Bottom of Form
Consolidated Balance Sheet of Tata Consultancy Services
Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Init. Contribution Settler
Preference Share Application Money
Employee Stock Opiton
Policy Holders Funds
Group Share in Joint Venture
Application Of Funds
Less: Accum. Depreciation
Capital Work in Progress
Cash and Bank Balance
Total Current Assets
Loans and Advances
Total CA, Loans & Advances
Total CL & Provisions
Net Current Assets
Group Share in Joint Venture
Book Value (Rs)
Key Financial Ratios of Tata Consultancy Services
Investment Valuation Ratios
Dividend Per Share
Operating Profit Per Share (Rs)
Net Operating Profit Per Share (Rs)
Free Reserves Per Share (Rs)
Bonus in Equity Capital
Operating Profit Margin(%)
Profit Before Interest And Tax Margin(%)
Gross Profit Margin(%)
Cash Profit Margin(%)
Adjusted Cash Margin(%)
Net Profit Margin(%)
Adjusted Net Profit Margin(%)
Return On Capital Employed(%)
Return On Net Worth(%)
Adjusted Return on Net Worth(%)
Return on Assets Excluding Revaluations
Return on Assets Including Revaluations
Return on Long Term Funds(%)
Liquidity And Solvency Ratios
Debt Equity Ratio
Long Term Debt Equity Ratio
Debt Coverage Ratios
Total Debt to Owners Fund
Financial Charges Coverage Ratio
Financial Charges Coverage Ratio Post Tax
Management Efficiency Ratios
Inventory Turnover Ratio
Debtors Turnover Ratio
Investments Turnover Ratio
Fixed Assets Turnover Ratio
Total Assets Turnover Ratio
Asset Turnover Ratio
Average Raw Material Holding
Average Finished Goods Held
Number of Days In Working Capital
Profit & Loss Account Ratios
Material Cost Composition
Imported Composition of Raw Materials Consumed
Selling Distribution Cost Composition
Expenses as Composition of Total Sales
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit
Dividend Payout Ratio Cash Profit
Earning Retention Ratio
Cash Earning Retention Ratio
AdjustedCash Flow Times
Earnings Per Share
1) CORPORATE INFORMATION
Tata Consultancy Services Limited (referred to as TCS Limited or the
Company) provide consulting-led integrated portfolio of information
technology (IT) and IT-enabled services delivered through a network of
multiple locations around the globe. The Companys full services
portfolio consists of IT and Assurance Services, Business Intelligence
and Performance Management, Business Process Services, Cloud Services,
Connected Marketing Solutions, Consulting, Eco-sustainability Services,
Engineering and Industrial Services, Enterprise Security and Risk
Management, Enterprise Solutions, iON-Small and Medium Businesses, IT
Infrastructure Services, Mobility Products and Services and Platform
As of March 31, 2014, Tata Sons Limited owned 73.69% of the Companys
equity share capital and has the ability to control its operating and
financial policies. The Companys registered office is in Mumbai and it
has 64 subsidiaries across the globe.
2) SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain financial
instruments which are measured at fair value. These financial
statements have been prepared to comply in all material aspects with
the accounting standards notified under Section 211(3C) (which
continues to be applicable in terms of General circular 15/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013) and other relevant provisions
of the Companies Act,1956.
Comparative figures do not include the figures of erstwhile TCS e-Serve
Limited and the discontinued operations of e-Serve International
Limited which is amalgamated with the Company effective April 1, 2013.
Consequently, the comparative figures are not comparable with the
figures for the year ended March 31, 2014.
b) Use of estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expense during the year. Examples of
such estimates include provisions for doubtful receivables, employee
benefits, provision for income taxes, accounting for contract costs
expected to be incurred, the useful lives of depreciable fixed assets
and provisions for impairment. Future results could differ due to
changes in these estimates and the difference between the actual
results and the estimates are recognised in the period in which the
results are known/materialise.
c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation /
amortisation. Costs include all expenses incurred to bring the asset to
its present location and condition.
Fixed assets exclude computers and other assets individually costing Rs.
