TATA CONSULTANCY SERVICES LIMITED
ANNUAL REPORT 2010-2011
NOTES ON ACCOUNTS
1) Significant Accounting Policies :
a) Basis of Preparation :
The financial statements are prepared under the historical cost convention
and the requirements of the Companies Act, 1956.
b) Use of estimates :
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported balances
of assets and liabilities and disclosures relating to the contingent
liabilities as at the date of the financial statements and reported amounts
of income and expenses during the year. Example of such estimates include
provisions for doubtful debts, employee benefits, provision for income
taxes, accounting for contract costs expected to be incurred to complete,
the useful lives of depreciable fixed assets and provisions for impairment.
c) Fixed Assets :
Fixed assets are stated at cost, less accumulated depreciation. Costs
include all expenses incurred to bring the assets to its present location
and condition.
Fixed assets exclude computers and other assets individually costing
Rs.50,000 or less which are not capitalised except when they are part of a
larger capital investment programme.
d) Depreciation :
Depreciation other than on freehold land and capital work-in-progress is
charged so as to write-off the cost of assets, on the following basis:
Leasehold Land and Buildings Straight line Lease period
Freehold Buildings Written down value 5%
Factory Buildings Straight line 10%
Leasehold Improvements Straight line Lease period
Plant and Machinery Straight line 33.33%
Computer Equipment Straight line 25%
Motor Cars Written down value 25.89%
Office Equipment Written down value 13.91%
Electrical Installations Written down value 13.91%
Furniture and Fixtures Straight line 100%
Intellectual Property / Distribution Straight line 24-60 months
Rights
Rights under Licensing agreement Straight line License period
Fixed assets purchased for specific projects are depreciated over the
period of the project.
e) Leases :
Assets leased by the Company in its capacity as lessee, where the Company
has substantially all the risks and rewards of ownership are classified as
finance lease. Such lease 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 created 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.
Lease arrangements where the risks and rewards incidental to ownership of
an asset substantially vest with the lessor, are recognised as operating
leases. Lease rentals under operating leases are recognised in the profit
and loss account on a straight-line basis.
f) Impairment :
At each balance sheet date, the management reviews the carrying amounts of
its assets included in each cash generating unit to determine whether there
is any indication that those assets were impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the higher
of an asset's net selling price and value in use. In assessing value in
use, the estimated future cash flows expected from the continuing use of
the asset and from its disposal are discounted to their present value using
a pre-tax discount rate that reflects the current market assessments of
time value of money and the risks specific to the asset.
Reversal of impairment loss is recognised immediately as income in the
profit and loss account.
g) Investments :
Long-term investments are stated at cost, less provision for other than
temporary diminution in value. Current investments comprising investments
in mutual funds are stated at the lower of cost and fair value, determined
on a portfolio basis.
h) Employee benefits :
i) Post-employment benefit plans :
Contributions to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered services entitling
them to contributions.
For defined benefit schemes, 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 the profit and loss account for the period in which
they occur. Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortised on a straight-
line basis over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligation as adjusted
for unrecognised past service cost, and as 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) Short-term employee benefits :
The undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognised during the
period when the employee renders the service. These benefits include
compensated absences such as paid annual leave, overseas social security
contributions and performance incentives.
iii) Long-term employee benefits :
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 defined benefit obligation at the balance sheet date.
i) Revenue recognition :
Revenues from contracts priced on a time and material basis are recognised
when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed price
contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the degree
of completion. Foreseeable losses on such contracts are recognised when
probable.
Revenues from the sale of equipment are recognised upon delivery, which is
when title passes to the customer.
Revenues from sale of software licences are recognised upon delivery where
there is no customisation required. In case of customisation the same is
recognised over the life of the contract using the proportionate completion
method.
Revenues from maintenance contracts are recognised pro-rata over the period
of the contract.
Revenues from Business Process Outsourcing (BPO) services are recognised on
time and material, fixed price and unit priced contracts. Revenue on time
and material and unit priced contracts is recognised as the related
services are rendered. Revenue from fixed price contracts is recognised as
per the proportionate completion method with contract cost determining the
degree of completion.
Dividends are recorded when the right to receive payment is established.
