To the Members,

The Directors submit the Annual Report of the Company along with the audited financial
statements for the financial year ended March 31, 2012.


1. Financial Results

(Rs. crores)


  

    

    
Unconsolidated
    
Consolidated
  
  

    

    
2011 - 2012
    
2010 - 2011
    
2011 - 2012
    
2010 - 2011
  
  

    
(i) Revenue from operations
    
38,858.54
    
29,275.41
    
48,893.83
    
37,324.51
  
  

    
(ii) Operating expenditure
    
27,472.82
    
20,511.88
    
34,458.52
    
26,146.15
  
  

    
(iii) Depreciation and amortisation
    
688.17
    
537.82
    
917.94
    
735.26
  
  

    
(iv) Operating profit
    
10,697.55
    
8,225.71
    
13,517.37
    
10,443.10
  
  

    
(v) Interest expense
    
16.40
    
20.01
    
22.23
    
26.48
  
  

    
(vi) Other income (net)
    
2,685.18
    
494.73
    
428.17
    
604.00
  
  

    
(vii) Profit before tax
    
13,366.33
    
8,700.43
    
13,923.31
    
11,020.62
  
  

    
(viii) Provision for tax
    
2,390.35
    
1,130.44
    
3,399.86
    
1,830.83
  
  

    
(ix) Minority interest and share of loss of associate
    
-
    
-
    
109.96
    
121.75
  
  

    
(x) Profit for the year
    
10,975.98
    
7,569.99
    
10,413.49
    
9,068.04
  
  

    
(xi) Balance brought forward from previous year
    
14,069.20
    
10,458.13
    
18,635.05
    
13,604.84
  
  

    
(xii) Amount available for appropriation
    
25,045.18
    
18,028.12
    
29,048.54
    
22,672.88
  
  

    
Appropriations
    

    

    

    

  
  

    
(a) Interim dividends on equity shares
    
1,761.49
    
1,174.32
    
1,761.49
    
1,174.32
  
  

    
(b) Proposed final dividend on equity shares (including special dividend)
    
3,131.55
    
1,565.78
    
3,131.55
    
1,565.78
  
  

    
(c) Total dividend on equity shares (a + b)
    
4,893.04
    
2,740.10
    
4,893.04
    
2,740.10
  
  

    
(d) Proposed dividend on redeemable preference shares
    
22.00
    
11.00
    
22.00
    
11.00
  
  

    
(e) Tax on dividend
    
797.34
    
450.82
    
806.86
    
459.15
  
  

    
(f) General reserve
    
1,097.60
    
757.00
    
1,166.10
    
827.58
  
  

    
(g) Balance carried to balance sheet
    
18,235.20
    
14,069.20
    
22,160.54
    
18,635.05
  
  

    

    
(1 crore = 10 million)
  



2. Dividend

Based on the Company's performance, the Directors are pleased to recommend for approval
of the members a final dividend of Rs. 8 per share and a special dividend of Rs. 8 per
share for the financial year 2011-12 taking the total dividend to Rs. 25 per share
(previous year Rs. 14 per share) on the capital of 1,95,72,20,996 equity shares of Rs. 1
each. The final dividend and the special dividend on the equity shares, if approved by the
members would involve a cash outflow of Rs. 3,639.57 crores including dividend tax. For
equity shares, the proposed final dividend (including special dividend), interim dividends
already paid and dividend tax for the financial year 2011-12 would aggregate Rs. 5,686.82
crores, resulting in a payout of 51.93% of unconsolidated profit of the Company (54.75% of
consolidated profit).

The redeemable preference shares allotted on March 28, 2008 are entitled to a fixed
cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the
difference between the rate of dividend declared during the year on the equity shares of
the Company and the average rate of dividend declared on the equity shares of the Company
for the three years preceding the year of issue of the said redeemable preference shares.
Accordingly, the Directors have recommended, for approval of the members, a dividend of
twenty-two paise (Rs. 0.22) per share on 100,00,00,000 redeemable preference shares of Rs.
1 each for the financial year 2011-12.


3. Transfer to Reserves

The Company proposes to transfer Rs. 1,097.60 crores to the general reserve out of the
amount available for appropriations and an amount of Rs. 18,235.20 crores is proposed to
be retained in the statement of profit and loss.


