TCS E-SERVE LIMITED
ANNUAL REPORT 2011-2012
To the Members,
Your Directors have pleasure in presenting the Twenty Eighth Annual Report
of the Company with the audited financial statements for the financial year
ended March 31, 2012.
Financial Performance of the Company on a consolidated and unconsolidated
basis is as follows:
(Rs. in crores)
2011-12 2010-11 2011-12 2010-11
Total Revenue 2,088.14 1,858.28 1,733.34 1,588.71
Profit before tax 899.53 838.02 769.24 737.46
Profit after tax 644.05 649.76 522.04 550.04
(a) Proposed final dividend 37.20 37.20 37.20 37.20
(b) Tax on dividend 6.03 6.03 6.03 6.03
(c) General Reserve 52.20 55.00 52.20 55.00
(d) Balance carried forward 2,146.78 1,598.16 1,906.90 1,480.29
Based on the Company's performance, the Directors are pleased to recommend
for approval of the members a dividend of Rs. 30 per equity share for the
year ended March 31, 2012 (previous year: Rs. 30 per equity share).
TRANSFER TO RESERVES
The Company proposes to transfer Rs. 52.20 crores to the General Reserve
out of the amount available for appropriations and an amount of
Rs.1,906.90 crores is proposed to be retained in the statement of profit
On consolidated basis, revenue from operations for the year 2011-12 grew by
13% at Rs. 1,920.11 crores (previous year: Rs. 1,700.83 crores). Profit
before tax (PBT) recorded an increase of 7% at Rs. 899.53 crores (previous
year: Rs. 838.02 crores). Profit after tax (PAT) was marginally lower by
1% at Rs. 644.05 crores (previous year: Rs. 649.76 crores).
On an unconsolidated basis, revenue from operations for the year 2011-12
grew by 10% at Rs. 1,578.44 crores (previous year: Rs. 1,440.78 crores).
Revenue from operations comprises of export income, which was higher by 11
% at Rs. 1,284.59 crores (previous year: Rs. 1,156.69 crores) and domestic
income, which grew at 3%, was at Rs. 293.85 crores (previous year:
Rs.284.09 crores). PBT grew by 4% at Rs. 769.24 crores (previous year:
Rs. 737.46 crores). PAT was lower by 5% at Rs. 522.04 crores (previous
year: Rs. 550.04 crores).
The operating environment during the year 2011-12 was challenging, caused
primarily by volatility in the macro-economic environment impacting both
the domestic as well as global economies. This has provided opportunities
as well as challenges for your Company.
Being a strategic partner to its clients, your Company has actively
partnered in solving the challenges faced by its customers and contributed
towards meeting their business targets. Cost increases owing to wage
inflation could only marginally be mitigated in such an environment as
inflation related pricing increase could not be passed on to the customers.
The need of the hour has been to significantly improve on efficiencies to
offset costs and create a long term and sustainable value for Company's
Several strategic initiatives were worked on during the year to deliver
cost efficiencies. Innovative techniques to improve operating efficiencies,
review of various cost levers to mitigate the effect of inflation,
alternate business models to address specific customer requirements and
selling offerings like collections. Business Process Management (BPM) etc.,
to customers beyond Banking, Financial Services and Insurance (BFSI)
industry segments, were some of the actions taken to address the situation.
Your Company continued on its customer-centric approach to understand and
solve specific customer issues, thereby enhancing value for customers. It
also actively focused on initiatives to grow the opportunities pipeline
with existing customers and win new customers.
Being a part of Tata Consultancy Services Limited has also enabled the
Company to access some of the industry best practices across multiple areas
like talent management, customer relationship management etc., and access
to a broader customer base to sell BFSI Business Process Services (BPO).
On the people front, various learning and development initiatives commenced
in the past years continued to be run successfully, augmenting competency
levels of associates and aligning the same to current market requirements.
As a part of this, Business Domain Academies were set up as repositories of
knowledge with development managers to guide associates to acquire/upgrade
their skills and enable them to work across domains.
