India's fastest growing large companies
Companies with revenues in excess of Rs 2,000 crore that grew the fastest in 2007.
1. HCL Infosystems
How does the information technology revolution begin? As a box, and that explains why HCL Infosystems has been on a burn. As the IT and communications market (read software services, outsourcing and the mobile boom) has exploded in India, so has HCL’s own growth. From Rs 2,705 crore in 2002-03, it now logs Rs 12,599 crore in revenue (annualised, ‘07-08) while net profit has soared from Rs 93 crore to Rs 313 crore (annualised) in that time. That translates into a compounded annual growth rate (CAGR) of 45 per cent. Interestingly, it’s the cellular boom that has been driving HCL’s growth more than the growth in computers and servers. For example, in 2003-04, its revenue from its telecom and office automation (primarily a distribution business) were a relatively modest Rs 2,877 crore, but at last count it stood at a whopping Rs 9,259 crore—a CAGR of over 30 per cent. Says Ajai Chowdhry, HCL’s co-founder and Chairman: “India is still an undersold IT market and there is immense upside for our business.” In the years ahead, he expects HCL’s systems integration business to drive growth. “Over the next 10 years we expect it to become a $2-billion business for us,” he says.
2. IVRCL Infrastructures
E. Sudhir Reddy
Five years ago, if he landed a RS 200-Crore infrastructure project, E. Sudhir Reddy would be giddy with excitement. Today, the Chairman and Managing Director of Hyderabadbased IVRCL Infrastructures and Projects (IVRCL) juggles projects worth Rs 800 crore without batting an eyelid. While that’s a sign of the growing investment in infrastructure projects in the country, it’s also evidence of the 21-year-old company’s shift into top gear. Starting out as a builder of small water-based projects, IVRCL has diversified into big-ticket projects related to road, building construction, transportation, power, water supply and irrigation. The happy result is that it has been growing its top line at a CAGR of 52 per cent since 2004-05. Today, nearly half of its top line of Rs 3,700 crore comes from irrigation and water projects, a little over one-third from transportation and power, and the rest from building and construction. Reddy attributes his company’s rapid growth mainly to three things: entry into long-term supply contracts, delegation and employee motivation through ESOPs. “Quick reaction time to problems with a feet-on-the-ground-approach has also helped,” he adds. A case in point: its Rs 315-crore Veeraman Drinking Water Project in Chennai that was completed in a record 15 months (against the norm of 21-24 months) despite certain challenges. With an order book of Rs 13,000 crore, Reddy will need lots more of his quick wits.
—E. Kumar Sharma
3. Shriram Transport
Like the trucks it finances, it’s been a long haul for Shriram Transport Finance (STF). Founded in 1979, it wasn’t until the late 90s that the Mumbai-based firm could prove the legitimacy of its business model, which centred around financing commercial vehicles. “Everyone considered this business high risk because the loans had no collateral to talk of,” says R. Sridhar, STF’s Managing Director of 22 years. Today, it’s a different story. Everyone from private equity investors (TPG Newbridge and ChrysCapital) to hedge funds (Tiger Global and Ridge) are investors in STF, whose asset under management has grown from Rs 2,500 crore in 2001-02 to Rs 12,500 crore. “We expect this figure to double by 2010,” says Sridhar. To stay on the growth track, Sridhar is looking at more opportunities. STF has started offering top-up loans for tyres and engine replacement. It has tied up with other partners such as Axis Bank and HPCL to offer credit cards for its customers; it has a deal with Ashok Leyland for freight exchange and freight bill discounting (a bridge financing service); and an arrangement with sister company Shriram Life for life insurance products for its customers. “We feel that these truck owners are the unsung heroes of the Indian economy,’’ says Sridhar. Perhaps, STF too.
