1) Corporate information
Tata Consultancy Services Limited (referred to as TCS Limited or the
Company) and its subsidiaries provide a wide range of information
technology and consultancy services including systems, hardware and
software, communications and networking, hardware sizing and capacity
planning, software management solutions, technology education services
and business process outsourcing. The Companys full services portfolio
consists of Application Development and Maintenance, Business
Intelligence, Enterprise Solutions, Assurance, Engineering and
Industrial Services, IT Infrastructure Services, Business Process
Outsourcing, Consulting and Asset Leveraged Solutions.
As of March 31, 2012, Tata Sons owned 73.75% of the Companys equity
share capital and has the ability to control its operating and
financial policies. The Companys registered office is in Mumbai and it
has 58 subsidiaries across the globe.
2) Rights, preferences and restrictions attached to shares Equity
The Company has one class of equity shares having a par value of Rs 1
each. Each shareholder is eligible for one vote per share held. 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.
Preference shares would be redeemable at par at the end of six years
from the date of allotment i.e. March 28, 2008, but may be redeemed at
any time after 3 years from the date of allotment at the option of
shareholder. These shares would carry 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 three years preceding the year
of issue of the redeemable preference shares.
Market value of quoted investments as classified above as at March 31,
2012 is Rs 1540.94 crores (March 31, 2011: Rs 1612.11 crores).
The Company has given undertakings to the Government of Maharashtra not
to divest its shareholding in MahaOnline Limited except to an
affiliate. This equity investment is subject to the restriction as per
terms of contractual agreement. The restriction is valid as on March
Unquoted debentures include subscription to the privately placed
unsecured, unlisted, redeemable, non - convertible debentures issued by
Tata Sons Limited in January 2010 and its subsidiary Panatone Finvest
Limited in March 2010 for a consideration of Rs 1000 crores and Rs 200
crores, respectively. The debentures issued by Tata Sons Limited would
be redeemable at par in three equal installments at the end of second,
third and fourth year, respectively from the date of allotment. The
first installment was received on January 21, 2012. The debentures
issued by Panatone Finvest Limited would be redeemed at the end of the
third year. The amount receivable on redemption within a period of one
year from the date of the balance sheet is classified under Current
investment and balance as Non - current investment.
3) NON - CURRENT INVESTMENTS
In terms of the shareholders agreement dated March 23, 2006, Phoenix
Group Services Limited (formerly known as Pearl Group Services
Limited), exercised their put option and sold equity holding of 24% in
Diligenta Limited to the Company at a fixed price of Rs 228.00 crores
(GBP 30.24 million) in September 2011. Thereby Diligenta Limited became
wholly owned subsidiary of the Company.
Tata Consultancy Services Morocco SARL AU, a wholly owned subsidiary,
is in the process of being voluntarily liquidated.
On December 20, 2011, the Company has subscribed to 100 percent equity
share capital of Tata Consultancy Services Qatar S.S.C.
On January 24, 2012, the Company through its wholly owned subsidiary,
Tata Consultancy Services Japan Limited subscribed to 60 percent share
capital of Nippon TCS Solution Center Limited.
On March 9, 2012, the Company through its wholly owned subsidiary, Tata
Consultancy Services Netherlands BV subscribed to 100 percent share
capital of Tata Consultancy Services Osterreich GmbH.
On March 16, 2012, the Company through its wholly owned subsidiary,
Tata Consultancy Services Netherlands BV subscribed to 100 percent
share capital of Tata Consultancy Services Danmark ApS.
4) Current tax includes write back of provision (net) of Rs 34.99
crores (Previous year: Additional provision (net) Rs 94.50 crores) in
domestic and certain overseas jurisdictions relating to earlier years.
5) Retirement benefit plans
a) Defined 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
contributions as specified under the law are paid to the provident fund
set up as a trust by the Company. The Company is generally liable for
annual contributions and any shortfall in the fund assets based on the
government specified minimum rates of return and recognises such
contributions and shortfall, if any, as an expense in the year it is
The Company recognised Rs 359.36 crores (March 31, 2011: Rs 285.78
crores) for provident fund contributions and Rs 91.19 crores (March 31,
2011: Rs 73.74 crores) for superannuation contributions in the statement
of profit and loss. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
The Company has contributed Rs 89.55 crores (March 31, 2011: Rs 61.39
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
6) Segment Reporting
The Company has identified business segments (industry practice) as its
primary segment and geographic segments as its secondary segment.
