Book Review: An Era of Darkness

“An Era of Darkness-The British Empire in India” by Shashi Tharoor was inspired by his speech at the Oxford Union Debate which went viral and even got praise from PM Modi.

In the book,the author expands on his speech and explains with an array of facts and figures how the British looted India and how millions of Indians paid with their properties and lives for the enrichment of Britain.

The “Brutish Rule” worked at destroying India at many levels:

  • The British Raj was different from the Mughals and other rulers was that they did not spend the collected tax revenues in India-what they could collect,loot and steal- they sent it back home.
  • Indian manufacturing was decimated-be it textiles & industry goods-ensuring that India only supplied raw materials.The adage “India missed the Industrial Revolution” is just a myth-Indians were thru rules, laws, regulations, tariffs and brute force were kept outside it
  • The British ruled India with only commercial interests in mind-how London could be benefited.As such,no money was spent on education,health etc.The British left India with a literacy rate of 16% and a female literacy rate of 8%
  • By pursing a policy of explicit racism,Indians were excluded from high posts in the Civil Services,Judiciary,Army,Police,Railways etc.As Nehru put it, “the Indian Civil Service is neither Civil nor a Service nor Indian”
  • By pursuing a policy of “Divide et Impera” (Divide & Rule), the British sowed divisions & exploited differences between Hindus & Muslims,Shias & Sunnis,Dalits & Upper Castes etc whose impact is still being suffered today and which directly lead to Partition
  • By placing London’s interests over the populace,the British ensured famines and epidemics went unchecked killing millions of people.In fact, for Indians Churchill is a bigger war criminal than Hitler for causing the Bengal Famine of 1943 where he remarked “The famine was their own fault for breeding like rabbits”

The effects of the British Raj on India can be summed as:

“In 1600 when the East India Company was established,Britain was producing just 1.8% of the World’s GDP while India was generating some 23%.

By 1940, Britain accounted for 10% of the World’s GDP while India had been reduced to a poor,’third world’ country destitute and starving”

I ,for one, believe in Karma and look forward to the day when India takes her rightful place at the top of the table

I also feel tremendously lucky to be born in a free India.

Do read this book if interested in history.

Book Review: My Journey with Vada Pav

I love reading books written by Indian entrepreneurs as they bring to life the challenges and difficulties of operating a business in India.

The book My Journey With Vada Pav written by Venkatesh Iyer is the story of Goli Vada Pav-a chain of 350 Vada Pav stores across 90 Cities in 21 States.

The book is written in a very light and breezy style and narrates in a humorous way the challenges and pitfalls the author faced while building up his business.

There are many interesting anecdotes of how Venkatesh built his brand, built his logistic and manufacturing partners,his franchise network and so on.

One anecdote that I found very amusing was this:

A franchise owner calls up the Central Kitchen to complain that the Vada has a small stone in it.

The phone is picked up a very junior kitchen staff who after listening to the tirade replies: “Panch rupay ke vada mein patthar nahin to kya heera milega !”

The book also highlights how political risk can destroy a business in India-the business was almost killed owing to political douchebags.

Feeling hungry after reading this book…off to get myself a Vada Pav !

Book Review: Concentrated Investing

Position sizing is one issue which bedevils most investors.

How many stocks to own,how much to bet on one stock,when to sell etc are key asset allocation decisions which eventually determine how successful one is in the world of investing.

The book Concentrated Investing-Strategies of the World’s Greatest Concentrated Value Investors  attempts to answer these questions by studying the track records and performances of the investing greats-Simpson,Lord Keynes,Buffett, Munger, Siem, Rosenfield etc

Some lessons that I learnt while reading this book are:

  • If you are an ordinary or passive investor, you are better off owning a diversified/index fund having many stocks and low fees
  • If you are an “active” knowledgeable investor, then you are better off putting your money in a very small number of stocks-Charlie Munger thought 3 stocks are good enough (!) , while for others 10 stocks seems to be a reasonable number
  • Investors differ in their ideal holding time-some hold for 2/3 years, some hold forever-at all times, they track the business v closely
  • For Concentrated Investing to succeed,its v important that you know the company very well-so much so that you understand the investing case against it better than the person making the argument.

