Vijay Kedia on Betting Big on Stocks 

0:08 Rahul Goel

Vijay welcome to the Equitymaster Investor Hour.

This is the first time incidentally we are speaking. I've not met you before. I've not had a conversation with you before, except for this podcast of course. But I've read about you and I have always sort of admired the way you've gone about explaining how you do what you do and you know and I'm very happy for all the success you've had.

So today we'll go through this you know this 60, 90 minute journey, try to get to know you better, try to understand how you do what you do and try, and you know, sneak away some learnings for the viewers, listeners, and myself so that we can become better investors and have some success of our own.

So to kick off this podcast if you will Vijay, tell us a little bit about yourself and when I'm saying tell us a little bit about yourself; I really mean tell me where you were born, where you grew up, how was the environment at your home, tell me about your parents, whether they were investors.

So I'm just trying to understand where Vijay comes from and what led to him becoming what he's become, which is a very successful investor. Over to you.

1:18 Vijay Kedia

Okay thank you very much Rahul, it's my pleasure to be here, on this wonderful platform and to interact with investors and to share my experiences with investors. So I was born and brought up in Kolkata.

And you know, my grandfather was a stockbroker in Kolkata Stock Exchange. So that is how this maybe the stock market was in my head, DNA you know, but they were basically into broking, and I was never interested in broking and all.

So I wanted to do something on my own, but anyways since childhood that my passion about stock market was there, since my childhood or I can say that. So unfortunately what happened, when I was 14 years of age so my father died and I was in class 10.

2:15 Vijay Kedia

So after a few months of his death, I had to appear for the exam which I failed. It was the 10th exam, which I failed. So, you know education for me was over for the time being, but somebody from my family approached the Headmaster of the school and I'm from Hindi medium let me tell you. So you can understand from my English, so I have to think twice then I have to speak. So my mind is working two times okay.

So somebody from my family approached the Headmaster, that this was the problem. So he gave me benefit of doubt and he arranged a re-exam for me, which I somehow passed. But fact was this that I was not interested in study and all.

2:58 Vijay Kedia

And after that I somehow did my graduation, somehow as I said that I was not interested.

But my focus was into the stock market and since we were in a joint family, so things were not that rosy; you know sometimes joint families boom, sometimes your things go haywire.

So that situation was not that harmonious. So that I realised early in my age, that now I have to work a little hard. So from there on I started focusing on the stock market, I have to make my career into this, but not into broking.

My grandfather also supported me, but he wanted me to be a broker like him. And was against you know my doing trading and all. So but at an age of 19, 18 or 19 I officially joined stock market, that means I started going into the ring.

4:01 Rahul Goel

In Calcutta?

4:02 Vijay Kedia

In Kolkata.

4:05 Vijay Kedia

So as an assistant member to my grandfather's confirm only, I started going into the ring just to feel what is happening around. I know, but he tried he pushed me hard to assist him in broking and talking to the client and doing the transaction for him. Which I used to do, but half-heartedly. Because I was not interested in calling somebody Sir and Babu, this, and that.

I thought I will do something on my own, so maybe after a few days or maybe a few months and all I switched to trading. And I took his permission and started trading in the market. That was the only easiest thing which one could have done, and my family was also mediocre, that time brokers were not that rich.

So this is how it happened, so initial luck actually favoured me and as beginners like as, we call it you know. So that favoured me and I made money initially. And every time I used to make money; my quantity of trading would rise like suppose I started with 100, then again if I am successful in 100 shares of trading, the next quantity is 500, then 1000, then 5,000, 10,000.

5:19 Vijay Kedia

So my grandfather realised that, one day he will make me you know put me on road. So yeah, so this is how initially I made money. But after that I started losing money, so we got separated from the family; from the joint family. But I had nothing else to do, so this is what I continued my trading thing and all and that was the initial phase.

5:42 Rahul Goel

So when you very young, the dinner time conversations were about stock market because there was a broking card in the family and was it like that?

5:52 Vijay Kedia

No I was actually isolated, let me tell you because my uncles never liked that I should go for trading and all. Because they felt that whatever little bit they have, one day I will blow them off. So there was no conversation as such and like Modern Age, that there is a dinner conversation that was nothing like this. So everybody used to have their own dinner.

Rahul Goel: Okay.

6:16 Vijay Kedia

Yeah, so this was...

6:19 Rahul Goel

The first thing you had a lot of success in trading and then you lost some money in trading...and then?

6:24 Vijay Kedia

Initially, I was successful maybe for six months or a year or so. And after that then I thought

that I'm really invincible, I can do anything in this world. You know this is what every newcomer, even today any newcomer comes into the market must be going through the same phase of life; that they think they are invincible and now they can make, they can become millionaire overnight, this and that. And finally the reality comes, so this was the life, but it continued for 10 years.

6:55 Rahul Goel

Do you remember the stocks you were trading though it was in the 80s, did I get that?

7:01 Vijay Kedia

Yeah, yeah.

7:01 Rahul Goel

What were the stocks you were trading those days?

7:03 Vijay Kedia

Mainly the darling of stock market in Kolkata was Hindustan Motors.

Rahul Goel: Wow

7:09 Vijay Kedia

Yeah, so that was the money liquid traded stock in the stock market. So I used to trade in Hindustan motor and JK synthetics and Ballarpur industries was there at that time and Grasim, well at that time you call, we used to call it Gwalior Rayons and Silk Manufacturing Company Limited and Silk Manufacturing Company ltd. That is how this Grasim involves you came into. So Grasim and Kesoram.

Rahul Goel

All are Birla companies, right?

7:43 Vijay Kedia

Yeah because headquarters of Birla, at that point of time so a lot of and people were connected with Bilaji and or Babu.

Rahul Goel: Babu ji, Babu ji.

7:53 Vijay Kedia

Babu ji. So that was, you know, typical Bengali thing yeah Bengali calling. So this is how it happened, so finally it did not work for me and I struggled for 10 years was hand to mouth.

8:09 Rahul Goel

This was like intraday trading...

8:12 Vijay Kedia

Intraday trading also but positional maybe two days, three day, four days or a week. That time like nowadays, if you are doing if you are into a then your settlement is T plus one, so that time it was T plus fourteen. So every 15 days you have to settle your things, so you have ample of time in between you can get it, you know, play the market as per your will, so that question was there.

So that T plus 14, so that was my experience which was not very good. I had said this thing on various platforms, so I would like to share with you also. Maybe the listeners are different than other, wherever I've spoken to. There was a time, you know, when somehow I got married because it was very difficult for me to get married nobody was willing to give their daughter.

9:05 Rahul Goel

(On a lighter note) Don’t marry this trader.

9:08 Vijay Kedia

Yeah, yeah. So this is how it happened. There was a time when I did not have 14 rupees to buy a milk powder box, for my child so that was also a time during that day. So it's okay this is a part of life.

9:27 Rahul Goel

So your trading actually came to an end at some point in time.

9:30 Vijay Kedia

Yeah, after 10 years of struggle I realised that it is not my cup of tea and still I am struggling for Rs 10,000 or Rs 20,000 rupees. So that time expenses were so low because we were living in one flat four-bedroom flat with 21 people we are living and one toilet we were sharing 20-22 people were sharing one toilet, so expenses were also so low so that somehow I survived as I said but it did not work for me.