The Company is enterprise-wide certified against ISO 9001:2008 (Quality
Management), ISO 27001:2005 (Security Management) and ISO 20000:2005
(Service Management) and has attained Customer Operations Performance
Centre (COPC), Certification for Outsourced Service Provider (OSP) version
5.0 for the Global Loan Operations of Consumer Banking, Collections and
Services domains. Your Company also has a Capability Maturity Model
Integration (CMMI) Level 5 certification.
This year, your Company has won an award at the Indian Statistical
Institute's Lean Six Sigma Process excellence awards.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to support local communities and actively
participate in the Corporate Social Responsibility (CSR) programmes, which
focus on affirmative action. Towards the objective of enhancing
employability and creating employment for deprived and socially
disadvantaged candidates across the country, the Company has currently
covered 10 states across India under the programme. About 3,000 college
graduates were trained to be job ready, of these about 39% were socially
disadvantaged candidates. During the year, 13% of the participants have
been offered jobs upon meeting selection criteria and about 250 candidates
have joined the Company.
TCS e-Serve International Limited is a wholly owned subsidiary of the
Company. TCS e-Serve America Inc. is a step down subsidiary of your Company
and is a wholly owned subsidiary of TCS e-Serve International Limited.
Pursuant to the provisions of Section 212(8) of the Companies Act, 1956,
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 Company's 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
details of annual accounts of subsidiaries to any member on demand.
Mr. Vishwanathan Iyer and Mr. Abid Ali Neemuchwala, Directors, retire by
rotation and being eligible, have offered themselves for re-appointment.
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
(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.
CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS
Corporate Governance Report and Management Discussion and Analysis
statement are attached to this Report.
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.
Messrs 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.
PARTICULARS OF EMPLOYEES
The information required under Section 217 (2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975, as amended,
are given in an annexure forming part of this report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
The particulars as prescribed under Section 217 (1) (e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, are set out in an annexure to this
The Board takes this opportunity to thank its employees, shareholders,
clients, bankers, vendors and others for the continued support.
On behalf of the Board of Directors,
Mumbai, June 14, 2012
Particulars pursuant to the Companies (Disclosure of particulars in the
Report of Board of Directors) Rules, 1988, are furnished hereunder:
(a) Conservation of Energy: Continuous steps are taken to use the energy
conservatively, by (i) installing energy saving devices wherever necessary
and (ii) preventive upkeep of all the equipment.
(b) Technology Absorption: Technology is an essential and integral part of
delivery to the customers. Your Company strives to remain abreast of state-
of-the-art systems and has used tested, proven and appropriate technology
to minimize time to delivery and improve maintainability.
As an ongoing process, your Company is strengthening itself in getting
appropriate tools for Information & Network Management to ensure that it
remains in the forefront of technology delivery.
(c) Foreign Exchange Earnings: Rs. 1,284.59 crores (previous year:
Rs.1,156.69 crores) Foreign Exchange Outgo: Rs. 14.56 crores (previous
year: Rs. 30.31 crores)
On behalf of the Board of Directors,
Mumbai, June 14, 2012
MANAGEMENT DISCUSSION AND ANALYSIS
This part of the Directors' Report contains the views and analysis of the
management regarding the Company and industry. These are in context of the
environment and in relation to parameters such as the Indian economy, the
global economy and forecast regarding the industry, based on reports from
industry associations such as Nasscom. It is not the Company's policy to
issue any forward looking statement I guidance and the Company and its
management shall not be liable for any loss or damage that may arise as a
result of any action taken based on the information contained herein.
1. INDUSTRY STRUCTURE, DEVELOPMENTS & OUTLOOK
According to Nasscom Strategic Review 2012, the world economy in 2011
remained sluggish entering a very difficult phase characterised by
significant downside risks and fragility. The global economy is now
expected to expand 2.5 per cent and 3.1 per cent in 2012 and 2013
respectively, versus the 3.6 per cent projected in June for both years. For
the moment, the magnitude of the effects of these developments on global
growth is uncertain. The major uncertainty concerns have been the
interaction of the policy-driven slowing of growth in the middle income
countries and the financial turmoil-driven slow down in Europe.
In the face of the volatility in economic environment and currency, 2011
recorded steady growth for the technology and related services sector, with
worldwide spending exceeding USD 1.7 trillion, a growth of 5.4 per cent
over 2010. Software products, IT and BPO services continued to lead,
accounting for over USD 1 trillion - 63 per cent of the total spend. IT-
hardware spend, at USD 645 billion, accounted for the balance 38 per cent
of the worldwide technology spend in 2011.
