Search for notes by fellow students, in your own course and all over the country.
Browse our notes for titles which look like what you need, you can preview any of the notes via a sample of the contents. After you're happy these are the notes you're after simply pop them into your shopping cart.
Title: MNC
Description: it's describe about the indian MNCs & foreign. easily understandable..
Description: it's describe about the indian MNCs & foreign. easily understandable..
Document Preview
Extracts from the notes are below, to see the PDF you'll receive please use the links above
INDIAN ECONOMIC OUTLOOK (2003-04)1
Economics’ experts and various studies conducted across the globe envisage India
and China to rule the World in the 21st century
...
The rich countries of Europe have seen the greatest decline in global GDP share by
4
...
Within Asia, the rising share of China and India has more
than made up the declining global share of Japan since 1990
...
Expectations are that the share of the US in World GDP is to fall (from twenty-one
percent to eighteen percent) and that of India to rise (from six percent to eleven
percent in 2025), and hence the latter will emerge as the third pole in the global
economy after the US and China
...
The transformation into a tri-polar economy will be complete by 2035,
with the probability that the Indian economy would be little smaller than the US
economy but larger than that of Western Europe
...
India, which is now the fourth largest economy in terms of purchasing power parity,
is expected to overtake Japan and become third major economic power within 10
years
...
N
...
5 to 7 %
...
7% per year in the 23 year growth record
...
8% since 1994 (the
period when India’s external crisis was brought under control)
...
having growth rates above 7%, the Indian growth experience lags behind
...
The agriculture and allied sector witnessed a growth
of 9
...
1% in 2004-05
...
6% preceded by the negative growth during
the year 2002-03
...
Industry: Index of Industrial Production (IIP) which measures the overall industrial
growth rate, was 10
...
2% in October 2003
...
3% in the manufacturing
sector followed by mining and quarrying and electricity generation
...
Thus one of
the critical challenges facing Indian economic policy consists in devising strategies
for sustained industrial growth
...
Services: Service sector has maintained a steady growth pattern since 1996-1997,
except into a fall in 2000-01
...
9% in 2004, followed by financial services with an
overall growth rate of -6
...
9% of
all the three sectors, services have been the highest contributor to total GDP growth
rate
...
India’s large number of English speaking skilled manpower has made India
a major exporter of software services and software workers
...
At the same time it is important that India sees BPO in a larger
perspective, than the Internet, as India’s share was just $3
...
Also India’s outsourcing
companies need to work more closely with their customers
...
Indian companies
need the right mix of domain expertise and process expertise
...
Education
for the off shoring industry needs to be given impetus too
...
Export stage
Initial inquiries – firm rely on export agents
Expansion of export sales
Further expansion of foreign sales branch or assembly operations (to
save transport cost)
2
...
licensing
...
Licensing
Foreign Direct Investment
a
...
a
...
b
...
b
...
c
...
c It is risky because of lack of
information
...
Payment is a fixed percentage
of sales
...
Plants are established in several
countries
...
The parent firm cannot exercise any
managerial control over the licensee
...
Licensing is switched from
independent producers to ITES
subsidiaries
...
The licensee may transfer industrial
secrets to another independent firm,
thereby creating a rival
...
Export continues
...
N
...
Multinational stage
The company becomes a multinational enterprise when it begins to plan, organize
and coordinate production, marketing, research & development, financing and staffing
function
...
GLOBALIZATION: A DRIVER TO MULTINATIONALISM
Post 1991, after India faced the worst economic crunch in terms of its forex reserves,
it was none other than our then Finance Minister Dr
...
The License Raj and the large number of trade barriers
were intended to be done away with
...
The Industrial Policy of 1991 drastically
affected the growth of Indian businesses by making trade boundaries more permeable
...
Reliance
Limited globally sourced its raw material; companies such as Lupin, Arvind Mills,
Maruti Limited increased their capacity to achieve global economies of scale; Chevro
Shoes and Hero Cycles registered their brands in foreign markets; Asian Paints,
CEAT and UB Group started setting up offshore manufacturing facilities
...
Increased Indian participation in the world’s economic activities is
evident from the following stray facts:
●
●
●
●
4
Indian exports’ growth rate increased from 3
...
2% in
1993-94
...
325,530 mn
...
1,064,650 mn
...
By the end of 1994, Indian companies had more than 500 overseas joint
ventures spread across 69 countries and about 300 wholly owned subsidiaries
in various countries including the US, the UK, Germany and Singapore
...
in 1992, the offering of Indian
companies through Euro issues in 1994 grossed more than $3
...
Challenges for Indian Multinationals
The outflow of foreign investment approved by the Indian Government doubled in
1992 (vis-à-vis approvals granted between 1975 to 1991) to Rs
...
87 bn
...
88
...
in 1993
...
India’s attractiveness increased with its ability to offer low cost labour, abundant
natural resources, the world’s third largest technically qualified population and
relatively large and well-developed industrial infrastructure
...
in 1990-91 to $1,981 mn
...
Between 1991 and 1993, the
combined cumulative investments from US, UK, Germany and Japan increased from
a mere $127 mn
...
7 bn
...
22 FIIs by
June 1993 had registered themselves with SEBI
...
INTRODUCTION TO MULTINATIONALS
An Indian MNC, a French MNC, a Dutch MNC, etc
...
An MNC may belong to a specific
country if its inception is in that particular country
...
E
...
Nestle is a
Swiss MNC because its concept of business and ideology originated in Switzerland
...
Therefore, a multinational can be called so by virtue of its physical presence
in two or more countries or by virtue of geographical scope of its operations in two
or more countries
...
The term ‘multinational’ is more of an American term whereas the
term ‘transnational’ is European
...
Among the Fortune 500, all major multinational corporations are either American,
Japanese or European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda
and BMW
...
Very large multinationals have budgets that
exceed those of many countries
...
Multinationals often make use of outsourcing as a strategy to produce certain goods
for them
...
N
...
The Country’s GDP Size
>
Wal-Mart Stores
Revenues $287,989 mn
...
>
Royal Dutch/Shell Group
Revenues $268,690 mn
...
>
General Motors
Revenues $193,517 mn
...
Of the largest 100 economic
actors in the World today, 51 are corporations and 49 are countries
...
The 100 largest
had assets of $28,813 billion, of which 40% were located outside their home countries
...
However, they are binational or national
in terms of ownership and mangement personnel
...
The Prolasca in Nicaragua is national in production but
6
Challenges for Indian Multinationals
multinational in ownership, marketing, finance and management
...
6
Thus, multinational companies may have their management as binational and their
functions as multinational
...
The first multinational appeared in 1602 and was the Dutch East India Company
(Source: www
...
demon
...
uk/malaya/dutch1
...
These corporations
originated early in the 20th century and proliferated after World War II
...
India was an appendage of Great Britain and the imperial
preference policy of Great Britain converted India into an agricultural hinterland
...
During the last two decades of the 20th century many smaller
corporations also became multinational, some of them in developing nations
...
That
which belongs to another; that which is strange; belonging to another nation or
country; belonging to or subject to another jurisdiction; that which is out of a
certain state, country, jurisdiction, etc; the correlative of “domestic
...
Foreign company – The term means a company which is not a domestic company
...
A foreign company must be deemed to carry on its business at its agent’s office in
India
...
A corporation that was organized and chartered by or under the laws of another
State, government, or country (in Arizona, a California corporation is said to be
a foreign corporation)
...
Research Department- Dr V
...
BRIMS
7
Multinational Company (MNC) – A company or corporation that has
manufacturing or trading interests in two or more countries
...
A large scale business enterprise having their branches or collaborations with
whole or majority ownership of interests in a number of countries
...
A large scale business enterprise having their branches or collaborations with
whole or majority ownership of interests in a number of countries
...
Transnational corporation (TNC) – Alternative term for a multinational company
...
Transnational corporations operate in such a
way that they exercise a uniform, cohesive, and common policy in order to further
their economic interests
...
e
...
(Oxford Law Dictionary, 5th Edn
...
Source: Advance Law Lexicon by P
...
The head office implies the prime operation
base of the company
...
To gain competitive advantage as also to capture sizable market share in the foreign
markets the multinational may opt for various strategies
...
One other option that is available as well as
beneficial is to acquire similar firms in other countries i
...
, acquire similar units
...
In other words, it gets access to a readymade
plant or facility in the foreign market
...
For example, if Apple Computers bought Intel
(the chip manufacturer), a plastics company (for the cases) a shipping company, a
CD Rom maker, etc, they would be limiting their costs by purchasing the companies
that they used to purchase component products from
...
It
would be like IBM purchasing Compaq, Dell and Gateway
...
Some horizontal mergers may be illegal and are halted
...
Corporations may become
conglomerates after becoming very large through mergers and acquisitions of a variety
of businesses
...
By having component businesses each making unrelated products, the overall sales
and profits will be protected
...
One classic conglomerate is ITC which at one
point owned international long distance phone service (their original core business),
the Sheraton Hotel chain, a large insurance company, a defence contractor and others
...
created
...
multinationals may prove to be nonbeneficial
...
of which new and better products flock the
market
...
Research Department- Dr V
...
BRIMS
9
• Expands and creates new markets
...
• Improves the income to the exchequer by
way of direct and indirect taxes
...
• Provides economic support for developing
nations
...
Flexibility in organisational design permits
delivery of market specific products whereas efficiency allows delivery of low-cost
products around the World
...
Centralised or decentralised decision making is another factor
that is considered as far as organisational design of multinationals is concerned
...
The choice of strategy determines the
organisational design
...
The following figure shows the relationship between the choice of multinational
strategy and the choice of organisational structure
...
Common Paths of Historical Evolution
Transnational
Network
Structure
Emphasis on Global Strategies
Worldwide
Product
Structure
Worldwide
Matrix
Structure
Worldwide
Geographic
Structure
Export Dept
...
From there onwards depending upon their strategy, companies
evolve into Worldwide product or geographical structures
...
Most companies never quite reach the
pure matrix or transnational state
...
Recently because of globalisation of some
products and the competitive efficiencies gained with global products, there is a
growing tendency of large multinationals to give product divisions, increased power
and to create more transnational subsidiaries
...
When export becomes a significant
portion of a company’s sales and a company wishes to have greater control over its
export operations, managers often create a separate export department
...
When a company uses a direct exporting strategy, sales
representatives located in other countries may also report to the export department
management
...
In the Worldwide geographic structure, regions or large market countries become
the geographical divisions of the multinational company
...
Since a company with a
multidomestic or regional strategy needs to differentiate its product or services by
country or by region, it needs an organisational design with maximum geographical
flexibility
...
Large differences in an
area’s product or service needs or in channels of distribution enhance the need for a
geographic structure
...
Each
product or service division assumes responsibility for producing and selling its products
or services throughout the World
...
It is usually considered
the ideal structure to implement an international strategy
...
