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# Management's Responsibility for the Consolidated Financial Statements The Company's Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 ('the Act') that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act as applicable. The respective Board of Directors of the Company and its subsidiary companies are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of these consolidated financial statements by the Board of Directors of the Company. # Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal financial controls relevant to the Company's preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors referred to in the 'Other Matter' paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. # Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March 31, 2016 and its consolidated profit and its consolidated cash flows for the year ended on that date. 146 Consolidated Financial Statements # Other Matter We did not audit the financial statements of 9 direct subsidiary companies, whose financial statements reflect total assets of ` 10,233.51 crores as at March 31, 2016, total revenues of ` 15,567.06 crores and net cash inflows amounting to ` 391.30 crores for the year ended on that date, as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries is based solely on the reports of the other auditors. Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory requirements below, is not modified in respect of the above matter with respect to our reliance on the work done and the reports of the other auditors. |
# Report on Other Legal and Regulatory Requirements As required by Section 143 (3) of the Act, we report, to the extent applicable, that: 1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements. 2. In our opinion, proper books of account as required by law relating to preparation of the consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors. 3. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. 4. In our opinion, the consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, as applicable. 5. On the basis of the written representations received from the Directors of the Company as on March 31, 2016, taken on record by the Board of Directors of the Company and the reports of the statutory auditors of its subsidiary companies incorporated in India, none of the Directors of the Group companies, incorporated in India is disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act. 6. With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls, refer to our report in "Annexure A", which is based on the Auditors' Reports of the Company and its subsidiary companies incorporated in India. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting of the Company and its subsidiary companies incorporated in India. 7. With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: 1. The Group has disclosed the impact of pending litigations on the consolidated financial position of the Group in its consolidated financial statements as of March 31, 2016. 2. The Group has made provisions in its consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses on long term contracts including derivative contracts. 3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company and its subsidiary companies incorporated in India. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm Registration No. 117366W / W-100018) P. R. RAMESH Partner (Membership No. 70928) Mumbai, April 18, 2016 # Consolidated Financial Statements 147 # Annual Report 2015-16 # ANNEXURE 'A' TO THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph (f) under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) # Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ('the Act') File: AR_TCS_2015_2016.md We have audited the internal financial controls over financial reporting of Tata Consultancy Services Limited ('the Company') and its subsidiary companies incorporated in India as at March 31, 2016 in conjunction with our audit of the consolidated financial statements of the Company for the year ended and as on that date. # Management's Responsibility for Internal Financial Controls The respective Board of Directors of the Company and its subsidiary companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the respective internal control over financial reporting criteria established by the Company and its subsidiary companies incorporated in India considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the 'Guidance Note'). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act. |
# Auditors' Responsibility Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Standards on Auditing prescribed under Section 143(10) of the Act and the Guidance Note, to the extent applicable to an audit of internal financial controls over financial reporting. Those Standards and the Guidance Note require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the subsidiary companies incorporated in India, in terms of their reports referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting. # Meaning of Internal Financial Controls Over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. # Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. # Consolidated Financial Statements # Opinion In our opinion to the best of our information and according to the explanations given to us, the Company and its subsidiary companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company and its subsidiary companies incorporated in India considering the essential components of internal control stated in the Guidance Note. # Other Matter Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to 5 subsidiary companies, incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm Registration No. 117366W / W-100018) P. R. RAMESH Partner (Membership No. 70928) Mumbai, April 18, 2016 # Consolidated Financial Statements 149 # Annual Report 2015-16 # Consolidated Balance Sheet as at March 31, 2016 |Note|As at March 31, 2016|As at March 31, 2015| |---|---|---| |I. EQUITY AND LIABILITIES|I. EQUITY AND LIABILITIES|I. |
EQUITY AND LIABILITIES| |Shareholders' funds|Shareholders' funds|Shareholders' funds| |(a) Share capital|197.04|195.87| |(b) Reserves and surplus|65163.52|50438.89| | |65360.56|50634.76| |Minority interest|502.23|1127.76| |Non-current liabilities|Non-current liabilities|Non-current liabilities| |(a) Long-term borrowings|82.53|114.27| |(b) Deferred tax liabilities (net)|441.17|342.96| |(c) Other long-term liabilities|745.10|825.02| |(d) Long-term provisions|277.28|297.87| | |1546.08|1580.12| |Current liabilities|Current liabilities|Current liabilities| |(a) Short-term borrowings|112.96|185.56| |(b) Trade payables|7539.93|8830.93| | |(includes dues to micro and small enterprises ` 18.46 crores (March 31, 2015: ` 12.35 crores))|(includes dues to micro and small enterprises ` 18.46 crores (March 31, 2015: ` 12.35 crores))| |(c) Other current liabilities|5357.45|3646.59| |(d) Short-term provisions|8965.17|7655.16| | |21975.51|20318.24| |TOTAL|89384.38|73660.88| |II. ASSETS|II. ASSETS|II. ASSETS| |Non-current assets|Non-current assets|Non-current assets| |(a) Fixed assets| | | |(i) Tangible assets|10606.61|9376.12| |(ii) Intangible assets|119.35|168.83| |(iii) Capital work-in-progress|1671.20|2766.37| | |12397.16|12311.32| |(b) Non-current investments|226.45|169.18| |(c) Deferred tax assets (net)|822.94|593.94| |(d) Long-term loans and advances|10395.48|9154.92| |(e) Other non-current assets|574.41|525.30| |(f) Goodwill (on consolidation)|1900.55|2093.22| | |26316.99|24847.88| |Current assets|Current assets|Current assets| |(a) Current investments|22359.15|1492.60| |(b) Inventories|16.27|16.07| |(c) Unbilled revenue|3991.74|3827.08| |(d) Trade receivables|24069.71|20437.94| |(e) Cash and bank balances|6784.76|18556.04| |(f) Short-term loans and advances|5582.35|4146.45| |(g) Other current assets|263.41|336.82| | |63067.39|48813.00| |TOTAL|89384.38|73660.88| |III. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS|III. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS|III. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS| |1-45|1-45|1-45| As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry Chairman N. Chandrasekaran CEO and Managing Director Prof. Clayton M. Christensen Director Aman Mehta Director Ishaat Hussain Director V. Thyagarajan Director P. R. Ramesh Partner Dr. Ron Sommer Director Dr. Vijay Kelkar Director Phiroz Vandrevala Director O. P. Bhatt Director Aarthi Subramanian Executive Director Rajesh Gopinathan Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 150 Consolidated Financial Statements # Consolidated Statement of Profit and Loss for the year ended March 31, 2016 |(` crores)|Note|2016|2015| |---|---|---|---| |I. Revenue from operations| |108646.21|94648.41| |(Net of excise duty of ` 0.86 crores (Previous year ` 4.09 crores ))|(Net of excise duty of ` 0.86 crores (Previous year ` 4.09 crores ))|(Net of excise duty of ` 0.86 crores (Previous year ` 4.09 crores ))|(Net of excise duty of ` 0.86 crores (Previous year ` 4.09 crores ))| |II. Other income (net)|23|3053.87|3229.91| |TOTAL REVENUE|TOTAL REVENUE|TOTAL REVENUE|TOTAL REVENUE| | | |111700.08|97878.32| |III. Expenses:| | | | |(a) Employee benefit expense|24|41769.08|38701.15| |(b) Operation and other expenses|25|36287.34|31465.55| |(c) Finance costs|26|19.83|104.19| |(d) Depreciation and amortisation expense|12|1947.96|1798.69| |TOTAL EXPENSES|TOTAL EXPENSES|TOTAL EXPENSES|TOTAL EXPENSES| | | |80024.21|72069.58| |IV. PROFIT BEFORE EXCEPTIONAL ITEM AND TAX| |31675.87|25808.74| |V. Exceptional item|42|-|489.75| |VI. PROFIT BEFORE TAX| |31675.87|26298.49| |VII. Tax expense:| | | | |(a) Current tax|27|7499.67|6276.02| |(b) Deferred tax| |(117.23)|(28.18)| |(c) MAT credit entitlement|27|(81.51)|(9.05)| |7300.93|7300.93|7300.93|7300.93| |VIII. PROFIT FOR THE YEAR BEFORE MINORITY INTEREST| |24374.94|20059.70| |IX. Minority interest| |83.12|207.52| |X. PROFIT FOR THE YEAR| |24291.82|19852.18| |XI. Earnings per equity share - Basic and diluted (`)|37|123.28|101.35| |Weighted average number of equity shares (face value of ` 1 each)| |197,04,27,941|195,87,27,979| |XII. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS| |1-45|1-45| As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry N. Chandrasekaran Prof. Clayton M. Christensen Chartered Accountants Chairman CEO and Managing Director Director Aman Mehta Ishaat Hussain V. Thyagarajan Director Director Director P. R. Ramesh Dr. Ron Sommer Dr. Vijay Kelkar Phiroz Vandrevala Partner Director Director Director O. P. |
Bhatt Aarthi Subramanian Rajesh Gopinathan Director Executive Director Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 Consolidated Financial Statements 151 # Annual Report 2015-16 # Consolidated Cash Flow Statement for the year ended March 31, 2016 | |Note|2016|2015| |---|---|---|---| |I CASH FLOWS FROM OPERATING ACTIVITIES| | | | |Profit before tax| |31675.87|26298.49| |Adjustments for:| | | | |Depreciation and amortisation expense| |1947.96|1308.94| |Bad debts written-off (net)| |10.03|12.46| |Provision for doubtful receivables (net)| |115.58|158.60| |Provision for doubtful advances (net)| |6.23|6.42| |Advances written off (net)| |2.83|0.25| |Diminution in value of investments (net)| |-|1.40| |Interest expense| |19.83|104.19| |Profit on sale of fixed assets (net)| |(4.86)|(2.54)| |Unrealised exchange (gain) / loss (net)| |(66.89)|54.31| |Dividend income from investments| |(11.26)|(9.49)| |Interest income| |(1715.53)|(1596.61)| |Profit on redemption of mutual funds and sale of other investments (net)| |(471.89)|(233.10)| |Operating profit before working capital changes| |31507.90|26103.32| |Inventories| |(0.20)|(0.86)| |Unbilled revenue| |(164.66)|212.76| |Trade receivables| |(3757.38)|(2158.04)| |Loans and advances and other assets| |(593.77)|(711.75)| |Trade payables, other liabilities and provisions| |(307.57)|3405.11| |Cash generated from operations| |26684.32|26850.54| |Taxes paid| |(7568.88)|(7481.76)| |Net cash provided by operating activities| |19115.44|19368.78| |II CASH FLOWS FROM INVESTING ACTIVITIES| | | | |Purchase of fixed assets| |(2046.52)|(2949.20)| |Proceeds from sale of fixed assets| |22.16|6.70| |Acquisition of subsidiaries net of cash of ` Nil (March 31, 2015: ` 25.23 crores)| |-|(263.65)| |Purchase of shares from minority shareholders| |-|(74.47)| |Purchase of mutual funds, government securities and other investments*| |(116529.47)|(67296.17)| |Proceeds from redemption of mutual funds, sale of government securities| |96903.68|69360.96| |and other investments*| | | | |Inter-corporate deposits placed| |(2590.00)|(1797.00)| |Inter-corporate deposits matured| |1083.00|1952.00| |Fixed deposits placed with banks having original maturity over three months| |(64.16)|(15538.60)| |Fixed deposits with banks matured having original maturity over three months| |16361.33|13064.39| |Earmarked deposits placed with banks| |(461.72)|(195.44)| |Earmarked deposits with banks matured| |306.62|25.27| |Dividends received| |11.26|9.49| |Interest received| |1795.15|1994.40| |Net cash used in investing activities| |(5208.67)|(1701.32)| # Consolidated Cash Flow Statement for the year ended March 31, 2016 (Contd.) | |(` crores)|Note|2016|2015| |---|---|---|---|---| |III CASH FLOWS FROM FINANCING ACTIVITIES| | | | | |Repayment of long-term borrowings| | |(0.47)|(0.47)| |Short-term borrowings (net)| | |(72.60)|43.41| |Dividend paid, including dividend tax| | |(9479.19)|(17020.46)| |Dividend paid to minority shareholders of subsidiaries and dividend tax on| | |(45.22)|(85.11)| |dividend paid by subsidiaries| | | | | |Issue of shares to minority shareholders| | |1.52|-| |Interest paid| | |(20.16)|(104.98)| |Net cash used in financing activities| | |(9616.12)|(17167.61)| |Net increase in cash and cash equivalents| | |4290.65|499.85| |Cash and cash equivalents at the beginning of the year| | |1861.89|1467.86| |Exchange difference on translation of foreign currency cash and cash equivalents| | |139.52|(105.82)| |Cash and cash equivalents at the end of the year|20| |6292.06|1861.89| |Earmarked balances with banks| | |439.96|312.67| |Short-term bank deposits| | |52.74|16381.48| |Cash and bank balances at the end of the year|20| |6784.76|18556.04| |Supplementary disclosure of cash flow non-cash investing activities:| | | | | |Investment in shares at cost received in settlement of trade receivables| | |0.01|58.87| |Issue of shares on acquisition of subsidiary| | |-|69.05| |*Purchase of mutual funds, government securities and other investments include| | | | | |` 473.09 crores (March 31, 2015: ` Nil) and redemption of mutual funds,| | | | | |government securities and sale of other investments include ` 197.49 crores| | |(March 31, 2015: ` Nil) of TCS Foundation, formed for conducting| | |corporate social responsibility activities of the Group| | | | | |IV NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS| | |1-45| | As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry Chairman N. Chandrasekaran CEO and Managing Director Prof. Clayton M. Christensen Director Aman Mehta Director Ishaat Hussain Director V. Thyagarajan Partner Dr. Ron Sommer Director Dr. Vijay Kelkar Director Phiroz Vandrevala Director O. P. Bhatt Director Aarthi Subramanian Executive Director Rajesh Gopinathan Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 Consolidated Financial Statements 153 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 1) CORPORATE INFORMATION Tata Consultancy Services Limited ("the Company") and its subsidiaries (collectively referred to as "the Group") provide consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. |
The Group's full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Cloud Services, Connected Marketing Solutions, Consulting, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON -Small and Medium Businesses, IT Infrastructure Services, Mobility Products and Services and Platform Solutions. As at March 31, 2016, Tata Sons Limited owned 73.26 % of the Company's equity share capital and has the ability to control its operating and financial policies. The Company's registered office is in Mumbai and it has 61 subsidiaries across the globe. # 2) SIGNIFICANT ACCOUNTING POLICIES # a) Basis of preparation These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 as applicable. The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair value. # b) Principles of consolidation The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as of the Company. The consolidated financial statements have been prepared on the following basis: 1. The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. Inter-company balances and transactions and unrealised profits or losses have been fully eliminated. 2. The share of profit / loss of associate companies is accounted under the 'Equity method' as per which the share of profit / loss of the associate company has been adjusted to the cost of investment. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture. 3. The excess of the cost to the parent of its investments in a subsidiary over the parent's portion of equity at the date on which investment in the subsidiary is made, is recognised as 'Goodwill (on consolidation)'. When the cost to the parent of its investment in a subsidiary is less than the parent's portion of equity of the subsidiary at the date on which investment in the subsidiary is made, the difference is treated as 'Capital Reserve (on consolidation)' in the consolidated financial statements. 4. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments in the subsidiary companies are made and further movements in their share in the equity, subsequent to the dates of investments. 5. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. # c) Use of estimates The preparation of financial statements requires the management of the Group to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Example of such estimates include provision for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognised in the period in which the results are known / materialise. # d) Fixed Assets Fixed assets are stated at cost, less accumulated depreciation/amortisation. Costs include all expenses incurred to bring the assets to its present location and condition. Fixed assets exclude computers and other assets individually costing ` 50,000 or less which are not capitalised except when they are part of a larger capital investment programme. # e) Depreciation / Amortisation In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation/amortisation is charged on a straight line basis so as to write off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life based on an evaluation. |
154 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements |Type of asset|Period| |---|---| |Leasehold land and buildings|Lease period| |Freehold buildings|20 years| |Factory buildings|20 years| |Leasehold improvements|Lease period| |Plant and machinery|10 years| |Computer equipment|4 years| |Vehicles|4 years| |Office equipment|5 years| |Electrical installations|10 years| |Furniture and fixtures|5 years| |Goodwill|12 years| |Acquired contract rights|12 years| |Intellectual property / distribution rights|5 Years| |Rights under licensing agreement and Software licenses|License period| Fixed assets purchased for specific projects are depreciated over the period of the project or the useful life stated above, whichever is shorter. # f) Leases Where the Group, as a lessor, leases assets under finance lease, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is based on a constant rate of return on the outstanding net investment. Assets taken on lease by the Group in its capacity as lessee, where the Group has substantially all the risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating lease. Lease rentals under operating lease are recognised in the statement of profit and loss on a straight-line basis. # g) Impairment At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and risks specific to the asset. Reversal of impairment loss is recognised as income in the statement of profit and loss. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment annually or more frequently when there is indication for impairment. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. # h) Investments Long-term investments and current maturities of long-term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long-term investments, comprising investments in mutual funds, government securities and bonds are stated at the lower of cost and fair value. Consolidated Financial Statements 155 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # i) Employee benefits # i) Post-employment benefit plans Contributions to defined contribution retirement benefit schemes are recognised as expense when employees have rendered services entitling them to such benefits. For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the statement of profit and loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested or amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. |
Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme. # ii) Other employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date. # j) Revenue recognition Revenue from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred. Revenue from turnkey contracts, which are generally time bound fixed price contracts, are recognised over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when probable. Revenue from the sale of equipment are recognised upon delivery, which is when the title passes to the customer. Revenue from sale of software licenses are recognised upon delivery. Revenue from maintenance contracts are recognised on pro-rata basis over the period of the contract. In respect of Business Process Services, revenue on time and material and unit priced contracts is recognised as the related services are rendered, whereas revenue from fixed price contracts is recognised using the proportionate completion method with contract cost determining the degree of completion. Revenue is reported net of discounts. Dividend is recorded when the right to receive payment is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable. # k) Taxation Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled. File: AR_TCS_2015_2016.md Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company and its Indian subsidiaries will pay normal income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with it will fructify. Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Group is able to and intends to settle the asset and liability on a net basis. The Group offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws. # Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # l) Foreign currency transactions Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. |
Foreign currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the exchange rate prevailing on the balance sheet date and the exchange gains or losses are recognised in the statement of profit and loss. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net investments in a non-integral foreign operation are accumulated in a foreign currency translation reserve. Premium or discount on foreign exchange forward, option and futures contracts are amortised and recognised in the statement of profit and loss over the period of the contract. Foreign exchange forward, option and future contracts outstanding at the balance sheet date, other than designated cash flow hedges, are stated at fair values and any gains or losses are recognised in the statement of profit and loss. For the purpose of consolidation, income and expenses are translated at average rates and the assets and liabilities are stated at closing rate. The net impact of such change is accumulated under foreign currency translation reserve. # m) Derivative instruments and hedge accounting The Group uses foreign exchange forward, option and futures contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Group designates these hedging instruments as cash flow hedges. The use of hedging instruments is governed by the Group's policies approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the Group's risk management strategy. Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in shareholders' funds and the ineffective portion is recognised immediately in the statement of profit and loss. The Group separates the intrinsic value and time value of an option and designates as hedging instruments only the fair value change in the intrinsic value of the option. The change in fair value of the time value of derivative instruments is accumulated in hedging reserve, a component of shareholders' funds and is transferred to statement of profit and loss when the forecast transaction occurs. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the statement of profit and loss as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Cumulative gain or loss on the hedging instrument recognised in shareholders' funds is retained there and is transferred to statement of profit and loss when the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholders' funds is transferred to the statement of profit and loss. # n) Inventories Raw materials, sub-assemblies and components are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net realisable value. Stores and spare parts are carried at the lower of cost and net realisable value. Finished goods produced or purchased by the Group are carried at the lower of cost and net realisable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads. # o) Government grants Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attached to them and the grants will be received. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge. Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic and rational basis. # p) Provisions, Contingent liabilities and Contingent assets A provision is recognised when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. |
Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements. # q) Cash and cash equivalents The Group considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Consolidated Financial Statements 157 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 3) SHARE CAPITAL The Authorised, Issued, Subscribed and Fully paid-up share capital comprises of equity shares and redeemable preference shares having a par value of ` 1 each as follows: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |Authorised| | | | |(i) 460,05,00,000 equity shares of ` 1 each| |460.05|420.05| |(ii) 105,02,50,000 redeemable preference shares of ` 1 each| |105.03|105.03| | |Total Authorised|565.08|525.08| |Issued, Subscribed and Fully paid-up| | | | |(i) 195,87,27,979 equity shares of ` 1 each| |195.87|195.87| |(ii) Issued during the year| |1.17|-| | |Total Issued, Subscribed and Fully paid-up|197.04|195.87| The Authorised equity share capital was increased to 460,05,00,000 equity shares of ` 1 each pursuant to the amalgamation of its subsidiaries, WTI Advanced Technology Limited vide the Order dated March 27, 2015 of the High Court of Judicature at Bombay and CMC Limited, vide the Order dated August 14, 2015 of the High Court of Judicature at Bombay and vide the Order dated July 20, 2015 of the High Court of Judicature at Hyderabad. # a) Reconciliation of number of shares | |As at March 31, 2016| |As at March 31, 2015| | |---|---|---|---|---| |Number of shares|Amount|(` crores)|Number of shares|Amount| |Equity shares| | | | | |Opening balance|195,87,27,979|195.87|195,87,27,979|195.87| |Issued during the year|1,16,99,962|1.17|-|-| |Closing balance|197,04,27,941|197.04|195,87,27,979|195.87| # b) Rights, preferences and restrictions attached to shares Equity shares The Company has one class of equity shares having a par value of ` 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. # Notes forming part of the Consolidated Financial Statements # c) Shares held by Holding company, its Subsidiaries and Associates |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Equity shares| | | |Holding company|144.35|144.35| |Subsidiaries and Associates of Holding company| | | |3,63,700 equity shares (March 31, 2015 : 10,29,700 equity shares) are held by Tata Industries Limited|0.04|0.10| |9,55,273 equity shares (March 31, 2015 : Nil equity shares) are held by Tata AIA Life Insurance Company Limited|0.10|-| |5,90,452 equity shares (March 31, 2015 : 5,90,452 equity shares) are held by Tata Investment Corporation Limited|0.06|0.06| |Nil equity shares (March 31, 2015 : 200 equity shares) are held by Tata Capital Limited *|-|-| |83,232 equity shares (March 31, 2015 : 83,232 equity shares) are held by Tata International Limited|0.01|0.01| |24,400 equity shares (March 31, 2015 : 24,400 equity shares) are held by Tata Steel Limited *|-|-| |452 equity shares (March 31, 2015 : 452 equity shares) are held by The Tata Power Company Limited *|-|-| |Total|144.56|144.52| *Equity shares having value less than ` 50,000. # d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |Equity shares| | | |Tata Sons Limited, the Holding company|144,34,51,698|144,34,51,698| | |73.26%|73.69%| # e) Equity shares allotted as fully paid up (during 5 years preceding March 31, 2016) including equity shares issued pursuant to contract without payment being received in cash 1,16,99,962 equity shares issued to the shareholders of CMC Limited in terms of the scheme of amalgamation ('the Scheme') sanctioned by the High Court of Judicature at Bombay vide its Order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015. |
15,06,983 equity shares of ` 1 each have been issued to the shareholders of TCS e-Serve Limited in terms of the composite scheme of amalgamation ('the Scheme') sanctioned by the High Court of Judicature at Bombay vide its Order dated September 6, 2013. Consolidated Financial Statements 159 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 4) RESERVES AND SURPLUS Reserves and surplus consist of the following: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |(a) Capital reserve (on consolidation)| |75.26|24.50| |(i) Opening balance| |75.26|75.26| |(ii) Addition during the year (net)| |-|50.76| |(b) Capital redemption reserve| |413.09|157.52| |(i) Opening balance| |523.57|413.09| |(ii) Transferred from surplus in statement of profit and loss*| |110.48|255.57| |(c) Securities premium reserve| |1918.87|1918.87| |(d) Foreign currency translation reserve| |1051.17|1547.78| |(i) Opening balance| |1418.25|1051.17| |(ii) Addition / (Deduction) during the year (net)| |367.08|(496.61)| |(e) Hedging reserve (Refer Note 40)| |150.75|29.64| |(i) Opening balance| |56.77|150.75| |(ii) (Deduction) / Addition during the year (net)| |(93.98)|121.11| |(f) General reserve| |7697.18|5742.39| |(i) Opening balance| |10366.66|7697.18| |(ii) Adjustment on amalgamation(Refer Note 29(a))| |365.71|1.15| |(iii) Transferred from surplus in statement of profit and loss| |2303.77|1953.64| |(g) Statutory reserve| |119.92|73.68| |(i) Opening balance| |185.44|119.92| |(ii) Transferred from surplus in statement of profit and loss| |65.52|46.24| |(h) Surplus in statement of profit and loss| |39012.65|39504.51| |(i) Opening balance| |63304.47|59356.69| |(ii) Add : Profit for the year| |24291.82|19852.18| |(iii) Less : Appropriations| | | | |(a) Interim dividends on equity shares| |3251.22|10772.92| |(b) Proposed final dividend on equity shares| |5320.16|4700.95| |(c) Tax on dividend| |1653.34|2635.69| |(d) Write back of tax on dividend of prior years| |(18.72)|(20.97)| |(e) Transferred to capital redemption reserve*| |110.48|255.57| |(f) Transferred to general reserve| |2303.77|1953.64| |(g) Transferred to statutory reserve| |65.52|46.24| | | |50618.70|39012.65| | | |65163.52|50438.89| * On June 25, 2015, Diligenta Limited, a wholly owned subsidiary redeemed 1,10,00,000 redeemable preference shares of GBP 1 each. Accordingly an amount of ` 110.48 crores has been transferred to Capital redemption reserve during the year. The Board of Directors at their meeting held on April 18, 2016 recommended a final dividend of ` 27 per equity share. 160 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 5) LONG-TERM BORROWINGS Long-term borrowings consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Secured loans|82.24|113.69| |(b) Unsecured loans|0.29|0.58| | |82.53|114.27| Obligations under finance lease are secured against fixed assets obtained under finance lease arrangements. # 6) DEFERRED TAX BALANCES Deferred tax balances consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Deferred tax liabilities (net)| | | |(i) Foreign branch profit tax|346.12|256.03| |(ii) Depreciation and amortisation|24.22|25.11| |(iii) Others|70.83|61.82| | |441.17|342.96| |(b) Deferred tax assets (net)| | | |(i) Depreciation and amortisation|(83.42)|(129.55)| |(ii) Employee benefits|326.57|293.57| |(iii) Operating lease liabilities|93.98|83.10| |(iv) Provision for doubtful receivables, loans and advances|190.05|158.07| |(v) Others|295.76|188.75| | |822.94|593.94| # 7) OTHER LONG-TERM LIABILITIES Other long-term liabilities consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Capital creditors|61.78|67.53| |(b) Operating lease liabilities|379.49|344.51| |(c) Others|303.83|412.98| | |745.10|825.02| Others include advance taxes paid of ` 229.53 crores (March 31, 2015: ` 333.28 crores) by the seller of TCS e-serve Limited which, on refund by tax authorities, is payable to the seller. # 8) LONG-TERM PROVISIONS Long-term provisions consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Provision for employee benefits| | | |(i) Gratuity|3.04|21.50| |(ii) Foreign defined benefit plans|170.12|140.42| |(iii) Other post retirement benefits|63.64|41.47| |(b) Provision for foreseeable loss on a long-term contract|40.48|94.48| | |277.28|297.87| Consolidated Financial Statements # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 9) SHORT-TERM BORROWINGS Short-term borrowings consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Secured loans|111.80|-| |(b) Unsecured loans|1.16|185.56| | |112.96|112.96| Secured overdrafts from banks are secured against trade receivables. |
# 10) OTHER CURRENT LIABILITIES Other current liabilities consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Current maturities of long-term debt|0.29|0.47| |(b) Current maturities of obligations under finance lease (Refer Note 35)|49.05|57.40| |(c) Interest accrued but not due on borrowings|0.15|0.48| |(d) Income received in advance|1358.86|1062.31| |(e) Unclaimed dividends|21.11|19.77| |(f) Advance received from customers|164.23|130.76| |(g) Operating lease liabilities|79.87|57.50| |(h) Fair values of foreign exchange forward, option and future contracts secured against trade receivables|152.43|19.75| |(i) Statutory liabilities|1378.59|1143.66| |(j) Capital creditors|331.02|337.41| |(k) Liabilities for cost related to customer contracts|881.55|727.79| |(l) Liabilities for purchase of government securities|804.86|-| |(m) Other payables|135.44|89.29| | |5357.45|5357.45| Obligations under finance lease are secured against fixed assets obtained under finance lease arrangements. # 11) SHORT-TERM PROVISIONS Short-term provisions consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Provision for employee benefits|1635.30|1356.15| |(b) Proposed final dividend on equity shares|5320.16|4700.95| |(c) Tax on dividend|1088.13|947.68| |(d) Current income taxes (net)|806.75|547.34| |(e) Provision for foreseeable loss on a long-term contract|114.83|103.04| | |8965.17|8965.17| Provision for employee benefits includes provision for compensated absences and other short-term employee benefits. 162 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 12) FIXED ASSETS Fixed assets consist of the following: # (i) Tangible assets |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Gross block as at April 1, 2015|347.26|217.59|4812.98|2.77|14.62|1678.04|126.68|5072.69|28.37|1768.86|1294.77|1259.32|16623.95| | |346.13|216.58|3508.02|2.77|14.62|1289.89|10.29|4166.29|27.80|1513.11|1050.35|1016.55|13162.40| |Additions|-|-|1285.34|-|-|185.87|193.08|654.86|8.02|246.37|335.24|192.55|3101.33| | |0.30|1.01|1302.64|-|-|260.68|116.40|964.06|4.72|237.28|245.36|255.84|3388.29| |Assets acquired on acquisition|-|-|-|-|-|-|-|-|-|-|-|-|164.04| | |-|71.98|-|31.37|4.52|0.74|272.65|-|-|-|-|-|-| |Deletions / Adjustments|(0.18)|-|(0.03)|(0.82)|(0.46)|(38.08)|-|(168.05)|(4.26)|(17.36)|(12.39)|(19.55)|(261.18)| | |-|(0.34)|-|1.94|(0.01)|(65.49)|(3.95)|(10.15)|(0.82)|0.70|(78.12)|-|-| |Translation exchange difference|1.21|-|3.94|-|-|17.11|-|30.33|0.06|10.96|1.52|4.41|69.54| | |0.83|-|2.66|-|-|(38.51)|-|(64.15)|(0.20)|(2.75)|(4.64)|(14.51)|(121.27)| |Gross block as at March 31, 2016|348.29|217.59|6102.23|1.95|14.16|1842.94|319.76|5589.83|32.19|2008.83|1619.14|1436.73|19533.64| | |347.26|217.59|4812.98|2.77|14.62|1678.04|126.68|5072.69|28.37|1768.86|1294.77|1259.32|16623.95| # Accumulated depreciation as at April 1, 2015 |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Accumulated depreciation as at April 1, 2015|-|(19.35)|(502.74)|(1.51)|(13.04)|(805.04)|(16.25)|(3541.19)|(19.80)|(966.99)|(486.58)|(875.34)|(7247.83)| | |-|(16.28)|(602.45)|(1.43)|(12.63)|(634.31)|(10.27)|(2894.92)|(17.78)|(672.31)|(484.14)|(781.07)|(6127.59)| # Depreciation for the year |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Depreciation for the year|-|(3.07)|(311.96)|(0.05)|(0.41)|(200.35)|(22.33)|(765.64)|(4.87)|(289.46)|(165.65)|(126.18)|(1889.97)| | |-|(3.07)|100.13|(0.08)|(0.41)|(182.39)|(5.99)|(743.06)|(6.03)|(301.35)|(3.97)|(100.98)|(1247.20)| # Deletions / Adjustments |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Deletions / Adjustments|-|-|0.03|0.28|0.46|29.24|-|167.60|4.24|16.51|7.35|18.17|243.88| | |-|0.08|-|0.18|0.01|61.57|3.82|6.41|0.41|11.65|74.13|-|-| # Translation exchange difference |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Translation exchange difference|-|-|(0.88)|-|-|(4.47)|-|(14.59)|(0.09)|(5.75)|(2.55)|(4.78)|(33.11)| | |-|(0.50)|-|11.48|-|35.22|0.19|0.26|1.12|5.06|52.83|-|-| # Accumulated depreciation as at March 31, 2016 |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Accumulated depreciation as at March 31, 2016|-|(22.42)|(815.55)|(1.28)|(12.99)|(980.62)|(38.58)|(4153.82)|(20.52)|(1245.69)|(647.43)|(988.13)|(8927.03)| | |-|(19.35)|(502.74)|(1.51)|(13.04)|(805.04)|(16.25)|(3541.19)|(19.80)|(966.99)|(486.58)|(875.34)|(7247.83)| # Net book value as at March 31, 2016 |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Net book value as at March 31, 2016|348.29|195.17|5286.68|0.67|1.17|862.32|281.18|1436.01|11.67|763.14|971.71|448.60|10606.61| | |347.26|198.24|4310.24|1.26|1.58|873.00|110.43|1531.50|8.57|801.87|808.19|383.98|9376.12| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 12) FIXED ASSETS (contd.) # (ii) Intangible assets |Description|Goodwill on acquisition|Acquired contract rights|Intellectual property / distribution rights|Rights under licensing agreement and software licenses|Total| |---|---|---|---|---|---| |Gross block as at April 1, 2015|303.55|233.90|13.45|141.20|692.10| | |327.64|252.46|13.51|141.40|735.01| |Additions|-|-|-|2.56|2.56| | |-|-|-|1.97|1.97| |Deletions / Adjustments|-|-|-|(0.08)|(0.08)| | |-|-|-|(0.17)|(0.17)| |Translation exchange difference|9.14|7.04|-|0.25|16.43| | |(24.09)|(18.56)|(0.06)|(2.00)|(44.71)| |Gross block as at March 31, 2016|312.69|240.94|13.45|143.93|711.01| | |303.55|233.90|13.45|141.20|692.10| |Accumulated amortisation as at April 1, 2015|(228.16)|(175.85)|(13.11)|(106.15)|(523.27)| | |(218.97)|(168.76)|(12.43)|(94.11)|(494.27)| |Amortisation for the year|(26.99)|(20.80)|(0.10)|(10.10)|(57.99)| | |(26.91)|(20.74)|(0.68)|(13.41)|(61.74)| |Deletions / Adjustments|-|-|-|0.08|0.08| | |-|-|-|-|-| |Translation exchange difference|(5.93)|(4.57)|-|0.02|(10.48)| | |17.72|13.65|-|1.37|32.74| |Accumulated amortisation as at March 31, 2016|(261.08)|(201.22)|(13.21)|(116.15)|(591.66)| | |(228.16)|(175.85)|(13.11)|(106.15)|(523.27)| |Net book value as at March 31, 2016|51.61|39.72|0.24|27.78|119.35| | |75.39|58.05|0.34|35.05|168.83| # (iii) Capital work-in-progress |Description|Total| |---|---| |Capital work-in-progress|1,671.20| | |2766.37| # Notes 1. Freehold buildings include ` 2.67 crores (March 31, 2015: ` 2.67 crores) being value of investment in shares of Co-operative Housing Societies and Limited Companies. 2. Legal formalities relating to conveyance of freehold buildings having net book value ` - * crores (March 31, 2015: ` 5.18 crores) are pending completion. 3. Net book value of computer equipment of ` 44.76 crores (March 31,2015: ` 78.84 crores), leasehold improvements of ` 46.18 crores (March 31,2015: ` 56.65 crores), office equipment of ` 1.41 crores (March 31, 2015: ` 2.11 crores) and electrical installations of ` 2.20 crores (March 31, 2015: ` 3.01 crores) are under finance lease. 4. In previous year fixed assets acquired on acquisition of IT Frontier Corporation which was renamed as Tata Consultancy Services Japan, Ltd., include Capital work-in-progress of ` 54.77 crores, which was subsequently capitalised. *Values less than ` 50,000. |
164 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 13) NON-CURRENT INVESTMENTS Non-current investments consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) TRADE INVESTMENTS (at cost)| | | |Fully paid equity shares (unquoted)| | | |National Power Exchange Limited|1.40|1.40| |Philippine Dealing System Holdings Corporation|5.96|5.63| |Taj Air Limited|19.00|19.00| |ALMC HF*|-|-| |KOOH Sports Private Limited|3.00|3.00| |Rural Shores Business Services Private Limited*|-|-| |FCM LLC|49.68|46.93| |Fully paid preference shares (unquoted)| | | |Rural Shores Business Services Private Limited|25.00|25.00| |Mozido LLC|66.25|62.58| |Fully paid equity shares (quoted)| | | |Yodlee, Inc.|-|-| |(46,386 equity shares exchanged for 8,762 shares of Envestnet Inc. and cash consideration)| | | |Lyondell Basell Industries N.V.|0.01|-| |(b) OTHER INVESTMENTS| | | |Debentures and bonds (unquoted)|0.12|0.12| |Mutual funds and other funds (unquoted)|57.55|7.04| |Total|227.97|170.70| |Less: Provision for diminution in value of investments|(1.52)|(1.52)| |Net Total|226.45|169.18| |(i) Market value of quoted investments|0.01|3.91| |(ii) Book value of quoted investments|0.01|-| |(iii) Book value of unquoted investments (net of provision)|226.44|169.18| * Non-current investments having a value of less than ` 50,000. # 14) LONG-TERM LOANS AND ADVANCES Long-term loans and advances consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Secured, considered good| | | |Loans and advances to employees|-|0.15| |(b) Unsecured, considered good| | | |(i) Capital advances|187.13|206.71| |(ii) Security deposits|729.72|665.02| |(iii) Loans and advances to employees|7.49|8.90| |(iv) Loans and advances to related parties|3.13|3.13| |(v) Advance tax (including refunds receivable) (net)|4464.21|4092.34| |(vi) MAT credit entitlement|1981.52|1899.76| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 14) LONG-TERM LOANS AND ADVANCES (contd.) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(vii) Indirect tax recoverable|20.66|52.49| |(viii) Inter-corporate deposits|2464.00|1572.00| |(ix) Prepaid expenses|447.78|534.25| |(x) Other amounts recoverable in cash or kind or for value to be received|89.84|120.17| |(c) Unsecured, considered doubtful| | | |Security deposits|0.32|0.31| |Less : Provision for doubtful security deposits|(0.32)|(0.31)| | |10395.48|10395.48| |Loans and advances to related parties comprise:| | | |Tata Sons Limited|2.74|2.74| |Tata Realty and Infrastructure Limited|0.39|0.39| # 15) OTHER NON-CURRENT ASSETS Other non-current assets consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Interest receivable|72.74|24.37| |(b) Long-term bank deposits|415.00|500.08| |(c) Earmarked balances with banks|86.38|0.41| |(d) Others|0.29|0.44| | |574.41|574.41| # 16) CURRENT INVESTMENTS Current investments consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Fully paid equity shares (quoted)|-|-| |(8,762 shares received in exchange of 46,386 equity shares of Yodlee, Inc. which were sold subsequently during the year)|(8,762 shares received in exchange of 46,386 equity shares of Yodlee, Inc. which were sold subsequently during the year)|(8,762 shares received in exchange of 46,386 equity shares of Yodlee, Inc. which were sold subsequently during the year)| |(b) Mutual funds and other funds (unquoted)|1695.76|1492.60| |(c) Government securities (quoted)|20171.95|-| |(d) Certificate of deposits (unquoted)|491.44|-| | |22359.15|22359.15| |(i) Market value of quoted investments|20253.65|-| |(ii) Book value of quoted investments|20171.95|-| |(iii) Book value of unquoted investments|2187.20|1492.60| Mutual funds include ` 282.11 crores (March 31, 2015: ` Nil) held by TCS Foundation, formed for conducting corporate social responsibility activities of the Group. 166 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 17) INVENTORIES Inventories consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Raw materials, sub-assemblies and components|8.71|10.36| |(b) Finished goods and Work-in-progress|0.08|2.16| |(c) Goods-in-transit (raw materials)|0.20|1.81| |(d) Stores and spares|7.28|1.74| |Total|16.27|16.07| Inventories are carried at the lower of cost and net realisable value. # 18) UNBILLED REVENUE Unbilled revenue as at March 31, 2016, amounting to ` 3991.74 crores (March 31, 2015 : ` 3827.08 crores) primarily includes revenue recognised in relation to efforts incurred on turnkey contracts priced on a fixed time, fixed price basis. |
# 19) TRADE RECEIVABLES Trade receivables (Unsecured) consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Over six months from the date they were due for payment| | | |(i) Considered good|1592.25|1469.78| |(ii) Considered doubtful|573.13|422.94| |(b) Others| | | |(i) Considered good|22477.46|18968.16| |(ii) Considered doubtful|0.58|24.67| |Total|24643.42|20885.55| |Less: Provision for doubtful receivables|(573.71)|(447.61)| |Net Total|24069.71|20437.94| # 20) CASH AND BANK BALANCES Cash and bank balances consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Cash and cash equivalents| | | |(i) Balances with banks| | | |In current accounts|2156.02|1443.19| |In deposit accounts with original maturity less than three months|2881.01|352.86| |(ii) Cheques on hand|25.49|50.85| |(iii) Cash on hand|1.39|1.43| |(iv) Remittances in transit|1228.15|13.56| |Total Cash and Cash Equivalents|6292.06|1861.89| |(b) Other bank balances| | | |(i) Earmarked balances with banks|439.96|312.67| |(ii) Short-term bank deposits|52.74|16381.48| |Total Cash and Bank Balances|6784.76|18556.04| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 21) SHORT-TERM LOANS AND ADVANCES Short-term loans and advances consist of the following: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| File: AR_TCS_2015_2016.md |(a) Secured, considered good|Loans and advances to employees|-|0.16| |(b) Unsecured, considered good|(i) Loans and advances to employees|1021.40|335.48| | |(ii) Loans and advances to related parties|0.90|0.01| | |(iii) Advance tax (including refunds receivable) (net)|31.68|74.93| | |(iv) MAT credit entitlement|5.00|5.25| | |(v) Security deposits|142.58|126.94| | |(vi) Indirect tax recoverable|340.15|308.76| | |(vii) Inter-corporate deposits|1698.00|1083.00| | |(viii) Prepaid expenses|1376.03|1512.13| | |(ix) Advance to Suppliers|240.01|109.57| | |(x) Fair values of foreign exchange forward, option and future contracts|537.24|365.38| | |(xi) Other amounts recoverable in cash or kind or for value to be received|189.36|224.84| |(c) Unsecured, considered doubtful|(i) Loans and advances to employees|56.32|51.46| | |(ii) Security deposits|2.27|4.65| | |(iii) Indirect tax recoverable|1.74|1.74| | |(iv) Advance to suppliers|3.07|4.79| | |(v) Other amounts recoverable in cash or kind or for value to be received|3.59|3.29| | |Less : Provision for doubtful loans and advances|(66.99)|(65.93)| | | |5582.35|4146.45| Loans and advances to related parties comprise: |Tata AIG General Insurance Company Limited|0.06|0.01| |---|---|---| |Taj Air Limited|0.84|-| # 22) OTHER CURRENT ASSETS Other current assets consist of the following: | | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---|---| |(a) Interest receivable|202.76|331.93| | | |(b) Others|60.65|4.89| | | | | |263.41|336.82| | 168 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 23) OTHER INCOME (NET) Other income (net) consist of the following: | |(` crores)|2016|2015| |---|---|---|---| |(a) Interest income| |1715.53|1596.61| |(b) Dividend income| |11.26|9.49| |(c) Profit on redemption of mutual funds, sale of government securities and other investments (net)| |471.89|233.10| |(d) Rent| |24.51|18.45| |(e) Profit on sale of fixed assets (net)| |4.86|2.54| |(f) Exchange gain (net)| |743.26|1308.47| |(g) Miscellaneous income| |82.56|61.25| |Total| |3053.87|3229.91| Interest income comprise: | |(` crores)|2016|2015| |---|---|---|---| |Interest on bank deposits| |1455.24|1198.85| |Interest on inter-corporate deposits| |202.97|272.07| |Interest on bonds, government securities and debentures (non-current)| |-|120.99| |Interest on bonds, government securities and debentures (current)| |31.64|-| |Interest on certificate of deposits| |1.18|-| |Others| |24.50|4.70| Dividend income comprise: | |(` crores)|2016|2015| |---|---|---|---| |From other long-term investment| |1.33|-| |From current investments (mutual funds)| |9.93|9.49| Profit on redemption of mutual funds, sale of government securities and other investments (net) comprise: | |(` crores)|2016|2015| |---|---|---|---| |From other long-term investments (net)| |5.37|24.78| |From current investments (net)| |466.52|208.32| Exchange gain (net) include: Gain on foreign exchange forward and currency option contracts which have been designated as Cash Flow Hedges (Refer Note 40) # 24) EMPLOYEE BENEFIT EXPENSE Employee benefit expense consist of the following: | |(` crores)|2016|2015| |---|---|---|---| |(a) Salaries and incentives (Refer Note 43)| |36535.94|34063.91| |(b) Contributions to:(Refer Note 31)| | | | |(i) Provident fund and pension fund| |679.83|606.47| |(ii) Superannuation scheme| |248.91|222.44| |(iii) Gratuity fund| |327.00|305.62| |(iv) Social security and other plans for overseas employees| |1744.51|1519.76| |(c) Staff welfare expenses| |2232.89|1982.95| |Total| |41769.08|38701.15| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 25) OPERATION AND OTHER EXPENSES Operation and other expenses consist of the following: |(` crores)|2016|2015| |---|---|---| |(a) Overseas business expenses|14839.99|13363.91| |(b) Services rendered by business associates and others|7947.99|6220.25| |(c) Software, hardware and material costs|4613.82|3835.83| |(d) Communication expenses|1107.31|1056.06| |(e) Travelling and conveyance expenses|1502.43|1261.25| |(f) Rent|1693.85|1569.46| |(g) Legal and professional fees|639.83|596.30| |(h) Repairs and maintenance|730.26|705.00| |(i) Electricity expenses|572.74|573.87| |(j) Bad debts written-off (net)|10.03|12.46| |(k) Advances written-off (net)|2.83|0.25| |(l) Provision for doubtful receivables (net)|115.58|158.60| |(m) Provision for doubtful advances (net)|6.23|6.42| |(n) Recruitment and training expenses|364.20|360.94| |(o) Diminution in value of investments (net)|-|1.40| |(p) Printing and stationery|101.42|97.76| |(q) Insurance|75.25|70.41| |(r) Rates and taxes|186.50|119.08| |(s) Entertainment|80.50|71.93| |
|(t) Other expenses|1696.58|1384.37| |Total|36287.34|31465.55| (i) Overseas business expenses comprise: |Travel expenses|1161.34|1140.71| |---|---|---| |Employee allowances|13678.65|12223.20| (ii) Repairs and maintenance includes: |Buildings|273.65|267.25| |---|---|---| |Office and computer equipment|448.96|427.95| # 26) FINANCE COSTS Finance costs consist of the following: |(` crores)|2016|2015| |---|---|---| |Interest expense|19.83|104.19| # 27) Current tax is adjusted for the effect of additional provision (net) of ` 20.52 crores (March 31, 2015: write back of provision (net) ` 28.79 crores) in domestic and certain overseas jurisdictions relating to earlier years. The impact of MAT entitlement of earlier period is ` 89.24 crores (March 31, 2015: ` 8.83 crores). 170 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 28) (a) STATEMENT OF NET ASSETS AND PROFIT OR LOSS ATTRIBUTABLE TO OWNERS AND MINORITY INTEREST |Name of the entity|Country of incorporation|% of voting power as at March 31, 2016|% of voting power as at March 31, 2015|Net Assets, i.e. total assets minus total liabilities As % of consolidated net assets|Amount (` crores)|As % of consolidated profit or loss|Amount (` crores)| |---|---|---|---|---|---|---|---| |Tata Consultancy Services Limited|India|-|-|83.73|58866.86|91.01|22882.70| |Subsidiaries (held directly)| | | | | | | | |APTOnline Limited (formerly APOnline Limited)|India|89.00|89.00|0.06|45.35|0.12|31.29| |MP Online Limited|India|89.00|89.00|0.08|53.62|0.06|14.63| |C-Edge Technologies Limited|India|51.00|51.00|0.14|96.75|0.13|33.66| |MahaOnline Limited|India|74.00|74.00|0.06|41.31|0.04|10.01| |TCS e-Serve International Limited|India|100.00|100.00|0.26|181.86|0.04|10.59| |TCS Foundation( w.e.f. 25.03.2015)|India|100.00|100.00|0.39|275.73|0.51|129.29| |CMC Limited (Refer Note 29(a))|India|-|51.12|-|-|-|-| |Foreign| | | | | | | | |Diligenta Limited|UK|100.00|100.00|0.82|577.10|(0.27)|(66.82)| |Tata Consultancy Services Canada Inc.|Canada|100.00|100.00|0.56|391.21|0.81|203.99| |Tata America International Corporation|USA|100.00|100.00|3.25|2281.82|2.89|727.84| |Tata Consultancy Services Asia Pacific Pte Ltd.|Singapore|100.00|100.00|0.72|504.26|0.72|180.23| |Tata Consultancy Services Belgium S.A.|Belgium|100.00|100.00|0.25|175.03|0.18|45.12| |Tata Consultancy Services Deutschland GmbH|Germany|100.00|100.00|0.16|113.65|0.23|58.55| |Tata Consultancy Services Netherlands BV|Netherlands|100.00|100.00|2.40|1685.45|1.00|250.77| |Tata Consultancy Services Sverige AB|Sweden|100.00|100.00|0.30|209.82|0.26|64.82| |TCS FNS Pty Limited|Australia|100.00|100.00|0.23|163.83|-|-| |TCS Iberoamerica SA|Uruguay|100.00|100.00|1.61|1132.75|0.29|73.14| |Tata Consultancy Services (Africa) (PTY) Ltd.|South Africa|100.00|100.00|0.01|6.40|0.02|3.97| |CMC Americas Inc. (w.e.f. 01.04.2015)|USA|100.00|100.00|0.19|132.34|0.30|75.55| |Tata Consultancy Services Qatar S.S.C.|Qatar|100.00|100.00|0.08|57.96|0.08|18.94| |Subsidiaries (held indirectly)| | | | | | | | |Foreign| | | | | | | | |CMC eBiz Inc.|USA|100.00|100.00|-|0.17|-|0.11| |TCS e-Serve America, Inc.|USA|100.00|100.00|0.02|15.26|(0.05)|(12.00)| |Diligenta 2 Limited|UK|100.00|100.00|0.11|74.62|-|0.04| |MS CJV Investments Corporation|USA|100.00|100.00|0.01|9.30|-|-| |Tata Consultancy Services (China) Co., Ltd.|China|90.00|90.00|0.22|154.59|0.09|22.44| |Tata Consultancy Services Japan, Ltd.|Japan|51.00|51.00|1.11|791.80|0.40|90.31| |Tata Consultancy Services Malaysia Sdn Bhd|Malaysia|100.00|100.00|0.13|89.69|0.14|36.27| |PT Tata Consultancy Services Indonesia|Indonesia|100.00|100.00|0.04|27.90|0.05|11.87| |Tata Consultancy Services (Philippines) Inc.|Philippines|100.00|100.00|0.22|156.10|0.10|25.85| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 28) (a) STATEMENT OF NET ASSETS AND PROFIT OR LOSS ATTRIBUTABLE TO OWNERS AND MINORITY INTEREST (contd.) |Name of the entity|Country of incorporation|% of voting power as at March 31, 2016|% of voting power as at March 31, 2015|Net Assets, i.e. total assets minus total liabilities As % of consolidated net assets|Amount (` crores)|As % of consolidated profit or loss|Amount (` crores)| |---|---|---|---|---|---|---|---| |Tata Consultancy Services (Thailand) Limited|Thailand|100.00|100.00|0.01|10.24|-|0.46| |TCS Italia SRL|Italy|100.00|100.00|-|0.53|(0.03)|(8.54)| |Tata Consultancy Services Luxembourg S.A.|Capellen (G.D. de Luxembourg)|100.00|100.00|0.04|29.56|0.06|13.99| |Tata Consultancy Services Switzerland Ltd.|Switzerland|100.00|100.00|0.25|173.67|0.33|82.64| |Tata Consultancy Services France S.A.S|France|100.00|100.00|(0.08)|(54.87)|(0.06)|(15.35)| |Tata Consultancy Services Osterreich GmbH|Austria|100.00|100.00|-|3.02|-|0.07| |Tata Consultancy Services Danmark ApS|Denmark|100.00|100.00|0.06|42.24|-|0.27| |Tata Consultancy Services De Espana S.A.|Spain|100.00|100.00|-|1.29|(0.03)|(7.14)| |Tata Consultancy Services Portugal Unipessoal Limitada|Portugal|100.00|100.00|(0.02)|(12.60)|(0.02)|(4.07)| |Alti S.A.|France|100.00|100.00|(0.26)|(181.42)|(0.69)|(174.23)| |Alti HR S.A.S.|France|100.00|100.00|0.02|12.19|-|(0.29)| |Tescom (France) Software Systems Testing S.A.R.L.|France|100.00|100.00|(0.01)|(5.70)|-|0.49| |Alti Switzerland S.A.|Switzerland|100.00|100.00|0.02|11.11|0.01|1.49| |Alti Infrastructures Systemes & Reseaux S.A.S.|France|100.00|100.00|-|1.79|-|0.45| |Alti NV|Belgium|100.00|100.00|0.02|12.46|(0.04)|(8.83)| |Teamlink|Belgium|100.00|100.00|-|(0.13)|-|(0.02)| |Planaxis Technologies Inc.|Canada|100.00|100.00|0.07|46.80|(0.03)|(6.85)| |Tata Consultancy Services Saudi Arabia|Saudi Arabia|76.00|-|0.01|6.15|-|(0.48)| |Tata Consultancy Services (South Africa) (PTY) Ltd.|South Africa|75.00|75.00|0.10|69.71|0.08|19.84| |TCS Financial Solutions Beijing Co., Ltd.|China|100.00|100.00|(0.01)|(5.27)|0.05|12.75| |TCS Financial Solutions Australia Holdings Pty Limited|Australia|100.00|100.00|0.07|50.27|-|-| |TCS Financial Solutions Australia Pty Limited|Australia|100.00|100.00|0.14|95.35|0.24|59.86| |PT Financial Network Services|Indonesia|100.00|100.00|-|(1.09)|-|-| |TCS Solution Center S.A.|Uruguay|100.00|100.00|0.07|47.22|(0.07)|(17.73)| |TCS Uruguay S.A.|Uruguay|100.00|100.00|0.10|73.10|0.24|60.96| |Tata Consultancy Services Argentina S.A.|Argentina|99.99|99.99|(0.03)|(23.70)|(0.25)|(61.74)| |Tata Consultancy Services Do Brasil Ltda|Brazil|100.00|100.00|0.03|23.84|(0.07)|(17.50)| |Tata Consultancy Services De Mexico S.A., De C.V.|Mexico|100.00|100.00|0.54|376.29|0.25|64.08| |MGDC S.C.|Mexico|100.00|100.00|0.13|89.56|0.10|26.15| |TCS Inversiones Chile Limitada|Chile|99.99|99.99|0.45|313.73|-|1.20| # Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 28) (a) STATEMENT OF NET ASSETS AND PROFIT OR LOSS ATTRIBUTABLE TO OWNERS AND MINORITY INTEREST (contd.) |Name of the entity|Country of incorporation|% of voting power as at March 31, 2016|% of voting power as at March 31, 2015|Net Assets, i.e. |
