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of shares held at the end of the year March 31, 2020| | |%|Change during the year| |---|---|---|---|---|---|---|---|---|---|---|---|---| |(A) Promoters and Promoter Group|(1) Indian|(a) Individuals / HUF|-|-|-|-|-| | | | | | |(b) Central Government/State Government(s)|-|-|-|-|-| | | | | | | | |(c) Bodies Corporate|2,703,542,000| |-|2,703,542,000| |72.0|2,703,542,000|-|2,703,542,000|72.0|-| | |(d) Financial Institutions / Banks|-|-|-|-|-| | | | | | | | |(e) Other- Trust|-|-|-|-|-| | | | | | | | |Sub-Total (A) (1)|2,703,542,000|-|2,703,542,000| | |72.0|2,703,542,000|-|2,703,542,000|72.0|-| | |(2) Foreign|(a) Individuals (Non- Resident Individuals/Foreign Individuals)|-|-|-|-|-| | | | | | | |(b) Bodies Corporate|-|-|-|-|-| | | | | | | | |(c) Institutions|-|-|-|-|-| | | | | | | | |(d) Qualified Foreign Investor|-|-|-|-|-| | | | | | | | |(e) Any Other (specify)|-|-|-|-|-| | | | | | | | |Sub-Total (A) (2)|-|-|-|-|-| | | | | | | | |Total Shareholding of Promoter and Promoter Group (A)|2,703,542,000| |-|2,703,542,000| |72.0|2,703,542,000|-|2,703,542,000|72.0|-| | TCS Annual Report 2019-20 Directors' Report I 64 # TCS Annual Report 2019-20 # Directors' Report |Sr.|Category of shareholders|No. of shares held at the beginning of the year April 1, 2019|No. of shares held at the end of the year March 31, 2020|%|No. of shares|% of total|Change during the year| |---|---|---|---|---|---|---|---| |(B)|Public Shareholding| | | | | | | |(1)|Institutions| | | | | | | |(a)|Mutual Funds / UTI|93,354,218|95,695,453|2.5|3,450|2.6|0.1| |(b)|Financial Institutions / Banks|707,232|1,844,729|-|5,110|0.1|0.1| |(c)|Central Government / State Governments(s)|2,037,771|2,420,388|0.1|-|0.1|-| |(d)|Venture Capital Funds|-|-|-|-|-|-| |(e)|Insurance Companies|196,172,807|200,941,420|5.2|-|5.3|0.1| |(f)|Foreign Institutional Investors|4,732,576|979,740|0.1|-|-|(0.1)| |(g)|Foreign Venture Capital Investors|-|-|-|-|-|-| |(h)|Qualified Foreign Investor|-|-|-|-|-|-| |(i)|Foreign Portfolio Investors (Corporate)|588,110,025|589,641,314|15.7|-|15.7|-| |(j)|Any Other (specify)|-|-|-|-|-|-| |Sub-Total (B) (1)| |885,114,629.0|891,523,044|23.6|8,560|23.8|0.2| |(2)|Non-Institutions| | | | | | | |(a)|Bodies Corporate|12,451,882|12,428,282|0.3|34,647|0.3|-| |(b)|Individuals -|114,051,696|111,069,357|3.1|1,414,588|3.0|(0.1)| | |Individual shareholders holding nominal share capital upto| | | | | | | | |`1 lakh| | | | | | | # TCS Annual Report 2019-20 # Directors' Report |Sr.|Category of shareholders|No. of shares held at the beginning of the year April 1, 2019|No. of shares held at the end of the year March 31, 2020|%|No.|Demat|Physical|Total|% of total|Demat|Physical|Total|% of total|Change during the year| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |ii|Individual shareholders holding nominal share capital in excess of `1 lakh|20,132,741|-|20,132,741|0.5|12,091,576|-|12,091,576|0.3|(0.2)| | | | | |(c)|Qualified Foreign Investor|-|-|-|-|-|-|-|-|-| | | | | |(d)|Any Other| | | | | | | | | | | | | | |i|Trusts|9,879,420|-|9,879,420|0.3|11,230,590|-|11,230,590|0.3|-| | | | | |ii|Foreign Companies|56|-|56|-|56|-|56|-|-| | | | | |iii|Clearing Members / Clearing House|3,842,202|-|3,842,202|0.1|7,107,736|-|7,107,736|0.2|0.1| | | | | |iv|Alternative Investment Fund|1,663,495|-|1,663,495|0.1|1,820,360|-|1,820,360|0.1|-| | | | | |v|IEPF Suspense A/c|248,790|-|248,790|-|301,900|-|301,900|-|-| | | | | |Sub-total (B) (2)| |162,270,282|1,449,235|163,719,517|4.4|156,049,857|1,261,345|157,311,202|4.2|(0.2)| | | | | |Total Public Shareholding| |1,047,384,911|1,457,795|1,048,842,706|28.0|1,047,572,901|1,269,805|1,048,842,706|28.0|-| | | | | |(B) = (B)(1)+(B)(2)| |3,750,926,911|1,457,795|3,752,384,706|100.0|3,751,114,901|1,269,805|3,752,384,706|100.0|-| | | | | |(C)|Shares held by Custodians and against which Depository Receipts have been issued|-|-|-|-|-|-|-|-|-| | | | | |GRAND TOTAL (A)+(B)+(C)| |3,750,926,911|1,457,795|3,752,384,706|100.0|3,751,114,901|1,269,805|3,752,384,706|100.0|-| | | | | # ii) Shareholding of Promoters (including Promoter Group) |Sr. No.|Shareholder's Name|Shareholding at the beginning of the year April 1, 2019| | | | |Shareholding at the end of the year March 31, 2020|% change in shareholding| | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---| |1.|Tata Sons Private Limited (Promoter)|No. of shares: 2,702,450,947 % of total shares of the Company: 72.0 % of shares pledged/encumbered to total shares: 2.1|No. of shares: 2,702,450,947 % of total Shares of the Company: 72.0 % of shares pledged/encumbered to total shares: 2.1| | | | | | | | |-| |2.|Tata Industries Limited*|No. of shares: 7,220 % of total shares of the Company: - % of shares pledged/encumbered to total shares: -|No. of shares: 7,220 % of total Shares of the Company: - % of shares pledged/encumbered to total shares: -|-| | | | | | | | | |3.|Tata Investment Corporation Limited*|No. of shares: 1,036,269 % of total shares of the Company: - % of shares pledged/encumbered to total shares: -|No. of shares: 1,036,269 % of total Shares of the Company: - % of shares pledged/encumbered to total shares: -|-| | | | | | | | | |4.|Tata Steel Limited*|No. of shares: 46,798 % of total shares of the Company: - % of shares pledged/encumbered to total shares: -|No. of shares: 46,798 % of total Shares of the Company: - % of shares pledged/encumbered to total shares: -|-| | | | | | | | | |5.|The Tata Power Company Limited*|No. of shares: 766 % of total shares of the Company: - % of shares pledged/encumbered to total shares: -|No. of shares: 766 % of total Shares of the Company: - % of shares pledged/encumbered to total shares: -|-| | | | | | | | | |Total|No. |
of shares: 2,703,542,000 % of total shares of the Company: 72.0 % of shares pledged/encumbered to total shares: 2.1|No. of shares: 2,703,542,000 % of total Shares of the Company: 72.0 % of shares pledged/encumbered to total shares: 2.1| | | | | | | | | |-| *Forms part of the Promoter Group. # iii) Change in Promoter's (including Promoter Group) Shareholding (please specify, if there is no change) |Sr. No.|Name of the shareholder|Shareholding at the beginning of the year April 1, 2019|Date|Reason|Increase/Decrease in Shareholding|Cumulative shareholding during the year| |---|---|---|---|---|---|---| |1.|Tata Sons Private Limited (Promoter)|No. of shares: 2,702,450,947 % of total shares of the Company: 72.0|-|-|-|No. of Shares: 2,702,450,947 % of Total Shares of the Company: 72.0| |2.|Tata Industries Limited*|No. of shares: 7,220 % of total shares of the Company: -|-|-|-|No. of Shares: 7,220 % of Total Shares of the Company: -| |3.|Tata Investment Corporation Limited*|No. of shares: 1,036,269 % of total shares of the Company: -|-|-|-|No. of Shares: 1,036,269 % of Total Shares of the Company: -| |4.|Tata Steel Limited*|No. of shares: 46,798 % of total shares of the Company: -|-|-|-|No. of Shares: 46,798 % of Total Shares of the Company: -| |5.|The Tata Power Company Limited*|No. of shares: 766 % of total shares of the Company: -|-|-|-|No. of Shares: 766 % of Total Shares of the Company: -| *Forms part of the Promoter Group. # iv) Shareholding Pattern of Top ten shareholders (other than Directors, Promoters and holder of GDRs and ADRs): |Sr. No.|Top Ten Shareholders*|Shareholding at the beginning of the year| |Cumulative shareholding at the end of the year| | | | |---|---|---|---|---|---|---|---| | | |No. of shares|% of total shares of the Company|No. of shares|% of total shares of the Company| | | |1.|Life Insurance Corporation of India|152,493,927|4.1|157,538,396| | |4.2| |2.|Invesco Oppenheimer Developing Markets Fund|16,731,906|0.4|28,045,020| | |0.8| |3.|SBI Mutual Fund|21,680,561|0.6|26,429,597| | |0.7| |4.|Axis Mutual Fund Trustee Limited|15,244,614|0.4|16,609,800|0.4| | | |5.|Government of Singapore|18,028,475|0.5|16,012,250| | |0.4| |6.|Vanguard Total International Stock Index Fund|13,978,944|0.4|15,772,829|0.4| | | |7.|Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International Equity Index Funds|14,112,213|0.4|13,199,846|0.4| | | |8.|ICICI Prudential Life Insurance Company Ltd|16,139,316|0.4|12,868,617| | |0.3| |9.|First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund|19,248,438|0.5|12,257,728| | |0.3| |10.|Wgi Emerging Markets Fund LLC|10,193,241|0.3|11,243,846|0.3| | | *The shares of the Company are traded on daily basis and hence the datewise increase/decrease in shareholding is not indicated. Shareholding is consolidated based on permanent account number (PAN) of the shareholder. TCS Annual Report 2019-20 Directors' Report I 68 # v) Shareholding of Directors and Key Managerial Personnel: |Sr. No.|Name of the Shareholder|Date|Reason|Shareholding at the beginning of the year|Cumulative shareholding at the end of the year| |---|---|---|---|---|---| |1.|N Chandrasekaran|01-Apr-2019|-|No. of shares: 177,056 % of total shares of the Company: -|No. of shares: 177,056 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 177,056 % of total shares of the Company: -|No. of shares: 177,056 % of total shares of the Company: -| |2.|Aarthi Subramanian|01-Apr-2019|-|No. of shares: 5,600 % of total shares of the Company: -|No. of shares: 5,600 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 5,600 % of total shares of the Company: -|No. of shares: 5,600 % of total shares of the Company: -| |3.|Rajesh Gopinathan|01-Apr-2019|-|No. of shares: 2,260 % of total shares of the Company: -|No. of shares: 2,760 % of total shares of the Company: -| | | |14-Oct-2019|Purchase of Shares|No. of shares: 500 % of total shares of the Company: -|No. of shares: 2,760 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 2,760 % of total shares of the Company: -|No. of shares: 2,760 % of total shares of the Company: -| |4.|N Ganapathy Subramaniam|01-Apr-2019|-|No. of shares: 197,760 % of total shares of the Company: -|No. of shares: 197,760 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 197,760 % of total shares of the Company: -|No. of shares: 197,760 % of total shares of the Company: -| |5.|Keki Mistry|01-Apr-2019|-|No. of shares: 4,078 % of total shares of the Company: -|No. of shares: 4,078 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 4,078 % of total shares of the Company: -|No. of shares: 4,078 % of total shares of the Company: -| |1.|Ramakrishnan V|01-Apr-2019|-|No. of shares: 2,000 % of total shares of the Company: -|No. of shares: 2,000 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 2,000 % of total shares of the Company: -|No. |
of shares: 2,000 % of total shares of the Company: -| |2.|Rajendra Moholkar|01-Apr-2019|-|No. of shares: 364 % of total shares of the Company: -|No. of shares: 364 % of total shares of the Company: -| | | |31-Mar-2020|-|No. of shares: 364 % of total shares of the Company: -|No. of shares: 364 % of total shares of the Company: -| # V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment |(` crore)|Secured Loans excluding deposits|Unsecured Loans|Deposits|Total Indebtedness| |---|---|---|---|---| |Note 1|Note 2|Note 3| | | |Indebtedness at the beginning of the financial year| | |4|4| |i) Principal Amount|-|-|4|4| |ii) Interest due but not paid|-|-|-|-| |iii) Interest accrued but not due|-|-|-|-| |Total (i+ii+iii)|-|-|4|4| |Change in Indebtedness during the financial year| | | | | |*≈ Addition|14,719|-|-|14,719| |*≈ Reduction|(14,719)|-|-|(14,719)| |Net Change|-|-|-|-| |Indebtedness at the end of the financial year| | |4|4| |i) Principal Amount|-|-|4|4| |ii) Interest due but not paid|-|-|-|-| |iii) Interest accrued but not due|-|-|-|-| |Total (i+ii+iii)|-|-|4|4| *Opening balance adjusted on account of transition to Ind AS 116 Leases. Note: Deposits represent amounts received from lessee for the premises given on sub-lease and from vendors for contracts to be executed. TCS Annual Report 2019-20 Directors' Report I 70 # VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL # A. Remuneration to Managing Director, Whole-time Directors and / or Manager: |Sr. No.|Particulars of Remuneration| |Name of MD/WTD/Manager| | | | |---|---|---|---|---|---|---| |1.|Gross salary|Rajesh Gopinathan|Chief Executive Officer and Managing Director|135.90| | | | | | |N Ganapathy Subramaniam|Chief Operating Officer and Executive Director|129.18| | | | | | | |Total Amount|265.08| |(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961| | | | | | | |(b) Value of perquisites u/s 17(2) of the Income-tax Act, 1961| |Rajesh Gopinathan|129.22| | | | | | | |N Ganapathy Subramaniam|16.00| | | | | | | | |Total Amount|145.22| |(c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961|-|-|-| | | | |2.|Stock Option|-|-|-| | | |3.|Sweat Equity|-|-|-| | | |4.|Commission|Rajesh Gopinathan|1,000.00| | | | | | | |N Ganapathy Subramaniam|700.00| | | | | | | | |Total Amount|1,700.00| | |as % of profit|0.02|0.02| |0.04| | |5.|Others, Allowances|Rajesh Gopinathan|72.82| | | | | | | |N Ganapathy Subramaniam|166.51| | | | | | | | |Total Amount|239.33| | |Total (A)|1,337.94| |1,011.69|2,349.63| | | |Ceiling as per the Act (@ 10% of profits calculated under Section 198 of the Companies Act, 2013)| | | |420,701.94| | # B. Remuneration to other directors: |Sr. No.|Particulars of Remuneration|Sitting Fees for attending board/ committee meetings|Commission|Others, please specify|Total Amount| | |---|---|---|---|---|---|---| |1.|Independent Directors| | | | | | |Aman Mehta*| | |1.80|60.00|-|61.80| |Dr. Ron Sommer*| | |1.80|60.00|-|61.80| |O P Bhatt**| | |6.90|200.00|-|206.90| |Dr. Pradeep Kumar Khosla| | |5.10|140.00|-|145.10| |Hanne Sorensen| | |4.80|140.00|-|144.80| |Keki Mistry| | |5.10|140.00|-|145.10| |Don Callahan| | |5.10|140.00|-|145.10| |Total (1)| | |30.60|880.00|-|910.60| |2.|Other Non-Executive Directors| | | | | | |N Chandrasekaran@| | |4.20|-|-|4.20| |Aarthi Subramanian@@| | |5.40|-|-|5.40| |Total (2)| | |9.60|-|-|9.60| |Total (B)=(1+2)| | |40.20|880.00|-|920.20| |Total Managerial Remuneration Ceiling as per the Act (@1% of profits calculated under Section 198 of the Companies Act, 2013)|Total Managerial Remuneration Ceiling as per the Act (@1% of profits calculated under Section 198 of the Companies Act, 2013)|Total Managerial Remuneration Ceiling as per the Act (@1% of profits calculated under Section 198 of the Companies Act, 2013)|Total Managerial Remuneration Ceiling as per the Act (@1% of profits calculated under Section 198 of the Companies Act, 2013)|Total Managerial Remuneration Ceiling as per the Act (@1% of profits calculated under Section 198 of the Companies Act, 2013)|42,070.19| | | | | | * Ceased to be Directors w.e.f. June 26, 2019 upon completion of their term as Independent Director. ** Re-appointed as Independent Director for a second term w.e.f. June 27, 2019. @ As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated. @@ In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata company and hence not stated. # C. Remuneration to Key Managerial Personnel other than MD / Manager / WTD |Sr. |
No.|Particulars of Remuneration| |Key Managerial Personnel| | | | | |---|---|---|---|---|---|---|---| |1.|Gross salary| | | | | | | |(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961| |Ramakrishnan V|77.66|Rajendra Moholkar|23.90|Total|101.56| | |(b) Value of perquisites u/s 17(2) of the Income-tax Act, 1961|54.82|1.55|56.37| | | | |(c) Profits in lieu of salary under Section 17(3) of the Income-tax Act, 1961|-|-|-| | | | | |2.|Stock Option|-| | | | | | |3.|Sweat Equity|-| | | | | | |4.|Commission|-| | | | | | |as % of profit| |-| | | | | | |5.|Others, Allowances|265.95|114.54|380.49| | | | |Total| |398.44|139.99|538.42| | | | Note: For more information, please refer the Corporate Governance Report. # VII. PENALTIES/ PUNISHMENT/COMPOUNDING OF OFFENCES: There were no penalties, punishment or compounding of offences during the year ended March 31, 2020. # Annexure IV # FORM No. MR-3 # Secretarial Audit Report # for the financial year ended March 31, 2020 [Pursuant to Section 204 (1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members, Tata Consultancy Services Limited We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Tata Consultancy Services Limited (hereinafter called "the Company"). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. Based on our verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company, the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to us and the representations made by the Management and considering the relaxations granted by the Ministry of Corporate Affairs and Securities and Exchange Board of India warranted due to the spread of the COVID-19 pandemic, we hereby report that in our opinion, the Company has during the audit period covering the financial year ended on March 31, 2020, generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: # (i) The Companies Act, 2013 (the Act) and the rules made thereunder; # (ii) The Securities Contract (Regulation) Act, 1956 ('SCRA') and the rules made thereunder; # (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; # (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; # (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'): - (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; - (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; - (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and amendments from time to time; - (d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the audit period) TCS Annual Report 2019-20 Directors' Report I 74 # TCS Annual Report 2019-20 # Directors' Report (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable to the Company during the audit period) (f) The Patents Act, 1970 exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. |
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the Company during the audit period) (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the audit period) (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018; (Not applicable to the Company during the audit period) (vi) Other laws applicable specifically to the Company namely:- - (a) Information Technology Act, 2000 and the rules made thereunder; - (b) Special Economic Zones Act, 2005 and the rules made thereunder; - (c) Software Technology Parks of India rules and regulations - (d) The Indian Copyright Act, 1957 We have also examined compliance with the applicable clauses of the following: - (i) Secretarial Standards issued by The Institute of Company Secretaries of India with respect to board and general meetings. - (ii) The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE Limited read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above. We further report that: The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. File: AR_TCS_2019_2020-1-314.md Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance for meetings other than those held at shorter notice, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. As per the minutes, the decisions at the Board Meetings were taken unanimously. We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines etc. We further report that during the audit period the Company no events occurred which had bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc. For Parikh & Associates Company Secretaries P N Parikh Partner FCS No: 327 CP No: 1228 Mumbai, April 16, 2020 UDIN: F000327B000161246 This Report is to be read with our letter of even date which is annexed as Annexure A and Forms an integral part of this report. # Annexure A To, The Members Tata Consultancy Services Limited Our report of even date is to be read along with this letter. 1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion. 3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 4. Where ever required, we have obtained the Management Representation about the Compliance of laws, rules and regulations and happening of events etc. 5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis. 6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. For Parikh & Associates Company Secretaries P N Parikh Partner FCS No: 327 CP No: 1228 Mumbai, April 16, 2020 UDIN: F000327B000161246 TCS Annual Report 2019-20 Directors' Report I 76 # OVERVIEW OF THE INDUSTRY In CY 2019, the global market for software and services is estimated to have grown to $1.5 trillion1. |
IT services is estimated to have grown by 3.5% YoY, characterized by a shift to digital technologies, and adoption of DevOps, and as-a-service models. Business Process Management grew by 4.5% over the prior year driven by a greater focus on robotic process automation as customers automate repetitive tasks and focus on strategic work. # Discussion and Analysis TCS has historically grown much faster than the market. In the latest five-year period, while the market for IT-BPM services expanded by a CAGR of 2.4% (IT Services CAGR: 2.3%), TCS had a CAGR of 7.3% in USD terms. One reason for the outperformance is market share gains on account of superior capabilities, better execution, higher customer satisfaction and greater participation in our customers' growth and transformation spends. Our geographic footprint covers North America, Latin America, the United Kingdom, Continental Europe, Asia-Pacific, India, and Middle-East and Africa3. # OUR BUSINESS TCS is an IT services, consulting and business solutions organization partnering many of the world's largest businesses in their transformational journeys for the last 50 years. It has a global presence, deep domain expertise in multiple industry verticals and a complete portfolio of offerings - grouped under consulting and service integration, digital transformation services, cognitive business operations, and products and platforms - targeting every C-suite stakeholder. The company leverages all these and its deep contextual knowledge of its customers' businesses to craft unique, high quality, high impact solutions designed to deliver differentiated business outcomes. These solutions are delivered using the latest technologies through a unique Location Independent Agile™ delivery model, embedding a Machine First™ approach, recognized as a benchmark of excellence in software development. # Key Vertical Clusters TCS considers industry verticals as its go-to-market business segments. The five key vertical clusters are: - Banking, Financial Services & Insurance (BFSI) - Retail and Consumer Business - Communications, Media and Technology (CMT) - Manufacturing - Others (including Life Sciences and Healthcare, Energy, Resources and Utilities, Public Services and others) 1 Nasscom Strategic Review Report 2020 2 102-2 3 102-4, 102-6 # Integrated Business Model for Value Creation # TCS Annual Report 2019-20 # Management Discussion and Analysis I 78 # Value Creation Model TCS applies some of its intellectual capital towards investments in research and innovation (R&I), exploring the creative use of newer technologies to solve business problems across different industry verticals. In addition to its own intellectual capital, TCS also partners with leading technology providers, start-ups and academic researchers to leverage their intellectual capital and build solutions. These solutions create immense value for our customers by helping them embrace new business models, pursue new revenue streams, deliver superior customer experiences or build resilience and efficiency into their operations, and gain competitive differentiation. Talent and creativity, that is represented by human capital, is at the core of TCS' value creation engine. TCS continually enhances its human capital by acquiring the best talent available in each of the markets it operates in, providing a supportive and vibrant workplace to engage that talent, investing in upskilling individuals with the latest technology skills, and giving them career paths matching their aspirations. A firm belief in organic talent development, and of investing in people, has helped TCS successfully navigate through multiple technology cycles over the last five decades, pivoting and adapting each time to build relevant new capabilities through reskilling of the workforce at scale and helping customers realize the benefits of emerging technologies. The company's strong service orientation, willingness to invest in the relationship, commitment to deliver impactful outcomes and track record of execution excellence have resulted in consistently high customer satisfaction levels and long, enduring customer relationships. The resultant expansion in relationship capital translates into a very high level of repeat business that lends greater visibility and predictability to the business model. # Customer Engagement TCS uses its intellectual capital and human capital to build impactful, customized technology and business solutions that address the customer's business problems. The immediate tangible outcomes of TCS' R&I, produced by in-house teams or co-created with customers or partners, are patents, proofs of concepts, and pilot solutions. The latter two are showcased at various innovation centers and Pace Ports™, and trigger conversations with customers on innovation in their specific business contexts. These often culminate in them signing up TCS as their innovation partner. Some of the innovative software solutions piloted by R&I, that are assessed to have a material market potential are productized, adding to TCS' large portfolio of products and platforms. |
These expand the organization's intellectual capital; create new revenue streams, adding to the financial capital; and enhance its brand positioning i.e. relationship capital. TCS constantly invests in building newer capabilities and expanding its offerings. By cross-selling and up-selling these new offerings, customer engagements continually expand over the years, covering newer and newer areas of the enterprise's operations. This further broadens and deepens the contextual knowledge of customers' business and IT landscapes, further enhancing TCS' intellectual capital. Over time, this combination of business knowledge, contextual knowledge, technology depth, and intellectual property has become a steadily deepening moat around the company's business model and sharpened its differentiated positioning. # Value Sharing Best in class profitability, reduced cost of capital due to a more predictable and resilient business, and high cash conversion on account of superior execution have resulted in a high return on equity. All this and a shareholder-friendly capital allocation policy have boosted the company's relationship capital with shareholders. The investments in people, research and innovation, and intellectual property creation are all charged off and not capitalized. The company's capital expenditure to support its growth - manufacturing capital - towards building campuses, Agile workspaces, innovation centers, and Pace Ports is modest relative to its size. That and the focus on pursuing organic business growth opportunities maximizes the free cash flow available for distribution to shareholders. # Strategy for Sustainable Growth TCS' business model and strategy have resulted in deep and enduring customer relationships, a vibrant and engaged workforce, a steady expansion of its addressable market, a strong reputation as a responsible corporate citizen and a proven track record in delivering longer term stakeholder value. All of this has significantly enhanced the company's brand value, which is a quantifiable measure of its social and relationship capital with stakeholders. # Enabling Investments Customer-centricity is at the heart of TCS' strategy, organization structure and investment decisions. TCS' customer-centric worldview helps spot trends early, embrace business opportunities by making the right investments and mitigating risks while discharging its social and environmental responsibilities. The company invests in broadening and deepening customer relationships by continually looking for new areas in their value chain where the company can add value, proactively investing in these new areas, and alliances and partnerships. TCS pioneered the use of the word 'digital' to describe the new family of technologies that emerged in the last few years. Quick to recognize their potential, the company made investments ahead of time in developing relevant capabilities - in terms of reskilling the workforce, research and innovation around the creative use of these technologies across different industries, building collaborative workspaces and innovation centers, IP in these new areas. Those early investments have given TCS a head start in participating in our customers' growth and transformation journeys. 5 102-12: TCS is a signatory to the UN Global Compact and aligned with its ten principles. It is also one of the first companies in India to participate in the Carbon Disclosure Project (CDP). 6 Ref MD&A - AR FY 2011, CEO's Letter - AR FY 2012 TCS Annual Report 2019-20 Management Discussion and Analysis I 80 # In FY 2020 In addition to continued investments in the Location Independent Agile model and the forward-thinking Machine First™ Delivery Model, TCS doubled down on Japan, raising its equity holding in TCS Japan Ltd, its joint venture with Mitsubishi Corporation, from 51% to 66%. This follows the setting up of a TCS Pace Port in Tokyo in FY 2019, and a Japan-centric delivery center in Pune in FY 2016. The company set up its second TCS Pace Port at New York, at the Tata Innovation Center on the Cornell Tech campus. This co-innovation and advanced research center consists of a TCS COIN™ accelerator, an Agile workspace, an academic research lab and an innovation showcase, and will help engage customers through the discovery, definition, refinement and delivery phases of innovation. TCS' Location Independent Agile model allows large transformational programs to be delivered by globally distributed teams working collaboratively in an Agile mode, resulting in significant speed to market, reduced risk and enhanced customer experiences. The underlying project management methodology, governance structures, processes and controls, and security protocols have been extended to implement Secure Borderless Workspaces™, a fully location-agnostic model that lends further resilience to the delivery model. This has increased demand for the entire gamut of services, solutions, products and platforms offered by TCS, resulting in a stronger order book, more robust revenue growth, and improved market share. |
These transformational engagements are raising TCS' profile within C-suites, embedding its teams more deeply within customers' businesses and resulting in greater predictability and resilience. # Thought Leadership In 2017, TCS unveiled its Business 4.0™ thought leadership framework7 to guide customers in their growth and transformation journeys. The four defining behaviors of successful enterprises in the Business 4.0 era are: drive mass personalization, leverage the ecosystem, embrace risk and create exponential value. They accomplish this by harnessing the abundance of resources - compute power, storage, talent, market reach - created by the convergence of intelligence, agility, automation and cloud. While this provides a way for customers to think through their digital transformation journeys at a business model level, TCS followed it up with an execution framework consisting of outcomes that unlock significant value, helping the enterprise fund growth and transformation initiatives that are critical for its competitive differentiation. # Outcomes TCS' thought leadership and investments have made it the preferred innovation and transformation partner to progressive enterprises across different industry verticals. 7 Ref AR FY 2018 TCS Annual Report 2019-20 Management Discussion and Analysis I 81 # TCS Strategy |Market Trends|TCS Approach|Outcomes| |---|---|---| |More and more industries are leveraging technology to differentiate themselves|Position as a growth and transformation partner|Industry-defining mega deals| |Customers want solutions to business problems and not just technology skills|More investment in research and innovation, co-innovation and collaboration|Thinner competitive set| | |Domain-specific IP|Higher quality revenue| | |Greater focus on contextual knowledge|More fulfilling work; better retention| | |Proactive solution selling| | |Non-CIO buyers emerging in enterprises|Full stakeholder services and solutions|Expansion of addressable market| | | |More deeply embedded in customer's business; greater resilience and visibility| | | |Higher profile, strategically more important engagements| |Transformational partners selected based on solution quality and time to market|Leverage TCS' contextual knowledge, Location Independent Agile, Machine First Delivery Model and Intellectual Property|Thinner competitive set| | | |Higher quality revenue| |Greater platformization of business|Launch of cloud based platforms and new business models|Large deals that improve business visibility| | |Leverage IP portfolio|Expansion of addressable market| | | |Frees up spends for systems of differentiation| |Pandemic disruption highlights need for operational resilience and enterprise adaptability|Launch of SBWS|Highlights company's responsiveness| | |Greater focus on Location Independent Agile and MFDM|Market share expansion| | |Promote operating model transformation using AI| | TCS Annual Report 2019-20 Management Discussion and Analysis I 82 # FY 2020 PERFORMANCE OVERVIEW: # HUMAN CAPITAL # Talent Management The ability to attract, motivate, develop and retain talent is critical to TCS' continued success. The company's HR strategy is focused on attracting the best talent globally, reskilling and transforming the workforce and providing a stimulating work environment which is flexible, nurtures social contract, fosters innovation, and builds a result-oriented, high performance culture. The progressive policies, continual investment in upgrading employees' skills and the philosophy of empowering individuals and helping them realize their potential have made TCS' HR processes and outcomes an industry benchmark. |Young, Global, Diverse Workforce|Talent Development|Talent Retention| |---|---|---| |448,464 employees|4.7 million learning days|12.1% Attrition in IT services| |36.2% women|335K employees trained| | |144 nationalities|417K trained in Agile| | |31 years average age|679,805 certifications acquired| | 8 103-2, 103-3 TCS Annual Report 2019-20 Management Discussion and Analysis I 83 # TALENT MANAGEMENT A break-up of the workforce by region, age and gender is provided in the figure below. | |Male|Female| |---|---|---| |India|<br/><30|24%|28%| |30-40|11%|28%| |40-50|1%|7%| |>50|1%| | |North America|4%|12%| |---|---|---| | |8%|15%| |United Kingdom|22%|5%| | |14%| | Europe |<30|13%|12%| |---|---|---| |30-40|14%|20%| |40-50|7%|20%| |>50|11%|5%| |APAC|15%|17%| |---|---|---| | |20%|23%| |Emerging Markets|23%|14%| | |6%|13%| 9 102-8 TCS Annual Report 2019-20 Management Discussion and Analysis I 84 # Talent Acquisition TCS' talent acquisition strategy is to hire candidates with the right competencies required by the business at the right time, a judicious mix of lateral hires and trainees. TCS continues to remain the preferred employer at leading engineering campuses in India. The company's college recruitment efforts in USA, Canada, Latin America, China and Hungary have been progressing well with very encouraging outcomes. TCS has also been recruiting graduates from the Top 10 B-Schools in the US for key business roles. Including both fresher and lateral hires, TCS was one of the largest job creators in IT services in several major markets. |TCS National Qualifier Test|Academic Interface Program|Campus Commune|Gamified hiring| |---|---|---|---| |This nationwide online test administered by TCS iONTM has democratized the opportunity to work for TCS. |
It has helped TCS tap into the larger national talent pool and significantly boosted the quality of entry-level talent.|TCS partners with academic institutions to enhance their curriculum and pedagogy. Activities include workshops, internships, sponsorship of contests, faculty development programs, research scholarships, curriculum review and launch of new programs.|A unique student engagement portal for collaboration and peer networking, featuring webinars, educational videos and expert blogs.|Programming contests to spot top talent.| - Participation by over 336,000 students. - 2,500 colleges represented. - 2,181 internships across 711 institutes in India and 352 institutes outside. - 885 workshops; 73,146 students. - 404 faculty development programs; 14,774 members of the faculty. - 1,794 employees pursuing higher education under TCS Higher Education Program. - 3,000+ job offers made to toppers of six contests - EnQuode, EngiNx, Codevita, HackQuest, Inframind, HumAIn. - 230,000+ registrations from 88 countries in CodeVita's 8th season. 10 102-9 TCS Annual Report 2019-20 Management Discussion and Analysis I 85 # Reimagining Fresher Onboarding # Competitive Compensation women employees rejoined work, amounting to a retention rate of 97% and 98% respectively. In FY 2020, TCS reimagined the fresher onboarding process. In a departure from the past, where campus recruits used to be onboarded in batches staggered across the entire year, TCS onboarded all campus recruits, adding up to over 30,000 trainees, in just the first two quarters of the year. This feat of unprecedented scale was accomplished by front-loading the fresher training program even before they were onboarded, through TCS Xplore, a digital training program that leverages the TCS iON platform. This program provides video courses on technology topics, TCS processes and soft skills. Through live webinars, trainee candidates interact with TCS SMEs and have their questions answered. Proctored assessments test the candidates' theoretical and practical knowledge. High performers are rewarded with monetary incentives and early joining dates, incentivizing better preparation and performance. Documents are verified digitally, and physical onboarding takes place at multiple locations across India. On joining TCS, a customized and differential training program is conducted based on each candidate's performance in the Xplore proctored assessment. Exit tests, conducted twice a week, help ensure that the trainees are competent and can be deployed on billable assignments. At TCS, three months' notice is required from either side for termination. In India, less than 0.03% of the workforce is unionized. Although most of the organization's activities are performed by full-time employees, TCS uses contractors, especially for short-term assignments or those requiring skills not internally available. Compensation structures are driven by prevailing practices in each country that TCS operates in. However, across the enterprise, remuneration is the same for men and women working full-time, in the same grade, in the same role, and at the same location. Where relevant, the company publishes the raw mean and median pay differences between genders (not normalized for part-timers or grade and role differences) on its own website as well as on public sites. There is also a skill-based allowance for employees possessing niche skills, designed to motivate employees to acquire marketable skills, thereby benefiting themselves as well as TCS. # Talent Diversity TCS is an equal opportunity employer, embracing diversity in race, nationality, religion, ancestry, marital status, gender, age, ethnic origin, physical ability, and sexual orientation. Compensation levels are merit based, determined by qualification, experience levels, special skills if any, and individual performance. Through a variety of initiatives and campaigns, the company celebrates the diversity within the workforce and promotes inclusion. The company has a well-defined and progressive Diversity and Inclusion Policy with a focus on gender diversity (men, women, non-binary gender), persons with disability and neuro diversity, sexual orientation, diversity of the mind, and generational diversity. This includes parental leave and insurance cover for LGBTQ+ partners and gender re-assignment surgery. In FY 2020, a total of 8,331 employees availed of parental leave. Of these, 92 were men and 8,239 were women. Of the 4,693 employees whose parental leave ended during the year, 92 were men and 4,601 were women. Of these, 89 men and 4,502 were women. 11 405-2 12 401-3 13 402-1 14 102-41 15 103-2, 103-3 TCS Annual Report 2019-20 Management Discussion and Analysis I 86 # TCS Annual Report 2019-20 # Women in workforce (%) | |Junior|Middle|Senior| |---|---|---|---| |Male|79%|21.3|11.5| |Female|83%|37.8|42%| # Average learning hours per associate (%) | |Junior|Middle|Senior| |---|---|---|---| |Male|12.4|24.1|42.5| |Female|33%|36%|40%| The company has multiple initiatives for helping women employees realize their potential, while striking a good work-life balance. |
These include: discussion circles to help women through major life stages, re-orientation programs to reconnect employees after long leave, interactions with inspirational women leaders, and special leadership development programs to address the needs and aspirations of women (Presence, ImaginAll and iExcel), learning modules to equip mid-level managers to work with diverse teams, tie-ups with day care centers near the workplace, virtual support groups and parenting workshops. These targeted initiatives have helped TCS make tremendous progress in fostering gender diversity. It is today one of the world's largest employers of women. A few key outcomes are detailed below: # Participation There has been significant improvement in women's participation across different levels over the last five years: # Role Mobility 63% of the participants in the iExcel program reported role movements thereafter. 41% experienced upward progression while 14% had lateral movements. # Mentorship Participants in these programs are also helping develop and advance others. 228 iExcellers are active mentors, having mentored 1,825 associates till date, an average of 8 mentees per iExcel mentor. # Innovation This is a high focus area, helping TCS gain a differentiated positioning in the market. Of the 2,571 unique inventors responsible for the 1,341 granted patents till date, 544 are women. # Quality of life An internal poll showed that 76.3% women were satisfied with their work-life balance (versus 69.8% among men). TCS takes a purpose-based approach to learning and development that leverages horizontal collaboration and the abundance of internal talent in an ecosystem where the training is just-in-time, just-for-me and just-enough. The company's self-sustaining model for building a competency in any new area is by first seeding a core pool of experts who go on to guide other individuals thereby creating a pipeline of expertise. Complementing this, the learning ecosystem uses a phy-gital (physical and digital) model to guide self-paced, gamified digital learning through learning platforms, bootcamps and hackathons, with a feedback loop of robust data analytics that shapes investment decisions. 16 404-1 # Associates are encouraged to embrace continuous learning mobility, followed by an assessment of their leadership attributes. The objective of the program is to create and sustain a healthy leadership pipeline. # Purpose4life Forum for volunteering for community projects in the areas of education, health and environment. # Opportunities is the internal platform to publish niche and critical requirements to the leadership and high potential communities, thereby facilitating talent mobility. This embodies the company's philosophy of giving the first right of refusal for all leadership positions to internal candidates, thereby enabling better leadership development and building strong organizational loyalty. # Maitree Community of TCSers and their families who plan activities that help create a bond among employees and promote work-life balance. # PULSE Our annual employee engagement and satisfaction survey is the organization's formal listening forum. # TCS Cares Program aimed at creating robust avenues to build an emotionally strong and mentally resilient workforce. # Talent Engagement Some of the platforms and initiatives used by TCS to enhance and enrich employee engagement are: - iConnect is a highly collaborative tool designed to help employees reach out to senior mentors for guidance on career paths, and have face-to-face dialogues about their role and career. It provides flexibility for group mentoring as well as individual mentoring. - Inspire is the high potential program for mid-level employees. It helps identify high potentials as early as possible, invest in them continuously, enable accelerated growth, and transition them to leadership roles, and reward and recognize their efforts and success. File: AR_TCS_2019_2020-1-314.md - Talent Review is TCS' process to assess and review the leadership pool in the organization. It enables leaders to share their career aspirations and preferences. - Cara: AI-based HR assistant that answers employee questions on HR policies. - Milo: Chatbot to facilitate the mentoring process. - Knome, KnowMax, GEMS: Platforms for social collaboration within the organization, learning, sharing and for rewards and recognition. - Safety First: Initiative focused on employee safety and security. - Fit4life: Builds a fraternity of health and fitness conscious employees and creates a culture of fitness. # Talent Retention TCS' empowering culture, philosophy of investing in people, career growth opportunities, and progressive HR policies have resulted in consistently high retention levels and developed a strong employer brand. |
