The Hindu : Business : TCS sequential Q4 net profit dips

Online edition of India's National Newspaper
Tuesday, Apr 22, 2008
ePaper | Mobile/PDA Version

Business

Business

TCS sequential Q4 net profit dips

Special Correspondent

Project delays for specific customers hit margins

— PHOTO: VIVEK BENDRE

MAINTAINING THE TEMPO: S. Ramadorai (right), CEO and Managing Director, with N. Chandrasekaran, Chief Operating Officer, Tata Consultancy Services, at a press conference in Mumbai on Monday.

MUMBAI: In spite of a fairly muted fourth quarter, Tata Consultancy Services (TCS) has reported a robust growth for the whole of 2007-08. In the fourth quarter, the company reported a net profit of Rs. 1,245 crore, up 4.15 per cent year-on-year and down 6.17 per cent over the third quarter. Operating profit margins for the quarter were at 22.81 per cent and net income margins were at 20.61 per cent.

Revenues for the fourth quarter at Rs. 6,098 crore were up 18.13 per cent year-on-year and up 2.95 per cent over the third quarter.

Addressing the media here on Monday, S. Ramadorai, CEO and Managing Director, TCS, said, “the growth in the fourth quarter is muted due to a project delay for specific customers. The fourth quarter profits only reflect a dip and one has to look at the fourth quarter figures as an ‘Investment Quarter’ for 2008-09 and beyond.”

N. Chandrasekaran, Chief Operating Officer, said, “the fourth quarter has been a hit in our revenue trajectory but we do continue to build capacity and infrastructure. Specific clients in the financial services vertical in the U.S. have difficulties and as a result transformation is delayed as was assured ramp-ups and there is a dip in revenue growth trajectory. We have entered into some partnerships and dialogue with them.

The ramp-ups have started happening since March 2008 and so we expect a good growth in FY09.”

For 2007-08, the company reported a net profit of Rs. 5,026 crore (Rs. 4,212.63 crore), a 19.31-per cent jump on revenues of Rs. 22,863.39 crore (Rs. 18,685.21 crore), a 22.36 per cent increase. The total dividend for the year is at Rs. 14 per share with a final dividend of Rs. 5 per share declared after its board meeting. Operating profit margins for the year were at 23.47 per cent and 21.95 per cent at the net income level.

$50 m plus deals

During the year, the company concluded 20 $50 million-plus deals and has increased the $100 million customers to seven (three in 2007). The new growth services (BPO, assurance, infrastructure services and consulting) revenues were up 52 per cent at $1.1 billion. TCS added 212 new customers during the year. The company has opened new development centres in Cincinnati (U.S.), Mexico and Morocco.

Attrition rate

At the end of the year, the employee strength stood at 111,407 with a gross addition of 35,672 employees and a net addition of 22,116 employees. In the fourth quarter, there was a gross addition of 6,921 and a net addition of 3,299 employees. The company has the industry’s lowest attrition rate of 12.6 per cent. While overseas nationals formed 9.1 per cent of the total base, 28 per cent of all employees are women.

The company made 22,451 campus offers for 2008-09 including over 4,000 science graduates for its science-to-software transformation programme, Ignite.

According to Ajoy Mukherjee, Vice President (Head), Global Human Resources, TCS, “we are likely to hire between 30,000 and 35,000 people in 2008-09 and salary hikes in the current year are likely to be in the 8-10 per cent range in India and 2-4 per cent overseas.”

Mr. Ramadorai said, “our full year results reflect a validation of our strategy and robust business model that has helped us deliver strong growth rates again on an ever increasing base and in a difficult and challenging environment.” On the outlook for the current year, Mr. Ramadorai said, “we will deliver sustained profitable growth in the next financial year, helped by a new, agile customer-centric organization structure that adds value to our clients and employees. We are confident of growth prospects based on capacity building and momentum. We continue to be watchful about developments in the U.S.”

PTI reports:

Chile cancels contract

The Chile Government has cancelled the $70-million contract given to Tata Consultancy Services following alleged irregularities committed by a couple of employees of the Indian firm.

Mr. Ramadorai said as part of corporate governance followed by the IT firm, he would like to reveal about the event in Chile. He said the contract was given to the company after evaluation but the same was cancelled after the local authorities found some irregularities committed by two of TCS employees.

Printer friendly page
Send this article to Friends by E-Mail

Business