total assets minus total liabilities As % of consolidated net assets (` crores)|Amount|As % of consolidated profit or loss|Amount| |---|---|---|---|---|---|---|---| |Tata Consultancy Services Chile S.A.|Chile|100.00|100.00|0.86|604.31|0.39|99.10| |Technology Outsourcing S.A.C|Peru|100.00|-|0.01|9.56|(0.01)|(1.51)| |TATASOLUTION CENTER S.A.|Ecuador|100.00|100.00|0.25|172.33|0.40|100.09| |TOTAL|TOTAL|TOTAL|TOTAL|100.00|70304.07|100.00|25142.77| a) Adjustments arising out of consolidation (4441.28) (767.83) b) Minority Interest # Indian Subsidiaries |APTOnline Limited (formerly APOnline Limited)|(7.35)|(3.44)| |---|---|---| |MP Online Limited|(6.44)|(1.61)| |C-Edge Technologies Limited|(55.50)|(17.24)| |MahaOnline Limited|(10.74)|(2.60)| # Foreign Subsidiaries |Tata Consultancy Services Saudi Arabia|(1.36)|0.23| |---|---|---| |Tata Consultancy Services (China) Co., Ltd.|(15.46)|(2.25)| |Tata Consultancy Services Japan, Ltd.|(387.98)|(51.25)| |Tata Consultancy Services (South Africa) (PTY) Ltd.|(17.40)|(4.96)| |TOTAL|(502.23)|(83.12)| Consolidated Net Assets / Profit after tax 65360.56 24291.82 # (b) The contribution of the subsidiaries acquired and incorporated during the year is as under: |Name of Subsidiary|Revenue (` crores)|Net loss (` crores)|Net Assets (` crores)| |---|---|---|---| |Technology Outsourcing S.A.C.|29.26|1.22|9.56| |Tata Consultancy Services Saudi Arabia|-|0.47|6.15| # 29) ACQUISITIONS / DIVESTMENTS a) CMC Limited, a subsidiary, amalgamated with the Company, with effect from April 1, 2015 ("the appointed date") in accordance with the terms of the Scheme of amalgamation sanctioned by the High Court of judicature at Bombay vide its order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015. The Company issued 1,16,99,962 equity shares to the shareholders of CMC Limited pursuant to the Scheme. As a result of the amalgamation, adjustments to goodwill on consolidation and minority interest have been recorded in general reserve. b) On July 2, 2015, the Company through its wholly owned subsidiary, Tata Consultancy Services Netherlands BV subscribed to 76 percent share capital of Tata Consultancy Services Saudi Arabia. c) On October 30, 2015, the Company through its wholly owned subsidiaries TCS Inversiones Chile Limitada and Tata Consultancy Services Chile S.A. subscribed to 100 percent share capital of Technology Outsourcing S.A.C., an information technology services provider in Peru. # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 30) The Company has given letter of comfort to various banks for credit and/or foreign exchange hedging facilities availed by its subsidiaries (a) Tata America International Corporation, (b) Tata Consultancy Services Switzerland Ltd., (c) Tata Consultancy Services Sverige AB, (d) Tata Consultancy Services Belgium S.A., (e) Tata Consultancy Services Deutschland GmbH, (f) Tata Consultancy Services Netherlands BV (g) Tata Consultancy Services Asia Pacific Pte Ltd., (h) TCS Italia SRL, (i) Tata Consultancy Services France S.A.S., (j) Tata Consultancy Services Malaysia Sdn Bhd, and (k) Tata Consultancy Services Luxembourg S.A. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiaries and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiaries. # 31) EMPLOYEE RETIREMENT BENEFITS # a) Defined contribution plans The Company and its subsidiaries make Provident fund, Superannuation fund and foreign defined contribution fund contributions to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company and its subsidiaries are required to contribute a specified percentage of the payroll costs to fund the benefits. In case of Provident Fund, the contributions as specified under the law are paid to the Provident Fund where set up as a trust and to the respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme in other cases in India and to the administrator of funds in case of foreign contribution plans. In respect of Provident fund contributions to trusts set up for this purpose, the Company and its subsidiaries are generally liable for annual contribution and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the Central Government under the Employees' Provident Fund Scheme, 1952. In addition to such contributions the Company also recognises potential deficiency in interest, if any, computed as per actuarial valuation of interest as an expense in the year it is determined. As of March 31, 2016, the fair value of the assets of the fund and the accumulated members' corpus is ` 9743.90 crores and ` 9126.96 crores respectively, in respect of provident fund managed by trusts. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.80%. The actuarial assumptions include discount rate of 7.75% and an average expected future period of 8 years. |
The Group recognised ` 679.83 crores (March 31, 2015: ` 606.47 crores) for provident fund and pension fund contributions and ` 248.91 crores (March 31, 2015: ` 222.44 crores) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Group are at rates specified in the rules of the schemes. The Group has contributed ` 816.51 crores (March 31, 2015: ` 715.25 crores) towards other foreign defined contribution plans. # b) Defined benefit plans The Company and its subsidiaries in India provide to the eligible employees defined benefit plans such as gratuity, post retirement medical benefit, post retirement vacation and pension plan. The Gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. Certain overseas subsidiaries of the Company also provide for retirement benefit plans in accordance with the local laws. The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. |
# Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements The following table set out the funded and unfunded status of the retirement benefit plans and the amounts recognised in the financial statements: | |Indian| |Foreign| |Consolidated| | |---|---|---|---|---|---|---| | |Funded|Unfunded|Funded|Unfunded|Funded|Unfunded| | |As at March 31, 2016|As at March 31, 2016|As at March 31, 2016|As at March 31, 2016|As at March 31, 2016|As at March 31, 2016| |i) Change in benefit obligations:|Projected benefit obligation, beginning of the year|1295.20|1.71|686.20|53.05|2036.16| | |1017.55|1.24|429.19|33.85|1481.83| | | |Service cost|201.61|0.46|23.76|12.21|238.04| | |165.85|0.33|17.15|12.88|196.21| | | |Interest cost|104.69|0.14|14.15|1.81|120.79| | |98.57|0.11|16.33|1.87|116.88| | | |Acquisitions|-|-|-|-|-| | |-|-|178.86|-|178.86| | | |Actuarial loss / (gain)|149.19|0.55|(16.07)|(0.44)|133.23| | |131.09|0.11|111.74|11.29|254.23| | | |Plan participants' contributions|-|-|6.33|-|6.33| | |-|-|6.67|-|6.67| | | |Exchange loss / (gain) / adjustments|-|-|52.78|3.85|56.63| | |-|-|(62.84)|(4.45)|(67.29)| | | |Past service cost / (credit)|13.38|-|-|(2.18)|11.20| | |0.20|-|-|(1.36)|(1.16)| | | |Benefits paid|(131.25)|(0.06)|(22.63)|(1.25)|(155.19)| | |(118.06)|(0.08)|(10.90)|(1.03)|(130.07)| | | |Projected benefit obligation, end of the year|1632.82|2.80|744.52|67.05|2447.19| | |1295.20|1.71|686.20|53.05|2036.16| | |ii) Change in plan assets:|Fair value of plan assets, beginning of the year|1453.14|-|669.23|-|2122.37| | |860.22|-|388.87|-|1249.09| | | |Expected return on plan assets|116.25|-|16.73|-|132.98| | |84.70|-|16.92|-|101.62| | | |Plan participants' contributions|-|-|6.33|-|6.33| | |-|-|6.67|-|6.67| | | |Acquisition|-|-|-|-|-| | |-|-|241.77|-|241.77| | | |Employers' contributions|281.82|-|28.20|-|310.02| | |620.34|-|25.00|-|645.34| | | |Exchange (loss) / gain|-|-|52.89|-|52.89| | |-|-|(63.52)|-|(63.52)| | | |Benefits paid|(131.25)|-|(22.63)|-|(153.88)| | |(118.06)|-|(10.90)|-|(128.96)| | | |Actuarial gain / (loss)|26.77|-|(19.47)|-|7.30| | |5.94|-|64.42|-|70.36| | | |Fair value of plan assets, end of the year|1746.73|-|731.28|-|2478.01| | |1453.14|-|669.23|-|2122.37| | | |Excess / (Deficit) of plan assets over obligation (net)|113.91|(2.80)|(13.24)|(67.05)|30.82| | |157.94|(1.71)|(16.97)|(53.05)|86.21| | |Unrecognised asset due to assets ceiling|-|-|(65.81)|-|(65.81)| | | |-|-|(69.95)|-|(69.95)| | |iii) Excess / (Deficit) of plan assets over obligation (net)|113.91|(2.80)|(79.05)|(67.05)|(34.99)| | | |157.94|(1.71)|(86.92)|(53.05)|16.26| | Consolidated Financial Statements 175 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements | | | | | |(` crores)| | |---|---|---|---|---|---|---| | |Indian| |Foreign| |Consolidated| | | |Funded|Unfunded|Funded|Unfunded| | | | |2016|2016|2016|2016|2016| | |iv) Net gratuity and other retirement benefit cost:|201.61|0.46|23.76|12.21|238.04| | | |165.85|0.33|17.15|12.88|196.21| | |Interest on defined benefit obligation|104.69|0.14|14.15|1.81|120.79| | | |98.57|0.11|16.33|1.87|116.88| | |Expected return on plan assets|(116.25)|-|(16.73)|-|(132.98)| | | |(84.70)|-|(16.92)|-|(101.62)| | |Past service cost / (credit)|13.38|-|-|(2.18)|11.20| | | |0.20|-|-|(1.36)|(1.16)| | |Net actuarial loss / (gain) recognised during the year|122.42|0.55|(9.21)|(0.44)|113.32| | | |125.15|0.11|62.92|11.29|199.47| | |Net gratuity and other retirement benefit cost|325.85|1.15|11.97|11.40|350.37| | | |305.07|0.55|79.48|24.68|409.78| | |Actual return on plan assets|143.02|-|(2.74)|-|140.28| | | |90.64|-|81.34|-|171.98| | | |(` crores)|(` crores)|(` crores)|(` crores)| | | | | |---|---|---|---|---|---| | |Indian|Foreign|Consolidated| | | | |As at|As at|As at| | | | | |March 31, 2016|March 31, 2016|March 31, 2016| | |v) Category of assets:|Corporate bonds|311.69|99.02|410.71| | | | |174.55|121.19|295.74| | | |Equity shares|42.67|51.21|93.88| | | | |-|134.08|134.08| | | |Index linked bonds|-|113.01|113.01| | | | |-|107.52|107.52| | | |Insurer managed funds|736.68|197.52|934.20| | | | |748.90|172.27|921.17| | | |Bank balances|97.62|270.52|368.14| | | | |217.33|5.89|223.22| | | |Government Securities|499.93|-|499.93| | | | |265.55|99.42|364.97| | | |Others|58.14|-|58.14| | | | |46.81|28.86|75.67| | | |Total|1746.73|731.28|2478.01| | | | |1453.14|669.23|2122.37| | | |Assumptions used in accounting for defined benefit plan| | | | |---|---|---|---|---| | |Indian| |Foreign| | | | |As at|As at| | | | |March 31, 2016|March 31, 2016| | |Discount rate| | |7.50%-7.75%|0.40%-7.13%| | | | |8.00%|0.87%-6.75%| |Salary escalation rate| | |6.00%-10.00%|1.25%-4.64%| | | | |6.00%-7.00%|1.00%-4.64%| |Expected rate of return on plan assets| | |7.50%-7.75%|0.40%-7.13%| | | | |8.00%|0.87%-3.30%| # Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements The estimate of future salary increases considered in actuarial valuation takes account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company and its subsidiaries policy for plan asset management. # (` crores) Indian |Particulars|2016|2015|2014|2013|2012| |---|---|---|---|---|---| |Experience adjustment On plan liability loss/(gain)|76.23|31.50|55.10|(17.78)|44.05| |On plan asset gain|26.77|5.94|22.22|4.06|6.61| |Present value of benefit obligation|1635.62|1,296.91|1018.79|882.75|724.70| |Fair value of plan assets|1746.73|1,453.14|860.22|623.58|569.23| |Excess/(Deficit) of plan assets over obligation (net)|111.11|156.23|(158.57)|(259.17)|(155.47)| # (` crores) Foreign |Particulars|2016|2015|2014|2013|2012| |---|---|---|---|---|---| |Experience adjustment On plan liability (gain)/loss|(3.76)|5.05|(3.06)|(2.11)|(0.38)| |On plan asset (loss)/gain|(19.47)|64.42|(8.90)|13.74|4.16| |Present value of benefit obligation|811.57|739.25|463.04|354.97|273.68| |Fair value of plan assets|731.28|669.23|388.87|312.58|269.29| |Unrecognised asset due to assets ceiling|(65.81)|(69.95)| | | | |Excess of obligation over plan assets (net)|(146.10)|(139.97)|(74.17)|(42.39)|(4.39)| The expected contributions are based on the same assumptions used to measure Group's defined benefit obligations as at March 31, 2016. |
The Group is expected to contribute ` 114.23 crores to defined benefit plans for the year ended March 31, 2017, comprising domestic component of ` 102.86 crores and foreign component of ` 11.37 crores. Previous years' figures are in italics. # 32) SEGMENT REPORTING The Group has identified business segments (industry practice) as its primary segment and geographic segments as its secondary segment. Business segments comprise banking, finance and insurance services, manufacturing, retail and consumer packaged goods, telecom, media and entertainment and others such as energy, resources and utilities, Hi-Tech, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc. Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to a specific segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments. Geographical revenue is allocated based on the location of the customer. Geographic segments of the Group are Americas (including Canada and South American countries), Europe, India and Others. # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # Year ended March 31, 2016 |Particulars|Business Segments|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Packaged Goods|Telecom, Media and Entertainment|Others|Total| |---|---|---|---|---|---|---|---| |Revenue| |44162.64|10908.81|15274.01|11854.32|26446.43|108646.21| | | |38565.66|9242.45|12829.01|10933.55|23077.74|94648.41| |Segment result| |12809.20|2914.59|4111.78|3403.98|7231.17|30470.72| | | |10594.47|2223.00|3254.49|2770.78|5480.11|24322.85| |Unallocable expenses (net)| |1848.72|1848.72|1848.72|1848.72|1848.72|1848.72| | | |1744.02|1744.02|1744.02|1744.02|1744.02|1744.02| |Operating income| |28622.00|28622.00|28622.00|28622.00|28622.00|28622.00| | | |22578.83|22578.83|22578.83|22578.83|22578.83|22578.83| |Other income (net)| |3053.87|3053.87|3053.87|3053.87|3053.87|3053.87| | | |3229.91|3229.91|3229.91|3229.91|3229.91|3229.91| |Profit before Exceptional item and tax| |31675.87|31675.87|31675.87|31675.87|31675.87|31675.87| | | |25808.74|25808.74|25808.74|25808.74|25808.74|25808.74| |Exceptional item| |-|-|-|-|-|-| | | |489.75|489.75|489.75|489.75|489.75|489.75| |Profit before tax| |31675.87|31675.87|31675.87|31675.87|31675.87|31675.87| | | |26298.49|26298.49|26298.49|26298.49|26298.49|26298.49| |Tax expense| |7300.93|7300.93|7300.93|7300.93|7300.93|7300.93| | | |6238.79|6238.79|6238.79|6238.79|6238.79|6238.79| |Profit before minority interest| |24374.94|24374.94|24374.94|24374.94|24374.94|24374.94| | | |20059.70|20059.70|20059.70|20059.70|20059.70|20059.70| |Minority interest| |83.12|83.12|83.12|83.12|83.12|83.12| | | |207.52|207.52|207.52|207.52|207.52|207.52| |Profit for the year| |24291.82|24291.82|24291.82|24291.82|24291.82|24291.82| | | |19852.18|19852.18|19852.18|19852.18|19852.18|19852.18| # As at March 31, 2016 |Particulars|Business Segments|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Packaged Goods|Telecom, Media and Entertainment|Others|Total| |---|---|---|---|---|---|---|---| |Segment assets| |11544.04|2872.99|3659.50|3702.61|8919.97|30699.11| | | |9649.76|2489.20|3298.98|3248.77|8949.38|27636.09| |Unallocable assets| |58685.27|58685.27|58685.27|58685.27|58685.27|58685.27| | | |46024.79|46024.79|46024.79|46024.79|46024.79|46024.79| |Total assets| |89384.38|89384.38|89384.38|89384.38|89384.38|89384.38| | | |73660.88|73660.88|73660.88|73660.88|73660.88|73660.88| |Segment liabilities| |1843.37|149.44|193.29|295.59|925.49|3407.18| | | |2592.41|340.86|531.48|551.56|1827.96|5844.27| |Unallocable liabilities| |20114.41|20114.41|20114.41|20114.41|20114.41|20114.41| | | |16054.09|16054.09|16054.09|16054.09|16054.09|16054.09| |Total liabilities| |23521.59|23521.59|23521.59|23521.59|23521.59|23521.59| | | |21898.36|21898.36|21898.36|21898.36|21898.36|21898.36| # Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Year ended March 31, 2016 |Particulars|Business Segments|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Packaged Goods|Telecom, Media and Entertainment|Others|Total| |---|---|---|---|---|---|---|---| |Other information :|Capital expenditure (allocable)|15.45|-|-|-|3.28|18.73| | | |73.56|-|-|-|63.00|136.56| | |Capital expenditure (unallocable)| | | | |1989.99| | | | | | | | |3124.24| | | |Depreciation (allocable)|116.78|-|-|-|2.29|119.07| | | |113.43|-|-|-|66.43|179.86| | |Depreciation (unallocable)| | | | |1828.89| | | | | | | | |1129.08| | | |Other significant non cash expenses (allocable)|30.39|9.10|9.75|9.13|76.30|134.67| | | |28.47|7.78|54.85|7.18|79.45|177.73| | |Other significant non cash expenses (net) (unallocable)| |-| | | | | | | | | | | |1.40| | # The following geographic segments individually contribute 10 percent or more of the Group's revenue or segment assets: |Geographic segments|Revenue for the year ended March 31, 2016|Segment assets as at March 31, 2016| |---|---|---| |Americas|60010.88|14254.13| | |51053.46|12639.38| |Europe|29092.07|10273.30| | |26729.63|9022.42| |India|6728.81|5960.98| | |6107.55|5292.85| Previous years' figures are in italics. |
# RELATED PARTY DISCLOSURES # A) Related parties and their relationship # I) Holding Company Tata Sons Limited # II) Fellow subsidiaries with whom the Group has transactions * * * ** n n t *Ret* * te * * * * ** o*t** * ene * * n u *n e*Uo *n * te * * * ** o*t** * e* n u *n e*Uo *n * te * * * ** o*t** n e t ent*Uo o *t on* te * * * ** o*t** te * * * ** o*t** *n e *n te * te * * * ** o*t** et*h*n* e ent* te * * * ** o*t**Tu ne *nu o t*ne e * te * * * * ** o*t**U* t* * te * * * * ** o*t** ou n * e e o ent*Uo *n * te * Consolidated Financial Statements 179 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 33) RELATED PARTY DISCLOSURES (contd.) # A) Related parties and their relationship (contd.) * * * ** o*t**Uon u t n * n nee * te * * * * ** o*t**n * te * * * ** o*t**Re* t **n * n * t u tu e* te * * * * ** e t n*n * * te *0 e e * t *o*t**Tu ne *nu o t*ne e * te * 7e7 7* 7 7 * * * ** o*t** n u t e * te * * * ** o*t** nte n*t on* * te * * * ** e* n ** nte e*no ut on * te *0 e* e * 7e7 7* 7 7 * * * ** o ** nte *te *n te * te * * * ** o*t**n o * e o * e* te *0 o e *o* ** e o * e*n te * te * * * ** oTnn* e* t * e*o *ne e * te * * * ** o*t**U* t* * ou n * n*n e* te * * * ** oU*o * e * n *ne e * te * * * ** o*t**ne u t e * te * * * ** o*t**U* t* * o e * te * * * ** o*t**U* t* * n*n * *ne e * te * * * ** o*t**U e*nte *U* t* * te * * * ** o*t** * ue* o e * te *0 o e *n * t* * ue* o e * te * * * ** o*t** nte * t e*n te * * * * * ** o*t** nte * t e*n te * * * * ** o*t**pn to e* te *0n* e* *n e * 7e7 7* 7 7 *0 o e *o*t** n u t * *ne e * te * * * ** o*t** ** o n *0n *0 o et* * te * * * ** o o * ** o n *0fen * * te * * * ** o*t** ** o n *0o*n *n * * te * * * ** o*t** **ne e *0 e * * te * * * ** o*t**p *n ** te * * * ** o*t**u* * ** te * * * ** U* e** oot e* * *te* te * * * ** o*t**n * ne * te * * * * ** o* * * te File: AR_TCS_2015_2016.md * * * ** oR * n o * * te * * * ** o*t** uto o *n te * te * * * ** o*t** o ee *h* t n* e o t u tu e * te *0 o e *o*t** e o t u tu e * te * * * ** *n*tone* n e t* te # III) Key Management Personnel * * * ** h 7* 7*U *n * e * *n5*U e * e ut e* e **n *h*n* n * e to * * * ** h 7*R* e * o n*t *n5*U e * n*n * * e * * * * ** h 7* * t *nu* * *n *n5* e ut e* e to *0 7e7 7* 7 7 180 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 33) RELATED PARTY DISCLOSURES (contd.) # B) Transactions with related parties for the year ended March 31, 2016 | |Holding Company|Fellow Subsidiaries|Key Management Personnel and their relatives|Total| |---|---|---|---|---| |Brand |
equity contribution|128.36|-|-|128.36| | |122.93|-|-|122.93| |Purchase of fixed assets|-|29.93|-|29.93| | |-|66.73|-|66.73| |Loans and advances given|-|0.94|-|0.94| | |-|-|-|-| |Loans and advances repaid|-|-|-|-| | |-|0.05|-|0.05| |Inter-corporate deposits matured|-|-|-|-| | |-|385.00|-|385.00| |Purchase of investments|-|8843.50|-|8843.50| | |-|7441.46|-|7441.46| |Redemption / sale of investments|-|8928.54|-|8928.54| | |29.43|6736.55|-|6765.98| |Revenue (including reimbursements)|4.27|222.56|-|226.83| | |2.99|242.09|-|245.08| |Interest income|-|-|-|-| | |49.61|30.04|-|79.65| |Purchase of goods, services and facilities (including reimbursements)|3.35|632.79|-|636.14| | |0.81|268.21|-|269.02| |Rent expense|0.98|27.90|-|28.88| | |0.98|28.55|-|29.53| |Provision / (Write back of provision) for doubtful receivables, advances (net)|-|(0.07)|-|(0.07)| | |-|0.40|-|0.40| |Bad debts written-off|-|0.04|-|0.04| | |-|-|-|-| |Dividend paid on equity shares|5845.98|4.20|0.37|5850.55| | |10825.89|12.78|0.66|10839.33| |Dividend paid on redeemable preference shares|-|-|-|-| | |28.68|-|-|28.68| |Remuneration|-|-|43.26*|43.26| | |-|-|23.50|23.50| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 33) RELATED PARTY DISCLOSURES (contd.) # C) Balances with related parties as at March 31, 2016 | |Holding Company|Fellow Subsidiaries|Key Management Personnel and their relatives|Total| |---|---|---|---|---| |Trade receivables, Unbilled revenue, Loans and advances, Other assets (net)|4.40|112.74|-|117.14| |Other assets (net)|4.00|117.46|-|121.46| |Trade payables, Income received in advance, Advances from customers, Other liabilities|117.18|20.13|-|137.31| | |113.70|35.87|-|149.57| |Investment in debentures / mutual funds / bonds|-|642.90|-|642.90| | |-|676.70|-|676.70| Previous years' figures are in italics. # D) Disclosure of material transactions with related parties | |2016|2015| |---|---|---| |Purchase of fixed assets| | | |TRIL Infopark Limited|5.90|0.54| |Tata Consulting Engineers Limited|17.03|18.66| |Tata Realty and Infrastructure Limited|1.79|46.68| |Tata Interactive Systems GmbH|5.17|0.73| |Loans and advances given| | | |Tata AIG General Insurance Company Limited|0.10|-| |Taj Air Limited|0.84|-| |Loans and advances repaid| | | |Infiniti Retail Limited|-|0.04| |Tata AIG General Insurance Company Limited|-|0.01| |Inter-corporate deposits matured| | | |Tata Realty and Infrastructure Limited|-|50.00| |Tata Housing Development Company Limited|-|55.00| |Tata Capital Financial Services Limited|-|280.00| |Purchase of investments| | | |Tata Asset Management Limited|8843.50|7370.64| |Redemption / sale of investments| | | |Tata Asset Management Limited|8928.54|6726.41| |Revenue (including reimbursements)| | | |Tata Sky Limited|59.33|73.36| |Infiniti Retail Limited|16.34|30.33| |Tata Capital Financial Services Limited|41.95|42.89| |Tata Unistore Limited (name changed w.e.f. 13.05.2015) (formerly Tata Industrial Services Limited)|36.48|25.34| 182 Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 33) RELATED PARTY DISCLOSURES (contd.) # D) Disclosure of material transactions with related parties (contd.) | |2016|2015| | |---|---|---|---| |Interest income|Tata Sons Limited|-|49.61| | |Panatone Finvest Limited|-|8.85| | |Tata Capital Financial Services Limited|-|13.75| |Purchase of goods, services and facilities (including reimbursements)|Tata Capital Forex Limited|489.57|218.30| |Rent expense|Tata Sons Limited|0.98|0.98| | |Tata Limited|-|1.61| | |Tata Africa Holdings (SA) (Proprietary) Limited|1.83|1.97| | |TRIL Infopark Limited|24.35|24.90| |Provision / (Write back of provision) for doubtful receivables, advances (net)|Tata Sky Limited|0.21|0.32| | |Drive India Enterprise Solutions Limited|0.05|(0.28)| | |Infiniti Retail Limited|(0.33)|0.35| | |Tata Capital Limited|(0.18)|-| | |TATA Africa Holdings (Kenya) Limited|0.18|(0.04)| |Bad debts written-off|Tata AIG General Insurance Company Limited|0.04|-| |Remuneration to Key Management Personnel|Mr. N. Chandrasekaran|36.66*|21.28| # E) Disclosure of material balances with related parties | |As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |Trade receivables, Unbilled revenue, Loans and advances, Other assets (net)|Tata Capital Financial Services Limited|12.09|19.56| | |Infiniti Retail Limited|1.74|16.46| | |Tata Unistore Limited (name changed w.e.f. 13.05.2015) (formerly Tata Industrial Services Limited)|20.90|30.09| | |Tata Sky Limited|25.66|9.40| | |TATA Africa Holdings (Kenya) Limited|14.77|7.61| |Trade payables, Income received in advance, Advances from customers, Other liabilities|Tata Sons Limited|117.18|113.70| |Investment In debentures / mutual funds / bonds|Tata Asset Management Limited|642.90|676.70| * Includes the one time bonus paid to eligible employees. Consolidated Financial Statements 183 # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements # 34) OBLIGATION TOWARDS OPERATING LEASES |Particulars|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Non cancellable operating lease obligation| | | |Not later than one year|732.65|763.21| |Later than one year but not later than five years|2169.16|2243.34| |Later than five years|1233.01|1403.30| |Total|4134.82|4409.85| Rental expenses of ` 922.42 crores (March 31, 2015: ` 825.21 crores) in respect of obligation under non-cancellable operating leases and ` 771.43 crores (March 31, 2015: ` 744.25 crores) in respect of cancellable operating leases have been charged to the statement of profit and loss. |
# 35) OBLIGATIONS TOWARDS FINANCE LEASES |Particulars|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Assets acquired under finance lease| | | |i) Minimum lease payments:| | | |Not later than one year|58.73|70.03| |Later than one year but not later than five years|80.18|109.59| |Later than five years|32.92|44.35| |Total|171.83|223.97| |ii) Present value of minimum lease payments:| | | |Not later than one year|49.05|57.40| |Later than one year but not later than five years|55.75|80.48| |Later than five years|26.49|33.21| |Total|131.29|171.09| |Add: Future finance charges|40.54|52.88| |Total|171.83|223.97| # 36) RECEIVABLES UNDER SUB LEASES |Particulars|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Not later than one year|19.00|17.81| |Later than one year but not later than five years|15.58|36.44| |Later than five years|-|-| |Total|34.58|54.25| The total amount recognised in the statement of profit and loss for the year ended March 31, 2016 is ` 24.51 crores (March 31, 2015: ` 18.45 crores). # Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 37) EARNINGS PER EQUITY SHARE |Particulars|2016|2015| |---|---|---| |Profit for the year (` crores)|24291.82|19852.18| |Amount available for equity shareholders (` crores)|24291.82|19852.18| |Weighted average number of equity shares|197,04,27,941|195,87,27,979| |Earning per share - Basic and diluted (`)|123.28|101.35| |Face value per equity share (`)|1.00|1.00| # 38) CONTINGENT LIABILITIES |Particulars|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Claims against the Group not acknowledged as debt (See (a) below)|7017.37|191.75| |Income tax demands (See (b) below)|7957.36|3904.63| |Indirect tax demands (See (c) below)|193.19|170.31| |Other contingencies|-|0.34| a) In October 2014, Epic Systems Corporation ('Epic') filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged unauthorised download and misuse of Epic's confidential information and trade secrets. In April 2016, the Company received an unfavorable jury verdict awarding damages totalling ` 6227.03 crores (US$940 million) to Epic which the trial judge has indicated his intent to reduce. On the basis of legal opinion and legal precedence, the Company expects to defend itself against the claim and believes that the claim will not sustain. b) In respect of income tax demands of ` 318.20 crores (March 31, 2015: ` 318.20 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. c) In respect of indirect tax demands of ` 8.53 crores (March 31, 2015: ` 8.53 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. d) The Group has examined the social security and tax aspects of contracts with legal entities which provide services to overseas subsidiaries and, based on legal opinion, concludes that the subsidiaries are in compliance with the related statutory requirements. # 39) CAPITAL AND OTHER COMMITMENTS a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) ` 1456.70 crores (March 31, 2015: ` 1878.48 crores). b) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of balance ` 24486.94 per unit for 1000 units aggregating ` 2.45 crores (March 31, 2015: ` 2.96 crores). # 40) DERIVATIVE FINANCIAL INSTRUMENTS The Company and its subsidiaries, in accordance with its risk management policies and procedures, enter into foreign exchange forwards, option and futures contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one day and eight years. The Group has following outstanding foreign exchange option contracts, which have been designated as Cash Flow Hedges, as at: |Foreign Currency|No. of Contracts|Notional amount (million)|Fair Value of (` crores)|No. of Contracts|Notional amount (million)|Fair Value of (` crores)| |---|---|---|---|---|---|---| |U.S. Dollar|9|225.00|41.44|-|-|-| |Sterling Pound|8|160.00|51.85|18|297.00|67.05| |Euro|24|285.00|19.51|9|171.00|87.78| |Australian Dollar|21|228.00|(12.47)|6|97.00|31.15| # Annual Report 2015-16 # Notes forming part of the Consolidated Financial Statements The movement in Hedging Reserve for derivatives designated as Cash Flow Hedges is as follows: |Particulars|Year ended March 31, 2016| |Year ended March 31, 2015| | |---|---|---|---|---| | |Intrinsic value|Time value|Intrinsic Value|Time Value| |Balance at the beginning of the year|151.42|(0.67)|24.88|4.76| |Changes in the fair value of effective portion of Cash Flow Hedges|249.82|(338.69)|905.89|(440.18)| |(Gains)/losses transferred to statement of profit and loss on occurrence of forecasted hedge transactions|(323.09)|317.98|(779.35)|434.75| |Balance at the end of the year|78.15|(21.38)|151.42|(0.67)| Net gain on derivative instruments of ` 56.77 crores recognised in Hedging Reserve as at March 31, 2016, is expected to be transferred to the statement of profit and loss by March 31, 2017. |
In addition to the above Cash Flow Hedges, the Group has outstanding foreign exchange forwards, option and futures contracts with notional amount aggregating ` 22143.66 crores (March 31, 2015: ` 19949.03 crores) whose fair value showed a gain of ` 284.48 crores as at March 31, 2016 (March 31, 2015 : gain of ` 159.65 crores). Exchange gain of ` 180.55 crores (March 31, 2015 : exchange gain of ` 1360.57 crores) on foreign exchange forwards, option and futures contracts for the year ended March 31, 2016, have been recognised in the statement of profit and loss. 41) Research and development expenditure aggregating ` 236.94 crores (March 31, 2015: ` 225.07 crores), including capital expenditure, was incurred during the year. 42) The Group revised its policy of providing depreciation on fixed assets effective April 1, 2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis for some assets and straight line basis for others. Further the remaining useful life has also been revised wherever appropriate based on an evaluation. The carrying amount as on April 1, 2014 is depreciated over the revised remaining useful life. As a result of these changes, the depreciation charge for the year ended March 31, 2015 is higher by ` 155.70 crores and the effect relating to the period prior to April 1, 2014 is net credit of ` 489.75 crores (excluding deferred tax of ` 118.90 crores) which has been shown as an 'Exceptional Item' in the statement of profit and loss. 43) During the year ended March 31, 2015, an amount of ` 2627.91 crores has been recognized in the statement of profit or loss and accrued under Trade Payables in the balance sheet in respect of one-time bonus to eligible employees. 44) Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the Group financial statements. 45) Previous years' figures have been recast / restated. # Consolidated Financial Statements # Unconsolidated Financial Statements 187 # Annual Report 2015-16 # INDEPENDENT AUDITORS' REPORT # TO THE MEMBERS OF TATA CONSULTANCY SERVICES LIMITED # Report on the Standalone Financial Statements We have audited the accompanying standalone financial statements of Tata Consultancy Services Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. # Management's Responsibility for the Standalone Financial Statements The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ('the Act') with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, as applicable. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of these standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. # Auditors' Responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order under Section 143(11) of the Act. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. |
The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. # Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date. # Report on Other Legal and Regulatory Requirements 1. As required by Section 143(3) of the Act, we report that: 1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. 2. In our opinion, proper books of account as required by law relating to preparation of the standalone financial statements have been kept by the Company so far as it appears from our examination of those books. 3. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of these standalone financial statements. 4. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, as applicable. 5. On the basis of the written representations received from the Directors as on March 31, 2016, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2016 from being appointed as a Director in terms of Section 164 (2) of the Act. # Unconsolidated Financial Statements (f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in 'Annexure A'. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting. (g) With respect to the other matters to be included in the Independent Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: 1. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. 2. The Company has made provision in its financial statements, as required under the applicable law or accounting standards, for material foreseeable losses on long term contracts including derivative contracts; 3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company. 2. As required by the Companies (Auditor's Report) Order, 2016 ('the Order') issued by the Central Government in terms of Section 143(11) of the Act, we give in 'Annexure B' a statement on the matters specified in paragraphs 3 and 4 of the Order. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm Registration No. 117366W/W-100018) P. R. RAMESH Partner (Membership No. |
70928) Mumbai, April 18, 2016 # Unconsolidated Financial Statements 189 # Annual Report 2015-16 # ANNEXURE 'A' TO THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph 1(f) under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) # Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ('the Act') We have audited the internal financial controls over financial reporting of Tata Consultancy Services Limited ('the Company') as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended and as on that date. # Management's Responsibility for Internal Financial Controls The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the 'Guidance Note'). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act. # Auditors' Responsibility Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Standards on Auditing prescribed under Section 143(10) of the Act and the Guidance Note, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting. # Meaning of Internal Financial Controls Over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. # Inherent Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. |
190 Unconsolidated Financial Statements # Opinion In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm Registration No. 117366W/W-100018) P. R. RAMESH Partner (Membership No. 70928) Mumbai, April 18, 2016 # Unconsolidated Financial Statements 191 # Annual Report 2015-16 # ANNEXURE 'B' TO THE INDEPENDENT AUDITORS' REPORT (Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) Report on Companies (Auditor's Report) Order, 2016 ('the Order') issued by the Central Government in terms of Section 143(11) of the Companies Act, 2013 ('the Act') of Tata Consultancy Services Limited ('the Company') # 1. In respect of the Company's fixed assets: - (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. - (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. File: AR_TCS_2015_2016.md - (c) According to the information and explanations given to us and the records examined by us and based on the examination of the conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except a building with carrying value of ` 0.27 lakhs which is under dispute. In respect of immovable properties been taken on lease and disclosed as fixed asset in the standalone financial statements, the lease agreements are in the name of the Company. # 2. As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification. # 3. The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. # 4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable. # 5. The Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 31, 2016 and therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company. # 6. Reporting under clause 3(vi) of the Order is not applicable as the Company's business activities are not covered by the Companies (Cost Records and Audit) Rules, 2014. # 7. According to the information and explanations given to us, in respect of statutory dues: - (a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other material statutory dues applicable to it with the appropriate authorities. - (b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other material statutory dues in arrears as at March 31, 2016 for a period of more than six months from the date they became payable. |
- (c) Details of dues of Income Tax, Sales Tax, Service Tax and Value Added Tax which have not been deposited as at March 31, 2016 on account of dispute are given below: |Particulars|Forum where the dispute is pending|Financial Year to which the amount relates|Total (` Crores)| |---|---|---|---| |Income Tax|Commissioner of Income Tax (Appeals)|2006-07, 2007-08, 2009-10, 2011-12|2058.74| | |Income Tax Appellate Tribunal|2005-06, 2010-11|1929.93| |Sales Tax and Value Added Tax|Additional Commissioner|2007-2008|0.01| | |Assistant Commissioner|1995-1996, 1997-1998, 2001-2002, 2004-2005, 2005-2006, 2010-2011, 2011-2012, 2012-13|53.08| | |Commercial tax Officer|2005-2006|0.01| | |Commissioner|2012-13|0.03| | |Deputy Commissioner|1994-1995, 2005-2006, 2008-2009, 2010-2011, 2011-2012, 2012-2013|2.70| | |Joint commissioner|1997-1998, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014|4.84| # Unconsolidated Financial Statements |Particulars|Forum where the dispute is pending|Financial Year to which the amount relates|Total (` Crores)| |---|---|---|---| | |High Court|1994-1995, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2007-2008, 2008-2009, 2009-2010, 2011-2012, 2012-2013|32.71| | |Tribunal| |6.94| |Service Tax|Commissioner of Service Tax (Appeals)| |14.65| | |Tribunal| |70.13| There were no dues of duty of Customs, duty of Excise and Cess which have not been deposited as at March 31, 2016 on account of dispute. 1. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks. The Company does not have any loans or borrowings from financial institutions or government and has not issued any debentures. 2. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause 3 (ix) of the Order is not applicable. 3. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year except 15 cases totaling ` 4.37 lakhs in respect of claims for reimbursement of expenses. 4. In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act. 5. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable. 6. In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Act, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards. 7. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause 3(xiv) of the Order is not applicable to the Company. 8. In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its Directors and hence provisions of Section 192 of the Act are not applicable. 9. The Company is not required to be registered under Section 45-I of the Reserve Bank of India Act, 1934. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm Registration No. 117366W/W-100018) P. R. RAMESH Partner (Membership No. 70928) Mumbai, April 18, 2016 Unconsolidated Financial Statements # Annual Report 2015-16 # Balance Sheet as at March 31, 2016 |Note|As at March 31, 2016|As at March 31, 2015| |---|---|---| |I. EQUITY AND LIABILITIES|I. EQUITY AND LIABILITIES|I. EQUITY AND LIABILITIES| |Shareholders' funds|Shareholders' funds|Shareholders' funds| |(a) Share capital|197.04|195.87| |(b) Reserves and surplus|58669.82|45220.57| | |58866.86|45416.44| |Non-current liabilities|Non-current liabilities|Non-current liabilities| |(a) Long-term borrowings|50.06|64.71| |(b) Deferred tax liabilities (net)|365.52|271.46| |(c) Other long-term liabilities|591.15|722.15| |(d) Long-term provisions|88.66|126.91| | |1095.39|1185.23| |Current liabilities|Current liabilities|Current liabilities| |(a) Short-term borrowings|112.96|185.56| |(b) Trade payables (includes dues of micro and small enterprises ` 18.46 crores (March 31, 2015: ` 9.90 crores))|5369.90|6767.25| |(c) Other current liabilities|4003.84|2491.47| |(d) Short-term provisions|8219.59|7019.35| | |17706.29|16463.63| |TOTAL|77668.54|63065.30| |II. ASSETS|II. ASSETS|II. ASSETS| |Non - current assets|Non - current assets|Non - current assets| |(a) Fixed assets| | | |(i) Tangible assets|9689.22|7964.88| |(ii) Intangible assets|24.06|31.41| |(iii) Capital work-in-progress|1641.84|2706.94| | |11355.12|10703.23| |(b) Non-current investments|2228.28|2651.23| |(c) Deferred tax assets (net)|465.83|303.47| |(d) Long-term loans and advances|9750.92|8452.55| |(e) Other non-current assets|572.52|524.68| | |24372.67|22635.16| |Current assets|Current assets|Current assets| |(a) Current investments|21847.39|747.47| |(b) Inventories|8.99|12.34| |(c) Unbilled revenue|2712.18|2439.36| |(d) Trade receivables|19058.20|17036.76| |(e) Cash and bank balances|4806.37|16502.50| |(f) Short-term loans and advances|4675.78|3352.18| |(g) Other current assets|186.96|339.53| | |53295.87|40430.14| |TOTAL|77668.54|63065.30| |III. |
NOTES FORMING PART OF THE FINANCIAL STATEMENTS|III. NOTES FORMING PART OF THE FINANCIAL STATEMENTS|III. NOTES FORMING PART OF THE FINANCIAL STATEMENTS| |1-50|1-50|1-50| As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry N. Chandrasekaran Prof. Clayton M. Christensen Chartered Accountants Chairman CEO and Managing Director Director Aman Mehta Ishaat Hussain V. Thyagarajan Director Director P. R. Ramesh Dr. Ron Sommer Dr. Vijay Kelkar Phiroz Vandrevala Partner Director Director O. P. Bhatt Aarthi Subramanian Rajesh Gopinathan Director Executive Director Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 194 Unconsolidated Financial Statements # Statement of Profit and Loss for the year ended March 31, 2016 |Note|2016|2015| |---|---|---| |I. Revenue from operations|85863.85|73578.06| |(Net of excise duty of ` 0.86 crore (Previous year: ` 4.09 crores))|(Net of excise duty of ` 0.86 crore (Previous year: ` 4.09 crores))|(Net of excise duty of ` 0.86 crore (Previous year: ` 4.09 crores))| |II. Other income (net)|3740.20|4466.73| |III. TOTAL REVENUE|89604.05|78044.79| |IV. Expenses:| | | |(a) Employee benefit expense|30068.19|27368.32| |(b) Operation and other expenses|28846.45|25181.54| |(c) Finance costs|13.58|79.57| |(d) Depreciation and amortisation expense|1559.19|1393.77| |TOTAL EXPENSES|60487.41|54023.20| |V. PROFIT BEFORE EXCEPTIONAL ITEM AND TAX (III-IV)|29116.64|24021.59| |VI. Exceptional item|-|528.38| |VII. PROFIT BEFORE TAX|29116.64|24549.97| |VIII. Tax expense:| | | |(a) Current tax|6376.81|5269.48| |(b) Deferred tax|(53.63)|14.70| |(c) MAT credit entitlement|(89.24)|8.83| | |6233.94|5293.01| |IX. PROFIT FOR THE YEAR|22882.70|19256.96| |X. Earnings per equity share - Basic and diluted (`)|116.13|98.31| |Weighted average number of equity shares (face value of ` 1 each)|197,04,27,941|195,87,27,979| |XI. NOTES FORMING PART OF THE FINANCIAL STATEMENTS|1-50|1-50| As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry Chairman N. Chandrasekaran CEO and Managing Director Prof. Clayton M. Christensen Director Aman Mehta Director Ishaat Hussain Director V. Thyagarajan Director P. R. Ramesh Partner Dr. Ron Sommer Director Dr. Vijay Kelkar Director Phiroz Vandrevala Director O. P. |
Bhatt Director Aarthi Subramanian Executive Director Rajesh Gopinathan Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 Unconsolidated Financial Statements # Annual Report 2015-16 # Cash Flow Statement for the year ended March 31, 2016 | |Note|2016|2015| |---|---|---|---| |I CASH FLOWS FROM OPERATING ACTIVITIES| | | | |Profit before tax| |29116.64|24549.97| |Adjustments for:| | | | |Depreciation and amortisation expense| |1559.19|865.39| |Bad Debts written off (net)| |4.26|5.69| |Provision for doubtful receivables (net)| |106.92|124.56| |Provision for doubtful advances (net)| |5.31|(13.10)| |Advances written-off (net)| |2.58|19.50| |Provision for diminution in value of long-term investments| |-|2.50| |Interest expense| |13.58|79.57| |Profit on sale of fixed assets (net)| |(5.06)|(2.94)| |Unrealised exchange (gain) / loss| |(133.34)|91.64| |Exchange difference on translation of foreign currency cash and cash equivalents| |(40.12)|27.26| |Dividend income (including exchange gain)| |(705.08)|(1335.54)| |Interest income| |(1679.48)|(1554.93)| |Profit on redemption of mutual funds and sale of other investments (net)| |(459.25)|(225.99)| |Operating profit before working capital changes| |27786.15|22633.58| |Inventories| |6.51|(3.77)| |Unbilled revenue| |(81.45)|187.39| |Trade receivables| |(1777.53)|(2694.09)| |Loans and advances and other assets| |(566.83)|(596.97)| |Trade payables, other liabilities and provisions| |(905.85)|3114.32| |Cash generated from operations| |24461.00|22640.46| |Taxes paid| |(6464.69)|(6320.57)| |Net cash provided by operating activities| |17996.31|16319.89| |II CASH FLOWS FROM INVESTING ACTIVITIES| | | | |Purchase of fixed assets| |(1784.21)|(2568.72)| |Proceeds from sale of fixed assets| |7.06|4.23| |Purchase of trade investments| |-|(60.83)| |Purchase of mutual funds, government securities and other investments| |(113476.29)|(62938.73)| |Proceeds from sale / redemption of trade investments| |113.72|253.36| |Proceeds from redemption of mutual funds, sale of government securities and other investments| |94296.58|65389.79| |Certificate of deposit placed| |(490.26)|-| |Loans repaid by subsidiaries| |6.48|37.32| |Inter-corporate deposits placed| |(2425.00)|(1777.00)| |Inter-corporate deposits matured| |1063.00|1880.00| |Earmarked deposits with banks placed| |(400.18)|(49.00)| |Earmarked deposits with banks matured| |99.00|25.27| |Fixed deposit placed with banks having original maturity over three months| |-|(15000.75)| |Fixed deposit with banks matured having original maturity over three months| |15952.87|12126.90| |Dividend received from subsidiaries (including exchange gain)| |696.05|1354.31| |Dividend received from other investments| |9.03|0.48| |Interest received| |1782.83|1934.38| |Net cash (used in / provided by) investing activities| |(4549.32)|611.01| |III CASH FLOWS FROM FINANCING ACTIVITIES| | | | |Repayment of long-term borrowings| |(0.47)|(0.47)| |Short-term borrowings (net)| |(72.60)|185.56| |Dividend paid (including dividend tax)| |(9479.19)|(17020.46)| |Interest paid| |(12.77)|(78.83)| |Net cash used in financing activities| |(9565.03)|(16914.20)| |Net increase in cash and cash equivalents| |3881.96|16.70| |Cash and cash equivalents at the beginning of the year| |429.78|438.37| |Add: Transferred consequent to amalgamation of companies| |31.61|1.97| |Exchange difference on translation of foreign currency cash and cash equivalents| |40.12|(27.26)| |Cash and cash equivalents at the end of the year|20|4383.47|429.78| |Earmarked balances with banks| |422.90|69.97| |Short-term bank deposits| |-|16002.75| |Cash and bank balances at the end of the year|20|4806.37|16502.50| |IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS| |1-50| | |Cash flows have been adjusted for the balances transferred from the amalgamated companies.| | | | As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP Cyrus Mistry N. Chandrasekaran Prof. Clayton M. Christensen Chartered Accountants Chairman CEO and Managing Director Director Aman Mehta Ishaat Hussain V. Thyagarajan Director Director P. R. Ramesh Dr. Ron Sommer Dr. Vijay Kelkar Phiroz Vandrevala Partner Director Director O. P. Bhatt Aarthi Subramanian Rajesh Gopinathan Director Executive Director Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 Mumbai, April 18, 2016 196 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 1) CORPORATE INFORMATION Tata Consultancy Services Limited (referred to as 'TCS Limited' or 'the Company') provides consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. The Company's full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Cloud Services, Connected Marketing Solutions, Consulting, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON-Small and Medium Businesses, IT Infrastructure Services, Mobility Products and Services and Platform Solutions. As at March 31, 2016, Tata Sons Limited owned 73.26% of the Company's equity share capital and has the ability to control its operating and financial policies. The Company's registered office is in Mumbai and it has 61 subsidiaries across the globe. # 2) SIGNIFICANT ACCOUNTING POLICIES # a) Basis of preparation These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, as applicable. |
The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair value. Comparative figures do not include the figures of erstwhile CMC Limited which is amalgamated with the Company with effect from April 1, 2015. Consequently, the comparative figures are not comparable with the figures for the year ended March 31, 2016. # b) Use of estimates The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Examples of such estimates include provisions for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognised in the period in which the results are known / materialise. # c) Fixed assets Fixed assets are stated at cost, less accumulated depreciation / amortisation. Costs include all expenses incurred to bring the asset to its present location and condition. Fixed assets exclude computers and other assets individually costing ` 50,000 or less which are not capitalised except when they are part of a larger capital investment programme. # d) Depreciation / amortisation In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, depreciation / amortisation is charged on a straight line basis so as to write-off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life based on an evaluation. |Type of asset|Period| |---|---| |Leasehold land and buildings|Lease period| |Freehold buildings|20 years| |Factory buildings|20 years| |Leasehold improvements|Lease period| |Plant and machinery|10 years| |Computer equipment|4 years| |Vehicles|4 years| |Office equipment|5 years| |Electrical installations|10 years| |Furniture and fixtures|5 years| |Intellectual property / distribution rights|5 years| |Rights under licensing agreement|License period| Fixed assets purchased for specific projects are depreciated over the period of the project or the useful life stated above, whichever is shorter. Unconsolidated Financial Statements 197 # Annual Report 2015-16 # Notes forming part of the Financial Statements # e) Leases Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such a lease is capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating leases. Lease rentals under operating leases are recognised in the statement of profit and loss on a straight-line basis. # f) Impairment At each balance sheet date, the management reviews the carrying amounts of its assets included in each cash generating unit to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset. Reversal of impairment loss is recognised as income in the statement of profit and loss. # g) Investments Long-term investments and current maturities of long-term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long-term investments, comprising investments in mutual funds, government securities and bonds are stated at the lower of cost and fair value. |
