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Notes to Accounts of Tata Consultancy Services Ltd.

Mar 31, 2017

1) MERGER OF CMC LIMITED

a) Nature of business

CMC Limited is engaged in the design, development and implementation of software technologies and applications, providing professional services in India and overseas and procurement, installation, commissioning, warranty and maintenance of imported / indigenous computer and networking systems, and in education and training. The Company holds 51.12% of the voting power of CMC Limited.

b) CMC Limited has been amalgamated with the Company with effect from April 1, 2015 (''appointed date’) in terms of the scheme of amalgamation (''the Scheme’) sanctioned by the High Court of Judicature at Bombay vide its Order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015. The Scheme came into effect on April 1, 2015 and pursuant thereto all assets, unbilled revenue, debts, outstanding, credits, liabilities, benefits under income tax, service tax, excise, value added tax, sales tax (including deferment of sales tax), benefits for and under Software Technology Parks of India (''STPI’) and Special Economic Zone (''SEZ’), duties and obligations of the CMC Limited, have been transferred to and vested in the Company retrospectively with effect from April 1, 2015.

Pursuant to the Scheme coming into effect, all the equity shares held by the Company in CMC Limited shall stand automatically cancelled and remaining shareholders of CMC Limited holding fully paid equity shares shall be allotted 79 shares of Rs, 1 each in the Company, credited as fully paid-up, for every 100 shares of Rs, 10 each fully paid-up held in the share capital of CMC Limited by adjusting the General reserve.

c) The assets, liabilities and reserves of CMC Limited as at April 1, 2015 have been taken over at their carrying values since the entities are under common control.

2) FINANCIAL INSTRUMENTS

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2(i) to the financial statements.

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 investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range.

The following table summarizes 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 disclosure are required):

(b) Derivative financial instruments and hedging activity

The Company’s revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Company also does business in Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real. 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 Company monitors and manages the financial risks relating to its operations by analyzing its foreign exchange exposures by the level and extent of currency risks.

The Company use various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward, option and future contracts to manage and mitigate its exposure to foreign exchange rates. The counterparty is generally a bank. The Company can enter into contracts for a period between one day and eight years.

The Company report quarterly to its risk management committee, an independent body that monitors foreign exchange risks and policies implemented to manage its foreign exchange exposures.

The following are outstanding currency option contracts, which have been designated as cash flow hedges as at:

Net gain on derivative instruments of Rs, 88 crores recognized in Hedging Reserve as at March 31, 2017, is expected to be transferred to the statement of profit and loss by March 31, 2018. The maximum period over which the exposure of cash flow variability has been hedged is through calendar year of 2017.

In addition to the above cash flow hedges, the Company has outstanding foreign exchange forwards, options and future contracts with notional amount aggregating Rs, 19,159 crores, Rs, 22,144 crores and Rs, 19,949 crores whose fair value showed a net gain of Rs, 412 crores, Rs, 284 crores and Rs, 159 crores as at March 31, 2017, March 31, 2016 and April 1, 2015 respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting.

Exchange gain of Rs, 1,522 crores (March 31, 2016: Exchange gain of Rs, 181 crores) on foreign exchange forwards, options and future contracts for the year ended March 31, 2017 have been recognized in the statement of profit and loss.

Following table summarizes approximate gain / (loss) on the Company’s other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies.

(c) 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.

(i) 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.

(a) 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 risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

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 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 28(b).

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company’s profit before tax by approximately '' 155 crores as on April 1, 2015.

*Others include Australian Dollar, Saudi Arabian Riyal, Danish Kroner, Brazilian Real, Mexican Peso, United Arab Emirates Dirham, Swedish Kroner, South African Rand, Swiss Franc, Norwegian Kroner etc.

(b) 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.

(ii) 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 analyzing 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 revenue, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of Rs, 2,425 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of Rs, 415 crores held with an Indian bank having high quality credit rating which are individually in excess of 10% or more of the Company’s total bank deposits for the year ended March 31, 2017. 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 represents the maximum credit exposure. The maximum exposure to credit risk was Rs, 67,749 crores, Rs, 55,563 crores and Rs, 42,423 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled revenue and other financial assets.

The Company’s exposure to customers is diversified and no single customer contributes to more than 10% of outstanding accounts receivable and unbilled revenue as at March 31, 2017 and March 31, 2016.

Geographic concentration of credit risk

TCS Limited also has a geographic concentration of trade receivables, net of allowances and unbilled revenue is given below:

(in %)

(iii) 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 as and when they fall due.

The tables below provide details regarding the contractual maturities of significant financial liabilities as at:

3) SEGMENT REPORTING

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 Company’s chief operating decision maker is the Chief Executive Officer and Managing Director.

The Company has identified business segments (industry practice) 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 science and healthcare, s-Governance and products.

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 and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallowable 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 unallowable. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments.

