results for quarter ii fy 2008 - 09...top 5 17.8 18.5 top 10 26.9 28.3 us$ 1 mln clients 397 362 us$...
TRANSCRIPT
22 October 2008
Results for Quarter II FY 2008 - 09
22 October 2008 2
Disclaimer
Certain statements in this release concerning our future prospects are forward-lookingstatements. Forward-looking statements by their nature involve a number of risks anduncertainties that could cause actual results to differ materially from market expectations.These risks and uncertainties include, but are not limited to our ability to manage growth,intense competition among Indian and overseas IT services companies, various factorswhich may affect our cost advantage, such as wage increases or an appreciating Rupee,our ability to attract and retain highly skilled professionals, time and cost overruns onfixed-price, fixed-time frame contracts, client concentration, restrictions on immigration,our ability to manage our international operations, reduced demand for technology in ourkey focus areas, disruptions in telecommunication networks, our ability to successfullycomplete and integrate potential acquisitions, liability for damages on our servicecontracts, the success of the companies in which TCS has made strategic investments,withdrawal of governmental fiscal incentives, political instability, legal restrictions onraising capital or acquiring companies outside India, unauthorized use of our intellectualproperty and general economic conditions affecting our industry. TCS may, from time totime, make additional written and oral forward-looking statements, including our reportsto shareholders. These forward-looking statements represent only the Company’s currentintentions, beliefs or expectations, and any forward-looking statement speaks only as ofthe date on which it was made. The Company assumes no obligation to revise or updateany forward-looking statements.
22 October 2008
Financial Performance
22 October 2008 4
Indian GAAP Growth Summary
Income from IT & Consultancy Services 6,667 6,098 5,296
% Growth Q-o-Q 9.33%
% Growth Y-o-Y 25.88%
Total Income 6,953 6,411 5,550
% Growth Q-o-Q 8.46%
% Growth Y-o-Y 25.29%
PBIDT (before Other Income) 1,820 1,559 1,389
% Growth Q-o-Q 16.78%
% Growth Y-o-Y 31.08%
Profit After Tax 1,271 1,291 1,252
% Growth Q-o-Q -1.52%
% Growth Y-o-Y 1.52%
Consolidated Indian GAAP (INR Crore) Q2 FY09 Q1 FY09 Q2 FY08
22 October 2008 5
US GAAP Revenue Growth
22 October 2008 6
US GAAP Growth Summary
22 October 2008
Operational Performance
22 October 2008 8
49.7%
4.7%
20.2%
10.5%
7.8%5.3% 1.8%
North America
Ibero America
UK
Continental Europe
India
Asia Pacific
MEA
Growth by Market
Americas
North America 49.7 51.1
Ibero America 4.7 4.1
Europe
UK 20.2 19.5
Continental Europe 10.5 10.1
India 7.8 8.7
Asia Pacific 5.3 4.9
MEA 1.8 1.6
Total 100.0 100.0
Geography (% ) Q2 FY09 Q1 FY09
• Diversification across emerging
markets like Ibero-america, APAC,
Middle East and Africa helped
soften impact of developed market
slowdown.
• North America posted positive
growth.
• Ramp ups from recent large
outsourcing wins continue to drive
growth in UK and Continental
Europe.
• Overall, TCS registered higher
growth in International markets to
mitigate the drop of the public
sector business in India.
22 October 2008 9
Growth by Domain
BFSI 41.9 42.5
Telecom 15.3 15.5
Manufacturing 11.0 10.7
Retail & Distribution 9.0 8.6
Hi-Tech 6.9 7.0
Life Sciences & Healthcare 4.8 5.3
Travel & Hospitality 4.6 4.3
Energy & Utilities 3.0 2.9
Media & Entertainment 1.7 1.7
Others 1.8 1.5
Total 100.0 100.0
IP Revenue (%) Q2 FY09 Q1 FY09
41.9%
15.3%
11.0%
9.0%
6.9%
4.8%4.6%
3.0%1.7% 1.8%
BFSI
Telecom
Manufacturing
Retail & Distribution
Hi-Tech
Life Sciences & Healthcare
Travel & Hospitality
Energy & Utilities
Media & Entertainment
Others
• BFSI continues to register
positive growth despite
unprecedented volatility and
uncertainty in the global financial
markets.