In recent years, the company's investments in organic talent development and initiatives like Contextual Masters have further reassured employees that the company values them for the contextual knowledge they possess, and is prepared to invest in equipping them with new-age technology skills that they do not have. This has made TCS the employer of choice, and its employee retention record an industry benchmark. In FY 2020, TCS' IT services attrition rate was 12.1%. TCS Annual Report 2019-20 Management Discussion and Analysis I 88 # Occupational Health and Safety self-harm, and street crime. Employee satisfaction index on sensing, and space technology. health and safety has consistently increased over the years, reflecting the success of these engagement initiatives. TCS has a well-defined Occupational Health and Safety policy and supporting processes to ensure the safety and well-being of its employees. Safety lead and lag indicators are measured across the organization and reported. The board-level Stakeholders' Relationship Committee reviews the company's health and safety performance on a regular basis. Over 96% of our workforce is represented in joint management-employee health and safety committees that monitor, advise and drive occupational, health and safety initiatives. # FY 2020 PERFORMANCE OVERVIEW: # INTELLECTUAL CAPITAL Sustained investments over the years have resulted in a significant scaling up of TCS' Research and Innovation (R&I) capability and assets, reaching deep into the individual business units. The company now has 4,000+ inventors and innovators across the enterprise. The Chief Technology Officer orchestrates investments across the organization, spread across three horizons: # Horizon 1 or derivative innovations: Consist of newer adjunct offerings around an established intellectual property. Mature IP based solutions from TCS R&I relating to Accessibility and Privacy, as well as ignio™, MasterCraft™ and Jile™ saw new features and releases this year. # Horizon 2 or platform innovations: Examples in the AI area include enterprise digital twins, drones and machine vision, semantic systems and automation, which enable a number of platforms created with business units. # TCS Digital Workplace Studio: This is a cognitive platform designed to accelerate digital workplace transformation. It hosts a complete suite of digital workplace components that enhances user experience with persona-based delivery, predictive healing, advanced analytics, cognitive IT support, chatbot assistance, knowledge as a service, and modern device management. # Horizon 3 or disruptive innovations: New areas for foundational research in domains such as media and advertising, metamaterials, quantum computing. In FY 2020, TCS migrated to the ISO 45001:2018 Occupational Health and Safety Management System standard and successfully completed external certification for 126 of its facilities worldwide. A key initiative was the implementation of real-time indoor air quality monitoring across 100+ facilities, leveraging IoT. Medical support and emergency preparedness was further strengthened, with health centers across all locations including nurses, medical equipment, AEDs, on-site ACLS ambulances, and visiting doctors covering all operational shifts. Workplace safety remains a key focus area. In addition to induction training, and mandatory annual refreshers, a variety of employee engagement activities were conducted round the year. The themes covered included road safety, ergonomics, fire safety, workplace safety, women's safety. 17 103-2, 103-3 18 403-1 TCS Annual Report 2019-20 Management Discussion and Analysis I 89 # TCS Enterprise Digital Twin (TwinX™) This uses AI (machine learning, deep learning and reinforcement learning) and TCS' proprietary Enterprise Simulation to deliver a holistic reflection or a 'digital twin' of the enterprise. # AlgoRetail™ Combining AI and machine learning techniques, AlgoRetail creates a paradigm shift in how retailers do business, seamlessly integrating and orchestrating data across the retail value chain to unlock exponential value. # Innovation Ecosystem TCS' Co-Innovation (COIN)™ ecosystem continues to expand. It now consists of over 1,900 start-ups distributed across innovation hubs all around the world. The global Academic COIN program now has 55 active partnerships with various institutions and 43 active research projects. This year, the company entered into research partnership in Life Sciences and Materials with the Council of Scientific and Industrial Research, India. Additionally, it strengthened engagements with existing partners like the IISc, IITs, IIITs and ISI in India, Cornell Tech and Carnegie Mellon University, USA and University of Tokyo, Japan. # Social Good TCS' R&I also has been working on an accessibility suite of solutions to extend digital services to people with accessibility issues, making computing solutions inclusive. # Customer Engagement The TCS Innovation Forum 2019 was held in Tokyo, London, New York and Sao Paulo and attracted over 700 participants. |
Customized Innovation Days were held for the TCS Research Scholar Program which has supported 321 scholars from 41 premier institutes till date; 71 scholars are currently covered by the program. TCS' researchers mentor young social entrepreneurs solving socially relevant problems at the TCS Foundation's Digital Impact Square. TCS Annual Report 2019-20 Management Discussion and Analysis I 90 # TCS Suite of Products and Platforms # TCS BaNCS - 23 new wins (7 for TCS BaNCS Cloud) and 24 go-lives in FY 2020 - Highlights: - Banking: Serves ~25% of the world population. - Capital Markets: Records 10 million trades per day (peak), represents $40 trillion worth of AUC across 100 countries - Insurance: Administers over 20 million life, annuity and pension policies; 135 million property and casualty policies # TCS iON - Digital Glass room: Virtual learning platform, made available to educational institutions across the country shut down by lockdown, free of cost. 2,000 institutions resumed their teaching sessions in a span of one week since launch - Assessment: 200 million+ candidates assessed till date; 2.4 million candidates assessed in largest single shift in FY 2020 - Learning: 3 million+ learners on the platform, 47,000 courses available, 18,000 communities - Process Management: 500+ SMB clients, 1 million+ users # TCS TwinX - AI powered system of actionable intelligence - powered by an enterprise digital twin (customer, product, process) to help business leaders simulate and optimise enterprise decisions, predict and proactively manage outcomes - 2 new wins and go-lives in FY 2020 # TCS Optumera - AI and ML powered merchandise optimization platform that enables retailers to unlock exponential value by optimizing their space, mix and price in an integrated manner. - 4 new wins and 1 go-live in FY 2020 # Ignio - World leading cognitive automation software for enterprise IT and business operations # TCS OmniStore - Unified store suite which leverages AI to help deliver personalized, interconnected journeys across various touch points for frictionless customer experience and predictive operations - 4 new wins and 2 go-lives in FY 2020 - 54 new wins and 34 go-lives in FY 2020 - 12 VARs and distributors and 13 tech and cloud partners in FY 2020 - Manages over 1.5 million technology resources autonomously # TCS ADD - Comprehensive suite for digital transformation of drug development and clinical trials - 9 new wins in FY 2020 - 6 new offerings enabled by AI and predictive analytics launched in Site Feasibility, Safety Leveraging Decision Fabric, Clinical Analytics and Insights Platform, Regulatory Insights, Metadata Registry, Digital Documents # Mastercraft - Digital platform to optimally automate and manage IT processes - FY 2020 Highlights: 29 new wins, 1 billion+ records cleansed, 110 billion records masked, 500+ million lines of code (mloc) analyzed, 25+ mloc generated - Successfully delivered 60+ modernization projects so far # TCS HOBS - Plug and play SaaS based business platform to digitally transform business, network and revenue management domains of subscription based businesses. - Serving 27+ clients, across Communications, Utilities, Manufacturing and Personal Care; Serving 21 million+ subscribers, handling 125,000+ devices and processing 1 billion+ events. - 5 new wins and 4 go-lives in FY 2020 # Jile - SaaS-based, scalable Agile DevOps platform to accelerate software development and delivery and integrate DevOps tools - 8 new wins and go-lives in FY 2020 # TCS Annual Report 2019-20 # Management Discussion and Analysis 91 # Relationship Capital # FY 2020 PERFORMANCE OVERVIEW: # Client metrics # TCS Brand Valuation | |$50 Mn+ Clients|$100 Mn+ Clients| |---|---|---| |Customers|120| | | |100| | | |97| | | |99| | |Investors|84| | | |80| | | |73| | | |60| | | |40| | | |20| | | |37| | | |35| | | |38| | | |44| | | |49| | | |0| | Customer-centricity is at the core of TCS' business model, organization structure and investment decisions. The philosophy has been to delight them by accommodating their needs and delivering superior outcomes, and build strong, enduring relationships. Additionally, the company seeks to expand and deepen customer engagements by continually looking for new areas in the customer's business where the company can add value, proactively invest in building newer capabilities, and launch new services and solutions to participate in those opportunities. Over time, this has resulted in an expanding participation in the departmental spends of a broad range of stakeholders across the enterprise, including business heads, CMOs, CROs, COOs, CFOs and even CEOs. |
It has also resulted in a continual expansion of customer relationships in terms of the services consumed, revenue and share of wallet, as evidenced by the client metrics that the company reports every quarter and every year. TCS' Sustainable Supply Chain policy and Green Procurement policy outline its commitment to making its supply chain more responsible and sustainable. In FY 2020, the company integrated sustainability, safety and environmental requirements in its online vendor management system across the various stages of vendor lifecycle - selection, review and renewal. Supplier engagement includes defining product specifications on safety/environment, vendor compliance review, outlining mandatory policy and process requirements, desktop assessments, audits and performance review on these criteria. TCS' responsible sourcing program encourages its suppliers to go beyond 100% regulatory compliance, and strive for better sustainability performance. # The following table provides the number of investor and analyst interactions by category in FY 2020: |Particulars|Q1|Q2|Q3|Q4|FY 20| |---|---|---|---|---|---| |Meetings and Calls|20|46|41|151|258| |Conferences|93|99|119|47|358| |Road Shows|16|7|4| |27| |Sell Side Analyst|15|40|32|9|96| |Total|144|192|196|207|739| 19 308-1 TCS Annual Report 2019-20 Management Discussion and Analysis I 92 # TCS Annual Report 2019-20 # Management Discussion and Analysis Quarterly, half-yearly, and annual results are intimated to the PacePorts. Partnerships with leading technology providers, stock exchanges, published in leading Indian newspapers, emailed to analysts and investors who subscribe to the service, and posted on the website. Half-yearly results are mailed to shareholders, along with a message from the MD on the company's performance. The quarterly earnings release is accompanied by a press conference, which is streamed live on www.tcs.com, and an earnings call that is webcast on the website. Material developments during the quarter that might impact revenue or earnings are intimated to the stock exchanges and through the website. Quarterly results, regulatory filings, transcripts of earnings call, Investor Relations presentations and schedules of analyst and investor interactions are available at https://www.tcs.com/investor-relations. The cumulative effect of all the goodwill and recognition from these different stakeholders has helped put TCS among the Top 3 brands in IT Services by brand value. In recent years, TCS has significantly built its presence and strengthened its brand across all major markets. It is a strategic partner to the World Economic Forum and European Business Summit, and hosts a range of annual industry forums for C-suite customers and partners. TCS also significantly invests in a comprehensive portfolio of brand sponsorship platforms, from the TCS New York City Marathon and TCS Amsterdam Marathon, to several other running events in the United Kingdom, Sweden, Japan, Singapore, Australia, India, and the Philippines. Together, these annual events engage more than 10,000 leading business executives. The company's long-standing research and innovation program has resulted in an industry-leading portfolio of patents, products and platforms. It has gained more visibility due to investments in innovation centers, design studios and execution excellence have made it the preferred growth and transformation partner to leading corporations across the world. It is also recognized as a top employer brand across the major markets it operates in, including North America, Europe, UK, India, Latin America and Australia, among others. # Client metrics |$50 Mn+ Clients|$100 Mn+ Clients| |---|---| |120| | |105| | |100|97| |99|84| |80|73| |60| | |40| | # TCS Brand Valuation |FY|2016|2017|2018|2019|2020| |---|---|---|---|---|---| | |$12.8|$13.5| | | | | |$10.4|$8.7|$9.4|$9.1|$8.2| | |$5.2|$2.3| | | | According to Brand Finance, TCS' brand value grew 476% from 2010-2020, the highest percentage growth in the IT services industry; year-on-year brand value grew from $12.8bn to $13.5bn in FY 2020, making TCS the fastest growing among the top three IT services brands for the second year running. Source: Brand Finance # FY 2020 PERFORMANCE OVERVIEW: MANUFACTURED CAPITAL To support the large-scale adoption of the Location Independent Agile delivery model, TCS has invested in transforming its conventional delivery centers into Agile delivery centers. These are characterized by visual openness and are designed to enable greater collaboration among Agile teams. Variable-height workstations, multimedia conference tables, on-demand mobile video conferencing facilities and huddle spaces help create an open, vibrant, and collaborative workspace. Using advanced planning, preparatory work, order consolidation and by optimizing logistics for on-premises ADC creation, TCS has been able to complete the conversion over 2-3 weekends, without impacting ongoing work at those centers. The larger transformation program is being run using Agile principles. Till date, over 1,000 Agile delivery centers have been created, 250 of them in FY 2020. |
# Open Agile collaborative workspaces to support all stages of the innovation lifecycle To support the various stages of the innovation lifecycle, TCS has also created many Open Agile Collaborative Workspaces within its campuses, each featuring an ideation zone, an innovation zone, a design thinking zone, a prototype-demo area, and social collaboration zones. The technology resources, software, and necessary tools are available in a self-provisioning mode, fulfilling on-demand requirements in a highly secure manner, driving greater productivity. These workspaces also feature software defined networks, enabling greater mobility and flexibility. TCS Annual Report 2019-20 Management Discussion and Analysis I 94 # FY 2020 PERFORMANCE OVERVIEW: FINANCIAL CAPITAL The discussions in this section relate to the consolidated, Rupee-denominated financial results pertaining to the year that ended March 31, 2020. The financial statements of Tata Consultancy Services Limited and its subsidiaries (collectively referred to as 'TCS' or 'the company') are prepared in accordance with the Indian Accounting Standards (referred to as `Ind AS') prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements. # Overview of the consolidated financial results of the company: | |FY 2020|% of Revenue|% Growth|FY 2019|% of Revenue| |---|---|---|---|---|---| |Revenue|156,949|100.0|7.2|146,463|100.0| |Earnings before interest, tax, depreciation and amortization (EBITDA) before other income|42,109|26.8|6.6|39,506|27.0| |Profit Before Tax (PBT)|42,248|26.9|1.6|41,563|28.4| |Profit after tax attributable to shareholders of the company|32,340|20.6|2.8|31,472|21.5| |Earnings per share (in `)|86.19| |3.8|83.05| | # Analysis of revenue growth Average currency exchange rates during FY 2020 for the three major currencies are given below: |Currency|Weightage (%)|FY 2020 `|FY 2019 `|% Change YoY| |---|---|---|---|---| |USD|53.0|71.23|70.07|1.7| |GBP|14.0|90.15|91.60|(1.6)| |EUR|10.7|78.94|80.82|(2.3)| Movements in currency exchange rates through the year resulted in a positive impact of 0.1% on the reported revenue. The constant currency revenue growth for the year, which is the reported revenue growth stripped of the currency impact, was 7.1%. # Growth attributable to | |FY 2020 (%)|FY 2019 (%)| |---|---|---| |Business growth|7.1|11.4| |Impact of Exchange rate|0.1|7.6| |Total Growth|7.2|19.0| On a reported basis, TCS' revenue grew 7.2% in FY 2020, compared to 19.0% in the prior year. Much of the year on year deceleration is on account of the lesser currency benefit received in FY 2020 (7.6% currency benefit in FY 2019 vs 0.1% benefit in FY 2020). Additionally, there was volatility in demand in the financial services and retail verticals. 20 103-3 TCS Annual Report 2019-20 Management Discussion and Analysis I 95 # Segmental Performance The revenue break-up by Industry Vertical and Geography is provided below: |Others|17.3%|Others|11.5%| |---|---|---|---| |Banking|Financial Services|India|5.7%| |Manufacturing|10.5%|Revenue by Vertical|38.9%| |Insurance| |Americas|52.2%| |Communication Media & Technology|16.6%|Europe|30.6%| |Retail & Consumer Business|16.7%| | | TCS Annual Report 2019-20 Management Discussion and Analysis I 96 # Segment revenues, year on year growth, a brief commentary and segment margins are provided below: |Industry Vertical|Segment Revenue FY 2020 (FY 2019) ` crore|YoY Revenue Growth %|Commentary|Segment Margin FY 2020 (FY 2019) %| |---|---|---|---|---| |Banking, Financial Services and Insurance|61,095 (57,938)|5.4|* Growth and transformation spends gained priority over cost optimization spends in FY 2020. There was more focus on innovation and ecosystem play to deliver more fulfilling customer journeys. * Future readiness remained a key theme. Legacy estate modernization and cloud enablement for greater agility and reduced cost of ownership continued to be significant drivers. * Other key areas of spend included adoption of open banking, payments, insights-driven customer experience, automation, and robo-advisory systems. * On the compliance front, new standards like IFRS 17, FRTB, Definition of Default and LIBOR transition drove spend.|27.7 (27.8)| |Communication, Media and Technology|25,978 (23,925)|8.6|* Key drivers of spend were continued investments in analytics and superior customer experience for growth in subscription centric business models, simplification and automation of core operations to improve efficiencies, OTT platforms and services, roll outs of fiber networks for high bandwidth connectivity, and mergers, acquisitions and divestitures. * Customers invested more on re-architecting existing products on cloud native platforms, and in transforming their marketing, sales, customer service and supply chain operations to support changing business models.|29.7 (27.8)| |Retail and Consumer Business|26,280 (25,164)|4.4|* Retail - The North American market was under stress, with store closures and bankruptcies. Growth was driven by operating model transformation initiatives for greater agility, efficiency and resilience; and to enhance customer experience. * CPG - Companies are focused on strengthening consumer relationship with the brand. Technology investments were driven by direct-to-consumer initiatives including mass personalization. |
* Travel, Transportation & Hospitality - The transportation sector was subdued due to the slowdown in global trade. Overall, growth was driven by investments in analytics, customer experience, ecosystem leverage and M&A.|26.1 (27.3)| TCS Annual Report 2019-20 Management Discussion and Analysis I 97 # Industry Vertical |Segment|Revenue FY 2020 (FY 2019) ` crore|YoY Revenue Growth %|Commentary|Segment Margin FY 2020 (FY 2019) %| |---|---|---|---|---| |Manufacturing|16,468 (15,682)|5.0|* Across the sub-segments, a common thread was the effort to mitigate commoditization of traditional business by adopting B2B2C business models or 'asset as a service' business models. * Enhancing customer experience and engagement, as well as ecosystem partnering were the strong investment themes. * Some segments saw cost optimization, and focus on M&A, driving demand for process harmonization and global rollouts of enterprise software. * Investments were around the shift to cloud, CRM, portals, extended mobility, and application development using Agile methods.|27.0 (27.5)| |Others|27,128 (23,754)|14.2|* Growth in the Life Sciences segment has been led by continued M&A, need for business agility, need for improved R&D outcomes and patient-centricity. * Key areas of spend across verticals included user experience, compliance, IT operating model transformation, ERP transformations, digital workplace, digitization of clinical trials, process automation and Intelligence, cloud enablement and cyber security.|22.6 (23.4)| # Business Outlook Global economic growth is projected to contract sharply from 3.3% in 2019 to -3%21 in 2020, much worse than during the 2008-09 financial crisis. Rolling lockdowns and social distancing restrictions on account of the pandemic are expected to significantly impact economic activity in all major markets, and cause demand compression. In the immediate aftermath, enterprises are expected to downscale current investments, defer planned initiatives, cut costs and conserve cash. While this could inject volatility into TCS' revenue growth, the company expects to gain market share from ensuing vendor consolidations. Demand is expected to increase for services around digital channels, collaboration and workplace transformation, online learning and workforce analytics. Companies are also expected to invest more towards building operational resilience, leveraging analytics, intelligent automation, cloud and cyber security. This is expected to accelerate the adoption of TCS' Location Independent Agile and Machine First Delivery Model. Increased M&A activity in certain sectors are expected to result in integration and transitional service opportunities for TCS. 21 World Economic Outlook, April 2020, International Monetary Fund As economic recovery progresses, enterprises operating with pared down workforces are likely to increase outsourcing to build scale in operations to meet rising demand. Spending on growth and transformation initiatives is also expected to start picking up from that point on. # Enterprise Risk Management TCS' global operations bring in considerable complexities and in response to that, it has established a robust enterprise risk and compliance management framework and process to ensure achievement of its strategic objectives. This process is enabled by a digital platform that provides an enterprise-wide view of risks and compliance which enables a more holistic approach towards informed decision making. Risks are assessed and managed at various levels with a top-down and bottom-up approach covering the enterprise, the business units, the geographies, the functions and projects. Listed below are some of the key risks, anticipated impact on the company and mitigation strategies. TCS Annual Report 2019-20 Management Discussion and Analysis I 99 # Key Risks # Impact on the Company The company's operations might be adversely impacted due to incapacitation of sections of the global workforce due to exposure to the pandemic, reduced productivity due to employee stress and impact on emotional wellbeing while under local lockdowns or quarantines, inability to provide work from home access to some employees due to logistical or security or contractual reasons, and suppliers' inability to service TCS. These could impact revenue growth and lead to potential customer claims on grounds of non-adherence to service delivery commitments. Demand for the company's services may be adversely affected not only in industry segments directly impacted by the pandemic - like travel and hospitality, but across other segments as well due to a sharp slowing down of the world's major economies. This is likely to affect the company's earnings in the short and medium term. However, the company's relative competitiveness is expected to increase because of its traditional value focus and its strong track record in helping customers improve the efficiency and resilience of their business and IT operations through core transformation initiatives and the Machine First Delivery Model. # Mitigation - Establishment of a Covid-19 Emergency Response Apex committee at Enterprise level to drive a holistic action plan and coordinate global efforts. |
- Deployment of TCS' Secure Borderless Workspaces infrastructure enabling associates to work from home and ensure business continuity. Digital communication channels and collaboration platforms set up for them to stay connected with colleagues and customers. - 24*7 dedicated helpline for associates to address their Covid-19 related queries and for emotional support. Organization of regular webinars, interactive sessions, group and one-on-one counseling services (including their ergonomic health) for associates with HR and medical specialists. - Guidance and mandate of appropriate social distancing measures and workplace and home functioning advisories. - Rigorous review and execution of Business Continuity and Crisis Management capability which is benchmarked with ISO 22301 certification. - Regular coordination with key suppliers for expeditious provisioning of assets critical for business services. - Regular communication with customers about measures taken to maintain business services and reporting of status. - Drawing up of plans and identification of opportunities for proposing new and re-purposed offerings and solutions during and post the Covid-19 disruption. TCS Annual Report 2019-20 Management Discussion and Analysis I 100 # Key Risks # Impact on the Company File: AR_TCS_2019_2020-1-314.md Corporate spending on technology has shown strong correlations with GDP growth. The company derives a material portion of its revenues from customers' discretionary spending which is linked to their business outlook. Political disruptions or volatile economic conditions (trade tensions, post-Brexit uncertainty, Covid-19 pandemic impacts on the global economy, US presidential elections etc.) may adversely affect that outlook resulting in reduced spending which could restrict revenue growth opportunities. # Mitigation - Broad-based business mix, well diversified across geographies and industry verticals - Offerings and value propositions targeting all stakeholders (in addition to the CIO) in the customer organization, covering discretionary as well as non-discretionary spends, and relevant at every point in the business cycle - Cater to market segments which might provide counter-cyclical support - Long term contracting models - Leverage business ecosystem through collaboration with partners, start-ups and alliances to participate in transformation initiatives of customers # Restrictions on global mobility, location strategies Distributed software development models require the free movement of people across countries and any restrictions in key markets pose a threat to the global mobility of skilled professionals. Legislations which restrict the availability of work visas or apply onerous eligibility criteria or costs could lead to project delays and increased costs. The impact of Covid-19 pandemic may further aggravate restrictions on global mobility in the coming year. # Mitigation - Ongoing monitoring of the global environment, working with advisors, partners and governments - Material reduction in dependency on work visas through increased hiring of local talent including freshers, use of contractors, local mobility and training in all major markets - Use of Location Independent Agile to promote systematic collaboration and reduce the need for co-location - Active engagement in Science, Technology, Engineering and Math (STEM) initiatives designed to structurally increase the availability of engineering talent in major markets - Greater brand visibility through event sponsorships, community outreach, showcasing of investments, innovation capabilities and employment generation - Increased outreach to government stakeholders, trade bodies, think tanks and research institutes TCS Annual Report 2019-20 Management Discussion and Analysis I 101 # Key Risks |Impact on the Company|Mitigation| |---|---| |Business model challenges Rapidly evolving technologies are changing technology consumption patterns, creating new classes of buyers within the enterprise, giving rise to entirely new business models and therefore new kinds of competitors. This is resulting in increased demands on the company's agility to keep pace with the changing customer expectations. Failure to cope may result in loss of market share and impact business growth.|* Strong customer-centricity which results in a strategy, investments and enabling organization structure that are always aligned to customer needs * Early and continued investments in building scale and differentiated capabilities on emerging technologies through large scale reskilling, external hiring, research and innovation, solution development and IP asset creation leveraging deep contextual knowledge * Staying relevant to customers by constantly launching new service practices and technology solutions and modernizing existing offerings and solutions * Thought leadership by propagating the Business 4.0 framework leveraging the Machine First Delivery Model. |
Developing industry-specific best practices and artificial intelligence-led products to enable customers to derive greater business value and discover opportunities to transform and grow their businesses * Implementing Location Independent Agile methods to mitigate location constraints and pricing and margin pressures * Constant scouring of the technology landscape through alliance partnerships, and strong connections in academia and the start-up ecosystem to spot new trends and technologies and launch offerings around them| # Key Risks |Impact on the Company|Mitigation| |---|---| |Litigation risks Given the scale and geographic spread of the company's operations, litigation risks can arise from commercial disputes, perceived violation of intellectual property rights and employment related matters. Our rising profile and scale also make us a target to litigations without any legal merit. This risk is inherent to doing business across various countries and commensurate with the risk faced by other players similarly placed in the industry. In addition to incurring legal costs and distracting management, litigations garner negative media attention and pose reputation risk. Adverse rulings can result in substantive damages.|* Strengthening internal processes and controls to adequately ensure compliance with contractual obligations, information security and protection of intellectual property * Improved governance and controls over immigration process / increasing localization and sensitization of business managers * Potential disputes are promptly brought to the attention of management and dealt with appropriately * The company has a team of in-house counsels in all major geographies it operates in. It also has a network of highly reputed global law firms in countries it operates in * There is a robust mechanism to track and respond to notices as well as defend the company's position in all claims and litigation| |Currency volatility Volatility in currency exchange movements results in transaction and translation exposure. TCS' functional currency is the Indian Rupee. Appreciation of the Rupee against any major currency could impact the reported revenue in Rupee terms, the profitability and also result in collection losses.|* TCS follows a currency hedging policy that is aligned with market best practices, to limit impact of exchange volatility on receivables, forecasted revenue and other current assets and liabilities * Hedging strategies are decided and monitored periodically by the Risk Management Committee of the Board convened on a regular basis| |Breach of data protection laws Data privacy and protection of personal data is an area of increasing concern globally. Legislations like GDPR in Europe carry severe consequences for non-compliance or breach. Many other countries are also enacting their Data Privacy regulations to ensure protection of personal data. Violation of data protection laws or security breaches can result in substantive liabilities, fines or penalties and reputational impact.|* A global privacy policy is in place covering all applicable geographies and areas of operations, which sets out the privacy principles within TCS * A Global Privacy Office is in place to oversee and deploy data privacy obligations and support initiatives across the enterprise. DPOs (Data Protection Officers) have been appointed for TCS entities in the UK and Ireland and in Europe as required by GDPR. Privacy leads have been appointed in all units| TCS Annual Report 2019-20 Management Discussion and Analysis I 103 # Key Risks |Risk|Impact on the Company|Mitigation| |---|---|---| |Data Privacy|- Embedding privacy by design and privacy by default principles in development of new or changed internal processes or services or products. - Robust and continued governance of personal data. |- Data protection controls and robust risk response mechanisms to cater to protection of personal data in the TCS ecosystem as well as protection of such data in client-managed networks in Global Delivery Centers. - Industry standard data masking technologies to protect personal data in sensitive customer engagements, as applicable. - Reviewing and negotiating vendor contracts to support compliance with privacy obligations. - Mandatory online training and other workshops on data privacy and protection and on GDPR. Awareness campaigns through blog posts, email broadcasts, gamification and roadshows to foster a culture of responsibility among associates. - Implementing and maintaining data transfer agreements, where required for the transfer of data across jurisdictions. - Periodic reviews and audits to verify compliance to obligations. | |Cyber attacks|Risks of cyber-attacks are forever a threat on account of the fast-evolving nature of the threat. |
In addition to impact on business operations, a security breach could result in reputational damage, penalties and legal and financial liabilities.|- Investments in automated prevention and detection solutions, including perimeter security controls with advanced tools, enhanced internal vulnerability detection, data leak prevention tools, defined and tested incident management and recovery process in compliance with ISO 27001 standard. - Compliance to security controls for cloud services as per ISO 27017:2015 / 27018:2014 standard. - Continued reinforcement of stringent security policies and procedures. | TCS Annual Report 2019-20 Management Discussion and Analysis I 104 # Key Risks # Impact on the Company Non-compliance to complex and changing global regulations As a global organization, the company has to comply with complex and changing laws and regulations across multiple jurisdictions, covering areas such as HR, Employment and Immigration, Taxation, Foreign Exchange & Export Controls, Health Safety and Environment (HSE), Anti-Bribery and Corruption, Data Privacy etc. The fast pace of changes in the regulatory environment also requires quick understanding of their implications and adaptation in business operations. Failure to comply could result in penalties, reputational damage and criminal prosecution. # Mitigation - Collaboration with Computer Emergency Response Team (CERT) and other private Cyber Intelligence agencies, and enhanced awareness of emerging cyber threats - Enterprise-wide training and awareness programs on Information Security with refresher courses - Strict access controls including dynamic passwords for secure access to enterprise applications and special handling of privileged administrator accounts. Rigorous access management on all cloud deployments - Encryption of data, data back-up and recovery mechanisms for ensuring business continuity - Ability to isolate TCS enterprise network from client network and defined escalation mechanisms to handle security incidents in client environment - Periodic rigorous testing to validate effectiveness of controls through vulnerability assessment and penetration testing - Internal and external audits and forensics - Deployment of a comprehensive global compliance management framework that enables tracking of changes to applicable regulations globally across various jurisdictions and functional areas and managing compliance obligations - Global regulatory compliance certification is fully digitized and covers compliance across all the locations of the company - Strong governance at executive and board level through compliance committees - Awareness through web-based compliance training courses for all staff and regular notifications/alerts on regulatory changes communicated to stakeholders # Key Risks # Impact on the Company Intellectual Property (IP) infringement Risk of infringement of third-party IPs by TCS may lead to potential liabilities, increased litigation and impact on reputation. Inadequate protection of TCS' IP may lead to loss of IP leading to potential loss of ownership rights, revenue and value. # Mitigation - Dedicated IP Management and Software Product Engineering group - TCS IP Protection: IP Safe assessment and readiness program governing the creation of proprietary software and other IP assets across all asset types, patent management and contract management, IP audits and integrated IP compliance checks for TCS products - IP Governance program that ensures that there is correct access and correct use of TCS IP, customer IP, partner IP, and third-party IP in service and partner engagements - Employee engagement: Employee confidentiality agreement, training and awareness for IP protection and prevention of IP contamination and infringement. Digitized system to enable strict controls around movement of people and information across TCS' product teams and customer account teams TCS Annual Report 2019-20 Management Discussion and Analysis I 106 # Internal Financial Control Systems and their Adequacy Our management assessed the effectiveness of the statutory auditors to ascertain, inter alia, their views on the company's internal control over financial reporting (as defined in Clause 17 of SEBI Regulations 2015) as of March 31, 2020. TCS has aligned its current systems of internal financial control with the requirement of Companies Act 2013, on the lines of the globally accepted risk-based framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The Internal Control - Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organization's process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The company has successfully laid down the framework and ensured its effectiveness. TCS' internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. |
TCS has a well-defined delegation of power with authority limits for approving contracts as well as expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down. TCS uses a state-of-the-art enterprise resource planning (ERP) system that connects all parts of the organization, to record data for accounting, consolidation and management information purposes. It has continued its efforts to align all its processes and controls with global best practices. TCS has appointed Ernst & Young LLP to oversee and carry out internal audit of its activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and approved by the audit committee. In line with international practice, the conduct of internal audit is oriented towards the review of internal controls and risks in the company's operations such as software delivery, accounting and finance, procurement, employee engagement, travel, insurance, IT processes, including most of the subsidiaries and foreign branches. TCS also undergoes periodic audit by specialized third party consultants and professionals for business specific compliances such as quality management, service management, information security, etc. The audit committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets TCS'. # Performance Trend 10 yrs |Amounts in ` Crore|FY 2020|FY 2019|FY 2018|FY 2017|FY 2016|FY 2015*|FY 2015|FY 2014|FY 2013|FY 2012|FY 2011| |---|---|---|---|---|---|---|---|---|---|---|---| |Revenues|156,949|146,463|123,104|117,966|108,646|94,648|94,648|81,809|62,989|48,894|37,325| |Revenue by geographic segments| | | | | | | | | | | | |Americas|82,000|77,562|66,145|66,091|60,011|51,053|51,053|45,259|35,247|27,570|21,457| |Europe|48,037|43,456|34,155|30,038|29,092|26,730|26,730|23,433|16,813|12,382|9,251| |India|8,964|8,393|7,921|7,415|6,729|6,108|6,108|5,488|4,890|4,202|3,435| |Others|17,948|17,052|14,883|14,422|12,814|10,757|10,757|7,629|6,039|4,740|3,182| |Cost| | | | | | | | | | | | |Employee cost|85,952|78,246|66,396|61,621|55,348|48,296|50,924|40,486|31,922|24,683|18,806| |Other operating cost|28,888|28,711|24,192|24,034|22,621|19,242|19,242|16,170|13,027|9,776|7,341| |Total cost (excluding interest & depreciation)|114,840|106,957|90,588|85,655|77,969|67,538|70,166|56,656|44,949|34,459|26,147| |Profitability| | | | | | | | | | | | |EBITDA (Before other income)|42,109|39,506|32,516|32,311|30,677|27,110|24,482|25,153|18,040|14,435|11,178| |Profit before tax|42,248|41,563|34,092|34,513|31,840|28,437|25,809|25,402|18,090|13,923|11,021| |Profit after tax attributable to shareholders of the company|32,340|31,472|25,826|26,289|24,270|21,912|19,852|19,164|13,917|10,413|9,068| |Financial Position| | | | | | | | | | | | |Equity share capital|375|375|191|197|197|196|196|196|196|196|196| |Reserves and surplus|83,751|89,071|84,937|86,017|70,875|52,499|50,439|48,999|38,350|29,284|24,209| |Gross block of property, plant and equipment|26,444|24,522|22,720|20,891|19,308|16,624|16,624|13,162|10,996|8,844|7,199| |Total investments|26,356|29,330|36,008|41,980|22,822|1,662|1,662|3,434|1,897|1,350|1,763| |Net current assets|63,177|70,047|63,396|65,804|47,644|30,726|28,495|27,227|19,734|12,673|9,790| |Earnings per share in `| | | | | | | | | | | | |EPS - as reported|86.19|83.05|134.19|133.41|123.18|111.87|101.35|97.67|70.99|53.07|46.27| |EPS - adjusted for Bonus Issue|86.19|83.05|67.10|66.71|61.59|55.94|50.68|48.84|35.50|26.54|23.14| |Headcount (number)| | | | | | | | | | | | |Headcount (including subsidiaries) as on March 31st|448,464|424,285|394,998|387,223|353,843|319,656|319,656|300,464|276,196|238,583|198,614| Note: The company transitioned into Ind AS from April 1, 2015. *Excluding the impact of one-time employee reward. TCS Annual Report 2019-20 Management Discussion and Analysis I 108 # OVERVIEW OF FUNDS INVESTED Funds invested exclude earmarked balances with banks and equity shares measured at fair value through other comprehensive income. |(Amount in ` Crore)|FY 2020|FY 2020|FY 2020|FY 2019|FY 2019|FY 2019| | | | | | | |---|---|---|---|---|---|---|---|---| | | |Current|Non-current| |Total funds invested|Current|Non-current|Total funds invested| |Investments in mutual funds, Government securities and others|26,140|174|26,314|29,091|181|29,272| | | |Deposits with banks|1,210|348|1,558|6,161|-|6,161| | | |Inter-corporate deposits|8,171|27|8,198|7,667|58|7,725| | | |Cash and bank balances|8,241|-|8,241|6,491|-|6,491| | | |Total|43,762|549|44,311|49,410|239|49,649| | | Total invested funds include `1,195 crore and `907 crore for FY 2020 and 2019, respectively, pertaining to trusts and TCS Foundation held for specified purposes. |
