It is the season for lists. The issue you hold in your hands, constant reader, is the annual BT 500, the listing of India's best and brightest by one measure- their average market capitalisation in the first half of this financial year. It isn't, alas, the only list of its kind. Analysts, editors, and sundry others who do not work for this publication have every right to come up with metrics and listings all their own, and that's just the way it should be in a free market. There is a simple recipe for this: quote an economist or two, knock the BT 500, arrive at a new way of listing companies, however asinine it may be, and don't spare the adjectives while describing it.

The BT 500 is a market-oriented list. It is a ranking of listed companies in terms of market capitalisation. Unlisted companies? Well, we've been trying to crack that problem for some time, but there just doesn't seem to be any accurate way to rank unlisted companies, or compile a listed-unlisted aggregate list without compromising two of business journalism's fundamental tenets: truth, and the representativeness of the data presented. The minute we find out a way to include the likes of Microsoft India, IBM India, GE Capital, PepsiCo India, Coca-Cola, Hutchison Max, McDonald's, Sony, Jet, and DaimlerChrysler we'll be happy to feature a list. Heck, we'd love to do it. Only, we do not want to do a half-and-half in the name of comprehensiveness. Listed companies it is, then. And we will stick to our tradition of separate listings for the private sector and the public sector.

Now, for the metric: just why are we obsessed with market capitalisation? Sales would be too short-term; assets, downright misleading. Videsh Sanchar Nigam Limited, for instance, boasts sales of Rs 6,508.1 crore in 2001-02. Is that a measure of how valuable it is? We think not.

The Tata Group may well have paid too much for reserves it cannot touch (remember the Rs 1,200-crore controversy), licences that do not really cost that much (Reliance paid Rs 25 crore for the international long distance licence; Bharti did Rs 500 crore for the domestic long distance licence, including bank guarantees), and access that could soon go phut! The erstwhile monopoly, after all, is locked in a messy revenue-sharing battle with BSNL and MTNL, the two carriers that originate and terminate its long distance calls. Does the number Rs 6,508.1 crore tell us this? No. Does its total assets of Rs 7,621.18 crore tell us this? No. What does, is its market capitalisation of Rs 4,387.14 crore for the first half of this year, down from Rs 8,401 crore for the corresponding period last year.

The Indian stockmarket may not be perfect, but it rarely goes wrong over the long-term. Thus HFCL, a company that once nudged the honours list of the BT 500 (it was ranked 29 in 2000) is ranked 101. In terms of assets it would rank 41; in terms of sales, 94. Consider one more case. Ailing fertiliser maker spic ranks 42 in terms of sales and 48 in terms of assets. Its ranking according to the BT 500 is 391, which is probably where it belongs. We rest our case.

Sales can be bought and assets often end up being under-utilised-indeed, for most part of the 1980s, several Indian conglomerates, spic included, invested in assets that haven't really paid off. The market, for all its inefficiencies, is the only impartial (our apologies, but we really, oops, had to use that word here) judge of a company's value. It is a rough-and-ready measure of a company's ability to create value in the future. And it factors in qualitative variables, such as, in one of the numerical illustrations we have provided, the impact of VSNL's tiff with MTNL and BSNL.

The data that accompanies the BT 500 is as current as can be. The ranking itself is based on the average market capitalisation for the first half of the year and most sales and profit figures relate to the financial year 2001-02.

The BT 500, as we already mentioned, isn't the only list of its kind; pretenders abound. But it is the most market-focussed, and most authoritative list yet. Sit back, and enjoy the ride.