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An additional 44 Data centers were also taken up and the weighted average PUE of all DCs reduced to 1.77 this year from 2.4 in 2017. The energy analysts at the command center were able to get insights on possible areas of additional optimization during the COVID-19 period. # Footnotes 31 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 15.0, Dec 2019, published by the Central Electricity Authority of India. For Scope 2 emissions of locations other than India, IEA emission factors 2020 have been used. 32 305-1, 210,278 tCO2e in FY 2021 vs 410,971 tCO2e in FY 2020 33 Based on actual carbon footprint and notional headcount associated with each center, assuming FTE growth in line with overall net headcount addition. 34 103-2, 103-3 # Cooling and Lighting Cooling and lighting were aligned, in a continuous manner, to the reduced operations demand. Base load requirements (UPS, cooling, etc) were analysed in the context of the new normal and optimized through initiatives such as consolidation of hub rooms, consolidation of workspaces within many of the operational facilities, and consolidation of facilities. Once the optimizations were achieved, the consumption at the appropriate levels of granularity were continuously monitored through automated alerts, to ensure that any consumption leakages were immediately identified and addressed. The company has saved ~0.4 million units of electricity through UPS and server rooms consolidation. # 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 2021, TCS consumed 1.4 million kL of fresh water. Out of this, 73% was from municipal sources, 13% from third party suppliers, 8% from groundwater and 6% from rainwater harvested at the campuses. Absolute water consumption was 63.9% lower in FY 2021 as compared to FY 2020. The focus had been on restricting the use of water for maintenance and upkeep of the offices. On-campus sewage treatment plants were run at below capacity to ensure the sewage is treated and recycled. Total treated sewage recycled as a percentage of the total sewage generated was ~54% in FY 2021. # 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 in its value chain. The company estimates that value chain emissions amounted to 234,615 tCO2e, which is 0.50 tCO2e per FTE in FY 2021, by applying an expansive boundary and using standard Scope 3 emission factors. # Other Emissions Emissions of Ozone-depleting substances primarily occur during operation and maintenance of air conditioning systems in the form of system losses or fugitive emissions. TCS is committed to using zero-ODP refrigerants in its operations. New facilities have HVAC systems based on zero-ODP refrigerants as well as a low Global Warming Potential (GWP). 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. # ISO 50001:2018 Energy Management System Certification audits were successfully extended at four campuses in India in FY 2021, taking the total count of certified locations to five. Synergy Park - Hyderabad, TCS Center - Kochi, Garima Park - Ahmedabad and Siruseri - Chennai have been recommended for new certification and Sahayadri Park - Pune has been recommended for continuation of certification. # Impact of Reduced Operations Low occupancy in offices and significantly reduced business travel and employee commuting has resulted in a reduction in the Scope 3 emissions. The largest contributors in earlier reporting years, amounting to ~60%, were business travel intrinsic to the consultancy business model, and daily workplace commutes of employees. Both these categories saw a reduction of more than 95% in FY 2021. # Footnotes 35 103-2, 103-3 36 303-3 37 306-1 The company continues to pursue groundwater treatment of food waste. The aim is to divert all garden waste to composting to generate organic manure.
Elimination of single-use plastics across campuses and recycling of all recyclable plastic wastes remain as focus areas. TCS continues to support initiatives on surface water body rejuvenation at Siruseri in Chennai, Kasalganga in Solapur and Malguzari ponds in Vidarbha. Biodegradable waste is treated onsite for biogas recovery or manure generation through bio-digesters or composting. All TCS campuses, owned offices and leased offices that have the required space have been provided with on-site food waste management facilities. In FY 2021, due to low quantities of waste generated, the waste management systems could not be operated optimally as they are designed for higher capacity. Small organic waste handling units were piloted for use across leased locations which are space constrained. Over 162 tons of compost were generated in FY 2021, reducing the need for chemical fertilizers and the resultant soil and groundwater pollution. # Waste Reduction and Reuse As an IT services and consulting organization, TCS' facilities mostly generate electronic, electrical, and municipal solid waste. Potentially hazardous and regulated wastes such as lead-acid batteries and waste lube oil are generated in relatively smaller proportions. The waste generation across all waste categories reduced due to the limited operations in FY 2021. TCS is committed to sustain the best practices that have already been institutionalized like segregation of all recyclable wastes, 100% compliance to management practices for regulated wastes like hazardous and e-waste and 100% recycling on printer and toner cartridges, paper and packaging wastes. TCS aspires to improve the waste management practices and achieve 100% onsite. # Employee Engagement TCS observed the Tata Sustainability Month in June'20, featuring a fully digital campaign on the theme 'Time for Nature' consisting of multiple online contests, live sessions, webinars with eminent speakers on topics related to conservation and environment, and multiple blogs on TCS internal social media platform to sensitize associates and share knowledge on the topic. Over 9,000 employees participated in this campaign. The year-round calendar for engaging with employees to create environmental awareness included themes aligned with the 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. This year, associates innovated and engaged in activities in their homes and neighborhood to keep up the spirit of care for environment. Employees grew plants and trees in and around their homes with their families. Some took up urban farming assisted by a phygital workshop on 'how to grow your own food'. Green consumerism through a stronger focus on 'buy local' saw traction among associates. # 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 (Holding Company and its subsidiaries together referred to as "the Group"), which comprise the consolidated balance sheet as at 31 March 2021, 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"). # 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 ethical requirements that are relevant to our audit of the consolidated financial statements in terms of the Code of Ethics issued by the Institute of Chartered Accountants of India, and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion on consolidated financial statements. # 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. 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 2021, of its consolidated profit and other comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 174 # Description of Key Audit Matters # Key audit matters # Revenue recognition- Fixed price contracts The Group inter alia engages in Fixed-price contracts, wherein, revenue is recognized using the percentage of completion computed as per the input method based on the Group's estimate of contract costs (Refer Note 5(a) and Note 12 to the consolidated financial statements). We identified revenue recognition of fixed price contracts as a Key Audit Matter since - - there is an inherent risk and presumed fraud risk around the accuracy and existence of revenues recognised considering the customised and complex nature of these contracts and significant inputs of IT systems; File: AR_TCS_2020_2021.md - application of revenue recognition accounting standard (Ind AS 115, Revenue from Contracts with customers) is complex and involves a number of key judgments and estimates mainly in identifying performance obligations, related transaction price and estimating the future cost-to-completion of these contracts, which is used to determine the percentage of completion of the relevant performance obligation; # How our audit addressed the key audit matter Our audit procedures included the following: - Obtained an understanding of the systems, processes and controls implemented by the Group for recording and computing revenue and the associated contract assets, unearned and deferred revenue balances. - Including involvement of our Information technology ('IT') specialists, as required: - - Assessed the IT environment in which the business systems operate and tested system controls over computation of revenue recognised; - Tested the IT controls over appropriateness of cost and revenue reports generated by the system; - Tested the controls pertaining to allocation of resources and budgeting systems which prevent the unauthorized recording/changes to costs incurred; - Tested on a random sampling basis the controls relating to the estimation of contract costs required to complete the respective projects. On selected specific and statistical samples of contracts, we tested that the revenue recognized is in accordance with the revenue recognition accounting standard - Integrated Annual Report 2020-21 Consolidated Financial Statements \| 175 # 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 included the following: - Understood, assessed and tested the design, implementation and operating effectiveness of key controls over taxes; - Obtained an understanding of key tax matters; - The audit team, along with our internal tax experts - - read and analysed select key correspondences, external legal opinions/consultations obtained by the Group for key tax matters; - evaluated and challenged key assumptions made by the Group in estimating the current and deferred tax balances; - assessed and challenged the Group's estimate of the possible outcome of the disputed cases by considering legal precedence and other judicial rulings; - assessed and tested the presentation and disclosures relating to taxes in the consolidated financial statements. The Group has ongoing legal proceedings with Epic Systems Corporation (referred to as Epic), for alleged unauthorised access to and download of Epic's confidential information and use thereof in the development of the Company's product MedMantra. The Company in the current year has recorded a provision of `1,218 crore (US $165 million) towards this legal claim in its 'Consolidated Statement of Profit and Loss'.
This has been presented as an "exceptional item" in the Consolidated Statement of Profit and Loss. Due to the complexity involved in this litigation, the Group applied judgement in measuring and recognizing provision towards the legal claim. This process involved an evaluation based on judicial precedents and views shared by the lawyers (external and internal) of the Group and detailed deliberations with the Group's senior management. Accordingly, it has been considered as a key audit matter. # Assessment of provision towards legal claim Refer to Note 5(f) to the consolidated financial statements - "Use of estimates and judgements - Provisions and contingent liabilities" and Note 20 to the consolidated financial statements - "Commitments and contingencies". # How our audit addressed the key audit matter Our audit procedures included the following: - obtained management assessment on the litigation along with the communications made to the Board of Directors and regulators; # Other Information 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. # 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 profit/loss and other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The respective management and Board of Directors of the entities included in the Group are responsible for assessing the ability of each entity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective management and Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. The respective Board of Directors of the entities included in the Group are responsible for overseeing the financial reporting process of each entity. # 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. # Auditor's Responsibilities for the Audit of the 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. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on the internal financial controls with reference to the consolidated financial statements and the operating effectiveness of such controls based on our audit. - 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 modify our 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. - 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. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. We communicate with those charged with governance of the Holding Company and such other entities included in the consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other. matters that may reasonably be thought to bear on 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. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. # Report on Other Legal and Regulatory Requirements 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. 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 2021 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 2021, none of the directors is disqualified as on 31 March 2021 from being appointed as a director in terms of Section 164(2) of the Act. # B.
With respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The consolidated financial statements disclose the impact of pending litigations as at 31 March 2021 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 2021. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 179 # 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 2021. # iv. The disclosures in the consolidated financial statements regarding holdings as well as dealing in specified banks notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2021. With respect to the matter to be included in the Auditors' report under Section 197(16) 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. 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. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Amit Somani Partner Bengaluru Membership No: 060154 12 April 2021 UDIN: 21060154AAAAAV1547 # Integrated Annual Report 2020-21 Consolidated Financial Statements \| 180 # Annexure A to the Independent Auditors' Report on the consolidated financial statements of Tata Consultancy Services Limited for the year ended 31 March 2021 # Audi tor'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 under the Companies Act, 2013 (hereinafter referred to as "the Act"). # Opinion In conjunction with our audit of the consolidated financial statements of Tata Consultancy Services Limited (hereinafter referred to as "the Holding Company") as of and for the year ended 31 March 2021, we have audited the internal financial controls with reference to the consolidated financial statements of the Holding Company and such companies incorporated in India under the Companies Act, 2013 which are its subsidiary companies, as of that date. In our opinion, the Holding Company and such companies incorporated in India which are its subsidiary companies, have, in all material respects, adequate internal financial controls with reference to consolidated financial statements. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 181 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. # Meaning of 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. A company's internal financial controls with reference to consolidated financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated 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 consolidated financial statements. # 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 Amit Somani Partner Bengaluru Membership No: 060154 12 April 2021 UDIN: 21060154AAAAAV1547 # Consolidated Balance Sheet \|Note\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|ASSETS\|ASSETS\|ASSETS\| \|Non-current assets\|Non-current assets\|Non-current assets\| \|Property, plant and equipment\|11,110\|10,941\| \|Capital work-in-progress\|926\|906\| \|Right-of-use assets\|7,633\|7,994\| \|Goodwill\|1,798\|1,710\| \|Other intangible assets\|480\|283\| \|Financial assets\|Financial assets\|Financial assets\| \|Investments\|213\|216\| \|Trade receivables\|55\|74\| \|Unbilled receivables\|273\|324\| \|Loans\|29\|29\| \|Other financial assets\|1,573\|1,184\| \|Income tax assets (net)\|1,845\|2,462\| \|Deferred tax assets (net)\|3,931\|2,828\| \|Other assets\|1,613\|1,711\| \|Total non-current assets\|31,479\|30,662\| \|Current assets\|Current assets\|Current assets\| \|Inventories\|8\|5\| \|Investments\|29,160\|26,140\| \|Trade receivables\|30,079\|30,532\| \|Unbilled receivables\|6,583\|5,732\| \|Cash and cash equivalents\|6,858\|8,646\| \|Other balances with banks\|2,471\|1,020\| \|Loans\|11,472\|8,475\| \|Other financial assets\|1,394\|1,473\| \|Other assets\|11,236\|8,206\| \|Total current assets\|99,280\|90,237\| \|TOTAL ASSETS\|TOTAL ASSETS\|TOTAL ASSETS\| \|1,30,759\|1,30,759\|1,20,899\| \|EQUITY AND LIABILITIES\|EQUITY AND LIABILITIES\|EQUITY AND LIABILITIES\| \|Equity\|Equity\|Equity\| \|Share capital\|370\|375\| \|Other equity\|86,063\|83,751\| \|Equity attributable to shareholders of the Company\|86,433\|84,126\| \|Non-controlling interests\|675\|623\| \|Total equity\|87,108\|84,749\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 183 # Consolidated Balance Sheet \|Note\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Liabilities\| \| \| \|Non-current liabilities\| \| \| \|Financial liabilities\| \| \| \|Lease liabilities\|6,503\|6,906\| \|Other financial liabilities\|280\|291\| \|Unearned and deferred revenue\|1,197\|697\| \|Employee benefit obligations\|749\|417\| \|Deferred tax liabilities (net)\|767\|779\| \|Total non-current liabilities\|9,496\|9,090\| \|Current liabilities\| \| \| \|Financial liabilities\| \| \| \|Lease liabilities\|1,292\|1,268\| \|Trade payables\|7,860\|6,740\| \|Other financial liabilities\|6,150\|6,100\| \|Unearned and deferred revenue\|3,650\|2,915\| \|Other liabilities\|4,068\|3,283\| \|Provisions\|1,394\|293\| \|Employee benefit obligations\|3,498\|2,749\| \|Income tax liabilities (net)\|6,243\|3,712\| \|Total current liabilities\|34,155\|27,060\| \|TOTAL EQUITY AND LIABILITIES\|1,30,759\|1,20,899\| 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 Rajesh Gopinathan N Ganapathy Subramaniam CEO and Managing Director COO and Executive Director Firm's registration no: 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Integrated Annual Report 2020-21 Consolidated Financial Statements \| 184 # Consolidated Statement of Profit and Loss \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Revenue from operations\|1,64,177\|1,56,949\| \|Other income\|3,134\|4,592\| \|TOTAL INCOME\|1,67,311\|1,61,541\| # Expenses \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Employee benefit expenses\|91,814\|85,952\| \|Cost of equipment and software licences\|1,462\|1,905\| \|Finance costs\|637\|924\| \|Depreciation and amortisation expense\|4,065\|3,529\| \|Other expenses\|24,355\|26,983\| \|TOTAL EXPENSES\|1,22,333\|1,19,293\| # PROFIT BEFORE EXCEPTIONAL ITEM AND TAX \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\| \|44,978\|42,248\| # Exceptional item \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Provision towards legal claim\|1,218\|-\| # PROFIT BEFORE TAX \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\| \|43,760\|42,248\| # Tax expense \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Current tax\|11,635\|10,378\| \|Deferred tax\|(437)\|(577)\| \|TOTAL TAX EXPENSE\|11,198\|9,801\| # PROFIT FOR THE YEAR \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\| \|32,562\|32,447\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 185 # Consolidated Statement of Profit and Loss \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Income tax on items that will be reclassified subsequently to profit or loss\|(32)\|(315)\| \|TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)\|461\|464\| \|TOTAL COMPREHENSIVE INCOME FOR THE YEAR\|33,023\|32,911\| \|Profit for the year attributable to:\| \| \| \|Shareholders of the Company\|32,430\|32,340\| \|Non-controlling interests\|132\|107\| \| \|32,562\|32,447\| \|Other comprehensive income for the year attributable to:\| \| \| \|Shareholders of the Company\|484\|424\| \|Non-controlling interests\|(23)\|40\| \| \|461\|464\| \|Total comprehensive income for the year attributable to:\| \| \| \|Shareholders of the Company\|32,914\|32,764\| \|Non-controlling interests\|109\|147\| \| \|33,023\|32,911\| \|Earnings per equity share:- Basic and diluted (`)\|86.71\|86.19\| \|Weighted average number of equity shares\|374,01,10,733\|375,23,84,706\| Bengaluru, April 12, 2021 Mumbai, April 12, 2021 As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Rajesh Gopinathan N Ganapathy Subramaniam CEO and Managing Director COO and Executive Director Chartered Accountants Firm's registration no: 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar CFO Company Secretary Membership No: 060154 # Consolidated Statement of Changes in Equity # A. EQUITY SHARE CAPITAL \| \|Balance as at April 1, 2019\|Changes in equity share capital during the year\|Balance as at March 31, 2020\| \|---\|---\|---\|---\| \|(` crore)\|375\|-\|375\| \| \|Balance as at April 1, 2020\|Changes in equity share capital during the year\|Balance as at March 31, 2021\| \|(` crore)\|375\|(5)\|370\| Refer note 8(l). # B. OTHER EQUITY \| \| \| \| \|Reserves and surplus\| \| \| \|Items of other comprehensive income\| \| \|Equity\|Non-controlling\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Capital\|Capital redemption\|General\|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\| \| \| \| \|(` crore)\|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 tax\|-\|-\|-\|-\|(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\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 187 # Consolidated Statement of Changes in Equity \|(` crore)\|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\|Equity attributable to shareholders of the Company\|Non-controlling interests\|Total equity\| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Balance as at April 1, 2020\|75\|431\|27\|1,594\|78,810\|375\|796\|45\|(68)\|1,666\|83,751\|623\|84,374\| \|Profit for the year\|-\|-\|-\|-\|32,430\|-\|-\|-\|-\|-\|32,430\|132\|32,562\| \|Other comprehensive income / (losses)\|-\|-\|-\|-\|(71)\|-\|32\|11\|41\|471\|484\|(23)\|461\| \|Total comprehensive income\|-\|-\|-\|-\|32,359\|-\|32\|11\|41\|471\|32,914\|109\|33,023\| \|Dividend\|-\|-\|-\|-\|(10,850)\|-\|-\|-\|-\|-\|(10,850)\|(57)\|(10,907)\| \|Expenses for buy-back of equity shares1\|-\|-\|-\|-\|(31)\|-\|-\|-\|-\|-\|(31)\|-\|(31)\| \|Tax on buy-back of equity shares1\|-\|-\|-\|-\|(3,726)\|-\|-\|-\|-\|-\|(3,726)\|-\|(3,726)\| \|Buy-back of equity shares1\|-\|5\|-\|-\|(16,000)\|-\|-\|-\|-\|-\|(15,995)\|-\|(15,995)\| \|Transfer to Special Economic Zone re-investment reserve\|-\|-\|-\|5,058\|(5,058)\|-\|-\|-\|-\|-\|-\|-\|-\| \|Transfer from Special Economic Zone re-investment reserve\|-\|-\|-\|(4,114)\|4,114\|-\|-\|-\|-\|-\|-\|-\|-\| \|Transfer to reserves\|-\|-\|-\|-\|(32)\|32\|-\|-\|-\|-\|-\|-\|-\| \|Balance as at March 31, 2021\|75\|436\|27\|2,538\|79,586\|407\|828\|56\|(27)\|2,137\|86,063\|675\|86,738\| 1Refer note 8(l). Total equity (primarily retained earnings) includes `1,366 crore and `1,258 crore as at March 31, 2021 and 2020, respectively, pertaining to trusts and TCS Foundation held for specified purposes. # Nature and purpose of reserves # a. Capital reserve The Group recognises profit and loss on purchase, sale, issue or cancellation of the Group's own equity instruments to capital reserve. # b. Capital redemption reserve File: AR_TCS_2020_2021.md 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 188 # Consolidated Statement of Changes in Equity # 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 other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement 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. Retained earnings This reserve represents undistributed accumulated earnings of the Group as on the balance sheet date. # f. Statutory reserve Statutory reserves are created to adhere to requirements of applicable laws. # g. 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. # h. 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. # i. 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 Rajesh Gopinathan N Ganapathy Subramaniam Chartered Accountants CEO and COO and Executive Director Firm's registration no: Managing Director 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Integrated Annual Report 2020-21 Consolidated Financial Statements \| 189 # Consolidated Statement of Cash Flows \| \|Year ended March 31, 2021\|Year ended March 31, 2020\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\|---\|---\| \|CASH FLOWS FROM OPERATING ACTIVITIES\| \| \| \| \| \|Profit for the year\|32,562\|32,447\| \| \| \|Adjustments to reconcile profit and loss to net cash provided by operating activities\| \| \| \| \| \|Depreciation and amortisation expense\|4,065\|3,529\| \| \| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|201\|144\| \| \| \|Provision towards legal claim (Refer note 20)\|1,218\|-\| \| \| \|Tax expense\|11,198\|9,801\| \| \| \|Net gain on lease modification\|(100)\|(14)\| \| \| \|Unrealised foreign exchange gain\|(21)\|(117)\| \| \| \|Net gain on disposal of property, plant and equipment\|(13)\|(46)\| \| \| \|Net gain on investments\|(204)\|(214)\| \| \| \|Interest income\|(2,504)\|(3,562)\| \| \| \|Dividend income\|(8)\|(10)\| \| \| \|Finance costs\|637\|924\| \| \| \|Operating profit before working capital changes\|47,031\|42,882\| \| \| \|Net change in\| \| \| \| \| \|Inventories\|(3)\|5\| \| \| \|Trade receivables\|1,260\|(3,295)\| \| \| \|Unbilled receivables\|(201)\|(508)\| \| \| \|Loans and other financial assets\|(17)\|(2)\| \| \| \|Other assets\|(2,805)\|(3,492)\| \| \| \|Trade payables\|(93)\|446\| \| \| \|Net cash generated from operating activities\|38,802\|32,369\| \| \| \|CASH FLOWS FROM INVESTING ACTIVITIES\| \| \| \| \| \|Bank deposits placed\|(6,605)\|(7,663)\| \| \| \|Inter-corporate deposits placed\|(21,076)\|(14,905)\| \| \| \|Purchase of investments\|(54,462)\|(80,002)\| \| \| \|Payment for purchase of property, plant and equipment\|(2,719)\|(2,538)\| \| \| \|Payment including advances for acquiring right-of-use assets\|(101)\|(519)\| \| \| \|Payment for purchase of intangible assets\|(356)\|(192)\| \| \| \|Proceeds from bank deposits\|4,767\|11,965\| \| \| \|Proceeds from inter-corporate deposits\|18,018\|14,432\| \| \| \|Proceeds from disposal / redemption of investments\|51,630\|84,089\| \| \| \|Proceeds from disposal of property, plant and equipment\|37\|161\| \| \| \|Interest received\|2,730\|3,729\| \| \| \|Dividend received\|8\|8\| \| \| \|Net cash generated from / (used in) investing activities\|(8,129)\|8,565\| \| \| # Consolidated Statement of Cash Flows \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|CASH FLOWS FROM FINANCING ACTIVITIES\| \| \| \|Repayment of lease liabilities\|(1,336)\|(1,062)\| \|Interest paid\|(634)\|(924)\| \|Dividend paid (including tax on dividend in previous year)\|(10,850)\|(37,634)\| \|Dividend paid to non-controlling interests (including tax on dividend in previous year)\|(57)\|(68)\| \|Purchase of non-controlling interests\|-\|(227)\| \|Transfer of funds to buy-back escrow account\|(160)\|-\| \|Transfer of funds from buy-back escrow account\|160\|-\| \|Expenses for buy-back of equity shares (Refer note 8(l))\|(31)\|-\| \|Tax on buy-back of equity shares (Refer note 8(l))\|(3,726)\|-\| \|Buy-back of equity shares (Refer note 8(l))\|(16,000)\|-\| \|Net cash used in financing activities\|(32,634)\|(39,915)\| \|Net change in cash and cash equivalents\|(1,961)\|1,019\| \|Cash and cash equivalents at the beginning of the year\|8,646\|7,224\| \|Exchange difference on translation of foreign currency cash and cash equivalents\|173\|403\| \|Cash and cash equivalents at the end of the year (Refer note 8(c))\|6,858\|8,646\| *Purchase of investments include `172 crore and `503 crore for the years ended March 31, 2021 and 2020, respectively, and proceeds from disposal / redemption of investments include `104 crore and `542 crore for the years ended March 31, 2021 and 2020, 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 Rajesh Gopinathan CEO and Managing Director N Ganapathy Subramaniam COO and Executive Director Amit Somani Partner V Ramakrishnan CFO Rajendra Moholkar Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Consolidated Financial Statements \| 191 # Notes forming part of Consolidated Financial Statements # 1) Corporate information Tata Consultancy Services Limited ("the Company") and its subsidiaries (collectively together with 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. 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, 2021, Tata Sons Private Limited, the holding company owned 72.16% of the Company's equity share capital.
The Board of Directors approved the consolidated financial statements for the year ended March 31, 2021 and authorised for issue on April 12, 2021. # 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, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents. 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 statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 192 # Notes forming part of Consolidated Financial Statements 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. 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 management to make estimates and judgements that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the consolidated financial statements and the reported amounts of income and expenses for the periods presented. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected. The Group uses the following critical accounting estimates in preparation of its consolidated financial statements: - a. Revenue recognition Revenue for fixed-price contracts is recognised using percentage-of-completion method. The Group uses judgement to estimate the future cost-to-completion of the contracts which is used to determine the degree of completion of the performance obligation. Consolidated Financial Statements \| 193 # Notes forming part of Consolidated Financial Statements # 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 units (CGUs) 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 rates used for the CGUs 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 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. # 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 period 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 consolidated financial statements. # 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. # Notes forming part of Consolidated 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 judgement. The Group uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. 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. In assessing whether the Group 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 Group to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Group revises the lease term if there is a change in the non-cancellable period of a lease. 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. # i. Impact of COVID-19 (pandemic) The Group has taken into account all the possible impacts of COVID-19 in preparation of these consolidated financial statements, including but not limited to its assessment of, liquidity and going concern assumption, recoverable values of its financial and non-financial assets, impact on revenue recognition owing to changes in cost budgets of fixed price contracts, impact on leases and impact on effectiveness of its hedges. The Group has carried out this assessment based on available internal and external sources of information upto the date of approval of these consolidated financial statements and believes that the impact of COVID-19 is not material to these consolidated financial statements and expects to recover the carrying amount of its assets. The impact of COVID-19 on the consolidated financial statements may differ from that estimated as at the date of approval of these consolidated financial statements owing to the nature and duration of COVID-19. # 6) Recent pronouncements On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are: # Balance Sheet: - Lease liabilities should be separately disclosed under the head 'financial liabilities', duly distinguished as current or non-current. - Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period. - Specified format for disclosure of shareholding of promoters. - Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 195 # Notes forming part of Consolidated Financial Statements - If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used. - Specific disclosure under 'additional regulatory requirement' such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc. # Statement of profit and loss: - Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head 'additional information' in the notes forming part of consolidated financial statements. - The amendments are extensive and the Group will evaluate the same to give effect to them as required by law. # 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 as goodwill.
Where the fair value of identifiable assets and liabilities exceed the cost of acquisition, after reassessing the fair values of the net assets and contingent liabilities, the excess is recognised as capital reserve. The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests' proportionate share of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity of subsidiaries. Business combinations arising from transfers of interests in entities that are under common control are accounted at historical cost. The difference between any consideration given and the aggregate historical carrying amounts of assets and liabilities of the acquired entity is recorded in shareholders' equity. # 8) Financial assets, financial liabilities and equity instruments Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. # Notes forming part of Consolidated Financial Statements # Cash and cash equivalents The Group considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage. # Financial assets at amortised cost Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. # Financial assets at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Group has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss. # Financial liabilities Financial liabilities are measured at amortised cost using the effective interest method. # Equity instruments An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received net of direct issue cost. # Derivative accounting - Instruments in hedging relationship File: AR_TCS_2020_2021.md The Group designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. The Group uses hedging instruments that are governed by the policies of the Company and its subsidiaries which are approved by their respective Board of Directors. The policies provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company and its subsidiaries. The hedge instruments are designated and documented as hedges at the inception of the contract.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item. Consolidated Financial Statements \| 197 # Notes forming part of Consolidated Financial Statements based on the currency, amount and timing of their respective cash flows. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in net foreign exchange gains in the statement of profit and loss. The effective portion of change in the fair value of the designated hedging instrument is recognised in other comprehensive income and accumulated under the heading cash flow hedging reserve. The Group separates the intrinsic value and time value of an option and designates as hedging instruments only the change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised in other comprehensive income and accounted as a separate component of equity. Such amounts are reclassified into the statement of profit and loss when the related hedged items affect statement of profit and loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit and loss. Any gain or loss is recognised immediately in the statement of profit and loss when the hedge becomes ineffective. # 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 a loss allowance. The Group recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 198 # Notes forming part of Consolidated Financial Statements # (a) Investments # Investments - Current Investments consist of the following: \|Investments - Non-current\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Investments carried at fair value through profit or loss\| \| \| \|Mutual fund units (quoted)\|4,904\|1,692\| \|Investments carried at fair value through OCI\| \| \| \|Government bonds and securities (quoted)\|23,670\|24,290\| \|Corporate bonds (quoted)\|450\|132\| \|Investments carried at amortised cost\| \| \| \|Corporate bonds (quoted)\|-\|26\| \|Commercial papers (quoted)\|136\|-\| \| \|29,160\|26,140\| \|Government bonds and securities (quoted)\|165\|164\| \|Corporate bonds (quoted)\|10\|10\| \| \|213\|216\| Investments - Current includes `166 crore and `95 crore as at March 31, 2021 and 2020, respectively, pertaining to trusts and TCS Foundation held for specified purposes. Investments - Non-current includes `175 crore and `174 crore as at March 31, 2021 and 2020, respectively, pertains to trusts held for specified purposes. Government bonds and securities includes bonds pledged with bank for credit facility amounting to `1,650 crore and NIL as at March 31, 2021 and 2020, respectively.
# Aggregate value of quoted and unquoted investments is as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Aggregate value of quoted investments\|29,335\|26,314\| \|Aggregate value of unquoted investments\|38\|42\| \|(net of impairment)\| \| \| \|Aggregate market value of quoted investments\|29,356\|26,336\| \|Aggregate value of impairment of investments\|116\|114\| # Notes forming part of Consolidated Financial Statements # Market value of quoted investments carried at amortised cost is as follows: \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Government bonds and securities\|186\|186\| \|Corporate bonds\|10\|36\| \|Commercial papers\|136\|-\| # Equity instruments carried at fair value through OCI are as follows: \|In Numbers Currency\|Face value per share\|Equity instruments carried at fair value\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\| \|1,00,00,000 USD\|1\|Mozido LLC\|73\|75\| \|5,00,000 USD\|15\|FCM LLC\|55\|55\| \|1,90,00,000 INR\|10\|Taj Air Limited\|19\|19\| \|5,00,000 PHP\|100\|Philippine Dealing System Holdings Corporation\|7\|7\| \|Less: Impairment in value of investments\|Less: Impairment in value of investments\|(116)\|(116)\|(116)\| \| \| \|38\|38\|38\| # The movement in fair value of investments carried / designated at fair value through OCI is as follows: \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|796\|192\| \|Net loss arising on revaluation of financial assets carried at fair value\|(2)\|(20)\| \|Net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|51\|972\| \|Deferred tax relating to net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|(17)\|(340)\| \|Net cumulative gain reclassified to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income\|-\|(14)\| \|Deferred tax relating to net cumulative gain reclassified to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income\|-\|6\| \|Balance at the end of the year\|828\|796\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 200 # Notes forming part of Consolidated Financial Statements # (b) Trade receivables Trade receivables (unsecured) consist of the following: # Trade receivables - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Trade receivables\|787\|656\| \|Less: Allowance for doubtful trade receivables\|(732)\|(582)\| \|Considered good\|55\|74\| # Trade receivables - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Trade receivables\|30,248\|30,747\| \|Less: Allowance for doubtful trade receivables\|(244)\|(306)\| \|Considered good\|30,004\|30,441\| \|Trade receivables\|388\|340\| \|Less: Allowance for doubtful trade receivables\|(313)\|(249)\| \|Credit impaired\|75\|91\| \| \|30,079\|30,532\| # (c) Cash and cash equivalents Cash and cash equivalents consist of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Balances with banks\| \| \| \|In current accounts\|5,266\|8,237\| \|In deposit accounts\|1,586\|405\| \|Cheques on hand\|-\|1\| \|Cash on hand\|1\|1\| \|Remittances in transit\|5\|2\| \| \|6,858\|8,646\| Represents value less than `0.50 crore. Balances with banks in current accounts include `13 crore and `4 crore as at March 31, 2021 and 2020, 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, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Earmarked balances with banks\|209\|215\| \|Short-term bank deposits\|2,262\|805\| \| \|2,471\|1,020\| Earmarked balances with banks primarily relate to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. # Notes forming part of Consolidated Financial Statements # (e) Loans Loans (unsecured) consist of the following: # Loans - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Considered good\| \| \| \|Inter-corporate deposits\|27\|27\| \|Loans and advances to employees\|2\|2\| \| \|29\|29\| # Loans - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Considered good\| \| \| \|Inter-corporate deposits\|11,229\|8,171\| \|Loans and advances to employees\|243\|304\| \|Credit impaired\| \| \| \|Loans and advances to employees\|17\|15\| \|Less: Allowance on loans and advances to employees\|(17)\|(15)\| \| \|11,472\|8,475\| # (f) Other financial assets Other financial assets consist of the following: # Other financial assets - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Security deposits\|837\|824\| \|Earmarked balances with banks\|3\|1\| \|Long-term bank deposits\|719\|348\| \|Others\|14\|11\| \| \|1,573\|1,573\| # Other financial assets - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Security deposits\|168\|170\| \|Fair value of foreign exchange derivative assets\|495\|425\| \|Interest receivable\|615\|744\| \|Others\|116\|134\| \| \|1,394\|1,394\| Interest receivable includes `40 crore and `43 crore as at March 31, 2021 and 2020, respectively, pertaining to trusts and TCS Foundation held for specified purposes. Inter-corporate deposits placed with financial institutions yield fixed interest rate.
Inter-corporate deposits include `952 crore and `922 crore as at March 31, 2021 and 2020, respectively, pertaining to trusts and TCS Foundation held for specified purposes. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 202 # Notes forming part of Consolidated Financial Statements # (g) Other financial liabilities Other financial liabilities consist of the following: # (h) Financial instruments by category The carrying value of financial instruments by categories as at March 31, 2021 is as follows: \| \|As at March 31, 2021\|As at March 31, 2020\|Fair value through other comprehensive income\|Fair value in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Capital creditors\|-\|3\| \| \| \| \| \| \|Others\|280\|288\| \| \| \| \| \| \| \|280\|291\|Financial assets\| \| \| \| \| Others include advance taxes paid of `226 crore and `226 crore as at March 31, 2021 and 2020, respectively, by the seller of TCS e-Serve Limited (merged with the Company) which, on refund by tax authorities, is payable to the seller. # Other financial liabilities - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Accrued payroll\|4,482\|3,907\| \|Unclaimed dividends\|50\|53\| \|Fair value of foreign exchange derivative liabilities\|92\|693\| \|Capital creditors\|399\|502\| \|Liabilities towards customer contracts\|914\|807\| \|Others\|213\|138\| \| \|6,150\|6,100\| Loans include inter-corporate deposits of `11,256 crore, with original maturity period within 36 months. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 203 # Notes forming part of Consolidated Financial Statements # 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 carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Financial assets\|-\|-\|-\|-\|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\|-\|-\|-\|-\|8,504\|8,504\| \|Other financial assets\|-\|-\|146\|279\|1,883\|2,308\| \| \|1,692\|24,464\|146\|279\|57,264\|83,845\| \| \|Fair value through profit or loss\|Fair value through other comprehensive income\|Derivative instruments in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Financial liabilities\|-\|-\|-\|-\|6,740\|6,740\| \|Lease liabilities\|-\|-\|-\|-\|8,174\|8,174\| \|Other financial liabilities\|-\|-\|34\|659\|5,698\|6,391\| \| \|-\|-\|34\|659\|20,612\|21,305\| Loans include inter-corporate deposits of `8,198 crore, with original maturity period within 36 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables, loans and trade payables as at March 31, 2021 and 2020, 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 `332 crore and `222 crore as at March 31, 2021 and 2020, respectively. # (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 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.
