Mumbai : Despite a slowdown in the global economy, the CAGR of emerging market companies stood at 13 per cent, comparaed to those in mature markets which stood at 4 per cent, in the period 2009-14, according to a Boston Consulting Group (BCG) report, Global Challengers.
The report stated that top ten companies across emerging market grew three times more compared to their competition in mature markets. Indian companies like Apollo Tyres, Bajaj Auto, Bharti Airtel, Dr. Reddy’s Laboratories, Godrej Consumer Products, Infosys, Larsen and Turbo, Lupin, Mahindra &Mahindra, Wipro, UPL, Vendanta Resources, Tech Mahindra, Sun Pharmaceuticals, Reliance Industries and Motherson Sumi Systems are listed in the Global Challengers 2016.
The IT and business process company – Tech Mahindra, has created a major presence with their US $ 43 billion network-infrastructure business. The company has adopted merger and acquisition (M&A) route to grow. In 2015, the company acquired Pininfarina and Sofgen Holdings and in 2016, it acquired entities Bio Agency and Target Group.
Commenting on Tech Mahindra’s strategy, Jagdish Mitra, chief strategy and marketing officer Tech Mahindra, said, “These key acquisitions clearly show the key areas Tech Mahindra is focusing on – design, digital and platforms. We are open to acquire any company based on the key focus the company has set out for itself.” He also added that the company has not set a limit in terms of number of acquisitions but in case any businesses are in line with company’s strategy, it would acquire it.
Tech Mahindra is not the only company that has taken M&A route. Other companies have also followed this strategy to grow faster. For instance, Apollo Tyres acquired Netherlands-based Vredestein Banden B V in 2009, which helped the company build a much-needed presence in Europe. Now, the company is not just focusing on growth in India but in Europe as well.
Neeraj Kanwar, vice chairman and MD of Apollo Tyres Ltd attributed the presence of Apollo Tyres in the global challengers list to the company’s “ability to think and act quickly to market forces as a trait that stands out.” Kanwar added, “At the peak of the downturn, when everyone was pulling back on their investments, we went ahead and invested in a Greenfield facility in Chennai. We knew that once the economy revives, there will be huge demand for tyres, and that’s what helped us in being ahead of the competition.”
The report points out that state-owned enterprises will have to restructure in order to stay competitive while family-owned businesses will need transition to the next generation. Conglomerates will have to focus on productivity and profitability and not just top-line growth.