TCS Annual Report 2019-20 Management Discussion and Analysis I 109 # Ratio Analysis 10 yrs |Ind AS|Units|FY 2020|FY 2019|FY 2018|FY 2017|FY 2016|FY 2015*|FY 2015|FY 2014|FY 2013|FY 2012|FY 2011| |---|---|---|---|---|---|---|---|---|---|---|---|---| |Ratios - Financial Performance|Employee Cost / Total Revenue|54.8|53.4|53.9|52.2|50.9|51.0|53.8|49.5|50.7|50.5|50.4| |Other Operating Cost / Total Revenue| |18.4|19.6|19.7|20.4|20.9|20.4|20.3|19.8|20.7|20.0|19.6| |Total Cost / Total Revenue| |73.2|73.0|73.6|72.6|71.8|71.4|74.1|69.3|71.4|70.5|70.0| |EBITDA (Before Other Income) / Total Revenue| |26.8|27.0|26.4|27.4|28.2|28.6|25.9|30.7|28.6|29.5|30.0| |Profit Before Tax / Total Revenue| |26.9|28.4|27.7|29.3|29.3|30.0|27.3|31.1|28.7|28.5|29.5| |Tax / Total Revenue| |6.2|6.8|6.7|6.9|6.9|7.2|6.6|7.4|6.4|7.0|4.9| |Effective Tax Rate - Tax / PBT| |23.2|24.1|24.1|23.6|23.6|23.5|23.7|23.9|22.2|24.4|16.6| |Profit After Tax / Total Revenue| |20.6|21.5|21.0|22.3|22.3|23.2|21.0|23.4|22.1|21.3|24.3| |Ratios - Growth|Total Revenue|7.2|19.0|4.4|8.6|14.8|15.7|15.7|29.9|28.8|31.0|24.3| |EBITDA (Before Other Income)| |6.6|21.5|0.6|5.3|25.3|7.8|(2.7)|39.4|25.0|29.1|28.6| |Profit After Tax| |2.8|21.9|(1.8)|8.3|22.3|14.3|3.6|37.7|33.6|14.8|29.5| |Ratios - Balance Sheet|Debt-Equity Ratio|-|-|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0| | |Current Ratio| |3.3|4.2|4.6|5.5|4.1|3.9|2.4|2.7|2.7|2.2|2.4| |Days Sales Outstanding (DSO) in ` terms| |71|68|74|70|81|79|79|81|82|86|80| |Days Sales Outstanding (DSO) in $ terms| |67|69|74|73|80|78|78|82|82|81|82| |Invested Funds / Capital Employed| |47.2|53.5|53.9|54.6|44.2|38.0|43.5|43.0|36.4|34.8|36.8| |Capital Expenditure / Total Revenue| |2.0|1.5|1.5|1.7|1.8|3.1|3.1|3.8|4.2|4.1|4.9| |Operating Cash Flows / Total Revenue| |20.6|19.5|20.4|21.4|17.6|20.5|20.5|18.0|18.4|14.3|17.7| |Free Cash Flow / Operating Cash Flow Ratio| |90.5|92.5|92.8|92.3|89.7|84.8|84.8|78.9|77.3|71.5|72.7| |Depreciation of Property, Plant and Equipment / Average Gross Block of Property, Plant and Equipment| |8.6|8.5|9.1|9.5|10.0|11.7|11.7|10.6|10.2|10.7|10.5| # Ratio Analysis |Units|FY 2020|FY 2019|FY 2018|FY 2017|FY 2016|FY 2015*|FY 2015|FY 2014|FY 2013|FY 2012|FY 2011| |---|---|---|---|---|---|---|---|---|---|---|---| |EPS - adjusted for Bonus|86.19|83.05|67.10|66.71|61.59|55.94|50.68|48.84|35.50|26.54|23.14| |Price Earning Ratio, end of year|21.2|24.1|21.2|18.2|20.4|22.8|25.1|21.8|22.1|22.0|25.6| |Dividend Per Share|73.00|30.00|50.00|47.00|43.50|79.00|79.00|32.00|22.00|25.00|14.00| |Dividend Per Share - adjusted for Bonus|73.00|30.00|25.00|23.50|21.75|39.50|39.50|16.00|11.00|12.50|7.00| |Market Capitalization / Total Revenue|4.4|5.1|4.4|4.1|4.6|5.3|5.3|5.1|4.9|4.7|6.2| # FY 2020 PERFORMANCE OVERVIEW: SOCIAL CAPITAL # Education TCS' Corporate Social Responsibility (CSR) commitment stems from the 151-year-old legacy of the Tata Group and the founder's vision that: In a free enterprise, the community is not just another stakeholder in business, but is in fact the very purpose of its existence. TCS' vision is to empower communities by connecting people to opportunities in the digital economy. The company has focused on education, skilling, employability and village entrepreneurship, to help individuals and communities bridge the opportunity gap. In addition, it supports the health, wellness, water, sanitation and hygiene needs of communities. The company's approach is to support large scale, sustainable, multi-year programs that build inclusive, equitable and sustainable pathways for youth, women and marginalized groups and which can have a strategic impact on the community. In India, these programs are aligned with the Government of India's Affirmative Action Policy and the Tata Group's Affirmative Action Program. In FY 2020, the global community initiatives of TCS reached more than 840,000 beneficiaries. TCS' purpose-driven worldview is shared by its employees who contribute their time and expertise for social and environmental causes in their local communities. In FY 2020, TCSers contributed more than 780,000 volunteering hours. TCS volunteers work with Charlotte, NC middle school students, integrating computational thinking and Ignite My Future in School content. Ignite My Future in School has engaged over 176,792 students in FY 2020. Digital technologies are transforming every industry around the world. In this new world of work, companies across almost all sectors have the responsibility to develop talent that engages in computational thinking and innovation excellence and is digitally fluent. In North America, Ignite My Future in School (IMFIS), is a pioneering effort to empower educators through a transdisciplinary approach that integrates computational thinking into core subjects like English, Math, Science, Art, and Social Studies. Computational Thinking is a higher-level process, whereby students can learn how to collect and analyze data, find patterns, decompose complex problems, abstract, build models and develop algorithms - the fundamental building blocks of innovation in an increasingly digital world. The program also offers year-round assistance through its Learning Leaders Network - a responsive and involved nationwide network of teachers, Community Nights - an immersive and interactive event for students, teachers and families to experience the curriculum and Days of Discovery - an in-person professional development training for educators to meet with program experts and understand the curriculum. 22 103-2, 103-3, 413-1 TCS Annual Report 2019-20 Management Discussion and Analysis I 112 # TCS Annual Report 2019-20 # Management Discussion and Analysis In India, TCS' 'Lab on Bike' is providing a similar experience to teachers in government schools and children from low-income, disadvantaged communities. The program introduces novel learning opportunities that foster a scientific mind-set. The Lab on Bike instructors travel to government schools with a set of science experiment kits with which they demonstrate experiments in physics, chemistry and biology. The program has been implemented in 12 schools around Bengaluru, benefiting 1,291 students and 10 schools in Ahmedabad impacting 1,140 students. A key issue confronting India is the lack of literacy, especially among adults. |
TCS empowers entire communities, especially those marginalized, by implementing the Adult Literacy Program, which creates access to literacy, enhances earning potential and unlocks the entrepreneurial spirit. "IMFIS provides a type of learning that goes beyond the classroom," says Pete. "It empowers students to apply computational and problem-solving thinking to all aspects of their lives and that's especially valuable, because many of these students wouldn't have had access to this kind of learning before." The Adult Literacy Program was set up to help the Government of India improve adult literacy rates, using the Computer Based Functional Literacy (CBFL) solution. Using the CBFL model, non-literate adult learners can achieve functional literacy (reading, writing, arithmetic) within 50 hours, over a period of three months, which is about 1/6th the time demanded by conventional learning methods. Learners acquire a vocabulary of 500 words, which when put into use, allow them to access essential government policies and form self-help groups and in some cases, even set up entrepreneurial ventures. 143,323 learners were made literate across 17 states of India and in Burkina Faso, Western Africa in FY 2020. Pete Delgado is a middle school teacher from the El Paso Independent School District in Texas. One of the tools that Pete has to empower these students is Ignite My Future in School, which offers lesson plans and study material that weave computational thinking into core curriculum subjects like math, sciences, and social studies. In addition to being a participating teacher, Pete is also a Learning Leader within the IMFIS teacher network. "I've been able to collaborate with educators across the US, Canada and Mexico," Pete explains, "which means students leave my classroom as global citizens." Literacy remains an issue for millions of Indians, and women are impacted the most. In one example, 40-year-old Nurabati Putel had to rely on her husband to support their three daughters because she lacked the basic literacy skills to earn an income herself. This changed thanks to the Adult Literacy Program provided by TCS. After hearing about ALP, Nurabati enrolled in the program and attended regularly. ALP leverages the digital expertise of TCS to offer computer-based learning which quickly provided Nurabati with basic literacy skills. Nurabati also credits ALP with wealth you cannot measure, namely, improved self-confidence, the respect of her friends and neighbors in the village, and the opportunity to become a role model and demonstrate how ALP can empower women just like her. # Skilling Working in partnership with schools, universities, industry and the non-profit sector, TCS' various skills programs have helped youth realize they can both work in and help create the digital future of our world. In FY 2020, TCS reached over 310,000 students through these STEM initiatives. Students, across the globe, learn the steps to produce inventive technology-enabled solutions to real-life problems, then go a step ahead by benchmarking their solutions against those that exist in the market and finally presenting their solutions to experts within the field. goIT, which is TCS' flagship student engagement program, is implemented across markets (North America, LATAM, Europe, APAC and Australia) and is tailored in each region to meet the specific needs of that community. Mentorship forms a large part of the engagement, bringing in TCS associates and their expertise to the fore. Collaborating with TCS associates to develop these apps helps students visualize a future career and understand the pathways available to them. TCS combines its core capabilities of research excellence in consulting, technology expertise, skill-based volunteering and philanthropic investments into the program design of goIT. goIT participants are introduced to computational thinking as a problem-solving framework, acquire the experience in critical evaluation while troubleshooting designs, improve their ability to cooperate and coordinate, and refine their communication skills through public presentations. Students experience the use of technology through GoIT Girls at the Customer Experience Centre, Sydney, Australia. TCS Annual Report 2019-20 Management Discussion and Analysis I 114 # goIT Reaches 12,000+ Students across the World: Key Highlights In North America, the 3rd Annual goIT Student Technology Competition was held in partnership with the Toronto District School Board and the 4th annual goIT Regional Competition was hosted at the NYC Marathon pavilion. TCS Norway conducted a four-week program for 9th graders at Jordal school in Oslo to introduce them to the possibilities within IT and help them explore career paths in technology. |
TCS Singapore partnered with ITE West College (an educational institution under the Institute of Technical Education) to raise STEM awareness and to contribute to Singapore's transition into a Smart Nation. GoIT was the first program that was launched with ITE West College as a result. File: AR_TCS_2019_2020-1-314.md TCS Australia's GoIT Girls program is a week-long work experience program aimed at female students in Years 10 and 11. The participants meet senior executives from TCS and from client organizations, who provide insight into the various STEM roles that exist across the business spectrum, with the hope of inspiring a new generation of innovators, problem solvers and technology professionals. The aim is to provide insight into and challenge stereotypes of the technology industry, particularly gender occupational stereotypes. This year, 29 schools across Australia registered for the program submitting over 40 projects. At the finals, the GoIT Challenge had a record of 11 teams showcasing technology solutions to community challenges. In the United Kingdom and Ireland, the TCS Digital Explorers program offers young people an insight into the world of work in digital industries. The program is run in seven cities across the UK and aims to tackle the digital skills gap by giving young people from diverse backgrounds an opportunity to experience work and gain a real understanding of tech careers. Digital Explorers is rooted in a robust evidence-based intervention designed to engage young people with employers who otherwise would not have such an opportunity. Such interventions are shown to increase learning potential as well as lower the chances of becoming NEET (Not in Education, Employment or Training) as young adults. In FY 2020 more than 8,500 youth were directly engaged across 7 cities. Young people at Digital Explorers learning how to code with Ozobots TCS Annual Report 2019-20 Management Discussion and Analysis I 115 # LaunchPad provides foundational skills for technology jobs through a gamified learning of C++ and Python. This is provided to students in schools and universities through a free online course. Designed as a self-learning course, it focuses on improving the analytical and logical skills of students, and nurtures the concept of lifelong learning where students develop the essential skills of investing in their own learning journeys throughout their careers. # With a focus on equity and inclusion, TCS has developed programs to enhance the capacity and utilize the potential of individuals with visual impairment. The Advanced Computer Training (ACTC) program, aided by technology and mentorship, provides training opportunities aimed at creating access to employment in highly skilled roles including those in the technology sector. ACTC offers courses that are in sync with industry requirements, subsequently providing trainees with employment opportunities. # Students learn next generation competencies through a hands-on, experiential program linked to the International Space Station The program dovetails into TCS' InsighT intervention which includes advanced programming concepts. InsighT provides access to quality programming courses in schools and colleges, thereby raising the quality of professionals accessible to the IT Industry. This program is available online, is free of cost and covers advanced concepts in two months. # Drawing from the company's focus on providing experiential learning, in South Africa, hands-on technology and STEM learning pathways are created by connecting learners to the International Space Station (ISS). The ExoLab program allows students to conduct integrated STEM experiments alongside identical live experiments which are conducted at the ISS' national laboratory. # Hardware Training provided for ACTC candidates TCS Annual Report 2019-20 Management Discussion and Analysis I 116 # Village Entrepreneurship Around 300 million individuals in India belong to historically disadvantaged and marginalized communities. Lack of proper digital infrastructure, knowledge and resources in villages often prevent these communities from accessing the opportunities presented by the digital economy, making up the so-called digital divide. Implemented in 2014 in 6 villages of Jhansi district and later expanded across several states, BridgeIT was created in response to the need to address prevailing social inequities in India by empowering communities with digital knowledge and tools, enabling entrepreneurship and innovation. Youth who undergo training through BridgeIT are empowered to take up digital entrepreneurship in their village. They also deploy Computer Aided Learning in local government schools and support literacy among adults using the CBFL modules. Till date, this program has developed 236 entrepreneurs across 265 rural locations in 9 states. |
"If it wasn't for BridgeIT, I would never have seen so much success in my life." Ujjwal Mondal pursued multiple post graduate degrees, but few opportunities existed for him to use his education back home in West Bengal. He worked for local NGOs for nearly nine years, but never earned more than ₹ 3,000 a month. That changed, when Ujjwal applied for the BridgeIT program. He was equipped with laptops and software and various other activities through the two shops he has set up in his locality. Gaining access to the digital economy has economically empowered Ujjwal and his income has increased manifold. He is looking forward to developing new lines of revenue in the coming weeks. He is also seen as a community leader, as he provides employment to others in his village. Ujjwal now feels more confident and respected in his community, and his neighbors speak proudly of what hasn't changed about him - how he remains kind-hearted, gentle and always eager to help. Digital Impact Square (DISQ), is an open social innovation center located in Nashik, Maharashtra, which encourages innovation using digital technologies to address social challenges. These challenges are drawn from the voice of citizens, domain experts, the local administration and government. The initiative fosters a culture of innovation through a series of sustained innovation cycles, provides an opportunity to bring research and technology from academia and business to life, and accelerate the journey of young innovators from being ideators to entrepreneurs. TCS Annual Report 2019-20 Management Discussion and Analysis I 117 # Employment and Employability Sayali Deshmukh was encouraged to attend school and university by her parents, so she wouldn't face the same economic situation as them. She studied Electronics and Telecommunication Engineering at the Government College of Engineering and Research in Maharashtra but struggled to articulate her ideas when presenting to her class. The BPS Employability program is designed to bridge that gap, offering coaching and mentorship, and employment with TCS for suitable applicants. Engineering students are trained on three modules covering business communication, general aptitude, and technical skills for a duration of 18-24 months (192 hours). Non-engineering students receive 100 hours of training on math, analytics, general knowledge, English, and computers. It introduces Business English, imparts corporate etiquette, improves soft skills, sharpens aptitude and strengthens core subjects pertinent to the industry. At the end of training, the youth are much better placed to gain employment. In FY 2020, nearly 22,880 youth across India gained industry-relevant skills and 4,470 secured jobs in the services sector. The solution came in the form of TCS' IT Employability Program. Sayali then took part in the TCS National Qualifier Test prior to graduation and her hard work paid off. She was selected for a position with TCS upon graduation, wherein she spring-boarded right from college to the beginnings of a bright, new career in the IT industry. "I had employment waiting for me before I graduated, and the interview skills sessions and role plays really helped me to improve my confidence and overcome my stage fright," says Sayali, who also encourages other rural students to join the program. Divya and Vidya both participated in this program. Twin sisters, they graduated with degrees from Mercy College, Palakkad, and while in school also enrolled in the program. Both took advantage of the coaching and mentorship, which transformed their confidence and communication skills. They met the criteria to work at TCS and have held positions there for more than a year. "We moved to Bangalore - and while the journey wasn't easy, the learning was priceless," Vidya explains. "That one chance TCS offered us, It changed our life," says Divya, who also credits their mother - a anganwadi childcare teacher - for pushing them to pursue education and embrace a new future filled with economic opportunity. TCS Annual Report 2019-20 Management Discussion and Analysis I 118 # Thought Leadership, Research and Insights TCS believes that companies across almost all sectors have the responsibility to develop talent that engages in computational thinking and innovation excellence; embrace diversity and support inclusion and provide access to underserved populations. The company's thought leadership initiatives address the opportunity gap through research, insights, advocacy and policy. Through these consultation forums, TCS has mobilized the public-, private- and not for profit sector to address gender, ethnic and socioeconomic inequities, and has led discussions around pioneering solutions that will democratize learning and unlock opportunities. # Digital Empowers A partnership between TCS and the U.S. |
Chamber of Commerce Foundation, explores the ways in which technologies such as blockchain, cloud, Internet of Things, robotics, artificial intelligence augmented reality/virtual reality, data analytics, and human centered design can be leveraged to solve social issues including workforce development and education, food safety and distribution, microfinance, the opioid epidemic, community recycling, non-profit capacity building, refugee resettlement, natural and human-made disasters, criminal justice reform and healthcare and bring greater access and equity to individuals and communities. # Health TCS' Digital Nerve Centre (DiNC) is a unique and innovative delivery model designed to connect, communicate, coordinate and deliver care by leveraging people, infrastructure and a robust digital platform. DiNC has opened new avenues of connection and real time communication at The Cancer Institute (CI) - Chennai and Tata Medical Center (TMC) - Kolkata. These two premier cancer hospitals are also part of the National Cancer Grid. The North-East region via the State Cancer Institute, Guwahati (Assam), is also leveraging DiNC for enhanced reach and accessibility. DiNC works at all level of healthcare - Tertiary, Secondary and Primary - leading to a well-connected and integrated healthcare system. At the Primary Care level, DiNC is currently operating in Kolar, Karnataka and in Kullu, Himachal Pradesh. These states have roped in DiNC to facilitate Primary Healthcare Transformation for the identified districts, wherein DiNC-enabled Primary Healthcare Transformation has been helping augment key Primary Care programs and efforts. Accompanied by a strong awareness mechanism - the Known Citizen Drive, DiNC with its unique phygital approach of physical/human connect and cutting-edge digital technologies is slowly helping alleviate the issue of healthcare accessibility, care continuum and management for the rural/underprivileged. With DiNC, care seekers are able to access the right care, through the right healthcare center at the right time, which otherwise was a huge challenge for them. In FY 2020, DiNC services expanded with a Virtual Tumor Board for quick diagnosis and expedited treatment. Currently, this service is operational at the Cancer Institute and Assam State Cancer Institute. # The Future Leaders Summit Organized as part of the TCS APAC Summit and now in its fourth year, brings together delegates from customer organizations who are identified as high performers and are passionate about harnessing the power of digital technologies to create a fairer, more inclusive society. The theme this year was 'Digital empowering a sustainable world', and explored how digital technologies can empower communities across the world - how drones are helping to save endangered animals and protect forests in Australia; how technology is supporting a culture of health and wellbeing in Indigenous Australia with children being encouraged to become the next generation of innovators through STEM education. Meanwhile, the TCS team has been supporting the Tata Memorial Hospital, Mumbai, locally, with its online registration process and enquiries. This has significantly improved data quality with zero reported issues. # The Tata Translational Cancer Research Centre (TTCRC) was set up in partnership with TMC in Kolkatta. TTCRC aims to create an interactive environment for clinicians, scientists and the industry to work together to deliver a better future for cancer patients in India. TCS has been providing operational solutions for TTCRC since its inception. Clinicians, scientists and industry are developing partnerships at TTCRC so patients not only benefit from modern affordable cancer therapy but also from the cost-effective models of care. # Employee Engagement TCS has partnered with the American Heart Association in the United States and the Heart and Stroke Foundation in Canada, to fight heart disease and stroke. Annual initiatives such as Go Red for Women, Heart Walks, Big Bike events and Heart Month aid in fundraising and also increases awareness around cardiovascular research and public policy advocacy. The programs below summarize the key partners and achievements of this work in the last year. In North America, associates are directly involved in supporting the mission of our national partners, the American and Canadian Red Crosses, the American Heart Association, and Heart & Stroke Foundation. Since 2011, TCS' Employee Volunteer Program channels the unique skillset of our employees and their energies to address some of the most pressing issues facing Education, Health, and Planet, in countries where we live and work. In the United Kingdom, The Wildlife Trust became TCS' new corporate charity partner. In this two-year partnership, the focus is on employee mental health and wellbeing. |
The overall campaign theme in the partnership is 'Disconnect to reconnect', which raises awareness of the importance of disconnecting from our everyday digital lives and use nature to improve both mental and physical health. # Impact after earthquake Over 2,500 children returned to a new school due to the efforts and contributions of TCSers worldwide, who collaborated with 'Strong Mexico' campaign, developed to provide aid and support to the victims of the 2017 earthquake. # Impact After TCS efforts TCS' interventions enabled the building of a new school for the children of Cintalapa in Chiapas, Mexico. TCS Annual Report 2019-20 Management Discussion and Analysis I 120 # Business Responsibility Report This section is as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. # Section A: General information about the company 1. Corporate Identity Number (CIN) of the Company: L22210MH1995PLC084781 2. Name of the Company: Tata Consultancy Services Limited 3. Registered address: 9th Floor, Nirmal Building, Nariman Point, Mumbai - 400 021, India 4. Website: www.tcs.com 5. E-mail id: [email protected] 6. Financial Year reported: April 1, 2019 to March 31, 2020 7. Sector(s) that the Company is engaged in (industrial activity code-wise): ITC CODE: 85249009 Product Description: Computer Software 8. List three key products/services that the Company manufactures/provides (as in balance sheet): Consulting and Service Integration, Digital Transformation Services and Cognitive Business Operations. 9. Total number of locations where business activity is undertaken by the Company: Number of International Locations (Provide details of major 5): 72 delivery centers |Region|# of Delivery Centers| |---|---| |UK and Ireland|20| |Latin America|15| |North America|18| |Asia Pacific|12| |Europe|6| 10. Number of National Locations: 115 Markets served by the Company - Local/State/National/International: North America, Latin America, United Kingdom and Ireland, Continental Europe, Asia Pacific, Middle East and Africa, and India. # Section B: Financial details of the company 1. Paid up Capital (INR): 375 crore 2. Total Turnover (INR): 156,949 crore 3. Total profit after taxes (INR): 32,340 crore 4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%): 2.01% of average net profit for previous three years in respect of standalone TCS (India Initiatives only) 5. List of activities in which expenditure in 4 above has been incurred: |Category (CSR in India only)|` crore| |---|---| |Health and Wellness|175| |Education and Skill Building|116| |Environmental Sustainability|6| |Disaster Relief|2| |Contribution to Foundations/Trusts|303| |Total|602| 6. Including overseas spend, the company's total spending on Corporate Social Responsibility is ` 755 Crore # Section C: Other details 1. Does the Company have any Subsidiary Company/ Companies? Yes 2. Do the Subsidiary Company/ Companies participate in the BR Initiatives of the parent company? If yes, then indicate the number of such subsidiary company(s): Yes, 36 subsidiaries participated 3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities? [Less than 30%, 30-60%, More than 60%] No. # Section D: BR information 1. Details of Director/Directors responsible for BR 1. Details of the Director/Directors responsible for implementation of the BR policy/policies The Corporate Social Responsibility (CSR) Committee of the Board of Directors is responsible for implementation of BR policies. The members of the CSR Committee are as follows: |DIN Number|Name|Designation| |---|---|---| |00121863|N Chandrasekaran|Chairman| |00548091|O P Bhatt|Independent Director| |07006215|N Ganapathy Subramaniam|Chief Operating Officer| 2. Details of the BR head Name: Milind Lakkad Designation: Executive Vice President and CHRO Telephone number: 022 67789999 E-mail id: [email protected] 2. Principle wise (as per NVGs) BR Policy/policies The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) released by the Ministry of Corporate Affairs has adopted nine areas of Business Responsibility. These briefly are as follows: 1. P1 Business should conduct and govern themselves with Ethics, Transparency and Accountability 2. P2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle 3. P3 Businesses should promote the wellbeing of all employees 4. P4 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized 5. P5 Businesses should respect and promote human rights 6. P6 Business should respect, protect, and make efforts to restore the environment 7. P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner 8. P8 Businesses should support inclusive growth and equitable development 9. |
P9 Businesses should engage with and provide value to their customers and consumers in a responsible manner |S.N.|Questions|P1|P2|P3|P4|P5|P6|P7|P8|P9| |---|---|---|---|---|---|---|---|---|---|---| |1|Do you have a policy / policies for....|Y|Y|Y|Y|Y|Y|Y|Y|Y| |2|Has the policy being formulated in consultation with the relevant stakeholders?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |3|Does the policy conform to any national / international standards?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |4|Has the policy been approved by the Board? If yes, has it been signed by MD/owner/ CEO/ appropriate Board Director?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |5|Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? Indicate the link for the policy to be viewed online?|Y*|Y*|Y*|Y**|Y*|Y***|Y*|Y*|Y*| |6|Has the policy been formally communicated to all relevant internal and external stakeholders?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |7|Does the company have in-house structure to implement the policy/ policies?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |8|Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders' grievances related to the policy/ policies?|Y|Y|Y|Y|Y|Y|Y|Y|Y| |9|Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency?|Y|N|Y|N|N|Y|N|N|Y| * TATA Code of Conduct (https://on.tcs.com/Tata-Code-Of-Conduct) ** CSR Policy (https://on.tcs.com/Global-CSR-Policy) *** Environment Policy (https://on.tcs.com/Environmental-Policy) # 3. Governance related to BR (a) Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year: Seven Board Meetings were held during the year. (b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published? Yes, the company publishes its Sustainability Report annually. In FY 2020, the Sustainability Report is part of this Annual Report. The hyperlink is: https://on.tcs.com/Annual-Report-2020 TCS Annual Report 2019-20 Management Discussion and Analysis I 123 # SECTION E: PRINCIPLE WISE PERFORMANCE # Principle 1 1. Does the policy relating to ethics, bribery and corruption cover only the company? No Does it extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others? Yes 2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so: In FY 2020, 149 concerns from various stakeholders were received in the ethics channels. Of these, 136 (91.3%) were satisfactorily resolved as on March 31, 2020, and the remaining concerns were work in progress to be resolved following due process. # Principle 2 1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities: Three instances of work done by TCS that results in social or environmental good are: - a) Intelligent Speech to Text Solution: Verbose is an intelligent solution for the hearing impaired. It enables end-to-end speech to text conversion. It converts live lectures into real-time data that can be viewed in different formats such as animated video, comic strips, notes etc. More than 1,000 children are using the solution. It is also part of many "Assistive Conference" kits, for hearing-impaired conference attendees, to engage with conference content at their own pace. - b) Research Scholarship Program: TCS' Research Scholarship Program continues to support PhD scholars in Computer Sciences in India. In FY 2020, 40 new scholars were included in the program and a stipend hike was announced. TCS Researchers continue to mentor scholars who are a part of the program. The total number of scholars supported by the program is 322. - c) Digital Impact Square - The Digital Impact Square, based in Nasik, provides internships to young innovators to build solutions that solve social problems using Digital technologies and human-centric design principles. The FY 2020 cohort had 60 innovators in 10 teams. Four DISQ initiatives moved to the sustain phase (successful exit from DISQ). Total 10 successful exits from DISQ so far. ₹6.2 crore was raised by DISQ startups and more than one lakh lives were impacted this year. Three new design schools joined DISQ this year. 2. For each such product, provide the following details in respect of resource used (Energy, Water, Raw material etc.) per unit of product (optional): - a) Reduction during sourcing/production/distribution achieved since the previous year throughout the value chain? Not applicable. - b) Reduction during usage by consumers (energy, water) has been achieved since the previous year: Not applicable. 3. Does the company have procedures in place for sustainable sourcing (including transportation)? (a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so. |
Our suppliers sign the Supplier Code of Conduct and the Tata Code of Conduct. Our policy on supply chain sustainability can be found here: https://on.tcs.com/Sustainable-Supply-Chain-Policy 4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work? Yes (a) If yes, what steps have been taken to improve their capacity and capability of local and small vendors? While the criteria for selection of goods and services is quality, reliability and price, TCS gives preference to small organizations, particularly promoted by entrepreneurs from socially backward communities. Under the BridgeIT program, TCS has trained digital entrepreneurs who have established themselves as key resources in the villages within which they operate. TCS promotes the exhibition and sale of goods produced by socially and economically underprivileged men/women supported by Non-Governmental Organizations. TCS facilitated stalls for organizations like Etasha Society and Maher to sell various products that were made by destitute and mentally challenged men and women from the slums of National Capital Region, Haryana and Maharashtra. TCS provided a platform for selling products made by the inmates of Tihar Jail and enabled their sale in Tata Power, Delhi as well. # 5. Does the company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as 10%). Also, provide details thereof, in about 50 words or so: Yes. For more details please refer to the FY 2020 Performance Overview: Natural Capital which forms part of this Annual Report. # Principle 3 1. Please indicate the Total number of employees: 448,464 as on March 31, 2020 2. Please indicate the Total number of employees hired on temporary/ contractual/ casual basis: 17,273 as on March 31, 2020 3. Please indicate the Number of permanent women employees: 162,220 as on March 31, 2020 4. Please indicate the Number of permanent employees with disabilities: 661 as on March 31, 2020 5. Do you have an employee association that is recognized by management? Yes 6. What percentage of your permanent employees are members of this recognized employee association? 0.03% (For India) 7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year: File: AR_TCS_2019_2020-1-314.md 8. The company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (India) and the Rules thereunder. During FY 2020, the company has received 86 complaints on sexual harassment, out of which 77 complaints have been resolved with appropriate action taken and 9 complaints remain pending as on March 31, 2020. Internal review is under progress for the pending complaints, following due process. There have been no complaints in other areas. What percentage of your under mentioned employees were given safety & skill upgradation training in the last year? # Principle 4 1. Has the company mapped its internal and external stakeholders? Yes 2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders: Yes 3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders? If so, provide details thereof, in about 50 words or so: Yes. Please refer to the section on FY 2020 Performance Overview: Social Capital in this Annual Report for details on our Adult Literacy Program, Bridge IT, BPS/IT Employability programs, Advanced Computer Training Centre, etc. # Principle 5 1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs/Others? The principles stated in our code and policies which include respect for human rights and dignity of all stakeholders, extend to the group, joint venture, suppliers and all those who work with us. 2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management? No material complaint related to violation of fundamental human rights of individuals was received during the financial year. # Principle 6 1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/Contractors/NGOs/others? The policy is applicable to TCS, its subsidiaries and vendors. 2. Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc? Y/N. |
If yes, please give hyperlink for webpage etc: Yes. TCS' Environmental Policy is available on https://on.tcs.com/Environmental-Policy 3. Does the company identify and assess potential environmental risks? Yes. 4. Does the company have any project related to Clean Development Mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed? Not Applicable 5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc.. Yes. Please refer to the section on FY 2020 Performance Overview: Natural Capital in this Annual Report. 6. Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported? Yes. 7. Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year. None # Principle 7 1. Is your company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with: Yes. National Association of Software and Services Companies (NASSCOM), Confederation of Indian Industries (CII), Federation of India Chambers of Commerce and Industry (FICCI), US India Business Council (USIBC) US Chamber of Commerce and Confederation of British Industry (CBI) TCS Annual Report 2019-20 Management Discussion and Analysis I 126 # 2. Have you advocated/lobbied through above associations for the advancement or improvement of public good? Yes/ No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others): Yes. TCS participates in consultations on governance and administration, sustainable business principles, inclusive development policies (with a focus on skill building and literacy), economic reforms and tax and other legislations. TCS uses the Tata Code of Conduct as a guide for its actions in influencing public and regulatory policy. # Principle 8 1. Does the company have specified program/initiatives/ projects in pursuit of the policy related to Principle 8? If yes details thereof? 2. Yes. Please refer to the preceding section on FY 2020 Performance Overview: Social Capital in this Annual Report. Are the program/projects undertaken through in-house team/own foundation/external NGO/government structures/any other organization? 3. TCS uses all of these modes. Have you done any impact assessment of your initiative? 4. Yes. What is your company's direct contribution to community development projects- Amount in INR and the details of the projects undertaken? 5. ₹ 755 crore, including overseas spend. For more details, please refer to Annexure II of Directors' Report in this Annual Report. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so. # Principle 9 1. What percentage of customer complaints/consumer cases are pending as on the end of financial year. 2. 8% of the complaints received are pending resolution as on March 31, 2020. Does the company display product information on the product label, over and above what is mandated as per local laws? Yes/No/N.A./Remarks (additional information): 3. Not Applicable Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anticompetitive behavior during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so: 4. No Did your company carry out any consumer survey/ consumer satisfaction trends? TCS Annual Report 2019-20 Management Discussion and Analysis I 127 # FY 2020 PERFORMANCE OVERVIEW: # NATURAL CAPITAL TCS is certified under the ISO 14001:2015 Environmental Management System (EMS) standard, across 126 locations globally. TCS views its responsibility for environmental stewardship seriously and has taken a 'beyond compliance' approach, setting a bold vision for environmental sustainability, articulated in the Environmental Policy. This translates into a strong focus on operational efficiency and concern for the environment across the organization and in the value chain. The objective is to grow sustainably by successfully decoupling business growth and the impact on the environment from our operations, effectively doing more with less through better design, planning and operational efficiency. The company's environmental sustainability strategy is implemented through its policy, standardized processes, impact assessment, performance monitoring and strong partnerships with stakeholders, including employees. |