P&G is moving towards the Worldwide
product structure
...
N
...
The Worldwide matrix structure enables a firm to
pursue global and local strategies at the same time
...
The matrix structure works well only when there are equal demands from the
environment for local adaptation and for product standardisation with its associated
economies of scale
...
The Royal Dutch/Shell Group recently phased out the
Worldwide matrix structure due to the bureaucracy it created to adopt the product
structure
...
Like the
matrix the transnational network tries to get advantage of the various structural
options
...
However, unlike
the symmetrical product structure the transnational has no basic form
...
Nodes, the units at the centre of the network, coordinate product, functional and
geographical information
...
Rather, transnational
units evolve to take advantage of resources, talent and market opportunities wherever
they exist in the World
...
V
...
INDIAN MULTINATIONALS4
When some major Indian business houses established Greenfield manufacturing joint
ventures abroad, but most of them, with the exception of the AV Birla group, did not
do very well
...
The situation has, of course, changed dramatically over the last decade
...
is flying high
...
Many Indian firms have slowly
and surely embarked on the global path and lead to the emergence of Indian
multinational companies
...
While
Asian Paints is painting the World red, Tata is rolling out Indicas from Birmingham
and Sundram Fasteners nails home the fact that the Indian company is an entity to be
reckoned with
...
A major challenge for these corporations
was to manage the interface of global corporate culture and India’s powerful,
traditional and widely varying cultural practices
...
Therefore, it becomes essential
for businesses to concentrate on what they do best and where they can add value in
their value chains
...
It is not only respected for reducing costs, but also as a tool for adding
value to business
...
Multinationalism by India
In the past few years, whenever organizations around the World have outsourced
activities to India, the Indian counterparts have helped to cut costs, while maintaining
high quality
...
Indian companies have created value and thereby helped organizations around the
globe gain competitive edge
...
Indian direct investment abroad has now gone past the $10 billion
mark
...
The situation has, of course, changed dramatically over the last decade
...
Marketing:
Information technology and pharmaceutical sectors have
also established a large number of companies outside
India
...
Energy security:
Some of the largest foreign investments have been made
by ONGC
...
N
...
Other public sector
companies like Indian Oil and Bharat Petroleum
Corporation Limited are looking at retailing in Sri Lanka,
Singapore and south-east Asia, while Hindustan Petroleum
Corporation Limited was looking at an investment in a
refinery in Saudi Arabia
...
In size, if
not in number, the oil and gas sector will probably remain
the largest single foreign investor for the foreseeable future
...
Business strategy:
Some Indian business groups are acquiring businesses
abroad, in industrial countries as well, as a measure of
conscious business strategy
...
The
Mahindras have also bought tractor companies as a part
of deliberate growth strategy
...
Indian banks and a few insurance companies have been
operating abroad for a long time
...
It is only
recently that they seem to be looking at acquiring or
developing business abroad, much of which is still focused
on non-resident Indians
...
The
attraction of Indian companies as employers has increased
in recent years — as witness the ability of companies like
Ranbaxy, Jet Airways, and several Tata group companies
to attract senior foreign nationals in top positions
...
Working for an Indian company
seems to be getting accepted as a respectable occupation
even in the industrial countries
...
A major challenge for these corporations was to manage the
interface of global corporate culture and India’s powerful, traditional and widely
varying cultural practices
...
It has been affecting
the lives of many
...
Now this trend has burgeoned into a huge industry with third party Information
Technology Enabled Services (ITES)/Business Process Outsourcing (BPO) companies
bagging prestigious remote services projects from leading global organizations
...
Based on these factors, projections are flying thick and fast Refer bibliography
8-15 for the six points below
–
The McKinsey Global Institute (MGI) estimates that the volume of offshore
outsourcing will increase by 30 to 40 percent a year for the next five years
...
3 million white-collar jobs will move overseas
by 2015
...
●
The Gartner research firm has estimated that by the end of this year, one out of
every ten IT jobs will be offshored
...
●
According to business intelligence major International Data Corporation (IDC),
the IT enabled services market globally will account for revenues of US$ 1
...
With growth projected at 11 percent annually, the Information
Technology Enabled Services (ITES)/Business Process Outsourcing (BPO)
segment will provide one of the most significant business opportunities for the
Indian software and services industry
...
Its biggest strength is its vast supply of over 2 million graduates and 300,000 post
graduates that pass out of its colleges each year
...
N
...
It isn’t only the cost factor that continues to make India an attractive outsourcing
destination
...
A review of Indians in one of the news articles abroad speaks as follows “New
generation Indians employed in GE and other MNCs that grew up in posteconomically liberalised India, are a new breed with a zip in their step
...
They’re demanding of their government
...
You bring up Pakistan to them say, Pakistan?
Kashmir? They’ll say they got better things to do
...
You see, when India is part of GE’s global supply chain, when they are actually
involved in the day-to-day operation of GE’s health care, call centers, payroll, they
can’t take a day off for war
...
They have now taken
lead in colonizing cyberspace
...
Country
On ITES
workers
US
India
$42,927
$6,179
Spending ($ Mn)
On administrative
& general expenses
$8,571
$1,000
On property rentals
$1,500
$847
(Source: NASSCOM)
16
Challenges for Indian Multinationals
US companies move their business services offshore so that they can make more
money
...
‘Outsourcing causes unemployment’ is an economic myth
...
The truth is that most American jobs
will remain unaffected since 70 percent of them require geographic proximity
...
This work, by its very nature, cannot be moved abroad
...
It is the standardised repetitive tasks such as data entry,
accounting and IT support that are being outsourced
...
7 percent
...
The case of IBM reinforces this point: although
critics highlight the outsourcing of 3,000 IT jobs, they fail to mention the company’s
plans to add 4,500 positions to its U
...
payroll
...
Delta Airlines outsourced 1,000 call-centre jobs to India in 2003, but the $25
million in savings allowed the firm to add 1,200 reservation and sales positions in
the US
...
3 million lost jobs, for example, is spread
across 15 years
...
Annually, outsourcing would
affect less than 0
...
A closer look at the benefits of US outsourcing in India:
●
Every dollar that US companies spend on services that have been moved offshore,
they save 58 cents, mainly in wages
...
N
...
More often than not, they buy these from
US companies such as Microsoft, Lucent, Carrier and Coke
...
Total
exports from the US to India have grown from $2
...
1
billion in 2002
...
Offshoring value to the US (per US $ 1 spent on offshoring)
Savings accruing to US investors, Customers
0
...
05 Cents
in India
Transfer of profits by US-based providers in
India back to the US
0
...
67 Cents
Indirect Benefits
0
...
47 Cents
Total benefits
1
...
14 Dollars
Source: McKinsey Global Institute Report - Publication on
Ensuring India’s offshoring future
Notes:
The above data is based on conservative estimates based on historical and
reemployment wage levels; value created from improved global competitiveness of
US companies and multiplier effect of increased savings would most likely increase
the amount of value created
...
10 Cents
Profits retained in India
0
...
09 Cents
Taxes Central Government
0
...
01 Cents
Total benefits
0
...
The above data includes revenue estimates accruing to supplier industries less
sales taxes, income taxes for employees and corporate taxes
2
...
3
...
Many Indian offshore service providers are in fact US companies that repatriate
earnings
...
According to McKinsey estimates this accounts for an additional
four cents of every dollar spent on off-shoring to create value for the US
...
It is evident that the objections to off-shoring will soon die out as public awareness
about its benefits begins percolating down to the individual consciousness
...
Most Indian IT leaders today such as Wipro, Patni, Satyam, HCL among others,
have a presence in this market
...
The US and the UK markets are the source of maximum business for ITES/
BPO business in India
...
New opportunity areas include engineering design, biotech research, research
outsourcing, customer analytics, market research and equity research
...
Some of
the popular Information Technology Enabled Services (ITES)/Business Process
Outsourcing (BPO) hubs included Mumbai, Bangalore, Chennai, Kolkata,
Hyderabad, Kochi, Ahmedabad and Pune
...
DIFFERENT OPERATIONAL AREAS OF MULTINATIONALS
Software houses from India have effectively provided many of the Fortune 500
corporations with efficient software solutions
...
Research Department- Dr V
...
BRIMS
19
Companies like Citibank, Morgan Stanley, AT&T, General Electric, Reebok, General
Motors, Fujitsu, Boeing, Coca-Cola, Pepsi, Swissair and British Airways continue
to remain ahead of their rivals due to the efforts of many software companies in
India
...
A wave of U
...
high-tech companies began rushing to India to set up sales and
research & developement operations
...
Today the list of software multinationals
operating from India reads the greatest names among global software giants - IBM,
Microsoft, Novell, Computer Associates, Oracle, AT&T, Fujitsu, Motorola, EDS,
SAP, Computer vision, Digital, Hewlett Packard, etc
...
This has produced an industry realizing a compounded
annual growth of 53
...
The improved infrastructure, combined with more favorable policies allow companies
to begin following an outsourcing model, whereby companies could bring projects
(and add more value) back to India
...
9 billion in 1998-99 from just $835 million in 1994-95,
according to NASSCOM
...
Software exports increased over threefold to $2
...
Besides software and research & development, the following are different operational
areas in which major companies are operating as multinationals in India
...
Ranbaxy is the ninth largest generics company in the World
...
Dr Reddy’s Laboratories became the first Asia-Pacific pharmaceutical
company outside Japan to list on the New York Stock Exchange in 2001
...
Small auto components company Bharat Forge is now the World’s second
largest forgings maker
...
Its workforce includes Japanese, German, American and
Chinese people
...
Essel Propack is the World’s largest manufacturers of lamitubes; tubes used
to package toothpaste
...
609
...
The company commands
a staggering 30 percent of the 12
...
About 80 percent of revenues for Tata Consultancy Services comes from outside
India
...
It has (approximately) 30 marketing offices across the
World and 26 global software development centers in the US, Canada,
Australia, the UK and Japan
...
It believes in
thinking out of the box
...
The plant in Jiaxin city in the Haiyan economic zone has ensured one
fact: that its customers who were earlier buying Sundram products in Europe
and the US, did not have to go far from home to access the product
...
ibef
...
1
Bharat Forge
Carl Dan Peddinghaus, Germany
NA
Ranbaxy
Wockhardt
Cadila Health
Hindalco
Wipro
Aditya Birla
United Phosphorus
RPG (Aventis) Laboratories, France
CP Pharmaceuticals, UK
Alpharma SAS, France
Straits Ply, Australia
NerveWire Inc, US
Dashiqiao Chem, China
Oryzalin Herbicide, US
NA
18
5
...
4
18
...
5
21
...
ibef
...
N
...
●
●
●
●
●
●
●
●
●
●
22
Passenger car exports have nearly trebled in the past four years, from 28,122
units in 1998-99 to 1,30,000 units in 2003-04
...
