By Ruma Dubey

Chennai Express is getting a grand opening world over; after all with so much promotion and 3500 prints in India and 700 prints overseas, well, it would be no surprise to see it become one of the big hits of the year.

And if Chennai is the mood of the week then why not have a look at some of the South India based companies which are super hits themselves and need no aggressive marketing, no promotions. Just as South India has a unique culture, a different palate and way of living, even the stocks in some way reflects the very same culture and heritage. South Indians are known to be adept with numbers, very conservative and always sit on huge cash/reserves, do not believe in being ostentatious and expanding just for the sake of keeping up with the Joneses. Ditto for the companies. Majority of them are fundamentally very sound, promoters are sound and they believe in rewarding via liberal dividends and do not give bonuses. Their mind set is they look at their companies like an ongoing concern, which needs to be nurtured and taken care of; it is not a monetizing asset, not an opportunity which has to be arbitraged. These companies are thus typical in that context and consistent growth in earnings is a common vein running through all. It does not mean that other companies from other parts of India are not same, it is just that South Indian companies, on a majority are like this only! If you look at the texture of these south based companies, they are very similar to that of MNCs and that is truly what sets them apart.

Take the case of Lakshmi Machine Works. The company, at end of FY13 was sitting on reserves of Rs.949 crore and had a cash balance of Rs.769 crore and it is debt free and its equity capital is at Rs.11.27 crore. Another group company, Lakshmi Mills has a reserves of over Rs.17 crore, with an equity of Rs.6.95 crore. Promoters stake is at 55.01%.

Then there is Wheels India, a TVS group company – its equity is pretty small at Rs.9.87 crore. Reserves as at 31^st March 2013 stood at Rs.249 crore.  This company does not seem to fall under the purview of SEBI’s minimum holding. As at 30^th June 2013, promoter’s stake stood at 91.44%, in fact it has gone up from 85.62% at end of Q4FY13.

And talking about the TVS group, right now times are trying for the two-wheeler sector but otherwise, TVS Motors is a very sound, fundamentally strong company. This group was set up as T V Sundram Iyengar & Sons in 1911 and is the parent company of the TVS Group. Sundaram Finance, Sundaram Fastners, Lucas TVS, Sundaram-Clayton, Brakes India, Axles India, Lakshmi Auto Components and many more.

There is the Murugappa group which also has a fantastic reputation and has some of the best run companies of India - Carborundum Universal, Cholamandalam Investment and Finance Comp, Coromandel International, EID Parry, Parry Agro, Wendt (India) and today’s Stock Recommendation – Tube Investments.

Shriram group is equally well known with its Shriram Transport Finance, Shriram City Union, Shriram EPC and many more companies in the group. There is also MRF, which has a tiny equity base at Rs.4.24 crore and it is sitting on a gargantuan reserves of Rs.2853 crore and hopes remain high that the company will soon declare a bonus. It is generous when it comes to dividend.

The list of illustrious companies only grows – Ashok Leyland, Karur Vysya, Madras Cement, Lakshmi Vilas Bank, Pricol, Elgi Equipments, Shanthi Gears, City Union Bank. There is also the TTK group with TTK Prestige which today is a brand name to reckon with. Rane Holdings, Rane Brake, Nava Bharat Ventures, VST Tillers & Tractors… the list is enticing.

This is the unique DNA of South Indian companies, especially Tamil Nadu based. And in today’s time being conservative is fine, as long as one is not flamboyant enough to sink the company or leverage the balance sheet to the hilt for growth, which ironically is strangling growth. They have created an identity of their own, which also explains why there is not a single protest against the grotesque over-the-top accent of the actress in Chennai Express; South Indian companies and South Indians are secure in their identity and have the maturity to take all this with the right sense of humour.