8/8/2019 Brand Slams

1/1

N THE FACE OF IT,India Incs leading

brands seem to havedone quite well in

2009-10 a yearwhen the world econo-my was on its knees,gasping for breath in the

aftermath of a recession. In such a year, the com- bined brand value of the top 50 companies rose15% to $76 billion, according an annual surveyof Indias Most Valuable Brands by BrandFi-nance, in an exclusive partnership with The Eco-nomic Times. The figure had remained stagnantat $67 billion last year over $66.8 billion in 2008.

The top 50 brands may have gained $9 billionin value, but in reality only five companies ac-counted for as much as $8 billion of that increase.(see chart Top Gainers). More importantly, justone company, Tata Motors, registered a $5.3 bil-lion growth in the value of its brand single-handedly accounting for about two-thirds of thevalue growth of the top 50 companies.

This, at once, brings two quest ions into play.First, how did Tata Motors manage to unlockso much value in an intangible asset called

brand? And second, where did other compa-nies miss out and how are they now planningto grow the value of their brands?

The answer to the first largely lies in its abil-ity to unlock some value of Jaguar and LandRover brands. JLR was part of a larger con-glomerate (Ford). So the market couldnt val-ue them (at the time of the deal), says Carl-Peter Forster, CEO and MD Tata Motors.

The second question is engaging India Inc likenever before. New global compulsions are forc-ing large business groups, like the Tatas for exam-ple, to take a complete re-look at the way brandshave been managed. The group is now looking tocraft an all-new architecture for global brandmanagement. The Tata name is a valuable

brand property and is now like a landscape thathas to be nurtured to come up beautifully, says RGopalakrishnan, executive director of Tata Sons.

Business families such as Godrej, Dabur and

GMR have drafted guidelines on how scionsstarting new business ventures can and cannotuse the brands. They are seeing themselves asmere custodians of brands an asset that needs

to be preserved and nurtured for perpetuity.According to Amit Burman, non-executivevice chairman of Dabur India, the Burmanfamily has decided that no member who plansto float a new venture in his individual capaci-ty would use the brand Dabur. It is only whenall the family members collectively set up anew venture would they be allowed to use the

brand, he says.A few are exploring brand holding compa-

nies pretty much along the lines of holdingcompanies that control the equity a family hasinvested in group companies. We have divid-ed group companies according to product seg-

ments and each company uses brand Godrejfor that category alone, says Adi Godrej. Forinstance, Godrej Consumer Products owns the

brand for only FMCG, while Godrej & Boyceowns Godrej brand only for the consumerdurables. So, if tomorrow, Godrej Consumerenters a new category other than FMCG, it willnot use the brand Godrej.

Sectors like IT that have so far competed onthe Indias low-cost advantage are now figur-ing out that a stronger brand equity can helpfind better traction with customers and helpearn better profit margins.

Implicit in this is the assumption that IT com-panies will have to put the creation of long-term

brand value ahead of short-term compulsions.Short-term profit margins will need to be sacri-ficed with an eye on making the brand stronger

in the long run. This is true not just to the IT sec-tor but for companies across industries. There isa new value creation recipe thats brewing incorporate India, says Unni Krishnan, manag-

ing director of Brand Finance India.And last, but not the least, brand manage-ment is no longer the exclusive preserve of themarketing head. CEOs, CFOs, and the entiretop management and the board of directorsare beginning to apply themselves to the task.You will read a series of stories on these very is-sues on this page in the next four days.

This is the backdrop against which the fifthedition of the Indias Most Valuable Brands Sur-vey has been done. Brand valuation has final-ly come of age. Indian brand owners will be ableto develop, buy, sell, and leverage these vital as-sets in the knowledge that they can be reliablymonetised, says David Haigh the London-

based global CEO of Brand Finance. Its literal-ly a new dawn for Indian brand owners as theyrealize the vital importance of these invisible as-sets to make the next leap in value creation.

Brand Finance uses the Relief from Royal-ty a simple approach that assumes that acompany does not own its own brand and cal-culates how much it would need to pay to li-cense it from a third party. The present value ofthat stream of (hypothetical) royalty pay-ments represents the value of the brand.

Brand Finance started its annual report onthe worlds most valuable brands in 2006 andhas valued leading global brands Wal Mart,Coca-Cola, IBM, Microsoft and Google toname few among the list of 500.

The financial services sector finds a dispropor-tionately high representation in the 2010 editionof Most Valuable Brands with 13 companies three more than last year figuring in the list .