4. Company's Performance

During the financial year 2011-12, the volatility in the macroeconomic environment
continued to cast its shadow and most of the markets where TCS operates in, were impacted.
Even in this environment, the Company recorded industry leading financial performance. The
major contributing factors for such all round performance across geographies and industry
verticals were the Company's customer-centric approach and its ability to innovate
customer specific solutions, focus on pricing, disciplined execution of complex projects
and the rigor in following strong internal processes.

In the financial year 2011-12, the Company continued its strong growth momentum across
major markets. Revenue growth in the year remained high in North America (29.62%), UK
(29.16%), Europe (41.62%), Asia Pacific (50.67%) and Middle East & Africa (43.38%).
Other geographies also witnessed double digit growth rates.

In the financial year 2011-12, most of the industry verticals registered healthy growth
rates. Revenue growth in BFSI (27.44%), Retail & Consumer Packaged Goods (45.05%) and
Manufacturing (38.11%) were significant contributors. Revenue growth in "other
industry verticals" was also significantly high at 37.27% - the major contributors
were Life Sciences and Healthcare (33.10%), Hi-Tech (57.32%), Travel, Transport &
Hospitality (42.85%).

The Company became the first Indian IT Company to cross the US $10 billion milestone in
terms of annual revenue.

On consolidated basis, revenue for the year 2011-12 at Rs. 48,893.83 crores was higher
by 31.00% (Rs. 37,324.51 crores in 2010-11), operating profit at Rs. 13,517.37 crores was
higher by 29.44% (Rs. 10,443.10 crores in 2010-11) and the net profit for the year at Rs.
10,413.49 crores was higher by 14.84% (Rs. 9,068.04 crores in 2010-11).

On unconsolidated basis, revenue for the year 2011-12 at Rs. 38,858.54 crores was
higher by 32.73 % (Rs. 29,275.41 crores in 2010-11), operating profit at Rs. 10,697.55
crores was higher by 30.05% (Rs. 8,225.71 crores in 2010-11) and the net profit for the
year at Rs. 10,975.98 crores was higher by 44.99% (Rs. 7,569.99 crores in 2010-11).

The Company has been making good progress in the strategic initiatives to drive its
non-linear growth. Software products (Asset Leveraged Solutions) have added significant
new customers during the year. Platform based BPO or process cloud have been offered in
the areas of life insurance and pensions, analytics, finance and accounts, HR outsourcing
and procurement. iON, the Company's cloud based platform for small and medium businesses
launched in early 2011 has gained momentum in 2012.


5. International Credit Rating

The Company continues to have an A3 investment-grade issuer rating as well as an
indicative foreign currency debt rating of Baa1, with a stable outlook from Moody's
Investors Services. The rating is not for any specific debt issuance of the Company.

Standard and Poor's ratings services has assigned BBB positive corporate credit rating
with outlook as Negative to the Company.

The Company has also been rated by Dun & Bradstreet at 5A1 (Condition-Strong). The
rating is assigned on the basis of tangible net worth and composite appraisal of the
Company.


6. Strategic Alliance

With the objective of moving towards its goal of being amongst the top IT companies in
the world, the Company has made acquisitions/alliances over the past few years either
directly or through its subsidiaries.

On January 24, 2012, Tata Consultancy Services Japan Limited, a wholly owned
subsidiary, entered into an agreement with Mitsubishi Corporation, pursuant to which a new
subsidiary company, Nippon TCS Solution Center Limited (NTSC) has been setup. NTSC will
offer a full service suite of IT, BPO and infrastructure services to Japanese
corporations.


7. Human Resource Development

Employees today are looking for development opportunities, future career options,
empowerment and work-life balance in an organisation. To retain leadership position, the
Company continuously innovates and customises its human resource (HR) strategy to meet
changing employee needs.

The global diverse talent base of 2,38,583 competent people, consisting of 110
nationalities, 31.6% women, 69% belonging to Gen Y is the key asset to retain the
competitive edge and leadership position in the market. The Company's HR processes cope up
with the scale and complexity to manage this diverse talent base spread across 55
countries. The Company continues to invest in its people to upgrade their technical,
domain and leadership capability. A total of 9,972 person years of effort were invested in
the year 2011-12 on various learning and development programmes including the Initial
Learning Programme (ILP) offered to trainees joining the Company.

