Tata Consultancy Services (TCS) offers 1:1 bonus

By CROW -
 

Tata Consultancy Services (TCS), India's top software service company, on Monday reported a fourth quarterly profit of Rs 1,333 crore for

FY09, up 7% year-on-year in a challenging economic environment that has seen IT spends being cut, putting pressure on billing rates.

 

Revenues during the fourth quarter of FY09 increased to Rs 7,172 crore, up 18.5%. However, on a sequential basis (quarter-on-quarter) profit declined 2%, lagging expectations. TCS, part of the $62 billion Tata group, announced its second bonus issue after it went public in 2004.

 

Its board, in addition to a dividend of Rs 5 per share, has recommended a 1:1 bonus share issue, which would expand the company's equity base.

 

The company that announced the results after market hours saw its scrip close at Rs 560 on BSE, down 2.21%. During the March quarter, TCS has reported a forex loss of Rs 192 crore.

 

COO N Chandrasekaran said FY10 would see deals being renegotiated and pricing being reworked. "Over 50% of our top 100 clients are reporting a decline in profits. They plan serious cost management excerise. We have factored that pricing to be in single digit for FY10.'' Some of TCS's top clients include General Electric, Citigroup, Lloyds TSB and Axa. Rival Infosys Technologies, which posted Rs 1,613 crore in Q4 profit--up 29%--last week, has predicted a decline in its annual revenues.

 

For FY09, TCS consolidated net profit was up 5% to Rs 5,256 crore on revenues of Rs 27,813 crore. The TCS management said a strong off-shore shift, streamlining of operations, fall in number of outstanding debtor days by 12, controlling costs on travel, communications etc have helped the company generate strong cash flows. In the next few months, the company will continue with the strategy, besides freezing salary increments and slashing variable pay. Most TCSers may get 95% of the total variable pay, with middle and senior executive getting 94% and 92% respectively. TCS has 1.43 lakh employees. Despite its recent acquisition of Citigroup's captive BPO, its cash at the end of the year stands at an impressive Rs 4,300 crore, perhaps enough to insulate it from unforeseen contingencies.

 

In Q4 it added 36 new clients, of which six were from the US. The company said the ongoing pressure in the US auto and hi-tech industry could adversely affect demand in FY10. It is betting on the domestic and Latin American markets besides emerging areas like energy, healthcare and customer analytics to drive growth. During the quarter TCS added 17,489 employees and has made 24,885 campus offers for 2009-10

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