Market-value-added Of 345 Cos Down By 33.33% In 2002-03

Updated: Sep 19 2003, 05:30am hrs
The market-value-added (MVA) is simply the difference between the market capitalisation of the stock and net worth of the company. This is a tool to measure shareholders wealth.

Here an attempt is made to see the trend of MVA for 345 private sector companies during 2002-03 and 2001-02. The MVA of the sample of companies decreased during 2002-03 from the level of 2001-02, indicating a downturn in the shareholders wealth.

The MVA of 345 big private sector companies (sales above Rs 50 crore) had steadily decreased from Rs 1,79,582 crore in 2001-02 to Rs 1,19,723 crore in 2002-03. The market capitalisation of these 345 big companies taken together decreased by 13.62 per cent to Rs 3,01,545 crore in 2002-03 from Rs 3,49,086 crore in 2002-03.

And networth of the above firms increased by 7.27 per cent to Rs 1,81,822 crore from Rs 1,69,503 crore during the same period. But the market value added for 345 big companies decreased by 33.33 per cent during the study period.

Of the 345 companies in this study, 164 did better with an increase in MVA, while 181 experienced a decline in the two years under consideration. Many of them, particularly those in chemical & products, engineering others, construction, tea and steel showed an increase in MVA, meaning that the market has grown significantly for these sectors during the study period. For example, Bharat Forges MVA increased from Rs 246.22 crore in 2001-02 to Rs 688.49 crore in 2002-03.

In 2002-03, the top 10 companies according to MVA was Hindustan Lever (Rs 29,118 crore), Wipro (Rs 25,237 crore), Infosys Techno (Rs 23,902 crore), ITC (Rs 10,215 crore), Ranbaxy Labs (Rs 9,708 crore), Reliance Industries (Rs 8,216 crore), Dr Reddys Labs (Rs 5,207 crore), Nestle India (Rs 4,866 crore), Satyam Computer (Rs 3,431 crore) and Cipla (Rs 3,215 crore).

In 2001-02, the top 10 were Hindustan Lever (Rs 46,561 crore), Wipro (Rs 37,024 crore), Infosys Techno (Rs 22,641 crore), Reliance Industries (Rs 14,098 crore), ITC (Rs 12,829 crore), Dr Reddys Labs (Rs 6,942 crore), Satyam Computer (Rs 6,488 crore), Hero Honda (Rs 5,978 crore), Sun Pharma (Rs 5,733 crore) and HCL Techno (Rs 5,522 crore). Seven companies are common in both the list of top 10.

Significant increase in MVA during the study period was seen in the case of Ranbaxy Labs (Rs 4,647.55 crore in 2001-02 to Rs 9,708.11 crore in 2002-03), Tisco (Rs 147.27 crore to Rs 1,751.76 crore), Motor Industries (Rs 183.20 crore to Rs 486.83 crore), Ingersoll-Rand (Rs 178.06 crore to Rs 324.39 crore), Alfa-Laval (Rs 134.08 crore to Rs 264.97 crore), Atlas Copco (Rs 6.90 crore to Rs 192.12 crore), Tata Honeywell (Rs 50.16 crore to Rs 120.55 crore) and Colour-Chem (Rs 8.44 crore to Rs 93.96 crore).

An opposite trend can be seen in the case of Hindustan Lever (Rs 46,561 crore in 2001-02 to Rs 29,118 crore in 2002-03), Wipro (Rs 37,024 crore to Rs 25,237 crore), ITC (Rs 12,829 crore to Rs 10,215 crore), Reliance Industries (Rs 14,098 crore to Rs 8,216 crore), Satyam Computer (Rs 6,488 crore to Rs 3,431 crore), Hero Honda (Rs 5,978 crore to Rs 2,901 crore), HCL Techno (Rs 5,522 crore to Rs 2,261 crore) and Dabur India (Rs 1,187 crore to Rs 615 crore).

On the other hand, significant negative MVA was observed during 2002-03 in the case of Videocon International (Rs 1,580 crore), Essar Steel (Rs 1,521 crore), Zee Telefilms (Rs 1,329 crore), Ispat Industries (Rs 1,322 crore), Hindalco Industries (Rs 1,249 crore), Spic (Rs 1,075 crore), GTL (Rs 1,037 crore) and Hughes Tele.Com (Rs 909 crore). Sectors which improved MVA during 2002-03 from 2001-02 are chemical, construction, engineering others, hotels, steel, tea and textiles. A declining trend in MVA was seen in the case of autos, cigarettes, computers, diversified, food processing and pharmas.

Top five industries according to positive positive MVA during 2002-03 are computers (Rs 53,348 crore), diversified (Rs 36,767 crore), pharmaceuticals (Rs 24,234 crore), cigarettes (Rs 10,149 crore) and automobiles (Rs 6,376 crore).

Among the 25 industry groups, significant negative MVA during 2002-03 was seen in the case of fertilizers (-Rs 4,230 crore), textiles (-Rs 4,054 crore), steel (-Rs 3,631 crore), shipping (-Rs 1,483 crore) and electrical goods (-Rs 1501 crore).