Leading the Pack
Anup Jayaram May 14, 2018
Over the past few years, businesses in India have been facing rough weather. Some of that has been due to the sustained impact of demonetisation and introduction of the Goods and Services Tax. Now, with the rupee weakening against the dollar and a steady rise in crude oil prices as India enters an election year, business optimism has deteriorated, according to the latest Grant Thornton International Business Report. And it is happening at a time when global optimism is at a record high.
There are positive signals too. The International Monetary Fund (IMF) has stated that India will be the fastest growing economy at 7.4 per cent in 2018, and grow at 7.8 per cent in 2019. The IMF's Asia and Pacific Regional Economic Outlook says that "the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption." The World Bank has forecast that India will grow at 7.3 per cent in 2018 followed by 7.5 per cent in 2019 and 2020. Meanwhile, the Nikkei Manufacturing Purchasing Managers Index rose to 51.6 in April from 51 in March 2018. As the government aims to resolve the issue of banking NPAs under the Insolvency and Bankruptcy Code (IBC), there is hope that many large, indebted companies could find new buyers.
The positive indicators are what businesses need. Every year, we at Business Today take a close look at the growth story of Indian businesses through two special issues: The Fastest Growing Companies (the one that you are reading) and the BT 500 - to be published later in the year - that crunches the financial numbers of India's biggest businesses. The fifth edition of the Business Today Fastest Growing Companies study is different from the ones before as this time, we started by looking at listed and unlisted companies with a turnover of over Rs1,000 crore (last year, it was called the Fastest Growing Emerging Companies with focus on companies with revenues between Rs500 crore and Rs1,000 crore). This year, we identified 647 companies in the shortlist which had grown consistently all these years. These 647 companies (excluding BFSI) covered 33 sectors, of which six saw double-digit growth in total income between FY2015/16 and 2016/17. The aggregate total income of these companies grew around 6 per cent in 2016/17 compared to 2015/16 while aggregate operating profits grew faster, registering growth of 8.7 per cent in 2016/17 over 2015/16. Total debt grew 5.2 per cent during the period.
We divided the shortlist of 647 companies into four categories: Super, covering companies with total income over Rs1,00,000 crore; Large, with total income over Rs50,000 crore and lower than Rs1,00,000 crore; Medium, companies with total income over Rs10,000 crore and lower than Rs50,000 crore; and Small, with turnover of between Rs1,000 crore and Rs10,000 crore.
At the top end of the table are the Super companies. All companies in this category saw a revenue drop because of fall in oil prices during the study period while profits rose.
The real action is among the Large category companies. These are all marquee players which had, over the years, made it to the top in their respective segments and had stayed there. The list includes India's largest carmaker Maruti Suzuki, which has close to 50 per cent share of cars sold in the country, and India's largest mobile services company Bharti Airtel with a 32 per cent revenue market share despite the disruption caused in the sector by the launch of 4G services by Reliance Jio. The list also features two of India's leading software companies, Tata Consultancy Services and Infosys, and steel major JSW Steel, which is the lead bidder for Monnet Ispat and is looking to bid for Essar Steel under the IBC.
An interesting development is seen in the Medium category - companies with a turnover of over Rs10,000 crore but less than Rs50,000 crore. Here, organised retail has made its presence felt for the first time. Considering that organised retail is a relatively new business in India, the fact that two companies that we are profiling - Reliance Retail and Avenue Supermarts - are from the sector is an indicator of potential future trends.
This year's listing has identified the best in each revenue category over Rs1,000 crore. Not surprisingly, the highest three-year compound annual growth rate, or CAGR, and three-year average YoY growth are among the Medium companies, followed by the Large companies. The Small group companies also expanded but because of small base.
It has also brought out companies that are not just well-known but have made an impact, be it in automobiles, communications, software or organised retail. With frenetic activity and growth, not to forget the increased levels of competition, it remains to be seen how many of these companies will be there when we compile the list next year. But considering that many of these are marquee names, they should be in the listings for the long run.
What we have is a fascinating array of companies across sectors which have grown sharply over the past few years. Turn the page to read their growth stories.