TCS delivers steady performance in Q3

Announcement posted by Tata Consultancy Services 13 Jan 2016

Revenues at $4.15 billion; up 5.5% Y-o-Y

·      International business CC revenue growth of 1.1% Q-o-Q
·      Digital business growth at 4% Q-o-Q; Contributes 13.7% of revenues
·      Net Income at $ 926 million up 6% Y-o-Y

MUMBAI, January 12, 2016: Tata Consultancy Services (BSE: 532540, NSE: TCS), the leading IT services, consulting and business solutions firm reported its consolidated financial results according to IFRS US Dollars for the quarter ended December 31, 2015.

Business Highlights for Quarter Ended December 31, 2015

Gross employee addition 22,118
Total headcount: 344,691
Utilization: 84.9% (excluding trainees) & 80.9% (including trainees)
No of $100m+ clients increases by 1 to 34; No of $20M+ clients increase by 2 to 173

Commenting on the Q3 performance, Chief Executive Officer and Managing Director, N Chandrasekaran said: “All our industry segments have exhibited growth in a traditionally weak quarter additionally accentuated by the impact of the Chennai floods. Our international business has grown smartly in CC terms with North America and Europe leading the way among major markets and Latin America among growth markets.”

Mr Chandrasekaran added: “Digital will remain the core focus for enterprise IT in 2016 as our customers respond to competition in a global economy driven by real-time insights. With 13.7% of our revenues coming from Digital business and this segment growing at a higher sequential rate, TCS is playing an impactful role in partnership with customers.”

Rajesh Gopinathan, Chief Financial Officer, said: “In a challenging quarter with significant cross currency and other headwinds, we have operated with rigor and discipline to deliver credible margin performance and generated excellent cash flows.”

Growth in Q3 was holistic with all industry segments showing sequential growth with Life Sciences & Healthcare, Manufacturing and Hi-Tech leading the way. Europe and North America led growth in major markets while Latin America and Asia Pacific led the growth markets. Among service lines, Infrastructure Services and BPS were the leaders.

Select Key Wins

Selected by a large Global Bank for a multi-year Application Management and Service Delivery transformation to optimize operations
Chosen as a strategic partner by a leading European manufacturer for Application Support across Sales, HR, Finance & Operations applications in North America and Latin America
Selected by a leading UK-based Grocery Retailer to transform Quality Assurance and Environment Management services
Selected by a large European Airline as its Infrastructure transformation partner to standardize and improve End User Services and Operations across multiple lines of business
Selected by a North America's leading digital media and advertising company as its strategic partner to accelerate growth in online ad operations, search campaign management and customer on-boarding
Awarded by one of Europe's largest Utilities a multi-year engagement for delivering enterprise BI & analytics services, leveraging Big data and mobility
Entered into a strategic partnership with a large North American mutual life insurance company to provide end to end Application Management Services
Awarded a large end-to-end full services deal by a leading Latin American Bank to transform its IT and Business operations
Chosen by a leading Latin American Bank to completely transform its Data Center footprint to enable standardization of operations and align business growth strategy in the region

Key Wins in Digital Services and Solutions

Engaged by an automobile manufacturer for its digital journey to transform customer experience in its connected cars
Selected by a leading insurance company to transform the customer and agent experience by creating a compelling multi-channel solution
Engaged by a leading European Life sciences company to transform its product safety monitoring operations by leveraging data driven analytical insights from social channels
TCS has been selected by a major automobile manufacturer to deliver a unique engagement in robotics for its line of hybrid vehicles to enhance customer comfort
TCS has been engaged by a global media and information company to provide design services for social gamification of its customer experience to drive adoption of its products
Three global customers have selected TCS to deploy its TCS Active Archive™ product to enable fast on-demand access to archived enterprise data
Engaged by a large Indian bank to reimagine the user experience journey for digital banking

TCS BaNCS

A leading Asian bank selected BaNCS core banking platform for operations in Americas
Two large South African banks selected TCS BaNCS Insurance platform for their Life and General Insurance business
A global wealth management institution selected BaNCS platform for developing Digital offerings
A large European market infrastructure institution has selected TCS BaNCS to replace its clearing and settlement system

ignioTM: : TCS’ neural automation platform, ignioTM is witnessing increasing adoption with customers:

