India?s largest software company, Tata Consultancy Services (TCS), on Thursday reported almost flat growth in net profits owing to adverse currency movements. For the third quarter ended December 31, it posted a profit after tax of Rs 1,362.06 crore, up 2.68% against last year?s Rs 1,326.67 crore and up 7% quarter-on-quarter.
The TCS results are a disappointment after better-than-expected results from rival Infosys Technologies earlier this week lifted spirits, battered by the Satyam and World Bank disclosures. Most analysts had expected TCS profits to grow 6-7% on the back of a weakening rupee. But the company posted a forex loss of Rs 250 crore, of which Rs 205 crore was on hedging and the remaining, marked-to-market losses.
The company posted revenues of Rs 7,277 crore, up 24.13% against last year?s Rs 5,862.65 crore and up 4.65% quarter-on-quarter. The company declared a quarterly dividend of Rs 3 per share, which is its 18th consecutive quarterly dividend. The figures do not include revenues of Citigroup?s BPO unit in India, which TCS recently acquired.
In comparison, Infosys Technologies, the country?s second-largest software services company, had earlier this week announced a Q3 net profit growth of 33.3% year-on-year at Rs 1,641 crore thanks to better operating margins. Infy?s operating margins increased 200 basis points to 35.1% from the previous quarter, and 250 basis points compared with levels a year ago.
The TCS results were announced after markets closed, but its shares on Thursday fell 5.28% on the BSE to close at Rs 510. Commenting on the performance, TCS CEO & MD S Ramadorai said, ?In tough market conditions, TCS continues to perform in a stellar fashion, driving revenue growth through our diversified market presence and boosting our operational profitability by conserving costs and creating efficiencies.?
CFO S Mahalingam said, ?In the current environment, it is important to run a tight ship with cost control measures that can be sustained while continuing to invest for the future. We believe that the best course is to mitigate risk, move towards a sustainable and efficient cost base, continuously improve the collection process, and be prudent in cash and currency management.?
The company added 41 new clients in the quarter and signed six large deals. TCS said North America appears to be stabilising, adding two new marquee customers during the quarter. Revenues from North America increased 52.2% from 49.7%
?TCS?s strong pan-European presence and category leadership in the UK helped the company significantly grow revenues in a sluggish market? The Indian market continued to see low capital spend by both public and private sector clients. Going forward government spending is expected to revive demand,? a statement from the company said.
?We have added over 30,400 people in the first nine months, which is in line with our hiring plans for the financial year. Our retention rates for both IT services and BPO have shown significant improvement in the current quarter. We continue to focus on improving utilisation rates and employee productivity,? said Ajoy Mukherjee, vice-president & head, global human resources.
Q3 saw a gross addition of 11,773 employees (net 8,692 employees) of which 8,704 were trainees and 1,696 were lateral recruits in India and 1,373 employees were added in overseas subsidiaries and branches.
