Professional Documents
Culture Documents
http://www.wsj.com/articles/SB10001424052970204524604576609740825745286
In the second quarter of 2011, nonfinancial companies in the Standard & Poor's 500-stock
index generated $158 billion in cash flow from their operations after accounting for capital
spending, a 13.6% increase from a year earlier, according to data gathered by S&P Capital IQ.
The figure also represents a 60.4% increase from the first quarter of 2009, a recent low, as
companies navigated the depths of the recession. That improvement is a testament to the pains
U.S. companies have been taking to ensure their cash is coming in more quickly than it's going
out.
The ability to generate cash may be the most important measure of a business's health. Plenty
of companies with paper profits have failed because they lacked the cash to keep operating.
At the most basic level, companies improve cash flow by collecting receivables more quickly
and paying bills more slowly. If money is going out faster than it's coming in, a company must
find a way to fund operations for those days in between.
The choices include cash on hand, bank financing or funds raised in the capital markets. The
recent credit crunch threatened to stall even profitable companies because it left the latter two
options so badly impaired.
One advantage to tracking cash flow from operations is that it has a clear accounting definition.
That means it can be compared on an apples-to-apples basis from company to company.
Cash flow can also serve as the basis for calculating the corporate equivalent of disposable
income. Subtracting capital expendituresor critical investments in things like plants and
machineryfrom a company's cash flow shows how much of its resources are left available
for such purposes as paying dividends, financing buybacks, making acquisition or funding
other investments.
Matthew Quinn
http://articles.economictimes.indiatimes.com/2009-10-19/news/28490806_1_cash-flow-netprofit-net-cash
IF YOU'RE looking at plum stock picks that will stay ripe for years to come, you will probably
be guided towards two parameters : P/E ratio and P/BV multiple.
The P/E ratio is one of the oldest ways to show the value of a stock, and indicates how much
you pay for every rupee of a company's earnings. While the 'P' stands for the current stock
price, the 'E' denotes the company's annual earnings per share (EPS). A P/E ratio is arrived at
by dividing a company's current stock price by its annual EPS. So if a stock has a high P/E
ratio, then it could be overpriced.
Apart from the P/E ratio, another parameter commonly used to value stocks is price-to-book
value (P/BV). P/BV is arrived at by dividing the market price of a share with the respective
company's book value per share.
There's one catch in these methods, though: Neither P/E multiple nor P/BV ratio truly reflect
the ability of a company to generate cash flow from operations, the surest sign of a successful
business model.
Besides, companies often resort to window-dressing their accounts, in a bid to show growth in
their net profit. Take the case of the infamous Pentasoft Technologies, which showed a 52.5%
y-o-y growth in its net profit to Rs 126.6 crore during FY01.
However, a careful examination of its accounts showed that its net cash flow from operations
amounted to a negative Rs 46.4 crore during FY01. Little wonder then, its revenue and profit
fluctuated significantly over the next few years. At the end of FY09, its reported net profit was
merely Rs 0.21 crore.
Compare this with Infosys Technologies. At the end of FY01, it re-ported a net profit of Rs
628.8 crore, a growth of 114.3% y-o-y , while its net cash from operations was Rs 560.5 crore.
At the end of FY09, Infosys' net profit amounted to Rs 5,988 crore, a rise of 28.5% y-o-y ,
while its net cash from operations was Rs 5,401 crore, an increase of 31% y-o-y . Regular cash
flows are the backbone of long-term growth and sustain-ability , as against the relatively fickle
P/E valuation criterion. Keeping this in mind, ET Intelligence Group has compiled a list of
companies whose P/E valuations do not fully capture their capacity to generate operating cash.
A company with healthy operating cash flow is in a position to plough this cash into its
projects. It can thus grow at a steady pace, compared to companies that mostly rely on external
sources to fund their growth. This was on display during the credit crisis last year, which put
the future of companies with poor cash flows in doubt.
Valuations based on cash flow data also indicate higher reliability since it is not easy to
manipulate cash flows for a long time. In contrast, P/E ratio is based on accounting profit,
which is open to jugglery. Profit-ability can be inflated to suit market conditions, but it's far
more difficult to cook up cash flow accounts as it is based on actual inflows.
For instance, though a higher profit may be reported due to higher sales, a major chunk of it
may be in the form of credit sales, which can be reversed in the later accounting periods. Since
a profit and loss statement is based on the sales accrual system of accounting, a mere look at
net profit will not reveal the extent of revenue, which in may cases is yet to be collected.