4) COMMITMENTS AND CONTINGENCIES

(i) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs, 1,493 crores

(ii) Contingencies

Direct tax matters Refer Note 9 Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterization and classification of certain items. As at March 31, 2017, the Company has demands on appeal amounting to Rs, 253 crores from various indirect tax authorities, which are being contested by the Company. In respect of indirect tax contingencies of Rs, 9 crores, not include above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

Other claims

The Company has examined the social security and tax aspects of contracts with legal entities which provide services to an overseas subsidiary and, based on legal opinion, concludes that the subsidiary is in compliance with the related statutory requirements.

As at March 31, 2017, claims aggregating Rs, 6,276 crores against the Company have not been acknowledged as debts.

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 for alleged infringement of Epic’s intellectual property. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling Rs, 6,101 crores (US $941 million) to Epic which the trial judge has indicated his intent to reduce. On the basis of legal opinion and legal precedence, the Company expects to defend itself against the claim and believes that the claim will not sustain.

Bank guarantees and letters of comfort

The Company has given letter of comfort to various banks for credit facilities availed by its subsidiaries (a) Tata America International Corporation and

(b) Tata Consultancy Services Asia Pacific Pte Ltd. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiaries and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiaries.

The Company has provided guarantees to third parties on behalf of its subsidiaries aggregating '' 2,127 crores. The Company does not expect any outflow of resources in respect of the above.

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

5. DIVIDENDS

Dividends paid during the year ended March 31, 2017 include an amount of '' 27 per equity share towards final dividend for the year ended March 31, 2016 and an amount of Rs, 19.50 per equity share towards interim dividend for the year ended March 31, 2017. Dividends paid during the year ended March 31, 2016 include an amount of Rs, 24 per equity share towards final dividend for the year ended March 31, 2015 and an amount of Rs, 16.50 per equity share towards interim dividend for the year ended March 31, 2016.

The dividends declared by the Company are based on the profits available for distribution as reported in the financial statements of the Company. Accordingly, the retained earnings reported in these financial statements may not be fully distributable. As at March 31, 2017, income (net of dividend tax) available for distribution were Rs, 62,383 crores. On April 18, 2017, the Board of Directors of the Company have proposed a final dividend of Rs, 27.50 per share in respect of the year ended March 31, 2017 subject to the approval of shareholders at the Annual General Meeting. If approved, the dividend would result in a cash outflow of Rs, 6,522 crores inclusive of dividend distribution tax of Rs, 1,103 crores.

Analytics In the enterprise context, this is the discovery, interpretation, and communication of meaningful patterns in business data to predict and improve business performance

Application Programming APIs are a set of easily accessible protocols for communication between various software components Interface (API)

Pacification The process of exposing a discrete business function or data within an enterprise''s systems through APIs

Application Development Design, development, and deployment of custom software; ongoing support, upkeep, and enhancement of such software on behalf of the client and Maintenance

Artificial Intelligence (AI) AI is technology that appears to emulate human performance typically by learning, arriving at its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, enhancing human cognitive performance (cognitive computing) or replacing people on execution of non-routine tasks Asset Leveraged Solutions Software solutions delivered by leveraging TCS'' IP / frameworks or software products

Assurance Services Quality Assurance and Engineering Services encompassing business requirements validation, static and functional testing, non-functional testing including performance engineering, user experience, security and test automation

Attrition This measures what portion of the workforce left the organization (voluntarily or involuntarily) in a certain period. Attrition looks at employee departures over the last 12 months (LTM). The formula is: Total number of departures in the LTM / closing headcount

Augmented Reality (AR) Augmented Reality is a technology that superimposes a computer-generated image on a user''s view of the real world to enrich the interaction

Automation Automation is the execution of work by machines in accordance with rules that have either been explicitly coded by a human or ''learned'' by the machine through pattern recognition of data

Basis Point A basis point is one hundredth of a percentage point, that is, 0.01%

Big Data Big Data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight

discovery, and process optimization

Book Value The value at which an asset or a liability is carried on a balance sheet or the value of intial outlay for an investment.

Block chain Block chain is a distributed database that maintains a continuously growing list of records, called blocks, secured from tampering and revision

Business Process Designing, enabling, and executing business operations including data management, analytics, interactions and experience management

Services (BPS)

Chatbots Chatbots are 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

Cognitive Computing Cognitive computing is the simulation of human thought processes in a computerized model. It involves self-learning systems that use data mining, pattern recognition, and natural language processing to mimic the way the human brain works

Constant Currency Restating the current period''s revenue or profit after eliminating the impact of currency movement in the intervening period gives the constant currency revenue or profit

At TCS, this is done by recalculating the current period''s revenue using the average currency conversion rates from the prior period

Cross-currency impact When a company derives revenues in multiple currencies, the change in conversion rates of those currencies to the reporting currency (for example, INR) in the current period, vis-a-vis the conversion rates of the prior period affects the reported revenue. This revenue impact due to shifts in the value of currencies relative to the reporting currency is called cross-currency impact

