저자: RaamdeoAgrawal · 외국인
요약 보기
결론: 영상은 개인사·창업사 중심이며, 대상 자산에 대한 1~3개월 가격 방향 예측 발언은 없다. 개인 배경: 라이푸르 인근 시골 학교 출신으로 전기·버스 없는 환경에서 자랐고, 농장 가문이었다. 나그푸르에서 CA 준비 중 영어 전환과 낮은 학점(42%)으로 어려움을 겪었다. 시험과 커리어: 4번 낙방 끝에 필기체 교정 등으로 합격했고, 이를 가장 큰 성취로 꼽았다. 인턴 자리를 130여 곳에 지원했다. 창업 과정: 1980년대 형의 자금 몇 lakh으로 투자를 시작했고 레버리지 없이 운용했다. 모틸랄 오스왈(Motilal Oswal)과 1987년 동업을 시작해 1990년 멤버십을 구입했다. 시장 호황: 1992년 하르샤드 메타 붐 기간 19개월간 약 30 crore 수익을 올렸다고 언급했다. 시장 철학: 주식시장은 미친 사람들의 곳이며 장기적 인내와 야망이 중요하다고 강조했다. 자녀 교육: 아들은 AMC에서 일하며 복리 개념을 어릴 때부터 가르쳤고, 본인이 선택해 자산운용에 종사한다. 거시 전망: 인도 시장 시가총액은 연 17~18% 성장해 4.5년 내 10조 달러가 될 수 있다고 했다. 인플레이션 하락과 유가 하락으로 금리가 낮아질 것이며, AI는 소프트웨어 업계에 부담이 된다고 봤다. 리스크 인식: 과거 1992년 증시 폭락, 카길 전쟁, 글로벌 금융위기, 증권거래소 폭탄 테러 등을 겪었으나 시장은 결국 회복했다고 말했다. 트럼프 관세는 시장을 끌어내리지 못할 것이라고 봤다. 사회 공헌: 회사 지분 1%씩 매년 매각해 기부하는 10년 계획을 밝혔다.
다듬은 글
In the stock market, if you lose money, you should never get upset. I am sure that the stock market is a place for crazy people. I was the most avid stock buyer. My greatest asset is not my capital. I met Moti the moment we purchased our membership. When we started, Rajiv Gandhi was assassinated, and in 19 months we earned 30 crores.
I heard about Buffett in '94. OK. And it was love at first sight. We had big ambitions, but we had a lot of patience. I firmly believe that in 15 years, India's economy will be as big as China's economy is today. Welcome to this special meeting with the master of finance. A master who is also an entrepreneur, an entrepreneur in the financial services sector, co-founder of Motilal Oswal Financial Services Group.
Ramdeo, thank you very much for agreeing to this conversation. Let me get straight to the questions. Your journey from Raipur to co-founding Motilal Oswal is inspiring, it is a truly special story, it is practically your entire life. Could you share some memories of your early years, family values and how you grew up before moving to Bombay and before you encountered the market and how you came to business and investing in general?
But before that, how did you grow up? Yes. Thank you, Dan. This is interesting because, as I said, my school education was quite difficult: I was a good student, but I lived in a village 20-30 km from Raipur. The distance is short, but the conditions were primitive, no bus service. Of course. 30 km is, you know...
25 km. Aha. No, no, it's all day. All day. The bus was only in the morning and evening. Of course. These are the things. And also, there was no electricity. The school was very simple, four or five children came from the fields, and no one was particularly concerned. The teacher was also alone. It was a public school.
Public school. Yes. And the teacher lived by a small stream. So if the stream overflowed its banks, he couldn't come. You know, it was a kind of school, very difficult, but I still think we learned. Mhm. I don't know how, but we somehow pulled together math and maybe social studies, or at least math and languages .
Then the real education began when I came to Raipur. Okay. It was fifth grade. Then I went to a normal, organized school, and everything worked out. It so happened that in the sixth grade I became the first in the class. Okay. It just amazed me. Mhm. What I This didn't hit you in the head? No, it didn't hit my head.
But you know, I felt academically, as a person. Okay. My self- confidence just skyrocketed, and that's how it all happened. And then in the 11th I gave up the position again. I didn't study very well. Then at home they told me to become like a flexi-cap, you know. Ha? Sounds like the performance of a flexi-cap.
Yes. No, sorry. Sorry about that. Yes. So, essentially, you know, I was assigned the portfolio of "certified public accountant." Neither my family knew what it was , nor did I know what a certified public accountant was. And your parents, what did your father do? My father is a real farmer. We are real farmers, a large farm.
Large farm. So we weren't poor. But, you know, even with 100 acres in Chhattisgarh, it's not that much when you have six or seven children. Yes. So, we were clearly well-off, but not rich. Yes. So it was hard work. Toil. I mean, for my father and others, it was a year-round job , a lot of work, and...
so then I came to Nagpur, and that's when the real struggle started. Mhm. I switched from Hindi to English to prepare for CA because if you want to be a chartered accountant, you have to complete your bachelor's degree in English. Okay. Now I transferred from 11th grade because it's high school so the first year was torture because I transferred, so I could handle accounting, I could do math absolutely easily, but all the theoretical subjects were difficult for me.
I graduated with a 42% grade point average. Okay. And now you don't have the right to become a certified public accountant if you have less than 50%. So I had to take the entrance exams. Okay. I folded them, then went to Mumbai. And Mumbai is a city of dreams, you know. But there was a lot of struggle.
I went through 130 companies to get a certified public accountant internship. Okay. Since a recommendation is required, the demand for the internship was too high and, uh, it was difficult to get one. It's like an IIT type of admission. So I was somehow able to say no, no, let's just go back . You wanted to do an internship, but companies wouldn't take you because there were no vacancies.
Good. And you didn't even have any connections. No connections. No connections at all . So somehow, you know, I ended up in a very big company from Delhi. It was the biggest but not in Mumbai, not that big. So I somehow got there, and an understanding of how large corporations work began to form. You go to audits, you work.
So, all of this began to take shape in parallel with preparation for accounting. And in accounting, it so happened that I failed four times. Good. In the intermediate stage, CA is a good guy and I was very confident but, uh, I failed four times. Then I asked: what to do? Then I realized what the problem was.
