Another fortnight and the frenzy of the second quarter financial results will begin in all earnest. Sector, and company specific sales, profits, order books and operating margin figures will be dissected ad nauseam by analysts, brokerages, fund managers, investors and sundry others. Judgements will be passed, winners will be picked and positions taken on the stock?buy, sell or hold.

Amidst all this quarter-to-quarter performance anxiety that most business stakeholders have, justifiably, learnt to live with, it?s interesting to step back once in a while and try to look at the long-term historical trend. How have India?s top sales and profit grosser fared in the last 10 or 20 years, compared to not just each other but the broader economy? And have their sales and profit growth resulted in a commensurate growth in their (corporate) tax outgo?a measure of their relative criticality to the economy at large?

Analysis of decadal performance of the current top 10 listed companies on net sales, profit after tax, market capitalisation and tax outgo present an interesting picture. Take the first decade of economic liberalisation, for instance. The country?s nominal GDP grew at a compounded annual growth rate (CAGR) of 14.88% and central government?s gross tax revenue at around 12.9% for the decade ending March 2000.

Reliance Industries topped the sales growth chart in the 1990s, and Infosys, which listed in India in 1993, topped both profit and market cap growth, perhaps reflecting the sunrise status of the Indian IT sector at that time?remember that it was only later in 2000s that both Wipro and TCS listed on the Indian bourses. Some may point that a more like to like comparison is between measures of value-added, profits in case of companies and GDP for the economy.

Tata Steel?s profit growth was the weakest in 1990s, just over 11% CAGR, edging it out of the top 10 sales and profit list in 2000, a position it won back in the 2010 list on the back of global expansion and rising demand for steel as a result of massive infrastructure push in the country. Interestingly, SBI?s net revenue growth, TCS?s net profit growth and SBI and BHEL?s market cap and tax outgo growth lagged even government tax revenue growth (12.9%) in 1990s.

Cigarette major ITC?s tax outgo jumped most sharply in the 1990s (around 30% CAGR growth year-on-year between 1990 and 2000), not surprising, given its growing ambitions outside tobacco in packaged food and hotels. And though RIL was growing its profit and market cap by around 40% year-on-year all of 1990s, and sales by over 25%, thanks to tax sops, it was a zero tax company right till the middle of the decade, prompting the introduction of minimum alternate tax regime to ?correct? this anomaly.

Economic growth accelerated in 2000s, with GDP growing at a CAGR of 12.31% and tax revenue at 13.9%. New growth leaders emerged in tandem with the changing structure of Indian economy?Bharti Airtel on sales, TCS on profits, NMDC on market cap and yesteryears zero-tax company, RIL, on tax growth. While private sector saw huge jump in profits, for public sector power major NTPC profit growth was relatively muted, in single digits, 2.5% below GDP growth. Recollect that NTPC?s profit had clocked an impressive over 66% CAGR in the 1990s.

Shift the metrics to 20-year period (1990-2010), and the picture that emerges is, well, not very different. GDP growth in this period was 13.6% CAGR and tax revenue grew at 13.4%. Much like the 1990s, RIL emerges as the sales leader with around 28% growth, and Infosys as profit and market cap leader (a caveat here: please bear in mind that Bharti and TCS were not listed in 1990s).

Again, in 2000s, many state run companies sales, profit, market cap and tax outgo growth lagged the government buoyant tax revenue growth of 13.9%. Whilst Indian Oil, Hindustan Petroleum, SBI and NTPC net sales growth was lower than 14%, NTPC?s profit and market cap growth also was sub-par here. Even tech darlings TCS and Infosys were unable to grow their market cap at a rate at which government?s tax revenues grew in 2000s. Perhaps the only company that outgrew both the GDP and tax collections consistently between 1990 and 2010 is RIL, but remember that for the first four-five years of this period it paid no taxes on all that was adding to its bottom line and valuation.

?shailesh.dobhal@expressindia.com