Current wisdom dictates that it's mostly industries with a high "sexiness quotient"-it services, biotech, BPO, retail and the like-that clock high double-digit growth rates, which in turn makes companies in such industries better placed to reward shareholders handsomely and often. Oh, yeah? Try telling that to the managements of companies like Sintex Industries and Aarti Industries, which make plastic water tanks and benzene derivatives, respectively.

Core competency may be a forgotten catchphrase these days, and few gurus are screaming "stick to the knitting" from the rooftops of their consultancies simply because most corporations these days do just that. A few of course don't. That, as BT's study points out, doesn't stop them from being immensely investor-friendly. Case in point: Indian Rayon & Industries, which operates in a diverse range of industries, right from carbon black and insulators to BPO, it services and insurance. Sintex Industries somewhat bizarrely makes plastic water tanks and, well, textiles. If investors don't seem to mind, pretty much nobody else should.

Reality check #3: Even cyclical industries can be highly investor-friendly in an era of rapid economic growth. Great Eastern Shipping has been consistently rewarding shareholders for years now, never mind the vagaries of the industry in which it operates. Ditto with engineering Goliath ABB India. Clinching the case for cyclicals in today's business environment is that there's not even one company from the so-called 'defensive' sectors-it services, pharma and FMCG-on the top 10 list.

Lesson: Pledge to reward investors periodically, to communicate with them continuously and to almost maniacally follow good governance practices. Then go ahead and do that IPO.

What follows are pieces on BT's top 10 investor-friendly companies, and what exactly makes them so. Note: SKF India and Century Textiles, #8 and #10 on our list respectively, were unwilling to cooperate for this feature and are hence not covered. Instead we've done write-ups on #11 and #12, Bharat Electronics and Aarti Industries, respectively.

SMOKESTACK LIGHTNING

NAME: Amit Kalyani Executive Director COMPANY: Bharat Forge INDUSTRY: Automotive Ancillaries MOST INVESTOR-FRIENDLY MOVE: Acquisition of a German forgings company

When a company's revenues grow at over 30 per cent year-on-year, its investor-friendliness quotient automatically clips. Little wonder then, Pune-based Bharat Forge, which is today the world's second-largest forging company, ranks #1 in our survey this year. There are many factors that make Bharat Forge investor-friendly, but what sums it up is its growth in the topline and bottom line. From a turnover of Rs 689.22 crore in 2002-03, Bharat Forge hit Rs 2001.4 crore as of March 2005.

A key to that growth is the company's global strategy. In November 2003, Bharat Forge acquired Carl Dan Peddinghaus, a euro 116-million or Rs 614.8-crore German forgings company, at a throwaway price of euro 29 million or Rs 153.7 crore. As a result, during FY 2005, 64.2 per cent of the company's revenues came from outside of India, making it a global company of sorts. But the company's global strategy is not at the cost of the domestic market. During the last financial year, Bharat Forge's revenues from the domestic market grew by 42 per cent, and export revenue by 53.3 per cent. The company posted a healthy 29.3 per cent growth in net profit in FY 2005, at Rs 161.3 crore.

After growth comes transparency. Bharat Forge is amongst the few companies that puts its management discussion and analysis in its annual report. "We are transparent in our communication with our investors," says Amit Kalyani, Executive Director, Bharat Forge. The company's website has all you want to know about the company-right from its financials and vision, to its new phone numbers as well as driving directions to get to its plant in Mundhwa, near Pune! Says Kalpesh Parekh, Senior Analyst at ask Raymond James, Mumbai-based brokerage: "Bharat Forge has set a benchmark amongst ancillary companies for investor-friendliness."

-Swati Prasad

NAME: C.P. Gopalkrishnan Director (Finance) COMPANY: Aban Loyd Chiles INDUSTRY: Oil exploration MOST INVESTOR-FRIENDLY MOVE: Aiming to make the oil-drilling division debt-free in 18 months

PSST... THERE'S VALUE HERE

Getting through to the management of the painfully media-shy Aban Loyd Chiles is a bit like drilling for oil-results don't come easy, sometimes they don't come at all. From the numbers, though, it appears that this Chennai-based provider and operator of rigs has been more successful at finding oil than this correspondent has been at meeting the company's head honchos. "Strong cash flows from the rig operations are expected to make the oil-drilling division free of debt mid-way through 2006, making it capable of targeting fresh acquisitions for further growth," says a research note generated by ShareKhan.com, an equities-focussed analysis firm and a part of SSKI Securities. The note also states that Aban's oil drilling assets are around Rs 1,325 crore. "This gives a net asset value of approximately Rs 1,800 per share," the note adds.

