FOREIGN DIRECT

INVESTMENT
Presented by:
Shyamashree
Das
Asha Jaikishan
Neha Agarwal
S. Pramoth
Anirban Das

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 CONTENTS
 About FDI
 Types of FDI
 Theories Of FDI
 Joint Venture- Nokia
Siemens
 Acquisition – HCL Axon
 Merger- RPL & IPCL

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 WHAT IS FORIGN
DIRECT INVESTMENT?

FDI or Foreign Direct

Investment is any form of
investment that earns interest
in enterprises which function
outside of the domestic
territory of the investor.

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 TYPES OF FDI
HORIZONTAL FDI: It is investment in
the same industry abroad as at
home. 

Example: Ford builds an automobile

manufacturing facility in Mexico.

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 Contd.
VERTICAL FDI: It is found when a
firm invests abroad in other
operations in terms of supply of
inputs or to have control over
marketing its products.

It has two forms- Backward and

Forward.

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 Contd.
 Backward FDI is investing in an
industry which supplies your firm
at home. 
Example, if Ford builds an engine
production facility in Mexico which
ships engines to it manufacturing
site in Texas. 
Forward FDI is investing in an
industry which buys from your firm
at home. 
Example, if Ford buys seven
dealerships in Mexico City which it
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 BRODER
CLASSIFICATION OF
FDI
GREEN FIELD INVESTMENT: A form
of foreign direct investment where
a parent company starts a new
venture in a foreign country
by constructing new operational
facilities from the ground up.

Example: General Motors of the

USA has 20%share in the equity of
the Italian firm Fiat and Fiat
maintains 5%
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Shyamashree Das inNo-160
Roll the equity 7
 Contd.
BROWN FIELD INVESTMENT:
It denotes a combination of
green-field investment and
M&As.

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 FOREIGN DIRECT INVESTMENT

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 JOINT VENTURE
A Joint Venture (JV) Is An Entity Formed
Between Two Or More Parties To
Undertake Economic Activity Together.

The Parties Agree To Create A New Entity

By Both Contributing Equity And Then
They Share In The Revenues, Expenses,
And Control Of The Enterprise.

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 Bringing
Networks To
Life

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 Profile Of Both
Companies
NOKIA
FOUNDED Finland, 1865
HEADQUARTE  Espoo, Finland
RS
KEY PERSON Olli-pekka
Kallasvuo,
President& Ceo

INDUSTRY Telecommunication
s
Internet
Computer Software

PRODUCTS Mobile Phones

Smartphones
Multimedia
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Computers
 About Joint Venture

• 50-50 joint venture between

Nokia's Networks Business Group
and Siemens' carrier-related
operations for fixed and mobile
networks was announced on 19
June, 2006.

• For broad scale advantages and

worldwide presence.
 
•To gain Market strength and
leading position in fixed-mobile
convergence.
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 About The Company
• Nokia Siemens Networks is a leading global
enabler of communications services

• Nokia Siemens Networks is one of the largest

telecommunications infrastructure
companies with operations in 150 countries.

• The company is headquartered in Espoo,

Finland.

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 Contd.
Key people
Simon Beresford-Wylie
CEO (Nokia)
Eric Simonsen CFO
 Financial
(Siemens AG)
Olli-Pekka reporting
Kallasvuo Chairman (Nokia) Consolidation by
Nokia.
Equity accounting by
Market Position Siemens.

No. 2 in Wireless
Network
No. 2 in Operator
Services
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No. 3 in Wireline
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Networks
 Acquisition
Meaning: When one company purchases another
there is no exchange of stock or consolidation as a
new company.
Types:
• Friendly: The companies cooperate in negotiations
• Hostile : Acquiring company makes a sudden
purchase of shares of the target company with a
limited time

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 Acquisition

ACQUIRES

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 About HCL
• Hindustan Computers Limited is
India’s 4th largest leading global IT
Services companies .
• Founded on 11th August 1976
• Headquarters : Noida ,UP,INDIA
• CEO: Vineet Nayar
• Industry: Information Technology
Services
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 About AXON
• Axon Group plc is a leading British-
based consultancy dedicated to
assisting customers using SAP as
their Enterprise resource planning
system .

