Tata Group tops Brand Finance list

LIC comes second with a brand value of $4 billion

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The Tata Group has topped consulting firm Brand Finance India's annual study, which evaluates the country's most powerful and valuable brands. Life Insurance Corporation of India (LIC) and State Bank of India (SBI) came second and third, respectively, in the study.

The Tata Group saw its brand value increase by 16 per cent ($3 billion) to $21.1 billion, driven by its international acquisitions as well as its most-valuable company, Tata Consultancy Services.

"Despite the fact that some divisions within the group have been underperforming, the brand should benefit from its plans to invest $35 billion over the next three years and should go some way towards meeting the goal of the Tata chairman Cyrus Mistry to be amongst the top 25 most admired brands globally," said Brand Finance.

Airtel, with a brand value of $3.8 billion, was the fourth biggest brand, while Reliance at $3.5 billion was the fifth.

Brand Finance calculates brand value by determining the royalties a corporation would have to pay to license its brand if it did not own it, known as the 'royalty relief' method. Tata Sons, the holding company of the Tata Group, earned 23 per cent more brand fees at Rs 453 crore in FY14 by letting its group companies use the brand name.

This year, Brand Finance extended the study from 50 to 100 top Indian brands. Brand value has increased among the top 50 by 10 per cent compared to 2013 with brands such Tata, Godrej, HCL and Larsen & Toubro leading the way.

Banking brands on the whole fared the worst collectively, with most brands losing brand value or remaining stagnant because of poor governance and weak credit controls, especially at government-owned institutions.

SBI has seen its value drop by the largest amount ($1.9 billion) as poorer revenue forecasts and bad loans have dampened earnings, although state-run banks are cleaning up their loan books in anticipation of the next wave of economic growth.

The brand value to enterprise value (BV/EV) ratio shows the proportion of a company's value accounted for by the brand. It acts as a rough guide of how well developed a company's brand is. The average BV/EV for India's top 100 brands is 12 per cent. However, some of the largest public-sector undertakings (PSUs) have an average ratio of three per cent.

"Indian brands have benefited from the rapid economic growth seen over the past 10 years. Indian brands must take advantage of the improving business sentiment and invest in brand-related activities like customer engagement, sponsorships, employee satisfaction, and brand tracking to drive the next phase of growth in order for more Indian companies to join the global club of internationally-recognised brands," said Savio D'Souza of Brand Finance.