in a Dynamic Environment - Tata Consultancy Services

The primary reasons for the decrease in ‘other income’
are:
� net exchange loss of Rs.781.36 crore in fiscal 2009
as compared to a net exchange gain of
Rs.500.49 crore in fiscal 2008
� partially offset by higher interest income of
Rs.102.32 crore in fiscal 2009 (fiscal 2008
Rs.56.99 crore), higher dividend income of
Rs.125.89 crore in fiscal 2009 (Rs.107.98 crore in
fiscal 2008), higher profit on sale of mutual funds
and other current investments Rs.50.41 crore in
fiscal 2009 (Rs.15.70 crore in fiscal 2008), increased
profit on sale of fixed assets of Rs.7.31 crore (loss of
Rs.1.45 crore in fiscal 2008) and higher rent and
miscellaneous 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.6,439.67
crore in fiscal 2008). The profit as a percentage of
revenues was 24.24% in fiscal 2009 (28.47% in fiscal
2008). The decline in the PBIDT of 4.23% as percentage
of revenues in fiscal 2009 is attributable to:
� increase in ‘total employee cost’ of 1.59%
� increase in the cost of services rendered by business
associates of 0.23%
� decrease in overseas business expenses such as
travel, 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 costs
Interest costs decreased from Rs.30.01 crore in fiscal 2008
to Rs.28.66 crore in fiscal 2009.
Depreciation
Depreciation charge has increased from Rs.563.71 crore
in fiscal 2008 to Rs.564.08 crore in fiscal 2009. As a
percentage of revenues the depreciation charge was
2.49% in fiscal 2008 and 2.03% in fiscal 2009. The decrease
in depreciation of 0.46% as a percentage of revenues is
primarily attributable to:
� lower depreciation for computers in current fiscal
of 0.68% due to revision in the original estimate of
the useful life from two to four years
� higher depreciation on account of infrastructure
added in fiscal 2009 of 0.20%.
Profit before taxes
Profit before taxes in fiscal 2009 was Rs.6,150.07 crore
(Rs.5,845.95 crore in fiscal 2008). As a percentage of
revenues the profit reduced from 25.84% in fiscal 2008
to 22.11% in fiscal 2009. The decline in profit before tax
of 3.73% as a percentage of revenues can be attributed
to lower PBIDT of 4.23%, partially offset by lower
depreciation of 0.46 % and lower interest costs of 0.03%.
Provision for taxation
Income tax expense comprises tax on income from
operations in India and foreign tax jurisdictions. Tax
expenses relating to operations are determined in
accordance with tax laws applicable in countries where
such operations are carried out.
The Company’s consolidated tax expense (excluding fringe
benefit tax) in fiscal 2009 increased to Rs.812.51 crore
from Rs.760.11 crore in fiscal 2008. As a percentage of
revenues, it decreased to 2.92% in fiscal 2009 from 3.36%
in fiscal 2008. As a percentage of profit before taxes, the
tax charge has gone up from 13.00% in fiscal 2008 to
13.21% in fiscal 2009.
The increase in tax expense of Rs.52.40 crore is primarily
attributable to:
� higher net tax liabilities in some of our subsidiaries
resulting in additional tax expense of
Rs.102.18 crore
� lower net tax liabilities for TCS Limited
(unconsolidated) of Rs.51.60 crore as explained
earlier.
The tax expense on account of FBT was Rs.26.44 crore in
fiscal 2009 (Rs.26.20 crore in fiscal 2008). As a percentage
of revenues, FBT has come down to 0.10% in fiscal 2009
as compared to 0.12% in fiscal 2008.
Net profit before minority interest and share of
profit of associates
The Company’s net profit before minority interest
increased from Rs.5,059.64 crore in fiscal 2008 to
Rs.5,311.12 crore in fiscal 2009. Net profit margin on
revenues 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% offset
by lower net taxes (including FBT) of 0.46% in fiscal 2009.
Minority interest
Minority interest represents the amount of net profit
attributable to third party ownership interests in the
Company’s subsidiaries.
Minority interest registered an increase from
Rs.34.42 crore in fiscal 2008 to Rs.54.00 crore in fiscal
2009.
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