T N Ninan: The Big Four

WEEKEND RUMINATIONS

Check the Fortune 500 listings, and you will find that the largest companies in the world tend to be in five or six key businesses: energy, automobiles, telecom, IT, banking and retailing. If you want to know who in India is positioning himself right, check which business group is where and you will get the answers. Let's start with the sector that is seeing a lot of the action just now, retailing. Mukesh Ambani has opened his account here, and now Sunil Mittal has tied up with Wal-Mart. Tata has a smallish operation in Trent, and reports suggest that the group may be thinking of a bigger play soon. One report also says that Tesco, on the rebound from failed negotiations with Mittal, might tie the knot with Kumar Mangalam Birla. That accounts for the Big Four of Indian business.

Look next at telecom, which has been the big story of recent years, and it should not surprise that the list is no different: Ambani (Anil, this time), Tata, Birla and Mittal. In energy, it is Ambani (both brothers now) and Tata. In automobiles, the biggest Indian player is Tata. The industrial houses are barred from banking, but the Big Four are active in the financial sector: Tata, Birla and Ambani are all leading players in insurance and mutual funds, while Mittal as the latest arrival at the top has not had the time yet to spread his wings. In IT, once again, Tata is the biggest. It only underlines the dominance of these four industrial groups (five, if you count the Ambanis separately) when you realise that all these are sunrise sectors that have seen either their private sector birth (or rapid expansion) in the last decade.

Are we looking at a tiny corporate elite capturing the bulk of the business opportunities in an economy that has begun to flower, and should that be a matter of concern? It would certainly seem that way if you look at some of the pointers: four of the seven companies with the biggest market cap belong to these groups, and two of the remaining three are from the public sector! The Big Four (or Five) account for between a fifth and a sixth of the total value of Indian companies, and about a third of the total wealth owned by India's 400 billionaires (that is without counting Ratan Tata, whose personal holding in his group is nominal). Between them, they probably also account for more corporate wealth than the combined value of all the companies owned by the Government of India.

Having pointed out all this, I would argue that there is no cause for worry. First, all the markets in which these players operate are competitive, and there is no real evidence of collusion or price gouging by exploiting market power. Second, there is no shortage of fresh entrepreneurial talent that is able to compete and emerge into the sunshine. Sunil Mittal is himself a prime example of this, as he has competed successfully against both Tata and Ambani in telecom, but there are others: Anil Agarwal of Vedanta, Tulsi Tanti of Suzlon, KP Singh of DLF (watch his market cap once he lists), the software icons in Infosys and Wipro, Mahindra, the Dhoot brothers ... Indeed, the whole point of India's billionaires is that the vast majority are first-generation entrepreneurs""people like Kishore Biyani of the Future group, which is into retailing, and Jignesh Shah of the Multi-Commodity Exchange, who has just become India's youngest, first-generation dollar billionaire.

None of this speaks of dominance to a degree that it becomes detrimental to the rest of the system, or harmful to others. In any case, the Indian economy is now more open to the world and so national dominance is not important beyond a point because more and more of the global giants are here: Suzuki in cars, Hutch in phones, IBM in software, Citi and HSBC in banking. Indeed, the majority of big consumer brands in the country belong to large, international firms. In other words, let the hounds run.