The Economic Times
In December the RP Goenka group sold its stake in mobile and laptop retail chain RPG Cellucom to focus on “higher margin retail categories” . The metals-to-telecom Aditya Birla group is in negotiations to sell its electrical insulators business.
The go go years
During the bull run of 2000-2005 , amid increased global interest in the ‘India story’ and astonishing GDP growth, companies went on a high-octane drive of diversification beyond their central businesses. If in the days of the license raj it was the big business houses like the Tatas who could absorb the huge fixed costs of navigating the licensing system , the 21st century economic climate threw up business opportunities for all. “We mustn’t forget that Indian entrepreneurship, in the post-reform , free market environment, is still a nascent phenomenon that is less than a few cycles old,” says Chandra.
Some companies stayed focused: Infosys and Bharat Forge have been praised for their ability to stay invested in core operations. Others were lured by the high valuations in sunrise industries — like IT in the 90s, retail in 2000, and real estate and private equity recently. This kind of diversification is what Chris Zook, partner at Bain & Company and author of Profit from the core, describes as chasing the next “hot” topic.
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