Interview with Gaurav Shah

Loan defaulting and cheating inside Diamond Market is a big concern – it impacts and changes the way people trust and do business with each other. Our guest today, Gaurav Shah is asking for people inside market to come together and expose anyone who for selfish reason cheats or defaults on the loan.

Gaurav Shah

Gauravbhai, How did you start your career in Diamond Industry?
My dad is associated to Diamond Industry since last 35 years. Dad’s name is Girsh P Shah, more commonly addressed as ‘Girish-Das‘. My dad is in to Diamond Trading and we also do some ‘make-to-order’ Jewellery work. You unknowingly learn things from parents even while you are kid. Moreover, I started working in Diamond market, pretty early on part-time basis. While I was studying, I spent most of my vacations working inside Diamond Market.

After, finishing BCom, I started working full time. Started with a company named Karp in 2003. I did lot of work of Diamond Assorting. Worked here for 1.5 years. Later in 2005 I started working for Mahi-Diam. At Mahi I take care of buying diamonds for companies requirement.

In 2008 slowdown, you were working at Mahi-India, how was your experience?
I wouldn’t mind to say that 2008 brought good opportunities to us. I was in Buying and in turbulent times lot of good diamonds were available for steal-deal price. We knew that – ‘when the markets are down, it’s the time to buy‘ . Uncertainty was all around the place, no one knew when things will stabilize. Patience and courage was the key.

If you were not in Diamond Industry, which profession you would have got in to?
Lately I realized that I have keen interest in Mechanical Engineering. I could have also chose to become a lawyer[smiles]

If you get chance to change one thing in Indian Diamond Industry, what would you like to change?
Have you recently heard of cases where some Diamond business owner defaulting on his loan. Well we have a problem here. All members of market should get united and make sure that such defaulters do not get chance do new business for a decade. Presently you will find cases where such defaulters are back in market in 6 months time. I personally know such people who have done fraud or defaulted on loans and they are back in market in less then 6 months.

Such people come back to market with cash-rich pockets. This makes difficult for honest businesses to compete inside Diamond industry. We should simply expose people – who do fraud or cheat, small or big. Community inside Diamond market should make sure that they get penalized for their wrong actions. There are probably 5000 or so companies inside our market, it shouldn’t take much time to spread the word around.

Any other good or bad thing you have distinctly noticed in last 7 – 8 years of your experience in Diamond Industry?
Good thing – it is a high volume Diamond Industry.
Bad thing – the importance of goodwill has changed. Today our market has lot of people who are selfish and would not hesitate to make money at the cost of cheating others. When I hear from my dad about how Diamond Industry use to be 20 years back, it gives a sad feeling. If my Dad would try to do business the in old-day-style, I believe he would loose all his money in days. Things have changed.

Our markets are in process of moving to BKC, what do you think about it?
Bharat Diamond Bourse is a very good place to have our market. I am sure market will move there eventually. It will pleasure to work in such a organized place.

Any other change you for-see happening in our market in next 3 – 5 years?
There is lot of trading happening on paper even without having goods. People are competing with each other and wiping out margins. Too much transperency brings down the value of knowledge inside industry. Chances are people will realise this and again bring some change to stay in business.

Let say if all the companies in our market get listed in Stock market, and you are given 5 lakh rupees to invest, which company would you buy?
As in Stock market fortunes change every couple of years. At this point of time I would say, I will invest money in Kiran Gems, I see lot of potential and growth in it. Rosy Blue is a giant, but I would still invest money on Kiran Gems at this stage.

What is your  favorite thing to do in free time?
I like to watch movies alot. I think I watch at least one movie every week.

Any message for DiamondBhai.com readers?
Once again, I would say it is very important that we bring more unity in our Diamond market community and discourage elements who cheat or do fraud for selfish reasons.

This is why we like Gaddafi

Gaddafi going Insane - what are you doing about it?

Not really! No one should like this man, he should have stepped down last week instead he is killing his fellow citizens in Libya. We are sorry about people in Libya.

Anyways, here’s one interesting take on the situation.

