mnc industry

7/28/2019 MNC Industry

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Presented ByChandan Agarwal-03Anuja Bambulkar-05

Yash Chavda-08Sumeet Chhaparia-10

Pranav Dave-11Kayur Desai-13Girish Mistry-33Rohit Singh-43

Laxmi Sharma-48Sree Kumar-52


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INDIAN

India Inc. are flying

high.and not only over the

Indian sky..


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WHATISMNC ???

When a company operating in a

home nation establishes its

subsidiary in other nations (hos

nations), it becomes an MNCand 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

"inevitable" number of busines

casualties.


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WHATIS INDIAN

MNC ? Thus if an Indian Company operating within

the country establishes its subsidiaries inforeign soil, then it becomes an IndianMNC.

The age of Indian MNC has finally dawned.Mr. Aditya Birla of Aditya Birla group first

looked beyond India 30 years ago. Indiancompanies are using all the tricks of the trade

to go global: Mergers & Acquisitions, Organicexpansions, Green field investments, and

Joint Ventures. The scale and the businessshare may not be significant today, but Indian

businesses are slowly but surely establishing

themselves abroad.


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REALITY BYTES:

According to the latest UNCTADs World Investment

Report 2007 (WIR 07), Indias 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.


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Indian outbound deals, which were

valued at US$ 0.7billion in 2000-01,

increased to US$ 4.3 billion in 2005, andfurther crossed US$ 15 billion-mark in

2006.

In fact, 2006 will be remembered inIndias corporate history as a year when

Indian companies covered a lot of new

ground. They went shopping across the

globe and acquired a number ofstrategically significant companies. This

comprised 60 per cent of the total

mergers and acquisitions (M&A) activity

in India in 2006. And almost 99 per centof acquisitions were made with cash

payments.


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INDIAN MNCs OUTBOUNDDEAL Since 2000

raphical representation of Indian outbound deals since 200


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The economic crisis of 1991, which

dragged us to a near-default

situation in its interest payments isnow well established as a watershed

year in the history of our nation and

marks the leap from an inward

looking closed economy to a moreopen, 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$209million in 2002, US$1.8billion in 2003, US$1.79 billion in

2004 and US$2.3 billion in 2005.


12/42Source: www.ibe

The result was a surge inacquisitions by Indian companies as

shown above


13/42Source: www.ibe

Sector wise trend of Indiancompanies global acquisitions are

shown above


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GrowthOfIndianMNC

Corporate India is on

a rollIndian outbounddeals, or global

mergers andacquisitions, valued

at

$ 15 bn mark in 2006.And in 2007, it hascrossed the $33 bn

mark .


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The cornerstone of a recently

released Boston Consulting Group(BCG) studysifted through more

than 3,000 companies with an

annual $1 billion turnover for 2004-

06 - confirms that the next wave ofinternational corporate success will

come from a host of Indian

companies with low-cost, high-quality products and services.

Ten Indian companies are listed onthe NYSE and Four on NASDAQ.

There are over 15 companies listed

on the London Stock Exchange.


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IndianAcquisitionInEU


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$1.59 $1.61

$3.50

$2.98

$0.00

$0.50

$1.00

$1.50

$2.00$2.50

$3.00

$3.50

$4.00

2003 2004 2005 2006

Value of Global Acquisitions by Indian

Companies:2003-2006(till April 2006)

INDIA AND EUROPEAN

UNION


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dian Acquisitions In EUdian Acquisitions In EU


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IndianAcquisitionsInUK.


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Indian MNC on the global platform

ON THE NEW YORK STOCK

EXCHANGE

Sl.

No.

COMPANY SECTOR

1 DR REDDYS LABS LTD PHARMACEUTICALS

2 HDFC BANK LTD BANKING

3 ICICI BANK LTD BANKING4

MAHANAGAR TELEPHONE

NIGAM LTDTELECOMMUNIC

ATIONS5

PATNI COMPUTER SYSTEMSLTD

IT SERVICES6

SATYAM COMPUTERSERVICES LTD

IT SERVICES7 TATA MOTORS LTD AUTOMOBILES8

VIDESH SANCHAR NIGAMLTD

TELECOMMUNICATIONS

9 WIPRO LTD IT SERVICES

10 WNS BPO

INDIAN FIRMS LISTED ON

THE NASDAQ

Sl.No.

COMPANY SECTOR

1INFOSYS

TECHNOLOGIES LTD IT SERVICES2 REDIFF.COM INDIA LTDINTERNET

PORTAL

3 SIFY LTD IT SERVICES4 EXL BPO


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TopIndianMNCs


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The Group is one of India's

largest and most respectedbusiness conglomerates,

with revenues in 2006-07 of

$28.9 billion. The current

chairman of the Tata group

is Ratan Tata, who took over

fromJ. R. D. Tata in 1991.

It has interests in steel,

automobiles, information

technology, communication,power, tea and hotels.

