What is the emerging trend in the Indian M&A scene?
Big is becoming beautiful. Old economy companies are being driven by the desire to consolidate and build the scale of their operations. They want to rationalise and turn more efficient in the new consolidated gameplan. Among the new economy companies, quite a few mergers are already happening. These mergers are driven by potential benefits in scale, branding, marketing and distribution. Acquisitions are taking place in the convergence sectors too. Serious cross-border acquisitions are happening. This is the purest knowledge play. A lot of Indian pharmaceutical companies are doing it and this will extend soon to biotechnology companies.

What factors will fuel M&A deals in India?
We have a global scale, but no global brands. This is true for several sectors. Consider the dairy industry where we are the second largest milk producer in the world. But, we do not have a global brand. Such limitations should lead to more M&A deals in India.

What components are critical to M&A in India?
There are two critical components. One, M&A skills. These are gradually developing in India. Two, owner mentality. This too is changing in India. Traditional family-owned business houses are overcoming their family nostalgia and are now willing to consider rationalisation. Mind zones are changing. Businessmen are moving away from being protective and defensive. For instance, the conservative Tatas have sold businesses but have never acquired. Tatas built only organically. But, Tata Tea's acquisition of Tetley shows that their mindset is changing.

How important are post-acquisition inputs to the success of M&A deals?
Post-acquisition inputs are very important for the success of M&A deals. For instance, we brought in extensive post-acquisition inputs to the Tata-Tetley deal. The areas we covered were: business rationalisation, increasing retailing and Internet practices, more structured trade finance, deeper market strategies through trade partners, establishing a global corporate profile and exploring add-on acquisitions. We even went to the extent of considering how to retain the UK name Tetley and give it an Indian flavour. We explored ways of going about it. Deliberation on how to build an Indian mystique around a fine product was certainly one important post-acquisition input we brought in.

As an investment banker, how do you go about sniffing an M&A deal?
You need to be hand in glove with the management and be close to their strategy aspirations. You have to be as close to them as possible so that you would be able to strategise. If you know the strategy of your client, you will be proactive in sniffing a deal. Traditional bankers address identified issues and that is plain-vanilla banking. But, an investment banker needs to be astute and adept in understanding clients' businesses. He must have an entrepreneurial vision. He need to be a specialised banker and not a generalist universal banker. He must be specialised, be it in sectors or in product delivery.

What are the pitfalls in closing M&A deals?
Since M&A deals are driven by change in mindsets, there could be last minute blues. You need to have a strong team of legal and tax experts. A ring fenced with fire walls is critical in closing a deal.

Why is Tata-Tetley a memorable deal?
Tata-Tetley deal has helped to create India's first true MNC. In this transaction, just UK 15 million pounds has been utilised from India. Everything else, amounting to UK 290 million pounds, came from overseas. This is extremely strategic considering the fact that only five per cent has been utilised from the Indian reserves. In this deal, we were well-supported by the RBI. I must compliment the GoI for making this deal a reality. This deal is memorable also because it has made India the global number one at least in one product, the branded tea.