During the year 2011-12, the consolidated gross addition of 70,400 employees and net
addition of 39,969 employees was highest ever in the history of the Company. This included
1,898 people in-sourced from customer organisations.

The academic interface programme (AIP) was strengthened and expanded to reach 673
institutes in India and 184 institutes abroad. The Company visited 389 campuses in India
and released 43,604 offers. The Company also conducted campus placements outside India
especially in USA, Canada, China, Uruguay and Hungary.

The rigorous focus on talent engagement, deployment on right projects, role &
career progression and benchmarked compensation & benefits helped the Company to
attract and retain the best talent. The Company has launched Employee Assistance
Programme, which would provide employees 24X7 confidential counselling services, to enable
them to cope more effectively with stressful situations. The Company improved its talent
retention globally which is reflected in the attrition dropping from 14.4% in the year
2010-11 to 12.2% in the year 2011-12.

The Company sustained high utilisation rates throughout the year (82.2% excluding
trainees and 74.4% including trainees). Such high level of utilisation could be achieved
due to the robustness of the Company's sourcing to staffing process and talent management
practices that ensured the availability of people with the right competencies at right
places to meet the business demand.


8. Quality Initiatives

Sustained commitment to high levels of quality, best-in-class service management and
robust information security practices helped TCS to attain a number of milestones during
the year.

TCS continues to maintain the enterprise-wide highest maturity Level 5 for CMMI-DEV
(Development) and CMMI-SVC (Services) models. In the year 2011-12, TCS had set a new
benchmark as the first publicly stated recipient to achieve a Multiple Simultaneous
Appraisal against two constellations of the CMMI model; and is also the first
organisation in the world to be appraised at Level 5 of the CMMI-SVC model, which
underscores the maturity of the firm's fast growing business process outsourcing (BPO) and
infrastructure services business.

TCS is enterprise-wide certified against ISO 9001:2008 (Quality Management), ISO
27001:2005 (Security Management) and ISO 20000:2005 (Service Management). TCS also
continues to maintain domain specific quality certifications AS 9100 (for Aerospace
Industry), ISO 13485 (for Medical Devices) and TL 9000 (for Telecom Industry).

TCS is enterprise-wide certified against ISO 14001:2004 (Environmental Management) and
OHSAS 18001:2007 (Occupational Health and Safety Management). These certifications
demonstrate TCS' strong commitment to the environment and the occupational health and
safety of its associates and business partners; and helps convey this to all its
stakeholders, including customers.

In the area of Knowledge Management, TCS received the prestigious Most Admired
Knowledge Enterprise (MAKE) award for the 7th time in India and Asia. TCS also received
the global Independent Operating Unit (IOU) MAKE award for the 2nd time.

TCS launched 'Campus Commune', a social collaboration platform, to engage with
potential and selected recruits from academic institutions. The network of students,
faculty groups and TCS groups facilitate knowledge and experience sharing between academia
and the Company. At the recently held World HRD Congress, Campus Commune was recognised as
an innovative initiative in the talent recruitment and management area.

The cornerstone of these certifications is the in-house developed Integrated Quality
Management System (iQMS) -a vibrant, process-driven, people-oriented and customer-focused
quality management system. iQMS is continuously evolving to cater to the requirements of
TCS' varied business offerings; and is the backbone supporting the Global Network Delivery
Model (GNDMTM).


9. Corporate Sustainability

The Company's initiatives in the community aim to create impact through empowerment so
that the people in the community can make a better living and lead a better quality of
life. The Company has chosen four areas to focus its energies on namely Education and
Skill Development, Health, Environment and Affirmative Action.

Programmes undertaken under these four broad areas are aimed at economically backward
and other marginalized groups (like women, children and aged) as well as those who are
physically or socially disadvantaged.

The Company's community initiatives are delivered using four different approaches:

(i) Leveraging the Company's core competencies in technology

(ii) Creating conditions for employee participation through volunteering

(iii) Building synergistic partnerships with clients and other partners like NGOs

(iv) Financial sponsorships

In the Education and Skill Building area, the primary programmes are:

(i) Computer-based Functional Literacy (CBFL) programme helps teach illiterate adults
how to read and write. The literacy software was enhanced to support writing and numeracy
in four additional local languages (Bengali, Oriya, Marathi, and Tamil). A total of nine
languages are now covered under CBFL. TCS collaborated with Directorate of Adult Education
under Saakshar Bharat Scheme to run camps in eight languages in India. More than 11,100
adults were made literate using the CBFLsoftware.

