tata consultancy services ltd share price Directors report


To the Members,

The Directors present this Integrated Annual Report of Tata Consultancy Services Limited (the Company or TCS) along with the audited financial statements for the financial year ended March 31, 2023.

The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. Financial results

(Rs crore)

Standalone

Consolidated

Financial Year 2022-23 (FY 2023) Financial Year 2021-22 (FY 2022) Financial Year 2022-23 (FY 2023) Financial Year 2021-22 (FY 2022)
Revenue from operations 1,90,354 1,60,341 2,25,458 1,91,754
Other income 5,328 7,486 3,449 4,018
Total income 1,95,682 1,67,827 2,28,907 1,95,772
Expenses
Operating expenditure 1,39,357 1,14,096 1,66,199 1,38,697
Depreciation and amortisation expense 3,940 3,522 5,022 4,604
Total expenses 1,43,297 1,17,618 1,71,221 1,43,301
Profit before finance costs and tax 52,385 50,209 57,686 52,471
Finance costs 695 486 779 784
Profit before tax 51,690 49,723 56,907 51,687
Tax expense 12,584 11,536 14,604 13,238
Profit for the year 39,106 38,187 42,303 38,449
Attributable to:
Shareholders of the Company 39,106 38,187 42,147 38,327
Non-controlling interests NA NA 156 122
Opening balance of retained earnings 68,949 70,928 78,158 79,586
Closing balance of retained earnings 62,228 68,949 74,722 78,158

2. Return of surplus funds to Shareholders

In line with the practice of returning 80 to 100 percent free cash flow to shareholders and based on the Companys performance, the Directors have declared three interim dividends of Rs8 per equity share and a special dividend of Rs67 aggregating to Rs91 per equity share involving a cash outflow of Rs33,297 crore during the year. The Directors have also recommended a final dividend of Rs24 per equity share, the final dividend on equity shares, if approved by the Members, would involve a cash outflow of Rs8,782 crore. The total shareholders payout excluding the buyback tax of Rs4,192 crore paid at the beginning of FY 2023, would involve a total cash outflow of Rs42,079 crore at Rs115 per equity share, resulting in a dividend payout of 107.6 percent of the standalone profits of the Company.

For FY 2022, the Company paid a total dividend of Rs43 per equity share, which resulted in an outflow of Rs15,818 crore and a dividend payout of 41.4 percent of the standalone profits of the Company. In addition to the above, the Company bought back 4,00,00,000 equity shares at a price of Rs4,500 per equity share for an aggregate consideration of Rs18,000 crore. The offer size of the buyback was 21.03 percent and 19.06 percent of the aggregate paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as at December 31, 2021, respectively.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is available on the Companys website at https://on.tcs.com/Dividend.

3. Transfer to reserves

The closing balance of the retained earnings of the Company for FY 2023, after all appropriation and adjustments was Rs62,228 crore.

4. Companys performance

On a consolidated basis, the revenue for FY 2023 was Rs2,25,458 crore, higher by 17.6 percent over the previous years revenue of Rs1,91,754 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2023 and FY 2022 was Rs42,303 crore and Rs38,449 crore, respectively.

The PAT attributable to shareholders for FY 2023 was Rs42,147 crore registering a growth of 10.0 percent over the PAT of Rs38,327 crore in FY 2022.

On a standalone basis, the revenue for FY 2023 was Rs1,90,354 crore, higher by 18.7 percent over the previous years revenue of Rs1,60,341 crore in FY 2022. The PAT attributable to shareholders in FY 2023 was Rs39,106 crore registering a growth of 2.4 percent over the PAT of Rs38,187 crore in FY 2022.

5. Quality initiatives

The Company continues to strengthen its commitment to the highest levels of quality, superior customer experience, best-in-class service management, robust information security and privacy practices and mature business continuity management.

The relevance of TCS integrated Quality Management System (iQMS™) is continually evaluated for new service offerings, emerging delivery methodologies, industry best practices and latest technologies, and adequately upgraded to provide outstanding value and experience to its customers.