4. Idea Cellular
Although it’s been around for more than a decade now in different avatars, Idea Cellular is, effectively, just two years old. That’s when the Aditya Birla Group bought out the Tatas in the venture and hit the road with a vengeance. Result: While it took Idea Cellular (earlier called Birla-Tata-AT&T) 10 years to rack up its first 10 million subscribers, it took less than two years to add the next 10. Today, with a customer base of more than 24 million, Idea has a market share of 16.2 per cent in the 11 circles it operates in (end of March, 2008). In 2007-08, Idea’s net sales grew more than 54 per cent to Rs 6,719.99 crore and PAT by a jaw-dropping 108 per cent to Rs 1,044.39 crore. “We were able to expand the market by reaching out to previously unconnected areas. Our infrastructure sharing and licensing has also contributed to profitability,” explains Rajat Mukarji, Chief Corporate Affairs Officer, Idea. Last year, Idea grew its subscriber base to 24 million from 14 million—a growth of 70 per cent. However, average revenue per user (ARPU) continues to be a(n industry-wide) problem. In March 2007, ARPU was Rs 317 and by the quarter ending March 2008, it had fallen to Rs 287. With major players, including Idea, dropping call rates, ARPUs may fall some more. Idea isn’t too worried. It plans to focus on value-added services besides pushing farther into unconnected areas to keep growing.
5. Simplex Infrastructures
It’s not just riding the infrastructure wave, but doing a good job of ‘wave hopping’ to keep surfing. Simplex Infrastructures’ diversified portfolio within infrastructure—it is into urban infrastructure, industrial construction, marine, power, and oil rig projects—has ensured that it stays immune to a slowdown in any one segment. That explains why its three-year CAGR is a robust 39 per cent. “We have been progressive and have maintained our robust growth consistently,” says B.D. Mundhra, Chairman and Managing Director of the Kolkatabased Simplex.
What’s also impressive is that of its order book of Rs 10,100 crore, overseas orders account for almost a quarter. Mundhra is now planning forays into the mining sector, possibly in collaboration with a foreign firm. “Mining operations involve huge earth-moving and material handling, which are our core competencies. Tying up with a reputed mining company will give us the synergy to take up mining projects in the country,” says Mundhra.
—Ritwik Mukherjee 6. India Cements
The rapid growth India Cements (ICL) is witnessing today (profit up 72 per cent and sales up 52 per cent during April-Dec ‘07) came at a cost—Rs 1,500 crore plus three years of acute suffering. It all began in 1997-98 when the company decided to become a dominant player in South India and embarked on a series of hostile acquisitions. By 2000-01 its capacity had jumped from 2.6 million tonnes to over 8 million tonnes. This expansion cost the company Rs 1,500 crore, which was predominantly funded by debt. Even as it got the expected market dominance, the unexpected happened. A sudden surge in capacity expansion resulted in supply far exceeding demand. Cement prices plunged, losses piled up and ICL struggled to meet its debt obligations. It opted for a corporate debt restructuring scheme, cut costs and exited non-core businesses to stay afloat. When supply began to ease in 2003-04 and cement prices recovered, ICL was in the best position to take advantage of the situation. The company exploited its large capacity to the hilt recouping its accumulated losses of over Rs 300 crore in just one year. “Our vision to acquire capacities in late 1990s even if it meant taking on additional debt has paid off handsomely,” says N. Srinivasan, Vice Chairman and MD, ICL. The company is on the move again, this time in North India. “When our greenfield projects in Rajasthan and Himachal Pradesh go on stream, we will become a pan-Indian player with a capacity of 18 million tonnes,’’ he adds. That’s some turnaround.