Another factor that goes against the P/E valuation method is that it may reflect the impact of
change in non-cash items such as deprecia-tion and mark-to-market foreign exchange losses
since these items are deducted from operating profit to arrive at net profit.
These factors indicate the need for an alternative valuation method, which can take into
account a company's cash generating ability. One way is to look at the ratio of the market
capitalisation (m-cap ) of a stock with its operating cash flow (OCF). This ratio is then
compared with the stock's current P/E. A lower mcap /OCF indicates that the company's OCF
is stronger than its reported net profit.
The importance of this technique is that it allows us to highlight the strength of the company's
business model in meeting its working capital and capex requirements , coupled with its ability
to ensure orderly operations even during a cyclical downturn. Typically, a stock with an mcap /OCF ratio lower than its current P/E provides us with possible suitable long-term
investment options.
For our analysis, we considered financial data of companies that are part of the BSE-100 . We
selected data over three fiscals ended FY09. BSE-100 provides a good coverage of companies
across sectors and the selected three-year period encompasses the boom and slowdown in the
economy.
From this sample, we removed stocks from the banking and financial services industries and
public sector petroleum companies. The cash flows of oil marketing companies have been
erratic over the past few years, as their marketing operations are heavily dependent on the
central government's fuel pricing policy . For NBFCs and banks, their business model
inherently involves dealing in cash. Thus, the cash flow model cannot be applied to their
valuation.
The Cash Rich
WE TOOK a three-year weighted average of operating cash flows and profit after tax without
extraordinary items. We also considered the average market capitalisation for September 2009.
Based on this data, we computed P/E and m-cap /OCF ratios and picked up 15 companies with
current m-cap /OCF ratios significantly lower than their P/Es.
Tata Tea, Rs 5,955 crore Tata Group company, tops our chart since it is currently trading at a
P/E which is nearly four times its mcap /OCF. Thus, even though its current P/E is 76, a figure
that's way too high, the stock's m-cap /OCF is just over 19.7. It shows that the company's
business model has a sound cash-generating engine.
Next in line are JSW Steel and Hindalco Industries. Both the compa-nies have P/Es that are
three times more than their respective mcap /OCFs. Our analysis reflects that companies with
capital intensive businesses tend to offer lower valuations based on m-cap /OCF. There are
four metal companies, two cement companies and two power generation companies in the list.
Investors can use the m-cap /OCF as a valuation indicator, especially when conventional
indicators such as P/E may look stretched due to either seasonal or cyclical fluctuations in
reported profits. The m-cap /OCF method, when applied using average cash flow over a few
years, is apt in a current time frame since it focuses on the cash generation capability shown
by the company.
However, this method does suffer from historical bias, in the sense that it depends upon the
past cash flow performance of the company. The company may not necessarily report a similar
cash generation, especially in cases where its business uses obsolete technology or demand for
its products and services is highly elastic and can be substituted easily.
It is therefore recommended that investors carry out a fundamental analysis of the companies
selected by the criterion examined here. A company with sound fundamentals and healthy cash
flow stream stands a better chance of providing steady dividends along with capital gains in
the long run.
http://www.livemint.com/Industry/T5K84J77op9mWEvMmGc6VP/Steel-makers-stuck-with-heavy-debtnegative-cash-flow.html
Basu, in the report, cautioned that Tata Steels cash flows wont be adequate to fund its capital
expansion. According to Bloomberg data, Tata Steels free cash flow was minus Rs.4,989.86
crore in fiscal 2013.
A companys free cash flow is calculated by deducting the capital expenditure, or the amount
a company spends on the purchase of tangible fixed assets, from the cash flow it generates
from operations.
As much as 62% of the net debt of Tata Steel and 40% of JSW Steel are in foreign currency,
which means they will be worst hit by the weakness of the rupee against the dollar, according
to Basu, though to an extent, their foreign assets will act as a natural hedge, other analysts
added.
We expect the net debt of steel companies to increase over the next few years as companies
(SAIL and Tata Steel) continue to fund their ongoing projects; (feel) the impact of a weaker
INR on foreign currency debt (Tata Steel and JSW Steel are the most impacted); (see the)
consolidation of the JSW Ispat Steel merger (in the case of JSW) come through, said Basu in
the report.
