Ladies and gentlemen good day and welcome to TCS Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Kedar Shirali. Thank you and over to you sir.
Thank you, Inba. Good evening and welcome everyone. Thank you for joining us today to discuss TCS' financial results for the second quarter of fiscal year 2016 ending September 30, 2015. This call is being webcast through our website and an archive including the transcript will be available on the site for the duration of this quarter. The financial statements, quarterly fact sheet, and press releases are also available on our website.
Our leadership team is present on this call to discuss our results this evening. We have with us today, Mr. N. Chandrasekaran, Chief Executive Officer and Managing Director.
Chandra and Rajesh will give a brief overview of the Company's performance followed by a Q session. As you are aware, we do not provide specific revenue or earnings guidance. Anything said on this call which reflects our outlook for the future or which could be construed as a forward looking statement must be reviewed in the conjunction in conjunction with the risks that the company faces. We have outlined these risks in the second slide of the quarterly fact sheet available on our website. And also which has been e mailed out to those who have subscribed to our mailing list.
With that, I would like to turn the call over to Chandra.
Thank you, Kedar. Good morning, good afternoon and good evening to all of you. We had another strong quarter with our revenue growth accelerating on a sequential quarter basis. Our volume growth has been quite robust at 4.9% and revenue growth in constant currency terms grew 3.9%. Revenue growth in BFSI accelerated to 3.9% on a Q on Q basis in constant currency terms. As in prior quarters, the BFS is part of the core vertical for TCS. The retail industry growth 3.6%, and Life Sciences and Healthcare did extremely well at 5.4%. Travel and Hospitality vertical also grew at 5.7%. Overall, it has been a good well rounded robust growth across industries. Digital has been a significant driver of growth across all verticals. Our ability to bring together our domain expertise, deep technology capabilities and unique understanding of the customers' business contacts to create digital solutions in helping them to transform their business is positioning us very well. We are seeing engagements which are of a different quality, it's not about building mobile applications or building data platforms using big data, it is about end to end transformation of helping retailers transform from the supply chain oriented firms to customer insights based firms helping manufacturing companies to leverage with IOT and other data in order to leverage the insights coming from that ecosystem. Similarly, we can talk about insurance, where telematics is playing a very important role, banking, where data lakes are becoming the norm.
Our investments in digital IP and our portfolio of cloud based platforms are giving us tremendous competitive advantage. Our Digital business grew 10.7% on a Q o Q CC basis and is now 13.3% of our revenues compared to 12.5% in the previous quarter. From a servicing perspective our Asset Leveraged Solutions, primarily BaNCS platform and the Digital platforms grew significantly to deliver a sequential growth of 32.8% in constant currency terms.
We also saw a very good traction for our BaNCS suite of products, which is bringing a good pipeline. And other platforms which did very well are our assessment platform, talent management platform, accounts payable platform, and finance platforms. From a geography perspective, I already covered all the geographies that did well. From a clients metrics, as you know, our client centric approach on client metrics has been hallmark hallmark of our growth and we added three clients in the $100 million bucket, to take it to 33 clients over $100 million this quarter, which was 30 last quarter and 24 in the same quarter last year.
Even in the lower buckets, we added 15 clients to the $1 million category, 13 clients to the $5 million category and six clients to the $10 million category, ending the quarter with 819 clients who contributed over $1 million in revenue over the last 12 months. This number was 743 in the same time last year.
We have had very good deal signings this quarter with all key deals well distributed across the industry verticals and geographies. In terms of industry verticals, we had one deal in Banking, one deal in Insurance, four deals in Manufacturing, two in Retail, one in Telecom, High Tech, Licenses, Utilities and Media. So across the board we saw good deal signings. From a geography perspective, there are nine wins in North America, two in Europe and one each in UK and APAC, which are material.
I'm particularly happy to see the size of our order book. Our order book this quarter is the highest ever, accounting for 30% higher than our previous best order book closing. In terms of ignioTM I had spoken about the launch last quarter. and one in the UK. And all these are very large corporations and we expect them to implement ignioTM successfully and a very good pipeline is building up.
From a margins perspective, our operating margins expanded to 27.1% and our net income margin expanded slightly to 22.3%. On the employee front, we have the robust gross addition of 25,186 associates, net addition of 10,685 associates, ending the quarter at 335,620 employees. And on the attrition front, we had a sequential decline and our quarterly annualized attrition has come down 120 basis points compared to last quarter. Utilization was down slightly Q o Q at 86.0% ex trainees and 82.3% including trainees. From a talent management perspective, I had mentioned in the last call, that we are significantly investing in digital training and we have committed to train 100% employees this year. And I'm glad that our Digital Learning platform has been successfully launched and already 30,000 employees have taken courses in this platform. And we are well on our way to complete our target.
