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February 27, 2005
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February 27, 05




Page: 46/50

Home > 2005 Issues > February 27, 05

India That is Bharat
The devouring and swallowing MNCs

Satiricus

Thank God, Satiricus does not understand economics. Otherwise he would have stupidly asked, ?Is India being taken over?? Of course not. India is not being taken over; India is only being globalised. Then how come this ignoramus confuses globalisation for takeover? Has it not been learnedly explained to him that the two are as different as Tweedledum and Tweedledee?

In fact, there is an important aspect to this difference which Satiricus either does not understand or does not keep in mind. It is that globalisation of India means the Americanisation of the Indian economy, while takeover can mean its Europeanisation as well. Satiricus recalls that a few years ago, he had read a business weekly's listing of the world's 1,000 largest corporations, half of which are American. The market value of these US mega-corps totals more than eleven trillion dollars. The top 20 corporations on the list are all American, as are nine of the top 10 profit-makers. What does this prove?

In reply this business journal wrote, it proves that the widely accepted theory about the meaning of globalisation of the world economy is ?nonsense?-the idea that these corporations operate as world monsters without their country of origin having any significance. Here Satiricus also recalls a pithy observation by an Indian economist-there is no such thing as a Multi-National Coporation (MNC), it is actually a national corporation with multi-national operations. But here again Satiricus has a curious question-is an American MNC, that is, Multi-National Corporation, different from a European MNC, that is, Multi-National Company?

The top 20 corporations on the list are all American, as are nine of the top 10 profit-makers. What does this prove? In reply, this business journal wrote, it proves that the widely accepted theory about the meaning of globalisation of the world economy is ?nonsense?.

Satiricus does not know, because, being a journalist he is by definition illiterate. Perhaps the difference may be that American MNCs devour Indian industry, European MNCs swallow it. That this ?procedural? difference should be beyond the understanding of a simpleton like Satiricus is understandable, but what he finds hard to understand is that RSS chief, Shri Sudarshan, who, not being a journalist, is quite educated, sees no difference between the two.

Satiricus recalls that around the time Sudarshanji took over as Sarsanghachalak a few short years ago, the French cement MNC, Lafarge, had devoured (or swallowed) Tisco's cement plant, and the RSS Sarsanghachalak had expressed fears about what was happening to the Indian cement industry. Now, no Sangh Swayamsevak is supposed to understand the ABC of economics (least of all, their chief), so what he says should be beneath notice by the oh-so-knowledgeable English-language media, but amazingly enough, the economic columnist of India's biggest English-language newspaper considered the RSS chief's views serious enough to merit consideration and actually wrote an article, titled ?Addressing Mr Sudarshan's Fears?. In it he quoted Indian cement majors as saying that the French cement MNC was adopting predatory pricing in India to make the Indian cement industry go sick, so that it can buy them all up.

Now, now, was this economic columnist joining the RSS chief in the panicky feeling that just one company could gobble up a whole country's industry? Unfortunately, he was not only sharing the RSS chief's fear, he even went beyond. For he quoted the well-known Economist as saying that six multinational cement giants are jockeying to divide up the whole world's cement markets among themselves. In other words, takeovers are going global. In still other words, globalisation means multinational companies taking over national companies. And that is as it should be, no? For who wants national narrowness as against multinational munificence?

So happy cement industry takeover days are apparently here again. For not only has a newspaper headline recently reported that ?Takeovers in Cement Sector Hot Up? but have joyfully described them as ?bright prospects?. And of course, the brightest of them is the latest-the Holcim bid to take over ACC.

In spite of being blissfully ignorant of economics Satiricus could not help noticing that this bid is big enough to make banner headlines even in non-economic newspapers. But does that mean Holcim is about to pounce on ACC and just gobble it up? Oh, no, nothing so uncivilised. Rather, the details of the deal are delightfully devious. ACC is the second largest cement company in India, with a turnover of around Rs 3,560 crore. It was once a Tata Group company, and distinguished names like Nani Palkhivala were associated with it. In 1999 the Tata Group sold it to Gujarat Ambuja (GACL), which has now decided to sell it. As Satiricus sees it, this means an Indian cement company that was once sold to another Indian cement company will now be resold to a foreign cement company. Does this mean an Indian company's going global is the same thing as its going into the global gullet?

Satiricus does not know. All he knows is that Holcim of Switzerland is a major global cement company with a turnover of nine-and-a-half billion dollars, and if everything it has planned goes through, it will not only control ACC (GACL) but will also control Ambuja Cement Eastern Ltd (ACEL), one of the most profitable cement companies of India. There are also other global cement companies out to buy Indian ones. Lafarge has bought the Raymond plant, and Ital-cementi has purchased the Zuari company. And what is the national government doing about such multinational acquisitions? Is it disturbed? No, it is delighted. So takeovers have been helped by successive Central Governments in the name of worldwide business by actually providing loans for such takeovers as well as tax concessions.

Is this creeping acquisition, as polite economists call it, or is it galloping globalisation? Is such foreign control in the national interest? And do such takeovers not lead to oligopoly and price-fixing? Oh well, this curious cuss must not ask such questionable questions. After all, curiosity killed the cat, no?




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