My problem was my handwriting. Good. I had terrible handwriting. I couldn't read what I was writing. Good. Good. So at the age of 24, I changed my handwriting. M-hm. Good. So, you practiced practiced for six months everything from the beginning completely from the slopes, strokes and everything else to the letters and everything else all the letters everything, everything, in six months I changed my handwriting to a beautiful handwriting.
Good. Good. I took the exam again, and I failed because I couldn't finish the paper with good handwriting. Good. Then for the next six months I trained my writing speed with good handwriting. Good. And then I took the exam, passed without any problems. So this is my biggest achievement. So who helped you analyze the problems, yourself or not, the hostel where we had very good friends in the CA hostel , the biggest CA hostel of Rajasthan.
There are many good guys from all over India , and CA is not a competitive exam. Yes. You have to defeat yourself. Yes. I mean, you come to the fore . You have to work well. You have to work well. That's all. You have to score over 50%, and you pass, and the job is done. Yes. It's not at my expense or anything.
This is not a class. So, uh, everyone wanted to help each other. M-hm. That was the environment, and, uh, I made good friends there, and they helped out as much as they could. So somewhere in the discussion , it probably came up. So that could be the reason. Yes. So, there was no greater challenge in my life than passing the Certified Public Accountant exam.
Of course. That's why my greatest asset is not my wealth. This is a certified public accountant diploma. It is he, this diploma. No, because if it is achieved through many obstacles, you feel more satisfaction from the realization. So, you see, the challenge was that if you don't pass...90% of people don't pass, or even 97%.
No, they come back and do what they want. You would go back to farming. To farming. And I didn't want to go back there. Mhm. And this punishment of returning to the village forced me to keep trying , you know. Yes. Good. So for me, this is a very interesting story in terms of you not going back to farming and your difficulties in passing the exam.
Yes. Ahem. What were your first serious challenges and how did you and Motyl actually get along? Was he your classmate? In the dormitory. Hostel. Of course. So, what happened is, again, very interesting. I have been a stock market fan since 1980. Of course. Good. In 1980, it just so happened that it somehow got into my head that, boss, we could make money in the stock market, I don't know where.
Accidentally. By chance, because I was reading books and stuff. I had these fantasies in my head that we could make money, okay, but where would we get the capital? My brother was in the trades. Good. Yeah, he was earning 40-50 thousand, had two-three lakhs or maybe one lakh rupees saved, he said, " Ram, just do what you do best," so I advised him to go into the stock market.
We found a broker and everything, and I started investing on his behalf. On his money. Of course. So, all the experiments and studies of MGM. From 1980 to 1986, until I founded my company, it was all done with his money. On his capital. On his capital, so all the difficulties and risks were borne by his capital.
And I mean, we never used leverage, so one of the first stocks immediately went up fivefold. So, you know. The capital came back, so the capital came back, and yes, there was some risk, but if you look back, the whole risk of my education was taken by my brother—a few lakhs, that is, one or two, which, in reality, I gave him back, maybe six, seven or eight lakhs.
Of course. You know, I gave it back and then started my own company from scratch, with a clean slate, nothing, just myself and Moti. I met Moti, we lived in the same dormitory, at the same time, he also passed in 83, and I also passed. but because I often failed, he was 3 years younger than me, okay okay, that's why I didn't meet him in the dormitory, and in Lokhanal I lived with my brother, I had a motorcycle, I rode a motorcycle and got there in 15 minutes, but since the area was being built up, there were no cars in the morning .
It was terrible. So he asked for a ride to give him a ride. On the first day, he asked for a ride. I thought I had definitely seen this guy in the dorm. I'll give him a lift. He lived in a rented apartment. So I gave him a lift. He lived in a rented apartment in Loko. Local. Okay. So no dormitory, on the first day.
Mm. I dropped him off and said goodbye. He said thank you and left. The next day I saw him again, I picked him up again , it wasn't difficult for me. This went on for a while, and on the third day he said, why stand there in the heat? He started coming to my house. He was always a very punctual guy .
I left at 9:15, and at 9:00 he was already waiting downstairs. So from the beginning he was comfortable, and after a while he started coming straight to my house. Okay. Just for the trip. Mm. Okay. Then we started talking, and I realized that he was actually a broker. He was actually the one responsible for fulfilling his brother's deals from Ahmedabad.
Okay. His brother bought shares in Ahmedabad locally and sold them in Mumbai. He was involved in arbitration. So his job was to find a broker, make the deal, and send the money back. Okay. So, he was in dire need of a good broker. I needed it badly. Okay. I was looking for someone who could be a partner, I was looking for an office space because I did n't have anywhere to sit, he had a 100 square foot office somewhere in Kalawa Delwi, which his brother bought for him for a hundred thousand rupees or something, so there was an office and a telephone, and where is Karwa Quad, yes, it's a round building five kilometers from here.
Okay. This is not exactly a stock market in the usual sense. This is an old old market, an old market, a textile market and so on. We decided it made sense to take him on as a partner . He's a certified accountant, a hard-working guy, and he brings a client—his brother. So from day one, so you had a basic foundation of customers.
Yes. So we had two partners and my job was to do research, to communicate with clients, to get clients as well and, uh, the job was to do the execution and the accounting and so on and so forth and it was a very natural division of labor based on skills, not like "you do this" no it was a very natural division of labor okay so we started like this two bosses one partner and one client okay it was 87 mgm we started 87 500 rupees, 1000 rupees.
Mhm. One lakh rupees, 10,000, 20,000—that's how we worked and gradually the executive broker, and I was you were, you were a member of the exchange, you were a sub-broker, a sub-broker a sub-broker the smallest insect in the whole system—that's a sub-broker. So, we were one of the sub-brokers and, uh, whose sub-broker were you?
uh, Sundraer Sundra he, you see, I, I was very popular because for two years I was doing research, from 85 to 87 and during those two years I, I worked for Mr. Ram Kipar. Good. Good. Aridhi investment. So , he, he was a man. He had a lot of vision, but he couldn't create, as they say, an organization to implement, as they say, build a big brokerage house.
