You are on page 1of 40

India Inc. are flying high.


and not only over the Indian
sky……..
WHAT IS MNC ???

 When a company operating in a


home nation establishes its
subsidiary in other nations (host
nations), it becomes an MNC and
there starts the process of
globalization wherein a local
company serves the entire world
with its products and services. The
advent of Internet and the
ensuing "new economy" has
opened up a plethora of new
business opportunities - and an
WHAT IS INDIAN MNC
?
• Thus if an Indian Company operating within the
country establishes its subsidiaries in foreign soil,
then it becomes an Indian MNC.

• The age of Indian MNC has finally dawned. Mr.


Aditya Birla of Aditya Birla group first looked
beyond India 30 years ago. Indian companies are
using all the tricks of the trade to go global:
Mergers & Acquisitions, Organic expansions,
Green field investments, and Joint Ventures. The
scale and the business share may not be
significant today, but Indian businesses are slowly
but surely establishing themselves abroad.
REALITY BYTES:
•According to the latest UNCTAD’s World Investment
Report 2007 (WIR ’07), India’s outward FDI was the second
highest at US$ 20.4 billion after Brazil at US$ 28 billion.

•Grant Thornton a global consultancy firm stated that India


Inc had 92 merger and acquisition deals, valued at nearly
US$ 6 billion, in the first two months of 2008.

•In 2007, India Inc spent US$ 33 billion on overseas


mergers and acquisitions (M&As), compared to the US$ 15
billion spent by foreign firms for acquisitions in India.

•Tata Motors’ takeover of Jaguar and Land Rover (JLR) for


US$ 2-2.5 billion is an excellent example set by an INDIAN
MNC towards this glory.

•Consequent to this surging FDI outflows, there has been


an increase in the overseas earnings (in terms of dividend,
royalty, license and technical fee and other inward
remittances) of Indian companies.
Indian outbound deals, which were valued at
US$ 0.7 billion in 2000-01, increased to US$
4.3 billion in 2005, and further crossed US$
15 billion-mark in 2006.

In fact, 2006 will be remembered in India’s


corporate history as a year when Indian
companies covered a lot of new ground.
They went shopping across the globe and
acquired a number of strategically significant
companies. This comprised 60 per cent of
the total mergers and acquisitions (M&A)
activity in India in 2006. And almost 99 per
cent of acquisitions were made with cash
payments.
INDIAN MNCs OUTBOUND DEAL
Since 2000
• The economic crisis of 1991, which
dragged us to a near-default situation in
its interest payments is now well
established as a watershed year in the
history of our nation and marks the leap
from an inward looking closed economy
to a more open, globalized one.
• Data from finance advisors reveals that
in 2002, 28 foreign companies got
acquired by Indian companies. The figure
climbed to 49 in 2003, 60 in 2004 and
100 in 2005. In value terms, the
acquisitions were valued at US$209
million in 2002, US$1.8 billion in 2003,
US$1.79 billion in 2004 and US$2.3
The result was a surge in acquisitions by Indian
companies as shown above

Source: www.ibef.or
Sector wise trend of Indian companies’ global
acquisitions are shown above

Source: www.ibef.or
Growth Of Indian MNC

“Corporate India is on a
roll”
Indian outbound deals,
or global mergers and
acquisitions, valued at
$ 15 bn mark in 2006.
And in 2007, it has
crossed the $33 bn
•The cornerstone of a recently released
Boston Consulting Group (BCG) study –
sifted through more than 3,000
companies with an annual $1 billion
turnover for 2004-06 - confirms that the
next wave of international corporate
success will come from a host of Indian
companies with low-cost, high-quality
products and services.

• Ten Indian companies are listed on


Investment by Indian MNCs - Region wise

$5.000

$4.000

$3.000
$2.000 In Billion
$1.000

$0.000
United States of Asia Pacific Europe
America
Indian Acquisitions In EU
INDIA AND EUROPEAN UNION

Valueof Global AcquisitionsbyIndian


Companies:2003-2006(tillApril 2006)
$4.00 $3.50
$3.50
$2.98
$3.00
$2.50
$2.00 $1.59 $1.61
$1.50
$1.00
$0.50
$0.00
2003 2004 2005 2006
Indian Acquisitions In EU
Indian Acquisitions In UK.
Indian MNC on the global platform
INDIAN FIRMS LISTED ON THE
Sl. COMPANY NASDAQ
SECTOR
No.
1 INFOSYS TECHNOLOGIES LTD IT SERVICES

2 REDIFF.COM INDIA LTD INTERNET PORTAL

3 SIFY LTD IT SERVICES

4 EXL BPO

ON THE NEW YORK STOCK EXCHANGE


Sl. COMPANY SECTOR
No.
1 DR REDDY’S LABS LTD PHARMACEUTICALS

2 HDFC BANK LTD BANKING

3 ICICI BANK LTD BANKING

4 MAHANAGAR TELEPHONE NIGAM LTD TELECOMMUNICATIONS

5 PATNI COMPUTER SYSTEMS LTD IT SERVICES

6 SATYAM COMPUTER SERVICES LTD IT SERVICES

7 TATA MOTORS LTD AUTOMOBILES

8 VIDESH SANCHAR NIGAM LTD TELECOMMUNICATIONS

9 WIPRO LTD IT SERVICES

10 WNS BPO
Top Indian MNCs
Initiator
TATA GROUP

The Group is one of India's


largest and most respected
business conglomerates, with
revenues in 2006-07 of $28.9
billion. The current chairman
of the Tata group is Ratan
Tata, who took over from J. R.
D. Tata in 1991.
It has interests in steel,
automobiles, information
technology, communication,
power, tea and hotels.
Software Powerhouse
Infosys
Technologies
It is India’s second-
biggest software company
and a major IT consulting
firm that generates 60% of
its sales in the U.S. Market.
The Bangalore-based company is
expanding quickly into Europe to
customize software applications
and manage computer networks. It
is facing increasing competition
from IBM and Accenture for quality
engineering talent at home. Even
so, it’s an earnings high-achiever:
Third-quarter profits shot up 50%.
Acquisition Machine

