New Delhi, Dec 3 (UNI) A global report released here today by the Boston Consulting Group lists 20 Indian companies among the 100 emerging giants from Rapidly Developing Economies (RDEs) which are globalising so fast as to pose a threat to established industry leaders.
These companies are growing fast, globalising aggressively and reshaping global industries, the report said.
''Industry leaders need to understand these new rivals and act quickly. For those who move fast, the challengers could become key clients, suppliers, and even strategic partners. For those who don't, the challengers will represent fierce competition and, in time, become potential acquirers,'' Mr Jim Hemering, the Report's co-leader and a San Francisco-based BCG senior partner told a press conference here.
Others who spoke at the event included Mahindra and Mahindra Vice-Chairman Anand Mahindra and Boston Consulting Group Partner Arindam Bhattacharya.
The Report was released on the sidelines of the India Economic Summit, organised jointly by the World Economic Forum and CII.
The Report says by many measures, the BCG 100 New Global Challengers are already outperforming established industry leaders. In the past five years, the revenue of these challengers grew faster than the S&P 500 -- in fact almost three times as fast since 2004 --, earned a higher average return on sales, and created far more shareholder value.
The challengers are increasingly looking for acquisitions abroad.
In 2006, they completed 72 outbound acquisitions, up from 21 in 2000. The average size of these transactions grew from 156 million dollars in 2001 to 981 million dollars in 2006.
The Indian companies that figure in the list of top 100 include Bajaj Auto, Bharat Forge, Cipla, Crompton Greaves, Dr Reddy's Laboratories, Hindalco Industries, Infosys Technologies, Larsen&Toubro, Mahindra and Mahindra, Ranbaxy Pharmaceuticals, Reliance Group, Stayam Computer Services, Tata Consultancy Services, Tata Motors, Tata Steel, Tata Tea, Videocon Industries, VSNL, and Wipro.
Of the 100 companies on BCG's list, 41 are from China and 13 from Brazil, with the rest coming from 11 other rapidly developing economies. In the second edition of the report, 17 companies appear on the list for the first time, as they break into the ranks of the leading challengers entering the global stage.
Notable newcomers to the 2008 list include Suzlon Energy of India, Grupo Bimbo of Mexico, Nine Dragons Paper Holdings and Sinomach of China, Tenaris of Argentina, Marcopolo of Brazil, and Inter RAO UES of Russia.
The Report is titled 'The 2008 BCG 100 New Global Challengers: How Top Companies from Rapidly Developing Economies are Changing the World'.
In reply to a question Mr Mahindra said Indian Nuclear deal coming through will have no bearing on the ambition Indian Companies going global. The Indian stock markets went Southwards on the news that the deal may not come through. However, with the prospects of the deal coming through now, the stock markets have not reacted.
This was indicative of the fact that the deal will have no bearing on the Indian companies going in for overseas acquisitions.
With over 1.2 trillion dollars in total revenues and more than a half trillion dollars in yearly purchases, the BCG New Global Challengers are already formidable. But their ambitions are daunting-- according to the report, their combined revenues will reach 3.3 trillion dollars by 2010 and a massive 11.8 trillion dollars by 2015. Meanwhile, hundreds more RDE-based companies will gain critical mass and launch global expansions as well.
The Report says it was essential for every executive to develop clear strategies for dealing with this group of huge and ambitious companies. Never before have so many potential competitors and customers arisen so quickly on a global scale.
Moreover, the challengers have completely different approaches to competition, taking advantage of their bases in emerging markets.
Many established industry leaders are unprepared for these new types of competitors. They are also unprepared to capitalise on the sales-growth opportunities presented by selling to these companies.
The new comers have been selected based on a detailed screening of more than 3,000 companies from RDEs.
The BCG is a global management consulting firm and the world's leading advisor on business strategy.
The Report focuses on areas of the world that are experiencing rapid economic growth and on the fast growing companies operating within them. The RDEs are currently home to many excellent companies and have been experiencing substantial increase in Foreign Direct Investment (FDI).