations.
• Jindal Steel and Power (JSPL) disposed its oxygen plant assets by
way of sale to SREI Equipment Finance for USD 171 Mn. The sale
was primarily targeted to free up capital for debt-laden JSPL;
however, JSPL shall retain the operational control over the assets
under a lease back agreement.
• Reliance Industries sold a part of its Eagle Ford shale assets to
Sundance Energy for USD 100 Mn. The sale was in conjunction with
the sale of assets by other interest owners in the joint development
with Reliance.
Outlook
India’s oil & gas sector is expected to grow on the back of rising crude oil prices, stronger demand, increase in domestic oil & gas production, and a
favourable outlook for gross refining margin. The Government has switched to a liberal regime for oil & gas exploration by supporting outbound
investments in major oil producing countries. Further, state-run oil firms are planning higher investments to improve infrastructure whereby M&A
will stay in focus.
- 171
5,878
-
-
1
4
- -
1
1
2
2
3
3
4
4
5
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
USDMn
Value Volume

17
Healthcare
Summary
• This sector includes health care equipment & services and
pharmaceuticals, biotechnology and life sciences.
Key deals
• Fortis Healthcare announced acquisition of its healthcare and
hospital business along with SRL by Manipal Health Enterprises for
USD 2.3 Bn in Mar-18. However, the deal subsequently did not
materialize owing to several regulatory hurdles.
• Torrent Pharmaceuticals acquired domestic formulations business of
Unichem Laboratories for USD 556 Mn with a view to grow
domestic business in order to beat slowdown in other geographies,
increase productivity and expand capacity.
• P&G acquired majority stake in German drug maker Merck’s Indian
unit for USD 295 Mn with a view to expand P&G’s consumer
healthcare business by adding a portfolio of OTC brands to its
existing brands. For Merck, it was a strategic divestment to help
finance R&D activities and also to deleverage.
• Lupin acquired Symbiomex Therapeutics for USD 150 Mn in a bid
to expand its women’s health specialty business.
Outlook
Healthcare is one of the fastest growing sectors with tremendous growth prospects in India, backed by huge capital investments and various initiatives
by the Government including 100% FDI for manufacture of medical devices subject to certain conditions, ease of procedures for consents and
approvals, investments in healthcare programs and ensuring affordability and availability. Further, Indian pharma players continue to look for
outbound acquisitions with an aim to increase their customer base, gain access to distribution networks and acquire new products and technology.
66
854
2,659
328
11
14
11
5
-
2
4
6
8
10
12
14
16
-
500
1,000
1,500
2,000
2,500
3,000
USDMn
Value Volume

18
Industrials
Summary
• Industrials includes capital goods, transportation and commercial &
professional services business.
Key deals
• L&T divested its electric and automation (E&A) business to French
automation giant Schneider Electric for USD 2.1 Bn with a view to
exit non-core business, unlock value within the existing portfolio and
to streamline and allocate capital and management focus.
• Sale of its defense business by Tata Power to Tata Advanced Systems
for USD 343 Mn was with a view to monetize Tata Power’s non-core
assets, deleverage its balance sheet and consolidate the Group’s
aerospace and defense business under a single entity.
• Adani Ports’ acquisition of Kattupalli Port from L&T for USD 277
Mn would give Adani Ports a major presence in the highly
industrialized region of south-east India.
• Gateway Distriparks, a logistics facilitator, acquired the existing PE
investor’s stake in the railway freight company Gateway Rail Freight
Ltd for USD 118 Mn thereby consolidating businesses within the
group to take benefit of synergies.
Outlook
Manufacturing and capital goods sector has emerged as one of the high growth sectors in India with growing economic GVA and increased
contribution to GDP. With the help of Make in India drive, India is on the path of becoming a hub for hi-tech manufacturing with increasing global
investments. Government has taken measures to develop a globally competitive industry by way of reduced taxes, providing export incentives,
liberalising the FDI regime, and providing special incentive package to promote large scale manufacturing in the ESDM sector.
230 245
750
2,600
18
22
20
15
-
5
10
15
20
25
-
500
1,000
1,500
2,000
2,500
3,000
USDMn
Value Volume