For example, if 50% of the revenue is denominated in USD, and the USD has depreciated against the INR by 5% in a period, even if the company earns the same amount of dollars as in the prior period, it still translates into fewer rupees this period. The cross-currency impact on revenue will be 50% x 5% = 2.5%

Cyber Security Cyber Security is the body of technologies, processes, and practices designed to protect networks, computers, programs, and data from attack, damage, or unauthorized access. In a computing context, security includes both cyber security and physical security

Days'' Sales Outstanding Days'' Sales Outstanding is a popular way of depicting the Accounts Receivable relative to the company''s revenue over the last twelve months (DSO = Accounts (DSO) Receivable * 365 / Revenue)

Digital Technologies Digital technologies represent the nexus of new age services such as Social Media, Mobility, Analytics, Big Data, Cloud, Artificial Intelligence and Internet of Things

Discretionary Spend Discretionary spend, also known as Change the Business (CTB) spend, is that portion of the IT budget that''s outside of the basic minimum IT activities required to keep the business running. Projects that transform the manner in which business operates are considered discretionary

In uncertain economic times, t may be necessary for businesses to cut spend in response to decline in income and discretionary spend is often the first one to be scrutinized Discretionary spend is subjective, and may differ considerably among business

Dividend Payout Ratio Dividend Payout Ratio is the ratio of the annual dividend paid (including dividend distribution tax) to the Net Income, usually expressed as a percentage

Earnings per Share (EPS) EPS for any period is the amount of that period''s Net Income attributable to a single share after deducting any preference dividend and related taxes

EPS = [Net profit - Preference dividend if any] / Weighted average number of shares outstanding during the period

Effective Tax Rate (ETR) ETR is the proportion of the Profit Before Taxes that is provided for payment of income taxes

ETR = Provision for Taxes / Profit Before Taxes

Engineering and Next Generation Product Engineering, Manufacturing Operations Transformation, Services Transformation, Embedded software and Internet of Things Industrial Services

Enterprise Solutions and Business and technology consulting, design, architecture, implementation, and support services on Enterprise Application platforms covering the front, middle,

Consulting and back-office applications such as ERP CRM, Supply Chain, Content Management etc., on-premise, cloud and other digital platforms

Fair Value The fair value of a financial asset or liability is the price that would be received on selling an asset or paid on transferring a liability in an orderly transaction between market participants at the measurement date

Forward Contract A Forward Contract is a hedging instrument wherein two parties agree to buy or sell a particular currency at a pre-determined rate (OR Forward Currency rate ) on a specific future date.

For e.g. TCS enters into a forward contract to sell USD 1mn after 3 months @ '' 68. Irrespective of the prevailing USD spot rate, TCS will be obliged to sell USD 1mn @ '' 68 at the end of 3 months.

Ramification Ramification is the process of adding games or game-like elements to any activity in order to enrich experiences and encourage user participation

IT Infrastructure Services Technical consulting, remote infrastructure management, hosting, process and tools optimization, and technical transformation of the enterprise IT infrastructure

(IT IS) to a future proof hybrid cloud model

Internet of Things (IoT) IoT is a network of interconnected machines or devices which are 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 Invested funds are funds that are highly liquid in nature, and can be readily converted into cash

Invested Funds = Cash and Bank Balances Investments Deposits with Banks Inter corporate Deposits

Key Managerial KMP in relation to our Company means the Chief Executive Officer and Managing Director, Chief Financial Officer, all Executive Directors, Global Head for Human

Personnel (KMP) Resource and the Company Secretary. Please refer to the Company''s policy on KMP: http://www.tcs.com/ir-corporate-governance

Machine Learning Machine learning is a type of artificial intelligence (AI) that provides computers with the ability to learn without being explicitly programmed

Market Capitalization Total market value of all of a company''s outstanding equity shares

Market Cap = Last Trading Price * Total number of outstanding shares

Non controlling Interest Minority Interest is the share of the consolidated profits attributable to interests of the non-controlling ownership in the subsidiaries.

Non-discretionary Spend 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

Offshore leverage This is the proportion of our international revenues derived from services that are delivered out of centers in India. A service delivered out of an offshore delivery center is billed at a lower rate compared to what would be applicable if delivered out of the customer''s location. So higher offshore leverage depresses the revenue growth relative to the volume growth but expands the gross margin

Pricing This is the price charged to the customer per unit of effort. In contracts, pricing is the billing rate for a unit of effort (usually measured in person-hours). In Fixed Price contracts, pricing is the total sum the customer is expected to pay for the turnkey solution delivered. Some use this term interchangeably (and somewhat inaccurately) with the average revenue realized by the company per unit of effort. See Realization

Realization This is the revenue received by the company per unit of effort expended. TCS reports the quarter on quarter change in realization (in percentage terms) after removing any impact of changes in currency exchange rates and also any impact of change in offshore leverage between the two periods Billing rates vary depending on what service is offered, and in which part of the world, so it is important to note that increases or decreases in realization could be because of changes in the underlying business or geographic mix and not necessarily because of a change in the pricing of a service. Also, realization doesn''t take into account the costs and therefore higher realization is not necessarily more profitable

Related Party Any transaction between a company and its related party involving transfer of services, resources or any obligation, regardless of whether a price is charged.

