Identifying companies for the future or companies that stand a chance of global greatness-that is what the 20 Companies To Watch In 2004 list is about-is a hazardous job. Everyone, analysts, chief executives, bankers, consultants, even, in these retro-is-good days, venture capitalists, is so caught up in the here and the now (the next quarter, the year's order book, next week's big meeting in New York) that it is difficult to compile a listing of this nature. However, trying to put together such a list presents an opportunity for business writers to do something they very rarely do: look for signs (actually, even a suspicion will do) of greatness in a company. This could be anything: a big idea on how to do business differently, a great product, some intellectual property, advantages of scale, geography, or labour-markets, or a combination of any or all of these. Since this is the second year that Business Today is running this list (the first appeared in the issue of the magazine dated January 19, 2003, but was, for all purposes, a 2002 listing), we've been brave enough to revisit companies that made it to the first. Much to our relief, the inquest proved satisfactory. Now, on to this year's 20.

-Sahad P.V.

APOLLO HOSPITALS
PREETHA REDDY, Managing Director
The Eternal Bridesmaid

Healthcare has been the next big thing on the Indian scene for some time now. When (note, not if) the sector does make it, the company that will probably gain the most from it is the Chennai-based Apollo Hospitals. That would be poetic justice of sorts: the chain's first hospital, in Chennai, was founded by its Chairman Dr Prathap Reddy in 1983, a time when organised healthcare was an alien concept in India. Today, Apollo owns 11 hospitals, manages 12 more (this number will increase by 11 shortly), and boasts 6,000 beds. And it has already started benefiting from the health tourism movement: patients from the UK, West Asia, South Asia, even the US, fly to India to tap Apollo's low cost, high quality service. "Today, the East is setting better healthcare standards than the West," says Preetha Reddy, the chain's managing director. The company has put its knowledge to good use, winning hospital management contracts in Dubai and Bangladesh. It even runs a Business Process Outsourcing outfit which employs 500 and does back-office work for other hospitals like billing, documenting clinical and administrative records, and coding medical processes. None of this has come at the cost of profitability. Apollo hopes to close this year with around Rs 500 crore in revenues and Rs 42 crore in profits. Service and profits: that's the best of both worlds.

-Nitya Varadarajan

AUROBINDO PHARMA
NITYANAND REDDY, CEO
Bulk Success

Given the ripples created by Dr Reddy's, Ranbaxy, and Cipla in the global domain, Aurobindo's presence on this list should surprise no one. What should is the company's strategy. Like most other Indian pharma companies Aurobindo has its eye on the US market for generics (drugs that come off patent). Between 2005 and 2007 some $45 billion (Rs 2,06,302 crore) worth of drugs will come off patent in the US. Aurobindo's strategy will help it benefit from this: its generics business should see a spurt, and its bulk drugs business, which will supply ingredients to generics makers, should make a killing. Aurobindo is already the largest bulk drugs manufacturer in Asia (it even has a subsidiary in China and a joint venture in the US) and this year $165 million (Rs 756.4 crore) of its revenues of $325 million (Rs 1489.9 crore) will come from exports. "More than focusing on discovering new chemical entities, the emphasis of our research is on resolving complex chemical challenges and applying new technologies for better processes," says Srinivas Lanka, a director on the board of Aurobindo. That's beginning to show. So much so that the company (2002-03 revenues, Rs 1,214 crore; net profit, Rs 103.14 crore) hopes to touch revenues of Rs 4,000-crore well ahead of its stated deadline of 2006-7.

-Nenkatesha Babu

BAJAJ AUTO
RAJEEV BAJAJ, Joint Managing Director
Two-wheels Better

Eight years ago, analysts were beginning to write Bajaj Auto's obit. Circa 2003, Bajaj Auto is a constant in most listings of global Indian companies. Attribute that to a slew of launches in the motorbike segment that have seen it grab a respectable share (25 per cent, and this makes it second, after Hero Honda) of the market. And attribute that to an emphasis on exports. Three years ago, Bajaj would export 15,000 vehicles a year; today it does 15,000 a month. This year, exports should contribute 8 per cent to estimated revenues of Rs 5,300 crore (2002-03 net profit: Rs 535 crore). So, when Rajeev Bajaj, Joint Managing Director, Bajaj, uses the term 'market' he is probably referring to the 32 million units a year global one which he hopes to tap through a strategy that involves exports, alliances with long-time partner Kawasaki, even local manufacturing facilities. Bajaj's cost structure and emphasis on quality, says the man, give it an edge. "I am waiting for the day when we say our domestic sales is 20 per cent of global turnover," grins Bajaj.