A leading North American energy provider selected ignioTM to create a foundation for technology transformation
A global pharmaceutical major in North America chose ignioTM to improve efficiency of Data Center operations
A global automotive major is deploying ignioTM as a layer of intelligence over their entire IT landscape to create end-to-end visibility and automate operations
A large global airlines group chose ignioTM to help optimize their overall IT service quality

Innovation and Intellectual Property:
As of December 31, 2015, the company has applied for 2,536 patents, including 90 applied during the quarter. To date the company has been granted 302 patents.

Human Resources:
The company continued to hire to support business growth. There was a total gross addition of 22,118 people (net addition of 9,071 employees) taking the total employee strength to 344,691 employees on a consolidated basis. The attrition rate (LTM) fell to 15.9%.

“Our efforts to increase employee retention is working with quarterly attrition rates falling in Q3. Our hiring continues to support strong business growth and we continue to invest in building digital skills, with over 70,000 TCSers undergoing training in new technologies this year,” said Ajoy Mukherjee, Executive vice president and Global Head, Human Resources.

Awards and Recognition:

Business Leadership:

Asia IP Elite 2015 award from Intellectual Asset Management (IAM)
CII Industrial Intellectual Property Award 2015
the Aegis Graham Bell Awards 2015 in the 'mHealth' category
TCS China ranked among Top 10 Global Service Provider 2015
TCS Hungary receives the University Cooperation Excellence Award

Partner:

Oracle Excellence Award for Specialized Partner of the Year:
- Asia Pacific in Telecommunications Industry
- North America and Asia-Pacific in Engineered Systems Solution
FY16 GSI Partner of the Year Award at Dell World 2015

Sustainability:

Dow Jones Sustainability Index 2015

Leadership:
N Chandrasekaran:

Qimpro Platinum Standard Award 2015 (Business)
Business Today’s Best CEO 2015 (IT & ITEs)

Unaudited Condensed Consolidated Statements of Comprehensive Income

For the three-month periods ended December 31, 2014, September 30, 2015 and December 31, 2015

(In millions of USD, except per share data)

Three-month period ended December

31, 2014

Three-month period ended September 30, 2015

Three-month period ended December

31, 2015

Revenue

3,931

4,156

4,145

Cost of revenue

2,168

2,318

2,305

Gross margin

1,763

1,838

1,840

SG & A expenses

700

713

738

Operating income

1,063

1,125

1,102

Other income (expense), net

101

103

106

Income before income taxes

1,164

1,228

1,208

Income taxes

280

296

280

Income after income taxes

884

932

928

Minority interest

Net income

873

926

Earnings per share in USD

0.45

0.47

Unaudited Condensed Consolidated Statements of Financial Position

As of March 31, 2015 and December 31, 2015

(In millions of USD)

As of March 31, 2015

As of December 31, 2015

Assets

Property and equipment

1,849

1,765

Intangible assets and Goodwill

628

592

Accounts Receivable

3,266

3,455

Unbilled Revenues

612

615

Investments

280

1,273

Cash and Cash equivalents

298

355

Other current assets

3,399

3,232

Other non-current assets

1,667

1,432

Total Assets

11,999

12,719

Liabilities and Shareholders' Equity

Shareholders' Funds

9,185

10,265

Long term borrowings

Short term borrowings

Other current liabilities

2,306

2,077

Other non-current liabilities

305

307

Minority Interest

146

Total Liabilities

11,999

12,719

About Tata Consultancy Services Ltd (TCS)

Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model™, recognised as the benchmark of excellence in software development. A part of the Tata group, India’s largest industrial conglomerate, TCS has over 344,000 of the world’s best-trained consultants in 44 countries. The company generated consolidated revenues of US $15.5 billion for year ended March 31, 2015 and is listed on the National Stock Exchange and Bombay Stock Exchange in India. For more information, visit us at www.tcs.com.

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