6th February 2012

WF: Chandubhai, you are a well-regarded veteran in the fund distribution business in Mumbai. What led you into this business and how has this business shaped over the last several years?

Chandulal Vasa: I started this business in 1977. I got married in February 1977 and we had a joint family business of rubber goods. We are basically manufacturers of rubber goods. Since that was a joint income and I was keen to create my own income stream post marriage, I started pursuing some financial products. First ones were FD's, post office, UTI; and gradually there has been a transition from fixed income products to variable income products also. Now, my financial products portfolio includes mutual funds, insurance, postal schemes, FDs and also direct equity portfolios. Simultaneously, I am giving attention to our family business of rubber goods also.

WF: What is your business model? Is it more retail or HNI focused?

Chandulal Vasa: I have around 2500 clients - and they are a mix of retail and HNIs. I have been associated with the Mafatlal Swimming Bath and Boat Club at Marine Drive, Mumbai for several years and have also served as its treasurer. At least 1000 of my clients are people I got in touch with at the club. They are all friends, they trust me, they know me well socially. They also know that I am very ethical in my financial dealings - when I was treasurer of the club, I was nicknamed V.P.Singh! So, when they want to invest their personal money, they turn to me. You can say that I built my business at a swimming pool ! It has been great for me - go for a swim every morning, meet friends and clients in the process and very often, finish transacting the day's business in the morning itself, at the pool ! Today, my mutual fund AuM will be around Rs. 100 crores - split across three ARNs. So, my name doesn't come up in these new due diligence lists - which suits me very well !

WF: How do you manage to retain focus on two very diverse businesses - rubber goods and financial advisory?

Chandulal Vasa: The rubber business is a family business which has been jointly managed by us four brothers. I was actually always good in science, had an inclination towards engineering, but could not pursue an engineering degree due to money constraints. I instead went to Sydenham College and completed my B.Com. So, the rubber business is something that I am naturally quite interested in - apart from it being a family business anyway.

Like I mentioned, I have been fortunate that a lot of my financial advisory business gets discussed with clients in the morning itself at the pool. That allows me to spend time and do justice to both businesses.

WF: After August 2009, when margins in the mutual fund business came down so sharply, did you ever think of exiting the funds distribution business and concentrate only on rubber goods?

Chandulal Vasa: Every business has its share of challenges. If I compare my financial advisory business with the rubber business, in rubber we have credit risk issues that are absent in the funds business. Again, in the rubber business, you have to deal with factory labour and manufacturing risks. None of those are present in the financial advisory business.

Every business has its own issues and its own upsides. What the Government is telling us is that margins will reduce in the distribution business, but you should concentrate on volume expansion - financial inclusion is the mantra that the Government is preaching.

WF: One aspect Chandubhai that I have noticed in recent times is the way you are systematically paving the way for your sons to get involved in your financial advisory business. In what ways are your sons Vinit and Pratik contributing to your business now?

Chandulal Vasa: Vinit has done his B.Com, LLB, and MBA from Jamnalal Bajaj Institute, Mumbai. Pratik has done Electronics and Telecommunication engineering and then he went to London and completed a degree in financial mathematics - he is a specialist in technical analysis.

When they used to see me handling finances, they were quite interested. They were really surprised that our rubber business is a joint family business and the earnings are just sufficient to manage the household expenses. But what about making a capital and when they saw me building up my portfolio, they looked up to me. They thought that I have created a very big portfolio of shares and mutual funds, so they started looking towards joining me.

Vinit joined me when he was doing LLB. When he was doing his MBA, he used to come part time to office and learn the business. Now he is handling the entire marketing aspect and dealing with clients independently. I can now sit back in office, while he goes out to meet all clients.

WF : Did clients readily accept this change? Were there apprehensions of their portfolios now being advised by a much younger person, with far less experience than you?

Chandulal Vasa : : Initially, wherever Vinit used to go, clients used to ring me up to confirm the veracity of his advice. I used to tell them that we are consulting each other on all the advice we give to our clients - it's a joint strategy. Rather than saying that I am advising him what to advice, I always said that this is a joint advice, after we consult each other. That gave them the initial confidence in his abilities to advice them. Clients accepted that gradually and now, they ring him up directly for his advice - they don't call me now !

His style is very different from my old style. He goes to their offices with his laptop, shows them presentations, shows them portfolio analysis - he is a complete technocrat ! He has now fully established himself in the mutual funds advisory business.

WF : And what does Pratik contribute in the firm?

Chandulal Vasa : Pratik has now joined me, after completing his financial mathematics course in London. He is fully into technical analysis. In fact, at the end of his course, he gave a presentation in London that Sensex will go up to 21,000 in 2010 and then move sideways to down until 2014. He still stands by that forecast, and so far, he is on the right track. He is a practitioner of the Elliot Wave Theory.

Even in an overall bearish market, he is focusing on identifying multi-bagger stocks, and has already got some big wins to his account. When I saw his skills in this area, the first thing I did was to hand over my full equity portfolio - worth over Rs. 6 crores - to him for management. I thought that if I am going to ask my clients to take his advice on direct equity, I must first entrust him with my own portfolio. In a short span of less than a year, he has already saved me a lot of money by getting me out of a number of stocks at much higher prices and at the same time, is making me money by investing into some very good picks. He is accumulating some very interesting small cap names, which he is confident will become multi-baggers in the next 3 years.

People think that technical analysis is only for day trading and short term trading - they are wrong. Technical analysis can give you very good cues on when to time entry and exit in stocks that you are tracking. Fund managers will always paint a bullish picture - but, if you study technical trends closely, you will get a more objective picture.

Seeing him active on my portfolio, some of our friends and clients have also started taking his advice on their equity portfolios. Today, he is advising around Rs. 30 crores in direct equity portfolios for friends and clients. Some of our MF advisors in Mumbai are also consulting him for equity strategies. He is for example bullish in banking only on HDFC Bank and Yes Bank - no other bank. He is bearish on Reliance, L&T, BHEL. He is reasonably optimistic on IT and pharma shares. He believes the rupee is likely to go down to 54 levels against the dollar, which will benefit IT sector. He has been a buyer in Hindustan Unilever from 250 levels and is still a buyer at 390. The sensex would show strength only if it sustains above 17700 levels.

This has now opened up another wing in our financial advisory business. We were not into active stocks advisory before Pratik joined us. Now, we are able to offer another important service to our clients. And frankly, in a market that is trending sideways to down, being stock specific and being able to identify good potential multi-baggers will be a good service to our clients.

What we are doing is to grow our business without anybody coming in each other's ways. Each is a specialist in one field and is growing the business in that field.