Tata Consultancy Services Ltd

To the Members,

The Directors submit the Annual Report of the Company along with the audited statementof accounts for the financial year ended March 31, 2011.

1. Financial Results

2. Dividend

Based on the Company's performance, the Directors are pleased to recommend for approvalof the members a final dividend of Rs. 8 per share for the year 2010-11 taking the totaldividend to Rs. 14 per share (previous year Rs. 10 per share excluding special dividend ofRs. 10 per share) on the capital of 195,72,20,996 Equity Shares of Rs. 1 each. The finaldividend on the Equity Shares, if approved by the members would involve a cash outflow ofRs. 1,819.78 crores including dividend tax. The total cash outflow on account of dividendincluding 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 unconsolidatedprofits of the Company.

The Redeemable Preference Shares allotted on March 28, 2008 are entitled to a fixedcumulative dividend of 1% per annum and a variable non-cumulative dividend of 1% of thedifference between the rate of dividend declared during the year on the Equity Shares ofthe Company and the average rate of dividend declared on the Equity Shares of the Companyfor 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 ofEleven paise (Rs. 0.11) per share on 100,00,00,000 Redeemable Preference Shares of Rs. 1each 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 theamount available for appropriations and an amount of Rs. 14,069.20 crores is proposed tobe retained in the Profit and Loss Account.

4. Company's Performance

Financial Year 2010-11 marked a strong resurgence in volume and demand growth post thefinancial crisis. This growth was led by developed markets of the United States and Europewith strong contributions from Asia Pacific, Middle East and Africa and was secular acrossall industries and markets. The second half of the year also witnessed an uptick inpricing for the first time since September 2008. The Company has registered a strong broadbased sequential growth across all key markets and customer segments.

On consolidated basis for the year 2010-11, revenues at Rs. 37,324.51 crores werehigher by 24.30% over the previous year's revenues of Rs. 30,028.92 crores. Operatingprofit (profit before taxes excluding other income) at Rs. 10,416.62 crores was higher by29.92% over the previous year's operating profit of Rs. 8,017.56 crores. Net profit forthe year at Rs. 9,068.04 crores was higher by 29.53% over the previous year's net profitof Rs. 7,000.64 crores.

On unconsolidated basis, revenues at Rs. 29,275.41 crores for the year 2010-11 werehigher by 27.04% over the previous year's revenues of Rs. 23,044.45 crores. Operatingprofit (profit before taxes excluding other income) at Rs. 8,205.70 crores was up 32.50%from the previous year's operating profit of Rs. 6,192.78 crores. Net profit for the yearat Rs. 7,569.99 crores was higher by 34.73% than the previous year's 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 anindicative foreign currency debt rating of Baa1, with a stable outlook from Moody'sInvestors Services. The rating is not for any specific debt issuance of the Company.

Standard and Poor's Ratings Services has assigned to the Company its BBB positivecorporate credit rating with outlook as stable.

The Company has also been rated by Dun & Bradstreet at 5A1 (Condition-Strong). Therating is assigned on the basis of tangible net worth and composite appraisal of theCompany.

6. Strategic Acquisitions and Alliances

The strategic acquisitions and alliances during the year were as follows -

(i) MahaOnline Limited:

The Company has entered into an Agreement with the Government of Maharashtra pursuantto which a new subsidiary company, MahaOnline Limited (MahaOnline) has been setup on July28, 2010 with equity participation from TCS and Government of Maharashtra. MahaOnlineprovides online internet-based citizen services to the residents in Maharashtra. Thiscitizen service portal is integrated with DigiGov - a state-of-the-art e-Governancesolution 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 entireshare capital of Unisys Insurance Services Limited (UISL), which provides life andpensions services to its clients in the UK. On this acquisition UISL was renamed asDiligenta 2 Limited. This has secured Diligenta's position as a leading service providerin the UK's life and pensions BPO market. The number of policies now administered byDiligenta has risen from 3.6 million to over 5 million.

(iii) MS CJV Investments Corporation:

On October 4, 2010, Tata America International Corporation - a wholly owned subsidiary,acquired 100% share capital of MS CJV Investments Corporation. Consequently, the groupholding in Tata Consultancy Services (China) Co., Ltd. has increased from 65.94% to74.63%.

(iv) Retail FullServe Limited (formerly known as SUPERVALU Services India PrivateLimited):

On October 8, 2010, the Company acquired 100% equity share capital of SUPERVALUServices India Private Limited from SUPERVALU Inc., one of the largest grocery retailersin North America. Retail FullServe Limited specialises in providing complete IT andIT-enabled services to the Retail industry. TCS has signed a multi-year agreement withSUPERVALU Inc. for full services engagement. This acquisition has strengthened the retailindustry segment of the Company through integration of IT, IT infrastructure and BPOservices of Retail FullServe Limited.

7. Human Resource Development

TCS is the largest private sector employer in India with total employee strength of1,98,614 including its subsidiaries as at March 31, 2011.

A robust manpower planning process ensures that all steps from business requirements tosourcing and staffing are seamlessly aligned. Our distinct people integration model, notonly ensures faster time-to-productivity, but it also integrates culturally diverseprofessionals into the organisation by fostering a behaviour based on a shared set ofcommon values. This enabled the organisation to assimilate a gross addition of 69,685employees (including subsidiaries).

The strategic initiatives for talent development through learning and developmentprograms and experiential learning ensured that the Company had right competencies in itsworkforce to meet the business demand. High utilisation rates were sustained throughoutthe 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 careerprogression and benchmarked compensation and benefits for our employees helped the Companyto attract and retain the best talent across the globe as well as build a pipeline ofleaders to meet its future requirements. The Company has been successful in building aperformance oriented culture with high levels of engagement and empowerment in anenvironment of teamwork.

A well defined process to review its HR policies and processes ensured that the Companycomplied with the regulatory requirements of the countries where it operates. The strategyto have a diverse workforce catering to its global business requirements saw a grossaddition of 7,593 employees outside India (including subsidiaries) taking the count ofnon-Indian nationals (including subsidiaries) to 13,665 from 99 nationalities. Thepercentage 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 theCapability Maturity Model Integration for CMMI-DEV (Development) and CMMI-SVC(Services) models. With this achievement, TCS has set a new benchmark as the firstpublicly stated recipient to achieve a multiple simultaneous appraisal against twoconstellations of the CMMI model. TCS is also the first organisation in the world, to beappraised at Level 5 of the CMMI-SVC model, which underscores the maturity of the firm'sfast growing Business Process Outsourcing (BPO) and Infrastructure Services business.

TCS was recommended for continuation of its enterprise-wide certification for ISO9001:2008 (Quality Management), ISO 27001:2005 (Security Management) and ISO 20000:2005(Service Management). TCS also continues to maintain domain specific qualitycertifications AS 9100 (for Aerospace Industry), ISO 13485 (for Medical Devices) and TL9000 (for Telecom Industry) thus further reinforcing the industry domain focus within theorganisation.

TCS was certified enterprise-wide for ISO 14001:2004 (Environmental Management) andOHSAS 18001:2007 (Occupational Health and Safety Management) certifications. Thesecertifications demonstrate TCS' strong commitment to the environment and the occupationalhealth and safety of its associates and business partners; and helps convey this to allits stakeholders, including customers.

The above certifications reaffirm TCS' commitment to achieve the highest standards ofquality while focusing on constantly improving quality and processes in a dynamicenvironment. The cornerstone of these certifications is the in-house developed integratedQuality Management System (iQMS) - a vibrant, process-driven, people-oriented andcustomer-focused quality management system which is continuously evolving to cater to therequirements of TCS' varied business offerings and is the backbone supporting the GlobalNetwork Delivery Model (GNDMTM).

9. Corporate Sustainability

In keeping with the Tata tradition of giving back to the society, CorporateSustainability (CS) lies at the heart of TCS' corporate culture. The guiding principle ofTCS' CS programmes is "Impact through Empowerment" where empowerment is aprocess of strengthening the future today so that risk is minimised, value created andcertainty experienced. TCS focuses on empowering the community, especially through workwith youth, women and children. Affirmative action directed to less privileged communitiesis one of the highlight of TCS' activities under CS.

Education, Health and Environment are the core themes for TCS' CS programs. Over 6,600TCS volunteers and families provided education and skills development to 10,225 childrenand partnered with 65 institutes in China, Ecuador, India, South Africa and UK. Over 4,000villagers across Delhi, Maharashtra, Orissa and Tamil Nadu were benefited through ruraldevelopment initiatives.

