Increase Minus
Wednesday, December 13, 2017   SENSEX  33053.04  Down  -174.95      Adani Ports :   393.70  Down  -7.90      Asian Paints :   1116.55  Down  -1.95      Axis Bank :   534.95  Down  -3.35      Bajaj Auto :   3149.35  Down  -19.30      Bharti Airtel :   516.95  Down  -7.00      Cipla :   578.15  Down  -12.60      Coal India :   262.60  Down  -0.65      Dr Reddy's Labs :   2260.80  Up  5.20      H D F C :   1697.45  Down  -13.10      HDFC Bank :   1821.80  Down  -2.25      Hero Motocorp :   3421.85  Down  -23.10      Hind. Unilever :   1316.55  Up  1.60      ICICI Bank :   303.05  Down  -4.35      Infosys :   1003.45  Down  -7.65      ITC :   259.05  Down  -2.50      Kotak Mah. Bank :   1014.95  Up  14.35      Larsen & Toubro :   1189.00  Down  -13.85      Lupin :   843.60  Down  -1.40      M & M :   1412.55  Down  -6.70      Maruti Suzuki :   9110.60  Down  -32.15      NTPC :   175.75  Down  -0.05      O N G C :   183.75  Up  0.80      Power Grid Corpn :   200.75  Down  -2.25      Reliance Inds. :   914.00  Down  -1.05      St Bk of India :   313.25  Down  -5.15      Sun Pharma.Inds. :   516.80  Down  -4.00      Tata Motors :   401.85  Down  -3.85      Tata Motors-DVR :   224.95  Down  -4.90      Tata Steel :   682.10  Down  -7.10      TCS :   2627.30  Up  13.15      Wipro :   287.20  Up  0.00    
GET QUOTES NAV NEWS
SENSEX
33053.04
-174.95
NIFTY
10192.95
-47.20
GOLD
28194
52.00
SILVER
36982
253.00
equity
Daily Market Tracker
Gainers & Losers  
Live Indices  
Index Movers  
Advances & Declines  
Value & Volume Toppers  
Only Buyers/Sellers  
Sector Watch  
Bulk Deals  
Block Deals  
New Highs & Lows  
52 Week High & Low  
Out/Under Performers
Index Constituents  
Unusual Volume  
Historical Returns  
News Analysis
Market Analysis
Technical Chart
Company Profile
Other Markets
Corporate Action
Debt Content
Submit Your Query
You Are Here : Markets  |  Equity   |   Company Profile  |   Reports
Tata Consultancy Services Ltd(Industry :   Computers - Software - Large)
 
BSE Code:532540NSE Symbol: TCSP/E  (TTM): 20.67
ISIN Demat:INE467B01029Div Yield %:1.82EPS   (TTM) :127.11
Book Value (Rs):344.5533945Market Cap (RsCr):502940.78Face Value (Rs) :1
  Change Company 

1. Corporate Information

Tata Consultancy Services Limited ("the Company") and its subsidiaries (collectively referred to as "the Group") provides consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of delivery centres around the globe. The GroupRss full services portfolio consists of IT and Assurance Services, Business Intelligence and Performance Management, Business Process Services, Consulting, Digital Enterprise Services, Eco-sustainability Services, Engineering and Industrial Services, Enterprise Security and Risk Management, Enterprise Solutions, iON - Small and Medium Businesses, IT Infrastructure Services, IT Services and Platform Solutions.

The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is TCS House, Raveline Street, Fort, Mumbai - 400001. As at March 31, 2017, Tata Sons Limited, the holding company owned 73.26% of the CompanyRss equity share capital.

The consolidated financial statements for the year ended March 31, 2017 were approved by the Board of Directors and authorised for issue on April 18, 2017.

2. Significant Accounting Policies

(a) Statement of compliance

In accordance with the notification issued by the Ministry of Corporate Affairs, the Group has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Previous periods have been restated to Ind AS. In accordance with Ind AS 101- First-time Adoption of Indian Accounting Standards, the Group has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 ("Previous GAAP") to Ind AS of ShareholdersRs equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended March 31, 2016.

These consolidated financial statements have been prepared in accordance with Ind AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.

(b) Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

CMC Limited has been amalgamated with the Company with effect from April 1, 2015 in terms of the scheme of amalgamation 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 amalgamated companies being under common control effect of merger is given retrospectively in accordance with Ind AS 103 - Business combination.

(c) Basis of consolidation

The Company consolidates all entities which are controlled by it.

The Company establishes control when; it has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect the entityRss returns by using its power over the entity.

Entities controlled by the Company are consolidated from the date control commences until the date control ceases.

All inter-company transactions, balances and income and expenses are eliminated in full on consolidation.

Changes in the CompanyRss interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the CompanyRss interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

(d) Business Combinations

The Company accounts for its business combinations under acquisition method of accounting. Acquisition related costs are recognised in profit and loss as incurred. The acquireeRss identifiable assets, liabilities and contingent liabilities that meet the condition for recognition are recognised at their fair values at the acquisition date.

Purchase consideration paid in excess of the fair value of net assets acquired is recognised as goodwill. Where the fair value of identifiable assets and liabilities exceed the cost of acquisition, after reassessing the fair values of the net assets and contingent liabilities, the excess is recognised as capital reserve.

The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interestsRs proportionate share of the acquireeRss identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interestsRs share of subsequent changes in equity of subsidiaries.

Business combinations arising from transfers of interests in entities that are under the common control are accounted at historical cost. The

difference between any consideration given and the aggregate historical carrying amounts of assets and liabilities of the acquired entity are recorded in shareholdersRs equity.

(e) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses for the years presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

Key source of estimation of uncertainty at the date of financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment of goodwill, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities.

Impairment of Goodwill

The Group estimate the value in use of the cash generating unit (CGU) based on the future cash flows after considering current economic conditions and trends, estimated future operating results and growth rate and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The discount rate used for the CGURss represent the weighted- average cost of capital based on the historical market returns of comparable companies.

Useful lives of property, plant and equipment

The Group reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.

Valuation of deferred tax assets

The Group reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note 2(k).

Provisions and contingent liabilities

A provision is recognised when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance sheet date. These are reviewed at each Balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.

(f) Revenue recognition

The Group earns revenue primarily from providing information technology and consultancy services, including services under contracts for software development, implementation and other related services, licensing and sale of its own software, business process services and maintenance of equipment.

The Group recognises revenue as follows:

Revenue from bundled contracts that involve supplying computer equipment, licensing software and providing services is allocated separately for each element based on their fair values.

Revenue from contracts priced on a time and material basis is recognised as services are rendered and as related costs are incurred.

Revenue from software development contracts, which are generally time bound fixed price contracts, is recognised over the life of the contract using the percentage-of-completion method, with contract costs determining the degree of completion. Losses on such contracts are recognised when probable. Revenue in excess of billings is recognised as unbilled revenue in the Balance sheet; to the extent billings are in excess of revenue recognised, the excess is reported as unearned and deferred revenue in the Balance sheet.

Revenue from Business Process Services contracts priced on the basis of time and material or unit of delivery is recognised as services are rendered or the related obligation is performed.

Revenue from the sale of internally developed and manufactured systems and third party products which do not require significant modification is recognised upon delivery, which is when the absolute right to use passes to the customer and the Group does not have any material remaining service obligations.

Revenue from maintenance contracts is recognised on a pro-rata basis over the period of the contract.

Revenue is recognised only when evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including the price is fixed or determinable, services have been rendered and collectability of the resulting receivables is reasonably assured.

Revenue is reported net of discounts, indirect and service taxes.

(g) Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective interest method.

(h) Leases Finance lease

Assets taken on lease by the Group in its capacity as lessee, where the Group has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalised at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.

Operating lease

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are recognised as operating lease. Operating lease payments are recognised on a straight line basis over the lease term in the statement of profit and loss, unless the lease agreement explicitly states that increase is on account of inflation.

(i) Cost recognition

Costs and expenses are recognised when incurred and have been classified according to their nature.

The costs of the Group are broadly categorised in employee benefit expenses, depreciation and amortisation and other operating expenses. Employee benefit expenses include employee compensation, allowances paid, contribution to various funds and staff welfare expenses. Other operating expenses mainly include fees to external consultants, cost of running its facilities, travel expenses, cost of equipment and software licenses, communication costs, allowances for delinquent receivables and advances and other expenses. Other expenses is aggregation of costs which are individually not material such as commission and brokerage, recruitment and training, entertainment etc.

(j) Foreign currency

The functional currency of the Company and its Indian subsidiaries is the Indian rupee (Rs) whereas the functional currency of foreign subsidiaries is the currency of their countries of domicile.

Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are restated into the functional currency using exchange rates prevailing on the Balance sheet date. Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are recognised in the statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not translated.

Assets and liabilities of entities with functional currency other than presentation currency have been translated to the presentation currency using exchange rates prevailing on the Balance sheet date. Statement of profit and loss has been translated using weighted average exchange rates. Translation adjustments have been reported as foreign currency translation reserve in the statement of changes in equity.

(k) Income taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.

Current income taxes

The current income tax expense includes income taxes payable by the Company, its overseas branches and its subsidiaries in India and overseas. The current tax payable by the Company and its subsidiaries in India is Indian income tax payable on worldwide income after taking credit for tax relief available for export operations in Special Economic Zones (SEZs).

Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian income tax liability of the CompanyRss worldwide income.

The current income tax expense for overseas subsidiaries has been computed based on the tax laws applicable to each subsidiary in the respective jurisdiction in which it operates.

Advance taxes and provisions for current income taxes are presented in the Balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred income tax is recognised using the Balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred income tax asset are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.

For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse after the tax holiday ends.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax asset in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.

The Group recognises interest levied and penalties related to income tax assessments in finance costs.

(l) Financial instruments

Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.

Cash and cash equivalents

The Group considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.

Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.

The Group has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit and loss are immediately recognised in statement of profit and loss.

Financial liabilities

Financial liabilities are measured at amortised cost using the effective interest method.

Equity instruments

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Equity instruments recognised by the Group are recognised at the proceeds received net off direct issue cost.

Hedge accounting

The Group designates certain foreign exchange forward, option and future contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges.

The Group uses hedging instruments that are governed by the policies of the Company and its subsidiaries which are approved by their respective Board of Directors, which provide written principles on the use of such financial derivatives consistent with the risk management strategy of the Company and its subsidiaries.

The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.

The effective portion of change in the fair value of the designated hedging instrument is recognised in other comprehensive income and accumulated under the heading cash flow hedge reserve.

The Group separates the intrinsic value and time value of an option and designates as hedging instruments only the change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised in statement of other comprehensive income and accounted as a separate component of equity. Such amounts are reclassified into the statement of profit and loss when the related hedged items affect profit or loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit or loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the statement of profit and loss.

(m) Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation (other than freehold land) and impairment loss, if any. Depreciation is provided for property, plant and equipment so as to expense the cost over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.

The estimated useful lives are as mentioned below:

Type of asset Method Useful lives
Buildings Straight line 20 years
Leasehold improvements Straight line Lease term
Plant and equipment Straight line 10 years
Computer equipment Straight line 4 years
Vehicles Straight line 4 years
Office equipments Straight line 5 years
Electrical installations Straight line 10 years
Furniture and fixtures Straight line 5 years

Assets held under finance leases are depreciated over the shorter of the lease term and their useful lives.

Depreciation is not recorded on capital work-in-progress until construction and installation is complete and the asset are ready for its intended use.

(n) Goodwill and intangible assets

Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirerRss interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any. Goodwill is tested for impairment annually or when events or circumstances indicate that the implied fair value of goodwill is less than its carrying amount.

Intangible assets purchased including acquired in business combination, are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any.

Intangible assets consist of acquired contract rights, rights under licensing agreement and software licences and customer-related intangibles. Following table summarises the nature of intangibles and the estimated useful lives. Intangible assets are amortised on a straight line basis over its useful lives as given below:

Nature of intangible Useful lives
Acquired contract rights 3-12 years
Rights under licensing agreement and software licences Lower of licence period and 2-5 years
Customer-related intangibles 3 years

(o) Impairment

(i) Financial assets (other than at fair value)

The Group assesses at each date of Balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Group recognises lifetime expected losses for all contract assets and/ or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

(ii) Non-financial assets

(a) Tangible and intangible assets

Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.

(b) Goodwill

CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is indication for impairment. If the recoverable amount of a CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

(p) Employee benefits

(i) Defined benefit plans

For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance sheet date. Actuarial gains and losses are recognised in full in other comprehensive income for the period in which they occur. Past service cost both vested and unvested is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and (b) when the entity recognises related restructuring costs or termination benefits.

The retirement benefit obligations recognised in the Balance sheet represents the present value of the defined benefit obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the scheme.

(ii) Defined contribution plans

Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits.

(iii) Compensated absences

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as an actuarially determined liability at the present value of the obligation at the Balance sheet date.

(q) Inventories

Raw materials, sub-assemblies and components are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower of cost and net realisable value. Stores and spare parts are carried at lower of cost and net realisable value. Finished goods produced or purchased by the Group are carried at lower of cost and net realisable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads.

(r) Earnings per share

Basic earnings per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive securities in any of the years presented.

3. Explanation of transition to Ind AS

The transition as at April 1, 2015 to Ind AS was carried out from Previous GAAP The exemptions and exceptions applied by the Group in accordance with Ind AS 101 - First-time Adoption of Indian Accounting Standards, the reconciliations of equity and total comprehensive income in accordance with Previous GAAP to Ind AS are explained below.

Exemptions from retrospective application:

The Group has applied the following exemptions:

Business combinations

The Company has elected to apply Ind AS 103 - Business Combinations retrospectively to past business combinations from April 1, 2013.

Reconciliations between Previous GAAP and Ind AS (i) Equity reconciliation

Note As at March 31, 2016 As at April 1, 2015
Equity under Previous GAAP attributable to:
Tata Consultancy Services Limited 65,361 50,635
Non-controlling interests 502 1,128
Equity under Previous GAAP 65,863 51,763
Amalgamation of subsidiary a - (292)
Adjusted equity under Previous GAAP 65,863 51,467
Dividend (including dividend tax) b 6,406 5,649
Effect of consolidation of employee welfare trusts c 184 168
Depreciation d (483) (537)
Obligation to acquire non-controlling interests e (189) (240)
Reorganisation of entities under common control f (167) (167)
Fair valuation of investments g 86 10
Tax adjustments including deferred tax on undistributed earnings h (243) (25)
Impact of retrospective application of Ind AS 103 to past business combinations i (29) (47)
Others (1) (2)
Equity under Ind AS 71,427 56,276
Attributable to:
Tata Consultancy Services Limited 71,072 56,053
Non-controlling interests 355 223

(ii) Total comprehensive income reconciliation

(Rs crores)
Note Year ended March 31, 2016
Net income under Previous GAAP attributable to:
Tata Consultancy Services Limited 24,292
Non-controlling interests 83
Net income under Previous GAAP 24,375
Employee benefits j 114
Effect of consolidation of employee welfare trusts c 15
Depreciation d 57
Obligation to acquire non-controlling interests e (15)
Fair valuation of investments g (2)
Tax adjustments including deferred tax on undistributed earnings h (202)
Others (4)
Profit for the year under Ind AS 24,338
Other comprehensive income 9 6 2
Total comprehensive income under Ind AS 24,607
Attributable to:
Tata Consultancy Services Limited 24,498
Non-controlling interests 109

(iii) Reconciliation of statement of cash flow

There are no material adjustments to the statement of cash flows as reported under Previous GAAP

Notes to reconciliations between Previous GAAP and Ind AS (a) Amalgamation of subsidiary

In the previous year, CMC ltd., a subsidiary merged with the company effective with the terms of the Scheme of amalgamation sanctioned by High Court of judicature at Bombay vide its order dated August 14, 2015 and High Court of judicature at Hyderabad through its order dated July 20, 2015. The Company issued 1,16,99,962 equity shares of Rs 1 each to the non-controlling shareholders of CMC Limited pursuant to the Scheme of amalgamation without payment being received in cash. The difference between the nominal value of the shares issued and the carrying value of the non-controlling interests has been recorded in retained earnings.

This has resulted in decrease in equity by Rs 296 crores as on April 1, 2015.

(b) Dividend (including dividend tax)

Under Ind AS, dividend to holders of equity instruments is recognised as a liability in the period in which the obligation to pay is established. Under Previous GAAP dividend payable is recorded as a liability in the period to which it relates.

This has resulted in an increase in equity by Rs 6,406 crores and Rs 5,649 crores as on March 31, 2016 and April 1, 2015 respectively.

(c) Effect of consolidation of employee welfare trusts

Ind AS 110 - Consolidated Financial Statements defines control and establishes control as the main basis for consolidating the entities. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee, in light of which the employee welfare trusts of the Group are consolidated. Under Previous GAAP these were not required to be consolidated.

This has resulted in an increase in equity by Rs 184 crores and Rs 168 crores as at March 31, 2016 and April 1, 2015 respectively and increase in net profit by Rs 15 crores for year ended March 31, 2016.

(d) Depreciation

In April 2014, the Group revised its method of depreciation from written down value to straight-line basis. This change in method was retrospectively adjusted in accordance with Previous GAAP Under Ind AS, the Group has elected to apply Ind AS 16 - Property, plant and equipment from the date of acquisition of property, plant and equipment and accordingly as a change in estimate, the change in method has been prospectively applied.

This has resulted in a decrease in equity by Rs 483 crores and Rs 537 crores as on March 31, 2016 and April 1, 2015 respectively and increase in net profit by Rs 57 crores for year ended March 31, 2016.

(e) Obligation to acquire non-controlling interests

The Group under Ind AS 103 - Business Combinations has recognised a liability for the present value of the redemption amount towards call option and the non-controlling interestRss put option which collectively contains an obligation for the Group to acquire non-controlling interestRss equity ownership. Under Previous GAAP these were not required to be recognised.

This has resulted in a decrease in equity by Rs 189 crores and Rs 240 crores as on March 31, 2016 and April 1, 2015 respectively and decrease in net profit by Rs 15 crores for year ended March 31, 2016.

(f) Reorganisation of entities under common control

The Group under Ind AS 103 - Business Combinations has accounted the transfer of the shareholding of Tata Sons Limited in Tata America International Corporation to Tata Consultancy Services Limited on the historical cost basis and the consideration paid in excess of carrying cost of the entity, as on the date of transfer, has been recorded as reduction to equity. Under Previous GAAP the transfer has been accounted for on fair value basis.

This has resulted in a decrease in equity by Rs 167 crores as on March 31, 2016 and April 1, 2015.

(g) Fair valuation of investments

Under previous GAAP current investments were measured at lower of cost or fair value and long term investments were measured at cost less diminution in value which is other than temporary, under Ind AS Financial assets other than amortised cost are subsequently measured at fair value.

The Group holds investment in government securities with the objective of both collecting contractual cash flows which give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.

The Group has also made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. This has resulted in increase in investment revaluation reserve by Rs 82 crores and Rs 4 crores as on March 31, 2016 and April 1, 2015 respectively, and increase in other comprehensive income by Rs 51 crores for year ended March 31, 2016.

Investment in mutual funds have been classified as fair value through profit and loss and fair value changes are recognised in profit or loss. This has resulted in increase in retained earnings of Rs 4 crores and Rs 6 crores as on March 31, 2016 and April 1, 2015 respectively, and decrease in net profit by Rs 2 crores for year ended March 31, 2016.

(h) Tax adjustments including deferred tax on undistributed earnings

Under Previous GAAP in the consolidated financial statements, the tax expense of the parents and group companies were added line-by-line and no adjustments were made / additional deferred taxes recognised or reversed on consolidation. Under Ind AS, deferred taxes are computed for temporary differences between the carrying amount of an asset or liability in the Balance sheet and tax base. Consequently deferred tax on account of undistributed profits of the subsidiaries has been recognised in statement of profit and loss. Further tax adjustments are also made for deferred tax impact on account of differences between Previous GAAP and Ind AS.

These adjustments have resulted in decrease in equity under Ind AS by Rs 243 crores and Rs 25 crores as on March 31, 2016 and April 1, 2015 respectively and decrease in net profit by Rs 202 crores for year ended March 31, 2016.

(i) Impact of retrospective application of Ind AS 103 to past business combinations

Under Previous GAAP the business combination was accounted at the book value. Under Ind AS the acquireeRss identifiable assets, liabilities and contingent liabilities that meet the condition for recognition are recognised at their fair values at the acquisition date.

This has resulted in decrease in equity by Rs 29 crores and Rs 47 crores as on March 31, 2016 and April 1, 2015 respectively.

(j) Employee benefits

Under previous GAAP actuarial gains and losses were recognised in statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods.

This has resulted in increase in net profit by Rs 114 crores for year ended March 31, 2016. However the same does not result in difference in equity or total comprehensive income.

4. Property, plant and equipment

Property, plant and equipment consist of the following:

(Rs crores)
Description Freehold land Buildings Leasehold improve ments Plant and equipment Computer equipment Vehicles Office equipments Electrical installations Furniture and fixtures Total
Cost as at April 1, 2016 348 6,119 1,840 322 5,591 32 2,004 1,620 1,432 19,308
Additions - 598 183 73 835 2 136 113 123 2,063
Disposals - (7) (32) - (283) (2) (20) (6) (20) (370)
Translation exchange difference - (2) (18) - (61) - (8) (5) (16) (110)
Cost as at March 31, 2017 348 6,708 1,973 395 6,082 32 2,112 1,722 1,519 20,891
Accumulated depreciation as at April 1, 2016 - (1,139) (977) (40) (4,155) (21) (1,284) (732) (989) (9,337)
Depreciation for the year - (334) (194) (35) (788) (5) (257) (147) (146) (1,906)
Disposals - 5 18 - 269 2 18 5 20 337
Translation exchange difference - 1 10 - 44 - 5 3 9 72
Accumulated depreciation as at March 31, 2017 - (1,467) (1,143) (75) (4,630) (24) (1,518) (871) (1,106) (10,834)
Net carrying amount as at March 31, 2017 348 5,241 830 320 1,452 8 594 851 413 10,057
Cost as at April 1, 2015 347 4,831 1,675 129 5,074 28 1,762 1,295 1,257 16,398
Additions - 1,285 186 193 655 8 245 335 194 3,101
Disposals - (1) (38) - (168) (4) (17) (12) (20) (260)
Translation exchange difference 1 4 17 - 30 - 14 2 1 69
Cost as at March 31, 2016 348 6,119 1,840 322 5,591 32 2,004 1,620 1,432 19,308
Accumulated depreciation as at April 1, 2015 - (855) (802) (18) (3,542) (21) (1,042) (603) (874) (7,757)
Depreciation for the year - (283) (200) (22) (767) (4) (252) (134) (129) (1,791)
Disposals - - 29 - 168 4 17 7 18 243
Translation exchange difference - (1) (4) - (14) - (7) (2) (4) (32)
Accumulated depreciation as at March 31, 2016 - (1,139) (977) (40) (4,155) (21) (1,284) (732) (989) (9,337)
Net carrying amount as at March 31, 2016 348 4,980 863 282 1,436 11 720 888 443 9,971
Net carrying amount as at April 1, 2015 347 3,976 873 111 1,532 7 720 692 383 8,641

(i) Buildings include Rs 3 crores (March 31, 2016: Rs 3 crores, April 1, 2015: Rs 3 crores) being value of investment in shares of Co-operative Housing Societies and Limited Companies.

(ii) Legal formalities relating to conveyance of buildings having net book value Rs NIL (March 31, 2016: Rs -* crores, April 1, 2015: Rs 5 crores) are pending completion.

*Amounts less than Rs 0.50 crore.

Net carrying amount of property, plant and equipment under finance lease arrangements were as follows:

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Leasehold improvements 40 46 56
Computer equipment 16 45 79
Office equipments 2 1 3
Furniture and fixtures 2 - -
Electrical installations - 2 3
Leased assets 60 94 141

5. Intangible assets

Intangible assets consist of the following:

(Rs crores)
Description Acquired contract rights Rights under licensing agreement and software licence Customer- related intangibles Total
Cost as at April 1, 2016 379 144 86 609
Additions - 1 - 1
Disposals / Derecognised - (63) - (63)
Translation exchange difference (40) (2) (5) (47)
Cost as at March 31, 2017 339 80 81 0

0

5

Accumulated amortisation as at April 1, 2016 (281) (116) (78) (475)
Amortisation for the year (65) (8) (8) (81)
Disposals / Derecognised - 62 - 62
Translation exchange difference 35 1 5 41
Accumulated amortisation as at March 31, 2017 (311) (61) (81) (453)
Net carrying amount as at March 31, 2017 28 19 - 47
Cost as at April 1, 2015 364 141 80 585
Additions - 3 - 3
Translation exchange difference 15 - 6 21
Cost as at March 31, 2016 379 144 86 9 0 6
Accumulated amortisation as at April 1, 2015 (208) (106) (51) (365)
Amortisation for the year (66) (10) (21) (97)
Translation exchange difference (7) - (6) (13)
Accumulated amortisation as at March 31, 2016 (281) (116) (78) (475)
Net carrying amount as at March 31, 2016 98 28 8 134
Net carrying amount as at April 1, 2015 156 35 29 220

The estimated amortisation for each of the three fiscal years subsequent to March 31, 2017 is as follows:

(Rs crores)
Year ending March 31, Amortisation expense
2018 36
2019 7
2020 4
7

4

6. Goodwill

Goodwill consists of the following:

(Rs crores)
As at March 31, 2017 As at March 31, 2016
Balance at the beginning of the year 1,669 1,572
Foreign currency exchange loss (72) 97
Balance at the end of the year 1,597 1,669

Goodwill of Rs 531 crores (March 31, 2016: Rs 577 crores) has been allocated to the TCS business in France. The estimated value-in-use of this CGU is based on the future cash flows using a 1.50% annual growth rate for periods subsequent to the forecast period of 5 years and discount rate of 8.01%. An analysis of the sensitivity of the computation to a change in key parameters (operating margin, discount rates and long term average growth rate), based on reasonably probable assumptions, did not identify any probable scenario in which the recoverable amount of the CGU would decrease below its carrying amount.

The remaining amount of goodwill of Rs 1,066 crores (March 31, 2016: Rs 1,092 crores) (relating to different CGUs individually immaterial) has been evaluated based on the cash flow forecasts of the related CGUs and the recoverable amounts of these CGUs exceeded their carrying amounts.

7. Investments

Investments consist of the following:

(A) Investments - Non-Current

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Investments carried at fair value through profit or loss
Mutual and other funds (unquoted) 55 58 7
(b) Investments carried at fair value through OCI
Fully paid equity shares (quoted) - - 4
Fully paid equity shares (unquoted) 141 169 162
(c) Investments carried at amortised cost
Government securities (quoted) 132 101 55
Corporate debentures and bonds (unquoted) 16 15 25
344 3 4 3 253
The market value of quoted investments is equal to the carrying value.
(B) Investments - Current
(a) Investment carried at fair value through profit or loss
Mutual and other funds (unquoted) 19,637 1,709 1,501
(b) Investment carried at fair value through OCI
Government securities (quoted) 21,999 20,254 -
(c) Investment carried at amortised cost
Certificate of deposits (unquoted) - 491 -
Corporate debentures and bonds (unquoted) - 25 -
41,636 22,479 1,501

The market value of quoted investments is equal to the carrying value.

8. Loans

Loans (unsecured) consist of the following: (A) Long-term loans

(Rs crores)

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Considered good
(i) Loans and advances to employees 6 7 9
(ii) Inter-corporate deposits 3 2,465 1,572
9 2,472 1,581
(B) Short-term loans
(a) Considered good
(i) Loans and advances to employees 344 1,021 336
(ii) Inter-corporate deposits 2,565 1,721 1,154
(iii) Others - 1 3
(b) Considered doubtful
(i) Loans and advances to employees 57 56 51
Less: Allowance for loans and advances to employees (57) (56) (51)
2,909 2,743 1,493

Inter-corporate deposits placed with financial instututions yield fixed interest rate.

9. Other financial assets

Other financial assets consist of the following:

(A) Non-current financial assets

(< crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Interest receivable - 73 24
(b) Long-term bank deposits - 415 500
(c) Security deposits 816 733 8 6 6
(d) Earmarked balances with banks 1 86 -
(e) Others 8 18 42
5 2 8 1,325 1,234
(B) Current financial assets
(a) Interest receivable 715 6 0 2 2 4 3
(b) Fair value of foreign exchange forward and currency option contracts 572 537 365
(c) Security deposits 147 143 127
(d) Others 40 30 75
1,474 916 9 0 9

10. Income taxes

The income tax expense consists of the following:

(Rs crores)
2017 2016
Current tax:
Current tax expense for current year 8,341 7,489
Current tax (benefit) / expense pertaining to prior years (106) 19
8,235 7,508
Deferred tax benefit (79) (6)
Total income tax expense recognised in current year 8,156 7,502

The reconciliation of estimated income tax expense at Indian statutory income tax rate to income tax expense reported in statement of profit and loss is as follows:

(Rs crores)
2017 2016
Profit before income taxes 34,513 31,840
Indian statutory income tax rate 34.61% 34.61%
Expected income tax expense 11,945 11,020
Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense:
Tax holidays (4,175) (4,477)
Income exempt from tax (167) (97)
Undistributed earnings in branches and subsidiaries 195 410
Tax on income at different rates 101 5 3 2
Tax pertaining to prior years (174) 25
Others (net) 431 386
Total income tax expense 8,156 7,502

Tata Consultancy Services Limited benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profits or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions. From April 1, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

Opening balance Recognised in profit and loss Recognised in / reclassified from other comprehensive income Acquisitions / disposals Exchange difference Closing balance
Deferred tax assets / (liabilities) in relation to:
Property, plant and equipment and intangible assets (62) (39) - - (5) (106)
Provision for employee benefits 327 63 2 - (3) 389
Cash flow hedges (7) - (5) - - (12)
Receivables, financial assets at amortised cost 190 30 - - - 220
MAT credit entitlement 1,987 97 - - - 2,084
Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income (28) - (256) - (1) (285)
Undistributed earnings of subsidiaries (342) (167) - - - (509)
Branch profit tax (346) 60 - - - (286)
Operating lease liabilities 94 (3) - - (1) 90
Others 290 38 - - (4) 324
Net deferred tax assets / (liabilities) 2,103 79 (259) - (14) 1,909

Significant components of net deferred tax assets and liabilities for the year ended March 31, 2016 are as follows:

Opening balance Recognised in profit and loss Recognised in / reclassified from other comprehensive income Acquisitions / disposals Exchange difference Closing balance
Deferred tax assets / (liabilities) in relation to:
Property, plant and equipment and intangible assets (100) 39 - - (1) (62)
Provision for employee benefits 4 9 2 21 8 - 4 327
Cash flow hedges (20) - 13 - - (7)
Receivables, financial assets at amortised cost 158 31 - - 1 190
MAT credit entitlement 1,905 82 - - - 1,987
Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income (3) 2 (27) - - (28)
Undistributed earnings of subsidiaries (160) (182) - - - (342)
Branch profit tax 6) 5 (2 (90) - - - (346)
Operating lease liabilities 83 10 - - 1 94
Others 192 93 (2) - 7 0 9 2
Net deferred tax assets / (liabilities) 2,093 6 (8) - 12 2,103

 

As at March 31, 2017 Assets Liabilities (Rs crores) Net
Deferred tax assets / (liabilities) in relation to:
Property, plant and equipment and Intangible assets (8) 98 (106)
Provision for employee benefits 389 - 389
Cash flow hedges (12) - (12)
Receivables, financial assets at amortised cost 218 (2) 220
MAT credit entitlement 2,084 - 2,084
Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income (285) - (285)
Undistributed earnings of subsidiaries - 509 (509)
Branch profit tax - 286 (286)
Operating lease liabilities 90 - 90
Others 2 5 3 28 324
Net deferred tax assets / (liabilities) 2,828 919 1,909
As at March 31, 2016
Deferred tax assets / (liabilities) in relation to:
Property, plant and equipment and Intangible assets 40 102 (62)
Provision for employee benefits 327 - 327
Cash flow hedges (7) - (7)
Receivables, financial assets at amortised cost 190 - 190
MAT credit entitlement 1,987 - 1,987
Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income (28) - (28)
Undistributed earnings of subsidiaries - 342 (342)
Branch profit tax - 346 (346)
Operating lease liabilities 94 - 94
Others 305 15 0 9 2
Net deferred tax assets / (liabilities) 2,908 5 0 8 2,103
As at April 1, 2015
Deferred tax assets / (liabilities) in relation to:
Property, plant and equipment and Intangible assets 29 129 (100)
Provision for employee benefits 294 - 4 9 2
Cash flow hedges (20) - (20)
Receivables, financial assets at amortised cost 158 - 158
MAT credit entitlement 1,905 - 1,905
Unrealised gain on securities carried at fair value through statement of profit and loss / other comprehensive income (3) - (3)
Undistributed earnings of subsidiaries - 160 (160)
Branch profit tax - 256 (258)
Operating lease liabilities 83 - 83
Others 187 (5) 192
Net deferred tax assets / (liabilities) 2,633 540 2,093

Under the Indian Income Tax Act, 1961, unabsorbed business losses expire 8 years after the year in which they originate. In respect of certain foreign subsidiaries, business losses can be carried forward indefinitely unless there is a substantial change in the ownership.

Unrecognised deferred tax assets relate primarily to business losses and tax credit entitlement. These unexpired business losses will expire based on the year of origination as follows:

March 31, ( crores) Unabsorbed business losses
2018 15
2019 21
2020 32
2021 3 7
2022 51
Thereafter 298
490

Under the Indian Income Tax Act, 1961, Tata Consultancy Services Limited is liable to pay Minimum Alternate Tax in the tax holiday period. MAT paid can be carried forward for a period of 15 years and can be set off against the future tax liabilities. MAT is recognised as a deferred tax asset only when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised. Accordingly, Tata Consultancy Services Limited has recognised a deferred tax asset of Rs 2,084 crores and has not recognised deferred tax assets in respect of tax credit entitlement amounting to Rs 1,108 crores as at March 31, 2017.

Deferred tax liability on undistributed earnings of Rs 6,246 crores of certain subsidiaries has not been recognised, as it is the intention of Tata Consultancy Services Limited to reinvest the earnings of these subsidiaries for the foreseeable future.

Tata Consultancy Services Limited and its subsidiaries in India have ongoing disputes with Indian Income Tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company and its subsidiaries in India as deductions, and computation of, or eligibility of, certain tax incentives or allowances. As at March 31, 2017, the Company and its subsidiaries in India have contingent liability in respect of demands from direct tax authorities in India, which are being contested by the Company and its subsidiaries in India on appeal amounting Rs 2,690 crores. In respect of tax contingencies of Rs 318 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

The Group periodically receives notices and inquiries from income tax authorities related to the GroupRss operations in the jurisdictions it operates in. The Group has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution.

The number of years that are subject to tax assessments varies depending on tax jurisdiction. The major tax jurisdictions of Tata Consultancy Services Limited include India, United States of America and United Kingdom. In India, tax filings from fiscal 2014 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2013 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2014 and earlier.

11. Other assets

Other assets consist of the following:

(A) Other non-current assets

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Considered good
(i) Capital advances 143 149 169
(ii) Advances to related parties 6 - -
(iii) Prepaid expenses 281 448 4 3 5
(iv) Prepaid rent 228 235 241
(v) Others 31 94 131
689 6 2 9 1,075
Advances to related parties, considered good, comprise:
Voltas Limited 6 - -
(B) Other current assets
(a) Considered good
(i) Prepaid expenses 1,508 1,376 1,512
(ii) Advance to suppliers 188 240 110
(iii) Advance to related parties 1 1 -
(iv) Indirect tax recoverable 488 0 4 3 9 0 3
(v) Other advances 28 93 56
(vi) Others 63 124 96
(b) Considered doubtful
(i) Advance to suppliers 3 3 5
(ii) Indirect tax recoverable 2 2 2
(iii) Other advances 3 4 3
Less: Allowance on doubtful assets (8) (9) (10)
2,276 2,174 2,083
Advance to related parties, considered good comprise:
Taj Air Limited - 1 -
The Titan Company Limited 1 - -
12. Inventories
Inventories consist of the following:
(a) Raw materials, sub-assemblies and components 19 9 10
(b) Finished goods and work-in-progress 1 - 2
(c) Goods-in-transit (raw materials) 1 - 2
(d) Stores and spares - 7 1
21 16 15
Inventories are carried at lower of cost and net realisable value.
13. Trade receivables
Trade receivables (unsecured) consist of the following:
(a) Considered good 22,684 24,073 20,440
(b) Considered doubtful 643 574 448
23,327 24,647 20,888
Less: Allowance for doubtful trade receivables (643) (574) (448)
22,684 24,073 20,440

In determining the allowances for doubtful trade receivables the Group has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix.

14. Cash and cash equivalents

Cash and cash equivalents consist of the following:

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Balances with banks
In current accounts 3,077 2,159 1,443
In deposit accounts 466 2,881 353
(b) Cheques on hand 6 25 51
(c) Cash on hand 1 1 1
(d) Remittances in transit 47 1,229 14
3,597 6,295 1,862

Specified bank notes disclosure (SBNs)

In accordance with MCA notification G.S.R. 308(E) dated March 30, 2017 details of Specified Bank Notes (SBN) and Other Denomination Notes (ODN) held and transacted during the period from November 8, 2016 to December 30, 2016 is given below:

(Rs)
Particulars SBNs ODNs Total
Closing cash on hand as on November 8, 2016 4,11,000 3,12,694 7,23,694
( + ) Permitted receipts 2,89,000 3,59,136 6,48,136
( - ) Permitted payments - 3,68,707 3,68,707
( - ) Amounts Deposited in Banks 7,00,000 1,66,506 8,66,506
Closing cash on hand as on December 30, 2016 - 1,36,617 1,36,617

15. Other balances with banks

Other balances with banks consist of the following:

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Earmarked balances with banks 122 440 313
(b) Short-term bank deposits 430 53 16,383
552 3 9 4 16,696

Earmarked balances with banks significantly pertain to unclaimed dividends and margin money for derivative contracts.

16. 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:

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Authorised
(a) 460,05,00,000 equity shares of Rs 1 each (March 31, 2016: 460,05,00,000 equity shares of Rs 1 each) (April 1, 2015: 420,05,00,000 equity shares of Rs 1 each) 460 460 420
(b) 105,02,50,000 preference shares of Rs 1 each (March 31, 2016: 105,02,50,000 preference shares of Rs 1 each) (April 1, 2015: 105,02,50,000 preference shares of Rs 1 each) 105 105 105
565 565 525
Issued, Subscribed and Fully paid-up
(a) 197,04,27,941 equity shares of Rs 1 each (March 31, 2016: 197,04,27,941 equity shares of Rs 1 each) (April 1, 2015: 195,87,27,979 equity shares of Rs 1 each) 197 197 196
(b) Potential equity shares to be issued to non-controlling shareholders of CMC Limited - - 1
197 197 197

The authorised equity share capital was increased to 460,05,00,000 equity shares of Rs 1 each pursuant to the amalgamation of its subsidiaries, WTI Advanced Technology Limited vide the order dated March 27, 2015 of the High Court of Judicature of Bombay and CMC Limited, vide the order dated August 14, 2015 of the High Court of Judicature at Bombay and vide the order dated July 20, 2015 of the High Court of Judicature at Hyderabad.

The Board of Directors of the Company, at its meeting held on February 20, 2017 has approved a proposal to buy-back up to 5,61,40,351 equity shares (Five crore sixty one lakh forty thousand three hundred and fifty one only) of the Company for an aggregate amount not exceeding Rs 16,000 crore, being 2.85% of the total paid up equity share capital at Rs 2,850 per Equity Share. The shareholders of the Company have approved the scheme of buy-back of shares through postal ballot on April 17, 2017.

(a) Reconciliation of number of shares

As at March 31, 2017

As at March 31, 2016

Number of shares Amount Number of shares Amount
(Rs crores) (Rs crores)
Equity shares
Opening balance 197,04,27,941 197 195,87,27,979 196
Issued during the year - - 1,16,99,962 1
Closing balance 197,04,27,941 197 197,04,27,941 197

(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 and carry a right to dividend. 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.

(c) Shares held by Holding Company, its subsidiaries and associates

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Equity shares
Holding Company
144,34,51,698 equity shares (March 31, 2016: 144,34,51,698 equity shares; April 1, 2015: 144,34,51,698 equity shares) are held by Tata Sons Limited 144 144 144
Subsidiaries and associates of Holding Company
3,700 equity shares (March 31, 2016: 3,63,700 equity shares; April 1, 2015: 10,29,700 equity shares) are held by Tata Industries Limited* - - -
8,57,301 equity shares (March 31, 2016: 9,55,273 equity shares; April 1, 2015: Nil equity shares) are held by Tata AIA Life Insurance Company Limited *
5,50,000 equity shares (March 31, 2016: 5,90,452 equity shares; April 1, 2015: 5,90,452 equity shares) are held by Tata Investment Corporation Limited *
Nil equity shares (March 31, 2016: Nil equity shares; April 1, 2015: 200 equity shares) are held by Tata Capital Limited * - - -
Nil equity shares (March 31, 2016: 83,232 equity shares; April 1, 2015: 83,232 equity shares) are held by Tata International Limited * - - -
24,400 equity shares (March 31, 2016: 24,400 equity shares; April 1, 2015: 24,400 equity shares) are held by Tata Steel Limited * - - -
452 equity shares (March 31, 2016: 452 equity shares; April 1, 2015: 452 equity shares) are held by The Tata Power Company Limited *
4,84,902 equity shares (March 31, 2015: 6,1 1,352 equity shares; April 1, 2015: 6,33,352 shares) are held by AF-taab Investment Company Limited*
Total 144 144 144

* Equity shares having value less than Rs 0.50 crore (d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Equity shares
Tata Sons Limited, the Holding Company 144,34,51,698 144,34,51,698 144,34,51,698
73.26% 73.26% 73.69%

(e) Equity shares allotted as fully paid-up (during 5 years preceding March 31, 2017) including equity shares issued pursuant to contract without payment being received in cash

1,16,99,962 equity shares issued to the shareholders of CMC Limited in terms of the scheme of amalgamation (Rsthe SchemeRs) 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.

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 amalgamation sanctioned by the High Court of Judicature at Bombay vide its Order dated September 6, 2013.

(f) The CompanyRss objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. The Company is not subject to any externally imposed capital requirements.

17. (A) Other equity

Other equity consist of the following:

As at March 31, 2017 As at March 31, 2016
(a) Capital reserve (on consolidation) 75 75
(b) Securities premium reserve 1,919 1,919
(c) Capital redemption reserve
(i) Opening balance 3 2 5 413
(ii) Transfer from retained earnings* - 110
523 3 2 5
(d) General reserve
(i) Opening balance 10,549 8,245
(ii) Transfer from retained earnings - 2,304
10,549 10,549
(e) Special Economic Zone re-investment reserve
(i) Opening balance - -
(ii) Transfer from retained earnings 6 7 3 -
(iii) Transfer to retained earnings on utilisation (279) -
97 -
(f) Retained earnings
(i) Opening balance 56,113 43,904
(ii) Profit for the year 26,289 24,270
(iii) Remeasurement of defined employee benefit plans (net of taxes) (206) (108)
(iv) Purchase of non-controlling interests ** (28) -
(v) Realised (losses) / gains on equity shares carried at fair value through OCI (20) 5
(vi) Transfer from Special Economic Zone re-investment reserve on utilisation 210 -
82,427 68,071
(vii) Less: Appropriations
(a) Dividend on equity shares 9,162 7,993
(b) Tax on dividend 1,785 1,486
(c) Transfer to capital redemption reserve* - 110
(d) Transfer to general reserve - 2,304
(e) Transfer to Special Economic Zone re-investment reserve 376 -
(f) Transfer to statutory reserve 33 65
71,071 56,113
(g) Statutory reserve
(i) Opening balance 185 120
(ii) Transfer from retained earnings 33 65
218 185
(h) Investment revaluation reserve (Refer note 17(B))
(i) Opening balance 54 3
(ii) Addition during the year (net) 484 51
8 3 5 54
(i) Cash flow hedging reserve (Refer note 28(b))
(i) Opening balance 49 130
(ii) Addition / (deduction) during the year (net) 39 (81)
88 49
(j) Foreign currency translation reserve
(i) Opening balance 1,408 1,047
(ii) (Deduction) / addition during the year (net) (469) 361
939 1,408
86,017 70,875

* On June 25, 2015, Diligenta Limited, a wholly owned subsidiary redeemed 1,10,00,000 redeemable preference shares of GBP 1 each. Accordingly an amount of Rs 110 crores has been transferred to capital redemption reserve during the year.

** Purchase of non-controlling interests in Tata Consultancy Services (South Africa) (Propriety) Limited and Tata Consultancy Services (China) Co., Ltd .

(B) Other components of equity

Other components of equity consist of the following:

(a) Investment revaluation reserve

(Rs crores)
As at March 31, 2017 As at March 31, 2016
Balance at the beginning of the year 54 3
Net gain / (loss) arising on revaluation of financial assets carried at fair value (20) 1
Deferred tax relating to net gain / (loss) arising on revaluation of financial assets carried at fair value - (1)
Net cumulative loss / (gain) reclassified to retained earnings on sale of financial assets carried at fair value 20 (5)
Deferred tax relating to net cumulative gain reclassified to statement of profit and loss on sale of financial assets carried at fair value - 2
Net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income 0

4

7

138
Deferred tax relating to net gain arising on revaluation of investments other than equities carried at fair value through other comprehensive income (256) (48)
Transfer of net realised gain to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income - (56)
Deferred tax relating to transfer of net realised gain / (loss) to statement of profit and loss on sale of investments other than equities carried at fair value through other comprehensive income - 20
Balance at the end of the year 538 54

Nature of reserves (a) Capital reserve

The Group recognises profit or loss on purchase, sale, issue or cancellation of the GroupRss own equity instruments to capital reserve.

(b) Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provision of the Companies Act, 2013.

(c) General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

(d) Investment revaluation reserve

This reserve represents the cumulative gains and losses arising on the revaluation of equity / debt instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those assets have been disposed of.

(e) Cash flow hedging reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow reserve will be reclassified to statement of profit and loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item.

18. Borrowings

Borrowings consist of the following:

(A) Long-term borrowings

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Secured loans
Long-term maturities of obligations under finance lease 71 83 114
(b) Unsecured loans
Borrowings from entity other than banks - - 1
71 83 115

Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements. (B) Short-term borrowings

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Secured loans
Overdraft from banks - 112 -
(b) Unsecured loans
Overdraft from bank 200 1 186
200 113 186

Secured overdrafts from banks are secured against trade receivables.

19. Other financial liabilities

Other financial liabilities consist of the following:

(A) Other non-current financial liabilities

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Capital creditors 17 62 68
(b) Others 437 431 594
454 493 662

Other payables include advance taxes paid of Rs 227 crores (March 31, 2016: Rs 230 crores) (April 01, 2015: Rs 333 crores) by the seller of TCS e-serve Limited which, on refund by the tax authorities, is payable to the seller.

(B) Other current financial liabilities

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Current maturities of obligations under finance lease 18 49 57
(b) Unclaimed dividends 25 21 20
(c) Fair value of foreign exchange forward and currency option contracts 20 152 20
(d) Capital creditors 201 331 337
(e) Liabilities for cost related to customer contracts 1,001 8 CO ro 728
(f) Liabilities for purchase of government securities - 805 -
(g) Others 199 124 83
1,550 2,364 1,245

Obligations under finance lease are secured against property, plant and equipment obtained under finance lease arrangements.

20. Provisions

Provisions consist of the following:

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(A) Non-current
Provision for foreseeable loss on a long-term contract 39 40 94
39 40 94
(B) Current
Provision for foreseeable loss on a long-term contract 66 115 103
66 115 103

21. Other liabilities

Other liabilities consist of the following: (A) Other non-current liabilities

(Rs crores)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Operating lease liabilities 387 379 5 4 3
(b) Others 45 63 59
432 442 404
(B) Other current liabilities
(a) Advance received from customers 330 164 131
(b) Indirect tax payable and other statutory liabilities 1,301 1,381 1,146
(c) Operating lease liabilities 74 80 57
(d) Others 40 12 8
1,745 1,637 1,342

22. Other income (net)

Other income (net) consist of the following:

2017 2016
(a) Interest income 2,263 1,745
(b) Dividend income 1 11
(c) Net gain on investments carried at fair value through profit or loss 633 9 0 4
(d) Net gain on disposal of investments carried at amortised cost 9 -
(e) Net gain on disposal of investments other than equity shares carried at fair value through OCI - 56
(f) Net gain on disposal of property, plant and equipment 3 5
(g) Net foreign exchange gains 1,240 742
(h) Rent income 17 25
(i) Miscellaneous income 55 91
4,221 3,084
Interest income comprise:
Interest on bank deposits 116 1,459
Interest income on financial assets carried at amortised cost 412 8 4 2
Interest income on financial assets carried at fair value through OCI 1,598 32
Others 137 6
Net foreign exchange gains include:
Net gain on foreign exchange forward and currency option contracts transferred from cash flow hedging reserve (Refer note 28(b)) 8 0 5 5
Dividend income comprise:
From investments (mutual funds) 1 11
23. Employee benefit expenses
Employee benefit expenses consist of the following:
2017 2016
(a) Salaries, incentives and allowances 55,537 49,902
(b) Contributions to provident and other funds 4,189 3,939
(c) Staff welfare expenses 1,895 1,507
61,621 55,348

(A) Non-current employee benefit obligations

As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
(a) Gratuity liability 4 3 22
(b) Foreign defined benefit plans 159 169 140
(c) Other employee benefit obligations 82 65 41
5 4 2 237 3 0 2
(B) Current employee benefit obligations
(a) Compensated absences 1,834 1,614 1,340
(b) Other employee benefit obligations 28 21 16
1,862 1,635 1,356

Defined benefit plan Gratuity and pension

In accordance with Indian law, Tata Consultancy Services Limited and its subsidiaries in India provide to the eligible employees defined benefit plans such as gratuity and pension plan. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 daysRs salary payable for each completed year of service. Vesting occurs upon completion of five continuous 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 pension plans in accordance with the local laws.

The following tables set out the details of the defined benefit retirement plans and the amounts recognised in the financial statements:

Year ended March 31 , 2017

Year ended March 31 2016

Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total
Change in benefit obligations:
Benefit obligations, beginning of the year 1,633 3 744 67 2,447 1,295 2 686 53 2,036
Exchange (gain) / loss on translation - - (49) (5) (54) - - 53 3 56
Plan participantsRs contribution - - 8 - 8 - - 6 - 6
Service cost 241 1 12 21 275 202 - 24 12 238
Interest cost 138 - 10 3 151 105 - 14 2 121
Remeasurement of the net defined benefit liability 200 - 58 (3) 255 149 1 (16) - 134
Past service cost / (credit) - - (9) - (9) 13 - - (2) 11
Benefits paid (128) - (17) (2) (147) (131) - (23) (1) (155)
Adjustment on plan settlement - - (220) - (220) - - - - -
Benefit obligations, end of the year 2,084 4 537 81 2,706 1,633 3 744 67 2,447

 

Year ended March 31 2017

Year ended March 31, 2016

Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total Domestic plans Funded Domestic plans Unfunded Foreign Foreign plans plans Funded Unfunded Total
Change in plan assets:
Fair value of plan assets, beginning of the year 1,747 - 731 - 2,478 1,453 - 669 - 2,122
Exchange (loss) / gain on translation - - (42) - (42) - - 53 - 53
Interest income 145 - 8 - 153 116 - 17 - 133
EmployersRs contributions 393 - 15 - 408 282 - 28 - 310
Plan participantsRs contribution - - 8 - 8 - - 6 - 6
Benefits paid (128) - (17) - (145) (131) - (23) - (154)
Remeasurement - return on plan assets excluding amount included in interest income - - 47 - 47 27 - (19) - 8
Adjustment on plan settlement* - - (289) - (289) - - - - -
Fair value of plan assets, end of the year 2,157 - 461 - 2,618 1,747 - 731 - 2,478

* includes of Rs 69 crores in respect of fair value of plan assets not recognised in the Balance sheet in the previous year due to asset ceiling.

As at March 31,2017

As at March 31,2016

As at April 1,2015

Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total
Funded status:
Deficit of plan assets over obligations _ (4) (78) (81) (163) _ (3) (102) (67) (172) (20) (2) (87) (53) (162)
Surplus of plan assets over obligations 73 _ 2 _ 75 114 . 89 . 203 178 . 70 . 248
Unrecognised asset due to asset ceiling - - - - - - - (66) - (66) - - (70) - (70)
73 (4) (76) (81) (88) 114 (3) (79) (67) (35) 158 (2) (87) (53) 16
Category of assets:
Corporate bonds 731 - 145 - 876 312 - 99 - 411 175 - 121 - 296
Equity shares 95 - 34 - 129 43 - 51 - 94 - - 134 - 134
Government securities 621 - - - 621 500 - - - 500 266 - 99 - 365
Index linked gilt - - - - - - - 113 - 113 - - 108 - 108
Insurer managed funds 692 - 26 - 718 736 - 198 - 934 748 - 172 - 920
Bank balances 3 - 11 - 14 98 - 270 - 368 217 - 6 - 223
Others 15 - 245 - 260 58 - - - 58 47 - 29 - 76
Total 2,157 - 461 - 2,618 1,747 - 731 - 2,478 1,453 - 669 - 2,122

Net periodic gratuity / pension cost, included in employee cost consists of the following components:

Year ended March 31 2017

Year ended March 31 2016

Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total
Service cost 241 1 12 21 275 202 - 24 12 238
Net interest on net defined benefit (asset) / liability (7) - 2 3 (2) (11) - (3) 2 (12)
Past service (credit) / cost - - (9) - (9) 13 - - (2) 11
Net periodic gratuity / pension cost 234 1 5 24 264 204 - 21 12 237
Actual return on plan assets 145 - 55 - 200 143 - (2) - 141

Remeasurement of the net defined benefit liability / (asset):

Year ended March 31, 2017

Domestic plans Funded Domestic plans Unfunded Foreign plans Funded Foreign plans Unfunded Total
Actuarial (gains) and losses arising from changes in demographic assumptions (2) - 1 (1) (2)
Actuarial (gains) and losses arising from changes in financial assumptions 71 - 51 (3) 119
Actuarial (gains) and losses arising from changes in experience adjustments 131 - 6 1 138
Remeasurement of the net defined benefit liability 200 - 58 (3) 5

5

Remeasurement of return on plan assets excluding amount included in interest income - - (47) - (47)
Asset ceiling recognised in OCI - - - - -
Total 200 - 11 (3) 208
Year ended March 31, 2016
Actuarial (gains) and losses arising from changes in demographic assumptions 13 (11) (1) 1
Actuarial (gains) and losses arising from changes in financial assumptions 60 1 (1) - 60
Actuarial (gains) and losses arising from changes in experience adjustments 76 - (4) 1 73
Remeasurement of the net defined benefit liability 149 1 (16) - 134
Remeasurement of return on plan assets excluding amount included in interest income (27) - 19 - (8)
Asset ceiling recognised in OCI - - (12) - (12)
Total 122 1 (9) - 114

The assumptions used in accounting for the defined benefit plan are set out below:

Year ended March 31, 2017

Year ended March 31, 2016

Year ended April 1, 2015

Domestic plans Foreign plans Domestic plans Foreign plans Domestic plans Foreign plans
Discount rate 6.75%-7.25% 0.60%-7.75% 7.50%-7.75% 0.40%-7.13% 8.00% 0.87%-6.75%
Rate of increase in compensation levels of covered employees 6.00%-8.00% 1.25%-4.64% 6.00%-10.00% 1.25%-4.64% 6.00%-7.00% 1.00%-4.64%
Rate of return on plan assets 6.75%-7.25% 0.60%-7.75% 7.50%-7.75% 0.40%-7.13% 8.00% 0.87%-6.75%
Weighted average duration of defined benefit obligations 4-10 years 15-29 years 4-10 years 11-29 years 9 years 12-31 years

The expected benefits are based on the same assumptions as are used to measure GroupRss defined benefit plan obligations as at March 31, 2017. The Group is expected to contribute Rs 201 crores to defined benefit plan obligations funds for the year ended March 31, 2018 comprising domestic component of Rs 190 crores and foreign component of Rs 11 crores.

The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

If the discount rate increases (decreases) by 0.50%, the defined benefit obligations would decrease by Rs 128 crores (increase by Rs 142 crores) as at March 31, 2017.

If the expected salary growth increases (decreases) by 0.50%, the defined benefit obligations would increase by Rs 85 crores (decrease by Rs 81 crores) as at March 31, 2017.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance sheet.

Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study.

The defined benefit obligations shall mature after year ended March 31, 2017 as follows:

(Rs crores)
Year ending March 31, Defined benefit obligations
2018 220
2019 208
2020 214
2021 5

21

2022 210
Thereafter 986

Defined contribution plans Superannuation

In addition to gratuity benefits, all eligible employees are entitled to benefits under Superannuation, a defined contribution plan. The Group makes monthly contributions until retirement or resignation of the employee. The Group recognises such contributions as an expense when incurred. The Group has no further obligation beyond its monthly contribution.

The Group contributed Rs 265 crores and Rs 249 crores to the EmployeesRs Superannuation Fund for the year ended March 31, 2017 and March 31, 2016 respectively.

Provident fund

In accordance with Indian law, all eligible employees of Tata Consultancy Services Limited and its subsidiaries are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. Tata Consultancy Services Limited and its subsidiaries in India contribute as specified under the law to the Provident Fund where set up as a trust and to the respective Regional Provident Fund Commissioner. Tata Consultancy Services Limited and its subsidiaries in India which contributes to the Provident Fund where set up as a trust are liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognises such contributions and shortfall, if any, as an expense in the year incurred. 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.

The Group contributed Rs 804 crores and Rs 680 crores to the provident fund for the year ended March 31, 2017 and March 31, 2016, respectively. Foreign defined contribution plan

The Group contributed Rs 826 crores and Rs 817 crores for the year ended March 31, 2017 and March 31, 2016, respectively, towards foreign defined contribution plan.

24. Other operating expenses

Other operating expenses consist of the following:

(Rs crores)
2017 2016
(a) Fees to external consultants 8,854 8,412
(b) Facility running expenses 3,685 3,406
(c) Cost of equipment and software licences 2,808 2,571
(d) Travel expenses 2,786 2,664
(e) Communication expenses 1,067 1,107
(f) Bad debts and advances written off, allowance for doubtful trade receivables and advances (net) 125 135
(g) Other expenses 4,709 4,326
24,034 22,621

Research and development expenditure aggregating Rs 282 crores and Rs 237 crores in the year ended March 31, 2017 and March 31, 2016, including capital expenditure was incurred during the year.

25. Finance costs (at effective interest rate)

Finance costs consist of the following:

2017 2016
Interest expense 32 33
32 33
26. Earnings Per Share (EPS)
Profit for the year (Rs crores) 26,289 24,270
Weighted average number equity shares 197,04,27,941 197,04,27,941
Earnings per share basic and diluted (Rs) 133.41 123.18
Face value per equity share (Rs) 1 1

27. Leases

The Group has taken on lease property and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were Rs 1,818 crores and Rs 1,697 crores for the year ended March 31, 2017 and March 31, 2016, respectively.

The following is a summary of future minimum lease rental commitments towards non-cancellable operating leases and finance leases:

(Rs crores)
Operating lease As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Due within one year of Balance sheet date 833 733 764
Due in a period between one year and five years 2,302 2,169 2,243
Due after five years 1,215 1,233 1,403
Total minimum lease commitments 4,350 4,135 4,410

 

As at March 31, 2017

As at March 31, 2016

As at April 1, 2015

Finance lease Minimum lease commitments Present value of minimum lease commitments Minimum lease commitments Present value of minimum lease commitments Minimum lease commitments Present value of minimum lease commitments
Due within one year of Balance sheet date 25 18 59 49 70 57
Due in a period between one year and five years 73 52 80 57 110 81
Due after five years 21 19 33 26 44 33
Total minimum lease commitments 119 89 172 32 224 171
Less: Interest (30) (40) (53)
Present value of minimum lease commitments 89 2 3 171

 

(Rs crores)
Receivables under sub leases As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Due within one year of Balance sheet date 12 19 18
Due in a period between one year and five years 1 16 36
Due after five years - - -
Total 13 35 54

Income from sub leases of Rs 17 crores and Rs 25 crores have been recognised in the statement of profit and loss in the year ended March 31, 2017 and March 31, 2016 respectively.

28. Financial instruments

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

(a) Financial assets and liabilities

The carrying value of financial instruments by categories as at March 31, 2017 is as follows:

Fair value through profit or loss Fair value through other comprehensive income Derivative instruments in hedging relationship Derivative instruments not in hedging relationship Amortised cost Total carrying value
Financial assets:
Cash and cash equivalents - - - - 3,597 3,597
Bank deposits & earmarked bank balances - - - - 3

5

5

553
Trade receivables - - - - 22,684 22,684
Investments 19,692 22,140 - - 148 41,980
Unbilled revenue - - - - 5,351 5,351
Loans* - - - - 2,918 2,918
Other financial assets - - 140 432 1,726 2,298
Total 19,692 22,140 140 432 36,977 79,381
Financial liabilities:
Trade and other payables - - - - 6,279 6,279
Borrowings - - - - 271 271
Other financial liabilities 196 - - 20 1,788 2,004
Total 196 - - 20 8,338 8,554

*Loans include inter-corporate deposits of Rs 2,568 crores, with original maturity period within 50 months. The carrying value of financial instruments by categories as at March 31, 2016 is as follows:

Fair value through profit or loss Fair value through other comprehensive income Derivative instruments in hedging relationship Derivative instruments not in hedging relationship Amortised cost Total carrying value
Financial assets:
Cash and cash equivalents - - - - 6,295 6,295
Bank deposits & earmarked bank balances - - - - 994 994
Trade receivables - - - - 24,073 24,073
Investments 1,767 20,423 - - 2 3 6 22,822
Unbilled revenue - - - - 3,992 3,992
Loans* - - - - 5,215 5,215
Other financial assets - - 116 421 1,203 1,740
Total 1,767 20,423 116 421 42,404 65,131
Financial liabilities:
Trade and other payables - - - - 7,541 7,541
Borrowings - - - - 196 196
Other financial liabilities 188 - 15 137 2,517 2,857
Total 188 - 15 137 10,254 10,594

*Loans include inter-corporate deposits of Rs 4,186 crores, with original maturity period within 50 months.

The carrying value of financial instruments by categories as at April 1, 2015 is as follows:

Fair value through profit or loss Fair value through other comprehensive income Derivative instruments in hedging relationship Derivative instruments not in hedging relationship Amortised cost Total carrying value
Financial assets:
Cash and cash equivalents - - - - 1,862 1,862
Bank deposits & earmarked bank balances - - - - 17,196 17,196
Trade receivables - - - - 20,440 20,440
Investments 1,508 166 - - 80 1,754
Unbilled revenue - - - - 3,827 3,827
Loans* - - - - 3,074 3,074
Other financial assets - - 186 179 1,278 1,643
Total 1,508 166 186 179 47,757 49,796
Financial liabilities:
Trade and other payables - - - - 8,832 8,832
Borrowings - - - - 301 301
Other financial liabilities 0 4 2 - - 20 1,647 1,907
Total 240 - - 20 10,780 11,040

*Loans include inter-corporate deposits of Rs 2,726 crores, with original maturity period within 19 months.

Carrying amounts of cash and cash equivalents, trade receivables, unbilled revenues, loans and trade and other payables as at March 31, 2017, March 31, 2016 and April 1, 2015 approximate the fair value because of their short-term nature. Difference between carrying amounts and fair values of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the years presented.

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 consist 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 summarises 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 disclosures are required):

As at March 31, 2017: Level 1 Level 2 Level 3 Total
Financial assets:
Mutual fund units 19,692 - - 19,692
Equity shares - - 141 141
Corporate debentures and bonds - 16 - 16
Government securities 22,131 - - 22,131
Derivative financial assets - 572 - 572
Total 41,823 588 141 42,552
Financial liabilities:
Derivative financial liabilities - 20 - 20
Other financial liabilities - - 196 196
Total - 20 196 216
As at March 31, 2016:
Financial assets:
Mutual fund units 1,767 - - 1,767
Equity shares - - 9 6 169
Corporate debentures and bonds - 40 - 40
Government securities 20,355 - - 20,355
Certificate of deposits - 491 - 491
Derivative financial assets - 537 - 537
Total 22,122 1,068 9 6 23,359
Financial liabilities:
Derivative financial liabilities - 152 - 152
Other financial liabilities - - 188 188
Total - 152 188 340
As at April 1, 2015:
Financial assets:
Mutual fund units 1,508 - - 1,508
Equity shares 4 - 162 166
Corporate debentures and bonds - 25 - 25
Government securities 5 5 - - 55
Derivative financial assets - 365 - 365
Total 1,567 390 162 2,119
Financial liabilities:
Derivative financial liabilities - 20 - 20
Other financial liabilities - - 240 240
Total - 20 240 260

 

(Rs crores)
Reconciliation of Level 3 fair value measurement As at March 31, 2017 As at March 31, 2016
Opening balance 169 162
Less: Sale of equity shares (25) -
Exchange (loss) / gain (3) 7
Closing balance 141 169

(b) Derivative financial instruments and hedging activity

The GroupRss revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Group 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 Group to currency fluctuations.

The Group monitors and manages the financial risks relating to its operations by analysing its foreign exchange exposures by the level and extent of currency risks.

The Company and its subsidiaries 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 and its subsidiaries can enter into contracts for a period between one day and eight years.

The Company and its subsidiaries 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 March 31 2017

As at March 31, 2016

As at April 1, 2015

Foreign currency No. of contracts Notional amount of contracts (million) Fair value (Rs crores) No.of contracts Notional amount of contracts (million) Fair value (Rs crores) No. of contracts Notional amount of contracts (million) Fair value (Rs crores)
U.S. Dollar 6 150 9 9 225 41 - - -
Sterling Pound 45 318 60 8 160 52 18 297 67
Euro 27 198 40 24 285 20 9 171 88
Australian Dollar 6 60 11 21 200 (12) 6 97 31

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

As at March 31 2017

As at March 31, 2016

As at April 1, 2015

Foreign currency No. of contracts Notional amount of contracts (million) Fair value (Rs crores) No.of contracts Notional amount of contracts (million) Fair value (Rs crores) No. of contracts Notional amount of contracts (million) Fair value (Rs crores)
Sterling Pound 5 5 2 5 - - - - - -
Euro 3 91 15 - - - - - -

The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows:

Year ended March 31, 2017

Year ended March 31, 2016

Intrinsic value Time value Intrinsic value Time value
Balance at the beginning of the year 68 (19) 131 (1)
Changes in the fair value of effective portion of cash flow hedges 784 (232) 250 (339)
Deferred tax on fair value of effective portion of cash flow hedges (108) 30 (32) 44
(Gain) / loss transferred to the statement of profit and loss on occurrence of forecasted hedge transactions (743) 235 (323) 318
Deferred tax on (gain) / loss transferred to the statement of profit and loss on occurrence of forecasted hedge transactions 104 (31) 42 (41)
Balance at the end of the year 105 (17) 68 (19)

Net gain on derivative instruments of Rs 88 crores recognised 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 to cash flow variability has been hedged is through calendar year 2017.

In addition to the above cash flow hedges, the Group has outstanding foreign exchange forwards, option and futures contracts with notional amount aggregating Rs 19,159 crores (March 31, 2016: Rs 22,144 crores, April 1, 2015: Rs 19,949 crores) whose fair value showed a gain of Rs 412 crores as at March 31, 2017 (March 31, 2016: gain of Rs 284 crores, April 1, 2015: gain of Rs 159 crores). 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, option and futures contracts for the year ended March 31, 2017, have been recognised in the statement of profit and loss.