# h) Employee benefits # (i) Post-employment benefit plans Contributions to defined contribution retirement benefit schemes are recognised as expense when employees have rendered services entitling them to such benefits. For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the statement of profit and loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, or amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme. # (ii) Other employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service. These benefits include compensated absences such as paid annual leave, overseas social security contributions and performance incentives. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date. # i) Revenue recognition Revenue from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred. Revenue from turnkey contracts, which are generally time bound fixed price contracts, are recognised over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognised when probable. Revenue from the sale of equipment are recognised upon delivery, which is when title passes to the customer. Revenue from sale of software licences are recognised upon delivery. Revenue from maintenance contracts are recognised pro-rata over the period of the contract. In respect of Business Process Services, revenue on time and material and unit priced contracts is recognised as the related services are rendered, whereas revenue from fixed price contracts is recognised using the proportionate completion method with contract cost determining the degree of completion. Revenue is reported net of discounts. Dividend is recorded when the right to receive payment is established. Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable. # Unconsolidated Financial Statements # Notes forming part of the Financial Statements # j) Taxation Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled. Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax after the tax holiday period. Accordingly, MAT is recognised as an asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with it will fructify. Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and is likely to reverse in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets. |
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction for relevant tax paying units and where the Company is able to and intends to settle the asset and liability on a net basis. The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws. # k) Foreign currency transactions Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the exchange rate prevailing on the balance sheet date and exchange gains and losses are recognised in the statement of profit and loss. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net investments in a non-integral foreign operation are accumulated in a foreign currency translation reserve. Premium or discount on foreign exchange forward, options and futures contracts are amortised and recognised in the statement of profit and loss over the period of the contract. Foreign exchange forward, options and futures contracts outstanding at the balance sheet date, other than designated cash flow hedges, are stated at fair values and any gains or losses are recognised in the statement of profit and loss. # l) Derivative instruments and hedge accounting The Company uses foreign exchange forward, options and futures contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Company designates these hedging instruments as cash flow hedges. The use of hedging instruments is governed by the Company's policy approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the Company's risk management strategy. File: AR_TCS_2015_2016.md Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in shareholders' funds and the ineffective portion is recognised immediately in the statement of profit and loss. The Company separates the intrinsic value and time value of an option and designates as hedging instruments only the fair value change in the intrinsic value of the option. The change in fair values of the time value of option, is accumulated in hedging reserve, a component of shareholders' funds and is transferred to the statement of profit and loss when the forecast transaction occurs. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the statement of profit and loss as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Cumulative gain or loss on the hedging instrument recognised in shareholders' funds is retained there and is transferred to the statement of profit and loss when the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholders' funds is transferred to the statement of profit and loss. Unconsolidated Financial Statements 199 # Annual Report 2015-16 # Notes forming part of the Financial Statements # m) Inventories Raw materials, sub-assemblies and components are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net realisable value. Stores and spare parts are carried at lower of cost and net realisable value. Finished goods produced or purchased by the Company are carried at lower of cost and net realisable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads. # n) Provisions, Contingent liabilities and Contingent assets A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. |
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements. # o) Cash and cash equivalents The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. # 3) SHARE CAPITAL The Authorised, Issued, Subscribed and Fully paid-up share capital comprises of equity shares and redeemable preference shares having a par value of ` 1 each as follows: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |Authorised| | | | |(i) 460,05,00,000 equity shares of ` 1 each| |460.05|420.05| |(ii) 105,02,50,000 redeemable preference shares of ` 1 each| |105.03|105.03| | | |565.08|525.08| |Issued, Subscribed and Fully paid-up| | | | |(i) 195,87,27,979 equity shares of ` 1 each| |195.87|195.87| |(ii) Issued during the year| |1.17|-| | | |197.04|195.87| The Authorised Equity Share Capital was increased to 460,05,00,000 equity shares of ` 1 each pursuant to the amalgamation of its subsidiaries, WTI Advanced Technology Limited vide the Order dated March 27, 2015 of the High Court of Judicature at Bombay and CMC Limited, vide the Order dated August 14, 2015 of the High Court of Judicature at Bombay and vide the Order dated July 20, 2015 of the High Court of Judicature at Hyderabad. # (a) Reconciliation of number of shares | |As at March 31, 2016| | |As at March 31, 2015| | |---|---|---|---|---|---| | |Number of shares|Amount (` crores)|Number of shares|Amount (` crores)| | |Equity shares| | | | | | |Opening balance|195,87,27,979|195.87|195,87,27,979|195.87| | |Issued during the year|1,16,99,962|1.17| |-|-| |Closing balance|197,04,27,941|197.04|195,87,27,979| |195.87| # 200 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (b) Rights, preferences and restrictions attached to shares # Equity shares The Company has one class of equity shares having a par value of ` 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. # (c) Shares held by Holding company, its Subsidiaries and Associates | |As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |Equity shares| | | | |Holding company|144,34,51,698 equity shares (March 31, 2015: 144,34,51,698 equity shares) are held by Tata Sons Limited|144.35|144.35| |Subsidiaries and Associates of Holding Company|3,63,700 equity shares (March 31, 2015: 10,29,700 equity shares) are held by Tata Industries Limited|0.04|0.10| | |9,55,273 equity shares (March 31, 2015: Nil equity shares) are held by Tata AIA Life Insurance Company Limited|0.10|-| | |5,90,452 equity shares (March 31, 2015: 5,90,452 equity shares) are held by Tata Investment Corporation Limited|0.06|0.06| | |Nil equity shares (March 31, 2015: 200 equity shares) are held by Tata Capital Limited *|-|-| | |83,232 equity shares (March 31, 2015: 83,232 equity shares) are held by Tata International Limited|0.01|0.01| | |24,400 equity shares (March 31, 2015: 24,400 equity shares) are held by Tata Steel Limited *|-|-| | |452 equity shares (March 31, 2015: 452 equity shares) are held by The Tata Power Company Limited *|-|-| |Total| |144.56|144.52| *Equity shares having value less than ` 50,000. # (d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2016|As at March 31, 2015| | | |---|---|---|---|---| |Equity shares|Tata Sons Limited, the Holding company| |144,34,51,698|144,34,51,698| | | | |73.26%|73.69%| # (e) Equity shares allotted as fully paid-up (during 5 years preceding March 31, 2016) including equity shares issued pursuant to contract without payment being received in cash 1,16,99,962 equity shares issued to the shareholders of CMC Limited in terms of the scheme of amalgamation ('the Scheme') sanctioned by the High Court of Judicature at Bombay vide its Order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015. |
15,06,983 equity shares of ` 1 each have been issued to the shareholders of TCS e-Serve Limited in terms of the composite scheme of amalgamation sanctioned by the High Court of Judicature at Bombay vide its Order dated September 6, 2013. # Unconsolidated Financial Statements 201 # Annual Report 2015-16 # Notes forming part of the Financial Statements # 4) RESERVES AND SURPLUS Reserves and surplus consist of the following: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |(a) Capital redemption reserve| |100.40|100.00| |(i) Opening balance| |100.40|100.40| |(ii) Transferred on amalgamation| |-|0.40| |(b) Capital reserve| |0.34|-| |(i) Opening balance| |0.34|0.34| |(ii) Transferred on amalgamation| |-|0.34| |(c) Securities premium reserve| |1918.87|1918.87| |(d) Foreign currency translation reserve| |218.46|225.85| |(i) Opening balance| |218.46|225.85| |(ii) Addition / (deduction) during the year (net)| |8.74|(7.39)| |(e) Hedging reserve account (Refer Note 38)| |150.75|29.64| |(i) Opening balance| |150.75|29.64| |(ii) (Deduction) / addition during the year (net)| |(93.98)|121.11| |(f) General reserve| |7052.69|5161.20| |(i) Opening balance| |7052.69|5161.20| |(ii) Adjustment on amalgamation (Refer Note 28)| |(222.70)|(34.20)| |(iii) Transferred from surplus in statement of profit and loss| |2288.27|1925.69| | | |9118.26|7052.69| |(g) Surplus in statement of profit and loss| |35779.06|36420.45| |(i) Opening balance| |35779.06|36420.45| |(ii) Add: Transferred on amalgamation (Refer Note 28)| |1075.31|71.78| |(iii) Add: Profit for the year| |22882.70|19256.96| | | |59737.07|55749.19| | |Less: Appropriations| | | |(a) Interim dividends on equity shares| |3251.22|10772.92| |(b) Proposed final dividend on equity shares| |5320.16|4700.95| |(c) Tax on dividend| |1648.16|2591.54| |(d) Write back of tax on dividend of prior year| |(18.72)|(20.97)| |(e) Transferred to general reserve| |2288.27|1925.69| | | |47247.98|35779.06| | | |58669.82|45220.57| The Board of Directors at their meeting held on April 18, 2016 recommended a final dividend of ` 27.00 per equity share. # Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 5) LONG-TERM BORROWINGS Long-term borrowings consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Secured loans|49.77|64.13| |(b) Unsecured loans|0.29|0.58| | |50.06|64.71| Obligations under finance lease are secured against fixed assets obtained under finance lease arrangements. # 6) DEFERRED TAX BALANCES Deferred tax balances consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Deferred tax liabilities (net)| | | |(i) Foreign branch profit tax|346.12|256.03| |(ii) Depreciation and amortisation|19.40|15.43| | |365.52|271.46| |(b) Deferred tax assets (net)| | | |(i) Depreciation and amortisation|(139.35)|(146.58)| |(ii) Employee benefits|237.68|180.90| |(iii) Operating lease liabilities|75.46|65.69| |(iv) Provision for doubtful receivables, loans and advances|182.26|129.04| |(v) Others|109.78|74.42| | |465.83|303.47| # 7) OTHER LONG-TERM LIABILITIES Other long-term liabilities consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Capital creditors|61.78|67.53| |(b) Operating lease liabilities|298.36|310.90| |(c) Others|231.01|343.72| | |591.15|722.15| Others include advance taxes paid of ` 229.53 crores (March 31, 2015: ` 333.28 crores) by the seller of TCS e-Serve Limited which, on refund by the tax authorities, is payable to the seller. # 8) LONG-TERM PROVISIONS Long-term provisions consist of the following: (` crores) | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Provision for employee benefits:|48.18|32.43| |(b) Provision for foreseeable loss on a long-term contract|40.48|94.48| | |88.66|126.91| Unconsolidated Financial Statements # Annual Report 2015-16 # Notes forming part of the Financial Statements # 9) SHORT-TERM BORROWINGS Short-term borrowings consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |(a) Secured loans|Overdraft from banks|111.80|-| |(b) Unsecured loans|Overdraft from banks|1.16|185.56| |Total|112.96|185.56| | # 10) OTHER CURRENT LIABILITIES Other current liabilities consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| | | |---|---|---|---|---| |(a) Current maturities of long-term debt| | |0.29|0.47| |(b) Current maturities of obligations under finance lease (Refer Note 33)| |15.24|22.11| | |(c) Interest accrued but not due on borrowings| | |0.01|0.02| |(d) Income received in advance| |1067.72|854.67| | |(e) Unclaimed dividends| |21.11|19.41| | |(f) Advance received from customers| |39.21|26.18| | |(g) Operating lease liabilities| |67.05|44.86| | |(h) Fair value of foreign exchange forward and currency option contracts secured against trade receivables| |152.43|19.75| | |(i) Statutory liabilities| |741.43|568.83| | |(j) Capital creditors| |305.57|299.05| | |(k) Liabilities for cost related to customer contracts| |735.95|615.99| | |(l) Liabilities for purchase of government securities| |804.86|-| | |(m) Other payables| |52.97|20.13| | |Total|Total|4003.84|2491.47| | | Obligations under finance lease are secured against fixed assets obtained under finance lease arrangements. |
# 11) SHORT-TERM PROVISIONS Short-term provisions consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |(a) Provision for employee benefits| |1164.05|951.52| |(b) Proposed final dividend on equity shares| |5320.16|4700.95| |(c) Tax on dividend| |1083.06|939.91| |(d) Current income taxes (net)| |537.49|323.93| |(e) Provision for foreseeable loss on a long-term contract| |114.83|103.04| |Total|Total|8219.59|7019.35| | Provision for employee benefits include provision for compensated absences and other short-term employee benefits. # 204 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 12) FIXED ASSETS Fixed assets consist of the following: # (i) Tangible assets |Description|Freehold land|Leasehold land|Freehold buildings|Leasehold buildings|Leasehold improvements|Plant and machinery|Computer equipment|Vehicles|Office equipment|Electrical installations|Furniture and fixtures|Total| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Gross Block as at April 1, 2015|326.51|210.49|4379.71|2.77|9.81|1184.11|126.68|4133.90|26.48|1526.33|1183.00|953.84|14063.63| | |326.21|209.48|3137.73|2.77|9.81|976.73|10.29|3464.15|25.01|1318.34|942.76|754.73|11178.01| |Additions|-|-|1283.00|-|-|114.86|193.08|567.10|7.79|227.15|325.95|160.60|2879.53| | |0.30|1.01|1242.32|-|207.97|116.40|709.86|4.72|207.95|241.02|200.90|2932.45| | |Assets acquired on amalgamation|0.06|7.10|365.10|-|4.81|3.36|-|70.40|0.55|97.79|-|21.83|571.00| | |-|1.78|0.08|1.74|0.09|0.22|3.91| | | | | | | |Deletions / Adjustments|(0.18)|-|(0.03)|(0.82)|(0.46)|(14.28)|-|(121.74)|(4.07)|(11.31)|(7.60)|(14.65)|(175.14)| | |-|(0.34)|-|(0.59)|(0.01)|(41.89)|(3.33)|(1.70)|(0.87)|(2.01)|(50.74)| | | |Gross Block as at March 31, 2016|326.39|217.59|6027.78|1.95|14.16|1288.05|319.76|4649.66|30.75|1839.96|1501.35|1121.62|17339.02| | |326.51|210.49|4379.71|2.77|9.81|1184.11|126.68|4133.90|26.48|1526.33|1183.00|953.84|14063.63| |Accumulated depreciation as at April 1, 2015|-|(18.42)|(439.77)|(1.51)|(8.74)|(631.95)|(16.25)|(2999.85)|(18.19)|(848.45)|(407.32)|(708.30)|(6098.75)| | |-|(15.45)|(577.96)|(1.43)|(8.53)|(512.98)|(10.27)|(2483.94)|(15.79)|(589.27)|(409.69)|(665.61)|(5290.92)| |Depreciation for the year|-|(3.07)|(307.55)|(0.05)|(0.41)|(132.64)|(22.33)|(577.93)|(4.65)|(260.17)|(158.36)|(84.68)|(1551.84)| | |-|(2.97)|138.11|(0.08)|(0.21)|(119.56)|(5.99)|(555.67)|(5.58)|(259.60)|1.75|(44.38)|(854.18)| |Adjustments on amalgamation|-|(0.91)|(48.60)|-|(4.30)|(2.37)|-|(53.22)|(0.43)|(46.49)|-|(16.03)|(172.35)| | |-|(1.53)|(0.08)|(1.21)|(0.06)|(0.22)|(3.10)| | | | | | | |Deletions / Adjustments|-|0.03|0.28|0.46|14.10|-|121.63|4.05|10.98|7.00|14.61|173.14| | | |-|0.08|-|0.59|0.01|41.29|3.26|1.63|0.68|1.91|49.45| | | |Accumulated depreciation as at March 31, 2016|-|(22.40)|(795.89)|(1.28)|(12.99)|(752.86)|(38.58)|(3509.37)|(19.22)|(1144.13)|(558.68)|(794.40)|(7649.80)| | |-|(18.42)|(439.77)|(1.51)|(8.74)|(631.95)|(16.25)|(2999.85)|(18.19)|(848.45)|(407.32)|(708.30)|(6098.75)| |Net book value as at March 31, 2016|326.39|195.19|5231.89|0.67|1.17|535.19|281.18|1140.29|11.53|695.83|942.67|327.22|9689.22| | |326.51|192.07|3939.94|1.26|1.07|552.16|110.43|1134.05|8.29|677.88|775.68|245.54|7964.88| # Annual Report 2015-16 # Notes forming part of the Financial Statements # 12) FIXED ASSETS (contd.) # (ii) Intangible assets |Description|Intellectual property / distribution rights|Rights under licensing agreement|Total| |---|---|---|---| |Gross Block as at April 1, 2015|13.21|128.41|141.62| | |13.21|124.51|137.72| |Additions|-|-|-| | |-|0.06|0.06| |Assets acquired on amalgamation|-|-|-| | |-|3.84|3.84| |Deletions / Adjustments|-|-|-| | |-|-|-| |Gross Block as at March 31, 2016|13.21|128.41|141.62| | |13.21|128.41|141.62| |Accumulated amortisation as at April 1, 2015|(13.11)|(97.10)|(110.21)| | |(12.43)|(83.19)|(95.62)| |Amortisation for the year|(0.10)|(7.25)|(7.35)| | |(0.68)|(10.53)|(11.21)| |Adjustments on amalgamation|-|-|-| | |-|(3.38)|(3.38)| |Deletions / Adjustments|-|-|-| | |-|-|-| |Accumulated amortisation as at March 31, 2016|(13.21)|(104.35)|(117.56)| | |(13.11)|(97.10)|(110.21)| |Net book value as at March 31, 2016|-|24.06|24.06| | |0.10|31.31|31.41| # (iii) Capital work-in-progress |Description|Total| |---|---| |Capital work-in-progress|1641.84| | |2706.94| Previous years' figures are in italics. (a) Freehold buildings include ` 2.67 crores (March 31, 2015: ` 2.67 crores) being value of investment in shares of Co-operative Housing Societies and Limited Companies. (b) Net book value of computer equipment of ` 6.44 crores (March 31, 2015: ` 18.49 crores) and leasehold improvements of ` 46.18 crores (March 31, 2015: ` 56.65 crores) are under finance lease. (c) Legal formalities relating to conveyance of freehold buildings having net book value ` - * crores (March 31, 2015: ` 5.18 crores) are pending completion. * values less than ` 50,000 # Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 13) NON-CURRENT INVESTMENTS Non-current investments consist of the following: |In Numbers|Currency|Face Value Per share|Description|As at March 31, 2016|As at March 31, 2015| |---|---|---|---|---|---| |-|INR|-|(A) TRADE INVESTMENTS (at cost)| | | |-|INR|-|(i) Subsidiary companies| | | |-|INR|-|(a) Fully paid equity shares (quoted)| | | |-|INR|-|CMC Limited (Refer Note 28)|-|379.89| |2,12,27,83,424|Peso|1|TCS Iberoamerica SA|461.31|461.31| |15,75,300|INR|10|APTOnline Limited (formerly APOnline Limited)|-|-| |1,300|EUR|-|Tata Consultancy Services Belgium S.A.|1.06|1.06| |66,000|EUR|1000|Tata Consultancy Services Netherlands BV|402.87|402.87| |1,000|SEK|100|Tata Consultancy Services Sverige AB|18.89|18.89| |1|EUR|-|Tata Consultancy Services Deutschland GmbH|1.72|1.72| |20,000|USD|10|Tata America International Corporation|452.92|452.92| |75,82,820|SGD|1|Tata Consultancy Services Asia Pacific Pte Ltd.|18.69|18.69| |3,72,58,815|AUD|1|TCS FNS Pty Limited|211.72|211.72| |10,00,001|GBP|1|Diligenta Limited|429.05|429.05| |1,000|USD|-|Tata Consultancy Services Canada Inc. *|-|-| |100|CAD|70653.61|Tata Consultancy Services Canada Inc.|31.25|31.25| |51,00,000|INR|10|C-Edge Technologies Limited|5.10|5.10| |8,90,000|INR|10|MP Online Limited|0.89|0.89| |1,40,00,000|RAND|1|Tata Consultancy Services (Africa) (PTY) Ltd.|65.75|65.75| |18,89,000|INR|10|MahaOnline Limited|1.89|1.89| |-|QAR|-|Tata Consultancy Services Qatar S.S.C.|2.44|2.44| |16,00,01,000|USD|0.01|CMC Americas Inc.|8.18|-| |10,00,000|INR|100|TCS e-Serve International Limited|10.00|10.00| |10,00,000|INR|10|TCS Foundation|-|-| |-|GBP|-|(c) Fully paid preference shares (unquoted)| | | |-|GBP|-|Diligenta Limited|-|101.75| |-|USD|-|(ii) Others| | | |-|USD|-|(a) Fully paid equity shares (quoted)| | | |-|USD|-|Yodlee, Inc.|-|-| |-|USD|-|(46,386 equity shares exchanged for 8,762 shares of Envestnet Inc. |
and cash consideration)| | | Unconsolidated Financial Statements 207 # Annual Report 2015-16 # Notes forming part of the Financial Statements # 13) NON - CURRENT INVESTMENTS (contd.) |In Numbers|Currency|Face Value Per share|Description|As at March 31, 2016|As at March 31, 2015| |---|---|---|---|---|---| |25,00,000|INR|10|National Power Exchange Limited|2.50|2.50| |1,90,00,000|INR|10|Taj Air Limited|19.00|19.00| |69|EUR|297|ALMC HF *|-|-| |20,00,000|INR|10|KOOH Sports Private Limited|3.00|3.00| |1|INR|10|Ruralshores Business Services Private Limited*|-|-| |6,24,999|INR|10|Ruralshores Business Services Private Limited|25.00|25.00| # (B) OTHERS # (i) Mutual and other funds (unquoted) |1,000|INR|100000|India Innovation Fund (` 75513.06 paid-up per share)|7.55|7.04| |---|---|---|---|---|---| |5,00,00,000|INR|10|HDFC FMP 1170D March 2016 - Direct Growth Series|50.00|-| # (ii) Bonds and Debentures (unquoted) 69 EUR 297 0 % Bonds (2014) 0.12 0.12 Provision for diminution in value of investments | | | | |2230.90|2653.85| |---|---|---|---|---|---| | | | |Provision for diminution in value of investments|(2.62)|(2.62)| | | | | |2228.28|2651.23| Book value of quoted investments | | | | |-|379.89| |---|---|---|---|---|---| | | | |Book value of unquoted investments (net of provision)|2228.28|2271.34| | | | |Market value of quoted investments|-|2974.41| * Non-current investments having a value of less than ` 50,000. The Company has given letter of comfort to various banks for credit and / or foreign exchange hedging facilities availed by its subsidiaries (a) Tata America International Corporation, (b) Tata Consultancy Services Switzerland Ltd, (c) Tata Consultancy Services Sverige AB, (d) Tata Consultancy Services Belgium S.A., (e) Tata Consultancy Services Deutschland GmbH, (f) Tata Consultancy Services Netherlands BV, (g) Tata Consultancy Services Asia Pacific Pte Ltd., (h) TCS Italia SRL, (i) Tata Consultancy Services France S.A.S., (j) Tata Consultancy Services Malaysia Sdn Bhd and (k) Tata Consultancy Services Luxembourg S.A. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiaries and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiaries. On July 2, 2015, the Company through its wholly owned subsidiary, Tata Consultancy Services Netherlands BV subscribed to 76% share capital of Tata Consultancy Services Saudi Arabia. On October 30, 2015, the Company through its wholly owned subsidiaries TCS Inversiones Chile Limitada and TATA Consultancy Services Chile S.A., subscribed 100% share capital of Technology Outsourcing S.A.C, an information technology service provider in Peru. |
# Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 14) LONG-TERM LOANS AND ADVANCES Long-term loans and advances (unsecured) consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Considered good| | | |(i) Capital advances|186.46|201.90| |(ii) Security deposits|603.13|538.00| |(iii) Loans and advances to employees|7.49|8.88| |(iv) Loans and advances to related parties|3.13|21.98| |(v) Advance tax (including refunds receivable (net))|4229.86|3884.22| |(vi) MAT Credit entitlement|1960.31|1801.78| |(vii) Indirect tax recoverable|4.05|48.89| |(viii) Inter-corporate deposits|2425.00|1572.00| |(ix) Prepaid expenses|310.92|354.18| |(x) Other amounts recoverable in cash or kind or for value to be received|20.57|20.72| |(b) Considered doubtful| | | |Security deposits|0.15|0.15| |Less: Provision for doubtful loans and advances|(0.15)|(0.15)| | |9750.92|8452.55| Loans and advances to related parties, considered good, comprise: |Tata Sons Limited|2.74|2.74| |---|---|---| |TCS FNS Pty Limited|-|6.18| |CMC Limited|-|12.67| |Tata Realty and Infrastructure Limited|0.39|0.39| # 15) OTHER NON-CURRENT ASSETS Other non-current assets consist of the following: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Interest receivable|72.52|24.33| |(b) Long-term bank deposits|415.00|500.00| |(c) Earmarked balances with banks|85.00|0.35| | |572.52|524.68| Unconsolidated Financial Statements 209 # Annual Report 2015-16 # Notes forming part of the Financial Statements # 16) CURRENT INVESTMENTS Current investments consist of the following: |In Numbers|Currency|Face Value Per unit|Description|As at March 31, 2016|As at March 31, 2015| |---|---|---|---|---|---| |60,00,000|INR|10|HDFC Debt Fund for Cancer Cure - 50% Dividend Donation Option|6.00|6.00| |20,56,944|INR|100|Birla Sun Life Cash Plus - Growth-Direct Plan|50.00|96.47| |3,34,710|INR|1000|HDFC Liquid Fund - Direct Plan - Growth Option|100.00|-| |3,93,719|INR|1000|Tata Liquid Fund Direct Plan - Growth|110.00|295.00| |20,95,961|INR|1000|Tata Money Market Fund Direct Plan|500.00|300.00| |30,34,467|INR|100|ICICI Prudential Liquid - Direct Plan - Growth|68.00|-| |4,88,477|INR|1000|Kotak Liquid Scheme Plan A - Direct Plan - Growth|150.00|-| |9,59,884|INR|1000|Religare Invesco Liquid Fund - Direct Plan Growth|200.00|-| |-|INR|-|L&T Liquid Fund Direct Plan - Growth|-|50.00| |17,40,00,000|INR|100|7.16% Government of India bond (2023)|1678.90|-| |4,00,00,000|INR|100|7.28% Government of India bond (2019)|397.48|-| |5,00,000|INR|100|7.94% Government of India bond (2021)|5.03|-| |18,95,00,000|INR|100|8.08% Government of India bond (2022)|1921.23|-| |3,00,00,000|INR|100|8.12% Government of India bond (2020)|305.76|-| |2,70,00,000|INR|100|8.13% Government of India bond (2022)|274.10|-| |19,05,00,000|INR|100|8.15% Government of India bond (2026)|1949.97|-| |10,00,000|INR|100|8.19% Government of India bond (2020)|10.17|-| |3,05,00,000|INR|100|8.20% Government of India bond (2022)|310.66|-| |13,05,00,000|INR|100|8.20% Government of India bond (2025)|1335.22|-| |6,82,31,000|INR|100|8.24% Government of India bond (2027)|701.72|-| |2,75,00,000|INR|100|8.26% Government of India bond (2027)|283.24|-| |20,00,000|INR|100|8.27% Government of India bond (2020)|20.47|-| |21,61,34,900|INR|100|8.28% Government of India bond (2027)|2230.99|-| |5,95,00,000|INR|100|8.33% Government of India bond (2026)|615.31|-| |25,00,000|INR|100|8.35% Government of India bond (2022)|25.64|-| |34,70,00,000|INR|100|8.40% Government of India bond (2024)|3587.49|-| |4,25,00,000|INR|100|8.79% Government of India bond (2021)|443.69|-| |31,25,00,000|INR|100|8.83% Government of India bond (2023)|3298.97|-| |3,47,30,000|INR|100|9.15% Government of India bond (2024)|374.92|-| |25,00,000|INR|100|10.18% Government of India bond (2026)|29.07|-| |30,00,000|INR|100|10.25% Government of India bond (2021)|33.06|-| |-|INR|-|Pre-acquisition interest|338.86|-| |50,000|INR|100|Axis bank|491.44|-| |-|INR|-|Envestnet Inc.|-|-| (8,762 shares received in exchange of 46,386 equity shares of Yodlee Inc. which were sold subsequently during the year) Book value of quoted investments: 20171.95 Market value of quoted investments: 20253.65 # Notes forming part of the Financial Statements # 17) INVENTORIES Inventories consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Raw materials, sub-assemblies and components|8.71|10.07| |(b) Finished goods and work-in-progress|0.08|0.46| |(c) Goods-in-transit (raw materials)|0.20|1.81| |Total|8.99|12.34| Inventories are carried at the lower of cost and net realisable value. # 18) UNBILLED REVENUE Unbilled revenue as at March 31, 2016 amounting to ` 2712.18 crores (March 31, 2015: ` 2439.36 crores) primarily includes revenue recognised in relation to efforts incurred on turnkey contracts priced on a fixed time, fixed price basis. |
# 19) TRADE RECEIVABLES Trade receivables (Unsecured) consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Over six months from the date they were due for payment| | | |(i) Considered good|1534.77|1825.69| |(ii) Considered doubtful|495.24|322.17| |(b) Others| | | |(i) Considered good|17523.43|15211.07| |(ii) Considered doubtful|-|22.93| |Total|19553.44|17381.86| |Less: Provision for doubtful receivables|(495.24)|(345.10)| |Net Total|19058.20|17036.76| # 20) CASH AND BANK BALANCES Cash and bank balances consist of the following: |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---| |(a) Cash and cash equivalents| | | |(i) Balances with banks| | | |In current accounts|513.16|303.90| |In deposit accounts with original maturity less than three months|2648.05|77.64| |(ii) Cheques on hand|24.41|46.49| |(iii) Cash on hand|0.95|0.50| |(iv) Remittances in transit|1196.90|1.25| |Total|4383.47|429.78| |(b) Other bank balances| | | |(i) Earmarked balances with banks|422.90|69.97| |(ii) Short-term bank deposits|-|16002.75| |Total|4806.37|16502.50| # Annual Report 2015-16 # Notes forming part of the Financial Statements # 21) SHORT-TERM LOANS AND ADVANCES Short-term loans and advances (Unsecured) consist of the following: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |(a) Considered good| | | | |(i) Loans and advances to employees| |951.46|272.59| |(ii) Loans and advances to related parties| |7.73|12.32| |(iii) Security deposits| |117.63|104.17| |(iv) Indirect tax recoverable| |138.65|157.82| |(v) Inter-corporate deposits| |1572.00|1063.00| |(vi) Prepaid expenses| |992.72|1143.00| |(vii) Advance to suppliers| |211.38|59.76| |(viii) Fair value of foreign exchange forward and currency option contracts| |537.24|365.38| |(ix) Other amounts recoverable in cash or kind or for value to be received| |146.97|174.14| |(b) Considered doubtful| | | | |(i) Loans and advances to employees| |54.62|49.13| |(ii) Security deposits| |1.67|2.60| |(iii) Indirect tax recoverable| |1.74|1.74| |(iv) Advance to suppliers| |2.98|2.89| |(v) Other amounts recoverable in cash or kind or for value to be received| |3.15|2.00| |Less: Provision for doubtful loans and advances| |(64.16)|(58.36)| | |Total|4675.78|3352.18| Loans and advances to related parties, considered good, comprise: |TCS FNS Pty Limited|2.61|5.10| |---|---|---| |CMC Limited|-|0.73| |Tata Consultancy Services (Africa) (PTY) Ltd.|-|0.55| |TCS e-Serve International Limited|0.55|0.40| |C-Edge Technologies Limited|3.49|5.49| |Tata America International Corporation|-|0.03| |APTOnline Limited (formerly APOnline Limited)|-|0.01| |TCS Uruguay S.A.|0.11|-| |TCS Solution Centre S.A.|0.07|-| |Tata AIG General Insurance Company Limited|0.06|0.01| |Taj Air Limited|0.84|-| # 22) OTHER CURRENT ASSETS Other current assets consist of the following: | |(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |Interest receivable| |186.96|339.53| 186.96 339.53 # 212 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 23) OTHER INCOME (NET) Other income (net) consist of the following: | |(` crores)|2016|2015| |---|---|---|---| |(a) Interest income| |1679.48|1554.93| |(b) Dividend income| |704.54|1335.13| |(c) Profit on redemption of mutual funds and sale of other investments (net)| |459.25|225.99| |(d) Rent| |3.33|2.85| |(e) Profit on sale of fixed assets (net)| |5.06|2.94| |(f) Exchange gain (net)| |798.26|1278.63| |(g) Miscellaneous income| |90.28|66.26| |Total| |3740.20|4466.73| Interest income comprise: |Interest on bank deposits|1428.58|1165.11| |---|---|---| |Interest on inter - corporate deposits|194.49|264.14| |Interest on bonds, government securities and debentures (non-current)|-|120.32| |Interest on bonds, government securities and debentures (current)|31.64|-| |Interest on loan given to subsidiary|0.06|1.12| |Interest on certificate of deposits|1.18|-| |Others|23.53|4.24| Dividend income comprise: |Dividends from subsidiaries (non-current trade investments)|695.51|1334.65| |---|---|---| |Dividends from mutual funds (current investments)|9.03|0.48| Profit on redemption of mutual funds and sale of other investments (net) comprise: |From non-current investments (net)|5.37|24.78| |---|---|---| |From current investments (net)|453.88|201.21| Exchange gain (net) include: Gain on foreign exchange forward and currency option contracts which have been designated as Cash Flow Hedges (Refer Note 38) 5.11 344.60 # 24) EMPLOYEE BENEFIT EXPENSE Employee benefit expense consist of the following: | |(` crores)|2016|2015| |---|---|---|---| |(a) Salaries and incentives (Refer Note 49)| |26574.73|24441.85| |(b) Contributions: (Refer Note 29)| | | | |(i) Provident fund| |658.04|571.65| |(ii) Superannuation scheme| |193.02|163.47| |(iii) Gratuity fund| |325.58|301.42| |(iv) Social security and other plans for overseas employees| |693.56|501.25| File: AR_TCS_2015_2016.md |(c) Staff welfare expenses| |1623.26|1388.68| |Total| |30068.19|27368.32| Unconsolidated Financial Statements # Annual Report 2015-16 # Notes forming part of the Financial Statements # 25) OPERATION AND OTHER EXPENSES Operation and other expenses consist of the following: | |2016|2015| |---|---|---| |(a) Overseas business expenses|13406.15|11817.63| |(b) Services rendered by business associates and others|6320.53|5046.61| |(c) Software, hardware and material costs|3107.14|2932.16| |(d) Communication expenses|688.97|641.50| |(e) Travelling and conveyance expenses|1094.73|812.94| |(f) Rent|1058.65|1072.70| |(g) Legal and professional fees|328.42|333.54| |(h) Repairs and maintenance|633.03|491.18| |(i) Electricity expenses|510.83|493.36| |(j) Bad debts written off (net)|4.26|5.69| |(k) Provision for doubtful receivables|106.92|124.56| |(l) Advances written off (net)|2.58|19.50| |(m) Provision for doubtful advances (net)|5.31|(13.10)| |(n) Recruitment and training expenses|270.80|235.10| |(o) Diminution in value of long-term investments|-|2.50| |(p) Printing and stationery|43.76|39.75| |(q) Insurance|30.03|22.33| |(r) Rates and taxes|134.68|95.59| |(s) Entertainment|52.38|44.97| |(t) Other expenses|1047.28|963.03| |Total|28846.45|25181.54| # (i) |
Overseas business expenses comprise: |Travel expenses|947.07|930.73| |---|---|---| |Employee allowances|12459.08|10886.90| # (ii) Repairs and maintenance comprise: |Buildings|240.47|227.72| |---|---|---| |Office and computer equipment|392.56|263.46| # (iii) Software, hardware and material costs include: |Material costs| | | | |---|---|---|---| |(a) Raw materials, sub-assemblies and components consumed| |39.09|64.62| |(b) Opening stock:|Finished goods and work-in-progress|0.46|0.61| |(c) Less: Closing stock:|Finished goods and work-in-progress|0.08|0.46| | | |0.38|0.15| | | |39.47|64.77| # (iv) Other expenses include: |(a) Stores and spare parts consumed|0.74|0.06| |---|---|---| |(b) Donation to Electoral Trust|-|1.49| # 26) FINANCE COSTS Finance costs consist of the following: | |2016|2015| |---|---|---| |Interest expense|13.58|79.57| Total: 13.58 # Notes forming part of the Financial Statements 27) Current tax includes additional provision (net) of ` 31.75 crores (March 31, 2015: ` 61.33 crores) in domestic and certain overseas jurisdictions relating to earlier years. The impact of MAT entitlement of earlier period is ` 89.24 crores (March 31, 2015: ` 8.83 crores). # 28) AMALGAMATION OF COMPANIES # a) Nature of business CMC Limited is engaged in the design, development and implementation of software technologies and applications, providing professional services in India and overseas and procurement, installation, commissioning, warranty and maintenance of imported / indigenous computer and networking systems, and in education and training. The Company holds 51.12% of the voting power of CMC Limited. # b) Amalgamation details CMC Limited has been amalgamated with the Company with effect from April 1, 2015 ('appointed date') in terms of the scheme of amalgamation ('the Scheme') sanctioned by the High Court of Judicature at Bombay vide its Order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015. The Scheme came into effect on April 1, 2015 and pursuant thereto all assets, unbilled revenue, debts, outstandings, credits, liabilities, benefits under income tax, service tax, excise, value added tax, sales tax (including deferment of sales tax), benefits for and under Software Technology Parks of India ('STPI') and Special Economic Zone ('SEZ'), duties and obligations of the CMC Limited, have been transferred to and vested in the Company retrospectively with effect from April 1, 2015. Pursuant to the Scheme coming into effect, all the equity shares held by the Company in CMC Limited shall stand automatically cancelled and remaining shareholders of CMC Limited holding fully paid equity shares shall be allotted 79 shares of ` 1 each in the Company, credited as fully paid-up, for every 100 shares of ` 10 each fully paid-up held in the share capital of CMC Limited by adjusting the General reserve. # c) Accounting treatment The amalgamation has been accounted for under the 'pooling of interests' method as prescribed by Accounting Standard (AS-14) specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the assets, liabilities and reserves of CMC Limited as at April 1, 2015 have been taken over at their book values and in the same form. The difference between the amounts recorded as investments of the Company and the amount of share capital of CMC Limited has been adjusted in the General reserve. Accordingly, the amalgamation has resulted in transfer of assets, liabilities and reserves in accordance with the terms of the Scheme at the following summarised values: |Particulars|(` crores)|CMC Limited| |---|---|---| |Assets| | | |Fixed assets| |437.20| |Investments| |226.86| |Deferred tax asset (net)| |14.67| |Inventories| |3.15| |Unbilled revenue| |217.89| |Trade receivables| |413.59| |Cash and bank balances| |32.53| |Loans and advances and other assets| |247.04| | |Total Assets|1592.93| |Less: Liabilities| | | |Trade payables, other liabilities and provisions| |401.86| | |Total Liabilities|1191.07| |Adjustment for:| | | |Add: Dividend on equity shares paid by CMC Limited to the Company post appointed date| |42.60| | |Total After Adjustment|1233.67| |Less:| | | |Issue of shares (1,16,99,962 equity shares of company in the ratio of 79 equity shares of the Company for every 100 equity shares of CMC Limited)| |1.17| |Adjustment for cancellation of Company's investment in CMC Limited| |379.89| | |Total After Less|852.61| |Less: Transfer of balances of surplus in statement of profit and loss of CMC Limited| |1075.31| | |Balance transferred to General reserve as at appointed date|(222.70)| Unconsolidated Financial Statements 215 # Annual Report 2015-16 # Notes forming part of the Financial Statements # 29) EMPLOYEE RETIREMENT BENEFITS # (a) Defined contribution plans The Company makes Provident fund, Superannuation fund and foreign defined contribution fund contributions to defined contribution retirement benefit plans for eligible employees. |
Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. In respect of Provident fund contributions to trust set up for this purpose, the Company is generally liable for annual contribution and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the Central Government under the Employees' Provident Fund Scheme, 1952. In addition to such contributions, the Company also recognises potential deficiency in interest, if any, computed as per actuarial valuation of interest as an expense in the year it is determined. As of March 31, 2016, the fair value of the assets of the fund and the accumulated members' corpus is ` 9743.90 crores and ` 9126.96 crores respectively. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.80%. The actuarial assumptions include discount rate of 7.75% and an average expected future period of 8 years. The Company recognised ` 658.04 crores (March 31, 2015: ` 571.65 crores) for provident fund contributions and ` 193.02 crores (March 31, 2015: ` 163.47 crores) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes. The Company has contributed ` 335.42 crores (March 31, 2015: ` 267.63 crores) towards foreign defined contribution plans. # (b) Defined benefit plans The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for service less than 15 years, three-fourth month's salary for service of 15 years to 19 years and one month salary for service of 20 years and more, payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. # The following table sets out funded status of the gratuity plan and the amounts recognised in the Company's financial statements as at March 31, 2016. | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |i) Change in benefit obligations:| | | |Projected benefit obligation, beginning of the year|1264.32|987.22| |Service cost|201.47|163.69| |Interest cost|104.64|95.87| |Liabilities transferred on amalgamation|30.35|0.47| |Actuarial loss|149.08|131.41| |Benefits paid|(131.21)|(114.54)| |Past service cost|13.38|0.20| |Projected benefit obligation, end of the year|1632.03|1264.32| | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |ii) Change in plan assets:| | | |Fair value of plan assets, beginning of the year|1441.91|849.52| |Expected return on plan assets|116.22|83.79| |Employers' contributions|281.63|616.53| |Assets transferred on amalgamation|10.81|0.65| |Benefits paid|(131.21)|(114.54)| |Actuarial gain|26.77|5.96| |Fair value of plan assets, end of the year|1746.13|1441.91| |Excess of plan assets over obligations|114.10|177.59| |Accrued asset|114.10|177.59| # Unconsolidated Financial Statements # 29) EMPLOYEE RETIREMENT BENEFITS (contd.) # iii) Net gratuity cost: | |2016|2015| |---|---|---| |Service cost|201.47|163.69| |Interest on defined benefit obligation|104.64|95.87| |Expected return on plan assets|(116.22)|(83.79)| |Net actuarial losses recognised in the year|122.31|125.45| |Past service cost|13.38|0.20| |Net gratuity cost|325.58|301.42| |Actual return on plan assets|142.99|89.75| # iv) Category of assets: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |Corporate Bonds|311.69|174.55| |Insurer managed funds|736.08|737.67| |Government Securities|499.93|265.55| |Bank balance|97.62|217.33| |Others|100.81|46.81| |Total|1746.13|1441.91| # v) Assumptions used in accounting for gratuity plan: | |As at March 31, 2016|As at March 31, 2015| |---|---|---| |Discount rate|7.75%|8.00%| |Salary escalation rate|6.00%|6.00%| |Expected rate of return on plan assets|7.75%|8.00%| The estimate of future salary increase considered in actuarial valuation takes account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risk of asset management, historical results of the return on plan assets and the Company's policy for plan asset management. |
# Experience adjustment | |2016|2015|2014|2013|2012| |---|---|---|---|---|---| |On plan liabilities loss/(gain)|76.13|32.06|(56.09)|(18.10)|43.75| |On plan assets gain|26.77|5.96|21.90|4.00|6.63| |Present value of benefit obligation|1632.03|1264.32|987.22|830.16|679.25| |Fair value of plan assets|1746.13|1441.91|849.52|593.50|542.04| |Excess / (deficit) of plan assets over obligations|114.10|177.59|(137.70)|(236.66)|(137.21)| The expected contribution is based on the same assumptions used to measure the Company's gratuity obligations as at March 31, 2016. The Company is expected to contribute ` 102.51 crores for the year ended March 31, 2017. Unconsolidated Financial Statements 217 # Annual Report 2015-16 # 30) SEGMENT REPORTING The Company has identified business segments (industry practice) as its primary segment and geographic segments as its secondary segment. Business segments comprise banking, finance and insurance services, manufacturing, retail and consumer packaged goods, telecom, media and entertainment and others such as energy, resources and utilities, Hi-tech, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc. Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to specific segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments. Geographical revenue is allocated based on the location of the customer. Geographic segments of the Company are Americas (including Canada and South American countries), Europe, India and Others. |Particulars| | |Business Segments| | | | |---|---|---|---|---|---|---| | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Packaged Goods|Telecom, Media and Entertainment|Others|Total| |Year ended March 31, 2016|33473.50|7409.64|12598.14|10197.20|22185.37|85863.85| | |28871.39|6514.53|10876.56|9217.83|18097.75|73578.06| |Segment result|10928.78|2464.95|3535.44|3066.06|6953.98|26949.21| | |8801.09|1821.43|2863.46|2490.17|5054.55|21030.70| |Unallocable expenses (net)| | | | | |1572.77| | | | | | | |1475.84| |Operating income| | | | | |25376.44| | | | | | | |19554.86| |Other income (net)| | | | | |3740.20| | | | | | | |4466.73| |Profit before Exceptional item and tax| | | | | |29116.64| | | | | | | |24021.59| |Exceptional item| | | | | |-| | | | | | | |528.38| |Profit before tax| | | | | |29116.64| | | | | | | |24549.97| |Tax expense| | | | | |6233.94| | | | | | | |5293.01| |Profit for the year| | | | | |22882.70| | | | | | | |19256.96| # 218 Unconsolidated Financial Statements # 30) SEGMENT REPORTING (contd.) |Particulars|Business Segments|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Packaged Goods|Telecom, Media and Entertainment|Others|Total| |---|---|---|---|---|---|---|---| |As at March 31, 2016|Segment assets|7130.90|1938.46|2797.72|3051.07|7467.41|22385.56| | | |6164.34|1809.16|2620.90|2947.68|6509.17|20051.25| | |Unallocable assets| | | | |55282.98| | | | | | | | |43014.05| | | |Total assets| | | | |77668.54| | | | | | | | |63065.30| | |Segment liabilities|1123.13|126.70|137.92|280.21|570.25|2238.21| | | |1774.71|290.22|472.25|490.29|1049.27|4076.74| | | |Unallocable liabilities| | | | |16563.47| | | | | | | | |13572.12| | | |Total liabilities| | | | |18801.68| | | | | | | | |17648.86| | |Year ended March 31, 2016|Other Information| |Capital Expenditure (unallocable)| | |2385.43| | | | | | | | |2599.67| | | |Depreciation and amortisation| | | | |1559.19| | | |(unallocable)| | | | |865.39| | | |Other significant non cash expense|29.41|7.29|8.09|11.34|62.94|119.07| | |(allocable)|19.34|6.46|47.08|1.08|62.69|136.65| | |Other significant non cash expense| | | | |-| | | |(net) (unallocable)| |2.50| | | | | # The following geographic segments individually contribute 10 percent or more of the Company's revenue and segment assets. |Geographic segments|Revenue for the year ended March 31, 2016|Segment assets as at March 31, 2016| |---|---|---| |Americas|49248.66|9288.17| | |41969.70|9331.78| |Europe|22409.07|6677.58| | |19965.38|5931.83| |India|6182.38|5659.67| | |4875.99|4202.63| Previous years' figures are in italics. # Annual Report 2015-16 # Notes forming part of the Financial Statements # 31) RELATED PARTY DISCLOSURES # A) Related parties and their relationship # I) Holding Company Tata Sons Limited # II)(A) Subsidiaries (Direct holding) 1. CMC Limited (amalgamated with Tata Consultancy Services w.e.f. 01.04.2015) 2. CMC Americas Inc. 3. Tata Consultancy Services Sverige AB 4. Tata Consultancy Services Asia Pacific Pte Ltd. 5. TCS Iberoamerica SA # II)(B) Subsidiaries (Indirect holding) 1. CMC eBiz Inc. 2. Tata Consultancy Services Malaysia Sdn Bhd 3. Tata Consultancy Services (China) Co., Ltd. 4. PT Tata Consultancy Services Indonesia 5. Tata Consultancy Services (Thailand) Limited 6. Tata Consultancy Services (Philippines) Inc. 7. |
Nippon TCS Solution Center Limited (merged with Tata Consultancy Services Japan Ltd. w.e.f 01.07.2014) 8. Tata Consultancy Services Japan Ltd. (merged with IT Frontier Corporation (a subsidiary of Mitsubishi Corporation) w.e.f 01.07.2014) 9. Tata Consultancy Services Japan, Ltd. (new entity formed w.e.f 1.07.2014 pursuant to the merger of Tata Consultancy Services Japan Ltd. and IT Frontier Corporation) 10. TCS Solution Center S.A. 11. Tata Consultancy Services Argentina S.A. 12. Tata Consultancy Services De Mexico S.A., De C.V. 13. TCS Inversiones Chile Limitada 14. Tata Consultancy Services Do Brasil Ltda 15. Tata Consultancy Services Chile S.A. 16. TATASOLUTION CENTER S.A. 17. TCS Uruguay S.A. 18. MGDC S.C. 19. Technology Outsourcing S.A.C. (new entity acquired on 30.10.2015) 6. Tata Consultancy Services Netherlands BV 1. Tata Consultancy Services Luxembourg S.A. 2. Tata Consultancy Services Switzerland Ltd. 3. Tata Consultancy Services France S.A.S. 4. TCS Italia SRL 5. Tata Consultancy Services Osterreich GmbH 6. Tata Consultancy Services Danmark ApS 7. Tata Consultancy Services De Espana S.A. 8. Tata Consultancy Services Portugal Unipessoal Limitada 9. Alti S.A. 220 Unconsolidated Financial Statements # 31) RELATED PARTY DISCLOSURES (contd.) # A) Related parties and their relationship (contd.) # II)(A) Subsidiaries (Direct holding) # II)(B) Subsidiaries (Indirect holding) |x.|Planaxis Technologies Inc.| |---|---| |xi.|Alti HR S.A.S.| |xii.|Alti Infrastructures Systemes & Reseaux S.A.S.| |xiii.|Alti NV| |xiv.|Tescom (France) Software Systems Testing S.A.R.L.| |xv.|Alti Switzerland S.A.| |xvi.|Teamlink| |xvii.|Tata Consultancy Services Saudi Arabia (New entity incorporated on 02.07.2015)| |7.|TCS FNS Pty Limited| | |i. TCS Financial Solutions Australia Holdings Pty Limited| | |ii. TCS Financial Solutions Australia Pty Limited| | |iii. PT Financial Network Services| | |iv. TCS Management Pty Ltd.(liquidated w.e.f 23.03.2015)| | |v. TCS Financial Solution (Beijing) Co. Ltd.| |8.|APTOnline Limited (formerly APOnline Limited)| |9.|Tata America International Corporation| | |i. MS CJV Investments Corporation| |10.|Tata Consultancy Services Belgium S.A.| |11.|Tata Consultancy Services Deutschland GmbH| |12.|WTI Advanced Technology Limited (Amalgamated with Tata Consultancy Services Limited pursuant to the order dated 27.03.2015 of the Hon'ble High Court of Judicature at Bombay)| |13.|Tata Consultancy Services Canada Inc.| |14.|Diligenta Limited| | |i. Diligenta 2 Limited| |15.|C-Edge Technologies Limited| |16.|MP Online Limited| |17.|Tata Consultancy Services Morocco SARL AU (liquidated w.e.f. 30.05.2014 vide court order dated 07.08.2014)| |18.|Tata Consultancy Services (Africa)(PTY) Ltd.| | |i. Tata Consultancy Services (South Africa) (PTY) Ltd.| |19.|TCS e-Serve International Limited| | |i. TCS e-Serve America, Inc.| |20.|MahaOnline Limited| |21.|Tata Consultancy Services Qatar S. S. C.| |22.|Computational Research Laboratories Inc. (liquidated w.e.f. 18.02. 2015)| |23.|TCS Foundation (entity incorporated on 13.03.2015 under Section 8 of the Companies Act, 2013)| # III) Fellow Subsidiaries with whom the Company has transactions - Infiniti Retail Limited - Tata AIG General Insurance Company Limited - Tata AIA Life Insurance Company Limited - Tata Investment Corporation Limited Unconsolidated Financial Statements 221 # Annual Report 2015-16 # Notes forming part of the Financial Statements # 31) RELATED PARTY DISCLOSURES (contd.) # A) Related parties and their relationship (contd.) - Tata Limited - Tata Advanced Systems Limited - Tata Asset Management Limited - Tata Business Support Services Limited - Tata Capital Limited - Tata Housing Development Company Limited - Tata Consulting Engineers Limited - Tata Sky Limited - Tata Realty And Infrastructure Limited - e-Nxt Financials Limited (merged with Tata Business Support Services Limited w.e.f. 01.07.2015) - Tata Industries Limited - Tata International Limited - Drive India Enterprise Solutions Limited (ceased w.e.f. 01.09.2015) - Nova Integrated System Limited - Tata Sikorsky Aerospace Limited (formerly Tara Aerospace Systems Limited) - TBSS Healthcare TPA Services Limited - Tata Capital Housing Finance Limited - TC Travel And Services Limited - Tata Securities Limited - Tata Capital Forex Limited - Tata Capital Financial Services Limited - Tata Cleantech Capital Limited - Tata Value Homes Limited (formerly Smart Value Homes Limited) - Tata Interactive Systems GmbH - Tata Interactive Systems AG - Tata Unistore Limited (named changed w.e.f. 13.05.2015) (formerly Tata Industrial Services Limited) - Tata Africa Holdings (SA) (Proprietary) Limited - TATA Africa Holdings (Kenya) Limited - TATA Africa Holdings (Tanzania) Limited - Tata Africa Services (Nigeria) Limited - Tata Uganda Limited - Tata Zambia Limited - Calsea Footwear Private Limited - Tata SIA Airlines Limited - Taj Air Limited - TRIL Infopark Limited - Tata Autocomp Systems Limited - Tata Lockheed Martin Aerostructures Limited (formerly Tata Aerostructures Limited) - Panatone Finvest Limited # IV) Key Management Personnel - Mr. N. Chandrasekaran, Chief Executive Officer and Managing Director - Mr. Rajesh Gopinathan, Chief Financial Officer - Ms. Aarthi Subramanian, Executive Director (w.e.f. |
