Despite strong headwinds and pressure on margins, Tata Consultancy Services (TCS), on Thursday, reported a 38 per cent growth in net profit at Rs.3,281 crore for the first quarter ended June 30, 2012. Revenue grew 38 per cent to Rs.14,869 crore over the same quarter last year and operating profit was up 48 per cent at Rs.4,090 crore. It was able to maintain operating margin at 27.5 per cent. It has an annual capex plan of Rs.4,200 crore.


The company announced a dividend of Rs.3 per share.

Addressing presspersons, S. Mahalingam, CFO and Executive Director, said, “Our ability to closely monitor and maintain our operating expenses to support higher revenues is helping us maintain healthy margins. This ensures that we are able to continuously make investments needed in technology, capabilities and infrastructure to fuel long-term growth. We had a positive 2 per cent exchange rate impact.”

“In the current dynamic global environment, we delivered spectacular numbers across all industry verticals. All our investments made earlier are coming through and we have been able to win engagements in many future technology areas too which we are interested in,” said N. Chandrasekaran, CEO & MD.

“While we benefited from rupee depreciation, we had to confront headwinds in terms of margin pressure. There was an average wage hike of 8 per cent in India and 2-4 per cent overseas. Second, we added 19,000 employees in the fourth quarter of 2011-12 and 13,000 more in the first quarter of this year. Third was the H1 visa applications which were significant,” he said.

In terms of industry verticals, TCS’ retail vertical grew 8.3 per cent, telecom 7.6 per cent and banking, financial services and insurance (BFSI) grew 5.3 per cent. The business grew across markets but India revenues fell 7 per cent, Latin America grew 18 per cent, U.S. 3 per cent, U.K. 25 per cent and Europe 10 per cent.

“We expected to do better in India, and would like it to be a growth engine. We probably do not have the right mix of annuity and discretionary clients. Till then, we will have to live with it,’’ said Mr. Chandrasekaran.

The company added 29 new clients during the quarter.

There was a gross addition of 13,831 employees (net addition of 4,962 employees) during the period, taking the total strength to 2.43 lakh.


IT spending to remain static: TCSDecember 20, 2012

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