India’s largest IT service provider, Tata Consultancy Services (TCS), which showed growth in the US and Europe in the July-September 2011 quarter despite the economic crisis, has a cash chest of Rs 8,500 crore that will help the company pass the stress test in case another downturn hits the world economy, said S Mahalingam, executive director and CFO.
With growth on track and a huge cash chest, TCS uses its money in development programmes and acquisitions, for which it prefers cash transactions. “Acquisition is an important tool in our growth. We plan acquisitions efficiently. We acquire to address our business needs and to fill gaps in our competency or intellectual property in the areas we service,” Mahalingam told Hindustan Times in an interview.
Mahalingam also said that in the results declared on Monday, the profit under US accounting rules (International Financial Reporting Standards) showed a 15% jump year on year, against 6.1% under the Indian rules, as the profit of its US subsidiary is treated as taxable business income in India. “In IFRS, it is already provided for and you can prepare a deferred tax liability,” Mahalingam said.