Interest income is recognised on time proportion basis taking into account
the amount outstanding and the rate applicable.
j) Research and Development :
Expenditure on research and development activities is recognised as an
expense in the period in which it is incurred. Development costs of
marketable computer software are capitalised when a product's technological
feasibility has been established until the time the product is available
for general release to customers. In most instances, the Company's products
are released soon after technological feasibility has been established.
Therefore, costs incurred subsequent to achievement of technological
feasibility are usually not significant, and generally most software
development costs have been expensed.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with depreciation rates set out in note 1(d).
k) Taxation :
Current income tax expense comprises taxes on income from operations in
India and in foreign jurisdictions. Income tax payable in India is
determined in accordance with the provisions of the Income Tax Act, 1961.
Tax expense relating to foreign operations is determined in accordance with
tax laws applicable in countries where such operations are domiciled.
Minimum alternative tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax after the tax holiday
period. Accordingly, MAT is recognised as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
Deferred tax expense or benefit is recognised on timing differences being
the difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantively enacted by the
balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is virtual
certainty that sufficient future taxable income will be available to
realise such assets. In other situations, deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available to realise these assets.
Advance taxes and provisions for current income taxes are presented in the
balance sheet after off-setting advance taxes paid and income tax
provisions arising in the same tax jurisdiction and the Company intends to
settle the asset and liability on a net basis.
The Company offsets deferred tax assets and deferred tax liabilities if it
has a legally enforceable right and these relate to taxes on income levied
by the same governing taxation laws.
l) Foreign currency transactions :
Income and expenses in foreign currencies are converted at exchange rates
prevailing on the date of the transaction. Foreign currency monetary assets
and liabilities other than net investments in non-integral foreign
operations are translated at the exchange rate prevailing on the balance
sheet date. Exchange difference arising on a monetary item that, in
substance, forms part of an enterprise's net investments in a non-integral
foreign operation are accumulated in a foreign currency translation
reserve.
Premium or discount on forward exchange contracts and currency option
contracts are amortised and recognised in the profit and loss account over
the period of the contract. Forward exchange contracts and currency option
contracts outstanding at the balance sheet date, other than designated cash
flow hedges, are stated at fair values and any gains or losses are
recognised in the profit and loss account.
m) Derivative instruments and hedge accounting :
The Company uses foreign currency forward contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions. The Company
designates these hedging instruments as cash flow hedges applying the
recognition and measurement principles set out in the Accounting Standard
30 'Financial Instruments: Recognition and Measurement' (AS-30).
The use of hedging instruments is governed by the Company's policies
approved by the Board of Directors, which provide written principles on the
use of such financial derivatives consistent with the Company's risk
management strategy.
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognised directly in shareholders' funds and the
ineffective portion is recognised immediately in the profit and loss
account.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the profit and loss account
as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time for forecasted transactions, any cumulative gain
or loss on the hedging instrument recognised in shareholders' funds is
retained there until the forecasted transaction occurs. If a hedged
transaction is no longer expected to occur, the net cumulative gain or loss
recognised in shareholders' funds is transferred to the profit and loss
account for the period.
n) 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 cost, less provision for obsolescence. Finished goods
produced or purchased by the Company are carried at lower of cost and net
realisable value. Cost includes direct material and labour cost and a
proportion of manufacturing overheads.
o) Provisions, Contingent Liabilities and Contingent Assets :
A provision is recognised when the Company 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 reliable estimate
can be made. Provisions (excluding retirement benefits) 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.
p) Cash and cash equivalents :
The Company considers all highly liquid financial instruments, which are
readily convertible into cash and have original maturities of three months
or less from the date of purchase, to be cash equivalents.