Among Top 50, 16 brands from the last yearmoved up the ladder, 19 slipped to varying de-grees and seven retained their last years position.Amongst upwardly mobiles, Jet Airways rose thehighest, eight rungs, to No 33. Suzlon sufferedthe biggest drop, slipping nine rungs to No 31.

Team ET

INDIAS TOP

Rank 09:5 Value 10:8,454 Value 09:3,100

2010 2009 Brand 2010 200911 10 ICICI Bank 2,164 2,27712 9 ITC LTD 2,137 2,34813 13 LARSEN & TOUBRO 2,007 1,82314 15 UNITED BREWERIES 1,863 1,42115 14 INFOSYS TECHNOLOGIES 1,800 1,71916 16 RELIANCE COMMUNICATIONS1,493 1,43617 18 MAHINDRA & MAHINDRA 1,395 1,33518 17 MARUTI SUZUKI INDIA 1,193 1,41119 19 BAJAJ AUTO 972 1,01020 21 HDFC BANK 951 78421 20 HERO HONDA MOTORS 926 85922 23 TATA TEA 792 709

23 26 HDFC 769 62324 24 HCL TECHNOLOGIES 723 70325 27 PUNJAB NATIONAL BANK 713 56426 31 IDEA CELLULAR 660 51327 25 DABUR INDIA 659 63428 33 TATA POWER 619 47529 29 TATA COMMUN ICATIONS 611 53930 36 BANK OF INDIA 602 44231 22 SUZLON ENERGY 602 74532 34 BANK OF BARODA 601 46633 41 JET AIRWAYS INDIA 541 33134 * CROMPTON GREAVES 541 035 * CANARA BANK 525 036 35 JSW STEEL 520 44737 30 GRASIM INDUSTRIES 512 53138 * ADITYA BIRLA NUVO 506 24739 32 INDIAN HOTELS 496 48040 40 PANTALOON RETAIL IN DIA 445 35341

37 VIDEOCON INDUSTRIES445

41642 38 AXIS BANK 428 40443 47 RELIANCE INFRASTRUCTURE 393 26444 39 KOTAK MAHINDRA BANK 391 35945 * S. KUMARS NATIONWIDE 371 046 * PUNJ LLOYD 364 047 * ARVIND 363 048 * UNION BANK OF INDIA 340 049 45 ESSAR OIL 335 31850 * IDBI BANK 299 0

- 28 RANBAXY - 552- 42 DLF - 330- 43 JAINPRAKASH ASSOCIATES - 326- 44 DR. REDDY LABS - 320- 46 GMR - 238- 48 TATA CHEM ICALS - 262- 49 ASHOK LEYLAND - 259- 50 BHARAT FORGE - 251

Rank 09:1 Value 10:7,040 Value 09:7,844

Rank 09:2 Value 10:6,301 Value 09:5,480

Rank 09:4 Value 10:4,367 Value 09:4,177

Rank 09:3 Value 10:4,304 Value 09:4,807

Rank 09:7 Value 10:3,159 Value 09:2,512

Rank 09:6 Value 10:2,945 Value 09:2,620

Rank 09:12 Value 10:2,943 Value 09:2,264

Rank 09:8 Value 10:2,492 Value 09:2,370

Rank 09:11 Value 10:2,235 Value 09:2,274

Rank Value

THE NEXT40 IN THE BIG LEAGUE

Riding onthe Nano, the worlds cheapest car, andsmooth integration of itsacquired Jaguar LandRover, Tata Motor hasdemonstrated a huge

potential to create value

The petrochem-to-retailmajor, surprisinglypushed to the secondposition, suffered a bigbrand value erosion, butits ability to recoup

remains unchallenged

The state-run bank,although moved a rankdown, still retains itscharm as the biggestbanking brand in thecountry and has added

huge value this year

Out of the woods ledby global meltdown last year, largest technologycompany in the countryheld its own at No. 4and managed to limp

ahead in brand value

Dropped two rungsdown, this state-run oilcompany increased itsbrand value on the backof subsequent oil pricehikes and ability to cre-

ate value for investors

Indias largest privatetelco is fast expandingglobal reach to drive value. After Warid Tele-com, it has snapped upZains African business

and Telecom Seychelles

Surging consolidatedprofits, that grew 158%last fiscal, an the back ofhigher crude throughputand sales helped the oilmajor make incremental

growth in brand value

With increasingdemand for steel and noGreenfield projects insight, Tata Steel holdstremendous potential forgrowth on account of its

global footprints

The companysdiversifi-cation strategy or derisk-ing model with lowdependence on a singlemarket or client helped ittied over recession and a

robust last year

With earnings pershares more than dou-bled during last year, theoil major from publicsector unit moved a slotup, to number 10 for the

first time

Indias 50 mostvaluable corporatebrands increasedtheir combinedbrand value by $9 billion in 2010 with the biggest,Tata Motors, aloneaccounting foralmost two-thirdsof it. Other businessgroups too are now looking for ways totake good care of their brands

IN THE FIVE YEARS SINCE WEfirst startedpublishing t heannual analysis of Indias MostValuable Brands, the wealthcreation algorithm of Indiasleading companies hasundergone a tectonic shift. It isincreasingly obvious that tradi-tional manufacturing and trad-ing-based, We make, youtake business philosophy isgetting wiped out.

