Comparative Study Of Financial Statements Of Tata Consultancy Services

And Infosys
For The Year 2013-2014
INTRODUCTION
Comparative financial statements are accounting reports that show more than
just the current-year activity or balances. The three major financial statements
are the balance sheet, the income (or profit and loss) statement and the cash
flow statement. Comparative statements are required in order to comply with
generally accepted accounting principles. They give readers a more complete
view of the direction of the company over time.
Financial statements are a collection of reports about an organization's financial
results and condition. They are useful for the following reasons:

To determine the ability of a business to generate cash, and the sources

and uses of that cash.
To determine whether a business has the capability to pay back its debts.

To track financial results on a trend line to spot any looming profitability

issues.

To derive financial ratios from the statements that can indicate the
condition of the business.

To investigate the details of certain business transactions, as outlined in

the disclosures that accompany the statements.
The standard contents of a set of financial statements are:

Balance sheet Shows the entity's assets, liabilities, and stockholders

equity as of the report date.

Income statement. Shows the results of the entity's operations and

financial activities for the reporting period.

Statement of cash flows. Shows changes in the entity's cash flow during
the reporting period.

Supplementary notes. Includes explanations of various activities,

additional detail on some accounts, and other items as mandated by GAAP or
IFRS.

INTRODUCTION OF TATA CONSULTANCY SERVICE

1968 to 2000
Tata Consultancy Services Limited (TCS) was founded in 1968 as a division of
Tata Sons Limited by JRD Tata. Its early contracts included providing punched
card services to sister company TISCO (now Tata Steel)working on an InterBranch Reconciliation System for the Central Bank of India, and providing
bureau services to Unit Trust of India.
In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore.
The recruits comprised 12 Indian Institutes of Technology graduates and three
IISc graduates, who became the first TCS employees to enter a formal graduate
trainee programmer.
In 1979, TCS delivered an electronic depository and trading system called
SECOM for the Swiss company SIS Sega Inter Settle. TCS followed this up
with System X for the Canadian Depository System and automating the
Johannesburg Stock Exchange. TCS associated with a Swiss partner, TKS
Techno soft, which it later acquired.
In 1981, TCS established India's first dedicated software research and
development centre, the Tata Research Development and Design Centre
(TRDDC) in Pune. In 1985 TCS established India's first client-dedicated
offshore development centre, set up for client Tandem.
In the early 1990s the Indian IT outsourcing industry grew rapidly due to the
Y2K bug and the launch of a unified European currency, Euro. TCS created the
factory model for Y2K conversion and developed software tools which
automated the conversion process and enabled third-party developer and client
implementation.
2000 to present
2

 By 2004, TCS's e-business activities were generating over US$500 million in

annual revenues.
On 25 August 2004 TCS became a publicly listed company.
In 2005 TCS became the first India-based IT services company to enter the
bioin formatics market.
In 2006 TCS designed an ERP system for the Indian Railway Catering and
Tourism Corporation.
In 2008 TCS undertook an internal restructuring exercise which aimed to
increase the company's agility.
TCS entered the small and medium enterprises market for the first time in 2011,
with cloud based offerings. On the last trading day of 2011, TCS overtook RIL
to achieve the highest market capitalization of any India-based company.
In the 2011/12 fiscal year TCS achieved annual revenues of over US$10 billion
for the first time.
In May 2013 TCS bagged a Six Year contract from DoP worth over 1100 crore
Rupees.