TCS has successfully achieved Maturity Level 5 in CMMI Enterprise Wide assessment for Development. TCS has successfully completed the annual ISO surveillance audit and has been recommended for continuation of its enterprise-wide certification. TCSs enterprise ISO certification scope includes conformance to the following globally recognized standards: ISO 9001:2015 (Quality Management), ISO 20000-1:2018 (IT Service Management), ISO 22301:2019 (Business Continuity Management), ISO 27001:2013 (Information Security Management), ISO 27017:2015 (Information Security Controls for Cloud Services), ISO 27018:2019 (Protection of PII in Public Clouds as PII Processors), ISO 27701:2019 (Privacy Information Management Systems), AS 9100:2016 (Aerospace Industry), ISO 13485:2016 (Medical Devices) and TL 9000-SV R6.2/R5.7 (Telecom Industry).

The customer-centricity, focus on their growth and transformation, rigor in operations and commitment to delivery excellence have resulted in sustained high customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third party surveys as well. TCS achieved the top position in Whitelane customer satisfaction survey for the tenth consecutive year, with an overall satisfaction score of 83 percent compared to the industry average of 75 percent.

TCS has received multiple external awards this year, in the areas of quality and data privacy. TCS won the Data Security Council of India (DSCI) Excellence Award 2022 in category Best Privacy Practices in Organization, two years in a row; PICCASO Privacy Awards Europe 2022 for Best Privacy Programme; Gold award won by BFSI Cognitive Business Operations- IT IS Team in 8th National Institute for Quality and Reliability (NIQR) Annual Six Sigma/Task Achievement Competition; Customer Experience Team of the Year Award by Global Sourcing Association - UK.

6. Subsidiary companies

On March 31, 2023, the Company has 51 subsidiaries and there has been no material change in the nature of the business of the subsidiaries. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

On May 18, 2022, Tata Consultancy Services Asia Pacific Pte. Ltd. acquired additional 6.8 percent ownership interest in Tata Consultancy Services (China) Co., Ltd. (TCS China) thereby making it a wholly owned subsidiary.

Tata Consultancy Services Danmark ApS was liquidated effective July 27, 2022.

On March 16, 2023, TCS China acquired 100 percent ownership interest in TCS Financial Solutions (Beijing) Co., Ltd. from TCS Financial Solutions Australia Pty Limited.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Companys subsidiaries in Form No. AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Companys website at https://www.tcs.com/investor-relations.

7. Directors responsibility statement

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

i. In the preparation of the annual accounts, 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 that period;

iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 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 such internal financial controls are adequate and operating effectively;

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

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2023.

8. Directors and key managerial personnel

As on March 31, 2023, the Company has nine Directors comprising of two Executive Directors and seven Non-Executive Directors out of which five are Independent Directors. There are two women directors.

On April 16, 2022, the Members approved the re-appointment of Rajesh Gopinathan (DIN 06365813) and N G Subramaniam (DIN 07006215) as the CEO and MD and COO and ED, respectively.

On February 12, 2023, the Members approved the re-appointment of Dr Pradeep Kumar Khosla (DIN 03611983) as an Independent Director. In the opinion of the Board, he is a person of integrity, fulfils requisite conditions as per applicable laws and is independent of the management of the Company.

Rajesh Gopinathan would relinquish his position of CEO and MD of the Company with effect from June 1, 2023. The Board places on record its appreciation of the invaluable services of Rajesh Gopinathan as the CEO and MD.

The Board appointed K Krithivasan (DIN 10106739) as the Chief Executive Officer Designate with effect from March 16, 2023 and as CEO and MD with effect from June 1, 2023 for a period of five years, subject to approval of the Members at the ensuing Annual General Meeting (AGM).

K Krithivasan heads the Banking, Financial Services, and Insurance (BFSI) Business Group at the Company and has been part of the global technology sector for over 34 years, having joined the Company in 1989.

Aarthi Subramanian (DIN 07121802) retires by rotation and being eligible, offers herself for re-appointment.

A resolution seeking shareholders approval for their appointment/re-appointment along with other required details forms part of the Notice.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any.

Pursuant to the provisions of Section 203 of the Act, Rajesh Gopinathan, CEO and MD, N G Subramaniam, COO and ED, Samir Seksaria, Chief Financial Officer and Pradeep Manohar Gaitonde, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2023.

9. Number of meetings of the Board

Six meetings of the Board were held during the year.

For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.

10. Board evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.

The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. In a separate meeting of Independent Directors, Performance of Non-Independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.

11. Policy on directors appointment and remuneration and other details

The Companys policy on appointment of directors is available on the Companys website at https://on.tcs.com/ApptDirectors.

The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on the Companys website at https://on.tcs.com/remuneration-policy.

12. Corporate Social Responsibility (CSR)

TCS CSR initiatives and activities are aligned to the requirements of Section 135 of the Act.

A brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. This Policy is available on the Companys website at https://on.tcs.com/Global-CSR-Policy

For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.

13. Internal financial control systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which is a part of this report.

14. Audit committee

The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which is a part of this report.

15. Auditors

At the twenty-seventh AGM held on June 9, 2022, the Members approved the re-appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the thirty- second AGM to be held in the year 2027.

16. Auditors report and Secretarial audit report

The statutory auditors report and the secretarial auditors report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report as Annexure II.

17. Risk management

The Board of Directors of the Company has a Risk Management Committee to frame, implement and monitor the risk management plan for the Company.

The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.

18. Vigil Mechanism

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in conformation with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour. This Policy is available on the Companys website at https://on.tcs.com/WhistleB .

19. Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements.

20. Transactions with related parties

None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2023 and hence does not form part of this report.

Pursuant to SEBI Listing Regulations, the resolution for seeking approval of the shareholders on material related party transactions is being placed at the AGM.

21. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Companys website at https://on.tcs.com/annualreturn-22-23.

22. Particulars of employees

The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:

Name Ratio to median remuneration % increase in remuneration in the financial year
Non-executive Directors:
N Chandrasekaran* - -
O P Bhatt 41.16 10.41
Aarthi Subramanian# - -
Dr Pradeep Kumar Khosla 37.10 10.80
Hanne Sorensen 37.32 11.46
Keki Mistry 41.03 9.80
Don Callahan 37.23 10.76
Executive Directors:
Rajesh Gopinathan 427.10 13.17
N G Subramaniam 345.68 14.08
Chief Financial Officer:
Samir Seksaria - $
Company Secretary:
Pradeep Manohar Gaitonde - $

* As a policy, N Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.

# In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata Company and hence not stated.

$ Remuneration received in FY 2023 is not comparable with remuneration received in FY 2022 (for part of the year) and hence not stated.

b. The percentage increase in the median remuneration of employees in the financial year is 5.11 percent.

c. The number of permanent employees on the rolls of Company are 6,14,795.

d. The average annual increase was in the range of 5- 8 percent in India. However, during the course of the year, the total increase is in the range of

6- 9 percent, after accounting for promotions and other event based compensation revisions.

Employees outside India received a wage increase varying from 1.5 to 5.5 percent.

The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects the Companys performance, the performance pay is also linked to organization performance and individual utilization in addition to individual performance.

Increase in the managerial remuneration for the year was 13.58 percent.

e. The Company affirms that the remuneration is as per the remuneration policy of the Company.

f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report.

Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure.

In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

23. Integrated Report

The Company has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Companys long term perspective. The Report also touches upon aspects such as organisations strategy, governance framework, performance and prospects of value creation based on the five forms of capital viz. financial capital, intellectual capital, human capital, social capital and natural capital.

24. Disclosure requirements

As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the integrated Management Discussion and Analysis, the Business Responsibility and Sustainability Report ("BRSR") form part of the Directors Report.

