| Field | Value | Source text | Reading (model) |
|---|---|---|---|
| G1 Scope, precedence and principles · 6 fields | |||
| Classification levels | 4 levels | facilitates comparison of companies across four levels of classification.Open p.3 ↗ |
The industry classification framework uses four levels for industry and sector analysis. |
| Classification basis | Nature of revenue generated from business activities | Each company is classified into a particular category based on the nature of its revenue generated from business activities carried out.Open p.3 ↗ |
Each company is assigned to an industry category according to the nature of revenue generated by its business activities. |
| Covered indices | Companies classified for NSE Indices Limited's broad-based benchmark, sectoral, strategy, thematic, fixed-income and customised indices; the document is an industry classification guideline rather than an index constituent rulebook. | NSE Indices Ltd. maintains equity indices comprising broadbased benchmark indices, sectoral indices, strategy indices, thematic indices, fixed income and customised indices.Open p.3 ↗ |
NSE Indices Limited maintains broad-based benchmark, sectoral, strategy, thematic, fixed-income and customised indices, and provides industry classifications for companies. |
| Principles | Revenue-based classification, Comprehensive four-level industry and sector structure, Comparability across companies, Long-term structure evolution rather than temporary industry fluctuations | based on comprehensive and detailed structure for industry and sector analysis that facilitates comparison of companies across four levels of classification.Open p.3 ↗ |
Companies are classified by the nature of revenue from business activities within a four-level structure that supports industry and sector comparison; structural changes reflect long-term trends rather than temporary fluctuations. |
| Administrator | NSE Indices Limited | NSE Indices Limited (formerly known as India Index Services & Products Ltd. - IISL), an NSE group company, was setup in May 1998Open p.3 ↗ |
The industry classification rules are issued and maintained by NSE Indices Limited. |
| Rulebook version | July 2023 | July 2023Open p.1 ↗ |
The guideline is identified by the July 2023 issue date; no separate version label is stated. |
| G3 Prices and market data · 2 fields | |||
| Classification data primary source | Audited consolidated annual financial report | Audited consolidated annual financials report shall be the prime source information that is considered for classification of a company.Open p.11 ↗ |
The audited consolidated annual financial report is the primary information source used to classify a company. |
| Classification data fallback sources | company annual report business description, red herring prospectus, information memorandum, other regulatory filings, business description on the company website | the company will be classified based on the definition closely coincides with the description of company’s business as stated in company’s annual report, or if the annual report is not available, description of the company’s business provided in its red herring prospectus (RHP), information memorandum, any other regulatory filings by company, business description provided on company’s website etc.Open p.11 ↗ |
When revenue data are unavailable or insufficient, or for newly listed companies or businesses that have changed, annual-report descriptions and, if unavailable, prospectus, information-memorandum, regulatory-filing or website descriptions may be used. |
| G7 Review and constituent changes · 7 fields | |||
| Event driven classification review | Merger, Demerger, other significant change in business activities | Additionally, classification of a company may be reviewed upon significant change in company's business activities as a result of any corporate event such as a merger or demerger.Open p.12 ↗ |
A company's classification may also be reviewed after a significant business change caused by a merger, demerger or other corporate event. |
| Company requested reclassification | A company may request review by contacting NSE Indices Limited with rationale and supporting documentary evidence. | If a company wishes to revise its current classification, it should contact NSE Indices Ltd. providing rationale for proposing a change of classification, having regard to the classification rules and attaching any documentary evidence in support of its claim.Open p.12 ↗ |
A company seeking to revise its classification must contact NSE Indices Limited, explain the proposed change under the classification rules and attach supporting documentary evidence. |
| Evidence standard for reclassification | Non-public information, promises, assertions or aspirations are insufficient unless substantiated by audited or independently authenticated formal company statements. | No changes in classification will be made on the basis of non-public information, promises of action, assertions or company’s/ director’s aspiration, unless these can be substantiated by audited or independently authenticated formal company statements.Open p.12 ↗ |
Classification changes cannot be based on non-public information, promises, assertions, or company or director aspirations unless supported by audited or independently authenticated formal company statements. |
| Discretionary or advisor requested review | NSE Indices Limited may review a classification at its discretion or upon request from the company or its professional advisors. | A company's classification may also be reviewed by NSE Indices Ltd. either at their discretion or at the request of the company or professional advisors acting on its behalf.Open p.12 ↗ |