# Specific Electricity Consumption (KWH/FTE/MONTH) 400 319 300 275 267 246 231 216 196 186 177 162 155 145 # Managing the Carbon Footprint Long before it became an established science, TCS embraced the precautionary principle and recognized carbon footprint mitigation as a high priority area. With an operational footprint that consists largely of campuses of office blocks for the delivery organization, and sales offices, direct emissions from operations - also referred to as Scope 1 emissions - are a very small part of the company's carbon footprint, amounting to just 6.5% of the overall carbon footprint. The rest is made up of indirect emissions, referred to as Scope 2 emissions, associated with purchased electricity. # Specific Scope 1 + Scope 2 Emissions (TCO2E/FTE/ANNUM) 400 319 300 275 267 246 231 216 196 186 177 162 155 145 # Trend in specific electricity consumption |2007-08|2.00| |---|---| |2008-09|1.15| |2009-10|1.00| |2010-11|0.00| |2011-12| | |2012-13| | |2013-14| | |2014-15| | |2015-16| | |2016-17| | |2017-18| | |2018-19| | # Footnotes In FY 2020, TCS consumed 547 GWh of electricity of which 10.9% was from renewable sources, ~3.5% from onsite utilities and the remaining was purchased electricity. Total direct energy used was 0.13 Million GJ and total direct plus indirect energy used was 2.08 GJ. The total electricity consumed, as well as direct energy usage, have gone down, indicating better controls. # TCS Annual Report 2019-20 # Management Discussion and Analysis TCS has been able to reduce its specific energy consumption by over 60% over baseline year FY 2008, and bring down its greenhouse gas emissions (Scope 1 + Scope 2) from 3 tCO2E/FTE/Annum in FY 2008 to 1.15 tCO2e/FTE/Annum in the current reporting year, a reduction of 61.6%. Compared to the prior year, the specific energy consumption is down 11.9% and specific carbon footprint is down 11.8% YoY. Additionally, absolute (Scope 1 + Scope 2) emissions have reduced by 6% YoY, for the fourth consecutive year. Having achieved the previous target of halving the specific carbon footprint by 2020 (versus baseline year FY 2008) ahead of schedule, the company is now working on setting new targets for the next decade. # The Path to Energy Efficiency The reduction in specific energy consumption was achieved by adding more green buildings to the company's real estate portfolio, installing roof top solar power plants across campuses, optimizing IT system power usage, upgrading legacy equipment with state-of-the-art technology, and improving operational efficiency through the inhouse-built, IoT-based Remote Energy Management System. All these efforts have resulted in year-on-year energy reduction, despite the growth in employees, commissioning of new facilities and ramping up within existing facilities. In FY 2020, the company added 2 MWp of rooftop solar, taking the total on-site roof top solar capacity across its campuses to 7.6 MWp. This contributed 6.4 million units of electricity generated from in-house solar plants. About 53 million units of renewable energy were sourced in FY 2020 through power purchase agreements. Total renewable energy units generated from rooftop solar projects and sourced through power purchase agreements was ~10.9% of the total electricity consumption. # Other Emissions Emissions of Ozone-depleting substances are primarily in the form of system losses or fugitive emissions during maintenance and repair of air conditioning systems. TCS is committed to using zero-ozone depleting potential (ODP) refrigerants in its operations. New facilities have HVAC systems based on zero-ODP refrigerants. All ODP refrigerant gases will be phased out and replaced with zero-ODP refrigerants, in line with country-specific timelines agreed to as per the Montreal Protocol and local regulations. # Value Chain Emissions All other indirect emissions are accounted by TCS as Scope 3 emissions. These are also known as value chain emissions because they are caused by sources not owned or controlled by TCS, but are relevant to its operations and within its value chain. By applying an expansive boundary and using standard Scope 3 emission factors, the company estimates that value chain emissions amounted to 1.57 tCO2e per FTE, in FY 2020. The largest contributors, amounting to ~60%, were business travel intrinsic to the consultancy business model, and daily workplace commutes of employees. TCS has been investing in superior communications and video conferencing infrastructure to promote greater collaboration across remote teams, and with lesser in-person attendance for meetings and business discussions. This has helped reduce the power utilization efficiency (PUE) of its 23 data centers to 1.66 (versus 1.67 in the prior year). Of the 23 data centers, 22 have achieved the target PUE of 1.65. |
Data center/server room consolidation, higher rack utilization, and UPS rationalization have been the key levers. # Footnotes 26 Scope 1 emissions have been calculated using the emissions factors published by the GHG (greenhouse) Protocol All Sector Tools version released in 2017. For Scope 2 emissions - that is, purchased electricity-related carbon emissions - for India, the source is the emissions factor in the CO2 Baseline Database for the Indian Power Sector, User Guide, Version 13.0, June 2018, published by the Central Electricity Authority of India. For Scope 2 emissions of locations other than India, emission factors published by DEFRA 2015 have been used. 27 305-1, 410,971 tCO2e in FY 2020 vs 437,366 tCO2e in FY 2019 28 306-1 # Water Conservation TCS optimizes water consumption through conservation, sewage treatment and reuse, and rainwater harvesting. All new campuses have been designed for 50% higher water efficiency, 100% treatment and recycling of sewage, and rainwater harvesting. Employee engagement also plays a big role in the company's water sustainability strategy. In FY 2020, consistent water management measures, consolidation of offices and increased occupancy of green-field centers helped reduce specific freshwater consumption by over 9% compared to FY 2019. Of the 3.9 million kL of fresh water consumed by TCS in FY 2020, 56% came from municipal sources, 28% from third party suppliers, 14% from groundwater and 2% from rainwater harvest at our campuses. Consistent water efficiency measures have helped the company reduce freshwater consumption by over 27% over baseline year FY 2008. Total treated sewage recycled as a percentage of the total sewage generated was ~70% in FY 2020. # Waste Reduction and Reuse As an IT services and consulting organization, TCS' facilities mostly generate electronic, electrical, and office consumables waste and municipal solid waste. Generation of potentially hazardous wastes such as lead-acid batteries and waste lube oil is in relatively smaller proportions. In FY 2020, despite the growth in business, the company was able to achieve material reductions in the absolute quantities across all key wastes: paper wastes, cafeteria dry waste, and canteen biodegradable waste. In FY 2020, 72.6% of the total food waste generated across all TCS facilities was treated using onsite composting methods or bio-digester treatment. In locations lacking space for these systems, the waste is disposed of as fodder for livestock or sent to the municipal waste collection system. Dry waste is categorized, segregated, and sent for recycling. Garden waste is composted onsite. Over 336 tons of compost were generated in FY 2020, reducing the need for chemical fertilizers and the resultant soil and groundwater pollution. Used printer cartridges and photocopier toner bottles are sent back to the manufacturers for proper disposal. # TCS' waste management practices TCS continues to achieve 100% recycling of its paper waste. Per capita paper consumption reduced by ~16% over the prior year and ~89% over the baseline year FY 2008. The success of this drive can be attributed to the awareness created among employees, and the enforcement of printing discipline through automated and manual means. TCS' waste management practices seek to maximize segregation at source, as well as reuse and recycle as possible. All the hazardous and regulated waste is disposed. 29 103-2, 103-3 30 303-1 31 306-1 # Employee Engagement TCS has a year-round calendar for engaging with employees to create environmental awareness and sensitizing them towards nature and conserving its resources. The company has run communication campaigns around World Bio-diversity Day, World Environment Week, World Ozone Day, Green Consumer Day, World Wildlife Week, Pollution Control Day, Energy Conservation Day, World Water Day and the Earth hour campaign. The company's purpose-driven worldview inspires many employees to undertake volunteering in their local communities around environmental themes. A month-long campaign to encourage the elimination of single use plastic saw over 80,000 TCSers participate in 256 cleanliness drives and 130 awareness sessions in the community, across 90 cities in India. Elsewhere, employees at TCS Mexico participated in reforestation activities to save 'Guadalajara's lungs', planting saplings in designated areas to increase the green cover. As part of the Tata Sustainability Month, the company ran a campaign to create awareness among employees on the UN Sustainable Development Goals, and inspire them to take small actions in their lives to contribute towards those goals. It saw participation by over 120,000 associates participate in such activities as plantation drives, cleanliness drives, cyclathon, walkathon, external sessions, clean (food) plate drive, community initiatives and several contests. TCS Annual Report 2019-20 Management Discussion and Analysis I 131 # I. |
Company's Philosophy on Corporate Governance Effective corporate governance practices constitute the strong foundation on which successful commercial enterprises are built to last. The Company's philosophy on corporate governance oversees business strategies and ensures fiscal accountability, ethical corporate behaviour and fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large. Strong leadership and effective corporate governance practices have been the Company's hallmark inherited from the Tata culture and ethos. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees including the Managing Director and the Executive Directors. In addition, the Company has adopted a Code of Conduct for its non-executive directors which includes Code of Conduct for Independent Directors which suitably incorporates the duties of Independent Directors as laid down in the Companies Act, 2013 ("the Act"). The Company's corporate governance philosophy has been further strengthened through the Tata Business Excellence Model, the TCS Code of Conduct for Prevention of Insider Trading and the Code of Corporate Disclosure Practices ("Insider Trading Code"). The Company has in place an Information Security Policy that ensures proper utilisation of IT resources. The Company is in compliance with the requirements stipulated under Regulation 17 to 27 read with Schedule V and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), as applicable, with regard to corporate governance. Details of TCS' board structure and the various committees that constitute the governance structure1 of the organization are covered in detail in this report. 1 102-18 # The various material aspects of corporate governance and TCS' approach to them are discussed in the table below: |Material Aspect|TCS' Approach| |---|---| |Avoidance of conflict of interest|Chairmanship of the Board is a non-executive position, and separate from that of the Chief Executive Officer and Managing Director. The Code of Conduct (https://www.tcs.com/tata-code-of-conduct) for non-executive directors, and for Independent Directors, carries explicit clauses covering avoidance of conflict of interest. Likewise, there are explicit clauses in the Tata Code of Conduct (TCoC) prohibiting any employee - including the Managing Director and executive directors - from accepting any position of responsibility, with or without remuneration, with any other organization without TCS' prior written approval. For executive directors and the Managing Director, such approval must be obtained from the Board.| |Board independence and minority shareholders' interests|The TCoC, which defines the governance philosophy at TCS, emphasizes fairness and transparency to all stakeholders. The Company also has a variety of channels including a structured global investor outreach program, through which minority shareholders can interact with the management or Board and express their concerns. Shareholders can communicate any grievance to the Company Secretary's office through a well-publicized channel, where complaints are tracked to closure. The Stakeholders' Relationship Committee oversees the redressal of these complaints. The Annual General Meeting is another forum where they can interact with the Board.| # Values, Ethics and compliance Over the last five decades, TCS has consistently adhered to the highest principled conduct and has earned its reputation for trust and integrity in the course of building a highly successful global business. The Company's core values are: Leading change, Integrity, Respect for the individual, Excellence, and Learning and sharing. TCoC, which every employee signs at the time of joining the Company, serves as a moral guide and a governing framework for responsible corporate citizenship. Periodic refresher courses are conducted to ensure continued awareness of the code, and employee communications from the leadership reiterate the importance of our values and the TCoC. Customers and suppliers are made aware of the TCoC principles in contract discussions, and through inclusion of specific clauses in proposals and contracts. The TCS Supplier Code of Conduct is shared with suppliers as part of the procurement process and is published on the TCS website. Compliance to laws of the countries in which we operate, as well as global legislation such as FCPA, UKBA is monitored through formal compliance procedures led by the corporate compliance office. Changes to legislation are closely monitored, risks are evaluated and effectively managed across our operations. Avenues have been provided for all employees and stakeholders to report concerns or non-compliance which are investigated and addressed by following due process. At the apex level, the Audit Committee oversees compliance to internal policies and external regulations. |
TCS Annual Report 2019-20 Corporate Governance Report I 133 # Succession Planning Succession planning is an integral part of the operations of the Company. Succession planning of senior management is reviewed by the Board. Business or unit heads are invited to present on specific topics at Board meetings from time to time, offering an opportunity for the directors to assess their values, competencies, and capabilities. # II. Board of Directors i. As on March 31, 2020, the Company has nine Directors. Of the nine Directors, seven (i.e. 77.8 percent) are Non-Executive Directors out of which five (i.e. 55.6 percent) are Independent Directors. The profiles of Directors can be found on https://www.tcs.com/ir-corporate-governance. The composition of the Board is in conformity with Regulation 17 of the SEBI Listing Regulations read with Section 149 of the Act. ii. None of the Directors on the Board holds directorships in more than ten public companies. None of the Independent Directors serves as an independent director on more than seven listed entities. Necessary disclosures regarding Committee positions in other public companies as on March 31, 2020 have been made by the Directors. None of the Directors is related to each other except N Ganapathy Subramaniam and N Chandrasekaran. iii. Independent Directors are non-executive directors as defined under Regulation 16(1)(b) of the SEBI Listing Regulations read with Section 149(6) of the Act along with rules framed thereunder. In terms of Regulation 25(8) of SEBI Listing Regulations, they have confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based on the declarations received from the Independent Directors, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the SEBI Listing Regulations and that they are independent of the management. iv. Seven board meetings were held during the year under review and the gap between two meetings did not exceed one hundred and twenty days. The said meetings were held on: - April 12, 2019 - June 13, 2019 - July 9, 2019 - October 10, 2019 - January 17, 2020 - February 13, 2020 - March 10, 2020 The necessary quorum was present for all the meetings. v. The names and categories of the Directors on the Board, their attendance at board meetings held during the year under review and at the last Annual General Meeting ("AGM"), name of other listed entities in which the Director is a director and the number of Directorships and Committee Chairmanships / Memberships held by them in other public limited companies as on March 31, 2020 are given herein below. Other directorships do not include directorships of private limited companies, foreign companies and companies registered under Section 8 of the Act. Further, none of them is a member of more than ten committees or chairman of more than five committees across all the public companies in which he / she is a Director. For the purpose of determination of limit of the Board Committees, chairpersonship and membership of the Audit Committee and Stakeholders' Relationship Committee has been considered as per Regulation 26(1)(b) of SEBI Listing Regulations. # Directors' Information |Name of the Director|Category| |---|---| |N Chandrasekaran|Non-Independent, Non-Executive| |Rajesh Gopinathan|Non-Independent, Executive| |N Ganapathy Subramaniam|Non-Independent, Executive| |Aman Mehta*|Independent, Non-Executive| |Dr Ron Sommer*|Independent, Non-Executive| # Board Meeting Attendance and Directorships |Number of Board Meetings attended|Whether attended last AGM held on June 13, 2019|Number of Directorships in other Public Companies|Committee positions held in other Public Companies| |---|---|---|---| |7|Yes|5|Chairman: - Member: -| |7|Yes|-|Chairman: - Member: -| |7|Yes|1|Chairman: - Member: -| |2|Yes|N.A.|Chairman: N.A. Member: N.A.| |2|Yes|N.A.|Chairman: N.A. Member: N.A.| # Directorship in other listed entity (Category of Directorship) 1. Tata Steel Limited (Non-Independent, Non-Executive) 2. Tata Motors Limited (Non-Independent, Non-Executive) 3. Tata Consumer Products Limited (Formerly known as Tata Global Beverages Limited) (Non-Independent, Non-Executive) 4. The Tata Power Company Limited (Non-Independent, Non-Executive) 5. The Indian Hotels Company Limited (Non-Independent, Non-Executive) 6. |
Tata Elxsi Limited (Non-Independent, Non-Executive) # Corporate Governance Report # Name of the Director |Name of the Director|Category| |---|---| |O P Bhatt|Independent, Non-Executive| |Aarthi Subramanian|Non-Independent, Non-Executive| |Dr Pradeep Kumar Khosla|Independent, Non-Executive| |Hanne Sorensen|Independent, Non-Executive| |Keki Mistry|Independent, Non-Executive| |Don Callahan|Independent, Non-Executive| File: AR_TCS_2019_2020-1-314.md # Board Meetings |Number of Board Meetings attended|Whether attended last AGM held on June 13, 2019|Number of Directorships in other Public Companies|Committee positions held in other Public Companies|Directorship in other listed entity (Category of Directorship)| |---|---|---|---|---| |7|Yes|-|4|2| |7|Yes|-|5|1| |7|Yes|-|-|-| |7|Yes|-|1|-| |6|Yes|-|6|2| |7|Yes|-|-|-| # Footnotes * Ceased to be Directors w.e.f. June 26, 2019 upon completion of their term as Independent Directors. ** Re-appointed as Independent Director for a second term w.e.f. June 27, 2019. TCS Annual Report 2019-20 Video-conferencing facilities are also used to facilitate Directors travelling / residing abroad or at other locations to participate in the meetings. # vi. During FY 2020, information as mentioned in Part A of Schedule II of the SEBI Listing Regulations, has been placed before the Board for its consideration. # vii. During FY 2020, one meeting of the Independent Directors was held on April 12, 2019. The Independent Directors, inter-alia, reviewed the performance of Non-Independent Directors, Board as a whole and Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors. # viii. The Board periodically reviews the compliance reports of all laws applicable to the Company. # ix. Details of equity shares of the Company held by the Directors as on March 31, 2020 are given below: |Name|Category|Number of equity shares| |---|---|---| |N Chandrasekaran|Non-Independent, Non-Executive|177,056| |Aarthi Subramanian|Non-Independent, Non-Executive|5,600| |Rajesh Gopinathan|Non-Independent, Executive|2,760| |N Ganapathy Subramaniam|Non-Independent, Executive|197,760| |Keki Mistry|Independent, Non-Executive|4,078| The Company has not issued any convertible instruments. # x. The Board has identified the following skills / expertise / competencies fundamental for the effective functioning of the Company which are currently available with the Board: - Global Business: Understanding of global business dynamics, across various geographical markets, industry verticals and regulatory jurisdictions. - Strategy and Planning: Appreciation of long-term trends, strategic choices and experience in guiding and leading management teams to make decisions in uncertain environments. - Governance: Experience in developing governance practices, serving the best interests of all stakeholders, maintaining board and management accountability, building long-term effective stakeholder engagements and driving corporate ethics and values. The eligibility of a person to be appointed as a Director of the Company is dependent on whether the person possesses the requisite skill sets identified by the Board as above and whether the person is a proven leader in running a business that is relevant to the Company's business or is a proven academician in the field relevant to the Company's business. Being an IT service provider, the Company's business runs across different industry verticals, geographical markets and is global in nature. The Directors so appointed are drawn from diverse backgrounds and possess special skills with regard to the industries / fields from where they come. TCS Annual Report 2019-20 Corporate Governance Report I 137 # III. Committees of the Board With effect from April 1, 2019, Ethics and Compliance Committee, Health Safety and Sustainability Committee, Software Technology Parks of India (STPI) / Special Economic Zone (SEZ) Committee, Bank Account Committee were dissolved and the Terms of Reference of these Committees have been transferred to the Statutory Committees. |
There are six Board Committees as on March 31, 2020, which comprises five statutory committees and one other non-statutory committee, details of which are as follows: |Name of the Committee|Extract of terms of reference|Category and composition|Other details| |---|---|---|---| |Audit Committee|Committee is constituted in line with the provisions of Regulation 18 of SEBI Listing Regulations and Section 177 of the Act.|Name|* Seven meetings of the Audit Committee were held during the year under review and the gap between two meetings did not exceed one hundred and twenty days.| | |* Oversight of financial reporting process.|Keki Mistry (Chairman)*|* Committee invites such of the executives as it considers appropriate, representatives of the statutory auditors and internal auditors, to be present at its meetings.| | |* Reviewing with the management, the annual financial statements and auditors' report thereon before submission to the Board for approval.|O P Bhatt|* The Company Secretary acts as the Secretary to the Audit Committee.| | |* Evaluation of internal financial controls and risk management systems.|Aarthi Subramanian|* Rajendra Moholkar is the Compliance Officer to ensure compliance and effective implementation of the Insider Trading Code.| | |* Recommendation for appointment, remuneration and terms of appointment of auditors of the Company.|Dr Pradeep Kumar Khosla|* Quarterly Reports are sent to the members of the Committee on matters relating to the Insider Trading Code.| | |* Approve policies in relation to the implementation of the Insider Trading Code and to supervise implementation of the same.|Hanne Sorensen**|* The previous AGM of the Company was held on June 13, 2019 and was attended by Aman Mehta, the then Chairman of the Audit Committee.| | |* To consider matters with respect to the Tata Code of Conduct, Anti-bribery and Anti-Corruption Policy and Gifts Policy.|Don Callahan**| | | | |Aman Mehta^| | | | |Dr Ron Sommer^^| | * Appointed as a member w. e. f. April 12, 2019 and Chairman w.e.f. June 27, 2019 of this Committee. ** Appointed as a member of this Committee w.e.f. April 12, 2019. ^ Ceased to be a member and Chairman of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. ^^ Ceased to be a member of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. # Nomination and Remuneration Committee Committee is constituted in line with the provisions of Regulation 19 of SEBI Listing Regulations and Section 178 of the Act. - Recommend to the Board the setup and composition of the Board and its committees. - Recommend to the Board the appointment/re-appointment of Directors and Key Managerial Personnel. - Support the Board and Independent Directors in evaluation of the performance of the Board, its Committees and individual Directors. - Recommend to the Board the Remuneration Policy for Directors, executive team or Key Managerial Personnel as well as the rest of employees. - Oversee familiarisation programs for Directors. |Name of the Committee|Category|Composition| |---|---|---| |O P Bhatt (Chairman)*|Independent, Non-Executive|Committee meetings were held during the year under review.| |N Chandrasekaran|Non-Independent, Non-Executive|The Company does not have any Employee Stock Option Scheme.| |Aarthi Subramanian**|Non-Independent, Non-Executive|Details of Performance Evaluation Criteria and Remuneration Policy are provided at serial no. III(iii) below.| |Hanne Sorensen**|Independent, Non-Executive|The previous AGM of the Company was held on June 13, 2019 and was attended by Aman Mehta, the then Chairman of the Nomination and Remuneration Committee.| |Aman Mehta^|Independent, Non-Executive| | |Dr Ron Sommer^^|Independent, Non-Executive| | * Appointed as Chairman of this Committee w. e. f. June 27, 2019. ** Appointed as a member of this Committee w.e.f. April 12, 2019. ^ Ceased to be a member and Chairman of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. ^^ Ceased to be a member of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. # Extract of terms of reference # Stakeholders' Relationship Committee Committee is constituted in line with the provisions of Regulation 20 of SEBI Listing Regulations and Section 178 of the Act. The broad terms of reference are as under: - Consider and resolve the grievances of security holders. - Consider and approve issue of share certificates, transfer and transmission of securities, etc. - Review activities with regard to the Health Safety and Sustainability initiatives of the Company. |
# Category and composition |Name|Category| |---|---| |Dr Pradeep Kumar Khosla*|Independent, Non-Executive| |Rajesh Gopinathan|Non-Independent, Executive| |Keki Mistry**|Independent, Non-Executive| |Dr Ron Sommer^|Independent, Non-Executive| |N Ganapathy|Non-Independent, Executive| |Subramaniam^^| | # Other details - Two meetings of the Stakeholders' Relationship Committee were held during the year under review. - Details of Investor complaints and Compliance Officer are provided at serial no. III(ii) below. - The previous AGM of the Company was held on June 13, 2019 and was attended by Dr Ron Sommer the then Chairman of the Stakeholders' Relationship Committee. # Footnotes - * Appointed as Chairman of this Committee w.e.f. June 27, 2019. - ** Appointed as a member of this Committee w.e.f. April 12, 2019. - ^ Ceased to be a member and Chairman of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. - ^^ Ceased to be a member of this Committee w.e.f. April 12, 2019. # Corporate Social Responsibility ("CSR") Committee Committee is constituted in line with the provisions of Section 135 of the Act. |Name of the Committee|Extract of terms of reference|Category and composition|Other details| |---|---|---|---| |Corporate Social Responsibility Committee|- Formulate and recommend to the Board, a CSR Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Act. - Recommend the amount of expenditure to be incurred on the activities mentioned in the CSR Policy. - Monitor the CSR Policy. |- N Chandrasekaran (Chairman) - Non-Independent, Non-Executive - O P Bhatt - Independent, Non-Executive - N Ganapathy Subramaniam* - Non-Independent, Executive - Rajesh Gopinathan** - Non-Independent, Executive - Aarthi Subramanian** - Non-Independent, Non-Executive |- Four meetings of the CSR Committee were held during the year under review. - Four Board meetings of TCS Foundation, a Section 8 company which was incorporated with sole objective of carrying on Corporate Social Responsibility (CSR) activities of the Company were held during the year. | * Appointed as a member of this Committee w.e.f. April 12, 2019. ** Ceased to be a member of this Committee w.e.f. April 12, 2019. TCS Annual Report 2019-20 Corporate Governance Report I 141 # Extract of terms of reference # Risk Management Committee ("RMC") Committee is constituted in line with the provisions of Regulation 21 of SEBI Listing Regulations. # Category and composition |Name|Category| |---|---| |Keki Mistry*|Independent, Non-Executive| |Don Callahan**|Independent, Non-Executive| |Rajesh Gopinathan|Non-Independent, Executive| |N Ganapathy Subramaniam**|Non-Independent, Executive| |O P Bhatt^|Independent, Non-Executive| |Aarthi Subramanian^^|Non-Independent, Non-Executive| |Ramakrishnan V|Chief Financial Officer| # Other details - Four meetings of the RMC were held during the year under review. - Fortnightly reports on management of foreign exchange risks are made available to the members of the RMC. # Footnotes * Appointed as a member and Chairman of this Committee w.e.f. April 12, 2019. ** Appointed as a member of this Committee w.e.f. April 12, 2019. ^ Ceased to be a member and Chairman of the Committee w.e.f. April 12, 2019. ^^ Ceased to be a member of the Committee w.e.f. April 12, 2019. # Extract of terms of reference |Name of the Committee|Category and composition|Other details| |---|---|---| |Executive Committee|Detailed review of the following matters which form part of terms of Executive Committee, were presented to the Board:| | | |* Business and strategy review;| | | |* Long-term financial projections and cash flows;| | | |* Capital and revenue budgets and capital expenditure programmes;| | | |* Acquisitions, divestments and business restructuring proposals;| | | |* Senior management succession planning;| | | |* Any other item as may be decided by the Board.| | # Other Committees |Name|Category| |---|---| |N Chandrasekaran (Chairman)|Non-Independent, Non-Executive| |Rajesh Gopinathan|Non-Independent, Executive| |Dr Ron Sommer*|Independent, Non-Executive| * Ceased to be a member of this Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019 The terms of reference of these committees are available on the website (https://www.tcs.com/ir-corporate-governance) TCS Annual Report 2019-20 Corporate Governance Report I 143 # ii. Stakeholders' Relationship Committee-other details The Board of Directors, on the recommendation of the Nomination and Remuneration Committee, decides the commission payable to the Managing Director and the Executive Directors out of the profits for the financial year and within the ceilings prescribed under the Act, based on the Board evaluation process considering the criteria such as the performance of the Company as well as that of the Managing Director and each Executive Director. # a. |
Name, designation and address of Compliance Officer: Rajendra Moholkar Company Secretary Tata Consultancy Services Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021. Telephone: 91 22 6778 9595 # b. Details of investor complaints received and redressed during FY 2020 are as follows: |Opening balance|Received during the year|Resolved during the year|Closing balance| |---|---|---|---| |1|99|100|-| # iii. Nomination and Remuneration Committee - other details Performance Evaluation Criteria for Independent Directors: The performance evaluation criteria for independent directors is determined by the Nomination and Remuneration Committee. An indicative list of factors on which evaluation was carried out includes participation and contribution. The remuneration policy of the Company is designed to create a high-performance culture. It enables the Company to attract, retain and motivate employees to achieve results. Our business model promotes customer centricity and requires employee mobility to address project needs. The remuneration policy supports such mobility through pay models that are compliant to local regulations. In each country where the Company operates, the remuneration structure is tailored to the regulations, practices and benchmarks prevalent in the IT industry. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and commission (variable component) to its Managing Director and the Executive Directors. Annual increments are recommended by the Nomination and Remuneration Committee within the salary scale approved by the Board and Members and are effective April 1, each year. The Company also reimburses the out-of-pocket expenses incurred by the Directors for attending the meetings. The Remuneration policy is available on https://on.tcs.com/remuneration-policy. # iv. Details of the Remuneration for the year ended March 31, 2020: # b. Managing Director and Executive Director # a. Non-Executive Directors: |Name|Commission|Sitting fees| |---|---|---| |N Chandrasekaran, Chairman@|-|4.20| |Aman Mehta*|60.00|1.80| |Dr Ron Sommer*|60.00|1.80| |O P Bhatt|200.00|6.90| |Aarthi Subramanian@@|-|5.40| |Dr Pradeep Kumar Khosla|140.00|5.10| |Hanne Sorensen|140.00|4.80| |Keki Mistry|140.00|5.10| |Don Callahan|140.00|5.10| |Total|880.00|40.20| @ As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company. * Ceased to be Directors w.e.f. June 26, 2019 upon completion of their term as Independent Directors. @@ In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata company. # Salary, Benefits, Perquisites, Commission and ESPS |Name of Director|Salary|Benefits, perquisites and allowances|Commission|ESPS| |---|---|---|---|---| |Rajesh Gopinathan|135.90|202.04|1,000.00|-| |Chief Executive Officer and Managing Director (w.e.f. February 21, 2017 for a period of 5 years)| | | | | |N Ganapathy Subramaniam|129.18|182.51|700.00|-| |Chief Operating Officer and Executive Director (w.e.f. February 21, 2017 for a period of 5 years)| | | | | The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available. Services of the Managing Director and Executive Director may be terminated by either party, giving the other party six months' notice or the Company paying six months' salary in lieu thereof. There is no separate provision for payment of severance pay. TCS Annual Report 2019-20 Corporate Governance Report I 145 # v. Number of committee meetings held and attendance records |Name of the Committee|Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|Corporate Social Responsibility Committee|Risk Management Committee| |---|---|---|---|---|---| |No. of meetings held|7|3|2|4|4| |Date of meetings|April 12, 2019; June 13, 2019; July 9, 2019; August 13, 2019; October 10, 2019; January 17, 2020; February 13, 2020|April 12, 2019; January 17, 2020; February 13, 2020|July 9, 2019 and January 16, 2020|April 11, 2019; July 16, 2019; October 25, 2019; February 11, 2020|April 4, 2019; June 13, 2019; October 9, 2019 and January 16, 2020| # No. of meetings attended |Name of Member|Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|Corporate Social Responsibility Committee|Risk Management Committee| |---|---|---|---|---|---| |N Chandrasekaran|-|3|-|4|-| |Rajesh Gopinathan*|-|-|2|1|4| |Aman Mehta**|2|1|-|-|-| |Dr Ron Sommer***|2|1|-|-|-| |O P Bhatt^|7|3|-|4|1| |N Ganapathy Subramaniam^^|-|-|-|3|3| |Aarthi Subramanian^^^|7|2|-|1|1| |Dr Pradeep Kumar Khosla|7|-|2|-|-| |Hanne Sorensen#|6|2|-|-|-| |Keki Mistry##|6|-|2|-|3| |Don Callahan###|6|-|-|-|3| # TCS Annual Report 2019-20 # Corporate Governance Report |Name of the Committee|Audit Committee|Nomination and Remuneration Committee|Stakeholders' Relationship Committee|Corporate Social Responsibility Committee|Risk Management Committee| |---|---|---|---|---|---| |No. of meetings held|7|3|2|4|4| |Date of meetings|April 12, 2019; June 13, 2019; July 9, 2019; August 13, 2019; October 10, 2019; January 17, 2020; February 13, 2020|April 12, 2019; January 17, 2020; February 13, 2020|July 9, 2019; January 16, 2020; October 25, 2019|April 11, 2019; July 16, 2019; October 9, 2019; January 16, 2020|April 4, 2019; June 13, 2019| |No. |
of meetings attended|Ramakrishnan V|-|-|-|4| Whether quorum was present for all the meetings: The necessary quorum was present for all the above committee meetings. * Rajesh Gopinathan ceased to be a member of Corporate Social Responsibility Committee w.e.f. April 12, 2019. ** Aman Mehta ceased to be Chairman of Audit Committee and Nomination and Remuneration Committee consequent to the completion of his term as Independent Director w.e.f. June 26, 2019. *** Dr Ron Sommer ceased to be Chairman of Stakeholders' Relationship Committee and member of Audit Committee and the Nomination and Remuneration Committee w.e.f. June 26, 2019 consequent to the completion of his term as Independent Director of the Company. ^ O P Bhatt ceased to be a member of Risk Management Committee w.e.f. April 12, 2019 and was appointed as Chairman of Nomination and Remuneration Committee w.e.f. June 27, 2019. ^^ N Ganapathy Subramaniam was appointed as a member of Risk Management Committee and Corporate Social Responsibility Committee and ceased to be a member of Stakeholder Relationship Committee w.e.f. April 12, 2019. ### Aarthi Subramanian was appointed as member of Nomination and Remuneration Committee and ceased to be a member of Corporate Social Responsibility Committee. ## Keki Mistry was appointed as a member of Audit Committee, Stakeholders' Relationship Committee and Risk Management Committee w.e.f. April 12, 2019 and Chairman of Audit Committee and Risk Management Committee w.e.f. June 27, 2019 and April 12, 2019 respectively. # Don Callahan was appointed as a member of Audit Committee and of Risk Management Committee w.e.f. April 12, 2019. TCS Foundation, a Section 8 company incorporated in 2015 with sole objective of carrying on Corporate Social Responsibility (CSR) activities of the Company, has held four meetings during the FY 2020. # IV. General Body Meetings # i. General Meeting # a. Annual General Meeting ("AGM"): |Financial Year|Date|Time|Venue| |---|---|---|---| |2017|June 16, 2017| |Birla Matushri Sabhagar| |2018|June 15, 2018|3.30 p.m.|Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai - 400 020| |2019|June 13, 2019| | | # b. Extraordinary General Meeting: No extraordinary general meeting of the members was held during FY 2020. # c. Special resolution: Special resolution for re-appointment of O P Bhatt as an Independent Director was passed at the AGM held in 2019 and no special resolution was passed in the previous AGMs held in 2017 and 2018. # iii. Details of special resolution proposed to be conducted through postal ballot: None of the businesses proposed to be transacted at the ensuing AGM requires passing of a special resolution through postal ballot. # V. None of the Directors of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Securities and Exchange Board of India or the Ministry of Corporate Affairs or any such statutory authority. A Certificate to this effect, duly signed by the Practicing Company Secretary is annexed to this Report. # VI. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W - 100022) have been appointed as the Statutory Auditors of the Company. The particulars of payment of Statutory Auditors' fees, on consolidated basis is given below: |Particulars|(` lakh)| |---|---| |Services as statutory auditors (including quarterly audits)|729.5| |Tax audit|53.4| |Services for tax matters|20.5| |Other matters|402.8| |Re-imbursement of out-of-pocket expenses|70.6| |Total|1,276.8| # ii. Details of special resolution passed through postal ballot, the persons who conducted the postal ballot exercise, details of the voting pattern and procedure of postal ballot: No postal ballot was conducted during the FY 2020. TCS Annual Report 2019-20 Corporate Governance Report I 148 # VII. Other Disclosure |Particulars|Regulations|Details|Website link for details/policy| |---|---|---|---| |Related party transactions|Regulation 23 of SEBI Listing Regulations and as defined under the Act|There are no material related party transactions during the year under review that have conflict with the interest of the Company. Transactions entered into with related parties during FY2020 were in the ordinary course of business and at arms' length basis and were approved by the Audit Committee. |
The Board's approved policy for related party transactions is uploaded on the website of the Company.|https://on.tcs.com/RPT| |Details of non - compliance by the Company, penalty, strictures imposed on the Company by the stock exchange, or Securities and Exchange Board of India ('SEBI') or any statutory authority on any matter related to capital markets during the last three financial years.|Schedule V (C) 10(b) to the SEBI Listing Regulations|Nil| | |Whistle Blower Policy and Vigil Mechanism|Regulation 22 of SEBI Listing Regulations|The Company has this Policy and has established the necessary vigil mechanism for directors and employees to report concerns about unethical behavior. No person has been denied access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.|https://on.tcs.com/WhistleBP| |Discretionary requirements|Schedule II Part E|- A message from the Chief Executive Officer and Managing Director on the half-yearly financial performance of the Company including a summary of the significant events in the six month period ended September 30, 2019 was sent to every member in October 2019. - The auditors' report on financial statements of the Company are unqualified. - Internal auditors of the Company make quarterly presentations to the audit committee on their reports. | | # TCS Annual Report 2019-20 # Corporate Governance Report |Particulars|Regulations|Details|Website link for details/policy| |---|---|---|---| |Subsidiary companies|Regulation 24 of the SEBI Listing Regulations|The audit committee reviews the consolidated financial statements of the Company and the investments made by its unlisted subsidiary companies. The minutes of the Board meetings along with a report on significant developments of the unlisted subsidiary companies are periodically placed before the Board of Directors of the Company. The Company does not have any material unlisted subsidiary company. The Company has a policy for determining 'material subsidiaries' which is disclosed on its website.|https://on.tcs.com/Subsidiary| |Policy on Determination of Materiality for Disclosures|Regulation 30 of SEBI Listing Regulations|The Company has adopted this policy.|https://on.tcs.com/Material| |Policy on Archival and Preservation of Documents|Regulation 9 of SEBI Listing Regulations|The Company has adopted this policy.|https://on.tcs.com/Archival| |Reconciliation of Share Capital Audit Report|Regulation 76 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 and SEBI Circular No D&CC / FITTC/ Cir- 16/2002 dated December 31, 2002.|A qualified practicing Company Secretary carried out a share capital audit to reconcile the total admitted equity share capital with the National Securities Depository Limited ("NSDL") and the Central Depository Services (India) Limited ("CDSL") and the total issued and listed equity share capital. The audit report confirms that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.|https://www.tcs.com/corporate-governance| # TCS Annual Report 2019-20 # Corporate Governance Report |Particulars|Regulations|Details|Website link for details/policy| |---|---|---|---| |Code of Conduct|Regulation 17 of the SEBI Listing Regulations|The members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct applicable to them during the year ended March 31, 2020. The Annual Report of the Company contains a certificate by the Chief Executive Officer and Managing Director, on the compliance declarations received from the members of the Board and Senior Management.|https://www.tcs.com/tata-code-of-conduct| |Dividend Distribution Policy|Regulation 43A of the SEBI Listing Regulations|A regular annual dividend generally consists of three interim dividends after each of the first three quarters of the fiscal year, topped up with a final dividend after the fourth quarter. In addition, every second or third year, the accumulated surplus cash has been returned to shareholders through a special dividend.|https://on.tcs.com/Dividend| |Terms of Appointment of Independent Directors|Regulation 46 of SEBI Listing Regulations and Section 149 read with Schedule IV of the Act|Terms and conditions of appointment / re-appointment of Independent Directors are available on the Company's website.|https://on.tcs.com/ApptID| |Familiarisation Program|Regulations 25(7) and 46 of SEBI Listing Regulations|Details of familiarisation program imparted to Independent Directors are available on the Company's website.|https://on.tcs.com/Familiarization| File: AR_TCS_2019_2020-1-314.md |Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2018| |The details have been disclosed in the Business Responsibility Report forming part of the Annual Report.| | # VIII. Means of Communication The quarterly, half-yearly and annual financial results of the Company are published in leading newspapers in India which include The Indian Express, Financial Express, Loksatta, Business Standard, The Hindu Business Line, Hindustan Times and Sandesh. The results are also displayed on the Company's website www.tcs.com. Statutory notices are published in The Free Press Journal, Business Standard and Navshakti. The Company also issues press releases from time to time. |