2) Acquisitions / Divestments :
a) On June 30, 2010, Syscrom S.A. Chile has merged with Tata Consultancy
Services BPO Chile SA. The merged entity is a wholly owned subsidiary of
TCS Inversiones Chile Limitada.
b) On June 30, 2010, Custodia De Documentos Interes Limitada has merged
with Tata Consultancy Services BPO Chile SA. The merged entity is a wholly
owned subsidiary of TCS Inversiones Chile Limitada.
c) On July 31, 2010, Tata Consultancy Services Chile SA has merged with
Tata Consultancy Services BPO Chile SA. The merged entity is a wholly owned
subsidiary of TCS Inversiones Chile Limitada.
d) On August 31, 2010, the Company, through its subsidiary, Diligenta
Limited, acquired 100% equity interest in Diligenta 2 Limited (formerly
Unisys Insurance Services Limited).
e) National Power Exchange Limited ceased to be an associate of the Company
w.e.f. September 4, 2010.
f) On September 23, 2010, the Company subscribed to 74% of the equity share
capital of MahaOnline Limited.
g) On October 4, 2010, the Company, through its subsidiary, acquired 100%
equity share holding of MS CJV Investments Corporation. Consequently, the
group holding in Tata Consultancy Services (China) Co., Ltd. has increased
from 65.94% to 74.63%.
h) On October 8, 2010, the Company has acquired 100% equity share capital
of Retail FullServe Limited (formerly SUPERVALU Services India Private
Limited).
i) On October 15, 2010, Financial Network Services (H.K.) Limited
(subsidiary of TCS Financial Solutions Australia Holdings Pty Limited) has
been voluntarily liquidated.
j) On December 1, 2010, Exegenix Research Inc. and ERI Holding Corp. have
merged with Tata Consultancy Services Canada Inc. The merged entity is a
wholly owned subsidiary of Tata Consultancy Services Limited.
k) On January 27, 2011, the Company, through its subsidiary, CMC America
Inc, subscribed to 100 percent share capital of CMC eBiz Inc.
3) The Company has given undertakings to (a) Bank of China Co. Limited, not
to transfer its controlling interest in TCS Financial Solutions Australia
Pty Limited, a wholly owned subsidiary of TCS FNS Pty Limited and (b) the
Government of Maharashtra not to divest its shareholding in MahaOnline
Limited except to an affiliate.
4) Retirement benefit plans :
a) Defined contribution plans :
The Company makes Provident Fund and Superannuation Fund contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the schemes, the Company is required to contribute a specified
percentage of the payroll costs to fund the benefits. The Provident Fund
scheme additionally requires the Company to guarantee payment of interest
at rates notified by the Central Government from time to time, for which
shortfall has been provided for as at the Balance Sheet date.
The Company recognised Rs. 285.78 crores (March 31, 2010 : Rs. 232.02
crores) for provident fund contributions and Rs. 73.74 crores (March 31,
2010 : Rs. 52.62 crores) for superannuation contributions in the profit and
loss account. The contributions payable to these plans by the Company are
at rates specified in the rules of the schemes.
The Company has contributed Rs. 60.91 crores (March 31, 2010 : Rs. 48.40
crores) towards foreign defined contribution plans.
b) Defined benefit plan :
The Company makes annual contributions to the Employees' Group Gratuity-
cum-Life Assurance Scheme of the Life Insurance Corporation of India, a
funded defined benefit plan for qualifying employees. The scheme provides
for lump sum payment to vested employees at retirement, death while in
employment or on termination of employment of an amount equivalent to 15
days salary for service less than 15 years, three-fourth month's salary for
service of 15 years to 19 years and one month salary for service of 20
years and more, payable for each completed year of service or part thereof
in excess of six months. Vesting occurs upon completion of five years of
service.
The present value of the defined benefit obligation and the related current
service cost were measured using the Projected Unit Credit Method, with
actuarial valuations being carried out at each balance sheet date.
The following table sets out the funded status of the gratuity plan and the
amounts recognised in the Company's financial statements as at March 31,
2011.