85 percent during April-May 2004-05 to Rs 7
...
84 billion in the same period last year
...
Commercial vehicle exports have also increased to an all time high of over
17,000 as of 2004-05
...
India’s export of auto components crossed the $ 1 billion mark in 2003-04
...
Bharat Forge has grown from a turnover of Rs
...
Its chairman and managing director Baba Kalyani
says: “We are today the most profitable forgings company in the World and the
Germans respect that
...
”
Vedanta Resources, the holding company of the Sterlite group raised a record
$1 billion last year in its maiden public offering on the London Stock Exchange
(LSE)
...
In 2003-04, nearly Rs 2,500 Crore of the total turnover of Hindalco - Rs 1,800
crore from copper and Rs
...
Another space which is seeing hectic
activity is the pharma sector
...
That would require a compounded annual growth rate in excess of 20
percent
...
The firm exports to over 70 countries, directly manages operations in 34
and manufactures in seven
...
Ranbaxy entered into research collaboration with GlaxoSmithkline Plc
...
Dr
...
The US and India contribute close to 70 percent of its
Challenges for Indian Multinationals
sales
...
It is also the only Indian company to
have ever out-licensed three molecules to MNCs
...
Half of its revenues
come from exports, which accounted for 47 percent of the total sales in 20022003
...
It’s not only the private sector that is in aggressive mode
...
●
In the last two years (2003-04 & 2004-05), ONGC has become a valuable
company with a market capitalization of Rs
...
Now it wants to
build bigger energy assets, both in India and abroad
...
Its chairman M
...
Ramachandran feels that Southeast Asia and Africa offers
great opportunities for the corporation
...
Indian multinationals appear to be on a shopping spree
...
6 billion and are
now in the process of further expanding their mergers and acquisition activities to
Spain, Brazil, the rest of South America and Europe
...
Information technology,
biotechnology, engineering and financial services are sectors that Irish manufacturers
are said to be keen on investing in
...
e
...
e
...
62
(taken from rbi
...
in)
...
N
...
1 Company name (India - US)
Rank
...
& Petrochem
...
– IBM
Assets State Bank Of India Limited – Citigroup
HDFC Bank Limited – Wachovia Corp
...
S
...
)
34,924
...
40
144,103
...
20
3,326
...
30
45
...
50
5
...
)
287,989
...
13
96,293
...
97
1,484,101
...
7
493,324
...
4
25,330
...
1
8,509
...
6
28
...
6*
20
...
8*
6
...
5*
2
...
61
24
...
13
15
...
19
0
...
6*
5
...
1 Company name
India
Japan
No
...
)
($ mn
...
60
4,788
...
30
46,962
...
23
10
...
10 1,337,648
...
77
Revenues Indian Oil Corporation Limited – Toyota motors
Mangalore Refin
...
Ltd
...
20
178,556
...
6
3,326
...
30
45
...
20
1,886
...
64
30
...
04
24
...
50
5
...
40
89
...
93
5
...
95
1
...
07
4
...
53*
3
...
10*
80
...
18*
*Difference between India and Japan
24
Challenges for Indian Multinationals
India – China
Table 3
Criteria
No
...
10 Company name
India
($ mn
...
& Petrochem
...
– China
Construction Bank
Assets State Bank Of India Limited – Industrial &
Commercial Bank of China
HDFC Bank Limited – China Telecommunications
Profits ONGC – China National Petroleum
TCS Limited – China First Automotive Works
Profit Mangalam Cement Limited –
Margin China Construction Bank
Infosys Technologies Limited –
Agricultural Bank of China
Asset HCL Infosystems Limited – Sinochem
Turnover Nestle India Limited – China Life Insurance
ROI Mangalam Cement Limited –
China National Petroleum
Glaxosmithkline Pharmaceuticals Limited – Sinopec
34,924
...
40
India as
% of
China
75,076
...
52
19047
...
14
China
($ mn
...
10 685,135
...
03
11,790
...
80
472
...
00
65,332
...
1
293
...
70
18
...
99
160
...
31*
26
...
60
24
...
20
2
...
61
3
...
40
7
...
89*
2
...
71*
24
...
70
23
...
1 Company name
No
...
Profits Toyota motors – Exxon Mobil
Nippon Life Insurance – Johnson & Johnson
Profit Mizuho Financial Group – U
...
Bancorp
Margin Nissan Motor – Wells Fargo
Asset Mediceo Holdings – Plains
Turnover All American Pipeline
Isuzu Motors – Publix Super Markets
ROI
Canon – Johnson & Johnson
Denso – Nextel Communications
Japan
($ mn
...
)
172,616
...
0
46,962
...
0
1,337,648
...
00
178,556
...
00
Japan as
% of US
59
...
80
90
...
20
10,898
...
30
20
...
97
1
...
00
8,509
...
33
20
...
64
43
...
20
7
...
73*
4
...
30
9
...
75
3
...
96
13
...
83*
6
...
44*
*Difference between Japan and US
Research Department- Dr V
...
BRIMS
25
The following is the comparison of some popular Indian multinationals with the
tenth ranked companies in India with respect to assets, revenues, net profits, profit
margin, asset turnover and ROI respectively
...
)
($ mn
...
)
Mphasis BFL Ltd
...
5
1
...
2
28
...
9
NIIT Ltd
...
1
3,816
25
...
300
...
4
372
...
5
37
7
...
2
12
...
2
14
157
32
...
3
10
...
9
8
...
5
Wockhardt Ltd
...
4
438
...
9
48
...
2
United Phosphorus
336
...
7
441
...
9
36
7
...
352
...
8
214
...
4
36
7
...
2
18
...
50
14
...
4
34
...
5
1
...
9
27
...
8
Dr
...
9
3
...
7
4
...
3
1
...
60
11
1150
...
6
121
...
2
Sun Pharma
689
5
...
8
1
...
1
14
...
8
15
...
7
5
185
...
6
Larsen & Toubro
3380
...
3
2984
...
6
257
...
6
Name
Table 6
Name
Mphasis BFL Ltd
...
Bharat Forge Ltd
...
United Phosphorus
Dabur India Ltd
...
Reddys Laboratories
Torrent Pharma
Sun Pharma
Hero Honda Motors
Larsen & Toubro
26
Asset
Diff
...
Margin from 4* Turnover from 5*
15
...
80
1
...
50
9
...
50
1
...
60
9
...
90
1
...
40
7
...
40
1
...
20
13
...
80
1
...
60
11
...
60
1
...
10
8
...
60
1
...
30
16
...
00
0
...
00
7
...
00
0
...
70
9
...
30
1
...
30
1
...
70
1
...
10
10
...
30
0
...
80
24
...
30
0
...
20
24
...
20
0
...
20
8
...
20
0
...
70
Challenges for Indian Multinationals
Diff
from 6*
16
...
70
8
...
10
12
...
70
10
...
60
12
...
30
16
...
20
10
...
30
10
...
80
7
...
80
12
...
40
1
...
30
8
...
10
10
...
80
9
...
60
7
...
40
ROI
Notes to table 5 and table 6 :
1*
...
6mn
...
The tenth rank in revenues is that of National Thermal Power Corporation
($15202
...
)
3*
...
8 mn
...
The tenth rank in profit margin is that of Hindustan Zinc Limited (26
...
5*
...
6 times)
...
The tenth rank in ROI is that of Nestle India Limited (25 %)
...
Of the three Indian sectors i
...
Agriculture,
Industry and Services, though the dependency on Agriculture is most, Services
contribute largely to the Indian GDP
...
The advent of
multinationals in India has evolved through various stages but even as of now these
companies have not come of age
...
Whether multinational, transnational, international, foreign or non-Indian, these
companies have been accepted by the Indian businesses – some as allies and some as
adversaries
...
It now becomes confusing to numerically differentiate a corporate and a country by
its size of revenue or GDP respectively
...
Indian markets are now been viewed as growing and creation of new markets through
exploration and experiment with the needs of the present cash rich Indian customer
is underway
...
Though there can be basic distinctions
between multinationals in terms of their organizational design, each multinational
has customized its structure as per its objectives
...
The coming of
age of these multinationals would mean revenues, profits and assets at par with those
leading in the World
...
But what still matters is global presence and reach to a much larger extent
...
N
...
’s performance vis-à-vis the
performance of the US, Japan and China
...
Before going further,
it is clearly stated that the data with respect to Indian organizations has been made
available through the internet (courtesy equitymaster
...
This financial data was converted into the Dollar equivalent with
the help of the prevailing rate as on 31st March, 2005 i
...
$ 1 = INR 43
...
org
...
The financials of US companies have been taken from the Fortune
500 magazine
...
The comparisons bring out different trends that are being followed lately in the top
companies of India and the US
...
The comparison has been structured as follows:
Summary of the findings
Revenue
Industry Profile
Product/Service Profile
Assets
Industry Profile
Product/Service Profile
Profits
Industry Profile
Product/Service Profile
Profit Margin
Industry Profile
Product/Service Profile
Profit Margin of Companies top in Profit
Profit Margin of Companies top in Revenues
28
Challenges for Indian Multinationals
Asset Turnover
Industry Profile
Product/Service Profile
Asset Turnover of Companies top in Revenues
Asset Turnover of Companies top in Assets
ROI
Industry Profile
Product/Service Profile
ROI of Companies top in Profits
ROI of Companies top in Assets
ROI of Companies top in Profit Margin
ROI of Companies top in Asset Turnover
The comparison of India-US is an elaborated one
...
e
...
Research Department- Dr V
...
BRIMS
29
ANNEXURE 1:
CROSS CULTURAL COMPARISON OF
INDIAN & AMERICAN MULTINATIONALS
SUMMARY OF THE FINDINGS
1
...
2
...
3
...
4
...
5
...
The difference in profit margin gradually reduces as the ranks decrease
...
21percent
...
With respect to the top ten asset turnover companies, the US stands ahead of
India
...
The average
difference is about 1
...
7
...
The difference in ROI reduces as the ranks reduce
...
8
...
9
...
10
...
11
...
12
...
30
Challenges for Indian Multinationals
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
23
...
24
...
25
...
26
...
27
...
Research Department- Dr V
...
BRIMS
31
REVENUES
Economists are of the view that India in the long run would be an economic superpower
standing at par with the US
...
0 Indian Oil Corporation Ltd
...
0 Bharat Petroleum
Corporation Ltd
...
0 Reliance Industries Ltd
...
0 Hindustan Petroleum Corp
...
152,866
...
0 State Bank Of India Ltd
...
0 Steel Authority Of India
Ltd
...
0 NTPC
97,987
...
96,293
...
&
Petrochem
...
#Revenues # as
($ Mn)
% of *
34,924
...
13
16,977
...
27
16,778
...
4
8
...
15
14,307
...
5
7,743
...
36
6
...
36
5,391
...
9
4,788
...
98
5
...
