Tata Sons undervalues its telecom business to Rs 28,651 crore

According to a report, Tata Sons has written off Rs 28,651 crore on its telecom business in the previous financial year, lowering its net profit by 76%. It is confirmed that the write-offs on the balance sheet for the telecom arm are expected to be completed by March 2019.

Tata Sons has posted a 14% rise in total revenue to Rs 1,96,903 crore in the year ending March 2018, from Rs 1,73,178 crore in the previous year. Profit after tax declined to Rs 4,379 crore, from Rs 18,432 crore, after exceptional items worth Rs 21,216.2 crore, compared to Rs 7,352.7 crore a year ago.

The group took initiatives during the previous year to consolidate its stake in Tata companies to simplify cross-holdings and help provide cash for entities wanting to cut debt and make investments, it said. Profit on the sale of investments during the year mostly included that held in Tata Consultancy Services, amounting to Rs 8,929 crore.

Profit on buyback of 3.6 crore TCS shares was about Rs 10,262 crore.

Since N Chandrasekaran took over as chairman in January 2017, he has urged the group’s chief executives to focus on core businesses and tap the huge opportunities within India, a marked shift in the business strategy to focus on the domestic market.

Tata Sons is talking tough on performance and capital allocation, asking CEOs for better returns on capital employed. The group is quite hopeful about a few fledgling companies that will contribute in a few years. Insurance, steel, hotels and retail clusters will take off significantly to contribute to group profits.