Bullet proof investing seminar takeways

Yesterday I attended a seminar hosted by TIA titled Bullet Proof Investing. Here is my take on the event.

Disclaimer : All the below is from my memory and I frankly have a poor one. So the numbers, %, stocks and speakers I may have mixed up. Just take the notes for the essence of the seminar and not for the figures.

Basant Maheswari was as usual at his best. His talk echoed the thoughts of his book. He feels people should not attempt to get 15% or similar % returns because that will not ensure financial independence. He joked about a parent with 40 kids will never get to know any of the kids well. Investors should restrict his number of stocks to 8. He was very forthcoming and said he would not have bought Pantaloon retail if he had all the knowledge he has now. He also emphasized buying sector leaders.

Next came Anoop Bhaskar of UTI. He also had a great sense of humour.He said he will hold 80+ stocks in his fund and would also have a huge portfolio in his personal account. He feels 1 or 2 of the large basket will be great enough to carry his portfolio, at the same the large number of stocks will protect the downside. He made an excellent observation about IPOs being less attractive due to entry of PE. He quoted the tweet of Marc Andreessen

Microsoft IPO market cap 1986: $500M. Google IPO market cap 2004: $23B. Facebook IPO market cap 2012: $100B.

He fees PE backed IPOs in India will go the same way, leaving less money on the table for the retail investors 

He showed a 2X2 matrix wherein the 1st quadrant was made up of quality stocks and the 4th made of micro and nano caps which he had termed hope less. His study showed that during bull mkts the tendency of the 4th quadrant stocks returns were a little more than Quad 1 but during the bear period the Quad 4 stocks were thrashed whereas Quad 1 stocks were more resilient. He said he is only interested in the Quad 1 stocks.

Overall his session was very neat. I would have enjoyed it even more if only all my portfolio stocks were not in Quad 4

After the lunch came Porinju Veliyath. He gave a blockbuster session. He feels that the companies with great management and clean balance sheets covered by analysts will not give great returns going forward. He feels investors should look at companies which are undergoing curable issues. He also advised looking at companies which have a change of guard. The old guard giving way to the next generation which have a better perception, education etc could do wonders to the stock. 

He said markets ignore penny stocks which are not penny companies.He gave some mind boggling examples. He had bought 5% of Shyreyas shipping when the market cap was around Rs 50 Cr (cmp of Rs 15). Within a year it is around 20X. At the time he had bought it was a penny stock but not a penny company. It is one of the major players in marine cargo. 

He had bought Kitex when it was around Rs 3. He had bought the company when its PE was 3. He had known the promoters but the reason he had bought was due to a factory visit. It is well known that Kerala used to face severe labour strikes. When he visited the plant there were around 6000 ladies aged around 20 were walking towards the dormitories. They had had a unique solution for the labour problem.

He also mentioned about a news article about Walchandnagar. The article said the company will demerge into 3 companies. The market apparently did not react to the news. Then the company hired GK Pillai as the CEO. Porinju read about the CEO and found he had a great track record and also turned around a sick PSU. Porinju bet on the jockey and the news and bought the stock. The new CEO came in CNBC and informed about the demerger. The stock ran up 80%. The news was the same but the medium was different. So with eyes and ears wide open we can have great opportunities.

He spoke about Wockhardt in troubled times. The company had some FDA issues and forex loss of Rs 1200 cr. The stock was beaten down heavily. The market was evaluating the stock as if the company will have annual forex loss of Rs 1200 cr every year going fwd. Porinju bought heavily in his PMS and some clients even left because of that. The stock was then around Rs 150. Then within 4 years it rallied to Rs 2000.

He had invested in Geojith which also became a multi baggers. He said mgmt interaction should be taken with a pinch of select. For example the very able Swelect promoter does not encourage analyst interaction , all he wants to say is done at the AGM. Another promoter whose company did not do well gave analyst meetings left right and center.

Porinju gave these examples just to illustrate his hits and misses.

The next session was handled by Rajeev Thakkar of PPFAS. He spoke about new age tech stocks. Again it was a great learning for me. For me value investors and Google stock would be like chalk and cheese but his slides showed me a perspective of a true value investor buying GOOGL. On a not so serious note, he mentioned some of the allegations against Google as

• Company managed on the whims and fancies of 2 persons
• Does not interact very well with analysts
• Does not pay dividends
• Does acquisitions of companies which are diverse

Then he said this reminds us of somebody else also and showed the next slide with 2 photographs. They were Warren Buffet and Charlie Munger. Wow. 2 more similarities, the mgmt takes a $1 pay and sends informative letters to shareholders. It does not matter whether you think Google is not a value stock or the current ecom companies in India are too expensive, but you have to respect his super informative perspective.

