ITC is the world's 6th largest sustainable value creator: Boston Consulting Group
Titled Threading the Needle: Value Creation in a Low-Growth Economy, the report uses a database of over 4,000 companies worldwide and presents detailed analysis of the total shareholder return (TSR) of 712 companies across 14 major industries for the five-year period from 2005 through 2009. It also identifies the overall top ten value creators and the top ten in each of the industries studied. The ranking takes into account only those companies that have been creating sustainable shareholder value for at least 10 years. Performance was tracked across the 10-year period to evaluate the companies' staying power.
According to the BCG report, "The very best performers, those that make our annual rankings of the top 10 value creators by industry will be companies that find ways to "thread the needle", that is to combine increased cash payouts with above average profitable growth in what is a much tougher and more competitive economic environment.' The report further added, "What is most striking about our list is the way these top performers combine significant revenue growth with high free-cash-flow yield.'
Commenting on the ranking, K Vaidyanath, Executive Director, ITC Limited said that, "It is gratifying to know that BCG has ranked ITC as the world's sixth largest sustainable value creator among consumer goods companies globally. It is a matter of pride that ITC is the only Indian company to be featured among the top 10 in the consumer goods industry. We believe that, over the years, ITC has honed its competitive vitality to deliver superior value to its customers generating high quality earnings and returns to shareholders. ITC has delivered a compound annual average growth of 24 % in shareholder returns over the last 15 years demonstrating its leadership in sustainable value creation.
ITC's Gross Income has increased from around Rs. 5,000 crores in 1996 to over Rs. 26,000 crores in 2010. Profit After Tax has increased from a level of Rs. 261 crores to Rs. 4,061 crores in the same period. In terms of Market Capitalisation, the Company is valued today at around Rs 1,20,000 crores, up from around Rs 5500 crores in 1996. Profitability, in terms of Return on Net Assets Employed ' calculated as Profit Before Interest and Tax over Net Assets employed -- also improved substantially from 28.4 % to 41 % during this period.