• Weakness among developed
market telecom operators drags
growth from emerging markets.
• Manufacturing and Retail grow as
large transformation deals ramp
up.
• Travel, Energy, Media keep
growth momentum through
increased penetration in newer
markets.
22 October 2008 10
49.2%
8.6%
12.5%
4.4%
6.0%
7.5%
2.9%3.1% 5.8% Application Development & Maint.
Business Intelligence
Enterprise Solutions
Assurance Services
Engineering & Industrial Services
Infrastructure Services
Global Consulting
Asset Leverage Solutions
Business Process Outsourcing
Growth by Service Line
SP Revenue (%) Q2 FY09 Q1 FY09
IT Solutions and Services
Application Development & Maint. 49.2 46.9
Business Intelligence 8.6 9.0
Enterprise Solutions 12.5 13.0
Assurance Services 4.4 4.5
Engineering & Industrial Services 6.0 5.6
Infrastructure Services 7.5 7.7
Global Consulting 2.9 3.7
Asset Leverage Solutions 3.1 3.5
Business Process Outsourcing 5.8 6.1
Total 100.0 100.0
• Traditional application
development and maintenance
gained prominence in
weakening investment climate.
• Outsourcing continues to
enjoy strong demand across all
major markets.
• Product implementations and
new project kick-offs delayed
amidst general weakness in
economy.
• Engineering services
continues to experience
strong demand across all
markets.
22 October 2008 11
Client Parameters
Clients Contribution *
Revenue %
Top 1 5.9 6.2
Top 5 17.8 18.5
Top 10 26.9 28.3
US$ 1 mln Clients 397 362
US$ 5 mln Clients 168 147
US$ 10 mln Clients 108 105
US$ 20 mln Clients 55 54
US$ 50 mln Clients 22 21
US$ 100 mln Clients 7 7
* Last Twelve Months
Q2 FY09 Q1 FY09
22 October 2008 12
Operational Parameters
Onsite 52.6 54.9
GDC/RDC 4.6 4.2
Offshore 42.8 40.9
Time & Material 56.6 57.2
Fixed Price & Time 43.4 42.8
* Excluding Domestic Clients
Delivery Location*
Revenue % Q2 FY09 Q1 FY09
Contract Type
22 October 2008 13
Client Acquisition and Expansion
Particulars Q2 FY09 Q1 FY09
Active Clients 920 885
New Clients 51 35
Revenue % from Repeat Business 97.6 99.3
Revenue % from New Business * 2.4 0.7
* Reset at the beginning of Financial Year
22 October 2008 14
Key Wins
• A large, electronic retailer in Europe has engaged TCS as their strategic partner through
a full services outsourcing deal.
• A Leading North American Financial Services organization has selected TCS as their
partner for providing transformational BPO services in a multi-year deal.
• TCS has been selected by the Ministry of External Affairs, Government of India for an
end to end business process transformation of their passport issuing process.
• A leading pharmaceutical and healthcare company has selected TCS as a preferred
partner for its ERP consolidation program.
• One of the leading banks in Europe awarded TCS with a five-year contract to render
application maintenance and development services for capital market solution.
• A leading financial institution in the Middle East has chosen TCS BαNCS for their
multi-market online trading and asset management business.
• TCS BαNCS has been selected by one of the largest banks in Latin America as their
core banking platform across five regional countries.
22 October 2008 15
• TCS designed, developed and is operating, a comprehensive solution for a leading
European Insurer to support launch and servicing of annuity products.
• TCS successfully completed the enterprise Manufacturing, Distribution and Financial
application rollout for world's leading document management technology and services
enterprise.
• The multi-bank roll out of a shared securities processing infrastructure was completed
successfully for a leading Benelux bank in the first of its kind engagement in Europe.
• One of the largest Financial service providers in Malaysia has successfully gone live
with our enterprise compliance solution including Islamic banking.
• TCS successfully delivered an automatic document checking solution which shortens
airport check-in time, especially for international travelers for a global airlines network.
• TCS implemented a large end-to-end Reengineering project involving movement from
legacy to web based system for a large banking institution in North America.