We are also scaling up further in terms of our employee profile. We had a target of 60,000 to 65,000 associates at the beginning of the year. Now we are rising this target to hire 75,000 associates this fiscal year. In terms of our output for the rest of the year we expect a tapering off the sequential revenue growth in the second half, similar to earlier years, the December quarter is typically affected by fewer working days and furloughs.
Lastly, I also want to talk about an investment we made with the Carnegie Mellon University. We announced $35 million gift to CMU, the largest gift of its kind to CMU to endorse both presidential fellowships and scholarships. And also to create a building which is a 40,000 square feet facility, to be called as the Tata Consultancy Services Building, with collaborative status for CMU facility, researchers, students and TCS researchers to promote market driven innovation.
And those are the business updates I wanted to share. And I will now pass it on to Rajesh so that he can give a little bit more details on the financials.
Thank you, Chandra. I will just go over the headline numbers once again. Our second quarter revenue of INR 271.65 billion represents a growth of 5.8% Q on Q and 14.1% year on year in INR terms. In constant currency terms our revenue growth was 3.9% Q on Q.
In terms of the revenue growth buildup, our INR revenue growth of 5.8% Q on Q, was made up of a volume growth of 4.9% and a constant currency realization impact of minus one percentage and an exchange rate movement in fact of plus 1.9 percentage.
In terms of operating margin, our operating margin this quarter has was at 27.1%, a Q on Q expansion of 0.8 percentage, of which 0.7 was from currency movements and 0.1 from SG efficiencies and other productivity drivers.
In terms of net income, our net income margin expanded to 22.3% and we crossed 6,000 crore mark and had a net profit of 60.55 billion in this quarter. The net income comes despite an impact of INR 69.29 billion of cash that we distributed to shareholders as dividend resulting in other income being depressed due to lower average cash balances.
We also had a slightly higher effective tax rate of 24.1% compared to 23.2% in Q1. Our accounts receivables positions stood at 78 days DSO in dollar terms, which is down one day Q on Q.
Operating cash flow stood at 20% of revenue and free cash flow was 18.3% of revenue. Invested funds as of September 30, was at INR 237.24 billion. Lastly, the Board has recommended an interim dividend of INR 5.5 in Q2.
With that we can open the line for questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] Our first question is Anantha Narayan of Credit Suisse. Please go ahead.
Yes. Thank you and good evening everyone. Chandra for my first question, can you comment on whether the macro environment as relevant for TCS has changed in any way in the last few months?
Anantha, actually we have talked about from our perspective three soft spots. One was Diligenta, another one is Japan and the third one is Latin America. We believe that we are out of the issues of Latin America and we expect that from here it should start to deliver growth on a constant currency basis. And the softness in Diligenta and Japan will continue. And in fact, the revenues in areas are declining on a sequential basis. So we need to overcome that otherwise we don't see any specific things that I can talk about. We see traction in the digital space as I indicated with numbers.
Thanks and then for my final question. There are clearly some areas of IT services which I guess are getting cannibalized and there are obviously new streams that didn't exist before. So again from TCS' perspective, can you just give us a color on how these two contrary dynamics are playing out?
No, I think the way if you look at is that, one is the simplification theme is a broader theme, where customers are moving away from the legacy IT footprint they have, whether it is in terms of infrastructure whether it's operations, whether it is applications that is a transformation that's happens into a cloud environment or into enterprise software environment et cetera, which are platform based and there we stand to gain.BCI Veterinary Clip Spo2 Sensor
Then in the second area is the digital area where the fresh investments are happening, albeit these investments may come from squeezing budget somewhere else, there I think that, there is a significant advantage TCS has, because of the investments we've made, whether it is in terms of trading talent or in terms of intellectual property platforms, automation in the form of ignioTM, so all of these things will play to TCS advantage in the way I look at it, but when you talk about cannibalization we need to see, for example, you can take into the extent saying, in a financial services industry, blocked chain can become a significant technology that can bring all process into real time, so back offices can get automated in a big way, but those are things that are under experimentations, we need to see how it will play out. But whichever way it plays out, I believe that TCS is well positioned primarily because of the forward looking business model that we have been consistently building, and the kind of investments that we have made both in people, process, technology and IT.