97
From what is apparent in the table above, the difference between revenues of the top
ten Indian and American companies for the year 2004-05 is vast
...
Except for IOC which is above ten percent
of the revenue of Wal-Mart and two other companies (HPCL and ONGC) which
have revenue sizes of approximately ten percent of their respective US counterparts,
all others are too small in size of revenue to be even compared
...
What can be inferred is that revenues of top ten Indian companies
are within the range of five to twelve percent of their respective American counterparts
...
Thus, the extent of
increase required on the Indian side can be measured
...
The US top ten, however,
has three petroleum giants namely Exxon Mobil, Chevron and ConoccoPhillips
...
Where India, on one hand, has one Automobile company i
...
Tata
Motors Limited, US has two automobile manufacturers which are General Motors
and Ford Motors
...
The rest of the
Indian counterparts are from energy (NTPC) and banking (SBI)
...
Research Department- Dr V
...
BRIMS
33
Graph 2 - Industry (ranks) - US
Retailing (1)
Petroleum (2,6,7)
Automobiles (3,4)
Diversified Financials (5)
Banking (8)
Insurance (9)
Computer Equipments (10)
Graph 3 - Industry (ranks) - India
Petroleum (1,2,4,9)
Steel (3,7)
Energy Resources (5)
Banking (6)
F&B and Tobacco (7)
Softwares (10)
34
Challenges for Indian Multinationals
Product / Service Profile – Revenue
Table 3
Rank
2005
1
2
3
4
5
6
7
8
9
10
US
Companies
Product
Product
Product
Product
Service
Product
Product
Service
Service
Product
Indian
Companies
Product
Product
Product
Product
Product
Service
Product
Service
Product
Product
The table displays the product/service profile of the top ten companies
...
e
...
It is evident that in both
countries a majority of companies with the largest revenues are those which offer
products
...
Graph 4 - Product/Service Profile - Revenue
100%
90%
Number of Companies
80%
70%
60%
50%
40%
Product
Service
30%
20%
10%
0%
US
India
Countries
Research Department- Dr V
...
BRIMS
35
ASSETS
The table below gives the ranks of the top ten Indian and US companies with respect
to assets :
Table 4
Rank
2005
1
2
3
4
5
6
7
8
9
10
US Companies
Citigroup
J
...
Morgan Chase& Company
Bank Of America Corporation
American International Group
Freddie Mac
Morgan-Stanley
General Electric
Merill Lynch
Goldman Sachs Group
Wachovia Corp
...
0 State Bank Of India Ltd
...
0 ICICI Bank Ltd
...
0 Punjab National Bank
798,660
...
0 Reliance Industries Ltd
...
0 ONGC
750,507
...
648,059
...
0 Oriental Bank Of Commerce
493,324
...
#Assets
# as
($ Mn) % of *
144,103
...
7
40,906
...
5
29,368
...
6
21,802
...
7
18,640
...
3
17,981
...
3
17,913
...
4
15,202
...
3
12,395
...
3
11,790
...
4
In case of assets, the percentage of assets of Indian companies seem to be within the
range of two to ten percent of the assets of their American counterparts
...
Banks and
financial institutions hold the largest of assets in both the cases (quite obvious)
...
However, Indian companies should make sure that assets are acquired and used
optimally
...
Graph 5
Assets: India-US
1,600,000
1,400,000
Assets ($ Mn)
1,200,000
1,000,000
US
India
800,000
600,000
400,000
200,000
0
1
2
3
4
5
6
7
8
Ranks
36
Challenges for Indian Multinationals
9
10
Industry Profile – Assets
The Industry profiles of the top ten companies in terms of assets would appear as
follows:
Table 5
Rank
2005
1
2
3
4
5
6
7
8
9
10
US Industry
Profile
Banking
Banking
Banking
Insurance
Diversified Financials
Securities
Diversified Financials
Securities
Securities
Banking
Indian Industry
Profile
Banking
Banking
Banking
Banking
Petroleum
Petroleum
Petroleum
Energy Resources
Banking
Banking
The industry profile of the companies top in assets consists mostly of banks and
financial companies
...
In case of India, sixty percent of the cases are of
banking, thirty percent of petroleum and ten percent of energy resources
...
N
...
Contrastingly, the top ten companies with respect to asset size in case of
India are not from the service industries
...
It can also be
seen that in case of India the service profile is entirely held by banking whereas, in
case of the US it is diversified into banking, insurance, diversified financials and
securities
...
0
17,046
...
0
14,143
...
0
11,361
...
0
9,731
...
0
8,509
...
SAIL
Indian Oil Corporation Ltd
...
TISCO
ITC Ltd
...
#Profits # as
($ Mn) % of
3,326
...
1
1,748
...
3
1,594
...
5
1,378
...
7
1,333
...
7
11
...
0
8
...
3
5
...
8
5
...
3
5
...
ONGC’s profits are about thirteen
percent of those of Exxon Mobil’s
...
The
scope for improvement ranges to about twenty to eight times
...
N
...
The US has two
companies from pharmaceuticals and two from petroleum whereas India has four
from petroleum and two from steel
...
The financial services industry does not seem to gain high priority in India
...
N
...
For companies selling products in India profits
are sizably more as compared to the ones selling services (among the top ten)
...
S
...
3 Mangalam Cement Ltd
...
0
16
...
3 Shipping Corporation Of India
41
...
7
Ltd
...
4 Neyveli Lignite Corporation
40
...
1
Ltd
...
3 Great Eastern Shipping Co
...
2
17
...
2 HDFC Ltd
...
7
16
...
1 Television Eighteen India Ltd
...
0 Sesa Goa Ltd
...
5 National Aluminium Company
Ltd
...
9 Hindustan Zinc Ltd
...
7 Infosys Technologies Ltd
...
4
30
...
5
11
...
2
6
...
8
26
...
8
5
...
42
Challenges for Indian Multinationals
Graph 13
India-US Profit Margin
50
45
Profit Margin (%)
40
35
30
US
25
India
20
15
10
5
0
1
2
3
4
5
6
Ranks
7
8
9
10
A completely contrasting picture comes forward when the profit margins of the top
companies of both the countries are compared
...
It is
therefore evident why India is being preferred for international investment
...
Industry Profile – Profit margin
The industry profile of the top ten companies with respect to profit margin is as
follows :
Table 11
Rank
2005
1
2
3
4
5
6
7
8
9
10
US Industry
Profile
Indian Industry
Profile
Banking
Cement
Pharmaceuticals
Shipping
Telecommunications
Mining
Banking
Shipping
Software
Investment & Finance
Food, Beverages & Tobacco Media
Semiconductors &
Steel
Other Components
Pharmaceuticals
Aluminum
Telecommunications
Zinc
Banking
Softwares
Research Department- Dr V
...
BRIMS
43
Banking in the US appears to give best margins with three of the top ten profit
margin companies belonging to it
...
Just as banking in the US, metals (steel, aluminum and zinc) in
India constitute a majority of the top profit margin companies
...
Graph 14 - Industry (ranks) - US
Banking (1,4,10)
Pharmaceuticals (2,8)
Telecommunications (3,9)
Softwares (5)
F&B and Tobacco (6)
Semiconductors (7)
Graph 15 - Industry (ranks) - US
Cement (1)
Shipping (2,4)
Mining (3)
Finance (5)
Media (6)
Steel (7)
Aluminium (8)
Zinc (9)
Software (10)
44
Challenges for Indian Multinationals
Product/Service Profile – Profit margin
The product/service profile of the top ten companies with respect to profit margin is
as follows :
Table 12
Rank
2005
1
2
3
4
5
6
7
8
9
10
US
Companies
Product
Service
Service
Service
Product
Product
Product
Service
Product
Product
Indian
Companies
Product
Product
Product
Product
Product
Service
Product
Product
Product
Service
With respect to profit margin, six out of top ten companies are those of the service
industry in the US
...
The graph of the tabulated data is as follows :
Number of Companies
Graph 16 - Product/Service Profile - Profit Margin
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Service
Product
US
India
Countries
Research Department- Dr V
...
BRIMS
45
Profit Margins of Companies Top in Profit
The following table contains data on companies top in profit in both the countries
and their respective profit margins :
Table 13
Rank
2005
US Companies
1
2
3
4
*Profit
Margin
(%)
Exxon Mobil
9
...
7
General Electric
11
...
3
#Profit
Margin
(%)
ONGC
23
...
10
...
6
Indian Oil Corporation Ltd
...
9
5
6
7
8
9
10
Chevron
Pfizer
Wal-Mart Stores
American International Group
Altria Group
Johnson & Johnson
NTPC
State Bank Of India Ltd
...
BPCL
TCS Ltd
...
0
21
...
6
9
...
6
18
...
7
12
...
8
16
...
8
21
...
9
(5
...
6
(18
...
7
(9
...
3
6
...
8)
3
...
e
...
46
Challenges for Indian Multinationals
Profit Margins of Companies Top in Revenues
The following table depicts the profit margin of companies top in revenues for both
the countries :
Table 14
US Companies
Rank
2005
Indian Companies
*Profit
Margin
(%)
3
...
1
Wal-Mart Stores
2
Exxon Mobil
3
4
General Motors
Ford Motors
5
6
7
8
9
10
General Electric
Chevron
Conocco Phillips
Citigroup
American International Group
IBM
9
...
1
...
2
...
Ltd
...
0 ONGC
9
...
6
...
15
...
9 Tata Motors Ltd
...
8 Mangalore Refin
...
Ltd
...
9
0
...
8
(6
...
4
2
...
0
(0
...
3
12
...
6
24
...
1
4
...
3
3
...
9
9
...
8)
(4
...
Major differences arise in case
of the last four ranks
...
It could
be said that in terms of profit margin for the top ten revenue earning companies, if
there exists differences where Indian companies stand ahead, the difference is higher
as compared to the cases where US companies have higher profit margins
...
N
...
6 HCL Infosystems Ltd
...
6 Hindustan Petroleum
Corp
...
4
...
3 Kochi Refineries Ltd
...
2 Bharat Petroleum
Corporation Ltd
...
7 Hero Honda Motors Ltd
...
7 Munjal Showa Ltd
...
4 Marico Industries Ltd
...
2 Mangalore Refin
...
Ltd
...
1 Nestle India Ltd
...
2
1
...
4
1
...
2
1
...
2
2
...
1
1
...
6
2
...
6
2
...
1
1
...
8
0
...
4
0
...
8
(Nestle India Limited ranked tenth) and 1
...
This analysis also speaks about how Indian companies are able to keep pace with
their American counterparts in terms of asset turnover irrespective of the economic
environment prevailing in the respective countries
...
In the US, the
ranks are first and fifth whereas in India they are second, fourth and ninth
...
India lists two
companies from steel and one each from banking, energy resources and other
industries
...
N
...
In case of India it is seven companies
...
e
...