Following table summarises approximate gain / (loss) on GroupRss other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies.

(Rs crores)
2017 2016
10% Appreciation of the underlying foreign currencies (218) (238)
10% Depreciation of the underlying foreign currencies 793 3 2 6

(c) Financial risk management:

The Group 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 Group 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 Group.

(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 GroupRss 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 respective entities.

Considering the countries and economic environment in which the Group 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, Euro, Great Britain Pound, Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real against the respective functional currencies of Tata Consultancy Services Limited and its subsidiaries.

The Group, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. Further, any movement in the functional currencies of the various operations of the Group against major foreign currencies may impact the GroupRss revenue in international business.

The Group 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 respective functional currencies of Tata Consultancy Services Limited and its subsidiaries.

The following analysis has been worked out based on the net exposures for each of the subsidiaries and Tata Consultancy Services Limited as of the date of Balance sheet which could affect the statement 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 Group as disclosed in note 28(b).

The following table sets forth information relating to foreign currency exposure as at March 31, 2017:

(Rs crores)
USD R U E GBP AUD SGD DKK BRL SAR Others*
Net financial assets 2,032 99 242 19 7 8 3 6 444 715
Net financial liabilities (215) (26) (1) (256) - 8) (8) - (214)

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the GroupRss profit before tax by approximately Rs 288 crores for the year ended March 31, 2017.

The following table sets forth information relating to foreign currency exposure as at March 31, 2016:

(Rs crores)
D C/O ID EUR P B CD AUD SGD DKK RL B R A S Others*
Net financial assets 1,123 127 74 26 28 57 10 - 638
Net financial liabilities (322) (6) (72) (68) (23) (2) (11) (538) (314)

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the GroupRss profit before tax by approximately Rs 73 crores for the year ended March 31, 2016.

The following table sets forth information relating to foreign currency exposure as at April 1, 2015:

D S U EUR P B G AUD SGD DKK RL B R A S Others*
Net financial assets 884 63 106 15 98 98 95 - 295
Net financial liabilities (2,248) (99) (17) (15) (4) (4) - (8) (74)

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of Tata Consultancy Services Limited and its subsidiaries would result in decrease / increase in the GroupRss profit before tax by approximately Rs 82 crores as at April 1, 2015.

*Others include currencies such as South African Rand, Canadian Dollar, Swiss Franc, Norwegian Kroner etc.

(b) Interest rate risk

The GroupRss investments are primarily in fixed rate interest bearing investments. Hence the Group 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 analysing 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 2,568 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 GroupRss total bank deposits in year ended March 2017. None of the other financial instruments of the Group 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 79,239 crores, Rs 64,961 crores, Rs 49,629 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 GroupRss 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

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

(In %)
As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
United States of America 44.30 42.90 41.90
India 14.71 15.32 16.50
United Kingdom 13.46 14.97 15.00

Geographical concentration of credit risk is allocated based on the location of the customers.

(iii) Liquidity risk

Liquidity risk refers to the risk that the Group 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 Group 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 March 31, 2017 Due in 1st year Due in 2nd year Due in 3rd to 5th year Due after 5th year Total
Non-derivative financial liabilities:
Trade and other payables 6,279 - - - 6,279
Borrowings 200 16 36 19 271
Other financial liabilities 1,530 13 464 2 2,009
Total 8,009 29 500 21 8,559
Derivative financial liabilities 20 - - - 20
Total 8,029 29 500 21 8,579
As at March 31, 2016
Non-derivative financial liabilities:
Trade and other payables 7,541 - - - 7,541
Borrowings 113 24 33 26 196
Other financial liabilities 2,212 44 467 19 2,742
Total 9,866 68 0 0 5 45 10,479
Derivative financial liabilities 152 - - - 152
Total 10,018 68 500 45 10,631
As at April 1, 2015
Non-derivative financial liabilities:
Trade and other payables 8,832 - - - 8,832
Borrowings 186 43 38 34 301
Other financial liabilities 1,225 63 608 10 1,906
Total 10,243 106 646 44 11,039
Derivative financial liabilities 20 - - - 20
Total 10,263 106 646 44 11,059

29. 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 GroupRss chief operating decision maker is the Chief Executive Officer and Managing Director.

The Group 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 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. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments.

Summarised segment information for the years ended March 31, 2017, 2016 and April 1, 2015 is as follows: Year ended March 31, 2017

Business segments

Particulars Banking, Financial Services and Insurance Manufacturing Retail and Consumer Business Communication, Media and Technology Others Total
Revenue 47,505 12,486 20,459 19,521 17,995 117,966
Segment result 13,098 3,574 5,740 5,552 4,271 32,235
Total Unallocable expenses 1,943
Operating income 30,292
Other income (net) 4,221
Profit before taxes 34,513
Tax expense 8,156
Profit for the year 26,357
Depreciation and amortisation 74 - - - 2 76
Depreciation and amortisation (unallocable) 1,911
Significant non-cash items (allocable) 19 6 10 22 68 125
As at March 31, 2017
Segment assets 10,341 3,223 5,232 5,104 6,267 30,167
Unallocable assets 73,085
Total assets 1,03,252
Segment liabilities 1,706 123 382 433 698 3,342
Unallocable liabilities 13,330
Total liabilities 16,672
Year ended March 31, 2016
Revenue 44,163 10,909 19,204 18,040 16,330 1,08,646
Segment result 12,851 2,924 5,330 5,190 4,294 30,589
Total Unallocable expenses 1,833
Operating income 28,756
Other income (net) 3,084
Profit before taxes 31,840
Tax expense 7,502
Profit for the year 24,338
Depreciation and amortisation (allocable) 86 - - - 2 88
Depreciation and amortisation (unallocable) - - - - - 1,800
Significant non-cash items (allocable) 30 9 27 9 60 135
As at March 31, 2016
Segment assets 11,525 2,825 4,917 5,076 6,233 30,576
Unallocable assets 58,520
Total assets 89,096
Segment liabilities 1,844 149 276 437 702 3,408
Unallocable liabilities 14,261
Total liabilities 17,669
As at April 1, 2015
Segment assets 9,599 2,441 4,261 4,331 6,551 27,183
Unallocable assets 45,783
Total assets 72,966
Segment liabilities 2,593 341 731 828 1,352 5,845
Unallocable liabilities 10,845
Total liabilities 16,690

Geographical revenue is allocated based on the location of the customers. Information regarding geographical revenue is as follows:

Geography 2017 2016
Americas (1) 66,091 60,011
Europe (2) 30,038 29,092
India 7,415 6,729
Others 14,422 12,814
Total 1,17,966 1,08,646

Geographical non-current assets (property, plant and equipment, goodwill, intangible assets, advance income tax and other non-current assets) are allocated based on the location of the assets.

Information regarding geographical non-current assets is as follows:

(Rs crores)
Geography As at March 31, 2017 As at March 31, 2016 As at April 1, 2015
Americas (3) 1,246 1,170 1,254
Europe (4) 1,521 1,585 1,629
India 15,355 15,335 14,597
Others 598 745 884
Total 18,720 18,835 18,364

i. (1) and (3) are substantially related to operations in the United States of America.

ii. (2) includes revenue from operations in the United Kingdom of Rs 16,404 crores and Rs 17,171 crores for the years ended March 31, 2017 and March 31, 2016 respectively.

iii. (4) includes non-current assets from operations in the United Kingdom of Rs 568 crores, Rs 643 crores and Rs 726 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively.

Information about major customers:

No single customer represents 10% or more of the GroupRss total revenue for the year ended March 31, 2017 and March 31, 2016.

30. Commitments and contingent liabilities

Capital and other commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) as at March 31, 2017 is Rs 1,503 crores.

Contingencies

Direct tax matters Refer note 10.

Indirect tax matters

Tata Consultancy Services Limited and its subsidiaries in India have ongoing disputes with Indian tax authorities mainly relating to treatment of characterisation and classification of certain items. As at March 31, 2017, Tata Consultancy Services Limited and its subsidiaries in India have demands on appeal amounting to Rs 284 crores from various indirect tax authorities in Indian jurisdiction, which are being contested by the Company and its subsidiaries in India. In respect of indirect tax contingencies of Rs 9 crores, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

Other claims

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.

As at March 31, 2017, claims aggregating Rs 6,308 crores against the Group (individually insignificant) 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 EpicRss intellectual property. In April 2016, the Company received an unfavourable jury verdict awarding damages totalling Rs 6,101 crores (US941 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.

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

(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 Group periodically receives notices and inquiries from income tax authorities related to the GroupRss operations in those jurisdictions. The Group has evaluated these notices and inquiries and has concluded that any consequent income tax claims or demands by the income tax authorities will not succeed on ultimate resolution.

31. Statement of Net assets and Profit and Loss and other comprehensive income attributable to Owners and Non-controlling interest

Net assets, i.e. total assets minus total liabilities

I Share in profit and loss

Share in Other comprehensive income

Share in Total comprehensive income

% of voting power as at March % of voting power as at March As % of consolidated net Amount As % of consolidated profit Amount
Name of the entity Country of incorporation 31,2017 31,2016 assets (Rs crores ) and loss (Rs crores) As % of consolidated other comprehensive Amount income (Rs crores) As % of consolidated total comprehensive income Amount (Rs crores)
Tata Consultancy Services Limited India - - 84.61 78,022 86.94 23,653 102.02 303 87.11 23,956
Subsidiaries (held directly)
Indian
APTOnline Limited India 89.00 89.00 0.07 66 0.07 20 - 0.07 20
MP Online Limited India 89.00 89.00 0.08 74 0.07 20 - 0.07 20
C-Edge Technologies Limited India 51.00 51.00 0.14 131 0.12 34 - 0.12 34
MahaOnline Limited India 74.00 74.00 0.05 46 0.02 5 - 0.02 5
TCS e-Serve International Limited India 100.00 100.00 0.24 222 0.15 41 - 0.15 41
TCS Foundation India 100.00 100.00 0.54 500 0.82 222 - 0.81 222
Foreign
Diligenta Limited UK 100.00 100.00 0.64 591 0.03 8 (4.38) (13) (0.02) (5)
Tata Consultancy Services Canada Inc. Canada 100.00 100.00 0.55 508 1.18 320 - 1.16 320
Tata America International Corporation USA 100.00 100.00 3.60 3,324 4.15 1,130 - 4.11 1,130
Tata Consultancy Services Asia Pacific Pte Ltd. Singapore 100.00 100.00 0.54 499 0.44 120 - 0.44 120
Tata Consultancy Services Belgium S.A. Belgium 100.00 100.00 0.28 257 0.37 102 - 0.37 102
Tata Consultancy Services Deutschland GmbH Germany 100.00 100.00 0.14 127 0.36 98 (0.67) (2) 0.35 96
Tata Consultancy Services Netherlands BV Netherlands 100.00 100.00 2.02 1,866 1.22 333 - 1.21 333
Tata Consultancy Services Sverige AB Sweden 100.00 100.00 0.34 309 0.48 130 - 0.47 130
TCS FNS Pty Limited Australia 100.00 100.00 - 1 - - - - -
TCS Iberoamerica SA Uruguay 100.00 100.00 1.33 1,223 0.44 120 - 0.44 120
Tata Consultancy Services (Africa) (PTY) Ltd. South Africa 100.00 100.00 0.06 52 0.16 44 - 0.16 44