According to Bloomberg data, Rs.3,650.4 crore is the debt repayment that is due in 2014 for
Tata Steel. This includes $546.935 million (Rs.3,247.153 crore) which is the outstanding
amount on a convertible bond issued by Tata Steel that matures in 2014. Tata Steels net worth
was Rs.34,172.24 crore on 31 March.
The report also projected the net debt of SAIL to rise to Rs.35,400 crore in fiscal 2015
from Rs.26,300 crore in fiscal 2014 and Rs.17,650 crore in fiscal 2013. It forecast JSWs net
debt at Rs.28,700 crore in fiscal 2014 from Rs.19,200 crore last year, factoring in the debt of
the recently-integrated JSW Ispat.
The free cash flow at JSW Steel in fiscal 2013 was minus Rs.1,251.11 crore, according
to Bloomberg data. Its net worth was Rs.17,064.70 crore as on 31 March.
Tata Steel, JSW and Jindal Steel and Power did not comment on questions emailed to them on
17 July, while the rest said they were confident of meeting their debt obligations.
The mounting debt of steel companies definitely causes a great deal of anxiety and there could
be some pain, said Narendra Chaudhary, a mining and metals consultant and former
executive vice-president and chief executive for Asia, Africa and East European countries
for ArcelorMittal, the worlds biggest steel maker.
Analysts also said the forecast of low steel demand amid expansion of capacity in India and
idle capacities in other parts of the world are likely to put more pressure on profit margins,
resulting in prices remaining soft.
In the year ended March, Indias steel consumption was at 73.34 million tonnes, up just 3.3%
from the previous year, data from the Joint Plant Committee shows. With gross domestic
product (GDP) growth forecast at 5-6% in the current fiscal year, close to the lowest in a
decade, steel demand is expected to remain muted.
On 10 July, India Ratings and Research, aFitch group company, revised its outlook on steel
producers to negative from stable for the second half of 2013, reflecting risks ahead.
This is due to the higher-than-expected deterioration in the financial and liquidity profiles of
rated issuers due to muted demand for steel products from the end-user industries, the India
Ratings report, authored by director Ashish Upadhyay said.
On their part, companies said they were confident of meeting their debt obligations.
We are confident of servicing our debt burden, which is lower than envisaged, due to lesser
dependence on borrowed capital, SAIL chairman C.S. Verma said in a written response to
an emailed questionnaire.
He pointed to the companys current net worth at about Rs.41,000 crore and debt to equity
ratio at 0.53: 1.
SAILs free cash flow in fiscal 2012 stood at minus Rs.6,757.59 crore, Bloomberg data
showed.
An Essar Steel Ltd spokesperson said the company had a net debt of Rs.22,000 crore in fiscal
2013. I have enough free cash flows in the company to take care of interest and debt
servicing, said Ashutosh Agarwala, director, finance, and chief financial officer of Essar
Steel.
The weaker rupee is making dollar-denominated steel imports more expensive, which will
support local prices, the Essar executive added.
Bhushan Steel Ltds whole-time director, finance, Nittin Johari said the long-term demand
outlook for Indias steel demand remained positive. I see a shortage of capacity after two
years, said Johari, whose company has a net debt of aroundRs.20,000 crore with a debt to
equity ratio of 2.2: 1.
How much higher can interest rates go? It is already in the 12% range. If at all, it may be kept
stable, but big hikes are not expected, Johari added.
To be sure, the steel industry is largely cyclical, and the last time the industry tasted a
slowdown was in 1998-2002. This time, though, it threatens to last a lot longer.
This economic slowdown looks even worse. There seems to be no light at the end of the
tunnel, said Rakesh Arora, managing director and head of research at Macquarie Capital
Securities (India) Pvt. Ltd. Recovery may take a long time. Europe will continue to remain
a worry.
Chaudhary, cited above, added that besides cost cutting and job losses, the steel companies
may have to worry about getting working capital, sourcing cheaper raw materials, shutting
capacities if the market continues to remain bad for which they may have to approach banks
to restructure loans.
Indian banks have restructured Rs.2.50 trillion as of June. Iron and steel contributed most to
the restructured loan pile (26%) followed by infrastructure (9.65%) and power (8.13%),
according to banks involved in the corporate debt restructuring (CDR) cell.
The steel industry is facing a challenge because no new projects (construction and
infrastructure) are coming through and the macro environment has also not been very good.
