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Tata Consultancy Services Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

Mar 31, 2023

Carrying amounts of cash and cash equivalents, trade receivables, loans and trade payables as at March 31, 2023 and 2022, approximate the fair value due to their nature. Carrying amounts of bank deposits, earmarked balances with banks, other financial assets and other financial liabilities which are subsequently measured at amortised cost also approximate the fair value due to their nature in each of the periods presented. Fair value measurement of lease liabilities is not required. Fair value of investments carried at amortised cost is ''5,351 crore and ''1,470 crore as at March 31, 2023 and 2022, respectively

(k) Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

• Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The cost of unquoted investments included in Level 3 of fair value hierarchy approximate their fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range.

(l) Derivative financial instruments and hedging activity

The Company''s revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

The Board of Directors has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange forward, currency options and futures contracts in which the counter party is generally a bank.

The Company has entered into derivative instruments not in hedging relationship by way of foreign exchange forward, currency options and futures contracts. As at March 31, 2023 and 2022, the notional amount of outstanding contracts aggregated to ''46,102 crore and ''46,392 crore, respectively, and the respective fair value of these contracts have a net gain of ''12 crore and ''158 crore.

Exchange loss of ''1,159 crore and gain of ''645 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the standalone statement of profit and loss for the years ended March 31, 2023 and 2022, respectively.

Net foreign exchange gain / (loss) include loss of ''112 crore and gain of ''111 crore transferred from cash flow hedging reserve for the years ended March 31, 2023 and 2022, respectively.

Net loss on derivative instruments of ''20 crore recognised in cash flow hedging reserve as at March 31, 2023, is expected to be transferred to the statement of profit and loss by March 31, 2024. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2023.

Following table summarises approximate gain / (loss) on the Company''s other comprehensive income on account of appreciation / depreciation of the underlying foreign currencies:

(m) Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

• Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries.

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

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 6(l).

• Interest rate risk

The Company''s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

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, loans, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Bank deposits include an amount of ''2,428 crore held with three banks having high credit rating which is individually in excess of 10% or more of the Company''s total bank deposits as at March 31, 2023. None of the other financial instruments of the Company result in material concentration of credit risk.

• Exposure to credit risk

The carrying amount of financial assets and contract assets represents the maximum credit exposure. The maximum exposure to credit risk was ''90,655 crore and ''90,388 crore as at March 31, 2023 and 2022, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, loans, contract assets and other financial assets.

The Company''s exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivable and contract assets as at March 31, 2023 and March 31, 2022.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generated sufficient cash flows from operations to meet its financial obligations including lease liabilities as and when they fall due.

The Company''s 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.

II. Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of ''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.

• Equity shares issued as bonus

The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ''86 crore and capital redemption reserve amounting to ''106 crore in three month period ended June 30, 2018, pursuant to an ordinary resolution passed after taking the consent of shareholders through postal ballot.

• Equity shares extinguished on buy-back

The Company bought back 4,00,00,000 equity shares for an aggregate amount of ''18,000 crore being 1.08% of the total paid up equity share capital at ''4,500 per equity share. The equity shares bought back were extinguished on March 29, 2022.

The Company bought back 5,33,33,333 equity shares for an aggregate amount of ''16,000 crore being 1.42% of the total paid up equity share capital at ''3,000 per equity share. The equity shares bought back were extinguished on January 6, 2021.

The Company bought back 7,61,90,476 equity shares for an aggregate amount of ''16,000 crore being 1.99% of the total paid up equity share capital at ''2,100 per equity share. The equity shares bought back were extinguished on September 26, 2018.

7) Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate standalone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use asset is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease-by-lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

Company as a lessor

At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract.

The Company incurred ''211 crore and ''162 crore for the years ended March 31, 2023 and 2022, respectively, towards expenses relating to short-term leases and leases of low-value assets.

The total cash outflow for leases is ''1,732 crore and ''1,561 crore for the years ended March 31, 2023 and 2022, respectively, including cash outflow for short term and low value leases.

The Company has lease term extension options that are not reflected in the measurement of lease liabilities. The present value of future cash outflows for such extension periods is ''786 crore and ''722 crore as at March 31, 2023 and 2022, respectively.

Lease contracts entered by the Company majorly pertain for buildings taken on lease to conduct its business in the ordinary course.

The Company does not have any lease restrictions and commitment towards variable rent as per the contract.

8) Non-financial assets and non-financial liabilities (a) Property, plant and equipment

Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land) and impairment loss, if any.

Depreciation is provided for property, plant and equipment on a straight-line basis so as to expense the cost less residual value 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.

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

Property, plant and equipment 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.

• Project execution plans are modulated basis capacity requirement assessment on an annual basis and all the projects are executed as per rolling annual plan.

(b) Intangible assets

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

Intangible assets consist of rights under licensing agreement and software licences which are amortised over licence period which equates the economic useful life ranging between 2-5 years on a straight-line basis over the period of its economic useful life.

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.

Non-current - Others includes advance of ''177 crore and ''271 crore towards acquiring right-of-use of leasehold land as at March 31, 2023 and 2022, respectively.

Contract fulfillment costs of ''631 crore and ''564 crore for the years ended March 31, 2023 and 2022, respectively, have been amortised in the standalone statement of profit and loss. Refer note 10 for the changes in contract asset.

(d) Inventories

Inventories consists of a) Raw materials, sub-assemblies and components, b) Work-in-progress, c) Stores and spare parts and d) Finished goods. Inventories are carried at lower of cost and net realisable value. The cost of raw materials, sub-assemblies and components is determined on a weighted average basis. Cost of finished goods produced or purchased by the Company includes direct material and labour cost and a proportion of manufacturing overheads.

10) Revenue recognition

The Company earns revenue primarily from providing IT services, consulting and business solutions. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions.

Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.

• Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts expended, number of transactions processed, etc.

• Revenue related to fixed price maintenance and support services contracts where the Company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight-lined over the period of performance.

• In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method (''POC method'') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations.

• Revenue from the sale of distinct internally developed software and manufactured systems and third party software is recognised upfront at the point in time when the system / software is delivered to the customer. In cases where implementation and / or customisation services rendered significantly modifies or customises the software, these services and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method.

• Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to the customer.

• The solutions offered by the Company may include supply of third-party equipment or software. In such cases, revenue for supply of such third party products are recorded at gross or net basis depending on whether the Company is acting as the principal or as an agent of the customer. The Company recognises revenue in the gross amount of consideration when it is acting as a principal and at net amount of consideration when it is acting as an agent.

Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.

The Company''s contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.

Judgement is also required to determine the transaction price for the contract and to ascribe the transaction price to each distinct performance obligation. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, performance bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.

The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.

Revenue from subsidiaries is recognised based on transaction price which is at arm''s length.

Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria for capitalisation. Such costs are amortised over the contractual period or useful life of licence, whichever is less. The assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance resources to be used to satisfy future performance obligations and whether costs are expected to be recovered.

Contract assets are recognised when there are excess of revenues earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

Unearned and deferred revenue ("contract liability") is recognised when there are billings in excess of revenues.

The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.

In accordance with Ind AS 37, the Company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.

Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.

The Company disaggregates revenue from contracts with customers by nature of services, industry verticals and geography.

Information about major customers

No single customer represents 10% or more of the Company''s total revenue during the years ended March 31, 2023 and March 31, 2022.

While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts.

Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is ''1,13,145 crore out of which 55.41% is expected to be recognised as revenue in the next year and the balance thereafter. No consideration from contracts with customers is excluded from the amount mentioned above.

12) Employee benefits 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. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in 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.

The Company provides benefits such as gratuity, pension and provident fund (Company managed fund) to its employees which are treated as defined benefit plans.

Defined contribution plans

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

The Company provides benefits such as superannuation and foreign defined contribution plans to its employees which are treated as defined contribution plans.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Compensated absences

Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as undiscounted liability at the balance sheet date. 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 using the Projected Unit Credit Method.

Gratuity and pension

In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit 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 days'' salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The Company manages the plan through a trust. Trustees administer contributions made to the trust. Certain overseas branches of the Company also provide for retirement benefit plans in accordance with the local laws.

The expected benefits are based on the same assumptions as are used to measure the Company''s defined benefit plan obligations as at March 31, 2023. The Company does not expect to contribute to defined benefit plan obligations funds for year ending March 31, 2024 in view of adequate surplus plan assets as at March 31, 2023.

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.

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 assumptions 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.

In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company''s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in statement of profit and loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.

Superannuation

All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution.

The Company expensed ''278 crore and ''271 crore for the years ended March 31, 2023 and 2022, respectively, towards Employees'' Superannuation Fund.

Foreign defined contribution plan

The Company expensed ''1,070 crore and ''885 crore for the years ended March 31, 2023 and 2022, respectively, towards foreign defined contribution plans.

13) Cost recognition

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

The costs of the Company are broadly categorised in employee benefit expenses, cost of equipment and software licences, depreciation and amortisation expense and other expenses. Other expenses mainly include fees to external consultants, facility expenses, travel expenses, communication expenses, bad debts and advances written off, allowance for doubtful trade receivables and advances (net) and other expenses. Other expenses are aggregation of costs which are individually not material such as commission and brokerage, recruitment and training, entertainment, etc.

15) 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 taxes 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 having its branches in India and overseas where it operates. The current tax payable by the Company in India is Indian income tax payable on 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 Company''s worldwide income.

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 unit 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 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 assets 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 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 Alternate Tax (MAT) paid in accordance with the tax laws in India, to the extent it would be available for set off against future current 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 Company 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 profit 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 fulfillment of certain conditions. From April 1, 2011 profits from units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

Under the Income-tax Act, 1961, the Company 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.

Direct tax contingencies

The Company has ongoing disputes with income tax authorities in India and in some of the other jurisdictions where it operates. The disputes relate to tax treatment of certain expenses claimed as deduction, computation or eligibility of tax incentives and allowances and characterisation of fees for services received. The Company has recognised contingent liability in respect of tax demands received from direct tax authorities in India and other jurisdictions of ''1,471 crore and ''1,616 crore as at March 31, 2023 and 2022, respectively. These demand orders are being contested by the Company based on the management evaluation and advise of tax consultants. In respect of tax contingencies of ''318 crore and ''318 crore as at March 31, 2023 and 2022,

respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

The Company periodically receives notices and inquiries from income tax authorities related to the Company''s operations in the jurisdictions it operates in. The Company 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 2020 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2019 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2019 and earlier.

18) Segment information

The Company publishes the standalone financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

19) Commitments and contingencies Capital commitments

The Company has contractually committed (net of advances) ''1,454 crore and ''1,315 crore as at March 31, 2023 and 2022, respectively, for purchase of property, plant and equipment.

Contingencies• Direct tax matters

Refer note 15.

• Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company has demands amounting to ''498 crore and ''500 crore as at March 31, 2023 and 2022, respectively, from various indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants.

• Other claims

Claims aggregating ''218 crore and ''235 crore as at March 31, 2023 and 2022, respectively, against the Company have not been acknowledged as debts.

