BPL Ltd, as a part of its strategy to improve its shareholder-value, has for the first time measured its intellectual capital. In line with the international trend of assessing this intangible strength, the company has, for the financial year 1997-98, estimated that its intellectual capital is worth Rs 125.44 crore.
Intellectual capital is the difference between the market capitalisation of a company and its book value on that date.
"When one buys a stock at Rs 250 while its book value is Rs 100, it is clear that the incremental amount is paid for competitive skills not reflected in the balance sheet which are expected to drive corporate profits in the coming years. An averaged calculation over a period of time enables a more stable and corrected reading of a company's intellectual capital," a BPL spokesperson told Business Standard.
According to the company, this step has been taken as the investors preference is shifting towards companies which are building their strengths more in their people, brands and customer preference than in their plant and machinery.
"Over the last few years, we have created considerable intellectual capital in the field of consumer electronics and the showcasing of this intangible asset is an attempt which will enable a broader understanding and appreciation of the human resource we have built over the years," the spokesperson said.
Indicating how the company creates its intellectual capital, the official said that the company has used a five-pronged model for this purpose.
The constituents _ human capital, technology capital, structural capital, brand capital and customer capital _ are not isolated drivers and are inter-related and work as different arms of the same corporate body. The advances made by one are translated into gains for the other and so on, resulting in tangible evidence like a higher profit or a larger market share.
"The sequence does not end there: the ploughing back of corporate profits into productive assets _ a higher installed capacity for example _ creates room for recruiting people with more specialised skills. This accelerates the sequence for enlarging the intellectual capital process," added the company spokesperson.
