Tata Consultancy Services Ltd

TATA CONSULTANCY SERVICES LIMITED

1. We have audited the attached Balance Sheet of TATA CONSULTANCY SERVICES LIMITED ("theCompany") as at March 31, 2010, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company's Management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 ("CARO")issued by the Central Government of India in terms of Section 227(4A) of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportas follows:

(i) we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;

(ii) in our opinion, proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(iii the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

(iv) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;

(v) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2010;

(b) in the case of the Profit and Loss Account, of the profit of the Company for theyear ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for theyear ended on that date.

5. On the basis of the written representations received from the Directors, taken onrecord by the Board of Directors, none of the Directors is disqualified as on March 31,2010 from being appointed as a director in terms of Section 274(1)(g) of the CompaniesAct, 1956.

(Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Company's business / activities / result for theyear, clause (xiii) of paragraph 4 of CARO are not applicable to the Company.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of the fixed assets at reasonable intervals. According to theinformation and explanation given to us, no material discrepancies were noticed on suchverification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company.

(iii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by theManagement at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iv) In respect of unsecured loans granted by the Company to companies covered in theRegister under Section 301 of the Companies Act, 1956 and according to the information andexplanations given to us:

(a) During the year, the Company has given unsecured interest-free loan aggregating toRs. 86.12 crores to a wholly owned subsidiary. The Company has also given unsecured loansaggregating to Rs. 1.22 crores to one of its subsidiary. At the year end, the loansgranted to two subsidiaries aggregates to Rs. 485.65 crores. The maximum balanceoutstanding during the year is Rs. 651.45 crores.

(b) The rate of interest and other terms and conditions of such loans are, in ouropinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been as per stipulations.

(d) There are no overdue amounts and hence the provisions of sub-clause (d) of clause4(iii) of CARO are not applicable to the Company.

(e) The Company has not taken any loans, secured or unsecured, from companies, firms orother parties listed in the register maintained under Section 301 of the Companies Act,1956. Therefore, the provisions of sub-clauses (e), (f) and (g) of clause 4(iii) of CAROare not applicable to the Company.

(v) In our opinion and according to the information and explanations given to us,having regard to the explanations that some of the items purchased are of special natureand suitable alternative sources are not readily available for obtaining comparablequotations, there is an adequate internal control system commensurate with the size of theCompany and the nature of its business with regard to purchases of inventory and fixedassets and the sale of goods and services. During the course of our audit, we have notobserved any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained inpursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge andbelief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed tobe entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs. 5 lakhs in respect of any party,the transactions have been made at prices which are prima facie reasonable havingregard to the prevailing market prices at the relevant time except in respect of certainpurchases for which comparable quotations are not available and in respect of which we areunable to comment.

(vii) In our opinion and according to the information and explanations given to us, theCompany has not accepted deposits from the public during the year. Therefore, theprovisions of clause 4(vi) of CARO are not applicable to the Company.

(viii) In our opinion, the internal audit functions carried out during the year by afirm of Chartered Accountants appointed by the Management have been commensurate with thesize of the Company and the nature of its business.

(ix) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956 in respect to the manufacture of electronicproducts and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. We have, however, not made a detailed examinationof the records with a view to determining whether they are accurate or complete. To thebest of our knowledge and according to the information and explanations given to us, theCentral Government has not prescribed the maintenance of cost records for any otherproduct of the Company.

(x) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed dues, includingProvident fund, Investor Education and Protection fund, Employees' State Insurance, Incometax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other materialstatutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of Provident Fund, Investor Education and Protection Fund, Employees'State Insurance, Income tax, Sales tax, Customs duty, Excise duty and cess were inarrears, as at March 31, 2010 for a period of more than six months from the date theybecame payable.

(c) Details of dues of Sales tax, Service tax and Income tax which have not beendeposited as on March 31, 2010 on account of disputes are given below:

(xi) The Company does not have accumulated losses. The Company has not incurred cashlosses during the financial year covered by our audit and in the immediately precedingfinancial year.

(xii) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to a financial institution or bank.

(xiii) In our opinion and according to the information and explanations given to us,the Company has not granted loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

(xiv) In our opinion and according to the information and explanations given to us, theCompany is not dealing in shares, securities and debentures. Therefore, the provisions ofclause 4(xiv) of CARO are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us,having regard to the fact that the subsidiary is wholly owned the terms and conditions ofthe guarantee given by the Company for loan taken by the subsidiary from a bank are not primafacie prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purpose for which they were raised.

(xvii) In our opinion and according to the information and explanations given to us andon an overall examination of the Balance Sheet of the Company, we report that funds raisedon short-term basis have not been used during the year for long- term investment.

(xviii) According to the information and explanations given to us, during the periodcovered by our audit report, the Company has not made preferential allotment of equityshares to parties and companies covered in the register maintained under Section 301 ofthe Companies Act, 1956.

(xix) According to the information and explanations given to us, during the yearcovered by our audit report, the Company has not issued any secured debentures.

(xx) During the year covered by our audit report, the Company has not raised any moneyby way of public issue.

(xxi) To the best of our knowledge and belief and according to the information andexplanations given to us, no material fraud on or by the Company has been noticed orreported during the course of our audit.