Profit up 36 percent at India's Tata Consultancy Services

MUMBAI - India's largest software exporter Tata Consultancy Services said Monday that its first quarter net profit rose by 36 percent despite sharp gains in the rupee this year that hit earnings.

The firm, also known by its acronym, TCS, said net profit for the three months to June rose to 12.03 billion rupees (481 million dollars) from 8.83 billion rupees a year earlier.

Income in the first quarter rose nearly 27 percent to 53.65 billion rupees.

TCS shares fell 8.95 rupees or 0.79 percent to 1,127.9 ahead of its earnings statement, while the Indian stock market rose 0.25 percent or 38.5 points to a record 15,311.22.

Dealers had expected sharp gains in the rupee this year to a near decade high against the dollar to hurt local currency earnings, since many of the firm's clients pay in dollars.

"We have maintained profitability despite an appreciating rupee and wage hike factors," said S. Ramadorai, the chief executive and managing director of TCS.

TCS added 54 new clients in the first quarter while 8,706 employees joined in the same period to bring the workforce to 95,000.

"TCS has showed a better-than-expected performance, despite being hit by the strong rupee. We are more positive on TCS going ahead, with a right mix of business streams," said Ashwin Mehta, an analyst with brokerage Ambit Capital.

TCS said it had also struck a 100-million-dollar deal with an Asian telecom company to provide a full range of outsourced services. It did not provide more details about the agreement.

TCS is part of India's diversified Tata group and employs people from 60 different nationalities.

The Mumbai-based firm earns nearly half of its revenues from banking and financial services in an industry that relies on India's cheap but skilled English-speaking workforce.

TCS listed on Indian exchanges in August 2004 after raising 1.2 billion dollars.

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