The Hindu : Business : TCS does well in challenging environment

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Business

TCS does well in challenging environment

Special Correspondent

Modest rise in net profit despite BFSI worry; declares Rs. 3 per share interim dividend

Will strive to prop up global economic recovery
9.5% sequential growth in international business

— PHOTO: SHASHI ASHIWAL

SUSTAINING GROWTH: S. Ramadorai (left), Managing Director, with S. Mahalingam, CFO, Tata Consultancy Services, addressing a press conference in Mumbai on Wednesday.

MUMBAI: In a challenging environment, a strong performance from the banking, financial services and insurance (BFSI) segment and improved margins saw Tata Consultancy Services report a marginal growth in its net profit at Rs. 1,271 crore in the second quarter of 2008-09 against Rs. 1,252 crore in the corresponding quarter in the previous year. Revenues were up 25 per cent at Rs. 6,953 crore (Rs. 5,550 crore).

The profit from operations before other income, interest and taxes was up at Rs. 1,680.34 crore (Rs. 1,254.02 crore).

The company also declared a second interim dividend of Rs. 3 per equity share of face value of Rs. 1. Sequentially, the company’s operating margins improved by 217 basis points after factoring in the turmoil in the BFSI space which had an impact of around 55 basis points.

For the half year ended September, the net profit was up at Rs. 2,561.60 crore (Rs. 2,454.50 crore) on 25 per cent higher revenues of Rs. 13,364 crore (Rs. 10,707 crore).

Addressing the media here on Wednesday, TCS CEO and Managing Director S. Ramadorai said, “our growth has been balanced across markets and verticals with a 9.5-per cent sequential growth in our international business during the second quarter and we have improved margins significantly. New opportunities are emerging and there are signs that our services will play a significant part in the global economic recovery. Our acquisition of Citigroup Global Services will provide another driver for growth.”

“Our business model is resilient and we have demonstrated this in the second quarter through volume growth, improvement in our offshore leverage, pricing, productivity as well as over 50 new clients wins,” said company COO N. Chandrasekaran. Six of TCS’ clients in the BFSI space were those affected by the current crisis but the revenues from these clients accounted for around two per cent of the company’s revenues. Chief Financial Officer S. Mahalingam said, “in a quarter where the Indian rupee and global currency has been very volatile, TCS has managed to deliver greater profitability by achieving significant improvement in operating profits and margins. We have a sustainable business model and we remain focussed on managing risks, continued growth and delivering margin improvements going forward. The only hit was on the net profit because of a one-time hedging loss.” In terms of human resources, TCS added over 18,000 people in the first six months of the current year, including 11,150 campus trainees. “We remain on course to meet our annual hiring target of 30,000 to 35,000 professionals and have made 24,500 campus offers for the next financial year,” said Ajoy Mukherjee, Vice President, Head, Global Human Resources. The total employee base is at 1.22 lakh.

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