-Swati Prasad

BHARAT ELECTRONICS
Y. GOPALA RAO, CMD
Arms Dealer

Purely on the strength of numerical achievements, Bharat Electronics Limited (BEL) qualifies for this listing: its turnover has trebled over the past 10 years to Rs 2,508 crore in 2002-03; net profit grew by more than eight times in the same period to Rs 260.6 crore; and its stock is on fire on D Street. None of this matters as much as the business BEL is in: defence and civilian communication and sensing equipment. That counts for something. Not too long ago Israel-based Elop was caught in a typical 'make or buy' dilemma involving hand-held thermal imagers. The firm was impressed enough with BEL's grasp of the opto-circuitry required to place an initial order worth $4 million (Rs 18.33 crore). "The real indicator isn't the order's size," says Y. Gopala Rao who has just taken charge as bel's chairman and managing director, "but the confidence reposed by the customer in our ability to deliver customised solutions at a competitive price". Exports currently constitute under 2 per cent of revenues, but Rao is confident they will grow to 10 per cent of revenues of Rs 5,000 crore by 2006-07. The emphasis on research will help: BEL boasts a R&D team of around 1,300 and spends some Rs 125 crore on this every year. Now, if only the company's largest shareholder, the government, would be a little less coy about exports of military equipment.

-Venkatesha Babu

BHARAT FORGE
BABA KALYANI, CMD
Thor's Hammer

Baba Kalyani, the 54-year-old Chairman and Managing Director of Bharat Forge, is back in Pune after a short trip to Germany, where he had some business, and New Delhi, where he attended the World Economic Forum's annual India Summit. And the man looks pleased. The Delhi jamboree has little to do with it. If Kalyani is happy, it is because he has just acquired a German forging company, Carl Dan Peddinghaus (CDP). And it is because a bet he made five years ago has worked out his way. In 1998-99 Kalyani predicted that the centre of gravity of the forging industry would shift to cost-competitive destinations such as India. And so, he restructured Bharat Forge's operations with an eye on cost, quality, and efficiencies. Today, the company's revenues have increased to Rs 700 crore and exports are up to 42 per cent of turnover. The CDP acquisition has already made Bharat Forge the world's second largest forging company, besides almost doubling its turnover (CDP's revenues in 2002 were Rs 620 crore). Once the integration is done, "we will look at acquisitions in North America and China," says Kalyani. His strategy is to marry the cost advantage of doing business in India with access to technology (the CDP acquisition will provide this) and markets. The man's strategy has worked in the past.

-Swati Prasad

BIO VEDA
VINITA JAIN, Chairperson
Herb Highness

A cosmetics brand cannot get any more global than having the UK's Prince Charles and Hollywood star Demi Moore among its users. Biotique is the brand, Bio Veda Technologies the company, and now that it has reached a critical mass of some Rs 200 crore in sales (it is growing at the rate of 30 per cent a year), both brand and company seem set for greater things. It wasn't always this way. Back in 1984, when founder Vinita Jain, six ayurveda doctors, and two doctors from Switzerland embarked on a research project to develop personal care products from Indian herbs, most people thought she was out of her mind. Eight years later, in 1992, Jain launched Biotique as a for-exports brand. Today, Bio Veda exports its products to more than 25 countries (40 per cent of its sales come from exports), has a laboratory in Switzerland where it also plans to put down a manufacturing facility by 2005, and boasts a US Food and Drug Administration-approved plant in India. "Our whole idea is to blend the ancient science of ayurveda and modern technology," says the 40-something Jain who grew up in her family's tea gardens in West Bengal and has read ayurveda classics such as Shushruta Samhita and Charak Samhita in the original Sanskrit. Success, we're told, is spelt the same in most languages.

-Sahad P.V.

