TCS sees flat Q1 growth, sets Rs 1,300 cr as capex

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Mumbai: The $6-billion Indian IT giant, Tata Consultancy Services (TCS), on Tuesday said the company was expecting the first three months of the current financial year to be reasonably flat in growth. The company has also lined up a capex plan of Rs 1,3 00 crore for the year.

Addressing shareholders at the company's annual general meeting, Ratan Tata, chairman of the Tata Group, said: "We expect the first three months of the next year to be reasonably flat and therefore, we would be driving more of cost cutting measures that include bringing a lot of work to India. We have already taken up some aggressive means like cutting travel and closing some of the offices."

“The capex for the year would be Rs 1300 crore,” he said.

Tata said offshoring work to India would mean bringing here more jobs for lower costs, and at the same time, hiring locals around the world in a bid to avoid negative voices. He said, “Foreseeing the concern, we would aggressively protect margins, widen our breadth of services and increase verticals. But we are still on track to be one of the top 10 IT companies globally by 2010.” Tata added that TCS would be focusing on new markets and would address customers more effectively.

During the fourth quarter of the financial year 2008-09, TCS saw a blended volume decline by 2.6% and price drop of 2% quarter-on- quarter (QoQ), resulting in a decline of its consolidated revenues by 1.4% to Rs 7,172 crore on QoQ basis and up by 18.5%, compared to the same period of FY 2008. The company posted a net profit at Rs 1,333 crore, a drop of 2% on a sequential basis and up by 7% compared to the same quarter last year.

The EBIT margins dropped by 105 bps QoQ. With aggressive cost containment measures coupled with higher offshore shift and currency tailwinds, TCS had managed to restrict the margins fall, despite the decrease in utilisation, volume and pricing.

Its net profit for the full year ended March 31, 2009, grew 4.58% to Rs 5,256.42 crore against Rs 5,026.02 crore in FY08. Income from operations during the year stood at Rs 27,812.88 crore, up 22.96% as compared to Rs 22,619.52 crore last year.