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Transamerica awarded TCS a multi-year, $2+ Billion contract to digitally transform its Life and Annuities business to service more than 10 million policies using TCS BaNCS Insurance, an integrated cloud-based single instance, multi-tenant platform. # Q3 BNP Paribas Securities partnered with TCS to implement the Quartz blockchain solution for capturing and storing corporate actions information, making it one of the earliest adopters of blockchain technology in its operations. The TCS-built platform's built-in security ensures that the information is tamper-proof, resistant to node failure and recoverable. TCS senior executives rang the Opening Bell at the Toronto Stock Exchange to celebrate the partnership between TCS and the TMX Group which selected the TCS BaNCS for Market Infrastructure platform to overhaul its clearing and settlement business technology. The Tata Innovation Center was inaugurated on Cornell Tech's Roosevelt Island campus, funded by a $50 Mn investment by TCS to drive applied research and collaboration between Cornell, industry and the startup ecosystem in emerging areas including human machine interaction, and cyber security. Announced a $50 Mn+ Internet of Things digital transformation partnership with Rolls-Royce - the largest digital deal signed till date. This digital transformation for Rolls-Royce will be supported by TCS' Connected Universe Platform, a platform-as-a-Service (PaaS) offering that accelerates the development and deployment of Internet of Things (IoT) applications. Won two awards in the Forbes 2017 Global 2000 list, as one of the Top Regarded Companies and as one of the World's Best Employers. # TCS BaNCS TCS BaNCS THE MARKET IS OPEN N Ganapathy Subramaniam, Surya Kant and other senior leaders from TCS rang the opening bell at the Toronto Stock Exchange The Year Gone by | 11 # Q2 File: AR_TCS_2017_2018.md Secured a 15 year partnership with Scottish Widows, Lloyds Banking Group's Life and Pensions business to provide end-to-end policy administration services for 4 million heritage customers. Recognized in the Fortune annual list of the Top 50 Companies that Changed the World, as one of the world's most notable brands whose businesses are helping to address numerous societal challenges and ultimately 'do well by doing good.' Additionally, TCS was included in the Global Dow Jones Sustainability Index (DJSI) for the fifth consecutive year, and in FTSE4Good's Emerging Index. Zions Bancorporation's Consumer Lending business went live on TCS BaNCS for Core Banking. The bank had selected TCS BaNCS after an extensive review of US and global core banking platforms for their 'FutureCore' program which is foundational to their digital transformation objectives: to better leverage data assets to improve the customer experience and to digitize and streamline operations. # Q1 Opened its first Drones Research Lab in the US at its Seven Hills Park Innovation Center in Cincinnati, OH, to address the rapidly expanding demand for drone-based business solutions across industries. The TCS Drones Research Lab - featuring both indoor labs, showcase, warehouse, and outdoor terrain footprints - provides a rapid experimentation and co-innovation environment for customers to build solutions for specific industry problems. Chairman N Chandrasekaran and Chairman Emeritus of Tata Sons, Ratan Tata, flank the Dean of CMU at the ground breaking ceremony of the new TCS Hall. Recognized as among the top two job creators in the US in the IT Services sector in the last five years, hiring more than 12,500 employees between 2012 and 2016, according to a study by The Cambridge Group. TCS was ranked Number One in terms of US employee growth during that period. Completed the `16,000 crore share buyback at `2,850 a share through the tender offer route, extinguishing 5.6 crore equity shares, representing 2.85 per cent of its total equity. Selected by one of Europe's largest utilities companies, Swedish state-owned Vattenfall, as a strategic partner in a managed services engagement to provide IT services across Sweden, Germany and the Netherlands, and help it make its operations more flexible and agile. Reorganized its service practices and launching several new service practices addressing the individual elements of the digital stack. The transformed and the new units were consolidated under the Business & Technology Services Unit, comprising (1) Digital Transformation Services (2) Cognitive Business Operations (3) Consulting and Service Integration. Carnegie Mellon University and TCS broke ground for a high-tech global research facility to be built on the CMU campus in Pittsburg. The new TCS Hall will house researchers working on next generation technologies including cognitive systems and autonomous vehicles, and is supported by a $35 million grant from TCS, the largest ever industry donation to CMU. |
Researchers pose in front of the newly opened Drones Research Lab in Cincinnati, OH. 12 | The Year Gone by # Marching ahead with Our Brand The TCS brand has been built on a solid foundation of trust that we have established with all stakeholders over the last five decades. Today, in its 50th year of operations, TCS is a respected global brand with solid brand equity. Successive surveys have ranked us a leader in customer satisfaction in our key markets; competitive assessments by industry analysts rank us as leaders in new digital technologies; investor polls rank our investor relations program among the best in the region; we are ranked a Global Top Employer, and our community outreach efforts keep winning awards year after year. TCS has been boosting its community outreach and brand awareness across the world by promoting fitness and sponsoring sporting events. In FY 2018, we expanded our brand properties in the APAC region with major new sponsorships in Japan, India and Australia. The company is now the official partner to 10 marathon and running events across the world, in major cities like New York, London, Singapore, Amsterdam, Mumbai and Canberra. Our keynote global events - the TCS Summit, TCS Davos Reception and TCS Innovation Forum have become red letter days on the calendars of C-level executives across the world. Our global brand campaign at the World Economic Forum, #DigitalEmpowers showcases the positive role that digital technologies can play in reducing the inequities in society, and was recognized with 20 major awards this year. We were recognized by Fortune magazine as one of the world's most notable brands that are helping address societal challenges, by being named in their annual list of the Top 50 Companies that Changed the World, Forbes ranked us in their 2017 Global 2000 list as one of the Top Regarded Companies and as one of the World's Best Employers. In a major milestone in our 50th anniversary year, TCS was ranked by BrandFinanceTM as the fastest growing global IT Services Brand in 2018 and joined the exclusive club of brands rated as over US$ 10 billion in brand value. This continues the forward march of our brand in our key markets, including being recognized as a Top 100 brand in the United States, and as a Superbrand in the United Kingdom. # Business # Intelligent, Agile, Automated, and on the Cloud 4.0 # What Business 4.0 means to Global enterprises across Industries TCS is guiding many of its customers through Business 4.0 digital transformations--defining value propositions, creating new business models, winning over new customers, and creating exponential growth. Successful adopters of Business 4.0 will embrace its four primary characteristics. |Delivering|Mass|Personalisation| |---|---|---| |Embracing greater segmentation and responding to individual transactions, customised for a single customer in a single instance.|Embracing greater segmentation and responding to individual transactions, customised for a single customer in a single instance.|Embracing greater segmentation and responding to individual transactions, customised for a single customer in a single instance.| |Harnessing|Abundance| | |Abundance of Capital|Abundance of Capital|Abundance of Capital| |Unimagined pools of capital exist for those organisations that can paint a vision of what the future looks like and have the strength of character and boldness of leadership to execute on that task.|Unimagined pools of capital exist for those organisations that can paint a vision of what the future looks like and have the strength of character and boldness of leadership to execute on that task.|Unimagined pools of capital exist for those organisations that can paint a vision of what the future looks like and have the strength of character and boldness of leadership to execute on that task.| |Abundance of Talent|Leveraging|Ecosystems| |Enormous skilled talent pools can be crowd-sourced and utilised on-demand. Enterprises have to embrace the idea of blurred organisational boundaries, where old definitions of "who is" and "who isn't" an employee are challenged.|Enormous skilled talent pools can be crowd-sourced and utilised on-demand. Enterprises have to embrace the idea of blurred organisational boundaries, where old definitions of "who is" and "who isn't" an employee are challenged.|Enormous skilled talent pools can be crowd-sourced and utilised on-demand. |
Enterprises have to embrace the idea of blurred organisational boundaries, where old definitions of "who is" and "who isn't" an employee are challenged.| |Rapidly tapping into|the capabilities and|resources of partners| |and competitors|through technology|platforms, to influence| |their entire value and supply chains.|their entire value and supply chains.|their entire value and supply chains.| 14 | Business 4.0 # The convergence of intelligence, agility, automation, and the cloud has allowed for the creation of technology platforms to effectively harness abundant resources in real-time. # Companies' infrastructure and assets are increasingly becoming insufficient to meet today's rapidly expanding needs. Business 4.0 organisations are shifting mindsets from "optimising scarce resources" to that of "leveraging abundant resources"--such as: # Abundance of Capabilities By re-imagining the wider organisational environment and rethinking relationships, enterprises can unlock the capabilities of their entire ecosystem. # Creating Exponential Value Creating true value propositions that deliver on customer demands for the best products, world class services, instantaneous delivery, and incredible price points. # Abundance of Market Reach Reducing markets to a segment of one is allowing companies to transcend geographic and demographic boundaries and expand their addressable markets exponentially. # Embracing Risk Responding to threats and delivering new capabilities much faster, by changing the risk-mitigation mindset 180 degrees to that of "embracing risk" and "adapting and transforming continuously". Business 4.0 | 15 # INFRASTRUCTURE # Strategic Investments # Scalable re-skilling using Digital Learning Platforms # Cloud Based, Immersive, Virtual DELIVERY 861K+ digital competencies acquired # Domain Infused, Culture Focused, G DELIVERY 247K+ associates trained in digital # Rich and Expanding Multi-Sourced CONTENT "Faculty" ACCESS Any Place, Anytime, Any Device # Focus areas for Research and Innovation |Foundational Research|Industry 4.0|Governance|Sustainability| |---|---|---|---| |Computing|Automation|Automated Compliance|Remote Healthcare| |Physical Systems|Cognitive Computing|Consent Management|Accessibility| |Sciences|Drones|Enterprise Security|Energy Management| |Banking & Financial Services|Retail|Manufacturing|Life Sciences| |Banking Analytics|Price Optimisation|Digital Twin|Digital Clinical Trials| |Data Marketplace|Dynamic omnichannel|Early warning System|Digital Drug Discovery| |Blockchain peer to peer|Supply chain|EHS Digital Assistant|Paperless Lab| |Insurance|Shelf Product Recognition| | | 16 | Strategic Investments # Embracing Agile for Success |Customer Engagement|1,900+|400+|Ready Teams| |---|---|---|---| |Agile Engagements|Agile Development Zones|2,100+|SAFe Certified Associates| |Largest Agile Workforce in the world|211,000+|50+|8,000+| |Enterprise Agile Transformations|Externally Certified Agile Assets| | | # Digital Alliances and Partnerships |135+|CLOUD AND IoT| |---|---| |AUTOMATION AND INTELLIGENCE|Machine Learning / NLP / NLG| # Strategic Investments 17 # Benefiting from Business 4.0 # The TCS Advantage # Buying Behaviors Customers are buying solutions to their business problems, and not just technical skills. - Decades of experience in solution selling positions TCS ahead of others in envisioning, designing and deploying solutions that are uniquely tailored to a customer's business context, on a turnkey basis. - TCS' verticalized organization structure, consisting of about two dozen Industry Solution Units (ISUs), was designed precisely to facilitate solution selling. Each ISU possesses deep domain expertise and contextual knowledge that enable solutions uniquely tailored for each customer. # New buyers are emerging within the customer organization - the CEO, COO, CFO, CMO, CDO, and other CXOs. - Deep domain expertise and over a decade's experience in selling to other buyers in the customer's organization positions TCS very well to have very deep business-focused conversations with CXOs of all kinds. - The launch of several new Digital transformation services, and the creation of Cognitive Business Operations unit in FY 2018 addresses the needs of other stakeholders very effectively. # Selection criteria for transformational engagements solution quality, references and time to market. - TCS' domain expertise and contextual knowledge results in higher quality solutions that are specifically tailored to each customer's unique context. - TCS' location independent agile model allows execution of large programs across distributed location using agile methodologies, delivering significant time to market advantages. - TCS' industry-leading portfolio of intellectual property - frameworks, accelerators, products and platforms - deliver greater speed to market. # Taking on an overall transformational program involves orchestrating the delivery of multiple service lines. - TCS has historically been very good at bringing together multiple teams that collaborate, giving it the reputation for execution excellence - particularly in large and complex program implementations. - Creation of a separate Consulting and Service Integration practice in FY 2018 has helped formalize the collaborative model and made it scalable. # Virtualization of generic activities that don't provide competitive differentiation - Early investments in cloud-based platforms, many years ahead of peers, positions TCS very well today to take advantage of the increasing demand for as-a-Service offerings. |
- TCS' Machine First Delivery Model (MFDM™), backed by partnerships with leading providers of RPA software as well as our own cognitive automation software ignio™, gives software the first right of refusal on any activity, be it in business operations or IT operations. This approach has positioned TCS as a thought leader in this area, and is driving significant business opportunities. 18 | Benefiting from Business 4.0 # Business 4.0 # Stories # Algorithmic Retailing Progressive retailers who will flourish in a Business 4.0 world are those who are leveraging the huge amounts of granular data available to them from online, stores, sensors and IoT devices to create significant business value by applying advanced artificial intelligence and machine learning algorithms. For example, a traditional process like pricing which was based on a few variables earlier, now stands transformed by TCS' Optumera™ suite which uses a rich set of 500 factors like weather, online metrics, competitor prices, local events, category-specific characteristics to determine the optimal pricing, accounting for the impact of each factor on the other. Similarly other processes like forecasting, replenishment, transportation, space, assortment, sales and marketing can be completely transformed to create exponential value using advanced analytics and machine learning. TCS is working with leading grocery retailers, to leverage the data from various IoT sensors and supply chain networks to provide real time updates on fresh produce - like strawberry, lettuce - across the supply chain. This intelligence has reduced the overall dwell time by up to 25 hours, resulting in reduced wastage in stores and substantially improved the home life of fresh produce for the consumer. The data generated is driving the complete supply chain ecosystem towards greater agility and efficiency. Business 4.0 stories | 19 # Business 4.0 # Stories This new partnership will bring the best of TCS' capabilities to M&S. We will join our expertise to unlock the potential for technology to drive our digital-first transformation and accelerate growth of our business. Through our Technology Transformation Programme, our business will be faster, simpler and more focused on achieving a seamless customer experience. Steve Rowe, CEO, M&S # M&S Marks and Spencer, a leading omni-channel retailer in the UK has embarked on a five-year transformation program to become a digital-first business. As their principal technology partner in this strategic initiative, TCS will transition M&S to a new Technology Operating Model, which embraces the agile mindset to transform business and IT strategy, aligned with rapid technology innovation to meet fast changing business priorities. This will help drive agility, intelligence, innovation and efficiency to transform the retailer's customer experience, drive business growth and position them for success in the Business 4.0 world. # Rolls-Royce Rolls-Royce, the market-leader in high performance power systems, expanded its long-standing partnership with TCS to accelerate its 'Digital First' vision to lead in a Business 4.0 world. This digital transformation for Rolls-Royce will be supported by TCS' Connected Universe Platform, a platform-as-a-Service (PaaS) that accelerates the development and deployment of Internet of Things (IoT) applications. Leveraging this, Rolls-Royce will be able to collect data real time from their equipment in the field, such as jet engines, and provide predictive diagnostics that would help improve their reliability and availability, and thereby deliver a superior experience and create exponential value for their customers - the airlines which use those engines. TCS' IoT solution will allow more data to be captured, shared and analyzed more quickly across Rolls-Royce, to accelerate the development of new products and services. The resultant agility and data innovation will drive greater collaboration with partners and customers, deliver further value to customers, improve existing services, accelerate development and deployment times and create new areas of growth. This is an example of how we intend to unleash data innovation through collaboration. TCS is an outstanding partner with excellent experience in delivering a flexible and agile platform capability across many different markets. We expect to be able to realise both short-term and long-term benefits through collaboration with partners and customers on the TCS IoT Platform. It will allow us to take advantage of fast-paced data innovation - including accelerating our application of industrial artificial intelligence and a range of other cutting edge breakthrough opportunities. |
Neil Crockett, Chief Digital Officer, Rolls-Royce Business 4.0 stories | 21 # Business 4.0 # Stories # Transamerica Transamerica, a leading provider of life insurance, retirement and investment solutions in the United States, has joined forces with TCS to simplify its core operations around the administration of its life insurance and annuity business lines, transforming them to TCS BaNCS, our integrated, cloud-based insurance digital platform. This new digital core will enable Transamerica to modernize its operations, rapidly enhance its digital capabilities, and support agile new product development and enhanced customer services, acquisitions and strategic innovation investments. In turn, this will help Transamerica pursue greater sustainable growth opportunities, create exponential value and succeed in a Business 4.0 world. Transamerica continues to put our customers at the forefront of everything we do. I'm very excited to embark on this partnership with TCS, whose transformation and technology innovation capabilities will supplement our focus on improving our customers' experience in a digitally enabled way. This supports meaningful growth in all business lines, including insurance and annuities, and advances our competitive positioning. TCS was carefully selected because of their significant, ongoing investments in technology and their expertise in the insurance and annuity industry. Mark Mullin, President & Chief Executive Officer, Transamerica 22 | Business 4.0 stories # TMX Group The TMX group of Canada runs the Toronto and Montreal Stock Exchanges, the Canadian Depository for Securities, the Canadian Derivatives Clearing Corporation, and several other exchange platforms. In a Business 4.0 world, TMX envisions operating a powerful ecosystem of markets and provide the tools needed for the diverse needs of global investors at large to fulfill their agile and intelligent aspirations. In pursuit of this vision, they chose TCS BaNCS Market Infrastructure as a single integrated platform for clearing, settlement and depository functions with a multi-asset class structure for both cash and derivatives markets. Along with QUARTZ Blockchain, the solution is conceptualized to deliver instantaneous access to information, automated straight through experience, real-time risk & collateral management and the agility in defining products across markets. I have a vision of what we'd like to be able to deliver to customers. In meeting with the senior team at TCS, we found that we have a shared vision of how we expect Market Infrastructure to evolve. This gave me great comfort that TCS, as a partner, could help us evolve our business. -- Glenn Goucher, President and COO, CDCC and President, CDS Business 4.0 stories | 23 # Reimagining Cancer Care In the first phase, the platform will connect four premier cancer hospitals -- the Tata Memorial Center in Mumbai, the Cancer Institute in Chennai, the Tata Medical Center in Kolkata and the Regional Cancer Center in Thiruvananthapuram - and allow pooling of their knowledge and resources, easier patient movement across facilities, and research collaboration across doctors and institutions. # Digital Nerve Centre TCS, in partnership with the Tata Trusts, is deploying the Digital Nerve Centre (DiNC), an innovative platform that leverages digital technologies to connect leading cancer research centers and specialists within the National Cancer Grid to reimagine patients' access to cancer care, and make it more equitable and affordable. Through resource pooling and digitization, DiNC is driving significant efficiencies resulting in better utilization, higher throughput, speedier access to medical care and superior treatment outcomes. As the network expands, even patients in remote areas won't have to travel more than a few hours to access the full suite of cancer treatment services. 24 | Reimagining Cancer Care # Notice Notice is hereby given that the twenty-third Annual General Meeting of Tata Consultancy Services Limited will be held on Friday, June 15, 2018 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: the Audited Financial Statements of the Company for the financial year ended March 31, 2018, 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, 2018, together with the Report of the Auditors thereon. To confirm the payment of Interim Dividends on Equity Shares and to declare a Final Dividend on Equity Shares for the financial year 2017-18. To appoint a Director in place of Mr. N. Chandrasekaran (DIN 00121863), who retires by rotation and, being eligible, offers himself for re-appointment. |
Ratification of Appointment of Auditors 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 and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, the Company hereby ratifies the appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W - 100022), as Auditors of the Company to hold office from the conclusion of this Annual General Meeting ("AGM") till the conclusion of the twenty-fourth AGM of the Company to be held in the year 2019, to examine and audit the accounts of the Company at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Auditors." Appointment of Ms. Aarthi Subramanian as a Director To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that Ms. Aarthi Subramanian (DIN 07121802) who was appointed by the Board of Directors as an Additional Director of the Company with effect from August 17, 2017 and who holds office upto the date of this Annual General Meeting of the Company in terms of Section 161(1) of the Companies Act, 2013 ("Act") and Article 73 of the Articles of Association of the Company 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 her candidature for the office of Director of the Company, be and is hereby appointed as Director of the Company, liable to retire by rotation." Appointment of Dr. Pradeep Kumar Khosla as an Independent Director To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: "RESOLVED that Dr. Pradeep Kumar Khosla (DIN 03611983), who was appointed by the Board of Directors as an Additional Director of the Company with effect from January 11, 2018 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") and Article 73 of the Articles of Association of the Company 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 as Director of the Company." "RESOLVED FURTHER that pursuant to the provisions of Sections 149, 152 and other applicable provisions, if any, of the Act and the Companies (Appointment and Qualifications of Directors) Rules, 2014, read with Schedule IV to the Act, as amended from time to time, the appointment of Dr. Pradeep Kumar Khosla, who meets the criteria for independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and who has submitted a declaration to that effect, and who is eligible for appointment as an Independent Director of the Company, not liable to retire by rotation, for a term of five years commencing January 11, 2018 to January 10, 2023, be and is hereby approved." # Annual Report 2017-18 # 7. 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: File: AR_TCS_2017_2018.md 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 7 of the Notice, is annexed hereto. The relevant details, pursuant to Regulations 26(4) and 36(3) of the 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, in respect of Directors seeking appointment/re-appointment at this Annual General Meeting ("AGM") are also annexed. 2. |
A Member entitled to attend and vote at the AGM is entitled to appoint a proxy to attend and vote on his/her behalf and the proxy need not be a Member of the Company. 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. 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. 3. Corporate Members intending to send their authorized representatives to attend the AGM are requested to send a certified copy of the Board Resolution to the Company, authorizing them to attend and vote on their behalf at the AGM. 4. Members, Proxies and Authorised Representatives are requested to bring the duly completed Attendance Slip enclosed herewith to attend the AGM. 5. The Company has fixed Saturday, June 2, 2018 as the 'Record Date' for determining entitlement of members to final dividend for the financial year ended March 31, 2018. 6. If the final dividend, as recommended by the Board of Directors, is approved at the AGM, payment of such dividend will be made on Tuesday, June 19, 2018 as under: 1. To all Beneficial Owners in respect of shares held in dematerialized form as per the data as may be made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on Saturday, June 2, 2018; 2. To all Members in respect of shares held in physical form after giving effect to valid transfers in respect of transfer requests lodged with the Company as of the close of business hours on Saturday, June 2, 2018. 7. 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 are requested to submit the said details to their depository participants ("DPs") in case the shares are held by them in electronic form and to TSR DARASHAW Limited ("TSRDL") in case the shares are held by them in physical form. 8. To support the 'Green Initiative', Members who have not yet registered their email addresses are requested to register the same with their DPs in case the shares are held by them in electronic form and with TSRDL in case the shares are held by them in physical form. 9. Members are requested to intimate changes, if any, pertaining to their name, postal address, email address, telephone/mobile numbers, Permanent Account Number (PAN), mandates, nominations, power of attorney, bank details such as, name of the bank and branch details, bank account number, MICR code, IFSC code, etc., to their DPs in case the shares are held by them in electronic form and to the Company's Registrars and Transfer Agents, TSRDL in case the shares are held by them in physical form. 26 I Notice # 10. 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. # 11. 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. # 12. 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. # 13. |
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. # 14. Members are requested to note that, dividends if not encashed for a consecutive period of 7 years from the date of transfer to Unpaid Dividend Account of the Company, are liable to be transferred to the Investor Education and Protection Fund (IEPF). The shares in respect of such unclaimed dividends are also liable to be transferred to the demat account of the IEPF Authority. In view of this, Members are requested to claim their dividends from the Company, within the stipulated timeline. The Members, whose unclaimed dividends/shares have been transferred to IEPF, may claim the same by making an application to the IEPF Authority in Form No. IEPF-5 available on www.iepf.gov.in. For details, please refer to corporate governance report which is a part of this Annual Report. # 15. Notice of the AGM along with the Annual Report 2017-18 is being sent by electronic mode to those Members whose email 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 email addresses, physical copies are being sent by the permitted mode. Members may note that the Notice and Annual Report 2017-18 will also be available on the Company's website viz. www.tcs.com # 16. The route map showing directions to reach the venue of the twenty-third AGM is annexed. # 17. Voting through electronic means 1. 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. 2. The Board of Directors has appointed Mr. P. N. Parikh (Membership No. FCS 327) and failing him Mr. Mitesh Dhabliwala (Membership No. FCS 8331) of Parikh & Associates, Practicing Company Secretaries as the Scrutinizer to scrutinize the voting at the AGM and remote e-voting process in a fair and transparent manner. 3. The facility for voting, either through electronic voting system or poll paper, shall also be made available at the AGM and the Members attending the AGM, who have not already cast their vote by remote e-voting, may exercise their right to vote at the AGM. 4. 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. 5. A Member can vote either by remote e-voting or at the AGM. In case a Member votes by both the modes then the votes cast through remote e-voting shall prevail and the votes cast at the AGM shall be considered invalid. 6. The details of the process and manner for remote e-voting are explained herein below: 1. Log-in to NSDL e-Voting system at https://www.evoting.nsdl.com/ 2. Cast your vote electronically on NSDL e-Voting system. 3. Details on Step 1 are mentioned below: 4. How to Log-in to NSDL e-Voting website? 1. Visit the e-Voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl.com/ either on a Personal Computer or on a mobile. 2. Once the home page of e-Voting system is launched, click on the icon "Login" which is available under 'Shareholders' section. 3. A new screen will open. You will have to enter your User ID, your Password and a Verification Code as shown on the screen. # Annual Report 2017-18 Alternatively, if you are registered for NSDL eservices i.e. IDEAS, you can log-in at https://eservices.nsdl.com/ with your existing IDEAS login. Once you log-in to NSDL eservices after using your log-in credentials, click on e-Voting and you can proceed to Step 2 i.e. Cast your vote electronically. # 4. Your User ID details are given below: |Manner of holding shares i.e. |
Demat (NSDL or CDSL) or Physical|Your User ID is:| |---|---| |a) For Members who hold shares in demat account with NSDL.|8 Character DP ID followed by 8 Digit Client ID For example, if your DP ID is IN300*** and Client ID is 12****** then your user ID is IN300***12******| |b) For Members who hold shares in demat account with CDSL.|16 Digit Beneficiary ID For example, if your Beneficiary ID is 12************** then your user ID is 12**************| |c) For Members holding shares in Physical Form.|EVEN Number followed by Folio Number registered with the company For example, if EVEN is 101456 and folio number is 001*** then user ID is 101456001***| # 5. Your password details are given below: a) If you are already registered for e-Voting, then you can use your existing password to login and cast your vote. b) If you are using NSDL e-Voting system for the first time, you will need to retrieve the 'initial password' which was communicated to you. Once you retrieve your 'initial password', you need to enter the 'initial password' and the system will force you to change your password. c) How to retrieve your 'initial password'? 1. If your email ID is registered in your demat account or with the company, your 'initial password' is communicated to you on your email ID. Trace the email sent to you from NSDL from your mailbox. Open the email and open the attachment i.e. a .pdf file. Open the .pdf file. The password to open the .pdf file is your 8 digit client ID for NSDL account, last 8 digits of client ID for CDSL account or folio number for shares held in physical form. The .pdf file contains your 'User ID' and your 'initial password'. 2. If your email ID is not registered, your 'initial password' is communicated to you on your postal address. # 6. If you are unable to retrieve or have not received the "initial password" or have forgotten your password: a) Click on "Forgot User Details/Password?" (If you are holding shares in your demat account with NSDL or CDSL) option available on www.evoting.nsdl.com b) "Physical User Reset Password?" (If you are holding shares in physical mode) option available on www.evoting.nsdl.com If you are still unable to get the password by aforesaid two options, you can send a request at [email protected] mentioning your demat account number/folio number, your PAN, your name and your registered address. # 7. After entering your password, click on Agree to "Terms and Conditions" by selecting on the check box. # 8. Now, you will have to click on "Login" button. # 9. After you click on the "Login" button, Home page of e-Voting will open. # Details on Step 2 are mentioned below: # How to cast your vote electronically on NSDL e-Voting system? 1. After successful login at Step 1, you will be able to see the Home page of e-Voting. Click on e-Voting. Then, click on Active Voting Cycles. 2. After click on Active Voting Cycles, you will be able to see all the companies "EVEN" in which you are holding shares and whose voting cycle is in active status. 3. Select "EVEN" of the Company, which is 108359. 4. Now you are ready for e-Voting as the Voting page opens. # 28 I Notice # 5. Cast your vote by selecting appropriate options i.e. assent or dissent, verify/modify the number of shares for which you wish to cast your vote and click on "Submit" and also "Confirm" when prompted. # 6. Upon confirmation, the message "Vote cast successfully" will be displayed. # 7. You can also take the printout of the votes cast by you by clicking on the print option on the confirmation page. # 8. Once you confirm your vote on the resolution, you will not be allowed to modify your vote. # General Guidelines for shareholders # 1 Institutional shareholders (i.e. other than individuals, HUF, NRI, etc.) are required to send a scanned copy (PDF/JPG Format) of the relevant Board Resolution/Authority letter etc. with attested specimen signature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer by email to [email protected] with a copy marked to [email protected] # 2. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Login to the e-voting website will be disabled upon five unsuccessful attempts to key in the correct password. |
In such an event, you will need to go through the "Forgot User Details/Password?" or "Physical User Reset Password?" option available on www.evoting.nsdl.com to reset the password. # 3. In case of any queries, you may refer to the Frequently Asked Questions (FAQs) for Shareholders and e-voting user manual for Shareholders available at the download section of www.evoting.nsdl.com or call on toll free no.: 1800-222-990 or send a request at [email protected] # Other Instructions i. The e-voting period commences on Tuesday, June 12, 2018 (9.00 a.m. IST) and ends on Thursday, June 14, 2018 (5.00 p.m. IST). During this period, Members holding shares either in physical form or in dematerialized form, as on Friday, June 8, 2018, 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 the vote again. ii. 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 AGM through electronic voting system or poll paper. iii. 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 the vote. iv. 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 AGM, 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. v. 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 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 RAJENDRA MOHOLKAR Company Secretary Mumbai, April 19, 2018 # Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 CIN: L22210MH1995PLC084781 Tel: 91 22 6778 9595 Email: [email protected] Website: www.tcs.com Notice I 29 # Annual Report 2017-18 # Explanatory Statement As required under Section 102 of the Companies Act, 2013 ("Act"), the following explanatory statement sets out all material facts relating to business mentioned under Item Nos. 4 to 7 of the accompanying Notice: # Item No. 4 This explanatory statement is provided though strictly not required as per Section 102 of the Act. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W - 100022), were appointed as the statutory auditors of the Company for a period of five years at the Annual General Meeting ("AGM") of the Company held on June 16, 2017, to hold office from the conclusion of the twenty-second AGM till the conclusion of the twenty-seventh AGM to be held in the year 2022. As per provisions of Section 139(1) of the Act, their appointment for the above tenure is subject to ratification by Members at every AGM. Accordingly, ratification of the Members is being sought for the appointment of statutory auditors as per the proposal contained in the Resolution set out at Item No. 4 of this Notice. The Board recommends the Resolution at Item No. 4 of this Notice for approval of the Members. None of the Directors and Key Managerial Personnel of the Company and their respective relatives, is, in any way, concerned or interested in the Resolution set out at Item No. 4 of this Notice. # Item No. 5 Ms. |
Aarthi Subramanian relinquished her position as the Executive Director of the Company with effect from August 17, 2017 for taking up a leadership role as the Group Chief Digital Officer at Tata Sons Limited. The Board of Directors, on the recommendation of the Nomination and Remuneration Committee, appointed Ms. Aarthi Subramanian as an Additional Director of the Company with effect from August 17, 2017. Pursuant to the provisions of Section 161(1) of the Act and Article 73 of the Articles of Association of the Company, she holds office up to the date of this AGM and is eligible to be appointed as Director, whose office shall be liable to retire by rotation. The Company has, in terms of Section 160(1) of the Act, received in writing a notice from a member, proposing her candidature for the office of Director. Ms. Aarthi Subramanian holds a B.Tech in Computer Science from the National Institute of Technology, Warangal and a Masters in Engineering Management from the University of Kansas, USA. A professional with over 28 years of experience in the global technology sector, Ms. Aarthi Subramanian started her career with Tata Consultancy Services (TCS) and worked in diverse roles in India, Sweden, USA and Canada, thereby gaining rich experience in consulting engagements and management of large-scale technology programs as well as operations. At TCS, Ms. Aarthi Subramanian was Executive Director and Global Head of Delivery Excellence, Governance and Compliance. She was responsible for driving excellence in service delivery, governance of key programs and initiatives as well as enterprise-wide compliance. Further details of Ms. Aarthi Subramanian have been given in the Annexure to this Notice. The Board recommends the Resolution at Item No. 5 of this Notice for approval of the Members. Except Ms. Aarthi Subramanian and her relatives, none of the Directors and Key Managerial Personnel of the Company and their respective relatives is, in any way, concerned or interested, in the Resolution set out at Item No. 5 of this Notice. # Item No. 6 The Board of Directors, on the recommendation of the Nomination and Remuneration Committee, appointed Dr. Pradeep Kumar Khosla, as an Additional Director of the Company and also an Independent Director, not liable to retire by rotation, for a term of 5 years i.e. from January 11, 2018 to January 10, 2023, subject to approval of the Members. Pursuant to the provisions of Section 161(1) of the Act and Article 73 of the Articles of Association of the Company, Dr. Pradeep Kumar Khosla shall hold office up to the date of this AGM and is eligible to be appointed as a Director. The Company has, in terms of Section 160(1) of the Act, received in writing a notice from a Member, proposing his candidature for the office of Director. 30 I Notice The Company has received a declaration from Dr. Pradeep Kumar Khosla to the effect that he meets the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). In the opinion of the Board, Dr. Pradeep Kumar Khosla fulfils the conditions specified in the Act and SEBI Listing Regulations for appointment as Independent Director and is independent of the management of the Company. The terms and conditions of his appointment shall be open for inspection by the Members at the Registered Office of the Company during the normal business hours on any working day (except Saturday) and will also be kept open at the venue of the AGM. Dr. Pradeep Kumar Khosla holds a B.Tech Degree in Electrical Engineering from IIT-Kharagpur and has received his MS and PhD degrees in Electrical and Computer Engineering from Carnegie Mellon University. He is the eighth Chancellor of the University of California, San Diego, and a distinguished professor in the Department of Electrical and Computer Engineering and Computer Science and Engineering. He began his teaching career at Carnegie Mellon University in 1986 and was elected as the University Professor in 2008, the highest distinction a faculty member could achieve. His research interest encompass the areas of internet-enabled collaborative design, collaborating autonomous systems, agent-based architectures for distributed design and embedded control, software composition and reconfigurable software for real-time embedded systems, reconfigurable and distributed robotic systems, integrated design-assembly planning systems and distributed information systems. |