In addition to above, 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 alleging unauthorised access to and download of their confidential information and use thereof in the development of the Company''s product MedMantra.

In April 2016, the Company received an unfavourable jury verdict awarding damages of ''7,730 crore (US $940 million) to Epic which was thereafter reduced by the Trial Court to ''3,454 crore (US $420 million). Pursuant to reaffirmation of the District Court Order in March 2019, the Company filed an appeal in the Appeals Court to fully set aside the Order. Epic also filed a cross appeal challenging the reduction by the District Court judge of ''822 crore (US $100 million) award and ''1,645 crore (US $200 million) in punitive damages.

On August 20, 2020, the Appeals Court (a) vacated the award of ''2,303 crore (US $280 million) in punitive damages considering the award to be constitutionally excessive and remanded the case back to District Court with instructions to reassess and reduce the punitive damages award to at most ''1,151 crore (US $140 million), (b) affirmed the District Court''s decision vacating the jury''s award of ''822 crore (US $100 million) in compensatory damages for alleged use of "other confidential information" by the Company, and, (c) affirmed the District Court''s decision upholding the jury''s award of ''1,151 crore (US $140 million) in compensatory damages for use of the comparative analysis by the Company. Considering all the facts and various legal precedence, on a conservative and prudent basis, the Company provided ''1,218 crore (US $165 million) towards this legal claim in its statement of profit and loss for three month period ended September 30, 2020. This was presented as an "exceptional item" in the standalone statement of profit and loss. On April 8, 2021, Epic approached the Supreme Court seeking review of the Order of the Appeals Court which was denied by the Supreme Court on March 21, 2022.

On April 21, 2022, Epic invoked payment of ''1,151 crore (US $140 million) out of ''3,618 crore (US $440 million) Letter of Credit provided as security, towards compensatory damages awarded by the District Court and confirmed by the Appeals Court, already provided for in the earlier years.

On July 1, 2022, the District Court passed an Order affirming the punitive damages at ''1,151 crore (US $140 million). The Company has filed an appeal on November 16, 2022, in the Appeals Court to reduce the punitive damages awarded by the District Court, which is pending.

Pursuant to encashment of the Letter of Credit towards compensatory damages, the value of Letter of Credit made available to Epic stands reduced to ''1,250 crore (US $152 million).

• Guarantees and letter of comfort

The Company has given letter of comfort to banks for credit facilities availed by its subsidiaries. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary.

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

The amounts assessed as contingent liability do not include interest that could be claimed by counter parties.

20) Related party transactions

The Company''s principal related parties consist of its holding company, Tata Sons Private Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The Company''s material related party transactions and outstanding balances are with related parties with whom the Company routinely enter into transactions in the ordinary course of business. Refer note 21 of consolidated financial statement for list of subsidiaries of the Company.

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

The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available.

21) No funds have been advanced / loaned / invested (from borrowed funds or from share premium or from any other sources / kind of funds) by the Company to any other person(s) or entity(ies), including foreign entities (Intermediaries), with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons

or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding (whether recorded in writing or otherwise) that the Company shall (i) directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

22) The sitting fees and commission paid to non-executive directors is ''13 crore and ''12 crore as at March 31, 2023 and 2022, respectively.

23) The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

25) Dividend

Dividends paid during the year ended March 31, 2023 include an amount of ''22.00 per equity share towards final dividend for the year ended March 31, 2022 and an amount of ''91.00 per equity share towards interim dividends (including special dividend) for the year ended March 31, 2023. Dividends paid during the year ended March 31, 2022 include an amount of ''15.00 per equity share towards final dividend for the year ended March 31, 2021 and an amount of ''21.00 per equity share towards interim dividends for the year ended March 31, 2022.

Dividends declared by the Company are based on the profit available for distribution. On April 12, 2023, the Board of Directors of the Company have proposed a final dividend of ''24.00 per share in respect of the year ended March 31, 2023 subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately ''8,782 crore.


Mar 31, 2022

(k) Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

• Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The cost of unquoted investments included in Level 3 of fair value hierarchy approximate their fair value because there is a wide range of possible fair value measurements and the cost represents estimate of fair value within that range.

(l) Derivative financial instruments and hedging activity

The Company''s revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

The Board of Directors has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange forward, currency options and futures contracts in which the counter party is generally a bank.

The Company has entered into derivative instruments not in hedging relationship by way of foreign exchange forward, currency options and futures contracts. As at March 31, 2022 and 2021, the notional amount of outstanding contracts aggregated to ''46,392 crore and ''37,615 crore, respectively, and the respective fair value of these contracts have a net gain of ''158 crore and ''242 crore.

Exchange gain of ''645 crore and ''490 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the standalone statement of profit and loss for the years ended March 31, 2022 and 2021, respectively.

Net foreign exchange gain include gain of ''111 crore and loss of ''189 crore transferred from cash flow hedging reserve for the years ended March 31, 2022 and 2021, respectively.

Net loss on derivative instruments of ''26 crore recognised in cash flow hedging reserve as at March 31, 2022, is expected to be transferred to the statement of profit and loss by March 31, 2023. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2022.

(m) Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

• Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries.

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

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign

exchange rates shift of all the currencies by 10% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 6(l).

10% appreciation / depreciation of the functional currency of the Company with respect to various foreign currencies would result in increase / decrease in the Company''s profit before taxes by approximately ''63 crore for the year ended March 31, 2021.


• Interest rate risk

The Company''s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

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, loans, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of ''5,386 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of ''4,800 crore held with three Indian banks having high credit rating which is individually in excess of 10% or more of the Company''s total bank deposits as at March 31, 2022. None of the other financial instruments of the Company result in material concentration of credit risk.

• Exposure to credit risk

The carrying amount of financial assets and contract assets represents the maximum credit exposure. The maximum exposure to credit risk was ''90,388 crore and ''77,949 crore as at March 31, 2022 and 2021, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, loans, contract assets and other financial assets.

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generated sufficient cash flows from operations to meet its financial obligations including lease liabilities as and when they fall due.

The Board of Directors at its meeting held on January 12, 2022, approved a proposal to buy-back upto 4,00,00,000 equity shares of the Company for an aggregate amount not exceeding ''18,000 crore, being 1.08% of the total paid up equity share capital at ''4,500 per equity share. The shareholders approved the same on February 12, 2022, by way of a special resolution through postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 4,00,00,000 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on March 29, 2022. Capital redemption reserve was created to the extent of share capital extinguished (''4 crore). The excess cost of buy-back of ''18,049 crore (including ''49 crore towards transaction cost of buy-back) over par value of shares and corresponding tax on buy-back of ''4,192 crore were offset from retained earnings.

The Company''s 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.

II. Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of ''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.


V. Equity shares movement during the 5 years preceding March 31, 2022• Equity shares issued as bonus

The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to ''86 crore and capital redemption reserve amounting to ''106 crore in three month period ended June 30, 2018, pursuant to an ordinary resolution passed after taking the consent of shareholders through postal ballot.

• Equity shares extinguished on buy-back

The Company bought back 4,00,00,000 equity shares for an aggregate amount of ''18,000 crore being 1.08% of the total paid up equity share capital at ''4,500 per equity share. The equity shares bought back were extinguished on March 29, 2022.

The Company bought back 5,33,33,333 equity shares for an aggregate amount of ''16,000 crore being 1.42% of the total paid up equity share capital at ''3,000 per equity share. The equity shares bought back were extinguished on January 6, 2021.

7) Leases

The Company bought back 7,61,90,476 equity shares for an aggregate amount of ''16,000 crore being 1.99% of the total paid up equity share capital at ''2,100 per equity share. The equity shares bought back were extinguished on September 26, 2018.

The Company bought back 5,61,40,350 equity shares for an aggregate amount of ''16,000 crore being 2.85% of the total paid up equity share capital at ''2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Company as a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate standalone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use asset is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease

payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease-by-lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.

Company as a lessor

At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis

over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease. When the Company is an intermediate lessor it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract.

Interest on lease liabilities is ''451 crore and ''450 crore for the years ended March 31, 2022 and 2021, respectively.

The Company incurred ''162 crore and ''189 crore for the years ended March 31, 2022 and 2021, respectively, towards expenses relating to short-term leases and leases of low-value assets.

The total cash outflow for leases is ''1,561 crore and ''1,619 crore for the years ended March 31, 2022 and 2021, respectively, including cash outflow for short term and low value leases.

The Company has lease term extension options that are not reflected in the measurement of lease liabilities. The present value of future cash outflows for such extension periods is ''722 crore and ''660 crore as at March 31, 2022 and 2021, respectively.

Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the contract.

8) Non-financial assets and non-financial liabilities (a) Property, plant and equipment

Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land) and impairment loss, if any.

Depreciation is provided for property, plant and equipment on a straight-line basis so as to expense the cost less residual value over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual

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

Property, plant and equipment 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) Intangible assets

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

Intangible assets consist of rights under licensing agreement and software licences which are amortised over licence period which equates the economic useful life ranging between 2-5 years on a straight-line basis over the period of its economic useful life.

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.

(d) Inventories

Inventories consists of a) Raw materials, sub-assemblies and components, b) Work-in-progress, c) Stores and spare parts and d) Finished goods. Inventories are carried at lower of cost and net realisable value. The cost of raw materials, sub-assemblies and components is determined on a weighted average basis. Cost of finished goods produced or purchased by the Company includes direct material and labour cost and a proportion of manufacturing overheads.

10) Revenue recognition

The Company earns revenue primarily from providing IT services, consulting and business solutions. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions.

Revenue is recognised upon transfer of control of promised products or

services to customers in an amount that reflects the consideration which the

Company expects to receive in exchange for those products or services.

• Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts expended, number of transactions processed, etc.

• Revenue related to fixed price maintenance and support services contracts where the Company is standing ready to provide services is recognised based on time elapsed mode and revenue is straight-lined over the period of performance.

• In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method (‘POC method'') of accounting with contract costs incurred determining the degree of completion of the performance obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations.

• Revenue from the sale of distinct internally developed software and manufactured systems and third party software is recognised upfront at the point in time when the system / software is delivered to the customer. In cases where implementation and / or customisation services rendered significantly modifies or customises the software, these services and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method.

• Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to the customer.

• The solutions offered by the Company may include supply of third-party equipment or software. In such cases, revenue for supply of such third party products are recorded at gross or net basis depending on whether

the Company is acting as the principal or as an agent of the customer. The Company recognises revenue in the gross amount of consideration when it is acting as a principal and at net amount of consideration when it is acting as an agent.

Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.

The Company''s contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.

Judgement is also required to determine the transaction price for the contract and to ascribe the transaction price to each distinct performance obligation. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, performance bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. Any consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period. The Company allocates the elements

of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.

The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such as how customer consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc.

Revenue from subsidiaries is recognised based on transaction price which is at arm''s length.

Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria for capitalisation. Such costs are amortised over the contractual period or useful life of licence, whichever is less. The assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance resources to be used to satisfy future performance obligations and whether costs are expected to be recovered.