Libya exports close to 1/10 of Oil that comes out of gulf land and near by area. Gaddafi is causing trouble and oil prices have gone up. Things are bad for Oil companies in India and all around the world.

Should you runway from Oil companies that have been impacted presently due to rise in oil price ? May be! May be not!

Once again let me remind you one thing.

Diamondbhai.com will always sound stupid.

We will talk about loss management, ponzy schemes, blunders, bankruptcy, saving money – when whole market is talking about India shining.

In contrast when almost all of your friends talk about how things are bad in market – diamondbhai.com will talk about taking risk, buying value and right actions.

I am making a promise (imagine me taking oath, keeping my hand on my laptop and www), this blog will always sound stupid and not in sync with rest of the world around you. We will sound negative when whole world is talking about good times. We will talk about risk taking and value investing when everyone else is talking about running away from market.

Anyways, Gadaffi is acting insane, markets went down globally, Oil companies in India are loosing money. Hindustan Petroleum, Bharat Petroleum, Indian Oil are loosing crores of rupees everyday. Mr. Pranav Mukherjee doesn’t want petrol price to go up. Hence petrol companies who buy petrol at high price have to continue to sell it at loss. The only other option they have is shutdown operation. Read somewhere that these 3 companies HP BP and IOC – all together are loosing about 400 crores every single day.

What do you think people around you are doing to these petrol companies in stock market?
These companies have got whacked!

Are these companies good? Ofcourse! They sell you Oil at petrol pump.
Will they go up sometime in future? May be! May be not! I dont know!

Diamondbhai.com says – “these oil companies are good companies at low price”
Your friends are saying – “do not touch oil companies, stay atleast 10 feet away from them”

I am making two promises today
1) I will continue to sound negative when everyone else is positive and I will talk positive when rest of the world talks negative.
2) I will never forget promise number 1. (Alright! Alright! I copied that from warren buffets saying – but still it sounds good)

How to Identify a Ponzi Scheme – Part 2

This is continuation of earlier post “How to Identify Ponzi Scheme Part 1”

In earlier post I gave you some basic outline of how Ponzi schemes are designed. Core of such fraud schemes are –

(1) It give a very high rate of interest or reward – which excites people to take part in to the flow.

(2) Use money from new investors to pay interest for whole pool of customers.

Ponzi Schemes

There are several outcomes of such Ponzi schemes:

Situation 1) The whole movement fails when things go bad. For Example:  Ireland as a country is filing Bankruptcy. Stock market all over the world has started diving south. Indian markets are down. Media and newspaper are full of negative news. In such situation people become part of herd and flow what everyone else does. “Even though people are getting 10% per month – I want to withdraw all money and stay on the side”.Out of panic people withdraw money. One who get their money out first will be in good position. Most of them who run late will loose money. Most of the Ponzi schemes go bust when Economy faces some severe crisis.

Situation 2) One fine day owner of the company disappears.  News are out that scheme was a big scam. In short no one really knows where money went.

Does everyone taking part in Ponzi scheme loose money?

No!

Owner of company definitely makes fortune unless he gets caught by Government Investigators at right time.  Investors who made money and walked  out of the scheme while things were good also stay safe. But most of the people get greedy and stay until market takes them out in bad way.

If you ever come across such company – one important thing you want to check is – what is the source of income. If company says that source is stock trading (like Ahmedabad company mentioned in Earlier post) – than ask for Trading records – which stock were bought and sold – ask for daily records on same day – do not accept 3 -4 days old record. In past one Ponzi scheme use to create records after markets have closed – this way it was able to show that it always made profit.

After reading all this if you still decide to take part in such schemes than – here are two most important suggestions:

1) People take part in such Ponzi schemes and then start referring friends and relatives. If you loose your personal money – it’s your personal pain. If your friends and relatives loose money because of you – it will spoil relations for rest of your life.

2) If at all you find yourself already in middle of such Ponzi situation – Exit out when things are good. Usually people tend to get greedy. After seeing a good interest rate earned on money – people tend to stay with the scheme – infact they decide to put in more money in to it.