GOING GLOBAL - IBEF
GOING GLOBALINDIA INC. IN UKThe India Brand Equity Foundation is a public-privatepartnership between the Ministry of Commerce &Industry, Government of India and the Confederationof Indian Industry.The Foundation’s primary objectiveis to build positive economic perceptions of India globally.India Brand Equity Foundationc/o Confederation of Indian Industry249-F Sector 18, Udyog Vihar Phase IVGurgaon 122015, Haryana, INDIATel 91 124 401 4087, 4060 - 67Fax 91 124 401 3873Email ajay.khanna@ciionline.orgWeb www.ibef.orgwww.ibef.org
CONTENTSForeword03Executive Summary04Hindustan Computers Limited (HCL)12ICICI Bank Limited15Infosys Technologies Limited18MindTree Consulting22Rolta India Limited25Sundram Fasteners Limited28Tata Consultancy Services31Thermax Limited35VIP Industries Limited37United Phosphorus Limited40Wipro Limited42Wockhardt Limited45
FOREWORDIndia’s huge and increasingly prosperous middle class remains an attraction for UK investors,but now, in a remarkable reversal of that trend, Indian companies investing in the UK considermarket potential in that country as the main attraction!I am pleased that the India Brand Equity Foundation (IBEF) has carried out this first-of-a-kindconcerted study of Indian companies going global in the context of a specific market.“Going Global: India Inc. in UK” reveals that second biggest reason for Indians investingin the UK is that it acts as base to invest in other European countries.This mindset representsthe confident and aspiring new India.Let me take this opportunity to invite UK’s business community to re-look at India. India isperhaps the most diverse market in the world. In comparable terms, it would be consideredalongside EU, Latin America, and ASEAN. A traditional worldview would seek to address theIndian market from a uni-dimensional lens.The visionary international organisation, however,would look at the multi-layered paradigm shifts taking place in the world’s most diversemarketplace, that are giving rise to innumerable opportunities to go global via an India strategy.I would like to think that India Inc. is best poised to leverage this advantage.The companiesin this study are from that new breed, which sees a globalising India as a great launch platformfor going global. UK businesses would do well to appreciate this aspect of approaching the Indianmarket, as a gateway to the world, and will certainly “profit from the experience”!Kamal NathMinister of Commerce & IndustryGovernment of India
EXECUTIVEABICORBINZELPRODUCTIONSUMMARY(INDIA) PVT. LTD.Since, there has been a significant change in themindset of India Inc. as companies increasinglyventure abroad.India’s Direct Overseas Investments (US Million):2001-2005 Non-financial ServicesOthers (Financial Services,Telecom, etc.)While the average size of global acquisition in 2005was US 32 million, for Jan-April 2006, the figurestood at US 69 million.The sectors that heldsway in these deals include Engineering, IT-enabledservices, Media, Pharmaceuticals & Healthcareand Textiles.The majority of overseas acquisitionsby Indian companies are in Europe, whichcomprises nearly 50 per cent of total M&A activity.Number and Value of global acquisition by Indian companies:2003-2006 (Till April 2006)613615044.351003.660250521.82200320040Source: Reserve Bank of India4Most Indian companies have followed an inorganicroute to expand their overseas operations.50Number of DealsIndian firms began investing abroad in 1992when policy guidelines were redefined to promoteenhanced investment opportunities in the country.This was a result of policymakers’ belief thatan urgent need existed for Indian firms to accessadvanced foreign technologies and new overseasmarkets.Indian companies are increasing their overseasinvestments to gain access to the US and EUmarkets.The targeted firms are being usedas platforms to gain access into these foreignmarkets by leveraging the market positions alreadyestablished by these firms on their respectivedomestic turfs.The value of overseas buyoutsby Indian companies increased from US 1.7 billionin 2004 to US 4.5 billion in 2005.This representsan increase of 164 per cent.Value of Deal (US Billion)India – Going Global0n Total Value of deals20052006n Number of dealsSource: Grant Thornton of India
