The Hindu Business Line : TCS net profit rises 35 pc to Rs 883 cr in Q1

ALL ROUND PERFORMANCE: Mr S. Ramadorai (right), Managing Director & CEO, TCS, and Mr S. Mahalingam, CFO, announcing the company's results in Mumbai on Tuesday. - Shashi Ashiwal

Mumbai , July 18

Tata Consultancy Services has reported a 34.99 per cent rise in its consolidated net profit for the first quarter ended June 30. Net profit for the quarter amounted to Rs 883 crore against Rs 654 crore during the corresponding quarter of the previous fiscal.

The rise in its bottomline was on the back of an all round good performance across all its domains of activity — financial services, telecom and retail, - as well as across its new services such as assurance, infrastructure support and consulting, said Mr S. Ramadorai, CEO and Managing Director, TCS, at a news conference here on Tuesday.

The board of directors has recommended an interim dividend of Rs 3 per on shares of Re.1 each.

Income from operations, at Rs 4,227 crore (Rs 2,890 crore), rose by over 46 per cent from a year ago. Foreign exchange fluctuations plumped up the topline by Rs 40 crore, said Mr S. Mahalingam, Chief Financial Officer .

Profit before interest, depreciation and tax amounted to Rs 1,070 crore, rising over 30 per cent from a year ago. EBITDA margins, however, declined, standing at 26.75 per cent during the quarter, down from 28.28 per cent a year ago.

This quarter was one of purely volume growth, said TCS officials, explaining that the fall in EBITDA margins was due to investment in new talent, salary increases, visa costs, integration of new acquisitions as well as from ramping up on large projects which will pay off later. "Despite this, we have been able to manage our expenditure efficiently so that the net negative impact on margins is less than 200 basis points," said Mr Mahalingam.

Overall the margins of the last year will be maintained during this fiscal too, he added.

Billing rates are on the upswing, with new contracts coming at rates that are 3-4 per cent higher, he said. Renewals of existing contracts were happening at higher rates too, he said.

High attrition rate

The company's employee attrition rate was higher. The attrition rate for the 12 months ended June 30, 2006, was 10.6 per cent, said Mr S. Padmanabhan, global head of HR for TCS. The attrition rate for the 12 months ended March 31, 2006, was 9.9 per cent.

The company hired 7,095 employees during the first quarter of this fiscal, making for a net addition of 4,698 employees. As at the end of the quarter, TCS' employee strength was 71,190.

The standalone net profit for the first quarter of this fiscal was Rs 796.69 crore against Rs 578.86 crore for the corresponding year-ago quarter. The company's scrip ended lower on the exchanges. It lost Rs 18 on the BSE during the day, closing at Rs 1,841.75 on Tuesday.