DIVI'S LAB
MURALI K. DIVI, CEO
Playing By The Rules

Want to know why Divi's scrip has appreciated over 700 per cent in five months?. The Rs 300-crore company is set to benefit from the contract manufacturing boom India will see post 2005. The country moves to the product patent regime that year and multinationals are likely to outsource production to India to cut costs. It helps that CEO Murali K. Divi has announced his desire to respect IPRs (Intellectual Property Rights). "This gives a lot of comfort to MNCs," says Tejas Doshi, Head (Research) at Mumbai-brokerage Sushil Finance. Divi's also supplies ingredients to generics manufacturers and makes peptides, crucial to the emerging area of proteonomics. "Chemistry is our core strength," says Divi. And playing by the rules, its core philosophy.

-Sahad P.V.

HINDUSTAN INKS
YUNUS BILAKHIA, Chairman
Is This Its Ink?

It could be. After all unlikely success-story Hindustan Inks and Resins supplies ink to the press where this magazine is printed. Unlikely because no one could have imagined a printing inks company to grow at a rate that would give most of India's software stars an inferiority complex: in the 11 years between 1991-92 and 2002-03, Hindustan Inks grew at a scorching CAGR of 67 per cent, growing its revenues from Rs 2 crore to around Rs 600 crore. Today, the company is the fifteenth-largest producer of ink in the world, has a wholly-owned subsidiary Micro Inks in the US (a greenfield project), and has set its sights on being one of the top five global players in its business by 2008. "We have already beaten the MNCs in India," says Chairman Yunus Bilakhia. "We'll do this internationally."

-Sahad P.V.

INDECOMM
NARESH PONNAPA, CEO
A Different BPO

Indecomm, rather its Indian arm TRRs imaging, is the only Business Process Outsourcing firm to figure in this year's listing and its presence will probably be questioned. Well, the CEOs of most BPOs would probably give an arm and a leg to be in the shoes of Naresh Ponnapa, the company's CEO. "I am besieged by venture capitalists who want to invest in the company," laughs the man. One reason for that is Ponnapa's profile. The man in the fast track at HLL but decided to move on. Another is the nature of Indecomm's work. It is focussed on transaction processing in four areas: healthcare, banking, insurance, and financial services. "We are a value-play, not a volume one," says Ponnapa. And adds that the emphasis is on addressing the client's 'pain points'. It seems to have worked.

-Venkatesha Babu

INDIAN OIL CORPORATION
M.S. RAMACHANDRAN, CEO
The World's Petrol Station

It is already ranked 191 in the fortune 500, and is the country's biggest refining and marketing company, but there are more, non-numerical reasons to include Indian Oil Corporation (Rs 1,19,848 crore in sales and Rs 6,115 crore in net profits in 2002-03) in this listing. One is the company's efforts to reinvent itself as a "major diversified transnational integrated company" to use the words of M.S. Ramachandran, its Chairman and Managing Director. That doesn't mean Ramachandran would like his company to target markets in North America and Europe; he is happy focusing on ones in the neighbourhood such as Sri Lanka, others farther away but with a sizeable Indian population (Mauritius and South Africa), and a few African countries. In Sri Lanka, for instance, IOC helped Ceylon Petroleum Corporation refurbish its marketing network and has now entered the business itself through a 100 per cent subsidiary. And it is managing terminals and refineries in Nigeria, Madagascar, Zambia, and the Mauritius, a process that it hopes will earn it goodwill enough in these countries to translate into a marketing opportunity once the markets open up. Coupled with its forays into exploration, these could help IOC move into the Fortune 100 over the next couple of years as Ramachandran wants it to.

-Ashish Gupta

ITTIAM SYSTEMS
SRINI RAJAM, CEO
DSPing The World

Can an Indian company make it in the global chip design industry? Bangalore-based Ittiam Systems thinks it can. First, some basics: digital signal processing has to do with the digitisation of typically analogue information such as video and audio; any chip that can do this is called a digital signal processor; and DSPs typically end up in consumer electronics appliances. Srini Rajam is a 17-year vet of the DSP and chip design industry; in January 2001, the former head of Texas Instruments' Indian ops founded Ittiam as a DSP-design company focussed on digital video and audio, wireless LAN (Local area Network), and VOIP (Voice over Internet Protocol). The timing wasn't great: the global chip industry was facing a meltdown but Rajam says ''the tough market conditions imposed discipline on us; and we focussed on things that could bring us revenue streams''. Today, Ittiam boasts more than 30 IPs (Intellectual Properties; these and 10 patents in various stages of approval were created from $5 million of initial funding) and a growing list of companies (30, at last count) that pay to use them. ''Our goal is to become the global leader in the DSP IP space and to file at least 10 patents a year,'' says Rajam. It's possible.

