Second 500

• 24.07.2014
• Archive

For ISO, the research on Türkiye’s second 500 Largest Industrial Businesses is as important as the one on the top 500. The findings of the research proved us right in breaking the main research into 2 sections of 500 each.

The following needs to be underlined first: Looking at the results of the survey, the first thing that meets the eye is that today’s small and medium size companies which will shape the future of Türkiye are doing a good job at being open to innovation, flexible, different and making the change quickly.

Compared to the top 500 outcomes which we declared last month, companies in this second 500 batch are doing better in some areas, especially in developing technology. As for exports, again, Second 500 Largest Companies outperform both Türkiye and the Top 500 Largest Companies. Increasing their exports by 3,7%, they rank higher than both the top 500 companies and Türkiye’s exports. Besides, it requires special emphasis that the share of these companies in Türkiye's total exports has increased.

These companies are also doing an important job in creating employment. Despite some negative developments that took place last year, companies in the second 500 group increased their employment by 6,4%.

All these data point to a great players’ capital in Turkish economy’s infrastructure. Unfortunately, however, this capital is not backed by a well-chosen financing model. That is, optimism, courage, entrepreneurship, the potential to seize opportunities etc. are all there. But we fail in effective use of financial instruments or creating options for our companies.

This is evident in the financial ratios of second 500 industrial businesses, which are as imbalanced as those of the top 500. What else can explain why companies which increase their sales by 13% and core activities by 50% lose more than 50% of this new profit to funding expenses?

The main reason why companies experience this is that their debt to equity ration is above 60%.

If Türkiye is to face the future in manufacture with these companies, we have to feed our industry and industrialists with the right financial instruments. Industrialists, on the other hand, will have to leave aside conservatism towards using these globally-used and start using or finding out about globally-used financial instruments such as bonds, bills, IPOs, long-term financing instruments, partnerships, risk management and hedging. Companies today mainly prefer maintaining business with bank-based borrowing tools.

Indeed, it is regrettable that companies which perform well in their core activities underperform in finding and using funding.

If, especially small and medium-sized companies are given proper support with this, our economy can move in great speed towards the much-desired levels in employment, added value, exports, technological transformation. This can be one of our most important contributions to Türkiye’s holistic development.

Erdal Bahçıvan
Istanbul Chamber of Industry
Chairman of the Board Of Directors