How We Did It

THIS IS THE THIRD EDITION of Fortune India Best CEOs that identifies and ranks the best corporate performers in India Inc.

The methodology takes into consideration quantitative as well as qualitative assessment of financial and strategic performance of India’s Best CEOs. It all starts with how the enterprise has performed financially. To do that, we extract data for the last four fiscals — FY21 to FY24 this time round — for all listed companies with the Registrar of Companies to identify their performance over the past three fiscals. A CEO’s performance can be judged by financial metrics, but there are many aspects which are not purely driven by numbers. To bring in the qualitative inputs, the quantitative findings were presented to a jury. The jury this year comprised of Cyril Shroff, managing partner, Cyril Amarchand Mangaldas & Co; Hemendra Kothari, non-executive chairman, DSP Investment Managers; M. Damodaran, former chairman, Securities and Exchange Board of India (Sebi); Prashant Jain, founder, 3P Investment Managers; Rajat Dhawan, managing partner, McKinsey & Co, and Vinod Rai, former Comptroller and Auditor General (CAG) of India. Sanjiv Goenka, chairman, RP-Sanjiv Goenka Group, chaired the Jury.

In the quantitative study, we ran the numbers through a set of filters to eliminate non-performers.

First, we considered companies with net sales of ₹1,000 crore or higher. Any company that incurred a loss during any of the three fiscals was not included. For all private firms, the CEO had to be in place for the entire three-year period of the survey. In case of public sector undertakings, (PSUs) since CEOs usually have shorter stints, all CEOs who were at the helm for at least one year were considered. Companies that went public during the study period were not considered. Only companies with accounting periods for 12 months were considered. After applying all filters, a total of 345 companies qualified for the study, of which 50 were BFSI companies.

To get the financial metrics, we considered three parameters — net sales, profit after tax (PAT) and total shareholder return (TSR) — each with a 33.33% weightage. Both net sales and PAT have two elements — absolute change and three-year CAGR. Both absolute change and three-year CAGR have 16.66% weightage each. In addition, for banks, the return on assets (RoA) data was provided while for the rest it was return on capital employed (RoCE). Companies were scored on average of year-on-year absolute change in net sales and PAT and three-year CAGR for the study period.

We ranked companies on the basis of net sales apart from sectoral ranking. There are four categories: Super-large (net sales of over ₹100,000 crore); Large (net sales between ₹50,000 crore and ₹100,000 crore); Medium (net sales between ₹25,000 crore and ₹50,000 crore) and Emerging (net sales between ₹1,000 crore and ₹25,000 crore). The jury also identified winners for Super CEO 2024 (Best of the Best) and Lifetime Achievement.

In addition, we identified winners in 18 sectors. Two sectors — Auto Ancillaries and IT Services — have been split into super-large and large companies for better comparison, making it 20 sectors in all. These are Auto Ancillaries, Automobile, BFSI, Capital Goods, Cement, Chemicals, Consumer Durables, Diversified, FMCG, Internet Commerce, IT Services, Logistics, Metals, Oil & Gas, Pharma, Retail, Renewable Energy and Steel.

The jury was presented with financial data and company details that looked at the strategic initiatives by the CEO during the study period; moves to focus on growth, and steps to enhance profitability. The jury was provided details of the top three companies in each of the categories and sectors to identify the best performers. After an intense 90-minute deliberation, the jury identified the Best CEOs for 2024.