Mar 31, 2023
The Directors present this Integrated Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2023.
The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. Financial results (? crore) |
||||
Standalone |
Consolidated |
|||
Financial Year 2022-23 (FY 2023) |
Financial Year 2021-22 (FY 2022) |
Financial Year 2022-23 (FY 2023) |
Financial Year 2021-22 (FY 2022) |
|
Revenue from operations |
1,90,354 |
1,60,341 |
2,25,458 |
1,91,754 |
Other income |
5,328 |
7,486 |
3,449 |
4,018 |
Total income |
1,95,682 |
1,67,827 |
2,28,907 |
1,95,772 |
Expenses |
||||
Operating expenditure |
1,39,357 |
1,14,096 |
1,66,199 |
1,38,697 |
Depreciation and amortisation expense |
3,940 |
3,522 |
5,022 |
4,604 |
Total expenses |
1,43,297 |
1,17,618 |
1,71,221 |
1,43,301 |
Profit before finance costs and tax |
52,385 |
50,209 |
57,686 |
52,471 |
Finance costs |
695 |
486 |
779 |
784 |
Profit before tax |
51,690 |
49,723 |
56,907 |
51,687 |
12,584 |
11,536 |
14,604 |
13,238 |
|
Profit for the year |
39,106 |
38,187 |
42,303 |
38,449 |
Attributable to: |
||||
Shareholders of the Company |
39,106 |
38,187 |
42,147 |
38,327 |
Non-controlling interests |
NA |
NA |
156 |
122 |
Opening balance of retained earnings |
68,949 |
70,928 |
78,158 |
79,586 |
Closing balance of retained earnings |
62,228 |
68,949 |
74,722 |
78,158 |
2. Return of surplus funds to Shareholders
In line with the practice of returning 80 to 100 percent free cash flow to shareholders and based on the Company''s performance, the Directors have declared three interim dividends of ?8 per equity share and a special dividend of ?67 aggregating to ?91 per equity share involving a cash outflow of ?33,297 crore during the year. The Directors have also recommended a final dividend of ?24 per equity share, the final dividend on equity shares, if approved by the Members, would involve a cash outflow of ?8,782 crore. The total shareholders payout excluding the buyback tax of ?4,192 crore paid at the beginning of FY 2023, would involve a total cash outflow of ?42,079 crore at ?115 per equity share, resulting in a dividend payout of 107.6 percent of the standalone profits of the Company.
For FY 2022, the Company paid a total dividend of ?43 per equity share, which resulted in an outflow of ?15,818 crore
and a dividend payout of 41.4 percent of the standalone profits of the Company. In addition to the above, the Company bought back 4,00,00,000 equity shares at a price of ?4,500 per equity share for an aggregate consideration of ?18,000 crore. The offer size of the buyback was 21.03 percent and 19.06 percent of the aggregate paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as at December 31, 2021, respectively.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is available on the Company''s website at https://on.tcs.com/Dividend.
The closing balance of the retained earnings of the Company for FY 2023, after all appropriation and adjustments was ?62,228 crore.
On a consolidated basis, the revenue for FY 2023 was ?2,25,458 crore, higher by 17.6 percent over the previous year''s revenue of ?1,91,754 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2023 and FY 2022 was ?42,303 crore and ?38,449 crore, respectively.
The PAT attributable to shareholders for FY 2023 was ?42,147 crore registering a growth of 10.0 percent over the PAT of ?38,327 crore in FY 2022.
On a standalone basis, the revenue for FY 2023 was ?1,90,354 crore, higher by 18.7 percent over the previous year''s revenue of ?1,60,341 crore in FY 2022. The PAT attributable to shareholders in FY 2023 was ?39,106 crore registering a growth of 2.4 percent over the PAT of ?38,187 crore in FY 2022.
The Company continues to strengthen its commitment to the highest levels of quality, superior customer experience, best-in-class service management, robust information security and privacy practices and mature business continuity management.
The relevance of TCS'' integrated Quality Management System (iQMSâ¢) is continually evaluated for new service offerings, emerging delivery methodologies, industry best practices and latest technologies, and adequately upgraded to provide outstanding value and experience to its customers.
TCS has successfully achieved Maturity Level 5 in CMMI Enterprise Wide assessment for Development. TCS has successfully completed the annual ISO surveillance audit and has been recommended for continuation of its enterprise-wide certification. TCS''s enterprise ISO certification scope includes conformance to the following globally recognized standards: ISO 9001:2015 (Quality Management), ISO 20000-1:2018 (IT Service Management), ISO 22301:2019 (Business Continuity Management), ISO 27001:2013 (Information Security Management), ISO 27017:2015 (Information Security Controls for Cloud Services), ISO 27018:2019 (Protection of PII in Public Clouds as PII Processors), ISO 27701:2019 (Privacy Information Management Systems), AS 9100:2016 (Aerospace Industry), ISO 13485:2016 (Medical Devices) and TL 9000-SV R6.2/R5.7 (Telecom Industry).
The customer-centricity, focus on their growth and transformation, rigor in operations and commitment to delivery excellence have resulted in sustained high customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third party surveys as well. TCS achieved the top position in Whitelane customer satisfaction survey for the
tenth consecutive year, with an overall satisfaction score of 83 percent compared to the industry average of 75 percent.
TCS has received multiple external awards this year, in the areas of quality and data privacy. TCS won the Data Security Council of India (DSCI) Excellence Award 2022 in category Best Privacy Practices in Organization, two years in a row; PICCASO Privacy Awards Europe 2022 for Best Privacy Programme; Gold award won by BFSI Cognitive Business Operations- IT IS Team in 8th National Institute for Quality and Reliability (NIQR) Annual Six Sigma/Task Achievement Competition; Customer Experience Team of the Year Award by Global Sourcing Association - UK.
On March 31, 2023, the Company has 51 subsidiaries and there has been no material change in the nature of the business of the subsidiaries. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").
On May 18, 2022, Tata Consultancy Services Asia Pacific Pte. Ltd. acquired additional 6.8 percent ownership interest in Tata Consultancy Services (China) Co., Ltd. (TCS China) thereby making it a wholly owned subsidiary.
Tata Consultancy Services Danmark ApS was liquidated effective July 27, 2022.
On March 16, 2023, TCS China acquired 100 percent ownership interest in TCS Financial Solutions (Beijing) Co., Ltd. from TCS Financial Solutions Australia Pty Limited.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form No. AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Company''s website at https://www.tcs.com/investor-relations.
7. Directors'' responsibility statement
Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. They have selected such accounting policies
and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. They have prepared the annual accounts on a going concern basis;
v. They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2023.
8. Directors and key managerial personnel
As on March 31, 2023, the Company has nine Directors comprising of two Executive Directors and seven Non-Executive Directors out of which five are Independent Directors. There are two women directors.
On April 16, 2022, the Members approved the re-appointment of Rajesh Gopinathan (DIN 06365813) and N G Subramaniam (DIN 07006215) as the CEO and MD and COO and ED, respectively.
On February 12, 2023, the Members approved the re-appointment of Dr Pradeep Kumar Khosla (DIN 03611983) as an Independent Director. In the opinion of the Board, he is a person of integrity, fulfils requisite conditions as per applicable laws and is independent of the management of the Company.
Rajesh Gopinathan would relinquish his position of CEO and MD of the Company with effect from June 1, 2023. The Board places on record its appreciation of the invaluable services of Rajesh Gopinathan as the CEO and MD.
The Board appointed K Krithivasan (DIN 10106739) as the Chief Executive Officer Designate with effect from March 16, 2023 and as CEO and MD with effect from June 1, 2023 for a period of five years, subject to approval of the Members at the ensuing Annual General Meeting (AGM).
K Krithivasan heads the Banking, Financial Services, and Insurance (BFSI) Business Group at the Company and has been part of the global technology sector for over 34 years, having joined the Company in 1989.
Aarthi Subramanian (DIN 07121802) retires by rotation and being eligible, offers herself for re-appointment.
A resolution seeking shareholders'' approval for their appointment/re-appointment along with other required details forms part of the Notice.
Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.
During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any.
Pursuant to the provisions of Section 203 of the Act,
Rajesh Gopinathan, CEO and MD, N G Subramaniam,
COO and ED, Samir Seksaria, Chief Financial Officer and Pradeep Manohar Gaitonde, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2023.
9. Number of meetings of the Board
Six meetings of the Board were held during the year.
For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. In a separate meeting of Independent Directors, Performance of Non-Independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee
meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
11. Policy on directors'' appointment and remuneration and other details
The Company''s policy on appointment of directors is available on the Company''s website at https://on.tcs.com/ApptDirectors.
The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on the Company''s website at https://on.tcs.com/remuneration-policy.
12. Corporate Social Responsibility (CSR)
TCS'' CSR initiatives and activities are aligned to the requirements of Section 135 of the Act.
A brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. This Policy is available on the Company''s website at https://on.tcs.com/Global-CSR-Policy
For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.
13. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report.
At the twenty-seventh AGM held on June 9, 2022, the Members approved the re-appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the thirty-second AGM to be held in the year 2027.
16. Auditor''s report and Secretarial audit report
The statutory auditor''s report and the secretarial auditor''s report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report as Annexure II.
The Board of Directors of the Company has a
Risk Management Committee to frame, implement and
monitor the risk management plan for the Company.
The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in conformation with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour. This Policy is available on the Company''s website at https://on.tcs.com/WhistleB .
19. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements.
20. Transactions with related parties
None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2023 and hence does not form part of this report.
Pursuant to SEBI Listing Regulations, the resolution for seeking approval of the shareholders on material related party transactions is being placed at the AGM.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Company''s website at https://on.tcs.com/annualreturn-22-23.
The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and
percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
Name |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Non-executive Directors: |
||
N Chandrasekaran* |
- |
- |
O P Bhatt |
41.16 |
10.41 |
Aarthi Subramanian# |
- |
- |
Dr Pradeep Kumar Khosla |
37.10 |
10.80 |
Hanne Sorensen |
37.32 |
11.46 |
Keki Mistry |
41.03 |
9.80 |
Don Callahan |
37.23 |
10.76 |
Executive Directors: |
||
Rajesh Gopinathan |
427.10 |
13.17 |
N G Subramaniam |
345.68 |
14.08 |
Chief Financial Officer: |
||
Samir Seksaria |
- |
$ |
Company Secretary: |
||
Pradeep Manohar Gaitonde |
- |
$ |
* As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.
# In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata Company and hence not stated.
$ Remuneration received in FY 2023 is not comparable with remuneration received in FY 2022 (for part of the year) and hence not stated.
b. The percentage increase in the median remuneration of employees in the financial year is 5.11 percent.
c. The number of permanent employees on the rolls of Company are 6,14,795.
d. The average annual increase was in the range of
5- 8 percent in India. However, during the course of the year, the total increase is in the range of
6- 9 percent, after accounting for promotions and other event based compensation revisions.
Employees outside India received a wage increase varying from 1.5 to 5.5 percent.
The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects the Company''s performance, the performance pay is also linked to organization performance and individual utilization in addition to individual performance.
Increase in the managerial remuneration for the year was 13.58 percent.
e. The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report.
Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure.
In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Company has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company''s long term perspective. The Report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the five forms of capital viz. financial capital, intellectual capital, human capital, social capital and natural capital.
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors'' Certificate thereon, and the integrated Management Discussion and Analysis, the Business Responsibility and Sustainability Report ("BRSR") form part of the Director''s Report.
The BRSR indicates the Company''s performance against the principles of the ''National Guidelines on Responsible Business Conduct''. This would enable the Members to have an insight into Environmental, Social and Governance initiatives of the Company.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
26. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Conservation of energy
The Company is committed towards conservation of energy and climate action which is reaffirmed in its Environmental Sustainability policy
(https://on.tcs.com/Environmental-Sustainability).
During the year, several initiatives were aligned to achieve the carbon targets which included those in building and IT infrastructure. Initiatives in building infrastructure included higher energy efficiencies in heating, ventilation, and air conditioning (HVAC) systems, uninterruptible power supply (UPS), LEDs, motors, chillers and Energy Monitoring and Analytics (Clever Energy Resource Oprtimization Center) which resulted in energy savings of 4,219 MWh, equivalent to 3,016 tCO2e reduction during FY 2023.
Initiatives in green IT focussed on data center and IT device consolidation and optimization to reduce the carbon footprint. Our data centers had a weighted average power utilisation effectiveness (PUE) of 1.66 during the year. In addition to this, the Company ensures energy efficiency of the equipment it procures.
The Company continues to leverage the TCS'' IoT-based Real-time Energy Management System (TCS Clever EnergyTM) that involves real time monitoring to optimization of operational energy efficiency across all offices.
The roof top solar photo voltaic installations this year remained at 10.2 MWp contributing to 3.44 percent of total electricity use in the reporting year. The Company increased the renewable energy procurement through switch over to green tariffs for its operations in several states in India and addition to open access power purchase
agreements (PPA). The renewable energy procurement has resulted in an increase in renewable energy use to 55.2 percent of total energy use.
TCS is certified to ISO 50001:2018 standards for Energy Management Systems (EnMS) across 19 campuses in India of which 14 campuses were included in FY 2023 ensuring our commitment to energy conservation and management.
The above energy efficiency and renewable energy procurement efforts helped achieve a year-on-year reduction in absolute carbon footprint (across Scope 1 and Scope 2) of TCS'' global operations by 12.4 percent. The Company has achieved a 71 percent reduction in absolute emissions (Scope 1 and Scope 2) when compared to the base year of FY 2016 thereby achieving the 2025 target (of 70 percent reduction) ahead of time. The electricity consumption across TCS operations increased by 33.3 percent compared to FY 2022. This is due to increased resumption of operations in FY 2023 compared to FY 2022 and inclusion of 22 locations globally in the reporting boundary during the current year.
The Company has achieved carbon neutrality across Scope 1 and Scope 2 in Asia Pacific*, Europe, North America, UK & Ireland**, Latin America, Middle East & Africa regions during the reporting year.
Continued focus on the above initiatives will enable steer the Company towards achieving its carbon target to become net zero by 2030.
Technology absorption, adoption and innovation Research & Development (R&D): Specific areas in which R&D was carried out by the Company
With innovation being central to the Company''s purpose statement TCS Research, TCS PACE⢠and TCS Co-Innovation Network(COIN)⢠adopted many initiatives to address customer needs and create impact.
In its fifth decade, TCS Research continued to expand its foundational research in computing, and its intersection with the sciences. As part of physical sciences research,
TCS focused on formulation of new materials with applications in batteries, catalysis and industrial effluents. Teams also worked on carbon capture, digital twins for continuous manufacture of biopharma, and emission reduction in industries. Generative Design research and realisation of this with complex problems with customers showed that algorithmic methods, including AI, can transform early stage design of complex systems with significant benefits over the traditional methods. In the life sciences area, the Company explored generative design across drug design and synthesis, molecules and formulations, and manufacturing processes.
TCS Research used diffusion models as well as large language models for computational creativity. The software research teams worked on learning aided adaptive software, digital transformation of applications, and AI in the software development lifecycle and data analytics. Cyber security remains an important area of
research; AI for cybersecurity, privacy enabled service operations, privacy preserving biometrics and trustworthy AI initiatives are in progress. Research in AI was oriented around the latest in Generative Large Language Models, to create techniques for controlled code generation, question answering, consistent image generation, solving optimisation problems and other core AI problems.
The Company expanded its space tech research, working on on-board computing for remote sensing satellites to reduce data and bandwidth for ground communication; it is also leveraging neuromorphic computing for low power computing at the edge. In the area of embedded devices and intelligent systems, research continued solving customer problems in machine, material, infrastructure, and people sensing, using AIoT and edge computing.
Teams also worked on meta materials for next gen communications, computational sensing/imaging and neuromorphic computing.
TCS deepened its expertise in heterogeneous computing. The high performance computing team is working on accelerating runtime performance of computing systems while minimizing energy consumption and costs.
Quantum computing, resilience on cloud with data residency, compliance and security on cloud are other areas of focus.
In the area of behavioural and business sciences, the Company created tools for emotional wellbeing of employees, studied consumer behaviour in retail and gamified learning. Research also provided intervention options for caregivers of elders in connected homes.
Quantum computing initiatives progressed with Proofs of Concepts and customer engagements. Research based offerings in robotics are moving to deployment for logistics and warehouses. TCS'' Digital twins are now integrating industrial, data driven, physics-based and enterprise models to offer comprehensive insights to customers.
TCS'' IP based offerings made headway. TCS TwinXâ¢, an AI powered enterprise digital twin platform for risk-free business simulations, is available on Google Cloud.
The Company''s substantial Investments in IP, as in MFDMâ¢, TCS Cognixâ¢, ignioâ¢, Pace Portsâ¢, and Dedicated Cloud Units, was seen as a key strength by analysts.
TCS Avapresence, a cloud-based virtual event platform with extended reality(XR) elements, was leveraged by customers for product launches. TCS Conversa⢠and TCS GoSafe⢠have multiple implementations across the globe;
TCS Crvstallus⢠adoption and Industry Innovations continue to resonate well with customers in their enterprise transformation journey. Semiconductor engineering, 5G engineering and software product engineering services made a mark and won awards.
The Company''s research and innovation in meta-material-based antenna, network softwarization and desegregation, expanded the opportunity pipeline. TCS contributed in the area of interoperability of ORAN sub-systems. It contributed to the Chromite Core community in processor design and verification areas.
The Company''s Pace Ports⢠are spaces that connect customers to all of TCS'' organizational capabilities in innovation, technology, and industry expertise.
The Company inaugurated two Pace Ports this year:
TCS Pace Port⢠Pittsburgh, on the Carnegie Mellon University campus; and TCS Pace Port⢠Toronto. TCS and Boots launched an innovation hub, INNOVATE Powered by TCS Paceâ¢, at the Boots Nottingham headquarters. TCS forged a major applied engineering and research partnership with The National Robotarium, UK''s largest and most advanced AI and robotics research centre.
TCS launched a Quantum Computing Lab on AWS.
TCS COIN⢠expanded its global footprint. It now has over 2,700 start-ups in the network and 80 active academic partnerships. COIN Business Accelerator, a high-touch program with emerging tech companies, has kicked off its 3rd cohort. The Accelerator is playing an instrumental part in TCS'' ecosystem strategy, increasing its innovation footprint, and winning deals.
In keeping with the Company''s commitment to social responsibility and sustainability, TCS Research continued its focus on energy, circularity, and development related projects. These have won appreciation from analysts.
TCS'' Clever Energy was launched on Google Cloud.
TCS'' futuristic accessibility research was also lauded. Barclays leveraged TCS'' VHAB, a gamified assistive tech offering, to help children with special needs. The Digital farming Initiative enabled carbon sequestration in agriculture. TCS'' energy research teams worked on smart grids, the EV ecosystem, the energy internet, and carbon market.
TCS conducted several sustainathons to create pools of ideas to address social issues. TCS Sustainathon South Africa 2022 focused on nutrition and food security for underprivileged South African children. Another sustainathon was launched in UK and Ireland with University of Glasgow to Develop Sustainable Technology Solutions that support businesses.
The Digital Impact Square, that encourages innovation using digital technologies to address social challenges, onboarded many new projects selected from 900 applications. DiSQ expanded its ecosystem with more network partners. Several companies within the purview of DiSQ have won awards. The TCS Research Scholarship Program, that completed 10 years, has been extended.
In keeping with the Company''s belief of building greater futures through innovation and collective knowledge, Research and Innovation initiatives to foster a culture of creativity continued this year. An organization-wide incubation bootcamp to encourage and support entrepreneurial ideas in areas of Space Tech, Future of Software, Sustainability, Financial Crime and Compliance was held. To further scale out the concept of Rapid Labs, "Build your own Rapid" initiative was held, mentoring teams to create labs that can deliver quick MVPs for customer requests. The TCS Innovista 2022 contest drew
10,000 innovative entries. TCS won four awards in the Tata Innovista 2022 finals.
TCS CodeVita completed a decade of engaging students with programming as a sport. Season 10 saw participation of 100,000 students from 87 countries and was one of the most competitive finales in the contest''s history.
TCS OmniStore⢠and TCS Optumera⢠won Stevies at the International Business Awards 2022 in the AI/ML solution category. TCS won gold in the category ''Smart Technology- Electricity Transmission'' at Indian Smart Grid Forum (ISGF) Innovation Awards 2023. VidyutVanika created in collaboration with IIIT Hyderabad won at the international smart grid competition PowerTAC 2022.
TCS'' Digital Farming Initiatives won the NASSCOM Enterprise Cloud Awards ''22. ignio⢠AIOps was awarded significant industry accolades.
TCS continues to contribute to standards in areas such as environmental engineering, cyber security, cyber resilience, Internet of Things, smart cities, software architecture, quantum computing & communication, accessibility of ICT for the differently abled, AI and FinTech-RegTech.
The Company''s intellectual property grew with 260 publications and presentations in top-tier journals and conferences. As of March 31, 2023, 7305 patents have been filed (cumulatively) by the Company and 2878 have been granted. TCS won many awards relating to IP, including the Asia IP Elite Award 2022 for being an exemplar of IP value creation.
TCS will continue to scale the Patents, Products and Platforms strategy across the organization, harnessing the collective knowledge and creativity of internal teams and of partners to deliver innovative solutions for customers.
TCS research and innovation centres are located in India and other parts of the world. The research centres in India, as certified by Department of Scientific & Industrial Research (DSIR), function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2023 and FY 2022 are given below:
('' crore) |
|||||
Expenditure on R&D and innovation |
Standalone |
Consolidated |
|||
FY 2023 |
FY 2022 |
FY 2023 |
FY 2022 |
||
a. |
Capital |
1 |
_* |
1 |
_* |
b. |
Recurring |
375 |
337 |
380 |
341 |
c. |
Total R&D expenditure (a b) |
376 |
337 |
381 |
341 |
d. |
Innovation center expenditure |
2,048 |
1,841 |
2,119 |
1,901 |
e. |
Total R&D and innovation expenditure (c d) |
2,424 |
2,178 |
2,500 |
2,242 |
f. |
R&D and innovation expenditure as a percentage of total turnover |
1.3% |
1.4% |
1.1% |
1.2% |
*Represents value less than ?0.50 crore |
Foreign exchange earnings and outgo Export revenue constituted 94.3 percent of the total standalone revenue in FY 2023 (94.0 percent in FY 2022). ('' crore) |
|||
Foreign exchange earnings and outgo |
FY 2023 |
FY 2022 |
|
a. |
Foreign exchange earnings |
1,83,412 |
1,55,240 |
b. |
CIF Value of imports |
144 |
216 |
c. |
Expenditure in foreign currency |
75,786 |
63,689 |
The Directors thank the Company''s employees, customers, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.
The Directors appreciate and value the contribution made by every member of the TCS family.
On behalf of the Board of Directors
Chairman DIN 00121863
Mumbai, April 12, 2023
Mar 31, 2022
The Directors present this Integrated Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2022.
To support âGreen initiative'', the Abridged Integrated Annual Report has been sent to the Members whose e-mail ids are not registered with the Company / Depositories.
The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
('' crore) |
||||
Standalone |
Consolidated |
|||
Financial Year |
Financial Year |
Financial Year |
Financial Year |
|
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
(FY 2022) |
(FY 2021) |
(FY 2022) |
(FY 2021) |
|
Revenue from operations |
1,60,341 |
1,35,963 |
1,91,754 |
1,64,177 |
Other income |
7,486 |
5,400 |
4,018 |
3,134 |
Total income |
1,67,827 |
1,41,363 |
1,95,772 |
1,67,311 |
Expenses |
||||
Operating expenditure |
1,14,096 |
95,653 |
1,38,697 |
1,17,631 |
Depreciation and amortisation expense |
3,522 |
3,053 |
4,604 |
4,065 |
Total expenses |
1,17,618 |
98,706 |
1,43,301 |
1,21,696 |
Profit before finance costs, exceptional item and tax |
50,209 |
42,657 |
52,471 |
45,615 |
Finance costs |
486 |
537 |
784 |
637 |
Profit before exceptional item and tax |
49,723 |
42,120 |
51,687 |
44,978 |
Exceptional item |
||||
Provision towards legal claim |
- |
1,218 |
- |
1,218 |
Profit before tax |
49,723 |
40,902 |
51,687 |
43,760 |
Tax expense |
11,536 |
9,942 |
13,238 |
11,198 |
Profit for the year |
38,187 |
30,960 |
38,449 |
32,562 |
Attributable to: |
||||
Shareholders of the Company |
38,187 |
30,960 |
38,327 |
32,430 |
Non-controlling interests |
NA |
NA |
122 |
132 |
Openina balance of retained earninas |
70,928 |
71,532 |
79,586 |
78,810 |
68,949 |
70,928 |
78,158 |
79,586 |
The COVID-19 pandemic, continued to be a global challenge, creating disruption across the world. In the first three months of FY 2022, the second wave of the pandemic overwhelmed India''s medical infrastructure. Through this trying period, hospitalization support was provided and Covid care centers were opened in TCS facilities in 13 cities to help affected associates and their families. This was in addition to the medical helplines, self-help and counseling services provided from the start of the pandemic.
Amid the pandemic, the Company launched a PAN-India vaccination drive for its employees and their families to ensure the safety and well-being of the associates and their families covering over a million individuals in all, across all the TCS locations and smaller cities from where some of the employees were remote-working.
3. Return of surplus funds to Shareholders
In line with the practice of returning 80 to 100 percent free cash flow to shareholders and based on the Company''s performance, the Directors have declared three interim dividends of ''7 per equity share aggregating to ''21 per equity share involving a cash outflow
*Excluding provision towards legal claim.
of ''7,768 crore during the year. The Directors have also recommended a final dividend of ''22 per equity share, the final dividend on equity shares, if approved by the Members, would involve a cash outflow of ''8,050 crore. The total dividend for FY 2022 amounts to ''43 per equity share and would involve a total cash outflow of ''15,818 crore, resulting in a dividend payout of 41.4 percent of the standalone profits of the Company.
In addition to the above, the Company bought back 4,00,00,000 equity shares at a price of ''4,500 per equity share for an aggregate consideration of ''18,000 crore. The offer size of the buyback was 21.03 percent and 19.06 percent of the aggregate fully paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as at December 31, 2021, respectively.
The buyback represented 1.08 percent of the total issued and paid-up equity share capital of the Company as at December 31, 2021.
The settlement of bids and payment of buyback consideration was made on March 28, 2022 and the shares were extinguished on March 29, 2022.
The shareholders'' payout with respect to dividend and buyback including tax on buyback (excluding transaction costs, other incidental and related expenses) aggregated to ''38,010 crore, resulting in a payout of 99.5 percent of the standalone profits of the Company.
For FY 2021, the Company paid a total dividend of ''38 per equity share, which resulted in an outflow of ''14,147 crore and a dividend payout of 44.3 percent* of the standalone profits of the Company. In addition to the above, the Company bought back 5,33,33,333 equity shares at a price of ''3,000 per equity share for an aggregate consideration of ''16,000 crore. The offer size of the buyback was 19.96 percent and 18.11 percent of the aggregate paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as at September 30, 2020, respectively.
The buyback represented 1.42 percent of the total issued and paid-up equity share capital of the Company. The buyback process was completed and the shares were extinguished on January 6, 2021.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations,
2015 (âSEBI Listing Regulationsâ) is available on the Company''s website at https://on.tcs.com/ Dividend.
The closing balance of the retained earnings of the Company for FY 2022, after all appropriations and adjustments was ''68,949 crore.
On a consolidated basis, the revenue for FY 2022 was ''1,91,754 crore, higher by 16.8 percent over the previous year''s revenue of ''1,64,177 crore. The profit after tax (âPATâ) attributable to shareholders and non-controlling interests for FY 2022 and FY 2021 was ''38,449 crore and ''33,520 crore1, respectively. The PAT attributable to shareholders for FY 2022 was ''38,327 crore1 registering a growth of 14.8 percent over the PAT of ''33,388 crore1 in FY 2021.
On a standalone basis, the revenue for FY 2022 was ''1,60,341 crore, higher by 17.9 percent over the previous year''s revenue of ''1,35,963 crore. The PAT attributable to shareholders in FY 2022 was ''38,187 crore registering a growth of 19.6 percent over the PAT of ''31,918 crore1 in FY 2021.
*Excluding provision towards legal claim.
The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management.
TCS'' integrated Quality Management System (iQMSâ¢) continues to enable outstanding value and experience to its customers. iQMS⢠is continually enhanced for new service offerings, emerging delivery methodologies, industry best practices and latest technologies.
TCS successfully completed the annual ISO surveillance audit and has been recommended for continuation of its enterprise-wide certification. This year, TCS has expanded the scope of enterprise certification to include conformance to Privacy Information Management Systems Standard (ISO 27701:2019). TCS''s enterprise ISO certification scope includes conformance to the following globally recognized standards:
ISO 9001:2015 (Quality Management),
ISO 20000:2018 (IT Service Management),
ISO 22301:2019 (Business Continuity Management), ISO 27001:2013 (Information Security Management) and compliance to ISO 27017:2015 (Information Security
Controls for Cloud Services), ISO 27018:2019 (Protection of PII in Public Clouds as PII Processors) and ISO 27701:2019 (Privacy Information Management Systems).