(ii) InSight, addressing school children to develop their communication skills and
giving them an exposure to IT Industry.

(iii) GoIT, addressing school children in Cincinnati, USA around the Company's campus
and giving them exposure to the IT Industry and an opportunity to work on latest
technology in the Company's research labs.

(iv) mKrishi - Enhance farmer's knowledge about their crops and provide solutions to
their problems over mobile phones.

(v) Advanced Computer Training - The Company organises training for visually impaired
candidates to improve their employability in IT/ITES industry. Two batches were completed
during the year 2011-12.

(vi) Skill Development - A special programme to develop skills of NGOs to help them
manage their operations and finances better along with Yale University and one of the
Company's large customers in the financial industry.

(vii) TCS Research Scholar Scheme supporting students who wish to pursue PhD in India.

(viii) Academic Collaboration by conducting faculty development programmes, workshops
for students and establishing joint research labs in the Institutes.

In the area of Health, the primary programmes are:

(i) Developing applications and Portals. During the year 2011-12, systems were
developed and maintained, where necessary, for Lady Tata Memorial Trust in UK, Impact
India, Smile Train, Childline, Mumbai Mobile Creches, Cancer Institute (Chennai) and Tata
Medical Centre.

(ii) Creating awareness - HIV and AIDS awareness programmes were conducted by TCSers
who have formed Club RED to drive this initiative. In addition, TCSers in USA participated
in a number of Walks, sometimes for causes supported by the Company's customers to
increase awareness of diabetes and cancer.

(iii) Blood donation camps - These camps are organised regularly across the delivery
centers in India and a similar drive was organised in Singapore in association with Red
Cross.

(iv) Today is a Good Day - A programme to increase awareness of cancer in UK.

(v) WebHealth Center - Providing free medical consulting and advice over the web.

To promote wellness and raise money for local charities, TCS supports a number of
sporting events, like Mumbai marathon, TCS World 10K race, TCS Amsterdam marathon as well
as the New York City, Boston and Chicago marathons.

In the area of Environment, the primary programmes are:

(i) Enhancing awareness - Organising different events to enhance awareness.

(ii) Reduction of carbon footprint and waste within the organisation by following
Reduce, Reuse and Recycle themes.

In the area of Affirmative Actions, the primary programme is as follows:

Enhancing Employability and Create Employment - The Company initiated a programme to
train economically deprived and socially disadvantaged candidates for BPO jobs and absorb
some of them based on the Company's requirements and their performance during training.
The Company trained 7,828 economically weaker candidates during the year 2011-12, out of
which 3,071 were socially disadvantaged candidates. Post completion of training, 1,018
offers were given, out of which 313 were socially disadvantaged candidates. During the
year 2011-12, a total of 717 candidates offered (in the year 2011-12 and last quarter of
the year 2010-11) joined TCS, out of which 326 are socially disadvantaged candidates.


10. Awards/Recognitions

During the year, the Company received various awards and recognitions, some of which
are given below:


India

• Outstanding Company of the Year 2012 - CNBC TV18

• Ranked #1 Employer in India - DataQuest

• Best Company to Work For - Business Today

• Ranked #1 in DataQuest Top 20 IT companies

• ICAI Award for Excellence in Financial Reporting

• IT Company of the Year - NDTV Business Leadership Awards

• Indian IT Company of the Year- Bloomberg-UTV CXO Awards 2011


Global

• 5th in Bloomberg Businessweek's Tech 100

• 7th in Newsweek's Global Green Rankings

• India's Best Managed Company - Finance Asia

• Forbes Asia's Fab 50 companies

• Gold SABRE, USA for Executive Leadership Communications

• Best Architecture Trophy 2011 for TCS campus at Siruseri, Chennai at
International Property Awards


11. Corporate Governance Report and Management Discussion and Analysis Statement

Corporate Governance Report and Management Discussion and Analysis statement are
attached to this Report.


12. Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956
("Act"), and based on the representations received from the operating
management, the Directors hereby confirm that:

(i) in the preparation of the Annual Accounts for the year 2011-12, the applicable
Accounting Standards have been followed and there are no material departures;

(ii) they have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company at the end of the financial year and of the profit
of the Company for the financial year;

(iii) they have taken proper and sufficient care to the best of their knowledge and
ability for the maintenance of adequate accounting records in accordance with the
provisions of the Act. They confirm that there are adequate systems and controls for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;

(iv) they have prepared the Annual Accounts on a going concern basis.


