Tuesday, July 17, 2012

IN THE 21ST CENTURY, INDIA’S TRUE WORTH LIES IN ITS ENTREPRENEURS 2010- 11

Indeed, the maiden decade of this century was a decade of sweeping acquisitions by the Indian players, and Indians on the street revelled at the manner in which the Tatas, Birlas, Ambanis and Mittals (in telecom and steel) went reversing the not so good ol’ status quo; just as they revelled in India’s T20 World Cup triumph. Everyone seemed to agree that size was just about all that mattered! But India’s future cannot be about these large conglomerates and business houses alone, for there are a number of weaknesses in this kind of a structure, even though there are exceptions to the rule. We need competitive markets like telecom. We need businesses that do not shy away from competing globally. We need businesses that can innovate and create new value. We need businesses that do not return to the government for one or the other concession every now and then, or oppose every possible move that can lead to a more dynamic marketplace. In short, we need wave after wave of entrepreneurial energy sweeping across, which can generate new ideas and solutions for the problems we face, and also create unbeatable competitive advantage for the India of the future.



In this decade’s closing issue, B&E salutes India’s greatest 1st generation Wealth Creators and the companies they lead, taken from the BSE 500. The basic criterion (and the difference from normal definitions of what constitutes ‘first generation’) was that any of the founder members or first generation kin should still be in-charge of the company, the company should be listed and it should have attained a particular size in terms of annual revenue (base set at Rs.5 billion). We then calculated the final value of the remaining companies in terms of their mcap growth between January 1, 2010 and December 1, 2010 and employment growth during the financial year 2010, with equal weightage being given to both the parameters. The rationale behind giving equal weightage was that while mcap represents the company’s wealth creation for its shareholders, its employment generation represents the company’s contribution towards the supreme stakeholder, the country.

The final list of 40 top wealth creators was then prepared based on the final value calculated. Some of them, like Bharat Forge, Hero Honda, Infosys, Jet Airways and HCL Technologies, are still creating a momentous difference despite the disadvantage of the base effect. Then there are rising stars like IndusInd Bank, M&M Financial, Yes Bank, Amara Raja Batteries and Radico Khaitan that are achieving critical mass and on their way to set new benchmarks. And there are those like Spanco Ltd., Stride Arcolabs, Jayant Agro Jay Bharat Maruti and Surya Roshni, which have received tremendous encouragement from the markets this year, but would realise that they still have many miles to go. Nevertheless, they are all beacons of hope for an the industry that aspires to reach and create new global benchmarks, and one can only hope that they and their ilk keep growing.