He had ambitions. So, I, I was his research assistant, and I, I had access to the trading floor, but I didn't do any trading. So my job was to come for 2 hours, go to everyone, and be friends with everyone. So everyone knew me. Mhm. Mhm. Good. But, uh, I didn't do any business with anyone. So, in '87, when I said that now I'm getting into business.
So Sumeri said, "Ram, I will do anything for you ." And so we started. So we got even getting subbrokerage was as difficult as getting an article. Ha because someone was taking on counterparty risk, you could disappear, and he could… no, the problem was the volume of business he was doing, because each broker was only allowed to send six guys.
Good. Good. So if he gives one place, his income from that place if he gives to a newbie like me, I will give 1000 rupees, if he gives to some experienced guy, he will give him 10,000 bucks. So why should he waste his time on me? So that was a problem . So, this privilege will be exhausted. Yes. So, anyway, he gave me this opportunity and we started slowly and by 1990 we had collected about 15 lakh rupees.
Mhm. Uh, this thing, the membership cost 25 lakhs. Yes. So we somehow saved up another five to seven lakhs and bought memberships. At that time, Rajiv Gandhi was assassinated. Mhm. This was around 1990 . There was great fear in the market, the seller was even trembling, not knowing if we would pay. But in the end we did it, and that's how fate decreed it.
As soon as we bought the membership, the Harshad Mehta boom began. 1992, 91. 92, May 92. In 19 months of 92, we earned 30 crores. Of course. And no speculation. No speculation. Only client deals or my own. And brokerage services. Brokerage and own investments. Of course. So I was, I was the most insatiable stock buyer.
If I earned 10,000 in a day, I bought 10,000 shares. Of course. I never saw any money coming in as brokerage. I always saw stocks coming in as brokerages. During the boom. Mhm. That's it. This is how you built your capital. That's how I built my capital. And in 1991-92 , when we made that 30 crores, which turned into 10 crores after the crash.
10 crores was a lot of money. Then we said: now no one will kick us out, because it was a very closed club. Yes. It was very difficult to get membership. By that time, the membership fee had increased to three crores. Mhm. So we started building a research base. We started working for clients. We didn't know about the depression or anything, the market was normal for us.
We never looked at the index. I don't think any index was popular at that time . There must have been some kind of index, a Sensex or something. There was a Sensex, but no one tracked it that closely. At least I never tracked. So we came to the market, and we didn't actually transact in Group A. We only transacted in Group B.
Mhm. This is how we evolved. What were the considerations for not working with Group A? Because I remember, I knew a lot of big investors in Delhi in the 90s as well. who said that forward contracts. Because forward contracts had this speculative element. Of course. Firstly, these were large companies.
So . I. Everything was there. So they had a lot, how to say, a lot of momentum. And speculation. Speculation and large scale. So our understanding of those companies was also limited. Of course. Management availability was also low. Mhm. You know, if you try to get into Tisco or Telco at that time, they were like giants to us .
Unattainable by any stretch of the imagination, where the leadership is and what they do, how they do it; Perhaps our minds were also limited to grasping the complexity of the scale of the business. But they looked like state-owned companies, you know. Oh, yes, it once looked like, you know, like Hindustan Motor or, say, Tisco—like a state-owned company.
A huge state-owned company or giant. Yes. It's even hard to imagine how much. But smaller companies, 100-200 crores at that time... Yes. Companies worth 200-400 crores, startups that grew from 10-20 to 100 crores in revenue. We bet on little-known companies with high growth potential. Got it, got it.
You know, probably medium size. There was no media then. No, there was no one. No rules, no internet. It was before SEBI existed. So there were no laws, or even the concept of insider trading. I mean, management was buying shares with us. And it was official. It was official. We did n't do anything illegal.
Mhm. But I can say one thing : we have always conducted business transparently. Of course. For example, they paid all taxes. If I earned 10 lakhs, I still paid 20-30% tax . Of course. From the very beginning, we worked only with "white" capital. I've never seen cash in my life. Of course. You know, this is one big thing.
So it happened that my capital, no matter how small it was, was always mobile. He has always been powerful. He was a worker. He was working. He worked for me. If you have 100 crores but it is cash, you beg people to somehow legalize it in the system. You are essentially begging for an opportunity to enter.
Yes. Yes. Entrance. So, I clearly understood: we had great ambitions, but also a lot of patience . Mhm. We wanted to be big since '85, even before we started, I wanted to be big. I mean, we wanted to make a lot of money. Everyone wants to make a lot of money, but we were in no hurry. Mhm. Mhm. I knew it would take time to capitalize.
If you start small, even with a 25-30% return, it takes a lot of time. One crore will become ten in just 10 years. And a hundred in 20 years. So we had this patience : values, patience, and huge ambitions. Mhm. Long-term focus —just doing your thing from 9 to 7 or 10 to 7, whatever. Don't look for shortcuts.
Nothing, no shortcuts, no. Passing it on, you know, to your children. Now, now you know, you can remember the past with great warmth , and, you know, we actually , uh, enjoy hearing about what you've been through, or how you built everything and what your value system is. Your children are now also involved in the financial world, they work, how do you approach guiding them?
What values do you hope to pass on to them regarding wealth and responsibility? Because they didn't go to the village school. They are a product of a different environment, they are different . Their parents are billionaires, how do you actually help them, guide them? How do you rate them? It's probably worth asking him, but you know my strategy.
I have a son who works at AMC. He takes care of...he is the second in command. So he studied in good schools. He graduated from LBS and UPENN. He received his bachelor's degree from UPENN and his business degree from LBS. So he is academically savvy. The first thing I noticed was that he had to be academically strong so that...
No one in life can take your diploma away from you. Yes. All the basic things are there. Fundamental things. So all those kinds of things—he has to be in good shape and, I mean, have good values. You see, no matter what we preach, what we actually practice is the biggest lesson for children. Yes. You know, he saw it, for example, at the age of six or seven I taught him compound interest.
Mhm. You know, in the evening, when I was walking with him after dinner, we continued to practice, and he is probably better than me. In compound interest. So, you know, these are small things, but then I gave him a choice. You talk about the compound interest formula and practice it. These are little things, and he watches what happens in the family: how I treat my parents, how I behave—these are real things that he absorbs.
or how we implement HR practices here. or how we pay taxes or talk about them, or something else. How you care about people. Yes, people, and how intensely we care about business. and also how we ensure work-life balance . So, all that you've seen, but one thing I understand: I fundamentally believe that the stock market is for crazy people.
