The Hindu Business Line : `India is exciting, but not without hassles'

He defines his experience in investing in India as `exciting,' but adds that it is, "never a smooth sailing. If there is a possibility of the bureaucrat saying no, the answer will be `No.'" An original allottee of nine million shares of HDFC Bank before its listing, Mr Sat Pal Khattar, Chairman, Khattar Holdings Pvt Ltd, Singapore, in an interview to Business Line, said that there "has been tremendous improvement in the investment climate of India."

Excerpts from the interview:

Give us a brief outline of your company and the kind of investments it makes.

Khattar Holdings is an investment vehicle for our family funds; we invest our own money. We invest in India and other countries, but India is one of our major investment destinations.

Where else do you invest?

China, Europe, Vietnam.

Only in equity or businesses as well?

We do both. We do part of our investment in listed equity, a lot of which is in private equity that is not listed, and which may or may not get listed. There are occasions when listing is so remote that we may not even think of it.

What Indian companies are you invested in?

I don't discuss my investments, not even with the local newspapers.

But you could talk about the sectors.

We have fairly broad based investments in banking and real-estate.

Have you always lived in Singapore?

I came here when I was seven ; my father came in 1932, but we were in Pakistan during Partition and ended up in a refugee camp in Ambala. My father returned to Singapore to start over. The Japanese, who controlled Singapore at that time, closed down his sports shop.

When did you start investing in India?

In the early 1990s, when Narasimha Rao and Dr Manmohan Singh decided to open up India.

How has been your experience in India so far?

Exciting.

How would you define `exciting'?

One, I made money in India; I've had a few lemons as well, which was to be expected. But on the whole, we have done quite well.

What percentage were the `lemons'?

About 20 per cent. Nobody invests in equity and hopes to make money in each one of them. Now there has been a meltdown in the equity market, but in three or five years the Sensex will hit 20,000 and people will forget what happened in May 2006!

So you do have that confidence?

Yes, a growth rate of 7-8 per cent is sustainable for India and very good in Asian terms. But investing in India is also very challenging. Very few investments in India are without hassles. For instance, I invested in the Radisson Hotel in Delhi and it took 15 months after the hotel was ready to get a licence to open it! In no other country, does one face such hassles. Even with regard to other investments, rules and regulations take a lot of time and it is not always smooth. If there is a possibility of a bureaucrat saying no, the answer will be `No.'

But haven't things improved over the years?

Yes, tremendously. But there is still a tendency among the bureaucrats not to let go of control.

In which other areas are you invested?

I'm chairman of a public listed property company in Singapore called Guoco Land Ltd, which has its headquarters in Hong Kong (Guoco Group). But my personal investments are broader.

So would you be interested in the DLF listing?

Unless the price is unattractive.

You mentioned banking as an area of interest.

We have an interest in HDFC Bank and were the original subscribers at Rs 10. We were allotted nine million shares before it went public.

Have you retained those shares?

We held on to some and sold some. We also have a small interest in Centurion Bank.

Do you also invest through Indian mutual funds?

No, we don't need an intermediary to invest for us. We do it ourselves.

What areas in India look exciting to you?

Clearly infrastructure, but our investments in that sector is through Gateway Distriparks Ltd (listed in India). We have a small interest in the auto and manufacturing sectors, but real estate and finance form the bulk of our investments. We buy equity, even pre-IPO equity through the book-building route, and even six months before listing, when they need validation of their new price, they come to us and we examine possibilities.

Has perception about India changed in Singapore?

Definitely. Even our Senior Minister, Mr Lee Kuan Yew, made a public statement a few days ago that he was wrong about India and that India would be an important economic engine for Asia and the world. Now even the Singaporean Chinese who were earlier uncomfortable about going to India are now looking at it.

I am chairman of a group called Network India, which was formed to help Singaporeans invest in India or help Indians come and use Singapore as a base. This is an advisory body with a dozen members that helps people who don't know the rules and regulations on investing in India.

Are Singapore investors interested in investing in Indian equity through the mutual fund route?

Yes, except for the very big investors who invest directly, others use the mutual fund route. The meltdown in the last few weeks not withstanding, they are still interested in investing in Indian equity. But there is more interest among the Indian community here which understands Indian equity much better. An India-specific index fund was launched a few weeks ago by Barclays.

What kind of response did it have?

They haven't disclosed the figure, and probably never will, but I think it will be well received.

What about Pakistan? Are you looking at investing there?

Pakistan wasn't on my radar till now, but I'm slowly getting interested and might look at opportunities there. Things are starting to look a little attractive.

How often do you travel to India?

Twice a month.

And like many other Singaporeans, do you also have a problem with our congested Indian airports?

I am used to it. I don't regard this a negative feature. In 1991, it used to take me one hour to clear Immigration, now if I don't have checked-in luggage, I'm out of the airport in 10 minutes. But the impression of India on a person who is going there for the first time is not great. Singapore is nice, clean and green, but the opportunities are not in Singapore.

Are you looking at China too?

Yes, I go to China once in two/three months.

Do you have a sentimental affinity for India or do you take a hardcore business decision when it comes to your investments?

Sentimentality comes into the picture but in a very limited way. I feel comfortable in India because I can speak the language, understand the nuances of the language, culture, etc., which I can't in China.

But do you think business opportunities are greater in China?

I think they are greater in India today for somebody like me who thinks he knows a little bit about India! About 60-70 per cent of our investments are in India and 5-10 per cent in China, with the remaining in Singapore, Malaysia and Europe. I think in the coming years the perception of India will become even more positive. This century belongs to India and China, even though there will be mishaps along the way.

There are a lot of Indian professionals here and they find Singapore attractive, the reason being that you can keep your Indianness here; you are just three-five hours away from your cousin, uncle or grandfather.

In the West, you can't keep your Indianness; one generation and it's gone. In the UK, for instance, they look Indian but speak Cockney!

Singapore used to be very important in this region. As the Indian economy surges, are people here looking at India as a rival or a partner?

No we don't regard India as a rival, India is so big, so diverse. We are not competitors but would like to benefit from India's growth.

Our land is expensive, our labour is expensive and our cost of living is much higher; we will never compete with India in the areas where India excels.