-Venkatesha Babu

MOSCHIP
K. RAMACHANDRA REDDY, Founder & CEO
Indian Tech's Hottest

No, it isn't software product company i-flex we are referring to; our choice for the label is Hyderabad-based MosChip, a chip company that has eight products targeting the global consumer appliance and data communication markets under its own name, with 10 more in the pipeline. Then, there's the small thing about founder and CEO K. Ramachandra 'Ram' Reddy being the individual credited with having designed the world's first DSP way back in 1977. MosChip's design-to-delivery model is riskier, but also more rewarding. Since it outsources manufacturing to UMC, TSMC, and Flextronics (also an investor) it doesn't incur the killing manufacturing overheads a small player otherwise would. ''It is not improbable for a company of our size and focus to touch $500 million (Rs 2,292 crore) in revenues over the next seven to 10 years with the right kind of management,'' says Reddy. As long as it gets its marketing act right, that is.

-Venkatesha Babu

MPHASIS BFL
JERRY RAO, Chairman & CEO
The Second Wave

Jaithirth 'Jerry' Rao still remembers how, when Mphasis and BFL merged in April 2000, the CFO of a large software company said, ''Two losers coming together do not make a winner.'' Today, Mphasis bfl is the sixth largest software company in India and its sales have increased from $34 million at the time of the merger to $120-$125 million (Rs 560-600 crore). Better still, it will end 2003-04 with Rs 100 crore in net profits. While the tech slowdown saw the gap between Indian software's first-tier and second-tier widen, Mphasis BFL bucked the trend. And it was a pioneer of sorts, bundling its services and that of its BPO subsidiary MsourcE into an integrated whole for clients. ''Our goal is to be a global company with a large Indian footprint,'' says Rao. With centres in China and Mexico that seems like a real objective, not just words.

-Venkatesha Babu

NALCO
C. VENKATRAMANA, CMD
Cost Warrior

Not too many public sector companies boast a vision statement that speaks of ''becoming a company of global repute''. But then, not too many public sector companies would be able to advertise net profit margins of around 19 per cent on sales of Rs 2,718 crore. The numbers and the vision statement could explain why C. Venkatramana, the Chairman and Managing Director of NALCO, refuses to be drawn into a discussion on the government's blow-hot, blow-cold approach to divesting its stake in the company. Instead, the chain-smoking gent speaks at length on the inevitability of NALCO becoming a global aluminum major. A sampling: NALCO has the largest alumina production capacity in Asia; it exports almost 55 per cent of its produce; and at Rs 5,717 a tonne, its cost of production is the lowest in the world. Healthy reserves of the ore, proximity to coal mines and captive power plants (its cost per unit is a mere Re 1) are behind the last. Once the government gives its go-ahead, NALCO will spend Rs 4,100 crore (80 per cent will come from internal accruals) to up mining, refining, smelting, and power production capacities. Phew!

-Ashish Gupta

SAMI LABS
RAJ BAMMI, President
The New-age Traditionalist

First, a disclaimer: Sami Labs isn't in this list because the company is in the hot area of alternative medicine (ayurveda, in this case). Instead, the company makes it to the list of 20 companies to watch because it brings the discipline of product- and clinical research that is very much part of the allopathic way to ayurveda. Sami's R&D facility in Bangalore has 100 scientists on its rolls, it spends 9 per cent of its revenues on r&d (2002-03 revenues: Rs 71 crore) and it even boasts a research facility in Princeton, New Jersey. ''We conduct pre-clinical and clinical trials in the US on the American population to develop credibility for the made-in-India label,'' says Raj Bammi, President, Sami. The idea to market Indian herbal medicine to Americans came to Sami's Founder and Chairman Dr Muhammed Majeed when he was in the US in the early 1980s: allopathic drugs were expensive and the only alternatives were Chinese or European herbal medicine. Today, competition has intensified, but Sami's credibility-building efforts have paid off. As has its investment in research: it has nine international patents to its credit with some 20 others in various stages of approval. Now, Sami is venturing into areas like biotech and supercritical fluid extraction (a joint venture with IIT Mumbai) to reduce costs and increase efficiencies in its manufacturing process. This quaint mix of the new and the old has spelt success for Sami.