During second wave of the pandemic, the Company was actively monitoring all customer engagements across the globe to minimize risks and ensure continuity of services. This was achieved through daily tracking, digitized multi-level dashboards and differentiated governance of critical engagements.
The customer-centricity, rigor in operations and focus on delivery excellence have resulted in sustained high customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third party surveys as well. In these surveys, TCS achieved the top position in customer satisfaction for the ninth consecutive year, with an overall satisfaction score of 84 percent compared to the industry average of 75 percent.
TCS has also received multiple awards from CII and National Institute for Quality and Reliability this year. TCS won the Data Security Council of India (DSCI) Excellence Award 2021 in two categories - Best Privacy Practices in Organization and Best Security Practices in IT-ITes/ BPM (Large).
The Company has 52 subsidiaries as on March 31, 2022. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 (âActâ). There has been no material change in the nature of the business of the subsidiaries.
⢠The name of W12 Studios Limited was changed to Tata Consultancy Services UK Limited w.e.f. May 24, 2021.
⢠On May 26, 2021, Tata Consultancy Services Netherlands B.V., a 100 percent subsidiary of the Company, increased
its equity stake to 100 percent in Tata Consultancy Services Saudi Arabia on acquisition of Saudi Desert Rose Holding B.V.
⢠Tata Consultancy Services Ireland Limited, a 100 percent subsidiary of the Company, incorporated a wholly owned subsidiary, Tata Consultancy Services Bulgaria EOOD in Bulgaria on August 31, 2021. 1
⢠The name of Postbank Systems AG changed to TCS Technology Solutions AG w.e.f. December 27, 2021.
⢠TCS e-Serve America, Inc. was liquidated w.e.f. December 29, 2021.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form No. AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Company''s website at https://www.tcs.com/investor-relations.
8. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work
performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2022.
9. Directors and key managerial personnel
The Board of Directors at its meeting held on October 8, 2021, subject to approval of the shareholders, approved the re-appointment of Rajesh Gopinathan (DIN 06365813) as the Chief Executive Officer and Managing Director of the Company for a further period of five years from February 21, 2022 and re-appointment of N Ganapathy Subramaniam (DIN 07006215) as Chief Operating Officer and Executive Director from February 21, 2022 to May 19, 2024, as per the retirement age policy for the Directors of the Company.
N Ganapathy Subramaniam (DIN 07006215) retires by rotation and being eligible, offers himself for re-appointment. A resolution seeking shareholders'' approval for his re-appointment along with other required details forms part of the Notice.
Pursuant to the provisions of Section 149 of the Act, the independent directors have
submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.
During the year under review, the nonexecutive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any.
Samir Seksaria took over as the Chief Financial Officer, with effect from May 1, 2021, in place of V Ramakrishnan, who retired from the services of the Company w.e.f. April 30, 2021.
Samir Seksaria has been with TCS since 1999 and has held various positions in business consulting and finance. He is a commerce graduate from Narsee Monjee College, Mumbai and a member of the Institute of Chartered Accountants of India.
During the year under review, the Board at its meeting held on October 8, 2021 appointed Pradeep Manohar Gaitonde as the Company Secretary and Compliance Officer of the Company to take over from Rajendra Moholkar as Company Secretary and Compliance Officer,
with effect from November 1, 2021.
Pradeep Manohar Gaitonde is a member of the Institute of Company Secretaries of India and the Institute of Chartered Accountants of India. He has degrees in Commerce and General Law. He joined TCS in 2006 and has over thirty years of experience in finance, governance and secretarial functions.
The Board places on record its appreciation for V Ramakrishnan and Rajendra Moholkar for their invaluable contribution and guidance during their tenure as Chief Financial Officer, and Company Secretary and Compliance Officer, respectively.
Pursuant to the provisions of Section 203 of the Act, Rajesh Gopinathan, Chief Executive Officer and Managing Director,
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, Samir Seksaria, Chief Financial Officer and Pradeep Manohar Gaitonde, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2022.
10. Number of meetings of the Board
Five meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.
The Board and the Nomination and Remuneration Committee reviewed the
performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
12. Policy on directorsâ appointment and remuneration and other details
The Company''s policy on appointment of directors is available on the Company''s website at https://on.tcs.com/ApptDirectors.
The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on the Company''s website at https:/''''on.tcs.com/remuneration-policy.
13. Corporate social responsibility (CSR)
TCS'' CSR initiatives and activities are aligned to the requirements of Section 135 of the Act.
The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. This Policy is available on the Company''s website at https^on.tcs.com/Global-CSR-Policy
14. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report.
B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) the statutory auditors of the Company, will hold office till the conclusion of the twenty-seventh Annual General Meeting of the Company.
The Board has recommended the re-appointment of B S R & Co. LLP, Chartered Accountants as the statutory auditors of the Company, for a second term of five consecutive years, from the conclusion of the twenty-seventh Annual General Meeting scheduled to be held in the year 2022 till the conclusion of the thirty-second Annual General Meeting to be held in the year 2027, for approval of shareholders of the Company, based on the recommendation of the Audit Committee.
17. Auditorâs report and Secretarial audit report
The statutory auditor''s report and the secretarial auditor''s report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report as Annexure II.
The Board of Directors of the Company has formed a Risk Management Committee
to frame, implement and monitor the risk management plan for the Company.
The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in conformation with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behavior. This Policy is available on the Company''s website at https^on.tcs.com/WhistleBP.
20. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements.
21. Transactions with related parties
None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2022 and hence does not form part of this report.
Pursuant to SEBI Listing Regulations, the resolution for seeking approval of the shareholders on material related party transactions is being placed at the AGM.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2022 is available on the Company''s website at https^on.tcs.com/annual-return-21-22.
The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
a. The ratio of the remuneration of each
director to the median remuneration of the
employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
Name |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Non-executive Directors: |
||
N Chandrasekaran* |
- |
- |
O P Bhatt |
38.49 |
8.70 |
Aarthi Subramanian# |
- |
- |
Dr Pradeep Kumar Khosla |
34.64 |
21.62 |
Hanne Sorensen |
34.64 |
21.62 |
Keki Mistry |
38.49 |
25.00 |
Don Callahan |
34.64 |
12.50 |
Executive Directors: |
||
Rajesh Gopinathan |
396.67 |
26.52 |
N Ganapathy Subramaniam |
318.52 |
28.47 |
Chief Financial Officer |
||
Samir Seksaria## |
- |
$ |
V Ramakrishnan### |
- |
$ |
Company Secretary |
||
Pradeep Manohar Gaitonde@ |
- |
$ |
Rajendra Moholkar@@ |
- |
$ |
* As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.
# In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata Company and hence not stated.
## Appointed as Chief Financial Officer w.e.f. May 1, 2021.
### Relinquished the office of Chief
Financial Officer w.e.f. April 30, 2021.
@ Appointed as Company Secretary and Compliance Officer w.e.f. November 1, 2021.
@@ Relinquished the office of Company Secretary and Compliance Officer w.e.f. October 31, 2021
$ Since the remuneration is only for part of the year, the percentage increase in remuneration is not comparable and hence, not stated.
b. The percentage increase in the median remuneration of employees in the financial year is 4.24 percent
c. The number of permanent employees on the rolls of Company are 5,92,195
d. The average annual increase was in the range of 5-8 percent in India. However, during the course of the year, the total increase is approximately 10.5 percent, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 1.5 to 6 percent.
The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects the Company''s performance, the performance pay is also linked to organization performance and individual utilization in addition to individual performance.
Increase in the managerial remuneration for the year was 27.38 percent.
e. The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report.
Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Company, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company''s long term perspective. The Report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors''
Certificate thereon, and the integrated Management Discussion and Analysis, the Business Responsibility and Sustainability Report (âBRSRâ) form part of the Director''s Report.
The Company has provided BRSR, in lieu of the Business Responsibility Report which indicates the Company''s performance against the principles of the âNational Guidelines on Responsible Business Conduct''. This would enable the Members to have an insight into environmental, social and governance initiatives of the Company.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
27. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The Company is committed towards conservation of energy and climate action which is reaffirmed in its Environmental Sustainability Policy (https://on.tcs.com/Environmental-Sustainability).
Through the reporting year, initiatives were aligned towards achieving these targets. Having already switched over to LED lights across all offices in 2020, this year the focus was on cooling system and UPS efficiencies. Offices with old/inefficient air conditioners were upgraded to energy efficient and energy star rated cooling systems. Initiatives to optimize the UPS load included UPS resizing and switch over to modular UPS. The data center PUE of 1.65 was achieved for the corporate data centers at Yantra Park and Siruseri. The Company is also incorporating next generation green data center practices with futuristic and modular technologies like modular UPS, cold aisle containment, real time monitoring of temperature and energy consumption.
The Company continued to augment the roof top solar photo voltaic installations this year as well taking the total installed capacity to 10.2 MWp contributing to 3.76 percent of total electricity use in the reporting year. The Company increased the renewable energy procurement through third party power purchase agreement (PPA) for solar energy at TCS Siruseri campus and switch over to green tariff for its operations in the states of Karnataka and Maharashtra. This resulted in an increase in the renewable energy use to 37.2 percent of total electricity use.
The Company has become carbon neutral across Scope 1 and Scope 2 for its operations in Asia Pacific (APAC), Europe and North America (NA) for this reporting year. These efforts helped achieve a year-on-year reduction in absolute carbon footprint reduction (across Scope 1 and Scope 2) across TCS'' global operations by 25 percent. The electricity use across India operations reduced by 6.54 percent y-o-y. For global operations, there is an increase in total electricity use (y-o-y) by approx.
2.7 percent due to increased reporting boundary to include operations in NA, APAC, Europe and Middle East and Africa (MEA) regions.
Continued focus on the above initiatives will enable steer the Company towards achieving its carbon target to reduce its absolute Scope 1 Scope 2 carbon footprint by 70 percent by 2025 over the baseline on 2016 and also to become net zero by 2030.
Technology absorption, adaption and innovation
Research & Development (R&D): Specific areas in which R&D was carried out by the Company
FY 2022 marked the beginning of TCS'' fifth decade as a research-focused organization.
Activities that strengthened both brands related to R&D are specified here. TCS Research as a brand, highlights the Company''s ability to invent with impact, and explore futuristic ideas with the wider academic ecosystem. The TCS Pace⢠brand stands for its innovation capability, by which intellectual content is made tangible and experiential to customers.
TCS continues to expand its foundational research in computing and its intersection with the sciences. New areas of research include sensing, digital twins for social systems, efficient and robust AI and deep learning, quantum computing and generative design for materials, manufacturing and life sciences. Work began with cross-functional teams on strategic initiatives such as Future of Software Development and Sustainability. Research on other strategic initiatives continued.
More of TCS'' IP based products and platforms were made available natively on hyperscaler cloud platforms. While TCS BaNCS⢠suite in financial services, TCS Optumera⢠and TCS Omnistore⢠in retail, TCS HOBS⢠in telecom and TCS ADD⢠in life sciences were made available on AWS last year, TCS Aviana⢠for travel customers followed suit this year. TCS'' Cognitive Plant Operations Adviser (CPOA), an amalgamation of IP-based solutions for
manufacturing has also been developed using Microsoft Azure Cloud capabilities.
TCS MasterCraft⢠is now on the Microsoft Azure Marketplace. TCS Clever Energyâ¢, TCS Envirozone⢠were launched on Microsoft''s Azure IoT platform to help organizations gain insights into energy usage and reduce waste and emissions. Many of these products and platforms are available on Google Cloud as well. TCS also has a rich suite of cloud accelerators rendered on the Google Cloud Garages launched at TCS Pace Ports.
The best of TCS'' innovation assets, capabilities, and practices were brought to customers through experiential initiatives. The Company''s Pace Ports, spaces that connect customers to all of TCS'' organizational capabilities in innovation, technology and industry expertise, hosted several events and workshops. TCS Pace Ports are active across geographies. The Company launched a Pace Port⢠in Amsterdam formally this year to bring TCS'' ecosystem of partners from academia, government institutions, start-ups and technology providers to co-innovate with European customers with a focus on sustainability.
âPowered by Pace'' centres were launched across the globe to help customers leverage co-innovation and accelerate digital transformation. These include the digital
innovation lab at the Letterkenny Global Delivery Centre, Ireland; Digital Garage Innovation Centre at Sydney; and the Allwomen Innovation Lab at Riyadh. TCS'' Agile Innovation Cloud (AIC) was adopted by multiple customers this year.
TCS Co-Innovation Network (TCS COINâ¢) expanded its global footprint with more than 55 active academic partnerships and over 2,600 start-up partners in the network.
In keeping with the Company''s commitment to social responsibility and sustainability,
TCS Research its continued focus on energy, circularity, and development related projects. Several other initiatives were undertaken:
TCS and Glasgow University launched UK Sustainathon 2021 to empower UK university students to tackle sustainability challenges using digital technologies, the winners of which showcased their idea at the TCS Innovation Forum 2021 in UK. The second edition of TCS Sustainathon ASEAN 2021 expanded beyond Singapore to Malaysia and Philippines. It focused on âReimagining Education.'' Sustainathon - The Balancing Act, a Europe-wide sustainathon in alignment with Conference of Parties 26 (COP 26) and the European Green Deal was also launched in FY 2022.
In line with the Company''s belief of building greater futures through innovation and collective knowledge, R&I continued to combine know-how and innovation mindset across the organization by regularly organizing crowdsourcing initiatives. TCS Innovista 2022, attracted 11,970 entries across the organization. TCS secured 4 wins at TATA Innovista 2021. Innovation Champions continued to be active across several accounts facilitating TCS customers'' growth and transformation journeys. TCS Innovation Forum 2021 with sustainability as a theme was held in seven geographies; many Innovation Days were held with customers across industries.
The ninth season of TCS CodeVita, won the Guinness World Records⢠title for the world''s largest computer programming competition with 1,36,054 participants from 34 countries.
Intellectual property of TCS R&I grew with more than 240 publications presented in top-tier conferences or published in journals. The Company continued to contribute to standards bodies especially in ISO SC7 and SC42 on Software and Systems Engineering and Artificial Intelligence, respectively. As of March 31, 2022, 6,583 patents have been filed
and 2,287 granted cumulatively by the Company. TCS won CII''s Industrial Intellectual Property Awards 2021 for the Best Patents Portfolio in the Large Enterprises (Information and Communications Technology and Services) category, for the fifth consecutive year. TCS also won the ASSOCHAM IP Excellence Award 2021 for the best IP In-House Team of the Year.
TCS will continue to scale the Patents, Products and Platforms strategy across the organization, harnessing the collective knowledge and creativity of internal teams and of partners to deliver innovative solutions in support of the Company''s pursuit of growth and transformation opportunities and longer-term sustainability goals.
TCS research and innovation centres are located in India and other parts of the world. These research centres in India, as certified by Department of Scientific & Industrial Research (DSIR), function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2022 and FY 2021 are given below:
('' crore) |
|||||
Expenditure on R&D and |
Standalone |
Consolidated |
|||
innovation |
FY 2022 |
FY 2021 |
FY 2022 |
FY 2021 |
|
a. |
Capital |
_* |
1 |
_* |
1 |
b. |
Recurring |
337 |
298 |
341 |
302 |
c. |
Total R&D expenditure (a b) |
337 |
299 |
341 |
303 |
d. |
Innovation center expenditure |
1,841 |
1,546 |
1,901 |
1,614 |
e. |
Total R&D and innovation expenditure (c d) |
2,178 |
1,845 |
2,242 |
1,917 |
f. |
R&D and innovation expenditure as a percentage of total turnover |
1.4% |
1.4% |
1.2% |
1.2% |
*Represents value less than ''0.50 crore.
Foreign exchange earnings and outgo
Export revenue constituted 94.0 percent of the total standalone revenue in FY 2022 (94.0 percent in FY 2021).
('' crore) |
|||
Foreign exchange earnings and outgo |
FY 2022 |
FY 2021 |
|
a. |
Foreign exchange earnings |
1,55,240 |
1,30,720 |
b. |
CIF Value of imports |
216 |
241 |
c. |
Expenditure in foreign currency |
63,689 |
54,800 |
The Directors thank the Company''s employees, customers, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.
The Directors regret the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked his life and safety to fight this pandemic.
The Directors appreciate and value the contribution made by every member of the TCS family.
On behalf of the Board of Directors
Chairman DIN No. 00121863
Mumbai, April 11, 2022
TCS Iberoamerica SA, a 100 percent subsidiary of the Company, incorporated a subsidiary, Tata Consultancy Services Guatemala, S.A. in Guatemala on September 1, 2021.
Mar 31, 2021
The Directors present the Integrated Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2021. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. |
Financial results ('' crore) |
||||
Standalone |
Consolidated |
||||
Financial Year 2020-21 (FY 2021) |
Financial Year 2019-20 (FY 2020) |
Financial Year 2020-21 (FY 2021) |
Financial Year 2019-20 (FY 2020) |
||
Revenue from operations |
135,963 |
131,306 |
164,177 |
156,949 |
|
Other income |
5,400 |
8,082 |
3,134 |
4,592 |
|
Total income |
141,363 |
139,388 |
167,311 |
161,541 |
|
Expenses |
|||||
Operating expenditure |
95,653 |
93,953 |
117,631 |
114,840 |
|
Depreciation and amortisation expense |
3,053 |
2,701 |
4,065 |
3,529 |
|
Total expenses |
98,706 |
96,654 |
121,696 |
118,369 |
|
Profit before finance costs, exceptional item and tax |
42,657 |
42,734 |
45,615 |
43,172 |
|
Finance costs |
537 |
743 |
637 |
924 |
|
Profit before exceptional item and tax |
42,120 |
41,991 |
44,978 |
42,248 |
|
Exceptional item |
|||||
Provision towards legal claim |
1,218 |
- |
1,218 |
- |
|
Profit before tax |
40,902 |
41,991 |
43,760 |
42,248 |
|
Tax expense |
9,942 |
8,731 |
11,198 |
9,801 |
|
Profit for the year |
30,960 |
33,260 |
32,562 |
32,447 |
|
Attributable to: |
|||||
Shareholders of the Company |
30,960 |
33,260 |
32,430 |
32,340 |
|
Non-controlling interests |
NA |
NA |
132 |
107 |
|
Opening balance of retained earnings |
71,532 |
77,159 |
78,810 |
85,520 |
|
Closing balance of retained earnings |
70,928 |
71,532 |
79,586 |
78,810 |
The COVID-19 pandemic has emerged as a global challenge, creating disruption across the world. Global solutions are needed to overcome the challenges - businesses & business models have transformed to create a new work order. The swift transition to remote working was facilitated by the Secure Borderless Workspaces⢠model adopted by the Company.
The physical and emotional wellbeing of employees continues to be a top priority for the Company, with several initiatives to support employees and their families during the pandemic. The Company has invested in setting up medical helplines, ambulance services and first line Covid Care Centers within TCS premises, and has also extended counselling and self-help services providing mental & emotional support to employees. The Company has reimagined employee engagement, which transcends geographic barriers by embracing virtual technologies and embraces our diverse workforce. Initiatives like the #OneTCS channel, designed to reduce stress and the feeling of isolation, hosted inspirational leaders, mental health experts, virtual town halls and a global talent hunt competition to boost morale of employees.
The SBWS⢠model has been institutionalized and the Company has been able to seamlessly adapt and extend it to prospect for new business, sell, contract and execute programs. This transformative model enables remote access for employees, sets up a suitable cybersecurity framework and all project management practices and systems needed to ensure that work allocation, monitoring and reporting continues without disruption. In this way, the SBWS⢠model ensured that neither the quality nor the timeliness of client deliveries was ever compromised. SBWS⢠is not a short-term response to a crisis, but a new beginning. These new ways of working and managing businesses present a great opportunity to more than just ârecover'' from the consequences of the crisis, but to accelerate transformation.
The revenue impact of the pandemic played out broadly along the lines that the Company had anticipated at the start and affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact.
3. Return of surplus funds to Shareholders
In line with the practice of returning 80 to 100 percent free cash flow to shareholders
and based on the Company''s performance, the Directors have declared interim dividends of ''23 per equity share involving a cash outflow of ''8,598 crore. The Directors have also recommended a final dividend of ''15 per equity share, the final dividend on equity shares, if approved by the Members, would involve a cash outflow of ''5,549 crore. The total dividend for FY 2021 amounts to ''38 per equity share and would involve a total cash outflow of ''14,147 crore, resulting in a dividend payout of 44.3 percent1 of the standalone profits of the Company.
In addition to the above, the Company bought back 5,33,33,333 equity shares at a price of ''3,000 per equity share for an aggregate consideration of ''16,000 crore. The offer size of the buy-back was 19.96 percent and 18.11 percent of the aggregate paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as on September 30, 2020, respectively.
The buy-back represented 1.42 percent of the total issued and paid-up equity share capital of the Company. The buy-back process was completed and the shares were extinguished on January 6, 2021.
The shareholder''s payout with respect to dividend and buy-back including tax on buy-back (excluding transaction costs, other incidental and related expenses) aggregated to ''33,873 crore, resulting in a payout of 106.1 percent* of the standalone profits of the Company.
In FY 2020, the Company paid a total dividend of ''73 per equity share, including a special dividend of ''40 per equity share, which resulted in an outflow of ''31,895 crore and a dividend payout of 95.9 percent of the standalone profits of the Company.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (âSEBI Listing Regulationsâ) is available on the Company''s website onhttps://on.tcs.com/ Dividend.
The closing balance of the retained earnings of the Company for FY 2021, after all appropriation and adjustments was ''70,928 crore.
On a consolidated basis, the revenue for FY 2021 was ''164,177 crore, higher by 4.6 percent over the previous year''s revenue of ''156,949 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2021 and FY 2020 was ''33,520 crore* and ''32,447 crore, respectively. The profit after tax (PAT) attributable to shareholders for FY 2021 and FY 2020 was ''33,388 crore* and ''32,340 crore, respectively.
On a standalone basis, the revenue for FY 2021 was ''135,963 crore, higher by 3.5 percent over the previous year''s revenue of ''131,306 crore in FY 2020. The profit after tax (PAT) attributable to shareholders for FY 2021 and FY 2020 was ''31,918 crore* and ''33,260 crore, respectively.
In this extraordinary year, TCS continued to stay focused on the health and wellbeing of its associates through multiple measures. Some of these included the setting up of first line Covid Care Centres at TCS premises, hospital admission assistance, home healthcare services, availability of OHC doctors round the clock, tele medicine and repatriation of onsite associates
and families through the Vande Bharat Mission. In addition, TCS took various initiatives to keep employees productive and engaged, with secure access and the latest collaboration tools. Virtual HR days, daily check-in calls to associates, increased connect sessions with leaders, counselling services and other initiatives focused on improving the employees'' resilience.
TCS employees, their families and other stakeholders highly appreciated these steps.
This year the Company''s Learning Intensity has increased significantly, by almost 37%.
The Company launched TCS Elevate, a merit-based talent framework to bring further tighter linkage between learning and careers, and to drive a culture of continuous learning and aspiration for accelerated career paths.
Over 138,000 associates have been on-boarded to this program.
The Company continued its track record of pioneering industry-first practices by embracing online hiring, conducting around 100,000 virtual interviews, and pivoting the TCS NQT completely to virtual mode.
Over 368K students from 3,100 colleges attended the TCS NQT from the safety of their homes. The Company''s investment in strategic leadership hiring from top B-schools deepened with TCS being the highest internship hirer in
these top campuses. The Company had a net addition of 40,185, taking its total associate count to 488,649.
A digital online onboarding model helped the Company to effectively integrate associates hired across the globe. Its diverse workforce includes 154 nationalities across 46 countries. The Company is one of the largest employers of women in the world. Sustained efforts to improve gender diversity, through focused hiring, mentoring and coaching women employees, have resulted in women currently accounting for 36.5 percent of the workforce.
TCS'' commitment to its employees and its pioneering and innovative HR initiatives have won it many awards and accolades from top Industry bodies such as ATD and Brandon Hall. The Company''s internal associate satisfaction survey PULSE showed the highest associate satisfaction and engagement scores in the last 13 years. This is also reflected in its LTM attrition rate of 7.2 percent, which is an industry benchmark, and its lowest ever.
The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust
information security practices and mature business continuity management by successfully completing annual re-certification/surveillance audits for various industry standards and models.
TCS'' integrated Quality Management System (iQMSâ¢) continues to enable outstanding value and experience to its customers. iQMS⢠is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. iQMS⢠has been updated with handbooks and guidelines for Agile methodology.
Agile is a method to accelerate the speed of delivery in software development. TCS saw an opportunity to elevate Agile by applying it to everything an organization does spanning market research, innovation, product development, sales, delivery, and support functions, allowing organization wide delivery and innovation at high speeds, breaking departmental barriers and transcending location constraints. TCS calls this as Enterprise Agile.
In 2017, TCS declared âEnterprise Agile by 2020'' as its vision with the goal of transforming TCS along four dimensions: Workforce, Workplace & Infrastructure, Service Delivery, and Internal Processes. Implementation was accomplished in three waves for (1) IT Services, (2) Cognitive Business Operations and (3)
Enablement Functions such as HR, Marketing, Administration, IT Infrastructure, Delivery Excellence, Internal IT, and Research.
While standard Agile pushes for collaboration within a physical setting, TCS had to invent a method to bring agility without the need for physical co-location of teams.
TCS created the Location Independent Agile⢠providing comprehensive blueprints of team configurations, practices and technology for collaboration such as Open Agile Collaborative Workspace (OACW) so that team members from any part of the world can work together without location constraints.
By converting Agile into a strategic enterprise transformation lever, TCS created many capabilities, including the world''s largest Agile workforce. TCS has filed five patents in the Agile space. Today, industry Agile experts and analysts acknowledge TCS'' leadership in Agile. TCS handles over 12,000 Agile projects contributing to 85 percent of IT services revenue. TCS has also added a key term to the worldwide agile vocabulary by introducing the concept of Agility Debt⢠- an index that uniquely measures an organization''s agility.
TCS saw customers who undertook holistic Agile Transformations growing faster than their peers, and more than 90 percent of customers
acknowledged increased speed-to-value from their agile adoption.
The Company accomplished the Enterprise Agile 2020 vision by October 2020 satisfying all the KPI''s that were set, which the Company believes is first of its kind in the industry.
The Company has 427,000 Agile Ready workforce with 86 percent of them functioning as Practitioners in client projects.
The Company''s AgiltyDebt⢠stands below 0.25 and more than 70 percent of new projects getting initiated are following agile methods
Technologies and Investments from âEnterprise Agile'' initiative gave the foundation for Secure Borderless Workspaces (SBWSâ¢), which is the backbone for our associates to work remotely from wherever they feel safe.
To reduce the delivery risks during the pandemic, the Company had rolled out Guidelines for âService Delivery under SBWS⢠and the SBWS⢠Governance utility. It has been monitoring the 20,000 projects across the globe through digitized dashboards.
The customer-centricity, rigor in operations and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third party surveys as well.
The Company has 50 subsidiaries as on March 31, 2021. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 (âActâ). There has been no material change in the nature of the business of the subsidiaries.
⢠The Equity stake in Technology Outsourcing S.A.C., was sold to Banco Pichincha Peru on December 1, 2020, at book value, consequent to which Technology Outsourcing S.A.C. ceased to be the subsidiary of the Company.
⢠In November 2020, TCS entered into an agreement with Prudential Financial, Inc.(PFI) to acquire over 1,500 staff and select assets of Pramerica Systems Ireland Ltd. (Pramerica), PFI''s subsidiary based
in Letterkenny, Ireland. The intent of the transaction was for TCS to establish a new global delivery centre in Ireland to provide PFI with a range of business and technology services, while also expanding TCS nearshore capabilities to provide the multifunctional, digital services and solutions to other customers in Ireland, the UK, Europe and the US. Accordingly, on December 2, 2020, Tata Consultancy
Services Ireland Limited was incorporated as a wholly owned subsidiary of the Company in Ireland to provide the aforesaid services.
⢠CMC Americas, Inc., a US based subsidiary of the Company was voluntarily dissolved with effect from December 16, 2020 as CMC Americas Inc. and TCS both provide similar services. This would also enable rationalization of the number of entities in the US.
⢠On January 1, 2021, Tata Consultancy Services Netherlands B.V., a wholly owned subsidiary of the Company acquired
100 percent shares of Postbank Systems AG (PBS), a subsidiary of Deutsche Bank AG at an estimated transaction value at a symbolic 1 Euro. PBS is the full-range captive IT service provider that provides project management, application management and infrastructure support services to Postbank and other subsidiaries of Deutsche Bank. As a part of transaction, PBS and its around 1,500 employees become part of TCS which helped in deepening the relationship between the two organizations and add to TCS'' scale in Germany and strengthen its growth outlook.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form No. AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Company''s website onhttps://www.tcs.com/investor-relations.
9. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and
the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2021.
10. Directors and key managerial personnel
N. Chandrasekaran retires by rotation and being eligible, offers himself for re-appointment.
A resolution seeking shareholders'' approval for his re-appointment along with other required details forms part of the Notice.
Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.
During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any.
