Indian Companies Hit Their Stride

Newly confident, they're climbing the Asia BusinessWeek 50 with global ambitions

By Manjeet Kripalani

The BusinessWeek 50

It's been a banner year for India Inc. In March, Tata Steel finalized its $11.3 billion purchase of Dutch steelmaker Corus. In June, wind turbine maker Suzlon Energy paid $530 million for a controlling interest in German rival REpower Systems. Now, drug producer Sun Pharmaceuticals Industries is bidding $454 million for Taro Pharmaceutical Industries (TAROF ), an Israeli generics maker. And Tata Steel's sister company, Tata Motors (TTM ), could face off against hometown rival Mahindra & Mahindra in bidding for Jaguar and Land Rover, which Ford Motor (F ) has put up for sale.

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As India's economy grows faster than ever, its newly confident companies are showing their global ambition. And India's moment is evident in the latest BusinessWeek ranking of Asia's top 50 companies. Indian outfits dominate this year's list: There are a dozen in all, ranging from automakers to a mortgage lender to pharmaceutical producers. This diversity is a surprising reversal from just a few years ago, when all the world knew about corporate India was its software shops. This year, there's just one tech player on the list, Tata Consultancy Services Ltd. (No. 23). "India is no longer a one-trick pony," says Subir Gokarn, the chief Asia-Pacific economist for ratings agency Standard & Poor's (MHP ).

Other trends play out on the list, which captures the performers with the most dynamic sales and profit growth. (The list weighs two core financial measures: average return on capital and sales growth, both taken over the previous three years—which favors smaller, faster-growing outfits over giants such as Sony (SNE ) and Toyota (TM ).) Hong Kong property developers capitalized on the surge in real estate prices both in their city and on the mainland. Taiwan's role as tech manufacturer for the world boosted the fortunes of High Tech Computer (No. 2), Compal (No. 18), and Novatek (No. 37). And the rebound in Indonesia, back from the financial crisis that consumed it in 1998, can be seen in the surprising surge of Unilever Indonesia to the top of the list: Indonesians are finally feeling affluent enough to buy more of the company's consumer products.


But the strength of India's showing stands out the most. The Indian companies represented have plenty in common: smart management, low costs, and—increasingly—aspirations to join the elite ranks of multinationals. "All of India is dreaming bigger and aiming higher," says Keshav Sanghi, head of equities for Deutsche Bank (DB ) in Mumbai. Tata Consultancy has been building software and tech operations from Latin America to China, while generic drugmakers Cipla Ltd. (No. 10) and Sun (No. 48) now export close to half of their production. It's a good bet that as international giants from Motorola (MOT ) to British American Tobacco (BTI ) to Renault (RNO ) tap fast-growing markets such as India and China, they'll be competing head-on with some of these seasoned Indian players.

Our list is also a testament to the remarkable resilience and endurance of India's sprawling conglomerates. Three of the 12 on the list are part of the Tata Group of companies, which traces its roots to the British Raj. The two drugmakers were born around the time of India's independence in 1947. The baby of the bunch is Suzlon (No. 16), which was founded in 1995 and is now the world's fifth-biggest producer of wind turbines. Remarkable also is the presence of a multinational subsidiary, Siemens India (No. 4), and state-owned Bharat Heavy Electricals (No. 44), both of which are benefiting from Delhi's infrastructure buildout.

Look around Asia and you'll find plenty of chaebol and keiretsu that failed to make the transition from coddled, national champions to agile, profit-driven players on the global stage. In contrast, most of the Indian companies on our list endured decades of socialist rule, which starved them of capital and technology but guaranteed them a captive market. In the early 1990s, they were subjected to the shock of economic liberalization, which opened the door to foreign competition and left much of corporate India in deep trouble. Those companies that hunkered down and restructured became lean and competitive. India's success is due to a "lot of hard work that went into operating in a tough domestic market," says Alan Rosling, executive director of Tata Sons, the holding company that controls the conglomerate's sprawling operations.


Big demographic and social trends help Indian companies as well. India has one of the most youthful populations on earth, and these young people enjoy a higher standard of living than previous generations: They earn more than their parents and, unlike them, have access to credit from the likes of mortgage lender HDFC (No. 45). And more and more, they're picking up a new set of wheels from Tata Motors (No. 28) or Japanese-Indian joint venture Hero Honda Motors Ltd. (No. 19), and taking vacations in hotels built by ITC Ltd. (No. 24) as it diversifies away from its historical focus as a cigarette maker. "Middle-class values are dominating India," says Deepak Parekh, chairman of HDFC. Young Indians "are desperate to improve their lives."

The one potential brake on India's success is its turbulent politics. Continuing turmoil in Delhi could undo efforts to improve the country's infrastructure, which is vital to economic growth. But it's still a good bet that India's blue chips will continue to figure prominently in BusinessWeek's league tables, since they're far more than local champions. Tata, for example, is a global leader in developing low-cost business models in everything from cars to hotels. And India's drugmakers are plowing more of their profits into research and development in the hope of devising cures for diseases such as AIDs, cancer, and malaria. "Indian pharma is at the cusp of dramatic change," says Dilip Shanghvi, Sun's founder and chief executive. "It's where the IT sector was a decade ago."

Kripalani is chief of BusinessWeek's India bureau

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