2011 saw renewed demand for overall global sourcing, which grew by 12 per
cent over 2010, nearly twice the global technology spend growth. Growth in
BPO was around 10 per cent, slightly lower than the IT offshoring rate of
13 per cent, despite the uncertainty in the Western nation economies,
particularly the US and Europe, which disrupted and in some cases halted
deal flow in the first half of the year. Global IT offshoring accounts for
over 61 per cent of the total global sourcing market while BPO off-shoring
accounts for 39 per cent.
Concerns of an economic recession in US and the debt crisis in Europe have
had a slight effect on IT spending. However, EMEA and the Asia Pacific
regions together grew at over 6 per cent in 2011, a growth of over 1.5
times than that of mature geographies.
In 2011, while the BFSI and manufacturing segment remained the two largest
verticals in terms of total share in spending, these sectors recorded a
below average growth of 1.5 per cent and 2 per cent respectively.
Going forward, technology services spending in the BFSI segment will be
driven by the key imperatives of integration, optimisation and regulation.
Emerging verticals like healthcare, communication and media, government
were the key growth drivers for the IT segment during 2011. These verticals
together garnered a growth of over 6 per cent in 2011 compared to a growth
of around 2.4 per cent recorded by the traditional segments during the same
Worldwide spending in BPO services touched USD 153 billion in 2011,
reflecting an increase of 4.3 per cent over the previous year. The economic
crisis continued to impact BPO spend as customers focused on getting the
highest ROI out of every BPO engagement through extensive due diligence and
intense negotiations of contracts.
BPO vendors have played a key role in helping their customers improve
processes, increase revenues and improve profitability thus enabling them
to position themselves as the business transformation partner for their
Traditionally, BPO service providers took over customers' operations and
ran it for them, which is now evolving to include business process
transformation for the customers and operations delivered through
innovative business models. These services include platform BPO, business
analytics and others.
While the growth in IT-BPO spend is expected to be gradual over the next
two to three years, global sourcing spend is seen to outpace this growth.
IT off shoring market is set to grow at a CAGR of about 8 per cent over
2011 to 2013, while BPO off shoring is expected to grow at a little over 7
per cent during the same period.
As per Nasscom Strategic Review 2012, direct employment within the IT-BPO
sector is expected to grow by over 9 per cent to reach -2.8 million, with
over 230,000 jobs being added in FY2012. IT services exports (including
ER&D and software products) continues to be the largest employer within the
industry with nearly 47 per cent share of total direct employment, BPO
exports generate about 32 per cent of the total industry employment, and
the remaining 22 per cent is accounted for by the domestic IT-BPO sector.
The IT-BPO sector has become one of the key sectors for the Indian economy
because of its economic impact. The sector is responsible for enabling
employment to an additional 8.9 million people in various associated
sectors -catering, security, transportation, housekeeping, etc. - many of
whom belong to rural areas / small towns of India.
Indian IT-BPO exports are expected to cross USD 69 billion during FY2012.
This indicates a year-on-year growth of 16 per cent. This year has been
marked by the return of discretionary spends. Even though the economic
situation in the US and Europe continues to be a concern and customers are
still being cautious, there has not been any panicked reactions and
therefore IT budgets have remained strong. US and APAC led growth among
geographies and BFSI and emerging verticals (Retail, Utilities, Healthcare
and MPE) drove vertical growth.
2. COMPANY OVERVIEW
Your Company, along with its subsidiary companies - TCS e-Serve
International Limited and TCS e-Serve America Inc., is primarily engaged in
the business of providing Business Process Services (BPO) for its customers
in Banking, Financial Services and Insurance domain.
