The majority of Indian companies with an international asset base are part of business conglomerates.
According to the finding of a survey conducted by Indian School of Business and the Brazilian business school Fundacao Dom Cabrall, 50 per cent of companies that acquired global assets during 2008-11 belonged to business groups.
“The sharing of knowledge and resources seem to be helping the affiliates of business group firms in acquitting overseas assets,” Prof. Raveendra Chittoor of ISB who conducted the study told Business Line .
The survey had ranked Indian trans-national companies, using a global measure of internationalisation called the transnational index, during 2008-09 to 2010-11.
“The chief growth for Indian companies during this period came through overseas acquisitions or inorganic growth,” Prof Chittoor said.
Tata Steel Ltd, Tata Global Beverages Ltd and Hindalco Industries Ltd topped the list of 15 companies with an international asset base of over $500 million.
More than half of the top 15 transnational companies are affiliated to business groups, a phenomenon unique to emerging economies with companies from Tata Group dominating the list, the study showed.
Outward FDI
India's outward foreign direct investment grew from $1 billion in 2001-02 to $18.5 billion in 2007-08 at a compound annual growth rate of over 60 per cent.
During 2008-10, the global economic crisis slowed the internationalisation of Indian companies.
In 2010-11, Indian companies resumed their process of internationalisation and outward foreign direct investment increased by over 23 per cent in the year-ago period.
But 2011-12 could be different. “We don't have complete data for the last financial year yet. But as per Reserve Bank of India's figures, the global investments of our corporate houses appear to have come down,” the ISB academician said.
The objective of the study was to benchmark Indian transnational companies against their global counterparts, he added.
The study was based on information collected from the top 50 companies ranked by their consolidated international assets.
The transnational index was developed by the United Nations Conference on Trade and Development as a standardised index for comparative analysis across geographies.
It uses various parameters such as international assets, international revenues and number of foreign employees.
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