The Traffic

“The main reason that makes road safety suffer in India is that instead of one specialised department to tackle the problem, we employ a number of agencies to look into road accidents,” says Nishi Mittal, Scientist, Central Road Research Institute.

In India, the traffic police still lack the authority to register and investigate road accidents. In case of an accident, it is the non-traffic police who are expected to look into it. This obviously does not give any opportunity for specialisation in the concerned field. As a result, reliability and regency of data on national scale is affected. Central agencies depend on state governments for data on road accidents as traffic management is a state subject

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Conventional wisdom teaches us that a fool and his money are soon parted

Based on this example, the first company is better at converting its investment into profit. Godrej Consumer Products Ltd. (GCPL) emerges as the numero uno in the RoA, followed by Nestle India and ICSA (India). Godrej has a three year average ROA of 1.36 (over an average asset base of Rs.680 million), Nestle has an average ROA of 0.79 (over an average asset base of Rs.3.45 billion) and ICSA, which is into power utilities & energy management business, has a ROA of 0.72 (over an average asset base of Rs.78.4 million).

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So why is m-cap of pristine importance and who are the winners?

That is, increase or decrease in share price of a company can be an indicator of the company’s performance; as the same is affected by many external factors like issue of bonus shares, right shares, share splits, share consolidations, and of course the present value of future cash flows to the corporation. The market cap of a company – that is computed by multiplying the market price per share of a company with the total number of shares – should technically remain unaltered in all the aforementioned cases (except due to factual performance changes in the corporation) as the fluctuations in share prices get adjusted automatically due to the proportionate changes in the total number of shares.

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ITC’s net sales for the year 2005-06 were Rs.97.86 billion

ITC’s net sales for the year 2005-06 were Rs.97.86 billion, which is an increase of 29% over last year. Profit after tax (PAT) of the company increased from Rs.21.91 billion in FY05 to Rs.22.35 billion in FY06. ITC’s market capitalisation expanded by a mind boggling 120% in FY06 and reached Rs.732 billion. “Any strategy for inclusive and sustainable growth would necessarily need to encompass rural India,” reasons Y. C. Deveshwar, Chairman, ITC. And the proof of the pudding has been in ITC’s e-choupal model, with which the company has tried to tap the hinterland; a reason due to which this company has become a case study at various leading business schools across the globe. Truly, at one time in the past decade, this company was talked about in the media just for the internal wars brewing within the boardrooms of the company, when its parent British American Tobacco was trying to wrest control away from the typically “Indian” management monopolising decisions.

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