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Tata Consultancy Services
BSE: 532540|NSE: TCS|ISIN: INE467B01029|SECTOR: Computers - Software
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
To the Members,
 
 The Directors submit the Annual Report of the Company along with the
 audited financial statements for the financial year ended March 31,
 2013.
 
 1.  Financial results
 
                                                        (Rs. crores)
 
                             Unconsolidated          Consolidated
                       2012-2013    2011-2012    2012-2013     2011-2012
 
 Revenue from 
 operations           48,426.14     38,104.23    62,989.48     48,893.83
 
 Operating 
 expenditure          34,119.87     26,718.51    44,949.57     34,458.52
 
 Earnings before 
 interest, tax, 
 depreciation
 and amortisation 
 (EBITDA)             14,306.27     11,385.72    18,039.91     14,435.31
 
 Other income (net)    2,230.39      2,685.18     1,178.23        428.17
 
 Finance costs            30.62         16.40        48.49         22.23
 
 Depreciation and 
 amortisation expense    802.86        688.17     1,079.92        917.94
 
 Profit before tax
 (PBT)                15,703.18     13,366.33    18,089.73     13,923.31
 
 Tax expense           2,916.84      2,390.35     4,014.04      3,399.86
 
 Profit for the 
 year before
 minority interest    12,786.34     10,975.98    14,075.69     10,523.45
 
 Minority interest            -             -       158.38        109.96
 
 Profit for the 
 year (PAT)           12,786.34     10,975.98    13,917.31     10,413.49
 
 Adjustment for 
 amalgamation of 
 Retail FullServe 
 Limited and 
 Computational 
 Research
 Laboratories 
 Limited                (103.00)            -      (126.22)            -
 
 Balance brought
 forward from 
 previous year        18,235.20     14,069.20    22,160.54     18,635.05
 
 Amount available 
 for appropriation    30,918.54     25,045.18    35,951.63     29,048.54
 
 Appropriations
 
 Interim dividends 
 on equity shares      1,761.49      1,761.49     1,761.49      1,761.49
 
 Proposed final 
 dividend on
 equity shares         2,544.39      1,565.77     2,544.39      1,565.77
 
 Special dividend 
 on equity shares             -      1,565.78            -      1,565.78
 
 Proposed dividend
 on redeemable
 preference shares        19.00         22.00        19.00         22.00
 
 Tax on dividends 
 on equity & 
 preference shares
 (interim and proposed)  712.18        797.34       727.34        806.86
 
 General reserve       1,278.63      1,097.60     1,352.79      1,166.10
 
 Statutory reserve            -             -        16.65             -
 
 Balance carried to 
 balance sheet        24,602.85     18,235.20    29,529.97     22,160.54
 
 (Rs. 1 crore = Rs. 10 million)
 
 2.  Dividend
 
 Based on the Companys performance, the Directors are pleased to
 recommend for approval of the members a final dividend of Rs. 13 per
 share for the financial year 2012-13 taking the total dividend to Rs.
 22 per share (previous year Rs. 17 per share excluding special dividend
 of Rs. 8 per share) on the capital of 195,72,20,996 equity shares of
 Rs. 1 each. The final dividend on the equity shares, if approved by the
 members would involve a cash outflow of Rs. 2,976.81 crores including
 dividend tax. The total cash outflow on account of dividend (interim as
 well as proposed) including dividend tax for the financial year 2012-13
 would aggregate Rs. 5,014.83 crores resulting in a payout of 39.29% of
 the unconsolidated profits of the Company.
 
 The redeemable preference shares allotted on March 28, 2008 are
 entitled to a fixed cumulative dividend of 1% per annum and a variable
 non-cumulative dividend of 1% of the difference between the rate of
 dividend declared during the year on the equity shares of the Company
 and the average rate of dividend declared on the equity shares of the
 Company for the three years preceding the year of issue of the said
 redeemable preference shares. Accordingly, the Directors have
 recommended, for approval of the members, a dividend of nineteen paise
 (Rs. 0.19) per share on 100,00,00,000 redeemable preference shares of
 Rs. 1 each for the financial year 2012-13.
 
 3.  Transfer to reserves
 
 The Company proposes to transfer Rs. 1,278.63 crores to the general
 reserve out of the amount available for appropriation and an amount of
 Rs. 24,602.85 crores is proposed to be retained in the statement of
 profit and loss.
 
 4.  Companys performance
 
 During the financial year 2012-13, the global economic environment was
 on a slow growth path. There were signs of faster growth in certain
 geographies, primarily in the emerging markets. The prevailing
 uncertainties were challenging, which called for much higher level of
 efficiency and preparedness for participants in the market.
 
