Ask any CEO, and she will tell you that creating shareholder wealth is anything but easy. You have to be in the right industry, have the right strategies, and the right people to execute those strategies. Even then, there's no guarantee that you'll make your next quarter numbers, or that investors will be pleased enough to demand more of your company's shares. If your customer isn't trying to stiff you, then there's a competitor waiting to undercut you. One way or another, someone's trying to eat your lunch. Then, someone like Business Today comes into the picture and raises the bar farther. To be considered truly investor-friendly, it says, it is not enough if you've outperformed your peer group. You must outperform the BT 50 for not one or two, but three years in a row, disclose shareholder information on time, declare quarterly results on time, and hold the AGM on time, too. That's why, there's no other measure of investor-friendliness like BT's Most Investor-friendly Companies survey. That's also why not too many companies manage to stay on our listing year after year. In fact, our third annual listing has just one name from the previous year.

But which are these companies that have managed to meet our tough criteria (see The Methodology on page 108) and be crowned the 10 most investor-friendly companies? What industries do they belong to, and are they big or small? The answer to the first question is offered on the pages that follow. As for the second question, the diversity among our top 10 surprised even us. At the top of the chart is a Pune-based company that makes engines, followed by a sugar company that went through a massive restructuring to emerge stronger. Among the others are those that make two-wheelers and three-wheelers, sell cement, make abrasives and ceramics, play host, and even rent oil rigs. Our top 10 companies, only one of which is a Sensex stock, have nothing in common, except the fact that they try to do their best to stay focussed on one thing: Shareholder value. Like dream stocks, they have been growing in value (at least for the last three years), paying dividend like EMIs, and offering bonus shares.

Here's a secret we hate telling you, but must: You don't have to be a media-savvy company to be an investor darling. One of our top 10 companies stubbornly refused to either comment or let its CEO be photographed, stating that it had decided to maintain media silence for one year. So, the good thing about our survey is this: As long as you make obscene amounts of money for your shareholders, we'll do our bit to let the world at large know about your good work.

Picking Up Speed

COMPANY: KIRLOSKAR OIL ENGINES NAME: ATUL C. KIRLOSKAR Chairman & Managing Director INDUSTRY: Engineering (diesel engines and engine components) MOST INVESTOR-FRIENDLY MOVE: A 1:5 stock split last year SHARE PRICE AS ON JULY 6, 2006: Rs 183.75 SHARE PRICE AS ON JULY 3, 2003: Rs 26.12 Source: CMIE; adjusted stock price

Last year, the Indian government introduced tougher emission and noise-level norms for generating sets. Far from complaining, Pune-based Kirloskar Oil Engines Ltd (KOEL) moved deeper into the market to make a killing. As one of India's oldest manufacturers of engines, generating sets and engine bearings, koel doesn't just have a leading share of the market, but also a technological edge. Therefore, while its smaller competitors went back to the drawing board to develop compliant products, KOEL used the lead to increase its sales, both in India and regulated markets outside. Result: Overall sales jumped 21 per cent to Rs 1,395 crore and profit before tax 46 per cent to Rs 148 crore. For the first time, too, engine sales topped Rs 1,000 crore and exports, Rs 100 crore. Despite a 1:5 split at Rs 397.50 (that is, Rs 79.50 a share) on March 31 last year, the KOEL stock has jumped to Rs 183.75.

Atul C. Kirloskar, the company's Chairman and Managing Director, says last year's gains were a result of the steps taken over the recent years. For instance, in 2000, the company moved accounting, purchase and sales to its ERP system, making the processes not just faster, but more transparent. "Making of the monthly and quarterly reports became easier, the auditing was easy," says Kirloskar, 50. For the last few years, the board has approved company accounts on 19th day from close of the financial year, and shareholders have been delivered copies of the annual report in less than three months from year-close. The stock market seems confident of KOEL's future, not the least because booming profits have pushed earnings per share 17 per cent to Rs 21. No wonder, KOEL tops our list.

