National

New worlds to conquer

Anand Kalyanaraman | Updated on August 14, 2020

These risk-embracing corporate warriors put India on the global business map

Could Indian companies be world-beaters, could they make a mark globally? In a young nation struggling to find its feet, facing myriad challenges and tethered to socialist moorings, it may have been difficult to be optimistic about this proposition - one that involved thinking big, breaking shackles, having the audacity to take on the world’s largest, and being unapologetic about creating wealth.

But some India Inc. warriors have done all this and more, displaying drive and chutzpah, making the most of opportunities to become global giants. The economic liberalisation of 1991 and the easing of rules catalysed the journey of these companies from the local arena to the global stage. Mega global acquisitions, attracting big foreign investments, capturing huge markets… their paths may have been different and not all their moves may have played out as expected, but these companies have helped put India on the global business map.

RIL’s metamorphosis

From an energy-focussed giant to an energy-plus-consumer business play, Reliance Industries (RIL) has metamorphosed over the past decade. Spending its way at break-neck speed to dominance in the telecom sector, Reliance Industries has in recent months secured mega-investments (about ₹1.5-lakh crore, nearly $20 billion) at top-dollar valuations into Jio Platforms, its digital business holding company. The world’s top technology companies such as Facebook and Google and private equity biggies have made a beeline for Jio Platforms, whose next stop could be a mega-IPO on global bourses.

RIL was already a major player in global refining and petrochemicals. Jio Platforms now seems set to be catapulted into the league of global technology companies. RIL’s retail business could also attract marquee global investors. RIL, incorporated in 1973 as a textile business, is now India’s largest company in terms of market-cap ($179 billion), and figures in the Fortune 500 list.

Infosys scales new heights

Software major Infosys too started small and scaled global heights. The triumph of Infosys is held up as a victory of the hard-working middle-class India. With an investment of $250 in 1981 pitched in by seven co-founders, Infosys started in an office in Pune. It now clocks annual revenue of about $12 billion and has a market-cap of $54 billion. Infosys was among the first to capitalise on the great opportunity of software services outsourced from foreign countries. It achieved runaway success with high-quality delivery to a diverse global clientele from delivery centres across continents.

The company listed on the Indian bourses in 1993, achieved $100 million revenue in 1999, and listed on the Nasdaq that year. Its ESOP plan made many of its employees millionaires. The company has now moved beyond traditional application development and maintenance to become a full-fledged IT and digital services player. Towards this end, it acquired global companies such as Lodestone, Panaya and Simplus.

On an acquisition spree

Acquisition-driven global growth was a key strategy adopted by the Aditya Birla Group too. Hindalco Industries, the group’s flagship aluminum company, acquired US-based Novelis, the world's largest aluminum rolling company, in a landmark $6-billion deal in 2007. Novelis’ 25 manufacturing facilities in nine countries across North America, South America, Europe and Asia gave Hindalco a global footprint, positioning it among the top five global aluminum majors. Novelis now accounts for about two-thirds of Hindalco’s revenue and operating profit.

In April 2020, Hindalco acquired another US-based rolled products major, Aleris Corporation, through Novelis for $2.8 billion. The Aditya Birla Group companies made several other global acquisitions too including Australia-based Nifty Copper Mines in 2003, Dubai-based Star Cement in 2010, and Domsjö Fabriker, a Swedish speciality pulp and bio-refinery company in 2011.

Tata makes headlines

The Tata Group too pressed hard on the global acquisition paddle since the turn of the century. Tata Tea’s acquisition of Tetley in 2000 made headlines. So did Tata Steel’s buys of Corus in Europe in 2007, NatSteel in Singapore in 2004 and Millennium Steel in Thailand in 2005. In particular, the acquisition of Anglo-Dutch steel-maker Corus for $12 billion after a tough fight was a watershed event, making Tata Steel the world’s fifth-largest steel producer at that time.

The acquisitions, however, did not deliver as expected. Unfavourable market conditions for steel left these businesses bleeding. Tata Steel has been attempting to reshape the company by focussing on its Indian operations and divesting non-core overseas businesses. But these plans such as the agreement with thyssenkrupp AG have not yet gone through due to regulatory troubles.

Another of the Tata Group’s landmark deals — Tata Motors’ acquisition of Jaguar Land Rover (JLR) from Ford in 2008 for about ₹9,200 crore ($2.3 billion) — had raised eyebrows. Though JLR had turned in an operating profit in 2007, the Jaguar brand wasn't in great shape. The company was saddled with high costs and needed restructuring and huge investments. But the acquisition paid off for Tata Motors in the initial years, with the JLR brand identity kept undiluted, focus on emerging markets such as China for volumes, and cut in costs. JLR recorded its highest profit since the acquisition by Tata Motors in 2014-15.

But since then, the business has weakened, and JLR has recorded losses the past two years due to weak sales growth, margin pressures and increasing debt. JLR is again on mission to cut back on investments, rationalise inventory and control costs through ‘Project Charge’.

With inputs from Vivek Ananth, Satya Sontanam and Parvatha Vardhini C

Published on August 15, 2020

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