(Rs. in crores)
As at As at
March 31, 2011 March 31, 2010
i) Change in benefit obligations:
Projected benefit obligation,
beginning of the year 452.49 385.23
Service cost 81.39 70.62
Interest cost 37.07 29.84
Actuarial (gain)/loss 14.46 (7.34)
Benefits paid (32.61) (25.86)
Projected benefit obligation,
end of the year 552.80 452.49
ii) Change in plan assets:
Fair value of plan assets,
beginning of the year 420.14 344.16
Expected return on plan assets 36.15 31.07
Employer's contributions 65.07 66.86
Benefit paid (32.61) (25.86)
Actuarial gain 5.67 3.91
Fair value of plan assets at
the end of the year 494.42 420.14
Excess of (obligation over
plan assets) (58.38) (32.35)
Accrued liability (58.38) (32.35)
(Rs. in crores)
2011 2010
iii) Net gratuity and other cost:
Service cost 81.39 70.62
Interest on defined benefit obligation 37.07 29.84
Expected return on plan assets (36.15) (31.07)
Net actuarial loss/(gain) recognised
in the year 8.80 (11.24)
Net gratuity cost and other cost 91.11 58.15
Actual Return on Plan Assets 41.82 34.98
(Rs. in crores)
As at As at
March 31, 2011 March 31, 2010
iv) Category of Assets:
Special Deposits Scheme - 1.76
Insurer Managed Funds 494.36 418.32
Others 0.06 0.06
Total 494.42 420.14
As at As at
March 31, 2011 March 31, 2010
v) Assumptions used in accounting
for the gratuity plan: % %
Discount rate 8.00 7.50
Salary escalation rate 6.00 6.00
Expected rate of return on
plan assets 8.00 8.00
The estimate of future salary increases considered in actuarial valuation
takes account of inflation, seniority, promotion and other relevant factors
such as supply and demand factors in the employment market.
The expected return on plan assets is determined considering several
applicable factors mainly the composition of the plan assets held, assessed
risks of asset management, historical results of the return on plan assets
and the Company's policy for plan asset management.
(Rs. in crores)
2011 2010 2009 2008 2007
Experience
adjustment:
On plan liabilities 35.00 4.93 (16.54) (26.62) (20.91)
On plan assets 5.67 3.91 6.12 4.13 2.31
Present value of
benefit obligation 552.80 452.49 385.23 315.26 240.91
Fair value of
plan assets 494.42 420.14 344.16 264.87 243.13
Excess of
(obligation over
plan assets) /
plan assets over
obligation (58.38) (32.35) (41.07) (50.39) 2.22
The expected contribution is based on the same assumptions used to measure
the Company's gratuity obligations as of March 31, 2011. The Company is
expected to contribute Rs. 52.12 crores to gratuity funds for the year
ended March 31, 2012.
5) Unbilled revenue as at March 31, 2011 amounting to Rs. 836.37 crores
(March 31, 2010 : Rs. 646.96 crores) primarily comprises of the revenue
recognised of Rs. 794.97 crores (March 31, 2010 : Rs. 609.30 crores) in
relation to efforts incurred on turnkey contracts priced on a fixed time,
fixed price basis.
6) Obligations towards operating leases:
(Rs. in crores)
Non-cancellable operating lease obligation 2011 2010
Not later than one year 307.94 245.31
Later than one year but not later than five years 872.00 741.61
Later than five years 760.87 818.93
Total 1940.81 1805.85
Rental expenses of Rs. 263.46 crores (Previous year : Rs. 313.15 crores) in
respect of obligation under non-cancellable operating leases have been
recognised in the profit and loss account. Further a sum of Rs. 214.18
crores (Previous year : Rs. 190.75 crores) has been charged to the profit
and loss account in respect of cancellable operating leases.
7) Obligations towards finance leases:
(Rs. in crores)
Assets acquired under finance lease 2011 2010
Minimum Lease Payments:
Less than one year 9.38 7.11
One to five years 37.52 28.45
Later than five years 10.92 14.81
Total 57.82 50.37
Present Value of minimum lease payments:
Less than one year 3.54 2.30
One to five years 22.23 14.42
Later than five years 10.10 12.53
Total 35.87 29.25
8) Research and development expenditure aggregating Rs. 97.20 crores
(Previous year : Rs. 77.19 crores) was incurred during the year.
9) Sale of Equipment is net of excise duty of Rs. 0.27 crore (Previous year
: Rs. 0.39 crore).
10) Segment Reporting :
The Company has identified business segments (industry practice) as its
primary segment and geographic segments as its secondary segment.
Business segments are primarily financial services comprising customers
providing banking, finance and insurance services, manufacturing companies,
companies in retail and consumer packaged goods industries, companies in
telecommunication, media and entertainment and others such as energy,
resources and utilities, Hi-Tech industry practice, life science and
healthcare, s-Governance, travel, transportation and hospitality, products,
etc.
