In talks with Mr. Anil Lamba

Q1. You have been on a mission to spread financial literacy for a while now. How has the journey been for you so far?

I make my living by training corporations. It’s my bread-and-butter activity, which is a hobby turned passion turned full-time profession. In fact, the desire to train the underprivileged segment rose from the thinking that I owe a moral obligation to those people who can’t afford to pay for training but need it as badly.

With time as we expanded our scope, it became a very ambitious project. This project is still in the nascent stage and the challenges aren’t over yet. I can’t talk in the past tense because the challenges are there now in the present. We have a long way to go before we make real headway. We have just about touched the tip of the iceberg as of now.

My model is a volunteer-driven one. The vision is to mobilize about a million volunteers who in turn will be able to train a billion Indians. This might take 10-20 years or even more, and I may not be even around when all this might be happening for real. This is a project that should go on and on and it should have a life of its own.

I don’t plan to train the target audience myself because if I train them, I’ll be able to reach only a handful of them. To reach large numbers, we have to build layers of volunteers to cover the huge distance between us and the target audience. Also, it’s very heartening to see how spontaneously people respond and offer to become volunteers.

So, we are creating content that will be used to teach volunteers who will in turn teach the target audience. Since we’re talking about people who are low down in financial affordability, they will most probably not understand English, so our content needs to be translated into every Indian language. And to communicate the content more efficiently we need to present it in various formats, video, e-learning, textual, and so on. A lot of the back-end work is going on and much more needs to be done. That’s the plan we’re working on to succeed at the big mission.

Q2. In your financial literacy learning program, you’ve categorized people into different groups like small business owners, NGOs, housewives, students, etc., and designed the course according to their needs; how has this approach worked out for your program?

There’s no such thing as a right or wrong approach. There can’t be one answer for everybody’s needs. When we did the original thinking, we just broke them up into 6 groups, but there can be 10 such groups, and maybe we’ve left out some important ones.

From my experience of conducting workshops for businesses, I realized that in the corporate sector as we go down the line, there are people left untrained because it doesn’t help the company. So, we decided to cover the employees on the lowest rungs. We want to focus on small business owners outside the corporate sector whose needs are the same as the big corporations, even though the numbers in absolute amounts may be smaller.

Housewives handle the finance at home. So, we decided to cover housewives from low-income households and give them some literacy about the importance of saving habits and how to plan their expenses better.

Then, there are NGOs who are doing good work. They can stretch their money further if they know how to handle money and do good for more people with the same resources.

Students are important since they should be taught young. Most people make the mistake of realizing the importance of financial literacy very late in life, and they learn it the hard way by paying a very high price for it.

Lastly, we decided to club everybody else into one bracket, viz. the generally underprivileged sector, and as time goes by, we may create more segments.

Q3. We have seen a huge influx of traders in the markets during the pandemic. This has brought in a great amount of liquidity and cash into the market. What is your opinion on the thought that all these traders/investors may soon withdraw themselves from the markets seeing how tough it is to survive out there and the results if such a scenario takes place?

This happens all the while. I’m not sure whether a lot of new people have come in or not, but definitely, a lot of money has come in. How much has come from the existing people and how much has come from brand new players – that remains to be checked. I doubt if too many new players came in the market when everybody was expecting the market to crash, and funnily the markets have gone up.

In fact, to a large extent, all my predictions were wrong. Because every time I wanted to buy, I said no it should fall by all logic so I am going to wait for it to fall, but instead of falling, it went up. So it defied all logic, so far as I am concerned. So, I still haven’t invested since probably March, when it started falling. I was sure it will fall further, because COVID is such a massive problem and everybody’s businesses were shut, the numbers were taking a hit, turnovers were not there. So logically speaking, everybody’s results were going to be bad. The markets should have crashed further, so we were all waiting, but that did not happen.

But on the other hand, due to the stimulus packages introduced by different countries and more money in people’s hands, the liquidity found its way into the market. And then, of course, the market is a very sensitive place that grabs any good news that it sees so when little signs of revival were seen, markets would suddenly shoot up, and that is what seems to be happening. But you’re right, this place is extremely fluid. Investors will come when they see things might be getting better and they will rush out equally fast when they see that things are going bad, so that can happen, that will happen, and that happens every now and then, it’s no big deal! Markets are used to that. FII’s money is not permanent money, like water it’ll find its level, wherever it is attractive it’ll move there. But that’s nothing new.

Q4. A lot of unicorn start-ups are eyeing for IPOs in 2021, the most prominent ones among them being Flipkart and Zomato. Considering the recent blockbuster IPO openings of a lot of companies, do you believe the upcoming ones in 2021 will be met with a similar response by the investors?

