When Ratan Tata's Indian steel behemoth won the £6 billion auction of Corus, the former British Steel, in January last year, it began what India's newspapers quickly began calling the Great Indian Takeaway.

This week's deals — ONGC Videsh's £1.4 billion offer for London entrepreneur Peter Levine's exploration firm Imperial Energy and Infosys's £407 million takeover bid for UK software firm Axon — show that this hunger to go global through bold acquisitions remains.

After years of rapid economic growth, Indian companies have money to spend, just as valuations of companies in the west have falling dramatically.

Data compiled by Thomson show they have already spent £33 billion in the past 10 years on overseas acquisitions.

Sanjay Bhandarkar, managing director at Rothschild in India, says: “As the deals confirm, the appetite among Indian companies still remains strong — selective but strong.”

Anuj Chande, head of Grant Thornton's South Asia division, says: “Indian businesses are looking primarily to buy brands and established distribution networks. This is a nation forging ahead with buy-and-build on a massive scale.”
Hence the £1.2 billion takeover of Jaguar and Rover from Ford earlier this year by Tata Motors, which wants to push into upmarket segments of the Indian market.

According to Dealogic, the two deals this week bring the total value of the acquisitions India has in the pipeline this year to £9.7 billion.
That's not far shy of the £10 billion it had in the pipeline at the same time last year, before the credit crunch killed off much of the easy credit available for takeover deals.

And this year would have left 2007 trailing far behind if South Africa's MTN, worth more than £20 billion, had succumbed to bids from either of India's two largest mobile phone companies, Bharti Airtel or Reliance Telecom, which both got close to a deal.

Global deal volumes, in contrast to the Indian experience, are down 27% this year, according to Dealogic.

“By virtue of not declining so quickly, Asian or BRIC (Brazil, Russia, India, China) mergers and acquisitions looks like it's doing relatively well,” says Jitesh Gadhia, global head of advisory at Barclays Capital, and one of the bankers to the Corus deal.

Fears that corporate India would see a sudden slump in earnings growth this year have so far been proved wrong. In the three months to June, Indian companies saw an average increase in their earnings of around 10%, according to HSBC.
But the global squeeze on corporate financing is nonetheless having an effect.

“What people can afford to buy has come down fairly significantly,” says Bhandarkar. “But the theme of cross border hasn't really changed. Most corporates are actively looking for opportunities.” Both this week's deals are from companies with solid backing, says Gadhia.

“Both in the case of ONGC and Infosys there's a pretty significant parent which can finance these transactions in such a way that it doesn't rely too much on ring-fenced corporate leverage.”
Bhandarkar predicts that this will make Indian companies choosier. But for those that have the financial muscle, the global slump may make acquisitions more affordable.

For ONGC Videsh the high premium it is paying for Imperial seems worthwhile considering Imperial stock was trading significantly higher as recently as January. Shares in Axon, similarly, were trading at 830p in November, far above Infosys's 600p offer price.

The two deals sum up perfectly the two drivers for Indian acquisitions internationally — to tie up raw materials for growth and to access foreign markets and technology.

Infosys is well established in the US, but India's outsourcing companies have struggled to make headway in Europe, a problem which the Axon acquisition neatly solves. But while the appetite from Indian companies is certainly still there, what isn't certain is their ability to close the deal.

Neither the Imperial acquisition nor the Axon deal are in the bag. Indeed, the share prices of both companies are indicating that a counter-offer is a very real possibility.

When Brazil's CSN decided to barge in on Tata Steel's Corus acquisition, Tata Steel was able to tie up sufficient financing to beat a considerably bigger company in one of the decade's hardest-fought takeover battles.
If China's Sinopec or Korea's KNOC decide to table rival offers for Imperial, ONGC Videsh may not have the speed or financial flexibility to do likewise.

Indian oil companies have already lost out in bidding for Burren Energy, Maurel & Prom, and Petrokazakhstan, to name but a few. London's investment bankers have been frustrated in the past few years by what they see as Indian oil companies' refusal to pay the prices necessary to win in bidding battles.

And while Tata has shown itself willing to take short-term financial risks for strategic gain, Infosys has stayed away from deals until companies began to trade at more attractive valuations.

The Tata-Corus tie-up proved Indian companies could be successful bidders in world-class auctions. The MTN tilt earlier this year showed these world-class takeover attempts could also run aground. This week's deals could go either way.