Consistency is what counts. And, perhaps, nothing matters more than a consistent performance, achieved especially when the going gets tough. In acknowledgment of this trait as the hallmark of a winner, we identify consistency (in performance) as the theme for this year's annual special issue, The Analyst 500.
Great companies like great sportspersons believe in consistently churning out their best performances, creating new milestones, one after another, with every performance of theirs. It does not matter to them what the setting is, who the rivals are, and how challenging the environment is. As the global business environment suddenly turns gloomy, the focus is back on the consistency factor, and rightly so. The Analyst 500 exclusively focuses on this aspect, as India Inc. faces a tough business environment in the aftermath of the global credit crisis, which also exposes it to an unprecedented challenge of this kind after embarking on the liberalization and globalization bandwagon nearly two decades ago. While the performances under study pertain to a period much before the global credit crisis unfolded and became pronounced (it was not until at least before the mid-September this year when the US insurance giant revealed about its financial woes related to its exposure to derivatives called the Credit Default Swaps, which also signaled the onset of the global credit crisis), the fiscal 2007-08 nevertheless marked a change in the business environment, as corporate India was beginning to face a slew of challenges.
First and foremost, the rising rupee had begun to make a dent in the bottom line and hence in the confidence of major export-driven sectors such as software, BPOs and textiles, among others. This was also the period when international crude oil prices were on a fire, which substantially hit the profits of domestic oil refinery and marketing companies. Crude oil prices doubled to touch a record $100 per barrel for the first time in January 2008 from $50 per barrel a year ago. And if this was not enough, a combination of rising commodity prices and interest rates just added to the pressure on the domestic firms. Led by strong commodity prices, the headline inflation, based on movement in the Wholesale Price Index (WPI), touched a high of 7.7% at the end-March 2008 from 5.9% a year ago. And now with the unfolding of the worst ever credit crisis of modern times since the Great Depression of the 1930s, which has shaken the global economy to its core, India Inc. faces unprecedented challenges. Can they sustain their recent sterling performances?
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