The Acid Test

height="119" align="left">As we wind down on this century's last DQ Top 20 Survey, there

is a mixture of pride and satisfaction. Pride in the fact that this survey has become the

benchmark for Indian IT industry. Pride in the sense that this survey has been now

conducted uninterrupted for the last 16 years. Pride in the sense that not only is this

the largest quantitative survey in the Indian IT industry, but qualitatively also, DQ Top

20 is unparalleled in terms of probity and integrity. To say we are satisfied with what we

have achieved would both be an understatement and incorrect. Understated because the

emotions attached are far above satisfaction. Incorrect because to be satisfied connotes a

certain amount of complacency.

In fact every year, the DQ Top 20

Survey adds new features which all go toward strengthening the data collection and

analysis of the performance of Indian IT industry from more than one angle. First it was

the introduction of GAAP, then it was the user segment analysis and last year it was from

the financial end of the organizations. Peppered in the middle were innovations such as

APAC analysis, Fortune 500 analysis, guest articles from global CEOs et al.

The financial analysis of the listed

companies in the IT industry assumes significance from the point of view that today, many,

if not all, of the listed IT stocks are considered to be blue chips. So much so, that a

few of the stocks actually dictate the way Sensex moves. Bulk of the northward movement of

the index in the last three weeks has been attributed to infotech stocks, especially

Infosys, NIIT and Satyam. In that scenario, it is important to see as to which of the

stocks are performing in consonance with the actual performance of the company and which

are hyped up.

Many of the companies in the Top 20

ranking or the group ranking may not be seen here. The parameter for inclusion is listing

in the stock market. Hence if a company is not listed, it will not be taken; period. No

matter how good the performance or notwithstanding the fact we may have all the financial

data available for the company. On the other hand, you will see many companies which are

not very well-known but have had the courage to be listed as public companies and thus be

subject to public scrutiny and, of course, those which have used the IPO as a convenient

tool to collect money from the market, without any real performance.

And this is the time when the wheat

gets separated from the chaff. Given the fact that the duty of every corporate entity is

to give a fair return to its stakeholders, this analysis of the financial performance of

IT companies is a culmination of all the factors that have been captured in the Top 20

Survey and putting them up for a test of financial probity. This is the final acid test.