How we did it

 

The methodology behind the new ROAD to growth

Report | June 2016 | Kanvic Grey Matter

by Deepak Sharma, Ravindra Beleyur, Vlad Flamind, Gehan Wanduragala, Guillaume Santesmases

 

Two years of unprecedented analysis into corporate performance at India Inc. laid the foundations for Kanvic’s ground-breaking report.

To arrive at the pool of companies which the Kanvic Performance Navigator studies, we first looked at the universe of all listed companies on the Bombay Stock Exchange (BSE). We then compiled a list of the largest companies according to major business publications. Based on this we created a list of the top 1,000 companies by revenue for the financial year 2014 and captured information on major financial metrics from company databases, annual reports, and the BSE.

 

From the comprehensive list we kept only those companies for which complete data was available for the full five years of our study.

 

We looked at both profit and loss items including total sales, EBITDA, interest, and net profit. We also looked at balance sheet figures including total assets, net worth and debt. All of these metrics were captured for five years from 2009-10 to 2014-15.

 

These metrics were then used to calculate various measures of operational and financial wellbeing for each company such as return on total assets (ROTA), debt equity ratio, interest coverage, EBITDA margin and net margin. The metrics were then used to calculate medians and averages at the sector and aggregate level.

 

The sectors covered in the study were arrived at by first looking at the BSE sector list and then re-grouping the companies to make them more relevant for the general business audience. Multi-business companies were assigned sectors based on their principal line of business. This was defined by more than 50% of their business coming from that sector. Where no one sector contributed more than 50% of revenues the company was categorised as diversified.

 

Financial services companies were excluded from the study because of their different reporting requirements.

Our analysis of the top 1,000 companies was complemented by the Kanvic Trends Tracker (KaTT), a comprehensive tool designed by Kanvic to track major market changes across sectors in India. We also reviewed and analysed the Government of India’s Economic Survey for this period to look at major economic and policy changes which had an impact on business performance.

 

Finally, we created a database of digital start-ups in India to find the extent of digital disruption in India. The database was built on the basis of market information from companies, investors and the media.

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