The BRSR indicates the Companys performance against the principles of the National Guidelines on Responsible Business Conduct. This would enable the Members to have an insight into Environmental, Social and Governance initiatives of the Company.

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

25. Deposits 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.

26. Conservation of energy, technology absorption, foreign exchange earnings and outgo Conservation of energy

The Company is committed towards conservation of energy and climate action which is reaffirmed in its Environmental Sustainability policy (https://on.tcs.com/Environmental-Sustainability).

During the year, several initiatives were aligned to achieve the carbon targets which included those in building and IT infrastructure. Initiatives in building infrastructure included higher energy efficiencies in heating, ventilation, and air conditioning (HVAC) systems, uninterruptible power supply (UPS), LEDs, motors, chillers and Energy Monitoring and Analytics (Clever Energy + Resource Oprtimization Center) which resulted in energy savings of 4,219 MWh, equivalent to 3,016 tCO2e reduction during FY 2023.

Initiatives in green IT focussed on data center and IT device consolidation and optimization to reduce the carbon footprint. Our data centers had a weighted average power utilisation effectiveness (PUE) of 1.66 during the year. In addition to this, the Company ensures energy efficiency of the equipment it procures.

The Company continues to leverage the TCS IoT-based Real-time Energy Management System (TCS Clever EnergyTM) that involves real time monitoring to optimization of operational energy efficiency across all offices.

The roof top solar photo voltaic installations this year remained at 10.2 MWp contributing to 3.44 percent of total electricity use in the reporting year. The Company increased the renewable energy procurement through switch over to green tariffs for its operations in several states in India and addition to open access power purchase agreements (PPA). The renewable energy procurement has resulted in an increase in renewable energy use to 55.2 percent of total energy use.

TCS is certified to ISO 50001:2018 standards for Energy Management Systems (EnMS) across 19 campuses in India of which 14 campuses were included in FY 2023 ensuring our commitment to energy conservation and management.

The above energy efficiency and renewable energy procurement efforts helped achieve a year-on-year reduction in absolute carbon footprint (across Scope 1 and Scope 2) of TCS global operations by 12.4 percent. The Company has achieved a 71 percent reduction in absolute emissions (Scope 1 and Scope 2) when compared to the base year of FY 2016 thereby achieving the 2025 target (of 70 percent reduction) ahead of time. The electricity consumption across TCS operations increased by 33.3 percent compared to FY 2022. This is due to increased resumption of operations in FY 2023 compared to FY 2022 and inclusion of 22 locations globally in the reporting boundary during the current year.

The Company has achieved carbon neutrality across Scope 1 and Scope 2 in Asia Pacific*, Europe, North America, UK & Ireland**, Latin America, Middle East & Africa regions during the reporting year.

Continued focus on the above initiatives will enable steer the Company towards achieving its carbon target to become net zero by 2030.

Technology absorption, adoption and innovation Research & Development (R&D): Specific areas in which R&D was carried out by the Company

With innovation being central to the Companys purpose statement TCS Research, TCS PACE™ and TCS Co-Innovation Network(COIN)™ adopted many initiatives to address customer needs and create impact.

In its fifth decade, TCS Research continued to expand its foundational research in computing, and its intersection with the sciences. As part of physical sciences research,

TCS focused on formulation of new materials with applications in batteries, catalysis and industrial effluents. Teams also worked on carbon capture, digital twins for continuous manufacture of biopharma, and emission reduction in industries. Generative Design research and realisation of this with complex problems with customers showed that algorithmic methods, including AI, can transform early stage design of complex systems with significant benefits over the traditional methods. In the life sciences area, the Company explored generative design across drug design and synthesis, molecules and formulations, and manufacturing processes.