Key Deliveries
22 October 2008
Human Resources
22 October 2008 17
Total Employees : 121,610
TCS : 117,921
Indian subsidiaries : 3,689
Overseas Subsidiaries and Branches : 11,002
Global Delivery Centers : 4,785
Largest IT Employer in India: 121,610 employees
100,362104,399
107,698
112,593117,921
3,985 3,830 3,709 3,7153,689
Q2-08 Q3-08 Q4-08 Q1-09 Q2-09
22 October 2008 18
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
12,523
7,522 6,9218,982 9,6829,268
4,037 3,299 4,895 5,328
Gross Additions Net Additions
• Q2 Additions:
• 6,673 Trainees & 1,587 Laterals in India; 1,422 in Overseas Subs & Branches
• Attrition: 13.2%(LTM), including BPO
• IT Services: 12.4% (LTM), BPO: 22.7 % (LTM)
• Utilization Rate was 81.1 % (excluding trainees), 74.7 % (including trainees)
Q2 - 09 Gross Additions 9,682 & Net Additions 5,328.
22 October 2008 19
British
16.9%
Chilean
11.6%
Ecuadorian
11.5%
Brazilian
10.3%
Chinese
9.9%
American
9.6%
Mexican
7.4%
Uruguayan
6.0%
Hungarian
4.2%
Colombian
2.3%
Others
10.3%Indian
90.8%
Others
9.2%
• 29% of our workforce are women
• 52% of our associates have more than 3 years of work experience.
• Associates from 64 Nationalities
Diverse Workforce
22 October 2008 20
Campus Update - 24,789 offers made for FY’10
96.4% Day 1 slots achieved
• 41 Institutes visited
Total Offers made in Q2 : 2,641
Total Institutes Accredited: 455
22 October 2008
Annexure
22 October 2008 22
Indian GAAP Income Statement – Consolidated – Q2 FY09
INCOME
a) IT & Consultancy Services 6,667 6,098 5,296 95.88 95.13 95.43
b) Manufacturing, Sale of equipment and Licences 286 313 254 4.12 4.87 4.57
Total Income 6,953 6,411 5,550 100.00 100.00 100.00
EXPENDITURE
a ) Salaries & Wages 2,469 2,310 1,936 35.51 36.03 34.88
b ) Overseas business expenditure 1,262 1,186 1,002 18.14 18.51 18.05
c) Other operating expenses 1,402 1,356 1,223 20.17 21.15 22.04
Total Expenditure 5,133 4,852 4,161 73.82 75.69 74.97
Profit Before Interest, Depreciation, Taxes
& Other Income 1,820 1,559 1,389 26.18 24.31 25.03
Interest 6 7 9 0.08 0.11 0.15
Depreciation 140 112 134 2.01 1.75 2.42
Profit Before Taxes & Other Income 1,675 1,440 1,246 24.09 22.45 22.46
Other income (expense), net (169) 44 212 (2.43) 0.69 3.82
Profit Before Taxes 1,506 1,484 1,458 21.66 23.14 26.28
Provision For Taxes 220 185 204 3.17 2.88 3.68
Profit After Taxes From Operations 1,285 1,299 1,254 18.49 20.26 22.60
Minority Interest (14) (8) (2) (0.20) (0.13) (0.04)
Share of profit in respect of investments in Associates (1) 0 0 (0.01) (0.01) 0.01
Net Profit 1,271 1,291 1,252 18.28 20.12 22.57
% of Total Income
Q2 FY09 Q1 FY09 Q2 FY08 Q2 FY09 Q1 FY09 Q2 FY08Consolidated Indian GAAP
INR Crore
22 October 2008 23
Indian GAAP Balance Sheet - Consolidated
30-Sep-08 31-Mar-08 30-Sep-08 31-Mar-08
Source of Funds
Shareholders' Funds 13,867 12,300 93.64 93.83
Minority Interest 241 213 1.62 1.62
Loan Funds 491 455 3.32 3.47
Deferred Tax Liability 209 140 1.41 1.08
Total Liabilities 14,808 13,108 100.00 100.00
Application of Funds
Fixed Assets (net) 3,932 3,576 26.55 27.28
