A business group, in general, is a legal entity, which includes the parent company and
its subsidiaries; for example TATA group is a business group in India. It is not necessary
that the relationship between the firms under one group is always formal, it can also
be informal. James Mclean defines it as "a cluster of legally distinct firms with a
managerial relationship." Business groups are generally started by trust or family and bound
together by equity cross-ownership and common board membership (Chang and Choi, 1988;
and Encarnation, 1989). Groups, through inter-linkages, would permit its affiliates to use
its technology, market opportunities, and innovative strategies (Keister, 1998).
Group affiliates generally rely on each other for financing and common brand equity
(Dutta, 1997).
The non-metallic mineral products category consists of cement, glass, gems and
jewelry, refractories, ceramic tiles, abrasive, granite and other non-metallic products
industries. The industries falling in this category are mostly export-based and contribute about
3-4% of total GDP. All the above industries have seen manifold growth post liberalization.
The exports of the industries experienced approximately 200% growth after 2002. One of
the important industries of the group is the cement industry.
Cement industry of India is the second largest producer of cement in the world,
behind China. It contributes about 1.3% of total GDP. The industry has been experiencing a
boom for the last few years due to growing real estate business, increasing investment in
the infrastructure and overall development of the Indian economy. The rationale behind
the selection of this industry is that since non-metallic mineral products category consists
of important industries of manufacturing sector (which contributes almost 15% to the
GDP) and contributes 3-4% to the GDP, it is interesting to see the performance of the
firms during different business cycles (Growth, Recession, etc.). |