So, after 10 years I realised that maybe I'm not cut out for trading. So I looked around and found there were very hardly few investors in Kolkata stock market a few maybe two, three, four, five investors were there.

I used to talk to them, I used to observe them, you know and I used to analyse them; the how they are talking, how they are walking, what they are wearing and all these things, you know. And then I thought maybe I should try my luck and investment, and from there my journey of investment started.

10:27 Rahul Goel

And which year was this?

10:29 Vijay Kedia

19, yeah.

10:32 Rahul Goel

Do you remember the first talk you invested in?

10:37 Vijay Kedia

Yeah, first stock that time I had somehow at that point of time I had some Rs 35,000 with me. As I said that I was not bad in trading either, let me tell you, because I used to make money in every trade. But my problem was is that after making the money in that particular trade, immediately my quantity would rise; phenomenal like five times or seven times, so even a little bit of losses I would just off.

So that was a time, where I was about to sell jewellery of my mom to pay losses of my trading, so this is how that time I was in my grandfather's firm. So whatever profit used to come everything profit or loss was in the firm only, not for me not individually. But there was once there was loss, so my uncle asked my mom to give her jewellery. So that they don't want to pay the losses the losses was on I think 30,000, 35,000 I don't remember, but somewhere there only.

So there I realised that in trading stop loss is a must you know, so I prayed to God, and I said God please save me. I don't want to sell jewellery of my mom so next time I will not do trading. So God listened to me and I stopped trading for maybe five days or ten days but ultimately again I came back to the market and started trading. God forgave me for that you know so this is how it happened. So then after 10 years, as I said 10 or 11 years I switched to investments, yeah.

12:07 Rahul Goel

And so this was when you were observing the investors at the Kolkata’s stock exchange, those is

Kolkata’s Stock Exchange and this was also on the eve of probably the Harshad Mehta boom right?

12:27 Vijay Kedia

So I came to Mumbai in 1989-90 in fact. I came to Mumbai with the help of one of my friends and he was also in Kolkata, but he shifted to Mumbai three, four years in 86 or something. So with his help I came to Mumbai and after I think Harshad Mehta came in picture in 92 or something, so this is how, so I have seen that I have gone through that I have lived that era of Harshad Mehta euphoria and all those things I have lived.

12:57 Rahul Goel

Tell us more about that because that's also kind of overlaps with the journey from converting from a

Trader to an investor. How was that experience?

13:07 Vijay Kedia

So before that, as I said that in 1989 or something at one time I was having some Rs 35 000 and I bought one company Punjab Tractor Limited that time later on.

13:18 Rahul Goel

It used to be at one time if I remember.

13:21 Vijay Kedia

Yeah but it was yeah, yes so but very liquid at that time. So whatever money the Rs 35,000 rupees I had that I bought a Punjab tractor and with that money I came to Mumbai you know, but I had only hope in my mind and expectation or something that, I will do something with that kind of hope I came to Mumbai and in two years’ time, that stock become four or five times you know so that was so that gave me a lot of confidence and maybe I realised, that maybe I have found my you know path.

This is the path for me, that if I can really make four or five times in two three years or two years or three whatever, so that things will work out for me. And then after in 92 or something I sold that Punjab tractor and I bought it, whatever money I had I bought ACC you know. So that time Harshad Mehta was not in picture. Harshad Mehta came later on. So and now this is the history everybody knows.

14:24 Rahul Goel

Harshad Mehta favourite stock is ACC.

14:26 Vijay Kedia

Yeah, yeah, everybody made money in ACC. So that was some not it was not my skill. Market was such only and everybody made money.

14:38 Rahul Goel

For our viewers if you can recollect, how many times and all it went up ACC in that one year two year period?

14:43 Vijay Kedia

You see I had bought ACC at around 250 rupees okay. So as I said that whatever money I had at that point of time, I invested in ACC but even after that for three four months ACC did not move at all okay. So it was used to go to 300, then again 250, 300 and 250. So that was the scene.

So I was really depressed, because I had nothing else to survive and whatever liquidity I had almost everything I had put in ACC, and it was not moving. And so I realised then also I had I used to tell everybody that time Century Anchor was the darling of the stock market and price of century enka was 1400, 1500 rupees and ACC was 250 rupees. I used to tell all my friends, so whoever I knew in Bombay stock exchange, I used to tell everybody that ACC price will surpass Century Enterprise because century enka was the leader. I remember that example, I used to give to everybody whoever I would meet.

15:45 Vijay Kedia

So for six months or four, five months, it did not move at all. So I will tell you it's an interesting story. So I was very as I said depressed one day I saw one night I dreamed I saw one dream that, “I have sat in a train and it was not moving and suddenly the train started moving”. So that day I realised that maybe it is something related to ACC and all because 24*7 ACC is going into my mind you know, so I thought maybe it's an indication that now is the time for ACC. And luckily the same thing happened.

So this is how from their own ACC started moving and I sold after maybe in a one year's time, then

Harshad Mehta came into the market and cooperation or whatever. Then ACC went to 3,500 and whatever stocks I had, I sold at 3,500 and from there it went up to 10,000 rupees.

So I missed that part of the rise, doesn't matter, because it was enough for me to survive in Mumbai and to have enough confidence to you know, do my own research, and do my own investment and all. So this is how the real journey started from there.

16:57 Rahul Goel

Wow. Punjab Tractors ACC and what do you do with the money from ACC did you leverage up did you like roll it over into the next big star?

17:08 Vijay Kedia

Of course of course, I would never that's my problem. Even like suppose in my childhood, if my mom would give me say 50 paisa or one rupee, so by the time I reach home that one rupee is spent. So this was my niches, I couldn't hold money entire my life you know whole my life. Even today also it's very difficult more for me to retain money. So whatever money I had made from ACC, so I bought one bedroom wall kitchen apartment and we moved there, before this I used to live in PG in paying guest and all in Mumbai sometime here, sometime for three months, six months here, some six months there.

So that was the thing, so that first flat first apartment that was some 375 square feet apartment I bought I was very happy, that now this is you're now on money. I don't have to go back to North Kolkata, if something it does not happen at least. I have my own house so that money I kept you know and whatever money I had that I invested in other shares, so this is how we are. I never get liquid money in my bank maybe for five days, ten days or something like that, yeah.

18:28 Rahul Goel

And then of course you know Harshad Mehta was followed by the filed bull-run.

18:34 Vijay Kedia

Yeah

18:35 Rahul Goel

And then I think there was a little bit of a lull and then came the TMT the technology media, telecom bull run. (Vijay Kedia: Yeah, yeah) Where were you in your phase of life by the time the next market you know boom happened if you will?

18:51 Vijay Kedia

So I will tell you, there was that was my own strategy maybe bad or good I don’t know about it. But I never followed any shares operated by Harshad Mehta. So this word well orchestrated in my mind that,

I don’t have to buy any shares which is being manipulated, which is being operated. Because I have heard so many stories of so many people, who before ultimately who, you know, defaulted in the market, just because of operation in their own shares or something.