Integrated Annual Report 2020-21 Consolidated Financial Statements \| 204 # Notes forming part of Consolidated Financial Statements The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required): \|(` crore)\|As at March 31, 2021\| \| \| \| \| \|---\|---\|---\|---\|---\|---\| \| \|Level 1\|Level 2\|Level 3\|Total\| \| \|Financial assets\|Mutual fund units\|4,849\|-\|55\|4,904\| \| \|Equity shares\|-\|-\|38\|38\| \| \|Government bonds and securities\|23,856\|-\|-\|23,856\| \| \|Corporate bonds\|460\|-\|-\|460\| \| \|Commercial papers\|136\|-\|-\|136\| \| \|Fair value of foreign exchange derivative assets\|-\|495\|-\|495\| \| \|Total Financial Assets\|29,301\|495\|93\|29,889\| \|(` crore)\|As at March 31, 2020\|As at March 31, 2020\|As at March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\| \|Level 1\|Level 2\|Level 3\|Total\| \| \| \|Financial assets\|Mutual fund units\|1,692\|-\|-\|1,692\| \| \|Equity shares\|-\|-\|42\|42\| \| \|Government bonds and securities\|24,476\|-\|-\|24,476\| \| \|Corporate bonds\|168\|-\|-\|168\| \| \|Fair value of foreign exchange derivative assets\|-\|425\|-\|425\| \| \|Total Financial Assets\|26,336\|425\|42\|26,803\| Financial liabilities \|(` crore)\|As at March 31, 2021\| \| \| \| \|---\|---\|---\|---\|---\| \| \|Level 1\|Level 2\|Level 3\|Total\| \|Fair value of foreign exchange derivative liabilities\|-\|92\|-\|92\| \|Total Financial Liabilities\|-\|92\|-\|92\| Reconciliation of Level 3 fair value measurement of financial assets is as follows: \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|42\|58\| \|Additions during the year\|52\|-\| \|Fair value of investments\|4\|-\| \|Impairment in value of investments\|(2)\|(20)\| \|Translation exchange difference\|(3)\|4\| \|Balance at the end of the year\|93\|42\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 205 # Notes forming part of Consolidated Financial Statements # Reconciliation of Level 3 fair value measurement of financial liabilities The following are outstanding currency options contracts, which have been designated as cash flow hedges: \| \| \|(` crore)\| \| \|As at March 31, 2021\| \| \| \|As at March 31, 2020\| \| \| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Year ended March 31, 2021\|Year ended March 31, 2020\|Foreign currency\|No. of contracts\|Notional amount of contracts\|Fair value (` crore)\|No. of contracts\|Notional amount of contracts\|Fair value (` crore)\| \| \| \| \| \| \| \| \| \| \|Balance at the beginning of the year\| \|-\|-\|-\|-\|-\|-\|-\|-\| \| \| \| \| \| \| \| \| \|Repayment during the year\|-\|(227)\|US Dollar\|63\|1,615\|51\| \|55\|1,420\|20\| \| \| \| \| \| \| \| \|Translation exchange difference\| \|-\| \| \| \| \| \| \| \|9\|Great Britain Pound\|64\|330\|14\|71\|384\|59\| \|Balance at the end of the year\| \|-\|-\|Euro\|60\|346\|78\|38\|363\|(31)\| \| \| \| \| \| \| \| \| \| \| \|Australian Dollar\|38\|206\|16\| \|26\|192\|48\| \| \| \| \| \| \| \| \| \| \| \|Canadian Dollar\|23\|114\|2\| \|19\|104\|16\| \| \| \| \| \| \| \| # Derivative financial instruments and hedging activity The Group's revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Group to currency fluctuations. The Board of Directors have constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Group which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Group uses various derivative instruments such as foreign exchange forward, currency options and futures contracts in which the counter party is generally a bank. # The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows: \| \| \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Intrinsic value\|Time value\|Intrinsic value\|Time value\| \| \| \| \| \| \|Balance at the beginning of the year\|45\|(68)\|134\|(30)\| \|(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\| \| \|(341)\|530\|(449)\|513\| \|Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\| \| \|73\|(125)\|54\|(38)\| \|Change in the fair value of effective portion of cash flow hedges\| \| \|355\|(477)\|355\|(565)\| \|Deferred tax on fair value of effective portion of cash flow hedges\| \| \|(76)\|113\|(49)\|52\| \| \| \|Balance at the end of the year\|56\|(27)\|45\|(68)\| # Notes forming part of Consolidated Financial Statements 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, 2021 and 2020, the notional amount of outstanding contracts aggregated to ₹37,615 crore and ₹40,298 crore, respectively and the respective fair value of these contracts have a net gain of ₹242 crore and net loss of ₹380 crore.
Exchange gain of ₹490 crore and loss of ₹461 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, 2021 and 2020, respectively. Net foreign exchange gains include loss of ₹189 crore and ₹64 crore transferred from cash flow hedging reserve for the years ended March 31, 2021 and 2020, respectively. Net gain on derivative instruments of ₹30 crore recognised in cash flow hedging reserve as at March 31, 2021, is expected to be transferred to the statement of profit and loss by March 31, 2022. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2021. # 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, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|10% Appreciation of the underlying foreign currencies\|(306)\|(407)\| \|10% Depreciation of the underlying foreign currencies\|1,906\|1,261\| # (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. # Notes forming part of Consolidated Financial Statements 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, 2021 \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|3,194\|155\|101\|1,129\| \|Net financial liabilities\|(41)\|(573)\|(354)\|(411)\| 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 `320 crore for the year ended March 31, 2021.
# 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 208 # Notes forming part of Consolidated Financial Statements # * 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, loans, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of `11,256 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of `2,669 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 March 31, 2021. None of the other financial instruments of the Group result in material concentration of credit risk. The carrying amount of financial assets and contract assets represents the maximum credit exposure. The maximum exposure to credit risk was `94,201 crore and `88,291 crore as at March 31, 2021 and 2020, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments, trade receivables, unbilled receivables, loan, 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, 2021 and 2020. # 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, 2021\|As at March 31, 2021\|As at March 31, 2020\|As at March 31, 2020\| \|---\|---\|---\| \|Geographic Area\|Gross%\|Net%\|Gross%\|Net%\| \|United States of America\|41.08\|41.83\|44.94\|45.66\| \|India\|20.31\|18.79\|11.56\|10.01\| \|United Kingdom\|16.37\|16.75\|14.74\|15.02\| Geographical concentration of trade receivables, unbilled receivables and contract assets is allocated based on the location of the customers. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 209 File: AR_TCS_2020_2021.md # Notes forming part of Consolidated Financial Statements The allowance for lifetime expected credit loss on trade receivables for the years ended March 31, 2021 and 2020 was `190 crore and `133 crore respectively. The reconciliation of allowance for doubtful trade receivables is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|1,137\|1,020\| \|Change during the year\|190\|133\| \|Bad debts written off\|(34)\|(43)\| \|Translation exchange difference\|(4)\|27\| \|Balance at the end of the year\|1,289\|1,137\| # 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.
# Significant financial liabilities as at March 31, 2021 \|(` crore)\| \|March 31, 2021\|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\|7,860\|-\|-\|-\|7,860\| \| \| \|Lease liabilities\|1,742\|1,601\|3,325\|3,509\|10,177\| \| \| \|Other financial liabilities\|6,058\|50\|230\|-\|6,338\| \| \| \| \|15,660\|1,651\|3,555\|3,509\|24,375\| \|Derivative financial liabilities\| \| \|92\|-\|-\|-\|92\| \| \| \| \|15,752\|1,651\|3,555\|3,509\|24,467\| # Significant financial liabilities as at March 31, 2020 \|(` crore)\|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\|Trade payables\|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\| \| \| \|13,869\|1,526\|3,796\|4,034\|23,225\| \|Derivative financial liabilities\| \|693\|-\|-\|-\|693\| \| \| \|14,562\|1,526\|3,796\|4,034\|23,918\| # Notes forming part of Consolidated Financial Statements # (l) Equity instruments The authorised, issued, subscribed and fully paid-up share capital consist of the following: \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Authorised\| \| \| \|460,05,00,000 equity shares of `1 each\|460\|460\| \|(March 31, 2020: 460,05,00,000 equity shares of `1 each)\| \| \| \|105,02,50,000 preference shares of `1 each\|105\|105\| \|(March 31, 2020: 105,02,50,000 preference shares of `1 each)\| \| \| \| \|565\|565\| \|Issued, Subscribed and Fully paid up\| \| \| \|369,90,51,373 equity shares of `1 each\|370\|375\| \|(March 31, 2020: 375,23,84,706 equity shares of `1 each)\| \| \| \| \|370\|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. The Board of Directors at its meeting held on October 7, 2020, approved a proposal to buy-back upto 5,33,33,333 equity shares of the Company for an aggregate amount not exceeding `16,000 crore, being 1.42% of the total paid up equity share capital at `3,000 per equity share. The shareholders approved the same on November 18, 2020, by way of a special resolution through postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 5,33,33,333 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on January 6, 2021. Capital redemption reserve was created to the extent of share capital extinguished (`5 crore). The excess cost of buy-back of `16,031 crore (including `31 crore towards transaction cost of buy-back) over par value of shares and corresponding tax on buy-back of `3,726 crore were offset from retained earnings. # I. Reconciliation of number of shares \| \|As at March 31, 2021\| \|As at March 31, 2020\| \| \|---\|---\|---\|---\|---\| \|Number of shares\|Amount (` crore)\|Number of shares\|Amount (` crore)\| \| \|Equity shares\| \| \| \| \| \|Opening balance\|375,23,84,706\|375\|375,23,84,706\|375\| \|Shares extinguished on buy-back\|(5,33,33,333)\|(5)\|-\|-\| \|Closing balance\|369,90,51,373\|370\|375,23,84,706\|375\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 211 # Notes forming part of Consolidated Financial Statements # II. Rights, preferences and restrictions attached to shares \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|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.\|46,798 equity shares (March 31, 2020 : 46,798 equity shares) are held by Tata Steel Limited\|-\| \| \|766 equity shares (March 31, 2020 : 766 equity shares) are held by The Tata Power Company Limited\|-\| \| \|267\|270\| # III. Shares held by Holding company, its Subsidiaries and Associates \| \|As at March 31, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \|Equity shares\| \| \| \| \|Holding company\|266,91,25,829 equity shares (March 31, 2020: 270,24,50,947 equity shares) are held by Tata Sons Private Limited\|267\|270\| \|Subsidiaries and Associates of Holding company\|7,220 equity shares (March 31, 2020: 7,220 equity shares) are held by Tata Industries Limited\| \|-\| \| \|10,23,685 equity shares (March 31, 2020: 10,36,269 equity shares) are held by Tata Investment Corporation Limited\| \|-\| \| \| \|267\|270\| # IV.
Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company \| \|As at March 31, 2021\|As at March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Equity shares\|Tata Sons Private Limited, the Holding company\|266,91,25,829\|270,24,50,947\| \| \| \| \|% of shareholding\|72.16%\|72.02%\| \| \| \| \| # V. Equity shares movement during 5 years preceding March 31, 2021 * 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 Integrated Annual Report 2020-21 Consolidated Financial Statements \| 212 # Notes forming part of Consolidated Financial Statements earnings amounting to `86 crore and capital redemption reserve amounting to `106 crore in the quarter ended June 30, 2018, 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 5,33,33,333 equity shares for an aggregate amount of `16,000 crore being 1.42% of the total paid up equity share capital at `3,000 per equity share. The equity shares bought back were extinguished on January 6, 2021. 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. # 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 standalone price of the lease component and the aggregate standalone 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 213 # Notes forming part of Consolidated Financial Statements 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. # 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. # The details of the right-of-use assets held by the Group is as follows: \| \|Additions for year ended March 31, 2021\|Net carrying amount as at March 31, 2021\| \|---\|---\|---\| \|Leasehold land\|-\|682\| \|Buildings\|1,226\|6,758\| \|Leasehold improvements\|6\|26\| \|Computer equipment\|102\|101\| \|Software licences\|26\|25\| \|Vehicles\|30\|32\| \|Office equipment\|1\|9\| \|Total\|1,391\|7,633\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 214 # Notes forming part of Consolidated Financial Statements \| \|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\|Total\|7,994\| # Depreciation on right-of-use assets is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Leasehold land\|8\|4\| \|Buildings\|1,453\|1,225\| \|Leasehold improvements\|8\|10\| \|Computer equipment\|12\|17\| \|Software licences\|1\|-\| \|Vehicles\|14\|10\| \|Office equipment\|4\|2\| \|Total\|Total\|1,268\| Interest on lease liabilities is `523 crore and `492 crore for the years ended on March 31, 2021 and 2020, respectively. The Group incurred `352 crore and `392 crore for the years ended March 31, 2021 and 2020, respectively, towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is `2,312 crore and `2,465 crore for years ended March 31, 2021 and 2020, respectively, including cash outflow for short term and low value leases. 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 is `708 crore and `457 crore as at March 31, 2021 and 2020, respectively. 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. # 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. Consolidated Financial Statements \| 215 # Notes forming part of Consolidated Financial Statements \|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\| 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. Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 216 # Notes forming part of 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\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Cost as at April 1, 2020\|347\|7,719\|2,427\|681\|8,794\|42\|2,509\|2,039\|1,886\|26,444\| \|Additions\|5\|71\|142\|53\|2,047\|3\|137\|46\|61\|2,565\| \|Disposals\|-\|(11)\|(72)\|(1)\|(180)\|(5)\|(80)\|(29)\|(63)\|(441)\| \|Translation exchange difference\|(1)\|(2)\|5\|4\|73\|-\|8\|2\|1\|90\| \|Cost as at March 31, 2021\|351\|7,777\|2,502\|737\|10,734\|40\|2,574\|2,058\|1,885\|28,658\| \|Accumulated depreciation as at April 1, 2020\|-\|(2,563)\|(1,441)\|(228)\|(6,414)\|(34)\|(2,068)\|(1,266)\|(1,489)\|(15,503)\| \|Depreciation\|-\|(393)\|(199)\|(72)\|(1,246)\|(4)\|(204)\|(152)\|(137)\|(2,407)\| \|Disposals\|-\|8\|68\|1\|168\|5\|79\|26\|62\|417\| \|Translation exchange difference\|-\|1\|(3)\|(3)\|(39)\|-\|(6)\|(1)\|(4)\|(55)\| \|Accumulated depreciation as at March 31, 2021\|-\|(2,947)\|(1,575)\|(302)\|(7,531)\|(33)\|(2,199)\|(1,393)\|(1,568)\|(17,548)\| \|Net carrying amount as at March 31, 2021\|351\|4,830\|927\|435\|3,203\|7\|375\|665\|317\|11,110\| \|Capital work-in-progress\|926\|926\|926\|926\|926\|926\|926\|926\|926\|926\| \|Total\|12,036\|12,036\|12,036\|12,036\|12,036\|12,036\|12,036\|12,036\|12,036\|12,036\| `2,565 crore has been capitalised and transferred to property, plant and equipment during the year ended March 31, 2021. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 217 # Notes forming part of Consolidated Financial Statements \|(` crore)\|Freehold land\|Buildings\|Leasehold improvements\|Plant and equipment\|Computer equipment\|Vehicles\|Office installations\|Electrical fixtures\|Furniture\|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\|-\|-\|(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\|-\|-\|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\|-\|(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\| \|Capital work-in-progress\|906\|906\|906\|906\|906\|906\|906\|906\|906\|906\| \|Total\|11,847\|11,847\|11,847\|11,847\|11,847\|11,847\|11,847\|11,847\|11,847\|11,847\| `2,858 crore has been capitalised and transferred to property, plant and equipment during the year ended March 31, 2020. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 218 # Notes forming part of Consolidated Financial Statements # (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 pro-rata on the basis of the carrying amount of each asset in the unit. Goodwill consists of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|1,710\|1,700\| \|Translation exchange difference\|88\|10\| \|Balance at the end of the year\|1,798\|1,710\| Goodwill of `660 crore and `636 crore as at March 31, 2021 and 2020, 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 `1,138 crore and `1,074 crore as at March 31, 2021 and 2020, 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. Intangible assets consist of rights under licensing agreement and software licences and customer-related intangibles. # Notes forming part of Consolidated Financial Statements Following table summarises the nature of intangibles and their estimated useful lives: \|Type of asset\|Useful lives\|Rights under licensing agreement and software licences\|Customer-related intangibles\|Total\| \| \|---\|---\|---\|---\|---\|---\| \|Rights under licensing agreement and software licences\|Lower of licence period and 2-5 years\|Cost as at April 1, 2020\|448\|120\|568\| \|Customer-related intangibles\|3 years\|Additions\|356\|-\|356\| \| \| \|Disposals / Derecognised\|(64)\|-\|(64)\| \| \| \|Translation exchange difference\|-\|2\|2\| \| \| \|Cost as at March 31, 2021\|740\|122\|862\| \| \| \|Accumulated amortisation as at April 1, 2020\|(180)\|(105)\|(285)\| \| \| \|Amortisation\|(149)\|(9)\|(158)\| \| \| \|Disposals / Derecognised\|64\|-\|64\| \| \| \|Translation exchange difference\|-\|(3)\|(3)\| \| \| \|Accumulated amortisation as at March 31, 2021\|(265)\|(117)\|(382)\| \| \| \|Net carrying amount as at March 31, 2021\|475\|5\|480\| 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 220 # Notes forming part of Consolidated Financial Statements \|Rights under licensing agreement and software licences\|Customer-related intangibles\| \|Total\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Cost as at April 1, 2019\|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\| \|(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\| \| \| \| The estimated amortisation for the years subsequent to March 31, 2021 is as follows: \|Year ending March 31\|Amortisation expense\| \|---\|---\| \|2022\|196\| \|2023\|152\| \|2024\|96\| \|2025\|36\| \|Thereafter\|-\| \|Total\|480\| # Other assets Other assets consist of the following: \|Other assets - Non-current\|(` crore)\| \|---\|---\| \|Considered good\| \| \|Contract assets\|250\| \|Prepaid expenses\|621\| \|Contract fulfillment costs\|228\| \|Capital advances\|66\| \|Advances to related parties\|33\| \|Others\|415\| \|Total\|1,613\| Advances to related parties, considered good, comprise: \|Entity\|Amount (` crore)\| \|---\|---\| \|Voltas Limited\|2\| \|Tata Realty and Infrastructure Ltd\|-\| \|Tata Projects Limited\|30\| \|Titan Engineering and Automation Limited\|-\| # Notes forming part of Consolidated Financial Statements # Other assets - Current # (e) Inventories \| \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\| \|Considered good\| \|3,830\|4,292\| \|Contract assets\| \|4,651\|1,498\| \|Prepaid expenses\| \|28\|15\| \|Contract fulfillment costs\| \|796\|621\| \|Advance to suppliers\| \|157\|136\| \|Advance to related parties\| \|10\|11\| \|Indirect taxes recoverable\| \|1,491\|1,374\| \|Others\| \|273\|259\| \|Considered doubtful\| \| \| \| \|Advance to suppliers\| \|3\|3\| \|Indirect taxes recoverable\| \|-\|2\| \|Other advances\| \|1\|3\| \|Less: Allowance on doubtful assets\| \|(4)\|(8)\| \| \| \|11,236\|8,206\| # Inventories consist of the following: \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Raw materials, sub-assemblies and components\|8\|5\| \|Finished goods and work-in-progress \|-\|-\| \|Goods-in-transit (raw materials)\|-\|-\| \|Stores and spares\|-\|-\| \| \|8\|5\| *Represents value less than `0.50 crore.
# Advance to related parties, considered good comprise: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|The Titan Company Limited\|2\|3\| \|Tata AIG General Insurance Company Limited\|1\|-\| \|Tata AIA Life Insurance Company Limited\|-\|1\| \|Tata Sons Private Limited\|7\|7\| Non-current - Others includes advance of `369 crore and `271 crore towards acquiring right-of-use of leasehold land as at March 31, 2021 and 2020, respectively. Contract fulfillment costs of `568 crore and `510 crore for the years ended March 31, 2021 and 2020, respectively, have been amortised in the consolidated statement of profit and loss. Refer note 12 for changes in contract assets. # Notes forming part of Consolidated Financial Statements # (f) Other liabilities Other liabilities consist of the following: \|Other liabilities - Current\|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\| \|Advance received from customers\| \|312\|345\| \|Indirect taxes payable and other statutory liabilities\| \|3,726\|2,874\| \|Operating lease liabilities\| \|-\|2\| \|Others\| \|30\|62\| \| \| \|4,068\|3,283\| # (h) Other equity Other equity consist of the following: \| \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\| \|Capital reserve\| \|75\|75\| \|Capital redemption reserve\| \|431\|431\| \|Transfer from retained earnings\| \|5\|-\| \| \| \|436\|431\| \|General reserve\| \|27\|27\| \|Transfer to retained earnings\| \|-\|-\| \| \| \|27\|27\| \|Special Economic Zone re-investment reserve\| \|1,594\|994\| \|Transfer from retained earnings\| \|5,058\|2,947\| \|Transfer to retained earnings\| \|(4,114)\|(2,347)\| \| \| \|2,538\|1,594\| \|Retained earnings\| \|78,810\|85,520\| \|Transition impact of Ind AS 116\| \|-\|(357)\| \|Profit for the year\| \|32,430\|32,340\| \|Remeasurement of defined employee benefit plans\| \|(71)\|(339)\| \|Expenses for buy-back of equity shares\|1\|(31)\|-\| File: AR_TCS_2020_2021.md \|Tax on buy-back of equity shares\|1\|(3,726)\|-\| \|Buy-back of equity shares\|1\|(15,995)\|-\| \|Transfer from Special Economic Zone re-investment reserve\| \|4,114\|2,347\| \|Purchase of non-controlling interests\| \|-\|(93)\| \| \| \|95,531\|1,19,418\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 223 # Notes forming part of Consolidated Financial Statements \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Less: Appropriations\| \| \| \|Dividend on equity shares\|10,850\|31,896\| \|Tax on dividend\|-\|5,738\| \|Transfer to capital redemption reserve1\|5\|-\| \|Transfer to Special Economic Zone re-investment reserve\|5,058\|2,947\| \|Transfer to statutory reserve\|32\|27\| \| \|79,586\|78,810\| \|Statutory reserve\| \| \| \|Opening balance\|375\|348\| \|Transfer from retained earnings\|32\|27\| \| \|407\|375\| \|Investment revaluation reserve\| \| \| \|Opening balance\|796\|192\| \|Change during the year (net)\|32\|604\| \| \|828\|796\| \|Cash flow hedging reserve (Refer note 8(j))\| \| \| \|Opening balance\|(23)\|104\| \|Change during the year (net)\|52\|(127)\| \| \|29\|(23)\| \|Foreign currency translation reserve\| \| \| \|Opening balance\|1,666\|1,380\| \|Change during the year (net)\|471\|286\| \| \|2,137\|1,666\| \| \|86,063\|83,751\| 1Refer note 8(l). 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. - 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 # Notes forming part of Consolidated Financial Statements 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. The Group's contracts with customers could include promises to transfer multiple products and services to a customer. The Group assesses the products/services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract 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, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Group allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. The Group exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Group considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 225 # Notes forming part of Consolidated Financial Statements Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues. The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period. In accordance with Ind AS 37, the Group recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received. Contracts are subject to modification to account for changes in contract specification and requirements. The Group reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for. The Group disaggregates revenue from contracts with customers by nature of services, industry verticals and geography. # Integrated Annual Report 2020-21 # Revenue disaggregation by nature of services is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Consultancy services\|1,62,508\|1,54,829\| \|Sale of equipment and software licences\|1,669\|2,120\| \|Total\|1,64,177\|1,56,949\| 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 `1,13,827 crore out of which 53.05% 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. # Notes forming part of Consolidated Financial Statements # Changes in contract assets are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|4,489\|3,428\| \|Invoices raised that were included in the contract assets balance at the beginning of the year\|(3,496)\|(2,788)\| \|Increase due to revenue recognised during the year, excluding amounts billed during the year\|2,985\|3,621\| \|Translation exchange difference\|102\|228\| \|Balance at the end of the year\|4,080\|4,489\| # Reconciliation of revenue recognised with the contracted price is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Contracted price\|1,66,917\|1,58,977\| \|Reductions towards variable consideration components\|(2,740)\|(2,028)\| \|Revenue recognised\|1,64,177\|1,56,949\| The reduction towards variable consideration comprises of volume discounts, service level credits, etc. # Changes in unearned and deferred revenue are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|3,612\|3,236\| \|Revenue recognised that was included in the unearned and deferred revenue balance at the beginning of the year\|(3,010)\|(2,421)\| \|Increase due to invoicing during the year, excluding amounts recognised as revenue during the year\|4,182\|2,618\| \|Translation exchange difference\|63\|179\| \|Balance at the end of the year\|4,847\|3,612\| # 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, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Interest income\|2,504\|3,562\| \|Dividend income\|8\|10\| \|Net gain on investments carried at fair value through profit or loss\|204\|200\| \|Net gain on sale of investments other than equity shares carried at fair value through OCI\|-\|14\| \|Net gain on disposal of property, plant and equipment\|13\|46\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 227 # Notes forming part of Consolidated Financial Statements \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Net gain on lease modification\|100\|13\| \|Net foreign exchange gain\|248\|727\| \|Rent income\|1\|1\| \|Other income\|56\|19\| \| \|3,134\|4,592\| \|Interest income comprise:\| \| \| \|Interest on bank balances and bank deposits\|137\|519\| \|Interest on financial assets carried at amortised cost\|587\|613\| \|Interest on financial assets carried at fair value through OCI\|1,762\|1,878\| \|Other interest (including interest on tax refunds)\|18\|552\| \|Dividend income comprises:\| \| \| \|Dividend from mutual fund units and other investments\|8\|10\| # 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 # Notes forming part of Consolidated Financial Statements 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. # 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: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Salaries, incentives and allowances\|83,045\|77,660\| \|Contributions to provident and other funds\|6,401\|5,834\| \|Staff welfare expenses\|2,368\|2,458\| \|Total\|91,814\|85,952\| # Employee benefit obligations consist of the following: # Employee benefit obligations - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Gratuity liability\|12\|8\| \|Foreign defined benefit plans\|473\|308\| \|Other employee benefit obligations\|264\|101\| \|Total\|749\|417\| # Employee benefit obligations - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Compensated absences\|3,448\|2,720\| \|Other employee benefit obligations\|50\|29\| \|Total\|3,498\|2,749\| # 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.
Consolidated Financial Statements \| 229 # Notes forming part of 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, 2021\| \| \| \| \|Year ended March 31, 2020\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic\|Domestic\|Foreign\|Foreign\|Total\|Domestic\|Domestic\|Foreign\|Foreign\|Total\| \| \|plans\|Funded\|Unfunded\|Funded\|Unfunded\| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \| \|Change in benefit obligations\|Benefit obligations, beginning of the year\|3,638\|8\|753\|145\|4,544\|2,679\|4\|629\|120\|3,432\| \| \|Translation exchange difference\|-\|-\|(21)\|6\|(15)\|-\|-\|55\|5\|60\| \| \|Plan assumed on insourcing of employees\|-\|-\|1,348\|20\|1,368\|30\|-\|-\|-\|30\| \| \|Plan participants' contribution\|-\|-\|12\|-\|12\|-\|-\|9\|-\|9\| \| \|Service cost\|460\|2\|27\|32\|521\|358\|1\|16\|22\|397\| \| \|Interest cost\|244\|1\|12\|3\|260\|222\|-\|11\|5\|238\| \| \|Remeasurement of the net defined benefit liability\|135\|2\|139\|18\|294\|520\|4\|43\|2\|569\| \| \|Past service cost / (credit)\|-\|-\|-\|-\|-\|-\|-\| \|1\|1\| \| \|Benefits paid\|(162)\|(1)\|21\|(6)\|(148)\|(171)\|(1)\|(10)\|(10)\|(192)\| \| \|Benefit obligations, end of the year\|4,315\|12\|2,291\|218\|6,836\|3,638\|8\|753\|145\|4,544\| # Notes forming part of Consolidated Financial Statements \|(` crore)\| \| \|Year ended March 31, 2021\| \| \| \| \|Year ended March 31, 2020\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic\|Domestic\|Foreign\|Foreign\|Total\|Domestic\|Domestic\|Foreign\|Foreign\|Total\| \| \|plans\|Funded\|Unfunded\|Funded\|Unfunded\|plans\|Funded\|Unfunded\|Funded\|Unfunded\| \| \| \|Change in plan assets\|Fair value of plan assets, beginning of the year\|3,643\|-\|627\|-\|4,270\|2,672\|-\|532\|-\|3,204\| \| \|Translation exchange difference\|-\|-\|(17)\|-\|(17)\|-\|-\|41\|-\|41\| \| \|Plan assumed on insourcing of employees\|-\|-\|1,302\|-\|1,302\|30\|-\|-\|-\|30\| \| \|Interest income\|269\|-\|9\|-\|278\|235\|-\|9\|-\|244\| \| \|Employers' contributions\|837\|-\|25\|-\|862\|766\|-\|17\|-\|783\| \| \|Plan participants' contribution\|-\|-\|12\|-\|12\|-\|-\|9\|-\|9\| \| \|Benefits paid\|(162)\|-\|21\|-\|(141)\|(171)\|-\|(10)\|-\|(181)\| \| \|Remeasurement - return on plan assets excluding amount included in interest income\|119\|-\|93\|-\|212\|111\|-\|29\|-\|140\| \| \|Fair value of plan assets, end of the year\|4,706\|-\|2,072\|-\|6,778\|3,643\|-\|627\|-\|4,270\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 231 # Notes forming part of Consolidated Financial Statements \| \| \| \|As at March 31, 2021\| \| \| \| \|As at March 31, 2020\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|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\|-\|(12)\|(255)\|(218)\|(485)\|-\|(8)\|(163)\|(145)\|(316)\| \|Surplus of plan assets over obligations\|391\|-\|36\|-\|427\|5\|-\|37\|-\|42\| \| \|391\|(12)\|(219)\|(218)\|(58)\|5\|(8)\|(126)\|(145)\|(274)\| \| \| \| \|As at March 31, 2021\| \| \| \| \| \| \|As at March 31, 2020\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|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\|1,408\|-\|805\|-\|2,213\|1,004\|-\| \|137\|-\|1,141\| \| \|Equity instruments\|29\|-\|-\|-\|29\|17\|-\|-\|-\|17\| \| \| \|Government bonds and securities\|2,257\|-\|-\|-\|2,257\|1,695\|-\|-\|-\|1,695\| \| \| \|Insurer managed funds\|910\|-\|430\|-\|1,340\|852\|-\| \|275\|-\|1,127\| \| \|Bank balances\|2\|-\|3\|-\|5\|-\|-\| \|6\|-\|6\| \| \|Others\|100\|-\|834\|-\|934\|75\|-\| \|209\|-\|284\| \| \|Total\|Total\|4,706\|-\|2,072\|-\|6,778\|3,643\|-\|627\|-\|4,270\| \| # Notes forming part of Consolidated Financial Statements # Net periodic gratuity / pension cost, included in employee cost consists of the following components: \|(` crore)\| \| \|Year ended March 31, 2021\| \| \| \| \| \|Year ended March 31, 2020\| \| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \| \| \|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\|460\|2\|27\| \|32\|521\|358\|1\|16\|22\|397\| \| \| \| \| \| \|Net interest on net defined benefit (asset) / liability\|(25)\|1\|3\|3\| \|(18)\|(13)\|-\|2\|5\|(6)\| \| \| \| \| \| \|Past service cost / (credit)\|-\|-\|-\|-\|-\|-\|-\| \| \|1\|1\| \| \| \| \| \| \|Net periodic gratuity / pension cost\|435\|3\|30\|35\| \|503\|345\|1\|18\|28\|392\| \| \| \| \| \| \|Actual return on plan assets\|388\|-\|102\|-\| \|490\|346\|-\|38\|-\|384\| \| \| \| \| \| # Remeasurement of the net defined benefit (asset) / liability: \|(` crore)\| \|Year ended March 31, 2021\| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \|Domestic plans\|Domestic plans\| \|Foreign plans\|Foreign plans\| \|Total\| \| \|Funded\|Unfunded\|Funded\|Unfunded\| \| \| \| \| \|Actuarial (gains) and losses arising from changes in demographic assumptions\| \| \|24\|-\|1\| \|(2)\|23\| \|Actuarial (gains) and losses arising from changes in financial assumptions\| \| \|(32)\|-\|118\| \|19\|105\| \|Actuarial (gains) and losses arising from changes in experience adjustments\| \| \|143\|2\|20\|1\| \|166\| \|Remeasurement of the net defined benefit liability\| \| \|135\|2\|139\| \|18\|294\| \|Remeasurement - return on plan assets excluding amount included in interest income\| \| \|(119)\|-\|(93)\|-\| \|(212)\| \| \| \| \|16\|2\|46\| \|18\|82\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 233 # Notes forming part of Consolidated Financial Statements \|(` crore)\| \| \| \|Year ended March 31, 2020\|Total\| \| \|---\|---\|---\|---\|---\|---\|---\| \| \|Domestic plans\| \| \|Foreign plans\|Domestic plans\|Foreign plans\| \|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\| \| \|47\|10\|403\| \|Actuarial (gains) and losses arising from changes in experience adjustments\|180\|1\|1\| \| \|185\| \|Remeasurement of the net defined benefit liability\|520\| \| \|43\|2\|569\| \|Remeasurement - return on plan assets excluding amount included in interest income\|(111)\| \| \|(29)\|-\|(140)\| \| \|409\| \| \|14\|2\|429\| # The assumptions used in accounting for the defined benefit plan are set out below: \|Year ended March 31, 2021\|Domestic plans\|Foreign plans\| \|---\|---\|---\| \|Year ended March 31, 2020\|Domestic plans\|Foreign plans\| \|Discount rate\|4.25%-7.00%\|0.40%-7.55%\| \|Rate of increase in compensation levels of covered employees\|4.00%-6.00%\|1.25%-7.00%\| \|Rate of return on plan assets\|4.25%-7.00%\|0.40%-7.55%\| \|Weighted average duration of defined benefit obligations\|3-18 years\|5-65 years\| # Notes forming part of Consolidated Financial Statements Future mortality assumptions are taken based on the published
statistics by the Insurance Regulatory and Development Authority of India. 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. The expected benefits are based on the same assumptions as are used to measure Group's defined benefit plan obligations as at March 31, 2021. The Group is expected to contribute `140 crore to defined benefit plan obligations funds for the year ending March 31, 2022 comprising domestic component of `117 crore and foreign component of `23 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. If the discount rate increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Increase of 0.50%\|(378)\|(236)\| \|Decrease of 0.50%\|421\|262\| If the expected salary growth increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Increase of 0.50%\|276\|177\| \|Decrease of 0.50%\|(260)\|(165)\| The defined benefit obligations shall mature after year ended March 31, 2021 as follows: \|Year ending March 31\|Defined benefit obligations (` crore)\| \|---\|---\| \|2022\|367\| \|2023\|310\| \|2024\|329\| \|2025\|353\| \|2026\|341\| \|2027-2031\|1,840\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 235 # Notes forming part of Consolidated Financial Statements # 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. 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. # Integrated Annual Report 2020-21 # The details of fund and plan assets are given below: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Fair value of plan assets\|20,003\|17,072\| \|Present value of defined benefit obligations\|(20,003)\|(17,072)\| \|Net excess / (shortfall)\|-\|-\| The plan assets have been primarily invested in Government securities and corporate bonds. # The principal assumptions used in determining the present value obligations of interest guarantee under the deterministic approach are as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Discount rate\|6.50%\|6.50%\| \|Average remaining tenure of investment portfolio\|8 years\|7.73 years\| \|Guaranteed rate of return\|8.50%\|8.50%\| The Group expensed `1,085 crore and `1,042 crore for the years ended March 31, 2021 and 2020, respectively, towards provident fund. # Superannuation All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Group makes monthly contributions until retirement or resignation of the employee. The Group recognises such contributions as an expense when incurred.
The Group has no further obligation beyond its monthly contribution. Consolidated Financial Statements \| 236 # Notes forming part of Consolidated Financial Statements The Group expensed `366 crore and `356 crore for the years ended March 31, 2021 and 2020, respectively, towards Employees' Superannuation Fund. The Group expensed `1,458 crore and `1,324 crore for the years ended March 31, 2021 and 2020, respectively, towards foreign defined contribution plans. # (a) Cost of equipment and software licences Cost of equipment and software licences consist of the following: \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Raw materials, sub-assemblies and components consumed\|14\|18\| \|Equipment and software licences purchased\|1,447\|1,888\| \|Finished goods and work-in-progress\|1,461\|1,906\| \|Opening stock\|1\|-\| \|Less: Closing stock\|-\|-\| \| \|1\|-\| \|Total\|1,462\|1,906\| *Represents value less than `0.50 crore. File: AR_TCS_2020_2021.md # (b) Other expenses Other expenses consist of the following: \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Fees to external consultants\|13,214\|12,937\| \|Facility expenses\|2,131\|2,702\| \|Travel expenses\|1,081\|3,296\| \|Communication expenses\|1,896\|1,592\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|201\|144\| \|Other expenses\|5,832\|6,312\| \|Total\|24,355\|26,983\| # Notes forming part of Consolidated Financial Statements # 16) Finance costs Finance costs consist of the following: \| \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\|---\| \|Interest on lease liabilities\| \|523\|492\| \|Interest on tax matters\| \|96\|354\| \|Other interest costs\| \|18\|78\| \|Total\| \|637\|924\| # 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. # Current income taxes The current income tax expense includes income taxes payable by the Company, its branches and its subsidiaries in India and overseas. The current tax payable by the Company and its subsidiaries in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. The current income tax expense for overseas subsidiaries has been computed based on the tax laws applicable to each subsidiary in the respective jurisdiction in which it operates. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis. # Deferred income taxes Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 238 # Notes forming part of Consolidated Financial Statements 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. # The income tax expense consists of the following: \| \| \| \| \|(` crore)\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\|---\|---\|---\|---\| \| \|Current tax\|Current tax expense for current year\|11,737\|9,730\| \| \| \| \|Current tax expense / (benefit) pertaining to prior years\| \|(102)\|648\| \| \| \| \|Total Current Tax\| \|11,635\|10,378\| \| \| \| \|Deferred tax\|Deferred tax expense / (benefit) for current year\|(359)\|899\| \| \| \| \|Deferred tax benefit pertaining to prior years\| \|(78)\|(1,476)\| \| \| \| \|Total Deferred Tax\| \|(437)\|(577)\| \| \| \| \|Total Income Tax Expense\| \|11,198\|9,801\| \| \| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 239 # Notes forming part of Consolidated Financial Statements 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, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Profit before tax\|43,760\|42,248\| \|Indian statutory income tax rate\|34.94%\|34.94%\| \|Expected income tax expense\|15,292\|14,764\| \|Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense\| \| \| \|Tax holidays\|(4,708)\|(4,879)\| \|Income exempt from tax\|(325)\|(285)\| \|Undistributed earnings in branches and subsidiaries\|(13)\|428\| \|Tax on income at different rates\|843\|152\| \|Tax pertaining to prior years\|(180)\|(828)\| \|Others (net)\|289\|449\| \|Total income tax expense\|11,198\|9,801\| 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).
