Tata Capital’s profit hit 87% due to higher impairments

Mumbai: Profit at Tata Capital, the unlisted financial services arm of Tata Group, declined 87% to Rs 124 crore in fiscal 2020 as impairments saw a rise. Impairments on investments and financial instruments increased 138% to Rs 1,581 crore from Rs 665 crore in fiscal 2019. Even though interest income, the main revenue stream of the firm, grew 19% to Rs 8,999 crore, its book size remained flat at Rs 77,110 crore.

An analyst pointed out that this indicates the book has high-risk assets, which could turn into NPAs and the same may have to be written off in the future. Impairments over the two last fiscals increased almost five times, an analysis of the firm’s FY20 report showed. Even though parent Tata Sons pumped in Rs 3,500 crore into Tata Capital over the last two fiscals, return on equity declined to 3.4% from 13.8% in FY19.