Business Today

Methodology: The ranking process

Print Edition: Nov 11, 2012

As in 2011, private and public sector companies have been clubbed to produce a single, comprehensive ranking.

This is the 21st year of the BT 500 list, an annual ranking of the most valuable companies in the country, begun the same year Business Today was launched, 1992. The current year has been a tough one for Indian business with the global economy going through a rough phase. It has been a year of economic slowdown, flattening growth rates, fiscal deficit and current account deficit concerns, and lethargic stock movements. However, a recent ray of hope is the flurry of reform announcements begun in September.

Last year we made a significant change in our methodology. Until then, private companies and state-owned enterprises had been ranked separately. In 2011, we clubbed the two to produce a single, comprehensive ranking. We have followed the same methodology this time too and, as was the case last year, we have a number of public sector companies in our list with high valuations - Coal India, ONGC, Indian Oil Corporation and others.

We have ranked listed companies on the basis of their average market capitalization for the first half of the financial year - from April 1 to September 30. We have also ranked them separately on other financial parameters, each time comparing their performance this year to that of last year.

For our data, we relied on Prowess, the database of the Centre for Monitoring Indian Economy (CMIE). We screened all the 5,051 companies listed on the Bombay Stock Exchange. As a primary filter we excluded illiquid companies which had traded on less than 20 per cent of the total number of trading days - or less than 25 days out of the 126 trading days - between April 1 and September 30. We were then left with 3,146 companies, of which we ranked the top 1,000. The main ranking was assigned on the basis of absolute market capitalization.

The primary financial parameter in the BT 500 rankings is market capitalization which captures the markets' sentiment towards each company.

But to broaden the scope, we have separately included total income, net profit, total assets, net profit as a percentage of total income, return on net worth (RONW), return on capital employed (ROCE), and earnings per share (EPS). While calculating these, the financial year ended March 2012 has been considered for most companies.

When exceptions have been made, they are mentioned in the footnotes accompanying the tables. We have used standalone numbers - as against consolidated results - for all companies.

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