He is a Fellow of the Institute of Electrical and Electronics Engineers, the American Society of Mechanical Engineers, the American Association for Advancement of Science, the American Association of Artificial Intelligence and the Indian Academy of Engineering. He serves on advisory boards for several non-profit and government organizations, venture capital firms and high-tech start-up companies. He has served as a member of Strategy Review Board for the Ministry of Science and Technology, Taiwan; the Council of Deans of the Aeronautics Advisory Committee, NASA; the National Research Council Board on Manufacturing and Engineering Design; the Pennsylvania Treasury Advisory Board; and the Senior Advisory Group for the DARPA Program on Joint Unmanned Combat Air Systems. Further details of Dr. Pradeep Kumar Khosla have been given in the Annexure to this Notice. In compliance with the provisions of Section 149 read with Schedule IV of the Act, the appointment of Dr. Pradeep Kumar Khosla as an Independent Director is now being placed before the Members for their approval. The Board recommends the Resolution at Item No. 6 of this Notice for approval of the Members. Except Dr. Pradeep Kumar Khosla and his relatives, none of the Directors and Key Managerial Personnel of the Company and their respective relatives is, in any way, concerned or interested, in the Resolution set out at Item No. 6 of this Notice. # Item No. 7: 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. File: AR_TCS_2017_2018.md 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 recommends the Resolution at Item No. 7 of this Notice for approval of the Members. None of the Directors and Key Managerial Personnel of the Company and their respective relatives, is, in any way, concerned or interested in the Resolution set out at Item No. 7 of this Notice. By Order of the Board of Directors RAJENDRA MOHOLKAR Company Secretary Mumbai, April 19, 2018 # Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 CIN: L22210MH1995PLC084781 Tel: 91 22 6778 9595 Email: [email protected] Website: www.tcs.com Notice I 31 # Annual Report 2017-18 # Details of Directors seeking appointment/re-appointment at the Annual General Meeting |Particulars|Mr. N. Chandrasekaran|Ms. Aarthi Subramanian|Dr. Pradeep Kumar Khosla| |---|---|---|---| |Date of Birth|June 2, 1963|June 26, 1967|March 13, 1957| |Date of Appointment|February 21, 2017|August 17, 2017|January 11, 2018| |Qualifications|* Bachelor's Degree in Applied Science * Master's Degree in Computer Application|* B. Tech in Computer Science * Master's Degree in Engineering Management|* B. Tech in Electrical Engineering * Master's Degree and PhD in Electrical and Computer Engineering| |Expertise in specific functional areas|Wide experience in Information Technology|Wide experience in Information Technology|Wide experience in academia and Information Technology| |Directorships held in other public companies (excluding foreign companies and Section 8 companies)|* Tata Sons Limited * Tata Global Beverages Limited * Tata Steel Limited * Tata Motors Limited * The Indian Hotels Company Limited * The Tata Power Company Limited|* Tata Capital Limited * Tata AIA Life Insurance Company Limited|Nil| |Memberships/ Chairmanships of committees of other public companies (includes only Audit Committee and Stakeholders' Relationship Committee)|Nil|Stakeholders' Relationship Committee * Tata Capital Limited (Chairperson)|Nil| |Number of shares held in the Company|88,528|2,800|Nil| 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 above directors, please refer to the corporate governance report which is a part of this Annual Report. 32 I Notice # Marine Lines # Railway Station # Maharshi Karve Road # Marine Lines Flyover # Metro - Gol Masjid - Inox Cinema - Walter D'Souza Udyan - Petrol Pump # Kala # Maharshi Karve Road Niketan # Mahatma Gandhi Road # Bombay Hospital # Mahapalika Marg # Municipal Corporation Building # Azad # UAH Khan Marg # Maidan # Chatrapati D N Road # Shivaji Maharaj Terminus (CSMT) # Maharshi Karve Road # Birla Matushri Sabhagar 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020. # Flora Fountain # Churchgate Railway Station # Notice I 33 # Annual Report 2017-18 # Directors' Report To the Members, The Directors present the Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2018. |
The consolidated performance of the Company and its subsidiaries has been referred to wherever required. # 1. Financial results | |Unconsolidated| |Consolidated| | |---|---|---|---|---| |Financial Year|2017-18 (FY18)|2016-17 (FY17)|2017-18 (FY18)|2016-17 (FY17)| |Revenue from operations|97,356|92,693|1,23,104|1,17,966| |Other income (net)|5,803|4,568|3,642|4,221| |Total income|1,03,159|97,261|1,26,746|1,22,187| |Expenses| | | | | |Operating expenditure|69,551|65,604|90,588|85,655| |Depreciation and amortization expense|1,647|1,575|2,014|1,987| |Total expenses|71,198|67,179|92,602|87,642| |Profit before finance cost and tax|31,961|30,082|34,144|34,545| |Finance costs|30|16|52|32| |Profit before tax (PBT)|31,931|30,066|34,092|34,513| |Tax expense|6,690|6,413|8,212|8,156| |Profit for the year|25,241|23,653|25,880|26,357| |Attributable to:| | | | | |Shareholders of the Company|25,241|23,653|25,826|26,289| |Non-controlling interests|NA|NA|54|68| |Opening balance of retained earnings|65,965|53,576|71,071|56,113| |Adjustment with other equity|184|59|208|25| |Buy-back of equity shares|(4,999)|-|(4,999)|-| |Amount available for appropriation|86,391|77,288|92,106|82,427| |Appropriations| | | | | |Dividend on equity shares (excluding tax)|9,284|9,162|9,284|9,162| |Tax on dividends|1,442|1,785|1,442|1,785| |Capital redemption reserve|6|-|6|-| |General reserve|-|-|-|-| |Statutory reserve|-|-|40|33| |Special Economic Zone re-investment reserve|1,579|376|1,579|376| |Closing balance of retained earnings|74,080|65,965|79,755|71,071| # 2. Issue of Bonus Shares Considering the financial position, the Board of Directors at its meeting held on April 19, 2018, recommended issue of Bonus Shares, subject to approval of Members, in the ratio of one new Equity Share of the Company of `1 each, as fully paid-up, for every one existing Equity Share of the Company. The Bonus Shares will be issued, by capitalizing a part of its retained earnings, to those persons who are Members as on the record date. # 3. Buyback of Equity Shares 5,61,40,350 equity shares were bought back during the year, at a price of `2,850 per Equity Share for an aggregate consideration of `16,000 crore. The Offer Size of the Buyback was 21.89% of the aggregate paid-up equity share capital and free reserves of the Company, and represented 2.85% of the total issued and paid-up equity share capital of the Company. The buyback process was completed and the shares were extinguished on June 7, 2017. # 4. Dividend Based on the Company's performance, the Directors are pleased to recommend for approval of the members a final dividend of `29 per share for FY18 taking the total dividend to `50 per share (previous year `47 per share). The final dividend on equity shares, if approved by the members, would involve a cash outflow of `6,693 crore, including dividend tax. The total dividend on equity shares including dividend tax for FY18 would aggregate `11,377 crore, resulting in a payout of 45.07% of the unconsolidated profits of the Company. # 5. Transfer to reserves The Directors have decided to retain the entire amount of `74,080 crore in the retained earnings. # 6. Company's performance On a consolidated basis, the revenue from operations for FY18 at `1,23,104 crore was higher by 4.40% over the previous year (`1,17,966 crore in FY17). The profit after tax attributable to shareholders and non-controlling interests was `25,880 crore (`26,357 crore in FY17). The profit after tax attributable to shareholders was `25,826 crore (`26,289 crore in FY17). On an unconsolidated basis, the revenue from operations for FY18 was at `97,356 crore (`92,693 crore in FY17). The profit for the year was `25,241 crore (`23,653 crore in FY17). # 7. Human resource development Recognising the imperatives of Business 4.0 era, the Company is investing heavily in transforming the workforce at scale, even while simplifying processes and making them more agile to cater to the needs of a predominantly millennial workforce. In FY18, the Company hired globally, leveraging a completely digitised hiring and onboarding process that harnesses next generation technologies. TCS' workforce of 3,94,998 is dynamic and diverse, with 35.3% women, from 131 nationalities and over 85% belonging to Gen Y. The Company is using digital technologies to gain intelligent insights while designing HR strategies to keep the young workforce engaged and motivated. The Company continuously explores new approaches to learning and development to keep the workforce relevant in an evolving technology landscape. In addition, the Company continues to invest in leadership development programs at all levels to sustain the Company's growth, while staying true to the core values which underpin TCS' success over the last five decades. The Company's culture promotes an environment that is transparent, flexible, fulfilling and purposeful. A host of customised initiatives based on a deep understanding of individual needs and aspirations, backed by the power of data sciences, have helped create an engaging workplace that enables individuals to realise their potential. The Company is driven by passionate and highly engaged workforce. This is evident from the fact that the Company continues to remain the industry benchmark for talent retention. Attrition in FY18 was at 11% for IT Services and 11.8% on an overall basis. # 8. |
Quality initiatives The Company continues its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY18, the Company retained its enterprise-wide ISO certification for Quality Management (ISO 9001:2015), IT Service Management (ISO 20000-1:2011), Information Security Management (ISO 27001:2013), and Business Continuity Management (ISO 22301:2012). In addition, the Company was certified under the new ISO Standard for Business Process Outsourcing (ISO 30105:2016). The Company's strong commitment to the environment and occupational health and safety of # Annual Report 2017-18 its employees and business partners is demonstrated through its enterprise-wide Environmental Management (ISO 14001:2004) and Occupational Health and Safety Management (BS OHSAS 18001:2007) certifications. The Company also maintains domain-specific quality certifications including AS 9100 (Aerospace), TL 9000 (Telecom) and ISO 13485 (Medical Devices). The Company's Global Network Delivery Model (GNDMTM), built on a strong process-driven and customer-centric integrated Quality Management System (iQMSTM), continues to deliver outstanding value and experience to our customers. iQMSTM is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. The Company is committed to transforming itself into an agile enterprise. Towards this, it invests in developing its agile workforce, creating agile offerings, moving into agile workspaces and transforming its customer relationships into agile partnerships. The Company continues to invest in knowledge management platforms for effective collaboration, learning and sharing. The Company received the prestigious Most Admired Knowledge Enterprise (MAKE) award in the Global Independent Operating Unit (IOU) category for the eighth time and in the Asian and Indian categories for the thirteenth time. Customer-centricity, rigor in operations, and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels recorded in the periodic surveys conducted by the Company. This is validated by top rankings in third-party surveys as well. # 9. Subsidiary companies The Company has 50 subsidiaries as on March 31, 2018 (58 subsidiaries as on March 31, 2017). There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries. Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company. Restructuring of following subsidiaries in Europe was completed during the year: - a. Alti Switzerland S.A. merged with Tata Consultancy Services Switzerland Ltd effective March 29, 2018. - b. Alti NV merged with Tata Consultancy Services Belgium (formerly known as Tata Consultancy Services Belgium S.A.) effective March 30, 2018. - c. Tata Consultancy Services France S.A.S., Alti HR S.A.S., Alti Infrastructures Systemes & Reseaux S.A.S. and TESCOM (France) Software Systems Testing S.A.R.L. merged with Alti S.A., effective March 31, 2018. - d. Teamlink, a wholly owned subsidiary of Alti NV, was liquidated effective January 31, 2018. - e. Planaxis Technologies Inc., a wholly owned subsidiary of Alti S.A. was liquidated effective March 31, 2018. The name of Alti S.A. was changed to Tata Consultancy Services France SA effective March 31, 2018. # 10. Directors' responsibility statement Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that: 1. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; 2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; 3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. they have prepared the annual accounts on a going concern basis; 5. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; # vi. |
they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY18. # 11. Directors and key managerial personnel Dr. Vijay Kelkar, Independent Director and Mr. Ishaat Hussain, Non-Executive Director retired with effect from May 14, 2017 and September 3, 2017, respectively, in accordance with the retirement age policy for Directors. The Board places on record its appreciation for their invaluable contribution and guidance provided by them. Ms. Aarthi Subramanian relinquished the office of Executive Director for taking up leadership role as Group Chief Digital Officer at Tata Sons Limited and was appointed as Additional Director in non-executive capacity with effect from August 17, 2017. Dr. Pradeep Kumar Khosla was appointed as an Additional and Independent Director with effect from January 11, 2018. Mr. N. Chandrasekaran, retires by rotation and being eligible, offered himself for re-appointment. Pursuant to the provisions of Section 149 of the Act, Mr. Aman Mehta, Mr. V. Thyagarajan, Prof. Clayton M. Christensen, Dr. Ron Sommer, Mr. O. P. Bhatt and Dr. Pradeep Kumar Khosla are Independent Directors of the Company. They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). There has been no change in the circumstances affecting their status as an Independent Director during the year. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company. The Board appointed Mr. Rajendra Moholkar as the Company Secretary and Compliance Officer, to take over from Mr. Suprakash Mukhopadhyay with effect from April 24, 2017. The Board places on record its appreciation for the outstanding contribution of Mr. Suprakash Mukhopadhyay as Global Treasury Head and Company Secretary. Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2018 are: Mr. Rajesh Gopinathan, Chief Executive Officer and Managing Director, Mr. N. Ganapathy Subramaniam, Chief Operating Officer and Executive Director, Mr. Ramakrishnan V., Chief Financial Officer and Mr. Rajendra Moholkar, Company Secretary. During the year, Ms. Aarthi Subramanian ceased to be a Key Managerial Personnel of the Company with effect from August 17, 2017. # 12. Number of meetings of the Board Six meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report. # 13. Board evaluation The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act, SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. Directors' Report I 37 # Annual Report 2017-18 The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc. In a separate meeting of independent directors, performance of non-independent directors, the Chairman of the Company and the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. |
In the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated. # 14. Policy on directors' appointment and remuneration and other details The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report. # 15. Internal financial control systems and their adequacy The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report. # 16. Audit committee The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report. # 17. Auditors Pursuant to the provisions of Section 139 of the Act read with 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), were appointed as statutory auditors from the conclusion of the twenty-second Annual General Meeting (AGM) held on June 16, 2017 till the conclusion of the twenty-seventh AGM of the Company in 2022, subject to the ratification of their appointment at every AGM, if required under law. Accordingly, necessary resolution for ratification of appointment of auditors is included in the Notice for this AGM. # 18. Auditor's report and secretarial audit report The auditor's report and the secretarial audit report do not contain any qualifications, reservations, or adverse remarks. Secretarial audit report is attached to this report. # 19. Risk management The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report. # 20. Particulars of loans, guarantees and investments The particulars of loans, guarantees and investments have been disclosed in the financial statements. # 21. Transactions with related parties None of the transactions with related parties fall under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form No. AOC-2 and the same forms part of this report. # 22. Corporate social responsibility The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in 38 I Directors' Report the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The policy is available on https://www.tcs.com/investors. # 23. Extract of annual return As per the requirements of Section 92(3) of the Act, the extract of the annual return is given in Annexure III in the prescribed Form No. MGT-9, which is a part of this report. # 24. Particulars of employees The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given below: a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year: |Name|Ratio to median remuneration|% increase in remuneration in the financial year| |---|---|---| |Non-executive directors:| | | |Mr. N. Chandrasekaran|-|-| |Mr. Aman Mehta|50.91|13.21| |Mr. V. Thyagarajan|33.94|11.11| |Prof. Clayton M. Christensen|25.45|11.11| |Dr. Ron Sommer|35.64|10.53| |Dr. Vijay Kelkar*|^|^| |Mr. Ishaat Hussain**|^|^| |Mr. O. P. Bhatt|33.94|17.65| |Ms. Aarthi Subramanian***|-|-| |Dr. Pradeep Kumar Khosla****|^|^| |Executive directors:| | | |Mr. Rajesh Gopinathan|211.99|^^| |Mr. N. Ganapathy Subramaniam|157.78|^^| |Chief Financial Officer| | | |Mr. Ramakrishnan V.|-|^^| |Company Secretary| | | |Mr. Suprakash Mukhopadhyay @|-|-| |Mr. |
Rajendra Moholkar @@|-|^^| * Retired as Independent Director w.e.f. May 14, 2017 in accordance with the retirement age policy for Directors. ** Retired as Director w.e.f. September 3, 2017 in accordance with the retirement age policy for Directors. *** Relinquished the office of Executive Director and appointed as an Additional Director in non-executive capacity w.e.f. August 17, 2017. The remuneration is for part of the year and is not comparable and hence, not stated. **** Appointed as an Additional and Independent Director w.e.f. January 11, 2018. @ Relinquished the office of Company Secretary and Compliance Officer w.e.f. April 24, 2017. @@ Appointed as Company Secretary and Compliance Officer w.e.f. April 24, 2017. ^ Since the remuneration is only for part of the year, the ratio of their remuneration to median remuneration and % increase in remuneration is not comparable and hence, not stated. ^^ Remuneration received in FY18 is not comparable with remuneration received in FY17 owing to change in role/designation and hence, not stated. Directors' Report I 39 # Annual Report 2017-18 # 25. Disclosure requirements As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors' Certificate thereon, and the Management Discussion and Analysis are attached, which forms part of this report. As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this Annual Report. As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and is uploaded on the Company's website. The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. # 26. Deposits from public The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. # 27. Conservation of energy, technology absorption, foreign exchange earnings and outgo # Conservation of energy: Retaining the momentum on our energy and carbon management programs, the Company achieved its 2020 target to reduce the specific carbon footprint by 50%, in FY18 - 2 years ahead of the timeline. Green buildings, efficient operations, green IT and the use of renewable energy have been the key enablers in our journey of carbon and energy performance improvement. As the Company grows, it would add more green buildings to its campuses. File: AR_TCS_2017_2018.md The TCS Remote Energy Management and Control program witnessed rapid scaling up and achieved further maturity during the year. Internet of Things (IoT) platform was leveraged to acquire asset (chillers, air handling units, etc.) level data and analysed to improve asset efficiency and operations. Renewable energy used in the Company's offices increased to 8.5% as compared to 7.3% in the last year. During the year, Company added 2.05 MW of solar rooftop system across four locations, taking the total installed capacity to 3.55 MW. On data center power management, Company successfully reduced the Power Utilization Efficiency (PUE) of 13 data centers to the target of 1.7. The average PUE across 23 key data centers is at 1.7. These initiatives collectively resulted in the Company's energy consumption reducing by 4.5% over the prior year, on a per FTE basis. # 40 I Directors' Report # Technology absorption, adaption and innovation: The Company continues to adopt and use the latest technologies to improve the productivity and quality of its services and products. The Company's operations do not require significant import of technology. # Research and Development (R&D): Specific areas in which R&D was carried out by the Company TCS Research and Innovation (R&I) activities and outcomes were aligned to the Company's focus areas (personalization, new value creation models, ecosystems leverage, a mindset to embrace risk and abundance) enabled by technologies and appropriate processes (Intelligence, Agility, Cloud and Automation). Teams in Research, Incubation, Innovation and the Co-Innovation Network, have worked on the 'Ideas to Execution' process, and delivered value to business and to social causes as well. Some examples of such work are presented here. The Conversational Systems that emerged from the Company's research enabled mass personalisation for its associates. For instance, the chatbot created for HR answers queries from associates on leave policies; several bots enable personalisation in Fresco - our collaboration platform. Many research programs have enabled a step change in processes creating exponential value for customers. |
The Physical Sciences research team was effective in building a "Digital Twin" for thermal plants; Using the rich data such plants already have, creating models and simulation technologies, our research enabled lowering risk in plant functions, increasing agility and creating savings. The research team worked closely with the retail business unit to build a dynamic pricing model for retailers, taking into account millions of Stock Keeping Units (SKUs), demand patterns and competitive pricing by e-commerce channels. This enabled to help retail customers cut costs and also forecast sales with accuracy. The TCS Connected Universe Platform team along with the engineering and manufacturing business units won prestigious engagements. The drones program created interest across business units and several projects are in progress. Organisations today need intelligent and automated tools to manage risk. Automated Compliance to identify regulatory changes, data privacy with fine-grained consent management and lightweight encryption research projects made progress. The TCS Blockchain solution has been integrated with the TCS BaNCS platform. TCS MasterCraft Tools team launched a General Data Protection Regulations (GDPR) Compliant edition as part of its MasterCraft Data Plus suite. The TCS MasterCraft trial version was tried by over 1,000 customers in the last 6 months. MasterCraft added 30 new customers this year. The Company leveraged both the Academic Research Ecosystem and the Emerging Tech ecosystem for collaborative research as part of its Co-Innovation (TCS COINTM) Program. Your Company has comprehensive Memorandum of Understanding (MoU) for joint research projects with the Indian Institute of Science Bangalore, all five of the older IITs, and Indian Statistical Institute, Kolkata. There are focused projects also with other leading academic research institutes in India. The Company's R&I continues its collaboration with leading universities in North America, Europe and Asia Pacific in a number of areas including genomics, materials, digital manufacture, data analytics, cyber security, smart cities, intelligent infrastructure and digital health. The Company also leveraged its internal ecosystem - the problem solving capability of its associates. Innovation events such as ideathons and hackathons happened every week. These put forth customer problems; associates offered ideas and created prototypes to solve them. The response to these events was overwhelming. Internal teams and customers gained immensely from them. The TCS Innovista competition attracted over 1000 entries across the Company. The Company remained closely connected to customers through events in different geographies. TCS Innovation Forum was held in New York City, London, Medellin and Sao Paulo, attracting 700+ customers, partners and technology experts. TCS hosted "The TCS Slush Experience", a curated pitching session, to connect customers to some breakthrough technology companies (at "Slush", the biggest start-up event in Europe). TCS Innovation Days and workshops continue to be held for customers in various geographies. Several pilot and proofs of concept implementations resulted from these connects. The Company was honoured by the Fortune magazine as one of the 50 companies that "Changed the World" based on its digital farming Innovation, "mKRISHI". The Company won the Physionet Challenge 2017 for ECG Analytics. Researchers from TCS and IIT Kanpur stood 4th in the Amazon Robotics Challenge. TCS Accessibility Practice won the International Federation for Information Processing (IFIP) Technical Committee on Human-Computer Interaction's Accessibility Award for 2017. The Company won four awards at the Tata Innovista 2017 competition. # Annual Report 2017-18 Researchers won individual honours for presenting papers and by winning competitions. Three Researchers from the Company have been mentioned in JFG's Global AI Talent Report 2018. Researchers from the Company presented 250+ papers in premier conferences, have written books and book chapters. As of March 31, 2018, the Company has applied for 3916 patents, including 522 applied during the year. Till date, the Company has been granted 654 patents. # Future plan of action Digital reimagination of industry and society, and industrialistion of software and computing will both continue to be the focus of TCS R&I. Engagement with all its businesses with its Co-Innovation Network, and with society at large will continue. # Expenditure on R&D TCS' Innovation Labs are located in India and other parts of the world. The R&D centers, certified by Department of Scientific & Industrial Research (DSIR), Government of India, function from Pune, Chennai, Bengaluru, Delhi-NCR, Hyderabad, Kolkata and Mumbai. Expenditure incurred in the R&D centers and innovation centers during FY17 and FY18 are given below: |Expenditure on R&D and innovation| | | |Unconsolidated|Consolidated| | | | | |---|---|---|---|---|---|---|---|---|---| | | | |FY18|FY17|FY18|FY17| | | | |a. Capital| | | | | |-|1|-|1| |b. Recurring| | | |295|281|298|281| | | |c. |
Total R&D expenditure (a+b)| | | |295|282|298|282| | | |d. Innovation center expenditure| | | |1,079|878|1,202|996| | | |e. Total R&D and innovation expenditure (c+d)| | | |1,374|1160|1,500|1,278| | | |f. R&D and innovation expenditure as a percentage of total turnover| | | |1.4%|1.2%|1.2%|1.1%| | | # Foreign exchange earnings and outgo Export revenue constituted 92.22% of the total unconsolidated revenue in FY18 (92.41% in FY17). |Foreign exchange earnings and outgo|FY18|FY17| |---|---|---| |a. Foreign exchange earnings|92,258|86,370| |b. CIF Value of imports|768|561| |c. Expenditure in foreign currency|33,014|31,553| # Acknowledgements The Directors thank the Company's employees, customers, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation. The Directors appreciate and value the contribution made by every member of the TCS family. On behalf of the Board of Directors N. Chandrasekaran Mumbai, April 19, 2018 Chairman # Annexure I # Form No. AOC-2 (Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014) Form for disclosure of particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto: # 1. Details of contracts or arrangements or transactions not at arm's length basis: Tata Consultancy Services Limited (the Company) has not entered into any contract/arrangement/transaction with its related parties which is not in ordinary course of business or at arm's length during FY18. The Company has laid down policies and processes/procedures so as to ensure compliance to the subject section in the Companies Act, 2013 (Act) and the corresponding Rules. In addition, the process goes through internal and external checking, followed by quarterly reporting to the Audit Committee. - (a) Name(s) of the related party and nature of relationship: Not Applicable - (b) Nature of contracts/arrangements/transactions: Not Applicable - (c) Duration of the contracts/arrangements/transactions: Not Applicable - (d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable - (e) Justification for entering into such contracts or arrangements or transactions: Not Applicable - (f) Date(s) of approval by the Board: Not Applicable - (g) Amount paid as advances, if any: Not Applicable - (h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188: Not Applicable # 2. Details of material contracts or arrangement or transactions at arm's length basis: - a. Name(s) of the related party and nature of relationship: Not Applicable - b. Nature of contracts/arrangements/transactions: Not Applicable - c. Duration of the contracts/arrangements/transactions: Not Applicable - d. Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable - e. Date(s) of approval by the Board, if any: Not Applicable - f. Amount paid as advances, if any: None Note: All related party transactions are benchmarked for arm's length, approved by Audit Committee and reviewed by Statutory Auditors. The above disclosures on material transactions are based on threshold of 10% of consolidated turnover and considering wholly owned subsidiaries are exempt for the purpose of Section 188(1) of the Act. On behalf of the Board of Directors N. Chandrasekaran Mumbai, April 19, 2018 Chairman Directors' Report I 43 # Annual Report 2017-18 # Annexure II # Annual Report on CSR Activities A brief outline of the Company's Corporate Social Responsibility (CSR) policy, including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programmes: The guiding principle of TCS' CSR programs is "Impact through Empowerment". Empowerment results in enabling people to lead a better life. The Company's focus areas are Education and Skill Development, Health and Wellness and Environmental Sustainability. In addition, the Company has been supporting the restoration of heritage sites as well as participating in relief operations during natural disasters. The Company's participation focuses on operations where it can contribute meaningfully either through employee volunteering or through using core competency which develops solutions. In addition, for key engagements, it also partners with other Tata entities, NGOs, Government and the clients. The communities that the Company chooses are economically backward, and consist of marginalized groups (like women, children and aged) and differently abled. |
In addition, the Affirmative Action programs of the Company in India are directed towards SC/ST communities as defined by the Government of India. The projects undertaken are within the broad framework of Schedule VII of the Companies Act, 2013. Details of the CSR policy and projects or programmes undertaken by the Company are available on links given below: CSR Policy Community Initiatives and Impact 1. The composition of the CSR committee: The Company has a CSR committee of directors comprising Mr. N. Chandrasekaran, Chairman of the Committee, Mr. O. P. Bhatt, Mr. Rajesh Gopinathan and Ms. Aarthi Subramanian. 2. Average net profit of the company for last three financial years for the purpose of computation of CSR: `24,868 crores. 3. Prescribed CSR Expenditure (two per cent of the amount as in item 2 above): `497 crores. 4. Details of CSR spent during the financial year: - Total amount to be spent for the financial year: `497 crores. - Amount unspent: `97 crores. Some of the large programmes in the areas of healthcare, education and promoting employability are multiyear projects. - Manner in which the amount spent during the financial year: Annexed. 5. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report. Please refer to item no. 4(b) above. 6. A responsibility statement of the CSR committee that the implementation and monitoring of CSR policy, is in compliance with CSR objectives and policy of the Company. We hereby declare that implementation and monitoring of the CSR policy are in compliance with CSR objectives and policy of the Company. Rajesh Gopinathan Chief Executive Officer and Managing Director N. Chandrasekaran Chairman, Corporate Social Responsibility Committee Mumbai, April 19, 2018 44 I Directors' Report # 4 (c) Manner in which amount spent during the financial year is detailed below: |Sr. No.|CSR Project or Activity identified|Sector in which project is covered|Projects or programs|Amount Outlay (budget)|Amount spent on the projects or program|Cumulative Expenditure upto the reporting period|Amount Spent : Direct or through implementing agency| |---|---|---|---|---|---|---|---| |1|Training and educating children, women, elderly, differently abled, scholarships, special education and increasing employability, childline software support to track missing children|Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects, measures for reducing inequalities faced by socially and economically backward groups|Pan India|263|86|247|Through implementing agency| |2|Disaster Relief, technical support for Hospitals including Cancer Institutes, promoting hygenic sanitation|Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water|Pan India|400|131|310|Through implementing agency| Directors' Report I 45 # Annual Report 2017-18 |Sr. No.|CSR Project or Activity identified|Sector in which project is covered|Projects or programs|Amount Outlay (budget)|Amount spent on the projects or program|Cumulative Expenditure upto the reporting period|Amount Spent : Direct or through implementing agency| |---|---|---|---|---|---|---|---| |3|Water conservation through desilting, repair and maintenance of lakes, watershed restoration for sustainability and flood protection.|Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga|Pan India|16|1|2|Direct| |4|Contribution to TCS Foundation|Various sectors covered by Schedule VII of the Companies Act, 2013|Pan India|492|172|490|Through implementing agency| |Sub-total|Sub-total|Sub-total|Sub-total|1,171|390|1,049| | |Overheads for various CSR initiatives|Overheads for various CSR initiatives|Overheads for various CSR initiatives|Overheads for various CSR initiatives|Overheads for various CSR initiatives|Overheads for various CSR initiatives|Overheads for various CSR initiatives|10| |Total CSR Spend|Total CSR Spend|Total CSR Spend|Total CSR Spend|Total CSR Spend|Total CSR Spend|Total CSR Spend|400| Note: With respect to the projects identified by the Company as a part of its CSR activities, the Company had an outlay of `1,180 crore against which a cumulative expenditure of `1,056 crore has been incurred upto March 31, 2018. # Directors' Report # Annexure III # Form No. MGT-9 # Extract of Annual Return as on the financial year ended on March 31, 2018 [Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] # I. REGISTRATION AND OTHER DETAILS: - i. CIN: L22210MH1995PLC084781 - ii. Registration Date: January 19, 1995 - iii. Name of the Company: Tata Consultancy Services Limited - iv. |
Category / Sub-Category of the Company: Company Limited by shares / Indian Non-Government Company - v. Address of the Registered office and contact details: - 9th Floor, Nirmal Building, - Nariman Point, - Mumbai 400 021 - Tel: 91 22 6778 9595 - Email: [email protected] - Website: www.tcs.com - vi. Whether listed company: Yes - vii. Name, Address and Contact details of Registrar and Transfer Agent, if any: - TSR DARASHAW Limited - 6-10, Haji Moosa Patrawala Industrial Estate - 20, Dr. E. Moses Road - Mahalaxmi - Mumbai 400 011 - Tel: 91 22 6656 8484 - Fax: 91 22 6656 8494 - Email: [email protected] - Website: www.tsrdarashaw.com # II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY All the business activities contributing 10% or more of the total turnover of the company shall be stated: |Sr. No.|Name and Description of main products / services|NIC Code of the Product / service|% to total turnover of the company| |---|---|---|---| |1.|Computer Programming, Consultancy and Related Activities|620|100| Directors' Report I 47 # Annual Report 2017-18 # III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES |Sr. No.|Name and Address of the Company|CIN / GLN|Holding/ Subsidiary/ Associate|% of shares held|Applicable Section| |---|---|---|---|---|---| |1.|Tata Sons Limited Bombay House, 24, Homi Modi Street, Mumbai 400 001.|U99999MH1917PLC000478|Holding|71.89|2(46)| |2.|APTOnline Limited Kohinoor, e-Park Plot No.1, Jubilee Gardens, Hyderabad 500081, Telangana, India|U75142TG2002PLC039671|Subsidiary|89|2(87)| |3.|C-Edge Technologies Limited Palm Centre, Banyan Park, Suren Road, Andheri East, Mumbai 400 093, Maharashtra, India|U72900MH2006PLC159038|- do -|51|2(87)| |4.|MP Online Limited Nirupam, Shopping Mall, 2nd Floor, Ahmedpur, Hoshangabad Road, Bhopal 462026, Madhya Pradesh, India|U72400MP2006PLC018777|- do -|89|2(87)| |5.|TCS e-Serve International Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400021, Maharashtra, India|U72300MH2007PLC240002|- do -|100|2(87)| |6.|MahaOnline Limited Directorate of Information Technology, Mantralaya Annex, 7th Floor, Mumbai 400032, Maharashtra, India|U72900MH2010PLC206026|- do -|74|2(87)| |7.|TCS Foundation 9th floor, Nirmal Building, Nariman Point, Mumbai 400 021 Maharashtra, India|U74999MH2015NPL262710|- do -|100|2(87)| |8.|Tata Consultancy Services (Africa) (PTY) Ltd. 39 Ferguson Road, Illovo, Johannesburg 2196, South Africa|Not applicable|- do -|100|2(87)| |9.|Tata Consultancy Services (South Africa) (PTY) Ltd. 39 Ferguson Road, Illovo, Johannesburg 2196, South Africa|- do -|- do -|100|2(87)| |10.|Tata Consultancy Services Qatar S. S. C. 935 Al Fardan Office Tower, Al Fardan 61, P.O. Box No. 31316, Doha, State of Qatar|- do -|- do -|100|2(87)| |11.|Tata Consultancy Services Saudi Arabia Akaria, Centre II, 7th Floor, Office No 712, Kingdom of Saudi Arabia|- do -|- do -|76|2(87)| |12.|Tata Consultancy Services Asia Pacific Pte Ltd. 60, Anson Road, # 18-01, Mapletree Anson, Singapore 079914|- do -|- do -|100|2(87)| |13.|Tata Consultancy Services Malaysia Sdn Bhd Suite 21-16, Level 21, G Tower, 199, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia.|- do -|- do -|100|2(87)| |14.|Tata Consultancy Services (China) Co., Ltd. 1st floor, Tower D 3rd Block Zhongguancun Software Park Building No. 9, No. 8 Dongbeiwang West Road, Haidian District, Beijing, Peoples Republic of China|- do -|- do -|93.20|2(87)| |15.|PT Tata Consultancy Services Indonesia Gedung Menara Prima Lt.6 Unit F, Jl. Dr. Ide Anak Agung Gde Agung Blok 6.2, Kawasan Mega Kuningan Kel. Kuningan Timur, Kec. Setiabudi Jakarta Selatan 12950|- do -|- do -|100|2(87)| |16.|Tata Consultancy Services (Thailand) Limited 32/46, Sino-Thai Tower, 18th Floor, Sukhumvit 21 Road (Asoke) Road, Klongtoey-Nua Sub-District, Wattana District, Bangkok|-do-|-do-|100|2(87)| |17.|Tata Consultancy Services (Philippines), Inc. 10th Floor, Panorama Towers, 34th Street Corner, Lane A, Bonifacio Global City, Taguig City, Philippines 1634|- do -|- do -|100|2(87)| # 48 I Directors' Report |Sr. No.|Name and Address of the Company|CIN / GLN|Holding/ Subsidiary/ Associate|% of shares held|Applicable Section| |---|---|---|---|---|---| |18.|Tata Consultancy Services Japan, Ltd. 38 Masonic MT Building, 4-1-4 Shibakoen, Minato Ku, Tokyo, Japan|- do -|- do -|51|2(87)| |19.|Tata Consultancy Services Canada Inc. 400 University Avenue, 25th Floor, Toronto, Ontario M5G 1S5, Canada|- do -|- do -|100|2(87)| |20.|Tata Consultancy Services De Espana S.A. C/ Santa Leonor 65, Edificio F 2 planta 28037, Madrid, Spain|- do -|- do -|100|2(87)| |21.|Tata Consultancy Services Deutschland GmbH Messeturm, D-60308 Frankfurt a.M., Germany|- do -|- do -|100|2(87)| |22.|Tata Consultancy Services Netherlands B.V. Symphony Towers, 20th Floor, Gustav Mahlerplein 85-91, 1082 MS Amsterdam, The Netherlands|- do -|- do -|100|2(87)| |23.|Tata Consultancy Services Sverige AB Mäster Samuelsgatan, 42 SE 111 57, Sweden|- do -|- do -|100|2(87)| |24.|Tata Consultancy Services Belgium (formerly Tata Consultancy Services Belgium S.A.) Lenneke Marelaan 6, 1932 Sint-Stevens-Woluwe, Belgium|- do -|- do -|100|2(87)| |25.|TCS Italia s.r.l. Corso Italia 1, Milano 20122, Italy|- do -|- do -|100|2(87)| |26.|Diligenta Limited Lynch Wood, Peterborough, Cambridgeshire, PE2 6FY, United Kingdom|- do -|- do -|100|2(87)| |27.|Tata Consultancy Services (Portugal) Unipessoal, Limitada Av. José Gomes Ferreira, 15.7 U, 1495-139 Algés Portugal|- do -|- do -|100|2(87)| |28.|Tata Consultancy Services Luxembourg S.A. |
