TCS’ revenue from Tata Sons units touch Rs 2,400 crore

Tata Consultancy Services’ revenue from parent Tata Sons and its subsidiaries was a tad higher in FY17 at over Rs 2,400 crore boosting its top line growth marginally, the company’s annual report showed.

TCS has been working on boosting revenue from the Tata Group, a move started under former chairman Cyrus Mistry and expected to gain steam under current chairman and former TCS CEO N Chandrasekaran.

“They are attempting to grow their revenue from the group. If you assume that a company spends 2% of revenue on IT, then that is a $2 billion spend that they can potentially tap. But it might not all accrue in India, because they do work for the group in Europe and other geographies as well,” an analyst with an IT consultancy told ET on the condition he not be identified.

For FY17, TCS reported Rs 4 crore in revenue from Tata Sons, Rs 246 crore from subsidiaries of Tata Sons and Rs 2,162 crore from associates and joint ventures of Tata Sons and subsidiaries. It also reported Rs 755 crore in trade receivables and unbilled revenue at the end of the year.

In FY16, TCS reported revenue of Rs 2,390 crore from the same parties. The IT company had reported Rs 738 crore in trade receivables and unbilled revenue in that year.

Analysts have pointed out that being able to tap the Tata Sons companies, which have a combined revenue of $100 billion, is a key factor in TCS’ ability to grow profitably in India. The Indian market contributed a little over $1.1 billion to TCS’ revenue in FY17.
TCS is focussing on the group’s newer ventures. The company partially built the group’s online sales store. Its FY16 annual report shows that it was paid Rs 56 crore for the platform.

To be sure, TCS does not have a lock on all Tata IT deals. In March, the group’s jewellery-and-watch making arm Titan chose IBM’s cognitive computing platform to boost customer engagement.

“We started discussing the digital transformation of Titan about 18 months ago. Using Watson for customer is just the first stage of the process,” Dulles Krishnan, director, IBM Software and Solutions at IBM India, had told ET in March.He added that IBM had won the deal after competing with other IT service providers.

The annual report also showed that TCS’ brand equity contribution rose to Rs 156 crore in FY17, from Rs 128 crore in FY16. TCS paid Rs 6,712 crore in dividends to Tata Sons, up from Rs 5,846 crore in FY16.