13. Subsidiary Companies and Consolidated Financial Statements

The Company had 54 subsidiaries at the beginning of the year. Four subsidiaries were
set up during the year viz.:

(i) Tata Consultancy Services Qatar S.S.C.

(ii) Nippon TCS Solution Center Limited

(iii) Tata Consultancy Services Osterreich GmbH

(iv) Tata Consultancy Services Danmark ApS

The total number of subsidiaries as on March 31, 2012 is 58.

There has been no material change in the nature of the business of the subsidiaries. A
statement containing brief financial details of the subsidiaries is included in the Annual
Report.

As required under the Listing Agreements entered into with the Stock Exchanges, a
consolidated financial statement of the Company and all its subsidiaries is attached. The
consolidated financial statements have been prepared in accordance with the relevant
accounting standards as prescribed under Section 211(3C) of the Act. These financial
statements disclose the assets, liabilities, income, expenses and other details of the
Company, its subsidiaries and associate companies.

Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate
Affairs vide its circular dated February 8, 2011 has granted general exemption from
attaching the balance sheet, statement of profit and loss and other documents of the
subsidiary companies with the balance sheet of the Company. A statement containing brief
financial details of the Company's subsidiaries for the financial year ended March 31,
2012 is included in the Annual Report. The annual accounts of these subsidiaries and the
related detailed information will be made available to any member of the Company/its
subsidiaries seeking such information at any point of time and are also available for
inspection by any member of the Company/its subsidiaries at the registered office of the
Company. The annual accounts of the said subsidiaries will also be available for
inspection, as above, at the head offices/registered offices of the respective subsidiary
companies. The Company shall furnish a copy of the details of annual accounts of
subsidiaries to any member on demand.


14. Fixed Deposits

The Company has not accepted any public deposits and as such, no amount on account of
principal or interest on public deposits was outstanding as on the date of the balance
sheet.


15. Directors

Mr. O. P. Bhatt and Mr. Cyrus Mistry have been appointed as Additional Directors on
April 2, 2012. Mr. O. P. Bhatt is an Independent Director. As per the provisions of
Section 260 of the Act, both the Directors hold office only up to the date of the
forthcoming Annual General Meeting (AGM) of the Company and are eligible for appointment
as Directors. The Company has received notices under Section 257 of the Act, in respect of
the above persons, proposing their appointment as a Director of the Company. Resolutions
seeking approval of the members for the appointment of Mr. O. P. Bhatt and Mr. Cyrus
Mistry as Directors of the Company have been incorporated in the Notice of the forthcoming
AGM along with brief details about them.

Prof. Clayton M. Christensen, Dr. Ron Sommer and Mr. S. Ramadorai, Directors, retire by
rotation and being eligible have offered themselves for re-appointment.

Mrs. Laura M. Cha, a Director of the Company since November 2, 2006, who retires by
rotation at the forthcoming AGM, has conveyed her decision not to offer herself for
re-appointment. She is also the Chairperson of the Shareholders/Investors Grievance
Committee. The Directors place on record their appreciation of the valuable contribution
made by her.


16. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the statutory
auditors of the Company, hold office, in accordance with the provisions of the Act up to
the conclusion of the forthcoming AGM and are eligible for re-appointment.


17. Particulars of employees

The information required under Section 217(2A) of the Act and the Rules made
thereunder, is provided in annexure forming part of the report. In terms of Section
219(1)(b)(iv) of the Act, the report and accounts are being sent to the shareholders
excluding the aforesaid annexure. Any shareholder interested in obtaining copy of the same
may write to the Company Secretary.


18. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under Section 217(1)(e) of the Act, read with the
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are
set out in an annexure to this report.


19. Acknowledgements

The Directors thank the Company's employees, customers, vendors, investors and academic
institutions for their support to the Company.

The Directors also thank the Government of various countries, Government of India,
State Governments in India and concerned Government Departments/Agencies for their
co-operation.

The Directors appreciate and value the contributions made by every member of the TCS
family globally.