Pursuant to the provisions of Section 203 of the Act, Rajesh Gopinathan, Chief Executive Officer and Managing Director, N. Ganapathy Subramaniam, Chief Operating Officer and
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
13. Policy on directorsâ appointment and remuneration and other details
The Company''s policy on appointment of directors is available on the Company''s website onhttps://on.tcs.com/ApptDirectors.
The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on the Company''s website on https://on.tcs.com/remuneration-policy.
Executive Director, Ramakrishnan V., Chief Financial Officer and Rajendra Moholkar, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2021.
Ramakrishnan V. has been the Chief Financial Officer since February 21, 2017. He will be retiring from the services of the Company effective April 30, 2021. The Board places on record its appreciation for his invaluable contribution and guidance during his tenure with the Company.
During the year under review, the Board at its meeting held on October 7, 2020 appointed Samir Seksaria as the Chief Financial Officer Designate of the Company to take over from Ramakrishnan V. as Chief Financial Officer, with effect from May 1, 2021. Samir Seksaria has been with TCS since 1999 and has held various positions in business consulting and finance.
He is a commerce graduate from Narsee Monjee College, Mumbai and a member of the Institute of Chartered Accountants of India.
11. Number of meetings of the Board
Seven meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.
In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.
17. Auditors
At the twenty-second AGM held on June 16, 2017 the Members approved appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the twenty-seventh AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act.
18. Auditorâs report and Secretarial audit report
The statutory auditor''s report and the secretarial auditor''s report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report as Annexure II.
19. Risk management
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company.
The Committee is responsible for monitoring and reviewing the risk management plan and
14. Corporate social responsibility
The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. This Policy is available on the Company''s website on https://on.tcs.com/Global-CSR-Policy.
15. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report.
ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behavior. This Policy is available on the Company''s website onhttps://on.tcs.com/ WhistleBP.
21. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements.
22. Transactions with related parties
None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2020-21 and hence does not form part of this report.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Companyâs website onhttps://on.tcs.com/ annual-return-20-21.
The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
Name |
Ratio to median remuneration |
% increase in remuneration in the financial year |
|
Non-executive Directors: |
|||
N. Chandrasekaran* |
- |
- |
|
O P Bhatt |
36.91 |
15.00 |
|
Aarthi Subramanian# |
- |
- |
|
Dr. Pradeep Kumar Khosla |
29.69 |
32.14 |
|
Hanne Sorensen |
29.69 |
32.14 |
|
Keki Mistry |
32.09 |
42.86 |
|
Don Callahan |
32.09 |
42.86 |
|
Executive Directors: |
|||
Rajesh Gopinathan |
326.81 |
52.21 |
|
N. Ganapathy Subramaniam |
258.43 |
59.18 |
|
Chief Financial Officer |
|||
Ramakrishnan V. |
60.30 |
||
Company Secretary |
|||
Rajendra Moholkar |
76.00 |
||
* As a policy, N. Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated. |
|||
# In line with the internal guidelines of the Company, Non-Executive Directors of the Company, who are Company and hence not stated. |
no payment is made towards commission to the in full time employment with any other Tata |
b. The percentage increase in the median remuneration of employees in the financial year: (0.03) percent
c. The number of permanent employees on the rolls of Company: 488,649
d. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was 5.2 percent in India. However, during the course of the year, the total increase is approximately 6.4 percent, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 2 percent to 6 percent. The increase in remuneration is in line with the market trends in the respective countries.
Increase in the managerial remuneration for the year was 55.22 percent. Increase in the managerial remuneration for FY 2021 is not comparable with
FY 2020 owing to decrease in remuneration of 15 percent in FY 2020 in view of the economic conditions impacted by the COVID-19 pandemic wherein the Directors had decided to moderate the executive remuneration for FY 2020 to express solidarity and conserve resources.
e. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3)
of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Company being one of the top companies in the country in terms of market capitalization, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company''s long term perspective. The Report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors'' Certificate thereon, and the integrated Management Discussion and Analysis including the Business Responsibility Report are attached, which forms part of this report.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
28. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The Company saw a year-on-year reduction in absolute energy use by 46.6 percent in MWh and an absolute carbon footprint reduction (across Scope 1 and Scope 2) by 48.8 percent (in tonnes of carbon dioxide equivalent).
This reduction was not commensurate to the extremely low occupancy because some utilities had to be run to maintain the infrastructure.
TCS'' specific greenhouse gas emissions (Scope 1 Scope 2) comes to 0.54 tCO2e/ FTE (Full Time Equivalent)/Annum in the current reporting year, a reduction of 53 percent Y-O-Y. This is estimated with the actual carbon footprint and a notional FTE (working out of TCS offices), considering an increase of 8.23 percent in the FTE over the last reporting year. This increase in FTE, is in line with the TCS global headcount growth. The specific
carbon footprint data is presented for the sake of continuity and is not comparable with the earlier year.
The total rooftop solar energy generation across the campuses increased to 8.1 MWp contributing to 2.5 percent of total electricity use in the reporting year. Total renewable energy used - from rooftop solar power plants and through power purchase agreements was 45.5 million units amounting to 15.6 percent of the total electricity consumption.
The Company achieved the target power utilization efficiency (PUE) of 1.65 across 21 of 23 target data centers. The Company has also taken up additional 44 data centers for this initiative and reduced weighted average PUE of all DCs to 1.77 in reporting year from 2.4 in 2017. The Company has focused on temporary closure of ODCs and hub rooms as SBWSTM was approved by customers and all stakeholders, leading to further reduction in energy consumption.
The investment in IoT based energy management system helped the Company to define a new normal of consumption profile, leveraging cognitive AI/ML algorithms and monitoring performance against it to drive efficiency.
Technology absorption, adaption and innovation
Research & Development (R&D): Specific areas in which R & D was carried out by the Company
TCS Research and Innovation (R&I) commemorated the 40th year of its founding by adopting a new brand statement âInventing for Impactâ. In keeping with its purpose-driven worldview, TCS R&I teams were engaged in 72 COVID related initiatives around the world, working with local, national and international bodies, adopting multiple approaches: leveraging TCS IP, collaborating with partners, and offering individual consultative inputs across many areas, such as drug candidate molecule discovery, COVID data management, diagnostic kits, epidemiological study and management.
TCS continues to expand its foundational research, in core computing areas and the intersections with other sciences. New areas of focus include DNA computing, AI for protein design, cognitive robotics, meta materials, quantum computing and sensing. Research and Innovation teams worked with cross-functional teams across the Company on strategic initiatives such as Patents, Products & Platforms (3P), Technology Change Management,
5G, Cloud and Cyber Security.
TCS R&I continues to build its intellectual property; more than 240 papers were presented at conferences or published in journals. The New Products and Solutions Development framework that governs the emerging pipeline of IP, and IP-leveraged offerings continued to expand the Company''s portfolio with new offerings like TCS Dynaportâ¢, TCS Consent Management Solution, and TCS Omnistore⢠to support the next wave of growth. Numerous new technology use cases were piloted for customers in various industry segments.
The Company''s existing portfolio of products and platforms continued to grow, with new releases in FY 2021 with additional features and functionality, and expansion of the ignioâ¢, TCS ADD and TCS BaNCS⢠suites with new products covering adjacencies.
TCS won CII''s Industrial Intellectual Property Awards 2020. R&I won the Business Culture Award, and several of the Company''s products and platforms won multiple awards across the world. The Company continued to contribute to standards bodies especially in ISO SC7 and Systems Engineering. As of March 31, 2021, the Company has applied for 5,879 patents cumulatively and has been granted 1,850 patents.
TCS continued to foster the culture of innovation, organizing one crowdsourced innovation a week. The TCS Innovista competition attracted over 10,290 entries from across the organization. The Company set up a community of Innovation Champions who serve as innovation ambassadors, helping customers leverage the best of TCS for their growth and transformation. Its Co-Innovation Network (TCS COINâ¢) initiative continued to expand, with 67 ongoing projects in emerging technologies with global academic partners, and with over 2,400 start-ups in its emerging technology ecosystem.
The Company''s Pace Ports, which are experiential spaces connecting customers to all of TCS'' organizational capabilities in innovation, technology and industry expertise, hosted several events and workshops. In FY 2021, three new PACE Ports, in Pittsburgh, Toronto and Amsterdam respectively, commenced virtual operations. The PACE Internship Program was launched this year in Amsterdam with a batch of students pursuing Masters in Innovation & Digitalization from Nyenrode Business University.
In keeping with the Company''s commitment to social responsibility and environmental stewardship, it launched several new initiatives.
The first edition of TCS Sustainathon, a challenge that aims to inspire students to envision a sustainable future using technology to solve real world problems, focused on reducing food wastage. TCS and the Malaysian petroleum major PETRONAS launched a Social Enterprise Education Lab (SEEd.Lab), an end-to-end incubation program to encourage entrepreneurship and job creation. TCS and Auckland Business School partnered to develop an APAC-Focused Digital Sustainability Index.
TCS will continue to scale the Patents, Products and Platforms strategy across the organization, harnessing the collective knowledge and creativity of internal teams and of partners to deliver innovative solutions in support of the Company''s pursuit of the growth and transformation opportunity and longer term sustainability goals.
TCS innovation Labs are located in India and other parts of the world. These R&D centers, as certified by Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Excluding provision towards legal claim.
Mar 31, 2019
To the Members,
The Directors present the Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. Financial results
(Rs. crore)
Unconsolidated |
Consolidated |
|||
Financial Year 2018-19 (FY 2019) |
Financial Year 2017-18 (FY 2018) |
Financial Year 2018-19 (FY 2019) |
Financial Year 2017-18 (FY 2018) |
|
Revenue |
123,170 |
97,356 |
146,463 |
123,104 |
Other income |
7,627 |
5,803 |
4,311 |
3,642 |
Total income |
130,797 |
103,159 |
150,774 |
126,746 |
Expenses |
||||
Operating expenditure |
88,206 |
69,551 |
106,957 |
90,588 |
Depreciation and amortization expense |
1,716 |
1,647 |
2,056 |
2,014 |
Total expenses |
89,922 |
71,198 |
109,013 |
92,602 |
Profit before finance cost and tax |
40,875 |
31,961 |
41,761 |
34,144 |
Finance costs |
170 |
30 |
198 |
52 |
Profit before tax (PBT) |
40,705 |
31,931 |
41,563 |
34,092 |
Tax expense |
10,640 |
6,690 |
10,001 |
8,212 |
Profit for the year |
30,065 |
25,241 |
31,562 |
25,880 |
Attributable to: |
||||
Shareholders of the Company |
30,065 |
25,241 |
31,472 |
25,826 |
Non-controlling interests |
NA |
NA |
90 |
54 |
Opening balance of retained earnings |
74,080 |
65,965 |
79,755 |
71,071 |
Profit for the year |
30,065 |
25,241 |
31,472 |
25,826 |
Other comprehensive income / (losses) |
(14) |
86 |
(41) |
102 |
Total comprehensive income |
30,051 |
25,327 |
31,431 |
25,928 |
Dividend (including tax on dividend) |
(11,424) |
(10,726) |
(11,424) |
(10,726) |
Buy-back of equity shares |
(16,000) |
(4,963) |
(16,000) |
(4,963) |
Expenses for buy-back of equity shares |
(45) |
(42) |
(45) |
(42) |
Issue of bonus shares |
(86) |
- |
(86) |
- |
Realized loss on equity shares carried at fair value through OCI |
(1) |
- |
(1) |
- |
Transfer to Special Economic Zone re-investment reserve |
(2,750) |
(1,579) |
(2,750) |
(1,579) |
Transfer from Special Economic Zone re-investment reserve |
3,334 |
98 |
3,334 |
98 |
Transfer to reserves |
- |
- |
1,306 |
(32) |
Closing balance of retained earnings |
77,159 |
74,080 |
85,520 |
79,755 |
2. Issue of Bonus Shares
The Company allotted 1,914,287,591 equity shares as fully paid-up bonus shares in the ratio of 1:1 (one equity share for every one existing equity share held on the record date) to its shareholders on June 3, 2018, pursuant to a resolution passed by the shareholders on May 26, 2018 by postal ballot.
3. Buy-back of Equity Shares
In line with the practice of returning 80 to 100 percent free cash flow to shareholders, the Company completed its second buy-back of 76,190,476 equity shares at a price of Rs.2,100 per equity share for an aggregate consideration of Rs.16,000 crore. The offer size of the buy-back was 21.54 percent of the aggregate paid-up equity share capital and free reserves of the Company and represented 1.99 percent of the total issued and paid-up equity share capital of the Company. The buy-back process was completed and the shares were extinguished on September 26, 2018. The Companyâs first buy-back was completed in FY 2018.
4. Dividend
Based on the Companyâs performance, the Directors have recommended a final dividend of Rs.18 per equity share for FY 2019 taking the total dividend to Rs.30 per share. The total dividend paid for FY 2018 was Rs.25 per share (adjusted for bonus issued in FY 2019). The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs.8,142 crore, including dividend tax. The total dividend on equity shares including dividend tax for FY 2019 would aggregate Rs.13,148 crore, resulting in a payout of 43.7 percent of the unconsolidated profits of the Company.
5. Transfer to reserves
The closing balance of the retained earnings of the Company for FY 2019, after all appropriation and adjustments was Rs.77,159 crore.
6. Companyâs performance
On a consolidated basis, the revenue for FY 2019 was Rs.146,463 crore, higher by 19.0 percent over the previous yearâs revenue of Rs.123,104 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2019 and FY 2018 was Rs.31,562 crore and Rs.25,880 crore respectively. The PAT attributable to shareholders for FY 2019 was Rs.31,472 crore registering a growth of 21.9 percent over the PAT of Rs.25,826 crore for FY 2018.
On an unconsolidated basis, the revenue for FY 2019 was Rs.123,170 crore, higher by 26.5 percent over the previous yearâs revenue of Rs.97,356 crore in FY 2018. The PAT attributable to shareholders for FY 2019 was Rs.30,065 crore registering a growth of 19.1 percent over the PAT of Rs.25,241 crore for FY 2018.
7. Human resource development
Your Company continued to focus on attracting new talent while investing in organic talent development to help employees acquire new skills, explore new roles and realize their potential.
The reimagined approach to learning and development has helped the Company train over 311,000 employees on digital technologies and over 348,000 employees on Agile methodologies.
The Company had a net addition of 29,287 employees globally, taking its total employee count to 424,285. Women make up 35.9 percent of the workforce, making your Company one of the largest employers of women in the world. A strong localization focus resulted in on-boarding of an all-time high number of local employees across all major markets in FY 2019. The diverse workforce now has 147 nationalities.
Progressive HR policies and ongoing employee engagement initiatives, guided by our OneTCS culture, have made your Company an industry benchmark for talent retention. Attrition in FY 2019 was 11.3 percent for IT Services. The Companyâs internal employee satisfaction survey PULSE showed the highest employee satisfaction and engagement scores in the last 10 years.
This year, the Company democratized campus hiring with an all India TCS National Qualifier Test administered using the TCS iON Assessment Platform. This was open to any student across India who aspired to join TCS. The test saw participation by 280,000 students from 1,800 colleges.
8. Quality initiatives
The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY 2019, the Company successfully completed the annual ISO surveillance audit and retained the enterprise-wide ISO certification for ISO 9001:2015, ISO 20000:2011, ISO 27001:2013 and ISO 22301:2012 standards. The Company successfully completed the compliance check for ISO 27017:2015 / 27018:2014 (Security controls for cloud services) standards. The Company continues to maintain the industry specific quality certifications - AS 9100 (Aerospace Industry), ISO 13485 (Medical Devices) and TL 9000 (Telecom Industry). The Company successfully completed the enterprise-wide surveillance assessment for ISO 30105:2016 (ITES/BPS Life cycle process requirements for Service Providers), enterprise-wide annual SSAE 18 (Statement on Standards for Attestation Engagements) and ISAE 3402 - SOC 1 and SOC 2 assessment for Business Process Services.
The Company successfully completed Maturity Level 3 of the Automotive SPICE V3.1 (Automotive Software Process Improvement and Capability Determination) assessment for automotive domain projects for Engineering Services.
TCSâ integrated Quality Management System (iQMSTM) continues to enable outstanding value and experience to our customers. iQMS⢠is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. iQMS⢠has been updated to conform to the General Data Protection Regulation (GDPR) requirements.
Our customer-centricity, rigor in operations, and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third-party surveys as well.
9. Subsidiary companies
The Company has 50 subsidiaries as on March 31, 2019. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 (âActâ). There has been no material change in the nature of the business of the subsidiaries.
On October 31, 2018, the Company acquired 100% stake in W12 Studios Limited, an UK based company. W12 Studios brings with it an award-winning digital design studio based in London.
Further, CMC eBiz, Inc., a subsidiary of CMC Americas, Inc., a US based subsidiary of the Company was voluntarily dissolved with effect from June 19, 2018. There were no employees or business operations in the dissolved subsidiary.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Companyâs subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company https://www.tcs.com/investor-relations.
10. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2019.
11. Directors and key managerial personnel
Hanne Sorensen and Keki Mistry were appointed as additional and independent directors with effect from December 18, 2018. Don Callahan was appointed as additional and independent director with effect from January 10, 2019. A resolution seeking shareholdersâ approval for their appointment forms a part of the Notice.
N Ganapathy Subramaniam retires by rotation and being eligible, offers himself for re-appointment. A resolution seeking shareholdersâ approval for his re-appointment forms part of the Notice.
O P Bhatt was appointed as an independent director at the nineteenth Annual General Meeting (AGM) held on June 27, 2014 for a period of five years. Based on the recommendation of the Nomination and Remuneration Committee, his re-appointment for a second term of five years is proposed at the ensuing AGM for the approval of the Members by way of special resolution.
During the year, V Thyagarajan relinquished the position of independent director with effect from July 10, 2018 as part of the Board succession planning. Prof Clayton M Christensen relinquished the position of independent director with effect from September 28, 2018 due to personal reasons. Aman Mehta and Dr Ron Sommer were appointed as independent directors at the nineteenth AGM of the Company held on June 27, 2014 for the period of five years and are holding office till June 26, 2019. The Board places on record its appreciation for their invaluable contribution and guidance.
Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ). There has been no change in the circumstances affecting their status as independent directors of the Company.
During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committee of the Company.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2019 are: Rajesh Gopinathan, Chief Executive Officer and Managing Director, N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, Ramakrishnan V, Chief Financial Officer and Rajendra Moholkar, Company Secretary.
12. Number of meetings of the Board
Six meetings of the Board were held during the year under review. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.
13. Board evaluation
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The above criteria are based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017
In a separate meeting of independent directors, performance of non-independent directors, the board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and nonexecutive directors.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
In the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
14. Policy on directorsâ appointment and remuneration and other details
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on https://www.tcs.com.
15. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
16. Audit committee
The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report.
17. Auditors
At the twenty-second AGM held on June 16, 2017 the Members approved appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the twenty-seventh AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the ensuing AGM and a note in respect of same has been included in the Notice for this AGM.
18. Auditorâs report and secretarial audit report
The statutory auditorâs report and the secretarial audit report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report.
19. Risk management
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
20. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
21. Transactions with related parties
None of the transactions with related parties falls under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form No. AOC-2 and the same forms part of this report.
22. Corporate Social Responsibility
The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is available on https://on.tcs.com/Global-CSR-Policy.
23. Extract of annual return
As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the annual return for FY 2019 is given in Annexure III in the prescribed Form No. MGT-9, which is a part of this report. The same is available on https://on.tcs.com/annual-return-18-19.
24. Particulars of employees
The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
Name |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Non-executive directors |
||
N Chandrasekaran® |
- |
- |
Aman Mehta |
51.55 |
5.00 |
V Thyagarajan* |
A |
A |
Prof Clayton M Christensen** |
A |
A |
Dr Ron Sommer |
36.00 |
4.76 |
O P Bhatt |
35.18 |
7.50 |
Aarthi Subramanian®® |
- |
- |
Dr Pradeep Kumar Khosla |
24.55 |
AA |
Hanne Sorensen*** |
A |
A |
Keki Mistry*** |
A |
A |
Don Callahan**** |
A |
A |
Executive directors |
||
Rajesh Gopinathan |
262.30 |
28.31 |
N Ganapathy Subramaniam |
190.01 |
24.88 |
Chief Financial Officer |
||
Ramakrishnan V |
- |
22.58 |
Company Secretary |
||
Rajendra Moholkar |
18.23 |
@ As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.
@@ In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata company and hence not stated.
* Relinquished the position of Independent Director w.e.f. July 10, 2018.
** Relinquished the position of Independent Director w.e.f. September 28, 2018.
*** Appointed as an Additional and Independent Director w.e.f. December 18, 2018.
**** Appointed as an Additional and Independent Director w.e.f. January 10, 2019.
A Since the remuneration is only for part of the year, the ratio of their remuneration to median remuneration and percentage increase in remuneration is not comparable and hence, not stated.
aa Remuneration received in FY 2019 is not comparable with remuneration received in FY 2018 and hence, not stated.
b. The percentage increase in the median remuneration of employees in the financial year: 3.70 percent
c. The number of permanent employees on the rolls of Company: 424,285
d. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was 6 percent in India. However, during the course of the year, the total increase is approximately 7.2 percent, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 2 percent to 5 percent. The increase in remuneration is in line with the market trends in the respective countries.
Increase in the managerial remuneration for the year was 14.66 percent.
e. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
25. Disclosure requirements
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditorsâ Certificate thereon, and the Management Discussion and Analysis are attached, which forms part of this report.
As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this Annual Report.
As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and is uploaded on the Companyâs website https://www.tcs.com/content/dam/tcs/pdf/discover-tcs/investor-relations/faq/TCS-Dividend-Distribution-Policy.pdf.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
26. Deposits from public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
27. Conservation of energy, technology absorption, foreign exchange earnings and outgo Conservation of energy:
Energy continues to be a material aspect from climate change as well as operational perspective. TCSâ commitment to decouple energy and carbon footprint from business growth reflects in the reduction in specific consumption that TCS has delivered year-on-year. FY 2019 saw addition of more green buildings into office infrastructure, addition of roof top solar system in offices, optimization of IT power usage as well as higher operational efficiency augmented through machine learning based cognitive algorithms on TCS IoT platform.
The commitment towards energy was reinforced as TCS went in for Energy Management System certification as per ISO 50001:2011 for its campus at Pune (Sahayadri Park) and the same was recommended for certification. TCS is the first IT services company in India to have achieved this certification. The management system gives the tool to look at energy efficiency in a more systematic manner and helps drive continual improvement.
The TCS IoT platform has been further enhanced to acquire Indoor Air Quality (IAQ) data - indoor CO2 levels, temperature and relative humidity. This helps ensure that the IAQ parameters inside TCS facilities are maintained within acceptable limits to ensure a healthy and conducive work environment for the associates. Renewable energy used in the Companyâs offices increased to 10.1 percent from 8.45 percent in the last year. During the year under review, Company added 1.7 MW of rooftop solar system across four locations, with plans to add another 3 MW in the coming year. On data center power management, Company successfully reduced the Power Utilization Efficiency (PUE) of the 23 data centers to 1.67 from 1.71 in FY 2019. Data Center/server room consolidation was a key enabler towards achieving this efficiency.
These initiatives collectively resulted in the Companyâs specific energy consumption reducing by ~6.5 percent and specific carbon footprint reducing by ~8.1 percent, as compared to FY 2018, on a per FTE (full time equivalent) basis.
Technology absorption, adaption and innovation:
The Company continues to adopt and use the latest technologies to improve the productivity and quality of its services and products. The Companyâs operations do not require significant import of technology.
Research & Development (R&D): Specific areas in which R&D was carried out by the Company
TCS Research and Innovation continued its alignment to the Companyâs business strategy and customer expectations manifest in the Business 4.0 framework. Agility in processes and enablers for a Machine First Delivery Model have been in focus.
TCS has continued to invest in foundational research in Artificial Intelligence (AI), Deep Learning and high performance Computing Systems, to further Machine First Delivery Models. Research and innovation (R&I) programs created business impact across domains. TCSâ Knowledge Extraction Framework was deployed for a large retail customer in the Middle East. The Compliance Automation was piloted for a leading European Bank. The Physical Sciences team is working closely with a mining company, providing deep insights into molecular modeling. The Data and Decision Sciences team provided an award winning solution for a CPG supply chain customer using reinforcement learning. The drone program from the incubation team had many successful client engagements. Ignioâ¢, a cognitive platform was significantly enhanced in FY 2019. Using its Machine-First⢠approach, the platform enables customers transform underlying technology operations and enhance productivity. The MasterCraft Suite sees continuing investment, and has 100 active customers. Jile 2.0, the agile planning, delivery and transformation offering, was launched. R&I was a clear differentiator to many business opportunities in FY 2019.
R&I also provided enablers to further digitize and automate TCSâ own processes. R&I provided inputs for the TCS National Qualifier Test which has opened up the TCS entry test to talented youth even in remote parts of India. Season Seven of TCSâ CodeVita Contest, run on an improved coding platform, saw 210,000 participants build and submit 850,000 pieces of code.
Research, innovation, the contextual knowledge within the units, the portfolio of intellectual property help TCS gain significant market share as well as mind share. To further strengthen delivery of research, innovation, business and technology transformations in close collaboration with the customer, the Company launched TCS Pace⢠as an umbrella brand, and physical spaces called TCS Pace Portâ¢. These hubs will be flexible modular spaces, featuring innovation showcases, co-innovation network, start-up accelerators, collaborative Think Spaces, Academic Research Spaces and Agile Workspaces, designed to ignite collaborative experimentation, research and rapid product prototyping along with customers, partners and academia. The first TCS Pace Port⢠was launched in Tokyo.
TCS leveraged both the Academic Research Ecosystem and the Emerging Technology ecosystem for collaborative research as part of its Co-Innovation (TCS COINâ¢) Program. Your Company continues to collaborate significantly with existing global academic partners and premier Indian institutes. Emerging Technology COIN continued its interactions with innovation ecosystems in Americas, Europe and Asia.
The Company continued to foster its culture of innovation, providing all employees the opportunity to innovate and receive recognition. The TCS Innovista competition attracted 3600 entries across business units. An innovation challenge per week was held to solve customer problems with associates participating across the Company.
TCS R&I remained closely connected to customers through events in different geographies. The TCS Innovation Forum was held in New York City, Mexico City, London and Edinburgh attracting 700 customers, partners and technology experts. TCS hosted âThe TCS Slush Experienceâ a curated pitching session to connect to TCS customers to some breakthrough technology companies at âSlushâ, the biggest start-up event in Europe. TCS Innovation Days and workshops were held for customers in various geographies. Pilot and proofs of concept implementations resulted from these connects.
TCS R&I leadership continued to lead National Task Forces in areas like AI and 5G. TCS Researchers presented 200 papers in premier conferences, have written books and book chapters through the year. The Company released a book of essays titled âReimagining Researchâ describing several of its key research projects. Over a dozen researchers won best paper awards. TCS Incubation team won the 2018 NASA Space Apps Challenge.
TCS R&I solutions won a number of awards. At the 13th edition of TATA Innovista (2018) TCS won five awards across categories. TCS Research won the first place for modeling results in an (Additive Manufacture) AM-Bench 2018 Benchmark Challenge conducted by the National Institute of Standards and Technology (NIST), USA. TCS Optumera⢠received the Best Machine Learning/Artificial Intelligence Implementation Award at Cypher 2018 as well as the
âBest Application of AI in the Enterprise Categoryâ award at The AIconics; Verification by Abstraction and Test Generation emerged winner in the International Competition on Software Verification 2019 held at TACAS in Prague, Czech Republic. TCSâ Digital Twin Solution won the IT Innovation - Express IT Award. The TCS digital assistive solution to improve physiotherapy regimen for children with locomotor disabilities won several awards and was deployed jointly in a TCS clientâs program at a rehabilitation center.
As of March 31, 2019, the Company has applied for 4,596 patents cumulatively. Till date the Company has been granted 946 patents.
Future Plan of Action
Business 4.0 and its enabling technologies, digital reimagination of industry and society, and industrialization of software and computing will continue to be the focus of TCS R&I. Engagement with all its businesses, with its Co-Innovation Network, and with society at large will continue.
Expenditure on R&D
TCS Innovation Labs are located in India and other parts of the world. These R&D centers, as certified by Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers during FY 2019 and FY 2018 are given below:
(Rs. crore)
Expenditure on R&D and innovation |
Unconsolidated |
Consolidated |
|||
FY 2019 |
FY 2018 |
FY 2019 |
FY 2018 |
||
a. |
Capital |
2 |
- |
2 |
- |
b. |
Recurring |
303 |
295 |
306 |
298 |
c. |
Total R&D expenditure (a b) |
305 |
295 |
308 |
298 |
d. |
Innovation center expenditure |
1,285 |
1,079 |
1,352 |
1,202 |
e. |
Total R&D and innovation expenditure (c d) |
1,590 |
1,374 |
1,660 |
1,500 |
f. |
R&D and innovation expenditure as a percentage of total turnover |
1.3% |
1.4% |
1.1% |
1.2% |
28. Acknowledgments
The Directors thank the Companyâs employees, customers, vendors, investors and academic partners for their continuous support.
The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.
The Directors appreciate and value the contribution made by every member of the TCS family.