Cannot say, they could well be in for a rude shock. A lot of companies start planning an IPO, seeing the response of others and the process is long, and by the time the issue comes to the market, the markets have already turned the corner, so it is anybody’s guess how these will do. Those which come in quick succession probably will get a good response because the market sentiment still seems to be positive but those which come after a few months, and now with this new strain coming from the UK, you again don’t know what the implication of that is going to be. As I said, markets are so sensitive, you hear one bad news, it falls; you hear one good news, it just shoots up, so it’s anybody’s guess.

Q5. In your book Flirting with Stocks, you’ve mentioned that investing is a national duty, and investing in markets will result in more capitalism. What are your views on these factors contributing to the development of the country?

Imagine if there was no stock market and just IPOs. How many people do you think would invest? People would not invest since the person who invests, tomorrow if he wants his money back, he will have to go hunting for people who want to buy it which would be a very difficult job. The stock market provides a platform for buyers and sellers to meet and therefore if any investor wants to exit, he will be able to do so. Only when an investor knows that he would be able to exit when he needs the money back, he will be willing to invest.

If I tell you, I’ve got a wonderful project, why don’t you invest with me, and I will return your money, multiplied manifold, 20 years later, chances are you will not be interested because of the fear that in case you need your money back tomorrow you will not be able to get it back. This is the problem that the stock market addresses. The stock market allows you to encash your investment whenever you wish to have it back. It says, if you have money, please invest in the project. Whenever you want it back, you can find a buyer to whom you can sell. So that makes people more inclined towards investing.

But imagine that you wish to sell, and your broker can’t find a buyer, because there is lacklustre activity on the stock exchange.

So investing is a national duty because when a large number of people invest, they help in making the stock market a busy place. When the stock market is teeming with activity, any buyer will be able to find a seller, any seller will find a buyer. When buyers and sellers find it easier to locate each other, they are more willing to invest the next time an entrepreneur comes out with a public issue of shares. When more people are willing to invest, entrepreneurs find it easier to raise money and that leads to more industry, more employment, more GDP growth, and the whole thing started just because you and I said let’s invest in stock markets.

I’ve always felt there is a definite correlation between a nation’s development and the development of the stock market. Which one led to which, I’m not sure, but since there is a definite correlation and you and I want to contribute to nation-building, I think a great way to do it is through the stock market. This is why I keep saying investing in stock markets is a national duty.    

Q6. In your various talks, you’ve mentioned that most of the businesses fail drastically and a few only grow exponentially big. According to you, what is the reason behind such incidents in companies, and what is the position of Indian companies in this context as compared to foreign companies? 

There are several factors that lead to failure, but the biggest factor is financial mismanagement. It’s an undisputed fact that out of all the businesses that fail, most fail because of bad financial management. I’m not saying most businesses fail. Out of 1000 only 50 might fail, but of them, 40-45 will fail because of bad financial management.

Financial mismanagement is the single biggest cause of business failures worldwide. Now why this happens is important. Because people’s perception of what is financial management is wrong. They perceive accountancy to be finance management and consider the accounts department as the finance department. Consequently, even organizations that understand the importance of financial management, try to make the accounts department more robust. But very little finance management happens there. Finance management or mismanagement occurs in the actions of every individual in the company. Every action of a production person has a financial implication. Every action of a purchase manager has a financial implication. Every HR decision has a financial implication. And these are the people who call themselves non-finance people. That term, non-finance person, is so terrible because the moment you say you are non-finance, you’ve absolved yourself of the guilt of financial mismanagement, you are saying it’s not your job. Whereas it is your job. An HR decision is not only an HR decision, it has to be a financially intelligent decision. The production decision has to be financially intelligent. How much to produce, what is the process, the time taken from raw material to finished product, everything has a financial implication. The purchase manager doesn’t just decide to buy, he should know how much to buy, what kind of inventory to maintain, on what terms to buy. He should understand if he buys less, there will be a financial implication, if he buys more, there will be a financial implication. Production happens in the production department, HR happens in the HR department, sales happen in the sales department, but finance doesn’t happen in the finance department. It happens across the organisation and mainly outside the finance department. So, one of my missions is to create an awareness that everybody is a financial person which means everybody must understand the financial implication of their actions. The so-called finance person (working in the accounts and finance department) might be brilliant, but he does a post-mortem. He is not there when financial management or mismanagement is happening. After those people who call themselves non-finance persons finish what they are doing, this fellow comes into the picture, does some calculation, and tells us where the company has made a profit or a loss. So, the finance guy can’t generate profit, he calculates the profit. Profits are generated by people who call themselves non-finance. Financial management is the generation part, not the calculation part. So, this financial illiteracy amongst the so-called non-finance people causes most businesses that fail to fail.