Contract assets are recognised when there are excess of revenues earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

Unearned and deferred revenue (“contract liability”) is recognised when there are billings in excess of revenues.

The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within contractually agreed credit period.

In accordance with Ind AS 37, the Company recognises an onerous contract provision when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.

Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.

The Company disaggregates revenue from contracts with customers by nature of services, industry verticals and geography.

Information about major customers

No single customer represents 10% or more of the Company''s total revenue during the years ended March 31, 2022 and 2021.

While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts.

Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is ''93,546 crore out of which 56.71% is expected to be recognised as revenue in the next year and the balance thereafter. No consideration from contracts with customers is excluded from the amount mentioned above.

12) Employee benefits 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. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in 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.

The Company provides benefits such as gratuity, pension and provident fund (Company managed fund) to its employees which are treated as defined benefit plans.

Defined contribution plans

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

The Company provides benefits such as superannuation and foreign defined contribution plans to its employees which are treated as defined contribution plans.

Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Compensated absences

Compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related

services are recognised as undiscounted liability at the balance sheet date. 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.

Gratuity and pension

In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit 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 days'' salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The Company manages the plan through a trust. Trustees administer contributions made to the trust. Certain overseas branches of the Company also provide for retirement benefit plans in accordance with the local laws.

Future mortality assumptions are taken based on the published statistics by the Insurance Regulatory and Development Authority of India.

The expected benefits are based on the same assumptions as are used to measure the Company''s defined benefit plan obligations as at March 31, 2022. The Company does not expect to contribute to defined benefit plan obligations funds for year ending March 31, 2023 in view of adequate surplus plan assets as at March 31, 2022.

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.

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 assumptions 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.

Provident fund

In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company''s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in statement of profit and loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.

The Company expensed ''1,372 crore and ''1,078 crore for the years ended March 31, 2022 and 2021, respectively, towards provident fund.

Superannuation

All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution.

The Company expensed ''271 crore and ''254 crore for the years ended March 31, 2022 and 2021, respectively, towards Employees'' Superannuation Fund.

Foreign defined contribution plan

The Company expensed ''885 crore and ''658 crore for the years ended March 31, 2022 and 2021, respectively, towards foreign defined contribution plans.

13) Cost recognition

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

The costs of the Company are broadly categorised in employee benefit expenses, cost of equipment and software licences, depreciation and amortisation expense and other expenses. Other expenses mainly include fees to external consultants, facility expenses, travel expenses, communication expenses, bad debts and advances written off, allowance for doubtful trade receivables and advances (net) and other expenses. Other expenses are aggregation of costs which are individually not material such as commission and brokerage, recruitment and training, entertainment, etc.

15) 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 taxes 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 having its branches in India and overseas where it operates. The current tax payable by the Company 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 Company''s worldwide income.

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 unit intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred income tax is recognised using the balance sheet approach. Deferrec 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 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 assets 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 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.

Direct tax contingencies

The Company has ongoing disputes with income tax authorities in India and in some of the other jurisdictions where it operates. The disputes relate to tax treatment of certain expenses claimed as deduction, computation or eligibility of tax incentives and allowances and characterisation of fees for services received. The Company has recognised contingent liability in respect of tax demands received from direct tax authorities in India and other jurisdictions of ''1,616 crore and ''891 crore as at March 31, 2022 and 2021, respectively. These demand orders are being contested by the Company based on the management evaluation and advise of tax consultants. In respect of tax contingencies of ''318 crore and ''318 crore as at March 31, 2022 and 2021, respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

The Company periodically receives notices and inquiries from income tax authorities related to the Company''s operations in the jurisdictions it operates in. The Company 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 2018 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2018 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2018 and earlier.

19) Commitments and contingencies Capital commitments

The Company has contractually committed (net of advances) ''1,315 crore and ''1,009 crore as at March 31, 2022 and 2021, respectively, for purchase of property, plant and equipment.

Contingencies

• Direct tax matters

Refer note 15.

• Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company has demands amounting to ''500 crore and ''495 crore as at March 31, 2022 and 2021, respectively, from various indirect tax authorities which are being contested by the Company based on the management evaluation and advice of tax consultants.

• Other claims

Claims aggregating ''235 crore and ''105 crore as at March 31, 2022 and 2021, respectively, against the Company have not been acknowledged as debts.

In addition to above, 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 alleging unauthorised access to and download of their confidential information and use thereof in the development of the Company''s product MedMantra. In April 2016, the Company received an unfavourable jury verdict awarding damages of

''7,115 crore (US $940 million) to Epic which was thereafter reduced by the Trial Court to ''3,179 crore (US $420 million). Pursuant to reaffirmation of the District Court order in March 2019, the Company filed an appeal in the Appeals Court to fully set aside the Order. Epic also filed a cross appeal challenging the reduction by the District Court judge of ''757 crore (US $100 million) award and ''1,514 crore (US $200 million) in punitive damages. On August 20, 2020, the Appeals Court vacated the award of ''2,119 crore (US $280 million) in punitive damages considering the award to be constitutionally excessive and remanded the case back to District Court with instructions to reassess and reduce the punitive damages award to at most ''1,060 crore (US $140 million), affirmed the District Court''s decision vacating the jury''s award of ''757 crore (US $100 million) in compensatory damages for alleged use of “other confidential information” by the Company, and affirmed the District Court''s decision upholding the jury''s award of ''1,060 crore (US $140 million) in compensatory damages for use of the comparative analysis by the Company. The proceedings for assessing punitive damages have been remanded back to the District Court. Both the Company and Epic have filed their briefs at the District Court in relation to punitive damages. The matter is under consideration by the District Court. On April 8, 2021, Epic approached the Supreme Court seeking review of the order of the Appeals Court vacating the award of ''2,119 crore (US $280 million) towards punitive damages and remanding back to District Court with an instruction to reassess the punitive damages, to no more than ''1,060 crore (US $140 million). On March 21, 2022, Supreme Court denied Epic''s petition seeking review of the order. The Company will continue to pursue all legal options available in the matter. Considering all the facts and various legal precedence, on a conservative and prudent basis, the Company provided ''1,218 crore (US $165 million) towards this legal claim in its statement of profit

and loss for three month period ended September 30, 2020. This was presented as an “exceptional item” in the standalone statement of profit and loss.

Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for ''3,331 crore (US $440 million) as financial security in order to stay execution of the judgement pending post-appeal proceedings and conclusion.

• Guarantees and letter of comfort

The Company has given letter of comfort to banks for credit facilities availed by its subsidiaries. As per the terms of letter of comfort, the

Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary.

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

The amounts assessed as contingent liability do not include interest that could be claimed by counter parties.

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

The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available.

21) The sitting fees and commission paid to non-executive directors is ''12 crore and ''10 crore as at March 31, 2022 and 2021, respectively.

22) The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are under consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

24) Dividends

Dividends paid during the year ended March 31, 2022 include an amount of ''15.00 per equity share towards final dividend for the year ended March 31, 2021 and an amount of ''21.00 per equity share towards interim dividends for the year ended March 31, 2022. Dividends paid during the year ended March 31, 2021 include an amount of ''6.00 per equity share towards final dividend for the year ended March 31, 2020 and an amount of ''23.00 per equity share towards interim dividends (including special dividend) for the year ended March 31, 2021.

Dividends declared by the Company are based on the profit available for distribution. On April 11, 2022, the Board of Directors of the Company have proposed a final dividend of ''22.00 per share in respect of the year ended March 31, 2022 subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately ''8,050 crore.


Mar 31, 2021

6) Financial assets, financial liabilities and equity instruments

Financial assets and liabilities are recognised when the Company 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.

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired.

Cash and cash equivalents

The Company 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 are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets 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 Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless they are 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 or loss are immediately recognised in statement of profit and loss.

Investment in subsidiaries

Investment in subsidiaries are measured at cost less impairment loss, if any.

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 issued by the Company are recognised at the proceeds received net of direct issue cost.

Derivative accounting

• Instruments in hedging relationship

The Company designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in respect of foreign exchange risks. These hedges are accounted for as cash flow hedges.

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

The hedge instruments are designated and documented as hedges at the inception of the contract. The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of their respective cash flows. 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. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in net foreign exchange gains in the statement of profit and loss.

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

The Company 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 the 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 and 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 and loss. Any gain or loss is recognised immediately in statement of profit and loss when the hedge becomes ineffective.

• Instruments not in hedging relationship

The Company enters into contracts that are effective as hedges from an economic perspective, but they do not qualify for hedge accounting. The change in the fair value of such instrument is recognised in statement of profit and loss.

The Company 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 Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. In determining the allowances for doubtful trade receivables, the Company 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 allowance rates used in the provision matrix. For all other financial assets, expected credit losses are measured at an amount equal to the 12-months 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.


Mar 31, 2019

1) Corporate information

Tata Consultancy Services Limited (referred to as “TCS Limited” or “the Company”) provides IT services, consulting and business solutions that has been partnering with many of the world’s largest businesses in their transformation journeys for the last fifty years. The Company offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. This is delivered through its unique Location-Independent Agile delivery model recognised as a benchmark of excellence in software development.

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, 2019, Tata Sons Private Limited (formerly Tata Sons Limited), the holding company owned 72.02% of the Company’s equity share capital.

The Board of Directors approved the financial statements for the year ended March 31, 2019 and authorised for issue on April 12, 2019.

2) Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (“MCA”), through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective from April 1, 2019:

Ind AS 116 - Leases

Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lessee accounting model for lessees. A lessee recognises right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.

The Company will adopt Ind AS 116, effective annual reporting period beginning April 1, 2019. The Company will apply the standard to its leases, retrospectively, with the cumulative effect of initially applying the standard, recognised on the date of initial application (April 1, 2019). Accordingly, the Company will not restate comparative information, instead, the cumulative effect of initially applying this Standard will be recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019. On that date, the Company will recognise a lease liability measured at the present value of the remaining lease payments. The right-of-use asset is recognised at its carrying amount as if the standard had been applied since the commencement date, but discounted using the lessee’s incremental borrowing rate as at April 1, 2019. In accordance with the standard, the Company will elect not to apply the requirements of Ind AS 116 to short-term leases and leases for which the underlying asset is of low value.

On transition, the Company will be using the practical expedient provided the standard and therefore, will not reassess whether a contract, is or contains a lease, at the date of initial application.

The Company is in the process of finalising changes to systems and processes to meet the accounting and reporting requirements of the standard.

With effect from April 1, 2019, the Company will recognise new assets and liabilities for its operating leases of premises and other assets. The nature of expenses related to those leases will change from lease rent in previous periods to (a) amortization change for the right-to-use asset, and (b) interest accrued on lease liability.

Previously, the Company recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.

As a lessor, sublease shall be classified as an operating lease if the head lease is classified as a short term lease. In all other cases, the sublease shall be classified as a finance lease.

On preliminary assessment, for leases other than short-term leases and leases of low value assets, the Company will recognise a right-of-use asset of Rs. 4,206 crore and a corresponding lease liability of Rs. 5,029 crore with the cumulative effect of applying the standard by adjusting retained earnings net of taxes. There will be consequent reclassification in the cash flow categories in the statement of cash flows.

