DOMESTIC companies are emerging as symbols of success in India and abroad. A number of these companies have successfully leveraged their expertise to outgrow their Indian roots and make a mark in global markets. We take a look at those companies that have made it big outside India, while staying quintessentially Indian in nature, emerging as 'Indian MNCs' for the rest of the world.

When talking of global influence, IT is the first sector that comes to mind. But the Indian success story is not restricted to IT companies. Many non-IT companies are also making a mark in global markets. Indian companies are taking all possible routes to make their overseas presence felt - aggressively exporting from their low-cost operations in India, going in for overseas acquisitions, making greenfield investments in foreign markets, signing joint ventures or a mix of all these.

Pharma companies, which were the first to taste foreign shores, began their journey by exporting from their low-cost bases in India; they're now aggressively acquiring companies in their key markets overseas. A similar trajectory is visible in auto ancillaries, steel and metal sectors. India is only one of the major markets for these companies, which are expanding their footprints in overseas markets. In the pharma sector, Dr Reddy's Labs acquired betapharm Arzneimittel, Ranbaxy acquired Terapia, and Sun Pharma is trying to wrest control over Taro, unmindful of hurdles. The goal is to acquire global scale and pricing power to survive competition in the generic drugs space.

Bharat Forge and Amtek Auto have followed a similar model in the auto ancillaries sector. The former acquired a string of forging companies in Europe and North America in its quest to emerge as the global leader in its segment. Amtek Auto did the same to emerge as the world's largest manufacturer of ring gears used in automobiles.

Their footsteps have been followed by Crompton Greaves and Havell's in their quest to acquire technology and scale of operation in the electrical equipment business. Suzlon Energy is also aiming for the same, as it tries to fill the market share and technological gap between itself and its global peers in wind energy. In the metals space, Tata Steel bought Corus, while Hindalco bought Novelis. Textile is another sector where many Indian companies have emerged as MNCs.

Before we elaborate on the list of companies, let's elaborate on our selection criterion. We have taken the ratio of foreign exchange (forex) earnings to total annual sales as a criterion for choosing the set of companies that qualify as Indian MNCs. All companies with more than 40% of revenues coming from forex earnings qualify as MNCs, since a large part of their business can be said to be concentrated overseas. We have selected this cut-off to reduce the list to a manageable size.

We have excluded IT-ITeS, shipping and trading industries, since these are export-oriented sectors, where majority of the sales come from exports. Many more companies can qualify as MNCs on a more subjective basis. However, several potential Indian MNCs - Bharat Forge, Amtek Auto, Crompton Greaves and Havell's India, among others - were left out because either they don't consolidate their overseas subsidiaries, or they don't reveal a geographical break-up of their global revenues. To keep this list objective, we have not gone into that classification.

It is clear why the earlier-mentioned sectors have done so well abroad, as well as in India. In the pharma sector, Dr Reddy's Labs and Ranbaxy Labs among others, derive 48% and 46% of their revenues, respectively, from forex sales. Strong technical know-how, low cost of production, low R&D costs and innovative scientific manpower are just some of the reasons for the emergence of India as a force to reckon with. The domestic pharma sector is growing at a rapid pace and will continue to produce more MNCs as more companies target global markets.

In the metals sector, nine companies have made it to the list, excluding Tata Steel and Hindalco, since they have not yet integrated their acquisitions. Most steel companies in the current list, such as Jindal Stainless, Uttam Galva and Jindal Saw, are present in the value-added exports market with a large part of their production meant for overseas markets. The same is the case for Sterlite Industries. Graphite India and HEG, engaged in the business of graphite electrodes, are niche players that need to be present in multiple markets. At the same time, there are companies like Nalco, Sesa Goa and Ashapura Minechem in the mineral exports business, which deploy India's abundant mineral resources to maximise exports. With Tata Steel and Hindalco joining the list, the number of metal MNCs will only increase.

The textile industry is the third-largest group among Indian MNCs, with seven companies making it to the list. Arvind Mills has a large export presence in overseas markets, while Spentex has expanded rapidly via the inorganic route. Up to 85% of the company's capacity is due to acquisitions made in the past 3-4 years. The acquisition of an Uzbekistan company accounts for almost 40% of Spentex's capacity.

There are several reasons for the emergence of Indian companies as MNCs. Traditionally, Indian companies have been operating in a conservative manner. This means debt levels have been low and lots of free cash is available. More importantly, the opening up of the Indian market has allowed companies to think globally and break free of several regulatory shackles which were in place since independence. Cash flows have been helped to a great extent due to liberalisation, allowing Indian companies to tap into foreign debt and stock markets. The large, talented and cheap labour pool available in India gives companies a major advantage and helps them to remain cost-competitive amidst cutting-edge technology.

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