The Company's operations include delivering core business processing
services, analytics & insights (KPO) and support services for both data and
Your Company is an integral part of the Tata Consultancy Services' (TCS)
strategy to build on its 'Full Services Offerings' that offer global
customers an integrated portfolio of services ranging from IT services to
The Company provides its services from various processing facilities,
backed by a robust and scalable infrastructure network tailored to meet
clients' needs. A detailed Business Continuity Plan has also been put in
place to ensure the services are provided to the customers without any
OPPORTUNITIES AND RISKS:
Nasscom Strategic Review 2012 has estimated that the Indian IT-BPO exports
are likely to cross USD 69 billion during the financial year 2011-12,
indicating a year-on-year growth of 16 per cent. Your Company, backed by
TCS' full service strategy, strong domain expertise, operational
efficiency, inherent 'India based' cost advantage, experience in handling
global clients and a dedicated workforce is well-placed to expand and
diversify its service offerings as new opportunities come up. The Company
is actively focused on initiatives to grow the opportunities pipeline with
existing customers and win new customers.
Key demand side strategies are:
1. Cross-sell BPO services to existing customers
2. Grow within the current BPO accounts
3. Acquire new customers
Key supply side strategies are:
2. Talent Acquisition and Talent Development
3. One Global Service Standard
4. Growth in Tier II BPO cities in India. Risks and Risk Mitigation:
* Delivery concentration: Your Company primarily operates from multiple
delivery centers located within India, thereby reducing the delivery
* Macro-Economic Risks: Your Company's performance is sensitive to the
global economic environment. For the foreseeable future, the Company
expects to continue to derive most of its revenue from services provided to
the BSFI clients. Given this concentration, the Company is exposed to
current global economic conditions in the financial services industry.
Factors such as economic environment, rise in protectionist sentiment,
competition from other players / countries and regulatory changes may
affect the demand for these services by current and potential clients. The
Company is increasing the breadth and depth of service offerings and
penetrating new customer accounts and markets to mitigate this risk.
* Ability to hire and retain talent: Company's performance is largely
dependent on the talent and efforts of its employees. To compete
effectively in this expanding business, to manage its business effectively
and to expand into new businesses depends on the Company's ability to
attract talent and to retain and motivate its existing employees. The
Company proposes to continue to invest in its people with robust and
feature rich human resource practices that would help manage the problem of
* Data protection: Security of information outsourced by Clients is one of
the most challenging and crucial tasks facing BPO industry today. The risks
associated with Information Security are real and the ramifications of
security breaches are serious in terms of financial, reputation, franchise
and regulatory impact especially for an organization like the Company which
handles critical and sensitive customer data in the Banking, Financial
Services and Insurance industry. Your Company has defined and implemented
an Information Security Management System (ISMS) framework across the
organization and is certified on ISO 27001: 2005 standards. The Company is
also certified on Payment Card Industry Data Security Standards (PCIDSS)
for some of the Company's processes to ensure secure processing of card
related information. Your Company has also obtained a CMMI Level 5
certification and has also been successfully audited under the Statements
of Standards for Attestation Engagements (SSAE) 16 and International
Standard for Attestation Engagements(ISAE) 3402. Further, in order to
comply with the Company's obligations under various laws including
international laws, the Company complies with annual reporting / licensing
requirements and also implements operating policies and procedures to
protect, among other matters, the privacy and security of clients'
* Technology, network and telecommunications risk: The Company is dependent
upon infrastructure like electricity, telecommunication and internet
facilities among others for providing its services. Any disruption of these
could seriously impact the business of the Company. To mitigate this risk,
the Company has detailed contingency plans in place to ensure smooth and
uninterrupted conduct of its business. Your company is also BS 25999
* Risks from operations: Risks from operations basically means risk of non-
performance / loss resulting from inadequate or failed internal processes,
people or systems, or from external events. The chance of human error or
system failure is endemic to every business. In case of processing, these
risks are higher due to the large value of the underlying transactions
being processed and risk of resultant claims from clients for non-
performance. Besides, there is a risk of person acting with malafide
intent. Your Company has a robust Risk Management Framework, which is
benchmarked to the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), Capability Maturity Model Integration (CMMI) Level 5,
Customer Operations Performance Centre (COPC) (local and international),
regulatory bodies such as Office of the Comptroller of the Currency (OCC),
Financial Services Authority (FSA), Reserve Bank of India (RBI), etc., in
place to identify, mitigate, monitor and report these risks. Further, risks
can come from external events, which may result in expenses for maintaining
continuity of business. These are mitigated through vulnerability
assessments of these external risks to your Company's assets which ensure
timely mitigation of these risks. In order to mitigate the risks of
financial liability, contingency provisions have been created. The adequacy
of this is reviewed from time to time based on management perception of the
quantitative liability that may arise.