INTRODUCTION OF INFOSYS
Infosys Ltd is a global technology services firm that defines designs and
delivers information technology (IT)-enabled business solutions to their clients.
The company provides end-to-end business solutions that leverage technology
for their clients, including technical consulting, design, development, product
engineering, maintenance, systems integration, package-enabled consulting, and
implementation and infrastructure management services. The company also
provides software products to the banking industry. They have developed
finacle, a universal banking solution to large and medium size banks across
India and overseas. Infosys BPO is a majority owned subsidiary. Through
Infosys BPO, the company provides business process management services,
such as offsite customer relationship management, finance and accounting, and
administration and sales order processing. The company is having marketing
and technical alliance with FileNet, IBM, Intel, Microsoft, Oracle and System
Application Products. Infosys Ltd is a public limited and India's second largest
software exporter company was incorporated in the year 1981 as Infosys
Consultants Pvt Ltd by Mr.N.R.Narayana Murthy at Karnataka. The company
was started by seven people with the investment of USD 250. The company
became a public limited company in the year 1992. The company was the first
Indian company to be listed on the NASDAQ at the year 1999. Infosys also
forms a part of the NASDAQ-100 index. Continuously in the year 2001, 2002
and 2003, the company wins the National award for excellence in corporate
governance conferred by the Government of India. In October 2, 2004, they set
up a wholly owned subsidiary in People's Republic of China named Infosys
Technologies (China) Co Ltd. In the year 2005, the company established Infosys
Consulting Inc, a wholly owned subsidiary in Texas, US to add high-end
consulting capabilities to their Global Delivery Model. The company was
selected as 'Best Outsourcing Partner' by the readers of Waters, a publication
covering the needs of chief information officers in the capital market firms. In
the year 2007, the company increased the stake value in Progeon to 98.9% after
4

acquiring shares from Citicorp International Financial Company. Infosys had

taken over Philips' finance and administration business process outsourcing
(BPO) centers spread across India, Poland and Thailand for USD 28 million.
Infosys Technologies has 47% of core business assets stagnating.

MEANING OF BALANCE SHEET

In financial accounting, a balance sheet or statement of financial position is a
summary of the financial balances of a sole proprietorship, a business
partnership, a corporation or other business organization, such as an LLC or an
LLP. Assets, liabilities and ownership equity are listed as of a specific date, such
as the end of its financial year. A balance sheet is often described as a "snapshot
of a company's financial condition Of the four basic financial statements, the
balance sheet is the only statement which applies to a single point in time of a
business' calendar year.
A standard company balance sheet has three parts: assets, liabilities and
ownership equity. The main categories of assets are usually listed first, and
typically in order of liquidity. Assets are followed by the liabilities. The
difference between the assets and the liabilities is known as equity or the net
assets or the net worth or capital of the company and according to the
accounting equation, net worth must equal assets minus liabilities.[
A business operating entirely in cash can measure its profits by withdrawing
the entire bank balance at the end of the period, plus any cash in hand. However,
many businesses are not paid immediately; they build up inventories of goods
and they acquire buildings and equipment. In other words: businesses have
assets and so they cannot, even if they want to, immediately turn these into cash
at the end of each period. Often, these businesses owe money to suppliers and to
tax authorities, and the proprietors do not withdraw all their original capital and
profits at the end of each period. In other words businesses also have liabilities

FORMAT OF VERTICAL BALANCE SHEET

Vertical form of balance sheet does not demonstrate just financial position but
it also shows the flow of fund in one year. We can create our balance sheet in
such shape for knowing the exact position of our funds. If we include the
previous figures of liabilities and assets, then we need not to make fund flow
statement because to show the comparison of two period vertical balance sheets
is just like fund flow statement. In short cut, it fulfills the requirement of fund
flow analysis. One more mystery can be analyzed with this form of balance
sheet. We can evaluate changes in working capital by comparing two vertical
balance sheets.
Moreover, most of the companies today use the vertical form for reporting
because with this balance sheet looks without any clutter.
Now, we tell you the structure of vertical balance sheet. Basic formula is of
accounting equation.
Capital + Liabilities = Assets

Shareholders fund + long term liabilities + short term liabilities = Fixed assets
+ current assets

Shareholders fund + Long term liabilities = Final Assets + Current Assets

Current Liabilities

Source of Fund = Application of Fund

BALANCESHEET OF TATA CONSULTANCY SERVICES AND

INFOSYS
8

FOR THE YEAR 2013-2014

AMTS IN CRORES
PARTICULARS

TCS

INFOSYS

295.72
32266.53

287
35772

32562.25

36059

83.10
168.49
251.87
269.52
772.98

56
120
176

80.02
3528.04
2172.71
3896.14
9676.91

178
2827
3788
6793

43012.14

43028

5059.48
44.80
1763.85

4425
28
1135

1.EQUITY & LIABILITIES

SHAREHOLDERS FUNDS
a) Share capital.
b) Reserves and surplus
NON -CURRENT LIABILITIES
a)
b)
c)
d)

