TCS posts strong revenue growth in FY 2015-16

The company's share price was marginally hit after last weekend's US court verdict that ruled in favour of Epic Systems Corporation.
Written by V L Srinivasan, Contributor

Indicating strong improvement in margins and posting robust revenue growth, India's largest software exporter Tata Consultancy Services on Monday announced 5.42 percent quarter-on-quarter (QOQ) growth in its consolidated net profit figures at $952.82 million for the quarter ending March 2016, compared with around $580 million for the corresponding period last year.

During Q4 ending March 2016, TCS reported a total expenditure of $3.2 billion (21,068.54 crore rupees) compared with $3.09 billion (20409.14 crore rupees) in the same quarter last year. In the financial year ended March 2016, the company's bottom line stood at $3.68 billion (24,291.82 crore rupees), up 22.36 percent, compared with $3 billion (19,852.18 crore rupees) a year ago.

TCS CEO and Managing Director N Chandrasekaran said that driven by strong volumes led by growth in BFSI, retail, and manufacturing sectors, the company's core portfolio performed strongly in a seasonally weak fourth quarter.

"This gives us good momentum going into the new financial year. Our investments in building high impact digital platforms have been paying off, resulting in over $2.3 billion in digital revenues. We are building the right talent pool by training more than 120,000 TCSers in FY16 in over 400 new digital technologies to help our customers drive adoption of digital in their enterprise," he said.

On future plans, he said that the company would continue to build on its trusted customer relationships and remain focused on helping its clients in the new experience economy.

"We will continue to invest in developing 'digital' talent and launch new products in emerging areas leveraging the Internet of Things, automation, and machine learning. We also look forward to intensifying our social initiatives to bring the benefits of technology to the community," he added.

In terms of key markets, growth in Q4 was led by Europe (3.6 percent QOQ) and North America (2.4 percent QOQ) in constant currency. For FY 2015-16, North America grew by 10.8 percent, Europe by 12.9 percent, and the UK by 8.3 percent in constant currency. India crossed the $1 billion milestone in annual revenues while overall revenues from new growth markets stood at $3.3 billion during the year under review, the company said.

The company's performance is viewed as a morale booster after a US Court awarded $940 million on April 15 in damages to American healthcare company Epic Systems Corporation, which filed a case against TCS in the court of Western District Madison, Wisconsin in October 2014. Epic Systems alleged that the Indian firm unauthorisedly downloaded and misused its confidential information and trade secrets.

However, the trial judge has indicated his intent to reduce the fine amount, and after legal consultations, TCS has decided to appeal in the higher court.

"While we respect the legal process, the jury's verdict on liability and damages was unexpected as we believe they are unsupported by the evidence presented during the trial," TCS said in a statement.

The company also reiterated that TCS did not misuse or derive any benefit from downloaded documents from Epic System's user web portal. TCS plans to defend its position vigorously in appeal to higher courts and appreciates the trial judge's announcement from the bench that he is almost certain he will reduce the damages award.

"TCS did not misuse or benefit from any of the said information for development of its own hospital management system 'Med Mantra', which was implemented for a large hospital chain in India in 2009," the statement added.

Though the shares of TCS fell by over 3 percent after the market opened in the morning, it recovered and ended 0.03 percent down in the evening.

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