They key note session was handled by Anand Radhakrishnan SVP of Franklin Templeton funds. He did justice to the theme of the seminar of Bullet proof investing. He shared some learning he had with people he worked with. The slides had no bells and whistles but man they were all gems. He also added his own learning. He said luck played a part but we have to work hard to get that luck. He gave an real life example. Some years ago he was in a presentation show by Eicher Motors mgmt. They spoke mainly about a JV they were going to start with Volvo for manufacturing engines. On a side note they spoke about a old factory in Chennai which was manufacturing Royal Enfield Bullet bikes and that they were going to refurbish the factory. So the fund bought the stock for the JV with Volvo. The stock too of like a rocket but for the bike division. So that was the luck part. He also mentioned about selling too soon and gave the same example. The fund started selling the stock on the way up. If they had held the entire stock lot , the fund CAGR annual returns would have been + 2% or 3%. I sincerely hope Mr. Anand shares the ppt. It was full of gems.

My key takeaways

• Surround yourself with smart people. It really opens up the way you can think. Different people have different perceptions and it can only help us
• Every single one of the speakers had a different style and all of them are successful. So we need to find a way which is suitable for us and also understand there are numerous ways of attaining wealth.
• Learning is the biggest investment we can make.
• When we speak with experienced people we learn a lot by their hits and misses. So theory meets practicals here. The real life examples given by all the speakers were valuable.
• The speakers speak about their failures as a learning experience and not as a embarrassment.

Couple of coincidences among the speakers

• All were aged 40+ and market experience of 20+.
• All of them had a great and superb sense of humour.

Overall I felt the intrinsic value of the seminar today was much much more than the money I paid for it. But if you had come looking for tips or trends you would have been disappointed.

Last but not the least the seminar was organized in a very very meticulous manner. Kudos to the TIA and Shyam Sekar. I think Shyam had a major role in this not only in logistical matters but also in the selection of topics etc. I seriously expected only 2 sessions to be interesting but all the 5 were superb. Thanks TIA and Shyam Sekar.

Pat Dorsey - The Little Book that Builds Wealth- Talks at Google

Pat Dorsey - Talks at Google about Moats. Good discussion. Must watch

https://www.youtube.com/watch?v=YFS5JBgz1Xc

Adapt. Why Success always starts with Failure

Adapt 

by Tim Harford

Was going through this book and read about the Palchinsky Principles and was impressed by it. Palchinsky was a Russian engineer who was advisor to the Tsar and Stalin, His views were not liked by the rulers and he was put to death by the secret police. Stalin wanted to build a mammoth dam whereas Palchinsky thought building smaller dams would be more suitable. Palchinsky principles are

• Seek out new ideas and try new things
• When trying out something new, do it in a scale where failure is survivable
• Seek out feedback and learn from your mistakes as you go along

I think the above would be very much suitable for investments / speculations also. 

Textile major Arvind to step into footwear business

Disc : No Holding

http://timesofindia.indiatimes.com/business/india-business/Textile-major-Arvind-to-step-into-footwear-business/articleshow/45973749.cms

Textile major Arvind to step into footwear business

Kalpesh Damor & Piyush Mishra, TNN | Jan 22, 2015, 05.19AM IST

AHMEDABAD: Textile major Arvind is looking to go beyond its core businesses. Riding high on e-commerce wave, textiles and apparels company Arvind Ltd is readying to foray into the Rs 30,000 crore Indian footwear market in a big way. The company will launch its own footwear brand in coming days. 

"Footwear will be a mix of own brands, acquired, licensed and joint ventures. Initially we will have footwear items from our brands such as Arrow, Tommy Hilfiger and Calvin Klein among others," said Sanjay Lalbhai, chairman and managing director, Arvind Ltd, which aims to bring in national and international brands under its portfolio and retail them mostly through the online platform. The Arvind group has already forayed into the realty market. 

As per latest estimates of Council for Leather Exports, India is the second largest global producer of footwear after China, accounting for 13% of global footwear production of 16 billion pairs. Interestingly, 95% of its production goes into meeting domestic demand. 

The company has roped in Rajiv Mehta from Puma India to spearhead its footwear vertical. Mehta, who joined Arvind three months back, was heading German footwear firm Puma's India business for nine years. 

"Rajiv is looking at our footwear vertical and a few other things which we cannot disclose at this moment," added Kulin Lalbhai, executive director, Arvind.

Five accidents to watch for on the startup highway - Alok Kejriwal

http://economictimes.indiatimes.com/magazines/corporate-dossier/five-accidents-to-watch-for-on-the-startup-highway/articleshow/45896736.cms?flstry=1

Fancy stepping out of your dreadful, unsatisfying salaried job that's sputtering at 58 kms an hour (takes you 58 years to make boss) and fantasizing about getting into the F1 zone of starting up where you could be rich & famous and your own boss in less than three years? Well dream on, and pay critical attention to these five 'accident spots' on your startup highway that could get you in serious trouble.