Goodwill 1,303 1,265 8.80 9.65
Deferred Tax Asset 113 108 0.77 0.82
Investments 2,741 2,606 18.51 19.88
Cash and Bank Balance 1,612 1,223 10.88 9.33
Current Assets, Loans and Advances 10,587 8,807 71.49 67.19
Current Liabilities and Provisions (5,480) (4,477) (37.01) (34.15)
Net Current Assets 6,719 5,553 45.37 42.37
Total Assets 14,808 13,108 100.00 100.00
Consolidated Indian GAAPINR Crore %
22 October 2008 24
Revenue 69,534 64,107 55,497 100.00 100.00 100.00
Cost of revenue 37,752 37,147 31,106 54.29 57.95 56.05
Gross margin 31,782 26,960 24,391 45.71 42.05 43.95
SG & A expenses 14,934 12,813 11,853 21.48 19.99 21.36
Operating income 16,848 14,147 12,538 24.23 22.06 22.59
Other income (expense), net (1,784) 332 2,006 (2.56) 0.52 3.61
Income before income taxes 15,064 14,479 14,544 21.67 22.58 26.20
Income taxes 2,291 1,946 2,037 3.29 3.04 3.67
Equity in net earnings of affiliates (7) 1 4 (0.01) 0.00 0.01
Income after income taxes 12,766 12,534 12,511 18.37 19.54 22.54
Minority Interest 151 97 42 0.22 0.15 0.08
Net Income 12,615 12,437 12,469 18.15 19.39 22.46
INR INR INR
Earnings Per Share 12.89 12.71 12.74
Q1 FY09Q2 FY08Consolidated US GAAP
INR Million % of Revenue
Q2 FY09 Q1 FY09 Q2 FY09 Q2 FY08
US GAAP Income Statement
22 October 2008 25
COR – SG&A Details
22 October 2008 26
INR Million % INR Million %
Assets
Cash and Cash equivalents 13,858 6.89 10,352 5.91
Accounts Receivable 62,507 31.06 53,903 30.80
Unbilled Revenues 14,728 7.32 13,525 7.73
Other Current assets 18,588 9.24 15,390 8.79
Property & Equipment 33,640 16.72 30,214 17.26
Intangible assets and Goodwill 15,117 7.51 14,738 8.43
Investments 27,621 13.73 26,503 15.14
Other Non Current assets 15,147 7.53 10,399 5.94
Total assets 201,206 100.00 175,024 100.00
Liabilities and Shareholders' Equity
Current liabilities 53,399 26.54 41,050 23.46
Short term borrowings 73 0.04 371 0.21
Long term debt 7,645 3.80 6,727 3.84
Minority Interest 2,523 1.25 2,300 1.31
Other non-current liabilities 1,000 0.50 756 0.44
Shareholders' Funds 136,566 67.87 123,820 70.74
Total Liabilities 201,206 100.00 175,024 100.00
Consolidated US GAAP30-Sep-08 31-Mar-08
US GAAP Balance Sheet
22 October 2008 27
US GAAP Income Statement
22 October 2008 28
COR – SG&A Details
22 October 2008 29
US GAAP Balance Sheet
USD Million % USD Million %
Assets
Cash and Cash equivalents 295 6.89 258 5.92
Accounts Receivable 1,330 31.07 1,344 30.80
Unbilled Revenues 313 7.32 337 7.73
Other Current assets 396 9.23 384 8.79
Property & Equipment 716 16.72 753 17.26
Intangible assets and Goodwill 322 7.51 368 8.42
Investments 588 13.73 660 15.13
Other Non Current assets 322 7.53 259 5.94
Total assets 4,282 100.00 4,364 100.00
Liabilities and Shareholders' Equity
Current liabilities 1,136 26.53 1,023 23.45
Short term borrowings 2 0.04 9 0.22
Long term debt 163 3.80 168 3.84
Minority Interest 54 1.25 58 1.32
Other non-current liabilities 21 0.49 19 0.43
Shareholders' Funds 2,907 67.88 3,087 70.74
Total Liabilities 4,282 100.00 4,364 100.00
Consolidated US GAAP30-Sep-08 31-Mar-08
22 October 2008 30
Thank You!