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Branches of TSRDL: |TSR DARASHAW Limited|TSR DARASHAW Limited| |---|---| |503, Barton Centre, 5th Floor|'E' Road, Northern Town| |84, Mahatma Gandhi Road|Bistupur| |Bangalore 560 001|Jamshedpur 831 001| |Telephone: 91 80 2532 0321|Telephone: 91 657 2426616| |Fax: 91 80 2558 0019|Fax: 91 657 2426937| |E-mail: [email protected]|E-mail: [email protected]| |TSR DARASHAW Limited|TSR DARASHAW Limited| |---|---| |Tata Centre, 1st Floor|2/42, Ansari Road, 1st Floor| |43, J. L. Nehru Road|Daryaganj, Sant Vihar| |Kolkata 700 071|New Delhi 110 002| |Telephone: 91 33 2288 3087|Telephone: 91 11 2327 1805| |Fax: 91 33 2288 3062|Fax: 91 11 2327 1802| |E-mail: [email protected]|E-mail: [email protected]| # b. Agent of TSRDL: Shah Consultancy Services Limited 3, Sumatinath Complex, 2nd Dhal Pritam Nagar, Ellisbridge Ahmedabad 380 006 Telefax: 91 79 2657 6038 E-mail: [email protected] Corporate Governance Report 103 # Annual Report 2016-17 # xi. Share Transfer System: 99.94% of the equity shares of the Company are in electronic form. Transfer of these shares are done through the depositories with no involvement of the Company. As regards transfer of shares held in physical form, the transfer documents can be lodged with TSRDL at any of the above mentioned addresses. Transfer of shares in physical form is normally processed within ten to twelve working days from the date of receipt, if the documents are complete in all respects. The Directors and certain Company officials (including Chief Financial Officer and Company Secretary), under the authority of the board, severally approve transfers, which are noted at subsequent board meetings. # xii. Shareholding as on March 31, 2017: # a. Distribution of equity shareholding as on March 31, 2017: |Number of shares|Holding|Percentage to capital (%)|Number of accounts|Percentage to total accounts (%)| |---|---|---|---|---| |1 - 100|1,92,68,969|0.98|5,36,041|84.05| |101 - 500|1,80,02,098|0.91|83,574|13.10| |501 - 1000|71,40,310|0.36|10,061|1.58| |1001 - 5000|1,21,92,212|0.62|6,136|0.96| |5001 - 10000|41,19,726|0.21|590|0.09| |10001 - 20000|50,01,393|0.25|353|0.06| |20001 - 30000|34,26,504|0.18|142|0.02| |30001 - 40000|36,01,452|0.18|103|0.02| |40001- 50000|33,88,535|0.17|76|0.01| |50001 -100000|1,54,46,657|0.79|216|0.03| |100001 - above|1,87,88,40,085|95.35|511|0.08| |GRAND TOTAL|197,04,27,941|100.00|6,37,803|100.00| # b. Categories of equity shareholding as on March 31, 2017: |Category|Number of equity shares held|Percentage of holding (%)| |---|---|---| |Promoters|1,44,34,51,698|73.26| |Other Entities of the Promoters Group|10,63,454|0.05| |Insurance Companies|8,63,30,709|4.38| |Indian Public and others|7,47,54,449|3.79| |Mutual Fund and UTI|1,85,24,541|0.94| |Corporate Bodies|92,43,212|0.47| |Banks, Financial Institutions, State Governments and Central Government|17,78,686|0.09| |Foreign Institutional Investors|3,56,48,888|1.81| |Foreign Portfolio Investor - Corporate|29,72,84,243|15.09| |NRI's / OCBs / Foreign Nationals|23,48,061|0.12| |GRAND TOTAL|1,97,04,27,941|100.00| # Corporate Governance Report # c. Top ten equity shareholders of the Company as on March 31, 2017: |Sr. No.|Name of the shareholder|Number of equity shares held|Percentage of holding| |---|---|---|---| |1|Tata Sons Limited|1,443,451,698|73.26| |2|Life Insurance Corporation of India|71,841,104|3.65| |3|First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund|16,035,510|0.81| |4|Abu Dhabi Investment Authority|11,033,526|0.56| |5|Lazard Emerging Markets Portfolio|10,532,329|0.53| |6|Government of Singapore|9,857,425|0.50| |7|Oppenheimer Developing Markets Fund|9,472,685|0.48| |8|Vanguard Emerging Markets Stock Index Fund, (a series of Vanguard International Equity Index Fund)|75,00,802|0.38| |9|Europacific Growth Fund|6,854,315|0.35| |10|Aberdeen Global Indian Equity Limited|6,272,473|0.32| # xiii. Dematerialisation of shares and liquidity: The Company's shares are compulsorily traded in dematerialised form on NSE and BSE. Equity shares of the Company representing 99.94% of the Company's equity share capital are dematerialised as on March 31, 2017. Under the Depository System, the International Securities Identification Number (ISIN) allotted to the Company's shares is INE467B01029. # xiv. Outstanding GDRs / ADRs / Warrants or any convertible instruments, conversion date and likely impact on equity: The Company has not issued any GDRs / ADRs / Warrants or any convertible instruments in the past and hence as on March 31, 2017, the Company does not have any outstanding GDRs / ADRs / Warrants or any convertible instruments. # xv. Commodity price risk or foreign exchange risk and hedging activities: Please refer to Management Discussion and Analysis Report for the same. # xvi. |
Equity shares in the suspense account: In accordance with the requirement of Regulation 34(3) and Part F of Schedule V to the SEBI Listing Regulations, the Company reports the following details in respect of equity shares lying in the suspense account which were issued in dematerialised form pursuant to the public issue of the Company: |Particulars|Number of shareholders|Number of equity shares| |---|---|---| |Aggregate number of shareholders and the outstanding shares in the suspense account lying as on April 1, 2016|200|7,746| |Shareholders who approached the Company for transfer of shares from suspense account during the year|5|300| |Shareholders to whom shares were transferred from the suspense account during the year|(5)|(300)| |Aggregate number of shareholders and the outstanding shares in the suspense account lying as on March 31, 2017|195|7,446| The voting rights on the shares outstanding in the suspense account as on March 31, 2017 shall remain frozen till the rightful owner of such shares claims the shares. Corporate Governance Report 105 # Annual Report 2016-17 # xvii. Transfer of unclaimed / unpaid amounts to the Investor Education and Protection Fund ("IEPF"): Pursuant to Sections 205A and 205C, and other applicable provisions, if any, of the Companies Act, 1956, all unclaimed / unpaid dividend, application money, debenture interest and interest on deposits as well as the principal amount of debentures and deposits, as applicable, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, were required to be transferred to the IEPF. Sections 124 and 125 of the Act, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('IEPF Rules'), both of which were applicable with effect from September 7, 2016, also contain similar provisions for transfer of such amounts to the IEPF. Accordingly, all unclaimed / unpaid dividend, application money, debenture interest and interest on deposits as well as the principal amount of debentures and deposits, as applicable, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, in relation to the Company, erstwhile TCS e-Serve Limited and erstwhile CMC Limited, which have been amalgamated with the Company, have been transferred to the IEPF established by the Central Government. No claim shall be entertained against the Company for the amounts so transferred. # a. For shareholders of erstwhile TCS e-Serve Limited which has merged with the Company: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2009-10|August 24, 2010|August 23, 2017| |2010-11|August 12, 2011|August 11, 2018| |2011-12|July 10, 2012|July 9, 2019| |2012-13|May 30, 2013|May 29, 2020| # b. For shareholders of erstwhile CMC Limited which has merged with the Company: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2009-10|June 29, 2010|June 28, 2017| |2010-11|June 27, 2011|June 26, 2018| |2011-12|June 27, 2012|June 26, 2019| |2012-13|June 26, 2013|June 25, 2020| |2013-14|June 23, 2014|June 22, 2021| |2014-15|June 11, 2015|June 10, 2022| |2015-16|July 16, 2015|July 15, 2022| # c. For shareholders of Tata Consultancy Service Limited (TCS): |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2009-10|July 2, 2010|July 1, 2017| | |July 15, 2010|July 14, 2017| |2010-11|October 21, 2010|October 20, 2017| | |January 17, 2011|January 16, 2018| # Corporate Governance Report # Plant locations: In view of the nature of the Company's business viz. Information Technology (IT) Services and IT Enabled Services, the Company operates from various offices in India and abroad. The Company has a manufacturing facility at 17-B, Tivim Industrial Estate, Karaswada, Mapusa- Bardez, Goa. # xviii. Address for correspondence: Tata Consultancy Services Limited 9th Floor, Nirmal Building Nariman Point Mumbai 400 021 Telephone: 91 22 6778 9595 Fax: 91 22 6778 9660 Designated e-mail address for Investor Services: [email protected] Website: www.tcs.com # DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANY'S CODE OF CONDUCT This is to confirm that the Company has adopted a Code of Conduct for its employees including the Managing Director and Executive Directors. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors and Independent Directors. These Codes are available on the Company's website. I confirm that the Company has in respect of the year ended March 31, 2017, received from the Senior Management Team of the Company and the Members of the Board a declaration of compliance with the Code of Conduct as applicable to them. |
For the purpose of this declaration, Senior Management Team means the Chief Financial Officer, Global Head - HR, Global Business Unit Heads, Global Head - Legal and the Company Secretary as on March 31, 2017. Rajesh Gopinathan Chief Executive Officer and Managing Director Mumbai, April 18, 2017 Corporate Governance Report 107 # Annual Report 2016-17 # INDEPENDENT AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE # TO THE MEMBERS OF TATA CONSULTANCY SERVICES LIMITED 1. We, Deloitte Haskins & Sells LLP, Chartered Accountants, the Statutory Auditors of TATA CONSULTANCY SERVICES LIMITED ("the Company"), have examined the compliance of conditions of Corporate Governance by the Company, for the year ended on March 31, 2017, as stipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C and D of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). # Managements' Responsibility 2. The compliance of conditions of Corporate Governance is the responsibility of the Management. This responsibility includes the design, implementation and maintenance of internal control and procedures to ensure the compliance with the conditions of the Corporate Governance stipulated in the SEBI Listing Regulations. # Auditors' Responsibility 3. Our responsibility is limited to examining the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 4. We have examined the books of account and other relevant records and documents maintained by the Company for the purpose of providing reasonable assurance on the compliance with Corporate Governance requirements by the Company. 5. We have carried out an examination of the relevant records of the Company in accordance with the Guidance Note on Certification of Corporate Governance issued by the Institute of Chartered Accountants of India (the ICAI), the Standards on Auditing specified under Section 143(10) of the Companies Act, 2013, in so far as applicable for the purpose of this certificate and as per the Guidance Note on Reports or Certificates for Special Purposes issued by the ICAI which requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI. 6. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements. # Opinion 7. Based on our examination of the relevant records and according to the information and explanations provided to us and the representations provided by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in regulations 17 to 27 and clauses (b) to (i) of regulation 46(2) and para C and D of Schedule V of the SEBI Listing Regulations during the year ended March 31, 2017. 8. We state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the Management has conducted the affairs of the Company. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W / W-100018) P. R. RAMESH Partner (Membership No.70928) MUMBAI, April 18, 2017 # Corporate Governance Report # Corporate Sustainability Report TCS Noida, Delhi # Annual Report 2016-17 # Corporate Sustainability Report Being part of the Tata group, TCS has a unique relationship with society at large. The Tata ethos of caring for the community governs all our actions. At the structural level, nearly half the dividend we pay out annually eventually reaches the various philanthropic trusts that own Tata Sons Ltd, going towards funding community programs in the areas of education, healthcare, and livelihoods. It is a source of tremendous pride and motivation to employees that their efforts and contribution to the company's business success result in tangible benefits to society at large. TCS also engages in a variety of sustainability initiatives, with the goal of empowering communities to make an impact in the three focus areas of Education and Skills, Health and Wellbeing, and Environmental Stewardship. Our sustainability initiatives take the form of volunteering effort by our employees, providing pro bono IT services for worthy causes, and funding programs run by non-governmental organizations and other agencies. In this section, we discuss our ongoing programs and new initiatives launched in FY17 towards making the world a better place. |
The statutory Business Responsibility Report is provided at the back of the Annual Report, along with some disclosures. TCS also publishes a more detailed Sustainability Report that is aligned with international sustainability disclosure standards. This is available on our website, www.tcs.com. # People When TCS Mumbai associate Akhilesh Beri set out to conduct a clean-up drive at a city beach, only a few of his colleagues were willing to pursue the cause. Nevertheless, the small group was determined. They announced their intention on the TCS Purpose4Life portal, reaching out to like-minded associates far beyond their known circles. The result: nearly a 100 people turned up on the appointed day to spruce up Mumbai's Juhu beach. File: AR_TCS_2016_2017.md "We were only a few people and the cause demanded greater numbers. After we put up our plan on the portal, people responded in large numbers, bringing their families along. This initiative would have remained just a thought had it not been for Purpose4Life." The program is one of the many employee engagement initiatives launched by TCS, through which associates are encouraged to commit a minimum of 10 hours of volunteer activity each year. We aim to leverage our large employee base, vast global presence, and unmatched IT expertise to bring about social change. In FY17, TCS associates dedicated 694,487 hours for various activities such as cleaning up beaches and forts, teaching marginalized communities conversational English, basic mathematics, and science, and augmenting their computer skills. # Education and Skill Development Demonstrating our faith in the ability of computer-based education to empower those without access to resources and opportunities, we launched our flagship program for social empowerment, BridgeIT, in collaboration with the National Confederation of Dalit and Adivasi Organisations. The program aims to use Digital tools to mainstream marginalized communities, with focus on education, employability, and entrepreneurship. In FY17, under BridgeIT, we trained 126 Digital entrepreneurs to implement our computer-aided learning module in 210 government schools, reaching 18,230 children and 808 adults across 143 villages. In schools where the program is active, overall attendance went up by nearly 52%. TCS is also bringing the power of IT to support the Government of India's efforts toward making every adult functionally literate. Our long-running CSR initiative, the Adult Literacy Program (ALP) has the computer-based functional literacy (CBFL) system at its core. As part of the CBFL solution, non-literate adults receive approximately 50 hours of training in their native languages. CBFL supports nine Indian and three foreign languages. The BridgeIT program aims to mainstream marginalized communities using Digital tools. 110 Corporate Sustainability Report The number of participants as well as the beneficiaries under ALP has gone up. We work with a range of partners, from jail authorities and local governments to NGOs and corporates. In FY17, this program reached over 1,26,000 persons. TCS has also designed a program to increase the employability of visually impaired youth in India. Our Advanced Computer Training Centre (ACTC) offers them free, industry-specific training and skilling. The courses are tailored as per industry requirements to ensure a high placement rate. Target customers hail from industries such as legal and accountancy services, banking, hospitality, retail, BPO, and IT. In Bengaluru, India, we have partnered with local NGOs to organize lab-based experiments to make science education more enjoyable for over 2,600 primary school students and 327 teachers across 19 government schools. TCS has also made science learning more accessible to children in tribal areas across Odisha by setting up mobile laboratories at 200 schools in the state, with the help of NGO partners. # TCS' Adult Literacy Program partners today range from NGOs to corporates TCS also runs separate BPS and IT Employability Programs for the underprivileged. Launched in 2010, the BPS Program imparts basic training in English grammar and communication, mathematics, analytics, computers, and the working of the BPS industry. The IT Employability Program, on the other hand, trains rural engineering and science graduates in business skills, general aptitude, and technical skills. In FY17, over 9,100 students benefited from the former, while the latter helped 2,400 students. TCS' mobile laboratories at 200 schools across Odisha are making science learning accessible to children in tribal areas. To bring teachers up to speed with our fast-changing world, TCS initiated a Teacher Empowerment Program in 2014. This module provides them with soft skills through intensive training in communication, presentation, empathy, ethics, organizational behavior, time management, and stress management. Nearly 850 teachers have benefited from the program till date. |
But education alone cannot bridge the talent gap in India. Mindful of this reality, TCS launched its UDAAN program, which offers experiential, activity-based learning over 14 weeks to help youngsters get access to employment opportunities. Facilitated by the National Skill Development Corporation, UDAAN is helping the youth in Jammu and Kashmir improve their employability. Of the 743 youngsters that have undergone training, 675 have been offered job opportunities with TCS. Another program, Empower, focuses on enhancing spoken skills and basic computer-related knowledge. It has benefited nearly 2,178 support staff who have been employed and other organizations across 14 Indian cities. Children from marginalized communities need more than just classroom sessions to get a well-rounded education. So, TCS sponsors the education of students living in hostels run by the Manuski Center in Pune. We also fund subject-wise tuition classes, water filters, computers, and Wi-Fi facilities at the center. A similar initiative in villages on the outskirts of Mumbai has given nearly 1,300 tribal children access to volunteer-led English and computer science lessons, subject-wise laboratories, computers, printers, and scanners. With knowledge of programming languages being an imperative to succeed in a Digital economy, TCS has developed LaunchPad, an animated series that uses gamification to teach programming logic in C++ and Python to school students. Since 2016, the program has reached over 5,700 students across India, Muscat, and Singapore. A similar program, InsighT, was launched in Chennai in 2006 to help higher secondary school students understand programming and application development. Having supported over 12,700 students since inception, InsighT was taken on the cloud in 2016 due to the growing demand for face-to-face sessions. Corporate Sustainability Report 111 # Annual Report 2016-17 After funding the construction of toilets in 1,472 schools across the country - reaching over 80,757 girl students - under the Prime Minister's Swachh Bharat in FY16, TCS is currently supporting sanitation awareness programs and the maintenance of the toilets. # TCS sponsors the educational infrastructure for students living in hostels run by the Manuski Center in Pune To facilitate resource sharing and collaboration among young entrepreneurs, we set up the Digital Impact Square (DISQ) -- an open, social innovation center for students, start-up owners, and budding entrepreneurs from across the country. A select group of innovators receive sponsorship to look for ways to solve India's pressing social problems through Digital technology. In our continuing effort to align science and engineering education with the needs of the industry, we have launched an MSc program in Big Data Analytics in partnership with four leading institutes in India. Eighty students have enrolled in the first batch. Another brick-and-mortar initiative was the Kohli Research Block at the Kohli Center on Intelligent Systems (KCIS), IIIT Hyderabad. Inaugurated on January 16, 2017, this 60,000-sq-ft center is dedicated to research activities in robotics, natural language processing, and cognitive sciences. # Health and Sanitation Efforts After implementing a highly acclaimed system to cut wait times for OPD patients at India's premier medical institution, the All India Institute of Medical Sciences (AIIMS). In 2016, TCS has initiated a similar transformation at the Tata Medical Center (TMC), Kolkata. We have deployed our Hospital Management System (HMS) at TMC and the Cancer Institute (CI), Chennai, to deliver integrated patient treatment. In FY17, TCS upgraded CI's Digital infrastructure to handle the increasing load of users and transactions. The benefits to patients were immediate: faster access to consultations, tests, and reports. The hospital can now focus on patient care instead of documentation. # Overseas Initiatives To encourage schoolchildren to pursue higher education in the science, technology, engineering, and mathematics (STEM) fields, TCS has implemented student engagement programs across several countries. In North America, our flagship program goIT continues to scale well (page 12). TCS is leading cross-sector efforts to expand diversity and ensure access to computer science education, including its founding partnership of STEM mentoring programs such as US 2020 and Million Women Mentors, and our ongoing work with partners such as NPower, NCWIT, Boys Scouts of America, and STEMconnector. Over 3,000 TCS volunteers supported these programs in FY17, reaching over 17,600 students. Additionally, over 300,000 people benefited through TCS' leadership in national initiatives, STEM partnerships, and pro bono tech platforms. On December 1, 2016, MWM crossed the one million mentor pledges milestone, and has already engaged over 650,000 mentor-mentee relationships. Meanwhile, the goIT program has taken wing and expanded across the Atlantic to Finland, Germany, and Sweden, and has so far reached more than 1,500 young people in direct partnerships with local schools. |
In each geography, the implementation of the program was tailored to fit local needs. One goIT success story is currently unfolding in Germany. At Frankfurt's Edith-Stein-Schule Antoniushaus Hochheim, a school catering to differently-abled students, identical twins, Dominik and Michael, started small at goIT, tinkering with LEGO robots and the like. But two sessions in, the wheelchair-bound brothers, who had never programmed before, were hooked. Both the brothers have received student internships with TCS. In the UK, TCS has been running its STEM initiative, IT Futures, under which we conduct workshops in schools and universities, develop online resources, and offer employment and internships to participants. In 2017, TCS created a tablet-based tool called e-partogram. Prescribed by the World Health Organization, this tool is used by workers associated with the Indian Institute of Public Health in Odisha to reduce infant and maternal mortality by identifying and prioritizing critical cases. Wheelchair-bound identical twins, Dominik, and Michael from Frankfurt received student internships with TCS after attending our goIT program. 112 Corporate Sustainability Report reached over 170,000 young people since inception, with 84,000 beneficiaries in FY17. "I always shrugged off the idea of choosing a career in IT, because I felt it wasn't for me. But TCS' workshops really showed me the practical side of IT and technology," says Miqdad, a sixth form grade from London's Stepney Green Maths, Computing and Science College. To keep young minds like Miqdad engaged, TCS also launched a series of events called Spark Salon. This program showcases thought-provoking perspectives on the role of technology in sustainability. In Latin America, TCS runs the ENABLE program, an employment-related initiative that provides technical and soft skills training to underprivileged youth. In FY17, 24 ENABLE programs touched the lives of over 1,500 people across eight countries. The flagship goIT program has also been activated in this geography. In Asia-Pacific, TCS associates supported Operation Smile in China, helping 85 underprivileged children undergo cleft lip surgeries in FY17. In Hong Kong, TCS partnered with the Young Men's Christian Association (YMCA) to improve the quality of life of 293 underprivileged women and children. In the Philippines, we ran programs to support local schools that lack government funding, benefiting 3,500 students in FY17. In Australia, goIT has changed the lives of over 8,000 students and 531 teachers. Several tree-planting drives have also been held in schools and local communities across the Philippines, Malaysia, Thailand, and China. In South Africa, TCS partnered with the Department of Public Enterprise to set up an IT learning center at Lisisiki in the Eastern Cape. This IT center is intended for use by multiple schools to provide children with basic IT skills, and to train unemployed women and youngsters in the local community. Every year, TCS associates contribute about 200 hours to train children in basic IT concepts in and around Johannesburg. With all these initiatives, Tata Consultancy Services continues to change the lives of people across the globe - both within the company and outside. # Employee Engagement Employee engagement is a key part of TCS' Environmental Sustainability Roadmap. To sensitize associates toward nature and the need to conserve resources, we organize induction training and on-site activities, and regularly send out awareness emails. Over 12 lakh training hours were spent on health, safety, and the environment in FY17. TCS also observed 'Tata Sustainability Month' in June 2016, with over 1.6 lakh associates participating. As part of this initiative, more than 26,000 LED bulbs were supplied to 7,221 employees with the help of Energy Efficiency Services Ltd, and as part of the Ujala initiative of the Government of India. More than 20,000 people were also engaged beyond TCS boundaries through exhibitions and sessions at school and colleges. # Planet While plastic is not biodegradable, it can be recycled and reused. As part of a pilot program, TCS set up a PET bottle-crushing biocrux machine within its Pune campus in January 2017. These machines help convert PET bottles into flakes, which are used to create recycled products, or are absorbed for further industrial use. Since its installation, the biocrux machine has compacted 24,337 bottles, weighing a total 402 kg. The benefits are manifold -- this not just helps reduce emissions, and the Company's carbon footprint as a result, but also ensures TCS sends 'zero waste to landfills.' Both these are commitments to sustainability that we have made, and continue to abide by, among other components of our environment management plan. |
And both TCS and our supply chain partners are held to the same high standards through a series of programs. (See Exhibit 1 and 2.) Sustainability is a key criterion for selecting vendors and maintaining ongoing relationships with them. Compliance to legal requirements is set as the minimum requirement for business. |Green|Assess: Based on the vendor risk level and engagement requirement, conduct assessment ranging from desktop to regular site audits.| |---|---| |Climate|Engage: Based on the risk level assigned in Step 3, draw the vendor engagement plan at all stages from release of tender till on-boarding.| |Beyond Compliance|Assign overall risk level and impact type: Prioritize based on the risk level assigned as an outcome of Step and ascertain whether impact on TCS is direct or indirect.| |Focus|Conduct risk assessment: Check for environmental, social, and safety risks for each vendor and product category.| | |Evaluate the vendor/product portfolio and prioritize.| # Exhibit 1: Environmental Management at TCS # Exhibit 2: Steps for Supply Chain Sustainability [1] Data for all geographies. Corporate Sustainability Report 113 # Annual Report 2016-17 # Energy Conservation As part of our energy conservation plans, we aim to halve the company's carbon footprint by 2020, with FY08 taken as the base year. Energy consumption is the key contributor to TCS' carbon footprint, with purchased electricity accounting for 90% of our total consumption. To achieve this carbon target, TCS has formulated a detailed plan of action on energy and carbon management, focusing on four key levers: green buildings, efficient operations, green IT, and use of renewable energy. The foundation to better energy use is set with green infrastructure, designed as per green building standards for resource efficiency. Currently, over 50% of the total real estate portfolio of the Company is certified green building space, and 80% of TCS-owned real estate certified by the Indian Green Building Council (IGBC) or LEED. As part of its remote energy monitoring and control initiative, TCS has completely digitized the energy monitoring process for over 135 locations in India and 23 key data centers. A centralized Resource Operations Center at Kochi helps monitor and streamline energy consumption with real-time analysis of usage patterns. Our efforts in energy conservation have won accolades. Four TCS facilities -- Garima Park, Gandhinagar; Deccan Park, Hyderabad; New Campus, Kochi; and Synergy Park, Hyderabad -- won awards for energy management at the 17th National Award for Excellence in Energy Management 2016, organized by the Confederation of Indian Industries. Apart from conventional sources of electricity, we also source power from rooftop solar panels and renewable energy purchased from third-party providers. We are targeting a 20% usage of renewable energy by 2020. Towards this, we are exploring more procurement from third-party providers, and also increasing in-house generation. In FY17, we reached the 7.2% mark, remaining on track to achieve the 2020 target. Our concerted efforts resulted in the reduction of our overall energy consumption by 8.3% over FY16, and 49.1% over baseline year FY08. Our combined GHG emission (Scope 1 + Scope 2) was 1.62 tCO2e/FTE, 49.1% less than the baseline year 2008, and 9.72% less than the last reporting year. # Water Conservation All our new facilities are built for water conservation to ensure 100% treatment of sewage and rainwater harvesting. In FY17, consistent water management measures have helped reduce per capita fresh water consumption by 14.6% over baseline year FY08, and flattish compared to FY16. TCS recycled 7.5 mn kL of water in FY17. Implementation of rooftop collection systems, storage tanks, and recharge trenches and pits has led to a 25% increase in the rainwater harvesting potential at TCS sites in FY17 over the previous year. # Waste Reduction and Reuse Being an IT services and consulting organization, TCS does not produce industrial waste. Instead, the emphasis is on reducing municipal solid waste, as well as electronic and electrical waste. There is also a relatively smaller proportion of potentially hazardous wastes, such as lead-acid batteries and waste lube oil. TCS' waste management practices (Exhibit 3) seek to ensure that less than 5% waste is sent to landfills by 2020 by ensuring segregation at source, reuse, and recycle wherever possible. |
|On-site composting and/or digestion sent to piggeries as feed|Food and garden waste|Disposed through government authorized recyclers in compliance with local regulations| |---|---|---| |Printer and toner cartridges|Sent back to the manufacturer under product take-back arrangement| | |Paper and mixed dry waste|Paper - sent for recycling|Mixed dry waste - sent to scrap dealers or municipal disposal| In FY17, 27.4% of the total wet waste generated was treated through onsite composting or bio-digester treatment. A total of 185.5 ton of compost was generated from garden waste in FY16, helping TCS avoid the use of chemical fertilizers, and the resultant soil and groundwater pollution. As for e-waste, in FY17, 25,623 items of redundant equipment were disposed of through government-authorized handlers or recyclers, in accordance with the regulations of each country. For India operations, hazardous wastes (as defined by regulations) are handled and disposed of as per the Hazardous Waste (Management and Handling) Rules, 2008, only through government-authorized vendors. As a result of TCS' focus on waste reduction, per capita paper consumption has reduced by 19.8% over the prior year, and 83.6% over the baseline. The success of this drive can be attributed to the awareness created among associates, and the enforcement of printing discipline through automated and manual means. Paper waste is carefully segregated, shredded, and sent for recycling. In some cases, waste paper is sent to NGOs, which supply stationery items such as notepads and files made from recycled paper back to TCS. In FY17, TCS continued to achieve 100% recycling of its paper waste. [2] Data given is only for India, since most overseas locations are multi-occupancy facilities, where waste handling and disposal is handled by the building authority. # Business Responsibility Report TCS Synergy Park, Hyderabad # Annual Report 2016-17 This section is as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Business Responsibility Report 2016-17 A more detailed Sustainability Report for the year FY17 will be published shortly on our website: www.tcs.com. # Section A: General information about the company 1. Corporate Identity Number (CIN) of the Company: L22210MH1995PLC084781 2. Name of the Company: Tata Consultancy Services Limited 3. Registered address: 9th Floor, Nirmal Building, Nariman Point, Mumbai - 400 021, India 4. Website: www.tcs.com 5. E-mail id: [email protected] 6. Financial Year reported: April 1, 2016 to March 31, 2017 7. Sector(s) that the Company is engaged in (industrial activity code-wise): |ITC Code|Product Description| |---|---| |85249009|Computer Software| 8. List three key products / services that the Company manufactures / provides (as in balance sheet): Consulting and IT Services, IT Infrastructure Services, and Business process services 9. Total number of locations where business activity is undertaken by the Company: 141 Solution Centers Number of International Locations (Provide details of major 5): |Top 5 regions|Number of Locations| |---|---| |North America|7| |Continental Europe|3| |UK & Ireland|7| |APAC|9| |LATAM|8| 10. Number of National Locations: 105 Markets served by the Company - Local / State / National / International: North America, Latin America, United Kingdom & Ireland, Continental Europe, Asia Pacific, Middle East & Africa, and India # Section B: Financial details of the company 1. Paid up Capital (INR): 197 Crore 2. Total Turnover (INR): 1,17,966 Crore 3. Total profit after taxes (INR): 26,289 Crore 4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%): 1.7% of average profit for previous three years in respect of standalone TCS (India initiatives only) 5. Category (CSR in India only): |Category|Amount (Crore)| |---|---| |Education & Skill Building|90.6| |Health & Wellness|88.3| |Restoration of Heritage Site|0.2| |Environmental Sustainability|0.6| |Contribution to TCS Foundation|200.0| |Total|379.7| 6. List of activities in which expenditure in 4 above has been incurred: Including overseas spend, the Company's total spending on Corporate Social Responsibility is ` 437 Crore # Section C: Other details 1. Does the Company have any Subsidiary Company/ Companies? Yes 2. Do the Subsidiary Company/ Companies participate in the BR Initiatives of the parent company? Yes. 22 subsidiaries participated 3. Do any other entity/entities (e.g. suppliers, distributors, etc.) that the Company does business with participate in the BR initiatives of the Company? No # Section D: BR information 1. Details of Director/Directors responsible for BR Details of the Director/Director responsible for implementation of the BR policy/policies: The Corporate Social Responsibility (CSR) Committee of the Board of Directors is responsible for implementation of BR policies. The members of the CSR Committee are as follows: |DIN Number|Name|Designation| |---|---|---| |00121863|Mr N. Chandrasekaran|Chairman| |00548091|Mr O.P. |
Bhatt|Independent Director| |06365813|Mr Rajesh Gopinathan|Chief Executive Officer and Managing Director| |07121802|Ms Aarthi Subramaniam|Executive Director| 2. Details of the BR head: Name: Mr. Ajoyendra Mukherjee Designation: Executive Vice President & Global Head HR Telephone number: 022 67789999 E-mail id: [email protected] # 2. Principle wise (as per NVGs) BR Policy/policies The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) released by the Ministry of Corporate Affairs has adopted nine areas of Business Responsibility. These briefly are as follows: - P1 Business should conduct and govern themselves with ethics, Transparency and Accountability - P2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle - P3 Businesses should promote the wellbeing of all employees - P4 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalised - P5 Businesses should respect and promote human rights - P6 Business should respect, protect, and make efforts to restore the environment - P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner - P8 Businesses should support inclusive growth and equitable development - P9 Businesses should engage with and provide value to their customers and consumers in a responsible manner |S.N. Questions|P1|P2|P3|P4|P5|P6|P7|P8|P9| |---|---|---|---|---|---|---|---|---|---| |1 Do you have a policy / policies for....|Y|Y|Y|Y|Y|Y|Y|Y|Y| |2 Has the policy been formulated in consultation with the relevant stakeholders?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |3 Does the policy conform to any national/international standards?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |4 Has the policy been approved by the Board? If yes, has it been signed by MD/owner/CEO/appropriate Board Director?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |5 Does the company have a specified committee of the Board/Director/Official to oversee the implementation of the policy? Indicate the link for the policy to be viewed online.|Y*|Y*|Y*|Y**|Y*|Y***|Y*|Y*|Y*| |6 Has the policy been formally communicated to all relevant internal and external stakeholders?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |7 Does the company have in-house structure to implement the policy/policies?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |8 Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders' grievances related to the policy/policies?|Y|N|Y|N|N|Y|N|N|Y| |9 Has the company carried out independent audit/evaluation of the working of this policy by an internal or external agency?|Y|Y|Y|Y|Y|Y|Y|Y|Y| * Tata Code of Conduct (https://www.tcs.com/tata-code-of-conduct); ** CSR Policy (http://sites.tcs.com/corporate-sustainability/corporate-social-responsibility-policy); *** Environment Policy (http://sites.tcs.com/corporate-sustainability/environmental-policy) # 3. Governance related to BR (a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO meet to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year: Within 3 months. The Board meets 7-8 times a year (b) Does the Company publish a BR or Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published? Yes, the Company publishes its Sustainability Report annually. The hyperlink is: http://sites.tcs.com/corporate-sustainability/archive-of-annual-sustainability-reports File: AR_TCS_2016_2017.md # Section E: Principle-wise performance # Principle 1 1. Does the policy relating to ethics, bribery, and corruption cover only the company? No Does it extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others? Yes 2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so: 129 ethics concerns from various stakeholders were received in the year FY17. 123 (95%) of these were satisfactorily resolved. The remaining concerns are under review. Business Responsibility Report 117 # Annual Report 2016-17 # Principle 2 1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities: Three examples of work done by TCS that results in social and environmental good are: - (a) Reduction of emissions from thermal plants (See Page 19) - (b) Reduction in electricity consumption at TCS centers (See Page 14) - (c) mKrishi system that empowers farmers with data to improve farming productivity (More details online - https://goo.gl/w8Ysws) 2. 1. (a) Reduction during sourcing/production/ distribution achieved since the previous year throughout the value chain? Not applicable 2. (b) Reduction during usage by consumers (energy, water) has been achieved since the previous year?: See Page 14 (Reimagining Energy Management) 3. Does the company have procedures in place for sustainable sourcing (including transportation)? Yes 1. (a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so. 100% of our suppliers sign the Supplier Code of Conduct and the Tata Code of Conduct. Our policy on supply chain sustainability can be found here: http://sites.tcs.com/corporate-sustainability/sustainable-supply-chain-policy. |
More details of our framework are provided in our Corporate Sustainability Report, which forms part of this Annual Report. 4. Has the company taken any steps to procure goods and services from local and small producers, including communities surrounding their place of work? Yes 1. (a) If yes, what steps have been taken to improve the capacity and capability of local and small vendors? Two vendors from the marginalised community commissioned and empanelled with TCS under the CSR supplier diversity and affirmative action initiatives continue to work with TCS. Under the BridgeIT program, TCS has trained digital entrepreneurs who have established themselves as key resources in the villages within which they operate. The Company has worked to open up new avenues and provide opportunities to the entrepreneurs to utilize their skills in an effective manner, including providing them the opportunity to be part of Jagriti Yatra, the government initiative of 'building India through enterprise'. To enhance livelihood options in Panvel, India, TCS associates have trained 45 women in making eco-friendly jute bags through the 'Women Empowerment Programme'. We procure those bags for distribution at various marketing events organized by TCS. 5. Does the company have a mechanism to recycle products and waste? If yes, what is the percentage of recycling of products and waste (separately as 10%). Also, provide details thereof, in about 50 words or so: Yes. For more details please refer Corporate Sustainability Report, which forms part of this Annual Report. # Principle 3 1. Please indicate the Total number of employees: 3,87,223 as on March 31, 2017 2. Please indicate the Total number of employees hired on temporary/ contractual/casual basis: 14,525 as on March 31, 2017 3. Please indicate the Number of permanent women employees: 1,34,542 as on March 31, 2017 4. Please indicate the Number of permanent employees with disabilities: 525 5. Do you have an employee association that is recognized by the management? Yes 6. What percentage of your permanent employees are members of this recognized employee association? 0.02% 7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year: 65 complaints of sexual harassment, of which four are pending. No complaints received in other areas. 8. What percentage of your under mentioned employees were given safety & skill upgradation training in the last year? - (a) Permanent Employees - 98% - (b) Permanent Women Employees - 98% - (c) Casual/Temporary/Contractual Employees - 87% - (d) Employees with Disabilities - 87.8% # Principle 4 1. Has the company mapped its internal and external stakeholders? Yes 2. Out of the above, has the company identified the disadvantaged, vulnerable and marginalized stakeholders? Yes 3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable, and marginalized stakeholders? If so, provide details thereof, in about 50 words or so: Yes. TCS has several programs designed to benefit marginalized stakeholders. Please refer Corporate Sustainability Report, which forms part of this Annual Report, for details of BridgeIT, Advanced computer training for the visually impaired, Adult Literacy Program, UDAAN and BPS/IT Employability Programs. 118 Business Responsibility Report # Principle 5 1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others? The policy is applicable to TCS, its subsidiaries and vendors. 2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management? None was received. # Principle 6 1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/others? The policy is applicable to TCS, its subsidiaries and vendors. 2. Does the company have strategies/initiatives to address global environmental issues such as climate change, global warming, etc? Y/N. If yes, please give hyperlink for webpage etc: Yes. For more details please refer Corporate Sustainability Report, which forms part of this Annual Report. 3. Does the company identify and assess potential environmental risks? Yes. 4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed? Not applicable. 5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc: Yes. |
