There are many who bemoan the absence of animal spirits in the private sector today. But Govindram Seksaria’s life shows that these qualities including risk taking ability, keen eye to spot the right opportunity and using the profits for philanthropy are innate in Indians.

Sekhsaria was ‘unlettered’, did not speak English or Hindi and hailed from the tiny village of Nawalgarh in former Rajputana. Yet he managed to awe the sophisticated traders in Liverpool and New York Cotton Exchanges, so much so that the President of the New York Stock Exchange and the New York Cotton Exchange travelled to India to see how the Indians operated.

Minhaz Merchant has done a service to the country by writing the book, “Govindram Seksaria, The untold saga of an empire builder.” It is a reminder to all of us that it is possible to assume a dominant position in the world, by a mere tapping of the ‘Indian-ness’ within us.

The NYSE President was shocked to see Seksaria sitting cross-legged on a white gaddi , dressed in simple kurta and dhoti. “He never travelled abroad, rarely socialised and led a Spartan life. Beneath the calm visage though lay sharp mind.”

Yet another aspect that stands out in this book is the manner in which Merchant has delved into the two aspects of Seksaria’s personality — the speculator and the industrialist, drawing the conclusion that the two sides complement each other and define him. This is at odds with general perception of speculation being addictive and destructive. Merchant, while briefly touching on the pitfalls, outlines how speculation can be constructive and lead to the creation of a large industrial empire.

“While Seksaria remained rooted to his origins as an intuitive trader and speculator, industry gave him added prestige and influence. And yet his identity as a man who made a mark as a speculator never diminished. Not only did speculative trading define him, it was his financial bedrock.”

Not a mere speculator

Most of the persons interviewed in the book seem to be in awe of Seksaria’s speculative skills. Rajkumar Sekhsaria, his grandson, calls him an inveterate, almost compulsive, speculator. “He would lose money and he would make money overnight.”

It is also true that luck has a large part to play in getting success in speculation and this is very nicely illustrated through a story told by Rajkumar. “Govindramji used to go to his native place quite often. He used to meet villagers in a small outhouse called bageecha in Nawalgarh.”

Once the villagers wanted Govindramji to place a bet so that they could win money from him. He agreed. The bet was that a mojdi (shoe) would be flung in the air. “If it landed one way, the villagers won, but if it straight up, Govindramji would win. One per cent chance.” The mojdi was flung in the air, “and as luck would have it, it fell and stood straight. He was that lucky.”

Using straddles

The description of the famous trade that made the cotton exchanges in New York sit up and take notice of Seksaria makes an interesting read for those involved in derivative trading. It was a perfectly executed straddle strategy, something that hedge fund managers use now. “His success was based on a study of straddles in commodities,” says Suresh Kotak.

Seksaria seems to have bought futures in New York prices and kept buying Bombay cotton futures that were trading cheaper than the NYCE contracts, till there was no spread left. Other arbitragers kept selling to Seksaria in the hope of squaring the contracts once the spread expanded again.

The Oakland Tribune on May 8, 1938 wrote, “The Bombay Cotton Exchange…is a colourful market…loaded with speculators. We call them plungers in this country. The most popular of the lot is Govindram Seksaria. Right now Seksaria has the Bombay cotton market in the palm of his hand. He is said to have cornered the April-May contracts.

To offset the position he is short of the July-August delivery. He aims to accept the May delivery and dump on the July-August buyers. It’s a cold manipulative deal.”

This brilliant deal however needs to be lauded because as explained above, Seksaria did not speak English, there was no internet or flood of analysis from research outfits. He could still track the prices across continents, to clinch the trade. A daily call from New York would give him an analysis of New York trading and he used analysis provided by East India Cotton Association.

Morphing in to an industrialist

Seksaria’s foray in to industries was in 1924 when he established Shree Krishna Rice and Oil Mills. He set up greenfield manufacturing units and also expanded through acquisitions. “It was impossible to separate Seksaria the speculator from the industrialist: both were integral to his life and work. Speculation enabled him to invest in industry and industry enabled him to engage in philanthropy.” He had interests across sectors in sugar, oil, textiles, minerals, banking, printing presses, motion pictures and real estate.

His trading activities complemented his industrial ventures ensuring him profits through managing input prices with his trading acumen.

The book describes how he went about acquiring various important companies including the Currimbhoy Mills in Bombay in 1937. He did this by purchasing debentures issued by the company to the State of Gondal for ₹12.5 lakh, in accordance with the scheme of arrangement sanctioned by the Bombay High Court. The mill was not operational then. He infused funds, about ₹40 to ₹50 lakh to start the mill and to modernise it, renaming it Sekhsaria Cotton Mills. It became among the biggest mills in Bombay then with 75,000 spindles, 1,000 looms and employing 3,400 workers.

The book weaves the seminal events that took place during Seksaria’s life — the Great Depression, the World Wars and India’s freedom struggle in to the narrative.

The important role that cotton played in the pre-independence period and shaped Seksaria’s growth, descriptions of his contribution towards the freedom struggle, his philanthropy related activities and most important, his frugal life-style, are other interesting facets in the book.