Yes, I know it’s a truism to say that any list based on company size and performance will change. But the Fortune India Next 500 list is so characterised by unpredictability, only a truism works. This is the fourth edition of the Next 500, and this is the fourth time I say that change is the only constant in this list. This year, 118 companies have fallen off the list, either because they have grown into the Fortune India 500 or because they are just not big enough anymore. That’s quite a churn, but it’s nothing like what we’ll see next year. To explain that, allow me to get a little technical.

The Next 500 list is, essentially, a continuation of the Fortune India 500 list. Together, they rank India’s 1,000 largest companies. The 500 list of 2017 should be seen with the Next 500 of 2018. Both lists are built on the basis of audited financials for fiscal 2017, that is, the financial year that ended in March 2017. Sounds dated? But it really isn’t. Listed companies have six months to publish their audited annual reports, which means most of these reports are available by the end of October. What that means in the context of the Next 500 is that the financials available do not take into account the effect of GST or the goods and services tax, which came into effect in July 2017.

Those who track these lists may already be familiar with another external factor that I mentioned when introducing the 2017 list of India’s 500 largest companies: the introduction of the new Indian Accounting Standard (Ind-AS) which aims to make Indian accounting standards comparable to global standards.

Ind-AS has had an impact on the profit declared by the Next 500 companies. Total profit of the Next 500 companies was up 43.2% (Rs 16,127 crore) from last year. There were 83 loss-making companies this year, with an average loss of Rs 236.5 crore; the average profit of the 417 profit-making companies was a far lower Rs 85.8 crore.

When the Next 500 performance is seen through revenue clusters, there are 96 companies with revenue above Rs 1,500 crore which account for 27.8% of total revenue and 30.3% of total profit. In the next cluster are 81 companies with revenue between Rs 1,250 crore and Rs 1,500 crore, which account for 19.6% of total revenue and 35.6% of total profit of the Next 500 companies. The next cluster is of 117 companies with revenues of Rs 1,000 crore to Rs 1,250 crore, which account for 23.3% of revenue and a mere 0.9% of total profit. The bottom 43 companies, which clocked revenue under Rs 700 crore, accounted for 5.1% of the total revenue and a loss of Rs 283 crore.

More interesting is the difference in the sectors that performed well. In the larger companies (in the 500 list), the oil and gas sector accounted for the largest revenue share. In the Next 500, that place goes to the capital goods sector, with 47 companies accounting for 9% of total revenue and 9.2% of total profit. Auto ancillaries takes second place, with 42 companies. These 42 account for 8.8% of total revenue, but a much higher share of profit (13.4%).

It looks like services companies are making a comeback. Last year, services accounted for a scant 1.4% share of the total profit; this year, that’s shot up to 32.2%.

Not everyone is delighted with the performance of these companies. Shareholders are an extremely disappointed lot, as equity dividend fell 62.8%. It’s steep, yes, but it’s worse when you see this fall in light of a 15.6% growth in equity dividend last year. The blame must fall on Ind-AS. Earlier, proposed dividend was accounted in the financial year for which the dividend was proposed. Except for interim dividend, which was paid in the same financial year, the proposed dividend used to be approved by the shareholders at annual general meetings and was effectively paid in the subsequent fiscal. The new norms call for accounting for the dividend in the year it is paid, and not just proposed. This very change was the reason why the Fortune India 500 list of 2017 saw a 21.2% annual decline in dividend—the highest since 2010. And a similar fall is seen in the Next 500, too. Against 283 companies which doled out dividend worth Rs 7,063.4 crore in the 2017 list, this time the number of companies is down to 111, with a total outlay of Rs 2,626 crore.

Here’s something that we are asked every now and then: Is the Next 500 list largely a PSU list? The answer is a definite no. There are only 22 government-owned entities on this list. Together, they account for just 5.3% of the total revenue. There are also 64 foreign-owned companies on this list, accounting for 12.9% of the total revenue. The remaining 414 are in the private sector, and account for 81.7% of the revenue.

But enough of the data slicing. On with the list. Just remember, it’s vastly different from last year’s list, and will be even more different from next year’s.

(This was originally published in the June 15 - September 14 special issue)

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