The Telegraph
Since 1st March, 1999
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Wobble muffles TCS roar
- Sluggish fourth quarter weighs heavy on surge in revenues to $2 billion

Mumbai, April 19: A fourth-quarter wobble eclipsed Tata Consultancy Services' (TCS) leap to the super league of IT firms with $2 billion in sales and a quarter of that in profits.

Analysts and investors fretted over a dreary performance in the three months to March, when the company racked up a net profit of Rs 469.7 crore. This was almost unchanged when measured against the tally in January-March 2003-04, but 33.67 per cent lower than the figure achieved in the third quarter of the year just ended.

The full-year picture ' a 36.57 per cent jump in revenues at Rs 9727 crore and a 37.81 per cent spurt in profits at Rs 2256 crore ' was brighter but it could not calm a market where the TCS stock plunged 8.36 per cent to Rs 1209.75.

'Essentially, we have doubled our revenues and profits in two years,' chief executive S. Ramadorai said at a press conference held after the close of trading on bourses. He will see on Wednesday whether investors chafing at sluggish growth are ready to put it behind them.

TCS officials took pains to explain that the net profit for the fourth quarter was arrived at after an additional charge of Rs 102 crore on account of an incentive plan for employees based on the economic value added (EVA) maxim. The extra cost on this count was Rs 427 crore.

Sporting their trademark light-blue shirts with the TCS logo emblazoned on them, executives tried to explain how the company had come from its days as an unlisted entity and how its 2004 listing changed fortunes.

'TCS is proud to be the first IT company to cross the $2-billion dollar milestone. Our strategic initiatives have helped us double revenues in the last two years. We are alive to the challenges facing the industry and geared to enhance our leadership position,' Ramadorai said.

In a departure from IT tradition, Ramadorai refused to predict revenues and earnings for the quarter to June, saying his firm took a 'long-term view of 12, 36 and 60 months'.

In the last financial year, TCS added 256 clients and reduced dependence on General Electric as its main customer. The share of business from Europe, Latin America, Asia and Japan kept on increasing in the last quarter.

The company achieved positive cash flows in 2004-05. It had to borrow funds at the time of its initial public offer to pay Tata Sons Rs 2300 crore. In March, it was sitting on Rs 685 crore in cash reserves, Rs 266 crore in cash equivalents and Rs 419 crore in mutual fund investments.

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