12.03.2015) # Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 31) RELATED PARTY DISCLOSURES (contd.) # B) Transactions with related parties for the year ended March 31, 2016 | |Holding Company|Subsidiaries|Fellow Subsidiaries|Management Personnel and their relatives|Total| |---|---|---|---|---|---| |Brand equity contribution|75.00|-|-|-|75.00| |Purchase of fixed assets|-|-|29.91|-|29.91| | |-|1.20|66.73|-|67.93| |Loans and advances given|-|0.34|0.89|-|1.23| | |-|14.40|-|-|14.40| |Loans and advances repaid|-|11.27|-|-|11.27| | |-|40.33|0.05|-|40.38| |Inter-corporate deposits placed|-|-|-|-|-| | |-|-|-|-|-| |Inter-corporate deposits matured|-|-|-|-|-| | |-|-|380.00|-|380.00| |Purchase of investments|-|8.18|8583.00|-|8591.18| | |-|-|6917.57|-|6917.57| |Redemption / sale of investments|-|101.75|8617.87|-|8719.62| | |29.43|253.36|6284.56|-|6567.35| |Revenue (including reimbursements)|4.27|53069.96|222.56|-|53296.79| | |2.37|45575.72|231.68|-|45809.77| |Interest income|-|0.16|-|-|0.16| | |49.61|1.31|29.40|-|80.32| |Dividend income|-|695.51|-|-|695.51| | |-|1334.65|-|-|1334.65| |Rent income|-|2.99|-|-|2.99| | |-|2.50|-|-|2.50| |Other income|-|38.69|-|-|38.69| | |-|35.91|-|-|35.91| |Purchase of goods, services and facilities (including reimbursements)|3.35|3185.20|632.74|-|3821.29| | |0.64|3045.17|266.62|-|3312.43| |Rent expense|0.98|20.25|26.07|-|47.30| | |0.98|89.02|26.59|-|116.59| |Provision / (Write back of provision) for doubtful receivables, advances (net)|-|(0.02)|(0.07)|-|(0.09)| | |-|(19.72)|0.40|-|(19.32)| |Bad debts written off|-|0.01|0.04|-|0.05| | |-|0.34|-|-|0.34| |Advances written off|-|-|-|-|-| | |-|19.37|-|-|19.37| |Dividend paid on equity shares|5845.98|-|4.20|0.37|5850.55| | |10825.89|-|12.78|0.66|10839.33| |Dividend paid on redeemable preference shares|-|-|-|-|-| | |28.68|-|-|-|28.68| |Guarantees given|-|2.76|-|-|2.76| | |-|0.25|-|-|0.25| |Remuneration|-|-|-|43.26*|43.26| | |-|-|-|23.50|23.50| # Annual Report 2015-16 # Notes forming part of the Financial Statements # 31) RELATED PARTY DISCLOSURES (contd.) # C) Balances with related parties as at March 31, 2016 | |Holding Company|Subsidiaries|Fellow Subsidiaries|Key Management Personnel and their relatives|Total| |---|---|---|---|---|---| |Trade receivables, Unbilled revenue, Loans and advances, Other assets (net)|4.40|10481.24|112.74|-|10598.38| |Trade payables, Income received in advance, Advances from customers, Other liabilities|68.67|1509.14|35.60|-|1613.41| |Guarantees|-|3225.31|-|-|3225.31| |Investment in debentures / mutual funds / bonds|-|-|610.00|-|610.00| |Previous years' figures are in italics|-|3310.95|-|-|3310.95| | |-|-|595.00|-|595.00| # D) Disclosure of material transactions with related parties | |2016|2015| |---|---|---| |Purchase of fixed assets| | | |TRIL Infopark Limited|5.90|0.54| |Tata Consulting Engineers Limited|17.03|18.66| |Tata Realty and Infrastructure Limited|1.79|46.68| |Tata Interactive Systems GmbH|5.17|0.73| |Loans and advances given during the year| | | |CMC Limited|-|12.46| |Taj Air Limited|0.84|-| |TCS e-Serve International Limited|0.16|0.40| |Loans and advances repaid during the year| | | |TCS FNS Pty Limited|8.68|37.31| |C-Edge Technologies Limited|2.00|1.99| |Inter-corporate deposits matured| | | |Tata Realty and Infrastructure Limited|-|50.00| |Tata Housing Development Company Limited|-|50.00| |Tata Capital Financial Services Limited|-|280.00| |Purchase of investments| | | |Tata Asset Management Limited|8583.00|6856.74| |Redemption / sale of investments| | | |Tata Asset Management Limited|8617.87|6284.56| |Revenue (including reimbursements)| | | |Tata America International Corporation|43396.54|36962.35| |Interest income| | | |Tata Sons Limited|-|49.61| |Panatone Finvest Limited|-|8.85| |Tata Capital Financial Services Limited|-|13.75| |TCS FNS Pty Limited|0.06|-| |Tata Consultancy Services Switzerland Ltd.|0.10|0.14| # 224 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 31) RELATED PARTY DISCLOSURES (contd.) # D) Disclosure of material transactions with related parties (contd.) | |2016|2015| |---|---|---| |Dividend income| | | |Tata America International Corporation|-|766.17| |Tata Consultancy Services Canada Inc.|73.89|193.37| |TCS e-Serve International Limited|25.00|202.00| |CMC Americas Inc.|99.48|-| |Tata Consultancy Services Asia Pacific Pte Ltd.|297.19|-| |Tata Consultancy Services Deutschland GmbH|73.07|-| |Diligenta Limited|100.43|-| |Rent income| | | |TCS e-Serve International Limited|2.80|2.19| |Other income| | | |Diligenta Limited|25.97|25.07| |TCS e-Serve International Limited|8.50|6.34| |Purchase of goods, services and facilities (including reimbursements)| | | |CMC Americas Inc.|1170.34|1110.19| |Tata America International Corporation|587.68|578.86| |Tata Capital Forex Limited (formerly TT Holdings & Services Limited)|489.57|216.92| |Rent expense| | | |CMC Limited|-|69.44| |Diligenta Limited|17.69|17.23| |TRIL Infopark Limited|24.35|24.90| |Provision / (Write back of provision) for doubtful receivables, advances (net)| | | |Tata Consultancy Services Morocco SARL AU (liquidated w.e.f. 30.05.2014 vide court order dated 07.08.2014)|-|(19.37)| |Tata Sky Limited|0.21|0.32| |Drive India Enterprise Solutions Limited|0.05|(0.28)| |Infiniti Retail Limited|(0.33)|0.35| |Tata Capital Limited|(0.18)|-| |TATA Africa Holdings (Kenya) Limited|0.18|(0.04)| |Bad debts written off| | | |Tata Consultancy Services (Thailand) Limited|-|0.33| |Tata AIG General Insurance Company Limited|0.04|-| |APTOnline Limited (formerly APOnline Limited)|0.01|0.01| |Advances written off| | | |Tata Consultancy Services Morocco SARL AU (liquidated w.e.f. 30.05.2014 vide court order dated 07.08.2014)|-|19.37| |Guarantees given during the year| | | |Tata Consultancy Services Asia Pacific Pte Ltd.|2.76|0.25| |Remuneration to Key Management Personnel| | | |Mr. |
N.Chandrasekaran|36.66*|21.28| Unconsolidated Financial Statements 225 # Annual Report 2015-16 # 31) RELATED PARTY DISCLOSURES (contd.) # E) Disclosure of material balances with related parties | |As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |Trade receivables, unbilled revenues, loans and advances and other assets (net)|Tata America International Corporation|7459.43|7266.20| |Trade payables, income received in advance, advances from customers, other liabilities|Tata America International Corporation|742.39|629.20| | |CMC Americas Inc.|123.85|274.79| |Guarantees outstanding|Diligenta Limited|2716.40|2694.55| |Investment in debentures / mutual funds / bonds|Tata Asset Management Limited|610.00|595.00| *Includes the one-time bonus paid to eligible employees # 32) OBLIGATIONS TOWARDS OPERATING LEASES |Particulars|As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |Non-cancellable operating lease obligations|Not later than one year|386.37|511.72| | |Later than one year but not later than five years|1283.53|1590.64| | |Later than five years|986.14|1474.45| |Total|2656.04|3576.81| | Rent expense of ` 439.19 crores (Previous year: ` 550.93 crores) in respect of obligations under non-cancellable operating leases and ` 619.46 crores (Previous year: ` 521.77 crores) in respect of cancellable operating leases have been charged to the statement of profit and loss. # 33) OBLIGATIONS TOWARDS FINANCE LEASES |Particulars|As at March 31, 2016|As at March 31, 2015| | |---|---|---|---| |Assets acquired under finance leases|(i) Minimum lease payments:| | | | |Not later than one year|24.13|33.08| | |Later than one year but not later than five years|47.48|59.27| | |Later than five years|32.92|44.35| | |Total|104.53|136.70| | |(ii) Present value of minimum lease payments:| | | | |Not later than one year|15.24|22.11| | |Later than one year but not later than five years|23.28|30.92| | |Later than five years|26.49|33.21| | |Total|65.01|86.24| | |Add: Future finance charges|39.52|50.46| | |Total|104.53|136.70| # 226 Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 34) EARNINGS PER EQUITY SHARE |Particulars|2016|2015| |---|---|---| |Profit for the year (` crores)|22882.70|19256.96| |Amount available for equity shareholders (` crores)|22882.70|19256.96| |Weighted average number of shares|197,04,27,941|195,87,27,979| |Earning per share - Basic and diluted (`)|116.13|98.31| |Face value per equity share (`)|1.00|1.00| # 35) AUDITORS' REMUNERATION File: AR_TCS_2015_2016.md |Particulars|(` crores)|2016|2015| |---|---|---|---| |Services as statutory auditors (including quarterly audits)| |4.50|3.75| |Audit of financial statements as per IFRS| |3.00|2.50| |Tax audit| |0.63|0.53| |Services for tax matters| |0.85|0.70| |SSAE 16 and other matters| |3.03|1.47| |Reimbursement of out-of-pocket expenses| |0.16|0.16| |Service tax| |1.71|1.13| Service tax credit has been / will be availed. In addition to the above, fees amounting to ` 1.41 crores (Previous year: ` 1.97 crores) for attest and other professional services rendered have been paid to firms of Chartered Accountants in which some of the partners are also partners in the firm of statutory auditors. # 36) CONTINGENT LIABILITIES |Particulars|(` crores)|As at March 31, 2016|As at March 31, 2015| |---|---|---|---| |Claims against the Company not acknowledged as debt (See (a) below)| |6873.46|40.72| |Income tax demands (See (b) below)| |7955.14|3901.82| |Indirect tax demands (See (c) below)| |192.89|61.01| |Guarantees given by the Company on behalf of subsidiaries (See (d) below)| |3225.31|3310.95| a) In October 2014, Epic Systems Corporation ('Epic') filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged unauthorised download and misuse of Epic's confidential information and trade secrets. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling ` 6227.03 crores (US $940 million) to Epic which the trial judge has indicated his intent to reduce. On the basis of legal opinion and legal precedence, the Company expects to defend itself against the claim and believes that the claim will not sustain. b) In respect of income tax demands of ` 318.20 crores (March 31, 2015: ` 318.20 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. c) In respect of indirect tax demands of ` 8.53 crores (March 31, 2015: ` 8.53 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. d) The Company has provided guarantees aggregating ` 2716.40 crores (GBP 285.08 million) (March 31, 2015: ` 2694.55 crores) (GBP 291.30 million) to third parties on behalf of its subsidiary Diligenta Limited. The Company does not expect any outflow of resources in respect of the above. Unconsolidated Financial Statements # Annual Report 2015-16 # Notes forming part of the Financial Statements # 37) CAPITAL AND OTHER COMMITMENTS a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) ` 1446.17 crores (March 31, 2015: ` 1844.08 crores). |
b) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of balance ` 24,486.94 per unit of 1,000 units aggregating to ` 2.45 crores (March 31, 2015: ` 2.96 crores) # 38) DERIVATIVE FINANCIAL INSTRUMENTS The Company, in accordance with its risk management policies and procedures, enters into foreign exchange forwards, options and futures contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one day and eight years. The Company has outstanding foreign exchange option contracts, which have been designated as Cash Flow Hedges, as at: | |March 31, 2016|March 31, 2016|March 31, 2016|March 31, 2015|March 31, 2015|March 31, 2015| |---|---|---| |Foreign Currency|No. of Contracts|Notional amount of contracts (million)|Fair Value (` crores)|No. of Contracts|Notional amount of contracts (million)|Fair Value (` crores)| |U.S. Dollar|9|225.00|41.44|-|-|-| |Sterling Pound|8|160.00|51.85|18|297.00|67.05| |Euro|24|285.00|19.51|9|171.00|87.78| |Australian Dollar|21|228.00|(12.47)|6|97.00|31.15| The movement in Hedging Reserve for derivatives designated as Cash Flow Hedges is as follows: |Particulars|Year ended March 31, 2016|Year ended March 31, 2016|Year ended March 31, 2015|Year ended March 31, 2015| |---|---|---| | |Intrinsic Value|Time Value|Intrinsic Value|Time Value| |Balance at the beginning of the year|151.42|(0.67)|24.88|4.76| |Changes in the fair value of effective portion of Cash Flow Hedges|249.82|(338.69)|905.89|(440.18)| |(Gains)/losses transferred to the statement of profit and loss on occurrence of forecasted hedge transactions|(323.09)|317.98|(779.35)|434.75| |Balance at the end of the year|78.15|(21.38)|151.42|(0.67)| Net gain on derivative instruments of ` 56.77 crores recognised in Hedging Reserve as at March 31, 2016, is expected to be transferred to the statement of profit and loss by March 31, 2017. In addition to the above Cash Flow Hedges, the Company has outstanding foreign exchange forwards, options and future contracts with notional amount aggregating ` 22143.66 crores (March 31, 2015: ` 19949.03 crores) whose fair value showed a gain of ` 284.48 crores as at March 31, 2016 (March 31, 2015: gain of ` 159.65 crores). Exchange gain of ` 180.55 crores (March 31, 2015: Exchange gain of ` 1363.87 crores) on foreign exchange forwards, options and future contracts for the year ended March 31, 2016 have been recognised in the statement of profit and loss. As at March 31, 2016, the Company has net foreign currency exposures that are not hedged by derivative instruments or otherwise amounting to ` 2119.01 crores (March 31, 2015: ` 2884.79 crores) # Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 39) MICRO AND SMALL ENTERPRISES |Particulars|As at March 31, 2016|As at March 31, 2015| |---|---|---| |Amount due to vendor|15.48|7.74| |Principal amount paid (includes unpaid) beyond the appointed date|175.40|247.61| |Interest due and payable for the year|-|-| |Interest accrued and remaining unpaid (includes interest disallowable of ` 2.98 crores ( Previous year: ` 2.16 crores))|-|-| Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management. # 40) INCOME IN FOREIGN CURRENCY |Particulars|2016|2015| |---|---|---| |(a) Revenue from operations|81193.85|70680.70| |(b) Interest income|5.37|5.41| |(c) Dividend income|647.10|1090.29| |(d) Other income (net)|38.41|41.92| # 41) EXPENDITURE IN FOREIGN CURRENCY |Particulars|2016|2015| |---|---|---| |(a) Royalty|8.84|1.85| |(b) Legal and professional fees|190.54|189.27| |(c) Interest|2.64|9.27| |(d) Overseas employee costs|7090.34|5193.50| |(e) Overseas business expenses|13054.16|11636.80| |(f) Services rendered by business associates and others|5762.89|4682.61| |(g) Software, hardware and material cost|1046.03|1002.32| |(h) Communication expenses|326.49|317.87| |(i) Travelling and conveyance expenses|369.23|258.43| |(j) Other operating expenses|818.44|678.26| |(k) Foreign taxes|884.93|775.38| # 42) VALUE OF IMPORTS CALCULATED ON CIF BASIS |Particulars|2016|2015| |---|---|---| |Raw materials, sub-assemblies and components|27.66|47.37| |Capital goods|474.13|523.21| |Stores and spare parts|0.31|0.03| # Annual Report 2015-16 # Notes forming part of the Financial Statements # 43) VALUE OF IMPORTED AND INDIGENOUS RAW MATERIALS, SUB-ASSEMBLIES AND COMPONENTS, STORES AND SPARE PARTS CONSUMED |Particulars|2016 ( ` crores)|%|2015 ( ` crores)|%| |---|---|---|---|---| |Raw materials, sub-assemblies and components|28.31|72.42|46.08|71.31| |Imported:|28.31|72.42|46.08|71.31| |Indigenous:|10.78|27.58|18.54|28.69| | |39.09|100.00|64.62|100.00| |Stores and spare parts|0.31|41.89|0.03|50.00| |Imported:|0.31|41.89|0.03|50.00| |Indigenous:|0.43|58.11|0.03|50.00| | |0.74|100.00|0.06|100.00| Consumption figures shown above are after adjusting excess and shortages ascertained on physical count, unserviceable items, etc. # 44) REMITTANCE IN FOREIGN CURRENCIES FOR DIVIDENDS The Company has remitted ` Nil (March 31, 2015: ` Nil ) in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittance, if any, in foreign currencies on account of dividends have been made by / on behalf of non-resident shareholders. |
The particulars of dividends declared and paid to non-resident shareholders for the year ended March 31, 2015 and interim dividends for the year ended March 31, 2016, are as under: |Number of non-resident shareholders|Number of equity shares held|Gross amount of dividend 2016 ( ` crores)|Gross amount of dividend 2015 ( ` crores)| | |---|---|---|---|---| |Final dividend for 2013-14 declared in June 2014|10,690|32,47,83,907|-|649.57| |Interim dividend declared in July 2014|10,605|32,79,02,995|-|1475.56| |Interim dividend declared in October 2014|11,497|32,96,36,378|-|164.82| |Interim dividend declared in January 2015|11,970|33,23,64,092|-|166.18| |Final dividend for 2014-15 declared in June 2015 *|12,882|33,80,58,847|813.72|-| |Interim dividend declared in July 2015 *|13,047|33,68,72,803|184.53|-| |Interim dividend declared in October 2015|13,015|33,63,87,264|185.01|-| |Interim dividend declared in January 2016|13,376|33,25,39,442|182.90|-| *Includes dividend declared by CMC Limited # 45) DISCLOSURE UNDER REGULATION 34(3) OF THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 Amount of loans and advances in nature of loans outstanding from subsidiaries as at March 31, 2016: |Subsidiary Company|Outstanding as at March 31, 2016 (` crores)|Maximum amount outstanding during the year (` crores)| |---|---|---| |TCS FNS Pty Limited *|-|6.71| | |6.18|45.53| |Tata Consultancy Services Morocco SARL AU|-|-| | |-|5.51| * TCS FNS Pty Limited has made the following investments in its subsidiaries: No. of Shares TCS Financial Solutions Australia Holdings Pty Limited: 65,58,424 Previous years' figures are in italics 230 Unconsolidated Financial Statements # Notes forming part of the Financial Statements 46) Research and development expenditure aggregating ` 232.22 crores (Previous year: `192.62 crores), including capital expenditure was incurred during the year. 47) During the year, the Company has incurred an amount of ` 294.23 crores (Previous year: `218.42 crores) towards Corporate Social Responsibility expenditure. 48) The Company revised its policy of providing depreciation on fixed assets effective April 1, 2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis on some assets and straight line basis on others. Further the remaining useful life has also been revised wherever appropriate based on an evaluation. The carrying amount as on April 1, 2014 is depreciated over the revised remaining useful life. As a result of these changes, the depreciation charge for the year ended March 31, 2015 is higher by ` 131.16 crores and the effect relating to the period prior to April 1, 2014 is a net credit of ` 528.38 crores (excluding deferred tax of ` 129.62 crores) which has been shown as an 'Exceptional Item' in the statement of profit and loss. 49) During the year ended March 31, 2015, an amount of ` 2326.42 crores has been recognised in the statement of profit and loss and accrued under Trade Payables in the balance sheet in respect of one-time bonus to eligible employees. 50) Previous years' figures have been recast / restated. Unconsolidated Financial Statements # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 # in the prescribed Form AOC-1 relating to subsidiary companies # Annual Report 2015-16 (` crores) |Sr. No.|Name of the Subsidiary Company|Reporting Currency|Exchange Rate|Share Capital|Reserves & Surplus|Total Assets|Total Liabilities|Turnover|Profit before Taxation|Provision for Taxation|Profit after Taxation|Proposed Dividend|% of Shareholding|Country| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |1|APTOnline Limited (formerly APOnline Limited)|INR|1.000000|1.77|43.58|169.16|123.81|30.00|163.27|48.07|16.78|31.29|17.70|89%|India| |2|MP Online Limited|INR|1.000000|1.00|52.62|91.18|37.56|-|68.60|22.68|8.05|14.63|4.90|89%|India| |3|C-Edge Technologies Limited|INR|1.000000|10.00|86.75|190.95|94.20|-|238.79|51.72|18.06|33.66|32.00|51%|India| |4|MahaOnline Limited|INR|1.000000|2.55|38.76|143.07|101.76|-|195.43|15.35|5.33|10.02|6.38|74%|India| |5|CMC Americas Inc.|USD|66.245000|10.60|121.74|360.46|228.12|0.00|1,572.37|124.46|48.23|76.23|105.99|100%|U.S.A.| |6|CMC eBiz Inc.|USD|66.245000|0.01|0.16|2.97|2.80|-|1.54|0.17|0.06|0.11|19.87|100%|U.S.A.| |7|TCS e-Serve International Limited|INR|1.000000|10.00|171.86|206.25|24.39|34.20|80.05|25.72|15.13|10.59|-|100%|India| |8|TCS e-Serve America, Inc.|USD|66.245000|1.83|13.43|26.49|11.23|-|57.98|(13.18)|(1.24)|(11.94)|-|100%|U.S.A.| |9|Diligenta Limited|GBP|95.286795|9.53|567.57|1,024.58|447.48|240.29|1,772.69|(78.06)|(14.28)|(63.78)|95.29|100%|U.K.| |10|Diligenta 2 Limited|GBP|95.286795|0.01|74.61|74.62|-|-|195.67|(0.83)|(0.68)|(0.15)|-|100%|U.K.| |11|Tata Consultancy Services Canada Inc.|CAD|51.138644|36.13|355.08|962.61|571.40|-|3,148.78|286.45|76.43|210.02|76.71|100%|Canada| |12|Tata America International Corporation|USD|66.245000|1.32|2,280.50|11,534.49|9,252.67|125.75|50,882.82|1,163.24|430.76|732.48|-|100%|U.S.A.| |13|MS CJV Investments Corporation|USD|66.245000|9.30|-|9.30|-|9.30|-|-|-|-|-|100%|U.S.A.| |14|Tata Consultancy Services Asia Pacific Pte Ltd.|USD|66.245000|29.15|475.11|968.74|464.48|487.75|1,877.46|204.72|25.34|179.38|298.10|100%|Singapore| |15|Tata Consultancy Services (China) Co., Ltd.|CNY|10.249567|206.98|(52.39)|224.13|69.54|-|466.34|27.27|5.06|22.21|-|90%|China| |16|Tata Consultancy Services Japan, Ltd.|JPY|0.589499|255.11|536.69|1,573.74|781.94|-|3,674.75|156.01|56.84|99.17|51.68|51%|Japan| |17|Tata Consultancy Services Malaysia Sdn Bhd|MYR|17.007702|3.40|86.29|154.62|64.93|0.01|311.25|49.35|11.46|37.89|25.51|100%|Malaysia| |18|PT Tata Consultancy Services Indonesia|IDR|0.005016|0.50|27.40|40.12|12.22|-|58.52|19.69|7.33|12.36|19.29|100%|Indonesia| |19|Tata Consultancy Services (Philippines) Inc.|PHP|1.442382|39.84|116.26|276.87|120.77|0.00|569.92|27.20|0.85|26.35|-|100%|Philippines| |20|Tata Consultancy Services (Thailand) Limited|THB|1.883860|1.51|8.73|13.28|3.04|-|18.86|0.68|0.21|0.47|-|100%|Thailand| |21|Tata Consultancy Services Belgium S.A.|EUR|75.274218|1.42|173.61|401.56|226.53|0.01|939.12|68.58|22.38|46.20|-|100%|Belgium| |22|Tata Consultancy Services Deutschland GmbH|EUR|75.274218|1.13|112.52|611.24|497.59|-|1,965.21|87.33|27.81|59.52|75.27|100%|Germany| |23|Tata Consultancy Services Sverige AB|SEK|8.149520|0.08|209.74|728.29|518.47|-|1,608.94|87.79|20.98|66.81|-|100%|Sweden| |24|Tata Consultancy Services Netherlands B.V.|EUR|75.274218|496.81|1,188.64|1,991.30|305.85|1,197.42|2,034.03|344.76|86.48|258.28|-|100%|Netherlands| |25|TCS Italia SRL|EUR|75.274218|16.56|(16.03)|121.55|121.02|-|258.32|(4.23)|4.74|(8.97)|-|100%|Italy| |26|Tata Consultancy Services Luxembourg S.A.|EUR|75.274218|42.15|(12.59)|72.51|42.95|-|154.48|10.05|(3.63)|13.68|-|100%|Capellen (G.D. de Luxembourg)| # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 # in the prescribed Form AOC-1 relating to subsidiary companies |Sr. |
No.|Name of the Subsidiary Company|Reporting Currency|Exchange Rate|Share Capital|Reserves & Surplus|Total Assets|Total Liabilities|Turnover|Profit before Taxation|Provision for Taxation|Profit after Taxation|Proposed Dividend|% of Shareholding|Country| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |27|Tata Consultancy Services Switzerland Ltd.|CHF|68.761677|10.31|163.36|563.22|389.55|51.58|1,593.05|104.22|20.15|84.07|-|100% Switzerland| |28|Tata Consultancy Services France|SAR|75.274218|2.26|(57.13)|306.69|361.56|-|644.35|(9.29)|6.51|(15.80)|-|100% France| |29|Tata Consultancy Services Osterreich GmbH|EUR|75.274218|0.26|2.76|21.10|18.08|-|19.28|0.08|0.02|0.06|-|100% Austria| |30|Tata Consultancy Services Danmark Ap|DKK|10.100941|1.01|41.23|46.58|4.34|-|18.62|0.34|0.08|0.26|-|100% Denmark| |31|Tata Consultancy Services De Espana S.A.|EUR|75.274218|0.45|0.84|101.71|100.42|0.04|229.09|(7.55)|-|(7.55)|-|100% Spain| |32|Tata Consultancy Services Portugal Unipessoal Limitada|EUR|75.274218|0.04|(12.64)|18.44|31.04|-|22.87|(4.31)|-|(4.31)|-|100% Portugal| |33|Alti S.A.|EUR|75.274218|2.76|(184.18)|521.36|702.78|109.78|771.55|(165.85)|16.95|(182.80)|-|100% France| |34|Alti HR S.A.|EUR|75.274218|0.28|11.91|14.36|2.17|-|6.65|(0.19)|0.11|(0.30)|-|100% France| |35|Tescom (France) Software Systems Testing S.A.R.L.|EUR|75.274218|0.75|(6.45)|4.41|10.11|-|12.55|0.79|0.27|0.52|-|100% France| |36|Alti Switzerland S.A.|CHF|68.761677|0.62|10.49|18.68|7.57|-|50.59|2.15|0.61|1.54|-|100% Switzerland| |37|Alti Infrastructures Systemes & Reseaux S.A.|EUR|75.274218|0.38|1.41|4.94|3.15|-|11.89|0.68|0.21|0.47|-|100% France| |38|Alti NV|EUR|75.274218|6.17|6.29|33.70|21.24|-|66.99|(9.15)|0.01|(9.16)|-|100% Belgium| |39|Teamlink|EUR|75.274218|0.47|(0.60)|0.07|0.20|-|-|(0.02)|-|(0.02)|-|100% Belgium| |40|Planaxis Technologies Inc.|EUR|75.274218|-|46.80|98.15|51.35|-|45.94|(5.65)|1.46|(7.11)|-|100% Canada| |41|Tata Consultancy Services Saudi Arabia|SAR|17.663449|6.62|(0.47)|6.62|0.47|-|-|(0.47)|-|(0.47)|-|76% Saudi Arabia| |42|Tata Consultancy Services (Africa) (PTY) Ltd.|ZAR|4.462896|6.25|0.15|6.44|0.04|6.02|-|3.89|0.01|3.88|3.75|100% South Africa| |43|Tata Consultancy Services (South Africa) (PTY) Ltd.|ZAR|4.462896|8.03|61.68|196.99|127.28|-|529.36|29.90|11.27|18.63|5.22|75% South Africa| |44|TCS FNS Pty Limited|AUD|50.843038|189.44|(25.61)|168.15|4.32|170.57|-|(0.05)|-|(0.05)|-|100% Australia| |45|TCS Financial Solutions Beijing Co., Ltd.|CNY|10.249567|1.98|(7.25)|98.09|103.36|-|105.60|12.48|(1.06)|13.54|-|100% China| |46|TCS Financial Solutions Australia Holdings Pty Limited|AUD|50.843038|70.82|(20.55)|50.27|-|1.92|-|-|-|-|-|100% Australia| |47|TCS Financial Solutions Australia Pty Limited|AUD|50.843038|-|95.35|180.68|85.33|1.64|85.77|67.21|3.46|63.75|-|100% Australia| |48|PT Financial Network Services|USD|66.245000|0.40|(1.49)|-|1.09|-|-|0.17|(0.17)|-|-|100% Indonesia| |49|TCS Iberoamerica SA|UYU|2.065960|651.97|480.78|1,307.45|174.70|1,307.15|-|74.02|2.13|71.89|-|100% Uruguay| |50|TCS Solution Center S.A.|UYU|2.065960|40.84|6.38|264.74|217.52|-|363.80|(9.89)|6.11|(16.00)|-|100% Uruguay| |51|Tata Consultancy Services Argentina S.A.|ARS|4.534844|19.10|(42.80)|27.20|50.90|-|48.13|(43.93)|0.01|(43.94)|-|99.99% Argentina| |52|Tata Consultancy Services Do Brasil Ltda|BRL|18.420833|290.07|(266.23)|246.66|222.82|-|398.26|(13.96)|2.48|(16.44)|-|100% Brazil| |53|Tata Consultancy Services De Mexico S.A., De C.V.|MXN|3.840334|1.01|375.28|775.19|398.90|-|1,447.41|95.19|32.19|63.00|41.26|100% Mexico| # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 # in the prescribed Form AOC-1 relating to subsidiary companies # Annual Report 2015-16 (` crores) |Sr. No.|Name of the Subsidiary Company|Reporting Currency|Exchange Rate|Share Capital|Reserves & Surplus|Total Assets|Total Liabilities|Turnover|Profit before Taxation|Provision for Taxation|Profit after Taxation|Proposed Dividend|% of Shareholding|Country| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |54|Tata Consultancy Services Chile S.A.|CLP|0.098425|167.29|437.02|722.14|117.83|65.78|413.99|90.07|(9.43)|99.50|-|100%|Chile| |55|TCS Inversiones Chile Limitada|CLP|0.098425|150.49|163.24|317.03|3.30|316.21|-|1.27|0.05|1.22|-|99.99%|Chile| |56|TATASOLUTION CENTER S.A.|USD|66.245000|19.88|152.45|378.38|206.05|-|759.53|132.85|31.82|101.03|132.49|100%|Ecuador| |57|TCS Uruguay S.A.|UYU|2.065960|0.11|72.99|100.52|27.42|0.02|193.25|55.09|(0.78)|55.87|36.62|100%|Uruguay| |58|MGDC S.C.|MXN|3.840334|0.02|89.54|191.95|102.39|-|849.22|43.37|17.00|26.37|-|100%|Mexico| |59|TECHNOLOGY OUTSOURCING S.A.|PEN|19.708735|10.77|(1.21)|20.98|11.42|-|28.98|(1.67)|(0.47)|(1.20)|-|100%|Peru| |60|Tata Consultancy Services Qatar S.S.C.|QAR|18.192678|3.64|54.32|76.40|18.44|-|150.84|20.99|1.93|19.06|-|100%|Qatar| |61|TCS Foundation|INR|1.000000|1.00|274.73|282.75|7.02|282.11|-|129.29|-|129.29|-|100%|India| # Notes: 1. Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as on 31.03.2016 2. On July 2, 2015, the Company through its wholly owned subsidiary, Tata Consultancy Services Netherlands BV subscribed to 76 percent share capital of Tata Consultancy Services Saudi Arabia 3. CMC Limited was amalgamated with TCS with effect from April 1, 2015 in accordance with the terms of the Scheme of Amalgamation sanctioned by the High Court of judicature at Bombay vide their Order dated August 14, 2015. 4. The shares for TECHNOLOGY OUTSOURCING S.A.C were subscribed for on October 30, 2015 # For and on behalf of the Board Cyrus Mistry N. Chandrasekaran Prof. Clayton M. Christensen Chairman CEO and Managing Director Director Aman Mehta Ishaat Hussain V. Thyagarajan Director Director Director Dr. Ron Sommer Dr. Vijay Kelkar Phiroz Vandrevala Director Director Director O. P. Bhatt Aarthi Subramanian Rajesh Gopinathan Director Executive Director Chief Financial Officer Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2016 CIN: L22210MH1995PLC084781 Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 Phone: 91 22 6778 9595 Fax: 91 22 6778 9660 E-mail: [email protected] Website: www.tcs.com # ATTENDANCE SLIP (To be presented at the entrance) 21ST ANNUAL GENERAL MEETING ON FRIDAY, JUNE 17, 2016 AT 3.30 P.M. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020 Folio No. _________________________________ DP ID No. _________________________________ Client ID No. _________________________________ Name of the Member_________________________________________________________________ Signature ___________________________________ Name of the Proxyholder______________________________________________________________ Signature___________________________________ 1. Only Member/Proxyholder can attend the Meeting. 2. Member/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting. CIN: L22210MH1995PLC084781 Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 Phone: 91 22 6778 9595 Fax: 91 22 6778 9660 E-mail: [email protected] Website: www.tcs.com # PROXY FORM [Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014] Name of the Member(s) : ....................................................................................................................................................................................... Registered address : ....................................................................................................................................................................................... E-mail Id : ....................................................................................................................................................................................... Folio No. / Client ID No. : ..............................................................................................DP ID No. ....................................................................... I / We, being the member(s) of ………..............…. Shares of Tata Consultancy Services Limited, hereby appoint 1. Name: ………………………...................................................................................... E-mail Id: ...................................................................... Address: ................................................................................................................... .................................................................................................................................. Signature: ……………................................................... 2. or failing him 3. Name: ………………………...................................................................................... E-mail Id: ...................................................................... Address: ................................................................................................................... .................................................................................................................................. Signature: ……………................................................... 4. or failing him 5. Name: ………………………...................................................................................... E-mail Id: ...................................................................... Address: ................................................................................................................... .................................................................................................................................. Signature: ……………................................................... as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the twenty first Annual General Meeting of the Company to be held on Friday, June 17, 2016 at 3.30 p.m. |
at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020 and at any adjournment thereof in respect of such resolutions as are indicated below: 1. To receive, consider and adopt (a) the Audited Financial Statements of the Company for the financial year ended March 31, 2016, together with the Reports of the Board of Directors and the Auditors thereon; and (b) the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2016, together with the Report of the Auditors thereon. 2. To confirm the payment of Interim Dividends on Equity Shares and to declare a Final Dividend on Equity Shares for the financial year 2015-16. 3. To appoint a Director in place of Mr. Ishaat Hussain (DIN:00027891), who retires by rotation and, being eligible, offers himself for re-appointment and his term would be up to September 2, 2017. 4. Ratification of Appointment of Auditors. 5. Appointment of Branch Auditors. Signed this ……… day of ………………. 2016 Affix Revenue Signature of shareholder.................................................................... Signature of Proxyholder(s)............................................................................Stamp # NOTES: 1. This Form in order to be effective should be duly completed and deposited at the Registered Office of the Company at 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021, not less than 48 hours before the commencement of the Meeting. 2. Those Members who have multiple folios with different jointholders may use copies of this Attendance slip/Proxy. NO_CONTENT_HERE # SHAREHOLDERS ARE REQUESTED TO SUBMIT THIS FORM TO THE DEPOSITORY PARTICIPANT To, (Name of the Depository Participant) _________________________________________ _________________________________________ _________________________________________ _________________________________________ # Updation of Shareholder Information I / We request you to record the following information against my /our Folio No. /DP ID /Client ID : # General Information: Folio No. /DP ID /Client ID : Name of the first named Shareholder: PAN: * CIN / Registration No.: * (applicable to Corporate Shareholders) Tel No. with STD Code: Mobile No.: Email Id: *Self attested copy of the document(s) enclosed # Bank Details: IFSC: (11 digit) MICR: (9 digit) Bank A/c Type: Bank A/c No.: * Name of the Bank: Bank Branch Address: * A blank cancelled cheque is enclosed to enable verification of bank details I /We hereby declare that the particulars given above are correct and complete. If the transaction is delayed because of incomplete or incorrect information, I /we would not hold the Company /RTA responsible. I/ We undertake to inform any subsequent changes in the above particulars as and when the changes take place. I /We understand that the above details shall be maintained till I /we hold the securities under the above mentioned Folio No. /beneficiary account. Place : ______________________ Date : Signature of Sole /First holder 237 # TCS Sahyadri Park, Pune Spread over 48 acres of land in Pune, India, TCS Sahyadri Park is one of TCS' largest delivery facilities globally and can accommodate over 23,000 associates. Named after the rolling Sahyadri Mountains that surround it on three sides, the center's design is inspired by Maratha architecture. With 3.2 million sq. ft. of constructed and 60% landscaped areas, TCS Sahyadri Park has been built in line with global standards of comfort and care and has received LEED Gold certification in environmental standards. Designed and produced by: Corporate Marketing and Corporate Communications, Tata Consultancy Services Experience certainty; File: AR_TCS_2016_2017.md 7 5 1 # REIMAGINING THE ENTERPRISE # Annual Report 2016-17 www.tcs.com # About TCS Tata Consultancy Services (TCS) is a global leader in providing information technology services, consulting, and digital and business solutions to large enterprises through its unique Global Network Delivery Model™, recognized as the benchmark of excellence in software development. TCS' customer-centricity, deep domain expertise, agility in building new capabilities, and focus on constant innovation and IP development, and execution excellence have resulted in enduring customer relationships. With over 387,000 employees in 55 countries, and a global delivery footprint that covers over 141 solution centers across 19 countries, TCS is among the world's top 10 IT service providers. The Company's compounded annual growth rate (CAGR) since FY 05 is 21.6%, with industry-leading operating margins. Founded in 1968 as part of the Tata group, TCS is headquartered in Mumbai, India and is a public limited company, listed on the National Stock Exchange (NSE) and BSE Ltd. (Bombay Stock Exchange) in India. |
# About the Theme TCS has successfully navigated through multiple technology cycles over the last five decades, pivoting and adapting each time to build new capabilities and help our clients realize the benefits of these new technologies. Our responsiveness, agility, and adaptability to change have been core to our longevity. The theme for this year's Annual Report, Reimagining the Enterprise, captures the depth and profoundness of the transformation that enterprises - both TCS and our customers - are going through in the Digital age. In the thematic section, we have showcased a few examples of customers partnering with TCS to reimagine parts of their businesses to become data-driven, smarter, and agile to deliver a superior experience for their customers. Alongside, we have interviews with key leaders in TCS describing the change we are executing within the organization - at scale and with agility - to lead in the Digital age. # Recent Annual Report Themes FY 2016: Shaping the Future FY 2015: Default is Digital FY 2014: One TCS The Annual General Meeting will be held on Friday, June 16, 2017 at Birla Matushri Sabhagar, Sir V. T. Marg., New Marine Lines, Mumbai 400020, at 3:30pm. Towards preserving our environment, printed copies of the Annual Report will not be distributed at the Annual General Meeting. Members are requested to bring their copies to the meeting. # TCS Annual Report 2016-17 # Contents |Board of Directors|02| |---|---| |Management Team|04| |Letter from the Chairman|06| |Letter from the CEO|08| |Performance Highlights|11| |Reimagining Digital Skilling|12| |Reimagining Elderly Care|13| |Reimagining Energy Management|14| |Building the TCS Brand|15| |Reimagination across Industries|16| |Reimagining Ecommerce|18| |Reimagining Boiler Controls|19| |Reimagining Research and Innovation|20| |Reimagining IT Landscapes|22| |Reimagining Business Models|23| |Reimagining IT Services|24| |Reimagining Business Structures|26| |Reimagining Payments|27| |Reimagining Software Delivery|28| |Reimagining Talent Management|30| |Reimagining Citizen Services|32| |Directors' Report|34| |Management Discussion and Analysis|62| |Corporate Governance Report|88| |Corporate Sustainability Report|110| |Business Responsibility Report|116| |Awards and Recognition|120| |Unconsolidated Financial Statements|184| |Independent Auditors' Report|184| |Balance Sheet|190| |Statement of Profit and Loss|191| |Statement of Changes in Equity|192| |Statement of Cash Flow|193| |Notes forming part of the Financial Statements|194| |Statement under Section 129 of the Companies Act, 2013 relating to Subsidiary Companies|236| |Consolidated Financial Statements| | |Independent Auditors' Report|122| |Glossary|239| |Consolidated Balance Sheet|126| |Consolidated Statement of Profit and Loss|127| |Consolidated Statement of Changes in Equity|128| |Consolidated Statement of Cash Flows|129| |Notes forming part of the Consolidated Financial Statements|130| # Board of Directors # TCS Annual Report 2016-17 |(Seated - Left to Right)|(Standing - Left to Right)| |---|---| |V Kelkar|A Mehta| |Director|Director| |Aarthi Subramanian|V Thyagarajan| |Executive Director|Director| |N Chandrasekaran|N G Subramaniam| |Chairman|Chief Operating Officer| | |& Executive Director| |Rajesh Gopinathan|O P Bhatt| |Chief Executive Officer|Director| |& Managing Director| | |C M Christensen|R Sommer| |Director|Director| | |I Hussain| | |Director| Board of Directors 03I # Management Team # Corporate |Rajesh Gopinathan|N G Subramaniam|V Ramakrishnan|Ajoyendra Mukherjee|Aarthi Subramanian| |---|---|---|---|---| |Chief Executive Officer|Chief Operating Officer|Chief Financial Officer|Global Head, Human Resources|Global Head, Delivery Excellence, Governance & Compliance| |Rajendra Moholkar|Pradipta Bagchi|K Ananth Krishnan|Vishwanathan Iyer| | |Company Secretary|Communication|Research & Development|Legal| | # Geography Heads |Surya Kant|Henry Manzano|Ravi Viswanathan|Girish Ramachandran|AS Lakshminarayanan| |---|---|---|---|---| |North America, UK & Europe|Latin America|India, Middle-East & Africa|Asia Pacific|Japan| # Strategic Growth Unit Heads |Venkateshwaran Srinivasan|Venguswamy Ramaswamy| |---|---| |BaNCS|iON| # TCS Annual Report 2016-17 # Industry Service Unit Heads |K Krithivasan|Susheel Vasudevan|Ramanamurthy Magapu|Suresh Muthuswami| |---|---|---|---| |Banking & Financial Services|Banking & Financial Services|Banking & Financial Services|Insurance & Healthcare| |Pratik Pal|Debashis Ghosh|Milind Lakkad|Kamal Bhadada| |Retail, Travel & Consumer Products|Life Sciences, Manufacturing & Energy|Manufacturing|Communication, Media & Information Services| # Service Unit Heads |Krishnan Ramanujam|Regu Ayyaswamy|Dinanath Kholkar|P R Krishnan| |---|---|---|---| |Enterprise Solutions & Global Consulting Practice|Engineering & Industrial Services|Business Process Services|IT Infrastructure Services| Management Team I 05 # Letter from the Chairman Global business is transitioning to a new age where technology is playing a central role in the growth of every industry by delivering a superior customer experience anytime, anywhere. The power of a business now depends on its ability to manage the transition from process maturity to data maturity. # TCS Annual Report 2016-17 Dear Shareholders, It is with a great sense of pride that I write to you after being appointed as the Chairman of this exceptional Company. In the past seven years, when I had the privilege of leading this organization in an executive capacity, it has been an exhilarating journey. The commitment and passion of a diverse, global employee base helped your Company exhibit strong leadership during this period, against the backdrop of immense volatility in our key markets and the world economy. |
Amidst the rise of new Digital technologies, your Company remained focused on staying relevant to customers, employees, and the society at large, while delivering significant returns to shareholders. As our business transitions into a new and exciting phase of growth and innovation, the future of your Company could not be in better hands than under a dynamic new executive leadership team led by Rajesh Gopinathan as the Chief Executive Officer and Managing Director, ably supported by N G Subramaniam as the Chief Operating Officer and V Ramakrishnan as the Chief Financial Officer, together with a strong team of senior business leaders. The new team will continue to drive an organizational culture that embraces change, believes in growing talent, and invests ahead of time, anticipating the future needs of our customers. Your Company is once again at the forefront of this transformation. TCS has made significant investments in driving innovation in Digital, as well as by building new capabilities and skills in technologies like cloud, artificial intelligence, automation, and analytics. It continues to transform its engagement models to fit the customer's needs. To succeed in the Digital age, customers need the right technology partners with the strategic commitment and sustained investments necessary to stay relevant to their business. My thirty years with TCS have given me a ringside seat to the evolution and growth of your Company. I have witnessed your Company's ability to emerge from every technology cycle stronger than ever and be in a position to capture a greater share of market opportunities. Your Company is in a growth industry where the demand for technology continues to expand. In earlier decades, IT played a key role in supporting business. The Internet era then saw business strategy being defined by technology strategy. As a result, technology was embedded into business. Today we are entering a new world where technology is now defining what the business can or should do. The global business is transitioning to a new age where technology is playing a central role in the growth of every industry by delivering a superior customer experience anytime, anywhere. The power of a business now depends on its ability to manage the transition from process maturity to data maturity. The Internet of Things (IoT) is about capturing data from machines and sensors; cloud is helping make the data available at scale as and when needed; automation and artificial intelligence are helping sift through enormous quantities of data; and analytics is helping derive insights and make useful predictions from that data. Businesses have to change and understand the impact and influence of these technologies. Those who can do it faster and smarter will be the leaders in the new economic world. In the Tata group, our ethos is shaped by the core belief that our founder articulated almost hundred and fifty years ago that the community is not just another stakeholder of business, but the very purpose of its existence. That ethos guides all our actions and initiatives. Your Company has focused on helping communities in three core areas: education and skills, health and wellness, and environmental sustainability. This concentration of effort on a few areas has allowed us to make a bigger impact in those chosen areas. I am delighted to see each of those programs scale up significantly to start making a difference to the targeted communities. On behalf of the entire Board of Directors of Tata Consultancy Services, I would like to thank you - our valued stakeholders - for the continuing confidence you have placed in the organization. Warm regards, N Chandrasekaran Chairman # Letter from the CEO During the past few months, I have met many customers, each of them at different stages in their Digital transformation journeys. Every one of them is looking at further accelerating those programs and becoming more technology-driven. Speaking with the CXOs of these organizations, I was humbled and re-energized, by the uniformly high esteem in which they hold your Company. # TCS Annual Report 2016-17 Dear Shareholders, FY 2017 was a year of leadership transitions, globally, and in your Company too. In January this year, N Chandrasekaran (Chandra), who led Tata Consultancy Services as the Chief Executive Officer and Managing Director for the past seven years, stepped down from his executive role to become the Chairman of the Board. In the seven years under Chandra's leadership, your Company's stellar financial performance made it a bellwether, with industry-leading metrics in every respect. |
Revenue grew almost four-fold, from ` 30,029 crore in FY 2010 to ` 117,966 crore in FY 2017, a compounded annual growth rate of 21.6%. Our operating profit margin - the highest in the industry - stayed stable in the 26-28% band throughout this period. Most importantly, the customer-centric vision to make early, far-sighted investments in emerging technologies allowed us to gain a leadership position in the Digital space, positioning us well for the future. On behalf of the shareholders, the Board of Directors, and all my colleagues at TCS, I would like to thank Chandra for the executive leadership, vision, and mentorship he provided. In FY 2017, your Company delivered a steady performance, with a reported revenue of ` 117,966 crore, growing 8.6% over the prior year. TCS continues to be the most profitable Company in the IT services industry, with a net profit of ` 26,289 crore, which is a net margin of 22.3%. In keeping with our tradition of directing surplus cash to shareholders, the Board has recommended a final dividend of ` 27.50. Including the three interim dividends paid earlier this fiscal, the total dividend payout in FY 2017 amounts to ` 47 per share, a payout ratio of 42.0%. In addition to that, your Company announced a proposal to buy back up to 56,140,351 equity shares of the Company, at ` 2,850 per share, for an aggregate amount not exceeding 16,000 crore. Our investments in geographies are paying off very handsomely, with all regions reporting considerable growth on a full year basis. Continental Europe, Latin America, and Middle East-Africa grew in the mid-teens, while the other geographies grew in the 6 to 10% range on a constant currency basis. Among the service lines, I'm happy to report that our Enterprise Solutions and Consulting business crossed $3 Bn in revenue this year, while our BPS business crossed the $2 Bn milestone. Digital technologies account for most of the net new IT spending by customers today. Your Company continues to fare very well in this area, emerging as the preferred partner for many large enterprises in their Digital transformation journeys. Over 55% of our clients engage with us today on Digital Services, and that percentage is much higher among larger clients. Digital revenue crossed the $3 Bn milestone this year, making up 16.7% of revenue and growing 28.8% over the prior year. In FY 2017, your Company was the technology partner of choice for many leading corporations across the world in their business transformational and Digital reimagination journeys. We helped the world's largest bauxite mining and aluminium manufacturing company split into two entities by engineering a flawless IT separation. One of the largest healthcare organizations in the world chose TCS to standardize and simplify its vast and complex supply chain footprint. We helped one of the world's largest banks identify and publish some of the critical APIs to their back-office systems that account for 85% of the bank's transactions, inviting the global developer community to build innovative new apps that extend the bank's services to newer customer segments. The key differentiators that enable TCS to strategically partner with these large global progressive corporations are our deep contextual knowledge of customers' business models, functions, processes, and systems; our proactive approach to innovation; and our commitment to delivery excellence. At the core of all this is our ability to attract, develop, and retain talent. # People Your Company's talent management practices continue to be a benchmark in the industry. In FY 2017, we added about 79,000 employees on a gross basis, ending the year with over 387,000 employees across 130 nationalities. Women make up 34.7% of our workforce. Our local hiring programs in various geographies are progressing well. In FY 2017, we recruited over 11,500 employees outside India, including students from leading engineering campuses and business schools in the US. This has allowed us to bring down our dependence on work visas significantly. Your Company has made significant progress in reskilling the workforce on newer technologies. Our Digital competency development program has resulted in over 200,000 TCS associates getting Digitally trained, possessing nearly 600,000 competencies. We are experimenting with ever more innovative ways to accelerate Digital learning. One such recent initiative is a mobile-first app that uses gamification to deliver an immersive learning experience. Our progressive policies, culture of empowerment, and continual investments in people have historically resulted in industry-best retention rates. In FY 2017, our attrition rate in the IT Services... |
# Letter from the CEO segment was 10.5%; once again, the lowest in the industry. A significant part of our innovation effort this year was focused on harnessing the power of artificial intelligence (AI) and automation. This includes exciting new areas such as conversational systems, natural language processing systems, IoT platforms, robotics, and image processing capabilities. Your Company has filed more than 3,350 patent applications to date, with 493 filings in FY17. It has been 478 granted patents as of March 31, 2017. In addition, TCS Researchers presented 350+ papers in premier conferences. The work we have done for our banking clients on the Blockchain technology has established us as a credible player in this emerging space. The Blockchain platform built by our Research and Innovation group has now been integrated into the TCS BaNCS software. In addition to the in-house effort, we also leverage the innovation capabilities of our technology partners, startups, and academic alliances. Our Co-Innovation Network (COIN™) expanded in FY 2017 to cover over 150 ecosystem partners, 2,000 startups, and 27 partnerships in academia. All our products and platform offerings - industry-focused ones such as TCS BaNCS, Optumera™, Advanced Drug Development platform, and HOBS, as well as horizontal and technology platforms such as ignio™, TAP™, iON, CHROMA™, and TCS MasterCraft™ - are achieving new milestones in terms of customer adoption. # Beyond Business Your Company has a long tradition of being a responsible corporate citizen in all the communities we work with across the world. The guiding principle of TCS' CSR programs is "Impact through Empowerment" through interventions in Education, Health and Environment. In the field of healthcare, we continue to support the Tata Medical Center. TCS initiated the Outpatient Department Transformation (TransOPD) at TMC for a better Patient Experience. The TCS Fit4Life continues to energize employees and increase their wellness. In FY 2017, employees spent over 3 million hours logging 13.5 million kilometres of physical exercise and activity. I am proud to note that in FY 2017, TCSers volunteered over 6.9 lakh hours for social and environmental causes in their respective communities. The guiding philosophy behind our CSR programs is to make an impact on communities by empowering individuals. Many of our programs are focused on imparting education and skills which help individuals become productive. Our long-running Adult Literacy Program, which uses computers to impart functional literacy, now supports nine Indian languages and continues to expand its reach. In FY 2017, this program alone reached 126,000 persons. Other programs in India, like BridgeIT and our BPS and IT Employability Programs help individuals from underprivileged backgrounds find employment and become catalysts of change in their communities. The TCS Research Scholarship Program is now in its thirteenth cycle, covering 245 PhD scholars across 33 institutes across India. 55 persons have obtained their PhD through this program. In North America, our flagship program goIT and other initiatives to promote STEM education and careers among students continue to gather pace. In FY 2017, our various programs touched the lives of over 17,600 students. I am very happy to note that the Million Women Mentors (MWM) initiative which we support in the US has crossed the milestone of 1 million pledges to mentor girls and young women in STEM education and careers. # Agile, Cloud, and Automation Competitive differentiation in the Digital world will come from enterprises becoming smarter, faster, and lighter. In terms of technology imperatives, this requires adopting distributed and location-independent Agile services, embracing a cloud-first strategy, and deploying automation at every level. TCS is aligning its technology capabilities, customer relationships, people, and execution model to participate in this opportunity and continue to create value for all our stakeholders. I thank you all for your continued support and encouragement. |
With Warm Regards Yours Sincerely Rajesh Gopinathan Chief Executive Officer and Managing Director April 18, 2017 # TCS Annual Report 2016-17 # Performance Highlights # Revenue trend | |FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| |Revenue|62,989|81,809|94,648|108,646|117,966| CAGR 19.3% # Client metrics |$50 Mn+ Clients|84| |---|---| |$100 Mn+ Clients|73| # Earnings trends | |FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| |Operating Income|17,008|23,808|25,424|28,790|30,324| |Operating Margin| |27.0%|26.9%|26.5%|25.7%| # Earnings per share |Amount in `|FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| | |71|97.7|111.9|123.3|133.4| CAGR 20.2% # Cash usage | |FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| |Dividend paid*| | | | |29.4%| |Capex| | | | |56.7%| |Acquisitions, etc| | | | |1.0%| *including dividend tax and final dividend for fiscal 2017 (FY 2013 to FY2017) # Cash flow from operating activities |Amount in `|FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| | |11,615|14,751|19,369|19,109|25,223| # Shareholder payouts |Amount in `|FY13|FY14|FY15|FY16|FY17| |---|---|---|---|---|---| |Special dividends| | | |9,166|10,206| |Dividends (Excl spl divs)| | | |11,071|7,058| |Shareholder payout ratio (incl special dividend)| | | |36.2%|42.0%| # The Company transitioned into Ind AS with effect from April 01, 2015. The IFRS operating profit being in line with the Ind AS operating profit, IFRS numbers have been considered for prior years for continuity purpose in the above chart instead of the Indian GAAP numbers that were actually reported in those financial years. Also note that FY 2015 numbers exclude a one-time employee reward of ` 2,628 crores paid by the Company. # Performance Highlights # Reimagining Digital Skilling TCS is working at the grassroot level to address the shortage of STEM skills through goIT-- our flagship student engagement program in North America. goIT seeks to spark an interest in technology among middle-school students through design thinking, mobile app development, and mentorship from TCS employee volunteers. Students work in teams to identify problems, generate possible solutions, wireframe their prototypes, develop and test their solutions, and present their work to peers and judges. Each TCS volunteer completes extensive training, covering youth psychology, design thinking, educational systems, and tools for mobile app development to aid their preparation as a mentor. Till date, we have engaged over 13,000 middle and high school students across 50 cities in US and Canada. More than half of them reported an increased interest in STEM disciplines, and 86% agreed that the program encouraged them to consider a STEM career. # Reimagining Elderly Care TCS, along with Singapore Management University, is reimagining elderly care in Singapore, using remote-monitoring technology. The scalable solution allows senior citizens living alone to receive prompt care, unobtrusively. Motion sensors and connected medication boxes embedded in the homes of the elderly alert caregivers in the event of inactivity for unusual periods of time, and warn them if prescribed medication is not taken regularly. The solution allows senior citizens to live a dignified and independent lifestyle. # Reimagining Energy Management Large enterprises incur significant energy costs in maintaining comfortable ambient conditions at their workplaces. TCS has reimagined energy management with its cloud-based energy-management-as-a-service platform that leverages TCS IP, IoT, machine learning, and predictive analytics to monitor energy consumption on a real-time basis, detect anomalies, and identify ways to reduce consumption. The largest deployment of this platform has been across TCS' facilities in India - over 150 of them, housing 280,000 employees. By using real-time data and intelligent decision support, TCS saved 26.6 million kwh of power last year and kept electricity spend flat year-on-year across the connected facilities, despite a 15% increase in seating capacity. 150 FACILITIES IN INDIA 35 MILLION SQ. FT. AREA 280,000 ASSOCIATES 13,000+ OCCUPANCY SENSORS 20,000 CARBON SAVINGS ANNUAL TONNES # Building the TCS Brand The TCS brand has been built on a solid foundation of trust that we have established with our stakeholders over decades. Our customer-centricity and focus on execution excellence is recognized by customers who continue to reward us with more business every year. Third party surveys show that we are an industry benchmark in customer satisfaction - we have been ranked no 1 in customer satisfaction in Europe four years in a row. Likewise, our employee-friendly workplace and HR policies have resulted in consistently high employee retention levels. We have been ranked Top Employer in the US and other major markets every year for the last few years. On the investor front, our disclosure levels, transparency, accessibility and track record of dividend payouts have gotten us top place in local and regional investor polls. We crossed an important milestone in our brand building journey in FY 2017. In a formal brand valuation and ranking exercise, TCS broke into the list of the Top 3 brands in the IT services industry globally. |
