How Wipro company made a village full of Millionaires!!!???
— by Niteesh
In the year of 1947, WIPRO Ltd.’s current chairman Azim Premji’s father Mohammad Hussain Premji set up the first plant of Western Indian Vegetables Product Limited (WIPRO Ltd) to make Vanaspati ghee, laundry soap and cooking oil in Amalner, a small town of Maharashtra. No, it was not an IT company back then.
Many residents of Amalner worked at the plant and some of them were given shares in the company. It’s estimated that around 3% stakes of WIPRO, amounting to 250 crores of shares worth of 3448 crore about are owned by residents of Amalner.
As a producer of Vanaspati; it didn’t made such gains in it’s earlier years. In 1966, highly respected, Mr. Azim Premji took over the reins of the company by becoming Chairman.
In 1970 the company went on an IPO with a face value of 100 INR. The response was lukewarm, and Mohammad Hussain Premji went to each person in the village to sell the IPO. The company employees too subscribed to the IPO. As the Indian stock exchange was paper-based in those times, the brokers in the stock exchange seldom knew about the company Wipro.
After the initial IPO, the share price dropped, but many still held on to their stocks. The company has now grown into a multi-conglomerate, and the share price is 591 INR. One might think it’s just a five-fold price increase, but the company gave a bonus share many times in this period. Let’s look at a simple example. If someone bought 200 shares of Wipro for 10000 INR or 200 US dollars, he would have now owned 96,00,000 shares worth close to 500 Crore or 67 million US dollars. And also a massive dividend in this period. Amalner village holds close to 3 percent of Wipro shares, and many have become millionaires just through dividends from the company.
Pathway from a vegetables products company to one of the prominent IT companies in the country!!!
Azim Premji took over Wipro when he was just 21.
During the 1970s and 1980s, the company shifted its focus to new opportunities in the IT and computing industry, which was at a nascent stage in India at the time. On 7 June 1977, the name of the company changed from Western India Vegetable Products Limited, to Wipro Products Limited. In 1982, the name was changed again, from Wipro Products Limited to Wipro Limited. Wipro continued to expand in the consumer products domain with the launch of “Ralak” a Tulsi based family soap and “Wipro Jasmine”, a toilet soap.
1980: The company entered the IT business
1982: Name of the company changed to Wipro
1983: Established software products and exports subsidiary, Wipro systems ltd.
1985: Pioneers in marketing indigenous personal computers.
1988: The company diversified in industrial cylinders and mobile hydraulic cylinders.
1989: Wipro GE medical systems was set up to manufacture diagnostic and imaging products.
1990: Wipro baby soft and santoor talcum launched.
1991: Wipro fluid power division established.
1995: Wipro overseas division set up, and Wipro Infotech and Wipro systems merged.
1996: Shifted headquarters to Bengaluru, from Mumbai
1999: Wipro acquired Wipro Acer
2000: Wipro got listed in New York Stock Exchange
2002: Wipro becomes first Indian software company to get ISO certification.
2002: Entered BPO business.
2004: Wipro became a billion-dollar company
2008: The firm entered clean energy business through Wipro Eco Energy
2013: Wipro demerges its ‘diversified business’ into a separate company to be named ‘Wipro Enterprises Ltd’. Wipro to focus exclusively on IT business.
2015: Carved out Wipro digital business as a separate unit. Announced its intention to acquire Designit, global strategic design firm specializing in designing transformative product-service experiences.
2016: Wipro acquires HealthPlan Services, a leading technology and business process as a service provider in the US health insurance market.
2019–2020 : The firm announced the launch of its 5G edge services solutions suite built with IBM software systems.
WIPRO.LTD became one of the fastest and largest growing companies in the world.
A journey from 10,000 INR to 500+ Cr. :
This is a fictional story originally written in Prudent Equity based on a resident of Amalner, Mohammed Anwar Ahmed’s father owned a large farmland in the 1970’s.
After his father’s demise, he had around Rs. 20000 with him. In 1980, while Ahmed sat near a tea shop, a young stock broker from Mumbai stopped to ask a question. This meeting would change the life of Ahmed. The broker had come to Amalner to buy as many shares as he could on behalf of some clients in Mumbai. The question that the broker asked was, “Do you know anyone here who owns shares in that factory?” pointing to the WIPRO plant. Ahmed replied that the owners of the factory stayed in Mumbai and that many residents worked in the plant and they would be holding shares of the company.
In the next 15 minutes, the broker explained to Ahmed, how owning a share could make one a part owner in the company without working in the company. This made Ahmed inquisitive and the meeting lasted for 30 more minutes. Ahmed, completely convinced of the ownership model, helped the broker go door to door to collect shares from willing sellers (in very small towns nearly everyone knows each other) and for himself bought 100 shares of Rs.100 face value, thus investing Rs.10,000 from the total of Rs.20,000 that he had.
Over the last 36 years, this is how his wealth has grown.
1981: declared a 1:1 bonus. He now had 200 shares.
1985: declared 1:1 bonus. He therefore had 400 shares.
1986: split the share to Rs.10. He thus had 4000 shares.
1987: declared 1:1 bonus. He hence had 8000 shares.
1989: declared a 1:1 bonus. Now he had 16,000 shares.
1992: declared a 1:1 bonus. By now he had 32,000 shares.
1995: declared a 1:1 bonus. He then had 64,000 shares.
1997: declared 2:1 bonus. He now held 1,92,000 shares.
1999: split the share to Rs.2. He now had 9,60,000 shares.
2004: declared 2:1 bonus. He thus had 28,80,000 shares.
2005: declared 1:1 bonus. He came to have 57,60,000 shares.
2010: declared 2:3 bonus. He now had 96,00,000 shares.
It’s been 33 years since Ahmed took the plunge in this ownership model. Today, WIPRO’s share price is 463.85 making it worth of 445 Cr.
The company has been a regular dividend payer. He received 120 Cr.+ worth of dividends over the years. It’s a huge of income considering it’s tax free (Actually companies pay tax on dividends directly to the Government before issuing the dividend).
Thus, an investment of 10,000 has turned into 550 Cr+.
WIPRO is more than just a company
For the people of Amalner, WIPRO is something more than a company. None of them would ever want to let go entirely, regardless of what analysts say. Indeed, one popular saying at Amalner is that if you buy 10 shares of WIPRO the day your child is born, it will earn enough over the years to pay for the child’s higher education or marriage.
In investing, patience is an important virtue, and the villagers of Amalner have proved it right.