Financial results, statutory notices, press releases and presentations made to the institutional investors/ analysts after the declaration of the quarterly, half-yearly and annual results are submitted to the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) as well as uploaded on the Company's website. Frequently Asked Questions (FAQs) giving details about the Company and its shares is uploaded on the Company's website https://www.tcs.com/investor-relations. A Management Discussion and Analysis report is a part of this Annual Report. # IX. General shareholder information # i. Annual General Meeting for FY 2020 |Year ending|:|March 31| |---|---|---| |AGM in|:|June| |Dividend|:|The final dividend, if approved, shall be paid/credited on June 15, 2020| |Date of Book Closure / Record Date|:|As mentioned in the Notice of this AGM| |Listing on Stock Exchanges|:|National Stock Exchange of India Limited Exchange Plaza, C-1, Block G, Bandra Kurla Complex Bandra (East), Mumbai 400 051 BSE Limited P. J. Towers, Dalal Street, Mumbai 400 001| |Stock Codes / Symbol| | | |Date|:|June 11, 2020| |NSE|:|TCS| |BSE|:|532540| |Time|:|3.30 p.m.| |Venue|:|The Company is conducting meeting through VC / OAVM pursuant to the MCA Circular dated May 5, 2020 and as such there is no requirement to have a venue for the AGM. For details please refer to the Notice of this AGM.| |Corporate Identity Number (CIN) of the Company|:|L22210MH1995PLC084781| As required under Regulation 36(3) of the SEBI Listing Regulations and Secretarial Standard 2, particulars of Directors seeking re-appointment at this AGM are given in the Annexure to the Notice of this AGM. # vii. Market Price Data: # viii. Performance of the share price of the Company in comparison to the BSE Sensex: |Month|NSE|NSE|NSE|BSE|BSE|BSE| |---|---|---| | |High (`)|Low (`)|Total number of equity shares traded|High (`)|Low (`)|Total number of equity shares traded| |Apr-2019|2,260.35|2,014.50|67,089,639|2,254.95|2,013.75|3,232,471| |May-2019|2,215.40|2,048.00|60,480,346|2,214.40|2,049.65|2,859,620| |Jun-2019|2,277.95|2,166.10|46,280,351|2,279.00|2,167.40|2,060,686| |Jul-2019|2,252.10|2,065.95|60,441,617|2,252.75|2,065.60|4,300,813| |Aug-2019|2,276.30|2,163.00|44,449,609|2,275.10|2,163.50|2,088,400| |Sep-2019|2,251.60|2,015.80|56,752,600|2,252.25|2,014.75|2,349,328| |Oct-2019|2,269.65|1,986.85|73,272,420|2,270.20|1,987.05|2,513,926| |Nov-2019|2,201.85|2,046.65|59,754,775|2,202.05|2,046.90|2,341,916| |Dec-2019|2,231.70|2,012.85|86,634,118|2,232.45|2,012.50|3,728,749| |Jan-2020|2,255.25|2,079.05|63,370,917|2,255.05|2,079.30|2,460,473| |Feb-2020|2,215.75|2,000.15|50,645,330|2,215.30|2,000.95|2,264,640| |Mar-2020|2,125.05|1,636.35|115,641,660|2,124.90|1,636.10|5,405,600| # ix. Registrars and Transfer Agents Name and Address: 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. Telephone: 022 6656 8484 Fax: 022 6656 8494 E-mail: [email protected] Website: www.tsrdarashaw.com *Pursuant to the de-merger, the Registry business of TSR Darashaw Limited stands transferred to a new entity TSR Darashaw Consultants Private Limited ("TCPL") with effect from May 28, 2019. # Places for acceptance of documents: Kolkata Documents will be accepted at the above address between 10.00 a.m. and 3.30 p.m. (Monday to Friday except bank holidays). For the convenience of the shareholders, documents will also be accepted at the following branches / agencies of TCPL: # a. Branches of TCPL: Bengaluru 503, Barton Centre, 5th Floor 84, Mahatma Gandhi Road Bengaluru 560 001 Telephone: 080 2532 0321 Fax: 080 2558 0019 E-mail: [email protected] New Delhi 2/42, Ansari Road, 1st Floor Daryaganj, Sant Vihar New Delhi 110 002 Telephone: 011 2327 1805 Fax: 011 2327 1802 E-mail: [email protected] Jamshedpur 'E' Road, Northern Town Bistupur Jamshedpur 831 001 Telephone: 0657 2426616 Fax: 0657 2426937 E-mail: [email protected] # b. Agent of TCPL: Shah Consultancy Services Limited 3, Sumatinath Complex, 2nd Dhal, Pritam Nagar, Ellisbridge Ahmedabad 380 006 Telefax: 079 2657 6038 E-mail: [email protected] # Share Transfer System: Tata Centre, 1st Floor 43, J. L. Nehru Road Kolkata 700 071 Telephone: 033 2288 3087 Fax: 033 2288 3062 E-mail: [email protected] In terms of Regulation 40(1) of SEBI Listing Regulations, as amended, securities can be transferred only in dematerialized form w.e.f. April 1, 2019, except in case of request received for transmission or transposition of securities. Members holding shares in physical form are requested to consider converting their holdings to dematerialized form. Transfers of equity shares in electronic form are effected through the depositories with no involvement of the Company. The Directors and certain Company officials (including Chief Financial Officer and Company Secretary) are authorised by the Board severally to approve transfers, which are noted at subsequent Board Meetings. # xii. Shareholding as on March 31, 2020: # b. Categories of equity shareholding as on March 31, 2020: # a. |
Distribution of equity shareholding as on March 31, 2020: |Category|Number of equity shares held|Percentage to capital|Number of accounts|Percentage to total accounts| |---|---|---|---|---| |Promoters|2,702,450,947|72.0| | | |Other Entities of the Promoter Group|1,091,053|-| | | |Mutual Funds and UTI|95,698,803|2.6| | | |Banks, Financial Institutions, States and Central Government|4,270,227|0.1| | | |Insurance Companies|200,941,420|5.4| | | |Foreign Institutional Investors and Foreign Portfolio Investors - Corporate|590,621,054|15.7| | | |NRI's / OCB's / Foreign Nationals|5,307,647|0.1| | | |Corporate Bodies / Trust|23,696,580|0.6| | | |Indian Public and Others|126,184,715|3.4| | | |Alternate Investment Fund|1,820,360|0.1| | | |IEPF account|301,900|-| | | |GRAND TOTAL|3,752,384,706|100.0|893,446|100.0| # c. Top ten equity shareholders of the Company as on March 31, 2020: # xiii. Dematerialization of shares and liquidity: |Sr. No.|Name of the shareholder*|Number of equity shares held|Percentage of holding| |---|---|---|---| |1|Tata Sons Private Limited|2,702,450,947|72.0| |2|Life Insurance Corporation of India|157,538,396|4.2| |3|Invesco Oppenheimer Developing Markets Fund|28,045,020|0.8| |4|SBI Mutual Fund|26,429,597|0.7| |5|Axis Mutual Fund Trustee Limited|16,609,800|0.4| |6|Government Of Singapore|16,012,250|0.4| |7|Vanguard Total International Stock Index Fund|15,772,829|0.4| |8|Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International Equity Index Funds|13,199,846|0.4| |9|ICICI Prudential Life Insurance Company Limited|12,868,617|0.3| |10|First State Investments Icvc- Stewart Investors Asia Pacific Leaders Fund|12,257,728|0.3| * Shareholding is consolidated based on Permanent Account Number (PAN) of the shareholder. # xiv. Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity: The Company has not issued any GDRs/ADRs/Warrants or any convertible instruments in the past and hence, as on March 31, 2020, the Company does not have any outstanding GDRs/ADRs/Warrants or any convertible instruments. # xv. Commodity price risk or foreign exchange risk and hedging activities: The Company does not deal in commodities and hence the disclosure pursuant to SEBI Circular dated November 15, 2018 is not required to be given. For a detailed discussion on foreign exchange risk and hedging activities, please refer to Management Discussion and Analysis Report. # xvi. Equity shares in the suspense account: In accordance with the requirement of Regulation 34(3) and Part F of Schedule V to the SEBI Listing Regulations, details of equity shares in the suspense account are as follows: |Particulars|Number of shareholders|Number of equity shares| |---|---|---| |Aggregate number of shareholders and the outstanding shares in the suspense account lying as on April 1, 2019|26|1,640| |Shareholders who approached the Company for transfer of shares from suspense account during the year|-|-| |Shareholders to whom shares were transferred from the suspense account during the year|-|-| |Shareholders whose shares are transferred to the demat account of the IEPF Authority as per Section 124 of the Act|-|-| |Aggregate number of shareholders and the outstanding shares in the suspense account lying as on March 31, 2020|26|1,640| The voting rights on the shares outstanding in the suspense account as on March 31, 2020 shall remain frozen till the rightful owner of such shares claims the shares. # xvii. Transfer of unclaimed / unpaid amounts to the Investor Education and Protection Fund: Pursuant to Sections 124 and 125 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividend, if not claimed for a period of 7 years from the date of transfer to Unpaid Dividend Account of the Company, are liable to be transferred to the Investor Education and Protection Fund ("IEPF"). Further, all the shares in respect of which dividend has remained unclaimed for seven consecutive years or more from the date of transfer to unpaid dividend account shall also be transferred to IEPF Authority. The said requirement does not apply to shares in respect of which there is a specific order of Court, Tribunal or Statutory Authority, restraining any transfer of the shares. In the interest of the shareholders, the Company sends periodical reminders to the shareholders to claim their dividends in order to avoid transfer of dividends / shares to IEPF Authority. Notices in this regard are also published in the newspapers and the details of unclaimed dividends and shareholders whose shares are liable to be transferred to the IEPF Authority, are uploaded on the Company's website(https://on.tcs.com/FAQ18). In light of the aforesaid provisions, the Company has during the year under review, transferred to IEPF the unclaimed dividends, outstanding for 7 years, of the Company, erstwhile TCS e-Serve Limited and CMC Limited (since amalgamated with the Company). Further, shares of the Company, in respect of which dividend has not been claimed for 7 consecutive years or more from the date of transfer to unpaid dividend account, have also been transferred to the demat account of IEPF Authority. |
# The details of unclaimed dividends and shares transferred to IEPF during FY 2020 # a. For shareholders of Tata Consultancy Service Limited (TCS): are as follows: |Financial Year|Amount of unclaimed dividend (` lakh)|Number of shares transferred|Date of declaration|Last date for claiming unpaid dividend| |---|---|---|---|---| |2011-12|173.5*|35,251|June 28, 2013|July 28, 2020| |2012-13|73.2|19,535|July 18, 2013|August 18, 2020| |2013-14| | |October 15, 2013|November 14, 2020| |2014-15| | |January 16, 2014|February 16, 2021| |2015-16| | |June 27, 2014|July 27, 2021| |2016-17| | |July 17, 2014|August 18, 2021| |TOTAL|246.7|54,786| | | *Includes final dividend of erstwhile TCS e-Serve Limited and erstwhile CMC Limited. The members who have a claim on above dividends and shares may claim the same from IEPF Authority by submitting an online application in web Form No. IEPF-5 available on the website www.iepf.gov.in and sending a physical copy of the same, duly signed to the Company, along with requisite documents enumerated in the Form No. IEPF-5. No claims shall lie against the Company in respect of the dividend / shares so transferred. The following tables give information relating to various outstanding dividends and the dates by which they can be claimed by the shareholders from the Company's Registrar and Transfer Agent: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2013-14|October 15, 2013|November 14, 2020| |2014-15|January 16, 2014|February 16, 2021| |2015-16|June 27, 2014|July 27, 2021| |2016-17|July 17, 2014|August 18, 2021| |2016-17|October 13, 2016|November 16, 2023| |2017-18|January 12, 2017|February 12, 2024| |2017-18|June 16, 2017|July 16, 2024| # TCS Annual Report 2019-20 # Corporate Governance Report # Financial Year |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2017-18|July 13, 2017|August 13, 2024| | |October 12, 2017|November 12, 2024| | |January 11, 2018|February 10, 2025| | |June 15, 2018|July 15, 2025| |2018-19|July 10, 2018|August 9, 2025| | |October 11, 2018|November 10, 2025| | |January 10, 2019|February 9, 2026| | |June 17, 2019|July 13, 2026| |2019-20|July 9, 2019|August 8, 2026| | |October 10, 2019|November 9, 2026| | |January 17, 2020|February 16, 2027| | |March 10, 2020|April 9, 2027| # For shareholders of erstwhile CMC Limited which has merged with the Company: # For shareholders of erstwhile TCS e-Serve Limited which has merged with the Company: |Financial Year|Date of declaration|Last date for claiming unpaid dividend| |---|---|---| |2012-13|May 30, 2013|July 3, 2020| # Plant locations: In view of the nature of the Company's business viz. Information Technology (IT) Services and IT Enabled Services, the Company operates from various offices in India and abroad. The Company has a manufacturing facility at 17-B, Tivim Industrial Estate, Karaswada, Mapusa- Bardez, Goa 403 526. # Address for correspondence: Tata Consultancy Services Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 Telephone: 91 22 6778 9595 Designated e-mail address for Investor Services: [email protected] For queries on IEPF related matters: [email protected] Website: www.tcs.com # DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANY'S CODE OF CONDUCT This is to confirm that the Company has adopted a Code of Conduct for its employees including the Managing Director and Executive Directors. In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors and Independent Directors. These Codes are available on the Company's website. I confirm that the Company has in respect of the year ended March 31, 2020, received from the Senior Management Team of the Company and the Members of the Board a declaration of compliance with the Code of Conduct as applicable to them. For the purpose of this declaration, Senior Management Team means the Chief Financial Officer, Global Head - HR, Global Business Unit Heads, Global Head - Legal and the Company Secretary as on March 31, 2020. Rajesh Gopinathan Chief Executive Officer and Managing Director # PRACTISING COMPANY SECRETARIES' CERTIFICATE ON CORPORATE GOVERNANCE To the Members of Tata Consultancy Services Limited We have examined the compliance of the conditions of Corporate Governance by Tata Consultancy Services Limited ('the Company') for the year ended on March 31, 2020, as stipulated under Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of Regulation 46 and para C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company. |
The compliance of the conditions of Corporate Governance is the responsibility of the management of the Company. Our examination was limited to the review of procedures and implementation thereof, as adopted by the Company for ensuring compliance with conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, and the representations made by the Directors and the For Parikh & Associates Company Secretaries P N Parikh Partner FCS No: 327 CP No: 1228 Mumbai, April 16, 2020 UDIN: F000327B000161686 Mumbai, April 16, 2020 TCS Annual Report 2019-20 Corporate Governance Report I 160 # CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS (pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) To, The Members Tata Consultancy Services Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 Year ending on March 31, 2020 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority. Ensuring the eligibility of for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company. |S.|Name of Director|DIN|Date of Appointment in Company *| |---|---|---|---| |1.|N Chandrasekaran|00121863|September 6, 2007| |2.|Rajesh Gopinathan|06365813|February 21, 2017| |3.|N Ganapathy Subramaniam|07006215|February 21, 2017| |4.|O P Bhatt|00548091|April 2, 2012| |5.|Aarthi Subramanian|07121802|March 12, 2015| |6.|Dr Pradeep Kumar Khosla|03611983|January 11, 2018| |7.|Hanne Sorensen|08035439|December 18, 2018| |8.|Keki Mistry|00008886|December 18, 2018| |9.|Don Callahan|08326836|January 10, 2019| *the date of appointment is as per the MCA Portal. For Parikh & Associates Company Secretaries P N Parikh Partner FCS No: 327 CP No: 1228 Mumbai, April 16, 2020 UDIN: F000327B000161686 # Leadership Awards and Accolades - 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, in its 2020 Global 500 report released at the World Economic Forum in Davos, Switzerland. - Ranked #1 in Customer Satisfaction in the Whitelane Research 2019/2020 IT Sourcing Study, which surveyed more than 1,600 CxOs of the top IT spending organizations in Europe. TCS has been voted to this top spot by customers for the seventh consecutive year. - Won CNBC-TV18's 'Iconic Company of the Decade' award. Rajesh Gopinathan, CEO & MD, TCS, received the 'Outstanding Business Leader of the Year' award at the 15th edition of the India Business Leader Awards. - Ranked Overall Best Managed Company in Asia in the technology sector, in FinanceAsia's 2020 Asia's Best Companies survey of investors across the region. TCS also won five awards in the India rankings, including #1 ranking in Best Environmental Stewardship and Most Committed to Social Causes. - Voted the Overall Most Outstanding Company in India by investors across the region in Asiamoney's 2019 Asia's Outstanding Companies poll. Additionally, TCS was recognized as the most awarded company of the decade in India, for topping Asiamoney's investor polls most number of times over the last 10 years. - Won the 'Best Risk Management Framework & Systems - Business Continuity' Award presented by ICICI Lombard and CNBC-TV18 for the robust business continuity framework and systems implemented across the organization. - Won the ITSMA 2019 Marketing Excellence Diamond Award in the 'Building Reputation Through Brand and Differentiation' category. - Recognized as a Business Superbrand in the UK, fifth year in a row, for brand reputation, deep relationships with customers, thought leadership, and community initiatives. - Honored with the 2020 CIO 100 Award, for the large scale Agile and DevOps automation transformation implemented internally to enhance its business agility. - TCS LATAM was named the Nearshore Trendsetter of the Year at the 2019 Nexus Illuminate Awards. # Intellectual Property - Won the Intellectual Asset Management's Asia IP Elite award in the category 'Internet and Software Team of the Year' at the Intellectual Property Business Congress Asia 2019 in Tokyo. - Recognized with the Best Patents Portfolio Award in the Large (Engineering) Enterprises category at the event. |
# TCS Annual Report 2019-20 # Awards and Accolades the Confederation of Indian Industry (CII) Industrial Intellectual Property Awards 2019. - Most Innovative Use of Emerging Digital Technology - Marathon City: Sprint to Win, an inclusive, 3D simulation IoT category for its Remote Monitoring and Predictive Maintenance solution, and in the 'Intelligent Enterprise Award for Most Innovative Application - Developed for Government' category for using TCS DigiFleet™ to transform public transportation in India. - Won the National Intellectual Property Award 2019 in the category 'Top Public Limited Company/Private Limited Company for Patents & Commercialization in India'. - Awarded the World Intellectual Property Organization's (WIPO's) IP Enterprise Trophy. - Recognized for its partnership and innovation with the Best Supplier Award - IT Operations and Projects for the year 2018 - 2019 by Infineon Technologies AG, a leader in semiconductor solutions. - TCS New York City Marathon App named the 'Best Sports Mobile Application' at the 2019 MobileWebAwards for excellence in mobile web development. - TCS' New York City Marathon App won Gold in the App of the Year category at the Best in Biz Awards 2019 International, as well as the MediaPost Appy Award in the 'Entertainment and Sports' category. - Digitate won the Best Overall AI Company of the Year award from AI Breakthrough, competing with 2,500 companies and startups in the AI sector from all over the world. - Digitate and ignio™ won four silver Stevies® at the 2019 International Business Awards, in the categories: Software Company of the Year, Most Innovative Tech Company of the Year and Fastest Growing Software Company of the Year. ignio™, won in the Software Defined Infrastructure product category. - TCS BaNCS™ Network Solution powered by Quartz™ Blockchain was named the Best Blockchain Breakthrough of the Year at the 2019 FTF News Technology Innovation Awards. - TCS' IoT solutions won two awards at ASSOCHAM's Emerging Digital Technologies Awards 2019, in the category Big Data and Analytics Innovation at an event organized by Channel Partner Insight. - TCS' cognitive automation software, ignio™, received the Artificial Intelligence Excellence Award in the Self-Awareness category, from the Business Intelligence Group. - Won the prestigious Red Dot: Best of the Best - Brands and Communications Design 2019 Award for its game. # People - Named as One of the Fortune Best Big Companies to Work For™ in 2020, for the strength of its management team, how the company embraces diversity as an asset, and the extent to which it helps to identify employee strengths and career growth opportunities. - Named in The Sunday Times list of Best Big Companies to Work For 2020 in the UK, for its outstanding. # TCS Annual Report 2019-20 # Awards and Accolades - Presented with Three Stevies® for Workforce Development and Community Initiatives in Canada - a Gold Stevie for Best CSR Strategy, a Silver Stevie for Best Learning and Development Strategy, and a Bronze Stevie for Achievement in Workforce Development and Learning. - Awarded the 2019 New Partner of the Year by Ivalua. - TCS' ECP Alpha Architecture implementation awarded the 'Architecture Excellence Award' by Cisco. - Won the Salesforce Partner Innovation Award in the category 'Fastest and Most Efficient Scaling'. - The SMU-TCS iCity Lab's SHINESeniors project won Constellation Research's 2019 SuperNova Award in the category AI & Augmented Humanity. - Recognized as a Global Top Employer for the fifth consecutive year by the Top Employers Institute for exceptional progressive workplace policies, culture, continued investments in its workforce, advanced digital up-skilling and local hiring practices. - In addition, TCS has been certified as the Number One 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. - Recognised in DiversityInc's Top 50 Companies for Diversity in America for its Investments and Efforts in Diversity and Inclusion, Leadership Accountability, Talent Programs, and Workplace Practices. - Won Community Business' 2019 D&I Pioneering Initiative Award for the Allies of Diversity Conclave. - Won the US Chamber of Commerce Foundation's 2019 Citizens Award in the category of Best Commitment to Education Program for the Ignite My Future in School (IMFIS) program. - Named America's Most Community-Minded Information Technology Company for the second consecutive year, in the 2019 Civic 50 by Points of Light, the world's largest organization dedicated to volunteer service. - Recognized by Adobe as the Customer Success Partner of the Year at Adobe's India Symposium 2019. |
- Recognized for Excellence in Digital Transformation in the 2019 Pega Partner Awards, for developing and delivering digital process automation (DPA) solutions for clients within the financial services industry. - TCS Enterprise Cloud Platform won the Best Innovation Award in Australia at the 2018 Equinix Partner Awards. - TCS Colombia won 2019 Microsoft Partner of the Year for DevOps and Alliance Global SI in Colombia. - TCS was recognized as Oracle's HCM Cloud Partner of the Year for The Netherlands. # Independent Auditors' Report # To the Members of Tata Consultancy Services Limited # Report on the Audit of the Consolidated Financial Statements # Opinion We have audited the consolidated financial statements of Tata Consultancy Services Limited (hereinafter referred to as "the Holding Company") and its subsidiaries listed in Annexure I (Holding Company and its subsidiaries together referred to as "the Group"), which comprise the consolidated balance sheet as at 31 March 2020, and the consolidated statement of profit and loss (including other comprehensive income), consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated financial statements"). File: AR_TCS_2019_2020-1-314.md In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the 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 consolidated state of affairs of the Group as at 31 March 2020, of its consolidated profit and other comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended. # 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 Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ('ICAI'), and we have fulfilled our other ethical responsibilities in accordance with the provisions of the Act. 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. TCS Annual Report 2019-20 Consolidated Financial Statements I 165 # Description of Key Audit Matters |Key audit matters|How our audit addressed the key audit matter| |---|---| |Revenue recognition - Fixed price contracts|- On selected specific/statistical samples of contracts, we tested that the revenue recognized is in accordance with the revenue recognition accounting standard - - Evaluated the identification of performance obligations and the ascribed transaction price; - Tested the Group's computation of the estimation of contract costs and onerous obligations, if any. We: | # Key audit matters # Evaluation of key tax matters The Group 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 judgment by the Group to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the consolidated financial statements. Refer Note 5(e) and Note 20 to the consolidated financial statements. # How our audit addressed the key audit matter Our audit procedures include the following substantive procedures: - Obtained an understanding of key tax matters; and - The audit team, along with our internal tax experts - # Adoption of Ind AS 116 Leases As described in Note 9 to the consolidated financial statements, the Group has adopted Ind AS 116 Leases (Ind AS 116) in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit since the Group has a large number of leases with different contractual terms. |
# How our audit addressed the key audit matter Our audit procedures on adoption of Ind AS 116 include: - Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116); - On a statistical sample, we performed the following procedures: - - assessed the key terms and conditions of each lease with the underlying lease contracts; and - evaluated computation of lease liabilities and challenged the key estimates such as, discount rates and the lease term. Assessed and tested the presentation and disclosures relating to Ind AS 116 including, disclosures relating to transition. # Other Information profit/loss and other comprehensive income, consolidated intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. The Holding Company's management and Board of Directors are responsible for the other information. The other information comprises the information included in the Holding Company's Annual Report, but does not include the financial statements and our auditor's report thereon. Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated 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. # Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 consolidated 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 consolidated 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. # Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements The Holding Company's management and Board of Directors are responsible for the preparation and presentation of these consolidated financial statements in terms of the requirements of the Act that give a true and fair view of the consolidated state of affairs, consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The respective management and Board of Directors of the entities included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each entity and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the management and Board of Directors of the Holding Company, as aforesaid. The risk of not detecting a material misstatement 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 Group (Holding company and subsidiaries) to cease to continue as a going concern. |
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. - 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 entity has adequate internal financial controls system in place and the operating effectiveness of such controls. - Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management and Board of Directors of the Holding Company. - Conclude on the appropriateness of management's and Board of Director's of the Holding Company use of the going concern basis of accounting in preparation of consolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the appropriateness of this assumption. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to express a qualified opinion. - Obtain sufficient appropriate audit evidence regarding the financial information of such entities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of financial information of the entities included in the consolidated financial statements. We remain solely responsible for our audit opinion. # Report on Other Legal and Regulatory Requirements A. As required by Section 143(3) of the Act, based on our audit, we report, to the extent applicable, that: - a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements. b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books. c) The consolidated balance sheet, the consolidated statement of profit and loss (including other comprehensive income), the consolidated statement of changes in equity and the consolidated statement of cash flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. d) In our opinion, the aforesaid consolidated financial statements comply with the Ind AS specified under Section 133 of the Act. e) On the basis of the written representations received from the directors of the Holding Company as on 31 March 2020 taken on record by the Board of Directors of the Holding Company and on the basis of written representations received by the management from directors of its subsidiaries which are incorporated in India, as on 31 March 2020, none of the directors of the Group's companies incorporated in India is disqualified as on 31 March 2020 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 consolidated financial statements of the Holding Company and its subsidiary companies incorporated in India and the operating effectiveness of such controls, refer to our separate report in 'Annexure A'. # 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: i. The consolidated financial statements disclose the impact of pending litigations as at 31 March 2020 on the consolidated financial position of the Group. Refer Note 20 to the consolidated financial statements. ii. The Group did not have any material foreseeable losses on long-term contracts including derivative contracts during the year ended 31 March 2020. iii. |
There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Holding Company and its subsidiary companies incorporated in India during the year ended 31 March 2020. # C. With respect to the matter to be included in the Auditors' report under Section 197(16) of the Act: In our opinion and according to the information and explanation given to us, the remuneration paid during the current year by the Holding Company and its subsidiaries which are incorporated in India to its directors is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director by the Holding Company and its subsidiaries which are incorporated in India, 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) of the Act 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 Partner Mumbai 16 April 2020 Membership No: 049265 UDIN: 20049265AAAAAL7719 # Annexure A to the Independent Auditors' Report on the and such internal financial controls were operating effectively as at 31 March 2020, based on the internal financial controls with reference to consolidated financial statements criteria established by such companies considering the essential components of such internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "Guidance Note"). # Auditor's Responsibility Our responsibility is to express an opinion on the internal financial controls with reference to consolidated financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to consolidated financial statements. 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 consolidated financial statements were established and maintained and if such controls operated effectively in all material respects. # Management's Responsibility for Internal Financial Controls The respective company's management and the Board of Directors are responsible for establishing and maintaining internal financial controls with reference to consolidated financial statements based on the criteria established by the respective company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required. In our opinion, the Holding Company and such companies incorporated in India which are its subsidiary companies, have adequate internal financial controls with reference to consolidated financial statements. Our audit of internal financial controls with reference to consolidated financial statements included obtaining an understanding of internal financial controls with reference to consolidated financial statements, assessing... # TCS Annual Report 2019-20 # Consolidated Financial Statements The risk that a material weakness exists, and testing principles. A company's internal financial controls and evaluating the design and operating effectiveness of the internal controls 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 consolidated 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 internal financial controls with reference to consolidated financial statements. A company's internal financial controls with reference to consolidated financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Inherent Limitations of Internal Financial Controls with reference to Consolidated Financial Statements Because of the inherent limitations of internal financial controls with reference to consolidated 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 consolidated financial statements to future periods are subject to the risk that the internal financial controls with reference to consolidated financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 16 April 2020 Membership No: 049265 UDIN: 20049265AAAAAL7719 # Annexure I: List of entities consolidated |1|APTOnline Limited|17|TCS FNS Pty Limited| |---|---|---|---| |2|C-Edge Technologies Limited|18|TCS Foundation| |3|CMC Americas, Inc.|19|TCS Iberoamerica SA| |4|Diligenta Limited|20|PT Tata Consultancy Services Indonesia| |5|MahaOnline Limited|21|Tata Consultancy Services (China) Co., Ltd.| |6|MP Online Limited|22|Tata Consultancy Services (Philippines) Inc.| |7|Tata America International Corporation|23|Tata Consultancy Services (Thailand) Limited| |8|Tata Consultancy Services (Africa) (PTY) Ltd.|24|Tata Consultancy Services Japan, Ltd.| |9|Tata Consultancy Services Asia Pacific Pte Ltd.|25|Tata Consultancy Services Malaysia Sdn Bhd| |10|Tata Consultancy Services Belgium|26|TCS Italia s.r.l.| |11|Tata Consultancy Services Canada Inc.|27|Tata Consultancy Services (South Africa) (PTY) Ltd.| |12|Tata Consultancy Services Deutschland GmbH|28|TCS e-Serve America, Inc.| |13|Tata Consultancy Services Netherlands BV|29|Tata Consultancy Services Chile S.A.| |14|Tata Consultancy Services Qatar S.S.C.|30|TATASOLUTION CENTER S.A.| |15|Tata Consultancy Services Sverige AB|31|Technology Outsourcing S.A.C.| |16|TCS e-Serve International Limited|32|Tata Consultancy Services (Portugal) Unipessoal, Limitada| TCS Annual Report 2019-20 Consolidated Financial Statements I 173 # TCS Annual Report 2019-20 # Consolidated Financial Statements |33|TCS Financial Solutions Australia Pty Limited|44|Tata Consultancy Services Danmark ApS| |---|---|---|---| |34|TCS Financial Solutions Beijing Co., Ltd.|45|Tata Consultancy Services De Espana S.A.| |35|TCS Financial Solutions Australia Holdings Pty Limited|46|Tata Consultancy Services Luxembourg S.A.| |36|MGDC S.C.|47|Tata Consultancy Services Osterreich GmbH| |37|Tata Consultancy Services Argentina S.A.|48|Tata Consultancy Services Saudi Arabia| |38|Tata Consultancy Services De Mexico S.A., De C.V.|49|Tata Consultancy Services Switzerland Ltd.| |39|Tata Consultancy Services Do Brasil Ltda|50|Tata Sons & Consultancy Services Employees' Welfare Trust| |40|TCS Inversiones Chile Limitada|51|TCS e-Serve Limited - Employees' Welfare Trust| |41|Tata Consultancy Services France SA|52|TCS e-Serve International Limited - Employees' Welfare Benefit Trust| |42|TCS Uruguay S.A.|53|W12 Studios Limited| |43|TCS Solution Center S.A.|54|TCS Business Services GmbH| # Consolidated Balance Sheet | |Note|As at March 31, 2020|As at March 31, 2019| | | | | |---|---|---|---|---|---|---|---| |ASSETS| | | | | | | | |Non-current assets| | | | | | | | |Property, plant and equipment|10(a)|10,941|10,411| | | | | |Capital work-in-progress| |906|963| | | | | |Right-of-use assets|9|7,994|-| | | | | |Goodwill|10(b)|1,710|1,700| | | | | |Other intangible assets|10(c)|283|179| | | | | | | | |Financial assets| | | | | |Investments|8(a)|216|239| | | | | |Trade receivables|8(b)|74|95| | | | | |Unbilled receivables| |324|391| | | | | |Loans receivables|8(e)|29|60| | | | | |Other financial assets|8(f)|1,184|738| | | | | |Income tax assets (net)| |2,462|4,017| | | | | |Deferred tax assets (net)|17|2,828|2,656| | | | | |Other assets|10(d)|1,711|1,363| | | | | |Total non-current assets| |30,662|22,812| | | | | | | | |Current assets| | | | | | | | |Inventories|10(e)|5|10| | | | | |Investments|8(a)|26,140|29,091| | | | | |Trade receivables|8(b)|30,532|27,346| | | | | |Unbilled receivables| |5,732|5,157| | | | | |Cash and cash equivalents|8(c)|8,646|7,224| | |Other balances with banks| | | |8(d)|1,020|5,624| | | | | |Loans receivables|8(e)|8,475|8,029| | | | | |Other financial assets|8(f)|1,473|1,769| | | | | |Income tax assets (net)|8| |1,853| | | | | |Other assets|10(d)|8,206|6,028| | | | | |Total current assets| |90,237|92,131| | | | | |TOTAL ASSETS| |120,899|114,943| | | | | |EQUITY AND LIABILITIES| | | | | | | | |Equity| | | | | | | | |Share capital|8(l)|375|375| | | | | |Other equity|11|83,751|89,071| | | | | |Equity attributable to shareholders of the Company| |84,126|89,446| | | | | |Non-controlling interests| |623|453| | | | | |Total equity| |84,749|89,899| | # Consolidated Balance Sheet |Note|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Liabilities|Liabilities|Liabilities| |Non-current liabilities|Non-current liabilities|Non-current liabilities| |Financial liabilities| | | |Lease liabilities|6,906|44| |Other financial liabilities|291|287| |Unearned and deferred revenue|697|844| |Employee benefit obligations|417|330| |Deferred tax liabilities (net)|779|1,042| |Other liabilities|-|413| |Total non-current liabilities|9,090|2,960| |Current liabilities|Current liabilities|Current liabilities| |Financial liabilities| | | |Lease liabilities|1,268|-| |Trade payables|6,740|6,292| |Other financial liabilities|6,100|4,903| |Unearned and deferred revenue|2,915|2,392| |Provisions|293|239| |Employee benefit obligations|2,749|2,356| |Income tax liabilities(net)|3,712|2,667| |Other liabilities|3,283|3,235| |Total current liabilities|27,060|22,084| |Total equity and liabilities|120,899|114,943| Mumbai, April 16, 2020 NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. |
LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Chairman CEO and Managing Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 # Consolidated Statement of Profit and Loss | | |Note|Year ended March 31, 2020|Year ended March 31, 2019| | | | | |---|---|---|---|---|---|---|---|---| |Revenue| |156,949|146,463| | | | | | |Other income| |4,592|4,311| | | | | | |TOTAL INCOME| |161,541|150,774| | | | | | |Expenses| | | | | | | | | |Employee benefit expenses| |85,952|78,246| | | | | | |Cost of equipment and software licences| |1,905|2,270| | | | | | |Depreciation and amortisation expense| |3,529|2,056| | | | | | |Other expenses| |26,983|26,441| | | | | | |Finance costs| |924|198| | | | | | |TOTAL EXPENSES| |119,293|109,211| | | | | | |PROFIT BEFORE TAX| |42,248|41,563| | | | | | |Tax expense| | | | | | | | | |Current tax| |10,378|9,502| | | | | | |Deferred tax| |(577)|499| | | | | | |TOTAL TAX EXPENSE| |9,801|10,001| | | | | | |PROFIT FOR THE YEAR| |32,447|31,562| | | | | | |OTHER COMPREHENSIVE INCOME (OCI)| | | | | | | | | |Items that will not be reclassified subsequently to profit or loss| | | | | | | | | |Remeasurement of defined employee benefit plans| |(429)|(51)| | | | | | |Net change in fair values of investments in equity shares carried at fair value through OCI| |(20)|(1)| | | | | | |Income tax on items that will not be reclassified subsequently to profit or loss| |90|11| | | | | | |Items that will be reclassified subsequently to profit or loss| | | | | | | | | |Net change in fair values of investments other than equity shares carried at fair value through OCI| |958|425| | | | | | |Net change in intrinsic value of derivatives designated as cash flow hedges| |(94)|153| | | | | | | | | | |TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)| |464|324| | | | | | |TOTAL COMPREHENSIVE INCOME FOR THE YEAR| |32,911|31,886| | | | | | |Profit for the year attributable to:| | | | | | | | | |Shareholders of the Company| |32,340|31,472| | | | | | |Non-controlling interests| | |107|90| | | | | |Total comprehensive income for the year attributable to:| | | | | | | | | |Shareholders of the Company| |32,764|31,787| | | | | | |Non-controlling interests| | |147|99| | | | | |Earnings per equity share:- Basic and diluted (`)| |86.19|83.05| | | | | | |Weighted average number of equity shares| |375,23,84,706|378,97,49,350| | # NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 Mumbai, April 16, 2020 # Consolidated Statement of Changes in Equity # A. EQUITY SHARE CAPITAL File: AR_TCS_2019_2020-1-314.md | |Balance as at April 1, 2018|Changes in equity share capital during the year*|Balance as at March 31, 2019| |---|---|---|---| | |191|184|375| | |Balance as at April 1, 2019|Changes in equity share capital during the year|Balance as at March 31, 2020| | |375|-|375| *Refer note 8(l). # B. |
OTHER EQUITY | | | |Reserves and surplus| | | | | |Items of other comprehensive income| | | |Equity|Non-controlling interests|Total| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | |Capital|Capital redemption reserve|General reserve|Special Economic Zone re-investment reserve|Retained earnings|Statutory reserve|Investment revaluation reserve|Cash flow hedging reserve|Foreign currency translation reserve|attributable to shareholders of the Company| | | | | | |Balance as at April 1, 2018|75|529|1,423| |1,578|79,755|258|(84)|(2)| |(69)|1,474|84,937|402|85,339| |Profit for the year|-|-|-|-| |31,472|-|-|-|-|-|31,472| |90|31,562| |Other comprehensive income / (losses)|-|-|-|-| |(41)|-|275|136| |39|(94)|315|9|324| |Total comprehensive income|-|-|-|-| |31,431|-|275|136| |39|(94)|31,787|99|31,886| |Dividend (including tax on dividend of `1,342 crore)|-|-|-|-| |(11,424)|-|-|-|-|-|(11,424)| |(48)|(11,472)| |Buy-back of equity shares1|-|8|-|-| |(16,000)|-|-|-|-|-| |(15,992)|-|(15,992)| |Expenses for buy-back of equity shares1|-|-|-|-| |(45)|-|-|-|-|-|(45)|-|(45)| | |Issue of bonus shares1|-|(106)|-|-| |(86)|-|-|-|-|-| |(192)|-|(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|-|-|-|-|-|-|-| | | |Transfer to reserves|-|-|(1,396)|-| |1,306|90|-|-|-|-|-|-| | | |Balance as at March 31, 2019|75|431|27| |994|85,520|348|192|134| |(30)|1,380|89,071|453|89,524| TCS Annual Report 2019-20 Consolidated Financial Statements I 178 # Consolidated Statement of Changes in Equity |(` crore)|Reserves and surplus|Reserves and surplus|Reserves and surplus|Reserves and surplus|Reserves and surplus|Reserves and surplus|Reserves and surplus|Items of other comprehensive income|Items of other comprehensive income|Items of other comprehensive income|Equity|Non-controlling interests|Total equity| | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Capital reserve|Capital redemption reserve|General reserve|Special Economic Zone re-investment reserve|Retained earnings|Statutory reserve|Investment revaluation reserve|Cash flow hedging reserve|Foreign currency translation reserve|attributable to shareholders of the Company| | | | | |Balance as at April 1, 2019|75|431|27|994|85,520|348|192|134|(30)|1,380|89,071|453|89,524| |Transition impact of Ind AS 116, net of tax2|-|-|-|-|(357)|-|-|-|-|-|(357)|(2)|(359)| |Restated balance as at April 1, 2019|75|431|27|994|85,163|348|192|134|(30)|1,380|88,714|451|89,165| |Profit for the year|-|-|-|-|32,340|-|-|-|-|-|32,340|107|32,447| |Other comprehensive income / (losses)|-|-|-|-|(339)|-|604|(89)|(38)|286|424|40|464| |Total comprehensive income|-|-|-|-|32,001|-|604|(89)|(38)|286|32,764|147|32,911| |Dividend (including tax on dividend of `5,742 crore)|-|-|-|-|(37,634)|-|-|-|-|-|(37,634)|(68)|(37,702)| |Impact on purchase of non-controlling interests|-|-|-|-|(93)|-|-|-|-|-|(93)|93|-| |Transfer to Special Economic Zone re-investment reserve|-|-|-|2,947|(2,947)|-|-|-|-|-|-|-|-| |Transfer from Special Economic Zone re-investment reserve|-|-|-|(2,347)|2,347|-|-|-|-|-|-|-|-| |Transfer to reserves|-|-|-|-|(27)|27|-|-|-|-|-|-|-| |Balance as at March 31, 2020|75|431|27|1,594|78,810|375|796|45|(68)|1,666|83,751|623|84,374| 1 Refer note 8(l). 2 Refer note 9. Total equity (primarily retained earnings) includes `1,258 crore and `864 crore as at March 31, 2020 and 2019, respectively, pertaining to trusts and TCS Foundation held for specified purposes. TCS Annual Report 2019-20 Consolidated Financial Statements I 179 # Consolidated Statement of Changes in Equity # Nature and purpose of reserves other comprehensive income, items included in the reserves accumulated will be reclassified to retained earnings and profit and loss respectively, when such instruments are disposed. # a. Capital reserve The Group recognises profit and loss on purchase, sale, issue or cancellation of the Group's own equity instruments to capital reserve. # b. 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 utilised in accordance with the provisions of section 69 of the Companies Act, 2013. # c. General reserve The general reserve is a free reserve which is used from time to time to transfer profits from / to 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 profit and loss. # d. Special Economic Zone re-investment reserve The Special Economic Zone (SEZ) re-investment reserve is 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 Group for acquiring new assets for the purpose of its business as per the terms of section 10AA(2) of Income-tax Act, 1961. # e. Statutory reserve Statutory reserves are created to adhere to requirements of applicable laws. # f. Investment revaluation reserve This reserve represents the cumulative gains and losses arising on the revaluation of equity and debt instruments on the balance sheet date measured at fair value through other comprehensive income. # 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. # h. |