# Brand |Employee|Customer|Investor| |---|---|---| |IN cusTOMER|2016-17 EurOpE|Institutional Investor's 2016 All Asia Executive Team recognized TCS as the Most Honored Company Asia: 2017| TCS' #DigitalEmpowers brand campaign, launched at the World Economic Forum in Davos in January 2017, won the 'Creative of the Future' award from the World Communications Forum. # Reimagination across Industries # N G Subramaniam, Chief Operating Officer The explosion of possibilities brought about by Digital technologies is changing the relationship between business and technology, driving Digital reimagination across industries, structurally increasing technology spending, and opening up new growth opportunities for TCS. Every new technology historically changed the way work got done. What makes Digital so different? What makes Digital different is that it empowers people and businesses to get things done interactively and instantaneously. There is an unprecedented volume, variety, and velocity of innovation that is leading to revolutionary change. Newer business models are based purely on technology, are asset-light, and yet pose a serious challenge to incumbents. These virtual entities have used Digital technologies to set very high standards of customer experience, changing the equation between business and technology. Historically, technology was an enabler of business and a source of efficiency. Today, Digital technologies are defining business, and are an active driver of competitiveness, business models, and even business viability. File: AR_TCS_2016_2017.md Digital is one diverse, yet inter-operable, constantly evolving family of technologies enabling continuous availability of data, systems, applications, and business processes. Such an architecture allows enterprises to completely reimagine different aspects of their businesses, and you will see some of those reimagination stories in this report. # How do brick and mortar enterprises reimagine themselves? Digital reimagination is all about looking at the end objective of delivering convenience and simplicity of interaction and working backwards, examining every link or hand-off in the value chain, and figuring out what needs to be done differently to enable that outcome. # What is the roadmap that you would prescribe for an enterprise seeking to Digitally transform itself? With the objective of delivering a simple, yet great customer experience, every organization has to work on three broad areas, all at the same time. First, there has to be a solid foundation or what we call a Digital spine, which is made up of three parts - a cloud-first strategy that makes infrastructure, applications, and data shareable; then APIfication or building a services fabric that will allow business services to be consumed internally and externally at will; and finally, renovation of core systems and automation frameworks as necessary. "We are advocating three common themes to customers: Agile, Automation, and Cloud. All three are critical building blocks for any organization's Digital transformation." # TCS Annual Report 2016-17 The second area is intelligence. Organizations have to learn to work with large volumes of real-time data and move to insights-driven decision making. Deployment of Big Data analytics, IoT, AI-based personalization and autonomous operations are examples of that. Our delivery engine is seen by our customers and even peers as the best in the industry. Our unwavering focus on quality results in superior outcomes and the experience of certainty which shows through in how we top customer satisfaction surveys year after year. Lastly, we strongly advocate cloud adoption and cloud-first strategies. Virtualization of assets is key to unlocking value within the enterprise. Computing power, storage, software, data analytics - all lend themselves to cloud-based models that deliver greater flexibility, agility, and efficiency. "Our services are getting embedded into their core products and services and are a source of competitive differentiation. This is a huge structural change. You have new generation, intelligent cars whose parking-assist feature or intelligent cruise-control feature is programmed by us." # How is Digital shaping the future opportunity for the IT services business? We are seeing increased spending by companies across industry verticals on Digital technologies. Our services are getting embedded into their core products and services and becoming a source of competitive differentiation. This is a huge structural change. You have new generation, intelligent cars whose parking-assist feature or intelligent cruise-control feature is programmed by us. # What are the key themes you are advocating to customers for FY 2018? Rajesh [Gopinathan] and I met over 75 customers across the world in the last couple of months. It was clear from those interactions that every customer has a transformative agenda, and they are looking for help navigating through real life challenges in accomplishing that agenda. |
Looking at those imperatives, we are advocating three common themes to customers: Agile, Automation, and Cloud. All three are critical building blocks for any organization's Digital transformation. Location-independent agility at scale, that is the ability to orchestrate Agile development across globally distributed teams is very critical for enterprises undertaking large Digital programs where time-to-market is critical. Automation is the other essential item on every CXO's agenda. With budgets remaining constrained, one way to fund the transformation is through outsourcing. We are therefore positive on our longer-term growth prospects. All these structural changes are expanding the overall spending on technology. Within that spend, there is a greater propensity to outsource because the shelf life of technologies is reducing, and it is hard to predict how long a certain technology will stay relevant. # Reimagining Ecommerce Dick's Sporting Goods (DSG), a leading omni-channel sporting goods retailer in the United States is reimagining its e-commerce strategy. They have chosen TCS as their partner in this journey, recognizing our thought leadership, expertise, and experience in developing omni-channel solutions in retail. TCS helped DSG insource their e-commerce operations onto their proprietary platform, using an Agile delivery model for quicker time to market, and relaunch dicks.com on time and within budget. The new e-commerce platform will provide DSG greater agility, easier access to data, better leverage of cross-channel data, and deliver a differentiated online experience for their customers. It will further accelerate DSG's e-commerce business growth and deliver superior profitability. # Reimagining Boiler Controls Mitsubishi Hitachi Power Systems is reimagining power plant operations, equipping operators with real-time adaptive control and actionable insights to help them optimize performance. They chose TCS to help build an AI-based boiler control system for efficiently regulating coal-fired thermal power plants. The system brings the power of Big Data analytics and artificial intelligence to check nearly 250 parameters and over 10,000 combinations to tune the boiler for maximum efficiency, depending on the kind of coal. More efficient combustion from the new system not only reduces costs for the plant operators but also cuts NOx emissions. Reimagining Boiler Controls 19I # Reimagining Research and Innovation K Ananth Krishnan, CTO Digital technologies have opened up exciting new avenues for research and innovation. By aligning our efforts in this space with customers' business imperatives and leveraging the start-up ecosystem, TCS' Research and Innovation is seeding the reimagination journeys of our customers across industries. # How has TCS' approach to research and innovation changed in the Digital world? The Digital world has opened up completely new avenues for TCS Research and Innovation. The innovation opportunity lies in two broad areas. First, the Digital reimagination of industry domains and society at large. With its stakeholders increasingly becoming digital, the industry is reimagining itself to become part of the experiences they seek. Businesses today aim to deliver unique, curated experiences to stakeholders in every value chain -- to the customer and to the Digital citizen, employee, partner, and regulator. # AI is the buzzword these days. What is TCS doing in this space? Artificial intelligence algorithms aim to solve problems by learning, or creating rules, and can tackle a very large number of variables and uncertainties. AI today is being applied in the consumer domain like image and speech recognition and natural language processing. We are applying AI in enterprise scenarios through Ignio™, our neural automation product for enterprise IT operations. We are also working on a range of conversational and visual perception systems, augmented reality applications, speech biometrics, and cognitive optimization. We have also been working with manufacturing units to help predict machine failures for condition-based maintenance and to intelligently control manufacturing or utility operations for improved efficiency. We are also exploring the role of 'humans in the loop' in the context of enterprise AI. # Tell us about some of your initiatives to align your research and innovation effort with customers. Our Innovation Evangelists connect TCS Research and Innovation, customers, and business stakeholders through various platforms. These include focused co-innovation events and workshops that help teams jointly identify opportunities and shape solution ideas through use cases. Customer-centric Innovation Days have become a strong platform for TCS to connect to customer leadership. Customers request Research and Innovation solutions across domains, sometimes resulting in research collaborations. A recent one was for energy demand forecasting for a utility company. Another outcome is technology proofs of concept, like the one we did for a capital markets customer who wanted these in themes ranging from operational efficiency to customer. |
# TCS Annual Report 2016-17 experience. We have also worked on new business ideas like contactless payment for an untapped segment of a financial services company. # How is TCS engaging with start-ups? TCS' Co-Innovation Network (COIN) has been connecting with start-ups, venture capitalists, and academia for over a decade. The COIN footprint has expanded globally. With COIN's maturity, more engagements, faster connects, and standard processes have been forged. We are able to engage with entities large and small in win-win partnerships. TCS' ability to orchestrate an external network to bring in new technologies at lowered risk is seen as a valuable capability by customers and partners. # Customer-centric Innovation Days have become a strong platform for TCS to connect to customer leadership. Customers request Research and Innovation solutions across domains, sometimes resulting in research collaborations... technology proofs-of-concept... [and implementing] new business ideas. # Tell us about TCS' relationships with academia. While we have partnered several notable institutes around the world in new technology research, this year's highlight has been the India Academic Alliance story. We have signed comprehensive research agreements with the Indian Institute of Science (IISc), the Indian Statistical Institute (ISI), five premier Indian Institutes of Technology (IITs), two Indian Institutes of Information Technology (IIITs), and other premier technology institutes. Outcomes from our academic alliances have been encouraging. For instance, the robot created by TCS and IIT-Kanpur did very well in the 2016 Amazon Picking Challenge, beating many established players. Our Research Scholar program is the largest corporate support program for PhDs in Computer Science and related disciplines in India. # What is different about the current wave of automation? How is this captured in ignio™, TCS' cognitive automation product for IT operations? The software industry has been driving automation for several decades. In fact, the word software is synonymous with automation. Traditionally, automation has been designed to be 'robotic'; it simply performs actions that it has been programmed for. With ignio™, we are taking automation to the highest level where the 'software' itself becomes intelligent. Instead of simply replaying what it has been programmed for, ignio™ emulates the human brain and its reasoning processes. ignio™ has the ability to self-learn and understand the enterprise context. It can decipher what is happening and why, predict what is likely to happen in the future, and prescribe actions to handle them. Finally, much like humans, it can construct without explicit instructions, end-to-end procedures for performing complex activities on-the-fly based on the context and simple reusable skills. The combination of these features allows ignio™ to take responsibility for running enterprise IT environments autonomously. # When you unleash a new automation product like ignio™ in a customer's production environment, how are the risks managed? We have introduced several checks and balances in the design of ignio™ to ensure safety and security. ignio™ performs only the activities that it is allowed to do and everything is logged and auditable. To prevent accidental errors, we have also designed an intelligent filter, called an 'action firewall', which blocks actions that are either not allowed or deemed to have high impact. Lastly, we implement ignio™ using incremental rollout sprints, to build confidence and trust. # What has triggered this sudden interest in AI? AI or machine learning techniques have been around for decades and have been improving incrementally over the years. The current quantum leap towards intelligent automation is driven by three basic trends. The first is hyper-instrumentation. Everything - people, technologies, household appliances or even industrial systems - is getting heavily instrumented and monitored, providing us with enormous amount of data and unprecedented visibility into their behavior and operations. The second is software-defined everything, or to put it simply, there's an app for everything! This makes it possible to perform actions on anything through software. Third, there is on-demand availability of abundant compute capacity from the cloud. Combine these three trends, and you have a strong foundation for intelligent automation. You have access to data about every system, you have the compute capacity at your fingertips to process such large data volumes and derive insights, and you have the ability to operationalize these insights through software (the app!). # How does ignio™ help our customers? ignio™ augments human intelligence and empowers people to do more making enterprises smarter, faster and more efficient. |
Our experience to-date indicates that ignio™ can reduce business-impacting outage duration by 80-90% through proactive actions and autonomous self-healing; reduce the time taken to perform complex activities by 90-95%, and eliminate 40-50% of manual effort. These benefits will keep increasing as we train ignio™ to take on more and more. # Reimagining Research & Innovation 21I # Reimagining IT Landscapes When 129-year old Alcoa, the world's largest aluminium company, split into an upstream mining and refining company (Alcoa) and a downstream components manufacturing business (Arconic) to become more competitive and drive shareholder value, they picked TCS to perform the critical task of separating the underlying IT systems and infrastructure. TCS set up an enterprise-class private cloud for Alcoa, and upgraded, remediated, and migrated over 1300 systems without any business disruption, while adhering to a non-negotiable deadline. The flexible cloud platform built by TCS is aligned with Alcoa's business strategy, and well placed to support their future growth. # Reimagining Business Models In a data- and content-driven Digital world, BT, UK's leading telecom company, reimagined its broadband and mobile businesses to go beyond being a passive carrier of third party content. BT TV is today a leading converged operator in the UK delivering its own IPTV content to subscribers. TCS has been their strategic partner in this journey, helping engineer, deploy, and support BT TV's products and solutions to deliver an exceptional experience to viewers anywhere, anytime, and on any device. # LBT Sport # Reimagining Business Models 23I # Reimagining IT Services # Krishnan Ramanujam, President The changed buying behavior of customers in the Digital world is reshaping the IT services landscape, resulting in integrated delivery, greater virtualization, more automation and non-linear business models. With its full services portfolio, TCS is participating in the entire spectrum of customer spending. # How has Digital adoption changed the IT services business? The adoption of Digital technologies and the changed equation between business and technology have brought about newer buying behaviors among customers. Then, there is virtualization. Hardware and software which were earlier purchased and installed within the customer's premises are now being accessed from the cloud on a rental basis. Customers don't want to get locked into any one proprietary technology but want systems integrators like us to stitch together multiple best-in-class point solutions which they can consume as a service. Virtualization of IT services results in what is known as Shared Services. These are basically a set of capabilities, say, ERP maintenance, which are not dedicated to any one customer but shared across multiple customers. Customers benefit from the standardization, flexibility in handling workloads, and lower cost while TCS can standardize, automate, and better govern the service delivery. Last, when many of the newer technologies are not fully understood, customers look to us to simplify matters and use our contextual knowledge of their business to explore the boundaries of what is possible. Related to that is the rise of integrated solution offerings. Customers want us to take responsibility for delivering the overall transformation program that often entails orchestrating the delivery of multiple service lines. This is in contrast to separately purchasing individual services such as application development and maintenance or package implementation. "Every business leader has to constantly look at how technology can reshape their area, and engage with technology to transform." Today, IT is no longer the exclusive domain of the CIO. Every business leader has to constantly look at how technology can reshape their area, and engage with technology to transform. This has created multiple buyers of technology within the enterprise. Second, there is an immense speed-to-market imperative. So Agile and DevOps is a default. Can you give an example of an offering that involves multi-service orchestration? How do you see this working on scale? A good example is the work we are doing for a large Fortune 500 company which is contemplating a series of divestitures. We are building a replicable model for carrying out IT system separations with minimal disruptions every time they go through a divestiture. System separations are immensely complex and require capabilities spanning the end-to-end transformation lifecycle covering assessment, evaluation of solutions, finalization of a roadmap, deployment and governance, with emphasis on change management. From a service delivery point of view, it is a consulting-led program that requires multiple teams from streams such as enterprise solutions, cyber-security, cloud, infrastructure services, and business process services to come together and deliver a seamless capability. |
This leverages our domain expertise, business knowledge, technology skills, and program management capability, and also our ecosystem partnerships. Most importantly, it is built on our unique collaborative and fluid service delivery structure that enables the easy coalescing of different capabilities into a One TCS team. At the other end of the spectrum, we have deflation at one end of the spectrum, the higher realization at the other end keeps our margins steady. The fears of automation leading to job losses are overdone. People had similar concerns when computers first entered the workplace. Today we know that the increased efficiency from computerization only resulted in greater economic growth. At TCS, we have focused on automation from our early days, going back to the code generators and reverse engineering parsers we built during the Y2K era. Automation is an integral part of the industrial model of software engineering that we pioneered. We see the growing interest in automation among customers as a revenue opportunity, and are now building greater focus. We work with all the leading automation product vendors and also have our own cognitive automation product, Ignio™, which is doing very well in the market. Products and platforms entail an initial investment in the development but thereafter, once they gain traction in the marketplace, incremental revenues do not carry proportional costs. That is why they are referred to as non-linear revenues, and are a way of boosting productivity in the services business. When we say products and platforms, there is a value continuum there. We start with high value, customizable software products for mission-critical operations - such as lending at a bank or merchandizing at a retailer. Next is the Software as a Service (SaaS) model where multiple customers subscribe to centrally hosted, standardized software to automate less critical, non-differentiated operations. At the other end is the convergence of SaaS and Shared Services into a platform-based utility model where the centrally hosted software and the operations team are shared across multiple customers who pay per transaction. To me, any activity which is not a source of competitive differentiation will eventually gravitate to this kind of a utility model because of the sheer economies of scale such platforms can achieve. Our experience has been that whenever we deliver greater efficiency and cost savings on lower value areas using cloud, automation, shared services and other 'Digital for Efficiency' initiatives, it frees up customers spending for higher-end, transformational initiatives such as omni-channel, customer experience or data analytics platforms that are a source of competitive differentiation. So, at the overall portfolio level, there is growth, and despite the deflation, there is an overall increase in spending on technology. # Reimagining Business Structures State Bank of India, the country's largest bank, reimagined its business structure by merging the operations of six associate banks with itself. The bank turned to its trusted technology partner, TCS, to manage the most critical part of the integration - the migration of product and customer data from six core banking platforms onto SBI's TCS BaNCS platform. The final merger was accomplished in a tight 48-hour window before the bank opened for business in the new fiscal year. Post merger, State Bank of India supports over 180 million transactions per day. These are the staggering numbers unmatched by any other core banking software in the world: the TCS BaNCS instance at SBI supports over 550 million customers, 725 million accounts, and further scale-related benefits, putting SBI into the league of the top 50 global banks by asset size. # Reimagining Payments DNB, Norway's largest financial services group, wanted to gain first mover advantage by offering a simple mobile-based person-to-person (P2P) payment app. They partnered TCS to leverage our deep expertise in the payments domain and strength in mobile technologies. TCS built Vipps, a simple and interactive app, in just five months -- making DNB a first mover in the P2P space in Norway. The app beat all estimates of user adoption, and became the highest downloaded app in Norway. Over half the population uses it, of which 55% are non DNB customers. Norwegians don't make payments anymore, they just Vipps it! # Reimagining Software Delivery # Aarthi Subramanian, Executive Director The speed of technology change, demands from business in a Digital era, and the consumerization of enterprise IT are driving a profound change in software delivery. Agile and DevOps have become the preferred approach to meet the time-to-market demands placed on today's IT organizations. |
It seems Agile and DevOps are the buzzwords in software delivery today. Can you explain these and put them in context? In the Digital era, enterprises are under pressure to cater to heightened expectations from consumers within and outside the enterprise. Users are always looking for the next release and the next feature-rich version of software. Secondly, consumers of technology expect software to be 'Always-On' -- always available and accessible from anywhere. Traditional methods of software development, which have taken a more phased and sequential approach to building software, make it hard to keep up with today's time-to-market demands. Agile and DevOps represent a new way of working to build and deliver software. Agile is an iterative approach that allows enterprises to develop software incrementally and faster. DevOps uses high levels of automation and tooling to rapidly deploy the software in production. So, while Agile gave us speed to develop, DevOps has extended this by giving us speed to deploy. Together these have truly enabled enterprises to achieve speed to market. The iterative approach of Agile would need close proximity to users in the client's organization. How do you do that in a globally distributed delivery model? There are proven operating models for effective communication and collaboration in distributed Agile that don't compromise agility. To make the distributed Agile model work we need to invest in building business knowledge across the teams, placing the right roles at the right locations, immersive collaboration tools, constant communication, and a structured approach to planning. Enterprises already working with distributed teams in traditional delivery models have typically built significant knowledge of the enterprise's business processes and mutual trust. These are important enablers for effective transition to Agile. Making distributed Agile work requires careful joint planning of delivery processes with the customer such as frequency of deployments, calibrated work hours, collaborative workspaces, and creating a One Team culture. # TCS Annual Report 2016-17 significant investments in adopting the Agile way of working across multiple customer engagements and establishing an Agile culture among our workforce through extensive training and promotional campaigns. An industrial model of service delivery relies on well-defined roles, responsibilities, processes and controls. Are these still relevant in an Agile world? These fundamental aspects of industrialization of service delivery are very much an integral part of the Agile way of working. With Agile, the focus is on delivering the program in increments -- called sprints -- with a well-defined shorter duration (usually in weeks). This means that Agile teams are typically sets of smaller teams who work on a finite set of clearly defined items of work. The work items are digitized using tools providing full visibility across distributed teams. Focus on programming excellence is core to Agile/DevOps. Clearly defined practices and a plethora of tools are available to enable this. That is key to the increased productivity of the development teams. Process centricity, another hallmark of the industrialized model, is embedded into the Agile way of working much more organically than in traditional models. A simple but effective example is the concept of daily stand-up meetings, a collaboration and planning process fundamental to the Agile way of working. File: AR_TCS_2016_2017.md DevOps takes process centricity to the next level through its focus on extreme process automation. To that extent, it is a hyper-industrialized approach to software deployment. When the emphasis is on speed-to-market, how are the operational risks around system stability managed? The Agile approach is designed to ensure quality and predictability while delivering faster in smaller increments creating a continuous flow-through to the business. # AGILE IMPACT: BENEFITS REALIZED BY BUSINESS AS WELL AS IT |Leading European Telecom Network|Leading Australian Bank| |---|---| |Time to Market|Time to Market| |40% reduction|65% reduction| |Product Quality|Test effort| |80% improvement|70% improvement| Give us a flavour of the cultural challenges in transforming the delivery organization to an Agile mindset? Agile transformation is very much a mindset change and should not be seen just as a new way of delivering software. So it is important for enterprises to see this as an organization-wide change management initiative with very strong enablement from the leadership. This should include awareness-building, re-skilling through training, support with change in roles, structural changes, creation of role models (people as well as projects), investment in Agile/Devops infrastructure and collaboration tools. The clear articulation of Agile values and principles remain fundamental to Agile execution and is very important in sustaining the culture across multiple teams. |
This means that the entire team operates as a single unit towards a shared vision. A strong focus on cultural integration is another important piece. Conducting cultural awareness sessions and enabling a 'culture coach' role at distributed locations aid continuous integration of the teams. Finally, other measures like travel of key roles to distributed locations, gamification, simulated scenarios and fun events establish strong ties amongst distributed teams, improving their ability to work together as one cohesive team. # Leading US Cable Operator # US Financial Services Company |Time to Market|Time to Market| |---|---| |25% reduction|20-50% reduction| |Product Quality|Product Quality| |70% improvement|60% improvement| # Reimagining Talent Management # Ajoy Mukherjee, EVP -- Human Resources The emergence of a new class of technologies and a generational shift in the workforce has necessitated reimagining every aspect of talent management. The power of Digital is being harnessed to reskill the workforce with speed and scale, and to enrich employee engagement. These investments and an empowering, enabling culture have made TCS an industry benchmark. # How are you building Digital capabilities in TCS? We do hire a few individuals where required but remember, there just won't be sufficient people with skills in newer technologies in the market. On the scale at which we operate, there are no shortcuts to capability development. We have to do what we have always done -- invest in re-skilling our employees. The task is made easier because we have a young and highly motivated workforce which recognizes the importance of Digital, and is eager to learn. The challenge is to do this quickly and at scale. That is where we are ourselves leveraging the power of Digital. # Tell us more about how you do that. We have fundamentally reimagined our approach to training. The starting point is to acknowledge that Gen Y's learning style is different. They don't learn by reading manuals. They pick up a technology skill only when they need it, only to the extent they require, and by trying it out on their own, and consulting peers when they need help. This globally available learning platform has removed geographic boundaries, giving us the benefit of both scale and speed. We have started using programming contests on Campus Commune -- such as TESTimony, EngiNx, GameOn, and CodeVita -- to spot and hire top talent from the student community. Last year, we recruited over a thousand talented students this way. Post recruitment, we have onboarding platforms to engage with both trainees and lateral hires. For laterals hiring, we use job boards, social media, and the TCS internal reference portal. We are also using new generation online recruitment tools that use analytics and AI to cast the net wider and screen a large number of candidates faster and with lesser effort. Our constant innovation has made us a benchmark in the talent acquisition domain. # TCS Annual Report 2016-17 Coming to the second part of the question, we will require fewer people to generate the same unit of revenue. TCS has historically had the best retention rates in the industry. What has made that possible? There are many things that go into creating an empowering environment that values and fosters talent and enables individuals to realize their potential. In my opinion, our caring and enabling culture steeped in Tata values and ethos is the most critical element from which everything else follows. # How has the quality of fresh engineering graduates changed over time? In my experience, the quality of fresh engineering graduates in India has improved over time. There are two reasons for this. First, millennials are more exposed to technology, much earlier, and come with a better awareness of the digital world. Unlike past generations, they start working with computers in school itself and even study a lot of programming in college. There is a lot of news on visa restrictions in the US. How dependent are you on such visas? Historically, we have always recruited local talent in all our major markets. We have significantly ramped it up in the last couple of years, replicating many of the programs that have worked very well for us in India - such as partnering academic institutions and engaging with high school students. These are now delivering results. We are hiring from over a hundred engineering campuses in the US and also hiring MBAs from top B-schools, and the experience has been excellent. |
We believe we were the top recruiter on a net basis in the United States in FY2017. We have been certified as a 'Top Employer in North America 2017' by the Top Employers Institute for the third consecutive year. All this is helping us bring down our dependence on work visas. In 2016 and again this year, we have applied for only a third of the visas we had applied for in 2015. "Millennials are more exposed to technology, much earlier, and come with a better awareness of the digital world." Second, many progressive engineering institutes are working closely with us, as partners in the TCS Academic Interface Program, to align their curriculum and pedagogy with the needs of the industry. We help them by organizing faculty training programs, technical workshops, project sponsorships, soft skill programs, and so on. # You have recruited fewer people this year in absolute terms compared to FY 2016. What is happening? Year-on-year comparisons can be misleading because we brought down our attrition significantly this year compared to the prior year and therefore had fewer positions to backfill. That aside, in the longer term, newer technologies and our adoption of automation and non-linear models will keep driving greater productivity. That means... # GLOBAL, DIVERSE WORKFORCE |TALENT ACQUISITION|TALENT ACQUISITION| |---| |78,912 employees hired in FY 2017|67,328 in India and 11,584 outside India| # TALENT DEVELOPMENT |130 NATIONALITIES|200,000+ associates trained in Digital,|598,996 Digital competencies acquired| |---|---|---| |34.7% women|34.7% women|34.7% women| # TALENT RETENTION |387,000+ EMPLOYEES|10.5% attrition rate in IT services:|Best in class| |---|---|---| |55 countries|55 countries|55 countries| Reimagining Talent Management # Reimagining Citizen Services TCS first partnered the Government of India in reimagining passport services nearly a decade ago. While the Ministry managed the sovereign functions, TCS set up the IT and non-IT infrastructure, and managed the front-office operations, delivering a superior customer experience. There has been more than a 100% jump in throughput -- we issue nearly a million passports every month today. But in a country as vast as India, the 92 facilitation centers run in 77 cities are proving inadequate. Applicants from smaller towns still travel hundreds of kilometers to the nearest center for completing their application formalities. In the next level of reimagination, TCS is working with the Ministry of External Affairs and the Department of Posts to extend our award-winning services to those in the hinterlands using the network of Post Offices across the country. This will set a new global benchmark in technology-enabled citizen services. # Directors' Report TCS Siruseri, Chennai # Annual Report 2016-17 # Directors' Report To the Members, The Directors present the Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2017. The consolidated performance of the Company and its subsidiaries has been referred to wherever required. Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Financial statements for the year ended and as at March 31, 2016 have been restated to conform to Ind AS. Note 3 to the consolidated financial statement provides further explanation on the transition to Ind AS. # 1. Financial results | |Unconsolidated| |Consolidated| | |---|---|---|---|---| |Financial Year|2016-17|2015-16|2016-17|2015-16| |Revenue from operations|92,693|85,864|117,966|108,646| |Other income (net)|4,568|3,757|4,221|3,084| |Total income|97,261|89,621|122,187|111,730| |Expenses| | | | | |Operating expenditure|65,604|58,810|85,655|77,969| |Depreciation and amortization expense|1,575|1,459|1,987|1,888| |Total expenses|67,179|60,269|87,642|79,857| |Profit before finance cost and tax|30,082|29,352|34,545|31,873| |Finance costs|16|13|32|33| |Profit before tax (PBT)|30,066|29,339|34,513|31,840| |Tax expense|6,413|6,264|8,156|7,502| |Profit for the year|23,653|23,075|26,357|24,338| |Attributable to:| | | | | |Shareholders of the Company|23,653|23,075|26,289|24,270| |Non-controlling interests|NA|NA|68|68| |Opening balance of retained earnings|53,576|42,370|56,113|43,904| |Adjustment with other equity|59|(102)|25|(103)| |Amount available for appropriation|77,288|65,343|82,427|68,071| |Appropriations| | | | | |Dividend on equity shares (excluding tax)|9,162|7,993|9,162|7,993| |Tax on dividends|1,785|1,486|1,785|1,486| |Capital redemption reserve|-|-|-|110| |General reserve|-|2,288|-|2,304| |Statutory reserve|-|-|33|65| |Special Economic Zone re-investment reserve|376|-|376|-| |Closing balance of retained earnings|65,965|53,576|71,071|56,113| (` 1 crore = ` 10 million) # 2. Buyback of Equity Shares The Board of Directors of the Company at its meeting held on February 20, 2017, has approved buyback up to 56,140,351 equity shares of `1 each, on a proportionate basis, at a price of ` 2,850 per equity share payable in cash for an aggregate consideration not exceeding `16,000 crore, excluding transaction costs viz. brokerage, applicable taxes such as securities transaction tax, service tax, stamp duty, etc., by way of a Tender Offer route through Stock Exchange Mechanism. |
This is in accordance with the provisions of the Companies Act, 2013 (Act), and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, and other applicable laws and regulations. The buyback is a capital allocation decision taken with the objective of seeking a fairer valuation of the Company's stock while improving the Company's Return on Equity, and increasing shareholder value in the longer term. The offer size of the buyback is within the prescribed limit of 25% of the aggregate of paid up capital and free reserves of the Company, and represents 2.85% of the total issued and paid-up equity share capital of the Company. # 3. Dividend Based on the Company's performance, the directors are pleased to recommend for approval of the members a final dividend of `27.50 per share for FY 2017 taking the total dividend to `47.00 per share (previous year `43.50 per share). The final dividend on equity shares, if approved by the members would involve a cash outflow of ` 6,522 crore, including dividend tax. The total dividend on equity shares including dividend tax for the FY 2017 would aggregate ` 11,071 crore, resulting in a payout of 46.8% of the unconsolidated profits of the Company. # 4. Transfer to reserves The Company proposes to retain the entire amount of ` 65,965 crore in the profit and loss account. # 5. Company's performance On a consolidated basis, the revenue from operations for FY 2017 at ` 117,966 crore was higher by 8.6% over the last year (`108,646 crore in FY 2016). The profit for the year attributable to shareholders and non-controlling interests was ` 26,357 crore, recording a growth of 8.3% over the last year (` 24,338 crore of FY 2016). The profit after tax attributable to shareholders of the Company was ` 26,289 crore, 8.3% higher than that of the previous year (` 24,270 crore). On an unconsolidated basis, the revenue from operations for FY 2017 at `92,693 crore, was higher by 8.0% over the last year (`85,864 crore in FY 2016). The profit for the year was `23,653 crore, registering a growth of 2.5% over the PAT of ` 23,075 crore in FY 2016. # 6. Human resource development The Company is responding to the evolving needs of the Digital era by leveraging Digital technologies to enhance the scale, quality and experience of our Talent Acquisition, Talent Engagement and Talent Development programs. In FY 2017, TCS hired 78,912 employees across the world. The Company's onboarding platforms give new employees a consistent, world-class integration experience. Our diversity initiatives are showing good progress. The Company has employees from 130 nationalities and is one of the largest employers of women, who constitute 34.7% of our global workforce. The Company had 387,223 employees across 55 countries, as on March 31, 2017. TCS' Digital Learning platform is helping the Company reskill the global workforce quickly, and at scale. The Company's various employee engagement platforms and initiatives have resulted in a vibrant, productive and enjoyable work environment. A structured approach to career development, leadership development, internal job rotations, and mentoring helps employees grow their careers and realize their potential. Programs like Fit4life, Safety First, Employee Assistance Program, and Purpose4Life are part of the total employee experience, helping to promote individual wellness while balancing the needs of work, family and society. PULSE, the Company's employee satisfaction survey, provides critical insights into the needs of the workforce and forms the basis of refining organizational policies and programs. Through all these initiatives, the Company continues to remain the industry benchmark for Talent Retention. Attrition in FY 2017 reduced to 10.5% in IT Services and to 11.5% on an overall basis. # 7. Quality initiatives The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY 2017, the Company was re-appraised enterprise-wide at the highest maturity Level 5 of CMMI-DEV® # Annual Report 2016-17 (Development) and CMMI-SVC® (Services) version 1.3. The Company also achieved enterprise-wide ISO certification for Quality Management (ISO 9001:2015), IT Service Management (ISO 20000-1:2011), Information Security Management (ISO 27001:2013), and Business Continuity Management (ISO 22301:2012). TCS' strong commitment to the environment and occupational health and safety of its employees and business partners is demonstrated through the enterprise-wide Environmental Management (ISO 14001:2004) and Occupational Health and Safety Management (BS OHSAS 18001:2007) certifications. The Company also maintain domain-specific quality certifications including AS 9100 (Aerospace), TL 9000 (Telecom) and ISO 13485 (Medical Devices). |
TCS' Global Network Delivery Model (GNDM), built on a strong process-driven and customer-centric integrated Quality Management System (iQMS), continues to deliver outstanding value and experience to our customers. iQMS is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. The Company continues to invest in knowledge management platforms for effective collaboration, learning and sharing. The Company received the prestigious Most Admired Knowledge Enterprise (MAKE) award in the Global Independent Operating Unit (IOU) category for the seventh time, Asian and Indian categories for the twelfth time. For a second successive year in 2016, the Company was ranked first in the Global IOU MAKE award category. Our customer-centricity, process rigor, and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by us. This is validated by top rankings in third-party surveys as well. # 8. Subsidiary companies The Company has 58 subsidiaries as on March 31, 2017. There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Act. There has been no material change in the nature of the business of the subsidiaries. Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents, and separate audited accounts in respect of subsidiaries, are available on the website of the Company. # Restructuring or closure of unlisted wholly-owned subsidiaries during the year: - a. Tata Consultancy Services (South Africa) (Pty) Limited (TCS South Africa): Tata Consultancy Services (Africa) (Pty) Limited (TCS Africa), wholly owned subsidiary of TCS, acquired the 25% ownership interest in TCS South Africa held by a minority shareholder in July 2016 and consequently, TCS South Africa became a wholly owned subsidiary of TCS Africa. TCS South Africa is engaged in IT services and consulting business, catering to the customers in the South Africa region. - b. Diligenta 2 Limited: A subsidiary of Diligenta Limited, the UK based subsidiary of the Company was dissolved with effect from March 14, 2017, by transfer of its employees, trade, and assets to Diligenta Limited, with the permission of the Financial Conduct Authority of the United Kingdom. - c. PT Financial Network Services Indonesia: The process of closure of this company, which is a subsidiary of Financial Network Services (Holdings) Pty. Limited, was completed and the same was effective March 16, 2017. - d. MS CJV Investment Corporation: A corporation, incorporated in the state of Nevada, USA, was dissolved with effect from January 24, 2017. MS CJV Investment Corporation's 4.75% holding in Tata Consultancy Services (China) Limited was transferred on December 29, 2016, to Tata Consultancy Services Asia Pacific Pte. Limited, based on a valuation report, for a consideration of RMB 9.6 million (USD 1.38 million). This company had no other investments or business. # 9. Directors' responsibility statement Pursuant to Section 134(5) of the Act, the board of directors, to the best of their knowledge and ability, confirm that: 1. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; 2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; 3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. they have prepared the annual accounts on a going concern basis; 5. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; # Directors' Report # vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. |
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory, and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during FY 2017. # 10. Directors and key managerial personnel Mr. N. Chandrasekaran relinquished his position as the Chief Executive Officer and Managing Director of the Company with effect from February 21, 2017, on his appointment as Executive Chairman of Tata Sons Limited. Mr. N Chandrasekaran demonstrated exemplary leadership during his tenure as the Chief Executive Officer and Managing Director of the Company. Prior to his elevation to the position of the Chief Executive Officer and Managing Director of the Company on October 6, 2009, he held the office of the Chief Operating Officer and Executive Director of the Company from September 6, 2008, till October 5, 2009. He joined the Company in 1987 and has held several key positions within the Company. The Directors place on record their appreciation of the invaluable services of Mr. N. Chandrasekaran as the Chief Executive Officer and Managing Director. Tata Sons Limited nominated Mr. N. Chandrasekaran as the Chairman of the Board of Directors of the Company in place of Mr. Ishaat Hussain, with effect from February 21, 2017. The nomination was duly noted by the Board of Directors at its meeting held on February 20, 2017. Consequent to this, Mr. N. Chandrasekaran took charge as the Non-Executive Chairman of the Board of Directors of the Company with effect from February 21, 2017. Mr. Ishaat Hussain was nominated as the Chairman of the Board by Tata Sons Limited on November 9, 2016, in place of Mr. Cyrus Mistry. Mr. Hussain presided over as the Chairman of the Board till the nomination of Mr. Chandrasekaran as the Chairman with effect from February 21, 2017. The Directors place on record their appreciation of Mr. Ishaat Hussain for presiding over the Company as the interim Chairman. Based on the requisition of the holding company, Tata Sons Limited, an Extra-Ordinary General Meeting of the Company was convened on December 13, 2016, at which the shareholders voted in favor of removal of Mr. Cyrus Mistry as a Director. Mr. Cyrus Mistry ceased to be a Director of the Company with effect from December 13, 2016. Mr. Phiroz Vandrevala stepped down as a Director with effect from July 8, 2016. In a career spanning over 25 years with the Company, Mr. Phiroz Vandrevala worked in various leadership roles including as the Executive Director from September 7, 2007 to May 13, 2011, and as a non-executive Director with effect from May 13, 2011. Mr. Phiroz Vandrevala took over as the Managing Director and Vice Chairman of Diligenta Limited in May 2011 to drive its business and execution globally. The Directors place on record their appreciation for the valuable contribution of Mr. Phiroz Vandrevala to the Company. Mr. Rajesh Gopinathan, who was the Chief Financial Officer of the Company, was elevated to the position of Chief Executive Officer and Managing Director of the Company with effect from February 21, 2017. Mr. Rajesh Gopinathan started his professional career with the Company in 2001. He was appointed as the Chief Financial Officer of the Company in February 2013. He has played a key role in helping the Company become a $17.6 billion global turnover company. The Board also appointed Mr. N. Ganapathy Subramaniam as the Chief Operating Officer and Executive Director of the Company with effect from February 21, 2017. Prior to this, Mr. N. Ganapathy Subramaniam was the President, Financial Services, a strategic business unit of the Company. He has been a part of the Company and the Indian IT Industry for the past 34 years and has had opportunities to perform a variety of roles in delivering solutions to customers globally, especially in the Banking and Financial Services sector. Ms. Aarthi Subramanian retires by rotation and being eligible has offered herself for re-appointment. Pursuant to the provisions of Section 149 of the Act, Mr. Aman Mehta, Mr. V. Thyagarajan, Prof. Clayton M. Christensen, Dr. Ron Sommer, Dr. Vijay Kelkar, and Mr. O. P. Bhatt were appointed as independent directors at the annual general meeting of the Company held on June 27, 2014. |