For more details please refer Corporate Sustainability Report, which forms part of this Annual Report. 6. Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported? Yes. 7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year. None. # Principle 7 1. Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with: Yes. Some organizations are - National Association of Software and Services Companies (NASSCOM), Confederation of Indian Industries (CII), All India Management Association (AIMA), Federation of India Chambers of Commerce and Industry (FICCI), US India Business Council (USIBC), and US Chamber of Commerce. 2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/ No; if yes, specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others): Yes. TCS participated in consultations on Governance and Administration, Sustainable Business Principles, Inclusive Development Policies (with a focus on skill building and literacy), Economic Reforms and Tax, and other legislations. TCS uses the Tata Code of Conduct as a guide for its actions in influencing public and regulatory policy. # Principle 8 1. Does the company have specified programmes/initiatives/ projects in pursuit of the policy related to Principle 8? If yes, details thereof? Yes. For more details please refer Corporate Sustainability Report, which forms part of this Annual Report. 2. Are the programmes/projects undertaken through in-house team/own foundation/external NGO/government structures/any other organization? TCS uses all of these modes. 3. Have you done any impact assessment of your initiative? Yes. 4. What is your company's direct contribution to community development projects - Amount in INR and the details of the projects undertaken? Rs 437 crore. For more details please refer Corporate Sustainability Report, which forms part of this Annual Report. 5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words or so. Yes. Initiatives conducted under CSR are tracked to determine the outcomes achieved and the benefits to the community. Internal tracking mechanisms, monthly reports, and follow-up field visits, and telephonic and email communications are regularly carried out. The Company has engaged highly trained employees to drive and monitor the CSR activities. # Principle 9 1. What percentage of customer complaints/consumer cases are pending as on the end of financial year? 10.8% of complaints are pending resolution. 2. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/No/N.A./Remarks (additional information): Not applicable. 3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anticompetitive behaviour during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so: No. 4. Did your company carry out any consumer survey/ consumer satisfaction trends? Yes. Business Responsibility Report 119 # Annual Report 2016-17 # Awards and Recognition # Business - Ranked as one of the Top 3 Global Brands in IT Services by Brand Finance - Ranked among Top 100 US Brands in the annual 'Top 500 US Brands' survey by Brand Finance® for second consecutive year - Awarded the Business Superbrands status in the UK for the third year in a row - Won Three Silver Stevies® at 2016 American Business Awards, for Brand Experience of the Year (Business-to-Business), Mobile Marketing Campaign of the Year and Corporate Social Responsibility Program of the Year. |
- Ranked Number One on the 2016 IDC Financial Insights FinTech Rankings Top 100 - TCS Remote Energy Management Solution won the 2016 IoT Award in the Connected Building category from IoT Evolution magazine - Won four awards at the CII's 17th National Awards for Excellence in Energy Management 2016 - Won the Top Employee Engagement and Social Responsibility Awards at the North American Employee Engagement Awards # Partner - Honored with Best Supplier Award by Infineon - Conferred with the Oracle Cloud Elite designation within the OPN Cloud Program; awarded the Oracle Excellence Award for the third consecutive year, named this time as the OPN Cloud Program Solution: PaaS Partner of the Year - Awarded '2016 Digital Innovator of the Year' by GE Digital - Recognized by Pega Japan with the Best Partner Award 2016 - Awarded a Gold Stevie for the Interview Ready Mobile Learning App at International Business Awards 2016 - Achievers Award for '50 Most Engaged Workplaces in North America' for the fourth consecutive year - Won 'Best Supplier' award from NXP - Awarded the 'Run SAP® Partner of the Year' Pinnacle Award for the fourth consecutive year # Leadership - Named Technology Company of the Year at the 2016 Asia CEO Awards - Ignio™ recognized as the 'Best Enterprise Application for AI' by The AIconics, the independently judged awards celebrating innovation - Won the Asian Banker Technology Innovation Award under the Data & Analytics Project category - Won the National Intellectual Property Award and WIPO Award 2016 for Innovative Enterprise # Sustainability - mKRISHI® won the National Contest for Social Innovation 2016 hosted by Ministry of External Affairs along with NITI Aayog - Named the Most Socially Responsible Company of the Year and the Industry Champion of the Year at 2016 Asia Corporate Excellence and Sustainability (ACES) Awards - Awarded the Gold rating certificate by EcoVadis for the third time in a row - Included in the Global Dow Jones Sustainability Index 2016 for the fourth consecutive year # Employer - Certified as a 'Top Employer in North America 2017' by the Top Employers Institute, third time in a row; Top UK Employer fifth time in a row; rated Top # Additional Recognitions - Polled top honors in the Institutional Investor's 2016 All Asia Executive Team rankings in all five categories: Best CEO, Best CFO, Best IR Professional, Best Investor Relations and Best IR Website - Then CEO N. Chandrasekaran awarded the 'Business Leader of the Year award' at the ET Corporate Excellence Awards 2016 - Then CFO, Rajesh Gopinathan, awarded the Overall Champion CFO at the Yes Bank-BW Best CFO Awards 2016 # 120 Awards and Recognition # Consolidated Financial Statements TCS Sahyadri Park, Pune # Annual Report 2016-17 # INDEPENDENT AUDITORS' REPORT # TO THE MEMBERS OF TATA CONSULTANCY SERVICES LIMITED # Report on the Consolidated Ind AS Financial Statements We have audited the accompanying consolidated Ind AS financial statements of Tata Consultancy Services Limited ('the Company') and its subsidiary companies (the Company and its subsidiary companies together referred to as 'the Group') comprising the Consolidated Balance Sheet as at March 31, 2017, the Consolidated Statement of Profit and Loss (including other comprehensive income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information ('the consolidated Ind AS financial statements'). # Management's Responsibility for the Consolidated Ind AS Financial Statements The Company's Board of Directors is responsible for the preparation of these consolidated Ind AS 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 including other comprehensive income, consolidated changes in equity and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act. |
The respective Board of Directors of the Company and its subsidiary companies included in the Group 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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 Ind AS 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 the consolidated Ind AS financial statements by the Board of Directors of the Company. # Auditors' Responsibility Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. In conducting 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. 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 consolidated Ind AS 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 Ind AS financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated Ind AS 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 consolidated Ind AS 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 Board of Directors, as well as evaluating the overall presentation of the consolidated Ind AS financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in the 'Other Matter' below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements. # Opinion In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of reports of the other auditors on separate financial statements of the subsidiary companies referred to in the 'Other Matter' below, the aforesaid consolidated Ind AS 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, 2017, and their consolidated profit, consolidated total comprehensive income, consolidated changes in equity and consolidated cash flows for the year ended on that date. # Other Matter We did not audit the financial statements of 9 subsidiaries, whose financial statements reflect total assets of 10,572 crores as at March 31, 2017, total revenues of 17,102 crores and net cash inflows amounting to 640 crores for the year ended on that date, as considered in the consolidated Ind AS 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 Ind AS financial statements in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of Section 143(3) of the Act, insofar as it relates to the aforesaid subsidiaries is based solely on the reports of the other auditors. Our opinion on the consolidated Ind AS financial statements above, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors. |
122 I Consolidated Financial Statements # Report on Other Legal and Regulatory Requirements As required by Section 143(3) of the Act, based on our audit and on the consideration of the report of the other auditors on separate financial statements and the other financial information of the subsidiary companies, referred in the 'Other Matter' paragraph above, 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 Ind AS financial statements. 2. In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated Ind AS 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 (including other comprehensive income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements. 4. In our opinion, the consolidated Ind AS financial statements comply with the Indian Accounting Standards prescribed 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, 2017 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, 2017 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 separate 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 Company and its subsidiary companies incorporated in India. 7. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us: 1. The consolidated Ind AS financial statements disclose the impact of pending litigations on the consolidated financial position of the Group. 2. Provision has been made in the consolidated Ind AS 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. 4. The Company has provided requisite disclosures in the consolidated Ind AS financial statements as regards the holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated November 8, 2016 of the Ministry of Finance, during the period from November 8, 2016 to December 30, 2016 of the Group entities as applicable. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the relevant books of account maintained by those entities for the purpose of preparation of the consolidated Ind AS financial statements and as produced to us by the management of the respective Group entities. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W / W - 100018) P. R. RAMESH Partner Mumbai, April 18, 2017 (Membership No. |
70928) Consolidated Financial Statements I 123 # Annual Report 2016-17 # 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') 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, 2017 in conjunction with our audit of the consolidated Ind AS financial statements of the Company for the year ended and as at March 31, 2017. # 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 File: AR_TCS_2016_2017.md Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company and its subsidiary companies incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls over financial reporting. The Guidance Note and those Standards require that we comply with 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' judgement, 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 internal financial controls system over financial reporting of the Company and its subsidiary companies incorporated in India. # 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. # Opinion In our opinion to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors referred to in the Other Matter paragraph below, 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, 2017, based on the internal control over financial reporting criteria established by the respective companies considering the essential components of internal control stated in the Guidance Note. 124 I Consolidated Financial Statements # Other Matters 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 6 subsidiary companies, which are incorporated in India, is based solely on the corresponding reports of the auditors of such companies incorporated in India. Our opinion is not modified in respect of the above matters. For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W / W - 100018) P. R. RAMESH Partner Mumbai, April 18, 2017 (Membership No. 70928) Consolidated Financial Statements I 125 # Annual Report 2016-17 # Consolidated Balance Sheet as at March 31, 2017, 2016 and April 1, 2015 |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |ASSETS| | | | |Non-current assets| | | | |(a) Property, plant and equipment|10,057|9,971|8,641| |(b) Capital work-in-progress|1,541|1,670|2,762| |(c) Intangible assets|47|134|220| |(d) Goodwill|1,597|1,669|1,572| |(e) Financial assets| | | | |(i) Loans|3,449|2,472|1,581| |(ii) Other financial assets|825|1,325|1,234| |(f) Income tax assets (net)|4,789|4,465|4,094| |(g) Deferred tax assets (net)|2,828|2,908|2,633| |(h) Other assets|689|926|1,075| |Total non-current assets|22,726|25,883|24,065| |Current assets| | | | |(a) Inventories|21|16|15| |(b) Financial assets| | | | |(i) Trade receivables|41,636|22,684|22,479| |(ii) Unbilled revenue|24,073|20,440|1,501| |(iii) Cash and cash equivalents|5,351|3,597|3,992| |(iv) Other balances with banks|6,295|3,827|1,862| |(v) Loans|2,909|2,743|16,696| |(vi) Other financial assets|1,474|916|909| |(c) Income tax assets (net)|26|32|75| |(d) Other assets|2,276|2,174|2,083| |Total current assets|80,526|63,213|48,901| |TOTAL ASSETS|1,03,252|89,096|72,966| |EQUITY AND LIABILITIES| | | | |Equity| | | | |(a) Share capital|197|197|197| |(b) Other equity|86,017|70,875|55,856| |Equity attributable to shareholders of the Company|86,214|71,072|56,053| |Non-controlling interests|366|355|223| |Total Equity|86,580|71,427|56,276| |Non-current liabilities| | | | |(a) Financial liabilities| | | | |(i) Other financial liabilities|454|471|493| |(ii) Long-term borrowings|18(A)|19(A)|115| |(b) Employee benefit obligation|245|237|203| |(c) Provisions|39|40|94| |(d) Deferred tax liabilities (net)|919|805|540| |(e) Other liabilities|432|442|404| |Total non-current liabilities|2,160|2,100|2,018| |Current liabilities| | | | |(a) Financial liabilities| | | | |(i) Trade and other payables|6,279|7,541|8,832| |(ii) Other financial liabilities|200|113|186| |(iii)|1,550|2,364|1,245| |(b) Unearned and deferred revenue|1,398|1,359|1,062| |(c) Current income tax liabilities (net)|1,412|805|546| |(d) Employee benefit obligation|1,862|1,635|1,356| |(e) Provisions|66|115|103| |(f) Other liabilities|1,745|1,637|1,342| |Total current liabilities|14,512|15,569|14,672| |TOTAL EQUITY AND LIABILITIES|1,03,252|89,096|72,966| NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS 1-33 As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian O. P. Bhatt Chartered Accountants Chairman CFO Director Executive Director Director P. R. Ramesh Rajesh Gopinathan Ishaat Hussain V. Thyagarajan Prof. Clayton M Christensen Partner CEO and Managing Director Director Director Director N. Ganpathy Subramaniam Dr. Vijay Kelkar Aman Mehta Suprakash Mukhopadhyay Mumbai, April 18, 2017 COO and Executive Director Director Director Company Secretary 126 I Consolidated Financial Statements # Consolidated Statement of Profit and Loss for the years ended March 31, 2017 and 2016 |(crores)|Note|2017|2016| |---|---|---|---| |I. Revenue from operations| |1,17,966|1,08,646| |II. Other income (net)|22|4,221|3,084| |III TOTAL INCOME| |1,22,187|1,11,730| |IV. Expenses:| | | | |(a) Employee benefit expenses|23|61,621|55,348| |(b) Other operating expenses|24|24,034|22,621| |(c) Finance costs|25|32|33| |(d) Depreciation and amortisation expense| |1,987|1,888| |TOTAL EXPENSES| |87,674|79,890| |V. PROFIT BEFORE TAX| |34,513|31,840| |VI. Tax expense:| | | | |(a) Current tax|10|8,235|7,508| |(b) Deferred tax|10|(79)|(6)| |TOTAL TAX EXPENSE| |8,156|7,502| |VII. PROFIT FOR THE YEAR| |26,357|24,338| |VIII. |
OTHER COMPREHENSIVE (LOSS) / INCOME| | | | |(A) (i) Items that will be reclassified subsequently to the statement of profit and loss| | | | |(a) Net changes in fair values of investments other than equity shares carried at fair value through OCI| |740|82| |(b) Net changes in fair values of intrinsic value of cash flow hedges| |41|(73)| |(c) Net changes in fair values of time value of cash flow hedges| |3|(21)| |(d) Exchange differences on translation of financial statements of foreign operations| |(474)|402| |(ii) Income tax on items that will be reclassified subsequently to the statement of profit and loss| |(261)|(15)| |(B) (i) Items that will not be reclassified subsequently to the statement of profit and loss| | | | |(a) Remeasurement of defined employee benefit plans| |(208)|(114)| |(b) Net changes in fair values of investments in equity shares carried at fair value through OCI| |(20)|1| |(ii) Income tax on items that will not be reclassified subsequently to the statement of profit and loss| |2|7| |TOTAL OTHER COMPREHENSIVE (LOSS) / INCOME| |(177)|269| |IX. TOTAL COMPREHENSIVE INCOME FOR THE YEAR| |26,180|24,607| |Profit for the year attributable to:| | | | |Shareholders of the Company| |26,289|24,270| |Non-controlling interests| |68|68| |Total comprehensive income for the year attributable to:| | | | |Shareholders of the Company| |26,117|24,498| |Non-controlling interests| |63|109| |X. Earnings per equity share:- Basic and diluted ( )|26|133.41|123.18| |Weighted average number of equity shares (face value of 1 each)| |197,04,27,941|197,04,27,941| |XI. NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS| |1-33| | As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Aarthi Subramanian Director P. R. Ramesh Partner Rajesh Gopinathan CEO and Managing Director Ishaat Hussain Director V. Thyagarajan Director Prof. Clayton M Christensen Director N. Ganpathy Subramaniam COO and Executive Director Dr. Vijay Kelkar Director Aman Mehta Director Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2017 # Tata CONSULTANCY SERVICES LIMITED # Consolidated Statement of Changes in Equity for the years ended March 31, 2017 and 2016 # Annual Report 2016-17 # A. EQUITY SHARE CAPITAL (` crores) |Balance as at April 1, 2015|Changes in equity share capital during the year|Balance as at March 31, 2016| |---|---|---| |197|-|197| |Balance as at April 1, 2016|Changes in equity share capital during the year|Balance as at March 31, 2017| |197|-|197| # B. OTHER EQUITY (` crores) |Reserves and surplus|Items of other comprehensive income|Equity|Non-|Total| | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Capital|Securi-|Capital|General|Special|Retained|Statutory|Invest-|Cash flow|Foreign|attribut-|controlling|Equity| | | |75|1,919|413|8,245|-|43,904|120|3|131|(1)|1,047|55,856|223|56,079| | |Profit for the year|-|-|-|-|24,270|-|-|-|-|-|24,270|68|24,338| | |Other comprehensive income|-|-|-|-|(108)|-|56|(63)|(18)|361|228|41|269| | |Total comprehensive income|-|-|-|-|24,162|-|56|(63)|(18)|361|24,498|109|24,607| | |Dividend (including tax on dividend)|-|-|-|-|(9,479)|-|-|-|-|-|(9,479)|(36)|(9,515)| | |Transfer to reserves (Refer note 17)|-|-|110|2,304|-(2,479)|65|-|-|-|-|-|-|-| | |Realised gain on equity shares carried at fair value through OCI|-|-|-|-|5|-|(5)|-|-|-|-|-|-| | |Remeasurement of obligation to acquire non-controlling interests|-|-|-|-|-|-|-|-|-|-|-|59|59| | |Balance as at March 31, 2016|75|1,919|523|10,549|-|56,113|185|54|68|(19)|1,408|70,875|355|71,230| |Balance as at April 1, 2016|75|1,919|523|10,549|-|56,113|185|54|68|(19)|1,408|70,875|355|71,230| |Profit for the year|-|-|-|-|26,289|-|-|-|-|-|26,289|68|26,357| | |Other comprehensive income|-|-|-|-|(206)|-|464|37|2|(469)|(172)|(5)|(177)| | |Total comprehensive income|-|-|-|-|26,083|-|464|37|2|(469)|26,117|63|26,180| | |Dividend (including tax on dividend)|-|-|-|-|(10,947)|-|-|-|-|-|(10,947)|(26)|(10,973)| | |Transfer to reserves (Refer note 17)|-|-|-|-|(33)|33|-|-|-|-|-|-|-| | |Realised loss on equity shares carried at fair value through OCI|-|-|-|-|(20)|-|20|-|-|-|-|-|-| | |Transfer to Special Economic Zone re-investment reserve|-|-|-|376|(376)|-|-|-|-|-|-|-|-| | |Transfer from Special Economic Zone re-investment reserve on utilisation|-|-|-|(279)|279|-|-|-|-|-|-|-|-| | |Purchase of non-controlling interests|-|-|-|-|(28)|-|-|-|-|-|(28)|(26)|(54)| | |Balance as at March 31, 2017|75|1,919|523|10,549|97|71,071|218|538|105|(17)|939|86,017|366|86,383| # C. NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-33 # For and on behalf of the Board As per our report attached N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Suprakash Mukhopadhyay Company Secretary Dr. Vijay Kelkar Director Ishaat Hussain Director V. Thyagarajan Executive Director For Deloitte Haskins & Sells LLP P. R. Ramesh Partner Rajesh Gopinathan CEO and Managing Director N. Ganpathy Subramanian COO and Executive Director O.P Bhatt Director Prof. Clayton M. Christensen Director Aman Mehta Director Aarthi Subramanian Executive Director Mumbai, April 18, 2017 # Consolidated Statement of Cash Flows for the years ended March 31, 2017 and 2016 |(crores)|Note|2017|2016| |---|---|---|---| |I. CASH FLOWS FROM OPERATING ACTIVITIES|I. CASH FLOWS FROM OPERATING ACTIVITIES|I. CASH FLOWS FROM OPERATING ACTIVITIES|I. |
CASH FLOWS FROM OPERATING ACTIVITIES| |Profit for the year|Profit for the year|26,357|24,338| |Adjustments to reconcile profit and loss to net cash provided by operating activities:|Adjustments to reconcile profit and loss to net cash provided by operating activities:| | | |Depreciation and amortisation expense|Depreciation and amortisation expense|1,987|1,888| |Net gain on disposal of property, plant and equipment|Net gain on disposal of property, plant and equipment|(3)|(5)| |Income tax expense|Income tax expense|8,156|7,503| |Net gain on investments|Net gain on investments|(642)|(465)| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|125|135| |Interest expense|Interest expense|32|33| |Interest Income|Interest Income|(2,263)|(1,745)| |Dividend Income|Dividend Income|(1)|(11)| |Unrealised foreign exchange loss / (gain)|Unrealised foreign exchange loss / (gain)|52|(40)| |Operating profit before working capital changes|Operating profit before working capital changes|33,800|31,631| |Net change in:|Net change in:| | | |Trade receivables|Trade receivables|680|(2,936)| |Unbilled revenue|Unbilled revenue|(1,539)|(51)| |Loans and other financial assets|Loans and other financial assets|580|(798)| |Other assets and inventories|Other assets and inventories|(142)|(12)| |Trade and other payables|Trade and other payables|(841)|(2,039)| |Unearned and deferred revenue|Unearned and deferred revenue|80|262| |Other financial liabilities|Other financial liabilities|107|146| |Other liabilities|Other liabilities|444|484| |Cash generated from operations|Cash generated from operations|33,169|26,687| |Taxes paid|Taxes paid|(7,946)|(7,578)| |Net cash provided by operating activities|Net cash provided by operating activities|25,223|19,109| |II. CASH FLOWS FROM INVESTING ACTIVITIES|II. CASH FLOWS FROM INVESTING ACTIVITIES|II. CASH FLOWS FROM INVESTING ACTIVITIES|II. CASH FLOWS FROM INVESTING ACTIVITIES| |Bank deposits placed|Bank deposits placed|(2)|(64)| |Inter-corporate deposits placed|Inter-corporate deposits placed|(2,299)|(2,614)| |Purchase of investments *|Purchase of investments *|(1,21,423)|(1,16,847)| |Payment for purchase of property, plant and equipment|Payment for purchase of property, plant and equipment|(1,989)|(1,987)| |Purchase of intangible assets|Purchase of intangible assets|(1)|(3)| |Earmarked deposits placed with banks|Earmarked deposits placed with banks|-|(462)| |Proceeds from bank deposits|Proceeds from bank deposits|40|16,363| |Proceeds from inter-corporate deposits|Proceeds from inter-corporate deposits|3,918|1,154| |Proceeds from disposal / redemption of investments *|Proceeds from disposal / redemption of investments *|1,02,798|97,154| |Proceeds from disposal of property, plant and equipment|Proceeds from disposal of property, plant and equipment|36|22| |Proceeds from disposal of intangible assets|Proceeds from disposal of intangible assets|1| | |Proceeds from earmarked deposits with banks|Proceeds from earmarked deposits with banks|400|307| |Dividend received|Dividend received|1|11| |Interest received|Interest received|1,788|1,816| |Net cash used in investing activities|Net cash used in investing activities|(16,732)|(5,150)| |III. CASH FLOWS FROM FINANCING ACTIVITIES|III. CASH FLOWS FROM FINANCING ACTIVITIES|III. CASH FLOWS FROM FINANCING ACTIVITIES|III. CASH FLOWS FROM FINANCING ACTIVITIES| |Short-term borrowings (net)|Short-term borrowings (net)|87|(73)| |Dividend paid to non-controlling interests of subsidiaries (including dividend tax)|Dividend paid to non-controlling interests of subsidiaries (including dividend tax)|(26)|(36)| |Dividend paid (including dividend tax)|Dividend paid (including dividend tax)|(10,947)|(9,479)| |Purchase of non-controlling interests|Purchase of non-controlling interests|(54)|(60)| |Repayment of finance lease obligations|Repayment of finance lease obligations|(66)| | |Issue of shares to non-controlling interests|Issue of shares to non-controlling interests|-|2| |Interest paid|Interest paid|(20)|(20)| |Net cash used in financing activities|Net cash used in financing activities|(11,026)|(9,666)| |Net change in cash and cash equivalents|Net change in cash and cash equivalents|(2,535)|4,293| |Cash and cash equivalents at the beginning of the year|Cash and cash equivalents at the beginning of the year|6,295|1,862| |Exchange difference on translation of foreign currency cash and cash equivalents|Exchange difference on translation of foreign currency cash and cash equivalents|(163)|140| |Cash and cash equivalents at the end of the year|Cash and cash equivalents at the end of the year|3,597|6,295| |*Purchase of investments include 890 crores (March 31, 2016: 473 crores) and proceeds from disposal / redemption of investments include 726 crores (March 31, 2016: 197 crores) of TCS Foundation, formed for conducting corporate social responsibility activities of the Group.|*Purchase of investments include 890 crores (March 31, 2016: 473 crores) and proceeds from disposal / redemption of investments include 726 crores (March 31, 2016: 197 crores) of TCS Foundation, formed for conducting corporate social responsibility activities of the Group.|*Purchase of investments include 890 crores (March 31, 2016: 473 crores) and proceeds from disposal / redemption of investments include 726 crores (March 31, 2016: 197 crores) of TCS Foundation, formed for conducting corporate social responsibility activities of the Group.|*Purchase of investments include 890 crores (March 31, 2016: 473 crores) and proceeds from disposal / redemption of investments include 726 crores (March 31, 2016: 197 crores) of TCS Foundation, formed for conducting corporate social responsibility activities of the Group.| |IV. NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-33|IV. NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-33|IV. NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-33|IV. |
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-33| |As per our report attached For and on behalf of the Board|As per our report attached For and on behalf of the Board|As per our report attached For and on behalf of the Board|As per our report attached For and on behalf of the Board| |For Deloitte Haskins & Sells LLP|For Deloitte Haskins & Sells LLP|For Deloitte Haskins & Sells LLP|For Deloitte Haskins & Sells LLP| |N. Chandrasekaran|N. Chandrasekaran|Chairman| | |V. Ramakrishnan|V. Ramakrishnan|CFO| | |Dr. Ron Sommer|Dr. Ron Sommer|Director| | |Aarthi Subramanian|Aarthi Subramanian|Executive Director| | |O. P. Bhatt|O. P. Bhatt|Director| | |P. R. Ramesh|P. R. Ramesh|Partner| | |Rajesh Gopinathan|Rajesh Gopinathan|CEO and Managing Director| | |Ishaat Hussain|Ishaat Hussain|Director| | |V. Thyagarajan|V. Thyagarajan|Director| | |Prof. Clayton M Christensen|Prof. Clayton M Christensen|Director| | |N. Ganpathy Subramaniam|N. Ganpathy Subramaniam|COO and Executive Director| | |Dr. Vijay Kelkar|Dr. Vijay Kelkar|Director| | |Aman Mehta|Aman Mehta|Director| | |Suprakash Mukhopadhyay|Suprakash Mukhopadhyay|Company Secretary| | |Mumbai, April 18, 2017|Mumbai, April 18, 2017|Mumbai, April 18, 2017|Mumbai, April 18, 2017| # Annual Report 2016-17 # 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") provides consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of delivery centres around the globe. The Group's full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Consulting, Digital Enterprise Services, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON - Small and Medium Businesses, IT Infrastructure Services, IT Services and Platform Solutions. The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is TCS House, Raveline Street, Fort, Mumbai - 400001. As at March 31, 2017, Tata Sons Limited, the holding company owned 73.26% of the Company's equity share capital. The consolidated financial statements for the year ended March 31, 2017 were approved by the Board of Directors and authorised for issue on April 18, 2017. # 2. Significant Accounting Policies # (a) Statement of compliance In accordance with the notification issued by the Ministry of Corporate Affairs, the Group has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Previous periods have been restated to Ind AS. In accordance with Ind AS 101- First-time Adoption of Indian Accounting Standards, the Group has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 ("Previous GAAP") to Ind AS of Shareholders' equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended March 31, 2016. These consolidated financial statements have been prepared in accordance with Ind AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013. # (b) Basis of preparation The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. CMC Limited has been amalgamated with the Company with effect from April 1, 2015 in 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 amalgamated companies being under common control effect of merger is given retrospectively in accordance with Ind AS 103 - Business combination. # (c) Basis of consolidation The Company consolidates all entities which are controlled by it. The Company establishes control when; it has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect the entity's returns by using its power over the entity. Entities controlled by the Company are consolidated from the date control commences until the date control ceases. All inter-company transactions, balances and income and expenses are eliminated in full on consolidation. |
Changes in the Company's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Company's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. # (d) Business Combinations The Company accounts for its business combinations under acquisition method of accounting. Acquisition related costs are recognised in profit and loss as incurred. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the condition for recognition are recognised at their fair values at the acquisition date. Purchase consideration paid in excess of the fair value of net assets acquired is recognised as goodwill. Where the fair value of identifiable assets and liabilities exceed the cost of acquisition, after reassessing the fair values of the net assets and contingent liabilities, the excess is recognised as capital reserve. The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests' proportionate share of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity of subsidiaries. Business combinations arising from transfers of interests in entities that are under the common control are accounted at historical cost. # Notes forming part of the Consolidated Financial Statements The difference between any consideration given and the aggregate historical carrying amounts of assets and liabilities of the acquired entity are recorded in shareholders' equity. # (e) Use of estimates and judgements The preparation of consolidated financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses for the years presented. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected. Key source of estimation of uncertainty at the date of financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment of goodwill, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities. # Impairment of Goodwill The Group estimate the value in use of the cash generating unit (CGU) based on the future cash flows after considering current economic conditions and trends, estimated future operating results and growth rate and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The discount rate used for the CGU's represent the weighted-average cost of capital based on the historical market returns of comparable companies. # Useful lives of property, plant and equipment The Group reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. # Valuation of deferred tax assets The Group reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note 2(k). # Provisions and contingent liabilities 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 a 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. |
# (f) Revenue recognition File: AR_TCS_2016_2017.md The Group earns revenue primarily from providing information technology and consultancy services, including services under contracts for software development, implementation and other related services, licensing and sale of its own software, business process services and maintenance of equipment. The Group recognises revenue as follows: - Revenue from bundled contracts that involve supplying computer equipment, licensing software and providing services is allocated separately for each element based on their fair values. - Revenue from contracts priced on a time and material basis is recognised as services are rendered and as related costs are incurred. - Revenue from software development contracts, which are generally time bound fixed price contracts, is recognised over the life of the contract using the percentage-of-completion method, with contract costs determining the degree of completion. Losses on such contracts are recognised when probable. Revenue in excess of billings is recognised as unbilled revenue in the Balance sheet; to the extent billings are in excess of revenue recognised, the excess is reported as unearned and deferred revenue in the Balance sheet. - Revenue from Business Process Services contracts priced on the basis of time and material or unit of delivery is recognised as services are rendered or the related obligation is performed. - Revenue from the sale of internally developed and manufactured systems and third party products which do not require significant modification is recognised upon delivery, which is when the absolute right to use passes to the customer and the Group does not have any material remaining service obligations. - Revenue from maintenance contracts is recognised on a pro-rata basis over the period of the contract. - Revenue is recognised only when evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including the price is fixed or determinable, services have been rendered and collectability of the resulting receivables is reasonably assured. - Revenue is reported net of discounts, indirect and service taxes. # (g) Dividend income Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # (h) Leases # Finance lease 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 leases are 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. # Operating lease Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating lease. Operating lease payments are recognised on a straight line basis over the lease term in the statement of profit and loss, unless the lease agreement explicitly states that increase is on account of inflation. # (i) Cost recognition Costs and expenses are recognised when incurred and have been classified according to their nature. The costs of the Group are broadly categorised in employee benefit expenses, depreciation and amortisation and other operating expenses. Employee benefit expenses include employee compensation, allowances paid, contribution to various funds and staff welfare expenses. Other operating expenses mainly include fees to external consultants, cost of running its facilities, travel expenses, cost of equipment and software licenses, communication costs, allowances for delinquent receivables and advances and other expenses. Other expenses is aggregation of costs which are individually not material such as commission and brokerage, recruitment and training, entertainment etc. # (j) Foreign currency The functional currency of the Company and its Indian subsidiaries is the Indian rupee (₹) whereas the functional currency of foreign subsidiaries is the currency of their countries of domicile. Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are restated into the functional currency using exchange rates prevailing on the Balance sheet date. Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not translated. |
Assets and liabilities of entities with functional currency other than presentation currency have been translated to the presentation currency using exchange rates prevailing on the Balance sheet date. Statement of profit and loss has been translated using weighted average exchange rates. Translation adjustments have been reported as foreign currency translation reserve in the statement of changes in equity. # (k) Income taxes Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. # Current income taxes The current income tax expense includes income taxes payable by the Company, its overseas branches and its subsidiaries in India and overseas. The current tax payable by the Company and its subsidiaries in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. The current income tax expense for overseas subsidiaries has been computed based on the tax laws applicable to each subsidiary in the respective jurisdiction in which it operates. 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 and where the relevant tax paying units intends to settle the asset and liability on a net basis. # Deferred income taxes Deferred income tax is recognised using the Balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. 132 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements Deferred income tax asset are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. |
The Group recognises interest levied and penalties related to income tax assessments in finance costs. # (l) Financial instruments Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. # 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. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage. # Financial assets at amortised cost Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. # Financial assets at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Group has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit and loss are immediately recognised in statement of profit and loss. # Financial liabilities Financial liabilities are measured at amortised cost using the effective interest method. # Equity instruments An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Equity instruments recognised by the Group are recognised at the proceeds received net off direct issue cost. # Hedge accounting The Group designates certain foreign exchange forward, option and future contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. Consolidated Financial Statements I 133 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements The Group uses hedging instruments that are governed by the policies of the Company and its subsidiaries which are approved by their respective Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company and its subsidiaries. The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss. The effective portion of change in the fair value of the designated hedging instrument is recognised in other comprehensive income and accumulated under the heading cash flow hedge reserve. The Group separates the intrinsic value and time value of an option and designates as hedging instruments only the change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised in statement of other comprehensive income and accounted as a separate component of equity. Such amounts are reclassified into the statement of profit and loss when the related hedged items affect profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting. |
Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit or loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the statement of profit and loss. # (m) Property, plant and equipment Property, plant and equipment are stated at cost, less accumulated depreciation (other than freehold land) and impairment loss, if any. Depreciation is provided for property, plant and equipment so as to expense the cost over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis. The estimated useful lives are as mentioned below: |Type of asset|Method|Useful lives| |---|---|---| |Buildings|Straight line|20 years| |Leasehold improvements|Straight line|Lease term| |Plant and equipment|Straight line|10 years| |Computer equipment|Straight line|4 years| |Vehicles|Straight line|4 years| |Office equipments|Straight line|5 years| |Electrical installations|Straight line|10 years| |Furniture and fixtures|Straight line|5 years| Assets held under finance leases are depreciated over the shorter of the lease term and their useful lives. Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset are ready for its intended use. # (n) Goodwill and intangible assets Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than its carrying amount. Intangible assets purchased including acquired in business combination, are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any. Intangible assets consist of acquired contract rights, rights under licensing agreement and software licences and customer-related intangibles. Following table summarises the nature of intangibles and the estimated useful lives. Intangible assets are amortised on a straight line basis over its useful lives as given below: |Nature of intangible|Useful lives| |---|---| |Acquired contract rights|3-12 years| |Rights under licensing agreement and software licences|Lower of licence period and 2-5 years| |Customer-related intangibles|3 years| # Notes forming part of the Consolidated Financial Statements # (o) Impairment # (i) Financial assets (other than at fair value) The Group assesses at each date of Balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Group recognises lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. # (ii) Non-financial assets # (a) Tangible and intangible assets Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss. # (b) Goodwill CGUs 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 a CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any 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. |