* Financial risk: Financial risk represents risk on account of foreign
exchange fluctuations, leverage and liquidity risks. Currently, the Company
has foreign exchange surplus due to its export activities. It has
procedures in place to actively manage its foreign exchange positions. The
Company currently has minimal leverage and liquidity risk and has followed
the strategy of funding all its expansions and infrastructure related
expenditure through internal accruals, as well as, earning returns through
investment of surplus funds. Your Company actively manages risks through a
variety of governance / control mechanisms.
* Legal & statutory liabilities risk: The Company has certain matters under
dispute / litigation in regard to taxation and labour laws. The Company
believes it is in a strong position in these matters and has taken adequate
legal steps to safeguard its position.
* Government policies: While the policies of the Government at state and
national level have generally been supportive of the IT & ITES industry,
any amendments which may have an adverse impact, will affect your Company's
These opportunities and risks have been identified based on the external
environment viewed in conjunction with the Company's plan and are in no way
exhaustive or in order or importance. The Company has put in place a risk
management framework across the various units in the Company and a report
thereon is placed before the Board of Directors at regular intervals.
The Company has identified industry segments as its primary segment and
geographic segments as its secondary segment (refer segment information in
Note 27 of the Unconsolidated Financial Statements and Note 28 of the
Consolidated Financial Statements).
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an internal control and internal audit system that is
adequate and commensurate with the size and nature of its business.
Adequate controls are established to ensure that assets of the Company are
safeguarded and transactions executed in accordance with appropriate
authorization and are properly recorded in the books of accounts. Internal
Control guidelines have been formulated and circulated within the Company
and are implemented in all transactions. The roles and responsibilities of
people at various levels are well defined to ensure appropriate information
flow and to facilitate effective monitoring. An authority-responsibility
matrix has been separately articulated for the employees, management team,
the Managing Director & CEO and the Board.
The Company has appointed Ernst & Young Private Limited to oversee and
carry out internal audit of the Company's activities. Their audit is based
on a plan, which is reviewed in consultation with the statutory auditors
and the Audit Committee. In line with international practice, the planning
and conduct of internal audit is oriented towards the review of controls in
the management of risks and opportunities in the Company's activities. The
internal audit process is designed to review the adequacy of internal
control checks in the system and covers all significant areas of the
The Company monitors and reviews progress on the internal audit reports at
the meetings of its Audit Committee and keeps the Board of Directors
regularly informed about major observations.
FINANCIAL PERFORMANCE - (UNCONSOLIDATED)
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO UNCONSOLIDATED
The financial statements are prepared under the historical cost convention,
on an accrual basis, and are in accordance with the requirements of the
Companies Act, 1956 and comply with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the said Act. During the financial year
ended March 31, 2012, the revised Schedule VI notified under the Companies
Act, 1956, has become applicable to the Company for the preparation and
presentation of its financial statements. Accordingly, the Company has
adopted the new reporting and disclosure requirement mandated in the
revised Schedule VI with one of the changes being on classification of
assets and liabilities as long term and short term. Assets and liabilities
with expected date of realization / settlement exceeding twelve months from
the balance sheet date have been classified as long term assets /
liabilities while those expected to be realized / settled within twelve
months from balance sheet date have been classified as short term assets /
liabilities. The financial statements have been prepared using 'Rupees in
crores' as a denomination for reporting purpose. All Income and
Expenditure, having a material bearing on the financial statements, are
recognized on accrual basis. The management accepts responsibility for the
integrity and the objectivity of these financial statements, as well as for
various estimates and judgments used therein.
1. SHARE CAPITAL
March 31, 2012 March 31, 2011
Number (Rs. in Number (Rs. in
(crores) crores) (crores) crores)
Equity (paid-up) 1.24 12.40 1.24 12.40
The Company has at present, two classes of shares, viz., preference shares
aggregating to Rs. 5 crores and Equity Shares aggregating to Rs. 20
crores. This constitutes the Authorised Share Capital of Rs. 25 crores. Of
this, the issued and paid-up share capital is Rs. 12.40 crores, comprising
1.24 crores Equity Shares of Rs. 10 each, fully paid-up. Of the total share
capital as at March 31, 2012, Tata Consultancy Services Limited,
representing, 96.26% of the total, holds 11,936,313 shares of the issued
and paid-up share capital.