Ind AS 12 - Income taxes (amendments relating to income tax consequences of dividend and uncertainty over income tax treatments)

The amendment relating to income tax consequences of dividend clarify that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The Company does not expect any impact from this pronouncement. It is relevant to note that the amendment does not amend situations where the entity pays a tax on dividend which is effectively a portion of dividends paid to taxation authorities on behalf of shareholders. Such amount paid or payable to taxation authorities continues to be charged to equity as part of dividend, in accordance with Ind AS 12.

The amendment to Appendix C of Ind AS 12 specifies that the amendment is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. It outlines the following: (1) the entity has to use judgement, to determine whether each tax treatment should be considered separately or whether some can be considered together. The decision should be based on the approach which provides better predictions of the resolution of the uncertainty

(2) the entity is to assume that the taxation authority will have full knowledge of all relevant information while examining any amount (3) entity has to consider the probability of the relevant taxation authority accepting the tax treatment and the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates would depend upon the probability. The Company does not expect any significant impact of the amendment on its financial statements.

Ind AS 109 - Prepayment Features with Negative Compensation

The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. TCS Limited does not expect this amendment to have any impact on its financial statements.

Ind AS 19 - Plan Amendment, Curtailment or Settlement

The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. TCS Limited does not expect this amendment to have any significant impact on its financial statements.

Ind AS 23 - Borrowing Costs

The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings. TCS Limited does not expect any impact from this amendment.

Ind AS 28 - Long-term Interests in Associates and Joint Ventures

The amendments clarify that an entity applies Ind AS 109 Financial Instruments, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied. TCS Limited does not currently have any long-term interests in associates and joint ventures.

Ind AS 103 - Business Combinations and Ind AS 111 - Joint Arrangements

The amendments to Ind AS 103 relating to re-measurement clarify that when an entity obtains control of a business that is a joint operation, it re-measures previously held interests in that business. The amendments to Ind AS 111 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not re-measure previously held interests in that business. TCS Limited will apply the pronouncement if and when it obtains control / joint control of a business that is a joint operation.

Under the Income-tax Act, 1961, the Company 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, the Company has recognised a deferred tax asset of Rs. 1,157 crore.

The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company as deductions, and computation of, or eligibility of, certain tax incentives or allowances.

The Company has contingent liability in respect of demands from direct tax authorities in India and other jurisdictions, which are being contested by the Company on appeal amounting Rs. 1,501 crore and Rs. 5,616 crore as at March 31, 2019 and March 31, 2018 respectively. In respect of tax contingencies of Rs. 318 crore and Rs. 318 crore as at March 31, 2019 and March 31, 2018, respectively, not included above, the Company is entitled to an indemnification from the seller of TCS e-Serve Limited.

The Company periodically receives notices and inquiries from income tax authorities related to the Company’s operations in the jurisdictions it operates in. The Company 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 2016 are generally subject to examination by the tax authorities. In United States of America, the federal statute of limitation applies to fiscals 2015 and earlier and applicable state statutes of limitation vary by state. In United Kingdom, the statute of limitation generally applies to fiscal 2016 and earlier.

Earmarked balances with banks significantly pertains to margin money for purchase of investments, margin money for derivative contracts and unclaimed dividends.

3) Share capital

The authorised, issued, subscribed and fully paid-up share capital comprises of the following:

The Board of Directors of the Company at its meeting held on April 19, 2018, approved a proposal to issue bonus shares in the ratio of one equity share of Rs. 1 each for every one equity share of Rs. 1 each held by the shareholders of the Company as on the record date, which was approved by the shareholders by means of an ordinary resolution through a postal ballot. The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to Rs. 86 crore and capital redemption reserve amounting to Rs. 106 crore.

The Board of Directors of the Company at its meeting held on June 15, 2018, approved a proposal to buyback of upto 7,61,90,476 equity shares of the Company for an aggregate amount not exceeding Rs. 16,000 crore being 1.99% of the total paid up equity share capital at Rs. 2,100 per equity share, which was approved by the shareholders by means of a special resolution through a postal ballot. A Letter of Offer was made to all eligible shareholders. The Company bought back 7,61,90,476 equity shares out of the shares that were tendered by eligible shareholders and extinguished the equity shares on September 26, 2018. Capital redemption reserve was created to the extent of share capital extinguished (Rs. 8 crore). The excess of cost of buy-back of Rs. 16,045 crore (including Rs. 45 crore towards transaction costs of buy-back) over par value of shares was offset from retained earnings.

In the previous year, the Company bought back 5,61,40,350 equity shares for an aggregate amount of Rs. 16,000 crore being 2.85% of the total paid up equity share capital at Rs. 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017.

(ii) 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.

(v) Equity shares movement during the 5 years preceding March 31, 2019

(a) Equity shares issued as bonus

The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation of profits transferred from retained earnings amounting to Rs. 86 crore and capital redemption reserve amounting to Rs. 106 crore, pursuant to an ordinary resolution passed after taking the consent of shareholders through postal ballot.

(b) Equity shares extinguished on buy-back

The Company bought back 7,61,90,476 equity shares for an aggregate amount of Rs. 16,000 crore being 1.99% of the total paid up equity share capital at Rs. 2,100 per equity share. The equity shares bought back were extinguished on September 26, 2018.

The Company bought back 5,61,40,350 equity shares for an aggregate amount of Rs. 16,000 crore being 2.85% of the total paid up equity share capital at Rs. 2,850 per equity share. The equity shares bought back were extinguished on June 7, 2017.

(c) Equity shares allotted as fully-paid including equity shares fully paid 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 (‘the Scheme’) sanctioned by the High Court of Judicature at Bombay vide its Order dated August 14, 2015 and the High Court of Judicature at Hyderabad vide its Order dated July 20, 2015.

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.

(vi) The Company’s 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.

Geographical revenue is allocated based on the location of the customers.

Information about major customers:

No single customer represents 10% or more of the Company’s total revenue during the year ended March 31, 2019 and March 31, 2018.

While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts.

Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as terminations, changes in scope of contracts, periodic revalidations of the estimates, economic factors (changes in currency rates, tax laws etc). The aggregate value of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is Rs. 68,065 crore out of which 53.87% is expected to be recognised as revenue in the next year and the balance thereafter. No consideration from contracts with customers is excluded from the amount mentioned above.

Employee benefit plans Gratuity and pension

In accordance with Indian law, the Company operates a scheme of gratuity which is a defined benefit 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 days’ salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The Company manages the plan through a trust. Trustees administer contributions made to the trust. Certain overseas subsidiaries of the Company also provide for retirement benefit pension plans in accordance with the local laws.

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

The expected benefits are based on the same assumptions as are used to measure the Company’s defined benefit plan obligations as at March 31, 2019. The Company is expected to contribute Rs. 315 crore to defined benefit plan obligations funds for the year ending March 31, 2020.

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 increase / (decrease) as follows:

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.

In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a Trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company’s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in statement of profit and loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of Government administered provident fund.

The Company contributed Rs. 856 crore and Rs. 795 crore for the years ended March 31, 2019 and 2018, respectively, to the provident fund.

Superannuation

All eligible employees on Indian payroll are entitled to benefits under Superannuation, a defined contribution plan. The Company makes monthly contributions until retirement or resignation of the employee. The Company recognises such contributions as an expense when incurred. The Company has no further obligation beyond its monthly contribution.

The Company contributed Rs. 232 crore and Rs. 222 crore for the years ended March 31, 2019 and 2018, respectively, to the Employees’ Superannuation Fund.

Foreign defined contribution plan

The Company contributed Rs. 475 crore and Rs. 331 crore for the years ended March 31, 2019 and 2018, respectively, towards foreign defined contribution plans.

Other expenses include Rs. 3,897 crore and Rs. 255 crore for the years ended March 31, 2019 and March 31, 2018, respectively, towards sales, marketing and advertisement expenses.

The Company made a contribution to an electoral trust of Rs. 220 crore and NIL for the years ended March 31, 2019 and 2018, respectively, which is included in other expenses.

4) Research and development expenditure including capital expenditure aggregating Rs. 305 crore and Rs. 295 crore was incurred in the years ended March 31, 2019 and 2018, respectively.

5) As per section 135 of the Companies Act, 2013, amount required to be spent by the Company during the year ended March 31, 2019 and 2018 is Rs. 542 cores and Rs. 497 crore, respectively, computed at 2% of its average net profit for the immediately preceding three financial years, on Corporate Social Responsibility (CSR). The Company incurred an amount of Rs. 434 crore and Rs. 400 crore during the year ended March 31, 2019 and 2018, respectively, towards CSR expenditure for purposes other than construction / acquisition of any asset.

6) Leases

The Company has taken on lease properties and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were Rs. 1,468 crore and Rs. 1,431 crore for the years ended March 31, 2019 and 2018, respectively.

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

Income under sub-leases of Rs. 7 crore and Rs. 5 crore have been recognised in the statement of profit and loss for the year ended March 31, 2019 and March 31, 2018, respectively.

7) 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(j) to the financial statements.

Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables (previous year: unbilled revenue), loans receivables and trade payables as at March 31, 2019 and March 31, 2018 approximate the fair value. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant in each of the periods 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 consists of the following three levels:

- Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The cost of unquoted investments included in Level 3 of fair value hierarchy approximate their 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 disclosure are required):

(b) Derivative financial instruments and hedging activity

The Company’s revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

The Board of Directors of the Company has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange forwards, currency option and futures contracts in which the counter party is generally a bank.

In addition to the above cash flow hedges, the Company has outstanding foreign exchange forward, currency options and futures contracts with notional amount aggregating Rs. 34,593 crore and Rs. 22,404 crore whose fair value showed a net gain of Rs. 288 crore and net loss of Rs. 12 crore as at March 31, 2019 and 2018, respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting.

Exchange gain of Rs. 405 crore and exchange loss of Rs. 52 crore on foreign exchange forward, currency options and futures contracts that do not qualify for hedge accounting have been recognised in the consolidated statement of profit and loss for the years ended March 31, 2019 and 2018, respectively.

Net foreign exchange gains include gain of Rs. 30 crore and exchange loss of Rs. 213 crore transferred from cash flow hedging reserve for the years ended March 31, 2019 and 2018, respectively.

Net gain on derivative instruments of Rs. 104 crore recognised in cash flow hedging reserve as at March 31, 2019, is expected to be transferred to the statement of profit and loss by March 31, 2020. The maximum period over which the exposure to cash flow variability has been hedged is through calendar year 2019.

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

(c) Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.

i. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

a) Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries.

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

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 29(b).

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company’s profit before taxes by approximately Rs. 173 crore for the year ended March 31, 2019.