# (p) Employee benefits # (i) Defined benefit plans For defined benefit plans, 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 other comprehensive income for the period in which they occur. Past service cost both vested and unvested is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits. The retirement benefit obligations recognised in the Balance sheet represents the present value of the defined benefit obligations 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) Defined contribution plans Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits. # (iii) Compensated absences 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 obligation at the Balance sheet date. # (q) 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 Group are carried at lower of cost and net realisable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads. # (r) Earnings per share Basic earnings per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive securities in any of the years presented. # 3. Explanation of transition to Ind AS The transition as at April 1, 2015 to Ind AS was carried out from Previous GAAP. The exemptions and exceptions applied by the Group in accordance with Ind AS 101 - First-time Adoption of Indian Accounting Standards, the reconciliations of equity and total comprehensive income in accordance with Previous GAAP to Ind AS are explained below. # Exemptions from retrospective application: The Group has applied the following exemptions: Business combinations The Company has elected to apply Ind AS 103 - Business Combinations retrospectively to past business combinations from April 1, 2013. # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # Reconciliations between Previous GAAP and Ind AS # (i) Equity reconciliation |( crores)|Note|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Equity under Previous GAAP attributable to:| | | | |Tata Consultancy Services Limited| |65,361|50,635| |Non-controlling interests| |502|1,128| |Equity under Previous GAAP| |65,863|51,763| |Amalgamation of subsidiary|a|-|(296)| |Adjusted equity under Previous GAAP| |65,863|51,467| |Dividend (including dividend tax)|b|6,406|5,649| |Effect of consolidation of employee welfare trusts|c|184|168| |Depreciation|d|(483)|(537)| |Obligation to acquire non-controlling interests|e|(189)|(240)| |Reorganisation of entities under common control|f|(167)|(167)| |Fair valuation of investments|g|86|10| |Tax adjustments including deferred tax on undistributed earnings|h|(243)|(25)| |Impact of retrospective application of Ind AS 103 to past business combinations|i|(29)|(47)| |Others| |(1)|(2)| |Equity under Ind AS| |71,427|56,276| |Attributable to:| | | | |Tata Consultancy Services Limited| |71,072|56,053| |Non-controlling interests| |355|223| # (ii) Total comprehensive income reconciliation |( crores)|Note|Year ended March 31, 2016| |---|---|---| |Net income under Previous GAAP attributable to:| | | |Tata Consultancy Services Limited| |24,292| |Non-controlling interests| |83| |Net income under Previous GAAP| |24,375| |Employee benefits|j|114| |Effect of consolidation of employee welfare trusts|c|15| |Depreciation|d|57| |Obligation to acquire non-controlling interests|e|(15)| |Fair valuation of investments|g|(2)| |Tax adjustments including deferred tax on undistributed earnings|h|(202)| |Others| |(4)| |Profit for the year under Ind AS| |24,338| |Other comprehensive income| |269| |Total comprehensive income under Ind AS| |24,607| |Attributable to:| | | |Tata Consultancy Services Limited| |24,498| |Non-controlling interests| |109| 136 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # (iii) Reconciliation of statement of cash flow There are no material adjustments to the statement of cash flows as reported under Previous GAAP. |
# Notes to reconciliations between Previous GAAP and Ind AS # (a) Amalgamation of subsidiary In the previous year, CMC ltd., a subsidiary merged with the company effective with the terms of the Scheme of amalgamation sanctioned by High Court of judicature at Bombay vide its order dated August 14, 2015 and High Court of judicature at Hyderabad through its order dated July 20, 2015. The Company issued 1,16,99,962 equity shares of ₹1 each to the non-controlling shareholders of CMC Limited pursuant to the Scheme of amalgamation without payment being received in cash. The difference between the nominal value of the shares issued and the carrying value of the non-controlling interests has been recorded in retained earnings. This has resulted in decrease in equity by ₹296 crores as on April 1, 2015. # (b) Dividend (including dividend tax) Under Ind AS, dividend to holders of equity instruments is recognised as a liability in the period in which the obligation to pay is established. Under Previous GAAP, dividend payable is recorded as a liability in the period to which it relates. This has resulted in an increase in equity by ₹6,406 crores and ₹5,649 crores as on March 31, 2016 and April 1, 2015 respectively. # (c) Effect of consolidation of employee welfare trusts Ind AS 110 - Consolidated Financial Statements defines control and establishes control as the main basis for consolidating the entities. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee, in light of which the employee welfare trusts of the Group are consolidated. Under Previous GAAP, these were not required to be consolidated. This has resulted in an increase in equity by ₹184 crores and ₹168 crores as at March 31, 2016 and April 1, 2015 respectively and increase in net profit by ₹15 crores for year ended March 31, 2016. # (d) Depreciation File: AR_TCS_2016_2017.md In April 2014, the Group revised its method of depreciation from written down value to straight-line basis. This change in method was retrospectively adjusted in accordance with Previous GAAP. Under Ind AS, the Group has elected to apply Ind AS 16 - Property, plant and equipment from the date of acquisition of property, plant and equipment and accordingly as a change in estimate, the change in method has been prospectively applied. This has resulted in a decrease in equity by ₹483 crores and ₹537 crores as on March 31, 2016 and April 1, 2015 respectively and increase in net profit by ₹57 crores for year ended March 31, 2016. # (e) Obligation to acquire non-controlling interests The Group under Ind AS 103 - Business Combinations has recognised a liability for the present value of the redemption amount towards call option and the non-controlling interest's put option which collectively contains an obligation for the Group to acquire non-controlling interest's equity ownership. Under Previous GAAP, these were not required to be recognised. This has resulted in a decrease in equity by ₹189 crores and ₹240 crores as on March 31, 2016 and April 1, 2015 respectively and decrease in net profit by ₹15 crores for year ended March 31, 2016. # (f) Reorganisation of entities under common control The Group under Ind AS 103 - Business Combinations has accounted the transfer of the shareholding of Tata Sons Limited in Tata America International Corporation to Tata Consultancy Services Limited on the historical cost basis and the consideration paid in excess of carrying cost of the entity, as on the date of transfer, has been recorded as reduction to equity. Under Previous GAAP, the transfer has been accounted for on fair value basis. This has resulted in a decrease in equity by ₹167 crores as on March 31, 2016 and April 1, 2015. # (g) Fair valuation of investments Under previous GAAP, current investments were measured at lower of cost or fair value and long term investments were measured at cost less diminution in value which is other than temporary, under Ind AS Financial assets other than amortised cost are subsequently measured at fair value. The Group holds investment in government securities with the objective of both collecting contractual cash flows which give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. |
# Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements The Group has also made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. This has resulted in increase in investment revaluation reserve by 82 crores and 4 crores as on March 31, 2016 and April 1, 2015 respectively, and increase in other comprehensive income by 51 crores for year ended March 31, 2016. Investment in mutual funds have been classified as fair value through profit and loss and fair value changes are recognised in profit or loss. This has resulted in increase in retained earnings of 4 crores and 6 crores as on March 31, 2016 and April 1, 2015 respectively, and decrease in net profit by 2 crores for year ended March 31, 2016. # (h) Tax adjustments including deferred tax on undistributed earnings Under Previous GAAP, in the consolidated financial statements, the tax expense of the parents and group companies were added line-by-line and no adjustments were made / additional deferred taxes recognised or reversed on consolidation. Under Ind AS, deferred taxes are computed for temporary differences between the carrying amount of an asset or liability in the Balance sheet and tax base. Consequently deferred tax on account of undistributed profits of the subsidiaries has been recognised in statement of profit and loss. Further tax adjustments are also made for deferred tax impact on account of differences between Previous GAAP and Ind AS. These adjustments have resulted in decrease in equity under Ind AS by 243 crores and 25 crores as on March 31, 2016 and April 1, 2015 respectively and decrease in net profit by 202 crores for year ended March 31, 2016. # (i) Impact of retrospective application of Ind AS 103 to past business combinations Under Previous GAAP, the business combination was accounted at the book value. Under Ind AS the acquiree's identifiable assets, liabilities and contingent liabilities that meet the condition for recognition are recognised at their fair values at the acquisition date. This has resulted in decrease in equity by 29 crores and 47 crores as on March 31, 2016 and April 1, 2015 respectively. # (j) Employee benefits Under previous GAAP, actuarial gains and losses were recognised in statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods. This has resulted in increase in net profit by 114 crores for year ended March 31, 2016. However the same does not result in difference in equity or total comprehensive income. # 4. Property, plant and equipment Property, plant and equipment consist of the following: |Description|Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office equipments|Electrical installations|Furniture and fixtures|Total (crores)| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2016|348|6,119|1,840|322|5,591|32|2,004|1,620|1,432|19,308| |Additions|-|598|183|73|835|2|136|113|123|2,063| |Disposals|-|(7)|(32)|-|(283)|(2)|(20)|(6)|(20)|(370)| |Translation exchange difference|-|(2)|(18)|-|(61)|-|(8)|(5)|(16)|(110)| |Cost as at March 31, 2017|348|6,708|1,973|395|6,082|32|2,112|1,722|1,519|20,891| |Description|Accumulated depreciation as at April 1, 2016|Depreciation for the year|Disposals|Translation exchange difference|Accumulated depreciation as at March 31, 2017| | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---| | | |(1,139)|(334)| |5|1|(1,467)| | | | | | | |(977)|(194)| | | | |18| |10|(1,143)| | | | | | | |(40)|(35)|-|-|(75)| | | | | | | | | | |(4,155)|(788)|(269)|44|(4,630)| | | | | |(21)| | | | | | |(5)|2|-|(24)| | | |(1,284)|(257)| | | | |18|5|(1,518)| | | | | | | | | | | | |(732)|(147)|5|3|(871)| | |(989)|(146)| |20|9|(1,106)| | | | | | | |Net carrying amount as at March 31, 2017|348|5,241|830|320|1,452|8|594|851|413|10,057| | | # Notes forming part of the Consolidated Financial Statements | |Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office equipments|Electrical installations|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2015|347|4,831|1,675|129|5,074|28|1,762|1,295|1,257|16,398| |Additions|-|1,285|186|193|655|8|245|335|194|3,101| |Disposals|-|(1)|(38)|-|(168)|(4)|(17)|(12)|(20)|(260)| |Translation exchange difference|1|4|17|-|30|-|14|2|1|69| |Cost as at March 31, 2016|348|6,119|1,840|322|5,591|32|2,004|1,620|1,432|19,308| |Accumulated depreciation as at April 1, 2015|-|(855)|(802)|(18)|(3,542)|(21)|(1,042)|(603)|(874)|(7,757)| |Depreciation for the year|-|(283)|(200)|(22)|(767)|(4)|(252)|(134)|(129)|(1,791)| |Disposals|-|-|29|-|168|4|17|7|18|243| |Translation exchange difference|-|(1)|(4)|-|(14)|-|(7)|(2)|(4)|(32)| |Accumulated depreciation as at March 31, 2016|-|(1,139)|(977)|(40)|(4,155)|(21)|(1,284)|(732)|(989)|(9,337)| |Net carrying amount as at March 31, 2016|348|4,980|863|282|1,436|11|720|888|443|9,971| |Net carrying amount as at April 1, 2015|347|3,976|873|111|1,532|7|720|692|383|8,641| (i) Buildings include 3 crores (March 31, 2016: 3 crores, April 1, 2015: 3 crores) being value of investment in shares of Co-operative Housing Societies and Limited Companies. (ii) Legal formalities relating to conveyance of buildings having net book value NIL (March 31, 2016: -* crores, April 1, 2015: 5 crores) are pending completion. *Amounts less than 0.50 crore. |
# Net carrying amount of property, plant and equipment under finance lease arrangements were as follows: | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Leasehold improvements|40|46|56| |Computer equipment|16|45|79| |Office equipments|2|1|3| |Furniture and fixtures|2|-|-| |Electrical installations|-|2|3| |Leased assets|60|94|141| # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 5. Intangible assets Intangible assets consist of the following: |Description|Rights under licensing agreement|Acquired contract rights|Customer-related intangibles|Total| |---|---|---|---|---| |Cost as at April 1, 2016|379|144|86|609| |Additions|-|1|-|1| |Disposals / Derecognised|-|(63)|-|(63)| |Translation exchange difference|(40)|(2)|(5)|(47)| |Cost as at March 31, 2017|339|80|81|500| |Accumulated amortisation as at April 1, 2016|(281)|(116)|(78)|(475)| |Amortisation for the year|(65)|(8)|(8)|(81)| |Disposals / Derecognised|-|62|-|62| |Translation exchange difference|35|1|5|41| |Accumulated amortisation as at March 31, 2017|(311)|(61)|(81)|(453)| |Net carrying amount as at March 31, 2017|28|19|-|47| |Description|Rights under licensing agreement|Acquired contract rights|Customer-related intangibles|Total| |---|---|---|---|---| |Cost as at April 1, 2015|364|141|80|585| |Additions|-|3|-|3| |Translation exchange difference|15|-|6|21| |Cost as at March 31, 2016|379|144|86|609| |Accumulated amortisation as at April 1, 2015|(208)|(106)|(51)|(365)| |Amortisation for the year|(66)|(10)|(21)|(97)| |Translation exchange difference|(7)|-|(6)|(13)| |Accumulated amortisation as at March 31, 2016|(281)|(116)|(78)|(475)| |Net carrying amount as at March 31, 2016|98|28|8|134| |Net carrying amount as at April 1, 2015|156|35|29|220| The estimated amortisation for each of the three fiscal years subsequent to March 31, 2017 is as follows: |Year ending March 31,|Amortisation expense| |---|---| |2018|36| |2019|7| |2020|4| | |47| # Notes forming part of the Consolidated Financial Statements # 6. Goodwill Goodwill consists of the following: | |(crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---|---| |Balance at the beginning of the year| |1,669|1,572| |Foreign currency exchange loss| |(72)|97| |Balance at the end of the year| |1,597|1,669| Goodwill of 531 crores (March 31, 2016: 577 crores) has been allocated to the TCS business in France. The estimated value-in-use of this CGU is based on the future cash flows using a 1.50% annual growth rate for periods subsequent to the forecast period of 5 years and discount rate of 8.01%. An analysis of the sensitivity of the computation to a change in key parameters (operating margin, discount rates and long term average growth rate), based on reasonably probable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount. The remaining amount of goodwill of 1,066 crores (March 31, 2016: 1,092 crores) (relating to different CGUs individually immaterial) has been evaluated based on the cash flow forecasts of the related CGUs and the recoverable amounts of these CGUs exceeded their carrying amounts. # 7. Investments Investments consist of the following: # (A) Investments - Non-Current | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Investments carried at fair value through profit or loss| | | | | |Mutual and other funds (unquoted)| |55|58|7| |(b) Investments carried at fair value through OCI| | | | | |Fully paid equity shares (quoted)| |-|-|4| |Fully paid equity shares (unquoted)| |141|169|162| |(c) Investments carried at amortised cost| | | | | |Government securities (quoted)| |132|101|55| |Corporate debentures and bonds (unquoted)| |16|15|25| | | |344|343|253| The market value of quoted investments is equal to the carrying value. # (B) Investments - Current | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Investment carried at fair value through profit or loss| | | | | |Mutual and other funds (unquoted)| |19,637|1,709|1,501| |(b) Investment carried at fair value through OCI| | | | | |Government securities (quoted)| |21,999|20,254|-| |(c) Investment carried at amortised cost| | | | | |Certificate of deposits (unquoted)| |-|491|-| |Corporate debentures and bonds (unquoted)| |-|25|-| | | |41,636|22,479|1,501| The market value of quoted investments is equal to the carrying value. # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 8. Loans Loans (unsecured) consist of the following: # (A) Long-term loans |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Considered good| | | | |(i) Loans and advances to employees|6|7|9| |(ii) Inter-corporate deposits|3|2,465|1,572| | |9|2,472|1,581| # (B) Short-term loans |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Considered good| | | | |(i) Loans and advances to employees|344|1,021|336| |(ii) Inter-corporate deposits|2,565|1,721|1,154| |(iii) Others|-|1|3| |(b) Considered doubtful| | | | |(i) Loans and advances to employees|57|56|51| |Less: Allowance for loans and advances to employees|(57)|(56)|(51)| | |2,909|2,743|1,493| Inter-corporate deposits placed with financial institutions yield fixed interest rate. # 9. |
Other financial assets Other financial assets consist of the following: # (A) Non-current financial assets |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Interest receivable|-|73|24| |(b) Long-term bank deposits|-|415|500| |(c) Security deposits|816|733|668| |(d) Earmarked balances with banks|1|86|-| |(e) Others|8|18|42| | |825|1,325|1,234| # (B) Current financial assets |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Interest receivable|715|206|342| |(b) Fair value of foreign exchange forward and currency option contracts|572|537|365| |(c) Security deposits|147|143|127| |(d) Others|40|30|75| | |1,474|916|909| 142 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 10. Income taxes The income tax expense consists of the following: | |(crores)|2017|2016| |---|---|---|---| |Current tax:| | | | |Current tax expense for current year| |8,341|7,489| |Current tax (benefit) / expense pertaining to prior years| |(106)|19| | | |8,235|7,508| |Deferred tax benefit| |(79)|(6)| |Total income tax expense recognised in current year| |8,156|7,502| The reconciliation of estimated income tax expense at Indian statutory income tax rate to income tax expense reported in statement of profit and loss is as follows: | |(crores)|2017|2016| |---|---|---|---| |Profit before income taxes| |34,513|31,840| |Indian statutory income tax rate| |34.61%|34.61%| |Expected income tax expense| |11,945|11,020| |Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense:| | | | |Tax holidays| |(4,175)|(4,477)| |Income exempt from tax| |(167)|(97)| |Undistributed earnings in branches and subsidiaries| |195|410| |Tax on income at different rates| |101|235| |Tax pertaining to prior years| |(174)|25| |Others (net)| |431|386| |Total income tax expense| |8,156|7,502| Tata Consultancy Services Limited benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profits or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions. From April 1, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT). |
Consolidated Financial Statements I 143 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2017 are as follows: |Deferred tax assets / (liabilities) in relation to:|Opening balance|Recognised in profit and loss|Recognised / reclassified from other comprehensive income|Acquisitions / disposals|Exchange difference|Closing balance| |---|---|---|---|---|---|---| |Property, plant and equipment and intangible assets|(62)|(39)|-|-|(5)|(106)| |Provision for employee benefits|327|63|2|-|(3)|389| |Cash flow hedges|(7)|-|(5)|-|-|(12)| |Receivables, financial assets at amortised cost|190|30|-|-|-|220| |MAT credit entitlement|1,987|97|-|-|-|2,084| |Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income|(28)|-|(256)|-|(1)|(285)| |Undistributed earnings of subsidiaries|(342)|(167)|-|-|-|(509)| |Branch profit tax|(346)|60|-|-|-|(286)| |Operating lease liabilities|94|(3)|-|-|(1)|90| |Others|290|38|-|-|(4)|324| |Net deferred tax assets / (liabilities)|2,103|79|(259)|-|(14)|1,909| # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2016 are as follows: |Deferred tax assets / (liabilities) in relation to:|Opening balance|Recognised in profit and loss|Recognised / reclassified from other comprehensive income|Acquisitions / disposals|Exchange difference|Closing balance| |---|---|---|---|---|---|---| |Property, plant and equipment and intangible assets|(100)|39|-|-|(1)|(62)| |Provision for employee benefits|294|21|8|-|4|327| |Cash flow hedges|(20)|-|13|-|-|(7)| |Receivables, financial assets at amortised cost|158|31|-|-|1|190| |MAT credit entitlement|1,905|82|-|-|-|1,987| |Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income|(3)|2|(27)|-|-|(28)| |Undistributed earnings of subsidiaries|(160)|(182)|-|-|-|(342)| |Branch profit tax|(256)|(90)|-|-|-|(346)| |Operating lease liabilities|83|10|-|-|1|94| |Others|192|93|(2)|-|7|290| |Net deferred tax assets / (liabilities)|2,093|6|(8)|-|12|2,103| 144 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Gross deferred tax assets and liabilities are as follows: |( crores)|As at March 31, 2017|Assets|Liabilities|Net| |---|---|---|---|---| |Deferred tax assets / (liabilities) in relation to:|Property, plant and equipment and Intangible assets|(8)|98|(106)| | |Provision for employee benefits|389|-|389| | |Cash flow hedges|(12)|-|(12)| | |Receivables, financial assets at amortised cost|218|(2)|220| | |MAT credit entitlement|2,084|-|2,084| | |Unrealised gain on securities carried at fair value through statement of|(285)|-|(285)| | |profit and loss / other comprehensive income| | | | | |Undistributed earnings of subsidiaries|-|509|(509)| | |Branch profit tax|-|286|(286)| | |Operating lease liabilities|90|-|90| | |Others|352|28|324| | |Net deferred tax assets / (liabilities)|2,828|919|1,909| |( crores)|As at March 31, 2016|Assets|Liabilities|Net| |---|---|---|---|---| |Deferred tax assets / (liabilities) in relation to:|Property, plant and equipment and Intangible assets|40|102|(62)| | |Provision for employee benefits|327|-|327| | |Cash flow hedges|(7)|-|(7)| | |Receivables, financial assets at amortised cost|190|-|190| | |MAT credit entitlement|1,987|-|1,987| | |Unrealised gain on securities carried at fair value through statement of|(28)|-|(28)| | |profit and loss / other comprehensive income| | | | | |Undistributed earnings of subsidiaries|-|342|(342)| | |Branch profit tax|-|346|(346)| | |Operating lease liabilities|94|-|94| | |Others|305|15|290| | |Net deferred tax assets / (liabilities)|2,908|805|2,103| |( crores)|As at April 1, 2015|Assets|Liabilities|Net| |---|---|---|---|---| |Deferred tax assets / (liabilities) in relation to:|Property, plant and equipment and Intangible assets|29|129|(100)| | |Provision for employee benefits|294|-|294| | |Cash flow hedges|(20)|-|(20)| | |Receivables, financial assets at amortised cost|158|-|158| | |MAT credit entitlement|1,905|-|1,905| | |Unrealised gain on securities carried at fair value through statement of|(3)|-|(3)| | |profit and loss / other comprehensive income| | | | | |Undistributed earnings of subsidiaries|-|160|(160)| | |Branch profit tax|-|256|(256)| | |Operating lease liabilities|83|-|83| | |Others|187|(5)|192| | |Net deferred tax assets / (liabilities)|2,633|540|2,093| # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements Under the Indian Income Tax Act, 1961, unabsorbed business losses expire 8 years after the year in which they originate. In respect of certain foreign subsidiaries, business losses can be carried forward indefinitely unless there is a substantial change in the ownership. Unrecognised deferred tax assets relate primarily to business losses and tax credit entitlement. These unexpired business losses will expire based on the year of origination as follows: |March 31,|Unabsorbed business losses (crores)| |---|---| |2018|15| |2019|21| |2020|32| |2021|73| |2022|51| |Thereafter|298| | |490| Under the Indian Income Tax Act, 1961, Tata Consultancy Services Limited is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. Accordingly, Tata Consultancy Services Limited has recognised a deferred tax asset of 2,084 crores and has not recognised deferred tax assets in respect of tax credit entitlement amounting to 1,108 crores as at March 31, 2017. Deferred tax liability on undistributed earnings of 6,246 crores of certain subsidiaries has not been recognised, as it is the intention of Tata Consultancy Services Limited to reinvest the earnings of these subsidiaries for the foreseeable future. |
Tata Consultancy Services Limited and its subsidiaries in India have ongoing disputes with Indian Income Tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company and its subsidiaries in India as deductions, and computation of, or eligibility of, certain tax incentives or allowances. As at March 31, 2017, the Company and its subsidiaries in India have contingent liability in respect of demands from direct tax authorities in India, which are being contested by the Company and its subsidiaries in India on appeal amounting to 2,690 crores. In respect of tax contingencies of 318 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. The Group periodically receives notices and inquiries from income tax authorities related to the Group's operations in the jurisdictions it operates in. The Group has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. In India, tax filings from fiscal 2014 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2013 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2014 and earlier. # 11. Other assets Other assets consist of the following: # (A) Other non-current assets | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Considered good| | | | |(i) Capital advances|143|149|169| |(ii) Advances to related parties|6|-|-| |(iii) Prepaid expenses|281|448|534| |(iv) Prepaid rent|228|235|241| |(v) Others|31|94|131| | |689|926|1,075| Advances to related parties, considered good, comprise: Voltas Limited 6 - - # Notes forming part of the Consolidated Financial Statements # (B) Other current assets |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Considered good| | | | |(i) Prepaid expenses|1,508|1,376|1,512| |(ii) Advance to suppliers|188|240|110| |(iii) Advance to related parties|1|1|-| |(iv) Indirect tax recoverable|488|340|309| |(v) Other advances|28|93|56| |(vi) Others|63|124|96| |(b) Considered doubtful| | | | |(i) Advance to suppliers|3|3|5| |(ii) Indirect tax recoverable|2|2|2| |(iii) Other advances|3|4|3| |Less: Allowance on doubtful assets|(8)|(9)|(10)| |Total|2,276|2,174|2,083| Advance to related parties, considered good comprise: |Taj Air Limited|-| |---|---| |The Titan Company Limited|1| # 12. Inventories Inventories consist of the following: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Raw materials, sub-assemblies and components|19|9|10| |(b) Finished goods and work-in-progress|1|-|2| |(c) Goods-in-transit (raw materials)|1|-|2| |(d) Stores and spares|-|7|1| |Total|21|16|15| Inventories are carried at lower of cost and net realisable value. # 13. Trade receivables Trade receivables (unsecured) consist of the following: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Considered good|22,684|24,073|20,440| |(b) Considered doubtful|643|574|448| |Total|23,327|24,647|20,888| |Less: Allowance for doubtful trade receivables|(643)|(574)|(448)| |Net Total|22,684|24,073|20,440| In determining the allowances for doubtful trade receivables the Group has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix. # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 14. Cash and cash equivalents Cash and cash equivalents consist of the following: |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Balances with banks| | | | |In current accounts|3,077|2,159|1,443| |In deposit accounts|466|2,881|353| |(b) Cheques on hand|6|25|51| |(c) Cash on hand|1|1|1| |(d) Remittances in transit|47|1,229|14| |Total|3,597|6,295|1,862| Specified bank notes disclosure (SBNs) In accordance with MCA notification G.S.R. 308(E) dated March 30, 2017 details of Specified Bank Notes (SBN) and Other Denomination Notes (ODN) held and transacted during the period from November 8, 2016 to December 30, 2016 is given below: |Particulars|SBNs|ODNs|Total| |---|---|---|---| |Closing cash on hand as on November 8, 2016|4,11,000|3,12,694|7,23,694| |(+) Permitted receipts|2,89,000|3,59,136|6,48,136| |( - ) Permitted payments|-|3,68,707|3,68,707| |( - ) Amounts Deposited in Banks|7,00,000|1,66,506|8,66,506| |Closing cash on hand as on December 30, 2016|-|1,36,617|1,36,617| # 15. |
Other balances with banks Other balances with banks consist of the following: |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Earmarked balances with banks|122|440|313| |(b) Short-term bank deposits|430|53|16,383| |Total|552|493|16,696| Earmarked balances with banks significantly pertain to unclaimed dividends and margin money for derivative contracts. # Notes forming part of the Consolidated Financial Statements # 16. 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, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Authorised| | | | |(a) 460,05,00,000 equity shares of 1 each|460|460|420| |(b) 105,02,50,000 preference shares of 1 each|105|105|105| | |565|565|525| |Issued, Subscribed and Fully paid-up| | | | |(a) 197,04,27,941 equity shares of 1 each|197|197|196| |(b) Potential equity shares to be issued to non-controlling shareholders of CMC Limited|-|-|1| | |197|197|197| File: AR_TCS_2016_2017.md 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 of 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. The Board of Directors of the Company, at its meeting held on February 20, 2017 has approved a proposal to buy-back up to 5,61,40,351 equity shares (Five crore sixty one lakh forty thousand three hundred and fifty one only) of the Company for an aggregate amount not exceeding 16,000 crore, being 2.85% of the total paid up equity share capital at 2,850 per Equity Share. The shareholders of the Company have approved the scheme of buy-back of shares through postal ballot on April 17, 2017. # (a) Reconciliation of number of shares | |As at March 31, 2017| |As at March 31, 2016| | |---|---|---|---|---| | |Number of shares|Amount ( crores)|Number of shares|Amount ( crores)| |Equity shares| | | | | |Opening balance|197,04,27,941|197|195,87,27,979|196| |Issued during the year|-|-|1,16,99,962|1| |Closing balance|197,04,27,941|197|197,04,27,941|197| # (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 and carry a right to dividend. 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. |
Consolidated Financial Statements I 149 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # (c) Shares held by Holding Company, its subsidiaries and associates |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Equity shares| | | | |Holding Company|144|144|144| |144,34,51,698 equity shares (March 31, 2016: 144,34,51,698 equity shares; April 1, 2015: 144,34,51,698 equity shares) are held by Tata Sons Limited| | | | |Subsidiaries and associates of Holding Company| | | | |3,700 equity shares (March 31, 2016: 3,63,700 equity shares; April 1, 2015: 10,29,700 equity shares) are held by Tata Industries Limited*|-|-|-| |8,57,301 equity shares (March 31, 2016: 9,55,273 equity shares; April 1, 2015: Nil equity shares) are held by Tata AIA Life Insurance Company Limited*|-|-|-| |5,50,000 equity shares (March 31, 2016: 5,90,452 equity shares; April 1, 2015: 5,90,452 equity shares) are held by Tata Investment Corporation Limited*|-|-|-| |Nil equity shares (March 31, 2016: Nil equity shares; April 1, 2015: 200 equity shares) are held by Tata Capital Limited*|-|-|-| |Nil equity shares (March 31, 2016: 83,232 equity shares; April 1, 2015: 83,232 equity shares) are held by Tata International Limited*|-|-|-| |24,400 equity shares (March 31, 2016: 24,400 equity shares; April 1, 2015: 24,400 equity shares) are held by Tata Steel Limited*|-|-|-| |452 equity shares (March 31, 2016: 452 equity shares; April 1, 2015: 452 equity shares) are held by The Tata Power Company Limited*|-|-|-| |4,84,902 equity shares (March 31, 2015: 6,11,352 equity shares; April 1, 2015: 6,33,352 shares) are held by AF-taab Investment Company Limited*|-|-|-| |Total|144|144|144| * Equity shares having value less than 0.50 crore # (d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | |---|---|---|---|---| |Equity shares|Tata Sons Limited, the Holding Company|144,34,51,698|144,34,51,698|144,34,51,698| | |73.26%|73.26%|73.69%| | # (e) Equity shares allotted as fully paid-up (during 5 years preceding March 31, 2017) 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. # (f) The Company's objective for capital management The Company's objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. The Company is not subject to any externally imposed capital requirements. 150 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 17. |
(A) Other equity Other equity consist of the following: |( crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |(a) Capital reserve (on consolidation)|75|75| |(b) Securities premium reserve|1,919|1,919| |(c) Capital redemption reserve| | | |(i) Opening balance|523|413| |(ii) Transfer from retained earnings*|-|110| | |523|523| |(d) General reserve| | | |(i) Opening balance|10,549|8,245| |(ii) Transfer from retained earnings|-|2,304| | |10,549|10,549| |(e) Special Economic Zone re-investment reserve| | | |(i) Opening balance|-|-| |(ii) Transfer from retained earnings|376|-| |(iii) Transfer to retained earnings on utilisation|(279)|-| | |97|-| |(f) Retained earnings| | | |(i) Opening balance|56,113|43,904| |(ii) Profit for the year|26,289|24,270| |(iii) Remeasurement of defined employee benefit plans (net of taxes)|(206)|(108)| |(iv) Purchase of non-controlling interests **|(28)|-| |(v) Realised (losses) / gains on equity shares carried at fair value through OCI|(20)|5| |(vi) Transfer from Special Economic Zone re-investment reserve on utilisation|279|-| | |82,427|68,071| |(vii) Less: Appropriations| | | |(a) Dividend on equity shares|9,162|7,993| |(b) Tax on dividend|1,785|1,486| |(c) Transfer to capital redemption reserve*|-|110| |(d) Transfer to general reserve|-|2,304| |(e) Transfer to Special Economic Zone re-investment reserve|376|-| |(f) Transfer to statutory reserve|33|65| | |71,071|56,113| |(g) Statutory reserve| | | |(i) Opening balance|185|120| |(ii) Transfer from retained earnings|33|65| | |218|185| # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements |(crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |(h) Investment revaluation reserve (Refer note 17(B))| | | |(i) Opening balance|54|3| |(ii) Addition during the year (net)|484|51| | |538|54| |(i) Cash flow hedging reserve (Refer note 28(b))| | | |(i) Opening balance|49|130| |(ii) Addition / (deduction) during the year (net)|39|(81)| | |88|49| |(j) Foreign currency translation reserve| | | |(i) Opening balance|1,408|1,047| |(ii) (Deduction) / addition during the year (net)|(469)|361| | |939|1,408| | |86,017|70,875| * 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 crores has been transferred to capital redemption reserve during the year. ** Purchase of non-controlling interests in Tata Consultancy Services (South Africa) (Propriety) Limited and Tata Consultancy Services (China) Co., Ltd. # (B) Other components of equity Other components of equity consist of the following: # (a) Investment revaluation reserve |(crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |Balance at the beginning of the year|54|3| |Net gain / (loss) arising on revaluation of financial assets carried at fair value|(20)|1| |Deferred tax relating to net gain / (loss) arising on revaluation of financial assets carried at fair value|-|(1)| |Net cumulative loss / (gain) reclassified to retained earnings on sale of financial assets carried at fair value|20|(5)| |Deferred tax relating to net cumulative gain reclassified to statement of profit and loss on sale of financial assets carried at fair value|-|2| |Net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income|740|138| |Deferred tax relating to net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income|(256)|(48)| |Transfer of net realised gain to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income|-|(56)| |Deferred tax relating to transfer of net realised gain / (loss) to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income|-|20| |Balance at the end of the year|538|54| # Notes forming part of the Consolidated Financial Statements # Nature of reserves # (a) Capital reserve The Group recognises profit or loss on purchase, sale, issue or cancellation of the Group's own equity instruments to capital reserve. # (b) Securities premium Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013. # (c) General reserve The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss. # (d) Investment revaluation reserve This reserve represents the cumulative gains and losses arising on the revaluation of equity / debt instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those assets have been disposed of. |
# (e) Cash flow hedging reserve The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow reserve will be reclassified to statement of profit and loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item. # 18. Borrowings Borrowings consist of the following: # (A) Long-term borrowings | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Secured loans|Long-term maturities of obligations under finance lease|71|83|114| |(b) Unsecured loans|Borrowings from entity other than banks|-|-|1| | |Total|71|83|115| Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements. # (B) Short-term borrowings | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Secured loans|Overdraft from banks|-|112|-| |(b) Unsecured loans|Overdraft from bank|200|1|186| | |Total|200|113|186| Secured overdrafts from banks are secured against trade receivables. Consolidated Financial Statements I 153 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 19. Other financial liabilities Other financial liabilities consist of the following: # (A) Other non-current financial liabilities | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Capital creditors|17|62|68| |(b) Others|437|431|594| |Total|454|493|662| Other payables include advance taxes paid of 227 crores (March 31, 2016: 230 crores) (April 01, 2015: 333 crores) by the seller of TCS e-serve Limited which, on refund by the tax authorities, is payable to the seller. # (B) Other current financial liabilities | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Current maturities of obligations under finance lease|18|49|57| |(b) Unclaimed dividends|25|21|20| |(c) Fair value of foreign exchange forward and currency option contracts|20|152|20| |(d) Capital creditors|287|331|337| |(e) Liabilities for cost related to customer contracts|1,001|882|728| |(f) Liabilities for purchase of government securities|-|805|-| |(g) Others|199|124|83| |Total|1,550|2,364|1,245| Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements. # 20. Provisions Provisions consist of the following: # (A) Non-current | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Provision for foreseeable loss on a long-term contract|39|40|94| # (B) Current | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Provision for foreseeable loss on a long-term contract|66|115|103| 154 I Consolidated Financial Statements # 21. Other liabilities Other liabilities consist of the following: # (A) Other non-current liabilities |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Operating lease liabilities|387|379|345| |(b) Others|45|63|59| |Total|432|442|404| # (B) Other current liabilities |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Advance received from customers|330|164|131| |(b) Indirect tax payable and other statutory liabilities|1,301|1,381|1,146| |(c) Operating lease liabilities|74|80|57| |(d) Others|40|12|8| |Total|1,745|1,637|1,342| # 22. Other income (net) Other income (net) consist of the following: |( crores)|2017|2016| |---|---|---| |(a) Interest income|2,263|1,745| |(b) Dividend income|1|11| |(c) Net gain on investments carried at fair value through profit or loss|633|409| |(d) Net gain on disposal of investments carried at amortised cost|9|-| |(e) Net gain on disposal of investments other than equity shares carried at fair value through OCI|-|56| |(f) Net gain on disposal of property, plant and equipment|3|5| |(g) Net foreign exchange gains|1,240|742| |(h) Rent income|17|25| |(i) Miscellaneous income|55|91| |Total|4,221|3,084| Interest income comprise: |Description|2017|2016| |---|---|---| |Interest on bank deposits|116|1,459| |Interest income on financial assets carried at amortised cost|412|248| |Interest income on financial assets carried at fair value through OCI|1,598|32| |Others|137|6| Net foreign exchange gains include: Net gain on foreign exchange forward and currency option contracts transferred from cash flow hedging reserve (Refer note 28(b)) Dividend income comprise: From investments (mutual funds) |Description|2017|2016| |---|---|---| |From investments (mutual funds)|1|11| # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 23. |
Employee benefit expenses Employee benefit expenses consist of the following: |( crores)|2017|2016| |---|---|---| |(a) Salaries, incentives and allowances|55,537|49,902| |(b) Contributions to provident and other funds|4,189|3,939| |(c) Staff welfare expenses|1,895|1,507| |Total|61,621|55,348| # (A) Non-current employee benefit obligations ( crores) | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Gratuity liability|4|3|22| |(b) Foreign defined benefit plans|159|169|140| |(c) Other employee benefit obligations|82|65|41| |Total|245|237|203| # (B) Current employee benefit obligations ( crores) | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Compensated absences|1,834|1,614|1,340| |(b) Other employee benefit obligations|28|21|16| |Total|1,862|1,635|1,356| # Defined benefit plan # Gratuity and pension In accordance with Indian law, Tata Consultancy Services Limited and its subsidiaries in India provide to the eligible employees defined benefit plans such as gratuity 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. Vesting occurs upon completion of five continuous years of service. The measurement date used for determining retirement benefits for gratuity is March 31. Certain overseas subsidiaries of the Company also provide for retirement benefit pension plans in accordance with the local laws. 156 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements The following tables set out the details of the defined benefit retirement plans and the amounts recognised in the financial statements: |(crores)| |Year ended March 31, 2017| | | | | |Year ended March 31, 2016| | | | |---|---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| |Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | |Change in benefit obligations:|Benefit obligations, beginning of the year|1,633|3|744|67|2,447|1,295|2|686|53|2,036| | |Exchange (gain) / loss on translation|-|-|(49)|(5)|(54)|-|-|53|3|56| | |Plan participants' contribution|-|-|8|-|8|-|-|6|-|6| | |Service cost|241|1|12|21|275|202|-|24|12|238| | |Interest cost|138|-|10|3|151|105|-|14|2|121| | |Remeasurement of the net defined benefit liability|200|-|58|(3)|255|149|1|(16)|-|134| | |Past service cost / (credit)|-|-|(9)|-|(9)|13|-|-|(2)|11| | |Benefits paid|(128)|-|(17)|(2)|(147)|(131)|-|(23)|(1)|(155)| | |Adjustment on plan settlement|-|-|(220)|-|(220)|-|-|-|-|-| |Benefit obligations, end of the year| |2,084|4|537|81|2,706|1,633|3|744|67|2,447| |(crores)| |Year ended March 31, 2017| | | | | |Year ended March 31, 2016| | | | |---|---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| |Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | |Change in plan assets:|Fair value of plan assets, beginning of the year|1,747|-|731|-|2,478|1,453|-|669|-|2,122| | |Exchange (loss) / gain on translation|-|-|(42)|-|(42)|-|-|53|-|53| | |Interest income|145|-|8|-|153|116|-|17|-|133| | |Employers' contributions|393|-|15|-|408|282|-|28|-|310| | |Plan participants' contribution|-|-|8|-|8|-|-|6|-|6| | |Benefits paid|(128)|-|(17)|-|(145)|(131)|-|(23)|-|(154)| | |Remeasurement - return on plan assets excluding amount included in interest income|-|-|47|-|47|27|-|(19)|-|8| | |Adjustment on plan settlement*|-|-|(289)|-|(289)|-|-|-|-|-| |Fair value of plan assets, end of the year| |2,157|-|461|-|2,618|1,747|-|731|-|2,478| * includes of 69 crores in respect of fair value of plan assets not recognised in the Balance sheet in the previous year due to asset ceiling. |
Consolidated Financial Statements I 157 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | | | | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Domestic|Funded|Unfunded|Funded|Unfunded|Total|Domestic|Funded|Unfunded|Funded|Unfunded|Total|Domestic|Funded|Unfunded|Funded|Unfunded|Total| |Deficit of plan assets over obligations|-|(4)|(78)|(81)|(163)|-|(3)|(102)|(67)|(172)|(20)|(2)|(87)|(53)|(162)| | | |Surplus of plan assets over obligations|73|-|2|-|75|114|-|89|-|203|178|-|70|-|248| | | |Unrecognised asset due to asset ceiling|-|-|-|-|(66)|-|-|-|(66)|-|-|-|(70)|-|(70)| | | |Total|73|(4)|(76)|(81)|(88)|114|(3)|(79)|(67)|(35)|158|(2)|(87)|(53)|16| | | |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | | | | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Domestic|Funded|Unfunded|Funded|Unfunded|Total|Domestic|Funded|Unfunded|Funded|Unfunded|Total|Domestic|Funded|Unfunded|Funded|Unfunded|Total| |Category of assets:|Corporate bonds|731|-|145|-|876|631|2|99|-|411|175|-|121|-|296| | |Equity shares|95|-|34|-|129|43|-|51|-|94|-|-|134|-|-|134| | |Government securities|621|-|-|-|621|500|-|-|-|500|266|-|99|-|365| | | |Index linked gilt|-|-|-|-|-|-|-|113|-|113|-|-|-|108|-|108| | |Insurer managed funds|692|-|26|-|718|736|-|198|-|934|748|-|172|-|920| | | |Bank balances|3|-|11|-|149|98|-|270|-|368|217|-|6|-|223| | | |Others|15|-|245|-|260|58|-|-|-|584|47|-|29|-|76| | | |Total|2,157|-|461|-|2,618|1,747|-|731|-|2,478|1,453|-|669|-|2,122| | | 158 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Net periodic gratuity / pension cost, included in employee cost consists of the following components: |( crores)| | |Year ended March 31, 2017| | | | | |Year ended March 31, 2016| | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | |Domestic|Domestic| |Foreign|Foreign|Total|Domestic|Domestic|Foreign|Foreign|Total| | | | | |plans|plans|plans|plans| |plans|plans|plans|plans| | | | | | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | | | | |Service cost|241|1| |12|21|275|202|0|24|12|238| | | | |Net interest on net defined benefit (asset) / liability|(7)|0| |2|3|(2)|(11)|0|(3)|2|(12)| | | | |Past service (credit) / cost|0|0| |(9)|0|(9)|13|0|0|(2)|11| | | | |Net periodic gratuity / pension cost|234| |1|5|24|264|204|0|21|12|237| | | | |Actual return on plan assets|145| | | | |0|55|0|200|143|0|(2)|0|141| # Remeasurement of the net defined benefit liability / (asset): |( crores)| | |Year ended March 31, 2017| | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| | |Domestic|Domestic|Foreign|Foreign|Total| | | | | | | | | | |plans|plans|plans|plans| | | | | | | | | | | |Funded|Unfunded|Funded|Unfunded| | | | | | | | | | |Actuarial (gains) and losses arising from changes in demographic assumptions| | | | | | | | |(2)|0|1|(1)|(2)| |Actuarial (gains) and losses arising from changes in financial assumptions| | | |71|0| | |51|(3)|119| | | | |Actuarial (gains) and losses arising from changes in experience adjustments| | | |131|0| | |6|1|138| | | | |Remeasurement of the net defined benefit liability| | | |200|0| | |58|(3)|255| | | | |Remeasurement of return on plan assets excluding amount included in interest income| | |0|0|(47)|0|(47)| | | | | | | |Asset ceiling recognised in OCI| | |0|0|0|0|0| | | | | | | |Total| | | |200|0| | |11|(3)|208| | | | # ( crores) # Year ended March 31, 2016 |Domestic|Domestic|Foreign|Foreign|Total| | | | |---|---|---|---|---|---|---|---| | |plans|plans|plans|plans| | | | | |Funded|Unfunded|Funded|Unfunded| | | | |Actuarial (gains) and losses arising from changes in demographic assumptions| |13|0| |(11)|(1)|1| |Actuarial (gains) and losses arising from changes in financial assumptions| |60| |1|(1)|0|60| |Actuarial (gains) and losses arising from changes in experience adjustments| |76|0| |(4)|1|73| |Remeasurement of the net defined benefit liability| |149|1| |(16)|0|134| |Remeasurement of return on plan assets excluding amount included in interest income| |(27)|0| |19|0|(8)| |Asset ceiling recognised in OCI| |0|0|(12)|0|(12)| | |Total| |122|1| |(9)|0|114| # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements The assumptions used in accounting for the defined benefit plan are set out below: |Assumptions|Year ended March 31, 2017|Year ended March 31, 2016| |Year ended April 1, 2015| | | |---|---|---|---|---|---|---| |Domestic plans|Foreign plans|Domestic plans|Foreign plans|Domestic plans|Foreign plans| | |Discount rate|6.75%-7.25%|0.60%-7.75%|7.50%-7.75%|0.40%-7.13%|8.00%|0.87%-6.75%| |Rate of increase in compensation levels of covered employees|6.00%-8.00%|1.25%-4.64%|6.00%-10.00%|1.25%-4.64%|6.00%-7.00%|1.00%-4.64%| |Rate of return on plan assets|6.75%-7.25%|0.60%-7.75%|7.50%-7.75%|0.40%-7.13%|8.00%|0.87%-6.75%| |Weighted average duration of defined benefit obligations|4-10 years|15-29 years|4-10 years|11-29 years|9 years|12-31 years| The expected benefits are based on the same assumptions as are used to measure Group's defined benefit plan obligations as at March 31, 2017. The Group is expected to contribute 201 crores to defined benefit plan obligations funds for the year ended March 31, 2018 comprising domestic component of 190 crores and foreign component of 11 crores. The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. If the discount rate increases (decreases) by 0.50%, the defined benefit obligations would decrease by 128 crores (increase by 142 crores) as at March 31, 2017. |