7. Pantaloon Retail (India)
Kishore Biyani must rue the fact that there are only 24 hours in a day; otherwise, this ‘rajah of retail’, who entered retail with a trousers brand in 1987 but now runs the biggest private retail entity, would be growing faster still. In the last three years, Pantaloon Retail, which operates a clutch of formats including a departmental store (Pantaloons), hypermarket (Big Bazaar), and malls (Central), has added 7 million sq. ft over the last three years, taking its retail space to a little more than 8 million sq. ft by June 08 and top line from Rs 1,072.54 crore in 2004-05 to an estimated Rs 5,714 crore in 2007-08. In that time, its market cap has risen from Rs 2,538.75 crore as on May 24, 2005 to Rs 7,521.32 crore as on May 23, 2008 (down from a peak figure of Rs 12,913.36 crore on January 2, 2008). Says Biyani: “We are still the largest in every category that we operate in and today 25 per cent of the retail space in the country is occupied by us,” According to analysts, one of the reasons for the good performance is Pantaloon building new businesses through subsidiaries, thereby allowing them to raise money independently. Some examples include Home Solutions and Future Bazaar, which began as part of Pantaloon retail and Future Group but are now stand-alone formats. With the big corporate players (see page 62) redrawing their strategies, Biyani’s leadership position will come under attack. The future for Biyani, then, does look a bit tense.
8. Larsen & Toubro
It’s a bit surprising that Larsen & Toubro should be on this list at all. After all, with Rs 17,566 crore in annual revenues, it’s already big. So, cranking up growth at rates of 50-100-plus per cent that most of the (smaller) companies in this listing have done, is no mean task for L&T. Yet, India’s best-known engineering company is on a roll. Its core business of engineering and construction notched a growth rate of 49 per cent to Rs 12,716.99 crore in the nine months ending December 2007. L&T’s electrical business and its machinery division, too, did well with growth rates of 33 per cent and 36 per cent, respectively. Shipbuilding and railways are new thrust areas for L&T, and it is scaling up its power business in anticipation of significant power generating capacity addition over the next five years. Says A.M. Naik, Chairman and Managing Director, L&T: “While maintaining our focus on the core business areas of infrastructure and hydrocarbon, our thrust will be on the power sector, including generation, transmission and distribution, critical equipment manufacturing, shipbuilding and railways.” With India building itself up, L&T has plenty of work ahead.
9. Infrastructure Development Finance
In March this year, infrastructure Development Finance Company (IDFC) snapped up Standard Chartered’s asset management business for Rs 820 crore. If at first blush that didn’t seem a logical step for an infrastructure finance company, it’s because Rajiv Lall, IDFC’s MD & CEO, isn’t thinking like an ordinary infrastructure financier. “Our business strategy is to be India’s specialist infrastructure institution with an infrastructure-focussed project finance, investment banking and asset management franchise,” Lall is quoted as saying on IDFC’s website. The institution already manages India’s biggest infrastructure-focussed private equity fund of $630 million, and it is the single-largest debt and equity financier of privatelysponsored infrastructure in the country. A wide portfolio has enabled IDFC to grow consistently. Its balance sheet has grown 56 per cent to Rs 27,921 crore in the one year to 2007-08, net income 62 per cent to Rs 694 crore, and consolidated net profit 47 per cent to Rs 742 crore.
10. Jindal Steel & Power
Naveen Jindal is the youngest of the four Jindal brothers (Prithviraj, Sajjan and Rattan), and he also heads the youngest of big ventures at the group, Jindal Steel & Power (JSPL), which was spun out of Jindal Strips in 1990. But the 38-year-old’s investment plans are in contrast to his relative youth. At last count, he had plans of investing Rs 75,000 crore in, among others, a 6-million-tonne per annum (TPA) steel plant in Orissa (Rs 13,500 crore), another 6-million-TPA steel plant in Jharkhand (Rs 15,000 crore) and a 1,000-MW power plant in Raigarh. The expansion plans are, of course, a reflection of the growth JSPL has been experiencing over the last three years. In that time, its revenue has risen from Rs 2,877 crore in 2005-06 to Rs 3,910 crore in 2007-08 (till Dec ‘07), net profit from Rs 572 crore to Rs 846 crore, and market cap from Rs 3,223 crore to Rs 31,900 crore. Vikrant Gujral, Vice Chairman and CEO, JSPL says: “Higher price realisation has indeed contributed to growth, but there are other factors like tighter control on costs and better operational efficiencies.” Polo-enthusiast Jindal recently also acquired the rights to some mines in Bolivia. So far his growth story looks intact. But any further tightening of steel prices by the government or a drop in global steel demand could spoil the story for him.