Wipro's Chairman Azim Premji: After a few bad quarters, Wipro's presence in many verticals is now beginning to pay off

The Merchant Of Speed
Wipro's prudence and its emphasis on verticals make it unique among Indian IT services firms.

First things first: Wipro ranks ninth among India's fastest growing large companies; its arch rival Infosys Technologies comes in at #21. The fact that Wipro grew faster (by this magazine's measure of fast growth, see page 118) should surprise most people. One reason for that surprise is the fact that almost a quarter of Wipro's revenues comes from its hardware and software-in-parts (West Asia and India) division Wipro Infotech, and its consumer care and lighting businesses. Although the company is quick to point out that these businesses are not laggards-for instance, Wipro Infotech grew revenues by 45 per cent and operating profit by 69 per cent in the nine months ended December 31, 2004, as compared to the corresponding period last year-the base effect makes the impact of these growth percentages negligible. So, how did Wipro do it? Well, one touchy-feely not-backed-by-numbers explanation is that the company's verticalised strategy (it is in more verticals than any other Indian software firm) is beginning to pay off. "Wipro has managed to positively project the length and breadth of its services offerings," says Partha Iyengar, Vice President, Gartner, an it research firm. Another, more grounded in numbers, one is that the company has achieved its growth more profitably than its peers (although the base effect, in terms of lower profitability to start with could play a hand here too). For instance, although Wipro's average growth in calendar year 2004, at 43.6 per cent, is not very different from Infosys' at 40.17 per cent, its average growth in operating profit in the same period is, at 54.95 per cent, significantly higher than Infosys' 35.47 per cent. There you have it.

-Rahul Sachitanand

Can you see the money? Gujarat Ambuja plans to double capacity to 24 million tonnes

Always Respected; Now Fast Too
Gujarat Ambuja rides the cement upturn to become one of India's fastest growing companies.

Analysts have always admired cement major Gujarat Ambuja. "I like Gujarat Ambuja because of its good management," says P. Ravishankar, Vice President, ICICI Securities. "Gujarat Ambuja is the most efficient cement player," adds Nilesh Shetty, Analyst, Pranav Securities. Therefore, it is only natural that the company benefit from the current upturn in the cement cycle to emerge one of India's fastest growing companies this year. Anil Singhvi, Executive Director, Gujarat Ambuja, is confident of maintaining this high growth trajectory: "Gujarat Ambuja has a tradition of growing well above the industry average, so we should be able to show an average volume growth of around 15-20 per cent in the years to come," he says. To achieve this, the company plans to increase capacity from the existing level of 12.86 million tonnes to around 23-24 mt in the next five to seven years. "This will be done through organic (increase in capacities at existing plants) as well as inorganic growth," says Singhvi. Growth means money, especially in an industry as capital intensive as cement, and the company has gone about addressing this requirement innovatively.

INDIA'S FASTEST GROWING LARGE COMPANIES

» National Mineral Dev. Corp. » Jindal Steel & Power » Bhushan Steel & Strips » Uttam Galva Steels » Great Eastern Shipping » Nagarjuna Construction » ABB » Tata Steel » Wipro » Gujarat Ambuja Cements

Gujarat Ambuja's Singhvi: With the Holcim deal done, he is now eyeing some acquisitions