If the expected salary growth increases (decreases) by 0.50%, the defined benefit obligations would increase by 85 crores (decrease by 81 crores) as at March 31, 2017. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance sheet. Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. The defined benefit obligations shall mature after year ended March 31, 2017 as follows: |Year ending March 31|Defined benefit obligations (crores)| |---|---| |2018|220| |2019|208| |2020|214| |2021|215| |2022|210| |Thereafter|986| # Defined contribution plans # Superannuation In addition to gratuity benefits, all eligible employees are entitled to benefits under Superannuation, a defined contribution plan. The Group makes monthly contributions until retirement or resignation of the employee. The Group recognises such contributions as an expense when incurred. The Group has no further obligation beyond its monthly contribution. The Group contributed 265 crores and 249 crores to the Employees' Superannuation Fund for the year ended March 31, 2017 and March 31, 2016 respectively. # Notes forming part of the Consolidated Financial Statements # Provident fund In accordance with Indian law, all eligible employees of Tata Consultancy Services Limited and its subsidiaries are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. Tata Consultancy Services Limited and its subsidiaries in India contribute as specified under the law to the Provident Fund where set up as a trust and to the respective Regional Provident Fund Commissioner. Tata Consultancy Services Limited and its subsidiaries in India which contributes to the Provident Fund where set up as a trust are liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognises such contributions and shortfall, if any, as an expense in the year incurred. 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. The Group contributed 804 crores and 680 crores to the provident fund for the year ended March 31, 2017 and March 31, 2016, respectively. # Foreign defined contribution plan The Group contributed 826 crores and 817 crores for the year ended March 31, 2017 and March 31, 2016, respectively, towards foreign defined contribution plan. # 24. Other operating expenses Other operating expenses consist of the following: | |( crores)|2017|2016| |---|---|---|---| |(a) Fees to external consultants| |8,854|8,412| |(b) Facility running expenses| |3,685|3,406| |(c) Cost of equipment and software licences| |2,808|2,571| |(d) Travel expenses| |2,786|2,664| |(e) Communication expenses| |1,067|1,107| File: AR_TCS_2016_2017.md |(f) Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)| |125|135| |(g) Other expenses| |4,709|4,326| |Total| |24,034|22,621| Research and development expenditure aggregating 282 crores and 237 crores in the year ended March 31, 2017 and March 31, 2016, including capital expenditure was incurred during the year. # 25. Finance costs (at effective interest rate) Finance costs consist of the following: | |( crores)|2017|2016| |---|---|---|---| |Interest expense| |32|33| |Total| |32|33| # 26. Earnings Per Share (EPS) | |2017|2016| |---|---|---| |Profit for the year ( crores)|26,289|24,270| |Weighted average number equity shares|197,04,27,941|197,04,27,941| |Earnings per share basic and diluted ( )|133.41|123.18| |Face value per equity share ( )|1|1| Consolidated Financial Statements I 161 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 27. Leases The Group has taken on lease property and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were 1,818 crores and 1,697 crores for the year ended March 31, 2017 and March 31, 2016, respectively. |
# Future Minimum Lease Rental Commitments |( crores)|Operating lease|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |Due within one year of Balance sheet date| |833|733|764| |Due in a period between one year and five years| |2,302|2,169|2,243| |Due after five years| |1,215|1,233|1,403| |Total minimum lease commitments| |4,350|4,135|4,410| # Finance Lease |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Due within one year of Balance sheet date|25|59|70| |Due in a period between one year and five years|73|80|110| |Due after five years|21|33|44| |Total minimum lease commitments|119|172|224| |Less: Interest|(30)|(40)|(53)| |Present value of minimum lease commitments|89|132|171| # Receivables under Sub Leases |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Due within one year of Balance sheet date|12|19|18| |Due in a period between one year and five years|1|16|36| |Due after five years|-|-|-| |Total|13|35|54| Income from sub leases of 17 crores and 25 crores have been recognised in the statement of profit and loss in the year ended March 31, 2017 and March 31, 2016 respectively. 162 I Consolidated Financial Statements # 28. Financial instruments The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2(l) to the consolidated financial statements. # (a) Financial assets and liabilities The carrying value of financial instruments by categories as at March 31, 2017 is as follows: | |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Carrying value| |---|---|---|---|---|---|---| |Financial assets:| | | | | | | |Cash and cash equivalents|-|-|-|-|3,597|3,597| |Bank deposits & earmarked bank balances|-|-|-|-|553|553| |Trade receivables|-|-|-|-|22,684|22,684| |Investments|19,692|22,140|-|-|148|41,980| |Unbilled revenue|-|-|-|-|5,351|5,351| |Loans*|-|-|-|-|2,918|2,918| |Other financial assets|-|-|140|432|1,726|2,298| |Total|19,692|22,140|140|432|36,977|79,381| Financial liabilities: | |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Carrying value| |---|---|---|---|---|---|---| |Trade and other payables|-|-|-|-|6,279|6,279| |Borrowings|-|-|-|-|271|271| |Other financial liabilities|196|-|-|20|1,788|2,004| |Total|196|-|-|20|8,338|8,554| *Loans include inter-corporate deposits of 2,568 crores, with original maturity period within 50 months. The carrying value of financial instruments by categories as at March 31, 2016 is as follows: | |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Carrying value| |---|---|---|---|---|---|---| |Financial assets:| | | | | | | |Cash and cash equivalents|-|-|-|-|6,295|6,295| |Bank deposits & earmarked bank balances|-|-|-|-|994|994| |Trade receivables|-|-|-|-|24,073|24,073| |Investments|1,767|20,423|-|-|632|22,822| |Unbilled revenue|-|-|-|-|3,992|3,992| |Loans*|-|-|-|-|5,215|5,215| |Other financial assets|-|-|116|421|1,203|1,740| |Total|1,767|20,423|116|421|42,404|65,131| Financial liabilities: | |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Carrying value| |---|---|---|---|---|---|---| |Trade and other payables|-|-|-|-|7,541|7,541| |Borrowings|-|-|-|-|196|196| |Other financial liabilities|188|-|15|137|2,517|2,857| |Total|188|-|15|137|10,254|10,594| *Loans include inter-corporate deposits of 4,186 crores, with original maturity period within 50 months. Consolidated Financial Statements I 163 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements The carrying value of financial instruments by categories as at April 1, 2015 is as follows: |Financial assets:| | | | | |( crores)| |---|---|---|---|---|---|---| |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|carrying value| | |Cash and cash equivalents|-|-|-|-|1,862|1,862| |Bank deposits & earmarked bank balances|-|-|-|-|17,196|17,196| |Trade receivables|-|-|-|-|20,440|20,440| |Investments|1,508|166|-|-|80|1,754| |Unbilled revenue|-|-|-|-|3,827|3,827| |Loans*|-|-|-|-|3,074|3,074| |Other financial assets|-|-|186|179|1,278|1,643| |Total|1,508|166|186|179|47,757|49,796| |Financial liabilities:| | | | | |( crores)| |---|---|---|---|---|---|---| |Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|carrying value| | |Trade and other payables|-|-|-|-|8,832|8,832| |Borrowings|-|-|-|-|301|301| |Other financial liabilities|240|-|-|20|1,647|1,907| |Total|240|-|-|20|10,780|11,040| *Loans include inter-corporate deposits of 2,726 crores, with original maturity period within 19 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled revenues, loans and trade and other payables as at March 31, 2017, March 31, 2016 and April 1, 2015 approximate the fair value because of their short-term nature. Difference between carrying amounts and fair values of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. # Fair value hierarchy: The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three levels: - Level 1 -- Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. |
- Level 2 -- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). - Level 3 -- Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range. # Notes forming part of the Consolidated Financial Statements The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required): # ( crores) # As at March 31, 2017: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Financial assets:|19,692|-|-|19,692| |Mutual fund units|-|-|141|141| |Corporate debentures and bonds|-|16|-|16| |Government securities|22,131|-|-|22,131| |Derivative financial assets|-|572|-|572| |Total|41,823|588|141|42,552| # Financial liabilities: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|20|-|20| |Other financial liabilities|-|-|196|196| |Total|-|20|196|216| # ( crores) # As at March 31, 2016: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Financial assets:|1,767|-|-|1,767| |Mutual fund units|-|-|169|169| |Corporate debentures and bonds|-|40|-|40| |Government securities|20,355|-|-|20,355| |Certificate of deposits|-|491|-|491| |Derivative financial assets|-|537|-|537| |Total|22,122|1,068|169|23,359| # Financial liabilities: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|152|-|152| |Other financial liabilities|-|-|188|188| |Total|-|152|188|340| # ( crores) # As at April 1, 2015: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Financial assets:|1,508|-|-|1,508| |Mutual fund units|4|-|162|166| |Corporate debentures and bonds|-|25|-|25| |Government securities|55|-|-|55| |Derivative financial assets|-|365|-|365| |Total|1,567|390|162|2,119| # Financial liabilities: | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|20|-|20| |Other financial liabilities|-|-|240|240| |Total|-|20|240|260| Consolidated Financial Statements I 165 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements |( crores)|( crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |Reconciliation of Level 3 fair value measurement| | | | |Opening balance| |169|162| |Less: Sale of equity shares| |(25)|-| |Exchange (loss) / gain| |(3)|7| |Closing balance| |141|169| # (b) Derivative financial instruments and hedging activity The Group's revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Group also does business in Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Group to currency fluctuations. The Group monitors and manages the financial risks relating to its operations by analysing its foreign exchange exposures by the level and extent of currency risks. The Company and its subsidiaries use various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward, option and future contracts to manage and mitigate its exposure to foreign exchange rates. The counterparty is generally a bank. The Company and its subsidiaries can enter into contracts for a period between one day and eight years. The Company and its subsidiaries report quarterly to its risk management committee, an independent body that monitors foreign exchange risks and policies implemented to manage its foreign exchange exposures. # Outstanding currency option contracts, which have been designated as cash flow hedges: | | | |As at March 31, 2017|As at March 31, 2016| |As at April 1, 2015| | | |---|---|---|---|---|---|---|---|---| |Foreign currency|Notional amount of|Notional amount of|Notional amount of|Notional amount of|Notional amount of| | | | | |No. of contracts|Fair value ( crores)|No. of contracts|Fair value ( crores)|No. of contracts|Fair value ( crores)| | | |U.S. Dollar| | |6|150|9|225|41|-| |Sterling Pound| | |45|318|8|160|52|18| |Euro| | |27|198|24|285|20|9| |Australian Dollar| | |6|60|21|228|(12)|6| # Outstanding currency forward contracts, which have been designated as cash flow hedges: | | |As at March 31, 2017| | |As at March 31, 2016| |As at April 1, 2015| | |---|---|---|---|---|---|---|---|---| |Foreign currency|Notional amount of|Notional amount of|Notional amount of|Notional amount of|Notional amount of| | | | | |No. of contracts|Fair value ( crores)|No. of contracts|Fair value ( crores)|No. |
of contracts|Fair value ( crores)| | | |Sterling Pound|5|125| |-|-|-|-| | |Euro|3|91| |-|-|-|-| | 166 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows: | |Year ended March 31, 2017|Year ended March 31, 2017|Year ended March 31, 2016|Year ended March 31, 2016| |---|---|---| | |Intrinsic value|Time value|Intrinsic value|Time value| |Balance at the beginning of the year|68|(19)|131|(1)| |Changes in the fair value of effective portion of cash flow hedges|784|(232)|250|(339)| |Deferred tax on fair value of effective portion of cash flow hedges|(108)|30|(32)|44| |(Gain) / loss transferred to the statement of profit and loss on occurrence of forecasted hedge transactions|(743)|235|(323)|318| |Deferred tax on (gain) / loss transferred to the statement of profit and loss on occurrence of forecasted hedge transactions|104|(31)|42|(41)| |Balance at the end of the year|105|(17)|68|(19)| Net gain on derivative instruments of 88 crores recognised in Hedging Reserve as at March 31, 2017, is expected to be transferred to the statement of profit and loss by March 31, 2018. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2017. In addition to the above cash flow hedges, the Group has outstanding foreign exchange forwards, option and futures contracts with notional amount aggregating 19,159 crores (March 31, 2016: 22,144 crores, April 1, 2015: 19,949 crores) whose fair value showed a gain of 412 crores as at March 31, 2017 (March 31, 2016: gain of 284 crores, April 1, 2015: gain of 159 crores). Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting. Exchange gain of 1,522 crores (March 31, 2016: Exchange gain of 181 crores) on foreign exchange forwards, option and futures contracts for the year ended March 31, 2017, have been recognised in the statement of profit and loss. # Following table summarises approximate gain / (loss) on Group's other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies. | |2017|2016| |---|---|---| |10% Appreciation of the underlying foreign currencies|(218)|(238)| |10% Depreciation of the underlying foreign currencies|793|623| # (c) Financial risk management: The Group is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Group has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Group. # (i) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Group's exposure to market risk is primarily on account of foreign currency exchange rate risk. # (a) Foreign currency exchange rate risk The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements Considering the countries and economic environment in which the Group operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro, Great Britain Pound, Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real against the respective functional currencies of Tata Consultancy Services Limited and its subsidiaries. The Group, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. Further, any movement in the functional currencies of the various operations of the Group against major foreign currencies may impact the Group's revenue in international business. The Group evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. |
The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the respective functional currencies of Tata Consultancy Services Limited and its subsidiaries. The following analysis has been worked out based on the net exposures for each of the subsidiaries and Tata Consultancy Services Limited as of the date of Balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Group as disclosed in note 28(b). # Foreign Currency Exposure as at March 31, 2017 | |USD|EUR|GBP|AUD|SGD|DKK|BRL|SAR|Others*| |---|---|---|---|---|---|---|---|---|---| |Net financial assets|2,032|99|242|19|87|3|6|444|715| |Net financial liabilities|(215)|(26)|(1)|(256)|-|(48)|(8)|-|(214)| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the Group's profit before tax by approximately 288 crores for the year ended March 31, 2017. # Foreign Currency Exposure as at March 31, 2016 | |USD|EUR|GBP|AUD|SGD|DKK|BRL|SAR|Others*| |---|---|---|---|---|---|---|---|---|---| |Net financial assets|1,123|127|74|26|28|57|10|-|638| |Net financial liabilities|(322)|(6)|(72)|(68)|(23)|(2)|(11)|(538)|(314)| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the Group's profit before tax by approximately 73 crores for the year ended March 31, 2016. # Foreign Currency Exposure as at April 1, 2015 | |USD|EUR|GBP|AUD|SGD|DKK|BRL|SAR|Others*| |---|---|---|---|---|---|---|---|---|---| |Net financial assets|884|63|106|15|98|98|95|-|295| |Net financial liabilities|(2,248)|(99)|(17)|(15)|(4)|(4)|-|(8)|(74)| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the Group's profit before tax by approximately 82 crores as at April 1, 2015. *Others include currencies such as South African Rand, Canadian Dollar, Swiss Franc, Norwegian Kroner etc. # Notes forming part of the Consolidated Financial Statements # (b) Interest rate risk The Group's investments are primarily in fixed rate interest bearing investments. Hence the Group is not significantly exposed to interest rate risk. # (ii) Credit risk Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of 2,568 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of 415 crores held with an Indian bank having high quality credit rating which are individually in excess of 10% or more of the Group's total bank deposits in year ended March 2017. None of the other financial instruments of the Group result in material concentration of credit risk. # Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was 79,239 crores, 64,961 crores, 49,629 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled revenue and other financial assets. The Group's exposure to customers is diversified and no single customer contributes to more than 10% of outstanding accounts receivable and unbilled revenue as at March 31, 2017 and March 31, 2016. # Geographic concentration of credit risk The Group also has a geographic concentration of trade receivables, net of allowances and unbilled revenue is given below: |(In %)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |United States of America|44.30|42.90|41.90| |India|14.71|15.32|16.50| |United Kingdom|13.46|14.97|15.00| Geographical concentration of credit risk is allocated based on the location of the customers. # (iii) Liquidity risk Liquidity risk refers to the risk that the Group cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. |
The Group consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due. The tables below provide details regarding the contractual maturities of significant financial liabilities: |(crores)|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Non-derivative financial liabilities:|6,279|-|-|-|6,279| |Borrowings|200|16|36|19|271| |Other financial liabilities|1,530|13|464|2|2,009| |Total|8,009|29|500|21|8,559| |Derivative financial liabilities|20|-|-|-|20| |Total|8,029|29|500|21|8,579| Consolidated Financial Statements I 169 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements |(crores)|As at March 31, 2016|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---|---| |Non-derivative financial liabilities:|Trade and other payables|7,541|-|-|-|7,541| | |Borrowings|113|24|33|26|196| | |Other financial liabilities|2,212|44|467|19|2,742| | |Total|9,866|68|500|45|10,479| |Derivative financial liabilities|152|-|-|-|152| | | |Total|10,018|68|500|45|10,631| |(crores)|As at April 1, 2015|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---|---| |Non-derivative financial liabilities:|Trade and other payables|8,832|-|-|-|8,832| | |Borrowings|186|43|38|34|301| | |Other financial liabilities|1,225|63|608|10|1,906| | |Total|10,243|106|646|44|11,039| |Derivative financial liabilities|20|-|-|-|20| | | |Total|10,263|106|646|44|11,059| # 29. Segment reporting Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Group's chief operating decision maker is the Chief Executive Officer and Managing Director. The Group has identified business segments (industry practice) as reportable segments. The business segments comprise: 1) Banking, Financial Services and Insurance, 2) Manufacturing, 3) Retail and Consumer Business, 4) Communication, Media and Technology and 5) Others such as Energy, Resources and Utilities, Life Science and Healthcare, s-Governance and Products. Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting 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. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments. |
# Notes forming part of the Consolidated Financial Statements # Summarised segment information for the years ended March 31, 2017, 2016 and April 1, 2015 is as follows: # Year ended March 31, 2017 (crores) |Particulars|Business segments|Business segments|Business segments|Business segments|Business segments| | | | | | |---|---|---|---|---|---|---| | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |Revenue|47,505|12,486|20,459|19,521|17,995|117,966| |Segment result|13,098|3,574|5,740|5,552|4,271|32,235| |Total Unallocable expenses| | | | |1,943| | |Operating income| | | | |30,292| | |Other income (net)| | | | |4,221| | |Profit before taxes| | | | |34,513| | |Tax expense| | | | |8,156| | |Profit for the year| | | | |26,357| | |Depreciation and amortisation|74|-|-|-|2|76| |Depreciation and amortisation (unallocable)| | | | |1,911| | |Significant non-cash items (allocable)|19|6|10|22|68|125| # As at March 31, 2017 (crores) |Particulars| |Business segments| | | | | |---|---|---|---|---|---|---| | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |Segment assets|10,341|3,223|5,232|5,104|6,267|30,167| |Unallocable assets| | | |73,085| | | |Total assets| | | |1,03,252| | | |Segment liabilities|1,706|123|382|433|698|3,342| |Unallocable liabilities| | | |13,330| | | |Total liabilities| | | |16,672| | | # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # Year ended March 31, 2016 (in crores) |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Revenue|44,163|10,909|19,204|18,040|16,330|1,08,646| |Segment result|12,851|2,924|5,330|5,190|4,294|30,589| |Total Unallocable expenses| | | | |1,833| | |Operating income| | | | |28,756| | |Other income (net)| | | | |3,084| | |Profit before taxes| | | | |31,840| | |Tax expense| | | | |7,502| | |Profit for the year| | | | |24,338| | |Depreciation and amortisation (allocable)|86|-|-|-|2|88| |Depreciation and amortisation (unallocable)|-|-|-|-|-|1,800| |Significant non-cash items (allocable)|30|9|27|9|60|135| # As at March 31, 2016 (in crores) |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Segment assets|11,525|2,825|4,917|5,076|6,233|30,576| |Unallocable assets| | | | | |58,520| |Total assets| | | | | |89,096| |Segment liabilities|1,844|149|276|437|702|3,408| |Unallocable liabilities| | | | | |14,261| |Total liabilities| | | | | |17,669| # As at April 1, 2015 (in crores) |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Segment assets|9,599|2,441|4,261|4,331|6,551|27,183| |Unallocable assets| | | | | |45,783| |Total assets| | | | | |72,966| |Segment liabilities|2,593|341|731|828|1,352|5,845| |Unallocable liabilities| | | | | |10,845| |Total liabilities| | | | | |16,690| # Notes forming part of the Consolidated Financial Statements Geographical revenue is allocated based on the location of the customers. # Information regarding geographical revenue is as follows: |Geography|2017|2016| |---|---|---| |Americas (1)|66,091|60,011| |Europe (2)|30,038|29,092| |India|7,415|6,729| |Others|14,422|12,814| |Total|1,17,966|1,08,646| Geographical non-current assets (property, plant and equipment, goodwill, intangible assets, advance income tax and other non-current assets) are allocated based on the location of the assets. # Information regarding geographical non-current assets is as follows: |Geography|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Americas (3)|1,246|1,170|1,254| |Europe (4)|1,521|1,585|1,629| |India|15,355|15,335|14,597| |Others|598|745|884| |Total|18,720|18,835|18,364| # Footnotes: 1. (1) and (3) are substantially related to operations in the United States of America. 2. (2) includes revenue from operations in the United Kingdom of 16,404 crores and 17,171 crores for the years ended March 31, 2017 and March 31, 2016 respectively. File: AR_TCS_2016_2017.md 3. (4) includes non-current assets from operations in the United Kingdom of 568 crores, 643 crores and 726 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively. Information about major customers: No single customer represents 10% or more of the Group's total revenue for the year ended March 31, 2017 and March 31, 2016. Consolidated Financial Statements I 173 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # 30. Commitments and contingent liabilities # Capital and other commitments Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2017 is 1,503 crores. # Contingencies # Direct tax matters Refer note 10. # Indirect tax matters Tata Consultancy Services Limited and its subsidiaries in India have ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. As at March 31, 2017, Tata Consultancy Services Limited and its subsidiaries in India have demands on appeal amounting to 284 crores from various indirect tax authorities in Indian jurisdiction, which are being contested by the Company and its subsidiaries in India. In respect of indirect tax contingencies of 9 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. |
# Other claims The Group has examined the social security and tax aspects of contracts with legal entities which provide services to an overseas subsidiary and, based on legal opinion, concludes that the subsidiary is in compliance with the related statutory requirements. As at March 31, 2017, claims aggregating 6,308 crores against the Group (individually insignificant) have not been acknowledged as debts. In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic's intellectual property. In April 2016, the Company received an unfavourable jury verdict awarding damages totalling 6,101 crores (US$941 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. The Company has given letter of comfort to various banks for credit facilities availed by its subsidiaries (a) Tata America International Corporation, (b) Tata Consultancy Services Asia Pacific Pte Ltd. 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. The Group periodically receives notices and inquiries from income tax authorities related to the Group's operations in those jurisdictions. The Group has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. 174 I Consolidated Financial Statements # 31. Statement of Net assets and Profit and Loss and other comprehensive income attributable to Owners and Non-controlling interest # Notes forming part of the Consolidated Financial Statements (in crores) |Country of incorporation|Net assets, i.e. total assets minus total liabilities at March 31, 2017|Net assets, i.e. total assets minus total liabilities at March 31, 2016|Share in Other comprehensive income|Share in profit and loss|Share in total comprehensive income| |---|---|---|---|---|---| |Tata Consultancy Services Limited|178,022|86.94|423,653|102.02|387.11| |Subsidiaries (held directly)| | | | | | |APTOnline Limited|0.07|0.07|0.00|0.07|0.07| |MP Online Limited|0.07|0.07|0.00|0.07|0.07| |C-Edge Technologies Limited|0.14|0.12|0.00|0.12|0.12| |MahaOnline Limited|0.05|0.02|0.00|0.02|0.02| |TCS e-Serve International Limited|0.24|0.15|0.00|0.15|0.15| |TCS Foundation|0.54|0.82|0.00|0.82|0.82| |Diligenta Limited|0.64|0.03|(4.38)|(0.02)|(5)| |Tata Consultancy Services Canada Inc.|0.55|1.18|0.00|1.18|1.18| |Tata America International Corporation|3.60|4.15|1,130|4.11|1,130| |Tata Consultancy Services Asia Pacific Pte Ltd.|0.54|0.44|0.00|0.44|0.44| |Tata Consultancy Services Belgium S.A.|0.28|0.37|0.00|0.37|0.37| |Tata Consultancy Services Deutschland GmbH|0.14|0.36|(0.67)|0.35|0.35| |Tata Consultancy Services Netherlands BV|2.02|1.22|0.00|1.21|1.21| |Tata Consultancy Services Sverige AB|0.34|0.48|0.00|0.47|0.47| |TCS FNS Pty Limited|-1| | | | | |TCS Iberoamerica SA|1.33|0.44|0.00|0.44|0.44| |Tata Consultancy Services (Africa) (PTY) Ltd.|0.06|0.16|0.00|0.16|0.16| Consolidated Financial Statements I 175 # Annual Report 2016-17 |Country of incorporation|Share in Other assets|Share in Total assets|Share in profit and loss|Share in comprehensive income|As % of consolidated voting power as at March 31, 2017|As % of consolidated voting power as at March 31, 2016|As % of total comprehensive income| | | |---|---|---|---|---|---|---|---|---|---| |CMC Americas Inc. (w.e.f. 01.04.2015)|USA|100.00|100.00|0.18|640.13|36|--|0.13|36| |Tata Consultancy Services Qatar S.S.C.|Qatar|100.00|100.00|0.07|660.03|--|0.03|--|0.03| |CMC eBiz Inc.|USA|100.00|100.00|--|--|--|--|--|--| |TCS e-Serve America, Inc.|USA|100.00|100.00|0.01|(0.03)|(8)|--|(0.03)|(8)| |Diligenta 2 Limited (w.e.f. March 14, 2017)|UK|-|100.00|--|--|--|--|--|--| |MS CJV Investments Corporation|USA|-|100.00|--|--|--|--|--|--| |Tata Consultancy Services (China) Co., Ltd.|China|93.20|90.00|0.19|770.14|37|--|0.13|37| |Tata Consultancy Services Japan, Ltd.|Japan|51.00|51.00|0.93|850.38|104|--|0.38|104| |Tata Consultancy Services Malaysia Sdn Bhd|Malaysia|100.00|100.00|0.10|930.06|16|--|0.06|16| |PT Tata Consultancy Services Indonesia|Indonesia|100.00|100.00|0.03|270.07|18|--|0.07|18| |Tata Consultancy Services (Philippines) Inc.|Philippines|100.00|100.00|0.23|2120.28|76|--|0.28|76| |Tata Consultancy Services (Thailand) Limited|Thailand|100.00|100.00|0.02|140.01|3|--|0.01|3| |TCS Italia SRL|Italy|100.00|100.00|-0.02|--|2|--|0.01|2| |Tata Consultancy Services Luxembourg S.A.|Capellen (G.D. |
de Luxembourg)|100.00|100.00|0.06|520.10|27|--|0.10|27| |Tata Consultancy Services Switzerland Ltd.|Switzerland|100.00|100.00|0.31|2820.43|181|35|0.44|122| |Tata Consultancy Services France S.A.S|France|100.00|100.00|-0.01|4|(0.34)|(1)|0.01|(1)| |Tata Consultancy Services Osterreich GmbH|Austria|100.00|100.00|-0.04|-1|--|--|--|--| |Tata Consultancy Services Danmark ApS|Denmark|100.00|100.00|-0.03|--|--|--|--|--| Notes forming part of the Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements |Country of incorporation|Share in Other assets|Share in Total assets|Share in profit and loss|Share in comprehensive income|Amount ( crores)|As % of consolidated voting power|As % of total comprehensive income| | | | | |---|---|---|---|---|---|---|---|---|---|---|---| |Tata Consultancy Services De Espana S.A.|Spain|100.00|100.00|0.02|150.06|15|-|0.05|15| | | |Tata Consultancy Services Portugal Unipessoal Limitada|Portugal|100.00|100.00|(0.01)|(13)|(1)|-|-|(1)| | | |Alti S.A.|France|100.00|100.00|(0.01)|(12)|(0.49)|(134)|5.39|16|(0.43)|(118)| |Alti HR S.A.S.|France|100.00|100.00|0.01|10|-|(1)|-|(1)| | | |Tescom (France) Software Systems Testing S.A.R.L.|France|100.00|100.00|(0.01)|(9)|(0.01)|(3)|-|(0.01)|(3)| | |Alti Switzerland S.A.|Switzerland|100.00|100.00|0.01|12|-|1|-|1| | | |Alti Infrastructures Systemes & Reseaux S.A.|France|100.00|100.00|-|(2)|(1)|-|-|(1)| | | |Alti NV|Belgium|100.00|100.00|-|4|(0.03)|(9)|-|(0.03)|(9)| | |Teamlink|Belgium|100.00|100.00|-|(1)|-|-|-|-| | | |Planaxis Technologies Inc.|Canada|100.00|100.00|0.04|400|0.01|3|-|0.01| | | |Tata Consultancy Services Saudi Arabia|Saudi Arabia|76.00|76.00|0.04|410|0.14|37|-|0.13|37| | |Tata Consultancy Services (South Africa) (PTY) Ltd.|South Africa|100.00|75.00|0.06|590|0.11|29|-|0.11|29| | |TCS Financial Solutions Beijing Co., Ltd.|China|100.00|100.00|0.03|290|0.01|2|-|0.01|2| | |TCS Financial Solutions Australia Holdings Pty Limited|Australia|100.00|100.00|0.05|49|-|-|-|-| | | |TCS Financial Solutions Australia Pty Limited|Australia|100.00|100.00|0.14|1250|0.11|31|0.34|10|0.12|32| |PT Financial Network Services|Indonesia|-|100.00|-|-|1|-|-|1| | | |TCS Solution Center S.A.|Uruguay|100.00|100.00|0.12|1090|0.10|27|(2.69)|(8)|0.07|19| |TCS Uruguay S.A.|Uruguay|100.00|100.00|0.06|530|0.02|-|-|0.02|-|(0.026)| |Tata Consultancy Services Argentina S.A.|Argentina|99.99|99.99|(0.04)|(36)|(0.06)|(15)|-|(0.05)|(15)| | # Annual Report 2016-17 |Country of incorporation|Share in Other assets|Share in Total assets|Share in profit and loss|Share in comprehensive income|As % of voting power as consolidated|As % of other consolidated|Amount (crores)|Amount (crores)|Amount (crores)|Amount (crores)| | |---|---|---|---|---|---|---|---|---|---|---|---| |Tata Consultancy Services Do Brasil Ltda|Brazil|100.00|100.00|0.08|730.03|-|0.03|-|-|-| | |Tata Consultancy Services De Mexico S.A., De C.V.|Mexico|100.00|100.00|0.55|5091.00|272|-|0.99|272|-| | |MGDC S.C.|Mexico|100.00|100.00|0.13|1220.14|380.34|10.14|0.14|39|-| | |TCS Inversiones Chile Limitada|Chile|99.99|99.99|0.34|311|-|(1)|-|-|(1)| | |Tata Consultancy Services Chile S.A.|Chile|100.00|100.00|0.72|6660.25|67|-|0.24|67|-| | |Technology Outsourcing S.A.|Peru|100.00|100.00|0.01|8|(0.01)|(2)|-|(0.01)|(2)| | |TATASOLUTION CENTER S.A.|Ecuador|100.00|100.00|0.06|65|(0.12)|(36)|(1.34)|(4)|(0.15)|(40)| |Trusts|India|-|0.23|211|0.10|27|-|0.10|27|-| | |TOTAL|100.00|92,216|100.00|27,205|100.00|2,971|100.00|27,502|-|-| | (a) Adjustments arising out of consolidation (5,636) (848) (474) (1,322) (b) Non-controlling interest # Indian Subsidiaries |APTOnline Limited|(7)|(2)|-(2)| |---|---|---|---| |MP Online Limited|(8)|(2)|-(2)| |C-Edge Technologies Limited|(67)|(22)|-(22)| |MahaOnline Limited|(10)|(1)|-(1)| # Foreign Subsidiaries |Tata Consultancy Services (China) Co., Ltd.|(12)|(4)|73| | |---|---|---|---|---| |Tata Consultancy Services Japan, Ltd.|(262)|(34)|(1)|(35)| |Tata Consultancy Services (South Africa) (PTY) Ltd.|-|(3)|(1)|(4)| TOTAL (366) (68) 5 (63) GRAND TOTAL 86,214 26,289 (172) 26,117 178 I Consolidated Financial Statements # 32. Related party transactions Tata Consultancy Services Limited's principal related parties consist of its holding company Tata Sons Limited and its subsidiaries, its own subsidiaries, affiliates and its key managerial personnel. The Group routinely enters into transactions with its related parties in the ordinary course of business. Transactions and balances with its own subsidiaries are eliminated on consolidation. |
Transactions with related parties are as follows: | | | | | |( crores)|Year ended March 31, 2017| |---|---|---|---|---|---|---| | |Associates /|Subsidiaries|Tata Sons|Other related parties|Total| | |Revenue from operations|4|246|2,162|-|2,412| | |Purchases of goods and services (including reimbursement)|4|555|634|-|1,193| | |Brand equity contribution|156|-|-|-|156| | |Dividend paid|6,712|8|3|-|6,723| | |Purchase of property, plant and equipment|-|21|33|-|54| | |Contribution to employees post employment benefit plans|-|-|-|1,029|1,029| | |Allowances / (write back) for doubtful accounts receivables and advances (net)|-|4|5|-|9| | |Rent expense|1|33|5|-|39| | |Loans and advances given|-|-|7|-|7| | |Loans and advances recovered|-|1|-|-|1| | | | | | | |( crores)|Year ended March 31, 2016| |---|---|---|---|---|---|---| | |Associates /|Subsidiaries|Tata Sons|Other related parties|Total| | |Revenue from operations|4|223|2,163|-|2,390| | |Purchases of goods and services (including reimbursement)|3|633|492|-|1,128| | |Brand equity contribution|128|-|-|-|128| | |Dividend paid|5,846|4|3|-|5,853| | |Purchase of property, plant and equipment|-|30|60|-|90| | |Contribution to employees post employment benefit plans|-|-|-|829|829| | |Rent expense|1|28|5|-|34| | |Loans and advances given|-|1|-|-|1| | |Bad debts and advances written off, Allowances for doubtful trade receivables and advances (net)|-|-|2|-|2| | Consolidated Financial Statements I 179 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # Balances receivable from related parties are as follows: |( crores)|As at March 31, 2017|Associates / jont ventures of Tata Sons|Subsidiaries of Tata Sons Limited|its subsidiaries|Total| |---|---|---|---|---|---| |Trade receivables and unbilled revenue (net)|1|128|626|755| | |Loans and advances, other financial assets and other assets|3|26|14|43| | |Investments|-|19|-|19| | |Total|4|173|640|817| | |( crores)|As at March 31, 2016|Associates / jont ventures of Tata Sons|Subsidiaries of Tata Sons Limited|its subsidiaries|Total| |---|---|---|---|---|---| |Trade receivables and unbilled revenue (net)|2|111|625|738| | |Loans and advances, other financial assets and other assets|2|2|9|13| | |Investments|-|19|-|19| | |Total|4|132|634|770| | |( crores)|As at April 1, 2015|Associates / jont ventures of Tata Sons|Subsidiaries of Tata Sons Limited|its subsidiaries|Total| |---|---|---|---|---|---| |Trade receivables and unbilled revenue (net)|1|116|665|782| | |Loans and advances, other financial assets and other assets|3|1|11|15| | |Investments|-|19|-|19| | |Total|4|136|676|816| | 180 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Balances payable to related parties |(crores)| |As at March 31, 2017|Associates / joint ventures of Tata Sons Limited|Subsidiaries of Tata Sons Limited|Tata Sons Limited and its subsidiaries|Total| |---|---|---|---|---|---|---| |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|138|28|150|316| | | |Total|138|28|150|316| | | |Commitments|-|24|71|95| | | |(crores)|As at March 31, 2016|Associates / joint ventures of Tata Sons Limited|Subsidiaries of Tata Sons Limited|Tata Sons Limited and its subsidiaries|Total| |---|---|---|---|---|---| |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|117|20|87|224| | |Total|117|20|87|224| | |Commitments|-|25|59|84| | |(crores)|As at April 1, 2015|Associates / joint ventures of Tata Sons Limited|Subsidiaries of Tata Sons Limited|Tata Sons Limited and its subsidiaries|Total| |---|---|---|---|---|---| |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|114|36|96|246| | |Total|114|36|96|246| | |Commitments|-|51|95|146| | The Group's material related party transactions and outstanding balances are with its subsidiaries with whom the Group routinely enters into transactions in the ordinary course of business. Consolidated Financial Statements I 181 # Annual Report 2016-17 # Notes forming part of the Consolidated Financial Statements # Compensation to key management personnel is as follows: | |(crores)|2017|2016| |---|---|---|---| |Short-term benefits| |46|43| |Dividend paid during the year| |1|-| |Total| |47|43| The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. # 33. Dividends Dividends paid during the year ended March 31, 2017 include an amount of 27 per equity share towards final dividend for the year ended March 31, 2016 and an amount of 19.50 per equity share towards interim dividend for the year ending March 31, 2017. Dividends paid during the year ended March 31, 2016 include an amount of 24 per equity share towards final dividend for the year ended March 31, 2015 and an amount of 16.50 per equity share towards interim dividend for the year ending March 31, 2016. The dividends declared by the Company are based on the profits available for distribution as reported in the financial statements of the Company. Accordingly, the retained earnings reported in these financial statements may not be fully distributable. As at March 31, 2017, income (net of dividend tax) available for distribution were 62,383 crores. On April 18, 2017, the Board of Directors of the Company have proposed a final dividend of 27.50 per share in respect of the year ending March 31, 2017 subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of 6,522 crores inclusive of dividend distribution tax of 1,103 crores. |
182 I Consolidated Financial Statements # Unconsolidated Financial Statements CONSULTANKY SfAVCESTaTA TCS Peepul Park, Trivandrum # Annual Report 2016-17 # INDEPENDENT AUDITORS' REPORT # TO THE MEMBERS OF TATA CONSULTANCY SERVICES LIMITED # Report on the Standalone Ind AS Financial Statements We have audited the accompanying standalone Ind AS financial statements of Tata Consultancy Services Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information. # Management's Responsibility for the Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act. 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 the standalone Ind AS 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 Ind AS financial statements based on our audit. In conducting 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. We conducted our audit of the standalone Ind AS financial statements 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 Ind AS 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 Ind AS financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 Ind AS 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 standalone Ind AS financial statements. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements. # Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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, 2017, and its profit, total comprehensive income, the changes in equity 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, based on our audit 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 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 including Other Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account. 4. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act. 5. On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164(2) of the Act. 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 Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, 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 Ind AS financial statements. 2. The Company has made provision, 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. 4. The Company has provided requisite disclosures in the standalone Ind AS financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated November 8, 2016 of the Ministry of Finance, during the period from November 8, 2016 to December 30, 2016. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. 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's Registration No. 117366W / W - 100018) P. R. RAMESH Mumbai, April 18, 2017 Partner (Membership No. 70928) Unconsolidated Financial Statements I 185 # Annual Report 2016-17 # 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') of Tata Consultancy Services Limited We have audited the internal financial controls over financial reporting of Tata Consultancy Services Limited ('the Company') as of March 31, 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended and as at 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 Guidance Note and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. The Guidance Note and those Standards require that we comply with 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' judgement, including the assessment of the risks of material misstatement of the standalone Ind AS 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 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. 186 I 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, 2017, 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's Registration No. 117366W / W - 100018) P. R. RAMESH Mumbai, April 18, 2017 Partner (Membership No. 70928) # Unconsolidated Financial Statements I 187 # Annual Report 2016-17 # 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) File: AR_TCS_2016_2017.md 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') # i. In respect of the Company's property, plant and equipment: - (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment. - (b) The property, plant and equipment 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. |
- (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. In respect of immovable properties been taken on lease and disclosed as property, plant and equipment in the standalone Ind AS financial statements, the lease agreements are in the name of the Company. # ii. Inventories: 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. # iii. Loans: According to the information and explanations given to us, 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. # iv. Compliance with provisions: 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. # v. Deposits: The Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 31, 2017 and therefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company. # vi. Reporting under clause 3(vi): 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. # vii. 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, 2017 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, 2017 on account of dispute are given below: |Particular|Forum where the dispute is pending|Financial Year to which the amount relates|Total (Crores)| |---|---|---|---| |Income Tax|Commissioner of Income Tax (Appeals)|2007-2008, 2009-2010, 2011-2012, 2012-2013|1,821| | |Income Tax Appellate Tribunal|2005-2006, 2010-2011|1,789| |Sales Tax, and Value Added Tax|Additional Commissioner|2007-2008|- *| | |Assistant Commissioner|1995-1996, 1997-1998, 2004-2005, 2005-2006, 2011-2012|- *| | |Deputy Commissioner|1994-1995, 2005-2006, 2008-2009, 2010-2011, 2011-2012, 2013-2014|4| | |Joint commissioner|1997-1998, 2005-2006, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014|4| | |Tribunal|1990-1991, 2002-2003, 2003-2004, 2004-2005|7| 188 I Unconsolidated Financial Statements # Tata |Particular|Forum where the dispute is pending|Financial Year to which the amount relates|Total (` Crores)| |---|---|---|---| |Service Tax|High Court|1994-1995, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013|142| | |Commissioner of Service tax (Appeals)|2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015|4| | |Tribunal|2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013|85| *Indicates amount less than `0.50 crore. There were no dues of duty of Customs, duty of Excise and Cess which have not been deposited as at March 31, 2017 on account of dispute. # viii. 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. # ix. 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. # x. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year. # xi. |