Foreign currency translation reserve The exchange differences arising from the translation of financial statements of foreign operations with functional currency other than Indian Rupee is recognised in other comprehensive income and is presented within equity in the foreign currency translation reserve. # NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Chairman Rajesh Gopinathan CEO and Managing Director Keki M Mistry Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla Partner Membership No: 049265 Mumbai, April 16, 2020 TCS Annual Report 2019-20 Consolidated Financial Statements I 180 # Consolidated Statement of Cash Flows | |Year ended March 31, 2020|Year ended March 31, 2019|Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---|---|---| |CASH FLOWS FROM OPERATING ACTIVITIES| | | | | |Profit for the year|32,447|31,562| | | |Adjustments to reconcile profit and loss to net cash provided by operating activities| | | | | |Depreciation and amortisation expense|3,529|2,056| | | |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|144|187| | | |Tax expense|9,801|10,001| | | |Net gain on lease modification|(14)|-| | | |Unrealised foreign exchange (gain) / loss|(117)|7| | | |Net gain on disposal of property, plant and equipment|(46)|(84)| | | |Net gain on investments|(214)|(427)| | | |Interest income|(3,562)|(2,762)| | | |Dividend income|(10)|(18)| | | |Finance costs|924|198| | | |Operating profit before working capital changes|42,882|40,720| | | |Net change in| | | | | |Inventories|5|16| | | |Trade receivables|(3,295)|(2,883)| | | |Unbilled receivables|(508)|1,286| | | |Loans receivables and other financial assets|(2)|(499)| | | |Other assets|(3,492)|(3,687)| | | |Trade payables|446|1,496| | | |Unearned and deferred revenue|375|679| | | |Other financial liabilities|1,208|791| | | |Other liabilities and provisions|596|632| | | |Cash generated from operations|38,215|38,551| | | |Taxes paid (net of refunds)|(5,846)|(9,958)| | | |Net cash generated from operating activities|32,369|28,593| | | |CASH FLOWS FROM INVESTING ACTIVITIES| | | | | |Bank deposits placed|(7,663)|(6,029)| | | |Inter-corporate deposits placed|(14,905)|(13,724)| | | |Purchase of investments*|(80,002)|(96,751)| | | |Payment for purchase of property, plant and equipment|(2,538)|(2,053)| | | |Payment including advances for acquiring right-of-use assets|(519)| | | | |Payment for purchase of intangible assets|(192)|(178)| | | |Purchase of subsidiary, net of cash of NIL and `16 crore respectively|11,965|(50)| | | |Proceeds from bank deposits|2,715| | | | |Proceeds from inter-corporate deposits|14,432|10,797| | | |Proceeds from disposal / redemption of investments*|84,089|104,133| | | *Purchase of investments include `503 crore and `352 crore for the years ended March 31, 2020 and 2019, respectively, and proceeds from disposal / redemption of investments include `542 crore and `281 crore for the years ended March 31, 2020 and 2019, respectively, held by trusts and TCS Foundation held for specified purposes. # NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Chairman CEO and Managing Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 Mumbai, April 16, 2020 # 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 and 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, 2020, Tata Sons Private 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, 2020 and authorised for issue on April 16, 2020. # 2) 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. |
# 3) Basis of preparation These consolidated financial statements have been prepared on historical cost basis except for certain financial instruments and defined benefit plans 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. 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. 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. The significant accounting policies used in preparation of the consolidated financial statements have been discussed in the respective notes. # 4) 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. # Notes forming part of the Consolidated Financial Statements The results of subsidiaries acquired, or sold, during the year are consolidated from the effective date of acquisition and up to the effective date of disposal, as appropriate. 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. 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. When a foreign operation is disposed off in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount of exchange differences related to that foreign operation recognised in OCI is reclassified to statement of profit and loss as part of the gain or loss on disposal. # 5) 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. Judgement is also required to determine the transaction price for the contract and to ascribe the transaction price to each distinct performance obligation. 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. 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. # Critical accounting estimates The Group uses the following critical accounting estimates in preparation of its consolidated financial statements: - 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. # Notes forming part of the Consolidated Financial Statements 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. # a. Revenue for fixed-price contracts Revenue 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. # b. 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. # c. 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. # d. 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. # e. Provision for income tax and deferred tax assets The Group uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax. # Notes forming part of the Consolidated Financial Statements losses can be utilised. Accordingly, the Group exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period. # g. Employee benefits The accounting of employee benefit plans in the nature of defined benefit requires the Group to use assumptions. These assumptions have been explained under employee benefits note. # f. Provisions and contingent liabilities The Group estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting date and are adjusted to reflect the current best estimates. The Group uses significant judgement to disclose contingent liabilities. |
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. # h. Leases The Group evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Group uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics. The Group determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. # 6) Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 1, 2020. # 7) 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. Purchase consideration paid in excess of the fair value of net assets acquired is recognised. # Notes forming part of the Consolidated Financial Statements as goodwill. Where the fair value of identifiable liabilities (other than financial assets and financial liabilities at fair value through profit or loss) 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. 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. # Purchase consideration paid for this acquisition | |Cash and cash equivalents|16| |---|---|---| |Net assets acquired, at fair value other than cash and cash equivalents| |8| | |Intangible assets|28| | |Goodwill|14| |Total|Total|66| | 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. # 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. # 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. |
# Notes forming part of the Consolidated Financial Statements 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 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. # Derivative accounting 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 # 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. File: AR_TCS_2019_2020-1-314.md 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. TCS Annual Report 2019-20 Consolidated Financial Statements I 187 # Notes forming part of the Consolidated Financial Statements Hedging instruments only the change in gain or loss is recognised immediately in the statement of profit and loss when the hedge becomes ineffective. The Group recognises lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction. 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. # Instruments not in hedging relationship The Group enters into the contracts that are effective as hedges from an economic perspective but they do not qualify for hedge accounting. The change in the fair value of such instrument is recognised in the statement of profit and loss. # Impairment of 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. |
# Notes forming part of the Consolidated Financial Statements # (a) Investments # Investments consist of the following: # Investments - Non-current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Investments designated at fair value through OCI| | | |Fully paid equity shares (unquoted)| | | |Mozido LLC|75|69| |FCM LLC|55|52| |Taj Air Limited|19|19| |Philippine Dealing System Holdings Corporation|7|6| |Less: Impairment in value of investments|(114)|(88)| |Investments carried at amortised cost| | | |Government bonds and securities (quoted)|164|165| |Corporate bonds (quoted)|10|16| | |216|239| Investments - Non-current includes `174 crore and `181 crore as at March 31, 2020 and 2019, respectively, pertaining to trusts held for specified purposes. # Investments - current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Investments carried at fair value through profit or loss| | | |Mutual fund units (quoted)|1,692|3,745| |Mutual fund units (unquoted)|-|63| |Investments carried at fair value through OCI| | | |Government bonds and securities (quoted)|24,290|23,566| |Corporate bonds (quoted)|132|1,206| |Investments carried at amortised cost| | | |Certificate of deposits (quoted)|-|490| |Corporate bonds (quoted)|26|21| | |26,140|29,091| Investments - Current includes `95 crore and `121 crore as at March 31, 2020 and 2019, respectively, pertaining to trusts and TCS Foundation held for specified purposes. # Aggregate value of quoted and unquoted investments is as follows: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Aggregate value of quoted investments|26,314|29,209| |Aggregate value of unquoted investments (net of impairment)|42|121| |Aggregate market value of quoted investments|26,336|29,222| |Aggregate value of impairment of investments|114|88| TCS Annual Report 2019-20 Consolidated Financial Statements I 189 # Notes forming part of the Consolidated Financial Statements # Market value of quoted investments carried at amortised cost is as follows: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Government bonds and securities|186|177| |Certificate of deposits|-|491| |Corporate bonds|36|36| # In numbers | |Currency|Face value per share|Investments|As at March 31, 2020|As at March 31, 2019| |---|---|---|---|---|---| | |USD|1|Mozido LLC|75|69| | |USD|5,00,000|FCM LLC|55|52| | |INR|10|Taj Air Limited|19|19| | |PHP|100|Philippine Dealing System Holdings Corporation|7|6| |Less: Impairment in value of investments| | | |(114)|(88)| | | | | |42|58| # The movement in fair value of investments carried / designated at fair value through OCI is as follows: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Balance at the beginning of the year|192|(84)| |Net loss arising on revaluation of financial assets carried at fair value|(20)|(1)| |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|972|425| |Deferred tax relating to net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income|(340)|(149)| |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|(14)|-| |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|6|-| |Balance at the end of the year|796|192| # Notes forming part of the Consolidated Financial Statements # (b) Trade receivables Trade receivables (unsecured) consist of the following: # Trade receivables - Non-current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Trade receivables|656|569| |Less: Allowance for doubtful trade receivables|(582)|(474)| |Considered good|74|95| # Trade receivables - Current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Trade receivables|30,747|27,629| |Less: Allowance for doubtful trade receivables|(306)|(340)| |Considered good|30,441|27,289| |Trade receivables|340|263| |Less: Allowance for doubtful trade receivables|(249)|(206)| |Credit impaired|91|57| | |30,532|27,346| # (c) Cash and cash equivalents Cash and cash equivalents consist of the following: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Balances with banks| | | |In current accounts|8,237|6,463| |In deposit accounts|405|733| |Cheques on hand|1|2| |Cash on hand|1|19| |Remittances in transit|2|7| | |8,646|7,224| Balances with banks in current accounts include `4 crore and `5 crore as at March 31, 2020 and 2019, respectively, pertaining to trusts held for specified purposes. # (d) Other balances with banks Other balances with banks consist of the following: # | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Earmarked balances with banks|215|196| |Short-term bank deposits|805|5,428| | |1,020|5,624| Earmarked balances with banks primarily relates to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. |
# Notes forming part of the Consolidated Financial Statements # (e) Loans receivables Loans receivables (unsecured) consist of the following: # Loans receivables - Non-current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Considered good| | | |Inter-corporate deposits|27|58| |Loans and advances to employees|2|2| | |29|60| # Loans receivables - Current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Considered good| | | |Inter-corporate deposits|8,171|7,667| |Loans and advances to employees|304|362| |Credit impaired| | | |Loans and advances to employees|15|63| |Less: Allowance on loans and advances to employees|(15)|(63)| | |8,475|8,029| # (f) Other financial assets Other financial assets consist of the following: # Other financial assets - Non-current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Security deposits|824|737| |Earmarked balances with banks|1|1| |Long-term bank deposits|348|-| |Others|11|-| | |1,184|1,184| # Other financial assets - Current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Security deposits|170|154| |Fair value of foreign exchange derivative assets|425|585| |Interest receivable|744|834| |Others|134|196| | |1,473|1,473| Interest receivable includes `43 crore and `46 crore as at March 31, 2020 and 2019, respectively, pertaining to trusts and TCS Foundation. # Notes forming part of the Consolidated Financial Statements # (g) Other financial liabilities Other financial liabilities consist of the following: # Other financial liabilities - Non-current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Capital creditors|3|3| |Others|288|284| | |291|287| Others include advance taxes paid of `226 crore and `226 crore as at March 31, 2020 and 2019, 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. # Other financial liabilities - Current | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Accrued payroll|3,907|3,203| |Current maturities of finance lease obligations|-|18| |Unclaimed dividends|53|41| |Fair value of foreign exchange derivative liabilities|693|60| |Capital creditors|502|303| |Liabilities towards customer contracts|807|895| |Others|138|383| | |6,100|4,903| # (h) Financial instruments by category The carrying value of financial instruments by categories as at March 31, 2020 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| |---|---|---|---|---|---|---| |Financial assets|Cash and cash equivalents|-|-|-|8,646|8,646| |Bank deposits|-|-|-|-|1,153|1,153| |Earmarked balances with banks|-|-|-|-|216|216| |Investments|1,692|24,464|-|-|200|26,356| |Trade receivables|-|-|-|-|30,606|30,606| |Unbilled receivables|-|-|-|-|6,056|6,056| |Loans receivables|-|-|-|-|8,504|8,504| |Other financial assets|-|-|146|279|1,883|2,308| |Total|1,692|24,464|146|279|57,264|83,845| # 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| |---|---|---|---|---|---|---| |Trade payables|-|-|-|-|6,740|6,740| |Lease liabilities|-|-|-|-|8,174|8,174| |Other financial liabilities|-|-|34|659|5,698|6,391| |Total|-|-|34|659|20,612|21,305| In the previous year, 'Others' include a liability accrued towards exercise of put / call option for acquisition by TCS Annual Report 2019-20. # Notes forming part of the Consolidated Financial Statements The carrying value of financial instruments by categories as at March 31, 2019 is as follows: # (i) 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. |Financial assets|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| |---|---|---|---|---|---|---| |Cash and cash equivalents|-|-|-|-|7,224|7,224| |Bank deposits|-|-|-|-|5,428|5,428| |Earmarked balances with banks|-|-|-|-|197|197| |Investments|3,808|24,830|-|-|692|29,330| |Trade receivables|-|-|-|-|27,441|27,441| |Unbilled receivables|-|-|-|-|5,548|5,548| |Loans receivables|-|-|-|-|8,089|8,089| |Other financial assets|-|-|237|348|1,921|2,506| |Total|3,808|24,830|237|348|56,540|85,763| # Financial liabilities |Financial liabilities|Fair value through profit or loss|Fair value through other comprehensive income|Derivative financial liabilities|Amortised cost|Total| |---|---|---|---|---|---| |Trade payables|-|-|-|6,292|6,292| |Lease liabilities|-|-|-|44|44| |Other financial liabilities|218|-|-|4,912|5,190| |Total|218|-|-|11,248|11,526| Loans receivables include inter-corporate deposits of `7,725 crore, with original maturity period within 50 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables, loans receivables and trade payables as at March 31, 2020 and 2019, approximate the fair value. |
Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets and other financial liabilities subsequently measured at amortised cost is not significant in each of the years presented. Fair value measurement of lease liabilities is not required. Fair value of investments carried at amortised cost is `222 crore and `704 crore as at March 31, 2020 and 2019, respectively. # As at March 31, 2020 |Financial assets|Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Mutual fund units|1,692|-|-|1,692| |Equity shares|-|-|42|42| |Government bonds and securities|24,476|-|-|24,476| |Corporate bonds|168|-|-|168| |Derivative financial assets|-|425|-|425| |Total|26,336|425|42|26,803| # Financial liabilities |Financial liabilities|Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Derivative financial liabilities|-|693|-|693| |Total|-|693|-|693| # Notes forming part of the Consolidated Financial Statements | |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| | |Level 1|Level 2|Level 3|Total| |---|---|---|---|---| |Financial liabilities|-|60|-|60| |Derivative financial liabilities|-|-|218|218| |Total|-|60|218|278| # Reconciliation of Level 3 fair value measurement of financial assets is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|58|58| |Disposals during the year|-|(3)| |Impairment in value of investments|(20)|-| |Translation exchange difference|4|3| |Balance at the end of the year|42|58| # Reconciliation of Level 3 fair value measurement of financial liabilities is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|218|203| |Additions during the year|-|13| |Repayment during the year|(227)|-| |Translation exchange difference|9|2| |Balance at the end of the year|-|218| # (j) 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. # Notes forming part of the Consolidated Financial Statements The following are outstanding currency options contracts, which have been designated as cash flow hedges: |Foreign currency|No. of contracts|Notional amount of contracts (In million)|Fair value (` crore)|No. of contracts|Notional amount of contracts (In million)|Fair value (` crore)| |---|---|---|---|---|---|---| |US Dollar|55|1,420|20|28|1,000|128| |Great Britain Pound|71|384|59|24|177|23| |Euro|38|363|(31)|33|239|50| |Australian Dollar|26|192|48|26|181|22| |Canadian Dollar|19|104|16|21|99|14| The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows: | |Year ended March 31, 2020| |Year ended March 31, 2019| | |---|---|---|---|---| | |Intrinsic value|Time value|Intrinsic value|Time value| |Balance at the beginning of the year|134|(30)|(2)|(69)| |(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|(449)|513|(488)|458| |Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|54|(38)|94|(25)| |Change in the fair value of effective portion of cash flow hedges|355|(565)|641|(414)| |Deferred tax on fair value of effective portion of cash flow hedges|(49)|52|(111)|20| |Balance at the end of the year|45|(68)|134|(30)| The Group has entered into derivative instruments not in hedging relationship by way of foreign exchange forward, currency options and futures contracts. As at March 31, 2020 and 2019, the notional amount of outstanding contracts aggregated to `40,298 crore and `34,939 crore, respectively and the respective fair value of these contracts have a net loss of `380 crore and net gain of `288 crore. Exchange loss of `461 crore and exchange gain of `408 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, 2020 and 2019, respectively. Net foreign exchange gains include loss of `64 crore and gain of `30 crore transferred from cash flow hedging reserve for the years ended March 31, 2020 and 2019, respectively. Net loss on derivative instruments of `23 crore recognised in cash flow hedging reserve as at March 31, 2020, is expected to be transferred to the statement of profit and loss by March 31, 2021. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2020. |
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, 2020|As at March 31, 2019| |---|---|---| |10% Appreciation of the underlying foreign currencies|(407)|(64)| |10% Depreciation of the underlying foreign currencies|1,261|1,370| # Notes forming part of the Consolidated Financial Statements # (k) 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. # 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. # 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 8(j). # Unhedged foreign currency exposure as at March 31, 2020: | |USD|EUR|GBP|Others| |---|---|---|---|---| |Net financial assets|2,140|239|82|1,145| |Net financial liabilities|(3,257)|(325)|(160)|(249)| 10% appreciation / depreciation of the respective functional currency of Tata Consultancy Services Limited and its subsidiaries with respect to various foreign currencies would result in increase / decrease in the Group's profit before taxes by approximately `39 crore for the year ended March 31, 2020. # Notes forming part of the Consolidated Financial Statements The following table sets forth information relating to unhedged 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)| 10% appreciation / depreciation of the respective functional currency of Tata Consultancy Services Limited and its subsidiaries with respect to various foreign currencies would result in decrease / increase in the Group's profit before taxes by approximately `423 crore for the year ended March 31, 2019. # Impact of COVID-19 (Global pandemic) The Group basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Group has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Group continues to believe that there is no impact on effectiveness of its hedges. # 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. |
# Credit risk Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled receivables, loan receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of `8,198 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of `1,135 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, 2020. 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 and contract assets represents the maximum credit exposure. The maximum exposure to credit risk was `88,291 crore and `89,172 crore as at March 31, 2020 and 2019, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments, trade receivables, unbilled receivables, loan receivables, 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 and contract assets as at March 31, 2020 and 2019. TCS Annual Report 2019-20 Consolidated Financial Statements I 198 # Notes forming part of the Consolidated Financial Statements # Geographic concentration of credit risk Geographic concentration of trade receivables (gross and net of allowances), unbilled receivables and contract assets is as follows: | |As at March 31, 2020| |As at March 31, 2019| | |---|---|---|---|---| |Geography|Gross%|Net%|Gross%|Net%| |United States of America|44.94|45.66|45.95|46.67| |India|11.56|10.01|11.83|10.37| |United Kingdom|14.74|15.02|14.12|14.30| Geographical concentration of trade receivables, unbilled receivables and contract assets is allocated based on the location of the customers. The allowance for lifetime expected credit loss on trade receivables for the years ended March 31, 2020 and 2019 was `133 crore and `187 crore respectively. The reconciliation of allowance for doubtful trade receivables is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|1,020|831| |Change during the year|133|187| |Bad debts written off|(43)|(9)| |Translation exchange difference|27|11| |Balance at the end of the year|1,137|1,020| # 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 including lease liabilities as and when they fall due. The tables below provide details regarding the contractual maturities of significant financial liabilities as of: | |March 31, 2020|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---|---| |Non-derivative financial liabilities| |6,740|-|-|-|6,740| |Lease liabilities| |1,722|1,514|3,517|4,034|10,787| |Other financial liabilities| |5,407|12|279|-|5,698| |Total| |13,869|1,526|3,796|4,034|23,225| |Derivative financial liabilities| |693|-|-|-|693| |Total| |14,562|1,526|3,796|4,034|23,918| # Notes forming part of the Consolidated Financial Statements | |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|Trade payables|6,292|-|-|-|6,292| | |Lease liabilities|-|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| | # Other risk - Impact of COVID-19 Financial assets carried at fair value as at March 31, 2020 is `26,581 crore and financial assets are carried at amortised cost as at March 31, 2020 is `57,264 crore. A significant part of the financial assets are classified as Level 1 having fair value of `26,336 crore as at March 31, 2020. The fair value of these assets is marked to an active market which factors the uncertainties arising out of COVID-19. The financial assets carried at fair value by the Group are mainly investments in liquid debt securities and accordingly, any material volatility is not expected. File: AR_TCS_2019_2020-1-314.md Financial assets of `10,015 crore as at March 31, 2020 carried at amortised cost is in the form of cash and cash equivalents, bank deposits and earmarked balances with banks where the Group has assessed the counterparty credit risk. |
Trade receivables of `30,606 crore as at March 31, 2020 forms a significant part of the financial assets carried at amortised cost which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk and consequential default considering emerging situations due to COVID-19. This assessment is not based on any mathematical model but an assessment considering the nature of verticals, impact immediately seen in the demand outlook of these verticals and the financial strength of the customers in respect of whom amounts are receivable. The Group has specifically evaluated the potential impact with respect to customers in Retail, Travel, Transportation and Hospitality, Manufacturing and Energy verticals which could have an immediate impact and the rest which could have an impact with a lag. The Group closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, discounting of receivables with institutions on no-recourse basis, recognition of revenue on collection basis etc., depending on severity of each case. The same assessment is done in respect of unbilled receivables and contract assets of `10,545 crore as at March 31, 2020 while arriving at the level of provision that is required. Basis this assessment, the allowance for doubtful trade receivables of `1,137 crore as at March 31, 2020 is considered adequate. TCS Annual Report 2019-20 Consolidated Financial Statements I 200 # Notes forming part of the Consolidated Financial Statements # (l) Equity instruments In the previous year, 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 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 in the previous year. The equity shares bought back were extinguished on September 26, 2018. # I. Reconciliation of number of shares | | | | |As at March 31, 2020| |As at March 31, 2019| | |---|---|---|---|---|---|---|---| |Number of shares| | | | |Amount|Number of shares|Amount| |Equity shares| | |Opening balance|375,23,84,706|375|191,42,87,591|191| | | | |Issued during the year|-|-|191,42,87,591|192| | |Shares extinguished on buy-back| | |-|-|(7,61,90,476)|(8)| | | | |Closing balance|375,23,84,706|375|375,23,84,706|375| # II. Rights, preferences and restrictions attached to 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. # Notes forming part of the Consolidated Financial Statements # III. Shares held by Holding company, its Subsidiaries and Associates |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Equity shares| | | |Holding company|270|270| |270,24,50,947 equity shares (March 31, 2019: 270,24,50,947 equity shares) are held by Tata Sons Private Limited| | | |Subsidiaries and Associates of Holding company| | | |7,220 equity shares (March 31, 2019: 7,220 equity shares) are held by Tata Industries Limited*|-|-| |10,36,269 equity shares (March 31, 2019: 10,36,269 equity shares) are held by Tata Investment Corporation Limited*|-|-| |46,798 equity shares (March 31, 2019: 46,798 equity shares) are held by Tata Steel Limited*|-|-| |766 equity shares (March 31, 2019: 766 equity shares) are held by The Tata Power Company Limited*|-|-| | |270|270| *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, 2020|As at March 31, 2019| |---|---|---| |Equity shares|Tata Sons Private Limited, the holding company|270,24,50,947| |% of shareholding| |72.02%| # V. Equity shares movement during 5 years preceding March 31, 2020 - Equity shares issue 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. |
- 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. - 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. # Notes forming part of the Consolidated Financial Statements 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. # 9) Leases A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. # Group as a lessee The Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Group recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss. The Group measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses incremental borrowing rate. For leases with reasonably similar characteristics, the Group, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Group is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Group recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the re-measurement in statement of profit and loss. |
The Group has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term. # Notes forming part of the Consolidated Financial Statements # Group as a lessor At the inception of the lease the Group classifies each of its leases as either an operating lease or a finance lease. The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. When the Group is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease. If an arrangement contains lease and non-lease components, the Group applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract. # Transition to Ind AS 116 Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 Leases and other interpretations. 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 lease accounting model for lessees. The Group has adopted Ind AS 116, effective annual reporting period beginning April 1, 2019 and applied 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 has not restated comparative information, instead, the cumulative effect of initially applying this standard has been recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019. Refer note 2(h) - Significant accounting policies - Leases in the Annual report of the Group for the year ended March 31, 2019, for the policy as per Ind AS 17. # Group as a lessee # Operating leases For transition, the Group has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis. The Group has also used the practical expedient provided by the standard when applying Ind AS 116 to leases previously classified as operating leases under Ind AS 17 and therefore, has not reassessed whether a contract, is or contains a lease, at the date of initial application, relied on its assessment of whether leases are onerous, applying Ind AS 37 immediately before the date of initial application as an alternative to performing an impairment review, excluded initial direct costs from measuring the right-of-use asset at the date of initial application and used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. The Group has used a single discount rate to a portfolio of leases with similar characteristics. On transition, the Group recognised 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 of the lease, but discounted using the lessee's incremental borrowing rate as at April 1, 2019. Accordingly, a right-of-use asset of `6,360 crore and lease liability of `6,831 crore has been recognised. The cumulative effect on transition in retained earnings net of taxes is `359 crore (including the deferred tax of `170 crore). The principal portion of the lease payments have been disclosed under cash flow from financing activities. The lease payments for operating leases as per Ind AS 17 - Leases, were earlier reported under cash flow from operating activities. |
The weighted average incremental TCS Annual Report 2019-20 Consolidated Financial Statements I 204 # Notes forming part of the Consolidated Financial Statements A borrowing rate of 6.78% has been applied to lease liabilities recognised in the balance sheet at the date of initial application. On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use asset, and finance cost for interest accrued on lease liability. The difference between the future minimum lease rental commitments towards non-cancellable operating leases and finance leases reported as at March 31, 2019 compared to the lease liability as accounted as at April 1, 2019 is primarily due to inclusion of present value of the lease payments for the cancellable term of the leases, reduction due to discounting of the lease liabilities as per the requirement of Ind AS 116 and exclusion of the commitments for the leases to which the Group has chosen to apply the practical expedient as per the standard. # Finance lease The Group has leases that were classified as finance leases applying Ind AS 17. For such leases, the carrying amount of the right-of-use asset and the lease liability at the date of initial application of Ind AS 116 is the carrying amount of the lease asset and lease liability on the transition date as measured applying Ind AS 17. Accordingly, an amount of `31 crore has been reclassified from property, plant and equipment to right-of-use assets. An amount of `18 crore has been reclassified from other current financial liabilities to lease liability - current and an amount of `44 crore has been reclassified from borrowings - non-current to lease liability - non-current. # Group as a lessor The Group is not required to make any adjustments on transition to Ind AS 116 for leases in which it acts as a lessor, except for a sub-lease. The Group accounted for its leases in accordance with Ind AS 116 from the date of initial application. The Group does not have any significant impact on account of sub-lease on the application of this standard. # The details of the right-of-use asset held by the Group is as follows: | |Additions for year ended March 31, 2020|Net carrying amount as at March 31, 2020| |---|---|---| |Leasehold land|474|690| |Buildings|2,443|7,218| |Leasehold improvements|15|46| |Computer equipment|7|13| |Vehicles|5|16| |Office equipment|7|11| |Total|2,951|7,994| # Depreciation on right-of-use asset is as follows: | |Year ended March 31, 2020| |---|---| |Leasehold land|4| |Buildings|1,225| |Leasehold improvements|10| |Computer equipment|17| |Vehicles|10| |Office equipment|2| |Total|1,268| Interest on lease liabilities is `492 crore for the year ended on March 31, 2020. # Notes forming part of the Consolidated Financial Statements The Group incurred `392 crore for the year ended March 31, 2020 towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is `2,465 crore for the year ended March 31, 2020, including cash outflow of short-term leases and leases of low-value assets. The Group has lease term extension options that are not reflected in the measurement of lease liabilities. The present value of future cash outflows for such extension periods as at March 31, 2020 is `457 crore. Lease contracts entered by the Group majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Group does not have any lease restrictions and commitment towards variable rent as per the contract. # Impact of COVID-19 The Group does not foresee any large-scale contraction in demand which could result in significant down-sizing of its employee base rendering the physical infrastructure redundant. The leases that the Group has entered with lessors towards properties used as delivery centers / sales offices are long term in nature and no changes in terms of those leases are expected due to the COVID-19. # 10) Non-financial assets and liabilities # (a) 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. |
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|4-10 years| |Furniture and fixtures|5 years| Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use. Property, plant and equipment with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss. # Notes forming part of the Consolidated Financial Statements # Property, plant and equipment consist of the following: |(` crore)|Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office installations|Electrical fixtures|Furniture and fixtures|Total| |---|---|---|---|---|---|---|---|---|---|---| |Cost as at April 1, 2019|345|7,429|2,403|552|7,687|39|2,377|1,935|1,755|24,522| |Transition impact of Ind AS 116 (Refer note 9)|-|-|(106)|-|(130)|-|(5)|-|(2)|(243)| |Restated cost as at April 1, 2019|345|7,429|2,297|552|7,557|39|2,372|1,935|1,753|24,279| |Additions|-|290|302|134|1,620|5|223|119|165|2,858| |Disposals|-|(7)|(185)|-|(379)|(2)|(90)|(19)|(51)|(733)| |Translation exchange difference|2|7|13|(5)|(4)|-|4|4|19|40| |Cost as at March 31, 2020|347|7,719|2,427|681|8,794|42|2,509|2,039|1,886|26,444| |Accumulated depreciation as at April 1, 2019|-|(2,187)|(1,396)|(172)|(5,906)|(31)|(1,921)|(1,132)|(1,366)|(14,111)| |Transition impact of Ind AS 116 (Refer note 9)|-|-|60|-|129|-|4|-|1|194| |Restated accumulated depreciation as at April 1, 2019|-|(2,187)|(1,336)|(172)|(5,777)|(31)|(1,917)|(1,132)|(1,365)|(13,917)| |Depreciation for the year|-|(379)|(191)|(60)|(998)|(5)|(232)|(147)|(160)|(2,172)| |Disposals|-|6|99|-|357|2|85|18|51|618| |Translation exchange difference|-|(3)|(13)|4|4|-|(4)|(5)|(15)|(32)| |Accumulated depreciation as at March 31, 2020|-|(2,563)|(1,441)|(228)|(6,414)|(34)|(2,068)|(1,266)|(1,489)|(15,503)| |Net carrying amount as at March 31, 2020|347|5,156|986|453|2,380|8|441|773|397|10,941| # Notes forming part of the Consolidated Financial Statements |(` crore)|Freehold land|Buildings|Leasehold improvements|Plant and equipment|Computer equipment|Vehicles|Office installations|Electrical fixtures|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| TCS Annual Report 2019-20 Consolidated Financial Statements I 208 # Notes forming part of the Consolidated Financial Statements # Net carrying amount of property, plant and equipment under finance lease arrangements are as follows: | |(` crore)| |---|---| |As at March 31, 2019| | |Leasehold improvements|27| |Computer equipment|2| |Office equipment|1| |Furniture and fixtures|1| |Leased assets|31| # (b) Goodwill 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. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is indication for impairment. The financial projections basis which the future cash flows have been estimated consider the increase in economic uncertainties due to COVID-19, reassessment of the discount rates, revisiting the growth rates factored while arriving at terminal value and subjecting these variables to sensitivity analysis. 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. # Goodwill consist of the following: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Balance at the beginning of the year|1,700|1,745| |Additional amount recognised from business combination during the year|-|14| |Translation exchange difference|10|(59)| |Balance at the end of the year|1,710|1,700| Goodwill of `636 crore and `594 crore as at March 31, 2020 and 2019, 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 9.30%. |
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 `1,074 crore and `1,106 crore as at March 31, 2020 and 2019, 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. # (c) Other intangible assets 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. TCS Annual Report 2019-20 Consolidated Financial Statements I 209 # Notes forming part of the Consolidated Financial Statements Intangible assets consist of 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| |---|---| |Rights under licensing agreement and software licences|Lower of licence period and 2-5 years| |Customer-related intangibles|3 years| File: AR_TCS_2019_2020-1-314.md Intangible assets are amortised on a straight-line basis over the period of its economic useful life. Intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss. Intangible assets consist of the following: | |Rights under licensing agreement and software licences|Customer-related intangibles|Total| |---|---|---|---| |Cost as at April 1, 2019|(` crore) 256|115|371| |Additions|192|-|192| |Translation exchange difference|-|5|5| |Cost as at March 31, 2020|448|120|568| |Accumulated amortisation as at April 1, 2019|(102)|(90)|(192)| |Amortisation for the year|(80)|(9)|(89)| |Translation exchange difference|2|(6)|(4)| |Accumulated amortisation as at March 31, 2020|(180)|(105)|(285)| |Net carrying amount as at March 31, 2020|268|15|283| # Notes forming part of the Consolidated Financial Statements |Other assets|Rights under licensing agreement|Customer-related intangibles|Total| |---|---|---|---| |Cost as at April 1, 2018|80|89|169| |Additions|178|-|178| |Acquisition through a business combination|-|28|28| |Translation exchange difference|(2)|(2)|(4)| |Cost as at March 31, 2019|256|115|371| |Accumulated amortisation as at April 1, 2018|(68)|(89)|(157)| |Amortisation for the year|(35)|(4)|(39)| |Translation exchange difference|1|3|4| |Accumulated amortisation as at March 31, 2019|(102)|(90)|(192)| |Net carrying amount as at March 31, 2019|154|25|179| The estimated amortisation for the years subsequent to March 31, 2020 is as follows: |Year ending March 31|Amortisation expense| |---|---| |2021|103| |2022|98| |2023|65| |2024|17| |Thereafter|-| Total: 283 # Other assets consist of the following: |Other assets - Non-current|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Contract assets|197|190| |Prepaid expenses|839|351| |Prepaid rent|-|339| |Contract fulfillment costs|286|174| |Capital advances|55|276| |Advances to related parties|36|3| |Others|298|30| |Total|1,711|1,711| # Advances to related parties, considered good, comprise: |Entity|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Voltas Limited|3|2| |Tata Realty and Infrastructure Ltd*|-|-| |Concorde Motors (India) Limited|-|1| |Tata Projects Limited|33|-| |Titan Engineering and Automation Limited*|-|-| *Represents value less than `0.50 crore. # Notes forming part of the Consolidated Financial Statements # Other assets - Current Prepaid rent of `366 crore has been reclassified to right-of-use asset pursuant to transition to Ind AS 116. |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Considered good| | | |Contract assets|4,292|3,238| |Prepaid expenses|1,498|614| |Prepaid rent|15|50| |Contract fulfillment costs|621|537| |Advance to suppliers|136|139| |Advance to related parties|11|2| |Indirect taxes recoverable|1,374|1,170| |Other advances|130|142| |Others|129|136| |Considered doubtful| | | |Advance to suppliers|3|3| |Indirect taxes recoverable|2|4| |Other advances|3|4| |Less: Allowance on doubtful assets|(8)|(11)| | |8,206|6,028| # 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. |