Transactions Please refer the Company''s policy on Related Party Transactions : http://www.tcs.com/ir-corporate-governance

Simplification Simplification is the term used to describe 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

Unbilled Revenue (UBR) UBR is revenue that is yet to be invoiced for services already delivered. The budgeted effort has been expended (and therefore the revenue has been recognized) and yet, no invoice has been raised. While this could happen due to several reasons, the most common one is the customer delay in acceptance of a project deliverable. This is the opposite of Unearned Revenue

Unearned Revenue (UER) UER is money received in advance for services yet to be delivered. In other words, it is revenue that has been invoiced and collected from the client although the underlying effort is yet to be expended. Unearned revenue is the opposite of Unbilled Revenue

Virtual Reality (VR) VR is an artificial, computer-generated simulation or recreation of a real life environment or situation. It engages users by offering simulated reality experiences firsthand, primarily by stimulating their vision and hearing

Volume Volume in any period is the Billed Effort and the quantum of hardware equipment and software licenses sold in that period

Disclaimer: This glossary is intended to help understand commonly used terms and phrases in TCS'' Annual 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.


Mar 31, 2015

1) CORPORATE INFORMATION

Tata Consultancy Services Limited (referred to as "TCS Limited" or "the Company") provides consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. The Company''s full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Cloud Services, Connected Marketing Solutions, Consulting, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON-Small and Medium Businesses, IT Infrastructure Services, Mobility Products and Services and Platform Solutions.

As at March 31, 2015, Tata Sons Limited owned 73.69% of the Company''s equity share capital and has the ability to control its operating and financial policies. The Company''s registered office is in Mumbai and it has 60 subsidiaries across the globe.

2) SHARE CAPITAL

The Authorised, Issued, Subscribed and Fully paid-up share capital comprises of equity shares and redeemable preference shares having a par value of Rs. 1 each as follows:

The Authorised Share Capital was increased to 420,05,00,000 equity shares of Rs. 1 each and 105,02,50,000 redeemable preference shares of Rs. 1 each pursuant to the amalgamation of two wholly-owned subsidiaries, Retail FullServe Limited and Computational Research Laboratories Limited vide Order dated March 22, 2013 and TCS e-Serve Limited vide Order dated September 6, 2013 of the Hon''ble High Court of Judicature at Bombay.

(b) 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 carried 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.

(e) Equity shares allotted as fully paid up (during 5 years preceding March 31, 2015) including equity shares issued pursuant to contract without payment being received in cash 15,06,983 equity shares of Rs. 1 each have been issued to the shareholders of TCS e-Serve Limited in terms of the composite scheme of arrangement ("the Scheme") sanctioned by the High Court of Judicature at Bombay vide their order dated September 6, 2013.

3) UNBILLED REVENUE

Unbilled revenue as at March 31, 2015 amounting to Rs. 2439.36 crores (March 31, 2014: Rs. 2626.08 crores) primarily includes revenue recognised in relation to efforts incurred on turnkey contracts priced on a fixed time, fixed price basis.

4) TRADE RECEIVABLES

Trade receivables (Unsecured) consist of the following:

5) Current tax includes additional provision (net) of Rs. 61.33 crores (March 31, 2014 : additional provision (net) Rs. 467.62 crores) in domestic and certain overseas jurisdictions relating to earlier years. The impact of MAT entitlement of earlier period is Rs. 8.83 crores (March 31, 2014 : Rs. 451.92 crores).

6) AMALGAMATION OF COMPANIES WTI Advanced Technology Limited

a) Nature of business

WTI Advanced Technology Limited is engaged in the business of Information Technology (IT) and Information Technology Engineering Services (ITES). The Company holds 100.00% of the voting power of WTI Advanced Technology Limited.

b) WTI Advanced Technology Limited has been amalgamated with the Company with effect from April 1, 2014 ("the appointed date") in terms of the scheme of amalgamation (Scheme) sanctioned by the High Court of Judicature at Bombay vide their Order dated March 27, 2015. Pursuant thereto all assets, unbilled revenue, debts, outstandings, credits, liabilities, benefits under income tax, service tax, excise, value added tax, sales tax (including deferment of sales tax), benefits for and under Software Technology Parks of India (STPI), duties and obligations of WTI Advanced Technology Limited, have been transferred to and vested in the Company retrospectively with effect from April 1, 2014.

Since WTI Advanced Technology Limited, amalgamated as aforesaid, was wholly owned by the Company, no shares were exchanged to effect the amalgamation.

c) The amalgamation has been accounted for under the ''pooling of interests'' method as prescribed by Accounting Standard 14 specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. Accordingly, the assets, liabilities and reserves of WTI Advanced Technology Limited as at April 1, 2014 have been taken over at their book values and in the same form.

