Providing the best possible service to customers at competitive prices is one of the biggest reasons for D-Mart's success, said Vallabh Bhanshali of Enam Securities.
Radhakishan Damani is a modest and a very wise person, he does not live in a fantasy world, said Bhanshali. Damani did not have a vision when he launched the D-Mart chain of supermarkets, it was created by accident, he added.
Below is the complete transcript of CNBC-TV18's interview with Vallabh BhanshaliAnuj: You have tracked Radhakishan Damani’s journey for many decades now. When he started this company in 2002, did you ever think it would be worth Rs 40,000 crore in a matter of 15 years?Bhanshali: Not the least, for two reasons. One, RK Damani did not start with a big vision. This started almost as an accident. However, more importantly, because RK Damani never talks about the future. He is such a modest person. However, one thing was clear that he was onto something very nice and very big because we had seen his success in the stock market, but to say that could we see Rs 40,000 crore, no way.
Sonia: You have known RK Damani for over three to four decades now, what do you think his vision is here on because so far he has achieved a lot of success in the retail space, but what next, are we looking at him creating a Walmart out of a D-Mart or are there some other avenues that he his sight set on?Bhanshali: We must understand RK Damani as a person. He is an incredibly modest person and incredibly wise person which means that he doesn’t think in a fantasy like manner. He tries to understand the basic principles which take life forward, take business forward, etc. and he has tried to adopt that in all aspects of life, his personal life, his children’s life, wherein he was a speculator or a stock market investor, and now in this business. He says keep it simple, try and do your best whether it becomes Walmart, bigger than Walmart or some small mart, it doesn’t matter to him. So, I would not want to talk in that language.
However, I think what he has shown is that if you keep it simple which means I deliver the best value for my customer, and I work within my capacity and my circle of competence, India is a country of growth and you can do very well. So, I think these are the three things that this is a tripod on which he works – keep it simple, know your competence, and India is a growth market so you don’t have to do anything funny, just keep working. Given that we don’t know how big this can become.
Anuj: The Midas touch and going into areas where you sometimes don’t know anything, even relaunching Sridevi’s movie and even that becoming a big hit, so, it tells a lot about the man. I know you are saying that if you keep it simple in a country like India, you will achieve success, but clearly that vision stands out.Bhanshali: Yes, I have known Radhakishan for now almost 35 years, from the time he came to the market. He was somebody who was not from the stock market, his father was very much a part of the market floor, but he unfortunately died young and Radhakishan took over from him. However, he was an amazing listener, and a very avid learner. People know this is not a myth, it is the truth that he would stand at the corner of Dalal Street for 5-10 hours a day meeting hundreds of people and he learned from everybody, he respected everybody and therefore he has seen the world from ground level up.
At the same time he always admired whosoever had succeeded particularly those who had succeeded in the right manner. So he knew all the great stories that were happening and he knew the common man and he has been putting the two together in all that he did. He knew the pulse of the market, he knew the principles by which great people had succeeded, he tried to apply them in his own simple manner and therefore when it came to D-Mart, he said I don’t understand credit, I don’t want to make borrowings and so on and why not deliver a simple product to the customer.
One thing that I can share with you, I think one of the questions asked them on the roadshow was that what about special schemes for consumers and how do you incentivise them, and they said we don’t want to confuse the consumer. Every time you give a special scheme, he has to go into thinking and sometimes he is tempted wrongly. So, we don’t want to do that. We simply just give him the best possible price with a smiling face in the most efficient manner. So this is the kind of wisdom that he has developed through his grounds-up approach and once you understand this part, you will understand why people are so excited about D-Mart.
Bhanshali: I had an occasion to be part of the listing ceremony and I said RK Damani’s life is university; learning from that will be more profitable even than investing in D-Mart. If you know him socially, he is somebody who never speaks loudly. He doesn't want to win every argument. He is happy to stand in a corner and he just showed that how developing an acumen is more important than being supremely intelligent, how having the right information is more important than being extremely well informed, knowing the right people who he can trust is more important than having a large network and trusting people that he works with.
