To become a global powerhouse, Indian business groups need to look out for is the changing geopolitical world order

After Jack Welch became chairman and managing director of General Electric Co (GE) in 1981, he shut factories, cut jobs and closed non-performing units in a ruthless consolidation drive.

The drive cost thousands of jobs, but Welch, a legend of American business, had the backing of shareholders to see the process through. Welch gained the sobriquet Neutron Jack after the neutron bomb, which spreads radiation to kill people, but spares buildings.

GE’s consolidation marked the start of the decline of American conglomerates, or sprawling multi-industry, multinational business groups with independent subsidiaries; it’s a process that has continued for a quarter century with one set of conglomerates replacing another.

In India, too, many family-owned conglomerates like the Mafatlals, the Thapar Group, Videocon Industries, owned by the Dhoots, and Walchandnagar, controlled by the Doshis, have faded in recent decades. True, other large multi-generational Indian groups like the Tatas, Aditya Birla Group, Godrej and Mahindra and Mahindra have not only survived, but thrived. With a significant share of revenue generated overseas, they have become the new global Indian MNCs.

Away from multigenerational family businesses, first- and second-generation groups like Mukesh Ambani’s Reliance Industries Ltd, Gautam Adani’s Adani Group and Sunil Mittal’s Bharti Enterprises diversified to become the new giants of Indian industry. Chandrashekhar Sripada, Clinical Professor (OB) at Indian School of Business (ISB), says: “I think the combination of family orientation, the economic climate of the country, and the sheer gravitas and vision of leaders who wanted to make contributions in every field led to the growth of Indian conglomerates.” Jubilant Group, led by the Bhartias, DCM Shriram and DS Group fall into a third group of conglomerates; they aren’t as large as those in the first two, but possess the potential to get there.

Professionally Managed Companies

Distinct from all the family business groups are widely held, professionally managed companies like ITC Ltd and Larsen and Toubro Ltd (L&T).

ITC runs companies in Fast Moving Consumer Goods (FMCG), paper boards and packaging and agricultural businesses along with independent companies in infotech and hotels. L&T has a dozen companies in engineering, realty, infotech and software development, construction, technology and finance. Finally, mirroring a unique group of global digital giants like Alphabet Inc. (Google) and Amazon.com Inc. are Indian Internet companies, of which Info Edge (India), the parent of naukri.com, is an epitome with a presence in recruitment, matrimony, real estate and education.

Says J. Ramachandran, retired Professor of Strategy at the Indian Institute of Management, Bangalore: “For all conglomerates, the ability to marry good governance with the right competitive strategy is the key to success.”

Key Growth Drivers

What are the key drivers for Indian conglomerates today? They include macro factors like the Indian economy’s stage of development to more specific elements like leadership, clarity of purpose, governance standards, global competitiveness and successful change management.

It was once said Ambition + Money makes Ambani. Today, not only is this axiom true of Reliance Industries, but applies equally to other large groups like the Tatas, Mahindras, Aditya Birla, Bharti Enterprises and Adani Enterprises.

Many large units of Tata, Godrej, Bharti, M&M and Adani have ventured successfully into not only the developing countries of Africa and South-East Asia, but also the developed economies of North America and Europe, and even China. Today, a substantial portion of the $100 billion Tata Group’s revenue come from outside India with the United States and United Kingdom contributing the most.

Says Professor Irfan Rizvi, Professor at the New Delhi-based International Management Institute: “I believe that with the business opportunities that are there, India Inc. is going to thrive. Take the example of the Tata Group’s acquisition of JLR (Jaguar Land Rover). “There was some initial resistance, but then it died down because they (opponents) also realised that no other company is going to invest and that JLR has to survive, especially since lots of people have their livelihood at stake.” In these groups, professional leaders like N. Chandrasekaran (Tata), Anish Shah of M&M and Gopal Vittal of Bharti demonstrated that not only could they deliver results but also command the trust of all stakeholders.

Nikhil Prasad Ojha, Partner & Head of Strategy Practice, Asia-Pacific, Bain & Company, says, “In India, conglomerates outperformed pureplay companies because they made changes in their portfolio mix (entering new, high-growth sectors and exiting some old ones) and exited via bankruptcies. Conglomerates also enjoy a cushion against downturns.”