1. "Finding a problem for a solution - not a solution for a problem"

I was once a jury chair for a rather prominent startup competition that was being recorded for national television. My fellow jury members were very distinguished and we had an entire panel of IIT professors as tech advisors on the side. This was serious stuff. One of the most passionate presentations was made by a man (in a suit) who described how he had created a complex 'sms' alarm system to wake up people when intruders stepped into their homes. His solution would cost Rs. 7 lakhs. Mr. Suit spoke non-stop for 28 minutes about how triggers all over the house would be invoked to spot the intruders. He had complex charts (that looked like rocket designs) to show off.

Some of us tried to question him. A jury member said, "But I sleep with my phone ringer off." The man shot back, "No, you will set your phone ringer on after you install my security system." When it was my turn, I smiled at him and asked, "Why can't I keep two dogs in my house?" The man looked at me, shattered and bitterly angry. He refused to answer my question and walked off the stage. Lesson 1: While starting up, don't go around looking for a problem to 'fit' your so-called solution. Most probably, the problem does not exist.

2. "Worrying that people will steal your idea"

Many interesting ideas pop up in the minds of several people across the world at the same time. It's as if God sprinkles the world with ideas every morning. Having said so, many people hold on to these ideas in their minds, as if they have found the Kohinoor. They refuse to 'share and discuss' the idea with people around them because of the insane fear of their idea getting stolen Unfortunately, in the startup world, ideas are worth only 1% of the real value of a great company. The rest of the 99% value comes from execution, and only execution. Now consider the rather contrarian case of Facebook and the so-called 'idea theft' by Mr. Zuckerberg (those who haven't heard, please go and watch the movie, The Social Network. So, Zucky Baba stole an idea. Hmmmm. Ok. Sniff Sniff for the Winklevoss Twins. But guess what? The manner in which Facebook has 'executed' in the past 7 years beats any other social network that has existed, even before Facebook - like Orkut (owned by Google) and hi5. No one executed like Zucky and that's why he has won. Lesson 2: The minute you get a great idea, share it and start building it. If people steal (copy) it, feel proud! It means you have a valuable idea!

3. "Startups: the fastest way to riches"

Quite the contrary. I can assert that starting up is the fastest way of getting poor. 99 people out of 100 who start up typically lose years of salaries, job promotions, relevance of being out there in the professional job market and of course, the 'reputation' of being unsuccessful amidst friends and relatives.

The reason is very simple. Starting up is like replicating 22 years of education. When you start up, you go back to Grade One. I mean who would pay you to be studying in Grade One? Later on, only the awesomeness, great application and favorable stars get you noticed as you inch up the grades and have a VC or Angel finance you in bits and pieces. Typically there is only one student who tops the school. And she is the one who walks away with the scholarship. Lesson 3: Yoda, the Guru of Star Wars tells Anakin the Jedi-in-making, "Train yourself to let go of everything you fear to lose". Yoda was most definitely speaking for startup entrepreneurs.

4. "Building to sell - not selling to build"

I am a Marwari Dinosaur of the Internet. Been around since 1998 and have seen many moons and suns go by. One of the most common blunders I have seen being committed by entrepreneurs is starting up a company with the sole intention of selling it to someone else. In fact, a slide in most funding pitches mentions 'Exit Plan' and that is where most entrepreneurs let their imaginations go wild on speculating who will buy them out. Think of real businesses around you. McDonald's sells burgers to build its business. Mercedes sells cars. Bose sells music systems. These companies sell things to make their business valuable. They don't sell themselves as the value proposition. Lesson 4: Building a business to sell out is perverted. It's like growing up for someone else. If you are a startup, build to create a great business that will sell great products and services. It will sell itself.

5. "Starting up is an adventure - not a boring dull job"

People who burn out at their jobs typically take 'exotic' vacations here and there. Some enjoy standing on icebergs while their nose freezes; others like to swim in underwater cages getting clicked with thumbs up signs (while they are actually worried about the shark near their leg). Once the vacation is over, they come back to their 9 hour-day at work, staring at spreadsheets. Many people think starting up is an adrenaline-pumping adventure that will leave the drudgery of their job behind. Unfortunately, that is never the case. Starting up is tedious, taxing, draining and hopelessly lonely. The loneliness kills. An entrepreneur has to do ten times more boring things than most salaried employees ever do (like packing parcels). Lesson 5: Don't start up for a thrill. Go ostrich-riding instead! Start up as if you are switching careers and plan for a 20-25 year innings in which you may see some fun

Why Sanjeev Bikchandani, the Naukri man, wants to be a builder and funder with Info Edge

Disc : No holding

http://economictimes.indiatimes.com/news/emerging-businesses/entrepreneurship/why-sanjeev-bikchandani-the-naukri-man-wants-to-be-a-builder-and-funder-with-info-edge/articleshow/45892016.cms

Why Sanjeev Bikchandani, the Naukri man, wants to be a builder and funder with Info Edge

By N Shivapriya, ET Bureau | 15 Jan, 2015, 02.45AM IST

Every month some 30 million people seeking to satisfy their gastronomic cravings by visiting Zomato, the popular restaurant discovery service, co-founded by Deepinder Goyal and Pankaj Chaddah. In London, people want to know more about the ambience, in Kolkata they want to know more about the food. The nuances are many and Zomato caters to all quirks and palates.

