Besides stock appreciation, mid sized manufacturers appear to be doing way better than their larger peers in another important department -job creation.
In the past nine years, the biggest in India Inc made about `10 lakh crore of incremental capital expenditure, but cumulatively added only a few thousand jobs. For instance, the gross block of top 10 large companies, such as L&T, BHEL and Indian Oil, rose 8.6% a year since 2008, but headcount increased at just 0.5% a year.
By contrast, smaller manufactur ers, non-banking finance companies and flexi-staffing firms seem to have emerged as India's biggest job creators. For instance, the annualised headcount growth at mid-sized manufacturers Amara Raja, Page Industries, Johnson Control, Nilkamal, Century Ply and Shree Cement has been in the range of 11 23% in the past nine years, although they cumulatively invested `15,000 crore to expand gross assets base.
The average manpower growth at manufacturing companies included in the BSE 500 was 2.88% a year, with more additions at smaller companies. Mid-sized and small manufacturers need more hands as they ought to maintain the man-to-machine ratio. So, increases in installed capacity translate into net headcount additions. Bigger companies, by contrast, need not add more jobs directly as they either outsource tasks or rely on improved technology to harness the additional capacity .
A total of 916 listed firms reporting staffing figures in FY17 had a cumulative manpower base of 5.2 million, and average annual wages of ` 10.2 lakh. These companies added jobs at a 3.7% annualised rate over the past five years, according to CLSA.