India's TCS yearly profits muted on FX volatility
India's biggest outsourcing firm Tata Consultancy Services Thursday reported only a marginal rise in its earnings for the just-ended financial year citing volatile currency markets and a sluggish global economy.
The Mumbai-based company, commonly known as TCS, reported that net profit for the year ended March 31 rose only 2.60 percent to 196.48 billion rupees ($3.15 billion) from 191.17 billion rupees.
For the quarter, the IT services giant's net profit fell 27.2 percent to 38.58 billion rupees ($619 million) from 52.97 billion rupees a year ago, weighed down by 26.28 billion rupees ($421.83 million) in employee bonuses.
The company was expected to post a 53.9 billion rupee profit according to the median forecast of 24 analysts surveyed by Bloomberg.
"We accept that it was a weak quarter. We had warned that currency volatility was going to be huge, but it turned out to be worse," said TCS chief executive N. Chandrasekaran.
The company's revenues for the year grew tepidly by 15.7 percent to 946.48 billion rupees ($15.19 billion) from 818.09 billion rupees underlining the weakness in the global economy.
But despite the lacklustre demand, TCS said it added five clients in the $100 million plus band and expects earnings to improve in coming months.
"Looking into the future for FY16 our deal pipelines, our order books and client sentiment all look positive," Chandrasekaran said.
"We have huge traction across major markets like US, Europe and I see no reason for it to slow down," he added.
The International Monetary Fund (IMF) in its World Economic Outlook released Tuesday suggested that global growth would be moderate thanks to a pick-up in the Japanese and European economies.
The IMF expects growth in Asia's third largest economy—India—to outpace rival China in 2015.
India has become a back office to the world as companies, especially in developed nations, have subcontracted work to firms such as TCS, taking advantage of the country's skilled English-speaking workforce.
The flagship industry has made India a top business destination by offering software development and information technology, engineering and design and other services.
© 2015 AFP