Mhm. If you're not crazy about the stock market, don't go there, because it's, you know, a crazy system, every day is a new day. mgm. There are no sad days here, this is not a cement factory where you set up a machine. I say that because you know, even my feeling, you know, as a leader, I ran Value Research with the belief that the stock market is for everyone, because if you want to multiply your money, small money, as an investor—that's fine.
as an investor, but if you go into business, a business in the stock market, a businessman, a business centered around the stock market, the stock market. So if you want to be passionate about the stock market, you know, it's crazy, I mean, every day is fun, I mean, it's a challenge, yeah, one day it's bull, the next day it's something else, so I think if you're not passionate about it intensely, don't come here.
Mhm. So I told my son: just because you're my son, you don't have to be in the stock market, do whatever you want. OK. But he chose this. It is his choice that he is in the stock market, or more precisely in fund management. So, that was one choice given to him. And, you know, he knows that this is a professional company.
He has to earn his, he can get a certificate, but he has to hold, you know, the bar. Yes. Yes. The certificate is guaranteed, but he has to earn the position himself. So you are happy with how it has developed. Yes. I am very satisfied. Yes. OK. And now let's move on to some of the things that I've talked to you about in the past, and that great, you know, that great blue book that you put out eight years ago, which I, you know, purchased , and actually, that QLGP framework QLGP QGP, the framework that was documented in that book.
How did this philosophy develop over the decades, you know, when did you manage to formulate it, or, you know, did it somehow exist in a very diffuse form and was really formulated somewhat later. So, it so happened that I met Buffett, I mean, heard about Buffett in '94. Good. And it was love at first sight in the sense that I read his annual report for '94 or '95, and I used to think I was a smart guy.
Mhm. between 87 and 95. You can still think that way. No. But when I listened to him, I understood. Given what you have built, you have every reason to believe so, and it is thanks to the guru. So when I heard that, sir, I said, boss, we do n't know anything, we need to learn the hell out of everything, from '65 to '95, I first downloaded all the diet owner's manuals, owner's manuals, and I read, I used to get up at 5 in the morning and read all those annual reports, and they didn't make sense to me because they're all about America and all that, but still, there's a lot of wisdom between the lines, we learned that wisdom, and then they said, now we need to start writing something that's going to make me smarter.
That's how we started researching wealth creation from 1996 onwards. So, from '96 to last year, we published 29 studies, and each study is my improvement over the last 12 months, and it was your own learning curve, so to speak. Yes. So we kept writing and writing and writing every year, and you will see that there is a gradual learning in every study.
Mhm. Even Buffett writes like this, every one of his annual reports—it's always his learnings from the last 12 months, and he passes it off as wisdom or something. So in 2014 we said, boss, now is the time to write down our philosophy and that's when we wrote QGLP. Okay. And QGLP stands for quality of business, quality of management, growth and longevity, quality, growth and price.
So, in essence, it's very simple. Good business, good management, good price. This is the investment triangle. Everyone does it: the only way to good business, the way to good management, and if you understand both of these factors, then what is the score? So everyone is going in different directions, but everyone is looking at the business, management, and price.
Yes. Okay. So QGLP is nothing more than this and is actually the annual report for 2007. In fact, Buffett has laid out everything he does. So there are four lines in 200...horrible. There are pages six and seven, if you read them, and the two best pages of Buffett are these two lessons. Yes. There are so many companies that never make money.
Yes. So we got it out there but the market is busy talking about it and it's Yes. So, QGLP comes from there. This is an expanded form or a revised format of buffettiology. I also use the same structure. So now there is a structure . Okay. When I look at a company, I mean, I'm clearly not concerned with the price, because if you don't know the company, what price can you justify?
Okay. So let me meet with the management. Let me meet you , let me understand what the business does. What is the profitability structure there? How successful have they been in the past and what do you think will happen in the future, given my understanding of how India will develop ? How will the world develop in this area?
how this company is going to work from a business perspective and then how good is he, let's say, how much energy does he have, how passionate is he, how competent is he in his business, when I actually looked at your company since it went public and it was very difficult to imagine a growth path. Ha?
We knew each other. But you see, you need to enter into a discussion with the entrepreneur, because you know, on an ongoing basis, you know, the incentive system, which is transparent, no one, I can tell you, no matter how great analysts you are, it is very difficult to understand someone else's business, sitting aside and that's in a few days or hours, but you can get a good idea of it, um, the more time and effort you put in, you can understand by 67, 70, 80%.
Mm. At some point, you literally know, seeing the news, what's going to happen to that company. Mm. So when you reach that level of understanding, then you can value the company, you can price the company or somehow value the company more or less reasonably. It is always a certain range. Yes. The rise of new economy stocks and, you know, your QGLP concept.
How does this fit in? So, everything, absolutely everything fits into the action and disruptive technologies. Yes. Yes. It will all fit. See, the concept of quality itself is not necessarily related only to profitability. Good. With big profits and everything else. If the company is 2 years old, 3 years old , what kind of profit are they talking about?
Mm. You see, one of the things I learned just a few days ago: is this product big enough? Today I met a company, a Rs 1000 crore, Rs 1100 crore turnover, a consumer goods company, and it is only 5, 6, 7 years old. So I asked: What do you do? He said: I'm selling this. So, one of the concepts is an amazing consumer experience.
Mm. Now there will be no profit . All these fast-commerce guys don't make money, but it's an awesome experience. You can get everyone saying: great, you know great. Yes, here you can get hot tea with a bun and a mask in 10 minutes. I order in 10 minutes, and if you order at my dining room, they won't be able to deliver.