 

Net assets, i.e. total assets minus total liabilities

Share in profit and loss

Share compr inc Other ehensive :ome

Share in Total comprehensive income

Name of the entity Country of incorporation % of voting power as at March 31,2017 % of voting power as at March 31,2016 As % of consolidated net assets As % of consoli- dated profit and loss Amount(Rs crores) Amount (Rs crores) As % of consolidated other comprehensive income Amount (Rs crores) As % of consolidated total comprehensive income Amount (Rs crores)
CMC Americas Inc. (w.e.f. 01.04.2015) USA 100.00 100.00 0.18 164 0.13 36 - - 0.13 36
Tata Consultancy Services Qatar S.S.C. Qatar 100.00 100.00 0.07 66 0.03 9 - - 0.03 9
Subsidiarias (held indirectly)
Foreign
CMC eBiz Inc. USA 100.00 100.00 - - - - - - - -
TCS e-Serve America, Inc. USA 100.00 100.00 0.01 8 (0.03) (8) - - (0.03) (8)
Diligenta 2 Limited (w.e.f. March 14, 2017) UK - 100.00 - - - - - - - -
MS CJV Investments Corporation (w.e.f. January 24, 2017) USA - 100.00 - - - - - - - -
Tata Consultancy Services (China) Co., Ltd. (w.e.f. December 29, 2016) China 93.20 90.00 0.19 177 0.14 37 - - 0.13 37
Tata Consultancy Services Japan, Ltd. Japan 51.00 51.00 0.93 LO LO CO 0.38 104 - - 0.38 104
Tata Consultancy Services Malaysia Sdn Bhd Malaysia 100.00 100.00 0.10 93 0.06 16 - - 0.06 16
PTTata Consultancy Services Indonesia Indonesia 100.00 100.00 0.03 27 0.07 18 - - 0.07 18
Tata Consultancy Services (Philippines) Inc. Philippines 100.00 100.00 0.23 212 0.28 76 - - 0.28 76
Tata Consultancy Services (Thailand) Limited Thailand 100.00 100.00 0.02 14 0.01 3 - - 0.01 3
TCS Italia SRL Italy 100.00 100.00 - 2 0.01 2 - - 0.01 2
Tata Consultancy Services Luxembourg S.A. Capellen (G.D. de Luxembourg) 100.00 100.00 0.06 52 0.10 27 - - 0.10 27
Tata Consultancy Services Switzerland Ltd. Switzerland 100.00 100.00 0.31 NO CO NO 0.43 118 1.35 4 0.44 122
Tata Consultancy Services France S.A.S France 100.00 100.00 - 1 0.01 4 (0.34) (1) 0.01 3
Tata Consultancy Services Osterreich GmbH Austria 100.00 100.00 - 4 - 1 - - - 1
Tata Consultancy Services Danmark ApS Denmark 100.00 100.00 - 3 - - - - - -
Tata Consultancy Services De Espana S.A. Spain 100.00 100.00 0.02 15 0.06 15 - - 0.05 15
Tata Consultancy Services Portugal Unipessoal Limitada Portugal 100.00 100.00 (0.01) (13) - (1) - - - (1)
Alti S.A. France 100.00 100.00 (0.01) (12) (0.49) (134) 5.39 16 (0.43) (118)
Alti HR S.A.S. France 100.00 100.00 0.01 10 - (1) - - - (1)
Tescom (France) Software Systems Testing S.A.R.L. France 100.00 100.00 (0.01) (9) (0.01) (3) - - (0.01) (3)
Alti Switzerland S.A. Switzerland 100.00 100.00 0.01 12 - 1 - - - 1
Alti Infrastructures Systemes & Reseaux S.A.S. France 100.00 100.00 - (2) - (1) - - - (1)
Alti NV Belgium 100.00 100.00 - 4 (0.03) (9) - - (0.03) (9)
Teamlink Belgium 100.00 100.00 - (1) - - - - - -
Planaxis Technologies Inc. Canada 100.00 100.00 0.04 40 0.01 3 - - 0.01 3
Tata Consultancy Services Saudi Arabia (w.e.f. July 2, 2015) Saudi Arabia 76.00 76.00 0.04 41 0.14 37 - - 0.13 37
Tata Consultancy Services (South Africa) (PTY) Ltd. (w.e.f. July 28, 2016) South Africa 100.00 75.00 0.06 59 0.11 29 - - 0.11 29
TCS Financial Solutions Beijing Co., Ltd. China 100.00 100.00 0.03 29 0.01 2 - - 0.01 2
TCS Financial Solutions Australia Holdings Pty Limited Australia 100.00 100.00 0.05 49 - - - - - -
TCS Financial Solutions Australia Pty Limited Australia 100.00 100.00 0.14 125 0.11 31 0.34 1 0.12 32
PT Financial Network Services (w.e.f. March 16,2017) Indonesia - 100.00 - - - 1 - - - 1
TCS Solution Center S.A. Uruguay 100.00 100.00 0.12 109 0.10 27 (2.69) (8) 0.07 19
TCS Uruguay S.A. Uruguay 100.00 100.00 0.06 53 0.02 6 - - 0.02 6
Tata Consultancy Services Argentina S.A. Argentina 99.99 99.99 (0.04) (36) (0.06) (15) - - (0.05) (15)
Tata Consultancy Services Do Brasil Ltda Brazil 100.00 100.00 0.08 73 0.03 9 - - 0.03 9
Tata Consultancy Services De Mexico S.A., De C.V. Mexico 100.00 100.00 0.55 509 1.00 272 - - 0.99 272
MGDC S.C. Mexico 100.00 100.00 0.13 122 0.14 38 0.34 1 0.14 39
TCS Inversiones Chile Limitada Chile 99.99 99.99 0.34 311 - (1) - - - (1)
Tata Consultancy Services Chile S.A. Chile 100.00 100.00 0.72 666 0.25 67 - - 0.24 67
Technology Outsourcing S.A.C. Peru 100.00 100.00 0.01 8 (0.01) (2) - - (0.01) (2)
(w.e.f. October 30, 2015)
TATASOLUTION CENTER S.A. Ecuador 100.00 100.00 0.06 65 (0.12) (36) (1.34) (4) (0.15) (40)
Trusts India - - 0.23 211 0.10 27 - - 0.10 27
TOTAL 100.00 92,216 100.00 27,205 100.00 297 100.00 27,502
(a) Adjustments arising out of consolidation (5,636) (848) (474) (1,322)
(b) Non-controlling interest
Indian Subsidiaries
AFTOnline Limited (7) (2) - (2)
MP Online Limited (8) (2) - (2)
C-Edge Technologies Limited (67) (22) - (22)
MahaOnline Limited (10) (1) - (1)
Foreign Subsidiaries
Tata Consultancy Services (China) Co., Ltd. (12) (4) 7 3
Tata Consultancy Services Japan, Ltd. (262) (34) (1) (35)
Tata Consultancy Services (South Africa) (PTY) Ltd. (3) (1) (4)
TOTAL (366) (68) 5 (63)
GRAND TOTAL 86,214 26,289 (172) 26,117

32. Related party transactions

Tata Consultancy Services LimitedRss principal related parties consist of its holding company Tata Sons Limited and its subsidiaries, its own subsidiaries, affiliates and its key managerial personnel. The Group routinely enters into transactions with its related parties in the ordinary course of business.

Transactions and balances with its own subsidiaries are eliminated on consolidation.

Transactions with related parties are as follows:

Year ended March 31, 2017

Tata Sons Limited Subsidiaries of Tata Sons Limited Associates / jont ventures of Tata Sons Limited and its subsidiaries Other related parties Total
Revenue from operations 4 246 2,162 - 2,412
Purchases of goods and services (including reimbursement) 4 5 5 5 634 - 1,193
Brand equity contribution 156 - - - 156
Dividend paid 6,712 8 3 - 6,723
Purchase of property, plant and equipment - 21 33 - 54
Contribution to employees post employment benefit plans - - - 1,029 1,029
Allowances / (write back) for doubtful accounts receivables and advances (net) - 4 5 - 9
Rent expense 1 33 5 - 39
Loans and advances given - - 7 - 7
Loans and advances recovered - 1 - - 1
Year ended March 31, 2016
Revenue from operations 4 223 2,163 - 2,390
Purchases of goods and services (including reimbursement) 3 698 498 - 1,128
Brand equity contribution 128 - - - 128
Dividend paid 5,846 4 3 - 5,853
Purchase of property, plant and equipment - 30 60 - 90
Contribution to employees post employment benefit plans - - - 829 829
Rent expense 1 28 5 - 34
Loans and advances given - 1 - - 1
Bad debts and advances written off, Allowances for doubtful trade receivables and advances (net) - - 2 - 2

Balances receivable from related parties are as follows:

As at March 31, 2017
Tata Sons Limited Subsidiaries of Tata Sons Limited Associates / jont ventures of Tata Sons Limited and its subsidiaries Total
Trade receivables and unbilled revenue (net) 1 128 626 755
Loans and advances, other financial assets and other assets 3 26 14 43
Investments - 19 - 19
Total 4 173 640 817
As at March 31, 2016
Trade receivables and unbilled revenue (net) 2 111 625 738
Loans and advances, other financial assets and other assets 2 2 9 13
Investments - 19 - 19
Total 4 132 634 770
As at April 1, 2015
Trade receivables and unbilled revenue (net) 1 116 665 782
Loans and advances, other financial assets and other assets 3 1 11 15
Investments - 19 - 19
Total 4 136 676 816
Balances payable to related parties
As at March 31, 2017
Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities 138 28 150 316
Total 138 28 150 316
Commitments - 24 71 95
As at March 31, 2016
Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities 117 20 87 224
Total 117 20 87 224
Commitments - 25 591 84
As at April 1, 2015
Trade payables, unearned and deferred revenue, other financial liabilities and other liabilities 114 36 6 9 246
Total 114 6 3 96 246
Commitments - 51 951 46

The GroupRss material related party transactions and outstanding balances are with its subsidiaries with whom the Group routinely enters into transactions in the ordinary course of business.

Compensation to key management personnel is as follows:

2017 2016
Short-term benefits 46 43
Dividend paid during the year 1 -
Total 47 43

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

33. Dividends

Dividends paid during the year ended March 31, 2017 include an amount of Rs 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 ending 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 ending 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 ending 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.

   

  A    |   B   |   C    |  D    |    E    |  F  |    G   |   H  |  I  |    J   |   K  |   L  |    M  |   N  |   O  |   P  |  Q  |  R  |  S  |  T   |  U   |   V   |    W   |  X   |  Y  |    Z
Left Decrease Increase Right SEBI Regn. No. NSE: INB/INF/INE 230881235   |   BSE: INB/INF/INE 010881234   |   DSE: INB 050881235   |   MCX-SX : INE 260881235  |   USE - INE 270881235   |   NSDL- DP ID: IN-DP-NSDL-14-96   |   CDSL DP ID: IN-ID-CDSL-43-99         Commodity Membership No.: MCX-10705, NCDEX-0016, NMCE-CL0044, NSPOT-10002, NSEL-10700, SNX-2255, ICEX-1025   |   Dubai Gold and Commodity Exchange (DGCX)-3035   |   Indian Energy Exchange (IEX)- Electricity Trading N2DLOAIL0000
4E/2, Jhandewalan Extension New Delhi Delhi 110 055 India
Copyright@2012 Alankit . All rights reserved. Designed, developed and powered by C-MOTS Infotech (ISO 9001:2008 certified)