-Venkatesha Babu

STERLITE
ANIL AGARWAL, CEO
Man Of Mettle

It wasn't easy deciding to fit this company here. Not that there was any argument over whether or not Sterlite deserved to be on the list. As an up-and-coming global non-ferrous major it was a shoo-in. The only debate was the name it would go under. Would it be S for Sterlite or V for Vedanta (the holding firm for all group companies that Agarwal will shortly list on London Stock Exchange, after a $700 million issue)? Well, we decided on S. You can read all you want to and then some about Sterlite, Vedanta, and Agarwal elsewhere in this issue (See Man Of Metal), but the company's presence here sets us wondering. What's it with Indians and metal? There's Lord Bagri of London Metals Exchange and L.N. Mittal of LNM Group. Last year's listing featured Hindalco. And this year's features Nalco. We don't know the answer but would just like to say that it certainly seems to be a case of the more the merrier.

-Abir Pal

STRAND GENOMICS
SRINIVASAN SESHADRI, CEO
Algorithmist

The hype may be gone, but bioinformatics-the use of complex computational techniques to simplify even more complex genetic and molecular research-remains hot. Three years after it was spun off from the serene campus of Bangalore's Indian Institute of Science by four professors, Strand Genomics has three major products and 30 clients to show for its efforts. K.P. Balraj, a director at West Bridge Capital Partners, one of the venture capital firms that has invested in the firm, says the background of its founders is Strand's biggest asset. "These guys are among the very best in the world in areas such as image processing, pattern recognition, visualisation, and complex systems modelling." The three products launched by Strand thus far, Spathika, an image analysis system, Avadis, a data mining software, and Acuris, a workflow engine, bear this out. Strand's client list may include the likes of Eli Lilly, Sequoia and Abgenics-all names to reckon with in the life sciences space-but the company isn't satisfied with this and is looking to expand its focus into areas like semiconductor research and financial services. Both, you see, could do with some algorithms.

-Venkatesha Babu

SUN PHARMA
DILIP SHANGHVI, CEO
Sunrise

We could get into trouble for saying this, but of all the pharmaceutical companies featured in this list, this year and last, Sun Pharma is probably the strongest player in the domestic market. That's because the company is what you'd call a boutique drugs manufacturer: it makes specialty medicines for therapeutic areas such as cardiology, psychiatry, neurology, and gastroenterology. Most of these drugs fall outside the purview of the Indian government's price control laws, one reason why Sun has consistently grown at least twice as fast as the industry. However, Dilip Shanghvi, who founded Sun with Rs 10,000 and some borrowed equipment, is unlikely to proffer this explanation as reason for Sun's meteoric growth from a Rs 7.5 lakh company in 1983 to a Rs 858 crore company today. ''We possibly work harder,'' he smiles. Sun isn't oblivious to the generics opportunity either, the vast amounts of money to be made by replicating drugs that go off patent. Its US subsidiary Caraco is the vehicle that will do this. Caraco has already filed two Abbreviated New Drug Applications-these are mandatory for marketing generics-with the US Food and Drug Administration. And Sun itself will chip in with five more by March next year. A strong domestic play, and an emerging generics one in the US-that's quite a combo.

-Sahad P.V.

TATA MOTORS
RATAN TATA, Chairman
Global Wheels

In 2000, barely a few months after its high-decibel launch, Tata Motors Chairman Ratan Tata's dream, small car Indica, looked a loser. Its quality was inconsistent and the company itself was bleeding under a huge loss. Today, Tata Motors has started exporting the Indica, badged CityRover to the UK under an agreement with MG Rover (over the next five years it will ship 100,000), looks set to achieve record profits, is bidding for South Korea's Daewoo Commercial Vehicle Company, and has drawn up an aggressive globalisation blueprint. And Ratan Tata is already articulating another dream, this one about a Rs 1 lakh car. Clearly, Tata Motors is on a globalisation overdrive. "This is only the first chapter of the relationship between the two companies," says V. Sumantran, the head of the company's passenger car business and its engineering research centre, referring to the Rover alliance. "We plan to share products and jointly develop car parts." "A Rover-like alliance for commercial vehicles cannot be ruled out,'' adds Ravi Kant, the head of commercial vehicles business. Already, Tata Motors is working on a new truck platform that it will unveil in 2005, and modify according to the market to which it is being exported. Think of it as a World Truck.

