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Tata Consultancy Services
BSE: 532540|NSE: TCS|ISIN: INE467B01029|SECTOR: Computers - Software
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Mar 12
Notes to Accounts Year End : Mar '13
1) CORPORATE INFORMATION
 
 Tata Consultancy Services Limited (referred to as TCS Limited or the
 Company) provide consulting-led integrated portfolio of information
 technology (IT) and IT-enabled services delivered through a network of
 multiple locations around the globe.  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, 2013, 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.
 
 (a) Rights, preferences and restrictions attached to shares Equity
 shares
 
 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
 
 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.
 
 (b) Shares allotted as fully paid up by way of bonus shares (during 5
 years preceding March 31, 2013)
 
 The Company allotted 97,86,10,498 equity shares as fully paid up bonus
 shares by utilisation of Securities premium reserve on June 18, 2009
 pursuant to a shareholders resolution passed by postal ballot on June
 12, 2009.
 
 The Company has given an undertaking 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 at March
 31, 2013.
 
 The Company has given an undertaking to the investors of KOOH Sports
 Private Limited not to transfer its shareholding prior to the expiry of
 thirty-six months from the completion date of the investment agreement
 except with the prior written consent of the other parties to the
 agreement. The restriction is valid as at March 31, 2013.
 
 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 two installments of the debentures issued by Tata Sons
 Limited have been redeemed during the years ended March 31, 2012 and
 March 31, 2013 respectively. The debentures issued by Panatone Finvest
 Limited have been renewed for a further period of three years with a
 revised interest rate of 9.50% during the year ended March 31, 2013.
 
 Tata Consultancy Services Morocco SARL AU, a wholly owned subsidiary,
 is in the process of being voluntarily liquidated.
 
 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 two installments of the debentures issued by Tata Sons
 Limited have been redeemed during the years ended March 31, 2012 and
 March 31, 2013 respectively. The debentures issued by Panatone Finvest
 Limited have been renewed for a further period of three years with a
 revised interest rate of 9.50% during the year ended March 31, 2013.
 
 2) UNBILLED REVENUE
 
 Unbilled revenue as at March 31, 2013 amounting to Rs. 2303.35 crores
 (March 31, 2012: Rs. 1567.47 crores) primarily comprises of the revenue
 recognised in relation to efforts incurred on turnkey contracts priced
 on a fixed time, fixed price basis of Rs. 1509.25 crores (March 31,
 2012: Rs. 1208.10 crores).
 
 3) Current tax includes additional provision (net) of Rs. 39.12 crores
 (March 31, 2012: Write back of provisions (net) and refunds received
 Rs. 34.99 crores) in domestic and certain overseas jurisdictions
 relating to earlier years. The impact of MAT entitlement of earlier
 period is Rs. 128.97 crores (March 31, 2012: Nil).
 
 4) AMALGAMATION OF COMPANIES
 
 a) Nature of business of amalgamating companies:
 
 Retail FullServe Limited is engaged in the business of providing
 information technology and business process outsourcing services.
 
 Computational Research Laboratories Limited is engaged in the business
 of conducting research and development relating to high performance
 computing and allowing usage of computers, including providing
 consultation services in the field of information technology. On August
 16 2012, the Company has acquired 100% equity share capital of
 Computational Research Laboratories Limited.
 
 b) Retail FullServe Limited and Computational Research Laboratories
 Limited - wholly owned subsidiaries of Tata Consultancy Services
 Limited, have been amalgamated with the Company with effect from April
 1, 2012 and October 1, 2012 respectively, in terms of the scheme of
 amalgamation (Scheme) sanctioned by the High Court of Judicature at
 Bombay vide their Order dated March 22 , 2013. The Scheme came into
 effect on April 1, 2013 and pursuant thereto all assets and debts,
 outstandings, credits, liabilities, benefits under income tax, excise,
 sales tax (including deferment of sales tax), benefits for and under
 STPI and special economic zone registrations, duties and obligations of
 the above mentioned subsidiaries, have been transferred to and vested
 in the Company retrospectively with effect from April 1, 2012 and
 October 1, 2012 respectively.
 
 Since the subsidiaries, amalgamated as aforesaid, were wholly owned by
 the Company, no shares were exchanged to effect the amalgamation.
 
 c) The amalgamations stated above have been accounted for under the
 pooling of interests method as prescribed by Accounting Standard
 (AS-14) notified under Section 211 (3C) of the Companies Act, 1956.
 Accordingly, the assets, liabilities and reserves of Retail FullServe
 Limited and Computational Research Laboratories Limited as at April 1,
 2012 and October 1, 2012 respectively, have been taken over at their
 book values. As stipulated in the scheme of amalgamation, all reserves
 of the above mentioned subsidiaries have been transferred to the
 General reserve except for balances lying in the statement of profit
 and loss as on March 31, 2012 and September 30, 2012 respectively,
 which have been transferred to the surplus in statement of profit and
 loss of the Company.
 
