TCS Ebidta margins hard to maintain: Mahalingam

Written by Rachana Khanzode | Mumbai | Updated: Oct 23 2010, 07:05am hrs
Tata Consultancy Services (TCS), that reported robust Ebidta margins at 30% for the second quarter, said it will be difficult to maintain the current level of margins in the coming quarters, since currency tends to be volatile.

TCS chief financial officer S Mahalingam said the firm will take a realistic approach towards margins and expect it to be around 27% for the whole year, as rupee has already touched Rs 44.59 against the dollar.

We cannot promise that we can deliver that kind of ebitda margins as in the second quarter, because achieving growth itself is an issue. So unless the growth is at a much higher level, for the year as a whole, we see a margin level of about 27%, said Mahalingam. However, the firm isnt expecting as robust a volume growth of 11% it did in the second quarter. It would be difficult to achieve volumes in the coming quarters that would equal volumes in the second quarter. We are not able to see that at the moment. We have had around 6-7% growth and that is what we have to see in the coming quarters, he added.

Besides currency, the overall manpower expense is expected to hit TCS margins. The company had a net addition of about 33,000 employees in the last one year, taking its current headcount to about 1,74,000 employees, up from about 1, 41,000 in the same quarter last year. It has now revised the gross hiring target for the financial year up from 40,000 to 50,000. MD & CEO, N Chandrasekaran, said, We easily expect the headcount to touch between 1,81,000 to 1,85,000 this year. However, there is not much that we can do about the currency. The companys utilisation levels are at an all time high of 83% and the firm is not willing to push too much work offshore.