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Radhakishan Damani – Success Journey

RadhaKishan Damani

How often do you visit Kirana stores in a month? Well if you just need a soap or a toothpaste the best option would be to go the nearest local stores and return home. But what if you need things in bulk and that too you prefer visiting only one store for all your needs?

Yes you got it right. There are Retail Chains today Like DMart, Jio Smart point, Spencer Retails.

Of which DMart is one of the top one-stop supermarket chain that offers customers a variety of products which are basic and personal under one roof.

This supermarket chain of DMart Stores is owned and operated by Avenue Supermarts Ltd. But Do you know who founded this Hypermarket? Mr. Radhakishan Damani is the Founder of the Mega Retail Chain Stores “DMart” in India.

Who is Mr. Radhakishan Damani?

Mr. Radhakishan Damani is an Entrepreneur, Businessman, and Stock Broker and Investor in Stock Market.  He also manages his portfolio through his Investment firm, Bright Star Investments Limited. Let us understand his Journey so far.

Early Life of Mr. Radhakishan Damani

  • Radhakishan Damani was born on 15th March 1954 in a Marwari Family. He was born and bought up in Bikaner, Rajasthan.
  • He was born in a Stock Broking Family. But he had set up his own auto ancillary trading business. But due to sudden death of his father, he shut his own business and joined his family business.
  • At the age of 32 he started trading in the market. Radhakishan Damani got popular during 1992 for his Bull and Bear Fight with Harshad Mehta.
  • Harshad Mehta was continuously buying selected stocks taking the share price at the top whereas Radhakishan Damani was short selling the stocks.
  • He very well knew that Mr. Harshad Mehta is manipulating the market and artificially rising the prices. He was incurring continuous losses and one day an article published by Times of India Journalist Sucheta Dalal exposed the entire scam of Harshad Mehta and this helped Radhakishan Damani earn lot of money.
  • He is called “Mr. White and White” because he always paired his white shirt with white pants. That became his calling card.

Stock market as a Career

  • Although Radhakishan Damani started his career as a stockbroker, he soon understood that if he wants to earn money from the market, then he should invest and trade his own money in the stock market.
  • So, instead of being just a stockbroker he started stock trading in the Indian stock market. Through this he earned lot of profits. Also he was a flexible trader
  • A few best-performing stocks from his portfolio are Century textiles, Indian Cement, VST Industries, TV Today Network, Blue Dart, Sundaram Finance, 3M India, Jubilant FoodWorks, etc.
  • He was inspired by Mr. Chandrakant Sampat, a well-known value investor, RK took the leap towards investing for long term. He invested primarily in MNC FMCG companies like Gillete, Colgate, Nestle, and HUL which again created lot of wealth for him.
  • He repeated the feat in the 2000-01 Ketan Parekh scam where again he emerged as the winner. He created his initial corpus by trading. Still today he trades and maintains a core investment portfolio.

Journey from Dalal Street to Business Man

  • Radhakishan Damani started his career as an investor in the year 1980. In 1999, he operated a franchise of Apna Bazaar, a cooperative department store, in Nerul, but was “unconvinced” by its business model.
  • In 2001, after reaching such great heights, he suddenly quit the stock market business and decided to enter the retail industry.
  • Damani founded Avenue Supermarkets the parent company of DMart in the year 2000 and launched the first store in 2002. “Daily Discounts Daily Savings” is the tagline of DMart
  • DMart followed a slow and steady approach unlike competitors. In the year 2017 when DMart announced its IPO, it was oversubscribed 104 times. Since listing, the stock price had gone up 447%. This had taken Damani’s net-worth to $16.5 billion, making him the 117th richest manin the world. 

What made D Mart Special?

  • DMart is located in the residential area targeting middle class population.
  • It provides basic and essential daily need products especially food and grocery.
  • Most of his stores are self-owned and so the rent cost is avoided
  • One roof solution for all your needs and also bulk purchase and quick payments are possible
  • Each DMart supermarket store stocks home utility products- Beauty products, toiletries, bed and bath linen, garments, kitchenware, home appliances, Footwear, Food, Games and Stationery and lots more.
  • Avenue Supermarket Ltd owns brands like DMart Premia, DMart, Dutch Harbour, DMart Minimax, and DHomes.
  • The main objective is to offer customers good products at a great value.

Unshakable Focus of Mr. Radhakishan Damani

  • In many ways, identifying the right model and then pursuing it with a long-term approach is what distinguishes a successful retailer from one who struggles. There is a clear logic in Mr. Damani’s approach.
  • The thumb rule is that rental costs should account for around 3 per cent of a retailer’s turnover. And with most efficient retailers operating at an EBITDA margin of 3-4 per cent, the ability to control costs becomes extremely critical.
  • By owning its real estate, DMart is able to deliver higher EBITDA margins since what is saved in rentals. The emergence of organized retail in India around two decades ago saw many Competitors, like Big Bazaar and Subhiksha being the prominent ones.
  • Damani, meanwhile, understood real estate and acquired land in locations where it was affordable and at an early stage of urban development. At the core of his audience is the Indian middle class, a population that is large, aspirational and tremendously smart. 
  • The capex for land acquisition is amortized over time and the tack is to spend less on the store and more on providing value to the consumer.
  • Customers today have become techno savvy. And with digitalization, Customers now days prefer purchasing online rather than physically visiting the store. And so as per the demand DMart has started DMart The management has been cautious on expanding delivery and currently operates it in 18 cities from 12 in Q1FY23. Over 90 per cent of DMart’s online sales come from Mumbai, Pune, Bengaluru, Hyderabad and Ahmedabad. Like in the hypermarket format, there is room for growth in this segment as well.

Stock Markets Lessons One Can Learn From Mr. Damani

  1. Keep Focus on Long Term – Mr. Damani always believed that there should be value in the investment made. He purchased undervalued equities with aim of earning profit in the long term.
  2. Take Small Steps to make it Big: Damani took time and planned accordingly. He maintained vendor friendly reputation and slowly achieved profitability
  3. Patience: Trading in stock market requires Patience. He understands his customer’s emotions and also stock market movements. To handle both his Patience was his biggest strength.
  4. Ignore Herd Sentiments: He initially adopted well-linked financial methods when he invested in Dalal Street. He ignored all the Herd instincts and stuck to his own plans which gave him success. For example Harshad Mehta case and Ketan Parekh case.
  5. Know Your Game: Damani before picking his stock goes through the entire history. This act is based on data and not on the intuition or guess. He uses ratios like P/E Ratio, Enterprise Value to EBITDA, Net Margin, Revenue Growth year on year and quarterly basis. When fundamentals are known value can be accessed correctly.
  6. Diversification: Damani believes that one should not keep all Eggs in the same basket. There is high risk that all eggs might break together. Similarly in stock market it is better to invest money in different portfolios rather than sticking to one single stock. That could be risky!

Radhakishan Damani – ‘Warren Buffet of India’ And ‘Retail King of India’

  • Radhakishan Damani is not highly educated person like other Business Man. He lives a simple life yet he creates a revolution in whatever he does. He lived in a single apartment yet he became billionaire. He avoids media and public gatherings.
  • He always aspired to do bigger things in life.
  • Radhakishan Damani has taught us to take big risks in life and to use own logics.
  • If you have passion in life you can do anything. At the age of 67 he is now 5th Richest Person in India.
  • The universe always bows down to a stubborn heart, and that is true in case of Mr. Radhakishan Damani.
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