 In the financial year 2012-13, on consolidated basis, the Company has
 achieved well-rounded growth with steady profitability. The Company had
 excellent growth across markets - United Kingdom (44%), Latin America
 (40%), North America (27%), Europe (21%), Asia Pacific (27%), Middle
 East Africa (28%) and India (16%).  All the industry segments have
 registered double digit growth.
 
 For the first time, the Company crossed USD 3 billion revenue in a
 quarter during Q4 of the financial year 2012-13.
 
 On consolidated basis, revenue from operations for the financial year
 2012-13 at Rs. 62,989.48 crores was higher by 28.8% over last year (Rs.
 48,893.83 crores in 2011-12). Earnings before interest, tax,
 depreciation and amortisation (EBITDA) at Rs. 18,039.91 crores was
 higher by 25.0% over last year (Rs. 14,435.31 crores in 2011-12).
 Profit after tax (PAT) for the year at Rs. 13,917.31 crores was higher
 by 33.7% over last year (Rs. 10,413.49 crores in 2011-12).
 
 On unconsolidated basis, revenue from operations for the financial year
 2012-13 at Rs. 48,426.14 crores was higher by 27.1% over last year (Rs.
 38,104.23 crores in 2011-12).Earnings before interest, tax,
 depreciation and amortisation (EBITDA) at Rs. 14,306.27 crores was
 higher by 25.7% over last year (Rs. 11,385.72 crores in 2011-12).
 Profit after tax (PAT) for the year at Rs. 12,786.34 crores was higher
 by 16.5% over last year (Rs. 10,975.98 crores in 2011-12).
 
 5.  Strategic acquisition
 
 The Company has made acquisitions over the past few years either
 directly or through its subsidiaries.  During the year 2012-13, the
 Company acquired Computational Research Laboratories Limited (CRL). CRL
 was a wholly owned subsidiary of Tata Sons Limited. The acquisition of
 CRL, a pioneering start-up company in the area of high performance
 computing solutions in India, enabled the Company to extend its suite
 of solutions and offer integrated high performance computing
 applications and Cloud services to its large base of customers.
 
 6.  Status of restructuring of unlisted subsidiary companies
 
 i.  Retail FullServe Limited (RFL) and Computational Research
 Laboratories Limited (CRL):
 
 RFL and CRL, both wholly owned subsidiaries engaged in similar business
 as that of the Company, have amalgamated with the Company with effect
 from the Appointed Date, i.e., April 1, 2012 and October 1, 2012
 respectively, in terms of the scheme of amalgamation sanctioned by the
 High Court of Judicature at Bombay by its Order dated March 22, 2013.
 The amalgamation would lead to efficient utilisation of resources and
 enhanced growth of the consolidated entity.
 
 ii.  TCS e-Serve Limited (e-Serve) and TCS e-Serve International
 Limited (TEIL):
 
 On October 19, 2012, the Board of Directors of the Company, e-Serve and
 TEIL have approved a composite scheme of arrangement (Scheme)
 between the Company, e-Serve, TEIL and their respective shareholders
 under Sections 391 to 394 of the Companies Act, 1956 (Act),
 proposing amalgamation of e-Serve with the Company and demerger of SEZ
 undertaking of TEIL into the Company.
 
 e-Serve and TEIL are engaged in the business of providing information
 technology enabled services (ITES) and business process outsourcing
 services (BPO) for its customers primarily in the banking, financial
 services and insurance domain. e-Serves operations include delivering
 core business process services, analytics/ insights and support
 services for both data and voice processes. The Scheme will lead to
 operational synergy.
 
 In the year 2008-09, the Company had acquired Citigroup Inc.s (Citi)
 96.26% interest in e-Serve (then known as Citigroup Global Services
 Limited), the India-based captive BPO of Citi. TEIL is a wholly owned
 subsidiary of e-Serve.
 
 The Appointed Date proposed for the Scheme is April 1, 2013. Pursuant
 to an Order of the High Court of Judicature at Bombay, a meeting of the
 equity shareholders of the Company has been scheduled on Friday, May
 31, 2013, for the purpose of seeking approval of the shareholders.
 
 7.  Human resource development
 
 TCS draws its strength from a highly engaged and motivated workforce,
 whose collective passion and commitment has helped the organisation
 scale new heights. The Company has a diverse workforce of 2,76,196
 employees representing 118 nationalities.
 
 Human Resource policies and processes have evolved to stay relevant to
 the changing demographics, enhance organisational agility and remain
 compliant with the changing regulatory requirements.
 
 In financial year 2012-13, the Company remained the highest recruiter
 in the industry, with a gross addition of 69,728 and net addition of
 37,613 employees across the globe. Campus placement drive was conducted
 in 371 engineering institutes in India resulting in 24,531 job offers
 to students to join in the financial year 2013-14.  All the students
 who were given job offer last year were inducted into the organisation
 during financial year 2012-13. Trainees were recruited from established
 institutes across the globe.
 
