Construction World Annual Awards 2012 - Jury Meet
The panel members received a report with quantitative analysis one week before the jury meet so that they could study and digest the numbers for each and every category. Nonetheless, a presentation was made on the parameters of the model and reasons for selecting the companies were debated. Further, cut off levels applied for selecting companies in various categories were discussed.
Data has been sourced from published annual reports and results published by the companies. In case of non-listed companies, the same has been sourced from the company directly by seeking their audited figures. Various checks and balances were put in place for data compilation and its authenticity. The jury was also informed that the data was further audited selectively to ensure that typo errors do not creep in.
The jury was asked to also indicate some companies that should have been in the list or reckoning. Such companies were noted and put to test on the model. The findings therefore took into account suggestions of the jury. In some of the categories the Jury did point out that some of the companies in cements and ceramics were missing. They have been considered for the model now.
The jury members approved the changes in the category size of construction companies as under: Above Rs 3,000 crore for the large category; between Rs 1,000 and Rs 3,000 crore for the medium category; and between Rs 1,000 and Rs 200 crore for the small category.
Some members suggested that we consider only EBITA for all companies instead of a mix of PAT and EBITDA for some companies, which have diversified businesses. However, the counter argument was that PAT captured the interest costs in the case of debt-heavy companies, depreciation allowance and tax provisioning, which reflect the true position of a company. Thus, for the sake of a few companies, the change in considering EBITDA was not appreciable. Hence, the jury was convinced that only PAT should be considered, and wherever PAT was not available, EBITDA could be considered especially in cases of multiple divisions in a company of which 'construction' was only one of them in case of ranking of construction companies. A jury member was of the opinion that the methodology should include qualitative parameters - along with the two quantitative parameters - revenue growth and PAT growth. However, the general consensus was that since the methodology identifies the largest and fastest growing companies, it should be a numbers game, and the two quantitative parameters were good enough for the exercise. Qualitative parameters would only vitiate focus and would be very subjective. It was also acc¡epted that companies with a de-growth in any of the two parameters should not be considered for the award.
The panel raised the issue of PAT growth being influenced by extraordinary income or loss, if any, in the accounting year. It suggested that the methodology should net out such occurrences across companies. This was accepted and incorporated in the methodology.
The issue of equal weightage for revenue growth and PAT growth was revisited, with some members proposing a higher weightage for revenue and a lower one for PAT, since PAT is subject to manipulation. However, assuming that a company's finances are audited by reputed auditors, the scope for manipulation was minimal. Therefore, the unanimous opinion was to continue with equal weightage.
The jury members unanimously approved the methodology concluding that it is consistent across sectors and companies and hence should not be tampered with. The jury also debated at length the Construction World Man & Woman of the year for 2012. Presentations were made by Falguni Padode, Group Managing Editor and Sunil Damania, Investment Expert.