Company officials defend the low-profile stance taken by Aban, arguing that returns to investors are more important than posturing to the external world. "We are media-shy and low-profile by intention, not by accident. For us, investors are part owners of the business and we have to drive value for them rather than bask in the limelight," says C.P. Gopalkrishnan, Director (Finance) at Aban Loyd Chiles. This stance comes as a boon to small investors, since Aban is very wary of divulging information to big stock-broking companies and leaving smaller shareholders in the lurch. "Some large speculators have asked for data on the company and we have desisted from giving it to them, purely because we keep our smaller shareholders' best interests in mind," adds Goplakrishnan. The distance between Dalal Street and Chennai just got longer.

-Rahul Sachitanand

AHEAD OF THE PACK

NAME: S. Chatterjee Executive Director COMPANY: UTI Bank INDUSTRY: Banking MOST INVESTOR-FRIENDLY MOVE: Reining in NPAs to roughly 1 per cent

It's not the first name you'd recall if you were asked to name the top three or four Indian private banks, but then perceptions don't always mirror reality. Certainly not in the case of UTI Bank, one of the very few in the Indian corporate sector to have embraced corporate governance in its true spirit. Consider this: though promoted by financial institutions, it boasts a professional board. Not just that, independent directors do actually occupy half of the seats on the board. It gets better: The capital adequacy ratio works out to 12.66 per cent, well above the Reserve Bank-fixed threshold of 9 per cent. Net non-performing asset levels too are well below industry norms, at just around 1 per cent. "UTI Bank also scores high on transparency," points out Shriram Iyer, Head (Research) at Edelweiss Capital. "Their quarterly results give a very good business perspective. They are upfront and disclose all that they are able to."

S. Chatterjee, Executive Director, UTI Bank, sums it up when he says, "The board guards all stakeholders." It becomes easier to do so when you've been clocking an annual net profit growth of 45 per cent over the past five years. Even more impressive is a 30 per cent-plus growth in 19 out of the past 21 quarters. "We concentrate on income sources that are sustainable," says Chatterjee. That's exactly why UTI Bank could show growth despite a steep fall in treasury income, from 31 per cent (as a percentage of total operating income) in 2003-04 to 3 per cent last year. Fee-based income came to the rescue, climbing from 17 per cent to 33 per cent. "Fee income is the real growth story for the coming years," stresses Chatterjee. Watch this space-rather, watch UTI Bank.

-Narendra Nathan

NAME: Bharat Sheth Managing Director COMPANY: Great Eastern Shipping Company INDUSTRY: Shipping MOST INVESTOR-FRIENDLY MOVE: Paying dividends for 21 years at a stretch

BOUNTY AHOY!

A 21-year uninterrupted dividend-paying streak in a highly-cyclical business like shipping is no mean feat. And just in case there still exist long-faced shareholders, Great Eastern (GE) Shipping has been generous in doling out rights issues and bonuses, and has also concluded two share buyback programmes. That GE Shipping can thrive in an industry that has its periodic downcycles is thanks to the management's ability to reduce the cyclicality of earnings. This is done by actively hedging projected future earnings in global markets. For instance, roughly 55 per cent of GE Shipping's current year earnings are already covered (such information is revealed on a quarterly basis, segment-wise). It's such hedging that's played its part in keeping investors satisfied with chunky returns-the company generated a return on net worth of 43.8 per cent last year.

Not surprisingly, then, GE Shipping is one of those few companies with the lowest number of investor complaints. Analysts love GE Shipping for its corporate governance and transparency policies. "On a 10-point scale, GE Shipping will score eight on transparency", says Sachin Kasera, Senior Analyst at Pioneer Intermediaries. "And on the corporate governance issues, the score is higher (9/10)", he continues. "Everybody associated (or expecting to be associated) with our company has the right to be informed and it is our obligation to provide the same", says Bharat Sheth, Managing Director. For good measure, the company has been coming out with weekly updates on the shipping industry for the last two and a half years. GE Shipping may be operating in an industry fraught with uncertainty, but there's little cyclicality when it comes to shareholder information.

-Narendra Nathan

SAFE AS HOUSES

NAME: V.K. Chopra Chairman and MD COMPANY: Corporation Bank INDUSTRY: Banking MOST INVESTOR-FRIENDLY MOVE: A 65 per cent dividend even though profits fell

One surefire way of keeping the investor satisfied is to keep those chunky dividends coming-even when the bottom line takes a hit. That's how Corporation Bank stays investor-friendly: even when profits came down by around a fifth last year, this Mangalore-based bank decided to reward its shareholders with a 65 per cent dividend (compared to a 60 per cent one in the year before). What's more, there were few eyebrows raised in the fastidious analyst community simply because the drop in profits was more because of aggressive provisioning rather than any fundamental reversal. In fact, Corporation Bank (in which Life Insurance Corp. has a 27 per cent stake) might have scored a few brownie points with analysts for such a prudent move. "In a borrowers' market, Corporation Bank has been able to hold its own. Our net NPAs are in the range of 1.12 per cent of total advances while our capital adequacy ratio is at 16.2 per cent. It is this good prudent culture within the bank that has helped us maintain growth momentum," points out V.K. Chopra, Chairman & Managing Director.

