A stellar beginning for Tata's 'Mistry man'

Profit in FY13 up 18% to Rs 3,713 crore, dividend income jumps 37%

Cyrus Mistry, chairman of the $100-billion Tata Group from December 28 last year, has made a stellar beginning. In the first annual report signed by Mistry, Tata Sons — the unlisted holding company of the group — has recorded a net profit of Rs 3,713 crore (Rs 37.13 billion) for fiscal 2013, up 18 per cent from Rs 3,146 crore (Rs 31.46 billion) in the previous year.

Income earned from dividends on investments was up 37 per cent to Rs 4,669 crore (Rs 46.69 billion). The dividend boost came mainly from the group’s infotech giant TCS which paid Rs 3,630 crore (Rs 36.3 billion).

The dividend income supplemented by other income was primarily utilised to augment the resources of the holding company to increase its long-term investments in group companies, Tata Sons said in its annual report for FY13.

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Another big positive for the holding company was that though its investments at book value were Rs 41,942 crore (Rs 419.42 billion), the market value of its listed shares was a staggering Rs 274,293 crore (Rs 2,742.93 billion) as of March this year as compared to Rs 220,322 crore (Rs 2,203.22 billion) in the previous year.

Again, this significant rise in the market value of shares was due to a run-up in the TCS stock.

It is with this backing from rising profits that Tata Sons is investing in the high-risk aviation sector in India with two separate airline joint ventures, with Singapore Airlines and Air Asia. Tata Sons is also betting on realty and infrastructure businesses, which are showing good growth for the group.

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The company maintained its dividend at 800 per cent with an outgo of Rs 323 crore (Rs 3.23 billion).

Of this, the Mistry family, which owns 18.5 per cent stake in the holding company, earned Rs 60 crore (Rs 600 million) as dividend while the Tata trusts Sir Dorabji Trust and Sir Ratan Tata Trust, now chaired by former chairman Ratan Tata, earned Rs 90 crore (Rs 900 million) and Rs 76 crore (Rs 760 million) as dividend income respectively.

What is interesting is that a few Tata Sons-promoted companies such as Tata Sky and Infinity Retail (owner of Chroma retail stores) are now showing signs of rising revenues even as Tata Teleservices is slipping into a financial mess with its net worth turning negative by Rs 1,863 crore (Rs 18.63 billion).