Initiator

TATA GROUP


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oftware Powerhouse

Infosys

Technologies

It is Indias second-

biggest software company

and a major IT consulting

firm thatgenerates60%

of its sales in the U.S.

Market.

The Bangalore-based company is

expanding quickly into Europeto

customize software applications

and manage computer networks. I

is facing increasing competition

from IBM and Accenture for

quality engineering talent at

home. Even so, its an earningshigh-achiever: Third-quarter

profits shot up 50%.

One-Year Total Return:64.8%


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Acquisition Machine

WIPRO

Indias 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 athome and in foreign markets

such as Sweden and Finland,

and the companys billionaire

chairman, Azim Premji, says he

wants to do bigger deals in theyears ahead to boost economies

of scale and to lower costs.

One-Year Total Return: 26.26%


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This high-flying drug company,

Indias third largest, reported a

tripling of net income to $42.5

million in the fourth quarter

and specializes in selling and

exporting versions ofblockbuster drugs developed by

other companies such as Bayer

and Merck at much lower

prices. Its generic business in

the U.S., the worlds biggest

pharmaceutical market, issizable, and some 86% of its

global sales come from outside

India

One-Year Total Return: 25%

ndia Pharma

Dr. Reddys Laboratories


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Wireless Wonder

Bharti

t is good to be Indias biggest

wireless operatordoing

usiness in the worlds fastest-

rowing market for mobilehones. Now, Bharti is looking

o expand in other fast-

rowing emerging markets

uch as Africa. Britains

odafone owns a 10% stake in

harti, which also providesutsourcing services to IBM.

One-Year Total Return: 107%


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The TataNano, theworlds

cheapestproductioncar.

The HCLlaptop, thecheapestproductionlaptop.

TheInfosys ITtrainin

gcampus thelargestin theworld

KingfisherAirways, votedthe bestairline ofsouth-eastAsia.


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Challenges of Going Global

from India

Overcoming Liabilities

of Origin


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The first challenge is to develop a global

corporate mindset

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.


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LOOKING AHEAD----

FUTURE PLAN OFINDIAN MNCs


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A majority of all Indian outbounddeals and investments were done to

consolidate and integrate their

investment and business structuresof the companies acquired. More

overseas investments by leading

Indian firms are in the pipeline in a

bid to expand their business andstrengthen their global presence.


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ADA Group company Reliance

Communications (RCom) plans to setup 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 establishingan internet Protocol-enabled

integrated telecom network in

Uganda.


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India plans to set up a multi billion

dollar sovereign wealth fund to investn energy assets overseas.

Tata Communications plans to invest

more than US$ 2 billion over the next

hree years to fuel its global expansion

plans.

Indian preventive healthcare and

beauty-care brand VLCC has

nnounced rolling out of a US $ 54.5million expansion across the MiddleEast.


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WHAT DO THE

LEADERS

SAY???


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We have just begun.If we stay in India, we will be at acompetitive disadvantage

RATAN TATA

We have 40 patents, 60 percent ofour income comes from the UnitedStates. We have now expanded intoCanada.

AZIM PREMJI

The scale of operation isextremely important for thealuminum sector. Global growth isa must.

KUMARMANGALAM BIRLA


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CURRENT SCENARIO

FOR THE FISCAL 2007-2008 AND

Q1 FOR THE YEAR 2008-2009


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M&A by Indian Multinationals at

Foreign Turf valued at US$11.37

billion

Tata, Essar, Reliance and Infosys wereamong the biggest acquirers in the US.

Tata Group remained at the forefront with

their total deal values worth $2.13 billion insteel, hospitality and automotives sector,

revealed the Chamber Study.

Aditya Birla announced take over ofUtkal Alumina International for $0.19

billion.

India Inc acquired companies abroad

valued at $11.37 billion while theforeign firms invested much less $2.06

in buying out the Indian firms in the

first quarter of fiscal 07-08, according

to ASSOCHAM Eco Pulse Study (AEP)


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North America and Asia werethe favorite hunting

grounds of India Inc onglobal acquisition chase as

the takeovers deals inthese region touched

whopping $7 billion and

$4.2 billion within the firstfour months of financialyear 2007-08, according toASSOCHAM Eco Pulse

Study (AEP).Among the Asiancountries, Vietnam wasthe largest receiver of

the deal money as TataSteel entered into ajoint venture with

Vietnam Steel with 65per cent stake for $3.5

billion

The Indiancompanies madetheir presence felt inItaly and Spain with$97 million and $19

million takeoverdeals.

South American and Africanregion remained low on the

acquisition radar with $6 millionand $5 million deals completed

during the period notedAssocham study.
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CONCLUSION

Let the world buy in, letsbuy out is the latest buzzin boardrooms across the

countryThe rules of the game are

changing, and changingvery fast. Its almost like

Kerry Packers nightcricket, which had few

believers at first but laterbecame the mantra for

global cricket.

ndian companies are readyto play in the night andmake the years to come

bright with mega dealsand plenty of global

brands.

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