The market capitalisation of India Inc has eroded so much that as many as 86 per cent of actively traded shares or 1,220 scrips are available at a 65 per cent discount to their aggregated net worth.
The combined market capitalisation of these companies adds up to just Rs 56,922 crore, compared with their aggregate net worth of Rs 1,62,811 crore. This means, the share prices of these companies are quoting at 35 per cent of their net worth.
The net worth of a company is its equity capital plus reserves and surplus (excluding revaluation reserves) minus accumulated losses. The book value of shares, therefore, is the net worth divided by number of shares outstanding.
The list of 1,220 actively traded shares include 70 from A group, 363 from B1, 771 from B2 and 16 from Z group of the Bombay Stock Exchange. Of the sample, 445 companies reported a net loss during the quarter ended June 2001.
The companies in the list are from sectors like information technology, entertainment, communication, chemicals, pharmaceuticals, cement, steel, automobile and consumer electronics.
The list also includes companies from business houses such as AV Birla, BPL, Kirloskar, OP Jindal, RPG, Tata, Garware, Torrent, BK Birla besides others.
The market capitalisation of Himachal Futuristic Communica- tions Ltd stands at just Rs 340.50 crore against its net worth of a hefty Rs 2,301 crore.
The AV Birla group company Grasim Industries has a net worth of Rs 3,075 crore, but the market prices it at a paltry Rs 260.40 crore.
Similarly, Indo Gulf Corporation, another group company with a net worth of Rs 1,721 crore has a market capitalisation of Rs 769 crore.
Tata Engineering has a huge net worth of Rs 3,254 crore as against the market value of Rs 1,933 crore. Its shares are quoted at Rs 74.65 compared to its book value of Rs 127.15.
Tata Steel is quoted on the bourses with a total market capitalisation of Rs 3,100 crore compared with its net worth of Rs 4,748 crore.
Tata Power has a net worth of Rs 3,345 crore while its market capitalisation is just Rs 2,129 crore.
Similarly, Pentamedia Graphics, engaged in the animation business is quoted at a paltry Rs 46.70 against its book value of Rs 260 per share.
SSI, the software training major, has a book value of Rs 613 per share in June 2001 and yet its current market price is Rs 150.50 reflecting a 75 per cent discount to its book value.