The difference between the amounts recorded as investments of the Company and the amount of Share Capital of WTI Advanced Technology Limited has been adjusted in the General Reserve.

Accordingly, the amalgamation has resulted in transfer of assets, liabilities and reserves in accordance with the terms of the Scheme at the following summarised values:

(a) Defined contribution plans

The Company makes Provident fund, Superannuation fund and foreign defined contribution 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. In respect of Provident fund contributions to trust set up for this purpose, the Company is generally liable for annual contribution and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the Central Government under the Employees'' Provident Fund Scheme, 1952. In addition to such contributions, the Company also recognises potential deficiency in interest, if any, computed as per acturial valuation of interest as an expense in the year it is determined.

As of March 31, 2015, the fair value of the assets of the fund and the accumulated members'' corpus is Rs. 7939.41 crores and Rs. 7419.41 crores respectively. In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.75%. The actuarial assumptions include discount rate of 8.00% and an average expected future period of 7.35 years.

The Company recognised Rs. 571.65 crores (March 31, 2014: Rs. 514.91 crores) for provident fund contributions and Rs. 163.47 crores (March 31, 2014: Rs. 136.29 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. 267.63 crores (March 31,2014: Rs. 177.75 crores) towards foreign defined contribution plans.

(b) Defined benefit plans

The Company makes annual contributions to the Employees'' Group Gratuity-cum-Life Assurance Scheme, 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 month''s 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 are measured using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.

The following table sets out funded status of the gratuity plan and the amounts recognised in the Company''s financial statements as at March 31, 2015.

The Company has identified business segments (industry practice) as its primary segment and geographic segments as its secondary segment.

Business segments comprise banking, finance and insurance services, manufacturing, retail and consumer packaged goods, telecom, media and entertainment and others such as energy, resources and utilities, Hi-tech, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc.

Revenue 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 revenue 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 revenue is 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) RELATED PARTY DISCLOSURES

A) Related parties and their relationship

I) Holding Company

Tata Sons Limited

II)(A) Subsidiaries (Direct holding)

1. CMC Limited

II)(B) Subsidiaries (Indirect holding)

i. CMC Americas Inc.

ii. CMC eBiz Inc.

2. Tata Consultancy Services Sverige AB

3. Tata Consultancy Services Asia Pacific Pte Ltd.

i. Tata Consultancy Services Japan Ltd. (merged with IT Frontier Corporation (a susbsidiary of Mitsubishi Corporation) w.e.f 01.07.2014)

ii. Tata Consultancy Services Malaysia Sdn Bhd

iii. Tata Consultancy Services (China) Co., Ltd.

iv. PT Tata Consultancy Services Indonesia

v. Tata Consultancy Services (Thailand) Limited

vi. Tata Consultancy Services (Philippines) Inc.

vii. Nippon TCS Solution Center Limited

(merged with Tata Consultancy Services Japan Ltd. w.e.f 01.07.2014)

viii. Tata Information Technology (Shanghai) Co. Limited (Amalgamated with Tata Consultancy services (China) Co., Ltd. w.e.f. 05.11.2013)

ix. Tata Consultancy Services Japan, Ltd. (new entity formed w.e.f 1.07.2014 pursuant to the merger of Tata Consultancy Services Japan Ltd. and IT Frontier Corporation)

4. TCS Iberoamerica SA

i. TCS Solution Center S.A.

ii. Tata Consultancy Services Argentina S.A.

iii. Tata Consultancy Services De Mexico S.A., De C.V.

iv. TCS Inversiones Chile Limitada

v. Tata Consultancy Services Do Brasil Ltda

vi. Tata Consultancy Services Chile S.A. vii TATASOLUTION CENTER S.A.

viii. TCS Uruguay S.A.

ix. MGDC S.C.

5. Tata Consultancy Services Netherlands BV

i. Tata Consultancy Services Luxembourg S.A.

ii. Tata Consultancy Services Switzerland Ltd.

iii. Tata Consultancy Services France S.A.S.

iv. TCS Italia SRL

v. Tata Consultancy Services Osterreich GmbH

vi. Tata Consultancy Services Danmark ApS

vii. Tata Consultancy Services De Espana S.A.

viii. Tata Consultancy Services Portugal Unipessoal Limitada

ix. Alti S.A.

x. Planaxis Technologies Inc.

xi. Alti HR S.A.S.

xii. Alti Infrastructures Systemes & Reseaux S.A.S.

xiii. Alti NV

xiv. Tescom (France) Software Systems Testing S.A.R.L.

xv. Alti Switzerland S.A.

xvi. Teamlink

6. TCS FNS Pty Limited

i. TCS Financial Solutions Australia Holdings Pty Limited

ii. TCS Financial Solutions Australia Pty Limited

iii. PT Financial Network Services

iv. TCS Management Pty Ltd. (Liquidated w.e.f. 23.03.2015)

v. TCS Financial Solutions Beijing Co., Ltd.

