Forbes India – August 4, 2017

By Dinesh ArorA

Banks and nBFCs that kept a CheCk

on Credit quality have prevailed, while

there has Been an exodus oF it Firms

From the super 50 Companies list

The Qualities

of Being super

F

orbes India’s list of

Super 50 companies

has become the

benchmark to identify

Indian companies

that exhibit high

growth in profitability, sales and

shareholder returns. In the universe

of private listed companies with

market capitalisation exceeding

`10,000 crore, the ones that have

consistently delivered on these three

parameters over the last three years

have found a place in the third edition

of India’s Super 50 Companies.

The past year has been an eventful

one, for India and the world. Major

economic and geopolitical events

at home—demonetisation and the

surgical strikes, for instance—

and external events like the US

presidential elections and the Brexit

referendum had a bearing on the

domestic economy in general and

corporate India in particular. This

year’s Super 50 companies are

the ones that adjusted the sails,

with the right business strategies,

to tide over these storms.

Like last year, companies in

the financial services, consumer

products, auto, pharma and chemicals

sectors dominate the list. Roughly

a quarter of the 50 companies—

nine NBFCs, including six Super

50 debutants, and three banks—

are financial services entities.

In recent years, this sector has been

plagued by the deteriorating asset

quality of banks—an aftermath of the

rampant credit growth witnessed

between 2009 and 2012, when Indian

corporates went on a massive debt-

fed investment spree. The banking

system suffered from its own karma

as dud loans piled up, impacting

the overall health of the sector.

Karma, however, has favoured

those lenders who kept a check

on credit quality. They have been

rewarded both in terms of greater

profitability and better response from

shareholders. The list of Super 50

companies captures this trend: The

three banks and nine NBFCs that

made it to the list have, on an average,

gross NPAs that are around 200

basis points lower than their peers.

Behind the financial services sector,

the next four big baskets comprised

companies in the consumer products

(nine), auto (eight), pharma (seven)

and chemicals (seven) sectors.

A common thread running through

the companies in these four sectors

is their better cash management.

Their cash conversion cycles—time

required for a business to turn

purchases into cash receipts from

customers—in the last three years

were on an average around 30 percent

faster than their long-listed peers

who did not make it to the final list.

Effective working capital

management is an integral component

of any company’s success. Cash

management is no longer considered

just a financial decision but is also

regarded as a critical cog in the

operating cycle of an organisation.

Success comes to those companies

that have judicious systems and

processes in place that ensure lean

manufacturing, a prompt supply

chain for efficient inventory handling

this year’s super 50 companies

used the right strategies

to tide over economic and

geopolitical storms

india’sSuper 50 companies

36 | forbes india August 4, 2017