How we picked India's Best CEOs 2015

This is Business Today's fourth ranking of CEOs in India. In 2012, we published our first such ranking (India's Best CEOs), in partnership with INSEAD and Harvard Business Review. In 2013, Business Today partnered with PricewaterhouseCoopers (PwC) India and the team of editors and researchers devised the proprietary methodology. This year, we have continued with the same methodology - with some minor tweaks - and have re-introduced banks in our study after 2013.

For better comparability, we revisited our groupings this time. Companies were split into four categories based on their total income - super large, large, mid-sized and small - within each sector and overall. Those with total income of Rs 1 lakh crore and above were categorised as 'super large'. Companies between Rs 50,000 crore and 1 lakh crore were categorised as large. The medium category had companies between Rs 10,000 crore and 50,000 crore. The small category consisted of those with total income between Rs 1,000 crore and 10,000 crore.

Let us take you through the entire process. Before calculating the quantitative performance, there were a series of checks and filters. Our study universe was BT 500 - BT's listing of top 500 companies based on the average market capitalisation between April to September. Only companies with revenues of more than Rs 1,000 crore within the BT 500 were considered. The entire data was sourced from Ace Equity.

Our study period was three years: 2014/15, 2013/14 and 2012/13. Then, companies whose accounting period was only between nine and 15 months in these periods were considered. Companies whose latest audited financial year results were not available, were eliminated. We also removed companies that reported net loss in any of the three fiscals. Moreover, companies that listed during the study period were also not considered. To qualify for the rankings, CEOs must have been in the position for the complete study period. In case of PSUs, the CEO tenure has been revised to a minimum of one fiscal as majority of them have relatively short stints.

Finally, a total of 240 companies qualified for the study. For arriving at the rankings, growth in total income, net profit, market capitalisation and return on equity (RoE) were considered. And to focus only on the operational performance of the company, these parameters were taken net of extraordinary incomes and expenses. And only standalone numbers were used for our calculations.

Our quantitative analysis took place in three phases.

Phase I

We measured both absolute growth (three-year average) and percentage growth (three-year compounded annual growth rate or CAGR) in total income and profits. Thereafter, these companies were assigned scores, which were added to get the Phase I score.

Phase II

Market capitalisation of a company, which determines its valuation on the stock market, was scrutinised in the second stage. It was put through the same rigorous procedure. Both the absolute growth and CAGR over three years were taken into consideration. The CAGR growth was compared with the BSE Sensex CAGR over the same period. The companies were assigned scores on the basis of their outperformance compared to the Sensex. Scores from absolute growth and CAGR were then added to get the Phase II score.

Phase III

To measure how productively the companies utilised their capital, RoE came into play. Companies were ranked and scored on three years geometric mean of RoE. The scores from the three phases were added to get the final score. Our knowledge support partner, PwC India, reviewed and validated the process. Based on the final score, we arrived at the list of the top 100 companies.

A CEO's performance can be measured by how well his or her company has performed on various parameters. However, the CEO can't be judged only on quantitative metrics. An element of subjectivity is required to take into account the impact of long-term strategic decisions on a company's performance. This makes the role of the jury crucial in deciding the rankings.

The top three ranked CEOs in each group - overall and in each sector - were presented to the jury as nominations. The 'CEO' here is the executive head of the companies concerned - which could be the Chairman, CMD, Vice Chairman - essentially the executive leader.

This year, the jury comprised Ranjan Kapur, Country Manager-India, WPP; Janmejaya Sinha, Chairman (Asia Pacific), Boston Consulting Group; Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas and Sameer Sain, Co-founder and Managing Partner, Everstone Capital; Shashank Tripathi, Partner, Strategy & Leader, PwC India; Prosenjit Datta, Editor, Business Today. The jury decided on 20 award categories and 18 winners.

(Data research and analysis by Niti Kiran and Alokesh Bhattacharyya)