i am recently reading the book “What I learned about investing from Darwin” by Pulak Prasad from Nalanda Capital. In the 1st chapter itself he tells about businesses they try to avoid in Nalanda Capital. One of the category they have cited is MNC companies who are having Indian listed subsidiary and still they have other un-listed Indian subsidiary and they launch good brands under the un-listed category and thus create value addition to Parent MNC company at the expense of minority shareholders of Indian Listed subsidiary.
They have given examples of Unilever, Nestle but not Abbott.
rather I am not aware if in case of Hindustan Unilever and Nestle India, whether there is any un-listed subsidiary of Parent MNC companies operating in same segment.
but their description applies to Abbott India perfectly. They also talked about how Parent MNC sends good managers to Un-listed subsidiary while not-so-good to listed subsidiary.
they have recommended to avoid such indian listed subsidiaries of MNCs. In the long run it wont be in the interest of minority shareholders and why should we allow these MNCs to treat us like second class citizens?
but also the truth is that in case of Abbott India, shareholders have got very good returns in last decade.
so, in short, overall i am confused as to how to look at this situation. I hold Aboott India almost 3% in my portfolio. And like Nalanda Capital, I would think of myself , becoming permanent owner of it…not a short term view. If members can help me form a view
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