Gujarat Ambuja's minority investment in acc (it had an effective stake of 8.3 per cent, acquired in December 1999) was benefiting the company only to the tune of marginal dividend payouts. And the company realised that it would have to spend around Rs 900 crore buying back the 40 per cent stake private equity investors hold in Ambuja Cement India (part of a promised exit). Gujarat Ambuja has gotten around both challenges by bringing in Holcim. As part of this, Holcim will buy out the private equity investors in Ambuja Cement India, the investment arm of Gujarat Ambuja, which already owns a 13.8 per cent stake in ACC, then acquire a 50 per cent stake in acc through a deal with the company and an open offer. The deal, which is cash neutral for Gujarat Ambuja, will see its effective stake in acc increase to 16.5 per cent. And the long-term relationship with partner Holcim will help Gujarat Ambuja in its own quest for growth. Though the JV (joint venture) deal has a provision for Holcim to buy out Gujarat Ambuja's stake in future, the chances of this look remote. "We have shortlisted Holcim because it believes in partnership (glo-bally)," says Singhvi. Since Holcim has good experience in the use of optimising and also use of alternate fuels, this will help Gujarat Ambuja reduce its fuel cost further. "With a strategic partner like Holcim, Gujarat Ambuja has access to many more foreign markets," says Rohit Singhania, an analyst at brokerage HDFC Securities.

With the Holcim deal over, the management's focus is back on Gujarat Ambuja Cement's balance sheet and Singhvi says the next few months could see "deals that will add value to our own balance sheet".

-Narendra Nathan

The Cement Cycle: Where Is It Headed?

Though a cyclical commodity, cement is a proxy for overall economic growth. that explains why the industry has been growing at around 1.2 times India's GDP growth rate in the past. With GDP growth expected to remain high (6-8 per cent) over the next few years, the cement industry should grow at an average of 10 per cent. However, this growth may be sporadic (very high growth in one year and smaller growth or even negative growth next year). On the supply side, drives to enhance capacity will be based on long-term demand projection. That is why Ravishankar of ICICI Securities says, "The cement glut of early 2000s won't be repeated again." With demand continuing to zoom and no big greenfield projects coming up (it takes around two years for a plant to be commissioned), the gap between supply and demand is fast reducing. Ergo, reasons Jaspreet Singh, an analyst at Mumbai brokerage Angel Broking, "Cement prices next year should be higher." That is good news for all cement companies.

Large And Fast

NMDC's iron ore mines in Bailadila, MP With the steel sector on a roll, the company is hard-pressed to meet demand

National Mineral Development Corporation

With the steel sector booming, it shouldn't surprise anyone that iron ore producer NMDC, a government-owned company (2003-04 revenues Rs 1,532.70 crore; 2004-05 nine-month revenues Rs 1,497.97 crore), grew the fastest in 2004. Much of that growth came from the domestic market (almost 70 per cent of the company's revenues come from this, as compared to 30 per cent in 1992), but there's still more to the growth than meets the eye, insists B. Ramesh Kumar, Chairman, NMDC, pointing to "a quantum jump in productivity" of around 25 per cent in the three months ended December 31, 2004 alone, and efforts to tap new markets with offerings such as low-grade ores. It shows.

-E. Kumar Sharma

Jindal Steel & Power

Another steel company makes the list, but in this case, the recipe for growth is very different from that of NMDC. Jindal Steel & Power (2003-04 revenues Rs 1,419.1 crore; 2004-05 nine-month revenues Rs 1,843.77 crore) has grown largely on the strength of integration and exports. The company owns iron ore mines in Chattisgarh and Orissa and generates its own power, partly on waste gases and coal. The consequent low cost of power (Rs 2.32 per unit) doesn't just lower its own costs, but also enables it to find a ready market for the excess generated. "The integration helps us operate efficiently," says Navin Jindal, Managing Director, Jindal Steel & Power. And exports help the growth cause too: they are up 506 per cent between April and December 2004.

-Supriya Shrinate

Bhushan Steel & Strips

In 2004, Indians bought more cars (the passenger car market crossed the magic one-million-units-a-year mark) and white goods (think washing machines, microwave ovens, refrigerators and the like) than ever before. And Bhushan Steel & Strips (2003-04 revenues Rs 1,574.4 crore; 2004-05 nine-month revenues Rs 1,937.5 crore), which counts companies from these two sectors among its largest customers (almost 50-55 per cent of its revenues comes from sales to original equipment manufacturers, largely automobile and white goods makers) laughed all the way to the bank. A new plant helped, admits Nitin Johari, CFO, Bhushan Steels, adding that it enabled the company add "value- added products like colour-coated sheets, high-tensile strapping and outer skin panels for white goods" to its product range. By March 31, the company hopes to have toted up exports of Rs 1,000 crore (up from Rs 389 crore last year), and next year, the benefits of a backward integration into hot-rolled coils (December 2004) should kick in.

