10/05/2020

Story of a Stock Market Legend:

Radhakishan Damani

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Childhood & Early Life in the markets

In the year 1954 RKD was born to Shivkishanji Damani in a Marwari family in Bikaner,
Rajasthan. His father along with his elder brother were working as stock broker on Dalal
street.
Unlike several veteran investors, RKD was not academically sound. He got admission into
B-com in Mumbai university.
Since no one was well educated in his family he lacked interest in study and left his study
after first year of college.
Initially, He didn’t have any interest in stock market. He was into ball and bearing trading
business.
After his father’s death family had to face some financial issue. So closed the ball bearing
shop and he started stock broking business with his brother.
Since Mr RKD didn’t have much understanding on stock market so he started as a
speculator; buying stocks and hoping that it will go up.
Naturally he had to take many hits. Soon he realized that speculation is not the best way
to grow capital.
Even after started investment he was also actively trading as he didn’t have much capital
to invest. As he taught to Rakesh Jhunjhunwala,
Trading will help you to get capital and investment will help you to grow capital.

Manu Manek, The Black Cobra:

Manu Manek, the dreaded market operator, ruled Dalal Street in the 1980s. The cobra, as
Manek was referred to by brokers who disliked him, would run riot pounding and shorting
stocks at will. Not that Manek was a ‘perpetual bear’ by choice, but in a market lacking of
low interest funding, shorting was probably the smartest winning strategy to adopt.

Bullish traders, who had borrowed money to bet big, would be plagued by calls from
money lenders – either to replenish margins or exit the position completely.
When loses mount, the bulls pull out cutting huge losses. Manek – the Cobra would walk
away with all the gains he made on his short positions.

RKD, then in his late-20s, would stand at the farther end of the loud trading ring and watch
the Cobra in action. It is evident that the young Damani learnt a lot watching crafty Manek
spoiling the bulls’ party time and again. A few years later, RKD would employ similar tricks
to outgun his opponent – the big bull Harshad Mehta.

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RKD vs. Harshad Mehta

The late-80s and the early-90s were dark ages for Indian stock market.
Bombay exchange was clearly divided – with Gujaratis on one side and Marwari traders
holding fort on the other end.
“They spared no opportunity to bleed one another …
So when one group of traders bought, the other group went on an overdrive to spoil the
trade,” explains a retired investment manager of the old Unit Trust of India.
Gujarati traders found their voice when Harshad Mehta emerged from the shadows to
become the most powerful trader on D-Street in the late-80s. At around the same time, a
nondescript group – locally called the ‘triple-Rs’ – cut some real smart deals on the street.
The ‘triple-R’ group comprised RKD, a chartist named Raju and a young greenhorn, who
later became a big name in Indian stock market.

According to old-timers, Harshad and the ‘triple-Rs’ first locked horns over Apollo Tyres.
Harshad was long in the counter, but triple-Rs could not digest such high valuations for
the tyre company.
As was the practice of the day – and what they had learnt from the likes of Manu Manek
– triple-Rs went on shorting the stock, without really knowing the source of Harshad’s
endless funding.

But this was just the beginning of a long war that spanned for nearly two years – until the
scam was unearthed in 1992. The War was over and RKD and his commanders won it.

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Several years later, RKD is believed to have told a few of his friends: “Agar Harshad saat
din aur apni position hold kar leta, toh mujhe kathora leke road par utarna padta.” (Had
Harshad held his position for seven more days, I’d have taken a begging bowl and walked
on the road).

“Till 1992, RD was a punter like others of those times… He cleaned up after the Mehta
scam. He turned a long-term investor after 1992,” said an observer. Perhaps, he came too
close to bankruptcy then. He was scared of losing money after that,” he added.

After meeting his Guru, he started pay attention to fundamentals of the company. He
focused on investing for long term. That was the beginning of the value investor RKD.

Then he started investing in MNC and banking companies. He had always fascinated in
consumer business companies and invested in those as well.

In 1998, once again the battle continued between RD & MR Mehta, same speculation, but
on three stocks namely Videocon, BPL & Sterlite.
Again, the prices fell by more than 60% within few day’s & Mr RKD made killing profits.