Q7. We all are aware of ‘Atma Nirbhar Bharat’ but most might be unaware of the fact that Chinese Companies own shares of numerous well known Indian companies and start-ups and have a good amount of influence as well. Also, if India cuts trade ties with China, we might not create an impact as most are expecting. How do you think India should approach this aim and how doable is it?

Not doable at all. It’s all tokenism. It is fueling patriotic fervor, which is fine, which should be done, but it will have zero impact. What you and I can shun are a few Chinese-made products, which probably in the overall picture are not even a minuscule percentage of the total trade with China. China is an extremely smart country, it has made in-roads into numerous countries across the world, including India. You talk about Diwali, they say don’t buy crackers or lights from there, fair enough! Nice sentiment! But what kind of impact will it have. They own companies in India. You may think many Chinese investments in India are made by private sector companies, but that’s not the case. In every company which has Chinese origin/ownership, there is either the PLA (People’s Liberation Army) involved or the Communist Party of China is involved. Nothing is done without their blessings, doesn’t matter whether the company has come from China or it has been routed via the US, or wherever. It is ultimately China-controlled. Alibaba has funded, tens or maybe hundreds of companies. Tencent has invested in so many companies. China has investments in infrastructure, automobiles, engineering, tech sector, energy, real estate, pharmaceuticals! Alibaba owns Paytm, Big Basket, Snapchat, Zomato. Tencent owns Ola, Byjus, Flipkart, Swiggy, MakeMyTrip. And by just not buying Chinese crackers or lights, do you think it will make any dent. So, the strategy has to be something else.

Our problem is not commercial. In a globalized world, we should buy from them what they are good at and we should sell them goods which we are good at, only then everyone benefits. Atma Nirbhar is very fine thinking, but not the most efficient. If you start making things which are better made in Germany, you’ll have a substandard product with you. If you’re good at IT, sell IT services and buy German-made products, that’s when Germany will get the best IT and India will get the best engineering products.

Having said that, Atma Nirbharta is a wonderful thing because then you are not dependent on anybody, but the price that you pay will be in the mediocrity of quality. We would be doing things that are not our strength. So, there are no straight answers to the question. At the same time, we have to protect our sovereignty and make sure nobody enters through the backdoors and takes undue advantage, which does happen. And China is known for that, so we have to be wary of China.

Q8. What is your opinion on the various courses such as CA, CFA, and MBA in Finance for value addition in the world of Finance? 

Being a Chartered Accountant myself, I’m obviously biased. I feel a course like CA is one-of-a-kind and probably the best. The depth and grounding it give you is amazing. Having said that, the CFA course is also very good but its scope is narrower. If you want to work in the Financial Industry, the CFA course would be very valuable. However Chartered Accountancy gives you broad-based learning, and you can be absorbed in any industry. Plus, you could be on your own – practicing – or you could be employed. CFA is a wonderful course, no doubt. If you’re working in the field of banking, investment banking, or with a venture fund, it can be an amazing add-on to you; but it has restricted application. CA is extremely wide. Today, I do not practice because I followed my passion – education – but everything that I do and teach, I’ve learned from the CA course.

I’ve taught MBA Finance for several years too and I found that, even for MBA Finance specialization programs, the level of complexity at which we would stop is the level where we start in CA. And it’s no fault of anybody, that’s the way the curriculum is designed.

The CA students go through a gruelling schedule and training. But they have their own shortcomings. They’re not taught, unlike management graduates; how to dress, how to speak, business and social etiquettes. So, they miss out on that. Very often, people do not understand the amazing wealth of knowledge that is there in a CA because of their inability to communicate it to people correctly, and therefore they are sometimes undervalued. An MBA student comes out polished, knows how to dress well, wears shining shoes, knows how to knot a tie. So sometimes they even get to command higher salaries than a CA. But again, mind you, I’m a biased person. However, I ran my own B-School for several years too, so I can speak from both angles.

Q9. What advice would you like to give to the students of St. Xavier’s College?

You seem to be doing great work. It’s lovely to see the interest you’re taking in the field of finance so early in life which is what is required. You have also zeroed in on financial literacy as your mission which makes me really happy. At your age, I was lost in my CA books and wasn’t aware of what was happening in the outside world. Students of St. Xavier’s seem to be doing well, and you two are an example of what the rest of you are like. I think the future of India is very bright. So, keep up the great work that you guys are doing! 

Disclaimer – The opinions expressed in this article are personal views of the interviewee.

Interview by: Aayush Sharma and Ronit Bala