The Week That Was:

From: Vartaa Editorial Team on Feb 7, 2016

26/11 plotter on trial

The 26/11 terror case returns to the spotlight this week as a key plotter, David Colemand Headley, appears before a court in Mumbai. Headley, who is accused of scouting the possible locations for the attack for his handlers, has been pursued by Indian authorities ever since they identified his role in the attacks. Some media reports suggested that Headley has already revealed the hand of the LeT and the ISI behind the attack.

Road Rage or Racial Bias?

There was an ugly incident this past week in Bangalore where a Tanzanian woman was stripped and beaten up by a mob who mistook her for another car driver involved in a hit and run accident. The incident has brought in sharp focus issues of edginess of urban living, the implicit racial biases and mob violence. While the Bangalore police tried to downplay the racial angle of the issue, it still went ahead and suspended six police personnel for dereliction of duty.

Factories up

One of India's largest utility companies, Adani Power, announced plans this past week of building a $2bn coal fired power plant in the state of Jharkhand. Adani's announcement came in the light of government announcing that import of coal is down as domestic production is speeding up. While Jharkhand is gleaming with the new investment proposal, another state, Haryana is trying to woo its most famous investor, Maruti Suzuki. Haryana CM has expressed confidence that the company, which is setting up its latest facility in Gujarat, will soon be returning to his state.

T20 Squad

There was plenty of off-field cricket action this past week. India announced their squad for the World T20 Cup to be held in March. Read a take here by Ayaz Memon analysing the team. The IPL also conducted its auction which brought riches for some and disappointment for others.

Opinions you must read:

  • The Indian Express had strong words of condemnation for the racist overtones in the assault against the Tanzanian women in Bangalore
  • The auto industry is set to face disruption from technology trends in the coming years. Read here to find out more about what is coming.
  • R.Sukumar in Mint derives some lessons from the US Presidential Primaries that Indian political parties can draw upon.

Chart of the Week

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.