Mhm. Mhm. And they will come from a distance of 3 km from here. This is the experience, again and again, 24/7, 24/7. Hence, consistent quality. So you know, when you see these breakthrough, whatever you call them, services, even if there's no profit, it's very high quality. It's almost like imagining a mobile phone in the days of landlines, you know.
yeah, when that iPad came out, I knew it was something absolutely amazing. Apple's total market cap was 3-4 billion at the time it came out. so when you have or when Indigo launched in India 18 years ago. for the second or third year, I must have flown an Indigo flight and said India will fly like this .
mgm. and over the next 15 years it becomes 60-70%, today you may have seen a result of 3000 per quarter. so you know, this perfection, when there were, say, 50 or 60 planes, obviously they weren't making profits, that doesn't mean there's no quality. mgm. yes, so quality should be determined at different stages of the business, usually this does not apply to all businesses, but some very much so.
and of course you take risks, you know. we take risks, we take on additional risk, and therefore we receive a disproportionate reward as well. Yes. Warren Buffett was a significant influence on you, a huge one. and you know when you first visited Omaha? 95th. '95, so beyond the general principles, could you share a specific vision of Buffett's that, you know, fundamentally changed, oh, that particular annual report.
fundamentally changed your investment actions or portfolio structure in the early stages. Yes. This was in '95 or thereabouts . So the first thing was—don't focus on EPS, focus on return on equity. Good. I only knew two formulas. Mhm. EPS and PE. Good. I didn't even know about growth. Good. That was it then.
These were generally only two formulas that I knew. Mhm. Good. Because growth is a very, very crazy thing. Growth can only be appreciated if you understand compound interest. Yes. Yes. Yes. You know, at a rate of 25 %, the company will grow 10 times in 10 years. And at 35%, where will it be? It will grow 20 times.
At 45% it will increase 40 times. Now the market doesn't discriminate as much. Mhm. Between 25 and 45. 45. Maybe a company with 45% growth is available at 25 PE. Mhm. No. Or it could be different things. I'm just saying people talk about Dixon and then you look at the numbers. Yes. So until then, it's just history.
Yes. So, when I learned from Buffett about the company's focus on profitability , it turned out that there are many nuances. It's not just about return on equity, what does it represent? Where does it come from? Then there is the book value. You see, when you start following, I realized there was something here, and we started developing it.
Books began to appear explaining this, such as Hungstrom's "Quality Investing ," many biographies of Warren Buffett, The Making of a Capitalist, and so on. you started to absorb his ideas started to absorb them, but I didn't look for any other guru, and that was good. well I wasn't confused reading Peter Lynch, I read but didn't take anything completely different principles yes, but I only had one guru.
Good. You know, that's why I just followed him and blindly trusted him. and you have a concentrated focus strategy. Focus strategy, and he talked about it too. I mean, Charlie Munger was incredible. Yes. Charlie said that the main thing is the strategy of focus. If you know three companies, keep only three companies in your portfolio.
Yes. Why have four? Why have more? So in 1995 I learned a lesson, I'll tell you a real case: I had 225 companies in my portfolio worth 10-12 crores . Mm. Maybe a portfolio worth 15 crores. In fact, it was so difficult that by the time I started looking through the portfolio, I was tired. I got hungry and then threw it away.
How do you read this? Yes. And there were also poor deliveries from brokers. My good stocks went to the client, and bad deliveries went to me, that's how it all started. Now you have accumulated 225 companies in a portfolio worth Rs 10 crore. I got my wife involved. I asked her: please come and help me.
She came and sold 15, 10-15 companies every day. She didn't know what she was selling, but she was closing the sale, and it happened step by step, one after the other. At the end of the year, she left me with a portfolio of 15 companies. Good. And that same year, my portfolio doubled. Good. Because it gave such a strong focus.
I could see everything on a quarter of a page. I mean, usually on A4 you have 50 lines. Mhm. There were 15 lines here. So it became so small so narrow so narrow and so focused. So, I could spend some time talking about a company that is in my portfolio and you were interested in . Yes. So you will always be interested in all positions.
Yes. There was no "tail". Everything was meaningful. So if you see Motilal's strategy in AMC, we are talking about a focused strategy from start to finish. Sometimes it works, sometimes it also creates , uh, you know, uh, it creates problems because the markets can be very broad. So the focus strategy may not work.
It may not work. We follow a focus policy so that my fund manager knows every position very well. I've interviewed a lot of guys who manage, say, a portfolio of 70 stocks. Mm. I said right in front of me, you guys, I mean, I actually gave the paper to the guys, after the 15th, they don't know the names.
I asked, how the hell do you run your companies? you know. So that's what it was, so one guru and focus is focus, but finding a guru in time is extremely important. If I had found it five years earlier, it probably would have helped even more. Yes. But in any case, God already decides when the guru will come to me.
You were outspoken, you know, you were outspoken about learning from mistakes. Could you discuss some of the mistakes, you know, discuss an investment that did n't go according to plan and the most important lesson it taught about the QGP framework? You see, QGP helps you, uh, organize your thoughts in one place, you know, very coherently: have you checked the management, have you checked the quality of the business, have you checked the quality of the governance, have you checked the growth potential?
Mm. Mm. And whatever price you pay, all four quadrants must be checked. Good. After checking then thing, then the story begins. Yes. Then, I mean, the biggest thing is that growth doesn't happen the way you say it does. Mm. Look at how you do it, they say that extraproductive growth is happening the way it is now.
It has been growing by 25% in the last 3 years, and TAM's business is very large. So they will probably continue to grow at this rate, but it's not happening at this rate. So some technologies will change, some rules will change, some consumer preferences may change something. So many times this growth doesn't happen but many times it accelerates beyond your expectations because there's a tailwind that you didn't account for and uh, for example, when we started the business, I mean , we thought we were going to make about a crore in 1990 and that was a good, good thing, a good thing to have, very excited but then the bull run happened and you made 30 crores in two years so it wasn't because we were competent or deserved that money or that it was predictable there was no way but it happens, that's the beauty of the stock market that a tailwind blows if you're ready for a stock or a sector or a business and it gives you disproportionate returns, which happens every now and then , until you tell me about a mistake, a decision that was horribly wrong, even though you firmly believed that this is what you've discovered for your whole life.
Yes. So I always had a parallel portfolio in my business. So the business couldn't be affected by what was happening in my portfolio. Yes. Of course. So this is a personal portfolio. Ugh. No. Whatever was there between me and Moti, whatever portfolio we had at different times, say 100 crores, 500 crores, 1000 crores, but it was always irrespective of the business.