If you know him socially, he is somebody who never speaks loudly. He doesn't want to win every argument. He is happy to stand in a corner and he just showed that how developing an acumen is more important than being supremely intelligent, how having the right information is more important than being extremely well informed, knowing the right people who he can trust is more important than having a large network and trusting people that he works with.
So he has trusted Neville Noronha and his team ardently, given them few principles and he let them function. He is such a low profile, I think the atmosphere in the company is one of an IT start-up. We fail to understand, fail to believe that how goodness, listening, and modesty along with business acumen of course can create wonder. So, I think it is an extraordinary learning, not only for youngsters, but for all those who care to learn. I am one of them, I am a great admirer of the man more than his company.
Anuj: Of course today is not the day to talk about whether the stock is expensive or not, but let us talk about this business because the fact is that the brick and mortar model is struggling a bit in the face of the kind of online models which are there right now. What next because if this company has to scale up from here - the existing model, while it is working also needs scaling up, do you think that will happen as you move forward?
Bhanshali: What prevents RK Damani from developing a proper platform for e-commerce too? At the end of the day if you understand the proposition that you must deliver the best goods at best prices, he doesn't have to do himself. I am sure that number of professional teams will want to come and work with him, so, he is open to it. I am not saying that he will do it or that there is a plan to do it, but I simply think that there are so many companies that have survived for decades, not based on the original business plan. They have the ability to learn and evolve, I think the same opportunity lies with RK Damani and D-Mart and I am sure they would be looking at it.
I am not saying that he will do it or that there is a plan to do it, but I simply think that there are so many companies that have survived for decades, not based on the original business plan. They have the ability to learn and evolve, I think the same opportunity lies with RK Damani and D-Mart and I am sure they would be looking at it.
Sonia: Everything is electronic now. No one goes to the Bombay Stock Exchange (BSE) anymore. So, this was the first day after many years that we saw all the market veterans come together in the Bombay Stock Exchange. So pretty historic day for all of us. If you had to tell us one fond memory that you have of the times when you guys used to trade in the ring together with RK Damani, what would that one memory be?Bhanshali: I was not someone who went to the ring much, but in the 2007-2008 period, that is not dream-period. I am sorry, I am not able to think of an event which was linked to the ring with RK Damani, but of course, I have seen crisis in the ring many times, when we saw the markets crash and rise, etc. However, with RK Damani, I am sorry, I do not have a memory.
Sonia: I know you are one of the few people who know RK Damani closely, not just as an investor, but as a human being as well. Tell us, as an investor your first take on the man and more importantly, the learnings you have had from him over the last many years.Jayakumar: As an investor, it is very clear to those who know him, and for those who do not, it is absolutely wonderful to see somebody with the kind of uncanny trading skills hand-in-hand with a long-term value investment outlook. I have not seen this kind of combination of a trader, value investor almost in anyone else.
Anuj: Also, tell us a bit about RK Damani as a human being.Jayakumar: He is one of the finest listeners I have ever met in my life. He is seen frequently talking to everyone from whether it is a kirana store, a pan-wala and he listens, he speaks so little as it were. More than anything else, the attention to detail and to my mind, at least the biggest takeaway, the humility and grace with which he handles success. I think management institutes only theorise about these things, but to my mind, he is the finest example of a walking, non-talking case study on human attributes and the ability to handle success.
Sonia: Tell us a little bit about what you learned from his three to four decade old journey into several businesses which turned into a success?Jayakumar: The important thing here, the big takeaway is that, I think Sunil Gavaskar once said it about retirement, he said you need to leave at the peak of your career which is when people say why, rather than why not. So, the question here is when he decides to do something, the first question is why rather than why not. To my mind, the unexpectedness, hand-in-hand of course with the ability to get detail oriented and everything else that goes in running a business -- many of us, for instance would be keenly observing as to if there is a fourth innings, a fourth venture that he would brave the waters for.
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