What is the best way to reduce attrition rate in a company?

Primarily you should make them feel at home, rather instilling on them a feeling they are working for their own good for a company of their own.
To achieve it is no mean task.
You have to be open about the company standings on matters like financial and employee welfare to them(Not to disclose the vital details).
Provide "No holds barred" support to them to achieve what they are expected of, which makes them feel you are with them for good.
Managers shouldn't be bossy but assist them in any help they ask for(They wont ask for it unless they really need it) however small it may be.
Compliment them on the achievements and conveying its importance, also boosting their morale for the higher targets they are able to achieve.
A simple thanks can work wonders( since they least expect it).
Overall a second thought should come to the employees mind when he is offered a better package by some other, because job satisfaction doesnt always come with better salaries.

make your employees feel important, needed and align them with the organization's vision, mission and goals.
It is essential for them to know that their work contributes to the company's success as a whole.