Tata Consultancy Services Ltd


BSE: 532540 | NSE: TCS | ISIN: INE467B01029 
Market Cap: [Rs.Cr.] 508,195 | Face Value: [Rs.] 1
Industry: Computers - Software - Large

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Management Discussions

Management Discussion and Analysis

1. ECONOMY AND INDUSTRY OVERVIEW

The global economic environment in calendar year 2012 continued to remain uncertainwith signs of concern and slow growth (1%-2%)1. Improving consumer confidenceand structural policy decisions in the developed markets are providing the requiredmomentum to kick-start the economy on to the path of recovery. In the emerging markets,strong consumer spending and upbeat investment sentiment continue to drive economic growth(5%-8%)1.

Across markets, technology and innovation are being seen as growth drivers. Investmentin innovation has emerged as a differentiator in the market place. Investment intechnology has been enabling companies to connect with customers and influence theirpurchase decisions on a real-time basis. As a result, spending on technology and relatedservices grew at a rate faster than the GDP growth. The worldwide spending on technologyand related services in 2012 was USD 1.9 trillion2, a growth of 4.8% over 2011.Spend on IT, BPO and software products, continued to have the majority share of 58% oftotal IT spend, standing at USD 1 trillion2. The global sourcing market reacheda volume of USD 124-130 billion in 2012 with a growth of 9% over 2011, which was twice thegrowth rate of the global IT spend.

While banking, financial services & insurance (BFSI) and manufacturing remained thelargest verticals in terms of total share in IT spending, emerging verticals such ashealthcare, retail, government and utilities were the drivers of incremental growth in2012.

The large North American IT market continues to expand at a faster pace (5%) than theeconomy. Investments by American corporations in innovation and digital technologies isdriving the growth in technology spend. IT spend in emerging markets like Asia-Pacificcontinues to grow at a faster pace than in mature geographies on account of investments bycorporations to bring their IT infrastructure on par with global standards.

Despite the changing and volatile economic environment, the global market offerssubstantial opportunities and TCS is fully geared to navigate through the changingtechnology demands and customer expectations.

2. BUSINESS

2.1 Overview

TCS is an Information Technology (IT) services, consulting and business solutionscompany. The Company provides end-to-end technology and technology related services toglobal enterprises. TCS' domain knowledge and Source:1 IMF, 2NASSCOM Strategic Review 2013 technology expertise helps global corporations tofocus on their core business, while TCS manages their investments in technology and helpstransform their business processes.

The breadth and depth of TCS' domain and technology expertise has been built over thelast 45 years through a unique combination of investments in people and new technologiessupported by long standing client relationships.

The Company has been registering steady all round growth in its customer base, presencein geographies, domain expertise and service offerings, which reflect in the steady upwardtrend in its financial outcome over the years. TCS has the distinction of being one of themost valuable companies in India and one of the top ten IT services companies in theworld.

2.2 Capabilities

TCS has strong domain expertise in banking, financial services & insurance, retailand consumer packaged goods, telecom, media and entertainment, manufacturing and 'other'verticals which include hi-tech, life sciences & healthcare, energy resources &utilities and travel transportation & hospitality.

TCS' full services portfolio consists of application development and maintenance,business process outsourcing, enterprise solutions & business intelligence, ITinfrastructure services, assurance services, engineering and industrial services, assetleveraged solutions and consulting. In addition, the Company has launched several newservice offerings in digital technologies - mobility, social computing, big data and cloudcomputing.

3. STRATEGY

The Company's strategy for long-term profitable growth is based on continuously scalingits core IT services business, while investing in new customers, services, markets andindustries.

The Company's strategy of strengthening the current business and investing in thefuture revolves around (1) customer centricity, (2) full services portfolio, (3) globalnetwork delivery model (GNDM™), (4) non-linear business models and (5) experiencecertainty.

3.1 Customer centricity

Building deep and long lasting customer relationships is the key to the Company'slong-term success. The Company has undertaken several initiatives to be customer centric,including creation of a domain-centric organisation structure and building deep domainknowledge and technology skills across industries.

The customer-centric approach has helped the Company to grow its customer baseconsistently. The customer metrics shown here reflect the success of the customer-centricstrategy.

Revenue bucket

Number of customers

FY-13 FY-12 FY-11
$1mn + 556 522 458
$5mn + 277 245 208
$10mn + 196 170 143
$20mn + 115 99 81
$50mn + 48 43 27
$100mn + 16 14 8

TCS' key principles of customer centricity are (1) staying relevant to customers and(2) helping customers to define their future.

3.1.1 Staying relevant

The uncertain economic environment, increasing competition, stricter regulatory &compliance framework and changing consumer behaviour are forcing businesses to adapt tochange and continuously look for ways to stay relevant to the market and customers.

TCS is helping enterprises to standardise, rationalise and transform their businessoperations to become operationally efficient and remain cost competitive in the marketplace. The Company is working closely with its customers, helping them to gain deeperinsights into their customers' needs and enabling them to realign their offeringsaccordingly.

3.1.2 Defining the future

Businesses are finding ways to keep re-inventing themselves for the future andinvesting in building capabilities to predict market dynamics and consumer behaviours.

TCS is working with its clients in a 'co-creation model' and helping them innovate newbusiness models, products & services in order to protect and grow their market base.

3.2 Full services portfolio

The Company has strategically invested in building multiple service offerings over thelast decade and made them function in a synchronised manner. This has helped the Companyto position itself as an integrated full service player in the IT services space. TCS'full services capability enables the customer to measure the efficiency and effectivenessof transformational engagements with the Company on the basis of business outcome.Leveraging this capability of TCS, global corporations are able to rely on a singleservice provider for assured delivery of large transformation programmes. In fiscal 2013,the Company has made significant progress in digital technologies and developed mobileapplications and consumer analytics on top of existing investments in core applicationsfor many customers.

3.3 Global Network Delivery Model (GNDM™)

TCS' full services capability is supported by its strategy of investing in GNDM™.This capability is widely recognised by leading industry analysts and observers as anindustry benchmark, offering 'one global service standard' to customers across the worldin a seamless manner.

GNDM™ supports customers' operations in various regions of the world and helpstheir business expansion plans in new and emerging markets. GNDM™ also provideshigher level of comfort to customers on account of

(a) proximity to client's location, (b) language capability, (c) similar time zone and(d) business continuity planning. For TCS, GNDM™ facilitates (a) leveraging of globaltalent,

(b) de-risking of delivery location concentration and

(c) entering new markets.

During last year, TCS further expanded its GNDM™ capability by opening four newdelivery centers in the USA, the UK and China, taking the total number of global deliverycenters (excluding India) to thirty two.

3.4 Non-linear business model

While the Company continues to make significant progress in the traditional IT servicesofferings, it has been pursuing non-linear growth opportunities, which contribute revenuegrowth without commensurate growth in headcount.

The contributors to the non-linear business model are:

Products: TCS' intellectual property (IP) based products in banking and financialservices, insurance, retail, life sciences and health care, public sector and in otherindustries is driving non-linear growth through license revenue and high-end domainconsulting. TCS' IP based products include TCS BaNCS(BFSI), Rewardz and mPOS (retail),hosted OSS/BSS (telecom), Clin e2e and Med Mantra (life science & healthcare) andSWIFT MRO (travel).

Platforms: TCS has built (a) vertical platforms in banking processes, life insuranceand pension policy administration, retail and manufacturing supply chain, (b) horizontalplatforms in analytics, finance & accounts (F&A) and payroll and (c) technologyplatforms like iON - a fully integrated IT-as-a-Service (ITaaS) model for small &medium businesses. TCS' platform based solutions and services optimises clients' spend ontechnology and processes.

Solutions: TCS has built several configurable solutions and pre-built components thathelp expedite the implementation of business transformation programmes and large complexprojects. The 'Technology Excellence

Group' of the Company focuses on predicting the future of technology and invests inbuilding various technology solutions. The Company has also built a number of industry andtechnology solutions in digital technologies like mobile and social media.

3.5 Experience certainty

'Experience certainty', TCS' brand promise to its customers, is based on the coreprinciples of 'results, leadership, and partnership'. TCS helps customers experiencecertainty by reliably delivering business results, providing leadership to drivetransformation and partnering for success. Experience certainty is part of our culture ofcommitment and is ingrained in the customer-centric behaviour of our associates.

Experience certainty is backed by a strong set of metrics that the Company monitors formeeting quality parameters of delivery and relationship. TCS' 'Delivery Excellence Group'continuously refines delivery processes and helps the Company to stay ahead of globalquality standards.

4. DIGITAL TECHNOLOGIES

Adoption of digital technologies is a top priority among all enterprises, acrossindustries and geographies. TCS has significantly invested in digital technologies -mobile, cloud, big data, analytics and social media. While, individually all of thesetechnologies are influencing the way business operates and interacts with consumers, theirreal power lies in the 'combination of digital forces'. A real time analysis of consumerbehaviour, delivered on a mobile device through cloud services has the biggest potentialto support business in taking right decisions in real-time.

TCS' digital innovation lab has built several digital applications and solutions formultiple industries, which are being implemented by customers in North America, Europe andAsia-Pacific. The 'customer collaboration center' in the Silicon Valley of the Company isa digital innovation lab, where customers from retail, telecom, banking, manufacturing andother industries are collaborating to shape the digital future of their business.

The Company envisions tremendous growth potential in digital technologies and iscommitted to continue investing in this area to drive long-term growth. The Company isalso making initial investments in new emerging technologies like production automationand high performance computing, which have great future potential.

5. INNOVATION

TCS continues to invest in research framework which includes:

• Invention: creation of TCS' IP based assets in the areas of domain andtechnology

• Co-Innovation: creation of new ideas, concepts and intellectual property inactive partnership and collaboration with entities outside the company, using TCS'Co-Innovation Network (COIN™)

• Innovation: conversion of new ideas, concepts & intellectual properties intouseful outcomes for the Company's customers, business units and society.

TCS R&D continues to focus on improvement of quality and efficiency in servicedelivery. This year, a large number of software tools from R&D were released in themarket as eight distinctive suites under TCS' tool brand MasterCraft™. These suitesof products automate IT service processes such as application design and development,software assurance, application support and maintenance, performance testing andmonitoring, test data management and enterprise data management.

Substantial R&D effort is also being spent on 'eTransform', an analytics-ledtoolset that transforms customers' IT infrastructure and drives efficiency. The 'ConnectedMarketing' platform has been enhanced to deliver social and digital analytics to themarketing function of TCS' customers. The product 'Optumera™' addresses keyoperational optimisation challenges for a retailer.

The Company is working on currency risk models, robotic surveillance, machine learningapplications, crowd sourcing platform, energy management systems, nano-technologyincluding novel drug-delivery mechanisms & nano-fluids, human-centric large-scalesocial systems and computer vision. In the longer time horizon. Company's R&D isexploring ideas in meta-genomics related to malnutrition, tuberculosis and diabetes, aswell as genomics and disease markers.

TCS filed 425 patents during the year 2012-13 and was granted 9 patents. Cumulativepatents filed till date globally stands at 1,280, out of which so far 81 patents have beengranted to the Company. These 'IP' assets are managed comprehensively by an indigenouslydeveloped process and system.

6. HUMAN RESOURCES STRATEGY

The human resources strategy enabled the Company to attract, integrate, develop andretain the best talent required for driving business growth. The sustained strategic focusto enhance employee capability, improve efficiency and groom future leaders has helped TCSmaintain its benchmark status in the IT industry.

The Company hired and integrated 69,728 people into its workforce across the globe infiscal 2013. The Company employs 2,76,196 associates representing 118 nationalitiesdeployed across 55 countries. The 'workforce management strategy' was executed optimallyto fulfil business demand, deliver consistently high utilisation rates and keep manpowercosts within the desired range as per business plan.

Our mature HR processes enable us to be agile and responsive to the dynamic globalenvironment and stay relevant to the customers. Robust HR systems and sound execution ofstrategy ensure that the Company is able to manage the complexities associated with itsscale and geographic spread, while remaining compliant with the regulatory requirements inthe countries it operates.

The Company has created a performance driven environment where innovation isencouraged, performance is recognised and employees are motivated to realise theirpotential. Our relentless pursuit to connect with employees on a regular basis,communicate in an open and transparent manner, provide opportunities to learn and growwithin the organisation are yielding desired results as is evident from the high retentionrates and the motivation and engagement levels of our employees.

6.1 Talent acquisition India Overseas Total
Opening headcount (As of April 1, 2012) 2,20,835 17,748 2,38,583
Gross additions 59,276 10,452 69,728
Attrition 25,745 6,370 32,115
Net additions 33,531 4,082 37,613
Closing headcount (As of March 31, 2013) 2,54,366 21,830 2,76,196

TCS remained the highest recruiter in the industry with a gross addition of 69,728employees out of which 59,276 were in India and the remaining 10,452 were outside India.The gross addition includes 1,368 people in-sourced from customer organisations globally.

The company kept its commitment and inducted all the trainees who were given offersduring campus placement to join the Company in fiscal 2013.

We continue to remain the employer of choice at the engineering campuses in India. TCSvisited 371 campuses in India, with 99.5% day one slots, and made 24,533 offers toengineering trainees and 269 offers to management trainees for fiscal 2014.

The Company has accelerated its effort to recruit from colleges in USA, Canada, China,Uruguay and Hungary. In the US, TCS recruited students from 40 universities and 7 businessschools.

6.2 Academic interface programme (AIP)

The Company continues to invest on AIP initiatives with the objective of developingfaculty for academic institutes, improve employability of students and develop curriculaas per industry requirements. As part of NASSCOM initiative of overall curriculumrevamping, TCS designed training modules for different engineering branches.

A total of 616 institutes in India and 288 institutes overseas benefitted through theCompany's AIP activities like workshops for faculty and students, faculty developmentprogrammes, research scholarships, awards, research alliances and project opportunitiesfor students. The Company supports 111 research scholars pursuing their PhD in 31institutes across India, through its research scholarship programme.

The top management of the Company engages in cross-pollination of ideas and discussionswith academicians from premier technical and management institutes through 'Sangam', anannual flagship event. In fiscal 2013 the event was held at Mumbai with 72 academiciansfrom India and abroad.

TCS won the 21st 'Global HR Excellence Awards 2013' in the category 'outstandingcontribution to the cause of education', for the second consecutive time.

'Campus Commune', the dedicated social engagement platform of TCS for various academicinterest groups has over 1,67,000 student members. This forum is used extensively fortalent spotting through various competitions like Codevita, Mobeel and Testimony. It isalso used as a platform to stay connected with prospective employees throughout theacademic life cycle of a student.

6.3 Learning and development

The Company continued to invest in enhancing its human capital through building skillsand competencies for its associates. We are bringing in a paradigm shift in the learningprocess which may be called the next-gen learning & development (L&D). Thelearning eco-system is being transformed by investing in interactive classrooms, videobased training and social media enabled social learning. 'Any Time - Any Where' learningis becoming a reality in TCS. 30,464 new hires from colleges were trained to be ITprofessionals through our elaborate initial learning programme.

We are expanding our training infrastructure capacity by building a state of the arttraining center in Thiruvananthapuram with a capacity to accommodate 15,000 trainees.

A total of 12,789 person years of effort was invested in fiscal 2013 on variouslearning activities. In addition, 47,167 certifications were acquired by our employees toenhance their proficiency in relevant areas of technology, domain and process.

6.4 Talent management, leadership development and talent retention

The performance and career management processes of TCS are fully globalised. Digitisedsystems have been enhanced and new 'Career Hub' has been launched streamlining the processof recording aspirations, identifying high potentials, mentoring and tracking careermovement of employees.

The culture of reward and recognition in TCS is aided by 'TCS Gems', the global rewardand recognition tool, with well-defined criteria and processes to enhance performance. Weparticipated in multiple compensation surveys in India and other geographies to ensurethat our compensation and total rewards strategy remains competitive.

A healthy leadership pipeline is maintained through the layered framework of'Leadership Development Programmes' (LDP), focusing on developing behavioural, businessand people competencies. Potential leaders are identified and are nurtured through LDPsand given challenging roles to build leadership capability. We have tied up with globallyrecognised coaching agencies to provide coaching intervention to our leaders.

The organisation culture of open communication is supported through a highly flexibleand transparent internal social networking platform. It empowers employees to articulatetheir feelings freely, exchange ideas and contribute to the organisational growth. Inaddition, regular connect with our employees helps to understand the pulse of theorganisation and take appropriate measures to keep the workforce engaged and motivated.

A number of non-work related employee engagement initiatives such as fun events,sports, cultural activities and volunteering for social causes were organised across theglobe under our employee engagement platform known as 'Maitree'. The culture ofvolunteering helps employee bonding within the organisation and reduces stress at work.Employees are also encouraged to involve their families in these activities.

Employee health and safety are of crucial importance. Fit4Life, health awarenesssessions, periodic medical check-ups, gymnasiums in offices and 24x7 'Employee AssistanceProgramme' are some of the important initiatives undertaken by the Company to encouragehealth consciousness. A number of events were organised throughout the year to enhance theawareness level of our employees towards road safety.

The employee engagement initiatives and various HR interventions have helped us controlattrition. We remain the industry benchmark for talent retention. The Company's attritionrate including BPO has come down to 10.60% in fiscal 2013, as compared to 12.20% in fiscal2012.

6.5 Talent diversity

The Company employed persons from 118 different nationalities. The number of non-Indiannationals was 21,282 as at March 31, 201 3 (1 7,329 as of March 31, 2012). Efforts aremade continuously to integrate differently-abled individuals into the workforce. Effortsare also made to increase recruitment of individuals belonging to disadvantaged sectionsof society.

TCS proactively creates an environment of inclusion to attract and retain women. Womenconstituted 32.40% of the Company's workforce as on March 31, 2013 (31.60% as on March 31,2012). Our progressive policies and customised programmes such as executive educationprogramme for women in mid-management, interactive forums and women discussion circlesaddress the aspirations and needs of our women employees.

Special initiatives were also taken to strengthen cultural orientation of employees andhelp drive "One TCS Culture" across the organisation. A learning module has beencreated specifically for managers to enable them to work with diverse teams.

6.6 Compliance

The Company regularly monitors the changes in legislation pertaining to employment,labour and immigration laws across the globe to ensure total compliance, assisted byregular audits. The key areas where TCS needs to introduce new policies or modify theexisting policies to remain compliant are identified and acted upon.

7. OPPORTUNITIES & RISKS

The large size of the addressable global market, with relatively low current level ofpenetration suggests significant headroom for future growth. The Company has positioneditself well for the growth in business with an aligned strategy, structure andcapabilities.

The Company has deployed an 'Enterprise-wide Risk Management' (ERM) programme based onthe recommendations of the 'Committee of Sponsoring Organisations' (COSO) formed by theTreadway Commission. The risk reports prepared by the Chief Risk Officer are reviewed bythe board of directors at regular intervals.

The risk management process goes through a review annually in order to keep it alignedwith the changing global risks. The risk management process is completely digitised,accessible to all units of operation across the globe and the same is reviewed by thecorporate risk office on quarterly basis.

ERM programme involves risk identification, assessment and risk mitigation planning forstrategic, operational, financial and compliance related risks across various levels ofthe organisation.

The following table lists some of the key risks faced by the Company.

Key risk Impact on TCS Mitigation
Global economic situation The economic slowdown in the US and Europe has eased, but uncertainty remains. The US economy has started showing signs of stability; still uncertainties remain with respect to debt ceiling, which could lead to further economic challenges in US. Unemployment situation is still a worry in US and Europe. Possible sovereign default in Europe is also an area of concern. • Geography diversification: Faster growth in geographies other than US and UK/Europe
• Increase emphasis on portfolio of offerings, higher value proposition and full service play
• Europe is providing opportunities for growth, since many customers are looking at cost optimisation strategies through application of technology.
Protectionism Some of the governments of the developed countries in North America and Europe are bringing in new regulations to make labour movement from India difficult. Tightening visa process, increasing rejections for visa and work permit applications, increasing minimum wage requirement may hamper growth prospect in major markets. Restrictions on foreign and preferential treatment to local organisations are on the increase. • Stepped up rigour in terms of manpower planning and deployment
• Focus on GNDM™ model with local talent sourcing and increased leveraging of offshore delivery
• Sensitising governments on restrictive regulations/ practices which prevent free flow of goods and services
• Use of industry bodies for lobbying with the governments
• Use of advocacy agencies in global markets to lobby for our commercial interests.
• Continuous scanning of environment for early detection of emerging trend
• Investing in emerging business models and taking pioneering role in adoption of technology
• Investing in new IPR
Business model redundancy Business models like cloud computing and other pay-for-use models are beginning to gain traction in most industries. This could result in demand compression for traditional IT services/ pricing pressures. • Culture of embracing new technology, path-breaking ideas and innovation.
• Well laid out integration plans and close monitoring of the same
Integration risks in M&A The Company's post-acquisition challenges include cultural, financial and technology integration risks which if not addressed adequately could result in failure to achieve the strategic objectives of the acquisition and the resultant synergy expectations. • Close monitoring and review of acquired entities and taking timely actions as required.
Supply-side risks • Scaling up the Company's delivery footprint in other geographies with large talent pools
• Investing in improving the quality of recruits while strengthening our brand image in campuses and getting us the coveted 'Day One' placement slot during recruitment season
• Recruiting science graduates to expand the available pool of fresh recruits
Subject matter experts with domain and technology expertise are the key to success of the Company. The Company could be impacted by the loss of such critical talent. Inability to attract sufficient number of software engineers, architects and IT specialists with critical skills in demand can impact the Company's ability to deliver. • Mature HR processes, competitive remuneration, growth opportunities and an empowering, engaging workplace to ensure high employee satisfaction and retention of Gen Y recruits who constitute the majority of our workforce
• Strong training programmes, in classroom as well as e-learning mode has been put in place in order to keep the workforce up-to-date with technology and soft skills.
• Currency hedging policies and practices in place
• Hedging strategy monitored by risk management council through regular reviews
Currency Volatility Volatility in currency exchange movements resulting in transaction and translation exposure. • Large part of expenses is in local currency, providing natural hedge.
• Decentralised, institutionalised framework for cost management
Cost pressures Increasing salary cost and escalating operation expenses creating pressure on margin. • Focus on improving productivity.
• Strong anti-bribery checks and controls put in place and being monitored closely
Anti bribery and compliance (ABC) Strict ABC laws on the lines of UK anti bribery law getting support world-wide. Non-compliance can lead to reputation loss in addition to penal action. • Tata Code of Conduct is binding on all employees.

VALUE CREATION SINCE FISCAL 2005

The journey of TCS is characterised by its ability to reinvent itself in terms ofevolving technology and business practices. Over the years, TCS has been able todemonstrate agility and adaptability in innovating customer-specific solutions.Disciplined execution of complex projects and customer centricity has enabled TCS tobecome a trusted business partner.

In achieving technical and professional excellence, TCS has not only added value tocustomers' businesses, but created significant wealth for its shareholders and otherstakeholders. The wealth so created has been judiciously allocated and shared with thestakeholders. The Company's performance over the last nine years at consolidated levelbrings out the success of the business strategy.

VALUE CREATION

Strategic focus on geographical diversity

We strategically invested in Asia-Pacific, Latin America and Middle East & Africamarkets in order to derisk geographical concentration. The strategy has paid off well overthe years.

Overseas delivery centers - 'One Global Service Standard'

We have set up 32 delivery centers in 20 countries outside India and ensured a uniformdelivery standard across the globe. This has expanded our geographic spread, derisking thedelivery location concentration. It has also enabled us to take advantage of local talentsand proximity to customers, while leveraging the benefits of diversity.

Strategic focus on new services

We have focused on new services in the portfolio of service offerings and revenues fromnew services recorded impressive growth over the years.

Customer centricity

Our strategy to understand customers' needs and offer relevant solutions has resultedin significant growth in the number of customers and upward movement in revenue band.Revenue percentage from repeat business remains at a high level of 98.61% in fiscal 2013(95.10% in fiscal 2005).

Last twelve months revenue buckets

Number of customers

Fiscal 2013 Fiscal 2005
$ 1 million + 556 214
$ 5 million + 277 76
$ 10 million + 196 42
$ 20 million + 115 25
$ 50 million + 48 5
$ 100 million + 16 -

Earnings per share

Earnings per share (EPS), after adjusting for two 1:1 bonus issues, went up 6 fold,from Rs 11.84 in fiscal 2005 to Rs 70.99, in fiscal 2013.

Economic value addition (EVA)

EVA per annum in the last nine years has increased 6 fold.

Market capitalisation

Market capitalisation crossed Rs 3,00,000 crores on March 31, 2013. Compared to thelisting price, capital appreciation of a share is more than 6 times, post two 1:1 bonusissues.

Increase in net worth

The net worth of the Company has increased more than 11 times in the last nine years.

Increase in gross block

The gross block of the Company has increased 10 times in nine years.

Dividend

Dividend for the year (including final dividend and dividend distribution tax) andpayout ratio have remained high. In addition, substantial special dividends were declaredfor two of the last four fiscals.

SHARING OF WEALTH

Sharing of cash generated since fiscal 2005

Of the cash generated during fiscal 2005 to 2013, as much as 41.57% has beendistributed to the shareholders as dividend (final dividend to be paid post fiscal 2013not considered).

OPERATIONAL EXCELLENCE

Revenue trend

Revenue in fiscal 2013 grew to Rs 62,989 crores (USD 11.57 billion), showing a 6-foldincrease in nine years, with a compounded annual growth rate (CAGR) of 26.27%.

Growth in industry verticals

Over the last nine years all industry verticals grew at double digit CAGR.

CAGR in retail & CPG (40%), BFSI (30%), telecom (23%) and other verticals (24%)were significant.

Management of costs

In spite of increases in the compensation package over the years, employee cost inrelation to revenue has been steady. The Company has been able to continuously strengthenits cost management processes, which is reflected in manpower as well as non-manpowercosts.

Growth in geographic revenue

Over the last nine years, CAGR in Americas and Europe has been more than 25%. CAGR inemerging markets such as Asia-Pacific and Middle East & Africa has been more than 35%.

Earnings trends

Profit before tax (PBT) has grown by almost 7 times in the last nine years. The Companyhas been successful in pursuing profitable growth over the years.

FINANCIAL PERFORMANCE - (CONSOLIDATED)

Tata Consultancy Services Limited was listed on 'National Stock Exchange of IndiaLimited' and 'BSE Limited' on August 25, 2004.

The financial statements of Tata Consultancy Services Limited ('TCS' or 'the Company')are prepared in compliance with the Companies Act, 1956 and Generally Accepted AccountingPrinciples in India (Indian GAAP). The Company follows the revised schedule VI as notifiedby the Ministry of Corporate Affairs (MCA) with effect from April 1, 2011.

Significant accounting policies used for the preparation of the financial statementsare disclosed in the notes to the consolidated financial statements 2 (a) to (q).

The financial results of the Company as per Indian GAAP are discussed in two parts.

(i) The consolidated financial results of Tata Consultancy Services Limited, whichdepicts the performance of the Company, including all its subsidiaries across the world.The consolidated results are more relevant for understanding the performance of theCompany.

(ii) The unconsolidated financial results of Tata Consultancy Services Limited,incorporated in India, excluding the performance of all its subsidiaries.

CONSOLIDATED FINANCIAL RESULTS - SUMMARY

The following discussion and analysis should be read together with the consolidatedIndian GAAP financial statements of Tata Consultancy Services Limited for the financialyear ended March 31, 2013.

The revenue of the Company aggregated Rs 62,989.48 crores in fiscal 2013 (Rs 48,893.83crores in fiscal 2012), registering a growth of 28.83%. Revenue in USD in fiscal 2013 was11.57 billion (USD 10.17 billion in fiscal 2012).

Other significant financial parameters are:

• The Company's earnings before interest, tax, depreciation and amortisation(EBITDA) excluding other income aggregated Rs 18,039.91 crores in fiscal 2013 (Rs14,435.31 crores in fiscal 2012) - a growth of 24.97%.

• The profit before tax (PBT) aggregated Rs 18,089.73 crores in fiscal 2013 (Rs13,923.31 crores in fiscal 2012) - a growth of 29.92%.

• The net profit after tax (PAT) for fiscal 2013 aggregated Rs 13,917.31 crores(Rs 10,413.49 crores in fiscal 2012) - a growth of 33.65%.

• Gross dividend paid/ proposed for the fiscal 2013 in respect of equity sharesaggregated Rs 5,024.06 crores (Rs 5,686.81 crores in fiscal 2012).

• The Company's consolidated earnings per share (EPS) were Rs 70.99 in fiscal 2013(Rs 53.07 in fiscal 2012) - a growth of 33.77%.

DISCUSSIONS ON CONSOLIDATED FINANCIAL RESULTS

The following table gives an overview of the financial results of TCS Limited(consolidated):

(Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores % of revenue Rs crores % of revenue % growth
Revenue from operations 62,989.48 100.00 48,893.83 100.00 28.83
Expenses
Employee benefit expenses 24,039.96 38.17 18,551.24 37.94 29.59
Overseas business expenses (employee allowances paid overseas) 7,881.90 12.50 6,132.11 12.54 28.53
Services rendered by business associates and others 3,763.74 5.98 2,414.61 4.94 55.87
Employee and BA related expenses 35,685.60 56.65 27,097.96 55.42 31.69
Overseas business expenses (other than employee allowances paid overseas) 820.04 1.30 620.90 1.28 32.07
Operation and other expenses 8,443.93 13.41 6,739.66 13.78 25.29
Total expenses 44,949.57 71.36 34,458.52 70.48 30.45
Earnings before interest, tax, depreciation and amortisation (EBITDA) 18,039.91 28.64 14,435.31 29.52 24.97
Other income (net) 1,178.23 1.87 428.17 0.88 175.18
Finance costs 48.49 0.08 22.23 0.04 118.13
Depreciation and amortisation expense 1,079.92 1.71 917.94 1.88 17.65
Profit before tax (PBT) 18,089.73 28.72 13,923.31 28.48 29.92
Tax Expense 4,014.04 6.37 3,399.86 6.96 18.06
Profit for the year before minority interest 14,075.69 22.35 10,523.45 21.52 33.76
Minority interest 158.38 0.26 109.96 0.22 44.03
Profit for the year (PAT) 13,917.31 22.09 10,413.49 21.30 33.65

Revenue Analysis of revenue growth

Growth attributable to Fiscal 2013 (%) Fiscal 2012 (%)
Volume 16.83 23.05
Realisation (0.37) 1.13
Mix (onsite / offshore) (0.28) (1.17)
Impact of exchange rate 12.65 7.99
Total growth 28.83 31.00

The growth in volume in fiscal 2013 was lower than that of fiscal 2012 primarily onaccount of continuing global economic uncertainties and lower discretionary spending bycustomers. Impact of exchange rate fluctuation was positive.

Movements of exchange rates of major currencies are given below.

Fiscal 2013

Fiscal 2012 % change in average rates
High Low Average Average
USD 57.33 50.52 54.55 48.12 13.36
GBP 89.76 80.50 85.89 77.02 11.52
EUR 73.43 66.65 70.27 66.36 5.89
CAD 57.39 50.93 54.33 48.56 11.88
AUD 58.89 52.12 56.26 50.30 11.85

Out of the total revenue earned in fiscal 2013, 92.70% was earned in foreigncurrencies. Fiscal 2013 witnessed strong volatility in exchange rates particularlyaffecting USD, GBP, CAD and AUD. Net impact of such strong volatility in exchange rates onrevenue of the Company has been a positive variance of 12.65% in fiscal 2013 (7.99% infiscal 2012).

Revenue by industry

Major industries contributing to revenue of the Company are (1) banking, financialservices and insurance (2) manufacturing (3) retail and consumer packaged goods (4)telecom, media and entertainment and (5) others. 'Others' includes (a) hi-tech (b) lifesciences and healthcare (c) travel, transportation and hospitality (d) energy, resourcesand utilities.

During fiscal 2013, revenue from all industries showed double digit growth rates.Industry wise performance is discussed in segment results section.

Revenue by geography

Fiscal 2013

Fiscal 2012

Rs crores % of revenue % growth Rs crores % of revenue % growth
North America 33,215.38 52.73 27.44 26,064.25 53.31 29.62
UK 10,758.29 17.08 44.34 7,453.28 15.24 29.16
Europe 5,976.07 9.49 21.26 4,928.25 10.08 41.62
India 4,890.24 7.76 16.37 4,202.29 8.60 22.34
Asia-Pacific 4,698.67 7.46 27.06 3,697.89 7.56 50.67
Latin America 2,112.13 3.35 40.29 1,505.56 3.08 11.52
Middle East and Africa 1,338.70 2.13 28.44 1,042.31 2.13 43.38
Total 62,989.48 100.00 28.83 48,893.83 100.00 31.00

North America, the United Kingdom and Europe continue to be major contributors. Revenuefrom these markets constituted 79.30% of the Company's revenue in fiscal 2013 (78.63% infiscal 2012).

Among other markets, Latin America had an impressive growth of 40.29%. Middle East andAsia-Pacific also grew in line with the Company growth rate.

Application development & maintenance (ADM) continues to be the major contributor,although its relative contribution to the total revenue has come down over the past years(42.80% in fiscal 2013, 58.20% in fiscal 2006). Service lines which registered significantgrowth during fiscal 2013 were consulting, IT infrastructure services, BPO andassurance services.

Revenue by services

Fiscal 2013

Fiscal 2012

Service lines Rs crores % of revenue % growth Rs crores % of revenue % growth
Application development and maintenance (ADM) 26,960.76 42.80 23.22 21,879.65 44.75 26.17
Business process outsourcing (BPO) 7,853.14 12.47 45.53 5,396.11 11.04 28.28
Enterprise solutions (ES) including business intelligence (Bl) 9,575.87 15.20 25.06 7,657.20 15.66 32.76
IT infrastructure services (IT IS) 7,229.52 11.48 46.97 4,919.20 10.06 39.96
Assurance services 4,856.29 7.71 33.29 3,643.51 7.45 44.01
Engineering and industrial services (EIS) 2,904.31 4.61 28.60 2,258.47 4.62 26.03
Asset leverage solutions 1,700.83 2.70 (9.51) 1,879.67 3.84 38.03
Consulting 1,908.76 3.03 51.49 1,260.02 2.58 55.46
Total 62,989.48 100.00 28.83 48,893.83 100.00 31.00

Revenue by nature of contracts

Nature of contract Fiscal 2013 (%) Fiscal 2012 (%)
Time and material basis 52.84 52.62
Fixed price, fixed time 47.16 47.38
Total 100.00 100.00

The mix of revenue from time and material contracts and fixed price, fixed timecontracts has remained steady with the former going up marginally in fiscal 2013.

Revenue by location of service delivery

On-site revenue is for those services which are performed at client locations. Off-siterevenue reflects the aggregation of revenue from services which are performed at deliverycenters located in India (referred to as offshore revenue) as well as global deliverycenters (GDC) in various countries. The composition of the Company's revenue from on-site,offshore and off-site was as follows:

Revenue mix (% of revenue) Fiscal 2013 Fiscal 2012
Offshore India

49.45

50.57

Off-site GDC

5.16

4.42

Total Off-site 54.61 54.99
Total On-site 45.39 45.01
Total 100.00 100.00

Revenue from on-site, offshore and off-site are aligned with customer requirements. Mixof revenue from these locations has remained steady.

Employee costs and overseas business expenses

Employee costs include salaries which have fixed and variable components, contributionto retirement funds and pension schemes. It also includes expenses incurred on staffwelfare.

Overseas business expenses primarily comprise living allowances paid to employees onoverseas assignments.

For purpose of the Management Discussion and Analysis (MD&A), employee relatedcosts included in 'overseas business expenses' and costs related to business associates(BA) have been grouped under 'Employee and BA related costs'.

(Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores %of revenue Rs crores %of revenue
Employee benefit expenses 24,039.96 38.17 18,551.24 37.94
Overseas business expenses (employee allowances paid overseas) 7,881.90 12.50 6,132.11 12.54
Services rendered by BA and others 3,763.74 5.98 2,414.61 4.94
Total 35,685.60 56.65 27,097.96 55.42

Total employee benefit expenses and BA costs have increased by 31.69%. The increase inrelation to revenue was 1.23%, mainly attributable to (1) requirement of businessassociates (BA) with specialised skills at overseas locations and (2) marginal drop inaverage utilisation as shown below.

Utilisation Fiscal 2013 Fiscal 2012
Including trainees 72.30% 74.40%
Excluding trainees 81.60% 82.20%

Overseas business expenses (other than employee allowances paid overseas)

Overseas business expenses (other than employee allowances paid overseas) includetravel, marketing and office expenses incurred in overseas locations. These expensesincreased from Rs 620.90 crores (1.28% of revenue) in fiscal 2012 to Rs 820.04 crores(1.30% of revenue) in fiscal 2013. Overseas travel which constituted the largestcomponent, increased from Rs 574.16 crores (1.17% of revenue) in fiscal 2012 to Rs 817.56crores (1.30% of revenue) in fiscal 2013.

Operation and other expenses

Fiscal 2013

Fiscal 2012

Rs crores %of revenue Rs crores %of revenue
Software, hardware and material costs 2,652.50 4.21 2,219.15 4.54
Communication 766.91 1.22 650.20 1.33
Travelling and conveyance 816.65 1.30 640.75 1.31
Rent 1,165.17 1.85 968.22 1.98
Legal and professional fees 460.53 0.73 346.61 0.71
Repairs and maintenance 409.77 0.65 325.66 0.66
Electricity 475.76 0.75 366.32 0.75
Recruitment and training 249.13 0.40 223.18 0.46
Others 1,447.51 2.30 999.57 2.04
Total 8,443.93 13.41 6,739.66 13.78

There has been a marginal decrease of 0.37% in operation and other expenses as apercentage of revenue (from 13.78% in fiscal 2012 to 13.41% in fiscal 2013) due todecrease in almost all items of expenses except the item 'others', which includes aonetime charge of Rs 161.63 crores for settlement of a class action suit in the US.

Earnings before interest, tax, depreciation and amortisation (EBITDA)

EBITDA in fiscal 2013 was Rs 18,039.91 crores (Rs 14,435.31 crores in fiscal 2012).There was a drop of 0.88% in EBITDA as percentage of revenue. The decrease was primarilyattributable to:

• increase in employee and BA related costs by 1.23%

• offset by a decrease in operation and other expenses by 0.37%.

Other income (net)

Other income in fiscal 2013 was Rs 1,178.23 crores (Rs 428.17 crores in fiscal 2012),primarily attributable to:

• interest income increasing by 35.87%, from Rs 765.22 crores in fiscal 2012 to Rs1,039.74 crores in fiscal 2013 arising out of effective treasury management

• increase in exchange gain (net), from a loss of ^ 426.02 crores in fiscal 2012to a gain of Rs 49.27 crores in fiscal 2013.

Forward and option contracts: The Company enters into foreign exchange forwardcontracts and currency option contracts to manage its exposure to exchange ratefluctuations, in accordance with its risk management policies.

The Company designates some of its hedges as 'cash flow hedges' on completion of therequired documentation. Such 'cash flow hedges' are measured at their respective fairvalues, at the reporting dates. Changes in the fair value of effective hedges areaccounted in the 'shareholders' funds' and the ineffective hedges are accounted as 'otherincome (net)' in the profit and loss account. On sale or termination of any 'cash flowhedge' before maturity, hedge accounting is discontinued and cumulative gains or losses onsuch instruments are retained in the 'shareholders' funds' and thereafter transferred tothe profit and loss account on maturity of the respective instruments. On maturity in thenormal course of a cash flow hedge instrument, the resultant gains or losses are taken to'other income (net)' in the profit and loss account.

Foreign exchange forward and currency option contracts outstanding at the reportingdates, other than designated cash flow hedges, are stated at their fair values and theresultant gains or losses are accounted as 'other income (net)' in the profit and lossaccount for the period.

Note 42 to the consolidated financial statements provides details of the Company's'Derivative financial instruments'.

Depreciation and amortisation

Depreciation and amortisation increased by 17.65% from ^ 917.94 crores in fiscal 2012to Rs 1,079.92 crores in fiscal 2013. The increase was spread across all asset groups,particularly in computers, furniture and fixtures, freehold buildings and off ceequipment.

Profit before tax (PBT)

PBT in fiscal 2013 was Rs 18,089.73 crores 13,923.31 crores in fiscal 2012). As apercentage of revenue PBT increased from 28.48% in fiscal 2012 to 28.72% in fiscal 2013.The increase of 0.24% in terms of revenue is mainly due to (1) decrease in EBITDA 0.88%,(2) increase in other income 0.99% and (3) decrease in depreciation & amortisation0.17%.

Tax expense

Tax expense comprises current income tax and the net movement in the deferred taxassets and liabilities from operations in India and foreign tax jurisdictions. Tax expenserelating to operations is determined in accordance with tax laws applicable in countrieswhere such operations are carried out.

The Company avails tax incentives applicable to Special Economic Zones (SEZ) under theIndian Income Tax Act, 1961 (IT Act).

Provisions of 'Minimum Alternative Tax' (MAT) under the IT Act were applicable to theCompany's income excluding its income from SEZ. With effect from April 1, 2011, MAT becameapplicable to income from SEZ also. Payment of MAT results in tax credit which accordingto the IT Act can be carried forward for subsequent ten years and adjusted against futuretax liabilities. In the view of the Company, it would have suffIcient tax liabilities tooffset the MAT credits during the prescribed carry forward period. Accordingly, MAT hasbeen recognised as an asset in the balance sheet.

Tax expense increased from Rs 3,399.86 crores in fiscal 2012 to Rs 4,014.04 crores infiscal 2013. As a percentage of revenue, it decreased from 6.96% in fiscal 2012 to 6.37%in fiscal 2013. The effective tax rate has gone down from 24.42% in fiscal 2012 to 22.19%in fiscal 2013, primarily on account of reduced tax on lower dividend received by theIndian parent company from its overseas subsidiaries, offset by some of the SEZ unitslosing status of full exemption on expiry of five years.

Minority interest

Minority interest registered an increase from Rs 109.96 crores in fiscal 2012 to Rs158.38 crores in fiscal 2013, primarily due to higher prof ts in some subsidiaries havingminority holding.

Profit for the year

The Company's net profit was Rs 13,917.31 crores in fiscal 2013 (22.09% of revenue) ascompared to Rs 10,413.49 crores in fiscal 2012 (21.30% of revenue). The increase of 0.79%in profitability is attributable to (1) improvement in PBT 0.24% and (2) lower taRs.59%.

Consolidated segment result

The Company considers 'Industry' as its primary segment and 'Geography' as itssecondary segment. Revenue and expenses directly attributable to segments are reportedunder each reportable primary segment. The following table presents each industrysegment's revenue as a percentage of total revenue and each industry segment's result,i.e., operating profit (excluding unallocated expenses) as a percentage of total segmentresult.

(Rs crores)

Segment revenue

Segment result

Fiscal 2013 Fiscal 2012 Fiscal 2013 Fiscal 2012 % growth Fiscal 2013 Fiscal 2012 Fiscal 2013 Fiscal 2012 % growth

Rs crores

% of Revenue

Rs crores

% of segnment result

Banking, financial services and insurance (BFSI) 27,146.25 21,062.22 43.10 43.08 28.89 8,014.29 6,493.07 44.78 45.36 23.43
Manufacturing 5,215.52 3,800.54 8.28 7.77 37.23 1,362.65 985.89 7.61 6.89 38.22
Retail & consumer packaged goods (Retail & CPG) 8,401.22 5,954.47 13.34 12.18 41.09 2,580.64 1,742.14 14.42 12.17 48.13
Telecom, media and entertainment 7,539.71 6,204.69 11.97 12.69 21.52 1,948.81 1,889.57 10.89 13.20 3.14
Others 14,686.78 11,871.91 23.31 24.28 23.71 3,991.73 3,202.81 22.30 22.38 24.63
Total 62,989.48 48,893.83 100.00 100.00 28.83 17,898.12 14,313.48 100.00 100.00 25.04
Unallocable expenses (net) 986.62 818.34
Operating income 16,911.50 13,495.14
Other income (net) 1,178.23 428.17
Profit before tax 18,089.73 13,923.31

Revenue by industry in fiscal 2013

In fiscal 2013, BFSI continued to grow at a healthy rate of 28.89% over fiscal 2012 dueto sustained demand. Industry verticals which recorded high growth in fiscal 2013 wereretail and CPG (41.09%), manufacturing (37.23%), life sciences and healthcare (27.40%),hi-tech (27.84%), energy, resources and utilities (19.26%) and travel, transportation andhospitality (21.51%). Telecom including media and entertainment grew at 21.52% in fiscal2013.

Industry segment wise performance Banking, financial services and insurance

Rs crores
Fiscal 2013 Fiscal 2012 % growth
BFSI revenue 27,146.25 21,062.22 28.89
% mix of total revenue 43.10 43.08
Segment result BFSI 8,014.29 6,493.07 23.43
% margin of segment revenue 29.52 30.83
% mix of total segment result 44.78 45.36

BFSI companies have left the 2008-09 crises behind and are now evolving new operatingmodels with a focus on rebuilding profitability. Tighter regulatory regime, pressure onmargins, evolution of innovative business models, ongoing consolidation, new technologiesand non-traditional competitors offer both opportunities and challenges to transformtraditional operating approaches. BFSI institutions are concentrating on cost optimisationas well as efficiency improvements. This has resulted in increased adoption of emergingtechnologies such as digital, channel integration, big data, analytics and social media.Assisted self-services, financial health checks, telematics, branch processoptimisation/digitisation are some of the key related themes. In addition, theinstitutions are also focusing on strengthening risk management, core system modernisationand data management capabilities.

In fiscal 2013, BFSI constituted 43.10% of Company's revenue (43.08% in fiscal 2012)and contributed 44.78% of total segment result (45.36% in fiscal 2012).

Telecom, media and entertainment

Rs crores

Fiscal 2013 Fiscal 2012 % growth
Telecom, media and entertainment revenue 7,539.71 6,204.69 21.52
% mix of total revenue 11.97 12.69
Segment result telecom, media and entertainment 1,948.81 1,889.57 3.14
% margin of segment revenue 25.85 30.45
% mix of total segment result 10.89 13.20

Fiscal 2013 has been a significant year for the Telecom industry. Popularity ofsubstitute products (such as Skype, WhatsApp and other Over-the-Top services) has beenseriously eroding the traditional voice and messaging revenues. Growth in data services,while impressive in isolation, provides little impetus to overall revenue growth comparedto the traffic growth. Emerging markets still provide growth levers through ruralpenetration but demand much higher cost efficiencies. For Telcos, this leads to two strongrequirements, namely, (a) operational cost and efficiency management and (b) renewed focuson segmented customer experience management.

The Telcos have witnessed emergence of increased demand for mobility among enterprises,outcome effectiveness among businesses and technological advancements in the areas likecloud computing. Launch of 4G networks and high speed broadband access, is drivinginnovation in bundling media and entertainment services with broadband networks.

TCS has been investing in a number of growth initiatives as a strategic response tothese industry trends and challenges faced by its customers. The key initiatives are:

• development of niche platforms (Cloud based Telecom-ln-a-Box, Cloud based DeviceManagement Platform and Next Generation Analytics platform) for Telcos to leverage theiroperations. These platforms are already being used by pilot customers. We expect continuednon-linear growth through these platforms

• investments in lab infrastructure to support network operations services createopportunities to partner with enterprise vendors in the services business

• focus on collaboration in the areas of infrastructure services, mobility, cloud,SMB platforms and other applications for industry verticals like banking, retail andhealthcare.

Media and information services industry is undergoing a digital metamorphosis asorganisations transition from primarily being in physical goods business to largelydigital products and services businesses. Cheap internet bandwidth, rapid proliferation ofsmartphones and digital tablets, and lowered cost of digital production of the audio,video and textual content has left no sector within media industry untouched. Publishersare undergoing enterprise wide transformations to arrest declining print product revenuegrowth through growth and bundling of digital product revenue streams. Broadcasters areexpected to follow a similar journey in the near future.

In fiscal 2013, revenue in telecom, media & entertainment witnessed growth of21.52% (17.24% in fiscal 2012). Ongoing investments in expanding the addressable markethave put pressure on segment margins.

Retail and consumer packaged goods (Retail & CPG)

Rs crores
Fiscal 2013 Fiscal 2012 % growth
Retail & CPG revenue 8,401.22 5,954.47 41.09
% mix of total revenue 13.34 12.18
Segment result retail & CPG 2,580.64 1,742.14 48.13
% margin of segment revenue 30.72 29.26
% mix of total segment result 14.42 12.17

The Retail & CPG vertical continued its broad-based growth path in fiscal 2013, asa result of full services offerings being extended to existing large customers. Multi-yeartransformational infrastructure support and managed services engagements in traditionaland new technologies with large customers demonstrated the success of our continued focuson rich domain expertise and investment in new technologies.

During fiscal 2013, the segment saw sustained focus on creation of 'Center ofExcellence' (CoEs) in new technologies. Domain consultants engaging with leading retailersbrought business & technology solutions and thought leadership to customers and helpedmanage large transformational deals.

TCS continued to develop its repository of offerings and solutions through itsintellectual property to enable retailers to realise customer centric value creation anddeliver cross-channel experience to consumers.

The segment revenue has shown a healthy growth of 41.09% in fiscal 2013 (45.05% infiscal 2012). Segment result as a percentage of segment revenue in fiscal 2013 was 30.72%(29.26% in fiscal 2012), and showed growth of 48.13% over fiscal 2012 (62.56% growth infiscal 2012).

Manufacturing Rs crores
Fiscal 2013 Fiscal 2012 % growth
Manufacturing revenue 5,215.52 3,800.54 37.23
% mix of total revenue 8.28 7.77
Segment result manufacturing 1,362.65 985.89 38.22
% margin of segment revenue 26.13 25.94
% mix of total segment result 7.61 6.89

Automotive industry: Automotive industry in North America and Latin American marketshas shown good recovery in fiscal 2013 whereas Europe and Asian markets are stillstruggling. The one dominant trend seen in the industry was in leveraging technology forproduct and service differentiation. To keep pace with this change, companies are aimingat reducing product introduction time, increasing service levels to customers byoptimising parts supply chain, and enabling increased connect with customers. Thecompanies are investing in modernising product lifecycle management (PLM) formanufacturing systems, global distribution systems, business intelligence, use of big dataand advanced analytics. There is also increased shift to IT infrastructure outsourcing andBPO services.

Aerospace and defense industry: Aerospace companies in North America had an extremelygood year in fiscal 2013, driven by robust long term demand for commercial airplanes.There is a new wave of initiatives around avionics, NextGen air traffic control systemsand new product development programmes. With uncertainty around US defence budget infiscal 2013 and beyond, companies are preparing for a tighter budgetary situation andreduced spend.

Chemical and process industry: Companies are trying to increase specialty chemicalsbusiness in order to achieve better margins and avoid commoditisation. Fiscal 2013 sawlarge ERP transformation programmes and initiatives, primarily driven by costoptimisation, supplier consolidation, strengthening of customer experience and focuseddeployment in emerging markets such as Asia Pacific and Latin America.

Industrial and diversified manufacturing industry: Due to a flat to negative growthoutlook in this sector, direct IT spend is being curtailed, resulting in project delays.While the traditional IT service remains the focus area, customers are showing interest inCloud and SaaS solutions. Also, there is trend to convert IT related expenses from Capexto Opex.

TCS is significantly investing in strengthening the domain and technology expertise inthis segment and has been focusing on providing thought leadership to the customers toleverage mobility solutions, big data technology and social media & digital marketinginnovations in the context of transforming business processes. We also continue to investin developing our own Intellectual Property for addressing industry needs.

Manufacturing industry revenue had a growth rate of 37.23% in fiscal 2013 (38.11% infiscal 2012). Segment results growth were good in fiscal 2013 at 38.22% of segment revenue(39.88% in fiscal 2012).

Others Rs crores
Fiscal 2013 Fiscal 2012 % growth
Others revenue 14,686.78 11,871.91 23.71
% mix of total revenue 23.31 24.28
Segment result others 3,991.73 3,202.81 24.63
% margin of segment revenue 27.18 26.98
% mix of total segment result 22.30 22.38

Segments combined in 'others' comprised:

• Hi-tech

• Life sciences and healthcare

• Energy, resources and utilities

• Travel, transportation and hospitality

• Others

Most of the segments grouped in 'others' showed good revenue growth over the prioryear, reflecting the Company's growing domain expertise in these industries:

Rs crores
Fiscal 2013 Fiscal 2012 % growth
Hi-tech revenue 3,682.47 2,880.61 27.84
Segment result hi-tech 999.02 699.32 42.86
Life sciences and healthcare revenue 3,285.64 2,578.93 27.40
Segment result life sciences and healthcare 1,034.68 852.44 21.38
Energy, resources and utilities revenue 2,340.33 1,962.30 19.26
Segment result energy, resources and utilities 799.16 514.78 55.24
Travel, transportation and hospitality revenue 2,229.79 1,835.07 21.51
Segment result travel, transportation and hospitality 765.57 602.64 27.04

The segments stated above, in aggregate, showed an excellent growth in revenue, 23.71%in fiscal 2013 (37.27% in fiscal 2012). Segment margin improved to 27.18% in fiscal 2013(26.98% in fiscal 2012).

Life sciences and healthcare

The pharmaceutical industry is facing increased cost pressure due to patent cliff,increased regulations and constrained budgets for R&D. Hence these firms are focusingon growth opportunities in emerging markets, acquiring generic firms, using genomics andtechnology as major tools to streamline their molecule discovery and transform the drugdevelopment process. TCS' strong domain knowledge, process outsourcing and technologyexpertise has enabled it to effectively serve its customers across the value chain in drugdiscovery, drug development, manufacturing and sales & distribution initiatives acrossthe globe. TCS has also been helping its clients to adapt and leverage new technologieslike mobility, big data, digital marketing etc to expand and optimise their businesses.TCS was ranked as a leader by leading analysts in life sciences drug safety services andgenomics.

In the United States, healthcare reform legislation, along with cost pressures and acall for preventive care programmes are leading to sweeping changes in the healthcarelandscape. The demand for preventive care and wellness management, the introduction of 40million uninsured Americans into the health insurance system and the expansion of socialmedia and mobile technology, are driving the evolution of a patient-centric healthcaresystem. The result is a rapid shift from traditional business-to-business (B2B) models toa business-to-consumer (B2C), or retail model.

TCS has leveraged its global business transformation consulting expertise, domain andtechnical experience and delivery excellence to partner with its customers and help themnavigate the changing healthcare landscape.

Hi-tech

The hi-tech industry saw a structural shift in personal computing industry due toconsumers' growing preference for tablets and smart phones. New interfaces, touch andgesture based user experiences, coupled with speech and contextual awareness, have enabledrich interaction with devices. Global economic uncertainty is forcing the hi-tech industrycompanies to reduce their operations cost with renewed focus on risk management.

TCS' hi-tech vertical has observed good growth across the service lines withsignificant momentum in the infrastructure services, BPO services and enterprise solutionspace. The unit is making investments in new technologies and platforms to support itscustomers navigate the complex global environment. There has been an increased demand fortransformational projects from hi-tech customers. The Company has added several newcustomers to its portfolio and won several large deals from within the existing customerbase.

Energy, resources & utilities

The industry fundamentals remained very strong throughout the year. The business focusremained on the three core tenets of asset reliability, operations predictability andagility in the context of time to market and time to produce. TCS has been able to achievecredibility in the market place, create significant mindshare and win major deals acrossoil & gas, oil field services, metals and mining by leveraging its domain expertise inthe areas of petro-technical integration, downstream operations, supply chain andanalytics.

TCS has invested in building template solutions in customer service transformationswith leading technology product vendors. The Company continued to invest in its joint labswith academia to develop power system network and smart grid related niche applications.Collaborations are being explored with our academia partners for enhancing grid monitoringand control, as part of research solutions on wide area measurement systems (WAMS) andanalytics for grid reliability. TCS is also investing in fundamental research inbio-refining to deliver value to power and smart water networks, building solutionframework for energy management as a service (EMaaS). Along with our co-innovation networkpartners and our labs, we are developing solutions to address the requirements for SMARTwater networks.

Travel, transportation and hospitality (TTH)

In addition to their own industry-specific challenges, the TTH industry, being cyclicalin nature, was affected by the macro-economic conditions globally. Fiscal 2013 sawcompanies across these industries trying to overcome these challenges throughconsolidation and cost control measures.

Companies continued to invest in IT, replacing their core systems, upgrading theirenterprise platforms, mobile application and merchandising technologies. Solutions thatcould help in improving efficiency and profitability were amongst the top priority areasfor the transportation industry.

TCS captured a fair share of these opportunities and acquired new clients during theyear. There was an all-round growth from most of the client relationships. The Companycontinues to make investments to develop industry specific offerings, domain capabilitiesand in other areas that would enable it to serve its clients better and grow in future.

FINANCIAL POSITION — CONSOLIDATED

Share capital

(Rs in crores)

As at March 31, 2013 As at March 31, 2012
Authorised
225 crores equity shares of n each 225.00 225.00
100 crores redeemable preference shares of Rs 1 each 100.00 100.00
Total 325.00 325.00
Issued, subscribed and fully paid-up
195.72 crores equity shares of Rs 1 each 195.72 195.72
100 crores redeemable preference shares of Rs 1 each 100.00 100.00
Total 295.72 295.72

Reserves and surplus

For the purpose of consolidation of subsidiaries with the financial information of theholding company, income and expenses are translated at average rates and the assets andliabilities are stated at closing rate. Use of such different rates for translation givesrise to exchange difference which is accumulated in foreign currency translation reserve.Foreign currency translation reserve increased from Rs 779.42 crores as at March 31, 2012to ^ 972.11 crores as at March 31 2013, due to volatility in exchange rates of currenciesin fiscal 2013.

The closing balance of hedging reserve account, arising out of cash flow hedges as atMarch 31, 2013 was a net gain of Rs 46.11 crores 133.09 crores net loss as at March 31,2012). Note 42 to the consolidated financial statements gives details of movements in thehedging reserve account.

Balance in statement of profit and loss as at March 31, 2013 was Rs 29,529.97 crores22,160.54 crores as at March 31, 2012) after appropriation towards equity dividend(interim and proposed final dividend), preference dividend, tax on dividends and transferto general reserves.

Reserves and surplus at the end of fiscal 2013 stood at ^ 38,350.01 crores, an increaseof 30.96% over Rs 29,283.51 crores at the end of fiscal 2012. Rs 1,352.79 crores wastransferred to the general reserve from the profit and loss account for fiscal 2013.

Short-term and long-term borrowings

The Company's long-term obligations under finance lease (refer note 5 to theconsolidated financial statements) were Rs 129.46 crores as at March 31, 2013 (Rs 112.61crores as at March 31, 2012). These are secured against fixed assets obtained underfinance lease arrangements. The Company's secured loans / bank overdrafts are securedagainst trade receivables.

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Short-term borrowings

Long-term borrowings

Total borrowings

Secured loans repayable on demand from banks 80.02 - - - 80.02 -
Unsecured loans repayable on demand from banks - 0.89 - - - 0.89
Secured loans- long term maturities of finance lease obligations - - 129.46 112.61 129.46 112.61
Unsecured loans - other borrowings - - 1.52 2.76 1.52 2.76
Total 80.02 0.89 130.98 115.37 211.00 116.26

Trade payables (current liabilities)

Trade payables (current liabilities), representing payables for purchase of goods andservices increased from Rs 3,250.78 crores as at March 31, 2012 to Rs 4,447.81 crores asat March 31, 2013. As percentage of revenue, trade payables have increased from 6.65% lastyear to 7.06% in the current year.

Deferred tax liabilities (net) and deferred tax assets (net)

As stated in the accounting policies, deferred tax assets and liabilities are offset,tax jurisdiction-wise. Note 6 to the consolidated financial statements brings out detailsof component-wise deferred tax balances where the net values result into liabilities orassets, jurisdiction-wise.

Deferred tax liabilities are created against certain items such as foreign branchprofit and depreciation & amortisation. The net deferred tax liabilities were Rs235.48 crores as at March 31, 2013 (Rs 173.45 crores as at March 31, 2012).

Deferred tax assets are created against certain items such as employee benefits,depreciation & amortisation and provision for doubtful debts. As at March 31, 2013,the net deferred tax asset had a balance of Rs 310.22 crores (Rs 256.04 crores as at March31, 2012). The Company assesses the likelihood of deferred tax assets getting recoveredfrom future taxable income.

Other current and long-term liabilities

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Other current liabilities

Other long-term liabilities

Total other liabilities

Income received in advance 966.26 823.01 - - 966.26 823.01
Advance received from customers 98.00 71.81 - - 98.00 71.81
Other payables 1,983.93 1,495.72 - 10.63 1,983.93 1,506.35
Other liabilities 33.33 19.74 367.99 286.30 401.32 306.04
Total 3,081.52 2,410.28 367.99 296.93 3,449.51 2,707.21

Other current liabilities

Current liabilities increased to Rs 3,081.52 crores as at March 31, 2013 (Rs 2,410.28crores as at March 31, 2012). The primary reasons for the increase are given below.

• Increase in income received in advance Rs 966.26 crores at March 31, 2013 (Rs823.01 crores as at March, 31, 2012). Income received in advance represents advancebillings to customers not recognised as revenue

• Increase in other payables Rs 1983.93 crores as at March 31, 2013 1,495.72crores as at March 31, 2012). Other payables include (1) statutory liabilities Rs 866.97crores as at March 31, 2013 612.07 crores as at March 31, 2012) (2) capital creditors Rs249.87 crores as at March 31, 2013 167.41 crores as at March 31, 2012) (3) class actionsuit settlement Rs 161.63 crores as at March 31, 2013 'Nil' as at March 31, 2012) and (4)fair values of foreign exchange forward and currency option contracts Rs 72.10 crores asat March 31, 2013 240.38 crores as at March 31, 2012)

• Increase in other liabilities mainly on account of current maturities of financelease obligations Rs 20.03 crores as at March 31, 2013 9.05 crores as at march 31,2012).

Other long-term liabilities

Other long-term liabilities increased to Rs 367.99 crores as at March 31, 2013 296.93crores as at March 31, 2012). The increase was primarily attributable to:

• increase in capital creditors Rs 54.34 crores as at March 31, 2013 31.63 croresas at March 31, 2012)

• increase in other liabilities Rs 313.65 crores as at March 31, 2013 202.16crores as at March 31, 2012) primarily comprising lease rental liabilities.

Short-term and long-term provisions

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Short-term provisions

Long-term provisions

Total provisions

Provision for employee benefits 804.22 641.45 348.92 217.65 1,153.14 859.10
Proposed final dividend on equity shares 2,544.39 3,131.55 - - 2,544.39 3,131.55
Proposed final dividend on redeemable preference shares 19.00 22.00 - - 19.00 22.00
Tax on dividend 455.65 524.07 - - 455.65 524.07
Current income taxes (net) 410.20 408.07 - - 410.20 408.07
Total 4,233.46 4,727.14 348.92 217.65 4,582.38 4,944.79

The decrease in short-term provisions was mainly attributable to:

• proposed final dividend on equity shares Rs 2,544.39 crores as at March 31, 2013(Rs 3,131.55 crores as at March 31, 2012)

• tax on dividend Rs 455.65 crores as at March 31, 2013 (Rs 524.07 crores as atMarch 31, 2012).

The increase in long-term provisions as at March 31, 2013 Rs 348.92 crores (Rs 217.65crores as on March 31, 2012) was attributable to employee benefits such as gratuity andother retirement benefits.

Fixed assets

Additions to the gross block in fiscal 2013 amounted to Rs 2,274.86 crores (Rs 1,735.86crores in fiscal 2012).

The Company has embarked on a large scale infrastructure development across variouslocations in India to meet its growing business needs. The Company has successfully put inplace state-of-the-art facilities at Mumbai, Ahmedabad, Chennai, Bengaluru, Hyderabad andPune for significant capacities across locations in India. The Company has also initiatedconstruction of large delivery centers across 17 locations in India, which are presentlyat different stages of completion.

The number of seats available in India including trainees as at March 31, 2013 was2,20,775 (1,99,274 seats as at March 31, 2012).

Goodwill on consolidation

Goodwill on consolidation represents the excess of purchase consideration over netasset value of acquired subsidiaries on the date of such acquisition. Such goodwill istested for impairment annually or more frequently, if there are indications forimpairment.

Goodwill on consolidation as at March 31, 2013 stood at Rs 3,581.50 crores (Rs 3,543.46crores as at March 31, 2012). Significant acquisitions over the years which resulted ingoodwill were TCS e-Serve Limited, TCS Do Brazil Ltda, TCS Financial Solutions AustraliaHoldings Pty Limited, Diligenta Limited and Tata Consultancy Services, Switzerland Ltd.

Most of these acquisitions are contributing significantly to the overall financialperformance of the Company. Overview of funds invested

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Current

Non-current

Total funds invested

Investments 929.04 775.77 968.30 574.56 1,897.34 1,350.33
Deposits with banks 5,535.87 4,608.80 2,411.99 2,704.28 7,947.86 7,313.08
Inter-corporate deposits 3,684.78 652.00 - 281.40 3,684.78 933.40
Cash and bank balances 1,233.29 1,204.28 - - 1,233.29 1,204.28
Total 11,382.98 7,240.85 3,380.29 3,560.24 14,763.27 10,801.09

Investible funds went up by Rs 3,962.18 crores (Rs10,801.09 crores as at March 31, 2012to Rs 14,763.27 crores as at March 31, 2013), mainly driven by

• increase in deposits with banks Rs 634.78 crores, arising out of a strategy tomaximise yield on funds invested

• increase in inter-corporate deposits Rs 2,751.38 crores, since these offeredrelatively good yield with minimum risk

• increase in cash and bank balances Rs 29.01 crores

• increase in investments Rs 547.01 crores.

Acquisition / amalgamation

Details of acquisitions and divestments are given in note 30 to the consolidatedfinancial statements. The significant development in fiscal 2013 was the acquisition of100% shares of Computational Research Laboratories Limited (CRL). Retail Full Serve andCRL, both wholly owned subsidiaries, have been amalgamated with the Company with effectfrom ApriM, 2012 and October 1, 2012 respectively, in terms of scheme of amalgamationsanctioned by the High Court of Judicature at Bombay.

Unbilled revenue

Unbilled revenue (UBR) increased by Rs 912.29 crores during fiscal 2013. UBR as atMarch 31, 2013 constituted 5.02% of the revenue (4.60% as at March 31, 2012).

Trade receivables (net)

Trade receivables increased by Rs 2,556.21 crores during fiscal 2013. As a percentageof revenue, trade receivables were at 22.35% as at March 31, 2013 (23.56% as at March 31,2012). The Company monitors trade receivables closely.

Short-term and long-term loans and advances

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Short-term loans and advances

Long-term loans and advances

Total loans and advances

Loans and advances to employees (net) 204.00 171.25 8.11 9.70 212.11 180.95
Advance tax [including refund receivable (net)) 4.90 - 1,856.06 1,406.06 1,860.96 1,406.06
MAT credit entitlement 4.43 10.29 1,840.27 1,465.83 1,844.70 1,476.12
Inter-corporate deposits 3,684.78 652.00 - 281.40 3,684.78 933.40
Prepaid expenses 1,130.61 815.13 358.04 341.61 1,488.65 1,156.74
Capital advances - - 491.79 346.09 491.79 346.09
Others 792.64 580.47 679.86 628.99 1,472.50 1,209.46
Total 5,821.36 2,229.14 5,234.13 4,479.68 11,055.49 6,708.82

Loans and advances as at March 31, 2013 increased by Rs 4,346.67 crores arising out of(1) increase in short-term loans and advances Rs 3,592.22 crores and (2) increase inlong-term loans and advances Rs 754.45 crores.

The increase in short-term loans and advances was primarily attributable to

• increase in inter-corporate deposits Rs 3,032.78 crores

• increase in prepaid expenses related to large projects Rs 315.48 crores

• increase in fair values of foreign exchange forward and currency optioncontracts Rs 35.41 crores

• increase in other items Rs 208.55 crores.

The increase in long-term loans and advances was primarily attributable to

• increase in MAT credit Rs 374.44 crores, mainly due to increase in profitarising out of SEZ units which is subject to MAT effective April 1, 2011

• increase in advance tax (net of provision for taxes) Rs 450.00 crores, mainlydriven by payments made against demands from tax authorities, which have been contested bythe Company

• increase in capital advances Rs 145.70 crores, arising out of higher capitaloutlay in fiscal 2013

• increase in other items Rs 65.71 crores primarily due to increased securitydeposits

• offset by decrease in long-term inter-corporate deposits Rs 281.40 crores.

Other current and non-current assets

(Rs in crores)

As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Other current assets

Other non-current assets

Total other assets

Future finance lease receivable less unearned finance income 0.93 1.24 - 0.93 0.93 2.17
Interest receivable 765.89 430.48 37.51 131.96 803.40 562.44
Other non-current assets - - 2,417.13 2,717.15 2,417.13 2,717.15
Other current assets 32.42 26.15 - - 32.42 26.15
Total 799.24 457.87 2,454.64 2,850.04 3,253.88 3,307.91

Other current and non-current assets as at March 31, 2013 were lower by Rs 54.03 croresprimarily on account of decrease in long term bank deposits offset by higher interestreceivable. Other non-current assets included bank deposits Rs 2,411.99 crores as at March31, 2013 (Rs 2,704.28 crores as at March 31, 2012).

CASH FLOW — CONSOLIDATED

The Company's cash flows from operating, investing and financing activities, asreflected in the consolidated statement of cash flow, is summarised in the table below.

Summary of cash flow statement:

(Rs crores)
Fiscal 2013 Fiscal 2012
Net cash provided by/ (used in)
Operating activities 11,614.96 6,977.17
Investing activities (6,085.66) (2,727.45)
Financing activities (5,729.48) (3,955.09)
Exchange difference on translation of foreign currency cash and cash equivalents 48.05 150.27
Net (decrease)/increase in cash and cash equivalents after translation (152.13) 444.90

Cash flows from operating activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Profit before tax 18,089.73 13,923.31
Adjustments: depreciation and amortisation 1,079.92 917.94
Other non-cash adjustments 72.97 443.49
Non operating income (net) (1,039.31) (780.81)
Effect of working capital changes (1,766.54) (3,458.36)
Cash generated from operations 16,436.77 11,045.57
Taxes paid (4,821.81) (4,068.40)
Net cash provided by operating activities 11,614.96 6,977.17

In fiscal 2013, an additional amount of Rs 1,766.54 crores (Rs 3,458.36 crores infiscal 2012) was used in working capital to meet the expanding business requirements. Cashgenerated from operations, post adjustments to profit before tax, has gone up from Rs11,045.57 crores in fiscal 2012 to Rs 16,436.77 crores in fiscal 2013 registering a growthof 48.81%.

The incremental taxes paid in fiscal 2013 include (1) additional Rs 577.00 crores ofadvance tax paid by TCS Ltd on its higher income for the year, (2) additional Rs 145.13crores of advance tax paid by some subsidiaries on their higher income, (3) Rs 250.00crores paid by TCS Ltd in fiscal 2013 under protest against contested demands for earlieryears and (4) absence of Rs 261.45 crores of tax refunds received in fiscal 2012 bysubsidiary, TCS e-Serve Ltd., offset by (1) absence of Rs 293.83 crores paid under protestin fiscal 2012 against contested demands by TCS Ltd and (2) Rs 187.84 crores of lower taxon dividend received by TCS Ltd from its overseas subsidiaries.

The resultant net cash inflow from operating activities was Rs 11,614.96 crores (Rs6,977.17 crores in fiscal 2012).

Cash flows from investing activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Fixed asset (net) (2,632.58) (1,987.36)
Other investments (net) (520.09) 447.24
Fixed deposits with banks (net) having maturity over three months (824.27) (700.28)
Inter - corporate deposits (net) (2,751.37) (683.41)
Interest received 798.80 419.31
Other items (net) (156.15) (222.95)
Net cash used in investing activities (6,085.66) (2,727.45)

During fiscal 2013, the significant uses of cash in investing activities were purchaseof fixed assets, inter-corporate deposits and investment in fixed deposits.

Interest received on funds invested went up by 90.50%, from Rs 419.31 crores in fiscal2012 to Rs 798.80 crores in fiscal 2013.

'Other items' in fiscal 2013 includes acquisition of Computational ResearchLaboratories Limited for Rs 162.62 crores. In fiscal 2012, 'Other items' included Rs229.16 crores paid for purchase of shares from minority shareholders of a subsidiary.

Cash flows from financing activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Dividend paid including dividend tax (5,715.64) (3,891.16)
Other payments (13.84) (63.93)
Net cash used in financing activities (5,729.48) (3,955.09)

In fiscal 2013, dividend paid includes the final dividend payout, special dividend andtax thereon for fiscal 2012 approved by the shareholders at the last Annual GeneralMeeting.

COMPANY'S PERFORMANCE TREND (INDIAN GAAP CONSOLIDATED) PERFORMANCE SUMMARY

(Rs crores)
Fiscal 2013 Fiscal 2012 Fiscal 2011 Fiscal 2010 Fiscal 2009 Fiscal 2008 Fiscal 2007 Fiscal 2006 Fiscal 2005
Revenue
Total revenue 62,989.48 48,893.83 37,324.51 30,028.92 27,812.88 22,619.52 18,685.21 13,263.99 9,748.47
International revenue 58,099.24 44,691.54 33,889.45 27,431.02 25,630.76 20,573.90 17,003.22 11,607.08 8,560.90
Domestic revenue 4,890.24 4,202.29 3,435.06 2,597.90 2,182.12 2,045.62 1,681.99 1,656.91 1,187.57
Revenues from offshore business 28,730.08 22,613.92 17,283.62 13,989.82 11,328.80 8,620.46 6,886.30 4,341.05 3,313.07
Revenue by geographic segments
Americas 35,327.51 27,569.81 21,457.51 17,272.93 15,600.21 12,394.05 10,514.81 7,831.28 5,771.41
Europe 16,734.36 12,381.53 9,250.67 8,009.57 8,212.22 6,603.02 5,320.48 2,975.34 2,250.17
India 4,890.24 4,202.29 3,435.06 2,597.90 2,182.12 2,045.62 1,681.99 1,656.91 1,187.57
Others 6,037.37 4,740.20 3,181.27 2,148.52 1,818.33 1,576.83 1,167.93 800.46 539.32
Cost
Employee cost 31,921.86 24,683.35 18,805.69 15,065.75 14,483.20 11,411.05 9,001.39 6,111.52 4,384.52
Other operating cost 13,027.71 9,775.17 7,340.46 6,268.62 6,159.88 5,497.09 4,544.97 3,468.17 2,550.12
Total cost (excluding interest & depreciation) 44,949.57 34,458.52 26,146.15 21,334.37 20,643.08 16,908.14 13,546.36 9,579.69 6,934.64
Profitability
EBIDTA (before other income) 18,039.91 14,435.31 11,178.36 8,694.55 7,169.80 5,711.38 5,138.85 3,684.30 2,813.83
Profit before tax 18,089.73 13,923.31 11,020.62 8,289.63 6,150.07 5,845.95 4,918.28 3,506.62 2,633.69
Profit after tax 13,917.31 10,413.49 9,068.04 7,000.64 5,256.42 5,026.02 4,212.63 2,966.74 1,976.90
Capital accounts (Rs crores)
Share capital 295.72 295.72 295.72 295.72 197.86 197.86 97.86 48.93 48.01
Reserves and surplus 38,350.01 29,283.51 24,209.09 18,171.00 15,502.15 12,102.26 8,752.24 5,949.88 3,429.53
Gross block 11,622.99 9,447.83 7,792.24 6,419.51 5,843.86 4,291.80 3,197.71 1,951.04 1,170.65
Total investments 1,897.34 1,350.33 1,762.67 3,682.08 1,614.41 2,606.16 1,256.87 704.62 421.54
Net current assets 19,733.75 12,672.65 9,790.38 7,395.02 7,544.12 5,553.32 4,331.11 2,867.18 1,797.09
Earnings per share inRs
EPS - as reported 70.99 53.07 46.27 35.67 53.63 51.36 43.05 60.63 47.37
EPS - adjusted for bonus issue 70.99 53.07 46.27 35.67 26.81 25.68 21.53 15.16 11.84
Headcount (number)
Headcount (including subsidiaries) as on March 31st 276,196 238,583 198,614 160,429 143,761 111,407 89,419 66,480 45,714

 

RATIO ANALYSIS
Ratio Analysis Units FY 2012-13 FY 2011-12 FY 2010-11 FY 2009-10 FY 2008-09 FY 2007-08 FY 2006-07 FY 2005-06 FY 2004-05
Ratios - financial performance
International revenue/total revenue % 92.24 91.41 90.80 91.35 92.15 90.96 91.00 87.51 87.82
Domestic revenue/total revenue % 7.76 8.59 9.20 8.65 7.85 9.04 9.00 12.49 12.18
Employee cost/total revenue % 50.68 50.48 50.38 50.17 52.07 50.45 48.17 46.08 44.98
Other operating cost/total revenue % 20.68 19.99 19.67 20.88 22.15 24.30 24.32 26.15 26.16
Total cost/total revenue % 71.36 70.48 70.05 71.05 74.22 74.75 72.50 72.22 71.14
EBIDTA (before other lncome)/total revenue % 28.64 29.52 29.95 28.95 25.78 25.25 27.50 27.78 28.86
Profit before tax/total revenue % 28.72 28.48 29.53 27.61 22.11 25.84 26.32 26.44 27.02
Tax/total revenue % 6.37 6.95 4.91 3.99 3.02 3.48 3.55 3.84 4.07
Effective tax rate - tax/PBT % 22.19 24.42 16.61 14.44 13.64 13.45 13.50 14.53 15.07
Profit after tax/total revenue % 22.09 21.30 24.30 23.31 18.90 22.22 22.55 22.37 20.28
Ratios - growth
International revenue % 30.00 31.87 23.54 7.02 24.58 21.00 46.49 35.58 N/A
Total revenue % 28.83 31.00 24.30 7.97 22.96 21.06 40.87 36.06 N/A
EBIDTA (before other income) % 24.97 29.14 28.57 21.27 25.54 11.14 39.48 30.94 N/A
Profit after tax % 33.65 14.84 29.53 33.18 4.58 19.31 42.00 50.07 N/A
Ratios - Balance Sheet
Debt-equity ratio Nos. 0.01 0.00 0.00 0.01 0.04 0.04 0.06 0.02 0.06
Current ratio Nos. 2.67 2.22 2.35 1.88 2.26 2.24 2.24 2.25 2.24
Days sales outstanding (DSO) in Rs terms Days 82 86 80 71 79 87 84 90 77
Days sales outstanding (DSO) in $ terms Days 82 81 82 74 74 87 88 90 78
Invested funds / total assets % 36.45 34.81 36.81 45.68 26.29 28.97 27.03 17.67 17.92
Invested funds / total revenue % 23.39 22.03 25.08 28.90 15.76 16.76 13.94 8.43 7.05
Capital expenditure/total revenue % 4.18 4.06 4.85 3.43 3.95 5.58 6.64 4.69 3.72
Operating cash flows / total revenue % 18.44 14.27 17.72 24.66 19.45 17.22 18.58 18.76 21.46
Free cash flow/operating cash flow ratio % 77.33 71.52 72.66 86.07 79.70 67.60 64.25 74.97 82.64
Depreciation / average gross block % 10.25 10.65 10.35 10.78 11.13 15.05 17.10 18.09 13.57
Ratios - per share
EPS - adjusted for Bonus Rs Rs 70.99 53.07 46.27 35.67 26.81 25.68 21.53 15.16 11.84
Price earning ratio, end of year Nos. 22.14 22.01 25.56 21.89 10.07 15.79 28.97 31.57 30.23
Dividend per share 22.00 25.00 14.00 20.00 14.00 14.00 13.00 13.50 11.50
Dividend per share - adjusted for bonus Rs Rs 22.00 25.00 14.00 20.00 7.00 7.00 6.50 3.38 2.88
Dividend payout % (based on consolidated profits) % 36.16 54.75 35.22 65.45 30.54 31.89 30.74 25.07 27.55
Market capitalisation/total revenue % 4.88 4.67 6.20 5.09 1.90 3.51 6.53 7.06 7.05

FINANCIAL PERFORMANCE UNCONSOLIDATED

The Management Discussion and Analysis given below relates to the audited financialstatements of TCS Limited (unconsolidated). The discussion should be read in conjunctionwith the financial statements (unconsolidated) and related notes to the financialstatements for the years ended March 31, 2013 and March 31, 2012.

Summary

Revenue of TCS Limited aggregated Rs 48,426.14 crores in fiscal 2013 as compared to Rs38,104.23 crores in fiscal 2012, registering a growth of 27.09%.

Other significant financial parameters are:

• Company's earnings excluding other income, before interest, tax, depreciation,and amortisation (EBITDA) aggregated Rs 14,306.27 crores in fiscal 2013 (Rs 11,385.72crores in fiscal 2012), registering a growth of 25.65%

• Company's profit before tax (PBT) aggregated Rs15,703.18 crores in fiscal 2013(Rs13,366.33 crores in fiscal 2012), registering a growth of 17.48%

• Company's profit after tax (PAT) aggregated Rs12,786.34 crores in fiscal 2013(Rs10,975.98 crores in fiscal 2012), registering a growth of 16.49%

• Company's earnings per share (EPS) were Rs 65.22 in fiscal 2013 (Rs 55.95 infiscal 2012), registering a growth of 16.57%.

DIVIDEND

Decision on dividend is based on Tata Consultancy Services Limited (Unconsolidated)financials which excludes the performance of subsidiaries of TCS Limited.

The board of directors decides on interim dividend based on the performance of theCompany during the course of the year. For fiscal 2013, the Company declared three interimdividends of Rs 3 per equity share. A final dividend of Rs 13 per equity share has beenrecommended by the board of directors at its meeting held on April 17, 2013.

On approval by the shareholders of the final dividend of Rs 13 per equity share, thetotal dividend for fiscal 2013 would be Rs 22 per equity share (dividend for fiscal 2012,Rs 17 per equity share, excluding special dividend Rs 8 per equity share).

The board of directors has recommended dividend of Rs 0.19 per preference share (Rs0.22 for fiscal 2012).

DISCUSSIONS ON FINANCIAL PERFORMANCE - UNCONSOLIDATED

The Management Discussion and Analysis given below relates to the audited financialstatements of TCS Limited (unconsolidated).

The following table gives an overview of the financial results of TCS Limited(unconsolidated):

(Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores % of revenue Rs crores % of revenue % growth
Revenue from operations 48,426.14 100.00 38,104.23 100.00 27.09
Expenses:
Employee benefit expenses 17,081.72 35.27 13,572.68 35.62 25.85
Overseas business expenses (employee allowances paid overseas) 6,817.87 14.08 5,326.09 13.98 28.01
Services rendered by business associates (BA) and others 3,653.10 7.55 2,587.88 6.79 41.16
Total employee and BA related expenses 27,552.69 56.90 21,486.65 56.39 28.23
Overseas business expenses (other than employee allowance paid overseas) 669.68 1.38 478.70 1.26 39.90
Operation and other expenses 5,897.50 12.18 4,753.16 12.47 24.08
Total expenses 34,119.87 70.46 26,718.51 70.12 27.70
Earnings before interest, tax, depreciation and amortisation (EBITDA) 14,306.27 29.54 11,385.72 29.88 25.65
Other income (net) excluding dividend income 1,121.51 2.32 257.18 0.68 336.08
Dividend income 1,108.88 2.29 2428.00 6.37 (54.33)
Finance costs 30.62 0.06 16.40 0.04 86.71
Depreciation and amortisation expense 802.86 1.66 688.17 1.81 16.67
Profit before tax (PBT) 15,703.18 32.43 13,366.33 35.08 17.48
Tax expense 2,916.84 6.03 2,390.35 6.27 22.03
Profit for the year (PAT) 12,786.34 26.40 10,975.98 28.81 16.49

Revenue from operations

Total revenue increased from Rs 38,104.23 crores in fiscal 2012 to Rs 48,426.14 croresin fiscal 2013, registering a growth of 27.09% (32.73% in fiscal 2012).

Revenue from information technology and consultancy services increased from Rs36,699.26 crores in fiscal 2012 to Rs 46,874.72 crores in fiscal 2013, a growth of 27.73%(32.95% in fiscal 2012).

Revenue from sale of equipment and software licenses increased from Rs 1,404.97 croresin fiscal 2012 to Rs 1,551.42 crores in fiscal 2013, an increase of 10.42% (27.24% infiscal 2012). Sale of equipment and software licenses constituted 3.20% of total revenuein fiscal 2013 (3.69% in fiscal 2012).

Expenses

Employee and BA related expenses

(Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores % of revenue Rs crores % of revenue % growth
Employee benefit expenses 17,081.72 35.27 13,572.68 35.62 25.85
Overseas business expenses (employee allowances paid overseas) 6,817.87 14.08 5,326.09 13.98 28.01
Services rendered by business associates (BA) and others 3,653.10 7.55 2,587.88 6.79 41.16
Total 27,552.69 56.90 21,486.65 56.39 28.23

Total employee and BA related expenses have increased by 28.23% from Rs 21,486.65crores in fiscal 2012 to Rs 27,552.69 crores in fiscal 2013. These costs as a percentageof revenue were 56.90% in fiscal 2013 (56.39% in fiscal 2012). The increase of 0.51 % wasprimarily attributable to higher BA costs and lower manpower utilisation. The rise in BAcosts was prompted by the need for specialised skill at overseas locations

Overseas business expenses (other than employee allowances paid overseas)

Overseas business expenses (other than employee allowances paid overseas) went up fromRs 478.70 crores (1.26 % of revenue) in fiscal 2012 to Rs 669.68 crores (1.38 % ofrevenue) in fiscal 2013. This was mainly due to increase in overseas travel related costs.

Operation and other expenses (Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores % of revenue Rs crores % of revenue % growth
Software, hardware and material costs 2,244.88 4.64 1,934.52 5.08 16.04
Communication expenses 417.27 0.86 372.91 0.98 11.90
Travelling and conveyance expenses 485.32 1.00 391.08 1.03 24.10
Rent 792.60 1.64 635.41 1.67 24.74
Legal and professional fees 242.69 0.50 166.99 0.44 45.33
Repairs and maintenance 271.93 0.56 219.67 0.58 23.79
Electricity expenses 375.61 0.78 292.10 0.77 28.59
Recruitment and training expenses 166.06 0.34 170.76 0.45 (2.75)
Others 901.14 1.86 569.72 1.47 58.17
Total 5,897.50 12.18 4,753.16 12.47 24.08

Operation and other expenses as percentage of revenue decreased from 12.47% in fiscal2012 to 12.18% in fiscal 2013. The decrease of 0.29% was primarily due to:

• decrease in software, hardware and material costs 0.44%

• decrease in communication expenses 0.12%

• decrease in recruitment and training expenses 0.11%

• offset by an increase in other expenses 0.39%, primarily on account of one timesettlement of a class action suit.

Earnings before interest, tax, depreciation and amortisation (EBITDA) excluding otherincome

EBITDA increased from Rs 11,385.72 crores (29.88% of revenue) in fiscal 2012 to Rs14,306.27 crores (29.54% of revenue) in fiscal 2013. The decrease in the EBITDA of 0.34%as a percentage of revenue during fiscal 2013 was primarily attributable to:

• increase in total employee and BA related expenses 0.51%

• increase in overseas business expenses (other than employee allowance paidoverseas) 0.12%

• offset by decrease in operation and other expenses 0.29%.

Other income (net) (Rs crores)

Fiscal 2013

Fiscal 2012

Rs crores % of revenue Rs crores % of revenue
Dividend income 1,108.88 2.29 2,428.00 6.37
Interest income 837.02 1.73 658.57 1.73
Exchange gain/(loss) (net) 223.05 0.46 (432.82) (1.14)
Others (net) 61.44 0.13 31.43 0.09
Total 2,230.39 4.61 2,685.18 7.05

The decrease in other income of 2.44% as a percentage of revenue, is primarilyattributable to:

• decrease in dividend received 4.08%, from some of the subsidiaries whose boardof directors declared and paid dividend to TCS based on their undistributed earnings andfuture investment plans

• offset by increase in net exchange gain /(loss)1.60%. Depreciation andamortisation

Depreciation and amortisation increased by 16.67% from Rs 688.17 crores in fiscal 2012to Rs 802.86 crores in fiscal 2013. The increase was spread across all asset groups,mainly computer, furniture and fixtures, office equipment, electrical installations andfreehold buildings.

Profit before tax (PBT)

PBT increased from Rs 13,366.33 crores (35.08% of revenue) in fiscal 2012, to Rs15,703.18 crores (32.43% of revenue) in fiscal 2013. The primary reasons for the decreasein the PBT as a percentage of revenue of 2.65% were:

• decrease in EBITDA 0.34%

• decrease in dividend income 4.08%

• offset partially by (1) increase in exchange gain/ (loss) 1.60% (2) decrease indepreciation 0.15%. Tax expense

The tax expense increased from Rs 2,390.35 crores in fiscal 2012 (6.27% of revenue) toRs 2,916.84 crores in fiscal 2013 (6.03% of revenue). The effective tax rate (ETR) hasgone up from 17.88% in fiscal 2012 to 18.57% in fiscal 2013. The increase in ETR isprimarily attributable to certain SEZ units in India entering the second phase of taxholiday, where tax benefit is restricted to 50% of the first phase of five years.

Profit for the year (PAT)

The Company's PAT was Rs 12,786.34 crores in fiscal 2013 (Rs 10,975.98 crores in fiscal2012). Net profit margin decreased from 28.81% in fiscal 2012 to 26.40% in fiscal 2013.The decrease of 2.41% was attributable to lower PBT 2.65% offset by lower taxes 0.24%.

FINANCIAL POSITION - UNCONSOLIDATED

Share capital

There has been no change in the position of authorised, issued, subscribed and paid upcapital. Reserves and surplus

General reserve as at March 31, 2012 was Rs 4,280.74 crores. On transfer of 10.00% ofthe profit aftertax in fiscal 2013 amounting to Rs 1,278.63 crores 1,097.60 crores infiscal 2012) and adjusting the reserve on account of merger by Rs 44.26 crores ('Nil' infiscal 2012), the general reserve as at March 31, 2013 increased to Rs 5,515.11 crores.

Foreign currency translation reserve was Rs 174.61 crores as at March 31, 2013 (Rs152.46 crores as at March 31, 2012).

The closing balance in hedging reserve account arising out of cash flow hedges as atMarch 31, 2013 showed an accumulated gain of Rs 55.49 crores (loss of Rs 25.96 crores asat March 31, 2012). Note 39 to unconsolidated notes to accounts gives details of movementsin the hedging reserve account.

Balance in the statement of profit and loss as at March 31, 2013 was Rs 24,602.85crores (Rs 18,235.20 crores as at March 31, 2012) after appropriation towards dividend onequity shares and preference shares, tax on dividend and transfer to general reserves.

Reserves and surplus as at March 31, 2013 were Rs 32,266.53 crores (Rs 24,560.91crores, as at March 31, 2012), an increase of 31.37%. Borrowings

Long-term borrowings

Long-term borrowings as at March 31, 2013 aggregated Rs 83.10 crores (Rs 96.23 croresas at March 31, 2012) primarily due to finance lease obligations of Rs 81.58 crores (Rs93.47 crores as at March 31, 2012) which are secured against fixed assets. For detailsrefer note 34 'Obligations towards finance leases' of the unconsolidated notes toaccounts.

Deferred tax liabilities (net) and deferred tax assets (net)

As stated in the accounting policies, deferred tax assets and liabilities are offset,tax jurisdiction-wise. Note 6 of the unconsolidated notes to accounts brings out detailsof component-wise deferred tax balances where the net values result into liabilities orassets, jurisdiction-wise.

Deferred tax liabilities are created against certain items such as foreign branchprofit and depreciation & amortisation. The net deferred tax liability was Rs 168.49crores as at March 31, 2013 (^118.10 crores as at March 31, 2012).

Deferred tax assets are created against certain items such as foreign branch profits,employee benefits, depreciation & amortisation, provision for doubtful receivables andloans & advances. As at March 31, 2013, the net deferred tax asset had a balance of Rs148.23 crores (Rs 139.74 crores as at March 31, 2012). The Company assesses the likelihoodof deferred tax assets getting recovered from future taxable income.

Other current liabilities and long-term liabilities

(Rs crores)
As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Other current liabilities

Other long-term liabilities

Total other liabilities

Income received in advance 683.59 561.18 - - 683.59 561.18
Advance received from customers 46.46 12.47 - - 46.46 12.47
Other payables and liabilities 1,442.66 1,024.91 251.87 197.59 1,694.53 1,222.50
Total 2,172.71 1,598.56 251.87 197.59 2,424.58 1,796.15

Other current and long-term liabilities increased to Rs 2,424.58 crores as at March 31,2013 (Rs 1,796.15 crores as at March 31, 2012). Current liabilities increased to Rs2,172.71 crores as at March 31, 2013 (Rs 1,598.56 crores as at March 31, 2012).

The increase in other payables and liabilities was primarily due to:

• increase in statutory current liabilities such as 'Value Added Tax' (VAT) and'Tax Deducted at Source' (TDS) Rs 161.22 crores

• class action suit settlement, a non-recurring charge Rs 161.63 crores

• increase in other payments and liabilities mainly on account of lease rentalliabilities.

Short-term and long-term provisions

Provisions aggregated Rs 4,165.66 crores as at March 31, 2013 (Rs 4,543.79 crores as atMarch 31, 2012). The composition of provisions is disclosed in the table below:

(Rs crores)
As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Short-term provisions

Long-term provisions

Total provisions

Provision for employee benefits 639.95 506.63 269.52 154.78 909.47 661.41
Proposed final dividend on equity shares 2,544.39 3,131.55 - - 2,544.39 3,131.55
Proposed dividend on redeemable preference shares 19.00 22.00 19.00 22.00
Tax on dividend 435.65 511.59 - - 435.65 511.59
Current income taxes 257.15 217.24 - - 257.15 217.24
Total 3,896.14 4,389.01 269.52 154.78 4,165.66 4,543.79

The decrease of Rs 492.87 crores in short term provisions were mainly attributable to:

• decrease in proposed final dividend on equity shares Rs 587.16 crores

• decrease in tax on dividend Rs 75.94 crores

• offset by increase in provision for employee benefits Rs 133.32 crores, whichmainly comprise liability for compensated absences and

• further offset by increase in current income taxes(net) Rs 39.91 crores.

