Warren Buffett Interview : Visit Analysis (Part -2)

In continuation with my last post, here I would like to give a brief account of an exclusive interview. Speaking to CNBC-TV18's Shereen Bhan, Buffet the chairman and chief executive officer of Berkshire Hathaway said India is a 'dream market for investors'. "The market is growing, getting more prosperous by the day, businesses are flourishing," he said. Sounding very optimistic and gratified with the current developments in the global market he didn't seem much disturbed with the problems of Liquidity denying any need for open-ended monetary expansion. Here are some of the critical questions answered by "the oracle of Ohama".

Q: What is your own assessment of the strength of the recovery that we are currently seeing in the US because there is mix economic data that we contend with week after week, the markets are doing very well?
A: It is getting stronger month-by-month. Sure everybody would love to see it go at a faster rate but we have over 70 businesses, of which perhaps four or five in a residential construction area, and they are not getting better. But the other 60 plus are getting better at different rates. Some of them are setting new records but the 60, which is close to 90% of our businesses are getting better by the month and that was true a year ago, that is true today.

Q: So what is it that attracts you to India at this point in time? Is it the size of the market? I know you don't have an India master plan as of now, but what is it that attracts you to India at this point?
A: The market is growing, getting more prosperous by the day, where businesses are flourishing. This is a dream market in a sense. The number of people, the buying power that they are gaining, the ability to produce things, everything is getting better everyday.

Q: The former RBI governor in India YV Reddy he said we should not blindly believe in the efficiency of global financial market because it does not exist. You agree with him?
A: Yes I agree with that but that does not mean that I don’t believe in the market and follow market signals. Market can get very inefficient and capitalism and markets lead to access particularly borrowed money is available and all that. When people have favourable experience in markets they tend to do things that eventually becomes stupid. Somebody said that there are the innovators, the imitators and then idiots; sometimes they follow in that progression.

Q: Can you give us some sense of how soon we could see Berkshire Hathway making a significant investment into India? Will you be looking at majority control on whichever company that you do decide to invest in?
A: Just within the last ten days or so, we began an insurance operation here in India. I do not know where the next opportunity is going to come from. It was almost five and a half years ago that I received a letter from Eitan Wertheimer of Iscar Metalworking. I didn’t know I was going to get that letter, it just came in and we are ready to go.
The same thing will happen in India, I will hear from somebody – I will be meeting a lot of people in the next few days and maybe from the next week or a year from now, one of those people may contact me and that is the way.

Q: Are you certain that you will make an investment in India in this financial year?
A: Our cheques were clear, I can promise you that.

Q: The average group of people present here is about 40. So, what was Warren Buffett’s dream when he was 40?
A: I have always been doing what I loved and so it’s never been that if I want to get there to some next plateau then I will be happy. I have been happy as I go along and it’s been a work in progress. It will never end. Berkshire is an organization will grow beyond my lifetime. It is not like I have any specific goals for next year or the year after. I just know if I keep showing up, good things will happen.

Q: Do you see new challenges for the cross border businesses?
A: There will always be people in all countries that resist change. There will be an element in United States or in other countries that resist the idea of more trade between countries. I am in exactly the opposite camp and believe that it will prosper as we do more and more business with each other.

Q: How real is the threat of protectionism at this point in time? How worried are you?
A: There will always be people pushing for protectionism. We are living better now in the United States because we are importing 16% of our GDP than we were when we were importing 5%. So, I believe that logic will prevail over time though there will be plenty of resistance and Congress will see from time-to-time bowing to protectionist type sentiment. In the end, the right thing works out.

Q: When there are so many other fields that are more challenging and more interesting why metal?
A: It is a very important business. Everything we do in life would not be done as efficiently or as effectively, if companies like TaeguTec were not turning out extraordinary products and thinking about products of tomorrow working with the end user. Hence, I regard it as a very exciting industry and I couldn’t be happier to be in it.

Q: Parliament session is going on and it is marred by corruption and scams. How this will adversely affect your investment plans in India?
A: Corruption is in every country, including United States. We are going to look at every activity we do to make sure that none of that creeps into any of the Berkshire Hathway companies. As I point out to lot of the managers, which is in the back of the annual report this year, if you have a city and we have 260,000 people working for Berkshire Hathway companies, there are going to be some who are wrong. It is our job to find out soon about those incorrect. We cannot eliminate all wrong doing. However, our whole approach is to set a tone at the top that we will move down from the various operations, so the people will know what is expected of them is good behaviour. It’s not a big issue but you have to simply draw the line. There is plenty of good and honest business to be done in this world and we are going to try and get every bit that we can.

He defended his lack of business interest in India before with a patience strategy followed him to find a big opportunity to start things off here.

Finally when asked about any succession plan in his company as Mr. Buffett is himself 80 yrs old now, he remarked that they already have a plan for that concern and will be revealed only when the time comes.

My take->
Overall the interview was filled with wit, charm and optimism of the great old man. He surely seemed to gain faith in the Indian economy in concord with the global market. He preferred partnerships and mutual development of all the countries for a promising future. Thank you!