Date:30/05/2008 URL: http://www.thehindubusinessline.com/2008/05/30/stories/2008053051580400.htm

TCS to spend Rs 1,900 cr this fiscal

For upgrading physical, tech assets

TCS has embarked on a plan to add about 30,000 seats within India which explains the higher capex spend for the year. – Mr S. Mahalingam

Mr S. Mahalingam

Adith Charlie

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Mumbai, May 29 The country’s largest software exporter Tata Consultancy Services (TCS) has outlined a capital expenditure plan (capex) of Rs 1,900 crore for the fiscal year 2008-09. This is 35.7 per cent higher than Rs 1,400 crore, which the company spent as capex in the fiscal year 2007-08.

Capital expenditure is the total amount of money spent by a company to acquire or upgrade physical or technological assets.

Of the proposed spend, Rs 1,300 crore will go as investments in physical infrastructure such as buildings and real estate while Rs 600 crore will be used for enhancing technology, Mr S. Mahalingam, Chief Financial Officer and Executive Director, TCS, told Business Line.

TCS has embarked on a plan to add about 30,000 seats within India which explains the higher capex spend for the year, according to Mr Mahalingam. In spite of the sub-prime crisis in the US, TCS sees a strong order book, with visibility of large deals across diverse geographies.

Hence the company is not cutting back on its capacity enhancement initiatives, Mr N. Chandrasekaran, Chief Operating Officer and Executive Director of TCS, had said in an earlier interaction.

Adding seats

The company will be adding seats in both tier-1 and tier-2 cities. This exercise would be undertaken in cities such as Coimbatore, Bhubaneswar, Ahmedabad, Mangalore, Mumbai, Chennai, Hyderabad and Kolkata.

TCS is actively chasing about 25 large deals and so it makes sense for the company to enhance its delivery infrastructure, analysts feel.

TCS’ capital expenditure requirements will be largely met through internal accruals, a company spokesperson said. TCS’ closest competitor Infosys intends to spend $250-300 million (Rs 1,050- Rs 1,250 crore) this fiscal, with a majority of investments being made in India. Hyderabad-based Satyam has planned a capital expenditure of $125 million (about Rs 500 crore) that would go into developing four SEZs.

In fiscal 2007-08, TCS had spent Rs 1,100 crore on infrastructure while the remaining was utilised on enhancing technology.