Long-term borrowings
Deferred tax liabilities(net)
Other long-term liabilities
Long term provisions

CURRENT LIABILITIES
a)
b)
c)
d)

Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions

TOTAL

2.ASSETS
NON-CURENT ASSETS
a) Fixed assets
i. Tangible assets
ii. Intangible assets
iii. capital work in progress

b)
c)
d)
e)

Non-current investments
Deferred tax assets
Long-term loans and advances
Other non-current assets

6868.13

5588

5975.73
148.23
4630.21
1881.20

2764
378
1529
31

19503.50

10290

348.65
6.34
2303.35
11202.32
4054.16
4911.48
682.34
23508.64

1580
6365
20401
4392
32738

43012.14

43028

CURRENT ASSETS
a)
b)
c)
d)
e)
f)
g)

Current investments
Inventories
Unbilled revenues
Trade receivables
Cash and cash balances
Short-term loans and advances
Other current assets

TOTAL

MEANING OF PROFIT AND LOSS ACCOUNT

An official quarterly or annual financial document published by a public
company, showing earnings, expenses, and net profit. Net income is determined
10

from this financial report by subtracting total expenses from total revenue. The
profit and loss statement and the balance sheet are the two major financial
reports that every public company publishes. The difference between this
statement and the balance sheet deals with the periods of time that each one
represents. The profit and loss statement shows transactions over a given period
of time (usually quarterly or annually), whereas the balance sheet gives a
snapshot holdings on a specific date. Also called income statement or earnings
report
Profit and loss account is that part of final account is made for calculating
the net profit or net loss. In the debit side of this account, we show all indirect
loss and expenses and in the credit side of this account, we show all indirect
incomes. After matching debit and credit side of profit and loss account, we can
find net profit or loss of business. If organisation is company, we transfer this
balance to profit and loss appropriation account; otherwise, we transfer this
balance to capital account.
Explanation of Profit and Loss Account
A) Debit Side of Profit and loss account
1. Gross loss transferred from trading account.
2. All indirect expenses like sale expenses, office expenses and legal expenses
3. If credit side is more than debit side, we show net profit in debit side
B) Credit Side of Profit and Loss account
1. Gross profit transferred from trading account
2. Indirect Incomes like rent, commission, and discount received
3. If debit side is more than credit side, we show net loss in credit side

Profit & Loss Account For Tata Consultancy Services And Infosys For
The Year 2013-2014
AMT IN CRORES
PARTICULARS

TCS

INFOSYS

11

I.
II.
III.

Revenue from operations

Other income(net)
TOTAL REVENUE

V.
a)
b)
c)

VII.

40352
2365
42717

17081.72
-

22565
85

TOTAL EXPENSES

30.62
802.86
17038.15

1459
1509
777
361
506
1099
1557

PROFIT BEFORE TAX

34953.35

29918

15703.18

12799

3197.42
44.00
(324.58)
2916.84

3518
(148)
3370

Expenses:
a) Employee benefit expenses
b) Deferred consideration pertaining to
acquisition
c) Cost of technical sub contractors
d) Travel expenses
e) Cost of software packages and others
f) Communication expenses
g) Professional charges
h) Finance costs
i) Depreciation and a amortizations expense
j) Operation and other expenses

IV.

VI.

48426.14
2230.39
50656.53

TAX EXPENSE:
Current tax
Deferred tax
MAT entitlement

PROFIT FOR THE YEAR

EARNINGS PER EQUITY SHARE:

12789.34

9429

basic and diluted

weighted average number of equity shares
(Face value Rs 1 and 5 each.)

