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NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS 1-37\| \| \| 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 O P Bhatt Hanne Birgitte Breinbjerg Sorensen Chartered Accountants Chairman CFO Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan Aman Mehta Aarthi Subramanian Dr Pradeep Kumar Khosla Partner CEO and Managing Director Director Director Director Membership No: 049265 N Ganpathy Subramaniam Dr Ron Sommer Keki M Mistry Daniel Hughes Callahan COO and Executive Director Director Director Director Rajendra Moholkar Mumbai, April 12, 2019 Company Secretary 118 I Consolidated Financial Statements # 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 IT services, consulting and business solutions that have been partnering with many of the world's largest businesses in their transformation journeys for the last fifty years. The Group offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. This is delivered through its unique Location-Independent Agile delivery model recognised as a benchmark of excellence in software development. 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, 2019, Tata Sons Private Limited (formerly Tata Sons Limited), the holding company owned 72.02% of the Company's equity share capital. The Board of Directors approved the consolidated financial statements for the year ended March 31, 2019 and authorised for issue on April 12, 2019. # 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 The functional currency of the Company and its Indian subsidiaries is the Indian Rupee (`). The functional currency of foreign subsidiaries is the currency of the primary economic environment in which the entity operates. These consolidated financial statements have been prepared on historical cost basis except for certain financial instruments which are measured at fair value or amortised cost at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities have been classified as current and non-current as per the Group's normal operating cycle. Based on the nature of services rendered to customers and time elapsed between deployment of resources and the realisation in cash and cash equivalents of the consideration for such services rendered, the Group has considered an operating cycle of 12 months. The statement of cash flows have been prepared under indirect method. # (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, 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 consolidated 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.
# Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements Purchase consideration paid in excess of the fair value of net assets acquired is recognised as goodwill. Where the fair value of identifiable assets and liabilities exceed the cost of acquisition, after reassessing the fair values of the net assets and contingent liabilities, the excess is recognised as capital reserve. The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests' proportionate share of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity of subsidiaries. Business combinations arising from transfers of interests in entities that are under 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 is 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 the management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as 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 sources 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, are in respect of impairment of goodwill, useful lives of property, plant and equipment, valuation of deferred tax assets, and fair value measurements of financial instruments, these are discussed below. Key sources of estimation of uncertainty in respect of revenue recognition, employee benefits and provisions and contingent liabilities 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). # 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 IT services, consulting and business solutions. The Group offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. # Notes forming part of the Consolidated Financial Statements Effective April 1, 2018, the Group has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Group has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. April 1, 2018).
The standard is applied retrospectively only to contracts that are not completed as at the date of initial application and the comparative information in the consolidated statement of profit and loss is not restated - i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11. Refer note 2(f) - Significant accounting policies - Revenue recognition in the Annual report of the Company for the year ended March 31, 2018, for revenue recognition policy as per Ind AS 18 and Ind AS 11. The impact of adoption of the standard on the financial statements of the Group is insignificant. Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Group expects to receive in exchange for those products or services. - Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts expended, number of transactions processed, etc. - Revenue related to fixed price maintenance and support services contracts where the Group is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance. - In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method ('POC method') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations. - Revenue from the sale of distinct internally developed software and manufactured systems and third party software is recognised upfront at the point in time when the system / software is delivered to the customer. In cases where implementation and / or customisation services rendered significantly modifies or customises the software, these services and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method. - Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to the customer. - The solutions offered by the Group may include supply of third-party equipment or software. In such cases, revenue for supply of such third party products are recorded at gross or net basis depending on whether the Group is acting as the principal or as an agent of the customer. The Group recognises revenue in the gross amount of consideration when it is acting as a principal and at net amount of consideration when it is acting as an agent. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues. The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period. In accordance with Ind AS 37, the Group recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received. Contracts are subject to modification to account for changes in contract specification and requirements. The Group reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for. The Group disaggregates revenue from contracts with customers by industry verticals, geography and nature of services. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # Use of significant judgements in revenue recognition * The Group's contracts with customers could include promises to transfer multiple products and services to a customer. The Group assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.
* Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, performance bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Group allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. * The Group uses judgement to determine an appropriate standalone selling price for a performance obligation. The Group allocates the transaction price to each performance obligation on the basis of the relative stand-alone selling price of each distinct product or service promised in the contract. Where standalone selling price is not observable, the Group uses the expected cost plus margin approach to allocate the transaction price to each distinct performance obligation. * The Group exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Group considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. * Revenue for fixed-price contracts is recognised using percentage-of-completion method. The Group uses judgement to estimate the future cost-to-completion of the contracts which is used to determine the degree of the completion of the performance obligation. * Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria for capitalisation. Such costs are amortised over the contractual period or useful life of the licence, whichever is less. The assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance resources to be used to satisfy future performance obligations and whether costs are expected to be recovered. (g) Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. # 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 in the consolidated statement of profit and loss, unless the lease agreement explicitly states that increase is on account of inflation. 122 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # (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 expenses. Employee benefit expenses includes salaries, incentives and allowances, contributions to provident and other funds and staff welfare expenses. Other 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 Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are retranslated at the exchange rate prevailing on the balance sheet date and exchange gains and losses arising on settlement and restatement are recognised in the consolidated statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated. 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 of such entities 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 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, 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 File: AR_TCS_2018_2019.md 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. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, to the extent it would be available for set off against future current 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. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. # 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. 124 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 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 issued 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 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. # 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 disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the financial statements. # Property, plant and equipment Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land) and impairment loss, if any. Depreciation is provided for property, plant and equipment on a straight line basis 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. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements The estimated useful lives are as mentioned below: \|Type of asset\|Useful lives\| \|---\|---\| \|Buildings\|20 years\| \|Leasehold improvements\|Lease term\| \|Plant and equipment\|10 years\| \|Computer equipment\|4 years\| \|Vehicles\|4 years\| \|Office equipment\|5 years\| \|Electrical installations\|10 years\| \|Furniture and fixtures\|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. # (o) 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 over the period of its economic useful life. 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: \|Type of asset\|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\| # (p) 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 allowance 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 other 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. # Notes forming part of the Consolidated Financial Statements 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. # (q) 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. # (iii) Short-term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
# (iv) 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. # (r) Inventories Inventories consists of (a) Raw materials, sub-assemblies and components, (b) Work-in-progress, (c) Stores and spare parts and (d) Finished goods. Inventories are carried at lower of cost and net realisable value. The cost of raw materials, sub-assemblies and components is determined on a weighted average basis. Cost of finished goods produced or purchased by the Group includes direct material and labour cost and a proportion of manufacturing overheads. # (s) 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. Consolidated Financial Statements I 127 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 3) Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified the following new and amendments to Ind AS which the Group has not applied as they are effective from April 1, 2019: - Ind AS 116 - Leases Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lessee accounting model for lessees. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The Group will adopt Ind AS 116 effective annual reporting period beginning April 1, 2019. The Group will apply the standard to its leases, retrospectively, with the cumulative effect of initially applying the standard, recognised on the date of initial application (April 1, 2019). Accordingly, the Group will not restate comparative information, instead, the cumulative effect of initially applying this Standard will be recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019. On that date, the Group will recognise a lease liability measured at the present value of the remaining lease payments. The right-of-use asset is recognised at its carrying amount as if the Standard had been applied since the commencement date, but discounted using the lessee's incremental borrowing rate as at April 1, 2019. In accordance with the standard, the Group will elect not to apply the requirements of Ind AS 116 to short-term leases and leases for which the underlying asset is of low value. On transition, the Group will be using the practical expedient provided by the standard and therefore, will not reassess whether a contract, is or contains a lease, at the date of initial application. The Group is in the process of finalising changes to systems and processes to meet the accounting and the reporting requirements of the standard in conjunction with review of lease agreements. The Group will recognise with effect from April 1, 2019 new assets and liabilities for its operating leases of premises and other assets. The nature of expenses related to those leases will change from lease rent in previous periods to (a) amortisation charge for the right-to-use asset, and (b) interest accrued on lease liability. Previously, the Group recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised. As a lessor, sublease shall be classified as an operating lease if the head lease is classified as a short term lease. In all other cases, the sublease shall be classified as a finance lease.
On transition, for leases other than short-term leases and leases of low value assets, the Group will recognise a right-of-use asset of ` 5,623 crore and a corresponding lease liability of ` 6,555 crore with the cumulative effect of applying the standard by adjusting retained earnings net of taxes. There will be consequent reclassification in the cash flow categories in the consolidated statement of cash flows. - Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments) The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The Group does not expect any impact from this pronouncement. It is relevant to note that the amendment does not amend situations where the entity pays a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to taxation authorities continues to be charged to equity as part of dividend, in accordance with Ind AS 12. The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty. # Notes forming part of the Consolidated Financial Statements (2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. The Group does not expect any significant impact of the amendment on its financial statements. # Ind AS 109 - Prepayment Features with Negative Compensation The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The Group does not expect this amendment to have any impact on its financial statements. # Ind AS 19 - Plan Amendment, Curtailment or Settlement The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Group does not expect this amendment to have any significant impact on its financial statements. # Ind AS 23 - Borrowing Costs The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. The Group does not expect any impact from this amendment. # Ind AS 28 - Long-term Interests in Associates and Joint Ventures The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. The Group does not currently have any long-term interests in associates and joint ventures. # Ind AS 103 - Business Combinations and Ind AS 111 - Joint Arrangements The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it re-measures previously held interests in that business. The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business.
The Group will apply the pronouncement if and when it obtains control / joint control of a business that is a joint operation. # 4) Acquisitions The Company acquired W12 Studios Limited, an award-winning digital design studio based in London on October 31, 2018. The Company paid ` 66 crore (GBP 7 million) to acquire 100% equity shares of W12 Studios Limited. File: AR_TCS_2018_2019.md # Purchase consideration paid for this acquisition has been allocated as follows: \|(` crore)\|As at March 31, 2019\| \|---\|---\| \|Cash and cash equivalents\|16\| \|Net assets acquired, at fair value other than cash and cash equivalents\|8\| \|Intangible assets\|28\| \|Goodwill\|14\| \|66\|66\| Revenues and net profit of the acquiree included in the consolidated financial statements and proforma revenue and net profit information as at the beginning of April 1, 2018 have not been presented because the amounts are immaterial. Consolidated Financial Statements I 129 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 5) 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, 2018\|348\|7,102\|2,257\|501\|6,786\|34\|2,221\|1,831\|1,640\|22,720\| \|Additions\|(4)\|335\|236\|56\|1,120\|7\|200\|130\|150\|2,230\| \|Disposals\|-\|(13)\|(95)\|(3)\|(194)\|(2)\|(46)\|(30)\|(45)\|(428)\| \|Translation exchange difference\|1\|5\|5\|(2)\|(25)\|-\|2\|4\|10\|-\| \|Cost as at March 31, 2019\|345\|7,429\|2,403\|552\|7,687\|39\|2,377\|1,935\|1,755\|24,522\| \|Accumulated depreciation as at April 1, 2018\|-\|(1,821)\|(1,283)\|(122)\|(5,292)\|(28)\|(1,720)\|(1,004)\|(1,234)\|(12,504)\| \|Depreciation for the year\|-\|(374)\|(205)\|(54)\|(820)\|(4)\|(245)\|(147)\|(168)\|(2,017)\| \|Disposals\|-\|10\|94\|2\|194\|1\|46\|23\|43\|413\| \|Translation exchange difference\|-\|(2)\|(2)\|2\|12\|-\|(2)\|(4)\|(7)\|(3)\| \|Accumulated depreciation as at March 31, 2019\|-\|(2,187)\|(1,396)\|(172)\|(5,906)\|(31)\|(1,921)\|(1,132)\|(1,366)\|(14,111)\| \|Net carrying amount as at March 31, 2019\|345\|5,242\|1,007\|380\|1,781\|8\|456\|803\|389\|10,411\| \| \|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)\| \|Depreciation for the year\|-\|(356)\|(202)\|(46)\|(819)\|(5)\|(251)\|(150)\|(148)\|(1,977)\| \|Disposals\|-\|2\|73\|1\|202\|1\|54\|19\|27\|379\| \|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\| # Net carrying amount of property, plant and equipment under finance lease arrangements are as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Leasehold improvements\|27\|33\| \|Computer equipment\|2\|5\| \|Office equipment\|1\|1\| \|Furniture and fixtures\|1\|1\| \|Leased assets\|31\|40\| # Notes forming part of the Consolidated Financial Statements # 6) Goodwill Goodwill consist of the following: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|1,745\|1,597\| \|Additional amount recognised from business combination during the year\|14\|-\| \|Translation exchange difference\|(59)\|148\| \|Balance at the end of the year\|1,700\|1,745\| The Group tests goodwill annually for impairment. Goodwill of ` 594 crore and ` 618 crore as at March 31, 2019 and 2018, respectively, 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 reasonable 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 ` 1,106 crore and ` 1,127 crore as at March 31, 2019 and 2018, respectively, (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) Other intangible assets Intangible assets consist of the following: \| \|Acquired contract rights\|Rights under licensing agreement and software licences\|Customer-related intangibles\|Total\| \|---\|---\|---\|---\|---\| \|Cost as at April 1, 2018\|369\|80\|89\|538\| \|Additions\|-\|178\|-\|178\| \|Acquisition through a business combination\|-\|-\|28\|28\| \|Translation exchange difference\|3\|(2)\|(2)\|(1)\| \|Cost as at March 31, 2019\|372\|256\|115\|743\| \|Accumulated amortisation as at April 1, 2018\|(369)\|(68)\|(89)\|(526)\| \|Amortisation for the year\|-\|(35)\|(4)\|(39)\| \|Translation exchange difference\|(3)\|1\|3\|1\| \|Accumulated amortisation as at March 31, 2019\|(372)\|(102)\|(90)\|(564)\| \|Net carrying amount as at March 31, 2019\|-\|154\|25\|179\| \| \|Acquired contract rights\|Rights under licensing agreement and software licences\|Customer-related intangibles\|Total\| \|---\|---\|---\|---\|---\| \|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\| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements The estimated amortisation for the years subsequent to March 31, 2019 is as follows: \|Year ending March 31,\|Amortisation expense\| \|---\|---\| \|2020\|59\| \|2021\|54\| \|2022\|50\| \|2023\|16\| \|2024\|-\| \|Thereafter\|-\| \| \|179\| # 8) Investments Investments consist of the following: # (A) Investments - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|(a) Investments carried at fair value through profit or loss\|Mutual fund units (unquoted)\|-\|59\| \|(b) Investments designated at fair value through OCI\|Fully paid equity shares (unquoted)\| \| \| \|Mozido LLC\|69\|65\| \| \|FCM LLC\|52\|49\| \| \|Taj Air Limited\|19\|19\| \| \|Philippine Dealing System Holdings Corporation\|6\|6\| \| \|KOOH Sports Private Limited\|-\|3\| \| \|Less: Impairment in value of investments\|(88)\|(84)\| \| \|(c) Investments carried at amortised cost\|Government bonds and securities (quoted)\|165\|168\| \|Corporate bonds (quoted)\|16\|16\| \| \| \|239\|301\| \| Investments - Non-current includes ` 181 crore and ` 185 crore as at March 31, 2019 and 2018 respectively, pertains to trusts held for specified purposes. # Notes forming part of the Consolidated Financial Statements # (B) Investments - current \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Investments carried at fair value through profit or loss\| \| \| \|Mutual fund units (quoted)\|3,745\|9,735\| \|Mutual fund units (unquoted)\|63\|-\| \|(b) Investments carried at fair value through OCI\| \| \| \|Government bonds and securities (quoted)\|23,566\|25,217\| \|Corporate bonds (quoted)\|1,206\|755\| \|(c) Investment carried at amortised cost\| \| \| \|Certificate of deposits (quoted)\|490\|-\| \|Corporate bonds (quoted)\|21\|-\| \|Total\|29,091\|35,707\| Investments - current includes ` 121 crore and ` 42 crore as at March 31, 2019 and 2018, respectively, pertaining to trusts and TCS Foundation held for specified purposes. \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Aggregate value of quoted investments\|29,209\|35,891\| \|Aggregate value of unquoted investments (net of impairment)\|121\|117\| \|Aggregate market value of quoted investments\|29,222\|35,899\| \|Aggregate value of impairment of investments\|(88)\|(84)\| \|Market value of quoted investments carried at amortised cost\| \| \| \|Government bonds and securities\|177\|176\| \|Certificate of deposits\|491\|-\| \|Corporate bonds\|36\|16\| \|In numbers\|Currency\|Face value per share\|Investments\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\|---\|---\| \|1,00,00,000\|USD\|1\|Mozido LLC\|69\|65\| \|15\|USD\|5,00,000\|FCM LLC\|52\|49\| \|1,90,00,000\|INR\|10\|Taj Air Limited\|19\|19\| \|5,00,000\|PHP\|100\|Philippine Dealing System Holdings Corporation\|6\|6\| \|20,00,000\|INR\|10\|KOOH Sports Private Limited\|-\|3\| \|Less: Impairment in value of investments\| \| \| \|(88)\|(84)\| \| \| \| \|Total\|58\|58\| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 9) Loans receivables Loans receivables (unsecured) consist of the following: # (A) Loans receivables - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Considered good\|58\|1,972\| \|Inter-corporate deposits\|2\|3\| \| \|60\|1,975\| # (B) Loans receivables - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|7,667\|2,825\| \|Inter-corporate deposits\|362\|380\| \|(b) Credit impaired\|63\|63\| \|Loans and advances to employees\|(63)\|(63)\| \| \|8,029\|3,205\| Inter-corporate deposits placed with financial institutions yield fixed interest rate. Inter-corporate deposits Includes ` 600 crore and ` 619 crore as at March 31, 2019 and 2018, respectively, pertaining to trusts and TCS Foundation held for specified purposes. # 10) Other financial assets Other financial assets consist of the following: # (A) Other financial assets - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Security deposits\|737\|683\| \|(b) Earmarked balances with banks\|1\|1\| \|(c) Interest receivable\|-\|3\| \|(d) Others\|-\|4\| \| \|738\|691\| # (B) Other financial assets - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Security deposits\|154\|217\| \|(b) Fair value of foreign exchange derivative assets\|585\|89\| \|(c) Interest receivable\|834\|534\| \|(d) Others\|196\|35\| \| \|1,769\|875\| Interest receivable includes ` 46 crore and ` 11 crore as at March 31, 2019 and 2018, respectively, pertaining to trusts and TCS Foundation.
134 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 11) Income taxes The income tax expense consists of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Current tax\| \| \| \|Current tax expense for current year\|10,024\|8,493\| \|Current tax benefit pertaining to prior years\|(522)\|(228)\| \|Total Current Tax\|9,502\|8,265\| \|Deferred tax\| \| \| \|Deferred tax expense / (benefit) for current year\|607\|(57)\| \|Deferred tax expense / (benefit) pertaining to prior years\|(108)\|4\| \|Total Deferred Tax\|499\|(53)\| \|Total income tax expense recognised in current year\|10,001\|8,212\| The reconciliation of estimated income tax expense at Indian statutory income tax rate to income tax expense reported in consolidated statement of profit and loss is as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Profit before taxes\|41,563\|34,092\| \|Indian statutory income tax rate\|34.94%\|34.61%\| \|Expected income tax expense\|14,524\|11,799\| \|Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense\| \| \| \|Tax holidays\|(4,829)\|(4,389)\| \|Income exempt from tax\|(151)\|(194)\| \|Undistributed earnings in branches and subsidiaries\|605\|486\| \|Tax on income at different rates\|674\|472\| \|Tax pertaining to prior years\|(630)\|(224)\| \|Others (net)\|(192)\|262\| \|Total income tax expense\|10,001\|8,212\| 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, profits from units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT). # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2019 are as follows: \| \|Opening balance\|Recognised in profit and loss\|Recognised in / reclassified from other comprehensive income\|Exchange difference\|Closing balance\| \|---\|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and intangible assets\|43\|50\|-\|2\|95\| \|Provision for employee benefits\|395\|128\|8\|-\|531\| \|Cash flow hedges\|10\|-\|(22)\|-\|(12)\| \|Receivables, financial assets at amortised cost\|301\|42\|-\|(3)\|340\| \|MAT credit entitlement\|2,217\|(1,047)\|-\|-\|1,170\| \|Branch profit tax\|(400)\|101\|-\|-\|(299)\| \|Undistributed earnings of subsidiaries\|(605)\|31\|-\|-\|(574)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(2)\|-\|(149)\|2\|(149)\| \|Operating lease liabilities\|85\|8\|-\|1\|94\| \|Others\|235\|188\|-\|(5)\|418\| \|Total deferred tax assets / (liabilities)\|2,279\|(499)\|(163)\|(3)\|1,614\| # Gross deferred tax assets and liabilities are as follows: \| \|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and Intangible assets\|212\|117\|95\| \|Provision for employee benefits\|532\|1\|531\| \|Cash flow hedges\|(12)\|-\|(12)\| \|Receivables, financial assets at amortised cost\|339\|(1)\|340\| \|MAT credit entitlement\|1,170\|-\|1,170\| \|Branch profit tax\|-\|299\|(299)\| \|Undistributed earnings of subsidiaries\|-\|574\|(574)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(149)\|-\|(149)\| \|Operating lease liabilities\|94\|-\|94\| \|Others\|470\|52\|418\| \|Total deferred tax assets / (liabilities)\|2,656\|1,042\|1,614\| # Notes forming part of the Consolidated Financial Statements # 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\|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\| # Gross deferred tax assets and liabilities are as follows: \| \|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|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\| Under the 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.
Consolidated Financial Statements I 137 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements Unrecognised deferred tax assets relate primarily to business losses and tax credit entitlement. These unexpired business losses will expire based on the year of origination as follows: \|March 31,\|Unabsorbed business losses (` crore)\| \|---\|---\| \|2020\|2\| \|2021\|15\| \|2022\|5\| \|2023\|6\| \|2024\|16\| \|Thereafter\|-\| \| \|44\| Under the 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 ` 1,170 crore. Deferred tax liability on temporary differences of ` 8,456 crore as at March 31, 2019, associated with investments in 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. The Company and its subsidiaries have contingent liability of ` 1,504 crore and ` 5,639 crore as at March 31, 2019 and 2018, respectively, in respect of tax demands which are being contested by the Company and its subsidiaries based on the management evaluation and advice of tax consultants. In respect of tax contingencies of ` 318 crore and ` 318 crore as at March 31, 2019 and 2018, respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. The Group periodically receives notices and inquiries from income tax authorities related to the Group's operations in the jurisdictions it operates in. The Group has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. In India, tax filings from fiscal 2016 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2015 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2016 and earlier. # Notes forming part of the Consolidated Financial Statements # 12) Other assets Other assets consist of the following: # (A) Other assets - Non-current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|Considered good\| \| \| \| \|(a) Contract assets\| \|190\|-\| \|(b) Prepaid expenses\| \|351\|356\| \|(c) Prepaid rent\| \|339\|373\| \|(d) Contract fulfillment costs\| \|174\|95\| \|(e) Capital advances\| \|276\|106\| \|(f) Advances to related parties\| \|3\|2\| \|(g) Others\| \|30\|21\| \| \|Total\|1,363\|953\| Advances to related parties, considered good, comprise: \|Voltas Limited\|2\| \|---\|---\| \|Concorde Motors (India) Limited\|1\| # (B) Other assets - Current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|Considered good\| \| \| \| \|(a) Contract assets\| \|3,238\|-\| \|(b) Prepaid expenses\| \|614\|1,083\| \|(c) Prepaid rent\| \|50\|54\| \|(d) Contract fulfillment costs\| \|537\|463\| \|(e) Advance to suppliers\| \|139\|144\| \|(f) Advance to related parties\| \|2\|3\| \|(g) Indirect taxes recoverable\| \|1,170\|699\| \|(h) Other advances\| \|142\|41\| \|(i) Others\| \|136\|97\| \|Considered doubtful\| \| \| \| \|(a) Advance to suppliers\| \|3\|3\| \|(b) Indirect taxes recoverable\| \|4\|2\| \|(c) Other advances\| \|4\|3\| \|Less: Allowance on doubtful assets\| \|(11)\|(8)\| \| \|Total\|6,028\|2,584\| Advance to related parties, considered good comprise: \|Tata AIG General Insurance Company Limited\|1\| \|---\|---\| \|The Titan Company Limited\|1\| Contract fulfillment costs of ` 665 crore and ` 607 crore for the years ended March 31, 2019 and 2018, respectively, have been amortised in the statement of profit and loss. Refer note 23 for changes in contract assets.
Consolidated Financial Statements I 139 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 13) Inventories Inventories consist of the following: \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Raw materials, sub-assemblies and components\|9\|25\| \|(b) Finished goods and work-in-progress\|-\|-\| \|(c) Goods-in-transit (raw materials)\|-\|-\| \|(d) Stores and spares\|1\|1\| \|Total\|10\|26\| Represents value less than ` 0.50 crore. Inventories are carried at lower of cost and net realisable value. # 14) Trade receivables Trade receivables (unsecured) consist of the following: # (A) Trade receivables - Non-current \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|569\|460\| \|Less: Allowance for doubtful trade receivables\|(474)\|(366)\| \|Total\|95\|94\| # (B) Trade receivables - Current \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|27,629\|25,196\| \|Less: Allowance for doubtful trade receivables\|(340)\|(301)\| \|Total\|27,289\|24,895\| \|(b) Credit impaired\|263\|211\| \|Less: Allowance for doubtful trade receivables\|(206)\|(163)\| \|Total\|57\|48\| \|Overall Total\|27,346\|24,943\| Above balances of trade receivables include balances with related parties (Refer note 35). # Notes forming part of the Consolidated Financial Statements # 15) Cash and cash equivalents Cash and cash equivalents consist of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Balances with banks\| \|6,463\|4,487\| \|In current accounts\| \|6,463\|4,487\| \|In deposit accounts\| \|733\|328\| \|(b) Cheques on hand\| \|2\|3\| \|(c) Cash on hand\| \|19\|-\| \|(d) Remittances in transit\| \|7\|65\| \| \|Total\|7,224\|4,883\| *Represents value less than ` 0.50 crore. Balances with banks in current accounts include ` 5 crore and ` 3 crore as at March 31, 2019 and 2018, respectively, pertaining to trusts held for specified purposes. # 16) Other balances with banks Other balances with banks consist of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Earmarked balances with banks\| \|196\|222\| \|(b) Short-term bank deposits\| \|5,428\|2,056\| \| \|Total\|5,624\|2,278\| Earmarked balances with banks significantly includes margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 17) Share capital The authorised, issued, subscribed and fully paid-up share capital comprises of: \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|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\| \| \|565\|565\| \|Issued, Subscribed and Fully paid up\| \| \| \|375,23,84,706 equity shares of ` 1 each\|375\|191\| \| \|375\|191\| The Board of Directors of the Company at its meeting held on April 19, 2018, approved a proposal to issue bonus shares in the ratio of one equity share of ` 1 each for every one equity share of ` 1 each held by the shareholders of the Company as on the record date, which was approved by the shareholders by means of an ordinary resolution through a postal ballot. The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ` 86 crore and capital redemption reserve amounting to ` 106 crore. The Board of Directors of the Company at its meeting held on June 15, 2018, approved a proposal to buyback of upto 7,61,90,476 equity shares of the Company for an aggregate amount not exceeding ` 16,000 crore being 1.99% of the total paid up equity share capital at ` 2,100 per equity share, which was approved by the shareholders by means of a special resolution through a postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 7,61,90,476 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on September 26, 2018. Capital redemption reserve was created to the extent of share capital extinguished (` 8 crore). The excess of cost of buy-back of ` 16,045 crore (including ` 45 crore towards transaction costs of buy-back) over par value of shares was offset from retained earnings. In the previous year, the Company bought back 5,61,40,350 equity shares for an aggregate amount of ` 16,000 crore being 2.85% of the total paid up equity share capital at ` 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017.
# (i) Reconciliation of number of shares \| \|As at March 31, 2019\| \|As at March 31, 2018\| \| \|---\|---\|---\|---\|---\| \|Number of shares\|Amount (` crore)\|Number of shares\|Amount (` crore)\| \| \|Equity shares\| \| \| \| \| \|Opening balance\|191,42,87,591\|191\|197,04,27,941\|197\| \|Issued during the year\|191,42,87,591\|192\|-\|-\| \|Shares extinguished on buy-back\|(7,61,90,476)\|(8)\|(5,61,40,350)\|(6)\| \|Closing balance\|375,23,84,706\|375\|191,42,87,591\|191\| 142 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # (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, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|Equity shares\| \| \| \| \|Holding company\|270,24,50,947 equity shares (March 31, 2018: 137,61,18,911 equity shares) are held by Tata Sons Private Limited\|270\|138\| \|Subsidiaries and Associates of Holding company\| \| \| \| \|Tata Industries Limited\|7,220 equity shares (March 31, 2018: 3,610 equity shares) are held by\|-\|-\| \|Tata AIG Life Insurance Company Limited\|NIL equity share (March 31, 2018: 2,06,000 equity shares) are held by\|-\|-\| \|Tata AIA Life Insurance Company Limited\|NIL equity share (March 31, 2018: 7,76,533 equity shares) are held by\|-\|-\| \|Tata Investment Corporation Limited\|10,36,269 equity shares (March 31, 2018: 5,27,110 equity shares) are held by\|-\|-\| \|Tata Steel Limited\|46,798 equity shares (March 31, 2018: 23,804 equity shares) are held by\|-\|-\| \|The Tata Power Company Limited\|766 equity shares (March 31, 2018: 383 equity shares) are held by\|-\|-\| \|Total\| \|270\|138\| *Equity shares having value less than ` 0.50 crore. # (iv) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company \| \|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|Equity shares\|Tata Sons Private Limited, the holding company\|270,24,50,947\|137,61,18,911\| \|% of shareholding\| \|72.02%\|71.89%\| # (v) Equity shares movement during 5 years preceding March 31, 2019 # (a) Bonus issue of equity shares The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ` 86 crore and capital redemption reserve amounting to ` 106 crore, pursuant to an ordinary resolution passed after taking the consent of shareholders through postal ballot. Consolidated Financial Statements I 143 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # (b) Buy-back of equity shares The Company bought back 7,61,90,476 equity shares for an aggregate amount of ` 16,000 crore being 1.99% of the total paid up equity share capital at ` 2,100 per equity share. The equity shares bought back were extinguished on September 26, 2018. 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. # (c) 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. File: AR_TCS_2018_2019.md 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 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.
# Other equity Other equity consist of the following: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Capital reserve (on consolidation)\|75\|75\| \|(b) Securities premium\| \| \| \|(i) Opening balance\|-\|1,919\| \|(ii) Utilised for buy-back of equity shares\|-\|(1,919)\| \| \|-\|-\| \|(c) Capital redemption reserve\| \| \| \|(i) Opening balance\|529\|523\| \|(ii) Transfer from retained earnings\|8\|6\| \|(iii) Issue of bonus shares\|(106)\|-\| \| \|431\|529\| \|(d) General reserve\| \| \| \|(i) Opening balance\|1,423\|10,549\| \|(ii) Transfer to retained earnings\|(1,396)\|(8)\| \|(iii) Utilised for buy-back of equity shares\|-\|(9,118)\| \| \|27\|1,423\| \|(e) Special Economic Zone re-investment reserve\| \| \| \|(i) Opening balance\|1,578\|97\| \|(ii) Transfer from retained earnings\|2,750\|1,579\| \|(iii) Transfer to retained earnings\|(3,334)\|(98)\| \| \|994\|1,578\| 144 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(f) Retained earnings\| \| \| \|(i) Opening balance\|79,755\|71,071\| \|(ii) Profit for the year\|31,472\|25,826\| \|(iii) Remeasurement of defined employee benefit plans\|(41)\|102\| \|(iv) Utilised for buy-back of equity shares\|(15,992)\|(4,957)\| \|(v) Expense relating to buy-back of equity shares\|(45)\|(42)\| \|(vi) Issue of bonus shares\|(86)\|-\| \|(vii) Realised loss on equity shares carried at fair value through OCI\|(1)\|-\| \|(viii) Transfer from Special Economic Zone re-investment reserve\|3,334\|98\| \|(ix) Transfer from general reserve\|1,396\|8\| \| \|99,792\|92,106\| \|(x) Less: Appropriations\| \| \| \|(a) Dividend on equity shares\|10,085\|9,284\| \|(b) Tax on dividend\|1,339\|1,442\| \|(c) Transfer to capital redemption reserve\|8\|6\| \|(d) Transfer to Special Economic Zone re-investment reserve\|2,750\|1,579\| \|(e) Transfer to statutory reserve\|90\|40\| \| \|85,520\|79,755\| \|(g) Statutory reserve\| \| \| \|(i) Opening balance\|258\|218\| \|(ii) Transfer from retained earnings\|90\|40\| \| \|348\|258\| \|(h) Investment revaluation reserve\| \| \| \|(i) Opening balance\|(84)\|538\| \|(ii) Net cumulative loss reclassified to retained earning on sale of financial assets carried at fair value\|1\|-\| \|(iii) Change during the year (net)\|275\|(622)\| \| \|192\|(84)\| \|(i) Cash flow hedging reserve (Refer note 30 b)\| \| \| \|(i) Opening balance\|(71)\|88\| \|(ii) Change during the year (net)\|175\|(159)\| \| \|104\|(71)\| \|(j) Foreign currency translation reserve\| \| \| \|(i) Opening balance\|1,474\|939\| \|(ii) Change during the year (net)\|(94)\|535\| \| \|1,380\|1,474\| \| \|89,071\|84,937\| *Refer note 17. Consolidated Financial Statements I 145 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # Other components of equity Other components of equity consist of the following: # Investment revaluation reserve \|(` crore)\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|(84)\|538\| \|Net loss arising on revaluation of financial assets carried at fair value\|(1)\|(84)\| \|Net cumulative loss reclassified to retained earnings on sale of financial assets carried at fair value\|1\|-\| \|Net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|425\|(625)\| \|Deferred tax relating to net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|(149)\|216\| \|Net cumulative (gain) / loss 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) / loss 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\|192\|(84)\| # Borrowings Borrowings consist of the following: # (A) Borrowings - Non-current (secured loans) \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Long-term maturities of finance lease obligations\|44\|54\| Finance lease obligations are secured against property, plant and equipment obtained under finance lease arrangements (Refer note 29). # (B) Borrowings - Current (unsecured loans) \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Overdraft from banks\|-\|181\| # Notes forming part of the Consolidated Financial Statements # 20) Other financial liabilities Other financial liabilities consist of the following: # (A) Other financial liabilities - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Capital creditors\|3\|18\| \|(b) Others\|284\|485\| \| \|287\|503\| Others include advance taxes paid of ` 226 crore and ` 227 crore as at March 31, 2019 and 2018, respectively, by the seller of TCS e-Serve Limited which (merged with the Company), on refund by the tax authorities, is payable to the seller. # (B) Other financial liabilities - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Accrued payroll\|3,203\|2,637\| \|(b) Current maturities of finance lease obligations\|18\|12\| \|(c) Unclaimed dividends\|41\|28\| \|(d) Fair value of foreign exchange derivative liabilities\|60\|91\| \|(e) Capital creditors\|303\|262\| \|(f) Liabilities towards customer contracts\|895\|776\| \|(g) Others\|383\|107\| \| \|4,903\|3,913\| Finance lease obligations are secured against property, plant and equipment obtained under finance lease arrangements (Refer note 29).
# 21) Provisions Provisions consist of the following: # (A) Provisions - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Provision for foreseeable loss\|-\|26\| \| \|-\|26\| # (B) Provisions - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Provision for foreseeable loss\|184\|199\| \|(b) Other provisions\|55\|41\| \| \|239\|240\| Consolidated Financial Statements I 147 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 22) Other liabilities Other liabilities consist of the following: # (A) Other liabilities - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Operating lease liabilities\|413\|392\| \| \|413\|392\| # (B) Other liabilities - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Advance received from customers\|575\|796\| \|(b) Indirect taxes payable and other statutory liabilities\|2,526\|1,986\| \|(c) Operating lease liabilities\|60\|99\| \|(d) Others\|74\|48\| \| \|3,235\|2,929\| # 23) Revenue Revenue consists of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Consultancy services\|143,935\|120,128\| \|Sale of equipment and software licences\|2,528\|2,976\| \| \|146,463\|123,104\| Revenue disaggregation as per industry vertical and geography has been included in segment information (Refer note 32). While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially satisfied) performance obligations, along with the broad time band for the expected time to recognise those revenues, the Group has applied the practical expedient in Ind AS 115. Accordingly, the Group has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts. Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is ` 82,489 crore out of which 54.48% is expected to be recognised as revenue in the next year and the balance thereafter. No consideration from contracts with customers is excluded from the amount mentioned above. 148 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Changes in contract assets are as follows: \| \|(` crore)\| \|---\|---\| \|Year ended\|March 31, 2019\| \|Balance at the beginning of the year\|2,882\| \|Revenue recognised during the year\|11,404\| \|Invoices raised during the year\|(10,893)\| \|Translation exchange difference\|35\| \|Balance at the end of the year\|3,428\| # Changes in unearned and deferred revenue are as follows: \| \|(` crore)\| \|---\|---\| \|Year ended\|March 31, 2019\| \|Balance at the beginning of the year\|2,535\| \|Revenue recognised that was included in the unearned and deferred revenue balance at the beginning of the year\|(2,376)\| \|Increase due to invoicing during the year, excluding amounts recognised as revenue during the year\|2,996\| \|Translation exchange difference\|81\| \|Balance at the end of the year\|3,236\| # Reconciliation of revenue recognised with the contracted price is as follows: \| \|(` crore)\| \|---\|---\| \|Year ended\|March 31, 2019\| \|Contracted price\|148,649\| \|Reductions towards variable consideration components\|(2,186)\| \|Revenue recognised\|146,463\| The reduction towards variable consideration comprises of volume discounts, service level credits, etc.
