Assignment on

Analysis of Annual Report of TCS for the year 2009-10

Submitted by

Debojit chauhan (BAM10030)

Jaydeep Das (Bam10036)
Luhit Parajuli (Bam10034)
Utpal Bora (Bam10029)
Akalabya Sonowal (Bam10045)
Angikar Borgohain (BAM10032)
 A Brief History:

Tata Consultancy Services Limited (TCS) (BSE: 532540, NSE: TCS)

Tata Consultancy Services Limited (TCS) is the world-leading information technology consulting, services,
and business process outsourcing organization that envisioned and pioneered the adoption of the
flexible global business practices that today enable companies to operate more efficiently and produce
more value.
TCS commenced operations in 1968, when the IT services industry didn’t exist as it does today.
Now, with a presence in 34 countries across 6 continents with over 100,000 employees it is Asia’s largest
IT Services firm with annualized revenue of over 30,028.92 crore (US$ 6.82 billion)(2010), an Operating
income of 8,305.73 crore (US$ 1.89 billion)(2010), along with Profits and Total assets worth 5,618 crore
(US$ 1.28 billion) 2010) and 6.112 billion (2010)respectively. It has offices in 42 countries with more than
142 branches across the globe. It is a part of one of Asia's largest conglomerates - the TATA Group –
which has its interests in Energy, Telecommunications, Financial Services, Chemicals, Engineering &
Materials. It has its Headquarters in Mumbai, Maharashtra, India and has offices around the globe.

Few important names in relation to the company:

Ratan Tata, Chairman of the Board
S. Ramadorai, CEO & MD

Services provided by TCS:

· Application Development and Maintenance
· Business Process Outsourcing
· E-Business
· Engineering and Industrial Services
· Infrastructure Services
· Quality and IT Process Consulting & E-Security

Industries to which TCS provides its services and solutions:

· Banking,
Financial Services,
Insurance, Telecom,
Manufacturing,
Media and Entertainment,
Retail and Consumer Goods Transportation,
Travel & Hospitality,
Healthcare and Life Sciences
Energy & Utilities

It’s Products:
Quartz - Payments Processing Solution
FinDNA - Anti Money Laundering Solution
FNS BANCS - Core Banking Solution,
EClearSettle - Clearing & Settlement Solution and host of many other services.
Analysis:

ACCOUNTING POLICY (31st March 2010)

a) Basis of Preparation
The consolidated financial statements of Tata Consultancy Services Limited, its subsidiaries and
associates (“the Group”) are prepared under the historical cost convention and in accordance with the
requirements of the Companies Act, 1956.

b) Fixed Assets:
Fixed assets are stated at cost, less accumulated depreciation. Costs include all expenses
incurred to bring the assets to its present location and condition. Fixed assets exclude computers and
other assets individually costing Rs. 50,000 or less which are not capitalised except when they are part
of a larger capital investment programme.

c) Revenue Recognition:
Revenues from contracts priced on a time and material basis are recognised when services are
rendered and related costs are incurred. Revenues from turnkey contracts, which are generally time
bound fixed price contracts, are recognised over the life of the contract using the proportionate
completion method, with contract costs determining the degree of completion. Foreseeable losses on
such contracts are recognised when probable. Revenues from the sale of equipment are recognised
upon delivery, which is when title passes to the customer. Revenues from sale of software licences are
recognised upon delivery where there is no customisation required. In case of customisation the same is
recognised over the life of the contract using the proportionate completion method. Revenues from
maintenance contracts are recognised pro-rata over the period of the contract. Revenues from Business
Process Outsourcing (BPO) services are recognised on time and material, fixed price and unit priced
contracts. Revenue on time and material and unit priced contracts is recognised as the related services
are rendered. Revenue from fixed price contracts is recognised as per the proportionate completion
method with contract cost determining the degree of completion. Dividends are recorded when the
right to receive payment is established. Interest income is recognised on time proportion basis taking
into account the amount outstanding and the rate applicable.

d) Investments
Long-term investments are stated at cost, less provision for other than temporary diminution in
value. Current investments comprising investments in mutual funds are stated at the lower of cost and
fair value, determined on a portfolio basis.

e) Cash and Cash Equivalents

The Group considers all highly liquid financial instruments, which are readily convertible into
cash and have original maturities of three months or less from the date of purchase, to be cash
equivalents.
 Depreciation:

Depreciation is the permanent and continuous decrease in the book value of a fixed asset due to use,
effluxion of time, obsolence, expiration of legal rights or any other cause.

