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Are Indian companies ready to go global?-a panel discussion

Monday 30 January, 2012

Ashutosh Sinha of NDTV Profit television network moderated a panel discussion on the above-mentioned topic. The panel consisted of Tomas Hult of Michigan State University, Dev Bhattacharya of Aditya Birla Group, Pradeep Parameswaran of McKinsey, Prem Chandrani of SP Jain, Shashank Tripathi of PWC India, Sunny Banerjea of KPMG, & Kannan Chakravarthy of Mahindra & Mahindra. This was a heavy-hitting panel.  The discussion was hosted by the SP Jain Institute of Management & Research Consulting Symposium.

India has demonstrated that it’s ready. The question is what is “global,” & what are the metrics to measure it? It’s a continuum, so M&A is not the only way, but that’s still tough. Globalization is on CEO’s agendas as Indian companies aspire to become the top 3-4 in their industries in the world. It’s reached mid-level companies now, but they’re still in the early stages because execution & integration sometimes fail as probabilities of success rise. Access to intellectual property is still an issue, as are questions of core competencies.
Different companies have different strengths with regard to culture. Indian companies lack sensitivity & that needs to change as they learn how to build bridges. Culture differences can break deals because many times an international deal is all about the people involved, & what happens if those people leave the company? Board compositions need to change too.

Indian companies have a good line of sight for what they want, but they’re still too ad hoc & lack discipline. They need process & diversity. Private enterprise & an educated democracy are advantages, but cost advantages need to lead to other value propositions. Indian banks are not as strong as they need to be. An important question is “why are Indian companies going global?” To acquire resources or technologies? Replicate partners? For example, telecom markets & models differ. Indians like to talk a lot, so in India it’s a volume business. Africans talk less, so when Indian companies expanded there, they made mistakes. Products differ & financial risk is not the only concern. Indian firms are evolving from export-led strategies to establishing subsidiaries to building a physical presence in other countries.

Open Q&A

  • Price points in India differ & need to be made appropriate to the market, but it must start with the value proposition.
  • In global expansion, it helps to start focusing on 5-10 countries which are similar.
  • 70% of M&A deals fail, but doing structured due diligence, planning, developing, & defending the action encourage its success.
  • There has been a bias by foreign companies not wanting to be acquired by Indian companies, but Arcelor-Mittal is an example that has worked out well.
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