Buoyed by a rise in discretionary spend by clients and higher operating margins, Tata Consultancy Services (TCS), on Thursday reported a 31.1 per cent growth in its net profit at Rs.2,623 crore for the fourth quarter of 2010-11. Revenues for the period rose by 31 per cent to Rs.10,157 crore. Operating profit for the quarter was up 33 per cent at Rs.2,877 crore and operating margin moved up by 31 basis points to 28.3 per cent.
Revenue crosses $8 b
For the full year 2010-11, the company reported a 29.5 per cent jump in net profit at Rs.9,068 crore on 24.3 per cent higher revenues of Rs.37,325 crore, crossing the $8 billion mark to $8.2 billion. The company has proposed a final dividend of Rs.8 per share taking the total dividend to Rs.14 per share.
Operating profit at Rs.10,417 crore was up 30 per cent and operating profit margins were up 122 basis points at 27.9 per cent. The business volume grew 30 per cent and total employee strength was at 1.99 lakh professionals. There was secular growth across markets and industries during the year. All industry verticals returned to the growth path during the year.
Addressing the media, N. Chandrasekaran, CEO and MD, said, “Excellent execution and a constant focus on the customer has helped TCS round off a sterling performance in 2010-11 with strong growth in the fourth quarter while maintaining margins at historic highs”.
The company's business grew 3 per cent in volume terms and during the fourth quarter gross addition of employees was 19,324 and net addition 11,700. Attrition was at 14.4 per cent and utilisation rate excluding trainees at 82.4 per cent. The company added 39 clients during the quarter. While Indian operations contributed around 10 per cent to business, this was unlikely to change in the coming years.
According to S. Mahalingam, CFO and Executive Director, “We have created a structurally robust cost base that is able to withstand a dynamic demand environment. The strength of this model can be seen from the steady improvement we have shown in operational and profitability parameters over the last four quarters”.
“While certain headwinds remain in the near-term and medium-term global macro-horizon, we remain confident of our ability to mitigate challenges as well as sustain business growth. Growth will remain a major lever coming from the organisation's efficiency,” he added. Mr. Chandrasekaran said the headwinds in terms of margins were the wage hikes which average 12-14 per cent and foreign exchange currency fluctuations. “So we will look at growth, pricing and overall efficiencies”.
In terms of human resources, high utilisation rates have been maintained in the fourth quarter.
“Rapid growth in business demand during 2010-11 resulted in the largest-ever hiring effort in our history with a gross addition of 69,685 professionals during the year,” said Ajoy Mukherjee, Vice-President, Head, Global Human Resources, TCS. The campus hiring process in India has been completed for 2011-12 and the company released 37,396 offers to students to join during 2011-12.
Looking ahead, Mr. Chandrasekaran said, “The demand environment continues to be vibrant. There are opportunities across markets and industries. Our nimble organisation structure together with our full-services strategy and domain-intensive solutions gives us a great platform to sustain growth. We continue to shape the adoption of next generation technologies by investing in new areas like mobility, analytics, social media and sustainability solutions”.
