Companies

Telecom provisions drag Tata Sons FY 20 profits 61%

Rajesh Kurup Mumbai | Updated on August 30, 2020

A photo of Bombay House, corporate office of Tata Sons in Mumbai.

Tata Sons’ consolidated profit for the financial year ended March 2020 fell 61 per cent to ₹10,916.36 crore compared to a profit of ₹28,463.49 crore during the same period a year ago.

The dip in profits is primarily due to exceptional items related to Tata Teleservices.

The total income rose to ₹2,36,636.34 crore during the fiscal under review from ₹2,23,990.76 crore. Its profits before exceptional items and taxes on a consolidated basis stood at ₹31,678.17 crore (₹37,071.18 crore in the previous year), according to its annual report for FY 2019-2020, seen by BusinessLine.

On a standalone basis, Tata Sons’ profit rose to ₹2,679.75 crore in 2019-2020, from ₹1,143.67 crore recorded during the previous period.

“Various businesses experienced disruptions resulting from uncertainty and nation-wide lockdown and hence the operations of various Tata companies were also adversely affected. The impact faced by each company has been disclosed in their respective annual reports. Tata Sons believes that the Tata companies will navigate through these difficult times and will succeed in minimising the impact of this unprecedented situation. The pandemic also presents certain opportunities, which the businesses are evaluating and would aim to capitalise on,” N Chandrasekaran, Executive Chairman, Tata Sons, said in the annual report.

As of March 31, 2020, Tata Sons’ investments rose to ₹84,534.78 crore (₹73,421.74 crore as of March 31, 2019). Its aggregate borrowings were at ₹31,603.34 crore (₹31,647.31 crore as on March 31, 2019).

During the year, Tata Sons infused ₹7,000 crore in Tata Teleservices Ltd (TTSL) to discharge obligations including operational requirements. It also made provisions of ₹16,439 crore relating to TTSL and Tata Teleservices (Maharashtra) Ltd (TTML). Under exceptional items, TTSL and TTML also made provisions of ₹9,706 crore in the quarter ended September 30, 2019, as initial estimate towards licence fee and spectrum usage charges.

Cloud over Tata Steel Europe

The annual report highlighted that the group continues to face headwinds across its different businesses including aviation and steel. The independent auditors said due to the impact of Covid-19 pandemic, Tata Steel Europe will require further group company support to meet obligations.

“These conditions, along with the other matters explained in the special purpose financial information, indicate the existence of a material uncertainty which may cast significant doubt about Tata Steel Europe Ltd’s ability to continue as a going concern,” it added.

Published on August 30, 2020

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