In its centenary year, the bank has commissioned Boston Consultancy Group (BCG) to identify areas where it needs to beef up. Based on the firm's recommendations the bank has requested permission from the Reserve Bank of India to operate representative branches in Dubai, Hong Kong and Antwerp. "Nearly 15 per cent of our deposit base comes from NRIs. In order to serve them better, we require a physical presence in these places," says Chopra. And to move away from the image of being a South Indian bank, 70 per cent of the expansion activities are focussed on the northern and western markets. That should ensure the dividends keep coming.

-Venkatesha Babu

NAME: Ravi Uppal MD and Vice Chairman COMPANY: ABB India INDUSTRY: Engineering MOST INVESTOR-FRIENDLY MOVE: Seventeen successive quarters of growth

ON CRUISE CONTROL

Its parent might be undergoing a difficult phase (primarily because of asbestos-related claims) internationally, but ABB India has been on a smooth ride. This power and automation technology leader has almost doubled its turnover in the past three years without increasing the headcount. And in case you forgot, ABB operates in the rather sedate engineering and manufacturing sector of the economy. Whilst the upswing in the manufacturing and infrastructure sectors-two major target segments for the company's offerings-no doubt have helped the company to put in a sterling performance, it has also done well in the power segment despite having to deal with not-so-healthy state electricity boards. The markets have taken notice, with the share price quadrupling in the past three years to around Rs 1,300. Says Ravi Uppal, MD and Vice Chairman, ABB India: "Our stakeholders have acknowledged ABB India's strong performance over the last few years and this is reflected in our market standing."

K. Rajgopal, CFO of ABB India, adds that a sharp focus on working capital management has yielded good results. "Our portfolio management has also been excellent. We have 44 different streams of business. Earlier, 80 per cent of our revenues used to come from projects and the rest from products and services. We have been able to change this to a 60- to 40- mix." The advantage of such a reshuffle is more stable revenues and growth. Growth is something ABB India knows a thing or two about-it's had 17 successive quarters of it!

-Venkatesha Babu

THE SPICE OF VARIETY

NAME: Sanjeev Aga Managing Director COMPANY: Indian Rayon & Industries INDUSTRY: Diversified MOST INVESTOR-FRIENDLY MOVE: Entry into insurance in 2001

You won't stumble on too many companies with as diverse a mix of old and new-age businesses as Indian Rayon & Industries. The traditional component comprises viscose filament yarn (VFY), carbon black and insulators, whilst the more contemporary activities-flagged off over the past five years via acquisitions and joint ventures-include branded garments, life insurance, it services and BPO. Doubtless the faster-growing, higher-margin portfolio, the new service-oriented businesses are expected to account for at least three quarters of consolidated revenues over the next five years; in 2004-05 they accounted for a little over half the consolidated top line.

"Indian Rayon was always a diversified company and the new businesses will only fuel growth," points out Adesh Gupta, Senior President & CFO. The makeover of Indian Rayon began five years ago with the acquisition of Madura Garments. In one stroke, brands like Louis Philippe and Van Heusen facilitated the foray into the growing branded apparels sphere. A year later, a JV with Sun Life of Canada for life insurance took shape; PSI Data Systems was acquired in the same year. In 2002, Indian Rayon bought over back-office processing firm Transworks, even as the insulators business was demerged through a JV with NGK of Japan. The shift in focus, away from the traditional activities, was clearly underway.

Clearly it's not as if the new businesses will hog all of centrestage in the years to come. "The existing businesses too are very solid," stresses Sanjeev Aga, Indian Rayon's newly-anointed MD. In insulators, for instance, this Aditya Birla group company is the domestic market leader, and is #2 in the VFY and carbon black. Esoteric businesses perhaps, but what matters to investors is the returns they're yielding.

-Krishna Gopalan

NAME: Amit Patel Managing Director COMPANY: Sintex Industries INDUSTRY: Plastic water tanks and textiles MOST INVESTOR-FRIENDLY MOVE: Holding one-on-one meetings with investors

LEARNING THE ROPES

It's become fashionable these days for India's large-cap companies to meet institutional investors and share their plans with them. But when a relatively less-known company from Gujarat that makes plastic water tanks begins having such one-on-one meetings with investors, you have to sit up and take notice. With sales of Rs 659 crore and profits of Rs 54 crore last year, it becomes even more difficult to ignore Sintex Industries. "We believe that correct and timely communication is the basis of public confidence in the corporate system. And successful centres of economic activity are those that inspire trust." That's not some management guru pontificating; it's just Amit Patel, Managing Director, Sintex Industries, explaining his company's concern for investors.

