It is measured in net profit as percentage of networth. Of the 211 big private sector companies selected for this study, nearly 60 per cent were found to have increased their efficiency of generating higher shareholder value. Only profit-making companies during 2002-03 and 2001-02 are considered for this study.
Aggregate networth of 211 big private sector companies has increased by 10.0 per cent to Rs 89,201 crore during 2002-03 from the level of Rs 81,087 crore during 2001-02 and their combined net profit have increased by 16.67 per cent, resulting in a sharp increase in RONW, higher from 14.51 per cent in 2001-02 to 15.39 per cent in 2002-03.
Of the selected companies, the top five according to the PAT to networth ratio during 2002-03 are Aksh Optifibre (118.71 per cent), Godrej Consumer Products (117.59 per cent), Polygenta Technologies (112.38 per cent), Swaraj Mazda (76.43 per cent) and Hero Honda Motors (67.45 per cent). In 2001-02, the top five five were Polygenta Technologies (89.81 per cent), Godrej Consumer Products (78.94 per cent), Hero Honda Motors (67.51 per cent), VST Industries (42.47 per cent) and Digital GlobalSoft (41.04 per cent).
Only three companies namely Godrej Consumer Products, Polygenta Technologies and Hero Honda Motors are common on both these lists. The first rank of Aksh Optifibre in 2002-03 can be explained from its performance. The net profit of the company increased by 327.9 per cent to Rs 90.75 crore, against Rs 21.21 crore during 2001-02.
On the other hand, Swaraj Mazda improved its RONW significantly during 2002-03. Its net profit increased to Rs 14.40 crore, against Rs 6.50 crore during 2001-02, indicating growth of 121.54 per cent. One hundred twenty seven of these 211 companies have witnessed an increase in PAT to networth ratio, while 84 companies have shown a lower ratio in 2002-03, against that in 2001-02.
A significant increase in RONW was witnessed in the case of Aksh Optifibre (27.74 per cent in 2001-02 to 118.71 per cent in 2002-03), Swaraj Mazda (37.27 per cent to 76.43 per cent), TVS Motor Company (16.67 per cent to 39.47 per cent), Bharat Forge (14.09 per cent to 36.94 per cent), Kedia Infotech (9.78 per cent to 32.39 per cent), Geodesic Info Systems (12.28 per cent to 31.08 per cent), Indo Rama Synthetics (7.16 per cent to 27.77 per cent), Genesys Intl Corpn (8.23 per cent to 22.03 per cent) and Gabriel India (5.14 per cent to 16.24 per cent).
TVS Motor Co posted a net profit of Rs 127.65 crore against Rs 53.91 crore in 2001-02, registering an increase of 136.78 per cent.
Similarly, in the case of Bharat Forge, net profit increased by 268.59 per cent to Rs 81.09 crore, against Rs 22.00 crore during 2001-02. Its networth increased by 40.57 per cent during the same period.
A significant fall in RONW was witnessed in the case of Infosys Techno (38.84 per cent in 2001-02 to 33.49 per cent in 2002-03), VST Inds (42.47 per cent to 33.04 per cent), Digital GlobalSoft (41.04 per cent to 32.79 per cent), Tata Elxsi (40.03 per cent to 26.11 per cent), and Balrampur Chini Mills (21.67 per cent to 12.49 per cent).