The past five years have been enormously challenging for Indian businesses. It’s been chaotic — alongside policy changes, the economic environment has been dampened by demand destruction, oversupply, cash crunch, cost pressure and all kinds of issues. The result: there has been a deterioration in the performance of companies of all shapes and sizes.
Ironically, ever since the first year (2012) when we started the exercise of identifying fastest growing companies, the list has consistently shrunk. To make it to the Outlook Business Fastest Growing Companies shortlist, a company should have clocked sales and net profit of 20% compounded annually over the past five years, a debt-equity of less than 2x and a return on capital employed of over 15% in each of the past five years, demonstrating consistently good quality of earnings. Five years ago, there were more than 40 companies that boasted a growth of over 25% compounded over the previous five-year period, along with the other criteria. This year, even with a lower growth threshold, the list comprised only 14 companies.
Of these, the seven companies we have profiled this year are an eclectic mix. If Avanti Feeds has seen a huge surge in profit thanks to the jump in shrimp exports, Chaman Lal Setia, a family-owned enterprise, has seen its basmati rice exports gallop with the next generation coming on board. Ditto for Gufic Biosciences, where the next gen has altered the company's growth trajectory. Then, EPC contractor Dilip Buildcon has not only kept its head above water, but also managed to swim through turbulent times when most other infra players have drowned in debt. Indian Terrain is a home-grown brand success, while Tiger Logistics is riding the wave in a growing sector and so is CMI.
Now, after the fifth edition we are wondering how many companies will show up next year, considering the slow pace of economic growth. In all likelihood, we have to temper our expectation and redefine what can be termed as “fastest” to align with the new normal, or take a break, till the economy turns vibrant enough for companies to flourish and meet our stringent criteria.