Clarity of Purpose

Relatively mid-level business families like the Bhartias of Jubilant and DCM Shriram restarted on a clean slate after family feuds. Non-family groups like ITC and L&T diversified into new areas and succeeded.

Beyond ambition and growth, many of these groups have a clear purpose, which helped them in building their reputation, and social commitment.

The Tatas stayed true to the group’s articulated responsibility towards society and nation. Two-thirds of Tata Sons’ equity is held by the non-profit Tata Trusts, which funnels funds into 15 areas from education to nutrition and environment to energy.

Project Nanhi Kali, founded in 1996 at K.C. Mahindra Education Trust by Anand Mahindra, envisioned a world where girls, despite patriarchal challenges and societal biases, are empowered through education. Since 1996, this project has covered 870,000 girls.

The Rs 10,000 crore DS Group champions the role of women both within its corporate structure and through extensive community initiatives, demonstrating a commitment to gender equity.

Strategic Redirection

Beyond leadership, strategy and the ability to implement strategy successfully is an important pre-condition to conglomerate growth. And diversification, both related and unrelated, is a key factor.

Since Anand Mahindra took the reins of M&M from his uncle Keshub Mahindra, he has redirected the group from automobiles, tractors and farm machinery to finance, hospitality, real estate, agriculture, renewables, defence and digital.

DS Group’s diversification is primarily rooted in leveraging its strengths in flavours, fragrances, and knowledge of Indian consumers and their taste buds. Most of its businesses are natural extensions of its expertise; it ventured into hospitality when it acquired a hotel in 2000.

Says Rajiv Kumar, Vice Chairman, DS Group: “The DS Group maintains a clear focus on its core strengths, expanding mainly within food and FMCG verticals where it has established expertise and market leadership. Our non-food diversification is measured and strategic.”

Digital Conglomerate

The term conglomerate is usually used in the context of physical, brick-and-mortar companies. With their rapid growth, Google, Apple, Amazon, Meta and Microsoft acquired complex structures befitting conglomerates, offered diversified products and had the potential to run into conflict with regulators.

Cut to the digital landscape in India. One of the biggest online companies in India that can be truly called a digital conglomerate is Info Edge, founded by Sanjeev Bhikchandani and Hitesh Oberoi in 1995. With about 6,000 employees, the company focuses on recruitment, matrimony, real estate and education. With the large amount of cash generated by naukri.com, the parent has invested in about 100 start-ups. One of its biggest bets is an early investment in Zomato, now Eternal.

How will the group grow in the next decade? As a company, it has decided not to get into new verticals but strengthen and consolidate the existing ones. Artificial Intelligence (AI), which has made its presence felt in the past couple of years, will increasingly play a role in Info Edge’s jobs and recruitment business. Says Hitesh Oberoi, Managing Director and CEO: “At one level, many jobs will be lost as AI will make the ecosystem far more efficient. At another level, experts say that AI can create many new jobs. For example, in our resume writing service and the job interview service, we use AI. We do not know right now how it will play out. It is an opportunity and a threat. But one thing we know: it will be disruptive.”

What Future Holds

One development Indian companies need to look out for is the changing geo-political world order. These include wars in parts of the world, the impact of Donald Trump’s new tariff regime, and the realignment of countries like China, Russia, Turkey and North Korea. India’s role in such developments and ability to keep its economy healthy will be critical.

Says IMI’s Professor Rizvi: “Indian conglomerates have to be adaptive to the changing situations. If not, some of them will survive and others will die. That is the law of nature that the fittest will survive.”

Generational Shift

At a number of conglomerates, the new generation is playing a more important role than ever before. At Reliance Industries, Mukesh Ambani’s three children, Isha, Akash and Anant, have been brought onto the board of directors; they also play operational roles in group companies. Similarly, in the Aditya Birla Group, Kumar Mangalam Birla’s two children, Ananya Birla and Aryaman Vikram Birla, have also been brought onto the board of directors of the holding firm, Aditya Birla Management Corp.

You will surely hear more about the new generation of business leaders and the groups they run as India makes progress towards becoming a developed nation by 2047, a full century after Independence—an aspiration articulated by the Narendra Modi government.