Revenues and expenses directly attributable to segments are reported under
each reportable segment. Expenses which are not directly identifiable to
each reporting segment have been allocated on the basis of associated
revenues of the segment and manpower efforts. All other expenses which are
not attributable or allocable to segments have been disclosed as
unallocable expenses.
Assets and liabilities that are directly attributable or allocable to
segments are disclosed under each reportable segment. All other assets and
liabilities are disclosed as unallocable. Fixed assets that are used
interchangeably among segments are not allocated to primary and secondary
segments.
The Company has identified geographical markets as the secondary segments.
Geographical revenues are allocated based on the location of the customer.
Geographic segments of the Company are Americas (including Canada and South
American countries), Europe, India and Others.
Year ended March 31, 2011:
(Rs. in crores)
Particulars A B C D E F
Revenue 11719.88 2257.38 3533.18 4578.05 7186.92 29275.41
9225.71 1986.63 2705.51 3762.94 5363.66 23044.45
Segment result 3797.37 567.62 894.22 1626.90 1885.71 8771.82
2838.03 560.48 643.38 1117.16 1508.12 6667.17
Unallocable 566.12
expenses (net) 474.39
Operating 8205.70
income 6192.78
Other 494.73
income, (net) 177.60
Profit before 8700.43
taxes 6370.38
Tax expense 1130.44
751.87
Net profit for 7569.99
the year 5618.51
Segment assets 1797.98 320.46 474.36 1415.21 2162.05 6170.06
1314.03 273.36 462.67 1074.47 1333.76 4458.29
Unallocable 19873.05
assets 17973.42
Total assets 26043.11
22431.71
Segment 436.40 39.34 87.35 202.46 447.24 1212.79
liabilities 355.89 26.15 64.90 184.81 278.85 910.60
Unallocable 5250.83
liabilities 6404.49
Total 6463.62
liabilities 7315.09
Other
Information:
Capital 1600.75
Expenditure 827.17
(unallocable)
Depreciation 537.82
(unallocable) 469.35
Other 12.80 1.15 (0.38) (110.48) 0.95 (95.96)
significant 8.68 3.69 0.05 113.73 29.31 155.46
non cash
expenses
(allocable)
Other (23.49)
significant (1.91)
non cash
expenses
(unallocable)
A = Business Segments - Banking, Financial Services and Insurance
B = Business Segments - Manufacturing
C = Business Segments - Retail and ConsumernPackaged Goods
D = Business Segments - Telecom
E = Business Segments - Others
F = Business Segments - Total
The following Geographic segments individually contribute 10 percent or
more of the Company's revenues and segment assets:
(Rs. in crores)
Geographic Segment Revenues for the Segment Assets
year ended March as at March
31, 2011 31, 2011
Americas 16907.78 1256.44
13391.10 926.10
Europe 7039.12 1939.03
6060.03 1379.78
India 2759.36 2450.99
1920.78 1587.65
11) Auditor's remuneration :
(Rs. in crores)
2011 2010
For services as auditors, including
quarterly audits 2.10 2.10
For Tax Audit 0.35 0.35
For Other services * 3.02 2.58
Reimbursement of out-of-pocket expenses 0.12 0.10
For service tax ** 0.58 0.53
The remuneration disclosed above excludes fees of Rs. 0.70 crore (Previous
year : Rs. 0.89 crore) for attest and other professional services rendered
by a firm of accountants in which some partners of the firm of statutory
auditors are partne'.
* Other services include fees towards attest services Rs. 2.87 crores
(Previous year : Rs. 2.96 crores)
** Service tax credit has been / will be availed.
12) Current tax includes additional provision (net) of Rs. 94.50 crores
(Previous year : Rs. 13.98 crores) in domestic and certain overseas
jurisdiction relating to earlier yea' The impact on MAT entitlement of
earlier periods is Rs. 267.14 crores (Previous year : Rs. Nil).