7. APOnline Limited

8. Tata America International Corporation

i. MS CJV Investments Corporation

9. Tata Consultancy Services Belgium S.A.

10. Tata Consultancy Services Deutschland GmbH

11. Tata Consultancy Services Canada Inc.

12. Diligenta Limited

i. Diligenta 2 Limited

8. WTI Advanced Technology Limited (Amalgamated with Tata Consultancy Services Limited pursuant to the order dated 27.03.2015 of the Hon''ble High Court of Judicature at Bombay. Effective Date: 01.04.2015. Appointed Date: 01.04.2014)

9. C-Edge Technologies Limited

10. MP Online Limited

11. Tata Consultancy Services Morocco SARL AU (liquidated w.e.f. 30.05.2014 vide court order dated 07.08.2014)

12. Tata Consultancy Services (Africa)(PTY) Ltd.

i. Tata Consultancy Services (South Africa) (PTY) Ltd.

13. TCS e-Serve International Limited

i. TCS e-Serve America, Inc.

14. MahaOnline Limited

15. Tata Consultancy Services Qatar S.S.C.

16. Computational Research Laboratories Inc. (liquidated w.e.f. 18.02.2015)

17. TCS Foundation (entity incorporated on 13.03.2015 under Section 8 of the Companies Act, 2013)

III) Fellow Subsidiaries with whom the Company has transactions

- Infiniti Retail Limited

- Panatone Finvest Limited

- Tata AIG General Insurance Company Limited

- Tata AIA Life Insurance Company Limited

- Tata Investment Corporation Limited

- Tata Limited

- Tata Asset Management Limited

- Tata Business Support Services Limited

- Tata Capital Limited

- Tata Housing Development Company Limited

- Tata Consulting Engineers Limited

- Tata Sky Limited

- Tata Realty and Infrastructure Limited

- e-Nxt Financials Limited

- Tata Industries Limited

- Tata International Limited

- Tata Autocomp Systems Limited

- Drive India Enterprise Solutions Limited

- Tata Advanced Systems Limited

- Tata Lockheed Martin Aerostructures Limited (formerly Tata Aerostructures Limited)

- Tata Capital Housing Finance Limited

- TC Travel and Services Limited

- Tata Securities Limited

- Tata Capital Forex Limited

- Tata Capital Financial Services Limited

- Tata Interactive Systems GmbH

- TATA Africa Holdings (Kenya) Limited

- Tata Zambia Limited

- Tata Sikorsky Aerospace Limited (formerly Tara Aerospace Systems Limited)

- Tata Cleantech Capital Limited

- Tata Interactive Systems AG

- Tata Industrial Services Limited

- Tata Uganda Limited

- Tata SIA Airlines Limited

- Tata Africa Holdings (SA) (Proprietary) Limited

- TRIL Infopark Limited (ceased to be an associate and is a subsidiary w.e.f. 23.03.2015)

- Tata Africa Services (Nigeria) Limited

IV) Key Management Personnel

- Mr. N. Chandrasekaran, Chief Executive Officer and Managing Director

- Mr. Rajesh Gopinathan, Chief Financial Officer

- Ms. Aarthi Subramanian, Executive Director (w.e.f. 12.03.2015)

(Rs. crores)

As at As at Particulars March 31, 2015 March 31, 2014

Claims against the Company not acknowledged as debt 40.72 29.57

Income tax demands (See (a) below) 3901.82 3890.20

Indirect tax demands (See (b) below) 61.01 63.27

Guarantees given by the Company on behalf of subsidiaries (See (c) and (d) below) 3310.95 4082.31

a) In respect of income tax demands of Rs. 318.20 crores (March 31, 2014: Rs. 318.20 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

b) In respect of indirect tax demands of Rs. 8.53 crores (March 31, 2014: Rs. 8.53 crores), not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

c) The Company has provided guarantees aggregating Rs. 2694.55 crores (GBP 291.30 million) (March 31, 2014: Rs. 3167.02 crores) (GBP 317.20 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.

d) The Company has provided guarantees aggregating Rs. 87.42 crores (USD 13.97 million) (March 31, 2014: Rs. 83.91 crores) (USD 13.97 million) 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.

18) CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1844.08 crores (March 31, 2014: Rs. 2811.44 crores).

b) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of balance Rs. 29618.47 per unit of 1000 units aggregating to Rs. 2.96 crores (March 31, 2014: Rs. 3.64 crores).

19) DERIVATIVE FINANCIAL INSTRUMENTS

The Company, in accordance with its risk management policies and procedures, enters into foreign exchange forward, options and future 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.

Net gain on derivative instruments of Rs. 150.75 crores recognised in Hedging Reserve as at March 31, 2015, is expected to be transferred to the statement of profit and loss by March 31, 2016.