Zomato itself has a distinct global flavour. This week, it took its biggest bite with a $ 52 million acquisition of Seattleheadquartered Urbanspoon, entering the US, the largest and most competitive market. The acquisition also gives Zomato leadership in two other markets, Australia and Canada.

Back home, news of Zomato's acquisition, its global ambition and its huge appetite — six acquisitions in five months — pushed share prices of Info Edge (India) up on a day the BSE Sensex was down. But why the boost for Info Edge? The internet company, founded by 51-year-old Sanjeev Bikchandani, is Zomato's single largest shareholder with a 50.1% holding. Why Sanjeev Bikchandani, the Naukri man, wants to be a builder and funder with Info Edge Bikchandani spotted Zomato early and made a $1 million investment in it five years ago, and followed it up with five more rounds of investment worth a total of Rs 327 crore. Its investments in Zomato are now worth over Rs 2,030 crore.

This is one of the two things Bikchandani is known for. Finding and funding early stage startups and mentoring them to success. Info Edge has invested about Rs 570 crore in backing nine companies like Zomato. Sure, a few deals have gone bad — it wrote off about Rs 35 crore in three of its investments, StudyPlace, 99labels and Floost. But there are more big successes like Zomato.

Info Edge was again an early investor in PolicyBazaar, a portal that helps users compare and choose from different insurance products. At a fund raising last May, PolicyBazaar was valued at $100 million and Info Edge now owns 23% in it.

But the first thing Bikchandani is known for, of course, is his ability to successfully build internet businesses within Info Edge. He is often referred to as the 'Naukri man'; Naukri being one of India's top job portals. 99acres and jeevansathi.com are two more such examples (see table).

Bikchandani is both a builder and a funder. The remarkable thing though is that he has persuaded public shareholders to back him. Info Edge went public in 2006 and non-promoter shareholders own over 55% in the company.

Investors demand that listed companies deliver predictability of revenues and performance. How did Bikchandani get public shareholders to back his plan to build a portfolio of early stage and high risk startups? "Naukri is stable and predictable. The others less so. So it is a blended model with some volatility because of the other businesses.

But by and large, investors are well-informed and well-researched and they factor this in their decisions," says Bikchandani. He expects the top three growth engines for Infoedge in the next few years to be Naukri, 99acres and Zomato.

Bikchandani says that as the company is growing and is of a certain scale, profitable, with a strong brand and a market leader, he sees no reason why investors will not understand the model. Naukri, which contributes more than half of Info Edge's revenues, has a stable and predictable revenue stream. It also contributes more than 100% of the profit — surpluses from this business unit goes into other ventures. By building Naukri successfully, he has earned the right to fund other businesses outside Info Edge.

In the last 12 months, Info Edge's share price has gone up from around Rs 500 to around Rs 850, and its market capitalisation is now close to $ 1.7 billion (Rs 10,385 crore).

Moving in quickly

Zomato has been the most high profile of Bikchandani's bets. It has been growing rapidly. Prior to its US acquisition, last month it acquired Cibando, a restaurant search service in Italy. At last count it was in over 100 cities in 20 countries and investors funding the company valued it at $660 million in December. Only two years ago, it was valued at about $160 million.

Five years ago, Goyal and Chaddah were looking for seed funding and were in discussions with a prospective investor. The discussions dragged on for nearly two months before they got to a term sheet.

Both of them were used to working at a faster pace. Then Goyal got an e-mail from someone he had never met before. That person was Bikchandani and his mail said, "Do you need funding? If yes, you can contact me," also mentioning a mobile number.

"It was basically like cold calling," recalls Bikchandani, who was only acquainted with Goyal through his site, Foodiebay. com, as Zomato was then called.

Within three hours of sending the mail, the two had met and within 48 hours, agreed on the broad contours of a deal. "We went with Info Edge over the others because they were very quick. Speed of execution really mattered to us," says Goyal.

Bikchandani's due diligence consisted of doing basic checks and calling up some customers of Zomato. It was quick, and within few weeks, Info Edge had invested $1 million in Zomato.

"I think entrepreneurs understand entrepreneurs slightly better. Chances are they will be more comfortable with a good entrepreneur than a pure financial investor," says Bikchandani, about why Zomato's founders opted to go with Info Edge. Why Sanjeev Bikchandani, the Naukri man, wants to be a builder and funder with Info Edge

Taking the road less travelled

Bikchandani has challenged many stereotypes without intending to. Despite being an internet venture, his firm, Info Edge, has been profitable since 2003. In 2006, it listed on stock exchanges in India when others like Rediff and Sify were listing on the Nasdaq. Even today it is one of the handful of internet firms to be listed here along with those like Just Dial.