According to The Institute Of Chartered Accountants in England And Wales,

“Depreciation represents that part of the cost of a fixed asset to its owners which is not recoverable
when the asset is finally out of use by him. Provision against this loss of capital is an integral cost of
conducting the business during the effective commercial life of the asset and is not dependent on the
amount of profit earned”

In the case of TATA CONSULTANCY SERVICES:

Depreciation other than on freehold land and capital work-in-progress is charged so as to write-off the
cost of assets, on the following basis:

Assets: Method Followed: Rate Of Depreciation:

Freehold Buildings Written down value 5%
Factory Buildings Straight line 10%
Plant and Machinery Straight line 33.33%
Computer Equipment Straight line 25%
Motor Cars Written down value 25.89%
Office Equipment Written down value 13.91%
Electrical Installations Written down value 13.91%
Furniture and Fixtures Straight line 100%
Intellectual Property
& Distribution Rights Straight line 24 – 36 months

Fixed assets purchased for specific projects are depreciated over the period of the project.
 SUMMARY

REVENUE:

The term “Revenue” refers to the amount charged for the goods sold or services rendered, or
permitting others to use enterprise’s resources yielding interest, royalty and dividend.

The Company’s revenues increased to Rs.23,044.45 crore in fiscal 2010, from Rs.22,404.00 crore in fiscal
2009, a growth of 2.86%.Revenues from information technology and consultancy services increased to
Rs.22,232.93 crore in fiscal 2010 from Rs.21,535.75 crore in fiscal 2009, a growth of 3.24%. Revenues
from information technology and consultancy services contributed 96.48% of revenues in fiscal 2010
(96.12% in fiscal 2009).
Revenues from sale of equipment and software licenses decreased to Rs. 811.52 crore in fiscal
2010 from Rs. 868.25 crore in fiscal 2009, a decrease of 6.53% and contributed 3.52% of revenues in the
fiscal 2010 (3.88% in fiscal 2009).
REVENUE
(TCS Revenue comparison for the last two fiscals)

Amount

In

(Crores)

Year

Amount

In

(Crores)

Year
 Net profit:

“Net Profit” refers to the excess of revenue over expenses

The Company's net profit was Rs. 5,618.51 crore in fiscal 2010 (Rs.4,696.21 crore in fiscal 2009).Net
profit margin increased from 20.96% in fiscal 2009 to 24.38% in fiscal 2010. There was an improvement
of 3.42% which is mainly attributable to:
 Higher PBT of 4.70%
 Discontinuance of fringe benefit tax.

Amount

In

(Crores)

Year

Amount

In

(Crores)

Year
SHARE CAPITAL:

Share capital refers to the portion of a company's equity that has been obtained (or will be obtained) by
trading stock to a shareholder for cash or an equivalent item of capital value. Share capital can be
composed of both common and preferred shares.

There are different types of Share Capital:

Authorised Share Capital is also referred to, at times, as registered capital. This is the total of the share
capital which a limited company is allowed (authorized) to issue to its shareholders.

Issued Share Capital is the total of the share capital issued to shareholders.

Called up Share Capital is the total amount of issued capital for which the shareholders are required to
pay.

Paid up Share Capital is the amount of share capital paid by the shareholders

In the case of TATA CONSULTANCY SERVICES

Less:Calls
Year Authorised Issued Subscribed Called Up Forfeited Paid Up
in Arrears
2010 225.00 195.72 195.72 195.72 0.00 0.00 195.72
DIVIDENDS:

For fiscal 2010 the Company declared three interim dividends of Rs.2 each on the equity shares.
A final dividend of Rs.4 per equity share has been recommended. In addition, the Board of Directors has
recommended a special dividend of Rs.10 for the current fiscal. On approval of the final dividend of Rs.4
and the special dividend of Rs.10, total dividend for fiscal 2010 would be Rs.20 per equity share.

Proposed dividend on redeemable preference shares of Rs.100 crore is Rs.17 crore.

 RATIO ANALYSIS

PROFITABILITY RATIOS:
 GROSS PROFIT RATIO=GROSS PROFIT/NETSALES*100
 NET PROFIT RATIO=NET PROFIT/NETSALES*100
LIQUIDITY AND SOLVENCY RATIO:

 CURRENT RATIO=CURRENT ASSETS/CURRENT LIABLITIES*100

 QUICK RATIO=QUICK ASSETS/CURRENT LIABLITIES*100
MANAGEMENT EFFICIENCY RATIO:

 DEBTOR TURNOVER RATIO

EARNING PER SHARE RATIO: