CMC Ltd Merged Directors Report

TO THE MEMBERS OF CMC LIMITED

Your Directors have pleasure in presenting the 39th Annual Report of CMC Limited (the Company) and Consolidated CMC along with the audited financial statements for the financial year ended 31 March, 2015.

1. FINANCIAL RESULTS

(Rs. in crore)

Particulars	Standalone		Consolidated
	2014-15	2013-14	2014-15	2013-14
Income from Sales and Services	1,288.46	1,189.79	2,513.49	2,230.93
Other Income	13.68	141.11	14.32	25.01
Total Income	1,302.14	1,330.90	2,527.81	2,255.94
Operating Expenses	1,030.12	918.53	2,129.11	1,841.59
Profit before Depreciation, Interest and Tax	272.02	412.37	398.70	414.35
Depreciation and amortization	67.19	26.56	67.23	26.98
Interest	0.03	-	0.05	0.08
Profit before Tax	204.80	385.81	331.42	387.29
Provision for Taxation (incl. deferred Income Tax)	7.02	62.20	54.30	106.87
Profit after Tax	197.78	323.61	277.12	280.42
Add: Profit brought forward from previous year	938.04	726.55	992.17	823.87
Amount available for appropriations	1,135.82	1,050.16	1,269.29	1,104.29
Appropriations
Proposed Dividend	83.33	68.18	83.33	68.18
Tax on Proposed Dividend*	-	11.58	-	11.58
Transfer to General Reserve	19.78	32.36	19.78	32.36
Balance carried to Balance Sheet	1,032.71	938.04	1,166.18	992.17
	1,135.82	1,050.16	1,269.29	1,104.29

*No provision for tax on proposed dividend for the financial year 2014-15 is required since the Company has adjusted the proposed dividend with the dividend received from its wholly owned foreign subsidiary, CMC Americas Inc., in April 2015.

2. DIVIDEND

Your Directors are pleased to recommend for approval of the Members a dividend of Rs. 27.50 per equity share of Rs. 10/- each of the Company for the financial year 2014-15. The The total cash outfl ow on account of dividend on equity shares for the financial year 2014-15 would aggregate Rs. 83.33 crore resulting in a payout of 42.13% of the standalone profits of the Company.

3. TRANSFER TO RESERVES

The Company proposes to transfer Rs. 19.78 crore to the General Reserve out of amount available for appropriations and an amount of Rs. 1,032.71 crore is proposed to be retained in the Profit and Loss Account.

4. OPERATING RESULTS AND BUSINESS OPERATIONS

During the financial year 2014-15, your Company has achieved another milestone of crossing Rs. 2,500 crore revenue from operations on consolidated basis. The Company has earned total income from sales and services of Rs. 2,513.49 crore during the financial year 2014-15 registering a growth of 13%.

The Company achieved broad based revenue growth across the geographies. The revenue from international market increased to Rs. 1,713.54 crore in financial year 2014-15 compared to Rs. 1,501.29 crore in financial year 2013-14, registering a growth of 14%, while revenue from domestic market increased to Rs. 799.95 crore in 2014-15 compared to Rs. 729.64 crore in 2013-14, registering a growth of 10%.

The wholly owned subsidiary CMC Americas, Inc., contributed with 17% revenue growth in dollar terms.

The income from sales and services on standalone basis grew by 8% to Rs. 1,288.46 crore in financial year 2014-15 compared to Rs. 1,189.79 crore in financial year 2013-14.

The Systems Integration (SI) segment has been the main contributor to the revenue growth, where the revenue grew by 17% over the previous financial year followed by Customer Services (CS) with 7% revenue growth.

The operating profit (earnings before interest, tax, depreciation and other income) marginally decreased by 1.27% on consolidated basis to Rs. 384.38 crore in financial year 2014-15 compared to Rs. 389.34 crore in financial year 2013-14. On a standalone basis, the operating profit stood at Rs. 258.34 crore during financial year 2014-15 compared to Rs. 271.26 crore during the financial year 2013-14, registering a decline of 4.76%. Operating profit in the previous financial year 2013-14 included Rs. 31.72 crore resulting from a favourable decision in a legal case against a customer. Excluding the impact of this one time transaction, the operating profit during the financial year 2014-15 grew by 7.48% on consolidated basis and 7.85% on standalone basis over the previous financial year.

5. HUMAN RESOURCES DEVELOPMENT

The Company has continuously adopted structures that help attract best external talent and promote internal talent to higher roles and responsibilities. CMC’s people centric focus providing an open work environment fostering continuous improvement and development helped several employees realize their career aspirations during the year. Company’s Health and Safety Policy commits to provide a healthy and safe work environment to all employees. The Company’s progressive workforce policies and benefits, various employee engagement and welfare initiatives like Maitree, various employee engagement programs, have addressed stress management, promoted work life balance.

6. DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. During the financial year 2014-15, the Company received 7 complaints on sexual harassment. All complaints have been disposed off after taking appropriate action and no complaints remain pending as of 31 March, 2015.

7. BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues to be guided by the philosophy of business excellence to achieve sustainable growth using the Tata Business Excellence Model (TBEM). Your Company launched the Tata Group Customer Promise manifesto. Innovation in products, services and business models is a key agenda of the Management along with a customer-focused culture towards building long-term customer relationships. Net Promoter Score was adapted to further Company’s efforts at Customer Centricity and Customer Relationship building.

