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TCS net rises 51.8 pc in Q2 — Half-year revenues cross $1-billion mark

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Mr S. Ramadorai (left), CEO and Managing Director, TCS, and Mr S. Mahalingam, Executive Vice-President, announcing the company's results at a press conference in Mumbai on Wednesday. - Shashi Ashiwal

Mumbai , Oct. 13

TATA Consultancy Services Ltd has reported a year-on-year increase of 51.8 per cent in net profit (excluding exceptional items) and a 43.5 per cent increase in consolidated revenues for the quarter ended September 30, 2004, under US GAAP.

Taking into consideration the exceptional items, consisting mainly of a one-time charge of Rs 186.56 crore on the Employee Stock Option Scheme, the growth in the Q2 net profit is only marginal.

The company's annual comparative growth figures for its first quarterly results since its initial public offer were provided under US GAAP.

The results under Indian GAAP would not be comparable with the previous year's since TCS was a division of Tata Sons then, said officials of the company at a news conference here on Wednesday.

"High productivity, controlling of costs and high market penetration" have been responsible for the growth of the company's business during the quarter, said Mr S. Ramadorai, Managing Director and CEO of TCS, at the news conference.

The half-year revenues for the fiscal stood at Rs 4,630 crore, crossing the $1-billion figure, a landmark for the company, which made its initial public offer in August, said officials.

Net profit for the quarter ended September 30, 2004, rose to Rs 576 crore, (excluding exceptional items) up from Rs 379 crore reported for the corresponding year-ago quarter.

Net profit grew 14.1 per cent over the immediate previous quarter.

Revenues under US GAAP rose to Rs 2,430 crore, up from Rs 1,693 crore during the previous corresponding quarter.

The gross margin stood at 45 per cent, operating margin at 27.47 per cent, and net margin at 23.71 per cent. "Our margins show an exceptional performance by any benchmark," said Mr Ramadorai.

Under Indian GAAP, the company reported a net profit of Rs 342 crore for the quarter, excluding exceptional items, and revenues of Rs 2,044 crore.

Total expenditure under Indian GAAP amounted to Rs 1,395 crore, with profit before taxes and exceptional items at Rs 615 crore.

Profit after taxes from operations amounted to Rs 538 crore. The company provides for forward cover for not more than three months' receivables, said Mr S. Mahalingam, Executive Vice-President and CFO. The current forward cover stood at around $250 million, he said.

The company's net addition of employees during the quarter under consideration stood at 3,974; while it added 52 more clients .

The momentum is good, observed Mr Ramadorai of TCS's business.

He said that going ahead the internal focus would be on competency building and developing quick learnability. Alongside, "value creation" through a research and development thrust with an emphasis on collaborative research, is going to create the "core" for the future.

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