GROWTH is the lifeblood for any company. In the corporate world, a company that is not growing is left behind on the highway of success as road kill. It is for this reason that we took upon ourselves the task of examining the companies that have been in overdrive over the past couple of years and emerged as the fastest climbers in ET500 rankings. While most of the front-runners are new companies that have made it big, some established companies are on the list too, thanks to nimble adjustments in their businesses and operations.

With strong growth and rising profit margins, the Indian economy has been in a heady phase during the past couple of years. India Inc, as a whole, has posted a 20% CAGR in sales over the past three years. ET500 companies have done even better, posting a CAGR of 26% over the same period. But this story is about the companies which have grown at breakneck pace.

The fastest growing company in ET500 is House of Pearl Fashions, which has become a Rs 1,000-crore enterprise from a Rs 5-crore company three years ago. But this figure can be attributed to the base effect, since the company started out recently. Discounting that, the best performer in the past three years is Videocon Industries, which has grown by more than 1,000 times in the past three years. Its rapid growth can be attributed to its restructuring, which has enabled it to emerge as the world's largest TV picture tube manufacturer and an electronic appliances giant. Videocon's success is reflected in its overall ranking in ET500, at No 30.

Next in line is Housing Development and Infrastructure (HDIL) which, on an average, has been more than quadrupling its revenues every year in the past four years. It has benefited from the booming real estate business. HDIL is followed by two IT companies, Teledata Informatics and Cambridge Solutions, with CAGR of 298% and 216%, respectively, over the same period.

Looking further down this list, we find it is dominated by companies from construction, real estate and infrastructure sectors. Companies like GMR Infra, Lanco Infratech, Parsvnath Developers, Era Constructions, Suzlon Energy and Unitech are all pretty high up in the honours list.

Most of the top companies in this list are relatively new. That is perhaps the reason for their rapid growth. Only eight of the top 20 companies were listed in FY04. But the presence of new companies at the top of the pecking order indicates their success in battling competition and emerging on top.

At the same time, unbridled growth without corresponding improvement in margins and profits indicates a troubled future for a company. A case in point is Deccan Aviation, which has posted a topline CAGR of 170%. But the company's profit margins have been falling and it is deeper in the red now than it was in FY04. The same is the case with Matrix Labs, which has seen its margins heading south over the past four fiscals. Other notable examples are GMR Infra and Suzlon Energy. GMR's margins slipped to 9% in FY07 from 46% in FY04, while Suzlon's margins fell to 10% from 20% three years ago. But the company enjoys a lot of success, since it is ranked 49 in ET500.

An ideal scenario for any company is when it grows at a brisk pace while maintaining healthy profit margins. Most companies have managed to do so. In fact, the profits of ET500 companies have seen a CAGR of 30%, compared to net sales CAGR of 26%. House of Pearl Fashions leads in profitability growth too, with 552% CAGR. Videocon is again placed second with a profit of Rs 792 crore in FY07, compared to a loss of Rs 2 crore in FY04. In any business, rising toplines and bottomlines are meaningless if they do not create wealth for shareholders. Of the eight relatively older companies among the top 20 fastest climbers, six have posted a three-year CAGR of over 100% in m-cap. Videocon and Electrotherm India lead this pack with a three-year CAGR of 377% and 305%, respectively, in m-cap.

TOP