19
Consumer staples
Summary
• Consumer staples comprises of food & beverages, household &
personal products, and food and staples retailing business.
Key deals
• Wilmar Sugar Holdings (Singapore) increased stake in Shree Renuka
Sugars through a series of share acquisitions for USD 246 Mn as part
of a debt restructuring program approved by the lenders of Shree
Renuka Sugars.
• Lotte Confectionery (South Korea) acquired Havmor Ice Cream for
USD 150 Mn as part of a strategic investment, marking Lotte’s entry
into Indian ice cream market yielding a larger geographic presence.
• Promoter of MedPlus Health Services, India’s second largest
pharmacy retail chain, bought out the stake of erstwhile PE investors
for USD 100 Mn. Mr. Madhukar Gangadi, the promoter of MedPlus,
financed the buyout by raising debt from Goldman Sachs.
• Future Retail acquired Hypercity from Shoppers Stop for USD 100
Mn. The deal helps Shoppers Stop cut its losses in Hypercity while
helping Future Retail take its food business to another level by
adding 19 stores and by bringing out brands into the fold.
Outlook
Indian food industry has been increasing its contribution to world food trade every year primarily supported by the food processing industry.
Government’s measures in this space includes allowing 100% FDI in marketing of food products, incentives to enhance supply chain infrastructure,
and promoting entrepreneurship & training. The online food ordering business, which is still in its nascent stage, is witnessing exponential growth
creating a huge potential for the organised food business. Government has also taken measures such as setting up of dairy processing infrastructure
fund, 100% FDI in food product e-commerce, strengthening food testing infrastructure and promoting best practices for research in fertiliser sector.
133
412
228
78
7
9
7
5
-
1
2
3
4
5
6
7
8
9
10
-
50
100
150
200
250
300
350
400
450
USDMn
Value Volume

20
A. Glossary
ARCs Asset Reconstruction Companies
Bn Billion
BPO Business Process Outsourcing
E&A Electric and Automation
EPC Engineering, Procurement and Construction
ESDM Electronic System Design and Manufacturing
F&B Food and Beverages
FDI Foreign Direct Investment
GDP Gross Domestic Product
GST Goods and Service Tax
GVA Gross Value Added
IBC Insolvency and Bankruptcy Code
IIP Index of Industrial Production
IMF International Monetary Fund
IPO Initial Public Offer
IT Information Technology
Appendices
ITES Information Technology Enabled Services
LED Light Emitting Diode
LTCG Long Term Capital Gains
M&A Mergers and Acquisitions
MFs Mutual Funds
Mn Million
NBFC Non Banking Finance Company
OTC Over the Counter
PE Private Equity
PMI Purchase Manager's Index
R&D Research and Development
REITs Real Estate Investment Trust
RERA Real Estate (Regulation and Development) Act
USD US Dollar
VC Venture Capital
WPI Wholesale Price Index

21
B. References
Appendices
Data sources
• M&A deal data – VCC (Venture Capital Circle) Edge Database
• GDP annual growth rate – Investing.com
• FDI equity inflows – Department of Industrial Policy & Promotion
• PMI – Tradingeconomics.com
• IIP – Ministry of Statistics and Programme Implementation
• Interest rate - Tradingeconomics.com
• Foreign exchange rate – Reserve Bank of India
• WPI – Department of Industrial Policy & Promotion
Other references
• India Brand Equity Foundation
• Livemint
• Economic Times
• Times of India
• Financial Express
• Yourstory.com
• Maxminindia.com
• Moneycontrol.com
• Business Standard
• NDTV Profit
• Bloomberg
• India Today
• IMF publications
• FirstPost

22
C. Disclaimer
Appendices
VCC database captures details of the deals announced based on the
information available in the public domain. The deal data is compiled for the
period 1 July 2017 to 30 June 2018. However, deals with undisclosed values
have been ignored for the purposes of this analysis.
Publicly available economic, industrial, statistical and sectoral information as
well as outlook have been obtained from the sources mentioned in Appendix
B. We make no representation as to the accuracy or completeness of such
information.
Views expressed in this document are solely based on the information and data
points as referred to in Appendix B. The views may differ depending upon
changes in facts, circumstances and regulatory provisions.
Readers may or may not fully subscribe to the views expressed in this
document. We do not take any responsibility for decisions taken by the readers
based on this information. Further, this document should not be relied upon as
a substitute to detailed advice.
The contents of this document do not necessarily reflect the views of K C
Mehta & Co. but remain solely those of the authors.
Authors
Chinmay Naik Sanjana Shah
Associate Director Assistant Manager

India M&A Dealscape Report Analysis

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