Submitted by:

Group A5
• Tata Consultancy Services Limited (TCS) is an Indian multinational information
technology (IT) service and consulting company
• Headquartered in Mumbai, Maharashtra, India.
• It is a subsidiary of Tata Group and operates in 149 locations across 45 countries.
• TCS is the largest Indian company by market capitalization.
• TCS is now placed among the most valuable IT services brands worldwide.
• In 2015 TCS was ranked 64th overall in the Forbes World's Most Innovative
Companies ranking,
• As of 2017, it is ranked tenth on the Fortune India 500 list.
• In April 2018, TCS became the first Indian IT company to breach $100 billion market
capitalization, and second Indian company ever (after Reliance Industries achieved it
in 2007) after its market capitalization stood at ₹6,79,332.81 crore ($102.6 billion) on
the Bombay Stock Exchange.
 Business

• TCS offers a consultingled, cognitive powered, integrated portfolio of business, technology and
engineering services and solutions.

• This is delivered through its unique, Location Independent Agile delivery model, a benchmark of
excellence in software development.

• The company generated consolidated revenues of US $20 billion for the year ended March 31,
2019 and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock
Exchange) in India.

• TCS’ proactive stance on climate change and award-winning work with communities across the
world have earned it a place in leading sustainability indices such as the Dow Jones Sustainability
Index (DJSI), MSCI Global Sustainability Index
Products Services
 Chroma  Cognitive business operations
 Customer intelligence and insights  Consulting
 Ignio  Analytics and insights
 Intelligent urban exchange  Automation and Artificial intelligence
 Jile  Internet of things
 Optumera  Cloud application
 Quartz  Blockchain
 TAP  Cloud infrastructure
 TCS BaNCS  Cyber security
 TSC Ion  TCS interactive
 TCS Mastercraft  Industrial engineering
 Quality engineering
 Enterprise
 Conversational experience
Industries Major Competitors
 Banking and financial services  Infosys
 Consumer goods and distribution  Wipro
 Communication , Media and  HCL Technologies
technology
 Tech Mahindra
 Energy, resources and utilities
 Cognizant
 HiTech
 Insurance
 Life science and healthcare
 Manufacturing
 Public services
 Retail
 Travel transportation and hospitality
 Its annual revenue crossed the $20 billion figure, a 20-fold increase over the last 16 years. It also

became the first Indian company to achieve a market capitalization of $100 billion in the last
decade.

 The power of new technologies to craft innovative solutions that give them the differentiation they

need to thrive in a Business 4.0 world.

 Company has shown itself to be immensely entrepreneurial, agile, adaptive and innovative over the

years.

 TCS’ differentiated strategy, market success, capital allocation policy and most importantly, belief

in your Company’s ability to sustain its superior revenue growth and profitability in the longer
term.
 The unique ownership structure which ensures that much of the shareholder value that TCS creates,
automatically flows back to civic society through the sterling work undertaken by the various Tata
trusts.

 TCS focus on investing in building digital talent, reducing the digital divide and resultant
inequities, creating well-paying jobs that boost local economies.

 TCS’ customer centric philosophy and modular organization structure allowed it to work closely
with customers, and be agile in responding to their needs and reacting to events on the ground.

 Company’s structured corporate social responsibility initiatives offer volunteering opportunities to

employees, helping them give back to their local communities and imbuing them with a higher
sense of purpose
 The company is crossing major milestones and delivering outstanding financial performance in the
financial year 2019 with the revenue of Rs1,46,463 crores a growth of 19% over prior year (Rupee
terms).
 The Board of directors of the TCS has recommended a final dividend of Rs18 for the year, bringing
the total dividend for the year to Rs30 per share.
 Company returned Rs29,148 crore to shareholders in FY 2019, Rs13,148 crore as dividends, and
16,000 crore through the share buyback, which is 110.2% of the free cash flow.
 The strong performance of the TCS is driven by two inter-related factors:
1. The rapid mainstreaming of digital technologies.
2. Expanding participation in our customers’ growth and transformation initiatives.
 Business 4.0 is TCS thought leadership framework, identifying four key behaviors of successful
organizations in the digital era:
1. Mass personalization
2. Leveraging ecosystems
3. Embracing risk
4. Creating exponential value
 Machine First Delivery Model integrates analytics, AI, and automation technology deep within

the enterprise to redefine how humans and machines can work together more effectively to
deliver superior outcomes and at scale.

