PROJECT REPORT

ANALYSIS
OF
ANNUAL REPORT 2009-10

FOR

TATA CONSULTANCY SERVICES

SUBMITTED BY:
ANKITA AGARWAL (ROLL NO. 7)
DEEPANSHI KOCHHAR (ROLL NO. 14)
HIMANSHI GULATI (ROLL NO. 18)
(SECTION B)
 EXECUTIVE SUMMARY

The project has been prepared to fulfill the objective of analyzing,

understanding and interpreting the financial statements of a company. For
this purpose, the annual report of Tata Consultancy Services (TCS) has been
taken.

The project discuss about the relevant information provided in the annual
report of TCS for customers, employees and suppliers. It also discuss about
financial highlights page, auditors' report, disclosure of accounting policies
and their significance.

The project has helped in understanding the purpose for which financial
statements are prepared and the qualitative characteristics required in
preparing them.

The project has been prepared under the guidance of Ms. Gunjan Mehta.
 TABLE OF CONTENTS

• Company at a glance
• Financial highlights
• Relevant information in the annual report for employees
• Relevant information in the annual report for customers
• Relevant information in the annual report for suppliers
• Auditors' Report
• Disclosure of accounting policies in the report
• Characteristics of the information provided
• Recommendations
 COMPANY AT A GLANCE

Tata Consultancy Services (TCS) is a software services and consulting company headquartered in
Mumbai, India. TCS is the largest provider of information technology and business process outsourcing
services in Asia. The company is listed on the National Stock Exchange and Bombay Stock Exchange
of India.
TCS is a flagship subsidiary of one of India's largest and oldest conglomerate company, the Tata Group,
which has interests in areas such as energy, telecommunications, financial services, manufacturing,
chemicals, engineering, materials, government and healthcare. The company was established in 1968.
Despite unfavorable government regulations the company succeeded in establishing the Indian IT
industry.
TCS has established Tata Research Development and Design Centre in Pune. The company has 19
Innovation Labs in three countries. It is one of the largest private sectors employers in India. It has the
lowest attrition rates in the Indian IT industry.
TCS was the fourth largest visa recipient of US VISA Program, preceded by Infosys, Wipro and
Satyam.

SOURCE: Tata Consultancy Services. [online]

Available at: http://en.wikipedia.org/wiki/Tata_Consultancy_Services [Accessed 30 July, 2010]
 FINANCIAL HIGHLIGHTS

Items given under financial highlights page1 are as follows:

• 8% Growth in Consolidated Revenue to Rs. 30,029 crores
• 22% Growth in Consolidated Operating Profit to Rs. 8,018 crores
• 33% Growth in Consolidated Profit after Tax to Rs. 7,001 crores

Users of this information:

• shareholder- a shareholder would like to know if the company is performing according to his
expectations and whether he should continue to hold the shares of this company or not. The
amount shown for profit after tax is important from shareholder's view as it infers how much
dividend is payable to him in this year.
• investor- a prospective investor would like to know if the company is profitable or not. He
would like to know whether such growth would continue in future; and buying the securities of
this company would help him in meeting his financial goals or not.
• Employees- they will note how the company is doing in growth of total revenue from which
their salaries are provided and also, whether the amount of their salary is fair in accordance to
the profit their company is making.
• banks and financial institutions- the banks which have provided loans to the company are
interested in knowing the status of total revenue from which a company pays interest to the
banks. Also, it helps them in analyzing whether the company will be in a position to repay the
principal amount in future.
• Creditors and suppliers- from the above figures they can analyze if the company will be able to
meet their dues and make the timely payments.
 RELEVANT INFORMATION IN ANNUAL REPORT FOR EMPLOYEES:

• TCS is the largest private sector employer in India with a total employee strength of 160,429
including those in its subsidiaries.13
• The attrition rate for this fiscal was 11.8%, which is amongst the lowest in the industry.13
• Utilization, excluding trainees, touched an all time high of 81.8% and including trainees it
touched 74.3% at the end of March 2010.13 This has been achieved by focusing on employees,
needs and proving them requisite training. This also concludes that the company keep its
employees engaged and adjust their work load according to their personal capabilities.
• Overall, 1,458,079 learning days were invested towards competency development in key
technology areas and 11,276 managers at various levels attended leadership development
programs. To widen the reach of Learning and Development (L&D) globally, 25% of the total
L&D effort was delivered through e-Learning.13 This helps employees and managers in
keeping pace with the change within the organization, becoming more efficient and
competitive, responding better to external pressures and becoming more people oriented.
• The Diversity and Women’s Network (DAWN) initiative that was launched to encourage
diversity and inclusion in our workforce has gained momentum within the organization.13 The
company is taking initiative to develop effective communication channels among them to
address their needs properly and to keep them engaged.
• There has been decrease in “total employees cost” as a percentage of revenues from 52.12% in
fiscal 2009 to 51.13% in fiscal 201013.
1. Salaries and incentives have increased due to increase in the number of employees.
2. Staff expenses has increased by 0.22%
3. Due to movement of on-site personnel to offshore projects, employee allowances to
overseas employees decreased by 2.29%, which offset the above increases.
4. Also the company has cut down the recruitment and training expenses from Rs 98.89
crores in 2009 to Rs 78.79 crores in 2010.13
• There has been significant increase in remuneration expense of key management personnel by
18.9%.
 RELEVANT INFORMATION IN ANNUAL REPORT FOR CUSTOMERS:

• TCS has a unique Global Network Delivery Model for customers for delivering services at
multiple locations.
• TCS has following integrated portfolio of services13:
1. IT services in Application Development, Application Management and Enterprise solutions
2. Business Process Outsourcing Services- an outsourcing model using own technology platform
built on utility based model
3. IT Infrastructure Solutions with focus on 'Remote Infrastructure Management'
4. Engineering services with focus on Enterprise Asset Management, Industrial Embedded
Systems, Plant Automation Services and Product Engineering
5. Assurance and validation services
6. Product based solutions in financial services under the brand name TCS BαNCS
7. Global Consulting for change management, program management, process management and
architecture
8. Small and Medium Business solutions- providing end to end information and communication
technology solutions to SMBs.
• The company has introduced industrial solution units for following sectors: banking and
financial services, insurance, telecoms, manufacturing, retail and consumer packaged goods,
life science and healthcare, media and information services, hi-tech, government, energy,
resources and utilities and travel, transport and hospitality.
• TCS established Co-Innovation Network for leveraging an external ecosystem. In current fiscal
year, two solutions, the home infotainment platform and Tata Swach were created for purifying
water.
• TCS provide Asset Leveraged Solutions based on company's intellectual property and domain
expertise.
• TCS established integrated Quality Management Systems(iQMS) to ensure quality of its
services.
• TCS has adopted world-class corporate governance standards to mitigate fraud related risks.
 RELEVANT INFORMATION IN ANNUAL REPORT FOR SUPPLIERS:

From the financial statements and schedules forming part of it, following information is noticeable for
suppliers:

• There has been slight decrease in services consumed from business associates and others by the
company by 2.71%. Thus, the service providers saw 2.71% decrease in their business with this
company this year.
• The company has cut down heavily on consumption of raw materials, sub-assemblies and
components by 54.94%. The suppliers of components faced its low demand from company this
fiscal. Even, the demand for stores and spare parts was cut down extremely by 98%.
• The amount due to micro and small enterprises (vendors) stood at Rs 26 lakhs this year which is
lower comparatively to Rs. 1.01 crores in 2009.
• TCS' full services strategy was validated with new service lines like BPO, Infrastructure,
Assurance and products. The suppliers already engaged in these sectors can tap this opportunity
to expand their customer base and network.
 AUDITOR'S REPORT

