in a Dynamic Environment - Domain-b

The primary reasons for the decrease in ‘other income’are: net exchange loss of Rs.781.36 crore in fiscal 2009as compared to a net exchange gain ofRs.500.49 crore in fiscal 2008 partially offset by higher interest income ofRs.102.32 crore in fiscal 2009 (fiscal 2008Rs.56.99 crore), higher dividend income ofRs.125.89 crore in fiscal 2009 (Rs.107.98 crore infiscal 2008), higher profit on sale of mutual fundsand other current investments Rs.50.41 crore infiscal 2009 (Rs.15.70 crore in fiscal 2008), increasedprofit on sale of fixed assets of Rs.7.31 crore (loss ofRs.1.45 crore in fiscal 2008) and higher rent andmiscellaneous income of Rs.68.44 crore in fiscal 2009(Rs.45.04 crore in fiscal 2008).Profit before interest, depreciation and taxes (PBIDT)PBIDT in fiscal 2009 was Rs.6,742.81 crore, (Rs.6,439.67crore in fiscal 2008). The profit as a percentage ofrevenues was 24.24% in fiscal 2009 (28.47% in fiscal2008). The decline in the PBIDT of 4.23% as percentageof revenues in fiscal 2009 is attributable to: increase in ‘total employee cost’ of 1.59% increase in the cost of services rendered by businessassociates of 0.23% decrease in overseas business expenses such astravel, marketing and office expenses of 0.29% decrease in operating expenses of 2.06% net loss in fiscal 2009 over net gain in fiscal 2008 in‘other income’ as percentage of revenues of 4.76%.Interest costsInterest costs decreased from Rs.30.01 crore in fiscal 2008to Rs.28.66 crore in fiscal 2009.DepreciationDepreciation charge has increased from Rs.563.71 crorein fiscal 2008 to Rs.564.08 crore in fiscal 2009. As apercentage of revenues the depreciation charge was2.49% in fiscal 2008 and 2.03% in fiscal 2009. The decreasein depreciation of 0.46% as a percentage of revenues isprimarily attributable to: lower depreciation for computers in current fiscalof 0.68% due to revision in the original estimate ofthe useful life from two to four years higher depreciation on account of infrastructureadded in fiscal 2009 of 0.20%.Profit before taxesProfit before taxes in fiscal 2009 was Rs.6,150.07 crore(Rs.5,845.95 crore in fiscal 2008). As a percentage ofrevenues the profit reduced from 25.84% in fiscal 2008to 22.11% in fiscal 2009. The decline in profit before taxof 3.73% as a percentage of revenues can be attributedto lower PBIDT of 4.23%, partially offset by lowerdepreciation of 0.46 % and lower interest costs of 0.03%.Provision for taxationIncome tax expense comprises tax on income fromoperations in India and foreign tax jurisdictions. Taxexpenses relating to operations are determined inaccordance with tax laws applicable in countries wheresuch operations are carried out.The Company’s consolidated tax expense (excluding fringebenefit tax) in fiscal 2009 increased to Rs.812.51 crorefrom Rs.760.11 crore in fiscal 2008. As a percentage ofrevenues, it decreased to 2.92% in fiscal 2009 from 3.36%in fiscal 2008. As a percentage of profit before taxes, thetax charge has gone up from 13.00% in fiscal 2008 to13.21% in fiscal 2009.The increase in tax expense of Rs.52.40 crore is primarilyattributable to: higher net tax liabilities in some of our subsidiariesresulting in additional tax expense ofRs.102.18 crore lower net tax liabilities for TCS Limited(unconsolidated) of Rs.51.60 crore as explainedearlier.The tax expense on account of FBT was Rs.26.44 crore infiscal 2009 (Rs.26.20 crore in fiscal 2008). As a percentageof revenues, FBT has come down to 0.10% in fiscal 2009as compared to 0.12% in fiscal 2008.Net profit before minority interest and share ofprofit of associatesThe Company’s net profit before minority interestincreased from Rs.5,059.64 crore in fiscal 2008 toRs.5,311.12 crore in fiscal 2009. Net profit margin onrevenues decreased from 22.37% in fiscal 2008 to 19.10%in fiscal 2009. The reduction in net profit margin of 3.27%is attributable to a decline of PBT margin of 3.73% offsetby lower net taxes (including FBT) of 0.46% in fiscal 2009.Minority interestMinority interest represents the amount of net profitattributable to third party ownership interests in theCompany’s subsidiaries.Minority interest registered an increase fromRs.34.42 crore in fiscal 2008 to Rs.54.00 crore in fiscal2009.77