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. # xii. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable. # xiii. 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 Ind AS financial statements as required by the applicable accounting standards. # xiv. 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. # xv. 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. # xvi. 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's Registration No. 117366W / W - 100018) P. R. RAMESH Mumbai, April 18, 2017 Partner (Membership No. 70928) # Unconsolidated Financial Statements I 189 # Annual Report 2016-17 # Balance Sheet as at March 31, 2017, 2016 and April 1, 2015 |( crores)|Note|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | |---|---|---|---|---|---| |ASSETS|ASSETS|ASSETS|ASSETS|ASSETS| | | | | | |Non - current assets|Non - current assets|Non - current assets|Non - current assets|Non - current assets| | | | | | | |(a) Property, plant and equipment|4|9,214|9,056|7,629| | |(b) Capital work-in-progress| |1,477|1,640|2,741| | |(c) Intangible assets|5|17|24|31| | |(d) Financial assets| | | | | | |(i) Investments|6(i)|2,201|2,229|2,283| | |(ii) Loans|7(i)|6|2,432|1,587| | |(iii) Other financial assets|8(i)|638|1,179|1,080| | |(e) Income tax assets (net)| |4,560|4,230|3,956| | |(f) Deferred tax assets (net)|9|2,447|2,530|2,321| | |(g) Other assets|10(i)|579|720|843| | |Total non - current assets| |21,139|24,040|22,471| |Current assets|Current assets|Current assets|Current assets|Current assets| | | | | | | |(a) Inventories|11|21|9|15| | |(b) Financial assets| | | | | | |(i) Investments|6(ii)|40,729|21,930|971| | |(ii) Trade receivables|12|16,649|19,058|17,392| | |(iii) Unbilled revenue| |4,235|2,712|2,631| | |(iv) Cash and cash equivalents|13|790|4,383|461| | |(v) Other balances with banks|14|526|423|16,074| | |(vi) Loans|7(ii)|2,704|2,523|1,337| | |(vii) Other financial assets|8(ii)|1,418|866|884| | |(c) Other assets|10(ii)|1,547|1,473|1,503| | |Total current assets| |68,619|53,377|41,268| | |TOTAL ASSETS| |89,758|77,417|63,739| |EQUITY AND LIABILITIES|EQUITY AND LIABILITIES|EQUITY AND LIABILITIES|EQUITY AND LIABILITIES|EQUITY AND LIABILITIES| | | | | | |Equity|Equity|Equity|Equity|Equity| | | | | | | |(a) Share capital|15|197|197|197| | |(b) Other equity|16|77,825|64,816|51,352| | |Total Equity| |78,022|65,013|51,549| |Liabilities|Liabilities|Liabilities|Liabilities|Liabilities| | | | | | |Non-current liabilities|Non-current liabilities|Non-current liabilities|Non-current liabilities|Non-current liabilities| | | | | | | |(a) Financial liabilities| | | | | | |(i) Long-term borrowings|17(i)|44|50|65| | |(ii) Other financial liabilities|18(i)|245|293|411| | |(b) Employee benefit obligation| |63|48|56| | |(c) Provisions|19(i)|39|40|94| | |(d) Deferred tax liabilities (net)|9|314|366|272| | |(e) Other liabilities|20(i)|330|298|281| | |Total non-current liabilities| |1,035|1,095|1,179| |Current liabilities|Current liabilities|Current liabilities|Current liabilities|Current liabilities| | | | | | | |(a) Financial liabilities| | | | | | |(i) Trade and other payables| | | | | | |(ii) Short-term borrowings|17(ii)|4,874200|5,370113|6,855186| | |(iii) Other financial liabilities|18(ii)|1,262|2,083|1,001| | |(b) Unearned and deferred revenue| |1,126|1,068|870| | |(c) Current income tax liabilities (net)| |1,046|536|350| | |(d) Employee benefit obligation| |1,376|1,164|982| | |(e) Provisions|19(ii)|66|115|103| | |(f) Other liabilities|20(ii)|751|860|664| | |Total current liabilities| |10,701|11,309|11,011| | |TOTAL EQUITY AND LIABILITIES| |89,758|77,417|63,739| NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-37 As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian O. P. Bhatt Chartered Accountants P. R. Ramesh Rajesh Gopinathan Ishaat Hussain V. Thyagarajan Prof. Clayton M Christensen Partner CEO and Managing Director Director Director Director N. Ganapathy Subramaniam Dr. Vijay Kelkar Aman Mehta Suprakash Mukhopadhyay Mumbai, April 18, 2017 COO and Executive Director Director Director Company Secretary 190 I Unconsolidated Financial Statements # Statement of Profit and Loss for the years ended March 31, 2017 and 2016 |( crores)|Note|2017|2016| |---|---|---|---| |I. Revenue from operations| |92,693|85,864| |II. Other income (net)|21|4,568|3,757| |III. TOTAL INCOME| |97,261|89,621| |IV. |
Expenses:| | | | |(a) Employee benefit expenses|22|48,116|42,420| |(b) Other operating expenses|23|17,488|16,390| |(c) Finance costs|26|16|13| |(d) Depreciation and amortisation expense| |1,575|1,459| |TOTAL EXPENSES| |67,195|60,282| |V. PROFIT BEFORE TAX (III-IV)| |30,066|29,339| |VI. Tax expense:| | | | |(a) Current tax|9|6,643|6,376| |(b) Deferred tax|9|(230)|(112)| |TOTAL TAX EXPENSE| |6,413|6,264| |VII. PROFIT FOR THE YEAR (V-VI)| |23,653|23,075| |VIII. OTHER COMPREHENSIVE INCOME / (LOSSES)| | | | |(A) (i) Items that will be reclassified subsequently to the statement of profit and loss| | | | |(a) Net changes in fair values of investments other than equity shares carried at fair value through OCI| |740|82| |(b) Net changes in fair values of intrinsic value of cash flow hedges| |41|(73)| |(c) Net changes in fair values of time value of cash flow hedges| |3|(21)| |(ii) Income tax on items that will be reclassified subsequently to statement of profit and loss| |(261)|(15)| |(B) (i) Items that will not be reclassified subsequently to the statement of profit and loss| | | | |(a) Remeasurement of defined employee benefit plans| |(200)|(122)| |(b) Changes in fair values of investment in equities carried at fair value through OCI| |(20)|5| |(ii) Income tax on items that will not be reclassified subsequently to the statement of profit and loss| |-|12| |TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)| |303|(132)| |IX. TOTAL COMPREHENSIVE INCOME FOR THE YEAR| |23,956|22,943| |X. Earnings per equity share - Basic and diluted ( )|31|120.04|117.11| |Weighted average number of equity shares (face value of 1 each)| |197,04,27,941|197,04,27,941| |XI. NOTES FORMING PART OF THE FINANCIAL STATEMENTS| |1-37| | As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian O. P. Bhatt Chartered Accountants Chairman CFO Director Executive Director Director P. R. Ramesh Rajesh Gopinathan Ishaat Hussain V. Thyagarajan Prof. Clayton M Christensen Partner CEO and Managing Director Director Director Director N. Ganapathy Subramaniam Dr. Vijay Kelkar Aman Mehta Suprakash Mukhopadhyay Mumbai, April 18, 2017 COO and Executive Director Director Director Company Secretary Unconsolidated Financial Statements I 191 # Annual Report 2016-17 # Statement of Changes in Equity for the years ended March 31, 2017 and 2016 # A. EQUITY SHARE CAPITAL |( crores)|Balance as at April 1, 2015|Changes in equity share capital during the year|Balance as at March 31, 2016| | | | | | | |---|---|---|---|---|---|---|---|---|---| | | | |197| | |-|197| | | |( crores)|Balance as at April 1, 2016|Changes in equity share capital during the year|Balance as at March 31, 2017| | | | | | | | |---|---|---|---|---|---|---|---|---|---|---| | | |197| | | |-|197| | | | # B. OTHER EQUITY |( crores)| | |Reserves and surplus| | | | |Items of other comprehensive income| | | |---|---|---|---|---|---|---|---|---|---|---| |Capital reserve*|Securities premium|Capital redemption reserve|General reserve|Special Economic Zone re-investment reserve|Retained earnings|Investment revaluation reserve|Cash flow hedging reserve|Intrinsic value|Time value|Total Equity| | |-|1,919|100|6,830|-|42,370|3|131|(1)|51,352| |Profit for the year|-|-|-|-| |23,075|-|-|-|23,075| |Other comprehensive income|-|-|-|-| |(107)|56|(63)|(18)|(132)| |Total comprehensive income|-|-|-|-| |22,968|56|(63)|(18)|22,943| |Dividend (including tax on dividend)|-|-|-|-| |(9,479)|-|-|-|(9,479)| |Transfer of profits of the year to General reserve|-|-|-|2,288| |(2,288)|-|-|-|-| |Realised gain on equity shares carried at fair value through OCI|-|-|-|-| |5|(5)|-|-|-| |Balance as at March 31, 2016|-|1,919|100|9,118|-|53,576|54|68|(19)|64,816| |Balance as at April 1, 2016|-|1,919|100|9,118|-|53,576|54|68|(19)|64,816| |Profit for the year|-|-|-|-| |23,653|-|-|-|23,653| |Other comprehensive income|-|-|-|-| |(200)|464|37|2|303| |Total comprehensive income|-|-|-|-| |23,453|464|37|2|23,956| |Transfer to Special Economic Zone re-investment reserve|-|-|-|-|376|(376)|-|-|-| | |Transfer from Special Economic Zone re-investment reserve|-|-|-|-|(279)|279|-|-|-| | |Dividend (including tax on dividend)|-|-|-|-| |(10,947)|-|-|-|(10,947)| |Realised loss on equity shares carried at fair value through OCI|-|-|-|-| |(20)|20|-|-|-| |Balance as at March 31, 2017|-|1,919|100|9,118|97|65,965|538|105|(17)|77,825| * represents values less than 0.50 crore. # NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-37 # As per our report attached # For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian O. P. Bhatt Chartered Accountants Chairman CFO Director Executive Director Director P. R. Ramesh Rajesh Gopinathan Ishaat Hussain V. Thyagarajan Prof. Clayton M Christensen Partner CEO and Managing Director Director Director Company Secretary N. Ganapathy Subramaniam Dr. |
Vijay Kelkar Aman Mehta Suprakash Mukhopadhyay Mumbai, April 18, 2017 192 I Unconsolidated Financial Statements # Statement of Cash Flow for the years ended March 31, 2017 and 2016 |( crores)|Note|2017|2016| |---|---|---|---| |I NET CASH FLOWS FROM OPERATING ACTIVITIES|I NET CASH FLOWS FROM OPERATING ACTIVITIES|I NET CASH FLOWS FROM OPERATING ACTIVITIES|I NET CASH FLOWS FROM OPERATING ACTIVITIES| | |Profit before tax|30,066|29,339| | |Adjustments for:| | | | |Depreciation and amortisation expense|1,575|1,459| | |Bad debts and advances written off, allowance for doubtful trade receivable and advances (net)|107|119| | |Interest expense|16|13| | |Gain on disposal of property, plant and equipment|(6)|(5)| | |Unrealised foreign exchange gain|52|(49)| | |Dividend income (including exchange gain)|(394)|(705)| | |Interest income|(2,216)|(1,695)| | |Net gain on investments|(596)|(451)| | |Operating profit before working capital changes|28,604|28,025| | |Inventories|(12)|6| | |Unbilled revenue|(1,523)|(81)| | |Trade receivables|2,303|(1,777)| | |Loans|705|(679)| | |Other financial assets|(46)|(264)| | |Other assets|67|130| | |Trade and other payables|(495)|(1,485)| | |Unearned and deferred revenue|58|198| | |Other financial liabilities|37|155| | |Other liabilities|(100)|222| | |Cash generated from operations|29,598|24,450| | |Taxes paid|(6,466)|(6,464)| | |Net cash provided by operating activities|23,132|17,986| |II CASH FLOWS FROM INVESTING ACTIVITIES|II CASH FLOWS FROM INVESTING ACTIVITIES|II CASH FLOWS FROM INVESTING ACTIVITIES|II CASH FLOWS FROM INVESTING ACTIVITIES| | |Payments for purchase of property, plant and equipment|(1,655)|(1,765)| | |Proceeds from disposal of property, plant and equipment|19|6| | |Purchase of investments|(118,283)|(113,968)| | |Proceeds from disposal / redemption of investments|100,031|94,410| | |Loans repaid by subsidiaries|-|6| | |Inter-corporate deposits placed|(2,125)|(2,425)| | |Proceeds from inter-corporate deposits|3,697|1,063| | |Earmarked deposits placed with banks| |(400)| | |Proceeds from earmarked deposits with banks|400|99| | |Proceeds from bank deposits|-|15,953| | |Dividend received from subsidiaries (including exchange gain)|394|696| | |Dividend received from other investments|-|9| | |Interest received|1,740|1,798| | |Net cash used in investing activities|(15,782)|(4,518)| |III CASH FLOWS FROM FINANCING ACTIVITIES|III CASH FLOWS FROM FINANCING ACTIVITIES|III CASH FLOWS FROM FINANCING ACTIVITIES|III CASH FLOWS FROM FINANCING ACTIVITIES| | |Repayment of finance lease obligations|(15)|(21)| | |Short term borrowings (net)|87|(73)| | |Dividend paid (including dividend tax)|(10,947)|(9,479)| | |Interest paid|(16)|(13)| | |Net cash used in financing activities|(10,891)|(9,586)| | |Net change in cash and cash equivalents|(3,541)|3,882| | |Cash and cash equivalents at the beginning of the year|4,383|461| | |Exchange difference on translation of foreign currency cash and cash equivalents|(52)|40| | |Cash and cash equivalents at the end of the year|790|4,383| |IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS|IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS|IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS|IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS| |1-37|1-37|1-37|1-37| As per our report attached For and on behalf of the Board For Deloitte Haskins & Sells LLP N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Aarthi Subramanian Executive Director O. P. Bhatt Director P. R. Ramesh Partner Rajesh Gopinathan CEO and Managing Director Ishaat Hussain Director V. Thyagarajan Director Prof. Clayton M Christensen Director N. Ganapathy Subramaniam COO and Executive Director Dr. Vijay Kelkar Director Aman Mehta Director Suprakash Mukhopadhyay Company Secretary Mumbai, April 18, 2017 Unconsolidated Financial Statements I 193 # Annual Report 2016-17 # 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 delivery centers around the globe. The Company's full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Consulting, Digital Enterprise Services, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON-Small and Medium Businesses, IT Infrastructure Services, IT Services and Platform Solutions. The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is TCS House, Raveline Street, Fort, Mumbai - 400001. As at March 31, 2017, Tata Sons Limited, the holding company owned 73.26% of the Company's equity share capital. The financial statements for the year ended March 31, 2017 were approved by the Board of Directors and authorised for issue on April 18, 2017. # 2) SIGNIFICANT ACCOUNTING POLICIES # a) Statement of compliance In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Previous periods have been restated to Ind AS. |
In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards, the Company has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 ("Previous GAAP") to Ind AS of shareholders' equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended March 31, 2016. These financial statements have been prepared in accordance with Ind AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013. # b) Basis of preparation These financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. CMC Limited has been amalgamated with the Company with effect from April 1, 2015 in 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. All assets and liabilities, income and expense have been included retrospectively in the financial statements of the Company. 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. # c) Use of estimates and judgements The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected. Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities. Impairment of investments: The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. Useful lives of property, plant and equipment: The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. 194 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Valuation of deferred tax assets The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note 2(i). # Provisions and contingent liabilities 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 a 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. # Revenue recognition The Company earns revenue primarily from providing information technology and consultancy services, including services under contracts for software development, implementation and other related services, licensing and sale of its own software, business process services and maintenance of equipment. The Company recognises revenue as follows: - Revenue from bundled contracts that involve supplying computer equipment, licensing software and providing services is allocated separately for each element based on their fair values. |
- Revenue from contracts priced on a time and material basis is recognised as services are rendered and as related costs are incurred. - Revenue from software development contracts, which are generally time bound fixed price contracts, is recognised over the life of the contract using the percentage-of-completion method, with contract costs determining the degree of completion. Losses on such contracts are recognised when probable. Revenue in excess of billings is recognised as unbilled revenue in the Balance sheet; to the extent billings are in excess of revenue recognised, the excess is reported as unearned and deferred revenue in the Balance sheet. - Revenue from Business Process Services contracts priced on the basis of time and material or unit of delivery is recognised as services are rendered or the related obligation is performed. - Revenue from the sale of internally developed and manufactured systems and third party products which do not require significant modification is recognised upon delivery, which is when the absolute right to use passes to the customer and the Company does not have any material remaining service obligations. - Revenue from maintenance contracts is recognised on a pro-rata basis over the period of the contract. - Revenue is recognised only when evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including the price is fixed or determinable, services have been rendered and collectability of the resulting receivables is reasonably assured. - Revenue is reported net of discounts, indirect and service taxes. # Dividend income Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. # Leases # Finance lease File: AR_TCS_2016_2017.md 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 leases are 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. # Operating lease Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating lease. Operating lease payments are recognised on a straight line basis over the lease term in the statement of profit and loss, unless the lease agreement explicitly states that increase is on account of inflation. Unconsolidated Financial Statements I 195 # Annual Report 2016-17 # Notes forming part of the Financial Statements # g) Cost recognition Costs and expenses are recognised when incurred and have been classified according to their nature. The costs of the Company are broadly categorised in employee benefit expenses, depreciation and amortisation and other operating expenses. Employee benefit expenses include employee compensation, allowances paid, contribution to various funds and staff welfare expenses. Other operating expenses mainly include fees to external consultants, cost of running its facilities, travel expenses, cost of equipment and software licenses, communication costs, allowances for delinquent receivables and advances and other expenses. Other expenses is an aggregation of costs which are individually not material such as commission and brokerage, recruitment and training, entertainment etc. # h) Foreign currency The functional currency of the Company is Indian rupee ( ). Income and expenses in foreign currencies are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing on the Balance sheet date and exchange gains and losses arising on settlement and restatement are recognised in the statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated. # i) Income taxes Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. # Current income taxes The current income tax expense includes income taxes payable by the Company and its branches in India and overseas. |
The current tax payable by the Company in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. 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 and where the relevant tax paying units intends to settle the asset and liability on a net basis. # Deferred income taxes Deferred income tax is recognised using the Balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred income tax asset are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future. # 196 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements Economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. The Company recognises interest levied and penalties related to income tax assessments in finance costs. # j) Financial instruments Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. # Cash and cash equivalents The Company 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. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage. # Financial assets at amortised cost Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
# Financial assets at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in profit or loss. # Financial liabilities Financial liabilities are measured at amortised cost using the effective interest method. # Equity instruments An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Equity instruments recognised by the Company are recognised at the proceeds received net off direct issue cost. # Hedge accounting The Company designates certain foreign exchange forward, option and future contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss. The effective portion of change in the fair value of the designated hedging instrument is recognised in the other comprehensive income and accumulated under the heading cash flow hedge reserve. Unconsolidated Financial Statements I 197 # Annual Report 2016-17 # Notes forming part of the Financial Statements The Company separates the intrinsic value and time value of an option and designates as hedging instruments only the change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised in the statement of other comprehensive income and accounted as a separate component of equity. Such amounts are reclassified into the statement of profit and loss when the related hedged items affect profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit or loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the statement of profit and loss. # k) Investment in subsidiaries Investment in subsidiaries are measured at cost less impairment. # l) Property, plant and equipment Property, plant and equipment are stated at cost, less accumulated depreciation (other than freehold land) and impairment loss, if any. Depreciation is provided for property, plant and equipment so as to expense the cost over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual value are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis. |Type of asset|Method|Useful lives| |---|---|---| |Buildings|Straight line|20 years| |Leasehold improvements|Straight line|Lease term| |Plant and equipment|Straight line|10 years| |Computer equipment|Straight line|4 years| |Vehicles|Straight line|4 years| |Office equipments|Straight line|5 years| |Electrical installations|Straight line|10 years| |Furniture and fixtures|Straight line|5 years| Assets held under finance lease are depreciated over the shorter of the lease term and their useful lives. Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset is ready for its intended use. # m) Intangible assets Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any. |
Intangible assets consist of rights under licensing agreement and software licences which are amortised over license period which equates the useful life ranging between 2-5 years on a straight line basis. # n) Impairment (i) Financial assets (other than at fair value) The Company assesses at each date of Balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. (ii) Non-financial assets Tangible and intangible assets Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost # Notes forming part of the Financial Statements to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss. # o) Employee benefits # (i) Defined benefit plans For defined benefit plans, 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 other comprehensive income for the period in which they occur. Past service cost both vested and unvested is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits. The retirement benefit obligations recognised in the Balance sheet represents the present value of the defined benefit obligations 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) Defined contribution plans Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits. # (iii) Compensated absences 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. # p) 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. # q) Earnings per share Basic earnings per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive securities in any of the years' presented. # 3) EXPLANATION OF TRANSITION TO IND AS The transition as at April 1, 2015 to Ind AS was carried out from Previous GAAP. The exemptions and exceptions applied by the Company in accordance with Ind AS 101 - First-time Adoption of Indian Accounting Standards, the reconciliations of equity and total comprehensive income in accordance with Previous GAAP to Ind AS are explained below. |
# Exemptions from retrospective application: The Company has applied the following exemptions: # (a) Investments in subsidiaries, joint ventures and associates The Company has elected to adopt the carrying value under Previous GAAP as on the date of transition i.e. April 1, 2015 in its separate financial statements. # (b) Business combinations The Company has elected to apply Ind AS 103 - Business Combinations retrospectively to past business combinations from April 1, 2013. Unconsolidated Financial Statements I 199 # Annual Report 2016-17 # Reconciliations between Previous GAAP and Ind AS # (i) Equity reconciliation |Note|As at March 31, 2016|As at April 1, 2015| | |---|---|---|---| |As reported under Previous GAAP|58,867|45,416| | |Adjusted effect of CMC Merger|--|810| | |Adjusted equity under Previous GAAP|58,867|46,226| | |Dividend (including dividend tax)|a|6,403|5,724| |Depreciation|b|(440)|(537)| |Change in fair valuation of investments|c|83|9| |Tax adjustments|d|101|133| |Others| |(1)|(6)| |Equity under Ind AS| |65,013|51,549| # (ii) Total Comprehensive income reconciliation |Note|2016| | | |---|---|---|---| |Net profit under Previous GAAP| | |22,883| |Employee benefits|e| |122| |Depreciation|b| |97| |Change in fair valuation of investments|c| |(3)| |Tax adjustments|d| |(28)| |Others| | |4| |Net profit under Ind AS| | |23,075| |Other comprehensive income| | |(132)| |Total comprehensive income under Ind AS| | |22,943| # (iii) Reconciliation of Statement of Cash Flow There are no material adjustments to the Statements of Cash Flows as reported under the Previous GAAP. # Notes to reconciliations between Previous GAAP and Ind AS (a) Dividend (including dividend tax) Under Ind AS, dividend to holders of equity instruments is recognised as a liability in the year in which the obligation to pay is established. Under Previous GAAP, dividend payable is recorded as a liability in the year to which it relates. This has resulted in an increase in equity by 6,403 crores and 5,724 crores (including dividend declared by CMC Limited) as at March 31, 2016 and April 1, 2015 respectively. (b) Depreciation In April 2014, the Company revised its method of depreciation from written down value to straight-line basis. This change in method was retrospectively adjusted in accordance with Previous GAAP. Under Ind AS, the Company has elected to apply Ind AS 16 - Property, plant and equipment from the date of acquisition of property, plant and equipment and accordingly the change in method has been prospectively applied as a change in estimate. This has resulted in a decline in equity under Ind AS by 440 crores, and 537 crores as at March 31, 2016, and as at April 1, 2015 respectively, and increase in net profit by 97 crores for the year ended March 31, 2016. 200 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (c) Fair valuation of investments Under Previous GAAP, current investments were measured at lower of cost or fair value and long term investments were measured at cost less diminution in value which is other than temporary, under Ind AS Financial assets other than amortised cost are subsequently measured at fair value. The Company holds investment in government securities with the objective of both collecting contractual cash flows which give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Company has also made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. This has resulted in increase in investment revaluation reserve by 82 crores, and increase in investment revaluation reserve by 4 crores as at March 31, 2016 and April 1, 2015 respectively. Investment in mutual funds have been classified as fair value through statement of profit and loss and changes in fair value are recognised in statement of profit and loss. This has resulted in increase in retained earnings of 1 crore, and 5 crores as at March 31, 2016 and April 1, 2015 respectively, increase in net profit by 3 crores for the year ended March 31, 2016. # (d) Tax adjustments Tax adjustments include deferred tax impact on account of differences between Previous GAAP and Ind AS. These adjustments have resulted in an increase in equity under Ind AS by 101 crores and 133 crores as at March 31, 2016, and April 1, 2015 respectively and decrease in net profit by 28 crores for the year ended March 31, 2016. # (e) Employee benefits Under Previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. |
Under Ind AS, the actuarial gains and losses form part of re-measurement of net defined benefit liability/asset which is recognised in other comprehensive income in the respective years. This difference has resulted in increase in net profit of 122 crores for the year ended March 31, 2016. However, the same does not result in difference in equity or total comprehensive income. Unconsolidated Financial Statements I 201 # Annual Report 2016-17 # Notes forming part of the Financial Statements # 4) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: | |Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office equipments|Electrical installations|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2016|327|6,044|1,288|320|4,649|31|1,840|1,501|1,122|17,122| |Additions|-|596|133|72|607|2|119|106|104|1,739| |Disposals|-|(3)|(9)|-|(126)|(2)|(16)|(6)|(18)|(180)| |Cost as at March 31, 2017|327|6,637|1,412|392|5,130|31|1,943|1,601|1,208|18,681| |Accumulated depreciation as at April 1, 2016|-|(1,119)|(753)|(38)|(3,509)|(19)|(1,191)|(643)|(794)|(8,066)| |Depreciation for the year|-|(328)|(118)|(35)|(611)|(5)|(225)|(140)|(106)|(1,568)| |Disposals|-|3|9|-|115|2|15|5|18|167| |Accumulated depreciation as at March 31, 2017|-|(1,444)|(862)|(73)|(4,005)|(22)|(1,401)|(778)|(882)|(9,467)| |Net carrying amount as at March 31, 2017|327|5,193|550|319|1,125|9|542|823|326|9,214| | |Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office equipments|Electrical installations|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2015|327|4,762|1,187|127|4,204|27|1,624|1,183|976|14,417| |Additions|-|1,283|115|193|567|8|227|326|161|2,880| |Disposals|-|(1)|(14)|-|(122)|(4)|(11)|(8)|(15)|(175)| |Cost as at March 31, 2016|327|6,044|1,288|320|4,649|31|1,840|1,501|1,122|17,122| |Accumulated depreciation as at April 1, 2015|-|(841)|(634)|(16)|(3,053)|(19)|(977)|(524)|(724)|(6,788)| |Depreciation for the year|-|(279)|(133)|(22)|(578)|(4)|(225)|(126)|(85)|(1,452)| |Disposals|-|1|14|-|122|4|11|7|15|174| |Accumulated depreciation as at March 31, 2016|-|(1,119)|(753)|(38)|(3,509)|(19)|(1,191)|(643)|(794)|(8,066)| |Net carrying amount as at March 31, 2016|327|4,925|535|282|1,140|12|649|858|328|9,056| |Net carrying amount as at April 1, 2015|327|3,921|553|111|1,151|8|647|659|252|7,629| (i) Buildings include 3 crores (March 31, 2016: 3 crores) (April 1, 2015: 3 crores) being value of investment in shares of Co-operative Housing Societies and Limited Companies. (ii) Net book value of computer equipment of 1 crore (March 31, 2016: 6 crores) (April 1, 2015: 18 crores) and leasehold improvements of 36 crores (March 31, 2016: 46 crores) (April 1, 2015: 57 crores) are under finance lease. (iii) Legal formalities relating to conveyance of freehold buildings having net book value Nil (March 31, 2016: * crores) (April 1, 2015: 5 crores) are pending completion. *represents values less than 0.50 crore. 202 I Unconsolidated Financial Statements # INTANGIBLE ASSETS Intangible assets consist of the following: |Description|Cost as at April 1, 2016|Additions|Disposals|Cost as at March 31, 2017|Accumulated amortisation as at April 1, 2016|Amortisation for the year|Disposals|Accumulated amortisation as at March 31, 2017|Net carrying amount as at March 31, 2017| |---|---|---|---|---|---|---|---|---|---| |Rights under licensing agreement and software licenses|129|-|(61)|68|(105)|(7)|61|(51)|17| |Description|Cost as at April 1, 2015|Additions|Disposals|Cost as at March 31, 2016|Accumulated amortisation as at April 1, 2015|Amortisation for the year|Disposals|Accumulated amortisation as at March 31, 2016|Net carrying amount as at March 31, 2016|Net carrying amount as at April 1, 2015| |---|---|---|---|---|---|---|---|---|---|---| |Rights under licensing agreement and software licenses|129|-|-|129|(98)|(7)|-|(105)|24|31| The estimated amortisation for each of the five years subsequent to March 31, 2017 is follows: |Year ending March 31,|Amortisation expense| |---|---| |2018|7| |2019|7| |2020|3| 17 # Annual Report 2016-17 # Notes forming part of the Financial Statements # 6) INVESTMENTS Investments consist of the following: # (i) Investments - Non-current |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(A) Investments carried at cost| | | | |(a) Subsidiary companies|2,124|2,124|2,225| |(B) Investments carried at fair value through profit or loss| | | | |Mutual and other funds (unquoted)|55|58|7| |(C) Investments carried at fair value through OCI| | | | |Fully paid equity shares (quoted)|-|-|4| |Fully paid equity shares (unquoted)|22|47|47| | |2,201|2,229|2,283| The market value of quoted investments is equal to the carrying value. # (ii) Investments - Current |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(A) Investment carried at amortised cost| | | | |Certificate of deposits (unquoted)|-|491|-| |(B) Investment carried at fair value through profit or loss| | | | |Mutual and other funds (unquoted)|18,730|1,185|971| |(C) Investment carried at fair value through OCI| | | | |Government securities (quoted)|21,999|20,254|-| | |40,729|21,930|971| File: AR_TCS_2016_2017.md The market value of quoted investments is equal to the carrying value. |
# Details of investment in subsidiaries is as follows: |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Fully paid equity shares (unquoted)| | | | |TCS Iberoamerica SA|461|461|461| |APTOnline Limited|-|-|-| |Tata Consultancy Services Belgium S.A.|1|1|1| |Tata Consultancy Services Netherlands BV|403|403|403| |Tata Consultancy Services Sverige AB|19|19|19| |Tata Consultancy Services Deutschland GmbH|2|2|2| |Tata America International Corporation|453|453|453| |Tata Consultancy Services Asia Pacific Pte Ltd.|19|19|19| |TCS FNS Pty Limited|212|212|212| |Diligenta Limited|429|429|530| |Tata Consultancy Services Canada Inc.|31|31|31| |C-Edge Technologies Limited|5|5|5| |MP Online Limited|1|1|1| |Tata Consultancy Services (Africa) (PTY) Ltd.|66|66|66| |MahaOnline Limited|2|2|2| |Tata Consultancy Services Qatar S.S.C.|2|2|2| |CMC Americas Inc.|8|8|8| |TCS e-Serve International Limited|10|10|10| |TCS Foundation|-|-|-| | |2,124|2,124|2,225| 204 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 7) LOANS Loans (unsecured) consist of the following: # (i) Long-term loans | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |Considered good| |6|7|9| |Loans and advances to employees| |6|7|9| |Loans to related parties| |-|-|6| |Inter-corporate deposits| |-|2,425|1,572| | |Total|6|2,432|1,587| Loans to related parties, considered good, comprise: TCS FNS Pty Limited - - 6 # (ii) Short-term loans | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Considered good| | | | | |(i) Loans and advances to employees| |279|951|274| |(ii) Inter-corporate deposits| |2,425|1,572|1,063| |(b) Considered doubtful| | | | | |(i) Loans and advances to employees| |56|55|50| |Less: Allowance for loans and advances to employees| |(56)|(55)|(50)| | |Total|2,704|2,523|1,337| Inter-corporate deposits placed with financial institutions yield fixed interest rate. # 8) OTHER FINANCIAL ASSETS Other financial assets consist of the following: # (i) Non-current financial assets | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Interest receivable| |-|73|24| |(b) Long-term bank deposits| |-|415|500| |(c) Security deposits| |638|606|556| |(d) Earmarked balances with banks| |-|85|-| | |Total|638|1,179|1,080| # (ii) Current financial assets | |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---|---| |(a) Interest receivable| |697|187|340| |(b) Fair value of foreign exchange forward and currency option contracts| |572|537|365| |(c) Security deposits| |119|118|110| |(d) Others| |30|24|69| | |Total|1,418|866|884| # Annual Report 2016-17 # Notes forming part of the Financial Statements # 9) INCOME TAXES The income tax expense consists of the following: | |( crores)|2017|2016| |---|---|---|---| |Current tax:| |6,762|6,344| |Current tax expense / (benefit) pertaining to prior years| |(119)|32| | | |6,643|6,376| |Deferred tax benefit| |(230)|(112)| |Total income tax expense recognised in the current year| |6,413|6,264| The reconciliation of estimated income tax expense at statutory income tax rate to income tax expense reported in statement of profit and loss is as follows: | |Year ended|Year ended| |---|---|---| | |March 31, 2017|March 31, 2016| |Profit before income taxes|30,066|29,339| |Indian statutory income tax rate|34.61%|34.61%| |Expected income tax expense|10,406|10,154| |Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense:| | | |Tax holidays|(4,134)|(4,468)| |Income exempt from tax|(27)|(34)| |Undistributed earnings in branches and subsidiaries|(60)|90| |Tax on income at different rates|166|285| |Tax pertaining to prior years|(218)|32| |Others (net)|280|205| |Total income tax expense|6,413|6,264| The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profits or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 1, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT). |
Significant components of net deferred tax assets and liabilities for the year ended March 31, 2017 are as follows: | |Opening|Recognised /|Recognised in/|Closing| |---|---|---|---|---| | |balance|reversed|reclassified|balance| |Deferred tax assets/ (liabilities) in relation to:| | | | | |Property, plant and equipment and Intangible assets|(22)|(62)|-|(84)| |Provision for employee benefits|238|58|-|296| |Cash flow hedges|(7)|-|(5)|(12)| |Receivables, loans and advances|183|22|-|205| |MAT credit entitlement|1,960|102|-|2,062| |Branch profit tax|(346)|60|-|(286)| |Unrealised gain / loss on securities carried at fair value through statement of profit and loss / OCI|(27)|(2)|(256)|(285)| |Others|185|52|-|237| |Net deferred tax assets / (liabilities)|2,164|230|(261)|2,133| 206 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Gross deferred tax assets and liabilities are as follows: |( crores)|Assets|Liabilities|Net| | |---|---|---|---|---| |As at March 31, 2017|Deferred tax assets / (liabilities) in relation to:| | | | | |Property, plant and equipment and Intangible assets|(56)|(28)|(84)| | |Provision for employee benefits|296|-|296| | |Cash flow hedges|(12)|-|(12)| | |Receivables, loans and advances|205|-|205| | |MAT credit entitlement|2,062|-|2,062| | |Branch profit tax|-|(286)|(286)| | |Unrealised gain / loss on securities carried at fair value through statement of profit and loss / OCI|(285)|-|(285)| | |Others|237|-|237| | |Net deferred tax assets / (liabilities)|2,447|(314)|2,133| # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2016 are as follows: |( crores)|Opening balance|Recognised / reversed through profit and loss|Recognised in/ reclassified from other comprehensive income|Closing balance| |---|---|---|---|---| |Deferred tax assets/ (liabilities) in relation to:| | | | | |Property, plant and equipment and Intangible assets|(27)|5|-|(22)| |Provision for employee benefits|198|26|14|238| |Cash flow hedges|(20)|-|13|(7)| |Receivables, loans and advances|142|41|-|183| |MAT credit entitlement|1,871|89|-|1,960| |Branch profit tax|(256)|(90)|-|(346)| |Unrealised gain / loss on securities carried at fair value through statement of profit and loss / OCI|(4)|1|(24)|(27)| |Others|145|40|-|185| |Net deferred tax assets / (liabilities)|2,049|112|3|2,164| # Gross deferred tax assets and liabilities are as follows: |( crores)| |Assets|Liabilities|Net| |---|---|---|---|---| |As at March 31, 2016|Deferred tax assets / (liabilities) in relation to:| | | | | |Property, plant and equipment and Intangible assets|(2)|(20)|(22)| | |Provision for employee benefits|238|-|238| | |Cash flow hedges|(7)|-|(7)| | |Receivables, loans and advances|183|-|183| | |MAT credit entitlement|1,960|-|1,960| | |Branch profit tax|-|(346)|(346)| | |Unrealised gain / loss on securities carried at fair value through statement of profit and loss / OCI|(27)|-|(27)| | |Others|185|-|185| | |Net deferred tax assets / (liabilities)|2,530|(366)|2,164| # Annual Report 2016-17 # Notes forming part of the Financial Statements |(crores)| |Assets|Liabilities|Net| |---|---|---|---|---| |As at April 1, 2015|Deferred tax assets / (liabilities) in relation to:|(11)|(16)|(27)| | |Provision for employee benefits|198|-|198| | |Cash flow hedges|(20)|-|(20)| | |Receivables, loans and advances|142|-|142| | |MAT credit entitlement|1,871|-|1,871| | |Branch profit tax|-|(256)|(256)| | |Unrealised gain / loss on securities carried at fair value through statement of profit and loss / OCI|(4)|-|(4)| | |Others|145|-|145| | |Net deferred tax assets / (liabilities)|2,321|(272)|2,049| Under the Indian Income Tax Act, 1961, the Company is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. Accordingly, the Company has recognised a deferred tax asset of 2,062 crores and has not recognised a deferred tax asset of 1,108 crores as at March 31, 2017. The Company has ongoing disputes with Income Tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company as deductions, and computation of, or eligibility of, certain tax incentives or allowances. As at March 31, 2017, the Company has contingent liability in respect of demands from direct tax authorities in India, which are being contested by the Company on appeal amounting 2,688 crores. In respect of tax contingencies of 318 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. The Company periodically receives notices and inquiries from income tax authorities related to the Company's operations in the jurisdictions it operates in. The Company has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. |
In India, tax filings from fiscal 2014 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2013 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2014 and earlier. # 10) OTHER ASSETS Other assets consist of the following: # (i) Other non-current assets |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Considered good| | | | |(a) Capital advances|142|148|167| |(b) Advances to related parties|6|-|-| |(c) Prepaid expenses|191|311|362| |(d) Prepaid rent|228|235|241| |(e) Indirect taxes recoverable|4|4|49| |(f) Others|8|22|24| | |579|720|843| Advances to related parties, considered good, comprise: Voltas Limited 6 - - # Notes forming part of the Financial Statements # (ii) Other current assets |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(i) Considered good| | | | |(a) Prepaid expense|1,118|993|1,151| |(b) Advance to suppliers|148|211|67| |(c) Advance to related parties|1|8|12| |(d) Indirect taxes recoverable|262|139|165| |(e) Other advances|13|77|47| |(f) Other current assets|5|45|61| |(ii) Considered doubtful| | | | |(a) Advance to suppliers|3|3|5| |(b) Indirect taxes recoverable|2|2|2| |(c) Other advances|3|3|2| |Less : Allowance for doubtful advances|(8)|(8)|(9)| |Total|1,547|1,473|1,503| Advances to related parties, considered good, comprise: |TCS FNS Pty Limited|-| |---|---| |Tata Consultancy Services (Africa) (PTY) Limited|-| |TCS e-Serve International Limited|-| |C-Edge Technologies Limited|-| |Taj Air Limited|-| |The Titan Company Limited|1| # 11) INVENTORIES Inventories consist of the following: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Raw materials, sub-assemblies and components|19|9|10| |(b) Finished goods and work-in-progress|1|-|3| |(c) Goods-in-transit (raw materials)|1|-|2| |Total|21|9|15| Inventories are carried at the lower of cost and net realisable value. # 12) TRADE RECEIVABLES Trade receivables (unsecured) consist of the following: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Considered good|16,649|19,058|17,392| |(b) Considered doubtful|571|495|382| |Total|17,220|19,553|17,774| |Less: Allowance for doubtful receivables|(571)|(495)|(382)| |Net Total|16,649|19,058|17,392| In determining the allowances for doubtful trade receivables the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix. # Annual Report 2016-17 # Notes forming part of the Financial Statements # 13) CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following: |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(i) Balances with banks|724|513|322| |In current accounts|724|513|322| |In deposit accounts|-|2,648|86| |(ii) Cheques on hand|5|24|51| |(iii) Cash on hand|1|1|1| |(iv) Remittances in transit|60|1,197|1| |Total|790|4,383|461| # SPECIFIED BANK NOTES DISCLOSURE (SBNs) In accordance with the MCA notification G.S.R. 308(E) dated March 30, 2017 details of Specified Bank Notes (SBN) and Other Denomination Notes (ODN) held and transacted during the period from November 8, 2016 to December 30, 2016, is given below: |Particulars|SBNs|ODNs|Total| |---|---|---|---| |Closing cash on hand as on November 8, 2016|4,11,000|2,83,599|6,94,599| |(+) Non Permitted receipts|-|-|-| |(+) Permitted receipts|-|2,59,577|2,59,577| |( - ) Permitted payments|-|(3,01,379)|(3,01,379)| |( - ) Amounts deposited in Banks|(4,11,000)|(1,66,118)|(5,77,118)| |Closing cash on hand as on December 30, 2016|-|75,679|75,679| # 14) OTHER BALANCES WITH BANKS Other bank balances consist of the following: |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(i) Earmarked balances with banks|111|423|71| |(ii) Short-term bank deposits|415|-|16,003| |Total|526|423|16,074| Earmarked balances with banks significantly pertains to unclaimed dividends and margin money for derivative contracts. |
