EDITORIAL

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The market’s incessant rise has encouraged companies to raise funds from the public

URGE TO SPLURGE
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SHAKERS BUT NOT MARKET MOVERS
The ones who did not have to tap the market to get the numbers

BILLIONAIRE CLUB
A definitive list of India Inc’s richest

HIGHEST PAY PACKETS
List of the best paymasters

BILLIONAIRE CLUB 2006
BILLIONAIRE CLUB 2005

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Counting the money

How we estimated the wealth and earnings of billionaires

For the promoters of listed companies, we use the accepted method of estimating wealth based on the market value of their holdings in listed companies. This is the category we have been estimating for the last nine years. In line with international practices, we have eliminated crossholdings in their stakes.

This year, instead of removing the entire market value of crossholding from the promoters' net worth, we have added back their share in the crossholding as their net worth. This results in wealth estimates based on the promoters' direct holding in listed companies and share in crossholding.

This year we also collected information on public shareholders whose personal investment of over one per cent in various companies was made available by both the Bombay Stock Exchange and the National Stock Exchange. Rakesh Jhunjhunwala with net worth of Rs 2,375 crore top the list of investors' billionaire. Balrajsinh Parmar, an investor, too joined the big league with net worth of Rs 540 crore, followed by Desai brothers Rs 491 crore and Shivanand Mankekar Rs 344 crore.

As in previous years, we estimated individual net worth by taking the average market price of shares for the last one month. So we estimated wealth for the current period on the basis of the average price for August 2007 and similarly for August 2006 for comparison purposes. Also, we estimated the net worth of individual promoters (or even members of the promoter family) only if a break up of the individual share holdings is available.

As for the salaried wealthy, we look at big-buck salaries, both of promoters who take a salary from the company and of professional managers. Strictly speaking, professional managers are a different genre. Unlike the previous two categories which are based on the stock concept of wealth, these are based on the flow concept of income. So obviously, these earning billionaires cannot be compared with the other billionaires.

Within the salaried lot, the biggest group is the professional managers, or middle class millionaires. Their earnings are reported in the annual reports of companies. By and large, these are very accurate but because of innovative compensation structuring the figures may tend to be a bit lower than the actual sums.

There is no systemic bias in the data. Data for promoters' net worth are sourced from information on shareholding patterns published by the Bombay Stock Exchange. The data on the salaried classes are sourced from the annual reports of companies for the accounting years ending anywhere between April 2006 and June 2007. •

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Business Standard • December 2007