The announcement by Reliance Industries Ltd that it has bid for a controlling stake in LyondellBasell, the world’s third largest chemical company, is a sign that animal spirits are back in Indian boardrooms.

One effect of the financial panic that struck the world at the end of 2008 was that major Indian companies decided to steer clear of ambitious investment plans. The investment surge was stopped in its tracks and government spending had to be increased to prevent a collapse in growth.

Companies have been able to raise new equity and refinance old debts over the past six months, thanks to the easing of financial conditions. But much of that money has been used to repair balance sheet damage rather than fund new growth plans.

Reliance’s bid could make this the biggest overseas acquisition by an Indian company. As those companies that went in for ambitious leveraged buyouts realized, a lot will depend on how well the financial risks are managed by the acquirer.