Global Challengers 2011

Earlier this year BCG (Boston Consulting Group) came up with BCG Global Challengers 100 list, rising stars from rapidly developing economies are reshaping global industries. The 2011 global challengers are a diverse group, reflecting the dynamic nature of global competition. The list came from 16 countries, with China, India, Russia, Brazil, and Mexico dominating the list –although less so then they did in previous years.

Western corporate now fully recognize – even if they don’t understand – the rise of companies with global aspirations from rapidly developing economies. Established western brands such as Jaguar and Land Rover are now owned by Tata Group of India. Huawei Technologies and ZTE, both of China, are the second and fifth largest global manufacturers of mobile equipment, ranked by overall revenues. Mexico’s Grupo Bimbo is the largest bread baker in the world. Brazil’s JBS, the largest meat producer; and Russia’s United Company Rusal, the largest producer of aluminium. Revenue from these global challengers rose 18% annually from 2000 through 2009, triple the average annual growth achieved by both global peers and non-financial firms from S&P 500. All this reflects in return created by these global challengers. A long term, emerging market investor earned 17% p.a. compared to -0.7% from S&P 500 and 0.5% from Global peers.

The economic downturn took a tall on the total shareholder return of nearly all companies. But the performance of the global challengers has bounced back more quickly and strongly than that of other companies. It is very important for Long Term investors from developing economies to look at this new wave of growth engines of future. In 2011, BCG listed 20 companies from India, next only to china. This has been the greatest shift since 1999.

Seven Global challengers are from conglomerates; the most notable is Tata Group from India, which is operations in chemicals, communication, IT, beverages, automotive and steel sector. Over the last decade, the Tata Group has completed cross-border acquisitions whose value exceeds $17.5 billion. Tata Group now owns global names like Anglo-Dutch group Corus, General chemical industrial product, Eight’O Clock (a leading Coffee brand), Land Rover, Jaguar, British Salt and Tetley Tea. The Tata Group works collaboratively with its acquisitions. The acquired companies generally remain separate organizations and have operation freedoms. Tata also emphasizes the retention of top managers. The link that holds the acquisitions together is Tata’s corporate centre.

List of Indian companies part of BCG Global Challengers 2011

Name	Price (INR)	Market Cap (INR in Billions)	P/E
Bajaj Auto	1640.00	474.94	13.72
Bharat Forge	284.35	66.37	18.99
Bharti Airtel	377.90	1435.47	19.88
Crompton Greaves	137.90	88.43	13.93
Dr. Reddy Laboratories	1530.15	259.28	23.51
Hindalco Industries	121.65	233.09	10.37
Infosys Technologies	2722.70	1563.35	22.83
Larsen & Toubro	1336.00	816.08	20.22
Lupin Pharmaceuticals	465.00	208.32	28.63
Mahindra & Mahindra	801.10	492.44	18.19
Reliance Industries	835.40	2736.58	12.50
Suzlon Energy	36.15	64.34	19.33
Tata Chemicals	308.90	78.53	21.38
Tata Communications	182.70	52.16	30.91
Tata Consultancy Services	1048.25	2054.79	22.68
Tata Global Beverages	84.90	52.38	20.60
Tata Motors	177.95	526.25	31.06
Tata Steel	432.15	415.34	4.37
Vedanta Resources*
Wipro	353.90	870.12	16.30

 * Not Listed in India

Revenues at Indian equities are growing annually at more than 20% for last 3 years and are expected to grow at 20-30% for next 5 years. India provides a unique investment opportunity to create a lifetime wealth for long-term investors. Indian equities provided 717% returns in last 10 years compared to -0.7% for S&P 500.

For more information, please call us at +91-9925001805 or email us at investors@pisquareinvestments.com

-Vishrut Pathak

Pi Square Investments

(Download detailed copy of this report at  http://www.bcg.com/documents/file70055.pdf)