Functioning In A Financially Intelligent Way: Anil Lamba, Director, Lamcon

"When a company fails due to financial mismanagement, it's not because the finance department is ineffective; rather, financial mismanagement occurs every single day in everyone's actions. "As a result, every act must be carried out in a financially prudent manner," said Dr Anil Lamba, Director at Lamcon Finance & Management Services.

While speaking at the Pune Chapter of the Indian Business Literature Festival, Lamba discussed why intelligent people struggle to understand finance. He said, “Firstly, the finance people are terrible at marketing it. Additionally, the way the finance curriculum is set up, it gives the impression that finance is a challenging, dull subject. As a result, most people hold the same opinion. On the contrary, I think it's one of the most intriguing topics. To create this awareness for a wider audience, I wrote this book called Romancing The Balance Sheet.”

Lamba provided crucial business advice by stating that people believe business is about generating top lines, but it is actually about the bottom line. Secondly, he added that just because you have made profit, it doesn't mean you have arrived, as profit and money have no connection with each other. So, cash flow matters. The third thing is regarding the cost of capital. People think that the owner’s money is free, whereas, in reality, it is probably the most important source of money available.

When asked about the things he wished young people knew, he added, “I wish people understood that it is very important to start investing early. I wish everybody knew that a significant portion of your investment should be in stocks, and it should only be after learning the know-how of the stock market. I wish the power of compounding and the kind of toll inflation can take on your investments were known to them."

Speaking about the ideal profile for an individual, Lamba said that one's portfolio should be a balanced one with certain investments in stocks, certain in real estate, and a small amount in gold, and the remainder can be divided into a number of other things like tax-saving investments and so on.

"I don't think anyone can guarantee that this startup will succeed in this manner." Many people have greatly benefited from it, but I believe that currently there are too many people engaging in it. However, the ability to see into the future remains crucial to making the right decision. Having said so, financial mismanagement will be the cause of many start-up failures in India,” he added while talking about investments in start-ups. 

Bhupendra Paintola

BW Reporters The author is Trainee Correspondent with BW Businessworld