On behalf of the Board of Directors
N Chandrasekaran
Mumbai, April 12, 2019 Chairman
Mar 31, 2018
To the Members,
The Directors present the Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2018. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. Financial results
(Rs, crore)
Unconsolidated |
Consolidated |
|||
Financial Year 2017-18 (FY18) |
Financial Year 2016-17 (FY17) |
Financial Year 2017-18 (FY18) |
Financial Year 2016-17 (FY17) |
|
Revenue from operations |
97,356 |
92,693 |
1,23,104 |
1,17,966 |
Other income (net) |
5,803 |
4,568 |
3,642 |
4,221 |
Total income |
1,03,159 |
97,261 |
1,26,746 |
1,22,187 |
Expenses |
||||
Operating expenditure |
69,551 |
65,604 |
90,588 |
85,655 |
Depreciation and amortization expense |
1,647 |
1,575 |
2,014 |
1,987 |
Total expenses |
71,198 |
67,179 |
92,602 |
87,642 |
Profit before finance cost and tax |
31,961 |
30,082 |
34,144 |
34,545 |
Finance costs |
30 |
16 |
52 |
32 |
Profit before tax (PBT) |
31,931 |
30,066 |
34,092 |
34,513 |
Tax expense |
6,690 |
6,413 |
8,212 |
8,156 |
Profit for the year |
25,241 |
23,653 |
25,880 |
26,357 |
Attributable to: |
||||
Shareholders of the Company |
25,241 |
23,653 |
25,826 |
26,289 |
Non-controlling interests |
NA |
NA |
54 |
68 |
Opening balance of retained earnings |
65,965 |
53,576 |
71,071 |
56,113 |
Adjustment with other equity |
184 |
59 |
208 |
25 |
Buy-back of equity shares |
(4,999) |
- |
(4,999) |
- |
Amount available for appropriation |
86,391 |
77,288 |
92,106 |
82,427 |
Appropriations |
||||
Dividend on equity shares (excluding tax) |
9,284 |
9,162 |
9,284 |
9,162 |
Tax on dividends |
1,442 |
1,785 |
1,442 |
1,785 |
Capital redemption reserve |
6 |
- |
6 |
- |
General reserve |
- |
- |
- |
- |
Statutory reserve |
- |
- |
40 |
33 |
Special Economic Zone re-investment reserve |
1,579 |
376 |
1,579 |
376 |
Closing balance of retained earnings |
74,080 |
65,965 |
79,755 |
71,071 |
2. Issue of Bonus Shares
Considering the financial position, the Board of Directors at its meeting held on April 19, 2018, recommended issue of Bonus Shares, subject to approval of Members, in the ratio of one new Equity Share of the Company of Rs,1 each, as fully paid-up, for every one existing Equity Share of the Company. The Bonus Shares will be issued, by capitalizing a part of its retained earnings, to those persons who are Members as on the record date.
3. Buyback of Equity Shares
5,61,40,350 equity shares were bought back during the year, at a price of Rs,2,850 per Equity Share for an aggregate consideration of Rs,16,000 crore. The Offer Size of the Buyback was 21.89% of the aggregate paid-up equity share capital and free reserves of the Company, and represented 2.85% of the total issued and paid-up equity share capital of the Company. The buyback process was completed and the shares were extinguished on June 7, 2017.
4. Dividend
Based on the Company''s performance, the Directors are pleased to recommend for approval of the members a final dividend of Rs,29 per share for FY18 taking the total dividend to Rs,50 per share (previous year Rs,47 per share). The final dividend on equity shares, if approved by the members, would involve a cash outflow of Rs,6,693 crore, including dividend tax. The total dividend on equity shares including dividend tax for FY18 would aggregate Rs,11,377 crore, resulting in a payout of 45.07% of the unconsolidated profits of the Company.
5. Transfer to reserves
The Directors have decided to retain the entire amount of Rs,74,080 crore in the retained earnings.
6. Company''s performance
On a consolidated basis, the revenue from operations for FY18 at Rs,1,23,104 crore was higher by 4.40% over the previous year (Rs,1,17,966 crore in FY17). The profit after tax attributable to shareholders and non-controlling interests was Rs,25,880 crore (Rs,26,357 crore in FY17). The profit after tax attributable to shareholders was Rs,25,826 crore (Rs,26,289 crore in FY17).
On an unconsolidated basis, the revenue from operations for FY18 was at Rs,97,356 crore (Rs,92,693 crore in FY17). The profit for the year was Rs,25,241 crore (Rs,23,653 crore in FY17).
7. Human resource development
Recognising the imperatives of Business 4.0 era, the Company is investing heavily in transforming the workforce at scale, even while simplifying processes and making them more agile to cater to the needs of a predominantly millennial workforce.
In FY18, the Company hired globally, leveraging a completely digitised hiring and onboarding process that harnesses next generation technologies. TCS'' workforce of 3,94,998 is dynamic and diverse, with 35.3% women, from 131 nationalities and over 85% belonging to Gen Y The Company is using digital technologies to gain intelligent insights while designing HR strategies to keep the young workforce engaged and motivated.
The Company continuously explores new approaches to learning and development to keep the workforce relevant in an evolving technology landscape. In addition, the Company continues to invest in leadership development programs at all levels to sustain the Company''s growth, while staying true to the core values which underpin TCS'' success over the last five decades.
The Company''s culture promotes an environment that is transparent, flexible, fulfilling and purposeful. A host of customized initiatives based on a deep understanding of individual needs and aspirations, backed by the power of data sciences, have helped create an engaging workplace that enables individuals to realize their potential.
The Company is driven by passionate and highly engaged workforce. This is evident from the fact that the Company continues to remain the industry benchmark for talent retention. Attrition in FY18 was at 11% for IT Services and 11.8% on an overall basis.
8. Quality initiatives
The Company continues its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY18, the Company retained its enterprise-wide ISO certification for Quality Management (ISO 9001:2015), IT Service Management (ISO 20000-1:2011), Information Security Management (ISO 27001:2013), and Business Continuity Management (ISO 22301:2012). In addition, the Company was certified under the new ISO Standard for Business Process Outsourcing (ISO 30105:2016). The Company''s strong commitment to the environment and occupational health and safety of its employees and business partners is demonstrated through its enterprise-wide Environmental Management (ISO 14001:2004) and Occupational Health and Safety Management (BS OHSAS 18001:2007) certifications. The Company also maintains domain-specific quality certifications including AS 9100 (Aerospace), TL 9000 (Telecom) and ISO 13485 (Medical Devices).
The Company''s Global Network Delivery Model (GNDMTM), built on a strong process-driven and customer-centric integrated Quality Management System (iQMSTM), continues to deliver outstanding value and experience to our customers. iQMS⢠is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. The Company is committed to transforming itself into an agile enterprise. Towards this, it invests in developing its agile workforce, creating agile offerings, moving into agile workspaces and transforming its customer relationships into agile partnerships.
The Company continues to invest in knowledge management platforms for effective collaboration, learning and sharing. The Company received the prestigious Most Admired Knowledge Enterprise (MAKE) award in the Global Independent Operating Unit (IOU) category for the eighth time and in the Asian and Indian categories for the thirteenth time.
Customer-centricity, rigor in operations, and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels recorded in the periodic surveys conducted by the Company. This is validated by top rankings in third-party surveys as well.
9. Subsidiary companies
The Company has 50 subsidiaries as on March 31, 2018 (58 subsidiaries as on March 31, 2017). There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company.
Restructuring of following subsidiaries in Europe was completed during the year:
a. Alti Switzerland S.A. merged with Tata Consultancy Services Switzerland Ltd effective March 29, 2018.
b. Alti NV merged with Tata Consultancy Services Belgium (formerly known as Tata Consultancy Services Belgium S.A.) effective March 30, 2018.
c. Tata Consultancy Services France S.A.S., Alti HR S.A.S., Alti Infrastructures Systemes & Reseaux S.A.S. and TESCOM (France) Software Systems Testing S.A.R.L. merged with Alti S.A., effective March 31, 2018.
d. Teamlink, a wholly owned subsidiary of Alti NV, was liquidated effective January 31, 2018.
e. Planaxis Technologies Inc., a wholly owned subsidiary of Alti S.A. was liquidated effective March 31, 2018.
The name of Alti S.A. was changed to Tata Consultancy Services France SA effective March 31, 2018.
10. Directors'' responsibility statement
Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY18.
11. Directors and key managerial personnel
Dr. Vijay Kelkar, Independent Director and Mr. Ishaat Hussain, Non-Executive Director retired with effect from May 14, 2017 and September 3, 2017, respectively, in accordance with the retirement age policy for Directors. The Board places on record its appreciation for their invaluable contribution and guidance provided by them.
Ms. Aarthi Subramanian relinquished the office of Executive Director for taking up leadership role as Group Chief Digital Officer at Tata Sons Limited and was appointed as Additional Director in non-executive capacity with effect from August 17, 2017.
Dr. Pradeep Kumar Khosla was appointed as an Additional and Independent Director with effect from January 11, 2018.
Mr. N. Chandrasekaran, retires by rotation and being eligible, offered himself for re-appointment.
Pursuant to the provisions of Section 149 of the Act, Mr. Aman Mehta, Mr. V. Thyagarajan, Prof. Clayton M. Christensen, Dr. Ron Sommer, Mr. O. P. Bhatt and Dr. Pradeep Kumar Khosla are Independent Directors of the Company. They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). There has been no change in the circumstances affecting their status as an Independent Director during the year.
During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.
The Board appointed Mr. Rajendra Moholkar as the Company Secretary and Compliance Officer, to take over from Mr. Suprakash Mukhopadhyay with effect from April 24, 2017. The Board places on record its appreciation for the outstanding contribution of Mr. Suprakash Mukhopadhyay as Global Treasury Head and Company Secretary.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2018 are:
Mr. Rajesh Gopinathan, Chief Executive Officer and Managing Director, Mr. N. Ganapathy Subramaniam, Chief Operating Officer and Executive Director, Mr. Ramakrishnan V., Chief Financial Officer and Mr. Rajendra Moholkar, Company Secretary.
During the year, Ms. Aarthi Subramanian ceased to be a Key Managerial Personnel of the Company with effect from August 17, 2017.
12. Number of meetings of the Board
Six meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.
13. Board evaluation
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act, SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.
The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
In a separate meeting of independent directors, performance of non-independent directors, the Chairman of the Company and the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
In the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
14. Policy on directors'' appointment and remuneration and other details
The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report.
15. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
16. Audit committee
The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report.
17. Auditors
Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014, as amended from time to time, B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as statutory auditors from the conclusion of the twenty-second Annual General Meeting (AGM) held on June 16, 2017 till the conclusion of the twenty-seventh AGM of the Company in 2022, subject to the ratification of their appointment at every AGM, if required under law. Accordingly, necessary resolution for ratification of appointment of auditors is included in the Notice for this AGM.
18. Auditor''s report and secretarial audit report
The auditor''s report and the secretarial audit report do not contain any qualifications, reservations, or adverse remarks. Secretarial audit report is attached to this report.
19. Risk management
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.
20. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
21. Transactions with related parties
None of the transactions with related parties fall under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form No. AOC-2 and the same forms part of this report.
22. Corporate social responsibility
The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The policy is available on https://www.tcs.com/investors.
23. Extract of annual return
As per the requirements of Section 92(3) of the Act, the extract of the annual return is given in Annexure III in the prescribed Form No. MGT-9, which is a part of this report.
24. Particulars of employees
The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:
Name |
Ratio to median remuneration |
% increase in remuneration in the financial year |
Non-executive directors: |
||
Mr. N. Chandrasekaran |
- |
- |
Mr. Aman Mehta |
50.91 |
13.21 |
Mr. V. Thyagarajan |
33.94 |
11.11 |
Prof. Clayton M. Christensen |
25.45 |
11.11 |
Dr. Ron Sommer |
35.64 |
10.53 |
Dr. Vijay Kelkar2 |
A |
A |
Mr. Ishaat Hussain3 |
A |
A |
Mr. O. P. Bhatt |
33.94 |
17.65 |
Ms. Aarthi Subramanian4 |
- |
- |
Dr. Pradeep Kumar Khosla5 |
A |
A |
Executive directors: |
||
Mr. Rajesh Gopinathan |
211.99 |
AA |
Mr. N. Ganapathy Subramaniam |
157.78 |
AA |
Chief Financial Officer |
||
Mr. Ramakrishnan V. |
- |
AA |
Company Secretary |
||
Mr. Suprakash Mukhopadhyay @ |
- |
- |
Mr. Rajendra Moholkar @@ |
- |
AA |
b. The percentage increase in the median remuneration of employees in the financial year: 0.57%, reflecting an improvement in the overall employee pyramid.
c. The number of permanent employees on the rolls of Company: 3,94,998.
d. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 5-6% in India. However, during the course of the year, the total increase is approximately 7%, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 2% to 5%. Increase in the managerial remuneration for FY18 is not comparable with FY17 owing to change in role/designation and hence, not stated.
e. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of the Company.
f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
25. Disclosure requirements
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors'' Certificate thereon, and the Management Discussion and Analysis are attached, which forms part of this report.
As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this Annual Report.
As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and is uploaded on the Company''s website.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
26. Deposits from public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
27. Conservation of energy, technology absorption, foreign exchange earnings and outgo Conservation of energy:
Retaining the momentum on our energy and carbon management programs, the Company achieved its 2020 target to reduce the specific carbon footprint by 50%, in FY18 - 2 years ahead of the timeline. Green buildings, efficient operations, green IT and the use of renewable energy have been the key enablers in our journey of carbon and energy performance improvement. As the Company grows, it would add more green buildings to its campuses. The TCS Remote Energy Management and Control program witnessed rapid scaling up and achieved further maturity during the year. Internet of Things (IoT) platform was leveraged to acquire asset (chillers, air handling units, etc.) level data and analysed to improve asset efficiency and operations. Renewable energy used in the Company''s offices increased to 8.5% as compared to 7.3% in the last year. During the year, Company added 2.05 MW of solar rooftop system across four locations, taking the total installed capacity to 3.55 MW. On data center power management, Company successfully reduced the Power Utilization Efficiency (PUE) of 13 data centers to the target of 1.7. The average PUE across 23 key data centers is at 1.7. These initiatives collectively resulted in the Company''s energy consumption reducing by 4.5% over the prior year, on a per FTE basis.
Technology absorption, adaption and innovation:
The Company continues to adopt and use the latest technologies to improve the productivity and quality of its services and products. The Company''s operations do not require significant import of technology.
Research and Development (R&D): Specific areas in which R&D was carried out by the Company
TCS Research and Innovation (R&I) activities and outcomes were aligned to the Company''s focus areas (personalization, new value creation models, ecosystems leverage, a mindset to embrace risk and abundance) enabled by technologies and appropriate processes (Intelligence, Agility, Cloud and Automation). Teams in Research, Incubation, Innovation and the Co-Innovation Network, have worked on the ''Ideas to Execution'' process, and delivered value to business and to social causes as well.
Some examples of such work are presented here.
The Conversational Systems that emerged from the Company''s research enabled mass personalization for its associates. For instance, the chatbot created for HR answers queries from associates on leave policies; several bots enable personalization in Fresco - our collaboration platform.
Many research programs have enabled a step change in processes creating exponential value for customers. The Physical Sciences research team was effective in building a "Digital Twin" for thermal plants; Using the rich data such plants already have, creating models and simulation technologies, our research enabled lowering risk in plant functions, increasing agility and creating savings. The research team worked closely with the retail business unit to build a dynamic pricing model for retailers, taking into account millions of Stock Keeping Units (SKUs), demand patterns and competitive pricing by e-commerce channels. This enabled to help retail customers cut costs and also forecast sales with accuracy. The TCS Connected Universe Platform team along with the engineering and manufacturing business units won prestigious engagements. The drones program created interest across business units and several projects are in progress.
Organizations today need intelligent and automated tools to manage risk. Automated Compliance to identify regulatory changes, data privacy with fine-grained consent management and lightweight encryption research projects made progress. The TCS Blockchain solution has been integrated with the TCS BaNCS platform. TCS MasterCraft Tools team launched a General Data Protection Regulations (GDPR) Compliant edition as part of its MasterCraft Data Plus suite. The TCS MasterCraft trial version was tried by over 1,000 customers in the last 6 months. Master Craft added 30 new customers this year.
The Company leveraged both the Academic Research Ecosystem and the Emerging Tech ecosystem for collaborative research as part of its Co-Innovation (TCS COINâ¢) Program. Your Company has comprehensive Memorandum of Understanding (MoU) for joint research projects with the Indian Institute of Science Bangalore, all five of the older IITs, and Indian Statistical Institute, Kolkata. There are focused projects also with other leading academic research institutes in India. The Company''s R&I continues its collaboration with leading universities in North America, Europe and Asia Pacific in a number of areas including genomics, materials, digital manufacture, data analytics, cyber security, smart cities, intelligent infrastructure and digital health.
The Company also leveraged its internal ecosystem - the problem solving capability of its associates. Innovation events such as ideathons and hackathons happened every week. These put forth customer problems; associates offered ideas and created prototypes to solve them. The response to these events was overwhelming. Internal teams and customers gained immensely from them. The TCS Innovista competition attracted over 1000 entries across the Company.
The Company remained closely connected to customers through events in different geographies. TCS Innovation Forum was held in New York City, London, Medellin and Sao Paulo, attracting 700 customers, partners and technology experts. TCS hosted "The TCS Slush Experience", a curated pitching session, to connect customers to some breakthrough technology companies (at "Slush", the biggest start-up event in Europe). TCS Innovation Days and workshops continue to be held for customers in various geographies. Several pilot and proofs of concept implementations resulted from these connects.
The Company was honoured by the Fortune magazine as one of the 50 companies that "Changed the World" based on its digital farming Innovation, "mKRISHI". The Company won the Physionet Challenge 2017 for ECG Analytics. Researchers from TCS and IIT Kanpur stood 4th in the Amazon Robotics Challenge. TCS Accessibility Practice won the International Federation for Information Processing (IFIP) Technical Committee on Human-Computer Interaction''s Accessibility Award for 2017. The Company won four awards at the Tata Innovista 2017 competition. Several researchers won individual honours for presenting papers and by winning competitions. Three Researchers from the Company have been mentioned in JFG''s Global AI Talent Report 2018.
Researchers from the Company presented 250 papers in premier conferences, have written books and book chapters.
As of March 31, 2018, the Company has applied for 3916 patents, including 522 applied during the year. Till date, the Company has been granted 654 patents.
Future plan of action
Digital reimagination of industry and society, and industrialist ion of software and computing will both continue to be the focus of TCS R&I. Engagement with all its businesses with its Co-Innovation Network, and with society at large will continue.
Expenditure on R&D
TCS'' Innovation Labs are located in India and other parts of the world. The R&D centers, certified by Department of Scientific & Industrial Research (DSIR), Government of India, function from Pune, Chennai, Bengaluru, Delhi-NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers during FY17 and FY18 are given below:
(Rs, crore)
Expenditure on R&D and innovation |
Unconsolidated |
Consolidated |
|||
FY18 |
FY17 |
FY18 |
FY17 |
||
a. |
Capital |
- |
1 |
- |
1 |
b. |
Recurring |
295 |
281 |
298 |
281 |
c. |
Total R&D expenditure (a b) |
295 |
282 |
298 |
282 |
d. |
Innovation center expenditure |
1,079 |
878 |
1,202 |
996 |
e. |
Total R&D and innovation expenditure (c d) |
1,374 |
1160 |
1,500 |
1,278 |
f. |
R&D and innovation expenditure as a percentage of total turnover |
1.4% |
1.2% |
1.2% |
1.1% |
Foreign exchange earnings and outgo
Export revenue constituted 92.22% of the total unconsolidated revenue in FY18 (92.41% in FY17).
(Rs, crore)
Foreign exchange earnings and outgo |
FY18 |
FY17 |
|
a. |
Foreign exchange earnings |
92,258 |
86,370 |
b. |
CIF Value of imports |
768 |
561 |
c. |
Expenditure in foreign currency |
33,014 |
31,553 |
28. Acknowledgements
The Directors thank the Company''s employees, customers, vendors, investors and academic partners for their continuous support.
The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.
The Directors appreciate and value the contribution made by every member of the TCS family.
On behalf of the Board of Directors
N. Chandrasekaran
Mumbai, April 19, 2018 Chairman
Management
Mar 31, 2017
Directors'' Report
To the Members,
The Directors present the Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2017. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. Financial statements for the year ended and as at March 31, 2016 have been restated to conform to Ind AS Note 3 to the consolidated financial statement provides further explanation on the transition to Ind AS.
1. Financial results
(Rs, crore)
Unconsolidated |
Consolidated |
|||
Financial Year 2016-17 (FY 2017) |
Financial Year 2015-16 (FY 2016) |
Financial Year 2016-17 (FY 2017) |
Financial Year 2015-16 (FY 2016) |
|
Revenue from operations |
92,693 |
85,864 |
117,966 |
108,646 |
Other income (net) |
4,568 |
3,757 |
4,221 |
3,084 |
Total income |
97,261 |
89,621 |
122,187 |
111,730 |
Expenses |
||||
Operating expenditure |
65,604 |
58,810 |
85,655 |
77,969 |
Depreciation and amortization expense |
1,575 |
1,459 |
1,987 |
1,888 |
Total expenses |
67,179 |
60,269 |
87,642 |
79,857 |
Profit before finance cost and tax |
30,082 |
29,352 |
34,545 |
31,873 |
Finance costs |
16 |
13 |
32 |
33 |
Profit before tax (PBT) |
30,066 |
29,339 |
34,513 |
31,840 |
Tax expense |
6,413 |
6,264 |
8,156 |
7,502 |
Profit for the year |
23,653 |
23,075 |
26,357 |
24,338 |
Attributable to: |
||||
Shareholders of the Company |
23,653 |
23,075 |
26,289 |
24,270 |
Non-controlling interests |
NA |
NA |
68 |
68 |
Opening balance of retained earnings |
53,576 |
42,370 |
56,113 |
43,904 |
Adjustment with other equity |
59 |
(102) |
25 |
(103) |
Amount available for appropriation |
77,288 |
65,343 |
82,427 |
68,071 |
Appropriations |
||||
Dividend on equity shares (excluding tax) |
9,162 |
7,993 |
9,162 |
7,993 |
Tax on dividends |
1,785 |
1,486 |
1,785 |
1,486 |
Capital redemption reserve |
- |
- |
- |
110 |
General reserve |
- |
2,288 |
- |
2,304 |
Statutory reserve |
- |
- |
33 |
65 |
Special Economic Zone re-investment reserve |
376 |
- |
376 |
- |
Closing balance of retained earnings |
65,965 |
53,576 |
71,071 |
56,113 |
(Rs,1 crore = '' 10 million) |
2. Buyback of Equity Shares
The Board of Directors of the Company at its meeting held on February 20, 2017, has approved buyback up to 56,140,351 equity shares of ''1 each, on a proportionate basis, at a price of '' 2,850 per equity share payable in cash for an aggregate consideration not exceeding ''16,000 crore, excluding transaction costs viz. brokerage, applicable taxes such as securities transaction tax, service tax, stamp duty, etc., by way of a Tender Offer route through Stock Exchange Mechanism. This is in accordance with the provisions of the Companies Act, 2013 (Act), and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, and other applicable laws and regulations.
The buyback is a capital allocation decision taken with the objective of seeking a fairer valuation of the Company''s stock while improving the Company''s Return on Equity, and increasing shareholder value in the longer term.
The offer size of the buyback is within the prescribed limit of 25% of the aggregate of paid up capital and free reserves of the Company, and represents 2.85% of the total issued and paid-up equity share capital of the Company.
3. Dividend
Based on the Company''s performance, the directors are pleased to recommend for approval of the members a final dividend of Rs,27.50 per share for FY 2017 taking the total dividend to Rs,47.00 per share (previous year Rs,43.50 per share). The final dividend on equity shares, if approved by the members would involve a cash outflow of Rs, 6,522 crore, including dividend tax. The total dividend on equity shares including dividend tax for the FY 2017 would aggregate Rs, 11,071 crore, resulting in a payout of 46.8% of the unconsolidated profits of the Company.
4. Transfer to reserves
The Company proposes to retain the entire amount of Rs, 65,965 crore in the profit and loss account.
5. Companyâs performance
On a consolidated basis, the revenue from operations for FY 2017 at Rs, 117,966 crore was higher by 8.6% over the last year (Rs,108,646 crore in FY 2016). The profit for the year attributable to shareholders and non-controlling interests was Rs, 26,357 crore, recording a growth of 8.3% over the last year (Rs, 24,338 crore of FY 2016). The profit after tax attributable to shareholders of the Company was Rs, 26,289 crore, 8.3% higher than that of the previous year (Rs, 24,270 crore).
On an unconsolidated basis, the revenue from operations for FY 2017 at Rs,92,693 crore, was higher by 8.0% over the last year (Rs,85,864 crore in FY 2016). The profit for the year was Rs,23,653 crore, registering a growth of 2.5% over the PAT of Rs, 23,075 crore in FY 2016.
6. Human resource development
The Company is responding to the evolving needs of the Digital era by leveraging Digital technologies to enhance the scale, quality and experience of our Talent Acquisition, Talent Engagement and Talent Development programs.
In FY 2017, TCS hired 78,912 employees across the world. The Company''s on boarding platforms give new employees a consistent, world-class integration experience. Our diversity initiatives are showing good progress. The Company has employees from 130 nationalities and is one of the largest employers of women, who constitute 34.7% of our global workforce. The Company had 387,223 employees across 55 countries, as on March 31, 2017.
TCS'' Digital Learning platform is helping the Company reskill the global workforce quickly, and at scale. The Company''s various employee engagement platforms and initiatives have resulted in a vibrant, productive and enjoyable work environment. A structured approach to career development, leadership development, internal job rotations, and mentoring helps employees grow their careers and realize their potential.
Programs like Fit4life, Safety First, Employee Assistance Program, and Purpose4Life are part of the total employee experience, helping to promote individual wellness while balancing the needs of work, family and society. PULSE, the Company''s employee satisfaction survey, provides critical insights into the needs of the workforce and forms the basis of refining organizational policies and programs.
Through all these initiatives, the Company continues to remain the industry benchmark for Talent Retention. Attrition in FY 2017 reduced to 10.5% in IT Services and to 11.5% on an overall basis.
7. Quality initiatives
The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management. In FY 2017, the Company was re-appraised enterprise-wide at the highest maturity Level 5 of CMMI-DEV® (Development) and CMMI-SVC® (Services) version 1.3. The Company also achieved enterprise-wide ISO certification for Quality Management (ISO 9001:2015), IT Service Management (ISO 20000-1:2011), Information Security Management (ISO 27001:2013), and Business Continuity Management (ISO 22301:2012). TCS'' strong commitment to the environment and occupational health and safety of its employees and business partners is demonstrated through the enterprise-wide Environmental Management (ISO 14001:2004) and Occupational Health and Safety Management (BS OHSAS 18001:2007) certifications. The Company also maintain domain-specific quality certifications including AS 9100 (Aerospace), TL 9000 (Telecom) and ISO 13485 (Medical Devices).
TCS'' Global Network Delivery Model (GNDMâ¢), built on a strong process-driven and customer-centric integrated Quality Management System (iQMSâ¢), continues to deliver outstanding value and experience to our customers. iQMS⢠is continually enhanced for emerging service offerings, new delivery methodologies, industry best practices and latest technologies. The Company continues to invest in knowledge management platforms for effective collaboration, learning and sharing. The Company received the prestigious Most Admired Knowledge Enterprise (MAKE) award in the Global Independent Operating Unit (IOU) category for the seventh time, Asian and Indian categories for the twelfth time. For a second successive year in 2016, the Company was ranked first in the Global IOU MAKE award category.
Our customer-centricity, process rigor, and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by us. This is validated by top rankings in third-party surveys as well.
8. Subsidiary companies
The Company has 58 subsidiaries as on March 31, 2017. There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Act. There has been no material change in the nature of the business of the subsidiaries.
Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents, and separate audited accounts in respect of subsidiaries, are available on the website of the Company.
Restructuring or closure of unlisted wholly-owned subsidiaries during the year:
a. Tata Consultancy Services (South Africa) (Pty) Limited (TCS South Africa) : Tata Consultancy Services (Africa) (Pty) Limited (TCS Africa), wholly owned subsidiary of TCS, acquired the 25% ownership interest in TCS South Africa held by a minority shareholder in July 2016 and consequently, TCS South Africa became a wholly owned subsidiary of TCS Africa. TCS South Africa is engaged in IT services and consulting business, catering to the customers in the South Africa region.
b. Diligenta 2 Limited: A subsidiary of Diligenta Limited, the UK based subsidiary of the Company was dissolved with effect from March 14, 2017, by transfer of its employees, trade, and assets to Diligenta Limited, with the permission of the Financial Conduct Authority of the United Kingdom.
c. PT Financial Network Services Indonesia: The process of closure of this company, which is a subsidiary of Financial Network Services (Holdings) Pty. Limited, was completed and the same was effective March 16, 2017.
d. MS CJV Investment Corporation: A corporation, incorporated in the state of Nevada, USA, was dissolved with effect from January 24, 2017. MS CJV Investment Corporation''s 4.75% holding in Tata Consultancy Services (China) Limited was transferred on December 29, 2016, to Tata Consultancy Services Asia Pacific Pte. Limited, based on a valuation report, for a consideration of RMB 9.6 million (USD 1.38 million). This company had no other investments or business.
9. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the board of directors, to the best of their knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory, and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2017.
10. Directors and key managerial personnel
Mr. N. Chandrasekaran relinquished his position as the Chief Executive Officer and Managing Director of the Company with effect from February 21, 2017, on his appointment as Executive Chairman of Tata Sons Limited. Mr. N Chandrasekaran demonstrated exemplary leadership during his tenure as the Chief Executive Officer and Managing Director of the Company. Prior to his elevation to the position of the Chief Executive Officer and Managing Director of the Company on October 6, 2009, he held the office of the Chief Operating Officer and Executive Director of the Company from September 6, 2008, till October 5, 2009. He joined the Company in 1987 and has held several key positions within the Company. The Directors place on record their appreciation of the invaluable services of Mr. N. Chandrasekaran as the Chief Executive Officer and Managing Director.
Tata Sons Limited nominated Mr. N. Chandrasekaran as the Chairman of the Board of Directors of the Company in place of Mr. Ishaat Hussain, with effect from February 21, 2017. The nomination was duly noted by the Board of Directors at its meeting held on February 20, 2017. Consequent to this, Mr. N. Chandrasekaran took charge as the Non-Executive Chairman of the Board of Directors of the Company with effect from February 21, 2017.
Mr. Ishaat Hussain was nominated as the Chairman of the Board by Tata Sons Limited on November 9, 2016, in place of Mr. Cyrus Mistry. Mr. Hussain presided over as the Chairman of the Board till the nomination of Mr. Chandrasekaran as the Chairman with effect from February 21, 2017. The Directors place on record their appreciation of Mr. Ishaat Hussain for presiding over the Company as the interim Chairman.
Based on the requisition of the holding company, Tata Sons Limited, an Extra-Ordinary General Meeting of the Company was convened on December 13, 2016, at which the shareholders voted in favor of removal of Mr. Cyrus Mistry as a Director. Mr. Cyrus Mistry ceased to be a Director of the Company with effect from December 13, 2016.
Mr. Phiroz Vandrevala stepped down as a Director with effect from July 8, 2016. In a career spanning over 25 years with the Company, Mr. Phiroz Vandrevala worked in various leadership roles including as the Executive Director from September 7, 2007 to May 13, 2011, and as a non-executive Director with effect from May 13, 2011. Mr. Phiroz Vandrevala took over as the Managing Director and Vice Chairman of Diligenta Limited in May 2011 to drive its business and execution globally. The Directors place on record their appreciation for the valuable contribution of Mr. Phiroz Vandrevala to the Company.
Mr. Rajesh Gopinathan, who was the Chief Financial Officer of the Company, was elevated to the position of Chief Executive Officer and Managing Director of the Company with effect from February 21, 2017. Mr. Rajesh Gopinathan started his professional career with the Company in 2001. He was appointed as the Chief Financial Officer of the Company in February 2013. He has played a key role in helping the Company become a $17.6 billion global turnover company.
The Board also appointed Mr. N. Ganapathy Subramaniam as the Chief Operating Officer and Executive Director of the Company with effect from February 21, 2017. Prior to this, Mr. N. Ganapathy Subramaniam was the President, Financial Services, a strategic business unit of the Company. He has been a part of the Company and the Indian IT Industry for the past 34 years and has had opportunities to perform a variety of roles in delivering solutions to customers globally, especially in the Banking and Financial Services sector.
Ms. Aarthi Subramanian retires by rotation and being eligible has offered herself for re-appointment.
Pursuant to the provisions of Section 149 of the Act, Mr. Aman Mehta, Mr. V. Thyagarajan, Prof. Clayton M. Christensen, Dr. Ron Sommer, Dr. Vijay Kelkar, and Mr. O. P Bhatt were appointed as independent directors at the annual general meeting of the Company held on June 27, 2014. They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as an independent director during the year.
During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.
The Board appointed Mr. V. Ramakrishnan as the Chief Financial Officer of the Company, to take over from Mr. Rajesh Gopinathan, with effect from February
21, 2017. Mr. Ramakrishnan has been a key member of TCS Finance for more than 17 years and has served in various leadership roles in TCS Finance. He is a graduate in commerce from Loyola College, Chennai, and is a member of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost & Management Accountants of India.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2017 are:
Mr. Rajesh Gopinathan, Chief Executive Officer and Managing Director, Mr. N Ganapathy Subramanian, Chief Operating Officer and Executive Director, Ms. Aarthi Subramanian, Executive Director, Mr. V. Ramakrishnan, Chief Financial Officer, and Mr. Suprakash Mukhopadhyay, Company Secretary. Mr. N. Chandrasekaran ceased to be a Key Managerial Personnel of the Company with effect from February 21, 2017.
11. Number of meetings of the board
Nine meetings of the board were held during the year. For details of meetings of the board, please refer to the Corporate Governance Report, which is a part of this report.
12. Board evaluation
The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (''SEBI Listing Regulations'').
The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.
The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.
In a separate meeting of independent directors, performance of non-independent directors and the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
13. Policy on directorsâ appointment and remuneration and other details
The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report.
14. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.
15. Audit committee
The details pertaining to the composition of the audit committee are included in the Corporate Governance Report, which is a part of this report.
16. Auditors
Deloitte Haskins & Sells LLP Chartered Accountants, the statutory auditors of the Company, hold office till the conclusion of the 22nd Annual General Meeting of the Company. The Board has recommended the appointment of B S R & Co. LLP Chartered Accountants as the statutory auditors of the Company in their place, for a term of five consecutive years, from the conclusion of the 22nd Annual General Meeting of the Company scheduled to be held in the year 2017 till the conclusion of the 27th Annual General Meeting to be held in the year 2022, for approval of shareholders of the Company, based on the recommendation of the Audit Committee.
Further, based on the recommendation of the Audit Committee of the Company, the Board has appointed KPMG India, Chartered Accountants, to audit the financial statements under the International Financial Reporting Standards (IFRS) for a period of five financial years from FY 2017-18 to FY 2021-22.
17. Auditorsâ report and secretarial auditorsâ report
The auditors'' report and secretarial auditors'' report do not contain any qualifications, reservations, or adverse remarks. Report of the secretarial auditor is given as an annexure to this report.
18. Risk management
The Board of Directors of the Company has formed a risk management committee to frame, implement, and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continual basis.
The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which is a part of this report.
19. Particulars of loans, guarantees, and investments
The particulars of loans, guarantees, and investments have been disclosed in the financial statements.
20. Transactions with related parties
None of the transactions with related parties fall under the scope of Section 188(1) of the Act. The information on transactions with related parties pursuant to Section 134(3) (h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form AOC-2 and the same form a part of this report.
21. Corporate social responsibility
The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The policy is available on the website of the Company.
22. Extract of annual return
As provided under Section 92(3) of the Act, the extract of the annual return is given in Annexure III in the prescribed Form MGT-9, which is a part of this report.
23. Particulars of employees
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Name of the directors |
Ratio to median remuneration |
Non-executive directors: |
|
Mr. N. Chandrasekaran * |
514.78 |
Mr. Cyrus Mistry ** |
|
Mr. Aman Mehta |
46.30 |
Mr. V. Thyagarajan |
31.90 |
Prof. Clayton M. Christensen |
23.35 |
Dr. Ron Sommer |
33.35 |
Dr. Vijay Kelkar |
29.83 |
Mr. Ishaat Hussain |
37.02 |
Mr. O. P Bhatt |
30.29 |
Mr. Phiroz Vandrevala *** |
|
Executive directors: |
|
Mr. Rajesh Gopinathan # |
@ |
Mr. N. Ganapathy Subramaniam ## |
@ |
Ms. Aarthi Subramanian |
63.47 |
^ Since the remuneration of these Directors is only for part of the year, the ratio of their remuneration to median remuneration is not comparable
b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
Mr. N. Chandrasekaran* |
17.55 |
Mr. Cyrus Mistry ** |
@@ |
Mr. Aman Mehta |
15.25 |
Mr. V. Thyagarajan |
12.18 |
Prof. Clayton M. Christensen |
7.38 |
Dr. Ron Sommer |
11.78 |
Dr. Vijay Kelkar |
25.04 |
Mr. Ishaat Hussain |
20.23 |
Mr. O. P Bhatt |
20.09 |
Mr. Phiroz Vandrevala *** |
@@ |
Mr. Rajesh Gopinathan # |
@ |
Mr. N. Ganapathy Subramaniam ## |
@ |
Ms. Aarthi Subramanian |
35.15 |
Mr. Ramakrishnan V, Chief Financial Officer w.e.f February 21, 2017 |
@ |
Mr. Suprakash Mukhopadhyay, Global Treasury Head and Company Secretary |
30.76 |
@ Mr. Rajesh Gopinathan, Mr. N. Ganapathy Subramaniam and Mr. Ramakrishnan V were appointed on February 21, 2017. Accordingly, the disclosures with respect to increase in their salary and median are not given.
@@ Increase in remuneration is not given as the concerned directors were only for the part of the year.
* Relinquished the office of Chief Executive Officer and Managing Director and appointed as a Chairman of the Company w.e.f. February 21, 2017 ** Ceased to be a Director of the Company w.e.f. December 13, 2016
*** Relinquished the office of Non-Executive Director w.e.f. July 8, 2016
# Appointed as Chief Executive Officer and Managing Director of the Company w.e.f. February 21, 2017 ## Appointed as Chief Operating Officer and Executive Director w.e.f. February 21, 2017
c. The percentage increase in the median remuneration of employees in the financial year: 4.91%
d. The number of permanent employees on the rolls of Company: 387,223
e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 8% in India. However, during the course of the year, the total increase is approximately 10%, after accounting for promotions and other event based compensation revisions. Employees outside India received wage increase varying from 2% to 6%.
Increase in the managerial remuneration for the year was 31.38%.
f. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of the Company.
g. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
24. Disclosure requirements
As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors'' Certificate thereon, and the Management Discussion and Analysis are attached, which form part of this report.
As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this annual report.
As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and on the website of the Company.
25. Deposits from public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
26. Conservation of energy, technology absorption, foreign exchange earnings, and outgo Conservation of energy:
The Company is committed to reduce its energy consumption through four key levers: green buildings, efficient operations, green IT and the use of renewable energy. Green buildings are energy efficient by design and hence help us reduce energy footprint. Over half of the Company''s real estate portfolio are green buildings. Some 80% of all the TCS-owned offices are LEED/IGBC certified. The Company''s Remote Energy Monitoring and Control initiative has enabled real-time energy monitoring and performance optimization, including that of data centers. All the owned campuses have onsite solar photovoltaic power generation. The Company has significantly increased its use of renewable power year on year. These initiatives collectively resulted in the Company''s energy consumption reducing by 8.3% over the prior year, on a per FTE per annum basis.
Technology absorption, adaption, and innovation:
The Company continues to adopt and use the latest technologies to improve the productivity and quality of its services and products. The Company''s operations do not require significant import of technology.
Research and Development (R&D): Specific areas in which R&D was carried out by the Company
TCS research deepened its exploration in the areas of intersection between computing and sciences; focusing on Artificial Intelligence (AI), the industrialization of software and computing, and the Digitization of business and society. Other areas of research include: an Integrated Computational Materials Platform in the materials space, the use of data science and high performance computational methods in genome analysis, met genomic bio-markers and systems biology, and modeling of human behavior to understand the needs of a Digital citizen, Digital workplaces, and Digital customer in behavioral, social, and business sciences.
TCS Research and Innovation (R&I) remained closely connected to customers. Our marquee event, the TCS Innovation Forum, attracted over 700 customers, partners, and technology experts across New York City, London, Medellin, and Sao Paulo. We conducted a track called the ''The TCS Slush Experience'' at Slush - Europe''s premier startup event. Innovation Days and workshops held for customers in various locations resulted in several pilots and proofs of concept. The Company''s Entrepreneur-in-Residence program as well as the Co-Innovation Network (TCS COINâ¢) continued to accelerate innovation. The latter expanded its footprint in several geographies and also deepened its academic alliances in India, extending it to Tier 1 institutions.
Your Company is again named in the Forbes list of the ''World''s Most Innovative Companies'', ninth year in a row. The Company was also awarded the WIPO IP Enterprise Trophy. VeriAbs, TCS'' V&V framework offering, came first in the Loops category in 6th International Competition on Software V&V. The TCS Remote Energy Monitoring System won the 2016 IoT Connected Building Award and the 17th National Award on Excellence in Energy Management. TCS and IIT Kanpur together ranked fifth in the Amazon Picking Challenge. TCS had three winners in Tata Innovista 2016; all six winners of the Challenges Worth Solving were from TCS. Several associates have won individual honors.
Looking forward, the Digital reimagination of industry and society and the industrialization of software and computing will continue to be focus areas for TCS R&I.
Expenditure on R&D
TCS Innovation Labs are located in India and other parts of the world. These R&D centers, certified by the Department of Scientific & Industrial Research (DSIR) function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.
Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2017 and FY 2016 are given below:
(Rs, crore)
Expenditure on R&D and innovation |
Unconsolidated |
Consolidated |
|||
FY 2017 |
FY 2016 |
FY 2017 |
FY 2016 |
||
a. |
Capital |
1 |
3 |
1 |
3 |
b. |
Recurring |
281 |
229 |
281 |
234 |
c. |
Total R&D expenditure (a b) |
282 |
232 |
282 |
237 |
d. |
Innovation center expenditure |
878 |
780 |
996 |
884 |
e. |
Total R&D and innovation expenditure (c d) |
1,160 |
1,012 |
1,278 |
1,121 |
f. |
R&D and innovation expenditure as a percentage of total turnover |
1.2% |
1.2% |
1.1% |
1.0% |
Foreign exchange earnings and outgo (Rs, crore)
Export revenue constituted 92.4% of the total unconsolidated revenue in FY 2017 (92.8% in FY 2016).
Foreign exchange earnings and outgo |
FY 2017 |
FY 2016 |
|
a. |
Foreign exchange earnings |
86,370 |
81,885 |
b. |
CIF Value of imports |
561 |
2 0 5 |
c. |
Expenditure in foreign currency |
31,553 |
29,555 |
27. Acknowledgement
The Directors thank the Company''s employees, customers, vendors, investors, and academic partners for their continuous support.
The Directors also thank the governments of various countries, the Government of India, governments of various states in India, and concerned government departments and agencies for their co-operation.
The Directors appreciate and value the contribution made by every member of the TCS family.
On behalf of the Board of Directors
N. Chandrasekaran
Mumbai, April 18, 2017 Chairman
Mar 31, 2015
To the members,
The directors submit annual report of Tata Consultancy Services Limited
(the "Company" or "TCS") along with the audited financial statements
for the financial year ended March 31, 2015. Consolidated performance
of the Company and its subsidiaries has been referred to wherever
required.
1. Financial results
(Rs. crores)
Unconsolidated Consolidated
2014-15 2013-14 2014-15 2013-14
Revenue from operations 73,578.06 64,672.93 94,648.41 81,809.36
Operating expenditure 52,549.86 43,139.21 70,166.70 56,656.57
Earnings before interest,
tax, depreciation and
amortisation (EBITDA) 21,028.20 21,533.72 24,481.71 25,152.79
Other income (net) 4,466.73 3,114.71 3,229.91 1,636.74
Finance costs 79.57 23.41 104.19 38.52
Depreciation and
amortisation expense 1,393.77 1,080.55 1,798.69 1,349.15
Profit before exceptional
item and tax 24,021.59 23,544.47 25,808.74 25,401.86
Exceptional item 528.38 - 489.75 -
Profit before tax (PBT) 24,549.97 23,544.47 26,298.49 25,401.86
Tax expense 5,293.01 5,069.55 6,238.79 6,069.99
Profit for the year before
minority interest 19,256.96 18,474.92 20,059.70 19,331.87
Minority interest - - 207.52 168.00
Profit for the year (PAT) 19,256.96 18,474.92 19,852.18 19,163.87
Adjustment for amalgamation
of acquired subsidiaries 71.78 2,375.22 - -
Balance brought forward
from previous year 36,420.45 24,602.85 39,504.51 29,529.97
Amount available for
appropriation 55,749.19 45,452.99 59,356.69 48,693.84
Appropriations
Interim dividends on
equity shares
(excluding tax) 10,772.92 2,349.87 10,772.92 2,349.87
Proposed dividend on
equity shares
(excluding tax) 4,700.95 3,917.46 4,700.95 3,917.46
Dividend on redeemable
preference shares
(excluding tax) - 28.76 - 28.76
Tax on dividends (interim
and proposed) 2,591.54 788.96 2,635.69 795.68
Write back of tax on
dividends of prior year (20.97) - (20.97) -
Capital redemption reserve - 100.00 255.57 157.12
General reserve 1,925.69 1,847.49 1,953.64 1,883.41
Statutory reserve - - 46.24 57.03
Balance carried to
balance sheet 35,779.06 36,420.45 39,012.65 39,504.51
(Rs. 1 crore = Rs. 10 million)
2. Dividend
Based on the Company''s performance, the directors are pleased to
recommend for approval of the members a final dividend of Rs. 24 per
share for the financial year 2014-15 taking the total dividend to Rs. 79
per share (previous year Rs. 32 per share), including a special dividend
of Rs. 40 per share. The final dividend on equity shares, if approved by
the members would involve a cash outflow of Rs. 5,640.86 crores including
dividend tax. The total dividend on equity shares including dividend
tax for the financial year 2014-15 would aggregate Rs. 18,065.41 crores
(including special dividend and tax thereon), resulting in a payout of
93.81% and Rs. 8,877.98 crores (excluding special dividend and tax
thereon), resulting in a payout of 46.10% of the unconsolidated profits
of the Company.
3. Transfer to reserves
The Company proposes to transfer Rs. 1,925.69 crores to the general
reserve out of the amount available for appropriation and an amount of
Rs. 35,779.06 crores is proposed to be retained in the profit and loss
account.
4. Company''s performance
On consolidated basis, revenue from operations for the financial year
2014-15 at Rs. 94,648.41 crores was higher by 15.69% over last year (Rs.
81,809.36 crores in 2013-14). Earnings before interest, tax,
depreciation and amortisation (EBITDA) was Rs. 27,109.62 crores excluding
a significant adjustment for one-time employee reward, registering a
growth of 7.78% over EBITDA of Rs. 25,152.79 crores in 2013-14. The
reported EBITDA aggregated Rs. 24,481.71 crores. Profit after tax (PAT)
for the year was Rs. 21,911.85 crores excluding the said one-time
adjustment for employee reward recording a growth of 14.34% over the
PAT of Rs. 19,163.87 crores in 2013-14. The reported PAT aggregated Rs.
19,852.18 crores.
On unconsolidated basis, revenue from operations for the financial year
2014-15 at Rs. 73,578.06 crores, was higher by 13.77% over last year (Rs.
64,672.93 crores in 2013-14). Earnings before interest, tax,
depreciation and amortisation (EBITDA) was Rs. 23,354.62 crores excluding
the one-time employee reward registering a growth of 8.46% over the
EBITDA of Rs. 21,533.72 crores in 2013-14. The reported EBITDA aggregated
Rs. 21,028.20 crores. Profit after tax (PAT) for the year was Rs.
21,091.43 crores excluding the said one-time adjustment stated above
recording a growth of 14.16% over the PAT of Rs. 18,474.92 crores in
2013-14. The reported PAT aggregated Rs. 19,256.96 crores.
5. Human resource development
Evolution of digital forces has transformed the way we live and work.
TCS has built a digital and vivacious workplace which goes beyond
constraints of time and distance. This reimagined workplace has enabled
employees to interact and collaborate better with each other, thereby
facilitating bonding of the global talent pool and building "One TCS"
culture. ''Knome'', one of the interaction platforms, has transcended
beyond just interaction platform to become an effective tool driving
transparency, policy changes and even experimenting and crowd sourcing.
It has transformed the way TCSers interact socially or professionally.
The Company continues to grow its global scale and footprint with a
diverse talent base of 319,656 employees representing 122
nationalities, deployed across 55 countries. From gender diversity
point of view, the Company is one of the largest employers of women
with 105,481 women employees and a number of senior positions held by
women leaders. Efficient systems, processes and continuous investments
in technology helps the Company manage this scale and complexity of a
large, distributed and diverse workforce.
The Company has hired and integrated 67,123 employees across the globe
in FY 2014-15. Through its Academic Interface Program (AIP), the
Company continues its efforts to strengthen relationship with key
institutes globally.
The Company continues its focus on retention through employee
engagement initiatives and provides a holistic environment where
employees get opportunities to realize their potential. ''Career Hub''
captures the career aspirations of employees and offers a framework to
shape and propel their careers. ''Anytime and Anywhere'' learning,
reinforced through the digital learning ecosystem, help employees to
build their competencies across domains and technologies. Company''s
performance driven culture helps and motivates employees to excel in
their respective areas and progress within the organization.
Company''s Health and Safety Policy commits to provide a healthy and
safe work environment to all employees. Company''s ''Fit4life''
initiative creates a culture of fitness in the organization by helping
to build a fraternity of health and fitness conscious employees.
''SafetyFirst'' initiative was launched to make Safety and Wellbeing a
part of the Company''s culture and to change employee behaviour and
attitude to safety. From self-defence classes to using technology to
track vehicles transporting our employees, this initiative promotes
several other safety campaigns across the organization to improve
safety awareness. Each and every TCSer is urged to reflect on the need
to ensure personal safety and security at all times and make sure
colleagues are safe too.
The Company also launched ''Purpose4life'' initiative to consolidate the
employee volunteering programs for social cause under one umbrella so
that larger programs which empower people to lead a better life could
be taken up.
Employee inputs from PULSE, TCS'' annual global employee satisfaction
and engagement survey, are analyzed to gain necessary insight into the
needs of the diverse workforce. This helps the Company to design new
interventions and take necessary steps to enhance the engagement level.
The Company''s progressive workforce policies and benefits, various
employee engagement and welfare initiatives like Maitree and Employee
Assistance Program, have addressed stress management, promoted work
life balance and helped the Company maintain a low attrition which was
14.9% during this year.
6. Quality initiatives
Sustained commitment to highest levels of quality, best-in-class
service management, robust information security practices and mature
business continuity processes helped the Company attain significant
milestones during the year.
The Company continues to maintain the enterprise-wide highest maturity
Level 5 for CMMI-DEV® (Development) version 1.3. The Company was
re-assessed enterprise-wide at the highest maturity Level 5 for
CMMI-SVC® (Services) version 1.3.
The Company successfully achieved the annual enterprise-wide ISO
certification for ISO 20000:2011 (Service Management), ISO 9001:2008
(Quality Management), ISO 27001:2013 (Security Management) and ISO
22301:2012 (Business Continuity Management).
The Company is enterprise-wide certified for ISO 14001:2004
(Environmental Management) and BS OHSAS 18001:2007 (Occupational Health
and Safety Management) which demonstrates TCS'' strong commitment to the
environment and the occupational health and safety of its employees and
business partners. The Company also continues to maintain the industry
specific quality certifications viz., AS 9100 (Aerospace Industry), ISO
13485 (Medical Devices) and TL 9000 (Telecom Industry).
The cornerstone of these certifications is TCS'' integrated quality
management system (iQMSÂ), a global process- driven and
customer-focused system which provides ''One Global Service Standard''.
iQMSTM is the backbone that supports TCS'' global network delivery model
(GNDMTM).
At the annual ''Knowledge Management'', India summit, hosted by the
Confederation of Indian Industries (CII) in March 2015, the Company was
recognized as India''s ''Most Admired Knowledge Enterprise'' (MAKE) winner
(1st place) for a third successive year. The Company has received the
prestigious MAKE award for the 10th time in India as well as Asia. The
Company also received the Global Independent Operating Unit (IOU) MAKE
award for the 5th time in a row.
In December 2014, the Company received the ''Excellence Award'' in
information security in the large IT Service category by the Data
Security Council of India (DSCI).
7. Subsidiary companies
The Company has 60 subsidiaries as on March 31, 2015. There are no
associate companies within the meaning of Section 2(6) of the Companies
Act, 2013 ("Act"). There has been no material change in the nature of
the business of the subsidiaries.
Pursuant to provisions of Section 129(3) of the Act, a statement
containing salient features of the financial statements of the
Company''s subsidiaries in Form AOC-1 is attached to the financial
statements of the Company. Pursuant to the provisions of section 136
of the Act, the financial statements of the Company, consolidated
financial statements along with relevant documents and separate audited
accounts in respect of subsidiaries, are available on the website of
the Company.
TCS Foundation was incorporated as wholly-owned subsidiary of the
Company on March 13, 2015 under Section 8 of the Act with the sole
objective of undertaking Corporate Social Responsibility (CSR)
activities of the Company and its subsidiaries.
During the year, the process of closure of following wholly-owned
subsidiaries, which were not in operation, was completed:
a. Tata Consultancy Services Morocco SARL AU (w.e.f. May 30, 2014)
b. Computational Research Laboratories Inc. ( w.e.f. February 18, 2015)
c. TCS Management Pty Ltd. (w.e.f. March 23, 2015).
During the year, operations of following subsidiaries were reviewed and
a restructuring process was carried out:
a. CMC Limited
At the respective meetings held on October 16, 2014, the Boards of the
Company and its subsidiary CMC Limited (CMC) have approved a scheme of
amalgamation between the Company and CMC ("Scheme") proposing
amalgamation of CMC with the Company under Sections 391 to 394 of the
Companies Act, 1956. The appointed date for the proposed scheme is
April 1, 2015.
Pursuant to an Order of the High Court of Judicature at Bombay, a
meeting of the equity shareholders of the Company has been scheduled on
April 28, 2015, for the purpose of seeking approval of the shareholders
for the Scheme. The shareholders of CMC have, at their meeting held on
March 5, 2015, duly approved the Scheme.
The Company holds 51.12% stake in CMC. CMC is engaged in procurement,
installation, commissioning and maintenance of computer and networking
systems, providing education and training, designing, developing and
implementing software technologies and applications as well as
providing professional services in India and overseas.
The amalgamation will enable the Company to consolidate CMC''s
operations in a single company with rationalized structure, enhanced
reach and greater financial strength.
As per the terms of the Scheme, shareholders of CMC will receive 79
equity shares of Rs. 1 each of the Company for 100 equity shares of Rs. 10
each of CMC. The swap ratio has been arrived at based on the valuation
report prepared by B.S.R. & Associates LLP. The Scheme is subject to
court, regulatory, shareholders and other necessary approvals. If
approved, the paid-up share capital of the Company, will increase from
Rs. 195.87 crores to Rs. 197.04 crores.
b. WTI Advanced Technology Limited
Pursuant to the Scheme of Amalgamation sanctioned by the Hon''ble High
Court of Bombay vide its order dated March 27, 2015, WTI Advanced
Technology Limited (WTI) was amalgamated with the Company with effect
from appointed date, April 1, 2014. Consequently, the entire business,
assets, liabilities, duties and obligations of WTI have been
transferred to and vested in the Company with effect from April 1,
2014.
WTI was engaged in information technology and information technology
engineering services mainly comprising geographic information systems,
computer aided design, engineering services and business associate
services which are complementary to the business of the Company.
c. Tata Consultancy Services Japan, Limited
Nippon TCS Solution Center Limited, IT Frontier Corporation (ITF) and
Tata Consultancy Services Japan Limited merged on July 1, 2014 to form
a consolidated entity - Tata Consultancy Services Japan, Limited,
wherein Tata Consultancy Services Asia Pacific Pte. Limited (a
wholly-owned subsidiary of the Company) holds 51% stake and Mitsubishi
Corporation holds the balance 49% stake. ITF, a subsidiary of
Mitsubishi, brings its long standing relationships with Japanese
corporations, talented workforce and competencies in industries like
retail, distribution and trading.
This strategic alliance with Mitsubishi has enabled the Company to
leverage the mutual strengths in Japanese market to have scale, strong
local presence and capability to offer full range of TCS'' global
services to Japanese customers and accelerate growth in Japan market.
d. Tata Consultancy Services (Africa) (Pty) Limited
On September 16, 2014, the Company acquired additional 40% ownership
interest in Tata Consultancy Services (Africa) (Pty) Limited (TCS
Africa) from Tata Africa Holdings (SA) Pty Limited and thereby making
TCS Africa a wholly owned subsidiary of the Company. TCS Africa is the
holding company of Tata Consultancy Services (South Africa) (Pty)
Limited, which is engaged in IT services and consulting business
catering to the customers in South Africa region.
8. Directors'' responsibility statement
Pursuant to Section 134(5) of the Companies Act, 2013, the board of
directors, to the best of their knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
iii. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and
operating effectively;
vi. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, work performed by
the internal, statutory and secretarial auditors and external
consultants and the reviews performed by management and the relevant
board committees, including the audit committee, the board is of the
opinion that the Company''s internal financial controls were adequate
and effective during the financial year 2014-15.
