Henry Kravis surely knows a thing or two about investing. It is not for nothing that the private equity giant founded by Kravis and his cousin, George Roberts, in 1976 has a staggering $195 billion in assets around the world.

So when Kravis, co-chairman and co-CEO of Kohlberg Kravis Roberts (KKR), said on a recent trip to India that his firm liked to buy “complexities”, it was a telling remark on KKR’s investment rationale. This is also perhaps the reason why KKR has significantly grown its portfolio in India—across asset classes like equity, credit and everything in between—since 2009. Afterall, there is hardly any other economy in the world where these lucrative complexities exist the way they do in India.

The annual Fortune India 500 list of the country’s top companies and the intricate details that lie therein are arguably the best manifestation of such complexity and a definitive reflection of the state of India Inc. At the start of 2018, Fortune India Called out consolidation as the ‘Move of the Year’, alluding to foreseeable mergers and acquisitions that would see debt-laden enterprises change ownership, with their promoters’ hands forced by banks. These lenders have been hit hard with bad debt but are now empowered with a more stringent and unforgiving bankruptcy law. And, surely, the Fortune India 500 list for 2018 (based on fiscal year 2017-18 data)—the barometer of corporate India’s performance—has captured this new reality.

A decline in revenue and non-availability of financial data led to 36 companies dropping off the list this year, including Lanco Infratech and Binani Industries. The gap was partially filled by12 companies that made their debut, backed by handsome revenue growth, which catapulted them from the Fortune India Next 500 list. The rest were large firms like Hindustan Aeronautics (No. 84) and United India Insurance Company (No. 94)which made it to the list this year on account of their recent initial public offerings.

In many ways, FY18 was unique as it was the first full fiscal year after demonetisation in November 2016 and the goods and services tax (GST), which was introduced during the period under review. As Discussed last year, new accounting standard Ind AS was fully implemented, which has changed the way companies report their earnings.

Despite the uncertainties that prevailed in the country as well as global challenges such as trade wars, volatile crude oil prices, and a strengthening dollar, the Fortune India 500 companies recorded revenue growth of 11.7%in FY18 from FY17. And for the first time in nine years, the last company on the list, Linde India,had a turnover of more than ₹2,000 crore, signalling that India’s largest companies are growing bigger.

Having said that, the aggregate profitability of these companies, which was at ₹4,07,223.3 crore, declined 10.2% during FY18. This means that while 421 companies on the list recorded a total profit of ₹6,07,084.1 crore, the remaining 79 reported a total loss of ₹1,99,860.8 crore.

A closer look at profitability presents some interesting data points. Of the 79 loss-making enterprises, 51 registered losses in FY18 as well as FY17. Their total losses more than doubled to ₹1,47,182.5 crore this year from ₹55,883.9 crore in FY17.

While leveraged companies took a bashing, their lenders weren’t spared either. Of the 50 banks on this year’s list, 22 registered a total loss of ₹87,954.7 crore while the rest made a total profit of ₹62,320.8 crore. Public sector banks led the pack when it came to reporting losses, with as many as 20 of the 24 state-run lenders reporting losses, aggregating to ₹86,836.9 crore.

Seen through revenue clusters, this year 34 companies—or less than 7% of the top 500 firms—recorded revenues in excess of ₹50,000 crore, and together accounted for 54.9% of the Fortune India 500 universe’s total revenue.

Breaking down the 500 firms by industry type reveals manufacturing remained the main growth driver of revenue and profitability in FY18, with 292 manufacturing firms on the list accounting for 63.4% of the total revenue and 70.3% of the total profits.

Decoding the data by ownership type reveals that private sector firms continue to drive revenue, profitability, and shareholder wealth. The 376 companies from the private sector together accounted for 59%, 73.8% and 45.5% of the lists revenue, profit and equity dividend, respectively.This year, 113 companies declared an equity dividend of ₹73,740 crore—an annual fall of 31.8% from last year. Of them, 22 government-owned companies doled out dividend worth ₹38,633.5 crore.

While shareholders had fewer reasons to celebrate—unless of course you were a shareholder of a public sector company along with the government—employees of Fortune India 500 firms had reason to cheer as total salaries grew 10.2% in FY18.

Even as you read this, the return of consumerism, following a lull after demonetisation and the introduction of the GST, is helping Indian companies regain their feet. Industry experts point out that capacity utilisation is inching upwards and anew capital expenditure cycle may be round the corner. But a depreciating rupee and volatile crude oil prices are hardly friendly factors.

With the continued tough stance adopted by lenders with respect to errant borrowers, the list is likely to see more churn in 2019, which, by the way,is an election year. Complexities, anyone?

Find the complete Fortune India 500 list here

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