Twenty-five years have been completed since economic reforms were set in motion by the Narasimha Rao government, and guided by then Finance Minister Manmohan Singh.

These far-reaching reforms transformed the economy and set it firmly on the growth path. The stock market, which is called the barometer of the economy, also underwent a sea-change during this quarter century.

We analysed the constituents of the Sensex in 1992, based on data provided by Capitaline Database, and their financial parameters then, to highlight how the Indian stock market has changed with the economy.

Of the 30 stocks that are part of the Sensex today, only seven were in the Sensex in 1992 — ITC, Larsen & Toubro, Mahindra & Mahindra, Reliance Industries, Tata Motors and Tata Steel.

With the technology sector in its early stages, not a single technology company was part of the Sensex basket in 1992.

Manufacturing companies held sway, with 27 of the 30 companies belonging to this segment.

MNC stocks were still in vogue then with Nestle, Philips, Siemens and Glaxo SmithKline Pharma finding a place in the top 30 stocks. PSU stocks were also conspicuously absent as they were just emerging from a socialist era, where making profits was not the top priority.

With the country then driving around in Ambassador cars, Hindustan Motors was also one of the trading favourites, though it was already bleeding at the bottom-line. Other stocks that have bitten the dust since 1992 are Zenith Birla, Mukand and Great Eastern Shipping.

Banking stocks, which currently dominate the Sensex, had zero presence 25 years ago. State Bank of India listed on the stock market only in 1995 and private sector banks such as HDFC Bank and ICICI Bank were established only in mid-1990s and were yet to make a mark.

How they performed The Tatas ruled the roost in 1992, with Tata Steel and Tata Motors topping the turnover table; both have slipped considerably, to the 17th and 14th position.

Tata Steel was also the most profitable company in 1992 with Reliance Industries at number 2 and Tata Motors in the third position. Today it is IT giant TCS that leads the profitability table, with Reliance still in second position.

In terms of profit margins, GE Shipping, with 51 per cent, and Tata Power, with 36 per cent, had the best operating margins in 1992.

ITC, which was then predominantly a cigarette manufacturer, unhindered by tax burden, reported the third highest profit margin at 31 per cent. Surprisingly, all MNC stocks in the Sensex reported strong margins then. Taking on large debt to expand was probably not looked upon favourably then; the debt-equity ratio of 73 per cent of the Sensex constituents in 1992 was less than 1.

Managing capital If the efficiency of a company in managing its funds to deliver profits is considered, MNC players such as Hindustan Unilever, Philips, Nestle and GSK Pharma once again top the charts.

HUL reported a ROCE (return on capital employed) of 119 per cent in 1992, while other MNCs reported a ROCE between 27 and 32 per cent. These companies also reported sturdy Returns on Net Worth.

On the other hand, Indian manufacturers such as Tata Steel, Reliance Industries, Century Textiles and Mukand, whose products were under government price control, struggled to increase profits, resulting in ROCE of less that 10 per cent.

Twenty-five years later, HUL continues to lead in the ROCE and RONW (return on net worth) chart.

But all other MNCs have been edged out by companies such as Coal India, TCS and Hero MotoCorp, which have upped the ante in efficient deployment of capital.