The following table sets forth information relating to foreign currency exposure as at March 31, 2018:

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company’s profit before taxes by approximately Rs. 168 crore for the year ended March 31, 2018.

b) Interest rate risk

The Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

ii. Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by 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 receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of Rs. 6,750 crore are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of Rs. 4,850 crore held with two Indian banks having high credit rating which are individually in excess of 10% or more of the Company’s total bank deposits as at March 31, 2019. None of the other financial instruments of the Company result in material concentration of credit risk.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs. 75,278 crore and Rs. 68,711 crore as at March 31, 2019, and 2018, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled receivables (previous year: unbilled revenue), contract assets and other financial assets.

The Company’s exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivable, unbilled receivables (previous year: unbilled revenue) and contract assets as at March 31, 2019 and March 31, 2018.

Geographical concentration of trade receivables, unbilled receivables (previous year: unbilled revenue) and contract assets is allocated based on the location of the customers.

iii. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due.

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

8) Segment information

The Company publishes the unconsolidated financial statements of the Company along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

9) Commitments and Contingencies Capital commitments

The Company has contractually committed (net of advances) Rs. 1,258 crore and Rs. 760 crore as at March 31, 2019 and 2018, respectively, for purchase of property, plant and equipment.

Contingencies

Direct tax matters

Refer note 9.

Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification of certain items. The Company has demands amounting to Rs. 325 crore and Rs. 275 crore as at March 31, 2019 and 2018, respectively from various indirect tax authorities which are being contested by the Company based on the management evaluation and on the advice of tax consultants.

Other claims

Claims aggregating Rs. 3,138 crore and Rs. 2,977 crore as at March 31, 2019 and 2018, respectively, against the Company have not been acknowledged as debts.

In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic’s proprietary information. In April 2016, the Company received an unfavourable jury verdict awarding damages totaling Rs. 6,499 crore (US $ 940 million) to Epic.

In September 2017, the Company received a Court order reducing the damages from Rs. 6,499 crore (US $ 940 million) to Rs. 2,904 crore (US $ 420 million) to Epic. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for Rs. 3,042 crore (US $ 440 million) as financial security in order to stay execution of the judgment pending post-judgment proceedings and appeal. Pursuant to reaffirmation of the court order in March 2019, the Company has filed a notice of appeal in the superior Court to fully set aside the Order. The Company has received legal advice to the effect that the order and the reduced damages awarded are not supported by evidence presented during the trial. Accordingly, an amount of Rs. 3,042 crore (US $ 440 million) is disclosed as contingent liability which is included in the claims not acknowledged as debts.

Bank guarantees and letters of comfort

The Company has given letter of comfort to bank for credit facilities availed by its subsidiary Tata America International Corporation. As per the terms of letter of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary.

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

The amounts assessed as contingent liability do not include interest that could be claimed by counter parties.

10) Related party transactions

The Company’s principal related parties consist of its holding company, Tata Sons Private Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The Company’s material related party transactions and outstanding balances are with related parties with whom the Company routinely enter into transactions in the ordinary course of business. Refer note 34 of consolidated financial statement for list of subsidiaries of the Company.

Transactions with related parties are as follows:

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

The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available.

11) The sitting fees and commission paid to non-executive directors is Rs. 12 crore and Rs. 13 crore as at March 31, 2019 and 2018, respectively.

12) Subsequent event

Dividends paid during the year ended March 31, 2019 include an amount of Rs. 29 per equity share towards final dividend for the year ended March 31, 2018 and an amount of Rs. 12 per equity share towards interim dividends for the year ended March 31, 2019. Dividends paid during the year ended March 31, 2018 include an amount of Rs. 27.50 per equity share towards final dividend for the year ended March 31, 2017 and an amount of Rs. 21 per equity share towards interim dividends for the year ended March 31, 2018.

Dividends declared by the Company are based on the profit available for distribution. Distribution of dividends out of general reserve and retained earnings is subject to applicable dividend distribution tax. On April 12, 2019, the Board of Directors of the Company have proposed a final dividend of Rs. 18 per share in respect of the year ended March 31, 2019 subject to the approval of shareholders at the Annual General Meeting. The proposal is subject to the approval of shareholders at the Annual General Meeting, and if approved, would result in a cash outflow of approximately Rs. 8,142 crore, inclusive of corporate dividend tax of Rs. 1,388 crore.


Mar 31, 2018

1) Research and development expenditure aggregating Rs, 295 crores (March 31, 2017: Rs, 282 crores), including capital expenditure was incurred during the year.

27) During the year, the Company has incurred an amount of Rs, 400 crores (March 31, 2017: Rs, 380 crores) towards Corporate Social Responsibility expenditure.

2) Leases

The Company has taken on lease properties and equipment under operating lease arrangements. Most of the leases include renewal and escalation clauses. Operating lease rent expenses were Rs, 1,431 crores and Rs, 1,213 crores for the year ended March 31, 2018 and March 31, 2017 respectively.

Carrying amounts of cash and cash equivalents, trade receivables, unbilled revenues, loans and trade payables as at March 31, 2018 and March 31, 2017 approximate the fair value. Difference between carrying amounts and fair values of bank deposits, earmarked balances with banks, 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 consists of the following three levels:

Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The financial instruments 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 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 disclosure are required):

(b) Derivative financial instruments and hedging activity

The Company''s revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Company also does business in Australian Dollar, Canadian Dollar, Swiss Franc, Japanese Yen, Norwegian Krone, Swedish Krona, South African Rand, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

The Board of Directors of the Company has constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange forward, currency options contracts and futures contracts in which the counter party is generally a bank.

In addition to the above cash flow hedges, the Company has outstanding foreign exchange forward, currency options and futures contracts with notional amount aggregating Rs, 22,404 crores (March 31, 2017 : Rs, 19,159 crores) whose fair value showed a net loss of Rs, 12 crores as at March 31, 2018 (March 31, 2017 : net gain Rs, 412 crores) respectively. Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting.

Exchange loss for the year ended March 31, 2018 of Rs, 52 crores (March 31, 2017: Exchange gain of Rs, 1,522 crores) on foreign exchange forward, currency options and futures contracts has been recognized in the statement of profit and loss.

Net foreign exchange gains include loss of Rs, 213 crores (March 31, 2017: Net gain of Rs, 508 crores) transferred from cash flow hedging reserve for the year ended March 31, 2018.

Net loss on derivative instruments of Rs, 71 crores recognized in Hedging Reserve as at March 31, 2018, is expected to be transferred to the statement of profit and loss by March 31, 2019. The maximum period over which the exposure of cash flow variability has been hedged is through calendar year of 2018.

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

(c) Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.

(i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

(a) Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

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

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 29(b).

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company''s profit before taxes by approximately Rs, 168 crores for the year ended March 31, 2018.

10% appreciation / depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease / increase in the Company''s profit before taxes by approximately Rs, 112 crores for the year ended March 31, 2017.

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

(b) Interest rate risk

The Company''s investments are primarily in fixed rate interest bearing investments. Hence the Company is not significantly exposed to interest rate risk.

(ii) Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by 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, 4,000 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of Rs, 2,000 crores held with an Indian bank having high quality credit rating which are individually in excess of 10% or more of the Company''s total bank deposits for the year ended March 31, 2018. None of the other financial instruments of the Company result in material concentration of credit risk.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs, 68,711 crores and Rs, 67,749 crores as at March 31, 2018, and March 31, 2017, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled revenue and other financial assets.

The Company''s exposure to customers is diversified and no single customer contributes to more than 10% of outstanding trade receivable and unbilled revenue as at March 31, 2018 and March 31, 2017.

Geographical concentration of trade receivables and unbilled revenue is allocated based on the location of the customers.

(iii) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due.

Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterization and classification of certain items. As at March 31, 2018, the Company has demands amounting to Rs, 275 crores (March 31, 2017: Rs, 253 crores) from various indirect tax authorities which are being contested by the Company based on management evaluation and on the advice of tax consultants.

Other claims

As at March 31, 2018, claims aggregating Rs, 2,977 crores (March 31, 2017: Rs, 6,276 crores) against the Company have not been acknowledged as debts.

In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic''s proprietary information. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling Rs, 6,114 crores (US $ 940 million) to Epic. In September 2017, the Company received a Court order reducing the damages from Rs, 6,114 crores (US $ 940 million) to Rs, 2,732 crores (US $ 420 million) to Epic. The Company has received legal advice to the effect that the order and the reduced damages awarded are not supported by evidence presented during the trial and a strong appeal can be made to superior Court to fully set aside the Order. Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for Rs, 2,862 crores (US $ 440 million) as financial security in order to stay execution of the judgment pending post-judgment proceedings and appeal. Accordingly, an amount of Rs, 2,862 crores (US $ 440 million) is disclosed as Contingent Liability as included in the claims not acknowledged as debts by the Company.

Bank guarantees and letters of comfort

The Company has given letter of comfort to bank for credit facilities availed by its subsidiary Tata America International Corporation. 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 subsidiary.

The Company has provided guarantees to third parties on behalf of its subsidiaries aggregating Rs, 4,343 crores (March 31, 2017: Rs, 2,127 crores). The Company does not expect any outflow of resources in respect of the above.

The amounts assessed as Contingent liability do not include interest that could be claimed by counter parties.

*Represents value less than Rs, 0.50 crore.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.

3) Related party transactions

The Company''s principal related parties consist of its holding company Tata Sons Limited and its subsidiaries, its own subsidiaries, affiliates and key managerial personnel. The Company''s material related party transactions and outstanding balances are with related parties with whom the Company routinely enter into transactions in the ordinary course of business.

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

The above figures do not include provisions for encashable leave, gratuity and premium paid for group health insurance, as separate actuarial valuation / premium paid are not available.

4) Subsequent events

Dividends

Dividends paid during the year ended March 31, 2018 include an amount of '' 27.50 per equity share towards final dividend for the year ended March 31, 2017 and an amount of '' 21 per equity share towards interim dividend for the year ended March 31, 2018. Dividends paid during the year ended March 31, 2017 include an amount of '' 27 per equity share towards final dividend for the year ended March 31, 2016 and an amount of '' 19.50 per equity share towards interim dividend for the year ended March 31, 2017.

Dividends declared by the Company are based on the profit available for distribution. Distribution of dividend out of general reserve and Retained earnings is subject to applicable dividend distribution tax. On April 19, 2018, the Board of Directors of the Company have proposed a final dividend of Rs, 29 per share in respect of the year ended March 31, 2018 subject to the approval of shareholders at the Annual General Meeting.

Bonus issue

The Board of Directors at its meeting held on April 19, 2018, approved a bonus issue of equity shares, subject to the approval of the shareholders, in the ratio of one equity share of Rs, 1 each for every one equity share of the Company held by the shareholders as on a record date to be fixed later for this purpose.

