Blogs

Some of India’s largest listed companies are not allowed to earn more than a fixed return on the money their owners put in. That ceiling sounds like bad news. Understanding exactly how it is calculated tells you what kind of business you are really looking at — and the three ways the promise quietly fails.

Some companies add a hundred outlets in a year without building a single one of them. Who pays for those shops, and what the company keeps in return, tells you a great deal about the quality of the business.

A very large part of India’s industry makes things that carry another company’s name on the box. Some of those factories are wonderful businesses. Most are not. The difference comes down to five questions you can ask without knowing anything about the product.

Some things you buy can be judged before you pay. Some can be judged after you use them. And some can never be judged at all. Businesses that sell the third kind are paid on trust alone — which makes them unusually strong, and unusually breakable.