Legacy companies make way for modern businesses on the index

Family-owned firms’ predominance in the Sensex is in relative decline over the life of the index.

- KRISHNA KANT

They have ceded ground to central public-sector undertakings (CPSUs) and companies owned by independent institutions.Their number this year declined to 18 of the 30 from 22 in 1985.

Multinationals too lost part of their turf and their representation declined to two this year from five in 1985 and a high of six in 1990.

By comparison, there are now four CPSUs from none in 1985 and independent companies number six, up from two in 1985.

Among business conglomerates, the Tata group has largely maintained its presence with four in its tent this year, as against five, including Associated Cement Company (now ACC), in 1985. Two of these are original members of the index — Tata Steel (then Tata Iron and Steel Company) and Tata Motors Passenger Vehicles (earlier Tata Engineering & Locomotive Company). The biggest growth has, however, been reported by Reliance Industries Ltd (RIL), which is now the most valuable company, the Adani group, the Bajaj group, and the Bharti group. In contrast, historically big business groups such as those of various Birla wings, and those of the Goenkas, Thapars, and Wadias failed to grow and have no presence in the index today.

The scene in 1985

Family-owned firms were the most visible, besides a handful of multinationals and institutionally owned and professionally run companies. The 22 family-owned firms included RIL, Tata Steel, Grasim Industries, Bombay Dyeing, and Ceat.

There were six multinationals led by Hindustan Lever (now Hindustan Unilever) and ITC (then Indian Tobacco Company). Other Indian subsidiaries of multinationals included Nestle, Cummins, Siemens, and GlaxoSmithKline Pharmaceuticals.

Larsen & Toubro, an independent company owned by financial institutions such as insurance companies and UTI, was part of the index.

All index companies except Scindia Steam Navigation were in manufacturing.