Top 10 Monopoly Companies in India

There are various types of market structures that are operational in the economy like monopoly, monopolistic, oligopoly and perfect markets. Few of these are merely theoretical in nature. But others are functional and practicable. Let's talk about monopoly. 

Theoretically, Monopoly is a type of market structure wherein a single business operates in an industry selling a unique product or service that cannot be easily replicated. This type of market usually has no competitors. There could be various reasons for this. It could be technological hindrances, difficulty in procuring inputs, political and legal restrictions, etc. 

But in the real world, is it possible to have just one company in an entire industry? For a few sectors, like railways, there are drawbacks that restrain other players from entering the industry. But in most industries, players attempt to enter the market and try their luck. 

So, the meaning of "monopoly" is slightly tweaked. A business is said to have a monopoly position in the industry if it has captured the majority of the market share and can influence the business decisions of other players in that industry. The "monopolist" also becomes the trendsetter and price leader, which is followed by the other players.

Companies Enjoying Monopoly Status in India

Today we will look into the top 10 companies in India that have managed to acquire the monopoly position in their respective industries. You can check real-time share prices, market cap, EPS, P/E ratio, P/B ratio, corporate actions and so much more, all in one place - in Finology Ticker!

1. Coal India Limited

Having a market share of 85%, Coal India Limited is a public sector undertaking involved in the business of coal mining and refining. It is the world's largest coal-producing company.

It produces coal through 7 of its subsidiaries. Currently, the government's shareholding stands at 63.13%. Coal India Ltd. has shown a good profit growth of 18.97% for the last 3 years.

2. IRCTC

Indian Railway Catering and Tourism Corporation (IRCTC) provides ticketing, catering, and tourism services to the Indian Railways. Though it was initially established as an organisation wholly owned by the government, it currently has its stock traded on the NSE. IRCTC enjoys the power of monopoly status as it is the only organisation that operates Indian Railways.

The government recently announced that it has plans of privatisation of this sector in a phased manner. IRCTC has been maintaining a healthy ROE of 33.14% over the past 3 years.

3. HAL

Headquartered in Bangalore, India, Hindustan Aeronautics Limited (HAL) is a government-owned aerospace and defence company. Incorporated as Hindustan Aircraft Limited, Hindustan Aeronautics Limited has been operating in the industry for more than 81 years.

It is one of the largest aerospace companies in Asia, and the government owns around 72% of the total stake. HAL has shown a good profit growth of 26.92% for the past 3 years.

4. BHEL

Bharat Heavy Electricals Limited is a government-owned engineering and manufacturing company. It is India's largest power generation equipment manufacturer. BHEL is engaged in the design, manufacturing, engineering, construction, testing, commissioning and servicing of a wide range of products and services.

It is operating in the crucial sectors of the economy like transmission, power, oil and gas, renewable energy, transportation and defence. Currently, 63.17% of the ownership lies with the Government of India, and the rest of the stock is publicly traded on NSE and BSE. 

5. Indian Energy Exchange Limited (IEX) 

IEX is the only electricity trading exchange in India. India's premier energy marketplace provides a nationwide automated trading platform for the physical delivery of electricity, renewables, and certificates.

IEX is approved and regulated by the Central Electricity Regulatory Commission and has been operating since 27 June 2008. It is a publicly listed company with NSE and BSE since October 2017. The government holds 61.86% stake in the company.

6. ITC Limited

The now Indian Tobacco Company Limited was established in 1910 as Imperial Tobacco Company of India Limited. Having sustained in the industry for decades, the company diversified its operations from tobacco to various other industries.

Nonetheless, its main business still remains to be tobacco. With major competitors like Godfrey Phillips India Ltd., VST Industries Ltd., Golden Tobacco Company Ltd., ITC continues to hold 77% of the market share.

7. Asian Paints

Asian Paints is India's largest paints company by market share. It is Berger International's holding company. Asian Paints derives 70-80% of its revenue from paint manufacturing. The company is also into chemicals, wall covering, waterproofing, adhesives, sanitisers and kitchen and bath fittings. 

Rapid urbanisation and expansion of paint companies to tier II and tier III cities are other positive factors for paint demand and paint companies. The company encompasses 53% of the market share in the paint manufacturing sector. Asian Paints has been maintaining healthy ROE of 27.12% over the past 3 years.

8. Nestle India Ltd.

Cerelac is an instant cereal for infants in the age group of 6 months and older. Recognised as 'The Most Valuable Food Brand' in India, Nestle is the global leader in infant nutrition and milk substitute products. In the Indian market, Nestle India has a market share of around 96.5%.

The government holds around 16.13% stake in the company. Nestle India has been maintaining healthy ROE of 107.04% over the past 3 years. Plus, the company is virtually debt free.

9. Praj Industries

Praj is a leading process solutions company with expertise in integrated offerings for bio-energy, high-purity water solutions, and engineering-led businesses, namely zero liquid discharge solutions, critical process equipment & systems and brewery plants.

 Sustainability is at the core of Praj's solutions, driven by and supported by its state-of-the-art R&D Centre - Matrix and manufacturing facilities. Led by an able leadership, Praj is a socially responsible corporate citizen. Headquartered in India, Praj is listed on BSE and NSE and has a market share of 33%. The government holds over 34% of the firm. 

10. Computer Age Management Services

Computer Age Management Services (CAMS) is a Mutual Fund Transfer Agency for Indian Asset Management Companies with a share of ~ 70% of the Assets Under Management (AUM). Founded in 1988 and institutionally owned until September 2020. Company listed w.e.f. 1 October 2020.

CAMS is a compliant organisation that complies with SOC 1 & 2 (UTC) standards Service Organization Controls. The government holds over 26% stake in the company. CAMS has been maintaining healthy ROE of 48.81% over the past 3 years.

The Bottom Line

A company that has secured a monopoly does enjoy a lot of benefits. There is a constant demand for their products. The monopolist can adopt the strategy of price differentiation wherein different prices are charged for the same product from different target markets. However, there are drawbacks to this type of market structure. Lack of competition in the market can often lead to the monopolist's inefficient operations. Also, price differentiation could be disadvantageous for the consumers.

In short, it is surely difficult for a business to attain a monopoly in an industry, but it is even more difficult for it to maintain that position. With most industries having no barriers to entry, it becomes relatively easier for businesses to enter a market and tap into potential opportunities.

Anyway, do you have any business ideas that could be the next monopoly?