Forgetting & Compounding

I recently tweeted this

This post is expansion on how an unassuming event brought a surprise happy new year gift for few family members

1. My dad bought 300 shares in three of his brother’s account 100 each of Inox Leasing and Finance Limited in late 1990s. He recalls he paid approximately INR 20,000 for these 300 shares.

2. Few years pass and the shares stop trading, the company also doesn’t have any meaningful running operations so for him he treated as dead money

3. In June 2002, the promoters make a takeover offer at INR 10 per share, he ignores the memo as it too much to bother for INR 3,000 rupee¹

4. Over years promoters slowly try to acquire 25.51% stake of public shareholders may be they knew the value of something that was not known to public shareholders.

5. The company continues to pay regular dividend through these years

6. After decades in Oct’24 , the company announces a restructuring arrangement ²whereby existing shareholders of Inox Leasing and finance would get approx 5.84 shares of GFCL and 1 share of Inox holding and Investment limited

7. Each share of Inox leasing would be roughly ~INR 25,000, the value of initial investment would have compounded from INR 20,000 to INR 75,00,000 compounding 375x in 30 years

8. A truly happy new year for all of his brothers who now have these shares :)

The most important takeaway for me is

• Time is crucial for extra ordinary compounding results

• Inactivity - My Dad said if they were listed he would have sold them off at first chance of decent profits

• Luck - The shares were of a company run by one of the most prominent business houses in country Inox group, who have developed and grown multiple business in last 4-5 decades

Happy Investing

1. https://www.sebi.gov.in/filings/takeovers/jun-2002/inox-leasing-and-finance-limited_13118.html

2. https://www.gfl.co.in/upload/5.%20%20Valuation%20Report%20-%20Scheme%20of%20Arrangement.pdf