-Supriya Shrinate

Uttam Galva's Miglani: The benefits of differentiation

Uttam Galva Steels

In 2001-02, Uttam Galva's revenues were Rs 596 crore. Last year (2003-04), they were Rs 1,221 crore. And by 2005-06, reckons Rajinder Miglani, the company's Chairman and Managing Director, they "should cross the Rs 3,000-crore mark". Part of the growth can be attributed to Miglani's opinion that "the learning process (an euphemism for the horrors the steel industry went through) is over and we can grow with confidence for several years from now." And part of it comes from Uttam Galva's approach of not competing with the heavyweights, but doing something different. "We can service our customers better (through quicker delivery schedules, the ability to deliver small quantities and the like)," says Miglani. That could explain why the company exports to 110 countries.

-Narendra Nathan

Great Eastern Shipping

With the shipping business booming, it is only natural that Great Eastern Shipping (2003-04 revenues Rs 1,351.82 crore; 2004-05 nine-month revenues Rs 1,494.01 crore), the largest private sector shipping company in India with a diversified fleet (in terms of territories, trades and kinds of ships), has grown, and how. To augment its growth, the company has embarked on a fleet-expansion drive. "Currently, we have a committed capital expenditure of around $353 million (Rs 1,550 crore)," says K.M. Sheth, Executive Chairman, Great Eastern Shipping. This will add 15 more ships (seven tankers and eight offshore support vessels) to the company's fleet in the next two years. And prevailing high shipping rates should help translate this volume growth into revenue growth.

-Narendra Nathan

Nagarjuna Construction Company

Like most construction companies in India, Nagarjuna Construction (2003-04 revenues Rs 762 crore; 2004-05 nine-month revenues Rs 741 crore) is growing. What's impressive about this company, however, isn't growth, but a business model that manages risks well enough to ensure sustainable growth. "We have a de-risked business model as we operate across seven business verticals," says Y.D. Murthy, Vice President (Finance and Accounts), Nagarjuna Construction. There's enough happening in all-industrial structures and buildings, transportation, water and environment, electrical, housing, property, and irrigation and hydropower-right now and Murthy is convinced that the ongoing National Highways project (the 7,300-km NSEW corridor) can only "open up new opportunities".

-E. Kumar Sharma

ABB India's Uppal: The power sector is on a roll and so is ABB

ABB

Forget the troubles of the parent, ABB India (January-December 2004 revenues Rs 2,305.6 crore; January-December 2003 revenues Rs 1,503.1 crore) is on a roll. This major player in power and automation technologies has benefited from the surge in the power sector in India. "The country's macro-economic fundamentals are encouraging and power sector reforms are gathering pace," says Ravi Uppal, Vice Chairman and Managing Director. Then, there's the current investment boom (companies are investing in fresh capacities) that bodes well for ABB's advanced automation technologies.

-Venkatesha Babu

Burning bright: Tata Steel is on its way to being an MNC

Tata Steel

It is riding the boom in steel demand. And how! Sales for the quarter ended December 31, 2004 jumped 37.87 per cent to Rs 4,090.46 crore, and net profit zoomed 99.14 per cent compared to the previous corresponding quarter. For the nine months to December 31, 2004, the topline grew 36.75 per cent and the bottom line, 129.61 per cent. The company's expansion plans are also progressing well. "We're on track to fulfil our vision of becoming a 15-million-tonne per annum, multi-location, multinational steel company by 2010," says T. Mukherjee, Deputy Managing Director of Tata Steel.

Arnab Mitra