50,000 or less which are not capitalised except when they are part of a
larger capital investment programme.
d) Depreciation / Amortisation
Depreciation / amortisation on fixed assets, other than freehold land
and capital work-in-progress is charged so as to write-off the cost of
assets, on the following basis:
Assets taken on lease by the Company in its capacity as lessee, where
the Company has substantially all the risks and rewards of ownership
are classified as finance lease. Such a lease is capitalised at the
inception of the lease at lower of the fair value or the present value
of the minimum lease payments and a liability is recognised for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognised as
operating leases. Lease rentals under operating leases are recognised
in the statement of profit and loss on a straight-line basis.
At each balance sheet date, the management reviews the carrying amounts
of its assets included in each cash generating unit to determine
whether there is any indication that those assets were impaired. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of impairment. Recoverable
amount is the higher of an assets net selling price and value in use.
In assessing value in use, the estimated future cash flows expected
from the continuing use of the asset and from its disposal are
discounted to their present value using a pre-tax discount rate that
reflects the current market assessments of time value of money and the
risks specific to the asset.
Reversal of impairment loss is recognised as income in the statement of
profit and loss.
Long-term investments and current maturities of long-term investments
are stated at cost, less provision for other than temporary diminution
in value. Current investments, except for current maturities of
long-term investments, comprising investments in mutual funds are
stated at the lower of cost and fair value.
h) Employee benefits
(i) Post-employment benefit plans
Contributions to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered services
entitling them to such benefits.
For defined benefit schemes, the cost of providing benefits is
determined using the Projected Unit Credit Method, with actuarial
valuations being carried out at each balance sheet date. Actuarial
gains and losses are recognised in full in the statement of profit and
loss for the period in which they occur. Past service cost is
recognised immediately to the extent that the benefits are already
vested, or amortised on a straight-line basis over the average period
until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligation as
adjusted for unrecognised past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to the present value of available refunds and reductions in
future contributions to the scheme.
i) Revenue recognition
Revenues from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable.
Revenues from the sale of equipment are recognised upon delivery, which
is when title passes to the customer.
Revenues from sale of software licences are recognised upon delivery.
Revenues from maintenance contracts are recognised pro-rata over the
period of the contract.
In respect of Business Process Outsourcing (BPO) services, revenue on
time and material and unit priced contracts is recognised as the
related services are rendered, whereas revenue from fixed price
contracts is recognised as per the proportionate completion method with
contract cost determining the degree of completion.
Revenues are reported net of discounts.
Dividends are recorded when the right to receive payment is
established. Interest income is recognised on time proportion basis
taking into account the amount outstanding and the rate applicable.
Current income tax expense comprises taxes on income from operations in
India and in foreign jurisdictions. Income tax payable in India is
determined in accordance with the provisions of the Income Tax Act,
1961. Tax expense relating to foreign operations is determined in
accordance with tax laws applicable in countries where such operations
Minimum Alternative Tax (MAT) paid in accordance with the tax laws in
India, which gives rise to future economic benefits in the form of
adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Company will pay normal income
tax after the tax holiday period. Accordingly, MAT is recognised as an
asset in the balance sheet when the asset can be measured reliably and
it is probable that the future economic benefit associated with it will
Deferred tax expense or benefit is recognised on timing differences
being the difference between taxable income and accounting income that
originate in one period and is likely to reverse in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainty supported by convincing evidence that sufficient
future taxable income will be available to realise such assets. In
other situations, deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available to realise these assets.
Advance taxes and provisions for current income taxes are presented in
the balance sheet after off-setting advance taxes paid and income tax
provisions arising in the same tax jurisdiction for relevant tax paying
units and where the Company is able to and intends to settle the asset
and liability on a net basis.
The Company offsets deferred tax assets and deferred tax liabilities if
it has a legally enforceable right and these relate to taxes on income
levied by the same governing taxation laws.
k) Foreign currency transactions
Income and expenses in foreign currencies are converted at exchange
rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities other than net investments in
non-integral foreign operations are translated at the exchange rate
prevailing on the balance sheet date and exchange gains and losses are
recognised in the statement of profit and loss. Exchange difference
arising on a monetary item that, in substance, forms part of an
enterprises net investments in a non-integral foreign operation are
accumulated in a foreign currency translation reserve.
