The Hindu : Business : TCS plans Rs. 4,500 crore capex

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Wednesday, Jul 02, 2008
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TCS plans Rs. 4,500 crore capex

Special Correspondent

Has lowest attrition rate of 12.6 %
Diversifies across geographies

— PHOTO: PAUL NORONHA

HEDGING RISKS: Ratan Tata (right), Chairman, with S. Ramadorai, Chief Executive Officer and Managing Director, Tata Consultancy Services, at the company’s annual meeting in Mumbai on Tuesday.

MUMBAI: Tata Consultancy Services (TCS), a leading information technology services provider, has planned a capital expenditure of around Rs. 4,500 crore for the current year. The company will invest around Rs. 1,467 crore in equipment and Rs. 3,000 crore in land.

Tata Realty, a Tata Group company, will be investing in the land on behalf of TCS, said Mr. Ratan Tata, Chairman, TCS, while addressing the shareholders at the company’s 40th annual meeting here on Tuesday. The company has declared a final dividend of Rs. 5 per share which along with the interim dividends, works out to Rs. 14 per share for 2007-08 against Rs. 13 per share in the previous year. As on March 31, 2008, the company had 1.11 lakh employees and boasts of the lowest attrition rate in the industry at 12.6 per cent as also the highest retention rate.

Mr. Tata said that North America, which accounts for 40 per cent of the global IT industry and about 50 per cent of the company’s business, had seen margin pressures with the sub-prime crisis and the oil and commodity price escalation.

To address the risk, the company has increased diversification across geographies, enlarged the basket of offerings and has focussed on enlarging global presence by strengthening global development centres.

Also, a one per cent appreciation of the rupee against the dollar has a 35 basis point impact on the margins of the company. The company has used various types of foreign currency forward and options contracts to hedge the risks associated with fluctuations in currency.

“The banking, financial services and insurance (BFSI) sectors are curtailing operations and costs and that is a challenge for TCS also. However, IT contracts, outsourcing and off-shoring momentum will continue and will help the organisations become for cost-efficient.”

The first phase of the company’s Chennai software park, slated to be among the largest in Asia and employing 3,000 people was ready and the second phase with a similar number of employees would be ready by August, said Mr. Tata.

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