NSE Indices Limited may review a company's classification on its own initiative or at the request of the company or professional advisors acting for it. |
| Review frequency | Annual | The classification of all companies listed on NSE will be reviewed on annual basis following receipt of companies’ annual report.Open p.12 ↗ |
The industry classifications of all NSE-listed companies are reviewed annually after receipt of annual reports, and the industry structure is also reviewed annually. |
| Effective date rule | Classification changes caused by corporate events are implemented when the corporate event is completed. | Any adjustment resulting from a change in a company’s classification will be implemented at the same time as the corporate event is completed.Open p.12 ↗ |
Any adjustment resulting from a change in a company's classification is implemented at the same time the relevant corporate event is completed. |
| Universe eligibility | All companies listed on NSE are within the annual company classification review scope. | The classification of all companies listed on NSE will be reviewed on annual basis following receipt of companies’ annual report.Open p.12 ↗ |
The annual classification review covers all companies listed on NSE, subject to the classification source and evidence rules. |
| G8 Governance, changes and termination · 7 fields | |||
| Structural change long term trend principle | Structural changes must reflect long-term trends rather than temporary industry fluctuations. | Any changes to the industry classification structure will be based on long-term trends and may not consider temporary fluctuations within individual industries.Open p.12 ↗ |
Industry structure changes are based on long-term trends and do not respond to temporary fluctuations in individual industries. |
| Oversight body | NSE Indices Limited | A company's classification may also be reviewed by NSE Indices Ltd. either at their discretion or at the request of the company or professional advisors acting on its behalf.Open p.12 ↗ |
NSE Indices Limited reviews classifications and the industry classification structure. |
| Discretion points | Reviewing a company's classification at NSE Indices Limited's discretion, Classifying a company using alternative sources when revenue information is unavailable, insufficient, the company is newly listed, or its business line has changed | A company's classification may also be reviewed by NSE Indices Ltd. either at their discretion or at the request of the company or professional advisors acting on its behalf.Open p.12 ↗ |
NSE Indices Limited may review a company's classification at its discretion and may use descriptions from reports, filings or websites when the usual revenue information is unavailable or insufficient. |
| Methodology review frequency | Annual | NSE Indices annually reviews the industry classification structure based on internal assessment, market feedback and consultation with relevant stakeholders.Open p.12 ↗ |
NSE Indices Limited reviews the industry classification structure annually. |
| External review | Annual structure review considers market feedback and consultation with relevant stakeholders. | NSE Indices annually reviews the industry classification structure based on internal assessment, market feedback and consultation with relevant stakeholders.Open p.12 ↗ |
The annual review of the industry classification structure uses internal assessment, market feedback and consultation with relevant stakeholders. |
| Change procedure | Structural changes are evolutionary, based on long-term trends, and reviewed annually through internal assessment, market feedback and stakeholder consultation. | Changes to the industry structure is evolutionary. Any changes to the industry classification structure will be based on long-term trends and may not consider temporary fluctuations within individual industries.Open p.12 ↗ |
Changes to the industry classification structure evolve with long-term trends and are assessed annually using internal analysis, market feedback and stakeholder consultation. |
| Consultation procedure | NSE Indices Limited consults relevant stakeholders and considers market feedback during the annual structure review. | based on internal assessment, market feedback and consultation with relevant stakeholders.Open p.12 ↗ |
Market feedback and consultation with relevant stakeholders feed the annual review of the industry classification structure. |
Open points · 9Model-written, for reference
- 1No explicit precedence rule between this industry classification guideline and individual index methodologies was stated.
- 2No formal effective date for the July 2023 guideline was stated beyond the issue month/year.
- 3No security price source, closing price, suspended-security price or foreign-exchange rule was stated.
- 4No index constituent review calendar, data cut-off date, announcement timing, buffer, reserve list, turnover limit, fast-entry rule or deletion price was stated.
- 5No named oversight committee, formal methodology-change approval steps, notice period, cessation or termination procedure, complaints procedure, disclosure channels or usage restrictions were stated.
- 6Not coveredG2 Calculation and publication: not covered by this edition
- 7Not coveredG4 Corporate events: not covered by this edition
- 8Not coveredG5 Shares, free float and weight factors: not covered by this edition
- 9Not coveredG6 Disruption, emergencies and corrections: not covered by this edition
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