Info Edge is one of the few internet portals and ventures, even globally, that have managed to survive and stay successful from the last internet boom to the current one. "Bikchandani's strongest quality as an entrepreneur is in developing a very robust business model," says Renuka Ramnath, who was MD and CEO of ICICI Ventures, when Info Edge was one of its portfolio companies.

Bikchandani saw Naukri through the dotcom boom and the bust in the late 1990s and 2000 and made a big shift from an onlineonly business model to one which also had a physical presence.

"He felt it was important at that time," says Ramnath. "To have the confidence to change the business model, make a significant course correction, get the buy-in of investors and take the company forward is where most entrepreneurs falter. He did that extremely well," she adds. Ramnath now runs her own fund, Multiples.

When the dotcom bust happened, ICICI Ventures withdrew from many companies but stayed invested in Info Edge. "We had full confidence in Sanjeev (Bikchandani) and Naukri so we stayed invested," says Ramnath. The decision turned out to be right, giving ICICI Ventures a more than 28x return on its investment.

Bikchandani doesn't make any personal investments, though many entrepreneurs of the last dotcom boom vintage have become angels or started venture capital funds. All investments are made through Info Edge. Bikchandani says this is to prevent any potential conflict of interest. "Info Edge is diversifying. If we invest in our personal capacity, we may end up competing," he says.

Onl ine travel booking venture, Makemytrip.com, recently announced a $15 million fund for investing in innovative startups but only for those in allied areas like travel technology. Info Edge, on the other hand, doesn't have a specific corpus from which it invests and target companies need not be related to its core business. The only criterion is they have to be consumer internet firms.

Riding the next internet wave

Similar examples of other ventures that do this are global ones like Naspers, Softbank and Rocket Internet. So is Info Edge modelled on them? Pat comes the reply: "We want to be like ourselves only. We will continue to do what is best for us and our shareholders and our company."

Why did he chose this model? "We (Info Edge) have surplus cash. There are plenty of opportunities out there which smart entrepreneurs are chasing. We can't do everything in-house so we back entrepreneurs who are chasing good ideas and hopefully end up creating value for our shareholders," he says. For Indian investors, investing in Info Edge is one way to participate in the country's booming consumer internet story.

It's also how Info Edge has become a major player in the next internet wave. In September, Info Edge raised a QIP of Rs 750 crore — a large part of the proceeds will go towards building more capability for 99acres. Since then it has acquired 3D design studio and integrated it with 99acres.

Goyal says Bikchandani looks for a return from his investee companies like any other investor but recognises entrepreneurs are best positioned to run their companies. "He's not actively involved in the business but he is always there in the background if you need him. More like an older brother who will always be there to support you through the good and the bad," says Goyal.

When Zomato launched in the UK last year, Bikchandani felt it was too early to enter that market. Over the next three to six months as the struggled in the UK, Goyal realised Bikchandani was probably right. "Still, we never heard, 'I told you so', from him. We were actively thinking of how to solve it and how to make it work," says Goyal.

Bikchandani says being an entrepreneur himself, he understands entrepreneurs need independence. "While we offer our advice, if they don't want to take it, we don't impose it." And that's from a man who has built and funded so many successful businesses.

Winners and lossers of oil price drop

http://fortune.com/2015/01/07/oil-winners-losers/

Nothing to suggest the bull market is over: Ramesh Damani

http://www.business-standard.com/article/markets/nothing-to-suggest-that-the-bull-market-is-over-115010600849_1.html

Interview with Member, BSE

Sachin P.Mampatta  |  Mumbai  January 7, 2015 Last Updated at 22:47 IST

Tuesday was one of the worst days for Indian markets in recent memory but it hasn’t fazed market mavens. Ramesh Damani, member, BSE, explains why. Edited excerpts:

What is the sense you are getting on the ground?

There is foreign investor selling but no underlying panic. The markets fell but there was no panic.

What do you make of the worries over crude oil?

Oil going down should help India. It is unclear why this should be seen as a negative for India.

There is a sense that it might signal a slowdown in major emerging markets, especially China.

Oil is not going down because of a slowdown but because its fundamentals have changed in terms of supply and demand.

But, would you expect the risk aversion seen in commodities to spread to Indian equities?

I think it’s a good buying opportunity. I would probably step up to the plate tomorrow and buy something. I view this as a strong correction and nothing beyond that.

The markets were very bad today, so we’ll just have to watch for it to make a bottom and then bounce from that bottom and see how it bounces. I’m surprised that we are down 900 points. I’m trying to find an explanation… there is no reason that we should be down 900 points.

Is there a case to be made for further downside?

There is nothing to suggest the bull market is over. The market is not over-leveraged, nor are IPOs (Initial Public Offers) very heavy. None of the classic signs of a market on a top are present. Bull markets do show changes in direction but, typically, the markets recover. Once you get further into January, people will be looking at the budget, at global flows. I think the market will recover. At least, that’s the thesis I'm working on.