Rue Pafebruch 89D, L - 8308 Capellen, Luxembourg|- do -|- do -|100|2(87)| |29.|Tata Consultancy Services Switzerland Ltd Thurgauerstrasse 36/38, 8050 Zurich, Switzerland|- do -|- do -|100|2(87)| |30.|Tata Consultancy Services Osterreich GmbH Schottengasse 1, 1010 Wien, Austria|- do -|- do -|100|2(87)| |31.|Tata Consultancy Services Danmark ApS C/o CityCallCenter ApS, Hammerensgade 1, 2, 1267 Kobenhavn K, Denmark|- do -|- do -|100|2(87)| |32.|Tata Consultancy Services France SA (formerly Alti S.A.) Tour Franklin-La Defense 8, 100/101 Terrasse Boieldieu-92042 La Defense Cedex, Paris, France|- do -|- do -|100|2(87)| |33.|TCS FNS Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|100|2(87)| |34.|TCS Financial Solutions Australia Holdings Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|100|2(87)| |35.|TCS Financial Solutions Australia Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia|- do -|- do -|100|2(87)| |36.|TCS Financial Solutions Beijing Co., Ltd. Unit 2509, No.23, Qinghe Anningzhuang East Road No.18, Haidian District, Beijing, Peoples Republic of China 100193|- do -|- do -|100|2(87)| |37.|TCS Iberoamerica S.A. Colonia 1329; Montevideo, Uruguay|- do -|- do -|100|2(87)| |38.|TCS Solution Center S.A. Ruta 8, km 17500, Zonamerica, Ed 600, Montevideo, Uruguay|- do -|- do -|100|2(87)| Directors' Report I 49 # Annual Report 2017-18 |Sr. No.|Name and Address of the Company|CIN / GLN|Holding/ Subsidiary/ Associate|% of shares held|Applicable Section| |---|---|---|---|---|---| |39.|Tata Consultancy Services Argentina S.A. Uspallata 3046; Capital Federal, Buenos Aires, Argentina (CP: C1437JCJ)|- do -|- do -|99.99|2(87)| |40.|Tata Consultancy Services De Mexico S.A., De C.V. Av. Insurgentes Sur 664, 2nd Floor, Colonia Del Valle, México, D.F., México (Postal Code: 03100)|- do -|- do -|100|2(87)| |41.|TCS Inversiones Chile Limitada Curico 18, 3rd & 5th Floor, Santiago, Chile|- do -|- do -|100|2(87)| |42.|Tata Consultancy Services Do Brasil Ltda Av. Aruanã, 70. Tamboré - Barueri; São Paulo, Brazil (Postal Code: 06460-010)|- do -|- do -|100|2(87)| |43.|Tata Consultancy Services Chile S.A. Curicó 18, piso 3, Santiago, Chile|- do -|- do -|100|2(87)| |44.|TATASOLUTION CENTER S.A Francisco Salazar E10-61 and Camilo Destruge, Building INLUXOR 7th Floor; Quito, Ecuador|- do -|- do -|100|2(87)| |45.|TCS Uruguay S.A. Colonia 1324, Montevideo, Uruguay (Postal Code: 11100)|- do -|- do -|100|2(87)| |46.|Technology Outsourcing S.A.C. Las Begonisa 475, sexto pisa, San Isidro, Lima 27-Peru|- do -|- do -|100|2(87)| |47.|MGDC S.C. Avenue Tizoc No.97, Colonia Ciudad del Sol, ZapopanJalisco, Mexico (Postal Code 45050)|- do -|- do -|100|2(87)| |48.|Tata America International Corporation 101, Park Avenue, 26th Floor, New York 10178, U.S.A.|- do -|- do -|100|2(87)| |49.|CMC Americas, Inc. 379 Thornall Street, Edison 08837, New Jersey, U.S.A.|- do -|- do -|100|2(87)| |50.|TCS e-Serve America, Inc. Corporation Trust Center, 1209, Orange Street, Wilmington, New Castle County, Delaware - 19801, U.S.A.|- do -|- do -|100|2(87)| |51.|CMC eBiz, Inc. 379 Thornall Street, Edison 08837, New Jersey, U.S.A.|- do -|- do -|100|2(87)| # Directors' Report # IV. SHAREHOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity) # i) Category-wise Shareholding |Sr. No.|Category of Shareholders|No. of Shares held at the beginning of the year 01.04.2017| | | | |No. of Shares held at the end of the year 31.03.2018| |%|No. of Shares held at the beginning of the year 01.04.2017|No. of Shares held at the end of the year 31.03.2018|%|Change during the year| |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |A. Promoters and Promoter Group|(1) Indian|(a) Individuals/Hindu Undivided Family|0|0|0|0|0|0|0| | | | | | |(b) Central Government/State Government(s)|0|0|0|0|0|0|0|0| | | | | | |(c) Bodies Corporate|1,44,45,15,152|0|1,44,45,15,152|73.3|1,37,66,73,818|0|1,37,66,73,818|71.9|(1.4)| | | | | |(d) Financial Institutions/Banks|0|0|0|0|0|0|0|0| | | | | | |(e) Others-Trust|0|0|0|0|0|0|0|0| | | | | |Sub-Total (A) (1)| |1,44,45,15,152|0|1,44,45,15,152|73.3|1,37,66,73,818|0|1,37,66,73,818|71.9|(1.4)| | | | | |(2) Foreign|(a) Individuals (Non-Resident Individuals/Foreign Individuals)| |0|0|0|0|0|0|0|0| | | | |(b) Bodies Corporate|0|0|0|0|0|0|0|0| | | | | | |(c) Institutions|0|0|0|0|0|0|0|0| | | | | | |(d) Qualified Foreign Investor|0|0|0|0|0|0|0|0| | | | | | |(e) Any Other (specify)|0|0|0|0|0|0|0|0| | | | | |Sub-Total (A) (2)| |0|0|0|0|0|0|0|0| | | | | |Total Shareholding of Promoter and Promoter Group (A)| |1,44,45,15,152|0|1,44,45,15,152|73.3|1,37,66,73,818|0|1,37,66,73,818|71.9|(1.4)| | | | |(B) Public Shareholding|(1) Institutions|(a) Mutual Funds/UTI|1,85,22,768|1,773|1,85,24,541|0.9|4,11,97,074|1,725|4,11,98,799|2.2|1.3| | | | |(b) Financial Institutions/Banks|7,31,730|2,703|7,34,433|0|5,42,844|2,555|5,45,399|0|0| | | | | |(c) Central Government/State Government(s)|10,44,253|0|10,44,253|0.1|8,90,812|0|8,90,812|0|(0.1)| | | | | |(d) Venture Capital Funds|0|0|0|0|0|0|0|0| | | | | | |(e) Insurance Companies|8,63,30,709|0|8,63,30,709|4.4|9,01,63,887|0|9,01,63,887|4.7|0.3| | | | | |(f) Foreign Institutional Investors|3,56,48,888|0|3,56,48,888|1.8|29,03,768|0|29,03,768|0.2|(1.6)| | | | | |(g) Foreign Venture Capital Investors|0|0|0|0|0|0|0|0| | | | | File: AR_TCS_2017_2018.md | |(h) Qualified Foreign Investors|0|0|0|0|0|0|0|0| | | | | | |(i) Foreign Portfolio Investors (Corporate)|29,72,84,243|0|29,72,84,243|15.1|32,02,12,127|0|32,02,12,127|16.7|1.6| | | | | |(j) Any Other (specify)| | | | | | | | | | | | | |Sub-Total (B) (1)| |43,95,62,591|4,476|43,95,67,067|22.3|45,59,10,512|4,280|45,59,14,792|23.8|1.5| | | | # Annual Report 2017-18 |Sr. No.|Category of Shareholders|No. |
of Shares held at the beginning of the year 01.04.2017|No. of Shares held at the end of the year 31.03.2018|%|No. of Shares held at the beginning of the year 01.04.2017|No. of Shares held at the end of the year 31.03.2018|%|Change during the year| | | |---|---|---|---|---|---|---|---|---|---|---| |(2)|Non-Institutions| | | | | | | | | | |(a)|Bodies Corporate|46,57,240|2,07,186|48,64,426|0.3|65,43,057|18,072|65,61,129|0.3|0.1| |(b)|Individuals -| | | | | | | | | | |i|Individual shareholders holding nominal share capital upto ` 1 lakh|6,20,98,566|9,12,518|6,30,11,084|3.2|5,54,47,184|8,17,080|5,62,64,264|2.9|(0.3)| |ii|Individual shareholders holding nominal share capital in excess of ` 1 lakh|1,40,91,398| |1,40,91,398|0.7|1,22,05,322| |1,22,05,322|0.7|(0.1)| |(c)|Qualified Foreign Investors|0|0|0|0|0|0|0|0|0| |(d)|Any Other| | | | | | | | | | |i|Trusts|22,95,183|0|22,95,183|0.1|39,56,861|0|39,56,861|0.2|0.1| |ii|Foreign Companies|28|0|28|0|28|0|28|0|0| |iii|Clearing Members/Clearing House|20,83,603|0|20,83,603|0.1|17,77,666|0|17,77,666|0.1|(0)| |iv|Alternative Investment Fund|0|0|0|0|8,25,661|0|8,25,661|0|0| |v|IEPF Suspense A/c|0|0|0|0|1,08,050|0|1,08,050|0.1|0.1| |Sub-total (B) (2)| |8,52,26,018|11,19,704|8,63,45,722|4.4|8,08,63,829|8,35,152|8,16,98,981|4.3|(0.1)| |Total Public Shareholding| |52,47,88,609|11,24,180|52,59,12,789|26.7|53,67,74,341|8,39,432|53,76,13,773|28.1|1.4| |(B) = (B)(1)+(B)(2)| |1,96,93,03,761|11,24,180|1,97,04,27,941|100.0|1,91,34,48,159|8,39,432|1,91,42,87,591|100.0|0| |(C)|Shares held by Custodians and against which Depository Receipts have been issued|0|0|0|0|0|0|0|0|0| |GRAND TOTAL (A)+(B)+(C)| |1,96,93,03,761|11,24,180|1,97,04,27,941|100.0|1,91,34,48,159|8,39,432|1,91,42,87,591|100.0|0| # 52 I Directors' Report # ii) Shareholding of Promoters (including Promoter Group) |Sr. No.|Shareholder's Name|Shareholding at the beginning of the year 01.04.2017|% of total Shares of the company|% of Shares Pledged/ encumbered to total shares|Shareholding at the end of the year 31.03.2018|% of total Shares of the company|% of Shares Pledged/ encumbered to total shares|% change in shareholding during the year| |---|---|---|---|---|---|---|---|---| |1.|Tata Sons Limited (Promoter)|1,44,34,51,698|73.3|2.3|1,37,61,18,911|71.9|2.1|(1.4)| |2.|Tata Industries Limited|3,700|0|0|3,610|0|0|0| |3.|AF-Taab Investment Company Limited|4,84,902|0|0|0|0|0|0| |4.|Tata Investment Corporation Limited|5,50,000|0|0|5,27,110|0|0|0| |5.|Tata Steel Ltd (Formerly Kalimati Investment Company Limited)|24,400|0|0|23,804|0|0| | |6.|The Tata Power Company Limited|452|0|0|383|0|0| | |Total| |1,44,45,15,152|73.3|2.3|1,37,66,73,818|71.9|2.1|(1.4)| # iii) Change in Promoters' (including Promoter Group) Shareholding (please specify, if there is no change) |Sr. No.|Name of the Shareholder|Shareholding at the beginning of the year 01.04.2017|Date|Reason|Increase/Decrease in Shareholding|Cumulative Shareholding during the Year| |---|---|---|---|---|---|---| |1|Tata Sons Limited|144,34,51,698|06-06-2017|Tendered in buyback offer|(3,60,63,787)|144,34,51,698| | | | |16-03-2018|Sale of Shares|(3,12,69,000)|1,37,61,18,911| |2|Tata Industries Limited|3,700|06-06-2017|Tendered in buyback offer|(90)|3,700| | | | | | | |3,610| |3|Af-Taab Investment Company Limited|4,84,902|06-06-2017|Tendered in buyback offer|(74,288)|4,84,902| | | | |23-01-2018|Sale of Shares|(1,28,238)| | | | | |26-01-2018|Sale of Shares|(2,82,376)|0| |4|Tata Investment Corporation Ltd|5,50,000|06-06-2017|Tendered in buyback offer|(22,890)|5,50,000| | | | | | | |5,27,110| |5|Tata Steel Limited|24,400|06-06-2017|Tendered in buyback offer|(596)|24,400| | | | | | | |23,804| |6|The Tata Power Company Limited|452|06-06-2017|Tendered in buyback offer|(69)|452| | | | | | | |383| # Annual Report 2017-18 # iv) Shareholding Pattern of top ten shareholders (other than Directors, Promoters and Holder of GDRs and ADRs): |Sr. No|Top Ten Shareholders*|Shareholding at the beginning of the year 01.04.2017|Cumulative Shareholding at end of the year 31.03.2018| |---|---|---|---| |1|Life Insurance Corporation of India|No of shares: 7,18,41,104 % of total shares of the company: 3.7|No of shares: 7,53,84,947 % of total shares of the company: 3.9| |2|First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund|No of shares: 1,60,35,510 % of total shares of the company: 0.8|No of shares: 1,50,54,489 % of total shares of the company: 0.8| |3|Lazard Emerging Markets Equity Portfolio|No of shares: 1,05,32,329 % of total shares of the company: 0.5|No of shares: 98,19,005 % of total shares of the company: 0.5| |4|Oppenheimer Developing Markets Fund|No of shares: 94,72,685 % of total shares of the company: 0.5|No of shares: 79,96,009 % of total shares of the company: 0.4| |5|HDFC Trustee Company Limited|No of shares: 46,04,547 % of total shares of the company: 0.2|No of shares: 76,45,593 % of total shares of the company: 0.4| |6|Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds|No of shares: 75,00,802 % of total shares of the company: 0.4|No of shares: 75,95,080 % of total shares of the company: 0.4| |7|SBI Mutual Fund|No of shares: 39,44,557 % of total shares of the company: 0.2|No of shares: 70,56,720 % of total shares of the company: 0.4| |8|Government of Singapore|No of shares: 98,57,425 % of total shares of the company: 0.5|No of shares: 64,97,754 % of total shares of the company: 0.3| |9|Abu Dhabi Investment Authority|No of shares: 1,10,33,526 % of total shares of the company: 0.6|No of shares: 62,96,384 % of total shares of the company: 0.3| |10|Vanguard Total International Stock Index Fund|No of shares: 56,85,917 % of total shares of the company: 0.3|No of shares: 61,79,273 % of total shares of the company: 0.3| * The shares of the Company are traded on daily basis and hence the datewise increase/decrease in shareholding is not indicated. Shareholding is consolidated based on permanent account number (PAN) of the shareholder. # v) Shareholding of Directors and Key Managerial Personnel: |Sr. No.|Name of the Shareholder|Date|Reason|Shareholding at the beginning of the year 01.04.2017|Cumulative Shareholding at the end of the year 31.03.2018| |---|---|---|---|---|---| |1|Mr. N. Chandrasekaran|01-Apr-2017| |No. |
of shares: 88,528 % of total shares of the company: 0|No. of shares: 88,528 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 88,528 % of total shares of the company: 0| |2|Mr. Ishaat Hussain*|01-Apr-2017| |No. of shares: 1,740 % of total shares of the company: 0|No. of shares: 1,740 % of total shares of the company: 0| | | |06-Jun-2017|Tendered in buyback offer|No. of shares: (42) % of total shares of the company: 0|No. of shares: 1,698 % of total shares of the company: 0| | | |03-Sept-2017| | |No. of shares: 1,698 % of total shares of the company: 0| |3|Ms. Aarthi Subramanian|01-Apr-2017| |No. of shares: 2,800 % of total shares of the company: 0|No. of shares: 2,800 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 2,800 % of total shares of the company: 0| |4|Mr. Rajesh Gopinathan|01-Apr-2017| |No. of shares: 1,130 % of total shares of the company: 0|No. of shares: 1,130 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 1,130 % of total shares of the company: 0| |5|Mr. N. Ganapathy Subramaniam|01-Apr-2017| |No. of shares: 98,880 % of total shares of the company: 0|No. of shares: 98,880 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 98,880 % of total shares of the company: 0| |1|Mr. Ramakrishnan V.|01-Apr-2017| |No. of shares: 300 % of total shares of the company: 0|No. of shares: 300 % of total shares of the company: 0| | | |25-Aug-2017|Purchase of Shares|No. of shares: 700 % of total shares of the company: 0|No. of shares: 1,000 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 1,000 % of total shares of the company: 0| |2|Mr. Rajendra Moholkar|01-Apr-2017| |No. of shares: 182 % of total shares of the company: 0|No. of shares: 182 % of total shares of the company: 0| | | |31-Mar-2018| | |No. of shares: 182 % of total shares of the company: 0| *Retired as Director of the Company w. e. f. September 3, 2017 in accordance with the retirement age policy for Directors. # V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment | |Secured Loans|Unecured Loans|Deposits|Total Indebtedness| |---|---|---|---|---| |Note 1|Note 2|Note 3| | | |Indebtedness at the beginning of the financial year| | | | | |i) Principal Amount|50|200|3|253| |ii) Interest due but not paid|0|0|0|0| |iii) Interest accrued but not due|0|0|0|0| |Total (i+ii+iii)|50|200|3|253| |Change in Indebtedness during the financial year| | | | | |*€ Addition|0|0|0|0| |*€ Reduction|(6)|(19)|0|(25)| |Net Change|(6)|(19)|0|(25)| |Indebtedness at the end of the financial year| | | | | |i) Principal Amount|44|181|3|228| |ii) Interest due but not paid|0|0|0|0| |iii) Interest accrued but not due|0|0|0|0| |Total (i+ii+iii)|44|181|3|228| Notes: 1. These liabilities represent obligations under finance lease including current portion of obligations of `44 crore as of March 31, 2018. 2. These represent bank overdraft of `181 crores as of March 31, 2018. 3. These are deposits received on account of sub-lease of premises and from vendors for contracts to be executed. # VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL # A. Remuneration to Managing Director, Whole-time Directors and / or Manager: |Sr. No.|Particulars of Remuneration| |Name of MD/WTD/Manager| | | |---|---|---|---|---|---| | | |Mr. Rajesh Gopinathan|Mr. N. Ganapathy|Ms. Aarthi|Total| | |Chief Executive Officer and Managing Director| |Subramaniam|Chief Operating Officer and Executive Director| | |1|Gross salary| | | | | |(a)|Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961|102.3|95.6|35.9|233.8| |(b)|Value of perquisites u/s 17(2) of the Income-tax Act, 1961|60.1|11.5|3.3|74.9| |(c)|Profits in lieu of salary under Section 17(3) of the Income tax Act, 1961|-|-|-|-| |2|Stock Option|-|-|-|-| |3|Sweat Equity|-|-|-|-| |4|Commission|1000.0|700.0|150.0|1850.0| | |as % of profit|0.03|0.02|0.01|0.06| |5|Others, Allowances|86.8|122.7|42.4|251.9| |Total (A)| |1249.2|929.8|231.6|2410.6| | |Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)| | | |3,11,537.3| * Relinquished the office of Executive Director and appointed as an Additional Director in non-executive capacity w.e.f. August 17, 2017. # Annual Report 2017-18 # B. Remuneration to other directors: |Sr. No.|Particulars of Remuneration|Sitting Fees for attending board/ committee meetings|Commission|Others, please specify|Total Amount| |---|---|---|---|---|---| |1|Independent Directors| | | | | | |Mr. Aman Mehta|4.5|300|-|304.5| | |Mr. V. Thyagarajan|5.1|200|-|205.1| | |Prof. Clayton M. Christensen|0.6|150|-|150.6| | |Dr. Ron Sommer|3.9|210|-|213.9| | |Dr. Vijay Kelkar*|0.6|50|-|50.6| | |Mr. O. P. Bhatt|5.7|200|-|205.7| | |Dr. Pradeep Kumar Khosla**|0.6|25|-|25.6| | |Total (1)|21.0|1135|-|1156.0| |2|Other Non-Executive Directors| | | | | | |Mr. N. |
Chandrasekaran#|3.0|-|-|3.0| | |Mr. Ishaat Hussain***|2.4|130|-|132.4| | |Ms. Aarthi Subramanian#|2.4|-|-|2.4| | |Total (2)|7.8|130|-|137.8| | |Total (B)=(1+2)|28.8|1265|-|1293.8| | |Total Managerial Remuneration| |1265| | | | |Ceiling as per the Act (@ 1% of profits calculated under Section 198 of the Companies Act, 2013)| | | |31,153.7| * Retired as Independent Director w.e.f. May 14, 2017, in accordance with the retirement age policy for Directors. ** Appointed as an Additional and Independent Director w.e.f. January 11, 2018. *** Retired as Director w.e.f. September 3, 2017 in accordance with retirement age policy for Directors. # Being in full time employment of other Tata company is not eligible for commission from FY18 onwards, pursuant to a policy in this regard. # C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD |Sr. No.|Particulars of Remuneration|Key Managerial Personnel| | | | | | | | |---|---|---|---|---|---|---|---|---|---| |1|Gross salary| | | | | | | | | | |(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961|Mr. Ramakrishnan V. Chief Financial Officer|66.5|Mr. Suprakash@ Mukhopadhyay|9.5|Mr. Rajendra Moholkar@@ Company Secretary|15.1|Total|91.1| | |(b) Value of perquisites u/s 17(2) of the Income tax Act, 1961|7.2|4.7| |0.4|12.4| | | | | |(c) Profits in lieu of salary under Section 17(3) of the Income tax Act, 1961| | | |-|-|-|-| | |2|Stock Option|-|-|-|-| | | | | |3|Sweat Equity|-|-|-|-| | | | | |4|Commission|-|-|-|-| | | | | | |as % of profit|-|-|-|-| | | | | |5|Others, Allowances|263.3|15.2|103.0| |381.5| | | | | |Total|337.0|29.4|118.5| |485.0| | | | @ Relinquished the office of Company Secretary and Compliance Officer w.e.f. April 24, 2017. @@ Appointed as Company Secretary and Compliance Officer w.e.f. April 24, 2017. # VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: There were no penalties, punishment or compounding of offences during the year ended March 31, 2018. 56 I Directors' Report # Form No. MR-3 # Secretarial Audit Report # for the financial year ended March 31, 2018 [Pursuant to Section 204(1) of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members, Tata Consultancy Services Limited We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Tata Consultancy Services Limited (hereinafter called "the Company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. Based on our verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company, the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to us and the representations made by the Management, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2018, generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records made available to us and maintained by the Company for the financial year ended on 31st March, 2018 according to the applicable provisions of: 1. The Companies Act, 2013 (the Act) and the rules made there under; 2. The Securities Contract (Regulation) Act, 1956 ('SCRA') and the rules made there under; 3. The Depositories Act, 1996 and the Regulations and Bye-laws framed there under; 4. Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; 5. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'): 1. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; 2. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; 3. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments from time to time; 4. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the audit period) 5. |
The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable to the Company during the audit period) 6. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the Company during the audit period) 7. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the audit period) 8. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 Directors' Report I 57 # Annual Report 2017-18 # (vi) Other laws specifically applicable to the Company namely:- - (a) Information Technology Act, 2000 and the rules made thereunder; - (b) Special Economic Zones Act, 2005 and the rules made thereunder; - (c) Software Technology Parks of India rules and regulations - (d) The Indian Copyright Act, 1957 - (e) The Patents Act, 1970 - (f) The Trade Marks Act, 1999 We have also examined compliance with the applicable clauses of the following: - (i) Secretarial Standards issued by The Institute of Company Secretaries of India with respect to board and general meetings. - (ii) The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE Limited read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above. However, the Company has spent an amount of `400 crore against the amount of `497 crore to be spent during the year towards Corporate Social Responsibility. We further report that: The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance for meetings other than those held at shorter notice, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. As per the minutes, the decisions at the Board Meetings were taken unanimously. We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines etc. We further report that during the audit period, the Company had following event which had bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc. The Company has completed buyback of its equity shares in June 2017. For Parikh & Associates Company Secretaries P. N. Parikh Partner Mumbai, April 19, 2018 FCS No: 327 CP No: 1228 This Report is to be read with our letter of even date which is annexed as Annexure A and Forms an integral part of this report. 58 I Directors' Report # Annexure A To, The Members Tata Consultancy Services Limited Our report of even date is to be read along with this letter. 1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion. 3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 4. Wherever required, we have obtained the Management Representation about the Compliance of laws, rules and regulations and happening of events etc. 5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis. 6. |
The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. For Parikh & Associates Company Secretaries P. N. Parikh Partner Mumbai, April 19, 2018 FCS No: 327 CP No: 1228 Directors' Report I 59 # Annual Report 2017-18 # Management Discussion and Analysis # 1.0 Overview of the Industry In FY 2018, the global market for software and services is estimated to have grown to $1.3 Trillion1. Within that, outsourced IT-BPM services grew by 2.6% over the prior year. IT Services is estimated to have grown by 2.4% year on year, driven by digital demand, while Business Process Management (BPM) grew by 4% over the prior year on account of greater implementation of automation. TCS has historically grown much faster than the market, driven by significant market share gains on account of a superior capabilities, greater participation in the digital opportunity and track record in taking on and successfully executing large, transformational programs. In the latest five-year period, while the market for IT-BPM services expanded by a CAGR of 1.3% (IT Services CAGR: 0.6%), TCS had a CAGR of 10.5% in USD terms. # 2.0 Our Business # a. An Overview TCS is an IT services, consulting and business solutions organization offering transformational as well as outsourcing services to global enterprises. We have a global presence, deep domain expertise in multiple industry verticals and a rich portfolio of services - consisting of consulting and service integration, digital transformation services, and cognitive business operations - targeting every C-suite stakeholder. The Company uses all these, and its industry leading suite of products and platforms to deliver high quality, high impact solutions leveraging the latest technologies to customers across the world. Our geographic footprint consists of North America, Latin America, the United Kingdom, Continental Europe, Asia-Pacific, India and Middle-East & Africa. TCS considers industry verticals as its primary business segments. The five key verticals are: Banking, Financial Services & Insurance (BFSI), Retail and Consumer Business, Communication, Media and Technology, Manufacturing and Others. The last category includes Life Sciences and Healthcare, Energy, Resources and Utilities, and others. # b. Strategy TCS has successfully navigated through multiple technology cycles over the last five decades, pivoting and adapting each time to build relevant new capabilities and helping our clients realize the benefits of that new technology. Our responsiveness, agility and adaptability to change have been core to our longevity. Customer-centricity is at the core of TCS' strategy, organization structure and investment decisions. The philosophy has been to expand and deepen customer engagements by continually looking for new areas in the customer's operational value chain where TCS can add value, and to proactively invest in building newer capabilities to participate in those opportunities. This has resulted in a continual expansion of every customer relationship in terms of the services consumed, revenue and share of wallet. The willingness to invest in the relationship, the commitment to deliver outstanding outcomes and the track record of execution excellence has resulted in high satisfaction levels and long, enduring customer relationships. Over time, every customer engagement results in the build-up of deep contextual knowledge of the customer's business which is leveraged to build innovative, transformative solutions. This is aided by TCS' investments in a robust research and innovation program, IP portfolio of accelerators, products and platforms, and partnerships and alliances with leading technology providers. TCS' technology-agnosticism, appetite for investments in new capabilities and IP, full services portfolio, and enduring customer relationships keep TCS relevant through business and technology cycles, and makes the business very resilient. |
1 Source: NASSCOM Strategic Review FY 2018 60 I Management Discussion and Analysis # Strategic Element Outcomes Validation Metrics A more detailed breakup of the various elements of strategy, their outcomes and the validation metrics is provided below: # Customer-centric organization structure and investment strategy - Vertical expertise, monetizable as IP - Deeper contextual knowledge - Entrepreneurial mindset in the business units - Continual acquisition of relevant skills to expand footprint - Expanding scope of engagements - Greater accountability - Higher customer satisfaction - Deep, enduring relationships - More defendable wallet share # Full services capability spanning consulting and service integration, digital transformation services and business and IT operations - Larger transformational deals - More cross sell/up sell opportunities - Expanding scope of engagements - Improved share of wallet - Strong participation in digital opportunity - Continued relevance through cycles - Greater resilience # Investment in Research & Innovation, intellectual property and solution frameworks - Proactive solutioning - Stronger connect with business - Superior mindshare - Better time to market - Non-linear revenues - Pricing premium # Investing to expand our addressable market by: - Acquiring new clients in existing geographies and verticals - Scaling newer geographies/industry verticals - Building new capabilities/launching new business models that leverage core strengths # Outcomes - Superior client metrics - Strong references and testimonials - Growing revenue from Digital engagements - Resilient pricing - Superior margins - Sustainability of margins # Validation Metrics - Deal wins - Client metrics - Digital growth - Historic growth profile - Higher productivity on an incremental basis # 3.0 Business 4.0 TCS unveiled its Business 4.0 thought leadership framework that helps customers leverage the power of digital technologies to further their growth and transformation agendas. In the Business 4.0 era, the most successful enterprises are those that harness the abundance of resources created by the convergence of intelligence, agility, automation and cloud, and leverage digital technologies to become smarter, leverage the ecosystem, embrace risk and deliver a hyper-personalized experience to customers, to create exponential value. Management Discussion and Analysis I 61 # Annual Report 2017-18 # a. Strategic Investments File: AR_TCS_2017_2018.md TCS pioneered the use of the word 'digital' to describe the new family of technologies that emerged in the last few years, and recognizing their potential, made investments ahead of time in building relevant capabilities - in terms of reskilling the workforce, research and innovation, building collaborative workspaces and innovation centers, intellectual property in these new areas and alliances and partnerships. Those early investments have given TCS a head start in participating in our customers' Business 4.0 journeys. # b. Outcomes With digital adoption progressing, project ticket sizes have been steadily increasing. Today, as our more forward looking customers progress in their Business 4.0 evolution, they are looking at revamping their core to enable their transformational objectives. Large transformational programs have deep, complex interlinkages to existing systems, and carry large operational risks. Our contextual knowledge, depth and scale in Digital capabilities positions us uniquely to meet their need for certainty and quick time to market. Consequently, TCS has gained significant share of wallet and is the preferred partner for our customers in their Digital initiatives. Revenues from Digital engagements constituted 21.2% of the Company's revenues in FY 2018, growing by 35.3% in constant currency over the prior year. The growing market share in Digital and glowing client testimonials of TCS' capabilities are also reflected in the high rankings assigned to TCS in the various competitive assessments pertaining to Digital capabilities, published by various industry analyst firms. In FY 2018, TCS was ranked a Leader among peers in 39 competitive assessments pertaining to different elements of the Digital stack. # 4.0 Talent Acquisition, Talent Development and Retention To cope with the demands of a Business 4.0 world, characterized by profound and rapid technology change, TCS' HR strategy is focused on reskilling and transforming its global, diverse workforce while providing a stimulating environment which is flexible, nurtures social contract, fosters innovation, builds a result-oriented, high performance culture. The Company has been leveraging Digital technologies extensively to reimagine its talent acquisition, talent development and engagement functions. The progressive policies, continual investment in upgrading employees' skills and the philosophy of empowering individuals and helping them realize their potential has made TCS' HR processes and outcomes an industry benchmark. |
|Global, Diverse Workforce|Talent Development|Talent Retention| |---|---|---| |* 394,998 employees|* 247K + associates trained in digital|Best in class Attrition| |* 35.3% women|* 861K digital competencies acquired|* 11% in IT Services| |* 131 Nationalities|* 208K trained in Agile|* 11.8% Overall, including BPS| 2 Ref MD&A - AR FY 2011, CEO's Letter - AR FY 2012 62 I Management Discussion and Analysis # Academic Interface Program: Targets Campus Commune: A unique student engagement portal for collaboration and peer networking, featuring webinars, educational videos and expert blogs. Gamified hiring: Programming contests to spot top talent. |706 institutes in India|1.5 mn+ students|TESTimony, EngiNx, GameOn and CodeVita|1100+ hires| |---|---|---|---| |881 workshops; 139,108 students|19 countries| | | |2572 interns| | | | |345 Faculty Development programs; 12,412 teachers| | | | |379 institutes outside India; 703 internships| | | | |264 research scholars| | | | # a. Talent Acquisition TCS' talent acquisition strategy is to hire the right competencies required by the business at the right time, a judicious mix of lateral hires and trainees. TCS continues to remain the preferred employer at leading engineering campuses in India. The Company's college recruitment efforts in USA, Canada, Latin America, China and Hungary have been progressing well with very encouraging outcomes. TCS has also been recruiting graduates from the Top 10 B-Schools in the US for key business roles. A third party report published in 2017 named TCS as an industry-leading job creator in IT Services in the United States, and ranked #1 in US employee growth during that period. # b. Talent Diversity TCS is an Equal Opportunity Employer and subscribes to the Tata Code of Conduct in embracing diversity in race, nationality, religion, ancestry, marital status, gender, age, ethnic origin, physical ability, and sexual orientation. Compensation levels are merit-based, determined by qualification, experience levels, special-skills if any, and performance. Gender and any of the other diversity parameters do not play a part in determining compensation levels. TCS has a well-defined Diversity and Inclusion Policy. TCS' diversity-focused talent acquisition strategy has resulted in greater diversity of gender, geographic locations, and academic discipline. TCS is today one of the world's largest employer of women. Progressive policies such as extended parental leave, special focus on security of women employees, mentoring program for junior women employees (nWin), discussion circles to help women through major life stages, a reorientation program to re-connect employees after long leave, projecting profiles of inspirational women leaders (Be-Inspired), special leadership development programs address the needs and aspirations of women, a learning module to equip mid-level managers to work with diverse teams, a virtual support group called 'Workplace Parents Group' on child psychology and parenting workshops for working parents have all gone towards making the workplace more gender-equal. Our Center of Excellence for Accessibility works on IT solutions for differently-abled individuals, aiding their integration into the workforce. # c. Talent Development Investment in human capital by equipping employees with skills - soft skills, design skills, multi-technology skills and domain skills - has been one of the biggest drivers of value creation at TCS. Over the last five decades, TCS has navigated every technology change by investing in organic talent development, in keeping with its core value of fostering a culture of lifelong learning. The sheer scale and rapidity of technology change in the Business 4.0 world called for a reimagined approach to reskilling, quickly, at scale, and catering to the millennial workforce's preference to pick up knowledge only when needed, only to the extent required, and through experimentation and social consultation. TCS' response to this has been the Digital Learning Platform - an integrated ecosystem. # Annual Report 2017-18 that combines virtual, physical and experiential learning infrastructure with high quality content, available any place, any time and on any device. There are virtual development environments where they can try out their learning, with a social connect so they can consult peers. Additionally, there is a focus on enhancing the learning experience through simulations, gamified learning and adaptive assessments. This globally available learning platform has removed geographic boundaries, giving TCS' reskilling program the benefit of both scale and speed. # Leadership review and assessment profile of all leaders ensures the maintenance of a healthy succession pipeline. # e. |
Talent Engagement Some of the platforms and initiatives we have at TCS to enhance and enrich employee engagement are: - Cara: AI-based HR assistant which answers employee questions on HR policies - Milo: Chatbot to facilitate the mentoring process - Knome, KnowMax, GEMS: Platforms for social collaboration within the organization, learning, sharing and for reward and recognition - Safety First: Initiative focused on employee safety and security. - Fit4life: Builds a fraternity of health and fitness conscious employees and creates a culture of fitness - Purpose4life: Forum for volunteering for community projects in the areas of Education, Health and Environment. - Maitree: helps in improving employee bonding within the organisation and promoting work-life balance, thereby, increasing employee retention. - PULSE: Our annual employee engagement and satisfaction survey is the organization's formal listening forum. # f. Compliance A robust internal check process is deployed to prevent and limit risk of non-compliance. The Compliance Cell within HR continues to track Acts/Laws in all countries of operation in the field of immigration, employment and labor laws. The Company approaches Compliance from both, reactive and proactive standpoints. # Career Management TCS has multiple initiatives to help employees grow in their careers: - 'CareerHub' is a platform enabling capture and fulfillment of career aspirations of employees and providing them a mentoring platform. Employees can choose their own mentor based on a match with their aspirational skill sets. - Inspire: A specialised programme used to groom and provide fast track career progression to high potentials. - Structured coaching programs at senior leadership levels to help them realise their full potential. 64 I Management Discussion and Analysis # 5.0 FY 2018 Financial Performance and Analysis The discussions in this section relate to the consolidated, Rupee-denominated financial results pertaining to the year that ended March 31, 2018. The financial statements of Tata Consultancy Services Limited and its subsidiaries have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS"), prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements 2 (a) to (r). The following table gives an overview of the consolidated financial results of the Company: | |FY 2018|% of|% Growth|FY 2017|% of| |---|---|---|---|---|---| |Revenue from operations|123,104|100.0|4.4|117,966|100.0| |Earnings before interest, tax, depreciation and amortisation (EBITDA) (Before Other Income)|32,516|26.4|0.6|32,311|27.4| |Profit Before Tax (PBT)|34,092|27.7|(1.2)|34,513|29.3| |Profit for the year (PAT)|25,880|21.0|(1.8)|26,357|22.3| |Earnings per share (in `)|134.19| |0.6|133.41| | # a. Analysis of revenue growth Growth attributable to | |FY 2018 (%)|FY 2017 (%)| |---|---|---| |Business growth|6.7|8.3| |Impact of exchange rate|(2.3)|0.3| |Total growth|4.4|8.6| Movements in currency exchange rates through the year resulted in an impact of (2.3%) on the reported revenue. The constant currency revenue growth for the year, which is reported revenue growth stripped of the currency impact, was 6.7%. Average currency rates during FY 2018 compared to those in FY 2017 are given below: |Currency|Weightage (%)|FY 2018|FY 2017|% Change YoY| |---|---|---|---|---| |USD|54.6|64.49|67.13|(3.9)| |GBP|12.4|86.05|87.35|(1.5)| |EUR|9.4|76.16|73.27|3.9| |CAD|3.2|50.36|51.01|(1.3)| |AUD|4.0|49.96|50.41|(0.9)| |JPY|2.5|0.58|0.62|(5.8)| # b. Segmental Performance The revenue break-up by Industry practice and Geography is provided below: # Annual Report 2017-18 Industry practice form the primary business segments for TCS. Segment revenues, year on year growth, a brief commentary and segment margins are provided below. # Industry Vertical |Segment|YoY Revenue Growth|Commentary|Segment Revenue FY 2018 (FY 2017)|Segment Margin % FY 2018 (FY 2017)| |---|---|---|---|---| |Banking, Financial Services and Insurance|1.9%|Back office rationalization using automation and cloud adoption was a trend across the BFSI industry. On the transformation side, key initiatives included automation, API-fication and advanced analytics. Holding back of spend by large banks in North America resulted in growth that was below the company average.|48,418 crore (47,505)|26.9% (27.6%)| |Manufacturing|7.0%|Manufacturing companies were focused on reducing their cost of operations, and use the savings to fund new transformational initiatives using digital technologies. |
There was significant interest in cloud-related services and in the creation of a digital data core, as well as in implementing next generation enterprise solutions.|13,361 crore (12,486)|27.7% (28.6%)| |Retail and Consumer Business|2.9%|The Retail and Consumer business segment underperformed the rest of the Company, mainly on account of reduced technology spending by a few major retailers in the US, even as other retailers continued to invest in their digital programs, particularly in the area of personalizing customer journeys across channels, pre-emptive pricing and merchandizing transformation.|21,055 crore (20,459)|26.5% (28.1%)| |Communication, Media and Technology|8.2%|This business segment experienced the strongest growth within TCS' portfolio in FY 2018, driven by investments in customer experience transformation, analytics, operating model transformation, network transformation, and over the top services. Technology spends covered Digital transformation, adoption of Agile / DevOps, cloud migration, and automation.|21,131 crore (19,521)|27.4% (28.4%)| |Others|6.4%|Growth in this segment continued to be driven by strong performance by the biggest components namely, Life Sciences & Healthcare and Energy, Resources & Utilities, both of which continued to grow in double digits, driven by spending on analytics, cloud adoption, automation, and cyber security.|19,139 crore (17,995)|22.7% (23.7%)| 66 I Management Discussion and Analysis # c. TCS Products and Platforms 63,916 filed I 654 Patents # TCS' Advanced Drug Development Platform: - Data of over 100,000 patients, pertaining to over 170 trials was processed on ADD in FY 2018 - iONTMAssessment: - - Over 100 million candidates assessed - launched the iON Learning Hub, which offers life long learning solutions for a large number of learners 14 customers globally; used by 5 of the Top 10 pharma companies # OptumeraTM: - Advanced digital merchandising suite - Used by 7 of the world's leading retailers # TCS MasterCraft: - Digital platform to optimally automate and manage IT processes - 93 active customers at the end of FY 2018 - Beta version of Jile, a scalable agile software lifecycle delivery platform on the cloud, launched in March 2018 # TCS BaNCS: - 29 new wins and 25 go lives in FY 18 - Launched four new solutions: Quartz Blockchain Solution, BaNCS Application Development Kit, Analytics and TCS BaNCS Cloud. - Hosted OSS/BSS applications and pre-modeled business processes - 30 customers globally # IgnioTM: - World leading cognitive automation software - Used by 55 Fortune 500 customers # TCS HOBS: - Comprehensive, pre-integrated suite of Analytics # TAPTM: - Accounts Payable Platform - Processed over 40 million invoices and Purchase Orders # 6.0 Business Outlook Global growth is projected to strengthen from 3.8 percent in 2017 to 3.9 percent in 2018 and 2019, with mixed trends in advanced markets, and a pickup in emerging and developing economies. Among advanced markets, US and Eurozone are expected to accelerate in 2018, while Japan, UK and Canada are expected to decelerate modestly. Industry analysts have forecasted a modest acceleration in IT services spending globally in 2018. TCS expects customers to continue investing in digital as part of their Business 4.0 journeys. The broad theme of revamping the core is expected to result in bigger digital projects and more large transformational engagements. Solutions encompassing advanced analytics, Internet of Things, APIfication, Blockchain, drones and cybersecurity are expected to gain more traction. The focus on delivering superior customer experiences is expected to result in greater demand for digital marketing, design, human machine interaction and virtual / augmented reality. Additionally, there is expected to be greater adoption of Agile/DevOps. At the same time, cloud adoption, automation and simplification will continue to be key initiatives towards greater back office efficiency. 3 World Economic Outlook, April 2018, International Monetary Fund Management Discussion and Analysis I 67 # Annual Report 2017-18 # 7.0 Risk Management and Compliance Our global operations bring in considerable complexities and in response to that, we have established a robust enterprise risk and compliance management framework and process. This process is enabled by a digital platform that provides an enterprise-wide view of risks and compliance which enables us to take a more holistic approach towards informed decision making. Our efforts in incorporating better practices were recognized at the India Risk Management Awards - 2018 held by ICICI-Lombard and CNBC TV18, where TCS won two awards in two categories: 'Best Risk Management Framework & Systems - IT - ITES' and 'Best Risk Management Framework & Systems - Private Company.' Listed below are our key risks with its anticipated impact on the company and mitigation plans. |