Continuing along the principles of Total Quality Management, your Company also maintained compliance to ISO 9001:2008, Data Protection Act through information security practices and ISO 27001 certification.

8. DOCUMENTS PLACED ON THE WEBSITE (www.cmcltd.com)

The following documents have been placed on the website in compliance with the Act:

• Details of unpaid dividend as per section 124(2).

• Corporate Social Responsibility policy as per section 135(4)(a).

• Financial statements of the Company and consolidated financial statements along with relevant documents as per third proviso to section 136(1).

• Separateauditedaccountsin respectofsubsidiariesasper fourth provisotosection 136(1).

• Details of vigil mechanism for directors and employees to report genuine concerns as per proviso to section 177(10).

• The terms and conditions of appointment of independent directors as per Schedule IV to the Act.

9. SUBSIDIARY COMPANIES

Your Company has two subsidiaries viz., CMC Americas, Inc. (Direct subsidiary) and CMC eBiz, Inc. (Step down subsidiary) in USA. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Further there has been no material change in the nature of business of the subsidiaries.

Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary.

In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC-1, which forms part of the annual report.

Performance and financial position of the subsidiary companies is given in clause 13 of Annexure-I. 10.

AMALGAMATION

At the respective meetings held on 16 October, 2014, the Board of Directors of the Company and of its holding company- Tata Consultancy Services Limited (TCS), have approved a scheme of amalgamation ("Scheme") between the Company, TCS and their respective shareholders under Sections 391 to 394 of the Companies Act, 1956. The appointed date of the proposed scheme is 1 April, 2015.

As per terms of the Scheme, shareholders of the Company will receive 79 equity shares of Re.1 each of TCS for 100 equity shares of Rs. 10 each of the Company. The swap ratio has been arrived at, based on the valuation report issued by M/s BSR Associates LLP, Chartered Accountants. The Scheme is subject to regulatory and other necessary approvals.

Pursuant to an Order of the High Court of Judicature at Hyderabad, shareholders of the Company at their meeting held on 5 March, 2015, duly approved the scheme. Company has filed the petition before the said court for sanction of the scheme.

11. CORPORATE GOVERNANCE REPORT, MANAGEMENT DISCUSSION & ANALYSIS AND OTHER INFORMATION REQUIRED UNDER THE COMPANIES ACT, 2013 AND LISTING AGREEMENT

As per Clause 49 of the listing agreement entered into with the stock exchanges, Corporate Governance Report with Auditors’ certificate thereon and Management Discussion and Analysis report are attached and form part of this report.

Various information required to be disclosed under the Act and the Listing Agreement is set out in the Annexure-I and forms part of this report.

12. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:

i. in the preparation of the annual accounts for the financial year 2014-15, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;

iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

13. AUDITORS AND SECRETARIAL AUDITORS REPORT

There are no disqualifications, reservations or adverse remarks or disclaimers in the Auditors and Secretarial Auditors Report.

14. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Rule 8(3) of the Companies (Accounts) Rules, 2014, are set out in an Annexure-II to this Report.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and the details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed in Annexure-III to this Report along with a compliance certificate from Secretarial Auditor. Further details of composition of the Corporate Social Responsibility Committee and other details are provided in clause 3.5 of the Corporate Governance Report which forms part of this report.

16. BOARD EVALUATION

The performance evaluation of the Board, its Committees and individual directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, Committees and self-evaluation.

Directors, who were designated, held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as each of the other Directors. Based on the questionnaire and feedback, the performance of every director was evaluated in the meeting of the Nomination and Remuneration Committee (NRC). The meeting of NRC also reviewed performance of the Chief Executive Officer and Managing Director on goals (quantitative and qualitative) set at the beginning of the year in April 2015. Ms. Aarthi Subramanian, additional director, being appointed on 31 March, 2015, was excluded from the process of evaluation.

A separate meeting of the independent directors ("Annual ID meeting") was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual ID meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the NRC with the Board’s Chairman covering performance of the Board as a whole; performance of the non-independent directors and performance of the Board Chairman.

Some of the key criteria for performance evaluation are as follows –

Performance evaluation of Directors:

• Attendance at Board or Committee meetings.

• Contribution at Board or Committee meetings.

• Guidance/support to management outside Board / Committee meetings.

Performance evaluation of Board and Committees:

• Degree offulfillment of key responsibilities.

• Board structure and composition.

• Establishment and delineation of responsibilities to Committees.

• Effectiveness of Board processes, information and functioning.

• Boardcultureanddynamics.

• Quality of relationship between Board and Management.

• Efficacy of communication with external stakeholders.

17. DEPOSIT FROM PUBLIC

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

18. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. S Ramadorai retired as the Director and Chairman of the Board w.e.f. 17 October, 2014 in accordance with the retirement age policy for Directors. The Directors place on record their appreciation of the invaluable contribution and guidance provided by Mr. S Ramadorai.

Mr. N Chandrasekaran was appointed as an Additional Director and took over as the Chairman of the Board from Mr. S Ramadorai w.e.f. 17 October, 2014.

Ms. Kalpana Morparia, Independent Director resigned from the Board of the Company w.e.f. 10 March, 2015. The Directors place on record their appreciation of the valuable contribution made by her.

Ms. Aarthi Subramanian has been appointed as Additional Director on 31 March, 2015, based on the recommendation of Nomination and Remuneration Committee.

Pursuant to Section 161(1) of the Act, Mr. N Chandrasekaran and Ms. Aarthi Subramanian hold office only upto the date of forthcoming Annual General Meeting (AGM) of the Company and are eligible for appointment as Directors.

The Board recommends their appointments and accordingly resolutions seeking approval of the members for their appointments have been included in the Notice of forthcoming Annual General Meeting of the Company along with their brief profile. Mr. S Mahalingam, Director, retires by rotation and being eligible, has offered himself for re-appointment. The Board recommends the same for your approval.

Pursuant to the provisions of Section 203 of the Act, the appointment of Mr. R Ramanan, Managing Director & Chief Executive Officer, Mr. J K Gupta, Chief Financial Officer and Mr. Vivek Agarwal, Company Secretary, were formalized as the Key Managerial Personnel of the Company.

19. AUDITORS

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s Deloitte Haskins & Sells, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 38th Annual General Meeting (AGM) of the Company held on 23 June, 2014 till the conclusion of the 41st AGM to be held in the year 2017, subject to ratification of their appointment at every AGM.

20. PARTICULARS OF EMPLOYEES

The information required under section 197 of the Act and rules made there-under, in respect of employees of the Company, is provided in Annexure-IV forming part of this report.

21. ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, shareholders, customers, suppliers, alliance partners and bankers for the continued support given by them to the Company and their confidence reposed in the management.

On behalf of the Board of Directors

N Chandrasekaran

Chairman

Mumbai

9 April, 2015

ANNEXURE-I

1. EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under Sub-Section (3) of Section 92 of the Companies Act, 2013 (the "Act") is enclosed at Annexure-V in the prescribed form MGT-9 and forms part of this Report.

2. NUMBER OF MEETINGS OF THE BOARD

6 meetings of the Board of Directors of the Company were held during the year. For detail of the meetings, please refer to clause 2(D) of the Corporate Governance Report, which forms part of this Report.

3. INDEPENDENT DIRECTORS’ DECLARATION

Mr. Sudhakar Rao, Mr. Ashok Sinha and Prof. M S Ananth who are Independent Directors, have submitted a declaration that each of them meets the criteria of independence as provided in Sub-Section (6) of Section 149 of the Act and revised Clause 49 of the Listing Agreements. Further, there has been no change in the circumstances which may affect their status as independent director during the year.

4. POLICY OF DIRECTORS’ APPOINTMENT AND REMUNERATION

Company’s policy on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act are covered in clause no.1.3-1.6 of Corporate Governance Report which forms part of this Report. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section 92(3) of the Act, is enclosed at Annexure-V in the prescribed form MGT-9 and forms part of this Report.

5. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT

The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company. A declaration to this effect has been signed by Mr. R Ramanan, Managing Director & Chief Executive Officer and forms part of the Annual Report.

6. RELATIONSHIP BETWEEN DIRECTORS INTER-SE

None of the Directors are related to each other within the meaning of the term "relative" as per Section 2(77) of the Act and clause 49(VIII)(E)(2) of the revised listing agreements.

7. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

There have been no loans, guarantees and investments under Section 186 of the Act during the financial year 2014-15.

8. TRANSACTIONS WITH RELATED PARTIES

The Company has entered into contract / arrangements with the related parties in the ordinary course of business and on arm’s length basis. Thus provisions of Section 188(1) of the Act are not applicable.

9. INTERNAL CONTROL

The information about internal controls is set out in the Management Discussion & Analysis report which is attached and forms part of this Report.

10. RISK MANAGEMENT

The Risk Management is overseen by the Audit Committee of the Company on a continuous basis. The Committee oversees Company’s process and policies for determining risk tolerance and review management’s measurement and comparison of overall risk tolerance to established levels. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. For details, please refer to the Management Discussion and Analysis report which form part of the Board Report.

11. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

The Company has practice of conducting familiarization program of the independent directors as detailed in clause 1.5 of the Corporate Governance Report which forms part of the Annual Report.

12. VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. For details, please refer to clause no. 1.7 of the Corporate Governance Report attached to this Report.

13. PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES

Subsidiaries of the Company are engaged in the business of providing IT services or business solutions or consulting including business process outsourcing services. There has been no material change in the nature of the business of the subsidiaries. The Company’s wholly owned subsidiary CMC Americas, Inc., earned revenue of $244.56 mn (equivalent to Rs. 1,498.27 crore) during financial year 2014-15 compared to $209.06 mn (equivalent to Rs. 1,273.85 crore) during financial year 2013-14 registering a growth of 17% in dollar terms over the previous financial year.

The operating profits of CMC Americas Inc., grew by 6% on consolidated basis and increased to $20.59 mn (equivalent to Rs. 126.03 crore) during financial year 2014-15 compared to $19.37 mn (equivalent to Rs. 118.07 crore) during financial year 2013-14. Financial position of each of the subsidiaries is provided in a separate statement AOC-1, attached to the Financial Statement pursuant to first proviso to Section 129(3) of the Act.

14. PARTICULARS OF REMUNERATION

The information required under Section 197 of the Act and the Rules made there-under, in respect of employees of the Company, is follows:-

(a) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

Non-Executive Directors	Ratio to Median Remuneration
Mr. S Ramadorai	3.25
Mr. N Chandrasekaran	Nil
Mr. S Mahalingam	4.87
Ms. Kalpana Morparia	2.99
Mr. Sudhakar Rao	3.95
Mr. Ashok Sinha	3.88
Prof. M S Ananth	2.93
Ms. Aarthi Subramanian	Nil
Executive Directors
Mr. R Ramanan	37.15

(b) the percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year;

Name of Person	% Increase in remuneration
Mr. S Ramadorai*	(30%)
Mr. N Chandrasekaran	Nil
Mr. S Mahalingam	23%
Ms. Kalpana Morparia	31%
Mr. Sudhakar Rao	31%
Mr. Ashok Sinha	29%
Prof. M S Ananth	34%
Ms. Aarthi Subramanian	Nil
Mr. R Ramanan, MD & CEO	23%
Mr. J K Gupta, Chief Financial Officer	28%
Mr. Vivek Agarwal, Company Secretary	15%

Percentage in brackets represents negative percentage.

*Mr. S Ramadorai retired on 17 October, 2014 as per retirement age policy for the directors of the Company. Hence, remuneration has been considered till that date during the financial year 2014-15.

(c) the percentage increase in the median remuneration of employees in the financial year

9%.

(d) the number of permanent employees on the rolls of company:

4839.

(e) the explanation on the relationship between average increase in remuneration and company performance;

On an average, employees received an increase of 9%. The increase in remuneration is in line with the market trends. In order to ensure that remuneration refl ects company performance, the performance pay is linked to organization performance.

(f) comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

Particulars	Rs. /lac
Remuneration of Key Managerial Personnel (KMP) during financial year 2014-15 (aggregated)	407.76
Revenue from operations	128,846.13
Remuneration (as % of revenue)	0.32%
Profit before tax (PBT)	20,480.38
Remuneration (as % of PBT)	1.99%

(g) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the Company as at the close of the current financial year and previous financial year;

Particulars	Unit	As at 31st Mar 15	As at 31st Mar 14	Variation
Closing rate of share at BSE	Rs.	1,917.70	1,385.55	38%
EPS (Consolidated)	Rs.	91.46	92.55	(1%)
Market Capitalization	Rs. /lac	581,063.10	419,822.65	38%
Price Earnings ratio	Ratio	21	15	40%

Percentage in bracket represents negative percentage.

(h) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

The average increase in salaries of employees other than managerial personnel in 2014-15 was 9%. Percentage increase in the managerial remuneration for the year was 23%.

(i) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company

Particulars	Chief Executive Officer	Chief Financial Officer	Company Secretary
	Rs. /lac	Rs. /lac	Rs. /lac
Remuneration	222.05	148.38	37.33
Revenue	128,846.13	128,846.13	128,846.13
Remuneration (as % of revenue)	0.17%	0.12%	0.03%
Profits before tax (PBT)	20,480.38	20,480.38	20,480.38
Remuneration (as % of PBT)	1.08%	0.72%	0.18%

(j) the key parameters for any variable component of remuneration availed by the directors;

Members at the AGM of the Company held on 27 June, 2012 approved payment of commission to the Non-Executive Directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Companies Act, 1956. The said commission is decided each year by the Board of Directors and distributed amongst the Non-Executive Directors based on performance evaluation which is based on attendance and contribution at the Board and certain committee meetings, as well as the time spent on operational matters other than at meetings.

(k) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year;

Not applicable.

(l) affirmation that the remuneration is as per the remuneration policy of the Company

The Company’s remuneration policy is driven by the success and performance of the individual employees and the Company. Through its compensation package, the Company endeavours to attract, retain, develop and motivate a high performance staff. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company affirms remuneration is as per the remuneration policy of the Company.

15. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON-EXECUTIVE DIRECTORS

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

On behalf of the Board of Directors

N Chandrasekaran

Chairman

Mumbai

9 April, 2015

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Rule 8(3) of the Companies (Accounts) Rules, 2014, are as follows:

A. CONSERVATION OF ENERGY a. The operations of the Company, being IT related, require normal consumption of electricity. The Company is taking every necessary step to reduce the consumption of energy. b. Your Company is not an industry as listed in Schedule to Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rule, 1988.

B. TECHNOLOGY ABSORPTION

Efforts made in technology absorption - as per Form B given below:

FORM B

1. Research and Development (R&D)

a. Specific areas in which Research and Development (R&D) is being carried out by the Company

The Company continues to invest in innovating and developing state of the art technologies that are core to providing key solutions in different industry verticals of interest. This includes critical investments in:

• Insurancesolutions

• Mining Solutions

• Big Data and Data Mining technologies

• Technology & Solutions for Shipping & Ports

• Mobilecomputing

• CloudBusinesstechnologies

Last year, significant investment continued to be made by the Company in

• Algorithmic improvements in product lines.

• Technology Refreshes in Existing Product Lines.

• Increasing the analytics coverage within the product lines.

• Added mobility enablement to several product lines.

b. Benefits derived as a result of R&D

1. Ports and Cargo has seen increased new sales in markets within and outside India and is now seen to be closing the gap with market leaders. The Company saw first deployment of the technically revamped product in production in London and interest from several terminals that are looking for Terminal operating system replacement. Your company has also won significant new deployment opportunities in cargo space in large cargo terminal in Middle East.

2. Insurance sector - Your Company continues to enjoy leadership in Domestic General Insurance sector and dominate the competition. It sees growth not only in India but also in Africa and Middle East now.

3. Our GPS based telematics solution has seen replication with new orders from various states.

4. Niche projects which combine systems integration, embedded systems, mechanical design, application software and control systems have been delivered successfully to international clientele.

c. Expenditure on R&D

		(Rs. /lac)
Particulars	2014-15	2013-14
A. Capital	70.15	67.05
B. Recurring	2,305.57	1,172.86
C. Total	2,375.72	1,239.91
D. Total R&D Expenditure as a percentage of Turnover	1.84	1.04

2. Technology Absorption, Adaptation and Innovation a. Efforts made towards technology absorption, adaptation and innovation

I. Your Company proactively uses new and emerging technologies for conceptualizing solutions to meet its business needs. The expertise gained in early usage results in developing/enhancing our offerings and provides us an advantage in differentiating our Company from others.

II. Apart from its own investment in various technologies, your Company constantly interacts with technology leaders and reputed academic institutes such as IITs to understand and absorb new developments in technologies and offerings.

III. Your Company ensures the readiness of its employees through ongoing Training and Skill Development to handle projects demanding new technology and skill set requirements.

IV. Your Company also periodically scans the market for innovative offerings and products across the world. After due diligence, these are either integrated with your Company’s offerings or used to enhance its solutions portfolio.

V. Your Company encourages its employees to participate in Tata Group level innovation program - Innovista. It also has equivalent internal programs, which recognize and reward improvements and innovation.

b. Benefits derived as a result of the above efforts

I. Increased business opportunities where the upgraded CMC products and solutions are in demand.

II. Your Company continues to be a value adding solution provider for complex projects in the market.

III. Ability to attract best talent to work with us on these products and technologies.

IV. Increased ability to respond to unique requirements of the customers and system engineers.

V. Investing in specific emerging technology spaces such as Platform as a service, Internet of Things, Wearable computing, Cloud, SaaS, Mobility, Analytics and Big Data allows your company relevance and superior positioning for tomorrow’s needs.

c. Information regarding Imported Technology

The Company has not imported any technology.

C. FOREIGN EXCHANGE EARNING AND OUTGO

1. Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services & export plan As a part of its core strategy, the Company is focusing on exports of its services by leveraging wide marketing reach of its Holding Company, Tata Consultancy Services Limited. The Company has established itself as a major supplier of Embedded Systems Services and software solutions in key industry verticals and e-governance space.

2. Total Foreign Exchange Earned & Used

The foreign exchange earned and used during the year were as follows:

(Rs. /lac)

Particulars	Year ended 31 March, 2015	Year ended 31 March, 2014
Foreign Exchange Earned	38,919.80	47,716.43
Foreign Exchange Used	8,482.84	8,139.95
Net Foreign Exchange Earnings (NFE)	30,436.96	39,576.48
NFE / earnings (%)	78.20	82.94

CORPORATE SOCIAL RESPONSIBILITY

CORPORATE SOCIAL RESPONSIBILITY POLICY - OVERVIEW

The Company has its CSR Policy within broad scope laid down in Schedule VII to the Act (vide Annexure I attached), as projects / programmes / activities, excluding activities in its normal course of business. The policy is duly approved by the Board of Directors in its meeting held on 5 December, 2014.

CMC’s APPROACH TO CSR

I. The guiding principles of CMC’s CSR programmes are "sustainability" and "impact through empowerment". These guiding principles shall run through all the approved CSR projects, within the broad framework of Schedule VII of the Act.

II. Existing CSR projects such as Sahapedia, an online resource to promote national heritage, art and culture including setting up of public library, upliftment of disadvantaged communities under affirmative action plan, promotion of education and employability including creation of Skillpedia.

III. Volunteering by employees including Maitree program and such other projects which CMC decides to carry out through its own internal team shall continue to be supported by CMC.

OPERATIONAL PROCESS

Budgetary control: As per the CSR policy, a budget for the approved projects and the projects in the pipeline shall be placed before the CSR Committee for approval. On a quarterly basis, the actual expenditure vis- -vis the budget shall also be placed before the CSR Committee for review.

Proposal for new CSR activity, as and when received, shall be evaluated by CSR Committee, in terms of propriety and social cost benefit in the backdrop of the CSR policy of CMC. The evaluation may involve inspection of documents, onsite visit, gathering of past data on the project partner, profile of beneficiaries etc. As stated above, report on utilization of funds allocated for projects shall be prepared and put up to the CSR Committee at quarterly intervals. This may involve physical on ground inspection in selected cases.

CSR IMPLEMENTATION:

I. CSR activities shall be carried out by the Company through:

(a) its own internal CSR team,

(b) Tata group, Tata Consultancy Services Limited (holding company) or third party registered trust/society/company formed under section 8, having track record of more than three years.

II. In case of (I)(b) above, the Company shall specify the project/programme and the modalities of utilisation of funds. In addition, the Company shall specify a suitable monitoring and reporting mechanism.

The CSR Policy and projects or programs may be accessed at www.cmcltd.com/sites/default/files/CSR-Policy.pdf.

The Company has formed Corporate Social Responsibility Committee as per the requirement of section 135 of the Companies Act, 2013. The Composition of the CSR committee is as follows:

Composition of CSR Committee

Mr. Ashok Sinha, Independent Director as Chairman

Mr. S Mahalingam, Non-Independent Director as Member

Mr. R Ramanan, Managing Director & CEO as Member

Average net profits and prescribed CSR expenditure:

The average net profits and prescribed CSR expenditure is as detailed below:

Particulars	(Rs. /lac)
Average net profits for last three financial years	20,907.23
Prescribed CSR expenditure	418.14
Details of CSR spent during the financial year 2014-15.
Particulars	(Rs. /lac)
Total amount spent during the year	418.14
Amount unspent	Nil

Manner in which the amount spent during the financial year is detailed:

CSR project or activity identified	Sector in which the Project is covered	Projects or programs : (1) Local area or other (2) Specify the State and district where projects or programs were undertaken.	Amount outlay (budget) project or programs wise	Amount spent on the projects or programs Sub-heads: (1) Direct expenditure on projects or programs (2) Overheads	Cumulative Expenditure up to the reporting period	Amount Direct or through implementing agency*
			(Rs. /lac)	(Rs. /lac)	(Rs. /lac)
1. Promotion of national heritage, art and culture including setting up of public library,	Cultural	New Delhi	75.81	75.81	75.81	Direct
2. Contribution to Sahapedia for Promotion of national heritage, art and culture including setting up of public library,	Cultural	New Delhi	138.11	138.11	138.11	Implementing Agency*
3. Donation of Ambulance for healthcare services	Healthcare	Goa	7.42	7.42	7.42	Direct
4. Contribution to TCS Foundation	Trust	Mumbai	196.80	196.80	196.80	Implementing Agency**
Total CSR Spent			418.14	418.14	418.14

* Sahapedia is a Society registered under the Societies Registration Act, 1860 for setting up an online resource to promote national heritage, art and culture including setting up of a public library.

** Tata Consultancy Services Limited (Holding Company) has set up TCS Foundation, a not for profit initiative under section 8 of the Companies Act, 2013. TCS Foundation aims at promoting projects and / or programmes relating to CSR activities. Your Company will use this initiative as one of the vehicle for its CSR activities as prescribed in the CSR Policy of the Company.

Responsibility Statement

Pursuant to the provisions of section 135 of the Companies Act, 2013 read with Companies Rules (Corporate Social Responsibility Policy) Rules, 2014, Mr. R Ramanan, Managing Director & CEO and Mr. Ashok Sinha, Chairman CSR Committee, do confirm that the implementation and monitoring of CSR policy, is in compliance with the CSR objectives and policy of the Company.

R RAMANAN	ASHOK SINHA
Managing Director & CEO	Chairman (CSR Committee)
Mumbai	Mumbai
9 April, 2015	9 April, 2015

CERTIFICATE ON CORPORATE SOCIAL RESPONSIBILITY STATEMENT

THE BOARD OF DIRECTORS

CMC LIMITED

CMC Centre,

Old Mumbai Highway,

Gachibowli,

Hyderabad - 500 032

We have examined the relevant books, paper and records as maintained by M/s. CMC Limited ("The Company") for the year ended on 31st March 2015 for compliances of the provisions of Corporate Social Responsibility (herein after referred as "CSR") undertaken by the CMC Limited as stipulated in the Section 135 of the Companies Act, 2013, Companies (Corporate Social Responsibility Policy) Rules, 2014 and schedule VII of the Companies Act, 2013.

The management of the Company is responsible for the Compliance of the CSR provision. Our examination was limited to the procedure and implementation thereof, adopted by the Company for ensuring the compliance of CSR.

In our opinion and to best of our information and explanation given to us, we certify that the Company has complied with the provisions of CSR pursuant to Section 135 of the Companies Act, 2013, Companies (Corporate Social Responsibility Policy) Rules,2014 and Schedule VII of the Companies Act, 2013.

For Chandrasekaran Associates

Company Secretaries

Dr. S Chandrasekaran

Senior Partner

Membership No. FCS: 1644

Certificate of Practice No.715

New Delhi

7 April, 2015

ANNEXURE-IV

Statement pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forming part of the Directors’ Report for the year ended March 31, 2015

(A) Personnel who are in receipt of remuneration aggregating not less than Rs. 60,00,000 per annum and employed throughout the financial year:

Name	Designation	Remuneration (Rs. )	Nature of Employment	Qualification	Experience	Date of Commencement of employment	Age	Previous Employment	% of Shares held in the company	Whether related to any director
R Ramanan	Managing Director & CEO	22,204,985	Permanent	B. Tech	34	16 October, 2001	56	Tata Consultancy Services	NIL	No
J K Gupta	Chief Financial Officer	14,838,440	Permanent	M.Com, LLB, FCMA, MBA	35	17 May, 2002	55	Tata Consultancy Services	NIL	No

(B) Personnel who are in receipt of remuneration aggregating not less than Rs. 5,00,000 per month and employed for part of the financial year:

NIL

Note: The above remuneration includes salaries, commission, contribution to Provident Fund, Medical reimbursement, LTC, bonus, if any and taxable value of perquisites.

For and on behalf of the Board

N Chandrasekaran

Chairman

Mumbai

9 April, 2015

ANNEXURE-V

FORM MGT-9

Extract of Annual Return as on the financial year ended on 31 March, 2015

[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:
i) CIN	- L72200TG1975PLC001970
ii) Registration Date	- 26 December, 1975
iii) Name of the Company	- CMC Limited
iv) Category / Sub-Category of the Company	- Information Technology
v) Address of the Registered office and contact details	- CMC Centre, Old Mumbai Highway, Gachibowli, Hyderabad - 500 032 (TG) Tel: 91 11 2373 6151 Fax: 91 11 2373 6159 email: investor.relations@cmcltd.com
vi) Whether listed company Yes / No	- Yes
vii) Name, Address and Contact details of Registrar and Transfer Agent, if any	- M/s. Karvy Computershare Private Limited,
	Karvy Selenium Tower B, Plot 31-32, Gachibowli,
	Financial District, Nanakramguda, Hyderabad - 500 032.
	Tel: 91 40 67162222
	Fax: 91 40 23001153
	email: einward.ris@karvy.com

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

Name and description of main products / services	NIC code of the product/ service	% to total turnover of the Company
1. Computer programming, consultancy and related activities	620	94.61

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Name and address of the company	CIN/GLN	Holding/ Subsidiary/ Associate	% of shares held	Applicable section
1. Tata Consultancy Services Limited 9th Floor, Nirmal Building, Nariman Point, Mumbai 400 021	L72210MH1995PLC084781	Holding company	51.12%	2(46)
2. CMC Americas,Inc. 4354 S. Sherwood Forest Blvd, Suite 175, Baton Rouge, USA	Not applicable	Subsidiary company	100%	2(87)
3. CMC eBiz Inc, 4354 S. Sherwood Forest Blvd, Suite 175, Baton Rouge, USA	Not applicable	Step-down subsidiary company	100%	2(87)

IV. SHAREHOLDING PATTERN (Equity share capital breakup as percentage of total equity)

i. Category-wise shareholding

Category of Shareholders	No. of Shares held at the beginning of the year (01.04.2014)				No. of Shares held at the end of the year (31.03.2015)				%Change during the year
Particulars	Demat	Physical	Total	% of Total Shares	Demat	Physical	Total	% of Total Shares
A. Promoters
1 Indian
a) Individual/HUF	0	0	0	0	0	0	0	0	0
b) Central Govt	0	0	0	0	0	0	0	0	0
c) State Govt (s)	0	0	0	0	0	0	0	0	0
d) Bodies Corp.	15489922	0	15489922	51.12	15489922	0	15489922	51.12	0
e) Banks / FI	0	0	0	0	0	0	0	0	0
f) Any Other	0	0	0	0	0	0	0	0	0
Sub-total (A) (1):-	15489922	0	15489922	51.12	15489922	0	15489922	51.12	0
2 Foreign
a) NRIs -Individuals	0	0	0	0	0	0	0	0	0
b) Other –Individuals	0	0	0	0	0	0	0	0	0
c) Bodies Corp.	0	0	0	0	0	0	0	0	0
d) Banks / FI	0	0	0	0	0	0	0	0	0
e) Any Other	0	0	0	0	0	0	0	0	0
Sub-total (A) (2):-	0	0	0	0	0	0	0	0	0
Total shareholding of Promoter	15489922	0	15489922	51.12	15489922	0	15489922	51.12	0
(A) =(A)(1)+(A)(2)
B. Public Shareholding
1 Institutions
a) Mutual Funds	3814838	0	3814838	12.60	2936422	0	2936422	9.69	(2.91)
b) Banks / FI	1366552	0	1366552	4.51	1370266	0	1370266	4.52	0.01
c) Central Govt	0	0	0	0	0	0	0	0	0
d) State Govt(s)	0	0	0	0	0	0	0	0	0
e) Venture Capital Funds	0	0	0	0	0	0	0	0	0
f) Ins. Companies	0	0	0	0	0	0	0	0	0
g) FIIs	6615981	0	6615981	21.83	6620243	0	6620243	21.85	0.02
h) Venture Capital Funds	0	0	0	0	0	0	0	0	0
i) Others	0	0	0	0	0	0	0	0	0
Sub-total (B)(1):-	11797371	0	11797371	38.94	10926931	0	10926931	36.06	(2.88)
2 Non-Institutions
a) Bodies Corp.
i) Indian	735091	700	735791	2.43	847706	700	848406	2.81	0.38
ii) Overseas	0	0	0	0	0	0	0	0	0
b) Individuals
i) holding shares upto Rs. 1 lakh	1828362	14583	1842945	6.09	2524882	14403	2539285	8.38	2.29
ii) holding shares above Rs. 1 lakh	433971	0	433971	1.42	495456	0	495456	1.63	0.21
c) Others	0	0	0	0	0	0	0	0	0
Sub-total (B)(2):-	2997424	15283	3012707	9.94	3868044	15103	3883147	12.82	2.88
Total Public Shareholding	14794795	15283	14810078	48.88	14794975	15103	14810078	48.88	0
[(B)=(B)(1)+(B)(2)]
C. Shares held by Custodian for GDRs & ADRs	0	0	0	0	0	0	0	0	0
Grand Total (A+B+C)	30284717	15283	30300000	100.00	30284897	15103	30300000	100.00	0

Note : Percentage in bracket represents negative percentage ii. Shareholding of Promoters