The only gainer today was consumption-driven stocks. Is this part of a larger play towards defensives, that might come up in the days ahead?

I think any theme of a return to the defensives might be overstated. My personal feeling is that the market will reward aggressive stands. Today is a one-off thing. You want to bet on people who are looking to grow their businesses. So, I don’t think defensives will work.

Market Correction Mainly Due To International Factors: Rakesh Jhunjhunwala - Bloomberg TV 7/Jan/2015

http://www.btvin.com/videos/watch/10444/market-correction-mainly-due-to-international-factors:-rakesh-jhunjhunwala

•  RJ iterates that fall in oil is a god's gift to India
•  Bull mkt corrections are deep and quick. Investors need to ride them
•  Markets are not over valued
•  We are underestimating the change and consequences in India
•  Feels post budget mkts will do well if the expectations of the budget are low and vice    versa
•  Thinks global stimuls will not stop fund flows
•  Investments are full time work and people are better choosing good fund managers  than stocks / sectors
•  Investment cannot be thought it has to be learned and that too with experience
•  Remains bullish on Housing Finance companies
•  Does not try to predict profits of companies beyond a point and is not into analysis  paralysis
•  Financial sectors will do well
•  Exchanges are having monopoly. It is a play on India's economic growth
•  PSUs have bad corporate governance
•  Bullish on Escorts where internal restructuring are taking place
•  When Indices goes down it is easy to get value picks but there are oppurtunities even  Indices go up. RJ invested in Praj when the Index was up by 40%. Praj was a 40X.
•  Regarding Infra companies, he rather invest in less leveraged companies
•  Cautiously optimistic in near term, very bullish on long term
•  Equity was / is the best asset class for RJ. Equity investing is easy in execution and  from tax perspective

Deep Value Investing

https://www.youtube.com/watch?v=1r1vJZ80Z7I

Talk given by Tobias Carlisle at Google

Borosil finds more ways to enter the kitchen

Disc : No holding. 

http://www.business-standard.com/article/management/borosil-finds-more-ways-to-enter-the-kitchen-115010600958_1.html

SAYANTANI KAR

Mumbai, 6 January

In the nineties, the glass carafes and serving bowls of Borosil were coveted tableware for the middle class.

Keeping Borosil company were a few other brands, not necessarily with the same product line, such as La Opala, Yera, Corelle and Milton. But consumers are spoilt for choice now, given the in-roads made by e-commerce and modern retail. Be it with brands from Italy (Bormioli), Germany (Devnow) or the indigenous ones (Roxx), pockets of every size can now afford fancy tableware.

As its core segment changes, Borosil is diversifying into small kitchen appliances.

The world of mixers, induction cook-tops, juicers, toasters etc. is, however, crowded. And, it is increasingly looking homogenous, with most players rolling out products in much the same categories. For example, the name synonymous with sewing machines, Usha International, now has food processors, mixergrinders, stick blenders and electric kettles, mirroring the additions made by popular fan manufacturer Orient Electric (of CK Birla group).

Nilesh Gupta, MD, Vijay Sales, a Mumbai- based consumer goods retail chain, says the leading players are Bajaj Electricals, Morphy Richards (distributed by Bajaj) and Philips. Later entrants include Prestige, Havells, Maharaja and Sunflame. Even regional players such as south- based Butterfly have made their mark. Retail chains, too, have their private labels, catering mostly to the lower end, while international brands such as Siemens and Bosch cater to premium users.

Glass to kitchen

Shreevar Kheruka, the MD of Borosil Glass Works, the company owning the brand, says, “In the Indian kitchen, there is a lot more automation now. Our surveys showed consumers associated us with glass and quality. So, the idea was to retain the quality and move beyond glassware, to being a kitchen and home brand.” Industry experts agree with the plan. Gupta says, “ Borosil getting into kitchen appliances is not too divergent because of its heritage.” Pinaki Ranjan Mishra, partner and national leader, EY, says, “ Borosil is a reasonably well- recognised brand.” It has been testing the water since last year. “ We started with induction cookers because of the connect, these have a glasstop, too,” says Kheruka. It also has mixer-grinders and sandwich-makers, with more to follow in 2015.

Mishra says that the market can be punishing, since the replacement cycle is quicker, and a bad experience can keep customers from going back to the brand. “ Borosil will have to find ways to differentiate itself,” he says. But it is a category which is also difficult to differentiate in. As the experts point out, it is often done by either tweaking the power of the motor or experimenting with the looks. The easy access to manufacturing and assembly has led to commoditisation.

Kheruka says that Borosil is tweaking its products, wherever possible, to customise for Indian usage. Its mixergrinders, for instance, are made from higher-grade stainless steel (304) and not the widelyused 302-grade alloy. “Indian homes grind haldi (turmeric) at times, and need sturdier blades,” says Kheruka.