They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as an independent director during the year. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company. File: AR_TCS_2016_2017.md The Board appointed Mr. V. Ramakrishnan as the Chief Financial Officer of the Company, to take over from Mr. Rajesh Gopinathan, with effect from February 21, 2017. Mr. Ramakrishnan has been a key member of TCS Finance for more than 17 years and has served in various leadership roles in TCS Finance. He is a graduate in commerce from Loyola College, Chennai, and is a member of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost & Management Accountants of India. Directors' Report 37 # Annual Report 2016-17 Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2017 are: Mr. Rajesh Gopinathan, Chief Executive Officer and Managing Director, Mr. N Ganapathy Subramanian, Chief Operating Officer and Executive Director, Ms. Aarthi Subramanian, Executive Director, Mr. V. Ramakrishnan, Chief Financial Officer, and Mr. Suprakash Mukhopadhyay, Company Secretary. Mr. N. Chandrasekaran ceased to be a Key Managerial Personnel of the Company with effect from February 21, 2017. # 11. Number of meetings of the board Nine meetings of the board were held during the year. For details of meetings of the board, please refer to the Corporate Governance Report, which is a part of this report. # 12. Board evaluation The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ('SEBI Listing Regulations'). The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In a separate meeting of independent directors, performance of non-independent directors and the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated. # 13. Policy on directors' appointment and remuneration and other details The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report. # 14. Internal financial control systems and their adequacy The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report. # 15. Audit committee The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report. # 16. Auditors Deloitte Haskins & Sells LLP, Chartered Accountants, the statutory auditors of the Company, hold office till the conclusion of the 22nd Annual General Meeting of the Company. The Board has recommended the appointment of B S R & Co. |
LLP, Chartered Accountants as the statutory auditors of the Company in their place, for a term of five consecutive years, from the conclusion of the 22nd Annual General Meeting of the Company scheduled to be held in the year 2017 till the conclusion of the 27th Annual General Meeting to be held in the year 2022, for approval of shareholders of the Company, based on the recommendation of the Audit Committee. Further, based on the recommendation of the Audit Committee of the Company, the Board has appointed KPMG India, Chartered Accountants, to audit the financial statements under the International Financial Reporting Standards (IFRS) for a period of five financial years from FY 2017-18 to FY 2021-22. # 17. Auditors' report and secretarial auditors' report The auditors' report and secretarial auditors' report do not contain any qualifications, reservations, or adverse remarks. Report of the secretarial auditor is given as an annexure to this report. # 38 Directors' Report # 18. Risk management The Board of Directors of the Company has formed a risk management committee to frame, implement, and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continual basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which is a part of this report. # 19. Particulars of loans, guarantees, and investments The particulars of loans, guarantees, and investments have been disclosed in the financial statements. # 20. Transactions with related parties None of the transactions with related parties fall under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form AOC-2 and the same form a part of this report. # 21. Corporate social responsibility The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The policy is available on the website of the Company. # 22. Extract of annual return As provided under Section 92(3) of the Act, the extract of the annual return is given in Annexure III in the prescribed Form MGT-9, which is a part of this report. # 23. Particulars of employees The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below: a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year: |Name of the directors|Ratio to median remuneration| |---|---| |Non-executive directors:| | |Mr. N. Chandrasekaran *|514.78| |Mr. Cyrus Mistry **|^| |Mr. Aman Mehta|46.30| |Mr. V. Thyagarajan|31.90| |Prof. Clayton M. Christensen|23.35| |Dr. Ron Sommer|33.35| |Dr. Vijay Kelkar|29.83| |Mr. Ishaat Hussain|37.02| |Mr. O. P. Bhatt|30.29| |Mr. Phiroz Vandrevala ***|^| |Executive directors:| | |Mr. Rajesh Gopinathan #|@| |Mr. N. Ganapathy Subramaniam ##|@| |Ms. Aarthi Subramanian|63.47| ^ Since the remuneration of these Directors is only for part of the year, the ratio of their remuneration to median remuneration is not comparable # Annual Report 2016-17 # b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year: |Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary|% increase in remuneration in the financial year| |---|---| |Mr. N. Chandrasekaran*|17.55| |Mr. Cyrus Mistry **|@@| |Mr. Aman Mehta|15.25| |Mr. V. Thyagarajan|12.18| |Prof. Clayton M. Christensen|7.38| |Dr. Ron Sommer|11.78| |Dr. Vijay Kelkar|25.04| |Mr. Ishaat Hussain|20.23| |Mr. O. P. Bhatt|20.09| |Mr. Phiroz Vandrevala ***|@@| |Mr. Rajesh Gopinathan #|@| |Mr. N. Ganapathy Subramaniam ##|@| |Ms. Aarthi Subramanian|35.15| |Mr. Ramakrishnan V, Chief Financial Officer w.e.f February 21, 2017|@| |Mr. Suprakash Mukhopadhyay, Global Treasury Head and Company Secretary|30.76| @ Mr. Rajesh Gopinathan, Mr. N. Ganapathy Subramaniam and Mr. Ramakrishnan V were appointed on February 21, 2017. Accordingly, the disclosures with respect to increase in their salary and median are not given. |
@@ Increase in remuneration is not given as the concerned directors were only for the part of the year. * Relinquished the office of Chief Executive Officer and Managing Director and appointed as a Chairman of the Company w.e.f. February 21, 2017 ** Ceased to be a Director of the Company w.e.f. December 13, 2016 *** Relinquished the office of Non-Executive Director w.e.f. July 8, 2016 # Appointed as Chief Executive Officer and Managing Director of the Company w.e.f. February 21, 2017 ## Appointed as Chief Operating Officer and Executive Director w.e.f. February 21, 2017 # c. The percentage increase in the median remuneration of employees in the financial year: 4.91% # d. The number of permanent employees on the rolls of Company: 387,223 # e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average annual increase was around 8% in India. However, during the course of the year, the total increase is approximately 10%, after accounting for promotions and other event based compensation revisions. Employees outside India received wage increase varying from 2% to 6%. Increase in the managerial remuneration for the year was 31.38%. # f. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that the remuneration is as per the remuneration policy of the Company. # g. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. # 40 Directors' Report # 24. Disclosure requirements As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors' Certificate thereon, and the Management Discussion and Analysis are attached, which form part of this report. As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this annual report. As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and on the website of the Company. # 25. Deposits from public The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. # 26. Conservation of energy, technology absorption, foreign exchange earnings, and outgo # Conservation of energy: The Company is committed to reduce its energy consumption through four key levers: green buildings, efficient operations, green IT and the use of renewable energy. Green buildings are energy efficient by design and hence help us reduce energy footprint. Over half of the Company's real estate portfolio are green buildings. Some 80% of all the TCS-owned offices are LEED/IGBC certified. The Company's Remote Energy Monitoring and Control initiative has enabled real-time energy monitoring and performance optimization, including that of data centers. All the owned campuses have onsite solar photovoltaic power generation. The Company has significantly increased its use of renewable power year on year. These initiatives collectively resulted in the Company's energy consumption reducing by 8.3% over the prior year, on a per FTE per annum basis. # Technology absorption, adaption, and innovation: The Company continues to adopt and use the latest technologies to improve the productivity and quality of its services and products. The Company's operations do not require significant import of technology. # Research and Development (R&D): Specific areas in which R&D was carried out by the Company TCS research deepened its exploration in the areas of intersection between computing and sciences; focusing on Artificial Intelligence (AI), the industrialization of software and computing, and the Digitization of business and society. |
Other areas of research include: an Integrated Computational Materials Platform in the materials space, the use of data science and high performance computational methods in genome analysis, metagenomic bio-markers and systems biology, and modeling of human behavior to understand the needs of a Digital citizen, Digital workplaces, and Digital customer in behavioral, social, and business sciences. TCS Research and Innovation (R&I) remained closely connected to customers. Our marquee event, the TCS Innovation Forum, attracted over 700 customers, partners, and technology experts across New York City, London, Medellin, and Sao Paulo. We conducted a track called the 'The TCS Slush Experience' at Slush - Europe's premier startup event. Innovation Days and workshops held for customers in various locations resulted in several pilots and proofs of concept. The Company's Entrepreneur-in-Residence program as well as the Co-Innovation Network (TCS COIN™) continued to accelerate innovation. The latter expanded its footprint in several geographies and also deepened its academic alliances in India, extending it to Tier 1 institutions. Your Company is again named in the Forbes list of the `World's Most Innovative Companies', ninth year in a row. The Company was also awarded the WIPO IP Enterprise Trophy. VeriAbs, TCS' V&V framework offering, came first in the Loops category in 6th International Competition on Software V&V. The TCS Remote Energy Monitoring System won the 2016 IoT Connected Building Award and the 17th National Award on Excellence in Energy Management. TCS and IIT Kanpur together ranked fifth in the Amazon Picking Challenge. TCS had three winners in Tata Innovista 2016; all six winners of the Challenges Worth Solving were from TCS. Several associates have won individual honors. Looking forward, the Digital reimagination of industry and society and the industrialization of software and computing will continue to be focus areas for TCS R&I. # Expenditure on R&D TCS Innovation Labs are located in India and other parts of the world. These R&D centers, certified by the Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai. # Annual Report 2016-17 # Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2017 and FY 2016 are given below: |Expenditure on R&D and innovation| |Unconsolidated| |Consolidated| | | |---|---|---|---|---|---|---| | |FY 2017|FY 2016|FY 2017|FY 2016| | | |a. Capital| | |1|3|1|3| |b. Recurring| |281|229|281|234| | |c. Total R&D expenditure (a+b)| |282|232|282|237| | |d. Innovation center expenditure| |878|780|996|884| | |e. Total R&D and innovation expenditure (c+d)| |1,160|1,012|1,278|1,121| | |f. R&D and innovation expenditure as a percentage of total turnover| |1.2%|1.2%|1.1%|1.0%| | # Foreign exchange earnings and outgo Export revenue constituted 92.4% of the total unconsolidated revenue in FY 2017 (92.8% in FY 2016). |Foreign exchange earnings and outgo|FY 2017|FY 2016| |---|---|---| |a. Foreign exchange earnings|86,370|81,885| |b. CIF Value of imports|561|502| |c. Expenditure in foreign currency|31,553|29,555| # 27. Acknowledgement The Directors thank the Company's employees, customers, vendors, investors, and academic partners for their continuous support. The Directors also thank the governments of various countries, the Government of India, governments of various states in India, and concerned government departments and agencies for their co-operation. The Directors appreciate and value the contribution made by every member of the TCS family. On behalf of the Board of Directors N. Chandrasekaran Mumbai, April 18, 2017 Chairman # 42 Directors' Report # Annexure I # Form No. AOC-2 (Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014) Form for disclosure of particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto: # 1. Details of contracts or arrangements or transactions not at arm's length basis: Tata Consultancy Services Limited (the Company) has not entered into any contract/arrangement/transaction with its related parties which is not in ordinary course of business or at arm's length during FY 2017. The Company has laid down policies and processes/procedures so as to ensure compliance to the subject section in the Companies Act, 2013 (Act) and the corresponding Rules. In addition, the process goes through internal and external checking, followed by quarterly reporting to the Audit Committee. |
- (a) Name(s) of the related party and nature of relationship: Not Applicable - (b) Nature of contracts/arrangements/transactions: Not Applicable - (c) Duration of the contracts / arrangements/transactions: Not Applicable - (d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable - (e) Justification for entering into such contracts or arrangements or transactions: Not Applicable - (f) Date(s) of approval by the Board: Not Applicable - (g) Amount paid as advances, if any: Not Applicable - (h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188: Not Applicable # 2. Details of material contracts or arrangement or transactions at arm's length basis: - a. Name(s) of the related party and nature of relationship: Not Applicable - b. Nature of contracts / arrangements / transactions: Not Applicable - c. Duration of the contracts / arrangements / transactions: Not Applicable - d. Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable - e. Date(s) of approval by the Board, if any: Not Applicable - f. Amount paid as advances, if any: None Note: The above disclosures on material transactions are based on the principle that transactions with wholly owned subsidiaries are exempt for purpose of section 188(1) of the Act. On behalf of the Board of Directors N. Chandrasekaran Mumbai, April 18, 2017 Chairman Directors' Report 43 # Annual Report 2016-17 # Annexure II # Annual Report on CSR Activities 1. A brief outline of the company's CSR policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes: TCS' CSR policy is aimed at demonstrating care for the community through its focus on education & skill development, health & wellness and environmental sustainability including biodiversity, energy & water conservation. Also embedded in this objective is support to the marginalised cross section of the society by providing opportunities to improve their quality of life. The projects undertaken will be within the broad framework of Schedule VII of the Companies Act, 2013. Details of the CSR policy and projects or programmes undertaken by the Company are available on the website of the Company. In other countries of operation, the Company's CSR projects are designed and implemented to address the needs of the local community. Projects such as goIT, IT Futures and work experience programme have been created to specifically address the science, technology, engineering and mathematics (STEM) education skill gap. The Company's global CSR expenditure and details of global programmes are elaborated in the Business Responsibility Report. 2. The composition of the CSR committee: The Company has a CSR committee of directors comprising of Mr. N. Chandrasekaran, Chairman of the Committee, Mr. O. P. Bhatt, Mr. Rajesh Gopinathan and Ms. Aarthi Subramanian. 3. Average net profit of the company for last three financial years for the purpose of computation of CSR: ` 22,275 crores. 4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above): ` 446 crores. 5. Details of CSR spent during the financial year: - Total amount to be spent for the financial year: ` 446 crores. - Amount unspent: ` 66 crores. - Some of the large programmes in the areas of healthcare, education and promoting employability are multiyear projects. - Manner in which the amount spent during the financial year: Attached. 6. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report. Please refer to item no. 5(b) above. 7. A responsibility statement of the CSR committee that the implementation and monitoring of CSR policy, is in compliance with CSR objectives and policy of the Company. We hereby declare that implementation and monitoring of the CSR policy are in compliance with CSR objectives and policy of the Company. Rajesh Gopinathan Chief Executive Officer and Managing Director N. Chandrasekaran Chairman, Corporate Social Responsibility Committee Mumbai, April 18, 2017 44 Directors' Report # 5(c) Manner in which amount spent during the financial year is detailed below: |Sr. |
No.|CSR Project or Activity|Sector in which the project is covered|Projects or programmes identified|Amount (budget)|Amount spent|Cumulative Expenditure|Direct or implementing agency| |---|---|---|---|---|---|---|---| |1|Training and educating children, women, elderly, differently abled, scholarships and special education and increasing employability|Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled|Pan India|206.81|188.08|159.80|Through implementing agency| |2|Disaster Relief, tech support for hospitals including Cancer Institutes, financing hygienic sanitation|Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water|Pan India|285.47|85.63|164.59|Through implementing agency| |3|Childline software support to track missing children|Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups|Pan India|1.35|0.26|1.35|Direct| |4|Desilting, repair and maintenance of Chinnappanahalli Lake, Siruseri lakes Watershed Restoration|Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga|Bengaluru|1.38|0.54|0.60|Direct| |5|Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women|Contribution to the Prime Minister's National Relief Fund|Pan India|4.44|-|4.44|Through implementing agency| |6|Contribution to Trusts engaged in CSR|Flood relief [Disaster relief covered under items of Schedule VII of the companies Act, 2013]|Chennai|13.80|-|13.80|Through implementing agency| |7|Contribution to TCS Foundation|Various sectors covered by Schedule VII of the Companies Act, 2013.|Pan India|320.00|200.00|318.07|Through implementing agency| |8|Support for the restoration and renovation of the heritage structures|Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts|Mumbai|4.70|0.20|3.86|Direct| # Sub-total 837.95 Overheads 5.00 # Total CSR Spend 379.71 Directors' Report 45 # Annual Report 2016-17 # Annexure III # Form No. MGT-9 # Extract of Annual Return as on the financial year ended on March 31, 2017 [Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] # I. REGISTRATION AND OTHER DETAILS: - i. CIN: L22210MH1995PLC084781 - ii. Registration Date: January 19, 1995 - iii. Name of the Company: Tata Consultancy Services Limited - iv. Category / Sub-Category of the Company: Company Limited by shares / Indian Non-Government Company - v. Address of the Registered office and contact details: - 9th Floor, Nirmal Building, - Nariman Point, - Mumbai 400 021. - Tel: 91 22 6778 9595 - Fax: 91 22 6778 9660 - Email: [email protected] - Website: www.tcs.com File: AR_TCS_2016_2017.md - vi. Whether listed company: Yes - vii. Name, Address and Contact details of Registrar and Transfer Agent, if any: - TSR DARASHAW Limited - 6-10, Haji Moosa Patrawala Industrial Estate - 20, Dr. E. Moses Road - Mahalaxmi - Mumbai 400 011 - Tel: 91 22 6656 8484 - Fax: 91 22 6656 8494 - Email: [email protected] - Website: www.tsrdarashaw.com # II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the company shall be stated: |Sl. No.|Name and Description of main products / services|NIC Code of the Product / service|% to total turnover of the company| |---|---|---|---| |1.|Computer Programming, Consultancy and Related Activities|620|100| # Directors' Report # III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES - |Sr. No.|Name and Address of the Company|CIN / GLN|Holding/Subsidiary/Associate|% of shares held| |---|---|---|---|---| |1|Tata Sons Limited Bombay House, 24, Homi Modi Street, Mumbai 400 001.|U99999MH1917PLC000478|Holding|73.262(46)| |2|APTOnline Limited (formerly known as APOnline Limited) Kohinoor, e-Park Plot No.1, Jubilee Gardens, Hyderabad -500081, Telangana, India|U75142TG2002PLC039671|Subsidiary|89.2(87)| |3|C-Edge Technologies Limited Palm Centre, Banyan Park, Suren Road, Andheri East, Mumbai 400 093, Maharashtra, India|U72900MH2006PLC159038|- do -|51.2(87)| |4|MP Online Limited Nirupam, Shopping Mall, 2nd Floor, Ahmedpur, Hoshangabad Road, Bhopal - 462026, Madhya Pradesh, India|U72400MP2006PLC018777|- do -|89.2(87)| |5|TCS e-Serve International Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400021, Maharashtra, India|U72300MH2007PLC240002|- do -|100.2(87)| |6|MahaOnline Limited Directorate of Information Technology, Mantralaya Annex, 7th Floor, Mumbai - 400032, Maharashtra, India|U72900MH2010PLC206026|- do -|74.2(87)| |7|TCS Foundation 9th floor, Nirmal Building, Nariman Point, Mumbai 400 021 Maharashtra, India|U74999MH2015NPL262710|- do -|100.2(87)| |8|Tata Consultancy Services (Africa) (PTY) Ltd. |
39 Ferguson Road, Illovo, Johannesburg 2196, South Africa|Not applicable|- do -|100.2(87)| |9|Tata Consultancy Services (South Africa) (PTY) Ltd. 39 Ferguson Road, Illovo, Johannesburg 2196, South Africa|- do -|- do -|100.2(87)| |10|Tata Consultancy Services Qatar S. S. C. 935 Al Fardan Office Tower, Al Fardan 61, P.O. Box No. 31316, Doha, State of Qatar|- do -|- do -|100.2(87)| |11|Tata Consultancy Services Saudi Arabia Akaria, Centre II, 7 Floor, Office No 712, Kingdom of Saudi Arabia|- do -|- do -|76.2(87)| |12|Tata Consultancy Services Asia Pacific Pte Ltd. 60, Anson Road, # 18-01, Mapletree Anson, Singapore 079914|- do -|- do -|100.2(87)| |13|Tata Consultancy Services Malaysia Sdn Bhd Suite 21-16, Level 21, G Tower, 199, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia.|- do -|- do -|100.2(87)| |14|Tata Consultancy Services (China) Co., Ltd. 1st floor, Tower D 3rd Block Zhongguancun Software Park Building No. 9, No. 8 Dongbeiwang West Road, Haidian District, Beijing, Peoples Republic of China|- do -|- do -|93.202(87)| |15|PT Tata Consultancy Services Indonesia Gedung Menara Prima Lt.6 Unit F, Jl. Dr. Ide Anak Agung Gde Agung Blok 6.2, Kawasan Mega Kuningan Kel. Kuningan Timur, Kec. Setiabudi Jakarta Selatan 12950|- do -|- do -|100.2(87)| Directors' Report 47 # Annual Report 2016-17 # Name and Address of the Company |Holding/% of Sr. Applicable|Subsidiary/Associate|Shares Held|CIN / GLN|No. Section| |---|---|---|---|---| |16|Tata Consultancy Services (Thailand) Limited|100|-do-|(87)| | |32/46, Sino-Thai Tower, 18th Floor, Sukhumvit 21 Road (Asoke) Road, Klongtoey-Nua Sub-District, Wattana District, Bangkok| | | | |17|Tata Consultancy Services (Philippines) Inc.|100|-do-|(87)| | |10th Floor Accralaw Tower, 30th St., cor 2nd Ave. E-Square IT Zone, Crescent Park West, Bonifacio Global City, Taguig City Philippines 1634| | | | |18|Tata Consultancy Services Japan, Ltd.|100|-do-|(87)| | |4th Floor, 38 Masonic Mt Building, 4-1-4 Shibakoen, Minato Ku, Tokyo 105-8551, Japan| | | | |19|Tata Consultancy Services Canada Inc.|100|-do-|(87)| | |400 University Avenue, 25th Floor, Toronto, Ontario M5G 1S5, Canada| | | | |20|Tata Consultancy Services De Espana S.A.|100|-do-|(87)| | |C/ Santa Leonor 65, Edificio F 2 planta 28037, Madrid, Spain| | | | |21|Tata Consultancy Services Deutschland GmbH|100|-do-|(87)| | |Messeturm, D-60308 Frankfurt a.M., Germany| | | | |22|Tata Consultancy Services Netherlands BV|100|-do-|(87)| | |Symphony Towers, 20th Floor, Gustav Mahlerplein 85-91, 1082 MS Amsterdam, The Netherlands| | | | |23|Tata Consultancy Services Sverige AB|100|-do-|(87)| | |Mäster Samuelsgatan, 42 SE 111 57, Sweden| | | | |24|Tata Consultancy Services Belgium S.A.|100|-do-|(87)| | |Lenneke Marelaan 6, 1932 Sint-Stevens-Woluwe, Belgium| | | | |25|TCS Italia SRL|100|-do-|(87)| | |Corso Italia 1, Milano 20122, Italy| | | | |26|Diligenta Limited|100|-do-|(87)| | |Lynch Wood, Peterborough, Cambridgeshire, PE2 6FY, United Kingdom| | | | |27|Tata Consultancy Services Portugal Unipessoal Limitada|100|-do-|(87)| | |Av. José Gomes Ferreira, 15.7 U, 1495-139 Algés Portugal| | | | |28|Tata Consultancy Services Luxembourg S.A.|100|-do-|(87)| | |Rue Pafebruch 89D, L - 8308 Capellen, Luxembourg| | | | |29|Tata Consultancy Services Switzerland Ltd|100|-do-|(87)| | |Thurgauerstrasse 36/38, 8050 Zurich, Switzerland| | | | |30|Tata Consultancy Services France S.A.S.|100|-do-|(87)| | |Tour Franklin - La Defense, 8 100-101 Quartier Boieldieu, 92042 Paris La Defense Cedex, Paris 92053, France| | | | # Directors' Report # Directors' Report |Holding/% of Sr. Applicable|Name and Address of the Company|CIN / GLN|Subsidiary/ Associate|shares No.|Section| |---|---|---|---|---|---| |100|Tata Consultancy Services Osterreich GmbH Schottengasse 1, 1010 Wien, Austria|- do -|- do -|1002(87)|-| |100|Tata Consultancy Services Danmark ApS C/o CityCallCenter ApS, Hammerensgade 1, 2, 1267 Kobenhavn K, Denmark|- do -|- do -|1002(87)|-| |100|Alti S.A. 88 de Villers, 92300 Levallois Perret, Paris, France|- do -|- do -|1002(87)|-| |100|Planaxis Technologies Inc. 505, Boulevard de la Maisonneuve, Ouest H3A 3C2 Montréal (Quebec), Canada|- do -|- do -|1002(87)|-| |100|ALTI HR S.A.S. 88, rue de Villiers, 92300 Levallois Perret, Paris, France|- do -|- do -|1002(87)|-| |100|ALTI INFRASTRUCTURES SYSTEMES & RESEAUX S.A.S. 88, rue de Villiers, 92300 Levallois Perret, Paris, France|- do -|- do -|1002(87)|-| |100|ALTI NV Lenneke Marelaan 6 - 1932 Sint-Stevens-Woluwe (Belgium)|- do -|- do -|1002(87)|-| |100|Tescom (France) Software Systems Testing S.A.R.L. 88, rue de Villiers, 92300 Levallois Perret, Paris, France|- do -|- do -|1002(87)|-| |100|ALTI Switzerland S.A. ALTI SWITZERLAND SA, avenue Louis-Casaî 18, 1209 Genève (Suisse)|- do -|- do -|1002(87)|-| |100|TEAMLINK Lenneke Marelaan 6 - 1932 Sint-Stevens-Woluwe (Belgium)|- do -|- do -|1002(87)|-| |100|TCS FNS Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|1002(87)|-| |100|TCS Financial Solutions Australia Holdings Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|1002(87)|-| |100|TCS Financial Solutions Australia Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|1002(87)|-| |100|TCS Financial Solutions Beijing Co., Ltd. |
(04) Floor 3, 10 Futong East Street, Chaoyang District, Beijing, Peoples Republic of China|- do -|- do -|1002(87)|-| |100|TCS Iberoamerica SA Colonia 1329; piso 3, Montevideo, Uruguay|- do -|- do -|1002(87)|-| |100|TCS Solution Center S.A. Ruta 8 km 17500, Zonamerica, Ed 600, Uruguay|- do -|- do -|1002(87)|-| |99.992|Tata Consultancy Services Argentina S.A. Uspallata 3046; Ciudad Autónoma de Buenos Aires, Argentina (CP: C1437JCJ)|- do -|- do -|1002(87)|-| # Annual Report 2016-17 # Holding/% of Sr. Applicable # Subsidiary/Associate |No.|Name and Address of the Company|CIN / GLN|Shares Held|Section| |---|---|---|---|---| |48|Tata Consultancy Services De Mexico S.A., De C.V. Av. Insurgentes Sur 664, 2nd Floor, Colonia Del Valle, México, D.F., México (Postal Code: 03100)|- do -|100|2(87)| |49|TCS Inversiones Chile Limitada Curico 18, Santiago, Chile|- do -|99.992|2(87)| |50|Tata Consultancy Services Do Brasil Ltda Av. Aruanã, 70. Tamboré - Barueri; São Paulo, Brazil (Postal Code: 06460-010)|- do -|100|2(87)| |51|Tata Consultancy Services Chile S.A. Curicó 18, piso 3, Oficina 502, Santiago, Chile|- do -|100|2(87)| |52|TATASOLUTION CENTER S.A Francisco Salazar E10-61 and Camilo Destruge Building INLUXOR 7th Floor; Quito, Ecuador|- do -|100|2(87)| |53|TCS Uruguay S.A. Monte Caseros 2600, Montevideo, Uruguay (Postal Code: 11100)|- do -|100|2(87)| |54|Technology Outsourcing S.A.C. Av. Nicolas Ayllon Nº 2491 (3er. Piso) El Agustino, Peru|- do -|100|2(87)| |55|MGDC S.C. Camino al iteso 8699 el mante tlaquepaque Jalisco, México (Postal Code: 45609)|- do -|100|2(87)| |56|Tata America International Corporation 101, Park Avenue, 26th Floor, New York 10178, U.S.A.|- do -|100|2(87)| |57|CMC Americas Inc. 379 Thornall Street, Edison 08837, New Jersey, U.S.A.|- do -|100|2(87)| |58|TCS e-Serve America, Inc. Corporation Trust Center, 1209, Orange Street, Wilmington, New Castle County, Delaware - 19801|- do -|100|2(87)| |59|CMC eBiz Inc 379 Thornall Street, Edison 08837, New Jersey, U.S.A.|- do -|100|2(87)| # Directors' Report # IV. SHAREHOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) # i.) Category-wise Shareholding |Category of Shareholders| | |No.of Shares held at the beginning of the year| | | | | |No.of Shares held at the end of the year|% Change during the year| | | |---|---|---|---|---|---|---|---|---|---|---|---|---| | | | |i.e. 01.04.2016| | | | | |i.e. 31.03.2017| | | | | | |Demat|Physical|Total Shares|Demat|Physical|Total Shares|% of Total Shares| | | | | | |A. Promoters| | | | | | | | | | | | |(1) Indian| | | | | | | | | | | | | |(a) Individuals / Hindu Undivided Family| |0|0|0| |0.000|0|0|0.000|0.000| | | |(b) Central Government / State Governments(s)| |0|0|0| |0.000|0|0|0.000|0.000| | | |(c) Bodies Corporate| |1,445,125,286|0|1,445,125,286| |73.341|1,444,515,152|0|1,444,515,152| |73.310|(0.031)| |(d) Financial Institutions / Banks| |0|0|0| |0.000|0|0|0.000|0.000| | | |(e) Others - Trust| |1,607,624|0|1,607,624| |0.082|0|0|0| |0.000|(0.082)| |Sub-Total (A) (1)| |1,446,732,910|0|1,446,732,910| |73.423|1,444,515,152|0|1,444,515,152| |73.310|(0.113)| |(2) Foreign Individuals| | | | | | | | | | | | | |(a) Individuals (Non-Resident / Foreign Individuals)| |0|0|0| |0.000|0|0|0.000|0.000| | | |(b) Bodies Corporate| |0|0|0| |0.000|0|0|0.000|0.000| | | |(c) Institutions| |0|0|0| |0.000|0|0|0.000|0.000| | | |(d) Qualified Foreign Investor| |0|0|0| |0.000|0|0|0.000|0.000| | | |(e) Any Other (specify)| |0|0|0| |0.000|0|0|0.000|0.000| | | |Sub-Total (A) (2)| |0|0|0| |0.000|0|0|0.000|0.000| | | |Total Shareholding of Promoter and Promoter Group (A)| |1,446,732,910|0|1,446,732,910| |73.423|1,444,515,152|0|1,444,515,152| |73.310|(0.113)| |(B) Public Shareholding| | | | | | | | | | | | | |(1) Institutions| | | | | | | | | | | | | |(a) Mutual Funds / UTI| |21,568,174|1,773|21,569,947| |1.095|18,522,768|1,773| |18,524,541|0.940|(0.155)| |(b) Financial Institutions / Banks| |1,006,863|2,703|1,009,566| |0.051|731,730|2,703| |734,433|0.037|(0.014)| |(c) Central Government / State Governments(s)| |700,233|0|700,233| |0.036|1,044,253|0|1,044,253| |0.053|0.017| |(d) Venture Capital Funds| |0|0|0| |0.000|0|0|0.000|0.000| | | |(e) Insurance Companies| |78,604,759|0|78,604,759| |3.989|86,330,709|0|86,330,709| |4.381|0.392| |(f) Foreign Institutional Investors| |200,246,839|0|200,246,839| |10.163|35,648,888|0|35,648,888| |1.809|(8.354)| # Annual Report 2016-17 |Category of Shareholders|No.of Shares held at the beginning of the year (i.e. 01.04.2016)|No.of Shares held at the end of the year (i.e 31.03.2017)|% Change during the year (01.04.16 - 31.03.17)| |---|---|---|---| |(g) Capital Investors Foreign Venture|0|0|0.000| |(h) Investor Qualified Foreign|0|0|0.000| |(I) Foreign Portfolio Investors (Corporate)|131,330,700|297,284,243|8.422| |(j) Any Other (specify)| | | | |Sub-Total (B) (1)|433,457,568|439,562,591|0.308| |(2) Non-Institutions| | | | |(a) Bodies Corporate|6,752,570|4,657,240|(0.106)| |(b) Individuals| | | | |Individual shareholders holding nominal share capital upto ` 1 lakh|64,948,729|62,098,566|(0.146)| |Individual shareholders holding nominal share capital in excess of ` 1 lakh|14,112,114|14,091,398|(0.001)| |(c) Investor Qualified Foreign|0|0|0.000| |(d) Any Other|0|0|0.000| |i Trusts|1,804,991|2,295,183|0.024| |ii Foreign Companies|28|28|0.000| |iii Clearing Members / Clearing House|1,458,692|2,083,603|0.032| |Sub-total (B) (2)|89,077,124|85,226,018|(0.197)| |Total Public Shareholding (B) = (B)(1)+(B)(2)|522,534,692|524,788,609|0.112| |TOTAL (A)+(B)|1,969,267,602|1,969,303,761|0.000| |Shares held by Custodians and against which Depository Receipts have been issued (C)|0|0|0.000| |GRAND TOTAL (A)+(B)+(C)|1,969,267,602|1,969,303,761|0.000| # Directors' Report # ii) ShareHolding of Promoters (including Promoter Group) |Sr. |
No.|Shareholder's Name|Shareholding at the end of the year 01.04.2016|Shareholding at the end of the year 31.03.2017|% change in shareholding| |---|---|---|---|---| |1|Tata Sons Limited|1,443,451,698|1,443,451,698|0.00| |2|Jamsetji Tata Trust|1,160,280|0|(0.06)| |3|Tata Industries Limited|363,700|3,700|(0.02)| |4|AF-Taab Investment Company Limited|611,352|484,902|(0.01)| |5|Tata Investment Corporation Limited|590,452|550,000|0.00| |6|Navajbai Ratan Tata Trust|447,344|0|(0.02)| |7|Tata International Limited|83,232|0|0.00| |8|Tata Steel Limited|24,400|24,400|0.00| |9|The Tata Power Company Limited|452|452|0.00| |Total| |1,446,732,910|1,444,515,152|(0.11)| # iii) Change in Promoters' (including Promoter Group) Shareholding (please Specify, if there is no change) |Sr. No.|Name of the Shareholder|Shareholding at the beginning of the year as on 01.04.2016|Reason| |---|---|---|---| |1|AF-Taab Investment Company Limited|611,352 (0.03)|Increase/ Decrease in Shareholding| | | |Cumulative Shareholding during the Year| | | | |611,352 (0.03)| | | | | |26.08.2016 Sale of Shares (6,450)| | | | |16.09.2016 Sale of Shares (80,000)| | | | |23.09.2016 Sale of Shares (260,000)| | | | |30.09.2016 Purchase of shares 220,000 (0.01)| |2|Tata Industries Limited|363,700 (0.02)| | | | | |20.01.2017 Sale of Shares (250,000)| | | | |24.01.2017 Sale of Shares (110,000)| |3|Jamsetji Tata Trust|1,160,280 (0.06)| | | | | |20.05.2016 Sale of Shares (118,500)| | | | |27.05.2016 Sale of Shares (1,041,780) (0.06)| # Annual Report 2016-17 # Shareholding Pattern of Shareholders |Sr. No.|Name of the Shareholder|Shareholding at the beginning of the year as on 01.04.2016|Date|Reason|Increase/Decrease in Shareholding during the Year|Cumulative Shareholding| |---|---|---|---|---|---|---| |4|Tata Investment Corporation Ltd|No. of Shares: 590,452 % of Total Shares of the Company: 0.03|23.09.2016|Sale of Shares|(40,452) 0.00|No. of Shares: 550,000 % of Total Shares of the Company: 0.03| |5|Navajbai Ratan Tata Trust|No. of Shares: 447,344 % of Total Shares of the Company: 0.02|20.05.2016|Sale of Shares|(48,100)| | | | | |27.05.2016|Sale of Shares|(399,244) 0.02|No. of Shares: 0 % of Total Shares of the Company: 0| |6|Tata International Limited|No. of Shares: 83,232 % of Total Shares of the Company: 0.00|29.04.2016|Sale of Shares|(83,232) 0|No. of Shares: 0 % of Total Shares of the Company: 0| # Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holder of GDRs and ADRs) |Sr. No.|Top Ten Shareholders*|Shareholding at the beginning of the year 01.04.2016|Cumulative Shareholding at end of the year 31.03.2017| |---|---|---|---| |1|Life Insurance Corporation of India|No of shares: 58,521,537 % of total shares of the company: 2.97|No of shares: 71,841,104 % of total shares of the company: 3.65| |2|First State Investments ICVC- Stewart Investors Asia Pacific Leaders Fund (formerly National Westminster Bank Plc As Depository of First State Asia Pacific Leaders Fund a sub Fund of First State Investments ICVC)|No of shares: 8,285,641 % of total shares of the company: 0.42|No of shares: 16,035,510 % of total shares of the company: 0.81| |3|Abu Dhabi Investment Authority**|No of shares: 14,165,505 % of total shares of the company: 0.72|No of shares: 11,033,526 % of total shares of the company: 0.56| |4|Lazard Emerging Markets Portfolio (formerly Lazard Asset Management LLC A/C Lazard Emerging Markets Portfolio)|No of shares: 7,682,828 % of total shares of the company: 0.39|No of shares: 10,532,329 % of total shares of the company: 0.53| |5|Government of Singapore**|No of shares: 11,299,187 % of total shares of the company: 0.57|No of shares: 9,857,425 % of total shares of the company: 0.50| |6|Oppenheimer Developing Markets Fund|No of shares: 8,309,112 % of total shares of the company: 0.42|No of shares: 9,472,685 % of total shares of the company: 0.48| |7|Vanguard Emerging Markets Stock Index Fund, A series of Vanguard International Equity Index Fund|No of shares: 7,211,765 % of total shares of the company: 0.37|No of shares: 7,500,802 % of total shares of the company: 0.38| |8|Europacific Growth Fund|No of shares: 7,966,000 % of total shares of the company: 0.40|No of shares: 6,854,315 % of total shares of the company: 0.35| |9|Aberdeen Global Indian Equity Limited (formerly Aberdeen Global Indian Equity (Mauritius) Limited)|No of shares: 7,122,473 % of total shares of the company: 0.36|No of shares: 6,272,473 % of total shares of the company: 0.32| |10|Copthall Mauritius Investment Limited|No of shares: 7,361,719 % of total shares of the company: 0.37|No of shares: 6,107,314 % of total shares of the company: 0.31| * The shares of the Company are traded on daily basis and hence the datewise increase / decrease in shareholding is not indicated. Shareholding is consolidated based on permanent account number (PAN) of the shareholder. ** Various other accounts # Directors' Report # v) Shareholding of Directors and Key Managerial Personnel: |SR. No|Name of the Shareholder|Date|Reason|Shareholding at the beginning of the year 01.04.2016|Cumulative Shareholding at the end of the year 31.03.2017| |---|---|---|---|---|---| |1|Mr. Cyrus Pallonji Mistry*|01-Apr-2016| |No. of shares: 4,163,526 % of total shares of the company: 0.21|No. |
of shares: 4,163,526 % of total shares of the company: 0.21| |2|Mr. N Chandrasekaran|01-Apr-2016| |No. of shares: 88,528 % of total shares of the company: 0.00|No. of shares: 88,528 % of total shares of the company: 0.00| |3|Mr. Ishaat Hussain|01-Apr-2016| |No. of shares: 1,740 % of total shares of the company: 0.00|No. of shares: 1,740 % of total shares of the company: 0.00| |4|Ms. Aarthi Subramanian|01-Apr-2016| |No. of shares: 2,800 % of total shares of the company: 0.00|No. of shares: 2,800 % of total shares of the company: 0.00| |5|Mr. Rajesh Gopinathan|01-Apr-2016| |No. of shares: 1,130 % of total shares of the company: 0.00|No. of shares: 1,130 % of total shares of the company: 0.00| |6|Mr. N Ganapathy Subramaniam|01-Apr-2016| |No. of shares: 98,880 % of total shares of the company: 0.00|No. of shares: 98,880 % of total shares of the company: 0.00| # Key Managerial Personnel |SR. No|Name of the Shareholder|Date|Reason|Shareholding at the beginning of the year 01.04.2016|Cumulative Shareholding at the end of the year 31.03.2017| |---|---|---|---|---|---| |1|Mr. Ramakrishnan V|01-Apr-2016| |No. of shares: 300 % of total shares of the company: 0.00|No. of shares: 300 % of total shares of the company: 0.00| * ceased to be Director w.e.f. 13.12.2016 # V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment (` crore) | |Secured Loans|Unsecured Loans|Deposits|Total| |---|---|---|---|---| |Indebtedness at the beginning of the financial year|177|2|12|191| |i) Principal Amount|177|2|12|191| |ii) Interest due but not paid|0|0|0|0| |iii) Interest accrued but not due|0|0|0|0| |Total (i+ii+iii)|177|2|12|191| |Change in Indebtedness during the financial year| | | | | |Ÿ Addition|0|198|0|198| |Ÿ Reduction|(127)|0|(9)|(136)| |Net Change|(127)|198|(9)|62| |Indebtedness at the end of the financial year|50|200|3|253| |i) Principal Amount|50|200|3|253| |ii) Interest due but not paid|0|0|0|0| |iii) Interest accrued but not due|0|0|0|0| |Total (i+ii+iii)|50|200|3|253| # Notes: 1. These liabilities represent obligations under finance lease including current portion of obligations of ` 50 crore as of March 31, 2017. 2. These represent the bank overdraft of ` 200 crore and other borrowings as of March 31, 2017. 3. These are deposits received on account of sub-lease of premises and from vendors for contracts to be executed. Directors' Report 55 # Annual Report 2016-17 # VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL # A. Remuneration to Managing Director, Whole-time Directors and / or Manager: |Sr. No.|Particulars of Remuneration| | |Name of MD/WTD/Manager| | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | | | | | |1|Gross salary|Mr. N. Chandrasekaran (Chief Executive Officer and Managing Director upto February 21, 2017)#|244.93|Mr. N. Ganapathy Subramaniam (Chief Executive Officer and Managing Director (w.e.f February 21, 2017))|66.68|Mr. Rajesh Gopinathan (Chief Operating Officer and Executive Director (w.e.f February 21, 2017))|76.06|Ms. |
Aarthi Subramanian, Executive Director|81.69| |(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961| | | | | |469.36| | | | | | | | | |(b) Value of perquisites u/s 17(2) of the Income-tax Act, 1961| |0.35|0.40|0.40|0.40|1.55| | | | | | | | | |(c) Profits in lieu of salary under Section 17(3) of the Income tax Act, 1961|-|-|-|-|-| | | | | | | | | | |2|Stock Option|-|-|-|-|-| | | | | | | | | |3|Sweat Equity|-|-|-|-|-| | | | | | | | | |4|Commission|-|2,500.00|400.00|350.00|200.00|3,450.00| | | | | | | | |- as % of profit| |0.084|0.013|0.012|0.007|0.116| | | | | | | | | |5|Others, Allowances|270.00|155.55|188.90|89.80|704.25| | | | | | | | | |Total (A)| |3,015.28|622.63|615.36|371.89|4,625.16| | | | | | | | | |Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)|2,97,699.16| | | | | | | | | | | | | | # The remuneration includes compensation for full year i.e., as Chief Financial Officer from April 1, 2016 to February 21, 2017 and as Chief Executive Officer and Managing Director from February 21, 2017 to March 31, 2017 ## The remuneration includes compensation for full year i.e., as President, Financial Services from April 1, 2016 to February 21, 2017 and as Chief Operating Officer and Executive Director from February 21, 2017 to March 31, 2017 # B. Remuneration to other directors: |Sr. No.|Particulars of Remuneration|Fee for attending board / committee meetings|Commission|Others, please specify|Total Amount| | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---| | | | | | |1|Independent Directors|Mr. Aman Mehta|6.30|265.00|-|271.30| | |Mr. V. Thyagarajan|6.90|180.00|-|186.90| | | | | | | | |Prof. Clayton M. Christensen|1.80|135.00|-|136.80| | | | | | | |Dr. Ron Sommer| |5.40|190.00|-|195.40| | | | | | | | |Dr. Vijay Kelkar|4.80|170.00|-|174.80| | | | | | | |Mr. O. P. Bhatt| |7.50|170.00|-|177.50| | | | | | | |Total (1)|-|32.70|1,110.00|-|1,142.70| | | | | | | |2|Other Non-Executive Directors|Mr. N. Chandrasekaran|0.90|-|-|0.90| | | | | | | |Mr. Cyrus Mistry|1.80|-|-|1.80| | | | | | | | |Mr. Ishaat Hussain|6.90|210.00|-|216.90| | | | | | | | |Mr. Phiroz Vandrevala|0.60|15.00|-|15.60| | | | | | | |Total (2)|-|10.20|225.00|-|235.20| | | | | | | |Total (B)=(1+2)|-|42.90|1,335.00|-|1,377.90| | | | | | | | |Total Managerial Remuneration| | |-|-|1,335.00|-| | | | | |Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)|Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)|29,769.92| | | | | | | | | | | # Directors' Report # C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD |Sr. No.|Particulars of Remuneration| |Key Managerial Personnel| | | | |---|---|---|---|---|---|---| |1|Gross salary| | | | | | | |(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961|Mr. Rajesh Gopinathan|Mr. Ramakrishnan V,|Mr. Suprakash Mukhopadhyay, Global Treasury Head and Company Secretary|Total| | | | |66.68|43.43| |35.13|145.24| | |(b) Value of perquisites u/s 17(2) of the Income tax Act, 1961|0.40|-| |26.72|27.12| | |(c) Profits in lieu of salary under Section 17(3) of the Income tax Act, 1961|-|-|-|-| | |2|Stock Option|-|-|-|-| | |3|Sweat Equity|-|-|-|-| | |4|Commission|400.00|-|-|400.00| | | |- as % of profit|0.013| | |0.013| | |5|Others, Allowances|155.55|193.07| |170.60|519.22| | |Total|622.63|236.50| |232.45|1,091.58| * The remuneration includes compensation for full year i.e., as Chief Financial Officer from April 1, 2016 to February 21, 2017 and as Chief Executive Officer and Managing Director from February 21, 2017 to March 31, 2017. |
**The remuneration includes compensation for full year i.e., as Vice President-Finance from April 1, 2016 to February 21, 2017 and as Chief Financial Officer from February 21, 2017 to March 31, 2017. Note: Please refer to the note given under section III. iv. b. of the Corporate Governance Report. # VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: There were no penalties, punishment or compounding of offences during the year ended March 31, 2017. Directors' Report 57 # Annual Report 2016-17 # Form No. MR-3 # Secretarial Audit Report # For The Financial Year Ended 31st March, 2017 (Pursuant to section 204 (1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014) To, The Members, Tata Consultancy Services Limited We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Tata Consultancy Services Limited (hereinafter called "the Company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. Based on our verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company, the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to us and the representations made by the Management, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2017, generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records made available to us and maintained by the Company for the financial year ended on 31st March, 2017 according to the applicable provisions of: File: AR_TCS_2016_2017.md 1. The Companies Act, 2013 (the Act) and the rules made there under; 2. The Securities Contract (Regulation) Act, 1956 ('SCRA') and the rules made there under; 3. The Depositories Act, 1996 and the Regulations and Bye-laws framed there under; 4. Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; 5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'): 1. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; 2. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; 3. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments from time to time; 4. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the audit period) 5. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable to the Company during the audit period) 6. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the Company during the audit period) 7. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the audit period) 8. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; # Directors' Report # (vi) Other laws specifically applicable to the Company namely:- - (a) Information Technology Act, 2000 and the rules made thereunder; - (b) Special Economic Zones Act, 2005 and the rules made thereunder; - (c) Software Technology Parks of India rules and regulations - (d) The Indian Copyright Act, 1957 - (e) The Patents Act, 1970 - (f) The Trade Marks Act, 1999 # We have also examined compliance with the applicable clauses of the following: 1. Secretarial Standards issued by The Institute of Company Secretaries of India with respect to board and general meetings. 2. The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE Limited read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. |
During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above. However, the Company has spent an amount of `380 crore against the amount of `446 crore to be spent during the year towards Corporate Social Responsibility, for which an explanation has been provided in the Directors' Report. Further, the Company was unable to file certain forms with the Ministry of Corporate Affairs (MCA), due to technical issues at the MCA's end. # We further report that: The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance for meetings other than those held at shorter notice, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. As per the minutes, the decisions at the Board Meetings were taken unanimously. We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines etc. We further report that during the audit period, the Company had following event which had bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc.: The Board of Directors of the Company has approved buyback of equity shares of the Company by way of a Tender Offer route through Stock Exchange Mechanism. For Parikh & Associates Company Secretaries P. N. Parikh Partner Mumbai, April 18, 2017 FCS No: 327 CP No: 1228 This Report is to be read with our letter of even date which is annexed as Annexure A and Forms an integral part of this report. Directors' Report 59 # Annual Report 2016-17 # 'Annexure A' To, The Members Tata Consultancy Services Limited Our report of even date is to be read along with this letter. 1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion. 3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 4. Wherever required, we have obtained the Management Representation about the Compliance of laws, rules and regulations and happening of events etc. 5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis. 6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. For Parikh & Associates Company Secretaries P. N. Parikh Partner Mumbai, April 18, 2017 FCS No: 327 CP No: 1228 # Directors' Report # Management Discussion and Analysis TCS House, Mumbai # Annual Report 2016-17 # Management Discussion and Analysis # 1.0 Overview of the Industry In FY 2017, the global market for Outsourced IT-BPM services grew by 3.9% over the prior year, to $1.2 Trillion. Within that larger market, IT Services grew by 2.5% year on year, driven largely by cloud adoption and package implementation. Business Process Management (BPM) grew by 4% over the prior year. It is worth noting that in a largely fragmented market landscape, TCS has historically grown much faster than the market, driven by significant market share gains on account of a superior execution model. In the latest five-year period, while the market has expanded by a CAGR of 1.7% (IT Services CAGR: 0.5%), TCS showed a CAGR of 11.6% in USD terms. |
Growth drivers for the industry in FY 2017 remained largely the same as in the prior years, which are efficiency spends and transformational spends of customers. The broad components of industry growth drivers are listed below. TCS considers industry verticals as the primary segment for the business. The four key verticals are: Banking, Financial Services, and Insurance (BFSI); Retail and Consumer Business; Communications, Media, and Technology; Manufacturing; and Others. Others includes Life Sciences and Healthcare; and Energy, Resources, and Utilities. # b. Strategy Customer-centricity is at the core of TCS' strategy and drives all investment decisions. The philosophy is to be technology agnostic and to keep investing in building capabilities in newer areas that customers are looking at, so we can continually expand our participation in customers' spend and stay relevant to them through business and technology cycles. The outcome of our strong relationship focus and unwavering pursuit of execution excellence is a superior service experience for our customers and long, enduring relationships. |IT Services|IT Infrastructure Services|Business Process Services| |---|---|---| |Ÿ Digital transformation|Ÿ Cloud adoption|Ÿ Robotic and cognitive automation| |Ÿ Core system renovation|Ÿ IT infrastructure rationalization|Ÿ Analytics| |Ÿ Simplification, automation, efficiency|Ÿ Market penetration|Ÿ Regulatory and compliance| # 2.0 Our business # a. An overview Tata Consultancy Services is an IT services, consulting, and business solutions organization offering transformational as well as outsourcing services to global enterprises. TCS uses its global delivery capability and full services portfolio - consulting and enterprise solutions, application development and maintenance, assurance services, engineering and industrial services, IT infrastructure services, business process services, and asset leveraged solutions - to deliver high quality, high impact solutions leveraging the latest technologies to customers across multiple regions and industry verticals. This strategy may be visually represented as below: |Scale| | | |---|---|---| |Client-centric model| | | |Expand Addressable Market|Agile Global Delivery Model|Superior, Differentiated Solutions| |Continual Reinvestment|Domain Expertise|Delivery Excellence| |Greater Value| | | |Profitable Revenue Growth|Deep, Enduring Relationships|More Repeat Business| Our geographic footprint consists of North America, Latin America, the United Kingdom, Continental Europe, Asia-Pacific, India, and Middle East and Africa. [1] Source: NASSCOM Strategic Review FY 2017 [2] See Glossary for description of service lines 62 Management Discussion and Analysis A more detailed breakup of the various elements of strategy, their outcomes, and the validation metrics is provided below: |Strategic Element|Outcomes|Validation Metrics| |---|---|---| |Continually investing in improving our customer-centric execution capabilities by:|Superior, differentiated outcomes|Superior client metrics| | |Increased customer satisfaction levels|Strong references and testimonials| | |Deep, enduring relationships|Growing revenue from Digital engagements| | |Improved share of wallet|Resilient pricing| | |More defendable share of wallet|Superior margins| | | |Sustainability of margins| |Investing to expand our addressable market by:|Diversified, de-risked revenue base|Change in segmental mix over time| | |Greater scale of operations| | | |More headroom for sustainable growth|Market share by geography and verticals| | |Greater resiliency through different business cycles| | # 3.0 Leading in a Digital world TCS has successfully navigated through multiple technology cycles over the last five decades, pivoting and adapting each time to build relevant new capabilities and helping our clients realize the benefits of that new technology. Our responsiveness, agility, and adaptability to change have been core to our longevity. With clients launching large scale Digital transformation programs that have deep, complex interlinkages to existing systems, our contextual knowledge, depth, and scale in Digital capabilities position us uniquely to meet their need for certainty and quick time to market. In certain industry verticals like Financial Services and Retail, TCS has gained a significant share of wallet and is the preferred partner for global companies in their Digital initiatives. In the below sections, we discuss the key strategic decisions and investments which gave TCS a head start in racing to the leadership position. # a. |