Factors Fuelling Acquisition by IndianCompanies AbroadFavourable Economic Conditions Large foreign exchange reserve: At present(June 2006), India has a foreign exchange reserveof US 164.5 billion, as compared to less thanUS 1 billion in 1991. Liberal policies: Many rules and regulations,which had a prohibitive effect on Indiancompanies going abroad, have been lifted sincethe economic liberalisation of the country.For example, Indian corporate and registeredpartnership firms are now allowed up to100 per cent of their net worth investmentin joint ventures and wholly owned subsidiariesoverseas, without any separate monetary ceiling.India Corporate Advantage Understanding of global environment: Indiahas vast experience in the service industry thatrequires companies to deal with diverse setsof clients, to be serviced across multiplelocations.This has helped Indian companiesto be global in terms of accessing capital, humanresources and clients. Consolidated domestic presence: Indiancompanies have consolidated their presenceon the domestic turf. After having exploredoptions in the domestic market, they arefocussing on foreign markets for new challengesand opportunities.Tata Steel, the Aditya BirlaGroup and ONGC Videsh are a few which areon the look out for global markets after gaininga strong foothold in the domestic industry. Large free cash reserves: As numerous Indianfirms possess enormous volumes of freecash reserves, such companies are acquiringforeign targets.AcquirerTarget CompanyCountryTargetedDeal Value Industry(US Mn)ONGC VideshBrazilian Oil Fieldsfrom Shell CorporationBrazil1,400Oil and GasDr. Reddy’s LabsBetapharmGermany570PharmaceuticalSuzlon EnergyHansen GroupBelgium565Wind EnergyHPCLKenya Petroleum Refinery Ltd.Kenya500Oil and GasRanbaxy LabsTerapia SARomania324PharmaceuticalVideoconThomson SAFrance290ElectronicsMatrix LaboratoriesDocpharma lecomTata ChemicalsBrunner MondUnited Kingdom177ChemicalsSubex SystemsAzure SolutionUnited Kingdom140Information TechnologyTata SteelMillennium SteelThailand130SteelSource: Business Line5
All these factors have resulted in India increasingits presence worldwide.Sectors Witnessing Acquisition AbroadPharmaceuticalIndian pharmaceutical companies are increasinglyfocussing on global acquisitions to enter newmarkets.This trend is fuelled by the need toexplore newer markets and products for futuregrowth in this industry. Further, acquisitions alsoact as mechanisms alleviate regulatory constraintsin penetrating overseas markets.Therefore,Indian pharmaceutical companies are, adoptingthe strategy of acquiring existing generic drugmarketing companies that hold valid drug licenses.For the period from April to July 2005, 13 per centof the cross-border investments by Indian firmswere in the pharmaceutical sector.Auto AncillarySeveral international auto firms have realised theadvantages of sourcing their components fromIndia. India with its strong engineering skillsrepresents a low-cost outsourcing destinationfor auto companies worldwide.Therefore, Indianauto ancillary companies are increasingly lookingat foreign acquisitions to grow and sustain theirmarket competitiveness. Acquiring overseas firmsfacilitate Indian companies by reducing deliverytime. Further, as overseas auto ancillary firms arenot registering adequate financial growth, they areavailable at relatively lower valuations.6Fast Moving Consumer Goods (FMCG)Several Indian FMCG companies are planningoverseas acquisitions, because such acquisitionsallow domestic companies to gain an easy footholdin overseas markets. Further, the cost of brandbuilding is lower as the consumer is already familiarwith the brand. For the period April to July 2005,8 per cent of the cross-border investments byIndian firms were in the FMCG sector.Information Technology (IT)Mergers and acquisition momentum is pickingup in the Indian IT industry. More and more Indiancompanies are planning to acquire firms abroad.During the period from April to July 2005, 13 percent of the cross-border investments by Indianfirms were in the IT sector. Some of the reasonsfor this trend are as follows: Getting hold of a ready customer base Access to domain knowledge or intellectualproperty Entry into newer marketsIndia and Europe: Economic andCommercial RelationsIndia-Europe trade has grown impressively overthe years. In 2005, the five largest European tradingpartners of India were UK, Belgium, Germany, Italyand France.European Union (EU) is India’s largest exportdestination. In 2005, India was the 11th largestexporter to the EU and accounted for over1.6 per cent in the total EU imports.The majorIndian exports to the EU are textiles and clothing,engineering products, gems and jewellery,chemicals, metal and metal products, leather andleather goods, agriculture and fisheries.India was also the 11th largest importer and hada share of 2 per cent in the EU’s global exports.The major Indian imports from the EU are in thesectors of metal/metal products, engineeringproducts, gems and jewellery and chemicals.UK - India: Economic andCommercial RelationsIndia and the UK are on the path to a healthybilateral economic and commercial relationship,arising from a common democratic outlookin both the countries.
