I remember being asked after I had completed a valuation of Tata Motors a few years ago whether I would buy its stock and shocking my audience by saying that I would never buy a Tata company for my portfolio.
When pushed for my rationale, I said that buying a family group company is like getting married and having your entire set of in-laws move into the bedroom with you;
in investment terms, if I invest in Tata Motors, I will (unwillingly) also be investing in many other Tata Group companies, because about 30-40% of the value of Tata Motors comes from its holdings in other Tata companies.
–wrote Aswath Damodaran,Professor of Finance,New York University
Answer: Make him a Director on a Tata Company Board !
Bhaskar Bhat,MD of Titan, is hugely respected in the industry for his professionalism and integrity.
He also serves on the Board of Tata Chemicals where the following incident took place:
Tata Chemicals Board Meeting appears to have been a dramatic affair. A handwritten note was circulated by Bhaskar Bhat, a director on the board of Tata Chem, asking Mistry not to chair the board meeting.
Bhat instead asked Wadia to chair it. “Bhat was asked by the board to move a formal resolution for removal of Mistry since he was appointed by the board. Bhat refused. He insisted his note be taken on record. But he refused to sign the handwritten note,” said a person close to an independent director.
“The directors told him, ‘This is an unsigned piece of paper dictated to you. You (Bhat) are just the stenographer. If you feel so strongly about what you have submitted, then move a resolution’,” said the person quoted earlier.-from ET
Source: Sucheta Dalal
The lunches at Bombay House for Tata Directors during JRD Tata’s time were legendary….and this anecdote adds to the legend
My father was also interested in stocks. When I was a young child, he and his friends would drink in the evening and discuss about the stock market. I would listen to them and one day I asked him why do these prices fluctuate.
He told me to check if there is a news item on Gwalior Rayon in the newspaper, and if there was Gwalior Rayon’s price would fluctuate the next day.
I found it very interesting and I got fascinated by stocks, I self-taught myself. My father told me to do whatever I wanted in life but at least get professionally qualified.
I was always a reasonably good student so I took up chartered accountancy. In January 1985, I completed my CA. I told my father I wanted to go to the stock market. My father reacted by telling me not to ask him or any of his friends for money. He, however, told me that I could live in the house in Mumbai and that if I did not do well in the market I could always earn my livelihood as chartered accountant. This sense of security really drove me in life.
Between 1986 and 1989 I must have earned Rs 20-25 lakhs. After 1986, the market went into a big depression for two three years but I put that money in Tata Power and the Tata Power stocks became about 1100-1200.
Now I was worth Rs 50-55 lakhs.
Sesa Goa had a big fall because there was a depression in the iron ore industry and then prices for the next year had been considerably raised about 20-25%. The stock was available abysmally cheap around Rs. 25-26. There was a projection of a very good growth in profitability in the next year but nobody seemed to believe it.
When I saw the facts, I wanted to invest but I did not have capital.
I bought 4 lakh shares of Sesa Goa in forward trading, worth Rs 1 crore. I sold about 2-2.5 lakh shares at Rs 60-65 and another 1 lakh at Rs 150-175. The prices then went up to Rs 2200 and I sold some shares. I did some other trading too. I had net worth of about Rs 2 – 2.5 crore.
-said Rakesh Jhunjhunwala