A year of challenges

At first blush, the revenue growth of 18.2 per cent for the BS1000 companies at the aggregate level suggests a strong recovery in FY19, but a closer look at the numbers does indicate building up of some pressures. Operating profit growth at 12.4 per cent and net profit growth of 16.4 per cent did not keep pace with the revenue growth. This suggests that companies were unable to pass on higher commodity prices to customers. If metals, mining, oil and gas companies, which benefited from higher product prices, are excluded, the growth rates would drop further.  

Bigger companies in general performed better than their smaller peers. The median company saw revenue growth of 14 per cent but its net profit grew under one per cent.

The World Bank’s FY19 GDP growth estimate for India stands reduced from an impressive 7.5 per cent a year ago to 5 per cent now as it expects weakness in credit from non-bank finance companies to linger. This is showing in India Inc’s numbers for April-December 2019.  

The business environment worsened in FY19. Resolution of insolvency cases under the new bankruptcy law moved slowly. The default at Infrastructure Leasing & Financial Services triggered a liquidity crunch for non-bank finance companies. Automobile sales started falling during the year. Meanwhile, key stock market indices kept rising barring a few hiccups, as investors kept lapping up shares of leading large-cap companies, and their valuations kept rising. Mid and small-cap stocks though struggled during the year. For those investing in the market, it was also the year when the government brought back capital gains tax for investments held over a year. 

This trend of “winners take all” is captured in our cover story, where leaders in telecom, paints, cement and other industries gain more market share in their sectors. Our second story is on the new entrants in the BS1000 club and what makes them noteworthy. 

BS 1000 is also about celebrating success. An eminent jury of seven top decision-makers, led by Aditya Birla Group Chairman Kumar Mangalam Birla, selected the winners of the Business Standard Awards for corporate excellence in 2018. Read about the outstanding success stories.