Inventories consist of the following: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Raw materials, sub-assemblies and components|5|9| |Finished goods and work-in-progress*|-|-| |Stores and spares|-|1| | |5|10| *Represents value less than `0.50 crore. # Advance to related parties, considered good comprise: |The Titan Company Limited|3|1| |---|---|---| |Tata AIG General Insurance Company Limited|-|1| |Tata AIA Life Insurance Company Limited|1|-| |Tata Sons Private Limited|7|-| # Notes forming part of the Consolidated Financial Statements # (f) Provisions Provisions consist of the following: # Provisions - Current | |` crore|` crore| |---|---|---| | |As at March 31, 2020|As at March 31, 2019| |Provision for foreseeable loss|238|184| |Other provisions|55|55| |Total|293|239| # (g) Other liabilities Other liabilities consist of the following: # Other liabilities - Non-current | | |` crore| | | | |---|---|---|---|---|---| | |As at March 31, 2020|As at March 31, 2019| | | | |Operating lease liabilities|-|413| | | | |Total|-|413| | | | # Other liabilities - Current | |` crore|` crore| |---|---|---| | |As at March 31, 2020|As at March 31, 2019| |Advance received from customers|345|575| |Indirect taxes payable and other statutory liabilities|2,874|2,526| |Operating lease liabilities|2|60| |Others|62|74| |Total|3,283|3,235| Operating lease liability of `462 crore has been reclassified to retained earnings pursuant to transition to Ind AS 116. # 11) Other equity Other equity consist of the following: | |` crore|` crore| |---|---|---| | |As at March 31, 2020|As at March 31, 2019| |Capital reserve|75|75| |Capital redemption reserve| | | |(i) Opening balance|431|529| |(ii) Transfer from retained earnings*|-|8| |(iii) Issue of bonus shares*|-|(106)| |Total|431|431| # General reserve | | | |` crore| | | | |---|---|---|---|---|---|---| | |As at March 31, 2020|As at March 31, 2019| | | | | |(i) Opening balance| | | | |27|1,423| |(ii) Transfer to retained earnings| | | | |-|(1,396)| |Total| | | | |27|27| # Special Economic Zone re-investment reserve | | |` crore| | | | |---|---|---|---|---|---| | |As at March 31, 2020|As at March 31, 2019| | | | |(i) Opening balance| | | |994|1,578| |(ii) Transfer from retained earnings| | | |2,947|2,750| |(iii) Transfer to retained earnings| | | |(2,347)|(3,334)| |Total| | | |1,594|994| # Retained earnings | | | |` crore| | | | |---|---|---|---|---|---|---| | |As at March 31, 2020|As at March 31, 2019| | | | | |(i) Opening balance| | | | |85,520|79,755| |(ii) Transition impact of Ind AS 116| | | | |(357)|-| | | | | |(Refer note 9)| | | |(iii) Profit for the year| | | | |32,340|31,472| |(iv) Remeasurement of defined employee benefit plans| | | | |(339)|(41)| # Notes forming part of the Consolidated Financial Statements | | | |(` crore)|(` crore)| | | |---|---|---|---|---|---|---| |As at March 31, 2020|As at March 31, 2019| | | | | | |(v) Utilised for buy-back of equity shares*|-| |(15,992)| | | | |(vi) Expense relating to buy-back of equity shares*|-| |(45)| | | | |(vii) Issue of bonus shares*| |-|(86)| | | | |(viii) Realised loss on equity shares carried at fair value through OCI| |-|(1)| | | | |(ix) Transfer from Special Economic Zone re-investment reserve| |2,347|3,334| | | | |(x) Transfer from general reserve*| |-|1,396| | | | |(xi) Purchase of non-controlling interests| |(93)|-| | | | | | |119,418|99,792| | | | |(xii) Less: Appropriations| | | | | | | |(a) Dividend on equity shares| |31,896|10,085| | | | |(b) Tax on dividend| |5,738|1,339| | | | |(c) Transfer to capital redemption reserve*|-| | | | |8| |(d) Transfer to Special Economic Zone re-investment reserve| |2,947|2,750| | | | |(e) Transfer to statutory reserve| |27|90| | | | | | |78,810|85,520| | | | # Statutory reserve |(i) Opening balance|348|258| |---|---|---| |(ii) Transfer from retained earnings|27|90| | |375|348| # 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. 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. # Notes forming part of the Consolidated Financial Statements - 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 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. 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. # Notes forming part of the Consolidated Financial Statements The Group disaggregates revenue from contracts with customers by nature of services, industry verticals and geography. # Revenue disaggregation by nature of services is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Consultancy services|154,829|143,935| |Sale of equipment and software licences|2,120|2,528| |Total Revenue|156,949|146,463| Revenue disaggregation by industry vertical and geography has been included in segment information (Refer note 19). 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 `112,266 crore out of which 49.55% 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, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|3,428|2,882| |Revenue recognised during the year|13,548|11,404| |Invoices raised during the year|(12,715)|(10,893)| |Translation exchange difference|228|35| |Balance at the end of the year|4,489|3,428| # Changes in unearned and deferred revenue are as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|3,236|2,535| |Revenue recognised that was included in the unearned and deferred revenue balance at the beginning of the year|(2,421)|(2,376)| |Increase due to invoicing during the year, excluding amounts recognised as revenue during the year|2,618|2,996| |Translation exchange difference|179|81| |Balance at the end of the year|3,612|3,236| TCS Annual Report 2019-20 Consolidated Financial Statements I 216 # Notes forming part of the Consolidated Financial Statements # Reconciliation of revenue recognised with the contracted price is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Contracted price|158,977|148,649| |Reductions towards variable consideration components|(2,028)|(2,186)| |Revenue recognised|156,949|146,463| The reduction towards variable consideration comprises of volume discounts, service level credits, etc. # Impact of COVID-19 While the Group believes strongly that it has a rich portfolio of services to partner with customers, the impact on future revenue streams could come from: - the inability of our customers to continue their businesses due to financial resource constraints or their services no-longer being availed by their customers - prolonged lock-down situation resulting in its inability to deploy resources at different locations due to restrictions in mobility - customers not in a position to accept alternate delivery modes using Secured Borderless WorkSpaces - customers postponing their discretionary spend due to change in priorities The Group has assessed that customers in Retail, Travel, Transportation and Hospitality, Energy and Manufacturing verticals are more prone to immediate impact due to disruption in supply chain and drop in demand while customers in Banking, Financial Services and Insurance would re-prioritise their discretionary spend in immediate future to conserve resources and assess the impact that they would have due to dependence of revenues from the impacted verticals. The Group has considered such impact to the extent known and available currently. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The Group has taken steps to assess the cost budgets required to complete its performance obligations in respect of fixed price contracts and incorporated the impact of likely delays/increased cost in meeting its obligations. Such impact could be in the form of provision for onerous contracts or re-setting of revenue recognition in fixed price contracts where revenue is recognised on percentage-of-completion basis. The Group has also assessed the impact of any delays and inability to meet contractual commitments and has taken actions such as engaging with the customers to agree on revised SLAs in light of current crisis, invoking of force-majeure clause etc., to ensure that revenue recognition in such cases reflect realisable values. # Other income Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method. |
Other income consists of the following: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Interest income|3,562|2,762| |Dividend income|10|18| |Net gain on investments carried at fair value through profit or loss|200|427| |Net gain on sale of investments other than equity shares carried at fair value through OCI|14|-| TCS Annual Report 2019-20 Consolidated Financial Statements I 217 # Notes forming part of the Consolidated Financial Statements | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Net gain / (loss) on disposal of property, plant and equipment|46|84| |Net foreign exchange gain / (loss)|727|967| |Rent income|1|6| |Other income|32|47| |Total|4,592|4,311| # Interest income comprise: |Interest on bank balances and bank deposits|519|188| |---|---|---| |Interest on financial assets carried at amortised cost|613|576| |Interest on financial assets carried at fair value through OCI|1,878|1,838| |Other interest (including interest on tax refunds)|552|160| # Dividend income comprises: Dividend from mutual fund units and other investments 10 18 # 14) Employee benefits # 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. The Group provides benefits such as gratuity, pension and provident fund (Company managed fund) to its employees which are treated as defined benefit plans. # Defined contribution plans Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits. The Group provides benefits such as superannuation, provident fund (other than Company managed fund) and foreign defined contribution plans to its employees which are treated as defined contribution plans. # 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. TCS Annual Report 2019-20 Consolidated Financial Statements I 218 # Notes forming part of the Consolidated Financial Statements # 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. # Employee benefit expenses consist of the following: |(` crore)|Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Salaries, incentives and allowances|77,660|70,642| |Contributions to provident and other funds|5,834|5,308| |Staff welfare expenses|2,458|2,296| |Total|85,952|78,246| # Employee benefit obligations consist of the following: # Employee benefit obligations - Non-current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Gratuity liability|8|11| |Foreign defined benefit plans|308|232| |Other employee benefit obligations|101|87| |Total|417|330| # Employee benefit obligations - Current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Compensated absences|2,720|2,330| |Other employee benefit obligations|29|26| |Total|2,749|2,356| # Employee benefits plans consist of the following: # 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. |
# Notes forming part of the Consolidated Financial Statements The following table sets out the details of the defined benefit retirement plans and the amounts recognised in the financial statements: |(` crore)| | | |Year ended March 31, 2020| | | | |Year ended March 31, 2019| | | | |---|---|---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| | |Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | | |Change in benefit obligations|Benefit obligations, beginning of the year|2,679|4|629|120|3,432|2,308|3| |626|103|3,040| | |Translation exchange difference|-|-|55|5|60|-|-| |(5)|1|(4)| | |Plan assumed on insourcing of employees|30|-|-|-|30|-|-|-|-| | | | |Plan participants' contribution|-|-|9|-|9|-|-|9|-|9| | | |Service cost|358|1|16|22|397|289|1| |14|19|323| | |Interest cost|222|-|11|5|238|190|-|9| |4|203| | |Remeasurement of the net defined benefit liability|520|4|43|2|569|39| |-|25|(2)|62| | |Past service cost / (credit)|-|-|-|1|1|-|-| |(35)|1|(34)| | |Benefits paid|(171)|(1)|(10)|(10)|(192)|(147)| |-|(14)|(6)|(167)| |Benefit obligations, end of the year|3,638|8| |753|145|4,544|2,679|4| |629|120|3,432| # Notes forming part of the Consolidated Financial Statements |(` crore)| | |Year ended March 31, 2020| | | | | |Year ended March 31, 2019| | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| | |Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Change in plan assets|Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | | | |Fair value of plan assets, beginning of the year|2,672| |-|532|-|3,204|2,433|-| |529|-| |2,962| |Translation exchange difference| |-|-|41|-|41|-|-| |(3)|-|(3)| | |Plan assumed on insourcing of employees|30| |-|-|-|30|-|-|-|-|-| | | |Interest income|235| |-|9|-|244|193|-| |7|-| |200| |Employers' contributions|766| |-|17|-|783|171|-| |15|-| |186| |Plan participants' contribution| |-|-|9|-|9|-|-|9|-|9| | | |Benefits paid|(171)| |-|(10)|-|(181)|(147)|-| |(14)|-| |(161)| |Remeasurement - return on plan assets excluding amount included in interest income|111|-| |29|-|140|22|-| |(11)|-|11| | |Fair value of plan assets, end of the year|3,643| |-|627|-|4,270|2,672|-| |532|-| |3,204| # Notes forming part of the Consolidated Financial Statements | | | |As at March 31, 2020| | | |As at March 31, 2019| | | | | |---|---|---|---|---|---|---|---|---|---|---|---| | |Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | |Funded status| |-|(8)|(163)|(145)|(316)|(7)|(4)|(112)|(120)|(243)| |Surplus of plan assets over obligations|5|-|37|-|42|-|-|15|-|15| | | |5|(8)|(126)|(145)|(274)|(7)|(4)|(97)|(120)|(228)| | | | | |As at March 31, 2020| | | | |As at March 31, 2019| | | | |---|---|---|---|---|---|---|---|---|---|---|---| | |Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | |Category of assets|Corporate bonds|1,004|-|137|-|1,141|684|-|101|-|785| | |Equity instruments|17|-|-|-|17|20|-|67|-|87| | |Government bonds and securities|1,695|-|-|-|1,695|1,150|-|-|-|1,150| | |Insurer managed funds|852|-|275|-|1,127|760|-|32|-|792| | |Bank balances|-|-|6|-|6|6|-|16|-|22| | |Others|75|-|209|-|284|52|-|316|-|368| | |Total|3,643|-|627|-|4,270|2,672|-|532|-|3,204| # Notes forming part of the Consolidated Financial Statements Net periodic gratuity / pension cost, included in employee cost consists of the following components: |(` crore)| | |Year ended March 31, 2020| | | | | |Year ended March 31, 2019| | | | |---|---|---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| | |Total|Domestic plans|Domestic plans|Foreign plans|Foreign plans|Total| | | |Funded|Unfunded|Funded|Unfunded| |Funded|Unfunded|Funded|Unfunded| | | | |Service cost|358| |1|16|22|397|289|1| |14|19|323| |Net interest on net defined benefit (asset) / liability|(13)| |-|2|5|(6)|(3)|-|2| |4|3| |Past service cost / (credit)| |-|-|-|1|1|-|-| |(35)|1|(34)| |Net periodic gratuity / pension cost|345| |1|18|28|392|286|1| |(19)|24|292| |Actual return on plan assets|346| |-|38|-|384|215|-| |(4)|-|211| # Remeasurement of the net defined benefit (asset) / liability: |(` crore)| | | |Year ended March 31, 2020| | | | | | | |---|---|---|---|---|---|---|---|---|---|---| |Domestic plans|Domestic plans|Foreign plans|Foreign plans| |Total| | | | | | | |Funded|Unfunded|Funded|Unfunded| | | | | | | |Actuarial (gains) and losses arising from changes in demographic assumptions| | | | | |(5)|-|(5)|(9)|(19)| |Actuarial (gains) and losses arising from changes in financial assumptions| | | | | |345|1|47|10|403| |Actuarial (gains) and losses arising from changes in experience adjustments| | | | | |180|3|1|1|185| |Remeasurement of the net defined benefit liability| | | | | |520|4|43|2|569| |Remeasurement - return on plan assets excluding amount included in interest income| | | | | |(111)|-|(29)|-|(140)| | | | | | | |409|4|14|2|429| # Notes forming part of the Consolidated Financial Statements |(` crore)|Domestic|Foreign| |Total| | |---|---|---|---|---|---| | |plans|plans|plans|plans| | File: AR_TCS_2019_2020-1-314.md |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)| | |17|-|36|(2)|51| # The assumptions used in accounting for the defined benefit plan are set out below: | |Year ended March 31, 2020|Year ended March 31, 2020|Year ended March 31, 2019|Year ended March 31, 2019| |---|---|---| | |Domestic plans|Foreign plans|Domestic plans|Foreign plans| |Discount rate|5.25%-6.75%|0.60%-8.05%|7.00%-7.75%|0.75%-9.00%| |Rate of increase in compensation levels of covered employees|4.00%-7.00%|1.25%-7.00%|6.00%-8.00%|1.25%-7.00%| |Rate of return on plan assets|5.25%-6.75%|0.60%-8.05%|7.00%-7.75%|0.75%-9.00%| |Weighted average duration of defined benefit obligations|3-18 years|6-26.10 years|8-11 years|6.25-27 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, 2020. The Group is expected to contribute `445 crore to defined benefit plan obligations funds for the year ended March 31, 2021 comprising domestic component of `425 crore and foreign component of `20 crore. 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. TCS Annual Report 2019-20 Consolidated Financial Statements I 224 # Notes forming part of the Consolidated Financial Statements If the discount rate increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Increase of 0.50%|(236)|(157)| |Decrease of 0.50%|262|175| If the expected salary growth increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Increase of 0.50%|177|120| |Decrease of 0.50%|(165)|(113)| 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 assumptions 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. |Year ending March 31,|Defined benefit obligations| |---|---| |2021|312| |2022|327| |2023|360| |2024|395| |2025|450| |Thereafter|2,746| # 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 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. # Notes forming part of the Consolidated Financial Statements 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. # 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 `356 crore and `324 crore for the years ended March 31, 2020 and 2019, respectively, to the Employees' Superannuation Fund. # Foreign defined contribution plans The Group contributed `1,260 crore and `1,161 crore for the years ended March 31, 2020 and 2019, respectively, towards foreign defined contribution plans. |
# 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. 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. # The details of fund and plan assets are given below: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Fair value of plan assets|17,072|14,555| |Present value of defined benefit obligations|(17,072)|(14,555)| |Net excess / (shortfall)|-|-| # The principal assumptions used in determining the present value obligations of interest guarantee under the deterministic approach are as follows: |(%)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Discount rate|6.50%|7.75%| |Average remaining tenure of investment portfolio|7.73 years|8.38 years| |Guaranteed rate of return|8.50%|8.65%| # Notes forming part of the Consolidated Financial Statements # (a) Cost of equipment and software licences The Company made a contribution to an electoral trust of NIL and `220 crore for the years ended March 31, 2020 and 2019, respectively, which is included in other expenses. Cost of equipment and software licences consist of the following: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Raw materials, sub-assemblies and components consumed|18|40| |Equipment and software licences purchased|1,888|2,230| |Finished goods and work-in-progress| | | |Opening stock*|-|-| |Less: Closing stock*|1|-| | |(1)|-| |Total|1,905|2,270| *Represents value less than `0.50 crore. # (b) Other expenses Other expenses consist of the following: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Fees to external consultants|12,937|11,330| |Facility expenses|2,702|4,262| |Travel expenses|3,296|3,474| |Communication expenses|1,592|1,321| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|144|187| |Other expenses|6,312|5,867| |Total|26,983|26,441| # (c) Research and development expenditure Research and development expenditure including capital expenditure aggregating `306 crore and `308 crore was incurred in the years ended March 31, 2020 and 2019, respectively. # (16) Finance costs Finance costs consist of the following: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Interest on lease liabilities|492|8| |Interest on tax matters|354|169| |Other interest costs|78|21| |Total|924|198| # (17) 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. 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. # Notes forming part of the Consolidated Financial Statements Worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. The current income tax expense for overseas subsidiaries has been computed based on the tax laws applicable to each subsidiary in the respective jurisdiction in which it operates. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis. # Deferred income taxes Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. |
Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets include Minimum Alternate 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. TCS Annual Report 2019-20 Consolidated Financial Statements I 228 # Notes forming part of the Consolidated Financial Statements The income tax expense consists of the following: |Year ended|March 31, 2020|March 31, 2019| |---|---|---| |Current tax| | | |Current tax expense for current year|9,730|10,024| |Current tax expense / (benefit) pertaining to prior years|648|(522)| |Total current tax|10,378|9,502| |Deferred tax| | | |Deferred tax expense for current year|899|607| |Deferred tax benefit pertaining to prior years|(1,476)|(108)| |Total deferred tax|(577)|499| |Total income tax expense recognised in current year|9,801|10,001| 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, 2020|March 31, 2019| |---|---|---| |Profit before tax|42,248|41,563| |Indian statutory income tax rate|34.94%|34.94%| |Expected income tax expense|14,764|14,524| |Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense| | | |Tax holidays|(4,879)|(4,829)| |Income exempt from tax|(285)|(151)| |Undistributed earnings in branches and subsidiaries|428|605| |Tax on income at different rates|152|674| |Tax pertaining to prior years|(828)|(630)| |Others (net)|449|(192)| |Total income tax expense|9,801|10,001| 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). |
# Notes forming part of the Consolidated Financial Statements # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2020 are as follows: | |Gross deferred tax assets|Gross deferred tax liabilities|Net| |---|---|---|---| |As at March 31, 2020|(` crore)|(` crore)|(` crore)| |Opening balance|1,784|577|(310)| |Recognised in profit and loss|279|134|145| |Recognised in / reclassified from other comprehensive income|1,170|(96)|1,074| |Exchange difference|-|-|-| |Closing balance|2,049|779|2,049| # Deferred tax assets / (liabilities) in relation to |Particulars|Assets|Liabilities|Net| |---|---|---|---| |Property, plant and equipment and intangible assets|279|134|145| |Provision for employee benefits|663|9|654| |Cash flow hedges|7|-|7| |Receivables, financial assets at amortised cost|387|(1)|388| |MAT credit entitlement|1,074|-|1,074| |Branch profit tax|-|284|(284)| |Undistributed earnings of subsidiaries|-|286|(286)| |Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income|(483)|1|(484)| |Lease liabilities|342|(3)|345| |Others|559|69|490| # Total deferred tax assets / (liabilities) 2,828 779 2,049 *Opening balance of deferred tax on lease liabilities has been restated by `170 crore to give impact of transition to Ind AS 116 (Refer note 9). # 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)| |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)| |Lease liabilities|94|-|94| |Others|470|52|418| |Total deferred tax assets / (liabilities)|2,656|1,042|1,614| 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. # Notes forming part of the Consolidated Financial Statements Unrecognised deferred tax assets relate primarily to business losses and tax credit tax treatment of certain expenses claimed as deductions, computation or eligibility entitlements which do not qualify for recognition as per the applicable accounting standards. These unexpired business losses will expire based on the year of origination as follows: |March 31,|Unabsorbed business losses| |---|---| |2021|11| |2022|4| |2023|5| |2024|12| |2025|7| |Thereafter|-| The Company and its subsidiaries have contingent liability of `1,512 crore and `1,504 crore as at March 31, 2020 and 2019, 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, 2020 and 2019, 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 2017 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2016 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2017 and earlier. Accordingly, Tata Consultancy Services Limited has recognised a deferred tax asset of `1,074 crore. Deferred tax liability on temporary differences of `8,932 crore as at March 31, 2020, 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. |
# Direct tax contingencies 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 # Notes forming part of the Consolidated Financial Statements # 18) 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 period. The Company did not have any potentially dilutive securities in any of the years presented. | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Profit for the year attributable to shareholders of the Company (` crore)|32,340|31,472| |Weighted average number of equity shares|375,23,84,706|378,97,49,350| |Basic and diluted earnings per share (`)|86.19|83.05| |Face value per equity share (`)|1|1| # 19) Segment information Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision-maker, in deciding how to allocate resources and assessing performance. The Group's chief operating decision maker is the Chief Executive Officer and Managing Director. The Group has identified business segments ('industry 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 Sciences 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. The assets and liabilities of the Group are used interchangeably amongst segments. Allocation of such assets and liabilities is not practicable and any forced allocation would not result in any meaningful segregation. Hence assets and liabilities have not been identified to any of the reportable segments. Summarised segment information for the years ended March 31, 2020 and 2019 is as follows: | |Banking, Financial Services and Insurance|Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| |---|---|---|---|---|---|---| |Revenue|61,095|16,468|26,280|25,978|27,128|156,949| |Segment result|16,950|4,445|6,870|7,703|6,141|42,109| |Total unallocable expenses| | | | | |4,453| |Operating income| | | | | |37,656| |Other income| | | | | |4,592| |Profit before tax| | | | | |42,248| |Tax expense| | | | | |9,801| |Profit for the year| | | | | |32,447| |Depreciation and amortisation expense (unallocable)| | | | | |3,529| |Significant non-cash items (allocable)|(2)|-|18|8|120|144| # Notes forming part of the Consolidated Financial Statements |Geography|Year ended March 31, 2019 (` crore)|Year ended March 31, 2020 (` crore)| | | | | | | | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Banking, Financial Services and Insurance| |Manufacturing|Retail and Consumer Business|Communication, Media and Technology|Others|Total| | | | | | | | |Americas (1)|57,938|15,682|25,164|23,925|23,754|146,463| | | | | | | | | | | | | | |Europe (2)| |48,037|43,456| | | | | | | | | | | |India| |8,964|8,393| | | | | | | | | | | |Others| |17,948|17,052| | | | | | | | | | | |Total| |156,949| | | | | | Revenue Segment result: 39,469 Total unallocable expenses: 2,217 Operating income: 37,252 Other income: 4,311 Profit before tax: 41,563 Tax expense: 10,001 Profit for the year: 31,562 Depreciation and amortisation expense: 37 Depreciation and amortisation expense (unallocable): 2,019 Significant non-cash items (allocable): 187 Unallocable expenses for current year include impact of Ind AS 116 adoption. Geographical revenue is allocated based on the location of the customers. # Information regarding geographical non-current assets is as follows: |Geography|As at March 31, 2019 (` crore)|As at March 31, 2020 (` crore)| |---|---|---| |Americas (3)|1,531|2,596| |Europe (4)|2,250|3,382| |India|14,313|18,920| |Others|539|1,109| |Total|18,633|26,007| * (1) and (3) are substantially related to operations in the United States of America. * (2) includes revenue in the United Kingdom of `24,899 crore and `22,862 crore for the years ended March 31, 2020 and 2019, respectively. # Notes forming part of the Consolidated Financial Statements (4) includes non-current assets in the United Kingdom of `1,245 crore and `891 crore as at March 31, 2020 and 2019, respectively. # Information about major customers No single customer represents 10% or more of the Group's total revenue for the years ended March 31, 2020 and 2019, respectively. |
# 20) Commitments and contingent liabilities # Capital commitments The Group has contractually committed (net of advances) `1,396 crore and `1,289 crore as at March 31, 2020 and 2019, respectively, for purchase of property, plant and equipment. # Contingencies - Direct tax matters - Refer note 17. 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 `517 crore and `392 crore as at March 31, 2020 and 2019, 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 `211 crore and `185 crore as at March 31, 2020 and 2019, respectively, against the Group have not been acknowledged as debts. File: AR_TCS_2019_2020-1-314.md In addition to above 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 `7,091 crore (US $940 million) to Epic. In September 2017, the Company received a Court order reducing the damages from `7,091 crore (US $940 million) to `3,168 crore (US $420 million) to Epic. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for `3,319 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. Epic has also filed a cross appeal challenging the reduction by the trial judge of `754 crore (US $100 million) award and `1,509 crore (US $200 million) in punitive damages. 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. Letter of comfort The amounts assessed as contingent liability do not include interest that could be claimed by counter parties. TCS Annual Report 2019-20 Consolidated Financial Statements I 235 # Notes forming part of the Consolidated Financial Statements # 21) Statement of net assets, profit and loss and other comprehensive income attributable to owners and non-controlling interests |Name of the entity|Country of incorporation|% of voting power as at March 31, 2020|% of voting power as at March 31, 2019|Net assets, i.e. total assets minus total liabilities As % of consolidated net assets (` crore)|Share in profit or loss As % of consolidated profit or loss (` crore)|Share in other comprehensive income As % of consolidated other comprehensive income (` crore)|Share in total comprehensive income As % of total comprehensive income (` crore)| | | | | | |---|---|---|---|---|---|---|---|---|---|---|---|---| |Tata Consultancy Services Limited|India|-|-|81.97|74,368|89.63|33,260| |124.29|174|89.76|33,434| |Subsidiaries (held directly)| | | | | | | | | | | | | |APTOnline Limited|India|89.00|89.00|0.11|103|0.08|31| |-|-|0.08|31| |MP Online Limited|India|89.00|89.00|0.11|99|0.05|17| |-|-|0.05|17| |C-Edge Technologies Limited|India|51.00|51.00|0.27|246|0.22|81|-|-|0.22|81| | |MahaOnline Limited|India|74.00|74.00|0.09|79|0.06|21| |-|-|0.06|21| |TCS e-Serve International Limited|India|100.00|100.00|0.02|19|(0.34)|(125)| |(2.14)|(3)|(0.34)|(128)| |TCS Foundation|India|100.00|100.00|1.10|995|0.76|282| |-|-|0.76|282| |Diligenta Limited|UK|100.00|100.00|1.20|1,091|0.77|284| |10.00|14|0.80|298| |Tata Consultancy Services Canada Inc.|Canada|100.00|100.00|0.70|631|1.33|494| |-|-|1.33|494| |Tata America International Corporation|USA|100.00|100.00|1.72|1,557|2.34|868| |(14.29)|(20)|2.28|848| |Tata Consultancy Services Asia Pacific Pte Ltd.|Singapore|100.00|100.00|0.75|676|0.58|217| |-|-|0.58|217| |Tata Consultancy Services Belgium|Belgium|100.00|100.00|0.37|333|0.24|90| |-|-|0.24|90| |Tata Consultancy Services Deutschland GmbH|Germany|100.00|100.00|0.52|470|0.51|188| |0.71|1|0.51|189| |Tata Consultancy Services Netherlands BV|Netherlands|100.00|100.00|3.03|2,750|(1.15)|(425)| |-|-|(1.14)|(425)| |Tata Consultancy Services Sverige AB|Sweden|100.00|100.00|0.59|539|0.21|77| |-|-|0.21|77| |TCS FNS Pty Limited|Australia|100.00|100.00|0.13|121|0.20|73| |-|-|0.20|73| TCS Annual Report 2019-20 Consolidated Financial Statements I 236 # Notes forming part of the Consolidated Financial Statements |Name of the entity|Country of incorporation|% of voting power as at March 31, 2020|% of voting power as at March 31, 2019|Net assets, i.e. |
total assets minus total liabilities As % of consolidated net assets|Share in profit or loss Amount As % of consolidated profit or loss|Share in other comprehensive income Amount As % of consolidated other comprehensive income|Share in total comprehensive income Amount As % of total comprehensive income| |---|---|---|---|---|---|---|---| |TCS Iberoamerica SA|Uruguay|100.00|100.00|1.78|1,618|0.99|367| |Tata Consultancy Services (Africa) (PTY) Ltd.|South Africa|100.00|100.00|0.05|45|0.09|33| |CMC Americas, Inc.|USA|100.00|100.00|0.03|27|0.07|25| |Tata Consultancy Services Qatar S.S.C.|Qatar|100.00|100.00|0.04|32|0.04|13| |W12 Studios Limited|UK|100.00|100.00|0.03|26|0.01|2| |Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)|Subsidiaries (held indirectly)| |TCS e-Serve America, Inc.|USA|100.00|100.00|0.09|85|0.07|25| |Tata Consultancy Services (China) Co., Ltd.|China|93.20|93.20|0.19|169|(0.03)|(11)| |Tata Consultancy Services Japan, Ltd.|Japan|66.00|51.00|1.50|1,360|0.51|188| |Tata Consultancy Services Malaysia Sdn Bhd|Malaysia|100.00|100.00|0.10|87|(0.03)|(10)| |PT Tata Consultancy Services Indonesia|Indonesia|100.00|100.00|0.03|26|0.04|13| |Tata Consultancy Services (Philippines) Inc.|Philippines|100.00|100.00|0.18|164|0.04|13| |Tata Consultancy Services (Thailand) Limited|Thailand|100.00|100.00|0.01|12|0.04|13| |TCS Italia s.r.l.|Italy|100.00|100.00|0.03|30|0.02|8| |Tata Consultancy Services Luxembourg S.A.|Capellen (G.D. de Luxembourg)|100.00|100.00|0.13|121|0.14|51| |Tata Consultancy Services Switzerland Ltd.|Switzerland|100.00|100.00|0.43|391|0.44|164| |Tata Consultancy Services Osterreich GmbH|Austria|100.00|100.00|0.01|5|-|-| TCS Annual Report 2019-20 Consolidated Financial Statements I 237 # Notes forming part of the Consolidated Financial Statements |Name of the entity|Country of incorporation|% of voting power as at March 31, 2020|% of voting power as at March 31, 2019|Net assets, i.e. total assets minus total liabilities As % of consolidated net assets|Share in profit or loss Amount (` crore)|As % of consolidated profit or loss|Share in other comprehensive income Amount (` crore)|As % of consolidated other comprehensive income|Share in total comprehensive income Amount (` crore)|As % of total comprehensive income| | | | |---|---|---|---|---|---|---|---|---|---|---|---|---|---| |Tata Consultancy Services Danmark ApS|Denmark|100.00|100.00|0.01|5|-|1|-|-|1| | | | |Tata Consultancy Services De Espana S.A.|Spain|100.00|100.00|0.04|39|0.03|12| |-|-|0.03|12| | |Tata Consultancy Services (Portugal) Unipessoal, Limitada|Portugal|100.00|100.00|-|-|0.01|3|-|-|0.01|3| | | |Tata Consultancy Services France SA|France|100.00|100.00|(0.45)|(404)|-|(1)| |1.43|2|-|1| | |Tata Consultancy Services Saudi Arabia|Saudi Arabia|76.00|76.00|0.28|250|0.16|58| |(0.01)|-|0.16|58| | |TCS Business Services GmbH (w.e.f. March 9, 2020)|Germany|100.00|-|-|-|-|-|-|-|-| | | | |Tata Consultancy Services (South Africa) (PTY) Ltd.|South Africa|100.00|100.00|0.07|66|0.07|27| |-|-|0.07|27| | |TCS Financial Solutions Beijing Co., Ltd.|China|100.00|100.00|0.03|26|0.02|9| |-|-|0.02|9| | |TCS Financial Solutions Australia Holdings Pty Limited (w.e.f. January 29, 2020)|Australia|-|100.00|-|-|0.20|73|-|-|0.20|73| | | |TCS Financial Solutions Australia Pty Limited|Australia|100.00|100.00|0.11|100|0.13|48| |-|-|0.13|48| | |TCS Solution Center S.A.|Uruguay|100.00|100.00|0.28|250|0.31|117| |-|-|0.31|117| | |TCS Uruguay S.A.|Uruguay|100.00|100.00|0.10|91|0.34|126| |-|-|0.34|126| | |Tata Consultancy Services Argentina S.A.|Argentina|100.00|100.00|0.01|6|(0.03)|(10)| |-|-|(0.03)|(10)| | |Tata Consultancy Services Do Brasil Ltda|Brazil|100.00|100.00|0.17|152|0.08|30| |-|-|0.08|30| | |Tata Consultancy Services De Mexico S.A., De C.V.|Mexico|100.00|100.00|0.80|722|0.49|184| |-|-|0.49|184| | |MGDC S.C.|Mexico|100.00|100.00|0.19|168|0.01|5| |(6.43)|(9)|(0.01)| |(4)| |TCS Inversiones Chile Limitada|Chile|100.00|100.00|0.31|285|0.24|88| |-|-|0.24|88| | # Notes forming part of the Consolidated Financial Statements |Name of the entity|Country of incorporation|% of voting power as at March 31, 2020|% of voting power as at March 31, 2019|Net assets, i.e. total assets minus total liabilities As % of consolidated net assets (` crore)|Share in profit or loss As % of consolidated profit or loss (` crore)|Share in other comprehensive income As % of consolidated other comprehensive income (` crore)|Share in total comprehensive income As % of consolidated comprehensive income (` crore)| |---|---|---|---|---|---|---|---| |Tata Consultancy Services Chile S.A.|Chile|100.00|100.00|0.39|352|0.05|18| |Technology Outsourcing S.A.C.|Peru|100.00|100.00|0.02|20|0.02|8| |TATASOLUTION CENTER S.A.|Ecuador|100.00|100.00|0.07|59|(0.08)|(21)| |Trusts|India|-|-|0.26|263|0.02|7| |TOTAL|TOTAL|TOTAL|TOTAL|100.00|90,725|100.00|37,109| a) Adjustments arising out of consolidation (5,976) (4,662) 324 (4,338) b) Non-controlling interests Indian subsidiaries |APTOnline Limited|(11)|(3)|-|(3)| |---|---|---|---|---| |MP Online Limited|(10)|(2)|-|(2)| |C-Edge Technologies Limited|(116)|(39)|-|(39)| |MahaOnline Limited|(19)|(5)|-|(5)| Foreign subsidiaries |Tata Consultancy Services (China) Co., Ltd.|(11)|2|3|5| |---|---|---|---|---| |Tata Consultancy Services Japan, Ltd.|(456)|(60)|(43)|(103)| TOTAL (623) (107) (40) (147) TOTAL 84,126 32,340 424 32,764 # Notes forming part of the Consolidated Financial Statements # 22) 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 21 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|31|432|2,193|-|2,656| |Purchases of goods and services (including reimbursements)|1|556|457|-|1,014| |Brand equity contribution|162|-|-|-|162| |Facility expenses|-|3|1|-|4| |Lease rental|2|68|26|-|96| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|1|-|-|-|1| | |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| |---|---|---|---|---|---| |Contribution and advance to post employment benefit plans|-|-|-|2,684|2,684| |Purchase of property, plant and equipment|-|219|110|-|329| |Loans and advances given|-|4|85|-|89| |Loans and advances recovered|-|3|30|-|33| |Dividend paid|22,971|9|-|-|22,980| # Notes forming part of the Consolidated Financial Statements |Material related party transactions are as follows:| | |Year ended March 31, 2019| | | | | | |---|---|---|---|---|---|---|---|---| |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 and advance 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 8(l). # Material related party balances are as follows: | | | | |(` crore)| | | | |---|---|---|---|---|---|---|---| | |As at March 31, 2020|As at March 31, 2019| | | | | | |Trade receivables, unbilled receivables and contract assets| | | | |Jaguar Land Rover Limited|209|362| # 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|Total| |---|---|---|---|---| |As at March 31, 2020|4|246|681|931| |Trade receivables, unbilled receivables and contract assets|10|30|65|105| |Loans receivables, other financial assets and other assets|14|276|746|1,036| # Balances payable to related parties are as follows: | |Tata Sons Private Limited|Subsidiaries of Tata Sons Private Limited|Associates / joint ventures of Tata Sons|Total| |---|---|---|---|---| |As at March 31, 2020|148|246|244|638| |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|-|11|367|378| # Balances receivable from related parties are as follows: | |Tata Sons Private Limited|Subsidiaries of Tata Sons Private Limited|Associates / joint ventures of Tata Sons|Total| |---|---|---|---|---| |As at March 31, 2019|8|118|647|773| |Trade receivables, unbilled receivables and contract assets|3|28|6|37| |Loans receivables, other financial assets and other assets|11|146|653|810| # Balances payable to related parties are as follows: | |Tata Sons Private Limited|Subsidiaries of Tata Sons Private Limited|Associates / joint ventures of Tata Sons|Total| |---|---|---|---|---| |As at March 31, 2019|170|106|129|405| |Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities|-|14|53|67| # Notes forming part of the Consolidated Financial Statements # Transactions with key management personnel are as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Short-term benefits|28|33| |Dividend paid during the year|2|1| | |30|34| 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. 23) The sitting fees and commission paid to non-executive directors is `9 crore and `12 crore as at March 31, 2020 and 2019, respectively. 24) The proposed Social Security Code, 2019, when promulgated, would subsume labour laws including Employees' Provident Funds and Miscellaneous Provisions Act and amend the definition of wages on which the organisation and its employees are to contribute towards Provident Fund. The Group believes that there will be no significant impact on its contributions to Provident Fund due to the proposed amendments. Additionally, there is uncertainty and ambiguity in interpreting and giving effect to the guidelines of Hon. Supreme Court vide its ruling in February 2019, in relation to the scope of compensation on which the organisation and its employees are to contribute towards Provident Fund. The Group will evaluate its position and act, as clarity emerges. |
25) Subsequent event Dividends paid during the year ended March 31, 2020 include an amount of `18 per equity share towards final dividend for the year ended March 31, 2019 and an amount of `67 per equity share towards interim dividends (including special dividend) for the year ended March 31, 2020. 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 declared by the Company are based on profits available for distribution. On April 16, 2020, the Board of Directors of the Company have proposed a final dividend of `6 per share in respect of the year ending March 31, 2020 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 `2,251 crore. As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Chairman CEO and Managing Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 Mumbai, April 16, 2020 TCS Annual Report 2019-20 Consolidated Financial Statements I 243 # 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 Standalone Balance Sheet as at 31 March 2020, and the Standalone Statement of Profit and Loss (including other comprehensive income), Standalone Statement of Changes in Equity and Standalone Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements"). # 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. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 244 # Description of Key Audit Matters |Key audit matters|How our audit addressed the key audit matter| |---|---| |Revenue recognition - Fixed price contracts|- On selected specific/statistical samples of contracts, we tested that the revenue recognized is in accordance with the revenue recognition accounting standard - - Evaluated the identification of performance obligations and the ascribed transaction price; - Tested Company's computation of the estimation of contract costs and onerous obligations, if any. We: | # Key audit matters # Evaluation of key tax matters 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 judgment by the Company 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 4(e) and Note 19 to the standalone financial statements. |
