Are Bigger Companies Losing Their Relevance?

Are bigger companies losing their relevance in the economy? A look at the performance of the Fortune India 500 this year compared with past years and relative to the overall economy shows that bigger companies still matter.

- Rajiv Bhuva & Ashish Gupta

“There is no law of nature that the most powerful will eventually remain at the top. Anyone can fall and most eventually do.” That was business consultant and author Jim Collins, in his 2009 book How The Mighty Fall. Seven years on, little has happened to make those words any less true. India Inc. has seen a dismal fall in the past few years; it reported its worst earnings in the past 20 years in 2015-16 with net sales growth plunging from a healthy 9.5% in FY13 to -3.7 % in the first three quarters of FY16. That performance is reflected in the 2016 Fortune India 500, which has seen its first fall (of 1.9% in aggregate revenue) since 2010.

This is not how it was supposed to be. From FY03 to FY08 (and later from 2012 to 2014), India Inc. was flying high. It was “enjoying a dream run, with industry and services growing at close to 10% every year during this period,” says Sunil Sinha, principal economist and director, public finance, India Ratings. The debt-led, cyclical boom coincided with an exceptional rise in global trade—exports grew by 17.8% and imports by 20.1% every year—which saw India’s economy growing at 8.8% a year.