Shareholder’s Name	Shareholding at the beginning of the year			Shareholding at the end of the year
	No. of Shares	% of total Shares of the company	%of Shares Pledged / encumbered to total shares	No. of Shares	% of total Shares of the company	%of Shares Pledged / encumbered to total shares	% change in share holding during the year
1 Tata Consultancy Services Limited	15489922	51.12	0	15489922	51.12	0	0
Total	15489922	51.12	0	15489922	51.12	0	0

iii. Change in Promoters’ Shareholding (please specify, if there is no change)

There is no change in promoter’s shareholding during FY 2014- 15. iv. Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

Name of the shareholders	Shareholding at the beginning of the year as on 1.4.2014		Change in shareholding during the year		Shareholding at the end of the year as on 31.3.2015
	No. of shares	% of total shares of the company	No. of shares	% of total shares of the company	No. of shares	% of total shares of the company
1 Aberdeen Global-Asian Smaller Companies Fund	2053220	6.78	70840	0.23	2124060	7.01
2 Aberdeen Global Indian Equity (Mauritius) Limited	1920000	6.34	(100000)	(0.33)	1820000	6.01
3 HDFC Trustee Company Limited-HDFC Equity Fund	1691392	5.58	(10000)	(0.03)	1681392	5.55
4 General Insurance Corporation of India	700000	2.31	100000	0.33	800000	2.64
5 Aberdeen Asian Smaller Companies Investment Trust Plc.	444000	1.47	26000	0.08	470000	1.55
6 HDFC Trustee Company Limited - HDFC Prudence Fund	438460	1.45	-	-	438460	1.45
7 The Scottish Oriental Smaller Companies Trust Plc.	402646	1.33	(40263)	(0.13)	362383	1.20
8 The New India Assurance Company Limited	-	-	-	-	334514	1.10
9 Government Pension Fund Global	688883	2.27	(409605)	(1.35)	279278	0.92
10 National Westminster Bank Plc. As Depository of First State Asia Pasific Fund A	-	-	-	-	222005	0.73
Sub Fund of First State Investments ICVC

Note : Numbers and Percentages represents negative numbers and percentages.

The above details are given as on 31 March, 2015. The Company is listed and 99.95% shareholding is in dematerialized form. Hence, it is not feasible to track movement of shares on daily basis. The aforesaid holdings by top ten shareholders is due to market operations. Further, Company has not allotted/transferred or issued any bonus or sweat equity shares during the year.

v. Shareholding of Directors and Key Managerial pesonnel

Directors and Key Managerial Personnel do not have any shareholding in the Company.

V. Indebtedness

Indebtedness of the Company including interest outstanding/accrued but not due for payment.

Company was not having any secured loans/unsecured loans and deposits during the financial year 2014-15.

VI. Remuneration of Directors And Key Managerial Personnel

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Name of MD & CEO: Mr. R Ramanan
Particulars of Remuneration	Rs. /lac
1 Gross salary
1(a) Salary as per provisions contained in section 17(1) of the Income tax Act, 1961	182.78
1(b) Value of perquisites u/s 17(2) Income tax Act, 1961	28.43
1(c) Profits in lieu of salary under section 17(3) Income tax Act, 1961	-
2 Stock Option	-
3 Sweat Equity	-
4 Commission	-
- as a % of profit	-
- others (specify)	-
5 Others, please specify: Retirement Benefits	10.84
Total (A)	222.05
Ceiling as per the Act	2,024.56

B. Remuneration to other directors:

Particulars of Remuneration	Name of Non-Executive Directors				Rs. /lac
1. Independent Directors	Mr. Sudhakar Rao	Ms. Kalpana Morparia	Prof. M.S. Ananth	Mr. Ashok Sinha
Fee for attending board / committee meetings	3.80	1.90	1.50	3.00	10.20
Commission	20.00	16.00	16.00	20.00	72.00
Others, please specify	-	-	-	-	-
Total (1)	23.80	17.90	17.50	23.00	82.20
2. Other Non-Executive Directors	Mr. S. Ramadorai	Mr. N. Chandrasekaran	Mr. S. Mahalingam	Ms. Aarthi Subramanian
Fee for attending board / committee meetings	1.40	-	4.10	-	5.50
Commission	18.00	-	25.00	-	43.00
Others, please specify	-	-	-	-	-
Total (2)	19.40	-	29.10	-	48.50
Total (B)=(1+2)	43.20	17.90	46.60	23.00	130.70
Total Managerial Remuneration					222.05
Total Remuneration (A+B)					352.75
Overall Ceiling as per the Act					2,227.02

C. Remuneration to key managerial personnel other than MD/Manager/WTD

Particulars of Remuneration	Key Managerial Personnel
	Chief Executive	Chief Financial	Company	Total
	Officer (CEO)*	Officer (CFO)	Secretary (CS)	(Rs. /lac)
1 Gross salary	-
1(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961	-	141.38	35.91	177.29
1(b) Value of perquisites u/s 17(2) Income-tax Act, 1961	-	2.46	-	2.46
1(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961	-	-	-	-
2 Stock Option	-	-	-	-
3 Sweat Equity	-	-	-	-
4 Commission	-	-	-	-
- as a % of profit	-	-	-	-
- others (specify)	-	-	-	-
5 Others, please specify: Retirement Benefits	-	4.54	1.42	5.96
Total	-	148.38	37.33	185.71

*Mr. R Ramanan is the Managing Director & CEO of the Company. Thus, CEO’s salary is shown in para VIA of the form as salary of MD & CEO.