KRC's portfolio management strategy and philosophy is to ``retain stocks in the portfolio by allowing them to grow and not aim for speculative short-term returns''. KRC follows a strict target of picking up stocks with a view to doubling its value within two years. "We have been getting returns on anaverage of 35 per cent per annum. When we select a stock our endeavor is see its value doubling in two years. Typically, we are a conservative long-term investor. We recommend investments for a minimum span of two years and the strategy is that in those two years the stock price should double," said managing director Deven R Choksey. He added, "Despite the ups and down in the economy and uncertainty on all fronts, we find that our clients' portfolio has grown at least 30-35 per cent per annum over the last twenty years."

KRC's stock picking strategy involves looking at the business profile of the company, its management and analysing whether it has the capability to grow and evolve in each of its businesses. "We are known in the market as an organisation which selects stocks in its nascent stage -- often this process has thrown up the blue chips of tomorrow," said Choksey. Some of the stocks we have nursed in our portfolio include Bajaj Auto, Britannia, Madras Cements, Ramco Systems, Finolex Cables,Infosys, NIIT, Tata Infotech. In the pharma sector we have targeted Dr Reddys, Cheminor Drugs, Ranbaxy, Pfizer, German Remedies, Cipla, Smithkline Pharma and Glaxo. "We believe that these stocks have contributed to the portfolio of our client handsomely," said Choksey.

KRC manages portfolios in a discretionary as well as a non-discretionary capacity. According to Choksey, KRC does not believe in profit sharing with investors because it believes that at every point of time the investor must earn. The firm earns its fees by charging investors at the point of the transaction itself. The charges are covered at the normal brokerage charges which ranges between 1.0-1.5 per cent of the total amount.

As a part of its portfolio management activity, KRC also makes investments in debt. In fact, the debt part of the portfolio is also gradually rising. But Choksey says there is a problem here as the secondary debt market is not in place and, as a result, there is hardly any yield trading and interest swaping. As aresult of this, opportunity-based investments have to be made in debt. "If the main requirement is safety of funds and regular returns, we feel vyaj badla offers a better option - it provides good opportunity to both long-term and short-term, gives a regular return and the money is safe.

Among KRC's success stories, Dr. Reddy's and Britannia are the most notable. The firm bought shares of Dr Reddy's Laboratories in 1987-89, when the stock was trading at Rs 50-60. Today, the stock quotes at more than Rs 650. According to Choksey, such returns are possible provided one holds their investments over a period of time, say 10-12 years. "If you keep on getting in and out of the portfolio quickly, you can forget about such returns." The philosophy of KRC's portfolio management is: "We will grow with capital appreciation at the cost of short-term money temptation."

KRC picked up Britannia in 1996 when the stock was available at Rs 175-250. The company had been in business for a long term and had an FMCG tag. "Butwhat we found interesting was that the company was coming out of a controlled atmosphere and getting into the value-added segment. Today, the stock price is more than Rs 1500. Similarly, KRC picked up Crisil four years ago and in four years the entire investment has quadrupled in value.

Ramco Systems is another exciting stock, says Choksey. According to him, the company is product-based, which is an exception in the Indian IT sector. It is also into the ERP segment. "The company has a model which is directly competing with the world leader, SAP. SAP is a 27 year-old story which came into focus only in the last 7-8 years and the development stage is over. This is one particular business which is going to add a lot of value to the portfolio of the investor," said Choksey.

Similarly, companies like Nestle and Cadbury are likely to outperform other FMCG stocks in the coming 3-4 years. In the next 3-4 years, these companies will see a CAGR of more than 30 per cent per annum. Cheminor Drugs is also a good bet.The company has consolidated its position and is selectively entering a niche market of generic drugs. KRC feels investment in this company will double in two years. Blue Dart is another stock which has a long way to go and will give a good appreciation.