 The difference between the amounts recorded as investments of the
 Company and the amount of share capital of Retail FullServe Limited and
 Computational Research Laboratories Limited have been adjusted in the
 General reserve.
 
 5) RETIREMENT BENEFIT PLANS
 
 (a) Defined contribution plans
 
 The Company makes Provident Fund and Superannuation Fund contributions
 to defined contribution retirement benefit plans for eligible
 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
 incurred.
 
 The Company recognised Rs. 430.24 crores (March 31, 2012: Rs. 359.36
 crores) for provident fund contributions and Rs. 106.36 crores (March
 31, 2012: Rs. 91.19 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. 123.86 crores (March 31, 2012: Rs.
 89.55 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 eligible 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.
 
 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 specific 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
 secondary segments.
 
 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.
 
 (a) The Company has provided guarantees aggregating Rs. 2910.88 crores
 (GBP 353.65 million) (March 31, 2012: Rs. 3068.55 crores) (GBP 376.75
 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.
 
 (b) The Company has provided guarantees aggregating Rs. 1208.41 crores
 (USD 222.42 million) (March 31, 2012: Nil ) to third parties on behalf
 of its subsidiary Tata America International Corporation. The Company
 does not expect any outflow of resources in respect of the above.
 
 7) CAPITAL AND OTHER COMMITMENTS
 
 a) Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) Rs. 3328.51 crores
 (March 31, 2012: Rs. 1682.98 crores).
 
 b) The Company is required to pay to the seller of TCS e-Serve Limited,
 amounts received by the subsidiary from tax authorities as refund
 against taxes paid aggregating Rs. 347.85 crores (March 31, 2012: Rs.
 321.85 crores), which is to be adjusted to the cost of investment of
 the subsidiary.
 
 c) The Company has undertaken to provide continued financial support to
 its subsidiaries APOnline Limited and TCS FNS Pty Limited.
 
 d) The Company has a purchase commitment towards India Innovation Fund
 for the uncalled amount of balance Rs. 47389.56 per unit of 1000 units
 aggregating Rs. 4.74 crores (March 31, 2012: Rs. 8.10 crores).
 
 8) DERIVATIVE FINANCIAL INSTRUMENTS
 
 The Company, in accordance with its risk management policies and
 procedures, enters into foreign currency forward and currency option
 contracts to manage its exposure in foreign exchange rates. The counter
 party is generally a bank. These contracts are for a period between one
 day and eight years.
 
 In addition to the above Cash Flow Hedges, the Company has outstanding
 foreign exchange forward contracts and currency option contracts with
 notional amount aggregating to Rs. 10427.63 crores (March 31, 2012: Rs.
 8222.75 crores) whose fair value showed a gain of Rs. 51.21 crores as
 on March 31, 2013 (March 31, 2012: loss of Rs. 92.81 crores). Exchange
 gain of Rs. 271.95 crores (March 31, 2012: Exchange loss of Rs. 192.83
 crores) on foreign exchange forward and currency option contracts for
 the year ended March 31, 2013 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. 375.25 crores (March 31, 2012: Rs. 338.23 crores)
 
 9) REMITTANCE IN FOREIGN CURRENCIES FOR DIVIDENDS
 
 The Company has remitted Rs. Nil (March 31, 2012: 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 ended March 31, 2012 and
 interim dividends for the year ended March 31, 2013, are as under:
 
 10) Research and development expenditure aggregating Rs. 151.36 crores
 (Previous year: Rs. 128.98 crores), including capital expenditure, was
 incurred during the year.
 
 11) The Board of Directors at their meeting held on October 19, 2012
 have accorded consent for the merger of TCS e-Serve Limited together
 with the de merger of TCS e-Serve International Limiteds SEZ
 undertaking with the Company. The appointed date for the above scheme
 proposed is April 1, 2013 respectively.
 
 12) On February 22, 2013, the Company entered into an agreement to
 settle for a sum of Rs. 161.63 crores, a class action suit filed in a
 United States of America Court relating to payments to employees on
 deputation. The Court has granted preliminary approval to the
 settlement agreement. The amount of settlement has been included in
 Other expenses, vide note no. 26.
 
 13) Previous year figures have been recast / restated.
Source : Dion Global Solutions Limited
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