The best-tended gardens hide unnoticed weeds; even arid zones can sprout winter flowers. As the country hopes, half-fearfully, for a better 2012 than the year gone by, are there trees that one can’t see for the wood? Consider the stock market, which saw the market value of its leading stocks drop by a staggering 25 per cent last year. Amid the carnage, are there positive trends that have not attracted attention? What about understanding the kind of companies that stand tall even now? The list of 25 most valuable listed companies makes for an instructive read. As many as 10 are state-owned, a testament to how much the government still dominates large sectors of business activity — energy (coal, oil, gas and electricity), banking, natural resources. A goodly number in the Top 25 did not exist in 1991 or were inconsequential at the time — tech companies like TCS and Infosys, private banks like HDFC Bank, telecom service providers like Bharti Airtel. These testify to the creative energies unleashed by the first flush of reforms. Those who have done well by the retail customer, like ITC and Hindustan Unilever, have flourished too; as have engineering companies with depth and the willingness to enter new territory, like Larsen & Toubro and Tata Motors.
The list of those missing is equally instructive — those who have been touched by scandal, or which function at the troubled interface between business and government. Also missing are players in glamour sectors like aviation, and shooting stars in sectors like real estate. True value, it would seem, is created when you focus on core business principles and stay focused on long-term sustainability, not on clever deal-making or capitalising on a business bubble. There must be a lesson in why Sun Pharma is a more valuable firm than rivals that have attracted more media attention. But it should concern everyone that manufacturing is poorly represented — not even half a dozen firms in the 25.
What about the presence of “business groups”? Tata has three companies, Vedanta has two, Reliance one. The majority of private entities don’t belong to any “group”. So if you go back to the rhetoric of 40 years ago, the old business “families” don’t dominate Indian industry in the way that they used to, though of course the vast majority of firms are necessarily family-owned enterprises because they are first- or second-generation enterprises. Another remarkable fact is how home-grown large business still is in India. Just one firm in the Top 25 is part of an integrated global enterprise (Hindustan Unilever). The remaining 24 are state-owned or run by Indians, even though a few have large foreign shareholdings (like ITC and Bharti). In other words, the three big fears voiced 20 years ago by the critics of reforms — that the new policies would mean the death of the public sector and a sell-out to either big business or to foreign enterprise — have all turned out to be ill-founded. The flip side of the coin could be that India remains a difficult market that international firms find difficult to negotiate. The key takeaway, however, is the simple point that, in a difficult economic environment, the best still manage to shine through.
