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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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29 crores to 10,000 crores

Posted by Muthu on April 24, 2015

I got the idea to write this piece from a blog written by Shankar of Credo Capital.

There is a government arm called ‘Office of the custodian of enemy property’ coming under Home ministry and governed by Enemy property act of 1968.

This office has confiscated share certificates from Pakistan nationals after the war of 1965 and 1971.

The value of these shares was Rs.29.4 crores in 1971.

Please note that these are confiscated shares and not a well thought and structured portfolio. These are being kept as it is for last 44 years. So definitely this would also contain perished companies, fraudulent companies who stole investor money, sub-par performers etc. The idea I’m trying to convey is that this confiscated stock portfolio is not like Sensex or a mutual fund, which are periodically changed and actively managed.

The above shares in the physical format and now govt. want to dematerialise (demat) it.

The current estimated value of these shares now stands at Rs.10,000 crores.

This works out to a return of above 14% over last 44 years. Even a confiscated and rusting Indian equity portfolio give this kind of return over 5 decades.

This does not include Rs.40 crores received as dividend last year. This portfolio has been generating regular return in the form of dividends for last 44 years and dividends are only increasing. In nominal terms, one year dividend now is worth more than the initial capital.

I assume that the returns would have been few percentage points higher if we include dividend yield as well.

As we saw last year, as per CRISIL data, well managed diversified equity funds have given an annualised return of 22.6% over last 2 decades. Over last 4 decades, Sensex has given an annualised return of 17%. Now we’ve seen that a confiscated, unplanned, unstructured, unmanaged, rusting, simply sit on it and do nothing portfolio has given a return of above 14% for last 5 decades.

Develop conviction and patience. Invest for long haul. Reap the benefits of compounding and time.

(Reference: http://www.business-standard.com/article/markets/enemy-shares-to-be-dematerialised-115041700037_1.html

3 Responses to “29 crores to 10,000 crores”

  1. Motivating!!!

  2. rajivahuja said

    Amazing

  3. […] written some time ago as to how there is a government arm called ‘Office of the custodian of enemy […]

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