How Ten Thousand rupees gets turned into Crores a perfect example !!

Hi Folks,

Just found this and felt worth sharing with all of you out there :)

How Rs 10,000 investment turned to more than 650 crores in three decades. The information provided below is only up to year 2010 and over the next 5 years the company still paid out dividends to its shareholders.

Mr. Mohammed Anwar Ahmed bought 100 shares of Wipro at a face value of Rs 100 in the year 1980 located at Amalner, Jalgaon district, Maharashtra. The place has its own story as Wipro’s first plant was setup in Jalgaon. 

Mr. Mohammed Anwar Ahmed had invested in 100 shares of Wipro at a face value of Rs.100 in 1980 and hence his initial investment was Rs.10,000 (100x100).

Let us now look how initial investment of Rs.10,000 was turned into a massive amount of more than 650 crores over the decades:

In 1981, the company declared a 1:1 bonus. So Mr. Mohammed Anwar Ahmed now had 200 shares.

In 1985, the company declared 1:1 bonus. He therefore had 400 shares.

In 1986, the company split the share face value from 100 to Rs.10. He thus had 4000 shares.

In 1987, the company declared 1:1 bonus. He hence had 8000 shares.

In 1989, the company announced a 1:1 bonus. Now he had 16,000 shares.

In 1992, the company declared a 1:1 bonus. By now he had 32,000 shares.

In 1995, the company declared a 1:1 bonus. He then had 64,000 shares.

In 1997, the company declared 2:1 bonus. He now held 1,92,000 shares.

In 1999, the company split the face value of the share to Rs.2. He now had 9,60,000 shares.

In 2004, the company declared a 2:1 bonus. He thus had 28,80,000 shares.

In 2005, the company declared a 1:1 bonus. He came to have 57,60,000 shares.

In 2010, the company declared 2:3 bonus. He now had 96,00,000 shares.

The last closing market price is Rs.586 per share. The shares are valued at more than 550 Crores if Mr. Mohammed Anwar Ahmed still holds them.. that’s not it folks keep reading: D

Over the past 35 years, the company regularly paid out dividends and increased them almost every year. Cumulatively he would have received more than Rs.120 crores as dividend over the past 35 years. Thus by investing Rs.10,000, Mohammed gained over more than 670 crores.

He is now retired and donates freely to charity from the dividends he receives. His children often advice him to sell the shares but he has kept his vow of not selling a single share till Mr.Azim Premji is the working Chairman.

This is the sole reason why we stress on investing in Equities and as Warren Buffets quotes – “If a business does well the stock eventually follows”

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