1. Indian rupee equivalents of the figures given in foreign currencies in the accounts of the subsidiary companies, are based on the exchange rates as on March 31, 2018

2. Proposed Dividend includes dividend proposed during the year but not paid

3. Alti S.A. was renamed as Tata Consultancy Services France SA

4. Alti HR S.A.S. was merged with Tata Consultancy Services France SA (Formerly Alti S.A.) w.e.f. April 1, 2017

5. Tescom (France) Software Systems Testing S.A.R.L. was merged with Tata Consultancy Services France SA (Formerly Alti S.A.) w.e.f. April 1, 2017

6. Alti Switzerland S.A. was merged with Tata Consultancy Services Switzerland Ltd. w.e.f. October 1, 2017

7. Alti Infrastructures Systemes & Reseaux S.A.S. was merged with Tata Consultancy Services France SA (Formerly Alti S.A.) w.e.f. April 1, 2017

8. Alti NV was merged with Tata Consultancy Services Belgium S.A. w.e.f. October 1, 2017

9. Teamlink was liquidated w.e.f. January 31, 2018

10. Planaxis Technologies Inc. was liquidated w.e.f. March 31, 2018

11. Tata Consultancy Services France S.A.S. was merged with Tata Consultancy Services France SA (Formerly Alti S.A.) w.e.f. April 1, 2017

12. Tata Consultancy Services Belgium S.A. was renamed as Tata Consultancy Services Belgium


Mar 31, 2017

1) MERGER OF CMC LIMITED

a) Nature of business

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

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

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

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

2) FINANCIAL INSTRUMENTS

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

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

- Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosure are required):

(b) Derivative financial instruments and hedging activity

The Company’s revenue is denominated in foreign currency predominantly US Dollar, Sterling Pound and Euro. In addition to these currencies, the Company also does business in Australian Dollar, Singapore Dollar, Saudi Arabian Riyal, Danish Kroner and Brazilian Real. Given the nature of the business, a large portion of the costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

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

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

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

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

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

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

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

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

(c) Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and liabilities. The risk management policy is approved by the Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.

(i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

(a) Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company.

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

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

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of Balance sheet which could affect the statements of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note 28(b).

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

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

(b) Interest rate risk

The Company’s investments are primarily in fixed rate interest bearing investments. Hence the Company is not significantly exposed to interest rate risk.

(ii) Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. Inter-corporate deposits of Rs, 2,425 crores are with a financial institution having a high credit-rating assigned by credit-rating agencies. Bank deposits include an amount of Rs, 415 crores held with an Indian bank having high quality credit rating which are individually in excess of 10% or more of the Company’s total bank deposits for the year ended March 31, 2017. None of the other financial instruments of the Company result in material concentration of credit risk.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs, 67,749 crores, Rs, 55,563 crores and Rs, 42,423 crores as at March 31, 2017, March 31, 2016 and April 1, 2015, respectively, being the total of the carrying amount of balances with banks, bank deposits, investments excluding equity and preference investments, trade receivables, unbilled revenue and other financial assets.

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

Geographic concentration of credit risk

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

(in %)

(iii) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due.

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

3) SEGMENT REPORTING

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer and Managing Director.

The Company has identified business segments (industry practice) as reportable segments. The business segments comprise: 1) Banking, Financial Services and Insurance, 2) Manufacturing, 3) Retail and Consumer Business, 4) Communication, Media and Technology and 5) Others such as energy, resources and utilities, life science and healthcare, s-Governance and products.

Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallowable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallowable. Property, plant and equipment that are used interchangeably among segments are not allocated to reportable segments.

4) COMMITMENTS AND CONTINGENCIES

(i) Commitments

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

(ii) Contingencies

Direct tax matters Refer Note 9 Indirect tax matters

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

Other claims

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

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

In October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the Company in the Court of Western District Madison, Wisconsin for alleged infringement of Epic’s intellectual property. In April 2016, the Company received an unfavorable jury verdict awarding damages totaling Rs, 6,101 crores (US $941 million) to Epic which the trial judge has indicated his intent to reduce. On the basis of legal opinion and legal precedence, the Company expects to defend itself against the claim and believes that the claim will not sustain.

Bank guarantees and letters of comfort

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

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

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

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

5. DIVIDENDS

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

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

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

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

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

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

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

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

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

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

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

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

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

discovery, and process optimization

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

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

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

Services (BPS)

Chatbots Chatbots are computer programs designed to simulate conversation with human users, especially over the internet. They are typically used in dialog systems for various practical purposes like customer service or information acquisition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ETR = Provision for Taxes / Profit Before Taxes

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

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

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

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

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

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

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

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

(IT IS) to a future proof hybrid cloud model

Internet of Things (IoT) IoT is a network of interconnected machines or devices which are embedded with sensors, software, network connectivity, and necessary electronics to generate and share run-time data that can be studied and used to monitor or control remotely, predict failure, and optimize the design of those machines / devices

Invested Funds Invested funds are funds that are highly liquid in nature, and can be readily converted into cash

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

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

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

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

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

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

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

Non-discretionary Spend Non-Discretionary spend, also known as Run the Business (RTB) spend, is that portion of the IT budget that covers the basic IT activities required to keep a business running

Even in tough economic times, non-discretionary spend remains relatively unaffected

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

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

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

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

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

Simplification Simplification is the term used to describe the rationalization of IT architectures through consolidation of systems and elimination of redundant systems and layers.

The primary purpose is to shrink the IT footprint and make operations leaner and more efficient

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

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

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

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

Disclaimer: This glossary is intended to help understand commonly used terms and phrases in TCS'' Annual Report. The explanations are not intended to be technical definitions. If explanations provided here are found to be different from what is described in the Company''s periodic financial statements (not limited to Notes to Accounts), then the definition provided in the certified financial statements will prevail.


Mar 31, 2015

1) CORPORATE INFORMATION

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

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

2) SHARE CAPITAL

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

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

(b) Rights, preferences and restrictions attached to shares Equity shares

The Company has one class of equity shares having a par value of Rs. 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Preference shares

Preference shares carried a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the equity shares of the Company and the average rate of dividend declared on the equity shares of the Company for three years preceding the year of issue of the redeemable preference shares.

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

3) UNBILLED REVENUE

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

4) TRADE RECEIVABLES

Trade receivables (Unsecured) consist of the following:

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

6) AMALGAMATION OF COMPANIES WTI Advanced Technology Limited

a) Nature of business

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

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

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

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

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

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

(a) Defined contribution plans

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

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

The Company recognised Rs. 571.65 crores (March 31, 2014: Rs. 514.91 crores) for provident fund contributions and Rs. 163.47 crores (March 31, 2014: Rs. 136.29 crores) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The Company has contributed Rs. 267.63 crores (March 31,2014: Rs. 177.75 crores) towards foreign defined contribution plans.

(b) Defined benefit plans

The Company makes annual contributions to the Employees'' Group Gratuity-cum-Life Assurance Scheme, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for service less than 15 years, three-fourth month''s salary for service of 15 years to 19 years and one month salary for service of 20 years and more, payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

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

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

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

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

Revenue and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to specific segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments.

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

7) RELATED PARTY DISCLOSURES

A) Related parties and their relationship

I) Holding Company

Tata Sons Limited

II)(A) Subsidiaries (Direct holding)

1. CMC Limited

II)(B) Subsidiaries (Indirect holding)

i. CMC Americas Inc.

ii. CMC eBiz Inc.

2. Tata Consultancy Services Sverige AB

3. Tata Consultancy Services Asia Pacific Pte Ltd.

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

ii. Tata Consultancy Services Malaysia Sdn Bhd

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

iv. PT Tata Consultancy Services Indonesia

v. Tata Consultancy Services (Thailand) Limited

vi. Tata Consultancy Services (Philippines) Inc.

vii. Nippon TCS Solution Center Limited

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

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

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

4. TCS Iberoamerica SA

i. TCS Solution Center S.A.

ii. Tata Consultancy Services Argentina S.A.

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

iv. TCS Inversiones Chile Limitada

v. Tata Consultancy Services Do Brasil Ltda

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

viii. TCS Uruguay S.A.

ix. MGDC S.C.

5. Tata Consultancy Services Netherlands BV

i. Tata Consultancy Services Luxembourg S.A.

ii. Tata Consultancy Services Switzerland Ltd.

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

iv. TCS Italia SRL

v. Tata Consultancy Services Osterreich GmbH

vi. Tata Consultancy Services Danmark ApS

vii. Tata Consultancy Services De Espana S.A.

viii. Tata Consultancy Services Portugal Unipessoal Limitada

ix. Alti S.A.

x. Planaxis Technologies Inc.

xi. Alti HR S.A.S.

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

xiii. Alti NV

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

xv. Alti Switzerland S.A.

xvi. Teamlink

6. TCS FNS Pty Limited

i. TCS Financial Solutions Australia Holdings Pty Limited

ii. TCS Financial Solutions Australia Pty Limited

iii. PT Financial Network Services

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

v. TCS Financial Solutions Beijing Co., Ltd.

7. APOnline Limited

8. Tata America International Corporation

i. MS CJV Investments Corporation

9. Tata Consultancy Services Belgium S.A.

10. Tata Consultancy Services Deutschland GmbH

11. Tata Consultancy Services Canada Inc.

12. Diligenta Limited

i. Diligenta 2 Limited

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

9. C-Edge Technologies Limited

10. MP Online Limited

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

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

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

13. TCS e-Serve International Limited

i. TCS e-Serve America, Inc.

14. MahaOnline Limited

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

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

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

III) Fellow Subsidiaries with whom the Company has transactions

- Infiniti Retail Limited

- Panatone Finvest Limited

- Tata AIG General Insurance Company Limited

- Tata AIA Life Insurance Company Limited

- Tata Investment Corporation Limited

- Tata Limited

- Tata Asset Management Limited

- Tata Business Support Services Limited

- Tata Capital Limited

- Tata Housing Development Company Limited

- Tata Consulting Engineers Limited

- Tata Sky Limited

- Tata Realty and Infrastructure Limited

- e-Nxt Financials Limited

- Tata Industries Limited

- Tata International Limited

- Tata Autocomp Systems Limited

- Drive India Enterprise Solutions Limited

- Tata Advanced Systems Limited

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

- Tata Capital Housing Finance Limited

- TC Travel and Services Limited

- Tata Securities Limited

- Tata Capital Forex Limited

- Tata Capital Financial Services Limited

- Tata Interactive Systems GmbH

- TATA Africa Holdings (Kenya) Limited

- Tata Zambia Limited

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

- Tata Cleantech Capital Limited

- Tata Interactive Systems AG

- Tata Industrial Services Limited

- Tata Uganda Limited

- Tata SIA Airlines Limited

- Tata Africa Holdings (SA) (Proprietary) Limited

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

- Tata Africa Services (Nigeria) Limited

IV) Key Management Personnel

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

- Mr. Rajesh Gopinathan, Chief Financial Officer

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

(Rs. crores)

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

Claims against the Company not acknowledged as debt 40.72 29.57

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

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

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

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

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

c) The Company has provided guarantees aggregating Rs. 2694.55 crores (GBP 291.30 million) (March 31, 2014: Rs. 3167.02 crores) (GBP 317.20 million) to third parties on behalf of its subsidiary Diligenta Limited. The Company does not expect any outflow of resources in respect of the above.

d) The Company has provided guarantees aggregating Rs. 87.42 crores (USD 13.97 million) (March 31, 2014: Rs. 83.91 crores) (USD 13.97 million) to third parties on behalf of its subsidiary Tata America International Corporation. The Company does not expect any outflow of resources in respect of the above.

