Tata Sons identified that its profit is increasing in fiscal 2020, driven by a higher dividend contribution from its software services subsidiary TCS. Profit rose130% to Rs 2,680 crore from Rs 1,145 crore in fiscal 2019.
The profit could have been better, but it made a provision of Rs 16,439 crore towards the liabilities of Tata Teleservices NSE 2.86 %, an evaluation of the Tata Sons FY20 report revealed. The holding company of the Tata group has to far write off Rs 60,000 crore of its investments in the loss-making telecom business. Even as the consumer mobile unit becomes offered to Bharti Airtel, the enterprise business remains housed under Tata Teleservices.
Sales from operations, which especially contain dividend earnings and brand royalty expenses, rocketed 158% to Rs 24,770 crore. TCS’s contribution to revenue expanded to greater than 90% from 77% in FY19.In the past, controlling shareholder Tata Trusts had expressed its displeasure over the low contribution of non-TCS entities to earnings. Non-TCS firms gave Rs 1,683 crore to revenue, decreased by 23%.
The dividend earnings of the investment company, which holds a stake in 344 companies along with 28 listed entities, was Rs 23,994 crore, in comparison with Rs 8,202 crore in FY19. Different profits for FY20 was lower at Rs 126 crore as compared to Rs 10,630 crore in FY19. This is because in FY19 other income predominantly comprised profit from buyback of stocks by TCS and Tata Investment Corporation. Tata Sons’ debt remained flat at Rs 31,319 crore, the data was according to the FY20 report. It is cash and equivalents were up 84% to Rs 513 crore. The aggregate rates improved 27% to Rs 5,074 crore. On a consolidated basis, the company’s earnings decreased by up to 62% at Rs 10,916 crore due to growth in exceptional items.
Tata Sons’ auditors have flagged ‘going concerned’ doubts on certain operating entities – Tata steel Europe and Air Asia India – amid their losses and slump in business due to COVID. Tata steel Europe made an operational loss of Rs 626 crore in Q1FY21 even as Air Asia India’s net worth has been fully eroded. The auditors also pointed out that Air Asia India’s existing liabilities exceeded its current assets by 1,209 crores.