• Founded on 1994
• Headquarters: Egham, Surrey
• Industry :Consulting
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 About Acquisition
• HCL Technologies Ltd has completed the
acquisition of UK-based Axon Group in a
£441.1 million all-cash deal

• Infosys Technologies had also offered to

buy Axon for £407.1 million

• But the HCL made a announcement that

it has offered £441.1 million to buy Axon.

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 Contd.
• It is the largest overseas acquisition by
an Indian tech firm
• They merged the HCL SAP practice
under Axon leadership in form of HCL
AXON .
• Steve Cardell will continue as a
president, HCL Axon
• HCL will raise funds through a loan
from Standard Chartered.

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 Structural Change
• Axon will help to add SAP consulting in
Europe to HCL's existing services.
• SAP will be a hot property in future terms
of application implementation.
• IT would catapult HCL to the 12th position
in terms of SAP implementation globally.
• Business accounting for 25 percent of
HCL's revenues

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 BENEFITS
• It is very Strategic for HCL
• Axon has consulting and
blueprinting business.
• Strategic alliance for the customer
• It adds value to the HCL
• Significant impact on global
revenues, margins and market
share.

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 Merger
The combining of two or
more entities into one,through
a purchase acquisition or
a pooling of interests. Differs from
 consolidation in that no new
entity is created from a merger.

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 Merger

IPCL

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 General Idea About
Companies
IPCL
FOUNDED Public(NSE:Relia
nce)
HEADQUARTE Navi Mumbai,
RS India
KEY PERSON Mukesh Ambani
President& Ceo

INDUSTRY Oil
Conglomerates
PRODUCTS Petroleum &
Petroleum
Products

TThe appointed date of merger of IPCL with RIL was April 1,2007
It is a Horizontal type of merger
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 Factors Leading To
Merger
Tax Saving Activity
GCPTCL IPCL RIL

Increasing Revenue From Chemicals IPCL

Reliance Supplying Raw Materials To IPCL.

Merger Will Help Reliance To Take On

Competition From West Asian Countries Which
Enjoyed Highly Subsidized Feedstock's And
Financial Concessions

Moving From Stereotype To Dynamic Business

Model
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 The Deal
•The merger increase treasury stock and
market capital: The combined entity will have a
market cap of Rs 2,00,000 crore

•Emergence of new products: Polypropylene

and Polyethylene and a couple of new products like
Polybutadiene rubber and Acrylic fibre

•Government Participation: Government holds

10.40 lakh shares accounting for 0.35 per cent of IPCL's
equity capital.

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 Financial year 2006 (in Rs Crore)
Particulars Reliance Ind. IPCL Merged Entity

Net Sales 80,877.79 10,884.78 91,762.57

Net Profit 9,069.34 1,163.75 10,233.09
Total Assets 76,640.69 7,732.09 84,372.78

Reserves 48,411.00 4,681.92 5,309.92

Net Worth 46,050.47 4,930.97 50,981.97
Financial year 2007
Net Sales 79,468.00 8,519.00 87,987.00

Net Profit 80,55.00 1,047.00 9,102.00

Market Capital 1,79,672.21 6,996.83 1,86,669.04

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 Structural Changes IPCL
Whopping Up Reliance Balance Sheet-
IPCL'S FY07 Net Profit Close To Rs1,000 Crore
A Cash Balance Of Around Rs1,100 Crore.
The Combined Net Worth Of The Merged Entity Will Be
Over Rs50,000 Crore .

Caring The IPCL Share Holders-

Reliance Have Issued Around 5.5 Crore Shares To

IPCL Shareholders
Shareholders Will Be Benefited From RIL'S Overall
Dynamism

Combined Marketing And Sales Function

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 Benefits
Enhancement Of Business Strength

Participation In Diversified Business

Portfolio

Product Exchange

Together, IPCL And Reliance Will Create

One Of The World's Largest Petrochemical
Companies.

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