TCS Research used diffusion models as well as large language models for computational creativity. The software research teams worked on learning aided adaptive software, digital transformation of applications, and AI in the software development lifecycle and data analytics. Cyber security remains an important area of research; AI for cybersecurity, privacy enabled service operations, privacy preserving biometrics and trustworthy AI initiatives are in progress. Research in AI was oriented around the latest in Generative Large Language Models, to create techniques for controlled code generation, question answering, consistent image generation, solving optimisation problems and other core AI problems.

The Company expanded its space tech research, working on on-board computing for remote sensing satellites to reduce data and bandwidth for ground communication; it is also leveraging neuromorphic computing for low power computing at the edge. In the area of embedded devices and intelligent systems, research continued solving customer problems in machine, material, infrastructure, and people sensing, using AIoT and edge computing.

Teams also worked on meta materials for next gen communications, computational sensing/imaging and neuromorphic computing.

TCS deepened its expertise in heterogeneous computing. The high performance computing team is working on accelerating runtime performance of computing systems while minimizing energy consumption and costs.

Quantum computing, resilience on cloud with data residency, compliance and security on cloud are other areas of focus.

In the area of behavioural and business sciences, the Company created tools for emotional wellbeing of employees, studied consumer behaviour in retail and gamified learning. Research also provided intervention options for caregivers of elders in connected homes.

Quantum computing initiatives progressed with Proofs of Concepts and customer engagements. Research based offerings in robotics are moving to deployment for logistics and warehouses. TCS Digital twins are now integrating industrial, data driven, physics-based and enterprise models to offer comprehensive insights to customers.

TCS IP based offerings made headway. TCS TwinX™, an AI powered enterprise digital twin platform for risk-free business simulations, is available on Google Cloud.

The Companys substantial Investments in IP, as in MFDM™, TCS Cognix™, ignio™, Pace Ports™, and Dedicated Cloud Units, was seen as a key strength by analysts.

TCS Avapresence, a cloud-based virtual event platform with extended reality(XR) elements, was leveraged by customers for product launches. TCS Conversa™ and TCS GoSafe™ have multiple implementations across the globe;

TCS Crvstallus™ adoption and Industry Innovations continue to resonate well with customers in their enterprise transformation journey. Semiconductor engineering, 5G engineering and software product engineering services made a mark and won awards.

The Companys research and innovation in meta-material- based antenna, network softwarization and desegregation, expanded the opportunity pipeline. TCS contributed in the area of interoperability of ORAN sub-systems. It contributed to the Chromite Core community in processor design and verification areas.

The Companys Pace Ports™ are spaces that connect customers to all of TCS organizational capabilities in innovation, technology, and industry expertise.

The Company inaugurated two Pace Ports this year:

TCS Pace Port™ Pittsburgh, on the Carnegie Mellon University campus; and TCS Pace Port™ Toronto. TCS and Boots launched an innovation hub, INNOVATE Powered by TCS Pace™, at the Boots Nottingham headquarters. TCS forged a major applied engineering and research partnership with The National Robotarium, UKs largest and most advanced AI and robotics research centre.

TCS launched a Quantum Computing Lab on AWS.

TCS COIN™ expanded its global footprint. It now has over 2,700 start-ups in the network and 80+ active academic partnerships. COIN Business Accelerator, a high-touch program with emerging tech companies, has kicked off its 3rd cohort. The Accelerator is playing an instrumental part in TCS ecosystem strategy, increasing its innovation footprint, and winning deals.

In keeping with the Companys commitment to social responsibility and sustainability, TCS Research continued its focus on energy, circularity, and development related projects. These have won appreciation from analysts.

TCS Clever Energy was launched on Google Cloud.

TCS futuristic accessibility research was also lauded. Barclays leveraged TCS VHAB, a gamified assistive tech offering, to help children with special needs. The Digital farming Initiative enabled carbon sequestration in agriculture. TCS energy research teams worked on smart grids, the EV ecosystem, the energy internet, and carbon market.

TCS conducted several sustainathons to create pools of ideas to address social issues. TCS Sustainathon South Africa 2022 focused on nutrition and food security for underprivileged South African children. Another sustainathon was launched in UK and Ireland with University of Glasgow to Develop Sustainable Technology Solutions that support businesses.

