TCS Q4 net profit plummets 30%

Our Bureau Mumbai | Updated on January 23, 2018 Published on April 16, 2015



Hit by one-time bonus, weakness in key sectors

Tata Consultancy Services has recorded a 30.7 per cent fall in net profit for the fourth quarter ended March 31, 2015, by a one-off bonus paid to employees, cross currency-movements and overall weakness in key sectors.

The country’s largest software exporter reported a net profit of ₹3,713 crore, as per Indian accounting standards, against ₹5,358 crore reported in the same quarter a year ago.

For the full year ended March 31, 2015, TCS reported net profit growth of 3.6 per cent to ₹19,852 crore (₹19,164 crore) while total revenue went up 15.7 per cent to ₹94,648 crore (₹81,809 crore).

Bonus impact

TCS’s numbers were dented by an outgo of ₹2,628 crore towards payment of one week’s salary for every year of service completed by employees who have been on the rolls for at least a year.

While this outgo has been expensed in Q4, the actual disbursement will take place in the current quarter.

If the one-time payment is not factored, the company’s year-on-year profit would have gone up by 7.7 per cent to ₹5,773 crore. Revenue went up 12.4 per cent to ₹24,220 crore (₹21,551 crore).

“We had said that Q4 would be slightly weak but we are happy with the company’s performance. We are extremely well placed for the future and are confident going into the new financial year,” N Chandrasekaran, CEO and MD, said at a news conference here on Thursday.

TCS encountered major headwinds in two verticals, energy & utilities and telecom. “The energy sector is under pressure owing to sliding oil prices, while telecom is extremely volatile globally as that industry is going through a transformation,” he said.

Cross currency movements had a negative impact of 270 basis points on dollar revenue, said Rajesh Gopinathan, CFO. Yet, operating margins were stable at around 27.2 per cent (excluding the one-time expense) on account of a better offshore mix, “realisation and other efficiencies”, he said.

For the full year, TCS says its cloud-based platforms grew 55 per cent to $125 million.

“The very fact that TCS is the only company openly talking about revenues generated through Cloud is a positive sentiment for the company as well as the industry. However, we are not sure about the performance of TCS iON (its IT-as-a-Service platform) and if it will be able to compete with Oracle, SAP and Ramco,” said Sanchit Vir Gogia, CEO, Greyhound Research.

For the current year, TCS maintains that its full-year earnings will be better than Nasscom’s projected guidance of 12-14 per cent. In all, it will hire 60,000 new staffers (gross) this fiscal year.

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Published on April 16, 2015
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