Machine tools is a highly capital intensive industry involving continuous innovation. This industry received government protection through the restricted import policy and the loose patent policy of India till 1991. The situation has changed after liberalization and globalization. In the current fast-changing technology scenario and increasing competition, this sector requires regular investment, continuous improvement and innovation in processes and products. Though, the Indian manufacturing sector reported an impressive growth in the last decade compared to the previous decades, the opening up of the economy and reducing import duties have made India a lucrative market for multinational companies. The entry of these companies has made the market intensely competitive for the domestic companies. Researchers have stated that in such situation conglomerate firms are better capable to handle the competition due to the economic strength as compared to individual firms. This study aims to empirically validate the above views by comparing and contrasting conglomerate firms with individual firms in the machine tools Industry.

The Indian Capital Goods Industry existed for a long time in the form of Carpenters and Blacksmiths, basically serving the farming community. During the British rule, the growth of the industry in general was very limited, thereby offering limited or no scope for the manufacturing of capital goods. However, the seeds of the equipment manufacturing for the process plants were sown by those who undertook to carry out maintenance work of the then existing textile mills, paper mills, etc. Under the British rule, East India Company did see the establishment of some well-equipped fabrication workshops. However, they catered mainly to the structural requirement of road bridges and railways. During those days, the development of railways was very fast and the requirement of structural steel was huge. But the equipment and machinery required for those process units which existed was mostly imported. An organized effort was taken up in Western India by Seth Walchand Hirachand in 1908 and the Walchand Industries were established at Sangli. This was followed by the Kirloskar Oil Engines at Kolhapur started by the Kirloskar Brothers in 1910, which grew into Kirloskar Brothers Ltd. (Chemical Business, 1998).

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