  

    

    
On behalf of the Board of Directors,
  
  

    
Mumbai
    
R. N. Tata
  
  

    
May 26, 2012
    
Chairman
  



Annexure to the Directors' Report

Particulars pursuant to the Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules, 1988

CONSERVATION OF ENERGY

The operations of the Company involve low energy consumption. Adequate measures have,
however, been taken to conserve energy.


TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

The Company continues to use the latest technologies for improving the productivity and
quality of its services and products.


RESEARCH & DEVELOPMENT (R&D)

Specific areas in which R&D was carried out by the Company

TCS conducts its R&D initiatives within the broad framework of innovation
initiatives. TCS believes innovation can be broadly defined as an idea that makes a
material difference to an organisation's current capabilities or creates a future
capability. TCS organises its innovation initiatives into the following three categories:

• Derivative or sustaining innovation that continually provides improvements on
current services and solutions

• Transformational improvement or platform innovation that facilitates a swift
move to 'visible adjacencies' in terms of emerging technologies as well as markets

• Disruptive or breakthrough innovation that enables customers to access
potentially game-changing or/and new market business models.

As part of its disruptive innovation initiatives, TCS is working with partners in
diverse domains such as Participatory Sensing, Sensor Informatics, Ultrasound, Large Data
Handling, Context-aware Multimodal Human Machine Interface (HMI), Privacy and Trust to
create several breakthroughs in developing an intelligent infrastructure platform. This
platform will sense data from multiple systems ranging from sensors to social networks,
extract information as well as sentiment, analyse this data and help stakeholders make
informed decisions. This will make transportation systems, public utilities, tourism,
public safety and the community provide better services. TCS believes that this
intelligent infrastructure platform will enable the Company's customers in different
industries as well as city infrastructures to create new business models.

Health, pharma and related industries are increasingly reliant on software applications
that crunch huge volume of data. TCS research invested in several tools that will aid
these sectors and improve health. In the realm of Human Genome, TCS invested in tools for
understanding genetic basis of disease and identification of genetic markers for disease,
diagnostics and prognostics. In metagenomics, TCS worked on a software platform for
analysis of metagenomes, identification of pathogens and design of probiotics. TCS is
enabling bibliomes with Cloud based solutions for integration of structured and
unstructured information.

As part of platform innovations (that enrich value in the near term), TCS enhanced its
information fusion platform. Enterprises accumulate enormous amount of data and trigger
creation of data outside the enterprise. Gathering and analysing data from diverse sources
and formats, understanding patterns from the distributed data and providing actionable
insights in a predictive way is a challenge for any business. TCS Enterprise Information
Platform promises to do this for customers. TCS also continues to invest in developing
transactional platforms that could radically change the overall cost structures and
business delivery models in target industries. Currently, TCS is investing in such
platforms across industry verticals like BFSI and Telecom. TCS is also developing a suite
of platform products that are targeted at changing the technology delivery model for small
and medium enterprises.

TCS expanded its green energy research. Apart from augmenting the building monitoring
systems and green datacenter tool, the Company has worked on renewable energy integration.
TCS tools can now enable customers choose the ideal power purchase plan from various
energy sources, power suppliers to make more accurate predictions of wind and solar
outputs and also know how to size hybrid power plants optimally. Smart water research is
looking at improving legacy water systems and enabling arsenic removal at low cost.

The Company's social media research teams worked on creating a comprehensive brand
awareness tool. They also cracked problems in enabling the workforce in global
organisations to bring their own devices (such as smart phones and tablets) to work
without compromising on organisational security.

TCS R&D also invested in derivative innovation (research that improves current
offerings). TCS tools that improve productivity and quality in the software lifecycle are
now categorised into platforms that align with the Company's service lines. These tools
offer an integrated framework for end-to-end solutions for a given service line. Several
risk, compliance, privacy and security solutions are being piloted. Other derivative
innovation initiatives include systematically converting the domain knowledge garnered
through the Company's extensive experience in select industries, into packaged software
products and solutions. TCS has been very successful in this strategy in the BFSI space,
where the BaNCS suite of products has been rated as among the best in the field by leading
industry analysts globally. TCS is also investing in creating similar intellectual
property in other key vertical industries like Retail.

TCS Co-innovation Network (COINTM) has scanned the emerging technology
landscape and funneled in new ideas that can be taken to customers; some new offerings
have been accepted by the customers. The research scholarship programme introduced last
year to support PhDs who are working in the Company's areas of interest, continued to gain
momentum and are currently supporting more than 80 PhDs from over 25 institutions.