# Other income (net) Other income (net) consists of the following: \| \|(` crore)\|Year ended\|March 31, 2019\|Year ended\|March 31, 2018\| \|---\|---\|---\|---\|---\|---\| \|(a) Interest income\|2,762\|(b) Dividend income\|18\| \| \| \|(c) Net gain on investments carried at fair value through profit or loss\|427\|(d) Net gain on sale of investments carried at amortised cost\|-\| \| \| \|(e) Net gain on sale of investments other than equity shares carried at fair value through OCI\|-\|(f) Net gain on disposal of property, plant and equipment\|84\| \| \| \|(g) Net foreign exchange gains\|967\|(h) Rent income\|6\| \| \| \|(i) Other income\|47\| \| \| \| \| \| \|4,311\| \|3,642\| \| \| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Interest income comprise\| \| \| \|Interest on bank balances and bank deposits\|188\|62\| \|Interest income on financial assets carried at amortised cost\|576\|245\| \|Interest income on financial assets carried at fair value through OCI\|1,838\|1,727\| \|Other interest (including interest on income tax refunds)\|160\|411\| \|Dividend income comprises\| \| \| \|Dividend from mutual fund units\|18\|9\| # 25) Employee benefits Employee benefit expenses consist of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|(a) Salaries, incentives and allowances\|70,642\|59,950\| \|(b) Contributions to provident and other funds\|5,308\|4,505\| \|(c) Staff welfare expenses\|2,296\|1,941\| \|Total\|78,246\|66,396\| Employee benefit obligations consist of the following: # (A) Employee benefit obligations - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Gratuity liability\|11\|3\| \|(b) Foreign defined benefit plans\|232\|213\| \|(c) Other employee benefit obligations\|87\|74\| \|Total\|330\|290\| # (B) Employee benefit obligations - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Compensated absences\|2,330\|1,995\| \|(b) Other employee benefit obligations\|26\|23\| \|Total\|2,356\|2,018\| # 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. The Company manages the plan through a trust. Trustees administer contributions made to the trust. 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, 2019\| \| \| \|Year ended March 31, 2018\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|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\|2,308\|3\|626\|103\|3,040\|2,084\|4\|537\|81\|2,706\| \|Translation exchange difference\|-\|-\|(5)\|1\|(4)\|-\|-\|59\|5\|64\| \|Plan participants' contribution\|-\|-\|9\|-\|9\|-\|-\|7\|-\|7\| \|Service cost\|289\|1\|14\|19\|323\|273\|1\|12\|19\|305\| \|Interest cost\|190\|-\|9\|4\|203\|159\|-\|9\|3\|171\| \|Remeasurement of the net defined benefit liability\|39\|-\|25\|(2)\|62\|(86)\|(2)\|(12)\|(3)\|(103)\| \|Past service cost / (credit)\|-\|-\|(35)\|1\|(34)\|-\|-\|33\|2\|35\| \|Benefits paid\|(147)\|-\|(14)\|(6)\|(167)\|(122)\|-\|(19)\|(4)\|(145)\| \|Benefit obligations, end of the year\|2,679\|4\|629\|120\|3,432\|2,308\|3\|626\|103\|3,040\| \|Change in plan assets\| \| \|Year ended March 31, 2019\| \| \| \|Year ended March 31, 2018\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|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\|2,433\|-\|529\|-\|2,962\|2,157\|-\|461\|-\|2,618\| \|Translation exchange difference\|-\|-\|(3)\|-\|(3)\|-\|-\|52\|-\|52\| \|Interest income\|193\|-\|7\|-\|200\|165\|-\|10\|-\|175\| \|Employers' contributions\|171\|-\|15\|-\|186\|233\|-\|15\|-\|248\| \|Plan participants' contribution\|-\|-\|9\|-\|9\|-\|-\|7\|-\|7\| \|Benefits paid\|(147)\|-\|(14)\|-\|(161)\|(122)\|-\|(19)\|-\|(141)\| \|Remeasurement - return on plan assets excluding amount included in interest income\|22\|-\|(11)\|-\|11\|-\|-\|3\|-\|3\| \|Fair value of plan assets, end of the year\|2,672\|-\|532\|-\|3,204\|2,433\|-\|529\|-\|2,962\| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements \| \| \| \|As at March 31, 2019\| \| \| \|As at March 31, 2018\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\| \| \| \|Funded\|Funded\|Unfunded\|Funded\|Unfunded\| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \|Funded status\|(7)\|(4)\|(112)\|(120)\|(243)\|-\|(3)\|(110)\|(103)\|(216)\| \| \|Surplus of plan assets over obligations\|-\|-\|15\|-\|15\|125\|-\|13\|-\|138\| \| \| \|(7)\|(4)\|(97)\|(120)\|(228)\|125\|(3)\|(97)\|(103)\|(78)\| \| # Category of assets \| \| \| \|As at March 31, 2019\| \| \| \| \|As at March 31, 2018\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\| \| \| \|Funded\|Funded\|Unfunded\|Funded\|Unfunded\| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \|Corporate bonds\|684\|-\|101\|-\|785\|560\|-\|50\|-\| \|610\| \|Equity shares\|20\|-\|67\|-\|87\|116\|-\|-\|-\|116\| \| \|Government bonds and securities\|1,150\|-\|-\|-\|1,150\|996\|-\|-\|-\|996\| \| \|Insurer managed funds\|760\|-\|32\|-\|792\|714\|-\|224\|-\| \|938\| \|Bank balances\|6\|-\|16\|-\|22\|5\|-\|1\|-\|6\| \| \|Others\|52\|-\|316\|-\|368\|42\|-\|254\|-\| \|296\| \|Total\|2,672\|-\|532\|-\|3,204\|2,433\|-\|529\|-\| \|2,962\| # Net periodic gratuity / pension cost, included in employee cost consists of the following components: \| \| \| \|Year ended March 31, 2019\| \| \| \| \|Year ended March 31, 2018\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\| \| \| \|Funded\|Funded\|Unfunded\|Funded\|Unfunded\| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \|Service cost\|289\|1\|14\|19\|323\|273\|1\|12\|19\| \|305\| \|Net interest on net defined benefit (asset) / liability\|(3)\|-\|2\|4\|3\|(6)\|-\|(1)\|3\| \|(4)\| \|Past service cost / (credit)\|-\|-\|(35)\|1\|(34)\|-\|-\|33\| \|2\|35\| \|Net periodic gratuity / pension cost\|286\|1\|(19)\|24\|292\|267\|1\|44\|24\| \|336\| \|Actual return on plan assets\|215\|-\|(4)\|-\|211\|165\|-\|13\|-\| \|178\| 152 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Remeasurement of the net defined benefit (asset) / liability: \|(` crore)\| \| \| \| \|Year ended March 31, 2019\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\| \| \| \| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \| \|Actuarial (gains) and losses arising from changes in demographic assumptions\| \|(17)\| \|-\|9\|(3)\|(11)\| \|Actuarial (gains) and losses arising from changes in financial assumptions\| \| \|-\|-\|(15)\|2\|(13)\| \|Actuarial (gains) and losses arising from changes in experience adjustments\| \|56\| \|-\|31\|(1)\|86\| \|Remeasurement of the net defined benefit liability\| \|39\| \|-\|25\|(2)\|62\| \|Remeasurement - return on plan assets excluding amount included in interest income\| \|(22)\|-\| \|11\|-\|(11)\| \|Total\| \|17\| \|-\|36\|(2)\|51\| \|(` crore)\| \| \| \|Year ended March 31, 2018\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \|Domestic plans\|Domestic plans\|Foreign plans\|Foreign plans\|Total\| \| \| \| \|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)\| \| # The assumptions used in accounting for the defined benefit plan are set out below: \| \|Year ended March 31, 2019\|Year ended March 31, 2019\|Year ended March 31, 2018\|Year ended March 31, 2018\| \|---\|---\|---\|---\|---\| \| \|Domestic plans\|Foreign plans\|Domestic plans\|Foreign plans\| \|Discount rate\|7.00%-7.75%\|0.75%-9.00%\|7.25%-7.75%\|0.60%-7.75%\| \|Rate of increase in compensation levels of covered employees\|6.00%-8.00%\|1.25%-7.00%\|5.00%-8.00%\|1.25%-6.00%\| \|Rate of return on plan assets\|7.00%-7.75%\|0.75%-9.00%\|7.25%-7.75%\|0.60%-7.75%\| \|Weighted average duration of defined benefit obligations\|8-11 years\|6.25-27 years\|8-12 years\|5-28 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, 2019. The Group is expected to contribute ` 330 crore to defined benefit plan obligations funds for the year ended March 31, 2020 comprising domestic component of ` 315 crore and foreign component of ` 15 crore. Consolidated Financial Statements I 153 # Annual Report 2018-19 # 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 increase / (decrease) as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Increase of 0.50%\|(157)\|(143)\| \|Decrease of 0.50%\|175\|158\| If the expected salary growth increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Increase of 0.50%\|120\|96\| \|Decrease of 0.50%\|(113)\|(90)\| 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, 2019 as follows: \|Year ending March 31\|Defined benefit obligations\| \|---\|---\| \|2020\|262\| \|2021\|231\| \|2022\|242\| \|2023\|244\| \|2024\|242\| \|2025-2029\|1,274\| # 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 # Notes forming part of the Consolidated Financial Statements 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. # The details of fund and plan assets are given below: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Fair value of plan assets\|14,555\|13,084\| \|Present value of defined benefit obligations\|(14,555)\|(13,084)\| \|Net excess / (shortfall)\|-\|-\| 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, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Discount rate\|7.75%\|7.75%\| \|Average remaining tenure of investment portfolio\|8.38 years\|7.95 years\| \|Guaranteed rate of return\|8.65%\|8.55%\| The Group contributed ` 917 crore and ` 848 crore for the years ended March 31, 2019 and 2018, respectively, 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 ` 324 crore and ` 264 crore for the years ended March 31, 2019 and 2018, respectively, to the Employees' Superannuation Fund. # Foreign defined contribution plans The Group contributed ` 1,161 crore and ` 927 crore for the years ended March 31, 2019 and 2018, respectively, towards foreign defined contribution plans. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 26) Cost of equipment and software licences Cost of equipment and software licences include: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|(a) Raw materials, sub-assemblies and components consumed\|40\|86\| \|(b) Equipment and software licences purchased\|2,230\|2,614\| \| \|2,270\|2,700\| \|Finished goods and work-in-progress\| \| \| \|Opening stock\|-\|1\| \|Less: Closing stock\|-\|-\| \| \|-\|1\| Represents value less than ` 0.50 crore. # 27) Other expense Other expenses consist of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|(a) Fees to external consultants\|11,330\|8,992\| \|(b) Facility expenses\|4,262\|3,938\| \|(c) Travel expenses\|3,474\|2,816\| \|(d) Communication expenses\|1,321\|1,062\| \|(e) Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|187\|206\| \|(f) Other expenses\|5,867\|4,478\| \| \|26,441\|21,492\| The Company made a contribution to an electoral trust of ` 220 crore and NIL for the years ended March 31, 2019 and 2018, respectively, which is included in other expenses. # 28) Research and development expenditure Research and development expenditure including capital expenditure aggregating ` 308 crore and ` 298 crore was incurred in the years ended March 31, 2019 and 2018, respectively. # 29) 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 ` 2,181 crore and ` 1,998 crore for the years ended March 31, 2019 and 2018, respectively. 156 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements The following is a summary of future minimum lease rental commitments towards non-cancellable operating leases and finance leases: # Operating lease \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Due within one year\|863\|897\| \|Due in a period between one year and five years\|2,676\|3,053\| \|Due after five years\|2,330\|1,061\| \|Total minimum lease commitments\|5,869\|5,011\| # Finance lease \| \|As at March 31, 2019\|Present\|As at March 31, 2018\|Present\| \|---\|---\|---\|---\|---\| \|Minimum lease commitments\|Due within one year\|24\|20\|12\| \| \|Due in a period between one year and five years\|55\|62\|45\| \| \|Due after five years\|-\|10\|9\| \|Total minimum lease commitments\|79\|62\|92\|66\| \|Less: Interest\|(17)\| \|(26)\| \| \|Present value of minimum lease commitments\|62\| \|66\| \| # Receivables under sub-leases \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Due within one year\|3\|6\| \|Due in a period between one year and five years\|4\|7\| \|Total\|7\|13\| Income from sub-leases of ` 6 crore and ` 16 crore have been recognised in the statement of profit and loss for the years ended March 31, 2019 and 2018, respectively. # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # 30) 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, 2019 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\| \| \| \| \|7,224\|7,224\| \|Cash and cash equivalents\| \| \| \| \|5,428\|5,428\| \|Bank deposits\| \| \| \| \|197\|197\| \|Earmarked balances with banks\|3,808\|24,830\| \| \|692\|29,330\| \|Investments\| \| \| \| \|27,441\|27,441\| \|Trade receivables\| \| \| \| \|5,548\|5,548\| \|Unbilled receivables\| \| \| \| \|8,089\|8,089\| \|Loans receivables\| \| \|237\|348\|1,921\|2,506\| \|Other financial assets\|3,808\|24,830\|237\|348\|56,540\|85,763\| \| \|Financial liabilities\| \| \| \|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade payables\| \| \| \| \|6,292\|6,292\| \|Borrowings\| \| \| \| \|44\|44\| \|Other financial liabilities\|218\| \| \|60\|4,912\|5,190\| \|Total\|218\| \| \|60\|11,248\|11,526\| *Loans receivables include inter-corporate deposits of ` 7,725 crore, with original maturity period within 50 months.
158 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # The carrying value of financial instruments by categories as at March 31, 2018 is as follows: File: AR_TCS_2018_2019.md \| \|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 receivables\|-\|-\|-\|-\|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\|-\|-\|-\|-\|5,094\|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 receivables include inter-corporate deposits of ` 4,797 crore, with original maturity period within 50 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables (previous year: unbilled revenues, loans receivables and trade payables as at March 31, 2019 and 2018, 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 periods presented. Fair value of investments carried at amortised cost is ` 704 crore and ` 192 crore as at March 31, 2019 and 2018, respectively. # 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 cost of unquoted investments included in Level 3 of fair value hierarchy approximate their fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range. # Annual Report 2018-19 # 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, 2019 \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|Financial assets\|3,745\|63\|-\|3,808\| \|Mutual fund units\|-\|-\|58\|58\| \|Government bonds and securities\|23,743\|-\|-\|23,743\| \|Certificate of deposits\|491\|-\|-\|491\| \|Corporate bonds\|1,243\|-\|-\|1,243\| \|Derivative financial assets\|-\|585\|-\|585\| \|Total\|29,222\|648\|58\|29,928\| # Financial liabilities \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|Derivative financial liabilities\|-\|60\|-\|60\| \|Other financial liabilities\|-\|-\|218\|218\| \|Total\|-\|60\|218\|278\| # As at March 31, 2018 \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|Financial assets\|9,735\|59\|-\|9,794\| \|Mutual fund units\|-\|-\|58\|58\| \|Government bonds and securities\|25,393\|-\|-\|25,393\| \|Corporate bonds\|771\|-\|-\|771\| \|Derivative financial assets\|-\|89\|-\|89\| \|Total\|35,899\|148\|58\|36,105\| # Financial liabilities \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|Derivative financial liabilities\|-\|91\|-\|91\| \|Other financial liabilities\|-\|-\|203\|203\| \|Total\|-\|91\|203\|294\| # Reconciliation of Level 3 fair value measurement is as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|58\|141\| \|Disposals during the year\|(3)\|-\| \|Impairment in value of investments\|-\|(83)\| \|Translation exchange difference\|3\|-\| \|Balance at the end of the year\|58\|58\| # Notes forming part of the Consolidated Financial Statements # (b) Derivative financial instruments and hedging activity The Group's revenue is denominated in various foreign currencies. 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 have 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 forward, currency options and futures contracts in which the counter party is generally a bank. The following are outstanding currency options contracts, which have been designated as cash flow hedges: \|Foreign currency\|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2018\|As at March 31, 2018\|As at March 31, 2018\| \|---\|---\|---\| \| \|No.
of contracts\|Notional amount of contracts (` crore)\|Fair value (` crore)\|No. of contracts\|Notional amount of contracts (` crore)\|Fair value (` crore)\| \|US Dollar\|28\|1,000\|128\|24\|1,466\|20\| \|Great Britain Pound\|24\|177\|23\|34\|263\|(23)\| \|Euro\|33\|239\|50\|26\|216\|1\| \|Australian Dollar\|26\|181\|22\|21\|150\|12\| \|Canadian Dollar\|21\|99\|14\|-\|-\|-\| The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2019\|Year ended March 31, 2018\|Year ended March 31, 2018\| \|---\|---\|---\| \| \|Intrinsic value (` crore)\|Time value (` crore)\|Intrinsic value (` crore)\|Time value (` crore)\| \|Balance at the beginning of the year\|(2)\|(69)\|105\|(17)\| \|(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\|(488)\|458\|(127)\|340\| \|Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\|94\|(25)\|15\|(38)\| \|Change in the fair value of effective portion of cash flow hedges\|641\|(414)\|5\|(399)\| \|Deferred tax on fair value of effective portion of cash flow hedges\|(111)\|20\|-\|45\| \|Balance at the end of the year\|134\|(30)\|(2)\|(69)\| In addition to the above cash flow hedges, the Group has outstanding foreign exchange forward, currency options and futures contracts with notional amount aggregating ` 34,939 crore and ` 22,404 crore whose fair value showed a net gain of ` 288 crore and net loss of ` 12 crore as at March 31, 2019 and 2018, respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting. Exchange gain of ` 408 crore and exchange loss of ` 52 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the consolidated statement of profit and loss for the years ended March 31, 2019 and 2018, respectively. Net foreign exchange gains include gain of ` 30 crore and exchange loss of ` 213 crore transferred from cash flow hedging reserve for the years ended March 31, 2019 and 2018, respectively. Consolidated Financial Statements I 161 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements Net gain on derivative instruments of ` 104 crore recognised in cash flow hedging reserve as at March 31, 2019, is expected to be transferred to the statement of profit and loss by March 31, 2020. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2019. Following table summarises approximate gain / (loss) on Group's other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies. \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|10% Appreciation of the underlying foreign currencies\|(64)\|(323)\| \|10% Depreciation of the underlying foreign currencies\|1,370\|1,054\| # (c) Financial risk management The Group is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Group has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Group. # (i) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Group's exposure to market risk is primarily on account of foreign currency exchange rate risk. # (i) (a) Foreign currency exchange rate risk The fluctuation in foreign currency exchange rates may have potential impact on the consolidated 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 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 30(b). The following table sets forth information relating to foreign currency exposure as at March 31, 2019: \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|2,519\|321\|500\|1,285\| \|Net financial liabilities\|(82)\|-\|(10)\|(308)\| 162 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements 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 ` 423 crore for the year ended March 31, 2019. # Foreign Currency Exposure \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|2,481\|349\|266\|1,228\| \|Net financial liabilities\|(298)\|(1)\|(6)\|(359)\| 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 crore for the year ended March 31, 2018. # (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 of 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 receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of ` 7,725 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of ` 4,870 crore held with two Indian banks having high credit rating which are individually in excess of 10% or more of the Group's total bank deposits as at year ended March 31, 2019. 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 ` 89,172 crore and ` 81,771 crore as at March 31, 2019 and 2018, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments, trade receivables, unbilled receivables (previous year: unbilled revenue), contract assets and other financial assets. The Group's exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivables, unbilled receivables (previous year: unbilled revenue) and contract assets as at March 31, 2019 and 2018. # Geographic Concentration of Credit Risk \| \|As at March 31, 2019\| \|As at March 31, 2018\| \| \|---\|---\|---\|---\|---\| \| \|Gross%\|Net%\|Gross%\|Net%\| \|United States of America\|45.95\|46.67\|41.83\|42.49\| \|India\|11.83\|10.37\|14.29\|13.00\| \|United Kingdom\|14.12\|14.30\|13.46\|13.59\| Geographical concentration of trade receivables, unbilled receivables (previous year: unbilled revenue) and contract assets is allocated based on the location of the customers. Consolidated Financial Statements I 163 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # (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.
# Contractual maturities of significant financial liabilities as of: # (` crore) March 31, 2019 \| \|Due in 1st year\|Due in 2nd year\|Due in 3rd to 5th year\|Due after 5th year\|Total\| \|---\|---\|---\|---\|---\|---\| \|Non-derivative financial liabilities\|6,292\|-\|-\|-\|6,292\| \|Borrowings\|-\|18\|37\|-\|55\| \|Other financial liabilities\|4,843\|12\|227\|48\|5,130\| \| \|11,135\|30\|264\|48\|11,477\| \|Derivative financial liabilities\|60\|-\|-\|-\|60\| \|Total\|11,195\|30\|264\|48\|11,537\| # (` crore) 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\| # 31) Earnings per share (EPS) \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Profit for the year (` crore)\|31,472\|25,826\| \|Weighted average number of equity shares\|378,97,49,350\|384,91,85,612\| \|Earnings per share basic and diluted (`)\|83.05\|67.10\| \|Face value per equity share (`)\|1\|1\| Pursuant to issue of bonus shares, the weighted average number of equity shares and earnings per share of the previous periods have been accordingly re-stated. # 32) 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. 164 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements The Group has identified business segments ('industry vertical') 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. 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, 2019 and 2018 is as follows: # Year ended March 31, 2019 (` crore) \| \|Banking, Financial Services and Insurance\|Manufacturing\|Retail and Consumer Business\|Communication, Media and Technology\|Others\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue\|57,938\|15,682\|25,164\|23,925\|23,754\|146,463\| \|Segment result\|16,089\|4,311\|6,871\|6,644\|5,554\|39,469\| \|Total Unallocable expenses\| \| \| \| \| \|2,217\| \|Operating income\| \| \| \| \| \|37,252\| \|Other income (net)\| \| \| \| \| \|4,311\| \|Profit before taxes\| \| \| \| \| \|41,563\| \|Tax expense\| \| \| \| \| \|10,001\| \|Profit for the year\| \| \| \| \| \|31,562\| \|Depreciation and amortisation expense\|35\|-\|-\|-\|2\|37\| \|Depreciation and amortisation expense (unallocable)\| \| \| \| \| \|2,019\| \|Significant non-cash items (allocable)\|6\|3\|27\|27\|124\|187\| # As at March 31, 2019 (` crore) \| \|Banking, Financial Services and Insurance\|Manufacturing\|Retail and Consumer Business\|Communication, Media and Technology\|Others\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Segment assets\|13,650\|4,305\|6,982\|6,042\|7,945\|38,924\| \|Unallocable assets\| \| \| \| \| \|76,019\| \|Total assets\| \| \| \| \| \|114,943\| \|Segment liabilities\|3,167\|262\|535\|452\|1,081\|5,497\| \|Unallocable liabilities\| \| \| \| \| \|19,547\| \|Total liabilities\| \| \| \| \| \|25,044\| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # Year ended March 31, 2018 \| \|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\|123,104\| \|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 \| \|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\| \| \| \| \|106,296\| \| \|Segment liabilities\|2,661\|178\|478\|428\|780\|4,525\| \|Unallocable liabilities\| \| \| \| \|16,241\| \| \|Total liabilities\| \| \| \| \|20,766\| \| # Geographical revenue is allocated based on the location of the customers.
# Information regarding geographical revenue is as follows: \|Geography\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Americas (1)\|77,562\|66,145\| \|Europe (2)\|43,456\|34,155\| \|India\|8,393\|7,921\| \|Others\|17,052\|14,883\| \|Total\|146,463\|123,104\| # 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\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Americas (3)\|1,531\|1,354\| \|Europe (4)\|2,250\|1,694\| \|India\|14,313\|14,699\| \|Others\|539\|588\| \|Total\|18,633\|18,335\| i. (1) and (3) are substantially related to operations in the United States of America. ii. (2) includes revenue in the United Kingdom of ` 22,862 crore and ` 17,625 crore for the years ended March 31, 2019 and 2018, respectively. iii. (4) includes non-current assets from operations in the United Kingdom of ` 891 crore and ` 568 crore as at March 31, 2019 and 2018, respectively. # Information about major customers No single customer represents 10% or more of the Group's total revenue for the years ended March 31, 2019 and 2018, respectively. # 33) Commitments and contingent liabilities # Capital commitments The Group has contractually committed (net of advances) ` 1,289 crore and ` 783 crore as at March 31, 2019 and 2018, respectively, for purchase of property, plant and equipment. # Contingencies # Direct tax matters Refer note 11. # 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. The Company and its subsidiaries in India have demands amounting to ` 392 crore and ` 305 crore as at March 31, 2019 and 2018, respectively 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 Claims aggregating ` 3,227 crore and ` 3,000 crore as at March 31, 2019 and 2018, respectively, against the Group 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 unfavourable jury verdict awarding damages totalling ` 6,499 crore (US$940 million) to Epic. In September 2017, the Company received a Court order reducing the damages from ` 6,499 crore (US $ 940 million) to ` 2,904 crore (US $ 420 million) to Epic. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for ` 3,042 crore (US $ 440 million) as financial security in order to stay execution of the judgment pending post-judgment proceedings and appeal. Pursuant to reaffirmation of the court order in March 2019, the Company has filed a notice of appeal in the superior Court to fully set aside the Order. 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. Accordingly, an amount of ` 3,042 crore (US $ 440 million) is disclosed as contingent liability which is included in the claims not acknowledged as debts. # 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. # 34) Statement of net assets, profit and loss and other comprehensive income attributable to owners and non-controlling interests # Annual Report 2018-19 \|Name of the entity\|Country of incorporation\|% of voting power\|% of net assets, i.e.
total assets minus total liabilities as at March 31, 2019\|Share in profit or loss as % of consolidated (` crore)\|Amount\|Share in Other comprehensive income as % of consolidated (` crore)\|Amount\|Share in Total comprehensive income as % of consolidated (` crore)\|Amount\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Tata Consultancy Services Limited\|India\|-\|-\|82.19\|78,898\|84.14\|30,065\|106.60\|436\|84.40\|30,501\| \|Subsidiaries (held directly)\| \| \| \| \| \| \| \| \| \| \| \| \|APTOnline Limited\|India\|89.00\|89.00\|0.09\|88\|0.07\|25\|-\|-\|0.07\|25\| \|MP Online Limited\|India\|89.00\|89.00\|0.10\|95\|0.06\|21\|-\|-\|0.06\|21\| \|C-Edge Technologies Limited\|India\|51.00\|51.00\|0.21\|199\|0.18\|64\|-\|-\|0.18\|64\| \|MahaOnline Limited\|India\|74.00\|74.00\|0.07\|66\|0.04\|15\|-\|-\|0.04\|15\| \|TCS e-Serve International Limited\|India\|100.00\|100.00\|0.15\|148\|(0.16)\|(58)\|-\|-\|(0.16)\|(58)\| \|TCS Foundation\|India\|100.00\|100.00\|0.74\|713\|0.21\|76\|-\|-\|0.21\|76\| \|Diligenta Limited\|UK\|100.00\|100.00\|0.98\|939\|0.63\|226\|(0.24)\|(1)\|0.62\|225\| \|Tata Consultancy Services Canada Inc.\|Canada\|100.00\|100.00\|0.84\|805\|1.14\|409\|-\|-\|1.13\|409\| \|Tata America International Corporation\|USA\|100.00\|100.00\|2.43\|2,337\|4.91\|1,754\|-\|-\|4.85\|1,754\| \|Tata Consultancy Services Asia Pacific Pte Ltd.\|Singapore\|100.00\|100.00\|0.55\|530\|0.31\|109\|-\|-\|0.30\|109\| \|Tata Consultancy Services Belgium\|Belgium\|100.00\|100.00\|0.35\|338\|0.45\|161\|-\|-\|0.45\|161\| \|Tata Consultancy Services Deutschland GmbH\|Germany\|100.00\|100.00\|0.55\|526\|0.64\|227\|-\|-\|0.63\|227\| \|Tata Consultancy Services Netherlands BV\|Netherlands\|100.00\|100.00\|3.36\|3,226\|2.34\|836\|-\|-\|2.31\|836\| \|Tata Consultancy Services Sverige AB\|Sweden\|100.00\|100.00\|0.48\|460\|0.49\|176\|-\|-\|0.49\|176\| \|TCS FNS Pty Limited\|Australia\|100.00\|100.00\|0.15\|148\|0.09\|31\|-\|-\|0.09\|31\| \|TCS Iberoamerica SA\|Uruguay\|100.00\|100.00\|1.50\|1,443\|0.58\|208\|-\|-\|0.58\|208\| \|Tata Consultancy Services (Africa) (PTY) Ltd.\|South Africa\|100.00\|100.00\|0.05\|51\|0.10\|34\|-\|-\|0.09\|34\| \|CMC Americas, Inc.\|USA\|100.00\|100.00\|0.08\|76\|0.09\|31\|-\|-\|0.09\|31\| \|Tata Consultancy Services Qatar S.S.C.\|Qatar\|100.00\|100.00\|0.04\|43\|0.03\|10\|-\|-\|0.03\|10\| \|W12 Studios Limited (w.e.f. October 31, 2018)\|UK\|100.00\|-\|0.02\|23\|-\|1\|-\|-\|-\|1\| 168 I Consolidated Financial Statements \|Name of the entity\|Country of incorporation\|% of voting power\|% of net assets, i.e. total assets minus total liabilities\|Share in profit or loss\|Share in Other comprehensive income\|Share in Total comprehensive income\| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|CMC eBiz, Inc. (w.e.f. June 19, 2018)\|USA\|-\|100.00\|-\|-\|-\| \| \| \| \| \| \|TCS e-Serve America, Inc.\|USA\|100.00\|100.00\|0.06\|55\|0.09\|31\| \| \| \| \| \|Tata Consultancy Services (China) Co., Ltd.\|China\|93.20\|93.20\|0.18\|175\|0.09\|33\| \| \| \| \| \|Tata Consultancy Services Japan, Ltd.\|Japan\|51.00\|51.00\|1.19\|1,138\|0.54\|194\| \| \| \| \| \|Tata Consultancy Services Malaysia Sdn Bhd\|Malaysia\|100.00\|100.00\|0.15\|143\|0.04\|14\| \| \| \| \| \|PT Tata Consultancy Services Indonesia\|Indonesia\|100.00\|100.00\|0.03\|32\|0.04\|14\| \| \| \| \| \|Tata Consultancy Services (Philippines) Inc.\|Philippines\|100.00\|100.00\|0.19\|186\|0.04\|13\| \| \| \| \| \|Tata Consultancy Services (Thailand) Limited\|Thailand\|100.00\|100.00\|0.02\|17\|0.01\|3\| \| \| \| \| \|TCS Italia s.r.l.\|Italy\|100.00\|100.00\|0.02\|21\|0.03\|12\| \| \| \| \| \|Tata Consultancy Services Luxembourg S.A. (G.D. de Luxembourg)\|Capellen\|100.00\|100.00\|0.08\|81\|0.09\|31\| \| \| \| \| \|Tata Consultancy Services Switzerland Ltd.\|Switzerland\|100.00\|100.00\|0.29\|282\|0.40\|142\| \| \| \| \| \|Tata Consultancy Services Osterreich GmbH\|Austria\|100.00\|100.00\|0.01\|5\|0.01\|4\| \| \| \| \| \|Tata Consultancy Services Danmark ApS\|Denmark\|100.00\|100.00\|-\|4\|1\|-\|1\| \| \| \| \|Tata Consultancy Services De Espana S.A.\|Spain\|100.00\|100.00\|0.03\|25\|0.01\|5\| \| \| \| \| \|Tata Consultancy Services (Portugal) Unipessoal, Limitada\|Portugal\|100.00\|100.00\|-\|(3)\|0.01\|5\| \| \| \| \| \|Tata Consultancy Services France SA\|France\|100.00\|100.00\|(0.39)\|(378)\|(0.15)\|(52)\|0.73\|3\|(0.14)\|(49)\| \|Tata Consultancy Services Saudi Arabia\|Saudi Arabia\|76.00\|76.00\|0.18\|175\|0.20\|71\| \| \| \| \| \|Tata Consultancy Services (South Africa) (PTY) Ltd.\|South Africa\|100.00\|100.00\|0.08\|79\|0.10\|37\| \| \| \| \| \|TCS Financial Solutions Beijing Co., Ltd.\|China\|100.00\|100.00\|0.02\|16\|0.02\|6\| \| \| \| \| \|TCS Financial Solutions Australia Holdings Pty Limited\|Australia\|100.00\|100.00\|0.05\|48\|0.07\|26\| \| \| \| \| \|TCS Financial Solutions Australia Pty Limited\|Australia\|100.00\|100.00\|0.14\|133\|0.11\|39\| \| \| \| \| \|TCS Solution Center S.A.\|Uruguay\|100.00\|100.00\|0.23\|222\|0.24\|87\| \| \| \| \| \|TCS Uruguay S.A.\|Uruguay\|100.00\|100.00\|0.06\|62\|0.13\|45\| \| \| \| \| \|Tata Consultancy Services Argentina S.A. (w.e.f. September 6, 2018)\|Argentina\|100.00\|99.99\|0.02\|18\|(0.07)\|(26)\| \| \| \| \| # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements as at March 31, 2019 File: AR_TCS_2018_2019.md \|Name of the entity\|Country of incorporation\|% of voting power\|% of net assets, i.e. total assets minus total liabilities\|Share in profit or loss\|Share in Other comprehensive income\|Share in Total comprehensive income\|Amount (` crore)\| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Tata Consultancy Services Do Brasil Ltda\|Brazil\|100.00\|100.00\|0.16\|158\|0.25\|89\| \|Tata Consultancy Services De Mexico S.A., De C.V.\|Mexico\|100.00\|100.00\|0.85\|814\|0.57\|205\| \|MGDC S.C.\|Mexico\|100.00\|100.00\|0.21\|201\|0.20\|73\| \| \| \| \| \|0.73\|3\|0.21\|76\| \|TCS Inversiones Chile Limitada\|Chile\|100.00\|100.00\|0.34\|326\|0.30\|108\| \|Tata Consultancy Services Chile S.A.\|Chile\|100.00\|100.00\|0.49\|470\|0.13\|45\| \|Technology Outsourcing S.A.C.\|Peru\|100.00\|100.00\|0.01\|11\|0.01\|4\| \|TATASOLUTION CENTER S.A.\|Ecuador\|100.00\|100.00\|0.07\|70\|0.11\|35\| \| \| \| \| \|(0.98)\|(4)\|0.06\|31\| \|Trusts\|India\|-\|-\|0.30\|256\|0.04\|14\| \| \| \| \| \|-\|-\|0.05\|14\| \|TOTAL\| \|100.00\|95,994\|100.00\|35,730\|100.00\|409\| # Adjustments arising out of consolidation \|a)\|Non-controlling interests\| \| \| \| \|---\|---\|---\|---\|---\| \|Indian Subsidiaries\| \| \| \| \| \|APTOnline Limited\|(10)\|(3)\|(3)\| \| \|MP Online Limited\|(10)\|(2)\|(2)\| \| \|C-Edge Technologies Limited\|(93)\|(24)\|(24)\| \| \|MahaOnline Limited\|(16)\|(5)\|(5)\| \| \|Foreign Subsidiaries\| \| \| \| \| \|Tata Consultancy Services (China)\|(12)\|(2)\|(3)\|(5)\| \|Tata Consultancy Services Japan, Ltd.\|(312)\|(54)\|(6)\|(60)\| \|TOTAL\|(453)\|(90)\|(9)\|(99)\| # TOTAL 89,446 31,472 315 31,787 170 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # 35) Related party transactions Tata Consultancy Services Limited's principal related parties consist of its holding company Tata Sons Private 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. Refer note 34 for list of subsidiaries of the Company. Transactions and balances with its own subsidiaries are eliminated on consolidation.
