TCS Q1 net profit declines 5.9% on rupee volatility

Seeing a ‘strong pipeline’ for new deals in North American market: Company

By: ENS Economic Bureau | Mumbai | Published:July 14, 2017 1:56 am
tcs, tata consultancy services, tcs profit, tcs quarter 1 net profit, business news, latest news (From left) Ajoyendra Mukherjee, EVP and Head, Global Human Resources, TCS; CEO & MD of TCS, Rajesh Gopinathan; COO, N Ganapathy Subramaniam and CFO V Ramakrishnan in Mumbai on Thursday. Express Photo by Prashant Nadkar

Hit by the sharp rise in the rupee, TCS, India’s largest software services company, on Thursday reported a 5.9 per cent decline in its consolidated net profit to Rs 5,945 crore for the first quarter ended June as against a net profit of Rs 6,317 crore in the same period of the 2016-17 fiscal.

When compared to the January-March 2017 quarter, its net fell 10 per cent, while revenue slipped 0.2 per cent. The company, however, posted a marginal increase of one per cent in its consolidated revenue at Rs 29,584 crore during the quarter as against Rs 29,305 crore in the year-ago period.

The Indian rupee has appreciated about 5 per cent this year against the US dollar, making exports costlier. The company lost Rs 650 crore revenue due to the rupee volatility.

TCS CEO and MD Rajesh Gopinathan said the company was seeing a “strong pipeline” for new deals in the key North American market, especially from smaller customers. In the banking, services and insurance segment, the company was seeing strong demand from the “bottom of the pyramid” as new entrants are coming into the sector, he said.

“We have seen steady growth across industries in Q1. Robust volumes from major markets driven by good client additions across revenue bands and accelerating Digital adoption among customers have given us the right start to the year. We have had excellent wins across all markets and have a good deal pipeline across industries that positions us well for growth in FY18,” Gopinathan said. “As we go through the early stages of Business 4.0, enterprises are reimagining themselves as leaner, responsive data-centric organisations by embracing Agile, Cloud, Analytics and Automation. We have retooled our organisation structures and go-to-market teams to remain relevant to customers and have introduced new service lines like cognitive business operations and digital transformation services to capture these new opportunities,” Gopinathan said.

On the impact of the rupee’s rise, V. Ramakrishnan, Chief Financial Officer, said: “during the quarter high currency volatility including sharp rupee appreciation against the dollar resulted in Rs 650 crore loss in reported revenues. We remain disciplined in our financial management, stay focused on generating strong cash flows and invest in our digital business. Despite the impact of wage hikes in Q1, we continue to drive profitability to our targeted range.”

N Ganapathy Subramaniam, chief operating officer & executive director, said: “Holistic growth across all industry segments in Q1, a strong order pipeline, as well as the closure of large platform-based transformation opportunities gives us the confidence that overall growth momentum will increase in the coming quarters”

The total employee strength at the end of the first quarter was 385,809 on consolidated basis with gross addition of 11,202 and net addition of (1,414 employees) during the quarter. The total attrition rate (LTM) was at 12.4 per cent including BPS, with IT attrition at only 11.6 per cent.

The percentage of women in TCS rose to an all-time high of 34.8 per cent while the number of nationalities increased to 134. “We continue to hire talent across markets and help TCSers gain new digital skills so they can participate successfully in the Digital economy. Over 215,000 TCSers have been trained as ‘Digital Champions’ and the accumulated contextual knowledge of the customer’s business together with our unparalleled execution capabilities positions us well in today’s competitive context,” said Ajoy Mukherjee, executive vice president and Global Head, Human Resources.

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