Mohnish Pabrai, Manging Partner of Pabrai Investment Funds also says that India is a tremendous market and that business in India has great growth prospects. If FIIs dance in and out of India, they will hurt themselves, says Pabrai.
He also says that India is a tremendous market and that business in India has great growth prospects. If foreign institutional investors (FIIs) dance in and out of India, they will hurt themselves, says Pabrai.
Below is the verbatim transcript of Mohnish Pabrai's interview to Latha Venkatesh on CNBC-TV18.
Q: You also paid USD 650,000 to have one lunch with Warren Buffet. How was that one hour or two hours that you spent with the big man?
A: The lunch with Warren Buffet – I felt like I had ripped of all the man’s intellectual property and I had made all this money and I wanted to thank him and there was an opportunity because he was doing this annual lunch auctions – so I tried about 3 times and got outbid and then finally in 2007 we prevailed and then in 2008 we won the lunch and really the objective I had was to simply be able to look him in the eye and thank him for his generosity and of course what ended happening is that Warren in all his lunches that he does every year – he has an objective and his objective is to make sure that at the end of the lunch the winner feels they got a bargain and I do believe we got the bargain of the century.
Q: So it is a conversation where he genuinely tries to give you what he has learned?
A: In fact, he sat down I had gone with my wife and daughters and the first thing he said to us is I have got nothing going on all afternoon – so until you tell me to leave I am here and he said you can ask me anything and what he would do is when we did asked him some innocuous questions – he convert it into a learning opportunity and it was learning with humour. It was a comedy show and I started addressing him as Mr Buffet – to Mr Buffet this – Mr Buffet that and both my daughters were sitting next to him so he told them if you call me Warren – maybe the grownups will learn.
Q: For us in India now and maybe for investors all over the world it is a time of great disquiet. Everything that we believed in is falling apart Brexit was the first shocks, so globalisation didn’t working in perhaps the most liberal of countries and then the Trump victory, which makes a person in emerging markets feel that perhaps US will grow, but without including or at the expense of emerging markets. Do you think that will happen?
A: No, I think we have to distinguish between candidate Trump and President-elect Trump and finally President Trump and I think that we have a wheeler dealer who is in the White House and he does like to make sure that the deals are winning deals and now he will focus on the deals being winning deals for the US, but they are in my opinion going to be winning deals for the world.
You have to distinguish between the rhetoric and reality, so for example Trump has made a lot of comments about The North American Free Trade Agreement (NAFTA) about erecting trade barriers and such that is not going to happen and the people he has appointed are pro-business, pro-growth and pro-globalisation and they are going to be pushing that agenda.
Q: For whatever reason FIIs are big investors in India and therefore this negative trade, short EM trade is a bit of a worry. Do you think India should worry about it?
A: No. The FIIs if they are dancing in and out of the Indian markets based on these factors then they are going to hurt themselves. India is a tremendous market with plenty of businesses which have very phenomenal growth prospects and right now compared to six months ago many of them are on sale. So, unless you are someone who is only going to be selling equities and never buying them, you are close to retirement and such, you should rejoice. Hamburgers are on sale, so that is great.
Q: How would you view the demonetisation that we just went through? Is that something that is short term in noise or will it have longer term, slightly medium term ramifications?
A: I think demonetisation is a huge shock. It is a shock to the system and there is no question that it will impact GDP growth in India for more than a quarter or two. It will have a negative impact because you are trying to kind of recalibrate the economy. However I do believe that when we look back 5-10 years from now, it will be a great positive. So, there is near term pain.
We can look back and say could the government have done this or could have done that, surely there are ways they could have executed it that may have made it a little bit easier for the common man but they are also dealing with multiple intractable problems.
So, I actually in the last couple of days in India, I asked various people I have run into and I don't see kind of an animosity. Even when I talk to people on the street, they seem to have kind of a pride that the government is actually going after some bad actors.
So, Modi has a reservoir of goodwill and he might be drawing on it but he still has a reservoir. So, I think it will work out fine.
The thing is that humans are very adaptable and I would say Indians are probably more adaptable than most humans - the concept of jugaad if you will. I was asking my staff, if I came to India what am I going to do without money. So, they told me the golgappawala takes Paytm now. So, they told me download the app and I did.
So, in the US I got myself setup with Paytm and so now I am all set, no problem having golgappa's.