Investor's View
How an investor reads two similar companies.
Two packaging companies of the same age, each with Rs 120 crore of revenue, Rs 12 crore of profit and 280 people. Seven questions show where an investor's reading of them differs. The questions apply to any business: for a services or trading company, read orders as contracts and the factory as your office or warehouse.
Seven questions, about three minutes. Choose the answer closer to your own company. There is no right answer, and nothing you choose leaves this page.
Question 1 of 7
Who buys from you?
How an investor reads it
Revenue spread across many buyers. Investors usually see less concentration risk here.
What can be shown: Customer-wise sales for three years.
How an investor reads it
Long relationships with large buyers are proof of quality that few suppliers can show. An investor will ask what happens if one of them reduces orders.
What can be shown: Contracts, rate revisions and renewal history with each large customer.
How an investor reads the other answer
Question 2 of 7
Why do customers choose you?
How an investor reads it
A price-led business can be strong if its costs are lower than its rivals'. An investor will look for that edge.
What can be shown: Cost per unit, capacity use, and margins held through good and bad years.
How an investor reads it
An investor values a supplier that customers cannot easily replace.
What can be shown: Approval letters, vendor ratings and years on each approved list.
How an investor reads the other answer
Question 3 of 7
If someone started a business like yours tomorrow, what would stop them?
How an investor reads it
An advantage that a competitor cannot match quickly. Investors look for advantages that can be shown and checked.
What can be shown: Certifications, approvals and process records.
How an investor reads it
Relationships are real, but hard to see from outside. An investor will look for signs of them in the numbers.
What can be shown: Customer tenure, repeat order rates, and complaint and return records.
How an investor reads the other answer
Question 4 of 7
If the company raised Rs 20 crore tomorrow, where would it go?
How an investor reads it
All sensible uses. The offer document will need each one set out with amounts and timing.
What can be shown: Quotations, loan schedules and working capital workings.
How an investor reads it
A specific use, with costs and orders that can be checked. The offer document sets this out in detail.
What can be shown: Quotations, costings and the order book.
How an investor reads the other answer
Question 5 of 7
Who owns the land and building the company uses?
How an investor reads it
Common in family businesses, and acceptable when the terms are fair and written down. An investor will ask about the rent and the length of the lease.
What can be shown: A registered long-term lease at a fair rent.
How an investor reads it
A simple position for an investor to check.
What can be shown: Title documents in the company's name.
How an investor reads the other answer
Question 6 of 7
Who runs the business when you are away for a month?
How an investor reads it
A company that runs on its systems. Investors ask about this for every company.
What can be shown: An organisation chart, written delegation of authority and the monthly reports.
How an investor reads it
Your experience is the company's strength. An investor will still ask what happens without you.
What can be shown: A named second line of managers, and a board with independent directors before filing.
How an investor reads the other answer
Question 7 of 7
How soon after a month ends are its accounts ready?
How an investor reads it
Usual for a private company. An SME-listed company reports every half year, and a Main Board company every quarter, on a fixed timetable, so this rhythm is built before filing.
What can be shown: Monthly closing, set up and running for some months before filing.
How an investor reads it
Numbers an investor can follow from month to month.
What can be shown: Monthly reports and reconciliations.
How an investor reads the other answer
Seven questions an investor will ask. Some answers are already in your files. The rest can be built before filing.
The two companies had the same Rs 120 crore of revenue and Rs 12 crore of profit. An investor reads them differently on these seven answers, and on what each company can show.
Your answers stay on this page. If you wish, they can start your note. Carry my answers into a note
Illustrative. It gives no valuation, no assessment of any company and no view on whether any company can list.