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It’s only when the tide goes out when you find out who’s been swimming naked

This is one of Warren Buffett’s favourite quotes. (Till now, he has used it four times in his letters to the shareholders of Berkshire Hathaway.)

The chart below depicts what happened to the long-term stockholders of six Indian real estate companies ever since the largest one of them— DLF— went public. You can pick any long-term period till date and you’ll get similar results. And they sure don’t look pretty, except for one company.

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Something to be Very Curious About

Recall, Gary Klein’s three pathways of getting insights? Well, take a look at it again.

When something stands out like this, it should ignite your curiosity. Why did Ashiana Housing succeed while others faltered? What is Ashiana been doing what others didn’t do? And what did others do which Ashiana refused to do?

To answer these, and many other questions you should have, Varun Gupta,

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Wholetime Director at Ashiana Housing Limited, will address you on Friday 27 September.

Varun is a Bachelor in Science from Stern School of Business, New York University (USA). He majored in Finance and Management and graduated with the high academic distinction, ‘Magna Cum Laude’. He then joined Citigroup in Commercial Mortgage Backed Securities where he was underwriting commercial real estate. After a year and a half of this rich experience, he joined Ashiana where he is looking after land, legal, strategy and finance for the last five years. Vishal, Ankur and Varun are brothers in relation.

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Study Material

I have uploaded the annual reports of Ashiana Housing for the last seven years and some corporate presentations at

https://db.tt/C7Zmz0Du

Carefully read the Q&A section on pages 31-34 of FY13 annual report document.

Also see the company’s excellent website at:

http://www.ashianahousing.com

Areas to Focus On

Compare Ashiana’s business model with that of other real estate companies like DLF and Parsvnath Developers.

What practices do you see in those companies which were missing in Ashiana and what did you see in Ashiana that was missing in those other real estate companies?

What is the track record of this company? How good or bad has it been in execution over the years?

A Few Questions You Should Ask From Varun

1. How does Ashiana differentiates itself from other typical real estate developers?

2. How does the balance sheet of Ashiana look different from those of other real estate developers?

3. Who is the customer for Ashiana Housing? How affluent is he?4. Does Ashiana enjoy pricing power over its competitors?5. What accounting policies does Ashiana follows which are not followed

by other real estate companies?6. Charlie Munger says “bad accounting promotes bad behaviour.” How

true is that in the real estate business?7. How does Ashiana finance its operations?

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8. What are the key metrics Varun looks at while evaluating the economics of any given real estate project?

9. How scalable is the business? How big can Ashiana become, a decade from now? What risks does Varun perceive in scaling up the company’s business?

10. What kinds of things does Ashiana does to keep its customers happy?11. Why did the company move into senior living segment?12. What are the key risks faced by Ashiana Housing?13. How would Varun value Ashiana Housing?14. Why does Ashiana Logo says “you are in safe hands?”15. How will Ashiana be affected if there was a significant drop in real

estate prices?16. What is the meaning of “Equivalent Area Constructed,” a term used by

the company in its presentations and annual reports.17. What is the relevance of modified cash flow statement provided by the

company in its last two annual reports?18. How much money does Ashiana charge from it’s customers for space

sold on a per square feet basis and what is the cost of construction and other costs like admin and marketing on a per square foot basis?

19. What kinds of things would make Ashiana walk away before entering into a real estate acquisition deal?

20. How does the company make decisions relating to land acquisition?21. How does the company make its pricing decisions?