In a moment of immense pride for the Indian subcontinent, three Indian firms have found a place in the prestigious Forbes’ list of 100 most innovative companies in the world. The three companies that have put India on the global innovation map are: Hindustan Unilever (HUL), Asian Paints and Bharti Airtel.
While Bharti Airtel at 78th position has debuted on the list for the very first time, HUL has moved up on the list from its 31st rank last year to 7th rank this year and Asian Paints has improved its ranking to 8th position from 18th position it acquired last time.
The 2017 list saw Salesforce.com replacing Tesla Motors on the top position with the prior numero uno settling for the second position. Ecommerce giant Amazon.com acquired the 3rd position, followed by Shanghai RAAS Blood Products at 4th, Netflix at 5th, Incyte at 6th, Naver at 9th and Regeneron Pharmaceuticals at 10th.
Forbes ranks companies on the basis of their innovation premium, which it explains is the difference between their market capitalisation and the net present value of cash flows from their existing businesses. The magazine considers that this difference is the bonus given by equity investors on the educated hunch that the company will continue its work on coming up with profitable new growth strategies.
The innovation premium for HUL was calculated at 68.59 per cent; Asian Paints at 68.28 per cent and Bharti Airtel at 41.4 per cent.
According to Forbes, the magazine only takes into account the industries that are into enthusiastically investing capital in innovation activities, and excludes those who have not made any measurable investment in Research and Development, which means banks and other financial services are automatically left out from the list. It also does not consider energy and mining firms, whose market value is dependent more on commodity prices and less on innovation. Besides this, in order to be included in the list, a company needs to have seven years of public financial data and $10 billion in market cap.
While two Indian companies (HUL and Asian Paints) improved their ranking and another (Bharti Airtel) entered the list for the very first time, three other Indian origin companies which had reserved themselves a place last year bowed out from the list. These were: Tata Consultancy Services (TCS), Sun Pharma and Larsen & Toubro.
Forbes annual ‘World’s Most Innovative Companies’ list has come to acquire a prestigious reputation in the investment world as investors consider it as an important parameter for innovation.
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