Some brokers say exchange authorities even tried to bring together Mr Damani and
Harshad for a compromise but the talks failed.
When Mr Damani came to know that some small shareholders were left with positions
they could not exit, he covered up a part of short positions by buying shares from these
investors at a negotiated price.
When a payment crisis loomed, Mr Damani responded to a request from authorities and
offloaded a part of his holding at a discount. He was among those probed by regulators
for suspected price hammering, but was eventually given a clean chit.

The Technology Boom Of 1999-2000

Towards the fag end of 1998, the overall market sentiment began to improve.
Before long, the market was in the grip of a bull run led by technology stocks, which would
peak out in February 2000.
Some players say that Mr Damani found himself a bit out of depth during the technology
boom of 1999-2000.
He stuck to the classic rules of trading, short selling shares that he felt were overvalued
and going long on the undervalued ones.

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But stocks from the sectors that he had a sound understanding of, cement, automobile,
steel, were out of favour.
Technology was the buzzword at the bourse, and irrespective of whether those companies
were making money or not, investors were falling over each other to buy into them.

And Ketan Parekh had now taken over the as the reigning Big Bull, and carved out a
reputation for himself as a champion of new economy stocks. Mr Damani’s old school
strategies did not work well for him in this period.

The journey from a Successful Investor to

a Giant Retailer
Having seen sevreal downturns in his life he still transformed himself into a value investor
from a mere observer of the stock market.
During the late 1980s and the early 1990s, he invested heavily in multinational stocks and
eventually became one of the leading stock-market investors in the country. He now holds
stakes in companies such as the tobacco firm 'VST Industries,' the beer maker 'United
Breweries,' and the logistics service provider 'Blue Dart Express Ltd.'
Some of his best-performing stocks from his portfolio are 'VST Industries,' 'Sundaram
Finance,' 'India Cements,' and 'Blue Dart.'Despite his flourishing success in the stock
market he quit the market to get into the business line and started to get back to the older
business which he started which was in the retail industry.
The veteran always had an affinity for consumer companies as he always believed that
they are and will be a big success in the coming times and he had a little experience in
similar ventures which were operating in the same line of business, but this was not as an
employee or any board members but this was as an investor. After quitting the stock
market business, Radhakishan founded “D-Mart”
Back in 1999, Radhakishan and Damodar Mall, the then CEO of ‘Reliance Retail’ had bought
a franchise of ‘Apna Bazaar’, a Mumbai-based co-operative organization that had started
in 1948. Mr.
The IPO of D-Mat under the parent name ‘Avenue Supermarts’ was a big hit in the stock
exchange across the country as it had overwhelming response and created a new record
in the market.
This big success of the company’s IPO placed Radhakishan on the list of top 20 billionaires.
Since then he is known as the retail king in the country.
He believes that a company lies between three pillars which is its consumers, its sellers,
and its employees and the same can be seen in the business model of D-Mart.

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Highlights from career

• During the lifetime he has invested in many places, the biggest investment which came
to the notice and made him India’s retail king is his supermarket chain D-Mart.
• The portfolio of Mr. Damani is diverse as he holds stakes in a range of companies, from
tobacco firm VST industries to beer maker United Breweries to his own retail chain.
• The property portfolio of his includes the 156-room Radisson Blu Resort in Alibag, a
popular beach-front gateway close to his city of residence Mumbai.

Summary:
• Rakesh Jhunjhunwala, the Indian investor and trader who is regarded as the
"Warren Buffet of India," considers Radhakishan his mentor.
• Always dressed in spotless white clothes, Radhakishan began his success story as a
humble trader and now rules 'Dalal Street.'
• Often referred as Mr white and white because of far-fetched low-profile, simple
life and always wearing a white trouser and white shirt.
• He is a person who speaks very less and listens with utmost attention.
• He doesn’t believe in social media, keep distance from media and public
appearance.
• However, his actions are louder enough to make him go unnoticed.
• Due to his Midas touch, he has successfully earned the reputation of being one of
India’s finest value investors and founder of most profitable retail store in India.
• Rakesh Jhunjhunwala describes him as “More than intelligence he has wisdom. He
is extremely patient, humble and hardworking.”

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