-Kushan Mitra

Reaping Fruits Of Restructuring

COMPANY: E.I.D PARRY NAME: A. VELLAYAN Vice Chairman INDUSTRY: Sugar MOST INVESTOR-FRIENDLY MOVE: Demerging fertilisers business SHARE PRICE AS ON JULY 6, 2006: Rs 196.55 SHARE PRICE AS ON JULY 3, 2003: Rs 25.34 Source: CMIE; adjusted stock price

What's better? More or less? In the case of E.I.D Parry, less was definitely better. Until three years ago, E.I.D was an unwieldy company, with interests in three unrelated businesses: sugar, fertilisers and ceramics. While that, in theory, may have helped E.I.D better survive industry cycles, it left investors terribly confused. "Were we a fertiliser company, a sugar manufacturer, or ceramics maker? They did not want to invest unless they knew for sure where the money went,'' recalls A. Vellayan, Vice Chairman.

Define E.I.D is just what Vellayan did. Out went fertilisers and ceramics, leaving the company sharply focussed on sugar. The results were stunning: Before the restructuring in 2000-01, gross income was Rs 1,364 crore and pat (profit after tax), Rs 44.64 crore. By 2003-04, when the impact of the overhaul was beginning to make itself felt, the topline dropped to Rs 641 crore, but the net profit remained strong at Rs 43.23 crore. The following year, E.I.D's revenues jumped to Rs 819 crore, but pat rose faster at Rs 104 crore. And last year, the company logged Rs 1,030 crore in revenues and Rs 116 crore in net profit. What helped? Apparently, good management. Managing Director P. Rama Babu pushed E.I.D into sugar with a vengeance, and proved to investors that restructuring was the right thing to do. "I had written a book on sugar in the early 1990s that speaks of our performance today,'' he says, not to boast, but to indicate his great confidence in the industry. Further moves, such as backward integration into ethanol and cogeneration, will boost E.I.D's income.

-Nitya Varadarajan

Small But Spectacular

It's not the biggest automotive gear manufacturer (Bharat Gears is), it doesn't manufacture out of industry hotspots such as Chennai, Pune or Haryana (Coimbatore has been its home for nearly four decades now), and it is so media shy that its founder-Chairman and Managing Director, P. Subramanian, has almost never been photographed by any publication (That explains why his is the only CEO picture missing in this listing). Yet, shareholders and analysts remain steadfast in their admiration for this company. Why? Apart from the 100 per cent dividend that it paid out last year, Shanthi Gears has been clocking solid growth year on year. In 2004-05, its revenues were Rs 138.54 crore and net profits Rs 19.12 crore. Last year, the numbers were up to Rs 184.25 crore and Rs 28.05 crore, respectively-that's a 33 per cent growth in sales and 47 per cent jump in profits. One reason why it has been able to keep its growth engine humming is its quick diversification from a producer of a few types of small gears to a well-respected manufacturer of not just gears, but geared motors and CNC machine tools.

With the auto components market sprinting ahead at 20-25 per cent annually, analysts believe that Shanthi Gears' growth story may have just begun. "Shanthi Gears has a strong and diverse product base and it is showing strong signs of growth. Its gross profit margins (around 33 per cent) are among the highest in the industry and this bodes well for shareholders," says

Huzaifa Suratwala, a research analyst with Emkay Share and Stock Brokers. According to him, the company's recent $70-million (Rs 322-crore) foreign currency convertible bond (FCCB) issue also helped boost Shanthi Gears' profile in the global market, besides increasing liquidity in the stock. A higher profile may be just what the company needs as it goes after the lucrative but difficult West European market.

