New President of Confederation of Indian Industry, Uday Kotak has given a statement that he is not against the idea of taking over weak businesses by financially strong organizations if it is in the interest of investors. Nevertheless, the government could take steps to protect Indian business from exploitative takeovers from the investors belonging to certain specific Nations because of strategic reasons. According to Kotak the decision of selling the investment should be left to the investors.
“Is this money coming from countries where we have a strategic level issue, then it’s a very separate issue by itself. And even the US wants to protect some key strategic sectors, from some countries for good reason. So, I would say that is a very different reason,” Kotak said.
As far as other takeovers by domestic investors are concerned, he said, “we have to look at the interests of both sides. On the one side is the interest of existing entrenched management, who’s going through a tough time, on the other side is a very poor performance of the investors’ money”.
Citing an example, Kotak said, if an investor is getting Rs 70 on an investment of Rs 100 as against the current value of Rs 30 then he should be allowed to exit. “We need to look at things from the lens of an investor.”
The outbreak of COVID-19 and sudden fall in demand has hit industries across the world. The crisis has unfolded opportunities for players with deep pockets to buy companies.
