Only six of the Top 25 back companies of 1991 remain in the Top 25 today
T N Ninan / New Delhi Feb 13, 2010, 01:56 IST
Back in 1991, just before Manmohan Singh kicked off his economic reforms, Business Standard’s annual ranking of India’s corporate giants had a list that can be compared, very instructively, with the list released earlier this week, in the latest BS 1000. Only six of the Top 25 back then remain in the Top 25 today (Tata Steel, Reliance, Tata Motors, L&T, Mahindra & Mahindra and Hindalco). Further, just 11 of the Top 50 remain in that category. Among the dropouts are manufacturing firms that have virtually disappeared, like JK Synthetics and Modi Rubber, but also those which have slipped sharply in the rankings, like Escorts and Spic, not to mention Century Textiles and Hindustan Motors.
As another indicator of change, 12 of today’s Top 25 are state-owned enterprises, led by Indian Oil, which leads the table when it comes to sales. In 1991, of course, no government-owned company was listed, and the change achieved since then goes to show how even limited disinvestment has transformed the stock market. For good measure, half of today’s private sector giants (Essar Oil, Bharti Airtel, TCS, Adani Enterprises, Suzlon, Wipro and Reliance Communication, all feature in the Top 25) either did not exist in 1991, or were inconsequential firms back then. Talk of churn.
Then talk scale. Back then, the company ranked 100 (LML, now a minor player in two-wheelers) had sales of Rs 172 crore; today the company at No. 100 is Bosch with sales of Rs 4,602 crore — or about a billion dollars. Back then, only one company had sales of a billion dollars (at the exchange rate of the time) — Tata Steel. In fact, the sales of all 300 companies then totalled only Rs 59,055 crore — barely a fifth of a single company’s sales now (Indian Oil’s is Rs 2,88,227 crore in the latest listing). Even after adjusting for the intervening inflation, the quantum shift is undeniable — a conclusion that follows from the profit figures too. The company with the biggest profits then was Tata Steel, which reported a net figure of Rs 149 crore. The company that comes in with similar profits today is Gitanjali Gems, which is 174 th in a profit-based ranking.
Some of today’s giants are in businesses that either did not exist back then, or were not open to the private sector (Bharti, Reliance Communications, Suzlon and Essar Oil, for instance). All four were incorporated after 1991. Further, Adani (ranked 19 today) had just been launched as a partnership with a seed capital of Rs 5 lakh, while Wipro (ranked 21) had yet to get into the global IT services business. For all practical purposes, six of the 14 private sector giants in today’s Top 25 did not exist in 1991.
The old making way for the new tells us that economic evolution is working, and that the marketplace is competitive. But the speed and scale of change suggests a revolution more than evolution. It is hard to tell how many businessmen saw the hurricane coming, and how many guessed that the reforms that had been launched, and which most of them welcomed, would sweep aside the majority of India’s large companies. One person who did was Anil Ambani, who told me back in 1991 that half the companies which existed then would not exist in a decade’s time, and that the Ambanis (father and sons) were figuring out how the reforms would change the landscape, and what Reliance needed to do in order to survive and prosper. It is time a much broader swathe of businessmen asked the same questions, with reference to the next 20 years.
A large number of private companies which were not in existence in 1991 are in the list of big companies. But these top companies were the product of our Finance Minister who promoted them at the cost of companies. While the PSUs paid all kind of taxes, no taxes were paid by the socalled big private companies dueto tax exemptions given to them but same exemption was not allowed to the existing PSUs or government companies. Moreover our PSUs have been denied the right to manage themselves. So if private companies flourished and came on the top it is no surprise. The point for debate should be which company paid taxes and to what extent? Most of our private companies right from 1991 to 2010 are enjoying tax free incomes.
Dear Sir,
Undoubtedly, a superb data based, macro-analysis of the industrial evolution of India.
However, to give it better balance and depth, it could have reflected upon comparitive time series data, selectively, on India's major implementation gaps viz., inertia in high quality engineering, science & advanced technology education, in encouraging innovative, high-end product brand development, creative R&D, reorganisation, rejuvenation & consolidation of national & atate level institutions which are static or declining for want of young blood, creative leadership etc. Perhaps, it can be another article !
Without wanting to distract one's attention, it should be noted that that China is spending & achieving exponential growth by overtaking the US, Germany & other developed nations e.g. non-conventional energy, railways etc, which should be a matter of urgent concern for policy makers in India.
Dr. Paul
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