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Tuesday, Jul 17, 2007
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Business Daily from THE HINDU group of publications Tuesday, Jul 17, 2007 ePaper |
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Financial Performance Corporate Results - Software Info-Tech - Financial Performance
Strong numbers: Mr S. Ramadorai (left), Managing Director & CEO, Tata Consultancy Services, and Mr S. Mahalingam, Chief Financial Officer, announcing the company’s results in Mumbai on Monday. —
Our Bureau Mumbai, July 16 Tata Consultancy Services (TCS) reported a 36.3 per cent rise in the consolidated net profit for the first quarter of fiscal 2007-08 over the same time last year. The company attributed this to factors, among others, to a combination ‘repeat business’ from clients, and a hedging policy that partly sheltered incomes from rupee appreciation. Consolidated net profit grew to Rs 1,213.8 crore in June 2008 from Rs 890.22 crore in June 2006. “As a result of cross-selling within our existing customer base, we managed to get about 99.2 per cent repeat business, which was a major driver of growth for us,” said Mr N. Chandrasekaran, Head Global Sales and Operation, TCS. The company added 54 new clients in Q1. On a standalone basis, TCS posted a net profit of Rs 1,073.85 crore for the quarter ended June 30, 2007 whereas the same was at Rs 796.6 crore for the quarter ended June 30, 2006. Total income is Rs 4,335.7 crore for the quarter ended June 30, 2007 whereas the same was at Rs 3,432.85 crore for the quarter ended June 30, 2006. Hedging gain
TCS was able to mitigate forex risks through hedging, said Mr S. Mahalingam, Chief Financial Officer, TCS. The company has hedged its dollar earnings for $1 billion, protecting itself above Rs 41 to the dollar, he said. The rupee rose by 7 per cent against the dollar this quarter from Rs 43.10 to Rs 40.66 as of end-June. “Rupee appreciation affected margins by 2.58 per cent. The hedging gains largely offset the rupee impact at the net level,” said Mr Mahalingam. In dollar terms, TCS revenues grew by 8 per cent during the first quarter driven by volume increases with an upward pricing bias, with banking, financial services, telecom and life sciences verticals performing strongly. “Among service lines, assurance services and asset leveraged solutions continue to grow faster than the average company growth rate,” said Mr Chandrasekaran. “Our focus on key accounts continues to yield positive results with significant movement of clients to higher revenue bands. TCS now has 6 customers with annual billings of over $100 million,” said Mr Chandrasekaran. TCS has also benefited, as clients are now willing to renegotiate on new as well as existing contracts. “For existing contracts, we are able to ensure 3-5 per cent rise in billing rates on average, while new contracts will be gained at an increase of 5 per cent onwards,” said Mr Mahalingam. TCS’ attrition rate in the first quarter was 11.5 overall with 11 per cent attrition rate in the IT services business and 16.7 per cent attrition rate in the BPO sector. At the end of Q1, the total employee strength of the company was 94,902, from 67 nationalities. The company’s share lost about Rs 8 on Monday, to close at Rs 1,127.90 at the BSE.
Related Stories: More Stories on : Financial Performance | Software | Financial Performance | Tata Consultancy Services Ltd
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