"Sustainability is inherent in the DNA"

Regular readers of Wealth Insight need no introduction to this month's interviewee. You know him as the 'Main Street' columnist. He has been writing for us for the best part of 10 years. However, for those new to investing, Saurabh Mukherjea is the Chief Investment Officer and one of the founders of Marcellus Investment Managers, a portfolio management outfit. He has authored several books, including 'The Unusual Billionaires', 'Coffee Can Investing' and 'Diamonds in the Dust.' As part of our 'Money Masters' series, our editor and CEO Dhirendra Kumar sat down with Mukherjea in January 2024 for a chat on all things investing. Here's a sneak peek into the interview. Don't forget to keep an eye out for the complete interview on our website. It's a must-watch for any investor, brimming with anecdotes and indispensable wisdom. What do you think are the essential qualities of a great business? Leaving aside clean accounts, the first sign of a successful business is a long track record of steady revenue growth alongside a healthy return on capital. I call them 'Rahul Dravid-type' companies, who at least over a decadal cycle have shown double-digit revenue growth, which is a very fair ask given that nominal GDP growth in India is at least 10 per cent. And pre-tax ROCE is at least 15 per cent. Or rather, a post-tax ROCE of 12 per cent, which is above the cost of capital. Broadly, roughly 50 to 60 companies will pass this test. The harder part is figuring out which of those 50 odd companies are the dozen and a half companies with overwhelmingly powerful competitive advantages. The reason is that the companies with powerful competitive advantages don't shout about it from the rooftops. I'm not saying they hide it, but they don't like talking about their strengths. Instead, they do boring quarterly conference calls. When they come on media, they will make banal statements which sound uninteresting. But it's these companies where the