Hope Over Despair
Just as Business Today has assiduously chronicled the rise and fall of India Inc year after year, this edition of BT 500 in your hands has a legacy that dates back 27 years. Such a long horizon not only tests robustness of businesses and longevity of firms, but also narrates fascinating tales. For instance, just the 10-year trend of BT 500 reveals that six of the Top 10 firms have managed to retain their position among India’s 10 most valuable companies. Even though their ranks have swung wildly, No.1 Reliance Industries stayed at the top.
If HDFC and HDFC Bank have consolidated from ranks 8 and 10 to 5 and 3 today, ITC has stayed at No.6, TCS has climbed from No.4 to 2, Kotak Mahindra Bank has risen from No.31 to an astounding 9 now and Hindustan Unilever from 14 to 4. Meanwhile, Larsen & Toubro slipped from No.5 to 12 and Infosys from No.3 to 7.
The other big trend is the decline of PSUs. Since 2011, when we integrated PSUs into the main BT 500 list, the number of PSUs in the rankings has fallen from 12 among India’s 50 most valuable firms to just nine today. Coal India, which was newly listed then, has fallen from No.2 to 18 today; ONGC from No.3 to 13; and, NTPC has fallen from No.9 to 22. SBI, No.8, is the only one among the Top 10.
But in this 2019 edition of BT 500, corporate India showed its mettle against enormous odds such as regulatory speed breakers – GST and DeMo, financial squeeze and economic downturn. All of which created an uncertain economic environment and stasis.
Yet, total income of BT 500 companies rose 16.4 per cent in 2018/19 against 11 per cent in 2017/18. As they tightened their belts, profit after tax recorded a healthy 19.4 per cent growth against a 12.2 per cent decline in 2017/18. Still, poor sentiment contributed to 1.5 per cent fall in overall market capitalisation of BT 500 companies – a first in seven years. It had risen 23 per cent in the last edition.
But it is in tough times that corporate strategy, risk management and innovation are put to test. Top 10 companies consolidated their presence in BT 500, accounting for 31.3 per cent of overall market cap as against 26 per cent in the 2018 edition. Eight of them recorded double-digit growth.
The leader, Reliance Industries, once a one-trick pony, is now the epitome of multifactor business diversity. It relentlessly focussed on domestic markets when other large firms ventured abroad and got singed. Chairman Mukesh Ambani’s huge bets on retail and telecom are beginning to deliver results just when refining and petrochemical margins have begun to dwindle.
But those with faulty strategy suffered. Overleveraged balance sheets, poor governance standards, scams and credit squeeze caused some mighty falls. Vakrangee, Dewan Housing, PC Jeweller, three Anil Ambani firms – Reliance Capital, Reliance Power and Reliance Infrastructure – as well as Indiabulls Real Estate and Rain Industries saw an erosion in their market cap by 50-80 per cent.
The good news, though, is that within India Inc optimism still overshadows pessimism; enthusiasm supercedes apathy and hope continues to triumph over despair. That marks the vital difference between the mood at the end of a tunnel and at the dawn of a new era. Our spiralling stock market clearly points to the latter than the former.