ENRON INTERNATIONAL IN INDIA

.Why do you think Enron was willing to shoulder the risk of making such a significant investment in India? What long run benefits did the company forsee? Do you think these benefits compensated for the risks involved?

India is a developing country with an underdeveloped economy. Since independence in 1947 India had a number of restrictions on foreign investments and it imposed number of trade barriers in the form of high import duties. However by the 90’s India opened its doors to foreign investors .Former prime minster, Narsimha Rao requested Enron to make an investment in India in the form of an independent power project. Enron accepted the request and then begins the Enron saga…

a .Enron was assured 16% return on investments. The rate of return after the agreement worked out to be 32%.Usally return on investment in the US would have been around 8%.The higher rate of return was attributed to risk associated with establishing a power plant in India. Considering the uncertain...