in a Dynamic Environment - Tata Consultancy Services

22
Annual Report 2008-09
the net profit for the year was Rs.5256.42 crore (19.19% of total income) as compared to Rs.5026.02 crore
(21.53% of total income) in 2007-08.
TCS is amongst the leading global IT companies and continues to retain its leadership position in the Indian IT
Industry. With Consolidated Revenues at Rs.27812.88 crore for the year ended March 31, 2009, TCS has, over
the last five years as a listed company, recorded a CAGR of 23.33%. TCS operates extensively in the global
market and the global economic slowdown in general, and the particular difficulties that the key global
markets and the customers of TCS have faced during this year on account of the economic conditions, has
required TCS to help customers meet their cost reduction goals, while enhancing the value. The currency
movement has been more volatile, with TCS gaining due to depreciation of the Rupee against major currencies
like US Dollar and Euro, while losing due to appreciation of Rupee against Pound Sterling. Given these difficult
market and volatile currency environment, TCS did well in achieving business growth. At the same time,
TCS continued to improve its operational profitability by conserving costs and creating efficiencies. Improving
cash collection was taken as a key focus area and TCS has improved on the key measure in Accounts Receivable.
The number of days outstanding of its Debtors came down by 13 days to 78 days at the end of the year.
TCS continues to focus on acquiring new customers while increasing its level of operations with existing
customers, post high growth in new markets which are not as adversely affected by the economic slowdown
and take efficiency and cost improvement measures.
TCS has had growth in all industry segments. The Banking and Financial Services sector, which is the largest
segment for TCS, has faced unprecedented volatility and uncertainty in the global financial markets. Some of
the major customers of TCS have had to restructure themselves. In this environment, TCS has registered growth
in this sector. The Manufacturing and Retail verticals have grown as large transformation deals have ramped
up, while the Travel, Energy and Media verticals have gained traction in new markets. Engineering services
continue to experience demand across all markets.
Full services play continued to get traction with key service lines including Application Development and
Maintenance, Infrastructure and Assurance services contributing to growth. TCS' Engineering and Industrial
Services along with IT services is enabling TCS to provide comprehensive offering to clients in Manufacturing and
Hi-Tech verticals, while the Global Consulting Practice is engaged by customers for IT optimization and overall
IT strategy and governance related engagements. The broad range of services enables the Company to provide
"end-to-end" services to its clients, in line with its position as a Global IT and Consulting Services Company.
Combined with its industry focus and its geographical spread, the Company is able to provide comprehensive
and high value adding services to its clientele.
In India, the Central and various State Governments are increasing their spending on e-governance initiatives.
Many mission mode projects have been introduced and TCS has won a number of deals in this area.
The USA continued to be the largest market for TCS and contributed 51.38% to the Company's consolidated
revenues. Ramp-ups from recent large outsourcing contracts continue to drive growth in the UK and
continental Europe which have contributed 29.53% of the consolidated revenues. Balanced growth across new
growth markets like Latin America, Asia Pacific, Middle East and Africa has contributed 11.24% of the
consolidated revenues of the Company. India will continue to be a strategic market for the Company and has
shown growth in absolute terms. Adoption of IT would increase in the coming years across all segments in India.
The Company has 140 offices globally. The Company has in addition, Global Delivery Centres in a number of
countries. This helps the Company to meet the needs of its global clients. TCS has pioneered the
Global Network Delivery Model TM , which the customers see as a key differentiator.
6. International Credit Rating
The Company continues to have from Moody's Investors Services, an investment-grade issuer rating of A3 as
well as an indicative foreign currency debt rating of Baa1, with the ratings outlook as stable. The rating is not
for any specific debt issuance by TCS.