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 corporations 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.
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.

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Vishrut Pathak – Partner

Vishrut Pathak is an MBA from St. John’s University, with specialisation in International Finance and has a PGD from New York university in Financial Statement Analysis. He was Vice President at HNW Inc. for 6 years where he worked with leading institutional clients like Lord Abbett Merrill Lynch, CitiBank and Morgan Stanley. Prior to HNW Inc, he worked as a senior analyst for a growing Buyout firm in New York in hospitality industry (IT Hospitality Inc.). After working for 10 years with various financial firms in New York, he founded “Pi Square Investments” in Jan 2011. He has over 20 years of Investment Management and corporate finance experience and also Mentors at EDII (Entrepreneurship Development Institute of India) under CrAdLE platform.