# How our audit addressed the key audit matter Our audit procedures include the following substantive procedures: - Obtained an understanding of key tax matters; and - The audit team, along with our internal tax experts - # Adoption of Ind AS 116 Leases As described in Note 7 to the standalone financial statements, the Company has adopted Ind AS 116 Leases (Ind AS 116) in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit since the Company has a large number of leases with different contractual terms. # How our audit addressed the key audit matter Our audit procedures on adoption of Ind AS 116 include: - Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116); - Assessed the Company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business; # 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. 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. 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. 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. The Board of Directors is also responsible for overseeing the Company's financial reporting process. |
# TCS Annual Report 2019-20 # Unconsolidated Financial Statements * Obtain an understanding of internal control * 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. 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 the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. (A) As required by Section 143(3) of the Act, we report that: - (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. - (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. - (c) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows dealt with by this Report are in agreement with the books of account. (d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act. (e) On the basis of the written representations received from the directors as on 31 March 2020 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 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 standalone 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: i. The Company has disclosed the impact of pending litigations as at 31 March 2020 on its financial position in its standalone financial statements. (C) With respect to the matter to be included in the Auditors' Report under Section 197(16) of the Act: 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. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and iv. 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 2020. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai 16 April 2020 Membership No: 049265 UDIN: 20049265AAAAAK1814 # Annexure A to the Independent Auditors' Report In respect of immovable properties taken on lease and disclosed as right-of-use-assets in the standalone financial statements, the lease agreements are in the name of the Company. 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 2020, we report the following: 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. File: AR_TCS_2019_2020-1-314.md (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 property, plant and equipment are held in the name of the Company. 2. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. The Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material. 3. According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of the Order are not applicable to the Company. 4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans given, investments made, guarantees and securities given. Accordingly, paragraph 3(iv) of the Order is not applicable to the Company. 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. 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 2020, for a period of more than six months from the date they became payable. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 250 # (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|1,222|Assessment Year - 2007-08, 2011-12, 2015-16|Commissioner of Income Tax (Appeals)| | | |193|Assessment Year - 2006-07|Income-Tax Appellate Tribunal| |The Central Sales Tax Act, 1956 and Value Added Tax Act|Sales tax and VAT|218|Financial Year - 1994-1995, 2001-2002, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016|High Court| | | |8|Financial Year - 1990-1991, 2002-2003, 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2011-2012, 2012-2013|Tribunal| | | |-*|Financial Year - 1995-1996, 1997-1998, 2004-2005, 2005-2006, 2011-2012|Assistant Commissioner| | | |5|Financial Year - 1994-1995, 2005-2006, 2008-2009, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017|Deputy Commissioner| | | |9|Financial Year - 1997-1998, 2005-2006, 2013-2014, 2014-2015, 2015-2016, 2016-2017|Joint Commissioner| | | |-*|Financial Year - 2007-2008|Additional Commissioner| | | |-*|Financial Year - 2012-2013|Commissioner| |The Finance Act, 1994|Service tax|-*|Financial Year - 2002-2003, 2003-2004, 2004-2005|Commissioner Appeals| | | |207.49|Financial Year - 2006-2007, 2007-2008, 2009-2010, 2010-2011, 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2017-2018|Tribunal| *Indicates amount less than `0.50 crore **These amounts are net of amount paid/ adjusted under protest `766 crore # TCS Annual Report 2019-20 # Unconsolidated Financial Statements (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. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company. (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 explanations 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 16 April 2020 Membership No: 049265 UDIN: 20049265AAAAAK1814 # Annexure B to the Independent Auditors' Report March 2020, based on the internal financial controls with reference to standalone financial statements criteria # Auditor's Responsibility Our responsibility is to express an opinion on the Company's internal financial controls with reference to standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "Guidance Note") and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to standalone financial statements. 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 standalone financial statements were established and maintained and whether such controls operated effectively in all material respects. # Management's Responsibility for Internal Financial Controls The Company's management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the 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 Companies Act, 2013 (hereinafter referred to as "the Act"). # Opinion We have audited the internal financial controls with reference to standalone financial statements of Tata Consultancy Services Limited ("the Company") as of 31 March 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. |
In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to standalone financial statements and such internal financial controls were operating effectively as at 31 March 2020. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 253 # TCS Annual Report 2019-20 # Unconsolidated Financial Statements depend on the auditor's judgement, including the accurately and fairly reflect the transactions and internal financial controls with reference to standalone 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 with reference to standalone financial statements. A company's internal financial controls with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to standalone financial statements include 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 standalone 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 standalone financial statements. # Inherent Limitations of Internal Financial Controls with Reference to Standalone Financial Statements Because of the inherent limitations of internal financial controls with reference to standalone 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 For B S R & Co. |
LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Yezdi Nagporewalla Mumbai Partner 16 April 2020 Membership No: 049265 UDIN: 20049265AAAAAK1814 # Standalone Balance Sheet | |Note|As at March 31, 2020|As at March 31, 2019| | | | | |---|---|---|---|---|---|---|---| |ASSETS| | | | | | | | |Non-current assets| | | | | | | | |Property, plant and equipment|8(a)|9,835|9,522| | | | | |Capital work-in-progress| |781|834| | | | | |Right-of-use assets|7|6,048|-| | | | | |Intangible assets|8(b)|239|139| | | | | | | | | |Financial assets| | | | | | | | |Investments|6(a)|25,686|28,280| | | | | |Trade receivables|6(b)|28,660|24,029| | | | | |Unbilled receivables| |4,763|4,389| | | | | |Cash and cash equivalents|6(c)|3,852|3,327| |Other balances with banks| | | | |6(d)|972|5,573| | | | | |Loans receivables|6(e)|7,270|7,018| | | | | |Other financial assets|6(f)|1,448|1,613| | | | | |Other assets|8(c)|6,538|4,793| |Income tax assets (net)| |2,020|3,598| | | | | |Deferred tax assets (net)|15|2,219|2,097| | | | | |Total non-current assets| |25,781|20,468| | | | | | | | | |Total current assets| | | | | | | | |TOTAL ASSETS| |104,975|99,500| | | | | |EQUITY AND LIABILITIES| | | | | | | | |Equity| | | | | | | | |Share capital|6(m)|375|375| | | | | |Other equity|9|73,993|78,523| | | | | |Total equity| |74,368|78,898| TCS Annual Report 2019-20 Unconsolidated Financial Statements I 255 # Standalone Balance Sheet |Note|As at March 31, 2020|As at March 31, 2019| | | | | | |---|---|---|---|---|---|---|---| |Liabilities| | | | | | | | |Non-current liabilities| | | | | | | | |Financial liabilities| | | | | | | | |Lease liabilities| |5,262|33| | | | | |Other financial liabilities|6(h)|237|232| | | | | |Unearned and deferred revenue| |644|662| | | | | |Employee benefit obligations|12|91|82| | | | | |Deferred tax liabilities (net)|15|347|339| | | | | |Other liabilities|8(f)|-|358| | | | | |Total non-current liabilities| |6,581|1,706| | | | | |Current liabilities| | | | | | | | |Financial liabilities| | | | | | | | |Lease liabilities| |848|-| | | | | |Trade payables| | | | | | | | |Dues of micro enterprises and small enterprises|6(g)|-|22| | | | | |Dues of creditors other than micro enterprises and small enterprises| |8,734|7,670| | | | | |Other financial liabilities|6(h)|4,694|3,351| | | | | |Unearned and deferred revenue| |2,271|1,804| | | | | |Provisions|8(e)|235|174| | | | | |Employee benefit obligations|12|2,057|1,776| | | | | |Income tax liabilities (net)| |3,139|2,157| | | | | |Other liabilities|8(f)|2,048|1,942| | | | | |Total current liabilities| |24,026|18,896| | | | | |Total Equity and Liabilities| |104,975|99,500| | | | | Mumbai, April 16, 2020 NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. |
LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Chairman CEO and Managing Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 # Standalone Statement of Profit and Loss # Revenue |Other income|TOTAL INCOME| |---|---| |131,306|139,388| |123,170|130,797| # Expenses |Employee benefit expenses|Cost of equipment and software licences|Depreciation and amortisation expense|Other expenses|Finance costs| |---|---|---|---|---| |64,906|8,082|1,596|27,451|743| |59,377|7,627|2,003|26,826|170| # TOTAL EXPENSES 97,397 90,092 # PROFIT BEFORE TAX PROFIT FOR THE YEAR 41,991 40,705 # OTHER COMPREHENSIVE INCOME (OCI) |Items that will not be reclassified subsequently to profit or loss| | | |---|---|---| | |Remeasurement of defined employee benefit plans|Net change in fair values of investments in equity shares carried at fair value through OCI| |Income tax on items that will not be reclassified subsequently to profit or loss| | | # Items that will be reclassified subsequently to profit or loss |Net change in fair values of investments other than equity shares carried at fair value through OCI|Net change in intrinsic value of derivatives designated as cash flow hedges|Net change in time value of derivatives designated as cash flow hedges|Income tax on items that will be reclassified subsequently to profit or loss| |---|---|---|---| |958|(94)|(52)|(315)| |425|153|44|(171)| # TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES) 174 436 # TOTAL COMPREHENSIVE INCOME FOR THE YEAR 33,434 30,501 # Earnings per equity share:- Basic and diluted (`) 88.64 79.34 # Weighted average number of equity shares 375,23,84,706 378,97,49,350 # NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 Mumbai, April 16, 2020 TCS Annual Report 2019-20 Unconsolidated Financial Statements I 257 # Standalone Statement of Changes in Equity # A. EQUITY SHARE CAPITAL | |Balance as at April 1, 2018|Changes in equity share capital during the year*|Balance as at March 31, 2019| |---|---|---|---| |(` crore)|191|184|375| | |Balance as at April 1, 2019|Changes in equity share capital during the year|Balance as at March 31, 2020| |(` crore)|375|-|375| *Refer note 6(m). # B. OTHER EQUITY | | |Reserves and surplus| | | |Items of other comprehensive income| | |Total| |---|---|---|---|---|---|---|---|---|---| | |Capital3|Capital redemption reserve|Special Economic Zone re-investment reserve|Retained earnings|Investment revaluation reserve| |Cash flow hedging reserve|Intrinsic value|Time value| |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 shares1|-|8|-|(16,000)|-|-|-| |(15,992)| |Expenses for buy-back of equity shares1|-|-|-|(45)|-|-|-|(45)| | |Issue of bonus shares1|-|(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| TCS Annual Report 2019-20 Unconsolidated Financial Statements I 258 # Standalone Statement of Changes in Equity |(` crore)|Reserves and surplus|Reserves and surplus|Reserves and surplus|Reserves and surplus|Items of other comprehensive income|Items of other comprehensive income|Items of other comprehensive income|Total| | | | | | |---|---|---|---|---|---|---|---|---| | |Capital3|Capital redemption reserve|Special Economic Zone re-investment reserve|Retained earnings|Investment revaluation reserve|Cash flow hedging reserve|Intrinsic value|Time value| |Balance as at April 1, 2019|-|8|994|77,159|258|134|(30)|78,523| |Transition impact of Ind AS 116, net of tax2|-|-|-|(330)|-|-|-|(330)| |Restated balance as at April 1, 2019|-|8|994|76,829|258|134|(30)|78,193| |Profit for the year|-|-|-|33,260|-|-|-|33,260| |Other comprehensive income / (losses)|-|-|-|(323)|624|(89)|(38)|174| |Total comprehensive income|-|-|-|32,937|624|(89)|(38)|33,434| |Dividend (including tax on dividend of `5,738 crore)|-|-|-|(37,634)|-|-|-|(37,634)| |Transfer to Special Economic Zone re-investment reserve|-|-|2,947|(2,947)|-|-|-|-| |Transfer from Special Economic Zone re-investment reserve|-|-|(2,347)|2,347|-|-|-|-| |Balance as at March 31, 2020|-|8|1,594|71,532|882|45|(68)|73,993| 1Refer note 6(m). 2Refer note 7. 3Represents values less than `0.50 crore. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 259 # Standalone 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 Company's own equity instruments to capital reserve.| |---|---| |b. 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 utilised in accordance with the provisions of section 69 of the Companies Act, 2013.| |c. |
Special Economic Zone re-investment reserve|The Special Economic Zone (SEZ) re-investment reserve is 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.| |d. Investment revaluation reserve|This reserve represents the cumulative gains and losses arising on the revaluation of equity and debt instruments on the balance sheet date measured at fair value through other comprehensive income. The reserves accumulated will be reclassified to retained earnings and profit and loss respectively, when such instruments are disposed.| |e. Cash flow hedging reserve|The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. 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 STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Chartered Accountants Firm's registration no: 101248W/W-100022 N Chandrasekaran Chairman Rajesh Gopinathan CEO and Managing Director Keki M Mistry Director Yezdi Nagporewalla Partner Membership No: 049265 Mumbai, April 16, 2020 TCS Annual Report 2019-20 Unconsolidated Financial Statements I 260 # Standalone Statement of Cash Flows | |Year ended March 31, 2020|Year ended March 31, 2019|Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---|---|---| |CASH FLOWS FROM OPERATING ACTIVITIES| | | | | |Profit for the year|33,260|30,065|Proceeds from bank deposits|11,612| |Adjustments to reconcile profit and loss to net cash provided by operating activities| | | | | |Depreciation and amortisation expense|2,701|1,716|Proceeds from inter-corporate deposits|13,400| |Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)|132|188|Proceeds from disposal / redemption of investments|80,865| |Tax expense|8,731|10,640|Proceeds from disposal of property, plant and equipment|130| |Net gain on lease modification|(4)|-|Interest received|3,353| |Unrealised foreign exchange (gain) / loss|(130)|7|Dividend received from subsidiaries|3,995| |Net gain on disposal of property, plant and equipment|(50)|(84)|Acquisition of subsidiary|-| |Net gain on investments|(197)|(416)|Net cash generated from investing activities|12,829| |Interest income|(3,197)|(2,651)|CASH FLOWS FROM FINANCING ACTIVITIES| | |Dividend income (Including exchange gain)|(3,995)|(3,574)|Buy-back of equity shares|-| |Finance costs|743|170|Expenses for buy-back of equity shares|-| |Operating profit before working capital changes|37,994|36,061|Short-term borrowings (net)|-| |Net change in| | | | | |Inventories|5|16|Dividend paid (including tax on dividend)|(37,634)| |Trade receivables|(4,736)|(5,335)|Repayment of lease liabilities|(668)| |Unbilled receivables|(311)|733|Interest paid|(743)| |Loans receivables and other financial assets|(72)|(417)|Net cash used in financing activities|(39,045)| |Other assets|(3,072)|(3,036)|Net change in cash and cash equivalents|387| |Trade payables|1,042|2,915|Cash and cash equivalents at the beginning of the year|3,327| |Unearned and deferred revenue|449|755|Exchange difference on translation of foreign currency cash and cash equivalents|138| |Other financial liabilities|1,183|610|Cash and cash equivalents at the end of the year (Refer note 6(c))|3,852| |Other liabilities and provisions|487|400| | | |Cash generated from operations|32,969|32,702| | | |Taxes paid (net of refunds)|(6,366)|(8,704)| | | |Net cash generated from operating activities|26,603|23,998| | | |CASH FLOWS FROM INVESTING ACTIVITIES| | | | | |Bank deposits placed|(6,999)|(5,690)|Inter-corporate deposits placed|(13,694)| |Purchase of investments|(77,191)|(92,020)|Payment for purchase of property, plant and equipment|(1,951)| |Payment including advances for acquiring right-of-use assets|(519)|-| | | Mumbai, April 16, 2020 TCS Annual Report 2019-20 Unconsolidated Financial Statements I 261 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP N Chandrasekaran Rajesh Gopinathan Keki M Mistry Chartered Accountants Chairman CEO and Managing Director Director Firm's registration no: 101248W/W-100022 Yezdi Nagporewalla V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 049265 # Notes forming part of the Standalone Financial Statements # 1) Corporate information Tata Consultancy Services Limited (referred to as "TCS Limited" or "the Company") provides IT services, consulting and business solutions and 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, 2020, Tata Sons Private Limited, the holding company owned 72.02% of the Company's equity share capital. |
The Board of Directors approved the standalone financial statements for the year ended March 31, 2020 and authorised for issue on April 16, 2020. # 2) Statement of compliance These standalone 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. # 3) Basis of preparation File: AR_TCS_2019_2020-1-314.md These standalone financial statements have been prepared on historical cost basis, except for certain financial instruments and defined benefit plans 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 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. These standalone financial statements have been prepared in Indian Rupee (`) which is the functional currency of the Company. 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. # 4) Use of estimates and judgements The preparation of these standalone 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. The Company uses the following critical accounting estimates in preparation of its financial statements: - a. 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. # Notes forming part of the Standalone Financial Statements promised in a contract and identifies 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. # b. 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. # c. Impairment of investments in subsidiaries The Company reviews its carrying value of investments carried at cost (net of impairment, if any) 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 in the statement of profit and loss. # d. 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. # Notes forming part of the Standalone Financial Statements # e. Provision for income tax and deferred tax assets The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. |
A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period. # f. Provisions and contingent liabilities The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates. The Company uses significant judgements to disclose contingent liabilities. 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. # g. Employee benefits The accounting of employee benefit plans in the nature of defined benefit requires the Company to use assumptions. These assumptions have been explained under employee benefits note. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics. # h. Leases The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. # 5) Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 1, 2020. # 6) Financial assets, financial liabilities and equity instruments Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets # Notes forming part of the Standalone Financial Statements and liabilities are initially measured at fair value. within a business whose objective is to hold these Investment in subsidiaries 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 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 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. # Derivative 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. # 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 assets at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income. # Notes forming part of the Standalone Financial Statements 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 the 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. Any gain or loss is recognised immediately in statement of profit and loss when the hedge becomes ineffective. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction. 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 lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. |
# Notes forming part of the Standalone Financial Statements # (a) Investments Investments consist of the following: # Investments - Non-current - Investment in subsidiaries - Fully paid equity shares (unquoted) - Investments designated at fair value through OCI - Fully paid equity shares (unquoted) - - Taj Air Limited Less: Impairment in value of investments # Investments - Current - Investments carried at fair value through profit or loss - Mutual fund units (quoted) - Mutual fund units (unquoted) - Investments carried at fair value through OCI - Government bonds and securities (quoted) - Corporate bonds (quoted) - Investments carried at amortised cost - Certificate of deposits (quoted) # Aggregate value of quoted and unquoted investments is as follows: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Aggregate value of quoted investments|25,686|28,217| |Aggregate value of unquoted investments (net of impairment)|2,189|2,252| |Aggregate market value of quoted investments|25,686|28,218| |Aggregate value of impairment of investments|19|19| # Market value of quoted investments carried at amortised cost is as follows: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Certificate of deposits|-|491| # Investment in subsidiaries |In numbers|Currency|Face value per share|Investment in subsidiaries|As at March 31, 2020|As at March 31, 2019| |---|---|---|---|---|---| |1,264|UYU|1|TCS Iberoamerica SA|461|461| |-|INR|10|APTOnline Limited|-|-| |24,290|EUR|1,300|Tata Consultancy Services Belgium|1|1| |-|EUR|1,000|Tata Consultancy Services Netherlands BV|403|403| TCS Annual Report 2019-20 Unconsolidated Financial Statements I 267 # Notes forming part of the Standalone Financial Statements |In numbers|Currency|Face value per share|Investment in subsidiaries|As at March 31, 2020|As at March 31, 2019| |---|---|---|---|---|---| |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| |In numbers|Currency|Face value per share|Investment in subsidiaries|As at March 31, 2020|As at March 31, 2019| |---|---|---|---|---|---| |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|66| |10,00,000|INR|10|TCS Foundation|-|-| # Investments designated at fair value through OCI |In numbers|Currency|Face value per share|Investments|As at March 31, 2020|As at March 31, 2019| |---|---|---|---|---|---| |1,90,00,000|INR|10|Taj Air Limited|19|19| |Less : Impairment in value of investments| | | |(19)|(19)| | | | | |-|-| *Represents value less than `0.50 crore. # Notes forming part of the Standalone Financial Statements # The movement in fair value of investments carried / designated at fair value through OCI is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|258|(18)| |Net gain / (loss) arising on revaluation of financial assets carried at fair value|-|(1)| |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|972|425| |Deferred tax relating to net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income|(340)|(149)| |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|(14)|-| |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|6|-| |Balance at the end of the year|882|258| # (b) Trade receivables Trade receivables (unsecured) consist of the following: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Trade receivables - Non-current|656|569| |Less: Allowance for doubtful trade receivables|(582)|(474)| |Considered good|74|95| | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Trade receivables - Current|28,822|24,227| |Less: Allowance for doubtful trade receivables|(227)|(222)| |Considered good|28,595|24,005| | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Trade receivables|194|165| |Less: Allowance for doubtful trade receivables|(129)|(141)| |Credit impaired|65|24| |Total Trade receivables|28,660|24,029| Above balances of trade receivables include balances with related parties (Refer note 21). # Notes forming part of the Standalone Financial Statements # (c) Cash and cash equivalents Cash and cash equivalents consist of the following: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Balances with banks| | | |In current accounts|3,848|2,919| |In deposit accounts|4|406| |Cheques on hand*|-|2| |Cash on hand*|-|-| |Remittances in transit*|-|-| |Total|3,852|3,327| *Represents value less than `0.50 crore. |
# (d) Other balances with banks Other balances with banks consist of the following: |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Earmarked balances with banks|185|173| |Short-term bank deposits|787|5,400| |Total|972|5,573| Earmarked balances with banks primarily relate to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. # (e) Loans receivables Loans receivables (unsecured) consist of the following: # Loans receivables - Non-current |(` crore)|As at March 31, 2020|As at March 31, 2019| | |---|---|---|---| |Considered good|Loans and advances to employees|2|2| | |Total|2|2| # Loans receivables - Current |(` crore)|As at March 31, 2020|As at March 31, 2019| | |---|---|---|---| |Considered good|Inter-corporate deposits|7,044|6,750| |Loans and advances to employees|226|268| | |Credit impaired|Loans and advances to employees|14|61| |Less: Allowance on loans and advances to employees|(14)|(61)| | |Total|7,270|7,018| | Inter-corporate deposits placed with financial institutions yield fixed interest rate. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 270 # Notes forming part of the Standalone Financial Statements # (f) Other financial assets Other financial assets consist of the following: # Other financial assets - Non-current - Security deposits - Others # Other financial assets - Current - Security deposits - Fair value of foreign exchange derivative assets - Interest receivable - Others # (g) Micro and small enterprises |(` crore)| | |As at March 31, 2020| | |As at March 31, 2019| | | | | | |---|---|---|---|---|---|---|---|---|---|---|---| | |(` crore)| |Principal|Interest|Principal|Interest| | | | | | |As at March 31, 2020|As at March 31, 2019|Amount due to vendor|-|-| |22|-| | | | | | |Principal amount paid (includes unpaid) beyond the appointed date| |140|2| |33| |-| | | | | | |Interest due and payable for the year|-|-|-|-| | | | | | | |Interest accrued and remaining unpaid (includes interest disallowable of NIL crore (March 31, 2019: `1 crore))| | | | | | |-|-|-|1| | |Total|624|565| | | | | | | | | 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. # (h) Other financial liabilities Other financial liabilities consist of the following: # Other financial liabilities - Non-current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Capital creditors|3|3| |Others|234|229| |Total|237|232| Others include advance taxes paid of `226 crore and `226 crore as at March 31, 2020 and March 31, 2019, 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. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 271 # Notes forming part of the Standalone Financial Statements # Other financial liabilities - Current |(` crore)|As at March 31, 2020|As at March 31, 2019| |---|---|---| |Accrued payroll|2,745|2,151| |Current maturities of finance lease obligations|-|6| |Unclaimed dividends|53|41| |Fair value of foreign exchange derivative liabilities|693|59| |Capital creditors|383|257| |Liabilities towards customer contracts|759|810| |Others|61|27| |Total|4,694|3,351| # (i) Financial instruments by category The carrying value of financial instruments by categories as at March 31, 2020 is as follows: |(` crore)|Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| | |---|---|---|---|---|---|---|---| |Financial assets|Cash and cash equivalents|-|-|-| |3,852|3,852| | |Bank deposits|-|-|-| |787|787| | |Earmarked balances with banks|-|-|-| |185|185| | |Investments (other than in subsidiary)|1,264|24,422|-|-|-|25,686| | |Trade receivables|-|-|-| |28,734|28,734| | |Unbilled receivables|-|-|-| |5,087|5,087| | |Loans receivables|-|-|-| |7,272|7,272| | |Other financial assets|-|-|146|279|1,647|2,072| |Total|1,264|24,422|146|279|47,564|73,675| | # Financial liabilities |(` crore)|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|-|-|-| | | |8,734|8,734| |Lease liabilities|-|-|-| | | |6,110|6,110| |Other financial liabilities|-|-| |34| |659|4,238|4,931| |Total|-|-|34|659|19,082|19,775| | | Loans receivables include inter-corporate deposits of `7,044 crore, with original maturity period within 12 months. |
# The carrying value of financial instruments by categories as at March 31, 2019 is as follows: |(` crore)|Fair value through profit or loss|Fair value through other comprehensive income|Derivative instruments in hedging relationship|Derivative instruments not in hedging relationship|Amortised cost|Total carrying value| | | | |---|---|---|---|---|---|---|---|---|---| |Financial assets|Cash and cash equivalents|-|-|-| | |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 |(` crore)|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| | |Lease liabilities| |-|-|-| | | | |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. Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables, loans receivables and trade payables as at March 31, 2020 and March 31, 2019 approximate the fair value. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets and other financial liabilities subsequently measured at amortised cost is not significant in each of the periods presented. Fair value measurement of lease liabilities is not required. Fair value of investments carried at amortised cost is NIL and `491 crore as at March 31, 2020 and March 31, 2019, respectively. TCS Annual Report 2019-20 Unconsolidated Financial Statements I 272 # Notes forming part of the Standalone Financial Statements # (j) 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. |
File: AR_TCS_2019_2020-1-314.md 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): | |Level 1|Level 2|Level 3|Total| | |---|---|---|---|---|---| |As at March 31, 2020|(` crore)| | | | | |Financial assets|Mutual fund units|1,264|-|-|1,264| | |Equity shares|-|-|-|-| | |Government bonds and securities|24,290|-|-|24,290| | |Corporate bonds|132|-|-|132| | |Derivative financial assets|-|425|-|425| |Total|25,686|425|-|26,111| | |Financial liabilities|Derivative financial liabilities|-|693|-|693| |Total|-|693|-|693| | | |Level 1|Level 2|Level 3|Total| | |---|---|---|---|---|---| |As at March 31, 2019|(` crore)| | | | | |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| | |Financial liabilities|Derivative financial liabilities|-|59|-|59| |Total|-|59|-|59| | # Reconciliation of Level 3 fair value measurement is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---| |Balance at the beginning of the year|-|3| |Disposals during the year|-|(3)| |Impairment in value of investments|-|-| |Balance at the end of the year|-|-| # Notes forming part of the Standalone Financial Statements # (k) Derivative financial instruments and hedging activity The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows: | |Year ended March 31, 2020|Year ended March 31, 2019| | | |---|---|---|---|---| | |Intrinsic value|Time value|Intrinsic value|Time value| |Balance at the beginning of the year|134|(30)|(2)|(69)| |(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|(449)|513|(488)|458| |Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions|54|(38)|94|(25)| |Change in the fair value of effective portion of cash flow hedges|355|(565)|641|(414)| |Deferred tax on fair value of effective portion of cash flow hedges|(49)|52|(111)|20| |Balance at the end of the year|45|(68)|134|(30)| The Company has entered into derivative instruments not in hedging relationship by way of foreign exchange forward, currency options and futures contracts. As at March 31, 2020 and 2019, the notional amount of outstanding contracts aggregated to `40,109 crore and `34,593 crore, respectively and the respective fair value of these contracts have a net loss of `380 crore and net gain of `288 crore. |Foreign currency|No. of contracts|Notional amount of contracts (` crore)|Fair value| |---|---|---|---| |US Dollar|55|1,420|20| |Great Britain Pound|71|384|59| |Euro|38|363|(31)| |Australian Dollar|26|192|48| |Canadian Dollar|19|104|16| Exchange loss of `451 crore and exchange gain of `405 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the standalone statement of profit and loss for the years ended March 31, 2020 and 2019, respectively. Net foreign exchange gains include loss of `64 crore and gain of `30 crore transferred from cash flow hedging reserve for the years ended March 31, 2020 and 2019, respectively. Net loss on derivative instruments of `23 crore recognised in cash flow hedging reserve as at March 31, 2020, is expected to be transferred to the statement of profit and loss by March 31, 2021. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2020. # Notes forming part of the Standalone Financial Statements 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, 2020|As at March 31, 2019| |---|---|---| |10% Appreciation of the underlying foreign currencies|(407)|(64)| |10% Depreciation of the underlying foreign currencies|1,261|1,370| # (l) 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. # 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. |
* 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. 10% appreciation / depreciation of the functional currency of the Company with respect to various foreign currencies would result in increase / decrease in the Company's profit before taxes by approximately `265 crore for the year ended March 31, 2020. | |USD|EUR|GBP|Others| |---|---|---|---|---| |Net financial assets|4,002|274|329|1,595| |Net financial liabilities|(7,097)|(596)|(475)|(678)| # Notes forming part of the Standalone Financial Statements The following table sets forth information relating to unhedged 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 functional currency of the Company with respect to various foreign currencies would result in decrease / increase in the Company's profit before taxes by approximately `173 crore for the year ended March 31, 2019. # Impact of COVID-19 (Global pandemic) The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not impacted by COVID-19 pandemic. The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Company continues to believe that there is no impact on effectiveness of its hedges. # 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. # Credit risk Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled receivables, loans receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of `7,044 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of `787 crore held with one Indian bank having high credit rating which is individually in excess of 10% or more of the Company's total bank deposits as at March 31, 2020. 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 and contract assets represents the maximum credit exposure. The maximum exposure to credit risk was `71,975 crore and `75,278 crore as at March 31, 2020 and 2019, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled receivables, loans receivables, 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 and contract assets as at March 31, 2020 and March 31, 2019. # Geographic concentration of credit risk Geographic concentration of trade receivables (gross and net of) TCS Annual Report 2019-20 Unconsolidated Financial Statements I 276 # Notes forming part of the Standalone Financial Statements allowances), unbilled receivables and contract assets is as follows: # Significant financial liabilities as at: | |As at March 31, 2020| |As at March 31, 2019| | | | | | | |---|---|---|---|---|---|---|---|---|---| |Geographic concentration of trade receivables (gross and net of allowances), unbilled receivables and contract assets is allocated based on the location of the customers.|Gross%|Net%|Gross%|Net%| | | | | | |United States of America|47.95|48.96|49.42|50.53| | | | | | |India|14.45|12.80|16.45|14.87| | | | | | |United Kingdom|15.03|15.26|15.39|15.55| | | | | | # Allowance for lifetime expected credit loss on trade receivables for the years ended March 31, 2020 and 2019 was `125 crore and `187 crore, respectively. |
The reconciliation of allowance for doubtful trade receivables is as follows: | |(` crore)|Year ended March 31, 2020|Year ended March 31, 2019| |---|---|---|---| |Balance at the beginning of the year| |837|651| |Change during the year| |125|187| |Bad debts written off| |(40)|(3)| |Translation exchange difference| |16|2| |Balance at the end of the year| |938|837| # 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 including lease liabilities as and when they fall due. # Financial liabilities |(` crore)|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Non-derivative financial liabilities|8,734|-|-|-|8,734| |Lease liabilities|1,261|1,099|2,638|3,507|8,505| |Other financial liabilities|4,001|10|227|-|4,238| |Total|13,996|1,109|2,865|3,507|21,477| # Derivative financial liabilities |(` crore)|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Total|693|-|-|-|693| # Overall Total |(` crore)|Due in 1st year|Due in 2nd year|Due in 3rd to 5th year|Due after 5th year|Total| |---|---|---|---|---|---| |Total|14,689|1,109|2,865|3,507|22,170| # Notes forming part of the Standalone Financial Statements # Other risk - Impact of COVID-19 Financial instruments carried at fair value as at March 31, 2020 is `26,111 crore and financial instruments carried at amortised cost as at March 31, 2020 is `45,864 crore. A significant part of the financial assets are classified as Level 1 having fair value of `25,686 crore as at March 31, 2020. The fair value of these assets is marked to an active market which factors the uncertainties arising out of COVID-19. The financial assets carried at fair value by the Company are mainly investments in liquid debt securities and accordingly, any material volatility is not expected. Financial assets of `4,824 crore as at March 31, 2020 carried at amortised cost is in the form of cash and cash equivalents, bank deposits and earmarked balances with banks where the Company has assessed the counterparty credit risk. Trade receivables of `28,734 crore as at March 31, 2020 forms a significant part of the financial assets carried at amortised cost, which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk and consequential default considering emerging situations due to COVID-19. This assessment is not based on any mathematical model but an assessment considering the nature of verticals, impact immediately seen in the demand outlook of these verticals and the financial strength of the customers in respect of whom amounts are receivable. The Company has specifically evaluated the potential impact with respect to customers in Retail, Travel, Transportation and Hospitality, Manufacturing and Energy verticals which could have an immediate impact and the rest which could have an impact with a lag. The Company closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, discounting of receivables with institutions on no-recourse basis, recognition of revenue on collection basis etc., depending on severity of each case. The same assessment is done in respect of unbilled receivables and contract assets of `8,573 crore as at March 31, 2020 while arriving at the level of provision that is required. Basis this assessment, the allowance for doubtful trade receivables of `938 crore as at March 31, 2020 is considered adequate. # (m) Equity instruments The authorised, issued, subscribed and fully paid-up share capital consist of the following: | |As at March 31, 2020|As at March 31, 2019| |---|---|---| |Authorised|460,05,00,000 equity shares of `1 each|460| | |(March 31, 2019: 460,05,00,000 equity shares of `1 each)| | | |105,02,50,000 preference shares of `1 each|105| | |(March 31, 2019: 105,02,50,000 preference shares of `1 each)| | | | |565| |Issued, Subscribed and Fully paid up|375,23,84,706 equity shares of `1 each|375| | |(March 31, 2019: 375,23,84,706 equity shares of `1 each)| | | | |375| 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. |
TCS Annual Report 2019-20 Unconsolidated Financial Statements I 278 # Notes forming part of the Standalone Financial Statements In the previous year, 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 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 in the previous year. The equity shares bought back were extinguished on September 26, 2018. # I. Reconciliation of number of shares | |As at March 31, 2020|As at March 31, 2019| | | | |---|---|---|---|---|---| |Number of shares|Amount (` crore)|Number of shares|Amount (` crore)| | | |Equity shares|Opening balance|375,23,84,706|375|191,42,87,591|191| |Issued during the year|-|-|191,42,87,591|192| | |Shares extinguished on buy-back|-|-|(7,61,90,476)|(8)| | |Closing balance|375,23,84,706|375|375,23,84,706|375| | # II. Rights, preferences and restrictions attached to 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, 2020|As at March 31, 2019| | |---|---|---|---| |Equity shares|Holding company|270,24,50,947 equity shares (March 31, 2019: 270,24,50,947 equity shares) are held by Tata Sons Private Limited|270| |Subsidiaries and Associates of Holding company|7,220 equity shares (March 31, 2019: 7,220 equity shares) are held by Tata Industries Limited*|-| | | |10,36,269 equity shares (March 31, 2019: 10,36,269 equity shares) are held by Tata Investment Corporation Limited*|-| | | |46,798 equity shares (March 31, 2019: 46,798 equity shares) are held by Tata Steel Limited*|-| | | |766 equity shares (March 31, 2019: 766 equity shares) are held by The Tata Power Company Limited*|-| | | | |270| | *Equity shares having value less than `0.50 crore. # Notes forming part of the Standalone Financial Statements # IV. Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company | |As at March 31, 2020|As at March 31, 2019| | |---|---|---|---| |Equity shares|Tata Sons Private Limited, the holding company|270,24,50,947|270,24,50,947| |% of shareholding|72.02%|72.02%| | # V. Equity shares movement during the 5 years preceding March 31, 2020 - 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. - 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. - 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. # 7) Leases A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. # Company as a lessee The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. |
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term. # Notes forming part of the Standalone Financial Statements or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss. The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss. The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term. # Company as a lessor At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease. If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract. |
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