So that was engrossed in my mind that, I don't have to you know, go on those path. So ACC I did not buy ACC because of Harshad, before that I had bought and I held, maybe I held because there was a momentum in the market. So when there is a momentum in the market, I did not have any reason to sell this stock and stock was really cheap. But beyond 3,500 it was not cheap, that was the froth created by Harshad Mehta.

19:49 Vijay Kedia

So after that I did not follow any of his shares like BPL, he was interested in and some whatever shares. And every time then I was engrossed in my own research there was a library in front in front of Bombay Stock Exchange. I would go there in that library read all the magazines whatever, business magazines I could lay my hand on.

So I used to read that all magazines and newspapers, business newspapers and all and used to do my own research and all and would buy some shares sell some. So that investment journey continued, so and then this TMT things came, as you said so that time also I did not buy any shares, which KP operated whether it is global tally system, or it is Himachal futuristic whatever stocks, so I did not get into.

20:42 Vijay Kedia

But in every bull market I would tell you that, I would get one share which was really multiply. That I missed this TMT rally it started from 94, 95 or 96 or whatever. So I couldn't make any sizable amount of money in all those shares, like Satyam was the darling of market but Infosys and Wipro and DSQ those were manipulated, but somehow I couldn’t make money in those years.

But I bought one share name was Leading Edge, so that was again into software, and I bought the shares at Rs 30, at which went up to Rs 800 in a year's time. So and I bought reasonable quantity again, so at that time and whatever money I have I would invest in one company or not in one company so three, four companies. So that was a sizable investment that went up to Rs 800.

21:33 Vijay Kedia

I sold my shares in 400, 500, 600 or 700 or something like that, then it went up to 2,500 something like this, then it went to zero. So that was the era that was the software kind of, you know, things and all. So this is every bull market luckily I would get one stock which would multiply number of many times, so I was lucky.

21:58 Rahul Goel

Correct me if I'm wrong, by the time the PMP rally is happening, you already spent a lot of time learning, reading up everything and you're more of a fundamental deep investor by now. Because you spend the first 10 years in trading, it didn't work out all that. It worked out but not great, then you went to Bombay, and you bought Punjab tractors ACC, which is after a couple of years of learning.

But by the end of the decade, I guess one of the reasons you probably missed out some of the stocks was because your numbers did not add up. They probably use it it's not possible that this is going to happen. [Vijay Kedia: Yeah] So, would that be a correct assessment by then you were like really coming if you were like confident as a value not a value better fundamental investor?

22:44 Vijay Kedia

Sorry, could you please tell me again what exactly do you mean?

22:48 Rahul Goel

What I mean is that, see you were you were trading first right? [Vijay Kedia: Yeah] and then you came to Bombay, you had some success with investing ACC, Punjab Tractors but that happened very quickly, after you gave up trading.

I'm saying by the time the 1999-2000 bull market happened you'd spend 10 years as a fundamental you know investor you were reading, you're probably researching so by then did you feel confident enough that, this is who I am and that is why you could pick these stocks or not now avoid these stocks because they did not fit into your model of, whether they have good fundamentally strong stocks or not or whether they offer value or not?

23:27 Vijay Kedia

One of those KP shares you mean to say?

23:29 Rahul Goel

Yeah, yeah.

23:30 Vijay Kedia

Of course they were manipulated not because the balance sheet does not justify the price rise, you know, so that was beyond. Whatever parameters that time I had set for myself, you know and so that I used to follow those parameters only and they would never fit into those parameters. So that is why I never traded, I never bought those shares. So I had my own thing you know, I had my own

discovery, I had my own, you know, investment style.

So I was happy about it because my style was also working. It is not there and there is only not one principle working in the market. There's so many so many parameters which are actually which can you know, make money for you.

So my style was working for me, and people were also asking me, whenever whether I'm going in the ring or people meeting me in the exchange and all. So that used to give me a lot of courage, you know my things are also working.

24:31 Vijay Kedia

So I was happy with my own thing, I had never invested in tips even you remember this my concept was very clear since my childhood. Even in Kolkata days I used to tell people that even if Birla ji comes and tells me I would not buy these shares.

So I don't know why but this concept in my mind was very clear since the beginning, that I don't have to invest or trade in borrowed knowledge. I have to find my own thing and I have to stick to it and since it was working maybe 6 out of 10 stocks were working, so this is how I was happy with my own thing which is nice.

25:10 Rahul Goel

So you mentioned your style of investing and stock picking we'll come to that, but I want to go back to our theme after the TMP big bubble and crash and all that, we of course had the melt up in between 2005, 06, 07. So how will you place for that and which was that stock you mentioned every Bull Run you've had one stock which has done phenomenally well? Tell us a little bit about that phase and how did it go for you?

25:39 Vijay Kedia

About 2005, 06, 07 the big, you know...

Rahul Goel

The shop in the markets.

25:45 Vijay Kedia

So that actually that as we call it mother of bull market, that started in 2003. You know around 2003, yeah after KP, after KP things were very scary markets were closed Kolkata stock closed forever and so many regional stock exchanges also went bankrupt or whatever it is.

So things had gone very you know tragic, so in 2003-04 I was active in the market, before that I had gone to Germany for one and one and a half year in 2002, because nothing was here so I went to Germany to try my luck into in something else.

So this I had this habit of trying you know to get into some other kind of business besides stock market, so this I used to try even when I was in Kolkata also. So because there was no stability in stock market you know, so I always used to try some new venture according to my capacity.

26:45 Vijay Kedia

So this is I had gone to you know Germany to try my luck, but by the time in 2003 mid of 2003 or something bull market here had started. So somehow I felt that maybe now the Happy Days are here again and things are changing for better.

So I came back to India and so whatever money again that I bought three stocks in those days from 2003 to 2004, 05 or between 2003 and 04, I bought three stocks the Atul Auto agency logistics and Cera agency and well luckily they all went a hundred times by 2014-15 and 16. So this is how it started from 2003 onwards.

27:39 Rahul Goel

So this is Cera and?

Vijay Kedia

And Atul auto.

27:47 Rahul Goel

So these were your 2003?

Vijay Kedia

Moon-shot, yeah, yeah that was a pic of my mother of all the bull market. That was these three.

27:59 Rahul Goel

Is there any story behind these stocks, that you want to share how you came about these and how do you go on to bet big on them where did the conviction come from?

28:09 Vijay Kedia

No, Atul auto it was very simple you know, that they were into three wheeler manufacturing and there was there were only five companies in India, which would manufacture three wheeler like all biggies four besides all very biggies is like Bajaj Auto, Mahindra and Mahindra, PBS, and Piago. And so they were the giants and this was the only company, but company I found was making a reasonable amount of money and PE wise it was very cheap compared to others and it was available at maybe three four or five kind of PE and all and rubber stock was not popular nobody knew, nobody even heard about this company. So this is what just going through the fundamentals I realised that this company should do well, and economy has also started improving after 2003, that is how stock market was also started improving.

29:11 Vijay Kedia

I made money because of the stock market, because of the economy, because of India as we all say that was the first skill that you believe in Indian theory, Indian economy and you buy good shares and you hold on to it you are going to make money, irrespective of whatever mistakes you do you do in between.