Transactions with related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\| \|Revenue\|27\|298\|2,241\|-\|2,566\| \|Purchases of goods and services (including reimbursements)\|1\|447\|378\|-\|826\| \|Brand equity contribution\|167\|-\|-\|-\|167\| \|Facility expenses\|1\|37\|17\|-\|55\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|(7)\|1\|-\|(6)\| \|Contribution to post employment benefit plans\|-\|-\|-\|816\|816\| \|Purchase of property, plant and equipment\|-\|2\|48\|-\|50\| \|Loans and advances given\|-\|2\|2\|-\|4\| \|Loans and advances recovered\|-\|-\|3\|-\|3\| \|Dividend paid\|7,254\|3\|-\|-\|7,257\| \|Buy-back of shares\|10,455\|4\|-\|-\|10,459\| \|Issue of bonus shares\|-\|-\|-\|-\|-\| Refer note 17. \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\| \|Revenue\|13\|260\|1,993\|-\|2,266\| \|Purchases of goods and services (including reimbursements)\|5\|37\|571\|-\|613\| \|Brand equity contribution\|185\|-\|-\|-\|185\| \|Facility expense\|1\|36\|6\|-\|43\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|5\|5\|-\|10\| \|Contribution to post employment benefit plans\|-\|-\|-\|821\|821\| \|Purchase of property, plant and equipment\|-\|6\|45\|-\|51\| \|Loans and advances recovered\|-\|-\|5\|-\|5\| \|Dividend paid\|6,826\|3\|2\|-\|6,831\| \|Buy-back of shares\|10,278\|7\|21\|-\|10,306\| Consolidated Financial Statements I 171 # Annual Report 2018-19 # Notes forming part of the Consolidated Financial Statements # Balances receivable from related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2019\|8\|118\|647\|773\| \|Loans receivables, other financial assets and other assets\|3\|28\|6\|37\| \|Total\|11\|146\|653\|810\| \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2018\|8\|122\|637\|767\| \|Loans receivables, other financial assets and other assets\|3\|27\|7\|37\| \|Total\|11\|149\|644\|804\| # Balances payable to related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2019\|170\|106\|129\|405\| \|Commitments\|-\|14\|53\|67\| \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2018\|165\|22\|206\|393\| \|Commitments\|-\|8\|39\|47\| 172 I Consolidated Financial Statements # Notes forming part of the Consolidated Financial Statements # Transactions with key management personnel are as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Short-term benefits\|33\|27\| \|Dividend paid during the year\|1\|1\| \|Total\|34\|28\| 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. The sitting fees and commission paid to non-executive directors is ` 12 crore and ` 13 crore as at March 31, 2019 and 2018, respectively. # Subsequent events Dividends paid during the year ended March 31, 2019 include an amount of ` 29 per equity share towards final dividend for the year ended March 31, 2018 and an amount of ` 12 per equity share towards interim dividends for the year ending March 31, 2019. 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 dividends for the year ending March 31, 2018. 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 12, 2019, the Board of Directors of the Company have proposed a final dividend of ` 18 per share in respect of the year ending March 31, 2019 subject to the approval of shareholders at the Annual General Meeting. The proposal is subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately ` 8,142 crore, inclusive of corporate dividend tax of ` 1,388 crore. 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 No: 049265 Mumbai, April 12, 2019 For and on behalf of the Board N Chandrasekaran Chairman V Ramakrishnan CFO O P Bhatt Director Hanne Birgitte Breinbjerg Sorensen Director Rajesh Gopinathan CEO and Managing Director Aman Mehta Director Aarthi Subramanian Director Dr Pradeep Kumar Khosla Director N Ganapathy Subramaniam COO and Executive Director Dr Ron Sommer Director Keki M Mistry Director Daniel Hughes Callahan Director Rajendra Moholkar Company Secretary Consolidated Financial Statements I 173 # Independent Auditors' Report # To the Members of Tata Consultancy Services Limited # Report on the Audit of the Standalone Financial Statements # Opinion We have audited the standalone financial statements of Tata Consultancy Services Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2019, and the Statement of Profit and Loss (including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements"). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 2019, and profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date. # Basis for Opinion We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. # Key Audit Matters Key audit matters ('KAM') are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. # The key audit matters # Revenue recognition - Fixed price development contracts The Company inter alia engages in Fixed-price development contracts, where, revenue is recognized using the percentage of completion computed as per the input method based on management's estimate of contract costs (Refer Note 2(d) to the standalone financial statements). We identified revenue recognition of fixed price development contracts as a KAM considering - - There is an inherent risk around the accuracy of revenues given, the customised and complex nature of these contracts and significant involvement of IT systems; # How our audit addressed the key audit matter Our audit procedures on revenue recognized from fixed price development contracts included: - Obtaining an understanding of the systems, processes and controls implemented by management for recording and calculating revenue and the associated contract assets, unearned and deferred revenue balances. - Involving Information technology ('IT') specialists to assess the design and operating effectiveness of key IT controls over: 174 I Unconsolidated Financial Statements # The key audit matters - Application of revenue recognition accounting standard is complex and involves a number of key judgments and estimates including estimating the future cost-to-completion of these contracts, which is used to determine the percentage of completion of the relevant performance obligation; - These contracts may involve onerous obligations on the Company that require critical estimates to be made by management; and - At year-end a significant amount of work in progress (Contract assets and liabilities) related to these contracts is recognised on the balance sheet.
# Adoption of Ind AS 115 - Revenue from Contracts with Customers As described in Note 2(d) to the standalone financial statements, the Company has adopted Ind AS 115, Revenue from Contracts with Customers ('Ind AS 115') which is the new revenue accounting standard. The application and transition to this accounting standard is complex and is an area of focus in the audit. The revenue standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations, determination of transaction price of identified performance obligation, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. The Company adopted Ind AS 115 and applied the available exemption provided therein, to not restate the comparative periods. # How our audit addressed the key audit matter - Testing the IT controls over the completeness and accuracy of cost and revenue reports generated by the system; and - Testing the access and application controls pertaining to allocation of resources and budgeting systems which prevents the unauthorized changes to recording of costs incurred and controls relating to the estimation of contract costs required to complete the project. On selected samples of contracts, we tested that the revenue recognized is in accordance with the accounting standard by - - Evaluating the identification of performance obligation; - Testing management's calculation of the estimation of contract cost and onerous obligation, if any. We: Our audit procedures on adoption of Ind AS 115, Revenue from contracts with Customers ('Ind AS 115'), which is the new revenue accounting standard, include - - Evaluated the design and implementation of the processes and internal controls relating to implementation of the new revenue accounting standard; - Evaluated the detailed analysis performed by management on revenue streams by selecting samples for the existing contracts with customers and considered revenue recognition policy in the current period in respect of those revenue streams; - Evaluated the changes made to IT systems to reflect the changes required in revenue recognition as per the new accounting standard; - Evaluated the cumulative effect adjustments as at 1 April 2018 for compliance with the new revenue standard; - Evaluated the appropriateness of the disclosures provided under the new revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures. Unconsolidated Financial Statements I 175 # Annual Report 2018-19 # The key audit matters Evaluation of uncertain tax positions The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the standalone financial statements. Refer Note 2(i) and Note 33 to the standalone financial statements. # How our audit addressed the key audit matter Our audit procedures include the following substantive procedures: - Obtained understanding of key uncertain tax positions; - We along with our internal tax experts - # Other Information The Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company's annual report, but does not include the standalone financial statements and our auditors' report thereon. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
# Management's Responsibility for the Standalone Financial Statements The Company's management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone 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) specified 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 of 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the standalone financial statements, management and Board of Directors are 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. Board of Directors is also responsible for overseeing the Company's financial reporting process. # Auditor's Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. 176 I Unconsolidated Financial Statements As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. - 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 Company's ability 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 standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. # Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditors' Report) Order, 2016 ("the Order") issued by the Central Government of India 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, to the extent applicable. 2. (A) As required by Section 143(3) of the Act, we report that: Unconsolidated Financial Statements I 177 # Annual Report 2018-19 (e) On the basis of the written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act. (f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". # (B) With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: 1. The Company has disclosed the impact of pending litigations as at 31 March 2019 on its financial position in its standalone financial statements - Refer Note 33 to the standalone 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 18 and 19 to the standalone 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. 4. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from 8 November 2016 to 30 December 2016 have not been made in these standalone financial statements since they do not pertain to the financial year ended 31 March 2019. # (C) With respect to the matter to be included in the Auditors' Report under section 197(16): In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 12 April 2019 Membership No: 049265 # 178 I Unconsolidated Financial Statements # Annexure A to the Independent Auditors' Report With reference to the Annexure A referred to in the Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended 31 March 2019, 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 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. File: AR_TCS_2018_2019.md 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, Goods and Services tax, duty of Customs, 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, Goods and Services tax, duty of Customs, Cess and other material statutory dues were in arrears as at 31 March 2019, for a period of more than six months from the date they became payable. (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 crore)\|Period\|Forum where dispute is pending\| \|---\|---\|---\|---\|---\| \|The Income-tax Act, 1961\|Income-tax\|2,199\|Assessment Year - 2007-2008, 2011-2012, 2014-2015, 2015-2016\|Commissioner of Income Tax (Appeals)\| \| \| \|197\|Assessment Year - 2006-2007, 2011-2012\|Income-Tax Appellate Tribunal\| Unconsolidated Financial Statements I 179 # Annual Report 2018-19 \|Name of the Statute\|Nature of the Dues\|Amount (` in crore)\|Period\|Forum where dispute is pending\| \|---\|---\|---\|---\|---\| \|The Central Sales Tax Act, 1956 and Value Added Tax Act\|Sales tax and VAT\|207\|Financial Year - 1994-1995, 2001-2002, 2003-2004, 2004-2005, 2005-2006, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015\|High Court\| \|\|8\|Financial Year - 1990-1991, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014\|Tribunal\| \| \|\|5\|Financial Year - 1995-1996, 2004-2005, 2005-2006, 2011-2012\|Assistant Commissioner\| \| \|\|12\|Financial Year - 1997-1998, 2005-2006, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016\|Joint Commissioner\| \| \| \|\|\|Financial Year - 2007-2008\|Additional Commissioner\| \|\|1\|Financial Year - 2012-2013, 2014-2015\|Commissioner\| \| \|The Finance Act, 1994\|Service tax\|6\|Financial Year - 2002-2003, 2003-2004, 2004-2005, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015\|Commissioner Appeals\| \|\|70\|Financial Year - 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014\|Tribunal\| \| Indicates amount less than ` 0.50 crore. **These amounts are net of amount paid/ adjusted under protest ` 3,848 crore.
180 I Unconsolidated Financial Statements # Report of the Auditors # (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. # (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 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 Partner 12 April 2019 Membership No: 049265 Unconsolidated Financial Statements I 181 # Annual Report 2018-19 # Annexure B to the Independent Auditors' Report (Referred to in paragraph 1(A)(f) under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) # Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls with reference to standalone financial statements of Tata Consultancy Services Limited ("the Company") as of 31 March 2019 in conjunction with our audit of the standalone 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 with reference to financial statements 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 (the "Guidance Note") 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 with reference to financial statements based on our audit.
We conducted our audit in accordance with 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 with reference to financial statements 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 with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 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 with reference to financial statements. # Meaning of Internal Financial Controls with reference to Financial Statements A company's internal financial control with reference to financial statements 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 with reference to financial statements 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. 182 I Unconsolidated Financial Statements # Inherent Limitations of Internal Financial Controls with reference to Financial Statements Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements 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 with reference to standalone financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at 31 March 2019, based on the internal control with reference to financial statements 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 Partner 12 April 2019 Membership No: 049265 # Unconsolidated Financial Statements I 183 # Annual Report 2018-19 # Balance Sheet \|Note\|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|ASSETS\| \| \| \| \|Non-current assets\| \| \| \| \|(a) Property, plant and equipment\|4\|9,522\|9,430\| \|(b) Capital work-in-progress\| \|834\|1,238\| \|(c) Intangible assets\|5\|139\|10\| \|(d) Financial assets\| \| \| \| \|(i) Investments\|6(A)\|2,189\|2,186\| \|(ii) Trade receivables\|12(A)\|95\|94\| \|(iii) Unbilled receivables (Previous year: Unbilled revenue)\| \|387\|179\| \|(iv) Loans receivables\|7(A)\|2\|1,503\| \|(v) Other financial assets\|8(A)\|565\|504\| \|(e) Income tax assets (net)\| \|3,598\|3,824\| \|(f) Deferred tax assets (net)\|9\|2,097\|3,051\| \|(g) Other assets\|10(A)\|1,040\|815\| \|Total non-current assets\| \|20,468\|22,834\| \|Current assets\| \| \| \| \|(a) Inventories\|11\|10\|25\| \|(b) Financial assets\| \| \| \| \|(i) Investments\|6(B)\|28,280\|35,073\| \|(ii) Trade receivables\|12(B)\|24,029\|18,882\| \|(iii) Unbilled receivables (Previous year: Unbilled revenue)\| \|4,389\|5,330\| \|(iv) Cash and cash equivalents\|13\|3,327\|1,278\| \|(v) Other balances with banks\|14\|5,573\|2,209\| \|(vi) Loans receivables\|7(B)\|7,018\|2,793\| \|(vii) Other financial assets\|8(B)\|1,613\|807\| \|(c) Other assets\|10(B)\|4,793\|1,825\| \|Total current assets\| \|79,032\|68,222\| \|TOTAL ASSETS\| \|99,500\|91,056\| \|EQUITY AND LIABILITIES\| \| \| \| \|Equity\| \| \| \| \|(a) Share capital\|15\|375\|191\| \|(b) Other equity\|16\|78,523\|75,675\| \|Total equity\| \|78,898\|75,866\| \|Liabilities\| \| \| \| \|Non-current liabilities\| \| \| \| \|(a) Financial liabilities\| \| \| \| \|(i) Borrowings\|17(A)\|33\|39\| \|(ii) Other financial liabilities\|18(A)\|232\|246\| \|(b) Unearned and deferred revenue\| \|662\| \| \|(c) Employee benefit obligations\|23(A)\|82\|62\| \|(d) Provisions\|19(A)\| \|26\| \|(e) Deferred tax liabilities (net)\|9\|339\|424\| \|(f) Other liabilities\|20(A)\|358\|335\| \|Total non-current liabilities\| \|1,706\|1,132\| \|Current liabilities\| \| \| \| \|(a) Financial liabilities\| \| \| \| \|(i) Borrowings\|17(B)\|-\|181\| \|(ii) Trade payables\| \| \| \| \|1. Dues of micro enterprises and small enterprises\|34\|22\|6\| \|2. Dues of creditors other than micro enterprises and small enterprises\| \|7,670\|4,769\| \|(iii) Other financial liabilities\|18(B)\|3,351\|2,739\| \|(b) Unearned and deferred revenue\| \|1,804\|1,711\| \|(c) Income tax liabilities (net)\| \|2,157\|1,144\| \|(d) Employee benefit obligations\|23(B)\|1,776\|1,478\| \|(e) Provisions\|19(B)\|174\|171\| \|(f) Other liabilities\|20(B)\|1,942\|1,859\| \|Total current liabilities\| \|18,896\|14,058\| \|TOTAL EQUITY AND LIABILITIES\| \|99,500\|91,056\| NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-37 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 No: 049265 Mumbai, April 12, 2019 For and on behalf of the Board N Chandrasekaran CFO V Ramakrishnan Director O P Bhatt Director Hanne Birgitte Breinbjerg Sorensen CEO and Managing Director Rajesh Gopinathan Director Aman Mehta Director Aarthi Subramanian Director Dr Pradeep Kumar Khosla COO and Executive Director N Ganapathy Subramaniam Director Dr Ron Sommer Director Keki M Mistry Director Daniel Hughes Callahan Company Secretary 184 I Unconsolidated Financial Statements # Statement of Profit and Loss \|Note\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|I. Revenue\|123,170\|97,356\| \|II. Other income\|7,627\|5,803\| \|III. TOTAL INCOME\|130,797\|103,159\| \|IV. Expenses\| \| \| \|(a) Employee benefit expenses\|59,377\|51,499\| \|(b) Cost of equipment and software licences\|2,003\|2,006\| \|(c) Depreciation and amortisation expense\|1,716\|1,647\| \|(d) Other expenses\|26,826\|16,046\| \|(e) Finance costs\|170\|30\| \|TOTAL EXPENSES\|90,092\|71,228\| \|V. PROFIT BEFORE TAX\|40,705\|31,931\| \|VI. Tax expense\| \| \| \|(a) Current tax\|9,943\|6,878\| \|(b) Deferred tax\|697\|(188)\| \|TOTAL TAX EXPENSE\|10,640\|6,690\| \|VII. PROFIT FOR THE YEAR\|30,065\|25,241\| \|VIII. OTHER COMPREHENSIVE INCOME (OCI)\| \| \| \|(A) (i) Items that will not be reclassified subsequently to profit or loss\| \| \| \|(a) Remeasurement of defined employee benefit plans\|(17)\|86\| \|(b) Net change in fair values of investments in equity shares carried at fair value through OCI\|(1)\|(19)\| \|(ii) Income tax on items that will not be reclassified subsequently to profit or loss\|3\|-\| \|(B) (i) Items that will be reclassified subsequently to profit or loss\| \| \| \|(a) Net change in fair values of investments other than equity shares carried at fair value through OCI\|425\|(821)\| \|(b) Net change in intrinsic value of derivatives designated as cash flow hedges\|153\|(122)\| \|(c) Net change in time value of derivatives designated as cash flow hedges\|44\|(59)\| \|(ii) Income tax on items that will be reclassified subsequently to profit or loss\|(171)\|306\| \|TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)\|436\|(629)\| \|IX. TOTAL COMPREHENSIVE INCOME FOR THE YEAR\|30,501\|24,612\| \|X. Earnings per equity share:- Basic and diluted (`)\|79.34\|65.57\| \|Weighted average number of equity shares\|378,97,49,350\|384,91,85,612\| \|XI. NOTES FORMING PART OF THE FINANCIAL STATEMENTS\|1-37\| \| 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 No: 049265 Mumbai, April 12, 2019 For and on behalf of the Board N Chandrasekaran CFO V Ramakrishnan Director O P Bhatt Director Hanne Birgitte Breinbjerg Sorensen CEO and Managing Director Rajesh Gopinathan Director Aman Mehta Director Aarthi Subramanian Director Dr Pradeep Kumar Khosla COO and Executive Director N Ganapathy Subramaniam Director Dr Ron Sommer Director Keki M Mistry Director Daniel Hughes Callahan Company Secretary Unconsolidated Financial Statements I 185 # Statement of Changes in Equity # Annual Report 2018-19 # A. EQUITY SHARE CAPITAL (` crore) \|Balance as at April 1, 2017\|Changes in equity share capital during the year\|Balance as at March 31, 2018\| \|---\|---\|---\| \|197\|(6)\|191\| \|Balance as at April 1, 2018\|Changes in equity share capital during the year\|Balance as at March 31, 2019\| \|191\|184\|375\| Refer note 15. # B. OTHER EQUITY (` crore) \|Reserves and surplus\|Items of other comprehensive income\| \| \| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Capital\|Securities premium\|Capital redemption reserve\|General reserve\|Special reserve\|Retained earnings\|Investment revaluation reserve\|Cash flow hedging reserve\|Total\| \| \|-\|1,919\|100\|9,118\|97\|65,965\|538\|105\|77,825\| \| \|Profit for the year\|-\|-\|-\|-\|25,241\|-\|-\|25,241\| \| \|Other comprehensive income / (losses)\|-\|-\|-\|-\|86\|(556)\|(107)\|(52)\|(629)\| \|Total comprehensive income\|-\|-\|-\|-\|25,327\|(556)\|(107)\|(52)\|24,612\| \|Dividend (including tax on dividend of ` 1,442 crore)\|-\|-\|-\|-\|(10,726)\|-\|-\|(10,726)\| \| \|Buy-back of equity shares\|(1,919)\|6\|(9,118)\|-\|(4,963)\|-\|-\|(15,994)\| \| \|Expenses for buy-back of equity shares\|-\|-\|-\|-\|(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\|-\|106\|-\|1,578\|74,080\|(18)\|(2)\|(69)\|75,675\| \|Balance as at April 1, 2018\|-\|106\|-\|1,578\|74,080\|(18)\|(2)\|(69)\|75,675\| \|Profit for the year\|-\|-\|-\|-\|30,065\|-\|-\|30,065\| \| \|Other comprehensive income / (losses)\|-\|-\|-\|-\|(14)\|275\|136\|39\|436\| \|Total comprehensive income\|-\|-\|-\|-\|30,051\|275\|136\|39\|30,501\| \|Dividend (including tax on dividend of ` 1,339 crore)\|-\|-\|-\|-\|(11,424)\|-\|-\|(11,424)\| \| \|Buy-back of equity shares\|-\|8\|-\|(16,000)\|-\|-\|-\|(15,992)\| \| \|Expenses for buy-back of equity shares\|-\|-\|-\|-\|(45)\|-\|-\|(45)\| \| \|Issue of bonus shares\|-\|-\|(106)\|-\|(86)\|-\|-\|(192)\| \| \|Realised loss on equity shares carried at fair value through OCI\|-\|-\|-\|-\|(1)\|1\|-\|-\| \| \|Transfer to Special Economic Zone re-investment reserve\|-\|-\|-\|2,750\|(2,750)\|-\|-\|-\| \| \|Transfer from Special Economic Zone re-investment reserve\|-\|-\|-\|(3,334)\|3,334\|-\|-\|-\| \| \|Balance as at March 31, 2019\|-\|8\|-\|994\|77,159\|258\|134\|(30)\|78,523\| *Refer note 15. # Represents values less than ` 0.50 crore. # Statement of Changes in Equity # Nature and purpose of reserves # (a) Capital reserve The Company 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 is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of section 52 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. The reserve is utilized in accordance with the provisions of section 69 of the Companies Act, 2013. # (d) General reserve The general reserve is a free reserve which 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 (SEZ) 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 will be utilised by the Company for acquiring new assets for the purpose of its business as per the terms of 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 / profit and loss 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. Such gains or losses will be reclassified to statement of profit and loss in the period in which the underlying hedged transaction occurs. # NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-37 As per our report of even date attached For and on behalf of the Board For B S R & Co.
LLP N Chandrasekaran Chairman V Ramakrishnan CFO O P Bhatt Director Hanne Birgitte Breinbjerg Sorensen Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan Aman Mehta Aarthi Subramanian Dr Pradeep Kumar Khosla Partner CEO and Managing Director Director Director N Ganapathy Subramaniam Dr Ron Sommer Keki M Mistry Daniel Hughes Callahan COO and Executive Director Director Director Rajendra Moholkar Company Secretary Mumbai, April 12, 2019 Unconsolidated Financial Statements I 187 # Annual Report 2018-19 # Statement of Cash Flows \|(` crore)\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|I. CASH FLOWS FROM OPERATING ACTIVITIES\| \| \| \|Profit for the year\|30,065\|25,241\| \|Adjustments to reconcile profit and loss to net cash provided by operating activities\| \| \| \|Depreciation and amortisation expense\|1,716\|1,647\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|188\|95\| \|Tax expense\|10,640\|6,690\| \|Finance costs\|170\|30\| \|Net gain on disposal of property, plant and equipment\|(84)\|(26)\| \|Exchange difference on translation of foreign currency cash and cash equivalents\|7\|(94)\| \|Dividend income (Including exchange gain)\|(3,574)\|(2,212)\| \|Interest income\|(2,651)\|(2,388)\| \|Net gain on investments\|(416)\|(858)\| \|Operating profit before working capital changes\|36,061\|28,125\| \|Net change in\| \| \| \|Inventories\|16\|(4)\| \|Trade receivables\|(5,335)\|(2,416)\| \|Unbilled receivables (Previous period: Unbilled revenue)\|733\|(1,274)\| \|Loans receivables and other financial assets\|(417)\|398\| \|Other assets\|(3,036)\|(554)\| \|Trade payables\|2,915\|585\| \|Unearned and deferred revenue\|755\|585\| \|Other financial liabilities\|610\|796\| \|Other liabilities and provisions\|400\|1,391\| \|Cash generated from operations\|32,702\|27,632\| \|Taxes paid (net of refunds)\|(8,704)\|(6,045)\| \|Net cash generated from operating activities\|23,998\|21,587\| \|II. CASH FLOWS FROM INVESTING ACTIVITIES\| \| \| \|Bank deposits placed\|(5,400)\|(2,000)\| \|Inter-corporate deposits placed\|(13,222)\|(6,000)\| \|Purchase of investments\|(92,020)\|(94,374)\| \|Payment for purchase of property, plant and equipment\|(1,556)\|(1,606)\| \|Payment for purchase of intangible assets\|(161)\|(230)\| \|Earmarked deposits placed with banks\|(290)\| \| \|Acquisition of subsidiary\|(66)\|-\| \|Proceeds from bank deposits\|2,000\|416\| \|Proceeds from inter-corporate deposits\|10,472\|4,425\| \|Proceeds from disposal / redemption of investments\|99,561\|100,063\| \|Proceeds from disposal of property, plant and equipment\|98\|29\| \|Proceeds from earmarked deposits with banks\|339\|135\| \|Dividend received from subsidiaries (including exchange gain)\|3,574\|2,207\| \|Dividend received from other investments\|-\|5\| \|Interest received\|2,554\|2,564\| \|Net cash generated from investing activities\|5,883\|5,634\| \|III. CASH FLOWS FROM FINANCING ACTIVITIES\| \| \| \|Buy-back of equity shares\|(16,000)\|(16,000)\| \|Expenses for buy-back of equity shares\|(45)\|(42)\| \|Short-term borrowings (net)\|(181)\|(20)\| \|Dividend paid (including tax on dividend)\|(11,424)\|(10,726)\| \|Repayment of finance lease obligations\|(5)\|(6)\| \|Interest paid\|(170)\|(33)\| \|Net cash used in financing activities\|(27,825)\|(26,827)\| \|Net change in cash and cash equivalents\|2,056\|394\| \|Cash and cash equivalents at the beginning of the year\|1,278\|790\| \|Exchange difference on translation of foreign currency cash and cash equivalents\|(7)\|94\| \|Cash and cash equivalents at the end of the year (Refer note 13)\|3,327\|1,278\| \|IV. NOTES FORMING PART OF THE FINANCIAL STATEMENTS 1-37\| \| \| 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 O P Bhatt Hanne Birgitte Breinbjerg Sorensen Chartered Accountants Chairman CFO Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan Aman Mehta Aarthi Subramanian Dr Pradeep Kumar Khosla Partner CEO and Managing Director Director Director Director Membership No: 049265 N Ganapathy Subramaniam Dr Ron Sommer Keki M Mistry Daniel Hughes Callahan COO and Executive Director Director Director Director Rajendra Moholkar Mumbai, April 12, 2019 Company Secretary 188 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 1) Corporate information Tata Consultancy Services Limited (referred to as "TCS Limited" or "the Company") provides IT services, consulting and business solutions that has been partnering with many of the world's largest businesses in their transformation journeys for the last fifty years. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. This is delivered through its unique Location-Independent Agile delivery model recognised as a benchmark of excellence in software development. 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, 2019, Tata Sons Private Limited (formerly Tata Sons Limited), the holding company owned 72.02% of the Company's equity share capital. The Board of Directors approved the financial statements for the year ended March 31, 2019 and authorised for issue on April 12, 2019. # 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 File: AR_TCS_2018_2019.md These financial statements have been prepared in Indian Rupee (`) which is the functional currency of the Company.
These financial statements have been prepared on historical cost basis, except for certain financial instruments which are measured at fair value or amortised cost 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. All assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle. Based on the nature of services rendered to customers and time elapsed between deployment of resources and the realisation in cash and cash equivalents of the consideration for such services rendered, the Company has considered an operating cycle of 12 months. The statement of cash flows have been prepared under indirect method. # (c) Use of estimates and judgements The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of 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, are in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets and fair value measurement of financial instruments, these are discussed below. Key sources of estimation of uncertainty in respect of revenue recognition, employee benefits and provisions and contingent liabilities have been discussed in their respective policies. Impairment of investments in subsidiaries 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. # Annual Report 2018-19 # Notes forming part of the Financial Statements # 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). # 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). # Revenue recognition The Company earns revenue primarily from providing IT services, consulting and business solutions. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. April 1, 2018). The standard is applied retrospectively only to contracts that are not completed as at the date of initial application and the comparative information in the statement of profit and loss is not restated - i.e. the comparative information continues to be reported under Ind AS 18 and Ind AS 11.
Refer note 2(d) - Significant accounting policies - Revenue recognition in the Annual report of the Company for the year ended March 31, 2018, for the revenue recognition policy as per Ind AS 18 and Ind AS 11. The impact of the adoption of the standard on the financial statements of the Company is insignificant. Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. - Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts expended, number of transactions processed, etc. - Revenue related to fixed price maintenance and support services contracts where the Company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance. - In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method ('POC method') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations. - Revenue from the sale of distinct internally developed software and manufactured systems and third party software is recognised upfront at the point in time when the system / software is delivered to the customer. In cases where implementation and / or customisation services rendered significantly modifies or customises the software, these services and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method. - Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to the customer. - The solutions offered by the Company may include supply of third-party equipment or software. In such cases, revenue for supply of such third party products are recorded at gross or net basis depending on whether the Company is acting as the principal or as an agent of the customer. The Company recognises revenue in the gross amount of consideration when it is acting as a principal and at net amount of consideration when it is acting as an agent. 190 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers. Revenue from subsidiaries is recognised based on transaction price which is at arm's length. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues. The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period. In accordance with Ind AS 37, the Company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received. Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for. The Company disaggregates revenue from contracts with customers by industry verticals, geography and nature of services. # Use of significant judgements in revenue recognition - The Company's contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. - Judgement is also required to determine the transaction price for the contract.
The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, performance bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. - The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract. Where standalone selling price is not observable, the Company uses the expected cost plus margin approach to allocate the transaction price to each distinct performance obligation. - The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. - Revenue for fixed-price contract is recognised using percentage-of-completion method. The Company uses judgement to estimate the future cost-to-completion of the contracts which is used to determine the degree of completion of the performance obligation. Unconsolidated Financial Statements I 191 # Annual Report 2018-19 # Notes forming part of the Financial Statements * Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria for capitalisation. Such costs are amortised over the contractual period or useful life of licence whichever is less. The assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance resources to be used to satisfy future performance obligations and whether costs are expected to be recovered. (e) 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. 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. (g) Cost recognition Costs and expenses are recognised when incurred and have been classified according to their nature. The costs of the Company are broadly categorised in employee benefit expenses, cost of equipment and software licences, depreciation and amortisation expense and other expenses. Employee benefit expenses include salaries, incentives and allowances, contributions to provident and other funds and staff welfare expenses. Other 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. (h) Foreign currency Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction.
Foreign currency denominated monetary assets and liabilities are retranslated at the exchange rate prevailing on the balance sheet date and exchange gains and losses arising on settlement and restatement are recognised in the statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated. (i) Income taxes Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred taxes are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Current income taxes The current income tax expense includes income taxes payable by the Company and its branches in India and overseas. The current tax payable by the Company in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis. 192 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 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. 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, to the extent it would be available for set off against future current 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.
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. # 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. Unconsolidated Financial Statements I 193 # Annual Report 2018-19 # Notes forming part of the Financial Statements 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 issued by the Company are recognised at the proceeds received net of 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. 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. 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. # (k) 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 disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the financial statements. # (l) Investment in subsidiaries Investment in subsidiaries are measured at cost less impairment loss, if any. 194 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (m) Property, plant and equipment Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land) and impairment loss, if any. Depreciation is provided for property, plant and equipment on a straight line basis 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. File: AR_TCS_2018_2019.md The estimated useful lives are as mentioned below: \|Type of asset\|Useful lives\| \|---\|---\| \|Buildings\|20 years\| \|Leasehold improvements\|Lease term\| \|Plant and equipment\|10 years\| \|Computer equipment\|4 years\| \|Vehicles\|4 years\| \|Office equipment\|5 years\| \|Electrical installations\|10 years\| \|Furniture and fixtures\|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. # (n) Intangible assets Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any. Intangible assets consist of rights under licensing agreement and software licences which are amortised over licence period which equates the useful life ranging between 2-5 years on a straight line basis over the period of its economic useful life. # (o) 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 allowance 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.
Unconsolidated Financial Statements I 195 # Annual Report 2018-19 # Notes forming part of the Financial Statements 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. # (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. # (iii) Short-term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. # (iv) 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 Inventories consists of (a) Raw materials, sub-assemblies and components, (b) Work-in-progress, (c) Stores and spare parts and (d) Finished goods. Inventories are carried at lower of cost and net realisable value. The cost of raw materials, sub-assemblies and components is determined on a weighted average basis. Cost of finished goods produced or purchased by the Company 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, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective from April 1, 2019: - Ind AS 116 - Leases Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, 196 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements on-balance sheet lessee accounting model for lessees. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The Company will adopt Ind AS 116, effective annual reporting period beginning April 1, 2019.
The Company will apply the standard to its leases, retrospectively, with the cumulative effect of initially applying the standard, recognised on the date of initial application (April 1, 2019). Accordingly, the Company will not restate comparative information, instead, the cumulative effect of initially applying this Standard will be recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019. On that date, the Company will recognise a lease liability measured at the present value of the remaining lease payments. The right-of-use asset is recognised at its carrying amount as if the standard had been applied since the commencement date, but discounted using the lessee's incremental borrowing rate as at April 1, 2019. In accordance with the standard, the Company will elect not to apply the requirements of Ind AS 116 to short-term leases and leases for which the underlying asset is of low value. On transition, the Company will be using the practical expedient provided the standard and therefore, will not reassess whether a contract, is or contains a lease, at the date of initial application. The Company is in the process of finalising changes to systems and processes to meet the accounting and reporting requirements of the standard. With effect from April 1, 2019, the Company will recognise new assets and liabilities for its operating leases of premises and other assets. The nature of expenses related to those leases will change from lease rent in previous periods to (a) amortization change for the right-to-use asset, and (b) interest accrued on lease liability. Previously, the Company recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised. As a lessor, sublease shall be classified as an operating lease if the head lease is classified as a short term lease. In all other cases, the sublease shall be classified as a finance lease. On preliminary assessment, for leases other than short-term leases and leases of low value assets, the Company will recognise a right-of-use asset of ` 4,206 crore and a corresponding lease liability of ` 5,029 crore with the cumulative effect of applying the standard by adjusting retained earnings net of taxes. There will be consequent reclassification in the cash flow categories in the statement of cash flows. # Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments) The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The Company does not expect any impact from this pronouncement. It is relevant to note that the amendment does not amend situations where the entity pays a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to taxation authorities continues to be charged to equity as part of dividend, in accordance with Ind AS 12. The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty (2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. The Company does not expect any significant impact of the amendment on its financial statements.
Unconsolidated Financial Statements I 197 # Annual Report 2018-19 # Notes forming part of the Financial Statements # Ind AS 109 - Prepayment Features with Negative Compensation The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. TCS Limited does not expect this amendment to have any impact on its financial statements. # Ind AS 19 - Plan Amendment, Curtailment or Settlement The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. TCS Limited does not expect this amendment to have any significant impact on its financial statements. # Ind AS 23 - Borrowing Costs The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. TCS Limited does not expect any impact from this amendment. # Ind AS 28 - Long-term Interests in Associates and Joint Ventures The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. TCS Limited does not currently have any long-term interests in associates and joint ventures. # Ind AS 103 - Business Combinations and Ind AS 111 - Joint Arrangements The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it re-measures previously held interests in that business. The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business. TCS Limited will apply the pronouncement if and when it obtains control / joint control of a business that is a joint operation. # 198 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\|Leasehold improvements\|Plant and equipment\|Computer equipment\|Vehicles\|Office installations\|Electrical fixtures\|Furniture\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Cost as at April 1, 2018\|327\|7,026\|1,702\|489\|5,695\|32\|2,038\|1,711\|1,308\|20,328\| \|Additions\|(4)\|335\|212\|53\|758\|6\|171\|120\|139\|1,790\| \|Disposals\|-\|(13)\|(94)\|(3)\|(180)\|(2)\|(45)\|(29)\|(27)\|(393)\| \|Cost as at March 31, 2019\|323\|7,348\|1,820\|539\|6,273\|36\|2,164\|1,802\|1,420\|21,725\| \|Accumulated depreciation as at April 1, 2018\|-\|(1,792)\|(970)\|(116)\|(4,526)\|(26)\|(1,572)\|(910)\|(986)\|(10,898)\| \|Depreciation for the year\|-\|(368)\|(134)\|(52)\|(626)\|(4)\|(213)\|(142)\|(145)\|(1,684)\| \|Disposals\|-\|10\|94\|2\|177\|1\|45\|23\|27\|379\| \|Accumulated depreciation as at March 31, 2019\|-\|(2,150)\|(1,010)\|(166)\|(4,975)\|(29)\|(1,740)\|(1,029)\|(1,104)\|(12,203)\| \|Net carrying amount as at March 31, 2019\|323\|5,198\|810\|373\|1,298\|7\|424\|773\|316\|9,522\| \| \|Freehold land\|Buildings\|Leasehold improvements\|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)\| \|Depreciation for the year\|-\|(352)\|(129)\|(44)\|(629)\|(5)\|(215)\|(143)\|(123)\|(1,640)\| \|Disposals\|-\|4\|21\|1\|108\|1\|44\|11\|19\|209\| \|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\| Net book value of leasehold improvements of ` 25 crore and ` 30 crore as at March 31, 2019 and March 31, 2018, respectively, is under finance lease.