 The Company continued its effort to strengthen relationship with key
 institutes globally through its academic interface programme which
 benefited 616 institutes in India and 288 institutes in other
 countries.
 
 Individual and organisational capability building remained one of the
 strategic focus areas. A total of 12,789 person years of effort were
 invested in enhancing the proficiency levels of the employees and in
 developing a steady stream of business leaders ready to take on the
 challenges as per growing requirements of the organisation.
 
 The workforce management strategy was executed optimally to deliver a
 sustained utilisation rate throughout the year helping business grow
 while maintaining employee costs at the desired level.
 
 The robust and mature talent management and talent engagement processes
 of the Company helped create an environment where performance is
 rewarded, opportunities are provided for career growth and people are
 encouraged to realise their potential. Focused initiatives towards
 health and safety and other non-work related employee engagement
 programmes helped develop the personality and confidence level of the
 employees enhancing their motivation and engagement with the
 organisation. The relentless drive to create One TCS Culture across
 the organisation helped the Company integrate its diverse global talent
 base into a cohesive high performing unit. These initiatives have
 delivered the desired results as is evident from the low attrition rate
 of 10.6% achieved during this year, a benchmark in the industry.
 
 8.  Quality initiatives
 
 Sustained commitment to highest levels of quality, best-in-class
 service management and robust information security practices helped the
 Company attain a number of milestones during the year.
 
 The Company continues to maintain the enterprise-wide highest maturity
 Level 5 for CMMI-DEV (Development) and CMMI-SVC (Services) models.
 
 The Company achieved annual enterprise-wide ISO certification for ISO
 20000:2011 (Service Management), ISO 9001:2008 (Quality Management) and
 ISO 27001:2005 (Security Management).
 
 The Company is enterprise-wide certified for ISO 14001:2004
 (Environmental Management) and BS OHSAS 18001:2007 (Occupational Health
 and Safety Management) which demonstrates TCS strong commitment to the
 environment and the occupational health & safety of its employees and
 business partners. The Company also continues to maintain the industry
 specific quality certifications viz., AS 9100 (Aerospace Industry), ISO
 13485 (Medical Devices) and TL 9000 (Telecom Industry).
 
 The cornerstone of these certifications is TCS integrated quality
 management system (iQMSTM), a global process- driven and
 customer-focused system which provides One Global Service Standard
 and is the backbone supporting the TCS global network delivery model
 (GNDMTM).
 
 The Company was recognised as Indias most admired knowledge enterprise
 (MAKE) winner (1st place) this year and has received the prestigious
 MAKE award for the 8th time in India as well as Asia. The Company also
 received the global individual operating unit (IOU) MAKE award for the
 3rd time in a row. TCS won the QuEST forum India quality award 2012 for
 being the first telecom software company in the world to implement the
 advanced surveillance and recertification procedure (ASRP) methodology
 for TL 9000.
 
 9.  Awards/Recognitions
 
 During the year, the Company received various awards and recognitions,
 some of which are given below:
 
 India
 
 - Awarded Company of the Year by Business Standard
 
 - Ranked as Indias Most Valuable Company in BT 500 from Business
 Today
 
 - Ranked No. 1 in India by Institutional Investors 2012 All-Asia
 Executive Team rankings
 
 - Selected as Best Managed Board in India by Aon Hewitt - Mint Study
 2012
 
 - ICAI Gold Shield for Excellence in Financial Reporting (2011-12),
 third time in succession Global
 
 - Rated as one of the worlds greenest companies by Newsweek Magazine
 
 - Listed in Forbes Asias Fab 50
 
 - Awarded Best Performing Consultancy Brand in Europe
 
 - Recognized as leading IT Services and Outsourcing Firm in China
 
 - Top honours at the Asian CIO Leadership Awards in Dubai
 
 - Top Software Company at QuEST Forum India Quality Award 2012
 
 - Three recognitions in UKs Business in the Communitys (BITC)
 Awards for Excellence 2012
 
 - Caring Company Award 2012 for CSR activities in Hong Kong
 
 10.  Corporate Governance Report, Management Discussion and Analysis
 Report and Business Responsibility Report
 
 As per Clause 49 of the Listing Agreements entered into with the Stock
 Exchanges, Corporate Governance Report with auditors certificate
 thereon and a Management Discussion and Analysis Report are attached
 and form part of this report.
 
 As per Clause 55 of the Listing Agreements entered into with the Stock
 Exchanges, a Business Responsibility Report (BRR) is attached and forms
 part of the annual report. A number of CSR activities were taken up
 through various programmes under the theme Impact through
 Empowerment, touching 21,68,815 beneficiaries globally.  The BRR
 provides details of these programmes.
 