There are companies which are into CDR but this industry can turn around if there are some
changes in regulations which can aid construction activity, said K.R. Kamath, chairman and
managing director at Punjab National Bank.
To be sure, India Ratings also said it is likely that growth could gain momentum in 2014 on
the back of a recovery in economic growth and an expected infrastructure push by the
government. The government has plans to spend $1 trillion on infrastructure development till
fiscal 2017. Macquaries Arora added that large steel companies will find their debts growing
bigger, but cheap iron ore, better margins than overseas peers, and the likelihood of exports
could support them. Their interest service coverage ratio may fall, Arora said. Things will
get a little stretched, but theyll survive.
http://www.business-standard.com/article/companies/india-inc-s-cash-flows-back-in-positive-zone114100600047_1.html
Indian companies' cash situation saw a marked improvement in 2013-14: These firms generated freecash
flows (net pf capital expenditure) from their operations for the first time since the Lehman crisis of 2008.
BSE 500 companies together generated a little over Rs 4 lakh crore of cash from operations, higher than the
Rs 3.32 lakh used for capital expenditure during the year. This reduced the need for fresh borrowing to fund
expansion. This was unlike earlier years, when cash flows from operations fell short of cash outgo on account
of capex and dividend payouts to shareholders, and companies were forced to scale up borrowings for
plugging the cash shortfall.
A Business Standard analysis of the combined consolidated finances of 394 of the BSE-500 companies
(excluding banking & financial and oil & gas ones) for the year ended March 2014 shows the cash flow from
operations in 2013-14 rose 22.7 per cent over a year earlier. The rate of growth during the year was the fastest
in four years, driven mainly by higher profitability and a decline in working capital requirements.
The cash outgo on account of capex and investmentdeclined 16.4 per cent in 2013-14, as companies lowered
their capacity expansion in view of an economic slowdown. This left them with free cash flows of nearly Rs
70,000
crore,
against
a
similar
amount
of
net
cash
outgo
in
2012-13.
At its peak in 2010-11, companies' cash burn rate exceeded their internal cash generation by Rs 1.27 lakh
crore, due to a mix of low internal cash generation and faster rise in capital expenditure.
Power companies like NTPC, PowerGrid, Reliance Power, Adani Power, JP Power and CESC also
reported strong cash flows from their operations but those proved inadequate to fund their incremental
capex and equity dividend. They were, therefore, forced to raise additional loans. Companies like Tata
Power, JSW Energy, NHPC, Neyveli Lignite, SJVN and Torrent Power, though, bucked the trend by
generating free cash flows, with a sharp fall in their incremental capex.
http://www.financialexpress.com/industry/companies/india-incs-cash-flows-crimped/99932/
Even as IT companies including TCS, tech Mahindra and Mindtree led the overall growth in the
operating cash flows with 30%-86% yoy jump in FY15, realty companies like Oberoi realty and
Sobha both reported negative cash flows despite reporting amarginal growth in profits (PBT). In the
case of Oberoi realty, a more than four-old jump in inventories to Rs 1,832 crore along with lower
dividend income and profit on sale of investments resulted in a negative cash flow of Rs 971 crore.
Sobhas FY15 cash flows, meanwhile, were adversely impacted by loans and advances of the order
of Rs 224 crore.
http://articles.economictimes.indiatimes.com/2012-11-26/news/35365231_1_capital-yeartelecom-companies-anand-tandon
also able to make sales in cash or collect payments within a few days. Whatever the reason,
the companies find it a beneficial position to be in.
To understand this better, consider the analogy of a trader, who buys goods on a credit card
that has a cycle of 45 days. If he can sell all his goods and collect the proceeds within a month,
he can roll the money till the card payment due date. This means he can invest for the short
term and make additional profit on it.
The negative working capital phenomenon not only depends on the size of the company, but
also on the kind of business. "Negative working capital is visible in companies with strong
brand and consumer franchise, which is why it is mostly seen in the consumer sector," says
Vetri Subramaniam, CIO, Religare Mutual Fund. As is evident from the table, consumercentric firms top the list of the BSE-500 companies that have the highest negative working
capital. Which sectors should investors consider.
