List of Tata's Loss-Making Companies

The Tata Group has 30 companies under its umbrella. It is also India's most valuable brand with a brand value of ₹30 lakh crore. This is higher than Pakistan's GDP which is somewhere around ₹28 lakh crore.

That's right! Tata is the ultimate big deal in the business world. From steel to salt, the group seems to do it all. But even giants stumble, and Tata's history isn't just about iconic cars and fancy hotels.

Tata fails, too. I mean, we all know about Nano— what started as the "people's car" ended up being nobody's car. Want to read about 5 other times Tata lost crores in failed business ventures? You can read all about it here.

But for now, let's take a closer look at some of Tata's other challenging ventures. Despite the group's massive success, not every venture has been a winner. So, let's dig into the losses that even India's most valuable brand couldn't dodge. Shall we?

Table of Contents:

• Tata's Aviation Segment
• Tata Play
• Tata Digital
• Tata Teleservices Maharashtra

Tata's Loss Making Companies

Tata's journey hasn't always been smooth sailing, especially in certain sectors. Take the aviation business, for instance. Tata Group’s aviation business reported a net loss of ₹6,337 crore for FY24, though that's an improvement from the ₹15,414 crore loss in the previous year.

On top of that, Tata Teleservices continues to face challenges, posting a net loss of ₹350.74 crore in Q2 FY25. So, while Tata's overall success is undeniable, some ventures just haven't quite made the cut.

Let's take a closer look at a few more of those loss-making companies.

Tata's Aviation Segment

Tata recently (2024) consolidated its aviation businesses under one brand, streamlining operations across the sector.

The Tata Aviation segment now includes:

1. AIX Connect Private Limited (formerly AirAsia India)
2. Air India Express Limited
3. Air India Limited
4. Tata SIA Airlines (Vistara)
5. AI Fleet Services IFSC Limited
6. Taj Air Limited

While this move aims to simplify operations, 4 out of 6 companies in the sector are facing ongoing financial struggles.

AIX Connect Pvt. Ltd.

AIX Connect, formerly known as AirAsia India, was a low-cost airline based in Bengaluru, Karnataka. It was a wholly-owned subsidiary of Air India Limited, which is, in turn, owned by the Tata Group.

The airline was part of Tata's broader strategy to expand its presence in the Indian aviation market, but like many others in the sector, it hit some turbulence along the way.

AIX Connect’s profitability took a big hit because of fluctuating fuel prices and exchange rates. Fuel costs alone made up 40-45% of expenses and had to be paid in USD, just like other major costs like leases and maintenance.

In FY23, high Aviation Turbine Fuel (ATF) prices combined with a weaker INR against the USD made things worse, even though passenger traffic had improved.

On top of that, the airline was navigating a tough domestic aviation market where cost sensitivity was key. To streamline things, Tata Group decided to merge AIX Connect with Air India Express, wrapping up the deal in October 2024. The airline also reduced its loss to ₹1,149 crore in FY24 from ₹2,750 crore in FY23.

Air India Express Ltd.

Air India Express, launched in 2005 as a subsidiary of Air India, is India's first international low-cost airline. It primarily focuses on connecting smaller cities in India to destinations in the Middle East and Southeast Asia, operating over 2,600 flights weekly to around 45 destinations.

But, it is not as impressive as it sounds. Air India Express reported a net loss of ₹163 crore in FY24, despite a 33% increase in income to ₹7,600 crore. Additionally, the company's expenses hit ₹7,763 crore.  

Why the big losses? Well, a few things played a role:

• Domestic Expansion: Air India Express went all-in on the domestic market in FY24, directly competing with giants like IndiGo. To keep up with IndiGo's competitive pricing, it had to adjust its fares, which impacted profits.
• Rising Operational Costs: Expanding quickly comes with a price tag. Maintenance costs for the company's growing fleet shot up by a whopping 80.57%, hitting ₹1,004 crore. On top of that, employee-related expenses went up more than 2x reaching ₹772 crore. The most likely reason for this is the need for more staff to manage the expanded operations.

But, thanks to the merger (Air India Express and AIX Connect), things might turn around. The airline plans to double its fleet to 175 aircraft in the next 2-3 years, with 50% of capacity dedicated to domestic operations.

In short, while Air India Express is doing its best to spread its wings, these growing pains are definitely costing it.

Air India Ltd.

Launched in 1932, Air India was India's first airline. However, Tata had to give up its control in 1953 when the airline was nationalised. The aim was to make the industry more organised through the Air Corporations Act. It was decided that private airlines couldn’t survive in a newly independent country without money or infrastructure. And at the time, many big airlines around the world were also owned by their governments.

However, the government failed to do so and the airline suffered losses. It was mainly due to operational inefficiencies and the government’s inability to fix its mess:

• Unrealistic Aircraft Purchases (2005): Ordered 111 planes for ₹70,000 crore on debt.
• Inefficient Merger with Indian Airlines (2007): Poor integration caused losses to soar from ₹63 crore to ₹7,000 crore by 2011.
• Declining Market Share (2008-2020): Market share fell to 14% by 2018, with unprofitable routes and high costs.
• Loss-Making Aircraft Sales (2013): Sold 5 Boeing 777s at a ₹671 crore loss, worsening finances.
• Failed Turnaround Plans (2011-2017): ₹48,212 crore bailout failed; losses hit ₹52,000 crore by 2017.

So, in January 2022, Tata regained ownership by acquiring 100% of a sinking Air India. And under Tata's leadership, Air India is going through big changes to fix these issues. Since the takeover, the airline has been making significant strides towards recovery.

