Noughties: decade of the conglomerates

Noughties: decade of the conglomerates

The beginning of a decade is an opportune time to look at what has passed and what lies ahead.

In the Indian business world, the first decade of the 21st century definitely belonged to so-called old economy companies and groups. The 1990s saw the emergence of several new faces in Indian business, among them Infosys Technologies Ltd, Bharti Airtel Ltd, ICICI Bank Ltd and Dr Reddy’s Laboratories Ltd. Many of these companies were founded earlier but the 1990s was when they really registered their presence.

In contrast, most large conglomerates were going through a period of painful and wrenching change in the 1990s. Some of them faced significant financial problems, and in some cases it seemed just a matter of time before they went under altogether.

The Bhartis and the Infosyses didn’t exactly do badly in the 2000s—many of these companies grew rapidly during the decade—but it was the large diversified companies and groups that really got their act together, restructuring existing businesses, becoming more efficient and competitive, acquiring companies in other parts of the world, and entering new businesses.

Illustration: Jayachandran / Mint

The two Reliance groups have grown in size and also entered new businesses such as retail, life sciences, telecom and entertainment.

The Aditya Birla Group is a far more global entity than it was in the 1990s and it, too, entered some new businesses, notably retail.

The Mahindra Group went global, launched one of the country’s best-selling utility vehicles and, towards the end of the decade, acquired India’s fourth largest IT services company.

And the Tata group became India’s most global business entity with significant acquisitions in steel and automobiles and also launched a small low-priced car that made the world’s car makers reassess the way they made cars.

Apart from what the conglomerates themselves did, there are also other factors that contributed to their showing in the past decade —including global business and commodity cycles. And to be sure, for every one of these that succeeded in the 2000s, there are probably two that failed. Still, the decade that has just ended was, at least from a business journalist’s perspective, more about old companies and conglomerates, than about new ones (unlike the second half of the previous decade, the 1990s, which was all about new companies).

From a microeconomic, corporate perspective, this perhaps explains India’s superior economic performance in the 2000s. New firms that emerged in the 1990s grew in size and scope. And old ones, many of which were floundering in the 1990s, really seemed to get into the groove of things (and how). Between 2000 and 2009, the Indian economy expanded at an average of 7.19%; between 1990 and 1999 it did so at 5.69%.

If business operates in cycles—and more often than not it does—this decade, then, could see the emergence of new companies. There are enough areas where this can happen: life sciences, infrastructure, entertainment and consumer technology, green technology, even financial services.

The conglomerates, as well as the stars of the 1990s, are likely to go from strength to strength—and will probably hog the headlines—but at a personal level, it is the new ones that I am really looking forward to.

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