Thapar Group – The Inorganic Expansion Route

India’s brand equity in the international market has been substantiated with overseas business expansions of Indian conglomerates like the RPG Group, Thapar Group and Bharti Group. Historically, these conglomerates have emphasised on overseas JVs, mergers and acquisitions for diversification purposes. Their success stories have been talked in volumes at seminars and also served as perfect case studies of successful business ventures of Indian companies abroad.

One such interesting story is the success of the Thapar Group with special focus on the Gautam Thapar promoted Avantha Group. The two arms of the Avantha Group – Crompton Greaves and Global Green are the only companies of the Group that have ventured overseas. The foresight and vision of Gautam Thapar converged with the business acumen of S.M. Trehan – Member of the Avantha Leadership Team and Vineet Chhabra – Group CEO acted as a catalyst for augmenting revenues and brand penetration for the Group companies overseas as well as domestically. It is understood that this group’s success overseas was attributed due to timely decision making, planning and proficient execution.

However, the noteworthy fact is that Crompton Greaves, the major revenue reaper for the Group, was actually a loss making company in mid 2000s. Crompton Greaves and Global Green ventured into the European and the US markets in 2005 at a time when the macro economic conditions were favourable for the transformer business and horticulture consumer products. The two companies made a series of acquisitions of companies like Pauwels, Ganz, Microsol, Societe Nouvelle de Maintenance de Transformateurs and Intergarden which were loss making but had a strong brand presence in different European and US markets. These timely strategic acquisitions by the stalwarts helped the companies expand their global footprint and increase brand presence. It also helped them leverage the acquired company’s customer network, technological expertise, manufacturing facilities in different geographical locations and gave access to their product lines.

These strategic decisions have increased the group’s revenues manifold in addition to the brand presence that it enjoys today. The group’s overall revenues in FY08 exceeded USD 8.2 billion, with the majority derived from the Avantha group, which contributed USD 6,773.7 million in FY08. The modus operandi for overseas expansion through acquisitions has turned the tables around for the Avantha Group. This is another group which is flourishing in the overseas markets and which is known for the managerial decisions taken by its leader. The Group has certainly witnessed a successful turnaround which is amongst a very few in India.