# 15) 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, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Authorised| | | | |(i) 460,05,00,000 equity shares of 1 each|460|460|420| |(ii) 105,02,50,000 preference shares of 1 each|105|105|105| |Total|565|565|525| |Issued, Subscribed and Fully paid up| | | | |(i) 197,04,27,941 equity shares of 1 each|197|197|196| |(ii) Potential equity shares to be issued to non-controlling shareholders of CMC Limited|-|-|1| |Total|197|197|197| # Notes forming part of the Financial Statements 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. The Board of Directors of the Company, at its meeting held on February 20, 2017 has approved a proposal to buy-back up to 5,61,40,351 equity shares (Five crore sixty one lakh forty thousand three hundred and fifty one only) of the Company for an aggregate amount not exceeding 16,000 crore, being 2.85% of the total paid up equity share capital at 2,850 per equity share. The shareholders of the Company have approved the scheme of buyback of shares through postal ballot on April 17, 2017. # (i) Reconciliation of number of shares | |As at March 31, 2017| |As at March 31, 2016| | |---|---|---|---|---| | |Number of shares|Amount (crores)|Number of shares|Amount (crores)| |Equity shares| | | | | |Opening balance|197,04,27,941|197|195,87,27,979|196| |Issued during the year|-|-|1,16,99,962|1| |Closing balance|197,04,27,941|197|197,04,27,941|197| # (ii) 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 and carry a right to dividend. 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. # (iii) Shares held by Holding Company, its Subsidiaries and Associates | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | |---|---|---|---|---| |Equity shares| | | | | |Holding Company|144,34,51,698 equity shares (March 31, 2016 : 144,34,51,698 equity shares; April 1, 2015 : 144,34,51,698 equity shares)|144|144|144| |Subsidiaries and Associates of Holding Company|3700 equity shares (March 31, 2016 : 3,63,700 equity shares; April 1, 2015 : 10,29,700 equity shares)|-|-|-| | |8,57,301 equity shares (March 31, 2016 : 9,55,273 equity shares; April 1, 2015 : Nil equity shares)|-|-|-| | |5,50,000 equity shares (March 31, 2016 : 5,90,452 equity shares; April 1, 2015 : 5,90,452 equity shares)|-|-|-| | |Nil equity shares (March 31, 2016 : Nil equity shares; April 1, 2015 : 200 equity shares)|-|-|-| | |Nil equity shares (March 31, 2016 : 83,232 equity shares; April 1, 2015: 83,232 equity shares)|-|-|-| | |24,400 equity shares (March 31, 2016 : 24,400 equity shares; April 1, 2015: 24,400 equity shares)|-|-|-| | |452 equity shares (March 31, 2016 : 452 equity shares; April 1, 2015 : 452 equity shares)|-|-|-| | |484,902 equity shares (March 31, 2016 : 611,352 equity shares; April 1, 2015 : 633,352 equity shares)|-|-|-| |Total|144|144|144| | *Equity shares having value less than 0.50 crore. # Annual Report 2016-17 # Notes forming part of the Financial Statements # (iv) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | |---|---|---|---|---| |Equity shares|Tata Sons Limited, the Holding company|144,34,51,698|144,34,51,698|144,34,51,698| | | |73.26%|73.26%|73.69%| # (v) 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. # (vi) The Company's objective for capital management The Company's objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. The Company is not subject to any externally imposed capital requirements. # 16) OTHER EQUITY Other equity consist of the following: | |(crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---|---| |(a) Capital reserve| |-|-| |(b) Securities premium| |1,919|1,919| |(c) Capital redemption reserve| |100|100| |(d) General reserve| | | | |(i) Opening balance| |9,118|6,830| |(ii) Transferred from retained earnings| |-|2,288| | | |9,118|9,118| |(e) Special Economic Zone re-investment reserve| | | | |(i) Opening balance| |-|-| |(ii) Transfer from retained earnings| |376|-| |(iii) Transfer to retained earnings on utilisation| |(279)|-| | | |97|-| |(f) Retained earnings| | | | |(i) Opening balance| |53,576|42,370| |(ii) Realised (losses) / gains on equity shares carried at fair value through OCI| |(20)|5| |(iii) Transfer from Special Economic Zone re-investment reserve| |279|-| |(iv) Remeasurement of defined employee benefit plans (net of taxes)| |(200)|(107)| |(v) Profit for the year| |23,653|23,075| | | |77,288|65,343| |Less : Appropriations| | | | |(a) Dividend on equity shares| |9,162|7,993| |(b) Tax on dividend| |1,785|1,486| |(c) Transferred to Special Economic Zone re-investment reserve| |376|-| |(d) Transferred to General reserve| |-|2,288| | | |65,965|53,576| # Notes forming part of the Financial Statements | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |(g) Investment revaluation reserve| | | |(i) Opening balance|54|3| |(ii) Addition during the year (net) (Refer note below)|484|51| | |538|54| |(h) Cash flow hedging reserve (Refer note 28)| | | |(i) Opening balance|49|130| |(ii) Addition / (deduction) during the year (net)|39|(81)| | |88|49| | |77,825|64,816| # Movement in Investment Revaluation Reserve | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |Net gains / (losses) arising on revaluation of financial assets carried at fair value|(20)|1| |Deferred tax relating to gains / (losses) arising on revaluation of financial assets carried at fair value|-|(1)| |Cumulative (gains) / losses reclassified to retained earnings on sale of financial assets carried at fair value|20|(5)| |Deferred tax relating to cumulative (gains) / losses reclassified to profit and loss on sale of financial assets carried at fair value|-|2| |Net gains / (losses) arising on revaluation of investments other than equities carried at fair value through other comprehensive income|740|138| |Deferred tax relating to gains / (losses) arising on revaluation of investments other than equities carried at fair value through other comprehensive income|(256)|(48)| |Cumulative (gains) / losses reclassified to statement of profit and loss on sale of investments other than equities carried at fair value|-|(56)| |Deferred tax relating to cumulative (gains) / losses reclassified to statement of profit and loss on sale of investments other than equities carried at fair value|-|20| | |484|51| # Nature of reserves (a) Capital reserve The Company recognises profit or loss on purchase, sale, issue or cancellation of the Company's own equity instruments to capital reserve. (b) Securities premium Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013. (c) General reserve The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to statement of profit and loss. Unconsolidated Financial Statements I 213 # Annual Report 2016-17 # Notes forming part of the Financial Statements # (c) Investment revaluation reserve This reserve represents the cumulative gains and losses arising on the revaluation of equity / debt instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those assets have been disposed of. # (d) Cash flow hedging reserve The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. |
The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow reserve will be reclassified to statement of profit and loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non financial hedged item. # 17) BORROWINGS Borrowings consist of the following: # (i) Long-term borrowings |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | | |---|---|---|---|---|---|---| |(a) Secured loans|Long-term maturities of obligations under finance lease| | |44|50|64| |(b) Unsecured loans|Borrowings from entity other than banks| | |-|-|1| | | | | |44|50|65| Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements. # (ii) Short-term borrowings |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | | | | | |---|---|---|---|---|---|---|---|---|---| |(a) Secured loans|Overdraft from banks| | | | | |-|112|-| |(b) Unsecured loans|Overdraft from banks| | | | | |200|1|186| | | | | | | | |200|113|186| Secured overdraft from banks are secured against trade receivables. # 18) OTHER FINANCIAL LIABILITIES Other financial liabilities consist of the following: # (i) Other non-current financial liabilities |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | | |---|---|---|---|---|---|---| |(a) Capital creditors| | |17| |62|68| |(b) Others| | |228| |231|343| | | | |245| |293|411| Others include advance taxes paid of 227 crores (March 31, 2016: 230 crores) (April 1, 2015: 333 crores) by the seller of TCS e-serve Limited which, on refund by the tax authorities, is payable to the seller. 214 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (ii) Other current financial liabilities |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Current maturities of obligations under finance lease|6|15|22| |(b) Unclaimed dividends|25|21|20| |(c) Fair value of foreign exchange forward and currency option contracts|20|152|20| |(d) Capital creditors|272|306|305| |(e) Liabilities for cost related to customer contracts|834|736|616| |(f) Liabilities for purchase of government securities|-|805|-| |(g) Others|105|48|18| |Total|1,262|2,083|1,001| Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements. |
# 19) PROVISIONS Provisions consist of the following: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| | | |---|---|---|---|---|---| |(i) Non-current provisions|Provision for foreseeable loss on a long-term contract| |39|40|94| | | | |39|40|94| |(ii) Current provisions|Provision for foreseeable loss on a long-term contract| |66|115|103| | | | |66|115|103| # 20) OTHER LIABILITIES Other liabilities consist of the following: # (i) Other non-current liabilities |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Operating lease liabilities|330|298|271| |(b) Others|-|-|10| |Total|330|298|281| # (ii) Other current liabilities |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(a) Advance received from customers|49|39|31| |(b) Indirect tax payable and other statutory liabilities|629|743|579| |(c) Operating lease liabilities|49|67|46| |(d) Others|24|11|8| |Total|751|860|664| Unconsolidated Financial Statements I 215 # Annual Report 2016-17 # Notes forming part of the Financial Statements # 21) OTHER INCOME (NET) Other income (net) consist of the following: File: AR_TCS_2016_2017.md | |( crores)|2017|2016| |---|---|---|---| |(a) Interest income| |2,216|1,695| |(b) Dividend income| |394|705| |(c) Net gain on investments carried at fair value through statement of profit and loss| |596|395| |(d) Net gain on investments other than equity shares carried at fair value through OCI| |-|56| |(e) Net gain on disposal of property, plant and equipment| |6|5| |(f) Net foreign exchange gains| |1,303|807| |(g) Rent income| |5|3| |(h) Miscellaneous income| |48|91| | |Total|4,568|3,757| Interest income comprise: | | |2017|2016| |---|---|---|---| |Interest on bank and bank deposits| |94|1,432| |Interest income on financial assets carried at amortised cost| |390|225| |Interest income on financial assets carried at fair value through OCI| |1,598|32| |Other interest (including interest on income tax refunds)| |134|6| Dividend income comprise: | | |2017|2016| |---|---|---|---| |Dividends from subsidiaries| |394|696| |Dividends from mutual funds| |-|9| Net foreign exchange gains include: | | |2017|2016| |---|---|---|---| |Gain / (loss) (net) on foreign exchange forward and currency option contracts transferred from Cash Flow Hedging Reserve (Refer note 28)| |508|5| # 22) EMPLOYEE BENEFIT EXPENSE Employee benefit expense consist of the following: | |( crores)|2017|2016| |---|---|---|---| |(a) Salaries, incentives and allowances| |43,876|38,708| |(b) Contributions to provident and other funds| |2,984|2,710| |(c) Staff welfare expenses| |1,256|1,002| | |Total|48,116|42,420| Defined benefit plan Gratuity and pension The Company provides to the eligible employees defined benefit plans such as gratuity 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. Vesting occurs upon completion of five continuous years of service. The measurement date used for determining retirement benefits for gratuity is March 31. |
216 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements The following table sets out the details of the defined benefit retirement plans and the amounts recognised in the financial statements: # ( crores) | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |Change in benefit obligations:| | | |Benefit obligations, beginning of the year|1,632|1,264| |Plans assumed on acquisitions|-|31| |Service cost|241|201| |Interest cost|138|105| |Remeasurement of the net defined benefit liability|200|149| |Past service cost / (credit)|-|13| |Benefits paid|(128)|(131)| |Benefit obligations, end of the year|2,083|1,632| # ( crores) | |As at March 31, 2017|As at March 31, 2016| |---|---|---| |Change in plan assets:| | | |Fair value of plan assets, beginning of the year|1,746|1,442| |Plans assumed on acquisitions|-|10| |Interest income|145|116| |Employer's contributions|393|282| |Benefits paid|(128)|(131)| |Remeasurement - return on plan assets excluding amount included in interest income|-|27| |Fair value of plan assets, end of the year|2,156|1,746| # ( crores) | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Funded status:| | | | |Deficit of plan assets over obligations|-|-|-| |Surplus of plan assets over obligations|73|114|178| # ( crores) | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Category of assets:| | | | |Corporate bonds|731|312|175| |Equity shares|95|43|-| |Government securities|621|500|266| |Insurer managed funds|691|736|738| |Bank balances|3|97|217| |Others|15|58|46| |Total|2,156|1,746|1,442| Unconsolidated Financial Statements I 217 # Annual Report 2016-17 # Notes forming part of the Financial Statements # Net periodic gratuity cost, included in employee cost consists of the following components: |( crores)|2017|2016| |---|---|---| |Service cost|241|201| |Net interest on net defined benefit (asset) / liability|(7)|(11)| |Past service cost / (credit)|-|13| |Net periodic gratuity cost|234|203| |Actual return on plan assets|145|143| # Remeasurement of the net defined benefit liability / (asset): |( crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |Actuarial (gains) and losses arising from changes in demographic assumptions|(2)|13| |Actuarial (gains) and losses arising from changes in financial assumptions|71|60| |Actuarial (gains) and losses arising from changes in experience adjustments|131|76| |Remeasurement of the net defined benefit liability|200|149| |Remeasurement - return on plan assets excluding amount included in interest income*|-|27| |Total|200|122| *Values less than 0.50 crore. # The assumptions used in accounting for the defined benefit plan are set out below: | |As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Discount rate|7.25%|7.75%|8.00%| |Rate of increase in compensation levels of covered employees|6.00%|6.00%|6.00%| |Rate of return on plan assets|7.25%|7.75%|8.00%| |Weighted average duration of defined benefit obligations|8|8|9| The expected benefits are based on the same assumptions as are used to measure the Company's defined benefit plan obligations as at March 31, 2017. The Company is expected to contribute 189 crores to defined benefit plan obligations funds for the year ending March 31, 2018. The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. If the discount rate increases (decreases) by 0.50%, the defined benefit obligations would decrease by 71 crores (increase by 76 crores) as at March 31, 2017. If the expected salary growth increases (decreases) by 0.50%, the defined benefit obligations would increase by 77 crores (decrease by 73 crores) as at March 31, 2017. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance sheet. Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study. |
218 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Defined Benefit Obligations The defined benefit obligations shall mature after year ended March 31, 2017 as follows: |Year ending March 31|Defined benefit obligations (crores)| |---|---| |2018|205| |2019|195| |2020|201| |2021|198| |2022|192| |Thereafter|887| # Defined Contribution Plans # Superannuation In addition to gratuity benefits, all eligible employees are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. TCS Limited recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution. The Company contributed 221 crores and 193 crores to the Employees' Superannuation Fund for the year ended March 31, 2017 and March 31, 2016, respectively. # Provident Fund All eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company contributes as specified under the law to the Provident Fund where set up as a trust and to the respective Regional Provident Fund Commissioner. The Company contributes to the Provident Fund where set up as a trust are liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognises such contributions and shortfall, if any, as an expense in the year incurred. 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. The Company contributed 756 crores and 658 crores to the provident fund during the year ended March 31, 2017 and March 31, 2016, respectively. # Foreign Defined Contribution Plan The Company contributed 304 crores and 335 crores during the year ended March 31, 2017 and March 31, 2016, respectively, towards foreign defined contribution plan. # OTHER OPERATING EXPENSES Other operating expenses consist of the following: | |2017 (crores)|2016 (crores)| |---|---|---| |(a) Fees to external consultants|6,566|5,978| |(b) Facility running expenses|2,783|2,527| |(c) Cost of equipment and software licenses|1,758|1,731| |(d) Travel expenses|2,181|2,031| |(e) Communication expenses|701|689| |(f) Bad debts and advances written off, allowance for doubtful trade receivable and advances (net)|107|119| |(g) Other expenses|3,392|3,315| |Total|17,488|16,390| # Cost of Equipment and Software Licenses Include: | |2017 (crores)|2016 (crores)| |---|---|---| |(a) Raw materials, sub-assemblies and components consumed|94|39| |(b) Opening stock: Finished goods and work-in-progress|-|1| |(c) Less: Closing stock: Finished goods and work-in-progress|1|-| | |(1)|1| |Total|93|40| # Annual Report 2016-17 # Notes forming part of the Financial Statements 24) Research and development expenditure aggregating 282 crores (Previous year: 232 crores), including capital expenditure was incurred during the year. 25) During the year, the Company has incurred an amount of 380 crores (Previous year: 294 crores) towards Corporate Social Responsibility expenditure. # 26) FINANCE COSTS (at effective interest rate) Finance costs consist of the following: | |( crores)|2017|2016| |---|---|---|---| |Interest expenses| |16|13| | | |16|13| # 27) MERGER OF CMC LIMITED 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) 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) The assets, liabilities and reserves of CMC Limited as at April 1, 2015 have been taken over at their carrying values since the entities are under common control. # 28) FINANCIAL INSTRUMENTS The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2(i) to the financial statements. (a) Financial assets and liabilities The carrying value of financial instruments by categories as at March 31, 2017 is as follows: | |Fair value through Profit or Loss|Fair value through Other Comprehensive Income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| |---|---|---|---|---|---|---| |Financial Assets:| | | | | | | |Cash and cash equivalents|-|-|-|-|790|790| |Other balances with banks|-|-|-|-|111|111| |Bank deposits|-|-|-|-|415|415| |Trade receivables|-|-|-|-|16,649|16,649| |Investments (other than in subsidiary)|18,785|22,021|-|-|-|40,806| |Unbilled revenues|-|-|-|-|4,235|4,235| |Loans*|-|-|-|-|2,710|2,710| |Other financial assets|-|-|140|432|1,484|2,056| |Total|18,785|22,021|140|432|26,394|67,772| |Financial Liabilities:| | | | | | | |Trade and other payables|-|-|-|-|4,874|4,874| |Borrowings|-|-|-|-|244|244| |Other financial liabilities|-|-|-|20|1,487|1,507| |Total|-|-|-|20|6,605|6,625| *Loans include inter-corporate deposits of 2,425 crores, with original maturity period within 15 months. # Notes forming part of the Financial Statements # The carrying value of financial instruments by categories as at March 31, 2016 is as follows: | |Fair value through Profit or Loss|Fair value through Other Comprehensive Income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| |---|---|---|---|---|---|---| |Financial Assets:| | | | | | | |Cash and cash equivalents|-|-|-|-|4,383|4,383| |Other balances with banks|-|-|-|-|423|423| |Bank deposits|-|-|-|-|415|415| |Trade receivables|-|-|-|-|19,058|19,058| |Investments (other than in subsidiary)|1,243|20,301|-|-|491|22,035| |Unbilled revenues|-|-|-|-|2,712|2,712| |Loans*|-|-|-|-|4,955|4,955| |Other financial assets|-|-|116|421|1,093|1,630| |Total|1,243|20,301|116|421|33,530|55,611| | |Fair value through Profit or Loss|Fair value through Other Comprehensive Income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| |---|---|---|---|---|---|---| |Financial Liabilities:| | | | | | | |Trade and other payables|-|-|-|-|5,370|5,370| |Borrowings|-|-|-|-|163|163| |Other financial liabilities|-|-|15|137|2,224|2,376| |Total|-|-|15|137|7,757|7,909| *Loans include inter-corporate deposits of 3,997 crores, with original maturity period within 19 months. # The carrying value of financial instruments by categories as at April 1, 2015 is as follows: | |Fair value through Profit or Loss|Fair value through Other Comprehensive Income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| |---|---|---|---|---|---|---| |Financial Assets:| | | | | | | |Cash and cash equivalents|-|-|-|-|461|461| |Other balances with banks|-|-|-|-|71|71| |Bank deposits|-|-|-|-|16,503|16,503| |Trade receivables|-|-|-|-|17,392|17,392| |Investments (other than in subsidiary)|978|51|-|-|-|1,029| |Unbilled revenues|-|-|-|-|2,631|2,631| |Loans*|-|-|-|-|2,924|2,924| |Other financial assets|-|-|186|179|1,099|1,464| |Total|978|51|186|179|41,081|42,475| | |Fair value through Profit or Loss|Fair value through Other Comprehensive Income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| |---|---|---|---|---|---|---| |Financial Liabilities:| | | | | | | |Trade and other payables|-|-|-|-|6,855|6,855| |Borrowings|-|-|-|-|251|251| |Other financial liabilities|-|-|-|20|1,392|1,412| |Total|-|-|-|20|8,498|8,518| *Loans include inter-corporate deposits of 2,635 crores, with original maturity period within 19 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled revenues, loans and trade and other payables as at March 31, 2017, March 31, 2016 and April 1, 2015 approximate the fair value because of their short-term nature. Difference between carrying amounts and fair values of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented. Unconsolidated Financial Statements I 221 # Annual Report 2016-17 # Notes forming part of the Financial Statements # Fair value hierarchy: The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels: - Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). - Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. |
The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range. # Financial assets and liabilities measured at fair value |As at March 31, 2017|Level|Level|Level|Total| | | | |---|---|---|---|---|---| | |Level 1|Level 2|Level 3| | | |Financial assets:|Mutual fund units|18,785|-|-|18,785| | |Equity shares|-|-|22|22| | |Government securities|21,999|-|-|21,999| | |Derivative financial assets|-|572|-|572| |Total|40,784|572|22|41,378| | |As at March 31, 2016|Level| |Total| | | |---|---|---|---|---|---| | |Level 1|Level 2|Level 3| | | |Financial assets:|Mutual fund units|1,243|-|-|1,243| | |Equity shares|-|-|47|47| | |Corporate debentures and Bonds|-|491|-|491| | |Government securities|20,254|-|-|20,254| | |Derivative financial assets|-|537|-|537| |Total|21,497|1,028|47|22,572| | |As at April 1, 2015|Level| |Total| | | |---|---|---|---|---|---| | |Level 1|Level 2|Level 3| | | |Financial assets:|Mutual fund units|978|-|-|978| | |Equity shares|4|-|47|51| | |Derivative financial assets|-|365|-|365| |Total|982|365|47|1,394| | # Financial liabilities: |As at March 31, 2017|Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|20|-|20| |Total|-|20|-|20| |As at March 31, 2016|Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|152|-|152| |Total|-|152|-|152| |As at April 1, 2015|Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|20|-|20| |Total|-|20|-|20| # Notes forming part of the Financial Statements # Reconciliation of Level 3 fair value measurement |( crores)|As at March 31, 2017|As at March 31, 2016| |---|---|---| |Opening balance|47|47| |Less : Sale of Equity shares|(25)|-| |Closing balance|22|47| # (b) Derivative financial instruments and hedging activity The Company's revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Company also does business in Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations. The Company monitors and manages the financial risks relating to its operations by analysing its foreign exchange exposures by the level and extent of currency risks. The Company uses various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward, option and future contracts to manage and mitigate its exposure to foreign exchange rates. The counterparty is generally a bank. The Company can enter into contracts for a period between one day and eight years. The Company reports quarterly to its risk management committee, an independent body that monitors foreign exchange risks and policies implemented to manage its foreign exchange exposures. # Outstanding currency option contracts designated as cash flow hedges as at: # March 31, 2017 |Foreign Currency|No. of Contracts|Notional amount of contracts (million)|Fair Value ( crores)| |---|---|---|---| |U.S. Dollar|6|150|9| |Sterling Pound|45|318|60| |Euro|27|198|40| |Australian dollar|6|60|11| # March 31, 2016 |Foreign Currency|No. of Contracts|Notional amount of contracts (million)|Fair Value ( crores)| |---|---|---|---| |U.S. Dollar|9|225|41| |Sterling Pound|8|160|52| |Euro|24|285|20| |Australian Dollar|21|228|(12)| # April 1, 2015 |Foreign Currency|No. of Contracts|Notional amount of contracts (million)|Fair Value ( crores)| |---|---|---|---| |Sterling Pound|18|297|67| |Euro|9|171|88| |Australian Dollar|6|97|31| Unconsolidated Financial Statements I 223 # Annual Report 2016-17 # Notes forming part of the Financial Statements The following are outstanding currency Forward contracts, which have been designated as cash flow hedges as at: # March 31, 2017 |Foreign Currency|No. of Contracts|Notional amount of contracts (million)|Fair Value (crores)| |---|---|---|---| |Sterling Pound|5|125|5| |Euro|3|91|15| The movement in hedging reserve for derivatives designated as cash flow hedges is as follows: | |Year ended March 31, 2017|Year ended March 31, 2017|Year ended March 31, 2016|Year ended March 31, 2016| |---|---|---| | |Intrinsic Value|Time Value|Intrinsic Value|Time Value| |Balance at the beginning of the year|68|(19)|131|(1)| |Changes in the fair value of effective portion of cash flow hedges|784|(232)|250|(339)| |Deferred tax on fair value of effective portion of cash flow hedges|(108)|30|(32)|44| |(Gains) / losses transferred to the statement of profit and loss on occurrence of forecasted hedge transactions|(743)|235|(323)|318| |Deferred tax on losses / (gains) transferred to the statement of profit and loss on occurrence of forecasted hedge transactions|104|(31)|42|(41)| |Balance at the end of the year|105|(17)|68|(19)| Net gain on derivative instruments of 88 crores recognised in Hedging Reserve as at March 31, 2017, is expected to be transferred to the statement of profit and loss by March 31, 2018. The maximum period over which the exposure of cash flow variability has been hedged is through calendar year of 2017. |
In addition to the above cash flow hedges, the Company has outstanding foreign exchange forwards, options and future contracts with notional amount aggregating 19,159 crores, 22,144 crores and 19,949 crores whose fair value showed a net gain of 412 crores, 284 crores and 159 crores as at March 31, 2017, March 31, 2016 and April 1, 2015 respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting. Exchange gain of 1,522 crores (March 31, 2016: Exchange gain of 181 crores) on foreign exchange forwards, options and future contracts for the year ended March 31, 2017 have been recognised in the statement of profit and loss. Following table summarises approximate gain / (loss) on the Company's other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies. | |Year ended March 31, 2017|Year ended March 31, 2016| |---|---|---| |10% Appreciation of the underlying foreign currencies|(218)|(238)| |10% Depreciation of the underlying foreign currencies|793|623| # (c) Financial risk management The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company. # (i) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company's exposure to market risk is primarily on account of foreign currency exchange rate risk. # (a) Foreign currency exchange rate risk The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. # Notes forming part of the Financial Statements Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. Further, any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company's revenue in international business. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company. The following analysis has been worked out based on the net exposures of the Company as of the date of Balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 28(b). # Foreign Currency Exposure as at March 31, 2017 (in crores) | |USD|GBP|EUR|Others*|Total| |---|---|---|---|---|---| |Total financial assets|2,544|815|214|1,227|4,800| |Total financial liabilities|2,225|620|237|599|3,681| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company's profit before tax by approximately 112 crores for the year ended March 31, 2017. # Foreign Currency Exposure as at March 31, 2016 (in crores) | |USD|GBP|EUR|Others*|Total| |---|---|---|---|---|---| |Total financial assets|2,628|542|220|208|3,598| |Total financial liabilities|2,582|608|175|538|3,903| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company's profit before tax by approximately 31 crores for the year ended March 31, 2016. |
# Foreign Currency Exposure as at April 1, 2015 (in crores) | |USD|GBP|EUR|Others|Total| |---|---|---|---|---|---| |Total financial assets|497|535|98|792|1,922| |Total financial liabilities|2,392|463|173|442|3,470| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company's profit before tax by approximately 155 crores as on April 1, 2015. *Others include Australian Dollar, Saudi Arabian Riyal, Danish Kroner, Brazilian Real, Mexican Peso, United Arab Emirates Dirham, Swedish Kroner, South African Rand, Swiss Franc, Norwegian Kroner etc. File: AR_TCS_2016_2017.md # (b) Interest rate risk The Company's investments are primarily in fixed rate interest bearing investments. Hence the Company is not significantly exposed to interest rate risk. # (ii) Credit risk Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of 2,425 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of 415 crores held with an Indian bank having high quality credit rating which are individually in excess of 10% or more of the Company's total bank deposits for the year ended March 31, 2017. None of the other financial instruments of the Company result in material concentration of credit risk. # Annual Report 2016-17 # Notes forming part of the Financial Statements # Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was 67,749 crores, 55,563 crores and 42,423 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled revenue and other financial assets. The Company's exposure to customers is diversified and no single customer contributes to more than 10% of outstanding accounts receivable and unbilled revenue as at March 31, 2017 and March 31, 2016. # Geographic concentration of credit risk TCS Limited also has a geographic concentration of trade receivables, net of allowances and unbilled revenue is given below: |(in %)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |United States of America|38|39|43| |India|20|19|19| |United Kingdom|17|17|17| Geographical concentration of credit risk is allocated based on the location of the customers. # (iii) Liquidity risk Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due. # The tables below provide details regarding the contractual maturities of significant financial liabilities as at: # ( crores) March 31, 2017 |Due in 1st year| |Due in 2nd year|Due in 3rd to 5th year|Due after 5 years|Total| |---|---|---|---|---|---| |Trade and other payables|4,874|-|-|-|4,874| |Borrowings|200|5|20|19|244| |Other financial liabilities|1,242|13|231|1|1,487| |Total|6,316|18|251|20|6,605| # ( crores) March 31, 2016 |Due in 1st year| |Due in 2nd year|Due in 3rd to 5th year|Due after 5 years|Total| |---|---|---|---|---|---| |Trade and other payables|5,370|-|-|-|5,370| |Borrowings|113|6|17|27|163| |Other financial liabilities|1,931|45|231|17|2,224| |Total|7,414|51|248|44|7,757| # Notes forming part of the Financial Statements |(crores)|April 1, 2015|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5 years|Total| |---|---|---|---|---|---|---| |Non-derivative financial liabilities:|Trade and other payables|6,855|-|-|-|6,855| | |Borrowings|186|15|17|33|251| | |Other financial liabilities|981|63|347|1|1,392| | |Total|8,022|78|364|34|8,498| |Derivative financial liabilities:|Total|20|-|-|-|20| # 29) SEGMENT REPORTING Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company's chief operating decision maker is the Chief Executive Officer and Managing Director. The Company has identified business segments (industry practice) as reportable segments. |
The business segments comprise: 1) Banking, Financial Services and Insurance, 2) Manufacturing, 3) Retail and Consumer Business, 4) Communication, Media and Technology and 5) Others such as energy, resources and utilities, life science and healthcare, s-Governance and products. Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting 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. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments. # Summarised segment information for the years ended March 31, 2017, March 31, 2016 and April 1, 2015 is as follows: |(crores)|Business Segments|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| | | |---|---|---|---|---|---|---|---|---|---| |Year ended March 31, 2017|Revenue| |35,836|8,447| |16,679|16,327|15,404|92,693| | |Segment result| |10,482|2,733| |4,694|4,696|4,484|27,089| | |Unallocable expenses| | | | | | | |1,591| | |Operating income| | | | | | | |25,498| | |Other income (net)| | | | | | | |4,568| | |Profit before tax| | | | | | | |30,066| | |Tax expense| | | | | | | |6,413| | |Profit for the year| | | | | | | |23,653| |Other information| | | | | | | | | | | |Depreciation and amortisation (unallocable)| | | | | | | |1,575| | |Other significant non cash expense (allocable)| |14| |3|12|8|70|107| # Annual Report 2016-17 # Notes forming part of the Financial Statements |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |As at March 31, 2017|6,793|1,940|3,432|3,808|5,423|21,396| |Unallocable assets| | | | | |68,362| |Total assets| | | | | |89,758| |Segment liabilities|1,175|92|317|392|488|2,464| |Unallocable liabilities| | | | | |9,272| |Total liabilities| | | | | |11,736| |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Year ended March 31, 2016|33,475|7,410|15,771|15,262|13,946|85,864| |Segment result|10,971|2,475|4,579|4,583|4,446|27,054| |Unallocable expenses| | | | | |1,472| |Operating income| | | | | |25,582| |Other income (net)| | | | | |3,757| |Profit before tax| | | | | |29,339| |Tax expense| | | | | |6,264| |Profit for the year| | | | | |23,075| |Other information| | | | | | | |Depreciation and amortisation| | | | | |1,459| |Other significant non cash expense (allocable)|29|7|10|11|62|119| |As at March 31, 2016|7,131|1,938|3,737|4,137|5,443|22,386| |Unallocable assets| | | | | |55,031| |Total assets| | | | | |77,417| |Segment liabilities|1,123|127|213|402|374|2,239| |Unallocable liabilities| | | | | |10,165| |Total liabilities| | | | | |12,404| # Notes forming part of the Financial Statements # (crores) # Business Segments |Particulars|Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |As at April 1, 2015|6,164|1,809|3,346|3,815|5,466|20,600| |Unallocable assets| | | | | |43,139| |Total assets| | | | | |63,739| |Segment liabilities|1,775|290|653|731|643|4,092| |Unallocable liabilities| | | | | |8,098| |Total liabilities| | | | | |12,190| Geographical revenue is allocated based on the location of the customers. # Information regarding geographical revenue is as follows: |(crores)|2017|2016| |---|---|---| |Americas|53,848|49,249| |Europe|22,728|22,409| |India|7,031|6,182| |Others|9,086|8,024| |Total|92,693|92,693| Geographical non-current assets (property, plant and equipment, intangible assets, income tax asset (net) and other non-current assets) are allocated based on the location of the assets. # Information regarding geographical non-current assets is as follows: |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Americas|277|154|357| |Europe|234|204|276| |India|15,265|15,240|14,502| Information about major customers: No single customer represents 10% or more of the Company's total revenue during the year ended March 31, 2017 and March 31, 2016. # LEASES The Company has taken on lease properties and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were 1,213 crores and 1,058 crores for the year ended March 31, 2017 and March 31, 2016 respectively. The following is a summary of future minimum lease rental commitments towards non-cancellable operating leases and finance leases. |
# Operating lease |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Not later than one year|482|386|523| |Later than one year but not later than five years|1,547|1,284|1,619| |Later than five years|1,012|986|1,476| |Total|3,041|2,656|3,618| # Annual Report 2016-17 # Notes forming part of the Financial Statements # Finance lease |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |(i) Minimum lease payments:| | | | |Not later than one year|14|24|33| |Later than one year but not later than five years|46|48|59| |Later than five years|21|33|45| |Total|81|105|137| |(ii) Present value of minimum lease payments:| | | | |Not later than one year|6|15|22| |Later than one year but not later than five years|25|23|31| |Later than five years|19|27|33| |Total|50|65|86| |Add: Future finance charges|31|40|51| |Total|81|105|137| # Receivables under sub-leases |( crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Not later than one year|4|4|3| |Later than one year but not later than five years|16|16|15| |Later than five years|6|9|12| |Total|26|29|30| Income under sub-leases of 5 crores and 2 crores have been recognised in the Statement of profit and loss and other comprehensive income for the year ended March 31, 2017 and March 31, 2016. # 31) EARNINGS PER EQUITY SHARE | |2017|2016| |---|---|---| |Profit for the year ( crores)|23,653|23,075| |Weighted average number of equity shares|197,04,27,941|197,04,27,941| |Earning per share basic - and diluted ( )|120.04|117.11| |Face value per equity share ( )|1|1| # 32) AUDITORS REMUNERATION |( crores)|2017|2016| |---|---|---| |Services as statutory auditors ( including quarterly audits )|5|5| |Audit of financial statements as per IFRS|3|3| |Tax audit|1|1| |Services for tax matters|1|1| |SSAE 16 and other matters|3|3| |Reimbursement of out-of-pocket expenses|*|*| |Service tax|2|2| Service tax credit has been / will be availed (subject to Swachh bharat cess and Krishi kalyan cess). In addition to the above, fees amounting to 1 crore ( Previous year: 1 crore) 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. *represents values less than 0.50 crore. 230 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 33) COMMITMENTS AND CONTINGENCIES # (i) Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances): 1,493 crores # (ii) Contingencies Direct tax matters Refer Note 9 Indirect tax matters The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. As at March 31, 2017, the Company has demands on appeal amounting to 253 crores from various indirect tax authorities, which are being contested by the Company. In respect of indirect tax contingencies of 9 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. Other claims The Company has examined the social security and tax aspects of contracts with legal entities which provide services to an overseas subsidiary and, based on legal opinion, concludes that the subsidiary is in compliance with the related statutory requirements. As at March 31, 2017, claims aggregating 6,276 crores against the Company have not been acknowledged as debts. In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic's intellectual property. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling 6,101 crores (US $941 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. Bank guarantees and letters of comfort The Company has given letter of comfort to various banks for credit facilities availed by its subsidiaries (a) Tata America International Corporation and (b) Tata Consultancy Services Asia Pacific Pte Ltd. 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. The Company has provided guarantees to third parties on behalf of its subsidiaries aggregating 2,127 crores. The Company does not expect any outflow of resources in respect of the above. |
# 34) MICRO AND SMALL ENTERPRISES |(crores)|As at March 31, 2017|As at March 31, 2016|As at April 1, 2015| |---|---|---|---| |Principal Amount due to vendor|11|15|10| |Interest|-|-|-| |Principal amount paid (includes unpaid) beyond the appointed date|192|175|248| |Interest due and payable for the year|-|-|1| |Interest accrued and remaining unpaid (includes interest disallowable of 3 crores (March 31, 2016: 3 crores; April 1, 2015: 2 crores))|-|3|2| 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. # 35) 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, 2017: |Subsidiary Company|Outstanding as at March 31, 2017|Maximum amount outstanding during the year| |---|---|---| |TCS FNS Pty Limited|-|-| |*Previous years' figures are in italics|*|7*| Unconsolidated Financial Statements I 231 # Annual Report 2016-17 # Notes forming part of the Financial Statements # 36) RELATED PARTY TRANSACTIONS The Company's material related party transactions and outstanding balances are with its subsidiaries with whom the Company routinely enters into transactions in the ordinary course of business. Transactions with related parties are as follows: # Year ended March 31, 2017 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Revenue from operations|4|57,787|246|2,162|-|60,199| |Interest income|-|- *|-|- *|-|- *| |Dividend income|-|394|-|-|-|394| |Rent income|-|5|-|-|-|5| |Other income|-|38|-|-|-|38| |Purchase of goods, services (including reimbursement)|4|1,091|544|634|-|2,273| |Brand equity contribution|89|-|-|-|-|89| |Dividend paid|6,712|-|8|3|-|6,723| |Purchase of property, plant and equipment|-|- *|21|33|-|54| |Contribution to employees post employment benefit plan|-|-|-|-|963|963| |Rent expense|1|18|33|5|-|57| |Bad debts and advances written off, Allowances for doubtful trade receivables and advances (net)|- *|- *|4|5|-|9| |Guarantees given|-|2|-|-|-|2| |Loans and advances given|-|-|-|7|-|7| |Loans and advances repaid|-|7|1|-|-|8| * represents values less than 0.50 crore. |
232 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Year ended March 31, 2016 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Revenue from operations|4|53,070|223|2,163|-|55,460| |Interest income|-|-|-|-|-|-| |Dividend income|-|696|-|-|-|696| |Rent income|-|3|-|-|-|3| |Other income|-|39|-|-|-|39| |Purchase of goods, services (including reimbursement)|3|3,185|633|471|-|4,292| |Brand equity contribution|75|-|-|-|-|75| |Dividend paid|5,846|-|4|3|-|5,853| |Purchase of property, plant and equipment|-|-|30|60|-|90| |Contribution to employees post employment benefit plan|-|-|-|-|771|771| |Rent expense|1|20|26|5|-|52| |Bad debts and advances written off, Allowances for doubtful trade receivables and advances (net)|-|-|-|2|-|2| |Guarantees given|-|3|-|-|-|3| |Loans and advances given|-|-|1|-|-|1| |Loans and advances repaid|-|11|-|-|-|11| |Redemption / sale of investments|-|102|-|-|-|102| # Balances receivable from related parties are as follows: # As at March 31, 2017 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade receivables, Unbilled revenue (net)|1|9,890|128|626|-|10,645| |Loans and advances, Other financial assets and other assets (net)|3|1|26|14|-|44| |Investments|-|-|19|-|-|19| | |4|9,891|173|640|-|10,708| # Annual Report 2016-17 # Notes forming part of the Financial Statements # As at March 31, 2016 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade receivables, Unbilled revenue (net)|2|10,474|111|625|-|11,212| |Loans and advances, Other financial assets and other assets (net)|2|7|2|9|-|20| |Investments|-|-|19|-|-|19| | |4|10,481|132|634|-|11,251| # As at April 1, 2015 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade receivables, Unbilled revenue (net)|1|9,969|109|658|-|10,737| |Loans and advances, Other financial assets and other assets (net)|3|47|-|9|-|59| |Investments|-|-|19|-|-|19| | |4|10,016|128|667|-|10,815| # Balances payable to related parties are as follows: # As at March 31, 2017 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade payables, Unearned deferred revenue, Other financial liabilities and Other liabilities|82|1,653|25|150|-|1,910| |Guarantees and commitments|-|2,127|24|71|-|2,222| | |82|3,780|49|221|-|4,132| # Notes forming part of the Financial Statements # As at March 31, 2016 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade payables, Unearned deferred revenue, Other financial liabilities and Other liabilities|68|1,503|20|81|-|1,672| |Guarantees and commitments|-|3,225|25|59|-|3,309| | |68|4,728|45|140|-|4,981| # As at April 1, 2015 | |Tata Sons Limited|Subsidiaries of the Company|Subsidiaries of Tata Sons Limited|Associates / Joint ventures of Tata Sons Limited and its subsidiaries|Other related parties|Total| |---|---|---|---|---|---|---| |Trade payables, Unearned deferred revenue, Other financial liabilities and Other liabilities|69|1,509|36|86|-|1,700| |Guarantees and commitments|-|3,311|51|95|-|3,457| | |69|4,820|87|181|-|5,157| The Company's material related party transactions and outstanding balances are with related parties with whom the Company routinely enters into transactions in the ordinary course of business. Compensation to key management personnel is as follows: | |Year ended March 31, 2017|Year ended March 31, 2016| |---|---|---| |Short-term benefits|46|43| |Dividend paid during the year|1|-| |Total|47|43| # DIVIDENDS Dividends paid during the year ended March 31, 2017 include an amount of 27 per equity share towards final dividend for the year ended March 31, 2016 and an amount of 19.50 per equity share towards interim dividend for the year ended March 31, 2017. Dividends paid during the year ended March 31, 2016 include an amount of 24 per equity share towards final dividend for the year ended March 31, 2015 and an amount of 16.50 per equity share towards interim dividend for the year ended March 31, 2016. The dividends declared by the Company are based on the profits available for distribution as reported in the financial statements of the Company. Accordingly, the retained earnings reported in these financial statements may not be fully distributable. As at March 31, 2017, income (net of dividend tax) available for distribution were 62,383 crores. On April 18, 2017, the Board of Directors of the Company have proposed a final dividend of 27.50 per share in respect of the year ended March 31, 2017 subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of 6,522 crores inclusive of dividend distribution tax of 1,103 crores. Unconsolidated Financial Statements I 235 # Annual Report 2016-17 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|Date of acquiring subsidiary|Start date of accounting period|End date of accounting period|Country|Currency|Exchange Rate|Share Capital|Reserves & Surplus|Total Assets|Investments|Turnover|Profit before Taxation|Provision for Taxation|Profit after Taxation|Proposed Dividend|% of Shareholding| | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |1|APTOnline Limited|August 9, 2004|April 1, 2016|March 31, 2017|India|INR|1.00|0|264|191|125|451|463|211|211|0|89%| | | |2|MP Online Limited|September 8, 2006|April 1, 2016|March 31, 2017|India|INR|1.00|0|173|125|513|986|311|120|88|0|89%| | | |3|C-Edge Technologies Limited|January 19, 2006|April 1, 2016|March 31, 2017|India|INR|1.00|0|101|212|097|8|-254|542|034|175|1%| | | |4|MahaOnline Limited|September 23, 2010|April 1, 2016|March 31, 2017|India|INR|1.00|0|343|135|894|569|725|274|0|0|4%| | | |5|CMC Americas Inc|August 9, 2004|April 1, 2016|March 31, 2017|U.S.A.|USD|64.84|0|101|542|4480|-327|562|234|-100|0|100%| | | |6|CMC eBiz Inc.|January 27, 2011|April 1, 2016|March 31, 2017|U.S.A.|USD|64.84|0|0|0|0|0|0|0|0|0|100%| | | |7|TCS e-Serve International Limited|December 31, 2008|April 1, 2016|March 31, 2017|India|INR|1.00|0|102|122|735|1118|4258|1741|0|0|100%| | | |8|TCS e-Serve America, Inc.