The Brand Finance India 100, released today, is an annual study conducted by leading brand valuation and strategy consultancy Brand Finance. India’s biggest brands are put to the test and evaluated to determine which are the most powerful and most valuable. Brand Finance has extended the study from 50 to now encapsulate the top 100 Indian brands, at least double the number covered in other lists of India’s top brands, reflecting Brand Finance’s view that branding has become crucial to an ever increasing number of Indian firms.
Brand value has increased among the top 50 by 10% compared to 2013 with brands such Tata, Godrej, HCL, and L&T leading the way.
Tata has seen its brand value increase by 16% ($3bn) in the year driven by its international diversification strategy and its jewel in the portfolio, Tata Consultancy Services. Despite the fact that some divisions within the group have been underperforming, the brand should benefit from the recently outlined plans to invest $35bn over the next three years and should go some way towards meeting the goal of the Tata chairman, Cyrus Mistry to be amongst the 25 most admired brands globally.
Banking brands on the whole fared the worst collectively with the majority of brands losing brand value or remaining stagnant, due to generally poor governance and weak credit controls especially at the government owned institutions. The State Bank of India has seen its value drop by the largest amount ($1.9bn) as poorer revenue forecasts and bad loans have dampened earnings, although with the RBI now taking a more active approach, state run banks are cleaning up their loan books in anticipation of the next wave of economic growth.
HCL technologies has seen an increase in brand value of 51% ($649m) as its successful strategy has seen the brand win 50 transformational engagements with contract values of $5bn in the past year distributed across all service lines and geographies.
The Brand Value to Enterprise Value ratio (BV/EV) shows the proportion of a company’s value accounted for by the brand. It therefore acts as a rough guide of how well developed a company’s brand is. The average Brand Value to Enterprise Value for India’s top 100 brands is 12%. However some of the largest Public Sector Undertakings (PSUs) have an average ratio of 3%. This shows a pressing need to develop the brands of these PSUs. Given the size of PSUs and their position within India’s economic landscape, this issue has implications for the reputation of Indian business and ‘Brand India’ as a whole. The Modi government has signaled its intent to improve the efficiency and reputation of the public sector but marketing investment and monitoring must also follow for PSUs, like all Indian brands, to reach their maximum potential.
Commenting on the results, Brand Finance’s Savio D’Souza stated, “Indian brands have benefitted from the rapid economic growth seen over the past ten years. Indian brands must take advantage of the improving business sentiment and invest in brand related activities like customer engagement, sponsorships, employee satisfaction and brand tracking to drive the next phase of growth in order for more Indian companies to join the global club of internationally recognized brands. ”
Marketing Director of Brand Finance India, Ajimon Francis, stated, "With the change in Business Sentiments, the Indian economy at large and major branded businesses in India will look to renew customer engagement for building on long term equity. The last few years have also demonstrated the importance of carrying all business stakeholders together with a shared vision and how this has contributed enormously to sustained value creation. Indian brands are gradually moving towards a complex matrix of managing legacies and using technology to remain competitive."
India’s Most Valuable Brands
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.