65.22

165.01

195722099
6

571400091

12

Comparative Statement Of Vertical Balance Sheet

13

For the year 2011-12 & 2012-2013

PARTICULARS

TCS

INFOSYS

Increase/decreas Increase/decreas
e
e
Amt

Amt

1.EQUITY & LIABILITIES

SHAREHOLDERS FUNDS
a Share capital.
b Reserves and surplus

7705.62
7705.62

31.37
31.00

6662.00
6662.00

NON -CURRENT LIABILITIES

a
b
c
d

Long-term borrowings
Deferred tax liabilities(net)
Other long-term liabilities
Long term provisions

CURRENT LIABILITIES
a
b
c
d

Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
TOTAL

2.ASSETS

(13.13)
50.39
54.28
114.74
206.28
80.02
680.13
574.15
(492.87)
841.43
8753.33

(13.64)
42.67
27.47
74.13
36.40
23.88
35.92
(11.23)
9.52
25.55

56
59
115
166
882
149
1197
7974

21.46
21.26

47.97
93.50
721.74
28.83
3.90
17.34
20.79

NON-CURENT ASSETS
a Fixed assets
i. Tangible assets
ii. Intangible assets
iii. capital work in progress
b Non-current investments

1047.32
(6.66)
364.03
1404.69

26.10
12.94

432
1152

9.87
97.63
93.22
34.73
14

c Deferred tax assets

d Long term loans and advances
e Other non-current assets

26.00
25.71

550
2134

CURRENT ASSETS
a
b
c
d
e

Current investments
Inventories
Unbilled revenues
Trade receivables
Cash and cash balances

TOTAL

828.67
8.49
297.4

16.10
(755.68) 6.08
1783.57 6.86
(28.66)
10.07

373
204
165

9325
76.98
9.90
106.67
35.72

16
2892

Year 2012-2013 & 2013-2014, taken 2012-2013 as base year.

15

Comparative Statement Of Profit And Loss Account

For the year 2011-2012&2012-2013
TCS

PARTICULARS

INFOSYS

Increase/decrease

I.
II.
III.
a)
b)

c)
d)
e)
f)
g)
h)
i)

j)

Revenue from
operations
Other income(net)
TOTAL REVENUE
Expenses:
Employee benefit
expenses
Deferred
consideration
pertaining to
acquisition
Cost of technical sub
contractors
Travel expenses
Cost of software
packages and others
Communication
expenses
Professional charges
Finance costs
Depreciation and a
amortizations
expense
Operation and other
expenses
TOTAL EXPENSES

Amt

10321.91
(454.79)
9867.12

27.09
(16.94)
24.19

3509.04

25.85

14.22

86.71

114.69

16.67

3892.32

29.61

7530.27

27.50

Increase/decrease
Amt

6618
461
7079

19.62
24.21
19.86

4225

23.04

85

682

87.77

387
123

34.49
18.81

87
23
-

31.75
4.76
-

171

18.43

196

14.40

5979

24.98

16

IV.

V.
a)
b)
c)
VI.

VII.

PROFIT BEFORE
TAX

TAX EXPENSE:
Current tax
Deferred tax
MAT entitlement

2336.85

332.04
82.93
111.52
526.49
1810.36

PROFIT FOR THE

YEAR

17.48

1100

9.40

11.59
(213.02)
(25.57)
22.03

205
(202)
3

6.19
(374.07)
(367.88)

16.49

1097

13.17

16.57

19.18

13.15

EARNINGS PER
EQUITY SHARE:

basic and diluted

9.27

Year 2012-2013 & 2013-2014, taken 2012-2013 as base year.