# Significant components of net deferred tax assets and liabilities for the year ended March 31, 2021 are as follows: \| \|Opening balance\|Recognised in profit and loss\|Recognised in / reclassified from other comprehensive income\|Ajustments / utilisation\|Exchange difference\|Closing balance\| \|---\|---\|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and intangible assets\|145\|124\|-\|40\|-\|309\| \|Provision for employee benefits\|654\|168\|8\|77\|(10)\|897\| \|Cash flow hedges\|7\|-\|(15)\|-\|-\|(8)\| \|Receivables, financial assets at amortised cost\|388\|35\|-\|-\|1\|424\| \|MAT credit entitlement\|1,074\|39\|-\|597\|-\|1,710\| \|Branch profit tax\|(284)\|(26)\|-\|-\|-\|(310)\| \|Undistributed earnings of subsidiaries\|(286)\|88\|-\|-\|-\|(198)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(484)\|1\|(17)\|-\|-\|(500)\| \|Lease liabilities\|345\|(84)\|-\|-\|-\|261\| \|Others\|490\|92\|-\|-\|(3)\|579\| \| \|2,049\|437\|(24)\|714\|(12)\|3,164\| # Notes forming part of Consolidated Financial Statements Gross deferred tax assets and liabilities are as follows: # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2020 are as follows: \|As at March 31, 2021\|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to\| \| \| \| \|Property, plant and equipment and intangible assets\|458\|149\|309\| \|Provision for employee benefits\|908\|11\|897\| \|Cash flow hedges\|(8)\|-\|(8)\| \|Receivables, financial assets at amortised cost\|424\|-\|424\| \|MAT credit entitlement\|1,710\|-\|1,710\| \|Branch profit tax\|-\|310\|(310)\| \|Undistributed earnings of subsidiaries\|-\|198\|(198)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(500)\|-\|(500)\| \|Lease liabilities\|260\|(1)\|261\| \|Others\|679\|100\|579\| \| \|3,931\|767\|3,164\| # Deferred tax assets / (liabilities) in relation to \| \|Opening balance\|Recognised in profit and loss\|Recognised in / reclassified from other comprehensive income\|Ajustments / utilisation difference\|Exchange difference\|Closing balance\| \|---\|---\|---\|---\|---\|---\|---\| \|Property, plant and equipment and intangible assets\|95\|50\|-\|-\|-\|145\| \|Provision for employee benefits\|531\|101\|5\|-\|17\|654\| \|Cash flow hedges\|(12)\|-\|19\|-\|-\|7\| \|Receivables, financial assets at amortised cost\|340\|46\|-\|-\|2\|388\| \|MAT credit entitlement\|1,170\|(96)\|-\|-\|-\|1,074\| \|Branch profit tax\|(299)\|15\|-\|-\|-\|(284)\| \|Undistributed earnings of subsidiaries\|(574)\|288\|-\|-\|-\|(286)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(149)\|(1)\|(334)\|-\|-\|(484)\| \|Lease liabilities\|264\|80\|-\|-\|1\|345\| \|Others\|418\|94\|-\|-\|(22)\|490\| \| \|1,784\|577\|(310)\|-\|(2)\|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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 241 # Notes forming part of Consolidated Financial Statements Gross deferred tax assets and liabilities are as follows: \|As at March 31, 2020\|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to\| \| \| \| \|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\|2,828\|779\|2,049\| Unrecognised deferred tax assets relate primarily to business losses and tax credit 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\| \|---\|---\| \|2022\|3\| \|2023\|3\| \|2024\|8\| \|2025\|5\| \|2026\|1\| \|Thereafter\|-\| Under the Income-tax Act, 1961, Tata Consultancy Services Limited is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. 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. Deferred tax liability on temporary differences of `9,100 crore as at March 31, 2021, 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. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 242 # Notes forming part of Consolidated Financial Statements # 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 tax treatment of certain expenses claimed as deductions, computation or eligibility of tax incentives or allowances and characterisation of fees for services received. The Company and its subsidiaries have contingent liability of `955 crore and `1,512 crore as at March 31, 2021 and 2020, 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, 2021 and 2020, 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 2018 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2017 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2018 and earlier. # Earnings per share Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive securities in any of the years presented. \|Year ended\|March 31, 2021\|March 31, 2020\| \|---\|---\|---\| \|Profit for the year attributable to shareholders of the Company (` crore)\|32,430\|32,340\| \|Weighted average number of equity shares\|374,01,10,733\|375,23,84,706\| \|Basic and diluted earnings per share (`)\|86.71\|86.19\| \|Face value per equity share (`)\|1\|1\| # 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. # Notes forming part of Consolidated Financial Statements 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. # Year ended March 31, 2020 \| \|Banking, Financial Services and Insurance\|Manufacturing\|Retail and Consumer Business\|Media and Technology\|Communication, Others\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue from operations\|61,095\|16,468\|26,280\|25,978\|27,128\|1,56,949\| \|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 # Year ended March 31, 2021 \| \|Banking, Financial Services and Insurance\|Manufacturing\|Retail and Consumer Business\|Media and Technology\|Communication, Others\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue from operations\|65,634\|15,950\|25,589\|27,077\|29,927\|1,64,177\| \|Segment result\|18,681\|4,483\|7,151\|8,010\|8,221\|46,546\| Total unallocable expenses: 5,920 Operating income: 40,626 Other income: 3,134 Profit before tax: 43,760 Tax expense: 11,198 Profit for the year: 32,562 Depreciation and amortisation expense (unallocable): 4,065 # Significant non-cash items \| \|Banking\|Manufacturing\|Retail\|Communication\|Others\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Allocable\|15\|1\|78\|9\|98\|201\| Includes the provision towards legal claim of `1,218 crore. Refer note 20. # Geographical revenue \|Geography\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Americas (1)\|84,278\|82,000\| \|Europe (2)\|52,346\|48,037\| \|India\|8,449\|8,964\| \|Others\|19,104\|17,948\| Total: 1,64,177 # Notes forming part of Consolidated Financial Statements # Geographical non-current assets (property, plant and equipment, right-of-use assets, goodwill, other intangible assets, income tax assets and other non-current assets) are allocated based on the location of the assets. # Information regarding geographical non-current assets is as follows: \|Geography\|As at March 31, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \|Americas (3)\|2,470\|2,596\| \| \|Europe (4)\|4,018\|3,382\| \| \|India\|17,901\|18,920\| \| \|Others\|1,016\|1,109\| \| \|Total\|Total\|25,405\|26,007\| \| # Capital commitments The Group has contractually committed (net of advances) `1,071 crore and `1,396 crore as at March 31, 2021 and 2020, respectively, for purchase of property, plant and equipment. # Contingencies - Direct tax matters: Refer note 17. - Indirect tax matters: The Company and its subsidiaries in India have ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items.
The Company and its subsidiaries have demands amounting to `556 crore and `517 crore as at March 31, 2021 and 2020, 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 `194 crore and `211 crore as at March 31, 2021 and 2020, respectively, against the Group have not been acknowledged as debts. # Information about major customers No single customer represents 10% or more of the Group's total revenue for the years ended March 31, 2021 and 2020, respectively. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 245 # Notes forming part of Consolidated Financial Statements 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 alleging unauthorised access to and download of their confidential information and use thereof in the development of the Company's product MedMantra. In April 2016, the Company received an unfavourable jury verdict awarding damages of `6,900 crore (US $940 million) to Epic which was thereafter reduced by the Trial Court to `3,083 crore (US $420 million). Pursuant to reaffirmation of the District Court order in March 2019, the Company filed an appeal in the Appeals Court to fully set aside the Order. Epic also filed a cross appeal challenging the reduction by the District Court judge of `734 crore (US $100 million) award and `1,468 crore (US $200 million) in punitive damages. On August 20, 2020, the Appeals Court vacated the award of `2,055 crore (US $280 million) in punitive damages considering the award to be constitutionally excessive and remanded the case back to District Court with instructions to reassess and reduce the punitive damages award to at most `1,028 crore (US $140 million), affirmed the District Court's decision vacating the jury's award of `734 crore (US $100 million) in compensatory damages for alleged use of "other confidential information" by the Company, and affirmed the District Court's decision upholding the jury's award of `1,028 crore (US $140 million) in compensatory damages for use of the comparative analysis by the Company. The Company filed a petition for re-hearing of compensatory and punitive damages at the Appeals Court on September 3, 2020. Epic also filed for re-hearing that portion of the Appeals Court's decision that invalidated award of punitive damages. In November 2020, the petitions for re-hearing filed by the Company and Epic, respectively, were denied by the Appeals Court. The proceedings for assessing punitive damages have been remanded back to the District Court. Both the Company and Epic have filed their briefs at the District Court in relation to punitive damages. The matter is under consideration by the District Court. On April 8, 2021, Epic has approached the Supreme Court seeking review of the order of the Appeals Court vacating the award of `2,055 crore (US $280 million) towards punitive damages and remanding back to District Court with an instruction to reassess the punitive damages, to no more than `1,028 crore (US $140 million). The Company will continue to pursue all legal options available in the matter. Considering all the facts and various legal precedence, on a conservative and prudent basis, the Company has provided `1,218 crore (US $165 million) towards this legal claim in its statement of profit and loss for the year ended March 31, 2021. This has been presented as an "exceptional item" in the consolidated statement of profit and loss. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for `3,230 crore (US $440 million) as financial security in order to stay execution of the judgement pending post-appeal proceedings and conclusion. # Letter of comfort The Company has given letter of comfort to banks for credit facilities availed by its subsidiaries. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary. The amounts assessed as contingent liability do not include interest that could be claimed by counter parties.
# Notes forming part of 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, 2021\|% of voting power as at March 31, 2020\|Net assets, i.e. total assets minus total liabilities (` crore)\|Share in profit or loss As % of consolidated profit or loss\|Amount\|Share in other comprehensive income As % of other comprehensive income\|Amount\|Share in total comprehensive income As % of total comprehensive income\|Amount\| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Tata Consultancy Services Limited\|India\|-\|-\|80.20\|74,794\|86.46\|30,960\|(48.34)\|73\|87.03\|31,033\| \|Subsidiaries (held directly)\| \| \| \| \| \| \| \| \| \| \| \| \|APTOnline Limited\|India\|89.00\|89.00\|0.11\|101\|0.04\|15\|-\|-\|0.04\|15\| \|MP Online Limited\|India\|89.00\|89.00\|0.11\|104\|0.04\|16\|-\|-\|0.04\|16\| \|C-Edge Technologies Limited\|India\|51.00\|51.00\|0.30\|277\|0.20\|72\|-\|-\|0.20\|72\| \|MahaOnline Limited\|India\|74.00\|74.00\|0.09\|82\|0.01\|4\|-\|-\|0.01\|4\| \|TCS e-Serve International Limited\|India\|100.00\|100.00\|0.07\|69\|0.14\|51\|0.66\|(1)\|0.14\|50\| \|TCS Foundation\|India\|100.00\|100.00\|1.17\|1,088\|0.26\|93\|-\|-\|0.26\|93\| \|Diligenta Limited\|U.K.\|100.00\|100.00\|1.50\|1,403\|0.74\|265\|4.64\|(7)\|0.72\|258\| \|Tata Consultancy Services Canada Inc.\|Canada\|100.00\|100.00\|1.04\|970\|1.31\|468\|-\|-\|1.31\|468\| \|Tata America International Corporation\|U.S.A.\|100.00\|100.00\|1.26\|1,174\|1.84\|659\|1.32\|(2)\|1.84\|657\| \|Tata Consultancy Services Asia Pacific Pte Ltd.\|Singapore\|100.00\|100.00\|0.95\|885\|0.64\|230\|-\|-\|0.65\|230\| \|Tata Consultancy Services Belgium\|Belgium\|100.00\|100.00\|0.55\|511\|0.47\|167\|-\|-\|0.47\|167\| \|Tata Consultancy Services Deutschland GmbH\|Germany\|100.00\|100.00\|0.74\|692\|0.60\|216\|6.62\|(10)\|0.58\|206\| \|Tata Consultancy Services Netherlands BV\|Netherlands\|100.00\|100.00\|3.01\|2,811\|0.96\|344\|-\|-\|0.96\|344\| \|Tata Consultancy Services Sverige AB\|Sweden\|100.00\|100.00\|0.81\|758\|0.42\|152\|-\|-\|0.43\|152\| \|TCS FNS Pty Limited\|Australia\|100.00\|100.00\|0.16\|145\|0.22\|77\|-\|-\|0.22\|77\| \|TCS Iberoamerica SA\|Uruguay\|100.00\|100.00\|1.70\|1,588\|1.07\|384\|-\|-\|1.08\|384\| \|Tata Consultancy Services (Africa) (PTY) Ltd.\|South Africa\|100.00\|100.00\|0.06\|53\|0.07\|25\|-\|-\|0.07\|25\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 247 # Notes forming part of Consolidated Financial Statements \|Name of the entity\|Country of incorporation\|% of voting power as at March 31, 2021\|% of voting power as at March 31, 2020\|Net assets, i.e. total assets minus total liabilities\| \|Share in profit or loss\| \|Share in other comprehensive income\|Share in total comprehensive income\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|CMC Americas, Inc.\|U.S.A.\|-\|100.00\|-\|-\|0.08\|30\|-\|-\|0.08\|30\| \|Tata Consultancy Services Qatar S.S.C.\|Qatar\|100.00\|100.00\|0.03\|31\|-\|-\|-\|-\|-\|-\| \|W12 Studios Limited\|U.K.\|100.00\|100.00\|0.03\|28\|-\|-\|-\|-\|-\|-\| \|Tata Consultancy Services Ireland Limited\|Ireland\|100.00\|-\|0.25\|230\|0.04\|14\|-\|-\|0.04\|14\| \|Subsidiaries (held indirectly)\|Subsidiaries (held indirectly)\|Subsidiaries (held indirectly)\|Subsidiaries (held indirectly)\|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.\|U.S.A.\|100.00\|100.00\|-\|2\|0.04\|16\|-\|-\|0.04\|16\| \|Tata Consultancy Services (China) Co., Ltd.\|China\|93.20\|93.20\|0.25\|230\|0.15\|52\|-\|-\|0.15\|52\| \|Tata Consultancy Services Japan, Ltd.\|Japan\|66.00\|66.00\|1.52\|1,422\|0.65\|231\|-\|-\|0.65\|231\| \|Tata Consultancy Services Malaysia Sdn Bhd\|Malaysia\|100.00\|100.00\|0.10\|94\|0.08\|27\|-\|-\|0.08\|27\| \|PT Tata Consultancy Services Indonesia\|Indonesia\|100.00\|100.00\|0.03\|29\|0.03\|12\|-\|-\|0.03\|12\| \|Tata Consultancy Services (Philippines) Inc.\|Philippines\|100.00\|100.00\|0.11\|98\|0.01\|3\|(0.66)\|1\|0.01\|4\| \|Tata Consultancy Services (Thailand) Limited\|Thailand\|100.00\|100.00\|0.02\|15\|0.03\|10\|-\|-\|0.03\|10\| \|TCS Italia s.r.l.\|Italy\|100.00\|100.00\|0.06\|58\|0.07\|26\|-\|-\|0.07\|26\| \|Tata Consultancy Services Luxembourg S.A.\|Capellen (G.D. de Luxembourg)\|100.00\|100.00\|0.12\|110\|0.15\|53\|-\|-\|0.15\|53\| \|Tata Consultancy Services Switzerland Ltd.\|Switzerland\|100.00\|100.00\|0.58\|545\|0.69\|248\|4.64\|(7)\|0.68\|241\| \|Tata Consultancy Services Osterreich GmbH\|Austria\|100.00\|100.00\|0.01\|5\|-\|-\|-\|-\|-\|-\| \|Tata Consultancy Services Danmark ApS\|Denmark\|100.00\|100.00\|0.01\|6\|-\|-\|-\|-\|-\|-\| \|Tata Consultancy Services De Espana S.A.\|Spain\|100.00\|100.00\|0.06\|53\|0.03\|11\|-\|-\|0.03\|11\| \|Tata Consultancy Services (Portugal) Unipessoal, Limitada\|Portugal\|100.00\|100.00\|0.01\|5\|0.01\|5\|-\|-\|0.01\|5\| # Notes forming part of Consolidated Financial Statements \|Name of the entity\|Country of incorporation\|% of voting power as at March 31, 2021\|% of voting power as at March 31, 2020\|Net assets, i.e. total assets minus total liabilities (` crore)\|Share in profit or loss As % of consolidated profit or loss\|Amount (` crore)\|Share in other comprehensive income As % of total comprehensive income\|Amount (` crore)\|Share in total comprehensive income As % of total comprehensive income\|Amount (` crore)\| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Tata Consultancy Services France\|France\|100.00\|100.00\|(0.46)\| \|(0.03)\|(432)\| \| \|(0.04)\|(9)\|2.65\|(4)\|(0.04)\|(13)\| \|Tata Consultancy Services Saudi Arabia\|Saudi Arabia\|76.00\|76.00\|0.29\| \|0.08\|271\|(0.66)\|(1)\|0.08\|28\| \| \| \| \| \|TCS Business Services GmbH\|Germany\|100.00\|100.00\|(0.03)\| \|(0.01)\|(28)\|16.56\|(25)\|(0.08)\|(28)\| \| \| \| \| \|Postbank Systems AG\|Germany\|100.00\|-\|(0.02)\| \|(0.14)\|(21)\|106.62\|(161)\|(0.59)\|(212)\| \| \| \| \| \|Tata Consultancy Services (South Africa) (PTY) Ltd.\|South Africa\|100.00\|100.00\|0.09\|0.09\|85\| \|-\|-\|0.10\|34\| \| \| \| \| \|TCS Financial Solutions Beijing Co., Ltd.\|China\|100.00\|100.00\|0.04\| \|0.03\|37\|-\|-\|0.03\|9\| \| \| \| \| \|TCS Financial Solutions Australia Pty Limited\|Australia\|100.00\|100.00\|0.09\| \|0.11\|81\|-\|-\|0.11\|40\| \| \| \| \| \|TCS Solution Center S.A.\|Uruguay\|100.00\|100.00\|0.37\| \|0.33\|342\|-\|-\|0.33\|119\| \| \| \| \| \|TCS Uruguay S.A.\|Uruguay\|100.00\|100.00\|0.10\| \|0.83\|96\|-\|-\|0.83\|296\| \| \| \| \| \|Tata Consultancy Services Argentina S.A.\|Argentina\|100.00\|100.00\|-\| \|(0.01)\|2\|-\|-\|(0.01)\|(2)\| \| \| \| \| \|Tata Consultancy Services Do Brasil Ltda\|Brazil\|100.00\|100.00\|0.21\| \|0.20\|200\|-\|-\|0.20\|71\| \| \| \| \| \|Tata Consultancy Services De Mexico S.A., De C.V.\|Mexico\|100.00\|100.00\|1.08\| \|0.68\|1,004\|4.64\|(7)\|0.66\|237\| \| \| \| \| \|MGDC S.C.\|Mexico\|100.00\|100.00\|0.06\| \|0.12\|57\|1.31\|(2)\|0.12\|42\| \| \| \| \| \|TCS Inversiones Chile Limitada\|Chile\|100.00\|100.00\|0.35\| \|0.01\|327\|-\|-\|0.01\|2\| \| \| \| \| \|Tata Consultancy Services Chile S.A.\|Chile\|100.00\|100.00\|0.42\| \|(0.01)\|393\|-\|-\|(0.01)\|(2)\| \| \| \| \| \|Technology Outsourcing S.A.C.\|Peru\|-\|100.00\|-\| \|(0.02)\|-\|-\|-\|(0.02)\|(7)\| \| \| \| \| \|TATASOLUTION CENTER S.A.\|Ecuador\|100.00\|100.00\|0.11\| \|0.13\|103\|-\|-\|0.13\|45\| \| \| \| \| \|Trusts\|India\|-\|-\|0.28\| \|0.06\|277\|-\|-\|0.05\|14\| \| \| \| \| \|TOTAL\| \| \| \|100.00\| \|93,260\|100.00\|35,807\|100.00\|(151)\|100.00\|35,656\| \| \| \| \|a) Adjustments arising out of consolidation\| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \|(6,152)\| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \|(3,245)\| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \|612\| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| \|(2,632)\| \| \| \| \| # Notes forming part of Consolidated Financial Statements File: AR_TCS_2020_2021.md \|Name of the entity\|Country of incorporation\|% of voting power as at March 31, 2021\|% of voting power as at March 31, 2020\|Net assets, i.e.
total assets minus total liabilities (` crore)\|Share in profit or loss As % of consolidated profit or loss\|Amount (` crore)\|Share in other comprehensive income As % of total comprehensive income\|Amount (` crore)\|Share in total comprehensive income As % of total comprehensive income\|Amount (` crore)\| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Indian subsidiaries\|APTOnline Limited\| \| \|(11)\| \|(2)\| \| \|-\|(2)\|-\|(2)\|-\|(2)\| \| \|MP Online Limited\| \| \| \|(11)\| \|(2)\| \| \|-\|(2)\|-\|(2)\|-\|(2)\| \| \|C-Edge Technologies Limited\| \| \| \|(136)\| \|(40)\|-\|(40)\|-\|(40)\|-\|(40)\| \| \| \| \|MahaOnline Limited\| \| \| \|(21)\| \|(2)\| \| \|-\|(2)\|-\|(2)\|-\|(2)\| \| \|Foreign subsidiaries\|Tata Consultancy Services (China) Co., Ltd.\| \| \|(16)\| \|(4)\| \| \|-\|(4)\|-\|(4)\|-\|(4)\| \| \|Tata Consultancy Services Japan, Ltd.\| \| \| \|(480)\| \|(82)\| \|23\| \| \|(59)\|23\|(59)\|23\|(59)\| \|TOTAL\| \| \| \|86.433\| \|32,430\| \|484\| \| \|32,915\| \| \| \| \| # Notes: 1. CMC Americas, Inc. was liquidated w.e.f. December 16, 2020. 2. Tata Consultancy Services Ireland Limited was incorporated on December 2, 2020. 3. Tata Consultancy Services France SA was renamed as Tata Consultancy Services France. 4. Equity stake in Postbank Systems AG acquired w.e.f. January 1, 2021. 5. Equity stake in Technology Outsourcing S.A.C. was sold on December 1, 2020. Integrated Annual Report 2020-21 Consolidated Financial Statements \| 250 # Notes forming part of Consolidated Financial Statements # 22) Related party transactions The Company's principal related parties consist of its holding company Tata Sons Private Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The 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 from operations\|35\|609\|2,205\|-\|2,849\| \|Purchases of goods and services (including reimbursements)\|1\|475\|361\|-\|837\| \|Brand equity contribution\|180\|-\|-\|-\|180\| \|Facility expenses\|-\|20\|42\|-\|62\| \|Lease rental\|1\|36\|45\|-\|82\| # Year ended March 31, 2021 \| \|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\| \|---\|---\|---\|---\|---\|---\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|2\|-\|-\|2\| \|Contribution and advance to post employment benefit plans\|-\|-\|-\|5,913\|5,913\| \|Purchase of property, plant and equipment\|-\|3\|88\|-\|91\| \|Loans and advances given\|-\|1\|6\|-\|7\| \|Loans and advances recovered\|-\|1\|10\|-\|11\| \|Advances taken\|-\|1\|5\|-\|6\| \|Dividend paid\|7,817\|4\|3\|-\|7,824\| \|Buy-back of shares\|9,998\|4\|-\|-\|10,002\| Integrated Annual Report 2020-21 Consolidated Financial Statements \| 251 # Notes forming part of Consolidated Financial Statements # (` crore) # Year ended March 31, 2020 \|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 from operations\|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\| \|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\| # Balances receivable from related parties are as follows: # (` crore) # As at March 31, 2021 \|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\| \| \|---\|---\|---\|---\|---\|---\| \|Trade receivables, unbilled receivables and contract assets\|8\|260\|714\|-\|982\| \|Loans, other financial assets and other assets\|9\|27\|62\|-\|98\| \| \|17\|287\|776\|-\|1,080\| # As at March 31, 2020 \|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\| \|---\|---\|---\|---\|---\|---\| \|Trade receivables, unbilled receivables and contract assets\|4\|246\|681\|-\|931\| \|Loans, other financial assets and other assets\|10\|30\|65\|-\|105\| \| \|14\|276\|746\|-\|1,036\| # Notes forming part of Consolidated Financial Statements # Balances payable to related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\| \|As at March 31, 2021\|175\|299\|394\|-\|868\| # Material related party transactions are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue from operations\| \| \| \|Jaguar Land Rover Limited\|1,093\|1,142\| \| \| \| \| \|Tata Steel IJmuiden BV\|452\|351\| # Material related party balances are as follows: \| \| \|As at March 31, 2021\|As at March 31, 2020\| \| \| \|---\|---\|---\|---\|---\|---\| \|Trade receivables, unbilled receivables and contract assets\| \| \|Jaguar Land Rover Limited\|290\|209\| # Transactions with key management personnel are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \| \| \| \| \|Short-term benefits\|43\|28\| \| \| \| \| \|Dividend paid during the year\|1\|2\| \| \|Total\| \| \| \|44\|30\| # Integrated Annual Report 2020-21 # Consolidated Financial Statements \| 253 # Notes forming part of Consolidated Financial Statements 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 `10 crore and `9 crore as at March 31, 2021 and 2020, respectively. 24) The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company and its Indian subsidiaries will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published. March 31, 2020 include an amount of `18.00 per equity share towards final dividend for the year ended March 31, 2019 and an amount of `67.00 per equity share towards interim dividends (including special dividend) for the year ended March 31, 2020. Dividends declared by the Company are based on profits available for distribution.
On April 12, 2021, the Board of Directors of the Company have proposed a final dividend of `15.00 per share in respect of the year ended March 31, 2021 subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately `5,549 crore. 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 Rajesh Gopinathan CEO and Managing Director N Ganapathy Subramaniam COO and Executive Director 25) Dividends Dividends paid during the year ended March 31, 2021 include an amount of `6.00 per equity share towards final dividend for the year ended March 31, 2020 and an amount of `23.00 per equity share towards interim dividends for the year ended March 31, 2021. Dividends paid during the year ended Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Amit Somani Partner Membership No: 060154 V Ramakrishnan CFO Rajendra Moholkar Company Secretary Integrated Annual Report 2020-21 Consolidated Financial Statements \| 254 # Independent Auditors' Report # Basis for Opinion To the Members of Tata Consultancy Services Limited 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 on the standalone financial statements. # Opinion We have audited the standalone financial statements of Tata Consultancy Services Limited (hereinafter referred to as "the Company"), which comprise the Standalone Balance Sheet as at 31 March 2021, 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"). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2021, and profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date. # 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. Integrated Annual Report 2020-21 Standalone Financial Statements \| 255 # Description of Key Audit Matters \|Key audit matters\|How our audit addressed the key audit matter\| \|---\|---\| \|Revenue recognition- Fixed price contracts\|- These contracts may involve onerous obligations which requires critical assessment of foreseeable losses to be made by the Company; and - At year-end, significant amount of work in progress (Contract assets), related to these contracts are recognised on the balance sheet. \| The Company inter alia engages in Fixed-price contracts, wherein, revenue is recognized using the percentage of completion computed as per the input method based on the Company's estimate of contract costs (Refer Note 4(a) and Note 10 to the standalone financial statements).
We identified revenue recognition of fixed price contracts as a Key Audit Matter since - - There is an inherent risk and presumed fraud risk around the accuracy and existence of revenues recognised considering the customised and complex nature of these contracts and significant inputs of IT systems; - Application of revenue recognition accounting standard (Ind AS 115, Revenue from Contracts with customers) is complex and involves a number of key judgments and estimates mainly in identifying performance obligations, related transaction price and estimating the future cost-to-completion of these contracts, which is used to determine the percentage of completion of the relevant performance obligation; Our audit procedures included the following: - Obtained an understanding of the systems, processes and controls implemented by the Company for recording and computing revenue and the associated contract assets, unearned and deferred revenue balances. - Including involvement of our Information technology ('IT') specialists, as required: - - Assessed the IT environment in which the business systems operate and tested system controls over computation of revenue recognised; - Tested the IT controls over appropriateness of cost and revenue reports generated by the system; - Tested the controls pertaining to allocation of resources and budgeting systems which prevent the unauthorized recording/changes to costs incurred; and - Tested on a random sampling basis the controls relating to the estimation of contract costs required to complete the respective projects. We: Integrated Annual Report 2020-21 Standalone Financial Statements \| 256 # 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 included the following: - understood, assessed and tested the design, implementation and operating effectiveness of key controls over taxes; - Obtained an understanding of key tax matters; - The audit team, along with our internal tax experts - The Company has ongoing legal proceedings with Epic Systems Corporation (referred to as Epic), for alleged unauthorised access to and download of Epic's confidential information and use thereof in the development of the Company's product MedMantra. The Company in the current year has recorded a provision of `1,218 crore (US $165 million) towards this legal claim in its 'Standalone Statement of Profit and Loss'. This has been presented as an "exceptional item" in the Standalone Statement of Profit and Loss. Due to the complexity involved in this litigation, the Company applied judgement in measuring and recognizing provision towards the legal claim. This process involved an evaluation based on judicial precedents and views shared by the lawyers (external and internal) of the Company and detailed deliberations with the Company's senior management. Accordingly, it has been considered as a key audit matter. # Assessment of provision towards legal claim Refer to Note 4(f) to the standalone financial statements - "Use of estimates and judgements - Provisions and contingent liabilities" and Note 19 to the standalone financial statements - "Commitments and contingencies". # How our audit addressed the key audit matter Our audit procedures included the following: - obtained management assessment on the litigation along with the communications made to the Board of Directors and regulators; # Other Information The Board of Directors is also responsible for a true and fair view of the state of affairs, profit/loss (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. # Auditor's Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. 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. # Management's and Board of Directors' 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. our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls. - Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. # Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditors' Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 2. (A) As required by Section 143(3) of the Act, we report that: - (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. Integrated Annual Report 2020-21 Standalone Financial Statements \| 259 # Report of the Auditors (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 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2021 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 2021 on its financial position in its standalone financial statements - Refer Note 19 to the standalone financial statements; - 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; iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank. For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Amit Somani Partner Bengaluru 12 April 2021 Membership No: 060154 UDIN: 21060154AAAAAU5511 # Annexure A to the Independent Auditors' report on the standalone financial statements of Tata Consultancy Services Limited for the year ended 31 March 2021 (Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date) # (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, certain fixed assets were physically verified during the year and no material discrepancies were noticed on such verification. (c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company. # (ii) 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. # (iii) 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. # (iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act, with respect to the loans given, investments made, guarantees and securities given. # (v) 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. # (vi) The Central Government has not prescribed the maintenance of cost records under Section 148 of the Act for any of the services rendered by the Company.
# (vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees' State Insurance, Income-tax, Goods and Services tax, duty of Customs, Cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund were outstanding at the year-end. # Integrated Annual Report 2020-21 # Standalone Financial Statements \|Name of the Statute\|Nature of the Dues\|Amount (` in crores)*\|Period\|Forum where dispute is pending\| \|---\|---\|---\|---\|---\| \|Employees' State Insurance, Income-tax, Goods and Services tax, duty of Customs, Cess and other material statutory dues\|in arrears\| \|as at 31 March 2021, for a period of more than six months from the date they became payable.\| \| \|Income-tax Act, 1961\|Income-tax\|1,222\|Assessment Year - 2007-08, 2011-12, 2015-16\|Commissioner of Income Tax (Appeals)\| \|The Finance Act, 1994\|Service tax\|-\|Financial Year - 2002-2003, 2003-2004, 2004-2005\|Commissioner Appeals\| File: AR_TCS_2020_2021.md \|The Central Sales Tax Act, 1956 and Value Added Tax Act\|Sales tax and VAT\|218\|Financial Year - 1994-1995, 2004-2005, 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017, 2017-2018\|High Court\| \|Goods and Service Tax Act\|GST\|19\|Financial Year - 2019-20, 2020-21\|Commissioner Appeals\| Indicates amount less than `0.50 crore *These amounts are net of amount paid/ adjusted under protest `767 Crores # Integrated Annual Report 2020-21 # Standalone 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 year. # (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 Indian 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. # (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. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company. For B S R & Co.
LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Amit Somani Partner Bengaluru Membership No: 060154 12 April 2021 UDIN: 21060154AAAAAU5511 # Annexure B to the Independent Auditors' Report on the standalone financial statements of Tata Consultancy Services Limited for the year ended 31 March 2021 # Report on the internal financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 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 2021 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 2021, 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 on Audit of Internal Financial Controls. # Auditors' 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. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to standalone financial statements and their operating effectiveness. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Integrated Annual Report 2020-21 Standalone Financial Statements \| 264 # 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 internal financial controls with reference to standalone financial statements to future periods are subject to the risk that the internal financial controls with reference to standalone 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 Amit Somani Partner Bengaluru Membership No: 060154 12 April 2021 UDIN: 21060154AAAAAU5511 Integrated Annual Report 2020-21 Standalone Financial Statements \| 265 # Standalone Balance Sheet \|Note\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|ASSETS\|ASSETS\|ASSETS\| \|Non-current assets\|Non-current assets\|Non-current assets\| \|Property, plant and equipment\|9,821\|9,835\| \|Capital work-in-progress\|861\|781\| \|Right-of-use assets\|5,876\|6,048\| \|Intangible assets\|362\|239\| \|Financial assets\|Financial assets\|Financial assets\| \|Investments\|2,405\|2,189\| \|Trade receivables\|55\|74\| \|Unbilled receivables\|260\|324\| \|Loans\|2\|2\| \|Other financial assets\|645\|624\| \|Current assets\|Current assets\|Current assets\| \|Inventories\|7\|5\| \|Investments\|28,324\|25,686\| \|Trade receivables\|25,222\|28,660\| \|Unbilled receivables\|5,399\|4,763\| \|Cash and cash equivalents\|1,112\|3,852\| \|Other balances with banks\|2,030\|972\| \|Loans\|10,486\|7,270\| \|Other financial assets\|1,363\|1,448\| \|Other assets\|9,217\|6,538\| \|Income tax assets (net)\|1,501\|2,020\| \|Deferred tax assets (net)\|3,160\|2,219\| \|Total current assets\|83,160\|79,194\| \|Total non-current assets\|26,221\|25,781\| \|TOTAL ASSETS\|TOTAL ASSETS\|TOTAL ASSETS\| \|1,09,381\|1,09,381\|1,04,975\| \|EQUITY AND LIABILITIES\|EQUITY AND LIABILITIES\|EQUITY AND LIABILITIES\| \|Equity\|Equity\|Equity\| \|Share capital\|370\|375\| \|Other equity\|74,424\|73,993\| \|Total equity\|74,794\|74,368\| # Standalone Balance Sheet \|Note\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Liabilities\|Liabilities\|Liabilities\| \|Non-current liabilities\|Non-current liabilities\|Non-current liabilities\| \|Financial liabilities\| \| \| \|Lease liabilities\|5,077\|5,262\| \|Other financial liabilities\|228\|237\| \|Unearned and deferred revenue\|284\|644\| \|Employee benefit obligations\|108\|91\| \|Deferred tax liabilities (net)\|365\|347\| \|Total non-current liabilities\|6,062\|6,581\| \|Current liabilities\|Current liabilities\|Current liabilities\| \|Financial liabilities\| \| \| \|Lease liabilities\|835\|848\| \|Trade payables\| \| \| \|Dues of small enterprises and micro enterprises\|-\|-\| \|Dues of creditors other than small enterprises and micro enterprises\|7,962\|8,734\| \|Other financial liabilities\|4,473\|4,694\| \|Unearned and deferred revenue\|2,877\|2,271\| \|Other liabilities\|2,720\|2,048\| \|Provisions\|1,350\|235\| \|Employee benefit obligations\|2,598\|2,057\| \|Income tax liabilities (net)\|5,710\|3,139\| \|Total current liabilities\|28,525\|24,026\| \|Total equity and liabilities\|1,09,381\|1,04,975\| NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Rajesh Gopinathan N Ganapathy Subramaniam Chartered Accountants CEO and Managing Director COO and Executive Director Firm's registration no: 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Integrated Annual Report 2020-21 Standalone Financial Statements \| 267 # Standalone Statement of Profit and Loss \|Note\|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Revenue from operations\|1,35,963\|1,31,306\| \|Other income\|5,400\|8,082\| \|TOTAL INCOME\|1,41,363\|1,39,388\| # Expenses \|Employee benefit expenses\|69,046\|64,906\| \|---\|---\|---\| \|Cost of equipment and software licences\|1,230\|1,596\| \|Finance costs\|537\|743\| \|Depreciation and amortisation expense\|3,053\|2,701\| \|Other expenses\|25,377\|27,451\| \|TOTAL EXPENSES\|99,243\|97,397\| # Profit Before Exceptional Item and Tax \|PROFIT BEFORE EXCEPTIONAL ITEM AND TAX\|42,120\|41,991\| \|---\|---\|---\| \|Exceptional item\| \| \| \|Provision towards legal claim\|1,218\|-\| \|PROFIT BEFORE TAX\|40,902\|41,991\| # Tax Expense \|Current tax\|10,300\|9,012\| \|---\|---\|---\| \|Deferred tax\|(358)\|(281)\| \|TOTAL TAX EXPENSE\|9,942\|8,731\| # Profit for the Year PROFIT FOR THE YEAR 30,960 33,260 # Other Comprehensive Income (OCI) \|Items that will not be reclassified subsequently to profit or loss\| \| \| \|---\|---\|---\| \|Remeasurement of defined employee benefit plans\|(16)\|(409)\| \|Income tax on items that will not be reclassified subsequently to profit or loss\|3\|86\| \|TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)\|73\|174\| # Total Comprehensive Income for the Year TOTAL COMPREHENSIVE INCOME FOR THE YEAR 31,033 33,434 # Earnings per Equity Share \|Earnings per equity share:- Basic and diluted (`)\|82.78\|88.64\| \|---\|---\|---\| \|Weighted average number of equity shares\|374,01,10,733\|375,23,84,706\| # Notes Forming Part of Standalone Financial Statements As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Rajesh Gopinathan N Ganapathy Subramaniam Chartered Accountants CEO and Managing Director Firm's registration no: 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar CFO Company Secretary Bengaluru, April 12, 2021 Mumbai, April 12, 2021 # Standalone Statement of Changes in Equity # A. EQUITY SHARE CAPITAL \| \|Balance as at April 1, 2019\|Changes in equity share capital during the year\|Balance as at March 31, 2020\| \|---\|---\|---\|---\| \|(` crore)\|375\|-\|375\| \| \|Balance as at April 1, 2020\|Changes in equity share capital during the year1\|Balance as at March 31, 2021\| \|(` crore)\|375\|(5)\|370\| 1 Refer note 6(m). # B.
