The first thing
to note about this year's BT 500 is its currency. The market cap
figures come fresh off the oven. Instead of ranking companies based
on their average market cap for the year ended March 31, 2002, which
we did until last year, we've measured them on their latest, first-half
market value. That's as current as current gets. The rationale for
the change is simple: the business landscape has changed so much
over the last one year that giving you a picture six months old
wouldn't have been fair, dear reader. Just the same, to give you
a sense of the change, we decided to give you market cap figures
not just for the first half of 2001-02, but also the average market
cap for the last two fiscal years.
The Deciding Metric
| HOW WE CRUNCHED THE NUMBERS
| » Began
with a universe of 5,495 companies. Separated state-owned public
sector companies, banks, and FIs.
» Of a master
sample of 1,358 companies, only 1,258 traded on 20 per cent
of the 128 trading days on the BSE in the first-half.
daily market capitalisation of each company on every traded
day and divided this aggregate by the number of days on which
the scrip was traded.
the 500 most valuable private companies by market capitalisation.
them on sales and net profits
Apart from the average market capitalisation,
our listing includes parameters such as total assets, return on
total assets (ROTA), sales, net profits, and return on capital employed
(ROCE). The average market capitalisation, however, remains the
deciding metric in our rankings. Notwithstanding what some others
may try to tell you, there's good reason for doing so: The market
value of a company is universally recognised as a metric that factors
in not just its present performance, but also its future prospects.
Variables such as assets or sales cannot be the true measure of
a company's worth since they fail to provide an idea of the company's
ability to perform in the future. The market capitalisation, despite
the hazards posed by a relatively shallow market like India, is
more precise on that count.
Once again, the Mumbai-based Centre for Monitoring
Indian Economy (CMIE) helped us in creating the database for our
study. It began with a universe of 5,495 companies selected on the
basis of their average market capitalisation on the Bombay Stock
Exchange (BSE). Where the market capitalisation of a company on
the BSE was not available, that on the NSE was taken.
Government-owned companies, banks, and financial
institutions have been dealt with separately (See India's Most Valuable
PSUs). After these exclusions, we were left with a master sample
of 1,358 companies that traded between April 1, 2002, and September
30, 2002, both days included. The field of study was further narrowed
down to the 1,258 companies that traded on at least 20 per cent
of the 128 trading days in the period.
The BT-500 listing has been drawn up based on
the market value of the companies all through the first half (April
1-September 30, 2002) of the financial year 2002-03.
To compute that, each company's market capitalisation
was calculated on each trading day between April 1, 2002 to September
30, 2002. Those values were aggregated and divided by the number
of days on which the scrip actually traded. This yielded a company's
average market capitalisation for the fiscal's first half.
We have also have taken care not to lose sight
of critical parameters other than market capitalisation. Our table
India's Most Valuable Private Companies also assigns rankings in
terms of sales and net profit. In most cases, the financial year
ending is on March 31. But there are significant exceptions to this,
and we have taken care to tell you when there is one.
All the definitions used in the computation
and the presentation of BT-500 are standard.
Sales: Operating sales, excluding other
Net Profits: Profits after tax, interest
Market Capitalisation: Stock price multiplied
by the number of shares outstanding.
Total Assets: Fixed assets plus current
Return on Total Assets: Net profit divided
by total assets.
Return on Capital Employed: Profit (usually
profit before interest and tax) as a percentage of the capital employed
(fixed assets + circulating capital - current liabilities).
Now that you know all about how we did it,
dive straight in. There's much the numbers reveal.