Lately Ratan Tata has been in the news as an Angel Investor. Among his high profile investments are Snapdeal, CarDekho, SwasthIndia, and Xiaomi. Although this may not entirely be his motive, an astronomical return on some of his smart investments seems highly likely. Which got us thinking- 'How has Ratan Tata the visionary corporate leader done vis-a-vis his fiduciary duties towards shareholders of Tata Group companies?' Turns out, very handsomely!
The chart below shows the performance of major Tata Group companies in the last decade that Mr. Tata was Chairman of the Group. He took over as Chairman in 1991 and stepped down in December 2012 handing the reins to Cyrus Mistry. Mr. Tata however truly unleashed agressive expansion efforts in the 21st century. Below, we look at the 10 year period from Nov 2002 onwards through November 2012- a month before his departure. If you had purchased an index fund that tracked the BSE Sensex (comprised of the 30 largest and most actively traded public companies in India), your investment would have turned 6 fold- an impressive 500% return over 10 years and annualized return of 17%. However, if you had purchased a share of Tata Power in November 2002, it would have multiplied a whopping 76 times by late 2012! An incredible 7500% return over 10 years (54% annualized). That means the stock grew 1.5 times every year for 10 years. The only low-performer among the majors is Tata Steel, the oldest of the lot. The Corus acquisition looks like a mistake in hindsight but commodity markets can be capricious and cruel. Nonethelss, Tata Steel grew almost five fold to provide an annualized return of 14%- well above the average rate of inflation.