Investing in India, + Website A Value Investor's Guide to the Biggest Untapped Opportunity in the World

India's rapid economic growth offers obvious opportunities for foreign investors, but making wise investing decisions can be difficult for any investor without a deep knowledge of the country and its culture. With a vibrant democracy and an active press, India can be a complex and chaotic place in which investors can find it difficult to make investing decisions with confidence. This book offers an on-the-ground perspective on India from one of India's most successful value investors. Looking deeply into the internal realities that impact India's investment climate, Investing in India helps investors both inside and outside the country cut through the noise and find the facts that truly matter for anyone who wants to invest there.

• Features charts of stocks, markets, and other helpful Indian economic indicators
• Offers a real-world look at India's politics and governance; its financial system and capital markets; its asset classes and equity markets; the private equity scene; and the real estate market
• Written by Indian value investing guru Rahul Saraogi

RAHUL SARAOGI leads Atyant Capital Advisors, advisor to the Atyant Capital family of funds. In the last 14 years he has focused on the Indian markets. His mission is to consistently identify the best 10-15 investment ideas from among the thousands of publicly-traded Indian corporations. Rahul's value-based investment philosophy stands apart due to his belief in the paramount importance of corporate governance, specifically how management operates with its minority shareholders in mind. While getting his undergraduate education at the University of Pennsylvania's Wharton School, he discovered Warren Buffett, Charlie Munger, Benjamin Graham, Phil Fisher, and Robert Cialdini.

Foreword xi

Preface xiii

CHAPTER 1 Understanding India 1

Agrarian Roots 1

India’s Villages 2

The Role of the Family 3

Seven Generations 3

Colonialism and Its Impact on Indian Villages 6

Deep-Rooted Beliefs and Aspirations 9

Spirituality and Superstition 14

Villages Are Not the Same Anymore 16

Urbanization Is Changing India 17

Summary 18

CHAPTER 2 Government, Politics, and the Media 19

Is India One Country? 19

Democracy 21

The Rise of Regional Parties 22

Competition among States Is Healthy 38

The Goods and Services Tax 39

Is Democracy Holding India Back? 40

State of Political Affairs in India 42

Bureaucracy 44

Corruption and Rent Seeking 45

War, Terrorism, and Violence 48

Role of the Fourth Estate and Accountability 49

The Ultimate Free Market 49

Summary 50

CHAPTER 3 The Economy 51

Overview of the Indian Economy 51

India’s Unique Economic Model and Its Legacy 55

India’s Public-Sector Undertakings (PSUs) 56

Monsoons and What They Mean for India 60

The Problem of Indian Agriculture 62

Manufacturing in India 65

India’s Infrastructure Defi cit 69

India’s Services Economy 73

India’s Natural Resource Wealth 74

Savings, Land, and Gold 77

The Macroeconomy 78

Summary 80

CHAPTER 4 Financial Architecture 81

History 81

The Banking System in India 83

Nonbanking Finance Companies 85

Financial Inclusion 87

The Reserve Bank of India 91

Equity Markets 97

Market Participants 99

Bankruptcy and Foreclosure 101

Risk and Capital 105

Summary 106

CHAPTER 5 Value Investing in India 107

Risk On, Risk Off, and Global Capital Flows 107

Liquidity, Volatility, and Risk 110

Value Traps 114

Corporate Governance 115

Capital Allocation 118

Business Fundamentals 125

Financial Strength 128

Relative Opportunity 128

Summary 130

CHAPTER 6 Looking Back 131

Real Estate 131

Private Equity 135

Equity Markets 139

Foreign Direct Investment 141

Debt Markets 142

Entrepreneurs and Businesspeople 143

Summary 144

Afterword 145

About the Companion Web Site 149

About the Author 151

Index 153

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