Indian Multinationals: The Dynamics of Explosive Growth in a Developing Country Context

289 Pages·2011·2.753 MB·English

by  Amar K. J. R. Nayak (auth.)

Indian

Multinationals
The Dynamics of Explosive Growth
in a Developing Country Context
Amar K. J. R. Nayak
Indian Multinationals
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Indian Multinationals
The Dynamics of Explosive Growth in
a Developing Country Context
Amar K.J.R. Nayak
Palgrave
macmillan
© Amar K.J.R. Nayak 2011
Softcover reprint of the hardcover 1st edition 2011 978-0-230-29860-6
All rights reserved. No reproduction, copy or transmission of this
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Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as the author of this work
in accordance with the Copyright, Designs and Patents Act 1988.
First published 2011 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-33480-3 ISBN 978-0-230-30871-8 (eBook)
DOI 10.1057/9780230308718
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.
10 9 8 7 6 5 4 3 2 1
20 19 18 17 16 15 14 13 12 11
Contents
List of Figures viii
List of Tables ix
Preface xii
Acknowledgements xv
1 Introduction 1
Premises 1
Analytical framework 3
Structure of analysis 5
2 Logic and Dynamics of Firm Growth 7
Theories of firm growth 7
Control and efficiency 10
Global structure for industrial growth and regulation 12
Country-specific characteristics and advantages 17
Rapid changes in regulations 20
Network dynamics of growth 22
3 Globalization: Asymmetry Perpetuation and Growth 27
Introduction 27
General perspectives of globalization 29
Globalization and the role of the state 31
Globalization in a developing country context 33
Globalization in and of India 36
Precursors to globalization 40
Perpetuation of asymmetric positions of firms under LPG 43
Globalization: the struggle between firm and society 47
4 Growth of Indian Multinationals 49
Growth patterns of traditional and emerging multinationals 49
Evolution of Indian business houses 53
v
vi Contents
National development-oriented growth: 1947–77 55
Precursor to explosive growth: 1977–91 60
Explosive growth phase: 1991–2010 62
5 A.V. Birla Group 92
Introduction 92
Genesis of the Birla group and generations of
diversifications 100
G.D. Birla phenomenon 116
Managerial processes and methods of growth 125
Project execution 128
Leveraging the industrial policy changes since 1991 132
6 Tata Sons 150
Introduction 150
Trusts and development activities of the Tatas 158
Industrial pioneers and building of goodwill 169
Tata Sons shaping industrial policies in India 176
Building the Tata brand 185
Corporate and management restructuring 186
Financial restructuring and resource reallocation 188
Raising capital, resources and capabilities 189
Has growth been at the cost of principles? 198
7 Reliance Industries Limited 206
Introduction 206
Dhirajlal Hirachand Ambani 210
Building manufacturing plant capacity 211
Growth through acquisitions and mergers 223
Growth through international acquisitions 227
Firm–industry–government network 235
Ambani business strategies 241
Contents vii
8 Asymmetries and Firm Growth 246
Sources of asymmetries 246
Perpetuation of asymmetries 248
Asymmetric growth factors and sustainability 250
Notes 255
Bibliography 259
Subject Index 266
Author Index 272
List of Figures
2.1 Network dynamics of firm growth 25
3.1 Sector-wise percentage share of FDI, 1921–2000 36
4.1 Growth in assets of the top 15 Indian private companies 88
4.2 Growth in revenue of the top 15 Indian private companies 89
4.3 Growth in PBDITA of the top 15 Indian private companies 90
5.1 Birla family tree 114
5.2 J.R.D. Tata’s letter to G.D. Birla regarding business
delegation to England and the US 121
5.3 The Birlas’ present network within government, industry
and regulatory bodies 130
6.1 Tata trusts 172
6.2 A section of the Tata family tree 174
6.3 Timeline of the Tata group 177
6.4 Letter from J.R.D Tata to G.D. Birla regarding shaping
government of India policy 181
6.5 Network of Tata Sons and directors of Tata group 182
6.6 Branding strategy of Tata group of companies 185
6.7 Cross-holdings of Tata group listed firms during the
financial year 2000 190
6.8 Cross-holdings of Tata group listed firms during the
financial year 2005 191
7.1 Vertical integration of Reliance Industries Ltd 222
7.2 Reliance’s financial engine 244
viii
List of Tables
2.1 Comparative socio-economic-geographic and
infrastructure position of the BRIC countries 18
3.1 History of FDI in India: 1882–2005 37
3.2 Privatization in Europe, 1981–2008 42
3.3 Privatization in BRIC nations, 2000–8 43
3.4 Disinvestment of PSUs in India, 1991–2009 45
3.5 Gini index of a few industrially advanced countries and
BRIC countries, 1975–2007 46
4.1 Private business group buyers of some key state-owned
enterprises through the disinvestment policy of the
government of India 66
4.2 Mergers, takeover of equity stakes, purchase of assets by
top 20 Indian private firms, 1991–2010 68
4.3 Growth in size and profits of the top 100 Indian private
and state-owned companies 80
4.4 Exports of the top 50 Indian private companies, 2010 91
5.1 Major companies of the Birla group 93
5.2 Key financial indicators, Hindalco Ltd 95
5.3 Major milestones of Hindalco Ltd 96
5.4 Key financial indicators, Grasim Ltd 98
5.5 Major milestones of Grasim Industries 99
5.6 Financial history of Aditya Birla Nuvo Ltd 101
5.7 Major milestones of AB Nuvo Ltd 102
5.8 Financial history of Idea Cellular Ltd 103
5.9 Major milestones of Idea Cellular Ltd 104
5.10 International companies of A.V. Birla group 105
5.11 Major companies of the Birla brothers and their key
financial indicators 108
5.12 Trusts and foundations of the Birlas 129
ix