So this is how I just because it was very cheap so I bought a lot of whatever shares I can get from the market, so I bought. And then after that I used to share my story with all my friends on whoever I knew, but nobody trusted, nobody had never heard the name, just to tell me nobody would buy. So this phenomena, so the stock was lying like this maybe for one and a half year, then it went up two three times or four times four, five times just went up.

30:00 Vijay Kedia

By 2007 then again in 2007 Lehman Brothers crisis, it came down to five rupees. You know, from 75 rupees went up to 225 rupees, then fell down to five rupees or something like that. So this is what how I selected Atul Auto and Cera sanitaryware selected, because again in this sector also there were only three, four people.

EID Parry used to make this sanitaryware and another company was this Cera sanitaryware and there was one third company also. So the EID Parry sold its sanitary division to Roka, if I remember the name correctly to Roka. So Roka bought their division, and they paid two times their sales okay. So did Perry's sanitaryware division and Cera was available at half time at sales you know. So that was a cushion for me, that was a comforting factor for me and then hardly there were only three companies in organised sector. Otherwise there are more B and all other places are full of sanitaryware and all.

31:07 Vijay Kedia

But in organized sector there were three companies. So I bought this company, so I remember I bought maybe two, three percent of this three percent of this company I bought. So this is how I held again the same story was repeated by 2007, stock went up three-four times and in 2008 crisis it came back to my original my cost price. So this is how it happened.

31:31 Rahul Goel

And you continued to hold these stocks? You did not exit and panic and exit after the sell-off in 2008?

31:37 Vijay Kedia

No, because I could have exited, I had these shares been liquid. So the biggest factor which worked in by favour was that the shares were liquid like suppose I was holding some three lakhs shares of Cera sanitaryware, okay, now it is ex-bonus. So see I bought it 40 rupees 40, 50 rupees or whatever 40 rupees, first purchase was 40 rupees.

But it was impossible to sell even 30,000 shares in them, even 3,000 shares it were difficult to sell 3,000 shares in the open market. So how could I sell three lakh shares, so that was beyond you know; even your expectation, beyond your mind, so I thought unnecessary if I will sell 3,000 shares price will go down 30, 40, 50 rupees ultimately, I will make losses in my whatever 300,000 shares I am holding right, forget it. So this is how this perception also you know, built let it go.

Rahul Goel: Wow.

32:39 Vijay Kedia

So that was in my favour.

Rahul Goel: If it worked in your favour, it's time to reap the riches of these investments. Wonderful.

Wow.

32:49 Vijay Kedia

I'm still holding one percent of Cera sanitaryware and two percent of Atul auto, still even after 17, 18, 19 years.

32:56 Rahul Goel

Wonderful that's an amazing holding period. We're going to talk a lot about even position sizing by the way, but let's come back to our again the whole time series and now of course we come to

March 2020 right?

After 2008 crash you know there's the market's gone up down and all that. But let's come to March 2020. How were you reacting to the pandemic and what followed there on?

33:29 Vijay Kedia

So during pandemic you know, now I was in a comfortable position. I had a reasonably okay, good house and reasonable security, I had of course. So I was not that worried one thing I thought was very clear in my mind, that until unless I sell my shares in the market, I never would count them. That is my work, you know people only tell me that this is my work, maybe sometime media tells me this is my work, sometimes friends tell me that there's some stranger tells me. Which doesn't go in my head until unless you sell.

That is why I have created all these codes in my life. I must have created 30, 40 quotes those are my experiences only. So one of the quote is like this that,”Your DP statement doesn't belong to you your bank statement belongs to you” or “money or your investment belongs to the market, your profit only belongs to you”.

34:25 Vijay Kedia

So this is how all these things came out. This is what I followed and I did in my life, so I was not you know so that we're not worried about. But of course all by shares were illiquid, even today also. So for two months I thought that this world has come to an end, and it is like I'll tell you I used to you know watch TV and all and all big, big industrialist, you know, money most popular industries of India.

They also were depressed, they also used to tell me I don't know what is going to happen now. You know the things I thought okay now that there is nothing in my hand and I used to you know read Gita, I have studied one book in my life holy book that is Gita only.

I haven't read any book related to a stock market, let me tell you. This is how I am doing my own thing I don't follow anybody, or I don't follow any theory and all.

35:24 Vijay Kedia

So, that that is an advantage for me maybe. I don't advantage or disadvantage, but this is what I did.

So Gita also tells you “now whatever is not in your hand you shouldn't worry about it”, the world has come to an end and this money is nothing just a paper, this is a digital adjective stock market but digital money every day it falls, it is not your money. You know so, I thought my only worried was this that would I be able to support my family or not and I will tell you Rahul, I must tell you this thing, even today believe me I am telling you whatever people tells me, even sometime even today also I feel am I secured or not?

Would I be able to meet the my family then my mind, of course you can is still playing in my mind if I have to invest somewhere suppose 50,000 rupees, thought comes to my mind, am I you know eligible to spend that kind of money? Can I afford? My mind's telling me, yeah maybe you can afford, you know. So this is a personal thing I'm sharing with you.

36:54 Vijay Kedia

So that time I thought okay this is dawn nothing belongs to us, I can support. I've realised that one

thing I realised that whatever lifestyle I am maintaining now, that won't be disturbed and the same lifestyle I would be able to maintain, even if whatever this stock market.

Whatever worth it is over this is what I realised already they were 30, 40, 50 percent now. And I thought this market has gone for years, so two months I lived in that dilemma, you can tell or in that kind of situation but by and by I realised you know things are not the worst has happened already, worst is over now things should improve for me.

37:36 Vijay Kedia

So my only job is to read news and happenings around the world, that is my only homework you know. I don't watch any big boss, stick boss I don't watch any anything Netflix but in my covid time I watch Netflix after that, for last two years or maybe one and a half year two years I haven't watched anything on Netflix. It doesn't give me any satisfaction, I feel boring, wasting my time, I find not learning anything.

So my time. So this is how I recovered after two months and so after two months I sold some shares which were slow moving shares, during the boom of 2017 to

2020, they did not perform like there was one share which went up 10 times between 2014 and 2018. It went up 10 times and from 2018 to 2020, it did not perform at all you know.

So I sold two thirds of my holding of those shares that was eviction and I invested in some other shares which I thought should that new bull market or New Era for those stocks have started.

So this is how I changed my you know position in the market. So this is what I did and luckily they also gave me a handsome returns.

38:59 Rahul Goel

So which? You want to add a name of a stock for this?

39:03 Vijay Kedia

Yeah, everybody knows yeah I’ve said this thing on platform, Twitter everywhere like I bought Tejas Network. You know, it was it was Rs 40 at in June, July, August, or something in 2020. So Telecom company, so I bought four or five percent of that company, Tejas Network.

So today it is Rs 700 and luckily Tata bought that company a year back. So this is luck I am telling you, I never thought in my dream that one day Tata Sons can come out of the blue and buy Tejas Network. Even the management had never thought. So things are working I think nature helps you know, this is what I believe and God helps you, your blessings helps you, then all these things happen.

