DISTINGUISHED industry helmsmen write them personal notes and invite them to tea. Company secretaries are wary of their presence. Their opinion is valued and their support wooed. They cannot be pushed around to conform nor ignored like bad dreams while they plot (growth of companies) and plan.
Welcome to the world of 'professional' individual investors.
Spotted regularly at just about every annual general meeting (AGM), these men and women, sometimes apparently old and frail, never fail to command a premium on attention. Having come from varied backgrounds—Outlook met ex-marketing professionals, bankers, finance executives and businessmen—they share a common passion for playing the bourse.
Take Minakshi Goradia who, despite a generous touch of grey in her hair, is actively monitoring her portfolio of about 200 companies. Or R. Karnad, aged 72, who spends the better part of the year following up on the 400 companies he has interests in. Chance or circumstances, say these people, have landed them in this all-consuming vocation. Goradia, an advocate by profession, took on the portfolio of her mother and uncle, themselves active investors since the '50s. Right from his teens, Mahesh Keswani took to "finding a safe avenue to invest the family money". Ajitsinh Bhatia, 62, got hooked to the business when the sale of his first investment, a single share of Thackeray & Co, earned him Rs 160 in 1954. In due course, each one of them left his profession prematurely to concentrate on stockmarkets.
The result: all of them have lakhs of shares of today's blue chips bought at par or extremely low prices among other enviable investments. Bhatia claims he earns a 'five-figure' monthly income from dividends alone. Keswani has recently bought a flat in south Bombay selling off a single scrip.
But what makes them tick? In the business for 15 to 25 years, most of them are self-taught in the craft of reading between the lines of annual reports. They have closely watched markets and companies evolve. They track not only the companies they have interests in, but also others with potential. Karnad recalls days when HLL AGMs were held in the building canteen. B.C. Dalal attributes a good deal of his current finesse to his banking background while Bhatia thanks his finance department job at a leading pharmaceutical company. Newshounds all, they unfailingly track international and domestic industry trends. Dalal never misses his regular shot of BBC and CNN. He even notes down points to make at the AGMs. Goradia is glued to Money TV which relays the daily activity on the Bombay Stock Exchange. A clerk tabulates the details of her investments.
In years of dedicated study of the markets, these people have honed their skill to predict trends. Not an easy task where excessive information, and often misinformation floats. All of them have, nevertheless, built enviable and highly profitable portfolios. They have spread their risks by covering a range of industries and companies. Karnad proudly says he has disobeyed his broker's suggestions many times only to be proven right.
Says Dalal, echoing a common sentiment: "My objective is long-term planning, not speculation." And most of them admit that they have hardly ever juggled portfolios. They rarely sell and buy large-scale, preferring to invest in scrips of long-term value. "I look for investments which will yield dividends, rights and bonusissues," says Goradia. All of them are consolidating their holdings and adding on promising investments.
While an average investor would address issues like non-receipt of warrants or perhaps a letter in an AGM, these people claim that they address one major issue of sustained growth and prosperity of the company. Which often means throwing up points which may be unpleasant or difficult for managements to handle.
Expectedly, interesting incidents dot their lives—sometimes downright altercations with leading industrymen have brought them into prominence. An old AGM-circuit hand recalls Goradia arguing furiously with a now leading petrochemical company chairman in the late '70s for concealing crucial information. Karnad says he took a leading company to court for unfairly refusing him share transfers—he won the case. Bhatia created a rumble when he asked the chairman at the Reliance Industries AGM to request silence in the front rows, largely filled with the first family's people.
Industry chieftains have, as a result, often shown concern about this outspoken, well-informed brigade. Goradia remembers how the then chairman of a prominent financial institution sent her "an invitation to join him for tea". A euphemistic message to request the investor to discontinue pursuing an uncomfortable shareholder cause. Karnad mentions gifts being routed to him from two leading textile companies.
But these investors stick to voicing shareholder concerns. Dalal recalls pointing out to the State Bank of India its incapacity to service a huge investor base of 30 lakh. Goradia filed a criminal case against a company which couldn't honour the postdated cheques given to depositors and followed it through actively. ICICI is the lead manager, the main lender as well as trustee for debenture-holders for Reliance. Keswani disputed its ability to represent the opposing interests of both the management and the debenture-holders of a company at the previous ICICI AGM.
Often, these investors have brought up issues concerning even employees of a company. Says Bhatia: "We have to protect the workers' interests to ensure the company performs well."
They have also influenced the ways of publicly-held companies. Says Bhatia: "When a number of people make a point, it does make an impact." Earlier, for instance, detailed balance sheets were given only on request. The regular shareholder got an abridged version. Repeated demands to change this procedure has shown positive results in many companies.
And does this reap any specific benefits? Says Goradia: "Our complaints get heard immediately." Karnad claims being often tipped off by company sources because they know him well, sometimes saving him from big trouble. Like when he sold off a blue chip company shares just before it went through a series of fatal problems. This feeling of power has had adverse effects too. Some such investors are known to arm-twist companies. The people we spoke to confess that there are some of their ilk who create a noise to ensure appeasement from the company in cash or kind. Others show off the fact that companies treat them preferentially—from paying their hotel bills to offering them extra or out-of-turn allotment of shares.
Given their potential reach and talent, each of these people has been finding job offers forever forthcoming. But most of them refuse to take up such assignments. Why? Does more money not hold any attraction for these compulsive money-spinners? Apparently not for these seemingly modest people who have transformed ordinary profiteering to a maverick art.