In addition to the above Cash Flow Hedges, the Company has outstanding foreign exchange forward, options and future contracts with notional amount aggregating Rs. 19949.03 crores (March 31, 2014: Rs. 15774.90 crores) whose fair value showed a gain of Rs. 159.65 crores as at March 31, 2015 (March 31, 2014: gain of Rs. 261.23 crores). Exchange gain of Rs. 1363.87 crores (March 31,2014 : Exchange loss of Rs. 66.60 crores) on foreign exchange forward, options and future contracts for the year ended March 31, 2015 have been recognised in the statement of profit and loss.

As at March 31, 2015, the Company has net foreign currency exposures that are not hedged by derivative instruments or otherwise amounting to Rs. 2884.79 crores (March 31, 2014: Rs. 681.53 crores).

20) Research and development expenditure aggregating Rs. 192.62 crores (Previous year: Rs. 176.31 crores), including capital expenditure was incurred during the year.

21) The Company has revised its policy of providing depreciation on fixed assets effective April 1,2014. Depreciation is now provided on a straight line basis for all assets as against the policy of providing on written down value basis on some assets and straight line basis on others. Further the remaining useful life has also been revised wherever appropriate based on an evaluation. The carrying amount as on April 1, 2014 is depreciated over the revised remaining useful life. As a result of these changes, the depreciation charge for the year ended March 31,2015 is higher by Rs. 131.16 crores and the effect relating to the period prior to April 1,2014 is a net credit of Rs. 528.38 crores (excluding deferred tax of Rs. 129.62 crores) which has been shown as an ''Exceptional Item'' in the statement of profit and loss.

22) At their respective meetings held on October 16, 2014, the Boards of the Company and of its subsidiary, CMC Limited have approved a Scheme of Amalgamation of CMC Limited with the Company. The appointed date for the proposed Scheme is April 1, 2015. The Scheme is subject to sanction of the Hon''ble High Courts and all other statutory approvals as may be required under law.

23) During the year, an amount of Rs. 2326.42 crores has been recognised in the Statement of Profit and Loss in respect of one-time bonus to eligible employees.

24) During the year, the Company has incurred an amount of Rs. 218.42 crores towards Corporate Social Responsibility expenditure.

25) Previous years'' figures have been recast / restated.


Mar 31, 2013

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.


Mar 31, 2012

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 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.

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 31, 2012.

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 incurred.

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 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 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 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.

7) Contingent liabilities

(Rs crores) 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.


Mar 31, 2011

1) 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, a wholly owned subsidiary of TCS FNS Pty Limited and (b) the Government of Maharashtra not to divest its shareholding in MahaOnline Limited except to an affiliate.

2) Retirement benefit plans

a) Defined contribution plans

The Company and its subsidiaries make Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. Under the schemes, the Company and its subsidiaries are required to contribute a specified percentage of the payroll costs to fund the benefits. The Provident Fund scheme additionally requires the Company and its subsidiaries 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 Group recognised Rs. 320.01 crores (Previous year : Rs. 264.68 crores) for provident fund contributions and Rs. 99.82 crores (Previous year : Rs. 77.21 crores) for superannuation contributions in the profit and loss account. The contributions payable to these plans by the Group are at rates specified in the rules of the schemes.

The Group has contributed Rs. 68.60 crores (Previous year : Rs. 53.01 crores) towards foreign defined contribution plans.

b) Defined benefit plans

In accordance with Indian law, the Company and its subsidiaries in India provide for gratuity, post retirement medical benefit and pension plan, a defined benefit retirement plan covering eligible employees in India. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment in an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The measurement date used for determining retirement benefits for gratuity is March 31. Certain overseas subsidiaries of the Company also provide for retirement benefit plans in accordance with the local laws.

The present value of the defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date.

The following table set out the funded status of the retirement benefit plans and the amounts recognised in the financial statements:

3) Unbilled revenue as at March 31, 2011, amounting to Rs. 1348.85 crores (March 31, 2010 : Rs. 1201.14 crores) primarily comprises of the revenue recognised in relation to efforts incurred on turnkey contracts priced on a fixed time, fixed price basis.

4) Research and development expenditure aggregating Rs. 106.13 crores (Previous year : Rs. 84.44 crores) was incurred during the year.

5) Sale of Equipment is net of excise duty of Rs. 0.27 crore (Previous year : Rs. 0.39 crore).

6) Segment Reporting

The Group 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 secondary segments.

Geographical revenues are allocated based on the location of the customer. Geographic segments of the Group are Americas (including Canada and South American countries), Europe, India and Others.

7) Current tax is net of the effect of additional provision (net) of Rs. 132.76 crores for the year ended March 31, 2011 (Previous year : X 39.27 crores) in domestic and certain overseas jurisdictions relating to earlier years.

