Where The Rich Are Investing 2017

Viju Jacob

The Oleoresin baron might never list Synthite but he loves equities for its compounding ability

RA Chandroo

India today accounts for 70% of the global spice oleoresin market and calling the shots from the God’s Own Country is the Rs.1,800 crore Synthite Industries, India's biggest oleoresin exporter. Jacob, a Malayalee Christian, is now nurturing a dream of touching Rs.3,000 crore in revenue by FY20. However, to fuel the business, Jacob is not putting his personal money, primarily salary and dividend income, back into the business. “We don’t involve personal money as the business is self-reliant and runs on its own accruals,” says Jacob, who owns a significant stake in the business besides his father, brother and a cousin. The company has been generating an average profit of Rs.71 crore for each of the past five years on an equity capital of Rs.1 crore.

Besides acres of rubber estate, Jacob has invested his personal wealth in equities, real estate and alternatives. Within equities Jacob prefers the comfort of large caps. “All said and done, equity investing is nothing short of a lottery. I prefer to invest in the FMCG space as it is related to my business. I am happy with 10% post-tax return from equity,” reveals Jacob. Besides FMCG, pharma and IT are other sectors that are a part of his portfolio. Jacob, however, has been disappointed by the performance of real estate. “Rental yields are dismal. In Kerala, rents are so low at Rs.18,000-Rs.20,000, that post-tax, the return falls further," mentions Jacob. The prime reason is that the IT boom in Kerala has slowed down. "Given the entry-level salary of Rs.20,000, youngsters are sharing 1BHK apartments which has further dampened demand,” feels Jacob. 

Bengaluru is, however, a market where the rent is comparatively better than Kerala. “In Bengaluru, 3BHK is still in demand and fetches around Rs.80,000-90,000 per month,” says Jacob, who is now not keen on increasing his exposure to realty. Instead, he is looking at alternatives as an option and has invested in an industrial manufacturing startup. “Given my background in manufacturing, it was easier to understand the nature of business,” says Jacob, who prefers to invest around Rs.1-1.5 crore in such deals. 

In the near term, equity is clearly his favourite. “I might never go public with Synthite, but I love equities given its good compounding ability.”