THE INDIAN
With characteristics like this there’s little wonder that companies, global and Indian alike, are clamoring to serve his needs. Although these companies will no doubt raise the living standard for the Indian common man, most of them will fail to generate adequate returns for their owners. Many of them will sink in the Indian political and bureaucratic quagmire. For most, the eventual competition will erode pricing power. For some, the consumer behavior will be too fickle to predict. A few will be run by greedy managers who use too much leverage and overpay for acquisitions. The inevitable business cyclicality will eventually eat some of them up.
Yet, among all this malaise there will be a few companies that remain profitable over long periods. They will grow to become behemoths and in the process make their owners incredibly wealthy.
Our job is to first, identify such companies and second, try and get these at bargain prices.
- Is least a decade younger than his Chinese, Japanese, American or European counterpart.
- Is getting younger while the rest of the world ages.
- Boasts one of the highest savings rate and one of the lowest household borrowing rate in the world.
- Consumes inordinately low amounts of almost everything. For example, he consumes a quarter of the amount of toothpaste that an average Brazilian does. Despite being a tea drinker he’s not even among the top 50 tea consumers in the world. His coffee consumption is so low that most rankings don’t bother to feature him. There are 50 of him for every car on Indian roads.
- Has over the last decade, he has raised his income and consumption levels at one of the highest rates in the world.
- Lives in remote villages and is difficult to get to. However, he’s urbanizing at a rate far higher than the world average.
- Is not highly educated but he is fixing that at a breakneck speed. He’s now among the largest English speaking, college going, newspaper reading, Facebook-ing and Tweeting populations in the world.
- Is free to choose his leaders, free to join politics, free to express his views in the press and free to use the Internet and social media.
With characteristics like this there’s little wonder that companies, global and Indian alike, are clamoring to serve his needs. Although these companies will no doubt raise the living standard for the Indian common man, most of them will fail to generate adequate returns for their owners. Many of them will sink in the Indian political and bureaucratic quagmire. For most, the eventual competition will erode pricing power. For some, the consumer behavior will be too fickle to predict. A few will be run by greedy managers who use too much leverage and overpay for acquisitions. The inevitable business cyclicality will eventually eat some of them up.
Yet, among all this malaise there will be a few companies that remain profitable over long periods. They will grow to become behemoths and in the process make their owners incredibly wealthy.
Our job is to first, identify such companies and second, try and get these at bargain prices.