|Key Risks|Impact on the Company|Mitigation| |---|---|---| |Volatile global political and economic scenario|Corporate spending on technology has shown strong correlations with GDP growth. The company derives a material portion of its revenues from customers' discretionary spending which is linked to their business outlook. Political disruptions or volatile economic conditions may adversely affect that outlook resulting in reduced spending which could restrict revenue growth opportunities.|- Broad-based, de-risked business mix, well diversified across geographies and industry verticals - Offerings and value propositions targeting all stakeholders in the customer organization, covering discretionary as well as non-discretionary spends, and relevant at every point in the business cycle - Target market segments which might provide counter-cyclical support | |Growing protectionist trends and restrictions on global mobility|Distributed software development models require the free movement of people across countries and current rhetoric in many key markets poses a threat to the global mobility of skilled professionals. Enactment of legislations which restrict the availability of work visas or apply onerous eligibility criteria or costs could lead to project delays, increased costs and margin pressures.|- TCS is monitoring the global environment closely and working with advisors, partners and governments - We have materially reduced our dependency on work visas through increased local hiring and focusing on local mobility and training across all major geographies of operation - Increased participation in academic partnerships and initiatives to attract local talent - Increased outreach to legislative/regulatory stakeholders, important trade bodies, think tanks and research institutes - Showcasing investments, employment generation and innovation capabilities to the appropriate audiences - Active engagement in Science, Technology, Engineering and Math (STEM) initiatives designed to structurally increase the availability of engineering talent in major markets | 68 I Management Discussion and Analysis # Key Risks |Impact on the Company|Mitigation| |---|---| |Business model changes Rapidly evolving technologies are changing technology consumption patterns, creating large scale reskilling, external hiring, Intellectual Property (IP) development and successful leverage of deep contextual knowledge. This is resulting in increased demands on the Company's agility to keep pace with the changing customer expectations. Failure to cope may result in loss of market share and impact business growth.|* Continued investments in Digital through large scale reskilling, external hiring, Intellectual Property (IP) development and successful leverage of deep contextual knowledge. * Focus on Research and Innovation efforts leveraging in house expertise, alliance partnerships, and strong connections in the academic start-up ecosystem, and launching multiple new services. * Strategic focus on business needs (tailored Experience, ecosystems, exponential models and embracing risk) and technology needs (Intelligence, Agile, Cloud, and Automation). * Strong customer-centricity which results in organization structures (and reorganizations) that are always aligned to customer needs.| |Litigation risks Given the scale and geographic spread of the company's operations, litigation risks can arise from commercial disputes, perceived violation of intellectual property rights and employment related matters. Our rising profile and scale also makes us a target to litigations without any legal merit. This risk is inherent to doing business across the various countries and commensurate with risk faced by other players similarly placed in the industry. In addition to incurring legal costs and distracting management, litigations garner negative media attention and pose reputation risk. Adverse rulings can result in substantive damages.|* Internal processes and controls adequately ensure compliance with contractual obligations and the protection of intellectual property and also that potential disputes are promptly brought to the attention of management and dealt with appropriately. * The company has a team of in-house counsels in all major geographies it operates in. It also has a network of highly reputed global law firms in countries it operates in. * There is a robust mechanism to track and respond to notices as well as defend the Company's position in all claims and litigation.| |Currency volatility Volatility in currency exchange movements results in transaction and translation exposure. TCS' functional currency is the Indian Rupee. Appreciation of the Rupee against any major currency could impact the reported revenue in Rupee terms, the profitability and also result in collection losses.|* TCS follows a currency hedging policy that is aligned with market best practices, to limit impact of exchange volatility on receivables and earnings. * Hedging strategy is monitored by the Risk Management Committee on a regular basis.| |Breach of data privacy and protection / Non-compliance to GDPR Privacy and protection of personal data is an area of increasing concern globally. Legislations like GDPR in Europe carry severe consequences for non-compliance or breach. |
Any violation or security breach, observed non-compliance or inadequacy of privacy policies and procedures can result in substantive liabilities, penalties and reputational impact.|* A global Privacy Policy is in place covering all applicable geographies and areas of operations. * A new organisational unit has been set up to ensure compliance to various Data Privacy Regulations, including GDPR. * Continued focus on employee related agreements with respect to Personally Identifiable Information (PII) and Sensitive Personal Data and Information (SPDI). * Data protection controls are a part of the engagement security management process. * Robust risk response mechanisms are in place to cater to protection of sensitive data in the TCS ecosystem as well protection of such data in Client-managed networks in Offshore/Global Delivery Centers.| Management Discussion and Analysis I 69 # Annual Report 2017-18 |Key Risks|Impact on the Company|Mitigation| |---|---|---| |Cyber Attacks|Risks of cyber attacks are forever a threat on account of the fast evolving nature of the threat. In addition to impact on business operations, a security breach could result in reputational damage, penalties and legal and financial liabilities.|- Investments in automated prevention and detection solutions - Continued reinforcement of stringent security policies & procedures - Collaboration with Computer Emergency Response Team (CERT) and other private Cyber Intelligence agencies, and enhanced awareness of emerging cyber threats - Enterprise-wide training and awareness programs on Information Security - Periodic rigorous testing to validate effectiveness of controls through Vulnerability Assessment and Penetration Testing - Internal and external audits | |Non-compliance to complex and changing global regulations|As a global organization, the company has to comply with laws across multiple jurisdictions, covering areas such as Employment & Immigration, Taxation, Foreign Exchange & Export Controls, Health Safety and Environment (HSE) regulations, Anti-Corruption laws, Data Privacy requirements etc. Failure to comply could result in penalties and reputational damage.|- A comprehensive global compliance management framework has been deployed across the Company - Global regulatory compliance certification is fully digitized and covers compliance across all the locations of the Company - To bring in further refinements in managing compliance, a transformation program to enable tracking of the changes to applicable regulations globally across various jurisdictions and functional areas, in a sustainable manner has been launched | # Management Discussion and Analysis # Key Risks |Risk|Impact on the Company|Mitigation| |---|---|---| |Inadequate protection in case of Intellectual Property (IP) infringement|Risk of infringements of third-party IPs by TCS may lead to potential liabilities, increased litigation and impact reputation.|- Focus group on IP Management and Engineering - TCS IP-SAFE Program: This Program covers IP Safety, IP Protection and IP Enforcement of TCS IP, Customer IP, Partner IP, and all 3rd Party IP - Employee Engagement: Employee confidentiality agreement, training and awareness for IP protection. Stricter controls around movement of people across customer accounts as well as into product organization - IP Protection Process & Checks: Comprehensive IPR framework covering IPR policy and procedures for IP creation, Patent management, Contract management and IP audit process to provide assurance on IP Safe assets and Integrated IP compliance checks for TCS Products | # 8.0 Internal Financial Control Systems and their Adequacy TCS has aligned its current systems of internal financial control with the requirement of Companies Act 2013, on lines of globally accepted risk based framework as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The Internal Control - Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organisation's process of designing and implementing a system of internal control. The framework requires a company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. TCS's internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. TCS has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down. TCS uses a state-of-the-art enterprise resource planning (ERP) system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices. |
Our management assessed the effectiveness of the Company's internal control over financial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of March 31, 2018. B S R & Co. LLP, the statutory auditors of TCS has audited the financial statements included in this annual report and has issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013). File: AR_TCS_2017_2018.md TCS has appointed Ernst & Young LLP to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and the audit committee. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in its operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes, including most of the subsidiaries and foreign branches. TCS also undergoes periodic audit by specialised third party consultants and professional for business specific compliances such as quality management, service management, information security, etc. The audit committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets TCS' statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations periodically. Based on its evaluation (as defined in section 177 of Companies Act 2013 and Clause 18 of SEBI Regulations 2015), our audit committee has concluded that, as of March 31, 2018, our internal financial controls were adequate and operating effectively. Management Discussion and Analysis I 71 # Annual Report 2017-18 # TCS' PERFORMANCE TREND (CONSOLIDATED) |Amounts in ` crore|Ind AS|Indian GAAP|FY 2017-18|FY 2016-17|FY 2015-16|FY 2014-15*|FY 2014-15|FY 2013-14|FY 2012-13|FY 2011-12|FY 2010-11|FY 2009-10|FY 2008-09| |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Revenues|Total revenue|Total revenue|123,104|117,966|108,646|94,648|94,648|81,809|62,989|48,894|37,325|30,029|27,813| | |Revenue by geographic segments|Revenue by geographic segments| | | | | | | | | | | | | |Americas| |66,145|66,091|60,011|51,053|51,053|45,259|35,247|27,570|21,457|17,273|15,600| | |Europe| |34,155|30,038|29,092|26,730|26,730|23,433|16,813|12,382|9,251|8,010|8,212| | |India| |7,921|7,415|6,729|6,108|6,108|5,488|4,890|4,202|3,435|2,598|2,182| | |Others| |14,883|14,422|12,814|10,757|10,757|7,629|6,039|4,740|3,182|2,148|1,819| |Cost|Employee cost|Employee cost|66,396|61,621|55,348|48,296|50,924|40,486|31,922|24,683|18,806|15,066|14,483| | |Other operating cost|Other operating cost|24,192|24,034|22,621|19,242|19,242|16,170|13,027|9,776|7,341|6,268|6,160| | |Total cost (excluding interest & depreciation)|Total cost (excluding interest & depreciation)|90,588|85,655|77,969|67,538|70,166|56,656|44,949|34,459|26,147|21,334|20,643| |Profitability|EBITDA (before other income)|EBITDA (before other income)|32,516|32,311|30,677|27,110|24,482|25,153|18,040|14,435|11,178|8,695|7,170| | |Profit before tax|Profit before tax|34,092|34,513|31,840|28,437|25,809|25,402|18,090|13,923|11,021|8,290|6,150| | |Profit after tax attributable to shareholders of the Company|Profit after tax attributable to shareholders of the Company|25,826|26,289|24,270|21,912|19,852|19,164|13,917|10,413|9,068|7,001|5,256| |Financial Position|Equity share capital|Equity share capital|191|197|197|196|196|196|196|196|196|196|98| | |Reserves and surplus|Reserves and surplus|84,937|86,017|70,875|58,140|50,439|48,999|38,350|29,284|24,209|18,171|15,502| | |Gross block (property, plant and equipment including intangible assets)|Gross block (property, plant and equipment including intangible assets)|23,258|21,391|19,917|17,316|17,316|13,897|11,623|9,448|7,792|6,420|5,844| | |Total investments|Total investments|36,008|41,980|22,822|1,662|1,662|3,434|1,897|1,350|1,763|3,682|1,614| | |Net current assets|Net current assets|63,396|65,804|47,644|36,189|28,495|27,227|19,734|12,673|9,790|7,395|7,544| |Earnings per share in `|EPS - as reported|EPS - as reported|134.19|133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|53.63| | |EPS - adjusted for Bonus Issue|EPS - adjusted for Bonus Issue|134.19|133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|26.81| |Headcount (number)|Headcount (including subsidiaries) as on March 31st|Headcount (including subsidiaries) as on March 31st|394,998|387,223|353,843|319,656|319,656|300,464|276,196|238,583|198,614|160,429|143,761| Note: The Company transitioned into Ind AS from April 1, 2015. *Excluding the impact of one-time employee reward. # Overview of Funds Invested Funds invested exclude earmarked balances with banks and equity shares measured at fair value through other comprehensive income. | |As at March 31, 2018|As at March 31, 2017| |Non-current|Total funds invested| | |---|---|---|---|---|---|---| |Investments in mutual funds, Government securities and others|35,707|41,636|243|203|35,950|41,839| |Deposits with banks|2,384|896|-|-|2,384|896| |Inter-corporate deposits|2,825|2,565|1,972|3|4,797|2,568| |Cash and bank balances|4,555|3,131|-|-|4,555|3,131| |Total|45,471|48,228|2,215|206|47,686|48,434| Total invested funds include ` 848 crores (March 31, 2017: ` 662 crores) for the year ended March 31, 2018 pertaining to trusts and TCS Foundation held for specified purposes. |
# Management Discussion and Analysis # RATIO ANALYSIS |Units|Ind AS|Indian GAAP|FY 2017-18|FY 2016-17|FY 2015-16|FY 2014-15*|FY 2014-15|FY 2013-14|FY 2012-13|FY 2011-12|FY 2010-11|FY 2009-10|FY 2008-09| |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Ratios - Financial Performance|Employee Cost / Total Revenue|%|53.9|52.2|50.9|51.0|53.8|49.5|50.7|50.5|50.4|50.2|52.1| | |Other Operating Cost / Total Revenue|%|19.7|20.4|20.9|20.4|20.3|19.8|20.7|20.0|19.6|20.8|22.1| | |Total Cost / Total Revenue|%|73.6|72.6|71.8|71.4|74.1|69.3|71.4|70.5|70.0|71.0|74.2| | |EBITDA (Before Other Income) / Total Revenue|%|26.4|27.4|28.2|28.6|25.9|30.7|28.6|29.5|30.0|29.0|25.8| | |Profit Before Tax / Total Revenue|%|27.7|29.3|29.3|30.0|27.3|31.1|28.7|28.5|29.5|27.6|22.1| | |Tax / Total Revenue|%|6.7|6.9|6.9|7.2|6.6|7.4|6.4|7.0|4.9|4.0|3.0| | |Effective Tax Rate - Tax / PBT|%|24.1|23.6|23.6|23.5|23.7|23.9|22.2|24.4|16.6|14.4|13.6| | |Profit After Tax / Total Revenue|%|21.0|22.3|22.3|23.2|21.0|23.4|22.1|21.3|24.3|23.3|18.9| |Ratios - Growth|Total Revenue|%|4.4|8.6|14.8|15.7|15.7|29.9|28.8|31.0|24.3|8.0|23.0| | |EBITDA (Before Other Income)|%|0.6|5.3|25.3|7.8|(2.7)|39.4|25.0|29.1|28.6|21.3|25.5| | |Profit After Tax|%|(1.8)|8.3|22.3|14.3|3.6|37.7|33.6|14.8|29.5|33.2|4.6| |Ratios - Balance Sheet|Debt-Equity Ratio|Times|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0| | |Current Ratio|Times|4.6|5.5|4.1|3.9|2.4|2.7|2.7|2.2|2.4|1.9|2.3| | |Days Sales Outstanding (DSO) in ` terms|Days|74|70|81|79|79|81|82|86|80|71|79| | |Days Sales Outstanding (DSO) in $ terms|Days|74|73|80|78|78|82|82|81|82|74|74| | |Invested Funds / Total Assets|%|53.9|54.6|44.2|38.0|43.5|43.0|36.4|34.8|36.8|45.7|26.3| | |Capital Expenditure / Total Revenue|%|1.5|1.7|1.8|3.1|3.1|3.8|4.2|4.1|4.9|3.4|4.0| | |Operating Cash Flows / Total Revenue|%|20.4|21.4|17.6|20.5|20.5|18.0|18.4|14.3|17.7|24.7|19.5| | |Free Cash Flow / Operating Cash Flow Ratio|%|92.8|92.3|89.7|84.8|84.8|78.9|77.3|71.5|72.7|86.1|79.7| | |Depreciation / Average Gross Block|%|9.0|9.6|10.1|11.5|11.5|10.6|10.3|10.7|10.4|10.8|11.1| |Ratios - Per Share|EPS - adjusted for Bonus|`|134.19|133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27|35.67|26.81| | |Price Earning Ratio, end of year|Times|21.2|18.2|20.4|22.8|25.1|21.8|22.1|22.0|25.6|21.9|10.1| | |Dividend Per Share|`|50.00|47.00|43.50|79.00|79.00|32.00|22.00|25.00|14.00|20.00|14.00| | |Dividend Per Share - adjusted for Bonus|`|50.00|47.00|43.50|79.00|79.00|32.00|22.00|25.00|14.00|20.00|7.00| | |Market Capitalisation / Total Revenue|Times|4.4|4.1|4.6|5.3|5.3|5.1|4.9|4.7|6.2|5.1|1.9| Note: The Company transitioned into Ind AS from April 1, 2015. *Excluding the impact of one-time employee reward. Management Discussion and Analysis I 73 # Annual Report 2017-18 # Corporate Governance Report # I. Company's Philosophy on Corporate Governance Effective corporate governance practices constitute the strong foundation on which successful commercial enterprises are built to last. The Company's philosophy on corporate governance oversees business strategies and ensures fiscal accountability, ethical corporate behaviour and fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large. Strong leadership and effective corporate governance practices have been the Company's hallmark inherited from the Tata culture and ethos. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees including the Managing Director and the Executive Directors. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors which includes Code of Conduct for Independent Directors which suitably incorporates the duties of independent directors as laid down in the Companies Act, 2013 ("Act"). The Company's corporate governance philosophy has been further strengthened through the Tata Business Excellence Model and the TCS Code of Conduct for Prevention of Insider Trading and the Code of Corporate Disclosure Practices ("Insider Trading Code"). The Company has in place an Information Security Policy that ensures proper utilisation of IT resources. The Company is in compliance with the requirements stipulated under Regulations 17 to 27 read with Schedule V and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), as applicable, with regard to corporate governance. # II. Board of Directors i. As on March 31, 2018, the Company has ten Directors. Of the ten Directors, eight (i.e. 80%) are Non-Executive Directors out of which six (i.e. 60%) are Independent Directors. The profiles of the Directors can be found on https://www.tcs.com/corporate-governance. The composition of the Board is in conformity with Regulation 17 of the SEBI Listing Regulations read with Section 149 of the Act. ii. None of the Directors on the Board hold directorships in more than ten public companies. Further, none of them is a member of more than ten committees or chairman of more than five committees across all the public companies in which he or she is a Director. Necessary disclosures regarding Committee positions in other public companies as on March 31, 2018 have been made by the Directors. None of the Directors are related to each other except Mr. N. Ganapathy Subramaniam and Mr. N. Chandrasekaran. iii. Independent Directors are non-executive directors as defined under Regulation 16(1)(b) of the SEBI Listing Regulations and Section 149(6) of the Act. The maximum tenure of independent directors is in compliance with the Act. All the Independent Directors have confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and Section 149(6) of the Act. iv. Six Board Meetings were held during the year and the gap between two meetings did not exceed one hundred and twenty days. The said meetings were held on: - April 18, 2017; - June 16, 2017; - July 13, 2017; - October 12, 2017; - January 11, 2018; - March 8 & 9, 2018. The necessary quorum was present for all the meetings. |
# Directors on the Board The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and at the last Annual General Meeting (AGM) and the number of Directorships and Committee Chairmanships/Memberships held by them in other public limited companies as on March 31, 2018 are given herein below. Other directorships do not include directorships of private limited companies, foreign companies and companies under Section 8 of the Act. For the purpose of determination of limit of the Board Committees, chairpersonship and membership of the Audit Committee and Stakeholders' Relationship Committee has been considered as per Regulation 26(1)(b) of SEBI Listing Regulations. |Name of the Director|Category|Number of board meetings attended during the year|Whether attended last AGM held on June 16, 2017|Number of Directorships in other Public Companies|Committee positions held in other Public Companies|Committee positions held in other Public Companies| |---|---|---|---|---|---| |Mr. N. Chandrasekaran (Chairman)|Non-Independent, Non-Executive|6|Yes|6|Chairman|Member| |Mr. Rajesh Gopinathan (Chief Executive Officer and Managing Director)|Non-Independent, Executive|6|Yes|-|-|-| |Mr. N. Ganapathy Subramaniam (Chief Operating Officer and Executive Director)|Non-Independent, Executive|6|Yes|1|-|-| |Mr. Aman Mehta|Independent, Non-Executive|6|Yes|-|5|6| |Mr. V. Thyagarajan|Independent, Non-Executive|6|Yes|-|-|-| |Prof. Clayton M. Christensen|Independent, Non-Executive|2|No|-|-|-| |Dr. Ron Sommer|Independent, Non-Executive|6|Yes|-|-|-| |Dr. Vijay Kelkar*|Independent, Non-Executive|1|N.A.|N.A.|N.A.|N.A.| |Mr. Ishaat Hussain**|Non-Independent, Non-Executive|3|Yes|N.A.|N.A.|N.A.| |Mr. O. P. Bhatt|Independent, Non-Executive|6|Yes|-|3|2| |Ms. Aarthi Subramanian***|Non-Independent, Non-Executive|6|Yes|-|2|-| |Dr. Pradeep Kumar Khosla****|Independent, Non-Executive|1|N.A.|-|-|-| * Retired as Independent Director w.e.f. May 14, 2017, in accordance with the retirement age policy for Directors. ** Retired as Director w.e.f. September 3, 2017, in accordance with the retirement age policy for Directors. *** Relinquished the office of Executive Director and appointed as an Additional Director in non-executive capacity w.e.f. August 17, 2017. **** Appointed as an Additional and Independent Director w.e.f. January 11, 2018. Video/tele-conferencing facilities are also used to facilitate Directors travelling/residing abroad or at other locations to participate in the meetings. # Annual Report 2017-18 vi. During the year 2017-18, information as mentioned in Part A of Schedule II of the SEBI Listing Regulations, has been placed before the Board for its consideration. vii. During the year 2017-18, two meetings of the Independent Directors were held on October 12, 2017 and March 8, 2018. The Independent Directors, inter-alia, have reviewed the performance of Non-Independent Directors, Chairman of the Company and the Board as a whole. viii. The Board periodically reviews the compliance reports of all laws applicable to the Company. ix. Details of equity shares of the Company held by the Directors as on March 31, 2018 are given below: |Name|Category|Number of equity shares| |---|---|---| |Mr. N. Chandrasekaran|Non-Independent, Non-Executive|88,528| |Ms. Aarthi Subramanian|Non-Independent, Non-Executive|2,800| |Mr. Rajesh Gopinathan|Non-Independent, Executive|1,130| |Mr. N. Ganapathy Subramaniam|Non-Independent, Executive|98,880| The Company has not issued any convertible instruments. # III. Committees of the Board i. There are ten Board Committees as on March 31, 2018, which comprise of five statutory committees and five other committees that have been formed considering the needs of the Company and best practices in Corporate Governance, details of which are as follows: |Name of the Committee|Extract of Terms of Reference|Category and Composition|Other details| |---|---|---|---| |Audit Committee|Committee is constituted in line with the provisions of Regulation 18 of SEBI Listing Regulations and Section 177 of the Act.|Mr. Aman Mehta (Chairman) - Independent, Non-Executive Mr. V. Thyagarajan - Independent, Non-Executive Dr. Ron Sommer - Independent, Non-Executive Dr. Vijay Kelkar* - Independent, Non-Executive Mr. Ishaat Hussain** - Non-Independent, Non-Executive Ms. Aarthi Subramanian*** - Non-Independent, Non-Executive Mr. O. P. Bhatt - Independent, Non-Executive|* Four meetings of the Audit Committee were held during the year and the gap between two meetings did not exceed one hundred and twenty days. * Committee invites such of the executives particularly the head of the finance function, representatives of the statutory auditors and internal auditors, as it considers appropriate, to be present at its meetings. * The Company Secretary acts as the Secretary to the Audit Committee. * Mr. Rajendra Moholkar was appointed as Compliance Officer by the Board to take over from Mr. Suprakash Mukhopadhyay w. e. f. May 14, 2017 to ensure compliance and effective implementation of the Insider Trading Code. * The previous AGM of the Company was held on June 16, 2017 and was attended by Mr. Aman Mehta, Chairman of the Audit Committee.| # Extract of Terms of Reference # Nomination and Remuneration Committee Committee is constituted in line with the provisions of Regulation 19 of SEBI Listing Regulations and Section 178 of the Act. |Name|Category| |---|---| |Mr. Aman Mehta|Independent, Non-Executive (Chairman)| |Mr. N. Chandrasekaran|Non-Independent, Non-Executive| |Mr. V. Thyagarajan|Independent, Non-Executive| |Mr. |
Ishaat Hussain*|Non-Independent, Non-Executive| * Retired as Director and consequently ceased to be a member of this Committee w. e. f. September 3, 2017. * Recommend to the Board its composition and the set up and composition of the committees. * Recommend to the Board the appointment/re-appointment of Directors and Key Managerial Personnel. * Carry out evaluation of every director's performance and support the Board and Independent Directors in evaluation of the performance of the Board, its committees and individual directors. * Recommend to the Board the Remuneration Policy for directors, executive team, Key Managerial Personnel, as well as the rest of employees. * Oversee the Human Resource philosophy, Human Resource and People strategy and Human Resource practices including those for leadership development, rewards and recognition, talent management and succession planning. * Oversee familiarisation programmes for directors. # Stakeholders' Relationship Committee Committee is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations and Section 178 of the Act. |Name|Category| |---|---| |Mr. V. Thyagarajan|Independent, Non-Executive (Chairman)| |Mr. O. P. Bhatt|Independent, Non-Executive| |Mr. Rajesh Gopinathan|Non-Independent, Executive| |Mr. N. Ganapathy Subramaniam|Non-Independent, Executive| * Consider and resolve the grievances of security holders. * Consider and approve issue of share certificates, transfer and transmission of securities, etc. # Corporate Social Responsibility ("CSR") Committee Committee is constituted in line with the provisions of Section 135 of the Act. |Name|Category| |---|---| |Mr. N. Chandrasekaran|Non-Independent, Non-Executive (Chairman)| |Mr. O. P. Bhatt|Independent, Non-Executive| |Ms. Aarthi Subramanian|Non-Independent, Non-Executive| |Mr. Rajesh Gopinathan|Non-Independent, Executive| * Formulate and recommend to the Board, a CSR Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Act. * Recommend the amount of expenditure to be incurred on the activities mentioned in the CSR Policy. * Monitor the CSR Policy. # Other details * Three Nomination and Remuneration Committee meetings were held during the year. * The Company does not have any Employee Stock Option Scheme. * Details of Performance Evaluation Criteria and Remuneration Policy are provided in this report. * One meeting of the Stakeholders' Relationship Committee was held during the year. * The Company has always valued its customer relationship. This philosophy has been extended to investor relationship and an Investor Relations Department (IRD) was set up in June 2004, prior to the Company's Initial Public Offer of shares. The IRD focuses on servicing the needs of various stakeholders viz., investors, analysts, brokers and the general public. * Details of investor complaints and the Compliance Officer are provided in this report. * One meeting of the CSR Committee was held during the year. * Four board meetings of TCS Foundation, a Section 8 company which was incorporated with sole objective of carrying on CSR activities of the Company, were held during the year. # Annual Report 2017-18 # Risk Management Committee |Name of the Committee|Extract of Terms of Reference|Category and Composition|Other details| |---|---|---|---| |Risk Management Committee|Committee is constituted in line with the provisions of Regulation 21 of SEBI Listing Regulations. Frame, implement and monitor the risk management plan for the Company.|- Mr. Ishaat Hussain* - Non-Independent, Non-Executive - Mr. N. Chandrasekaran** - Non-Independent, Non-Executive - Mr. O. P. Bhatt - Independent, Non-Executive - Ms. Aarthi Subramanian - Non-Independent, Non-Executive - Mr. Rajesh Gopinathan - Non-Independent, Executive - Mr. Ramakrishnan V.*** - Chief Financial Officer |- Four meetings of the Risk Management Committee were held during the year. - * Retired as Director and consequently ceased to be a member of this Committee w.e.f. September 3, 2017 - ** Ceased to be member of this Committee w.e.f. July 13, 2017 - *** Appointed as a member of this Committee w.e.f. July 13, 2017 | # Other Committees # Ethics and Compliance Committee |Name|Category|Other details| |---|---|---| |Mr. V. Thyagarajan (Chairman)|Independent, Non-Executive|- One meeting of the Ethics and Compliance Committee was held during the year. - Monthly reports are sent to the members of the Ethics and Compliance Committee on matters relating to the CoC. | |Mr. O. P. Bhatt|Independent, Non-Executive| | |Ms. Aarthi Subramanian|Non-Independent, Non-Executive| | |Mr. Rajesh Gopinathan|Non-Independent, Executive| | # Health, Safety and Sustainability Committee |Name|Category|Other details| |---|---|---| |Dr. Vijay Kelkar* (Chairman)|Independent, Non-Executive|- One meeting of the Health, Safety and Sustainability Committee was held during the year. | |Dr. Ron Sommer|Independent, Non-Executive| | |Mr. N. Ganapathy Subramaniam|Non-Independent, Executive| | # Executive Committee |Name|Category|Other details| |---|---|---| |Mr. N. |
Chandrasekaran (Chairman)|Non-Independent, Non-Executive|- The said matters were discussed in various board meetings held during the year in the presence of the Executive Committee Members with the intent to avail expertise of all Board members. | |Dr. Ron Sommer|Independent, Non-Executive| | |Prof. Clayton M. Christensen|Independent, Non-Executive| | |Mr. Rajesh Gopinathan|Non-Independent, Executive| | # Extract of Terms of Reference |Name of the Committee|Category and Composition|Other details| |---|---|---| |Software Technology Parks of India (STPI) / Special Economic Zone (SEZ) Committee|Mr. V. Thyagarajan Independent, Non-Executive Mr. N. Ganapathy Subramaniam Non-Independent, Executive|The matters relating to the business of the committee were passed by circulation.| |Bank Account Committee|Mr. Aman Mehta Independent, Non-Executive Mr. Rajesh Gopinathan Non-Independent, Executive|The matters relating to the business of the committee were passed by circulation.| The terms of reference of these committees are available on the website https://www.tcs.com/corporate-governance # Stakeholders' Relationship Committee - other details a. Name, designation and address of Compliance Officer: Mr. Rajendra Moholkar Company Secretary Tata Consultancy Services Limited 9th Floor, Nirmal Building Nariman Point, Mumbai 400 021 Telephone: 91 22 6778 9595 b. Details of investor complaints received and redressed during the year 2017-18 are as follows: |Opening Balance|Received during the year|Resolved during the year|Closing Balance| |---|---|---|---| |1|145|146|0| # Nomination and Remuneration Committee - other details Performance Evaluation Criteria for Independent Directors: The performance evaluation criteria for independent directors is determined by the Nomination and Remuneration Committee. An indicative list of factors on which evaluation was carried out includes participation and contribution by a director, commitment, effective deployment of knowledge and expertise, integrity and maintenance of confidentiality and independence of behaviour and judgement. Remuneration Policy: Remuneration policy of the Company is designed to create a high-performance culture. It enables the Company to attract, retain and motivate employees to achieve results. Our Business Model promotes customer centricity and requires employee mobility to address project needs. The remuneration policy supports such mobility through pay models that are compliant to local regulations. In each country where the Company operates, the remuneration structure is tailored to the regulations, practices and benchmarks prevalent in the IT industry. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and commission (variable component) to its Managing Director and the Executive Directors. Annual increments are decided by the Nomination and Remuneration Committee within the salary scale approved by the members and are effective April 1, each year. The Nomination and Remuneration Committee decides on the commission payable to the Managing Director and the Executive Directors out of the profits for the financial year and within the ceilings prescribed under the Act based on the performance of the Company as well as that of the Managing Director and each Executive Director. During the year 2017-18, the Company paid sitting fees of ` 30,000 per meeting to its Non-Executive Directors for attending meetings of the Board and meetings of committees of the Board. The Members have at the AGM of the Company held on June 27, 2014, approved payment of commission to the Non-Executive Directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Act. The said commission is decided each year by the Board of Directors and distributed amongst the # Annual Report 2017-18 Non-Executive Directors based on their attendance and contribution at the Board and Committee meetings, as well as the time spent on operational matters other than at meetings. The Company also reimburses the out-of-pocket expenses incurred by the Directors for attending the meetings. # iv. Details of the Remuneration for the year ended March 31, 2018: # a. Non-Executive Directors: |Name|Commission|Sitting Fees| |---|---|---| |Mr. N. Chandrasekaran|-|3.00| |Mr. Aman Mehta|300.00|4.50| |Mr. V. Thyagarajan|200.00|5.10| |Prof. Clayton M. Christensen|150.00|0.60| |Dr. Ron Sommer|210.00|3.90| |Dr. Vijay Kelkar*|50.00|0.60| |Mr. Ishaat Hussain**|130.00|2.40| |Mr. O. P. Bhatt|200.00|5.70| |Ms. Aarthi Subramanian***|-|2.40| |Dr. Pradeep Kumar Khosla****|25.00|0.60| * Retired as Independent Director w.e.f. May 14, 2017, in accordance with the retirement age policy for Directors. ** Retired as Director w.e.f. September 3, 2017, in accordance with the retirement age policy for Directors. *** Relinquished the office of Executive Director and appointed as an Additional Director in non-executive capacity w.e.f. August 17, 2017. **** Appointed as an Additional and Independent Director w.e.f. January 11, 2018. # b. Managing Director and Executive Director |Name of Director|Salary|Benefits, Perquisites and Allowances|Commission|ESPS| |---|---|---|---|---| |Mr. Rajesh Gopinathan|102.30|146.90|1000.00|Nil| |Mr. N. Ganapathy Subramaniam|95.58|134.19|700.00|Nil| |Ms. |
Aarthi Subramanian|35.92|45.75|150.00|Nil| The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available. Services of the Managing Director and Executive Director may be terminated by either party, giving the other party six months' notice or the Company paying six months' salary in lieu thereof. There is no separate provision for payment of severance fees. 80 I Corporate Governance Report # v. Number of meetings held and attendance records |Name of the Committee|Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|Corporate Social Responsibility Committee|Risk Management Committee|Ethics and Compliance Committee|Health, Safety and Sustainability Committee| |---|---|---|---|---|---|---|---| |No. of meetings and dates on which meetings were held|4 meetings held on April 18, 2017; July 13, 2017; October 11, 2017 and January 11, 2018|3 meetings held on April 18, 2017; October 11, 2017 and January 11, 2018|1 meeting held on October 11, 2017|1 meeting held on March 20, 2018|4 meetings held on June 16, 2017; August 09, 2017; October 11, 2017 and December 20, 2017|1 meeting held on October 11, 2017|1 meeting held on January 11, 2018| |Name of Member|No. of Meetings Attended| |Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|Corporate Social Responsibility Committee|Risk Management Committee|Ethics and Compliance Committee|Health, Safety and Sustainability Committee| |---|---|---|---|---|---|---|---|---|---| |Mr. N. Chandrasekaran*|-|3|-|1|-|-|-| | | |Mr. Rajesh Gopinathan|-|1|1|4|1|-| | | | |Mr. N. Ganapathy Subramaniam|-|1|-|-|-|1| | | | |Mr. Aman Mehta|4|3|-|-|-|-| | | | |Mr. V. Thyagarajan|4|3|1|-|-|1| | | | |Prof. Clayton M. Christensen$|-|-|-|-|-|-| | | | |Dr. Ron Sommer|4|-|-|-|-|1| | | | |Dr. Vijay Kelkar**|1|-|-|-|-|-| | | | |Mr. Ishaat Hussain***|2|1|-|-|2|-| | | | |Mr. O. P. Bhatt|4|-|1|1|4|1| | | | |Ms. Aarthi Subramanian****|1|-|-|1|4|1| | | | |Dr. Pradeep Kumar Khosla$|-|-|-|-|-|-| | | | |Mr. Ramakrishnan V.#|-|-|-|-|3|-| | | | Whether quorum was present for all the meetings: The necessary quorum was present for all the above committee meetings. * Ceased to be a member of the Risk Management Committee w.e.f. July 13, 2017. ** Retired as Independent Director and consequently ceased to be a member of the Audit Committee and Health, Safety and Sustainability Committee w.e.f. May 14, 2017. *** Retired as a Director and consequently ceased to be a member of the Audit Committee, Nomination and Remuneration Committee and Risk Management Committee w.e.f. September 3, 2017. **** Appointed as a member of the Audit Committee w.e.f. October 12, 2017. # Appointed as a member of the Risk Management Committee w.e.f. July 13, 2017. $ Do not hold membership of any of the above committees. @ Four board meetings of TCS Foundation, a Section 8 company which was incorporated with sole objective of carrying on Corporate Social Responsibility activities of the Company were held during the year. # Annual Report 2017-18 # IV. General Body Meetings # i. General Meeting # a. Annual General Meeting ("AGM"): |Financial Year|Date|Time|Venue| |---|---|---|---| |2014-15|June 30, 2015| |Birla Matushri Sabhagar| |2015-16|June 17, 2016|3.30 p.m.|19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020| |2016-17|June 16, 2017| | | # b. Extraordinary General Meeting: No extraordinary general meeting of the members was held during the financial year 2017-18. # c. Special Resolution(s): No special resolution was passed by the Company in any of its previous three AGMs. File: AR_TCS_2017_2018.md # ii. Details of special resolution passed through postal ballot: The Company had sought the approval of the shareholders by way of a Special Resolution through notice of postal ballot dated March 3, 2017 for Buyback of its Equity Shares, which was duly passed and the results of which were announced on April 17, 2017. Mr. P. N. Parikh (Membership No. FCS 327) of Parikh and Associates, Practicing Company Secretaries, was appointed as the Scrutinizer to scrutinize the postal ballot and remote e-voting process in a fair and transparent manner. # iii. Details of special resolution proposed to be conducted through postal ballot: None of the businesses proposed to be transacted at the ensuing AGM requires passing of a special resolution through postal ballot. # V. Other Disclosures |Particulars|Legal requirement|Details|Website link for details/policy| |---|---|---|---| |Related party transactions|Regulation 23 of SEBI Listing Regulations|There are no material related party transactions during the year that have conflict with the interest of the Company. Transactions entered into with related parties during the financial year were in the ordinary course of business and at arm's length basis and were approved by the Audit Committee. |
The Board's approved policy for related party transactions is uploaded on the website of the Company.|Link| |Details of Non - Compliance by the Company, penalty, strictures imposed on the Company by the stock exchange, or Securities and Exchange Board of India ('SEBI') or any statutory authority on any matter related to capital markets|Schedule V(C) 10(b) to the SEBI Listing Regulations|There were no cases of non-compliance during the last three financial years 2015-16, 2016-17 and 2017-18.| | |Whistle Blower Policy and Vigil Mechanism|Regulation 22 of SEBI Listing Regulations|The Company has adopted a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees to report concerns about unethical behavior. No person has been denied access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.|Link| # Particulars # Discretionary requirements # Subsidiary Companies # Policy on determination of materiality for disclosures # Policy on archival and preservation of documents # Reconciliation of Share Capital Audit Report # Code of Conduct # Legal requirement |Details|Website link for details/policy| |---|---| |Schedule II Part E to SEBI Listing Regulations|* A message from the Chief Executive Officer and Managing Director on the half-yearly financial performance of the Company, including a summary of the significant events in the six month period ended September 30, 2017, was sent to every member in November 2017. * The auditors' report on financial statements of the Company are unqualified. * The Company has complied with the requirement of having separate persons to the post of Chairman and Managing Director / Chief Executive Officer. * Ernst & Young LLP, the internal auditors of the Company, make quarterly presentations to the Audit Committee on their reports.| |Regulation 24 of SEBI Listing Regulations|The Audit Committee reviews the quarterly financial statements of the Company and the investments made by its unlisted subsidiary companies. The minutes of the Board meetings along with a report on significant developments of the unlisted subsidiary companies are periodically placed before the Board of Directors of the Company. The Company does not have any material unlisted Indian subsidiary company. The Company has a policy for determining material subsidiaries which is disclosed on its website.| |Regulation 23 of SEBI Listing Regulations|The Company has adopted a policy on determination of materiality for disclosures.| |Regulation 9 of SEBI Listing Regulations|The Company has adopted a policy on archival and preservation of documents.| |Regulation 55A of the SEBI (Depositories and Participants) Regulations, 1996 and SEBI Circular No D&CC / FITTC/ Cir- 16/ 2002 dated December 31, 2002|A qualified Practicing Company Secretary carried out a share capital audit to reconcile the total admitted equity share capital with the National Securities Depository Limited ("NSDL") and the Central Depository Services(India) Limited ("CDSL") and the total issued and listed equity share capital. The audit report confirms that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.| |Regulation 17 of SEBI Listing Regulations|The members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct applicable to them during the year ended March 31, 2018. The Annual Report of the Company contains a certificate by the Chief Executive Officer and Managing Director, on the compliance declarations received from Independent Directors, Non-Executive Directors and Senior Management.| # Annual Report 2017-18 |Particulars|Legal requirement|Details|Website link for details/policy| |---|---|---|---| |Dividend Distribution Policy|Regulation 43A of SEBI Listing Regulations|A regular annual dividend consists of three interim dividends after each of the first three quarters of the fiscal year, topped up with a final dividend after the fourth quarter. In addition, every second or third year, the accumulated surplus cash has been returned to shareholders through a special dividend.|Link| |Terms of Appointment of Independent Directors|Regulation 46 of SEBI Listing Regulations and Section 149 read with Schedule IV of the Act|Terms and conditions of appointment of Independent Directors are available on the Company's website.|Link| |Familiarisation Programme for Independent Directors|Regulations 25(7) and 46 of SEBI Listing Regulations|Details of familiarisation programme imparted to Independent Directors are available on the Company's website.|Link| # VI. Means of Communication The quarterly, half-yearly and annual financial results of the Company are published in leading newspapers in India which include The Indian Express, Financial Express, LokSatta, Business Standard, The Hindu Business Line, Hindustan Times and Sandesh. The results are also displayed on the Company's website www.tcs.com. Statutory notices are published in The Free Press Journal and Navshakti. |