On the sectoral front, telecom companies lead the pack. It may seem puzzling that a capitalintensive sector like telecom could have negative working capital, but it's not difficult to
understand this. Firstly, the sector does not require raw material. Secondly, most of the capital
requirements like licence fee, spectrum cost, tower installation cost, etc, are taken care of at
the initial stage. Finally, these companies collect money from prepaid customers in advance,
and from postpaid customers, without much delay.
Does this mean that the sector is a good investment opportunity now? "With several licences
coming up for renewal, the 2G auction failure is good news for telecom companies. Though
they are not very expensive at the moment, the growth rate has come down. So investors can
expect only about 10% upside from the current level," says Anand Tandon, CEO, JRG
Securities.
Aviation is another industry that has a high negative working capital because airlines collect
the money at the time of booking, months before they spend it to transport you. However,
aviation isn't a good bet now. "Since the sector is heavily in debt currently, the negative
working capital may not be of much relevance," says Subramaniam. The domestic aviation
industry is also plagued by several other problems like over-capacity, high airport charges,
high fuel cost, etc.
Some industries are known for generating fast cash and the FMCG sector is the best example
for this. Several FMCG companies have a high negative working capital. This may be because
their strong brand loyalty helps them maintain a low inventory as well as generate speedy
sales. Since these large companies have a high bargaining power, they are also able to extract
favourable terms from their suppliers. The products are sold to the customers and the cash
generated even before the company pays its suppliers. The additional cash generated can be
utilised for other purposes.
Though FMCG majors are fundamentally strong and well-managed companies, retail investors
should avoid them for now because most of them are quoting at very high valuations. "Most
FMCG stocks are overpriced now. However, if you want to invest for the long term, you can
buy shares of ITC. Its original business, cigarettes, will continue to generate cash in the future.
The other two businesses, food and hotel, where ITC is has been making investment for some
time, should also generate significant cash in future," says Tandon.
Other parameters
The negative working capital can be used as a screening criterion, but it's not the final stock
selection tool. What are the other parameters that investors should consider? The most
important is the ability to weed out capital guzzlers, especially from sectors that don't offer
very high operating margins. "Some capital-intensive businesses may have negative working
capital. Investors should look at those where the need for fixed capital is also less," says
Tandon.
"Along with the negative working capital, investors should also check whether the company
can generate free cash flow," says Subramaniam. This is calculated as operating cash flow
minus capital expenditure. So, free cash flow represents the cash that a company has even after
using the money required to maintain or expand its asset base. It is important for raising
shareholder value as it allows a firm to pursue opportunitiesdevelop new products or make
acquisitionswithout capital dilution.
http://www.business-standard.com/article/companies/cash-flow-of-high-debt-firms-turnspositive-after-10-years-115121800069_1.html
The bad news of corporate India's debt-equity ratio breaching a new high in 2014-15 comes
with a silver lining. For the first time in a decade, India's top indebted companies reported a
positive cash flow in 2014-15, which raises hopes of a decline in corporate indebtedness
down the line.
In the last financial year, the total cash flow from operations for the country's top 560 listed,
indebted firms exceeded their capital expenditure and investment for the first time since
2004-05. A company has a positive free cash flow when its operations generate more
cash than what is used in financing capital expenditure and investment.
This was largely because of a sharp cut in capex and investments rather than any material
improvement in cash flow generation from operations. Cash outgo on capex and investments
declined 19 per cent to Rs 4.15 lakh crore last financial year, while operations generated cash
flow worth Rs 4.7 lakh crore in 2014-15, down 1.5 per cent, year-on-year.
The immediate impact was a sharp decline in incremental borrowing. Fresh borrowing by the
sample more than halved to Rs 1.74 lakh crore in 2014-15 from around Rs 4 lakh crore in
2013-14. At its peak in 2011-12, companies had raised fresh loans worth Rs 4.4 lakh crore.
The analysis is based on a sample of 560 indebted firms, excluding banks and financial
companies, that are part of the BSE 500, BSE Mid-cap and BSE Small-cap indices. The data
excludes 246 companies from the initial universe of 806 that were debt-free (gross debt
minus cash and equivalents on books).
Companies in the sample generated free cash flow of Rs 54,000 crore in 2014-15 but it was
not sufficient to fund all expenses such as dividend, interest and loan repayment, leading to
additional borrowing and a further deterioration in the leverage ratio. The net debt-equity
ratio (debt minus cash and equivalent on books) rose to 1.2 in 2014-15 from 1.14 in 2013-14.