There is considerable excite-ment about Indias GDPestimates, plentiful inflow ofglobal capital and strength ofequity markets. Yet someintrospection is needed by thefirms about the sustainabilitydrivers of profitable growth,which they have enjoyed withrelative ease till date.

Twenty years ago, things likecustomers, brand, stakeholderrelationships or intellectual prop-erty did not matter. But now, hy-per competitive markets, rapidinnovation and choosycustomers are becoming thenorm rather than an exception.This puts customers at the centreof the business and makes brandsthe pivot of a value exchangeinterface between customers andthe enterprise.

In the next decade,sustainable businesses are thosethat will learn to walk the talkon customercentricity andconstruct a brand and intangibleasset-heavy business design. A

brand-led business design andinvestment thesis is not a fancyoption, but a necessity to deliver

on the businesss full potentialand for long-term viability.

Brand Finances global andIndian experience shows that alarge majority of businesses areoverbalanced towards short-term fire-fighting priorities

because they have little or novisibility into directing manage-ment attention and investmentsinto future value-producingactivities driven by brands andintangible assets.

The goal of this annual indexis not only to provide a snapshotof Indias biggest and mostpowerful brands, but also ignitean informed debate about whatreally matters for Indian firms adopting brand value as a surro-gate for business value creationcapability in the long run.

It is critical to bridge the gap between Delivering Today(short-term priorities) and Cre-ating Tomorrow (long-rungoals) of any business by provid-ing a common platform and setof metrics that can be used bythe senior management as wellas by analysts and investors.

O

Y-O-Y FALL IN BRAND VALUE

SUZLON ENERGY -19%MARUTI SUZUKI INDIA -15%INDIAN OIL CORPORATION -10%RELIANCE INDUSTRIES -10%ITC -9%ICICI Bank -5%BAJAJ AUTO -4%GRASIM INDUSTRIES -4%HINDUSTAN PETROLEUM CORP -2%

Paradigm shift in wealth creation

TATA MOTORS

1 2 3 4 5 6 7 8 9 10RIL SBI TCS INDIANOIL BHARTI AIRTEL BPCL TATA STEEL WIPRO HPCL

GUEST COLUMN

173 %MOTORSTATA

TOP 10 GAINERS

-19 %ENERGY LTDSUZLON

TOP 10 LOSERS

DROPPED*New Entrants

Y-O-Y RISE IN BRAND VALUE

JET AIRWAYS INDIA 64%RELIANCE INFRASTRUCTURE 49%BANK OF INDIA 36%UNITED BREWERIES 31%TATA POWER CO 30%TATA STEEL 30%BANK OF BARODA 29%IDEA CELLULAR 29%PUNJAB NATIONAL BANK 26%

4

ONLY FIRMS LISTED ONBSE were considered forthe study. Also, those witha number of stand-alone

brands were eliminated.Hence, no Amul or HUL.Five years of historic rev-enues and current marketvalue of the firms were ob-tained using Bloombergand other publicly-avail-able sources.

Evaluation of top 500firms (by market cap) wasused to arrive at the Top 50.

Only public data bro-ker reports, annual reportsand market research was used for the study.

The valuation was doneusing the 'Relief from Roy-alty' approach, which as-sumes that a firm does notown its own brand and cal-culates how much it wouldneed to pay to license itfrom a third party. Thepresent value of the (hypo-thetical) royalty representsthe brands value.

How WeDid It?

* THE ECONOMIC TIMES MUMBAI MONDAY 25 OCTOBER 2010

CORPORATE BRANDS

BRAND SLAMS

TUESDAY : How Tata Motorsunlocked the real value of the

Jaguar and LandRover brands

WEDNESDAY: The Family Brand how businesshouses are managing it

THURSDAY:

Managing Brands The Tata Way

FRIDAY: IndianITs BrandChallenge

Upcoming Special Features

ARINDAM

M UNNI KRISHNANMD,BRAND FINANCE INDIA

METHODOLOGY

Value In Million Dollars