Strategic decisions Three key strategic decisions taken in the past decade have played a major role in TCS' ability to successfully navigate this latest technology change to gain leadership in the Digital era: |Strategic Decision|What TCS did|Why it matters now| |---|---|---| |Shift to solution-selling|For over a decade, TCS has been steadily building solutioning skills as well as solution-selling capabilities, and developing business-focused bespoke software solutions for customers.|Enterprises are consuming Digital services not so much in the form of discrete technology skills, but more as holistic business solutions encompassing multiple technologies and services, to serve a greater transformational need.| This transformation entailed developing a deep contextual understanding of the business need, crafting a technology solution to address that need, and selling a business value proposition to a broader set of stakeholders in the client organization. Experience in selling solutions for over a decade has positioned TCS very well to participate in the opportunity that Digital adoption has presented, selling to Business Heads, COOs, CFOs, CMOs, and other CXOs, gaining share from others who are attempting that shift only now. Full Services Capability In 2005, TCS took a strategic decision to build capabilities in adjacent areas like IT Infrastructure Services and Business Process Services. In the last few years, these service lines have grown very well and today make up nearly a fourth of our revenue. The end-to-end capability allows TCS to develop comprehensive Digital solutions that best suit clients' longer-term business requirements, and are free from biases or capability constraints. Management Discussion and Analysis # Annual Report 2016-17 # Strategic Decision |What TCS did|Why it matters now| |---|---| |Customer-centric organization structure|The customer's purchase decision when it comes to Digital solutions is based on the quality of the solution proposed, the contextual understanding demonstrated by TCS, and the business value that the solution represents.| |Reorganizing TCS into multiple verticalized business units in 2008, brought about greater customer centricity - which allowed for building deep contextual knowledge - while at the same time creating a deep and broad pool of domain experts in each industry vertical.|The verticalized, client-centric model has allowed TCS to be very proactive in creating bespoke solutions leveraging our unique contextual knowledge of a client's business.| |Proximity to clients has helped identify opportunities better addressed with software products and platforms. TCS has a differentiated portfolio of top performing, industry specific IP, products and platforms. (See page 69.)|TCS' portfolio of products and platforms has helped establish the Company's domain expertise. Asset leveraged solutions help deliver quicker time to market to clients looking for a competitive edge.| # b. Strategic Investments In this decade, TCS recognized the potential of Digital technologies long before the word itself gained mainstream currency, and made investments ahead of time in building relevant capabilities. Those early investments gave TCS a head start in participating in our customers' Digital journeys. As those journeys progressed and every large enterprise embarked on ambitious Digital transformation programs, we scaled up our investments and transformed ourselves to ensure that we had what it took to partner with them. As detailed in the Annual Report for FY 2016, the investments have been in the following areas: - Gaining scale on newer technologies and capabilities through a massive reskilling exercise and hiring individuals with specialized skills - Re-tooling the Global Network Delivery Model (GNDM™) to incorporate greater levels of automation and collaborative workspaces for adoption of Agile and DevOps models - Building intellectual property (IP) and solution frameworks leveraging our deep domain expertise, technology depth, and partner-solutions from our Co-Innovation Network (TCS COIN™). - Setting up unique co-innovation workspaces designed to encourage joint ideation, creativity, participation, and collaboration with clients. # c. Outcomes Today, TCS has a significant market share in the Digital space. Over 55% of our customers, spanning every single industry vertical, have engaged TCS to partner them in their Digital journey. Revenues from Digital engagements constituted 16.7% of the Company's revenues in FY 2017, growing by 28.8% in constant currency over FY 2016. Customers are recognizing TCS' capacity for innovation. In November 2016, GE awarded TCS the Digital Innovator of the Year for Ecosystem Excellence. "As a strategic GE Digital partner, TCS is a leading contributor to advancing the industrial app economy. It's Digital Store--an innovative and differentiated approach to application development--includes more than 150 applications, including 50 implemented on the Predix platform," their announcement read. |
The growing market share in Digital and glowing client testimonials of TCS' capabilities are also reflected in the high rankings assigned to TCS in the various competitive assessments pertaining to Digital capabilities, published by various industry analyst firms. In FY 2017, TCS was ranked a Leader among peers in 21 competitive assessments in Digital areas such as Big Data and Analytics (5), IoT (5), Digital Services (4), Mobility (3), Digital Marketing (2), Cloud (1), and Cyber security (1). "TCS has demonstrated exceptional contextual knowledge in building a suite of digital solutions on the TCS Digital Store, leveraging GE's Predix platform for the Industrial Internet... TCS' capacity for innovation, broad expertise using Predix and strong track record in driving digital transformation for their customers makes them a significant player within our partner ecosystem." -- Bill Ruh, CEO - GE Digital # 4.0 Talent acquisition, Talent Development, and Retention At a time of profound and rapid technology change, TCS' HR strategy is focused on providing our global, diverse workforce a stimulating environment which is flexible, nurtures social contract, fosters innovation, builds a result- [3] Ref MD&A - AR FY 2011, CEO's Letter - AR FY 2012 [4] See Pages 17 to 32 for insights of the transformation underway at TCS [5] https://www.ge.com/digital/blog/introducing-2016-digital-innovator-year-award-winners 64 Management Discussion and Analysis # Management Discussion and Analysis oriented, high performance culture, and motivates today's multi-generational and mobile workforce to develop themselves personally and professionally. The Company has been leveraging Digital technologies extensively to reimagine its talent acquisition, talent development, and engagement functions. This, and our traditional philosophy of empowering individuals and helping them realize their potential, has made TCS' HR processes and outcomes an industry benchmark. See Reimagining Talent Management on Page 30. # a. Talent Acquisition TCS' talent acquisition strategy is to hire the right competencies required by the business at the right time. In FY 2017, we hired and integrated 78,912 employees - 67,328 in India and 11,584 outside India - a judicious mix of experienced professionals and trainees. Besides being the largest IT recruiter in India for the last many years, we believe we are also the largest net recruiter in the IT Services industry in the US in FY 2017. The global programming competition organized through Campus Commune has found its place in the Limca Book of Records. Running for 5 seasons, it witnessed over 260,000 registrations from more than 3,000 colleges across 18 countries in FY 2017. # b. Talent Diversity TCS is an Equal Opportunity Employer and subscribes to the Tata Code of Conduct in embracing diversity in race, nationality, religion, ancestry, marital status, gender, age, ethnic origin, physical ability, and sexual orientation. Compensation levels are merit-based, determined by qualification, experience levels, special skills if any, and performance. Gender and any of the other diversity parameters do not play a part in determining compensation levels. TCS has a well-defined Diversity and Inclusion Policy. TCS' diversity-focused talent acquisition strategy has resulted in greater diversity of gender, geographic locations, and academic discipline. TCS is today one of the world's largest employer of women. TCS continues to remain the preferred employer at leading engineering campuses in India. The Company's college recruitment efforts in USA, Canada, Latin America, China, and Hungary have been progressing well with very encouraging outcomes. TCS has also been recruiting graduates from the Top 10 B-Schools in the US for key business roles. Academic institutes are key partners in TCS' talent acquisition strategy. Our Academic Interface Program (AIP) is a structured approach to building strong, enduring relationships with top universities globally. In FY 2017, our AIP outreach covered a total of 1,232 institutes globally through both student and faculty-focused activities like workshops, internships, sponsorship of contests, faculty development programs, research scholarships, curriculum review, establishing technical institutes, and so on. Campus Commune, our unique student engagement portal that helps students collaborate and network with their peer groups globally now has over 1 million students in 19 countries as registered users. It also helps them in Digital learning through webinars, educational videos, and blog posts by experts in various fields, grooming them for the ensuing professional life. We use programming contests such as TESTimony, EngiNx, GameOn, and CodeVita to spot and hire top talent. In FY 2017, we recruited over 1,100 crack programmers through this gamified approach. |
CodeVita, "Huge congratulations to TCS … They have demonstrated a commitment to fundamentally changing workplace processes and cultures to make them inclusive to all, benefitting women and men at every level in their organization, and I hope they inspire other employers to do the same." -- Kathryn Nawrockyi, Gender Equality Director Business in the Community, UK Progressive policies such as extended parental leave, special focus on security of women employees, mentoring program for junior women employees (nWin), discussion circles to help women through major life stages; a reorientation program to re-connect employees after long leave; projecting profiles of inspirational women leaders (Be-Inspired); special leadership development programs to address the needs and aspirations of women; a learning module to equip mid-level managers to work with diverse teams; a virtual support group called 'Workplace Parents Group' on child psychology; and parenting workshops for working parents have all gone toward making the workplace more gender-equal. TCS was named as one of the UK's leading employers for women in The Times Top 50 Employers for Women, in recognition of our commitment to gender equality and for providing women avenues to pursue their professional aspirations. # Annual Report 2016-17 TCS celebrated the second anniversary of its all-women BPS and IT Centre at Riyadh, Saudi Arabia. The center employs over 1,000 women, of which 85% are local hires. This innovative socio-economic development model promotes long-term career opportunities for Saudi women. Our Center of Excellence for Accessibility works on IT solutions for differently-abled individuals, aiding their integration into the workforce. In addition to building diversity within our own workforce, TCS works actively to encourage greater diversity in the workforce in the communities we work in. More details are available in the Corporate Sustainability section of this report. # c. Talent Development There are only legacy technologies, no legacy people. -- N Chandrasekaran, Chairman, TCS Investment in human capital by equipping employees with skills - soft skills, design skills, multi-technology skills, and domain skills - has been one of the biggest drivers of value creation at TCS. TCS has navigated through the Digital wave by investing in re-skilling its workforce and working to continually deepen and broaden employees' skills in those new technologies. The sheer scale and rapidity of technology change has required a reimagined approach to reskilling, quickly and on scale. More details are provided on pages 30-31. Leadership training is a big focus area for TCS. A newly designed Leadership Development Program (LDP) for entry-level managers has been launched globally. The reach of LDP for middle-level managers has been expanded. A number of senior leaders at TCS are certified coaches, and they mentor and coach upcoming leaders. A special program designed for grooming mid-level women managers for leadership roles has started showing positive results. Cultural and Language Initiatives (CLI) focus on the three Cs - culture, communication, and collaboration. Some of these initiatives are: country-specific 'culture shots' offering training for first-time visitors to a new country, training on English language for non-English speaking employees, and training on 11 foreign languages. # d. Career Management TCS has started multiple initiatives to help employees grow in their careers: - 'CareerHub' is a platform that captures employees' career aspirations and provides mentoring services. Employees can choose their own mentor based on a match with their aspirational skill sets. - Inspire: A specialized program used to groom and provide fast-track career progression to high potential employees. - Structured coaching programs at senior leadership levels to make them realize their full potential. - Leadership review and assessment profile of all leaders to maintain a healthy succession pipeline. # e. Talent Engagement Some of the platforms and initiatives we have at TCS to enhance and enrich employee engagement are: - Knome, KnowMax, GEMS: Platforms for social collaboration within the organization, learning, sharing, and for reward and recognition. - Safety First: Initiative focused on employee safety and security. - Fit4life: Builds a fraternity of health and fitness conscious employees and creates a culture of fitness. - Purpose4life: Forum for volunteering for community projects in the areas of Education, Health and Environment. - Maitree: Helps in improving employee bonding within the organization and promoting work-life balance, thereby, increasing employee retention. - PULSE: Our annual employee engagement and satisfaction survey; the organization's formal listening forum. # f. Talent Retention TCS' employee retention record has been an industry benchmark, with our attrition rates being the lowest in the industry. |
In FY 2017, TCS' attrition rate in IT Services was 10.5% and overall attrition, including BPS was 11.5% (FY 2016: 14.7% and 15.5% respectively). This is not only a best-in-class metric, but also the lowest attrition rate at TCS in the last three years. # g. Compliance File: AR_TCS_2016_2017.md A robust internal check process is deployed to prevent and limit the risk of non-compliance. TCS' HR Compliance Cell tracks the various acts and laws pertaining to immigration, employment, and labor, in all the countries of operation. The Company approaches compliance from both, reactive and proactive standpoints. # 5.0 FY 2017 Revenue Performance TCS' consolidated revenue in FY 2017 was ` 117,966 crore (FY 2016: ` 108,646 crore), a revenue growth of 8.6% (FY 2016: 14.8%). Movements in currency exchange rates through the year resulted in a positive impact of +0.3% on the revenue. The constant currency revenue growth for the year, which is reported revenue growth stripped of the currency impact, was 8.3%. # Revenue break-up by Industry Vertical, Geography, and Service Line |Industry Vertical|MEA|LatAm|APAC|Others|India|BFSI|Mfg|CMT|Retail & Con Biz| |---|---|---|---|---|---|---|---|---|---| |Revenue by Industry Verticals|15.3%|2.5%|2.1%|6.3%|40.3%|10.6%|16.5%|17.3%| | |Revenue by Geography|N America|Europe|UK| |---|---|---|---| | |54.0%|11.6%|13.9%| |Revenue by Service Line|EIS|ALS|ITIS|EntSol|BPS| |---|---|---|---|---|---| | |4.9%|2.9%|16.1%|17.6%|11.7%| Details of the Company's Financial Performance are provided in Section 8.0. The current section covers the nature of demand for our services this year that drove our revenue performance and segmental performance, along with qualitative commentary. # a. Segmental Performance Industry verticals make up the primary reporting segments for TCS. From a segmental point of view, with the exception of the Retail and Consumer Business segment, all the other segments contributed revenue growth close to the company average or higher. In particular, the Manufacturing, Life Sciences (including healthcare), and Energy, Resources, & Utilities verticals grew in the mid-teens or above. Segment revenues, year on year growth, a brief commentary, and segment margins are provided below. Please note that the HiTech segment has been reclassified under the Communication, Media, and Technology (previous reported as Telecom, Media, and Entertainment) reportable segment. Likewise, the Travel, Transportation, and Hospitality segment has been reclassified under Retail and Consumer Business (previously reported as Retail and Consumer Packaged Goods). |Industry Vertical|Revenue (FY 16)|YoY Rev Growth|Commentary|Segment Margin %(FY 16)| |---|---|---|---|---| |Banking, Financial Services, and Insurance|47,505|7.6%|The BFSI industry revenue growth has been in line with the Company's overall growth. Focus on cost optimization, simplification and agility led to greater spending on automation and cloud adoption. Risk management and compliance continues to drive spending. However, uncertainties arising from key political events like Brexit and US elections led to holding back of discretionary spending - especially by large global banks - on account of which revenue growth in FY 2017 was lower than that in FY 2016.|27.6%| |Manufacturing|12,486|14.5%|The Manufacturing business segment significantly outperformed the rest of the Company in terms of revenue growth, driven by (a) cloud adoption and core system modernization, (b) IT integration in M&A scenarios, (c) greater demand for embedded software and (d) Digital adoption (IoT, robotics, AI, and so on). TCS' successful leverage of domain expertise, technology depth. IP and consulting capability helped the organization win key transformational deals.|28.4%| Management Discussion and Analysis # Annual Report 2016-17 |Industry Vertical|FY 17 Revenue (FY 16)|YoY Growth|Segment Commentary|Margin %| |---|---|---|---|---| |Retail and Consumer Business|20,459 (19,204)|6.5%|After years of outperformance, the Retail and Consumer Business segment underperformed this year, with revenue growth lagging behind the Company average, mainly on account of a slowdown in the Retail sector. Buffeted by weak sales and strong competition from online players, traditional retailers are cutting operating expenses as evidenced by news of store closures and layoffs by major retailers in the US and elsewhere. Clients continue to invest in their Digital programs but the spending is under pressure.|28.1% (27.6%)| |Communication, Media, and Technology|19,521 (18,040)|8.2%|The Communication, Media and Technology segment had revenue growth in line with the Company average after many years of underperformance. Growing convergence of the telecom and media worlds is resulting in greater investments - largely Digital - in moving upstream and into adjacencies. TCS' strong domain expertise and intellectual property is also giving us better traction in this segment.|28.2% (28.6%)| |Others|17,995 (16,330)|10.2%|Under Others, the biggest components namely, Life Sciences & Healthcare and Energy, Resources & Utilities grew by 14% and 18% respectively, driven by our continued demonstration of deep domain expertise, capacity for innovation and intellectual property in the respective areas. |
Overall growth was dragged down by the miscellaneous segment which declined year on year.|24.0% (26.1%)| The key areas of customer spending that drove across the different verticals this year were: - Experience first: Customer-centric initiatives focusing on superior user experience in an omni-channel context - Business model transformations and strategic investments in response to new, technology-led disruptions - Data for competitive advantage: Investments in enterprise data fabric and insights platforms - Supply chain transformation for greater responsiveness and to realize omni-channel proposition - Modernization of core systems to support Digital strategies and enable innovation in product development - Governance, Risk, and Compliance (GRC) initiatives in industries like BFSI, and Life Sciences and Healthcare, in response to a shifting regulatory environment - Enterprise-wide Agile delivery model adoption for quicker time to market and for constant innovation - Automation, simplification, rationalization, shared services, and cloud-first strategies to optimize cost and bring agility # Management Discussion and Analysis # TCS Products and Platforms New customers: 95+ in FY 17 Patents: 3,359 filed | 478 granted # iON TM Assessment: - Over 81 million candidates assessed # TCS BaNCS: - The universal financial platform - Processed more than 1.3bn global accounts, comprising approximately 15% of the global population - 22 new customers in FY17 - TCS BaNCS Insurance serviced 20mn life annuity and pension policies, and 135mn property policies # Ignio TM: - World's first neural automation system for IT operations in enterprises - 17 new customers in FY17 - 71 patents filed # TCS' Advanced Drug Development Platform: - Transforming clinical research by harnessing digital technologies to minimize human intervention - 11 global customers including two new customers in Q4 in FY17 - Handled data of over 65,000 patients # Optumera TM: - Digital merchandising suite - 5 of the world's leading retail customers # TCS HOBS: - Pre-integrated end-to-end platform for telecom business and operations support systems - 8 new customers in FY17 - Filed 2 new patents # TAP TM: - Accounts payable platform - Processed over 20mn accounts in FY17 # TCS MasterCraft TM: - Digital platforms to optimally automate and manage IT processes - 80 customers including 20 new customers in FY17 - Over 130 patents filed # Management Discussion and Analysis 69 # Annual Report 2016-17 # 6.0 Business Outlook The world output is expected to accelerate to 3.4% in 2017, with across the board acceleration in GDP growth. The advanced economies as a set are expected to grow by 1.9%, a 30 bps acceleration year on year. However, within that set, the outlook is mixed, with US accelerating to 2.3% while the UK and Euro Area are expected to decelerate year on year to 1.5% and 1.6% respectively. Most of the emerging market and developing economies are expected to perform better in 2017. Analyst forecasts point to a modest acceleration in worldwide IT spend forecasts. Based on extensive conversations with customers, TCS expects continued investments in the ongoing journey to building a Digital enterprise. Investments in Digital are expected along the following themes: - Digital Spine: Core modernization, Digitization, Simplification, Automation, Robotics, Cyber Security, IoT, Blockchain, APIfication, and Cloud - Intelligent Enterprise: Big Data Analytics, Cognitive Computing, Machine Learning, Customer insights, Monetization of data, Social - Experience First: Seamless transactions across channels and touchpoints, Virtual / Augmented / Mixed Reality, gamification, chatbots # 7.0 Risk Management and Compliance A robust enterprise compliance management (ECM) framework and process has been deployed across TCS. The process is enabled by a Digital platform that provides an enterprise-wide view of compliance across global locations. The Company ensures compliance of all applicable laws globally, including those relating to employment, visas, taxation, forex and export controls, health, safety and environment (HSE), company laws, establishment, SEZ regulations, data privacy, anti-bribery and anti-corruption regulations, and IT security. A committee at the corporate level oversees and monitors the deployment of the compliance function. Changes in the applicable regulations are tracked on a global basis. |Key Risks|Impact on the Company|Mitigation| |---|---|---| |Global Political and Economic Scenario|Technology investments by corporates have shown strong correlations with GDP growth. TCS derives a material portion of its revenues from customers' discretionary spending which is linked to their business outlook. With changing political dynamics in major markets such as the US, the UK, and elections in some key European countries, uncertainties in economic outlook in these markets can impact technology spend, and thereby constrain the Company's growth potential.|Broad-based, de-risked business mix, well diversified across geographies and industry verticals. |
Capabilities and value propositions addressing the discretionary as well as non-discretionary portions of client spend. Target market segments which might provide counter-cyclical support.| |Restrictions on Global Mobility|Distributed software development models require the free movement of people across countries. Growing protectionism in many key markets poses a threat to the global mobility of skilled professionals. There are multiple draft legislations in the United States to restrict the availability of work visas. Similar protectionist steps are being considered by some other countries. If implemented, this could result in project delays, increased costs and margin pressures.|Reducing our dependency on work visas through increased local hiring and focusing on local mobility and training across all major geographies of operation. Increased outreach to legislative/regulatory stakeholders, important trade bodies, think tanks and research institutes. Showcasing investments, employment generation and innovation capabilities to the appropriate audiences. Active engagement in STEM initiatives designed to structurally increase the availability of engineering talent in major markets.| # Business Model Changes Rapidly evolving technologies are changing technology consumption patterns, creating new classes of buyers within the enterprise, giving rise to entirely new business models and therefore new kinds of competitors. This is resulting in increased demands on the Company's agility to keep pace with the changing customer expectations. - Continued investments in Digital through large scale reskilling, external hiring, IP development and successful leverage of deep contextual knowledge. - Focus on Research and Innovation efforts leveraging in-house expertise, alliance partnerships, and strong connections in the startup ecosystem. - Strategic focus on Agile, Cloud, and Automation. - Strong customer-centricity which results in organization structures (and reorganizations) that are always aligned to customer needs. [6] http://www.imf.org/en/Publications/WEO/Issues/2016/12/27/A-Shifting-Global-Economic-Landscape 70 Management Discussion and Analysis # Key Risks |Impact on the Company|Mitigation| |---|---| |Litigation Risks Given the scale and geographic spread of the company's operations, litigation risks can arise from commercial disputes, perceived violation of intellectual property rights and employment related matters. Our rising profile and scale also makes us a target to litigations without any legal merit. This risk is inherent to doing business across the various countries and commensurate with the risks faced by other players similarly placed in the industry. In addition to incurring legal costs and distracting management, litigations garner negative media attention and pose reputation risk. Adverse rulings can result in substantive damages.|Ÿ Internal processes and controls adequately ensure the protection of intellectual property and also that potential disputes are promptly brought to the attention of management and dealt with appropriately. Ÿ The company has a team of in-house counsel in all major geographies it operates in. It also engages a network of highly respected global law firms in the countries it operates in. Ÿ There is a robust mechanism to track and respond to notices as well as defend the Company's position in all claims and litigation.| |Currency Volatility Volatility in currency exchange movements results in transaction and translation exposure. The Company's functional currency is the Indian Rupee. Appreciation of the Rupee against any major currency results in the revenue denominated in that currency to appear lesser in reported terms. Further, there could be collection losses if the exchange rates move between the time revenue is booked and the invoice amount is collected.|Ÿ TCS follows a currency hedging policy that is aligned with market best practices, to limit the impact of exchange volatility on earnings and collections. Ÿ Hedging strategy is monitored by the Risk Management Committee on a regular basis.| |Data Privacy and Protection Privacy and protection of personal data is an area of increasing concern across countries. Sensitive data has to be protected from individuals trying to gain unauthorized access or misusing access provided in business context. Any violation or security breach can result in liabilities, penalties and reputational impact.|Ÿ A global Privacy Policy is in place covering all applicable geographies and areas of operations. Ÿ The Company has continued focus on employee related agreements with respect Personally Identifiable Information (PII) and Sensitive Personal Data and Information (SPDI). Ÿ Data protection controls are a part of the engagement security management process. Ÿ Robust risk response mechanisms are in place to cater to protection of sensitive data in TCS ecosystem as well protection of such data in client-managed networks in Offshore/Global Delivery Centers. Ÿ Sensitive and complex engagements leverage industry standard practice of data masking technologies to protect PII and SPDI. |
Ÿ The Company also utilizes a combination of online training, educational tools, social media and other awareness initiatives regarding data privacy and protection to foster a culture of awareness and responsibility among its employees.| |Cyber Security Risks of cyber attacks on the Company's networks are forever a threat on account of the fast evolving nature of the threat, with perpetrators continually seeking to bypass known defenses. The impact of a breach could range from reputational to legal and financial.|Ÿ Investments in automated prevention and detection solutions. Ÿ Continued reinforcement of stringent security policies & procedures; Ÿ Collaboration with CERT and other private Cyber Intelligence agencies, and enhanced awareness of emerging cyber threats. Ÿ Enterprise-wide training and awareness programs on Information Security. Ÿ Internal and external audits.| |Global Regulatory Compliance Increasing complexity of global regulatory compliance landscape continues to be a focus area. As a global organization, the company has to demonstrate compliance to laws across jurisdictions, covering areas such as Employment & Immigration laws, Taxation, Foreign Exchange & Export Controls, HSE regulations, Anti-corruption laws, Data Privacy requirements, and so on. Failure could result in penalties and reputational damage.|Ÿ A comprehensive global compliance management framework has been deployed across the Company. Ÿ Global regulatory compliance certification is fully digitized and covers compliance across all the locations of the Company.| Management Discussion and Analysis 71 # Annual Report 2016-17 # 8.0 Analysis of Financials The financial statements of Tata Consultancy Services Limited and its subsidiaries (collectively referred to as TCS or the Company) are prepared in compliance with the Companies Act, 2013 and Indian Accounting Standards, Rules 2015 (Ind AS). In accordance with the Companies (Indian Accounting Standards), Rules, 2015 of the Companies Act, 2013, read with Section 133 of the Companies Act, 2013, TCS has adopted the Indian Accounting Standards (Ind AS) for preparation of its financial statements with effect from April 1, 2016, with comparative financials for the earlier period beginning April 1, 2015. TCS had been earlier publishing its financial statements prepared under the Indian GAAP and IFRS. The company has made available a note explaining the areas of difference between Indian GAAP and Ind AS and explained the reconciliation between the two GAAPs. The same can be found at https://www.tcs.com/investor-relations. The discussions herein below relate to the consolidated statement of profit and loss for the year ended March 31, 2017, the consolidated balance sheet as at March 31, 2017 and the consolidated cash flow statement for the year ended March 31, 2017. The consolidated results are more relevant for understanding the performance of TCS. Significant accounting policies used for the preparation of the financial statements are disclosed in the notes to the consolidated financial statements 2 (a) to (r). # CONSOLIDATED FINANCIAL RESULTS The following table gives an overview of the financial results of the Company: (` crore) | |FY 2017|% of Revenue|% Growth Compared to FY 2016|FY 2016|% of Revenue| |---|---|---|---|---|---| |Revenue from operations|117,966|100.0|8.6|108,646|100.0| |Expenses| | | | | | |Employee benefit expense|61,621|52.2|11.3|55,348|50.9| |Other Operating expenses|24,034|20.4|6.3|22,621|20.8| |Total expenditure|85,655|72.6|9.9|77,969|71.8| |Earnings before interest, tax, depreciation and amortisation (EBITDA)|32,311|27.4|5.3|30,677|28.2| |Depreciation and amortisation expense|1,987|1.7|5.2|1,888|1.7| |Finance costs|32|0.0|(3.0)|33|0.0| |Other income (net)|4,221|3.6|36.9|3,084|2.8| |Profit before taxes (PBT)|34,513|29.3|8.4|31,840|29.3| |Tax expense|8,156|6.9|8.7|7,502|6.9| |Profit after taxes and before Non Controlling Interest|26,357|22.3|8.3|24,338|22.4| |Earnings per share (in `)|133.41| |8.3|123.18| | |Profit for FY 2017 attributable to:| | | | | | |Shareholders of the Company|26,289|22.3|8.3|24,270|22.3| |Non controlling interests|68| | |68| | # Summary: - Revenue: The revenue of the Company aggregated ` 117,966 crore in FY 2017 (` 108,646 crore in FY 2016), registering a growth of 8.6%. - Earnings before interest, tax, depreciation and amortization (EBITDA): The EBITDA aggregated ` 32,311 crore in FY 2017 (` 30,677 crore in FY 2016) - a growth of 5.3%. - Profit before tax (PBT): PBT aggregated ` 34,513 crore in FY 2017 (` 31,840 crore in FY 2016) - a growth of 8.4%. - Profit after tax (PAT): PAT aggregated ` 26,289 crore in FY 2017 (` 24,270 crore in FY 2016) - a growth of 8.3%. - Earnings per share (EPS): EPS aggregated ` 133.41 in FY 2017 (` 123.18 in FY 2016) - a growth of 8.3%. 72 Management Discussion and Analysis # Analysis of revenue growth FY 2017 witnessed significant volatility in exchange rates particularly affecting GBP, YEN throughout the year. |
Average currency rates during FY 2017 compared to those in FY 2016 are given below: |Growth attributable to|FY 2017 (%)|FY 2016 (%)| |---|---|---| |Business growth|8.3|11.9| |Impact of Exchange rate|0.3|2.9| |Total Growth|8.6|14.8| |Currency|Weightage (Average)|FY 2017 (Average)|FY 2016 (Average)|Change in Average Rates| |---|---|---|---|---| |USD|57.0%|67.13|65.45|2.6%| |GBP|12.1%|87.35|98.62|(11.4%)| |EUR|8.0%|73.27|72.29|1.3%| |CAD|2.9%|51.01|49.96|2.1%| |AUD|3.9%|50.41|48.17|4.7%| |YEN|2.7%|0.62|0.56|11.0%| The net impact of such movement in exchange rates on revenue of the Company has been a positive variance of 0.3% in FY 2017 (positive variance of 2.9% in FY 2016). # Employee benefit expenses Employee benefit expenses include salaries which have fixed and variable components, contribution to retirement funds and pension schemes. It also includes expenses incurred on staff welfare. Employee benefit expenses aggregated ` 61,621 crore in FY 2017, representing 52.2% of revenue as compared to an expense of ` 55,348 in FY 2016, representing 50.9% of revenue. The increase in Employee benefit expenses is in line with the business growth and increase in local hires. |FY 2017|` crore|% of revenue|FY 2016|` crore|% of revenue|% growth| |---|---|---|---|---|---|---| |Salaries, incentives and allowances|55,537|47.1|49,902|45.9|11.3| | |Contributions to provident and other funds|4,189|3.5|3,939|3.6|6.4| | |Staff welfare expenses|1,895|1.6|1,507|1.4|25.8| | |Total|61,621|52.2|55,348|50.9|11.3| | # Annual Report 2016-17 # Operations and other expenses Operations and other expenses aggregated ` 24,034 crore in FY 2017, representing 20.4% of revenue as compared to an expense of ` 22,621 crore in FY 2016, representing 20.8% of revenue. Operations and other expenses, as a percentage of revenue, have remained steady. | |FY 2017| |FY 2016| |% growth| |---|---|---|---|---|---| |Fees to external consultants|` 8,854|7.5|` 8,412|7.7|5.3| |Facility running expenses|` 3,685|3.1|` 3,406|3.1|8.2| |Cost of equipment and software licenses|` 2,808|2.4|` 2,571|2.4|9.2| |Travel expenses|` 2,786|2.4|` 2,664|2.5|4.6| |Communication expenses|` 1,067|0.9|` 1,107|1.0|(3.6)| |Bad debts and advances written off, allowance for doubtful receivables and advances (net)|` 125|0.1|` 135|0.1|(7.4)| |Other expenses|` 4,709|4.0|` 4,326|4.0|8.9| |Total|` 24,034|20.4|` 22,621|20.8|6.2| # Earnings before interest, tax, depreciation and amortisation (EBITDA) In FY 2017, EBITDA was ` 32,311 crore (` 30,677 crore in FY 2016). EBITDA as a percentage of Total Revenue is down from 28.2% in FY 2016 to 27.4% in FY 2017. The decline in EBITDA margin is primarily attributable to increase in employee benefit expenses. # Tax expense Tax expense increased to ` 8,156 crore in FY 2017 from ` 7,502 crore as reported in FY 2016. The effective tax rate has remained steady. (FY 2017: 23.6%, FY 2016: 23.6%) # Other Income (net) Other income increased from ` 3,084 crore in FY 2016 to ` 4,221 crore in FY 2017 primarily due to an increase in exchange gain (net) by ` 498 crore and an increase in interest on investments by ` 518 crore, arising out of effective treasury management. Other Income as a percentage of revenue increased from 2.8% in FY 2016 to 3.6% in FY 2017. # Profit after tax attributable to shareholders Profit after tax attributable to shareholders in FY 2017 was ` 26,289 crore as compared to ` 24,270 crore in FY 2016. Net Profit Margin remained unchanged Y-o-Y at 22.3%. # Depreciation and amortisation expense Depreciation and amortisation expense increased from ` 1,888 crore in FY 2016 to ` 1,987 crore in FY 2017. As a percentage of revenue, this group of expenses remained constant at 1.7% in FY 2016 and FY 2017. # Profit before taxes (PBT) In FY 2017, PBT was ` 34,513 crore (` 31,840 crore in FY 2016). As a percentage of revenue, PBT remained constant at 29.3%. Decline in EBITDA Margin was offset by an increase in Other Income. 74 Management Discussion and Analysis # FINANCIAL POSITION -- CONSOLIDATED | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |EQUITY AND LIABILITIES| | | |Shareholders' funds|86,214|71,072| |Non Controlling interest|366|355| |Non-current liabilities|2,160|2,100| |Current liabilities|14,512|15,569| |TOTAL|103,252|89,096| | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |ASSETS| | | |Goodwill|1,597|1,669| |Non-current investments|344|343| |Other non-current assets including property, plant and equipment|20,785|23,871| |Current investments|41,636|22,479| |Trade receivables|22,684|24,073| |Unbilled revenue|5,351|3,992| |Cash and bank balances|3,597|6,295| |Short-term loans and advances|2,909|2,743| |Other current assets|4,349|3,631| |TOTAL|103,252|89,096| # Share Capital | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |Authorised| | | |460.05 crore equity shares of ` 1 each|460|460| |105.03 crore redeemable preference shares of ` 1 each|105|105| |Total|565|565| |Issued, subscribed and fully paid-up| | | |197.04 crore equity shares of ` 1 each (197.04 crore equity shares of ` 1 each as at March 31, 2016)|197|197| |Total|197|197| There has been no change in the Share Capital of the Company in FY 2017. |
# Reserves and Surplus Reserves and Surplus at the end of FY 2017 stood at `86,017 crore, an increase of 21.4% over `70,875 crore at the end of FY 2016. A brief description of the Company's Reserves and Surplus is provided below: - Capital Redemption Reserve primarily arises when companies redeem preference shares. In the absence of such activity, this reserve has not shown any movement during FY 2017. - Share Premium represents the surplus of proceeds received over the face value of shares, at the time of issue of shares. There was no movement in this reserve because there was no share issue during FY 2017. - For the purpose of consolidation of subsidiaries with the financial statement of the holding company, income and expenses are translated at average rates and the assets and liabilities are stated at closing rate. Use of such different rates for translation gives rise to exchange difference which is accumulated in Foreign Currency Translation Reserve. The movement in this reserve is due to fluctuation in exchange rates of currencies in FY 2017. - The gains / losses in cash flow hedges are reflected in the Cash Flow Hedging Reserve. Note 28 (b) to the consolidated financial statements gives details of the movement. - In the absence of any transfer to the General Reserve, there has been no movement in the General Reserve this year. - Statutory Reserve represents the amounts maintained by certain foreign subsidiaries who are required to maintain such a reserve under specific local regulations. The movement is due to statutory transfer from Retained earnings in those foreign subsidiaries. - Special Economic Zone Re-investment Reserve has been created under the Income Tax Act - Sec 10AA - to avail the extension of exemption benefit relating to business in SEZ areas. - Investment Revaluation Reserve represents the net mark to market gains on investments measured at fair value through other comprehensive income. Note 17 (B) (a) to the consolidated financial statements gives details of the movement. - The balance in the Retained Earnings primarily represents the surplus after payment of dividend (including tax on dividend) and transfer to reserves. | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |Capital Reserve|75|75| |Capital Redemption Reserve|523|523| |Share Premium|1,919|1,919| |Foreign Currency Translation Reserve|939|1,408| |Cash Flow Hedging Reserve|88|49| |General Reserve|10,549|10,549| |Statutory Reserve|218|185| |Special Economic Zone Re-investment Reserve|97|-| |Investment Revaluation Reserve|538|54| |Retained Earnings|71,071|56,113| |Total|86,017|70,875| # Annual Report 2016-17 # Short Term and Long Term Borrowings File: AR_TCS_2016_2017.md Secured overdraft was NIL as at March 31, 2017 (` 112 crore in FY 2016) and unsecured overdraft was ` 200 crore as at March 31, 2017 (` 1 crore in FY 2016). The decrease in Secured loans for long-term maturities of finance lease obligations from ` 83 crore in FY 2016 to ` 71 crore in FY 2017 was due to net payments on finance leases during the year. The Company's long-term obligations under finance lease, are secured against fixed assets obtained under finance lease arrangements. The maturity profile of the finance lease obligations (both long term as shown in this table and short term as shown under "other liabilities") is disclosed in detail in Note 27 to the Consolidated Financial Statements. |(` crore)|(` crore)|(` crore)|As at March 31, 2017|As at March 31, 2017|As at March 31, 2016|As at March 31, 2016| | | | | |---|---|---|---|---|---|---| | | |Short-term borrowings| |Long-term borrowings|Total borrowings| | |Secured loans: overdraft from banks|-|112|-|-|-|112| |Unsecured loans: overdraft from banks|200|1|-|-|200|1| |Secured loans: long-term maturities of finance lease obligations|-|-|71|83|71|83| |Total|200|113|71|83|271|196| # Trade Payables Trade payables (current liabilities), representing payables for purchase of goods and services decreased from ` 7,541 crore as at March 31, 2016 to ` 6,279 crore as at March 31, 2017. As a percentage of revenue, trade payables have decreased from 6.9% in FY 2016 to 5.3% in FY 2017. # Short-term and long-term provisions The increase in short-term provisions from ` 1,750 crore in FY 2016 to ` 1,928 crore in FY 2017 is mainly attributable to increase in Provision for employee benefits amounting to ` 1,862 crore as at March 31, 2017 (`1,635 crore as at March 31, 2016). Provision for employee benefits, short-term and long-term represent the provision on 1) Gratuity 2) Other employee benefit obligations / plans 3) Leave. Note 23 (A) & (B) to the consolidated financial statements gives the breakup of the employee benefit obligation. |
Short-term provision for foreseeable loss on a long term contract declined to ` 66 crore as at March 31, 2017 (`115 crore as at March 31, 2016). Provision for foreseeable loss on a long term contract occurs when the estimated cost to completion exceeds the future revenue. Long Term Provisions increased from ` 277 crore in FY 2016 to ` 284 crore in FY 2017. |(` crore)|(` crore)|(` crore)|As at March 31, 2017|As at March 31, 2017|As at March 31, 2016|As at March 31, 2016| | | | | |---|---|---|---|---|---|---| | |Short-term provisions| |Long-term provisions| |Total provisions| | |Provision for employee benefits|1,862|1,635|245|237|2,107|1,872| |Provision for foreseeable loss on a long term contract|66|115|39|40|105|155| |Total|1,928|1,750|284|277|2,212|2,027| # Other current and non-current liabilities Other current liabilities increased from ` 2,996 crore as at March 31, 2016 to ` 3,143 crore as at March 31, 2017. The increase was primarily due to: - Increase in Unearned and Deferred Revenue from ` 1,359 crore as at March 31, 2016 to ` 1,398 crore as at March 31, 2017. - Advance received from customers increased from ` 164 crore as at March 31, 2016 to ` 330 crore as at March 31, 2017. - Increase in other liabilities to ` 114 crore as at March 31, 2017 (` 92 crore as at March 31, 2016) mainly on account of operating lease liabilities recognised in advance, on account of straightlining the rental over the lease period. - Indirect tax payable and other statutory liabilities decreased from ` 1,381 crore as at March 31, 2016 to ` 1,301 crore as at March 31, 2017. Other non-current liabilities decreased from ` 442 crore as at March 31, 2016 to ` 432 crore as at March 31, 2017. # Management Discussion and Analysis # Financial Liabilities |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Other current liabilities|1,398|1,359|-|-|1,398|1,359| |Advance received from customers|330|164|-|-|330|164| |Indirect tax payable and other statutory liabilities|1,301|1,381|-|-|1,301|1,381| |Operating lease & other liabilities|114|92|432|442|546|534| |Total|3,143|2,996|432|442|3,575|3,438| # Other Financial Liabilities Other financial liabilities decreased from ` 2,857 crore as at March 31, 2016 to ` 2,004 crore as at March 31, 2017. - Liabilities for cost related to customer contracts increased from ` 882 crore as at March 31, 2016 to ` 1,001 crore as at March 31, 2017. - Liabilities on account of Capital creditors decreased from ` 393 crore as at March 31, 2016 to ` 304 crore as at March 31, 2017. - The decrease in other payables from ` 1,512 crore as at March 31, 2016 to ` 656 crore as at March 31, 2017 is primarily on account of settlement of liabilities towards purchase of government securities in the previous financial year and decrease in fair value of foreign exchange forward and currency option contracts. - Operating lease and other liabilities include current maturities of obligation under finance lease. The decline from ` 70 crore as at March 31, 2016 to ` 43 crore as at March 31, 2017 was primarily due to decline in net payments in finance lease obligations. # Financial Liabilities Summary |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Other current financial liabilities|1,550|2,364|454|493|2,004|2,857| |Liabilities for cost related to customer contracts|1,001|882|-|-|1,001|882| |Capital Creditors|287|331|17|62|304|393| |Other payables|219|1,081|437|431|656|1,512| |Other liabilities|43|70|-|-|43|70| |Total|1,550|2,364|454|493|2,004|2,857| # Goodwill on Consolidation Goodwill on consolidation represents the excess of purchase consideration over net asset value of acquired subsidiaries on the date of such acquisition. Such goodwill is tested for impairment annually or more frequently, if there are indications for impairment. Goodwill on consolidation as at March 31, 2017 stood at ` 1,597 crore (` 1,669 crore as at March 31, 2016). The change in Goodwill has been on account of exchange fluctuation. # Property, Plant, and Equipment The company has been investing in infrastructure development across various locations across the globe to meet its growing business needs. The Net Book Value of Property, Plant, and Equipment amounted to ` 10,057 crore as at March 31, 2017 (` 9,971 crore as at March 31, 2016). Incremental cash outflows toward capital expenditure in FY 2017 was mainly offset by the depreciation and amortisation expense resulting in a marginal increase in net block of Property, plant and equipment. |
Management Discussion and Analysis 77 # Annual Report 2016-17 # Note no 2 (m) to the consolidated financial statements gives the details of the rates and method of depreciation on property, plant and equipment. (` crore) |Particulars|Gross block as at March 31, 2017|Gross block as at March 31, 2016|Accumulated Depreciation as on March 31, 2017|Accumulated Depreciation as on March 31, 2016|Net book value as on March 31, 2017|Net book value as on March 31, 2016| |---|---|---|---|---|---|---| |Freehold land|348|348|-|-|348|348| |Buildings|6,708|6,119|(1,467)|(1,139)|5,241|4,980| |Leasehold Improvements|1,973|1,840|(1,143)|(977)|830|863| |Plant and equipment|395|322|(75)|(40)|320|282| |Computer equipment|6,082|5,591|(4,630)|(4,155)|1,452|1,436| |Vehicles|32|32|(24)|(21)|8|11| |Office equipment|2,112|2,004|(1,518)|(1,284)|594|720| |Electrical Installations|1,722|1,620|(871)|(732)|851|888| |Furniture and fixtures|1,519|1,432|(1,106)|(989)|413|443| |Total|20,891|19,308|(10,834)|(9,337)|10,057|9,971| # Trade Receivables and Unbilled Revenue As a percentage of revenue, Trade Receivables decreased to 19.2% as at March 31, 2017 from 22.2% as at March 31, 2016. The Unbilled Revenue as a percentage of revenue increased to 4.5% in FY 2017 from 3.7% in FY 2016. The Company monitors Trade Receivables and Unbilled Revenue, net of Unearned Revenues separately and collectively. The close monitoring, follow-up on collections and favorable exchange rates have ensured that the Trade Receivables and Unbilled Revenue, net of Unearned Revenues as a percentage of revenue has declined (22.6% in FY 2017, 24.6% in FY 2016). The Days Sales Outstanding for FY 2017 has come down to 70 days as compared to 81 days for FY 2016. | |As at March 31, 2017|As % of Revenue|As at March 31, 2016|As % of Revenue| |---|---|---|---|---| |Trade Receivables|22,684|19.2%|24,073|22.2%| |Unbilled Revenue|5,351|4.5%|3,992|3.7%| |Total|28,035|23.8%|28,065|25.8%| # Current investments and non-current investments Total Investments of the Company grew from ` 22,822 crore in FY 2016 to ` 41,890 crore in FY 2017: - 'Investments carried at fair value through OCI' increased from ` 20,423 crore in FY 2016 to ` 22,140 crore in FY 2017. The increase of ` 1,717 crore is due to net purchase of government securities of ` 1,745 crore, partially offset by decrease due to sale of equity shares of ` 28 crore. A significant part of treasury investments of the Company is in government securities, which are carried at fair value through OCI. - The increase in 'Investments carried at fair value through P&L' from ` 1,767 crore in FY 2016 to ` 19,692 crore in FY 2017 is due to net purchase of mutual funds amounting to ` 17,925 crore. - The net decrease of ` 484 crore in 'Investment carried at amortized cost' from ` 632 crore in FY 2016 to ` 148 crore in FY 2017 is primarily due to redemption of certificates of deposit. # Management Discussion and Analysis # Management Discussion and Analysis # Investments Overview |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Current investments|21,999|20,254|141|169|22,140|20,423| |Non-current investments|19,637|1,709|55|58|19,692|1,767| |Investment carried at amortized cost|-|516|148|116|148|632| |Total|41,636|22,479|344|343|41,980|22,822| # Overview of funds invested Funds invested exclude earmarked balances with bank, equity shares measured at fair value through OCI and liabilities for purchase of government securities. Investible funds went up by `14,832 crore (` 33,602 crore as at March 31, 2016 to ` 48,434 crore as at March 31, 2017), mainly driven by: - increase in investments of ` 19,186 crore primarily due to investment in mutual funds and government securities during FY 2017 - offset by decrease in bank deposits by ` 2,453 crore, decrease in inter-corporate deposits by ` 1,618 crore and decrease in cash and bank balances by `283 crore. # Funds Invested |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Current|41,636|22,479|203|174|41,839|22,653| |Deposits with banks|896|2,934|-|415|896|3,349| |Inter-corporate deposits|2,565|1,721|3|2,465|2,568|4,186| |Cash and bank balances|3,131|3,414|-|-|3,131|3,414| |Total|48,228|30,548|206|3,054|48,434|33,602| # Short-term and long-term loans and advances Loans and advances as at March 31, 2016 decreased by ` 2,297 crore from ` 5,215 crore in FY 2016 to ` 2,918 crore in FY 2017, mainly due to decrease in long-term loans and advances by ` 2,463 crore, partly offset by increase in short-term loans and advances by ` 166 crore. The increase in short-term loans and advances was primarily attributable to increase in inter-corporate deposits by ` 844 crore offset partly by a decrease in loans and advances to employees by ` 677 crore. In FY 2016, there had been a one-time assistance provided to associates impacted by Chennai floods. The decrease in long-term loans and advances was primarily attributable to decrease in inter-corporate deposits by ` 2,463 crore. |
