Rotarians learn all about non-intuitive insights
Nilesh Shah
Nilesh Shah is the Managing Director and CEO of Kotak Mahindra Asset Management Company Limited.
Kotak Mahindra is one of India’s leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, stockbroking, mutual funds to life insurance and investment banking, the Group caters to the financial needs of individuals and corporates.
President Shailesh Haribhakti introduced Shah as someone who has the best thoughts and suggestions on how to make money. Shah said, “It is an interesting subject but all of you present here have already made money. So the topic should be how to make more money that you can then donate to Rotary. In our Indian culture, we are told money is not everything. But I have found the American system quite useful where they believe that money is not everything
and it should not matter in the larger scheme of things but make sure that you have made enough money before making such statements.
“A majority of you own Apple products and are familiar with the fact that Apple is the world’s largest market cap company. The cash reserves on Apple’s balance sheet are almost 30 per cent of India’s entire foreign exchange reserve. They have created a 700 billion dollars market cap. Not many of you have had to avail of housing loans from banks like HDFC. The audience here has more Apple users than those who would avail of loans. This clearly shows the difference between HDFC and Apple. Apple has taken over the world and HDFC is only in India, but look at the returns generated by Apple as against HDFC. Since, 1991Apple has delivered about 19 per cent return, and HDFC in US dollars, has delivered about 25.76 per cent. The difference allows HDFC to generate four times more return than Apple. Sp Apple has made the world its playground and HDFC has not even touched your life but outperforms Apple in terms of returns, and HDFC is not even the largest market cap company in the country, TCS is.”
He explained the wealth creation done by Indian banks as against the value destruction by foreign banks. He said, “HDFC has delivered a return of 567 per cent and some of the big names such as JP Morgan, Bank of America, Merrill Lynch, Deutsche Bank, The Citi Bank, etc., have given negative returns. In fact, Deutsche Bank trades at the same price today as they did way back in 1993. Citi Bank’s price is down at about 95 per cent from top and is trading at the same price as it did in 1992. Unfortunately, instead of praising our companies that have spectacularly outperformed international competitors, we chose to criticise on the short period where our stocks have gone down but other indexes have picked up. ”