It is quite a remarkable fact that a few diverse Indian empires like the Tatas, Thapars, Birlas and the Goenkas laid down the genesis of the India Inc. in the ancient British era. These corporations have survived through the lows and highs of the precarious economic conditions over the decades due to the business acumen of their leaders and the timely managerial decisions that they have taken. These conglomerates have massive businesses today as they have been monitoring the pulse of the Indian Industrial sector since decades ago. Today, these Groups represent India on a global platform which is a matter of prestige for the country. The journey was definitely not a runaway for these empires and the same was the case for the RPG Group. The chronicle of the same would be worth focusing on.
The RPG Group was initiated by Ramdutt Goenka in the early 1900’s as an agent and money lender in the banking, textiles, jute and tea sectors. The Group got a real thrust in 1979 when major proportion of business was inherited by Rama Prasad Goenka – one of the successors of Ramdutt Goenka. The former took control of the business through the companies Phillips Carbon Black, Asian Cables, Agarpara Jute and Murphy India. Harsh Goenka and Sanjiv Goenka – RPG’s successors took the business altogether to a different level after the retirement of RPG. They continued the acquisition and the JV legacy and leveraged their managerial expertise and the astute business sense which was and is deep rooted in the Goenkas.
Over the years, the duo made several acquisitions and JVs domestically and well as internationally which have augmented growth of the group to a large extent. The strategy of expansion through acquisition has played an instrumental role in the robust income statements that the group is reporting. Harsh and Sanjiv have taken timely decisions at a time when the conditions were favourable for their business. Once they had a sizeable chunk of various businesses, they decided to consolidate their businesses as it was hampering their growth. They struck the right chord when they decided to concentrate on their core businesses and exit from the non core businesses. Currently, RPG Enterprises has operations in eight sectors with power transmission, tyres, transmission equipment, IT as its core sectors and retail, carbon black, entertainment and speciality sectors as its diversified sectors.
Today, RPG Enterprises is recognised as one of India’s largest and respected diversified industrial conglomerates. The Group is reporting revenues of nearly USD 2.72 billion from USD 790 million in 1979. The sustained growth the group has shown is the one which any business enterprise in the modern age would like to emulate today.
Friday, May 8, 2009
Thursday, May 7, 2009
The Inorganic Route – A Strategy for Expansion
India’s brand equity in the international market has been substantiated with overseas business expansions of Indian conglomerates like the RPG Group, Thapar Group and Bharti Group. Historically, these conglomerates have emphasised on overseas JVs, mergers and acquisitions for diversification purposes. Their success stories have been talked in volumes at seminars and also served as perfect case studies of successful business ventures of Indian companies abroad.
One such interesting story is the success of the Thapar Group with special focus on the Gautam Thapar promoted Avantha Group. The two arms of the Avantha Group – Crompton Greaves and Global Green are the only companies of the Group that have ventured overseas. The foresight and vision of Gautam Thapar converged with the business acumen of S.M. Trehan – Member of the Avantha Leadership Team and Vineet Chhabra - Group CEO acted as a catalyst for augmenting revenues and brand penetration for the Group companies overseas as well as domestically. It is understood that this group’s success overseas was attributed due to timely decision making, planning and proficient execution.
However, the noteworthy fact is that Crompton Greaves, the major revenue reaper for the Group, was actually a loss making company in mid 2000s. Crompton Greaves and Global Green ventured into the European and the US markets in 2005 at a time when the macro economic conditions were favourable for the transformer business and horticulture consumer products. The two companies made a series of acquisitions of companies like Pauwels, Ganz, Microsol, Societe Nouvelle de Maintenance de Transformateurs and Intergarden which were loss making but had a strong brand presence in different European and US markets. These timely strategic acquisitions by the stalwarts helped the companies expand their global footprint and increase brand presence. It also helped them leverage the acquired company’s customer network, technological expertise, manufacturing facilities in different geographical locations and gave access to their product lines.
These strategic decisions have increased the group’s revenues manifold in addition to the brand presence that it enjoys today. The group’s overall revenues in FY08 exceeded USD 8.2 billion, with the majority derived from the Avantha group, which contributed USD 6,773.7 million in FY08. The modus operandi for overseas expansion through acquisitions has turned the tables around for the Avantha Group. This is another group which is flourishing in the overseas markets and which is known for the managerial decisions taken by its leader. The Group has certainly witnessed a successful turnaround which is amongst a very few in India.
One such interesting story is the success of the Thapar Group with special focus on the Gautam Thapar promoted Avantha Group. The two arms of the Avantha Group – Crompton Greaves and Global Green are the only companies of the Group that have ventured overseas. The foresight and vision of Gautam Thapar converged with the business acumen of S.M. Trehan – Member of the Avantha Leadership Team and Vineet Chhabra - Group CEO acted as a catalyst for augmenting revenues and brand penetration for the Group companies overseas as well as domestically. It is understood that this group’s success overseas was attributed due to timely decision making, planning and proficient execution.
However, the noteworthy fact is that Crompton Greaves, the major revenue reaper for the Group, was actually a loss making company in mid 2000s. Crompton Greaves and Global Green ventured into the European and the US markets in 2005 at a time when the macro economic conditions were favourable for the transformer business and horticulture consumer products. The two companies made a series of acquisitions of companies like Pauwels, Ganz, Microsol, Societe Nouvelle de Maintenance de Transformateurs and Intergarden which were loss making but had a strong brand presence in different European and US markets. These timely strategic acquisitions by the stalwarts helped the companies expand their global footprint and increase brand presence. It also helped them leverage the acquired company’s customer network, technological expertise, manufacturing facilities in different geographical locations and gave access to their product lines.
These strategic decisions have increased the group’s revenues manifold in addition to the brand presence that it enjoys today. The group’s overall revenues in FY08 exceeded USD 8.2 billion, with the majority derived from the Avantha group, which contributed USD 6,773.7 million in FY08. The modus operandi for overseas expansion through acquisitions has turned the tables around for the Avantha Group. This is another group which is flourishing in the overseas markets and which is known for the managerial decisions taken by its leader. The Group has certainly witnessed a successful turnaround which is amongst a very few in India.
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