LEADING Indian industrialists, who just a few years ago were seen as knights in shining armour, rescuing floundering international companies from sure death, are today being seen in a different light — as value destroyers of successful domestic companies.

Back in the heady days before the 2008 global economic crisis, many brave Indian businessmen sailed forth around the globe, rescuing distressed businesses by acquiring them. They spent billions of dollars in acquiring assets and were hailed by the pink pages here for their audacity and vision.

But today, about a decade after their disastrous forays, they are being mocked for lack of vision and inability to predict either the global financial meltdown, or the commodity crisis.

Many of the Indian companies who had bravely ventured abroad and acquired foreign firms at record prices are today in deep trouble, unable to service their foreign loans. Their domestic operations are also suffering as they have to share the financial costs of overseas acquisitions.

The biggest Indian foray was by Tata Steel, the country’s leading — and oldest — steelmaker, which paid a whopping $12.7bn in 2006 to acquire Corus Steel, a much larger entity. Over the next few years, the Tatas poured a few more billion dollars in trying to revive the fortunes of its UK business.

Tata Steel also bought companies in Singapore and Thailand at a time when the sector was faring exceedingly well.

Ratan Tata, the then chairman of Tata Sons, the $110bn group’s holding company, also acquired the prestigious British luxury carmaker, Jaguar Land Rover (JLR) from America’s Ford Motor Company. Tata Motors, the group’s automobile firm, acquired JLR for $2.3bn.

The JLR acquisition fortunately proved to be a good one for Tata Motors and the group. Tata Motors also acquired South Korea’s Daewoo Commercial Vehicles for $102m in 2004 and a partial stake in Spanish bus-maker Hispano Carrocera for $18m.

The group’s automotive engineering and design services company, Tata Technologies bought Incat International of the UK for $53m. IT major TCS also splurged millions of dollars on overseas acquisitions.

Tata Chemicals spent more than $200m in acquiring Brunner Mond group of the UK and a Moroccan rock phosphate firm. The Tata group has emerged as one of the biggest buyers of international companies over the past 15 years.

Looking at the aggressive overseas expansion by the Tatas, many other groups also began buying foreign firms. They included the Birlas, the Ruias, the Ambanis, the Jindals, the Mittals, the Suzlon group, the GMR group, the Avantha group and Fortis.

The global economic crisis followed by a meltdown in commodity prices has seen many of these companies making hasty exits, albeit paying a hefty price. Last month, Tata Steel unveiled plans to sell its UK business after it admitted an impairment of £2bn.

Last year, Tata Steel had made provisions for writing off a large chunk of its European assets, including those in the UK. The Tata decision caused a political storm in the UK, with labour lawmakers demanding nationalisation. Tata Steel is also facing pension fund liabilities. The fate of nearly 15,000 workers in the UK is hanging in the balance.

Cheap steel imports from China into Britain had virtually destroyed the domestic steel industry. Unlike other countries — including the US and India — the UK was reluctant to curb Chinese imports, forcing the Tatas to exit. Tata Steel has been losing about £1m daily at one of its plants in the UK.

INDIAN steel and metal producers went on a buying spree over the past 10 years, without taking into consideration the associated risks of commodity and business cycles.

JSW Steel, another major domestic steel player, took an impairment charge of more than Rs21bn on its overseas investments, which included an iron ore mine in Chile, a plate and pipe mill in the US and coking coal mines, also in the US.

Essar Steel, part of the troubled Essar group of the Ruias, is seeking to dispose of its Algoma unit in Canada. Essar acquired the plant in 2007 for $1.63bn.

Reliance Industries, the flagship of the Mukesh Ambani group, also went on an overseas buying spree a few years ago. It had acquired a stake in the Eagle Ford shale oil field in the US in 2010 for $1.31bn; it invested nearly $4bn in the venture. However, last year it exited the business, selling it for just $1.07bn.

Like Reliance, Bharti Airtel, India’s top telecom service provider, has also been disposing of its overseas assets. The company acquired the African business of Kuwait’s Zain Telecoms in 2010 for $10.7bn. It has of late been selling off the telecom towers in different parts of the continent.

Bharti Airtel has already sold off its assets in nine of the 17 African countries that it had acquired in 2010. Last month, it sold 1,350 telecom towers in Tanzania to American Tower Corp.

Hindalco Industries, the aluminium major from the Aditya Birla group, had acquired American aluminium major Novelis in 2007 for $6bn. It has been struggling with its debt in recent times, especially with the slump in aluminium prices.

The problem with many of these acquisitions was that the Indian buyers had bought assets by borrowing funds — both domestically and overseas. While interest rates soared in India — making the servicing prohibitive — they also burnt their fingers by not hedging their overseas borrowings against currency fluctuations, especially the sharp fall in the value of the rupee against the dollar.

The liquidity crunch coincided with the slowdown in the Chinese economy and the sharp fall in commodity prices. Many Indian groups and companies have had to write down their expensive acquisitions of the past few years, hurting their domestic business.

Published in Dawn, Business & Finance weekly, April 18th, 2016