The below are bits and pieces of the letter. Please do go over the full letter for more clarity and learning
While we are bottom-up investors looking to buy exceptional Indian companies at reasonable prices, since our
investment thesis was predicated on the transformational impact on the Indian economy of Prime Minister Modi, we
would like to review how things are tracking in India as compared to our initial expectations.
We are not in the large camp of naysayers who are disappointed because they expected miraculous changes and
immediate results. We had no such expectations for an economy that was moribund from 67 years of socialism, a
literally unnavigable bureaucracy and endemic corruption, but we see significant progress on many important fronts
since the new government took office. Here is a list of measures already enacted by this government (our apologies
that the list is so long!):
- Crack-down on crony capitalism
- Implementation of a biometric-based identity program (Aadhaar scheme)
- Financial inclusion
- Subsidies shifting to DBT
- Improvement in national railway infrastructure
- Corporate tax: Simplification
- Financial turnaround of state power distribution companies (DISCOMs)
- Auction of coal mines
- Other mineral mines are also to be auctioned
- Higher foreign direct investment (FDI) in insurance, defence and railway infrastructure
- Bankruptcy code
- Smart cities
- Metro rail (commuter infrastructure)
- Progress on dedicated freight corridors (DFCs)
- Archaic labour and other laws amended
- Elimination of obsolete laws
- Make In India
- Invest India
- Involvement of states to improve business environment
- National agriculture market
- Populist decisions avoided
Now we are pleased to report to you on the investments we have made in India
National Collateral Management Services Limited (NCML)
NCML is a ten year old company now preparing to expand to take advantage of the significant market potential in
India’s under-developed agricultural storage industry. NCML operates in the agriculture value chain by offering
end-to-end solutions in grain procurement, testing, storage and collateral management.
IIFL Holdings Limited (IIFL)
By the time Fairfax Financial became a shareholder, IIFL had become a diversified financial services holding
company with subsidiaries in non-banking finance company (NBFC) business, wealth management, retail and
institutional stock broking, investment banking and financial products distribution
Adi Finechem Limited (Adi)
Adi is an oleo chemicals company. Oleo chemicals are, broadly, chemicals that are derived from plant or animal fat,
which can be used for making both edible products and non-edible products. In recent years the production of oleo
chemicals has been moving from the U.S., Europe and Japan to Asian countries because of the local availability of key
raw materials.
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