13) Contingent Liabilities :
(Rs. in crores)
As at As at
March 31, 2011 March 31, 2010
Claims against the Company not
acknowledged as debt 20.32 18.54
Income Tax demands 602.65 259.02
Indirect Tax demands 62.61 47.99
Guarantees given by the Company
on behalf of subsidiaries
(See note (ii) below) 2120.91 1851.93
Notes:
i) TCS e-Serve Limited has a contingent liability of Rs. 236.41 crores
(March 31, 2010 : Rs. 212.59 crores) in respect of Income Tax matters in
dispute. As on the acquisition date, i.e. December 31, 2008 TCS e-Serve
Limited has net advance taxes aggregating to Rs. 185.13 crores against
disputed amounts for the various assessment yea' The Company is entitled to
an indemnification from the seller, of the above referred contingent claims
on TCS e-Serve Limited, and would be required to refund to the seller,
amounts equal to the monies received by TCS e-Serve Limited, on all such
claims, as an adjustment to the purchase price consideration.
ii) The Company has provided guarantees aggregating to Rs. 1978.41 crores
(GBP 275.60 million) (March 31, 2010 : Rs. 1719.32 crores) (GBP 252.50
million) to third parties on behalf of its subsidiary Diligenta Limited.
The Company does not expect any outflow of resources in respect of the
above.
14) During the year, the Company has received Rs. 27.33 crores (USD 6
million) from the seller of an investment against the release of an
indemnification obligation, which amount has been adjusted against the cost
of the investment.
15) Commitments :
i) Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs. 1129.18 crores (March
31, 2010 : Rs. 1115.02 crores)
ii) Phoenix Group Services Limited ('Phoenix') (formerly known as Pearl
Group Services Limited ) has an equity holding of 24 percent in Diligenta
Limited. Under the shareholders agreement dated March 23, 2006, the Company
has a call option to purchase all the shares held by Phoenix at fixed price
of Rs. 217.08 crores (GBP 30.24 million) at the end of fourth year and
Phoenix has a put option to sell the shares to the Company at the same
price at the end of the fifth year. The Company has further call option
commencing from the sixth year till the end of the eightieth year. As at
March 31, 2011, neither of the option has been exercised.
iii) The Company has undertaken to provide continued financial support to
its subsidiary APOnline Limited, Tata Consultancy Services Morocco SARL AU
and TCS FNS Pty Limited.
iv) The Company has a purchase commitment towards India Innovation Fund for
the uncalled amount of balance Rs. 90,000 per unit against the investment
of 1000 units aggregating to Rs. 9.00 crores (March 31, 2010 : Rs. 9.00
crores).
16) Micro and Small Enterprises :
(Rs. in crores)
As at March 31, 2011 As at March 31, 2010
Principal Interest Principal Interest
Amount due to vendor 6.99 - 0.22 -
Principal amount paid
(includes unpaid)
beyond the appointed
date 60.38 - 7.86 -
Interest accrued and
remaining unpaid
(includes interest
disallowable) - 0.14 - 0.04
17) Income in Foreign Currency :
(Rs. in crores)
2011 2010
(a) FOB value of exports 114.08 128.92
(b) Consultancy services 26535.18 21115.28
(c) Interest income 16.57 36.16
(d) Other income 0.54 9.21
18) Expenditure in Foreign Currency :
(subject to deduction of tax where applicable)
(Rs. in crores)
2011 2010
(a) Royalty 2.48 2.80
(b) Legal and Professional fees 91.92 69.98
(c) Interest 0.22 4.01
(d) Services rendered by business
associates and others 1375.92 819.66
(e) Communication expenses 142.80 146.52
(f) Foreign taxes 296.46 319.78
(g) Overseas business expenses 4682.89 4056.93
(h) Overseas employee costs 1395.76 1131.00
(i) Travelling and conveyance expenses 88.28 69.87
(j) Software, hardware and material cost 357.70 373.43
(k) Other expenses 456.20 345.18
19) Value of Imports calculated on C.I.F. basis:
(Rs. in crores)
2011 2010
Raw materials, sub-assemblies and components 14.04 11.11
Capital goods 361.82 101.84
Stores and spare parts 0.01 0.02
20) Licensed and installed capacities and production:
(Installed capacity certified by the management and accepted by the
auditors without verification, this being a technical matter):
Installed Capacity Actual Production
(units) (units)
Document processing systems 45000 4314
45000 9004
Licensed capacity for document processing systems is not applicable.