2. RESERVES AND SURPLUS
The Company's Reserves & Surplus as on March 31, 2012, stood at
Rs.2,101.04 crores as against Rs. 1,760.11 crores in the previous year, an
increase of Rs. 340.93 crores. This increase is on account of profits for
the year after taxes and appropriations, as partially offset by movement in
the hedging reserve.
a) Long term liabilities
Long term liabilities increased from Rs. 18.99 crores to Rs. 32.79 crores
primarily on account of increase in the non current portion of the
derivative liability as well as rent escalation liability.
b) Trade payables
Trade payables (Sundry creditors) represent the amount payable to vendors
for the supply of services and goods.
c) Other current liabilities
Other current liabilities increased to Rs. 99.97 crores as at March 31,
2012, as against 14.76 crores as on March 31, 2011 owing primarily to
increase in current portion of derivative liability. Unclaimed dividends of
Rs. 1.03 crores (previous year: Rs. 0.83 crores) indicates dividend paid,
but not encashed by shareholders, and are represented by earmarked balances
in bank accounts separately maintained for an equivalent amount.
a) Long term provisions
Long term provisions are for gratuity liability and are based on
independent actuarial valuations as at end of the financial year.
b) Short term provisions
Short term provision includes provision on employee benefits Rs. 21.65
crores (previous year: Rs. 25.33 crores), provision for current income
taxes (net) Rs. 11.69 crores (previous year: Rs. 5.52 crores) and
provision towards proposed dividend including dividend tax Rs. 43.23
crores (previous year: Rs. 43.23 crores).
5. FIXED ASSETS (Rs. in crores)
As at As at Growth
March 31,2012 March 31, 2011
Improvement on Leasehold Premises 42.74 42.74 0%
Office equipments 62.85 61.39 2.38%
Computer equipments - Hardware 166.52 173.43 -3.98%
Computer equipments - Software 36.39 33.76 7.79%
Furniture and fixtures 34.37 34.51 -0.41%
Electrical fittings 27.29 27.11 0.66%
Vehicles 5.23 7.35 -28.84%
Total Gross Block 375.39 380.29 -1.29%
Less: Accumulated depreciation 312.92 295.35 5.95%
Net Block 62.47 84.94 -26.45%
Add: Capital work in progress 0.28 1.66 -83.13%
Net Fixed Assets 62.75 86.60 -27.54%
Depreciation charge for the year 41.06 47.72 -13.96%
Depreciation as a% of revenue 2.60% 3.31% -21.45%
Accumulated depreciation as a
% of gross block 83.36% 77.66% 7.34%
The addition to the gross block of assets (exclusive of assets disposed /
retired) during the year was Rs. 20.82 crores, including Rs. 15.41 crores
in respect of computer equipments.
6. DEFERRED TAX
Deferred tax benefit of Rs. 1.87 crores has been made for the year ended
March 31, 2012. The deferred tax asset balance as at March 31, 2012 is made
(Rs. in crores)
Particulars As at As at
March 31, 2012 March 31,2011
Provision for doubtful receivables
and advances 0.77 0.87
Depreciation on fixed assets 18.41 17.36
Provision for employee benefits 7.02 9.00
Rent escalation 7.72 5.98
Provision for contingencies 0.13 4.65
Interest u/s 143(1) not credited
to statement of profit and loss 3.73 -
Unrealized loss on derivatives recognized
in statement of profit and loss 1.23 (0.72)
Grand Total 39.01 37.14
7. LOANS AND ADVANCES
a) Long term loans and advances
Long term loans and advances increased from Rs. 348.63 crores to
Rs.398.95 crores, primarily due to increase in tax receivables and inter-
b) Short term loans and advances
Short term loans and advances include loans and advances to related
parties, inter-corporate deposits, prepaid expenses and other various
advances, and has decreased marginally to Rs. 294.14 crores as against
Rs. 308.98 crores as at the end of the previous financial year.