The product/service graph is as
follows :
50
Challenges for Indian Multinationals
Graph 22 - Product/Service Profile - Asset Turnover
Number of Companies
100%
80%
60%
S ervice
Product
40%
20%
0%
US
India
Countries
Asset Turnover of Companies Top in Revenues
The following table shows the top ten companies in terms of revenues and their
respective asset turnovers for both US & India :
Table 18
Rank
2005
US Companies
Indian Companies
*Asset
#Asset
Turnover
Turnover
(times)
(times)
2
...
1
...
4 Bharat Petroleum
2
...
0
...
0
...
6 Hindustan Petroleum Corp
...
4
Ltd
...
2 ONGC
0
...
6 State Bank Of India Ltd
...
1
1
...
1
...
1 NTPC
0
...
0
...
&
Petrochem
...
0
...
5
2
...
4)
1
...
5
2
...
6
(1
...
1)
0
...
4
1
...
Here, we can see that there are
seven Indian companies which surpass the asset turnovers of their respective
American counterparts with major differences
...
N
...
The following graph makes the above analysis attractive in a pictorial form :
Graph 23
India-US Asset Turnover of Companies top in Revenue
Asset Turnover (times)
4
3
US
2
India
1
0
1
2
3
4
5
6
Ranks
7
8
9
10
Asset Turnover of Companies Top in Assets
The following table depicts the top ten companies in assets and their respective asset
turnover for both, US and India :
Table 19
Rank
2005
1
2
US Companies
Citigroup
J
...
Morgan Chase &
Company
*Asset
Indian Companies
Turnover
(times)
0
...
Difference
#Asset
Turnover
#-*
(times)
0
...
05 ICICI Bank Ltd
...
06
0
...
06 Punjab National Bank
0
...
0
0
...
06
(0
...
04 Reliance Industries Ltd
...
90
0
...
05 ONGC
0
...
7
5
Bank Of America
Corporation
American International
Group
Freddie Mac
6
Morgan-Stanley
7
General Electric
1
...
8
8
Merill Lynch
0
...
35
0
...
06 Oriental Bank Of Commerce
0
...
0
...
0
...
2 Indian Oil Corporation Ltd
...
The graph below depicts the differences that occur between the Indian companies
and their American counterparts
...
96
15
...
47
15
...
44
6
7
Chevron
Anheuser-Busch
14
...
85
8
Publix Super Markets
13
...
66
13
...
Sesa Goa Ltd
...
Abbott India Ltd
...
Aventis Pharmaceuticals
Ltd
...
Nestle India Ltd
...
Research Department- Dr V
...
BRIMS
#ROI
Difference
(%)
89
...
96
42
...
78
30
...
65
29
...
65
17
...
19
28
...
01
13
...
16
25
...
63
25
...
93
11
...
74
53
The above analysis proves to be more favorable towards Indian companies
...
Infact the difference is vast (highest being 73
...
This also means that (top
ten ROI) Indian companies are able to profitably use assets better than the American
ones
...
It should also be noted that the
size of the assets of the US companies is large as compared to the Indian ones
...
The following graph gives a holistic
view of the tabulated data :
Graph 25
India-US ROI
100
90
80
ROI (%)
70
US
India
60
50
40
30
20
10
0
1
Industry Profile - ROI
2
3
4
5
6
7
8
9
10
Ranks
The industry profile would appear as follows :
Rank
2005
1
2
3
4
5
6
7
8
9
10
54
US Industry Profile
Indian Industry
Profile
Pharmaceuticals
Cement
Semi-conductors
Steel
Beverages
Softwares
Food and Drugs
Pharmaceuticals
Diversified Financials Petroleum
Petroleum
Softwares
Beverages
Pharmaceuticals
Food and Drugs
Pharmaceuticals
Pharmaceuticals
F&B and
Table 21
Telecommunications
Pharmaceuticals
Challenges for Indian Multinationals
The above industry profile of both the countries has pharmaceuticals as a major
contributor towards ROI among the top ten ROI companies - four companies on the
Indian side and two companies on the US side
...
The
Indian side consists of two software companies
...
The remaining companies in Indian case are from other industries
...
N
...
Except for the case of 3M i
...
the
fifth ranked company of the US and Nextel Communications i
...
the tenth rank, all
others offer products
...
The ratio of
products to services among the top companies in terms of ROI is 9:1 for America
...
The fifth rank is assumed to be of a product selling company
for the convenience of the graph
...
97
1
...
24
1
...
3
9
...
54
1
...
5
5
...
9
...
2
SAIL
24
...
1
Indian Oil Corporation
7
...
4
Ltd
...
8
(5
...
0
...
3)
TISCO
20
...
2
ITC Ltd
...
3
18
...
26 BPCL
7
...
1
15
...
(1
...
2
Again, Indian companies have an edge over American ones in terms of ROI of the
top ten profit making companies
...
In terms of American companies, the range of ROI is between
1 - 15 percent whereas in case of India the range is 0
...
The graph of
the above data is as follows :
50
Graph 29
India-US ROI of Companies top in Profits
ROI (%
40
30
US
India
20
10
0
1
2
3
4
5 6
Ranks
7
8
9
Research Department- Dr V
...
BRIMS
10
57
ROI of companies top in Assets
The table below gives the ROI of companies top in assets :
Table 24
Rank
US Companies
2005
1
Citigroup
2
*ROI
#ROI Difference
Indian Companies
(%)
(%)
#-*
1
...
0
...
3)
0
...
1
...
6
3
4
J
...
Morgan Chase&
Company
Bank Of America
American International
1
...
22 Bank Of India
1
...
3
(0
...
9)
5
6
7
Freddie Mac
Morgan-Stanley
General Electric
9
...
5
7
...
0
17
...
5
8
Merill Lynch
0
...
0
...
24 Indian Oil Corporation
Ltd
...
68 NTPC
8
...
1
9
Goldman Sachs Group
0
...
4
0
...
1
...
1
...
2
In case of companies top in assets the difference is marginal for the first, third and
tenth rank
...
Indian banks appear to be better performers
...
The maximum ROI is 2
...
5% in case of Indian companies
...
The graphical image of the above data is
as follows :
Graph 30
India-US ROI of Companies top in Assets
20
ROI (%
15
US
10
India
5
0
1
58
2
3
4
5
6
Ranks
7
8
Challenges for Indian Multinationals
9
10
ROI of companies top in Profit Margin
The following table displays the ROI of the top ten companies with respect to Profit
Margin in the US and India :
Table 25
Rank
US Companies
2005
1 U
...
Bancorp
2 Merck
3 Nextel
Communications
4 Bank Of America
Corporation
5
6
7
8
Microsoft
Coco-Cola
Intel
Pfizer
9
10
*ROI
Indian Companies
(%)
2
...
13
...
19 Neyveli Lignite Corporation
Ltd
...
27 Great Eastern Shipping Co
...
84
15
...
61
9
...
Television Eighteen India Ltd
...
National Aluminium Company
Ltd
...
00 Hindustan Zinc Ltd
...
64 Infosys Technologies Ltd
...
6
87
...
5
8
...
6
(1
...
6
17
...
4
13
...
0
20
...
4)
(1
...
4
10
...
0
28
...
0
26
...
There has been a wide
range of difference found between the two countries top performers
...
9 percent to 87
...
The American companies shows a range of
ROI at 1
...
6 percent which is poor as compared to Indian
companies at 2
...
6 percent
...
N
...
11 HCL Infosystems Ltd
...
10
11
...
02 Hindustan Petroleum Corp
...
3
4
5
McKesson
Express Scripts
6
7
8
9
Sysco
Ingram Micro
Medco Health Solutions
Costco Wholesale
10
Publix Super Markets
3
...
57 Bongaigaon Refinery &
Petrochemicals Ltd
-0
...
7
...
11
...
3
...
4
...
5
...
& Petrochem
...
13
...
Tech Data
7
...
60
27
...
40
7
...
24
0
...
60
3
...
50
10
...
03
0
...
91
4
...
00
11
...
In case of the US low profit margins pull down the high
turnovered performance
...
The following graph displays a clear picture:
Graph 32
India-US ROI of Companies top in Profit Margin
100
90
80
ROI (%)
70
60
US
50
India
40
30
20
10
0
1
60
2
3
4
5
6
Ranks
7
8
Challenges for Indian Multinationals
9
10
ANNEXURE 2:
CROSS CULTURAL COMPARISON OF
INDIAN & JAPANESE MULTINATIONALS
Summary of the Findings
1
...
2
...
3
...
4
...
5
...
The average difference in profit margin of the top ten companies with respect
to profit margin is about 26
...
6
...
The average difference is about 1
...
7
...
The difference in ROI reduces as the ranks reduce
...
8
...
9
...
10
...
11
...
12
...
N
...
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
23
...
24
...
25
...
26
...
27
...
62
Challenges for Indian Multinationals
REVENUES
The following pattern shows the top ten companies in terms of revenues in the year
2005 along with their respective figures :
Table 1
Rank
2005
Japanese Companies
1
Toyota motors
2
*Revenues
($ Mn)
Nippon Telegraph and
Telephone
Hitachi
3
4
5
6
Sony
8
9
10
#Revenues
($ Mn)
172,616
...
100,545
...
83,993
...
81,077
...
Ltd
...
6 ONGC
79,799
...
66,618
...
60,520
...
5 Tata Motors Ltd
...
7 MRPL
Matuchita Electric
Industrial
Honda Motor
Nissan Motor
7
Indian Companies
Nippon Life Insurance
Toshiba
Tokyo Electric Power
#as
% of
*
34,924
...
23
16,977
...
89
16,778
...
98
15,765
...
44
14,307
...
5
17
...
78
7,743
...
62
5,391
...
9
4,788
...
91
9
...
20
Japanese companies dominate in terms of revenue generation as compared to their
Indian counterparts
...
Graph 1
India-Japan Revenue
Revenues ($ Mn)
200,000
150,000
Japan
100,000
India
50,000
0
1
2
3
4
5
6
7
8
9
10
Ranks
Research Department- Dr V
...
BRIMS
63
The scope of improvement can be measured from the fact that Indian Oil Corporation
(first rank) is five times behind Toyota Motors and Mangalore Refineries and
Petrochemical Limited (tenth rank) is ten times behind Tokyo Electric Power
...
The industry profile of the Indian companies is as follows :
Petroleum (1,2,3,4,5,10); Banking (6); Steel (7); Energy (8) and
Automobiles(9)
...
ASSETS
The following table gives the comparison of the top ten Indian and Japanese companies
in terms of assets :
Rank
2005
1
2
Japanese Companies
Mizuho Financial
Group
Mitsubishi Tokyo
Financial Group
Table Indian Companies
2
*Assets
($ Mn)
1,337,648
...
1,031,081
...
#Assets
($ Mn)
# as
% of
*
144,103
...
