Tata group’s financial services business make hefty profits in FY24
The Tata group’s unlisted financial services businesses have reported hefty profits for the year, with Tata Capital, the group’s financial services business, reporting a profit of Rs 2,492 crore on revenues of Rs 13,309 crore, as per Tata Sons’ annual report for the financial year ended March 2024.
The two insurance joint ventures, Tata AIA General Insurance reported a profit of Rs 685 crore, and Tata AIA Life Insurance reported Rs 1,313.84 crore profit. Tata Sons directly owns a 74 per cent stake in the general insurance company and 51 per cent in the life insurance firm. The general insurance firm reported a turnover of Rs 15,422.56 crore, while the life insurance JV reported a turnover of Rs 25,691 crore for FY24.
The Tata group is currently toying with the idea of listing Tata Capital after the Reserve Bank of India classified the firm as an NBFC upper layer, with plans to list it by September next year.
In FY24, in January this year, Tata Capital merged its two subsidiaries, Tata Cleantech Capital (TCCL) and Tata Capital Financial Services (TCFSL), into Tata Capital (TCL). In June this year, the boards of Tata Motors, Tata Capital, and Tata Motors Finance (TMFL) approved the merger of TMFL with Tata Capital. As consideration for the merger, TCL will issue its equity shares to the shareholders of TMFL, resulting in TML effectively holding a 4.7 per cent stake in the merged entity.
While the group’s financial services have done well, the group’s realty, airline, and new-age businesses are still struggling to make money (see chart). Air India has reported a loss of Rs 4,444 crore on revenues of Rs 38,812 crore, and Tata SIA Airlines has made a loss of Rs 581 crore, the report said. Tata SIA reported a turnover of Rs 15,191 crore. The group is currently in the process of merging Air India and Tata SIA Airlines.
Infinity Retail, which operates the Croma brand of stores, reported a turnover of Rs 17,833 crore and a loss of Rs 986.7 crore. Tata Teleservices, which has seen a substantial cash burn for the group over the last few years, reported a loss of Rs 1,330 crore and a turnover of Rs 2,128 crore.
The report said that Tata Teleservices and its listed subsidiary, Tata Teleservices Maharashtra, along with other Indian telecom operators, have been in litigation with the Department of Telecom on the definition of Gross Revenue and Adjusted Gross Revenue.
TTSL and TTML made payments of Rs 4,197.37 crore during the financial year 2019-20. On October 17 last year, both companies filed curative petitions in the Supreme Court appealing to the top court to reconsider the levy of interest, penalty, and interest on penalty. During the year, TTSL/TTML continued to recognise interest on AGR obligations.
Hence, the report said, the gross liabilities of TTSL/TTML pertaining to the AGR matter stood at Rs 22,218 crore as of March this year, compared to Rs 20,878 crore as of FY23. Tata Tele has therefore recognised a provision for Rs 1,340 crore during the year ended March 31, 2024.
First Published: Sep 08 2024 | 7:00 PM IST