39:49 Rahul Goel

Wonderful. Great. So now we've gone through that, now let's talk about your investing style. Talk to me, you've given us a glimpse of how you bought some of your stocks; you know Cera and Atul Auto but talk to me a little bit about what your typical stock selection process is? What is important? what is not important?

I'll just maybe prime a bit on this, like when I get guests on my show I've noticed you know one of the fund managers which was on my show a very respected person, he is all about cash flow. He says balance sheet numbers can be rigged, P&L can be rigged, what can't be rigged is the cash flow. So if you focus on the cash flow, you will come to know the absolute truth, right? So everyone has their idiosyncratic or you know focus area. What is your go-to when you're trying to pick a start?

40:44 Vijay Kedia

So of course everybody has their own style. I'm not saying they are wrong and I don't say that I am also wrong. Tejas network still doesn't have cash flow.

Rahul Goel: Oh wow.

Vijay Kedia

Okay and marketcap is 12,000 crores or something 10,000 or 11,000 crore. Still the day I had bought from that day till now in three years time, it doesn't have cash flow you know. So it depends you know Rahul, whatever shares I had bought that time, they had a cash flow. But not up to the standard of any mutual funds or any fund manager would be interested.

So that is why whenever I bought any shares as I said Atul Auto nobody knew the names. Cera sanitaryware, nobody people knew the name, but they had it was a forgotten shares, why should why by Cera? I should buy EID Parry or this is for money or whatever it is. This is what same thing happened in the Aegis Logistics, which again 300 times you know, so all these shares did not have those financial ratios which nowadays fund manager see and all.

41:49 Vijay Kedia

So my style is very simple and one of my court also says that “stay invested in a sunrise industry at any cost and stay out of a sunset industry at any cost”.

So I'm just trying to figure out the next sunset, sunrise industrialising. So this is what it's very simple that, I'm just trying to figure out which is the next sunrise industry and if I like the management; so for me growth is very important, for me the most important thing is not the cash flow and all because if growth is there if company is going to rise by Leaps and Bounds like suppose; if their revenue can grow three times, four times or five times in next five six years or seven years. It is adequate enough to you know earn to get a better cash flow in future. So this is what my style is this.

42:40 Rahul Goel

Look for a sector which has a tailwind, which is going to grow [Vijay Kedia: Yeah] you already with the tide and find the right management. [Vijay Kedia: which is particular yeah sector. Management is a must, yeah]

42:53 Rahul Goel

So let's talk of Tejas Network, so this is the company which does that SMS thing?

43:02 Vijay Kedia

No, no, no they are into they are manufacturing equipment for 2G, 3G, 4G, 5G so yeah. So they are making those equipment’s it's only company in India, which is into this sector and their competitors are like Nokia, Ericsson, and Huawei, and ZTE.

Rahul Goel

Differently in that sector, because India is very early in the Telecom cycle. So there's going to be investment for a long time to come.

43:27 Vijay Kedia

Yeah.

Rahul Goel

It is Made in India, so if this is Made in India there's obviously an advantage. [Vijay Kedia: exactly] What did you see in this?

43:35 Vijay Kedia

Yeah so this is what it happened, because in 2020 I realised that Telecom sector has turned around. Because they were in a bad shape from 2014, 15 to 2018, you know, all the telecom companies are not. In 2020 when Jio came I think the entire you know, metrics of a telecom companies changed and at one time there was I think there were 14, 15 telecom companies in India, which actually came down to three only or two and a half whatever people call Vodafone two and I don't know about it.

So it came down to three companies and now after Jio, Bharti, has also started you know, announcing that they are going to you know modernise their things and all they are going to invest money in their own company.

44:24 Vijay Kedia

Bharti, has sold some shares to someone some foreigners and or I don't remember now. So this is what I realised that sector has changed because the management I started putting money in their own company.

So this is how and this Tejas network was also not performing, because telecom companies were not spending enough. You know they were just doing some opex kind of just to maintain. [Rahul Goel: some of them were flouting with bankruptcy, right?]

44:55 Vijay Kedia

So I realised that, after reading all these news and information that since management has started investing money. That means they see that there is some bright future ahead. So this is how I bought.

45:09 Rahul Goel

This it's very interesting style usually I'm talking to people who are very bottom up but you're a little top down so the second element of this is the management how do you assess management.

45:23 Vijay Kedia

I do not buy any companies, which does not have a background of 15 years. Let me tell you, at least they should have some background of 10, 15 years. If any company say four, five years old I usually generally speaking, I won’t buy any shares of them. And I keep on tracking the shares Sudarshan chemical as I said that I bought in 2014, you know, I didn’t tell you I think so I bought Sudarshan chemical in 2014 again 3-4% shares I bought.

First time I had bought Sudarshan chemical in 1992, so I sold those shares, but held a little quantity. May be very negligible but still I held because I loved that company, I loved that management.

For the simple example I will give you in 1991, when there was no rule of you know, Waste Management in India or environment and all. Even that time so Sudarshan chemicals used to spend money for Waste Management and environment protection and all these things. Because they had some Japanese collaboration or some Japanese company was there, so maybe they learned that culture from them and this is what they followed when nobody used to follow in India. So this is how that thing stuck in my mind, that this company is going by the rules.

46:39 Vijay Kedia

So in 2014, I was in China. You know and in China, I went to Beijing and I could see that, what pollution people learn newspaper, used to describe. I could see in the sky that you couldn’t see the sky in Beijing. It was all polluted only and luckily, I met two different people from chemical industry but different people.

They did not know each other, and they were telling me that, maybe because of this pollution and all Chinese plants are closing down. Government has given instructions to close down the plants, which are polluting and that could be an advantage to India.

This is what I heard from them you know, and from there only whatever Sudarshan chemical I and the company management so, it was done, and balance sheet was also good. Only thing was that, the people were not realising. People when people when P expands, when the revenue expands, when the growth comes then P expands.

So people had lost hope in this chemical and pigment company or chemical or all these companies, that they could ever rise again because there was no growth. So that was the one reason I realised and I bought two three percent of Sudarshan chemical from there.

47:46 Vijay Kedia

And one of my TV interview also I had said in 2016, or something that chemical could be the next pharma. And luckily the same thing happened after 2016-17, everybody all fund managers, all mutual funds, all FIIs they started buying all other chemical shares here and there. Whether it is PI Industries or alkylamine means of whatever you name it.

So this is what happened, so this is how we judge a management I observe a management maybe for five years, 10 years, 15 years and then I get into that. When the when the tailwind when the situation change so I wait. So this is how actually I'm trying to do okay. Wait for the right time, when you think that the right time has come then strike hard.

48:41 Rahul Goel

And all this while you're just absorbing everything, in your head you have all these histories of all these memories. You know exactly who to go to, so I'll just talk about Sudarshan chemicals a little bit so when you were in China and you saw that idea convinced you, that chemicals could move to India right and the Specialty Chemicals or how whatever you call them, and you said let’s buy.

So did you go step deeper and say it's already too expensive or still cheap or you said, because the sector is going to go through a very high phase of growth, the even if argument's sake if the P is high it does not matter. Because the market doesn't know what's coming.

