Tata Consultancy Services

1) Acquisitions / Divestments
 
 a) On May 12, 2008, the Company, through its wholly owned subsidiary,
 Tata Consultancy Services Asia Pacific Pte Limited, subscribed to 100
 percent share capital of Tata Consultancy Services (Thailand) Limited.
 
 b) On September 19, 2008, the Company, through its wholly owned
 subsidiary, Tata Consultancy Services Asia Pacific Pte Limited,
 subscribed to 100 percent share capital of Tata Consultancy Services
 (Philippines) Inc.
 
 c) On October 22, 2008, Tata Infotech Deutschland GmbH has merged with
 Tata Consultancy Services Deutschland GmbH. The merged entity is a
 wholly owned subsidiary of Tata Consultancy Services Limited.
 
 d) On December 2, 2008, Financial Network Services (Europe) Plc
 (subsidiary of TCS FNS Pty Limited) has been voluntarily liquidated.
 
 e) On December 11, 2008 the Company subscribed to 50 percent share
 capital of National Power Exchange Limited, established to promote
 trading of electrical power in India.
 
 f) On December 31, 2008 the Company acquired 96.26 percent equity
 interest in TCS e-Serve Limited (formerly known as Citigroup Global
 Services Limited (CGSL)), a business process outsourcing provider in
 the Banking and Financial Services sector, for a total consideration of
 Rs. 2449.48 crores (USD 504.54 million).
 
 g) On February 10, 2009, the Company, through its subsidiary, TCS
 e-Serve International Limited, subscribed to 100 percent share capital
 of TCS e-Serve America, Inc.
 
 2) The Company has given undertakings to (a) Bank of China Co. Limited,
 not to transfer its controlling interest in TCS Financial Solutions
 Australia Pty Limited (formerly Financial Network Services Pty.
 Limited), (b) The Government of Madhya Pradesh not to divest its
 shareholding in MP Online Limited except to an affiliate, (c) State
 Bank of India not to sell, transfer or otherwise dispose off its share
 or any interest in C-Edge Technologies Limited.
 
 3) Consequent to the Guidance on implementing Accounting Standard 15
 Employee Benefits (AS-15) which clarifies the applicability of the
 Accounting Standard, the Company has considered certain entitlements to
 earned leave which can be carried forward to future periods as a
 long-term employee benefit. The resultant reduction of Rs. Nil (March
 31, 2008: Rs. 28.67 crores - net of deferred tax) in the net liability
 in respect of employee benefit arising on April 1, 2006, the date of
 adoption has been adjusted to General Reserves.
 
 4) Retirement benefit plans
 
 a) pefined contribution plans
 
 The Company makes Provident Fund and Superannuation Fund contributions
 to defined contribution retirement benefit plans for qualifying
 employees. Under the schemes, the Company is required to contribute a
 specified percentage of the payroll costs to fund the benefits. The
 Provident Fund scheme additionally requires the Company to guarantee
 payment of interest at rates notified by the Central Government from
 time to time, for which shortfall has been provided for as at the
 Balance Sheet date.
 
 The Company recognised Rs. 217.63 crores (March 31, 2008: Rs. 192.41
 crores) for provident fund contributions and Rs. 65.71 crores (March
 31, 2008:Rs. 54.21 crores) for superannuation contributions in the
 profit and loss account. The contributions payable to these plans by
 the Company are at rates specified in the rules of the schemes.
 
 The Company has contributed Rs 27.82 crores (March 31, 2008: Rs.15.48
 crores) towards foreign defined contribution plans.
 
 b) Defined benefit plans
 
 The Company makes annual contributions to the Employees Group
 Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of
 India, a funded defined benefit plan for qualifying employees. The
 scheme provides for lump sum payment to vested employees at retirement,
 death while in employment or on termination of employment of an amount
 equivalent to 15 days salary for service less than 15 years,
 three-fourth months salary for service of 15 years to 19 years and one
 month salary for service of 20 years and more, payable for each
 completed year of service or part thereof in excess of six months.
 Vesting occurs upon completion of five years of service.
 
 The present value of the defined benefit obligation and the related
 current service cost were measured using the Projected Unit Credit
 Method, with actuarial valuations being carried out at each balance
 sheet date.
 
 5) Research and development expenditure aggregating Rs. 42.31 crores
 (Previous year: Rs. 36.94 crores) was incurred during the year.
 
 6) Sale of Equipment is net of excise duty of Rs. 2.08 crores
 (Previous year: Rs. 2.83 crores).
 
 7) The useful life of computer equipment of the Company has been
 reviewed by the management and the original estimate of the useful life
 of these assets has been revised to four years. The unamortised
 depreciable amount is charged over the revised remaining useful life of
 these assets. Consequently, depreciation for the year ended March 31,
 2009 is lower and the profit before tax for the period is higher by Rs.
 181.96 crores.
 