OTHER EQUITY \| \| \|Reserves and surplus\| \| \| \|Items of other comprehensive income\| \|Total Equity\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Capital reserve\|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 tax\|-\|-\|-\|(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\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 269 # Standalone Statement of Changes in Equity \|(` crore)\| \|Reserves and surplus\| \| \| \|Items of other comprehensive income\| \|Total Equity\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Capital reserve\|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, 2020\|-\|8\|1,594\|71,532\|882\|45\|(68)\|73,993\| \|Profit for the year\|-\|-\|-\|30,960\|-\|-\|-\|30,960\| \|Other comprehensive income / (losses)\|-\|-\|-\|(13)\|34\|11\|41\|73\| \|Total comprehensive income\|-\|-\|-\|30,947\|34\|11\|41\|31,033\| \|Dividend\|-\|-\|-\|(10,850)\|-\|-\|-\|(10,850)\| \|Expenses for buy-back of equity shares1\|-\|-\|-\|(31)\|-\|-\|-\|(31)\| \|Tax on buy-back of equity shares1\|-\|-\|-\|(3,726)\|-\|-\|-\|(3,726)\| \|Buy-back of equity shares1\|-\|5\|-\|(16,000)\|-\|-\|-\|(15,995)\| \|Transfer to Special Economic Zone re-investment reserve\|-\|-\|5,058\|(5,058)\|-\|-\|-\|-\| \|Transfer from Special Economic Zone re-investment reserve\|-\|-\|(4,114)\|4,114\|-\|-\|-\|-\| \|Balance as at March 31, 2021\|-\|13\|2,538\|70,928\|916\|56\|(27)\|74,424\| *Represents values less than `0.50 crore. 1Refer Note 6(m). Integrated Annual Report 2020-21 Standalone Financial Statements \| 270 # 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. Retained earnings This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date. # e. 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. # f. 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 STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For B S R & Co.
LLP Chartered Accountants Firm's registration no: 101248W/W-100022 Amit Somani Partner Membership No: 060154 Bengaluru, April 12, 2021 Integrated Annual Report 2020-21 For and on behalf of the Board Rajesh Gopinathan N Ganapathy Subramaniam CEO and Managing Director COO and Executive Director V Ramakrishnan Rajendra Moholkar CFO Company Secretary Mumbai, April 12, 2021 Standalone Financial Statements \| 271 # Standalone Statement of Cash Flows \| \|Year ended March 31, 2021\|Year ended March 31, 2021\|Year ended March 31, 2020\|Year ended March 31, 2020\| \|---\|---\|---\| \| \|(` crore)\|(` crore)\|(` crore)\|(` crore)\| \|CASH FLOWS FROM OPERATING ACTIVITIES\| \| \| \| \| \|Profit for the year\|30,960\|33,260\| \| \| \|Adjustments to reconcile profit and loss to net cash provided by operating activities\| \| \| \| \| \|Depreciation and amortisation expense\|3,053\|2,701\| \| \| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|185\|132\| \| \| \|Provision towards legal claim (Refer note 19)\|1,218\|-\| \| \| \|Tax expense\|9,942\|8,731\| \| \| \|Net gain on lease modification\|(89)\|(4)\| \| \| \|Unrealised foreign exchange gain\|(20)\|(130)\| \| \| \|Net gain on disposal of property, plant and equipment\|(19)\|(50)\| \| \| \|Net gain on investments\|(193)\|(197)\| \| \| \|Interest income\|(2,383)\|(3,197)\| \| \| \|Dividend income (Including exchange impact)\|(2,211)\|(3,995)\| \| \| \|Finance costs\|537\|743\| \| \| \|Realised foreign exchange gain on proceeds from liquidation of wholly owned subsidiary (Refer note 6(a))\|(5)\|-\| \| \| \|Operating profit before working capital changes\|40,975\|37,994\| \| \| \|Net change in\| \| \| \| \| \|Inventories\|(3)\|5\| \| \| \|Trade receivables\|3,282\|(4,736)\| \| \| \|Unbilled receivables\|(572)\|(311)\| \| \| \|Loans and other financial assets\|(54)\|(72)\| \| \| \|Other assets\|(2,432)\|(3,072)\| \| \| \|Trade payables\|(771)\|1,042\| \| \| \|Unearned and deferred revenue\|246\|449\| \| \| \|Other financial liabilities\|(171)\|1,183\| \| \| \|Other liabilities and provisions\|1,127\|487\| \| \| \|Cash generated from operations\|41,627\|32,969\| \| \| \|Taxes paid (net of refunds)\|(7,805)\|(6,366)\| \| \| \|Net cash generated from operating activities\|33,822\|26,603\| \| \| \|CASH FLOWS FROM INVESTING ACTIVITIES\| \| \| \| \| \|Bank deposits placed\|(5,678)\|(6,999)\| \| \| \|Inter-corporate deposits placed\|(20,139)\|(13,694)\| \| \| \|Purchase of investments\|(51,822)\|(77,191)\| \| \| \|Payment for purchase of property, plant and equipment\|(2,071)\|(1,951)\| \| \| \|Payment including advances for acquiring right-of-use assets\|(101)\|(519)\| \| \| \|Payment for purchase of intangible assets\|(242)\|(172)\| \| \| \|Payment towards subscription of shares in wholly owned subsidiary (Refer note 6(a))\|(224)\|-\| \| \| \|Proceeds from bank deposits\|4,617\|11,612\| \| \| \|Proceeds from inter-corporate deposits\|16,892\|13,400\| \| \| \|Proceeds from disposal / redemption of investments\|49,333\|80,865\| \| \| \|Proceeds from disposal of property, plant and equipment\|31\|130\| \| \| # Standalone Statement of Cash Flows \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Proceeds from liquidation of wholly owned subsidiary (Refer note 6(a))\|12\|-\| \|Interest received\|2,605\|3,353\| \|Dividend received from subsidiaries\|2,211\|3,995\| \|Net cash generated from / (used in) investing activities\|(4,576)\|12,829\| \|CASH FLOWS FROM FINANCING ACTIVITIES\|CASH FLOWS FROM FINANCING ACTIVITIES\|CASH FLOWS FROM FINANCING ACTIVITIES\| \|Repayment of lease liabilities\|(879)\|(668)\| \|Interest paid\|(537)\|(743)\| \|Dividend paid (including tax on dividend in previous year)\|(10,850)\|(37,634)\| \|Transfer of funds to buy-back escrow account\|(160)\|-\| \|Transfer of funds from buy-back escrow account\|160\|-\| \|Expenses for buy-back of equity shares (Refer note 6(m))\|(31)\|-\| \|Tax on buy-back of equity shares (Refer note 6(m))\|(3,726)\|-\| \|Buy-back of equity shares (Refer note 6(m))\|(16,000)\|-\| \|Net cash used in financing activities\|(32,023)\|(39,045)\| \|Net change in cash and cash equivalents\|(2,777)\|387\| \|Cash and cash equivalents at the beginning of the year\|3,852\|3,327\| \|Exchange difference on translation of foreign currency cash and cash equivalents\|37\|138\| \|Cash and cash equivalents at the end of the year (Refer note 6(c))\|1,112\|3,852\| NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS As per our report of even date attached For and on behalf of the Board For B S R & Co. LLP Rajesh Gopinathan N Ganapathy Subramaniam CEO and Managing Director COO and Executive Director Firm's registration no: 101248W/W-100022 Amit Somani V Ramakrishnan Rajendra Moholkar Partner CFO Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 # Notes forming part of 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. 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, 2021, Tata Sons Private Limited, the holding company owned 72.16% of the Company's equity share capital.
The Board of Directors approved the standalone financial statements for the year ended March 31, 2021 and authorised for issue on April 12, 2021. # 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 the Companies (Indian Accounting Standards) Rules as amended from time to time. # 3) Basis of preparation 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, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents. 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. 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 standalone financial statements have been discussed in the respective notes. # Notes forming part of Standalone Financial Statements # 4) Use of estimates and judgements The preparation of the standalone financial statements in conformity with the recognition and measurement principles of Ind AS requires management of the Company to make estimates and judgements that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the standalone 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 standalone financial statements: # (a) Revenue recognition Revenue for fixed-price contract is recognised using percentage-of-completion method. The Company uses judgement to estimate the future cost-to-completion of the contracts which is used to determine degree of completion of the performance obligation. # (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. 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 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 File: AR_TCS_2020_2021.md 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. # Notes forming part of Standalone Financial Statements 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 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 standalone financial statements. # (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. # (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 judgement. 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. 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. # (i) Impact of COVID-19 (pandemic) The Company has taken into account all the possible impacts of COVID-19 in preparation of these standalone financial statements, including but not limited to its assessment of, liquidity and going concern assumption, recoverable values of its financial and non-financial assets, impact on revenue recognition owing to changes in cost budgets of fixed price contracts, impact on leases and impact on effectiveness of its hedges. The Company has carried out this assessment based on available internal and external sources of information up to the date of approval of these standalone financial statements and believes that the impact of COVID-19 is not material to these financial statements and expects to recover the carrying amount of its assets. The impact of COVID-19 on the standalone financial statements may differ from that estimated as at the date of approval of these standalone financial statements owing to the nature and duration of COVID-19. Standalone Financial Statements \| 276 # Recent pronouncements On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013.
The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are: # Balance Sheet: - Lease liabilities should be separately disclosed under the head 'financial liabilities', duly distinguished as current or non-current. - Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period. - Specified format for disclosure of shareholding of promoters. - Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development. - If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used. - Specific disclosure under 'additional regulatory requirement' such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc. # Statement of profit and loss: - Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head 'additional information' in the notes forming part of the standalone financial statements. The amendments are extensive and the Company will evaluate the same to give effect to them as required by law. # 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 and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. # Cash and cash equivalents The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage. # Notes forming part of Standalone Financial Statements # Financial assets at amortised cost Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. # Financial assets at fair value through other comprehensive income Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income. # Financial assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss. # Investment in subsidiaries Investment in subsidiaries are measured at cost less impairment loss, if any. 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 # Instruments in hedging relationship The Company designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges. The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board of Directors. The policies provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The hedge instruments are designated and documented as hedges at the inception of the contract. The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception. Integrated Annual Report 2020-21 Standalone Financial Statements \| 278 # Notes forming part of Standalone Financial Statements and on an ongoing basis. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in net foreign exchange gains in the statement of profit and loss. The effective portion of change in the fair value of the designated hedging instrument is recognised in the other comprehensive income and accumulated under the heading cash flow hedging reserve. The Company separates the intrinsic value and time value of an option and designates as hedging instruments only the change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised in the statement of other comprehensive income and accounted as a separate component of equity. Such amounts are reclassified into the statement of profit and loss when the related hedged items affect profit and loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit and loss. Any gain or loss is recognised immediately in statement of profit and loss when the hedge becomes ineffective. # Impairment of financial assets (other than at fair value) The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. In determining the allowances for doubtful trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and allowance rates used in the provision matrix. For all other financial assets, expected credit losses are measured at an amount equal to the 12-months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. # Instruments not in hedging relationship The Company enters into 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 statement of profit and loss.
Integrated Annual Report 2020-21 Standalone Financial Statements \| 279 # Notes forming part of Standalone Financial Statements # (a) Investments Investments consist of the following: # Investments - Non-current \| \| \| \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\|---\| \|Investment in subsidiaries\|Fully paid equity shares (unquoted)\|2,405\|2,189\| \| \| \|Investments designated at fair value through OCI\|Fully paid equity shares (unquoted)\|Taj Air Limited\|19\|19\| \| \|Less: Impairment in value of investments\| \|(19)\|(19)\| \| \| \| \| \|2,405\|2,189\| \| \| # Investments - Current \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \|Investments carried at fair value through profit or loss\|Mutual fund units (quoted)\|4,068\|1,264\| \|Investments carried at fair value through OCI\|Government bonds and securities (quoted)\|23,670\|24,290\| \|Corporate bonds (quoted)\|450\|132\| \| \|Investments carried at amortised cost\|Commercial papers (quoted)\|136\|-\| \| \|28,324\|25,686\| \| Government bonds and securities includes bonds pledged with bank for credit facility amounting to `1,650 crore and NIL as at March 31, 2021 and 2020, respectively. # Aggregate value of quoted and unquoted investments is as follows: \|(` crore)\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Aggregate value of quoted investments\|28,324\|25,686\| \|Aggregate value of unquoted investments (net of impairment)\|2,405\|2,189\| \|Aggregate market value of quoted investments\|28,324\|25,686\| \|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, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Commercial Paper\|136\|-\| # Carrying value of investment in equity instruments is as follows: \|In Numbers\|Currency\|Face value per share\|Investment in subsidiaries\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\|---\| \|212,27,83,424\|UYU\|1\|TCS Iberoamerica SA\|461\|461\| \|15,75,300\|INR\|10\|APTOnline Limited\|-\|-\| \|1,300\|EUR\|-\|Tata Consultancy Services Belgium\|1\|1\| \|66,000\|EUR\|1,000\|Tata Consultancy Services Netherlands BV\|403\|403\| # Notes forming part of Standalone Financial Statements \|In Numbers\|Currency\|Face value per share\|Investment in subsidiaries\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\|---\| \|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\| # Integrated Annual Report 2020-21 \|In Numbers\|Currency\|Face value per share\|Investment in subsidiaries\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\|---\| \|16,00,01,000\|USD\|0.01\|CMC Americas, Inc.1\|-\|8\| \|10,00,000\|INR\|100\|TCS e-Serve International Limited\|10\|10\| \|1,00,500\|GBP\|0.00001\|W12 Studios Limited\|66\|66\| \|2,50,00,000\|EUR\|1\|Tata Consultancy Services Ireland Limited2\|224\|-\| \|10,00,000\|INR\|10\|TCS Foundation\|-\|-\| # Equity instruments designated at fair value through OCI \|In Numbers\|Currency\|Face value per share\|Investment in subsidiaries\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\|---\|---\|---\| \|1,90,00,000\|INR\|10\|Taj Air Limited\|19\|19\| \| \| \| \|Less : Impairment in value of investments\|(19)\|(19)\| \| \| \| \| \|-\|-\| # Notes: 1. CMC Americas, Inc., a wholly owned subsidiary of the Company incorporated in USA, was liquidated w.e.f. December 16, 2020. 2. The Company incorporated a wholly owned subsidiary, Tata Consultancy Services Ireland Limited in Ireland on December 2, 2020. Standalone Financial Statements \| 281 # Notes forming part of Standalone Financial Statements # The movement in fair value of investments carried / designated at fair value through OCI is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|882\|258\| \|Net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|51\|972\| \|Deferred tax relating to net gain / (loss) arising on revaluation of investments other than equities carried at fair value through other comprehensive income\|(17)\|(340)\| \|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\|916\|882\| # (b) Trade receivables Trade receivables (unsecured) consist of the following: # Trade receivables - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Trade receivables\|787\|656\| \|Less: Allowance for doubtful trade receivables\|(732)\|(582)\| \|Considered good\|55\|74\| # Trade receivables - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Trade receivables\|25,361\|28,822\| \|Less: Allowance for doubtful trade receivables\|(183)\|(227)\| \|Considered good\|25,178\|28,595\| \|Trade receivables\|211\|194\| \|Less: Allowance for doubtful trade receivables\|(167)\|(129)\| \|Credit impaired\|44\|65\| \| \|25,222\|28,660\| Above balances of trade receivables include balances with related parties (Refer note 21).
# (c) Cash and cash equivalents Cash and cash equivalents consist of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Balances with banks\| \| \| \|In current accounts\|1,032\|3,848\| \|In deposit accounts\|77\|4\| \|Cheques on hand\|-\|-\| \|Cash on hand\|-\|-\| \|Remittances in transit\|3\|-\| \| \|1,112\|3,852\| *Represents value less than `0.50 crore. # Notes forming part of Standalone Financial Statements # (d) Other balances with banks Other balances with banks consist of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \|Other balances with banks\| \| \| \| \|(` crore)\|(` crore)\| \|Earmarked balances with banks\|182\|185\| \| \| \| \| \|Short-term bank deposits\|1,848\|787\| \| \| \| \| \| \|2,030\|972\| \| \| \| \| \| \|Credit impaired Loans and advances to employees\| \| \|15\|14\| \| \|Less: Allowance on loans and advances to employees\| \| \| \|(15)\|(14)\| \| \| \| \| \| \|10,486\|7,270\| \| Earmarked balances with banks primarily relate to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends. # (e) Loans Loans (unsecured) consist of the following: # Loans - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Loans - Non-current\|(` crore)\|(` crore)\| \|Considered good\| \| \| \|Loans and advances to employees\|2\|2\| \| \|2\|2\| \|Total\|645\|624\| # Loans - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Loans - Current\|(` crore)\|(` crore)\| \|Considered good\| \| \| \|Inter-corporate deposits\|10,291\|7,044\| \|Loans and advances to employees\|195\|226\| \|Total\|1,363\|1,448\| # Notes forming part of Standalone Financial Statements # (g) Dues of small enterprises and micro enterprises \| \|As at March 31, 2021\|As at March 31, 2021\|As at March 31, 2020\|As at March 31, 2020\| \|---\|---\|---\| \| \|Principal\|Interest\|Principal\|Interest\| \|Amount due to vendor\|-\|-\|-\|-\| \|Amount paid beyond the appointed date during the year\|39\|-\|140\|2\| \|Interest due and payable for the year\|-\|-\|-\|-\| \|Interest accrued and remaining unpaid (includes interest disallowable of NIL (March 31, 2020: NIL))\|-\|-\|-\|-\| Dues to small enterprises and micro enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Company. # (h) Other financial liabilities Other financial liabilities consist of the following: # Other financial liabilities - Non-current \| \|As at March 31, 2021\| \|As at March 31, 2020\| \|---\|---\|---\|---\| \|Capital creditors\| \|-\|3\| \|Others\| \|228\|234\| \| \|228\|228\|237\| \| Others include advance taxes paid of `226 crore and `226 crore as at March 31, 2021 and 2020, respectively, by the seller of TCS e-Serve Limited (merged with the Company) which, on refund by tax authorities is payable to the seller. # Other financial liabilities - Current \| \|As at March 31, 2021\|As at March 31, 2021\|As at March 31, 2020\|As at March 31, 2020\| \| \| \|---\|---\|---\|---\|---\| \|Accrued payroll\| \| \|3,029\|2,745\| \|Unclaimed dividends\| \| \|50\|53\| \|Fair value of foreign exchange derivative liabilities\| \| \|92\|693\| \|Capital creditors\| \| \|347\|383\| \|Liabilities towards customer contracts\| \| \|860\|759\| \|Others\| \| \|95\|61\| \| \| \| \|4,473\|4,694\| # (i) Financial instruments by category The carrying value of financial instruments by categories as at March 31, 2021 is as follows: \| \|Fair value through profit or loss\|Fair value through other comprehensive income\|Derivative instruments in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Financial assets\|Cash and cash equivalents\|-\|-\|-\|1,112\|1,112\| \| \| \|Bank deposits\|-\|-\|-\|1,848\|1,848\| \| \| \|Earmarked balances with banks\|-\|-\|-\|182\|182\| \| \| \|Investments (other than in subsidiary)\|4,068\|24,120\|-\|136\|28,324\| \| \| \|Trade receivables\|-\|-\|-\|25,277\|25,277\| \| \| \|Unbilled receivables\|-\|-\|-\|5,659\|5,659\| \| \| \|Loans\|-\|-\|-\|10,488\|10,488\| \| \| \|Other financial assets\|-\|-\|163\|332\|2,008\| \| \| \| \|4,068\|24,120\|163\|332\|46,215\|74,898\| Financial liabilities \| \|Trade payables\|Lease liabilities\|Other financial liabilities\| \| \| \| \|---\|---\|---\|---\|---\|---\|---\| \| \|-\|-\|2\|90\|4,609\|4,701\| \| \|-\|-\|2\|90\|18,483\|18,575\| Loans include inter-corporate deposits of `10,291 crore, with original maturity period within 9 months.
# Notes forming part of Standalone Financial Statements 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 carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Financial assets\|-\|-\|-\|-\|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\|-\|-\|-\|-\|7,272\|7,272\| \|Other financial assets\|-\|-\|146\|279\|1,647\|2,072\| \|Total Financial Assets\|Total Financial Assets\|Total Financial Assets\|Total Financial Assets\|Total Financial Assets\|47,564\|73,675\| \| \|Fair value through profit or loss\|Fair value through other comprehensive income\|Derivative instruments in hedging relationship\|Derivative instruments not in hedging relationship\|Amortised cost\|Total carrying value\| \|---\|---\|---\|---\|---\|---\|---\| \|Financial liabilities\|-\|-\|-\|-\|8,734\|8,734\| \|Lease liabilities\|-\|-\|-\|-\|6,110\|6,110\| \|Other financial liabilities\|-\|-\|34\|659\|4,238\|4,931\| \|Total Financial Liabilities\|Total Financial Liabilities\|Total Financial Liabilities\|Total Financial Liabilities\|Total Financial Liabilities\|19,082\|19,775\| # (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. Loans include inter-corporate deposits of `7,044 crore, with original maturity period within 12 months. Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables, loans and trade payables as at March 31, 2021 and 2020 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 `136 crore and NIL as at March 31, 2021 and 2020, respectively. Integrated Annual Report 2020-21 Standalone Financial Statements \| 285 # Notes forming part of Standalone Financial Statements \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2021\| \| \| \| \| \|Financial assets\| \| \| \| \| \|Mutual fund units\|4,068\|-\|-\|4,068\| \|Equity shares\|-\|-\|-\|-\| \|Government bonds and securities\|23,670\|-\|-\|23,670\| \|Corporate bonds\|450\|-\|-\|450\| \|Commercial papers\|136\|-\|-\|136\| \|Fair value of foreign exchange derivative assets\|-\|495\|-\|495\| \| \|28,324\|495\|-\|28,819\| \|Financial liabilities\| \| \| \| \| \|Fair value of foreign exchange derivative liabilities\|-\|92\|-\|92\| \| \|-\|92\|-\|92\| \| \|Level 1\|Level 2\|Level 3\|Total\| \|---\|---\|---\|---\|---\| \|As at March 31, 2020\| \| \| \| \| \|Financial assets\| \| \| \| \| \|Mutual fund units\|1,264\|-\|-\|1,264\| \|Equity shares\|-\|-\|-\|-\| \|Government bonds and securities\|24,290\|-\|-\|24,290\| \|Corporate bonds\|132\|-\|-\|132\| \|Fair value of foreign exchange derivative assets\|-\|425\|-\|425\| \| \|25,686\|425\|-\|26,111\| \|Financial liabilities\| \| \| \| \| \|Fair value of foreign exchange derivative liabilities\|-\|693\|-\|693\| \| \|-\|693\|-\|693\| # (k) Derivative financial instruments and hedging activity The Company's revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations. The Board of Directors have constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange forward, currency options and futures contracts in which the counter party is generally a bank. Integrated Annual Report 2020-21 Standalone Financial Statements \| 286 # Notes forming part of Standalone 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\|63\|1,615\|51\|55\|1,420\|20\| File: AR_TCS_2020_2021.md \|Great Britain Pound\|64\|330\|14\|71\|384\|59\| \|Euro\|60\|346\|78\|38\|363\|(31)\| \|Australian Dollar\|38\|206\|16\|26\|192\|48\| \|Canadian Dollar\|23\|114\|2\|19\|104\|16\| # Movement in Cash Flow Hedging Reserve \|Year ended\|March 31, 2021\|March 31, 2020\| \| \| \| \|Intrinsic value\|Time value\|Intrinsic value\|Time value\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \| \| \| \| \|Balance at the beginning of the year\|45\|(68)\|134\|(30)\| \|(Gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\| \| \| \| \| \| \|(341)\|530\|(449)\|513\| \|Deferred tax on (gain) / loss transferred to profit and loss on occurrence of forecasted hedge transactions\| \| \| \| \| \| \|73\|(125)\|54\|(38)\| \|Change in the fair value of effective portion of cash flow hedges\| \| \| \| \| \| \|355\|(477)\|355\|(565)\| \|Deferred tax on fair value of effective portion of cash flow hedges\| \| \| \| \| \| \|(76)\|113\|(49)\|52\| \| \| \| \| \| \| \|Balance at the end of the year\|56\|(27)\|45\|(68)\| 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, 2021 and 2020, the notional amount of outstanding contracts aggregated to `37,615 crore and `40,109 crore, respectively, and the respective fair value of these contracts have a net gain of `242 crore and net loss of `380 crore. Exchange gain of `490 crore and loss of `451 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, 2021 and 2020, respectively. # Notes forming part of Standalone Financial Statements Net foreign exchange gains include loss of `189 crore and `64 crore transferred from cash flow hedging reserve for the years ended March 31, 2021 and 2020, respectively. Net gain on derivative instruments of `30 crore recognised in cash flow hedging reserve as at March 31, 2021, is expected to be transferred to the statement of profit and loss by March 31, 2022. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2021. 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, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|10% Appreciation of the underlying foreign currencies\|(306)\|(407)\| \|10% Depreciation of the underlying foreign currencies\|1,906\|1,261\| # (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. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. Further, any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company's revenue in international business. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign.
# Notes forming part of Standalone Financial Statements exchange rates shift of all the currencies by 10% against the functional currency of the Company. The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 6(k). # Unhedged Foreign Currency Exposure as at March 31, 2021 \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|3,981\|(9)\|264\|1,390\| \|Net financial liabilities\|(3,053)\|(564)\|(608)\|(774)\| 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 `63 crore for the year ended March 31, 2021. # Unhedged Foreign Currency Exposure as at March 31, 2020 \| \|USD\|EUR\|GBP\|Others\| \|---\|---\|---\|---\|---\| \|Net financial assets\|4,002\|274\|329\|1,595\| \|Net financial liabilities\|(7,097)\|(596)\|(475)\|(678)\| 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. # 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 of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled receivables, loans, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of `10,291 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of `1,848 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, 2021. 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 `77,949 crore and `77,161 crore as at March 31, 2021 and 2020, 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, contract assets and other financial assets. # Notes forming part of Standalone Financial Statements 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, 2021 and March 31, 2020. # 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. # Geographic concentration of credit risk Geographic concentration of trade receivables (gross and net of allowances), unbilled receivables and contract assets is as follows: \|Geographic Area\|As at March 31, 2021\| \|As at March 31, 2020\| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Gross%\|Net%\|Gross%\|Net%\| \| \| \| \|United States of America\|48.67\|49.97\|47.95\|48.96\| \| \| \| \|India\|15.32\|13.27\|14.45\|12.80\| \| \| \| \|United Kingdom\|17.05\|17.42\|15.03\|15.26\| \| \| \| The tables below provide details regarding the contractual maturities of significant financial liabilities as at: # March 31, 2021 \|Non-derivative financial liabilities\|Due in 1st year\|Due in 2nd year\|Due in 3rd to 5th year\|Due after 5th year\|Total\| \|---\|---\|---\|---\|---\|---\| \|Trade payables\|7,962\|-\|-\|-\|7,962\| \|Lease liabilities\|1,239\|1,157\|2,590\|3,098\|8,084\| \|Other financial liabilities\|4,381\|-\|228\|-\|4,609\| \|Total\|Total\|Total\|Total\|Total\|20,655\| # March 31, 2020 \|Non-derivative financial liabilities\|Due in 1st year\|Due in 2nd year\|Due in 3rd to 5th year\|Due after 5th year\|Total\| \|---\|---\|---\|---\|---\|---\| \|Trade payables\|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\|Total\|Total\|Total\|Total\|21,477\| The allowance for lifetime expected credit loss on trade receivables for the years ended March 31, 2021 and 2020 was `176 crore and `125 crore, respectively.
The reconciliation of allowance for doubtful trade receivables is as follows: \|Particulars\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|938\|837\| \|Change during the year\|176\|125\| \|Bad debts written off\|(30)\|(40)\| \|Translation exchange difference\|(2)\|16\| \|Balance at the end of the year\|1,082\|938\| # Notes forming part of Standalone Financial Statements # (m) Equity instruments The authorised, issued, subscribed and fully paid-up share capital consist of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Authorised\| \| \| \|460,05,00,000 equity shares of `1 each\|460\|460\| \|(March 31, 2020: 460,05,00,000 equity shares of `1 each)\| \| \| \|105,02,50,000 preference shares of `1 each\|105\|105\| \|(March 31, 2020: 105,02,50,000 preference shares of `1 each)\| \| \| \| \|565\|565\| \|Issued, Subscribed and Fully paid up\| \| \| \|369,90,51,373 equity shares of `1 each\|370\|375\| \|(March 31, 2020: 375,23,84,706 equity shares of `1 each)\| \| \| \| \|370\|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. The Board of Directors at its meeting held on October 7, 2020, approved a proposal to buy-back upto 5,33,33,333 equity shares of the Company for an aggregate amount not exceeding `16,000 crore, being 1.42% of the total paid up equity share capital at `3,000 per equity share. The shareholders approved the same on November 18, 2020, by way of a special resolution through postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 5,33,33,333 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on January 6, 2021. Capital redemption reserve was created to the extent of share capital extinguished (`5 crore). The excess cost of buy-back of `16,031 crore (including `31 crore towards transaction cost of buy-back) over par value of shares and corresponding tax on buy-back of `3,726 crore were offset from retained earnings. # I. Reconciliation of number of shares \| \|As at March 31, 2021\| \|As at March 31, 2020\| \| \|---\|---\|---\|---\|---\| \|Equity shares\|Number of shares\|Amount (` crore)\|Number of shares\|Amount (` crore)\| \|Opening balance\|375,23,84,706\|375\|375,23,84,706\|375\| \|Shares extinguished on buy-back\|(5,33,33,333)\|(5)\|-\|-\| \|Closing balance\|369,90,51,373\|370\|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. Integrated Annual Report 2020-21 Standalone Financial Statements \| 291 # Notes forming part of Standalone Financial Statements 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, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \|Equity shares\| \| \| \| \|Holding company\|266,91,25,829 equity shares (March 31, 2020: 270,24,50,947 equity shares) are held by Tata Sons Private Limited\|267\|270\| \|Subsidiaries and Associates of Holding company\| \| \| \| \|Tata Industries Limited\|7,220 equity shares (March 31, 2020: 7,220 equity shares)\|-\|-\| \|Tata Investment Corporation Limited\|10,23,685 equity shares (March 31, 2020: 10,36,269 equity shares)\|-\|-\| \|Tata Steel Limited\|46,798 equity shares (March 31, 2020: 46,798 equity shares)\|-\|-\| \|The Tata Power Company Limited\|766 equity shares (March 31, 2020: 766 shares)\|-\|-\| \| \|267\|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, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \|Equity shares\|Tata Sons Private Limited, the Holding company\|266,91,25,829\|270,24,50,947\| \|% of shareholding\|72.16%\|72.02%\| \| # V. Equity shares movement during the 5 years preceding March 31, 2021 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 in three month period ended June 30, 2018, 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 5,33,33,333 equity shares for an aggregate amount of `16,000 crore being 1.42% of the total paid up equity share capital at `3,000 per equity share. The equity shares bought back were extinguished on January 6, 2021. 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. # Notes forming part of Standalone Financial Statements 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. # 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 standalone price of the lease component and the aggregate standalone 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 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 recognised as an expense on a straight-line basis over the lease term. # Notes forming part of Standalone Financial Statements # 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. # The details of the right-of-use assets held by the Company is as follows: \| \|Additions for the year ended March 31, 2021 (` crore)\|Net carrying amount as at March 31, 2021 (` crore)\| \|---\|---\|---\| \|Leasehold land\|-\|682\| \|Buildings\|840\|5,083\| \|Leasehold improvement\|6\|6\| \|Computer equipment\|81\|79\| \|Software licences\|26\|25\| \|Vehicles\|1\|1\| \|Total\|954\|5,876\| # The details of the right-of-use assets held by the Company is as follows: \| \|Additions for the year ended March 31, 2020 (` crore)\|Net carrying amount as at March 31, 2020 (` crore)\| \|---\|---\|---\| \|Leasehold land\|474\|690\| \|Buildings\|1,689\|5,336\| \|Leasehold improvement\|-\|20\| \|Computer equipment\|-\|-\| \|Vehicles\|-\|2\| \|Total\|2,163\|6,048\| # Depreciation on right-of-use assets is as follows: \| \|Year ended March 31, 2021 (` crore)\|Year ended March 31, 2020 (` crore)\| \|---\|---\|---\| \|Leasehold land\|8\|4\| \|Buildings\|995\|837\| \|Leasehold improvement\|3\|5\| \|Computer equipment\|3\|-\| \|Software licences\|1\|-\| \|Vehicles\|1\|1\| \|Total\|1,011\|847\| Interest on lease liabilities is `450 crore and `416 crore for the years ended March 31, 2021 and 2020, respectively. # Notes forming part of Standalone Financial Statements The Company incurred `189 crore and `190 crore for the years ended March 31, 2021 and 2020, respectively, towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is `1,619 crore and `1,793 crore for the years ended March 31, 2021 and 2020, respectively, including cash outflow for short-term and low-value leases. The Company 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 is `660 crore and `457 crore as at March 31, 2021 and 2020, respectively. Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the contract. # 8) Non-financial assets and non-financial 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 Standalone 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\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Cost as at April 1, 2020\|323\|7,628\|1,824\|667\|7,273\|39\|2,263\|1,882\|1,510\|23,409\| \|Additions\|-\|71\|53\|51\|1,610\|2\|77\|28\|29\|1,921\| \|Disposals\|-\|(11)\|(60)\|-\|(102)\|(5)\|(38)\|(27)\|(30)\|(273)\| \|Cost as at March 31, 2021\|323\|7,688\|1,817\|718\|8,781\|36\|2,302\|1,883\|1,509\|25,057\| \|Accumulated depreciation as at April 1, 2020\|-\|(2,518)\|(1,042)\|(224)\|(5,536)\|(32)\|(1,868)\|(1,152)\|(1,202)\|(13,574)\| \|Depreciation\|-\|(387)\|(126)\|(69)\|(909)\|(4)\|(170)\|(143)\|(115)\|(1,923)\| \|Disposals\|-\|8\|60\|-\|96\|5\|37\|25\|30\|261\| \|Accumulated depreciation as at March 31, 2021\|-\|(2,897)\|(1,108)\|(293)\|(6,349)\|(31)\|(2,001)\|(1,270)\|(1,287)\|(15,236)\| \|Net carrying amount as at March 31, 2021\|323\|4,791\|709\|425\|2,432\|5\|301\|613\|222\|9,821\| \|Capital work-in-progress\|861\|861\|861\|861\|861\|861\|861\|861\|861\|861\| \|Total\|10,682\|10,682\|10,682\|10,682\|10,682\|10,682\|10,682\|10,682\|10,682\|10,682\| `1,921 crore has been capitalised and transferred to property, plant and equipment during the year ended March 31, 2021. # 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\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Cost as at April 1, 2019\|323\|7,348\|1,820\|539\|6,273\|36\|2,164\|1,802\|1,420\|21,725\| \|Transition impact of Ind AS 116\|-\|-\|(61)\|-\|-\|-\|-\|-\|-\|(61)\| \|Restated cost as at April 1, 2019\|323\|7,348\|1,759\|539\|6,273\|36\|2,164\|1,802\|1,420\|21,664\| \|Additions\|-\|287\|188\|128\|1,190\|5\|174\|98\|130\|2,200\| \|Disposals\|-\|(7)\|(123)\|-\|(190)\|(2)\|(75)\|(18)\|(40)\|(455)\| \|Cost as at March 31, 2020\|323\|7,628\|1,824\|667\|7,273\|39\|2,263\|1,882\|1,510\|23,409\| \|Accumulated depreciation as at April 1, 2019\|-\|(2,150)\|(1,010)\|(166)\|(4,975)\|(29)\|(1,740)\|(1,029)\|(1,104)\|(12,203)\| \|Transition impact of Ind AS 116\|-\|-\|36\|-\|-\|-\|-\|-\|-\|36\| \|Restated accumulated depreciation as at April 1, 2019\|-\|(2,150)\|(974)\|(166)\|(4,975)\|(29)\|(1,740)\|(1,029)\|(1,104)\|(12,167)\| \|Depreciation\|-\|(374)\|(115)\|(58)\|(750)\|(5)\|(203)\|(140)\|(137)\|(1,782)\| \|Disposals\|-\|6\|47\|-\|189\|2\|75\|17\|39\|375\| \|Accumulated depreciation as at March 31, 2020\|-\|(2,518)\|(1,042)\|(224)\|(5,536)\|(32)\|(1,868)\|(1,152)\|(1,202)\|(13,574)\| \|Net carrying amount as at March 31, 2020\|323\|5,110\|782\|443\|1,737\|7\|395\|730\|308\|9,835\| \|Capital work-in-progress\|781\|781\|781\|781\|781\|781\|781\|781\|781\|781\| \|Total\|10,616\|10,616\|10,616\|10,616\|10,616\|10,616\|10,616\|10,616\|10,616\|10,616\| `2,200 crore has been capitalised and transferred to property, plant and equipment during the year ended March 31, 2020. Integrated Annual Report 2020-21 Standalone Financial Statements \| 296 # Notes forming part of Standalone Financial Statements # (b) Intangible assets \|Intangible assets purchased are measured at cost as at the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any.\| \| \| \| \|---\|---\|---\|---\| \|Rights under licensing agreement and software licences\| \| \|(` crore)\| File: AR_TCS_2020_2021.md \| \|Cost as at April 1, 2019\| \|229\| \| \|Additions\| \|172\| \| \|Cost as at March 31, 2020\| \|401\| \| \|Accumulated amortisation as at April 1, 2019\| \|(90)\| \| \|Amortisation\| \|(72)\| \| \|Accumulated amortisation as at March 31, 2020\| \|(162)\| \| \|Net carrying amount as at March 31, 2020\| \|239\| The estimated amortisation for years subsequent to March 31, 2021 is as follows: \|Year ending March 31,\|Amortisation expense\| \|---\|---\| \|2022\|142\| \|2023\|117\| \|2024\|75\| \|2025\|28\| Intangible assets consist of the following: \|Rights under licensing agreement and software licences\|(` crore)\| \|---\|---\| \|Cost as at April 1, 2020\|401\| \|Additions\|242\| \|Disposals / Derecognised\|(63)\| \|Cost as at March 31, 2021\|580\| \|Accumulated amortisation as at April 1, 2020\|(162)\| \|Amortisation\|(119)\| \|Disposals / Derecognised\|63\| \|Accumulated amortisation as at March 31, 2021\|(218)\| \|Net carrying amount as at March 31, 2021\|362\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 297 # Notes forming part of Standalone Financial Statements # Other assets # Other assets - Current Other assets consist of the following: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Contract assets\|2,931\|3,341\| \|Prepaid expenses\|4,260\|1,381\| \|Prepaid rent\|6\|4\| \|Contract fulfillment costs\|534\|396\| \|Advance to suppliers\|83\|75\| \|Advance to related parties\|10\|11\| \|Indirect taxes recoverable\|1,172\|1,131\| \|Others\|221\|199\| # Other assets - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Considered good\| \| \| \|Contract assets\|120\|145\| \|Prepaid expenses\|527\|737\| \|Contract fulfillment costs\|137\|186\| \|Capital advances\|65\|50\| \|Advances to related parties\|33\|36\| \|Others\|391\|272\| \|Total Considered good\|9,217\|9,217\| \|Considered doubtful\| \| \| \|Advance to suppliers\|3\|3\| \|Indirect taxes recoverable\|-\|2\| \|Other advances\|2\|3\| \|Less: Allowance on doubtful assets\|(5)\|(8)\| # Advances to related parties, considered good, comprise: \|Entity\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Voltas Limited\|2\|3\| \|Tata Realty and Infrastructure Ltd\|-\|-\| \|Tata Projects Limited\|30\|33\| \|Titan Engineering and Automation Limited\|-\|-\| \|Represents value less than `0.50 crore.\| \| \| # Other advances \|Entity\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|The Titan Company Limited\|2\|3\| \|Tata AIG General Insurance Company Limited\|1\|-\| \|Tata AIA Life Insurance Company Limited\|-\|1\| \|Tata Sons Private Limited\|7\|7\| # Notes forming part of Standalone Financial Statements # (e) Other liabilities Other liabilities consist of the following: # Other liabilities - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \| \|Advance received from customers\|156\|226\| \|Indirect taxes payable and other statutory liabilities\| \|2,537\|1,762\| \| \|Operating lease liabilities\|-\|2\| \| \|Others\|27\|58\| \|Total\|Total\|2,720\|2,048\| \| # (f) Provisions Provisions consist of the following: # Provisions - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \| \|---\|---\|---\|---\| \| \|Provision towards legal claim\|1,211\|-\| \| \|Provision for foreseeable loss\|127\|199\| \| \|Other provisions\|12\|36\| \|Total\|Total\|1,350\|235\| \| Represents value less than `0.50 crore.
