The crisis that India Inc had faced in the mid-1990s was the inflection point that catapulted the corporations into the global league and paved the path for transforming some of them into multinationals.
Both Ratan Tata, chairman of the Tata Group and Baba Kalyani, chairman of Bharat Forge agreed on this. They were participating at the "Southern Multinationals: A Rising Force in the World Economy" conference, organised by the Financial Times and International Finance Corporation in Mumbai on Wednesday.
The discussion was initiated by Quentin Peel, international affairs editor of the Financial Times. "For us the tipping moment came when the British government put a price control on publications. We had to start overseas editions," he said. Peel was chairing the session.
After Tata experienced the "largest ever loss the country had ever seen in auto sector," recollected Ratan Tata, "we decided to go beyond the shores of India." He, however, prefers to call it internationalisation rather than globalisation in regions "where we will get a leadership position".
Tata also wants to play a role in the development of the local community.
"We would like to be viewed as a company that reflects the culture of that country with ownership from India," he said citing the example of Tata Consultancy Services, which today has a presence in 30 countries.
Tracing the 'crisis driven' growth of Bharat Forge, Kalyani said, "The point of inflection came in 1996 when the industry was in a downturn. There were large capacities but no business. We decided to export and by 2001, we had met with more success than we expected. We decided to go global."
Since then Bharat Forge has acquired three facilities in Europe and one each in China, the US, Scotland and Sweden.
While agreeing that many of the multinationals from the developing world were driven by a crisis, Shirish Sankhe of McKinsey said it may not be the case always.
He predicted that in the next 50 years, half of the top 100 global companies will be from the developing world. "Companies such as Haier, Infosys, SabMiller and Reliance represent the third era of globalisation," said Dr Sankhe.
He referred to the 'seven enablers' that could fuel the southern multinationals. They include a strong home market position, global aspirations, rapid fire deal making and a transferable and distinct capability.
Tata agreed that the starting point for an international company is its strength in its own country. "There is an enormous importance of a company's brand. But Indian companies need to realise and it is important that we go beyond the shores. During the crisis in the '90s, we realised that we couldn't depend on one economy," he said.
Companies from the developing world need to achieve the initial mass to be global company, said Kalyani. Another challenge, he said, "is to realise that people are the key driver of growth. Companies need to have world class human resource which has the ability to lead in adversity."