The unlisted company universe is dominated by 75 companies: they generate over 60 per cent of the revenue and over 106 per cent of the net profits


Much of India’s corporate sector is unlisted, and this is true especially of new and happening industries such as software services, business process outsourcing, telecom, pharmaceuticals and retailing. 
To get a true picture of India Inc, therefore, we need to take the country’s large pool of unlisted companies into account, especially now that many of these companies are readying for initial public offerings.

However, unlisted firms are pigmies in front of listed private as well public sector companies. The total income of the top 500 unlisted firms in the private sector stood at Rs 1,13,132 crore in 2001-2002. Compare this with the total income of Rs 4,34,936 crore of the top 500 listed firms in the private corporate sector and the point is only too evident. That’s the case too when it comes to net profit. The net profit of the top 500 unlisted firms of Rs 2,916 crore pales into insignificance when compared with the Rs 20,052 crore net profit of the top 500 listed companies in 2001-2002. 

The 210 unlisted public sector undertakings (PSUs) reported a total income of Rs 1,36,597 crore and a net profit of Rs 10,774 crore in 
2001-2002. During the same period 34 listed PSUs reported total sales of Rs 3,13,041 crore and a net profit of Rs 14,154 crore. Tata Sons heads the list of unlisted private sector firms, while telecom behemoth Bharat Sanchar Nigam (BSNL) tops the list of unlisted public sector companies, ranked by total income and net profits for 2001-2002.

Many of these unlisted companies are far from being small or of no consequence. For example, if BSNL had been a listed company, it would have topped the profit ranking of all companies, including listed ones, with a net profit of Rs 6,312 crore in 2001-2002. ONGC, our topper among listed companies, would have been demoted to second place. 
Further, with a total income of Rs 27,779 crore, BSNL would have ranked fifth in sales among all companies in 2001-2002. 

The presence of huge govenment-owned giants has meant that the public sector unlisted companies are usually larger than their private sector counterparts. For instance, Tata Sons, the private sector unlisted topper, ranked fourth in the overall ranking of unlisted firms. Its net profit was Rs 863 crore in 2000-2001 and total income stood at Rs 4,411 crore.

How did unlisted firms perform vis-a-vis their listed peers? The top 500 unlisted companies in the private corporate sector posted sales growth of 15.24 per cent and a profits growth rate of 15.27 per cent in 2001-2002. That’s compared with sales growth of 11.38 per cent for the listed private corporate sector and flat profits growth for the period. Clearly, the unlisted firms have beaten their listed counterparts hands down.

The story is repeated with the public sector unlisted companies. They posted a 19.24 per cent rise in total income and reported a sharp turnaround in profitability. These firms totted up net profits of Rs 10,896 crore in 2001-2002 versus a net loss of Rs 1,511 crore in 2000-2001. 

But dig a bit deeper into the figures and the storyline changes dramatically. There’s no doubt that among the unlisted PSUs, BSNL, National Thermal Power Corporation, Nuclear Power Corporation, Northern Coalfields, Power Grid Corporation, Oil India and Coal India are very profitable indeed. 

Also, of the 211 unlisted PSUs, 105 firms are profitable with net profit of Rs 18,871 crore, up 100 per cent over the previous year. The problem lies with the remaining firms, which piled up net losses of a huge Rs 7,975 crore, although this is down from Rs 10,974 crore in 2000-2001. It’s clear that the overall figures conceal a deep dichotomy.

Among unlisted private firms, the gems include Tata Sons (courtesy software arm Tata Consultancy Services), Bennett Coleman & Co, publishers of “The Times of India” group, Mahindra British Telecom, Larsen & Toubro Infotech, Siemens Information Systems, Hindus-tan Thomson Associates and Jyothi Laboratories. But in the private sector unlisted universe too there are plenty of loss makers.

The total income of 11,617 unlisted companies increased by 14.74 per cent and their net profits grew by 139.38 per cent in 2001-2002. But strikingly, revenues and profits are hugely concentrated in a few major unlisted companies – 75 companies, accounting for 0.64 per cent of the total sample size, generated 60.76 per cent of the revenue and 106.43 per cent of the net profits. They also accounted for 74.19 per cent of the total capital employed in unlisted companies.