• TCS has appointed following persons as auditors for the annual report:13
1. DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No.117366W)
2. N. VENKATRAM
Partner
(Membership No. 71387)
Auditor's report has been addressed to the members and the board of directors of the
company.
• The following financial statements have been audited:
1. Balance Sheet as at March 31, 2010
2. Profit and loss account for the year ended March 31, 2010
3. Statement of Cash Flows for the year ended March 31, 2010
• Auditing has been done in accordance with auditing standards generally accepted in India. Also,
as required by the Companies (Auditor’s Report) Order, 2003 (“CARO”) issued by the Central
Government of India in terms of Section 227(4A) of the Companies Act, 1956, a statement on
the matters specified in paragraphs 4 and 5 of the said Order has been enclosed in the
annexure.13
• In the opinion of the auditors13:
1. proper books of account as required by law have been kept by the Company
2. the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by
this report are in agreement with the books of account and are in compliance with the
Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.
3. according to the explanations given and to the best of their information, the said accounts
give the information required by the Companies Act, 1956, in the manner so required and
the above stated financial statements give a true and fair view in conformity with the
accounting principles generally accepted in India.
4. On the basis of the written representations received from the Directors, taken on record by
the Board of Directors, none of the Directors is disqualified as on March 31, 2010 from
being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
• From the above statements, it can be inferred that the auditor has given an unqualified opinion
report since in the opinion of the auditor the company's financial condition, position and
operations are fairly presented int the financial statements.
 DISCLOSURE OF ACCOUNTING POLICIES IN THE REPORT

• Analyzing the annual report it can be inferred that company has made the financial
statements in accordance with following principles:
1. going concern
2. principle of consistency
3. principle of periodicity
4. principle of full disclosure
5. matching principle

• According to accounting standards, the company has disclosed the method of computation
in following areas:
1. fixed assets
2. depreciation
3. leases
4. impairment
5. investments
6. employee benefits
7. revenue recognitions
8. research and development
9. taxation
10. foreign currency transactions
11. derivative instruments and hedge accounting
12. inventories
13. government grants
14. provisions, contingent liabilities, and contingent assets
15. cash and cash equivalents

• The company has made full disclosure on acquisitions and divestment made in the current
fiscal.
• The company has made full disclosure on retirement benefit plans and the changes occurred
within it.
• The company has made relevant disclosure on obligations towards operating leases and
financial leases.
• The company has provided segment report primarily on the basis of industry and secondarily on
the basis of geographic locations.
• The company has made full disclosure on related parties which includes following:
 1. holding company
2. subsidiaries (Direct Holding)
3. Subsidiaries (Indirect Holding)
4. Fellow Subsidiaries with whom the Company has transactions
5. Associates
6. Key Management Personnel
• Each information provided in financial statements has been in the regulatory form. There is no
unregulated information provided.

CHARACTERISTICS OF INFORMATION PROVIDED

1. RELEVANCE: The company has provided information in detail for the customers,
shareholders, prospective investors, government and employees. But the needs of the suppliers
have not been addressed properly. There was no direct or easy-to-locate information provided
for the suppliers or service providers or vendors which could influence their decisions.
2. RELIABILITY: From the auditors' report, it can be concluded that the company is providing
fair view of its financial position and the information so provided is reliable to make decisions.
The information provided has the capability of being verified.
3. COMPARABLE INFORMATION: The company has been following the principle of
continuity, so the user can compare the information of current fiscal with the previous years.
This can help in comparing the performance of the company over time. Also such information
can be compared with the information provided in other companies, annual report.
4. UNDERSTANDING: The company has used bar graphs, line graphs and pie charts in certain
areas to make it more understandable and for easy interpretation. The company has provided
non-financial information also, besides historical data and financial statements.
 RECOMMENDATIONS

• TCS should make efforts in reporting to supply chain sector to improve communications with
suppliers regarding future actions.
• The company can promote the use of technology to enable its users to locate and compile their
own information and easily navigate through the annual report.
• The company has not provided the honest and open analysis of the challenges it faces in the
industry and risks involved in global exposures. The company should mention at least the
principal risks involved.
• In certain cases, the company has provided information more than once for instance, details of
its services, which has resulted in high volume of data and can cause less retention by the users.
The company should follow an organized structure while presenting the data.
1 Tata Consulatancy Services, 2010. Annual Report 2009-2010. [Online]
Available at: http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2009-2010.PDF
[Accessed 25 July, 2010]