Best CFO Awards 2016-17 | Not Entirely New

Having stepped into the shoes of the chief finance officer just three months ago, V. Ramakrishnan has been busy — and how. As he was taking over from Rajesh Gopinathan, now managing director and CEO, the TCS board announced one of the biggest buybacks in the company’s history.

Added to that, these days have been especially difficult for CFOs of Indian IT firms, particularly with software companies faced with a paucity of H1B visas, and an overall slack in IT spends in verticals such as BFSI and retail. Ramakrishnan, popularly known as Ramki, is familiar with these issues and is ready for the game.

Joining the department of finance in 1999, Ramki served for seven years as head of finance of TCS North America, where he oversaw the company’s expansion of operations in the region. He has also been responsible for the financial controllership of TCS’ subsidiaries and branches globally, and overseas integration initiatives of the many mergers and acquisitions that TCS has been conducting across regions.

In fact, Ramki is now overseeing one of the biggest buybacks in recent times, of Rs 16,000 crore. The board of TCS announced it would buy back a smidgen over 5.61 crore shares, taking up nearly 41 per cent of the company’s cash reserves, and reducing its share capital by nearly 2.85 per cent. The buyback, slated to commence soon, would result in higher return on equity in future for shareholders.

TCS has a vibrant CSR programme that covers education, environmental relief, and social development. On the environment front, TCS logged 43.6 per cent reduction in carbon footprint. On the social front, its efforts on Swachh Bharat and Swachh Vidyalaya Abhiyaan benefited 80,757 girls in 1,472 schools across 1169 villages in FY 16.

During the Chennai floods, TCS donated Rs 10 crore to Tamil Nadu government’s flood relief work and also donated Rs 13.8 crore to the Tata Group’s efforts. Overall, TCS spent Rs 294 crore on CSR activities, which is 1.64 per cent of the annual average net profits of the last three years.

For growth, IT firms are embracing the digital space because some of the traditional verticals are reducing overall IT spends. Digital revenues such as cloud applications are growing faster. Last quarter, TCS’ digital revenues clocked 17.9 per cent and comprised 16.7 per cent of yearly revenue. Artificial intelligence and automation have been focus areas, with the IT behemoth investing in IoT (Internet of Things), robotics, etc, where it registered 29 per cent growth.

In a recent results conference call, Ramki says: “In the fourth quarter, our revenues grew 1 per cent quarter-on-quarter (qoq), on a constant currency basis. In rupee terms, we had a negative cross-currency impact of 1.3 per cent, resulting in reported revenue of Rs 296.42 billion, a 0.3 per cent sequential decline, and 4.2 per cent year-on-year (yoy) growth. In dollars, there was a cross-currency 0.5 per cent benefit, resulting in revenue of $4.452 billion, a 1.5 per cent qoq growth, and 5.8 per cent yoy.”

In all, analysts note that if traditional businesses such as retail and BFSI see an upswing in revenue growth, and in the expected lower net manpower additions, margins for the next quarter (and year) could hold within the range of 24-26 per cent as per management expectation. So, that would mean a decent next year for TCS. And, for Ramki, that would be a good start to a first full year as CFO.