TCS Kicks Off The Big Result Announcements Season By Beating Estimates

Revenue at TCS increased 7% year-on-year to $7.226 billion in the April-June quarter

29 July 2023 12:00 PM GMT

On today's episode, financial journalist Govindraj Ethiraj talks to CRISIL Chief Economist DK Joshi; Dinesh Kanabar, leading tax expert and CEO of Dhruva Advisors; as well as Nikhil Pahwa, Founder of Medianama.

  • <00:56> TCS Kicks Off the Big Result Announcements Season By Beating Estimate
  • <04:01> Inflation turns up after a 2-year low, driven by food prices, pulses are a particular concern with D K Joshi
  • <09:40> New GST Rates, where are we in our indirect tax journey? with Dinesh Kanabar
  • <15:01> We are now taxing casinos, gambling at 28%, what does this mean, for now, and future? with Nikhil Pahwa


NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning, It's Thursday, the 13th of July and I'm Govindraj Ethiraj coming to you from Mumbai, India's financial capital and most rocking city in the world.

Our Top Reports For Today

  • TCS Kicks Off the Big Result Announcements Season By Beating Estimate
  • New GST Rates, where are we in our indirect tax journey?
  • Inflation turns up after a 2-year low, driven by food prices, pulses are a particular concern.
  • We are now taxing casinos, and gambling at 28%, what does this mean, for now and future?

TCS Results

Tata Consultancy Services Ltd.'s first-quarter profit beat analysts' estimates though revenue growth at the IT major was slower in what normally is the strongest quarter for India's IT services industry.

TCS's revenue rose marginally over the previous three months to Rs 59,381 crore in the quarter ended June, according to an exchange filing on Wednesday. Net profit is down 2.8% at Rs 11,074 crore (Estimate: Rs 10,982 crore).

Its operating profit margin increased marginally to 23.2% from 23.1% a year ago.

Importantly, TCS declared an Interim dividend of Rs 9 per share.

In dollar terms, revenue at TCS increased 7% year-on-year to $7.226 billion in the April-June quarter.
TCS total headcount is 615,318 or over 600,000 employees with an attrition rate of around 18%
The attrition rate is quite amazing, it's almost 110,000 people who have left the organisation to be obviously replaced by as much or more. Other IT companies too have similar attrition levels but the absolute numbers here are staggering.

Just the attrition rate of TCS is more than most large organisations in India or for that matter anywhere in the world.

Back to the results, there are of course headwinds with a slowdown in North America and the Eurozone. The US also is facing some strain in the banking system, a major client for IT services companies.

Earlier, in a surprise move in March, then TCS CEO Rajesh Gopinathan said he would step down and leave the company in September. K. Krithivasan, who previously led its banking and financial services business, took over at the start of June.

Analysing TCS standalone can be tough except for really focused analysts so I thought I could give you some backdrop and size in a global context and in USD terms.

India's technology industry revenue including hardware is worth around $245 Bn (8.4% y-o-y growth), an addition of $19 Bn over the previous year. Exports, at $194 Bn are expected to grow at 11.4%.

While India's domestic technology sector is expected to reach $51 Bn, growing at 4.9% y-o-y. In rupee terms, domestic tech revenues are expecting a 13% y-o-y growth on the back of continued investments by enterprises and the government.

The industry continues to be a net hirer, adding nearly 3 lakh employees, taking the total employee base to 5.4 Mn people (5.7% y-o-y growth). These figures are from the industry body Nasscom.

Inflation After A 25-Month Low 

Inflation numbers are in and India's retail inflation was up in June after having eased to a 25-month low last month. This time, the rise is led by food prices.

The Consumer Price Index-based inflation stood at 4.81% in June, compared to 4.3% in May, according to data from the Ministry of Statistics and Programme Implementation released on Wednesday.

One factor driving food inflation is pulses which are now at 10.5%, just below cereals at 12.7%.
Masoor dal, urad dal and toor dal, also known as pulses and consumed in most Indian households and this is a specific area of concern.

In the last five months, the inflation rate for pulses has nearly doubled. Pulses are also an important source of protein for most of India.

A periodic up and downs in pulses inflation is not new but rising inflation in pulses, when other staples such as rice and wheat are already seeing inflation rates of ~10% and ~12%, respectively, is worrying, says a Crisil report.

I reached out to Crisil Chief Economist D K Joshi to understand why we should be thinking about pulses prices, also in the context of errant and high-intensity monsoons which are impacting cropping across India.

On the other hand, edible oil prices have helped push down inflation by -18.1%.

Vegetables interestingly were at -8% region but are now just -0.1%. High tomato prices are unlikely to help here when numbers emerge next month.

Where Are We In Our Indirect Tax Journey?

India's Goods & Service Tax or GST Council which governs the setting of rates for different products and services said the day before that bets placed on online gaming and casinos will now face 28% tax.
It also announced a reduction on tax on food and beverages at multiplexes and tweaked the definition of utility vehicles for taxation.

Food and beverages sold in restaurants will now be liable to a 5% tax and they will be treated as a restaurant service.

Of course, you can always think back and ask, why wasn't it like this in the first place?

You can also get some sense of which industry lobby won or lost in this round or the crumbs they have been happy to get and where. The gambling industry is not very happy but that is a separate issue for now.

To get a sense of where we are in the overall journey of GST taxes which started on the 1st of July, 2017, and what has become simpler and what is not, I am joined by Dinesh Kanabar, leading tax expert and CEO of Dhruva Advisors.

Dinesh Kanabar pointed out that the 28% tax on online gaming companies has come as a shock and also suggests policy inconsistency.

Let's get a slightly different perspective. Just to refresh your mind.

Game, Set And No Chance

The 28 per cent tax would be levied on the full face value of bets placed on online sites. The tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.

Union finance minister Nirmala Sitharaman said the decision to levy maximum tax on online gaming and casinos were not intended to kill the industry but considering the "moral question" that it cannot be taxed at par with essential commodities.

The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, said the decision by the council is unconstitutional, irrational, and egregious.

Website Medianama, which analyses technology policy in India, quoted AIGF CEO Roland Landers saying, "We believe this decision by the GST Council is unconstitutional, irrational, and egregious. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms.."

Gambling or some version of it, unfortunately, is a public policy issue as much as an economic issue and easy answers are not found.

I reached out to Nikhil Pahwa of Medianama who has been following this matter for his take. I began by asking him what this move to impose a 28% tax meant.

Some Aviation News

​​SpiceJet promoter Ajay Singh has said he will invest about Rs 500 crore into the company.
The infusion will be done through subscription to equity shares or convertible securities on a preferential basis.

"The Board deliberated on the matter and agreed to issue equity shares and/or convertible securities/equity share warrants on a preferential basis to the Promoter and/or the Promoter Group on preferential basis, in one or more tranches for an amount of Rs 500 crore," the company said in a filing.

SpiceJet further said the fundraising will also be considered as equity contribution by the promoters under the Emergency Credit Line Guarantee (ECLG) scheme, which will provide additional credit facilities of Rs 206 crore to the company.

The fundraise comes as reports claimed that the airline has been placed under enhanced surveillance by aviation regulator DGCA. After rival GoFirst filed for bankruptcy, concerns also surfaced over SpiceJet's financial viability.

Before I sign off, here's a message from Sohil Gilani in Bangkok who is also someone I know. He says, besides the lovely content and topics of course, so good to not hear a presenter shout for absolutely everything. I gave up listening to Indian news till your show came along.

Well thank you Sohil for your kind and encouraging words, from me and my colleagues who produce this show and at

Updated On: 13 July 2023 12:30 AM GMT
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