-Swati Prasad

TATA TEA
HOMI KHUSROKHAN, Managing Director
A Strong Potion

It surely didn't take a clairvoyant to pick this one. Kolkata-based Tata Tea has everything going for it: a strong international brand (Tetley), a diversified basket of products, acres of captive tea gardens, competent managers, and even more savvy number crunchers. A year ago, the company's acquisition of the UK's Tetley for $400 million (Rs 1,840 crore) looked like a blunder. The acquisition is now being cited as the master stroke that catapulted a sleepy Indian plantation company into the global big league. Over the past three years, the company has downed shutters on some plants, divested unprofitable businesses, and moved some global manufacturing to its manufacturing facility in Cochin. ''Costs have been kept on a tight leash while existing assets are being optimally utilised through financial and operational restructuring,'' says Jigar Shah, Head (Research) at Mumbai-based brokerage K.R. Choksey Securities. The reliance on global markets (in the UK and Canada Tetley is the market leader; it is the fastest growing tea brand in Australia; and it has a 11.5 per cent share of the market in the US) has helped Tata Tea weather a crisis in the domestic one. The only concern could be quality. ''Remember, while tea drinkers abroad might pay top dollar for their beverage, they're equally finicky about quality,'' cautions Shah. That's something for MD Homi Khusrokhan to contemplate over his morning cuppa of steaming Darjeeling.

-Abir Pal

LAST YEAR'S 20
AND JUST WHERE THEY STAND NOW

ASIAN PAINTS
One more acquisition, this one in Fiji, consolidation, and an ego-boosting stake acquisition in ICI India-it's been a good year.

AVESTHA GENGRAINE TECHNOLOGIES
Three subsidiaries in three geographies, and us patents for its grain-resistant seeds-we're feeling vindicated.

BIOCON
The company is in the midst of an exercise to increase capacities, and is preparing for its early 2004 IPO.

CIPLA
The company is still leading the charge for cheaper drugs and looks set to benefit from the great generics opportunity.

DAKSH
What's different? Try 2,550 more people, 1,700 seats, and new clients, including two leading airlines and a $2-billion hotel chain.

DR REDDY'S
An entry into Brazil and South Africa, more business in Europe, and just that closer to becoming a discovery-driven global player.

GUJARAT AMBUJA
No major acquisitions, but its sales increased by 37 per cent. Export sales grew faster, by 57 per cent to Rs 218.66 crore.

ESSEL PROPACK
CEO Cyrus Bagwadia resigns and is replaced by a member of the Goel family that controls the company but the business is on a song.

HDFC BANK
It is expanding its reach by the day and has addressed the one gap in its portfolio by tying up with parent HDFC to offer home loans.

HERO HONDA
The fact that Honda Motorcyle will launch motorbikes next year is a concern, but the company has diversified into scooters.

HINDALCO
The acquisition of two copper mines in Australia has transformed it into an integrated copper producer.

IFLEX
It's been an eventful year: New markets, new clients, a support and solutions centre in London, and a marketing alliance with IBM.

INFOSYS
Surprise, surprise. Just when everyone was writing it off, the company came back with stronger-than-strong results.

MOSER BAER
The company's share of optical media markets around the world increased and it is now helping create standards for the nex-gen Blue Disc.

KSHEMA TECHNOLOGIES
The company took the inorganic route to growth by acquiring systems integrator Singapore Computer Systems

ONGC
Its global strategy devolves around oilfields that are too small for the Exxon Mobils of the world; still in gestation stage.

RANBAXY
Its us operation goes from strength to strength. With its China plant kicking in, the company is now a true MNC.

RELIANCE INDUSTRIES
A growing telecom business, gains in exploration and a petroleum marketing business waiting to kick off. Phew!

SHANTHA BIOTECHNICS
The company unveiled another product, the only recombitant human interferon alpha 2B in the world. Jargon? Yes. Big thing? You bet.

WIPRO
Its results are beginning to look good again. It continues to acquire companies and may be better placed to address the future.