Unconsolidated Financial Statements I 199 # Annual Report 2018-19 # 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, 2018\|68\| \|Additions\|161\| \|Disposals / Derecognised\|-\| \|Cost as at March 31, 2019\|229\| \|Accumulated amortisation as at April 1, 2018\|(58)\| \|Amortisation for the year\|(32)\| \|Disposals / Derecognised\|-\| \|Accumulated amortisation as at March 31, 2019\|(90)\| \|Net carrying amount as at March 31, 2019\|139\| \| \|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)\| \|Amortisation for the year\|(7)\| \|Disposals / Derecognised\|-\| \|Accumulated amortisation as at March 31, 2018\|(58)\| \|Net carrying amount as at March 31, 2018\|10\| The estimated amortisation for the years subsequent to March 31, 2019 is as follows: \|Year ending March 31,\|Amortisation expense\| \|---\|---\| \|2020\|44\| \|2021\|40\| \|2022\|40\| \|2023\|15\| \|Thereafter\|-\| 139 # Notes forming part of the Financial Statements # 6) Investments Investments consist of the following: # (A) Investments - Non-current \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \| \| \|---\|---\|---\|---\|---\| \|(a) Investment in subsidiaries\|Fully paid equity shares (unquoted)\| \|2,189\|2,124\| \|(b) Investments carried at fair value through profit or loss\|Mutual fund units (unquoted)\| \|-\|59\| \|(c) Investments designated at fair value through OCI\|Fully paid equity shares (unquoted)\| \|-\|3\| \| \|Total\| \|2,189\|2,186\| # (B) Investments - Current \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|(a) Investments carried at fair value through profit or loss\|Mutual fund units (quoted)\|2,955\|9,101\| \| \|Mutual fund units (unquoted)\|63\|-\| \|(b) Investments carried at fair value through OCI\|Government bonds and securities (quoted)\|23,566\|25,217\| \| \|Corporate bonds (quoted)\|1,206\|755\| \|(c) Investment carried at amortised cost\|Certificate of deposits (quoted)\|490\|-\| \| \|Total\|28,280\|35,073\| # Market value of quoted investments carried at amortised cost \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Certificate of deposits\|491\|-\| # Aggregate value of quoted and unquoted investments is as follows: \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Aggregate value of quoted investments\|28,217\|35,073\| \|Aggregate value of unquoted investments (net of impairment)\|2,252\|2,186\| \|Aggregate market value of quoted investments\|28,218\|35,073\| \|Aggregate value of impairment of investments\|19\|19\| Unconsolidated Financial Statements I 201 # Annual Report 2018-19 # Notes forming part of the Financial Statements \|In numbers\|Currency\|Face value per share\|Investment in subsidiaries\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\|---\|---\| \|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\| \|18,89,005\|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\| \|1,00,500\|GBP\|0.00001\|W12 Studios Limited (w.e.f. October 31, 2018)\|66\|-\| \|10,00,000\|INR\|10\|TCS Foundation\|-\|-\| \|Total\|Total\|Total\|Total\|2,189\|2,124\| # Investments designated at fair value through OCI \|In numbers\|Currency\|Face value per share\|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\|---\|---\| \|1,90,00,000\|INR\|10\|Taj Air Limited\|19\|19\| \|20,00,000\|INR\|10\|KOOH Sports Private Limited\|-\|3\| \| \| \|Less: Impairment of investments\|(19)\|(19)\| \| TCS Limited acquired W12 Studios Limited, an award-winning digital design studio based in London on October 31, 2018. The Company paid ` 66 crore (GBP 7 million) to acquire 100% equity shares of W12 Studios Limited. *Represents value less than ` 0.50 crore. # 202 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 7) Loans receivables Loans receivables (unsecured) consist of the following: # (A) Loans receivables - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Considered good\|-\|1,500\| \|Loans and advances to employees\|2\|3\| \| \|2\|1,503\| # (B) Loans receivables - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|6,750\|2,500\| \|Loans and advances to employees\|268\|293\| \|(b) Credit impaired\|61\|61\| \|Less: Allowance on loans and advances to employees\|(61)\|(61)\| \| \|7,018\|2,793\| Inter-corporate deposits placed with financial institutions yield fixed interest rate.
# 8) Other financial assets Other financial assets consist of the following: # (A) Other financial assets - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Security deposits\|565\|504\| \| \|565\|504\| # (B) Other financial assets - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Security deposits\|101\|181\| \|(b) Fair value of foreign exchange derivative assets\|584\|89\| \|(c) Interest receivable\|770\|520\| \|(d) Others\|158\|17\| \| \|1,613\|807\| # Annual Report 2018-19 # Notes forming part of the Financial Statements # 9) Income taxes The income tax expense consists of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Current tax\| \| \| \|Current tax expense for current year\|8,672\|6,966\| \|Current tax (benefit) / expense pertaining to prior years\|1,271\|(88)\| \|Total Current Tax\|9,943\|6,878\| \|Deferred tax\| \| \| \|Deferred tax (benefit) / expense for current year\|697\|(217)\| \|Deferred tax (benefit) / expense pertaining to prior years\|-\|29\| \|Total Deferred Tax\|697\|(188)\| \|Total income tax expense recognised in current year\|10,640\|6,690\| The reconciliation of estimated income tax expense at statutory income tax rate to income tax expense reported in statement of profit and loss is as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Profit before taxes\|40,705\|31,931\| \|Indian statutory income tax rate\|34.94%\|34.61%\| \|Expected income tax expense\|14,224\|11,050\| \|Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense\| \| \| \|Tax holidays\|(4,735)\|(4,247)\| \|Income exempt from tax\|(21)\|(36)\| \|Undistributed earnings in branches\|299\|113\| \|Tax on income at different rates\|(403)\|(236)\| \|Tax pertaining to prior years\|1,271\|(242)\| \|Others (net)\|5\|288\| \|Total income tax expense\|10,640\|6,690\| The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 1, 2011 profits from units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
204 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2019 are as follows: \| \|Opening balance\|Recognised in profit and loss\|Recognised in / reclassified from other comprehensive income\|Closing balance\| \|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to:\| \| \| \| \| \|Property, plant and equipment and intangible assets\|67\|30\|-\|97\| \|Provision for employee benefits\|311\|57\|-\|368\| \|Cash flow hedges\|10\| \|(22)\|(12)\| \|Receivables, financial assets at amortised cost\|238\|46\|-\|284\| \|MAT credit entitlement\|2,204\|(1,047)\|-\|1,157\| \|Branch profit tax\|(400)\|101\|-\|(299)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|-\|-\|(149)\|(149)\| \|Operating lease liabilities\|80\|8\|-\|88\| \|Others\|117\|108\|-\|225\| \|Total deferred tax assets / (liabilities)\|2,626\|(697)\|(171)\|1,758\| # Gross deferred tax assets and liabilities are as follows: \| \|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to\| \| \| \| \|Property, plant and equipment and Intangible assets\|137\|40\|97\| \|Provision for employee benefits\|368\|-\|368\| \|Cash flow hedges\|(12)\|-\|(12)\| \|Receivables, financial assets at amortised cost\|284\|-\|284\| \|MAT credit entitlement\|1,157\|-\|1,157\| \|Branch profit tax\|-\|299\|(299)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(149)\|-\|(149)\| \|Operating lease liabilities\|88\|-\|88\| \|Others\|224\|-\|224\| \|Total deferred tax assets / (liabilities)\|2,097\|339\|1,758\| Unconsolidated Financial Statements I 205 # Annual Report 2018-19 # Notes forming part of the Financial Statements Significant components of net deferred tax assets and liabilities for the year ended March 31, 2019 are as follows: \| \|Opening balance\|Recognised in profit and loss\|Recognised in / reclassified from other comprehensive income\|Closing balance\| \|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and intangible assets\|(84)\|151\|-\|67\| \|Provision for employee benefits\|296\|15\|-\|311\| \|Cash flow hedges\|(12)\|-\|22\|10\| \|Receivables, financial assets at amortised cost\|205\|33\|-\|238\| \|MAT credit entitlement\|2,062\|142\|-\|2,204\| \|Branch profit tax\|(286)\|(114)\|-\|(400)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(285)\|1\|284\|-\| \|Operating lease liabilities\|80\|-\|-\|80\| \|Others\|157\|(40)\|-\|117\| \|Total deferred tax assets / (liabilities)\|2,133\|188\|306\|2,627\| Gross deferred tax assets and liabilities are as follows: \| \|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|As at March 31, 2018\| \| \| \| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and Intangible assets\|91\|(24)\|67\| \|Provision for employee benefits\|311\|-\|311\| \|Cash flow hedges\|10\|-\|10\| \|Receivables, financial assets at amortised cost\|238\|-\|238\| \|MAT credit entitlement\|2,204\|-\|2,204\| \|Branch profit tax\|-\|(400)\|(400)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|-\|-\|-\| \|Operating lease liabilities\|80\|-\|80\| \|Others\|117\|-\|117\| \|Total deferred tax assets / (liabilities)\|3,051\|(424)\|2,627\| Under the Income-tax Act, 1961, the Company is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. Accordingly, the Company has recognised a deferred tax asset of ` 1,157 crore. 206 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company as deductions, and computation of, or eligibility of, certain tax incentives or allowances. File: AR_TCS_2018_2019.md The Company has contingent liability in respect of demands from direct tax authorities in India and other jurisdictions, which are being contested by the Company on appeal amounting ` 1,501 crore and ` 5,616 crore as at March 31, 2019 and March 31, 2018 respectively. In respect of tax contingencies of ` 318 crore and ` 318 crore as at March 31, 2019 and March 31, 2018, respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. The Company periodically receives notices and inquiries from income tax authorities related to the Company's operations in the jurisdictions it operates in. The Company has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. In India, tax filings from fiscal 2016 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2015 and earlier and applicable state statutes of limitation vary by state.
In United Kingdom, the statute of limitation generally applies to fiscal 2016 and earlier. # 10) Other assets Other assets consist of the following: # (A) Other assets - Non-current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Contract assets\| \|100\|-\| \|(b) Prepaid expenses\| \|151\|237\| \|(c) Prepaid rent\| \|339\|373\| \|(d) Contract fulfillment costs\| \|174\|95\| \|(e) Capital advances\| \|272\|105\| \|(f) Advances to related parties\| \|3\|2\| \|(g) Others\| \|1\|3\| \|Total\|Total\|1,040\|815\| Advances to related parties, considered good, comprise: \|Voltas Limited\|2\| \|---\|---\| \|Tata Realty and Infrastructure Ltd\|-\| \|Concorde Motors (India) Limited\|1\| Represents value less than ` 0.50 crore. Unconsolidated Financial Statements I 207 # Annual Report 2018-19 # Notes forming part of the Financial Statements # (B) Other assets - Current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|Considered good\| \| \| \| \|(a) Contract assets\| \|2,723\|-\| \|(b) Prepaid expenses\| \|344\|735\| \|(c) Prepaid rent\| \|35\|39\| \|(d) Contract fulfillment costs\| \|468\|427\| \|(e) Advance to suppliers\| \|79\|84\| \|(f) Advance to related parties\| \|8\|4\| \|(g) Indirect taxes recoverable\| \|962\|482\| \|(h) Other advances\| \|123\|20\| \|(i) Others\| \|51\|34\| \|Considered doubtful\| \| \| \| \|(a) Advance to suppliers\| \|3\|3\| \|(b) Indirect taxes recoverable\| \|2\|2\| \|(c) Other advances\| \|3\|3\| \|Less: Allowance on doubtful assets\| \|(8)\|(8)\| \| \|Total\|4,793\|1,825\| Advance to related parties, considered good comprise: \|TCS e-Serve International Limited\|7\|-\| \|---\|---\|---\| \|The Titan Company Limited\|1\|2\| \|Tata Consultancy Services Danmark ApS\|-\|1\| \|Tata AIG General Insurance Company Limited\|1\|1\| \|APTOnline Limited\|-\|-\| Represents value less than ` 0.50 crore. Contract fulfillment costs of ` 479 crore and ` 463 crore for the years ended March 31, 2019 and 2018, respectively, have been amortised in the statement of profit and loss. Refer note 21 for the changes in contract asset. # 11) Inventories Inventories consist of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Raw materials, sub-assemblies and components\| \|9\|25\| \|(b) Finished goods and work-in-progress\| \|-\|-\| \|(c) Goods-in-transit (raw materials)\| \|-\|-\| \|(d) Stores and spares\| \|1\|-\| \| \|Total\|10\|25\| Inventories are carried at the lower of cost and net realisable value. Represents values less than ` 0.50 crore. 208 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # 12) Trade receivables (Unsecured) # (A) Trade receivables - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|569\|460\| \|Less: Allowance for doubtful trade receivables\|(474)\|(366)\| \| \|95\|94\| # (B) Trade receivables - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Considered good\|24,227\|19,065\| \|Less: Allowance for doubtful trade receivables\|(222)\|(194)\| \| \|24,005\|18,871\| \|(b) Credit impaired\|165\|103\| \|Less: Allowance for doubtful trade receivables\|(141)\|(92)\| \| \|24\|11\| \| \|24,029\|18,882\| Above balances of trade receivables include balances with related parties (Refer note 35). # 13) Cash and cash equivalents Cash and cash equivalents consist of the following: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Balances with banks\| \| \| \|In current accounts\|2,919\|1,211\| \|In deposit accounts\|406\|2\| \|(b) Cheques on hand\|2\|3\| \|(c) Cash on hand\|-\|-\| \|(d) Remittances in transit\|-\|62\| \| \|3,327\|1,278\| Represents value less than ` 0.50 crore. # Annual Report 2018-19 # Notes forming part of the Financial Statements # 14) Other balances with banks Other balances with banks consist of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Earmarked balances with banks\| \|173\|209\| \|(b) Short-term bank deposits\| \|5,400\|2,000\| \| \|Total\|5,573\|2,209\| Earmarked balances with banks significantly pertains to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. # 15) Share capital The authorised, issued, subscribed and fully paid-up share capital comprises of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|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\| \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|Issued, Subscribed and Fully paid up\| \| \| \| \|(a) 375,23,84,706 equity shares of ` 1 each\| \|375\|191\| \| \|Total\|375\|191\| The Board of Directors of the Company at its meeting held on April 19, 2018, approved a proposal to issue bonus shares in the ratio of one equity share of ` 1 each for every one equity share of ` 1 each held by the shareholders of the Company as on the record date, which was approved by the shareholders by means of an ordinary resolution through a postal ballot.
The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ` 86 crore and capital redemption reserve amounting to ` 106 crore. The Board of Directors of the Company at its meeting held on June 15, 2018, approved a proposal to buyback of upto 7,61,90,476 equity shares of the Company for an aggregate amount not exceeding ` 16,000 crore being 1.99% of the total paid up equity share capital at ` 2,100 per equity share, which was approved by the shareholders by means of a special resolution through a postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 7,61,90,476 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on September 26, 2018. Capital redemption reserve was created to the extent of share capital extinguished (` 8 crore). The excess of cost of buy-back of ` 16,045 crore (including ` 45 crore towards transaction costs of buy-back) over par value of shares was offset from retained earnings. In the previous year, the Company bought back 5,61,40,350 equity shares for an aggregate amount of ` 16,000 crore being 2.85% of the total paid up equity share capital at ` 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017. 210 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (i) Reconciliation of number of shares \| \| \|As at March 31, 2019\| \|As at March 31, 2018\| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Number of shares\|Amount (` crore)\|Number of shares\|Amount (` crore)\| \| \| \| \|Equity shares\| \| \| \| \| \| \| \|Opening balance\|191,42,87,591\|191\| \|197,04,27,941\|197\| \| \|Issued during the year\|191,42,87,591\| \|192\|-\|-\| \| \|Shares extinguished on buy-back\|(7,61,90,476)\| \|(8)\|(5,61,40,350)\| \|(6)\| \|Closing balance\|375,23,84,706\|375\| \|191,42,87,591\|191\| \| # (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, 2019\| \|As at March 31, 2018\| \| \|---\|---\|---\|---\|---\|---\| \|Equity shares\| \| \| \| \| \| \|Holding company\|270,24,50,947 equity shares (March 31, 2018: 137,61,18,911 equity shares) are held by Tata Sons Private Limited\|270\| \| \|138\| \|Subsidiaries and Associates of Holding company\|7,220 equity shares (March 31, 2018: 3,610 equity shares) are held by Tata Industries Limited\| \| \|-\|-\| \|NIL equity share (March 31, 2018: 2,06,000 equity shares) are held by Tata AIG Life Insurance Company Limited\| \| \| \|-\|-\| \|NIL equity shares (March 31, 2018: 7,76,533 equity shares) are held by Tata AIA Life Insurance Company Limited\| \| \| \|-\|-\| \|10,36,269 equity shares (March 31, 2018: 5,27,110 equity shares) are held by Tata Investment Corporation Limited\| \| \| \|-\|-\| \|46,798 equity shares (March 31, 2018: 23,804 equity shares) are held by Tata Steel Limited\| \| \| \|-\|-\| \|766 equity shares (March 31, 2018: 383 equity shares) are held by The Tata Power Company Limited\| \| \| \|-\|-\| \|Total\| \| \| \|270\|138\| *Equity shares having value less than ` 0.50 crore. # Annual Report 2018-19 # Notes forming part of the Financial Statements # (iv) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company \| \|As at March 31, 2019\|As at March 31, 2018\| \| \|---\|---\|---\|---\| \|Equity shares\|Tata Sons Private Limited, the holding company\|270,24,50,947\|137,61,18,911\| \|% of shareholding\|72.02%\|71.89%\| \| # (v) Equity shares movement during the 5 years preceding March 31, 2019 # (a) Equity shares issued as bonus The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ` 86 crore and capital redemption reserve amounting to ` 106 crore, pursuant to an ordinary resolution passed after taking the consent of shareholders through postal ballot.
# (b) Equity shares extinguished on buy-back The Company bought back 7,61,90,476 equity shares for an aggregate amount of ` 16,000 crore being 1.99% of the total paid up equity share capital at ` 2,100 per equity share. The equity shares bought back were extinguished on September 26, 2018. The Company bought back 5,61,40,350 equity shares for an aggregate amount of ` 16,000 crore being 2.85% of the total paid up equity share capital at ` 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017. # (c) Equity shares allotted as fully-paid 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. # 16) Other equity Other equity consist of the following: \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Capital reserve#\| \|-\|-\| \|(b) Securities premium\| \| \| \| \|(i) Opening balance\| \|-\|1,919\| \|(ii) Utilised for buy-back of equity shares\| \|-\|(1,919)\| \| \| \|-\|-\| \|(c) Capital redemption reserve\| \| \| \| \|(i) Opening balance\| \|106\|100\| \|(ii) Transfer from retained earnings\| \|8\|6\| \|(iii) Issue of bonus shares\| \|(106)\|-\| \| \| \|8\|106\| # Notes forming part of the Financial Statements \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(d) General reserve\| \| \| \|(i) Opening balance\|-\|9,118\| \|(ii) Transfer to retained earnings\|-\|-\| \|(iii) Utilised for buy-back of equity shares\|-\|(9,118)\| \| \|-\|-\| \|(e) Special Economic Zone re-investment reserve\| \| \| \|(i) Opening balance\|1,578\|97\| \|(ii) Transfer from retained earnings\|2,750\|1,579\| \|(iii) Transfer to retained earnings\|(3,334)\|(98)\| \| \|994\|1,578\| \|(f) Retained earnings\| \| \| \|(i) Opening balance\|74,080\|65,965\| \|(ii) Profit for the year\|30,065\|25,241\| \|(iii) Remeasurement of defined employee benefit plans\|(14)\|86\| \|(iv) Utilised for buy-back of equity shares\|(15,992)\|(4,957)\| \|(v) Expense relating to buy back of equity shares\|(45)\|(42)\| \|(vi) Issue of bonus shares\|(86)\|-\| \|(vii) Realised loss on equity shares carried at fair value through OCI\|(1)\|-\| \|(viii) Transfer from Special Economic Zone re-investment reserve\|3,334\|98\| \| \|91,341\|86,391\| \|(x) Less: Appropriations\| \| \| \|(a) Dividend on equity shares\|10,085\|9,284\| \|(b) Tax on dividend\|1,339\|1,442\| \|(c) Transfer to capital redemption reserve\|8\|6\| \|(d) Transfer to Special Economic Zone re-investment reserve\|2,750\|1,579\| \| \|77,159\|74,080\| \|(g) Investment revaluation reserve\| \| \| \|(i) Opening balance\|(18)\|538\| \|(ii) Realised (gain) / loss on equity shares carried at fair value through OCI\|1\|-\| \|(iii) Change during the year (net)\|275\|(556)\| \| \|258\|(18)\| \|(h) Cash flow hedging reserve (Refer note 29b)\| \| \| \|(i) Opening balance\|(71)\|88\| \|(ii) Change during the year (net)\|175\|(159)\| \| \|104\|(71)\| Refer note 15. #Represents value less than ` 0.50 crore.
Unconsolidated Financial Statements I 213 # Annual Report 2018-19 # Notes forming part of the Financial Statements # Movement in Investment revaluation reserve \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|(18)\|538\| \|Net gain / (loss) arising on revaluation of financial assets carried at fair value\|(1)\|(19)\| \|Net cumulative (gain) / loss reclassified to retained earnings on sale of financial assets carried at fair value\|1\|-\| \|Net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|425\|(625)\| \|Deferred tax relating to net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|(149)\|216\| \|Net cumulative (gain) / loss 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) / loss reclassified to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income\|-\|68\| \|Balance at the end of the year\|258\|(18)\| # Borrowings Borrowings consist of the following: # (A) Borrowings - Non-current (Secured) \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Long-term maturities of finance lease obligations\|33\|39\| Finance lease obligations are secured against property, plant and equipment obtained under finance lease arrangements (Refer note 28). # (B) Borrowings - Current (Unsecured) \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Overdraft from banks\|-\|181\| # Notes forming part of the Financial Statements # 18) Other financial liabilities Other financial liabilities consist of the following: # (A) Other financial liabilities - Non-current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Capital creditors\| \|3\|18\| \|(b) Others\| \|229\|228\| \| \|Total\|232\|246\| Others include advance taxes paid of ` 226 crore and ` 227 crore as at March 31, 2019 and 2018, respectively, by the seller of TCS e-Serve Limited (merged with the Company) which on refund by the tax authorities is payable to the seller. # (B) Other financial liabilities - Current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Accrued payroll\| \|2,151\|1,667\| \|(b) Current maturities of finance lease obligations\| \|6\|5\| \|(c) Unclaimed dividends\| \|41\|28\| \|(d) Fair value of foreign exchange derivative liabilities\| \|59\|91\| \|(e) Capital creditors\| \|257\|245\| \|(f) Liability towards customer contracts\| \|810\|669\| \|(g) Others\| \|27\|34\| \| \|Total\|3,351\|2,739\| Finance lease obligations are secured against property, plant and equipment obtained under finance lease arrangements (Refer note 28). # 19) Provisions Provisions consist of the following: # (A) Provisions - Non-current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|Provision for foreseeable loss\| \|-\|26\| \| \|Total\|-\|26\| # (B) Provisions - Current \| \|(` crore)\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\|---\| \|(a) Provision for foreseeable loss\| \|150\|41\| \|(b) Other provisions\| \|24\|130\| \| \|Total\|174\|171\| Unconsolidated Financial Statements I 215 # Annual Report 2018-19 # Notes forming part of the Financial Statements # 20) Other liabilities Other liabilities consist of the following: # (A) Other liabilities - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Operating lease liabilities\|358\|335\| \| \|358\|335\| # (B) Other liabilities - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Advance received from customers\|269\|556\| \|(b) Indirect taxes payable and other statutory liabilities\|1,556\|1,111\| \|(c) Operating lease liabilities\|47\|84\| \|(d) Others\|70\|108\| \| \|1,942\|1,859\| # 21) Revenue Revenue consist of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Consultancy services\|121,033\|95,150\| \|Sale of equipment and software licences\|2,137\|2,206\| \| \|123,170\|97,356\| Revenue disaggregation by industry vertical is as follows: \|Industry vertical\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Banking, Financial Services and Insurance\|45,558\|36,405\| \|Manufacturing\|11,568\|9,177\| \|Retail and Consumer Business\|22,379\|17,467\| \|Communication, Media and Technology\|21,131\|17,716\| \|Others\|22,534\|16,591\| \| \|123,170\|97,356\| 216 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Revenue disaggregation by geography is as follows: \|Geography\|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Americas\|71,554\|54,538\| \|Europe\|32,120\|25,445\| \|India\|8,277\|7,575\| \|Others\|11,219\|9,798\| \|Total\|123,170\|97,356\| Geographical revenue is allocated based on the location of the customers. Information about major customers: No single customer represents 10% or more of the Company's total revenue during the year ended March 31, 2019 and March 31, 2018.
While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts. Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is ` 68,065 crore out of which 53.87% is expected to be recognised as revenue in the next year and the balance thereafter. No consideration from contracts with customers is excluded from the amount mentioned above. # Changes in contract assets are as follows: \| \|Year ended March 31, 2019\| \|---\|---\| \|Balance at the beginning of the year\|2,281\| \|Revenue recognised during the year\|9,578\| \|Invoices raised during the year\|(9,093)\| \|Translation exchange difference\|57\| \|Balance at the end of the year\|2,823\| # Changes in unearned and deferred revenue are as follows: \| \|Year ended March 31, 2019\| \|---\|---\| \|Balance at the beginning of the year\|1,711\| \|Revenue recognised that was included in the unearned and deferred revenue at the beginning of the year\|(1,648)\| \|Increase due to invoicing during the year, excluding amounts recognised as revenue during the year\|2,418\| \|Translation exchange difference\|(15)\| \|Balance at the end of the year\|2,466\| # Annual Report 2018-19 # Notes forming part of the Financial Statements # Reconciliation of revenue recognised with the contracted price is as follows: \| \|(` crore)\| \|---\|---\| \|Year ended\|March 31, 2019\| \|Contracted price\|125,101\| \|Reductions towards variable consideration components\|(1,931)\| \|Revenue recognised\|123,170\| The reduction towards variable consideration comprises of volume discounts, service level credits, etc. # Other income Other income consist of the following: \| \|(` crore)\|Year ended\|Year ended\| \|---\|---\|---\|---\| \| \| \|March 31, 2019\|March 31, 2018\| \|(a) Interest income\| \|2,651\|2,388\| \|(b) Dividend income\| \|3,571\|2,207\| \|(c) Net gain on investments carried at fair value through profit or loss\| \|416\|662\| \|(d) Net gain on sale of investments carried at amortised cost\| \|-\|-\| \|(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\| \|84\|26\| \|(g) Net foreign exchange gains\| \|844\|265\| \|(h) Rent income\| \|7\|5\| \|(i) Other income\| \|54\|54\| \| \|Total\|7,627\|5,803\| Interest income comprises: - Interest on bank balances and bank deposits: 157 (41) - Interest income on financial assets carried at amortised cost: 506 (210) - Interest income on financial assets carried at fair value through OCI: 1,838 (1,727) - Other interest (including interest on income tax refunds): 150 (410) Dividend income comprise: - Dividends from subsidiaries: 3,571 (2,202) - Dividend from mutual fund units / other investments: - (5) # Employee benefits Employee benefit expenses consist of the following: \| \|(` crore)\|Year ended\|Year ended\| \|---\|---\|---\|---\| \| \| \|March 31, 2019\|March 31, 2018\| \|(a) Salaries, incentives and allowances\| \|54,080\|47,004\| \|(b) Contributions to provident and other funds\| \|3,665\|3,165\| \|(c) Staff welfare expenses\| \|1,632\|1,330\| \| \|Total\|59,377\|51,499\| 218 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Employee benefit obligation consist of the following: # (A) Employee benefit obligation - Non-current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Gratuity liability\|7\|-\| \|(b) Other employee benefit obligations\|75\|62\| \| \|82\|82\| # (B) Employee benefit obligation - Current \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|(a) Compensated absences\|1,756\|1,461\| \|(b) Other employee benefit obligations\|20\|17\| \| \|1,776\|1,776\| # Employee benefit plans # Gratuity and pension In accordance with Indian law, the Company operates 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. The Company manages the plan through a trust. Trustees administer contributions made to the trust. 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: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Change in benefit obligations\| \| \| \|Benefit obligations, beginning of the year\|2,307\|2,083\| \|Service cost\|289\|273\| \|Interest cost\|190\|159\| \|Remeasurement of the net defined benefit liability\|39\|(86)\| \|Benefits paid\|(147)\|(122)\| \|Benefit obligations, end of the year\|2,678\|2,307\| # Annual Report 2018-19 # Notes forming part of the Financial Statements \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Change in plan assets\| \| \| \|Fair value of plan assets, beginning of the year\|2,432\|2,156\| \|Interest income\|193\|165\| \|Employers' contributions\|171\|233\| \|Benefits paid\|(147)\|(122)\| \|Remeasurement - return on plan assets excluding amount included in interest income\|22\|-\| \|Fair value of plan assets, end of the year\|2,671\|2,432\| \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Funded status\| \| \| \|Deficit of plan assets over obligations\|(7)\|-\| \|Surplus of plan assets over obligations\|-\|125\| \| \|(7)\|125\| \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Category of assets\| \| \| \|Corporate bonds\|684\|560\| \|Equity shares\|20\|116\| \|Government bonds and securities\|1,150\|996\| \|Insurer managed funds\|759\|713\| \|Bank balances\|6\|5\| \|Others\|52\|42\| \|Total\|2,671\|2,432\| # Net periodic gratuity / pension cost, included in employee cost consists of the following components: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Service cost\|289\|273\| \|Net interest on net defined benefit (asset) / liability\|(3)\|(6)\| \|Net periodic gratuity / pension cost\|286\|267\| \|Actual return on plan assets\|215\|165\| # Notes forming part of the Financial Statements # Remeasurement of the net defined benefit (asset) / liability: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Actuarial (gains) and losses arising from changes in demographic assumptions\|(17)\|16\| \|Actuarial (gains) and losses arising from changes in financial assumptions\|-\|(85)\| \|Actuarial (gains) and losses arising from changes in experience adjustments\|56\|(17)\| \|Remeasurement of the net defined benefit liability\|39\|(86)\| \|Remeasurement - return on plan assets excluding amount included in interest income\|(22)\|-\| \|Total\|17\|(86)\| # The assumptions used in accounting for the defined benefit plan are set out below: File: AR_TCS_2018_2019.md \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Discount rate\|7.75%\|7.75%\| \|Rate of increase in compensation levels of covered employees\|6.00%\|6.00%\| \|Rate of return on plan assets\|7.75%\|7.75%\| \|Weighted average duration of defined benefit obligations\|8 years\|8 years\| The expected benefits are based on the same assumptions as are used to measure the Company's defined benefit plan obligations as at March 31, 2019. The Company is expected to contribute ` 315 crore to defined benefit plan obligations funds for the year ending March 31, 2020. 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 increase / (decrease) as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Increase of 0.50%\|(100)\|(79)\| \|Decrease of 0.50%\|108\|85\| # If the expected salary growth increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Increase of 0.50%\|109\|85\| \|Decrease of 0.50%\|(102)\|(80)\| # Annual Report 2018-19 # Notes forming part of the Financial Statements 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, 2019 as follows: \|Year ending March 31,\|Defined benefit obligations\| \|---\|---\| \|2020\|241\| \|2021\|223\| \|2022\|233\| \|2023\|233\| \|2024\|230\| \|2025-2029\|1,155\| # Provident fund In accordance with Indian law, all eligible employees of the Company 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 statement of profit and 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. The details of fund and plan assets are given below: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Fair value of plan assets\|14,555\|13,084\| \|Present value of defined benefit obligations\|(14,555)\|(13,084)\| \|Net excess / (shortfall)\|-\|-\| The plan assets have been primarily invested in Government securities and corporate bonds. # Notes forming part of the Financial Statements The principal assumptions used in determining the present value obligation of interest guarantee under the deterministic approach are as follows: \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Discount rate\|7.75%\|7.75%\| \|Average remaining tenure of investment portfolio\|8.38 years\|7.95 years\| \|Guaranteed rate of return\|8.65%\|8.55%\| The Company contributed ` 856 crore and ` 795 crore for the years ended March 31, 2019 and 2018, respectively, to the provident fund. # Superannuation All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution. The Company contributed ` 232 crore and ` 222 crore for the years ended March 31, 2019 and 2018, respectively, to the Employees' Superannuation Fund. # Foreign defined contribution plan The Company contributed ` 475 crore and ` 331 crore for the years ended March 31, 2019 and 2018, respectively, towards foreign defined contribution plans. # Cost of equipment and software licenses Cost of equipment and software licenses consist of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|(a) Raw materials, sub-assemblies and components consumed\|40\|86\| \|(b) Equipment and software licences purchased\|1,963\|1,920\| \| \|2,003\|2,006\| \|Finished goods and work-in-progress\| \| \| \|Opening stock\|-\|1\| \|Less: Closing stock\|-\|-\| \| \|-\|1\| Represents value less than ` 0.50 crore. Unconsolidated Financial Statements I 223 # Annual Report 2018-19 # Notes forming part of the Financial Statements # 25) Other expenses Other expenses consist of the following: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|(a) Fees to external consultants\|12,259\|6,415\| \|(b) Facility expenses\|3,275\|3,079\| \|(c) Travel expenses\|2,718\|2,179\| \|(d) Communication expenses\|837\|710\| \|(e) Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|188\|95\| \|(f) Other expenses\|7,549\|3,568\| \|Total\|26,826\|16,046\| Other expenses include ` 3,897 crore and ` 255 crore for the years ended March 31, 2019 and March 31, 2018, respectively, towards sales, marketing and advertisement expenses. The Company made a contribution to an electoral trust of ` 220 crore and NIL for the years ended March 31, 2019 and 2018, respectively, which is included in other expenses. # 26) Research and development expenditure Research and development expenditure including capital expenditure aggregating ` 305 crore and ` 295 crore was incurred in the years ended March 31, 2019 and 2018, respectively.