Sintex Industries, which has become synonymous with plastic water tanks (it has a 55 per cent market share in that segment), manufactures a range of plastic products at its seven plants across India. Rather oddly, it also has a textiles division that makes premium men's shirting (but then again if Indian Rayon can make insulators as well as garments, why can't Sintex make water tanks and shirts). Says Kishore Chinai, Vice President and Head of Equities, Tower Capital & Securities Pvt. Ltd: "The management is very receptive and open. Even though it is a family-run business, it has many professionals on board."

Like most frontline Indian companies, Sintex too is eyeing global markets and has serious ambitions of tapping the European market for shirting fabrics. Alas, those plastic water tanks may not find too many takers in the EU.

-Swati Prasad

ON DALAL STREET'S RADAR

NAME: Y. Gopala Rao Chairman and MD COMPANY: Bharat Electronics INDUSTRY: Defence electronics MOST INVESTOR-FRIENDLY MOVE: Spending 5 per cent of sales on basic R&D

It spends 5 per cent of turnover on basic research and development, and has close to 10 per cent of its workforce in the labs. Must be a top-notch pharma company, right? Not quite. We're talking about a public sector company called Bharat Electronics Ltd (BEL), which makes electronic equipment for the defence sector. bel designs and manufactures state-of-the-art electronics for radars, defence communication, opto electronics, telecommunications and sound and vision broadcasting equipment. There's obviously good demand for such products, considering that BEL has been able to parlay this into a growth of around 15 per cent per annum over the last five years to reach a turnover of around Rs 3,250 crore in 2004-05. Says Y. Gopala Rao, Chairman & Managing Director, BEL: "This is a vindication of the fundamental strengths of the company. Today our revenue mix is 80 per cent from defence and 20 per cent from civilan projects. Our exports have jumped by 40 per cent in the last one year."

Rao reveals that an internal exercise dubbed 'cost reduction for survival and growth' has yielded results. For instance, an early warning radar, which it supplies to the Indian Army, cost 9 per cent less this year than what it did last year. "We are always one step ahead of the curve in anticipating and meeting the requirements of our customers," says Rao. And it's not just defence projects alone that BEL is pocketing. Recently, for instance, in the face of stiff competition from multinational firms, BEL bagged a project to hook up all the police stations in the country on a common network. Rao says his goal is to satisfy the needs of all stakeholders: shareholders, employees and customers, both civil and defence. That's never easy, but Rao's pulled it off pretty spectacularly so far.

-Venkatesha Babu

NAME: Rajendra Gogri Vice Chairman and MD COMPANY: Aarti Industries INDUSTRY: Specialty chemcials MOST INVESTOR-FRIENDLY MOVE: A 2:1 bonus early this year

EASY BURN

It's bigger than many second-rung it services companies, with revenues of Rs 688 crore, of which Rs 250 crore are export sales. But it's pretty understandable if Aarti Industries isn't spoken of in the same breath as a code shop with an 'Infotech' or a 'Software' suffix. Alas, benzene-based intermediates-which is Aarti's primary business-hardly sends the adrenaline of fund managers, venture capitalists and headhunters soaring. Producing basic and specialty chemicals (needed to make polymers, agrochemicals, surfactants and pigments) may appear unsexy, but try telling that to Aarti Industries' shareholders. Three years after going public in 1992, Aarti announced its first bonus issue of 1:1. Early this year it got better, with shareholders receiving two shares for every one held. "Effectively, a shareholder with one share in 1992 will hold six shares today," beams Rajendra Gogri, Vice Chairman & MD, Aarti Industries.

If Aarti can dole out such largesse at will, it's because it is confident of at least 20 per cent annual growth. Exports will grow even faster, at 25-30 per cent, because specialty chemicals attract a large clientele from Europe. Indeed, there exists a huge demand from developed countries, where the cost of manufacturing is roughly 30 per cent higher than in India. This doesn't mean that Gogri is ignoring the Indian market, although the consumption of specialty products isn't too high in India. The company's plant in Tarapore (in Maharashtra) has received USFDA approval, which will make it a supplier to reckon with in the pharma sector. Any roadblocks ahead? "There has been some fluctuation in benzene prices and we hope that will stabilise." Benzene may be volatile, toxic, inflammable and all that, but it's also pretty rewarding for Aarti Industries.

-Krishna Gopalan