If we take out the top 25 firms from the unlisted private limited company universe, the finance company world and unlisted public sectorundertakings – a total of the top 75 companies – the aggregate performance of the remaining 11,542 firms has been extremely poor. The top 75 firms have done exceedingly well, with revenue growing by over 20.90 per cent and net profits by 83.08 per cent in 2001-2002. 

These firms controlled their total expenditure, which increased by just 15.02 per cent during the year. Interest costs rose by 8.83 per cent and corporate tax payments moved up by 28.56 per cent. This blistering performance looks pretty good compared with the performance of BS 1,000 companies, which posted sales growth of a mere 3 per cent and aggregate profits that were over 4 per cent lower in 2001-2002 than in the previous year.

Nevertheless, most unlisted Indian companies are not in the pink of health. That, at least, is what a Business Standard Research Bureau study based on Centre for Monitoring Indian Economy (CMIE) data on unlisted Indian firms suggests. The total revenue of the remaining 11,542 firms increased by just 6.34 per cent, though they reported a lower net loss of Rs 1,921.45 crore in 2001-2002 than the net loss of Rs 4,090.68 crore in 2000-2001. Their interest costs increased by 3.92 per cent and corporate tax payments climbed 1.88 per cent.

Interestingly, three groups–general (non-finance) private companies, public sector undertakings, and banks and credit companies–each accounted for almost a third of the full sample’s total income in 2001-2002.

Of the 11,617 unlisted firms, 7,617 private firms accounted for 37.05 per cent, 207 PSUs for 32.07 per cent and 3,790 finance firms for 30.88 per cent of the total income of unlisted firms. 

But when it comes to the total net profit, the finance sector–predominately banks–accounts for 60.81 per cent, while public sector undertakings account for 36.03 per cent. Private firms account for a minuscule 3.16 per cent of the aggregate net profits. Just five sectors accounted for almost 100 per cent of the net profits and 56 per cent of the revenues of 11,167 unlisted companies in 2001-2002. 

The sectors are insurance, financial and leasing services, trading, energy and telecommunication. Third on the list of top revenue generating sectors are the 1,400 trading companies, with a total income of Rs 38,462 crore in 2001-2002, up a modest 4.9 per cent over the previous year.

Forty eight unlisted energy companies, mainly public sector undertakings, recorded flat growth in revenues and a modest 5.2 per cent rise in net profits in 2001-2002. The total net profit of these firms was Rs 6,426 crore, with the National Thermal Power Corporation (NTPC) with a net profit of Rs 3,540 crore accounting for over half of this. NTPC’s total income stood at Rs 19,655 crore in 2001-2002.

The telecommunication sector was the fifth largest sector in the sample and Bharat Sanchar Nigam (BSNL) was way ahead of the rest, accounting for 83.9 per cent of the sector’s total income and almost all of its net profits. 

Private sector telecom players, on the other hand, were deep in the red with Bharti Mobile, Bharti Telenet, BTA Cellcom, Escotel Mobile Communication, Tata Internet Services and Hutchison Telecom East making losses in 2001 and 2002. Nearly 50 private telecom firms posted a total net loss of Rs 769 crore in 2001-2002 and of Rs 728 crore in 2000-2001. 
The carried forward losses of these firms mounted to Rs 3,083 crore. The performance of another 30-odd private telecom companies improved, with net profit rising to Rs 217 crore from Rs 52 crore on the back of a 42 per cent rise in income from the telecom business. However, they carried losses to the tune of Rs 1,164 crore.

The big loss making telecom firms in 2001-2002 were DSS Mobile Communication (net loss of Rs 143 crore), Bharti Telenet (Rs 108 crore), Tata Internet Services and Escotel Mobile Telecommu-nications (Rs 74 crore each) and Shyam Telelink (Rs 65 crore). The private telecom service companies that made profits were Bharti Cellular (net profit of Rs 99 crore), Hutchison Max Telecom (Rs 63 crore), RPG Cellular Services (Rs 21 crore) and Reliance Telecom (Rs 1 crore).

The profitable sectors in the unlisted world were mining, food products, transport vehicles, auto ancillaries, petroleum products, printing and newspapers, business services, software, paper and paper products, agro products, oil drilling, water transport (shipping), building construction and hospital and health centres. The losing sectors were pharmaceuticals and chemicals, air service, machinery manufacturers, yarn, construction, cement and cement products, transport and education.