 8) Segment Reporting
 
 The Company has identified geographic segments as its primary segment
 and industry segments as its secondary segment.
 
 Geographic segments of the Company are Americas, Europe, India and
 Others.
 
 Secondary segments of the Company are Banking, Financial Services and
 Insurance (BFSI), which are considered as single segment.
 Manufacturing, Retail and Distribution, Telecom and Others. Others
 comprise Transportation, Life Sciences and Healthcare, Energy and
 Utilities, s-Governance, Media and Entertainment, Travel and
 Hospitality services and sale of products.
 
 Revenue and expense directly attributable to segments are reported
 under each reportable segment. Expenses incurred in India on behalf of
 other segments and not directly identifiable to each reportable segment
 have been allocated to each segment on the basis of associated revenues
 of each segment. All other expenses which are not attributable or
 allocable to segments have been disclosed as unallocable expenses.
 
 Assets and liabilities that are directly attributable to segments are
 disclosed under each reportable segment. All other assets and
 liabilities are disclosed as unallocable. Fixed assets have not been
 allocated to primary and secondary segments as these are used
 interchangeably between segments.
 
 9) Current tax is net of the write-back of provisions (net) and
 refunds received of Rs. 103.11 crores for the year ended March 31, 2009
 (March 31, 2008: Rs. 37.52 crores) in domestic and certain overseas
 jurisdictions relating to earlier years.
 
 10) Contingent Liabilities
 
                                             As at               At at
                                    March 31. 2009      March 31, 2008
                                   (Rs. in crores)     (Rs. in crores)
 
 Claims against the Company 
 not acknowledged
 as debt (See note (i) below)             43.82              99.35
 Income Tax demands                      269.04               5.63
 Indirect Tax demands                     35.56              25.87
 Guarantees given by the Company 
 on behalf of subsidiaries
 (See note (iii) below)                 1938.841           2091.86
 
 i) The Company is contesting claims made by lessors for properties
 leased under tenancy agreements in the courts.  In respect of these
 claims, a provision has been held for Rs. 67.58 crores (March 31, 2008:
 Rs. 11.83 crores) and Rs. 32.90 crores (March 31, 2008: Rs. 81.54
 crores) have been included above under the head Claims against the
 Company not acknowledged as debt.
 
 ii) As stated in note 2(f) above, on December 31, 2008, the Company
 acquired 96.26 percent stake in TCS e-Serve Limited (formerly known as
 Citigroup Global Services Limited (CGSL)), a business process
 outsourcing services provider in the Banking and Financial Services
 sector. TCS e-Serve Limited has a contingent liability of Rs. 220.72
 crores as at March 31, 2009, in respect of Income Tax matters in
 dispute. TCS e-Serve Limited has also paid advance taxes aggregating
 Rs. 162.27 crores against the disputed amounts for the relevant
 assessment years. The Company is entitled to an indemnification of the
 above referred contingent claims on TCS e-Serve Limited from the seller
 and would be required to pay amounts equal to amounts refunded to TCS
 e-Serve Limited on those claims as an adjustment to the purchase price
 consideration.
 
 iii) The Company has provided guarantees aggregating to Rs. 1833.80
 crores (GBP 252.50 million) (March 31, 2008: Rs. 2006.93 crores) (GBP
 252.50 million) to third parties on behalf of its subsidiary Diligenta
 Limited.
 
 11) Commitments
 
 i) Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) Rs. 637.87 crores (March
 31, 2008: Rs. 503.40 crores).
 
 ii) Pearl Group Services Limited (Pearl) has an equity holding of 24
 percent in Diligenta Limited. Under the shareholders agreement dated
 March 23, 2006, the Company has a call option to purchase all the
 shares held by Pearl at fixed price of Rs. 219.62 crores (GBP 30.24
 million) at the end of fourth year and Pearl has a put option to sell
 the shares to the Company at the same price at the end of the fifth
 year.
 
 iii) The Company has undertaken to provide continued financial support
 to its subsidiary APOnline Limited, MP Online Limited, Tata Consultancy
 Services Asia Pacific Pte Limited, TCS FNS Pty Ltd. and Tata
 Consultancy Services Morocco SARL AU.
 
 12) Remittance in foreign currencies for dividends
 
 The Company has remitted Rs. 6.19 crores (March 31, 2008 Rs. Nil) in
 foreign currencies on account of dividends during the year and does not
 have information as to the extent to which remittance, if any, in
 foreign currencies on account of dividends have been made by/on behalf
 of non-resident shareholders. The particulars of dividends declared and
 paid to non-resident shareholders for the year 2007-2008 and interim
 dividends for the year 2008-2009, are as under:
 
 13) Subsequent event
 
 The Board of directors have recommended the issue of bonus shares in
 the proportion of one new equity share for every existing equity share
 by utilization of Securities Premium Account, subject to the approval
 of the shareholders.
 
 14) Previous years figures have been recast/restated wherever
 necessary.
 
 15) Previous years figures are in italics.