Madhu Kela: Very little is spoken about your private investment, having been a friend I am aware what kind of investments and returns you have made. Can you explain how your experience has been and how you are able to make such decisions across a variety of sectors?
See, I would have made 20 equity investments but only 10 are duds, dead and written off, five have done moderately well and five have done beautifully. So it is not that my strike rate is higher than most people.
Madhu Kela: But I am sure the amount of money which you lost in the investments must be very, very small?
No, overall my return today is higher than what is in the unlisted market. I invested in Metro in 2006, I invested in
in 2009. My investment horizons are far greater and I started with very small companies. When I invested in Metro, the turnover was Rs 60-80 crore. Last year, the turnover was about Rs 1,400 crore.
Madhu Kela: If I am not mistaken, you only paid about Rs 35-40 crore to buy?
I have long time horizons, I have patience and I judge the opportunity and the person and the valuation and then I leave it to the future. I am not doing much private equity. Of course I am doing three new investments at the moment but it is a very taxing job and then you get emotionally involved.
Madhu Kela: What kind of returns are we talking about even in absolute numbers?
I have been lucky. But I have done difficult deals like in Star Health. I do not think anybody else could have done it. The promoters had a lot of problems and valuation was very high and it took 18 months for us to do the deal.
Madhu Kela: I remember in the middle of the pandemic, I called you saying I like . But before I kept the phone down, you told me you have already bought it. How do you take such decisions?
Never go with the trend. The trend is upward, the stocks are battered, BHEL, for example, was 15% down. You expect a capital cycle will take place in India and you look for opportunity and when you see an opportunity why wait? Seize it. Markets do not give you time. I have no investment committee. I have only one partner, my wife, and she does not ask anything. So I do what I like.
Madhu Kela: Can you elaborate how you take risk, how you take bet and how you leverage?
I will say one thing that I have two interests in life; markets and women. They are both concerned with four letter words, women with love and markets with risk. I came to the market with Rs 5,000. I am a risk taker and now that risk taking has become a habit. But you must leverage and leverage extremely when you think the market is giving you unbelievable opportunities.
was available at 12% yield, at half book value and one-third fleet value at 12% yield. Standard Chartered would give you money at 9%. I would sell my wife’s bangles and buy a Great Eastern. So there have been occasions when markets give you extreme opportunities.
But remember one thing leverage has no mother, leverage has no emotions, leverage has no sympathy. If you go wrong, nobody is going to save you. In March, in four trading days I sold Rs 400 crore worth of shares and I told my dealer to come back only after selling the shares. I did not say the price. I was leveraged at that time.
Nikunj Dalmia: What do you think would be the differentiating factor for companies and what should shareholders look for when it comes to investing in this decade? Given that we are in a world dominated by technology and information what changes for an investor in this decade?
What has changed for investors is there is information overflow. The speed with which information is transmitted and the quantum of information or data which is available is unbelievable. The second thing is volatility. The basic principle of investing has remained the same and will remain the same forever. What has changed is the velocity and the availability of information. The second thing is volatility both in terms of the lifecycle of companies and in the terms of prices. I think that is what has changed in the last five decades.
Nikunj Dalmia: What will be your advice to the Robinhood investors?
I will tell them that this is not a race course and all these volumes of fluctuations are very damaging for investors. Investors are going to lose money in that. If you get 6% return on debt, you target should be to get 15% to 24% return on equity. Do not involve yourself in daily gambling where stocks go up 40- 50% every day. A mature attitude is to invest safely, give your money to experienced people to invest, to mutual funds, to fund managers and expect a return which is reasonable.
Also invest your own money, not your father-in-law’s or father’s money.
Madhu Kela: If you had the last 20 year to relive, is there any regret?
I have no regret in life. I only wish I had better personal habits and I exercised more.