The Company also issues press releases from time to time. Financial Results, Statutory Notices, Press Releases and Presentations made to the institutional investors/analysts after the declaration of the quarterly, half-yearly and annual results are submitted to the National Stock Exchange of India Limited and BSE Limited as well as uploaded on the Company's website. Frequently Asked Questions (FAQs) about the Company of investors' interest are also uploaded on the Company's website under 'Investor FAQs' section. A Management Discussion and Analysis Report is a part of this Annual Report. # VII. General shareholder information # i. Annual General Meeting for FY 2017-18 Date: June 15, 2018 Time: 3.30 p.m. Venue: Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020 As required under Regulation 36(3) of the SEBI Listing Regulations, particulars of Directors seeking appointment/re-appointment at this AGM are given in the Annexure to the Notice of this AGM. # ii. Financial Calendar |Year ending|AGM in|Dividend Payment| |---|---|---| |March 31|June|The final dividend, if declared, shall be paid/credited on June 19, 2018| # iii. Date of Book Closure / Record Date As mentioned in the Notice of this AGM # iv. Listing on Stock Exchanges National Stock Exchange of India Limited ("NSE") Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 BSE Limited ("BSE") 25th Floor, P. J. Towers, Dalal Street, Mumbai 400 001 84 I Corporate Governance Report # v. Stock Codes/Symbol NSE: TCS BSE: 532540 Listing Fees as applicable have been paid. # vi. Corporate Identity Number (CIN) of the Company L22210MH1995PLC084781 # vii. Market Price Data: High, Low (based on daily closing prices) and number of equity shares traded during each month in the year 2017-18 on NSE and BSE: |Month|NSE|NSE|NSE|BSE|BSE|BSE| |---|---|---| | |High (`)|Low (`)|Total number of equity shares traded|High (`)|Low (`)|Total number of equity shares traded| |Apr-2017|2,429.05|2,273.15|2,17,30,202|2,427.10|2,272.10|12,78,563| |May-2017|2,624.60|2,289.90|2,57,72,410|2,619.95|2,291.95|32,92,804| |Jun-2017|2,696.00|2,333.25|2,55,95,858|2,695.40|2,334.65|23,26,625| |Jul-2017|2,571.50|2,331.95|2,29,10,526|2,570.65|2,332.20|18,38,875| |Aug-2017|2,528.80|2,469.40|1,63,09,506|2,522.75|2,467.35|12,44,780| |Sep-2017|2,524.90|2,435.95|1,67,90,172|2,525.85|2,437.00|11,61,151| |Oct-2017|2,624.00|2,429.60|1,78,16,600|2,616.30|2,430.15|13,54,562| |Nov-2017|2,758.95|2,602.85|1,98,14,100|2,758.90|2,602.50|7,94,965| |Dec-2017|2,701.20|2,545.60|2,01,50,360|2,700.40|2,547.85|8,12,149| |Jan-2018|3,198.85|2,631.20|2,90,45,585|3,195.10|2,633.75|21,71,549| |Feb-2018|3,153.65|2,911.80|2,31,36,808|3,149.15|2,910.45|49,53,941| |Mar-2018|3,105.85|2,817.00|7,26,62,948|3,140.30|2,813.05|38,08,377| # viii. Performance of the share price of the Company in comparison to the BSE Sensex: TCS Share price and BSE Sensex Movement 140.00130.00120.00110.00100.0090.0080.00 Apr17 May17 Jun17 Jul 17 Aug17 Sep 17 Oct 17 Nov17 Dec 17 Jan18 Feb 18 Mar 18 TCS Share Price BSE Sensex Base 100 = Monday, April 3, 2017 Corporate Governance Report I 85 # Annual Report 2017-18 # ix. Registrars and Transfer Agents Name and Address : TSR DARASHAW Limited ("TSRDL") 6-10, Haji Moosa Patrawala Industrial Estate 20, Dr. E. Moses Road, Mahalaxmi Mumbai 400 011 Telephone : 91 22 6656 8484 Fax : 91 22 6656 8494 E-mail : [email protected] Website : www.tsrdarashaw.com # x. Places for acceptance of documents Documents will be accepted at the above address between 10.00 a.m. to 3.30 p.m. (Monday to Friday except bank holidays). For the convenience of the shareholders, documents will also be accepted at the following branches/agencies of TSRDL: # a. Branches of TSRDL: - TSR DARASHAW Limited 503, Barton Centre, 5th Floor 84, Mahatma Gandhi Road Bangalore 560 001 Telephone: 91 80 2532 0321 Fax: 91 80 2558 0019 E-mail: [email protected] - TSR DARASHAW Limited 'E' Road, Northern Town Bistupur Jamshedpur 831 001 Telephone: 91 657 2426616 Fax: 91 657 2426937 E-mail: [email protected] - TSR DARASHAW Limited Tata Centre, 1st Floor 43, J. L. Nehru Road Kolkata 700 071 Telephone: 91 33 2288 3087 Fax: 91 33 2288 3062 E-mail: [email protected] - TSR DARASHAW Limited 2/42, Ansari Road, 1st Floor Daryaganj, Sant Vihar New Delhi 110 002 Telephone: 91 11 2327 1805 Fax: 91 11 2327 1802 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] 86 I Corporate Governance Report # xi. Share Transfer System: Transfer of equity shares in electronic form are done through the depositories with no involvement of the Company. Transfer of equity shares in physical form are processed by TSRDL within 10 to 12 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) are authorised by the Board severally to approve transfers, which are noted at subsequent Board Meetings. # xii. Shareholding as on March 31, 2018: # a. |
Distribution of equity shareholding as on March 31, 2018: |Number of shares|Holding|Percentage to capital (%)|Number of accounts|Percentage to total accounts (%)| |---|---|---|---|---| |1 - 100|1,64,75,896|0.86|4,78,452|83.77| |101 - 500|1,63,02,104|0.85|75,919|13.29| |501 - 1000|64,82,946|0.34|9,136|1.60| |1001 - 5000|1,10,78,155|0.58|5,583|0.98| |5001 - 10000|39,87,394|0.21|567|0.10| |10001 - 20000|47,91,508|0.25|334|0.06| |20001 - 30000|40,81,382|0.21|166|0.03| |30001 - 40000|37,00,434|0.19|107|0.02| |40001- 50000|38,43,634|0.20|86|0.02| |50001 -100000|1,65,76,643|0.87|232|0.04| |100001 - above|1,82,69,67,495|95.44|569|0.09| |GRAND TOTAL|1,91,42,87,591|100.00|5,71,151|100.00| # b. Categories of equity shareholding as on March 31, 2018: |Category|Number of equity shares held|Percentage of holding (%)| |---|---|---| |Promoters|1,37,61,18,911|71.89| |Other Entities of the Promoter Group|5,54,907|0.03| |Mutual Fund and UTI|4,11,98,799|2.15| |Banks, Financial Institutions, State and Central Government|14,36,211|0.08| |Insurance Companies|9,01,63,887|4.71| |Foreign Institutional Investors and Foreign Portfolio Investor - Corporate|32,31,15,895|16.88| |NRIs/OCBs/Foreign Nationals|21,80,034|0.11| |Corporate Bodies/Trust|1,22,95,656|0.64| |Indian Public and Others|6,62,89,580|3.46| |Alternate Investment Fund|8,25,661|0.04| |IEPF Account|1,08,050|0.01| |GRAND TOTAL|1,91,42,87,591|100.00| Corporate Governance Report I 87 # Annual Report 2017-18 # c. Top ten equity shareholders of the Company as on March 31, 2018: |Sr. No.|Name of the shareholder*|Number of equity shares held|Percentage of holding| |---|---|---|---| |1|Tata Sons Limited|1,37,61,18,911|71.89| |2|Life Insurance Corporation of India|7,53,84,947|3.94| |3|First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund|1,50,54,489|0.79| |4|Lazard Emerging Markets Equity Portfolio|98,19,005|0.51| |5|Oppenheimer Developing Markets Fund|79,96,009|0.42| |6|HDFC Trustee Company Limited|76,45,593|0.40| |7|Vanguard Emerging Markets Stock Index Fund, A series of Vanguard International Equity Index Fund|75,95,080|0.40| |8|SBI Mutual Fund|70,56,720|0.37| |9|Government of Singapore|64,97,754|0.34| |10|Abu Dhabi Investment Authority|62,96,384|0.33| * Shareholding is consolidated based on permanent account number (PAN) of the Shareholder. # 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 99.96% of the Company's equity share capital are dematerialised as on March 31, 2018. 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, 2018, 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, details of equity shares in suspense account are as follows: |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, 2017|195|7,446| |Shareholders who approached the Company for transfer of shares from suspense account during the year|1|68| |Shareholders to whom shares were transferred from the suspense account during the year|1|68| |Shareholders whose shares are transferred to the demat account of the IEPF Authority as per Section 124 of the Act|168|6,558| |Aggregate number of shareholders and the outstanding shares in the suspense account lying as on March 31, 2018|26|820| The voting rights on the shares outstanding in the suspense account as on March 31, 2018 shall remain frozen till the rightful owner of such shares claims the shares. # 88 I Corporate Governance Report # xvii. Transfer of unclaimed/unpaid amounts to the Investor Education and Protection Fund: Pursuant to 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"), dividends, if not claimed for a consecutive period of 7 years from the date of transfer to Unpaid Dividend Account of the Company, are liable to be transferred to the Investor Education and Protection Fund ("IEPF"). Further, shares in respect of such dividends which have not been claimed for a period of 7 consecutive years are also liable to be transferred to the demat account of the IEPF Authority. The said requirement does not apply to shares in respect of which there is a specific order of Court, Tribunal or Statutory Authority, restraining any transfer of the shares. The provisions relating to transfer of shares were made effective by the Ministry of Corporate Affairs, vide its Notification dated October 13, 2017 read with the circular dated October 16, 2017, wherein it was provided that where the period of 7 consecutive years, as above, was completed or being completed during the period from September 7, 2016 to October 31, 2017, the due date of transfer for such shares was October 31, 2017. |
In the interest of the shareholders, the Company sends periodical reminders to the shareholders to claim their dividends in order to avoid transfer of dividends/shares to IEPF Authority. Notices in this regard are also published in the newspapers and the details of unclaimed dividends and shareholders whose shares are liable to be transferred to the IEPF Authority, are uploaded on the Company's website (https://www.tcs.com/details-unclaimed-dividend-transfer-IEPF-account-2017). In light of the aforesaid provisions, the Company has during the year, transferred to IEPF the unclaimed dividends, outstanding for 7 consecutive years, of the Company, erstwhile TCS e-Serve Limited and CMC Limited (since amalgamated with the Company). Further, shares of the Company, in respect of which dividend has not been claimed for 7 consecutive years or more, have also been transferred to the demat account of IEPF Authority. The details of unclaimed dividends and shares transferred to IEPF during the year 2017-18 are as follows: |Financial year|Amount of unclaimed dividend (` lakh)|Number of shares transferred| |---|---|---| |2009-10|110|99,519| |2010-11|45|8,531| |TOTAL|155|1,08,050| The members who have a claim on above dividends and shares may claim the same from IEPF Authority by submitting an online application in the prescribed Form No. 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 requisite documents enumerated in the Form No. IEPF-5. No claims shall lie against the Company in respect of the dividend/shares so transferred. The following tables give information relating to various outstanding dividends and the dates by which they can be claimed by the shareholders from the Company's Registrar and Share Transfer Agent: # a. For shareholders of Tata Consultancy Service Limited (TCS): |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2010-11|July 01, 2011|July 31, 2018| |2011-12|July 14, 2011|August 15, 2018| | |October 17, 2011|November 16, 2018| | |January 17, 2012|February 16, 2019| | |June 29, 2012|July 29, 2019| # Annual Report 2017-18 # a. For shareholders of the Company: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2012-13|July 12, 2012|August 12, 2019| | |October 19, 2012|November 18, 2019| | |January 14, 2013|February 13, 2020| | |June 28, 2013|July 28, 2020| |2013-14|July 18, 2013|August 18, 2020| | |October 15, 2013|November 14, 2020| | |January 16, 2014|February 16, 2021| | |June 27, 2014|July 27, 2021| |2014-15|July 17, 2014|August 18, 2021| | |October 16, 2014|November 16, 2021| | |January 15, 2015|February 15, 2022| | |June 30, 2015|July 30, 2022| |2015-16|July 9, 2015|August 9, 2022| | |October 13, 2015|November 12, 2022| | |January 12, 2016|February 11, 2023| | |June 17, 2016|July 17, 2023| |2016-17|July 14, 2016|August 15, 2023| | |October 13, 2016|November 16, 2023| | |January 12, 2017|February 12, 2024| | |June 16, 2017|July 16, 2024| |2017-18|July 13, 2017|August 13, 2024| | |October 12, 2017|November 12, 2024| | |January 11, 2018|February 10, 2025| # b. 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| |---|---|---| |2010-11|August 12, 2011|September 15, 2018| |2011-12|July 10, 2012|August 14, 2019| |2012-13|May 30, 2013|July 03, 2020| # c. For shareholders of erstwhile CMC Limited which has merged with the Company: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2010-11|June 27, 2011|July 26, 2018| |2011-12|June 27, 2012|July 26, 2019| |2012-13|June 26, 2013|July 25, 2020| |2013-14|June 23, 2014|July 22, 2021| |2014-15|June 11, 2015|July 10, 2022| |2015-16|July 16, 2015|August 18, 2022| # xviii. 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 403 526. # xix. Address for correspondence: Tata Consultancy Services Limited 9th Floor, Nirmal Building Nariman Point, Mumbai 400 021 Telephone: 91 22 6778 9595 E-mail: [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 including the code for 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, 2018, received from the members of the Board and Senior Management Personnel of the Company, a declaration of compliance with the Code of Conduct as applicable to them. |
For the purpose of this declaration, Senior Management Personnel means the Chief Financial Officer, Global Head-HR, Global Business Unit Heads, Global Head - Legal and Company Secretary as on March 31, 2018. Rajesh Gopinathan Chief Executive Officer and Managing Director Mumbai, April 19, 2018 Corporate Governance Report I 91 # Annual Report 2017-18 # INDEPENDENT AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE To the Members of Tata Consultancy Services Limited 1. This certificate is issued in accordance with the terms of our engagement letter dated 19 September, 2017. 2. This report contains details of compliance of conditions of Corporate Governance by Tata Consultancy Services Limited ('the Company') for the year ended 31 March 2018, as stipulated in Regulations 17-27, clauses (b) to (i) of Regulation 46 (2) and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI Listing Regulations'), pursuant to the Listing Agreement of the Company with Stock exchanges. # Management's Responsibility for compliance with the conditions of SEBI Listing Regulations The compliance with the conditions of Corporate Governance is the responsibility of the management of the Company, including the preparation and maintenance of all relevant supporting records and documents. 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 SEBI Listing Regulations. # Auditor's Responsibility Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. Pursuant to the requirements of the SEBI Listing Regulations, it is our responsibility to provide a reasonable assurance whether the Company has complied with the conditions of Corporate Governance as stipulated in SEBI Listing Regulations for the year ended 31 March 2018. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes, Guidance Note on Certification of Corporate Governance, both issued by the Institute of Chartered Accountants of India ('ICAI') and 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. The Guidance Note on Reports or Certificates for Special Purposes requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI. 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 In our opinion, and to the best of our information and according to explanations given to us and the representation provided by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned SEBI Listing Regulations. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. # Restriction on use The certificate is addressed and provided to the members of the Company solely for the purpose to enable the Company to comply with the requirement of the SEBI Listing Regulations, and it should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 19 April 2018 Membership No: 049265 92 I Corporate Governance Report # Corporate Sustainability Report TCS has had a tradition of enabling social good, through structured Corporate Social Responsibility (CSR) programs and volunteering. Through such programs, TCS enables individuals and communities to take charge of their own lives and improve their standard of living, as embodied by the guiding principle: "Impact through Empowerment". At TCS, the key impact areas for CSR are education and skilling, health and wellness and environment. TCS is also involved in the preservation of heritage structures. To run CSR programs, TCS partners with TATA Trusts, clients, NGOs, and various not-for-profit organizations. These collaborations help us serve marginalized communities better. |
The multiple CSR initiatives of TCS have touched 917,325 lives in FY 2018, globally. TCS Maitree is an employee engagement forum that provides associates an opportunity to express their creativity. Through its many interventions, Maitree helps TCS associates and their families reach out to underprivileged communities at office locations worldwide. Volunteers bring in with them valuable expertise and a spirit of generosity, and collectively contributed 571,998 volunteering hours in FY 2018. The vehicle for this change is Purpose for Life (P4L), a collaborative TCS volunteering platform. # Education and Skilling File: AR_TCS_2017_2018.md The choice of education as a theme flows from TCS' presence in the knowledge domain. The standard of education is a key factor that plays into both growth and sustainability. It is an integral component of development, and is critical to a community's ability to compete in a rapidly-changing technology landscape. This covers the entire life path of students from school to Ph.D. as also skilling and adult literacy that enables livelihood. These contributions through TCS' varied education programs in India, impacted 440,000 beneficiaries in FY 2018. This is a story about 14 formidable women. Members of Iswar Sankalpa, an NGO that works to uplift differently abled women, they have scripted a brand new life story for themselves using TCS' Computer-based Functional Literacy (CBFL) solution. 69 differently abled women from Iswar Sankalpa have used CBFL to learn the basics of reading, writing, and arithmetic. By August 2017, 14 of these women were able to successfully clear the OBE Level A exam conducted by the National Institute of Open Schooling. With this ethos in mind, TCS launched the Adult Literacy Program (ALP) in year 2000. It uses the CBFL solution to augment and accelerate the Indian government's efforts to achieve functional literacy across the country. CBFL software is available in nine Indian and three foreign languages. ALP enables adult learners to achieve functional literacy (reading, writing and arithmetic) in their respective native languages in approximately 50 to 55 learning hours. TCS has partnered with government and jail authorities, NGOs, group companies and other corporates for the successful implementation of the program. In FY 2018, ALP reached 173,876 learners, with a total reach of 561,884 beneficiaries since its inception. The Adult Literacy Program delivers basic lessons in reading, writing and arithmetic through TCS' CBFL solution. Often, there are societal barriers that crop up even before people can take a step towards continued learning. TCS' BridgeIT program uses digital tools to address such access and competency gaps between marginalized communities and mainstream society. Launched in February 2014, the program uses Information Technology (IT) as a key enabler for school education, adult literacy and entrepreneurship in villages across central and east India. # Annual Report 2017-18 The youngest in a family of seven, 23-year-old DCA graduate and BridgeIT entrepreneur Amuk Raj serves as an inspiration to unemployed and under-employed youth in his village of Bharatpur in Jhansi district, Uttar Pradesh. With the money he earns through his business, Amuk is able to contribute towards half of his family's household expenses. His biggest breakthrough? Convincing the people in his village to set aside caste-based differences and make best use of the digital services he offers. To enhance skills of its contract staff, TCS runs the Empower program to provide them with functional spoken English, basic computers and soft skills training. TCS volunteers conduct sessions within office premises for 25 hours, spread across five weeks. TCS runs a program for teachers as well, aiming to assist them with soft skills training in communication, presentation, empathy, ethics, organizational behaviour, time management, and stress management. Teachers have participated in the Teacher Empowerment Program at Trivandrum, Chennai, Coimbatore, Tirunelveli, Salem, Nagercoil, Kochi, Hyderabad, Hosur, Bangalore and Kolkata, since 2012. While TCS provides people greater social mobility and accessibility through these skilling and education programs, a section of the population struggles to access the very infrastructure used to impart these lessons. For instance, visually impaired persons have an additional barrier to contend with when it comes to accessing technology based jobs. To address this gap and enhance employment opportunities, TCS Maitree set up the Advanced Computer Training Centre (ACTC) in 2008. This initiative, while improving the prospects of India's visually impaired workforce, also aims to change the perspectives of employers regarding their potential and versatility. |
# Bridge IT entrepreneur serves as an inspiration to the youth in Bharatpur, Jhansi District So far, 136 youth from socially and economically disadvantaged communities across six Indian states have been trained to be digital entrepreneurs through this program. TCS supports the digital entrepreneurs for an initial period of two years to make them self-sufficient and sustainable. But merely bringing people up to speed with their more privileged peers will not help improve the employment rate. For that, the employability skill gap would need to be addressed first. At this end of the spectrum, TCS introduced the IT and BPS employability program, which seeks to enhance the employability of undergraduate students from rural engineering and science colleges by training them in business skills, general aptitude, and technical skills. # The IT and BPS employability program seeks to enhance the employability of undergraduate students from rural colleges ACTC familiarizes visually impaired persons with both computer hardware and software to enhance their employability. TCS volunteers have been proactive in both leading and launching initiatives. A case in point is the group Women of Waze (WoW), which is based in the Wazapur village of Raigad district, Maharashtra. Launched in 2007, with the long-term objective of making women in Wazapur financially independent, WoW trains them to make bags in different styles and designs using jute, cotton, and other materials. They are also trained in making stoles with shibori design and other home accessories. TCS' CSR is focusing on developing their entrepreneurial skills in order to empower them further and make them completely self-sustainable entrepreneurs. In step with the TATA group tradition, TCS has been involved in strengthening the academic community around the world through its Academic Interface Program (AIP). This program aims to bridge the gap between campuses and corporates through various initiatives namely organizing workshops for students, faculty development programs for teachers and creating internship opportunities for students. TCS, through its Research Scholar Program, has since inception of the program, supported 324 scholars, pursuing full time PhD in computing sciences, in India. Scholars have an opportunity to interact with TCS researchers and receive mentoring. 60 research scholars have achieved their Ph.D. till date. To promote 21st century thinking among students and encourage them to take on STEM (Science, Technology, Engineering and Mathematics) subjects, TCS has also been running a series of student engagement programs across the world. TCS has reached over 354,000 students through STEM initiatives across geographies. In Brazil, TCS partnered with the Sao Paulo municipal government through the goIT program, to contribute to the training of students and teachers in public schools, as well as give underprivileged families access to the technology market and encourage young students to pursue IT careers. In Europe, goIT continues to scale up in schools across Finland, Germany, Italy, Norway, and Sweden, with the program tailored as per local requirements in each region. In the United Kingdom and Ireland, TCS runs an initiative called IT Futures, which aims to inspire a generation of young people to develop an interest in technology. It engages secondary school to university students in information and communication technology (ICT), through coding, programming, and designing. In South Africa, TCS launched ExoLab in partnership with NASA and the Centre for the Advancement of Science in Space. The Exolab program is an experimental platform that brings together classrooms and the International Space Station, and enables children in South Africa to conduct integrated STEM experiments. In the United States, TCS partnered with Discovery Education in 2017, to launch Ignite My Future in School, which seeks to prepare more than 1 million students for 21st century careers. This initiative seeks to transform the US education system by embedding computational thinking and problem solving into core school subjects such as Mathematics, English, Social Studies and the Arts. The program provides teachers with digital tools, instructional resources, and in-market support they need to guide today's youth. # TCS seeks to transform the education system by embedding computational thinking in core school subjects goIT, TCS' flagship community engagement program increases interest in STEM and computer science through design thinking, mobile app development, and mentorship by TCS employee volunteers. Primarily focused towards middle school students under-represented in computing fields, goIT offers a free and flexible program for schools. # TCS launches the first ExoLab experiment in South Africa to conduct integrated STEM experiments In Australia and New Zealand, the push has been to correct the gender imbalance in the STEM fields. |
Towards this end, TCS runs a dedicated week-long program, called goIT Girls Work Experience, as part of which senior TCS executives provide high school students insights into the various STEM roles that exist across the business spectrum. In FY 2018, goIT Challenge was launched, which encourages high school students to learn about and apply technologies such as big data, mobility, social media, cloud computing, and robotics, to community challenges. As part of our efforts to raise STEM awareness in the Singapore community, TCS has worked closely with schools. # Annual Report 2017-18 inviting students to understand the IT industry better as well as embark on an e-learning journey on popular programming languages (C++/Python). # TCS' Translational Cancer Research Centre is set up in partnership with TMC, to develop technology for clinical trials, risk adapted treatment, predictive outcome and biomarkers - driven by a strategy to strengthen the impact of cancer. # Digital Nerve Centre (DiNC) is an innovative platform that enables re-imagined access to healthcare. It leverages digital technologies, to coordinate and connect hospitals, specialists and patients. Using DiNC, TCS along with the Ministry of Health and TATA Trusts have re-imagined patient interactions with the hospital system in four major cancer hospitals. # Singapore goIT - students interact with a robot at the TCS office In remote tribal areas in India, TCS is providing access to quality education by setting up science and math laboratories for children in partnership with TATA Trusts. Children and adults from the Kalahandi, Kandhamal, and Rayagada districts of Odisha have received access to modern equipment and learning protocol. Enthused by the positive reception the labs received, TCS introduced new technology and streamlined innovative processes that will benefit more than 3 million patients visiting 21 OPDs at the hospital each year. The process has helped eliminate overcrowding and reduce waiting time for patients, from six hours on an average, to less than two hours. # Lab on Bike Program The key objective of the program is to make learning accessible by bringing it to the doorstep of the most vulnerable and disadvantaged children. TCS has been supporting the Society for Rehabilitation of Crippled Children (SRCC) with the redevelopment of the children's hospital. All funds raised by TCS at the Mumbai Marathon are directed towards this cause. TCS has also supported the IT infrastructure and application development process at SRCC. # Health and Wellness When it comes to promoting better health practices among employees, clients, as well as stakeholder communities, TCS believes in leading from the front, which is why we wholeheartedly participate in the American Heart Association's (AHA's) yearly Heart Walks. The idea is to raise funds and create awareness to save lives from the no.1 and no.5 killers in the US - heart disease and strokes. TCS North America also participates in AHA's national campaign, 'Go Red for Women', in the US and in the Heart Month each February, through the Heart and Stroke Foundation in Canada. TCS has been providing IT solutions, logistics and operations support to Tata Medical Center (TMC), Kolkata and Cancer Institute (CI) in Chennai to improve comprehensive cancer care and research. 96 I Corporate Sustainability Report # Corporate Sustainability Report # Community Engagement These activities include meal sorting and packing at food banks to support low-income families. TCS also works closely with the American Red Cross (ARC) and the Canadian Red Cross to respond to natural disasters. TCS associates frequently organize and support meal sorting and packing activities at food banks. In the UK, TCS started a partnership with the British Heart Foundation (BHF) in 2016, to help spread awareness about heart health. This partnership supports our associates in many aspects of their well-being, from providing opportunities to volunteer and fundraise, to providing tailored information about individual employees' health. # Environment Environmental responsibility is one of the main aspects of sustainable development. TCS strives to create a continuing positive impact on the health of the environment. This has been made possible by adopting and implementing an organization-wide environmental policy; creating awareness among associates; increasing the amount and scope of responsibility towards the environment; and introducing environmental responsibility into the core values of the organization. TCS' Environmental Sustainability strategy is aligned to mitigate the climate change related risks by using scarce resources responsibly and doing more with less. The core to TCS' environmental management is the strategy supported by process, performance and people. # 1. |
Process Focus: TCS has been one of the pioneers in the IT-sector to be certified to the international standard, ISO 14001, for its Environment Management System (EMS) in as early as 2003. Keeping up the momentum, we successfully migrated to ISO 14001:2015 version of the standard this year under the enterprise-wide certification covering 112 locations globally. The TCS Environmental Policy integrates environmental considerations into business processes and adopts a life cycle approach across our value chain. Energy, carbon, water and waste are the most material environmental aspects for our operations. We measure, manage and report on these aspects covering our global operations. # 2. Performance # Energy Conservation and Carbon Management The year has been quite eventful with respect to energy conservation and carbon management. Energy as the key contributor to our carbon footprint is the cornerstone of our carbon mitigation strategy. TCS has achieved its 2020 target to reduce the specific carbon footprint by 50%, this year - 2 years ahead of the timeline. Our overall specific energy consumption reduced by 4.5% over FY17, and 51.4% over baseline year FY08. Our combined GHG emission (Scope 1 + Scope 2) was 1.42 tCO2e/FTE; 52.5% less than the baseline year 2008 and 6.8% less than the last reporting year. This has been possible through concentrated efforts by various teams across the four levers - Green Buildings, Efficient Operations, Green IT and Use of Renewable energy. We have 19.5 million square feet of office area designed as per Green Building standards, which makes up 50% of the total office space we currently occupy. Out of this, 16.7 million sq. ft. is in the form of campuses across India, which makes up approximately 80% of the total owned workspaces. The TCS Energy Management program has witnessed rapid scaling up and further maturity during the year. The program now covers over 135 facilities across India. The Internet of Things (IoT) platform has been significantly enhanced to also acquire asset (chillers, air handling units, etc.) level data which is analysed to improve asset efficiency and operations. Most significant portion of our optimization falls in the area of analytics leading to aligning / streamlining heating, ventilation, and air conditioning (HVAC) operations and set-points, chillers and Air Handling Unit (AHU) with ambient temperature levels, occupancy levels, associate comfort levels, and scheduling chiller operations to operate more efficient chillers more frequently than less efficient chillers. Associate comfort data relating to cooling and lighting is also monitored and tracked to ensure optimal comfort levels. The Resource Optimization Centre (ROC) in Kochi has successfully blended people, processes and technology to drive significant energy savings during the year. TCS India took up a major project to change the # Annual Report 2017-18 luminaires to LEDs across 21 locations which contributed towards significant energy savings. Major retrofits were carried out at some locations with legacy infrastructure to improve the efficiency levels. Renewable energy use in our offices increased to 8.45% as compared to 7.25% in the last reporting year, towards achieving the 2020 target of 20% RE in the energy mix. This year we added 2.05 MW of Solar Rooftop system across four locations, taking the total installed capacity to 3.55MW. The solar rooftop installations across our campuses contribute towards 4403 MWh of energy. # Waste Reduction and Reuse Being an IT services and consulting organization, the waste coming out of our facilities is limited to electronic and electrical waste, office consumables and municipal solid 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 seek to ensure that less than 5% waste is sent to landfills by 2020 by ensuring segregation at source, reuse and recycle wherever possible. # Food and Garden Waste Onsite composting and /or digestion sent to piggeries as feed Where there is a will there is a way! TCS Deccan Park, Hyderabad covered the open car parking with a canopy of solar photovoltaics. We have continuously innovated and improved our data center energy efficiency through initiatives like rack cooling solutions, air-flow management, UPS load optimization through modular UPS solutions and centralized monitoring, reducing the Power Utilization Efficiency (PUE) of 13 data centers to our target of 1.65. The average PUE across 23 key data centers is at 1.71, compared to an industry average of 1.8. # Water Conservation Water is a scarce and a shared resource. We strive to optimize our water consumption through conservation, sewage treatment and reuse and rainwater harvesting. |
All our new campuses are built for 50% higher water efficiency, 100% treatment and recycling of sewage, and rainwater harvesting. In FY 2018, consistent water management measures have helped us sustain our water consumption performance at nearly constant levels compared to previous years. # TCS' waste management practices |Hazardous & e-wastes|Disposed through government authorized recyclers in accordance with local laws| |---|---| |Printer & Toner cartridges|Sent back to manufacturer under product take back arrangement| |Paper & Mixed Dry Waste|Paper is sent for recycling| | |Mixed dry waste - sent to scrap dealers or municipal disposal| In FY 2018, 34.7% of the total wet waste generated was treated through onsite composting or bio-digester treatment. Over 150 tons of compost was generated from garden waste in FY 2018, helping TCS avoid the use of chemical fertilizers and the resultant soil and groundwater pollution. Over 10 tonnes of manure generated from our campus Yantra Park in Mumbai was donated to farmers from nearby villages. The organic manure has helped change the face of the small village converting waste land into cultivated land, thus providing for livelihood. 98 I Corporate Sustainability Report # By use of organic manure combined with new farming techniques, conversion of barren land into cultivable land In FY 2018, 18,727 items of obsolete or defunct electronic and electrical equipment classified as E-waste were disposed through government-authorized handlers or recyclers, in accordance with the regulations of each country1. 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 resource use and waste reduction, per capita paper consumption has reduced by 9% over the prior year 85% 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. TCS continues to achieve 100% recycling of its paper waste2. # 3. People Our customers, employees as well as suppliers are part of our environmental sustainability journey. We work with our customers to deliver IT-based green solutions. We motivate our suppliers to adhere to 100% regulatory compliance, adopt environmentally responsible practices and strive for better environmental performance as part of our Supply Chain Sustainability program. We also engage our employees through various awareness campaigns and communications to sensitize associates toward nature, the need to conserve resources and in general, be environmentally responsible. Over a million training hours were spent on health, safety, and the environment in FY18. In Philippines, TCS in partnership with the Pasig River Rehabilitation Commission, conducted a cleanup project at the mouth of Pasig River in BASECO Compound, Manila. # PASIG RIVER TCS team cleaning up the Pasig River in Philippines Associates in North America regularly participate in volunteering activities that positively impact the environment. Volunteers work with local park departments and other environmental organizations to participate in activities such as park clean-ups, where they work to remove invasive plant species, and clean up local shorelines. In UK, TCS continues to promote environmental sustainability through Eco Futures, a staff awareness program that encourages behavioural change. The focus has been on recycling, energy consumption, and travel. Collectively, all these environment campaigns help ensure that our employees not only adopt and sustain environment-friendly behaviour at work, but also at home. At the Siruseri location in Chennai, India, TCS has embarked on watershed management to prevent flooding in the area, including taking on the rejuvenation and maintenance of the Siruseri Lake. TCS is working towards the rejuvenation of River Kasalganga in Solapur, as it remains mostly dry, causing damage to crops which leads to consequential social impact. 1 Data for all geographies. 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. Corporate Sustainability Report I 99 # Annual Report 2017-18 # Business Responsibility Report This section is as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A more detailed Sustainability Report for FY18 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 Registered address: 9th Floor, Nirmal Building, Nariman Point, Mumbai - 400 021, India 3. Website: www.tcs.com 4. E-mail id: [email protected] 5. Financial Year reported: April 1, 2017 to March 31, 2018 6. Sector(s) that the Company is engaged in (industrial activity code-wise): |ITC CODE|Product Description| |---|---| |85249009|Computer Software| 7. List three key products/services that the Company manufactures/provides (as in balance sheet): Consulting and Service Integration, Digital Transformation Services and Cognitive Business Operations. 8. Total number of locations where business activity is undertaken by the Company: 190 solution centers Number of International Locations (Provide details of major 5): |Region|Number of Locations| |---|---| |North America|17| |UK & Ireland|17| |Latin America|16| |Asia Pacific|9| |Europe|4| 9. Number of National Locations: 125 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): 191 crore 2. Total Turnover (INR): 1,23,104 crore 3. Total profit after taxes (INR): 25,826 crore 4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%): 1.61% of average profit for previous three years in respect of standalone TCS (India initiatives only) 5. List of activities in which expenditure in 4 above has been incurred: |Category (CSR in India only)|` Crore| |---|---| |Health & Wellness|136| |Education & Skill Building|91| |Environmental Sustainability|1| |Contribution to TCS Foundation|172| |Total|400| Including overseas spend, the Company's total spending on Corporate Social Responsibility is ` 505 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? If yes, then indicate the number of such subsidiary company(s): Yes, 31 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? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%]: 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| File: AR_TCS_2017_2018.md |07121802|Ms Aarthi Subramanian|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 marginalized - 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| |---|---| |1|Do you have a policy / policies for....| |2|Has the policy being formulated in consultation with the relevant stakeholders?| |3|Does the policy conform to any national / international standards?| |4|Has the policy been approved by the Board? If yes, has it been signed by MD/owner/ CEO/appropriate Board Director?| |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?| |6|Has the policy been formally communicated to all relevant internal and external stakeholders?| |7|Does the company have in-house structure to implement the policy/policies?| |8|Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders' grievances related to the policy/policies?| |9|Has the company carried out independent audit/evaluation of the working of this policy by an internal or external agency?| |P1|P2|P3|P4|P5|P6|P7|P8|P9| |---|---|---|---|---|---|---|---|---| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y*|Y*|Y*|Y**|Y*|Y***|Y*|Y*|Y*| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y|Y|Y|Y|Y|Y|Y|Y|Y| |Y|N|Y|N|N|Y|N|N|Y| # 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: Six Board Meetings were held during the year and the gap between two meetings did not exceed one hundred and twenty days. (b) Does the Company publish a BR or a 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://on.tcs.com/Corporate-Sustainability-Report-2017 # Annual Report 2017-18 # 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: 138 ethics concerns from various stakeholders were received in the year FY 2018. 125 (91%) of these were satisfactorily resolved as on March 31, 2018. The remaining concerns are under review. # Principle 2 1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities: - a) Energy management solution (EMS) - an IoT based, closed-loop data detecting and machine learning system to monitor, detect and analyse energy consumption patterns in real-time and to uncover opportunities of reducing energy consumption and reducing the carbon footprint impact. - b) TCS' Digifleet Fleet Management Solution - An IoT enabled solution that results in fleet optimisation and consequently leads to reduction in the usage of fuel and hence emissions. - c) mKRISHI - A system that empowers farmers with data to improve farming productivity. (More details online - https://goo.gl/w8Ysws) 2. For each such product, provide the following details in respect of resource used (Energy, Water, Raw material etc.) per unit of product (optional): - a) Reduction during sourcing/production/distribution achieved since the previous year? - EMS - During this year (2017-18), TCS was able to reduce the specific electricity consumption by 4.5%. This has been achieved through a series of initiatives including real time energy monitoring (smart metering), timely interventions enabled through TCS' IoT platform, change over to energy efficient lighting and modernization of legacy infrastructure to energy efficient systems. - b) Digifleet - Not applicable. - c) mKRISHI - Not applicable. - b) Reduction during usage by consumers (energy, water) has been achieved since the previous year: - a) EMS - Not applicable. 3. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work? Yes (a) If yes, what steps have been taken to improve their capacity and capability of local and small vendors? While the criteria for selection of goods and services is quality, reliability and price, TCS gives preference to small organisations, particularly promoted by entrepreneurs from socially backward communities. Under the BridgeIT programme, TCS has trained digital entrepreneurs who have established themselves as key resources in the villages within which they operate. 4. 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 to the Corporate Sustainability section of this Annual Report. 102 I Business Responsibility Report # Principle 3 1. Please indicate the Total number of employees: 394,998 as on March 31, 2018. 2. Please indicate the Total number of employees hired on temporary/contractual/casual basis: 16,999 as on March 31, 2018. 3. Please indicate the Number of permanent women employees: 139,487 as on March 31, 2018. 4. Please indicate the Number of permanent employees with disabilities: 484 as on March 31, 2018. 5. |
