CIMdata PLM Industry Summary Online Archive

11 October 2005

Financial News

[TCS] Strong Q-o-Q Performance, Big Wins Drive Growth Momentum (US GAAP)

•  H1 Revenues at 1.3 billion USD

•  Revenue up by 8.93% Q-on-Q

•  Net income up by 8.84% Q-on-Q

•  Wins two US$ 250m deals during the quarter

Tata Consultancy Services reported its financial results according to US GAAP for the quarter ended September 30, 2005. Highlights for Quarter Ended September 30, 2005.

•  Revenue at Rs. 29,513.49 million (US$ 670.53 million) up by 8.93% Q-on-Q

•  Net Income at Rs. 6,733.73 million (US$ 152.99 million) up by 8.84% Q-on-Q

•  EPS up from Rs. 12.89 in Q1 to Rs. 14.03 in Q2

•  74 new clients added in Q2

•  5596 associates joined the company in Q2

•  TCS becomes the first Indian IT Services company to employ 50,000+ professionals

•  Second Interim Dividend of Rs 3 per share announced

Strong ramp-ups with existing clients in North America, new client acquisitions across verticals and large outsourcing wins helped the company post a stellar quarterly performance with excellent growth momentum for the future.

TCS reported a total income for the quarter ended September 30, 2005 at Rs. 29513.49 million (US$ 670.53 million) versus Rs. 24307.27 million (US$ 528.30 million) for the corresponding quarter last fiscal. Net Income stood at Rs. 6733.73 million (US$ 152.99 million) for the quarter ended September 30, 2005 versus Rs.5769.02 million (before one off item, US$ 125.39 million) for the corresponding quarter last fiscal.

Commenting on the company's performance in Q2, CEO and MD of TCS, Mr. S Ramadorai said: "The significant client acquisitions we have had in the previous quarters have resulted in excellent ramp-up and growth during the Quarter. TCS' Global delivery cum Consulting led growth strategy has gained full market validation with the number of significant wins we have had this quarter". "Our ability to manage complex technology engagements on a global scale will continue to be a growth driver" he added.

Big Wins

•  A US $250m + global engagement with ABN AMRO set the new benchmark for outsourcing deals to India. The pioneering efforts of TCS' Global Delivery Model again came to fruition.

•  In India, Tata Teleservices outsourced IT operations and applications to TCS in a contract worth US$250m

•  A leading US Retailer selected TCS as its strategic IT partner on a multi-year contract

•  Two large US insurance providers selected TCS as their strategic partner during the quarter

•  Another leading global bank selected TCS as its partner in Latin America in a multi-year, multi-million dollar deal.

•  One of the largest engineering, construction and oil-field services company selected TCS for providing state-of-the-art GIS solutions

Capturing Value

The company continued its client acquisition and growth momentum across all its service segments.

TCS' differentiated Platform-based BPO strategy continued to witness strong traction and the practice added 8 new clients in transaction processing during Q2 across Banking, Retail and, Pharma verticals. Three existing clients ramped up operation and added sizable additional associates during Q2. The BPO business had 2312 Employees at the end of Q2. A new BPO Centre in Chennai became operational during the quarter with a capacity of over 1000 seats.

Significant BPO deals include:

•  A leading US retailer selected TCS for its analytics process.

•  A major European bank selected TCS for its Fixed-Income process.

•  A leading US Semi-conductor equipment company selected TCS for Supply Chain processes.

TCS' Asset Leveraged Solutions are offering great value to clients. TCS' products in banking, insurance and capital markets achieved critical wins during Q2.

Significant Product deals include:

•  TCS' benchmark Insurance product IIMS was selected by a global insurance company for its China and Korean subsidiaries and will form the platform for the client's next generation solutions for group and individual life products.

•  A leading investment bank and brokerage house in Chile selected Quartz as its platform.

•  Two major US financial institutions selected TCS' Anti-money laundering solution finDNA.

•  TCS' eClearSettle was selected by the National Depository Centre in Moscow

The company continues to leverage its strong client base in the manufacturing segment to move successfully into Engineering and Industrial Services (EIS), which added 18 new clients during Q2.

Significant EIS deals include:

•  Engineering CAM solutions for a leading UK aerospace company.

•  Implementing its Product Lifecycle Management (PLM) strategy for the world's leading home and business audio systems company.

•  A large producer of semiconductor equipments in North America chose TCS as its EIS partner

The Remote Infrastructure Management services continued to grow in strength and added 18 new clients during Q2, taking the total number of active clients to 102 at the end of Q2.

Significant Remote Infrastructure Management deals include:

•  A leading North American Bank chose TCS as its strategic partner for a host of services including Server consolidation, Performance management, Network monitoring and Data centre management.

•  A leading UK-based global insurance company has engaged TCS for providing security and access management services.

•  TCS will provide end-to-end infrastructure management and services for Tata Teleservices.

TCS' Assurance Services won 6 new clients during Q2 with its new Testing Centre of Excellence gaining acceptance from large customers. At the end of Q2, it had 64 active customers.

Significant Assurance Services deals include:

•  Business Acceptance testing for a leading financial services company in Europe.

•  End-to-end test automation for a leading telecom equipment manufacturer in North America.

•  Enterprise testing strategy development for a leading manufacturing company in Asia Pacific.

Delivering Value

•  TCS' core banking solution at State Bank of India has been successfully implemented in over 5000+ branches. Two State Bank subsidiaries-State Bank of Patiala and State Bank of Travancore-are fully under the core banking solution.

•  The core banking implementation at Indian Bank crossed the 100 branches mark during the quarter.

•  TCS successfully implemented its depository and clearing solution eClearSettle for a Middle-Eastern financial exchange. This is considered as an international benchmark for end-to-end deployment timeline.

•  TCS successfully implemented an end-to-end business transformation program for a leading Insurance company in North America.

•  TCS defined and implemented data warehouse architecture to achieve process intelligence for a Pharma major in the US.

•  For a leading retail research company, TCS BPO delivers 300,000 reports every month with an accuracy of 99.98%.

•  TCS' EIS practice implemented an e-matrix based solution for a large medical equipment manufacturer to achieve FDA compliance in their manufacturing and supply chain processes.

Human Resources Update

There was a gross addition of 5596 employees and net addition of 4224 employees. TCS' attrition rate was 8.7% for the last 12 months, the lowest in the Indian IT industry.

At the end of Q2, the total employee strength of the company was 53, 329, with employees coming from 49 different nationalities. The strength of non Indian nationals increased to 3.9% of the total employee base from 3.7% at the end of Q1. 53% of TCS employees have more than 3 years of experience and 23% are women employees.

Tata Consultancy Services Limited (TCS) is a leading information technology consulting, services, business process outsourcing and engineering services organization. TCS reported consolidated revenues of $2.24 billion (U.S.) in the fiscal year 2004-2005.

For more information: http://www.tcs.com .

For Q2 2005-06 Press Release (Indian GAAP), please visit http://www.tcs.com/0_media_room/releases/200510oct/Indian_Gaap.htm .

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