Most Valuable CEOs: Stellar Showing
The past 36 months have been particularly demanding for everyone, including corporations. Nonetheless, amidst these challenging times, many accounts of success, growth and recovery have emerged. These businesses have stood out thanks to stable leadership, a sound strategy, sufficient financial resources and cost optimisation. This special issue on Most Valuable CEOs highlights a select few of these accomplishments. It is important to note that these are not rankings, but rather a compilation of success stories from companies and their leaders in various categories, filtered and selected by our knowledge partner TechSci Research.
This exercise is also an extension of sorts of the previous two special issues, the BW 500 (issue dated February 11, 2023) and the Most Respected Companies (issue dated April 8, 2023) that we had brought out with the help of our knowledge partner TechSci Research.
For all practical purposes, TechSci Research started out by analysing and short listing companies based on certain parameters and filters that were applied to bring out the list for BW500 and the MRC (please refer to the detailed research methodology). Categorisation of companies based on their total income/turnover helped us focus on some of the consistent performers across each of the categories.
It must be made clear from the outset that the names profiled and presented in the following pages do not allude to any kind of ranking. Those who have been highlighted are merely an editorial selection out of the pool of companies shortlisted by TechSci Research. There are many more in each of the categories that we could not showcase due to space constraints. The timeframe for the analysis of company finances were chosen by our knowledge partner factoring in the financial years of 2018-19, 2019-20, 2020-21 and 2021-22.
Steady leadership at the top for an uninterrupted period of at least three fiscal years was another filter applied because of which some names could not make the cut. While presenting the stories, we highlighted the performance in FY22 in order to give some context. At the time of filing this report most of the companies had not declared their fourth-quarter and full year results for 2022-23. That is the main reason cited by TechSci Research for not factoring in the numbers for FY23.
Notable Performances
Hindustan Unilever (HUL), ranked high in our MRC issue, has been a consistent performer in the period under consideration. Despite an overall slowdown, this FMCG giant has been marching ahead posting high growth numbers while discharging its social commitments. For the fiscal year 2021-22, HUL generated Rs 11,684 crore in cash from operations. On a standalone basis, it generated revenues of Rs 50,336 crore clocking a 11 per cent growth. HUL’s profit after tax stood at Rs 8,818 crore. Its three divisions—home care, beauty & personal care, foods & refreshment -- generated Rs 16,578 crore, Rs 19,460 crore and Rs 14,105 crore, respectively. For all companies including HUL, 2021-22 was a challenging year. HUL crossed the Rs 50,000 crore turnover mark in FY22.
Tata Consultancy Services (TCS) gave another standout performance in the period under consideration including FY22 thanks to a trustworthy leadership and wholesome work culture. The company generated consolidated revenues of $25.7 billion in the fiscal year ended March 31, 2022. In rupee terms, TCS posted a net revenue Rs 1,91,754 crore, which translated into 16.8 per cent growth. “Our profitability continued to be industry-leading, with the operating margin at 25.3 per cent, and net margin at 20 per cent. Our earnings per share was at Rs 103.62, growing 16.1 per cent over the prior year. Our cash conversion continued to be very strong, with a cash conversion ratio of 104.2 per cent and free cash flow of Rs 36,985 crore,” said Rajesh Gopinathan, CEO & MD. Gopinathan is now moving on from TCS.
Another company from the Tata family, Tata Power was able to deliver a strong financial performance in this period, especially during FY22. While revenues stood at Rs 42,576 crore, up 28
per cent over the previous fiscal, EBITDA grew at 3 per cent to Rs 8,191 crore and PAT was at Rs 2,156 crore (up 50 per cent y-o-y). “We also made solid progress on some of our key issues and continued to strengthen our balance sheet. Leveraging our robust operating cash flows, we brought down our net debt to underlying EBITDA to 3.92,” said Praveer Sinha, CEO & MD of Tata Power Company. “Our domestic as well as international credit ratings received an upgrade in FY22, with our average borrowing cost narrowing 36 bps y-o-y to 6.82 per cent,” the CEO added.
How We Did It?
The team at TechSci Research started the exercise of analysing the financial data of companies a month ago for the annual special issue of Most Valuable CEOs. The research team collected the raw data to start with. We collated this, taking the BSE 500 companies as the foundation, which as always gave us the base and the representative range of listed companies. From these, we profiled the Most Valuable CEOs and assessed them on a package of parameters.
First, though, we applied a set of filters to generate a list of companies whose performances could be calibrated. The filters were companies whose CEOs had at least a three-year tenure, it a trading history of at least 700 days in the last three years, and where revenues have been greater than Rs 250 crore for the 2021-2022 fiscal.
The exercise for putting together the Most Valuable CEOs list got underway with total income for financial years 2018-2019, 2019-2020, 2020-2021 and 2021-2022 available with our database of companies. We began with a universe of 500 listed companies, keeping banks and financial companies as well as trading companies.
We arranged the filtered database into four categories: Super Heavyweight (revenue more than Rs 20,000 crore), Heavyweight (revenue between Rs 7,500 crore and Rs 19,999 crore), Middleweight (revenue between Rs 2,500 and Rs 7,499 crore) and Lightweight (Rs 250 crore to Rs 2,499 crore). For banks, interest earned (and for other companies, income from operations) was considered as revenue for the purpose of this categorisation in ranking CEOs.
We have only included companies for which data on total income was available for the last four years. The ranking of the companies is based on the average growth rate of last four years and average market capitalisation for the financial year 2022. We have not included the companies whose average growth rate was coming out to be negative. As a result, more than 150 companies with positive growth rate as well as with high income and market capitalisation were shortlisted. After getting the exhaustive list, we further came up with the list of all the companies’ CEOs, or MDs in case there was no CEO, who are working continuously in their respective companies for the last three years.
The average growth rate was given a 75 per cent weightage while 25 per cent weightage was collectively given to other parameters. We then once again reviewed the CEO name, role and ensured eligibility. —TechSci Research