The liberalisation policy laid the foundation ofeconomic co-operation between India and the UK.In 1993, with the joint-initiative of the then Britishand Indian Prime Ministers, the Indo-BritishPartnership Initiative was established.The mainobjective of the partnership was to strengtheneconomic ties and increase bilateral trade andinvestment between the two countries.The initiativelaid particular emphasis on promoting small andmedium enterprises (SMEs) in both the countries.Since then, due to constant support from the twogovernments and the industry, the initiative hasbeen transformed into a full-fledged partnership.It is currently known as the Indo-British Partnership(IBP). Some accomplishments of the IBP:NASDAQ whereas over 18 companies are listedin London Stock Exchange.The latest step in reinforcing economic and tradeties between India and the UK has been the creationof the Joint Economic and Trade Committee(JETCO), which was set-up in January 2005.ImportsTextiles and readymade garments, gems andjewellery, footwear, metal manufactures, organicchemicals, and vegetables and fruit are among thekey goods imported by the UK from India. During2004-05, imports from India to the UK amountedto US 4,687 million.Imports from India to the UK (US million):2002-2006 (Till Feb 2006)5,000Imports (US million) Bilateral trade between India and the UKincreased from US 4.3 billion in 1993 toUS 11.6 billion in 2004, at a CAGR of 9.38 percent Making UK India’s fourth-largest tradingpartner (accounting for 3.7 per cent of its totaltrade in 2-03 There have been around 2000 joint venturessigned between the two countries since 1993.2003-042004-052005-06Total ImportSource: Ministry of Commerce, Government of India Some indicators of the strong India-UKrelationship:The UK is the third-largest investorin India in terms of new investments since 1991. India is one of the biggest export markets forthe UK among emerging economies. The number of Indian companies listed on theLondon Stock Exchange is more than thatof NASDAQ and NYSE combined. Eight Indiancompanies are listed in NYSE and three inExportsNon-metallic minerals, gold, telecom equipment,transport equipment and industrial machineryExports from the UK to India (US million):2002-2006 (Till Feb 2006)4,000Exports (US million) UK is one of the largest markets in the worldfor Indian IT services and occupies around14 per cent of Information and CommunicationTechnology (ICT) services 32003-042004-052005-06ExportsSource: Ministry of Commerce, Government of India7
dominate exports from the UK to India. Exportsfrom the UK to India amounted to US 3,431million during 2004-05.open environment with special partnerships, toattract Indian companies. Most Indian companiesventuring into the UK are going there through theinorganic expansion route.Investments in the UKKey Findings of the studyUK is a strategic market for Indian companies.According to British High Commission India is theeighth-largest investor in the UK .This is furtherhighlighted by the following facts: Investments by Indian companies in the UKincreased by 30 per cent in the financial year2004-05. India is the second-largest investor in the UKamong Asian countries, in terms of the numberof projects approved. According to a report published by UK Tradeand Investment, Indian companies looking tostart operations in Europe perceive UK as theforemost investment location. Around 40 percent of the total Indian FDI is directed towardsEurope and the UK bags a majority share(60 per cent) of the Indian FDI in Europe.The increase in the number of Indian investmentprojects in the UK is a sign of the country beingthe most prominent European location for Indianinvestments.This is due to the fact that it hasa globalised - high-technology, business-conducive,Name of Company8This study surveyed 15 organisations and profilesselect Indian companies that have establishedoperations in the UK.The study combines primaryand secondary research.Break-up of Companies Studied by SectorSectorNo. of CompaniesInformation Technology7Industrials4Consumer Durables1Financial services1Pharmaceuticals1Fast Moving Consumer Goods1Key findings include: Indian companies invested in 36 new projectsin 2004-05, compared to 28 in the previousyear, and 21 in 2000-01. The ICT sector has the highest amount ofinvestment (almost 50 per cent) from Indiancompanies in the UK.Activity in the UKHCL TechnologiesBPO ServicesAcquired a 90 per cent stake in BT's Apollo contact centre in Belfast,Northern Ireland in 2001.CeramedEngineers Pvt. Ltd.Acquired Acton Finishing Ltd. in the UK in 2003.Tata ConsultancyServicesAcquired the life insurance and pensions BPO division of the UK-based Pearl Groupin 2005, resulting in the formation of a joint venture based in Peterborough.Sundram FastenersAcquired the precision forging unit of Dana Spicer Europe, located in Cramlington, UK.