Chapter:5
MEANING OF CASH FLOW:
Definition:
17

A financial statement that reflects the inflow of revenue vs. the outflow of
expenses resulting from operating, investing and financing activities during
a specific time period
Cash flow statements and projections express a business's results or plans
in terms of cash in and out of the business, without adjusting for accrued
revenues and expenses. The cash flow statement doesn't show whether the
business will be profitable, but it does show the cash position of the business at
any given point in time by measuring revenue against outlays.
The cash flow statement should be prepared on a monthly basis during
the first year, on a quarterly basis for the second year, and annually for the third
year. The following 17 items are listed in the order they need to appear on your
cash flow statement:
1.
Cash refers to cash on hand in the business.
2.
Cash sales are income from sales paid for by cash.
3.
Receivables are income from the collection of money owed to the
business resulting from sales.
4.
Other income is income from investments, interest on loans that have
been extended, and the liquidation of any assets.
5.
Total income is the sum of total cash, cash sales, receivables and other
income.
6.
Material/merchandise is the raw material used in the manufacture of a
product (for manufacturing operations only), the cash outlay for merchandise
inventory (for merchandisers such as wholesalers and retailers), or the supplies
used in the performance of a service.
7.
Direct labor is the labor required to manufacture a product (for
manufacturing operations only) or to perform a service.
8.
Overhead is all fixed and variable expenses required for the operations
of the business.
9.
Marketing/sales is all salaries, commissions and other direct costs
associated with the marketing and sales departments.
10.
R&D is labor expenses required to support the research and development
operations of the business.
11.
G&A is labor expenses required to support the general and administrative
functions of the business.
12.
Taxes are all taxes, except payroll, paid to the appropriate government
institutions.
18

13.

Capital represents the capital requirements to obtain any equipment

needed to generate income.
14.
Loan payments are the total of all payments made to reduce any longterm debts.
15.
Total expenses are the sum of material, direct labor, overhead expenses,
marketing, sales, R&D, G&A, taxes, capital and loan payments.
16.
Cash flow is the difference between total income and total expenses. This
amount is carried over to the next period as beginning cash.
17.
Cumulative cash flow is the difference between current cash flow and
cash flow from the previous period.

CASH FLOW OF TATA CONSULTANCY SERVICES

19

20

CASH FLOW OF INFOSYS

21

TATA CONSULTANCY SERVICES

22

1. SHARE CAPITAL
The Authorized, Issued, Subscribed and Fully paid-up share capital
comprises of equity shares and redeemable preference shares having a par value
of ` 1 each as follows:

(b)
Rights,

preferences and restrictions attached to shares

Equity shares
The Company has one class of equity shares having a par value of ` 1 each.
Each shareholder is eligible for one vote per share held. The dividend proposed
by the Board of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting, except in case of interim dividend. In the
event of liquidation, the equity shareholders are eligible to receive the
remaining assets of the Company after distribution of all preferential amounts,
in proportion to their shareholding.
23

Preference shares
Preference shares would be redeemable at par at the end of six years from the
date of allotment i.e. March 28, 2008, but may be redeemed at any time after 3
years from the date of allotment at the option of shareholder. These shares
would carry a fixed cumulative dividend of 1% per annum and a variable noncumulative dividend of 1% of the difference between the rate of dividend
declared during the year on the equity shares of the Company and the average
rate of dividend declared on the equity shares of the Company for three years
preceding the year of issue of the redeemable preference shares.
Details of shares held by shareholders holding more than 5% of the
aggregate shares in the Company

Shares allotted as fully paid up by way of bonus shares (during 5 years

preceding March 31, 2013)
The Company allotted 97,86,10,498 equity shares as fully paid up bonus shares
by utilisation of Securities premium reserve on June 18, 2009 pursuant to a
shareholders resolution passed by postal ballot on June 12, 2009.

RESERVES AND SURPLUS

Reserves and surplus consist of the following reserves

24

The Board of Directors at its meeting held on April 17, 2013 has recommended
a final dividend of ` 13 per equity share

LONG TERM BORROWINGS

Long - term borrowings consist of the following:

Obligations under finance lease are secured against fixed assets obtained under
finance lease arrangements.
DEFERRED TAX BALANCES
Major components of the deferred tax balances consist of the following

25

 OTHER LONG - TERM LIABILITIES

Other long - term liabilities consist of the following:

Other liabilities comprise:

Fair value of foreign exchange forward and currency option
Contracts
secured
against
trade
Capital creditors 54.34
Others 197.53

receivables

LONG - TERM PROVISIONS

Long - term provisions consist of the following:

Provision for employee benefits includes provision for gratuity and other
retirement benefits.
SHORT - TERM BORROWINGS
Short term borrowings consist of the following:
26

B
ank Overdrafts are secured against book debts .
OTHER CURRENT LIABILITIES
Other current liabilities consist of the following

Other payables comprises of:

Fai r value of foreign exchange forward and currency option
Contracts secured against trade receivables57.86
Statutory liabilities498.96
Capital creditors 226.35
Class action suit settlement consideration 161.63
Others
479.18
Obligations under finance lease are secured against fixed assets obtained under
finance lease arrangements.
SHORT - TERM PROVISIONS
Short - term provisions consist of the following:

27

Provisions for employee benefits include provision for compensated absences

and other short - term employee benefits.