# Loans |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Short-term loans|344|1,021|6|7|350|1,028| |Inter-corporate deposits|2,565|1,721|3|2,465|2,568|4,186| |Others|-|1|-|-|-|1| |Total|2,909|2,743|9|2,472|2,918|5,215| # Other current and non-current financial assets Other current and non-current financial assets amounted to ` 2,241 crore as at March 31, 2017 (` 2,299 crore as at March 31, 2016). Interest receivable increased to ` 715 crore as at March 31, 2017 from ` 279 crore as at March 31, 2016. Long-term bank deposits have gone down from ` 415 crore as at March 31, 2016 to NIL as at March 31, 2017. Security deposits increased from ` 876 crore as at March 31, 2016 to ` 963 crore as at March 31, 2017. Others increased from ` 585 crore as at March 31, 2016 to ` 620 crore as at March 31, 2017. 'Others' primarily comprise of fair value of foreign exchange forward and currency option contracts. # Annual Report 2016-17 |(` crore)|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016|As at March 31, 2017|As at March 31, 2016| |---|---|---|---|---|---|---| |Other current financial assets|715|206|-|73|715|279| |Long - term bank deposits|-|-|-|415|-|415| |Security deposits|147|143|816|733|963|876| |Earmarked balances with banks|-|-|1|86|1|86| |Others|612|567|8|18|620|585| |Total|1,474|916|825|1,325|2,299|2,241| # Other current and non-current assets Other current and non-current assets amounted to ` 2,965 crore as at March 31, 2017 (` 3,100 crore as at March 31, 2016). - Decrease in prepaid expenses from ` 1,824 crore in FY 2016 to ` 1,789 crore in FY 2017 pertains to long term prepaid assets converted into short term over time, and amortization of prepaid assets in the normal course of business. - 'Others' which include advance to suppliers, advance to related parties, indirect tax recoverable, other advances declined from ` 1,127 crore in FY 2016 to ` 1,033 crore in FY 2017. Note 11 (A) & (B) to the Consolidated Financial Statements gives the details of the same. # CASH FLOW -- CONSOLIDATED The Company's cash flows from operating, investing and financing activities, is summarised below. |Summary of cash flow statement:|(` crore)|FY 2017|FY 2016| |---|---|---|---| |Net cash provided by / (used in) Operating activities| |25,223|19,109| |Investing activities| |(16,732)|(5,150)| |Financing activities| |(11,026)|(9,666)| |Exchange difference on translation of foreign currency| |(163)|140| |Net (decrease) / increase in cash and cash equivalents after translation| |(2,698)|4,433| # Cash flows from operating activities Cash generated from operations (before payment of taxes) was ` 33,169 crore in FY 2017 (` 26,687 crore in FY 2016), registering an increase of 24.3% over the previous FY. The net cash provided by operating activities (after payment of taxes) was ` 25,223 crore in FY 2017 (` 19,109 crore in FY 2016). Better working capital management has resulted in lower outflow of cash thereby increasing the Operating Cash flow ratio. Cash generated from operations (post taxes) as a percentage of revenue has gone up from 17.6% in FY 2016 to 21.4% in FY 2017. |(` crore)|FY 2017|FY 2016| |---|---|---| |Profit for the year|26,357|24,338| |Adjustments: depreciation and amortization|1,987|1,888| |Other non-cash adjustments|5,456|5,405| |Effect of working capital changes|(631)|(4,944)| |Cash generated from operations|33,169|26,687| |Taxes paid|(7,946)|(7,578)| |Net cash provided by operating activities|25,223|19,109| # Management Discussion and Analysis # Cash flows from investing activities During FY 2017, cash used in investing activities was primarily attributable to: - The net investment in property, plant and equipment and intangible assets amounted to ` 1,953 crore in FY 2017 (` 1,968 crore in FY 2016). The same was in line with the Company's infrastructure policies. - The net purchase of investments were ` 18,625 in FY 2017 (` 19,693 crore in FY 2016), which consists mainly of mutual funds and government securities. - The net proceeds from bank deposits were ` 438 crore in FY 2017 (` 16,144 crore in FY 2016). - The net inflow on account of Inter-corporate Deposits was ` 1,619 crore in FY 2017 (purchase of ` 1,460 crore in FY 2016). Interest received in FY 2017 amounted to ` 1,788 crore (` 1,816 crore in FY 2016). |
|(` crore)|FY 2017|FY 2016| |---|---|---| |Property, plant and equipment & intangible assets(net)|(1,953)|(1,968)| |Other investments (net)|(18,625)|(19,693)| |Deposits with banks (net)|438|16,144| |Inter - corporate deposits (ICD) (net)|1,619|(1,460)| |Interest received|1,788|1,816| |Other items (net)|1|11| |Net cash used in investing activities|(16,732)|(5,150)| # Cash flows from financing activities Dividend paid to shareholders amounted to ` 10,973 crore for FY 2017 (` 9,515 crore in FY 2016) and it includes the final dividend payout and tax thereon for FY 2016 approved by the shareholders at the last annual general meeting held in June 2016 (` 27 per share). In addition, the dividend paid includes the interim dividend of FY 2017 (` 19.5 per share). Other payments of ` 53 crore in FY 2017 (` 151 crore in FY 2016) include net payments related to borrowings. |(` crore)|FY 2017|FY 2016| |---|---|---| |Dividends paid including dividend tax|(10,973)|(9,515)| |Other payments|(53)|(151)| |Net cash used in financing activities|(11,026)|(9,666)| # Annual Report 2016-17 # TCS' PERFORMANCE TREND (CONSOLIDATED) |Amounts in ` crore| |Ind AS| | | | |Indian Gaap|FY 2016-17|FY 2015-16|FY 2014-15*|FY 2014-15|FY 2013-14|FY 2012-13|FY 2011-12|FY 2010-11|FY 2009-10|FY 2008-09| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Revenues|Total revenue| |117,966|108,646|94,648|94,648|81,809|62,989|48,894|37,325|30,029|27,813|22,620| | | | | | |Revenue By geographic segments| | | | | | | | | | | | | | | | | |North America| | |63,646|57,892|49,086|49,086|43,386|33,854|26,064|20,107|15,855|14,291|11,388| | | | | |UK| | |16,404|17,171|15,783|15,783|14,251|10,761|7,453|5,771|4,860|5,282|4,498| | | | | |Europe| | |13,634|11,921|10,946|10,946|9,181|6,053|4,928|3,480|3,149|2,930|2,106| | | | | |India| | |7,415|6,729|6,108|6,108|5,488|4,890|4,202|3,435|2,598|2,182|2,046| | | | | |Rest of the world| | |16,867|14,933|12,725|12,725|9,503|7,431|6,246|4,531|3,566|3,128|2,582| | | | | |Cost|Employee Cost| |61,621|55,348|48,296|50,924|40,486|31,922|24,683|18,806|15,066|14,483|11,411| | | | | | |Other Operating Cost| |24,034|22,621|19,242|19,242|16,170|13,028|9,775|7,340|6,269|6,160|5,497| | | | | | |Total Cost (excluding interest & depreciation)| |85,655|77,969|67,539|70,167|56,657|44,950|34,459|26,146|21,334|20,643|16,908| | | | | |Profitability|EBIDTA (before other income)| |32,311|30,677|27,110|24,482|25,153|18,040|14,435|11,178|8,695|7,170|5,711| | | | | | |Profit before tax| |34,513|31,840|28,437|25,809|25,402|18,090|13,923|11,021|8,290|6,150|5,846| | | | | | |Profit after tax attributable to shareholders of the Company| |26,289|24,270|21,912|19,852|19,164|13,917|10,413|9,068|7,001|5,256|5,026| | | | | |Financial Position|Equity Share capital| |197|197|196|196|196|196|196|98|98| | | | | | | | |Reserves and surplus| |86,017|70,875|58,140|50,439|48,999|38,350|29,284|24,209|18,171|15,502|12,102| | | | | | |Gross block (property plant and equipment including intangible assets)| |21,391|19,917|17,316|17,316|13,897|11,623|9,448|7,792|6,420|5,844|4,292| | | | | | |Total investments| |41,980|22,822|1,662|1,662|3,434|1,897|1,350|1,763|3,682|1,614|2,606| | | | | | |Net current assets| |66,014|47,644|36,189|28,495|27,227|19,734|12,673|9,790|7,395|7,544|5,553| | | | | |Earnings per share in `|EPS - as reported| |133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|53.63|51.36| | | | | | |EPS - adjusted for Bonus Issue| |133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|26.81|25.68| | | | | |Headcount (number)|Headcount (including subsidiaries)| |387,223|353,843|319,656|319,656|300,464|276,196|238,583|198,614|160,429|143,761|111,407| | | | | Note: The Company transitioned into Ind AS from April 1, 2015 * Excluding the impact of one-time employee reward # Management Discussion and Analysis # RATIO ANALYSIS |Ratio Analysis|Units|FY 2016-17|FY 2015-16|FY 2014-15*|FY 2014-15|FY 2013-14|FY 2012-13|FY 2011-12|FY 2010-11|FY 2009-10|FY 2008-09|FY 2007-08| | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Ratios - Financial Performance|Employee Cost/Total Revenue|%|52.2|50.9|51.0|53.8|49.5|50.7|50.5|50.4|50.2|52.1|50.4| | |Other Operating Cost/Total Revenue|%|20.4|20.8|20.3|20.3|19.8|20.7|20.0|19.7|20.9|22.1|24.3| | |Total Cost/Total Revenue|%|72.6|71.8|71.4|74.1|69.3|71.4|70.5|70.1|71.0|74.2|74.8| | |EBIDTA (before other Income)/Total Revenue|%|27.4|28.2|28.6|25.9|30.7|28.6|29.5|30.0|29.0|25.8|25.3| | |Profit before tax/Total Revenue|%|29.3|29.3|30.0|27.3|31.1|28.7|28.5|29.5|27.6|22.1|25.8| | |Tax/Total Revenue|%|6.9|6.9|7.2|6.6|7.4|6.4|7.0|4.9|4.0|3.0|3.5| | |Effective Tax Rate - Tax/PBT|%|23.6|23.6|23.5|23.7|23.9|22.2|24.4|16.6|14.4|13.6|13.5| | |Profit after tax/Total Revenue|%|22.3|22.3|23.2|21.0|23.4|22.1|21.3|24.3|23.3|18.9|22.2| |Ratios - growth|Total Revenue|%|8.6|14.8|15.7|15.7|29.9|28.8|31.0|24.3|8.0|23.0|21.1| | |EBIDTA (before other Income)|%|5.3|25.3|7.8|(2.7)|39.4|25.0|29.1|28.6|21.3|25.5|11.1| | |Profit after tax|%|8.3|22.3|14.3|3.6|37.7|33.6|14.8|29.5|33.2|4.6|19.3| |Ratios - Balance Sheet|Debt-Equity Ratio|Times|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0| | |Current Ratio|Times|5.5|4.1|3.9|2.4|2.7|2.7|2.2|2.4|1.9|2.3|2.2| | |Days Sales Outstanding (DSO) in ` terms|Days|70|81|79|79|81|82|86|80|71|79|87| | |Days Sales Outstanding (DSO) in $ terms|Days|73|80|78|78|82|82|81|82|74|74|87| | |Invested Funds / total assets|%|54.6|44.2|38.0|43.5|43.0|36.4|34.8|36.8|45.7|26.3|29.0| | |Capital expenditure / total revenue|%|1.7|1.8|3.1|3.1|3.8|4.2|4.1|4.9|3.4|4.0|5.6| | |Operating cash flows / total revenue|%|21.4|17.6|20.5|20.5|18.0|18.4|14.3|17.7|24.7|19.5|17.2| | |Free Cash Flow/Operating Cash Flow Ratio|%|92.3|89.7|84.8|84.8|78.9|77.3|71.5|72.7|86.1|79.7|67.6| | |Depreciation / average gross block|%|9.6|10.1|11.5|11.5|10.6|10.3|10.7|10.4|10.8|11.1|15.1| |Ratios - per share|EPS - adjusted for Bonus|`|133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|26.81|25.68| | |Price Earning Ratio, end of year|Times|18.2|20.4|22.8|25.1|21.8|22.1|22.0|25.6|21.9|10.1|15.8| | |Dividend Per Share|`|47.00|43.50|79.00|79.00|32.00|22.00|25.00|14.00|20.00|14.00|14.00| | |Dividend Per Share - adjusted for Bonus|`|47.00|43.50|79.00|79.00|32.00|22.00|25.00|14.00|20.00|7.00|7.00| | |Market Capitalization/total revenue|Times|4.1|4.6|5.3|5.3|5.1|4.9|4.7|6.2|5.1|1.9|3.5| Note: The Company transitioned into Ind AS from April 1, 2015. * Excluding the impact of one-time employee reward Management Discussion and Analysis 83 # Annual Report 2016-17 # UNCONSOLIDATED FINANCIAL RESULTS | |FY 2017|% of Revenue|% Growth Compared to FY 2016|FY 2016|% of Revenue| |---|---|---|---|---|---| |Revenue from operations|92,693|100.0|8.0|85,864|100.0| |Expenses| | | | | | |Employee benefit expense|48,116|51.9|13.4|42,420|49.4| |Other Operating expenses|17,488|18.9|6.7|16,390|19.1| |Total expenditure|65,604|70.8|11.6|58,810|68.5| |Earnings before interest, tax, depreciation and amortisation (EBITDA)|27,089|29.2|0.1|27,054|31.5| |Depreciation and amortisation expense|1,575|1.7|8.0|1,459|1.7| |Finance costs|16|0.0|23.1|13|0.0| |Other income (net)|4,568|4.9|21.6|3,757|4.4| |Profit before taxes (PBT)|30,066|32.4|2.5|29,339|34.2| |Tax expense|6,413|6.9|2.4|6,264|7.3| |Profit after taxes (PAT)|23,653|25.5|2.5|23,075|26.9| |Earnings per share (in `)|120.04| |2.5|117.11| | # Discussion on the Financial Performance - Unconsolidated - Revenue: Revenue from operations aggregated ` 92,693 crore in FY 2017 (`85,864 crore in FY 2016), registering a growth of 8.0%. - Earnings before interest, tax, depreciation and amortization (EBITDA): The EBITDA aggregated ` 27,089 crore in FY 2017 (` 27,054 crore in FY 2016) - a growth of 0.1%. |
- Profit before tax (PBT): PBT aggregated ` 30,066 crore in FY 2017 (` 29,339 crore in FY 2016) - a growth of 2.5%. - Profit after tax (PAT): PAT aggregated ` 23,653 crore in FY 2017 (` 23,075 crore in FY 2016) - a growth of 2.5%. - Earnings per share (EPS): EPS aggregated ` 120.04 in FY 2017 (` 117.11 in FY 2016) - a growth of 2.5%. # FINANCIAL POSITION -- UNCONSOLIDATED | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |EQUITY AND LIABILITIES| | | |Shareholders' funds|78,022|65,013| |Non-current liabilities|1,035|1,095| |Current liabilities|10,701|11,309| |TOTAL|89,758|77,417| |ASSETS| | | |Non-current assets including property, plant and equipment|21,139|24,040| |Current investments|40,729|21,930| |Trade receivables|16,649|19,058| |Unbilled revenue|4,235|2,712| |Cash and bank balances|1,316|4,806| |Short-term loans and advances|2,704|2,523| |Other current assets|2,986|2,348| |TOTAL|89,758|77,417| For schedules on the unconsolidated financial position, please refer detailed "Unconsolidated Financial Statements" which form part of this Annual Report. # Management Discussion and Analysis # CASH FLOW - UNCONSOLIDATED The Company's cash flows from operating, investing and financing activities, is summarised below. # Summary of cash flow statement: |(` crore)|FY 2017|FY 2016| |---|---|---| |Net cash provided by / (used in)| | | |Operating activities|23,132|17,986| |Investing activities|(15,782)|(4,518)| |Financing activities|(10,891)|(9,586)| |Exchange difference on translation of foreign currency|(52)|40| |Net (decrease) / increase in cash and cash equivalents after translation|(3,593)|3,922| # Cash flows from operating activities TCS generated net cash from operating activities of ` 23,132 crore in FY 2017 (` 17,986 crore in FY 2016) |(` crore)|FY 2017|FY 2016| |---|---|---| |Profit for the year|30,066|29,339| |Adjustments: depreciation and amortization|1,575|1,459| |Other non-cash adjustments|(3,037)|(2,773)| |Effect of working capital changes|994|(3,575)| |Cash generated from operations|29,598|24,450| |Taxes paid|(6,466)|(6,464)| |Net cash provided by operating activities|23,132|17,986| # Cash flows from financing activities During FY 2017, cash used in financing activities was ` 10,891 crore in FY 2017 (` 9,586 crore in FY 2016). |(` crore)|FY 2017|FY 2016| |---|---|---| |Dividends paid including dividend tax|(10,947)|(9,479)| |Other payments|56|(107)| |Net cash used in financing activities|(10,891)|(9,586)| # Cash flows from investing activities During FY 2017, cash used in investing activities was ` 15,782 crore in FY 2017 (` 4,518 crore in FY 2016). |(` crore)|FY 2017|FY 2016| |---|---|---| |Property, plant and equipment (net)|(1,636)|(1,759)| |Other investments (net)|(18,252)|(19,558)| |Deposits with banks (net)|400|15,652| |Inter - corporate deposits (ICD) (net)|1,572|(1,362)| |Interest received|1,740|1,798| |Dividend received from subsidiaries (including exchange gain)|394|705| |Other items (net)|-|6| |Net cash used in investing activities|(15,782)|(4,518)| # Annual Report 2016-17 # 9.0 Internal Financial Control Systems and their Adequacy TCS has aligned its current systems of internal financial control with the requirement of the Companies Act 2013, on lines of the globally accepted risk based framework as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The Internal Control - Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organization's process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. TCS' internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with the applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with corporate policies. TCS has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down. TCS uses a state-of-the-art enterprise resource planning (ERP) system to record data for accounting, consolidation, and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices. Our management assessed the effectiveness of the Company's internal control over financial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of March 31, 2017. Deloitte Haskins & Sells LLP, the statutory auditors of TCS, has audited the financial statements included in this annual report and has issued an attestation report on our internal control over financial reporting (as defined in section 143 of the Companies Act 2013). TCS has appointed Ernst & Young LLP to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors (Deloitte Haskins & Sells LLP) and the audit committee. |
In line with international practice, the conduct of internal audit is oriented toward the review of internal controls and risks in its operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes, including most of the subsidiaries and foreign branches. File: AR_TCS_2016_2017.md TCS also undergoes periodic audit by specialized third-party consultants and professionals for business specific compliances such as quality management, service management, information security, and so on. The audit committee reviews the reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets TCS' statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations periodically. Based on its evaluation (as defined in section 177 of the Companies Act 2013 and Clause 18 of SEBI Regulations 2015), our audit committee has concluded that, as of March 31, 2017, our internal financial controls were adequate and operating effectively. # Note: - Percentages reported are calculated from the underlying whole rupee numbers. - Within the tables, certain rows and columns may not add due to the use of rounded numbers. - Figures have been rounded off to ` crore # Management Discussion and Analysis # Corporate Governance # Report TCS Gitanjali Park, Kolkata # Annual Report 2016-17 # Corporate Governance Report for the year 2016-17 # I. Company's Philosophy on Corporate Governance Effective corporate governance practices constitute the strong foundation on which successful commercial enterprises are built to last. The Company's philosophy on corporate governance oversees business strategies and ensures fiscal accountability, ethical corporate behaviour and fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large. Strong leadership and effective corporate governance practices have been the Company's hallmark inherited from the Tata culture and ethos. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees including the Managing Director and the Executive Directors. In addition, the Company has adopted a Code of Conduct for its non-executive directors which includes Code of Conduct for Independent Directors which suitably incorporates the duties of independent directors as laid down in the Companies Act, 2013 ("the Act"). These codes are available on the Company's website. The Company's corporate governance philosophy has been further strengthened through the Tata Business Excellence Model, the TCS Code of Conduct for Prevention of Insider Trading and the Code of Corporate Disclosure Practices ("Insider Trading Code"). The Company has in place an Information Security Policy that ensures proper utilisation of IT resources. The Company is in compliance with the requirements stipulated under Regulation 17 to 27 read with Schedule V and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), as applicable, with regard to corporate governance. # II. Board of Directors i. As on March 31, 2017, the Company has eleven Directors. Of the eleven Directors, eight (i.e. 72.73%) are Non-Executive Directors out of which six (i.e. 54.55%) are Independent Directors. The profiles of Directors can be found on https://www.tcs.com/ir-corporate-governance. The composition of the Board is in conformity with Regulation 17 of the SEBI Listing Regulations read with Section 149 of the Act. ii. None of the Directors on the Board hold directorships in more than ten public companies. Further none of them is a member of more than ten committees or chairman of more than five committees across all the public companies in which he is a Director. Necessary disclosures regarding Committee positions in other public companies as on March 31, 2017 have been made by the Directors. None of the Directors are related to each other except Mr. N. Ganapathy Subramaniam and Mr. N. Chandrasekaran. iii. Independent Directors are non-executive directors as defined under Regulation 16(1)(b) of the SEBI Listing Regulations read with Section 149(6) of the Act. The maximum tenure of independent directors is in compliance with the Act. All the Independent Directors have confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations read with Section 149(6) of the Act. iv. Nine Board Meetings were held during the year and the gap between two meetings did not exceed one hundred and twenty days. |
The dates on which the said meetings were held: April 18, 2016; June 16 & 17, 2016; July 14, 2016; October 13, 2016; November 17, 2016; January 12, 2017; January 12, 2017; February 20, 2017 and March 9 & 10, 2017. The necessary quorum was present for all the meetings. v. The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and at the last Annual General Meeting (AGM) and the number of Directorships and Committee Chairmanships / Memberships held by them in other public limited companies as on March 31, 2017 are given herein below. Other directorships do not include directorships of private limited companies, foreign companies and companies under Section 8 of the Act. For the purpose of determination of limit of the Board Committees, chairpersonship and membership of the Audit Committee and Stakeholders' Relationship Committee has been considered as per Regulation 26(1)(b) of SEBI Listing Regulations. # Corporate Governance Report |Name of the Director|Category|Number of board meetings attended during the year 2016-17|Whether attended last AGM held on June 17, 2016|Number of Directorships in other Public Companies|Number of Committee positions held in other Public Companies| |---|---|---|---|---|---| |Mr. N. Chandrasekaran (Chairman)*|Non-Independent, Non-Executive|9|Yes|5|-| |Mr. Cyrus Mistry **|Non-Independent, Non-Executive|4|Yes|N.A.|N.A.| |Mr. Rajesh Gopinathan (Chief Executive Officer and Managing Director) ***|Non-Independent, Executive|1|N.A.|-|-| |Mr. Aman Mehta|Independent, Non-Executive|9|Yes|-|5| |Mr. V. Thyagarajan|Independent, Non-Executive|9|Yes|-|-| |Prof. Clayton M. Christensen|Independent, Non-Executive|5|No|-|-| |Dr. Ron Sommer|Independent, Non-Executive|9|Yes|-|-| |Dr. Vijay Kelkar|Independent, Non-Executive|8|Yes|-|5| |Mr. Ishaat Hussain^|Non-Independent, Non-Executive|9|Yes|4|5| |Mr. O. P. Bhatt|Independent, Non-Executive|9|Yes|-|2| |Mr. Phiroz Vandrevala #|Non-Independent, Non-Executive|2|Yes|N.A.|N.A.| |Mr. N Ganapathy Subramaniam (Chief Operating Officer and Executive Director) ^^|Non-Independent, Executive|1|N.A.|1|-| |Ms. Aarthi Subramanian|Non-Independent, Executive|9|Yes|-|-| * Relinquished the office of Chief Executive Officer and Managing Director and appointed as the Chairman of the Company w.e.f. February 21, 2017 ** Ceased to be Chairman of the Company w.e.f. November 9, 2016 and Director of the Company w.e.f December 13, 2016 *** Appointed as Chief Executive Officer and Managing Director of the Company w.e.f. February 21, 2017 ^ Nominated as the Chairman of the Company w.e.f. November 9, 2016 upto February 21, 2017 # Relinquished the office of Non-Executive Director w.e.f. July 8, 2016 ^^ Appointed as Chief Operating Officer and Executive Director w.e.f. February 21, 2017 Video/tele-conferencing facilities are also used to facilitate Directors travelling/residing abroad or at other locations to participate in the meetings. # Annual Report 2016-17 # vi. During the year 2016-17, information as mentioned in Part A of Schedule II of the SEBI Listing Regulations, has been placed before the Board for its consideration. # vii. The terms and conditions of appointment of the Independent Directors are disclosed on the website of the Company https://www.tcs.com/investor-relations. # viii. During the year 2016-17, two meetings of the Independent Directors were held on October 13, 2016 and March 10, 2017. The Independent Directors, inter-alia, reviewed the performance of non-independent directors, and the Board as a whole. # ix. The Board periodically reviews the compliance reports of all laws applicable to the Company, prepared by the Company. # x. The details of the familiarization programme of the Independent Directors are available on the website of the Company https://www.tcs.com/investor-relations. # xi Details of equity shares of the Company held by the Directors as on March 31, 2017 are given below: |Name|Category|Number of equity shares| |---|---|---| |Mr. N. Chandrasekaran|Non-Independent, Non-Executive|88,528| |Mr. Rajesh Gopinathan|Non-Independent, Executive|1,130| |Mr. Ishaat Hussain|Non-Independent, Non-Executive|1,740| |Mr. N Ganapathy Subramaniam|Non-Independent, Executive|98,880| |Ms. Aarthi Subramanian|Non-Independent, Executive|2,800| The Company has not issued any convertible instruments. # III. Committees of the Board i. There are ten Board Committees which comprise of five statutory committees and five other committees that have been formed considering the needs of the Company and best practices in Corporate Governance as on March 31, 2017, which are as follows: |Name of the Committee|Extract of Terms of Reference| |---|---| |Audit Committee|Committee is constituted in line with the provisions of Regulation 18 of SEBI Listing Regulations, read with Section 177 of the Act. - Oversight of financial reporting process. - Reviewing with the management, the annual financial statements and auditors' report thereon before submission to the board for approval. - Evaluation of internal financial controls and risk management systems. - Recommendation for appointment, remuneration and terms of appointment of auditors of the Company. - Approve policies in relation to the implementation of the Insider Trading Code and to supervise implementation of the same.| # Category and Composition Statutory Committees |Name|Category|Other details| |---|---|---| |Mr. |
Aman Mehta (Chairman)|Independent, Non-Executive|- Six audit committee meetings were held during the year and the gap between two meetings did not exceed one hundred and twenty days. - Committee invites such of the executives, as it considers appropriate (particularly the head of the finance function), representatives of the statutory auditors and internal auditors to be present at its meetings. - The Company Secretary acts as the Secretary to the audit committee. - Mr. Suprakash Mukhopadhyay, Global Treasury Head and Company Secretary was appointed as the Compliance Officer by the Board to ensure compliance and effective implementation of the Insider Trading Code. - Quarterly Reports are sent to the members of the Committee on matters relating to the Insider Trading Code. - The previous AGM of the Company was held on June 17, 2016 and was attended by Mr. Aman Mehta, Chairman of the audit committee.| |Mr. V. Thyagarajan|Non-Executive Independent| | |Dr. Ron Sommer|Independent, Non-Executive| | |Dr. Vijay Kelkar|Independent, Non-Executive| | |Mr. Ishaat Hussain|Non-Independent, Non-Executive| | |Mr. O. P Bhatt|Independent, Non-Executive| | # 90 Corporate Governance Report # Extract of Terms of Reference # Nomination and Remuneration Committee Committee is constituted in line with the provisions of Regulation 19 of SEBI Listing Regulations, read with Section 178 of the Act. - Recommend to the Board the setup and composition of the Board and its committees. - Recommend to the Board the Appointment/Re-appointment of Directors and Key Managerial Personnel. - Carry out evaluation of every director's performance and support the Board and Independent Directors in evaluation of the performance of the Board, its committees and individual directors. - Recommend to the Board the Remuneration Policy for directors, executive team or Key Managerial Personnel as well as the rest of employees. - Oversee the Human Resource philosophy, Human Resource and People strategy and Human Resource practices including those for leadership development, rewards and recognition, talent management and succession planning. - Oversee familiarisation programmes for directors. - Recommend to the Board on voting pattern for appointment and remuneration of directors on the Boards of its material subsidiary companies. # Stakeholders' Relationship Committee Committee is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations read with section 178 of the Act. - Consider and resolve the grievances of security holders. - Consider and approve issue of share certificates, transfer and transmission of securities, etc. # Category and Composition |Name|Category| |---|---| |Mr. Aman Mehta (Chairman)|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. V. Thyagarajan|Non-Executive Independent| |Mr. Cyrus Mistry**|Non-Independent, Non-Executive| |Mr. Ishaat Hussain|Non-Executive Non-Independent| * Appointed as member of the Committee w.e.f. February 20, 2017 ** Ceased to be Director of the Company and consequently a member of this Committee w.e.f. December 13, 2016 # Other details - Four nomination and remuneration committee meetings were held during the year. - The Company does not have any Employee Stock Option Scheme. - Details of Performance Evaluation Criteria and Remuneration Policy are detailed below this table. # Stakeholders' Relationship Committee Composition |Name|Category| |---|---| |Mr. V. Thyagarajan (Chairman)|Independent, Non-Executive| |Mr. O. P Bhatt|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. Rajesh Gopinathan**|Non-Independent, Executive| |Mr. N. Ganapathy Subramaniam**|Non-Independent, Executive| * Ceased to be member of the Committee w.e.f. March 10, 2017. ** Appointed as a member of the Committee w.e.f. March 10, 2017. Corporate Governance Report 91 # Annual Report 2016-17 # Corporate Social Responsibility Committee ("CSR") |Name of the Committee|Extract of Terms of Reference|Category and Composition|Other details| |---|---|---|---| |Corporate Social Responsibility Committee|Committee is constituted in line with the provisions of Section 135 of the Act. Ÿ Formulate and recommend to the board, a CSR Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Act. Ÿ Recommend the amount of expenditure to be incurred on the activities mentioned in the CSR Policy. Ÿ Monitor the CSR Policy.|Mr. N. Chandrasekaran (Chairman) * Mr. Cyrus Mistry ** Mr. O. P. Bhatt Mr. Rajesh Gopinathan# Ms. Aarthi Subramanian#|Ÿ Two meetings of the CSR committee were held during the year. * Appointed as Chairman of the Committee w.e.f. March 10, 2017 ** Ceased to be Director of the Company and consequently a member of this Committee w.e.f. December 13, 2016 # Appointed as a member of the Committee w.e.f. March 10, 2017| # Risk Management Committee |Name of the Committee|Extract of Terms of Reference|Category and Composition|Other details| |---|---|---|---| |Risk Management Committee|Committee is constituted in line with the provisions of Regulation 21 of SEBI Listing Regulations. |
Ÿ Frame, implement and monitor the risk management plan for the Company.|Mr. Ishaat Hussain Mr. N. Chandrasekaran Mr. O. P. Bhatt Mr. Rajesh Gopinathan* Ms. Aarthi Subramanian|Ÿ Four meetings of the risk management committee were held during the year. * Relinquished the office of Chief Financial Officer and appointed as the Chief Executive Officer and Managing Director of the Company w.e.f. February 21, 2017| # Corporate Governance Report # Extract of Terms of Reference # Category and Composition # Ethics and Compliance Committee - Consider matters relating to the Company's Code of Conduct (CoC). - Monitoring of Anti Bribery and Anti Corruption Policy and Gifts Policy. |Name|Category| |---|---| |Mr. V. Thyagarajan|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. O. P. Bhatt|Independent, Non-Executive| |Mr. Rajesh Gopinathan**|Non-Independent, Executive| |Ms. Aarthi Subramanian**|Non-Independent, Executive| * Ceased to be member of the Committee w.e.f. March 10, 2017 ** Appointed as a member of the Committee w.e.f. March 10, 2017 # Bank Account Committee - Responsible for approval of the opening and closing of bank accounts of the Company. - Authorise persons to operate the bank accounts of the Company. |Name|Category| |---|---| |Mr. Aman Mehta|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. Rajesh Gopinathan**|Non-Independent, Executive| * Ceased to be a member of the Committee w.e.f. March 10, 2017 ** Appointed as a member of the Committee w.e.f. March 10, 2017 # Executive Committee - Detailed review of the following matters before these are presented to the Board: - Business and strategy review; - Long-term financial projections and cash flows; - Capital and revenue budgets and capital expenditure programmes; - Acquisitions, divestments and business restructuring proposals; - Senior management succession planning; - Any other item as may be decided by the board. |Name|Category| |---|---| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. Cyrus Mistry**|Non-Independent, Non-Executive| |Mr. Rajesh Gopinathan***|Non-Independent, Executive| |Prof. Clayton M. Christensen|Independent, Non-Executive| |Dr. Ron Sommer|Independent, Non-Executive| * Appointed as Chairman of the Committee w.e.f. March 10, 2017 ** Ceased to be Director of the Company and consequently a member of this Committee w.e.f. December 13, 2016 *** Appointed as a member of the Committee w.e.f. March 10, 2017 Corporate Governance Report 93 # Annual Report 2016-17 # Name of the Committee # Extract of Terms of Reference # Category and Composition # Other Committees # Software Technology Parks of India (STPI) / Special Economic Zone (SEZ) committee |Name|Category| |---|---| |Mr. V. Thyagarajan|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non Independent, Non-Executive| |Mr. N. Ganapathy Subramaniam**|Non-Independent, Executive| * Ceased to be a member of the Committee w.e.f. March 10, 2017 ** Appointed as a member of the Committee w.e.f. March 10, 2017 # Health, Safety and Sustainability Committee |Name|Category| |---|---| |Dr. Vijay Kelkar (Chairman)|Independent, Non-Executive| |Dr. Ron Sommer|Independent, Non-Executive| |Mr. N. Chandrasekaran*|Non-Independent, Non-Executive| |Mr. N. Ganapathy Subramaniam**|Non-Independent, Executive| * Ceased to be member of the Committee w.e.f. March 10, 2017 ** Appointed as a member of the Committee w.e.f. March 10, 2017 The terms of reference of committee's are available on the website (https://www.tcs.com/ir-corporate-governance) # Other details Ÿ One meeting of the health, safety and sustainability committee was held during the year. # ii. Stakeholders Relationship Committee Details # a. Name, designation and address of Compliance Officer: Mr. Suprakash Mukhopadhyay Global Treasury Head and Company Secretary Tata Consultancy Services Limited 11th Floor, Maker Towers "E" Block Cuffe Parade, Colaba Mumbai 400 005 Telephone: 91 22 6778 9191 Fax: 91 22 6778 9660 # b. Details of investor complaints received and redressed during the year 2016-17 are as follows: |Opening Balance|Received during the year|Resolved during the year|Closing Balance| |---|---|---|---| |1|95|95|1*| * SEBI had requested the complainant to upload the scanned copy of the Arbitration Tribunal Order in SCORES by April 20, 2017. # Corporate Governance Report # iii. Nomination and Remuneration Committee Details # Performance Evaluation Criteria for Independent Directors: The performance evaluation criteria for independent directors is determined by the Nomination and Remuneration Committee. An indicative list of factors that were evaluated include participation and contribution by a director, commitment, effective deployment of knowledge and expertise, effective management of relationship with stakeholders, integrity and maintenance of confidentiality and independence of behaviour and judgement. # Remuneration Policy: Remuneration policy in the Company is designed to create a high performance culture. It enables the Company to attract, retain and motivate employees to achieve results. Our Business Model promotes customer centricity and requires employee mobility to address project needs. The remuneration policy supports such mobility through pay models that are compliant to local regulations. |
In each country where the Company operates, the remuneration structure is tailored to the regulations, practices and benchmarks prevalent in the IT industry. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and commission (variable component) to its Managing Director and the Executive Directors. Annual increments are decided by the Nomination and Remuneration Committee within the salary scale approved by the members and are effective April 1, each year. The Nomination and Remuneration Committee decides on the commission payable to the Managing Director and the Executive Directors out of the profits for the financial year and within the ceilings prescribed under the Act based on the performance of the Company as well as that of the Managing Director and each Executive Director. During the year 2016-17 the Company paid sitting fees of ` 30,000 per meeting to its Non-Executive Directors for attending meetings of the Board and meetings of committees of the Board. The Members have at the AGM of the Company held on June 27, 2014 approved a payment of commission to the Non-Executive Directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Act. The said commission is decided each year by the Board of Directors and distributed amongst the Non-Executive Directors based on their attendance and contribution at the Board and certain Committee meetings, as well as the time spent on operational matters other than at meetings. The Company also reimburses the out-of-pocket expenses incurred by the Directors for attending the meetings. # iv. Details of the Remuneration for the year ended March 31, 2017: # a. Non-Executive Directors: |Name|Commission|Sitting Fees| |---|---|---| |Mr. N. Chandrasekaran, Chairman (w.e.f. February 21, 2017)|-|0.90| |Mr. Cyrus Mistry|-|1.80| |Mr. Aman Mehta|265.00|6.30| |Mr. V. Thyagarajan|180.00|6.90| |Prof. Clayton M. Christensen|135.00|1.80| |Dr. Ron Sommer|190.00|5.40| |Dr. Vijay Kelkar|170.00|4.80| |Mr. Ishaat Hussain|210.00|6.90| |Mr. O. P. Bhatt|170.00|7.50| |Mr. Phiroz Vandrevala|15.00|0.60| Corporate Governance Report 95 # Annual Report 2016-17 # b. Managing Director and Executive Director |Name of Director|Salary|Benefits, Perquisites and Allowances|Commission|ESPS| |---|---|---|---|---| |Mr. N. Chandrasekaran Chief Executive Officer and Managing Director (upto February 21, 2017)|244.93|270.35|2500.00|nil| |Mr. Rajesh Gopinathan Chief Executive Officer and Managing Director (w.e.f. February 21, 2017 for a period of 5 years)*|66.68|155.95#|400.00|nil| |Mr. N Ganapathy Subramanian Chief Operating Officer and Executive Director (w.e.f. February 21, 2017 for a period of 5 years)**|76.06|189.30#|350.00|nil| |Ms. Aarthi Subramanian Executive Director|81.69|90.20|200.00|nil| * The remuneration includes compensation for the full year, i.e. as Chief Financial Officer from April 1, 2016 to February 21, 2017 and as Chief Executive Officer and Managing Director from February 21, 2017 to March 31, 2017. ** The remuneration includes compensation for the full year, i.e. as President, Financial Services for April 1, 2016 to February 21, 2017 and as Chief Operating Officer and Executive Director from February 21, 2017 to March 31, 2017. # Does not include performance bonus for FY 2016 paid in FY 2017. The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available. Services of the Managing Director and Executive Director may be terminated by either party, giving the other party six months' notice or the Company paying six months' salary in lieu thereof. There is no separate provision for payment of severance fees. # v. Number of Meetings Held and Attendance Records |Name of Committee|Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|CSR Committee|Ethics and Compliance Committee|Risk Management Committee|Health and Safety and Sustainability Committee| | |---|---|---|---|---|---|---|---|---| |Date on which meetings were held|6 meetings held on April 18, 2016; July 14, 2016; October 13, 2016; December 13, 2016; January 12, 2017; February 20, 2017|4 meetings held on April 18, 2016; January 11, 2017; February 20, 2017; March 10, 2017|1 meeting held on March 10, 2017|2 meetings held on October 12, 2016; March 10, 2017|1 meeting held on March 10, 2017|4 meetings held on April 4, 2016; July 11, 2016; October 12, 2016; March 10, 2017|1 meeting held on March 10, 2017| | |Name of Director|Mr. N. Chandrasekaran *|-|1|-|2|-|3|-| |Mr. Cyrus Mistry **|-|1|-|1|-|-|-| | |Mr. Rajesh Gopinathan #|-|-|1|1|1|4|-| | |Mr. Aman Mehta|6|4|-|-|-|-|-| | |Mr. V. Thyagarajan|6|4|1|-|1|-|-| | |Prof. Clayton M. Christensen|-|-|-|-|-|-|-| | |Dr. Ron Sommer|6|-|-|-|-|-|1| | |Dr. Vijay Kelkar|5|-|-|-|-|-|1| | |Mr. Ishaat Hussain|6|4|-|-|-|4|-| | |Mr. O. P. Bhatt|6|-|1|2|1|4|-| | |Mr. Phiroz Vandrevala @|-|-|-|-|-|-|-| | |Mr. N Ganapathy Subramaniam|-|-|1|-|-|-|1| | |Ms. |
Aarthi Subramanian ###|-|-|-|1|1|4|-| | Whether quorum was present for all the meetings: The necessary quorum was present for all the above committee meetings. * Mr. N. Chandrasekaran was appointed as a Chairman of Corporate Social and Responsibility Committee w.e.f. March 10, 2017, as a member of Nomination and Remuneration Committee w.e.f February 20, 2017 and ceased to member of Stakeholders' Relationship Committee, Ethics and Compliance Committee and Health Safety and Sustainability Committee w.e.f. March 10, 2017. ** Mr. Cyrus Mistry ceased to be a Director of the Company and consequently a member of Nomination and Remuneration Committee, and as a Chairman of Corporate Social and Responsibility Committee and Executive Committee w.e.f. December 13, 2016. # Mr. Rajesh Gopinathan was appointed as a member of Ethics and Compliance Committee, Stakeholders' Relationship Committee and Corporate Social and Responsibility Committee w.e.f. March 10, 2017. @ Mr. Phiroz Vandrevala relinquished the office of Non-Executive Director w.e.f. July 8, 2016. ## Mr. N Ganapathy Subramaniam was appointed as a member of Health Safety and Sustainability Committee and Stakeholders' Relationship Committee, w.e.f. March 10, 2017. ### Ms. Aarthi Subramanian was appointed as a member of Ethics and Compliance Committee and Corporate Social and Responsibility Committee w.e.f. March 10, 2017. # Annual Report 2016-17 # IV. General Body Meetings # i. General Meeting # a. Annual General Meeting ("AGM"): |Financial Year|Date|Time|Venue| |---|---|---|---| |2013-14|June 27, 2014| |Birla Matushri Sabhagar| |2014-15|June 30, 2015|3.30 p.m.|19, Sir Vithaldas Thackersey Marg,| |2015-16|June 17, 2016| |New Marine Lines, Mumbai - 400 020| # b. Extra Ordinary General Meeting An extra ordinary general meeting of the Company was held on December 13, 2016 at 3:30 p.m. at Yashwantrao Chavan Pratishthan Auditorium, Y.B. Chavan Centre, General Jangannath Bhosle Marg, next to Sachivalaya Gymkhana, Mumbai - 400021 for obtaining requisite approval of the shareholders of the Company for removal of Mr. Cyrus Mistry as a Director under Section 169 and other applicable provisions of the Companies Act, 2013. # c. Special Resolution(s) No special resolution was passed by the Company in any of its previous three AGMs. # ii. Details of special resolution passed through postal ballot File: AR_TCS_2016_2017.md During the year, the Company sought the approval of the shareholders by way of a Special Resolution through notice of postal ballot dated March 3, 2017 for Buyback of Equity Shares of the Company, the results of which were announced on April 17, 2017. Mr. P. N. Parikh (Membership No. FCS 327) of M/s Parikh and Associates, Practicing Company Secretaries was appointed as the Scrutinizer to scrutinize the postal ballot and remote e-voting process in a fair and transparent manner. # Details of Voting Pattern were as under: |Description of the Resolution|Votes in favour of the resolution|Votes against the resolution|Invalid Votes| |---|---|---|---| |Approval for Buyback of Equity Shares|Number of members voted through electronic voting system and through Physical ballot form: 7,341* Number of valid Votes cast (Shares): 1,79,68,85,635 % of total number of valid votes: 99.81|Number of members: 577 Number of valid Votes cast (Shares): 34,85,059 % of total number of valid votes: 0.19|Total number of members whose votes were declared invalid: 341 Total number of invalid votes cast (Shares): 38,788| * Two shareholders have partially voted for assent and partially for dissent. While their votes are counted, as cast, for the sake of number of shareholders they are counted only once in assent. # Procedure for postal ballot: The Company conducted the postal ballot in accordance with the provisions of Section 110 of the Act read with Rule 22 of the Companies (Management & Administration) Rules, 2014 ("Rules"). The Company had completed the dispatch of the Postal Ballot Notice dated March 3, 2017 along with the Explanatory Statement, postal ballot form and self-addressed business reply envelopes on March 16, 2017 to the shareholders who had not registered their e-mail IDs with the Company/Depositories and also sent by e-mail the said documents to shareholders whose e-mail IDs were registered with the Company/Depositories. The Company also published a notice in the newspaper declaring the details of completion of dispatch and other requirements as mandated under the provisions of the Act and Rules framed thereunder. In compliance with the provisions of Sections 108 and 110 of the Act and rule 20 and 22 of the Rules read with Regulation 44 of the SEBI Listing Regulations, the Company had offered the 98 Corporate Governance Report facility of e-voting to its members to enable them to cast their vote electronically. |
The voting under the postal ballot was kept open from March 17, 2017 (9.00 a.m. IST) to April 15, 2017 (5.00 p.m. IST). Upon completion of scrutiny of the postal ballot forms and votes cast through e-voting in a fair and transparent manner, the scrutinizer i.e. Mr. Parikh submitted his report to the Company and the results of the postal ballot were announced by the Company on April 17, 2017. The voting results were sent to the Stock Exchanges and also displayed on the Company's website www.tcs.com and on the website of National Securities Depository Limited www.evoting.nsdl.com # iii. Details of special resolution proposed to be conducted through postal ballot: No special resolution is proposed to be conducted through postal ballot at the AGM to be held on June 16, 2017. # V. Other Disclosure |Particulars|Regulations|Details|Website link for details/policy| |---|---|---|---| |Related party transactions|Regulation 23 of SEBI Listing Regulations and as defined under the Act|All material transactions entered into with related parties during the financial year were in the ordinary course of business and approved by the Audit Committee. The board approved policy for related party transactions is uploaded on the website of the Company.|Link| |D e t a i l s o f N o n - compliance by the Company, penalty, strictures imposed on the Company by the stock exchange, or Securities and Exchange Board of India ('SEBI') or any statutory authority on any matter related to capital markets|Schedule V (c) 10(b) to the SEBI Listing Regulations|There were no cases of non-compliance during the last three years 2014-15, 2015-16 and 2016-17| | |Whistle Blower Policy and Vigil Mechanism|Regulation 22 of SEBI Listing Regulations|The Company has adopted a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees to report concerns about unethical behavior. No person has been denied access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.|Link| |Policy on Determination of Materiality for Disclosures|Regulation 23 of SEBI Listing Regulations|The Company has adopted a Policy on Determination of Materiality for Disclosures|Link| |Policy on Archival and Preservation of Documents|Regulation 9 of SEBI Listing Regulations|The Company has adopted a Policy on Archival and Preservation of Documents|Link| Corporate Governance Report 99 # Annual Report 2016-17 |Particulars|Regulations|Details|Website link for details/policy| |---|---|---|---| |Discretionary requirements|Schedule II Part E of the SEBI Listing Regulations|- A message from the Chief Executive Officer and Managing Director on the half-yearly financial performance of the Company including a summary of the significant events in the six month period ended September 30, 2016 was sent to every member in October 2016. - The auditors' report on statutory financial statements of the Company are unqualified. - The Company has complied with the requirement of having separate persons to the post of Chairman and Managing Director / Chief Executive Officer. - Ernst & Young LLP, the internal auditors of the Company, make presentations to the audit committee on their reports. | | |Reconciliation of share capital audit| |A qualified practicing Company Secretary carried out a share capital audit to reconcile the total admitted equity share capital with the National Securities Depository Limited ("NSDL") and the Central Depository Services (India) Limited ("CDSL") and the total issued and listed equity share capital. The audit report confirms that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.|https://www.tcs.com/ir-corporate-governance| |Code of Conduct|Regulation 17 of SEBI Listing Regulations|The members of the board and senior management personnel have affirmed compliance with the Code of Conduct applicable to them during the year ended March 31, 2017. The annual report of the Company contains a certificate by the Chief Executive Officer and Managing Director, on the compliance declarations received from Independent Directors, Non-executive Directors and Senior Management.|https://www.tcs.com/tata-code-of-conduct| |Subsidiary Companies|Regulation 24 of SEBI Listing Regulations|The audit committee reviews the consolidated financial statements of the Company and the investments made by its unlisted subsidiary companies. The minutes of the Board meetings along with a report on significant developments of the unlisted subsidiary companies are periodically placed before the Board of Directors of the Company. |
The Company does not have any material non-listed Indian subsidiary company.|The Company has a policy for determining 'material subsidiaries' which is disclosed on its website at the following link| # 100 Corporate Governance Report # Particulars # Dividend Distribution Policy |Regulations|Details|Website link for details/policy| |---|---|---| |Regulation 43A of the SEBI Listing Regulations|A regular annual dividend consists of three interim dividends after each of the first three quarters of the fiscal year, topped up with a final dividend after the fourth quarter. In addition, every second or third year, the accumulated surplus cash has been returned to shareholders through a special dividend.|Link| In distributing the profits of the Company among shareholders, Board of Directors will seek to balance members' need for a reasonable and predictable return on their investment with the Company's funding requirements for longer-term sustainable growth. # VI. Means of communication After meeting internal cash requirements and maintaining a reasonable cash balance towards any strategic investments, the Company will endeavor to return the rest of the free cash generated to shareholders through regular dividends. The quarterly, half-yearly and annual results of the Company are published in leading newspapers in India which include The Indian Express, Financial Express, LokSatta, Business Standard, The Hindu Business Line, Hindustan Times, and Sandesh. The results are also displayed on the Company's website "www.tcs.com". Press Releases made by the Company from time to time are also displayed on the Company's website. Presentations made to the institutional investors and analysts after the declaration of the quarterly, half-yearly and annual results are also displayed on the Company's website. A list of Frequently Asked Questions (FAQs) giving details about the Company and its shares is uploaded on the Company's website under 'Investor FAQs' section. A Management Discussion and Analysis Report is a part of the Company's Annual Report. # VII. General shareholder information # i. Annual General Meeting for FY 2016-2017 |Date|June 16, 2017| |---|---| |Time|3.30 p.m.| |Venue|Birla Matushri Sabhagar 19, Sir Vithaldas Thackersey Marg New Marine Lines, Mumbai 400 020| As required under Regulation 36(3) of the SEBI Listing Regulations, particulars of Directors seeking appointment/re-appointment at the ensuing AGM are given herein and in the Annexure to the Notice of the AGM to be held on June 16, 2017. # ii. Financial Calendar: |Year ending|March 31| |---|---| |AGM in|June| |Dividend Payment|The final dividend, if declared, shall be paid/credited on June 23, 2017| # iii. Date of Book Closure / Record Date As mentioned in the Notice of the AGM to be held on June 16, 2017 # iv. Listing on Stock Exchanges |National Stock Exchange of India Limited ("NSE")|Exchange Plaza, C-1, Block G Bandra Kurla Complex Bandra (East), Mumbai 400 051| |---|---| |BSE Limited ("BSE")|25th floor, P. J. Towers, Dalal Street Mumbai 400 001| # Annual Report 2016-17 # v. Stock Codes/Symbol: NSE: TCS BSE: 532540 Listing Fees as applicable have been paid. # vi. Corporate Identity Number (CIN) of the Company: L22210MH1995PLC084781 # vii. Market Price Data: High, Low (based on daily closing prices) and number of equity shares traded during each month in the year 2016-17 on NSE and BSE: |Month|NSE|NSE|NSE|BSE|BSE|BSE| |---|---|---| | |High (`)|Low (`)|Total number of equity shares traded|High (`)|Low (`)|Total number of equity shares traded| |Apr-2016|2,535.50|2,417.05|245,98,437|2,530.05|2,417.20|17,44,830| |May-2016|2,636.40|2,467.70|168,29,863|2,635.35|2,467.50|12,63,930| |Jun-2016|2,667.65|2,463.95|219,25,266|2,665.50|2,461.80|13,03,910| |Jul-2016|2,619.30|2,426.60|261,26,814|2,618.55|2,425.50|13,82,846| |Aug-2016|2,738.45|2,500.55|230,20,890|2,732.35|2,501.60|12,11,478| |Sep-2016|2,514.80|2,322.10|259,21,371|2,513.50|2,321.15|39,97,517| |Oct-2016|2,428.65|2,328.90|207,93,059|2,428.70|2,328.50|20,96,477| |Nov-2016|2,350.00|2,101.15|272,09,010|2,347.70|2,105.05|32,58,480| |Dec-2016|2,365.55|2,154.55|208,30,615|2,361.95|2,158.20|11,80,000| |Jan-2017|2,379.50|2,229.80|298,50,037|2,378.55|2,229.90|22,00,387| |Feb-2017|2,502.20|2,167.90|336,42,122|2,506.50|2,169.45|26,71,385| |Mar-2017|2,567.50|2,412.05|236,94,270|2,562.35|2,412.10|19,99,462| # viii. Performance of the share price of the Company in comparison to the BSE Sensex: 120 110 100 90 80 70 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 TCS Share Price BSE SENSEX Base 100 = April 1, 2016 # 102 Corporate Governance Report # ix. Registrars and Transfer Agents: Name and Address: TSR DARASHAW Limited ("TSRDL") 6-10, Haji Moosa Patrawala Industrial Estate 20, Dr. E. Moses Road, Mahalaxmi Mumbai 400 011 Telephone: 91 22 6656 8484 Fax: 91 22 6656 8494 E-mail: [email protected] Website: www.tsrdarashaw.com # x. Places for acceptance of documents Documents will be accepted at: TSR DARASHAW Limited 6-10, Haji Moosa Patrawala Industrial Estate 20, Dr. E. Moses Road, Mahalaxmi Mumbai 400 011 Time: 10.00 a.m. to 3.30 p.m. (Monday to Friday except bank holidays) For the convenience of the shareholders based in the following cities, transfer documents and letters will also be accepted at the following branches/agencies of TSRDL: # a. |
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