9. Directors and key managerial personnel
Mr. S. Ramadorai, Vice Chairman, stepped down from the Board of the
Company on October 6, 2014 on attaining the age of 70 years as per the
Company''s policy. He was associated with the Company for over four
decades in various capacity. Under his leadership as Chief Executive
Officer and Managing Director, TCS was transformed into a global
software company. The Board places on record its appreciation of the
invaluable contribution and guidance provided by him.
Pursuant to the provisions of Section 149 of the Act, which came into
effect from April 1, 2014, Mr. Aman Mehta, Mr. V. Thyagarajan, Prof.
Clayton M. Christensen, Dr. Ron Sommer, Dr. Vijay Kelkar and Mr. O. P.
Bhatt were appointed as independent directors at the annual general
meeting of the Company held on June 27, 2014. The terms and conditions
of appointment of independent directors are as per Schedule IV of the
Act. They have submitted a declaration that each of them meets the
criteria of independence as provided in Section 149(6) of the Act and
there has been no change in the circumstances which may affect their
status as independent director during the year.
Mr. Cyrus Mistry retires by rotation and being eligible has offered
himself for re-appointment.
During the year, the non-executive directors of the Company had no
pecuniary relationship or transactions with the Company.
Mr. N. Chandrasekaran was appointed the Chief Executive Officer and
Managing Director of the Company for a period of five years with effect
from October 6, 2009. The Board of Directors at its Meeting held on
September 3, 2014, has re-appointed him as the Chief Executive Officer
and Managing Director of the Company for a further period of five years
from October 6, 2014, subject to the approval of the members.
As part of leadership development, Ms. Aarthi Subramanian was appointed
as Additional Director with effect from March 12, 2015. The Board has
also appointed her as Executive Director with effect from the same date
for a period of three years. She is the Global Head of Delivery
Excellence Group responsible for governance of service delivery,
compliance and risk management. Ms. Aarthi Subramanian holds a B. Tech
in Computer Science and a Masters in Engineering Management from
University of Kansas (USA) and has over 25 years of experience across
multiple industry solutions in different markets.
The resolutions seeking approval of the Members for the appointment of
Mr. N. Chandrasekaran and Ms. Aarthi Subramanian have been incorporated
in the notice of the forthcoming annual general meeting of the Company
along with brief details about them. The Company has received a notice
under Section 160 of the Act along with the requisite deposit proposing
the appointment of Ms. Aarthi Subramanian.
Pursuant to the provisions of Section 203 of the Act, which came into
effect from April 1, 2014, the appointments of Mr. N. Chandrasekaran,
Chief Executive Officer and Managing Director, Mr. Rajesh Gopinathan,
Chief Financial Officer and Mr. Suprakash Mukhopadhyay, Company
Secretary as key managerial personnel of the Company were formalised.
10. Number of meetings of the board
Seven meetings of the board were held during the year. For details of
the meetings of the board, please refer to the corporate governance
report, which forms part of this report.
11. Board evaluation
The board of directors has carried out an annual evaluation of its own
performance, Board committees and individual directors pursuant to the
provisions of the Act and the corporate governance requirements as
prescribed by Securities and Exchange Board of India ("SEBI") under
Clause 49 of the Listing Agreements ("Clause 49").
The performance of the Board was evaluated by the Board after seeking
inputs from all the directors on the basis of the criteria such as the
Board composition and structure, effectiveness of board processes,
information and functioning, etc.
The performance of the committees was evaluated by the board after
seeking inputs from the committee members on the basis of the criteria
such as the composition of committees, effectiveness of committee
meetings, etc.
The Board and the Nomination and Remuneration Committee ("NRC")
reviewed the performance of the individual directors on the basis of
the criteria such as the contribution of the individual director to the
Board and committee meetings like preparedness on the issues to be
discussed, meaningful and constructive contribution and inputs in
meetings, etc. In addition, the Chairman was also evaluated on the key
aspects of his role.
In a separate meeting of independent Directors, performance of
non-independent directors, performance of the board as a whole and
performance of the Chairman was evaluated, taking into account the
views of executive directors and non-executive directors. The same was
discussed in the board meeting that followed the meeting of the
independent Directors, at which the performance of the Board, its
committees and individual directors was also discussed.
12. Policy on directors'' appointment and remuneration and other details
The Company''s policy on directors'' appointment and remuneration and
other matters provided in Section 178(3) of the Act has been disclosed
in the corporate governance report, which forms part of the directors''
report.
13. Internal financial control systems and their adequacy
The details in respect of internal financial control and their adequacy
are included in the Management Discussion & Analysis, which forms part
of this report.
14. Audit committee
The details pertaining to composition of audit committee are included
in the Corporate Governance Report, which forms part of this report.
15. Auditors
Pursuant to the provisions of Section 139 of the Act and the rules
framed thereunder, Deloitte Haskins & Sells LLP, (''DHS LLP''), Chartered
Accountants, were appointed as statutory auditors of the Company from
the conclusion of the nineteenth annual general meeting (AGM) of the
Company held on June 27, 2014 till the conclusion of the twenty second
AGM to be held in the year 2017, subject to ratification of their
appointment at every AGM.
16. Auditors'' report and secretarial auditors'' report
The auditors'' report and secretarial auditors'' report does not contain
any qualifications, reservations or adverse remarks. Report of the
secretarial auditor is given as an annexure which forms part of this
report.
17. Risk management
The Board of the Company has formed a risk management committee to
frame, implement and monitor the risk management plan for the Company.
The committee is responsible for reviewing the risk management plan and
ensuring its effectiveness. The audit committee has additional
oversight in the area of financial risks and controls. Major risks
identified by the businesses and functions are systematically addressed
through mitigating actions on a continuing basis.
The development and implementation of risk management policy has been
covered in the management discussion and analysis, which forms part of
this report.
18. Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
19. Transactions with related parties
None of the transactions with related parties falls under the scope of
Section 188(1) of the Act. Information on transactions with related
parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of
the Companies (Accounts) Rules, 2014 are given in Annexure I in Form
AOC-2 and the same forms part of this report.
20. Corporate social responsibility
The brief outline of the Corporate Social Responsibility (CSR) Policy
of the Company and the initiatives undertaken by the Company on CSR
activities during the year are set out in Annexure II of this report in
the format prescribed in the Companies (Corporate Social Responsibility
Policy) Rules, 2014. The policy is available on the website of the
Company.
21. Extract of annual return
As provided under Section 92(3) of the Act, the extract of annual
return is given in Annexure III in the prescribed Form MGT-9, which
forms part of this report.
22. Particulars of employees
The information required under Section 197 of the Act read with rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are given below:
c. The percentage increase in the median remuneration of employees in
the financial year: 4.6%
d. The number of permanent employees on the rolls of Company: 319,656
e. The explanation on the relationship between average increase in
remuneration and Company performance:
On an average, employees received an annual increase of 10% in India.
The individual increments varied from 6% to 14%, based on individual
performance.
Employees outside India received wage increase varying from 2% to 6%.
The increase in remuneration is in line with the market trends in the
respective countries. In order to ensure that remuneration reflects
Company performance, the performance pay is also linked to organization
performance, apart from an individual''s performance.
i. Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 10%. However, during the course
of the year, the total increase is approximately 14%, after accounting
for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the year was 13.9%.
k. The key parameters for any variable component of remuneration
availed by the directors:
The members have, at the AGM of the Company on June 27, 2014 approved
payment of commission to the non-executive directors within the ceiling
of 1% of the net profits of the Company as computed under the
applicable provisions of the Act. The said commission is decided each
year by the board of directors and distributed amongst the
non-executive directors based on their attendance and contribution at
the board and certain committee meetings, as well as the time spent on
operational matters other than at meetings.
l. The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year:
None.
m. Affirmation that the remuneration is as per the remuneration policy
of the Company:
The Company affirms remuneration is as per the remuneration policy of
the Company.
n. The statement containing particulars of employees as required under
Section 197(12) of the Act read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, is
provided in a separate annexure forming part of this report. Further,
the report and the accounts are being sent to the members excluding the
aforesaid annexure. In terms of Section 136 of the Act, the said
annexure is open for inspection at the Registered Office of the
Company. Any shareholder interested in obtaining a copy of the same may
write to the Company Secretary.
23. Disclosure requirements
As per Clause 49 of the listing agreements entered into with the stock
exchanges, corporate governance report with auditors'' certificate
thereon and management discussion and analysis are attached, which form
part of this report.
As per Clause 55 of the listing agreements entered into with the stock
exchanges, a business responsibility report is attached and forms part
of this annual report.
Details of the familiarization programme of the independent directors
are available on the website of the Company (URL:
www.tcs.com/investors).
Policy for determining material subsidiaries of the Company is
available on the website of the Company (URL: www.tcs.com/investors).
Policy on dealing with related party transactions is available on the
website of the Company (URL: www.tcs.com/investors).
The Company has formulated and published a Whistle Blower Policy to
provide Vigil Mechanism for employees including directors of the
Company to report genuine concerns. The provisions of this policy are
in line with the provisions of the Section 177(9) of the Act and the
revised Clause 49 of the Listing Agreements with stock exchanges (URL:
www.tcs.com/investors).
24. Deposits from public
The Company has not accepted any deposits from public and as such, no
amount on account of principal or interest on deposits from public was
outstanding as on the date of the balance sheet.
25. Conservation of energy, technology absorption, foreign exchange
earnings and outgo Conservation of energy:
TCS continues to work on reducing carbon footprint in all its areas of
operations through initiatives like (a) green infrastructure,^) green
IT (data centers, laptops and servers etc, (c) operational energy
efficiency, (d) procurement of renewable energy through onsite solar
power generating units. TCS continues to add LEED certified green
buildings to its real estate portfolio. Green data center continues to
be a focus area with data center power management initiative extended
to 23 key data centers. FY15 saw operational efficiency emerging as a
main pillar for achieving the target. TCS leveraged its IT capabilities
with the remote energy monitoring centre (REMC) initiative, involving
real time monitoring and controls aided by smart meters and MIS, to
optimise the operational energy efficiency across its offices. The
initiative covered 90 TCS offices which account for over 98% of our
total power consumption. The estimated savings achieved in the FY15 was
approximately 10 million units. TCS was recognised for its commitment
to climate change management and improvement in carbon performance with
inclusion in the Global 500 Carbon Performance Leadership Index (CPLI)
2014 published by CDP. This is the second year in a row that TCS has
been included in this prestigious index.
TCS has enterprise wide certification under IS0 14001:2004
(Environmental Management System) for its 100 offices globally.
Data on reduction in energy consumption and consequent reduction in
carbon footprint have been provided in the Business Responsibility
Report.
Technology absorption, adaption and innovation:
The Company continues to use the latest technologies for improving the
productivity and quality of its services and products. The Company''s
operations do not require significant import of technology.
Research and Development (R&D): Specific areas in which R&D was carried
out by the Company
As the digital customer is disrupting business models in several
industries today, TCS research and innovation teams are working with
business units on meeting this challenge.
Two key business units, banking & financial services and insurance &
healthcare will have their own innovation units on the established 4E
model. This will help the Company to scale up innovation in these
specific domains in a structured way, supplementing innovation at the
corporate level. The Company hopes to deploy innovation management in
other industry units in a phased manner.
''Intelligent Cities'' initiative has grown this year to meet the needs
of several global governments looking for
intelligent infrastructures. TCS iCity Lab, in collaboration with
Singapore Management University has achieved its major research
objectives across the intelligent city domain, including citizen
frameworks for ageing and chronic disease management, as well as
personalised community healthcare services.
To enable better user experience TCS'' ''Accessibility CoE'' released a
set of tools based on universal design. TCS innovation has invested in
an application programming interfaces (APIs) initiative as APIs are
seen as the building blocks of a digital enterprise.
Several TCS explore projects in research areas of software,
applications and systems progressed creating more IPR for the Company.
In the software area, researchers are mining operational process models
to facilitate training and transformation and also modelling human
behaviour in the workplace. Research in the applications area deepened
explorations in several areas including ''Enterprise Contextual
Intelligence'', ''Digital Health'' and ''Digital Manufacturing''. The
systems research team worked on ''Analytics as a Service'', ''Human
Sensing'', ''Performance Prediction and Optimization'' among other things.
Many mature projects have moved from research to business. One example
of close coupling of TCS research and business is: TCS Research''s
''Energy Carbon View Tool'' and engineering and industrial services
unit''s ''Data Acquisition and Management System'' have together been
implemented in more than 75 buildings to monitor and save energy.
TCS researchers published 300 quality papers in various journals and
conferences. 509 patents were filed this year taking the tally of filed
patents to 2,277. Total number of granted patents is 206.
TCS ''Co-Innovation Network'' has expanded its footprint to include
Canada, Finland, Israel and the London Financial Technologies (FinTech)
hubs. Many co-innovation events including a start-up boot camp for
FinTech companies was held this year. TCS research scholar programme is
supporting 200 PhD scholars and the programme has been extended for the
next five years.
TCS research has been socialized well in FY15. Our flagship event in
North America, The ''TCS Innovation Forum 2014'', was well received with
185 clients and partners attending, ''TCS Evangelize'' held 39 innovation
days and workshops for customers. TCS continues to be in Forbes list of
Top 100 innovation companies. It scored 96 percentile in innovation
management on the Dow Jones Sustainability Index. A ''TCS Research
Solution'' won the best demo award for mobile based blood pressure
monitor at SenSys 2014, Memphis, USA. TCS was placed in CII''s
Industrial Innovation Awards List for 2014.
Looking forward, TCS R&D will deepen exploration in current areas of
research that have yielded benefits to customers and explore new areas
in software, applications and systems.
Expenditure on R&D
TCS innovation labs are located in India and other parts of the world.
These R&D centers, as certified by Department of Scientific &
Industrial Research (DSIR) function from Pune, Chennai, Bengaluru,
Delhi- NCR, Hyderabad, Kolkata and Mumbai.
26. Acknowledgement
The directors thank the Company''s employees, customers, vendors,
investors and academic institutions for their continuous support.
The directors also thank the government of various countries,
government of India, the governments of various states in India and
concerned government departments / agencies for their co-operation.
The directors appreciate and value the contributions made by every
member of the TCS family.
On behalf of the board of directors,
Mumbai Cyrus Mistry
April 16, 2015 Chairman
Mar 31, 2013
To the Members,
The Directors submit the Annual Report of the Company along with the
audited financial statements for the financial year ended March 31,
2013.
1. Financial results
(Rs. crores)
Unconsolidated Consolidated
2012-2013 2011-2012 2012-2013 2011-2012
Revenue from
operations 48,426.14 38,104.23 62,989.48 48,893.83
Operating
expenditure 34,119.87 26,718.51 44,949.57 34,458.52
Earnings before
interest, tax,
depreciation
and amortisation
(EBITDA) 14,306.27 11,385.72 18,039.91 14,435.31
Other income (net) 2,230.39 2,685.18 1,178.23 428.17
Finance costs 30.62 16.40 48.49 22.23
Depreciation and
amortisation expense 802.86 688.17 1,079.92 917.94
Profit before tax
(PBT) 15,703.18 13,366.33 18,089.73 13,923.31
Tax expense 2,916.84 2,390.35 4,014.04 3,399.86
Profit for the
year before
minority interest 12,786.34 10,975.98 14,075.69 10,523.45
Minority interest - - 158.38 109.96
Profit for the
year (PAT) 12,786.34 10,975.98 13,917.31 10,413.49
Adjustment for
amalgamation of
Retail FullServe
Limited and
Computational
Research
Laboratories
Limited (103.00) - (126.22) -
Balance brought
forward from
previous year 18,235.20 14,069.20 22,160.54 18,635.05
Amount available
for appropriation 30,918.54 25,045.18 35,951.63 29,048.54
Appropriations
Interim dividends
on equity shares 1,761.49 1,761.49 1,761.49 1,761.49
Proposed final
dividend on
equity shares 2,544.39 1,565.77 2,544.39 1,565.77
Special dividend
on equity shares - 1,565.78 - 1,565.78
Proposed dividend
on redeemable
preference shares 19.00 22.00 19.00 22.00
Tax on dividends
on equity &
preference shares
(interim and proposed) 712.18 797.34 727.34 806.86
General reserve 1,278.63 1,097.60 1,352.79 1,166.10
Statutory reserve - - 16.65 -
Balance carried to
balance sheet 24,602.85 18,235.20 29,529.97 22,160.54
(Rs. 1 crore = Rs. 10 million)
2. Dividend
Based on the Companys performance, the Directors are pleased to
recommend for approval of the members a final dividend of Rs. 13 per
share for the financial year 2012-13 taking the total dividend to Rs.
22 per share (previous year Rs. 17 per share excluding special dividend
of Rs. 8 per share) on the capital of 195,72,20,996 equity shares of
Rs. 1 each. The final dividend on the equity shares, if approved by the
members would involve a cash outflow of Rs. 2,976.81 crores including
dividend tax. The total cash outflow on account of dividend (interim as
well as proposed) including dividend tax for the financial year 2012-13
would aggregate Rs. 5,014.83 crores resulting in a payout of 39.29% of
the unconsolidated profits of the Company.
The redeemable preference shares allotted on March 28, 2008 are
entitled to a fixed cumulative dividend of 1% per annum and a variable
non-cumulative dividend of 1% of the difference between the rate of
dividend declared during the year on the equity shares of the Company
and the average rate of dividend declared on the equity shares of the
Company for the three years preceding the year of issue of the said
redeemable preference shares. Accordingly, the Directors have
recommended, for approval of the members, a dividend of nineteen paise
(Rs. 0.19) per share on 100,00,00,000 redeemable preference shares of
Rs. 1 each for the financial year 2012-13.
3. Transfer to reserves
The Company proposes to transfer Rs. 1,278.63 crores to the general
reserve out of the amount available for appropriation and an amount of
Rs. 24,602.85 crores is proposed to be retained in the statement of
profit and loss.
4. Companys performance
During the financial year 2012-13, the global economic environment was
on a slow growth path. There were signs of faster growth in certain
geographies, primarily in the emerging markets. The prevailing
uncertainties were challenging, which called for much higher level of
efficiency and preparedness for participants in the market.
In the financial year 2012-13, on consolidated basis, the Company has
achieved well-rounded growth with steady profitability. The Company had
excellent growth across markets - United Kingdom (44%), Latin America
(40%), North America (27%), Europe (21%), Asia Pacific (27%), Middle
East Africa (28%) and India (16%). All the industry segments have
registered double digit growth.
For the first time, the Company crossed USD 3 billion revenue in a
quarter during Q4 of the financial year 2012-13.
On consolidated basis, revenue from operations for the financial year
2012-13 at Rs. 62,989.48 crores was higher by 28.8% over last year (Rs.
48,893.83 crores in 2011-12). Earnings before interest, tax,
depreciation and amortisation (EBITDA) at Rs. 18,039.91 crores was
higher by 25.0% over last year (Rs. 14,435.31 crores in 2011-12).
Profit after tax (PAT) for the year at Rs. 13,917.31 crores was higher
by 33.7% over last year (Rs. 10,413.49 crores in 2011-12).
On unconsolidated basis, revenue from operations for the financial year
2012-13 at Rs. 48,426.14 crores was higher by 27.1% over last year (Rs.
38,104.23 crores in 2011-12).Earnings before interest, tax,
depreciation and amortisation (EBITDA) at Rs. 14,306.27 crores was
higher by 25.7% over last year (Rs. 11,385.72 crores in 2011-12).
Profit after tax (PAT) for the year at Rs. 12,786.34 crores was higher
by 16.5% over last year (Rs. 10,975.98 crores in 2011-12).
5. Strategic acquisition
The Company has made acquisitions over the past few years either
directly or through its subsidiaries. During the year 2012-13, the
Company acquired Computational Research Laboratories Limited (CRL). CRL
was a wholly owned subsidiary of Tata Sons Limited. The acquisition of
CRL, a pioneering start-up company in the area of high performance
computing solutions in India, enabled the Company to extend its suite
of solutions and offer integrated high performance computing
applications and Cloud services to its large base of customers.
6. Status of restructuring of unlisted subsidiary companies
i. Retail FullServe Limited (RFL) and Computational Research
Laboratories Limited (CRL):
RFL and CRL, both wholly owned subsidiaries engaged in similar business
as that of the Company, have amalgamated with the Company with effect
from the Appointed Date, i.e., April 1, 2012 and October 1, 2012
respectively, in terms of the scheme of amalgamation sanctioned by the
High Court of Judicature at Bombay by its Order dated March 22, 2013.
The amalgamation would lead to efficient utilisation of resources and
enhanced growth of the consolidated entity.
ii. TCS e-Serve Limited (e-Serve) and TCS e-Serve International
Limited (TEIL):
On October 19, 2012, the Board of Directors of the Company, e-Serve and
TEIL have approved a composite scheme of arrangement ("Scheme")
between the Company, e-Serve, TEIL and their respective shareholders
under Sections 391 to 394 of the Companies Act, 1956 ("Act"),
proposing amalgamation of e-Serve with the Company and demerger of SEZ
undertaking of TEIL into the Company.
e-Serve and TEIL are engaged in the business of providing information
technology enabled services (ITES) and business process outsourcing
services (BPO) for its customers primarily in the banking, financial
services and insurance domain. e-Serves operations include delivering
core business process services, analytics/ insights and support
services for both data and voice processes. The Scheme will lead to
operational synergy.
In the year 2008-09, the Company had acquired Citigroup Inc.s (Citi)
96.26% interest in e-Serve (then known as Citigroup Global Services
Limited), the India-based captive BPO of Citi. TEIL is a wholly owned
subsidiary of e-Serve.
The Appointed Date proposed for the Scheme is April 1, 2013. Pursuant
to an Order of the High Court of Judicature at Bombay, a meeting of the
equity shareholders of the Company has been scheduled on Friday, May
31, 2013, for the purpose of seeking approval of the shareholders.
7. Human resource development
TCS draws its strength from a highly engaged and motivated workforce,
whose collective passion and commitment has helped the organisation
scale new heights. The Company has a diverse workforce of 2,76,196
employees representing 118 nationalities.
Human Resource policies and processes have evolved to stay relevant to
the changing demographics, enhance organisational agility and remain
compliant with the changing regulatory requirements.
In financial year 2012-13, the Company remained the highest recruiter
in the industry, with a gross addition of 69,728 and net addition of
37,613 employees across the globe. Campus placement drive was conducted
in 371 engineering institutes in India resulting in 24,531 job offers
to students to join in the financial year 2013-14. All the students
who were given job offer last year were inducted into the organisation
during financial year 2012-13. Trainees were recruited from established
institutes across the globe.
The Company continued its effort to strengthen relationship with key
institutes globally through its academic interface programme which
benefited 616 institutes in India and 288 institutes in other
countries.
Individual and organisational capability building remained one of the
strategic focus areas. A total of 12,789 person years of effort were
invested in enhancing the proficiency levels of the employees and in
developing a steady stream of business leaders ready to take on the
challenges as per growing requirements of the organisation.
The workforce management strategy was executed optimally to deliver a
sustained utilisation rate throughout the year helping business grow
while maintaining employee costs at the desired level.
The robust and mature talent management and talent engagement processes
of the Company helped create an environment where performance is
rewarded, opportunities are provided for career growth and people are
encouraged to realise their potential. Focused initiatives towards
health and safety and other non-work related employee engagement
programmes helped develop the personality and confidence level of the
employees enhancing their motivation and engagement with the
organisation. The relentless drive to create "One TCS Culture" across
the organisation helped the Company integrate its diverse global talent
base into a cohesive high performing unit. These initiatives have
delivered the desired results as is evident from the low attrition rate
of 10.6% achieved during this year, a benchmark in the industry.
8. Quality initiatives
Sustained commitment to highest levels of quality, best-in-class
service management and robust information security practices helped the
Company attain a number of milestones during the year.
The Company continues to maintain the enterprise-wide highest maturity
Level 5 for CMMI-DEV® (Development) and CMMI-SVC® (Services) models.
The Company achieved annual enterprise-wide ISO certification for ISO
20000:2011 (Service Management), ISO 9001:2008 (Quality Management) and
ISO 27001:2005 (Security Management).
The Company is enterprise-wide certified for ISO 14001:2004
(Environmental Management) and BS OHSAS 18001:2007 (Occupational Health
and Safety Management) which demonstrates TCS strong commitment to the
environment and the occupational health & safety of its employees and
business partners. The Company also continues to maintain the industry
specific quality certifications viz., AS 9100 (Aerospace Industry), ISO
13485 (Medical Devices) and TL 9000 (Telecom Industry).
The cornerstone of these certifications is TCS integrated quality
management system (iQMSTM), a global process- driven and
customer-focused system which provides One Global Service Standard
and is the backbone supporting the TCS global network delivery model
(GNDMTM).
The Company was recognised as Indias most admired knowledge enterprise
(MAKE) winner (1st place) this year and has received the prestigious
MAKE award for the 8th time in India as well as Asia. The Company also
received the global individual operating unit (IOU) MAKE award for the
3rd time in a row. TCS won the QuEST forum India quality award 2012 for
being the first telecom software company in the world to implement the
advanced surveillance and recertification procedure (ASRP) methodology
for TL 9000.
9. Awards/Recognitions
During the year, the Company received various awards and recognitions,
some of which are given below:
India
- Awarded "Company of the Year" by Business Standard
- Ranked as Indias Most Valuable Company in BT 500 from Business
Today
- Ranked No. 1 in India by Institutional Investors 2012 All-Asia
Executive Team rankings
- Selected as Best Managed Board in India by Aon Hewitt - Mint Study
2012
- ICAI Gold Shield for Excellence in Financial Reporting (2011-12),
third time in succession Global
- Rated as one of the worlds greenest companies by Newsweek Magazine
- Listed in Forbes Asias Fab 50
- Awarded Best Performing Consultancy Brand in Europe
- Recognized as leading IT Services and Outsourcing Firm in China
- Top honours at the Asian CIO Leadership Awards in Dubai
- Top Software Company at QuEST Forum India Quality Award 2012
- Three recognitions in UKs Business in the Communitys (BITC)
Awards for Excellence 2012
- Caring Company Award 2012 for CSR activities in Hong Kong
10. Corporate Governance Report, Management Discussion and Analysis
Report and Business Responsibility Report
As per Clause 49 of the Listing Agreements entered into with the Stock
Exchanges, Corporate Governance Report with auditors certificate
thereon and a Management Discussion and Analysis Report are attached
and form part of this report.
As per Clause 55 of the Listing Agreements entered into with the Stock
Exchanges, a Business Responsibility Report (BRR) is attached and forms
part of the annual report. A number of CSR activities were taken up
through various programmes under the theme "Impact through
Empowerment", touching 21,68,815 beneficiaries globally. The BRR
provides details of these programmes.
11. Directors responsibility statement
Pursuant to the requirement of Section 217(2AA) of the Act, and based
on the representations received from the operating management, the
Directors hereby confirm that:
(i) in the preparation of the annual accounts for the financial year
2012-13, the applicable accounting standards have been followed and
there are no material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the financial year;
(iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Act. They confirm that
there are adequate systems and controls for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) they have prepared the annual accounts on a going concern basis.
12. Subsidiary companies and consolidated financial statements
The Company had 58 subsidiaries as on March 31, 2013. There has been no
material change in the nature of the business of the subsidiaries.
As required under the Listing Agreements entered into with the Stock
Exchanges, a consolidated financial statement of the Company and all
its subsidiaries is attached. The consolidated financial statement has
been prepared in accordance with the relevant accounting standards as
prescribed under Section 211 (3C) of the Act. The consolidated
financial statement discloses the assets, liabilities, income, expenses
and other details of the Company and its subsidiaries.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the balance sheet, statement of profit
and loss and other documents of the subsidiary companies with the
balance sheet of the Company. A statement containing brief financial
details of the Companys subsidiaries for the financial year ended
March 31, 2013 is included in the annual report. The annual accounts of
these subsidiaries and the related information will be made available
to any member of the Company/its subsidiaries seeking such information
and are available for inspection by any member of the Company/its
subsidiaries at the registered office of the Company. The annual
accounts of the said subsidiaries will also be available for
inspection, at the head offices/registered offices of the respective
subsidiary companies.
13. Fixed deposits
The Company has not accepted any public deposits and as such, no amount
on account of principal or interest on public deposits was outstanding
as on the date of the balance sheet.
14. Directors
Mr. R. N. Tata retired as the Director and Chairman of the Board with
effect from December 28, 2012 in accordance with the retirement age
policy for Directors. The Directors place on record their appreciation
of the invaluable contribution and guidance provided by Mr. R. N. Tata.
Mr. Cyrus Mistry has taken over as the Chairman of the Board from Mr.
R. N. Tata with effect from December 28, 2012. Mr. Cyrus Mistry was
appointed as Deputy Chairman on November 8, 2012.
Mr. S. Mahalingam, who was the Chief Financial Officer and Executive
Director retired on February 9, 2013 in accordance with the retirement
age policy for Directors. The Directors place on record their
appreciation of the invaluable contribution made by him.
Dr. Vijay Kelkar, Mr.Ishaat Hussain and Mr. Aman Mehta, Directors,
retire by rotation and being eligible have offered themselves for
re-appointment.
