Tata Sons net plummets 73% to Rs 824 crore in FY16-17
, ET Bureau|
Updated: Oct 24, 2017, 11.03 PM IST
MUMBAI: Tata Sons, the holding company of the diversified conglomerate Tata Group, posted a 73% drop in net profit to Rs 824 crore in FY17 even as revenue rose 23% to Rs 9,985 crore on a standalone basis, according to the firm’s filings last week before the Registrar of Companies.
On a consolidated basis, Tata Sons’ revenues rose 13% to Rs 1.73 lakh crore, while profit fell 20% to Rs 18,431 crore. Bottomline performance for FY17 is skewed because of higher exceptional items totaling Rs 6,773 crore. These mainly comprise damages, net interest costs, and Rs 5,528-crore of provisions for doubtful recoveries because of NTT Docomo issue.
Excluding exceptional items, Tata Sons’ profit would have risen 33% on a standalone basis and about 10% at a consolidated level. Tata Sons had made a provision of Rs 684 crore in its books for “doubtful recoveries” of dues from former business partner C Sivasankaran. The case relates to additional funds that were to be infused by shareholders as part of a settlement with Japanese telecom giant Docomo.
“Remittance would be made to NTT Docomo out of the amount deposited to the Delhi High Court immediately upon NTT Docomo furnishing an appropriate withholding tax certificate from the tax authorities," Tata Sons said in its filings. Tata Sons did not respond to an email query.
The group is considering shutting down a large part of the telecom business that has been making losses for long and carries a debt burden of about Rs 34,000 crore. "What is happening now is something the group should have done long ago. We are happy chairman N Chandrasekaran is boldly writing down losses instead of letting businesses bleed and keeping focus on capital allocation. Of course that is no different from what the former chairman Cyrus Mistry has been advocating," said CEO of a leading domestic fund.
The Tata Sons board ousted Mistry as chairman on October 24 last year. In a letter to Tata Sons the next day, Mistry highlighted “legacy hotspots”, which, if realistically assessed, could result in writedowns of nearly $18 billion. This included the telecom business.
Tata Trusts and Tata group companies hold about 79% equity stake in Tata Sons, with individual investors, including the Tata family, holding rest of the shares. It had recently sought shareholder approval to change its status as a public company to become a private limited company.
Tata Sons' standalone revenue or top-line includes dividend from group companies and brand equity subscriptions. On a consolidated basis, Tata Sons' profit depends on the performance of 234 subsidiaries, 35 joint ventures or associates, and yields in equity investments.
On a consolidated basis, Tata Sons’ revenues rose 13% to Rs 1.73 lakh crore, while profit fell 20% to Rs 18,431 crore. Bottomline performance for FY17 is skewed because of higher exceptional items totaling Rs 6,773 crore. These mainly comprise damages, net interest costs, and Rs 5,528-crore of provisions for doubtful recoveries because of NTT Docomo issue.
Excluding exceptional items, Tata Sons’ profit would have risen 33% on a standalone basis and about 10% at a consolidated level. Tata Sons had made a provision of Rs 684 crore in its books for “doubtful recoveries” of dues from former business partner C Sivasankaran. The case relates to additional funds that were to be infused by shareholders as part of a settlement with Japanese telecom giant Docomo.
“Remittance would be made to NTT Docomo out of the amount deposited to the Delhi High Court immediately upon NTT Docomo furnishing an appropriate withholding tax certificate from the tax authorities," Tata Sons said in its filings. Tata Sons did not respond to an email query.
The group is considering shutting down a large part of the telecom business that has been making losses for long and carries a debt burden of about Rs 34,000 crore. "What is happening now is something the group should have done long ago. We are happy chairman N Chandrasekaran is boldly writing down losses instead of letting businesses bleed and keeping focus on capital allocation. Of course that is no different from what the former chairman Cyrus Mistry has been advocating," said CEO of a leading domestic fund.
The Tata Sons board ousted Mistry as chairman on October 24 last year. In a letter to Tata Sons the next day, Mistry highlighted “legacy hotspots”, which, if realistically assessed, could result in writedowns of nearly $18 billion. This included the telecom business.
Tata Trusts and Tata group companies hold about 79% equity stake in Tata Sons, with individual investors, including the Tata family, holding rest of the shares. It had recently sought shareholder approval to change its status as a public company to become a private limited company.
Tata Sons' standalone revenue or top-line includes dividend from group companies and brand equity subscriptions. On a consolidated basis, Tata Sons' profit depends on the performance of 234 subsidiaries, 35 joint ventures or associates, and yields in equity investments.
