Mumbai, Dec 18 (IANS): After a gap of seven years, Reliance Industries Limited (RIL) has once again emerged as the biggest wealth creator over 2014-19 with the highest ever figures of Rs 5.6 lakh crore.
According to the Motilal Oswal 24th Annual Wealth Creation Study 2019, RIL, Indiabulls Ventures and IndusInd Bank are the biggest, fastest and most consistent wealth creators, respectively, between 2014 and 2019.
The Rs 5.6 lakh crore wealth created by Reliance is the highest ever so far by a huge margin.
One of the big findings of the survey is that state-owned companies have become marginalised in wealth creation with their share collapsing from 51 per cent in 2005 to 6 per cent in 2019.
The financials sector is the largest wealth creating sector between 2014 and 2019.
Indiabulls Ventures has emerged as the fastest wealth creator over 2014-19 with stock returns at a whopping 78 per cent CAGR.
Bajaj Finance has earned the unique distinction of being in the top 10 biggest as well as fastest wealth creators. The Rs 10 lakh invested equally among the top 10 fastest wealth creators in 2014 would have grown to Rs 110 lakh in 2019 at a return CAGR of 61 per cent vs barely 12 per cent for the Sensex.
IndusInd Bank has emerged the most consistent wealth creator by virtue of appearing among the top 100 wealth creators in each of the last 10 studies and recording the highest price CAGR of 49 per cent over the 10-year period between 2009 and 2019, ahead of Pidilite Industries' 40 per cent.
The study noted that in equity investing, management is 90 per cent, industry 9 per cent and 1 per cent everything else. Hence, getting management integrity right is the critical first step, the study stated.
There's only one way of writing honest accounts, and infinite ways of manipulating them. The most sharp practices are to inflate profits and stuff the "financial trash" in the balance sheet.
The profit and loss statement is easier to manipulate, hence, managements must be statutorily asked to present a simplified free cash flow statement.
Auditors must be made more accountable to minority shareholders to avoid sharp practices by the management.