@Capsule91 - The idea is from Munger’s “Practical thought about practical thought” where he dissects in hindsight how a company like Coca-Cola may be built. The idea is that the company has to last, a long, long time - Probably a 100 years or more, have desirable products with great band recall, the desirable product should solve a physiological need (quench thirst, in this case), a unique ingredient that links the physiological need of thirst with the look/taste/brand of the product (the bubbles, the flavour, the aroma for eg. and the Coca-Cola logo in this case).
Such a brand/product/company in its initial stages might start small, make losses but the market size is large in that, it is big to start with, growing (esp in a country like ours) and has great marginal utility. Customers will buy product repeatedly with little thought due to cognitive ease caused by the brand/flavour.
So with all this place, if I had to choose one of Manpasand or Paper boat, the latter is a desirable product/company which has focused on building a brand. It is this part that pays rich dividends (pun intended) over decades of product’s existence. So on a relative basis, one of these is going to last a long, long time because its building its brand while what another is doing is cheap processing type work (railway contracts at lower margins). Think of this as someone bringing pails of water from the river and looking successful at first to someone building a canal to where he wants the water go. The former loses out to the latter though the latter looks to be starting slow showing no results. Switching costs are low for Manpasand while its relatively higher for Paper boat (I gave up Real and Tropicana for Paper Boat and ITC’s B-Natural). Again, “relative” is the operating word.
So with all this place, 50 years from now if human beings in the country are still going to be consuming fruit juices (a certainty), ITC, Dabur, Pepsico and Coca-cola along with whoever builds brands with strong recall (Paper boat) are going to have staying power. At that point, today’s sales matter very little. That doesn’t mean whoever is buying Manpasand or Paper Boat is buying to hold for 50 years but that it has got to figure in the valuation in some way. Sorry for the long-winding answer but its not easy to put down a few disparate mental models onto paper.
Another thing I quickly considered is that if start-up valuations (usually done on Price-to-Sales or some other obscure gimmickry to justify random numbers someone came up with) that Narayana Murthy backed Paper Boat commends are cheaper than what I will have to pay for Manpasand, clearly I will choose Paper Boat any day. Hope that makes sense.