18) CAPITAL AND OTHER COMMITMENTS

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

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

19) DERIVATIVE FINANCIAL INSTRUMENTS

The Company, in accordance with its risk management policies and procedures, enters into foreign exchange forward, options and future contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one day and eight years.

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

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

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

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

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

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

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

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

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


Mar 31, 2013

1) CORPORATE INFORMATION

Tata Consultancy Services Limited (referred to as "TCS Limited" or the "Company") provide consulting-led integrated portfolio of information technology (IT) and IT-enabled services delivered through a network of multiple locations around the globe. The Companys full services portfolio consists of Application Development and Maintenance, Business Intelligence, Enterprise Solutions, Assurance, Engineering and Industrial Services, IT Infrastructure Services, Business Process Outsourcing, Consulting and Asset Leveraged Solutions.

As of March 31, 2013, Tata Sons owned 73.75% of the Companys equity share capital and has the ability to control its operating and financial policies. The Companys registered office is in Mumbai and it has 58 subsidiaries across the globe.

(a) Rights, preferences and restrictions attached to shares Equity shares

The Company has one class of equity shares having a par value of Rs. 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Preference shares

Preference shares would be redeemable at par at the end of six years from the date of allotment i.e. March 28, 2008, but may be redeemed at any time after 3 years from the date of allotment at the option of shareholder. These shares would carry a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the equity shares of the Company and the average rate of dividend declared on the equity shares of the Company for three years preceding the year of issue of the redeemable preference shares.

(b) Shares allotted as fully paid up by way of bonus shares (during 5 years preceding March 31, 2013)

The Company allotted 97,86,10,498 equity shares as fully paid up bonus shares by utilisation of Securities premium reserve on June 18, 2009 pursuant to a shareholders resolution passed by postal ballot on June 12, 2009.

The Company has given an undertaking to the Government of Maharashtra not to divest its shareholding in MahaOnline Limited except to an affiliate. This equity investment is subject to the restriction as per terms of contractual agreement. The restriction is valid as at March 31, 2013.

The Company has given an undertaking to the investors of KOOH Sports Private Limited not to transfer its shareholding prior to the expiry of thirty-six months from the completion date of the investment agreement except with the prior written consent of the other parties to the agreement. The restriction is valid as at March 31, 2013.

Unquoted debentures include subscription to the privately placed unsecured, unlisted redeemable non-convertible debentures issued by Tata Sons Limited in January 2010 and its subsidiary Panatone Finvest Limited in March 2010 for a consideration of Rs. 1000 crores and Rs. 200 crores, respectively. The debentures issued by Tata Sons Limited would be redeemable at par in three equal installments at the end of second, third and fourth year, respectively from the date of allotment. The first two installments of the debentures issued by Tata Sons Limited have been redeemed during the years ended March 31, 2012 and March 31, 2013 respectively. The debentures issued by Panatone Finvest Limited have been renewed for a further period of three years with a revised interest rate of 9.50% during the year ended March 31, 2013.

Tata Consultancy Services Morocco SARL AU, a wholly owned subsidiary, is in the process of being voluntarily liquidated.

Unquoted debentures include subscription to the privately placed unsecured, unlisted redeemable non-convertible debentures issued by Tata Sons Limited in January 2010 and its subsidiary Panatone Finvest Limited in March 2010 for a consideration of Rs. 1000 crores and Rs. 200 crores, respectively. The debentures issued by Tata Sons Limited would be redeemable at par in three equal installments at the end of second, third and fourth year, respectively from the date of allotment. The first two installments of the debentures issued by Tata Sons Limited have been redeemed during the years ended March 31, 2012 and March 31, 2013 respectively. The debentures issued by Panatone Finvest Limited have been renewed for a further period of three years with a revised interest rate of 9.50% during the year ended March 31, 2013.

2) UNBILLED REVENUE

Unbilled revenue as at March 31, 2013 amounting to Rs. 2303.35 crores (March 31, 2012: Rs. 1567.47 crores) primarily comprises of the revenue recognised in relation to efforts incurred on turnkey contracts priced on a fixed time, fixed price basis of Rs. 1509.25 crores (March 31, 2012: Rs. 1208.10 crores).

3) Current tax includes additional provision (net) of Rs. 39.12 crores (March 31, 2012: Write back of provisions (net) and refunds received Rs. 34.99 crores) in domestic and certain overseas jurisdictions relating to earlier years. The impact of MAT entitlement of earlier period is Rs. 128.97 crores (March 31, 2012: Nil).

4) AMALGAMATION OF COMPANIES

a) Nature of business of amalgamating companies:

Retail FullServe Limited is engaged in the business of providing information technology and business process outsourcing services.

Computational Research Laboratories Limited is engaged in the business of conducting research and development relating to high performance computing and allowing usage of computers, including providing consultation services in the field of information technology. On August 16 2012, the Company has acquired 100% equity share capital of Computational Research Laboratories Limited.

b) Retail FullServe Limited and Computational Research Laboratories Limited - wholly owned subsidiaries of Tata Consultancy Services Limited, have been amalgamated with the Company with effect from April 1, 2012 and October 1, 2012 respectively, in terms of the scheme of amalgamation (Scheme) sanctioned by the High Court of Judicature at Bombay vide their Order dated March 22 , 2013. The Scheme came into effect on April 1, 2013 and pursuant thereto all assets and debts, outstandings, credits, liabilities, benefits under income tax, excise, sales tax (including deferment of sales tax), benefits for and under STPI and special economic zone registrations, duties and obligations of the above mentioned subsidiaries, have been transferred to and vested in the Company retrospectively with effect from April 1, 2012 and October 1, 2012 respectively.

Since the subsidiaries, amalgamated as aforesaid, were wholly owned by the Company, no shares were exchanged to effect the amalgamation.

c) The amalgamations stated above have been accounted for under the "pooling of interests" method as prescribed by Accounting Standard (AS-14) notified under Section 211 (3C) of the Companies Act, 1956. Accordingly, the assets, liabilities and reserves of Retail FullServe Limited and Computational Research Laboratories Limited as at April 1, 2012 and October 1, 2012 respectively, have been taken over at their book values. As stipulated in the scheme of amalgamation, all reserves of the above mentioned subsidiaries have been transferred to the General reserve except for balances lying in the statement of profit and loss as on March 31, 2012 and September 30, 2012 respectively, which have been transferred to the surplus in statement of profit and loss of the Company.

The difference between the amounts recorded as investments of the Company and the amount of share capital of Retail FullServe Limited and Computational Research Laboratories Limited have been adjusted in the General reserve.

5) RETIREMENT BENEFIT PLANS

(a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the Provident Fund set up as a trust by the Company. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year it is incurred.

The Company recognised Rs. 430.24 crores (March 31, 2012: Rs. 359.36 crores) for provident fund contributions and Rs. 106.36 crores (March 31, 2012: Rs. 91.19 crores) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The Company has contributed Rs. 123.86 crores (March 31, 2012: Rs. 89.55 crores) towards foreign defined contribution plans.

(b) Defined benefit plans

The Company makes annual contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for eligible employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for service less than 15 years, three-fourth months salary for service of 15 years to 19 years and one month salary for service of 20 years and more, payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

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

6) SEGMENT REPORTING

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

Business segments are primarily financial services comprising customers providing banking, finance and insurance services, manufacturing companies, companies in retail and consumer packaged goods industries, companies in telecommunication, media and entertainment and others such as energy, resources and utilities, Hi-tech industry practice, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc.

Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to specific segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments.

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

(a) The Company has provided guarantees aggregating Rs. 2910.88 crores (GBP 353.65 million) (March 31, 2012: Rs. 3068.55 crores) (GBP 376.75 million) to third parties on behalf of its subsidiary Diligenta Limited. The Company does not expect any outflow of resources in respect of the above.

(b) The Company has provided guarantees aggregating Rs. 1208.41 crores (USD 222.42 million) (March 31, 2012: Nil ) to third parties on behalf of its subsidiary Tata America International Corporation. The Company does not expect any outflow of resources in respect of the above.

7) CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 3328.51 crores (March 31, 2012: Rs. 1682.98 crores).

b) The Company is required to pay to the seller of TCS e-Serve Limited, amounts received by the subsidiary from tax authorities as refund against taxes paid aggregating Rs. 347.85 crores (March 31, 2012: Rs. 321.85 crores), which is to be adjusted to the cost of investment of the subsidiary.

c) The Company has undertaken to provide continued financial support to its subsidiaries APOnline Limited and TCS FNS Pty Limited.

d) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of balance Rs. 47389.56 per unit of 1000 units aggregating Rs. 4.74 crores (March 31, 2012: Rs. 8.10 crores).

8) DERIVATIVE FINANCIAL INSTRUMENTS

The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward and currency option contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one day and eight years.

In addition to the above Cash Flow Hedges, the Company has outstanding foreign exchange forward contracts and currency option contracts with notional amount aggregating to Rs. 10427.63 crores (March 31, 2012: Rs. 8222.75 crores) whose fair value showed a gain of Rs. 51.21 crores as on March 31, 2013 (March 31, 2012: loss of Rs. 92.81 crores). Exchange gain of Rs. 271.95 crores (March 31, 2012: Exchange loss of Rs. 192.83 crores) on foreign exchange forward and currency option contracts for the year ended March 31, 2013 have been recognised in the statement of profit and loss.

As of balance sheet date, the Company has net foreign currency exposures that are not hedged by derivative instruments or otherwise amounting to Rs. 375.25 crores (March 31, 2012: Rs. 338.23 crores)

9) REMITTANCE IN FOREIGN CURRENCIES FOR DIVIDENDS

The Company has remitted Rs. Nil (March 31, 2012: Rs. Nil ) in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittance, if any, in foreign currencies on account of dividends have been made by / on behalf of non-resident shareholders. The particulars of dividends declared and paid to non-resident shareholders for the year ended March 31, 2012 and interim dividends for the year ended March 31, 2013, are as under:

10) Research and development expenditure aggregating Rs. 151.36 crores (Previous year: Rs. 128.98 crores), including capital expenditure, was incurred during the year.

11) The Board of Directors at their meeting held on October 19, 2012 have accorded consent for the merger of TCS e-Serve Limited together with the de merger of TCS e-Serve International Limiteds SEZ undertaking with the Company. The appointed date for the above scheme proposed is April 1, 2013 respectively.

12) On February 22, 2013, the Company entered into an agreement to settle for a sum of Rs. 161.63 crores, a class action suit filed in a United States of America Court relating to payments to employees on deputation. The Court has granted preliminary approval to the settlement agreement. The amount of settlement has been included in Other expenses, vide note no. 26.

13) Previous year figures have been recast / restated.


