The Hindu Business Line : TCS has $ 1-b hedge cushion, says CFO

Mumbai April 17 With international revenues comprising 90 per cent of Tata Consultancy Services' total revenues, the recent rise of the rupee saw a negative impact on its financials. It had a 57-basis point negative impact on its profit margin for 2006-07, and a negative impact of 1.8 per cent on revenues, said Mr S. Mahalingam, Chief Financial Officer of the company.

"Keeping our operating margins strong in an environment of wage increase and international expansion was challenging. We have to take currency fluctuations in our stride, and our currency management strategy is in place," said Mr Mahalingam.

The company has hedged its dollar earnings for $1 billion, protecting itself at Rs 43.5 to the dollar, he said.

US slowdown

"We do not see any impact on us of a US slowdown," said Mr S. Ramadorai, after the results news conference.

"We see a very strong environment there," added Mr N. Chandrasekaran, head, global sales and operations. "There are no signs of any slowdown in our pipeline or in our clients spending money. Our offshoring (to India) has increased by 310 basis points to 41.6 per cent of revenues, and most of that movement came from the US."

Overall revenues from the US dropped to 51.1 per cent of total TCS revenues, down from 56 per cent in the last fiscal.

There was a 460 basis point increase in the percentage of work moving to the global development centres in addition to the 310 basis point move to offshoring in India, said Mr Mahalingam.

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