49:27 Vijay Kedia

Usually what happens, usually I don't buy expensive shares. So that is very important for me, everything should be aligned together. Good management, sunrise industry at a reasonable cost. So even Sudarshan was available at a you see, one thing I have realised now and this is what I have said in many of my interviews, “The biggest wealth in this market can only be created if you invest in a bull market”.

You see my pattern, I invested on those three companies in 2003, 04, 05 that time bull market was just started and that was after this painful era of Ketan Parikh and all. So everybody was so depressed they could never believe that India could ever rise again, even though there could be a bull market in the country people had lost hopes.

Even a person like me had left India and went to Frankfurt, Germany to try something different. You can understand I have spent all my life you know, in market only and I was also so depressed I thought maybe this market is never to come up again.

50:25 Vijay Kedia

So this is what happened in 2014 also, so the biggest thing which went into my favour was that I could buy those shares when there was a panic in the market. When market wasn't not panicking there was a crisis in the market, this is how I bought Sudarshan chemical. This is how I bought Tejas you know, Tejas networks because there was a crisis in the market. World has come to an end, so usually I do not buy expensive stocks.

I buy which is reasonably on and cheapest stock I buy. Sudarshan was also cheap, company was making money you know and balance sheet was also good but people ignored that opportunity. They never looked at it that because the share did not perform in 20 years. You know, so people had forgotten they said not forgotten hero, so they had forgotten the name, this company can never survive was given the name.

51:18 Rahul Goel

So when you say expensive, again we can stick this to Sudarshan chemical for better understanding. How do you say that the stock is expensive at PEs, book values PEGs what are you looking at?

51:31 Vijay Kedia

No usually I use simple metrics, which is PE. Let me tell you and P and the best way to find whether it's cheap or it's expensive, it's compared with the peers. This is what formula I usually use. Yeah I compare them.

Rahul Goel

And past earnings or future earnings?

51:54 Vijay Kedia

Whichever way Apple to Apple, like suppose if even if you are March 22 so March 22 you compare Tejas with some other company. But there is no other companies like Sudarshan Chemical company you can compare with March 22 or and then plus you add your future growth.

Maybe having the same pe ratio but future growth would be different. Two plane maybe you know starting at the same time, but their speed would be different the destination would be different. So after getting into the shares and suppose as I said that to me growth is very important you know, so this is how Sudarshan also grew faster than its peers.

52:31 Rahul Goel

Yeah interesting, very insightful. I think the approach you've taken to investing, one way it differs is that you really go all in? Because I'm assuming, even if it's a cheap stock and you're trying to buy two, three if I just play back our conversation in my mind; when people talk about investing, he said that's a good stock yes I bought it.

When you talk, you say I bought two percent of it, I bought four percent of it, I bought five percent of it and there's a strong conviction behind that kind of a purchase. So one of our beats on this podcast is portfolio sizing, right? or position sizing you have to. What is the point in finding a great stock and buying hardly anything of it?

So you have to find the great stock, you have to find the right valuation and then you have to invest the right amount of money. And I think if I look back at what you've been telling me all along, the Delta is you call the position sizing right, you really went all in. Where does that conviction come from and was it deliberate was it like, you said I'd rather have 20 home runs in my life as compared to trying make money from 200 stocks a little bit 200 investments?

53:58 Vijay Kedia

No, no it depends on whether you take one run in each ball or you hit one six in one over. It is all the same, so I like to hit sixes only. Otherwise I will not take a run, if you tell me any stock first of all I need a larger runway you know, I have to buy if I have to buy 2, 3, or 4%, then I have to hold the shares for 10 years. Because to accumulate those 2, 3, 4% sometime it takes one year, you know so because all my shares are illiquid when I buy them at that time there is no mutual fund ,no FI no FPI and nothing so I have to buy it from the market from the retailers only so sometimes.

Rahul Goel

You can’t trust your purchase the price for yourself.

54:44 Vijay Kedia

Plus impact cost is huge you know, if I buy a shares not necessary that I will buy or I will get all the shares at One Price. There are sometimes I buy suppose one shares at 50 rupees, I keep on buying up to 100 rupees you know. Even the double and I keep on buying them you know, whenever Market Falls then I buy. So that means so my impact cost is so huge, so big, so my runway has to be bigger than the usual runways.

It has to be a horizon of 10 years, that is why I usually say the whole issues for 10 years you know. Because it takes I have number of stocks, I have shown them to bull market like Cera and whatever. I have shown them two or three bull markets I have shown those shares, so the runway has to be big you know. So what was your this was your question what was it actually?

55:35 Rahul Goel

So what I'm trying to understand is that the position sizing, the differentiating point from what I'm talking to you and what I'm talking to the others. There's importance, everyone agrees is important but in your case that seems to be the Delta which is giving you this extraordinary success; you got the right stock, you got the right value but you really put money in it.

55:59 Vijay Kedia

Of course, you have to know it's like love or it's like faith it either it is hundred percent or it is zero percent, it can’t be 99 percent. No one couldn't put this better, yeah so this is how I do, if I like the shares and suppose if I'm then I have to buy it big. And there is no differential of big and small let me tell you maybe 5 kg is big for me and maybe 50 kg is less for you.

So at that point of time whatever liquidity I have in my system and whatever small shares I have like suppose one company I am having half percent, some company I'm having 40 percent, some company maybe 0.7; I will sell those shares you know, so I don't know what you call in your language, but I will sell those shares and consolidate my position and put it into one company.

This is what I will do and whatever that is my ambition in life, the whatever shares are available in the market I will buy it or whatever money I have in my bank and whatever money I can arrange by selling some shares this and that ultimately money comes from the shares only you know, so that I will put that money whether it is two percent and remember you will get the answer of this. In your first question as I said Punjab tractor, I told you 35,000 rupees I had there was a problem of family running your family expenses but 35,000 rupees I put in Punjab Tractor.

57:33 Vijay Kedia

So this is what my style okay, I don't think about tomorrow. God will save tomorrow you know, so whatever that money I have I put it; the same formula, your same thing, same method is happening even today also.

57:50 Rahul Goel

Very eye-opening now if I was to so a full disclosure I completely agree with what you're saying, personally as well. Because I believe in the same thing and of course haven't one additional reason for it is it's too much of a hassle to track marginal holdings.

You know if you're busy you've got stuff to do you know might as well not do it, but one of the questions that arises is that if you're always trying to hit a six now I'm going to talk Cricket language even though I don't watch a lot of cricket.. [Vijay Kedia: Nor do I] there you go so where do you get the capital?

So you mentioned that you could sell some shares, so talk to us about your rules for selling a stock or exiting a position talk to us about it.

58:40 Vijay Kedia

So, I will tell you what happens now like I have a portfolio of say 30, 35 shares. So my core portfolio is having in my portfolio I’m having said 10 shares, maybe 10, 12 shares and 15, 18 shares are small quantities maybe below one percent, here and there but there could be large quantity also. But below one percent, I had to find somebody had asked me these questions that I’ll tell you it is not important to be successful in the market.

It is important to be successful what I would tell you in my Layman's language; it should beat the time you know, in five years everybody will be successful. If you hold any good company, in 10 years you will be very successful in 10 years if the company suppose goes up two times so three times you will be happy because you have beat every kind of return you know.

