What was your first investment?
A residential real estate plot in Nashik. I think I was a real estate man and groomed myself to think of the housing finance business much before I could become a real estate professional. I tripled the money in two-and-a-half years; that was the power of land way back in 1996.
Did you grow up in Nashik?
My wife is from Nashik. I grew up in Ahmednagar, and did my engineering at a college in Pune. After that, I joined a company through campus placement. Then, I did my management from Symbiosis. It had nothing to do with my previous mechanical engineering degree. So my career has been from management trainee to housing finance and then to investment/asset management.
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Going back to your first investment, you said you were able to multiply your money. Typically, people have a long-term approach in real estate. What made you think of exiting it in such a short time?
I was 26, and hardly understood the power of compounding. I am a science and engineering student, but I understood the power of compounding meaningfully after joining a bank and later when I became part of ASK. So, in 1996, I was in a capital building stage. When you are young, it is important that you invest in something you understand, feel comfortable about and something that you can touch and feel. This was the mindset in those days. Quickly create a significantly large capital and use that capital to multiply. I never thought about longevity.
How did you evolve as an investor after you joined ICICI?
In ICICI, I understood real estate and housing finance. Anything related with real estate, be it apartment, retail mall space, developed plots, townships, warehousing, or industrial park, was my first love. The second was my Esops from ICICI Bank. So, it is very interesting. It is your choice to convert your Esops into real estate. That is what I did in my journey at ICICI. When I came to ASK, I reversed it. I liquidated most of my physical real estate investment in 2012, and moved everything to equity. I had invested in Bengaluru, Pune, Mumbai, Delhi-NCR. Real estate is an asset where you could take leverage. And in the rising market, leverage plays a predominant role. For example, we put money in Nashik at ₹100 per sq. ft in 2006 and three years later, we sold it at ₹700 per sq. ft. We had 90% loan, and 10% own contribution, and the home loan interest rate was 8.5%. Can you imagine the return on investment for your own contribution?
In the bank, I had a significant real estate portfolio and only one stock—ICICI Bank—and nothing else. I have never made any mutual fund investment in my life. I later realized that residential real estate is going to have significant headwinds of price, high-interest rates, affordability and rental yields. It was not providing comfort, so in 2012-13 I exited most of the physical real estate. So, as we speak today, I have a larger portfolio in public equity (listed 50%/and unlisted 25%) around 75%. I have 20% in real estate and 5% in debt. I have nothing in gold and alternate asset classes. I also have one housing finance company where I am the promoter. I also did private angel investing with some of my known friends, who were starting a business.
Among the private angel investing, are there any unicorns that you would have picked?
No, we at ASK have become the unicorn. Other than that, I am not a part of any unicorn so far.
So, within listed equity, how do you pick stocks?
I don’t handle my direct portfolios. I have portfolios which are with ASK portfolio management. It has large cap and large and mid-cap stocks. I chase growth but have some value colour by virtue of margin of safety.
Do you follow the ASK PMS or have your own method?
I continued with whatever I had in the past. Now, I only invest under the ASK portfolio through the ASK PMS.
What kind of returns have you made if you exclude the value of your ASK’s stake?
My real estate returns in the very early years were obnoxious and I’m not going to consider them. So I’m only going to count the past 14 years. I’ve made 17-18% from real estate, 14-15% from the stock market and 7-7.25% from the debt instruments.
Any investment mistakes that you made during your career?
I think one of the angel investment teams came for seed funding via IITians who used to run marathons with me. I think it did not go well. Maybe there was learning there. The devil lies in the details and execution, and the entrepreneurs have to get into that part and find the ways and means to get sponsors for the dreams they have. So early-stage money is much easier to collect but, subsequently, you need more sponsors to endorse your efforts. I think since then I haven’t put money into those e-commerce businesses.
Do you have life and health insurance? And in the past, has it helped you?
I started with an LIC policy, with a ₹5,000 premium. After 10 years, on maturity, I realised that the corpus was not what I thought it would be. The agent said you should buy a policy every year to get the maturity in a sequential manner. For three years from 1994, I took the policy. But the quantum of money was significantly less to the income growth or the need. And I think that stands true for all of us.
Do you involve your wife in family finances?
Absolutely, yes. I think she is a co-applicant in all my physical assets. So, she has signed so many agreements. From risk and succession point of view, it is always better to have one or two more owners. I ensure that she knows everything about where I am investing.
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