The net profit of Tata Sons declined 19 per cent to Rs 3,054 crore for the financial year ending March 31, 2009 as interest cost increased nearly four times to Rs 504 crore.
The holding company of the Tata Group had posted its best ever results in FY’08 with Rs 3,780 crore net profit and Rs 4,500 crore total income.
“While the absolute debt level has increased due to investments in group firms, the debt equity level still remains at a comfortable level,” said an analyst with a rating firm, who did not wish to be named. According to him, the debt equity at the end of the year was at 0.6.
According to the latest annual report filed with the Registrar of Companies, total debt of Tata Sons increased by 22.4 per cent to Rs 10,750.7 crore, from Rs 8781.5 crore at the end of the previous financial year.
| BALANCE SHEET | ||
| In Rs crore | FY2008 | FY2009 |
| Income | 4517 | 4124 |
| Dividends | 1578 | 1,755 |
| Services | 288 | 291 |
| Other Income | 2649 | 2,077 |
| Expenditure | 395 | 778 |
| Net Interest | 131 | 504 |
| Establishment | 213 | 224 |
| Depreciation | 3 | 3 |
| Provision for employees | 46 | 46 |
| PAT | 3779 | 3053 |
| Debt | 8781 | 10,750 |
The profit also dipped as other incomes, largely from sale of investments, dropped by 21 per cent to Rs 2,077 crore. However, the dividend income that it earns from the group firms registered 11.2 per cent annual growth to Rs 1,755 crore, despite the financial crisis that affected the profits of Tata Steel and Tata Motors in the year.
The holding firm also used the opportunity of low market valuation of its group firm to increase investments in group companies by 24.5 per cent to Rs 29,336 crore in the year.
“The dividend income supplemented by the profit made on sale of investments was utilised to augment the resources of the company to increase long-term investments in promoted companies,” the firm in its annual report stated.
In 2008-09, Tata Sons increased its shareholding in Tata Motors, Tata Steel, Tata Communications and Indian Hotels, which got beaten in the stock markets during the downturn.
To manage this, it sold a part of its stake in Tata Consultancy Services, where its holding came down to 73.75 per cent from 75 per cent.
Tata Sons has a fund-raising plan of nearly Rs 9,300 crore. Icra, a leading rating firm, has given it the top rating for Rs 500 crore debt-raising through NCDs. Further, it has got the top, A1 Plus, rating for its Rs 2,625 crore commercial paper programme. A1 is the highest credit quality rating assignment for short-term debt instruments by Icra. Usually, ratings are taken for fund-raising plans within the next one year. It could not be immediately ascertained how much of this has already been raised. Icra could not be reached for its comments.
