If one wants to take a health check on corporate India, and hence get a glimpse of how the broader economy is looking, there are few better places to do that than the Fortune India 500 (FI500) listing of India’s largest corporations. Over the years, this list has demonstrated the ups and downs of India Inc, the challenges faced by companies in the wake of policy changes, and the way forward for the economy. This year’s listing, the ninth by Fortune India, takes a deep dive into the state of the country’s largest companies after what has arguably been a momentous fiscal year. The year 2017-18 is unique on many counts: It is the first full year after the dramatic demonetisation announcement of 2016 by the Narendra Modi government and also the financial year which saw the introduction of another mega policy initiative, the goods and services tax (GST). Both these developments inevitably affected companies, with many having to go back to their drawing boards to chalk out strategies to deal with the new normal.

On the face of it, the companies haven’t fared too badly on the turnover front, with the aggregate top line of the 500 growing 11.7% to ₹83.82 lakh crore over the previous year. Over a nine-year period, the aggregate top line of the FI500 companies has grown at a compound annual growth rate (CAGR) of 9.1%. Besides, the cut-off to qualify as a FI500 company has also increased this year, up 12.8% to ₹2,042 crore in 2018.

But dig a little deeper and you get a clearer picture of the health of the companies. While the aggregate top line has grown, the aggregate bottom line has, in fact, declined with the firms’ total net profit falling 10.2% to ₹4.07 lakh crore compared to the previous year. However, companies doled out higher salaries leading to a 10.2% increase in the overall salary bill. And that’s not all. The list also shows the massive dominance of the larger companies, unlike our Fortune India Next 500 list of mid-size companies where the distribution is more even across the list. As Rajiv Bhuva, Fortune India’s Editor (Lists), who puts together the FI500 points out: “The list has 34 companies with revenues of over ₹50,000 crore, and that accounts for an eye-popping 54.9% of the total revenue of the FI500.” In contrast, 238 companies (nearly 48%) of the 500 companies with revenues under ₹5,000 crore account for just 8.8% of the total revenues.

A story which is hard to miss when you look closely at this year’s FI500 is that of the banking sector in India. The declining fortunes of the banks in FY18 has dragged the profit share of the services sector down sharply to 24.3% from 42.8% in the previous fiscal. While as many as 22 of the 50 banks on the list made losses, totalling a hefty ₹87,955 crore, just nine of these loss-makers contributed nearly half the total losses figure racked up by the banks. Hopefully, with the Insolvency and Bankruptcy Code now in place and lenders pressing ahead to recover their dues from companies, things will begin looking better from FY19 onwards.

The FI500 has always been a mix of stories of success and failure, challenges and opportunities, and it’s no different this time. This year, in the following pages, we bring you stories of companies from diverse sectors which have either been able to succeed in facing business headwinds squarely or are in the process of executing their own plans for growth. There are also stories of rampant mismanagement and misdemeanour—like that in financial services company Infrastructure Leasing & Financial Services—where the government had to step in and take control and appoint an entirely new management team to stem a possible contagion effect on the country’s financial system.

There’s also the story of Zee Entertainment Enterprises Ltd (ZEEL), a successful broadcaster, which is now in the midst of a transformation, with ambitions of morphing into a media-tech firm. The ZEEL promoter family, led by media mogul Subhash Chandra, has put up to half the family’s stake in the company on the block, to try and rope in an international partner which will help with this plan. On the other hand, Mahindra Group tech firm Tech Mahindra, which bravely acquired fallen tech company Satyam a decade ago and is now the country’s fifth-largest tech company, has decided it is time to take a firm shot at the top, with plans to emphasise on digital businesses.

Meanwhile, the country’s largest multiplex chain, PVR, is drawing up a strategy for growth in an ecosystem where more and more people are preferring to opt for digital channels like streaming services for entertainment. Another fascinating story is that of Narayana Hrudayalaya, which is moving beyond being a cardiac care specialist and adding more areas to its services, while being true to its primary mission of providing quality healthcare at affordable prices to the masses. And if you thought the No. 1 on the list, Indian Oil Corporation (IOC), is content sitting pretty at the top of the heap, think again. As the IOC chairman tells us, the public sector megacorp is busy preparing itself for a world where electric vehicles will become increasingly popular.

One common theme: Good strong companies and managements are never content with what they have achieved. After all, the next air pocket could come up any moment.

This was originally published in the Dec. 15 - Mar. 15 special issue of the magazine.

Find the complete Fortune India 500 list here: https://goo.gl/scB1tC

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