15. Chief Financial Officer
Post retirement of Mr. S. Mahalingam as the Chief Financial Officer and
Executive Director of the Company, Mr. Rajesh Gopinathan has been
appointed as the Chief Financial Officer of the Company with effect
from February 10, 2013. Mr. Rajesh Gopinathan has 17 years of
experience and has been with TCS since 2001. He has held several key
positions in finance, strategy and sales during his career with the
Company and has worked in multiple geographies. He is an MBA from
Indian Institute of Management, Ahmedabad and an engineer from Regional
Engineering College, Trichy.
16. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
statutory auditors of the Company, hold office, in accordance with the
provisions of the Act till the conclusion of the forthcoming annual
general meeting and are eligible for re-appointment.
17. Particulars of employees
The information required under Section 217(2A) of the Act and the Rules
made thereunder, in respect of employees of the Company, is provided in
annexure forming part of this report. In terms of Section 219(1
)(b)(iv) of the Act, the report and accounts are being sent to the
shareholders excluding the aforesaid annexure. Any shareholder
interested in obtaining copy of the same may write to the Company
Secretary.
18. Conservation of energy, technology absorption, foreign exchange
earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Act, read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in an annexure to this report.
19. Acknowledgement
The Directors thank the Companys employees, customers, vendors,
investors and academic institutions for their support.
The Directors also thank the Government of various countries,
Government of India, State Governments in India and concerned
Government Departments/Agencies for their co-operation.
The Directors appreciate and value the contributions made by every
member of the TCS family globally.
On behalf of the Board of Directors,
Mumbai Cyrus Mistry
May 27, 2013 Chairman
Mar 31, 2012
To the Members,
The Directors submit the Annual Report of the Company along with the
audited financial statements for the financial year ended March 31,
2012.
1. Financial Results
(Rs crores)
Unconsolidated Consolidated
2011-2012 2010-2011 2011-2012 2010-2011
(i) Revenue from
operations 38,858.54 29,275.41 48,893.83 37,324.51
(ii) Operating
expenditure 27,472.82 20,511.88 34,458.52 26,146.15
(iii) Depreciation
and amortisation 688.17 537.82 917.94 735.26
(iv) Operating profit 10,697.55 8,225.71 13,517.37 10,443.10
(v) Interest expense 16.40 20.01 22.23 26.48
(vi) Other income (net) 2,685.18 494.73 428.17 604.00
(vii) Profit before
tax 13,366.33 8,700.43 13,923.31 11,020.62
(viii) Provision
for tax 2,390.35 1,130.44 3,399.86 1,830.83
(ix) Minority
interest and share
of loss of associate - - 109.96 121.75
(x) Profit for
the year 10,975.98 7,569.99 10,413.49 9,068.04
(xi) Balance
brought forward
from previous year 14,069.20 10,458.13 18,635.05 13,604.84
(xii) Amount
available for
appropriation 25,045.18 18,028.12 29,048.54 22,672.88
Appropriations
(a) Interim
dividends on
equity shares 1,761.49 1,174.32 1,761.49 1,174.32
(b) Proposed final
dividend on equity
shares
(including special
dividend) 3,131.55 1,565.78 3,131.55 1,565.78
(c) Total dividend
on equity shares
(a + b) 4,893.04 2,740.10 4,893.04 2,740.10
(d) Proposed
dividend on
redeemable
preference
shares 22.00 11.00 22.00 11.00
(e) Tax on dividend 797.34 450.82 806.86 459.15
(f) General reserve 1,097.60 757.00 1,166.10 827.58
(g) Balance carried
to balance sheet 18,235.20 14,069.20 22,160.54 18,635.05
(1 crore = 10 million)
2. Dividend
Based on the Companys performance, the Directors are pleased to
recommend for approval of the members a final dividend of Rs 8 per share
and a special dividend of Rs 8 per share for the financial year 2011-12
taking the total dividend to Rs 25 per share (previous year Rs 14 per
share) on the capital of 1,95,72,20,996 equity shares of Rs1 each. The
final dividend and the special dividend on the equity shares, if
approved by the members would involve a cash outflow of Rs 3,639.57
crores including dividend tax. For equity shares, the proposed final
dividend (including special dividend), interim dividends already paid
and dividend tax for the financial year 2011-12 would aggregate Rs
5,686.82 crores, resulting in a payout of 51.93% of unconsolidated
profit of the Company (54.75% of consolidated profit).
The redeemable preference shares allotted on March 28, 2008 are
entitled to a fixed cumulative dividend of 1% per annum and a variable
non-cumulative dividend of 1% of the difference between the rate of
dividend declared during the year on the equity shares of the Company
and the average rate of dividend declared on the equity shares of the
Company for the three years preceding the year of issue of the said
redeemable preference shares. Accordingly, the Directors have
recommended, for approval of the members, a dividend of twenty-two
paise (Rs 0.22) per share on 100,00,00,000 redeemable preference shares
of Rs 1 each for the financial year 2011-12.
3. Transfer to Reserves
The Company proposes to transfer Rs 1,097.60 crores to the general
reserve out of the amount available for appropriations and an amount of
Rs 18,235.20 crores is proposed to be retained in the statement of
profit and loss.
4. Companys Performance
During the financial year 2011-12, the volatility in the macroeconomic
environment continued to cast its shadow and most of the markets where
TCS operates in, were impacted. Even in this environment, the Company
recorded industry leading financial performance. The major contributing
factors for such all round performance across geographies and industry
verticals were the Companys customer-centric approach and its ability
to innovate customer specific solutions, focus on pricing, disciplined
execution of complex projects and the rigor in following strong
internal processes.
In the financial year 2011-12, the Company continued its strong growth
momentum across major markets. Revenue growth in the year remained
high in North America (29.62%), UK (29.16%), Europe (41.62%), Asia
Pacific (50.67%) and Middle East & Africa (43.38%). Other geographies
also witnessed double digit growth rates.
In the financial year 2011-12, most of the industry verticals
registered healthy growth rates. Revenue growth in BFSI (27.44%),
Retail & Consumer Packaged Goods (45.05%) and Manufacturing (38.11%)
were significant contributors. Revenue growth in "other industry
verticals" was also significantly high at 37.27% - the major
contributors were Life Sciences and Healthcare (33.10%), Hi-Tech
(57.32%), Travel, Transport & Hospitality (42.85%).
The Company became the first Indian IT Company to cross the US $10
billion milestone in terms of annual revenue.
On consolidated basis, revenue for the year 2011-12 at Rs 48,893.83
crores was higher by 31.00% (Rs 37,324.51 crores in 2010-11), operating
profit at Rs 13,517.37 crores was higher by 29.44% (Rs 10,443.10 crores
in 2010-11) and the net profit for the year at Rs 10,413.49 crores was
higher by 14.84% (Rs 9,068.04 crores in 2010-11).
On unconsolidated basis, revenue for the year 2011-12 at Rs 38,858.54
crores was higher by 32.73 % (Rs 29,275.41 crores in 2010-11), operating
profit at Rs 10,697.55 crores was higher by 30.05% (Rs 8,225.71 crores in
2010-11) and the net profit for the year at Rs 10,975.98 crores was
higher by 44.99% (Rs 7,569.99 crores in 2010-11).
The Company has been making good progress in the strategic initiatives
to drive its non-linear growth. Software products (Asset Leveraged
Solutions) have added significant new customers during the year.
Platform based BPO or process cloud have been offered in the areas of
life insurance and pensions, analytics, finance and accounts, HR
outsourcing and procurement. iON, the Companys cloud based platform
for small and medium businesses launched in early 2011 has gained
momentum in 2012.
5. International Credit Rating
The Company continues to have an A3 investment-grade issuer rating as
well as an indicative foreign currency debt rating of Baa1, with a
stable outlook from Moodys Investors Services. The rating is not for
any specific debt issuance of the Company.
Standard and Poors ratings services has assigned BBB positive
corporate credit rating with outlook as Negative to the Company.
The Company has also been rated by Dun & Bradstreet at 5A1
(Condition-Strong). The rating is assigned on the basis of tangible net
worth and composite appraisal of the Company.
6. Strategic Alliance
With the objective of moving towards its goal of being amongst the top
IT companies in the world, the Company has made acquisitions/alliances
over the past few years either directly or through its subsidiaries.
On January 24, 2012, Tata Consultancy Services Japan Limited, a wholly
owned subsidiary, entered into an agreement with Mitsubishi
Corporation, pursuant to which a new subsidiary company, Nippon TCS
Solution Center Limited (NTSC) has been setup. NTSC will offer a full
service suite of IT, BPO and infrastructure services to Japanese
corporations.
7. Human Resource Development
Employees today are looking for development opportunities, future
career options, empowerment and work-life balance in an organisation.
To retain leadership position, the Company continuously innovates and
customises its human resource (HR) strategy to meet changing employee
needs.
The global diverse talent base of 2,38,583 competent people, consisting
of 110 nationalities, 31.6% women, 69% belonging to Gen Y is the key
asset to retain the competitive edge and leadership position in the
market. The Companys HR processes cope up with the scale and
complexity to manage this diverse talent base spread across 55
countries. The Company continues to invest in its people to upgrade
their technical, domain and leadership capability. A total of 9,972
person years of effort were invested in the year 2011-12 on various
learning and development programmes including the Initial Learning
Programme (ILP) offered to trainees joining the Company.
During the year 2011-12, the consolidated gross addition of 70,400
employees and net addition of 39,969 employees was highest ever in the
history of the Company. This included 1,898 people in-sourced from
customer organisations.
The academic interface programme (AIP) was strengthened and expanded to
reach 673 institutes in India and 184 institutes abroad. The Company
visited 389 campuses in India and released 43,604 offers. The Company
also conducted campus placements outside India especially in USA,
Canada, China, Uruguay and Hungary.
The rigorous focus on talent engagement, deployment on right projects,
role & career progression and benchmarked compensation & benefits
helped the Company to attract and retain the best talent. The Company
has launched Employee Assistance Programme, which would provide
employees 24X7 confidential counselling services, to enable them to
cope more effectively with stressful situations. The Company improved
its talent retention globally which is reflected in the attrition
dropping from 14.4% in the year 2010-11 to 12.2% in the year 2011-12.
The Company sustained high utilisation rates throughout the year (82.2%
excluding trainees and 74.4% including trainees). Such high level of
utilisation could be achieved due to the robustness of the Companys
sourcing to staffing process and talent management practices that
ensured the availability of people with the right competencies at right
places to meet the business demand.
8. Quality Initiatives
Sustained commitment to high levels of quality, best-in-class service
management and robust information security practices helped TCS to
attain a number of milestones during the year.
TCS continues to maintain the enterprise-wide highest maturity Level 5
for CMMIî-DEV (Development) and CMMIî-SVC (Services) models. In the
year 2011-12, TCS had set a new benchmark as the first publicly stated
recipient to achieve a Multiple Simultaneous Appraisal against two
constellations of the CMMIî model; and is also the first organisation
in the world to be appraised at Level 5 of the CMMIî-SVC model, which
underscores the maturity of the firms fast growing business process
outsourcing (BPO) and infrastructure services business.
TCS is enterprise-wide certified against ISO 9001:2008 (Quality
Management), ISO 27001:2005 (Security Management) and ISO 20000:2005
(Service Management). TCS also continues to maintain domain specific
quality certifications AS 9100 (for Aerospace Industry), ISO 13485 (for
Medical Devices) and TL 9000 (for Telecom Industry).
TCS is enterprise-wide certified against ISO 14001:2004 (Environmental
Management) and OHSAS 18001:2007 (Occupational Health and Safety
Management). These certifications demonstrate TCS strong commitment to
the environment and the occupational health and safety of its
associates and business partners; and helps convey this to all its
stakeholders, including customers.
In the area of Knowledge Management, TCS received the prestigious Most
Admired Knowledge Enterprise (MAKE) award for the 7th time in India and
Asia. TCS also received the global Independent Operating Unit (IOU)
MaKE award for the 2nd time.
TCS launched Campus Commune, a social collaboration platform, to
engage with potential and selected recruits from academic institutions.
The network of students, faculty groups and TCS groups facilitate
knowledge and experience sharing between academia and the Company. At
the recently held World HRD Congress, Campus Commune was recognised as
an innovative initiative in the talent recruitment and management area.
The cornerstone of these certifications is the in-house developed
Integrated Quality Management System (iQMS) - a vibrant,
process-driven, people-oriented and customer-focused quality management
system. iQMS is continuously evolving to cater to the requirements of
TCS varied business offerings; and is the backbone supporting the
Global Network Delivery Model (GNDMTM).
9. Corporate Sustainability
The Companys initiatives in the community aim to create impact through
empowerment so that the people in the community can make a better
living and lead a better quality of life. The Company has chosen four
areas to focus its energies on namely Education and Skill Development,
Health, Environment and Affirmative Action.
Programmes undertaken under these four broad areas are aimed at
economically backward and other marginalized groups (like women,
children and aged) as well as those who are physically or socially
disadvantaged.
The Companys community initiatives are delivered using four different
approaches:
(i) Leveraging the Companys core competencies in technology
(ii) Creating conditions for employee participation through
volunteering
(iii) Building synergistic partnerships with clients and other partners
like NGOs
(iv) Financial sponsorships
In the Education and Skill Building area, the primary programmes are:
(i) Computer-based Functional Literacy (CBFL) programme helps teach
illiterate adults how to read and write. The literacy software was
enhanced to support writing and numeracy in four additional local
languages (Bengali, Oriya, Marathi, and Tamil). A total of nine
languages are now covered under CBFL. TCS collaborated with
Directorate of Adult Education under Saakshar Bharat Scheme to run
camps in eight languages in India. More than 11,100 adults were made
literate using the CBFL software.
(ii) InSight, addressing school children to develop their communication
skills and giving them an exposure to IT Industry.
(iii) GoIT, addressing school children in Cincinnati, USA around the
Companys campus and giving them exposure to the IT Industry and an
opportunity to work on latest technology in the Companys research
labs.
(iv) mKrishi - Enhance farmers knowledge about their crops and provide
solutions to their problems over mobile phones.
(v) Advanced Computer Training - The Company organises training for
visually impaired candidates to improve their employability in IT/ITES
industry. Two batches were completed during the year 2011-12.
(vi) Skill Development - A special programme to develop skills of NGOs
to help them manage their operations and finances better along with
Yale University and one of the Companys large customers in the
financial industry.
(vii) TCS Research Scholar Scheme supporting students who wish to
pursue PhD in India.
(viii) Academic Collaboration by conducting faculty development
programmes, workshops for students and establishing joint research labs
in the Institutes.
In the area of Health, the primary programmes are:
(i) Developing applications and Portals. During the year 2011-12,
systems were developed and maintained, where necessary, for Lady Tata
Memorial Trust in UK, Impact India, Smile Train, Childline, Mumbai
Mobile Creches, Cancer Institute (Chennai) and Tata Medical Centre.
(ii) Creating awareness - HIV and AIDS awareness programmes were
conducted by TCSers who have formed Club RED to drive this initiative.
In addition, TCSers in USA participated in a number of Walks, sometimes
for causes supported by the Companys customers to increase awareness
of diabetes and cancer.
(iii) Blood donation camps - These camps are organised regularly across
the delivery centers in India and a similar drive was organised in
Singapore in association with Red Cross.
(iv) Today is a Good Day - A programme to increase awareness of cancer
in UK.
(v) WebHealth Center - Providing free medical consulting and advice
over the web.
To promote wellness and raise money for local charities, TCS supports a
number of sporting events, like Mumbai marathon, TCS World 10K race,
TCS Amsterdam marathon as well as the New York City, Boston and Chicago
marathons.
In the area of Environment, the primary programmes are:
(i) Enhancing awareness - Organising different events to enhance
awareness.
(ii) Reduction of carbon footprint and waste within the organisation by
following Reduce, Reuse and Recycle themes.
In the area of Affirmative Actions, the primary programme is as
follows:
Enhancing Employability and Create Employment - The Company initiated a
programme to train economically deprived and socially disadvantaged
candidates for BPO jobs and absorb some of them based on the Companys
requirements and their performance during training. The Company trained
7,828 economically weaker candidates during the year 2011-12, out of
which 3,071 were socially disadvantaged candidates. Post completion of
training, 1,018 offers were given, out of which 313 were socially
disadvantaged candidates. During the year 2011-12, a total of 717
candidates offered (in the year 2011-12 and last quarter of the year
2010-11) joined TCS, out of which 326 are socially disadvantaged
candidates.
10. Awards/Recognitions
During the year, the Company received various awards and recognitions,
some of which are given below:
India
- Outstanding Company of the Year 2012 - CNBC TV18
- Ranked #1 Employer in India à Data Quest
- Best Company to Work For - Business Today
- Ranked #1 in Data Quest Top 20 IT companies
- ICAI Award for Excellence in Financial Reporting
- IT Company of the Year - NDTV Business Leadership Awards
- Indian IT Company of the Year- Bloomberg-UTV CXO Awards 2011 Global
- 5th in Bloomberg Business weeks Tech 100
- 7th in Newsweeks Global Green Rankings
- Indias Best Managed Company - Finance Asia
- Forbes Asias Fab 50 companies
- Gold SABRE, USA for Executive Leadership Communications
- Best Architecture Trophy 2011 for TCS campus at Siruseri, Chennai
at International Property Awards
11. Corporate Governance Report and Management Discussion and Analysis
Statement Corporate Governance Report and Management Discussion and
Analysis statement are attached to this Report.
12. Directors Responsibility Statement
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956 ("Act"), and based on the representations received from the
operating management, the Directors hereby confirm that:
(i) in the preparation of the Annual Accounts for the year 2011-12, the
applicable Accounting Standards have been followed and there are no
material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the financial year;
(iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Act. They confirm that
there are adequate systems and controls for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) they have prepared the Annual Accounts on a going concern basis.
13. Subsidiary Companies and Consolidated Financial Statements
The Company had 54 subsidiaries at the beginning of the year. Four
subsidiaries were set up during the year viz.:
(i) Tata Consultancy Services Qatar S.S.C.
(ii) Nippon TCS Solution Center Limited
(iii) Tata Consultancy Services Osterreich GmbH
(iv) Tata Consultancy Services Danmark ApS
The total number of subsidiaries as on March 31, 2012 is 58.
There has been no material change in the nature of the business of the
subsidiaries. A statement containing brief financial details of the
subsidiaries is included in the Annual Report.
As required under the Listing Agreements entered into with the Stock
Exchanges, a consolidated financial statement of the Company and all
its subsidiaries is attached. The consolidated financial statements
have been prepared in accordance with the relevant accounting standards
as prescribed under Section 211(3C) of the Act. These financial
statements disclose the assets, liabilities, income, expenses and other
details of the Company, its subsidiaries and associate companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the balance sheet, statement of profit
and loss and other documents of the subsidiary companies with the
balance sheet of the Company. A statement containing brief financial
details of the Companys subsidiaries for the financial year ended
March 31, 2012 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of the details of annual accounts of subsidiaries to any
member on demand.
14. Fixed Deposits
The Company has not accepted any public deposits and as such, no amount
on account of principal or interest on public deposits was outstanding
as on the date of the balance sheet.
15. Directors
Mr. O. P. Bhatt and Mr. Cyrus Mistry have been appointed as Additional
Directors on April 2, 2012. Mr. O. P. Bhatt is an Independent
Director. As per the provisions of Section 260 of the Act, both the
Directors hold office only up to the date of the forthcoming Annual
General Meeting (AGM) of the Company and are eligible for appointment
as Directors. The Company has received notices under Section 257 of the
Act, in respect of the above persons, proposing their appointment as a
Director of the Company. Resolutions seeking approval of the members
for the appointment of Mr. O. P. Bhatt and Mr. Cyrus Mistry as
Directors of the Company have been incorporated in the Notice of the
forthcoming AGM along with brief details about them.
Prof. Clayton M. Christensen, Dr. Ron Sommer and Mr. S. Ramadorai,
Directors, retire by rotation and being eligible have offered
themselves for re-appointment.
Mrs. Laura M. Cha, a Director of the Company since November 2, 2006,
who retires by rotation at the forthcoming AGM, has conveyed her
decision not to offer herself for re-appointment. She is also the
Chairperson of the Shareholders/Investors Grievance Committee. The
Directors place on record their appreciation of the valuable
contribution made by her.
16. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
statutory auditors of the Company, hold office, in accordance with the
provisions of the Act up to the conclusion of the forthcoming AGM and
are eligible for re-appointment.
17. Particulars of employees
The information required under Section 217(2A) of the Act and the Rules
made thereunder, is provided in annexure forming part of the report. In
terms of Section 219(1)(b)(iv) of the Act, the report and accounts are
being sent to the shareholders excluding the aforesaid annexure. Any
shareholder interested in obtaining copy of the same may write to the
Company Secretary.
18. Conservation of energy, technology absorption, foreign exchange
earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Act, read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in an annexure to this report.
19. Acknowledgements
The Directors thank the Companys employees, customers, vendors,
investors and academic institutions for their support to the Company.
The Directors also thank the Government of various countries,
Government of India, State Governments in India and concerned
Government Departments/Agencies for their co-operation.
The Directors appreciate and value the contributions made by every
member of the TCS family globally.
On behalf of the Board of Directors,
Mumbai R. N. Tata
May 26, 2012 Chairman
Mar 31, 2011
The Directors submit the Annual Report of the Company along with the
audited statement of accounts for the financial year ended March 31,
2011.
1. Financial Results
(Rs. crores)
Unconsolidated Consolidated
2010 - 2011 2009 - 2010 2010 - 2011 2009 - 2010
(i) Income from Sales
and Services 29,275.41 23,044.45 37,324.51 30,028.92
(ii) Other Income (net) 494.73 177.60 604.00 272.07
(iii) Total Income 29,770.14 23,222.05 37,928.51 30,300.99
(iv) Operating
Expenditure 20,511.88 16,372.78 26,146.15 21,334.37
(v) Profit before
Interest, Depreciation
and Tax 9,258.26 6,849.27 11,782.36 8,966.62
(vi) Interest 20.01 9.54 26.48 16.10
(vii) Depreciation and
Amortisation 537.82 469.35 735.26 660.89
(viii) Profit before
Taxes 8,700.43 6,370.38 11,020.62 8,289.63
(ix) Provision for Taxes1,130.44 751.87 1,830.83 1,196.97
(x) Minority Interest
and Share of Loss of
Associates - - 121.75 92.02
(xi) Net Profit for
the Year 7,569.99 5,618.51 9,068.04 7,000.64
(xii) Balance Brought
Forward from Previous
Year 10,458.13 9,990.41 13,604.84 11,835.03
(xiii) Amount Available
for Appropriation 18,028.12 15,608.92 22,672.88 18,835.67
Appropriations
(a) Interim Dividends
on Equity Shares 1,174.32 1,174.32 1,174.32 1,174.32
(b) Proposed Final
Dividend on Equity
Shares 1,565.78 782.89 1,565.78 782.89
(c) Proposed Special
Dividend on Equity Shares - 1,957.22 - 1,957.22
(d) Proposed Total
Dividend on Equity
Shares 2,740.10 3,914.43 2,740.10 3,914.43
(e) Proposed Dividend
on Redeemable Preference
Shares 11.00 17.00 11.00 17.00
(f) Tax on Dividends 450.82 657.51 459.15 663.18
(g) General Reserve 757.00 561.85 827.58 636.22
(h) Balance carried to
Balance Sheet 14,069.20 10,458.13 18,635.05 13,604.84
(1 crore = 10 million)
2. Dividend
Based on the Companys performance, the Directors are pleased to
recommend for approval of the members a final dividend of Rs. 8 per share
for the year 2010-11 taking the total dividend to Rs. 14 per share
(previous year Rs. 10 per share excluding special dividend of Rs. 10 per
share) on the capital of 195,72,20,996 Equity Shares of Rs. 1 each. The
final dividend on the Equity Shares, if approved by the members would
involve a cash outflow of Rs. 1,819.78 crores including dividend tax. The
total cash outflow on account of dividend including dividend tax for
the year 2010-11 including interim dividends already paid, would
aggregate Rs. 3,189.14 crores resulting in a payout of 42.13% of the
unconsolidated profits of the Company.
The Redeemable Preference Shares allotted on March 28, 2008 are
entitled to a fixed cumulative dividend of 1% per annum and a variable
non-cumulative dividend of 1% of the difference between the rate of
dividend declared during the year on the Equity Shares of the Company
and the average rate of dividend declared on the Equity Shares of the
Company for the three years preceding the year of issue of the said
Redeemable Preference Shares. Accordingly, the Directors have
recommended, for approval of the members, a dividend of Eleven paise (Rs.
0.11) per share on 100,00,00,000 Redeemable Preference Shares of Rs. 1
each for the financial year 2010-11.
3. Transfer to Reserves
The Company proposes to transfer Rs. 757.00 crores to the General Reserve
out of the amount available for appropriations and an amount of Rs.
14,069.20 crores is proposed to be retained in the Profit and Loss
Account.
4. Companys Performance
Financial Year 2010-11 marked a strong resurgence in volume and demand
growth post the financial crisis. This growth was led by developed
markets of the United States and Europe with strong contributions from
Asia Pacific, Middle East and Africa and was secular across all
industries and markets. The second half of the year also witnessed an
uptick in pricing for the first time since September 2008. The Company
has registered a strong broad based sequential growth across all key
markets and customer segments.
On consolidated basis for the year 2010-11, revenues at Rs. 37,324.51
crores were higher by 24.30% over the previous years revenues of Rs.
30,028.92 crores. Operating profit (profit before taxes excluding other
income) at Rs. 10,416.62 crores was higher by 29.92% over the previous
years operating profit of Rs. 8,017.56 crores. Net profit for the year
at Rs. 9,068.04 crores was higher by 29.53% over the previous years net
profit of Rs. 7,000.64 crores.
On unconsolidated basis, revenues at Rs. 29,275.41 crores for the year
2010-11 were higher by 27.04% over the previous years revenues of Rs.
23,044.45 crores. Operating profit (profit before taxes excluding other
income) at Rs. 8,205.70 crores was up 32.50% from the previous years
operating profit of Rs. 6,192.78 crores. Net profit for the year at Rs.
7,569.99 crores was higher by 34.73% than the previous years net
profit of Rs. 5,618.51 crores.
5. International Credit Rating
The Company continues to have A3 investment-grade issuer rating as well
as an indicative foreign currency debt rating of Baa1, with a stable
outlook from Moodys Investors Services. The rating is not for any
specific debt issuance of the Company.
Standard and Poors Ratings Services has assigned to the Company its
BBB positive corporate credit rating with outlook as stable.
The Company has also been rated by Dun & Bradstreet at 5A1
(Condition-Strong). The rating is assigned on the basis of tangible net
worth and composite appraisal of the Company.
6. Strategic Acquisitions and Alliances
The strategic acquisitions and alliances during the year were as
follows Ã
(i) MahaOnline Limited:
The Company has entered into an Agreement with the Government of
Maharashtra pursuant to which a new subsidiary company, MahaOnline
Limited (MahaOnline) has been setup on July 28, 2010 with equity
participation from TCS and Government of Maharashtra. MahaOnline
provides online internet-based citizen services to the residents in
Maharashtra. This citizen service portal is integrated with DigiGov à a
state-of-the-art e-Governance solution developed by TCS.
(ii) Diligenta 2 Limited (formerly known as Unisys Insurance Services
Limited):
On August 31, 2010, Diligenta Limited, a majority owned subsidiary,
acquired the entire share capital of Unisys Insurance Services Limited
(UISL), which provides life and pensions services to its clients in the
UK. On this acquisition UISL was renamed as Diligenta 2 Limited. This
has secured Diligentas position as a leading service provider in the
UKs life and pensions BPO market. The number of policies now
administered by Diligenta has risen from 3.6 million to over 5 million.
(iii) MS CJV Investments Corporation:
On October 4, 2010, Tata America International Corporation à a wholly
owned subsidiary, acquired 100% share capital of MS CJV Investments
Corporation. Consequently, the group holding in Tata Consultancy
Services (China) Co., Ltd. has increased from 65.94% to 74.63%.
(iv) Retail FullServe Limited (formerly known as SUPERVALU Services
India Private Limited):
On October 8, 2010, the Company acquired 100% equity share capital of
SUPERVALU Services India Private Limited from SUPERVALU Inc., one of
the largest grocery retailers in North America. Retail FullServe
Limited specialises in providing complete IT and IT-enabled services to
the Retail industry. TCS has signed a multi-year agreement with
SUPERVALU Inc. for full services engagement. This acquisition has
strengthened the retail industry segment of the Company through
integration of IT, IT infrastructure and BPO services of Retail
FullServe Limited.
7. Human Resource Development
TCS is the largest private sector employer in India with total employee
strength of 1,98,614 including its subsidiaries as at March 31, 2011.
A robust manpower planning process ensures that all steps from business
requirements to sourcing and staffing are seamlessly aligned. Our
distinct people integration model, not only ensures faster
time-to-productivity, but it also integrates culturally diverse
professionals into the organisation by fostering a behaviour based on a
shared set of common values. This enabled the organisation to
assimilate a gross addition of 69,685 employees (including
subsidiaries).
The strategic initiatives for talent development through learning and
development programs and experiential learning ensured that the Company
had right competencies in its workforce to meet the business demand.
High utilisation rates were sustained throughout the year, 83.10%
excluding trainees and 76.20% including trainees as at March 31, 2011,
helping to deliver better financial results.
