24937594 assignment on analysis of annual report of

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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 didnt exist as it does today.

Now, with a presence in 34 countries across 6 continents with over 100,000 employees it is Asias 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

Its 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 servicesare 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

(TCS Revenue comparison for the last two fiscals)

Amount

In

(Crores)

Amount

In

(Crores)

Year

REVENUE:

The term Revenue refers to the amount charged for the goods sold or services rendered, or

permitting others to use enterprises resources yielding interest, royalty and dividend.

The Companys 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).

Net profit:

³Net Profit´ refers to the excess of revenue over expenses

Year



Amount

In

(Crores)

Amount

In

(Crores)

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:

y Higher PBT of 4.70%

y Discontinuance of fringe benefit tax.

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:

Year

Year



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

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.

Year Authorised Issued Subscribed Called UpLess:Calls

in ArrearsForfeited Paid Up

2010 225.00 195.72 195.72 195.72 0.00 0.00 195.72



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

RATIO ANALYSIS

PROFITABILITY RATIOS:



y GROSS PROFIT RATIO=GROSS PROFIT/NETSALES*100

y NET PROFIT RATIO=NET PROFIT/NETSALES*100

LIQUIDITY AND SOLVENCY RATIO:

y CURRENT RATIO=CURRENT ASSETS/CURRENT LIABLITIES*100

y QUICK RATIO=QUICK ASSETS/CURRENT LIABLITIES*100



MANAGEMENT EFFICIENCY RATIO:

y DEBTOR TURNOVER RATIO



EARNING PER SHARE RATIO:

24937594 assignment on analysis of annual report of

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