TCS R&D also spent time and effort in the "invention" aspect with good
results. Over 600 research papers were published in peer reviewed journals or were
presented in national or international academic conferences by the Company's researchers.

TCS increased its Intellectual Property Rights (IPR) significantly. 460 patents were
filed in several countries in the year 2011-12. Until now, cumulatively, TCS has filed 855
patent applications of which 72 have been granted. In the year 2011-12, 4 patents have
been granted.


Benefits derived

R&D organisations in TCS continue to engage actively with customers across all
geographies and businesses, to identify potential opportunities to apply TCS Intellectual
Property and capability to enhance and deepen the relationships. About 90 "Innovation
Days" were held, where senior customer executives and scientists met TCS researchers
towards solving specific problems. TCS Innovation Forum held in Silicon Valley, drew a
good response from academia, partners and customers.

The intellectual assets created by the R&D organisations are deployed and monetised
in different business units and internal functions, resulting in substantial savings on
license costs. Over 850 person-years of productivity savings were measured in different
engagements.

TCS R&D has received several national and international awards, for example, the
Infoworld Green15 Award, Information Week 500 Award, IEI Industry Excellence Award and
Business World ICT Infocom Award. Internally, the Company has rewarded distinguished
scientists, patent owners, and authors of papers. To nurture the culture of innovation,
TCS R&D has built platforms for ideas and interaction among new recruits and campus
hires.


Future plan of action

In the coming years, the R&D organisations will invest in several softwares,
systems and application research projects. Supply chain frameworks, Integrated
Computational Materials Engineering and Human Centered Systems are some examples. TCS is
also integrating various enterprise applications on new age devices, to keep TCSers' work
environment vibrant and agile.


Expenditure on R&D

R&D centers have been set up at various locations all over the world. Out of these,
the R&D centers at Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai
have been recognised by the Department of Scientific & Industrial Research (DSIR).

In addition to the R&D centers, the Company has set up innovation labs, product
engineering groups and groups engaged in path breaking technologies at multiple locations
all over the world.

Expenditure incurred in the R&D centers and innovation centers of TCS
(unconsolidated) during financial year 2012 and 2011 are given below:


  

    

    

    
(Rs. crores)
  
  

    
Expenditure on R & D and Innovation - TCS (unconsolidated)
    
Year ended 31.3.2012
    
Year ended 31.3.2011
  
  

    
(a) Capital
    
1.82
    
1.41
  
  

    
(b) Recurring
    
127.16
    
97.20
  
  

    
(c) Total R&D expenditure
    
128.98
    
98.61
  
  

    
(d) Innovation center expenditure
    
198.44
    
134.81
  
  

    
(e) Total R&D and innovation expenditure
    
327.42
    
233.42
  
  

    
(f) R&D and innovation expenditure as a percentage of total turnover
    
0.84%
    
0.80%
  


Expenditure incurred in the R&D centers and innovation centers of TCS
(consolidated) during financial year 2012 and 2011 are given below:

(Rs. crores)


  

    
Expenditure on R & D and Innovation - TCS (consolidated)
    
Year ended 31.3.2012
    
Year ended 31.3.2011
  
  

    
(a) Capital
    
2.43
    
1.56
  
  

    
(b) Recurring
    
141.88
    
106.13
  
  

    
(c) Total R&D expenditure
    
144.31
    
107.69
  
  

    
(d) Other Innovation expenditure
    
260.75
    
174.09
  
  

    
(e) Total R&D and Innovation expenditure
    
405.06
    
281.78
  
  

    
(f) R&D and Innovation expenditure as percentage of total turnover
    
0.83%
    
0.75%
  



Foreign exchange earnings and outgo


  

    

    

    
(Rs. crores)
  
  

    

    
Year ended 31.3.2012 
    
Year ended 31.3.2011 
  
  

    
(a) Foreign exchange earnings
    
38,098.86
    
26,665.83
  
  

    
(b) CIF Value of imports
    
235.69
    
375.87
  
  

    
(c) Expenditure in foreign currency
    
12,263.02
    
8,890.64
  


 


  

    

    
On behalf of the Board of Directors,
  
  

    
Mumbai
    
R. N. Tata
  
  

    
May 26, 2012
    
Chairman