At the same time, Borosil is trying to hold the fort in its core category. Kheruka says, “ We have been highly specialised in glassware and continue to innovate. It will remain our core.” In consumer glassware (it also manufactures industrial and scientific products such as test tubes), the company has expanded its line of storage and serveware. Kheruka wants to populate the four needs of a kitchen: “Storage of the ingredients, appliances to process them, serveware and storage for refrigeration, reheating”.

Modus operandi

Appliances, however, will be challenging. Gupta says that the lower the ticket- size, the less involved the consumer is with the brand. Vijay Sales stocks around five- six brands.

Kheruka estimates the market size for small kitchen appliances to be at ? 15,000 crore.

Borosil had to make a move since, glassware, in which it has a headstart, is only worth Rs 60 crore. In FY- 14, the company’s consumerware arm made Rs 66 crore in revenues.

Borosil wants to play in the higher-end of the market, like Morphy Richards and Black & Decker.

What Borosil is betting on is the ambition of crockery and kitchenware stores that have been stocking its glassware. “These retailers are loyal and most don’t have an appliance range but are interested in one, to grow. It gives them a higher ticket size for the same shelf space,” says Kheruka.

Borosil has also taken to ecommerce, with six warehouses across India to cater to the orders logged through its own website, besides tying up with multi- brand portals.

Kheruka says his target is a joint venture with an overseas brand to market in India.

Bajaj has the longest- running association with the UKbased Morphy Richards. In FY14, Bajaj Electricals earned around Rs 1,115 crore from its own brand in domestic and kitchen appliances and Rs 190 crore from its tie- up with Morphy Richards.

Other categories that Borosil has entered, but which are smaller in scope, are melamine and plastic ware and home decor (with diya lights).

From agri-trading to a multiplex challenger: The Carnival has just begun for Shrikant Bhasi

http://economictimes.indiatimes.com/industry/media/entertainment/entertainment/from-agri-trading-to-a-multiplex-challenger-the-carnival-has-just-begun-for-shrikant-bhasi/articleshow/45769761.cms

By Nandini Raghavendra & Arijit Barman, ET Bureau | 6 Jan, 2015, 10.25AM IST

MUMBAI: In the beginning of 2014, Shrikant Bhasi was a fringe newcomer in the business of movie exhibition with just three screens in Kerala. Twelve months, two acquisitions and over 300 screens later, he closed the year as the fastest growing multiplex mogul in the country and his flagship Carnival Group already the third largest in the industry pecking order. 

But by the look of it, it seems this was just the trailer. 

So after closing the biggest deal in his career so far - Rs 700 crore acquisition of Big Cinemas from Reliance Mediaworks just last month - Bhasi is already plotting his next move. In his shopping list, say industry sources, are at least three more potential regional multiplex chains including SRS Cinemas in Delhi, Glitz (for north and Central India) and a South-based operator. 

Even for each of Big Cinemas' 242 locations there is a big turnaround blueprint that is being put in place set to kick in once the CCI approvals come through by the middle of this month. 

But one got a sense of what's imminent, when just a day after announcing the Big buyout, Bhasi took time out for a recce of the iconic Metro Cinema in South Mumbai where he instructed his management team to remove an entire row of seats in each of the screens to ensure better leg space while his CEO addressed the staff at Big in an afternoon town hall. 

Parallel to this, Bhasi is also in advance negotiations with L&T to buy their 1.15 million square foot integrated commercial real estate project in Chandigarh which houses the Elante mall, office blocks and the Hyatt hotel for an Rs 1800 crore valuation. 

Real estate is not a business but an "investment portfolio" that generates cash flows from rent yields part of which are ploughed back into the core exhibition business. Last year, the promoters of the cash strapped Leela Hotels sold two of their IT parks in Kerala to Bhasi. 

Rivals and peers gawk at these audacious moves; detractors question his financial and operational bandwidth and insist that he remains a "rank outsider" but his admirers swear by his single-minded focus and attention to details. For the moment though, Bhasi seems non-plussed with all the spotlight. 

"I am not in the numbers game," says the dapper 46-year old agri-trader turned multiplex maverick and chairman, Carnival Group. "During the Big Cinemas negotiations, I told Anil Ambani that I may not have the operational experience of my peers. But I have a definitive rollout strategy and it's a profitable one." 

It's this confidence that has always helped him breakout. Be it in Britannia where he first cut his teeth, joining as a young accounts assistant during the last year of his B-Comm studies and then rising from within the ranks to become a star agri-trader in the late 80s. It equally came handy when he started his own entrepreneurial set up Advantage Overseas Pvt Ltd a decade later and branched out to agri-financing for several global players like Bunge, where he still is an advisor.

"He never switches off and is endowed with tremendous mental and physical energy. He is very clear about what he wants to do and is very aggressive about reaching his goal," recalls Ravi Nigam, MD, Tasty Bites, a ready-to-eat foods company, and his former boss at Britannia. "But most importantly he has an uncanny ability to spot new opportunities and move in quickly." 