-Rrahul Sachitanand

A Full Pipeline To Tap

COMPANY: ORCHID CHEM. & PHARMA NAME: K. RAGHAVENDRA RAO Managing Director INDUSTRY: Pharmaceuticals MOST INVESTOR-FRIENDLY MOVE: A 1:2 bonus last financial year SHARE PRICE AS ON JULY 6, 2006: Rs 199.85 SHARE PRICE AS ON JULY 3, 2003: Rs 118.90 Source: CMIE; adjusted stock price

Over the last five years, k. Raghavendra Rao and his A-team have hit the road eight times, showcasing their drug company to global investors. The curious thing is, the roadshows weren't always aimed at raising money. Instead, they were just meant to "tell fund managers and other investors that it is good to stay invested in Orchid", says the 47-year-old founder and Managing Director. That's not all lip service. Orchid, which is a major manufacturer of cephalosporin bulk drugs and formulations, has consistently rewarded its shareholders with dividends. In fact, even when its chips were down-like in 2000-01, when it reported Rs 6.30 crore in profits on sales of Rs 425 crore-dividends have always come to investors. "We felt that just because of one bad year, we should not penalise shareholders," explains Rao.

As it turned out, the following years were vastly better, and last year's results (Rs 900 crore in revenues and Rs 83 crore in net profit) so enthused the board that it approved a 1:2 bonus and a 30 per cent dividend. (Promoters hold 20 per cent in the company). Rao says the years to come will be even better. With the required investment already on ground, "our speed has increased by 200 per cent", claims Rao. The company has a strong pipeline of 30 generic drugs, 19 of which have been filed for us Food and Drug Administration approval. Until recently, Orchid had been getting one approval a month, but now the rate has quickened to two a month and Rao says the pace will quicken further.

Typically, generic drugs have a small window of opportunity because prices fall rapidly as more competitors enter the fray. In Orchid's case, though, profit margins would be better protected because-at least in the cephalosporin segment-no new capital expenditure is required. Another important development for investors is that more and more of Orchid's revenues is coming from "regulated" markets such as North America, where competition is tougher, but margins better. In fact, in a conference call with analysts earlier this year, Rao said that he expected growth to be robust over the next three years.

It's quite possible that Orchid gathers momentum. Its joint ventures are also doing well and, in fact, the Chinese JV became profitable in the second year of its operation. Like other stocks, Orchid is down from its high (of Rs 399) end of April 2006. But if Rao has it his way, then it may start climbing back to those levels.

-Nitya Varadarajan

The Quiet Performer

COMPANY: CARBORUNDUM UNIVERSAL NAME: M.M. MURUGAPPAN Chairman INDUSTRY: Abrasives, ceramics and electrominerals MOST INVESTOR-FRIENDLY MOVE: A 1:1 bonus issue in 2005 SHARE PRICE AS ON JULY 6, 2006: Rs 129.20 SHARE PRICE AS ON JULY 3, 2003: Rs 17.80 Source: CMIE; adjusted stock price

Here's a stunning factoid about Carborundum Universal, or CUMI: Since 1958, the third year of its inception, the Murugappa group company hasn't skipped dividends a single year. Through good and bad, it has consistently paid out to its shareholders, and for the last 10 years, the dividends have averaged 36 per cent of profits after tax. As on March 31 this year, the abrasives manufacturer's paid-up capital was Rs 18.67 crore, of which Rs 16.57 crore (or 89 per cent) is due to issue of bonus shares. There have been six bonus issues in the company's history and the latest, in 2005, doubled the capital base from Rs 9.30 crore. By the way, CUMI also paid a special 80 per cent dividend on top of a standard dividend of 100 per cent. The special dividend was meant to distribute profits from sale of holdings in group companies. Says Chairman M.M. Murugappan: "We make clear, factual and balanced statements about our business, and that's important if we are to be investor friendly."

No doubt that's something investors like about the company, but the bigger lure must be the fact that CUMI is the market leader in abrasives and it has aggressive growth plans. For instance, the company's stated goal is to "achieve global leadership in delivering solutions in the areas of abrasives and ceramics by 2020". (At present, exports account for just a tenth of its total sales.) Achieving that goal involves investing in state-of-the-art production plants, one of which is coming up near Chennai. Then, Murugappan plans a slew of moves aimed at expansion: strategic alliances, joint ventures, acquisitions, setting up of low-cost production units outside of India, and investment in next generation products that use nano technology. "We don't say much, but we do what we say,'' quips Murugappan. Given that CUMI's market cap is up from Rs 103 crore in March 2000 to Rs 1,250 crore on July 6, 2006, investors believe what Murugappan says.