Emerging sectors like Food & Beverages,Pharmaceuticals and Engineering, have alsoattracted investments of late.According to data gathered during this study, mostof the companies cited global expansion plans asthe most important reason for their setting upoperations in the UK. Companies also cited marketpotential as a key advantage that UK offers.62 per cent of the companies surveyed,considered UK’s market potential to be a majoradvantage. UK serving as a base to expandoperationsin Europe (25 per cent of thecompanies) was another major advantage thatattracted Indian companies to set up operationsin that country.Future Plans of Indian Companiesin the UK12.50%Indian companies have ambitious plans in termsof investments in the UK. Backed by a buoyanteconomy, the companies are on a global expansionspree and UK provides a perfect platform for entryinto European markets.25%62.50%n Market potentialn Availability of Skilled Labourn Geographic Advantage(Base to access other European countries)Source: IBEF SurveyIndian companies are also planning to tap the localtalent not only to better understand the localmarket, but also to get access to excellent humancapital. M&A is expected to rise as Indiancompanies continue to increase their footholdin the global market.Future Plans of Indian Companies in the UKMergers and Acquisitions Ontrack plans to acquire companies having expertisein the software and network services domain. Wockhardt plans to acquire companies in thebio-technology and generics market segmentUK – the hub of operations Infosys plans to target Europe,Middle East and African marketsfrom its UK operations Bharat Forge plans to cater toEuropean clients extensively fromits UK OfficeUK:StrategicMarket forIndian CompaniesTap local talent Wipro plans to hire local skilledpeople for its UK operations Rolta plans to hire localprofessionals to create a talent poolfor latest technologiesExpand Operations Mind Tree is expanding its operations in the UKto cater to its global clients HCL plans to increase its operations to tap thegrowing markets of IT services in the UK9
Future Co-operation between Indiaand the UKThe success of the on-going partnershipbetween India and the UK has resulted in furtherco-operation in various business sectors. Accordingto this study, most Indian companies plan toincrease investments in the UK.The main sectorsidentified for economic and technologicalco-operation include: IT and Contact Centre Services: The UKmarket for contact centre services is estimatedat around US 3.5 billion. Moreover, the countryalso provides a sizeable market for IT andIT-enabled services.There are already a significantnumber of Indian firms operating in the UKin this sector, and the number is expectedto increase in the future. Agriculture-related Products: TheConfederation of Indian Food Trade and Industryhas recently signed an MoU with the BritishAgrifood Consortium of Hull and the HumberChamber of Commerce, UK.This association,along with JETCO, will further the businessinterests of both the countries in the sector.10 Oil, Gas and Coal: An MoU has been signedbetween the Directorate General ofHydrocarbons of India and the Oil and GasDirectorate of DTI, UK, to ensure greaterco-operation in upstream activities related tohydrocarbons.To enhance co-operation in thefield of coal mining and clean coal technologiesbetween India and the UK, there is a forum,known as the Indo-British Coal Forum. Pharmaceuticals and Healthcare: The UKpharmaceutical market is the fifth-largest in theworld and its biotechnology sector is the largestin Europe. Moreover, apart from routinehealthcare services, the country also hasexpertise in niche healthcare segments, such asdiagnostics, bio-device interfaces, and informaticsand laboratory technology.Therefore, thepharmaceuticals and healthcare sector presentsone of the biggest business opportunities forIndian firms.
GOING GLOBALINDIA INC. IN UK11
Hindustan Computers Limited (HCL) 12 ICICI Bank Limited 15 Infosys Technologies Limited 18 MindTree Consulting 22 Rolta India Limited 25 Sundram Fasteners Limited 28 Tata Consultancy Services 31 Thermax Limited 35 VIP Industries Limited 37 United Phosphorus Limited 40 Wipro Limited 42
3 Science and Technology For updated information, please visit www.ibef.org Third largest technical manpower in the world. 162 universities awarding 4,000 doctorates and 35,000 postgraduate degrees. Global share in scientific publications rising at a CAGR of 12 per cent.
5 E-commerce For updated information, please visit www.ibef.org ADVANTAGE INDIA India is the fastest growing E-commerce market and is expected to grow at approximately 1,200 per cent by 2026. Indian E-commerce market is
3 IT & ITeS MARCH 2017 For updated information, please visit www.ibef.org EXECUTIVE SUMMARY Strong growth opportunities The IT-BPM sector in India expanded at a CAGR of 13.7 per cent over 20
3 Telecommunication For updated information, please visit www.ibef.org EXECUTIVE SUMMARY India has the second largest telecom network in the world. Total subscriber base in the count
DECEMBER 2016 For updated information, please visit www.ibef.org 3 EXECUTIVE SUMMARY Impressive growth prospects Indian healthcare sector, one of the fastest growing industries, is expected to advance at a CAGR of 22.87 per cent during 2015–20 to
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Operational Excellence and Global Delivery Tarek Moustafa, Group CIO Hubert Tardieu, Global C&SI Francis Delacourt, Global MO London, December 2007. 1 »Industriali zation »Global Sourcing »MS Global factory »Talents »Global markets »Global and focused sales Operate as a global company »Support functions »Purcha-
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