Good. The business had its own stable flow, growing, let's say, developing. Yes. 5, 10, 15 , 100, 200, 500, and now 1000, 2000 crores of profit, but it has nothing to do with the performance of my portfolio. Okay, they'll always use securities as collateral or something like that in banks, but essentially, if I reduce it to zero, my business won't suffer.
So my priority has always been to build an investing business with people. Mhm. Mhm. You know, brokerage services, direct investments, AMC, wealth management . So that's what we always focused on. Mhm. We work only for clients. Good. Good. This personal portfolio is not involved in this. No, not at all.
This will never harm or affect the results of the business, the operating business . Good. This was a principle we always followed : the company's net capital is always invested in funds. Yes. Because of all the cash flow that comes from there, 30% goes to dividends and 70% goes back to the treasury.
Good. And the Treasury is being used strategically in the sense that all Treasury funds will be provided to banks to create a huge line of credit. If suddenly the market falls by 30%, by 25-30%, which cannot happen, but we should be prepared by having a reserve fund of 5-10 thousand crores of credit line, so that if my customers do not pay overnight then I have to close the gap, otherwise my terminals will not work.
Good. So we have to make sure that... it often seems like a business doesn't need assets, but that's only until there's a crisis, and on that one day of crisis and the crash happens, so yeah , on that day I have to stay up all night and put out, let's say, 5, 10 , 20 billion at 9:30 in the morning to keep everything afloat.
So this is precisely why the prophet once said that one should not rely on the generosity of passersby. Yes, I need to have my own liquidity if demands come in. Yes . No, but I still haven't received an answer. What was the biggest mistake? Errors. There were many of them. I mean , a lot. Tell me about that same, iconic mistake .
I know. What comes to my mind? But what left a scar, or whatever you call it, or what you regret, or something... I don't regret it, but I feel sad about it when I think about it . We bought the company, I think, about 10-12 years ago. It was a soft drink company, the brand "Masan"... You know, it was a mango drink.
It was called, I think, "Mango Sip," and it was sold almost everywhere in North India. We did everything right . We had the best analysts who conducted on-site inspections, everything was as it should be. But it turned out to be a fraudulent company with double-entry bookkeeping. Of course. So much so that even an investor from a private equity fund who had been there for many years didn't notice anything.
I then said, "Boss," we're completely blown away. Fully. And I personally lost probably 150 crores of my own money. Of course. Although, in reality, if you lose money in stocks, you shouldn't be upset, because that's the game. There is a very asymmetrical reward here. Mhm. That is, by allowing yourself to go down to zero, you can technically make a lot of money elsewhere .
So I never regretted losing my own money because it was my error in judgment. But because of my mistake, clients lost money in my mutual funds and other things. And it also tarnished the company's reputation. The reputation of the company, you know. And I still feel very sad about it, that I couldn't see the truth, even though I had full access to it.
It's not because I have n't met him or my people haven't talked to him . So have you learned anything to check... but we had many, many warnings about that guy. Good. What did you ignore, the red flags that you because before, I always, when I saw high growth and high profitability , the profitability is high and the growth is there.
But I didn't know that profitability was fictitious. Mhm. Mhm. You know, if there is high growth, I am the first to get hooked, that is, you know, I look at such a company, you are easy prey, easy prey, absolutely easy prey, that's how I got caught, okay, and the consumer, when you see the consumer, it means that in India the consumer—this is the next 50 years, the same pattern will be, more and more people will consume goods, we have one and a half billion people, so now 10 million are consuming , probably 100, 200, 300 million people are already in line, that's my basic belief, so my main problem was that I felt sorry for the customers, you know, it was a bit large-scale.
Uh, so now the errors will be bigger as time goes on. The errors will be bigger. You know, we also avoided a lot of trouble. It's not that we didn't have any idea, but this is where I got caught, yes, you're trapped , not quite properly. How do you approach valuing companies that are market leaders but maybe in a high growth phase, which you partially answered this question, a typical scenario for, you know, platform or technology businesses today, which is what, because I notice you're interested in them, so uh , what's your reasoning look, the first thing is that uh one of Buffett's biggest lessons from the 2007 report—don't do what you don't understand first try to understand okay this might be the most exotic company, but if you do n't understand—don't get into it, okay, for example, fast commerce is growing 100%+, do we understand, we see it right in front of us, it's happening But they're not making money; They grow by 100-200% but don't make a profit.
The market is huge. Actually in Mumbai and Delhi, if you have to get in a car and go for a few things, I think it's a 2-3 hour round trip, at least one. and here, in 10 minutes, you get everything for the same or lower price. Yes. Yes. So, it's a real treat for the consumer, and uh it makes sense, a lot of people are getting involved it's a viable business.
This is a very viable business. So, this is a customer-oriented business. The customer is very satisfied and at some point will be willing to pay significantly more than he is paying today. Today they are building the market, but someday…I mean, who goes to buy movie tickets now? You are not walking.
So even if you are charged a 5–10% service fee, you will pay it, and you will pay it calmly. And here they give a discount for the same service. So at some point they will start charging a service fee. So I think there's a business model here. Mhm. I believe they will make money, and that's why I'm very inspired because I understand this business.
Although it is quite possible that they will not earn. They may not make money, and they may not make it for a very long time. A very long time, and at some point I might think that these guys are incapable of anything . We will think that I am not buying 50% of my portfolio. I buy 5, 7, 8%. You have your own established approach.
Of course, the distribution should be very... you don't bet on one company in significant volumes. No. Now I turn to what concerns you, your business... managing a diversified fund and sharing your experience, because you have succeeded in areas where many have only succeeded in narrow areas. You know, there are banks, there are housing finance companies, there are brokerage firms, but ...
putting all of that together ... convergence, and you know, they're all investor-centric. So, you grew to PMS, AIF, mutual funds and brokerage services. Could you talk about the fundamental difference in your strategic approach to management, because, you know, different values... or what is common in all of this?
Look, there are generally only two fundamental areas of business. Good. The first one—we started with brokerage services. Good. Retail brokerage services. Of course, we moved into institutional brokerage. Once you get into institutional brokerage, investment banking comes into play. So, this whole ...
segment is brokerage, institutional, retail and investment banking, where you distribute corporate products. Good. This is one business. The second is the asset management side. We have mutual funds, PMS, AIFs and all that public stuff, and we also deal with unlisted assets. Good. This is direct investment, but it is also asset management.