The Digital Impact Square, that encourages innovation using digital technologies to address social challenges, onboarded many new projects selected from 900+ applications. DiSQ expanded its ecosystem with more network partners. Several companies within the purview of DiSQ have won awards. The TCS Research Scholarship Program, that completed 10 years, has been extended.

In keeping with the Companys belief of building greater futures through innovation and collective knowledge, Research and Innovation initiatives to foster a culture of creativity continued this year. An organization-wide incubation bootcamp to encourage and support entrepreneurial ideas in areas of Space Tech, Future of Software, Sustainability, Financial Crime and Compliance was held. To further scale out the concept of Rapid Labs, "Build your own Rapid" initiative was held, mentoring teams to create labs that can deliver quick MVPs for customer requests. The TCS Innovista 2022 contest drew 10,000+ innovative entries. TCS won four awards in the Tata Innovista 2022 finals.

TCS CodeVita completed a decade of engaging students with programming as a sport. Season 10 saw participation of 100,000+ students from 87 countries and was one of the most competitive finales in the contests history.

TCS OmniStore™ and TCS Optumera™ won Stevies at the International Business Awards 2022 in the AI/ML solution category. TCS won gold in the category Smart Technology- Electricity Transmission at Indian Smart Grid Forum (ISGF) Innovation Awards 2023. VidyutVanika created in collaboration with IIIT Hyderabad won at the international smart grid competition PowerTAC 2022.

TCS Digital Farming Initiatives won the NASSCOM Enterprise Cloud Awards 22. ignio™ AIOps was awarded significant industry accolades.

TCS continues to contribute to standards in areas such as environmental engineering, cyber security, cyber resilience, Internet of Things, smart cities, software architecture, quantum computing & communication, accessibility of ICT for the differently abled, AI and FinTech-RegTech.

The Companys intellectual property grew with 260+ publications and presentations in top-tier journals and conferences. As of March 31, 2023, 7305 patents have been filed (cumulatively) by the Company and 2878 have been granted. TCS won many awards relating to IP, including the Asia IP Elite Award 2022 for being an exemplar of IP value creation.

Future course of action:

TCS will continue to scale the Patents, Products and Platforms strategy across the organization, harnessing the collective knowledge and creativity of internal teams and of partners to deliver innovative solutions for customers.

Expenditure on R&D:

TCS research and innovation centres are located in India and other parts of the world. The research centres in India, as certified by Department of Scientific & Industrial Research (DSIR), function from Pune, Chennai, Bengaluru, Delhi- NCR, Hyderabad, Kolkata and Mumbai.

Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2023 and FY 2022 are given below:

(Rs crore)
Expenditure on R&D and innovation

Standalone

Consolidated

FY 2023 FY 2022 FY 2023 FY 2022
a. Capital 1 _* 1 _*
b. Recurring 375 337 380 341
c. Total R&D expenditure (a+b) 376 337 381 341
d. Innovation center expenditure 2,048 1,841 2,119 1,901
e. Total R&D and innovation expenditure (c+d) 2,424 2,178 2,500 2,242
f. R&D and innovation expenditure as a percentage of total turnover 1.3% 1.4% 1.1% 1.2%

*Represents value less than Rs0.50 crore

Foreign exchange earnings and outgo

Export revenue constituted 94.3 percent of the total standalone revenue in FY 2023 (94.0 percent in FY 2022).

(Rs crore)
Foreign exchange earnings and outgo FY 2023 FY 2022
a. Foreign exchange earnings 1,83,412 1,55,240
b. CIF Value of imports 144 216
c. Expenditure in foreign currency 75,786 63,689

27. Acknowledgements

The Directors thank the Companys employees, customers, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.

The Directors appreciate and value the contribution made by every member of the TCS family.

On behalf of the Board of Directors
N Chandrasekaran
Chairman
DIN 00121863
Mumbai, April 12, 2023