Major CS Initiatives through Information Technology (IT)

o Med Mantra: An integrated Hospital Management System along with the necessaryIT infrastructure including a comprehensive and fully integrated, web-based solution, 'MedMantra' has been implemented free of cost for the Cancer Institute at Chennai.

o Computer based Functional Literacy programme: TCS' Computer based FunctionalLiteracy programme that was first launched in the year 2000, has by now made around1,50,000 persons literate. TCS is partnering the National Literacy Mission Authority tospread literacy under the Saakshar Bharat programme.

International CS initiatives

o North America: During the year, TCS North America has made donations in excessof $500,000 for a variety of causes to organisations like the American Cancer Society,Habitat for Humanity, Juvenile Diabetes Research Foundation, Toys R Us Children's Fund,and the National Underground Railroad Freedom Center. Approximately 10% of the associatesparticipated in the various initiatives across North America throughout the year.

TCS' 'golT' program that has spread to 12 schools over 2 years, encourages localstudents to engage in computer science education and a career path through in-schoolworkshops 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 2010Investing in People Award by the Workforce One Investment Board of Southwest Ohio.

o UK and Ireland: TCS is working with the UK Government Department forInternational Development to deploy its capabilities in development activities. TCS UK andIreland donated around 200,000 during the year for influencing change in themarketplace, workplace and environment as well as supporting more than 200 charities inthe areas of health and education.

Over the past 3 years, TCS has been working with the UK Government Department forEducation and the British Council to develop 300 Global Fellows, who act as ambassadors to3,000 UK secondary schools. Furthermore, TCS partners the 'Wings of Hope' scheme to helpUK students develop business skills and gain an understanding of education in India andMalawi. In addition, TCS has developed an IT entrepreneur scheme with the local authorityfor Carlow University, Ireland.

o Europe: Activities to spread awareness and raise funds for treatment ofmultiple sclerosis and breast cancer were carried out across Europe during the year. Forcontributing to the Haiti earthquake relief fund, TCS employees in Switzerlandcollaborated with the client of Swiss Re. TCS Belgium employees engaged in 'Discover YourTalent' along with 6 other companies to create employability for immigrant children.

o China: As part of 'Operation Smile', TCS China participated in a charityauction and donated RMB 26,000 to help needy cleft lip and palate children to undergosurgery.

o Australia: Following the 2011 floods in Queensland, TCS initiated a collectiondrive to contribute AUD $30,000 towards the Queensland Flood Disaster Fund.

o Chile: Subsequent to the earthquake in Chile in February 2010, TCS donated 5desalination 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 SustainabilityAwards 2010

o TCS included in Dow Jones Sustainability World Index 2010 as one of the three Indiancompanies

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 Businessesat CII-ITC Sustainability Awards 2010

o DataQuest Best Employer Award in India

o 'Top Employer ICT Netherlands' with certification for Excellence in Human Resourcespractices and 5 stars (highest in the industry) in three categories

o Britain's Top Employers for 2011 by the CRF Institute (formerly known as CorporateResearch Foundation)

o Recruiting and Staffing Best in Class Awards (RASBIC) in four categories for thefourth year in a row

11. Corporate Governance Report and Management Discussion and Analysis Statement

Corporate Governance Report and Management Discussion and Analysis statement areattached 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 operatingmanagement, the Directors hereby confirm that:

(i) in the preparation of the Annual Accounts for the year 2010-11, the applicableAccounting Standards have been followed and there are no material departures;

(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for the financial year;

(iii) they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 1956. They confirm that there are adequate systems andcontrols for safeguarding the assets of the Company and for preventing and detecting fraudand 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 InvestmentsCorporation, Retail FullServe Limited and CMC eBiz Inc. were set up/acquired during theyear.

The following subsidiaries were merged during the year with other subsidiaries of theCompany:

o Exegenix Research Inc. and ERI Holdings Corp. were merged with Tata ConsultancyServices Canada Inc.

o Custodia De Documentos Interes Limitada, Syscrom SA and Tata Consultancy ServicesChile SA were merged with Tata Consultancy Services BPO Chile SA and subsequently the nameof the merged entity was changed to Tata Consultancy Services Chile SA.