I lead both of these areas. Good. So, there are only two groups of businesses, and the third is wealth management , because these products need to be distributed . So HNIs (high net worth customers) want to be served a little more delicately... than the usual standard scheme. Yes. So brokerage services are actually also capital management .
Mm, mgm. but, well, let's say you have a franchisee and I mean if someone how the business has developed so, so they are also wealth managers but very small but a big client who has 100-200 crores needs an individual manager, trained professionals etc. that's where wealth management comes in, so it's basically brokerage and mgm asset management it's actually and all of that is all, of course so asset management is completely based on the philosophy of mg buffett well and brokerage is driven by whatever, it's a flow so I have to take care of the clients and that the research is provided there is some influence of the buffett philosophy in the research too but research is research.
How threatened do you feel by these discount brokers? You see, discount brokers have certainly done an incredible thing in the last 10-15 years. They've used technology very well, but I think there's a place for them , just like there is for full-service brokers like us, because at the end of the day, you can't make money in the market if you don't know what to buy and what to sell.
Yes. Yes. You know, I have a very low- cost execution mechanism. Mhm. But who will give advice? And if I don't write research, how will I give advice? If I haven't met with the company, how will I form an opinion? You know, we have a team of 60-70 people, probably the largest research team , because we believe in research because if I'm managing assets, I'm managing, I'm advising people on IPOs, QIPs or just wealth management, or various consulting—that's our core business, but consulting comes out of research.
Yes. OK. So my feeling is that yes, the market is very well segmented. There is one market that covers the masses from Kanyakumari to Kashmir, remote areas where people can buy and sell at will, watching TV or reading blogs, random behavior, you know, random behavior. So for them it's a very big market but there's another big market of high net worth individuals (HNI) and people who would like personal support so it's a segmented market, we are the leaders here in this in this segment in this segment and we think they will coexist because we are also technologically advanced as well as they are, well my business model is different, I provide, in addition to digital execution, also a human approach mg and consultation which can be quite reassuring for a lot of people.
How about the basic principle of "buy right, sit still" ? You know, it became a really good rhyme, I really got into it, you know, buy right, sit still. This really resonates with you, a philosophy that can be applied to these fund structures. Do you think it can really meet investor expectations and regulatory requirements?
You know, will you actually buy and sit quietly through a broker? Of course, not through a broker, because those who buy correctly and really sit quietly for 5, 10, 15 years will not, unless they are very large, be good clients for a broker. Okay, okay, but if you buy my mutual fund, say, a scheme for 10 bucks at the start, I expect you to stay for the next 10-15 years because I put the money in every one of my schemes first.
Ugh. And often I own 15-20% of very large schemes. Ugh. If you look at Yes. your own investments. Most of them, that is, all of them, were bought for 10 bucks. Ugh. Now they can cost 120 bucks, 75 bucks. I didn't pay any taxes. So, we see that the fund manager is doing what is best for him. Something that suits his style, something that suits the inflow and outflow of money.
Corporate events, IPOs, so there are a lot of opportunities. They will use everything, they have tax breaks on everything they do. They don't have capital gains taxes etc. so they use what they are given. Some managers may have 10-15% turnover, while others may have 100% turnover. So it depends on the manager's own style, that flexibility is given to them.
But we, as investors, believe that if you invest in my fund, you better stay for the long haul. Okay. Because there will be periods of very good performance. There will be periods of mediocre performance, and then rapid growth again, because we are not entitled to receive 15-20% higher returns year after year forever.
Ugh. As was the case with flexible funds between 14 and 18, I had the best performance in the rankings. 19, 20, 21—three years of the biggest decline, and then we're back at the top of the charts. So it happens, eventually, after 10, 15, 20 years, you realize that we probably would have gotten 3-4%, like with the value investing strategy that I started in 2003 and personally led until 2008, which ultimately gave 5% higher returns compared to the index.
Okay. You know, I think if you can get about 13-14% index return and, say, 3-5%, well, 3-4% excess return, I think that's the best you can hope for, and I would consider myself to have earned my commission. Now about something very close to you. Your wealth creation research is eagerly awaited, and you know, this research has helped refine your investment strategies over the years, and it has been a learning experience for you as well.
Are you still continuing to improve them? Oh, yes. Every year you still... I have 10, 10 thoughts, 10 more ideas that need to... because you read so much that you need to dig deeper. You should... for example, I was discussing this with a guy who writes with me, Xin, you know, that I'm reading a book about the power of the subconscious.
Mhm. You know, I asked him if we could turn this into a study on wealth. You don't know what form this research will take. There's so much there. Ultimately, from this... you can learn so much about investing and you can become so much better. Having dedicated three months of focused work on one topic, given the global economic outlook, slowing growth, policy shifts, and this, let's call it " Trump hysteria" or "customs hysteria," what is your assessment of the resilience of the Indian market and key opportunities ?
Is this an opportunity or a threat? Definitely a possibility. You see, I'm an optimist, of course. This position has been in place for 45 years. In fact, she worked. Mhm. Good. And I think the next 45 years will be just as good. There is no reason to believe that the next 45 years will be any less exciting.
If you understand compound interest, and you do. So, if we are at $ 4 trillion now , in 75 years we reached $4 trillion, but in the next 7 years we will grow to $ 8 trillion, and in another 8 years, to $16 trillion. Of course. In 15 years, I firmly believe, the Indian economy will be as big as China's is today.
Mhm. Good. So, this is the rise of the third global power in the world. Yes. Gradually. This is not... Yes. Today, the global market capitalization is $124 trillion, and we're at ...well, four, 4.3, or about five. Five out of 125—that's, you know ... 60—that's only, 60-62—that's only the US, okay, China—nine, so they're the biggest, second in size, but there's only nine of them, then 5-6 trillion—that's Japan, Germany, etc., so it's not that far; if you exclude the US, we are very conveniently positioned for a market cap of $10 trillion, look, every macro market is growing by 17-18%.
