Financial Daily from THE HINDU group of publications
Wednesday, Apr 26, 2006
Corporate - Mergers & Acquisitions
Resurgent India strikes back with confidence
SUNDRAM FASTENERS' plant at Cramlington in the UK.
Smart Indian companies are emerging as smart leaders to the world.
Just a decade ago, the idea of Indian manufacturers emerging as significant competitors in the global economy might have attracted some incredulity. Today, it has become a fact of life. From robots and computer chips to value-for-money automobile technology and high-end auto components, an increasing number of products being sold and used all over the world now flaunt the Made-in-India tag. From global laggards, a growing number of Indian manufacturers are emerging as world-beaters, so to speak.
This striking transformation has been brought about by the opportunities of economic liberalisation that unleashed the potential of the country's unique strengths to create high-performance organisations in diverse industries. Companies are redefining standards and slashing through obstacles to establish supremacy. Manufacturing processes are being honed and sharpened.
India's growing reputation as an emerging centre of manufacturing excellence received its strongest endorsement yet in the fact that, after a gap of 21 years, India has been invited to be the Partner-Country for the Hannover Fair 2006. With more and more international companies establishing production operations in India, apart from sourcing technological services and sprucing-up plans to benefit from the enormous demand in the Indian market, the timing for the invitation is a reflection of the manufacturing revolution that has taken place in India Inc.
For instance, till recently, Indian companies were eager to play host to multinationals setting up base in India, in the hope of leveraging best practices and access to high-end technology. Today, powered by a newfound self-confidence, Indian corporations are keen to acquire the multinational tag.
Acquisitions and alliances have powered a new breed of leaders. Companies such as Bharat Forge are rapidly covering the globe with acquisitions in the US and Europe and joint ventures in China. Less than a decade ago, the company was yet another export aspirant, trying to prove its mettle in a fragile market. Today, it is the world's second-largest maker of forged vehicle components and the largest player in the Chinese forgings industry. And exports account for nearly three-quarters of its total income.
ON THE SAME PATH
Scores of companies are driving down the same lane. Another auto component company, Sundram Fasteners, has taken over companies in Germany and the US. It bought over the German company Peiner Umformtechnik for $ 16 million. Recently, Sun Pharma acquired Able Labs in the US for $23 million. Ranbaxy Laboratories has affiliates, joint ventures and alliances in over 46 countries and manufacturing facilities in seven. Its recent string of acquisitions has now helped the company establish its presence in Europe's pharma markets.
Biocon, one of Indian biotech's brightest stars, is among the top 20 companies in the field in the world. It has partners in the US and Europe that provide access to innovative technologies and an invaluable suite of intellectual property assets. Biocon started out with just three scientists and a garage for an office. Fuelled by the passion of its founding directors, the company has converted every potential and promise into profit. It has also spawned an entire industry of world-beaters. Today, the Indian vaccine industry is the third largest supplier of vaccines in the world.
Take the case of Mahindra & Mahindra, one of India's oldest automobile companies that once specialised in making hardy and stodgy vehicles. A few years ago, overwhelmed by the rapidly changing consumer base in India, the company overhauled its production and manufacturing models. It invested $120 million to manufacture the Scorpio, an example of indigenous enterprise at one-fifth the international cost of manufacturing.
Quest for best
In the quest to become the best, companies are journeying to the very edge of their resources and capabilities. Tata Motors, one of the country's leading automobile companies, plans to launch a car for $2,200 by 2008. If the company can pull this off, this would be the world's cheapest car.
Radical use of technology and craftsmanship is transforming the Indian corporate landscape. And it is drawing accolades and investors into the country.
Toyota is investing close to half a billion dollars in India to make manual transmission gear boxes for its markets across the world. Hyundai is already exporting engines and transmission systems to its operations in Korea and Turkey from its Indian operations. Fiat's Indian arm is expected to soon become a global sourcing hub for components.
Driven by a constantly evolving customer base, companies are rediscovering their strengths. Pharmaceutical companies such as Ranbaxy, Dr Reddy's Laboratories, Cipla and Sun Pharmaceuticals are betting on new molecules and drug delivery systems. Ranbaxy Laboratories was recently granted a US patent on its controlled-release drug delivery system.
There are many such examples on the Indian pharma landscape. Cipla's ground-breaking work in creating an alternative to high-priced AIDS drugs (Cipla offers a 3-in-1 drug to non-profit health organisations at less than half the regular prices) has changed the way the world treats the disease. Indian pharma and biotech companies are developing unique ways of harnessing the power of medicine at an affordable cost.
Success stories in industry after industry are proving India's ability to take the global centre-stage. And as it does, it is proving what John F. Kennedy once said: "Leadership and learning are indispensable to one another".
(The author is, CEO, India Brand Equity Foundation. The views are personal.)
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