The Hindu : Business : TCS revenues cross $2 b mark

Online edition of India's National Newspaper
Wednesday, Apr 20, 2005

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Business

TCS revenues cross $2 b mark

Staff Correspondent

Marginal drop in fourth quarter profit; recommends final dividend of Rs. 5

MOVING AHEAD: The Chief Executive Officer and Managing Director of TCS, S. Ramadorai (right), and the Executive Vice-President and Chief Financial Officer, S. Mahalingam, at a press conference in Mumbai on Tuesday. — Photo: Vivek Bendre

MUMBAI: Tata Consultancy Services (TCS) became the first Indian company in the information technology (IT) space to cross $2 billion in revenues and half a billion dollar in net profit as per U.S. GAAP when it reported its financial results for the year 2004-05 here on Tuesday.

Under the Indian GAAP, TCS reported a net profit of Rs. 1,976.90 crores (consolidated) and a total income of Rs. 9,824.36 crores, including other income of Rs. 75.89 crores. Figures are not available for comparison with the previous year under the Indian GAAP. The company's board has recommended a final dividend of Rs. 5 per share.

The profit before additional incentive, interest, depreciation, tax and exceptional items was Rs. 2,909.96 crores and additional performance incentive under the EVA-based incentive scheme Rs. 102 crores. It provided Rs. 15.45 crores for interest and Rs. 158.82 crores for depreciation. The provision for current tax was Rs. 358.57 crores and deferred tax Rs. 38.42 crores.

Exceptional items which included one time charge on compensation expense — Employee Stock Purchase Scheme — amounted to Rs. 186.65 crores and the one-time tax charge on transfer of overseas subsidiary and branches amounted to Rs. 65.02 crores, making a total of Rs. 251.67 crores.

For the fourth quarter, the company reported a net profit of Rs. 471.79 crores on a total income of Rs. 2,561.04 crores. The revenues for the quarter were up 26.8 per cent from Rs. 2,037.50 crores during the corresponding period last year. Also, during the quarter, profit on forward cover, amounting to Rs. 110.48 crores was booked in the third quarter. In the fourth quarter, the company suffered a loss of Rs. 10.71 crores on forward cover.

Net income after tax for the fourth quarter was Rs. 611.60 crores against Rs. 615.90 crores in the previous quarter and Rs. 470 crores in the year-ago period. In terms of geographies, revenues from the U.S. were 60 per cent, the European countries 23.1 per cent and India and others at 11.7 per cent and 5.5 per cent respectively. Onsite versus offshore revenues were still around 60:40 ratio.

Addressing the media, S. Ramadorai, Chief Executive Officer and Managing Director, TCS, said the company had been consciously reducing the contribution of GE to the revenues and this was down by around $5 million. Accordingly, over each of the last three quarters, it has been reducing by a percentage point and is now 13.96 per cent of international revenues against 14.83 per cent in the third quarter. During the year, the company added 256 new clients and had a net addition of 10,871 employees. Also, at 8 per cent, TCS' attrition is among the lowest in the industry. "Companies must have a retention policy and attrition has to be managed carefully to nurture, protect and retain talent," said Mr. Ramadorai. "We faced the challenge of rupee appreciation against the dollar and other global currencies, including the rand and euro but our hedging measures helped protect us from the adverse impact. The business environment remains positive across verticals with the challenges for future performance coming from exchange rate fluctuations," said the TCS chief.

S. Mahalingam, Chief Financial Officer, said the company's realisations were impacted by exchange rate fluctuations. The collection and revaluation loss resulted in a loss of Rs. 30 crores. He, however, added that margins would continue to improve in the coming quarters. "There is no downturn expected ahead and the outlook looks reasonably good," he said.

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