77
40,906
...
97
3
Sumitomo Mitsui
Financial Group
932,413
...
1
3
...
4
18,640
...
82
4
...
7 Bank Of India
437,336
...
279,687
...
9
6
...
1 Indian Oil Corporation
Ltd
...
9 NTPC
198,897
...
5 HDFC Bank Ltd
...
2
7
...
5
12,395
...
68
6
...
2
6
...
The scope for improvement ranges from ten times for State Bank of
India (first rank) to sixteen times for HDFC bank (tenth rank) when compared to
their respective Japanese counterparts
...
The industry profile of the Indian companies is as follows:
Banking (1,2,3,4,9,10); Petroleum (5,6,7) and Energy Resources (10)
...
Research Department- Dr V
...
BRIMS
65
PROFITS
The profits of the top ten companies in Japan and India are tabulated below :
Table 3
Rank
2005
*Profits
($ Mn)
Japanese Companies
#Profits
($ Mn)
# as
% of
*
3,326
...
53
Indian Companies
1
Toyota motors
10,898
...
0 Reliance Industries Ltd
...
8
26
...
6 SAIL
4,766
...
1,594
...
3
27
...
92
4,523
...
3 State Bank Of India Ltd
...
9 TISCO
1,333
...
7
832
...
49
39
...
42
518
...
8
472
...
63
23
...
04
5
6
7
Honda Motor
Canon
Mitsubishi Tokyo Financial
Group
8 Tokyo Electric Power
9 Nippon Steel
10 Nippon Life Insurance
2,104
...
2,052
...
3 TCS Ltd
...
ONGC’s profits are about
thirty percent of those of Toyota Motors
...
The scope for improvement ranges to about three
to four times
...
The industry profile of the Indian companies is as follows :
Petroleum (1,2,4,9); Energy Resources (5); Banking (6); Steel (3,7); F&B
and Tobacco (8) and Softwares (10)
...
PROFIT MARGIN
The following companies are the ones with the highest profit margins :
Table 4
Rank
2005
1
2
Japanese Companies
3
Mizuho Financial Group
Mitsubishi Tokyo
Financial Group
Canon
4
KDDI
5
6
Central Japan Railway
Nippon Telegraph and
Telephone
Nippon Steel
Kyushu Electric Power
7
8
9 Toyota motors
10 Nissan Motor
Indian Companies
*Profit
# Profit Difference
Margin
Margin
#-*
(%)
(%)
20
...
45
...
4
12
...
0
28
...
9
...
5
30
...
6
...
40
...
3
Ltd
...
8 HDFC Ltd
...
7
31
...
6 Television Eighteen India
33
...
8
Ltd
...
5 Sesa Goa Ltd
...
2
23
...
3 National Aluminium
27
...
2
Company Ltd
...
3 Hindustan Zinc Ltd
...
8
20
...
0 Infosys Technologies Ltd
...
5
20
...
It is clear that in terms of profit
margins of the top ten companies, India stands ahead of Japan with a very large
difference
...
Research Department- Dr V
...
BRIMS
67
Profit Margin (%)
Graph 4
India-Japan Profit Margin
50
45
40
35
30
25
20
15
10
5
0
Japan
India
1
2
3
4
5
6
Ranks
7
8
9
10
Industry Profile – Profit Margin
The industry profile of the Japanese companies is as follows (figures in bracket are
ranks) :
Banking (1,2); Computer Equipment (3); Telecommunications (4,6); Railroads
(5); Metals (7); Power (8) and Motor Vehicles and Parts (9,10)
...
Product / Service Profile – Profit Margin
The product / service profile of Japan as well as India is 6:4
...
3 ONGC
6
...
Japanese Companies
1
2
Toyota motors
Nippon Telegraph and
Telephone
3 Mizuho Financial Group
4 Nissan Motor
5 Honda Motor
6 Canon
7 Mitsubishi Tokyo
Financial Group
8 Tokyo Electric Power
9 Nippon Steel
10 Nippon Life Insurance
20
...
0
5
...
9
12
...
3
17
...
4
3
...
NTPC
State Bank Of India Ltd
...
6
3
...
7
12
...
8
16
...
8
21
...
5 ITC Ltd
...
5 BPCL
3
...
(0
...
1)
19
...
4
7
...
7
(3
...
1
The graph here shows the dominance of Indian companies over their Japanese
counterparts
...
e
...
Graph 5
India-Japan Profit Margin of Companies top in Profit
Profit Margin (%)
30
25
20
Japan
15
India
10
5
0
1
2
3
4
5
6
Ranks
7
8
Research Department- Dr V
...
BRIMS
9
10
69
Profit Margins of Companies Top in Revenues
The following table depicts the profit margin of companies top in revenues for both
the countries :
Table 6
Rank
2005
#Profit Difference
Margin
#-*
(%)
3
...
4)
*Profit
Indian Companies
Margin
(%)
6
...
Japanese Companies
1
Toyota motors
2
Nippon Telegraph and
Telephone
6
...
2
...
8)
3
4
Hitachi
Matuchita Electric Industrial
10
...
1
9
...
4
5
6
7
8
9
10
Honda Motor
Nissan Motor
Sony
Nippon Life Insurance
Toshiba
Tokyo Electric Power
0
...
0
...
Ltd
...
6 ONGC
6
...
2
...
3
...
8 Tata Motors Ltd
...
5 Mangalore Refin
...
Ltd
...
3
12
...
6
24
...
1
4
...
7
6
...
3
21
...
3
(0
...
This
also indicates that Indian companies that are top in revenues have kept their profit
margin in line with their revenues
...
0 HCL Infosystems Ltd
...
2
3
...
6 Hindustan Petroleum Corp
...
4
1
...
1
...
2
1
...
5 Kochi Refineries Ltd
...
2
1
...
4 Bharat Petroleum Corporation
2
...
4
Ltd
...
4 Hero Honda Motors Ltd
...
6
1
...
4 Munjal Showa Ltd
...
6
1
...
3 Marico Industries Ltd
...
6
1
...
3 Mangalore Refin
...
6
1
...
Ltd
...
3 Nestle India Ltd
...
4
1
...
10 times
(Nestle India Limited ranked tenth) and 3
...
This analysis also speaks about how Indian companies are able to keep pace
with their Japanese counterparts in terms of asset turnover irrespective of the
Research Department- Dr V
...
BRIMS
71
economic environment prevailing in each country
...
The industry profile of the Indian companies is as follows :
Computer Equipments (1); Petroleum (2,4,9); Steel (3,7); Energy Resources
(5); Banking (6); F&B and Tobacco (8) and Software (10)
...
Asset Turnover of Companies Top in Revenues
The following table shows the top ten companies in terms of revenues and their
respective asset turnovers for both Japan & India :
Table 8
Rank Japanese Companies
2005
1
2
3
4
5
6
7
8
9
10
Toyota motors
Nippon Telegraph and
Telephone
Hitachi
Matuchita Electric
Industrial
Honda Motor
Nissan Motor
Sony
Nippon Life Insurance
Toshiba
Tokyo Electric Power
Indian Companies
*Asset
#Asset Difference
Turnover
Turnover
#-*
(times)
(times)
0
...
1
...
1
0
...
8
2
...
0
...
0
...
0)
1
...
3
...
3
Ltd
...
9 ONGC
0
...
1)
0
...
0
...
8)
0
...
1
...
5
0
...
4
0
...
3 Tata Motors Ltd
...
5
0
...
4 Mangalore Refin
...
6
2
...
Ltd
...
Here, we can see that
there are seven Indian companies which surpass the asset turnovers of their respective
Japanese counterparts with large differences
...
72
Challenges for Indian Multinationals
Graph 8
India-Japan Asset Turnover of Companies top in Revenue
Asset Turnover (times)
4
4
3
3
Japan
2
India
2
1
1
0
1
2
3
4
5
6
Ranks
7
8
9
10
Asset Turnover of Companies Top in Assets
The following table depicts the top ten companies in assets and their asset turnovers
in Japan and India :
Table 9
Rank Japanese Companies
2005
1
2
Mizuho Financial
Group
Mitsubishi Tokyo
Financial Group
*Asset
Indian Companies
Turnover
(times)
0
...
# Asset Difference
Turnover
# -*
(times)
0
...
05
0
...
0
...
04
3
Sumitomo Mitsui
Financial Group
0
...
07
0
...
03 Bank Of India
0
...
0
...
06
0
...
80
0
...
76
0
...
16 Indian Oil Corporation Ltd
...
95
1
...
76 NTPC
0
...
35
0
...
41)
(0
...
56 HDFC Bank Ltd
...
06
(0
...
N
...
The difference is within the range of
-0
...
79 which is favorable towards Indian companies
...
07
8
...
10
5
...
23
Mangalam Cement Ltd
...
TCS Ltd
...
Bongaigaon Refinery &
Petrochemicals Ltd
5
...
5
...
4
...
4
...
4
...
#ROI
Difference
(%)
89
...
96
42
...
78
30
...
54
36
...
02
27
...
40
28
...
01
22
...
83
25
...
56
25
...
93
20
...
18
The above table is favorable towards Indian companies
...
Infact the difference is vast (highest being 80
...
This also means that (top ten ROI) Indian companies are able
74
Challenges for Indian Multinationals
ROI (%)
Graph 10
India-Japan ROI
100
90
80
70
60
50
40
30
20
10
0
Japan
India
1
2
3
4
5
6
Ranks
7
8
9
10
to profitably use assets better than the Japanese ones
...
It should also be noted that the size of the assets of the Japanese
companies is large as compared to the Indian ones
...
Industry Profile – ROI
The industry profile of the Japanese companies is as follows (figures in bracket are
ranks) :
Computer Equipment (1); Telecommunications (2); Motor Vehicles and parts
(3,5,6,7,9,10); Metals (4) and Shipping (8)
...
Product / Service Profile – ROI
The product / service profile of Japan as well as India is 8:2
...
N
...
5
13
...
4
5
...
8 ONGC
3
...
0
...
2 Indian Oil Corporation Ltd
...
0
2
...
2 NTPC
9
...
0
...
8
0
...
8
3
...
2)
20
...
6 ITC Ltd
...
7 BPCL
0
...
Honda Motor
Canon
Mitsubishi Tokyo
Financial Group
Tokyo Electric Power
Nippon Steel
Nippon Life Insurance
24
...
7
19
...
9
42
...
7
2
...
7
Graph 11
India-Japan ROI of Companies top in Profits
45
40
35
30
25
20
15
10
5
0
Japan
India
1
2
3
4
5
6
Ranks
7
8
9
10
Again, Indian companies have an edge over Japanese ones in terms of ROI of the top
ten profit making companies
...
In terms of Japanese companies
the range of ROI is between 0
...
07 percent whereas in case of India the range
is 0
...