# Notes forming part of Standalone Financial Statements # 9) Other equity \|Other equity consist of the following:\|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Capital reserve\|-\|-\| \|Capital redemption reserve\| \| \| \|Opening balance\|8\|8\| \|Transfer from retained earnings\|5\|-\| \| \|13\|8\| \|Special Economic Zone re-investment reserve\| \| \| \|Opening balance\|1,594\|994\| \|Transfer from retained earnings\|5,058\|2,947\| \|Transfer to retained earnings\|(4,114)\|(2,347)\| \| \|2,538\|1,594\| \|Retained earnings\| \| \| \|Opening balance\|71,532\|77,159\| \|Transition impact of Ind AS 116\|-\|(330)\| \|Profit for the year\|30,960\|33,260\| \|Remeasurement of defined employee benefit plans\|(13)\|(323)\| \|Expenses for buy-back of equity shares1\|(31)\|-\| \|Tax on buy-back of equity shares1\|(3,726)\|-\| \|Buy-back of equity shares1\|(15,995)\|-\| \|Transfer from Special Economic Zone re-investment reserve\|4,114\|2,347\| \| \|86,841\|1,12,113\| Represents value less than `0.50 crore. 1 Refer Note 6(m). # Notes forming part of Standalone Financial Statements # 10) Revenue recognition The Company earns revenue primarily from providing IT services, consulting and business solutions. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. - Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts expended, number of transactions processed, etc. - Revenue related to fixed price maintenance and support services contracts where the Company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance. - In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method ('POC method') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations. - Revenue from the sale of distinct internally developed software and manufactured systems and third party software is recognised upfront at the point in time when the system / software is delivered to the customer. In cases where implementation and / or customisation services rendered significantly modifies or customises the software, these services and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method. - Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to the customer. - The solutions offered by the Company may include supply of third-party equipment or software. In such cases, revenue for supply of such third party products are recorded at gross or net basis depending on whether the Company is acting as the principal or as an agent of the customer. The Company recognises revenue in the gross amount of consideration when it is acting as a principal and at net amount of consideration when it is acting as an agent. 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. The Company's contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract 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. # Notes forming part of Standalone 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 Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. Revenue from subsidiaries is recognised based on transaction price which is at arm's length. Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria for capitalisation. Such costs are amortised over the contractual period or useful life of licence whichever is less. The assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance resources to be used to satisfy future performance obligations and whether costs are expected to be recovered. Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unearned and deferred revenue ("contract liability") is recognised when there is billings in excess of revenues. The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period. In accordance with Ind AS 37, the Company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received. Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for. The Company disaggregates revenue from contracts with customers by nature of services, industry verticals and geography. # Revenue disaggregation by nature of services is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Consultancy services\|1,34,585\|1,29,565\| \|Sale of equipment and software licences\|1,378\|1,741\| \|Total\|1,35,963\|1,31,306\| # Notes forming part of Standalone Financial Statements # Revenue disaggregation by industry vertical is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Banking, Financial Services and Insurance\|51,189\|47,811\| \|Manufacturing\|11,747\|12,161\| \|Retail and Consumer Business\|22,219\|22,882\| \|Communication, Media and Technology\|24,243\|23,132\| \|Others\|26,565\|25,320\| \|Total\|1,35,963\|1,31,306\| Obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts. Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is ` 91,094 crore out of which 53.98% 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. # Revenue disaggregation by geography is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Americas\|76,798\|74,882\| \|Europe\|38,277\|35,999\| \|India\|8,102\|8,716\| \|Others\|12,786\|11,709\| \|Total\|1,35,963\|1,31,306\| Geographical revenue is allocated based on the location of the customers. # Information about major customers No single customer represents 10% or more of the Company's total revenue during the years ended March 31, 2021 and March 31, 2020.
While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations: # Changes in contract assets are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|3,486\|2,823\| \|Invoices raised that were included in the contract assets balance at the beginning of the year\|(2,795)\|(2,382)\| \|Increase due to revenue recognised during the year, excluding amounts billed during the year\|2,332\|2,897\| \|Translation exchange difference\|28\|148\| \|Balance at the end of the year\|3,051\|3,486\| Integrated Annual Report 2020-21 # Notes forming part of Standalone Financial Statements # Changes in unearned and deferred revenue are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Balance at the beginning of the year\|2,915\|2,466\| \|Revenue recognised that was included in the contract liability balance at the beginning of the year\|(2,388)\|(1,934)\| \|Increase due to invoicing during the year, excluding amounts recognised as revenue during the year\|2,602\|2,240\| \|Translation exchange difference\|32\|143\| \|Balance at the end of the year\|3,161\|2,915\| # Reconciliation of revenue recognised with the contracted price is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Contracted price\|1,38,292\|1,33,098\| \|Reductions towards variable consideration components\|(2,329)\|(1,792)\| \|Revenue recognised\|1,35,963\|1,31,306\| The reduction towards variable consideration comprises of volume discounts, service level credits, etc. # 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 consist of the following: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Interest income\|2,383\|3,197\| \|Dividend income\|2,213\|3,980\| \|Net gain on investments carried at fair value through profit or loss\|193\|183\| \|Net gain on sale of investments other than equity shares carried at fair value through OCI\|-\|14\| \|Net gain on disposal of property, plant and equipment\|19\|50\| \|Net gain on lease modification\|89\|4\| \|Net foreign exchange gain\|428\|632\| \|Rent income\|7\|2\| \|Other income\|68\|21\| \|Total\|5,400\|8,083\| # Interest income comprise: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Interest on bank balances and bank deposits\|107\|479\| \|Interest on financial assets carried at amortised cost\|500\|531\| \|Interest on financial assets carried at fair value through OCI\|1,762\|1,878\| \|Other interest (including interest on tax refunds)\|14\|309\| # Dividend income comprise: Dividend from subsidiaries 2,213 3,980 # Notes forming part of Standalone Financial Statements # 12) 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 Company 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 Company provides benefits such as superannuation 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. # 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: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Salaries, incentives and allowances\|63,006\|59,140\| \|Contributions to provident and other funds\|4,321\|4,020\| \|Staff welfare expenses\|1,719\|1,746\| \|Total\|69,046\|64,906\| # Notes forming part of Standalone Financial Statements # Employee benefit obligations consist of the following: # Employee benefit obligations - Non-current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Other employee benefit obligations\|108\|91\| \| \|108\|91\| # Employee benefit obligations - Current \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Compensated absences\|2,558\|2,034\| \|Other employee benefit obligations\|40\|23\| \| \|2,598\|2,057\| # Employee benefit plans consist of the following: # Gratuity and pension In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit plan. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days' salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The Company manages the plan through a trust. Trustees administer contributions made to the trust. # Integrated Annual Report 2020-21 # The following table sets out the details of the defined benefit retirement plans and the amounts recognised in the financial statements: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Change in benefit obligations\| \| \| \|Benefit obligations, beginning of the year\|3,636\|2,678\| \|Plan assumed on insourcing of employees\|-\|30\| \|Service cost\|460\|357\| \|Interest cost\|244\|222\| \|Remeasurement of the net defined benefit liability\|135\|520\| \|Benefits paid\|(162)\|(171)\| \|Benefit obligations, end of the year\|4,313\|3,636\| \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Change in plan assets\| \| \| \|Fair value of plan assets, beginning of the year\|3,641\|2,671\| \|Plan assumed on insourcing of employees\|-\|30\| \|Interest income\|269\|234\| \|Employers' contributions\|837\|766\| \|Benefits paid\|(162)\|(171)\| \|Remeasurement - return on plan assets excluding amount included in interest income\|119\|111\| \|Fair value of plan assets, end of the year\|4,704\|3,641\| Standalone Financial Statements \| 306 # Notes forming part of Standalone Financial Statements \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Funded status\| \| \| \|Deficit of plan assets over obligations\|-\|-\| \|Surplus of plan assets over obligations\|391\|5\| \| \|391\|5\| \|Year ended\|March 31, 2021\|March 31, 2020\| \|---\|---\|---\| \|Service cost\|460\|357\| \|Net interest on net defined benefit (asset) / liability\|(25)\|(12)\| \|Net periodic gratuity cost\|435\|345\| \|Actual return on plan assets\|388\|345\| # Category of assets \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Corporate bonds\|1,408\|1,004\| \|Equity instruments\|29\|17\| \|Government bonds and securities\|2,257\|1,695\| \|Insurer managed funds\|909\|850\| \|Bank balances\|2\|-\| \|Others\|99\|75\| \|Total\|4,704\|3,641\| # Remeasurement of the net defined benefit (asset) / liability: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Actuarial (gains) and losses arising from changes in demographic assumptions\|24\|(5)\| \|Actuarial (gains) and losses arising from changes in financial assumptions\|(32)\|345\| \|Actuarial (gains) and losses arising from changes in experience adjustments\|143\|180\| \|Remeasurement of the net defined benefit liability\|135\|520\| \|Remeasurement - return on plan assets excluding amount included in interest income\|(119)\|(111)\| \|Total\|16\|409\| # Notes forming part of Standalone Financial Statements The assumptions used in accounting for the defined benefit plan are set out below: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Discount rate\|6.50%\|6.50%\| \|Rate of increase in compensation levels of covered employees\|6.00%\|6.00%\| \|Rate of return on plan assets\|6.50%\|6.50%\| \|Weighted average duration of defined benefit obligations\|10 Years\|8 Years\| Future mortality assumptions are taken based on the published statistics by the Insurance Regulatory and Development Authority of India. The expected benefits are based on the same assumptions as are used to measure the Company's defined benefit plan obligations as at March 31, 2021. The Company is expected to contribute `116 crore to defined benefit plan obligations funds for year ending March 31, 2022. The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
# If the discount rate increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Increase of 0.50%\|(190)\|(151)\| \|Decrease of 0.50%\|206\|163\| # If the expected salary growth increases / decreases by 0.50%, the defined benefit obligations would increase / (decrease) as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Increase of 0.50%\|206\|163\| \|Decrease of 0.50%\|(192)\|(152)\| 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. # Notes forming part of Standalone Financial Statements Each year an Asset - Liability matching study is performed in which the statement of profit and loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund. # The defined benefit obligations shall mature after the year ended March 31, 2021 as follows: \|Year ending March 31,\|Defined benefit obligations (` crore)\| \|---\|---\| \|2022\|321\| \|2023\|277\| \|2024\|294\| \|2025\|307\| \|2026\|307\| \|2027-2031\|1,638\| # Provident fund In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company's contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in the statement of profit and loss under employee benefit expenses. # The details of fund and plan assets are given below: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Fair value of plan assets\|20,003\|17,072\| \|Present value of defined benefit obligations\|(20,003)\|(17,072)\| \|Net excess / (shortfall)\|-\|-\| # The principal assumptions used in determining the present value obligation of interest guarantee under the deterministic approach are as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \|---\|---\|---\| \|Discount rate\|6.50%\|6.50%\| \|Average remaining tenure of investment portfolio\|8 years\|7.73 years\| \|Guaranteed rate of return\|8.50%\|8.50%\| # Notes forming part of Standalone Financial Statements The Company expensed `1,078 crore and `1,035 crore for the years ended March 31, 2021 and 2020, respectively, towards provident fund. # Superannuation All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution. The Company expensed `254 crore and `248 crore for the years ended March 31, 2021 and 2020, respectively, towards Employees' Superannuation Fund. # Foreign defined contribution plan The Company expensed `658 crore and `549 crore for the years ended March 31, 2021 and 2020, respectively, towards foreign defined contribution plans. # Cost recognition Costs and expenses are recognised when incurred and have been classified according to their nature. File: AR_TCS_2020_2021.md The costs of the Company are broadly categorised in employee benefit expenses, cost of equipment and software licences, depreciation and amortisation expense and other expenses. 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.
# (a) Cost of equipment and software licences Cost of equipment and software licences consist of the following: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Raw materials, sub-assemblies and components consumed\|14\|18\| \|Equipment and software licences purchased\|1,215\|1,578\| \|Finished goods and work-in-progress\|1,229\|1,596\| \|Opening stock\|1\|-\| \|Less: Closing stock\|-\|-\| \| \|1\|-\| \| \|1,230\|1,596\| # (b) Other expenses Other expenses consist of the following: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Fees to external consultants\|14,527\|13,916\| \|Facility expenses\|1,708\|2,175\| \|Travel expenses\|919\|2,569\| \|Communication expenses\|1,254\|985\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|185\|132\| \|Other expenses\|6,784\|7,674\| \| \|25,377\|27,451\| # Notes forming part of Standalone Financial Statements Other expenses include `2,944 crore and `3,547 crore for the years ended March 31, 2021 and 2020, respectively, towards sales, marketing and advertisement expenses. # (c) Corporate Social Responsibility (CSR) expenditure As per section 135 of the Companies Act, 2013, amount required to be spent by the Company during the years ended March 31, 2021 and 2020 is `663 crore and `600 crore, respectively, computed at 2% of its average net profit for the immediately preceding three financial years, on CSR. The Company incurred an amount of `674 crore and `602 crore during the years ended March 31, 2021 and 2020, respectively, towards CSR expenditure for purposes other than construction / acquisition of any asset. # 14) Finance costs Finance costs consist of the following: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Interest on lease liabilities\|450\|416\| \|Interest on tax matters\|85\|256\| \|Other interest costs\|2\|71\| \|Total\|537\|743\| # 15) Income taxes Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during year. Current and deferred taxes are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. # Current income taxes The current income tax expense includes income taxes payable by the Company and its branches in India and overseas. The current tax payable by the Company in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs). Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the Company's worldwide income. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset and liability on a net basis. # Notes forming part of Standalone Financial Statements # Deferred income taxes Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in 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. # Income Tax Expense 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. # The income tax expense consists of the following: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Current tax\| \| \| \|Current tax expense for current year\|10,404\|8,440\| \|Current tax (benefit) / expense pertaining to prior years\|(104)\|572\| \| \|10,300\|9,012\| \|Deferred tax\| \| \| \|Deferred tax (benefit) / expense for current year\|(294)\|1,168\| \|Deferred tax (benefit) / expense pertaining to prior years\|(64)\|(1,449)\| \| \|(358)\|(281)\| \| \|9,942\|8,731\| # Notes forming part of Standalone Financial Statements The reconciliation of estimated income tax expense at statutory income tax rate to income tax expense reported in statement of profit and loss is as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Profit before taxes\|40,902\|41,991\| \|Indian statutory income tax rate\|34.94%\|34.94%\| \|Expected income tax expense\|14,293\|14,673\| \|Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense\| \| \| \|Tax holidays\|(4,708)\|(4,856)\| \|Income exempt from tax\|(773)\|(14)\| \|Undistributed earnings in branches\|26\|(15)\| \|Tax on income at different rates\|1,103\|(300)\| \|Tax pertaining to prior years\|(168)\|(877)\| \|Others (net)\|169\|120\| \|Total income tax expense\|9,942\|8,731\| The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 1, 2011 profits from units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
# Significant components of net deferred tax assets and liabilities for the year ended March 31, 2021 are as follows: \| \|Opening balance\|Recognised in profit and loss\|Recognised / reclassified from other comprehensive income\|Adjustments / utilisation\|Closing balance\| \|---\|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities) in relation to\| \| \| \| \| \| \|Property, plant and equipment and intangible assets\|162\|128\|-\|-\|290\| \|Provision for employee benefit obligations\|468\|171\|-\|-\|639\| \|Cash flow hedges\|7\|-\|(15)\|-\|(8)\| \|Receivables, financial assets at amortised cost\|327\|9\|-\|-\|336\| \|MAT credit entitlement\|1,049\|64\|-\|597\|1,710\| \|Branch profit tax\|(284)\|(26)\|-\|-\|(310)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(483)\|-\|(17)\|-\|(500)\| \|Lease liabilities\|308\|(98)\|-\|-\|210\| \|Others\|318\|110\|-\|-\|428\| \| \|1,872\|358\|(32)\|597\|2,795\| # Notes forming part of Standalone Financial Statements # Gross deferred tax assets and liabilities are as follows: # Significant components of net deferred tax assets and liabilities for the year ended March 31, 2020 are as follows: \|As at March 31, 2021\| \| \| \| \| \| \| \|(` crore)\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|Assets\|Liabilities\|Net\| \| \| \| \| \| \|Deferred tax assets / (liabilities) in relation to\|Property, plant and equipment and Intangible assets\|345\|55\|290\| \| \| \| \| \|Provision for employee benefit obligations\|639\|-\|639\| \| \| \| \| \| \|Cash flow hedges\|(8)\|-\|(8)\| \| \| \| \| \| \|Receivables, financial assets at amortised cost\|336\|-\|336\| \| \| \| \| \| \|MAT credit entitlement\|1,710\|-\|1,710\| \| \| \| \| \| \|Branch profit tax\|-\|310\|(310)\| \| \| \| \| \| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(500)\|-\|(500)\| \| \| \| \| \| \|Lease liabilities\|210\|-\|210\| \| \| \| \| \| \|Others\|428\|-\|428\| \| \| \| \| \| \|Total\|3,160\|365\|2,795\| \| \| \| \| \| # Deferred tax assets / (liabilities) in relation to \|Property, plant and equipment and intangible assets\|Opening balance\|Recognised in profit and loss\|Recognised in other comprehensive income\|Adjustments\|Closing balance\| \|---\|---\|---\|---\|---\|---\| \|Deferred tax assets / (liabilities)\|97\|65\|-\|-\|162\| \|Provision for employee benefit obligations\|368\|100\|-\|-\|468\| \|Cash flow hedges\|(12)\|-\|19\|-\|7\| \|Receivables, financial assets at amortised cost\|284\|43\|-\|-\|327\| \|MAT credit entitlement\|1,157\|(108)\|-\|-\|1,049\| \|Branch profit tax\|(299)\|15\|-\|-\|(284)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(149)\|-\|(334)\|-\|(483)\| \|Lease liabilities\|235\|73\|-\|-\|308\| \|Others\|225\|93\|-\|-\|318\| \|Total\|Total\|1,906\|281\|(315)\|1,872\| Opening balance of deferred tax on lease liabilities has been restated by `147 crore to give impact of transition to Ind AS 116. Integrated Annual Report 2020-21 Standalone Financial Statements \| 314 # Notes forming part of Standalone Financial Statements # Gross deferred tax assets and liabilities are as follows: \|(` crore)\|Assets\|Liabilities\|Net\| \|---\|---\|---\|---\| \|As at March 31, 2020\| \| \| \| \|Deferred tax assets / (liabilities) in relation to Property, plant and equipment and Intangible assets\|225\|63\|162\| \|Provision for employee benefit obligations\|468\|-\|468\| \|Cash flow hedges\|7\|-\|7\| \|Receivables, financial assets at amortised cost\|327\|-\|327\| \|MAT credit entitlement\|1,049\|-\|1,049\| \|Branch profit tax\|-\|284\|(284)\| \|Unrealised gain on securities carried at fair value through profit or loss / other comprehensive income\|(483)\|-\|(483)\| \|Lease liabilities\|308\|-\|308\| \|Others\|318\|-\|318\| \| \|2,219\|347\|1,872\| Under the Income-tax Act, 1961, the Company is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. # Direct tax contingencies The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. The disputes relate to tax treatment of certain expenses claimed as deductions, computation or eligibility of tax incentives or allowances, and characterisation of fees for services received. The Company has contingent liability in respect of demands from direct tax authorities in India and other jurisdictions, which are being contested by the Company on appeal amounting `891 crore and `1,453 crore as at March 31, 2021 and 2020, respectively. In respect of tax contingencies of `318 crore and `318 crore as at March 31, 2021 and 2020, respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited. The Company periodically receives notices and inquiries from income tax authorities related to the Company's operations in the jurisdictions it operates in. The Company has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution. The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. In India, tax filings from fiscal 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. # Notes forming part of Standalone Financial Statements # 16) 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 year. The Company did not have any potentially dilutive securities in any of years presented. \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Profit for the year (` crore)\|30,960\|33,260\| \|Weighted average number of equity shares\|374,01,10,733\|375,23,84,706\| \|Basic and diluted earnings per share (`)\|82.78\|88.64\| \|Face value per equity share (`)\|1\|1\| # 17) Auditors remuneration \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Services as statutory auditors (including quarterly audits)\|9\|7\| \|Tax audit\|1\|1\| \|Services for tax matters\|-\|-\| \|Other services\|4\|4\| \|Re-imbursement of out-of-pocket expenses\|1\|1\| *Represents value less than `0.50 crore. # 18) Segment information The Company publishes the standalone financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements. # 19) Commitments and Contingencies # Capital commitments The Company has contractually committed (net of advances) `1,009 crore and `1,272 crore as at March 31, 2021 and 2020, respectively, for purchase of property, plant and equipment. # Contingencies - Direct tax matters: Refer note 15. - Indirect tax matters: The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company has demands amounting to `495 crore and `464 crore as at March 31, 2021 and 2020, respectively, from various indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants. - Other claims: Claims aggregating `105 crore and `133 crore as at March 31, 2021 and 2020, respectively, against the Company have not been acknowledged as debts. 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 alleging unauthorised access to and download of their confidential information and use thereof in the development of the Company's product MedMantra. In April 2016, the Company received an unfavourable jury verdict awarding damages of `6,900 crore (US $940 million) to Epic which was thereafter reduced by the Trial Court to `3,083 crore (US $420 million). # Notes forming part of Standalone Financial Statements Reaffirmation of the District Court order in March 2019, the Company filed an appeal in the Appeals Court to fully set aside the Order. Epic also filed a cross appeal challenging the reduction by the District Court judge of `734 crore (US $100 million) award and `1,468 crore (US $200 million) in punitive damages. On August 20, 2020, the Appeals Court vacated the award of `2,055 crore (US $280 million) in punitive damages considering the award to be constitutionally excessive and remanded the case back to District Court with instructions to reassess and reduce the punitive damages award to at most `1,028 crore (US $140 million), affirmed the District Court's decision vacating the jury's award of `734 crore (US $100 million) in compensatory damages for alleged use of "other confidential information" by the Company, and affirmed the District Court's decision upholding the jury's award of `1,028 crore (US $140 million) in compensatory damages for use of the comparative analysis by the Company. The Company filed a petition for re-hearing of compensatory and punitive damages at the Appeals Court on September 3, 2020. Epic also filed for re-hearing that portion of the Appeals Court's decision that invalidated award of punitive damages. In November 2020, the petitions for re-hearing filed by the Company and Epic, respectively, were denied by the Appeals Court. The proceedings for assessing punitive damages have been remanded back to the District Court. Both the Company and Epic have filed their briefs at the District Court in relation to punitive damages. The matter is under consideration by the District Court.
On April 8, 2021, Epic has approached the Supreme Court seeking review of the order of the Appeals Court vacating the award of `2,055 crore (US $280 million) towards punitive damages and remanding back to District Court with an instruction to reassess the punitive damages, to no more than `1,028 crore (US $140 million). The Company will continue to pursue all legal options available in the matter. Considering all the facts and various legal precedence, on a conservative and prudent basis, the Company has provided `1,218 crore (US $165 million) towards this legal claim in its statement of profit and loss for the year ended March 31, 2021. This has been presented as an "exceptional item" in the standalone statement of profit and loss. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for `3,230 crore (US $440 million) as financial security in order to stay execution of the judgement pending post-appeal proceedings and conclusion. # Bank guarantees and letter of comfort The Company has given letter of comfort to banks for credit facilities availed by its subsidiaries. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary. The Company has provided guarantees to third parties on behalf of its subsidiaries. The Company does not expect any outflow of resources in respect of the above. The amounts assessed as contingent liability do not include interest that could be claimed by counter parties. # Impact of the Code on Social Security, 2020 The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published. Standalone Financial Statements \| 317 # Notes forming part of Standalone Financial Statements # 21) Related party transactions The Company's principal related parties consist of its holding company, Tata Sons Private Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The Company's material related party transactions and outstanding balances are with related parties with whom the Company routinely enter into transactions in the ordinary course of business. Refer note 22 of consolidated financial statement for list of subsidiaries of the Company.
Transactions with related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|Revenue from operations\|35\|18,245\|591\|1,752\|-\|20,623\| \|Dividend income\|-\|2,215\|-\|-\|-\|2,215\| \|Rent income\|-\|12\|-\|-\|-\|12\| \|Other income\|-\|40\|-\|-\|-\|40\| \|Purchases of goods and services (including reimbursements)\|1\|8,798\|444\|355\|-\|9,598\| \|Brand equity contribution\|100\|-\|-\|-\|-\|100\| \|Facility expenses\|-\|87\|17\|42\|-\|146\| \|Lease rental\|1\|-\|36\|45\|-\|82\| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|-\|-\|3\|-\|-\|3\| \|Contribution and advance to post employment benefit plans\|-\|-\|-\|-\|5,913\|5,913\| \|Purchase of property, plant and equipment\|-\|-\|3\|88\|-\|91\| \|Loans and advances given\|-\|-\|1\|6\|-\|7\| \|Loans and advances recovered\|-\|-\|1\|10\|-\|11\| \|Advances taken\|-\|3\|1\|4\|-\|8\| \|Dividend paid\|7,817\|-\|4\|3\|-\|7,824\| \|Guarantees given\|-\|1\|-\|-\|-\|1\| \|Buy-back of shares\|9,998\|-\|4\|-\|-\|10,002\| \|Sale / Redemption of investments\|-\|12\|-\|-\|-\|12\| \|Purchase of investments\|-\|224\|-\|-\|-\|224\| \|Cost recovery\|-\|2,840\|-\|-\|-\|2,840\| # Notes forming part of Standalone Financial Statements \|(` crore)\| \| \|Year ended March 31, 2020\|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited and their subsidiaries\|Other related parties\|Total\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Revenue from operations\|31\|16,998\|409\| \|1,859\| \|-\|19,297\| \| \| \| \|Dividend income\|-\|3,979\|-\|-\|-\|3,979\| \| \| \| \| \| \|Rent income\|-\|-\|-\|-\|-\|-\| \| \| \| \| \| \|Other income\|-\|39\|-\|-\|-\|39\| \| \| \| \| \| \|Purchases of goods and services (including reimbursements)\|1\|8,943\|550\| \|448\| \|-\|9,942\| \| \| \| \|Brand equity contribution\|100\|-\|-\|-\|-\|100\| \| \| \| \| \| \|Facility expenses\|-\|28\|2\| \|1\|-\| \|31\| \| \| \| \|Lease rental\|2\|-\|68\| \|26\|-\| \|96\| \| \| \| \|Bad debts and advances written off, allowance for doubtful trade receivables and advances (net)\|1\| \| \| \| \| \|-\|-\|1\|-\|2\| \|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\|-\|1\|4\| \|85\|-\| \|90\| \| \| \| \|Loans and advances recovered\|-\|7\|3\| \|30\|-\| \|40\| \| \| \| \|Dividend paid\|22,971\|-\|9\|-\|-\| \| \|22,980\| \| \| \| \|Guarantees given\|-\|2\|-\|-\|-\|2\| \| \| \| \| \| \|Cost recovery\|-\|2,998\|-\|-\|-\|2,998\| \| \| \| \| \| Represents value less than `0.50 crore.
Integrated Annual Report 2020-21 Standalone Financial Statements \| 319 # Notes forming part of Standalone Financial Statements # Balances receivable from related parties are as follows: \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|As at March 31, 2021\|8\|4,392\|255\|519\|-\|5,174\| \| \|9\|65\|21\|62\|-\|157\| \| \|17\|4,457\|276\|581\|-\|5,331\| \| \|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures of Tata Sons Private Limited\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\| \|As at March 31, 2020\|4\|6,582\|223\|449\|-\|7,258\| \| \|10\|62\|30\|65\|-\|167\| \| \|14\|6,644\|253\|514\|-\|7,425\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 320 # Notes forming part of Standalone Financial Statements # Balances payable to related parties are as follows: \|(` crore)\|As at March 31, 2021\|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities\|91\|3,604\|296\|393\|-\|4,384\| \| \|Commitments and Guarantees\| \|-\|4,669\|10\|270\|-\|4,949\| # Balances payable to related parties are as follows: \|(` crore)\|As at March 31, 2020\|Tata Sons Private Limited\|Subsidiaries of the Company\|Subsidiaries of Tata Sons Private Limited\|Associates / joint ventures\|Other related parties\|Total\| \|---\|---\|---\|---\|---\|---\|---\|---\| \|Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities\|93\|4,152\|245\| \|215\|-\|4,705\| \|Commitments and Guarantees\|-\|4,302\|11\| \|367\|-\|4,680\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 321 # Notes forming part of Standalone Financial Statements # Material related party transactions are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \| \| \|---\|---\|---\|---\|---\| \|Revenue from operations\|Tata Consultancy Services Sverige AB\|1,939\|1,713\| \| \| \|Tata Consultancy Services Canada Inc.\|2,034\|1,934\| \| \| \|Tata Consultancy Services Deutschland GmbH\|2,504\|2,020\| \| \| \|Tata Consultancy Services Netherlands BV\|2,848\|3,364\| \| \| \|Jaguar Land Rover Limited\|1,093\|1,142\| \| \|Purchases of goods and services (including reimbursements)\|Tata America International Corporation\|2,803\|3,416\| \| \| \|Tata Consultancy Services De Mexico S.A.,De C.V.\|1,637\|1,414\| \| \| \|TCS Foundation\|350\|552\| \| \|Dividend income\|Tata America International Corporation\|1,002\|1,752\| \| \| \|Tata Consultancy Services Canada Inc.\|193\|694\| \| \| \|Tata Consultancy Services Netherlands BV\|405\|239\| \| # Material related party balances are as follows: \| \|As at March 31, 2021\|As at March 31, 2020\| \| \| \|---\|---\|---\|---\|---\| \|Trade receivables, unbilled receivables and contract assets\| \|Tata America International Corporation\|456\|98\| \| \| \|Tata Consultancy Services Sverige AB\|219\|650\| \| \| \|Tata Consultancy Services France\|1,028\|900\| \| \| \|Tata Consultancy Services Netherlands BV\|244\|727\| \| \| \|Tata Consultancy Services Asia Pacific Pte Ltd.\|271\|635\| \| \| \|Diligenta Limited\|594\|311\| \| \| \|Jaguar Land Rover Limited\|290\|209\| \|Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities\| \|Tata America International Corporation\|1,519\|1,314\| \| \| \|Tata Consultancy Services De Mexico S.A.,De C.V.\|168\|402\| # Notes forming part of Standalone Financial Statements # Transactions with key management personnel are as follows: \| \|Year ended March 31, 2021\|Year ended March 31, 2020\| \|---\|---\|---\| \|Short-term benefits\|43\|28\| \|Dividend paid during the year\|1\|2\| \|Total\|44\|30\| 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. # 22) The sitting fees and commission paid to non-executive directors is `10 crore and `9 crore as at March 31, 2021 and 2020, respectively. # 23) Dividends File: AR_TCS_2020_2021.md Dividends paid during the year ended March 31, 2021 include an amount of `6.00 per equity share towards final dividend for the year ended March 31, 2020 and an amount of `23.00 per equity share towards interim dividends for the year ended March 31, 2021. Dividends paid during the year ended March 31, 2020 include an amount of `18.00 per equity share towards final dividend for the year ended March 31, 2019 and an amount of `67.00 per equity share towards interim dividends (including special dividend) for the year ended March 31, 2020. Dividends declared by the Company are based on the profit available for distribution. On April 12, 2021, the Board of Directors of the Company have proposed a final dividend of `15.00 per share in respect of the year ended March 31, 2021 subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately `5,549 crore. As per our report of even date attached For and on behalf of the Board For B S R & Co.