Some of the top companies that reported a turnaround in their free cash flow include Tata
Steel, JSW Steel, Reliance Infra, Adani Power, Bhushan Steel, Adani Ports, Gitanjali Gems
and GVK Power. In contrast, companies such as Reliance Industries, Aditya Birla Nuvo,
Steel Authority of India, Aban Offshore and Dalmia Bharat Cement reported a decline in
free cash flow as they stepped up capex.
A turnaround in India Inc's cash flow is the result of a process that began four years ago. The
cash burn peaked in 2011-12 when capex exceeded internal cash generation by Rs 2.04 lakh
crore. The numbers have improved every year since, due to a combination of higher internal
cash generation and slowdown in new projects.
The annual cash flow from operations has nearly doubled in the past five years, to Rs 4.7
lakh crore in 2014-15 from Rs 2.53 lakh crore in 2009-10, outpacing the growth in capex and
investment during the period.
Annual cash outlay on capex is up only 30 per cent during the period, growing at a
compounded annual rate of 5.2 per cent, against a 13.1 per cent compounded annual rate of
growth in cash flow from operations during the period. The companies in our sample
accounted for 80.6 per cent, 69 per cent and 42 per cent of the universe of combined net
sales, operating profit and reported net profit, respectively, in 2014-15. Their share in the
combined gross block (investment in fixed assets) of the universe and gross debt were 88.9
per cent and 98 per cent, respectively.
Experts say if companies sustain this trend, there could be an improvement in corporate
India's financial health a few years down the road. "What we see is a process of corporate deleveraging that happens in any business cycle. There was a time when many companies
leveraged excessively, betting on faster growth to take care of liabilities. Now as many of
those assets are under-utilised, companies have either applied the brakes on new projects or
are raising cash by selling unviable assets," says Madan Sabnavis, chief economist, CARE
Ratings.
"Corporate de-leveraging is one of the essential steps towards growth revival and the process
may take long. In the meantime, investment and demand will lag, resulting in poor economic
and corporate growth," says Dhananjay Sinha, head, institutional equity, Emkay Global.
"In the last economic downturn of the 1990s, de-leveraging consumed most of the latter half
of the decade and the process was finally over in 2003," Sinha adds.
http://www.livemint.com/Money/WqzMn5tlnCsvdd76ErxdGL/Is-TCSs-new-problem-thesame-as-Infosyss-old-one.html
Infosys Ltd has lagged peers on revenue and profit growth in six of the past seven years. But
even when its competitive position rapidly deteriorated, it held on to the pole position for one
important metriccash flow generation.
In the past seven years, cash flow from operations amounted to 23.3% of revenues for Infosys,
compared to 19.8% in the case of Tata Consultancy Services Ltd (TCS) and 16.2% for
Cognizant Technology Solutions Corp. But, as is well known, Infosys has lagged considerably
in terms of shareholder returns during this period. Cash may be king, but it is clearly no
emperor. Investors far prefer strong growth accompanied by a reasonable amount of
cash generation to exceptional cash generation accompanied by sluggish growth.
Is TCS now falling into the same trap? Its growth rate has fallen considerably and cash flow
generation has improved in recent years. It has closed the gap with Infosys considerably in
terms of cash generated from operations19.3% of revenues in FY16 versus 19.6% for
Infosys. Besides, it has curtailed capital expenditure. As a result, it has overtaken Infosys
in free cash flow generation in the past two years. The amount spent by TCS on capital
expenditure and acquisitions accounted for just 12.5% of cash flow from operations in
the past two years, compared to 28.7% in the case of Infosys.
Another reason cash flow generation has improved in recent years is that the company has
reduced its exposure to some emerging markets such as India. Working capital needs are
typically higher in these regions, and the lower exposure has meant that overall cash
generation has improved. Both of the above points suggest that growth isnt necessarily
being sacrificed. Of course, it remains to be seen if TCSs plan to grow organically helps it
catch up with peers soon.
Thankfully for Infosyss shareholders, its new leadership has made growth a priority. The
company even beat TCS on revenue growth in fiscal year 2015-16. M&A (mergers and
acquisitions) activity has picked up, indicating that it is getting bolder with its use of cash.
And cash flow from operations fell to below 20% of revenues last year, compared to around
24% in the preceding three years. Perhaps TCS too needs to take a cue and loosen its purse
strings to position itself better for growth ahead.