76
Challenges for Indian Multinationals
ROI of Companies top in Assets
The table below gives the ROI of companies top in assets :
Table 12
Rank
Japanese Companies
2005
1
Mizuho Financial Group
2
3
4
5
*ROI
Indian Companies
(%)
0
...
Mitsubishi Tokyo Financial
Group
Sumitomo Mitsui Financial
Group
UFJ Holdings
Nippon Life Insurance
#ROI Difference
(%)
# -*
0
...
5
0
...
1
...
7
-0
...
1
1
...
7 Bank Of India
0
...
0
...
4
1
...
0
6
Dai-Ichi Mutual Life Insurance
0
...
5
18
...
7 Indian Oil Corporation Ltd
...
7
7
...
8 NTPC
0
...
7 HDFC Bank Ltd
...
8
1
...
3
4
...
0
(2
...
Indian companies dominate this area with only one of the top ten
companies with respect to asset having ROI less than those of their Japanese
counterparts
...
Indian banks are thus
more efficient in terms of assets
...
79 % in case of Japanese
companies whereas it is 18
...
However this can be
attributed to the type of business of these companies
...
N
...
4 Mangalam Cement Ltd
...
6
89
...
3 Shipping Corporation of
India
9
...
8
...
Ltd
...
8 HDFC Ltd
...
5
22
...
6
2
...
6
10
...
4
0
...
7 Television Eighteen India
Ltd
...
7 Sesa Goa Ltd
...
2 National Aluminium
Company Ltd
...
8 Hindustan Zinc Ltd
...
2 Infosys Technologies Ltd
...
6
9
...
0
20
...
3
17
...
0
28
...
2
22
...
There is a wide
range of difference between the two countries’ top performers
...
60 percent to 89
...
The Japanese companies show a range of ROI
78
Challenges for Indian Multinationals
from 0
...
07 percent which is poor as compared to that
of Indian companies from 2
...
6 percent
...
0 HCL Infosystems Ltd
...
1 Hindustan Petroleum Corp
...
2
...
2 Kochi Refineries Ltd
...
6 Bharat Petroleum Corporation
Ltd
...
7 Hero Honda Motors Ltd
...
5 Munjal Showa Ltd
...
7) Marico Industries Ltd
...
9 Mangalore Refin
...
Ltd
...
2 Nestle India Ltd
...
1
14
...
10
0
...
6
28
...
4
7
...
2
4
...
6
3
...
5
10
...
0
0
...
2
9
...
00
19
...
In case of Japan low profit margins pull down the high turnovered
performance
...
Research Department- Dr V
...
BRIMS
79
ANNEXURE 3:
CROSS CULTURAL COMPARISON
INDIAN & CHINESE MULTINATIONALS
Summary of the Findings
1
...
2
...
3
...
4
...
5
...
The average difference in profit margin of the top ten companies with respect
to profit margin is about 23
...
6
...
The average difference is about 1
...
7
...
The difference in ROI reduces as the ranks reduce
...
8
...
9
...
10
...
11
...
12
...
80
Challenges for Indian Multinationals
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
23
...
24
...
25
...
26
...
27
...
Research Department- Dr V
...
BRIMS
81
REVENUES
The following pattern shows the top ten companies in terms of revenues in the year
2005 along with their respective figures :
Table 1
Rank
2005
Chinese Companies
1
2
3
4
China National Petroleum
China Life Insurance
5
7
China Mobile
Communications
Industrial & Commercial
Bank of China
China Telecommunications
8
9
10
Sinochem
Shanghai Baosteel Group
China Construction Bank
16,977
...
82
16,778
...
4
24
...
11
14,307
...
72
10,201
...
52
21,561
...
20,380
...
3 Tata Motors Ltd
...
9 MRPL
State Grid
34,924
...
52
23,444
...
Sinopec
6
Indian Companies
*Revenues
($ Mn)
# Revenues
($ Mn)
7,743
...
92
5,391
...
9
4,788
...
45
26
...
14
75,076
...
71,290
...
67,723
...
24,980
...
Ltd
...
6 ONGC
The Chinese companies are larger when it comes to revenue generation
...
Revenues ($ Mn)
Graph 1
India-China Revenue
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
China
India
1
2
3
4
5
6
7
8
Ranks
82
Challenges for Indian Multinationals
9
10
The scope for improvement can be measured for Indian Oil Corporation Limited
(first rank) as two times behind Sinopec and for Mangalore Refineries and
Petrochemical Limited (tenth rank) to be four times behind China Construction Bank
...
Industry Profile – Revenue
The industry profile of the Chinese companies is as follows (figures in bracket are
ranks):
Petroleum (1,3); Power (2); Insurance (4); Telecommunications (5,7), Banking
(6,10); Trading (8) and Metals (9)
...
Product / Service Profile – Revenue
The product / service profile of China is 5:5 whereas it is 8:2 in case of India
...
1
# as
% of
*
21
...
Punjab National Bank
Bank Of India
Reliance Industries Ltd
...
40,906
...
1
21,802
...
7
17,981
...
2
7
...
06
4
...
88
16
...
28
Sinopec
China Life Insurance
74,941
...
7 Oriental Bank Of Commerce
15,202
...
6
20
...
87
China Telecommunications
65,332
...
11,790
...
05
685,135
...
515,972
...
6
471,791
...
4
110,396
...
6
#Assets
($ Mn)
Indian companies are showing a sizeable amount of improvement and there is further
improvement required in terms of asset size which ranges from five times for State
Bank of India (first rank) to six times for HDFC bank (tenth rank)
...
N
...
The industry profile of the Indian companies is as follows:
Banking (1,2,3,4,9,10); Petroleum (5,6,7) and Energy Resources (10)
...
84
Challenges for Indian Multinationals
PROFITS
The profits of the top ten companies in China and India are tabulated below :
Table 3
Chinese Companies
1
2
3
4
5
6
7
8
China National Petroleum
China Construction Bank
China Mobile Communications
Bank of China
China Telecommunications
Hutchinson Whampoa
Shanghai Baosteel Group
Sinopec
9
10
State Grid
China First Automotive Works
Profits ($ Mn)
Rank
2005
Indian Companies
*Profits
($ Mn)
8,757
...
2
4,077
...
0
2,422
...
7
1,537
...
9
#Profits
($ Mn)
ONGC
Reliance Industries Ltd
...
NTPC
State Bank Of India Ltd
...
694
...
4 TCS Ltd
...
8
1,748
...
1
1,378
...
9
1,255
...
0
518
...
99
29
...
09
54
...
07
60
...
12
40
...
8 69
...
3 160
...
ONGC’s profits are about thirty
eight percent of those of China National Petroleum
...
Research Department- Dr V
...
BRIMS
85
Industry Profile – Profits
The industry profile of the Chinese companies is as follows (figures in bracket are
ranks) :
Petroleum (1,8); Banking (2,4); Telecommunications (3,5); Food and drugs
(6); Metals (7); Power (9) and Motor Vehicle and parts (10)
...
Product / Service Profile – Profits
The product / service profile of the China is 6:4 where as in case of India it is 8:2
...
7 Mangalam Cement Ltd
...
0
14
...
0 Shipping Corporation Of
41
...
98
India Ltd
...
1 Neyveli Lignite
40
...
42
Corporation Ltd
...
9 Great Eastern Shipping Co
...
2
27
...
12
...
38
...
72
11
...
4
22
...
7
...
30
...
33
2
...
1
...
1
...
27
...
38
26
...
5
25
...
92
As is depicted in the graph, it is clear that the Indian companies dominate their
Chinese counterparts in terms of profit margin
...
86
Challenges for Indian Multinationals
Profit Margin (%)
Graph 4
India-China Profit Margin
50
45
40
35
30
25
20
15
10
5
0
China
India
1
2
3
4
5
6
Ranks
7
8
9
10
Industry Profile – Profit Margin
The industry profile of the Chinese companies is as follows (figures in bracket are
ranks) :
Banking (1,3,10); Telecommunications (2,6); Petroleum (4,9); Food and drugs
(5); Metals (7) and Motor Vehicle and parts (8)
...
Product / Service Profile – Profit margin
The product / service profile of China is 5:5 where as in case of India it is 6:4
...
N
...
9
30
...
0
14
...
2
12
...
9
1
...
0
2
...
3
10
...
10
...
3)
SAIL
20
...
6
Indian Oil Corporation Ltd
...
9
(10
...
TISCO
ITC Ltd
...
24
...
3
20
...
2
2
...
2
13
...
3
12
...
5
1
...
1
Graph 5
India-China Profit Margin of Companies top in Profit
35
Profit Margin (%)
Indian Companies
30
25
20
China
15
India
10
5
0
1
2
3
4
5
6
Ranks
7
8
9
10
Except for the second and fourth ranks, India stands ahead i
...
eighty percent of the
top ten companies with respect to profits are ahead in terms of profit margin as
compared to their Chinese counter parts
...
7 Indian Oil Corporation Ltd
...
9
2
...
8
1
...
4
2
...
5)
1
...
3
6
...
2 State Bank Of India Ltd
...
3
11
...
2 Steel Authority Of India
Ltd
...
1 NTPC
7
...
30
...
&
Petrochem
...
20
...
4
24
...
1
4
...
6
(1
...
5)
Graph 6
India-China Profit Margin of Companies top in Revenue
35
Profit Margin (%)
1
...
12
...
0
...
Ltd
...
0 ONGC
30
25
20
China
15
India
10
5
0
1
2
3
4
5
6
Ranks
7
8
9
10
From the graph there are three incidences which shows that China is ahead of India
...
Research Department- Dr V
...
BRIMS
89
ASSET TURNOVER
The following table shows the comparison of China & India in terms of top ten asset
turnover companies :
Table 7
Rank
2005
1
2
3
4
5
6
7
8
9
10
*Asset
Indian Companies
Turnover
(times)
Sinochem
3
...
COFCO
2
...
Ltd
...
1 Bongaigaon Refinery &
Automotive Works
Petrochemicals Ltd
Sinopec
1
...
Shanghai Baosteel
0
...
China Southern Power
0
...
Grid
China National
0
...
Petroleum
State Grid
0
...
China Mobile
0
...
&
Communications
Petrochem
...
China Life Insurance
0
...
Chinese Companies
3
...
09
3
...
8
2
...
97
2
...
96
2
...
99
2
...
6
2
...
18
2
...
04
Graph 7
India-China Asset Turnover
6
Asset Turnover (times)
#Asset Difference
Turnover
#-*
(times)
5
...
89
3
...
43
5
4
China
3
India
2
1
0
1
2
3
4
5
6
Ranks
7
8
9
10
The above table clearly shows the difference between the top ten companies in India
and China in terms of asset turnover, which is within the range of 2
...
89 times (HCL Infosystems Limited ranked first)
...
