The annual incomes of top executives at Tata Consultancy Services fell in the just concluded fiscal year, as India’s largest IT services provider posted slower growth due to business uncertainty triggered by the Covid-19 pandemic.
Chief executive Rajesh Gopinathan’s income dropped 16.5% to Rs 13.3 crore in the fiscal year ended March 31 from Rs 16.04 crore in the previous financial year.
His compensation included Rs 1.35 crore in salary, Rs 1.29 crore as perquisites, Rs 10 crore in commission and about Rs 72 lakh from other allowances.
Chief operating officer N Ganapathy Subramaniam and chief financial officer V Ramakrishnan’s salary packages also dipped.
Subramaniam’s income fell to Rs 10.1 crore from Rs 11.6 crore (-12.9%), while Ramakrishnan’s dropped to Rs 3.98 crore from Rs 4.13 crore (-3.63%).
“The executive remuneration for FY20 is lower than FY19 in view of the economic conditions impacted by the Covid-19 pandemic,” according to the company’s annual report.
TCS’ Directors, including HDFC CEO Keki Mistry, also took a pay cut.
The total compensation for independent and other executive directors fell to Rs 9.20 crore from Rs 12.43 crore.
“Directors have decided to moderate the executive remuneration for this year to express solidarity and conserve resources,” the report added.
Non-managerial staff, however, were given average pay hikes of 6% in India, the same as in the 2018-19 fiscal year. Employees outside India received a wage increase of 2- 6%.
TCS said while there were short term business challenges due to the pandemic, it expects to gain more business later, as companies invest more in technology to adapt to the new normal and differentiate themselves.
“The next few months will be difficult, but your company is strong with deep relationships with customers and partners, enviable scale, a diversified business mix, a robust and resilient business model, and strong financials,” the chairman of TCS as well as Tata Sons, N Chandrasekaran, said in a letter to shareholders. “It is well positioned to weather the storms ahead and take advantage of opportunities that come up during the downturn to acquire new capabilities and gain market share”.
In his letter to shareholders, Gopinathan said the economic downturn was not due to any structural problem, but an externality that has hit the pause button on all economic activity. “Whenever that externality is removed, an equally quick brecovery should follow,” he said.
TCS could face credit risk and possible defaults from clients impacted by the pandemic, it said in the annual report.
“In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk and consequential default considering emerging situations due to Covid-19,” it said.
Based on its assessment, the company’s allowance or provision amount for “doubtful trade receivables” is Rs 1,137 crore as on March 31.
The assessment, it said, was “not based on any mathematical model but…considering the nature of verticals, impact immediately seen in the demand outlook…and the financial strength of the customers in respect of whom amounts are receivable.”
The evaluation is based on the potential impact on customers in retail, travel, transportation and hospitality, manufacturing and energy verticals who could have an immediate impact and the rest who could have an impact with a lag.
The assessment has been done in respect of unbilled receivables and contract assets worth Rs 10,545 crore till end-March to arrive at the provision amount, it said.