 11.  Directors responsibility statement
 
 Pursuant to the requirement of Section 217(2AA) of the Act, and based
 on the representations received from the operating management, the
 Directors hereby confirm that:
 
 (i) in the preparation of the annual accounts for the financial year
 2012-13, the applicable accounting standards have been followed and
 there are no material departures;
 
 (ii) they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year and of the profit of the
 Company for the financial year;
 
 (iii) they have taken proper and sufficient care to the best of their
 knowledge and ability for the maintenance of adequate accounting
 records in accordance with the provisions of the Act. They confirm that
 there are adequate systems and controls for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 12.  Subsidiary companies and consolidated financial statements
 
 The Company had 58 subsidiaries as on March 31, 2013. There has been no
 material change in the nature of the business of the subsidiaries.
 
 As required under the Listing Agreements entered into with the Stock
 Exchanges, a consolidated financial statement of the Company and all
 its subsidiaries is attached. The consolidated financial statement has
 been prepared in accordance with the relevant accounting standards as
 prescribed under Section 211 (3C) of the Act.  The consolidated
 financial statement discloses the assets, liabilities, income, expenses
 and other details of the Company and its subsidiaries.
 
 Pursuant to the provision of Section 212(8) of the Act, the Ministry of
 Corporate Affairs vide its circular dated February 8, 2011 has granted
 general exemption from attaching the balance sheet, statement of profit
 and loss and other documents of the subsidiary companies with the
 balance sheet of the Company. A statement containing brief financial
 details of the Companys subsidiaries for the financial year ended
 March 31, 2013 is included in the annual report. The annual accounts of
 these subsidiaries and the related information will be made available
 to any member of the Company/its subsidiaries seeking such information
 and are available for inspection by any member of the Company/its
 subsidiaries at the registered office of the Company. The annual
 accounts of the said subsidiaries will also be available for
 inspection, at the head offices/registered offices of the respective
 subsidiary companies.
 
 13.  Fixed deposits
 
 The Company has not accepted any public deposits and as such, no amount
 on account of principal or interest on public deposits was outstanding
 as on the date of the balance sheet.
 
 14.  Directors
 
 Mr. R. N. Tata retired as the Director and Chairman of the Board with
 effect from December 28, 2012 in accordance with the retirement age
 policy for Directors. The Directors place on record their appreciation
 of the invaluable contribution and guidance provided by Mr. R. N. Tata.
 
 Mr. Cyrus Mistry has taken over as the Chairman of the Board from Mr.
 R. N. Tata with effect from December 28, 2012. Mr. Cyrus Mistry was
 appointed as Deputy Chairman on November 8, 2012.
 
 Mr. S. Mahalingam, who was the Chief Financial Officer and Executive
 Director retired on February 9, 2013 in accordance with the retirement
 age policy for Directors. The Directors place on record their
 appreciation of the invaluable contribution made by him.
 
 Dr. Vijay Kelkar, Mr.Ishaat Hussain and Mr. Aman Mehta, Directors,
 retire by rotation and being eligible have offered themselves for
 re-appointment.
 
 15.  Chief Financial Officer
 
 Post retirement of Mr. S. Mahalingam as the Chief Financial Officer and
 Executive Director of the Company, Mr. Rajesh Gopinathan has been
 appointed as the Chief Financial Officer of the Company with effect
 from February 10, 2013. Mr. Rajesh Gopinathan has 17 years of
 experience and has been with TCS since 2001. He has held several key
 positions in finance, strategy and sales during his career with the
 Company and has worked in multiple geographies. He is an MBA from
 Indian Institute of Management, Ahmedabad and an engineer from Regional
 Engineering College, Trichy.
 
 16.  Auditors
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
 statutory auditors of the Company, hold office, in accordance with the
 provisions of the Act till the conclusion of the forthcoming annual
 general meeting and are eligible for re-appointment.
 
 17.  Particulars of employees
 
 The information required under Section 217(2A) of the Act and the Rules
 made thereunder, in respect of employees of the Company, is provided in
 annexure forming part of this report. In terms of Section 219(1
 )(b)(iv) of the Act, the report and accounts are being sent to the
 shareholders excluding the aforesaid annexure. Any shareholder
 interested in obtaining copy of the same may write to the Company
 Secretary.
 
 18.  Conservation of energy, technology absorption, foreign exchange
 earnings and outgo
 
 The particulars as prescribed under Section 217(1)(e) of the Act, read
 with the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, are set out in an annexure to this report.
 
 19.  Acknowledgement
 
 The Directors thank the Companys employees, customers, vendors,
 investors and academic institutions for their support.
 
 The Directors also thank the Government of various countries,
 Government of India, State Governments in India and concerned
 Government Departments/Agencies for their co-operation.
 
 The Directors appreciate and value the contributions made by every
 member of the TCS family globally.
 
                                On behalf of the Board of Directors,
 
 Mumbai                                                Cyrus Mistry
 
 May 27, 2013                                              Chairman
Source : Dion Global Solutions Limited
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