21) Information in regard to finished goods:
Opening Stock Purchase
Qty. Value Qty. Value
(Rs. in (Rs. in
crores) crores)
Document processing 2271 1.40 - -
systems 5291 2.87 - -
Others (including - - - -
software license) - - - -
Total 1.40 -
2.87 -
Turnover Closing Stock
Qty. Value Qty. Value
(Rs. in (Rs. in
crores) crores)
Document processing 6549 12.15 36 0.19
systems 12024 19.01 2271 1.40
Others (including - 1092.00 - -
software license) - 792.51 - -
Total 1104.15 0.19
811.52 1.40
22) Value of imported and indigenous raw materials, sub-assemblies and
components, stores and spare parts consumed:
Raw materials, Stores and
sub-assemblies and Spare Parts
components
(Rs. in % (Rs. in %
crores) crores)
Imported 14.23 80.36 0.01 26.91
18.67 78.66 0.01 57.01
Indigenous 3.48 19.64 0.03 73.09
5.06 21.34 0.01 42.99
Total 17.71 100.00 0.04 100.00
23.73 100.00 0.02 100.00
Consumption figures shown above are after adjusting excess and shortages
ascertained on physical count, unserviceable items, etc.
23) Remittance in foreign currencies for dividends:
The Company has remitted Rs. Nil (March 31, 2010 : Rs. Nil) in foreign
currencies on account of dividends during the year and does not have
information as to the extent to which remittance, if any, in foreign
currencies on account of dividends have been made by / on behalf of non-
resident shareholde' The particulars of dividends declared and paid to non-
resident shareholders for the year 2009-10 and interim dividends for the
year 2010-11, are as under:
Number of Number of Gross Amount
Non-Resident Equity of dividend
Shareholders Shares Held
(Rs. in crores)
2011 2010
Final dividend for 8739 11,08,03,238 - 55.40
2008-09 declared in
June 2009
Interim dividend
declared in July 2009 9136 21,88,45,873 - 43.77
Interim dividend
declared in
October 2009 9368 23,55,64,230 - 47.11
Interim dividend
declared in
January 2010 9515 24,59,40,797 - 49.19
Final dividend for
2009-10 declared
in June 2010 9980 23,88,02,924 334.32 -
Interim dividend
declared in
July 2010 9950 23,95,09,865 47.90 -
Interim dividend
declared in
October 2010 9435 25,18,31,069 50.37 -
Interim dividend
declared in
January 2011 9626 25,55,13,132 51.10 -
24) Derivative Financial Instruments :
The Company, in accordance with its risk management policies and
procedures, enters into foreign currency forward contracts and currency
option contracts to manage its exposure in foreign exchange rates. The
counter party is generally a bank. These contracts are for a period between
one day and eight years.
The Company does not have any outstanding foreign exchange forward
contracts, which have been designated as Cash Flow Hedges as on March 31,
2011.
The Company has following outstanding derivative instruments as on March
31, 2011:
The following are outstanding currency option contracts, which have been
designated as Cash Flow Hedges, as on:
Foreign Currency A B C D E F
U.S. Dollar 6 145.00 (39.52) 10 357.00 (115.68)
Sterling Pound 9 54.00 8.64 - - -
Euro 21 149.00 1.06 - - -
A = March 31, 2011 - No. of Contracts
B = March 31, 2011 - Notional amount of Currency Options contracts
(million)
C = March 31, 2011 - Fair Value (Rs. in crores) - Gain/(Loss)
D = March 31, 2010 - No. of Contracts
E = March 31, 2010 - Notional amount of Currency Options contracts
(million)
F = March 31, 2010 - Fair Value (Rs. in crores) - (Loss)
Net gain on derivative instruments of Rs. 20.20 crores recognised in
Hedging Reserve as of March 31, 2011 is expected to be reclassified to the
profit and loss account by March 31, 2012.