LLP Rajesh Gopinathan CEO and Managing Director N Ganapathy Subramaniam COO and Executive Director Amit Somani Partner V Ramakrishnan CFO Rajendra Moholkar Company Secretary Membership No: 060154 Bengaluru, April 12, 2021 Mumbai, April 12, 2021 Integrated Annual Report 2020-21 Standalone Financial Statements \| 323 # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies \|Sr. No.\|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period of subsidiary\|End date of accounting period\|Reporting Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Investments\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of Shareholding\|Country\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|1\|APTOnline Limited\|August 9, 2004\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|2\|99\|164\|63\|22\|151\|21\|6\|15\|-\|89%\|India\| \|2\|MP Online Limited\|September 8, 2006\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|1\|103\|156\|52\|93\|70\|22\|5\|17\|-\|89%\|India\| \|3\|C-Edge Technologies Limited\|January 19, 2006\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|10\|267\|379\|102\|-\|303\|97\|25\|72\|-\|51%\|India\| \|4\|MahaOnline Limited\|September 23, 2010\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|3\|79\|199\|117\|39\|36\|5\|2\|3\|-\|74%\|India\| \|5\|CMC Americas, Inc.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|USD\|73.402500\|-\|-\|-\|-\|-\|62\|30\|-\|30\|-\|-\|U.S.A.\| \|6\|TCS e-Serve International Limited\|December 31, 2008\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|10\|59\|722\|653\|12\|1,485\|58\|7\|51\|-\|100%\|India\| \|7\|TCS e-Serve America, Inc.\|February 10, 2009\|January 1, 2020\|December 31, 2020\|USD\|73.402500\|2\|-\|2\|-\|-\|97\|17\|2\|15\|-\|100%\|U.S.A.\| \|8\|Diligenta Limited\|August 23, 2005\|January 1, 2020\|December 31, 2020\|GBP\|101.060549\|10\|1,393\|2,509\|1,106\|384\|3,899\|331\|56\|275\|-\|100%\|U.K.\| \|9\|Tata Consultancy Services Canada Inc.\|October 1, 2009\|April 1, 2020\|March 31, 2021\|CAD\|58.269826\|41\|929\|1,990\|1,020\|-\|6,268\|656\|173\|483\|-\|100%\|Canada\| \|10\|Tata America International Corporation\|August 9, 2004\|April 1, 2020\|March 31, 2021\|USD\|73.402500\|1\|1,173\|3,003\|1,829\|98\|3,052\|913\|261\|652\|-\|100%\|U.S.A.\| \|11\|Tata Consultancy Services Asia Pacific Pte Ltd.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|USD\|73.402500\|32\|853\|1,494\|609\|794\|2,103\|262\|34\|228\|-\|100%\|Singapore\| \|12\|Tata Consultancy Services (China) Co., Ltd.\|November 16, 2006\|January 1, 2020\|December 31, 2020\|CNY\|11.196574\|226\|4\|324\|94\|-\|779\|68\|15\|53\|-\|93.2%\|China\| \|13\|Tata Consultancy Services Japan, Ltd.\|July 1, 2014\|April 1, 2020\|March 31, 2021\|JPY\|0.663465\|287\|1,135\|2,762\|1,340\|-\|4,852\|317\|98\|219\|-\|66%\|Japan\| \|14\|Tata Consultancy Services Malaysia Sdn Bhd\|August 9, 2004\|April 1, 2020\|March 31, 2021\|MYR\|17.704414\|4\|90\|175\|81\|-\|439\|36\|8\|28\|-\|100%\|Malaysia\| \|15\|PT Tata Consultancy Services Indonesia\|October 5, 2006\|April 1, 2020\|March 31, 2021\|IDR\|0.005054\|1\|28\|70\|41\|-\|88\|17\|5\|12\|-\|100%\|Indonesia\| \|16\|Tata Consultancy Services (Philippines) Inc.\|September 19, 2008\|April 1, 2020\|March 31, 2021\|PHP\|1.512440\|(42)\|140\|393\|295\|-\|648\|8\|5\|3\|-\|100%\|Philippines\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 324 # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies \|Sr. No.\|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period of subsidiary\|End date of accounting period\|Reporting Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Investments\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of Shareholding\|Country\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|17\|Tata Consultancy Services (Thailand) Limited\|May 12, 2008\|April 1, 2020\|March 31, 2021\|THB\|2.343630\|2\|13\|44\|29\|-\|102\|13\|3\|10\|-\|100%\|Thailand\| \|18\|Tata Consultancy Services Belgium\|August 9, 2004\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|2\|509\|917\|406\|-\|2,251\|220\|55\|165\|-\|100%\|Belgium\| \|19\|Tata Consultancy Services Deutschland GmbH\|August 9, 2004\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|1\|691\|1,805\|1,113\|-\|5,493\|322\|108\|214\|-\|100%\|Germany\| \|20\|Tata Consultancy Services Sverige AB\|August 9, 2004\|April 1, 2020\|March 31, 2021\|SEK\|8.425738\|-\|758\|1,312\|554\|-\|3,646\|194\|43\|151\|-\|100%\|Sweden\| \|21\|Tata Consultancy Services Netherlands BV\|August 9, 2004\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|569\|2,242\|3,700\|889\|1,653\|5,371\|405\|61\|344\|-\|100%\|Netherlands\| \|22\|TCS Italia s.r.l.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|19\|39\|162\|104\|-\|413\|44\|18\|26\|-\|100%\|Italy\| \|23\|Tata Consultancy Services Luxembourg S.A.\|October 28, 2005\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|48\|62\|244\|134\|-\|640\|74\|21\|53\|-\|100%\|Capellen (G.D. de Luxembourg)\| \|24\|Tata Consultancy Services Switzerland Ltd.\|October 31, 2006\|April 1, 2020\|March 31, 2021\|CHF\|77.946798\|12\|533\|1,261\|716\|-\|2,944\|297\|56\|241\|-\|100%\|Switzerland\| \|25\|Tata Consultancy Services Osterreich GmbH\|March 9, 2012\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|-\|5\|14\|9\|-\|66\|-\|-\|-\|-\|100%\|Austria\| \|26\|Tata Consultancy Services Danmark ApS\|March 16, 2012\|April 1, 2020\|March 31, 2021\|DKK\|11.590112\|1\|5\|14\|8\|-\|16\|-\|-\|-\|-\|100%\|Denmark\| \|27\|Tata Consultancy Services De Espana S.A.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|1\|52\|155\|102\|-\|363\|13\|2\|11\|-\|100%\|Spain\| \|28\|Tata Consultancy Services (Portugal) Unipessoal, Limitada\|July 4, 2005\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|-\|5\|31\|26\|-\|32\|5\|-\|5\|-\|100%\|Portugal\| \|29\|Tata Consultancy Services France\|June 28, 2013\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|4\|(436)\|1,311\|1,743\|-\|2,106\|(3)\|7\|(10)\|-\|100%\|France\| \|30\|Tata Consultancy Services Saudi Arabia\|July 2, 2015\|April 1, 2020\|March 31, 2021\|SAR\|19.571390\|7\|264\|333\|62\|-\|321\|32\|6\|26\|-\|76%\|Saudi Arabia\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 325 # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies \|Sr.
No.\|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period of subsidiary\|End date of accounting period\|Reporting Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Investments\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of Shareholding\|Country\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|31\|Tata Consultancy Services (Africa) (PTY) Ltd.\|October 23, 2007\|April 1, 2020\|March 31, 2021\|ZAR\|4.952768\|7\|46\|53\|-\|53\|-\|29\|-\|29\|-\|100%\|South Africa\| \|32\|Tata Consultancy Services (South Africa) (PTY) Ltd.\|October 31, 2007\|April 1, 2020\|March 31, 2021\|ZAR\|4.952768\|9\|76\|326\|241\|-\|849\|50\|13\|37\|-\|100%\|South Africa\| \|33\|TCS FNS Pty Limited\|October 17, 2005\|April 1, 2020\|March 31, 2021\|AUD\|55.910684\|208\|(63)\|145\|-\|2\|-\|84\|-\|84\|-\|100%\|Australia\| \|34\|TCS Financial Solutions Beijing Co., Ltd.\|December 29, 2006\|January 1, 2020\|December 31, 2020\|CNY\|11.196574\|41\|(4)\|62\|25\|-\|73\|9\|-\|9\|-\|100%\|China\| \|35\|TCS Financial Solutions Australia Pty Limited\|October 19, 2005\|April 1, 2020\|March 31, 2021\|AUD\|55.910684\|-\|81\|136\|55\|40\|78\|60\|18\|42\|-\|100%\|Australia\| \|36\|TCS Iberoamerica SA\|August 9, 2004\|April 1, 2020\|March 31, 2021\|USD\|73.402500\|722\|866\|1,596\|8\|1,587\|-\|383\|1\|382\|-\|100%\|Uruguay\| \|37\|TCS Solution Center S.A.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|UYU\|1.656194\|59\|283\|481\|139\|-\|747\|142\|27\|115\|-\|100%\|Uruguay\| \|38\|Tata Consultancy Services Argentina S.A.\|August 9, 2004\|April 1, 2020\|March 31, 2021\|ARS\|0.798238\|4\|(2)\|36\|34\|-\|35\|(1)\|-\|(1)\|-\|100%\|Argentina\| \|39\|Tata Consultancy Services Do Brasil Ltda\|August 9, 2004\|January 1, 2020\|December 31, 2020\|BRL\|12.711490\|223\|(23)\|402\|202\|-\|712\|107\|40\|67\|-\|100%\|Brazil\| \|40\|Tata Consultancy Services De Mexico S.A., De C.V.\|August 9, 2004\|January 1, 2020\|December 31, 2020\|MXN\|3.572698\|1\|1,003\|1,545\|541\|-\|2,470\|373\|117\|256\|-\|100%\|Mexico\| \|41\|Tata Consultancy Services Chile S.A.\|August 9, 2004\|January 1, 2020\|December 31, 2020\|CLP\|0.100520\|171\|222\|551\|158\|56\|529\|(8)\|(5)\|(3)\|-\|100%\|Chile\| \|42\|TCS Inversiones Chile Limitada\|August 9, 2004\|January 1, 2020\|December 31, 2020\|CLP\|0.100520\|154\|173\|338\|11\|323\|36\|3\|1\|2\|-\|100%\|Chile\| \|43\|TATASOLUTION CENTER S.A.\|December 28, 2006\|January 1, 2020\|December 31, 2020\|USD\|73.402500\|22\|81\|194\|91\|-\|436\|63\|18\|45\|-\|100%\|Ecuador\| \|44\|TCS Uruguay S.A.\|January 1, 2010\|April 1, 2020\|March 31, 2021\|UYU\|1.656194\|-\|96\|161\|65\|-\|415\|303\|19\|284\|-\|100%\|Uruguay\| \|45\|MGDC S.C.\|January 1, 2010\|January 1, 2020\|December 31, 2020\|MXN\|3.572698\|-\|57\|118\|61\|-\|98\|54\|10\|44\|-\|100%\|Mexico\| \|46\|Technology Outsourcing S.A.C.\|October 30, 2015\|January 1, 2020\|December 31, 2020\|PEN\|19.459320\|-\|-\|-\|-\|-\|24\|(3)\|4\|(7)\|-\|-\|Peru\| \|47\|Tata Consultancy Services Qatar S.S.C.\|December 20, 2011\|April 1, 2020\|March 31, 2021\|QAR\|20.156662\|4\|27\|59\|28\|-\|60\|-\|-\|-\|-\|100%\|Qatar\| Integrated Annual Report 2020-21 Standalone Financial Statements \| 326 # Statement pursuant to first proviso to sub-section (3) of section 129 of the Companies Act 2013, read with rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 relating to subsidiary companies \|Sr. No.\|Name of the Subsidiary Company\|Date of becoming subsidiary\|Start date of accounting period of subsidiary\|End date of accounting period\|Reporting Currency\|Exchange Rate\|Share Capital\|Reserves and Surplus\|Total Assets\|Total Liabilities\|Investments\|Turnover\|Profit before Tax\|Provision for Tax\|Profit after Tax\|Proposed Dividend\|% of Shareholding\|Country\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|48\|W12 Studios Limited\|October 31, 2018\|June 1, 2020\|May 31, 2021\|GBP\|101.060549\|-\|28\|28\|-\|-\|-\|-\|-\|-\|-\|100%\|U.K.\| \|49\|TCS Business Services GmbH\|March 9, 2020\|April 1, 2020\|March 31, 2021\|EUR\|86.203859\|-\|(28)\|118\|146\|55\|108\|(4)\|(1)\|(3)\|-\|100%\|Germany\| \|50\|Tata Consultancy Services Ireland Limited\|December 2, 2020\|January 1, 2020\|December 31, 2020\|EUR\|86.203859\|216\|14\|426\|196\|-\|234\|15\|1\|14\|-\|100%\|Ireland\| \|51\|Postbank Systems AG\|January 1, 2021\|January 1, 2020\|December 31, 2020\|EUR\|86.203859\|28\|(49)\|2,132\|2,153\|-\|382\|(50)\|-\|(50)\|-\|100%\|Germany\| \|52\|TCS Foundation\|March 25, 2015\|April 1, 2020\|March 31, 2021\|INR\|1.000000\|1\|1,087\|1,092\|4\|161\|-\|93\|-\|93\|-\|100%\|India\| # Notes: 1. Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as on March 31, 2021. 2. Equity stake in Technology Outsourcing S.A.C. was sold on December 1, 2020. 3. Tata Consultancy Services Ireland Limited was incorporated on December 2, 2020. 4. CMC Americas, Inc. was liquidated w.e.f. December 16, 2020. 5. Equity stake in Postbank Systems AG acquired w.e.f. January 1, 2021. 6. Tata Consultancy Services France SA was renamed as Tata Consultancy Services France. # For and on behalf of the Board Rajesh Gopinathan CEO and Managing Director N Ganapathy Subramaniam COO and Executive Director V Ramakrishnan CFO Rajendra Moholkar Company Secretary Mumbai, April 12, 2021 Integrated Annual Report 2020-21 Standalone Financial Statements \| 327 # Glossary \|5G\|Fifth generation wireless technology for digital cellular networks. 5G is expected to be much faster and enable much higher volumes of data sharing than earlier generations of cellular networks. Its massive capacity and ultra-low latency are expected to usher in an era of hyper-connectivity, enabling newer use cases such as autonomous cars, and accelerating the adoption of IoT.\| \|---\|---\| \|Agile Workspaces\|These are key enablers of TCS' Location Independent Agile model, and represent the next generation work environment that facilitate greater collaboration among teams. It is characterized by partition-less open offices, informal seating, interactive surfaces for information capture, and modern collaboration devices for increased productivity.\| \|AI\|See Artificial Intelligence\| \|ADM\|See Application Development and Maintenance\| \|Agile\|A collaborative approach for IT and business teams to develop software incrementally and faster. TCS has pioneered the Location Independent Agile™ model that allows for deployment at scale, and helps globally distributed organization execute large transformational programs quickly, while ensuring stability and quality.\| \|Algo Retail™\|TCS' proprietary approach and suite of intellectual property that enables retailers to seamlessly integrate and orchestrate data flows across the retail value chain, harnessing the power of analytics, AI and machine learning in the areas of personalization, pricing optimization, marketing, online search and commerce to unlock exponential business value.\| \|Amortization\|An accounting concept similar to depreciation, but used to measure the consumption of intangible assets.\| \|AgilityDebt™\|AgilityDebt™ is a simple index developed by TCS, which uniquely indicates the burden carried by an organization that restricts its Agility.
The index is arrived at based on a holistic Agile maturity assessment framework that measures the gap against required Agile talent, roles, team composition, delivery practices, Agile culture, Agile technology and DevOps enablers. TCS uses AgilityDebt™ to assess where the customer's teams are in the Agile journey, find the bottlenecks, and accelerate their Agile transformations.\| \|Annuity Contract\|A long-term contract which can guarantee regular payments.\| \|APAC\|Acronym for Asia Pacific\| \|API\|See Application Programming Interface\| # Glossary # APIfication The process of exposing a discrete business function or data within an enterprise's systems through APIs. # Augmented Reality Technology that superimposes a computer-generated image on a user's view of the real world to enrich the interaction. # Business 4.0 TCS' thought leadership framework that helps enterprises leverage technology to further their growth and transformation agenda. Successful Business 4.0 enterprises use technology to deliver mass personalization, leverage ecosystems, embrace risk and create exponential value. Such enterprises are agile, intelligent, automated and on the cloud. # Application Development and Maintenance Design, development, and deployment of custom software; ongoing support, upkeep, and enhancement of such software over its lifetime. # Application Programming Interface A set of easily accessible protocols for communication among various software components. # Basis Point One hundredth of a percentage point, that is, 0.01 percent. # AR See Augmented Reality # Artificial Intelligence Technology that emulates human performance by learning, coming to its own conclusions, understanding complex content, engaging in natural dialogs with people, augmenting human effort or replacing people on execution of non-routine tasks. Also known as Cognitive Computing. # BFSI Acronym for Banking, Financial Services and Insurance. # Big Data A high volume, high velocity, and/or high variety information asset that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization. # Blockchain A distributed database that maintains a continuously growing list of records, called blocks, secured from tampering and revision. # Assets Under Custody A measure of the total assets for which a financial institution, typically a custodian bank, provides custodian services. # AUC See Assets Under Custody # Attrition Measures what portion of the workforce left the organization (voluntarily and involuntarily) over the last 12 months (LTM). Attrition (LTM) = Total number of departures in the LTM / closing headcount # BPaaS See Business Process as a Service # BPS See Business Process Services # Buyback A corporate action in which a company returns excess cash to shareholders by buying back its shares from them and usually extinguishing those shares thereafter. The company's equity share capital and the number of shares outstanding in the market correspondingly reduces. # CAGR See Compounded Annual Growth Rate # Integrated Annual Report 2020-21 # Glossary \|Capital Expenditure (CapEx)\|Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, an industrial plant, technology, or equipment.\| \|---\|---\| \|Cash and Cash Equivalents\|Cash comprises cash on hand and demand / time / fixed deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.\| \|Cash Flow\|Inflows and outflows of cash and cash equivalents.\| \|Cash Flow from Operating Activities\|Primarily derived from the principal revenue producing activities. Therefore, they generally result from the transactions and other events that enter into the determination of profit or loss.\| \|CBO\|See Cognitive Business Operations\| \|CC\|See Constant Currency\| \|Chatbots\|Computer programs designed to simulate conversation with human users, especially over the internet. They are typically used in dialog systems for various practical purposes like customer service or information acquisition.\| \|Cloud\|See Cloud Computing\| \|Cloud Computing\|The delivery of easily provisionable computing resources - servers, storage, databases, networking, software, analytics and more - over the internet, consumed on a pay-as-you-go basis.\| \|Connected Computing (CCT) Platform\|Part of the TCS ADD suite, CCT is an innovative software-as-a-service platform that enables life sciences companies to significantly transform patient engagement in clinical trials and improve adherence to protocols, as well as the efficiency and accountability of clinical trials.\| \|CMT\|Acronym for Communication, Media and Technology\| \|Cognitive Automation\|The use of AI and machine learning to automate relatively more complex tasks that require reasoning capability and contextual awareness.
TCS' ignio™ is a leading cognitive automation software product in the market today.\| \|Contextual Knowledge\|This is tacit knowledge pertaining to, and specific to, the granular nuances of a customer's business and IT landscape, acquired on the job over a period of time. TCS teams use their contextual knowledge to design technology solutions that are uniquely tailored for that customer, and therefore, a potential source of competitive differentiation.\| \|Consumer Packaged Goods (CPG)\|Acronym for Consumer Packaged Goods\| \|Core Banking System\|A back-end system that processes daily banking transactions and posts updates to accounts and other financial records; typically includes deposit, loan and credit processing capabilities, with interfaces to general ledger systems and reporting tools.\| \|Co-Innovation Network (COIN)\|This is an extended, global innovation ecosystem curated by TCS, to harness the innovation efforts of start-ups and academia, and incorporate them into transformational solutions built by TCS for its customers.\| \|Compounded Annual Growth Rate (CAGR)\|The annual growth rate between any two points in time, assuming that it has been compounding during that period.\| # Integrated Annual Report 2020-21 # Glossary \|Core Modernization initiatives that target the one or more elements of the organization's operations stack consisting of business processes, software systems and underlying infrastructure, usually to enable greater agility, scalability, resilience and a superior customer experience. These are typically large in scale and scope, and entail the integrated delivery of multiple capabilities.\| \| \| \| \|---\|---\|---\|---\| \|Digital Twin\|A digital replica of a physical entity. For instance, a digital twin of a factory is a virtual model of the factory built using its data, process and people information. The Impact of any change in a process in the real factory can be studied by simulating the change in the digital twin.\| \| \| \| \| \|Earnings Per Share\|The amount of that period's Net Income attributable to a single share after deducting any preference dividend and related taxes.\| \| \|EPS = [Net profit attributable to Shareholders of the Company - Preference dividend, if any] / Weighted average number of equity shares outstanding during the period\| \| \| \|Cyber Security\|Technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access.\| \| \| \|Discretionary Spend\|Also known as Change the Business (CTB) spend, it is that portion of the IT budget which is used to fund projects that are not, strictly speaking, essential for day to day operations, but are more transformational in nature. In uncertain economic times, when businesses are forced to cut spends in response to decline in income, discretionary spend is often the first to be scrutinized. However, what is considered discretionary is subjective and may differ considerably amongst businesses even within the same sector.\| \| \| \|Days' Sales Outstanding (DSO)\|A popular way of depicting the Trade Receivable relative to the company's Revenue.\| \| \| \| \|DSO = Trade Receivable * 365 / LTM Revenue\| \| \| \|Depreciation\|A method of allocating the cost of a tangible long-term asset over its useful life. It is a non-cash accounting entry found in the statement of profit and loss.\| \| \| \|Distributed Ledger Technology\|See Blockchain\| \| \| \|DevOps\|Represents a new way of working to rapidly deploy new releases of a software in production using high levels of automation and tooling. TCS recommends adoption of DevOps, along with Agile for speed to market.\| \| \| \|Enterprise Agile\|The adoption of Agile methods across all the business functions of the enterprise, designed to empower employees, foster collaboration and drive a culture of continuous innovation at scale.\| \| \| \|Dividend\|One form of distribution of profits earned by the Company and is usually declared as an amount per equity share held by the shareholders. TCS has a policy of declaring quarterly interim dividends and the final dividend is approved by the shareholders in the Annual General Meeting.\| \| \| \| \|Fair Value\|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.\| \| \|Digital\|Represents new age technologies such as Social Media, Mobility, Analytics, Big Data, Cloud, Artificial Intelligence and Internet of Things.
Increasingly, with these technologies becoming mainstream, this word is becoming redundant.\| \| \| \| \|ETR\|See Effective Tax rate\| \| \|Effective Tax Rate\|The proportion of the Profit Before Tax that is provided towards income taxes.\| \| \| \| \| \|ETR = Tax expense / Profit Before Tax\| \| \|Engineering and Industrial Services\|Consists of next generation product engineering, manufacturing operations transformation, services transformation, embedded software and Internet of Things.\| \| \| # Glossary # Fintech Businesses that use technology to make financial services more efficient. Some fintech developments have improved traditional services, for example mobile banking apps, while others have revolutionized services such as pay per mile car insurance, or created new products, such as Bitcoin. # Fixed Price Contracts A form of services contracts where the vendor takes a turnkey responsibility for delivering a solution for a certain price and within a mutually agreed timeframe. The customer is billed on completion of key project milestones and related deliverables. This arrangement gives the vendor considerable flexibility in the staffing and execution of the project. On the other hand, it also means bearing the project risk. # Forward Contract A hedging instrument wherein two parties agree to buy or sell a particular asset (such as stock or currency) at a pre-determined rate (or Forward rate) on a specific future date. For e.g. TCS enters into a forward contract to sell USD 1 million after 3 months @ `72. Irrespective of the prevailing USD-INR spot rate, TCS will be obliged to sell USD 1 million @ `72 at the end of 3 months. # Free Cash Flow Represents the cash a company generates through its operations, less the capital expenditure. Free cash flow = Cash flow from operating activities - Capital expenditure # Furlough A temporary cessation of work without pay for the employees, usually implemented by organizations facing under difficult economic conditions, and in lieu of laying off employees. # Gamification The process of adding games or game-like elements to any activity in order to enrich experiences and encourage user participation. # GDPR Acronym for General Data Protection Regulation, a European Union regulation for data protection and privacy. # Growth and Transformation Initiatives launched to improve the enterprise's revenues, leveraging technology to adopt new business models, drive new revenue streams, enhance customer experience or target new customer segments. This is in contrast to traditional outsourcing engagements where the focus is on improving efficiency and saving costs. # Inorganic Growth Growth in revenue due to mergers, acquisitions or takeovers, rather than due to an increase in the company's own business activity. # Internet of Things A network of interconnected machines or devices embedded with sensors, software, network connectivity, and necessary electronics to generate and share run-time data that can be studied and used to monitor or control remotely, predict failure, and optimize the design of those machines/devices. # Invested Funds Aggregation of cash and various forms of investments (excluding investments in equity shares designated at fair value through OCI). Invested Funds = Cash and Cash Equivalents + Investments (excluding equity shares designated at fair value through OCI) + Bank deposits + Inter-corporate deposits # Integrated Annual Report 2020-21 # Glossary \|Intellectual Property\|An asset that is the result of a creative design or idea, such as patents, copyrights, reusable code, software products and platforms, and gives the owner exclusive rights over its usage, such that no one can copy or reuse the creation without the owner's permission.\| \|---\|---\| \|Interactive Technology\|Allows for a two-way flow of information through an interface between the user and the technology; the user usually communicates a request for data or action to the technology with the technology returning the requested data or result of the action back to the user.\| \|Involuntary Attrition\|A reduction in the workforce due to the employer's decision to terminate employment, instead of the employees' decision to leave.\| \|IoT\|See Internet of Things\| \|IP\|See Intellectual Property\| \|KMP\|See Key Managerial Personnel\| \|Key Managerial Personnel\|At TCS, this refers to the Chief Executive Officer and Managing Director, Chief Operating Officer and Executive Director, Chief Financial Officer, and the Company Secretary.
Please refer to the company's policy on KMP.\| \|LatAm\|Acronym for Latin America\| \|Managed Services\|This is the practice of outsourcing to one service provider, also known as the Managed Services Provider (MSP), the end-to-end responsibility for providing, or orchestrating the provision through third party providers of, services around a range of processes and functions, in order to improve efficiency, service quality, agility and scalability.\| \|MSP\|See Managed Services Provider\| \|MVP\|See Minimum Viable Product\| \|Non-Controlling Interest\|The share of the net worth attributable to non-controlling shareholders of the subsidiaries.\| \|Non-discretionary Spend\|Also known as Run the Business (RTB) spend, is that portion of the IT budget that covers the basic IT activities required to keep a business running. Even in tough economic times, non-discretionary spend remains relatively unaffected.\| \|Mobility\|Information, convenience, and social media all combined together, and made available across a variety of screen sizes and hand-held devices.\| \|Machine First™ Delivery Model\|A model that integrates analytics, AI and automation deep within the enterprise to redefine how humans and machines work together and to effectively deliver superior outcomes.\| \|Machine Learning\|A type of artificial intelligence that provides computers with the ability to learn behaviors without being explicitly programmed.\| \|LTM\|Last Twelve Months\| \|MEA\|Acronym for Middle East and Africa\| \|Market Capitalization\|The total market value of a company's total outstanding equity shares at a point in time. Market Cap = Last Trading Price * Total number of outstanding shares\| \|Minimum Viable Product\|The most basic version of a new product, with the bare minimum functionality, which can be released to the users at the earliest, to be augmented with incremental features and functionality over subsequent iterative cycles. MVPs can be used by teams to learn about user behavior and validate the product value with minimum investment.\| # Integrated Annual Report 2020-21 # Glossary \|Options\|A hedging instrument that offers the buyer the right to buy or sell the underlying asset (such as stocks or currency) on a future date, at a specified price, for small upfront fee called options premium. Eg: TCS purchases an options contract to sell USD 1mn @ ` 77/$ after 3 months, paying an option premium of `1 million. With this, TCS will have the right to sell USD 1mn at an exchange rate of `77, even if the prevailing market rate at the end of three months is, say `75. On the other hand, if the market rate is higher, say `79, then TCS can choose to let the options contract lapse and instead sell at the market rate.\| \|---\|---\| \|Order Book\|See Total Contract Value\| \|Organic Growth\|The revenue growth a company can achieve by increasing its existing business activity. This does not include growth attributable to takeovers, acquisitions or mergers.\| \|Other Comprehensive Income\|Other comprehensive income (OCI) comprises items of income and expense, including reclassification adjustments, that are not recognized in profit or loss as required or permitted by Ind ASs.\| File: AR_TCS_2020_2021.md \|PaaS\|See Platform as a Service\| \|Personalization\|Segmentation and responding to individual transactions, customized for a single customer in a single instance.\| \|Platforms\|A group of technologies that are used as a base upon which other applications, processes or technologies are developed. Useful for optimizing costs and efforts, and eliminating iterative tasks to drive strategic business initiatives.\| \|Public Cloud\|A computing service model used for the provisioning of storage and computational services to the general public over the internet. Public cloud facilitates access to IT resources on a 'pay as you go' billing model.\| \|Platform as a Service (PaaS)\|A category of cloud computing that provides a platform and environment to allow developers to build applications and services over the internet. PaaS services are hosted in the cloud and accessed by users simply via their web browser.\| \|Pricing\|The price charged to the customer for a billable effort, turnkey project or a certain process outcome, depending on the nature of the contract. Some use this term interchangeably (and somewhat inaccurately) with the average revenue realized by the company per utilized effort on an aggregate basis. See Realization.\| \|Realization\|The revenue received by the company per utilized effort. Pricing varies by service and by market. Consequently, there can be changes in realization compared to a prior period, due to changes in the underlying business or geographic mix during the period. This does not necessarily mean that like-to-like pricing has changed. Also, realization doesn't take into account the costs and therefore, higher realization is not necessarily more profitable.\| \|Related Party Transactions\|Any transaction between a company and its related party involving transfer of services, resources or any obligation, regardless of whether a price is charged.
Please refer to the Company's policy on Related Party Transactions.\| \|Product\|In the technology context, refers to a packaged software program that is made available to multiple customers either on a license basis, or on a subscription basis, to enable the execution of certain common tasks or processes or business functions in a standardized way. This is the opposite of bespoke or custom software which is built to specifications to meet a customer's unique needs.\| \|Revenue\|The income earned by the Company from operations by providing IT and consulting services, software licenses, and hardware equipment to customers.\| # Integrated Annual Report 2020-21 # Glossary \|RFP\|Acronym for Request for Proposal, meaning a document that solicits proposal, often made through a bidding process, by an entity interested in procurement of IT services, to potential service providers to submit business proposals. An RFP is floated early in the procurement cycle and requested information may include basic corporate information and history, financial information, technical capability and estimated completion period, and customer references.\| \|---\|---\| \|Secure Borderless Workspaces™\|TCS' innovative operating model rolled out in response to the COVID-19 disruption. It is a fully location agnostic extension of the Location Independent Agile model, enabling employees to work remotely, while retaining the same high rigor in project management, governance and security. The fully distributed nature of this model is better suited to ensure business continuity. It leverages TCS' prior investments and incorporates the learnings and best practices around network management, standard service delivery environment, digitized governance processes, heavy use of collaborative and cloud based technologies and an internal SOC benchmarked to the best in the industry.\| \|Sole Sourced Contract\|Non-competitive agreements that allow a single vendor to fulfill the needs of the contractual requirements. These types of contracts can be won when the competitor set narrows down significantly and comes down to a single vendor discussion, given the nature of the client's solution requirements.\| \|Special Economic Zone\|In India, these are designated areas in which business and trade laws are different from the rest of the country, with various benefits and tax breaks to promote exports, attract investments, and create local jobs.\| \|Robotic Process Automation\|The use of software tools to automate high-volume, repeatable tasks that previously required humans to perform. RPA is best suited for relatively simple and stable processes. Dynamic changes in the environment require ongoing upkeep of the robots, diluting the economic benefit of the automation. Increasingly, customers are preferring cognitive automation over RPA.\| \|T&M\|See Time and Materials Contract\| \|STEM\|An acronym for education in the fields of science, technology, engineering and math.\| \|Shareholder Payout Ratio\|The proportion of earnings paid to shareholders as a percentage of the Company's earnings, i.e. Net Income attributable to Shareholders of the Company. Payout can be in the form of dividend and share buyback. Payout includes tax payable by the company on behalf of the shareholders in the form of dividend distribution tax and buyback tax.\| \|TCS Pace™\|A brand promise that represents the way TCS channels its domain knowledge and organizational units - business and technology services, industry solutions units, and the research and innovation organization - into internal and external co-innovation programs.\| \|TCS Pace Port™\|Physical spaces where TCS Pace can be experienced. These spaces are close to academic and start-up hubs, and enclose innovation showcases, Agile workspaces and think spaces. They encourage brainstorming, design thinking and collaborative innovation with internal and external partners.\| \|Simplification\|The rationalization of IT architectures through consolidation of systems and elimination of redundant systems and layers. The primary purpose is to shrink the IT footprint and make operations leaner and more efficient.\| \|TCV\|See Total Contract Value\| # Integrated Annual Report 2020-21 # Glossary \|Time and Materials Contract\|A form of services contract where the customer is billed for the effort (in hours, days, weeks, etc.) logged by the project team members. Project risk is borne by the customer. This contrasts with Fixed Price Contracts.\| \|---\|---\| \|Total Contract Value\|An aggregation of the value of all the contracts signed during a period and a useful indicator of demand, and near term business visibility.\| \|Turnkey Contracts\|See Fixed Price Contracts\| \|Unearned and Deferred Revenue\|Invoices raised in line with agreed milestones for services yet to be delivered.
In other words, it is the amount that has been invoiced although the underlying effort is yet to be expended.\| \|Virtual Reality (VR)\|See Virtual Reality\| \|XR\|Extended reality, an umbrella term that covers augmented reality, virtual reality and mixed reality.\| \|Virtualization\|The abstraction of IT resources - like a server, client, storage or network - that masks the physical nature and boundaries of those resources from the users of those resources.\| \|Voluntary Attrition\|Refers to reduction in workforce resulting from employees willingly leaving the organization to pursue other opportunities, spend time with family, or for some other personal reason.\| Y-o-Y: Year-on-Year Disclaimer: This glossary is intended to help understand commonly used terms and phrases in this report. The explanations are not intended to be technical definitions. If explanations provided here are found to be different from what is described in the Company's periodic financial statements (not limited to Notes to Accounts), then the definition provided in the certified financial statements will prevail. # GRI Annexures # ABOUT THIS REPORT This report for FY 2021 (year ending March 31, 2021) is an Integrated Report, that covers TCS' performance across financial, human, intellectual, relationship, social, natural and manufactured capitals. The last edition was for FY 2020. It has been prepared in accordance with the Integrated Reporting framework and GRI Standards Core Option. # SCOPE AND BOUNDARY OF REPORTING # Reporting period This report is produced and published annually. It provides material information relating to TCS strategy and business model, operating context, material risks, stakeholder interests, performance, prospects and governance, covering the year April 1, 2020 to March 31, 2021. # Financial and non-financial reporting The basis and exclusions for reporting are as below: \|Data\|Basis\|Exclusions\| \|---\|---\|---\| \|Financial\|TCS' consolidated global operations\|None\| \|Human Resources\|TCS' global operations, including wholly owned subsidiaries\|Subsidiaries not wholly owned by TCS (accounting for 2.4% of the consolidated headcount)\| \|Environmental\|Delivery centers in Brazil, Chile, China, Colombia, Hungary, India, Mexico, Peru, Philippines, Singapore, UK, and Uruguay\|Remaining delivery centers, accounting for ~4% of the headcount\| 1 102-10, 102-45, 102-46, 102-48, 102-49, 102-50, 102-51, 102-52, 102-54, 102-56 # Stakeholder Engagement Framework The data measurement techniques used, and the basis of calculations and estimates have been mentioned in the relevant areas of this report. TCS does not believe there is any substantial divergence from the GRI Indicator Protocols. The scope, boundaries, and methodology for data analysis in this document remain the same as in the prior year. There has been no restatement of information or changes in the material topics or boundaries since the prior year. The data is sourced from Ultimatix, TCS' core enterprise platform. Other supporting data is reviewed by relevant third-party assurers as part of ISO and financial audit. # Assurance Ernst & Young has assured the data presented under GRI Standards disclosures as specified in their Assurance Statement. The scope and basis of assurance have been described in their assurance letter. The Board was not involved in seeking this assurance. # Contact Corporate Headquarters: TCS House, Raveline Street, Fort, Mumbai 400 001, Maharashtra, India. Website: www.tcs.com # Feedback Please email any feedback / queries: [email protected] Any other topic: [email protected] # Stakeholder Engagement TCS strives to create value for all stakeholders and aspires to understand and act upon material matters for its business, stakeholders, and society. TCS' strategy is based on its stakeholder engagement program and a materiality assessment. TCS engages with a broad spectrum of stakeholders, to deepen its insights into their needs and expectations, and to develop sustainable strategies for the short, medium, and long term. Stakeholder engagement also helps to manage risks and opportunities in business operations. # Stakeholder Overview The below table shows an overview of TCS' stakeholder group and how the company engages with them: \|Stakeholder Group\|Engagement Method\| \|---\|---\| \|Customers\|Structured and unstructured interactions\| \|Employees\|Surveys, town halls, 1x1 meetings\| \|Shareholders\|Periodic updates\| \|Academic Institutions\|Collaborative projects\| \|Head-hunters and Staffing Firms\|Recruitment processes\| \|Other Suppliers and Partners\|Regular meetings\| \|Industry Bodies (e.g., NASSCOM, CII)\|Membership and participation\| \|Governments\|Policy discussions\| \|NGOs\|Community engagement\| \|Local Communities\|Outreach programs\| \|Regulators\|Compliance meetings\| \|Society at Large\|Public forums\| # Footnotes 2 102-3, 102-53 3 102-13 4 102-40, 102-42 5 102-43 # Integrated Annual Report 2020-21 # GRI Annexures 338 # Customers # How TCS engages?