So my thinking is not that, my thinking is little different I need to find a cheetah okay I don't need to find you know a rabbit or don't need to find a elephant or I don't need to find a fox. I have to find a cheetah which can run faster than others, then only I can create you know wealth faster than others, so that competition is there. That healthy competition and that is always there in our mind, that I would like buy the company which will rise faster not in 10 years. 10 years what I am saying the whole 14 years because sometimes it happens that stock does not perform for five years, but in next five years it can go up to 50 times you know. So this what I have seen and this is what it has happened with me a number of times in all these companies.

1:00:31 Vijay Kedia

So that is why whenever I find some idea and I feel that this could be the cheetah, this could be the fastest growing sector and fastest growing company in that sector and the fastest growing company compared to others. I sell all my rabbits and I sell all my elephants and my horses and all you know all those small companies I said.

So those small companies are for that only, because I don't want to keep cash in my bank if I keep cash in my bank I will have sleepless night I can't sleep at night why I'm keeping money in the bank? The first answer is this and exit just it's one exit policy if my position is small I will exit at any point in time that means I am not committed to it you know.

So if I'm not committed to it that means I'm not having a meaningful position and I will exit it anytime. So that my commitment comes when my shareholding at that company crosses and when it comes to a meaningful size, then I feel committed to that company otherwise I'm not committed.

1:01:31 Vijay Kedia

And when I sell I have given one example that the biggest lesson in the history we can learn from a vision that he has invested into a AAA management called Raman, Raman was the biggest you know Pandit of that time you know.

And nobody was like Raman in that time and so he was associated with triple A management but when he's found that the focus of the management has changed, then he switched over he sold it exited from the company and invested in another Triple A company, which was going through a crisis.

So this is he entered another company, another Triple A management which was going through a crisis, so that management plays that role you know by any management when they are in crisis then you will make money generally speaking.

So this is what I see that whenever the focus of the management has changed the oven and the stock prices become very expensive you know like when I bought Atul Auto that time it was three, four, five copy at one point of time it was 45P and Bajaj auto was available at 25 P, so it can never happen a sizable company like Bajaj Auto can never have a lower multiple than Atul auto. So that was the reason I sold my Atul Auto and this is how I keep on churning my portfolio.

1:02:54 Rahul Goel

Agreed so that stream work is very helpful, you mentioned you're looking for cheetahs but in your stock selection process you never mention any momentum indicators or technicals do you look at any of that?

1:03:07 Vijay Kedia

No, no I don't look at them because I have realised one thing, if you will club your technical knowledge with investment you will go wrong you know. I used to study chart in 1980s let me tell you, but I never studied in a meaningful way.

I just know that some patterns some very common patterns I know. I haven't bought any shares based on the chart, haven't sold any shares whenever I have sold any shares on base of the charts. I have always lost money in this market, I'm telling you this is what so one should not you know focus on technical, technical is only for trading and for fundamental you should stick to fundamentals only.

1:03:59 Vijay Kedia

Ninety percent of the time so I don't buy on technical. Of course because I know little bit of technicals, so I do watch technical so for my shares. Let me tell you I do watch them and whenever there is a bearish shine I sleep and Mary there's a bullish shine I feel happy, you can now this will move this way this will move this way. But whenever there is a bearish shine I never sell my shares okay, I don't sell them.

1:04:25 Rahul Goel

Okay moving forward asset allocation, now you're a stocks guy and I can imagine the answer you're going to give me, but tell me what you think about asset allocation and I'm talking about stocks, gold, property you know whatever bonds, what have you what are your thoughts on that and how do you go about planning it for yourself?

1:04:45 Vijay Kedia

You've seen 90 around 88-90 percent of my wealth is into a stock market only into stocks only. 10 percent maybe in real estate and maybe eight-ten percent I don't know around 10 percent real estate, a little bit in gold and silver a little bit.

But sizable eight percent sizable investment is into real estate and that is only because so that I can get some rental income, so that I don't have to be dependent on the income of stock market. The moment I have started...

Rahul Goel: So you can pay the month end bills.

1:05:21 Vijay Kedia

So that is what actually has changed my portfolio let me tell you, my capability to hold my shares even in 2008 Layman Brothers crisis, was only because of I have some extra income from some different sources.

So that is why I had you know there is a code of mine that, until unless you reached with no gravity zone in a stock market you can never create wealth. No gravity zones means every time your expenses will pull you back you know and supposedly in 2020, if you have to support your family from the income or stock market then what will you do?

You have to sell shares at any price if you are not dependent on that income okay my rental income is there no it's sufficient to support my family whatever lifestyle I am having, it is not going to disturb. So then I can play you know then I can have success, I can get success, I can attempt at least to have success. It will be six or no ball or out don't know but at least I can attempt.

Rahul Goel

You can attempt it and you said you spoke about real estate and this is just out of curiosity residential real estate, commercial real estate mixture of [Vijay Kedia: commercial, commercial yeah because commercial gives you better yield than residential] great, [Vijay Kedia: yeah, yeah] you need the yield because you have to pay the bills at the end of the month.

1:06:45 Rahul Goel

Wonderful so I'm sorry I don't know this but you have how many kids?

Vijay Kedia: Two

1:06:56 Rahul Goel

Two kids both young adults by now? [Vijay Kedia: Yeah] young adults how are you teaching them about money and investing.

1:07:06 Vijay Kedia

Nothing I think it's very difficult to teach your own child because there is a saying no that “a child always think that his father is a fool till he becomes himself becomes a father”. So this is what happening.

So, maybe I'm just no, no it's not like that I'm just [Rahul Goel: Nice] yeah I tell them whatever I'm doing and I shares my thought process with them every now and then I teach them that this is how I did, this is what I am doing ,this is what I'm thinking now. So we interact with each other you know.

1:07:41 Rahul Goel

They have joined your sort of...

Vijay Kedia: Yeah, yeah

Rahul Goel: Investing?

Vijay Kedia: Yeah, yeah

Rahul Goel

Wow and they have the same are you able to see the same passion where they don't talk about and buying a stock, they talk about I'm buying two percent of the company?

1:07:57 Vijay Kedia

No not yet.

Rahul Goel

Not yet, I'm sure. Okay I'm moving on to a few more questions that I have. One of them is so of course during the pandemic you know, everyone ended up saving a lot of money, right? Especially our better hubs.

So let's say with your wife came to you and said you know Vijay all this lockdown I didn't go out, I didn't shop, I didn't spend money in the restaurants; so I have this one crore rupees spare cash line what should I do? So what would you tell her?

1:08:29 Vijay Kedia

Invest in your share.

Rahul Goel

Yes by one percent of some company ah?

1:08:35 Vijay Kedia

If I will tell you if I give it forget about one crore, if I will give her 10,000 rupees she will go to the market and come back with maybe 5,000 rupees or 6,000, she cannot spend even with ten thousand rupees at one.

Rahul Goel

So you are in the no gravity zone?

1:08:57 Rahul Goel

Okay so talk to me about your thoughts on giving away some of your wealth for social commerce, what's your thought on that?

1:09:09 Vijay Kedia

I have a trust with me and my wife’s name Vijay Kedia, Vijay and Manju Kedia charitable trust something, something. So we are doing something, some medical things we are doing.

