HOW WE RANKED THEM

This is the 20th year of the BT500 list, an annual ranking of the most valuable companies, which started the same year Business Today was launched: 1992. As BT hit the road to becoming the country’s highest selling and most respected business magazine, India too set out on its economic reforms’ journey. The journey, though bumpy, has transformed the nation into one of the world’s fastest growing economies.

Indian businesses have matured and globalised too. Hence this year we have made a key change in our methodology. From now on, the BT500 list will not discriminate as before between companies on the basis of ownership. In previous years, public sector companies were ranked separately in a list of 50.

Since private and public sector companies have been clubbed this year, we have, in order to facilitate comparisons, provided two separate columns depicting the ranks of the companies in 2010. The first has the ranks the companies earned last year and the second, the ranks they would have earned had there been a combined private-public sector list last year too.

There has been one more departure from previous practice. Last year, while allocating parameter ranks, we considered all listed com- panies in Prowess. Thus, while Cairn India was ranked at 12 by market capitalisation, its fall in revenues and net loss fetched it ranks of 1,172 and 2,910 respectively on these parameters. This year, we have focused on the top 1,000 companies alone and restricted our parameter ranks within these top 1,000. So Cairn India this year has been ranked 21 by market cap, but 917 and 991 respectively on total income and net profit/loss.

The rest remains the same. We considered the six months between April and September 2011 to calculate average market capitalisation, The ranking was assigned on the basis of market capitalisation, where we compared market cap growth over the previous year’s corresponding period.

The Process: We relied on Prowess, the database of the Centre for Monitoring Indian Economy. Initially, all 5,030 companies listed on the

Bombay Stock Exchange were considered. We then excluded those companies that traded for less than 20 per cent – that is 25 days – out of the total number of trading days (125) between April 1 and September 30, 2011. That left us with 2,839 companies, of which the top 1,000 were ranked.

Financial Parameters: While the rankings are based on market value, the BT500 list also provides financial data for the financial year 2010/2011. This includes total income, net profit, and total assets (along with rankings), net profit as a percentage of total income (or net profit margins), return on net worth, or RONW, return on capital employed, or ROCE, and EPS. For most companies, the financial year ended March 2011 has been considered. To know which other periods were looked at, refer to the footnotes on the table pages.

We have used standalone numbers– as against consolidated results – for all companies.