Video: Inside the issue, The Next 500
The Next 500 list has to be seen as continuation of the Fortune India 500 list, which we publish in December every year. While the two lists are connected, they widely differ as Next 500 list lacks predictability and concentration within few sectors. The companies in the latest edition of Fortune India Next 500 registered an annual growth of 2.6% in total revenue, while total profit grew by 43.2%.
Unlike the oil and gas sector which had the largest revenue share with 14 companies – accounting for 19.7% and 21.9% of the total revenue and profit of the Fortune India 500 companies in 2017, the Next 500 list has capital goods sector with 47 companies accounting for 9.0% and 9.2% of the total revenue and profit. The auto ancillaries’ sector, with 42 companies has the second largest revenue share – 8.8% and a profit share of 13.4%.
Here’s another interesting statistic: the total revenue of this year’s Next 500 companies, Rs 5,64,242 crore, is just 7.5% of the Fortune India 500 companies’ total revenue of Rs 75,02,274 crore in 2017. In terms of total profit, this year’s Rs 16,127 crore is just 3.6% of the main list’s total profit of Rs 4,53,218 crore.
Midsize companies lack the economies, and the advantages, of scale which the larger companies enjoy. This makes their operational arena way more challenging. A tear-down of the profit of the Next 500 companies vouches for this claim. Within the Next 500 companies’ total profit of Rs 16,127 crore in FY17, there are 83 companies with net losses adding up to 19,630 crore.
Within these 83 companies, 61 companies made a total loss of Rs 17,163.38 crore in FY17 and were loss-makers in FY16 too. While the remaining 22 loss-making companies were profitable in FY16, their total loss added up to Rs 2,467 crore. This means that 417 companies from the Next 500 list were profitable to the tune of Rs 35,757 crore. The average loss of the 83 loss-making companies works out to Rs 236.51 crore, while the average profit of the 417 profitable companies is tad lower at Rs 85.75 crore.
(Text by Rajiv Bhuva)
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