-Nitya Varadarajan

Building Efficiencies

COMPANY: HIND. CONSTRUCTION CO. NAME: AJIT GULABCHAND Chairman & Managing Director INDUSTRY: Construction MOST INVESTOR-FRIENDLY MOVE: Foray into real estate and construction abroad SHARE PRICE AS ON JULY 6, 2006: Rs 104.85 SHARE PRICE AS ON JULY 3, 2003: Rs 8.21 Source: CMIE; adjusted stock price

Thanks to the boom in the country's infrastructure and real estate industries, growth hasn't been an issue for Hindustan Construction Company (HCC). But maintaining profit margins has been. One of India's fastest-growing construction companies, HCC saw its 2005-06 operating profit margins drop to 9.5 per cent from 10.8 per cent the previous year. Ajit Gulabchand, HCC's Chairman and MD, blames it on the rush of new players in a booming market, but says that things are improving. "With some players leaving the industry, the bids are now 10-15 per cent above the estimated cost of a project, and that'll help improve margins."

Just the same, HCC, which has an order book of Rs 9,600 crore, is focussing on boosting growth and return on investment by bringing about greater construction efficiencies. It is also derisking business by scouting for opportunities outside the country, and Gulabchand reckons that in another three years, international operations will fetch a fifth of the company's revenues. "The intention is to become a global player," he says. That apart, Gulabchand is increasing the thrust on real estate development.

-Mahesh Nayak

Oil's Sweetspot

COMPANY: ABAN LOYD CHILES OFFSHORE NAME: C.P. GOPALAKRISHNAN Director (Finance) and Co. Secy INDUSTRY: Oil & Gas MOST INVESTOR-FRIENDLY MOVE: Acquisition of a stake in Norwegian driller, Sinvest SHARE PRICE AS ON JULY 6, 2006: Rs 972.45 SHARE PRICE AS ON JULY 3, 2003: Rs 59.24 Source: CMIE; adjusted stock price

Of the top 10 companies on our list last year, Aban Loyd Chiles Offshore is the only one to reappear this year. Clearly, there's something that Aban does right. What is it? "The company has the virtue of being in the right industry with the right business model,'' points out Jigar Shah, an oil & gas analyst at KRChoksey, a large Mumbai-based broking house. Aban, which recently also featured on our Fastest Growing Companies list, provides drilling rigs for oil exploration, and with the sector booming, it has been on a roll too. A consistent dividend payer, Aban has seen its topline grow from Rs 210 crore in 2001-02 to Rs 505 crore last year. Profit before tax has shot up from Rs 16 crore to Rs 152 crore in that time. Predictably, Dalal Street is in love with the stock. Back in March 2002, the stock was quoting at Rs 70.55, but by March this year, it was at Rs 1,100-and this after a 1:5 stock split in May 2005. Aban, it seems, has no intentions of slowing down. Its Singapore subsidiary recently acquired a 33.76 per cent stake in a Norwegian oil drilling company Sinvest, which, analysts say, should add to the Indian driller's bottom line.

-Nitya Varadarajan

Firing On All Four

COMPANY: BAJAJ AUTO NAME: RAJIV BAJAJ Managing Director INDUSTRY: Automotive MOST INVESTOR-FRIENDLY MOVE: Better utilistion of cash reserves SHARE PRICE AS ON JULY 6, 2006: Rs 2,770.40 SHARE PRICE AS ON JULY 3, 2003: Rs 553.25 Source: CMIE; adjusted stock price

Investors looking for reasons to continue their love affair with India's iconic two-wheeler company, were delivered several when the company announced its results for 2005-06 on May 19. Compared to industry growth of 19 per cent, Bajaj Auto's motorcycle sales surged 32 per cent to 19.1 lakh units; revenues jumped 28 per cent to Rs 8,106 crore and net profits soared 47 per cent to Rs 1,123.30 crore. A happy board approved a 400 per cent dividend for shareholders, compared to 250 per cent the previous year.

