Co-owners,

We've spun the wheel for the Emerging Markets bucket, and for the first time in this newsletter's run the ticker has landed in India. The company it picked is 119 years old, digs its own iron out of its own mines, and long before it became a global steel giant it did something stranger: it built a city.

Before we dive in, a reminder of what the index itself has delivered over time.

Every week, we pull one company at random from the FTSE All-World with ~4,200 companies representing 90% of global stock market wealth. We share the index's long-term returns since inception in 1986 as a reminder of why we're here: the long game. New to the newsletter? Start here.

Founded in 1907 in India. Listed on India's National Stock Exchange and the BSE (NSE: TATASTEEL).

In 1907, a company was born in India with a slightly mad ambition: to make steel in a country that had never made its own, using Indian money, Indian ore and Indian hands. Its founder, Jamsetji Tata, had chased the idea for twenty-five years and travelled halfway round the world for the know-how. He died in 1904, three years before the company existed.

His son finished the job, and they poured the first steel in 1912. But here is the part that sticks. Before the furnaces were even lit, the company laid out a whole town for the people who would run them: wide streets, houses, schools, a hospital. They called it Jamshedpur, and it was India's first planned industrial city. The same year the first steel ran, the company gave its workers an eight-hour day. Britain's legal limit at the time was twelve.

That company is Tata Steel, and if you hold a world equity index fund, you own a sliver of it.

A few key facts:

Steel sounds like one thing. It is really a ladder. At the bottom is the raw stuff, hot rolled coil, sold by the tonne to anyone who needs it. Every rung up, Tata Steel does a little more to it and charges a little more for it: cold rolled, coated, painted, bent into tubes, pressed into the panel of a car door. The whole art of the business is climbing that ladder, turning a bare commodity into something with a name on it.

And Tata Steel is oddly good at putting names on steel. It sells more than twenty brands to ordinary Indians. Tata Tiscon is the rebar inside the concrete of a new house. Tata Shaktee is the corrugated sheet on the roof. Tata Pravesh is a steel front door. There is even a website, Aashiyana, where someone building a home buys their steel the way you would buy a sofa online.

Some of it is genuinely charming. This year the company launched GajaMitra, a ten-foot steel fence designed to keep wild elephants and Indian villages safely apart. It makes PAXEL, the branded tin that holds the cooking oil in an Indian kitchen. And when you cross the new Kumar Bhaskar Varma bridge in Assam, the strands holding it up are Tata Steel. One company, in one week, fencing out elephants and suspending a bridge.

Here is the thing that makes Tata Steel unusual. Most steelmakers buy their two big raw materials, iron ore and coal, at whatever the market charges that day. Tata Steel's Indian operation digs its own. It owns the mines. This year they produced 44 million tonnes of iron ore, enough to make the Indian business completely self-sufficient in the stuff. When the ore is effectively yours, you make money in good years and you still make money in bad ones. Last year the Indian business ran at a 24% profit margin, which for a steelmaker is a genuinely rare number.

Europe is the opposite story, and it comes from one enormous bet.

In 2007, flush and ambitious, Tata Steel bought Corus, the old British and Dutch steel group, for around twelve billion dollars. Corus was four times its size. It was the biggest foreign purchase an Indian company had ever made, and it turned Tata Steel overnight into one of the largest steelmakers in the world. Then the 2008 crash arrived, European steel demand fell away, and the prize became a burden the company is still working through. Its UK plant at Port Talbot lost money again last quarter and is being rebuilt around a single electric furnace that melts scrap instead of smelting ore, part paid for by the British government.

Which makes a neat contrast with a company we met a few weeks ago. Steel Dynamics, our North American draw, was built from day one as a lean American scrap-melter, with no old furnaces to unwind. Tata Steel is its mirror image: a 119-year-old giant that owns mines, runs blast furnaces, and is now spending years and billions learning to melt scrap the way Steel Dynamics always has. Same metal, opposite companies.

Steel is a cycle, and Tata Steel rides every part of it. Its profit margin has swung from 26% in 2022 to 10% in 2024 and back to 15% now, all inside four years. Buy at the top of that wave and you can wait a long time to get your money back. The company also carries a fair amount of debt, and the European drag is real and slow to fix.

And yet, over the long run, it has beaten the very index it sits inside. Over the past ten years, with dividends reinvested, Tata Steel returned about 22% a year against roughly 11% for India's main market indices. Over twenty-five years, 19% against 13%. Over five years, though, its lead shrinks to almost nothing. That gap between the long record and the short one is the whole lesson of a business like this: patient owners have been paid handsomely, impatient ones far less so.

Tata Steel is not a company most people outside India think about. But it is one of the oldest and most stubborn industrial stories in your index fund: a firm that built a city before it built a profit, that reached for global scale and is still paying for the reach, and that keeps minting money at home because, more than a century ago, it made sure it would own the ground its steel comes from.

You own a slice of all of it. The rebar and the roof, the elephant fence and the bridge strands, the messy European inheritance and the mines full of iron. Next time someone tells you steel is boring, you own the counter-argument.

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Data and images sourced from the Tata Steel Integrated Annual Report 2025-26 and the Tata Steel Q1 FY2027 results presentation. Share price and market cap as of writing.

Next week, we'll be looking at a company from North America.