The movement in Hedging Reserve during the year ended March 31, 2011, for
derivatives designated as Cash Flow Hedges is as follows:
(Rs. in crores)
Year ended Year ended
March 31, 2011 March 31, 2010
Balance at the beginning of the year (76.82) (721.86)
Gains transferred to income statement
on occurrence of forecasted hedge
transaction 4.62 74.10
Net changes in the fair value of
effective portion of outstanding
cash flow derivatives 83.43 569.79
Net derivative gain related to
discontinued Cash Flow Hedges 0.12 1.15
Balance at the end of the year 11.35 (76.82)
In addition to the above Cash Flow Hedges, the Company has outstanding
foreign exchange forward contracts and currency option contracts with
notional amount aggregating Rs. 4432.67 crores (March 31, 2010: Rs. 3316.41
crores) whose fair value showed a gain of Rs. 27.45 crores as on March 31,
2011 (March 31, 2010 : Rs. 4.67 crores). Although these contracts are
effective as hedges from an economic perspective, they do not qualify for
hedge accounting and accordingly these are accounted as derivative
instruments at fair value with changes in fair value recorded in the profit
and loss account. Exchange loss of Rs. 8.88 crores (Previous year: exchange
gain Rs. 91.46 crores) on foreign exchange forward contracts and currency
option contracts have been recognised in the year ended March 31, 2011.
As of balance sheet date, the Company has net foreign currency exposures
that are not hedged by a derivative instrument or otherwise amounting to
Rs. 857.03 crores. (March 31, 2010 : Rs. 764.85 crores)
25) Disclosure required by Clause 32 of the Listing Agreement :
Amount of loans and advances in nature of loans outstanding from
subsidiaries for the year ended March 31, 2011:
(Rs. in crores)
Subsidiary Company Outstanding as at Maximum amount
March 31, 2011 outstanding
during the year
MP Online Limited - -
- 1.70
TCS FNS Pty Limited * 214.39 235.62
219.99 229.56
TCS Iberoamerica SA ** 263.71 278.37
265.66 300.05
CMC Limited *** - -
- 35.72
Tata Consultancy Services 5.19 5.48
Morocco SARL AU 5.23 14.46
Tata Consultancy Services - -
Canada Inc. - 85.76
MahaOnline Limited 0.19 2.08
- -
No. of Shares
* TCS FNS Pty Limited has made the following
investments in its subsidiaries:
(a) TCS Financial Solutions Australia Holdings Pty Limited 65,58,424
(b) TCS Management Pty Ltd. 4,91,712
** TCS Iberoamerica SA has made the following investments
in its subsidiaries:
(a) TCS Solution Centre S.A. 50,00,000
(b) Tata Consultancy Services Argentina S.A. 1,57,69,240
(c) Tata Consultancy Services Do Brasil Ltda 8,67,31,803
(d) Tata Consultancy Services De Mexico S.A., De C.V. 49,500
(e) Tata Consultancy Services De Espana S.A. 59,598
(f) TCS Inversiones Chile Limitada 3,10,10,000
(g) TCS Uruguay S.A. 5,40,000
*** CMC Limited has made the following investments in its subsidiaries:
(a) CMC Americas Inc. 16,00,01,000
26) Increase in payables in respect of purchase of fixed assets amounting
to Rs.14.69 crores for the year ended March 31, 2011 (Previous year:
Rs.5.02 crores) have been considered as non cash transactions.
27) Earning per share:
(Rs. in crores)
2011 2010
Net profit for the year 7569.99 5618.51
Less: Preference share dividend
(including dividend tax) 12.78 19.82
Amount available for equity shareholders 7557.21 5598.69
Weighted average number of shares 195,72,20,996 195,72,20,996
Earning per share basic and diluted (Rs.) 38.61 28.61
Face value per equity share (Rs.) 1 1
28) Previous year's figures have been recast/restated wherever necessary.
29) Previous year's figures are in italics.
As per our Report attached For and on behalf of the Board
For Deloitte Haskins & Sells Ratan N. Tata S. Ramadorai
Chartered Accountants Chairman Vice Chairman
N. Venkatram N. Chandrasekaran S. Mahalingam
Partner CEO and Managing Chief Financial
Director Officer and
Executive Director
Phiroz Vandrevala Aman Mehta
Head Global Director
Corporate Affairs and
Executive Director
Laura M. Cha V. Thyagarajan
Director Director
Dr. Ron Sommer Ishaat Hussain
Director Director
Suprakash Mukhopadhyay Dr. Vijay Kelkar
Company Secretary Director
Place : Mumbai, Place : Mumbai
Date : April 21, 2011 Date : April 21, 2011
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