- As needed: Project-related calls and meetings; project management reviews; relationship meetings and reviews; executive meetings and briefings; customer visits; responses to RFIs/RFPs; sponsored events; mailers; newsletters; brochures - Continuous: TCS website; social media (LinkedIn, Twitter, Facebook, Instagram, YouTube) - Half-yearly: Customer satisfaction surveys - Annual: Customer summits; Innovation days; Executive customer surveys; Sponsored Community events # Employees # How TCS engages? - As needed: Town halls; roadshows; project or operations reviews; video conferences; audio conference calls; one-on-one counselling - Monthly: @TCS (in-house magazine) - Continuous: TCS website; Ultimatix Notice Board; CEO Connect; CTO Blog; Corporate Corner; Knome; dipstick surveys; grievance redressal system - Annual: PULSE (employee feedback survey); long-service awards; sales meets; Blitz (business planning meet) # Shareholders # How TCS engages? - As needed: Press releases and press conferences; email advisories; facility visits; in-person meetings; investor conferences; non-deal roadshows; conference calls - Quarterly: Financial statements in Ind AS and IFRS; earnings call; exchange notifications; press conferences - Continuous: Investors page on the TCS website - Annual: Annual General Meeting; Annual Report # Head-hunters; staffing firms; other suppliers # How TCS engages? - One-time: RFIs/RFPs; empanelment process - As needed: Transactional meetings; periodic reviews; surveys # Academic Institutions # How TCS engages? - As needed: Academic Interface Program; Co-Innovation Network (COIN™) meetings - Continuous: TCS website; academic portal - Annual: Sangam (high-level academic conference); campus recruitment # Partners and Collaborators # How TCS engages? - As needed: Meetings/calls; COINTM meetings; visits; partner events - Monthly: Conference calls - Quarterly: Business reviews - Annual: Partner events # Industry bodies, Regulators # How TCS engages? - As needed (need basis / usually 1-2 meetings in 3 months' basis): - - Conferences and seminars - surveys - working committee meetings - other meetings Annual: Conferences; summits # Governments; NGOs; local communities; society at large # How TCS engages? - As needed: Governance RFIs/RFPs; presentations; project meetings; reviews; calls and meetings; surveys; consultative sessions; field visits; due diligence; calls and meetings; conferences and seminars; surveys; press releases; press conferences; media interviews and quotes; sponsored events - Continuous: TCS website Integrated Annual Report 2020-21 GRI Annexures \| 339 # Identification of Material Topics TCS conducts annual materiality assessments to update the list of material topics. The key elements of that assessment include: \|ENGGAMENT\|SUSTINBILITY CONTEXT\| \|---\|---\| \|ITH STKEHOLDERS\|ND VLUE CHIN\| \|Stakeholder interactions result in the identification of a broad funnel of issues important to each of the constituencies. The Company's Sustainability Council uses discussions with internal and external stakeholders, as well as its own judgment, to prioritize and arrive at a list of material topics with significant economic, environmental, or social impacts on TCS' business, reputation, and operations.\|The company looks at the role of TCS in wider sustainability issues, the impact the company has through its customer engagements and its operations, and the role that the company experts play in professional associations, industry forums and other thought leadership activities to address important issues raised by stakeholders.\| Integrated Annual Report 2020-21 GRI Annexures \| 340 # Key Material Topics # Key Concerns # Boundary of impact # TCS approach to them are listed below: \|Why this is material\|Key Concerns\|TCS Approach\|Boundary of impact\|GRI (Page Reference Number)\| \|---\|---\|---\|---\|---\| \|Corporate Governance\|* Governance Structure and composition * Independence of the Board and Minority Interest * Avoidance of conflict of interest * Board oversight * Disclosure and Transparency * Value, ethics and compliance * Enterprise Risk Management * Succession Planning * Remuneration Policy\|* Pg 72 * Pg 73 * Pg 73 * Pg 73 * Pg 73; Disclosures - Pg 87-89 * Pg 73 * Pg 131 * Pg 74 * Pg 82\|Internal\|102-18 102-16 102-16 102-16 102-16 102-16 102-16 102-16 102-16\| 6 102-47 7 102-44 8 102-46, 102-47: Boundary of Impact: Internal includes all TCS offices and campuses, 103-1 # Integrated Annual Report 2020-21 # GRI Annexures 341 # Why this is material # Key Concerns # TCS Approach # Boundary of impact # GRI (Page Reference Number) # Business Sustainability A financially strong, viable business that is able to adapt to changing technology landscapes to remain relevant to customers and profitably grow its revenues year-on-year is essential to meet longer term expectations of stakeholders.
- Economic performance - Demand sustainability - Investments in capability development # Performance Overview - Pg 127 # Strategy for sustainable growth - Pg 103 # TCS Strategy - Pg 106 # Business outlook - Pg 131 # Enabling investments - Pg 104 # Intellectual Capital - Pg 115 # Talent Management The company's ability to attract, develop, motivate, and retain talent is critical to business success. - Talent acquisition - Talent development - Diversity and Equal opportunity - Talent retention - Employee engagement - Occupational Health and safety # Pg 109 # Pg 110 # Pg 112 # Pg 112 # Pg 110 # Pg 113 Integrated Annual Report 2020-21 GRI Annexures \| 342 # Why this is material # Key Concerns # TCS Approach # Boundary of impact # GRI (Page Reference Number) # Social Responsibility The business must be rooted in community and be aligned with the community's larger interests. Any adversarial relationship can hurt the company's ability to create longer term value. \|* Local communities\|* Social Capital - Pg 145\| \|---\|---\| \|* Education and skill development\|* Education - Pg 146\| \| \|* Skill Development - Pg 148\| \|* Job creation\|* Employment and employability - Pg 149\| \|* Taxes payable in different regions\|* TCS standalone income taxes - Pg 311-315\| \| \|* Country-wise subsidiary income taxes - Pg 324-327\| \|* Health and wellness\|* Occupational Health and Safety - Pg 113\| \|* Environmental stewardship\|* Natural Capital - Pg 169\| # Environmental Footprint Business sustainability is linked to the planet's sustainability. Moreover, good environmental practices result in greater operational efficiency, adding to financial sustainability. \|* Energy consumption\|* The path to energy efficiency - Pg 171\| \|---\|---\| \| \|* GHG emissions - Pg 170\| \|* Water management\|* Water conservation - Pg 172\| \|* Effluents and waste\|* Waste reduction and reuse - Pg 173\| Integrated Annual Report 2020-21 GRI Annexures \| 343 # GRI Content Index \|GRI Standard\|Disclosure\|Page No.\|Omission\| \|---\|---\|---\|---\| \|GRI 101: Foundation 2016\|(GRI 101 doesn't include any disclosures)\| \| \| \|GRI 102: General disclosures 2016\| \| \| \| \| \|Organizational Profile\| \| \| \| \|102-1 Name of the organization\|3\| \| \| \|102-2 Activities, brands, products and services\|99\| \| \| \|102-3 Location of headquarters\|338\| \| \| \|102-4 Location of operations\|99\| \| \| \|102-5 Ownership and legal form\|3\| \| \| \|102-6 Markets served\|99\| \| \| \|102-7 Scale of the organization\|3\| \| \| \|102-8 Information on employees and other workers\|108\| \| \| \|102-9 Supply Chain\|109\| \| \| \|102-10 Significant changes to the organization and its supply chain\|337\| \| \| \|102-11 Precautionary principle or approach\|170\| \| \| \|102-12 External initiatives\|103\| \| \| \|102-13 Membership of associations\|338\| \| 102-55 Integrated Annual Report 2020-21 GRI Annexures \| 344 # GRI Standard \|Disclosure\|Page No.\|Omission\| \|---\|---\|---\| \|Strategy\|102-14 Statement from senior decision maker\|9\| \|Ethics and Integrity\|102-16 Values, principles, standards, and norms of behavior\|73\| \|Governance\|102-18 Governance structure\|72\| \|Stakeholder Engagement\|102-40 List of stakeholder groups\|338\| \| \|102-41 Collective bargaining agreements\|111\| \| \|102-42 Identifying and selecting stakeholders\|338\| \| \|102-43 Approach to stakeholder engagement\|338\| \| \|102-44 Key topics and concerns raised\|341\| \|Reporting Practice\|102-45 Entities included in the consolidated financial statements\|337\| \| \|102-46 Defining report content and topic boundaries\|337, 341\| \| \|102-47 List of material topics\|341\| \| \|102-48 Restatements of information\|337\| # Integrated Annual Report 2020-21 # GRI Annexures 345 # GRI Standard \|Disclosure\|Page No.\|Omission\| \|---\|---\|---\| \|102-49 Changes in reporting\|337\| \| \|102-50 Reporting period\|337\| \| \|102-51 Date of most recent report\|337\| \| \|102-52 Reporting cycle\|337\| \| \|102-53 Contact point for questions regarding the report\|338\| \| \|102-54 Claims of reporting in accordance with the GRI Standards\|337\| \| \|102-55 GRI content index\|344\| \| \|102-56 External assurance\|337\| \| # Material Topics - Economic # GRI 201 - Economic Performance # GRI 103: Management Approach \|Disclosure\|Page No.\| \|---\|---\| \|103-1 Explanation of the material topics and its boundaries\|341\| \|103-2 The management approach and its components\|102\| \|103-3 Evaluation of the management approach\|127\| # GRI 201: Economic Performance \|Disclosure\|Page No.\| \|---\|---\| \|201-1 Direct economic value generated and distributed\|15\| # Integrated Annual Report 2020-21 # GRI Annexures 346 # GRI Standard # Disclosure # Page No.
Omission # Material Topics - Environment # GRI 302: Energy # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|171\| \|103-3 Evaluation of the management approach\|171\| # GRI 302: Energy 2016 302-1 Energy consumption within the organization 170 # GRI 303: Water # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|172\| \|103-3 Evaluation of the management approach\|172\| # GRI 303: Water 2018 303-3 Water withdrawal by source 172 # GRI 305: Emissions # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|170\| \|103-3 Evaluation of the management approach\|170\| # GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG Emissions 171 # Integrated Annual Report 2020-21 # GRI Annexures \| 347 # GRI Standard # Disclosure # Page No. Omission # GRI 306: EFFLUENTS AND WASTE # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|172\| \|103-3 Evaluation of the management approach\|172\| # GRI 306: Effluents and Waste 2016 306-1 Water discharge by quality and destination 172 # Material Topics - Social # GRI 401: Employment # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|107\| \|103-3 Evaluation of the management approach\|107\| # GRI 401: Employment 2016 401-3 Parental Leave 111 # GRI 402: Labor/Management Relations # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|107\| \|103-3 Evaluation of the management approach\|107\| # GRI 402: Labor Relations 2016 402-1 Minimum notice periods regarding operational changes 111 # Integrated Annual Report 2020-21 # GRI Annexures 348 # GRI Standard # Disclosure # Page No. Omission # GRI 403: Occupational Health and Safety # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|113\| \|103-3 Evaluation of the management approach\|113\| # GRI 403: Occupational Health and Safety 2018 403-4 Worker participation, consultation, and communication on occupational health and safety 113 # GRI 404: Training and Education # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|110\| \|103-3 Evaluation of the management approach\|110\| # GRI 404: Training and Education 2016 404-1 Average hours of training per year per employee 110 # GRI 405: Diversity and Equal Opportunity # GRI 103: Management Approach \|103-1 Explanation of the material topics and its boundaries\|341\| \|---\|---\| \|103-2 The management approach and its components\|112\| \|103-3 Evaluation of the management approach\|112\| # GRI 405: Diversity and Equal Opportunity 2016 405-2 Ratio of basic salary and remuneration of women to men 111 # Integrated Annual Report 2020-21 # GRI Annexures 349 # GRI Standard # Disclosure \|GRI\|Disclosure\|Page No.\|Omission\| \|---\|---\|---\|---\| \|GRI 413: Local Communities\|GRI 103: Management Approach\|103-1 Explanation of the material topics and its boundaries\|341\| \| \|103-2 The management approach and its components\|145\| \| \| \|103-3 Evaluation of the management approach\|145\| \| \|GRI 413: Local Communities 2016\|413-1 Operations with local community engagement, impact assessments, and development programs\|146\| \| # Integrated Annual Report 2020-21 # GRI Annexures 350 # TCS Safe Harbor Clause Certain statements in this release concerning our future prospects are forward-looking statements. Forward-looking statements by their nature involve a number of risks and uncertainties that could cause actual results to differ materially from market expectations. These risks and uncertainties include, but are not limited to, our ability to manage growth, intense competition among global IT services companies, various factors which may affect our profitability, such as wage increases or an appreciating Rupee, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on cross-border movement of skilled personnel, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which TCS has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property, pandemics, natural disasters and general economic conditions affecting our industry.
TCS may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. These forward-looking statements represent only the Company's current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements. # IT Services # Business Solutions # Consulting Tata Consultancy Services Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021 www.tcs.com File: AR_TCS_2021_2022.md # TATA TCS/SE/39/2022-23 May 18, 2022 National Stock Exchange of India Limited BSE Limited Exchange Plaza, C-1, Block G, Bandra Kurla P. J. Towers, Complex, Bandra (East) Dalal Street, Mumbai - 400051 Mumbai - 400001 Symbol - TCS Scrip Code No. 532540 Dear Sirs, # Sub: Annual General Meeting Notice, Integrated Annual Report 2021-22 The twenty-seventh Annual General Meeting ("AGM") of the Company will be held on Thursday, June 9, 2022 at 3.30 p.m. IST through Video Conferencing / Other Audio Visual Means. Pursuant to Regulation 34(1) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are submitting herewith the Integrated Annual Report of the Company along with the Notice of AGM for the financial year 2021-22 which is being sent to the Members, who have registered their e-mail addresses with the Company/ Depositories, through electronic mode. The Integrated Annual Report containing the Notice is also uploaded on the Company's website www.tcs.com. This is for your information and records. Thanking you, Yours faithfully, For Tata Consultancy Services Limited Pradeep Manohar Gaitonde Company Secretary cc: 1. National Securities Depository Limited 2. Central Depository Services (India) Limited 3. TSR Consultants Private Limited TATA CONSULTANCY SERVICES TATA Consultancy Services Limited 9th Floor Nirmal Building Nariman Point Mumbai 400 021 Tel. 91 22 6778 9595 Fax 91 22 6778 9660 e-mail [email protected] website www.tcs.com Registered Office 9th Floor Nirmal Building Nariman Point Mumbai 400 021. Corporate identification No. (CIN): L22210MH1995PLC084781 # Innovating for Greater Futures # Integrated Annual Report # 2021 # Q&A with Finance and HR # Standalone Financial Statements # Content \|About TCS\|03\| \|---\|---\| \|Helping RS Components Deepen Customer Relationships and Drive Profitable Growth\|45\| \|Independent Auditors' Report\|318\| \|Board of Directors\|04\| \|Boosting Colruyt's Competitiveness with Algorithmic Pricing\|46\| \|Standalone Balance Sheet\|331\| \|Management Team\|05\| \|Standalone Statement of Profit and Loss\|333\| \|Letter from the Chairman\|06\| \|Standalone Statement of Changes in Equity\|334\| \|Letter from the CEO\|09\| \|Standalone Statement of Cash Flows\|337\| \|The Year Gone By\|14\| \|Notes forming part of the Standalone Financial Statements\|339\| \|Integrated Reporting Framework\| \| \|Directors' Report\|82\| \|Management Discussion and Analysis\|107\| \|Corporate Governance Report\|137\| \|Awards and Accolades\|166\| \|Corporate Sustainability Report\|174\| \|Business Responsibility and Sustainability Report\|186\| \|Identification of Material Topics\|412\| \|Consolidated Financial Statements\| \| \|Independent Auditors' Report\|233\| \|Consolidated Balance Sheet\|243\| \|Consolidated Statement of Profit and Loss\|245\| \|Consolidated Statement of Changes in Equity\|247\| \|Consolidated Statement of Cash Flows\|250\| \|Notes forming part of the Consolidated Financial Statements\|252\| # About # Tata Consultancy Services TCS is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for over 50 years. TCS offers a consulting-led, cognitive powered, integrated portfolio of business, technology and engineering services and solutions. This is delivered through its unique Location Independent AgileTM delivery model, recognized as a benchmark of excellence in software development. A part of the Tata group, India's largest multinational business group, TCS has over 592,000 of the world's best-trained consultants in 55 countries.
The company generated consolidated revenues of US $25.7 billion in the fiscal year ended March 31, 2022, and is # Board of Directors \| \| \|Average Age (years)\|Average Tenure on the Board (years)\| \|---\|---\|---\|---\| \| \| \|61\|06\| \|51\|71\|03\|15\| # Board Independence (%) Independent 56% Non-Independent 44% # Average Tenure of Independent Directors on the Board (years) 05 03 10 # From left to right \|Keki Mistry\|COO\|N G Subramaniam\|CEO & MD\|Hanne Sorensen\|Rajesh Gopinathan\| \| \| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|C\|C\|M\|I\|M\|M\|NE\|M\|M\|I\|M\|M\|M\|NE\| # Board Committees \|Audit Committee\|Nomination and Remuneration Committee\|Stakeholders' Relationship Committee\|Corporate Social Responsibility Committee\|Executive Committee\|Risk Management Committee\| \|---\|---\|---\|---\|---\|---\| \|N Chandrasekaran\|Aarthi Subramanian\|Dr Pradeep Kumar Khosla\|Don Callahan\|O P Bhatt\|Samir Seksaria (Chief Financial Officer) is also a member of the Committee\| \|C\|C\|M\|N\|M\|N\| \|C\|M\|I\|M\|M\|I\| \|C\|M\|M\|I\| \| \| # Management Team # Corporate \|Rajesh Gopinathan\|Chief Executive Officer and Managing Director\| \|---\|---\| \|Rajashree R\|Chief Marketing Officer\| # Business Heads \|Susheel Vasudevan\|Relationship Incubation Group\| \|---\|---\| \|Suresh Muthuswami\|Chairman - TCS North America\| \|N G Subramaniam\|Chief Operating Officer and Executive Director\| \|K Ananth Krishnan\|Chief Technology Officer\| \|Krishnan Ramanujam\|Enterprise Growth Group\| \|Amit Bajaj\|North America\| \|Debashis Ghosh\| \| \|Sapthagiri Chapalapalli\|Business Transformation Group\| \|Samir Seksaria\|Chief Financial Officer\| \|Madhav Anchan\|General Counsel Legal\| \|Milind Lakkad\|Chief Human Resources Officer\| \|Pradeep Manohar Gaitonde\|Company Secretary\| \|K Krithivasan\|Banking, Financial Services and Insurance\| \|Amit Kapur\|UK & Ireland\| # Letter from the Chairman The supply chain upheavals during the past couple of years are driving a shift towards rebalancing and resilience. As companies seek real-time data to transform their supply chains, AI and predictive analytics help capture insights and react to changing conditions. Your company is helping companies reconfigure their supply chains to ensure that they can serve their customers and stakeholders on time. Letter from the Chairman \| 6 The change in technology consumption reflects the prevailing trends in the economy. Recent events have accelerated digital adoption, put the spotlight on supply chain resilience and added urgency to the sustainability imperative. Each of these represents an opportunity that can contribute towards the growth of not just your company, but of the ecosystem as a whole. Dear Stakeholder, The past couple of years have been a period of intense action and reflection. We have seen a global pandemic, geopolitical tensions, supply chain disruptions, the rise of cryptocurrency and many other public and private upheavals. As the dust settles, and a clearer picture of the world ahead emerges, I believe we are standing at the threshold of a period of great opportunity and growth. In the face of widespread change, your company has shown remarkable resilience and adaptability, coming out stronger than ever, after catastrophic events like the global financial crisis or the pandemic. In FY 2022, your company crossed a milestone of $25 billion in revenues, experiencing strong growth of 15.9%, adding an all-time high incremental revenues of $3.5 billion. Even more satisfyingly, this growth has come with an industry-leading operating margin of 25.3%. Since the start of the last decade, the company has grown over four times, comfortably outperforming its largest global competitors. This growth is the source of our energy and vibrancy, reflected in the 17.7% growth in market value to `13,83,427 crore in the past year. Digital transformation is now an integral part of the functioning of enterprises, governments and societies. Your company continues to play a critical role in this transformation, helping clients embrace new technologies, initially to cope with the crisis, and since then, to innovate at scale and grow their businesses. As a fitness enthusiast, I can tell you that the only way to transform in the long term is by strengthening one's core. It is no different for organizations. We work with large enterprises to simplify their technology landscape and strengthen their core by building a cloud-based digital foundation and embedding intelligent automation into their operations so they can focus on building memorable experiences for their customers. In addition to reducing its own carbon footprint in its journey to be net zero by 2030, your company is helping the world's largest corporations in developing and executing their sustainability roadmaps, deploying its portfolio of intellectual property and services to help them track their emissions, reduce their carbon footprint and get closer to their net zero goals. The supply chain upheavals during the past couple of years are driving a shift towards rebalancing and resilience. As companies seek real-time data to transform their supply chains, AI and predictive analytics help capture insights and react to changing conditions--from widescale disruptions to individual customer complaints. Your company is helping.
Letter from the Chairman \| 7 # Letter from the Chairman Companies reconfigure their supply chains in many ways, including rolling out connected logistics to efficiently manage business disruption and ensure that they can serve their customers and stakeholders on time. I strongly believe that technology is at its most transformational when combined with the strength of human capital. In FY 2022, our employee strength grew to 592,195 with a record net addition of 103,546 employees. You will be proud of the way your company supported its employees and their families in dealing with the pandemic, including organizing what was perhaps the largest vaccination drive in corporate India for employees and families of not just TCS, but also of its extended ecosystem of partners and other group companies. In turn, our employees have shown remarkable resilience, loyalty and tenacity in ensuring that our customers are not impacted, despite significant personal challenges. I salute their spirit. Our purpose is anchored in the well-being of all our stakeholders, and the communities we operate in are very important stakeholders for us. Drawing from the legacy of the Tata group, we work closely with our communities to create equitable, inclusive pathways for all, especially women, youth and marginalized groups. We leverage four forms of capital - Intellectual, Technological, Human, and Financial - to bridge the opportunity gap for people and communities. Our primary focus areas are education, skilling, employment, and entrepreneurship. Additionally, we invest in basic health and wellness, water sanitation and hygiene, conservation, and disaster relief efforts. Since 2015, your company has invested $634 million in its community initiatives and empowered millions of people globally, primarily underserved students, minorities, youth, women and elders, to be literate, healthy, educated, digitally skilled, become rural entrepreneurs and gain employment. As we look ahead to the future, we go back to a key pillar of our strategy - customer centricity. Our organization structure, our investments in new capabilities and intellectual property, our delivery models and contracting structures have all been shaped by our clients' needs. Our new organization structure is designed to make every client continue to feel deeply valued, and to leverage TCS' rich set of capabilities and contextual knowledge to transform, grow and build better futures. With scale and by steadily expanding its transformation capabilities, TCS is moving from pursuing opportunities, to shaping those opportunities in the years ahead. Warm regards, N Chandrasekaran Chairman # Letter from the CEO Dear Stakeholder, With near normalcy all around, the pain and suffering caused by the pandemic at the start of the year seem so distant now. But the memories of TCSers and their loved ones we lost during the year will forever remain with us. My thoughts and prayers are with everyone who endured the loss of friends and family members to the pandemic. Given that context, I am grateful that on the business front we have much to feel happy about and celebrate. It has been a highly satisfactory year of consistently strong, profitable growth. In rupee terms, our revenue was ₹191,754 crore, which is growth of 16.8% (15.4% in constant currency). Our profitability continues to be industry-leading, with the operating margin at 25.3%, and net margin at 20%. Our Earnings Per Share was at ₹103.62, growing 16.1%* over the prior year. Our new purpose-designed organization structure, along with continued investments in building newer capabilities, next generation delivery models and assets that help our clients innovate at scale, and in building our brand, will help us deepen our customer relationships, expand our addressable market, gain market share and power growth in the years ahead. Our cash conversion continues to be very strong, with a cash conversion ratio of 104.2% and free cash flow of ₹36,985 crore. The Board has recommended a final dividend of ₹22 for the year, bringing the total dividend for the year to ₹43 per share. Additionally, during the year, we successfully completed our fourth buyback in five years, to the tune of ₹18,000 crore, representing a total payout of ₹38,010 crore including buyback tax of ₹4,192 crore paid out in April 2022. This amounts to over 102.8% of the free cash flow. 1 GRI 2-22 *Excluding provision towards legal claim in prior year. # Beyond the headline numbers, we are pleased with cloud transformation journeys However, the mindsets have changed.
During the year, enterprises moved from thinking of technology-led innovation as a way of coping with pandemic challenges, to looking at it as a means of powering their growth and transformation (G&T), especially in the case of clients who had already moved their most critical workloads to the cloud. Growth was led by Retail and Consumer Business which was impacted the most during the pandemic and which has bounced back strongly, growing 20.0%. Manufacturing grew 16.7%, Banking, Financial Services and Insurance grew 14.5% and Communications, Media and Technology grew 17.7%. Life Sciences and Healthcare grew 20.6% and Others which makes up 7.8% of revenues grew 15.5%. All our major markets grew in the mid-teens or above. North America grew 18.7%, Continental Europe grew 15.2% and UK grew 18.5%. Among emerging markets, Latin America grew 18.6%, India grew 16%, Middle East & Africa grew 16.3% while Asia Pacific grew 6.9%. # Innovating for Greater Futures Our outstanding performance this year, and the strong demand for our services that drove it, can be traced back to the innovation that enterprises scrambled to adopt at the start of the pandemic, to engage with customers digitally and to improve their operational resilience. The cloud adoption trends strengthened further in FY 2022, with more clients embarking on multi-horizon cloud journeys, while migrating to a new cloud-based. # All-time High Order Book In FY 2022, we won deals addressing a broad gamut of G&T objectives such as M&A, newer ways of working, product innovation, business model innovation and innovations around improved customer experience. We have been providing examples of these in our recent annual reports, including this year's report. The growing component of G&T revenue in our portfolio is also evidence that our differentiated, inside-out approach to transformation is resonating well with our clients. Our collaborative ways, and focus on harnessing collective contextual knowledge results in better buy-in for the transformation from stakeholders across the organization, setting it up for success. Our brand statement, 'Building on Belief', has also found strong resonance in the market, instilling hope into business and trust in the enterprise. # Letter from the CEO Digital core, is coming to an end as a key demand driver. Far from it, we saw strong deal flow right through the year from Horizon One initiatives. The sheer scale, depth of consulting expertise and full-service capabilities of our dedicated business units on each of the three large hyperscalers, and the investments we have made in building a rich portfolio of accelerators and toolsets for automating application and data estate modernization and cloud migration give us a distinct edge in this opportunity. Clients engaged us for some, or all, of the activities, starting from cloud assessment, business case preparation, roadmap creation, ERP consolidation and migration, application and data modernization and cloud migration. When core applications are re-engineered using cloud-native architectures, or on-premise ERP is moved to SaaS, it is not just a technology transformation but also a business transformation. Here too, our delivery model innovation, the Machine First™ approach, helped us win many large deals and gain share over pure play outsourcing companies. Our transformational approach embeds powerful technologies like machine vision, machine learning, and our AI-powered intellectual property such as ignio™ and Cognix™ into the core of our clients' processes, transforming the human-machine interface and delivering much leaner, faster and more resilient business and IT operations. Partnering with our clients in this initial phase is important not only for the sheer volume of business involved, but also because it is a gateway to the unbounded opportunity that the downstream innovation and transformation represent. The granular spend on innovation and transformation, cloud migration and outsourcing drove a strong flow of deals of all sizes. The total contract value of deals signed in the first three quarters averaged between $7-8 billion per quarter, capped by an all-time high order book of $11.3 billion in the fourth quarter. The robustness of the deal flow at the close of the year becomes evident when even after excluding the two mega deals of roughly a billion dollars each won in Q4, the order book TCV in Q4 was $9.5 billion, which is also an all-time high. The full year order book was $34.6 billion, our highest ever, representing a book to bill ratio of 1.3. The other big demand driver was outsourcing of business and IT operations.
There were three key reasons why enterprises outsourced more in FY 2022: the need to free up people as well as financial resources to execute their growth and transformation initiatives; talent scarcity especially in digital technologies, made worse by the Great Resignation; and the desire for leaner and more resilient IT and business operations. During the year, we saw many instances where clients engaged TCS to transform their operating models, and then manage those operations on their behalf. Such cloud transformation engagements are material, multi-year transformation engagements which when completed, result in resilient, future-ready digital technology stacks that enable leaner, more agile operations and very importantly, serve as a scalable foundation for their innovation and growth. Our purpose-driven approach to business and our values have shaped TCS' culture and work environment. We believe in investing in our people and giving them opportunities to realize their full potential. We believe in decentralized decision-making, in empowering leaders on the front lines, and in providing them all the support they need in their journeys. We also believe in treating the organization as an extended family, and standing by each member in their hour of need. This was best demonstrated in our response to the brutal second wave of the pandemic at the start of FY 2022. We scaled up our employee engagement, provided hospitalization support and access to Covid care centers at our facilities in 13 cities and undertook a massive - possibly the largest of its kind, pan-India vaccination drive, covering over a million individuals - employees and their dependents. # Letter from the CEO This philosophy, and our progressive policies and work organization crossed 50,000 this year, 24% of them women. Organizations like the UNICEF and the European Food Banks Federation are helping support war refugees streaming into neighboring countries. We are also matching funds raised by employees, families, and their networks, up to 500,000 Euros, as donation to these two organizations. The year also witnessed a sharp rise in employee turnover across the industry. TCS' attrition in IT services (LTM) was 17.4% in FY 2022. Despite the increase, your company stood out with the lowest attrition in the industry and remained the benchmark for talent retention. To support the strong growth momentum in FY 2022, we flexed the strength of that employer brand to set new benchmarks and cross new milestones in attracting and managing talent at scale across the world. Our workforce crossed the half-million mark in the first half of the year, and we ended the year with a headcount of 592,195, an all-time high net addition of 103,546 employees. The workforce remains a highly diverse one, with over 153 nationalities represented. We crossed an important diversity milestone this year, with the number of women in the workforce exceeding 200,000. We are also making progress, slowly but steadily, in improving gender diversity in the senior management ranks. Through focused leadership development programs, the number of women senior executives has grown 84% over the last 5 years, significantly higher than the male cohort. Organic talent development continues to be a key focus area in our journey to be a G&T partner to more of our clients. TCSers collectively logged 60.3 million learning hours and acquired over 3.5 million digital competencies in FY 2022. Very importantly, the number of Contextual Masters in the workforce remains a priority. # Community and planet We continued to work with communities across the world, pursuing our long-standing commitment to programs in the areas of health, STEM education, skills development and the bridging of digital divides. These programs are scaling well in reach as well as depth of impact, touching the lives of over 1.7 million beneficiaries - women, youth and marginalized people. To maximize the impact of our programs, we are now partnering with our customers in these initiatives. We engaged with 850 business leaders and teams, across 146 customer organizations and connected with over 50 government leaders on collaborative community efforts. On the environment front, we have good progress to report in our journey to become net zero by 2030. Our absolute carbon footprint across Scope 1 and Scope 2 emissions reduced by 66% over base year 2016 due to focused initiatives around energy efficiency and transition to renewable energy. We made a big leap on the latter, with use of renewable energy across TCS' global operations growing to 37.2% of the total (15.6% in FY 2021).
# Looking Ahead Our all-time high order book, continued deal flow and pipeline velocity give us confidence in the sustainability of our business momentum. We are in the midst of a multi-year technology upgrade cycle that provides strong, structural growth drivers for the next few years. The geo-political tensions in Europe and the resultant impact on global economic growth are real threats. However, the pandemic has shown us that enterprise spending on technology is far more resilient than most people credit it for. It is central to organizations' ability to innovate and differentiate in good times, and to survive and adapt in tough times. Importantly, TCSers have also been quick to respond to the humanitarian tragedy in Ukraine, helping in rescue efforts, relief assistance, and resilience support. To address the urgent needs of children, women, and those facing food insecurity, TCS is making a financial contribution of 1 million Euros to international humanitarian efforts. evolving market dynamics may prompt reprioritizing of do, making them feel special, and investing in newer service lines to stitch together solutions that address programs, we are confident that technology spending itself will continue to grow. That growth and our expanding market share give us confidence of being able to sustain a certain base case growth, with room to maximize in better years. At our current pace of growth, it is only a matter of time before we double our revenues and hit the $50 billion mark. In our journey to that next logical milestone, we are focused on not only our velocity, but also on ensuring we get there fighting fit, so it does not become a finish line to stumble across, but a launchpad to achieve even greater heights. For this to happen we are focusing on two things. One, we want to arrive at that milestone with a more balanced portfolio, with a much larger proportion of business transformation revenues, so we have two equally strong growth engines for the journey ahead. For this, we want to build on our initial successes in the G&T opportunity, and put in place a structured way to deepen existing innovation and transformation engagements, while expanding the number of clients for whom we provide such services. Second, as we get larger, we shouldn't lose sight of what has brought us thus far - our customer centricity. Our success stems from the fact that year after year, our clients reward us with more work, and rank us #1 in customer satisfaction across all the service providers they work with. Our approach of putting the client at the center of everything we do, has paid us rich dividends. Regardless of how large we get, we want to make sure that our customer focus never wavers, and every client continues to feel just as valued. We have rolled out a new organization structure that will help us achieve these two imperatives. It retains the atomicity of our earlier architecture, and its three dimensions - industry verticals, horizontal service lines and geography-based sales. We have now added a fourth dimension, the stage of the customer's relationship journey with TCS. File: AR_TCS_2021_2022.md That journey begins when a client first signs up for some initial work. When we successfully deliver, they give us more work and that is how the relationship starts growing. As trust levels steadily go up, they start viewing TCS as a strategic partner and consolidate more and more of their technology requirements with us. That is how we have steadily grown and deepened relationships with nearly 60 clients globally who spend more than $100 million on us annually. This new purpose-designed organization structure, along with continued investments in building newer capabilities, next generation delivery models and assets that help our clients innovate at scale, and in building our brand, will help us deepen our customer relationships, expand our addressable market, gain market share and power growth in the years ahead. We thank you for your continued support in this exciting journey ahead. We have rearranged existing units into three business groups, each aligned to a particular phase in the customer relationship journey: the Relationship Incubation Group that will provide the high-touch, high engagement, delivery-focused model that new clients require; the Enterprise Growth Group which will do what today's TCS does best, that is, pull together capabilities from across the different.
Warm regards, Rajesh Gopinathan Chief Executive Officer and Managing Director # The Year Gone By Announced a new organization structure designed to provide a curated experience to each customer depending on where they are in the customer relationship lifecycle journey. Leveraging TCS' large and deep bench of leadership talent, the new structure further deepens the customer-centricity that TCS was always known for, and is expected to help make TCS the preferred growth and transformation partner to more of its clientele. Won a very large contract from a Fortune 100 US company, further expanding the long-standing partnership, to transform the technology at its global data centers into a future-ready, hybrid cloud stack for greater agility, flexibility, and improved operational resilience. TCS will also deploy a new cognitive-powered operating model to run that stack, to improve the availability of business applications and enhance user experience. Selected by Payments Canada, the country's largest payment organization, to transform its payment system operations and help implement the Real-Time Rail (RTR), the new real-time payments system that will allow Canadians to initiate payments and receive irrevocable funds in seconds, 24/7/365. TCS will leverage its deep knowledge of the payments domain, and extensive experience in designing and implementing large payment systems for clients across the world to help Payments Canada create and execute an integration roadmap for the RTR. Testing and deployment is a critical step in the introduction of the new real-time payment system and we're excited to work with TCS to execute on this next step for the RTR as we help shape the future of payments in Canada. Announced plans to grow operations in New Jersey by hiring nearly 1,000 more employees by the end-2023 to meet the strong demand for digital transformation. This follows a similar announcement earlier, to expand in Arizona by investing more than $300 million by 2026 and hiring over 220 employees by 2023. In both states, TCS will also grow the reach of its STEM and computer science education programs, expanding teacher training and student programs. Became the #2 most valuable brand in the IT services sector globally, according to Brand Finance, the world's leading brand valuation firm. According to the Brand Finance 2022 Global 500 IT Services Ranking report, TCS grew its brand value by $1.8 billion (+12.5%) year on year, to $16.8 billion in 2021. Completed the fourth successful share buyback in five years, to the tune of ₹18,000 crore at ₹4,500 per share, through the tender offer route, extinguishing 4 crore equity shares, representing 1.08% of the total paid-up equity share capital. The Year Gone By \| 14 # Tata Group Chairperson and TCS Chairman N Chandrasekaran, was conferred the Padma Bhushan, the third highest civilian award in India, for distinguished service of high order in the field of trade and industry. and reliability, the Passport Seva program became an icon of Digital India and a source of national pride. Recognized as a Superbrand in Singapore for the first time, following recognition as a UK Superbrand for the seventh consecutive year. The latter acknowledges the company's exceptional business growth, its position as the top strategic IT player by revenue in the UK, its number one ranking in customer satisfaction, and its community initiatives. Ranked #1 in Customer Satisfaction in the largest survey of European businesses by Whitelane Research, for the ninth consecutive year, covering 1,800 CxOs from top IT spending companies in Europe. TCS' Overall Satisfaction Score was 84% with the lead over the nearest competitor expanding to 4 percentage points vs 1 percentage point in the prior year. Selected by the Government of India to drive the second phase of the pathbreaking Passport Seva program. TCS will refresh existing facilities and systems, develop new solutions to enable issuance of e-passports and further enhance the citizen experience. In the first phase launched in 2008, TCS transformed the citizen experience at its nationwide network of Passport Seva centers. Setting global benchmarks in service quality, timeliness, transparency, # Waterfront Marathon and Virtual Race through November 2026 Additionally, TCS renewed its title and technology sponsorship of the TCS New York City Marathon through 2029, and became the new title and technology sponsor of the TCS London Marathon for six years starting 2022. Launched TCS' Cyber Defense Suite--a comprehensive set of modular, quickly deployable cyber security services offered on a platform.
