Tata Sons FY20 profit doubles with TCS help

Tata Sons saw its profit more than doubling in fiscal 2020, driven by higher dividend contribution from its software services subsidiary TCS. Profit soared 130% to Rs 2,680 crore from Rs 1,145 crore in fiscal 2019. The profit could have been higher, but it made a provision of Rs 16,439 crore towards the liabilities of Tata Teleservices, an analysis of the Tata Sons FY20 report revealed. The holding company of the Tata Group has so far written off Rs 60,000 crore of its investments in the loss-making telecom business. While the consumer mobile unit was sold to Bharti Airtel, the enterprise business remains housed under Tata Teleservices.Revenue from operations, which mainly comprise dividend income and brand royalty fees, rocketed 158% to Rs 24,770 crore. TCS’s contribution to revenue increased to more 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 companies contributed Rs 1,683 crore to revenue, lower by 23%.Dividend income of the investment company, which holds stake in 344 firms including 28 listed entities, was Rs 23,994 crore, compared with Rs 8,202 crore in FY19. Other income 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 shares by TCS and Tata Investment Corporation. Tata Sons’ debt, however, remained flat at Rs 31,319 crore, according to the FY20 report. Its cash and equivalents were up 84% to Rs 513 crore. Total expenses increased 27% to Rs 5,074 crore. On a consolidated basis, the company’s profit declined 62% to Rs 10,916 crore due to increase in exceptional items. Tata Sons’ auditors have flagged ‘going concern’ doubts on certain operating entities - Tata Steel Europe and Air Asia India - amid their losses and slump in businesses due to Covid. Tata Steel Europe made an operational loss of Rs 626 crore in Q1FY21 while Air Asia India’s net worth has been fully eroded. The auditors also pointed out that Air Asia India’s current liabilities exceeded its current assets by Rs 1,209 crore.

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