Tata's financial services, insurance biz saw hefty profits in FY24

Realty, airline, and new-age businesses still struggling to make money

The Tata group’s unlisted financial services and insurance businesses have seen hefty profits during financial year 2023-24 (FY24).

Tata Capital, the group’s financial services business, has reported net profit of Rs 2,492 crore on revenues of Rs 13,309 crore, according to Tata Sons’ annual report for FY24.

The two insurance joint ventures, Tata AIA General Insurance reported net profit of Rs 685 crore and Tata AIA Life Insurance saw Rs 1,313.84-crore net profit.

Tata Sons directly owns 74 per cent stake in the general insurance company and 51 per cent in the life insurance firm.

The general insurance firm reported turnover of Rs 15,422.56 crore while the life insurance JV saw Rs 25,691 crore turnover for FY24.

The group is currently toying with the idea to list Tata Capital.

This comes after the Reserve Bank of India (RBI) classified the firm as an upper layer non-banking financial company (NBFC) and asked it to list it by September next year.

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 (TML), 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 realty, airline and new-age businesses are still struggling to make money (see chart).

Air India has reported a net 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 Chroma brand of stores, reported turnover of Rs 17,833 crore and a net loss of Rs 986.7 crore.

Tata Teleservices, which has been a substantial cash burn for the group over the last few years, reported a net loss of Rs 1,330 crore and 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 (DoT). It is over the definition of gross revenue and adjusted gross revenue.

TTSL and TTML have made payments of Rs 4,197.37 crore during the financial year 2019-20.

On October 17 last year, both the companies filed curative petitions in the Supreme Court appealing to reconsider levy of interest, penalty and interest on penalty.

During the year, TTSL and TTML continued to recognise interest on AGR obligations.

The report said gross liabilities of TTSL and TTML pertaining to the AGR matter stood at Rs 22,218 crore as on March this year. This compares to Rs 20,878 crore on FY23.

Tata Tele has recognised a provision of Rs 1,340 crore during the year ended March 31.