Face Value – Creation and Destruction of Shareholder Value in India

by Debashis Basu

GV Ramakrishna, former Chairman of "This is an uncommon book on a common topic written in a readable style. The little understood, but widely used cliche shareholder value has been demystified with a detailed and perceptive analysis of several companies. Many myths have been convincingly exploded... being the first of its kind, this book will be of immense value to capital market players, intermediaries, corporate executives, and all those interested in the practice of shareholder value."Published in 2003, Face Value is the first Indian book on widely discussed and misunderstood ideas of our time.This book, the first such book on shareholder value in India, was printed in 2003 and has been out of print since then. Republished as a kindle edition, it covers 10 years of rich corporate and market history between 1992-2002, which is unavailable anywhere else. This is the period when all the current drivers of value creation came to be identified and understood – prudent capital allocation, committed management, operating efficiency, all leading to earnings growth, no equity dilution and high return on invested capital.It is a book on the various factors that make shareholder value rise or fall and how these factors played out in the ‘90s, when the economy was characterised by high frictional cost of doing business, absence of current productivity tools including internet and high interest cost. Economic liberalisation, competition and entry of foreign institutional investors were also forcing companies to evolve and change. Most companies were clueless about what drove shareholder value and so, made mistakes that were responsible for wanton value destruction in the 1990s. This book captures this important part of Indian corporate history.Businessmen, fund managers, individual investors, business consultants, brokers, investment bankers, regulators, academics and students of management, market and finance, interested in the history of shareholder value in the aftermath of ‘90s liberalisation, will find this book unique and fascinating.This book is a product of a simple what creates and destroys shareholder value? In seeking answers to this question, since 1996, the author and his colleagues have been involved in pioneering work involving a multi-level research and analysis that monitoring of hundreds of corporate actions and their short-term and long-term impact on shareholder valueClose interaction with top managers and CEOsQuantitative and qualitative correlation studies of market prices and corporate strategiesExtensive field surveys on value drivers (done for more than 20 top India clients) that involved meeting brokers, analysts and fund managers - minds that influence stock pricesAuthor's two decades of close observation of how Indian businessmen think and behaveThe result of such intensive research, analysis and synthesis is a comprehensive book full of unique local insights presented in a lively style.

Genres: Finance, Nonfiction

400 pages, Kindle Edition

Published July 14, 2021

Reviews

[Shan P S · Rating 5 out of 5]

This is an essential read for all Indian equities investors. Most of the reading material for the average investor are US centric. The examples are American companies and the Indian readers find it confusing to relate to.
The book evaluates how listed public companies in India created shareholder value between the period 1992 to 2002. This time period is very relevant in the Indian context. The Indian economy opened up this year and the capital markets really began life after this event.
The author has put a lot of effort to honesty appraise the companies performance and their stock returns. The author has been fair and unbiased in his writing. Reading this book in 2021, I am surprised to see how things have panned out for all the companies mentioned in the book.

I wish I had read this book 15 years ago. My investing journey would have been very profitable. Well, better late than never.

[Bharath ayyappa · Rating 5 out of 5]

One of the best books I have read. Moneylife foundation helps first time investor like me to not make stupid decision. Hope more people get to read this book.
PS: Update regarding ranbaxy is needed here.

[Pranshumaan · Rating 3 out of 5]

Slightly dated but a good read nevertheless.