Industry Profile – Asset Turnover
The industry profile of Chinese companies is as follows (figures in bracket are ranks):
Trading (1,2); Motor Vehicle and parts (3); Petroleum (4,7); Metals (5); Power
(6,8); Telecommunications (9) and Insurance (10)
...
Product / Service Profile – Asset Turnover
The product / service profile of China is 8:2 whereas in case of India it is 7:3
...
0 Indian Oil Corporation Ltd
...
9
0
...
5 Bharat Petroleum
2
...
3
Corporation Ltd
...
6 Reliance Industries Ltd
...
9
0
...
4 Hindustan Petroleum
Corp
...
0
...
4
3
...
8
0
...
03 State Bank Of India Ltd
...
1
0
...
3 Steel Authority Of India
Ltd
...
3 NTPC
0
...
1
...
9
0
...
5
(2
...
7
2
...
6
0
...
&
Petrochem
...
Research Department- Dr V
...
BRIMS
91
Graph 8
India-China Asset Turnover of Companies top in Revenue
Asset Turnover (times)
4
4
3
3
China
2
India
2
1
1
0
1
2
3
4
5
6
Ranks
7
8
9
10
The above table shows some important facts which advocate the performance of the
Indian companies with their Chinese counterparts
...
Thus, it could be said that the top ten Indian
companies are more efficient in revenue generation than top ten Chinese companies
in terms of asset turnover
...
03 State Bank Of India Ltd
...
07
0
...
03 ICICI Bank Ltd
...
03 Punjab National Bank
0
...
07
0
...
04
0
...
53
0
...
21
1
...
36
0
...
90
0
...
95
0
...
07
0
...
37
0
...
74
(0
...
29)
0
...
27)
Bank Of India
Reliance Industries Ltd
...
NTPC
Oriental Bank Of
Commerce
0
...
Challenges for Indian Multinationals
Graph 9
India-China Asset Turnover of Companies top in Assets
Asset Turnover (times)
3
2
2
China
India
1
1
0
1
2
3
4
5
6
Ranks
7
8
9
10
The graphical representation and the table above makes the picture more clear for
Indian companies and their Chinese counterparts that India is ahead of China in
terms of asset turnover of companies top in assets
...
ROI
The further analysis is about ROI of top ten Indian and Chinese companies as follows:
Table 10
Rank
Chinese Companies
2005
1
China National Petroleum
2
China Mobile
Communications
3
Shanghai Baosteel Group
4
Sinochem
5
China Telecommunications
6
Hutchinson Whampoa
7
8
China First Automotive
Works
Sinopec
9
10
COFCO
China Construction Bank
*ROI
Indian Companies
(%)
7
...
7
...
#ROI Difference
(%)
# -*
89
...
7
45
...
8
6
...
3
...
3
...
5 Infosys Technologies Ltd
...
1
32
...
6
35
...
1
26
...
0
25
...
4 Aventis Pharmaceuticals
Ltd
...
7 P&G Hygiene &
Healthcare Ltd
...
7 Nestle India Ltd
...
2 Glaxosmithkline
Pharmaceuticals Ltd
...
0
23
...
4
23
...
0
24
...
3
23
...
N
...
The data above shows that none of the Chinese companies are
close to their Indian counterparts in terms of ROI
...
71% among the first ranked companies of the two countries)
...
The top Indian companies try to give an ROI of at least
twenty five percent whereas in China this percentage is one and half percent
...
The actual challenge for Indian companies is to maintain
these returns after attaining a size proportionate to the Chinese companies
...
The industry profile of the Indian companies is as follows:
Cement (1); Steel (2); Softwares (3,6); Pharmaceuticals (4,7,8,10); Petroleum
(5) and F & B and Tobacco (9)
...
94
Challenges for Indian Multinationals
ROI of Companies top in Profits
The following is the comparison between the top ten companies in terms of profits
and their ROI for China and India :
Table 11
ROI (%
Rank
Chinese Companies
2005
1
China National Petroleum
2
China Construction Bank
3
China Mobile
Communications
4
Bank of China
5
China Telecommunications
6
Hutchinson Whampoa
7
Shanghai Baosteel Group
8
Sinopec
9
State Grid
10 China First Automotive
Works
#ROI Difference
(%)
#-*
18
...
6
9
...
2
24
...
2
*ROI
Indian Companies
(%)
7
...
2 Reliance Industries Ltd
...
2 SAIL
0
...
7
2
...
6
1
...
5
2
...
NTPC
State Bank Of India Ltd
...
BPCL
TCS Ltd
...
7
8
...
9
20
...
3
7
...
1
7
...
1
(1
...
2
17
...
4
39
...
Large differences are found in case of TCS China First Automotive Works, ITC – Sinopec and SAIL-China Mobile
Communications
...
05
to 8 percent whereas in case of India the range is 0
...
Research Department- Dr V
...
BRIMS
95
ROI of Companies top in Assets
The table below gives the ROI of companies top in assets :
Table 12
Rank
Chinese Companies
2005
1
Industrial & Commercial
Bank of China
2
Bank of China
3
Agricultural Bank of China
4
China Construction Bank
5
State Grid
6
China National Petroleum
7
Hutchinson Whampoa
8
Sinopec
9
China Life Insurance
ROI (%
10
China Telecommunications
#ROI Difference
(%)
#-*
0
...
86
*ROI
Indian Companies
(%)
0
...
0
...
05
1
...
52
7
...
46
1
...
11
ICICI Bank Ltd
...
ONGC
Indian Oil Corporation Ltd
...
51
1
...
94)
8
...
57
5
...
11
1
...
30
3
...
1
...
10
0
...
40
18
...
70
8
...
40
(2
...
Indian banks appear to be
better performers
...
The maximum ROI is 7
...
5% in
case of Indian companies
...
96
Challenges for Indian Multinationals
ROI of Companies top in Profit Margin
The following table displays the ROI of the top ten companies with respect to Profit
Margin in China and India :
Table 13
Rank
*ROI
#ROI Difference
Chinese Companies
Indian Companies
2005
(%)
(%)
# -*
1 China Construction Bank
1
...
89
...
36
2
3
China Mobile
Communications
Bank of China
4
China National Petroleum
5
6
Hutchinson Whampoa
China
Telecommunications
Shanghai Baosteel Group
7
...
0
...
7
...
Ltd
...
46 HDFC Ltd
...
71 Television Eighteen
India Ltd
...
60 Sesa Goa Ltd
...
40 National Aluminium
Company Ltd
...
00
17
...
69 Hindustan Zinc Ltd
...
00
18
...
05 Infosys Technologies
Ltd
...
00
27
...
50
15
...
60
11
...
60
10
...
40
13
...
06)
9
...
00
38
...
There has been a wide
range of difference found between the two countries top performers
...
06 percent to 88
...
The Chinese companies shows
a range of ROI at 0
...
93 percent which is poor as compared
Research Department- Dr V
...
BRIMS
97
to Indian companies at 2
...
6 percent
...
70 HCL Infosystems Ltd
...
70 Hindustan Petroleum
Corp
...
China First Automotive Works
2
...
10
11
...
10
5
...
60
17
...
90
15
...
30
24
...
40
17
...
80
23
...
53)
16
...
60
25
...
69 Kochi Refineries Ltd
...
60 Bharat Petroleum
Corporation Ltd
...
80 Hero Honda Motors Ltd
...
93 Munjal Showa Ltd
...
52 Marico Industries Ltd
...
20 Mangalore Refin
...
Ltd
...
11 Nestle India Ltd
...
20
24
...
In case of the China low profit margins pull down the high
turnovered performance
...
98
Challenges for Indian Multinationals
ABBREVIATIONS
ASEAN
=>
Association of South East Asian Nations
BLS
=>
Bureau of Labour Statistics
BPO
=>
Business Process Outsourcing
BSE
=>
Bombay Stock Exchange
EU
=>
European Union
FTC
=>
Federal Trade Commission
NASSCOM =>
National Association of Software and Services Companies
GDP
=>
Gross Domestic Product
GNP
=>
Gross National Product
IBEF
=>
India Brand Equity Foundation
IDC
=>
International Data Corporation
IIP
=>
Index of Industrial Production
ITES
=>
Information Technology Enabled Services
LSE
=>
London Stock Exchange
MNC
=>
Multinational Corporation / Company
MNE
=>
Multinational National Enterprise
NSE
=>
National Stock Exchange
NYSE
=>
New York Stock Exchange
ROI
=>
Return On Investment
TNC
=>
Transnational Corporation / Company
NCR
=>
National Capital Region
Research Department- Dr V
...
BRIMS
99
BIBLIOGRAPHY
Specific References
1
...
economywatch
...
www
...
com
3
...
Projects of the students of Rizvi Institute of Management, Bandra under the
guidance of Dr
...
The advance Law dictionary by Wadhwa Publication
6
...
Shiva Ramu, Multinational Firms, First Edition, Sultan Chand and Sons
7
...
Cullen, Multinational Management
8
...
mckinseyquarterly
...
www
...
com
10
...
forrester
...
www
...
com
12
...
idc
...
www
...
org
14
...
ibef
...
www
...
gov
16
...
equitymaster
...
Fortune 500 July 25th , 2005 issue
18
...
Guruprasad Murthy, Capital Investment Decision in Indian Industry, First
Edition June 1985, Himalaya Publishing House
19
...
Guruprasad Murthy, Management by Ordinances - An Anti-Inflationary
Offensive, 1974, N
...
Tripathi Pvt
...
,
20
...
, New York
...
Taylor, On the Economic Theory of Socialism,
1976, Tata McGraw-Hill
22
...
C
...
P
...
W
...
Richard I
...
Rubin, Statistics for Managers, Seventh Edition
2004, Prentice Hall of India Publications
S
...
Gupta, Statistical Methods, Second Edition 1994, Sultan Chand and Sons
Prasanna Chandra, Financial Management, Theory and Practice, Sixth Edition
2005, Tata Mc-Graw Hill
Rudiger Dornbusch, Stanley Fishier and Richard Startz, Macro-Economics,
nineth Edition 2004, Tata Mc-Graw Hill
P
...
G
...
P
...
R
...
Momaya, Globalisation, Flexibility and Competitiveness, 2001,
Vikas Publication House Pvt
...
Dominic Salvatore, Managerial Economics in a Global Economy, Fourth
Edition 2005, South Western College Publishing
HandBook of Statistics of Indian Economy, RBI Sixth Edition 2003-04,
Published by Muneesh Kapur for RBI
Alan C
...
N
...
G
...
A
...
Eiteman, Arthur I
...
Moffett, Multinational
Business Finance, Nineth Edition 2001, Addison Wesley Longman (Singapore)
Pte
...
Levi, International Finance, Third Edition 1996, Mc-Graw Hill
102
Challenges for Indian Multinationals
Title: MNC
Description: it's describe about the indian MNCs & foreign. easily understandable..
Description: it's describe about the indian MNCs & foreign. easily understandable..