1:09:25 Rahul Goel

So I'm glad to hear that I can feel that you're not very comfortable.

1:09:31 Vijay Kedia

Yeah, so far I have not decided that I will give 5,000 crore like, but I will give 5,000 crore 25% whatever he had an hour, because I have still to catch up in miles to go to come to that level.

1:09:46 Rahul Goel

But it's so nice that your audio on the journey and the reason I asked is because I was not asking this question in my earlier podcast to be honest. on the podcast and he spoke about this, and I realised that it's so important, we can talk about earning money but our viewers and listeners can actually learn on how to you know.

Maybe they get inspired and they do something good which could be nice, so this help thing that you're doing is in Bombay, you know hometown Kolkata, anything you want to share if you're coming.

1:10:21 Vijay Kedia

Yeah mainly Kolkata and Bombay also, so I wouldn't tell you much about it. Because but one thing I would like to tell you, I had read Mahabharata you know in my childhood when I was in Kolkata, as I said that I used to read Gita a lot of course before Gita, I read Mahabharata you know and I was very much impressed with you can say Karan. So I'm not comparing not at all don't take it that way, so he's my model you know I remember one story that whoever come to Karan.

Rahul Goel: Cannot say no.

1:10:58 Vijay Kedia

He would not say no to anybody and he would not go empty-handed, whoever comes together. So this is what I would like to tell you so maybe I will also follow or following a little bit I will follow the same path.

1:11:12 Rahul Goel

That's a very nice thought. That’s a very, very nice thought. Okay pivoting a little bit, I want to spend a few minutes talking about India.

You mentioned a while back about you know you have to believe in India and the rest would follow. So the starting point is believing in India. Tell me what you think of India, at this stage where we are. See we've had these moments before we've had this moment in 1991, we've had this before where we thought we'll take off and we've been through cycles a lot of people believe that this is the time that we could actually see a 10, 20 year you know dramatic improvement in the country and how it could pan out.

So talk to me how you're thinking about India why do you think it's different this time if at all and where do you think we can go in the next 10, 20 years?

1:12:05 Vijay Kedia

You see as you know that by now that I'm not an economist, I'm not even a chartered accountant or don't have that kind of you know education or don't have that kind of mind-set also.

Rahul Goel

So no baggage? [Vijay Kedia: Yeah, yeah]

1:12:21 Vijay Kedia

I follow all you know educated and intelligent people like you and whatever you say, whatever you are saying on any interview or on TV I'm telling this from my heart. I watch all of them very carefully and I try to extract something from them you know and this is how I make my own idea. If you are educated you will need 100 books, so what is the point of 100 books you will extract some idea from every books and suppose there is some common idea, then you will create your own thing.

But this is a common factor between every all the intellectual people, then this should be a truth this is what should be followed in life right. I'm not reading books okay, so but I listen to the people who have read 500 books or 100 books or 5,000 books.

I'm listening to them so whatever they are saying I am watching their body language very carefully you know. So I'm a good observant I think so. So this is how I make my idea now what everybody is saying that earlier now you know all this terminology people used to say China Plus One, now people are talking Europe Euro one or this and that.

1:13:27 Vijay Kedia

So this is what data also suggests now World Bank is saying today that India will not grow 7 percent India will go 6.5 percent which country in world is growing 6.5 even 6.5 percent is also huge, so this is how I draw my you know data and you know get my idea.

I have you know there was very simple formula I have understood in my life early in my life, maybe after 2000, 2003 for something I have understood very simple. I have read it somewhere and I have made it a mantra, “as long as there is a productivity growth and there is a population growth you cannot grow wrong in that country”.

This is what happening with India you know in last 20, 25 years we haven't grown less than five percent, forget about this period of covid and all but on average, on an average after 1991 or 1992 India had never grown below five percent. So you are growing five percent your population growth is was 1.2 or whatever it is now coming down, but as long as your population growth your or productivity growth, you cannot go wrong.

You have to just select the right idea you just have to select the right stock and right management. So this is what makes me hold my shares in every crisis, as long as this is happening as when I will find some kind of signal that India is going that in a Japanese way for example, that there is no growth for 20, 30 years so that is still distant I think. Today there is no sign of it so this is what my faith in India is intact.

1:15:19 Rahul Goel

Yeah that's so interesting you say this because you know I recorded an episode of the Investor Hour yesterday with a person called Manish Sabharwal who is the founder of Team Lease and complete honesty Vijay, all he spoke was productivity and he said you have to get that right and you get that right, there'd be nothing to stop us and productivity is a function of so many elements but he said exactly what he said.

It's population and productivity you have the people so you can get the scale and imagine if they were productive, you can just achieve whatever you want so yeah it's like a reinforcement for me yesterday and today talking about you know a similar point.

Europe, so the other thing that I draw from this is that your view on India is very, very fundamental it’s on a trend which is already set it’s not based on any you know one news here, one news there, I think population is growing, productivity will improve, and India will do well and even five percent is not bad.

1:16:29 Vijay Kedia

And unemployment will also be there six percent, seven percent unemployment was there in 1970s, 1990s even 2020 that will also be there, yeah. That is why it is said that don't listen to Economist and all because their way of evaluating things are little different, they are not wrong but ultimately it's your body so there may not be some parts of your body little weak that does not mean that you are not a perfect man.

Everybody has that weakness so if you will look at those kind of statistics in India, then you won't have that confidence in investment.

1:17:06 Rahul Goel

So you've shared a lot of sayings on the podcast, I will share someone else's saying with you which is you know the economists have correctly predicted three of the last two recessions, anyways I'm so happy we got to chat every day it's been eye-opening and I must say that personally I feel that you know this conversation, it takes us in a direction which is so different per se in terms of the approach to investing. It's sharp, it's clinical yet it's got that element of macro and top down which sometimes we don't come across but the highlight has to be how you communicate; which is I bought two percent of the company ,I buy about four percent of the company so there are multiple elements in that right it's not just the size you're buying a share in a company is what Warren Buffett taught us all, you're not buying stock on the stock market you're buying two percent of the company which I think if our listeners and you know and our viewers you know imbibe that, and you know that's a great approach to investing so I'm so happy you could share all that with us today.

1:18:26 Vijay Kedia

There is a quote of mind, Rahul that, if you are having a no-ball in your terms in your Cricket terms which I also don't watch nowadays. “That if you are getting a no-ball and you are taking one run in a no-ball that does not mean that you have taken one run that means you have lost five runs” because this is what I confirmed with my son, that a no-ball maximum run you can take a six or something or seven something I don't know.

Probably suppose six runs that highest you can take, six runs or seven or whatever and you are taking one run that means you have lost six runs, so if you are finding everything is aligned you are finding a sector is prospering, you are finding the tailwind management is good, growth is coming and companies turning around and even then your wife you are buying 5,000 shares of 50,000 shares that means you are taking one run out of a no ball.

Rahul Goel

So should be hit should be hit across the fence.

Vijay Kedia

Exactly yeah that is the theory.

Rahul Goel

On that note, Vijay thank you very much once again. It's been a wonderful, wonderful conversation thank you very much.

Vijay Kedia

Thank you dear, thank you, thank you. Bye-bye.