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Last Updated : Sep 09, 2014 09:26 PM IST | Source: CNBC-TV18

Tata Sons FY14 revenues shrink, declares 800% dividend

Tata Sons, the Tata group's holding company, has seen revenues shrink in FY14. But that hasn't stopped it from declaring a dividend of 800 percent for the year, and hoping to increase this payout in FY15.


Tata Sons, the Tata group's holding company, has seen revenues shrink in FY14. But that hasn't stopped it from declaring a dividend of 800 percent for the year, and hoping to increase this payout in FY15.

But for that, the company, which depends solely on dividend paid to it by its group companies, says these companies will have to step up performance, report CNBC-TV18’s Sajeet Manghat and Payaswini Upadhyay report.

Tata Sons has felt the full force of the various challenges that its group companies have had to deal with through FY14, and this shows in the holding company's balance sheet.

Profits after tax fell 18 percent to Rs 3,053 crore, as revenues came in 5.6 percent lower at Rs 5,429.19 crore.

This fall in revenues can be ascribed to lower dividend payments by many of its group companies.

While dividend from TCS and Tata Investment Corporation remained flat, payments from its associate companies fell 29.3 percent to Rs 616.6 crore.

The revenues also include subscription to brand equity of Rs 453.29 crores, higher than the Rs 365.70 crore rupees in FY13.

But despite lower revenues, Tata Sons has not cut back on its own dividend payment.

So FY14 saw it declare a dividend of 800 percent, or Rs 8,000 rupees per ordinary share -- which works out to Rs 323.22 crore rupees.

In addition, Tata Sons has paid its preference shareholders dividend to the tune of Rs 340.2 crore.

FY14 also saw the book value of its investments rise to Rs 45,406.96 crore, from Rs 42,376.75 crore.

The value of its listed investments, however, declined to Rs 19,582.05 crore, from Rs 20,382.70 crore.

The book value of its crown jewel -- TCS -- stands at just Rs 146 crore. But a big reason for the decline in value of listed assets is the declassification of Tata Teleservices Maharashtra, which ceased as an associate firm.

Speaking of TTML, Tata Sons has booked a write-off against the investment in TTML to the tune of Rs 100 crore. So TTML's book value has declined to Rs 685.6 crore.

However, the value of Tata Sons' unlisted investments stood at Rs 19,600.20 crore, against Rs 18,874.60 crore.

FY14 also saw Tata Sons invest Rs 25.50 crore in Tata-SIA Airlines, and Rs 15.03 crore in AirAsia India.

Now Tata Sons has infused capital in some of the new businesses but one of the biggest expenses came when it increased its investment in its UK trading arm Tata Limited.

These capital infusion exercises pushed Tata Sons' long-term borrowings to Rs 14,505.55 crore, from Rs 13,270 crore in FY13.

As FY15 goes, the holding company can look forward to higher expenses.

For one, its aviation ventures will need a lot more money as they take to the skies. And two: the unravelling of its partnership with Docomo.

The exact exposure that Tata Sons will have to bear cannot be determined. But should a final notice from Docomo to exercise its right to sell come through, the buyback by Tata Group could see Tata Sons having an exposure of around Rs 4,140 crore -- that's a big chunk of the group's total potential exposure of Rs 7,250 crore.

So if the group is to help Chairman Cyrus Mistry keep his promise of more value to shareholders, each of them will have to do much better in FY15.



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First Published on Sep 9, 2014 09:26 pm
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