# 27) Corporate Social Responsibility (CSR) As per section 135 of the Companies Act, 2013, amount required to be spent by the Company during the year ended March 31, 2019 and 2018 is ` 542 crore and ` 497 crore, respectively, computed at 2% of its average net profit for the immediately preceding three financial years, on Corporate Social Responsibility (CSR). The Company incurred an amount of ` 434 crore and ` 400 crore during the year ended March 31, 2019 and 2018, respectively, towards CSR expenditure for purposes other than construction / acquisition of any asset. # 28) Leases The Company has taken on lease properties and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were ` 1,468 crore and ` 1,431 crore for the years ended March 31, 2019 and 2018, respectively. The following is a summary of future minimum lease rental commitments towards non-cancellable operating leases and finance leases: \|Operating lease\|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|Due within one year\|561\|557\| \|Due in a period between one year and five years\|1,914\|1,973\| \|Due after five years\|1,957\|2,443\| \|Total minimum lease commitments\|4,432\|4,973\| 224 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements \| \|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2018\|As at March 31, 2018\| \|---\|---\|---\| \|Finance lease\|Minimum lease commitments\|Present value of minimum lease commitments\|Minimum lease commitments\|Present value of minimum lease commitments\| \|Due within one year\|12\|6\|11\|5\| \|Due in a period between one year and five years\|44\|33\|46\|30\| \|Due after five years\|-\|-\|10\|9\| \|Total minimum lease commitments\|56\|39\|67\|44\| \|Less: Interest\|(17)\| \|(23)\| \| \|Present value of minimum lease commitments\|39\| \|44\| \| \| \|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2018\|As at March 31, 2018\| \|---\|---\|---\| \|Receivables under sub-leases\| \| \| \| \| \|Due within one year\|7\| \|5\| \| \|Due in a period between one year and five years\|18\| \|15\| \| \|Due after five years\|1\| \|3\| \| \|Total\|26\| \|23\| \| Income under sub-leases of ` 7 crore and ` 5 crore have been recognised in the statement of profit and loss for the year ended March 31, 2019 and March 31, 2018, respectively. # 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(j) to the financial statements. Unconsolidated Financial Statements I 225 # Annual Report 2018-19 # Notes forming part of the Financial Statements # (a) Financial assets and liabilities The carrying value of financial instruments by categories as of March 31, 2019 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\|-\|-\|-\|-\|3,327\|3,327\| \|Bank deposits\|-\|-\|-\|-\|5,400\|5,400\| \|Earmarked balances with banks\|-\|-\|-\|-\|173\|173\| \|Investments (other than in subsidiary)\|3,018\|24,772\|-\|-\|490\|28,280\| \|Trade receivables\|-\|-\|-\|-\|24,124\|24,124\| \|Unbilled receivables\|-\|-\|-\|-\|4,776\|4,776\| \|Loans receivables\|-\|-\|-\|-\|7,020\|7,020\| \|Other financial assets\|-\|-\|237\|347\|1,594\|2,178\| \|Total\|3,018\|24,772\|237\|347\|46,904\|75,278\| Financial liabilities \| \|Fair value through profit or loss\|Fair value through other comprehensive income\|Derivative instruments in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade payables\|-\|-\|-\|-\|7,692\|7,692\| \|Borrowings\|-\|-\|-\|-\|33\|33\| \|Other financial liabilities\|-\|-\|-\|59\|3,524\|3,583\| \|Total\|-\|-\|-\|59\|11,249\|11,308\| Loans receivables include inter-corporate deposits of ` 6,750 crore, with original maturity period within 24 months. The carrying value of financial instruments by categories as of 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\|-\|-\|-\|-\|1,278\|1,278\| \|Bank deposits\|-\|-\|-\|-\|2,000\|2,000\| \|Earmarked balances with banks\|-\|-\|-\|-\|209\|209\| \|Investments (other than in subsidiary)\|9,160\|25,975\|-\|-\|-\|35,135\| \|Trade receivables\|-\|-\|-\|-\|18,976\|18,976\| \|Unbilled revenue\|-\|-\|-\|-\|5,509\|5,509\| \|Loans receivables\|-\|-\|-\|-\|4,296\|4,296\| \|Other financial assets\|-\|-\|34\|55\|1,222\|1,311\| \|Total\|9,160\|25,975\|34\|55\|33,490\|68,714\| Financial liabilities \| \|Fair value through profit or loss\|Fair value through other comprehensive income\|Derivative instruments in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade payables\|-\|-\|-\|-\|4,775\|4,775\| \|Borrowings\|-\|-\|-\|-\|220\|220\| \|Other financial liabilities\|-\|-\|25\|66\|2,894\|2,985\| \|Total\|-\|-\|25\|66\|7,889\|7,980\| Loans receivables include inter-corporate deposits of ` 4,000 crore, with original maturity period within 24 months. 226 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables (previous year: unbilled revenue), loans receivables and trade payables as at March 31, 2019 and March 31, 2018 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 periods 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 consists of the following three levels: - Level 1 -- Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2 -- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). - Level 3 -- Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The cost of unquoted investments included in Level 3 of fair value hierarchy approximate their fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range. # Financial assets and liabilities measured at fair value 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 disclosure are required): \|As at March 31, 2019\|Level\| \| \| \|Total\| \|---\|---\|---\|---\|---\|---\| \| \|Level 1\|Level 2\|Level 3\| \| \| \|Financial assets\|Mutual fund units\|2,955\|63\|-\|3,018\| \| \|Equity shares\|-\|-\|-\|-\| \| \|Government bonds and securities\|23,566\|-\|-\|23,566\| \| \|Certificate of deposits\|491\|-\|-\|491\| \| \|Corporate bonds\|1,206\|-\|-\|1,206\| \| \|Derivative financial assets\|-\|584\|-\|584\| \|Total\|28,218\|647\| \|-\|28,865\| \|As at March 31, 2018\|Level\| \| \| \|Total\| \|---\|---\|---\|---\|---\|---\| \| \|Level 1\|Level 2\|Level 3\| \| \| \|Financial assets\|Mutual fund units\|9,101\|59\|-\|9,160\| \| \|Equity shares\|-\|-\|3\|3\| \| \|Government bonds and securities\|25,217\|-\|-\|25,217\| \| \|Corporate bonds\|755\|-\|-\|755\| \| \|Derivative financial assets\|-\|89\|-\|89\| \|Total\|35,073\|148\|3\| \|35,224\| # Financial liabilities \|Derivative financial liabilities\|-\|91\|-\|91\| \|---\|---\|---\|---\|---\| \|Other financial liabilities\|-\|-\|-\|-\| \|Total\|-\|91\|-\|91\| # Annual Report 2018-19 # Notes forming part of the Financial Statements # Reconciliation of Level 3 fair value measurement is as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|3\|22\| \|Disposals during the year\|(3)\|-\| \|Impairment in value of investments\|-\|(19)\| \|Balance at the end of the year\|-\|3\| # (b) Derivative financial instruments and hedging activity The Company's revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations. The Board of Directors of the Company has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company 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, which have been designated as cash flow hedges: \|Foreign currency\|No. of contracts\|Notional amount of contracts (` crore)\|Fair value (` crore)\|No. of contracts\|Notional amount of contracts (` crore)\|Fair value (` crore)\| \|---\|---\|---\|---\|---\|---\|---\| \|US Dollar\|28\|1,000\|128\|24\|1,466\|20\| \|Great Britain Pound\|24\|177\|23\|34\|263\|(23)\| \|Euro\|33\|239\|50\|26\|216\|1\| \|Australian Dollar\|26\|181\|22\|21\|150\|12\| \|Canadian Dollar\|21\|99\|14\|-\|-\|-\| # Movement in cash flow hedging reserve for derivatives designated as cash flow hedges: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Balance at the beginning of the year\|(2)\|105\| \|(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\|(488)\|(127)\| \|Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\|94\|15\| \|Change in the fair value of effective portion of cash flow hedges\|641\|5\| \|Deferred tax on fair value of effective portion of cash flow hedges\|(111)\|-\| \|Balance at the end of the year\|134\|(2)\| 228 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements In addition to the above cash flow hedges, the Company has outstanding foreign exchange forward, currency options and futures contracts with notional amount aggregating ` 34,593 crore and ` 22,404 crore whose fair value showed a net gain of ` 288 crore and net loss of ` 12 crore as at March 31, 2019 and 2018, respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting.
Exchange gain of ` 405 crore and exchange loss of ` 52 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the consolidated statement of profit and loss for the years ended March 31, 2019 and 2018, respectively. Net foreign exchange gains include gain of ` 30 crore and exchange loss of ` 213 crore transferred from cash flow hedging reserve for the years ended March 31, 2019 and 2018, respectively. Net gain on derivative instruments of ` 104 crore recognised in cash flow hedging reserve as at March 31, 2019, is expected to be transferred to the statement of profit and loss by March 31, 2020. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2019. # Following table summarises approximate gain / (loss) on the Company's other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies. \| \|As at March 31, 2019\|As at March 31, 2018\| \|---\|---\|---\| \|10% Appreciation of the underlying foreign currencies\|(64)\|(323)\| \|10% Depreciation of the underlying foreign currencies\|1,370\|1,054\| # (c) Financial risk management The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company. # i. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company's exposure to market risk is primarily on account of foreign currency exchange rate risk. # a) Foreign currency exchange rate risk The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. Further, any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company's revenue in international business. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company. The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 29(b). # Annual Report 2018-19 # Notes forming part of the Financial Statements The following table sets forth information relating to foreign currency exposure as at March 31, 2019: \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|4,431\|275\|837\|1,203\| \|Net financial liabilities\|4,044\|178\|414\|377\| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company's profit before taxes by approximately ` 173 crore for the year ended March 31, 2019.
The following table sets forth information relating to foreign currency exposure as at March 31, 2018: \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|3,783\|431\|944\|1,218\| \|Net financial liabilities\|3,077\|323\|761\|541\| 10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company's profit before taxes by approximately ` 168 crore for the year ended March 31, 2018. # b) Interest rate risk The Company's investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk. # ii. Credit risk Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of 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 receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of ` 6,750 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of ` 4,850 crore held with two Indian banks having high credit rating which are individually in excess of 10% or more of the Company's total bank deposits as at March 31, 2019. None of the other financial instruments of the Company 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 ` 75,278 crore and ` 68,711 crore as at March 31, 2019, and 2018, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled receivables (previous year: unbilled revenue), contract assets and other financial assets. The Company's exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivable, unbilled receivables (previous year: unbilled revenue) and contract assets as at March 31, 2019 and March 31, 2018. 230 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # Geographic concentration of credit risk Geographic concentration of trade receivables (gross and net of allowances), unbilled receivables (previous year: unbilled revenue) and contract assets is as follows: \| \|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2018\|As at March 31, 2018\| \|---\|---\|---\| \| \|Gross%\|Net%\|Gross%\|Net%\| \|United States of America\|49.42\|50.53\|39.37\|40.41\| \|India\|16.45\|14.87\|19.47\|17.87\| \|United Kingdom\|15.39\|15.55\|17.18\|17.35\| Geographical concentration of trade receivables, unbilled receivables (previous year: unbilled revenue) and contract assets is allocated based on the location of the customers. # iii. Liquidity risk Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due. # Contractual maturities of significant financial liabilities as at: # March 31, 2019 \| \|Due in 1st year\|Due in 2nd year\|Due in 3rd to 5th year\|Due after 5th year\|Total\| \|---\|---\|---\|---\|---\|---\| \|Non-derivative financial liabilities\|7,692\|-\|-\|-\|7,692\| \|Borrowings\|-\|11\|33\|-\|44\| \|Other financial liabilities\|3,286\|1\|227\|4\|3,518\| \| \|10,978\|12\|260\|4\|11,254\| \|Derivative financial liabilities\|59\|-\|-\|-\|59\| \|Total\|11,037\|12\|260\|4\|11,313\| # 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\|4,775\|-\|-\|-\|4,775\| \|Borrowings\|181\|12\|34\|10\|237\| \|Other financial liabilities\|2,648\|19\|227\|-\|2,894\| \| \|7,604\|31\|261\|10\|7,906\| \|Derivative financial liabilities\|91\|-\|-\|-\|91\| \|Total\|7,695\|31\|261\|10\|7,997\| Unconsolidated Financial Statements I 231 # Annual Report 2018-19 # Notes forming part of the Financial Statements # 30) Earnings Per Share (EPS) \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Profit for the year (` crore)\|30,065\|25,241\| \|Weighted average number of equity shares\|378,97,49,350\|384,91,85,612\| \|Earnings per share basic and diluted (`)\|79.34\|65.57\| \|Face value per equity share (`)\|1\|1\| Pursuant to issue of bonus shares, the weighted average number of equity shares and earnings per share of the previous periods have been accordingly re-stated. # 31) Auditors remuneration \| \|As at March 31, 2019 (` crore)\|As at March 31, 2018 (` crore)\| \|---\|---\|---\| \|Services as statutory auditors (including quarterly audits)\|7\|7\| \|Tax audit\|1\|1\| \|Services for tax matters\|-\|-\| \|Other services\|4\|4\| \|Re-imbursement of out-of-pocket expenses\|-\|-\| *Represents value less than ` 0.50 crore.
# 32) Segment information The Company publishes the unconsolidated financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements. # 33) Commitments and Contingencies # Capital commitments File: AR_TCS_2018_2019.md The Company has contractually committed (net of advances) ` 1,258 crore and ` 760 crore as at March 31, 2019 and 2018, respectively, for purchase of property, plant and equipment. # Contingencies # Direct tax matters Refer note 9. # Indirect tax matters The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company has demands amounting to ` 325 crore and ` 275 crore as at March 31, 2019 and 2018, respectively from various indirect tax authorities which are being contested by the Company based on the management evaluation and on the advice of tax consultants. # Other claims Claims aggregating ` 3,138 crore and ` 2,977 crore as at March 31, 2019 and 2018, respectively, against the Company have not been acknowledged as debts. In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic's proprietary information. In April 2016, the Company received an unfavourable jury verdict awarding damages totaling ` 6,499 crore (US $ 940 million) to Epic. 232 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements In September 2017, the Company received a Court order reducing the damages from ` 6,499 crore (US $ 940 million) to ` 2,904 crore (US $ 420 million) to Epic. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for ` 3,042 crore (US $ 440 million) as financial security in order to stay execution of the judgment pending post-judgment proceedings and appeal. Pursuant to reaffirmation of the court order in March 2019, the Company has filed a notice of appeal in the superior Court to fully set aside the Order. 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. Accordingly, an amount of ` 3,042 crore (US $ 440 million) is disclosed as contingent liability which is included in the claims not acknowledged as debts. # Bank guarantees and letters 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 Company has provided guarantees to third parties on behalf of its subsidiaries. The Company does not expect any outflow of resources in respect of the above. The amounts assessed as contingent liability do not include interest that could be claimed by counter parties. # Micro and small enterprises \| \|As at March 31, 2019\|As at March 31, 2019\|As at March 31, 2018\|As at March 31, 2018\| \|---\|---\|---\| \| \|Principal\|Interest\|Principal\|Interest\| \|Amount due to vendor\|22\|-\|6\|-\| \|Principal amount paid (includes unpaid) beyond the appointed date\|33\|-\|18\|-\| \|Interest due and payable for the year\|-\|-\|-\|-\| \|Interest accrued and remaining unpaid\|-\|1\|-\|-\| Represents value less than ` 0.50 crore. Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. Unconsolidated Financial Statements I 233 # Annual Report 2018-19 # Notes forming part of the Financial Statements # 35) Related party transactions The Company's principal related parties consist of its holding company, Tata Sons Private Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The Company's material related party transactions and outstanding balances are with related parties with whom the Company routinely enter into transactions in the ordinary course of business. Refer note 34 of consolidated financial statement for list of subsidiaries of the Company.
Transactions with related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue\|27\|15,999\|266\|2,215\|-\|18,507\| \|Dividend income\|-\|3,571\|-\|-\|-\|3,571\| \|Rent income\|-\|7\|-\|-\|-\|7\| \|Other income\|-\|38\|-\|-\|-\|38\| \|Purchases of goods and services (including reimbursements)\|1\|8,178\|415\|369\|-\|8,963\| \|Brand equity contribution\|101\|-\|-\|-\|-\|101\| \|Facility expenses\|1\|-\|37\|15\|-\|53\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|-\|(7)\|-\|-\|(7)\| \|Contribution to employees post employment benefit plans\|-\|-\|-\|-\|816\|816\| \|Purchase of property, plant and equipment\|-\|-\|2\|48\|-\|50\| \|Loans and advances given\|-\|6\|2\|1\|-\|9\| \|Loans and advances recovered\|-\|1\|-\|3\|-\|4\| \|Dividend paid\|7,254\|-\|3\|-\|-\|7,257\| \|Guarantees given\|-\|13\|-\|-\|-\|13\| \|Buy-back of shares\|10,455\|-\|4\|-\|-\|10,459\| \|Cost recovery\|-\|2,302\|-\|-\|-\|2,302\| \|Issue of bonus shares1\|-\|-\|-\|-\|-\|-\| 1Refer note 15. 234 I Unconsolidated Financial Statements # Notes forming part of the Financial Statements # (` crore) # Year ended March 31, 2018 \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\| \|Revenue\|13\|57,747\|260\|1,992\|60,012\| \|Dividend income\|-\|2,201\|-\|-\|2,201\| \|Rent income\|-\|5\|-\|-\|5\| \|Other income\|-\|34\|-\|-\|34\| \|Purchases of goods and services (including reimbursements)\|5\|3,009\|31\|549\|3,594\| \|Brand equity contribution\|114\|-\|-\|-\|114\| \|Facility expenses\|1\|8\|34\|6\|49\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|-\|5\|5\|10\| \|Contribution to employees post employment benefit plans\|-\|-\|-\|-\|818\| \|Purchase of property, plant and equipment\|-\|-\|6\|45\|51\| \|Loans and advances given\|-\|1\|-\|-\|1\| \|Loans and advances recovered\|-\|-\|-\|5\|5\| \|Dividend paid\|6,826\|-\|3\|2\|6,831\| \|Guarantees given\|-\|1,873\|-\|-\|1,873\| \|Buy-back of shares\|10,278\|-\|7\|21\|10,306\| \|Cost recovery\|-\|2,045\|-\|-\|2,045\| Represents value less than ` 0.50 crore. # Balances receivable from related parties are as follows: # (` crore) # As at March 31, 2019 \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\| \|Trade receivables and unbilled receivables\|6\|4,332\|97\|644\|5,079\| \|Loans receivables, other financial assets and other assets\|2\|6\|28\|6\|42\| \|Total\|8\|4,338\|125\|650\|5,121\| Unconsolidated Financial Statements I 235 # Annual Report 2018-19 # Notes forming part of the Financial Statements \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade receivables and unbilled revenue\|8\|10,140\|122\|637\|-\|10,907\| \|Loans receivables, other financial assets and other assets\|3\|1\|27\|7\|-\|38\| \|Total\|11\|10,141\|149\|644\|-\|10,945\| # Balances payable to related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities\|91\|3,195\|102\|129\|-\|3,517\| \|Commitments\|-\|4,263\|14\|53\|-\|4,330\| # As at March 31, 2018 \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities\|90\|2,006\|22\|203\|-\|2,321\| \|Commitments\|-\|4,343\|-\|-\|-\|4,343\| # Transactions with key management personnel are as follows: \| \|Year ended March 31, 2019\|Year ended March 31, 2018\| \|---\|---\|---\| \|Short-term benefits\|33\|27\| \|Dividend paid during the year\|1\|1\| \|Total\|34\|28\| 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. # Notes forming part of the Financial Statements 36) The sitting fees and commission paid to non-executive directors is ` 12 crore and ` 13 crore as at March 31, 2019 and 2018, respectively. 37) Subsequent event Dividends paid during the year ended March 31, 2019 include an amount of ` 29 per equity share towards final dividend for the year ended March 31, 2018 and an amount of ` 12 per equity share towards interim dividends for the year ended March 31, 2019. 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 dividends for the year ended March 31, 2018. Dividends declared by the Company are based on the profit available for distribution. Distribution of dividends out of general reserve and retained earnings is subject to applicable dividend distribution tax. On April 12, 2019, the Board of Directors of the Company have proposed a final dividend of ` 18 per share in respect of the year ended March 31, 2019 subject to the approval of shareholders at the Annual General Meeting.
The proposal is subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately ` 8,142 crore, inclusive of corporate dividend tax of ` 1,388 crore. 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 No: 049265 Mumbai, April 12, 2019 For and on behalf of the Board N Chandrasekaran Chairman V Ramakrishnan CFO O P Bhatt Director Hanne Birgitte Breinbjerg Sorensen Director Rajesh Gopinathan CEO and Managing Director Aman Mehta Director Aarthi Subramanian Director Dr Pradeep Kumar Khosla Director N Ganapathy Subramaniam COO and Executive Director Dr Ron Sommer Director Keki M Mistry Director Daniel Hughes Callahan Director Rajendra Moholkar Company Secretary Unconsolidated Financial Statements I 237 # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act, 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 # Annual Report 2018-19 # relating to subsidiary companies \|Sr. No.\| \|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period\|End date of accounting period\|Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of shareholding\|Country\| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|1\|APTOnline Limited\|August 9, 2004\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|2\|86\|171\|83\|31\|154\|35\|10\|25\|13\|89%\|India\| \| \|2\|MP Online Limited\|September 8, 2006\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|1\|94\|126\|31\|11\|77\|29\|8\|21\|11\|89%\|India\| \| \|3\|C-Edge Technologies Limited\|January 19, 2006\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|10\|189\|279\|80\|-\|274\|99\|35\|64\|29\|51%\|India\| \| \|4\|MahaOnline Limited\|September 23, 2010\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|3\|63\|138\|72\|25\|79\|21\|6\|15\|7\|74%\|India\| \| \|5\|CMC Americas, Inc.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|USD\|69.136300\|11\|65\|110\|34\|-\|199\|44\|14\|30\|-\|100%\|U.S.A.\| \| \|6\| \|TCS e-Serve International Limited\|December 31, 2008\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|10\|138\|767\|619\|46\|1,197\|(91)\|(33)\|(58)\|-\|100%\|India\| \|7\|TCS e-Serve America, Inc.\|February 10, 2009\|January 1, 2018\|December 31, 2018\|USD\|69.136300\|2\|53\|85\|30\|-\|286\|39\|9\|30\|-\|100%\|U.S.A.\| \| \|8\|Diligenta Limited\|August 23, 2005\|January 1, 2018\|December 31, 2018\|GBP\|90.077640\|9\|930\|1,803\|864\|509\|3,012\|273\|52\|221\|-\|100%\|U.K.\| \| \|9\| \|Tata Consultancy Services Canada Inc.\|October 1, 2009\|April 1, 2018\|March 31, 2019\|CAD\|51.513524\|36\|769\|1,526\|721\|-\|5,006\|542\|146\|396\|-\|100%\|Canada\| \|10\| \|Tata America International Corporation\|August 9, 2004\|April 1, 2018\|March 31, 2019\|USD\|69.136300\|1\|2,336\|4,017\|1,680\|121\|4,072\|632\|(1,121)\|1,753\|-\|100%\|U.S.A.\| \|11\| \|Tata Consultancy Services Asia Pacific Pte Ltd.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|USD\|69.136300\|30\|500\|1,003\|473\|522\|1,837\|123\|14\|109\|-\|100%\|Singapore\| \|12\| \|Tata Consultancy Services (China) Co., Ltd.\|November 16, 2006\|January 1, 2018\|December 31, 2018\|CNY\|10.297794\|208\|(33)\|252\|77\|-\|738\|28\|(4)\|32\|-\|93.2%\|China\| \|13\| \|Tata Consultancy Services Japan, Ltd.\|July 1, 2014\|April 1, 2018\|March 31, 2019\|JPY\|0.624030\|270\|868\|2,032\|894\|-\|4,662\|279\|87\|192\|-\|51%\|Japan\| \|14\| \|Tata Consultancy Services Malaysia Sdn Bhd\|August 9, 2004\|April 1, 2018\|March 31, 2019\|MYR\|16.937699\|3\|140\|259\|116\|-\|497\|19\|5\|14\|-\|100%\|Malaysia\| \|15\| \|PT Tata Consultancy Services Indonesia\|October 5, 2006\|April 1, 2018\|March 31, 2019\|IDR\|0.004852\|-\|32\|53\|21\|-\|65\|18\|5\|13\|-\|100%\|Indonesia\| \|16\| \|Tata Consultancy Services (Philippines) Inc.\|September 19, 2008\|April 1, 2018\|March 31, 2019\|PHP\|1.314953\|(36)\|222\|300\|114\|-\|503\|15\|1\|14\|-\|100%\|Philippines\| \|17\| \|Tata Consultancy Services (Thailand) Limited\|May 12, 2008\|April 1, 2018\|March 31, 2019\|THB\|2.178207\|2\|15\|23\|6\|-\|47\|4\|1\|3\|-\|100%\|Thailand\| \|18\| \|Tata Consultancy Services Belgium\|August 9, 2004\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|1\|337\|601\|263\|-\|1,584\|223\|68\|155\|-\|100%\|Belgium\| \|19\| \|Tata Consultancy Services Deutschland GmbH\|August 9, 2004\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|1\|525\|1,288\|762\|-\|4,053\|320\|101\|219\|-\|100%\|Germany\| \|20\| \|Tata Consultancy Services Sverige AB\|August 9, 2004\|April 1, 2018\|March 31, 2019\|SEK\|7.453566\|-\|460\|1,102\|642\|-\|2,861\|220\|51\|169\|-\|100%\|Sweden\| \|21\| \|Tata Consultancy Services Netherlands BV\|August 9, 2004\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|512\|2,714\|4,074\|848\|1,489\|4,371\|399\|(385)\|784\|-\|100%\|Netherlands\| \|22\|TCS Italia s.r.l.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|17\|4\|161\|140\|-\|395\|20\|8\|12\|-\|100%\|Italy\| \| \|23\| \|Tata Consultancy Services Luxembourg S.A.\|October 28, 2005\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|43\|38\|128\|47\|-\|222\|40\|10\|30\|-\|100%\|Capellen (G.D. de Luxembourg)\| \|24\| \|Tata Consultancy Services Switzerland Ltd.\|October 31, 2006\|April 1, 2018\|March 31, 2019\|CHF\|69.462775\|10\|272\|789\|507\|-\|2,076\|175\|35\|140\|-\|100%\|Switzerland\| \|25\| \|Tata Consultancy Services Osterreich GmbH\|March 9, 2012\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|-\|5\|12\|7\|-\|27\|4\|-\|4\|-\|100%\|Austria\| \|26\| \|Tata Consultancy Services Danmark ApS\|March 16, 2012\|April 1, 2018\|March 31, 2019\|DKK\|10.398469\|1\|3\|26\|22\|-\|49\|1\|-\|1\|-\|100%\|Denmark\| \|27\| \|Tata Consultancy Services De Espana S.A.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|-\|25\|133\|108\|-\|266\|2\|(3)\|5\|-\|100%\|Spain\| \|28\|Tata Consultancy Services (Portugal) Unipessoal, Limitada\|July 4, 2005\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|-\|(3)\|21\|24\|-\|25\|5\|-\|5\|-\|100%\|Portugal\| \| \|29\| \|Tata Consultancy Services France SA\|June 28, 2013\|April 1, 2018\|March 31, 2019\|EUR\|77.619315\|3\|(381)\|901\|1,279\|-\|1,581\|(36)\|14\|(50)\|-\|100%\|France\| \|30\| \|Tata Consultancy Services Saudi Arabia\|July 2, 2015\|April 1, 2018\|March 31, 2019\|SAR\|18.433397\|7\|168\|213\|38\|-\|376\|88\|18\|70\|-\|76%\|Saudi Arabia\| \|31\| \|Tata Consultancy Services (Africa) (PTY) Ltd.\|October 23, 2007\|April 1, 2018\|March 31, 2019\|ZAR\|4.750754\|7\|44\|51\|-\|51\|-\|32\|-\|32\|-\|100%\|South Africa\| \|32\| \|Tata Consultancy Services (South Africa) (PTY) Ltd.\|October 31, 2007\|April 1, 2018\|March 31, 2019\|ZAR\|4.750754\|9\|70\|333\|254\|-\|828\|49\|14\|35\|-\|100%\|South Africa\| \|33\|TCS FNS Pty Limited\|October 17, 2005\|April 1, 2018\|March 31, 2019\|AUD\|49.003809\|183\|(35)\|164\|16\|164\|-\|29\|-\|29\|-\|100%\|Australia\| \| \|34\| \|TCS Financial Solutions Beijing Co., Ltd.\|December 29, 2006\|January 1, 2018\|December 31, 2018\|CNY\|10.297794\|38\|(22)\|63\|47\|-\|69\|6\|-\|6\|-\|100%\|China\| \|35\| \|TCS Financial Solutions Australia Holdings Pty Limited\|October 19, 2005\|April 1, 2018\|March 31, 2019\|AUD\|49.003809\|68\|(20)\|48\|-\|1\|25\|-\|25\|-\|100%\|Australia\| \| \|36\| \|TCS Financial Solutions Australia Pty Limited\|October 19, 2005\|April 1, 2018\|March 31, 2019\|AUD\|49.003809\|-\|133\|171\|38\|35\|70\|51\|13\|38\|-\|100%\|Australia\| \|37\|TCS Iberoamerica S.A.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|USD\|69.136300\|680\|763\|1,492\|49\|1,491\|-\|231\|22\|209\|-\|100%\|Uruguay\| \| \|38\|TCS Solution Center S.A.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|UYU\|2.055181\|74\|148\|355\|133\|-\|689\|110\|28\|82\|-\|100%\|Uruguay\| \| \|39\| \|Tata Consultancy Services Argentina S.A.\|August 9, 2004\|April 1, 2018\|March 31, 2019\|ARS\|1.584932\|7\|11\|69\|51\|-\|38\|(16)\|-\|(16)\|-\|100%\|Argentina\| \|40\| \|Tata Consultancy Services Do Brasil Ltda\|August 9, 2004\|January 1, 2018\|December 31, 2018\|BRL\|17.721804\|312\|(154)\|357\|199\|-\|608\|21\|(64)\|85\|-\|100%\|Brazil\| # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act, 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies \|Sr.
No.\|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period\|End date of accounting period\|Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of shareholding\|Country\| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|41\|Tata Consultancy Services De Mexico S.A., De C.V.\|August 9, 2004\|January 1, 2018\|December 31, 2018\|MXN\|3.577428\|1\|813\|1,173\|359\|-\|2,090\|338\|136\|202\|-\|100%\|Mexico\| \|42\|Tata Consultancy Services Chile S.A.\|August 9, 2004\|January 1, 2018\|December 31, 2018\|CLP\|0.101417\|172\|298\|553\|83\|68\|483\|37\|(6)\|43\|-\|100%\|Chile\| \|43\|TCS Inversiones Chile Limitada\|August 9, 2004\|January 1, 2018\|December 31, 2018\|CLP\|0.101417\|155\|171\|347\|21\|326\|31\|103\|2\|101\|-\|100%\|Chile\| \|44\|TATASOLUTION CENTER S.A.\|December 28, 2006\|January 1, 2018\|December 31, 2018\|USD\|69.136300\|21\|49\|183\|113\|-\|555\|52\|17\|35\|-\|100%\|Ecuador\| \|45\|TCS Uruguay S.A.\|January 1, 2010\|April 1, 2018\|March 31, 2019\|UYU\|2.055181\|-\|62\|108\|46\|4\|227\|44\|1\|43\|-\|100%\|Uruguay\| \|46\|MGDC S.C.\|January 1, 2010\|January 1, 2018\|December 31, 2018\|MXN\|3.577428\|-\|201\|348\|147\|-\|1,279\|117\|47\|70\|-\|100%\|Mexico\| \|47\|Technology Outsourcing S.A.C.\|October 30, 2015\|January 1, 2018\|December 31, 2018\|PEN\|20.819170\|11\|-\|22\|11\|-\|68\|6\|2\|4\|-\|100%\|Peru\| \|48\|Tata Consultancy Services Qatar S.S.C.\|December 20, 2011\|April 1, 2018\|March 31, 2019\|QAR\|18.894862\|4\|39\|55\|12\|-\|43\|11\|1\|10\|-\|100%\|Qatar\| \|49\|W12 Studios Limited\|October 31, 2018\|April 1, 2018\|March 31, 2019\|GBP\|90.077640\|-\|23\|34\|11\|-\|10\|2\|1\|1\|-\|100%\|U.K.\| \|50\|TCS Foundation\|March 25, 2015\|April 1, 2018\|March 31, 2019\|INR\|1.000000\|1\|712\|719\|6\|80\|-\|76\|-\|76\|-\|100%\|India\| # Notes: 1. Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as on March 31, 2019. 2. Proposed dividend includes dividend proposed during the year but not paid. 3. CMC eBiz, Inc. was liquidated w.e.f. June 19, 2018. 4. W12 Studios Limited was acquired w.e.f. October 31, 2018. 5. Tata Consultancy Services Argentina S.A. has become a wholly owned subsidiary w.e.f. September 6, 2018. # 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 O P Bhatt Hanne Birgitte Breinbjerg Sorensen Chartered Accountants Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Rajesh Gopinathan Aman Mehta Aarthi Subramanian Dr Pradeep Kumar Khosla Partner CEO and Managing Director Director Director Membership No: 049265 N Ganapathy Subramaniam Dr Ron Sommer Keki M Mistry Daniel Hughes Callahan COO and Executive Director Director Director Rajendra Moholkar Mumbai, April 12, 2019 Company Secretary # Glossary # ADM See Application Development and Maintenance # Agile Traditional methods of software development, which work in phases and are milestone focused, make it hard to keep up with today's time-to-market demands. Agile represents a collaborative approach for IT and business teams to develop software incrementally and faster. TCS is pioneering the Location Independent Agile delivery model, that allows for deployment at scale, and helps customers whose own organizations are globally distributed to execute large transformational programs quickly while ensuring stability and quality. # Agile Workspaces Agile workspaces are key enablers of TCS' Location Independent Agile model, and represent the next generation work environments that facilitate greater collaboration amongst teams. It is characterized by partition-less open offices, informal seating, interactive surfaces for information capture, and modern collaboration devices for increased productivity. # AI See Artificial Intelligence # Amortization Amortization is an accounting concept similar to depreciation, but used to measure the consumption of intangible assets. # Analytics In the enterprise context, this is the discovery, interpretation, and communication of meaningful patterns in business data to predict and improve business performance. # APAC Acronym for Asia Pacific # API See Application Programming Interface # APIfication The process of exposing a discrete business function or data within an enterprise's systems through APIs. # Application Development and Maintenance Design, development, and deployment of custom software; ongoing support, upkeep, and enhancement of such software over its lifetime. # Application Programming Interface APIs are a set of easily accessible protocols for communication among various software components. # AR See Augmented Reality # Artificial Intelligence AI is technology that appears to emulate human performance typically by learning, coming to its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, augmenting human effort or replacing people on execution of non-routine tasks. Also known as Cognitive Computing. # Attrition Attrition measures what portion of the workforce left the organization (voluntarily and involuntarily) over the last 12 months (LTM). Attrition (LTM) = Total number of departures in the LTM / closing headcount # Assets Under Custody Assets Under Custody is a measure of the total assets for which a financial institution, typically a custodian bank, provides custodian services. # AUC See Assets Under Custody # Augmented Reality Augmented Reality is a technology that superimposes a computer-generated image on a user's view of the real world to enrich the interaction. # Automation Automation is the execution of work by machines in accordance with rules that have either been explicitly coded by a human or 'learned' by the machine through pattern recognition of data. Popular types include Robotic Process Automation and Cognitive Automation.
# Basis Point A basis point is one hundredth of a percentage point, that is, 0.01 percent. # BFSI # Big Data Big Data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization. # Blockchain Blockchain is a distributed database that maintains a continuously growing list of records, called blocks, secured from tampering and revision. # Business 4.0 Business 4.0 is TCS' thought leadership framework that helps enterprises leverage technology to further their growth and transformation agenda. Successful enterprises in the Business 4.0 epoch are ones which use technology to deliver mass personalization, leverage ecosystems, embrace risk and create exponential value. Such enterprises are agile, intelligent, automated and on the cloud. # BPaaS BPaaS refers to the delivery of BPS over a cloud computing model. Whereas traditional BPS relies on labor arbitrage to reduce costs, BPaaS aggregates demand using the cloud, servicing multiple customers with a single instance, multi-tenant platform and shared services, thereby delivering significant operating efficiencies. The pricing model is usually outcome based. # Business Process as a Service Designing, enabling, and executing business operations including data management, analytics, interactions and experience management. # Buyback Buyback is a corporate action in which a company returns excess cash to shareholders by buying back its shares from them and subsequently extinguishing those shares. The number of shares outstanding in the market correspondingly reduces. # CAGR CAGR is the annual growth rate between any two points in time, assuming that it has been compounding during that period. # CBO CBO refers to an integrated offering where TCS takes responsibility for the outcome of an entire slice of the customers' operations, and uses cognitive automation to transform the key elements of that operational stack. # CC See Constant Currency # Chatbots Chatbots are computer programs designed to simulate conversation with human users, especially over the internet. They are typically used in dialog systems for various practical purposes like customer service or information acquisition. # Cloud # Cloud Computing Cloud computing is the delivery of easily provisionable computing resources - servers, storage, databases, networking, software, analytics and more - over the Internet, consumed on a pay-as-you-go basis. # CMT Acronym for Communication, Media and Technology # Cognitive Automation Cognitive Automation is the use of AI and Machine Learning to automate relatively more complex tasks that require reasoning capability and contextual awareness. TCS' ignio™ is one of the leading cognitive automation software products in the market today. # Cognitive Business Operations See Artificial Intelligence # COIN TCS uses COIN to harness the innovation taking place within the start-up ecosystem, including venture capitalists and academia globally, and incorporate it into business solutions for customers. # Constant Currency Constant Currency is the basis for restating the current period's revenue growth after eliminating the impact of movements in exchange rates during the period. Glossary I 241 # Annual Report 2018-19 # Contract Assets Contract assets are recognized when there is excess of revenue earned over billings on contracts. # Core Banking System Core banking system is a back-end system that processes daily banking transactions and posts updates to accounts and other financial records. Core banking systems typically include deposit, loan and credit processing capabilities, with interfaces to general ledger systems and reporting tools. # Cyber Security Cyber Security is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access. In a computing context, security includes both cyber security and physical security. # Days' Sales Outstanding (DSO) Days' Sales Outstanding is a popular way of depicting the Trade Receivable relative to the Company's Revenue. DSO = Trade Receivable * 365 / Revenue # Depreciation Depreciation is a method of allocating the cost of a tangible long-term asset over its useful life. It is a non-cash accounting entry found in the statement of profit and loss. # DevOps DevOps represents a new way of working to rapidly deploy new releases of a software in production using high levels of automation and tooling. TCS recommends adoption of DevOps, along with Agile for speed to market. # Digital Digital is used to represent new age technologies such as Social Media, Mobility, Analytics, Big Data, Cloud, Artificial Intelligence and Internet of Things. Increasingly, with these technologies becoming mainstream, this word is becoming redundant.
