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Published: Sun, July 16, 2017
Culture | By Antonia Gonzales

TCS witnesses big drop in Q1 profit

TCS witnesses big drop in Q1 profit

V. Ramakrishnan, Chief Financial Officer, TCS, said that during the quarter high currency volatility including sharp rupee appreciation against the dollar resulted in Rs 650 crore loss in reported revenues.

The decline is 10 per cent compared to Rs 6,317 crore same quarter year ago.

A strong rupee and steep employee costs dragged Q1 net profit to Rs 5,945 crore, down from Rs 6,608 crore registered in the previous quarter and Rs 6,317 crore witnessed during the corresponding quarter past year.

TCS' operating margin fell to 23.4 per cent in June quarter from 25.7 per cent in March quarter. On the NSE, it dropped 2.91% to Rs 2,375.

"The interim dividend will be paid to the shareholders on August 1", added the statement.

"From an overall demand perspective looking forward we see a combination of strong demand for smaller projects coming out of newer areas like digital and some amount of very large transformation deals, especially in the insurance space", said Gopinathan, who took the top job in February. William Blair Analyst Anil Doradia pointed to healthy volumes, client additions, a promising deal pipeline and accelerating digital adoption.

Revenue from the digital stream grew 26 per cent to around $3.5 billion, constituting 18.9 per cent of the company's current business. TCS also announced that it has added 8 new clients in the $1 million-plus category, 12 clients in the $10 million-plus category, and one client each in $50 million plus and $100 million plus category. "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.

As 82 per cent of the company's revenue comes from major markets like Americas, Britain, Europe and Australia, its annuity-based income is less volatile to currency fluctuation.

TCS said that its total employee strength at the end of June quarter was 3.85 lakh with gross addition of 11,202 and net addition of 1,414 during the quarter.

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