|February 10, 2009|January 1, 2016|December 31, 2016|U.S.A.|USD|64.84|0|263|426|-88|-8|-8|0|0|0|100%| | | |9|Diligenta Limited|August 23, 2005|April 1, 2016|March 31, 2017|U.K.|GBP|80.80|0|336|858|384|725|616|21|485|7|100%| | | |10|Tata Consultancy Services Canada Inc.|October 1, 2009|April 1, 2016|March 31, 2017|Canada|CAD|48.57|667|234|741|1,036|528|-3,656|415|111|304|100%| | | |11|Tata America International Corporation|August 9, 2004|April 1, 2016|March 31, 2017|U.S.A.|USD|64.84|0|13,323|12,375|9,051|1135|3,685|1,846|756|1,090|100%| | | |12|Tata Consultancy Services Asia Pacific Pte Ltd.|August 9, 2004|April 1, 2016|March 31, 2017|Singapore|USD|64.84|0|294|708|307|951|662|138|221|0|100%| | | |13|Tata Consultancy Services (China) Co., Ltd|November 16, 2006|January 1, 2016|December 31, 2016|China|CNY|9.40|0|554|190|(13)|269|92|-498|592|435|-93.2%| | | |14|Tata Consultancy Services Japan, Ltd.|July 1, 2014|April 1, 2016|March 31, 2017|Japan|JPY|0.58|0|361|251|604|1,625|770|-3,451|143|459|1%| | | |15|Tata Consultancy Services Malaysia Sdn Bhd|August 9, 2004|April 1, 2016|March 31, 2017|Malaysia|MYR|14.65|0|869|390|172|79|-353|15|-15|0|100%| | | |16|PT Tata Consultancy Services Indonesia|October 5, 2006|April 1, 2016|March 31, 2017|Indonesia|IDR|0.00|0|0|-274|417|-662|141|717|0|0|100%| | | |17|Tata Consultancy Services (Philippines) Inc.|September 19, 2008|April 1, 2016|March 31, 2017|Philippines|PHP|1.29|0|960|361|763|069|4|-537|721|0|100%| | | |18|Tata Consultancy Services (Thailand) Limited|May 12, 2008|April 1, 2016|March 31, 2017|Thailand|THB|1.89|0|712|195|-283|-3|0|0|0|100%| | | | |19|Tata Consultancy Services Belgium S.A.|August 9, 2004|April 1, 2016|March 31, 2017|Belgium|EUR|69.29|0|335|612|564|414|-1,015|144|489|6|100%| | | |20|Tata Consultancy Services Deutschland GmbH|August 9, 2004|April 1, 2016|March 31, 2017|Germany|EUR|69.29|0|356|112|677|164|-2,316|139|459|469|100%| | | |21|Tata Consultancy Services Sverige AB|August 9, 2004|April 1, 2016|March 31, 2017|Sweden|SEK|7.26|0|107|309|772|463|-1,880|158|361|22|100%| | | |22|Tata Consultancy Services Netherlands BV|August 9, 2004|April 1, 2016|March 31, 2017|Netherlands|EUR|69.29|0|356|457|1,409|2,252|386|1,329|2,405|421|106|315|100%| |23|TCS Italia SRL|August 9, 2004|April 1, 2016|March 31, 2017|Italy|EUR|69.29|0|15|(13)|111|109|-296|108|2|0|100%| | | |24|Tata Consultancy Services Luxembourg S.A.|October 28, 2005|April 1, 2016|March 31, 2017|(G.D. de Luxembourg)|EUR|69.29|0|391|375|23|-155|338|25|-100|0|100%| | | # 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|Start date of accounting period|End date of accounting period|Profit before Taxation|Provision for Taxation|Total Profit after Taxation|Proposed Dividend|% of Shareholding of subsidiary|Country| |---|---|---|---|---|---|---|---|---|---| |25|Tata Consultancy Services Switzerland Ltd.|October 31, 2006|March 31, 2017|1,643|137|1,125|12|100%|Switzerland| |26|Tata Consultancy Services France S.A.S|August 9, 2004|March 31, 2017|394|39|33|-65|100%|France| |27|Tata Consultancy Services Osterreich GmbH|March 9, 2012|March 31, 2017|425|21|232|-100%|Austria| | |28|Tata Consultancy Services Danmark ApS|March 16, 2012|March 31, 2017|78|12|63|-11|100%|Denmark| |29|Tata Consultancy Services De Espana S.A.|August 9, 2004|March 31, 2017|151|31|116|-216|100%|Spain| |30|Tata Consultancy Services Portugal Unipessoal Limitada|July 4, 2005|March 31, 2017|-13|17|30|-19|100%|Portugal| |31|Alti S.A.|June 28, 2013|March 31, 2017|15|45|46|75|-100%|France| |32|Alti HR S.A.S.|June 28, 2013|March 31, 2017|-10|12|-3|-1|100%|France| |33|Tescom (France) Software Systems Testing S.A.R.L.|June 28, 2013|March 31, 2017|10|21|-7|-3|100%|France| |34|Alti Switzerland S.A.|June 28, 2013|March 31, 2017|111|64|-431|-1|100%|Switzerland| |35|Alti Infrastructures Systemes & Reseaux S.A.S.|June 28, 2013|March 31, 2017|-2|2|-3|-1|100%|France| |36|Alti NV|June 28, 2013|March 31, 2017|2|19|15|-52|100%|Belgium| |37|Teamlink|June 28, 2013|March 31, 2017|-1|34|-|-|100%|Belgium| |38|Planaxis Technologies Inc.|June 28, 2013|March 31, 2017|-40|58|-46|-3|100%|Canada| |39|Tata Consultancy Services Saudi Arabia|July 2, 2015|March 31, 2017|635|165|124|-32|76%|Saudi Arabia| |40|Tata Consultancy Services (Africa) (PTY) Ltd.|October 23, 2007|March 31, 2017|318|745|52|-45|100%|South Africa| |41|Tata Consultancy Services (South Africa) (PTY) Ltd.|October 31, 2007|March 31, 2017|318|950|264|205|100%|South Africa| |42|TCS FNS Pty Limited|October 17, 2005|March 31, 2017|599|941|15|-4|100%|Australia| |43|TCS Financial Solutions Beijing Co., Ltd.|December 29, 2006|March 31, 2017|955|434|976|-80|100%|China| |44|TCS Financial Solutions Australia Holdings Pty Limited|October 19, 2005|March 31, 2017|599|941|69|-20|100%|Australia| |45|TCS Financial Solutions Australia Pty Limited|October 19, 2005|March 31, 2017|599|941|-125|149|100%|Australia| |46|TCS Iberoamerica S.A.|August 9, 2004|March 31, 2017|688|638|585|1,344|100%|Uruguay| |47|TCS Solution Center S.A.|August 9, 2004|March 31, 2017|688|822|732|421|100%|Uruguay| |48|Tata Consultancy Services Argentina S.A.|August 9, 2004|March 31, 2017|253|318|-54|286|99.99%|Argentina| # Annual Report 2016-17 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|Date of acquiring subsidiary|Start date of accounting period|End date of accounting period|Country|Currency|Exchange Rate|Share Capital|Reserves & Surplus|Total Assets|Total Liabilities|Profit before Taxation|Provision for Taxation|Profit after Taxation|Proposed Dividend|% of Shareholding| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |49|Tata Consultancy Services Do Brasil Ltda|August 9, 2004|April 1, 2016|March 31, 2017|Brazil|BRL|20.5798|34362|(289)|254|181|-|484|1679|-|100%| |50|Tata Consultancy Services De Mexico S.A., De C.V.|August 9, 2004|January 1, 2016|December 31, 2016|Mexico|MXN|3.4720|85150|8700|191|-|1,705|391|120271|102|100%| |51|Tata Consultancy Services Chile S.A.|August 9, 2004|January 1, 2016|December 31, 2016|Chile|CLP|0.0977|85166|5007579|16543362|(2)|64|-|100%| | | |52|TCS Inversiones Chile Limitada|August 9, 2004|January 1, 2016|December 31, 2016|Chile|CLP|0.0977|1501613|154314|-|(1)|(1)|-|99.99%| | | |53|TATASOLUTION CENTER S.A.|December 28, 2006|January 1, 2016|December 31, 2016|Ecuador|USD|64.8450|1946240|175|-|659|(24)|11|(35)|65|100%| |54|TCS Uruguay S.A.|January 1, 2010|April 1, 2016|March 31, 2017|Uruguay|UYU|2.2696|-|538431|-|1858263|31|-|100%| | | |55|MGDC S.C.|January 1, 2010|January 1, 2016|December 31, 2016|Mexico|MXN|3.4720|-|12221694|-|860571839|-|100%| | | | |56|TECHNOLOGY OUTSOURCING S.A.C|October 30, 2015|January 1, 2016|December 31, 2016|Peru|PEN|19.9664|38|11|(3)|3123|-|(4)|(2)|(2)|100%| |57|Tata Consultancy Services Qatar S.S.C.|December 20, 2011|April 1, 2016|March 31, 2017|Qatar|QAR|17.8091|794628|317|-|123918|-|100%| | | | |58|TCS Foundation|March 25, 2015|April 1, 2016|March 31, 2017|India|INR|1.0000|149950|44473|-|222|-|222|100%| | | # 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 March 31, 2017. 2. Diligenta2 Ltd. was liquidated on March 14, 2017. 3. PT Financial Network Services was liquidated on March 16, 2017. 4. MSCJV was liquidated on January 24, 2017. # For and on behalf of the Board N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian O. P. Bhatt Chairman CFO Director Executive Director Director Rajesh Gopinathan Ishaat Hussain V. Thyagarajan Prof. Clayton M Christensen CEO and Managing Director Director Director Director N. Ganpathy Subramaniam Dr. Vijay Kelkar Aman Mehta Suprakash Mukhopadhyay COO and Executive Director Director Director Company Secretary # Analytics # Application Programming Interface (API) File: AR_TCS_2016_2017.md # APIfication # Application Development and Maintenance # Artificial Intelligence (AI) # Asset Leveraged Solutions # Assurance Services # Attrition # Augmented Reality (AR) # Automation # Basis Point # Big Data # Book Value # Blockchain # Business Process Services (BPS) # Chatbots # Cognitive Computing # Constant Currency # Cross-currency impact # Cyber Security # Days' Sales Outstanding (DSO) # Digital Technologies # Discretionary Spend # Dividend Payout Ratio # Earnings per Share (EPS) # Effective Tax Rate (ETR) # Engineering and Industrial Services # Enterprise Solutions and Consulting # Fair Value # Glossary In the enterprise context, this is the discovery, interpretation, and communication of meaningful patterns in business data to predict and improve business performance. APIs are a set of easily accessible protocols for communication between various software components. The process of exposing a discrete business function or data within an enterprise's systems through APIs. Design, development, and deployment of custom software; ongoing support, upkeep, and enhancement of such software on behalf of the client. AI is technology that appears to emulate human performance typically by learning, arriving at its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, enhancing human cognitive performance (cognitive computing) or replacing people on execution of non-routine tasks. Software solutions delivered by leveraging TCS' IP / frameworks or software products. Quality Assurance and Engineering Services encompassing business requirements validation, static and functional testing, non-functional testing including performance engineering, user experience, security and test automation. This measures what portion of the workforce left the organization (voluntarily or involuntarily) in a certain period. Attrition looks at employee departures over the last 12 months (LTM). The formula is: Total number of departures in the LTM / closing headcount. Augmented Reality is a technology that superimposes a computer-generated image on a user's view of the real world to enrich the interaction. Automation is the execution of work by machines in accordance with rules that have either been explicitly coded by a human or 'learned' by the machine through pattern recognition of data. A basis point is one hundredth of a percentage point, that is, 0.01%. Big Data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization. The value at which an asset or a liability is carried on a balance sheet or the value of initial outlay for an investment. Blockchain is a distributed database that maintains a continuously growing list of records, called blocks, secured from tampering and revision. Designing, enabling, and executing business operations including data management, analytics, interactions and experience management. Chatbots are computer programs designed to simulate conversation with human users, especially over the internet. They are typically used in dialog systems for various practical purposes like customer service or information acquisition. |
Cognitive computing is the simulation of human thought processes in a computerized model. It involves self-learning systems that use data mining, pattern recognition, and natural language processing to mimic the way the human brain works. Restating the current period's revenue or profit after eliminating the impact of currency movement in the intervening period gives the constant currency revenue or profit. At TCS, this is done by recalculating the current period's revenue using the average currency conversion rates from the prior period. When a company derives revenues in multiple currencies, the change in conversion rates of those currencies to the reporting currency (for example, INR) in the current period, vis-à-vis the conversion rates of the prior period affects the reported revenue. This revenue impact due to shifts in the value of currencies relative to the reporting currency is called cross-currency impact. For example, if 50% of the revenue is denominated in USD, and the USD has depreciated against the INR by 5% in a period, even if the company earns the same amount of dollars as in the prior period, it still translates into fewer rupees this period. The cross-currency impact on revenue will be 50% x 5% = 2.5%. Cyber Security is the body of technologies, processes, and practices designed to protect networks, computers, programs, and data from attack, damage, or unauthorized access. In a computing context, security includes both cyber security and physical security. Days' Sales Outstanding is a popular way of depicting the Accounts Receivable relative to the company's revenue over the last twelve months (DSO = Accounts Receivable * 365 / Revenue). Digital technologies represent the nexus of new age services such as Social Media, Mobility, Analytics, Big Data, Cloud, Artificial Intelligence and Internet of Things. Discretionary spend, also known as Change the Business (CTB) spend, is that portion of the IT budget that's outside of the basic minimum IT activities required to keep the business running. Projects that transform the manner in which business operates are considered discretionary. In uncertain economic times, it may be necessary for businesses to cut spend in response to decline in income and discretionary spend is often the first one to be scrutinized. Discretionary spend is subjective, and may differ considerably among business. Dividend Payout Ratio is the ratio of the annual dividend paid (including dividend distribution tax) to the Net Income, usually expressed as a percentage. EPS for any period is the amount of that period's Net Income attributable to a single share after deducting any preference dividend and related taxes. EPS = [Net profit - Preference dividend if any] / Weighted average number of shares outstanding during the period. ETR is the proportion of the Profit Before Taxes that is provided for payment of income taxes. ETR = Provision for Taxes / Profit Before Taxes. Next Generation Product Engineering, Manufacturing Operations Transformation, Services Transformation, Embedded software and Internet of Things. Business and technology consulting, design, architecture, implementation, and support services on Enterprise Application platforms covering the front, middle, and back-office applications such as ERP, CRM, Supply Chain, Content Management etc., on-premise, cloud and other digital platforms. The fair value of a financial asset or liability is the price that would be received on selling an asset or paid on transferring a liability in an orderly transaction between market participants at the measurement date. # Annual Report 2016-17 # Glossary A Forward Contract is a hedging instrument wherein two parties agree to buy or sell a particular currency at a pre-determined rate (OR Forward Currency rate) on a specific future date. For e.g. TCS enters into a forward contract to sell USD 1mn after 3 months @ ` 68. Irrespective of the prevailing USD spot rate, TCS will be obliged to sell USD 1mn @ ` 68 at the end of 3 months. Gamification is the process of adding games or game-like elements to any activity in order to enrich experiences and encourage user participation. Technical consulting, remote infrastructure management, hosting, process and tools optimization, and technical transformation of the enterprise IT infrastructure to a future proof hybrid cloud model. IoT is a network of interconnected machines or devices which are embedded with sensors, software, network connectivity, and necessary electronics to generate and share run-time data that can be studied and used to monitor or control remotely, predict failure, and optimize the design of those machines/devices. Invested funds are funds that are highly liquid in nature, and can be readily converted into cash. |
Invested Funds = Cash and Bank Balances + Investments + Deposits with Banks + Inter corporate Deposits. KMP in relation to our Company means the Chief Executive Officer and Managing Director, Chief Financial Officer, all Executive Directors, Global Head for Human Resource and the Company Secretary. Please refer to the Company's policy on KMP: http://www.tcs.com/ir-corporate-governance. Machine learning is a type of artificial intelligence (AI) that provides computers with the ability to learn without being explicitly programmed. Total market value of all of a company's outstanding equity shares. Market Cap = Last Trading Price * Total number of outstanding shares. Minority Interest is the share of the consolidated profits attributable to interests of the non-controlling ownership in the subsidiaries. Non-Discretionary spend, also known as Run the Business (RTB) spend, is that portion of the IT budget that covers the basic IT activities required to keep a business running. Even in tough economic times, non-discretionary spend remains relatively unaffected. This is the proportion of our international revenues derived from services that are delivered out of centers in India. A service delivered out of an offshore delivery center is billed at a lower rate compared to what would be applicable if delivered out of the customer's location. So higher offshore leverage depresses the revenue growth relative to the volume growth but expands the gross margin. This is the price charged to the customer per unit of effort. In contracts, pricing is the billing rate for a unit of effort (usually measured in person-hours). In Fixed Price contracts, pricing is the total sum the customer is expected to pay for the turnkey solution delivered. Some use this term interchangeably (and somewhat inaccurately) with the average revenue realized by the company per unit of effort. See Realization. This is the revenue received by the company per unit of effort expended. TCS reports the quarter on quarter change in realization (in percentage terms) after removing any impact of changes in currency exchange rates and also any impact of change in offshore leverage between the two periods. Billing rates vary depending on what service is offered, and in which part of the world, so it is important to note that increases or decreases in realization could be because of changes in the underlying business or geographic mix and not necessarily because of a change in the pricing of a service. Also, realization doesn't take into account the costs and therefore higher realization is not necessarily more profitable. Any transaction between a company and its related party involving transfer of services, resources or any obligation, regardless of whether a price is charged. Please refer the Company's policy on Related Party Transactions: http://www.tcs.com/ir-corporate-governance. Simplification is the term used to describe the rationalization of IT architectures through consolidation of systems and elimination of redundant systems and layers. The primary purpose is to shrink the IT footprint and make operations leaner and more efficient. UBR is revenue that is yet to be invoiced for services already delivered. The budgeted effort has been expended (and therefore the revenue has been recognized) and yet, no invoice has been raised. While this could happen due to several reasons, the most common one is the customer delay in acceptance of a project deliverable. This is the opposite of Unearned Revenue. UER is money received in advance for services yet to be delivered. In other words, it is revenue that has been invoiced and collected from the client although the underlying effort is yet to be expended. Unearned revenue is the opposite of Unbilled Revenue. VR is an artificial, computer-generated simulation or recreation of a real life environment or situation. It engages users by offering simulated reality experiences firsthand, primarily by stimulating their vision and hearing. Volume in any period is the Billed Effort and the quantum of hardware equipment and software licenses sold in that period. Disclaimer: This glossary is intended to help understand commonly used terms and phrases in TCS' Annual Report. The explanations are not intended to be technical definitions. If explanations provided here are found to be different from what is described in the Company's periodic financial statements (not limited to Notes to Accounts), then the definition provided in the certified financial statements will prevail. |
# Promoting fitness in the Community TCS is the title sponsor of premier marathons across the globe, including the TCS World 10K Bengaluru, the TCS New York City Marathon, the TCS Amsterdam Marathon, and the TCS Lidingloppet (the world's largest cross country run), and the technology partner to the Marathons held in Mumbai, London, Singapore, Chicago, and Boston -- all part of our effort to promote health and fitness in the communities we work with the world over. # Title Sponsors Certain statements in this release concerning our future prospects are forward-looking statements. Forward-looking statements by their nature involve a number of risks and uncertainties that could cause actual results to differ materially from market expectations. These risks and uncertainties include, but are not limited to our ability to manage growth, intense competition among Indian and overseas IT services companies, various factors which may affect our cost advantage, such as wage increases or an appreciating Rupee, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on cross-border movement of skilled personnel, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which TCS has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. TCS may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. These forward-looking statements represent only the Company's current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements. Produced and Designed by: Global Investor Relations and Corporate Marketing, Tata Consultancy Services # IT Services # Business Solutions # Consulting Tata Consultancy Services Limited 9th Floor Nirmal Building Nariman Point Mumbai 400 021 www.tcs.com # Annual Report 2016-17 # Notice Notice is hereby given that the twenty-second Annual General Meeting of Tata Consultancy Services Limited will be held on Friday, June 16, 2017 at 3.30 p.m. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020, to transact the following business: 1. To receive, consider and adopt: 1. the Audited Financial Statements of the Company for the financial year ended March 31, 2017, together with the Reports of the Board of Directors and the Auditors thereon; and 2. the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2017, 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 2016 -17. 3. To appoint a Director in place of Ms. Aarthi Subramanian (DIN 07121802) who retires by rotation and, being eligible, offers herself for re-appointment. 4. Appointment of Statutory Auditors of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that pursuant to the provisions of Section 139 and other applicable provisions, if any, of the Companies Act, 2013 ("Act") and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W - 100022), be and is hereby appointed as Auditors of the Company in place of the retiring auditors Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), to hold office from the conclusion of this Annual General Meeting ("AGM") till the conclusion of the twenty-seventh AGM to be held in the year 2022 (subject to ratification of their appointment at every AGM if so required under the Act), at such remuneration, as may be mutually agreed between the Board of Directors of the Company and the Auditors." 5. Appointment of Mr. N. Chandrasekaran as a Director of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that Mr. N. |
Chandrasekaran (DIN 00121863) who was appointed by the Board of Directors as an Additional Director of the Company with effect from February 21, 2017 and who holds office up to the date of this Annual General Meeting of the Company in terms of Section 161(1) of the Companies Act, 2013 ("Act"), but who is eligible for appointment and in respect of whom the Company has received a notice in writing from a Member under Section 160(1) of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed a Director of the Company, liable to retire by rotation." 6. Appointment of Mr. Rajesh Gopinathan as a Director of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that Mr. Rajesh Gopinathan (DIN 06365813) who was appointed by the Board of Directors as an Additional Director of the Company with effect from February 21, 2017 and who holds office up to the date of this Annual General Meeting of the Company." # 7. Appointment of Mr. Rajesh Gopinathan as Chief Executive Officer and Managing Director of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that pursuant to the provisions of Sections 196, 197 and other applicable provisions, if any, of the Companies Act, 2013, ("Act"), read with Schedule V to the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, the Company hereby approves the appointment and terms of remuneration of Mr. Rajesh Gopinathan (DIN 06365813), as the Chief Executive Officer and Managing Director of the Company for a period of five years with effect from February 21, 2017 upon the terms and conditions set out in the Explanatory Statement annexed to the Notice convening this Annual General Meeting, (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment) with authority to the Board of Directors to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the Board of Directors and Mr. Rajesh Gopinathan." "RESOLVED FURTHER that the Board of Directors of the Company (which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution) be and is hereby authorised to take all such steps as may be necessary, proper and expedient to give effect to this Resolution." # 8. Appointment of Mr. N. Ganapathy Subramaniam as a Director of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that Mr. N. Ganapathy Subramaniam (DIN 07006215), who was appointed by the Board of Directors as an Additional Director of the Company with effect from February 21, 2017 and who holds office up to the date of this Annual General Meeting of the Company in terms of Section 161(1) of the Companies Act, 2013 ("Act"), but who is eligible for appointment and in respect of whom the Company has received a notice in writing from a Member under Section 160(1) of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed a Director of the Company, liable to retire by rotation." # 9. Appointment of Mr. N. Ganapathy Subramaniam as Chief Operating Officer and Executive Director of the Company To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that pursuant to the provisions of Sections 196, 197 and other applicable provisions, if any, of the Companies Act, 2013 ("Act"), read with Schedule V to the Act, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, the Company hereby approves the appointment and terms of remuneration of Mr. N. |
Ganapathy Subramaniam (DIN 07006215) as Chief Operating Officer and Executive Director of the Company for a period of five years with effect from February 21, 2017 upon the terms and conditions set out in the Explanatory Statement annexed to the Notice convening this Annual General Meeting, (including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of his appointment) with authority to the Board of Directors to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the Board of Directors and Mr. N. Ganapathy Subramaniam." # Annual Report 2016-17 "RESOLVED FURTHER that the Board of Directors of the Company (which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution) be and is hereby authorised to take all such steps as may be necessary, proper and expedient to give effect to this Resolution." # 10. Appointment of Branch Auditors To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that pursuant to the provisions of Section 143(8) and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, the Board be and is hereby authorized to appoint Branch Auditors of any branch office of the Company, whether existing or which may be opened / acquired hereafter, outside India, in consultation with the Company's Auditors, any person(s) qualified to act as Branch Auditors and to fix their remuneration." # Notes: 1. The relative Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 ("Act") setting out material facts concerning the business under Item Nos. 4 to 10 of the Notice, is annexed hereto. The relevant details as required under Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and Secretarial Standard on General Meetings issued by the Institute of Company Secretaries of India, of the person seeking appointment/ re-appointment as Director under Item Nos. 3, 5, 6, and 8 of the Notice, are also annexed. 2. A Member entitled to attend and vote at the Annual General Meeting (AGM) is entitled to appoint a proxy to attend and vote instead of himself and the proxy need not be a Member of the Company. The instrument appointing the proxy, in order to be effective, must be deposited at the Company's Registered Office, duly completed and signed, not less than FORTY-EIGHT hours before the commencement of the AGM. Proxies submitted on behalf of limited companies, societies etc., must be supported by appropriate resolutions / authority, as applicable. A person can act as proxy on behalf of Members not exceeding fifty (50) and holding in the aggregate not more than 10% of the total share capital of the Company carrying voting rights. In case a proxy is proposed to be appointed by a Member holding more than 10% of the total share capital of the Company carrying voting rights, then such proxy shall not act as a proxy for any other person or shareholder. 3. The Register of Members and Share Transfer Books of the Company will be closed on Thursday, June 15, 2017 and Friday, June 16, 2017. 4. Members, Proxies and Authorised Representatives are requested to bring to the meeting, the Attendance Slip enclosed herewith, duly completed and signed, mentioning therein details of their DP ID and Client ID / Folio No. 5. If the Final Dividend, as recommended by the Board of Directors, is approved at the AGM, payment of such dividend will be made on Friday, June 23, 2017 as under: # 03 Notice # 6. File: AR_TCS_2016_2017.md Members holding shares in dematerialized form are requested to intimate all changes pertaining to their bank details such as bank account number, name of the bank and branch details, MICR code and IFSC code, mandates, nominations, power of attorney, change of address, change of name, e-mail address, contact numbers, etc., to their depository participant (DP). Changes intimated to the DP will then be automatically reflected in the Company's records which will help the Company and the Company's Registrars and Transfer Agents, TSR DARASHAW Limited (TSRDL) to provide efficient and better services. Members holding shares in physical form are requested to intimate such changes to TSRDL. # 7. |
Members holding shares in physical form are requested to consider converting their holdings to dematerialized form to eliminate all risks associated with physical shares and for ease of portfolio management. Members can contact the Company or TSRDL for assistance in this regard. # 8. Members holding shares in physical form, in identical order of names, in more than one folio are requested to send to the Company or TSRDL, the details of such folios together with the share certificates for consolidating their holdings in one folio. A consolidated share certificate will be issued to such Members after making requisite changes. # 9. In case of joint holders attending the AGM, the Member whose name appears as the first holder in the order of names as per the Register of Members of the Company will be entitled to vote. # 10. Members seeking any information with regard to the accounts, are requested to write to the Company at an early date, so as to enable the Management to keep the information ready at the AGM. # 11. As per the provisions of Section 72 of the Act, the facility for making nomination is available for the Members in respect of the shares held by them. Members who have not yet registered their nomination are requested to register the same by submitting Form No. SH-13. The said form can be downloaded from the Company's website www.tcs.com (under 'Investors' section). Members holding shares in physical form may submit the same to TSRDL. Members holding shares in electronic form may submit the same to their respective depository participant. # 12. Transfer of Unclaimed / Unpaid amounts to the Investor Education and Protection Fund (IEPF): Pursuant to Sections 205A and 205C, and other applicable provisions, if any, of the Companies Act, 1956, all unclaimed / unpaid dividend, application money, debenture interest and interest on deposits as well as the principal amount of debentures and deposits, as applicable, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, were required to be transferred to the IEPF. Sections 124 and 125 of the Act, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('IEPF Rules'), both of which were applicable with effect from September 7, 2016, also contain similar provisions for transfer of such amounts to the IEPF. Accordingly, all unclaimed / unpaid dividend, application money, debenture interest and interest on deposits as well as the principal amount of debentures and deposits, as applicable, remaining unclaimed / unpaid for a period of seven years from the date they became due for payment, in relation to the Company, erstwhile TCS e-Serve Limited and erstwhile CMC Limited, which have been amalgamated with the Company, have been transferred to the IEPF established by the Central Government. No claim shall be entertained against the Company for the amounts so transferred. Notice 04 # Annual Report 2016-17 As per Section 124(6) of the Act read with the IEPF Rules as amended, all the shares in respect of which dividend has remained unpaid/unclaimed for seven consecutive years or more are required to be transferred to an IEPF Demat Account. The Company has sent notice to all the members whose Dividends are lying unpaid / unclaimed against their name for seven consecutive years or more. Members are requested to claim the same on or before May 31, 2017. In case the dividends are not claimed by the said date, necessary steps will be initiated by the Company to transfer shares held by the members to IEPF without further notice. Please note that no claim shall lie against the Company in respect of the shares so transferred to IEPF. In the event of transfer of shares and the unclaimed dividends to IEPF, members are entitled to claim the same from IEPF by submitting an online application in the prescribed Form IEPF-5 available on the website www.iepf.gov.in and sending a physical copy of the same duly signed to the Company along with the requisite documents enumerated in the Form IEPF-5. Members can file only one consolidated claim in a financial year as per the IEPF Rules. Members who have not yet encashed their dividend warrant(s) pertaining to the final dividend for the financial year 2009-10 onwards for the Company, erstwhile TCS e-Serve Limited and erstwhile CMC Limited, are requested to lodge their claims with TSRDL. |
It may be noted that the unclaimed Final Dividend for the financial year 2009-10 declared by the Company on July 2, 2010 can be claimed by the Members by July 1, 2017. The unclaimed Final Dividend for the financial year 2009-10 declared by erstwhile CMC Limited on June 29, 2010 can be claimed by the Members by June 28, 2017 and the unclaimed Final Dividend for the financial year 2009-10 declared by erstwhile e-Serve Limited on August 24, 2010 can be claimed by the Members by August 23, 2017. Members attention is particularly drawn to the "Corporate Governance" section of the Annual Report in respect of unclaimed dividend. The Ministry of Corporate Affairs ('MCA') on May 10, 2012 notified the Investor Education and Protection Fund (Uploading of information regarding Unpaid and Unclaimed amount lying with Companies) Rules 2012. In terms of the above Rules, the Company has uploaded the information in respect of the Unclaimed Dividends, as on the date of last AGM i.e. June 17, 2016, on the website of the IEPF viz. www.iepf.gov.in and under 'Investors' section on the website of the Company viz. www.tcs.com. # 13. The Notice of the AGM along with the Annual Report 2016-17 is being sent by electronic mode to those Members whose e-mail addresses are registered with the Company / Depositories, unless any Member has requested for a physical copy of the same. For Members who have not registered their e-mail addresses, physical copies are being sent by the permitted mode. Members may note that this Notice and the Annual Report 2016-17 will also be available on the Company's website viz. www.tcs.com. # 14. To support the 'Green Initiative', Members who have not registered their e-mail addresses are requested to register the same with DPs / TSRDL. # 15. The route map showing directions to reach the venue of the twenty-second AGM is annexed. # 16. In compliance with the provisions of Section 108 of the Act read with Rule 20 of the Companies (Management and Administration) Rules, 2014, as amended from time to time, and Regulation 44 of the SEBI Listing Regulations, the Members are provided with the facility to cast their vote electronically, through the e-voting services provided by NSDL, on all the resolutions set forth in this Notice. The instructions for e-voting are given herein below. Resolution(s) passed by Members through e-voting is/are deemed to have been passed as if they have been passed at the AGM. # 17. The Board of Directors has appointed Mr. P. N. Parikh of M/s. Parikh & Associates, Practicing Company Secretaries (Membership No. FCS 327) and failing him Mr. Mitesh Dhabliwala, Practicing Company Secretary (Membership No. FCS 8331) as the Scrutinizer to scrutinize the voting at the meeting and remote e-voting process in a fair and transparent manner. # 05 Notice The facility for voting, either through electronic voting system or polling paper shall also be made available at the AGM and the Members attending the meeting who have not already cast their vote by remote e-voting shall be able to exercise their right to vote at the AGM. 19. The Members who have cast their vote by remote e-voting prior to the AGM may also attend the AGM but shall not be entitled to cast their vote again. # 20. The instructions for e-voting are as under: 1. In case a Member receives an e-mail from NSDL (for Members whose e-mail addresses are registered with the Company / Depositories): 1. Open the email and also open the PDF file, namely, "TCS e-voting.pdf", with your Client ID or Folio No. as password. The said PDF file contains your User ID and password for e-voting. Please note that the password is an initial password. NOTE: Shareholders already registered with NSDL for e-voting will not receive the PDF file "TCS e-voting.pdf". 2. Open the internet browser and type the following URL: https://www.evoting.nsdl.com. 3. Click on Shareholder - Login. 4. If you are already registered with NSDL for e-voting, then you can use your existing user ID and password for casting your vote. NOTE: Shareholders who forgot the User Details/ Password can use "Forgot User Details/Password?" or "Physical User Reset Password?" option available on www.evoting.nsdl.com. In case Shareholders are holding shares in demat mode, User ID is the combination of (DPID + Client ID). In case Shareholders are holding shares in physical mode, User ID is the combination of (Even No + Folio No.). 5. |
If you are logging in for the first time, please enter the User ID and password provided in the PDF file attached with the e-mail as initial password. The Password Change Menu will appear on your screen. Change to a new password of your choice, making sure that it contains a minimum of 8 digits or characters or a combination of both. Please take utmost care to keep your password confidential. If you forget your password, you can reset it using "Forgot User Details/ Password?" or "Physical User Reset Password?" option available on www.evoting.nsdl.com. 6. Once the e-voting home page opens, click on e-Voting > Active Voting Cycles. 7. Select "EVEN" (E-voting Event Number) of Tata Consultancy Services Limited which is 106156. Now you are ready for e-voting as 'Cast Vote' page opens. 8. Cast your vote by selecting the appropriate option and click on "Submit" and also "Confirm" when prompted. 9. Upon confirmation, the message "Vote cast successfully" will be displayed. 10. Once the vote on a resolution is cast, the Member shall not be allowed to change it subsequently. 11. Institutional shareholders (i.e. other than individuals, HUF, NRI, etc.) are required to send scanned copy (PDF/JPG format) of the relevant Board Resolution and / or Authority letter, etc., together with attested specimen signature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail to [email protected], with a copy marked to [email protected]. # Annual Report 2016-17 # Instructions for Members # A. Queries and Assistance In case of any queries, members may refer the Frequently Asked Questions (FAQs) and e-voting user manual for shareholders available at the Downloads section of www.evoting.nsdl.com or call on toll free no: 1800-222-990. # B. Physical Copy of the Notice of the AGM In case a Member receives a physical copy of the Notice of the AGM (for Members whose e-mail addresses are not registered with the Company / Depositories): 1. Initial password is provided in the enclosed attendance slip: EVEN (E-voting Event Number) + User ID and Password. 2. Please follow all steps from Sl. No. 20. A (ii) to (xii) above, to cast vote. # C. Other Instructions 1. The e-voting period commences on Tuesday, June 13, 2017 (9.00 a.m. IST) and ends on Thursday, June 15, 2017 (5.00 p.m. IST). During this period, Members holding shares either in physical form or in dematerialized form, as on Friday, June 9, 2017 i.e. cut-off date, may cast their vote electronically. The e-voting module shall be disabled by NSDL for voting thereafter. Once the vote on a resolution is cast by the Member, he / she shall not be allowed to change it subsequently or cast vote again. 2. The voting rights of Members shall be in proportion to their shares in the paid up equity share capital of the Company as on the cut-off date. A person, whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date only shall be entitled to avail the facility of voting, either through remote e-voting or voting at the Meeting through electronic voting system or poll paper. 3. Any person, who acquires shares of the Company and becomes a Member of the Company after dispatch of the Notice and holding shares as of the cut-off date, may obtain the login ID and password by sending a request at [email protected]. However, if he/she is already registered with NSDL for remote e-voting then he/she can use his/her existing User ID and password for casting vote. If you forget your password, you can reset your password by using "Forgot User Details / Password" option available on www.evoting.nsdl.com. 4. The Scrutinizer shall, immediately after the conclusion of voting at the AGM, first count the votes cast at the Meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the Company and make, not later than 48 hours of conclusion of the Meeting, a consolidated Scrutinizer's Report of the total votes cast in favour or against, if any, to the Chairman or a person authorised by him in writing who shall countersign the same. 5. The result declared along with the Scrutinizer's Report shall be placed on the Company's website www.tcs.com and on the website of NSDL www.evoting.nsdl.com immediately. |
The Company shall simultaneously forward the results to the National Stock Exchange of India Limited and BSE Limited, where the shares of the Company are listed. The results shall also be displayed on the notice board at the Registered Office of the Company. By Order of the Board of Directors SUPRAKASH MUKHOPADHYAY Global Treasury Head and Company Secretary Mumbai, April 18, 2017 # Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 CIN : L22210MH1995PLC084781 Tel: 91 22 6778 9595 Fax: 91 22 6778 9660 E-mail: [email protected] Website: www.tcs.com # 07 Notice # Explanatory Statement As required by Section 102 of the Companies Act, 2013 ("Act"), the following explanatory statement sets out all material facts relating to the business mentioned under Item Nos. 4 to 10 of the accompanying Notice: # Item No. 4 This explanatory statement is provided though strictly not required as per Section 102 of the Act. Deloitte Haskins & Sells LLP (DHS), Chartered Accountants, Mumbai, (ICAI Firm Registration No. 117366W/W-100018) were appointed as the Auditors of the Company at the nineteenth Annual General Meeting (AGM) of the Company held on June 27, 2014 for a term of three years to hold office till the conclusion of this AGM. DHS have been the Auditors of the Company since financial year 2008-09. Prior to this, S. B. Billimoria & Co. (SBB), Chartered Accountants, were the Auditors of the Company from the financial year 2004-05 till financial year 2007-08. SBB was an associate of DHS. As per the provisions of Section 139 of the Act, no listed Company can appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years. In view of the above, DHS can continue as the Auditors of the Company only up to the conclusion of this Annual General Meeting ('AGM'), having completed their term as per the provisions of Section 139 of the Act. The Board of Directors has, based on the recommendation of the Audit Committee, at its meeting held on January 12, 2017, proposed the appointment of M/s B S R & Co. LLP (Firm Registration No. 101248W/W - 100022) as the Statutory Auditors of the Company for a period of 5 years, to hold office from the conclusion of this AGM till the conclusion of the twenty-seventh AGM to be held in the year 2022 (subject to ratification of their appointment at every AGM, if so required under the Act). B S R & Co. LLP have consented to their appointment as Statutory Auditors and have confirmed that if appointed, their appointment will be in accordance with Section 139 read with Section 141 of the Act. The Board commends the Ordinary Resolution set out at Item No. 4 of the Notice for approval by the Members. None of the Directors or Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the Resolution set out at Item No. 4 of the Notice. # Item No. 5 The Board of Directors has appointed Mr. N. Chandrasekaran, as an Additional Director of the Company with effect from February 21, 2017, on the recommendation of the Nomination and Remuneration Committee. As per the provisions of Section 161(1) of the Act, he holds office of Additional Director only up to the date of this Annual General Meeting of the Company, and is eligible for appointment as Director. The Company has received a notice under Section 160(1) of the Act proposing his candidature for the office of Director of the Company, along with the requisite deposit. 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. He was nominated as the Chairman of the Board of Directors of the Company by Tata Sons Limited from the same date. Mr. Chandrasekaran demonstrated exemplary leadership as the Chief Executive Officer and Managing Director of the Company. Prior to his elevation to the position of 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. He joined the Company in 1987 and has held several key positions within the Company. He chairs the Board of several Tata companies and is also a Director of the Reserve Bank of India. Mr. |
