Of the top ten companies in the world by market capitalisation, four are from the BRIC countries. And of the four, three are from China and one is from Brazil. These are: Industrial and Commercial Bank of China, PetroChina, China Construction Bank and Petrobras. Such a representation from the BRIC gang shows how different the world economic order has become after the global meltdown. Equally surprising is the absence of any Indian company from this list, by a long shot.
Market capitalisation is a very fickle method of making up a pecking order but if one makes allowance for relative sizes then the numbers are a fairly cool way to arrive at conclusions.
The market cap numbers show that these companies could soon converge around the $400-billion mark, a sort of global scale of heights (quite similar to the way mountain peaks higher than 8,000 metres are considered part of an exclusive club). Judging by that scale, Indian companies, both in the public and the private sector, are dwarfs. RIL barely touched $68 billion and the biggest in the public sector, ONGC, is at $57 billion.
One interesting facet of the BRIC global gang is that a majority of the companies are from the financial, mineral and energy sectors. This does not apply to the companies from the developed world. GE, for instance, has been the world leader for a long time and so have been Apple and Microsoft. In India, like its BRIC peers, the biggest companies are from the financial, mineral and energy sectors. The other aspect of the BRIC list, even if we go by the global top 20 companies, is that most of the companies are state-controlled.
This is not surprising. As successive UNCTAD reports have pointed out, transnational companies from the new areas of the globe depend on state support to expand beyond borders. In any case, the financial sector in all these countries is dominated by the state. The same holds true for the extractive sectors.
Yet, at the same time, when China, and to a lesser extent Brazil, has widened the support to its companies to think big, Russia has lost out in a bruising war with its oligarchs. And India has just buried itself in building up rules that cripple all the leaders.
Each government has decided to interfere in the minute details of the working of the companies but abandoned them to fight an often losing battle in the international arena.
So, ONGC and NTPC have to check back for each investment decision, forget their Navratna status; but when Sudan is carving itself into two nations, OVL will be lucky if it manages to retain its royalty payment from the successor regimes. The pipeline that OVL built in the country runs through southern Sudan, which is waging a bitter war with Khartoum, with whom OVL had signed the deal. Going by the acid write-ups in the blogosphere on the split, the southern nation could take a fresh, hard look at the deal. Until now, the petroleum ministry has made precious little comments on the issue, busy as it is, trying to figure out if ONGC needs to pay royalty post the Cairn-Vedanta deal.
Managements of all major public sector enterprises are unanimous that it is impossible to push big deals abroad, unless the government, as the actual owner, comes with big time support through additional sweeteners. We have the money to offer these packages but that requires an approach that goes way beyond the turf of any single minister. The government has to ride behind the deals and cannot leave it to the diplomatic skills of individual ministers and bureaucrats from New Delhi. There is no evidence that either this government or its predecessors even thought through these possibilities.
Instead, the government has relied on a safety-first approach where more than one public sector company is roped in to share blame for a deal gone sour, rather than reap the benefits. This was most evident in the way a five-company child, ICVL, handled the Riversdale bid. It was evident that to clinch the deal someone had to take quick decisions. But there was no reason why any of the promoter company chairmen will put their heads in the noose at the fag end of a successful career to push Indian energy needs first, by taking quick decisions.
There can?t be a stronger contrast with the relentless march of PetroChina to satisfy China?s energy needs or of Brazil?s Petrobras, each of which are massively underwritten by their respective governments.
It is this crippling attitude that has stretched beyond the public sector to visit the promising private sector entities by now. For instance, the RIL-ADAG spat has obviously done the former little good, with the government meddling up the rules of the game in the sector thoroughly.
Of course, there could be an argument whether it is necessary for an economy to throw up such massive heavyweights and whether there is any need to set a time frame for it. But, when an economy graduates into the world leader club, it is certain that some companies from the heap will make their presence felt. So far, no names from India have shown such promise. In the same time period, others have reached a far higher scale of operations, which, in turn, has created a very positive spin off for their economy. If it does not happen for the Indian economy, one would think the conditions available within India are not promising enough for such a scale of growth. Some years ago, finance minister P Chidambaram had wondered why no Indian bank had managed to make it to the top 50 league, which raises the question?are we reading the growth story wrong?
subhomoy.bhattacharjee@expressindia.com
