The man behind the world’s largest bicycle and motorcycle company
This book is about Om Prakash Munjal, founder of the Hero Cycles and manufacturer of Hero motorbikes. It highlights the advantages of a home-grown and people-driven style of management over the process-driven Western systems.
Munjal, a first-generation industrialist, is a son of a food grains wholesaler from Kamalia, Pakistan. The four Munjal brothers started a modest business after being displaced twice. They had an ambition to create an inexpensive and effective mode of transport for post-independence India. Hero Cycles was founded in 1956, manufacturing 7,500 cycles a year. Over the years, it has graduated into producing seven million cycles annually, making it to the Guinness Book of World Records as the world’s largest integrated bicycle manufacturer.
This could not have happened without tremendous application and indomitable spirit. Says OP Munjal’s son Pankaj: “Our father did not study beyond the tenth grade but he takes pride in our education, asking us to speak to him in English to enable him to improve on his Englishspeaking skills. He enrolled in a public speaking class to improve his language and articulation. He would ask us what we learnt at school so that he could improve his knowledge.”
The father’s response to whether he regrets sacrificing studies to go to work is: “Life is the biggest teacher and the world the biggest school… When I make a mistake, I learn and grow bigger…Though I failed to go to school I’ve never failed to learn.” He doesn’t bring home his work and never mixes personal expenses with the company’s. When a factory worker’s seriously-ill child had to be taken to hospital, he sent his car. When the worker asked how he he would go home, he replied: “Don’t worry about me. I have put the world on cycles.”
When he started, Munjal would sell his cycles at his price but never make anyone suffer a loss. When the factory had to be shut down, following a general strike in Punjab, he rolled up his sleeves with a spray can in hand and assembled cycles. His workers returned behind closed gates and stayed on overnight to avoid risking violence. When truck-drivers went on a strike, he chose to transport cycles by buses. When the dollar rate fluctuated favourably giving him a windfall, he chose to share the gains with the management, the employees and dealers in equal measure!
He prefers personal meetings over conference calls and hardly uses his cell phone. When a new manager came to him with a detailed power point presentation, Munjal told him to close his laptop and explain the project verbally. After just 30 minutes of discussion, he assembled all the people involved, assigned tasks and approved budgets across the table to get started. What is this hard-nosed industrialist’s take on digital technology? According to him, technology:
• Gets in the way of productivity when the mailbox is full of ccs containing something one doesn’t need to know;
• Becomes an enemy of performance when weeks are spent on making presentations when the same time could be put in getting the job done;
• Is destructive when attention is distracted by social media and mindless instant messaging;
• Is a curse when work hours are made longer and attention span shorter.
This encapsulates the life story of a school-dropout with down-to-earth values, one who revolutionised the two-wheeler industry and led Hero Honda into becoming the world’s largest motorcycle company.
A range of value investing styles and opportunities
John Mihaljevic is the managing editor of The Manual of Ideas, a monthly journal for value-oriented investors. The popular investing newsletter is aimed at generating investment ideas and publishes interviews with numerous fund managers whose styles cover a range across areas of investing.
Mihaljevic, in his book titled The Manual of Ideas, aggregates the key takeaways from numerous interviews with fund managers and has created a guide to value investing. The book covers a range of value investing styles and opportunities: deep value, sum-of-the-parts value, jockey stocks, following super investors, small- and micro-cap stocks, special situations, equity stubs, and international equities.
If you are an avid reader on value investing and have already read other books on the subject, there’s only a marginal value addition to your knowledge. However, if you are new to stock investing, this would be a great book to gain insights into different proven investment approaches. Each investing category discussed has several dedicated works. Therefore, those who find a particular approach interesting, can do their research further.
Unfortunately, this book does not evaluate which method works best or to identify which strategy one should use, under what circumstances, and what would be the outcome. It offers basic knowledge, but you will have to dig deeper for a better understanding of which style to actually use and when. This book is more of a general overview of several approaches to investing rather than a detailed research on any one of them.
The book offers methods for deciding whether a company passed the right screen for the wrong reason, whether the financial statements are fudged, and discusses several other factors that may miss an investor’s eye. In the chapter on deep value, the author describes Benjamin Graham’s approach to ‘cigar butt’ investing. Like cigar butts, which may have a few puffs left in them, there may be stocks that have been discarded but still have some value left. This is what Graham called ‘net net’ stocks—stocks which were trading at a discount to their net current assets.
