India’s financial markets were already hot last year, but since IR magazine’s inaugural India conference in 2006 they’ve become even hotter. Industry players ranging from fledgling investor relations divisions to the more accomplished large-cap teams were drawn to this year’s conference in the north of Mumbai.
Debates kicked off with an encouraging keynote address by Ashok Rout, chief operating officer of the Bombay Stock Exchange, who pointed out that ‘tremendous strides’ had been made in the quality of IR programs at Indian companies over the past three years. He went on to highlight the importance of sophisticated IR to attract foreign capital. ‘India is an emerging market so it cannot rely on domestic savings alone,’ he pointed out. ‘It is also dependent on global investors, which are demanding in terms of disclosure.’
Given the incentive international capital lends to IR, global players were on hand to divulge their strategy to delegates. Nikhil Shah, IRO at Hyderabad’s international pharmaceutical heavyweight Dr Reddy’s, advised a high level of engagement with existing and potential shareholders, as well as sell-side analysts.
Kiran Bhojani, vice-president of IR at German energy giant E.ON, broke off from his holiday on a luxury cruise ship for his wife’s birthday to explain via telephone how IR teams can measure value. His key recommendations included analyst conferences, capital market days, investor targeting and perception studies.
Housing Development Finance Corporation (HDFC) has more foreign shareholders than any other company in India. Its company treasurer in charge of IR, Conrad D’Souza, explained the importance of dividing his time fairly between foreign and domestic stakeholders. ‘Even though foreign shareholders constitute 80 percent of our investor base, we cannot favor them over local retail shareholders,’ he explained.
Industry experts took turns throughout the day to thrash out a broad spectrum of issues relating to best practice IR for Indian companies. Coping with bad news was one of the topics tackled by Vivek Kelkar, vice president of communication at Deepak Fertilisers and Petrochemicals Corporation, which suffered a fire at a raw material plant a few months ago. ‘Bad news should be given straight away,’ he advised. ‘You need to tell it how it is and then take steps to rectify it, before rumors get out.’
Some Indian companies were accused of not using websites effectively for IR purposes. Arjun Marphatia, who was part of the team that took Tata public last year, addressed some of the problems associated with relying on electronic content. ‘A large number of Indian shareholders do not yet have access to the internet,’ he explained. ‘Even for those that do, online reporting can result in shareholders being sent only an abstract of the report, rather than the full hard copy.’
Indian companies were keen to avoid complacency after witnessing the sharp drop in share price of the industry giants involved in India’s three largest foreign takeovers earlier this year.
The conference illustrated the importance of clearly defining and explaining company activities to shareholders. And that bad news, cleverly handled, can even increase a company’s share price.
