The fascinating tale of how Dhirendra Kumar, founder and Chief Executive of Value Research grew a business that eschews the cut-throat attitude of the financial sector and maintains a long-term connect with the small investor. Here are edited excerpts:
Tell us about your early days?
I had a standard school education while growing up, across Assam, West Bengal and then Patna. My parents had government jobs. I grew up in an ordinary middle-class household with my one brother and two sisters. In 1987, I came to Delhi for my college education. Just at that time, the brand new College of Business Studies was being set up and I was part of the first batch of students. In the context of that time, an undergraduate education in business was an unusual thing and certainly more interesting than a routine graduation.
During my college days, I started carefully reading all the business and financial news I could find. I would also clip out the news and carefully file it under the company name. A couple of years later, this private, self-curated library became an invaluable tool in my education and then business.
Looking back, I realise that I was obsessive about classifying and storing information properly and in a way, that is really the core of Value Research even today.
How did you enter the world of mutual funds? Was it a planned move or an accidental one?
It was certainly not pre-planned in the sense of having some grand business plan. It happened in a series of steps, each of which logically followed the previous one.
In 1992, at the dawn of liberalisation, there was a great deal of excitement about PSU disinvestment. Fresh out of college, I walked into The Economic Times and somehow managed to meet the editor and convince him to let me write a series of research reports on these companies. These reports were published as a series in the newspaper and that was the birth of Value Research. After that I did some research projects and reports for various entities but there was a business imperative to set up some recurring sources of revenue.
Mutual funds were just coming into their own as an interesting and useful way to invest and I had started analysing and understanding them, something that few people did at the time. In 1993, I managed to convince the editor of Business Today magazine and Economic Times to start a regular Mutual Fund Scorecard--which was a format that we pretty much invented in those days.
After that, as mutual funds grew in India, my expertise and analytical skills also kept getting better and since that time, Value Research has remained the leader in data, information, analysis and advice on Indian mutual funds.
Were you always fascinated by financial products?
Well, certainly not as a school student. I mean I don’t come from a business community or family so there was no particular reason to be interested in them. I did have an interesting kind of a business experience. While I was a school student, I was practically managing a small manual printing press that my maternal grandfather ran in Patna. It was something quite trivial in today’s context but I now feel that the familiarity I gained with the nuts and bolts of running a business stood me in good stead later.
However, as far as financial products go, as I’ve recounted earlier, my education and early professional experience led me this way and then I realised that yes, I was deeply interested.
Did you have a team in the initial days, or was it a one-man show?
In the very early days, I was obviously alone. Value Research was just a desk and a chair in my room. However, as soon as I had some regular revenue, I took on a handful of people. Still, the numbers stayed in single digits for almost a decade. Today, we have about a hundred full-time people and we work out of our own building in Noida where we use just about 15,000 sq feet but which has room for growing to at least three times the current strength.
During the early days’ data compilation would have been a task. How did you go about it?
Data was a huge struggle. For the first seven-eight years, data arrived by fax and had to be re-entered by hand. Of course, since the number of funds were small and NAV declaration was not that frequent, the scale was smaller.
Right in the beginning, it was much worse. In the early 90s, funds calculated their NAVs once a quarter. So, most of the time, not only did the investors not have any real data about what their investments were worth, the mutual funds themselves didn't know. I personally got a taste of this in the early 90s when, as a young mutual fund researcher (maybe at the time India’s only one), I landed at a public sector mutual fund's head office to find out their schemes' NAVs. I heard someone say ‘Wo NAV mangne wala aa gaya’. It turned out that they hadn't calculated it themselves so someone just handed me a 'Register of Investments' and asked me to calculate it myself, which I sat down and did!
What was the biggest turning point for Value Research?
Like any information-based business of that time, the single biggest turning point was the rise of the Internet. Before that, I was just another vendor to media giants and financial companies. I had no deep moat around my business and was at the mercy of a handful of customers, each of whom was a much bigger and more powerful entity. The Internet changed all that. Value Research itself gained access to end-customers and I was able to build a lasting brand that earned the trust of millions of investors.
Another turning point was in 2007, when with the launch of Wealth Insight magazine, we branched out into equity analysis. Our expertise in this area kept getting stronger and in 2017 we launched Value Research Stock Advisor, our premium advisory service.
Was there ever a point where you thought about selling or divesting the company?
Never. Of course I have been approached by a wide variety of potential funders and acquirers but I have never considered these offers seriously. My instinct has always been to bootstrap and not to seek rapid growth at any cost.
I have a distinct set of values in terms of being honest with customers and giving independent, unbiased views. These values would not fit well in today’s venture culture. See, I’m not running a holiday resort or an apparel website. People trust Value Research’s advice and opinion to shape their entire financial life. That responsibility has to be shouldered in a way that is possible only if I’m in full control of my business.
How has the interaction with investors shaped your business?
People write to us with their investing and financial queries and we love answering them. We have always done so, although we do so publicly since we have been a media company and not an advisor. Staying in touch with actual small investors is a great way of being in touch with what is actually going on in people’s financial lives. People learn from the interaction and so do we.
Apart from those focused on mutual funds, Value Research has a variety of offerings. Can you elaborate on the other offerings?
As I described earlier, we have an exceptionally strong equity analysis activity. We also study and carry analyses on NPS, insurance and a variety of fixed income products. In terms of customer types, we serve individuals as well as businesses. We have a large B2B business which is not visible to the public. Media, financial institutions and large investors are our customers in this business.
We have very strong in-house data and tech capabilities. In our domain, these are second to none in the world. All this work has always been done completely in house by our own people and has never been outsourced in any way. Today, well over a hundred financial institutions depend on our data feeds to run their systems, websites and apps.
While MF penetration is rising, there is much to be done in Tier 2, 3 & 4 cities. How can the mutual fund industry achieve this?
The glass is half full. The Indian investor population has always been divided into two extremes--the rich short-term punter who likes stocks and the middle class saver who has a long-term perspective but is almost completely into fixed-income deposit-type products. Through banks and post offices, savings products have a huge reach. Mutual funds are getting there, but the process has started accelerating only now with industry efforts like the sahi hai campaign.
How do you see the MF industry emerging in the next 5-10 years? What, according to you, is the potential challenge the industry could face?
I think a period of great growth and the fulfilling of promises is beginning. All this is deeply intertwined with the general direction of strong sustainable growth and good governance that the country is seeing now.