News: Crisis separated the men from the boys

Strategic HR

Crisis separated the men from the boys

The crisis triggered by the 2008 Lehman Brothers collapse separated the men from the boys of India Inc. The immediate impact of the crisis was a sharp and sudden decline in India Inc's earning potential. Business Standard analyses that from 2003 to 2008, the earnings of India's top 50 companies, part of the Nifty 50 index, increased at a compound annual rate of 24.7 per cent. The crisis led to contraction in earnings for the next two years; when the economic recovery started in early 2009, earnings rose just 11 per cent annually from 2009 to 2013.

The crisis triggered by the 2008 Lehman Brothers collapse separated the men from the boys of India Inc. The immediate impact of the crisis was a sharp and sudden decline in India Inc's earning potential. Business Standard analyses that from 2003 to 2008, the earnings of India's top 50 companies, part of the Nifty 50 index, increased at a compound annual rate of 24.7 per cent. The crisis led to contraction in earnings for the next two years; when the economic recovery started in early 2009, earnings rose just 11 per cent annually from 2009 to 2013.

The report points out that despite the tough growth environment, 37 companies managed to beat their peers on all growth parameters - revenue, profit and market capitalisation. Besides, their net worth rose faster than their liabilities, indicating now, they were much stronger financially than in the eve of the Lehman collapse.

Tyre major MRF, for instance, grew faster post-2008 than in the preceding five years. Not only did its revenue nearly triple from 2008 to 2012, its profit and net worth also increased three times during the period. The case is the same for TCS and Titan Industries.

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Topics: Strategic HR, #Updates, #National

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