The Week That Was:

From: Vartaa Editorial Team on Feb 14, 2016

JNU student protests, Nationalism, and the freedom of speech

Events at the Jawaharlal Nehru University (JNU) dominated the political news in India this past week. After a group of students protested against the hanging of 2001 Parliament attack convict Afzal Guru and allegedly shouted anti-India slogans, the central government and Delhi Police swung into action. JNU Student Union President Kanhaiya Kumar was arrested from campus leading to strong political reaction and protests from university academics and the Delhi govt. With the row over Rohith Vermula's death at Hyderabad University still fresh, it remains to be seen how this latest episode of the government's confrontation with a university and its students is resolved. JNU meanwhile has barred 8 students who it believes were shouting anti-India slogans from academic activities barring further inquiry.

Rescued Soldier from Siachen Avalanche Passes Away

After miraculously surviving an avalanche and being buried under the snow for 6 days, Lance Naik Hanumanthappa lost his battle for life and passed away in Delhi. The incident has led to calls again from both sides of the border for the governments to re-evaluate their policies on militarization of the glacier.

US to sell F-16s to Pak

The Obama administration's decision this past week to sell eight F-16 fighter jets to Pakistan led to a sharp reaction from India with the US ambassador being summoned by the Ministry of External Affairs to convey its displeasure. The incident may put a fissure in Indo-US ties which seemed to be on the upswing after the bonhomie shared between US President Barack Obama and PM Modi during their interactions over the last few months.

Opinions you must read:

  • The Central Government's decision to arrest students at JNU has come in for heavy criticism from the press. Read editorials on the topic from the Economic Times, Firstpost and the Indian Express.
  • With the Union Budget set for later this month, Mint has a laundry list of what the industry wants from the government.
  • As the Arvind Kejriwal government completes a year in office, Shiv Vishwanathan evaluates the CM's performance.

Chart of the Week

Last week we saw that the visionary leadership of Ratan Tata has earned investors of the major Tata Group companies handsome returns during the last 10 years of his chairmanship. We compared 6 major Tata companies (check out last week's chart here) with the BSE 30 (Sensex) and all except Tata Steel performed heads and shoulders above this benchmark index. But how do each of these companies do compared to their direct competitors? Does Mr. Tata's charismatic leadership manifest itself as forcefully when viewed through this lens? Our short series over the next couple of weeks will try to answer exactly that.

We begin with the flagship Tata Motors. To be fair, TCS could just as easily qualify for the title of flagship but that is a discussion for another time. We have chosen the time window of June 2004 through February 2016 in order to include data for all 4 companies. As you can see below, Tata Motors (21% annualized return) is neck and neck with its arch rival Maruti Suzuki (23%). The Maruti Suzuki stock has seen a dramatic rise over the last 2 years. Since Feb 2014, the Tata Motors stock is down more than 25% while the Maruti stock is up more than 100%. It has enjoyed strong investor confidence due to its low debt and large variety of entry level models attractively priced for millions of first time middle-class Indian car-buyers. Tata Motors on the other hand, has been struggling in the passenger car market.

In the commercial vehicle sector, Mahindra and Mahindra and Ashok Leyland have been nipping at its heels. The company also appeared rudderless after its leader Karl Slym died under mysterious circumstances while the Tata Group spent 2 years trying to find his replacement. Mr. Tata showed gumption and foresight when he acquired Jaguar Land Rover from Ford in 2008. Apart from the JLR division which has posted strong sales in recent times and unveiled a range of new models, the company does not seem to be doing very well. We will leave it to industry insiders and consultants to opine on whether the company needs to focus on branding, strategy, or quality but Tata Motors- the company and the stock will very likely make a strong comeback as they repeatedly have in the past.