The airline's financial performance shows a trend of rising revenues, and it has been able to reduce its losses in FY24 compared to the previous year.

Let's take a look at how it has been performing since:

Air India is making rapid changes. Since Tata took over, the airline has focused on improving operations and reducing losses. The merger with Vistara is a part of this transformation.

Air India and Vistara merged in November 2024, shaking up the aviation market. The merger is expected to save over ₹500 crore every year by cutting costs like fuel and ground services.

Tata SIA Airlines

Tata SIA Airlines, better known as Vistara, was a Joint Venture (JV) between Tata Sons (51%) and Singapore Airlines (49%). The airline has served 2 crore passengers in the 5 years since it started operations in 2015.

However, it has been facing losses in recent years, but the good news is that its revenue shows things are moving in the right direction. Here's a look at its financial performance over the last 3 years:

Despite the massive dip in its revenue from FY23 to FY24, the airline reduced its losses significantly, cutting them nearly in half in FY24 compared to the previous year. This improvement came alongside a 29% increase in turnover.

The main challenge for Vistara has been high operational costs and intense competition in the Indian aviation industry. Although the airline is still not profitable, its merger with Air India (after which Tata Sons owns 74.9% of Air India, and Singapore Airlines holds 25.1%) might lead it on the path to financial recovery.

Tata Play

Tata Play (formerly Tata Sky) is a well-known name in India's entertainment world. We know it from its tagline: 'Isko laga dala toh life jingalala' and its iconic ads.

Tata Play offers a mix of services aimed at keeping its consumers entertained:

• Direct-to-Home (DTH) Services: Provides satellite TV directly to homes, offering a wide range of channels without the need for cable.
• Over-The-Top (OTT) Aggregation: Combines popular streaming services like Amazon Prime, Netflix, Disney+, and more into one platform.
• Set-Top Boxes: Offers smart set-top boxes, like Tata Play Binge+, that let people watch both live TV and streaming content with a single device.
• Home Security Services: Provides smart home security solutions with live camera feeds and alerts to keep homes safe.
• Internet Services: Delivers high-speed internet for smooth video streaming and gaming.

Now, about its financials. Let's just say it hasn’t been that great:

Tata Play's losses went up by 236% from FY23 to FY24. Revenue also took a hit, dropping 6.1%, which could mean people are spending less or switching to other services. Plus, its DTH segment, which was profitable last year, went from a ₹20 crore profit to a ₹247 crore loss, showing some operational problems or tougher competition.

Is Tata Play out of the entertainment game, or is this just a temporary slump? Let me know what you think in the comments!

Tata Digital

Tata Digital operates an all-in-one e-commerce platform: the Tata Neu app. It brings together a wide range of services, including:

• Croma for electronics
• BigBasket for your grocery needs
• Tata 1mg for health and pharmacy services
• Tata Cliq for fashion and luxury shopping

Plus, it offers financial services like co-branded credit cards and its NeuPass loyalty program. All of this has led to impressive platform transactions, with a reported Gross Merchandise Value (GMV) of ₹37,355 crore.

But here's the shocker: despite such huge platform transactions, Tata Digital is facing some hefty losses. Check out the numbers:

Why the Losses?

• High operational costs due to heavy investment in tech and infrastructure
• Big spending on marketing and building a loyal customer base (11.64 crore members)
• Challenges integrating all its businesses into one smooth app

Tata Digital is clearly aiming high, but the costs of building such a massive ecosystem are steep. Let's see if it can turn these losses into profits!

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Tata Teleservices Maharashtra (TTML)

TTML is about keeping you connected in the digital world with its multiple offerings:

• Connectivity: Traditional voice services, internet leased lines, SD-WAN, VPN-MPLS, and dedicated cloud connections.
• Cloud & SaaS: Provides cloud solutions like Microsoft Azure, along with smart tools like Microsoft 365 and Google Workspace.
• Value-Added Solutions: From cybersecurity to collaboration tools, these solutions help keep your information safe from hackers and make it easier for people to talk and work together.

But, despite these solid offerings, TTML has had a rough ride financially.

So, yeah, TTML is still struggling. These losses were happening because:

• The Indian telecom market is packed with many players; it's tough to stand out and keep prices high.
• The company also spent ₹147.16 crore on depreciation, which is like a slow leak draining its resources.

However, it has done a good job of cutting down its losses. Its net loss dropped by more than 40% between FY21 and  FY23, which shows its efforts to improve operations and financial management.

Despite this, the company is still struggling with a big debt problem. In FY 2022-23, the company had to spend ₹1,501.55 crore just on finance costs like interest payments. This takes up a huge chunk of its earnings, making it really hard for TTML to turn a steady profit.

The Bottom Line

Even the Tata Group, India's most valuable brand, doesn't always get it right. With a brand value of ₹30 lakh crore and businesses in 10 different verticals spanning everything from steel to salt, you'd think Tata can't go wrong. But the truth is, not every venture is a success.

Even a giant like Tata faces tough times, from big losses in its aviation businesses to struggles with Tata Play and Tata Digital. And honestly, it's really fascinating.

How does such a successful group deal with failures? Can these companies bounce back and turn their losses into wins, or are they always going to be a sore spot for Tata? What do you think? Share your thoughts in the comments!

By the way, did you know that most of Tata's businesses are thriving? If you're curious, read this article about Tata's listed companies to find out more.

*Disclaimer: The stocks and companies discussed above aren't a recommendation from Finology Insider and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.