8) Related Party Disclosures

A) Related Parties and their Relationship

I) Holding Company

Tata Sons Limited

II) Fellow Subsidiaries with whom the Group has transactions

- Tata Capital Limited

- Tata AIG General Insurance Company Limited

- Tata AIG Life Insurance Company Limited

- Tata Consulting Engineers Limited (formerly TCE Consulting Engineers Limited)

- Tata Housing Development Company Limited

- Tata Limited

- Panatone Finvest Limited

- Tata Business Support Services Limited

- Tata Sky Limited

- Tata Teleservices Limited

- Tata Teleservices (Maharashtra) Limited

- VIOM Networks Limited (Formerly Wireless - TT Info Services Limited)

- Infiniti Retail Limited

- Computational Research Laboratories Limited

- Tata Realty And Infrastructure Limited

- Tata Securities Limited

- e-Nxt Financials Limited

- Tata Investment Corporation Limited

- Nova Integrated Systems Limited

- Tara Aerospace Systems Limited

- Tata Advanced Systems Limited

- TC Travel And Services Limited Tata Capital Pic (UK)

- Tata Aerostructure Limited (w.e.f. 05.04.2010)

- TT Holdings & Services Private Limited (w.e.f. 25.08.2010)

- Tata Industries Limited (w.e.f. 01.09.2010)

- Tata Advanced Materials Limited (w.e.f. 01.09.2010)

- Tata International Limited (w.e.f. 01.09.2010)

- Tata Africa Holdings (SA) (Proprietary) Limited (w.e.f. 01.09.2010)

- TATA Africa Holdings (Kenya) Limited (w.e.f. 01.09.2010)

- Tata Automobile Corporation (SA) (Proprietary) Limited (w.e.f. 01.09.2010)

- Tata Autocomp Systems Limited (w.e.f. 01.09.2010)

- Drive India Enterprise Solutions limited (w.e.f. 01.09.2010)

III) Associate

- National Power Exchange Limited (ceased to be an associate w.e.f. 04.09.2010)

IV) Key Management Personnel

- Mr. N. Chandrasekaran

- Mr. S. Mahalingam

- Mr. Phiroz Vandrevala

9) Contingent Liabilities

(Rs. crores)

Particulars As at As at March 31, 2011 March 31, 2010

Claims against the Group not acknowledged as debt 82.83 114.33

Income Taxes (See note (i) below) 842.04 471.61

Indirect Taxes 144.68 121.89

Guarantees given by the Group (See note (ii) below) 2259.48 1923.19

Unexpired Letters of Credit 1.57 0.15

Other Contingencies 0.94 -

Notes:

i) Income tax matters includes Rs. 236.41 crores (March 31, 2010 : Rs. 212.59 crores) in respect of TCS e-Serve Limited, in which the Company has 96.26 percent stake. As on the acquisition date, i.e. December 31, 2008, TCS e-Serve Limited had net advance taxes aggregating to Rs. 185.13 crores against the disputed amounts for the various 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 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.

ii) The Group has provided guarantees aggregating to Rs. 1978.41 crores (GBP 275.60 million) (March 31, 2010 : Rs. 1719.32 crores) (GBP 252.50 million) to third parties on behalf of its subsidiary Diligenta Limited. The Group does not expect any outflow of resources in respect of the above.

iii) The Group has examined the social security and tax aspects of contracts with legal entities which provide services to an overseas subsidiary and, based on legal opinion, concludes that the subsidiary is in compliance with the related statutory requirements.

10) During the year ended March 31, 2011, the Company has received Rs. 27.33 crores (USD 6 million) from the seller of an investment against the release of an indemnification obligation, which has been adjusted against the goodwill arising on consolidation.

11) Commitments

i) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1208.27 crores (March 31, 2010 : Rs. 1172.62 crores).

ii) Phoenix Group Services Limited ("Phoenix") (formerly Pearl Group Services Limited ) has an equity holding of 24% in Diligenta Limited. Under the shareholders agreement dated March 23, 2006, the Company has a call option to purchase all the shares held by Phoenix at fixed price of Rs. 217.08 crores (GBP 30.24 million) at the end of fourth year and Phoenix has a put option to sell the shares to the Company at the same price at the end of the fifth year. The Company has further call option commencing from the sixth year till the end of the eightieth year. As at March 31, 2011, neither of the option has been exercised.

iii) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of Rs. 90,000 per unit against the balance investment of 1000 units aggregating to Rs. 9.00 crores (March 31, 2010 : Rs. 9.00 crores).

iv) The share purchase agreement for acquisition of Comicrom S.A. (merged with Tata Consultancy Services Chile S.A.) provided for additional contingent consideration payable to the previous owners. A sum of Rs. 4.55 crores (USD 1 million) has been paid by the Company during the year ended March 31, 2011, towards full and final settlement of its dues under the agreement.

12) Derivative Financial Instruments

The Company and its subsidiaries, in accordance with its risk management policies and procedures, enter into foreign currency forward contracts 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.

13) Increase in payables in respect of purchase of fixed assets amounting to Rs. 29.13 crores for the year ended March 31, 2011 (Previous year : Rs. 5.02 crores) have been considered as a non cash transaction.

14) Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the Group financial statements.

15) Previous years figures have been recast / restated wherever necessary.

16) Previous years figures are in italics.

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