Chandrasekaran is recipient of several awards and recognition in business and academic communities. # Annual Report 2016-17 Further details of Mr. N. Chandrasekaran have been given in the Annexure to this Notice. The Board commends the Resolution at Item No.5 of the accompanying Notice for the approval by the Members of the Company. Except Mr. N. Chandrasekaran, Mr. N. Ganapathy Subramaniam, and their relatives, none of the Directors and Key Managerial Personnel of the Company and their respective relatives is concerned or interested, in the Resolution set out at Item No. 5 of the Notice. # Item Nos. 6 and 7 The Board of Directors, at its meeting held on January 12, 2017 appointed Mr. Rajesh Gopinathan, as an Additional Director of the Company with effect from February 21, 2017. The Board, at the same meeting, has elevated him from the position of the Chief Financial Officer to the position of the Chief Executive Officer and Managing Director ("CEO & MD") of the Company effective the same date, for a period of five years, subject to the approval of the Members. His appointment has been recommended by the Nomination and Remuneration Committee. The Audit Committee has approved the terms and conditions of his appointment, as he, being a key managerial personnel, is a related party as per Section 2(76) of the Act. As per the provisions of Section 161(1) of the Act, he holds office of Additional Director only up to the date of this Annual General Meeting of the Company, and is eligible for appointment as Director. The Company has received a notice under Section 160(1) of the Act proposing his candidature for the office of Director of the Company, along with the requisite deposit. Prior to his elevation to the position as the CEO & MD, he held the office of the Chief Financial Officer of the Company from February 10, 2013. He has held several key positions within the Company and has played a key role in helping the Company become a US$ 17.6 billion global company. Mr. Rajesh Gopinathan joined Tata Consultancy Services in 2001 from Tata Industries, and worked to drive TCS' newly established e-business unit in the United States. He was also involved in the design, structure and implementation of the new organizational structure and operating model of the Company. He has worked on multiple assignments with Tata companies as part of the Tata Strategic Management Group since 1996. In 2014 he was awarded the "Young Alumni Achiever's Award" under "Corporate Leader" category by IIM, Ahmedabad. Further details of Mr. Rajesh Gopinathan have been given in the Annexure to this Notice. # The main terms and conditions of appointment of Mr. Rajesh Gopinathan (hereinafter referred to as "CEO & MD") are given below: # A. Tenure of Appointment: The appointment as CEO & MD is for a period of five years with effect from February 21, 2017. # B. Nature of Duties: The CEO & MD shall devote his whole time and attention to the business of the Company and shall perform such duties as may be entrusted to him by the Board from time to time and separately communicated to him and exercise such powers as may be assigned to him, subject to the superintendence, control and direction of the Board in connection with and in the best interests of the business of the Company and the business of one or more of its associated companies and/ or subsidiaries, including performing duties as assigned to the CEO & MD from time to time by serving on the Boards of such associated companies and / or subsidiaries or any other executive body or any committee of such a company. 09 Notice # C. Remuneration: # a. Basic Salary: Current Basic Salary of ₹7,50,000 per month; up to a maximum of ₹15,00,000 per month. The annual increments which will be effective 1st April each year, will be decided by the Board based on the recommendations of the Nomination and Remuneration Committee ("NRC") and the Audit Committee and will be performance-based and take into account the Company's performance as well, within the said maximum amount. # b. Benefits, Perquisites, and Allowances: Details of Benefits, Perquisites and Allowances are as follows: 1. |
Rent-free residential accommodation (partly furnished or otherwise) with the Company bearing the cost of repairs, maintenance, society charges and utilities (e.g., gas, electricity, and water charges) for the said accommodation or house rent, house maintenance and utility allowances aggregating 85% of the Basic Salary (in case residential accommodation is not provided by the Company). 2. Hospitalisation and major medical expenses, Car facility, Telecommunication facility and Housing loan facility as per Rules of the Company. 3. Other perquisites and allowances given below subject to a maximum of 55% of the Basic Salary; this shall include medical allowance, leave travel concession / allowance and other allowances / personal accident insurance / club membership fees. 4. Contribution to Provident Fund, Superannuation Fund or Annuity Fund and Gratuity Fund as per the Rules of the Company. 5. Leave and encashment of unavailed leave as per the Rules of the Company. # c. Commission: File: AR_TCS_2016_2017.md In addition to Salary, Benefits, Perquisites and Allowances, the CEO & MD would be paid such remuneration by way of Commission, calculated with reference to the net profits of the Company in a particular financial year, as may be determined by the Board of the Company subject to the overall ceilings stipulated in Section 197 of the Act. The specific amount payable to the CEO & MD will be based on his performance as evaluated by the Board or the NRC and approved by the Board and will be payable annually after the annual accounts have been approved by the Board. # D. Minimum Remuneration: Notwithstanding anything to the contrary herein contained, where in any financial year during the tenure of the CEO & MD, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of Salary, Benefits, Perquisites, Allowances and Commission subject to further approvals as required under Schedule V of the Act, or any modification(s) thereto. # E. Other terms of Appointment: The CEO & MD shall enter into an agreement, containing, inter alia, the following terms: 1. The CEO & MD shall not become interested or otherwise concerned, directly or through his spouse and / or children, in any selling agency of the Company. 2. The terms and conditions of the appointment of the CEO & MD may be altered and varied from time to time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule V to the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the CEO & MD, subject to such approvals as may be required. 3. The Agreement may be terminated by either party by giving to the other party six months' notice of such termination or the Company paying six months' remuneration in lieu thereof. 4. The employment of the CEO & MD may be terminated by the Company without notice or payment in lieu of notice: 1. if the CEO & MD is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the Company or any subsidiary or associated company to which he is required to render services; or # Annual Report 2016-17 b. in the event of any serious repeated or continuing breach (after prior warning) or non-observance by the CEO & MD of any of the stipulations contained in the Agreement. v. Upon the termination by whatever means of the CEO & MD's employment: - a. the CEO & MD shall immediately cease to hold offices held by him in any holding company, subsidiaries or associated companies without claim for compensation for loss of office by virtue of Section 167(1)(h) of the Act and unless the Board of Directors of the Company decide otherwise, shall resign as trustee of any trusts connected with the Company; - b. the CEO & MD shall not without the consent of the Company, at any time thereafter represent himself as connected with the Company or any of the subsidiaries or associated companies. vi. All Personnel Policies of the Company and the related Rules which are applicable to other employees of the Company shall also be applicable to the CEO & MD, unless specifically provided otherwise. vii. The terms and conditions of appointment of the CEO & MD also include clauses pertaining to adherence with the Tata Code of Conduct and maintenance of confidentiality. viii. |
If and when the Agreement expires or is terminated for any reason whatsoever, the CEO & MD will cease to be the CEO & MD, and also cease to be a Director. If at any time, the CEO & MD ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the CEO & MD, and the Agreement shall forthwith terminate. However, the Board may at its discretion decide that CEO & MD shall continue as Director of the Company. In compliance with the provisions of Sections 196, 197 and other applicable provisions of the Act, read with Schedule V to the Act, the terms of appointment and remuneration of the CEO & MD as specified above are now being placed before the Members for their approval. The Board commends the Resolutions at Item Nos. 6 and 7 for approval by the Members. Except Mr. Rajesh Gopinathan and his relatives, none of the other Directors and Key Managerial Personnel of the Company and their respective relatives is concerned or interested, in the Resolutions set out at Item Nos. 6 and 7 of the Notice. Item Nos. 8 and 9: The Board of Directors, at its meeting held on January 12, 2017 appointed Mr. N. Ganapathy Subramaniam, as an Additional Director of the Company with effect from February 21, 2017. The Board, at the same meeting, has also appointed him as the Chief Operating Officer and Executive Director ("COO & ED") of the Company effective the same date, for a period of five years, subject to the approval of the Members. His appointment has been recommended by the Nomination and Remuneration Committee. The Audit Committee has also approved the terms and conditions of his appointment, as he, being the brother of Mr. N. Chandrasekaran, is a related party as per Section 2(76) of the Act. As per the provisions of Section 161(1) of the Act, he holds office of Additional Director only up to the date of the forthcoming Annual General Meeting of the Company, and is eligible for appointment as Director. The Company has received a notice under Section 160(1) of the Act proposing his candidature for the office of Director of the Company, along with the requisite deposit. Mr. N. Ganapathy Subramaniam was elevated to the role of COO & ED on February 21, 2017. Prior to taking over the COO's role, he served as the President, Financial Services, a strategic business unit of the Company. In that role, he was responsible for steering the non-linear growth strategies, Products and Platform business of the Company for over five years. In steering TCS Financial Solutions, he led the Company's efforts in launching a suite of products for Banking, Capital Markets and Insurance domains - TCS BaNCS, many of which have become world class solutions used by major financial institutions globally. He has held many key leadership positions in the Company across Client Delivery, Business Development, integration of businesses and Product Development. He has been a part of the Company and the Indian IT Industry for the past 35 years and has in-depth knowledge on technology trends and systems policies of leading corporations. Mr. N. Ganapathy Subramaniam holds Master's in Mathematics from University of Madras and has attended various programs including the Executive program for Growing Companies at Stanford University. # 11 Notice Further details of Mr. N. Ganapathy Subramaniam have been given in the Annexure to this Notice. # The main terms and conditions of appointment of Mr. N. Ganapathy Subramaniam (hereinafter referred to as "COO and ED") are given below: # A. Tenure of Appointment: The appointment as COO & ED is for a period of five years with effect from February 21, 2017. # B. |
Nature of Duties: The COO & ED shall devote his whole time and attention to the business of the Company and shall perform such duties as may be entrusted to him by the Chief Executive Officer and Managing Director of the Company and/or the Board from time to time and separately communicated to him and exercise such powers as may be assigned to him, subject to the superintendence, control and direction of the Board in connection with and in the best interests of the business of the Company and the business of one or more of its associated companies and/or subsidiaries, including performing duties as assigned to the COO & ED from time to time by serving on the Boards of such associated companies and/or subsidiaries or any other executive body or any committee of such a company. # C. Remuneration: # a. Basic Salary: Current Basic Salary of `7,00,000 per month; up to a maximum of `12,00,000 per month. The annual increments which will be effective 1st April each year, will be decided by the Board based on the recommendations of the Nomination and Remuneration Committee ("NRC") and will be performance-based and take into account the Company's performance as well, within the said maximum amount. # b. Benefits, Perquisites, and Allowances: Details of Benefits, Perquisites, and Allowances are as follows: 1. Rent-free residential accommodation (partly furnished or otherwise) with the Company bearing the cost of repairs, maintenance, society charges and utilities (e.g., gas, electricity, and water charges) for the said accommodation or house rent, house maintenance and utility allowances aggregating 85% of the Basic Salary (in case residential accommodation is not provided by the Company). 2. Hospitalisation and major medical expenses, Car facility, Telecommunication facility and Housing loan facility as per Rules of the Company. 3. Other perquisites and allowances given below subject to a maximum of 55% of the Basic Salary; this shall include medical allowance, leave travel concession / allowance and other allowances / personal accident insurance / club membership fees. 4. Contribution to Provident Fund, Superannuation Fund or Annuity Fund and Gratuity Fund as per the Rules of the Company. 5. Leave and encashment of unavailed leave as per the Rules of the Company. # c. Commission: In addition to Salary, Benefits, Perquisites and Allowances, the COO & ED would be paid such remuneration by way of Commission, calculated with reference to the net profits of the Company in a particular financial year, as may be determined by the Board of the Company subject to the overall ceilings stipulated in Section 197 of the Act. The specific amount payable to the COO & ED will be based on his performance as evaluated by the Board or the NRC and approved by the Board and will be payable annually after the annual accounts have been approved by the Board. # Annual Report 2016-17 # D. Minimum Remuneration: Notwithstanding anything to the contrary herein contained, where in any financial year during the tenure of the COO & ED, the Company has no profits or its profits are inadequate, the Company will pay remuneration by way of Salary, Benefits, Perquisites, Allowances and Commission subject to further approvals as required under Schedule V of the Act, or any modification(s) thereto. # E. Other terms of Appointment: The COO & ED shall enter into an agreement, containing, inter alia, the following terms: 1. The COO & ED shall not become interested or otherwise concerned, directly or through his spouse and / or children, in any selling agency of the Company. 2. The terms and conditions of the appointment of the COO & ED may be altered and varied from time to time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule V to the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the COO & ED, subject to such approvals as may be required. 3. The Agreement may be terminated by either party by giving to the other party six months' notice of such termination or the Company paying six months' remuneration in lieu thereof. 4. The employment of the COO & ED may be terminated by the Company without notice or payment in lieu of notice: 1. |
if the COO & ED is found guilty of any gross negligence, default or misconduct in connection with or affecting the business of the Company or any subsidiary or associated company to which he is required to render services; or 2. in the event of any serious repeated or continuing breach (after prior warning) or non-observance by the COO & ED of any of the stipulations contained in the Agreement. 5. Upon the termination by whatever means of the COO & ED's employment: 1. the COO & ED shall immediately cease to hold offices held by him in any holding company, subsidiaries or associated companies without claim for compensation for loss of office by virtue of Section 167(1)(h) of the Act and unless the Board of Directors of the Company decide otherwise, shall resign as trustee of any trusts connected with the Company; 2. the COO & ED shall not without the consent of the Company, at any time thereafter represent himself as connected with the Company or any of the subsidiaries or associated companies. 6. All Personnel Policies of the Company and the related Rules which are applicable to other employees of the Company shall also be applicable to the COO & ED, unless specifically provided otherwise. 7. The terms and conditions of appointment of the COO & ED also include clauses pertaining to adherence with the Tata Code of Conduct, and maintenance of confidentiality. 8. If and when the Agreement expires or is terminated for any reason whatsoever, the COO & ED will cease to be the COO & ED, and also cease to be a Director. If at any time, the COO & ED ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the COO & ED, and the Agreement shall forthwith terminate. However, the Board may at its discretion decide that COO & ED shall continue as Director of the Company. In compliance with the provisions of Sections 196, 197 and other applicable provisions of the Act, read with Schedule V to the Act, the terms of appointment and remuneration of the COO & ED as specified above are now being placed before the Members for their approval. The Board commends the Resolutions at Item Nos. 8 and 9 for approval by the Members. Except Mr. N. Ganapathy Subramaniam, Mr. N. Chandrasekaran and their relatives, none of the Directors and Key Managerial Personnel of the Company and their respective relatives is concerned or interested, in the Resolutions set out at Item Nos. 8 and 9 of the Notice. # 13 Notice # Item No.10 The Company has branches outside India and may also open / acquire new branches outside India in future. It may be necessary to appoint branch auditors for carrying out the audit of the accounts of such branches. The Members are requested to authorize the Board of Directors of the Company to appoint branch auditors in consultation with the Company's Auditors and fix their remuneration. The Board commends the Resolution at Item No. 10 for approval by the Members. None of the Directors or Key Managerial Personnel (KMP) or relatives of Directors and KMPs is concerned or interested in the Resolution set out at Item No. 10 of the Notice. By Order of the Board of Directors SUPRAKASH MUKHOPADHYAY Global Treasury Head and Company Secretary Mumbai, April 18, 2017 # Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 CIN : L22210MH1995PLC084781 Tel: 91 22 6778 9595 Fax: 91 22 6778 9660 E-mail: [email protected] Website: www.tcs.com # Notice 14 # Annual Report 2016-17 # Details of Directors seeking Appointment/ Re-appointment at the Annual General Meeting |Particulars|Ms. Aarthi Subramaniam|Mr. N. Chandrasekaran|Mr. Rajesh Gopinathan|Mr. N. Ganapathy Subramaniam| |---|---|---|---|---| |Date of Birth (Age)|June 26, 1967 (49 years)|June 2, 1963 (53 years)|August 13, 1971 (45 years)|May 20, 1959 (57 years)| |Date of Appointment|March 12, 2015|February 21, 2017|February 21, 2017|February 21, 2017| |Qualifications|nB. Tech in Computer Science nMaster's Degree in Engineering Management|nBachelor's Degree - Applied Science nMaster's Degree - Computers|nMBA - IIM, Ahmedabad nEngineer, Regional Engg. |
College, Trichy|nMaster's Degree in Mathematics| |Expertise in specific functional areas|Wide experience in Information Technology|Wide experience in Information Technology|Wide experience in Information Technology|Wide experience in Information Technology| |Directorships held in other public companies (excluding foreign companies and Section 8 companies)|Nil|nTata Sons Limited nTata Steel Limited nTata Motors Limited nThe Indian Hotels Company Limited nThe Tata Power Company Limited|Nil|nTata Elxsi Limited| |Memberships / Chairmanships of committees of other public companies (includes only Audit Committee and Stakeholders' Relationship Committee.)|Nil|Nil|Nil|Nil| |Number of shares held in the Company|2,800|88,528|1,130|98,880| Note: For other details such as number of meetings of the Board attended during the year, remuneration drawn and relationship with other directors and key managerial personnel in respect of the above directors please refer to the Board's Report and the Corporate Governance Report. # 15 Notice # Route Map to the AGM Venue Venue: Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, Mumbai 400020 Landmark: Next to Bombay Hospital Date & Time: Friday June 16, 2017 at 3.30 p.m. Distance from Chhatrapati Shivaji Terminus: 2 km Distance from Churchgate Station: 1 km Distance from Marine Lines Station: 0.8 km # ATTENDANCE SLIP (To be presented at the entrance) I/ We hereby record my/our presence at the 22 Annual General Meeting (AGM) of the Company on Friday, June 16, 2017 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|Signature| |Name of the Proxyholder|Signature|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. # 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/her Name: ___________________________________________________________________ E-mail Id: ____________________________________ Address: _______________________________________________________________________________________________________________ Signature: ________________________________________________ 3. or failing him/her 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-second AGM of the Company to be held on Friday, June 16, 2017 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. # Resolution 1. To receive, consider and adopt: 1. the Audited Financial Statements of the Company for the financial year ended March 31, 2017, together with the Reports of the Board of Directors and the Auditors thereon; and 2. the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2017, 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 2016 -17. 3. To appoint a Director in place of Ms. Aarthi Subramanian who retires by rotation and, being eligible, offers herself for re-appointment. 4. Appointment of Statutory Auditors of the Company. 5. Appointment of Mr. N Chandrasekaran as a Director of the Company. 6. Appointment of Mr. Rajesh Gopinathan as a Director of the Company. 7. Appointment of Mr. Rajesh Gopinathan as Chief Executive Officer and Managing Director of the Company. 8. Appointment of Mr. N. Ganapathy Subramaniam as a Director of the Company. 9. Appointment of Mr. N. Ganapathy Subramaniam as Chief Operating Officer and Executive Director of the Company. 10. Appointment of Branch Auditors. Signed this ................day of ......................... 2017 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 joint holders may use copies of this Attendance slip/ Proxy. File: AR_TCS_2017_2018.md # TATA TCSISE/68/2018-19 # TCS/ SE /68 / 2018-19 June 20, 2018 # National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Mumbai # BSE Limited P.J. |
Towers, Dalal Street, Mumbai Kind Attn: Manager, Listing Department Kind Attn: General Manager, Department of Corporate Services Symbol: TCS Scrip Code No. 532540 (BSE) # Dear Sirs, # Sub: Annual Report 2017-18 Pursuant to Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, we are submitting herewith the Annual Report of the Company for the financial year 2017-18 approved and adopted by the members as per the provisions of the Companies Act, 2013, at the 23rd Annual General Meeting of the Company held on Friday, June 15, 2018 at 3.30 p.m. and concluded at 6.50 p.m. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai - 400 020. The above is also uploaded on the Company's website. Thanking you, Yours faithfully, For Tata Consultancy Services Limited Rajendra Mobolkar Company Secretary # Encl: As above # cc: 1. National Securities Depository Limited 2. Central Depository Services (India) Limited 3. TSR DARASHAW Limited Trade World, 4th Floor, Senapati Bapat Marg, Lower Parel, Mumbai 400 013 Marathon Futurex, A-Wing, 25th floor, NM Joshi Marg, Lower Parel, Mumbai 400 013 6-10 Haji Moosa Patrawalla Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011 # TATA CONSULTANCY SERVICES Tata Consultancy Services Limited 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 Corporate Identification No: (CIN): L22210MH1995PLC084781 # TATA CONSULTANCY SERVICES # DAWN OF BUSINESS # 4 YEARS OF INNOVATION AND GROWTH Annual Report 2017-18 NO_CONTENT_HERE # Contents |Board of Directors|02| |---|---| |Management Team|03| |Letter from the Chairman|04| |Letter from the CEO|06| |Performance Highlights|09| |The Year Gone by|10| |Marching ahead with our Brand|13| |Business 4.0|14| |Reimagining Cancer Care|24| |Notice|25| |Directors' Report|34| |Management Discussion and Analysis|60| |Corporate Governance Report|74| |Corporate Sustainability Report|93| |Business Responsibility Report|100| |Awards and Accolades|105| # Consolidated Financial Statements |Independent Auditor's Report|106| |---|---| |Consolidated Balance Sheet|110| |Consolidated Statements of Profit and Loss|111| |Consolidated Statements of Changes in Equity|112| |Consolidated Statements of Cash Flows|113| |Notes forming part of the Consolidated Financial Statements|114| # Unconsolidated Financial Statements |Independent Auditor's Report|164| |---|---| |Balance Sheet|170| |Statements of Profit and Loss|171| |Statements of Changes in Equity|172| |Statements of Cash Flows|173| |Notes forming part of the Financial Statements|174| |Statement under section 129 of the Companies Act, 2013 relating to Subsidiary Companies|218| # Glossary Glossary 220 # Dawn of Business The fourth industrial revolution is underway, driving the confluence of the physical, digital, and biological worlds. Rapid breakthroughs in digital technologies are reshaping industries and a new generation of agile organizations are evolving - embracing automation, robotics and artificial intelligence. # Board of Directors |Seated from left to right|Seated from left to right|Standing from left to right|Standing from left to right| |---|---| |R Sommer|Independent Director|N G Subramaniam|Chief Operating Officer & Executive Director| |Aarthi Subramanian|Director|O P Bhatt|Independent Director| |N Chandrasekaran|Chairman|A Mehta|Independent Director| |Rajesh Gopinathan|Chief Executive Officer & Managing Director|P K Khosla|Independent Director| |C M Christensen|Independent Director|V Thyagarajan|Independent Director| # Management Team # Corporate |Rajesh Gopinathan|N G Subramaniam|Ramakrishnan V|Ajoyendra Mukherjee| |---|---|---|---| |Chief Executive Officer & Managing Director|Chief Operating Officer & Executive Director|Chief Financial Officer|Global Head Human Resources| |Ravi Viswanathan|K Ananth Krishnan|Vishwanathan Iyer|Rajendra Moholkar| |Chief Marketing Officer|Chief Technology Officer|Global Head Legal & Corporate Affairs|Company Secretary| # Business Heads |Surya Kant|Krishnan Ramanujam|K Krithivasan|Pratik Pal| |---|---|---|---| |North America, UK & Europe|Business and Technology Services|Banking, Financial Services and Insurance|Retail, Travel & Consumer Products| |Kamal Bhadada|Debashis Ghosh|Milind Lakkad|Suresh Muthuswami| |Communication, Media & Information Services|Life Sciences, Healthcare and Public Services|Manufacturing|BFSI Platforms| Management Team | 03 # Letter from the CHAIRMAN Dear Stakeholder, It is my privilege to write to you on this occasion as we celebrate the 50th anniversary of the birth of TCS, as well as the 150th anniversary of the founding of the Tata Group. It is a matter of immense pride that today, 50 years later, your Company is one of the largest IT service-providers globally, a trusted partner to so many Fortune 500 corporations in their digital transformation journeys, and counted among the top three IT services brands globally. TCS is an inspiring story of a successful technology start-up. Over the past five decades, your Company has emerged from each cycle of technology change - from mainframes to the digital era - stronger, with bigger footprints across markets with more capabilities, solutions and customers. It has seeded and opened up new markets in Latin America, Europe, China and Japan for the industry. |
It has built an industry-wide ecosystem of students and academic institutions to develop new capabilities and innovations on a continuous basis. As technology is infused into every aspect of business and society today, its power to disrupt has only magnified the process of creative destruction. Against this backdrop, your Company's strong growth and customer impact over the last five decades in a dynamic global industry to emerge as a leader in its field is a worthy achievement. What has helped your Company sustain its journey has been its strong value systems, its ability to always put the customer at the center of its strategy and a never-ending desire to collaborate and learn. What also stands out are the employees who have made this possible with their strong customer focus, agile mindset and a strong performance ethic. TCS has invested in the right capabilities, at the right time, and at scale; helping it to stay relevant to customers through every period of technology change. Empowering employees and helping them realize their potential has resulted in an entrepreneurial, innovative, and agile organization. TCS has also inspired trust in all its stakeholders by delivering an experience of certainty in everything it does. I believe that longevity is not an end in itself but an opportunity for your Company to make a sustainable impact on society by aligning the interests of the organization with those of all our stakeholders. TCS has been pursuing a very well thought out, global Corporate Social Responsibility program with measurable outcomes in sectors like education, healthcare and the environment. In every community that TCS touches, it has been a force of good, creating skills and well-paying jobs that boost the local economies, promoting health and 04 | Letter from the Chairman wellness of its constituents as well as driving environmental sustainability. Our efforts in many parts of the world to reduce the inequities caused by the digital skill divide, and to build future generations of digitally savvy individuals, are scaling up very well. All this, and the structured volunteering programs offered to employees have imbued a higher sense of purpose in the organization. The onset of digital technologies is very different from prior technology changes, and is having a far more profound impact on businesses and entire industries, triggering very deep-rooted transformations that will play out over the next few years. The changes we are seeing are a direct outcome of the explosion of data in the last few years. Leading organization of the last many years were renowned for their process maturity, today's winners will be decided by their data maturity. Forward thinking enterprises have been investing over the last few years to harness the abundance of data within the enterprise and outside, to design products and experiences that are highly personalized for their customers. They will rely ever more on strategic partners like TCS, who possess a deep contextual knowledge of their business, and a full range of technology capabilities. Your Company's strategic and early investments in Digital have positioned it well to benefit from the immense opportunities that lie ahead. On behalf of the Board of Directors of Tata Consultancy Services, I want to thank you for your continued trust, confidence, and support. Warm regards, N Chandrasekaran Chairman # Letter from the Chairman | 05 # Letter from the CEO Dear Stakeholder, It is my privilege to be writing to you from this desk on completion of 50 years since our inception. TCS was established on April 1, 1968, and over the last five decades, your company benefited from the vision of three outstanding leaders - F C Kohli, S Ramadorai and N Chandrasekaran. Each of these leaders was instrumental in taking the organization to the next level, and each left a distinctive imprint on the company. Our values, entrepreneurial agility, customer-centricity, and social responsibility - all of which define who we are and how we got here, are direct outcomes of their vision and leadership. Following in their footsteps and building upon the accomplishments of these giants is humbling, and inspirational. Coming to the present, it has been a full year after our leadership transition. I am happy to report that it has been a very stable and seamless experience for all our stakeholders. I want to take this opportunity to thank our Chairman, Chandra, for his continuous guidance and support in helping us through this tough and crucial year. |
His effortless combination of ensuring that I had all the support he could give, and all the space I need, was the single biggest driver for your company's successful transition into the new management structure. I also want to highlight the unique culture and value system of the senior management team at TCS. They accepted and adopted the change in leadership wholeheartedly and worked relentlessly to make it a success. It is a matter of great joy and pride for me that during this transition year, each and every member of our leadership team stood steadfast by your company. The last year saw a steady acceleration on a path that we were already on, and we used the opportunity to make some incremental changes. We refocused the organization on the market opportunity presented by four big themes: Intelligence, Agility, Automation and Cloud, and reorganized the teams to align with these themes. # Letter from the CEO In FY 2018, your Company delivered a reported revenue of 123,104 crore, growing 4.4% over the prior year, which is 6.7% growth in constant currency terms. On a constant currency basis, barring BFSI which grew 3.2% and Retail & CPG which grew 1.5%, we had very strong growth in the other six industry verticals, averaging 13.2% in aggregate. Growth was led by Energy and Utilities which grew 26.8%, Travel and Hospitality which grew 22.4%, Life Sciences & Healthcare which grew 11.9% and Communications & Media which grew 11.6%. In terms of our markets, growth was led by Continental Europe which grew 19.1% in constant currency, UK which grew 8.6%, Latin America which grew 7.8% and India which grew 6.9%. Operating margin was 24.8%, which was flattish year on year, on a currency-adjusted basis. Net profit was 25,826 crore, a net margin of 21%. In keeping with our shareholder friendly capital allocation policy, the Board has recommended a final dividend of 29 for the year, bringing the total dividend payout for the year to 50 per share. The Board has also recommended a bonus issue in the ratio 1:1. # Business 4.0 Mid-year, we articulated our Business 4.0 thought leadership framework that allows enterprises to leverage digital technologies to further their growth and transformation agendas. The defining attributes of successful enterprises in the Business 4.0 world are their ability to mass personalize the customer experience - sometimes at a very granular, transactional level; actively leverage ecosystems and embrace risk to deliver exponential value. They are agile, intelligent, automated and on the cloud. At the core of Business 4.0 is a shift in mind-set, from optimizing the use of scarce resources to harnessing the technology-enabled abundance of talent, compute power, storage, and market reach. During the year, we revamped our services portfolio substantially, in tune with our Business 4.0 vision and evolving buying behaviours in the market. This is further strengthening our engagement with other stakeholders in our customers' organizations - like the CMO, COO, CFO and other CXOs, in addition to the CIOs and CTOs that we have traditionally worked with. FY 2018 saw many of our customers embark on the refurbishment of their core. With our contextual knowledge, domain expertise, depth in digital and intellectual property, we have been their preferred partner in these strategic initiatives. We signed several mega deals that are industry-defining in nature. Our Business 4.0 framework is resonating very well with our customers across every industry vertical, and guiding their transformational journeys. Their digital transformation is proceeding at three levels: the digital core, the intelligence layer and the experience layer. While popular attention has been on the latter two, the transformation of the core is a much larger, more complex, and riskier undertaking - and yet, that is the most critical program without which many of the digital initiatives simply can't progress further. FY 2018 saw many of our customers embark on the refurbishment of their core. With our contextual knowledge, domain expertise, depth in digital and intellectual property, we have been their preferred partner in these strategic initiatives. We signed several mega deals that are industry-defining in nature. Whether it was the largest Internet of Things (IoT) deal that we signed with Rolls Royce, or the deal with Transamerica to replace their fragmented, legacy core with a modern, cloud-based digital platform - the largest contract signed by TCS till date - these are all examples of progressive organizations embracing digital transformation at their core. |
Unlike the large deals of the past which were large in scale, but were mostly homogeneous in terms of the services sold, the large deals we are now signing are very large in scope as well, leveraging the full spectrum of our capabilities. That makes them very difficult for others to replicate, and strengthens our competitive positioning. Revenue from digital engagements accounted for 21.2% of our revenue in FY 2018 and grew 35.3% year on year. # Letter from the CEO Another important proof point of our participation in our customers' Business 4.0 spend is the steady increase in the number and size of the digital assignments they give us, resulting in increased share of wallet. At an aggregate level, this is evident from the client metrics where we see a strong progression of customers into higher revenue buckets on a quarterly as well as annual basis. For the full year, we added 3 more clients in the $100 Mn+ revenue band bringing the total to 38, 13 more clients in the $50 Mn+ revenue band, 17 more in the $20 Mn+ band and 40 more in the $10 Mn+ band. # Research and Innovation Much of the Business 4.0 spending by customers is around leveraging technology to innovate and gain competitive advantage. Our continued investments in Research and Innovation, and in building intellectual property, have further strengthened our transformational credentials. Many of our earlier research and innovation programs, now monetized into successful platforms and solutions - such as the TCS Connected Universe Platform, ignio™ and Optumera™ - performed very well this year and helped differentiate TCS. TCS built an Open Banking API Framework to help banks accelerate their digital transformation journey. The AI offerings developed by our R&I teams in the areas of conversational systems and natural language processing (NLP) were successfully deployed internally in TCS for employee engagement. We continue to invest in research in cutting edge areas in computational sciences - covering NLP, machine learning, deep learning and data marketplaces, materials engineering, behavioural sciences and bio-sciences - particularly in genome interpretation for personalization of medicine and developing biomarkers for early detection of diseases. In addition to the research and innovation that happens within TCS, we also leverage the innovation taking place in the start-up ecosystem through the TCS Co-Innovation Network or COIN. The program has now expanded its start-up connects to over 3000 start-ups in key innovation hubs in America, UK, Europe, Asia and Australia. The TCS Research Scholarship Program is now in its fourteenth cycle, covering 261 PhD scholars across 33 institutes across India. 67 individuals have obtained their PhD through this program. TCS Researchers presented 250+ papers in premier conferences. Your Company has filed more than 3,900 patent applications to date, with 522 filings in FY 2018. It has been granted 654 patents as of March 31, 2018. At the end of FY 2018, while we continue to hire talent from outside, we have doubled down on investing in internal talent development at scale, empowering individuals to acquire skills that will keep them relevant in an evolving technology landscape. In FY 2018, over 247,000 employees were trained in digital technologies, resulting in them gaining over 861,000 digital competencies. Our workforce continues to be young, dynamic and diverse. Women make up 35.3% of our workforce. We continue to attract, retain, and engage top notch talent across the world. For the third consecutive year, TCS was recognized as a Global Top Employer by the Top Employer Institute, and as one of the Best Employers globally in the Forbes 2000 list. The most gratifying validation of our employee-friendly practices however, is the best-in-class retention rate we continue to enjoy. In FY 2018, our attrition rate in the IT Services segment was 11%; once again, the lowest in the industry. # Beyond Business TCS and TCSers continue to make a big difference to every community we touch, across the world. In FY 2018, TCSers volunteered over 570,000 hours for worthy social and environmental causes in their respective communities. Our various CSR programs - be it the Adult Literacy Program and BridgeIT in India, or goIT and related programs to encourage STEM education and careers among students in North America and elsewhere, are scaling up nicely and making a difference, and estimated to have benefited over 900,000 people across the world. |
The cutting edge work we do for our customers, our best-in-class service quality, our reputation as a best employer, our award winning Investor Relations program, our sponsorship of various high profile marathons and other marketing efforts including the #digitalempowers campaign, have all gone towards elevating our brand and putting us firmly among the top 3 brands in IT services globally. In FY 2018, TCS was the fastest growing brand by value, crossing the $10 Bn mark and growing 14.4% year on year. Looking forward, we only see greater opportunity ahead, as businesses become more technology-intensive and depend more on technology to drive competitive differentiation. Our agility, core attributes and belief systems which have ensured our success over the last fifty years will continue to help us benefit from each new wave of technology change, and create ever more value for our stakeholders. I thank you all for your continued support and encouragement. Best regards, Rajesh Gopinathan Chief Executive Officer & Managing Director TCS' culture and people practices continue to differentiate us from the rest. We firmly believe that there are no legacy people, only legacy technologies. TCS had 394,998 employees. # Performance Highlights # Revenue Trend | |FY14|FY15|FY16|FY17|FY18| |---|---|---|---|---|---| |Revenue|94,648|108,646|117,966|123,104| | # Client Metrics |$100 Mn+ Clients|n|97| |---|---|---| |$50 Mn+ Clients|nn|84| | |73| | | |68| | | |53| | | |37| | | |37| | | |35| | | |38| | | |24| | | |29| | | |29| | # Operating Profit Trend | |FY14|FY15|FY16|FY17|FY18| |---|---|---|---|---|---| |Operating Profit|23,808|25,424|30,324|30,502| | |Operating Margin|26.9%|26.5%|29.1%|25.7%|24.8%| # Earnings per share | |FY14|FY15|FY16|FY17|FY18| |---|---|---|---|---|---| |Amount in `|97.67|111.87|123.18|134.19|133.41| # Cash usage | | | | | |n|Shareholder payouts| | | |---|---|---|---|---|---|---|---|---| | | | | | |n|Invested Funds| | | | | | | | |n|Acquisitions, etc|27.7%| | | | | | | |n|Capex|0.7%| | | | | | | | | | |61.3%| | | | | | | | |10.3%| | # Cash flow from operating activities | |FY14|FY15|FY16|FY17|FY18| |---|---|---|---|---|---| |Amount in ` crore|14,751|19,109|19,369|25,067|25,223| # Shareholder payouts | |FY14|FY15|FY16|FY17|FY18| |---|---|---|---|---|---| |nn Dividends|7,058|8,922|10,206|11,071|16,000| |n Special Dividends| | | | | | |n Buyback| | | | | | # Notes # The Company transitioned into Ind AS with effect from April 1, 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 crore paid by the Company. * Indian GAAP numbers have been reported in FY 2014 and FY 2015 for Earnings per Share and Cash flows from operating activities, and Ind AS reported numbers have been used thereafter. # Performance Highlights | 09 # The Year Gone by # Q4 Named among the Top 3 brands in the IT Services sector globally by Brand Finance. Additionally, TCS' brand value crossed the $10 Bn mark in 2017, and was the fastest growing brand by value, up 14.4% year on year, in contrast to the largely stagnant valuation of the sector as a whole. TCS showcased its #digitalempowers campaign at the World Economic Forum to show how technology can reduce societal inequities. Ranked #1 in Europe for customer satisfaction for the fifth consecutive year by Whitelane Research, based on a survey of 1,600 CXOs across 13 countries. In the country rankings, TCS topped the list in Germany, Belux, Netherlands, Switzerland, and the Nordics. Sectorwise, TCS topped in the Financial Services and Manufacturing sector. Recognized as a Top Employer globally for the third consecutive year by the Top Employer Institute. In addition, TCS was named the Top employer in 27 countries, across North America, Europe, Asia Pacific, Latin America and the Middle East. TCS, a longstanding strategic partner of the World Economic Forum, hosted an exclusive private reception at Davos, attended by 500+ global leaders from business, government, academia, media and civil society. At the event, TCS highlighted insightful stories from the #DigitalEmpowers campaign to show how technology could help create a more inclusive society. The event also celebrated 150 years of proud history of the Tata Group. Selected as the Principal Technology Partner by Marks & Spencer in their Digital-First retail transformation program. TCS will transition M&S to a new Technology Operating Model, which embraces the agile mind-set to transform business and IT strategy, aligned with rapid technology innovation to meet fast changing business priorities. |
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