Business segments are primarily financial services comprising customers
providing banking, finance and insurance services, manufacturing
companies, companies in retail and consumer packaged goods industries,
companies in telecommunication, media and entertainment and others such
as energy, resources and utilities, Hi-tech industry practice, life
science and healthcare, s-Governance, travel, transportation and
hospitality, products, etc.
Revenues 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 revenues of the segment and manpower efforts. All other
expenses which are not attributable or allocable to segments have been
disclosed as unallocable expenses.
Assets and liabilities that are directly attributable or allocable to
segments are disclosed under each reportable segment. All other assets
and liabilities are disclosed as unallocable. Fixed assets that are
used interchangeably among segments are not allocated to primary and
Geographical revenues are allocated based on the location of the
customer. Geographic segments of the Company are Americas (including
Canada and South American countries), Europe, India and Others.
7) Contingent liabilities
As at As at
March 31, 2012 March 31, 2011
Claims against the Company not
acknowledged as debt 21.49 21.45
Income tax demands 1381.97 602.65
Indirect tax demands 61.44 62.61
Guarantees given by the Company
on behalf of subsidiaries (See (b)
below) 3389.90 2120.91
a) TCS e-Serve Limited has received demands aggregating Rs 330.07 crores
(March 31, 2011: Rs 236.41 crores) in respect of income tax matters in
dispute. TCS e-Serve Limited has paid advance taxes aggregating to Rs
321.85 crores (March 31, 2011: Rs 185.13 crores) against disputed
amounts for the various assessment years. The Company is entitled to an
indemnification from the seller, of the above referred contingent
claims on TCS e-Serve Limited, and would be required to refund to the
seller, amounts equal to monies received by TCS e-Serve Limited, on all
such claims, as an adjustment to the purchase price consideration.
b) The Company has provided guarantees aggregating to Rs 3068.55 crores
(GBP 376.75 million) (March 31, 2011: Rs 1978.41 crores) (GBP 275.60
million) to third parties on behalf of its subsidiary Diligenta
Limited. The Company does not expect any outflow of resources in
respect of the above.
36) Capital and other commitments
a) Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs 1682.98 crores (March
31, 2011: Rs 1132.27 crores).
b) The Company has undertaken to provide continued financial support to
its subsidiaries APOnline Limited and TCS FNS Pty Limited.
c) The Company has a purchase commitment towards India Innovation Fund
for the uncalled amount of balance Rs 80963.86 per unit of 1000 units
aggregating to Rs 8.10 crores (March 31, 2011: Rs 9.00 crores).
In addition to the above Cash Flow Hedges, the Company has outstanding
foreign exchange forward and currency option contracts with notional
amount aggregating Rs 8222.75 crores (March 31, 2011: Rs 4432.67 crores)
whose fair value showed a loss of Rs 92.81 crores as on March 31, 2012
(March 31, 2011: gain of Rs 27.45 crores). Exchange loss of Rs 192.83
crores (Previous year: Rs 8.88 crores) on foreign exchange forward and
currency option contracts have been recognised in the statement of
profit and loss.
As of balance sheet date, the Company has net foreign currency
exposures that are not hedged by derivative instruments or otherwise
amounting to Rs 338.23 crores (March 31, 2011: Rs 109.03 crores).
8) Remittance in foreign currencies for dividends
The Company has remitted Rs Nil (March 31, 2011: 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 2010-11 and interim
dividends for the year 2011-12, are as under:
9) Research and development expenditure aggregating to Rs 127.16 crores
(Previous year: Rs 97.20 crores) was incurred during the year.
10) These financial statements have been prepared in the format
prescribed by the Revised Schedule VI to the Companies Act, 1956.
Previous years figures have been recast / restated.