Despite an economic slowdown, Indian corporates have been growing their assets. Assets of the top 25 industrial houses (ranked according to assets) grew by 36.7% in 2008-09. That is on a fairly large growth of 34.6% in 2007-08. The assets include fixed assets, capital work-in-progress, cash and bank balances, loans and other debtor balances, investments and other intangible assets but exclude accumulated losses.

The numbers are partly skewed by the huge addition to fixed assets (plant and machinery) by Reliance Industries. The other business house that added assets was the Aditya Birla Group, which saw its assets grow by 33.8% during 2008-09 . The Ruia-owned Essar group?s assets by 27.5% in 2008-09. Among the sectors where capacities have been added are cement.

However, the return on assets (RoA) of major industrial houses showed a decline during the last financial year. In fact, the RoA, as measured by the ratio of gross profits to total assets, has been falling for three years since 2006-07. That implies that the rate in the growth of gross profits has not kept pace with the growth in assets. Gross profits are arrived at by adding the profit before tax and depreciation.

A comparative study conducted for 25 major industrial houses showed that in 2008-09 gross profits decreased to Rs 97,250 crore from Rs 1.06 lakh crore. On the other hand, assets went up to Rs 9.09 lakh crore in 2008-09 from Rs 6.65 lakh crore in the previous year. As a result, the RoA in 2008-09 dropped to 10.7 per cent from 15.9 per cent in 2007-08.

D.R.Dogra, MD & CEO, Care explains that the strong economic growth and the ample availability of funds, both domestically and internationally, allowed companies to take up expansion plans, both greenfield and brownfield. Dogra believes that companies will continue to add capacities.

For the Tata group, the RoA fell to 15.07% in 2008-09 from 21.12 in 2007-08 while for the ADAG group the RoA dropped from 7.72% to 6.86%.

Among the 25 houses, top five houses according to assets in 2008-09 are Reliance Industries led by Mukesh Ambani, Tata, ADAG, Aditya Birla Group and Om Prakash Jindal .The ROA of these houses varies between 15.07% and 6.86% during 2008-09.