Strong volumes and robust utilisation rates saw Tata Consultancy Services (TCS) report a 13.2 per cent growth in net profit (consolidated) at Rs.5,244 crore for the second quarter of 2014-15. The company’s revenue for the quarter was up 13.5 per cent at Rs.23,816 crore.
The operating profit of the company at Rs.6,394.2 crore was up a percentage point while the operating margin declined 333 basis points to 26.80 per cent.
“This has been a quarter of steady and consistent performance,” TCS CEO and Managing Director N. Chandrasekaran said at a press conference here on Thursday. “Our well-rounded showing has been highlighted by broad-based growth in our key markets, industries and services as we continued to deepen our engagement with customers.”
He said the integration of Mitsubishi in Japan also provided additional growth to units such as manufacturing and hi-tech. While all core markets grew, Latin America faltered during the quarter. The de-growth in Latin America was not seasonal, and it was a ‘negative surprise.’
“However, India has seen good growth and, in fact, the double-digit growth on a sequential basis. This is on the back of pick-up in client spending and government initiatives,” the TCS CEO said adding that while the growth in India was good, TCS business here was not large enough to push its revenues. “But growth is back and teams are charged up here.”
During the period, the company added four $50-million clients and nine $20-million plus clients.
TCS added 20,350 employees at the gross level and 8,326 at the net level. Utilization was at an all-time high of 86.2 per cent (excluding trainees).
For the half year ended September, 2014, TCS net profit rose by 19.7 per cent to Rs.10,346.10 crore on a 18 per cent higher revenue of Rs.45,927.5 crore. The operating profit was up 9.1 per cent at Rs.12,209.10 crore.
Going forward, TCS expects the third quarter to be a soft quarter owing to furloughs, especially in manufacturing, hi-tech and telecom sectors. “But opportunities are very good. As announced, digital is a huge opportunity of $5 billion for us in 4-5 years,” and we will only surpass it and not fall short.”
CMC to amalgamate with TCS Mr. Chandrasekaran said the company would look at acquisitions “only to deliver a strategic capability in a sector, market or a platform.”
The boards of TCS and its subsidiary CMC separately approved the amalgamation with TCS and as per the scheme, shareholders of CMC will get 79 equity shares of Re.1 each of TCS for 100 equity shares of Rs.10 each held in CMC. TCS holds 51.12 per cent equity in CMC, and the scheme is subject to necessary approvals.
Post-amalgamation, TCS paid-up share capital will go to Rs.197.04 crore from Rs.195.87 crore. For the quarter ended September, 2014, CMC reported revenues of Rs.616.68 crore and a net profit of Rs.76 crore.