8. TRADE RECEIVABLES
Trade receivables (Sundry debtors) inclusive of unbilled revenues amounted
to Rs. 291.16 crores (18.44% of revenue) as at March 31, 2012 as compared
to Rs. 253.97 crores (17.62% of revenue) as at March 31, 2011. The Day
Sales Outstanding (DSO) was 67 days, including unbilled revenues as at
March 31, 2012 as against 64 days in the previous year. The increase in DSO
is attributable to one-time delays in billing in the fourth quarter pending
final confirmation on pricing negotiations as well as some delays in
collection of dues. Controls have been reinforced to bring in greater
9. CASH AND BANK BALANCES (Rs. in crores)
Particulars March 31,2012 March 31.2011
Bank balances - current accounts 0.50 2.57
Bank balances - cash credit accounts - 0.77
Remittances in transit 8.71 -
Total cash and bank balances 9.21 3.34
Fixed deposits with banks 762.90 475.55
Earmarked balances with banks 1.03 0.83
Total cash and cash equivalents 773.14 479.72
The bank balances include unclaimed dividend of Rs.1.03 crores in the
unclaimed dividend account as at March 31, 2012 (previous year: Rs.0.83
RESULTS OF OPERATIONS
10. TOTAL REVENUE
Revenue from operations for the year ended March 31, 2012 is Rs. 1,578.44
crores as compared to Rs. 1,440.78 crores for the previous year ended March
31, 2011, growth of 9.55% over previous year.
Share of export revenue to revenue from operations for the year ended March
31, 2012 has increased by 1%.
Staff and operating expenses increased by 14.87% to Rs. 922.93 crores for
the year ended March 31, 2012 as compared to Rs. 803.43 crores for the
year ended March 31, 2011.
The detailed break-up of the expenditure is given below:
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Amount % to Amount % to
(Rs. in Revenue (Rs. in Revenue
Employee benefits expense 697.91 44.2% 588.22 40.8%
Services rendered by business
associates and others 15.91 1.0% 25.83 1.8%
Rent 67.43 4.3% 50.58 3.5%
Communication expenses 19.02 1.2% 18.69 1.3%
Legal and professional fees 3.07 0.2% 1.84 0.1%
Travelling and conveyance 31.23 2.0% 34.15 2.4%
Others & miscellaneous
expenses 88.36 5.6% 84.12 5.8%
Total staff and operating
expenses 922.93 58.5% 803.43 55.8%
The increase in staff and operating expenses by about 2.7% of revenues is
primarily attributable to the impact of salary / promotion actions, higher
investments in head counts and mix as partially offset by certain savings
The Company provided Rs. 41.06 crores towards depreciation for the year
ended March 31, 2012 as compared to Rs. 47.72 crores for the year ended
March 31, 2011. It represents 2.60% and 3.31 % of the revenues for the
12. PROVISION FOR TAXATION
Provision for income tax is made on an annual basis on the tax liability as
computed, after taking credit for allowances and exemptions. Apart from the
current tax, deferred tax asset or liability is recognized for timing
differences between the profit as per financial statements and the profit
offered for the income taxes. Deferred tax assets are recognized only if
there is reasonable certainty that sufficient future taxable income will be
available, against which they can be realized. The net deferred tax
credited to the statement of profit and loss during the year was Rs. 1.87
crores (previous year: deferred tax charge of Rs. 10.90 crores).
The Company has provided a net sum of Rs. 247.20 crores towards tax
expense during the year compared to Rs. 187.42 crores during the previous
The break-up of tax expense is as follows: (Rs. in crores)
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Current tax 249.07 176.52
Deferred tax (1.87) 10.90
Grand Total 247.20 187.42
The net tax charge increased to Rs. 247.20 crores from Rs. 187.42 crores
during the financial year 2011-12 mainly due to impact of lower tax write-
back during the current year.
13. NET PROFIT
The net profit of the Company after tax was marginally lower at Rs. 522.04
crores as compared to Rs. 550.04 crores during the previous year primarily
due to a higher tax charge owing to lower tax write-back.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT:
As at March 31, 2012, the Company employed 14,785 employees. The Company
considers human resources as its most critical assets and has various
practices in place including incentive awards, career planning, training
programs, etc. to ensure a healthy work environment. There were no material
developments in human resources.