# Discretionary Spend Discretionary spend, also known as Change the Business (CTB) spend, is that portion of the IT budget which is used to fund projects that are not, strictly speaking, essential for day to day operations, but are more transformational in nature. In uncertain economic times, when businesses are forced to cut spends in response to decline in income, discretionary spend is often the first to be scrutinized. What is considered discretionary is subjective and may differ considerably amongst businesses. # Dividend Dividend is one form of distribution of profits earned by the Company and is usually declared as an amount per equity share held by the Shareholders. TCS has a policy of declaring quarterly interim dividends and the final dividend is approved by the shareholders in the Annual General Meeting. # Earnings per Share EPS for any period is the amount of that period's Net Income attributable to a single share after deducting any preference dividend and related taxes. EPS = [Net profit attributable to shareholders of the Company - Preference dividend, if any] / Weighted average number of equity shares outstanding during the period # Effective Tax Rate ETR is the proportion of the Profit Before Tax that is provided towards income taxes. ETR = Tax expense / Profit Before Tax # Engineering and Industrial Services Engineering and Industrial Services consists of next generation product engineering, manufacturing operations transformation, services transformation, embedded software and Internet of Things. # Enterprise Agile Enterprise Agile is the adoption of Agile methods across all the business functions of the enterprise, designed to empower employees, foster collaboration and drive a culture of continuous innovation at scale. # EPS See Earnings Per Share # ETR See Effective Tax rate # Fair Value 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. # Fixed Price This is a form of services contract where the vendor takes a turnkey responsibility for delivering a solution for a certain price and within a mutually agreed timeframe. The customer is billed on completion of key project milestones and related deliverables. This arrangement gives the vendor considerable flexibility in the staffing and execution of the project. On the other hand, it also means bearing the project risk. 242 I Glossary # Forward Contract File: AR_TCS_2018_2019.md A Forward Contract is a hedging instrument wherein two parties agree to buy or sell a particular currency at a pre-determined rate (OR Forward Currency rate) on a specific future date. For e.g. TCS enters into a forward contract to sell USD 1 million after 3 months @ `72. Irrespective of the prevailing USDINR spot rate, TCS will be obliged to sell USD 1 million @ `72 at the end of 3 months. # Fixed Price Contracts This is a form of services contract where the vendor takes a turnkey responsibility for delivering a solution for a certain price and within a mutually agreed timeframe. The customer is billed on completion of key project milestones and related deliverables. This arrangement gives the vendor considerable flexibility in the staffing and execution of the project. On the other hand, it also means bearing the project risk. # Framework A software framework is a kind of intellectual property, consisting of software which provides generic functionality for a certain business use case, and which is customized for a specific customer's needs with additional code. Use of such pre-built code reduces time to market and results in more stable, reliable solutions. # Gamification Gamification is the process of adding games or game-like elements to any activity in order to enrich experiences and encourage user participation. # Hybrid Cloud A hybrid cloud is an enterprise IT infrastructure model that combines private clouds, public clouds and on premise data centers, to meet the compute and storage needs of the business. # Inorganic Growth Inorganic growth arises from growth in revenue due to mergers, acquisitions or takeovers rather than an increase in the Company's own business activity. # Internet of Things IoT is a network of interconnected machines or devices which are embedded with sensors, software, network connectivity, and necessary electronics to generate and share run-time data that can be studied and used to monitor or control remotely, predict failure, and optimize the design of those machines / devices. # Invested Funds Invested funds are funds that are highly liquid in nature, and can be readily converted into cash.
Invested funds = Cash and bank balances + Investments + Deposits with banks + Inter-corporate deposits # IoT See Internet of Things # KMP See Key Managerial Personnel # Key Managerial Personnel KMP at TCS refers to the Chief Executive Officer and Managing Director, Chief Operating Officer, Chief Financial Officer, and the Company Secretary. Please refer to the Company's policy on KMP: http://www.tcs.com/ir-corporate-governance # LatAm Acronym for Latin America # Location Independent Agile Location Independent Agile is a method to orchestrate globally distributed stakeholders and talent into Agile teams for improved speed to market in large transformational programs. It comprises processes, structure, and the technology that allows enterprises to overcome location constraints and embrace Agile methods on a global scale. # Machine First Delivery Model TCS' Machine First Delivery Model is a way of integrating analytics, AI and Automation deep within the enterprise to redefine how humans and machines work together and to effectively deliver superior outcomes. # Machine Learning Machine learning is a type of artificial intelligence that provides computers with the ability to learn behaviors without being explicitly programmed. # Market Capitalization Total market value of a Company's total outstanding equity shares at a point in time. Market Cap = Last Trading Price * Total number of outstanding shares # MEA Acronym for Middle East and Africa # MFDM Acronym for Machine First Delivery Model Glossary I 243 # Annual Report 2018-19 # Minimum Viable Product A Minimum Viable Product is the smallest slice of a new product which can be released to the users at the earliest, followed by subsequent iterative cycles that add incremental functionality. MVPs can be used by teams to learn about user behavior and validate the product value with minimum investment. # Mobility Mobility means information, convenience, and social media all combined together, and made available across a variety of screen sizes and devices. # Non-Controlling Interest Non-controlling interest is the share of the net worth attributable to non-controlling shareholders of the subsidiaries. # Non-discretionary Spend Non-discretionary spend, also known as Run the Business (RTB) spend, is that portion of the IT budget that covers the basic IT activities required to keep a business running. Even in tough economic times, non-discretionary spend remains relatively unaffected. # Organic Growth Organic growth is the revenue growth a company can achieve by increasing its existing business activity. This does not include growth attributable to takeovers, acquisitions or mergers. # PaaS PaaS, is a category of cloud computing that provides a platform and environment to allow developers to build applications and services over the internet. PaaS services are hosted in the cloud and accessed by users simply via their web browser. # Pricing This is the price charged to the customer for billable effort or turnkey project or a certain process outcome, depending on the nature of the contract. Some use this term interchangeably (and somewhat inaccurately) with the average revenue realized by the Company per utilized effort. See Realization. # Private Cloud Private cloud refers to a model of cloud computing where IT infrastructure in terms of compute and storage resources are provisioned for the dedicated use of a single organization. # Public Cloud Public cloud refers to a computing service model used for the provisioning of storage and computational services to the general public over the internet. Public cloud facilitates access to IT resources on a "pay as you go" billing model. # Quality Engineering and Transformation Quality Engineering and Transformation services encompass business requirements validation, static and functional testing, non-functional testing including performance engineering, user experience, security and test automation. With greater adoption of Agile and DevOps, continuous testing and in-sprint test automation have gained traction. # Realization This is the revenue received by the Company per utilized effort. Pricing varies by service and by market. Consequently, there can be changes in realization compared to a prior period, due to changes in the underlying business or geographic mix during the period. This does not necessarily mean that like-to-like pricing has changed. Also, realization doesn't take into account the costs and therefore, higher realization is not necessarily better or more profitable. # Related Party Transactions Any transaction between a company and its related party involving transfer of services, resources or any obligation, regardless of whether a price is charged. Please refer the Company's policy on Related Party Transactions: http://www.tcs.com/ir-corporate-governance. # Revenue Revenue is the income earned by the Company from operations by providing IT & consulting services, software licenses, and hardware equipment to customers.
# Robotic Process Automation RPA is the use of software to automate high-volume, repeatable tasks that previously required humans to perform. RPA is best suited for relatively simple and stable processes. Dynamic changes in the environment require ongoing upkeep of the robots, diluting the economic benefit of the automation. Increasingly, customers are preferring cognitive automation over RPA. See Robotic Process Automation. 244 I Glossary # Glossary # SEZ See Special Economic Zone # Shareholder Payout Ratio Shareholder Payout Ratio is the proportion of earnings paid to shareholders as a percentage of the Company's earnings, i.e. Net Income attributable to Shareholders of the Company. Payout can be in the form of dividend (including dividend distribution tax) and share buyback. # Simplification Simplification is the term used to describe the rationalization of IT architectures through consolidation of systems and elimination of redundant systems and layers. The primary purpose is to shrink the IT footprint and make operations leaner and more efficient. # Special Economic Zone SEZ in India are designated areas in which business and trade laws are different from the rest of the country, with various benefits and tax breaks to promote exports, attract investments, and create local jobs. # STEM STEM is an acronym for education in the fields of science, technology, engineering and math. # T&M See Time and Materials Contract # TCV See Total Contract Value # Time and Materials Contract This is a form of services contract where the customer is billed for the effort (in hours, days, weeks, etc.) logged by the project team members. Project risk is borne by the customer. This is in contrast to Fixed Price Contracts. # Total Contract Value TCV is an aggregation of the value of all the contracts signed during a period, and is a useful indicator of demand. # Trade Receivable This is the sum of all the invoices outstanding at the end of the period. To get a complete picture of the total outstanding, one can also add the Unbilled Receivables and subtract the Unearned and Deferred Revenues. Trade Receivable is normally viewed in proportion to the size of the organization's revenue and so it is expressed as Days' Sales Outstanding or DSO. # Turnkey Contracts See Fixed Price Contracts # Unbilled Receivable Unbilled Receivable is excess of revenue earned over billings on contracts for which the Company has an unconditional right to receive cash, and only passage of time is required for invoicing the customer, as per contractual terms. # Unearned and Deferred Revenue Unearned and Deferred Revenue is invoice raised in line with agreed milestones for services yet to be delivered. In other words, it is the amount that has been invoiced although the underlying effort is yet to be expended. # VR See Virtual Reality # Virtual Reality VR is an artificial, computer-generated simulation or recreation of a real life environment or situation. It engages users by offering simulated reality experiences firsthand, primarily by stimulating their vision and hearing. # Virtualization Virtualization is the abstraction of IT resources - like a server, client, storage or network - that masks the physical nature and boundaries of those resources from the users of those resources. # Volume Volume in any period is the total quantum of services and products sold during that period. # Y-o-Y Acronym for Year-on-Year Disclaimer: This glossary is intended to help understand commonly used terms and phrases in this Report. The explanations are not intended to be technical definitions. If explanations provided here are found to be different from what is described in the Company's periodic financial statements (not limited to Notes to Accounts), then the definition provided in the certified financial statements will prevail. Glossary I 245 # Annual Report 2018-19 # Notes 246 I Dear Shareholder, In order to provide better service to you, we request you to submit the form given below to: - Depository Participant with whom you have your demat account. - Registrar and Transfer Agents, TSR Darashaw Limited, in case the shares are held in physical form. # Updation of Shareholder Information I / We request you to record the following information against my /our Folio No. /DP ID /Client ID : # General Information: Folio No. /DP ID/Client ID : Name of the first named Shareholder: PAN: * CIN / Registration No.: * (applicable to Corporate Shareholders) Tel No.
with STD Code: Mobile No.: Address: Email Id: Self attested copy of the document(s) enclosed # Bank Details: IFSC: (11 digit) MICR: (9 digit) Bank A/c Type: Bank A/c No.: Name of the Bank: Bank Branch Address: * Original cancelled cheque is enclosed to enable verification of bank details I /We hereby declare that the particulars given above are correct and complete. If the transaction is delayed because of incomplete or incorrect information, I /we would not hold the Company /RTA responsible. I/ We undertake to inform any subsequent changes in the above particulars as and when the changes take place. I /We understand that the above details shall be maintained till I /we hold the securities under the above mentioned Folio No. /beneficiary account. Place : Date : Signature of Sole /First holder NO_CONTENT_HERE # Fastest Growing Brand of the Decade in IT services* - Brand Finance 2019 IT Services' Rankings TCS is a strategic partner of the World Economic Forum (WEF) and hosts an exclusive Global Reception during the annual meeting at Davos, that brings together the foremost leaders from business, government, academia, media and civil society. Additionally, TCS and WEF have partnered on the Closing the Skills Gap initiative, and secured commitments to reskill 17.2 million people towards the fourth industrial revolution. TCS is the official partner to 12 marathons and running events across the world, in major cities like New York, London, Singapore, Amsterdam, Mumbai and Canberra. A community of 3,300 of TCS' clients and 10,400 of its employees participated in these races in 2018. TCS Summits in North America, Europe and Asia Pacific are invite-only events that bring together top executives from leading global corporations, and experts from different fields to discuss the profound business, geo-political, technology and leadership trends that are shaping our world. TCS' Innovation Forums, organized in London, New York, Sao Paulo and Tokyo, provide opportunities for business leaders, technology leaders, academicians and industry experts to come together to exchange ideas, learn about the latest in the enterprise technology landscape, share industry best practices and network with other attendees. # Awards & Recognition IN CUSTOMER SATISFACTION #1 Whitelane Research 2019 2018/19 EUROPE # TCS Safe Harbor Clause Certain statements in this release concerning our future prospects are forward-looking statements. Forward-looking statements by their nature involve a number of risks and uncertainties that could cause actual results to differ materially from market expectations. These risks and uncertainties include, but are not limited to, our ability to manage growth, intense competition among global IT services companies, various factors which may affect our profitability, such as wage increases or an appreciating Rupee, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on cross-border movement of skilled personnel, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which TCS has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. TCS may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. These forward-looking statements represent only the Company's current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements. # TATA CONSULTANCY SERVICES # CCS5O IT Services Business Solutions Consulting Tata Consultancy Services Limited 9th Floor Nirmal Building Nariman Point Mumbai 400 021 www.tcs.com # Corporate Identity Number (CIN): L22210MH1995PLC084781 Registered Office: 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 Phone: 91 22 6778 9595 E-mail: [email protected] Website: www.tcs.com # ATTENDANCE SLIP (To be presented at the entrance) I/We hereby record my/our presence at the twenty-fourth Annual General Meeting of the Company to be held on Thursday, June 13, 2019 at 3.30 p.m. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020. Folio No./DP ID No./Client ID No. ____________________________________________________________________________________________________ Name of the Member_________________________________________________________________ Name of the Proxyholder______________________________________________________________ 1. Only Member/Proxyholder can attend the Meeting. 2. Member/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting.
Signature ___________________________________ Signature ___________________________________ # PROXY FORM [Pursuant to Section 105(6) of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014] Name of the Member(s) : ............................................................................................................................................................................................. Registered address : ............................................................................................................................................................................................. E-mail Id : ............................................................................ Folio No./DP ID No. /Client ID No. ....................................................... I/We, being the member(s) of Tata Consultancy Services Limited, holding .................................... shares, hereby appoint 1. Name: ………………………...................................................................................... E-mail Id: .............................................................................. Address: ................................................................................................................... .................................................................................................................................. Signature: ……………........................................................... or failing him/her 2. Name: ………………………...................................................................................... E-mail Id: .............................................................................. Address: ................................................................................................................... .................................................................................................................................. Signature: ……………........................................................... or failing him/her 3. Name: ………………………...................................................................................... E-mail Id: .............................................................................. Address: ................................................................................................................... .................................................................................................................................. Signature: ……………........................................................... as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the twenty-fourth Annual General Meeting of the Company to be held on Thursday, June 13, 2019 at 3.30 p.m. at Birla Matushri Sabhagar, 19, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020 and at any adjournment thereof in respect of such Resolutions as are indicated below: \|Resolution No.\|Resolution\|For\|Against\| \|---\|---\|---\|---\| \|1.\|To receive, consider and adopt:\| \| \| \| \|a. the Audited Financial Statements of the Company for the financial year ended March 31, 2019, together with the Reports of the Board of Directors and the Auditors thereon;\| \| \| \| \|b. the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2019, together with the Report of the Auditors thereon.\| \| \| \|2.\|To confirm the payment of Interim Dividends on Equity Shares and to declare a Final Dividend on Equity Shares for the financial year 2018 -19.\| \| \| \|3.\|To appoint a Director in place of N Ganapathy Subramaniam, who retires by rotation and, being eligible, offers himself for re-appointment.\| \| \| \|4.\|Appointment of Hanne Birgitte Breinbjerg Sorensen as an Independent Director\| \| \| \|5.\|Appointment of Keki Minoo Mistry as an Independent Director\| \| \| \|6.\|Appointment of Daniel Hughes Callahan as an Independent Director\| \| \| \|7.\|Re-appointment of Om Prakash Bhatt as an Independent Director\| \| \| \|8.\|Payment of Commission to Non Whole-time Directors of the Company\| \| \| Signed this ……....… day of …………........……. 2019 Affix Revenue Stamp Signature of Shareholder...................................................................... Signature of Proxyholder(s).......................................................... # NOTES: 1. This Form in order to be effective should be duly completed and deposited at the Registered Office of the Company at 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021, not less than 48 hours before commencement of the Meeting. 2. Those Members who have multiple folios with different joint holders may use copies of this Attendance Slip/Proxy Form. File: AR_TCS_2019_2020-1-314.md # TATA # TCS/SE/30/2020-21 May 19, 2020 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Bandra Kurla Complex, Mumbai-400051 Symbol: TCS Scrip Code No. 532540 # Sub: Annual General Meeting- Annual Report 2019-20 and Intimation of Record Date Dear Sirs, The twenty-fifth Annual General Meeting ("AGM") of the Company will be held on Thursday, June 11, 2020 at 3.30 p.m. IST through Video Conferencing / Other Audio Visual Means. Pursuant to Regulation 34(1) of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), we are submitting herewith the Annual Report of the Company along with the Notice of AGM for the financial year 2019-20 which is being sent through electronic mode to the Members. The Directors have recommended a final dividend of `6 per equity share of `1 each of the Company for approval by the shareholders at the AGM. Pursuant to Regulation 42 of the SEBI Listing Regulations, the Company has fixed Thursday, June 4, 2020 as the Record Date for determining entitlement of members to final dividend for the financial year ended March 31, 2020. If the final dividend as recommended by the Board of Directors is approved at the AGM, payment of such dividend, subject to deduction of tax at source, will be made on Monday, June 15, 2020 as under: a) 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 and the Central Depository Services (India) Limited as of the close of business hours on Thursday, June 4, 2020; TATA CONSULTANCY SERVICES TATA Consultancy Services Limited 9th Floor Nirmal Building Nariman Point Mumbai 400 021 Tel. 91 22 6778 9595 Fax 91 22 6778 9660 e-mail [email protected] website www.tcs.com Registered Office 9th Floor Nirmal Building Nariman Point Mumbai 400 021. Corporate identification No.
(CIN): L22210MH1995PLC084781 b) To all Members in respect of shares held in physical form after giving effect to valid transmission or transposition requests lodged with the Company as of the close of business hours on Thursday, June 4, 2020. The Annual Report containing the Notice is also uploaded on the Company's website https://on.tcs.com/Annual-Report-2020 Thanking you, Yours faithfully, For Tata Consultancy Services Limited Rajendra Moholkar Company Secretary cc: \|1. National Securities Depository Limited\|2. Central Depository Services (India) Limited\| \|---\|---\| \|Trade World, 4th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013.\|Marathon Futurex, A-Wing, 25th floor, NM Joshi Marg, Lower Parel, Mumbai 400 013.\| \|3. TSR DARASHAW CONSULTANTS PRIVATE LIMITED (formerly known as TSR Darashaw Limited)\| \| \|6, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011.\| \| TATA Consultancy Services Limited 9th Floor Nirmal Building Nariman Point Mumbai 400 021 Tel. 91 22 6778 9595 Fax 91 22 6778 9660 e-mail [email protected] website www.tcs.com Registered Office 9th Floor Nirmal Building Nariman Point Mumbai 400 021. Corporate identification No. (CIN): L22210MH1995PLC084781 # 2019-20 ANNUAL REPORT Purpose-driven. Resilient. Adaptable. # TCS Annual Report 2019-20 # Content \|About TCS\|01\|Consolidated Financial Statements\| \| \|---\|---\|---\|---\| \|Board of Directors\|02\|Independent Auditors' Report\|165\| \|Management Team\|03\|Consolidated Balance Sheet\|175\| \|Letter from the Chairman\|05\|Consolidated Statement of Profit and Loss\|177\| \|Letter from the CEO\|07\| \| \| \|Performance Highlights\|12\|Consolidated Statement of Changes in Equity\|178\| \|TCS' Response to Covid-19\|13\|Consolidated Statement of Cash Flows\|181\| \|The Year Gone By\|16\|Notes forming part of the Consolidated Financial Statements\|182\| \|Thematic Section\| \| \| \| \|Business Model Transformation: Damen\|20\|Unconsolidated Financial Statements\| \| \|Operating Model Transformation: M&G\|21\|Independent Auditors' Report\|244\| \|Innovative. Resilient. Adaptable: A Panel Discussion\|22\|Balance Sheet\|255\| \|Customer Experience Transformation: RBC\|26\|Statement of Profit and Loss\|257\| \|Q&A with CFO and CHRO\|27\|Statement of Changes in Equity\|258\| \|In-Store CX Transformation: Woolworths\|30\|Statement of Cash Flows\|261\| \|Purpose-driven Business Model: Vitality UK\|31\| \| \| \|Bridgital Transformation: PM-JAY\|32\|Notes forming part of the Financial Statements\| \| \|Notice\|34\|Statement under section 129 of the Companies Act, 2013 relating to Subsidiary Companies\|312\| \|Directors' Report\|43\| \| \| \|Management Discussion and Analysis\|77\| \| \| \|Corporate Governance Report\|132\| \| \| \|Awards and Accolades\|162\| \| \| # About TCS Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for over 50 years. TCS offers a consulting-led, # Board of Directors \|From left to right\|N Chandrasekaran\|Chairman\| \|---\|---\|---\| \| \|O P Bhatt\|Independent Director\| \| \|Hanne Birgitte Breinbjerg Sorensen\| \| \| \|Don Callahan\|Independent Director\| \| \|Independent Director\|Dr Pradeep Kumar Khosla\| \| \|Rajesh Gopinathan\|Independent Director\| \| \|Chief Executive Officer and Managing Director\|N G Subramaniam\| \| \|Aarthi Subramanian\|Chief Operating Officer and Executive Director\| \| \|Director\|Keki M Mistry\| \| \|Independent Director\| \| TCS Annual Report 2019-20 Board of Directors I 02 # TCS Annual Report 2019-20 # Management Team \|Rajesh Gopinathan\|Chief Executive Officer and Managing Director\| \|---\|---\| \|N G Subramaniam\|Chief Operating Officer and Executive Director\| \|V Ramakrishnan\|Chief Financial Officer\| \|Milind Lakkad\|Global Head Human Resources\| # Corporate \|Rajashree R\|Chief Marketing Officer\| \|---\|---\| \|K Ananth Krishnan\|Chief Technology Officer\| \|Madhav Anchan\|General Counsel Legal & Corporate Affairs\| \|Rajendra Moholkar\|Company Secretary\| # TCS Annual Report 2019-20 # Management Team \|Surya Kant\|Krishnan Ramanujam\|K Krithivasan\|Shankar Narayanan\| \|---\|---\|---\|---\| \|North America, UK and Europe\|Business and Technology Services\|Banking, Financial Services and Insurance\|Retail, Travel and Consumer Products\| \|Kamal Bhadada\|Debashis Ghosh\|Susheel Vasudevan\|Suresh Muthuswami\| \|Communication, Media and Information Services\|Life Sciences, Healthcare and Public Services\|Manufacturing and Utilities\|BFSI Platforms\| Dear Stakeholder, Adversity, they say, is the true test of character. Your company achieved many admirable wins and milestones through the first 11 months of FY 2020. But it was in the final days of the year that the true nature of its purpose-driven worldview truly shone through. Your company prioritized the health and safety of its employees, kept customers' mission-critical systems running under very difficult circumstances and pitched in to help communities across the world battle the pandemic. When we emerge out of this crisis, the world will be a very different place. We are witnessing many of those changes already. With cloud and the new class of collaboration tools, people are discovering that they are able to collaborate with each other just as well working from home, as they did in person in the pre-COVID era. Employers are discovering that the productivity is just as good, if not better, in this new way of working. In many sectors, digital channels have gone from being secondary, nice-to-have options to become the primary channels, and in some instances, the only channels. Schools, colleges and even courts have shifted to an online-only mode.
Farmers' cooperatives are taking online orders and directly delivering fresh produce to city-dwellers. This is the transformation that we had spoken of five years ago, when we said that Default is Digital, but even I am still amazed by the scale and speed of the change. TCS Annual Report 2019-20 Letter from the Chairman I 05 # TCS Annual Report 2019-20 # Letter from the Chairman By staying true to its purpose and its values, and helping its employees, customers and communities use the power of technology to realize their potential, your company is the embodiment of stakeholder capitalism in the true spirit of the Tata ethos. Over the last five decades, your company has shown itself to be very purpose-driven, resilient and adaptable, staying relevant to its customers through multiple economic and technology cycles, and doing good for all its stakeholders. This is the secret behind its longevity and sustainability. The next few months will be difficult, but your company is strong with deep relationships with customers and partners, enviable scale, a diversified business mix, a robust and resilient business model, and strong financials. It is well positioned to weather the storms ahead and take advantage of opportunities that come up during the downturn to acquire new capabilities and gain market share. In the post-pandemic world, technology will play an ever larger role in helping enterprises adapt to the new normal and differentiate themselves. Your company is well poised to take the lead in partnering customers to recover and rebound on to their growth and transformation journeys. There are several other examples: the Passport Seva project which completely reimagined the issuance of passports, the digital transformation of India Post, the platform that supports Ayushman Bharat - the world's largest, fully funded health insurance scheme covering 500 million of India's poorest, and so on. Each of these initiatives showcases the innovative use of technology to transform citizen services, enhance inclusivity and reduce inequity in society. The sharp shift in consumer preferences will force enterprises to significantly accelerate their digital transformation initiatives. They will also invest heavily in building resilience at every level, on the front-end as well as in back-office operations. Having pioneered Location Independent Agile™ and the Machine First™ Delivery Model, both of which are of immense value to organizations looking to build operational resilience and agility, your company is very well positioned to benefit from these trends. On behalf of the Board of Directors of Tata Consultancy Services, I want to thank you for your continued trust, confidence, and support. Warm regards, N Chandrasekaran Chairman Dear Stakeholder, It is a measure of how quickly and profoundly our world has changed, that when we look back at the year gone by, it feels like a different era altogether. In FY 2020, your Company delivered revenue of ₹156,949 crore, growing 7.2% over the prior year in reported terms, and 7.1% in constant currency terms. Our operating margin continued to be best in class, at 24.6%. Net profit was ₹32,340 crore, a net margin of 20.6%. Our cash conversion continues to be very strong, with a cash conversion ratio of 100.1% and free cash flow of ₹29,281 crore. # Letter from the CEO1 The Board has recommended a final dividend of ₹6 for the year, bringing the total dividend for the year to ₹73 per share. This translates into ₹31,895 crore returned to shareholders in FY 2020, which is 108.9% of the free cash flow. We had a very productive year, engaging with customers in their innovation, growth and transformation initiatives, expanding and deepening our relationships, deploying very impactful solutions, and winning some of our largest deals till date. However, it is our response to the events of the last ten days of the fiscal year that will be our most defining accomplishment of FY 2020. 1 102-14 # TCS Annual Report 2019-20 # Letter from the CEO We believe that by 2025, only 25% of our associates will need to work out of our facilities at any point of time; and every associate will be able to realize their potential without spending more than 25% of their time in a TCS office. Our 448,000-strong workforce enabled to work remotely, in a matter of days, ensuring that our customers continue to experience the same high quality of delivery and certainty of outcomes that they have come to expect of TCS. There are even pockets where we have witnessed improved velocity, throughput, and productivity.
We not just enabled remote access for our associates but also calibrated our project management framework and security posture so that work could be properly allocated, governed, and reported, while maintaining our stringent security controls, and pivoted into a new operating model that we call Secure Borderless Workspaces™ (SBWS™). SBWS will continue to be an integral part of our new operating model and represents the future of work. It helps TCSers enjoy a better quality of life, while making TCS' service delivery more resilient as the fully distributed model is better suited for business continuity. Using SBWS, we have been able to continue supporting our customers not only in their mission critical operations but also their transformational projects, just as before, without any slippages. Our customers are comfortable with this model and want us to take more work that others are not able to handle. This has given us the confidence to come out with a bold new Vision 25x25. We believe that by 2025, only 25% of our associates will need to work out of our facilities at any point of time; and every associate will be able to realize their potential without spending more than 25% of their time in a TCS office. # Responding with Speed and Agility As the pandemic spread, our priority was to safeguard the health and well-being of our employees while continuing to support our customers' mission critical activities globally. The lockdowns tested the agility, resilience and adaptability of our delivery model. We responded to the challenge with speed and agility, and have emerged stronger, with our model now proven to be able to adapt to even extreme shocks. From a highly centralized model, with large campuses accommodating thousands of employees, we were able to switch to an extreme form of distributed model. Even though these are early days, the outcomes from our new model have been impressive. Our cloud-based project monitoring system has been tracking the progress of over 23,000 ongoing projects on a real time basis. We have received over 500 emails from customers in recent weeks, appreciating how seamlessly TCS managed the transition to SBWS, and expressing gratitude for how our teams went above and beyond to help keep their mission-critical systems and their business operations running under very difficult circumstances. Going through some of those notes filled me with immense pride. No training or standard operating process tells our associates that while enabling work-from-home... # Letter from the CEO For a customer organization, they should work extended hours, to step in and complete the work that another vendor was supposed to do, but had not. Or that they should think out of the box and implement innovative solutions to rapidly build new online features that a customer in the retail or pharma sector needed to urgently roll out for their end-customers during the pandemic. Our purpose has helped us stay relevant to our customers through their evolving needs. TCS has successfully navigated through multiple technology and economic cycles, over the last five decades, pivoting and adapting each time to build new capabilities and even new business models, and offer the services and solutions most relevant to our customers at that point in time. Our responsiveness, agility and adaptability to change have been central to our longevity. That kind of dedication to doing whatever it takes to help customers achieve their objectives, can only come from deep within, when individuals are driven by a higher sense of purpose that goes beyond the immediate task assigned to them. For over five decades, TCS has been helping individuals, enterprises, and communities use technology to realize their potential. This organizational purpose has served as a beacon that has guided our customer-centric strategy, our policies and our decision-making over the years. Our greatest accomplishment has been to imbue every TCSer with this same purpose-driven worldview. This organizational purpose has also shaped the culture of empowerment at TCS. Empowered individuals take ownership of outcomes, beyond just the completion of an assigned task. Empowered, purpose-driven teams can cope even with unexpected events because they know exactly what they need to do, even when no explicit instructions are provided. Such concerted, autonomous behaviors, in aggregate, give the organization the ability to cope with sudden shocks, and impart organizational resilience. In this current environment of economic uncertainty and fear, TCSers can focus on their work and rest assured that their organization stands by them.
TCS will also be honoring all the job offers made till date, to freshers and experienced professionals. Our investments, our empathy, and our commitment is what makes our associates feel valued, and which gets reciprocated with unmatched levels of energy and dedication to our organizational purpose. It has also resulted in TCS becoming a gold standard in talent retention. Our attrition in IT services in FY 2020 was 12.1%, the lowest in the industry, globally. # Letter from the CEO We have stayed close to our customers through good times and bad, helping them navigate challenges and speed bumps, harnessing the power of technology to solve their business problems and enabling competitive differentiation. We are entering the new fiscal year at a time when all major economies have been brought to a standstill. The impact has been very fast and widespread, and the next few months will be very difficult for everyone, individuals and organizations. On the other hand, the economic downturn is not due to any structural problem in any industry, but due to an externality that has hit the pause button on all economic activity. Whenever that externality is removed, an equally quick recovery should follow. Today, we have 49 customers who spend more than $100 million a year with us. The trust levels are so high, they turn to us to help them realize their growth and transformation objectives. In the case of one UK insurance customer, TCS and the transformational work we are doing for them have figured in the CEO's letter to their shareholders every year for the last three years. The strength of these relationships and the trust we enjoy is what gives us the confidence that we will come out of these difficult times stronger together. We are staying close to our customers, aligning ourselves to their evolving priorities, staying lean and nimble, finding newer ways to create value, and launching newer offerings that address current imperatives. The same purpose-driven worldview shapes the community initiatives we take up across the world, for building skills and fostering entrepreneurship to bridge the digital divide, to encourage STEM education and careers, and to enable better healthcare and wellness. Many of the innovative frameworks and methodologies that we pioneered are of even greater relevance to our customers today. The TCS thought-leading Business 4.0™ framework that we launched three years ago to help enterprises leverage digital technologies for their growth and transformation agendas, continues to guide them today. Business levers such as mass personalization, creating exponential value, leveraging ecosystems, and embracing risk coupled with core technologies such as agile, automation, intelligence, and cloud are some of the foundational pillars helping enterprises respond and recover from the crisis. These programs are estimated to have benefited over 840,000 people across the world. Our employees have also been doing their bit for worthy social and environmental causes in their respective communities, collectively contributing over 780,000 volunteering hours in FY 2020. # TCS Annual Report 2019-20 # Letter from the CEO Enterprises are discovering that investing in AI and automation is the best business continuity plan. Our Machine First™ Delivery Model puts AI and automation at the heart of the enterprise, making technology stacks self-healing, and operations and supply chains more resilient. Consequently, we expect many customers to accelerate their core transformation initiatives, and adoption of digital self-service channels, over the next few months. Similarly, we are seeing huge demand for our Location Independent Agile model based Secure Borderless Workspaces offering. This is helping our customers digitize their workplaces into boundary-less service clouds, leveraging the power of distributed networks for agility, resilience, and scale. Lastly, a strong driver of how companies adapt themselves is the way they look at their organizational purpose. Organizations are seeking to introspect about what is most critical for them and their end-customers and what their true sources of value are. Firms are looking beyond the products they make and sell, to the purpose behind their existence, which in turn is helping define the blueprint for their transformation journey. TCS has been helping insurers leverage ecosystems to transform into providers of wellness, helping ship-building companies reposition into maritime solutions providers, and by applying agile innovation at scale, helping energy companies become responsible providers of affordable, reliable, and clean energy. We believe this trend of purpose-driven transformation will only accelerate in the upcoming months.
Our strong and deep relationships with a high-quality customer base, largely Fortune 1000 and Global 2000 corporations, and our industry-leading operating margin give us the wherewithal to weather the difficulties ahead. A strong balance sheet with zero debt and a big war chest positions us strongly to seize any opportunities that might come up during this downturn. With all these strengths, we believe our relative competitiveness will only get better through the months ahead, and we will come out of this downturn, better positioned than ever to help our customers get back onto their longer-term growth and transformation journeys, and to lead in the new normal. As we navigate these uncertain times together with our customers, we look forward to your continued support. Best Regards, Rajesh Gopinathan Chief Executive Officer & Managing Director # Performance Highlights # Revenue Trend \|CAGR 10.6%\|Operating Profit Trend\|Client Metrics\|Employee Metrics\| \|---\|---\|---\|---\| \|FY 16\|146,463\|99\|424k\| \|FY 17\|156,949\|105\|448k\| \|FY 18\|108,646\|84\|387k\| \|FY 19\|117,966\|73\|354k\| \|FY 20\|123,104\|44\| \| # Operating Profit \|Operating Profit\|Operating Margin\|$50 Mn+ Clients\|$100 Mn+ Clients\| \|---\|---\|---\|---\| \|FY 16\|37,450\| \| \| \|FY 17\|38,580\| \| \| \|FY 18\|28,789\| \| \| \|FY 19\|30,324\| \| \| \|FY 20\|30,502\| \| \| # Earning Per Share* \|CAGR 9.0%\|OCF and Cash Conversion\|Cash Usage\|Shareholder Payouts\| \|---\|---\|---\|---\| \|Amount in `\|83.05\|100.1%\| \| \|61.59\|66.71\|95.9%\|16,000\| \|67.10\|78.7%\|7.7%\|16,000\| \| \|25,223\|Capex\|17,840\| \| \|19,109\|Acquisitions, etc\| \| # Footnotes * Earnings per share is adjusted for bonus issue #Operating Cash Flow * including final dividend for FY 2020 Shareholder Payout ratio (including special dividend and buyback) # TCS' Response to Covid-19 # Ensuring Business Continuity for Customers TCS works with more than 1,000 organizations across the world, helping keep their systems and operations up and running. The company's software and solutions power the financial backbones of several countries. It runs the technology for some of the largest health care and pharmacy companies, retailers, telcos, utilities, governments and public services organizations - whose continued functioning is all the more critical during times of crisis. In response to the lockdowns, the company launched a massive program to ensure business continuity of its services using its Secure Borderless Workspaces model, which allows TCS associates to work remotely from the safety of their homes, while continuing to provide uninterrupted support services to our customers. "[Our] partnership with TCS has been pivotal in enabling us to ensure business continuity while transforming our organization to remote working almost overnight…. Thanks to the TCS team for supporting us to make this possible with their passion, proactivity and customer-centric philosophy." VP - Global Transformation, Major Staffing Firm TCS Annual Report 2019-20 TCS' Response to Covid-19 I 13 "…Despite the huge disruption to your working life, your sense of professionalism, dedication, determination, perseverance and above all, your resilience has not at all faltered. All the TCS delivery updates I am getting show all critical projects and activities continue to be met to expectations. Being able to deliver to TCS' mantra of Experience Certainty is tough enough during steady state times, let alone being able to do the same at this point when the world is in crisis. Thanks to your individual efforts, TCS is the one silver lining in this dark cloud… I can't help but feel just how privileged and lucky I am, overseeing a partnership of high performing and committed individuals from TCS. Once again, thank you for all you do…" CIO, Large US Bank "TCS, through all of this, has also faced the Work from Home challenge like us. Moving call agents and support engineers from offices to home environments was not an easy challenge. You had to be creative, working under unconventional circumstances. The resilience and flexibility of the TCS organization is duly noticed!" Corporate Group Director, Large US Entertainment Company "I want to particularly call out the brilliant and heroic efforts of the entire TCS team in moving to remote working. This happened in record time almost over a weekend, with the result that we are getting close to 100% capacity, which is quite unprecedented. That this was done alongside moving your large workforce in such a short time was commendable. Please convey my deepest appreciation to your teams for the tremendous work to support our business world-wide." File: AR_TCS_2019_2020-1-314.md "I am so amazed at your flexibility, adaptability, creativity and the positive attitudes you demonstrate each day. What a fantastic group of people (across the globe) you are, during times like this, the proverbial phrase, 'cream rises to the top' holds so true.