In the chapter on good and cheap stocks, Mihaljevic describes the concepts used by Joel Greenblatt to identify a company’s quality. Under this approach, the company should not only be cheap but should be backed by a high-quality business. (This is the approach adopted by Moneylife while picking stocks.) In another chapter, the author also talks about ‘jockey’ stocks; in other words, investing in companies with great management by reviewing their capital expansion plans and trends as well as their management compensation and incentives. The book discusses how to follow investors who have done well over time and achieve success by investing in the same companies as they do.
While large companies are well covered by analysts and institutional investors, Mihaljevic has dedicated an entire chapter on finding hidden gems among smaller-sized companies. However, most experienced investors would be aware of the risks in these stocks; finding a good bargain requires deeper digging. The book also covers investing in stocks by looking for value during special situations such as spin-offs, mergers or acquisition. On this topic, among the most interesting books is the one by Joel Greenblatt titled You Too Can Be a Stock Market Genius.
Finally, choosing an investment style is a matter of one’s own special needs and interests. This book will act as a good introduction.
Some good profiles by Subroto Bagchi but many puff pieces
This book is a compilation of Subroto Bagchi’s long-running column about “sixty men and women I came in contact (who) left behind a sense of wisdom.” Bagchi shares these with us through this tome. He classifies his subjects under various categories; the category is mentioned in italics above the name. Some of the choices, and their categorisation, would seem strange. Determination—Ramesh Ramanathan ex-Citibanker and co-founder of Bengaluru-based NGO Janaagrha that works to change the quality of life in urban India, and Janalakshmi, an urban microfinance entity.
He also includes Nandan Nilekani in this category, because he “gave 1.2b Indians an identity.” Under Vision is Harish Hande, the winner of the Social Entrepreneurship Award of 2007 who believes that “subsidies are for the rich, sustainability is for the poor,” and Jimmy Wales, founder of Wikipedia whose passion for information arose out of an operation that saved his daughter’s life. Under Courage is GR Gopinath of Air Deccan who went bankrupt twice, and NS Narendra, owner of a fire-fighting company. There are others who are low-profile but well-known in their own domain like VG Siddhartha, son-in-law of former Karnataka chief minister SM Krishna, promoter of successful ventures such as Café Coffee Day.
Bagchi features Kiran-Mazumdar Shaw under Innovation; Dr Devi Shetty (Narayana Hrudayala), Dr Sharan Patil (Sparsh Hospital) and Dr Gulapalli N Rao (LV Prasad Eye Hospital) are placed under Corporate Leadership. He writes about Dalai Lama and Jaggi Vasudev, the BMW motorcycle-riding and golf playing guru, under Altruism.
A few stories are about sheer courage and fortitude. Like Anu Aga’s who anchored the family business (Thermax) after the sudden passing way of her husband Rohinton. A year later, her mother-in-law, a family pet and son Kurush (who died in a fatal road accident) all passed away within a fortnight of each other, giving her a lesson in life: “Pain is inevitable, suffering is optional.”
The story of Shashikant Shetty, the indomitable owner of a dive bar at a Mumbai suburb, is gripping. He survived a brutal attack in 2004 at the hands of two off-duty policemen who drank at his bar, necessitating 180 stitches and blood transfusions. While knocking on various doors for justice with bandages still on, he realised how the off-duty rampage by a criminalised force in uniform held the city to ransom.
In the introduction to the chapter on Vision, Bagchi quotes from an video-recorded talk of Peter Drucker, the father of modern management, with Peter Senge, where he pointed out that “the for-profit sector has much to learn from the not-for-profit sector than the other way round.” It is easier for a for-profit business to sustain itself because greed is a strong motivator.
Altruism is good but not always as potent as greed, to build a shared vision of the future of society in transition—a society that equates success with consumption and celebrates moving along at all costs. To create and sustain great businesses also requires the powers of vision, altruism and volunteerism; the ability to use technology as an ally, and the capacity to see problems as opportunities. Many of the cases Bagchi describes illustrate this.
These stories are interesting but, since Bagchi mostly says nice things about everybody, ignoring the warts, his book runs the risk of being seen as a collection of puff pieces. After all, the ‘unique identity’ project of Nandan Nilekani runs the risk of going down in history as the costliest and most irresponsible of public projects, especially now that Nilekani has decided to quit as head of the project and contest as a Congress candidate. Did his determination to press ahead with the project ignoring criticisms and challenges, only amount to pouring billions of dollars down the drain. Captain Gopinath is a model of courage but only with other people’s money—mainly of public sector banks, capitalised periodically with taxpayers’ money. The microfinance company of Ramesh Ramanathan is successful because of the government’s failure to create a fair and competitive lending system. Zen Garden is a good read. Bagchi describes a wide cross-section of achievers with great interest and passion. But it is rose-tinted.