Mar 31, 2012

1) Corporate information

Tata Consultancy Services Limited (referred to as "TCS Limited" or the "Company") and its subsidiaries provide a wide range of information technology and consultancy services including systems, hardware and software, communications and networking, hardware sizing and capacity planning, software management solutions, technology education services and business process outsourcing. The Companys full services portfolio consists of Application Development and Maintenance, Business Intelligence, Enterprise Solutions, Assurance, Engineering and Industrial Services, IT Infrastructure Services, Business Process Outsourcing, Consulting and Asset Leveraged Solutions.

As of March 31, 2012, Tata Sons owned 73.75% of the Companys equity share capital and has the ability to control its operating and financial policies. The Companys registered office is in Mumbai and it has 58 subsidiaries across the globe.

2) Rights, preferences and restrictions attached to shares Equity shares

The Company has one class of equity shares having a par value of Rs 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Preference shares

Preference shares would be redeemable at par at the end of six years from the date of allotment i.e. March 28, 2008, but may be redeemed at any time after 3 years from the date of allotment at the option of shareholder. These shares would carry a fixed cumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the rate of dividend declared during the year on the equity shares of the Company and the average rate of dividend declared on the equity shares of the Company for three years preceding the year of issue of the redeemable preference shares.

Market value of quoted investments as classified above as at March 31, 2012 is Rs 1540.94 crores (March 31, 2011: Rs 1612.11 crores).

The Company has given undertakings to the Government of Maharashtra not to divest its shareholding in MahaOnline Limited except to an affiliate. This equity investment is subject to the restriction as per terms of contractual agreement. The restriction is valid as on March 31, 2012.

Unquoted debentures include subscription to the privately placed unsecured, unlisted, redeemable, non - convertible debentures issued by Tata Sons Limited in January 2010 and its subsidiary Panatone Finvest Limited in March 2010 for a consideration of Rs 1000 crores and Rs 200 crores, respectively. The debentures issued by Tata Sons Limited would be redeemable at par in three equal installments at the end of second, third and fourth year, respectively from the date of allotment. The first installment was received on January 21, 2012. The debentures issued by Panatone Finvest Limited would be redeemed at the end of the third year. The amount receivable on redemption within a period of one year from the date of the balance sheet is classified under Current investment and balance as Non - current investment.

3) NON - CURRENT INVESTMENTS

In terms of the shareholders agreement dated March 23, 2006, Phoenix Group Services Limited (formerly known as Pearl Group Services Limited), exercised their put option and sold equity holding of 24% in Diligenta Limited to the Company at a fixed price of Rs 228.00 crores (GBP 30.24 million) in September 2011. Thereby Diligenta Limited became wholly owned subsidiary of the Company.

Tata Consultancy Services Morocco SARL AU, a wholly owned subsidiary, is in the process of being voluntarily liquidated.

On December 20, 2011, the Company has subscribed to 100 percent equity share capital of Tata Consultancy Services Qatar S.S.C.

On January 24, 2012, the Company through its wholly owned subsidiary, Tata Consultancy Services Japan Limited subscribed to 60 percent share capital of Nippon TCS Solution Center Limited.

On March 9, 2012, the Company through its wholly owned subsidiary, Tata Consultancy Services Netherlands BV subscribed to 100 percent share capital of Tata Consultancy Services Osterreich GmbH.

On March 16, 2012, the Company through its wholly owned subsidiary, Tata Consultancy Services Netherlands BV subscribed to 100 percent share capital of Tata Consultancy Services Danmark ApS.

4) Current tax includes write back of provision (net) of Rs 34.99 crores (Previous year: Additional provision (net) Rs 94.50 crores) in domestic and certain overseas jurisdictions relating to earlier years.

5) Retirement benefit plans

a) Defined contribution plans

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return and recognises such contributions and shortfall, if any, as an expense in the year it is incurred.

The Company recognised Rs 359.36 crores (March 31, 2011: Rs 285.78 crores) for provident fund contributions and Rs 91.19 crores (March 31, 2011: Rs 73.74 crores) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The Company has contributed Rs 89.55 crores (March 31, 2011: Rs 61.39 crores) towards foreign defined contribution plans.

b) Defined benefit plans

The Company makes annual contributions to the Employees Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary for service less than 15 years, three-fourth months salary for service of 15 years to 19 years and one month salary for service of 20 years and more, payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service.

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

6) Segment Reporting

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

Business segments are primarily financial services comprising customers providing banking, finance and insurance services, manufacturing companies, companies in retail and consumer packaged goods industries, companies in telecommunication, media and entertainment and others such as energy, resources and utilities, Hi-tech industry practice, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc.

Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments.

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

7) Contingent liabilities

(Rs crores) As at As at March 31, 2012 March 31, 2011

Claims against the Company not acknowledged as debt 21.49 21.45

Income tax demands 1381.97 602.65

Indirect tax demands 61.44 62.61

Guarantees given by the Company on behalf of subsidiaries (See (b) below) 3389.90 2120.91

a) TCS e-Serve Limited has received demands aggregating Rs 330.07 crores (March 31, 2011: Rs 236.41 crores) in respect of income tax matters in dispute. TCS e-Serve Limited has paid advance taxes aggregating to Rs 321.85 crores (March 31, 2011: Rs 185.13 crores) against disputed amounts for the various assessment years. The Company is entitled to an indemnification from the seller, of the above referred contingent claims on TCS e-Serve Limited, and would be required to refund to the seller, amounts equal to monies received by TCS e-Serve Limited, on all such claims, as an adjustment to the purchase price consideration.

b) The Company has provided guarantees aggregating to Rs 3068.55 crores (GBP 376.75 million) (March 31, 2011: Rs 1978.41 crores) (GBP 275.60 million) to third parties on behalf of its subsidiary Diligenta Limited. The Company does not expect any outflow of resources in respect of the above.

36) Capital and other commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs 1682.98 crores (March 31, 2011: Rs 1132.27 crores).

b) The Company has undertaken to provide continued financial support to its subsidiaries APOnline Limited and TCS FNS Pty Limited.

c) The Company has a purchase commitment towards India Innovation Fund for the uncalled amount of balance Rs 80963.86 per unit of 1000 units aggregating to Rs 8.10 crores (March 31, 2011: Rs 9.00 crores).

In addition to the above Cash Flow Hedges, the Company has outstanding foreign exchange forward and currency option contracts with notional amount aggregating Rs 8222.75 crores (March 31, 2011: Rs 4432.67 crores) whose fair value showed a loss of Rs 92.81 crores as on March 31, 2012 (March 31, 2011: gain of Rs 27.45 crores). Exchange loss of Rs 192.83 crores (Previous year: Rs 8.88 crores) on foreign exchange forward and currency option contracts have been recognised in the statement of profit and loss.

As of balance sheet date, the Company has net foreign currency exposures that are not hedged by derivative instruments or otherwise amounting to Rs 338.23 crores (March 31, 2011: Rs 109.03 crores).

8) Remittance in foreign currencies for dividends

The Company has remitted Rs Nil (March 31, 2011: Rs Nil) in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittance, if any, in foreign currencies on account of dividends have been made by / on behalf of non-resident shareholders. The particulars of dividends declared and paid to non-resident shareholders for the year 2010-11 and interim dividends for the year 2011-12, are as under:

9) Research and development expenditure aggregating to Rs 127.16 crores (Previous year: Rs 97.20 crores) was incurred during the year.

10) These financial statements have been prepared in the format prescribed by the Revised Schedule VI to the Companies Act, 1956. Previous years figures have been recast / restated.


Mar 31, 2011

1) The Company has given undertakings to (a) Bank of China Co. Limited, not to transfer its controlling interest in TCS Financial Solutions Australia Pty Limited, a wholly owned subsidiary of TCS FNS Pty Limited and (b) the Government of Maharashtra not to divest its shareholding in MahaOnline Limited except to an affiliate.

2) Retirement benefit plans

a) Defined contribution plans

The Company and its subsidiaries make Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. Under the schemes, the Company and its subsidiaries are required to contribute a specified percentage of the payroll costs to fund the benefits. The Provident Fund scheme additionally requires the Company and its subsidiaries to guarantee payment of interest at rates notified by the Central Government from time to time, for which shortfall has been provided for as at the Balance Sheet date.

The Group recognised Rs. 320.01 crores (Previous year : Rs. 264.68 crores) for provident fund contributions and Rs. 99.82 crores (Previous year : Rs. 77.21 crores) for superannuation contributions in the profit and loss account. The contributions payable to these plans by the Group are at rates specified in the rules of the schemes.

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

b) Defined benefit plans

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

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

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

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

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

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

6) Segment Reporting

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

Business segments are primarily financial services comprising customers providing banking, finance and insurance services, manufacturing companies, companies in retail and consumer packaged goods industries, companies in telecommunication, media and entertainment and others such as energy, resources and utilities, Hi-Tech industry practice, life science and healthcare, s-Governance, travel, transportation and hospitality, products, etc.

Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.

Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably among segments are not allocated to primary and secondary segments.

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

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

8) Related Party Disclosures

A) Related Parties and their Relationship

I) Holding Company

Tata Sons Limited

II) Fellow Subsidiaries with whom the Group has transactions

- Tata Capital Limited

- Tata AIG General Insurance Company Limited

- Tata AIG Life Insurance Company Limited

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

- Tata Housing Development Company Limited

- Tata Limited

- Panatone Finvest Limited

- Tata Business Support Services Limited

- Tata Sky Limited

- Tata Teleservices Limited

- Tata Teleservices (Maharashtra) Limited

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

- Infiniti Retail Limited

- Computational Research Laboratories Limited

- Tata Realty And Infrastructure Limited

- Tata Securities Limited

- e-Nxt Financials Limited

- Tata Investment Corporation Limited

- Nova Integrated Systems Limited

- Tara Aerospace Systems Limited

- Tata Advanced Systems Limited

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

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

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

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

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

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

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

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

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

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

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

III) Associate

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

IV) Key Management Personnel

- Mr. N. Chandrasekaran

- Mr. S. Mahalingam

- Mr. Phiroz Vandrevala

9) Contingent Liabilities

(Rs. crores)

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

Claims against the Group not acknowledged as debt 82.83 114.33

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

Indirect Taxes 144.68 121.89

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

Unexpired Letters of Credit 1.57 0.15

Other Contingencies 0.94 -

Notes:

i) Income tax matters includes Rs. 236.41 crores (March 31, 2010 : Rs. 212.59 crores) in respect of TCS e-Serve Limited, in which the Company has 96.26 percent stake. As on the acquisition date, i.e. December 31, 2008, TCS e-Serve Limited had net advance taxes aggregating to Rs. 185.13 crores against the disputed amounts for the various assessment years. The Company is entitled to an indemnification of the above referred contingent claims on TCS e-Serve Limited from the seller and would be required to refund to the seller, amounts equal to monies received by TCS e-Serve Limited, on all such claims, as an adjustment to the purchase price consideration.

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

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

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

11) Commitments

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

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

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

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

12) Derivative Financial Instruments

The Company and its subsidiaries, in accordance with its risk management policies and procedures, enter into foreign currency forward contracts and currency option contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one day and eight years.

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

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

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

16) Previous years figures are in italics.

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