Book Reviews
Quantitative Quest for Great Companies
Books that are able to describe successful businesses through a common theme or analytical framework are rare in India. This one (The Unusual Billionaires; Saurabh Mukherjea; Penguin Random House India, Rs499; 445 Pages) is an addition to that small collection. It uses the John Kay’s famous IBAS framework (Innovation, Brands/Reputation, Architecture, Strategic Assets) to explain the success stories of seven companies: Asian Paints, Astral Poly, Berger Paints, Marico, Page Industries, Axis Bank and HDFC Bank. Why these seven? Mukherjea, who is the CEO of institutional equities for broking firm Ambit Capital, and has studied under Kay, a professor of economics at the London School of Economics, has applied a quantitative process to select great companies. 
 
The process involved three steps. In step 1, Mukherjea and his team at Ambit created the basic set of companies to study. He limited himself to companies with at least Rs100 crore of market-cap. This surprisingly low barrier yielded a list of 1,500 companies. Step 2 was defining the time period. Great companies should be around for years. Here, Mukherjea chose a period of 10 years which is surprisingly short. Step 3 was defining superior financial performance as revenue growth of 10% and 15% return on capital employed (RoCE) for every year for the past 10 years. RoCE can’t be applied on financial firms and so, for them, Mukherjea used return on equity (RoE) of 15% and loan growth of 15% every year. Only eight companies have managed to fulfil both the growth and return criteria in each of the past 10 years, the eighth one being ITC (apart from the seven I mentioned earlier). 
 
Having identified these eight, Mukherjea has then told their stories. (Inexplicably, Mukherjea did not discuss ITC at all. Maybe, he did not get access to them.) What is behind the seven decades of continuous excellence of Asian Paints? How has Berger Paints done so well ever since the unassuming Dhingra brothers (now among the 50 richest Indians) bought the controlling shares in 1991? How has Marico, which still gets most of revenues from a commodity product (coconut oil), been such an outstanding performer? Mukherjea tells their stories. That apart, the book has sections on the IBAS framework, more detailed explanations of long-term portfolio called Coffee Can portfolio (a buy and forget approach) and a chapter on checklist for long-term investors. 

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COMMENTS

Rishabh Adukia

4 months ago

definitely seems interesting

India Inc. voices concern with government on GST provisions
 Indian industry chambers on Friday raised concerns on the draft Goods and Services Tax (GST) law at a meeting here with Revenue Secretary Hasmukh Adhia, flagging issues like dual administrative control vested and wide discretionary powers for tax authorities.
 
"Provisions may lead to unwarranted disputes in future so it requested to give a re-look the law before finalising," a Federation of Indian Chambers of Commerce and Industry (FICCI) representative said after the meeting.
 
"Non-inclusion of electricity will lead to significant economic distortion," Assocham said in a representation to the government.
 
The chamber also said that on products like petroleum and alcohol, the industries will operate under a hybrid tax regime and will be unable to claim GST credit due to temporary non-inclusion of these products, that could increase costs.
 
"Consequently, some thinking around zero rating or concessional taxation under existing law on the inputs for these industries is warranted," Assocham said.
 
The GST Constitutional Amendment Bill was passed by Parliament earlier this month, while three states - Assam, Bihar and Jharkhand - have so far ratified the Bill.
 
The meeting was a part of a Finance Ministry exercise to solicit industry's views on the proposed model GST law before finalising it.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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Zuckerberg gives away USD 95 mn Facebook shares in charity
In the first gesture to fulfil his pledge that he and his wife made last year, Facebook CEO Mark Zuckerberg has sold $95 million of the social networking giant's shares.
 
According to a US regulatory filing, The Chan Zuckerberg Foundation and CZI Holdings LLC sold Facebook shares worth $95 million before taxes, Forbes reported on Saturday.
 
"The sales likely netted more than $85 million after capital gains taxes, the report added.
 
The couple plans to give away no more than $1 billion worth of stock each year through 2018.
 
Last December, Zuckerberg and his wife Priscilla Chan pledged to donate 99 per cent of their Facebook shares -- about $45 billion -- to advance human potential and promote equality for children.
 
Declaring the "Chan Zuckerberg Initiative" as they welcomed their first girl Maxima Chan Zuckerberg, the couple said they have created a new foundation that would initially focus on "personalised learning, curing disease, connecting people and building strong communities".
 
"As you begin the next generation of the Chan Zuckerberg family, we also begin the Chan Zuckerberg Initiative to join people across the world to advance human potential and promote equality for all children in the next generation," they posted in a 2,200-word letter to their new-born daughter on Facebook.
 
"We will give 99 per cent of our Facebook shares during our lives to advance this mission. We know this is a small contribution compared to all the resources and talents of those already working on these issues. But we want to do what we can, working alongside many others," the couple wrote.
 
Facebook currently has 1.71 billion monthly active users.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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