Investors know who to thank for Bajaj's stellar performance: The young Bajaj brothers, Managing Director Rajiv and Executive Director Sanjiv. While Rajiv has been responsible for the slew of new motorcycles launches at Bajaj, Sanjiv has brought in greater financial discipline. Before Sanjiv took over the finance function, the company was pretty bad at utilising its huge cash reserves. But these days, treasury is a big money-spinner. Last year, it earned Rs 416.80 crore, up from Rs 383.20 the year before. Sanjiv has also led Bajaj into insurance (with Allianz), and in just five years, made it India's largest life insurer in terms of gross premium income. Just the sort of thing investors love.

-Kushan Mitra

Contrarian Moves

COMPANY: SHREE CEMENT LIMITED NAME: H.M. BANGUR Managing Director INDUSTRY: Cement MOST INVESTOR-FRIENDLY MOVE: Ending cross-holdings, bringing debt-equity ratio under 1 SHARE PRICE AS ON JULY 6, 2006: Rs 775.85 SHARE PRICE AS ON JULY 3, 2003: Rs 80.30 Source: CMIE; adjusted stock price

The cover page of Shree Cement's 2001-02 annual report read: "Shree Cement's profit after tax dropped 94.38 per cent. The management is delighted. Why?" That was the Shree Cement shareholder's first brush with an unusual, but clever, tax-saving tactic that the Kolkata-based company has since been using to good effect. "We were fortunate to have an intelligent group of shareholders, who did not look at immediate gains," says H.M. Bangur, reflecting on the risky move. Tax planning continues to remain a key part of financial management at Shree. Consider: In 2005-06, it reported a 15 per cent jump in net sales to Rs 667.69 crore over the previous year, but the net profits were down 37 per cent because the firm chose to charge against P&L all pre-operative expenses relating to new projects. Add the charge of Rs 21.23 crore back to the net profit, and the bottom line should have been Rs 39.63 crore-a 36 per cent jump. Shree now plans to increase capacity to 20 million tonne by 2015 and that too without increasing the capital. "Whatever we do, we will treat our investors as partners and not as mere shareholders," promises Bangur.

-Ritwik Mukherjee

Hospitality's Flag Bearer

COMPANY: THE INDIAN HOTELS CO. LTD NAME: RAYMOND N. BICKSON Managing Director INDUSTRY: Hospitality MOST INVESTOR-FRIENDLY MOVE: Taking over the management of The Pierre in New York SHARE PRICE AS ON JULY 6, 2006: Rs 1,176.20 SHARE PRICE AS ON JULY 3, 2003: Rs 262.30 Source: CMIE; adjusted stock price

There are two reasons why investors love Indian Hotels. One, hospitality is, of course, booming like never before. Two, the Tata group company has been the most aggressive of all hospitality players in the country. As promised, it has neatly slotted its hotels into luxury, leisure and business, and has been adding capacities in each of these categories. Over the last two years, it has added 900 rooms, both in India and elsewhere. Last calendar year, it took over the management of The Pierre, a 201-room tony hotel on New York's famed Fifth Avenue. Late last year too, it acquired another landmark hotel in Sydney, the W. Says Raymond Bickson, Indian Hotels' Hawaii-born Managing Director: "We look at local conditions but conduct business in a global fashion."

Record growth in travel last year translated into an average occupancy rate of 70 per cent and an average room rate at Rs 7,187. Result: The cash register at Indian Hotels was ringing loud and clear. Consolidated revenues were up 40 per cent at Rs 1,914 crore during 2005-06 and net profits, a whopping 94 per cent at Rs 249 crore.

Over 2007 and 2008, Indian Hotels plans to add another 23 hotels, or 2030 rooms, to its portfolio. Some of the properties will include the Indian Hotels-owned Taj itpl in Bangalore (200 rooms) and Ginger (earlier called IndiOne), spread over Bhubaneshwar, Pune, and Pondicherry, among others. By March 2008, Ginger is expected to offer 950 rooms. "I have been fortunate to have worked in India," says Bickson, referring to the exciting times his industry is in. His shareholders must be feeling fortunate.

-Krishna Gopalan