Tatas revenue grows faster than profit

Tata Group companies revenue grew faster than their net profits between 2005-06 and 2009-10. The total income of 42 group companies witnessed a compound annual growth rate of 16.4%,while the average net profit of these companies increased by 15.9% in the period.

Tata Group companies revenue grew faster than their net profits between 2005-06 and 2009-10. The total income of 42 group companies witnessed a compound annual growth rate (CAGR) of 16.4%,while the average net profit of these companies increased by 15.9% in the period.

In actual value terms,the combined net profit of these companies was up 81% from Rs 9,623 crore in 2005-06 to Rs 17,379 crore in 2009-10. During this period,the highest growth of 48.1% in net profit was seen in the year 2006-07. The total income of these Tata Group companies increased from Rs 0.79 lakh crore to 1.45 lakh crore in the same period. The highest growth of 29.2% in total income was seen in the year 2006-07. Among the 42 companies,significant CAGR in net profit was seen in the case of TCS,Titan Industries,Voltas,Rallis India,Nelco,CMC,TRF,Tata Sponge Iron and TCSe Serve.The net profit of TCS more than doubled from Rs 2,717 crore in 2005-06 to Rs 5,618 crore in 2009-10.

TCSs growth during last five years has been phenomenal. It emerged stronger out of the global economic downturn as it stayed close to its customers and helped them in the recovery process.The company was aggressive in its quest for new contracts,executed on its full services strategy and maintained pricing discipline. This helped to deliver 20% total income CAGR for the study period. The companys business grew even in those sectors affected by the economic meltdown,mainly because the customers appreciated the companys value proposition. Banking,financial services,retail,life sciences and healthcare and government sectors registered positive growth in 2009-10.

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TCS continues to have an A3 investment-grade issuer rating from Moody’s Investors Services as well as an indicative foreign currency debt rating of Baa1,with a stable outllook. Standard and Poors Ratings Services has assigned to the Company its BBB corporate credit rating with outlook as positive. It has also been rated by Dun & Bradstreet at 5A1 (Condition-Strong). The lower CAGR in net profit was witnessed in the case of Tata Steel,Tata Motors,Tata Elxsi,Tata Coffee,Tata Investment Corporation,Tata Refractories,Tinplate and Tata Sons. The net profit CAGR of Tata Steel was only 9.5% during last five years. In actual terms,net profit of Tata Steel increased from Rs 3,506 crore in 2005-06 to Rs 5,047 crore in 2009-10. Hooghly Metcoke & Power Company was merged with Tata Steel with effect from April 1,2009 as per the court order dated March 20,2010. Accordingly,the profit and loss account and balance sheet of Tata Steel will have an impact of incorporation of accounts of Hooghly Metcoke during 2009-10.

Similarly,in the case of total income,higher CAGR was seen in the case of TRF,TCS,Tata Tele,Titan Industries,Voltas,Tata Metaliks,Tata Sponge Iron,Tata Pigments and Nilachal Refractories.

The total income of TRF increased from Rs 215 crore in 2005-06 to Rs 644 crore in 2009-10. The lower CAGR in total income was seen in the case of Indian Hotels,Rallis India,Tata Investment Corporation,Oriental Hotels and Tata Ceramics.

The total income CAGR of Indian Hotels was only 7.8% during last five years. The total income of the company increased from Rs 1,179 crore in 2005-06 to Rs 1591 crore in 2009-10.