Continued focus on talent engagement, competency development, role and
career progression and benchmarked compensation and benefits for our
employees helped the Company to attract and retain the best talent
across the globe as well as build a pipeline of leaders to meet its
future requirements. The Company has been successful in building a
performance oriented culture with high levels of engagement and
empowerment in an environment of teamwork.
A well defined process to review its HR policies and processes ensured
that the Company complied with the regulatory requirements of the
countries where it operates. The strategy to have a diverse workforce
catering to its global business requirements saw a gross addition of
7,593 employees outside India (including subsidiaries) taking the count
of non-Indian nationals (including subsidiaries) to 13,665 from 99
nationalities. The percentage of women working for the Company is
30.30%.
8. Quality Initiatives
TCS has been assessed enterprise-wide, at the highest maturity Level 5
of the Capability Maturity Model Integrationî for CMMIî-DEV
(Development) and CMMIî-SVC (Services) models. With this achievement,
TCS has set a new benchmark as the first publicly stated recipient to
achieve a multiple simultaneous appraisal against two constellations of
the CMMIî model. TCS is also the first organisation in the world, to be
appraised at Level 5 of the CMMIî-SVC model, which underscores the
maturity of the firms fast growing Business Process Outsourcing (BPO)
and Infrastructure Services business.
TCS was recommended for continuation of its enterprise-wide
certification for ISO 9001:2008 (Quality Management), ISO 27001:2005
(Security Management) and ISO 20000:2005 (Service Management). TCS
also continues to maintain domain specific quality certifications AS
9100 (for Aerospace Industry), ISO 13485 (for Medical Devices) and TL
9000 (for Telecom Industry) thus further reinforcing the industry
domain focus within the organisation.
TCS was certified enterprise-wide for ISO 14001:2004 (Environmental
Management) and OHSAS 18001:2007 (Occupational Health and Safety
Management) certifications. These certifications demonstrate TCS
strong commitment to the environment and the occupational health and
safety of its associates and business partners; and helps convey this
to all its stakeholders, including customers.
The above certifications reaffirm TCS commitment to achieve the
highest standards of quality while focusing on constantly improving
quality and processes in a dynamic environment. The cornerstone of
these certifications is the in-house developed integrated Quality
Management System (iQMS) - a vibrant, process-driven, people-oriented
and customer-focused quality management system which is continuously
evolving to cater to the requirements of TCS varied business offerings
and is the backbone supporting the Global Network Delivery Model
(GNDMTM).
9. Corporate Sustainability
In keeping with the Tata tradition of giving back to the society,
Corporate Sustainability (CS) lies at the heart of TCS corporate
culture. The guiding principle of TCS CS programmes is "Impact through
Empowerment" where empowerment is a process of strengthening the future
today so that risk is minimised, value created and certainty
experienced. TCS focuses on empowering the community, especially
through work with youth, women and children. Affirmative action
directed to less privileged communities is one of the highlight of TCS
activities under CS.
Education, Health and Environment are the core themes for TCS CS
programs. Over 6,600 TCS volunteers and families provided education and
skills development to 10,225 children and partnered with 65 institutes
in China, Ecuador, India, South Africa and UK. Over 4,000 villagers
across Delhi, Maharashtra, Orissa and Tamil Nadu were benefited through
rural development initiatives.
Major CS Initiatives through Information Technology (IT)
o Med Mantra: An integrated Hospital Management System along with the
necessary IT infrastructure including a comprehensive and fully
integrated, web-based solution, Med Mantra has been implemented free
of cost for the Cancer Institute at Chennai.
o Computer based Functional Literacy programme: TCS Computer based
Functional Literacy programme that was first launched in the year 2000,
has by now made around 1,50,000 persons literate. TCS is partnering the
National Literacy Mission Authority to spread literacy under the
Saakshar Bharat programme.
International CS initiatives
o North America: During the year, TCS North America has made donations
in excess of $500,000 for a variety of causes to organisations like the
American Cancer Society, Habitat for Humanity, Juvenile Diabetes
Research Foundation, Toys R Us Childrens Fund, and the National
Underground Railroad Freedom Center. Approximately 10% of the
associates participated in the various initiatives across North America
throughout the year.
TCS goIT program that has spread to 12 schools over 2 years,
encourages local students to engage in computer science education and a
career path through in-school workshops and a summer robotics camp
hosted at the TCS Seven Hills Park campus in Ohio. This program has
received several community and government awards including the 2010
Investing in People Award by the Workforce One Investment Board of
Southwest Ohio.
o UK and Ireland: TCS is working with the UK Government Department for
International Development to deploy its capabilities in development
activities. TCS UK and Ireland donated around ã200,000 during the year
for influencing change in the marketplace, workplace and environment as
well as supporting more than 200 charities in the areas of health and
education.
Over the past 3 years, TCS has been working with the UK Government
Department for Education and the British Council to develop 300 Global
Fellows, who act as ambassadors to 3,000 UK secondary schools.
Furthermore, TCS partners the Wings of Hope scheme to help UK
students develop business skills and gain an understanding of education
in India and Malawi. In addition, TCS has developed an IT entrepreneur
scheme with the local authority for Carlow University, Ireland.
o Europe: Activities to spread awareness and raise funds for treatment
of multiple sclerosis and breast cancer were carried out across Europe
during the year. For contributing to the Haiti earthquake relief fund,
TCS employees in Switzerland collaborated with the client of Swiss Re.
TCS Belgium employees engaged in Discover Your Talent along with 6
other companies to create employability for immigrant children.
o China: As part of Operation Smile, TCS China participated in a
charity auction and donated RMB 26,000 to help needy cleft lip and
palate children to undergo surgery.
o Australia: Following the 2011 floods in Queensland, TCS initiated a
collection drive to contribute
AUD $30,000 towards the Queensland Flood Disaster Fund. o Chile:
Subsequent to the earthquake in Chile in February 2010, TCS donated 5
desalination plants and 2,000 water purifiers worth around one million
US Dollars.
Significant Recognition for CS Activities
o Commendation certificate for Significant Achievement in CII-ITC
Sustainability Awards 2010
o TCS included in Dow Jones Sustainability World Index 2010 as one of
the three Indian companies
10. Awards/Recognitions
o TCS rated Level A+ for its Sustainability Report by Global Reporting
Initiative
o TCS wins Certificate of Commendation for Significant Achievement for
Large Businesses at CII-ITC Sustainability Awards 2010
o DataQuest Best Employer Award in India
o Top Employer ICT Netherlands with certification for Excellence in
Human Resources practices and 5 stars (highest in the industry) in
three categories
o Britains Top Employers for 2011 by the CRF Institute (formerly known
as Corporate Research Foundation)
o Recruiting and Staffing Best in Class Awards (RASBIC) in four
categories for the fourth year in a row
11. Corporate Governance Report and Management Discussion and Analysis
Statement
Corporate Governance Report and Management Discussion and Analysis
statement are attached to this Report.
12. Directors Responsibility Statement
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956 ("Act"), and based on the representations received from the
operating management, the Directors hereby confirm that:
(i) in the preparation of the Annual Accounts for the year 2010-11, the
applicable Accounting Standards have been followed and there are no
material departures;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the financial year;
(iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956.
They confirm that there are adequate systems and controls for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;
(iv) they have prepared the Annual Accounts on a going concern basis.
13. Subsidiary Companies and Consolidated Financial Statements
The Company had 55 subsidiaries at the beginning of the year.
Five subsidiaries namely, MahaOnline Limited, Diligenta 2 Limited, MS
CJV Investments Corporation, Retail FullServe Limited and CMC eBiz Inc.
were set up/acquired during the year.
The following subsidiaries were merged during the year with other
subsidiaries of the Company:
o Exegenix Research Inc. and ERI Holdings Corp. were merged with Tata
Consultancy Services Canada Inc.
o Custodia De Documentos Interes Limitada, Syscrom SA and Tata
Consultancy Services Chile SA were merged with Tata Consultancy
Services BPO Chile SA and subsequently the name of the merged entity
was changed to Tata Consultancy Services Chile SA.
Financial Network Services (H.K.) Limited was liquidated and
de-registered during the year.
Consequently, the total number of subsidiaries as on March 31, 2011 is
54.
There has been no material change in the nature of the business of the
subsidiaries. A statement containing brief financial details of the
subsidiaries is included in the Annual Report.
As required under the Listing Agreements with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statements have
been prepared in accordance with the relevant Accounting Standards as
prescribed under Section 211(3C) of the Companies Act, 1956 ("Act").
These financial statements disclose the assets, liabilities, income,
expenses and other details of the Company, its subsidiaries and
associate companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the Balance Sheet, Profit and Loss
Account and other documents of the subsidiary companies with the
Balance Sheet of the Company. A statement containing brief financial
details of the Companys subsidiaries for the financial year ended
March 31, 2011 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of details of annual accounts of subsidiaries to any
member on demand.
14. Fixed Deposits
The Company has not accepted any public deposits and as such, no amount
on account of principal or interest on public deposits was outstanding
as on the date of the Balance Sheet.
15. Directors
Platform based BPO is one of the Companys strategic initiatives to
drive non-linear growth in the future. Diligenta Limited, the
Companys subsidiary in the United Kingdom addresses the life and
pension business segment by providing BPO services using the BaNCS
platform built by the Company and remains one of the key components of
this strategy. Mr. Phiroz Vandrevala has taken over as the Managing
Director and Vice Chairman of Diligenta Limited to drive this business
and its execution globally. Pursuant to his appointment in Diligenta
Limited, he has ceased to be an Executive Director of the Company. The
Company will continue to avail the services of Mr. Vandrevala as a
Director on the Board of the Company in Non-Executive, Non-Independent
capacity with effect from May 13, 2011. As per the provisions of
Section 260 of the Companies Act, 1956, ("Act"), Mr. Vandrevala holds
office up to the date of the forthcoming Annual General Meeting of the
Company. The Company has received notice in writing from a member
under Section 257 of the Act, in respect of Mr. Vandrevala proposing
his appointment as a Director of the Company.
Mr. Aman Mehta, Mr. V Thyagarajan and Mr. S. Mahalingam, Directors,
retire by rotation and being eligible have offered themselves for
re-appointment.
16. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
statutory auditors of the Company, hold office in accordance with the
provisions of the Act upto the conclusion of the forthcoming Annual
General Meeting and are eligible for re-appointment.
17. Particulars of employees
The information required under Section 217(2A) of the Companies Act,
1956 and the Rules made thereunder, is provided in Annexure forming
part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the
Report and Accounts are being sent to the Shareholders excluding the
aforesaid Annexure. Any Shareholder interested in obtaining copy of the
same may write to the Company Secretary.
18. Conservation of energy, technology absorption, foreign exchange
earnings and outgo
The particulars as prescribed under section 217(1)(e) of the Act, read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in an Annexure to this Report.
19. Acknowledgements
The Directors thank the Companys employees, customers, vendors,
investors and academic institutions for their support to the Company.
The Directors also thank the Governments of various countries,
Government of India, State Governments in India and concerned
Government Departments/Agencies for their co-operation.
The Directors appreciate and value the contributions made by every
member of the TCS family globally.
On behalf of the Board of Directors,
Mumbai R. N. Tata
May 20, 2011 Chairman
Mar 31, 2010
The Directors submit the Annual Report of the Company together with the
audited statement of accounts for the year ended March 31, 2010.
1. Financial Results
(Rs. in crore)
Unconsolidated Consolidated
2009- 2010 2008-2009 2009- 2010 2008-2009
(i) Income from Sales
and Services 23044.45 22404.00 30028.92 27812.88
(ii) Other Income
(net) 177.60 (456.24) 272.07 (426.99)
(iii) Total Income 23222.05 21947.76 30300.99 27385.89
(iv) Operating
Expenditure 16372.78 16383.17 21334.37 20643.08
(v) Profit before
Interest, Depreciation
and Tax 6849.27 5564.59 8966.62 6742.81
(vi) Interest 9.54 7.44 16.10 28.66
(vii) Depreciation 469.35 417.46 660.89 564.08
(viii)Profit before
Taxes 6370.38 5139.69 8289.63 6150.07
(ix)Provision for Taxes 751.87 443.48 1196.97 838.95
(x)Minority Interest
and Share of Loss /
(Profit)
of Associates - - 92.02 54.70
(xi) Net Profit for
the Year 5618.51 4696.21 7000.64 5256.42
(xii)Balance Brought
Forward from Previous
Year 9990.41 7374.89 11835.03 8688.21
(xiii)Amount Available
for Appropriation 15608.92 12071.10 18835.67 13944.63
Appropriations
(a>Interim Dividends
on Equity Shares 1174.32 880.74 1174.32 880.74
(b)Proposed Final
Dividend on Equity
Shares 782.89 489.31 782.89 489.31
(c)Proposed Special
Dividend on Equity Shares 1957.22 - 1957.22 -
(d)Total Dividend
on Equity shares 3914.43 1370.05 3914.43 1370.05
(e) Proposed Dividend
on Redeemable Preference
Shares 17.00 7.00 17.00 7.00
(f)Tax on Dividends 657.51 234.02 663.18 235.99
(g) General Reserve 561.85 469.62 636.22 496.56
(h) Balance carried to
Balance Sheet 10458.13 9990.41 13604.84 11835.03
(1 crore = 10 million)
2.Dividend
Based on the CompanyÃs performance, the Directors are pleased to
recommend for approval of the members a final dividend of Rs.4/- per
share and a special dividend of Rs.10/- per share for 2009-10 on the
enhanced capital of 1,95,72,20,996 Equity Shares of Re.1/- each. The
final dividend and the special dividend on the Equity Shares, if
approved by the members would involve a cash outflow of Rs.3195.21
crore including dividend tax. The total cash outflow of dividend
including dividend tax on Equity Shares of the Company for the year
2009-10, including interim dividends already paid would aggregate
Rs.4569.12 crore resulting in a payout of 81.60% of the unconsolidated
profits of the Company.
The Redeemable Preference Shares allotted on March 28, 2008 are
entitled to a fixed cumulative dividend of 1% per annum and a variable
non-cumulative dividend of 1% of the difference between the rate of
dividend declared during the year on the Equity Shares of the Company
and the average rate of dividend declared on the Equity Shares of the
Company for the three years preceding the year of issue of the said
Redeemable Preference Shares. Accordingly, the Directors have
recommended, for approval of the Members, a Dividend of Seventeen (17)
paise per share on 100,00,00,000 Redeemable Preference Shares of Re.1/-
each for the financial year 2009-10.
3. Transfer to Reserves
The Company proposes to transfer Rs. 561.85 crore to the General
Reserve out of the amount available for appropriations and an amount of
Rs. 10458.13 crore is proposed to be retained in the Profit and Loss
Account.
4. Operating Results and Business
Overall, 2009-10 has been a very satisfying year. TCS emerged stronger
out of the global economic downturn as it stayed close to its customers
and helped them in the recovery process. The Company was aggressive in
its quest for new contracts, executed on its full services strategy and
maintained pricing discipline. This helped to deliver 8% revenue growth
for the year along with improvement in margin.
On an Unconsolidated basis, in 2009-10 TCS revenues were at Rs.23044.45
crore, a growth of 2.86% over 2008- 09. Operating margin (Profit before
taxes excluding other income) grew 189 basis points to 26.87% and net
margin grew 342 basis points to 24.38%.
On a Consolidated basis, in 2009-10 TCS revenues were at Rs.30,028.92
crore, a growth of 7.97% over 2008-09. Operating margin (Profit before
taxes excluding other income) grew 304 basis points to 26.70% and net
margin grew 441 basis points to 23.31%. This stellar performance was
well received by investors, with the market capitalisation increasing
from Rs.52,845 crore ($10.4 billion) in March 2009 to Rs.152,820 crore
($34 billion) in March 2010.
The CompanyÃs business grew even in those sectors affected by the
economic meltdown, mainly because the customers appreciated the
CompanyÃs value proposition. Banking, Financial Services, Retail, Life
Sciences & Health Care and Government sectors registered positive
growth in FY10. However, sectors like Manufacturing, Telecom, Hi-Tech
and Insurance all declined on an annual basis. The Company sees
improvement in its order position in these industry segments as well as
growth in almost all geographical markets.
TCSÃ full services strategy was validated with new service lines like
BPO, Infrastructure, Assurance and products all delivering double digit
growth.
5. International Credit Rating
The Company continues to have an A3 investment-grade issuer rating from
MoodyÃs Investors Services as well as an indicative foreign currency
debt rating of Baa1, with a stable outlook. The rating is not for any
specific debt issuance by the Company. Standard and PoorÃs Ratings
Services has assigned to the Company its BBB corporate credit rating
with outlook as Positive.
The Company has also been rated by Dun & Bradstreet at 5A1
(Condition-Strong). The rating is assigned on the basis of tangible
networth and composite appraisal of the Company.
6. Change in Leadership in TCS
Mr. S. Ramdorai retired as the Chief Executive Officer and Managing
Director of the Company on October 5, 2009 as per the CompanyÃs Policy.
On October 6, 2009, Mr. N. Chandrasekaran assumed the role of Chief
Executive Officer and Managing Director of the Company. Mr. Ramadorai
continues to be on the Board as the Non-Executive Vice Chairman of the
Company. Mr. Chandrasekaran has spent over 20 years in the Company
performing various roles and was the Chief Operating Officer and
Executive Director. With this seamless transition of the CEO role, the
Company has continuity in its strategic and managerial approach.
7. Strategic Acquisitions and Alliances
The Company has been making acquisitions either directly or indirectly
through its subsidiaries during the past few years in order to
strengthen its leadership position in terms of its industry and service
lines.
TCS e-Serve Limited, TCSÃ acquisition of CitigroupÃs captive BPO
operations in India, posted a good performance in 2009-10. TCS e-Serve
recorded revenues of Rs.1517.78 crore on a consolidated basis, an
increase of 19.31% over previous yearÃs revenues of Rs.1272.12 crore.
Profit After Tax (PAT) at Rs.659.38 crore, was significantly higher
than previous yearÃs PAT of Rs.82.33 crore.
8. Human Resource Development
TCS is the largest private sector employer in India with a total
employee strength of 160,429 including those in its subsidiaries. This
diverse and global base of employees from 80 nationalities is central
to sustaining TCSÃ competitive edge.
The CompanyÃs recruitment strategy ensured that employee addition was
clearly aligned to business demand. During the year, there was a gross
addition of 38,063 employees (including in subsidiaries). The attrition
rate for this fiscal was 11.8%, which is amongst the lowest in the
industry. Utilization, excluding trainees, touched an all time high of
81.8% and including trainees it touched 74.3% at the end of March 2010.
TCS has 10,400 non-Indian nationals (including in subsidiaries) amongst
its employee base globally. The percentage of women working for the
Company is 30%. Competency and career development continued to be
thrust areas for the Company. Overall, 1,458,079 learning days were
invested towards competency development in key technology areas and
11,276 managers at various levels attended leadership development
programs. To widen the reach of Learning and Development (L&D)
globally, 25% of the total L&D effort was delivered through e-Learning.
The training program at the entry level as well as the continuous
learning programs have been enhanced to ensure that the Company has the
right competencies in its workforce.
A number of employee engagement initiatives were undertaken during the
year to understand the career issues and aspirations of high performers
and their career development. The Diversity and WomenÃs Network (DAWN)
initiative that was launched to encourage diversity and inclusion in
our workforce has gained momentum within the organisation.
9. Interface with Academia
TCS continued its Academic Interface Program (AIP) with select
institutes across the globe to understand their needs and communicate
the requirements of the IT industry to them. During the fiscal year,
431 institutes across India and 78 institutes abroad were benefited by
TCS AIP. The 11th TCS Annual Academic Meet - Sangam 2009 was held on
November 27, 2009 at Hyderabad which was attended by sixty academic
leaders who contributed to various collaboration opportunities between
industry and academia.
10. Quality Initiatives
Reinforcing its commitment to high levels of quality, best-in-class
service management and robust information security practices, TCS
attained a number of milestones during the year. TCS was recommended
for continuation of its enterprise-wide certification for ISO 9001:2008
(Quality Management), ISO 27001:2005 (Security Management) and ISO
20000:2005 (Service Management).
11. Corporate Sustainability
Health, education and concern for the environment are the focus areas
of TCSÃ Corporate Sustainability (CS) activities. In addition to
corporate programs, TCS employees also undertake many initiatives by
volunteering their time and capabilities to enrich the lives of the
community. The programs focus on education and skill development,
environmental sustainability as well as economic empowerment through
information technology and health awareness. More than 22,000
volunteers took part and spent over 70,000 hours over a period of two
years in such activities.
Major Ongoing CS initiatives:
o Computer based Functional Literacy:
The functional literacy offering of TCS has now covered more than
140,000 persons. A new initiative for development of a solution for the
Moree language spoken in Burkina Faso, West Africa has also begun. The
National Literacy Mission has now invited TCS as official partner in
Saakshar Bharat, a programme to cover 70 million illiterate persons.
o Advanced Computer Training Center (ACTC) Initiative:
To address the need for advanced learning institutions for visually
impaired, TCS Maitree paved the way and pioneered an Advanced Computer
Training Centre for the visually impaired at M. N. Banajee Industrial
Home for the Blind at Mumbai. This centre offers vocational courses
based on industry requirements. More than 65 visually impaired persons
have been trained through this initiative in the last two years.
International CS initiatives:
o UK & Ireland: TCS has over 30 champions and teams having an impact on
society in towns and cities, supporting over 45 charities through more
than 250 initiatives. TCS has created the Tata UK flagship initiative
called TODAY IS A GOOD DAY, which is a health programme deployed across
the 19 Tata UK and mainland European companies with its 60,000
employees. TCS has also developed a PASSPORT TO EMPLOYABILITY education
programme which includes: mentoring 160 boys in a deprived area of East
London; being the education partner to over 80 disaffected boys from
Stepney Football Club; working with ÃWings of Hopeà encouraging 1,400
senior school entrepreneurs; participation in the Prime MinisterÃs
Global Fellowship promoting global talent awareness.
o Chile: TCS had extensive discussions with the Chilean Government to
identify areas where TCS could contribute effectively after last yearÃs
devastating earthquake in the region. Given the fact that the residents
in the affected areas were facing shortage of the basic amenities, TCS
in consultation with the Chile Government decided to provide Water
Desalination plants. These plants, which help in converting sea water
into pure drinking water and are adequate in meeting the drinking water
requirements of a small community, were also used extensively as part
of the Tsunami relief efforts in South India. TCS deputed engineers,
who installed these plants as well as trained local engineers in
operating the plants. TCS is also working on procuring trucks which
will help in delivering pure water to locations which are at some
distance from the plants.
TCS has also decided to provide 4000 units of Tata Swach Water
Purifiers. These indigenously built water purifying equipment do not
require any electricity and perfectly meet the drinking water
requirements of individual affected families. These water filters will
be distributed to the families through the Chilean Government agency
involved in the relief and rehabilitation efforts.
o Mexico: Since 2006, TCS Mexico has collaborated in all events of the
ÃAsociación Con ganas de Vivirà (Eager to Live Association) for
children suffering from cancer.
o Ecuador: Since August 2009, a Blood Donation Program in co-ordination
with the Ecuadorian Red Cross has been scheduled to take place every
six months. The last Campaign was directed towards support of the Haiti
earthquake victims.
o North America: TCS has supported numerous health related causes such
as the AlzheimerÃs Association Memory Walk in which TCSers across 4
cities helped raise awareness on this issue. In the area of education,
TCS has created a student technology summer camp and awareness program
called ÃgoITÃ that is available to high school students in the Greater
Cincinnati, Ohio region. Volunteering comes naturally to TCSers in
North America who, for example, helped the less fortunate by working
with Habitat for Humanity to build houses and volunteered to clean up
roads and parks to better the environment. TCS North America
contributed more than $280,000 to various charitable initiatives and
organisations during the year and actively participated in more than
110 community activities.
o Singapore: TCS has organized and contributed towards a Bone Marrow
Donation Awareness Programme and 20 TCSers have registered as Bone
Marrow Donors.
Significant Recognition for TCS CS programs:
à "Commendation Certificate for Strong Commitment" in CII-ITC
Sustainability Awards 2009.
à Listed as top among 10 companies from India and overall 3rd out of
200 Asian companies for Corporate Sustainability by CSR Asia November
2009.
à Achieved Platinum Band (96%) in Corporate Responsibility Index 2009
of Business in the Community UK, in the fifth year of participation.
à Third Corporate Sustainability Report 2008-09, externally assured by
KPMG and certified as A+ by Global Reporting Initiative.
12. Corporate Governance Report and Management Discussion and Analysis
Statement
A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.
13. Directorsà Responsibility Statement
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956 (ÃActÃ), and based on the representations received from the
operating management, the Directors hereby confirm that:
(i) in the preparation of the Annual Accounts for the year 2009-10, the
applicable Accounting Standards have been followed and there are no
material departures;
(ii) they have selected such accounting policies in consultation with
the statutory auditors and applied them consistently and made judgments
and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for the financial year;
(iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956.
They confirm that there are adequate systems and controls for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities;
(iv) they have prepared the Annual Accounts on a going concern basis.
14. Subsidiary Companies and Consolidated Financial Statements
As required under the Listing Agreements with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standards 21 and 23 issued by
The Institute of Chartered Accountants of India and show the financial
resources, assets, liabilities, income, profits and other details of
the Company, its associate companies and its subsidiaries after
elimination of minority interest, as a single entity.
The Company has been granted exemption for the year ended March 31,
2010 by the Ministry of Corporate Affairs from attaching to its Balance
Sheet, the individual Annual Reports of its subsidiary companies. As
per the terms of the Exemption Letter, a statement containing brief
financial details of the CompanyÃs subsidiaries for the year ended
March 31, 2010 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any Member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any Member of the Company/ its subsidiaries at the Registered Office
of the Company and would be posted on the website of the Company. The
annual accounts of the said subsidiaries will also be available for
inspection, as above, at the Head Offices/ Registered Offices of the
respective subsidiary companies.
The statement containing the list of subsidiaries alongwith brief
financial details of the subsidiaries is given on page numbers 172 -
173 of the Annual Report.
15. Fixed Deposits
The Company has not accepted any public deposits and, as such, no
amount on account of principal or interest on public deposits was
outstanding as on the date of the Balance Sheet.
16. Directors
Mr. S. Ramadorai who was the Chief Executive Officer and Managing
Director retired on October 5, 2009 as per the CompanyÃs Policy and his
terms of appointment. Taking into consideration the contribution made
by Mr. Ramadorai during his tenure the Board decided to continue to
avail his services and appointed him as the Non-Executive Vice Chairman
on the Board of Directors of the Company with effect from October 6,
2009. As per the provisions of Section 260 of the Companies Act, 1956,
(Act) Mr. Ramadorai holds office up to the date of the forthcoming
Annual General Meeting of the Company. The Company has received notice
in writing from a Member under Section 257 of the Act, in respect of
Mr. Ramadorai proposing his appointment as a Director of the Company.
Mr. N. Chandrasekaran, Executive Director and Chief Operating Officer
has been appointed as the Chief Executive Officer and Managing Director
with effect from October 6, 2009 for a period of five years. An
abstract of the terms and conditions of his appointment and memorandum
of interest under Section 302 of the Act have been sent to the Members
of the Company in September 2009.
Dr. Vijay Kelkar and Mr. Ishaat Hussain have been appointed as
Additional Directors on January 5, 2010. Dr. Vijay Kelkar is an
Independent Director. As per the provisions of Section 260 of the
Companies Act, 1956, these Directors hold office only up to the date of
the forthcoming Annual General Meeting of the Company, and are eligible
for appointment as Directors. The Company has received notices under
Section 257 of the Act, in respect of the above persons, proposing
their appointment as Directors of the Company. Resolutions seeking
approval of the Members for the appointment of Dr. Vijay Kelkar and Mr.
Ishaat Hussain as Directors of the Company have been incorporated in
the Notice of the forthcoming Annual General Meeting along with brief
details about them.
Dr. Ron Sommer, Mrs. Laura M. Cha and Mr. R. N. Tata, Directors, retire
by rotation and being eligible have offered themselves for
re-appointment.
17. Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
statutory auditors of the Company, hold office in accordance with the
provisions of the Act upto the conclusion of the forthcoming Annual
General Meeting and are eligible for re-appointment.
18. Particulars of employees
The information required under Section 217(2A) of the Act and the Rules
made thereunder, is provided in an Annexure forming part of this
Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and
Accounts are being sent to the shareholders excluding the aforesaid
Annexure. Any Shareholder interested in obtaining a copy of the same
may write to the Company Secretary.
19. Conservation of energy, technology absorption, foreign exchange
earnings and outgo
The particulars as prescribed under section 217(1)(e) of the Act, read
with the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in an Annexure to this Report.
20. Acknowledgements
The Directors thank the CompanyÃs customers, vendors, investors,
business associates, bankers and academic institutions for their
support to the Company.
The Directors also thank the Government of India, the Governments of
various countries, the concerned State Governments, Government
Departments and Governmental Agencies for their co-operation.
The Directors appreciate and value the contributions made by every
member of the TCS family across the world.
On behalf of the Board of Directors,
Mumbai R. N. Tata
May 24, 2010 Chairman
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