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BW Businessworld

The Way We Did It

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For the BW Real 500 ranking this year, the total number  of companies considered added up to a whopping total of 30,194. This included listed (on the National Stock Exchange, or NSE) and unlisted companies — whose annual audited financial data was available with Ace Equity Corporate Database as on 3 October 2012. Where a company is listed on the Bombay Stock Exchange (BSE), and not the NSE, market capitalisation data from the BSE was taken into account to arrive at the rankings.

Next, companies whose total income and total assets added up to less than Rs 100 crore were eliminated from the list, which left us with 1,468 companies (including both financial and non-financial).

In all cases, consolidated numbers (combining those of subsidiaries and associates) were considered for the companies. Subsidiaries were eliminated from the BW Real 500 rankings to avoid counting companies twice. However, standalone results were taken into account for companies that have no subsidiaries as well as for those whose consolidated data was not available with Ace Equity. 

Data for the financial year 2011-12 was used to determine the rankings. In the case of companies whose financial year does not end in March, the fiscal ending between September 2011 and August 2012 was considered. And, for those whose financial year comprised more or less than the 12-month norm, the numbers have been annualised. For all stock market-related data and calculations, NSE data was taken into account for companies listed on the bourse.

After all the number crunching, separate lists were drawn up — of non-financial companies and financial service companies. The idea behind this exercise being elimination of differences in the nature of manufacturing and finance companies (manufacturing firms are asset-heavy, while finance firms are income-heavy). The financial service category comprises banking services, non-banking finance corporations and insurance companies.

The BW Real 500 ranking is based on the sum of total income and total assets. The parameter-wise rankings (undertaken only in the case of non-financial companies) have been arrived at based on all 1,347 companies that made the cut and not just the Top 500 companies.

In cases where there is a difference in total assets between the figures given by Ace Equity and the company’s annual reports, it is because of an adjustment on account of deferred tax. A similar difference in total income figures is because of adjustment under the head of other income (or miscellaneous income).

THE TERMS
The data for the BW Real 500 rankings was computed using these broad definitions:
Total income: Net sales + other income 
Total assets: Includes net block, lease adjustment account, capital work in progress, pre-operative expenses pending, assets in transit, investments, total current assets, miscellaneous expenses not written off and net deferred tax. It  excludes total current liabilities
Total current assets:  Current investments, inventories, trade receivables, cash and bank balances, short-term loans and advances, other current assets
Operating profit: Total income – total expenditure
Profit after tax (PAT): As reported by the company in the annual report
Reserves: Accumulated surplus of the company, including general reserves, capital reserves, share premium, etc.
Adjusted earning per share (EPS): Adjusted against split, bonus issue and rights issue
Return on capital employed (RoCE): (Profit before tax + interest) / average capital employed for a two-year period
Return on net worth (RoNW): Profit after tax / average net worth for a two-year period
Return on assets (RoA): Profit after tax / average of total assets for a two-year period
Average market cap period: The average market capitalisation of all trading days between 1 April 2011 and 28 September 2012
Total debt: Secured and unsecured borrowings
Interest expenses: Interest expenses from the profit-loss account, which includes interest on term loans, debentures and bonds, fixed deposits, bank charges, etc
Depreciation: Depreciation from the profit-and-loss account as reported by the company
Profit after tax (PAT) margin: Profit after tax / gross sales multiplied by 100
Operating profit margin: Operating profit / gross sales multiplied by 100

KEYS
(s): Standalone
(c): Consolidated
NR: Not ranked
UL: Unlisted
PTL: Profit to loss
LM: Loss-making
NNW: Negative net worth

(This story was published in Businessworld Issue Dated 29-10-2012)