21 Indian firms have the potential to take on the world

MUMBAI: They are puny when compared to global peers like the Toyotas, Accentures, Delphis, ABBs and Pfizers of the world. But a recent study reveals that among emerging global companies, 21 Indian companies have the potential to emerge as serious challengers.

A report by the Boston Consulting Group (BCG) and the Confederation of Indian Industry says that a “revolution in global business is underway” where companies from rapidly developing economies (RDEs) such as Brazil, China, India and Russia are expanding overseas, which could radically transform industries and markets around the world. Companies from these RDEs have ambitious leaders, low costs, appealing products or services, and modern facilities and systems to back their global thrust.

“India’s unique advantage has been the labour-cost advantage. Will it (the advantage) go as salaries and wages rise?” asks Arun Maira, chairman of BCG India. His answer: “Our analysis reveals that Indian companies will continue to enjoy the advantage.”

There are five Tata group companies featuring in the list of 21 Indian global challengers:  Tata Consultancy, the software services company, Tata Motors, Tata Steel, the lowest cost steel producer in the world, Tata Tea and VSNL, the international long distance player. All of them have made global acquisitions at some point of time in the recent past. Very few local companies, barring Tata Tea, which acquired Tetley, have global brands in their portfolios, though.

Twenty of India’s 21 global challengers are in the private sector. The lone exception is ONGC, which has been in a hunt for energy assets abroad. “This clearly reveals that liberalisation and delicensing have worked in India”, says Ajay Dua, secretary, department of industrial policy and promotion, in the ministry of commerce and industry.

India’s 21 form part of a larger list of 100 challengers identified by BCG.  The 100 were selected after scrutinising and shortlisting 3,000 probable companies located in 12 major RDEs. The study eliminated companies whose current international business presence amounted to less than 10% of revenues. At least 20% of the companies’ growth has come from mergers and acquisitions.

In the BCG 100 list, China accounts for 44 companies, Russia seven, Brazil 12 and Mexico six. The rest of the countries have 10 companies to boast of among the global challengers.

Indian companies enjoy skilled manpower advantage, which includes management and engineering talent, says Vikram Bhalla, director, BCG, who penned the report with his colleagues.

Apart from the Tata companies, the findings reveal a diverse list of Indian companies from diverse sectors. There is Videocon International, Venugopal Dhoot’s flagship consumer durables company, that created a stir when it acquired Thomson group’s European plants. Mukesh Ambani’s Reliance Industries features in the list as it unfolds a global strategy to take on the Du Ponts and British Petroleums.

The company gave a hint of its global ambitions when it acquired Trevira in Europe.

The Thapar group has also made a comeback after group company Crompton Greaves made an impressive turnaround under scion Gautam Thapar. The company had gone through a dramatic overhaul and is now preparing to compete globally with peers like ABB and Siemens.

ONGC is the only public sector Indian company featuring in the list whereas the bulk of the 44 companies from China were from the public sector. Bharat Forge, the second largest forging company, and Mahindra & Mahindra, represent the automobile ancillary and utility vehicles and tractor space.

Among drug majors, it is Yusuf Hamied’s Cipla which dished out a cocktail drug combination to take on global pharma majors for treating Aids and bird flu at bargain rates. Kumar Mangalam Birla’s AV Birla group has Hindalco representing it, while Azim Premji’s Wipro and Infosys Technologies are among the software stalwarts.