Tata Sons makes Rs 16,439 crore provisions for telecom business

Tata Sons, the holding company of the Tata group, has made provisions of Rs 16,439 crore for its now closed telecom business, according to the annual report of the company for the fiscal ending March 2020.

With this, the total amount written off by Tata Sons for its telecom business is now close to Rs 60,000 crore. In December 2019, DoT raised a consolidated demand for Rs 16,612 crores towards license fees, spectrum usage charges, interest, penalty and interest on penalty on TTSL and TTML, following a Supreme Court order. Tata Sons has already paid Rs 2,197 crores against this, according to the annual report.

While Tata Sons' dividend remained the same at Rs 404 crore as last year, in order to enable Tata Teleservices Limited to discharge its obligations, including operational requirements, Tata Sons infused an additional Rs 7,000 crore into the telecom arm and made provisions of Rs 16,439 crore relating to Tata Teleservices Limited and Tata Teleservices (Maharashtra) Limited.

For the fiscal year, at the consolidated level, the company's profit after tax has come down to Rs 10,916 crores from Rs 28,463 crores, mainly due to  an increase in exceptional items. At a standalone level, its profit before exceptional items and taxes was Rs 19,822 crore. Its profit before tax was Rs 2,679 crore after exceptional items of Rs 17,142 crore.

The auditors of the company have raised concerns over Tata Steel Europe and Air Asia India’s ability to continue as going concerns. The auditors said the impact of the Covid-19 pandemic would require Tata Steel Europe Ltd to access group company support in order to meet its obligation as they fall due. Tata Steel Europe Limited has received a letter from TS Global Procurement Company Pte Ltd undertaking to provide working capital and/or other cash support up to a specified amount which exceeds the amount forecast as being required by Tata Steel Europe Limited over the next twelve months. The letter states that it represents present policy, is given by way of comfort only and is not to be construed as constituting a promise as to the future conduct of TS Global Procurement Company Pte Ltd or Tata Steel Limited. 

''Accordingly, there can be no certainty that the funds required by Tata Steel Europe Limited will in fact be made available. 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 Limited’s ability to continue as a going concern. The special purpose financial information does not include the adjustments that would result if Tata Steel Europe Limited were unable to continue as a going concern," the auditor warned.

Commenting on Air Asia India, the auditors said,"The airline has accumulated losses and its net worth has been fully eroded." Air Asia (India) Limited has incurred a net loss during the current and previous years and Air Asia (India) Limited’s current liabilities exceeded its current assets at the balance sheet date by Rs 1208.89 crore. The Covid-19 pandemic indicates the existence of material uncertainty that may cast significant doubt on Air Asia (India) Limited’s ability to continue as a going concern. The total investment made in the airline venture is around Rs 1,255 crore while the total losses are around Rs 2,130 crore.

Salary cut

In FY20, Tata Sons management, including  N Chandrasekaran and executive director, Saurabh Agrawal, have taken a cut in the bonuses. While Chandrasekaran took home a total remuneration of Rs 58.34 crore, Agrawal's total remuneration was Rs 15.77 crore.