For Bhasi -- a Malayalee NRI from Singapore who grew up in Bhopal - a complete career switch after finding success in commodity trading and financing to move into the multiplex business around 2008 was just that. In between he even tried to replicate his structured finance learnings to bankroll and produce movies especially down south. "Financing Bollywood films was too expensive," realls Bhasi, "so we went back to our home market to finance, produce and distribute Malayalam films." 

And that's when it struck him that there were just no decent screens available for screenings. "In 2008, Kerala had only 2 multiplexes and a total of 30-35 theatres. We did a nation-wide survey and found people wanted to go to theatres but the environment was not conducive to take families. We figured a golden opportunity exists," says Bhasi. 

Right then, through a state government auction Bhasi won a tender to develop a 17,000 sq ft space above a bus shelter near the Kochi international airport. "Carnival at the bus stand" was a runaway hit -- 65-70% occupancy versus and the 40% average for competition -- buoyed Bhasi to ramp up in the South expanding to Kerala and Tamil Nadu. 

The two acquisitions - HDIL's Broadway and Big -- have now catapulted Carnival as a pan India player and more importantly has given it access to lucrative metro markets of north, west and east. It has in the process also increased its bargaining power with film producers and distributors for a larger share of the box office receipts. ""Once the industry converges around 3-4 players, a lot of equations within the film industry will change and people will exert market power. 

The big players will also see more automation as scale goes up. The exhibitors will also become partners in the industry with equal stake," feels Jehil Thakkar, Partner and head of media and entertainment, KPMG India.

But even as he goes on a buying spree, Bhasi is very clear that most of his organic growth in future will come from smaller beta cities. Going back to his Madhya Pradesh roots, he is planning to put up 400 screens across 128 centres over the next two years at a cost of Rs 650-700 crore. Bhasi has already tied up subsidies from the state government as well as a 5-year tax holiday similar to the one in Maharashtra for multiplexes. 

"Places like Satna have a decent population but do not have a multiplex. Incomes are from agriculture are rising and you find people go all the way to Bhopal, stay the night at a hotel there, watch a film and come back," says Bhasi. Aware that he has to keep his overheads and ticket prices low, Carnival will use pre-fabricated materials for these 100-125 seaters, lower the cost of per screen to under a crore and add a community centre with a small restaurant which can be a money spinner round the year. 

The whole idea is to be a holistic provider of entertainment for at least four hours per person. "Watching a film at our multiplex is just one of the options. We will also provide a viewer our restaurants and food courts, spas and entertainment zones. 

It will reduce our dependability on film content which is variable, at best and ensure revenue flows throughout," explains Bhasi. So along with the multiplex, Carnival has also launched its very own food courts under the aegis of Travancore Foods with QSR brands as diverse as Simbly South, Noodle Point, Kebab Station, Gulp and D'Bell cafes and lounges. 

The target is to reduce box receipts to just 40% of gross revenues from the current 60% while upping the share of F&B and entertainment to 60%. 

"The next set of growth will come for Tier II cities but you need to pick and choose selectively. Real estate costs will be low and these markets are starved of entertainment options. But ticket prices will not be as high as the metros but that can be offset by adding F&B," says Sudhir Pillai, Partner, Walker & Chandiok, who specializes on the multiplex sector. 

For his team Bhasi has already set an ambitious 1000 screens target by 2017. Next in line is also a logical entry into film distribution to improve his bargaining power with film studios. 

"We shall contract 500 single screens for this. We will also add our own portfolio of 400 (and counting) and aim to have a network of 900-1000 screens nationwide for distributing smaller, independent films who do not always get the right backing," says Bhasi, who himself has also made cameo appearances in Malayalam and even a Bollywood film. 

But is he biting off more than what he can chew? Questions remain about Bhasi's funding capabilities to support the growth plans. So far Carnival's total investment in the two mutiplex acquisitions is Rs 820 crore. 

Another Rs 250-Rs 280 crore will be required if he goes ahead with the next two. Even the real estate acquisition will come at a very steep valuation of Rs 1800 crore. So far his agri-trading businesses and rent income provide the group's financial backbone, but its profits are not enough to support all the sky-high ambitions. 

The multiplex operations will close its first full year operations with a Rs 90 crore topline and an EBITDA margin of 16-17%, the end of this financial year. Carnival - a debt free company before Big Cinemas buy - is securing a Rs 500 crore debt line from Yes Bank to complete the deal and Bhasi says has plans to bring in PE investors in each of the key verticals as they scale up. 

"He has to bring in equity either of his own or from financial investors to substitute debt. He is taking long term investment bets with short term funding and that can bite," warns a banker familiar with the plans. 

It's been a trailblazing journey thus far. But to draw a filmy parallel Carnival has to last the long haul before entering the multiplex hall of fame. For that, Picture abhi baaki hain mera dost