Billion-dollar babies bloom in India

BOYS TURN MEN

About two dozen companies join super league in 2 years as firms defy slump fears to post robust revenues

CLOSE to two dozen Indian companies joined the billion-dollar revenue club over the past two years, reflecting the strength of Asia's third-largest economy that came out unscathed from the most severe global economic crisis since the Great Depression. According to an ETIG study, which analysed the projected net sales for the 12 months ending March 31 using data available for the first nine months of the fiscal year, the number of companies in the billion-dollar club went up to 124 compared with 104 for the year ended March 2008. 

    Cipla, Lupin, Tata Tea, Tech Mahindra, Lanco Infratech, IVRCL Infrastructures and Bharat Electronics are among the firms that joined the billion-dollar revenue league in the past two years. Some like Motherson Sumi Systems and Apollo Tyres, which gained size through global acquisitions, also figure among the entrants. The study used Rs 45.5 as the rupeedollar exchange rate for both the years to factor out currency movement's impact on dollar revenues. The comparison has been made with FY08, which was the last year to record 9%-plus economic growth. Infra, agri firms rule $-b chart 
INDIA'S economy expanded 9.1% in FY08, before the global economic downturn pulled down growth rate to 6.7% in the next year. The government expects a growth rate of 7.2% for the current fiscal year. 
    Billion dollar revenues are considered as an important benchmark by many investors who use it to shortlist the pool of companies to invest in. "Institutions prefer the big companies by revenue due to consistency in financial terms," said Ajay Parmar, head of institutional equities at Emkay Global Financial Services. The increase in the number of companies in the billion-dollar club will act as a catalyst for market growth, he said. 
    Infrastructure and agriculture firms dominated the list of new entrants to the billion-dollar revenue club, as these sectors remained more-or-less unaffected by the economic downturn. "There is lot of autonomous demand due to consumption from rural and semi-urban India which was less affected by the slowdown allowing companies to grow revenues. The financial slowdown impacted the urban economy much more," said Jay Shankar, chief economist at Religare Capital Markets. This trend is reflected in the entry of agri-related firms such as United Phosphorus and National Fertilizers into the club. 
    While the big revenue league grew by nearly a fifth in the past two years, the group of firms with billion-dollar market value shrank by the same ratio. A large number of companies from the real estate and financial services sectors fell in the valuation charts while others from FMCG, pharma, healthcare representing domestic consumption demand joined the list. Apollo Hospitals, Fortis Healthcare, Gillette, P&G Hygiene, Glaxo Consumer, Emami, Marico, Godrej Consumer, Aurobindo Pharma and Cadila Healthcare, among others, joined the club.