Financial Network Services (H.K.) Limited was liquidated and de-registered during theyear.

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. Astatement containing brief financial details of the subsidiaries is included in the AnnualReport.

As required under the Listing Agreements with the Stock Exchanges, a ConsolidatedFinancial Statement of the Company and all its subsidiaries is attached. The ConsolidatedFinancial Statements have been prepared in accordance with the relevant AccountingStandards 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 CorporateAffairs vide its circular dated February 8, 2011 has granted general exemption fromattaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiarycompanies with the Balance Sheet of the Company. A statement containing brief financialdetails of the Company's subsidiaries for the financial year ended March 31, 2011 isincluded in the Annual Report. The annual accounts of these subsidiaries and the relateddetailed information will be made available to any member of the Company/its subsidiariesseeking such information at any point of time and are also available for inspection by anymember of the Company/its subsidiaries at the registered office of the Company. The annualaccounts of the said subsidiaries will also be available for inspection, as above, at thehead offices/registered offices of the respective subsidiary companies. The Company shallfurnish 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 ofprincipal or interest on public deposits was outstanding as on the date of the BalanceSheet.

15. Directors

Platform based BPO is one of the Company's strategic initiatives to drive non-lineargrowth in the future. Diligenta Limited, the Company's subsidiary in the United Kingdomaddresses the life and pension business segment by providing BPO services using the BaNCSplatform 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 DiligentaLimited to drive this business and its execution globally. Pursuant to his appointment inDiligenta Limited, he has ceased to be an Executive Director of the Company. The Companywill continue to avail the services of Mr. Vandrevala as a Director on the Board of theCompany in Non-Executive, Non-Independent capacity with effect from May 13, 2011. As perthe 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 theCompany. The Company has received notice in writing from a member under Section 257 of theAct, 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 rotationand being eligible have offered themselves for re-appointment.

16. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the statutoryauditors of the Company, hold office in accordance with the provisions of the Act upto theconclusion 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 Rulesmade thereunder, is provided in Annexure forming part of the Report. In terms of Section219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the Shareholdersexcluding the aforesaid Annexure. Any Shareholder interested in obtaining copy of the samemay 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 theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, areset out in an Annexure to this Report.

19. Acknowledgements

The Directors thank the Company's employees, customers, vendors, investors and academicinstitutions 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 theirco-operation.

The Directors appreciate and value the contributions made by every member of the TCSfamily globally.

CONSERVATION OF ENERGY

The operations of the Company involve low energy consumption. Adequate measures have,however, been taken to conserve energy.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

The Company continues to use the latest technologies for improving the productivity andquality of its services and products.

Specific areas in which R&D was carried out by the Company

TCS' R&D organisation is focused on creating intellectual capital for the Companyand enabling innovation across the following three dimensions:

o Supporting the competitiveness of current business across industries and servicelines.

o Enabling the creation of new platforms for non-linear business growth.

o Exploring new areas and technologies for future new business opportunities.

TCS has initiated 'Research Scholar' sponsorships to benefit research in the ITdisciplines in Indian Academia. This will increase the number of PhDs in the Company'sfocus areas. This program will also build stronger ties between the academic institutesand TCS Innovation Laboratories through active mentorship. TCS Innovation Laboratorieshave started operating out of the IIT Research Park in Chennai. Two major academicalliances with University of California at Berkeley and Purdue University of USA have beeninitiated.

To foster a culture of innovation in the Company, a number of innovation platforms,contests and awards were launched. The Company also hosted innovation forums in threecontinents and held over 40 innovation workshops and symposia. TCS' researchersparticipated in more than 150 conferences and published close to 200 papers in prestigiousjournals.

TCS increased its Intellectual Property Rights (IPR) significantly. 223 patents werefiled in several countries in FY 2010-11. Until now, cumulatively, TCS has filed 448patent applications of which 68 have been granted. In the current financial year 6 patentshave been granted.

Future Plan of Action

In the coming year R&D organisation will look at creating non-linear solutions. Theresearch areas under focus will be tools, performance and agility, security and privacy,customer experience, ubiquity and health.

Expenditure on R&D

Foreign exchange earnings and outgo