WIPRO

India’s third-biggest software


company and IT consulting firm
is on an earnings tear, with
fourth-quarter profits up 40%
to $169 million. Last year,
Wipro spent more than $250
million on acquisitions at home
and in foreign markets such as
Sweden and Finland, and the
company’s billionaire chairman,
Azim Premji, says he wants to do
bigger deals in the years ahead
to boost economies of scale and
to lower costs.
India Pharma
Dr. Reddy’s Laboratories

This high-flying drug company,


India’s third largest, reported a
tripling of net income to $42.5
million in the fourth quarter and
specializes in selling and
exporting versions of
blockbuster drugs developed by
other companies such as Bayer
and Merck at much lower prices.
Its generic business in the U.S.,
the world’s biggest
pharmaceutical market, is
sizable, and some 86% of its
global sales come from outside
Wireless Wonder
Bharti

It is good to be India’s biggest


wireless operator—doing
business in the world’s fastest-
growing market for mobile
phones. Now, Bharti is looking
to expand in other fast-growing
emerging markets such as
Africa. Britain’s Vodafone owns
a 10% stake in Bharti, which
also provides outsourcing
services to IBM.
The Tata Nano,
the world’s
cheapest
production car.

The HCL laptop,


Kingfisher Airways, the cheapest
voted the best production laptop.
airline of south-east
Asia.
The
Infosys IT
training
campus –
the
largest in
the world
Challenges of Going Global from India
Overcoming Liabilities of Origin
e first challenge is to develop a global corporate mind

•The second challenge is to make your


people understand and respect local habits,
cultures, etc.
•The third challenge relates to establishing
brand equity overseas.

•The fourth challenge is that of developing


a global pool of managerial talent.

• Finally, there is a fifth set of challenges.


These involve making one's globalised
character successful and sustainable.
LOOKING AHEAD----

FUTURE PLAN OF INDIAN


MNCs
A majority of all Indian outbound
deals and investments were done to
consolidate and integrate their
investment and business structures
of the companies acquired. More
overseas investments by leading
Indian firms are in the pipeline in a
bid to expand their business and
strengthen their global presence.
ADA Group company Reliance
Communications (RCom) plans to set up
WiMax networks across 50 countries in
the next three years to move into the
global telecommunication market.

Infosys plans to acquire Phillips Global


for $200 million.

Reliance Communications (RCom) the


Indian telecom major will invest up to
US$ 500 million in establishing an
India plans to set up a multi billion dollar
sovereign wealth fund to invest in energy
assets overseas.

Tata Communications plans to invest


more than US$ 2 billion over the next
three years to fuel its global expansion
plans.

Indian preventive healthcare and


beauty-care brand VLCC has announced
rolling out of a US $ 54.5 million
WHAT DO THE LEADERS
SAY???
“We have just begun.
If we stay in India, we will be at a competitive
disadvantage”

RATAN TATA

“We have 40 patents, 60 percent of our income


comes from the United States. We have now
expanded into Canada.”

AZIM PREMJI

“The scale of operation is extremely important


for the aluminum sector. Global growth is a
must.”

KUMARMANGALAM BIRLA
CURRENT SCENARIO

FOR THE FISCAL 2007-2008 AND Q1 FOR THE


YEAR 2008-2009
M&A by Indian Multinationals at Foreign
Turf valued at US$11.37 billion
Tata, Essar, Reliance and Infosys were
among the biggest acquirers in the US.
Tata Group remained at the forefront with
their total deal values worth $2.13 billion in
steel, hospitality and automotives sector,
revealed the Chamber Study.
 Aditya Birla announced take over of Utkal

Alumina International for $0.19 billion.


India Inc acquired companies abroad
valued at $11.37 billion while the foreign
firms invested much less $2.06 in buying
out the Indian firms in the first quarter of
fiscal 07-08, according to ASSOCHAM Eco
ACCROSS THE
GLOBE
North America and Asia were the
favorite hunting grounds of India Inc
on global acquisition chase as the
takeovers deals in these region
touched whopping $7 billion and $4.2
billion within the first four months of
financial year 2007-08, according to
ASSOCHAM Eco Pulse Study (AEP).
Among the Asian countries,
Vietnam was the largest
receiver of the deal money as
Tata Steel entered into a joint
venture with Vietnam Steel with
65 per cent stake for $3.5 billion

The Indian companies made


their presence felt in Italy
and Spain with $97 million
and $19 million takeover
deals.

South American and African region


remained low on the acquisition radar with
$6 million and $5 million deals completed
during the period noted Assocham study.
CONCLUSION
‘Let the world buy in, let’s
buy out’ is the latest buzz
in boardrooms across the
country
The rules of the game are
changing, and changing
very fast. It’s almost like
Kerry Packer’s night
cricket, which had few
believers at first but later
became the mantra for
global cricket.

Indian companies are ready


to play in the night and
make the years to come
bright with mega deals
Thank You
Presented By:
Amrita Bhattacharjee
Deblina Datta
Khushboo Khandelwal
Lalit Sharma
Sarfe Alam
Shaswati Pramanik