Augmenting the 10,000 cyber-specialists and global network of Threat Management Centers that TCS uses to secure its customers globally, the new platform provides 360-degree visibility and predictive intelligence to proactively defend and respond against evolving threats. The Year Gone By \| 15 # Celebrated a milestone with the number of women in the workforce crossing 200,000 in December. Women-centric leadership development initiatives have resulted in the number of senior women executives growing 84% over the last 5 years. The company is part of the 2022 Bloomberg Gender-Equality Index that tracks the performance of public companies committed to transparency in gender-data reporting. Launched the TCS Assessment and Migration Factory, a set of tools, accelerators, and services that enable customers to shift their mainframe workloads to the new AWS Mainframe Modernization platform. # Became title partner to Jaguar Racing ahead of the 2021/22 ABB FIA Formula E World Championship. The team will now be known as Jaguar TCS Racing. TCS will leverage its leadership in technology transformation and partnerships across the EV value chain to help Jaguar TCS Racing become a catalyst for electrification, promote low carbon emissions and sustainable mobility. # Gained further market share in the UK, and was ranked #1 by revenue in the UK Software and IT Services Rankings 2021 by TechMarketView. The company performed very well in the rankings by sub-category as well, topping the Applications Operations category, and ranking #3 in Consulting and Solutions. # The Year Gone By \| 16 # Launched `Rebegin', an initiative to enable experienced women professionals who had taken a work sabbatical due to family commitments, to reclaim their careers and pursue their professional aspirations in TCS. Over 14,000 job applications were received under this initiative in FY 2022. # Launched TCS Google Garages at the TCS Pace Port™ co-innovation centers in Amsterdam, New York and Tokyo. These Garages provide an immersive experience for companies to evaluate TCS' cloud solutions, develop and prototype applications, apply analytics and artificial intelligence (AI) capabilities using design thinking and agile development to rapidly address business opportunities and create value using Google Cloud. # Entered into a new partnership with Dutch Open one of Europe's most innovative and sustainable golf events. TCS will leverage its expertise in digital technologies to help the Dutch Open enrich participant and spectator experience. # The investments in innovation and strong market traction demonstrated by TCS' cloud units won several partner awards. TCS was named to the Microsoft Business Applications 2021/2022 Inner Circle, and also awarded two 2021 Microsoft Partner of the Year Awards. Similarly, TCS was named the 2020 Google Cloud Breakthrough Partner of the Year for outstanding results across sales, delivery, competency development, expertise, specialization badges, and growth of its customer base. # Partnered with the Australian Energy Market Operator (AEMO) to implement the switch from 30-minute settlement to 5-minute settlement in the national wholesale electricity spot market. The shorter settlement window, enabled by a cloud-based solution designed by TCS, is expected to provide a better price signal for investment in faster response technologies, such as batteries and gas peaking generators. # Continued to be the preferred transformation partner to market infrastructure institutions, with TCS BaNCS for Market Infrastructure and Custody solutions powering the operations of over 50 market-critical institutions across 66 countries. The Year Gone By \| 17 # Inaugurated TCS Pace Port™ Amsterdam Inaugurated TCS Pace Port™ Amsterdam, a co-innovation and advanced research center where TCS teams will co-innovate with European customers, drawing on an ecosystem of partners from academia, government institutions, start-ups and technology providers. The center will enable ideation and rapid prototyping with a clear focus on finding and creating sustainable solutions. # Q1 Samir Seksaria took over as the company's Chief Financial Officer on May 1, 2021, following the retirement of V Ramakrishnan. He moved to Corporate Finance in 2004 and played a critical role in the company's IPO. Prior to becoming CFO, he headed the financial analytics, planning and business finance functions. On November 1, 2021, Pradeep Manohar Gaitonde stepped in as the Company Secretary in place of Rajendra Moholkar who retired. # Winner The ninth season of TCS CodeVita attracted 136,054 participants from 34 countries, winning it a Guinness World Records™ title at the world's largest computer programming competition. College students from around the world competed in solving complex programming challenges over an intense six-hour period, to win cash prizes and be ranked among the top student programmers globally.
# Vaccination Launched a pan-India vaccination drive against Covid-19, covering TCSers and their families, across all TCS locations as well as smaller cities that some employees were remote-working from. The TCS Vaccination League benefited 1.2 million individuals and resulted in over 87% of employees in India getting fully vaccinated and 95% receiving at least one dose. The Year Gone By \| 18 # TCS' Integrated Business Model for Value Creation using the Five Capitals \|Domain knowledge, contextual knowledge, Intellectual Capital\| \|Partners\|Contextual Technology and COIN Knowledge\| \|---\|---\|---\|---\| \|Human Capital\|Skills, competencies, capabilities, knowledge\|OPERTIONS\| \| \| \|and motivation of employees\|Research & Innovation\| \| \| \| \|Products & Platforms\|Services & Solutions\| \|FINNCIL CPITL\|Sources of funds from business operations, financing or investing activities\| \| \| \|Natural Capital\|Renewable & Non-renewable Resources\| \|VLUE\| \|Talent acquisition\| \| \|CUSTOMER\| \|Talent Engagement\| \|Talent Development\|ENGGEMENT\| \|Customer Goodwill/Brand Value/CSR/Taxes\| \| \| \| \| \|Social & Relationship Capital\|Investors, Customers, Employees, Communities Goodwill\|Stakeholder Payout, Reserves\| TCS' Integrated Business Model \| 19 # Financial Capital The 25-fold revenue growth over the last 20 years is a testimony to the strength of our business model and our ability to reinvent ourselves in an ever-evolving technology landscape to stay relevant to our customers while remaining focused on creating value for all our stakeholders. # Economic Value Generated and Distributed1 # Outcomes - Best in class profitability and strong balance sheet provide greater ability to invest in newer capabilities and to weather economic downturns, macro uncertainties - Consistently high shareholder returns enhances social and relationship capital \| \|₹ 107,554 cr\|₹ 35,747 cr\|₹ 13,238 cr\| \|---\|---\|---\|---\| \| \|+ 17.1%\|+19.6%\|+ 15.5%\| \| \|Employee cost\|Other cost of operations\|Tax expense\| # Economic Value Distributed \|₹ 191,754 cr\|+ 16.8%\| \|---\|---\| \|Economic value generated\| \| \|₹ 855 cr\|₹ 2,242 cr\|₹ 38,010 cr\| \|---\|---\|---\| \|+ 16.0%\|+ 17.0%\|+ 12.2%\| \|Community Investments\|R&D and innovation including innovation center development\|Shareholder payout including unpaid final dividend, Buyback and taxes\| 1 GRI 201-1 Excluding provision towards legal claim in prior year # Financial Highlights # Revenue Trend \| \|FY 2018\|FY 2019\|FY 2020\|FY 2021\|FY 2022\| \|---\|---\|---\|---\|---\|---\| \|Revenue\|25,067\|28,593\|32,369\|38,802\|164,177\| \|CGR\|10.2%\| \| \| \| \| # Operating Profit Trend \| \|FY 2018\|FY 2019\|FY 2020\|FY 2021\|FY 2022\| \|---\|---\|---\|---\|---\|---\| \|Operating Profit\|39,949\|191,754\|24.8%\|25.6%\|25.9%\| \|Operating Margin\|24.6%\| \| \| \| \| # Earnings per share \|FY 2018\|FY 2019\|FY 2020\|FY 2021\|FY 2022\| \|---\|---\|---\|---\|---\| \| \| \| \| \| \| ^ Earnings per share is adjusted for bonus issue # OCF and Cash Conversion \|Cash Usage#\|116.2%\|104.2%\|100.1%\|97.1%\|90.9%\| \|---\|---\|---\|---\|---\|---\| \|Cash usage for the period FY 2018 to FY 2022\| \| \| \| \| \| # Shareholder Payouts \|FY 2018\|FY 2019\|FY 2020\|FY 2021\|FY 2022\| \| \| \| \| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \| \| \| \|Dividend\| \|37,450\| \| \| \| \| \| \| \| \| \|Special\| \| \| \| \| \| \| \| \| \| \| \|Buyback\| \| \| \| \| \| \| \|Shareholder Payout ratio\|90.5%\|1.8%\|7.5%\|92.6%\|98.6%\| \| \| \| \| \| # includes proposed final dividend Excluding provision towards legal claim Financial Capital \| 2142,481 # TCS Employees by Region, Age and Gender # Human Capital \| \| \| \| \| \|India\|North America\| \| \| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \| \|M\|M\| \| \| \| \| \|15%\| \| \| \| \| \| \|F\|0.1%\|F\|5%\| \| \| \| \| \|17.4%\|M\|6%\|M\|21%\| \| \|592,195\| \|103,546\|Employees\| \| \| \| \| \| \|Workforce\| \|Net Addition\|Talent Retention\| \| \| \| \| \| \|Globally distributed highly localized\| \|Highest ever\|Best in the Industry\| \| \| \| \| \| \| \| \| \| \|United Kingdom\| \|Europe\| \| \| \| \| \| \| \|M\|15%\|M\|19%\| \| \| \| \| \| \|F\|11%\|F\|6%\| \| \| \| \| \| \|M\|17%\|M\|17%\| \| \| \| \| \| \|F\|11%\|F\|6%\| \| \| \| \| \| \|M\|15%\|M\|19%\| \| \| \| \| \| \|F\|10%\|F\|11%\| \| \| \| \| \| \|M\|11%\|M\|13%\| \| \| \|153\|3 Generations\|Rising up the ranks\| \| \| \| \| \| \| \|Nationalities\|88% Millennials\|% Women improved at mid- and senior levels over last 5 years\| \| \| \| \| \| \| \|210,000+\|Women\|35.6% of workforce\| \| \| \| \| \|84%+ Increase in senior women\| \|executives over last 5 years\| \| \| \| \| \| \| \| \| \|678\|Women patent holders\| \| \| \| \| \| \| \| \| \|Junior\|Middle\|Senior\| \| \| \| \| \| \| \| \|M\| \|25%\|M\|14%\| \| \| \| \| \| \|F\|14%\|F\|14%\| \| \| \| \| \|FY 2018\|FY 2022\| \| \| \| 1 GRI 401-1, 2 GRI 405-1 Human Capital \| 22 # Talent Development TCS takes a purpose-centric 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.
\| \| \|Digital competencies\|Employees deep skilled\| \| \|---\|---\|---\|---\|---\| \|Average Learning Hours per employee\|3\|121 hrs\| \| \| \|Senior\|77\|91\|53\|Male\| \|Middle\|50\| \|Female\| \| \|Junior\| \|154\|144\| \| # Fresher Training TCS Elevate Linking learning to career growth Contextual Masters Xplore foundational virtual training with certifications, daily webinars, weekly assessments and gamified contests \|Employees identified as high talent, with higher pay\|13,000\| \|---\|---\| \|+169% YoY\|50,000 CMs\| \|100,000+\|trainees onboarded.\| \|The highest ever\|24% Women\| 3 GRI 404-1 Human Capital \| 23 # Four dimensions of TCS' Research and Innovation: # Innovation in the Core Business: Continuous creation of innovative new solutions in the core business, delivering incremental benefits using existing capabilities in areas like cloud, code, data and cybersecurity. Also includes newer functionality in existing products and platforms, or their replatforming onto hyperscaler clouds. Eg: TCS MastercraftTM, JileTM 4.0, TCS BaNCS Marketplace. # Technology-led innovation Use of emerging technologies to enable seamless human-machine collaboration and transform the client's way of doing business. Eg: Algo Retail suite (TCS Optumera™, TCS OptuniqueTM and TCS Omnistore™), TCS ADD™, TCS TwinXTM, Sustainability solutions (TCS Clever EnergyTM and TCS EnvirozoneTM), QuartzTM. # Highlights: \|6,500+\|researchers, inventors, and innovators\| \|---\|---\| \|2,287/6,583\|patents granted/ filed (cumulative)\| \|240+\|publications\| \|40+\|Research and Innovation Centers\| \|5\|Pace Ports\| \|2,600+\|start-up partners\| # Business and Ecosystem-led Innovation Leverage of domain and contextual knowledge, research outcomes and TCS COIN to connect ecosystems and transform industries. Eg: TCS Cognitive Plant Operations Adviser (CPOA), TCS' DeXAM, TCS AvianaTM, TCS HOBS ™. # Blue Sky Innovation Long-term investments in futuristic areas of research to address customers' needs that are not yet realized. Includes: cognitive robotics; quantum computing; next-generation communications technologies. Other research topics include sensing, digital twins for social systems, efficient and robust AI & deep learning, metagenomics, immersive technologies, sustainability, generative design for materials, manufacturing & life sciences, and personalized nutrition and medicine. Intellectual Capital \| 24 # TCS Suite of Products and Platforms # B NCS # Digital Advantage for Life Sciences - 22 new wins (50% of the new wins were on TCS BaNCS Cloud) and 16 go lives in FY 2022 - Highlights: - Services more than 35% of the world's banking population - More than 100 million transactions run on TCS BaNCS Cloud daily - Records 10 million new trades per day (peak) across 100+ countries - Offers ready market connectivity to 45+ local markets for settlements - Services over 20 million life, annuity and pension policies and 135 million property and casualty policies across the globe - Onboarded 700+ corporates to enable job outcome linkage through TCS NQT - Conducted ~45 million in-center and ~2.9 million remote assessments at national and regional scale - 110+ new wins in India and 15 in international market - Launched 250+ learning offerings (NQT variants, Certifications/Courses, Games), in latest tech. domains such as AI/ML, Big data, Data Mining/Analytics; banking & finance domain and in manufacturing sector in partnership with NTTF, ICA, and Tata Strive - Highlights: - 268 million candidates assessed till date; largest in-center assessment with 18.9 million candidates - 36.5 million remote assessments done - 700+ clinical trials supported by TCS ADD Platforms till date, Implemented across 50,000+ sites across the world. - 3 new wins and 1 go live in FY 2022 # Additional Highlights - World leading cognitive automation software for IT and business operations - 100+ deals closed in FY 2022, 27 new customers went live - 11,500+ ignio trained professionals, 4,100+ ignio certified professionals till date - 35 patents granted to date - 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.
- 1 new win and 3 go-lives in FY 2022 - ERP on cloud: 896 clients in manufacturing - 136 patents filed till date; 37 granted Intellectual Capital \| 25 # MasterCraft - 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 - Digital platform to optimally automate and manage IT processes - Intelligent smart contract development toolkits, Integration solutions and 'Designed for DLT' business solutions that provides foundational technology, tools and business components for creating distributed ledger solutions across varied industries - FY 2022 Highlights: 46 billion records processed for data privacy, 8.2+ billion Records processed for data quality, 8.8+ million lines of code (mloc) analyzed, thus helping clients get the right insights from legacy code and automate the business rules extraction with an overall productivity improvement of 20% - 30%, 3.4+ mloc of high-quality Java and JavaScript codes generated, resulting in 50% more productivity in development - 20 new wins and 9 go-lives in FY 2022 - TwinX Business Highlights: - Risk Free Experimentation Users: 5000+ - Number of End-Customer Orders Processed: 33 Mn - Number of Digital Twin transactions: 10 Mn - New Product Ideations: 20 - Safety Twin ensures zero harm workplace/ saves precious human lives in hazardous manufacturing facilities - Launched in Google Cloud in Oct 21 # AI powered unified commerce platform - Can flexibly orchestrate unified omnichannel customer journeys and help businesses roll out new services and apps quickly without having to worry about channel constraints. It can serve diverse lines of business - general merchandise, discount, specialty, fashion, restaurant, post office, telecom, and travel and hospitality industries. - 3 new wins and 5 go-lives in FY 2022 - SaaS-based, scalable Agile DevOps platform to accelerate software development and delivery and integrate DevOps tools - 13,000+ active users till date Intellectual Capital \| 26 # Social Good TCS Research collaborated with Prayas Help Group to develop a digital twin of Pune city to predict the spread of the pandemic and help devise local strategies to control it. TCS' inventors and innovators continued to mentor young social entrepreneurs as part of TCS Foundation's Digital Impact Square (DISQ). Over 30 start-ups are currently under various phases of incubation and graduation under DISQ. Prominent themes around which social challenges are being addressed include AgriTech, Assistive Tech, Citizen Services Tech, EduTech, HealthTech and Sustainability Tech. A number of assistive technologies have emerged from TCS R&I, including Assisto (speech aid for cerebral palsy); VHAB (Immersive Physio); Verbose (Speech-to-text); School at Home assistance for disabled; Emotrain (Training for Autistic) and Home Bound (COVID related remote medical assistance). These were especially useful during the pandemic, where much of the training and support for children with special needs had to be virtual. Intellectual Capital \| 27 # Outcomes # Relationship and Social Capital 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. # Customers Customer-centricity is at the core of TCS' business model, organization structure and investment decisions. The philosophy has been to delight them by 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 investing in building newer capabilities, and launching new services and solutions. # Large Client Metrics \| \|2020/21 EUROPE\|2014 EUROPE\|2019/20 EUROPE\| \|---\|---\|---\|---\| \|Customers\|268\|207\|120\| \|Rev per US$ 1 Million+ Client ($ Mn)\|19.8\|21.7\| \| \| \|FY 2018\|FY 2022\| \| \|US$ 20Mn+\|38\|58\| \| \|US$ 50Mn+\| \| \| \| \|US$ 100Mn+\| \| \| \| Growth 9.7% Relationship and Social Capital \| 28 # Investors TCS is seen as a benchmark in its outreach to investors, its transparency and disclosures, publicly communicating its longer-term strategy, qualitative aspects of the demand outlook, risks and opportunities, reducing information asymmetries and enabling fair valuation of the stock. For the last many years, it has been awarded the Best Investor Relations award by publications like Institutional Investor, FinanceAsia and AsiaMoney based on polls of investors and analysts in the region.
# Investor and Analyst Interactions in FY2022 \|Particulars\|Q1\|Q2\|Q3\|Q4\|FY 2022\| \|---\|---\|---\|---\|---\|---\| \|Total interactions\|152\|275\|243\|186\|856\| \|Total number of hours spent\|45\|53\|42\|34\|174\| # Assessments in which TCS was ranked a Leader by Research Firms \|FY\|2010\|2013\|2014\|2015\|2016\|2017\|2018\|2019\|2020\|2021\|2022\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Brand Valuation ($ billion)\|$10.4\|$8.2\|$8.7\|$9.4\|$9.1\|$5.2\|$2.3\| \| \| \| \| # Branding TCS' reputation for customer-centricity, domain depth 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. Its tagline 'Building on Belief' along with marketing campaigns, sponsored events and advertising, along with the goodwill built up with investors, local communities, academia and other stakeholders have cumulatively helped put TCS among the Top 2 brands in IT services by brand value according to Brand Finance. # TCS Brand Valuation \|FY\|2021\|2022\| \|---\|---\|---\| \|Brand Valuation\|$12.8\|$13.5\| Source: Brand Finance Relationship and Social Capital \| 29 # Awards & Recognition TCS rose to be the second most Valuable IT Services Brand \|Linkedin\|top\|top EMPLOYER AMERICA 2021\| \|---\|---\|---\| \|Jot0idveurope SATISFACTION customer TOP\|POLLCOMPANIES\|CIO100\| \|Brand Finance Awards\|GLOBAL\|EMPLOYER 2020\| \|FinanceAsia\|2020\|SIAMONEV\| \|WTNNFR\|KANTAR BRANDZ\|2021 MOST VALUABLE GLOBAL BRANDS\| \|ULTANCY\|2022\|TOP MOST VALUABLE IT SERVICES\| # Events Jaguar TCS Racing 2022 TCS Toronto Waterfront Marathon 2022 TCS Europe Summit 2022 Brand Finance Awards Relationship and Social Capital \| 30 # Natural Capital File: AR_TCS_2021_2022.md TCS is in a unique position to combine its heritage of purpose along with digital leadership and innovation to drive its own journey to more sustainable outcomes, as well as partner with customers, civil society and governments to lead and shape solutions towards the achievement of the UN Sustainable Development Goals. # Achievements \|% Total office space (for India) as per IGBC standards\|Energy efficiency initiatives at TCS data centers in Mumbai and Chennai\|Rooftop solar capacity across campuses\|Renewable electricity as % of total electricity consumed\| \|---\|---\|---\|---\| \|64.4%\|1.65 PUE\|10.2 MW\|37.2%\| # Energy Management and GHG Emissions Reduction Target: 70% reduction of Scope 1 + 2 emissions by 2025 (vs base year 2016) and Net Zero by 2030 - Prioritized energy optimization and carbon footprint mitigation. - 89% of emissions across Scope 1 and Scope 2 due to purchased electricity for office blocks. - Use of Clever Energy to optimize energy consumption and greater use of renewable energy. - 5 large campuses in India certified with ISO 50001: 2018 standards for Energy Management Systems (EnMS). # Outcomes \|Reduced Energy Consumption and…\|…Increased Use of Renewable Energy..\|… reduced TCS' Carbon footprint.\| \|---\|---\|---\| \|66%\|46%\|49%\| # Industry \| \|FY 2016\|FY 2022\|FY 2016\|FY 2022\|FY 2016\|FY 2022\|FY 2016\|FY 2022\| \|---\|---\|---\|---\|---\|---\|---\|---\|---\| \|Total Energy Consumed in Gh\|Reneable Energy Consumed in Gh\|Total Scope 1 + 2 emissions in '000 tCO2e\|Value chain emissions in '000 tCO2e\| \| \| \| \| \| # Consumption and Production Scope 3 emissions: Employee commutes and business travel cause ~50% of these value chain emissions. Remote working and reduced business travel resulted in a sharp reduction. # Water Conservation # Waste Reduction & Reuse # Target: 3% YoY reduction in freshwater consumption across owned campuses # Target: Reduction in waste generation, maximizing recycling/ reuse to divert waste sent to landfill # CLEAN WATER # CONSUMPTION AND PRODUCTION # CLIMATE ACTION Initiatives include conservation, sewage treatment & reuse, rainwater harvesting (RWH) and employee awareness. All new campuses have been designed for 50% higher water efficiency, 100% treatment and recycling of sewage, and rainwater harvesting. \|1.44 Bn Liters of fresh water consumed in FY 2022\|5.2%\|84%\| \|---\|---\|---\| \|Water from RWH; 86.4 % from third party sources; 8.4% from ground water\|Recycling of sewage generated (for India)\| \| Recycling of regulated wastes, e-waste, printer cartridges, paper, packaging and plastics. # Biodiversity conservation and enhancement initiatives within TCS campuses. # LIFE BELOW WATER # LIFE ON LAND Natural Capital \| 32 # Partnering with Takeda to Innovate at Scale Takeda, the global biopharmaceutical giant, is on a digital transformation journey to innovatively use technology to create better experiences and outcomes for patients, providers and payers. This means innovating continuously on not only in core drug development but also in behind-the-scenes areas such as manufacturing, procurement, shipping and distribution, to make sure that Takeda's life-saving therapies reach more patients, faster. Takeda partnered with TCS to develop an agile model that would enable the creation of new digital assets in a rapid and repeatable fashion.
Leveraging TCS Pace™, a philosophy and framework for innovation at scale, TCS helped Takeda envisage an innovation solution that uses machine learning to help supply planners optimally allocate the raw materials for drug production, leading to a 40x drop in raw material scrappage and an additional 200k doses produced annually. - TCS helped build a drug substance optimization factory delivery model called Enhanced Digital Global Experience (EDGE). - A mobile track-and-trace app was built to provide real-time visibility of product consignments for a newly launched product with a 72-hour shelf life. - A transportation modeler was developed to help decision makers evaluate various transportation and shipping scenarios to optimize on time and cost of shipments while reducing Scope 3 carbon emissions. We have developed a deep partnership with TCS to set up and run an innovation factory that's developing digital products and services across Takeda. This model centralizes domain expertise, design thinking and lean agile product development as part of an end-to-end capability that is driving digital transformation across our global supply chain. TCS is helping us embrace innovation at scale, and use the power of emerging technologies to transform our business. Hansjoerg Magalhaes Global Product Manager ERP Commercial and Supply, Takeda A controlled substance control tower was built to provide a single view of permits and visualization of risks associated with the global movement of controlled substance drug products. By partnering with TCS to scale up its innovation efforts using BizDevOps, Takeda has accomplished much in the short time since EDGE was implemented. The new innovation factory has released 12 products across over 40 design sprints at the peak of the pandemic, evaluated over 40 potential use cases and reduced the time-to-market for new products and services by 50% - a benchmark for organizations looking to embrace innovation at scale. Customer Stories \| 33 # Co-Innovating with Bovemij to Fulfill its Mission and Drive Growth For the last 60 years, Bovemij has been providing a variety of insurance services such as auto, fire, legal assistance, financing and other business services to mobility companies - vehicle dealerships, fleet owners, and service centers - in the Netherlands to help them compete successfully in the marketplace. To keep fulfilling its mission of helping this ecosystem stay competitive in a digital world, Bovemij partnered with TCS to realize its digital strategy to expand the ecosystem and bring in a richer set of offerings that ecosystem participants could use to connect better with digital native consumers. TCS also set up a digital innovation factory, for repeatable agile innovation at scale, to take each of the business propositions and deliver them to market at speed. A minimum viable product was put together in six weeks, with relevant user stories to demonstrate outcomes and gain acceptance of internal and external stakeholders. In addition to providing access to its full set of offerings to its regular B2B partners, Bovemij's new cloud-based Digital Mobility Platform is also enabling new B2C propositions - offered on a subscription basis - for its partners, to sell better to consumers while embedding its insurance and other offerings into those transactions. Other propositions seek to benefit the ecosystem as a whole. For example, consumers can sell their used cars on its portal, which mobility companies can bid for. Data from these consumer interactions are being harvested for further actionable insights for use by Bovemij's various business lines and other ecosystem partners. Bovemij is committed to help the mobility ecosystem thrive in the digital world. We selected TCS as our partner to help us realize our digital strategy because of the co-innovation architecture and agile practices that they already had in place. Using that, we could jointly visualize the platform and the various business propositions, and rapidly build out each such proposition. Their expertise, creative ideas and agile ways helped us get our platform up and running much faster than we had anticipated. Marcel van de Lustgraaf Member of the Executive Board Bovemij Customer Stories \| 34 # INNOVATING FOR GREATER FUTURES: A PANEL DISCUSSION Why are enterprises accelerating their investments in innovation? How does TCS help enterprises innovate for greater futures? Ananth: The initial trigger for this acceleration was the need to build resilience into the technology and business context of every enterprise. The next trigger was the adaptation required to compete in many contexts created by digital business models.
Finally, as enterprises are moving into a post-pandemic world of new risks, challenges and opportunities, a more strategic, purpose driven strategy is driving innovation. These factors are driving enterprises to develop a wide and deep innovation capability, which can scale. This is not easy. Most have found it difficult to measure up on both scale and speed. Smaller competitors may offer a non-stop stream of innovations. Large enterprises often struggle to innovate at that pace on their own, for lack of processes, toolsets and also sufficient dedicated bandwidth. Partnering with TCS can help them overcome all these issues. We help them create a strategic agenda using our tools and methods, especially our 'Clay Map', named so in honor of the late Clayton Christensen who greatly influenced our thinking on innovation. We also offer the TCS' Agile Innovation Cloud, a framework for operationalizing innovation at scale, which ensures that innovation does not happen by chance but by design. It brings together the best of TCS' innovation, global capabilities, ecosystem partnerships, and talent to help our clients define their strategy, create an innovation portfolio and scale the execution of innovation. Our clients tap into our contextual knowledge of their business and technology landscapes, when they jointly ideate with our teams. They work with our start-up and academic partners at our Pace Ports™ to harvest many more innovation candidates than on their own. We then jointly design and build 'minimum viable products' of the most promising ideas in Agile 'Pace Sprints'. At a larger level, we help clients create a # Featuring K Ananth Krishnan Chief Technology Officer N G Subramaniam Chief Operating Officer Krishnan Ramanujam Global Head - Enterprise Growth Group Panel Discussion \| 35 A repeatable process which can significantly scale up and speed up their innovation. What we have observed is that as soon as enterprises simplify their IT landscapes and build a new, cloud-based digital core, supporting micro services in a cloud native environment, their ability to realize innovative ideas and deploy them in production shoots up. # Innovation Factory A good example of this is the innovation factory we have set up for Takeda1. Using cloud, design thinking, and location independent agile methods, our combined teams are taking up innovative ideas across procurement, logistics and finance, and building innovative digital assets at twice the velocity. # Key Innovation Pillars Underpinning our work in G&T are our key innovation pillars - our Pace Ports™, the TCS Co-innovation Network (TCS COIN™), research collaborations with leading academic institutions, 'Future of Business' frameworks, W12 design studios, and our products and platforms like TCS BaNCS™, Optumera™, Optunique™, ADD, ignio™, Bringing Life to Things™, Cloudonomy™, and Cognix™ among others. # Themes of Innovation Krishnan: The three broad themes around which we saw our clients innovate the most were growth and transformation (G&T), resilience, and sustainability. We have been making significant investments in creating capabilities strategically relevant to each of these themes, some of which we have described in our prior years' annual reports as well. # Resilience The second big theme is resilience, which is the ability to weather foreseen as well as unforeseen emergencies. In these last two years, many of our largest deal wins were around transforming clients' IT and business operating models, and their supply chain management processes, using ignio or TCS Cognix to embed intelligent automation for greater resilience and agility. Much of the rush to embrace the cloud in the early months of the pandemic was also driven by this need. # Challenges of Legacy Technology Aren't large enterprises also constrained by their legacy technology stacks? How do they overcome that challenge? NGS: I call them heritage. They have been around and doing a good job of running their businesses in a way that encapsulates their organization's processes, checks and balances. Most organizations have worked to build APIs or middleware that enable their digital strategies, though they are suboptimal. # Sustainability Focus Lastly, we saw clients focus heavily on sustainability in FY 2022, particularly around carbon footprint reduction. Our investments in innovative digital solutions such as Envirozone™, Clever Energy™ and IP2™, and our expertise in cloud, data and analytics, AI and ML are helping us win more and more of such engagements, helping us amplify our contribution to the worldwide collective effort to mitigate climate change and build greater futures.
What we have observed is that as soon as enterprises simplify their IT landscapes and build a new, cloud-based digital core, supporting micro services in a cloud native environment, their ability to realize innovative ideas and deploy them in production shoots up. They are able to anchor or participate in ecosystems at will, which drives growth and innovation. Panel Discussion \| 36 1 Page 33, 2 Pages 41, 34 and 45 respectively You may recall the scalable, customer-centric digital operating model we built for the Phoenix Group, using TCS BaNCS3. Our platform is extensible, supporting the required APIs and microservices for them to leverage fintechs and our TCS COIN partners to enable differentiation in the front. Krishnan: We see this same dynamic with the broader set of clients who undertake Horizon One cloud transformations. Besides enhanced ability to integrate innovative new solutions into the core, their appetite for innovation itself goes up. The richness of the technology capabilities built into today's hyperscaler clouds triggers more innovative thinking and the desire to experiment with those powerful technologies to reimagine different aspects of the business. Even as existing workloads are migrated to the cloud, newer cloud-native systems are built to enhance customer experience or to drive product or business model innovation. That is how we have been able to give examples of G&T engagements being executed as part of Horizon Two investments in our quarterly earnings calls, even though we are still in the middle of the Horizon One opportunity. Another challenge that large enterprises face is the need to invest for the longer-term growth of their businesses, without disrupting near-term financials. TCS helps them square this circle by providing a line of sight for funding the innovation pipeline or the transformation by helping optimize operations. We expect the transition to be a seamless one. Horizon One is a bounded opportunity and will plateau at some point when most of the workloads are migrated. By that time, the other two horizons, which are boundless opportunities, would have scaled up and will support our future growth. All our investments into building our G&T capabilities, our branding and the new organization structure are geared to help us maximize our participation at that point. In the last couple of years, the industry has seen deal sizes reducing. What is driving that? On the outsourcing front too, average deal tenures have come down on the heritage stacks. That is because enterprises are in the midst of a technology transition. As clients migrate to the cloud, their legacy. One large US client of ours for whom we are building a new, cloud-native digital platform to support their business forays into adjacencies, calls it their 'save to invest' strategy. Panel Discussion \| 37 3 Integrated AR FY 2021, Page 22 infrastructure, application and data estates will outsourcing demand. Also, smaller players are enjoying strong demand from clients in the small and medium enterprise category, with little competition from larger providers. The industry didn't see too many billion-dollar deals in FY 2022. How important are they for longer-term growth? NGS: All deals are important to us. Billion-dollar deals are especially important because they boost medium-term visibility and provide us opportunities to bring the whole of TCS' offerings to play. We are very pleased at winning two such deals during the year. Having said that, the perceived importance of such deals for longer term growth need not be exaggerated versus smaller deals of say, $100 million+ TCV. Overall, the current demand environment is a rising tide that has lifted all boats. Horizon One is a very democratic opportunity, largely technology-centric. Having enough people with the requisite certifications and skills is sufficient to participate in this opportunity. The severe talent scarcity is also driving a broad. Krishnan: The impression about smaller companies growing faster is more due to sampling bias, based on a handful of highly visible outperformers. That is not true if you look at the global cohort. Even though the bottom quartile by revenue size had its best growth in a decade in 2021, it still underperformed the top quartile by a significant margin. For sustained longer term growth, what matters is that the base order book size, excluding the occasional mega deal, keeps growing year after year, and that the quality of revenue keeps improving with higher value engagements.
Our average order book size which used to be in the $6-7 billion range in FY 2021 moved to the $7-8 billion range in FY 2022, and ended with an all-time high order book of $11.3 billion in Q4. We are very pleased with that progression. The large scale vendor consolidation anticipated two years ago doesn't seem to have materialized. How come? Krishnan: Vendor consolidation is typically done to find an alternative strategic provider with a richer set of capabilities and a superior execution track record. However, the sharp recovery and subsequent growth in demand, coinciding with the great resignation and talent scarcity, have resulted in enterprises focusing more on pursuing their immediate technology priorities. How will the tensions in Europe, rising inflation and the looming threat of a recession affect spending on innovation, on technology and on your growth outlook? Ananth: Let me address the innovation part. It is a misconception that innovation is a nice-to-have activity apt for only good times. In fact, it is essential at all times, good or bad. In good times, enterprises. Panel Discussion \| 38 # Partnering with TCS to innovate So even in an economic slowdown, innovation doesn't stop. They may reprioritize one program over another based on shifting objectives, but the spending will continue. Partnering with TCS to innovate at scale will enable them to try out more ideas, and experiment more extensively with the same budget, and improve the yield on their innovation investment. We can't predict the future, but based simply on the deal signing momentum, our pipeline, and our on the ground observations of clients planning multi-horizon investments for their growth and transformation, we remain confident that we are on a good growth trajectory for the next three to five years. NGS: We have been through multiple disruptive macroeconomic events in the last decade and a half - the GFC, taper tantrums, Eurozone crisis, Brexit, the pandemic and now the war and the resulting humanitarian crisis. We always take a view that business is about growing in a constrained environment and over these events, we have survived, continued to grow and have ensured that we stay ahead of the technology curve. This speaks to the resilience of our business model, and of the essential nature of the services we offer to businesses across the world. In tough times, they find new ways of working to boost their resilience and adaptability - for example, re-designing the value chain at a strategic level. The sheer volume of innovation we saw over the last two years, even in the face of bleak business outlook, is testament to that. Today, technology is central to any enterprise. Businesses are rooted in technology, to the extent that every company is aspiring to become a technology company. Insurers are launching technology platforms for their ecosystem partners, and generating new revenue streams from that. The world's largest banks are incubating fintechs within the enterprise, and betting on those to drive their future growth. Retailers are depending heavily on online sales. These are all recent structural changes. We designed and rolled out AI-powered digitized underwriting and claims processing for insurers, omnichannel experiences with in-aisle checkouts for retailers, or remote monitoring and pre-emptive maintenance of equipment for manufacturers and utilities. None of these are 'nice to have' capabilities. These were necessary to simply stay in business, to stay relevant in the face of changing consumer behavior, and to cope with the operational challenges posed by the pandemic. # Panel Discussion 39 # Transforming Israel's Banking Sector The Government of Israel's Ministry of Finance was looking to encourage the entry of new digital-only banks that would boost competition, spark greater innovation and rejuvenate the banking sector. It selected TCS to play a leading role in this initiative, for its deep domain knowledge in the banking industry and experience in working with the largest financial institutions in the world. TCS built the Banking Service Bureau (BSB), a shared, end-to-end digital banking operations platform powered by TCS BaNCS™, that start-up banks can easily plug into, to launch their operations quickly and securely. It connects to the entire banking and securities ecosystem in Israel, including local and international payment gateways, stock exchanges, various regulatory authorities and market data providers. # As the first digital start-up bank in Israel our motto is to provide differentiated banking services and use technology to its fullest potential to deliver an innovative alternate to traditional banks.

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