Without dedicated and driven people, [Client Name] would simply not live up to its promise of securing the future for its customers. You certainly are the creme of the crop." CTO, Major Staffing firm Operations Head, Large Global Insurer TCS Annual Report 2019-20 TCS' Response to Covid-19 I 14 # Innovation in the time of Pandemic # Uninterrupted Learning during the Lockdowns At TCS' Innovation Lab in Hyderabad, India, a team of TCS scientists used deep neural network-based generative and predictive models to identify 31 new molecules that hold promise towards finding a cure for COVID-19. "We knew that the SARS-CoV-2 has a protease protein that is responsible for viral replication. What followed next was to ask the model to generate novel small molecules de novo which have protease inhibiting capability and could bind the target protease protein with high affinity," said Dr Gopalakrishnan Bulusu, a principal scientist involved in the project. "We filtered the suggestions of the AI model to a set of 1,450 molecules, and further shortlisted 31 that we determined would be good to start with and that could possibly be synthesized for further testing." The results from this research -- put together by Dr Bulusu, Dr Arijit Roy, Dr Navneet Bung and Ms. Sowmya Krishnan -- have been published in ChemRxiv. In the wake of nation-wide lockdowns of schools and colleges, TCS offered free access to the TCS iON Digital Glass Room, a virtual learning platform, to educational institutes across the country so their students' learning journeys could continue uninterrupted in a secure virtual environment. The TCS iON Digital Glass Room is a mobile and web education platform for schools and colleges, that empowers educators to engage with students in real time by sharing lessons, videos, worksheets, assignments and assessments, using interactive methods like polls, debates, quiz, surveys and many more tools. As an add-on, the platform also provides an embedded live classroom, which simulates live classroom teaching. "The use of AI has considerably shortened the initial drug design process from several months to only a few days," Dr Bulusu added. The TCS team is now working closely with India's Council for Scientific and Industrial Research (CSIR) that has agreed to provide its labs for the synthesized testing of these 31 molecular compounds. TCS Annual Report 2019-20 TCS' Response to Covid-19 I 15 # Europe Ranks TCS #1 in CUSTOMER SATISFACTION # Q4 for SEVENTH YEAR in a row The Year Gone By European IT customer satisfaction survey by Whitelane Research Rolled out the Secure Borderless Workspaces model in response to the lockdowns, enabling over 90% of the workforce to securely work from home. The model leverages all prior investments, and incorporates best practices around network management, an internal SOC, a standard service delivery environment, digitized delivery governance processes, and use of cloud-based collaboration technologies. # #1 GENERAL SATISFACTION \|Satisfaction by IT Domain\|TCS' RANK ACROSS VARIOUS COUNTRIES\| \|---\|---\| \|77% (TCS)\|70% (Average)\| # #1 SERVICE DELIVERY QUALITY \|Europe\|TCS #1\|78% (TCS)\|71% (Average)\| \|---\|---\|---\|---\| \|Nordics\|TCS\|79%\| \| \|Germany\|77%\|71%\| \| \|Accenture\| \|74%\| \| # #2 ACCOUNT MANAGEMENT 80% (TCS) 73% (Average) # #3 BUSINESS UNDERSTANDING 76% (TCS) 71% (Average) # #3 CONTRACTUAL FLEXIBILITY 78% (TCS) 69% (Average) Ranked Overall Best Managed Technology Company in Asia, in FinanceAsia's 2020 Asia's Best Companies survey of investors across the region. Also ranked #1 position for Best Environmental Stewardship and Most Committed to Social Causes, #2 in Best Corporate Governance and Best Investor Relations, and #3 in Best Managed Company in India. "TCS is topping our ranking for the seventh consecutive year thanks to its emphasis on the strength and depth of its customer relationships twinned with a relentless focus on delivery." -- JEF LOOS, HEAD OF RESEARCH, WHITELANE RESEARCH BASED ON STUDIES CONDUCTED BY WHITELANE RESEARCH, PA CONSULTING, QUINT WELLINGTON REDWOOD, NAVISCO AND VLERICK BUSINESS SCHOOL IN 2019. TCS Annual Report 2019-20 # Recognized as a Global Top Employer Recognized as a Global Top Employer by the Top Employers Institute. Also certified as the #1 Top Employer in Europe, MEA and APAC, and in 11 countries - Argentina, Australia, Belgium, Chile, Denmark, Germany, Hong Kong, Saudi Arabia, United Arab Emirates, the United Kingdom, and the United States. # Fastest Growing IT Services Brand Recognized as the fastest growing IT services brand of the decade and one of the fastest growing IT services brands of 2019, by Brand Finance. # Celebration of TCS House Celebrated 100 years of TCS House, the Company's head office in the historic Fort precinct in Mumbai.
Originally known as Ralli House, this Grade IIA heritage structure was acquired by TCS in 2004 from Rallis, a Tata Group company, and painstakingly restored and remodeled, while retaining the original stone facade. # Partnership with Walgreens Boots Alliance Walgreens Boots Alliance, a global leader in retail and wholesale pharmacy, expanded its strategic partnership with TCS with a 10-year contract. In the new operating model for IT Run and Operational services, TCS will provide managed services using an approach that blends artificial intelligence, machine learning and advanced software engineering to enhance operational resilience and boost productivity. # Celebrated 100 years of TCS House Celebrated 100 years of TCS House, the corporate head office. TCS Annual Report 2019-20 The Year Gone By I 17 # Q3 Petco, America's leading pet specialty retailer, selected TCS Optumera™, to hyper-localize and optimize its store products and space strategies, with greater speed and precision in decision-making, and deliver an improved end-to-end customer experience. Declared a special dividend of a ₹40 per share, amounting to over a 15,000 crore paid out to shareholders over and above the regular dividends. Towards enhanced LGBTQ+ inclusion and building on the core value of 'Respect for the Individual', TCS became the first Tata group company to include gender reassignment surgery under its employee health cover, and redefine the word 'spouse' to include same-sex partners, regardless of marital status. Launched the Quartz™ DevKit to accelerate enterprise adoption of blockchain technology. The DevKit abstracts out the complexity of blockchain programming and provides enterprises with a low-code means to quickly and easily build blockchain-based applications on popular platforms. Consolidated all operations for Strate, the South African central securities depository on to TCS BaNCS for Market Infrastructure. The implementation covers all markets and asset classes and marks a significant transformation in the South African securities market. Expanded strategic partnership with Phoenix Group to digitally transform Standard Life's pensions and savings operations by moving 4.2 million policies to the TCS BFSI Digital Platform. Recognized as the 'Most Awarded Company of the Decade in India', 'Overall Most Outstanding Company in India' and the 'Most Outstanding Company in India in the IT Services Sector' in Asiamoney's 2019 Asia's Outstanding Companies poll of investors and analysts across the region. # Q2 Launched TCS BaNCS Cloud for Asset Servicing, a platform that automates the servicing of all classes of assets across all markets, and is targeted at custodians, broker dealers, asset managers, and investment and private banks. ignio™, TCS' award-winning cognitive automation software, celebrated its fourth anniversary by doubling its revenue and customer base, year-on-year. FY 2020 saw Digitate's AI product line expand beyond the original ignio AIOps, to include ignio AI.WorkloadManagement, ignio AI.ERPOps for automating ERP support operations, ignio AI.Digital Workspace and ignio Cognitive Procurement. Established a strategic partnership with General Motors for global vehicle design and development including vehicle styling, EV battery, motor design and advanced virtual simulations to set new benchmarks in driving experience, safety and emissions. Chosen by the Reserve Bank of India as its strategic partner to design and implement an AI-based centralized information and management system that will collect, review and analyze data, enabling data-driven business decision-making for better regulation of financial markets and better tracking of the country's economic growth. Powered Jurassic Fibre's new, ultrafast full-fiber optic broadband offering to towns and rural communities in the South West of England, with TCS HOBS. TCS will also implement an ERP solution for its finance, supply chain, talent management and field service operations. Increased holding in TCS Japan Ltd, the Company's joint venture with Mitsubishi Corporation, from 51% to 66%, reiterating TCS' commitment to the Japanese market. This is the latest in a series of investments made by TCS in recent years to cater to the specific needs of Japanese corporations. TCS Annual Report 2019-20 The Year Gone By I 18 Canada's food and pharmacy leader, Loblaw, successfully deployed ignio, TCS cognitive automation software, as part of its IT transformation program. ignio has helped reduce the mean time to resolve outages to 3 - 6 minutes, and automate over 20% of incidents and alerts in the first ten months. The reduced outages and faster resolution have resulted in a superior online shopping experience for end customers. # Leadership teams from TCS and Cornell Tech at the ribbon cutting ceremony of TCS Pace Port NY.
# Q1 - Launched TCS Pace Port™ New York, a new co-innovation and advanced research center that unifies the best of TCS' global research, innovation, partner ecosystem and business transformation services - designed to help customers scale up their innovation efforts and accelerate their transformation journeys. - Celebrated 15 years of partnership with Star Alliance, the global airline network, by embarking on new digital transformation initiatives. TCS' industry-first solutions have helped the Alliance drive digital innovation and provide a seamless experience to passengers. # TCS leadership team Star Alliance CEO, welcoming the Jeffrey Goh. - Helped India Post transform to a multi-service digital hub, modernize mail delivery, enhance customer experience, and launch innovative services that drive new revenues. The new system connects over 150,000 post offices, and processes over 3 million postal transactions a day. Additionally, TCS implemented a POS solution across 80,000 POS terminals, making it one of the largest such implementations in the world. - Powered the world's first successful cross-border real-time securities settlement between two central securities depositories - Maroclear (Morocco) and Kuwait Clearing Company - using cash coins on the TCS BaNCS Network, powered by Quartz™ Blockchain. This could revolutionize cross-border flows, reducing currency risks and enhancing liquidity. TCS Annual Report 2019-20 The Year Gone By I 19 # Partnering with DAMEN to Reinforce its Reputation as a Maritime Innovation Pioneer Damen, the Netherlands-headquartered international shipyard group, has built a reputation for listening closely to its customers and innovating across its range of ships, yachts and other vessels. In the Business 4.0 era, Damen wanted to take its product innovation to the next level. As Damen's innovation partner on this journey, TCS used its 'Bringing Life to Things' IoT framework to envision an integrated Connected Vessel Platform that uses IoT, cloud, edge computing and advanced analytics to make Damen's ships smarter and more connected, with improved safety, sustainability and efficiency, and with which Damen can launch newer services and even new business models. The platform collects 700 data points from the nearly 10,000 sensors in each ship, giving Damen complete visibility into each vessel's fuel levels, engine performance - speed, rpm, fuel consumption and so on. The new platform has enabled the launch of value-added services such as fleet management and predictive maintenance, helping customers reduce fuel consumption by 12%, improve safety and enhance vessel utilization. It also enables co-innovation with maritime ecosystem partners like suppliers, insurers and port authorities, to curate a more holistic customer experience, and potentially offer shipping as a service. "We selected TCS as our strategic partner because of how well their innovation philosophy is aligned with ours, and for their experience in successfully executing large, complex programs elsewhere. Their digital expertise, creative ideas and intellectual property have helped us scale and speed up our business transformation journey." Arnout Damen CEO, Damen Shipyards TCS Annual Report 2019-20 Business 4.0 Stories I 20 # Helping M&G Innovate and Reimagine Customer Engagement "For more than 170 years, M&G has delivered good outcomes for savings and investment customers through product innovation and high-standard service. Our strategic partnership with TCS is an essential element of our ongoing work to create a digitally enabled M&G so that we can maintain this great track record. The primary focus has been on our Heritage business to transform the customer experience for our 5 million Prudential policyholders in the UK. Today's customers have higher expectations of the experience and the service they get from their savings and investment provider. However, complex, legacy IT landscapes, and fragmented customer data can constrain the ability to innovate and meet those expectations. Taking that challenge head on, M&G plc entered into a 10-year strategic partnership with TCS to transform its heritage UK life and pensions business by building a simpler customer focused operating model, which is digitally enabled, allowing it to respond quicker and better to its customers' needs. TCS' approach, working in partnership with M&G plc, entailed radically simplifying the IT landscape, reimagining customer engagement, redesigning operations for greater resilience and providing end-to-end policy administration services using the TCS BFSI Platform for Life and Pensions, powered by TCS BaNCS™. In just 15 months, TCS onboarded 1.4 million customers and their policies, delivered a new customer experience solution, CRM and complaint management solutions, and an online bond claim platform. The unified customer data and analytics on the new platform have enabled a more holistic approach to enhancing the customer experience, focused on the end-to-end customer journey and not just individual transactions.
The new digital bond claim service has reduced customers' wait time for cash withdrawal by almost 80%. Digitization has reduced claim processing time by 75%. All this has resulted in some early positive impacts on the Net Promoter Score as well. Leveraging the TCS innovation network and experience, we have achieved a lot together. We look forward to continuing to work and learn together, as we continue to meet the needs of customers and their advisers, and as we seek to exceed their expectations on service." John Foley CEO, M&G plc TCS Annual Report 2019-20 Business 4.0 Stories I 21 # WHAT IS THE CONNECTION BETWEEN INNOVATION, RESILIENCE AND ADAPTABILITY? # Innovative. Resilient. Adaptable: # A Panel Discussion KAK: The pandemic has resulted in a renewed focus on individual, societal and organizational resilience and adaptability. An organization that is innovative is also resilient and adaptable. All three elements stem from a customer-centric and forward-looking worldview, and all three require empowered people, an enabling culture, and supporting structures, processes and technologies. Empowered employees are key to innovation. Such individuals take ownership of their domains, and come up with new ideas to deliver better outcomes for customers, or improvise when faced with some unforeseen adverse event, to ensure continuity of service. When customers' needs or priorities change, innovative organizations adapt quickly by launching new business models or new services and products, and stay relevant in the changed market conditions. As you can see, all three are very closely connected in an enterprise and are critical to its longevity. KR: In addition to an empowering culture, enterprises which invest in building a robust, responsive and extensible operations stack - consisting of the processes, systems and core infrastructure - will be better placed to not only respond to an economic shock, but also to recover faster and get back to their growth trajectory earlier. Featuring: - K Ananth Krishnan, Chief Technology Officer - NG Subramaniam, Chief Operating Officer - Krishnan Ramanujam, Global Head - Business & Technology Services TCS Annual Report 2019-20 Panel Discussion I 22 # TCS Annual Report 2019-20 # Panel Discussion Digital technologies - especially cloud, IoT, AI and Machine Learning - have opened tremendous opportunities to innovate and transform some or all the components of the enterprise's operations stack - the business processes, the supporting systems and underlying infrastructure. By applying our innovation energies in such core transformation opportunities, we are helping customers build a new future-proof digital core, that is agile, efficient, scalable, and resilient. # CAN YOU PROVIDE EXAMPLES OF INNOVATION LEADING TO IMPROVED RESILIENCE? NGS: The work we are doing for life insurance companies in the UK is a great example. Large insurers face the problem of fragile operations and patchy customer service due to the complexity of multiple legacy systems which are difficult to maintain and are prone to breakdowns. We have built a highly successful and innovative business model in the UK wherein we administer the policies on the customer's behalf, using our multi-tenant, cloud-based platform which is our intellectual property. The operations are much faster and far more resilient on this robust, modern platform, and the customer experience is radically transformed. You can read more about this in the M&G story in this year's Annual Report. KR: A big part of our incremental revenue over the last three years has come from growth and transformation engagements which are rooted in innovation. We have spoken about the work we have done around business model innovation, product innovation, or even innovation around customer experiences, all of which help boost the customer's topline. However, such market-facing innovation doesn't work if back-end processes are slow and error-prone; or if the core systems and underlying infrastructure are outdated and not scalable; or if the data is fragmented. Several large deals in FY 2020 were core transformation initiatives where we are using our Machine First Delivery Model to reimagine the customer's IT operating model using AI and Machine Learning very innovatively. At the core is our cognitive automation software, ignio, which can autonomously pre-empt or resolve system failures. This makes the technology stack self-healing, and gives the organization a resilient digital core. The benefits were especially visible in the retail vertical during the holiday season peak and again during the panic shopping in March. when our customers were able to handle spikes in volumes without their systems breaking down. INTERESTING. BUT WON'T THIS CANNIBALIZE THE MANUAL PROCESSING WORK YOU WERE DOING? KR: Yes, it will.
But that is the nature of technological innovation. Newer technologies open up the possibility of accomplishing a certain task faster, better or cheaper. As a customer-centric organization, we will keep looking for newer, better ways to achieve a certain business outcome, and offering those innovations to our customers. This alignment with the customer's business interests is what has helped us build long, enduring relationships founded on trust. That goodwill translates into incremental business that more than makes up for the deflation. In this case, we are replacing human effort with cutting edge IP which deepens the competitive moat as well. # Example from the Life Sciences Vertical KR: Let me give you an example from the Life Sciences vertical. We have been providing pharmacovigilance services to a European pharma major for the last 12 years. Our team goes through unstructured documents describing adverse events associated with the company's various drugs, triages them and logs the data using standardized medical codes. We asked ourselves, why can't machine intelligence be trained to do this? Our Life Sciences domain experts and our Analytics & Insights practice teamed up and built an innovative solution, TCS ADD Safety™, that uses our Decision Fabric™ AI Engine to completely automate the case intake and processing of adverse events. It uses AI and machine learning to convert natural language data into structured data. This is not only faster and more accurate, but can also easily handle volume spikes, lending greater resilience and scalability to their pharmacovigilance operation. The solution is our intellectual property and we are now offering it to other life sciences companies as well. # Innovation Initiatives GIVEN ITS IMPORTANCE, WHY DO CUSTOMERS ENGAGE TCS FOR THEIR INNOVATION INITIATIVES? KAK: Well, innovation is not an exact science. Of the ten things you try out, one or two may succeed. To stay ahead in the innovation game, enterprises need to increase the 'yield' on the number of bets they make, thereby increasing the likelihood of landing 'winners'. By partnering with TCS, customers can leverage our investments in Research and Development. The power of such partnerships gets amplified when it crosses industry boundaries and creates new opportunities. TCS Annual Report 2019-20 Panel Discussion I 24 # TCS Annual Report 2019-20 # Panel Discussion Lastly, TCS' innovation initiatives in community-centric functional heads, COOs, CEOs and the Board. These connects give us a competitive edge even in the more traditional opportunities. KR: In the near term, enterprises are responding to the crisis by spending on workplace and collaboration tools, cyber-security and cloud adoption. We expect to see accelerated rollouts of digital channels including cognitive chatbots. Of course, such initiatives often translate into core transformation deals which are large in scale, scope and deal value, and with longer tenures. That improves our business visibility, and brings in higher quality revenues. It also embeds us deeper into the core of the customer's business, making us a strategic partner and sometimes the sole strategic partner, raising our brand visibility. In the next phase, customers will want to build greater resilience in their operations, and we expect greater interest in our Machine First approach, and ignio. You can also expect heightened M&A activity in the next few months, and given our experience in process and IT integration, enabling time-bound divestments and taking on commitments around transition services, we expect to benefit from that as well. WHAT DO YOU SEE AS THE KEY SPENDING THEMES AND DRIVERS OF YOUR GROWTH IN A POST-PANDEMIC WORLD? KAK: Innovation is a timeless business theme. It will not only continue to remain very relevant in the post-pandemic world, but might even see acceleration in some cases in the medium term. Even as we help customers improve their resilience in the immediate term, we are also having conversations on medium and longer term transformation plans. Second, those elements that Ananth listed, as well as our ability to stitch together different capabilities from across the organization into one seamless business-centric solution, are not easy to replicate. These capabilities are helping us differentiate ourselves from traditional outsourcers, and gain market share. NGS: There will be a short period of dislocation in some sectors due to the complete stalling of all economic activity, but once things settle down, you will see spending on these themes return. Different sectors will recover at different rates, but technology will remain front and center of every organization's strategy to innovate, differentiate itself and grow.
KR: To add to that, innovation initiatives tend to be fairly high profile in most organizations. By engaging in those initiatives, we are building strong relationships with a broader set of stakeholders in the enterprise - line of business heads, functional heads, COOs, CEOs and the Board. # Partnering RBC in Reimagining its Research Portal for Superior Customer Experience RBC Capital Markets, a top-10 global investment bank, has an extensive equity research capability covering around 1,700 corporations across the world. Its research desk has been consistently ranked #1 in Canada over the years. To expand its reach and retain its leadership, RBC wanted to redesign its client-facing research portal to provide a better customer experience. As RBC's strategic digital partner, TCS designed and developed a new microservices-based, cloud-ready research portal that provides a more engaging, intuitive and consistent user experience across a multitude of devices preferred by new-generation fund managers. AI-based algorithms power the intuitive search capability and provide personalized, context-driven research recommendations. The new portal supports multimedia formats including podcasts and videos. It also provides RBC's award-winning analysts with a best-in-class platform to publish their research and interact with clients online. In-depth readership analytics have enabled identification of cross-selling and up-selling opportunities. The superior user interface has helped improve customer satisfaction. Integration with third party research aggregator sites has significantly expanded its reach. File: AR_TCS_2019_2020-1-314.md "We have been maintaining our technological leadership by investing significantly in our digital and innovation strategies, enabling RBC to deliver superior experiences and even more insights that create value for our clients. Partnering with TCS helped us innovate at scale, leveraging leading-edge technology to transform the user experience as well as the reach of RBC Insights, and unlock new opportunities. They brought a lot of domain knowledge and were proactive in coming up with new ideas. By working Agile and deploying automation wherever possible, they significantly improved our speed to market. Their deep understanding of our business, passion for innovation and shared values have made them a key part of our digital transformation journey." Fardeen Khan Head - Strategic Initiatives - Research, RBC Capital Markets TCS Annual Report 2019-20 Business 4.0 Stories I 26 # WITH SBWS AND WORKING FROM HOME, WHAT HAPPENS TO THE TRADITIONAL ONSITE-OFFSHORE MODEL? # Q&A WITH # MILIND LAKKAD, CHRO # AND V RAMAKRISHNAN, CFO ML: With our teams as well as our customers' teams working from home, in-person interactions are now replaced with virtual collaboration. SBWS makes physical location irrelevant. This virtualization blurs the traditional divide between onsite and offshore. Traveling to onsite locations, particularly for initial transitions and knowledge transfer, will reduce further. At a societal level, this also means young people will eventually have the option of pursuing their careers in TCS without uprooting themselves from their home towns as long as they have good connectivity. Likewise, there will be greater opportunities for women to pursue fulfilling careers while managing familial responsibilities. In the longer term, it is possible that project teams will be seen as part of a virtualized talent cloud and provisioned for in the same way that we provision for compute power or storage today. # INTERESTING. BUT FOR NOW, HOW IS EMPLOYEE MORALE AND PRODUCTIVITY? ML: I feel the lockdowns, amidst the uncertainties and fears related to the pandemic, have actually brought us all a little closer. Daily team video calls, interaction over chats and email, and frequent updates from HR and senior management have helped mitigate any feeling of isolation. TCS Annual Report 2019-20 Q&A I 27 # WILL TRAVEL RESTRICTIONS OVER THE NEXT FEW MONTHS AFFECT YOUR ABILITY TO CLOSE DEALS? Traveling to onsite locations, particularly for initial transitions and knowledge transfer, will reduce further. At a societal level, this also means young people will eventually have the option of pursuing their careers in TCS without uprooting themselves from their home towns as long as they have good connectivity. Likewise, there will be greater opportunities for women to pursue fulfilling careers while managing familial responsibilities. # WHAT ABOUT RAMP-UPS ON NEW DEALS? ML: Our delivery model has evolved over the last few years. Our Location Independent Agile™ promotes systematic collaboration across distributed teams and reduces the need for co-location. This, coupled with greater use of managed-services contracting models have given us more flexibility around where our teams are based. VR: As for new deal closures, it is encouraging that we signed a large, multi-million dollar deal in end-March, entirely virtually, while both parties were under lockdown.
Anyway, most of our incremental revenue comes from existing customers who know us well, and with whom we have ongoing conversations. Second, travel restrictions impact everyone and not just us. So our relative competitiveness is not affected. And lastly, the post-pandemic world will see more and more activities that previously involved in-person interactions go virtual, including the sales process. Years from now, we will probably look back and wonder at how much time salespersons used to spend on the road. ML: Ramp-ups on some of the large deals we signed in the fourth quarter are progressing smoothly, with knowledge transfer taking place virtually. In fact, in the example that Ramki mentioned as well as in some other cases, the entire process of transition and moving to steady state operations are also taking place virtually. There is an added qualitative benefit of these virtual sessions. Now, the entire team can participate in these sessions, compared to the more exclusive 'train the trainer' approach we used in the past. This reduces the transmission losses and makes the process more efficient. # Through the TCS Cares initiative we are providing counseling services and running educational campaigns to help individuals cope with stress and anxiety. We are also creating self help networks of our associates with similar interests, so they get the social interaction that the physical workplace used to provide. As for productivity, the time saved on the daily commute is translating into increased energy levels and better engagement. There are some areas where teams have shown higher through-put, but these are still very early days. All this has brought down our use of work visas to a small fraction of what it used to be five years ago, de-risking our business significantly. Looking into the future, as I mentioned earlier, the virtualization of many activities with SBWS will reduce the need for travel and co-location even further. TCS Annual Report 2019-20 Q&A I 28 # GIVEN THE LIKELY DEMAND COLLAPSE IN FY 2021, IS THERE ANY CHANGE IN YOUR CAPITAL ALLOCATION # WHAT LEVERS DO YOU HAVE TO KEEP MARGINS STABLE? VR: Cost management at TCS has been devolved to the individual business units, and from there to the account and project levels. At that granular level, there are multiple margin management avenues available to them, starting from selling higher value services and solutions, getting into managed services contracts, superior execution leveraging MFDM™, replacing subcontractors with employees and so on. At a corporate level, we will scrutinize all expenses. We have frozen all new hiring, and we won't have our annual wage increase this year. There is some amount of relief from reduced spending on travel and facilities. Many big marketing events are likely to be canceled, bringing down the sponsorship expense. The Rupee depreciation, taking place after a fairly long gap, also provides some support. # WHAT ABOUT M&A? VR: We have sufficient cash on our balance sheet for the proverbial rainy day, so our capital allocation policy continues to be one of returning most of our free cash flow to shareholders. This year, once again, we have paid out nearly 109% of our free cash flow in the form of dividends. We are always open to the idea of picking up the right asset at the right price. Economic downturns are probably the best time to do it, when there are fewer buyers. You might recall that our largest acquisition till date was executed in December 2008, at the peak of the Global Financial Crisis. # WHY IS THERE SUCH A BIG GAP BETWEEN TCS' ATTRITION RATE AND THAT OF PEERS'? DO YOU CALCULATE IT DIFFERENTLY? AND YET, YOU PLAN TO HONOR ALL THE JOB OFFERS YOU HAVE MADE? ML: (Laughs) No, we use a standard formula that has remained unchanged in years. It is calculated by dividing the total number of departures in the prior twelve months by the closing headcount. ML: Yes. We will honor all the accepted job offers that we have already made. We have also assured our employees that we are not planning retrenchments. This commitment that we have for our people is what motivates them to give their best for TCS. # OUR COMMITMENT TO ORGANIC TALENT DEVELOPMENT Just to be clear, we have always had the best retention rate in the industry.
Our purpose-driven culture, progressive HR policies, and philosophy of investing in people and empowering them have made us an industry benchmark in talent retention, and an employer of choice across the world. We have a program called Contextual Masters which celebrates experienced employees who use their contextual knowledge to create value for our customers. This gives junior employees role models to emulate, and encourages them to plan long careers in TCS. In contrast, in some other organizations, experienced individuals are seen as expensive and targeted for layoffs, affecting the morale. I believe that is why the retention gap has widened in recent years. TCS Annual Report 2019-20 Q&A I 29 # Enabling Woolworths' Teams to Deliver Superior In-Store Customer Experiences Woolworths, Australia's largest supermarket group, views building a Customer 1st brand, team and culture as its foremost strategic priority. In this regard, they launched a store transformation program that aimed to empower store team members with data and automate many routine back-office tasks, freeing up time for customer engagement to improve the customer experience. TCS, as the strategic partner in this program, worked in close collaboration with Woolworths to help build a fully integrated, device-agnostic, centralized platform to enable this vision of a connected store and empowered store team members. The platform allows store team members to orchestrate selected operations through mobile RF devices by digitizing their day to day routines. It provides intelligence in the form of a 360-degree view of the store inventory, real-time stock adjustments, efficient management of store deliveries and stock-takes, enhancing productivity end to end and ultimately providing a better customer experience. Its intuitive user interface has allowed for quick, universal acceptance by the 90,000+ store users, with minimal training. Using targeted implementation automation tools, the solution was successfully deployed across 3000+ stores across 7 different brands, within just 6 months. "Our store transformation program is part of the various investments we have made in achieving the Group's strategy to enable consistently good customer and team experiences. TCS has been a critical partner in this journey. They have demonstrated deep contextual knowledge of our business and come up with out of the box ideas to address some of our technology challenges and opportunities. They are key to ensuring that our systems run smoothly, and go above and beyond for our business. We have awarded TCS Partner of the Year based on their delivery and passion to provide extraordinary service and support." -- John Hunt, CIO, Woolworths Group TCS Annual Report 2019-20 Business 4.0 Stories I 30 # Powering Vitality UK's Ambition to be an Insurance Brand that is Positively Different "The Vitality Shared Value model is based on the concept of interventions that will inspire behavioral change among our members - benefiting the person, us as the insurer and also wider society. Technology is a critical strategic enabler in our model. Partnering with TCS significantly accelerated our transformation journey, helping us launch newer innovations faster, while delivering a consistent, integrated experience to our members." Kris Tokarzewski CTIO, Vitality UK Traditionally, selling health insurance does not offer too many opportunities for customer engagement. Post purchase, the interaction is usually limited to claims processing. And yet, one insurer has built an innovative, purpose-driven business model that is helping build deep relationships, support people in living healthier lives and become a beloved consumer brand. Vitality, the wholly owned subsidiary of South African giant, Discovery, is a poster child of the immensely successful shared value business model. It engages with policyholders continually to incentivize preventive behaviors that promote wellness, and in the process, reduces costs and builds positive relationships between the business and its customers. VitalityHealth actively promotes the adoption of healthy lifestyles by its members, incentivizing them to undertake regular activity through a generous rewards program that is redeemable across a curated partner ecosystem. TCS has been its innovation partner in this transformation journey, helping build the enabling technology layer for this wellness-oriented insurance ecosystem. TCS consolidated and simplified its technology stack, modernized its policy administration system and integrated it with the Vitality rewards platform. A customer portal makes individuals aware of their risk factors and ways to improve their health, track their reward points and redeem them. Vitality's innovative model has resulted in deeper member engagement, driving revenue and profit. New business revenue grew 15%, and operating profit grew 22% in 2019. Best of all, it is also well on its way to realize its ambition to be an insurance brand that consumers will love.