Increase in long term provisions of Rs 114.74 crores were attributable to employeeretirement benefits. Fixed assets

The significant additions to gross block in fiscal 2013 were:

• land and buildings Rs 801.07 crores in fiscal 2013 (Rs 325.97 crores in fiscal2012)

• computer equipment Rs 558.49 crores in fiscal 2013 (Rs 413.33 crores in fiscal2012)

• office equipment, electrical installations, and furniture and fixtures Rs 510.75crores in fiscal 2013 (Rs 399.25 crores in fiscal 2012)

• leasehold improvements Rs 87.08 crores in fiscal 2013 (Rs 204.59 crores infiscal 2012).

The Company entered into contractual commitments with vendors who are executing variousinfrastructure projects. The estimated amounts of such contracts remaining to be executedon capital account were Rs 3,328.51 crores as at March 31, 2013 (Rs 1,682.98 crores as atMarch 31, 2012).

Current investments and non -current investments

(Rs crores)
As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Current investments

Non-current investments

Total

Investments in bonds and debentures 335.13 533.33 693.60 336.73 1,028.73 870.06
Investments in fully paid-up equity shares of subsidiaries and others 4,889.33 4,421.08 4,889.33 4,421.08
Investments in fully paid-up preference shares of subsidiaries and others 2.80 5.00 363.04 365.84 365.84 370.84
Other investments 10.72 3.00 29.76 23.41 40.48 26.41
Total 348.65 541.33 5,975.73 5,147.06 6,324.38 5,688.39

Increase in total investments of Rs 635.99 crores in fiscal 2013 were primarilyattributable to:

• additional investments in subsidiaries Rs 468.25 crores which mainly comprise(1) increased equity in TCS Iberoamerica SA Rs 296.08 crores, (2) increased equity in TCSFNS Pty Limited Rs 208.34 crores, (3) offset by cancellation of equity investments inRetail FullServe Limited on amalgamation Rs 36.17 crores.

• additional investments in bonds and debentures Rs 158.67 crores. Unbilledrevenue

Unbilled revenue was Rs 2,303.35 crores as at March 31, 2013 (Rs 1,567.47 crores as atMarch 31, 2012) representing 4.76% of revenue for fiscal 2013 (4.11% for fiscal 2012).

Trade receivables

Trade receivables as at March 31, 2013 aggregated Rs 11,202.32 crores (Rs 9,107.72crores as at March 31, 2012). As a percentage of revenue, trade receivables were at 23.13%as at March 31, 2013 compared to 23.90% as at March 31, 2012.

Short-term and long-term loans and advances

(Rs crores)
As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Short-term loans and advances

Long-term loans and advances

Total loans and advances

Capital advances - - 476.44 327.06 476.44 327.06
Security deposits - - 449.06 387.26 449.06 387.26
Loans and advances to employees 162.54 140.09 7.82 9.05 170.36 149.14
Loans and advances to related parties 107.20 176.84 58.92 541.23 166.12 718.07
Advance tax (including refunds receivable (net)) - - 1,459.78 978.58 1,459.78 978.58
MAT credit entitlement - - 1,772.31 1,443.60 1,772.31 1,443.60
Other loans and advances 4,641.74 1,332.81 405.88 646.03 5,047.62 1,978.84
Total 4,911.48 1,649.74 4,630.21 4,332.81 9,541.69 5,982.55

Loans and advances as at March 31, 2013 increased by Rs 3,559.14 crores. The increasewas primarily attributable to:

• increase in MAT credit Rs 328.71 crores, mainly due to increase in SEZ profit,which is subjected to MAT effective April 1, 2011

• increase in advance tax Rs 481.20 crores, mainly driven by payments made againstdemands from tax authorities, which have been contested by the Company

• increase in other loans and advances Rs 3,068.78 crores, mainly due to increasein inter-corporate deposits and prepaid expenses related to certain large projects

• increase in capital advances Rs 149.38 crores, related to infrastructuralfacilities in progress.

Other current and non-current assets

(Rs crores)
As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012 As at March 31, 2013 As at March 31, 2012

Other current assets

Other non-current assets

Total

Interest receivable 667.74 388.41 29.30 126.75 697.04 515.16
Long - term bank deposits - - 1,851.90 2,510.13 1,851.90 2,510.13
Others 14.60 - - - 14.60 -
Total 682.34 388.41 1,881.20 2,636.88 2,563.54 3,025.29

Other current and non-current assets as at March 31, 2013 were lower by Rs 461.75crores primarily on account of reduction in long term fixed deposits with banks.

Cash & bank balances (Rs crores)
As at March 31, 2013 As at March 31, 2012
Short - term bank deposits 3,719.78 2,953.00
Cash and cash equivalents 323.85 318.97
Earmarked balances with banks 10.53 8.10
Total 4,054.16 3,280.07

CASH FLOW - UNCONSOLIDATED

The Company's growth has been financed largely by cash generated from operations. TheCompany has sufficient cash generated from operations for meeting its working capitalrequirements as well as the requirements for capital expenditure.

Banking and financing arrangements

As at March 31, 2013, the Company had available line of credit with multiple banksaggregating Rs 5,334.00 crores, interchangeable between fund-based and non-fund basedlimits (Rs4,184.00 crores as at March 31, 2012). As at March 31, 2013 the Company hadutilised Rs 1,861.08 crores of these limits (Rs1,938.97 crores utilised as at March 31,2012).

Summary of cash flow statement is given below:

(Rs crores)
Fiscal 2013 Fiscal 2012
Net cash provided by/ (used in):
Operating activites 9,156.95 3,174.63
Investing activities (3,482.98) 433.36
Financing activities (5,655.80) (3,897.22)
Net increase / (decrease) in cash and cash equivalents 18.17 (289.23)
Adjustment on account of merger 3.39 -
Exchange difference on translation of foreign currency cash and cash equivalents (16.68) 31.02
Net increase / (decrease) in cash and cash equivalents after adjustments 4.88 (258.21)

Cash flows from operating activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Operating profit before working capital changes 14,571.59 11,083.53
Effect of working capital changes (1,776.48) (4,613.98)
Taxes paid (3,638.16) (3,294.92)
Net cash provided by operating activites 9,156.95 3,174.63

In fiscal 2013, the Company generated net cash of Rs 9,156.95 crores (Rs 3,174.63crores in fiscal 2012) from operating activities. This is attributable to:

• increase in operating profit before working capital changes Rs 14,571.59 croresin fiscal 2013 (Rs 11,083.53 crores in fiscal 2012)

• decrease in incremental working capital requirement Rs 1,776.48 crores in fiscal2013 (Rs 4,613.98 crores in fiscal 2012).

The incremental taxes paid in fiscal 2013 include (1) additional Rs 577.00 crores ofadvance tax paid by TCS Ltd on its higher income for the year and (2) Rs 250.00 crorespaid by TCS Ltd in fiscal 2013 under protest against contested demands for earlier years,offset by (1) absence of Rs 293.83 crores paid under protest in fiscal 2012 againstcontested demands and (2) Rs 187.84 crores of lower tax on dividend received by TCS Ltdfrom its overseas subsidiaries.

Cash flows from investing activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Fixed assets (net) (2,250.42) (1,689.15)
Acquisition of subsidiaries (163.92) -
Trade investments (net) 2.20 110.78
Mutual Funds (net) (163.75) 11.82
Inter-corporate deposits (net) (2,575.37) (361.40)
Fixed deposit with banks having original maturity over three months (net) (89.55) (443.13)
Dividends received from subsidiaries (including exchange gain) 1,109.44 2,447.47
Interest received 655.69 356.57
Others (7.30) 0.40
Net cash (used in) / provided by investing activities (3,482.98) 433.36

In fiscal 2013, the Company used Rs 3,482.98 crores for investing activities (Rs 433.36crores of cash generated in fiscal 2012).

During fiscal 2013, significant use of cash in investing activities was primarilyattributable to:

• purchase of fixed assets (net) Rs 2,250.42 crores in fiscal 2013 U 1,689.15crores in fiscal 2012)

• acquisition of Computational Research Laboratories Limited Rs 163.92 crores infiscal 2013 (^ 'Nil' in fiscal 2012)

• investment in fixed deposits with banks (net) Rs 89.55 crores in fiscal 2013 (Rs443.13 crores in fiscal 2012)

• inter-corporate deposits (net) Rs 2,575.37 crores in fiscal 2013 ( ^ 361.40crores in fiscal 2012).

Cash provided by investing activity was primarily attributable to:

• dividends from subsidiaries Rs 1,109.44 crores in fiscal 2013 (Rs 2,447.47crores in fiscal 2012)

• interest received from investments in fixed deposits and inter-corporatedeposits Rs 655.69 crores in fiscal 2013 (Rs 356.57 crores in fiscal 2012).

Cash flows from financing activities

(Rs crores)
Fiscal 2013 Fiscal 2012
Repayment of long term borrowings (1.24) (1.25)
Short term borrowings (net) 80.02 -
Repayment of inter-corporate deposits (5.00) -
Dividend paid, including dividend tax (5,703.16) (3,879.81)
Interest paid (26.42) (16.16)
Net cash used in financing activities (5,655.80) (3,897.22)

The significant item of cash used in financing activities was payment of dividend Rs5,703.16 crores including dividend tax (Rs 3,879.81 crores in fiscal 2012).

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate systems of internal control commensurate with itssize and the nature of its operations. These have been designed to provide reasonableassurance with regard to recording and providing reliable financial and operationalinformation, complying with applicable statutes, safeguarding assets from unauthoriseduse, executing transactions with proper authorisation and ensuring compliance of corporatepolicies.

The Company has a well defined delegation of power with authority limits for approvingrevenue as well as expenditure. Processes for formulating and reviewing annual and longterm business plans have been laid down. The Company uses a state-of-the-art ERP system torecord data for accounting, consolidation and management information purposes whichconnects to different locations for efficient exchange of information. It has continuedits efforts to align all its processes and controls with global best practices.

The Company has appointed Ernst & Young Private Limited to oversee and carry outinternal audit of the Company's activities. The audit is based on an internal audit plan,which is reviewed each year in consultation with the statutory auditors (M/s. DeloitteHaskins & Sells) and the audit committee. In line with international practice, theconduct of internal audit is oriented towards the review of internal controls and risks inCompany's operations such as software delivery, accounting and finance, procurement,employee engagement, travel, insurance, IT processes in the Company, including most of thesubsidiaries and foreign branches.

The Company has an audit committee, the details of which have been provided in thecorporate governance report.

The audit committee reviews audit reports submitted by the internal auditors.Suggestions for improvement are considered and the audit committee follows up oncorrective action. The audit committee also meets the Company's statutory auditors toascertain, inter alia, their views on the adequacy of internal control systems in theCompany and keeps the board of directors informed of its major observations periodically.

CAUTIONARY STATEMENT

Certain statements made in the management discussion and analysis report relating tothe Company's objectives, projections, outlook, expectations, estimates and others mayconstitute 'forward looking statements' within the meaning of applicable laws andregulations. Actual results may differ from such expectations whether expressed orimplied. Several factors could make significant difference to the Company's operations.These include climatic and economic conditions affecting demand and supply, governmentregulations and taxation, natural calamities over which the Company does not have anydirect control.

   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
TCS 508,194.51 25.80 11.54 16.41 48.2 60.1 0.00
Infosys 193,992.63 18.19 4.61 10.87 26.1 35.6 0.00
Wipro 142,318.91 20.53 4.85 11.93 27.6 30.8 0.20
HCL Technologies 110,638.44 20.60 10.81 10.25 44.0 47.1 0.10
Tech Mahindra 51,161.01 20.39 5.95 10.50 42.1 39.6 0.13
Oracle Fin.Serv. 27,425.37 23.88 3.24 10.52 15.2 22.1 0.00
MphasiS 9,645.38 19.83 2.50 25.12 14.1 19.4 0.00
IGate Computer 7,006.46 14.73 2.08 8.41 15.8 18.7 0.00
Polaris Finan. 2,164.32 26.10 1.84 11.30 8.7 11.2 0.05
Hewlett-Packard 0.11 0.00 0.00 0.00 37.3 36.3 0.00

Futures & Options Quote

 
Expiry Date
2557.75 7.90  (0.3%)
Instrument: FUTSTK
Expiry Date: 31 Jul 2014
Open Price: 2,551.95
Average Price: 2,544.64
No. of Contracts Traded: 1,429,875
Open Interest: 3,098,250
Underlying: TCS
Market Lot: 125
Previous Close: 2,557.75
Day’s High | Low: 2,564.00 | 2,524.50
Turnover (Cr.): 363.85
Open Int. Change: -19,250.00 ( [0.6]% )
View detailed F& O quotes >>

Key Information

Key Executives:

Cyrus Mistry , Chairman  

N Chandrasekaran , Managing Director & CEO  

Phiroz A Vandrevala , Director  

Aman Mehta , Director  


Company Head Office / Quarters:
Nirmal Building,
9th Floor Nariman Point,
Mumbai,
Maharashtra-400021
Phone : 91-22-67789595
Fax : 91-22-67789660
E-mail :
tcs@tata.com
investor.relations@tcs.com
Web : http://www.tcs.com
Registrars:
TSR Darashaw Ltd
6-10 Haji Moosa
Patrawala Ind.Estate
DrEMoses Rd Mahalaxm
Mumbai - 400 011

Fund Holding


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