Twenty top Indian companies together hold assets worth $80 billion (about Rs.4 lakh-crore) abroad with the top five among them holding a major share of $50 billion.
Reliance Industries, Tata Group, Hindaclo, Infosys and Wipro figure among the top five transnational companies (TNCs) along with the public sector oil major Oil and Natural Gas Corporation. The total foreign revenues of these 20 companies are estimated at $126 billion with top five contributing 69 per cent of the total.
Four of the top five companies belong to the manufacturing sector while four domestic IT majors Tata Consultancy Services, Infosys, Wipro and HCL Technologies are present in the list of top 20 firms. The figures form part of the first-of-its-kind Transnationality Index (TNI) prepared by the Indian School of Business (ISB) in association with its Brazilian counterpart Fundacao Dom Cabral.
The TNI had two components, companies with overseas assets of more than $500 million and those with assets between $150 million and $500 million. The report, released in Mumbai on Wednesday, revealed how the economic downturn affected the top 20 companies whose international assets declined by 4 per cent and the number of employees dropped by 2 per cent during 2009-10.
The year 2010-11 saw a sharp rebound as foreign assets of these companies grew by 29 per cent, international employees by 15 per cent and revenues by 25 per cent. According to Ravindra Chittoor, faculty at the ISB, who was instrumental in preparing the list, the rebound witnessed in 2010-11 could prove unsustainable considering the current economic trends.
The total outward foreign direct investment (FDI) during 2011-12 was estimated at $8.8 billion and “it remains to be seen how the top companies plan their international expansion in the current economic uncertainty”.
The index had been prepared on the basis of comparison of different dimensions in terms of assets, revenues and employees. TNCs were making large overseas investments due to inherent need to move up the value chain as well as the need for acquiring strategic assets.
The Indian transnationals, he said, showed tendency for direct acquisition rather than minority acquisitions and joint ventures. More than 150 majority acquisitions witnessed in 2008 as compared to 38 minority acquisitions stood testimony to this.
The United National Conference on Trade and Development estimated global FDI to be $1.24 trillion in 2010 and outward FDI from emerging market economies account for 29 per cent of the total.
“Investors from within the country and abroad can look at better comparison between the companies and the degree of their internationalisation,” Prof. Chittoor told The Hindu .
He said future reports of the ISB would include insights on key drivers of globalisation, geographic spread of TNCs, profitability analysis and other factors.
