Tata Sons sees 4-fold rise in overseas royalty earnings

Written by Debabrata Das | Mumbai | Updated: Nov 14 2012, 08:18am hrs
The increasing presence of the Tata brand overseas has benefited group holding company Tata Sons, which saw royalty earnings from overseas grow four fold during fiscal 2011-12 at R86 crore as more of its global group companies adopted the brand and the logo.

The companys foreign exchange earnings also grew significantly in 2011-12, signaling good health in the Tata groups overseas ventures. During the 2011-12 fiscal, Tata Sons total earning in foreign exchange increased to R263.7 crore from Rs 34.8 crore in 2010-11, as per the companys profit and loss account for 2011-12, sourced from the registrar of companies.

International operations of the group, driven by Tata Motors, which now owns Jaguar Land Rover, are a major driver for the Tata groups revenues. Out of a total of $100 billion revenues, nearly 58% come from overseas.

However, despite the increase in earnings in foreign exchange, both profit and total revenues for Tata Sons fell by nearly 3% during the fiscal 2011-12. Total revenues in 2011-12 fell to R4,726.2 crore from R4,857.9 crore. During the fiscal, the companys net profit fell 3% to R3,146.3 crore from R3,246.9 crore in the previous year.

Tata Sons, registered as a non-banking financial company, is the owner of the Tata name and the Tata trademark. All group companies pay a royalty fee to use the group mark logo. Apart from being owners of the brand and the trademark, Tata Sons also invests to maintain shareholding in the groups main operating companies.

The drop in revenues came as a direct result of lower dividend income from group companies. In 2010-11, Tata Consultancy Services paid a special dividend to Tata Sons, which was missing in 2011-12. Also, companies like Voltas, NELCO and Oriental Hotels paid lower dividend in 2011-12.

Tata Sons also invests in the groups operating companies to facilitate their funding requirements for growth and entry into new businesses. The companys long-term unsecured borrowings as of March 31 increased 13.1% during 2011-12 to R6,466 crore paving the way for future investments in the group companies. In the current fiscal, Tata Sons has increased its stake in Indian Hotels and Tata Steel. Reports suggest that the holding company also plans to hike its stake in Tata Chemicals and Tata Coffee.

Tata Sons also raised its share capital by R69.18 crore via private placement of preferential shares.

Meanwhile, Tata Sons also benefited from normal retirements as expense on managerial remuneration came down by nearly half. Tata Sons reduced managerial payment by nearly half to R22.3 crore from R41.3 crore in 2010-11.