As the authors put it,the lesson of this book condensed into a single sentence is “Bet seldom,and only when the odds are strongly in your favor but when you do,bet big,hold for the long term and control your downside risk”

The Book contains lots of anecdotes and investing war stories which makes for an interesting read.

I was particularly amused by this quote from Sir Ernest Cassel who once said (around 1920…nearly a hundred years ago !)

“When as a young and unknown man I started to be successful,I was referred to as a gambler.

My operations increased in scope.Then I was a speculator.

The sphere of my activities continued to expand and present I was known as a banker.

Actually I have been doing the same thing all the time”


Book Review: Bandhan-The Making of a Bank

Bandhan-The Making of a Bank by Tamal Badyopadhyay is the kind of book that you read and marvel at the wonder that is Indian entrepreneurship.

It chronicles the unusual story of an entrepreneur of Bengal of extremely humble origins striking gold by serving the banking needs of the poor.

As the author puts it,Bengal is not known for its entrepreneurship-entrepreneurship in Bengal is confined largely to running chowmein and momo stalls !

The founder of Bandhan Bank,Chandra Shekhar Ghosh, came from a family of very humble origins.

In his initial years, he was so financially constrained that even buying eggs for his young toddler son was beyond his reach.That such a person could rise above his circumstances and build a world-class organization is a testimony to his hard work,determination,vision and ingenuity.

The book narrates how Bandhan started-by giving loans of 1000 Rs  to SHG of women ! It is a marvelous story how branch by branch,member by member, Bandhan rose to become the largest MFI in India and eventually get a Universal Banking License

The author,with his vast experience, does a good job of explaining how the MFI industry works,its differences with the banking sector and so on.

One insight I found useful was a run on the bank usually means depositors coming all at once to take back their money whereas a run on a MFI means the borrowers ganging up together to refuse to pay back their loans !

The book has a chapter each on Vijay Mahajan of Basix and Vikram Akula of SKS Microfinance. It chronicles their rise and fall and illustrates in stark relief the political risk that MFIs face in India.

The Book also explains the challenges facing Bandhan as it moves ahead and its unique proposition-unlike other banks which borrow from the middle class/poor and lend to the rich/corporates, it intends to borrow from the middle class/rich and lend to the poor !

A wonderful book and a must-read for investors in the Indian banking sector.


Capital Returns: Investing through the Capital Cycle

This book “Capital Returns-Investing through the Capital Cycle” is a collection of reports written by investment professionals at Marathon Asset Management.

The premise of the Book is that investors frequently have an “inside view” of the Company and forget to look at the “outside view” i.e. the Competition or “the supply side”

This leads to the famous business cycle/capital cycle where boom is followed by bust and again by boom.We have witnessed this time and again in our own markets in numerous sectors like sugar,capex,paper,real estate etc

The book is littered with examples from Europe and China wherein investors paid top $ for buying companies at the top of the Capital Cycle only to lose large amounts when the cycle turned.

Capital Cycle Analysis is really about how competitive advantage changes over time,viewed from an Investor’s perspective.This leads to a key investment insight-when analyzing the prospects of stocks,it is necessary to take into account asset growth, at both the company and the sectoral level.

Since the future is uncertain,the Book suggests it is better to focus on supply (Competition) than demand.

This is v relevant in the Indian context.

As examples:

-Telecom sector is ravaged due to fresh supply by a new entrant (Reliance Jio).

-PSU Banks/Insurers have seen their market shares gobbled up by private players etc

-Paint industry has been able to maintain their fat profits owing to lack of competition

-Flipkart is no longer India’s ecommerce darling owing to Amazon

and so on and on

The book contains lots of nuggets on meeting managements.One of them being avoid companies which have a fancy corporate HQ !The other being avoid companies  whose CEO’s are impeccably dressed and have a need for glamour…these will lead them to take decisions which will put them in the limelight. Anilbhai and Biyani come to mind !

This book also contains a very useful list of 7 Deadly Sins of Banking:

  1. Imprudent Asset-Liability mismatches
  2. Supporting Asset-Liability mismatches by clients
  3. Lending to “Can’t Pay,Won’t Pay” types
  4. Reaching for growth in unfamiliar areas
  5. Engaging in off balance sheet lending
  6. Getting sucked into virtuous/vicious cycle dynamics
  7. Relying on the rearview mirror

This Book is a serious read and meant for professional investors.As such,it is not suitable for everyone.