Indian giants value brands

25 May 2011

NEW DELHI: Major Indian companies like Godrej, Tata Group and Infosys are attempting to establish the value of their brands.

Godrej, a conglomerate trading for 114 years and active in sectors from electrical appliances to grocery, recently asked specialist consultancy Interbrand to undertake such a task.

When including Godrej's leading offerings, like the Cinthol personal care range and Interio furniture, alongside its corporate brand, Interbrand delivered a figure of $2.8bn.

This actually outstripped the organisation's annual revenues of $2.6bn posted in its last full fiscal year.

"It was a study we needed to do to understand the value of our master and sub-brands better," Adi Godrej, chairman of the Godrej Group, told the Business Standard.

More broadly, the amount determined by Interbrand means Godrej has a net worth greater than Nissan, HTC, Yamaha and Lenovo, according to Ashustosh Tiwari, evp, strategic marketing at Godrej Group.

"By putting a distinctive brand at the core of our company actions across [our] portfolio, we will be even better positioned to meet the advancing expectations of our consumers," Tiwari said.

Elsewhere, Tata Group, which has a presence in categories like automotive and consultancy, first undertook such an enterprise during the 1990s.

On-going research revealed the net worth of the Tata title climbed from $300m in 1995 to $5.5bn in 2005, with further growth likely in the next round of analysis, typically conducted every five or six years.

"This becomes important given the size of the group," said R Gopalakrishnan, executive director of Tata Sons. "Building your intangible asset is important. We take this quite seriously."

In demonstration of this, Tata Group collects a fee for the use of its name by the sub-units making up its stable.

Regarding the business-to-business segment, engineering expert Larsen & Toubro intends to implement a similar exercise, with the aim of raising a levy from the various components of its portfolio.

"While we are mainly a capital goods company with very few consumer touchpoints, it does help to leverage your brand across the group," said J P Nayak, previously an L&T director, and an advisor to the firm.

Information technology and outsourcing pioneer Infosys has provided estimates for a sustained period, placing totals at $1.6bn in 2002 and $8.2bn in 2010.

However, Unni Krishnan, Indian managing director of consultancy Brand Finance, warned considerable progress was still needed by most operators.

"It is early days yet for brand valuations in India," said Krishnan.

Modifications to the country's International Financial Reporting Standards planned for 2012 will require the valuation of intangible assets, and may stimulate such processes.

"This is important because brand and marketing related expenditure can be put in perspective then," said Ramesh Jude Thomas, president of Equitor Consulting.

"Shareholders can get an idea where the money is going."

In the latest BrandZ study produced by Millward Brown Optimor, excluding parent companies, ICICI bank was the sole Indian member of the top 100, while Infosys stood just outside this group.

"The Indian market simply isn't big enough in value yet to create top 100 brands, compared with China's and Brazil's," said Nick Cooper, Millward Brown Optimor's managing director, Europe, Middle East and Africa.

"The Indian brands seem to be, perhaps, a bit more international than the Chinese ones, so maybe they're laying the foundations for something that might change."

Data sourced from Business Standard, Economic Times, Financial Times; additional content by Warc staff