Top 20 biz houses see 65% value erosion in 2008

Realty, infrastructure groups lead race to the bottom.

India’s richest business houses would like to forget 2008 in a hurry. The market capitalisation of the top 20 business houses fell a whopping 65 per cent (Rs 16.73 lakh crore) over the previous year, courtesy the mayhem in the stock markets, performing far worse than the Bombay Stock Exchange’s benchmark Sensex (down 52.5 per cent) and the broadbased BSE-500 index (down 58.3 per cent).

Predictably, the credit risk that began with the housing bubble has hurt real estate stocks the most. So no surprises that Ramesh Chandra, the biggest value creator in the bull markets, saw the market value of Unitech, his flagship realty firm, decline 92.2 per cent in one year, the most among the largest business groups by market capitalisation (m-cap).

DLF is the other real estate firm to figure in the losers’ list with its m-cap eroding 74 per cent. The K P Singh-promoted firm ranks fourth in the list of firms that saw the biggest percentage fall in their m-cap.

The sharp decline in metal prices hit the OP Jindal group hard, with a value erosion of 75.81 per cent in 2008. The market cap of four major steel and steel products firms in the group — Jindal Saw, Jindal Steel & Power, JSL and JSW Steel — fell 80 to 88 per cent.

While the Adani group ranks third in the list, the other prominent loser is Anil Dhirubhai Ambani Group (ADAG), with a shareholder wealth erosion of 73.4 per cent.

Reliance Industries, India’s largest private sector firm, couldn’t escape the global financial storm either. The company lost Rs 3.22 lakh crore (57.70 per cent) on account of domestic market volatility and economic slowdown.

Overall, the top three business groups headed by Mukesh Ambani, Ratan Tata and Anil Ambani accounted for 44.5 per cent of the total value erosion of the top 20 business groups.

The market cap ranking saw a dramatic change, with Unitech, Suzlon, the Bajaj group and Indiabulls exiting the top 20 list due to an over 84 per cent value erosion during the year. The four new entrants in the top 20 list are the Hero group, Cipla, Sun Pharmaceuticals and HCL Technologies.
 

HOW THE BIG TEN FARED Market capitalisation (in Rs crore)
Business house	Promoter	Dec 28, 07	Dec 29, 08	% chg
Unitech	Ramesh Chandra	78540.09	6160.80	-92.16
O P Jindal	Sajjan & Navin Jindal	84545.69	20454.04	-75.81
Adani	Gautam Adani	76887.67	19945.04	-74.06
DLF	K P Singh	181344.89	47147.63	-74.00
ADAG	Anil Ambani	300793.32	79943.64	-73.42
Vedanta	Anil Agarwal	128158.50	39803.85	-68.94
A V Birla	K M Birla	144345.84	48373.32	-66.49
Tata group	Ratan Tata	326184.09	124648.83	-61.79
Reliance	Mukesh Ambani	559389.60	236621.37	-57.70
Wipro	Azim Premji	77568.78	33255.26	-57.13
Bharti Telecom	Sunil Mittal	178563.67	134990.49	-24.40

Brijmohan Lall Munjal, the patriarch of the Hero group, created wealth for his investors as his flagship and the biggest motorcycle firm, Hero Honda, appreciated 15 per cent.

The Munjal group, which was ranked 42nd in 2007, climbed to the 12th slot as Hero Honda added a market cap of Rs 2,104 crore. Cipla and Sun Pharmaceuticals came into the top 20 list due to their relatively low market value erosion of 14.5 to 19 per cent.

Only Sunil Mittal’s Bharti group with m-cap losses of 24.4 per cent has outperformed the BSE Sensex and BSE-500.