International Joint Venture Deals in India: An Industry-Wise Historical Perspective

Abstract

This descriptive research has identified 152 IJV deals in India during the ten-year period of 2006-15 struck by firms belonging to 23 industries and has attempted to assess whether announcement of such deals has led to accrual of abnormal returns for these firm and the industries to which they belong to. 75 IJV announcements have resulted in negative returns while 77 have yielded positive returns. More number of IJV deals have materialised in finance, Automobile, Auto Ancillaries, Capital Goods, infrastructure and steel industries warranting huge investment. Negative returns have accrued to retailing, Jewellery, Plantation, power generation, Consumer Durables, auto ancillaries, finance, infrastructure, Other Manufacturing and Capital Goods (with and without non-Electrical Equipments) industrieswhile positive returns have accrued to steel, automobile, refinery, healthcare and pharmaceuticals, media, fertilizers, FMCG, chemicals, education, logistics, IT and telecom industries. During 2007 and 2012, negative CAR accrue to all the industries excepting Automobile and Auto ancillaries industries. During 2011, all the industries barring FMCG, Power generation and distribution, Retail and Diamond, Gems and Jewelry have managed positive CAR while during 2014, IJV announcement has yielded positive CAR to all industries. Indian firms belonging to services sector has gained positive returns from their IJV announcements while those firms belonging to Industrial goods sector has not made any such gains