In five short years, Vitality is among the top 5 market leaders in the UK and enjoys a 50% prompted brand awareness. TCS Annual Report 2019-20 Business 4.0 Stories I 31 # PM-JAY: Leveraging Technology to Provide Healthcare Coverage to India's Poorest Crushing poverty can deprive the poor of access to quality healthcare. Ayushman Bharat was a bold and innovative scheme launched by the Government of India to achieve universal health coverage. Central to this is the Pradhan Mantri Jan Arogya Yojana (PM-JAY), the world's largest fully funded health insurance scheme covering 500 million of India's poorest. With its track-record in successfully executing some of India's largest transformational programs, deep domain knowledge and experience in implementing similar schemes in three states, TCS was a natural partner to the National Health Authority (NHA) in implementing this visionary undertaking. TCS designed a highly configurable, cloud-based solution architected for usability, scalability, high performance and security, supporting sophisticated analytics to detect fraud. The solution caters to all the ecosystem participants - the NHA, state bodies, hospitals, and TPAs, enabling multi-level online scrutiny of beneficiaries before pre-authorisation, transmission of electronic medical records, monitoring of treatment and outcomes, and claim verification, and ensures adherence to scheme SLAs. TCS' successful implementation helped NHA achieve a glitch-free rollout of the scheme within six months. Since its launch, the solution has processed claims pertaining to 7.3 million hospital admissions, demonstrating how technology can transform social services, and make a world of difference to over 5 million beneficiaries till date. It has been great experience for all the stakeholders viz. NHA, SHAs, Hospitals, Insurance companies and TPAs working with Team TCS. It was very heartening to see the proactive involvement of the Team, coming up with solutions acceptable to all stakeholders without diluting the objectives of the scheme. Dr Indu Bhushan CEO, National Health Authority Government of India TCS Annual Report 2019-20 Business 4.0 Stories I 32 # Ranked #1 in CUSTOMER SATISFACTION - #1 Seventh consecutive year # Fastest Growing Brand of the Decade # Rated as GLOBAL TOP EMPLOYER - Leader in Fifth consecutive year 85 Analyst Assessments # @ACT # CONSULTANCYAtn # TCS Pace Port New York Close Partnerships with Leading Technology Providers Promoting Health and Fitness through Global Marathon Sponsorships # TCS Annual Report 2019 Fastest Growing Brand I 33 # Notice Notice is hereby given that the twenty-fifth Annual General Meeting ("AGM") of Tata Consultancy Services Limited will be held on Thursday, June 11, 2020 at 3:30 p.m. IST through Video Conferencing ("VC") / Other Audio Visual Means ("OAVM") to transact the following business: 1. To receive, consider and adopt: 1. the Audited Financial Statements of the Company for the financial year ended March 31, 2020, 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, 2020, together with the Report of the Auditors thereon. 2. To confirm the payment of Interim Dividends (including a special dividend) on Equity Shares and to declare a Final Dividend on Equity Shares for the financial year 2019-20. 3. To appoint a Director in place of Aarthi Subramanian (DIN 07121802) who retires by rotation and, being eligible, offers herself for re-appointment. # Notes: 1. In view of the continuing Covid-19 pandemic, the Ministry of Corporate Affairs ("MCA") has vide its circular dated May 5, 2020 read with circulars dated April 8, 2020 and April 13, 2020 (collectively referred to as "MCA Circulars") permitted the holding of the AGM through VC / OAVM. 2. The relevant details, pursuant to Regulations 26(4) and 36(3) of the SEBI Listing Regulations and Secretarial Standard on General Meetings issued by the Institute of Company Secretaries of India, in respect of Director seeking re-appointment at this AGM is annexed. 3. Pursuant to the provisions of the Act, 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. Since this AGM is being held pursuant to the MCA Circulars through VC / OAVM, physical attendance of Members has been dispensed with. Accordingly, the facility for appointment of proxies by the Members will not be available for the AGM and hence the Proxy Form and Attendance Slip are not annexed to this Notice. 4. Institutional / Corporate Shareholders (i.e.
other than individuals / HUF, NRI, etc.) are required to send a scanned copy (PDF/JPG Format) of its Board or governing body Resolution/Authorization etc., authorizing its representative to attend the AGM through VC / OAVM on its behalf and to vote through. remote e-voting. The said Resolution/Authorization for transmission or transposition of securities. are requested to register the same by submitting Form No. SH-13. The said form can be downloaded from the Company's website https://on.tcs.com/form-sh-13. Members are requested to submit the said details to their DP in case the shares are held by them in electronic form and to TCPL in case the shares are held in physical form. # 5. The Company has fixed Thursday, June 4, 2020 as the 'Record Date' for determining entitlement of members to final dividend for the financial year ended March 31, 2020, if approved at the AGM. # 6. If the final dividend, as recommended by the Board of Directors, is approved at the AGM, payment of such dividend subject to deduction of tax at source will be made on Monday, June 15, 2020 as under: - i. 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"), collectively "Depositories", as of the close of business hours on Thursday, June 4, 2020. - ii. To all Members in respect of shares held in physical form after giving effect to valid transfer, transmission or transposition requests lodged with the Company as of the close of business hours on Thursday, June 4, 2020. # 7. As per Regulation 40 of SEBI Listing Regulations, as amended, securities of listed companies can be transferred only in dematerialized form with effect from, April 1, 2019, except in case of request received. # 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 TCPL 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 TCPL in case the shares are held by them in physical form. # 10. 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. # 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 TCPL, 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, 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 at the AGM. # 13. Members seeking any information with regard to the accounts or any matter to be placed at the AGM, are requested to write to the Company on or before June 10, 2020 through email on [email protected]. The same will be replied by the Company suitably. # 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. # TCS Annual Report 2019-20 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 online application to the IEPF Authority in web 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 and FAQ of investor page on Company's website http://on.tcs.com/IR-FAQ. 17. At the twenty-second AGM held on June 16, 2017, the Members approved appointment of B S R & Co LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the twenty-seventh AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the twenty-fifth AGM. 18. Pursuant to Finance Act 2020, dividend income will be taxable in the hands of shareholders w.e.f. April 1, 2020 and the Company is required to deduct tax at source from dividend paid to shareholders at the prescribed rates. For the prescribed rates for various categories, the shareholders are requested to refer to the Finance Act, 2020 and amendments thereof. The shareholders are requested to update their PAN with the Company/TCPL (in case of shares held in physical mode) and depositories (in case of shares held in demat mode). 19. Since the AGM will be held through VC / OAVM, the Route Map is not annexed in this Notice. 20. Instructions for e-voting and joining the AGM are as follows: # A. VOTING THROUGH ELECTRONIC MEANS i. 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. Members attending the AGM through VC / OAVM shall be counted for the purpose of reckoning the quorum under Section 103 of the Act. A Resident individual shareholder with PAN and who is not liable to pay income tax can submit a yearly declaration in Form No. 15G/15H, to avail the benefit of non-deduction of tax at source by email to [email protected] by 11:59 p.m. IST. # ii. The remote e-voting period commences on Monday, June 8, 2020 (9:00 a.m. IST) and ends on Wednesday, June 10, 2020 (5:00 p.m. IST). During this period, Members holding shares either in physical form or in dematerialized form, as on Thursday, June 4, 2020 i.e. cut-off date, may cast their vote electronically. The e-voting module shall be disabled by NSDL for voting thereafter. Those Members, who will be present in the AGM through VC / OAVM facility and have not cast their vote on the Resolutions through remote e-voting and are otherwise not barred from doing so, shall be eligible to vote through e-voting system during the AGM. # iii. The Board of Directors has appointed P N Parikh File: AR_TCS_2019_2020-1-314.md (Membership No. FCS 327) and failing him Jigyasa Ved (Membership No. FCS 6488) of Parikh & Associates, Practicing Company Secretaries as the Scrutinizer to scrutinize the voting during the AGM and remote e-voting process in a fair and transparent manner. # iv. The Members who have cast their vote by remote e-voting prior to the AGM may also attend/participate in the AGM through VC / OAVM but shall not be entitled to cast their vote again. # v. 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. # vi. Any person, who acquires shares of the Company and becomes a Member of the Company after sending 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. # 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. 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. # Step 1: Log-in to NSDL e-voting system at https://www.evoting.nsdl.com/ # Step 2: Cast your vote electronically on NSDL e-voting system. # 4. Your User ID details are given below: # 5. Your password details are given below: ii) In case you have not registered your email address with the Company/Depository, please follow instructions mentioned below in this notice. # Manner of holding shares i.e. Demat (NSDL or CDSL) or Physical # A) For Members who hold shares in demat account with NSDL. Your User ID is: 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 IN30012*** # B) For Members who hold shares in demat account with CDSL. Your User ID is: 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. Your User ID is: EVEN Number followed by Folio Number registered with the company For example, if EVEN is 123456 and folio number is 001* then user ID is 123456001*** # 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. c) 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. d) Members can also use the one-time password (OTP) based login for casting the votes on the e-Voting system of NSDL. # 7. After entering your password, click on Agree to "Terms and Conditions" by selecting on the check box. TCS Annual Report 2019-20 Notice I 38 # 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 112923. 4. Now you are ready for e-voting as the Voting page opens. 5. Cast your vote by selecting appropriate options i.e. assent or dissent, verify/modify. 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. 9. After you click on the "Login" button, Home page of e-voting will open. # General Guidelines for shareholders 1. Institutional / Corporate 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 https://www.evoting.nsdl.com to reset the password. 3.
In case of any queries relating to e-voting you may refer to the FAQs for Shareholders and e-voting user manual for Shareholders available at the download section of https://www.evoting.nsdl.com or call on toll free no.: 1800-222-990 or send a request at [email protected]. # Contact Information In case of any grievances connected with facility for e-voting, please contact Ms. Pallavi Mhatre, Manager, NSDL, 4th Floor, 'A' Wing, Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. Email: [email protected]/[email protected], Tel: 91 22 2499 4545/ 1800-222-990 # Process for registration of email id for obtaining Annual Report and user id/password for e-voting and updation of bank account mandate for receipt of dividend: # B. INSTRUCTIONS FOR MEMBERS FOR ATTENDING THE AGM THROUGH VC / OAVM ARE AS UNDER: 1. Members will be able to attend the AGM through VC / OAVM or view the live webcast of AGM provided by NSDL at https://www.evoting.nsdl.com by using their remote e-voting login credentials and selecting the EVEN for Company's AGM. Members who do not have the User ID and Password for e-voting or have forgotten the User ID and Password may retrieve the same by following the remote e-voting instructions mentioned in the Notice. Further Members can also use the OTP based login for logging into the e-voting system of NSDL. # Physical Holding Send a request to the Registrar and Transfer Agents of the Company, TCPL at [email protected] providing Folio No., Name of shareholder, scanned copy of the share certificate (front and back), PAN (self attested scanned copy of PAN card), AADHAR (self attested scanned copy of Aadhar Card) for registering email address. Following additional details need to be provided in case of updating Bank Account Details: - a) Name and Branch of the Bank in which you wish to receive the dividend, - b) the Bank Account type, - c) Bank Account Number allotted by their banks after implementation of Core Banking Solutions, - d) 9 digit MICR Code Number, and - e) 11 digit IFSC Code - f) a scanned copy of the cancelled cheque bearing the name of the first shareholder. # Demat Holding Please contact your Depository Participant (DP) and register your email address and bank account details in your demat account, as per the process advised by your DP. 2. Facility of joining the AGM through VC / OAVM shall open 30 minutes before the time scheduled for the AGM and will be available for Members on first come first served basis. 3. Members who need assistance before or during the AGM, can contact NSDL on [email protected] / 1800-222-990 or contact Mr. Amit Vishal, Senior Manager - NSDL at [email protected] / 022-24994360 / +91 9920264780 or Mr. Sagar Ghosalkar, Assistant Manager- NSDL at [email protected] / 022-24994553 / +91 9326781467. TCS Annual Report 2019-20 Notice I 40 # 4. Members who would like to express their views or ask questions during the AGM may register themselves as a speaker by sending their request from their registered email address mentioning their name, DP ID and Client ID/folio number, PAN, mobile number at [email protected] from June 5, 2020 (9:00 a.m. IST) to June 7, 2020 (5:00 p.m. IST). Those Members who have registered themselves as a speaker will only be allowed to express their views/ask questions during the AGM. The Company reserves the right to restrict the number of speakers depending on the availability of time for the AGM. # Other Instructions 1. The Scrutinizer shall, immediately after the conclusion of voting at the AGM, first count the votes cast during the AGM, thereafter unblock the votes cast through remote e-voting 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. 2. 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 https://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. By Order of the Board of Directors RAJENDRA MOHOLKAR Company Secretary Membership No.
ACS 8644 Mumbai, May 15, 2020 # 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 TCS Annual Report 2019-20 Notice I 41 # Annexure to the Notice # Details of Directors seeking re-appointment at the Annual General Meeting \|Particulars\|Date of Birth\|Date of Appointment\|Qualifications\|Expertise in specific functional areas\|Directorships held in other companies\|Memberships / Chairmanships of committees of other companies\|Number of shares held in the Company\| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Aarthi Subramanian\|June 26, 1967\|March 12, 2015\|B.Tech in Computer Science Master's Degree in Engineering Management\|Wide experience in Information Technology\|Tata Industries Limited Tata Capital Limited Tata AIA Life Insurance Company Limited Tata Digital Limited Tata Payments Limited\|Tata Capital Limited Stakeholders' Relationship Committee (Chairperson) Corporate Social Responsibility Committee Information Technology Strategy Committee\|5,600\| 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. TCS Annual Report 2019-20 Notice I 42 # To the Members, # Directors' Report 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, 2020. The consolidated performance of the Company and its subsidiaries has been referred to wherever required. # 1. Financial results \|(` crore)\|Unconsolidated\|Unconsolidated\|Consolidated\|Consolidated\| \| \| \|---\|---\|---\|---\|---\| \|Financial Year 2019-20 (FY 2020)\|Financial Year 2018-19 (FY 2019)\|Financial Year 2019-20 (FY 2020)\|Financial Year 2018-19 (FY 2019)\| \| \|Revenue\|131,306\|123,170\|156,949\|146,463\| \|Other income\|8,082\|7,627\|4,592\|4,311\| \|Total income\|139,388\|130,797\|161,541\|150,774\| \|Expenses\| \| \| \| \| \|Operating expenditure\|93,953\|88,206\|114,840\|106,957\| \|Depreciation and amortisation expense\|2,701\|1,716\|3,529\|2,056\| \|Total expenses\|96,654\|89,922\|118,369\|109,013\| \|Profit before finance costs and tax\|42,734\|40,875\|43,172\|41,761\| \|Finance costs\|743\|170\|924\|198\| \|Profit before tax (PBT)\|41,991\|40,705\|42,248\|41,563\| \|Tax expense\|8,731\|10,640\|9,801\|10,001\| \|Profit for the year\|33,260\|30,065\|32,447\|31,562\| \|Attributable to:\| \| \| \| \| \|Shareholders of the Company\|33,260\|30,065\|32,340\|31,472\| \|Non-controlling interests\|NA\|NA\|107\|90\| \|Opening balance of retained earnings\|77,159\|74,080\|85,520\|79,755\| \|Closing balance of retained earnings\|71,532\|77,159\|78,810\|85,520\| # 2. COVID-19 Although there are uncertainties due to the pandemic and reversal of the positive momentum gained in the last quarter of FY2020, the strong balance sheet position, best-in-class profitability and inherent resilience of the business model position the Company well to navigate the challenges ahead and gain market share. In the last month of FY 2020, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees, and on minimizing disruption to services for all our customers globally. From a highly centralized model consisting of work spaces set in large delivery campuses capable of accommodating thousands of employees, the switch to work from home for employees all over extending all the elements of the Company's Open Agile Delivery model concept into a next-generation Secure Borderless Workspaces™ (SBWS) model was carried out seamlessly. As of March 31, 2020, work from home was enabled to close to 90 percent of the employees to work remotely and securely. This response has reinforced customer confidence in TCS and many of them have expressed their appreciation and gratitude for keeping their businesses running under most challenging conditions. The SBWS model ensures high quality and delivery certainty that the customers expect while addressing the issues around cyber security, project management practices and systems. Going forward, this location independent SBWS model could be a game changer due to its many advantages. # 3. Dividend For FY 2020, based on the Company's performance, the Directors have declared interim dividends of `27 per equity share and a special dividend of `40 per equity share. The Directors have also recommended a final dividend of `6 per equity share, taking the total dividend to `73 per equity share. The final dividend on equity shares, if approved by the Members, would involve a cash outflow of `2,251 crore. The total dividend on equity shares including dividend tax for FY 2020 would aggregate `31,895 crore, resulting in a dividend payout of 95.9 percent of the unconsolidated profits of the Company. # 4. Transfer to reserves The closing balance of the retained earnings of the Company for FY 2020, after all appropriation and adjustments was `71,532 crore. # 5. Company's performance On a consolidated basis, the revenue for FY 2020 was `156,949 crore, higher by 7.2 percent over the previous year's revenue of `146,463 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2020 and FY 2019 was `32,447 crore and `31,562 crore respectively.
The PAT attributable to shareholders for FY 2020 was `32,340 crore registering a growth of 2.8 percent over the PAT of `31,472 crore for FY 2019. For FY 2019, the Company paid a total dividend of `30 per equity share. Further, the Company bought back 76,190,476 equity shares at a price of `2,100 per equity share for an aggregate consideration of `16,000 crore and also allotted 1,914,287,591 equity shares as fully paid-up bonus shares in the ratio of 1:1. The total cash outflow for FY 2019 including dividend, dividend tax and buy-back consideration amounted to `29,148 crore. On an unconsolidated basis, the revenue for FY 2020 was `131,306 crore, higher by 6.6 percent over the previous year's revenue of `123,170 crore in FY 2019. The PAT attributable to shareholders for FY 2020 was `33,260 crore registering a growth of 10.6 percent over the PAT of `30,065 crore for FY 2019. # 6. Human resource development Attracting, enabling and retaining talent have been the cornerstone of the Human Resource function and the results underscore the important role that human capital plays in critical strategic activities such as growth. A robust Talent Acquisition system enables the Company to balance unpredictable business demands with a predictable resource supply through organic and inorganic growth. The Company had a net addition of 24,179 employees globally, taking its total employee count to 448,464. Fueled by inclusive hiring and heavy investment made to mentor and coach women at all levels, women currently account for 36.2 percent of the workforce, making the Company one of the largest employers of women in the world. An evolved onboarding model helped the Company to effectively integrate associates acquired through a strong localization focus. The diverse workforce represents 144 nationalities across 46 countries. The reimagined approach to learning and development has helped the Company train over 335,000 employees on digital technologies and over 417,000 employees on Agile methodologies. The Initial Learning Program approach has enabled faster release of freshers to projects. Post-offer engagement activities have also witnessed increased focus. Continual pursuit to connect with associates on a regular basis, communicate in an open and transparent manner, progressive HR policies and distinctive HR Business Partner model, guided by OneTCS culture, are yielding desired results. This is evident from the high retention rates and improved engagement levels of the associates. Attrition in FY 2020 was 12.1 percent for IT Services. The Company's internal employee satisfaction survey PULSE showed the highest employee satisfaction and engagement scores in the last 12 years. The Company has been appraised at Maturity Level 5 of the Capability Maturity Model Integration for Development (CMMI® V2.0 DEV). The Company was recognized as a 'Benchmark Leader', a first of its kind achievement in the Tata Group as part of the Tata Business Excellence Model assessment. Three Industry Solutions Unit achieved the 'Industry Leader' status while one of the units crossed over to the 'Benchmark Leader' band. # 7. Quality initiatives TCS' integrated Quality Management System (iQMSTM) continues to enable outstanding value and experience to its customers. iQMSTM is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. iQMSTM has been updated with handbooks and guidelines for Agile methodology. The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY 2020, the Company successfully completed the surveillance audits for industry specific quality certifications viz., AS 9100 (Aerospace Industry), ISO 13485 (Medical Devices) and TL 9000 (Telecom Industry). The Company has also successfully completed the annual ISO surveillance audit. The Company is now amongst the world's first organizations to be recommended for certification to ISO 22301:2019 standard. The Company has committed to become Enterprise Agile by 2020. To achieve this vision, the Company has created 417,000 Agile ready workforce and 1000+ futuristic Agile Delivery Centres. TCS Location Independent AgileTM is a Company proprietary methodology consisting of processes, management structure and the technology that enables enterprise wide agile transformations without the location. The Company has also driven agility in TCS Financial Solutions Australia Holdings Pty Limited was deregistered with effect from January 29, 2020. Its holdings in TCS Financial Solutions Australia Pty Limited along with its other assets and liabilities were transferred to its holding company, TCS FNS Pty Limited which is a wholly owned subsidiary of the Company.
To reduce the delivery risks, the company has rolled out Guidelines for "Service Delivery under SBWS" and has been monitoring the 25,000 projects across the globe on a daily basis through the digitized dashboards. The customer-centricity, rigor in operations and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third-party surveys as well. # 8. Subsidiary companies The Company has 50 subsidiaries as on March 31, 2020. There are no associate 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. On June 26, 2019, pursuant to exercise of put option by Mitsubishi Corporation, Tata Consultancy Services Asia Pacific Pte. Ltd. acquired additional 15 percent stake in its joint venture with Mitsubishi Corporation in Tata Consultancy Services Japan, Ltd. # 9. 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; 6. 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 provided in Section 149(6) of the Act along with Rules 12. Board evaluation and compliance systems established and maintained framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company. The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, if any and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board / Committee of the Company. # 10. Directors and key managerial personnel O P Bhatt was re-appointed as an Independent Director at the twenty-fourth Annual General Meeting (AGM) held on June 13, 2019 for a period of five years w.e.f. June 27, 2019 up to June 26, 2024. During the year, Aman Mehta and Dr. Ron Sommer ceased to be the Directors with effect from June 26, 2019 upon completion of their term as Independent Directors. The Board places on record its appreciation for their invaluable contribution and guidance. Aarthi Subramanian retires by rotation and being eligible, offers herself for re-appointment. A resolution seeking shareholders' approval for her re-appointment forms part of the Notice. Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2020 are: Rajesh Gopinathan, Chief Executive Officer and Managing Director, N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, Ramakrishnan V, Chief Financial Officer and Rajendra Moholkar, Company Secretary. The term of Ramakrishnan V as the Chief Financial Officer was extended up to April 30, 2021. 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. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. # 11. Number of meetings of the Board Seven meetings of the Board were held during the year under review. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report. In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors. Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meet the criteria of independence as. # 15. Audit committee File: AR_TCS_2019_2020-1-314.md The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report. # 16. Auditors At the twenty-second AGM held on June 16, 2017 the Members approved appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the twenty-seventh AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the ensuing AGM and a note in respect of same has been included in the Notice for this AGM. # 17. Auditor's report and Secretarial audit report The statutory auditor's report and the secretarial audit report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report. # 18. Risk management The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and 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. # 19. Vigil Mechanism The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behavior. The details of the policy have been disclosed in the Corporate Governance Report, which is a part of this report and is also available on https://on.tcs.com/WhistleBP. # 20. Particulars of loans, guarantees and investments The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements. # 13. Policy on directors' appointment and remuneration and other details The Company's policy on appointment of directors is available on https://on.tcs.com/ApptDirectors. The policy on 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 and is also available on https://on.tcs.com/remuneration-policy. # 14. Internal financial control systems and their adequacy The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report. # 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 as adopted by the Board and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on https://on.tcs.com/Global-CSR-Policy. # 23. Extract of annual return As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return for FY 2020 is given in Annexure III in the prescribed Form No. MGT-9, which is a part of this report. The same is available on https://on.tcs.com/annual-return-19-20. 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: \|Name\|Ratio to median remuneration\|% increase in remuneration in the financial year\| \|---\|---\|---\| \|Non-executive directors\| \| \| \|N Chandrasekaran@\|-\|-\| \|Aman Mehta\|^\|^\| \|Dr Ron Sommer\|^\|^\| \|O P Bhatt**\|32.09\|(6.98)#\| \|Aarthi Subramanian@@\|-\|-\| \|Dr Pradeep Kumar Khosla\|22.46\|(6.67)#\| \|Hanne Sorensen\|22.46\|^^\| \|Keki Mistry\|22.46\|^^\| \|Don Callahan\|22.46\|^^\| \|Executive directors\| \| \| \|Rajesh Gopinathan\|214.65\|(16.53)#\| \|N Ganapathy Subramaniam\|162.31\|(12.87)#\| \|Chief Financial Officer\| \| \| \|Ramakrishnan V\|-\|(3.54)#\| \|Company Secretary\| \| \| \|Rajendra Moholkar\|-\|(0.12)#\| TCS Annual Report 2019-20 Directors' Report I 49 # TCS Annual Report 2019-20 # Directors' Report As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated. The managerial remuneration for the year decreased by 15 percent. The executive remuneration for FY 2020 is lower than FY 2019 in view of the economic conditions impacted by the COVID-19 pandemic. The Directors have decided to moderate the executive remuneration for this year to express solidarity and conserve resources. # a. The percentage increase in the median remuneration of employees in the financial year: 2 percent # b. The number of permanent employees on the rolls of Company: 448,464 # c. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The average annual increase was 6 percent in India. However, during the course of the year, the total increase is approximately 7.7 percent, after accounting for promotions and other event-based compensation revisions. Employees outside India received a wage increase varying from 2 percent to 6 percent. The increase in remuneration is in line with the market trends in the respective countries. # d. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that the remuneration is as per the remuneration policy of the Company. # e. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and Any Member interested in obtaining a copy of the same may write to the Company Secretary. # f. The remuneration for FY 2020 is lower than FY 2019 in view of the economic conditions impacted by the COVID-19 pandemic. The Directors have decided to moderate the remuneration. # 25. Integrated Report The Company being one of the top companies in the country in terms of market capitalization, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company's long term perspective. The Report also touches upon aspects such as organisation's strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital. # 26. Disclosure requirements As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors' Certificate thereon, and the integrated Management Discussion and Analysis including the Business Responsibility Report are attached, which forms part of this report.
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. # 27. 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. The continued focus on Green IT and data center power management, has helped to reduce the Power Utilization Efficiency (PUE) of the 23 data centers to 1.66 from 1.67 in the last year. 22 of the 23 Data Centers have achieved the target PUE of 1.65. Data center / server room consolidation, higher rack utilization, UPS rationalization have been the key levers. The Company has also reduced the distributed IT power use by reducing the watts per seat from 200 to 85 over the last 3 years. # 28. Conservation of energy, technology absorption, foreign exchange earnings and outgo Conservation of energy: The eco-efficiency journey at TCS revolves around infrastructure and operations. TCS strategy to build green and operate optimally has led to year-on-year reduction in specific energy footprint by 11.9 percent and specific carbon footprint by ~11.8 percent, on per FTE basis. Technology absorption, adaption and innovation: Research & Development (R&D): Specific areas in which R&D was carried out by the Company TCS Research and Innovation is strongly aligned with the Company's vision of Growth and Transformation underpinned by Enterprise-wide Agile and the AI-powered Machine First Delivery Model™. In FY20, the Company added 2 MWp of rooftop solar across TCS campuses, taking the total to 7.6 MWp. Total renewable energy units generated from rooftop solar projects and sourced through power purchase agreements is cumulatively 59.5 million units in FY19-20 which is 10.9 percent of the total electricity consumption. The shift to low carbon operations by switching over to energy efficient Light Emitting Diode (LED) technology has resulted in saving of 11 million units of electricity across TCS India operations. TCS continues to expand its foundational research, in core computing areas and the intersections with other sciences. New areas such as media and advertising, meta materials, quantum computing and sensing have been added. TCS Research engages with its ecosystem in many areas including AI and 5G. TCS Researchers presented 200+ papers in premier conferences and produced books and book chapters through the year. The Company released its second book of essays. # TCS Annual Report 2019-20 # Directors' Report entitled 'Reimagining Research' describing several of its key research projects. TCS Pace Port™ delivers speedy, collaborative innovation to customers by providing access to COIN accelerators and academic research, in agile workspaces with innovation showcases. A number of customers were held through the year. Research and innovation teams worked with customers on several new ideas aligned with their business. Examples include: value addition through AI for a retailer's supply chain; robots to spot blast holes for a mining company; forklift damage detection using augmented reality for a forklift rental business; collusion and spoofing prevention methods for clearinghouses; foreign particle detection in steel manufacture; customer lifecycle value optimization with a digital twin for a communication service provider; multiscale modelling of digital skin for a pharma company. The contribution to TCS' 3P vision of patents, products and platforms continues. Ignio™, a cognitive automation solution, was significantly enhanced this year. TCS MasterCraft™ products have 110+ active customers. New features added this year include TransformPlus for application translation and cloud migration, and DataPlus for personal data protection in India. Jile™ 4.0, a new version of the flexible, agile planning and delivery offering was launched. A healthy pipeline of assets moved through the New Products and Services Development governance framework. TCS R&I remained closely connected to customers through events in different geographies. The TCS Innovation Forum was held in Tokyo, New York City, Sao Paulo and London attracted 700+ customers. # Future Plan of Action The Company leveraged both the academic research ecosystem and the emerging technology ecosystem for collaborative research as part of its Co-Innovation (TCS COINTM) Program. It has 50+ projects in emerging technologies with global academic institutes. The emerging tech COIN program is embedding itself in customer projects. The Company has applied for 5,216 patents cumulatively. The Company has been granted 1,341 patents. TCS Advanced Drug Development (ADD), TCS Optumera and the SMU-TCS iCity Lab's SHINESeniors project have won prestigious awards.
The Company continued to foster the culture of innovation, with one crowdsourced innovation event a week. The TCS Innovista competition attracted 6,500+ entries across business units. # Expenditure on R&D # Foreign exchange earnings and outgo TCS innovation Labs are located in India and other parts of the world. These R&D centers, as certified by Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai. Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2020 and FY 2019 are given below: \|Expenditure on R&D and innovation\| \|Unconsolidated\| \|Consolidated\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \|FY 2020\|FY 2019\|FY 2020\|FY 2019\| \| \| \|a. Capital\| \| \| \|2\|2\|2\|2\| \|b. Recurring\| \|300\|303\|304\|306\| \| \| \|c. Total R&D expenditure (a+b)\| \|302\|305\|306\|308\| \| \| \|d. Innovation center expenditure\| \|1,458\|1,285\|1,561\|1,352\| \| \| \|e. Total R&D and innovation expenditure (c+d)\| \|1,760\|1,590\|1,867\|1,660\| \| \| \|f. R&D and innovation expenditure as a percentage of total turnover\| \|1.3%\|1.3%\|1.2%\|1.1%\| \| \| Export revenue constituted 93.4 percent of the total unconsolidated revenue in FY 2020 (93.3 percent in FY 2019). \|Foreign exchange earnings and outgo\|FY 2020\|FY 2019\| \|---\|---\|---\| \|a. Foreign exchange earnings\|128,501\|119,499\| \|b. CIF Value of imports\|569\|447\| \|c. Expenditure in foreign currency\|51,748\|49,336\| # 29. Acknowledgments 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 regret the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic. 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 16, 2020 Chairman TCS Annual Report 2019-20 Directors' Report I 53 # 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 fourth proviso thereto: # 1. Details of contracts or arrangements or transactions not at arm's length basis: Tata Consultancy Services Limited (the Company) has not entered into any contract/arrangement/ transaction with its related parties, which is not in ordinary course of business or at arm's length during FY 2020. 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, if any:\|Not Applicable\| \|(g) Amount paid as advances, if any:\|None\| \|(h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188:\|Not Applicable\| 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 percent of consolidated turnover and considering wholly owned subsidiaries are exempt for the purpose of Section 188(1) of the Act. # 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\| On behalf of the Board of Directors N Chandrasekaran Mumbai, April 16, 2020 Chairman # Annexure II # Annual Report on CSR Activities A brief outline of the Company's Corporate Social Responsibility (CSR) Policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR Policy and projects or programs: 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 by using core competency which develops solutions. In addition, for key engagements, it also partners with other Tata entities, NGOs, Government and 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. # 1. Manner in which the amount spent during the financial year: Annexed # 2. 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. Not Applicable # 3. The composition of the CSR committee: The Company has a CSR committee of directors comprising N Chandrasekaran, Chairman of the Committee, O P Bhatt and N Ganapathy Subramaniam. # 4. Average net profit of the company for last three financial years for the purpose of computation of CSR: ₹30,003 crore. # 5. Prescribed CSR Expenditure (two per cent of the amount as in item 2 above): ₹600 crore. # 6. Details of CSR spent during the financial year: \|a. Total amount to be spent for the financial year:\|₹600 crore\| \|---\|---\| \|b. Amount unspent:\|Nil\| # 7. A responsibility statement of the CSR committee that the implementation and monitoring of CSR policy, is in compliance with CSR objectives and policy of the Company. We hereby declare that implementation and monitoring of the CSR policy are in compliance with CSR objectives and CSR policy of the Company. Rajesh Gopinathan Chief Executive Officer and Managing Director N Chandrasekaran Chairman, Corporate Social Responsibility Committee Mumbai, April 16, 2020 1 201-1 TCS Annual Report 2019-20 Directors' Report I 55 # 4(c) Manner in which amount spent during the financial year is detailed below: \|Sr. No.\|CSR Project or Activity\|Sector in which project is covered\| \|---\|---\|---\| \|1.\|Training and educating children, women, elderly, differently abled, scholarships, special education and increasing employability\|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\| \|2.\|Disaster Relief, technical support for Hospitals including Cancer Institutes, promoting hygienic sanitation.\|Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water\| \|Projects or programs\|Amount Outlay (budget)\|Amount spent on the projects or program\|Cumulative Expenditure up to the reporting period\|Amount Spent : Direct or through implementing agency\| \|---\|---\|---\|---\|---\| \|(1) Local area or other project or program wise\|423\|114\|397\|Through implementing agency\| \|(2) Specify the State and district where projects or programs was undertaken\|849\|176\|782\|Through implementing agency\| TCS Annual Report 2019-20 Directors' Report I 56 # TCS Annual Report 2019-20 # Directors' Report \|Sr. No.\|CSR Project or Activity\|Sector in which project is covered\|Projects or programs identified\|Amount Outlay (budget)\|Amount spent on the projects or program\|Cumulative Expenditure up to 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\|18\|6\|11\|Direct\| \|4.\|Contribution to Foundation/Trusts\|Various sectors covered by Schedule VII of the Companies Act, 2013\|Pan India\|886\|303\|885\|Through implementing agency\| \|Sub-total\|Sub-total\|Sub-total\|Sub-total\|2,176\|599\|2,075\| \| \|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\|3\| \|Total CSR Spend\|Total CSR Spend\|Total CSR Spend\|Total CSR Spend\|Total CSR Spend\|Total CSR Spend\|Total CSR Spend\|602\| Note: With respect to the projects identified by the Company as a part of its CSR activities, the Company had an outlay of `2,186 crore against which a cumulative expenditure of `2,082 crore has been incurred up to March 31, 2020. # Annexure III # Form No.
MGT-9 # Extract of Annual Return as on the financial year ended on March 31, 2020 [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 Consultants Private Limited, 6, 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\| TCS Annual Report 2019-20 Directors' Report I 58 # 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 Private Limited Bombay House, 24, Homi Modi Street, Mumbai, Maharashtra 400001, India\|U99999MH1917PTC000478\|Holding\|72\|2(46)\| \|2.\|APTOnline Limited STP Block SGA-Z4, Synergy Park (Non-SEZ) Campus, Opp. DLF Cybercity, Gachibowli, Hyderabad 500032, India\|U75142TG2002PLC039671\|Subsidiary\|89\|2(87)\| \|3.\|C-Edge Technologies Limited Palm Centre, Banyan Park, Suren Road, Andheri East, Mumbai, Maharashtra 400093, India\|U72900MH2006PLC159038\|- do -\|51\|2(87)\| \|4.\|MP Online Limited No 4th Floor, OB 14 to 17 DB City Corporate Block, DB Mall Arera Hill, Bhopal 462011, 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 400021, 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. Al Bidda Tower, Corniche Street, 7th floor, Building no. 56, Zone no. 60, Street no. 830, P.O. Box No. 207210, Doha, State of Qatar\|- do -\|- do -\|100\|2(87)\| \|11.\|Tata Consultancy Services Saudi Arabia Akaria, Centre II, 7th Floor, Office No 712, Riyadh - 11372, Kingdom of Saudi Arabia\|- do -\|- do -\|76\|2(87)\| 1 102-45 TCS Annual Report 2019-20 Directors' Report I 59 # TCS Annual Report 2019-20 # Directors' Report File: AR_TCS_2019_2020-1-314.md \|Sr. No.\|Name and address of the Company\|CIN/GLN\|Holding/ Subsidiary/ Associate\|% of shares held\|Applicable Section\| \|---\|---\|---\|---\|---\|---\| \|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 12th Floor, Menara Symphony, No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya Selangor, 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, People's Republic of China\|- do -\|- do -\|93.2\|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, Indonesia\|- 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, Thailand\|- 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)\| \|18.\|Tata Consultancy Services Japan, Ltd. 4-1-4 Shibakoen, Minato Ku, Tokyo, Japan\|- do -\|- do -\|66\|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 2a 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 BV Symphony Towers, 20th Floor, Gustav Mahlerplein 85-91, 1082 MS Amsterdam, The Netherlands\|- do -\|- do -\|100\|2(87)\| \|Sr.
No.\|Name and address of the Company\|CIN/GLN\|Holding/ Subsidiary/ Associate\|% of shares held\|Applicable Section\| \|---\|---\|---\|---\|---\|---\| \|23.\|Tata Consultancy Services Sverige AB Mäster Samuelsgatan, 42 SE 111 57, Sweden\|- do -\|- do -\|100\|2(87)\| \|24.\|Tata Consultancy Services Belgium 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 Orbi Tower, Thomas Klestil-Platz 13, 1030 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 Tour Franklin-La Defense 8, 100/101 Terrasse Boieldieu -92042, La Defense Cedex, Paris, France\|- do -\|- do -\|100\|2(87)\| \|33.\|TCS Business Services GmbH Elisabethstr 11, 40217, Dusseldorf, Germany\|- do -\|- do -\|100\|2(87)\| \|34.\|TCS FNS Pty Limited Level 6, 76 Berry Street, North Sydney, NSW 2060 Australia\|- do -\|- do -\|100\|2(87)\| TCS Annual Report 2019-20 Directors' Report I 61 \|Sr.\|Name and address of the Company\|CIN/GLN\|Holding/ Subsidiary/ Associate\|% of shares held\|Applicable Section\| \|---\|---\|---\|---\|---\|---\| \|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 China 100193\|- do -\|- do -\|100\|2(87)\| \|37.\|TCS Iberoamerica SA Monte Caseros 2600, 1329; Montevideo, Uruguay (Postal Code: 11100)\|- 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)\| \|39.\|Tata Consultancy Services Argentina S.A. Uspallata 3046; Capital Federal, Ciudad Autónoma de Buenos Aires, Argentina (CP: C1437JCJ)\|- do -\|- do -\|100\|2(87)\| \|40.\|Tata Consultancy Services De Mexico S.A., De C.V. Av. Insurgentes Sur 664, 2nd Floor, Colonia Del Valle, Ciudad de Mexico, México, DF, México (Postal Code: 03100)\|- do -\|- do -\|100\|2(87)\| \|41.\|TCS Inversiones Chile Limitada Curico 18, Piso 3 & 5, Santiago, Chile (Postal Code: 8330088)\|- do -\|- do -\|100\|2(87)\| \|42.\|Tata Consultancy Services Do Brasil Ltda Alameda Madeira, 328 - 13° andar, Alphaville Industrial - Barueri - SP. Zip Code 06453-020\|- do -\|- do -\|100\|2(87)\| \|43.\|Tata Consultancy Services Chile S.A. Curicó 18, Piso 3 & 5, Santiago, Chile (Postal Code: 8330088)\|- 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. Monte Caseros 2600, Montevideo, Uruguay (Postal Code:11100)\|- do -\|- do -\|100\|2(87)\| TCS Annual Report 2019-20 Directors' Report I 62 \|Sr. No.\|Name and address of the Company\|CIN/GLN\|Holding/ Subsidiary/ Associate\|% of shares held\|Applicable Section\| \|---\|---\|---\|---\|---\|---\| \|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, Zapopan Jalisco, Guadalajara, 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. 379 Thornall Street, Edison 08837, New Jersey, U.S.A.\|- do -\|- do -\|100\|2(87)\| \|51.\|W12 Studios Limited 75 Bayham Street, London, England, NW1 0AA\|- do -\|- do -\|100\|2(87)\| TCS Annual Report 2019-20 Directors' Report I 63 # 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 April 1, 2019\| \| \| \| \|No.

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