GVA by 335 companies in 1999-00 formed 23.1 per cent of the capital employed. Thus, the ratio of capital employed to GVA was 1:0.23. Similarly, the ratio of net value added (NVA) as percentage of capital employed, increased from 18.8 per cent in 1998-99 to 19.8 per cent in 1999-2000. The capital employed to value added ratio showed an increase in 1999-00 mainly due to higher value addition in the private corporate sector. Of the selected 335 companies, the top 10, according to net value added in 1999-00, are Reliance Industries (Rs 5,542 crore), Hindustan Lever (Rs 2,761 crore), Tata Steel (Rs 2,403 crore), ITC (Rs 1,942 crore), Larsen & Toubro (Rs 1,779 crore), Tata Engineering (Rs 1,708 crore), Bajaj Auto (Rs 1,341 crore), Hindalco (Rs 1,256 crore), Grasim Industries (Rs 1,101 crore) and Mahindra & Mahindra (Rs 1,073 crore), whose share in the total during 1999-00 works out to 29.9 per cent.

The study analyses gross and net value added and capital employed of these companies, which closed their accounts during April 1999 to March 2000. The companies are divided into 23 industrial groups: Aluminium (3 units), auto & ancillaries (16), cement & products (15), other chemical products (41), electricity (7), electrical goods (28), engineering others (29), fertilisers (13), food products (8), hotels (2), paints (3), paper & products (4), pharmaceuticals (30), iron & steel (11), sugar & breweries (7), tea & coffee (5), cotton textiles (14), manmade fibres (15), tobacco (4), tyres & tubes (8), diversified (14), computers (12) and others (46).

Net value added has been worked out as a total of i) salaries, wages & bonus; ii) employer's contribution to provident fund; iii) employee's welfare expenses; iv) interest paid; v)tax provision; vi) dividend paid and vii) retained profit. Depreciation has been added to arrive at the gross value added.

In the GVA, retained profit (net profit plus depreciation) is the largest factor followed by salaries etc, interest, depreciation, dividends and tax provision. Retained profit alone accounted for 37.4 per cent of the NVA by the selected companies in 1999-00.

The share of interest declined from 23.7 per cent in 1998-99 to 22.4 per cent in 1999-00 and that of retained profit increased from 35.7 per cent in 1998-99 to 37.4 per cent in 1999-00. On the other hand, the share of tax provision and dividend increased from 5.2 and 7.2 per cent in 1998-99 to 5.6 per cent and 7.8 per cent in 1999-00.

Among the items of gross or net value added, retained profit, interest and employees salaries showed significant shifts in 1999-00 in terms of their percentage share.

Retained profit, which constituted 30.6 per cent in 1998-99, increased to 32.1 per cent in 1999-00, a change of 1.5 percentage points over the year in the case of GVA. Similarly, in the case of NVA the share of retained profit increased by 1.7 percentage points over the year.

Unlike in the case of salaries etc, which constituted 24.1 per cent (28.1 per cent of NVA) in 1998-99 declined to 22.9 per cent (26.8 per cent) in 1999-00, indicating a decline of 1.2 percentage points (1.3 percentage points).

In absolute terms, while the interest has increased by 8.3 per cent to Rs 15,711 crore in 1999-00 over Rs 14,512 crore in 1998-99, the taxes rose by 23.2 per cent to Rs 3,954 crore in 1999-00 over Rs 3,209 crore in 1998-99.

The significant rise of 8.3 per cent in the interest amount was because of higher borrowings, the significant increase of 23.2 per cent in taxes was due to better profit performance by the companies during 1999-00.

While retained profit in absolute terms showed an increase of 19.7 per cent to Rs 26,158 crore in 1999-00 over Rs 1, 852 crore in 1998-99, dividend showed an increase of 23 per cent to Rs 5,448 crore in 1999-00 over of Rs 4,428 crore in 1998-99.

This indicates that the companies distributed significant amount of money with higher level of profits.

Employees salaries etc, which account for the second largest share of the GVA/NVA showed an increase of 8.7 per cent to Rs 18,737 crore in 1999-00 over Rs 17,228 crore.

The GVA/NVA as percentage of capital employed increased from 21.9 per cent/18.8 per cent in 1998-99 to 23.1 per cent/19.8 per cent in 1999-00. The GVA/NVA to capital employed ratio is indicative in that, one rupee capital employed generated 23 paisa of GVA (20 paisa of NVA) in 1999-00 against 22 paisa (19 paisa) in 1998-99.

Among the 23 industries covered in this study, all have shown positive change in GVA/NVA except three industries. They are cotton textiles, sugar & breweries and paper & products. Only eight, in the case of GVA (9 industries in the case of NVA) have shown a higher change in the year than the level of all industries percentage change.

Those which showed significant changes in GVA/NVA include computers (57.2 per cent in GVA and 60.2 per cent in NVA), tobacco (28.6 per cent/29.5 per cent), paints (21.2 per cent/20.8 per cent), other chemical products (19.1 per cent/20.7 per cent) and food products (19.9 per cent/20.6 per cent).

Out of the 23 industries, only 11 industries have contributed NVA at the rate of less than 20 per cent of their capital employed during 1999-00.

Seven industries have recorded ratios in the range of 20 per cent to 30 per cent, while five have recorded more than 30 per cent.

Thirteen industries have witnessed a rise in the ratio while ten have shown a decline in 1999-00 against 1998-99. In the ratio of NVA as percentage of capital employed, significant increases occurred in the case of food products (30.98 per cent in 1998-99 to 36.5 per cent in 1999-00), tobacco (29.98 per cent to 37.93 per cent) and computers (40.74 per cent to 48.77 per cent).

A significant decline was witnessed in the case of tea & coffee (39.69 per cent in 1998-99 to 32.72 per cent in 1999-00), hotels (24.18 per cent to 20.31 per cent), sugar & breweries (19.67 per cent to 16.66 per cent) and paper & products (15.1 per cent to 12.72 per cent).

Among the 335 companies, which have contributed NVA, 50 per cent and more of their capital employed during 1999-00 mention may be made of Hindustan Lever, Infosys, Wipro, Motor Industries, Castrol, Satyam Computer, Hero Honda, Nestle India, Punjab Tractors, NIIT, Novartis, Digital Equipment, Procter & Gamble, Knoll Pharma, Tata Infotech, Lipton India Exports, Pfizer, Rhone-Poulenc, German Remedies and Parke-Davis.

The significance of the capital employed-NVA ratio may be seen from the example of Punjab Tractors which added Rs 67.15 worth of value by manufacture for every Rs 100 of capital employed. In contrast, in the case of Essar Steel with every Rs 100 of capital employed, the NVA was only Rs 5.14.