Have bought 4 lakh shares of L&T Finance Holdings at an average price of Rs 80 per share, over a period of time, said Harsh Mariwala, Chairman, Marico.
Mariwala has over a period of time bought 4 lakh shares of the company at an average price of Rs 80 per share.
Talking about the rationale behind the purchases, he said he has full confidence in the ability of the company’s management. However, as of now, he is not looking at further purchases in L&T Finance Holdings.
“The company is undergoing a shift in terms of business model and is on the right track. If all is executed well, then the company will do well,” say Mariwala who calls himself a "long-term investor". So far he has invested in 8-10 unlisted companies.
On the business outlook for FMCG companies post demonetisation, the Marico chief says sales have improved substantially and expects to see single-digit growth in January.
Below is the verbatim transcript of Harsh Mariwala's interview to Ekta Batra & Prashant Nair.
Ekta: Can you give us more details about the purchase in L&T Finance Holdings. It's been over a period of time that you have purchased a bit. How many shares do you own, how much have you spent on this purchase and how much more would you purchase?
A: As an independent director I have to follow certain regulations and procedures in terms of getting permission from the company. I get a limited window to buy once the permission comes in. However, over a period of time I have bought 4 lakh shares and the average price would be around Rs 80 or so.
Ekta: How much more would you be looking to buy?
A: I had kept a budget of about 3 crore and I have completed that now.
Prashant: You think it's a good price and great business, right?
A: The Company is undergoing a big shift in terms of business model. I believe it's on the right track and if they will be able to execute it well it will do further better.
Prashant: You by making the purchase think that the market is not appreciating some of the changes which have been made.
A: The market is appreciating. The share price, in the last six-eight months has gone up from almost Rs 50-60 to Rs 80. So there is confidence in company's move in terms of reorganisation. However, any move like this takes time, so one has to evaluate this over a period of two-three years.
Prashant: L&T Finance used to be in a lot of businesses and they have slowly decided to pick and choose now. I understand from speaking to people that they have taken a lot of your advice in that regard. Is the transformation complete and it is just about growing business?
A: It's quite a lot. Transformation in terms of business model, which areas to pursue, which areas to drop. So be focused on one end, improve execution. I think there has been a lot of internal change in terms of management team and all that is getting together and it has to be executed well, but personally I have confidence in the ability of the management.
Ekta: Where else are you an independent director in terms of a company and have purchased shares there? I just want to get a sense in terms of how interested you are in L&T Finance.
A: I have not bought any other shares in an independent company where I am a director. One of them is not listed. It's going to get listed soon - it's Aster DM Healthcare which is based in Dubai. They have cleared all the permissions and they will file for an initial public offering (IPO) very soon. And I have just been appointed as director of Thermax.
Prashant: You have a family office as well, right?
Prashant: But you have no plans in terms of getting into financial services or anything?
A: No, there is no intention for me to get into this business.
Prashant: I want to understand, from your family office where else is your money going to, which areas broadly without giving names, if you don't want to?
A: I would say about 75-80 percent goes into capital market and balance 20 percent goes into start-ups ventures or early funding.
Ekta: What would your time period be in terms of holding the share or maybe a type of return that you would be looking at?
A: I am a long-term investor. I don't trade in shares. I buy and hold on. As long as I am confident that the company will do well, I will keep on holding on the company.
Ekta: It is D-day when it comes to demonetisation. Your sense in terms of what the recovery is possibly looking like after 50 days and your sense in terms of what the first half of 2017 will be?
A: November was down but December especially for both our businesses; fast moving consumer goods (FMCG) business as well as Marico Kaya Enterprises has improved substantially compared to November. Therefore, January onwards it should be back to normal.
Ekta: Normal means even pre November 8 levels?
A: December is very close to November 8 levels and January should be back to some growth.
Prashant: If you want to put some numbers to it, the ballpark not exactly but what volume growth should we expect?
A: It is too difficult to predict looking at demonetisation but some single digit volume growth should happen but I am not able to predict it.
Prashant: One of our reporters did a story where she was speaking with people from representatives of the flour mill association of India and they were saying that purchase from large companies is down 30-40 percent. The big purchasers from them would be the big FMCG companies.
A: Flour mill would go into biscuits and categories like that where there is an element of impulsive purchase. In our case, we are not in impulsive purchase category; we are more into necessities. So to that extent the impact of demonetisation has been much less on us.