The index is growing by 12-13%. But the market capitalization, as new small and mid- cap companies emerge, is 17-18%. So in four and a half years, I will double the market to $10 trillion . Mhm. So starting from...this is 2023, we will definitely be talking about a $10 trillion market. Mhm. Good. Regarding this hysteria, you see, for every action there is a certain reaction, as well as some benefits.
So this creates challenges for some industries. Let's say AI creates problems for the software industry . Good. But at the same time, inflation is decreasing or, say, oil prices are falling. Therefore, prices for all types of raw materials will decrease. My current account deficit will decrease. This will create a lot of favorable conditions for low inflation and low interest rates, and so this poor country will be able to afford, people will be able to afford a lot more.
So once rates start to come down, a lot of these things will happen. So, there are many such macroeconomic factors, although even macroeconomists cannot understand exactly what will happen because this is a multifaceted global economy. and all are interconnected here and there, so it's hard to understand , so you can't model everything that you have, if you run your country well, you know, my country is run quite well, I would say, I'm today, yes, today I'm running well and we're in a very stable situation, where I firmly believe that for any emerging market country, if they have enough foreign exchange reserves, which we have enough food, enough foreign exchange, enough defense mechanisms, I think nobody can blackmail them fundamentally, if you're weak in food, somebody will squeeze you, if you don't have a defense capability, like they do with Europe and everything else, then you're also in trouble, you know, you can be truly independent, you can be independent, and if you don't have foreign exchange, then you're a beggar.
Yes. Yes. You know, you have local currency, but no foreign currency. India is well positioned on all three counts, and on top of that I have a very stable economy, the political economy you know, growing at 6.5-7%. What more can I ask for? Can I ask for something else? You know what promising opportunities will appear: whether in green technologies, or in fast commerce , or in something else...
That was my next question. What do you find most promising today in this plethora of offerings? You know, I mean , you're seeing a real boom in the capital market. It started in 2020. Look, before 2020 it was like this: we were getting three hundred thousand customers every month. Today I get 3 million clients every month, the number of demo accounts has grown from 40 million to 200 million.
M-hm. We will become the most saturated capital market in the world within the next 5 years, once we reach 400 million. Name me one market where there are 400 million customers who are extremely well distributed. Nobody has and nobody owns 5% of the market. All are very small. Yes. So, venture capital is a reality.
Risk...how do you distribute corporate risk or country risk when your owners are dispersed? Very widely distributed. So broad that it doesn't hurt anyone. M-hm. You know that India is now second only to America in terms of venture capital flows. Okay . Today, if you are an entrepreneur and you need 25 crores, you will get it.
M-hm. If you are a brilliant auditor, a brilliant MBA, you have an idea and you were able to demonstrate something. Yes. OK. In our time, not a penny was available. Yes. I ran Value Research without any capital, fixed assets, or debt. Yes. No debts, because there was no collateral. No security . So what advice would you give to Value Research Online users who are serious long-term investors about navigating the current market and building sustainable wealth?
I firmly believe in what has worked for me over 45 years. Over the past 45 years, there have been all sorts of problems. But nothing on this scale. I'm telling you. 92nd year, bankruptcy of India. Yes. Kargil War. Yes. Global financial crisis. A bomb exploded in the stock exchange building. Were you there, in the stock exchange building?
Yes. No. Modili was there. In fact, Modili walked past the bodies of the dead. A. It exploded downstairs, in the basement, and he felt the effect. I mean, he saw severed hands and all that. He went through it and came out. By the way, there was a very small office there. We had a safe, you know, where we kept the stock certificates.
This damn thing fell. Fell. OK. You know, because the explosion was so powerful. I was there. So the first thing I said is : count the people. I did n't know what happened there. So we said gather all my traders, all my subbrokers, all six of them, and they came. Then we announced to all the families that we were all safe.
All the boys returned home. You know, like this, because the stock market can become a force of some kind. Was the Chief Minister a leader, you know? He said, "We're not going to let these guys succeed in their, you know, this, uh , motives." And the next day we will trade. The telecommunications department worked all night and connected all these hotlines so that orders and so on could be transmitted.
So, then we traded. The next day the whole damn thing was, uh , you know, blown up . Windows, this, that, and we traded. So this is the spirit of India, the spirit of Mumbai. But it's very tragic, you know, so I'm saying that the markets went through all of that and still only went up 15%. Yes. What are you worried about?
I'm not saying that a disaster can't happen tomorrow. Bond yields may rise, but every week there will be a new story. Everyone has been talking about Trump's tariffs for the last few months, but no one cares, I don't think tariffs can bring down the market. It's all over, it's all over. Now we need to find a new reason for it to fall or rise.
New cause for concern? Rejoice. Yes, okay. Now let's move on to something that I hope you've already started thinking about, even though you're long past the age where it's worth worrying about. Looking ahead, what lasting legacy do you hope to leave in the Indian financial landscape through Motilal?
We will not discuss anything like that . But I can say that we want to make a lot of money. We want to create the most ambitious corporation that will definitely outlive us. Of course. So I want to see that power of compound interest that worked for you at Berkshire Hathaway for 65 years, and he built a trillion-dollar company from nothing, and it's not over yet.
Yes. Yes. You know, we're sure they're still high-performing assets. Yes. So we would definitely like to create a lot, and we want to give a lot, and give a lot now. So the beauty of investing in a public company is that you can have your cake and eat it too. Yes. You know, I don't need to touch the company's capital to make donations.
I only need to use my own capital, your own assets. So, we allocated 10% of our company to charitable causes, and I decided to do this for 10 years. So every year we will sell 1%. Of course. So far, the company is showing increasingly better results. So this year we will sell 1%. And whatever 3,400 crores we get, we will give it for these purposes, next year again, no matter how much it turns out, we will continue to do so.
But we learn to give. Mm. Giving is also very difficult. Of course. Very difficult. I can tell you this. Thank you so much for your time and for sharing all the wonderful experiences you have had and what lies ahead . So thank you very much for your time and such a casual conversation. for the benefit of our users.
Thank you very much. I hope this was uh very interesting. A lot of this is actually close to my heart, I'm an entrepreneur too and I've never worked for anyone else, so I can relate to a lot of things, and, you know, it's nice to learn about everything you've been through and what you've managed to build. It was nice talking to you.
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