The Rise of India’s Emerging Companies

IT HAS BEEN a tough year for business with parts of the country being locked down multiple times due to the pandemic. But at the end of it, India’s emerging companies came out stronger. In a pandemic-stricken year, the Next 500 companies (with revenues of between ₹500 crore to ₹2,000 crore) swung to a profit of ₹14,902 crore in FY21 from a cumulative loss of ₹46,607 crore in FY20. Revenues rose 2.46% to ₹5.51 lakh crore. Emerging companies provide depth to Indian industry as they employ millions of people across the country, especially in smaller towns. In fact, profitability would have been much higher but for 92 companies that ran into losses. In all, profits fell for only 145 firms.

Fortune India celebrated the achievements of India’s Emerging Companies at the Next 500: Breaking New Frontiers gala event at The Lalit, New Delhi. The evening started off with two panel discussions on issues that are close to emerging companies.

The first panel — Building Strong Moat Businesses — looked at how companies could protect their business niche from being eroded by rival companies with similar strategies. As competition intensifies corporate strategies get copied by rivals at a rapid pace. The panel discussed how companies can create and retain their own niche in a hyper-competitive world. The panellists included Lalit Agarwal, chairman and managing director, V-Mart; Rashima Misra, co-founder, Milk Mantra; Sanjesh Thakur, partner (risk advisory), Deloitte India and Nikhil Singhal, director and head, top-tier business, HSBC India. They agreed that innovation, consumer centricity, network, scale and tracking mega trends early on were among the strongest business moats.

The second panel — The Talent Challenge — looked into one of the biggest issues that emerging businesses face. The panel comprising Dinesh Thakkar, CMD, Angel One; Binu Rajendran, director, Walkaroo; Bhuvana Subramanyan, chief marketing officer, Randstad India and Vidya Sagar Gannamani, chairman and MD, Adecco India, discussed the hurdles and remedies related to onboarding talent especially in non-metros. While getting quality talent in non-metros was difficult, retaining high-quality talent was an even bigger problem.

As part of the discussion, Thakkar said promoters have to recognise that human capital is an important part of success. After Covid, working from anywhere was a major attraction. “So, they could work from any place they liked to. Youth want to see if he would be of any value to the firm,” he said.

The event culminated with awards given to companies that performed well in a tough year. There were two sets of awards — Sectoral Stars and Rising Stars. The Sectoral Star awards were given to companies that recorded the highest growth in their sector during FY21. The sectors included auto ancillaries, cement, engineering, FMCG, IT, NBFCs, textiles and metals. The Rising Star awards were given to the five companies that rose the maximum number of ranks in this year’s The Next 500 ranking over 2021.

The award for auto ancillaries went to Sharda Motor Industries, while NCL Industries was the winner in cement. The engineering sector award went to Praj Industries and Hindustan Foods was the winner in the FMCG sector. The IT award went to Mastek and Nippon Life Asset Management was the winner among NBFCs. The winner in metals was Hindustan Copper, the only state-owned company to bag an award. The textiles award went to Lux Industries.

In the Rising Stars category there were five awards. These were given to GMM Pfaudler, Angel Broking, Hindustan Foods, Sharda Motor Industries and RHI Magnesita India.

The winners were felicitated by Chief Guest Sarbananda Sonowal, Union Minister for Ports, Shipping and Waterways & Minister of Ayush, Guests of Honour Arjun Ram Meghwal, Union Minister of State for Parliamentary Affairs and Culture, and Amitabh Kant, CEO, NITI Aayog.

Addressing the audience, Sonowal said, “Infrastructure is a key driver for the Indian economy. To power the vision of India becoming a $5-trillion economy by 2025, infrastructure development and upgrade will play a better role.” He added that the PM Gati Shakti project is an attempt to reduce logistic costs and improve trade competitiveness. India’s logistics cost at 13-14% of the country’s GDP is higher than the global average of 8-9%. The reduction in logistics costs will spur India’s exports in the longer term.

Meghwal talked of this being the Asian century where India is expected to be the leader in the continent. He mentioned that the reforms under the Narendra Modi government — GST, reduction in compliance burden, IBC — have helped improve the Ease of Doing Business ranking. Over the years, India’s Ease of Doing Business ranking has risen from 142 in 2014 (when the BJP government came to power) to 63 in 2019. This is out of 190 countries. To improve ease of doing business, the government has reduced more than 25,000 compliances.

Kant said if India has to transform itself in one generation, the key driver of growth is the private sector, and the government has to act as facilitator and catalyst. He added that Next 500 entrepreneurs are the people who will shape the future. He said young Indians as entrepreneurs — with 3-4 new unicorns being created every month — are transforming the country.

The event was presented by Lenovo and powered by HSBC. Swiss watchmaker Frederique Constant was the time partner.