TCS to shell out Rs7,834 crore in special dividend payout

Tata Consultancy Services (TCS), the country's top IT services company, will pay a total of about Rs7,834 crore in special dividend to its 600,000 shareholders, to commemorate the 10th year of its initial public offer (IPO).

TCS is paying a total dividend per share of Rs45, including Rs40 as special dividend, on the 10th anniversary of its IPO. The company's earnings per share stood at Rs28.42.

A major share of TCS' dividend payout will go to the holding company Tata Sons, which holds 73.69 per cent stake in the country's largest software exporter.

The largesse will deplete the company's cash chest of Rs25,900 crore by nearly a third.

TCS, however, expects to replenish the kitty in year's time as the company adds about Rs3,000 crore to the cash reserve (after dividend) every quarter.

''Our disciplined stance in operations helped us mitigate the impact of multiple headwinds like currency movements, accelerated depreciation norms and wage hikes during the quarter. Looking ahead, we will continue to maintain our operating margins in our desired band by operating efficiently,'' TCS had quoted Rajesh Gopinathan, chief financial officer, as saying while announcing financial performance of the company during the April-June 2014-15 quarter.

Mumbai-based TCS has posted consolidated net profit of Rs5,058 crore ($840.5 million) for the April-June 2014-15 quarter - a 26.9 per cent increase compared to the previous year and a 4.5 per cent increase from the previous quarter.

Revenue for the quarter showed an year-on-year rise of 2.6 per cent and a quarter-on-quarter increase of 22.9 per cent at Rs22,111 crore.

TCS said business volume grew 5.7 per cent during the quarter, led by a growth in North America, Europe, India and the Asia-Pacific region.

''Robust volumes and healthy growth across all industries and key markets helped TCS start the new financial year on a strong note as our broad-based business portfolio continues to deliver results. We have a strong demand pipeline in place and our customer-centric mindset, leadership in the 'Digital' space and strong execution capabilities will help us to sustain our momentum,'' chief executive officer and managing director N Chandrasekaran said commenting on the Q1 performance.

TCS has been the mainstay of Tata Sons for nearly a decade, providing funds needed to retire the huge debt of group companies like Tata Steel and Tata Motors and to fund the group's other expansion plans.