NON - CURRENT INVESTMENTS

Non - current investments consist of the following:
28

29

 LONG - TERM LOANS AND ADVANCES (Unsecured)

30

Long - term loans and advances (unsecured) consist of the following:

OTHER NON - CURRENT ASSETS

Other non - current assets consist of the following:
31

 CURRENT INVESTMENTS
Current investments consist of the following:

INVENTORIES
Inventories consist of the following:

32

Inventories are carried at the lower of cost and net realizable value.
UNBILLED REVENUES
Unbilled revenue as at March 31, 2013 amounting to ` 2303.35 crores (March
31, 2012: ` 1567.47 crores) primarily comprises of the revenue recognised in
relation to efforts incurred on turnkey contracts priced on a fixed time, fixed
price basis of ` 1509.25 crores (March 31, 2012: ` 1208.10 crores).
TRADE RECEIVABLES
Trade receivables (Unsecured) consist of the following

CASH AND BANK BALANCES

Cash and bank balances consist of the following:
33

Balances with banks in current accounts do not include fourteen bank accounts
having a balance of ` 1.35 crores (March 31, 2012: ` 0.31 crore) operated by the
Company on behalf of a third party.
SHORT - TERM LOANS AND ADVANCES
Short term loans and advances (Unsecured) consist of the following:

OTHER CURRENT ASSETS

Other current assets consist of the following:

34

 REVENUE FROM OPERATIONS

Revenue from operations consist of revenues from:

OTHER INCOME (NET)

Other income (net) consists of the following:

OPERATION AND OTHER EXPENSES

Operation and other expenses consist of the following:

35

 FINANCE COSTS
Finance costs consist of the following:

INFOSYS:
1. SHARE CAPITAL:

36

DuringtheyearendedMarch31,2012,theamountofpersharedividendrecognizedasdistrib
utionstoequityshareholderswas`47.ThedividendfortheyearendedMarch31,2012includ
es`22pershareoffinaldividend,`15pershareofinterimdividendand`10pershareofspecial
dividend-10yearsofInfosys BPO operations.
The Board of Directors, in their meeting on October 12, 2012, declared an interim
dividend of `15 per equity share. Further the Board of Directors, in their meeting on
April 12, 2013, proposed a final dividend of `27 per equity share. The proposal is
subject to the approval of shareholders at the Annual General Meeting to be held on
June 15, 2013. The total dividend appropriation for the year ended March 31, 2013
amounted to `2,815 crore including corporate dividend tax of `403 crore

RESEVES AND SURPLUS

37

DEFERRED TAXES
38

OTHER LONG TERM LIABILITIES

OTHER CURRENT LIABILITIES

39

SHORT TERM PROVISIONS

INVESTMENTS

40

LONG TERM LOANS AND ADVANCES

OTHER NON CURRENT ASSETS

41

TRADE RECEIVEBALES

CASH AND CASH EQUIVALENTS

SHORT TERM LOANS AND ADVANCES

42

OTHER INCOME:

EXPENSES

43

TAX EXPENSES

RESEARCH AND DEVELOPMENT EXPENDITURE

Reconciliation Of Basic And Diluted Shares Used In

Computing Earnings Per Share.

44

CONCLUSION
TCS also one of the successful private sector company in India. It is the
company that has pioneered many services first time in India. TCS was the first

45

to offer a product called one view by which customers are able to view their
accounts in six branches on one page on their website.
Infosys earlier known as Imperial Company has proved its existence through
introducing various innovative schemes and that also are considered as
competitive in present market. At the same time we can conclude that they need
to focus on their human resources in order to achieve the maximum market
share.

46