Do you have an employee association that is recognized by management? Yes. 6. What percentage of your permanent employees are members of this recognized employee association? 0.02% (For India) 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: During FY 2017-18, the Company has received 62 complaints on sexual harassment, out of which 58 complaints have been resolved with appropriate action taken and 4 complaints remain pending as on March 31, 2018. Internal review is under progress for the pending complaints. There have been no complaints in other areas. 8. What percentage of your under mentioned employees were given safety & skill upgradation training in the last year? (a) Permanent Employees - 93% (b) Permanent Women Employees - 92% (c) Casual/Temporary/Contractual Employees - 74% (d) Employees with Disabilities - 91% # 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 & 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 programmes designed to benefit marginalised stakeholders. Please refer to the Corporate Sustainability section of this Annual Report for details of BridgeIT, Advanced Computer Training Centre, Empower, Adult Literacy Program and BPS/IT Employability Programs. # 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. Please refer to this link. 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. Please refer to the Corporate Sustainability section of this Annual Report for details. 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. One # 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. National Association of Software and Services Companies (NASSCOM), Confederation of Indian Industries (CII), Federation of India Chambers of Commerce and Industry (FICCI), US India Business Council (USIBC) and US Chamber of Commerce. Business Responsibility Report I 103 # Annual Report 2017-18 # 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. Kindly refer to the Corporate Sustainability section 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? ₹ 505 Crore including overseas spend. For more details refer to the Corporate Sustainability section 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, 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? 5.66% of the complaints received is pending resolution as on March 31, 2018. 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. |
104 I Business Responsibility Report # Awards and Accolades # Business - Ranked as the fastest growing IT Services brand by brand value, and as one of the Top 3 Global Brands in IT Services globally in 2018 by Brand Finance - Recognized as one of the Top Regarded Companies and one of the World's Best Employers in the Forbes 2017 Global 2000 list - Ranked #1 in Europe for Customer Satisfaction for the fifth consecutive year by Whitelane Research - Ranked No 1 in the BT 500 - India's Most Valuable Companies 2017 - Topped the BW 500 Real rankings in the technology space - 2017 - Won the CII Industrial Intellectual Property Award 2017 - Won two awards at the Express IT Awards® 2017 for 'IT Innovation in large enterprise category' and 'Mobility Solutions category' - Bagged multiple awards at the Asian Banker Technology Innovation Awards 2017 - Recognised as a prominent 'Technology Partner' at the Manufacturing Leadership 100 Awards for the fourth time - TCS' Singapore Marathon App won the award for the Best Mobile App for Media, Entertainment & Social Media at GSMA's Asia Mobile Awards 2017 - The TCS New York City Marathon App, named the Consumer App of the Year for the second consecutive year, also won the Gold award at the Best in Biz Awards 2017 International # Employer - Ranked as a Top Employer globally for the third year running by the Top Employer Institute, including in leading regions such as North America, UK, Europe and LatAm - Named among the Top job creators in the US IT Services Sector by The Cambridge Group - Recognized as one of the Achievers 50 Most Engaged Workplaces™ in North America, for the fifth consecutive year - Won the Editor's choice Award for Best Learning Execution at the Chief Learning Officer Magazine's 2017 LearningElite Awards - Won the 'Innovation in Talent Development' Award and 'Excellence in Practice' recognitions at the Association for Talent Development (ATD) Conference in Atlanta # Awards - Won a Gold Stevie® for Achievement in Employee Engagement in the Americas, and two Silver Stevies® for Achievement in Recruitment and Employer of the Year at the Stevie® Awards for Great Employers (SAGE) - Won the 2017 Canadian National HR Award for 'Best Recruitment Campaign' from the Canadian HR Reporter for the third straight year - Named as one of the 'Best Companies to Work for Women in India' by Working Mother Media and Avtar Group - Won the 'WILL Best Employers for Women' award from the WILL Forum India - Received Eight Brandon Hall Group Awards covering Excellence in Learning, Leadership Development, Talent Management and Talent Acquisition - Named as Best Company for Diversity and Inclusion at the 2018 Women in Technology and Data Awards, hosted by Waters Technology - Recognized as Most Admired Knowledge Enterprise at the KM India Summit organized by CII # Sustainability - Named in Fortune's annual list of the Top 50 Companies that are changing the world, for mKrishi - Awarded the Gold rating certificate by EcoVadis for the fourth time in a row - Included in the Global Dow Jones Sustainability Index (DJSI) for fifth consecutive year - Included in the FTSE4Good Emerging Index - Recognized as a Leader in Climate Change efforts by CDP (formerly Carbon Disclosure Project) - Won the 'Social Responsibility Project of the Year' for the second year in a row at the North American Employee Engagement Awards - Named as One of America's Civic 50 by Points of Light - Awarded Gold for its BridgeIT Program at the India Digital Awards 2017, under 'Best Use of Internet for Social and Economic Development' category by the Internet & Mobile Association of India (IAMAI) - TCS' Passport Seva won two CSI Nihilent eGovernance Awards 2017 at the 52nd CSI annual convention - CFO, Ramakrishnan V., awarded the 'Creating Shared Value CFO' at the Yes Bank - BW Best CFO Awards 2017 # Consolidated Financial Statements # Independent Auditor's Report To the Members of Tata Consultancy Services Limited (Holding Company) # Report on the Audit of the Consolidated Ind AS Financial Statements We have audited the accompanying consolidated Ind AS financial statements of Tata Consultancy Services Limited ("the Holding Company") and its subsidiary companies listed in Annexure I (collectively referred to as "the Group"), which comprise the Consolidated Balance Sheet as at 31 March 2018, the Consolidated Statement of Profit and Loss, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows, |
for the year then ended, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated Ind AS financial statements"). # Management's Responsibility for the Consolidated Ind AS Financial Statements The Holding Company's Board of Directors is responsible for the preparation of these consolidated Ind AS financial statements in terms of the requirement of the Companies Act, 2013 (hereinafter referred to as "the Act") that give a true and fair view of the consolidated state of affairs, consolidated profit/loss (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 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 Directors of the Holding Company, as aforesaid. In preparing the consolidated Ind AS financial statements, the respective Board of Directors of the companies included in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. # Auditor's Responsibility Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with 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 auditor's 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 Holding 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, as well as evaluating the overall presentation of the consolidated Ind AS financial statements. We are also responsible to conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated. |
# Opinion In our opinion and to the best of our information and according to the explanations given to us, 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 31 March 2018, its consolidated profit (including other comprehensive income), its consolidated changes in equity and its consolidated cash flows for the year ended on that date. # Other Matter Corresponding figures of the Group for the year ended 31 March 2017 have been audited by another auditor who expressed an unmodified opinion dated 18 April 2017 on the consolidated Ind AS financial statements of the Group for the year ended 31 March 2017. Our opinion on the consolidated Ind AS financial statements is not modified in respect of the above matter. # Report on Other Legal and Regulatory Requirements As required by Section 143(3) of the Act, based on our audit 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. 3. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flow dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements. 4. In our opinion, the aforesaid consolidated 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 of the Holding Company and its subsidiary companies which are incorporated in India, as on 31 March 2018 and taken on record by the Board of Directors of respective companies, none of the directors of the Group companies incorporated in India is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act. 6. With respect to adequacy of the internal financial controls with reference to financial statements of the Holding Company and its subsidiary companies incorporated in India and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". 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, in our opinion and to the best of our information and according to the explanations given to us: For B S R & Co. |
LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 19 April 2018 Membership No: 049265 Consolidated Financial Statements I 107 # Annual Report 2017-18 # Annexure I: List of entities consolidated as at 31 March 2018 |1|APTOnline Limited| |---|---| |2|C-Edge Technologies Limited| |3|CMC Americas, Inc.| |4|Diligenta Limited| |5|MahaOnline Limited| |6|MP Online Limited| |7|Tata America International Corporation| |8|Tata Consultancy Services (Africa) (PTY) Ltd.| |9|Tata Consultancy Services Asia Pacific Pte Ltd.| |10|Tata Consultancy Services Belgium| |11|Tata Consultancy Services Canada Inc.| |12|Tata Consultancy Services Deutschland GmbH| |13|Tata Consultancy Services Netherlands BV| |14|Tata Consultancy Services Qatar S.S.C.| |15|Tata Consultancy Services Sverige AB| |16|TCS e-Serve International Limited| |17|TCS FNS Pty Limited| |18|TCS Foundation| |19|TCS Iberoamerica SA| |20|PT Tata Consultancy Services Indonesia| |21|Tata Consultancy Services (China) Co., Ltd.| |22|Tata Consultancy Services (Philippines) Inc.| |23|Tata Consultancy Services (Thailand) Limited| |24|Tata Consultancy Services Japan, Ltd.| |25|Tata Consultancy Services Malaysia Sdn Bhd| |26|TCS Italia s.r.l.| |27|CMC eBiz, Inc.| |28|Tata Consultancy Services (South Africa) (PTY) Ltd.| |29|Tata Consultancy Services Chile S.A.| |30|TATASOLUTION CENTER S.A.| |31|Technology Outsourcing S.A.C.| |32|TCS e-Serve America, Inc.| |33|Tata Consultancy Services (Portugal) Unipessoal, Limitada| |34|TCS Financial Solutions Australia Pty Limited| |35|TCS Financial Solutions Beijing Co., Ltd.| |36|TCS Financial Solutions Australia Holdings Pty Limited| |37|MGDC S.C.| |38|Tata Consultancy Services Argentina S.A.| File: AR_TCS_2017_2018.md |39|Tata Consultancy Services De Mexico S.A., De C.V.| |40|Tata Consultancy Services Do Brasil Ltda| |41|TCS Inversiones Chile Limitada| |42|TCS Solution Center S.A.| |43|TCS Uruguay S.A.| |44|Tata Consultancy Services France SA (formerly Alti S.A.)| |45|Tata Consultancy Services Danmark ApS| |46|Tata Consultancy Services De Espana S.A.| |47|Tata Consultancy Services Luxembourg S.A.| |48|Tata Consultancy Services Osterreich GmbH| |49|Tata Consultancy Services Saudi Arabia| |50|Tata Consultancy Services Switzerland Ltd.| |51|Tata Sons & Consultancy Services Employees' Welfare Trust| |52|TCS e-Serve Limited - Employees' Welfare Trust| |53|TCS e-Serve International Limited - Employees' Welfare Benefit Trust| # I Consolidated Financial Statements # Annexure A to the Independent Auditor's 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 the Tata Consultancy Services Limited ("the Company" or "the Holding Company") and its subsidiary companies which are incorporated in India as of 31 March 2018 in conjunction with our audit of the consolidated Ind AS financial statements of the Holding Company for the year ended on that date. # Management's Responsibility for Internal Financial Controls The respective Board of Directors of the Holding company and its subsidiary companies which are incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective 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 ("ICAI"). 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. # Auditor's Responsibility Our responsibility is to express an opinion on the Holding Company's and its subsidiary companies', which are incorporated in India, internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the ICAI and the Standards on Auditing, issued by the ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note 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 auditor's 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 is sufficient and appropriate to provide a basis for our audit opinion on the Holding Company's and its subsidiary companies', which are incorporated in India, 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. # Opinion In our opinion, the Holding Company and its subsidiary companies which are 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 31 March 2018, based on the internal control over financial reporting criteria established by the respective company considering the essential components of internal control stated in the Guidance Note issued by the ICAI. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai Partner 19 April 2018 Membership No: 049265 Consolidated Financial Statements I 109 # Annual Report 2017-18 # Consolidated Balance Sheet |Note|As at March 31, 2018|As at March 31, 2017| |---|---|---| |ASSETS|ASSETS|ASSETS| |Non-current assets|Non-current assets|Non-current assets| |(a) Property, plant and equipment|10,216|10,057| |(b) Capital work-in-progress|1,278|1,541| |(c) Intangible assets|12|47| |(d) Goodwill|1,745|1,597| |(e) Financial assets| | | |(i) Investments|301|344| |(ii) Trade receivables|94|67| |(iii) Unbilled revenue|227|143| |(iv) Loans|1,975|9| |(v) Other financial assets|691|825| |(f) Income tax assets (net)|4,131|4,789| |(g) Deferred tax assets (net)|3,449|2,828| |(h) Other assets|953|689| |Total non-current assets|25,072|22,936| |Current assets|Current assets|Current assets| |(a) Inventories|26|21| |(b) Financial assets| | | |(i) Investments|35,707|41,636| |(ii) Trade receivables|24,943|22,617| |(iii) Unbilled revenue|6,686|5,208| |(iv) Cash and cash equivalents|4,883|3,597| |(v) Other balances with banks|2,278|552| |(vi) Other financial assets| | | |(vii) Loans|3,205|2,909| |(c) Income tax assets (net)|37|26| |(d) Other assets|2,584|2,276| |Total current assets|81,224|80,316| |TOTAL ASSETS|106,296|103,252| |EQUITY AND LIABILITIES|EQUITY AND LIABILITIES|EQUITY AND LIABILITIES| |Equity|Equity|Equity| |(a) Share capital|191|197| |(b) Other equity|84,937|86,017| |Equity attributable to shareholders of the Company|85,128|86,214| |Non-controlling interests|402|366| |Total Equity|85,530|86,580| |Liabilities|Liabilities|Liabilities| |Non-current liabilities|Non-current liabilities|Non-current liabilities| |(a) Financial liabilities| | | |(i) Borrowings|54|71| |(ii) Other financial liabilities|503|454| |(b) Unearned and deferred revenue|503|-| |(c) Employee benefit obligations|290|245| |(d) Provisions|26|39| |(e) Deferred tax liabilities (net)|1,170|919| |(f) Other liabilities|392|432| |Total non-current liabilities|2,938|2,160| |Current liabilities|Current liabilities|Current liabilities| |(a) Financial liabilities| | | |(i) Borrowings|181|200| |(ii) Trade payables|5,094|4,905| |(iii) Other financial liabilities|3,913|2,924| |(b) Unearned and deferred revenue|2,032|1,398| |(c) Income tax liabilities(net)|1,421|1,412| |(d) Employee benefit obligations|2,018|1,862| |(e) Provisions|240|66| |(f) Other liabilities|2,929|1,745| |Total current liabilities|17,828|14,512| |TOTAL EQUITY AND LIABILITIES|106,296|103,252| NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS 1-35 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Chartered Accountants N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. |
Ron Sommer Director Aarthi Subramanian Director Yezdi Nagporewalla Rajesh Gopinathan O. P. Bhatt V. Thyagarajan Prof. Clayton M. Christensen Partner CEO and Managing Director Director Director Membership No: 049265 N. Ganpathy Subramaniam Aman Mehta Dr. Pradeep Kumar Khosla Rajendra Moholkar COO and Executive Director Director Director Company Secretary Mumbai, April 19, 2018 110 I Consolidated Financial Statements # Consolidated Statements of Profit and Loss |Note|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |I. Revenue from operations|123,104|117,966| |II. Other income (net)|3,642|4,221| |III. TOTAL INCOME|126,746|122,187| |IV. Expenses| | | |(a) Employee benefit expenses|66,396|61,621| |(b) Cost of equipment and software licences|2,700|2,808| |(c) Other operating expenses|21,492|21,226| |(d) Finance costs|52|32| |(e) Depreciation and amortisation expense|2,014|1,987| |TOTAL EXPENSES|92,654|87,674| |V. PROFIT BEFORE TAX|34,092|34,513| |VI. Tax expense| | | |(a) Current tax|8,265|8,235| |(b) Deferred tax|(53)|(79)| |TOTAL TAX EXPENSE|8,212|8,156| |VII. PROFIT FOR THE YEAR|25,880|26,357| |VIII. OTHER COMPREHENSIVE (LOSSES) / INCOME| | | |(A) (i) Items that will be reclassified subsequently to profit and loss| | | |(a) Net change in fair values of investments other than equity shares carried at fair value through OCI|(821)|740| |(b) Net change in intrinsic value of derivatives designated as cash flow hedges|(122)|41| |(c) Net change in time value of derivatives designated as cash flow hedges|(59)|3| |(d) Exchange differences on translation of financial statements of foreign operations|552|(474)| |(ii) Income tax on items that will be reclassified subsequently to profit and loss|305|(261)| |(B) (i) Items that will not be reclassified subsequently to profit and loss| | | |(a) Remeasurement of defined employee benefit plans|106|(208)| |(b) Net change in fair values of investments in equity shares carried at fair value through OCI|(84)|(20)| |(ii) Income tax on items that will not be reclassified subsequently to profit and loss|(5)|2| |TOTAL OTHER COMPREHENSIVE (LOSSES) / INCOME|(128)|(177)| |IX. TOTAL COMPREHENSIVE INCOME FOR THE YEAR|25,752|26,180| |Profit for the year attributable to:| | | |Shareholders of the Company|25,826|26,289| |Non-controlling interests|54|68| |Total comprehensive income for the year attributable to:| | | |Shareholders of the Company|25,682|26,117| |Non-controlling interests|70|63| |X. Earnings per equity share:- Basic and diluted (`)|134.19|133.41| |Weighted average number of equity shares|192,45,92,806|197,04,27,941| |XI. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS|1-35| | As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Chartered Accountants N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Aarthi Subramanian Director Yezdi Nagporewalla Partner Rajesh Gopinathan CEO and Managing Director O. P. Bhatt Director V. Thyagarajan Director Prof. Clayton M. Christensen Director N. Ganpathy Subramaniam COO and Executive Director Aman Mehta Director Dr. Pradeep Kumar Khosla Director Rajendra Moholkar Company Secretary Mumbai, April 19, 2018 # Consolidated Statements of Changes in Equity # Annual Report 2017-18 # A. EQUITY SHARE CAPITAL (` crores) |Balance as at April 1, 2016|Changes in equity share capital during the year|Balance as at March 31, 2017| |---|---|---| |197|-|197| |Balance as at April 1, 2017|Changes in equity share capital during the year*|Balance as at March 31, 2018| |197|(6)|191| # B. |
OTHER EQUITY (` crores) |Reserves and surplus| | |Items of other comprehensive income|Equity|Non-controlling interests|Total| | | | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Equity Capital|Securities Premium|General Reserve|Special Reserve|Retained Earnings|Statutory Reserve|Investment Reserve|Cash flow Hedge Reserve|Foreign Currency Translation Reserve|Intrinsic Value|Time Value| | | | | | | | | | |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 of ` 1,788 crores)| | |-|-|-|-|-|(10,947)|-|-|-|-|(10,947)|(26)|(10,973)| | | | | |Transfer to reserves| |-|-|-|-|-|(33)|33|-|-|-|-|-|-| | | | |Realised loss on equity shares carried at fair value through OCI| | |-|-|-|-|-|(20)|-|20|-|-|-|-|-| | | | | |Purchase of non-controlling interests|-|-|-|-|-|(28)|-|-|-|-|(28)|(26)|(54)| | | | | |Transfer to Special Economic Zone re-investment reserve|-|-|-| |376|(376)|-|-|-|-|-|-|-|-| | | | | |Transfer from Special Economic Zone re-investment reserve| | |-|-|-|(279)|279|-|-|-|-|-|-|-|-| | | | | |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| | | | | |Balance as at April 1, 2017|75|1,919|523|10,549|97|71,071|218|538|105|(17)|939|86,017|366|86,383| | | | |Profit for the year|-|-|-|-|-|25,826|-|-|-|-|25,826|54|25,880| | | | | | | | | | |Other comprehensive income|-|-|-|-|-|102|-(622)|(107)|(52)|535|(144)|16|(128)| | |Total comprehensive income| |-|-|-|-|-|25,928|-(622)|(107)|(52)|535|25,682|70|25,752| | | | | |Dividend (including tax on dividend of ` 1,444 crores)| |-|-|-|-|-|(10,726)|-|-|-|-|(10,726)|(34)|(10,760)| | | | | | |Transfer to reserves| |-|-|-|-|(8)|-|(32)|40|-|-|-|-|-| | | | |Buy-back of equity shares*| |(1,919)|6|(9,118)|-|(4,963)|-|-|-|-|-|(15,994)|-|(15,994)| | | | | | | | | | |Expenses for buy-back of equity shares*|-|-|-|-|-|(42)|-|-|-|-|(42)|-|(42)| |Transfer to Special Economic Zone re-investment reserve| | |-|-|-|1,579|(1,579)|-|-|-|-|-|-|-|-| | | | |Transfer from Special Economic Zone re-investment reserve| | |-|-|-|(98)|98|-|-|-|-|-|-|-|-| | | | | |Balance as at March 31, 2018|75|-|529|1,423|1,578|79,755|258|(84)|(2)|(69)|1,474|84,937|402|85,339| | | | *Refer note 16. Total equity (primarily retained earnings) includes ` 777 crores (March 31, 2017: ` 605 crores) pertaining to trusts and TCS Foundation held for specified purposes. # C. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS 1-35 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Chartered Accountants N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Aarthi Subramanian Director Yezdi Nagporewalla Partner Membership No: 049265 N. Ganpathy Subramaniam COO and Executive Director Aman Mehta Director Dr. Pradeep Kumar Khosla Director Rajendra Moholkar Company Secretary Mumbai, April 19, 2018 # Consolidated Statements of Cash Flows | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |I. CASH FLOWS FROM OPERATING ACTIVITIES| | | |Profit for the year|25,880|26,357| |Adjustments to reconcile profit and loss to net cash provided by operating activities| | | |Depreciation and amortisation expense|2,014|1,987| |Net gain on disposal of property, plant and equipment|(25)|(3)| |Tax expense|8,212|8,156| |Net gain on investments|(906)|(642)| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|206|125| |Finance costs|52|32| |Interest income|(2,445)|(2,263)| |Dividend income|(9)|(1)| |Unrealised foreign exchange (gain) / loss|(94)|52| |Operating profit before working capital changes|32,885|33,800| |Net change in| | | |Trade receivables|(1,833)|680| |Unbilled revenue|(1,441)|(1,539)| |Loans and other financial assets|388|580| |Other assets and inventories|(464)|(142)| |Trade payables|(346)|(201)| |Unearned and deferred revenue|1,104|80| |Other financial liabilities|1,003|(533)| |Other liabilities and provisions|1,380|444| |Cash generated from operations|32,676|33,169| |Taxes paid (net of refunds)|(7,609)|(7,946)| |Net cash provided by operating activities|25,067|25,223| |II. CASH FLOWS FROM INVESTING ACTIVITIES| | | |Bank deposits placed|(2,057)|(2)| |Inter-corporate deposits placed|(6,915)|(2,299)| |Purchase of investments*|(97,473)|(121,423)| |Payment for purchase of property, plant and equipment|(1,862)|(1,989)| |Purchase of intangible assets|-|(1)| |Earmarked deposits placed with banks|(231)|-| |Proceeds from bank deposits|431|40| |Proceeds from inter-corporate deposits|4,685|3,918| |Proceeds from disposal / redemption of investments*|103,482|102,798| |Proceeds from disposal of property, plant and equipment|58|36| |Proceeds from disposal of intangible assets|-|1| |Proceeds from earmarked deposits with banks|136|400| |Dividend received|9|1| |Interest received|2,623|1,788| |Net cash provided by / (used in) investing activities|2,886|(16,732)| |III. |
CASH FLOWS FROM FINANCING ACTIVITIES| | | |Buy-back of equity shares|(16,000)|--| |Expenses for buy-back of equity shares|(42)| | |Short-term borrowings (net)|(19)|87| |Dividend paid (including tax on dividend)|(10,726)|(10,947)| |Dividend paid to non-controlling interests (including tax on dividend)|(34)|(26)| |Purchase of non-controlling interests|-|(54)| |Repayment of finance lease obligations|(24)|(66)| |Interest paid|(40)|(20)| |Net cash used in financing activities|(26,885)|(11,026)| |Net change in cash and cash equivalents|1,068|(2,535)| |Cash and cash equivalents at the beginning of the year|3,597|6,295| |Exchange difference on translation of foreign currency cash and cash equivalents|218|(163)| |Cash and cash equivalents at the end of the year (Refer note 14)|4,883|3,597| |*Purchase of investments include ` 709 crores (March 31, 2017: ` 890 crores) and proceeds from disposal / redemption of investments include ` 1,182 crores (March 31, 2017: ` 726 crores) held by TCS Foundation, formed for conducting corporate social responsibility activities of the Group.|*Purchase of investments include ` 709 crores (March 31, 2017: ` 890 crores) and proceeds from disposal / redemption of investments include ` 1,182 crores (March 31, 2017: ` 726 crores) held by TCS Foundation, formed for conducting corporate social responsibility activities of the Group.|*Purchase of investments include ` 709 crores (March 31, 2017: ` 890 crores) and proceeds from disposal / redemption of investments include ` 1,182 crores (March 31, 2017: ` 726 crores) held by TCS Foundation, formed for conducting corporate social responsibility activities of the Group.| |IV. NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS 1-35| | | As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Chartered Accountants N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. Ron Sommer Director Aarthi Subramanian Director Yezdi Nagporewalla Partner Rajesh Gopinathan CEO and Managing Director O. P. Bhatt Director V. Thyagarajan Director Prof. Clayton M. Christensen Director N. Ganpathy Subramaniam COO and Executive Director Aman Mehta Director Dr. Pradeep Kumar Khosla Director Rajendra Moholkar Company Secretary Mumbai, April 19, 2018 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # 1) Corporate information Tata Consultancy Services Limited ("the Company") and its subsidiaries (collectively together with the employee welfare trusts referred to as "the Group") provide 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, 2018, Tata Sons Limited, the holding company owned 71.89% of the Company's equity share capital. The consolidated financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on April 19, 2018. # 2) Significant accounting policies # (a) Statement of compliance These consolidated financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") prescribed under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules as amended from time to time. # (b) Basis of preparation These consolidated financial statements have been prepared on historical cost basis, except for certain financial instruments which are measured at fair value 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. # (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 relevant activities of 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 shareholders of the Company. # (d) Business combinations The Group accounts for its business combinations under acquisition method of accounting. Acquisition related costs are recognised in the statement of 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 # Notes forming part of the Consolidated Financial Statements 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 common control are accounted at historical cost. 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 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 source of estimation of uncertainty at the date of consolidated 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, contingent liabilities and fair value measurements of financial instruments have been discussed below. Key source of estimation of uncertainty in respect of revenue recognition and employee benefits have been discussed in their respective policies. # Impairment of goodwill The Group estimates 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 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. 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. Contingent assets are neither recognised nor disclosed in the financial statements. |
# Fair value measurement of financial instruments When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The policy has been further explained under note 2(l). # (f) Revenue recognition The Group earns revenue primarily from providing information technology, business solutions and consultancy services through development and maintenance of IT applications and infrastructure, implementation of enterprise solutions, business process services, assurance services, engineering and industrial services using its own products, framework of solutions and third party products. # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements The Group recognises revenue as follows: File: AR_TCS_2017_2018.md Contracts are unbundled into separately identifiable components and the consideration is allocated to those identifiable components on the basis of their relative fair values. Revenue is recognised for respective components either at the point in time or over time, as applicable. 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 and indirect taxes. (g) Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. (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 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, 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 into employee benefit expenses, cost of equipment and software licences, 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, facility expenses, travel expenses, communication expenses, bad debts and advances written off, allowance for doubtful trade receivables and advances (net) 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. |
(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 116 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements 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 the functional currency of the Company have been translated 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 unit 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. Deferred income tax assets 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. # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements 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. # (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 subsequent changes in the fair value of equity investments not held for trading in other comprehensive income. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless they are 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 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 of direct issue cost. # Hedge accounting The Group designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. 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. The policies 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 Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an 118 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements Ongoing basis. |
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in net foreign exchange gains 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 hedging 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 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 and 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 and 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 less residual value 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 equipment|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 are complete and the asset is 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 at the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any. Intangible assets are amortised on a straight line basis. Consolidated Financial Statements I 119 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements 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 their estimated useful lives: |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| # (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. 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. 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 on a pro-rata 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. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in 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. 120 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # (iii) Compensated absences Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as undiscounted liability at the balance sheet date. 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. # (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. 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 is 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) Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Group has not applied as they are effective for annual periods beginning on or after April 1, 2018: - Ind AS 115 Revenue from Contracts with Customers - Ind AS 21 The Effect of Changes in Foreign Exchange Rates # Ind AS 115 - Revenue from Contracts with Customers Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue, Ind AS 11 - Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition: 1. Identify the contract(s) with a customer 2. Identify the performance obligation in contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when (or as) the entity satisfies a performance obligation Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. The Group has completed its evaluation of the possible impact of Ind AS 115 and will adopt the standard with all related amendments to all contracts with customers retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. Under this transition method, cumulative effect of initially applying Ind AS 115 is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period. The standard is applied retrospectively only to contracts that are not completed contracts at the date of initial application. The Group does not expect the impact of the adoption of the new standard to be material on its retained earnings and to its net income on an ongoing basis. # Ind AS 21 - The Effect of Changes in Foreign Exchange Rates The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Group is evaluating the impact of this amendment on its financial statements. |
Consolidated Financial Statements I 121 # Annual Report 2017-18 # Notes forming part of the Consolidated 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 equipment|Electrical Installations|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2017|348|6,708|1,973|395|6,082|32|2,112|1,722|1,519|20,891| |Additions|-|394|344|105|852|3|159|129|150|2,136| |Disposals|-|-|(77)|(1)|(215)|(1)|(56)|(22)|(39)|(411)| |Translation exchange difference|-|-|17|2|67|-|6|2|10|104| |Cost as at March 31, 2018|348|7,102|2,257|501|6,786|34|2,221|1,831|1,640|22,720| |Accumulated depreciation as at April 1, 2017|-|(1,467)|(1,143)|(75)|(4,630)|(24)|(1,518)|(871)|(1,106)|(10,834)| |Disposals|-|2|73|1|202|1|54|19|27|379| |Depreciation for the year|-|(356)|(202)|(46)|(819)|(5)|(251)|(150)|(148)|(1,977)| |Translation exchange difference|-|-|(11)|(2)|(45)|-|(5)|(2)|(7)|(72)| |Accumulated depreciation as at March 31, 2018|-|(1,821)|(1,283)|(122)|(5,292)|(28)|(1,720)|(1,004)|(1,234)|(12,504)| |Net carrying amount as at March 31, 2018|348|5,281|974|379|1,494|6|501|827|406|10,216| | |Freehold land|Buildings|Leasehold Improvements|Plant and equipment|Computer equipment|Vehicles|Office equipment|Electrical Installations|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |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| File: AR_TCS_2017_2018.md |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| |Accumulated depreciation as at April 1, 2016|-|(1,139)|(977)|(40)|(4,155)|(21)|(1,284)|(732)|(989)|(9,337)| |Disposals|-|5|18|-|269|2|18|5|20|337| |Depreciation for the year|-|(334)|(194)|(35)|(788)|(5)|(257)|(147)|(146)|(1,906)| |Translation exchange difference|-|1|10|-|44|-|5|3|9|72| |Accumulated depreciation as at March 31, 2017|-|(1,467)|(1,143)|(75)|(4,630)|(24)|(1,518)|(871)|(1,106)|(10,834)| |Net carrying amount as at March 31, 2017|348|5,241|830|320|1,452|8|594|851|413|10,057| # Net carrying amount of property, plant and equipment under finance lease arrangements were as follows: | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Leasehold improvements|33|40| |Computer equipment|5|16| |Office equipment|1|2| |Furniture and fixtures|1|2| |Leased assets|40|60| # Notes forming part of the Consolidated Financial Statements # 5) Intangible assets Intangible assets consist of the following: | |Acquired|Rights under|Customer -|Total|contract|licensing|related|intangibles| |---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2017|339|80|81|500| | | | | |Translation exchange difference|30|-|8|38| | | | | |Cost as at March 31, 2018|369|80|89|538| | | | | |Accumulated amortisation as at April 1, 2017|(311)|(61)|(81)|(453)| | | | | |Amortisation for the year|(30)|(7)|-|(37)| | | | | |Translation exchange difference|(28)|-|(8)|(36)| | | | | |Accumulated amortisation as at March 31, 2018|(369)|(68)|(89)|(526)| | | | | |Net carrying amount as at March 31, 2018|-|12|-|12| | | | | | |Acquired|Rights under|Customer -|Total|contract|licensing|related|intangibles| |---|---|---|---|---|---|---|---|---| |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)| | | | | |Disposals / derecognised|-|62|-|62| | | | | |Amortisation for the year|(65)|(8)|(8)|(81)| | | | | |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| | | | | The estimated amortisation for each of the two fiscal years subsequent to March 31, 2018 is as follows: |Year ending March 31,|Amortisation expense| |---|---| |2019|7| |2020|5| |Thereafter|-| | |12| Consolidated Financial Statements I 123 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # 6) Goodwill Goodwill consist of the following: | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Balance at the beginning of the year|1,597|1,669| |Foreign currency exchange gain / (loss)|148|(72)| |Balance at the end of the year|1,745|1,597| The Group tests goodwill annually for impairment. Goodwill of ` 618 crores (March 31, 2017: ` 531 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 10.77%. 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 ` 1,127 crores (March 31, 2017: ` 1,066 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 | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Investments carried at fair value through profit or loss| | | |Mutual fund units (unquoted)|59|55| |(b) Investments designated at fair value through OCI| | | |Fully paid equity shares (unquoted)| | | |Mozido LLC|65|65| |FCM LLC|49|49| |Taj Air Limited|19|19| |Philippine Dealing System Holdings Corporation|6|5| |KOOH Sports Private Limited|3|3| |Less: Impairment in value of investments|(84)|-| |(c) Investments carried at amortised cost| | | |Government securities (quoted)*|168|132| |Corporate debentures and bonds (unquoted)*|16|16| | |301|344| |Market value of quoted investments carried at amortised cost| | | |Government securities|176|145| *Pertains to trusts held for specified purposes. |
# Notes forming part of the Consolidated Financial Statements # (B) Investments - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Investments carried at fair value through profit or loss|9,735|19,637| |(b) Investments carried at fair value through OCI| | | |Government securities (quoted)|25,217|21,999| |Corporate debentures and bonds (unquoted)|755|-| | |35,707|41,636| The market value of quoted investments is equal to the carrying value. *Includes ` 42 crores (March 31, 2017: ` 500 crores) pertaining to trusts and TCS Foundation held for specified purposes. # 8) Loans Loans (unsecured) consist of the following: # (A) Loans - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Considered good| | | |Loans and advances to employees|3|6| |Inter-corporate deposits|1,972|3| | |1,975|9| # (B) Loans - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Considered good| | | |Loans and advances to employees|380|344| |Inter-corporate deposits|2,825|2,565| |(b) Considered doubtful| | | |Loans and advances to employees|63|57| |Less: Allowance on loans and advances to employees|(63)|(57)| | |3,205|2,909| Inter-corporate deposits placed with financial institutions yield fixed interest rate. Inter-corporate deposits include ` 619 crores (March 31, 2017: ` 13 crores) for the year ended March 31, 2018 pertaining to trusts and TCS Foundation held for specified purposes. Consolidated Financial Statements I 125 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # 9) Other financial assets Other financial assets consist of the following: # (A) Other financial assets - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Security deposits|683|816| |(b) Earmarked balances with banks|1|1| |(c) Interest receivable|3|-| |(d) Others|4|8| |Total|691|825| # (B) Other financial assets - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Security deposits|217|147| |(b) Fair value of foreign exchange derivative assets|89|572| |(c) Interest receivable|534|715| |(d) Others|35|40| |Total|875|1,474| # 10) Income taxes The income tax expense consists of the following: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Current tax| | | |Current tax expense for current year|8,493|8,341| |Current tax benefit pertaining to prior years|(228)|(106)| |Total current tax|8,265|8,235| |Deferred tax benefit|(57)|(11)| |Deferred tax expense / (benefit) pertaining to prior years|4|(68)| |Total deferred tax|(53)|(79)| |Total income tax expense recognised in current year|8,212|8,156| 126 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements 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: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Profit before taxes|34,092|34,513| |Indian statutory income tax rate|34.61%|34.61%| |Expected income tax expense|11,799|11,945| |Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense| | | |Tax holidays|(4,389)|(4,175)| |Income exempt from tax|(194)|(167)| |Undistributed earnings in branches and subsidiaries|486|195| |Tax on income at different rates|472|101| |Tax pertaining to prior years|(224)|(174)| |Others (net)|262|431| |Total income tax expense|8,212|8,156| 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). |
Significant components of net deferred tax assets and liabilities for the year ended March 31, 2018 are as follows: | |Opening balance|Recognised in profit and loss|Recognised in / reclassified from other comprehensive income|Acquisitions / disposals|Exchange difference|Closing balance| |---|---|---|---|---|---|---| |Deferred tax assets / (liabilities) in relation to| | | | | | | |Property, plant and equipment and intangible assets|(106)|145|-|-|4|43| |Provision for employee benefits|389|8|(5)|-|3|395| |Cash flow hedges|(12)|-|22|-|-|10| |Receivables, financial assets at amortised cost|220|81|-|-|-|301| |MAT credit entitlement|2,084|133|-|-|-|2,217| |Branch profit tax|(286)|(114)|-|-|-|(400)| |Undistributed earnings of subsidiaries|(509)|(96)|-|-|-|(605)| |Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income|(285)|-|283|-|-|(2)| |Operating lease liabilities|90|(5)|-|-|-|85| |Others|324|(99)|-|-|10|235| |Total deferred tax assets / (liabilities)|1,909|53|300|-|17|2,279| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # Gross deferred tax assets and liabilities are as follows: |(` crores)|Assets|Liabilities|Net| |---|---|---|---| |As at March 31, 2018| | | | |Deferred tax assets / (liabilities) in relation to Property, plant and equipment and intangible assets|175|132|43| |Provision for employee benefits|402|7|395| |Cash flow hedges|10|-|10| |Receivables, financial assets at amortised cost|300|(1)|301| |MAT credit entitlement|2,217|-|2,217| |Branch profit tax|-|400|(400)| |Undistributed earnings of subsidiaries|-|605|(605)| |Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income|-|2|(2)| |Operating lease liabilities|85|-|85| |Others|260|25|235| |Total deferred tax assets / (liabilities)|3,449|1,170|2,279| # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2017 are as follows: |(` crores)|Opening balance|Recognised in profit and loss|Recognised in other comprehensive income|Acquisitions / disposals|Exchange difference|Closing balance| |---|---|---|---|---|---|---| |Deferred tax assets / (liabilities) in relation to 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)| |Deferred revenue|-|-|-|-|-|-| |Receivables, financial assets at amortised cost|190|30|-|-|-|220| |MAT credit entitlement|1,987|97|-|-|-|2,084| |Branch profit tax|(346)|60|-|-|-|(286)| |Undistributed earnings of subsidiaries|(342)|(167)|-|-|-|(509)| |Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income|(28)|-|(256)|-|(1)|(285)| |Operating lease liabilities|94|(3)|-|-|(1)|90| |Others|290|38|-|-|(4)|324| |Total deferred tax assets / (liabilities)|2,103|79|(259)|-|(14)|1,909| # Notes forming part of the Consolidated 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|(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| | | |Branch profit tax|-|286|(286)| | | |Undistributed earnings of subsidiaries|-|509|(509)| | | |Unrealised gain on securities carried at fair value through profit|(285)|-|(285)| | | |or loss / other comprehensive income| | | | | | |Operating lease liabilities|90|-|90| | | |Others|352|28|324| | |Total deferred tax assets / (liabilities)|2,828|919|1,909| | | 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: |(` crores)|Unabsorbed business losses| |---|---| |March 31, 2019|4| |2020|31| |2021|11| |2022|16| |2023|-| |Thereafter|-| | |62| 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 ` 2,217 crores. Deferred tax liability on undistributed earnings of ` 7,164 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. The Company and its subsidiaries have ongoing disputes with Income Tax authorities in India and in some of the jurisdictions where they operate. The disputes relate to tax treatment of certain expenses claimed as deductions, computation or eligibility of tax incentives or allowances, and characterisation of fees for services received. As at March 31, 2018, the Company and its subsidiaries have contingent liability of ` 5,639 crores (March 31, 2017: ` 2,690 crores) in respect of tax demands which are being contested by the Company and its subsidiaries based. # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements on the management evaluation and advice of tax consultants. |
In respect of tax contingencies of ` 318 crores (March 31, 2017: ` 318 crores), 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 2016 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2014 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2015 and earlier. On December 22, 2017, H.R. 1, originally known as the "Tax Cuts and Jobs Act" was signed into law ("US Tax Reforms"). The law provides for a federal tax rate reduction from a maximum rate of 35% to a flat rate of 21% with effect from January 1, 2018. The tax rate change does not have any significant impact on the taxes of the Group. # 11) Other assets Other assets consist of the following: # (A) Other assets - Non-current | |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---|---| |Considered good| | | | |(a) Prepaid expenses| |451|281| |(b) Prepaid rent| |373|228| |(c) Capital advances| |106|143| |(d) Advances to related parties| |2|6| |(e) Others| |21|31| | |Total|953|689| Advances to related parties, considered good, comprise: - Voltas Limited: 2 (6) - Tata Realty and Infrastructure Ltd*: - (-) *Represents value less than ` 0.50 crore. # (B) Other assets - Current | |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---|---| |Considered good| | | | |(a) Prepaid expenses| |1,546|1,463| |(b) Prepaid rent| |54|46| |(c) Advance to suppliers| |144|188| |(d) Advance to related parties| |3|1| |(e) Indirect tax recoverable| |699|488| |(f) Other advances| |41|28| |(g) Others| |97|62| # Notes forming part of the Consolidated Financial Statements | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Advance to suppliers|3|3| |(b) Indirect tax recoverable|2|2| |(c) Other advances|3|3| |Less: Allowance on doubtful assets|(8)|(8)| | |2,584|2,276| |Advance to related parties, considered good comprise| | | |Tata AIG General Insurance Company Limited|1|-| |The Titan Company Limited|2|1| # 12) Inventories Inventories consist of the following: | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Raw materials, sub-assemblies and components|25|19| |(b) Finished goods and work-in-progress*|-|1| |(c) Goods-in-transit (raw materials)*|-|1| |(d) Stores and spares|1|-| | |26|21| *Represents values less than ` 0.50 crore. Inventories are carried at lower of cost and net realisable value. # 13) Trade Receivables Trade receivables (unsecured) consist of the following: # (A) Trade receivables - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Considered good|94|67| |(b) Considered doubtful|366|287| | |460|354| |Less: Allowance for doubtful trade receivables|(366)|(287)| | |94|67| # (B) Trade receivables - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Considered good|24,943|22,617| |(b) Considered doubtful|465|357| | |25,408|22,974| |Less: Allowance for doubtful trade receivables|(465)|(357)| | |24,943|22,617| Above balances of trade receivables include balances with related parties (Refer note 34). # Annual Report 2017-18 # 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, 2018|As at March 31, 2017| |---|---|---|---| |(a) Balances with banks| |4,487|3,077| |In current accounts| |4,487|3,077| |In deposit accounts| |328|466| |(b) Cheques on hand| |3|6| |(c) Cash on hand| |-|1| |(d) Remittances in transit| |65|47| | |Total|4,883|3,597| # 15) Other balances with banks Other balances with banks consist of the following: | |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---|---| |(a) Earmarked balances with banks| |222|122| |(b) Short-term bank deposits| |2,056|430| | |Total|2,278|552| Earmarked balances with banks significantly includes margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. |
# 16) Share capital The authorised, issued, subscribed and fully paid-up share capital comprises of: | |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---|---| |Authorised| | | | |(a) 460,05,00,000 equity shares of ` 1 each| |460|460| |(b) 105,02,50,000 preference shares of ` 1 each| |105|105| | |Total|565|565| |Issued, Subscribed and Fully paid up| | | | |(a) 191,42,87,591 equity shares of ` 1 each| |191|197| | |Total|191|197| The Board of Directors of the Company, at its meeting held on February 20, 2017 had approved a proposal to buy-back upto 5,61,40,351 equity shares of the Company for an aggregate amount not exceeding ` 16,000 crores being 2.85% of the total paid up equity share capital at ` 2,850 per equity share, which was approved by the shareholders by means of a special resolution through a postal ballot. 132 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements A Letter of Offer was made to all eligible shareholders. The Company bought back 5,61,40,350 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares bought on June 7, 2017. Capital Redemption Reserve was created to the extent of Share Capital extinguished (` 6 crores). An amount of ` 5,005 crores from retained earnings was used to offset the excess of buy-back cost of ` 16,042 crores (including ` 42 crores towards transaction costs of buy-back) over par value of shares after adjusting the balances lying in securities premium (` 1,919 crores) and general reserve (` 9,118 crores). # (i) Reconciliation of number of shares | | | |As at March 31, 2018| |As at March 31, 2017| | |---|---|---|---|---|---|---| |Number of shares|Amount (` crores)|Number of shares|Amount (` crores)| | | | |Equity shares|Opening balance| |197,04,27,941|197|197,04,27,941|197| | |Shares extinguished on buy-back| |(5,61,40,350)|(6)|-|-| | |Closing balance| |191,42,87,591|191|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, 2018| |As at March 31, 2017| | |---|---|---|---|---| |Equity shares|Holding company|137,61,18,911 equity shares (March 31, 2017: 144,34,51,698 equity shares) are held by Tata Sons Limited|138|144| | |Subsidiaries and Associates of Holding company|3,610 equity shares (March 31, 2017: 3,700 equity shares) are held by Tata Industries Limited*|-|-| | | |2,06,000 equity share (March 31, 2017 : NIL equity shares) are held by Tata AIG Life Insurance Company Limited*|-|-| | | |7,76,533 equity shares (March 31, 2017: 8,57,301 equity shares) are held by Tata AIA Life Insurance Company Limited*|-|-| | | |5,27,110 equity shares (March 31, 2017: 5,50,000 equity shares) are held by Tata Investment Corporation Limited*|-|-| | | |23,804 equity shares (March 31, 2017: 24,400 equity shares) are held by Tata Steel Limited*|-|-| | | |383 equity shares (March 31, 2017: 452 equity shares) are held by The Tata Power Company Limited*|-|-| | | |NIL equity shares (March 31, 2017: 4,84,902 equity shares*) are held by AF-taab Investment Company Limited|-|-| |Total| | |138|144| *Equity shares having value less than ` 0.50 crore. Consolidated Financial Statements I 133 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # (iv) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2018|As at March 31, 2017| | |---|---|---|---| |Equity shares|Tata Sons Limited, the Holding company|137,61,18,911|144,34,51,698| |% of shareholding| |71.89%|73.26%| # (v) Equity shares movement during 5 years preceding March 31, 2018 # (a) Equity shares extinguished on buy-back 5,61,40,350 equity shares of ` 1 each were extinguished on buy-back by the company pursuant to a Letter of Offer made to all eligible shareholders of the company at ` 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017. |
# (b) Equity shares allotted as fully paid-up including equity shares fully paid 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. 134 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 17) Other equity Other equity consist of the following: |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Capital reserve (on consolidation)|75|75| |(b) Securities premium reserve| | | |(i) Opening balance|1,919|1,919| |(ii) Utilised for buyback of equity shares*|(1,919)|-| | |-|1,919| |(c) Capital redemption reserve| | | |(i) Opening balance|523|523| |(ii) Transfer from retained earnings*|6|-| | |529|523| |(d) General reserve| | | |(i) Opening balance|10,549|10,549| |(ii) Transfer to retained earnings|(8)|-| |(iii) Utilised for buyback of equity shares*|(9,118)|-| | |1,423|10,549| |(e) Special Economic Zone re-investment reserve| | | |(i) Opening balance|97|-| |(ii) Transfer from retained earnings|1,579|376| |(iii) Transfer to retained earnings|(98)|(279)| | |1,578|97| |(f) Retained earnings| | | |(i) Opening balance|71,071|56,113| |(ii) Profit for the year|25,826|26,289| |(iii) Remeasurement of defined employee benefit plans|102|(206)| |(iv) Utilised for buyback of equity shares*|(4,957)|-| |(v) Expense relating to buy back of equity shares*|(42)|-| |(vi) Purchase of non-controlling interests|-|(28)| |(vii) Realised loss on equity shares carried at fair value through OCI|-|(20)| |(viii) Transfer from Special Economic Zone re-investment reserve|98|279| |(ix) Transfer from general reserve|8|-| | |92,106|82,427| |(x) Less: Appropriations| | | |(a) Dividend on equity shares|9,284|9,162| |(b) Tax on dividend|1,442|1,785| |(c) Transfer to capital redemption reserve*|6|-| |(d) Transfer to Special Economic Zone re-investment reserve|1,579|376| |(e) Transfer to statutory reserve|40|33| | |79,755|71,071| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(g) Statutory reserve| | | |(i) Opening balance|218|185| |(ii) Transfer from retained earnings|40|33| | |258|218| |(h) Investment revaluation reserve| | | |(i) Opening balance|538|54| |(ii) Change during the year (net)|(622)|484| | |(84)|538| |(i) Cash flow hedging reserve (Refer Note 29 (b))| | | |(i) Opening balance|88|49| |(ii) Change during the year (net)|(159)|39| | |(71)|88| |(j) Foreign currency translation reserve| | | |(i) Opening balance|939|1,408| |(ii) Change during the year (net)|535|(469)| | |1,474|939| | |84,937|86,017| *Refer note 16. # Other components of equity Other components of equity consist of the following: # Investment revaluation reserve | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Balance at the beginning of the year|538|54| |Net loss arising on revaluation of financial assets carried at fair value|(84)|(20)| |Net cumulative loss reclassified to retained earnings on sale of financial assets carried at fair value|-|20| File: AR_TCS_2017_2018.md |Net (loss) / gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income|(625)|740| |Deferred tax relating to net (loss) / gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income|216|(256)| |Net cumulative gain reclassified to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income|(196)|-| |Deferred tax relating to net cumulative gain reclassified to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income|67|-| |Balance at the end of the year|(84)|538| # Notes forming part of the Consolidated Financial Statements # Nature of reserves # (a) Capital reserve The Group recognises profit and 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) Capital redemption reserve As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. # (d) 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. # (e) Special Economic Zone re-investment reserve The Special Economic Zone re-investment reserve has been created out of the profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve should be utilised by the Group for acquiring new plant and machinery for the purpose of its business in the terms of the section 10AA(2) of Income-tax Act, 1961. # (f) 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 off. # (g) 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 hedging reserve. Such gains or losses will be reclassified to statement of profit and loss in the period in which the hedged transaction occurs. # (h) Foreign currency translation reserve The exchange differences arising from the translation of financial statements of foreign operations with functional currency other than Indian rupees is recognised in other comprehensive income, net of taxes and is presented within equity in the foreign currency translation reserve. # 18) Borrowings Borrowings consist of the following: # (A) Borrowings - Non-current (secured loans) | |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---|---| |Long-term maturities of finance lease obligations| |54|71| | | |54|71| Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements (Refer note 28). Consolidated Financial Statements I 137 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # (B) Borrowings - Current (unsecured loans) | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Overdraft from banks|181|200| | |181|200| # 19) Other financial liabilities Other financial liabilities consist of the following: # (A) Other financial liabilities - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Capital creditors|18|17| |(b) Others|485|437| | |503|454| Others include advance taxes paid of ` 227 crores (March 31, 2017: ` 227 crores) by the seller of TCS e-Serve Limited which, on refund by the tax authorities, is payable to the seller. # (B) Other financial liabilities - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Accrued payroll|2,637|1,374| |(b) Current maturities of finance lease obligations|12|18| |(c) Unclaimed dividends|28|25| |(d) Fair value of foreign exchange derivative liabilities|91|20| |(e) Capital creditors|262|287| |(f) Liabilities towards customer contracts|776|1,001| |(g) Others|107|199| | |3,913|2,924| Finance lease obligations are secured against property, plant and equipment obtained under finance lease arrangements. |
# 20) Provisions Provisions consist of the following: # (A) Provisions - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Provision for foreseeable loss|26|39| | |26|39| 138 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # (B) Provisions - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Provision for foreseeable loss|199|66| |Other Provisions|41|-| |Total|240|66| # 21) Other liabilities Other liabilities consist of the following: # (A) Other liabilities - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Operating lease liabilities|392|387| |(b) Others|-|45| |Total|392|432| # (B) Other liabilities - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Advance received from customers|796|330| |(b) Indirect tax payable and other statutory liabilities|1,986|1,301| |(c) Operating lease liabilities|99|74| |(d) Others|48|40| |Total|2,929|1,745| # 22) Revenue from operations Revenue from operations includes ` 2,976 crores for the year ended March 31, 2018 (March 31, 2017: ` 2,849 crores) towards sale of equipment and software licences. # 23) Other income (net) Other income (net) consist of the following: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |(a) Interest income|2,445|2,263| |(b) Dividend income|9|1| |(c) Net gain on investments carried at fair value through profit or loss|706|633| |(d) Net gain on sale of investments carried at amortised cost|4|9| |(e) Net gain on sale of investments other than equity shares carried at fair value through OCI|196|-| |(f) Net gain on disposal of property, plant and equipment|25|3| |(g) Net foreign exchange gains|163|1,240| |(h) Rent income|16|17| |(i) Other Income|78|55| |Total|3,642|4,221| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Interest income comprise| | | |Interest on bank deposits|62|116| |Interest income on financial assets carried at amortised cost|245|412| |Interest income on financial assets carried at fair value through OCI|1,727|1,598| |Other interest (including interest on income tax refunds)|411|137| |Dividend income comprise| | | |Dividend from mutual fund units|9|1| # 24) Employee benefits Employee benefit expenses consist of the following: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |(a) Salaries, incentives and allowances|59,950|55,537| |(b) Contributions to provident and other funds|4,505|4,189| |(c) Staff welfare expenses|1,941|1,895| |Total|66,396|61,621| Employee benefit obligations consist of the following: # (A) Employee benefit obligations - Non-current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Gratuity liability|3|4| |(b) Foreign defined benefit plans|213|159| |(c) Other employee benefit obligations|74|82| |Total|290|245| # (B) Employee benefit obligations - Current | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Compensated absences|1,995|1,834| |(b) Other employee benefit obligations|23|28| |Total|2,018|1,862| # Notes forming part of the Consolidated Financial Statements # Employee benefits plans # Gratuity and pension In accordance with Indian law, Tata Consultancy Services Limited and its subsidiaries in India operate a scheme of Gratuity which is a defined benefit 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. Certain overseas subsidiaries of the Company also provide for retirement benefit pension plans in accordance with the local laws. |
The following table sets out the details of the defined benefit retirement plans and the amounts recognised in the financial statements: |Change in benefit obligations| | |Year ended March 31, 2018| | | | |Year ended March 31, 2017| | | |---|---|---|---|---|---|---|---|---|---|---| |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| | |Benefit obligations, beginning of the year|2,084|4|537|81|2,706|1,633|3|744|67|2,447| |Exchange loss / (gain) on translation|-|-|59|5|64|-|-|(49)|(5)|(54)| |Plan participants' contribution|-|-|7|-|7|-|-|8|-|8| |Service cost|273|1|12|19|305|241|1|12|21|275| |Interest cost|159|-|9|3|171|138|-|10|3|151| |Remeasurement of the net defined benefit liability|(86)|(2)|(12)|(3)|(103)|200|-|58|(3)|255| |Past service cost / (credit)|-|-|33|2|35|-|-|(9)|-|(9)| |Benefits paid|(122)|-|(19)|(4)|(145)|(128)|-|(17)|(2)|(147)| |Adjustment on plan settlement|-|-|-|-|-|-|-|(220)|-|(220)| |Benefit obligations, end of the year|2,308|3|626|103|3,040|2,084|4|537|81|2,706| |Change in plan assets| | |Year ended March 31, 2018| | | | |Year ended March 31, 2017| | | |---|---|---|---|---|---|---|---|---|---|---| |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| | |Fair value of plan assets, beginning of the year|2,157|-|461|-|2,618|1,747|-|731|-|2,478| |Exchange gain / (loss) on translation|-|-|52|-|52|-|-|(42)|-|(42)| |Interest income|165|-|10|-|175|145|-|8|-|153| |Employers' contributions|233|-|15|-|248|393|-|15|-|408| |Plan participants' contribution|-|-|7|-|7|-|-|8|-|8| |Benefits paid|(122)|-|(19)|-|(141)|(128)|-|(17)|-|(145)| |Remeasurement - return on plan assets excluding amount included in interest income|-|-|3|-|3|-|-|47|-|47| |Adjustment on plan settlement*|-|-|-|-|-|-|-|(289)|-|(289)| |Fair value of plan assets, end of the year|2,433|-|529|-|2,962|2,157|-|461|-|2,618| *Adjustment in plan assets for year ended March 31, 2017 include ` 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 141 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements | | |As at March 31, 2018| | | | |As at March 31, 2017| | | | |---|---|---|---|---|---|---|---|---|---|---| | |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| | |Funded status|-|(3)|(110)|(103)|(216)|-|(4)|(78)|(81)|(163)| |Surplus of plan assets over obligations|125|-|13|-|138|73|-|2|-|75| | |125|(3)|(97)|(103)|(78)|73|(4)|(76)|(81)|(88)| | | | |As at March 31, 2018| | | | |As at March 31, 2017| | | | |---|---|---|---|---|---|---|---|---|---|---|---| | |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| | | |Category of assets|Corporate bonds|560|-|50|-|610|731|-|145|-|876| | |Equity shares|116|-|-|-|116|95|-|34|-|129| | |Government securities|996|-|-|-|996|621|-|-|-|621| | |Index linked gilt|-|-|-|-|-|-|-|-|-| | | |Insurer managed funds|714|-|224|-|938|692|-|26|-|718| | |Bank balances|5|-|1|-|6|3|-|11|-|14| | |Others|42|-|254|-|296|15|-|245|-|260| |Total|2,433|-|529|-|2,962|2,157|-|461|-|2,618| | # Net periodic gratuity / pension cost, included in employee cost consists of the following components: | | |Year ended March 31, 2018| | | | |Year ended March 31, 2017| | | | |---|---|---|---|---|---|---|---|---|---|---| | |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| | |Service cost|273|1|12|19|305|241|1|12|21|275| |Net interest on net defined benefit asset|(6)|-|(1)|3|(4)|(7)|-|2|3|(2)| |Past service cost / (credit)|-|-|33|2|35|-|-|(9)|-|(9)| |Net periodic gratuity / pension cost|267|1|44|24|336|234|1|5|24|264| |Actual return on plan assets|165|-|13|-|178|145|-|55|-|200| # Notes forming part of the Consolidated Financial Statements # Remeasurement of the net defined benefit liability / (asset): |(` crores)| | |Year ended March 31, 2018| | | |---|---|---|---|---|---| | |Domestic|Domestic|Foreign|Foreign|Total| | |plans|plans|plans|plans| | | |Funded|Unfunded|Funded|Unfunded| | |Actuarial (gains) and losses arising from changes in demographic assumptions|16|-|(6)|1|11| |Actuarial gains arising from changes in financial assumptions|(85)|(2)|(14)|(1)|(102)| |Actuarial (gains) and losses arising from changes in experience adjustments|(17)|-|8|(3)|(12)| |Remeasurement of the net defined benefit liability|(86)|(2)|(12)|(3)|(103)| |Remeasurement - return on plan assets excluding amount included in interest income|-|-|(3)|-|(3)| |Total|(86)|(2)|(15)|(3)|(106)| |(` 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)|-|1|(1)|(2)| |Actuarial (gains) and losses arising from changes in financial assumptions|71|-|51|(3)|119| |Actuarial losses arising from changes in experience adjustments|131|-|6|1|138| |Remeasurement of the net defined benefit liability|200|-|58|(3)|255| |Remeasurement - return on plan assets excluding amount included in interest income|-|-|(47)|-|(47)| |Total|200|-|11|(3)|208| # The assumptions used in accounting for the defined benefit plan are set out below: | |Year ended March 31, 2018| |Year ended March 31, 2017| | |---|---|---|---|---| | |Domestic plans|Foreign plans|Domestic plans|Foreign plans| |Discount rate|7.25%-7.75%|0.60%-7.75%|6.75%-7.25%|0.60%-7.75%| |Rate of increase in compensation levels of covered employees|5.00%-8.00%|1.25%-6.00%|6.00%-8.00%|1.25%-4.64%| |Rate of return on plan assets|7.25%-7.75%|0.60%-7.75%|6.75%-7.25%|0.60%-7.75%| |Weighted average duration of defined benefit obligations|8-12 years|5-28 years|4-10 years|15-29 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, 2018. The Group is expected to contribute ` 159 crores to defined benefit plan obligations funds for the year ended March 31, 2019 comprising domestic component of ` 147 crores and foreign component of ` 12 crores. Consolidated Financial Statements I 143 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements 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 ` 143 crores (increase by ` 158 crores) as at March 31, 2018. If the expected salary growth increases (decreases) by 0.50%, the defined benefit obligations would increase by ` 96 crores (decrease by ` 90 crores) as at March 31, 2018. 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, 2018 as follows: |Year ending March 31,|Defined benefit obligations (` crores)| |---|---| |2019|241| |2020|225| |2021|235| |2022|234| |2023|243| |Thereafter|1,018| # Provident fund In accordance with Indian law, all eligible employees of Tata Consultancy Services Limited in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a Trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company's contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in profit or loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund. All eligible employees of Indian subsidiaries of the Company are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to the Government administered provident fund plan. A part of the company's contribution is transferred to Government administered pension fund. This plan is a defined contribution plan as the obligation of the employer is limited to the monthly contributions made to the fund. The contributions made to the fund are recognised as an expense in profit and loss under employee benefit expenses. # Notes forming part of the Consolidated Financial Statements The details of fund and plan assets are given below: | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Fair value of plan assets|13,084|10,962| |Present value of defined benefit obligations|(13,084)|(10,962)| |Net (shortfall) / excess|-|-| The plan assets have been primarily invested in government securities and corporate bonds. The principal assumptions used in determining the present value obligations of interest guarantee under the deterministic approach are as follows: | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Discount rate|7.75%|7.25%| |Average remaining tenure of investment portfolio|7.95 years|7.01 years| |Guaranteed rate of return|8.55%|8.65%| The Group contributed ` 848 crores for the year ended March 31, 2018 (March 31, 2017: ` 804 crores) to the provident fund. # Superannuation All eligible employees on Indian payroll 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 ` 264 crores for the year ended March 31, 2018 (March 31, 2017: ` 265 crores) to the Employees' Superannuation Fund. |
# Foreign Defined Contribution Plan The Group contributed ` 927 crores for the year ended March 31, 2018 (March 31, 2017: ` 826 crores) towards foreign defined contribution plan. # Other operating expenses Other operating expenses consist of the following: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |(a) Fees to external consultants|8,992|8,854| |(b) Facility expenses|3,938|3,685| |(c) Travel expenses|2,816|2,786| |(d) Communication expenses|1,062|1,067| |(e) Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|206|125| |(f) Other expenses|4,478|4,709| |Total|21,492|21,226| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # 26) Cost of equipment and software licences Cost of equipment and software licences include: | |(` crores)|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---|---| |(a) Raw materials, sub-assemblies and components consumed| |86|94| |(b) Equipment and software licences purchased| |2,613|2,715| | |Finished goods and work-in-progress|2,699|2,809| |Opening stock| |1|-| |Less: Closing stock| |-|1| | | |1|(1)| | |Total|2,700|2,808| # 27) Research and development expenditure Research and development expenditure aggregating ` 298 crores in the year ended March 31, 2018 (March 31, 2017: ` 282 crores) including capital expenditure was incurred during the year. # 28) Lease 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 ` 1,998 crores (March 31, 2017: ` 1,818 crores) for the year ended March 31, 2018. 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, 2018|As at March 31, 2017| |---|---|---|---| |Due within one year| |897|833| |Due in a period between one year and five years| |3,053|2,302| |Due after five years| |1,061|1,215| |Total minimum lease commitments| |5,011|4,350| # Finance lease | |(` crores)|As at March 31, 2018|As at March 31, 2017| | |---|---|---|---|---| |Minimum lease commitments|Present value of minimum lease commitments|Minimum lease commitments|Present value of minimum lease commitments| | |Due within one year|20|12|25|18| |Due in a period between one year and five years|62|45|73|52| |Due after five years|10|9|21|19| |Total minimum lease commitments|92|66|119|89| |Less: Interest|(26)| |(30)| | |Present value of minimum lease commitments|66| |89| | 146 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Receivables under sub leases | |As at March 31, 2018|As at March 31, 2017| |---|---|---| |Due within one year|6|12| |Due in a period between one year and five years|7|1| |Total|13|13| Income from sub leases of ` 16 crores in the year ended March 31, 2018 (March 31, 2017: ` 17 crores) have been recognised in the statement of profit and loss. # 29) 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, 2018 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|9,794|26,030|-|-|4,883|81,865| |Cash and cash equivalents|-|-|-|-|4,883|4,883| |Bank deposits|-|-|-|-|2,056|2,056| |Earmarked balances with banks|-|-|-|-|223|223| |Investments|9,794|26,030|-|-|184|36,008| |Trade receivables|-|-|-|-|25,037|25,037| |Unbilled revenue|-|-|-|-|6,913|6,913| |Loans*|-|-|-|-|5,180|5,180| |Other financial assets|-|-|34|55|1,476|1,565| |Total|9,794|26,030|34|55|45,952|81,865| | |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|-|-|-|-|9,745|9,745| |Trade payables|-|-|-|-|5,094|5,094| |Borrowings|-|-|-|-|235|235| |Other financial liabilities|203|-|24|67|4,122|4,416| |Total|203|-|24|67|9,451|9,745| *Loans include inter-corporate deposits of ` 4,797 crores, with original maturity period within 50 months. # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements 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|-|-|-|-|3,597|3,597| |Bank deposits|-|-|-|-|430|430| |Earmarked balances with banks|-|-|-|-|123|123| |Investments|19,692|22,140|-|-|148|41,980| |Trade receivables|-|-|-|-|22,684|22,684| |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| | |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|-|-|-|-|4,905|4,905| |Borrowings|-|-|-|-|271|271| |Other financial liabilities|196|-|-|20|3,162|3,378| |Total|196|-|-|20|8,338|8,554| *Loans include inter-corporate deposits of ` 2,568 crores, with original maturity period within 50 months. |
Carrying amounts of cash and cash equivalents, trade receivables, unbilled revenues, loans and trade payables as at March 31, 2018 and 2017 approximate the fair value. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, 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 financial instruments 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): |As at March 31, 2018|Level|Level|Level|Total| | | | |---|---|---|---|---|---| | |Level 1|Level 2|Level 3| | | |Financial assets|Mutual fund units|9,735|59|-|9,794| | |Equity shares|-|-|58|58| | |Corporate debentures and bonds|-|771|-|771| | |Government securities|25,385|-|-|25,385| | |Derivative financial assets|-|89|-|89| |Total|35,120|919|58|36,097| | |As at March 31, 2017|Level|Level|Level|Total| | | | | |---|---|---|---|---|---|---| | |Level 1|Level 2|Level 3| | | | |Financial assets|Mutual fund units|19,692|-|-|19,692| | | |Equity shares|-|-|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| | | # Reconciliation of Level 3 fair value measurement is as follows: | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Balance at the beginning of the year|141|169| |Disposals during the year|-|(25)| |Impairment in value of investments|(83)|-| |Exchange loss|-|(3)| |Balance at the end of the year|58|141| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # (b) Derivative financial instruments and hedging activity File: AR_TCS_2017_2018.md 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, Canadian Dollar, Swiss Franc, Japanese Yen, Norwegian Krone, Swedish Krona, South African Rand, 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 Board of Directors of the Company has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Group which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Group uses various derivative instruments such as foreign exchange forwards, currency option and futures contracts in which the counter party is generally a bank. # Outstanding currency options contracts designated as cash flow hedges: |Foreign currency|As at March 31, 2018|As at March 31, 2018|As at March 31, 2018|As at March 31, 2017|As at March 31, 2017|As at March 31, 2017| |---|---|---| | |No. of contracts|Notional amount of contracts (million)|Fair value (` crores)|No. of contracts|Notional amount of contracts (million)|Fair value (` crores)| |U.S. Dollar|24|1,466|20|6|150|9| |Sterling Pound|34|263|(23)|45|318|60| |Euro|26|216|1|27|198|40| |Australian Dollar|21|150|12|6|60|11| # Outstanding foreign exchange forward contracts designated as cash flow hedges: |Foreign currency|As at March 31, 2018|As at March 31, 2018|As at March 31, 2018|As at March 31, 2017|As at March 31, 2017|As at March 31, 2017| |---|---|---| | |No. of contracts|Notional amount of contracts (million)|Fair value (` crores)|No. |
of contracts|Notional amount of contracts (million)|Fair value (` crores)| |Sterling Pound|-|-|-|5|125|5| |Euro|-|-|-|3|91|15| 150 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, 2018| |Year ended March 31, 2017| | |---|---|---|---|---| | |Intrinsic value|Time value|Intrinsic value|Time value| |Balance at the beginning of the year|105|(17)|68|(19)| |(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|(127)|340|(743)|235| |Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|15|(38)|104|(31)| |Changes in the fair value of effective portion of cash flow hedges|5|(399)|784|(232)| |Deferred tax on fair value of effective portion of cash flow hedges|-|45|(108)|30| |Balance at the end of the year|(2)|(69)|105|(17)| In addition to the above cash flow hedges, the Group has outstanding foreign exchange forward, currency options and futures contracts with notional amount aggregating ` 22,404 crores as at March 31, 2018 (March 31, 2017: ` 19,159 crores) whose fair value showed a net loss of ` 12 crores as at March 31, 2018 (March 31, 2017: net gain of ` 412 crores). Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting. Exchange loss of ` 52 crores for the year ended March 31, 2018 (March 31, 2017: Exchange gain of ` 1,522 crores) on foreign exchange forward, currency options and futures contracts, have been recognised in the statement of profit and loss. Net foreign exchange gains include loss of ` 213 crores for the year ended March 31, 2018 (March 31, 2017: Exchange gain of ` 508 crores) transferred from cash flow hedging reserve. Net loss on derivative instruments of ` 71 crores recognised in cash flow hedging reserve as at March 31, 2018, is expected to be transferred to the statement of profit and loss by March 31, 2019. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2018. # Following table summarises approximate gain / (loss) on Group's other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies. | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |10% Appreciation of the underlying foreign currencies|(323)|(218)| |10% Depreciation of the underlying foreign currencies|1,054|793| # (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. # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # 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. # i. (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. 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). # The following table sets forth information relating to foreign currency exposure as at March 31, 2018: | |USD|EUR|GBP|AUD|SGD|DKK|BRL|SAR|Others*| |---|---|---|---|---|---|---|---|---|---| |Net financial assets|2,481|349|266|145|1|16|-|383|683| |Net financial liabilities|(298)|(1)|(6)|(7)|(10)|(74)|(25)|-|(243)| 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 taxes by approximately ` 366 crores for the year ended March 31, 2018. # The following table sets forth information relating to 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 taxes by approximately ` 288 crores for the year ended March 31, 2017. *Others include currencies such as South African Rand, Canadian Dollar, Swiss Franc, Norwegian Kroner etc. # Notes forming part of the Consolidated Financial Statements # i. (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 ` 4,797 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of ` 2,000 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 2018. 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 ` 81,771 crores as at March 31, 2018 (March 31, 2017: ` 79,313 crores), being the total of the carrying amount of balances with banks, bank deposits, 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 trade receivable and unbilled revenue as at March 31, 2018 and 2017. # Geographic concentration of credit risk | |As at March 31, 2018|As at March 31, 2018|As at March 31, 2017|As at March 31, 2017| |---|---|---| |Geographic Area|Gross%|Net%|Gross%|Net%| |United States of America|41.83|42.49|43.47|44.30| |India|14.29|13.00|15.95|14.71| |United Kingdom|13.46|13.59|13.39|13.46| Geographical concentration of trade receivables and unbilled revenue 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. |
Consolidated Financial Statements I 153 # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements The tables below provide details regarding the contractual maturities of significant financial liabilities as of: # (` crores) # March 31, 2018 | |Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Non-derivative financial liabilities|5,094|-|-|-|5,094| |Borrowings|181|21|41|10|253| |Other financial liabilities|3,822|233|227|55|4,337| | |9,097|254|268|65|9,684| |Derivative financial liabilities|91|-|-|-|91| |Total|9,188|254|268|65|9,775| # (` crores) # March 31, 2017 | |Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Non-derivative financial liabilities|4,905|-|-|-|4,905| |Borrowings|200|26|47|21|294| |Other financial liabilities|2,904|13|464|2|3,383| | |8,009|39|511|23|8,582| |Derivative financial liabilities|20|-|-|-|20| |Total|8,029|39|511|23|8,602| # 30) Earnings per share (EPS) | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Profit for the year (` crores)|25,826|26,289| |Weighted average number of equity shares|192,45,92,806|197,04,27,941| |Earnings per share basic and diluted (`)|134.19|133.41| |Face value per equity share (`)|1|1| # 31) Segment information 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 or manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. 154 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements 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, 2018 and 2017 is as follows: # Year ended March 31, 2018 (` crores) | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Revenue|48,418|13,361|21,055|21,131|19,139|1,23,104| |Segment result|13,045|3,698|5,580|5,797|4,339|32,459| |Total Unallocable expenses| | | | |2,009| | |Operating income| | | | |30,450| | |Other income (net)| | | | |3,642| | |Profit before taxes| | | | |34,092| | |Tax expense| | | | |8,212| | |Profit for the year| | | | |25,880| | |Depreciation and amortisation expense|55|-|-|-|2|57| |Depreciation and amortisation expense (unallocable)| | | | |1,957| | |Significant non-cash items (allocable)|51|4|33|38|80|206| # As at March 31, 2018 (` crores) | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Segment assets|11,700|3,559|6,024|6,033|7,003|34,319| |Unallocable assets| | | | |71,977| | |Total assets| | | | |1,06,296| | |Segment liabilities|2,661|178|478|428|780|4,525| |Unallocable liabilities| | | | |16,241| | |Total liabilities| | | | |20,766| | # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # Year ended March 31, 2017 | |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|1,17,966| |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 expense|74|-|-|-|2|76| |Depreciation and amortisation expense (unallocable)| | | | | |1,911| |Significant non-cash items (allocable)|19|6|10|22|68|125| # As at March 31, 2017 | |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| | # Geographical revenue is allocated based on the location of the customers. # Information regarding geographical revenue is as follows: |Geography|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Americas (1)|66,145|66,091| |Europe (2)|34,155|30,038| |India|7,921|7,415| |Others|14,883|14,422| |Total|1,23,104|1,17,966| # Geographical non-current assets (property, plant and equipment, goodwill, intangible assets, income tax assets and other non-current assets) are allocated based on the location of the assets. |
# Notes forming part of the Consolidated Financial Statements # Information regarding geographical non-current assets is as follows: |Geography|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |Americas (3)|1,354|1,246| |Europe (4)|1,694|1,521| |India|14,699|15,355| |Others|588|598| |Total|18,335|18,720| i. (1) and (3) are substantially related to operations in the United States of America. ii. (2) includes revenue from operations in the United Kingdom of ` 17,625 crores (March 31, 2017: ` 16,404 crores) for the year ended March 31, 2018. iii. (4) includes non-current assets from operations in the United Kingdom of ` 568 crores (March 31, 2017: ` 568 crores) as of March 31, 2018. # Information about major customers No single customer represents 10% or more of the Group's total revenue for the year ended March 31, 2018 and 2017. # 32) Commitments and contingent liabilities # Capital commitments The Group has contractually committed (net of advances) ` 783 crores as at March 31, 2018 (March 31, 2017: ` 1,503 crores) for purchase of property, plant and equipment. # Contingencies # Direct tax matters Refer note 10. # Indirect tax matters The Company and its subsidiaries have ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. As at March 31, 2018, the Company and its subsidiaries in India have demands amounting to ` 305 crores (March 31, 2017: ` 284 crores) from various indirect tax authorities which are being contested by the Company and its subsidiaries based on the management evaluation and advice of tax consultants. # Other claims As at March 31, 2018, claims aggregating ` 3,000 crores (March 31, 2017: ` 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 proprietary information. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling ` 6,114 crores (US $ 940 million) to Epic. In September 2017, the Company received a Court order reducing the damages from ` 6,114 crores (US $ 940 million) to ` 2,732 crores (US $ 420 million) to Epic. The Company has received legal advice to the effect that the order and the reduced damages awarded are not supported by evidence presented during the trial and a strong appeal can be made to superior Court to fully set aside the Order. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for ` 2,862 crores (US $ 440 million) as financial security in order to stay execution of the judgment pending post-judgment proceedings and appeal. Accordingly, an amount of ` 2,862 crores (US $ 440 million) is disclosed as contingent liability as included in the claims not acknowledged as debts by the Company. # Letter of Comfort The Company has given letter of comfort to bank for credit facilities availed by its subsidiary Tata America International Corporation. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary. The amounts assessed as Contingent liability do not include interest that could be claimed by counter parties. # 33) Statement of net assets, profit and loss and other comprehensive income attributable to owners and non-controlling interest # Annual Report 2017-18 |Name of the entity|Country of incorporation|% of voting power|% of net assets, i.e. total assets minus total liabilities|Share in profit and loss|Share in Other comprehensive income|Share in Total comprehensive income| | | | | | |---|---|---|---|---|---|---|---|---|---|---|---| |Tata Consultancy Services Limited|India|-|-|82.93|75,866|86.21|25,241|92.36|(629)|86.06|24,612| |Subsidiaries (held directly)| | | | | | | | | | | | |APTOnline Limited|India|89.00|89.00|0.09|78|0.08|24|-|-|0.08|24| |MP Online Limited|India|89.00|89.00|0.09|86|0.08|22|-|-|0.08|22| |C-Edge Technologies Limited|India|51.00|51.00|0.18|166|0.19|55|-|-|0.19|55| |MahaOnline Limited|India|74.00|74.00|0.06|59|0.05|14|-|-|0.05|14| |TCS e-Serve International Limited|India|100.00|100.00|0.23|206|0.15|45|-|-|0.16|45| |TCS Foundation|India|100.00|100.00|0.70|637|0.46|136|-|-|0.48|136| |Diligenta Limited|UK|100.00|100.00|0.80|735|0.18|54|(1.03)|7|0.21|61| |Tata Consultancy Services Canada Inc.|Canada|100.00|100.00|0.69|629|0.95|278|-|-|0.97|278| |Tata America International Corporation|USA|100.00|100.00|3.44|3,150|2.68|786|9.54|(65)|2.52|721| |Tata Consultancy Services Asia Pacific|Singapore|100.00|100.00|0.53|481|0.60|175|-|-|0.61|175| |Tata Consultancy Services Belgium|Belgium|100.00|100.00|0.30|272|0.31|91|-|-|0.32|91| |Tata Consultancy Services Deutschland GmbH|Germany|100.00|100.00|0.35|319|0.55|161|-|-|0.56|161| |Tata Consultancy Services Netherlands BV|Netherlands|100.00|100.00|2.77|2,537|2.40|702|-|-|2.45|702| |Tata Consultancy Services Sverige AB|Sweden|100.00|100.00|0.51|463|0.44|128|-|-|0.45|128| |TCS FNS Pty Limited|Australia|100.00|100.00|0.16|145|-|-|-|-|-|-| |TCS Iberoamerica SA|Uruguay|100.00|100.00|1.41|1,291|0.92|268|-|-|0.94|268| |Tata Consultancy Services (Africa) (PTY) Ltd.|South Africa|100.00|100.00|0.07|60|0.05|14|-|-|0.05|14| |CMC Americas, Inc.|USA|100.00|100.00|0.08|70|0.12|35|-|-|0.12|35| |Tata Consultancy Services Qatar S.S.C.|Qatar|100.00|100.00|0.03|32|0.03|10|-|-|0.03|10| |CMC eBiz, Inc.|USA|100.00|100.00|-|-|-|-|-|-|-|-| |TCS e-Serve America, Inc.|USA|100.00|100.00|0.03|23|0.05|16|-|-|0.06|16| # Consolidated Financial Statements |Name of the entity|Country of incorporation|% of voting power as at March 31, 2018|% of voting power as at March 31, 2017|% of Net Assets, i.e. |
total assets minus total liabilities as at March 31, 2018|Share in profit and loss as % of consolidated (` crores)|Share in Other comprehensive income as % of consolidated (` crores)|Share in Total comprehensive income as % of consolidated (` crores)| |---|---|---|---|---|---|---|---| |Tata Consultancy Services (China) Co., Ltd.|China|93.20|93.20|0.16|144|(0.17)|(49)| |Tata Consultancy Services Japan, Ltd.|Japan|51.00|51.00|1.08|990|0.41|120| |Tata Consultancy Services Malaysia Sdn Bhd|Malaysia|100.00|100.00|0.14|129|0.08|22| |PT Tata Consultancy Services Indonesia|Indonesia|100.00|100.00|0.03|29|0.05|15| |Tata Consultancy Services (Philippines) Inc.|Philippines|100.00|100.00|0.18|163|0.09|25| |Tata Consultancy Services (Thailand) Limited|Thailand|100.00|100.00|0.02|20|0.02|6| |TCS Italia s.r.l.|Italy|100.00|100.00|0.01|11|0.02|7| |Tata Consultancy Services Luxembourg S.A.|Luxembourg|100.00|100.00|0.07|66|0.04|12| |Tata Consultancy Services Switzerland Ltd|Switzerland|100.00|100.00|0.33|302|0.96|281| |Tata Consultancy Services France S.A.S.|France|-|100.00|-|-|-|-| |Tata Consultancy Services Osterreich GmbH|Austria|100.00|100.00|-|1|(0.01)|(4)| |Tata Consultancy Services Danmark ApS|Denmark|100.00|100.00|-|3|-|-| |Tata Consultancy Services De Espana S.A.|Spain|100.00|100.00|0.02|21|0.01|4| |Tata Consultancy Services (Portugal) Unipessoal, Limitada|Portugal|100.00|100.00|(0.01)|(8)|0.02|6| |Tata Consultancy Services France SA (Formerly Alti S.A.)|France|100.00|100.00|(0.37)|(343)|(0.23)|(67)| |Alti HR S.A.S.|France|-|100.00|-|-|-|-| |Tescom (France) Software Systems Testing S.A.R.L.|France|-|100.00|-|-|-|-| |Alti Switzerland S.A.|Switzerland|-|100.00|-|-|-|-| |Alti Infrastructures Systemes & Reseaux S.A.S.|France|-|100.00|-|-|-|-| |Alti NV|Belgium|-|100.00|-|-|-|-| |Teamlink (w.e.f. January 31, 2018)|Belgium|-|100.00|-|-|-|-| |Planaxis Technologies Inc. (w.e.f. March 31, 2018)|Canada|-|100.00|-|-|-|-| |Tata Consultancy Services Saudi Arabia|Saudi Arabia|76.00|76.00|0.11|105|0.22|63| |Tata Consultancy Services (South Africa) (PTY) Ltd.|South Africa|100.00|100.00|0.10|89|0.12|34| |TCS Financial Solutions Beijing Co., Ltd.|China|100.00|100.00|0.01|10|(0.06)|(19)| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements |Name of the entity|Country of incorporation|% of voting power as at|% of voting power as at|Net Assets, i.e. total assets minus total liabilities as at March 31, 2018 (` crores)|Share in profit and loss as % of consolidated income|Share in Other comprehensive income as % of consolidated comprehensive income|Share in Total comprehensive income as % of Total comprehensive income| |---|---|---|---|---|---|---|---| |TCS Financial Solutions Australia Holdings Pty Limited|Australia|100.00|100.00|49|0.05|-|-| |TCS Financial Solutions Australia Pty Limited|Australia|100.00|100.00|123|0.13|0.11|0.11| |TCS Solution Center S.A.|Uruguay|100.00|100.00|180|0.20|0.29|0.30| |TCS Uruguay S.A.|Uruguay|100.00|100.00|36|0.04|0.02|0.02| |Tata Consultancy Services Argentina S.A.|Argentina|99.99|99.99|(44)|(0.05)|(0.06)|(0.07)| |Tata Consultancy Services Do Brasil Ltda|Brazil|100.00|100.00|81|0.09|0.04|0.04| |Tata Consultancy Services De Mexico S.A., De C.V.|Mexico|100.00|100.00|679|0.74|0.91|0.93| |MGDC S.C.|Mexico|100.00|100.00|125|0.14|0.01|0.01| |TCS Inversiones Chile Limitada|Chile|100.00|100.00|349|0.38|0.53|0.55| |Tata Consultancy Services Chile S.A.|Chile|100.00|100.00|554|0.61|(0.01)|(0.01)| |Technology Outsourcing S.A.C.|Peru|100.00|100.00|7|0.01|-|-| |TATASOLUTION CENTER S.A.|Ecuador|100.00|100.00|63|0.07|(0.01)|(0.01)| |Trusts|India|-|-|245|0.26|0.10|0.12| |TOTAL|-|100.00|91,484|100.00|29,278|100.00|(681)| # Adjustments arising out of consolidation |a)|(5,954)|(3,398)|553|(2,845)| |---|---|---|---|---| |b)|Minority Interest|-|-|-| # Indian Subsidiaries |APTOnline Limited|(9)|(3)|(3)| |---|---|---|---| |MP Online Limited|(9)|(2)|(2)| |C-Edge Technologies Limited|(84)|(27)|(27)| |MahaOnline Limited|(13)|(3)|(3)| # Foreign Subsidiaries |Tata Consultancy Services (China) Co., Ltd.|(10)|3|(1)|2| |---|---|---|---|---| |Tata Consultancy Services Japan, Ltd.|(277)|(22)|(15)|(37)| # TOTAL - (402) (54) (16) (70) # TOTAL - 85,128 25,826 (144) 25,682 # Notes forming part of the Consolidated Financial Statements # 34) 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 key managerial personnel. The Group's material related party transactions and outstanding balances are with related parties with whom the Group routinely enter into transactions in the ordinary course of business. Transactions and balances with its own subsidiaries are eliminated on consolidation. |
Transactions with related parties are as follows: | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Other related parties|Total| |---|---|---|---|---|---| |Year ended March 31, 2018|13|260|1,993|-|2,266| |Revenue from operations|5|37|571|-|613| |Purchases of goods and services (including reimbursements)|185|-|-|-|185| |Brand equity contribution|1|36|6|-|43| |Facility expenses|-|5|5|-|10| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|-|-|-|821|821| |Contribution to post employment benefit plans|-|6|45|-|51| |Purchase of property, plant and equipment|-|-|5|-|5| |Loans and advances recovered|6,826|3|2|-|6,831| |Dividend paid|10,278|7|21|-|10,306| | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Other related parties|Total| |---|---|---|---|---|---| |Year ended March 31, 2017|4|246|2,162|-|2,412| |Revenue from operations|4|555|634|-|1,193| |Purchases of goods and services (including reimbursements)|156|-|-|-|156| |Brand equity contribution|1|33|5|-|39| |Facility expense|-|4|5|-|9| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|-|-|-|1,029|1,029| |Contribution to post employment benefit plans|-|21|33|-|54| |Purchase of property, plant and equipment|-|-|7|-|7| |Loans and advances given|-|1|-|-|1| |Loans and advances recovered|6,712|8|3|-|6,723| # Annual Report 2017-18 # Notes forming part of the Consolidated Financial Statements # Balances receivable from related parties are as follows: | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Total| |---|---|---|---|---| |As at March 31, 2018|8|122|637|767| |Trade receivables and unbilled revenue|3|27|7|37| |Investments|-|-|-|-| |Total|11|149|644|804| | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Total| |---|---|---|---|---| |As at March 31, 2017|1|128|626|755| |Trade receivables and unbilled revenue|3|26|14|43| |Investments|-|19|-|19| |Total|4|173|640|817| # Balances payable to related parties are as follows: | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Total| | |---|---|---|---|---|---| |As at March 31, 2018|165|22|206|393| | |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|Total|165|22|206|393| |Commitments|-|8|39|47| | | |Tata Sons Limited|Subsidiaries of Tata Sons Limited|Associates / joint ventures of Tata Sons Limited and their subsidiaries|Total| | |---|---|---|---|---|---| |As at March 31, 2017|138|28|150|316| | |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|Total|138|28|150|316| |Commitments|-|24|71|95| | 162 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Compensation to key management personnel is as follows: | |(` crores)|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---|---| |Short-term benefits| |27|46| File: AR_TCS_2017_2018.md |Dividend paid during the year| |1|1| |Total| |28|47| The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available. # 35) Subsequent events # Dividends Dividends paid during the year ended March 31, 2018 include an amount of ` 27.50 per equity share towards final dividend for the year ended March 31, 2017 and an amount of ` 21 per equity share towards interim dividend for the year ending March 31, 2018. 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 declared by the Company are based on profits available for distribution. Distribution of dividends out of general reserve and retained earnings is subject to applicable dividend distribution tax. On April 19, 2018, the Board of Directors of the Company have proposed a final dividend of ` 29 per share in respect of the year ending March 31, 2018 subject to the approval of shareholders at the Annual General Meeting. # Bonus issue The Board of Directors at its meeting held on April 19, 2018, approved a bonus issue of equity shares, subject to the approval of the shareholders, in the ratio of one equity share of ` 1 each for every one equity share of the Company held by the shareholders as on a record date. |
# Unconsolidated Financial Statements # Independent Auditor's Report To The Members of Tata Consultancy Services Limited # Report on the Audit of 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 31 March 2018, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone Ind AS financial statements"). # 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 state of affairs, profit/loss (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. In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. # Auditor's Responsibility Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. 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 Board of Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We are also responsible to conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause an entity to cease to continue as a going concern. |
164 I Unconsolidated Financial Statements We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone 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 31 March 2018, its profit (including other comprehensive income), its changes in equity and its cash flows for the year ended on that date. # Other Matter Corresponding figures for the year ended 31 March 2017 have been audited by another auditor who expressed an unmodified opinion dated 18 April 2017 on the standalone Ind AS financial statements of the Company for the year ended 31 March 2017. Our opinion on the standalone Ind AS financial statements is not modified in respect of the above matter. # Report on Other Legal and Regulatory Requirements 1. 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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order. 2. As required by Section 143(3) of the Act, we report that: 1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. 2. In our opinion, proper books of account as required by law 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, the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the 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 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". 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 Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: 1. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 33 to the standalone Ind AS financial statements; 2. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 19 to the standalone Ind AS financial statements; 3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and 4. The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 has not been made since the requirement does not pertain to financial year ended 31 March 2018. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 19 April 2018 Membership No: 049265 Unconsolidated Financial Statements I 165 # Annual Report 2017-18 # Annexure A to the Independent Auditor's Report With reference to the Annexure A referred to in the Independent Auditor's Report to the members of the Company on the standalone Ind AS financial statements for the year ended 31 March 2018, we report the following: 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. |
(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, certain fixed assets were physically verified during the year and no material discrepancies were noticed on such verification. (c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties included in fixed assets are held in the name of the Company. 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. 2. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material. 3. 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. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company. 4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans given, investments made, guarantees and securities given. 5. The Company has not accepted any deposits from the public within the meaning of the directives issued by the Reserve Bank of India, provisions of Section 73 to 76 of the Act, any other relevant provisions of the Act and the relevant rules framed thereunder. 6. The Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for any of the services rendered by the Company. 7. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees' State Insurance, Income-tax, Sales tax, Service tax, Goods and Services tax, duty of Customs, duty of Excise, Value added tax, Cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees' State Insurance, Income-tax, Sales tax, Service tax, Goods and Services tax, duty of Customs, duty of Excise, Value added tax, Cess and other material statutory dues were in arrears as at 31 March 2018, for a period of more than six months from the date they became payable. |
166 I Unconsolidated Financial Statements # (b) According to the information and explanations given to us, there are no dues of Income-tax or Sales tax or Service tax or Goods and Services tax or duty of Customs or duty of Excise or Value added tax which have not been deposited by the Company on account of disputes, except for the following: |Name of the Statute|Nature of the Dues|Amount (` in crores)**|Period|Forum where dispute is pending| |---|---|---|---|---| |The Income-tax Act, 1961|Income-tax|3,601|Assessment Year - 2006-2007, 2010-2011, 2011-2012, 2012-2013, 2013-2014|Income-tax Appellate Tribunal| | | |2,312|Assessment Year - 2014-2015, 2015-2016|Commissioner of Income-tax (Appeals)| |The Central Sales Tax Act, 1956 and Value Added Tax Act|Sales tax and VAT|147|Financial Year - 1994-1995, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014|High Court| | | |8|Financial Year - 1990-1991, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2008-2009, 2011-2012, 2012-2013|Tribunal| | | |-*|Financial Year - 1995-1996, 1997-1998, 2004-2005, 2005-2006, 2011-2012, 2014-2015|Assistant Commissioner| | | |-*|Financial Year - 2016-2017|Commissioner Appeal| | | |7|Financial Year - 1994-1995, 2005-2006, 2008-2009, 2010-2011, 2011-2012, 2013-2014|Deputy Commissioner| | | |8|Financial Year - 1997-1998, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015|Joint Commissioner| | | |-*|Financial Year - 2007-2008, 2013-2014|Additional Commissioner| |The Finance Act, 1994|Service tax|7|Financial Year - 2002-2003, 2003-2004, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015|Commissioner Appeals| | | |80|Financial Year - 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013|Tribunal| * Indicates amount less than Rs 0.50 crore ** These amounts are net of amount paid/ adjusted under protest Rs. 3,948 crores # (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 did not have any outstanding loans or borrowings from financial institutions or government and there are no dues to debenture holders during the year. Unconsolidated Financial Statements I 167 # Annual Report 2017-18 (ix) In our opinion and according to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable to the Company. (x) To the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit. (xi) In our opinion and according to the information and explanations given to us and based on examination of the records of the Company, 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) According to the information and explanations given to us, in our opinion, the Company is not a Nidhi Company as prescribed under Section 406 of the Act. (xiii) According to the information and explanations given to us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards. (xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company. (xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company. (xvi) According to the information and explanation given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. For B S R & Co. |
LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 19 April 2018 Membership No: 049265 # 168 I Unconsolidated Financial Statements # Annexure B to the Independent Auditor's Report (Referred to in paragraph 2(f) under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) # Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting of Tata Consultancy Services Limited ("the Company") as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended 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 ("ICAI"). 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 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. # Auditor's 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 on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by ICAI. Those Standards and the Guidance Note 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 control 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 auditor's 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. # Opinion In our opinion, 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 31 March 2018, 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 issued by the ICAI. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 19 April 2018 Membership No: 049265 Unconsolidated Financial Statements I 169 # Annual Report 2017-18 # Balance Sheet |Note|As at March 31, 2018|As at March 31, 2017| |---|---|---| |ASSETS|ASSETS|ASSETS| |Non-current assets|Non-current assets|Non-current assets| |(a) Property, plant and equipment|9,430|9,214| |(b) Capital work-in-progress|1,238|1,477| |(c) Intangible assets|10|17| |(d) Financial assets| | | |(i) Investments|2,186|2,201| |(ii) Trade receivables|94|67| |(iii) Unbilled revenue|179|110| |(iv) Loans|1,503|6| |(v) Other financial assets|504|638| |(e) Income tax assets (net)|3,824|4,560| |(f) Deferred tax assets (net)|3,051|2,447| |(g) Other assets|815|579| |Total non-current assets|22,834|21,316| |Current assets|Current assets|Current assets| |(a) Inventories|25|21| |(b) Financial assets| | | |(i) Investments|35,073|40,729| |(ii) Trade receivables|18,882|16,582| |(iii) Unbilled revenue|5,330|4,125| |(iv) Cash and cash equivalents|1,278|790| |(v) Other balances with banks|2,209|526| |(vi) Loans|2,793|2,704| |(vii) Other financial assets|807|1,418| |(c) Other assets|1,825|1,547| |Total current assets|68,222|68,442| |TOTAL ASSETS|91,056|89,758| |EQUITY AND LIABILITIES|EQUITY AND LIABILITIES|EQUITY AND LIABILITIES| |(a) Share capital|191|197| |(b) Other equity|75,675|77,825| |Total Equity|75,866|78,022| |Liabilities|Liabilities|Liabilities| |Non-current liabilities|Non-current liabilities|Non-current liabilities| |(a) Financial liabilities| | | |(i) Borrowings|39|44| |(ii) Other financial liabilities|246|245| |(b) Employee benefit obligations|62|63| |(c) Provisions|26|39| |(d) Deferred tax liabilities (net)|424|314| |(e) Other liabilities|335|330| |Total non-current liabilities|1,132|1,035| |Current liabilities|Current liabilities|Current liabilities| |(a) Financial liabilities| | | |(i) Borrowings|181|200| |(ii) Trade payables|4,775|4,190| |(iii) Other financial liabilities|2,739|1,946| |(b) Unearned and deferred revenue|1,711|1,126| |(c) Income tax liabilities (net)|1,144|1,046| |(d) Employee benefit obligations|1,478|1,376| |(e) Provisions|171|66| File: AR_TCS_2017_2018.md |(f) Other liabilities|1,859|751| |Total current liabilities|14,058|10,701| |TOTAL EQUITY AND LIABILITIES|91,056|89,758| NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-36 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian Chartered Accountants Chairman CFO Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan O. P. Bhatt V. Thyagarajan Prof. Clayton M. Christensen Partner CEO and Managing Director Director Director Director Membership number: 049265 N. Ganpathy Subramaniam Aman Mehta Dr. Pradeep Kumar Khosla Rajendra Moholkar Mumbai, April 19, 2018 COO and Executive Director Director Director Company Secretary 170 I Unconsolidated Financial Statements # Statements of Profit and Loss |Note|Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |I. Revenue from operations|97,356|92,693| |II. Other income (net)|5,803|4,568| |III. TOTAL INCOME|103,159|97,261| |IV. Expenses| | | |(a) Employee benefit expenses|51,499|48,116| |(b) Cost of equipment and software licences|2,006|1,758| |(c) Other operating expenses|16,046|15,730| |(d) Finance costs|16| | |(e) Depreciation and amortisation expense|1,647|1,575| |TOTAL EXPENSES|71,228|67,195| |V. PROFIT BEFORE TAX|31,931|30,066| |VI. Tax expense| | | |(a) Current tax|6,878|6,643| |(b) Deferred tax|(188)|(230)| |TOTAL TAX EXPENSE|6,690|6,413| |VII. PROFIT FOR THE YEAR|25,241|23,653| |VIII. OTHER COMPREHENSIVE INCOME / (LOSSES)| | | |(A) (i) Items that will be reclassified subsequently to the profit or loss| | | |(a) Net changes in fair values of investments other than equity shares carried at fair value through OCI|(821)|740| |(b) Net change in intrinsic value of derivatives designated as cash flow hedges|(122)|41| |(c) Net change in time value of derivatives designated as cash flow hedges|(59)|3| |(ii) Income tax on items that will be reclassified subsequently to the profit or loss|306|(261)| |(B) (i) Items that will not be reclassified subsequently to the profit or loss| | | |(a) Remeasurement of defined employee benefit plans|86|(200)| |(b) Net changes in fair values of investments in equity shares carried at fair value through OCI|(19)|(20)| |(ii) Income tax on items that will not be reclassified subsequently to the profit or loss|-|-| |TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)|(629)|303| |IX. TOTAL COMPREHENSIVE INCOME FOR THE YEAR|24,612|23,956| |X. Earnings per equity share:- Basic and diluted (`)|131.15|120.04| |Weighted average number of equity shares|192,45,92,806|197,04,27,941| |XI. NOTES FORMING PART OF THE FINANCIAL STATEMENTS|1-36| | As per our report of even date attached For B S R & Co. LLP Chartered Accountants Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Partner Membership number: 049265 Mumbai, April 19, 2018 For and on behalf of the Board N. Chandrasekaran Chairman V. Ramakrishnan CFO Dr. |
Ron Sommer Director Aarthi Subramanian Director Rajesh Gopinathan CEO and Managing Director O. P. Bhatt Director V. Thyagarajan Director Prof. Clayton M. Christensen Director N. Ganpathy Subramaniam COO and Executive Director Aman Mehta Director Dr. Pradeep Kumar Khosla Director Rajendra Moholkar Company Secretary # Annual Report 2017-18 # Statements of Changes in Equity # A. EQUITY SHARE CAPITAL (` crores) |Balance as at April 1, 2016|Changes in equity share capital during the year|Balance as at March 31, 2017| |---|---|---| |197|-|197| |Balance as at April 1, 2017|Changes in equity share capital during the year*|Balance as at March 31, 2018| |197|(6)|191| *Refer note 15. # B. OTHER EQUITY (` crores) |Reserves and surplus| |Items of other comprehensive income| | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---| |Capital reserve*|Securities premium|Capital redemption reserve|General reserve|Special reserve|Retained earnings|Investment revaluation reserve|Cash flow hedging reserve|Total| | | | | | |-|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| | |Balance as at April 1, 2017|-|1,919|100|9,118|97|65,965|538|105|(17)|77,825| |Profit for the year|-|-|-|-|25,241|-|-|-|25,241| | | | |Other comprehensive income|-|-|-|-|86|(556)|(107)|(52)|(629)| | | |Total comprehensive income|-|-|-|-|25,327|(556)|(107)|(52)|24,612| | |Transfer to Special Economic Zone re-investment reserve| |-|-|-|-|1,579|(1,579)|-|-|-| | |Transfer from Special Economic Zone re-investment reserve| |-|-|-|-|(98)|98|-|-|-| | | | |Buyback of equity shares (Refer note 15)|(1,919)|6|(9,118)|-|(4,963)|-|-|-|(15,994)| | | |Expenses for buyback of equity shares (Refer note 15)|-|-|-|-|(42)|-|-|-|(42)| | |Dividend (including tax on dividend)|-|-|-|-|(10,726)|-|-|-|(10,726)| | | |Balance as at March 31, 2018|-|106|-|1,578|74,080|(18)|(2)|(69)|75,675| | *Represents values less than ` 0.50 crore. # NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-36 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N. Chandrasekaran V. Ramakrishnan Dr. Ron Sommer Aarthi Subramanian Chartered Accountants Chairman CFO Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan O. P. Bhatt V. Thyagarajan Prof. Clayton M. Christensen Partner CEO and Managing Director Director Director Director Membership number: 049265 N. Ganpathy Subramaniam Aman Mehta Dr. Pradeep Kumar Khosla Rajendra Moholkar Mumbai, April 19, 2018 COO and Executive Director Director Director Company Secretary 172 I Unconsolidated Financial Statements # Statements of Cash Flows | |Year ended March 31, 2018|Year ended March 31, 2017| |---|---|---| |I CASH FLOWS FROM OPERATING ACTIVITIES| | | |Profit for the year|25,241|23,653| |Adjustments to reconcile profit and loss to net cash provided by operating activities| | | |Depreciation and amortisation expense|1,647|1,575| |Bad debts and advances written off, allowance for doubtful trade receivable and advances (net)|95|107| |Tax expense|6,690|6,413| |Finance costs|30|16| |Net gain on disposal of property, plant and equipment|(26)|(6)| |Exchange difference on translation of foreign currency cash and cash equivalents|(94)|52| |Dividend income (including exchange gain)|(2,212)|(394)| |Interest income|(2,388)|(2,216)| |Net gain on investments|(858)|(596)| |Operating profit before working capital changes|28,125|28,604| |Net change in| | | |Inventories|(4)|(12)| |Trade receivables|(2,416)|2,303| |Unbilled revenue|(1,274)|(1,523)| |Loans and other financial assets|398|659| |Other assets|(554)|67| |Trade payables|585|(34)| |Unearned and deferred revenue|585|58| |Other financial liabilities|796|(407)| |Other liabilities and provisions|1,391|(117)| |Cash generated from operations|27,632|29,598| |Taxes paid (net of refunds)|(6,045)|(6,466)| |Net cash provided by operating activities|21,587|23,132| |II CASH FLOWS FROM INVESTING ACTIVITIES| | | |Bank deposits placed|(2,000)|-| |Inter-corporate deposits placed|(6,000)|(2,125)| |Purchase of investments|(94,374)|(118,283)| |Payments for purchase of property, plant and equipment|(1,606)|(1,655)| |Earmarked deposits placed with banks|(230)|-| |Proceeds from bank deposits|416|-| |Proceeds from inter-corporate deposits|4,425|3,697| |Proceeds from disposal / redemption of investments|100,063|100,031| |Proceeds from disposal of property, plant and equipment|29|19| |Proceeds from earmarked deposits with banks|135|400| |Dividend received from subsidiaries (including exchange gain)|2,207|394| |Dividend received from other investments|5|-| |Interest received|2,564|1,740| |Net cash provided by / (used in) investing activities|5,634|(15,782)| |III CASH FLOWS FROM FINANCING ACTIVITIES| | | |Buy-back of equity shares|(16,000)|-| |Expenses relating to buy-back of equity shares|(42)|-| |Short-term borrowings (net)|(20)|87| |Dividend paid (including tax on dividend)|(10,726)|(10,947)| |Repayment of finance lease obligations|(6)|(15)| |Interest paid|(33)|(16)| |Net cash used in financing activities|(26,827)|(10,891)| |Net change in cash and cash equivalents|394|(3,541)| |Cash and cash equivalents at the beginning of the year|790|4,383| |Exchange difference on translation of foreign currency cash and cash equivalents|94|(52)| |Cash and cash equivalents at the end of the year (Refer note 13)|1,278|790| |IV NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-36| | | As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N. Chandrasekaran V. Ramakrishnan Dr. |
Ron Sommer Aarthi Subramanian Chartered Accountants Chairman CFO Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan O. P. Bhatt V. Thyagarajan Prof. Clayton M. Christensen Partner CEO and Managing Director Director Director Director Membership number: 049265 N. Ganpathy Subramaniam Aman Mehta Dr. Pradeep Kumar Khosla Rajendra Moholkar Mumbai, April 19, 2018 COO and Executive Director Director Director Company Secretary Unconsolidated Financial Statements I 173 # Annual Report 2017-18 # 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, 2018, Tata Sons Limited, the holding company owned 71.89% of the Company's equity share capital. The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on April 19, 2018. # 2) Significant accounting policies # (a) Statement of compliance These financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules as amended from time to time. # (b) Basis of preparation These financial statements have been prepared on historical cost basis, except for certain financial instruments which are measured at fair value 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. # (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 judgements 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 and fair value measurement of financial instruments have been discussed below. Key source of estimation of uncertainty in respect of revenue recognition and employee benefits have been discussed in their respective policies. # 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. # Valuation of deferred tax assets The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been explained under note 2(i). 174 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 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. 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. Contingent assets are neither recognised nor disclosed in the financial statements. # Fair value measurement of financial instruments When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The policy has been further explained under note 2(j). # (d) Revenue recognition TCS Limited earns revenue primarily from providing information technology, business solutions and consultancy services through development and maintenance of IT applications and infrastructure, implementation of enterprise solutions, business process services, assurance services, engineering and industrial services using its own products, framework of solutions and third party products. The Company recognises revenue as follows: Contracts are unbundled into separately identifiable components and the consideration is allocated to those identifiable components on the basis of their relative fair values. Revenue is recognised for respective components either at the point in time or over time, as applicable. 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 and indirect taxes. # (e) Dividend income Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. # (f) Leases # Finance lease 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. Unconsolidated Financial Statements I 175 # Annual Report 2017-18 # Notes forming part of the Financial Statements # 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. # 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, cost of equipment and software licenses, 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, facility expenses, travel expenses, communication expenses, bad debts and advances written off, allowance for doubtful trade receivable and advances (net) 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. # 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. # 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 unit 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 assets 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. # Unconsolidated Financial Statements # Notes forming part of the Financial Statements 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. |
# (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 subsequent changes in the fair value of equity investments not held for trading in other comprehensive income. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless they are 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 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 Company are recognised at the proceeds received net off direct issue cost. # Hedge accounting The Company designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. Unconsolidated Financial Statements I 177 # Annual Report 2017-18 # Notes forming part of the Financial Statements The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors. The policies 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 Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. 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. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in net foreign exchange gains in the statement of profit and loss. File: AR_TCS_2017_2018.md 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 hedging reserve. 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 less residual value 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. 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 equipment|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. 178 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements 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. 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. For all other financial assets, expected credit losses are measured at an amount equal to the 12-months 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 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 expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as undiscounted liability at the balance sheet date. 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. Unconsolidated Financial Statements I 179 # Annual Report 2017-18 # Notes forming part of the Financial Statements # (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. 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 is 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) Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018: |Ind AS 115|Revenue from Contracts with Customers| |---|---| |Ind AS 21|The Effect of Changes in Foreign Exchange Rates| # Ind AS 115 - Revenue from Contracts with Customers Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue, Ind AS 11 - Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition: 1. Identify the contract(s) with a customer 2. Identify the performance obligation in contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognise revenue when (or as) the entity satisfies a performance obligation Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control' of the goods or services underlying the particular performance obligation is transferred to the customer. The Company has completed its evaluation of the possible impact of Ind AS 115 and will adopt the standard with all related amendments to all contracts with customers retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. Under this transition method, cumulative effect of initially applying Ind AS 115 is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period. The standard is applied retrospectively only to contracts that are not completed contracts at the date of initial application. The Company does not expect the impact of the adoption of the new standard to be material on its retained earnings and to its net income on an ongoing basis. # Ind AS 21 - The Effect of Changes in Foreign Exchange Rates The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. |
The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. TCS Limited is evaluating the impact of this amendment on its financial statements. 180 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 4) Property, plant and equipment Property, plant and equipment consist of the following: | |Freehold land|Buildings improvements|Leasehold equipment|Plant and equipment|Computer equipment|Vehicles|Office installations|Electrical fixtures|Furniture|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2017|327|6,637|1,412|392|5,130|31|1,943|1,601|1,208|18,681| |Additions|-|394|311|98|673|2|139|122|120|1,859| |Disposals|-|(5)|(21)|(1)|(108)|(1)|(44)|(12)|(20)|(212)| |Cost as at March 31, 2018|327|7,026|1,702|489|5,695|32|2,038|1,711|1,308|20,328| |Accumulated depreciation as at April 1, 2017|-|(1,444)|(862)|(73)|(4,005)|(22)|(1,401)|(778)|(882)|(9,467)| |Disposals|-|4|21|1|108|1|44|11|19|209| |Depreciation for the year|-|(352)|(129)|(44)|(629)|(5)|(215)|(143)|(123)|(1,640)| |Accumulated depreciation as at March 31, 2018|-|(1,792)|(970)|(116)|(4,526)|(26)|(1,572)|(910)|(986)|(10,898)| |Net carrying amount as at March 31, 2018|327|5,234|732|373|1,169|6|466|801|322|9,430| | |Freehold land|Buildings improvements|Leasehold equipment|Plant and equipment|Computer equipment|Vehicles|Office installations|Electrical fixtures|Furniture|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)| |Disposals|-|3|9|-|115|2|15|5|18|167| |Depreciation for the year|-|(328)|(118)|(35)|(611)|(5)|(225)|(140)|(106)|(1,568)| |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| Net book value of Computer equipment of ` Nil (March 31, 2017: ` 1 crore) and Leasehold improvements of ` 30 crores (March 31, 2017: ` 36 crores) are under finance lease. Unconsolidated Financial Statements I 181 # Annual Report 2017-18 # Notes forming part of the Financial Statements # 5) Intangible assets Intangible assets consist of the following: | |Rights under licensing agreement and software licences| |---|---| |Cost as at April 1, 2017|68| |Additions|-| |Disposals / derecognised|-| |Cost as at March 31, 2018|68| |Accumulated amortisation as at April 1, 2017|(51)| |Disposals / derecognised|-| |Amortisation for the year|(7)| |Accumulated amortisation as at March 31, 2018|(58)| |Net carrying amount as at March 31, 2018|10| | |Rights under licensing agreement and software licences| |---|---| |Cost as at April 1, 2016|129| |Additions|-| |Disposals / derecognised|(61)| |Cost as at March 31, 2017|68| |Accumulated amortisation as at April 1, 2016|(105)| |Disposals / derecognised|61| |Amortisation for the year|(7)| |Accumulated amortisation as at March 31, 2017|(51)| |Net carrying amount as at March 31, 2017|17| The estimated amortisation for each of the two fiscal years subsequent to March 31, 2018 is as follows: |Year ending March 31,|Amortisation expense| |---|---| |2019|7| |2020|3| | |10| 182 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 6) Investments Investments consist of the following: # (A) Investments - Non-current |(` crores)|As at March 31, 2018|As at March 31, 2017| |---|---|---| |(a) Investment in subsidiaries|2,124|2,124| |(b) Investments carried at fair value through profit or loss|59|55| |(c) Investments designated at fair value through OCI|3|22| |Total|2,186|2,201| # (B) Investments - Current |(` crores)|As at March 31, 2018|As at March 31, 2017| | |---|---|---|---| |(a) Investments carried at fair value through profit or loss| |9,101|18,730| |(b) Investments carried at fair value through OCI|Government securities (quoted)|23,218|21,999| | |Corporate bonds (quoted)|2,754|-| |Total| |35,073|40,729| The market value of quoted investments is equal to the carrying value. Unconsolidated Financial Statements I 183 # Annual Report 2017-18 # Notes forming part of the Financial Statements |In Numbers|Currency|Face value per share|Investment in subsidiaries|As at March 31, 2018|As at March 31, 2017| |---|---|---|---|---|---| |212,27,83,424|UYU|1|TCS Iberoamerica SA|461|461| |15,75,300|INR|10|APTOnline Limited*|-|-| |1,300|EUR|-|Tata Consultancy Services Belgium|1|1| |66,000|EUR|1,000|Tata Consultancy Services Netherlands BV|403|403| |1,000|SEK|100|Tata Consultancy Services Sverige AB|19|19| |1|EUR|-|Tata Consultancy Services Deutschland GmbH|2|2| |20,000|USD|10|Tata America International Corporation|453|453| |75,82,820|SGD|1|Tata Consultancy Services Asia Pacific Pte Ltd.|19|19| |3,72,58,815|AUD|1|TCS FNS Pty Limited|212|212| |10,00,001|GBP|1|Diligenta Limited|429|429| |1,000|USD|-|Tata Consultancy Services Canada Inc.*|-|-| |100|CAD|70,653.61|Tata Consultancy Services Canada Inc.|31|31| |51,00,000|INR|10|C-Edge Technologies Limited|5|5| |8,90,000|INR|10|MP Online Limited|1|1| |1,40,00,000|ZAR|1|Tata Consultancy Services (Africa) (PTY) Ltd.|66|66| |18,89,000|INR|10|MahaOnline Limited|2|2| |-|QAR|-|Tata Consultancy Services Qatar S.S.C.|2|2| |16,00,01,000|USD|0.01|CMC Americas, Inc.|8|8| |10,00,000|INR|100|TCS e-Serve International Limited|10|10| |10,00,000|INR|10|TCS Foundation|-|-| |Total|Total|Total|Total|2,124|2,124| # In Numbers |Currency|Face value per share|Investments designated at fair value through OCI|As at March 31, 2018|As at March 31, 2017| |---|---|---|---|---| |INR|10|Taj Air Limited|19|19| |INR|10|KOOH Sports Private Limited|3|3| |Less : Impairment of investments|Less : Impairment of investments|(19)|-|-| |Total|Total|3|22|-| *Represents value less than ` 0.50 crore. |
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