Premium or discount on foreign exchange forward, options and futures
contracts are amortised and recognised in the statement of profit and
loss over the period of the contract. Foreign exchange forward, options
and future contracts outstanding at the balance sheet date, other than
designated cash flow hedges, are stated at fair values and any gains or
losses are recognised in the statement of profit and loss.
l) Derivative instruments and hedge accounting
The Company uses foreign exchange forward, options and future contracts
to hedge its risks associated with foreign currency fluctuations
relating to certain firm commitments and forecasted transactions. The
Company designates these hedging instruments as cash flow hedges.
The use of hedging instruments is governed by the Companys policies
approved by the Board of Directors, which provide written principles on
the use of such financial derivatives consistent with the Companys
risk management strategy.
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognised directly in shareholders funds and the
ineffective portion is recognised immediately in the statement of
profit and loss. The Company separates the intrinsic value and time
value of an option and designates as hedging instruments, only the fair
value change in the intrinsic value of the option. The change in fair
values of the time value of option, which was previously recognised
immediately in profit or loss, is now accumulated in hedging reserve, a
component of shareholders funds and is classified to profit or loss
when the forecast transaction occurs. This change in accounting for
time value of an option has resulted in a reduction in profit before
tax of Rs. 4.76 crores for the year ended March 31, 2014.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognised in the statement of
profit and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Cumulative gain or loss on the hedging instrument
recognised in shareholders funds is retained there and is classified
to Statement of profit and loss when the forecasted transaction occurs.
If a hedged transaction is no longer expected to occur, the net
cumulative gain or loss recognised in shareholders funds is
transferred to the statement of profit and loss for the period.
Raw materials, sub-assemblies and components are carried at the lower
of cost and net realisable value. Cost is determined on a weighted
average basis. Purchased goods-in-transit are carried at cost.
Work-in-progress is carried at the lower of cost and net realisable
value. Stores and spare parts are carried at lower of cost and net
realisable value. Finished goods produced or purchased by the Company
are carried at lower of cost and net realisable value. Cost includes
direct material and labour cost and a proportion of manufacturing
n) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which reliable
estimate can be made. Provisions (excluding retirement benefits) are
not discounted to its present value and are determined based on best
estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect
the current best estimates. Contingent liabilities are not recognised
in the financial statements. A contingent asset is neither recognised
nor disclosed in the financial statements.
o) Cash and cash equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
The Authorised Share Capital was increased to 420,05,00,000 equity
shares of Rs. 1 each and 105,02,50,000 redeemable preference shares of
Rs. 1 each pursuant to the amalgamation of two wholly-owned
subsidiaries, Retail FullServe Limited and Computational Research
Laboratories Limited vide Order dated March 22, 2013 and TCS e-Serve
limited vide Order dated September 6, 2013 of the Honble High Court of
Judicature at Bombay.
* 100,00,00,000 Redeemable Preference Shares of Rs. 1 each , held by
Tata Sons Limited were redeemed on March 28, 2014. Consequently, an
amount of Rs. 100 crores has been transferred from the surplus in the
statement of profit and loss to Capital redemption reserve on that
date. The fixed cumulative dividend of 1 % per annum and the variable
non cumulative dividend on the shares so redeemed will be paid
consequent to the shareholders approval in a general meeting.
(b) Rights, preferences and restrictions attached to shares
The Company has one class of equity shares having a par value of Rs. 1
each. Each shareholder is eligible for one vote per share held. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting, except in
case of interim dividend. In the event of liquidation, the equity
shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.
Preference shares carried a fixed cumulative dividend of 1% per annum
and a variable non-cumulative dividend of 1% of the difference between
the rate of dividend declared during the year on the equity shares of
the Company and the average rate of dividend declared on the equity
shares of the Company for three years preceding the year of issue of
the redeemable preference shares.
(e) Equity shares allotted as fully paid up (during 5 years preceding
March 31, 2014) include equity shares issued:
(i) Pursuant to contract without payment being received in cash
15,06,983 equity shares issued to the shareholders of TCS e-Serve
Limited in terms of the composite scheme of arrangement (Scheme)
sanctioned by the High Court of Judicature at Bombay vide their Order
dated September 6, 2013.
(ii) Bonus shares
The Company allotted 97,86,10,498 equity shares as fully paid up bonus
shares by utilisation of Securities premium reserve on June 18, 2009
pursuant to a shareholders resolution passed by postal ballot on June