 TCS has also been systematically investing in research and innovation, and integrating that

function into the business units and the researchers take up promising themes in each industry,
and collaborate with domain experts to build innovative solutions that proactively showcase to
customers at innovation centers.

 TCS collectively logged 52 million learning hours in FY 2019,building deeper competencies in

multiple technologies in pursuit of individual career aspirations.

 Yezdi Nagporewalla (For B S R & Co. LLP Chartered Accountants)

 Consolidated financial statements of Tata Consultancy Services Limited and its subsidiaries

listed in Annexure has been audited in accordance with the Standards on Auditing (SAs)
specified under Section 143(10) of the Act.

 Relevant to the preparation and presentation of the standalone financial statements that give a

true and fair view and are free from material misstatement, whether due to fraud or error.

 Evaluated the design and implementation of the processes and internal controls relating to

implementation of the new revenue accounting standard

Key audit matters
 Application of revenue recognition accounting standard is complex and involves a number of key

judgments and estimates including estimating the future cost-to-completion of these contracts,
which is used to determine the percentage of completion of the relevant performance obligation

How the audit addressed the key audit matter

 Testing the IT controls over the completeness and accuracy of cost and revenue reports generated

by the system

 Testing the access and application controls pertaining to allocation of resources and budgeting

systems which prevents the unauthorized changes to recording of costs incurred and controls
relating to the estimation of contract costs required to complete the project.
Key audit matters
 At year-end a significant amount of work in progress (Contract assets and
liabilities) related to these contracts is recognized on the balance sheet

How the audit addressed the key audit matter

 Assessed the appropriateness of work in progress (contract assets) on balance sheet

by evaluating the underlying documentation to identify possible delays in
achieving milestones which may require change in estimated costs to complete the
remaining performance obligations

 Performed test of details including analytics to determine reasonableness of

contract costs
 Total Number of Directors: 9  Number of Independent Directors: 6
 P Bhat  O P Bhatt
 Dr Ron Sommer  Dr ron Sommer
 Don Callahan  Don Callahan
 Rajesh Gopinathan  Aman Mehta
 Aarthi Subramanian  Dr Pradeep Kumar Khosla
 Hanne Birgitte  Keki M Mistry
 Aman Mehta  Hanne birgitte breinbjerg Sorensen
 Dr Pradeep Kumar Khosla
 N G Subramaniam
 Keki M Mistry

Chairman of Board- N Chanderskern (is Non-executive chairman)

 Strategy:

 Customer centric: The philosophy has been to expand and deepen customer engagements

by continually looking for new areas in the customer’s business where we can add value,
proactively invest in building newer capabilities, and launch new offerings to participate
in those opportunities.

 This strategy has resulted in a continual expansion of customer relationships in terms of

the services consumed, revenue and share of wallet, as evidenced by the client metrics we
report every quarter and every year.

 The willingness to invest in the relationship, the commitment to deliver impactful

outcomes and the track record of execution excellence have resulted in high satisfaction
levels and long, enduring customer relationships.
 The various elements of strategy, their outcomes and the validation metrics are as follows:
A) Market Trends:
 More and more industries are leveraging technology to differentiate themselves Customers want
solutions to business problems and not just technology skills.
 Non CIO buyers emerging in enterprises.
 Transformational partners selected based on solution quality and time to market.
 Greater platform of business.
B) Outcomes:
 Industry-defining mega deals
 Thinner competitive set
 Greater pricing power, lower attrition rates.
 Embedding us more in business; gives greater resilience and visibility.
 New technologies to change their business models, drive new revenue streams, strengthen customer
relationships by offering superior experiences, and revamping their operations.
Segment revenues over year on year explanation is as follows:

1.Banking, Financial Services and Insurance:

 Segment revenue for FY 2019 is Rs. 57,938 (in crores),
 Year on year revenue growth is at 19.7%
 Customers have been spending on digital technologies to tap into newer segments and to
improve customer experience.
 Additionally, blurring industry boundaries are causing banks, insurers, and investment
managers to rethink existing business models, and reimagine products and services by
leveraging ecosystems.
 Cost optimization and legacy estate modernization continue to be drivers of growth.

2. Communication, Media and Technology:

 Customers invested more on re-architecting existing products on cloud native platforms,
and in transforming their marketing, sales, customer service and supply chain operations
to support changing business models.
 Segment revenue for FY 2019 is Rs 23,925 (in crores),
 Year on year revenue growth is at 13.2%.
3. Retail and Consumer Business:
 Spending’s includes frictionless and interconnected customer experiences, hyper-
personalization, building new ecosystems and new models - maximizing unique assets like
stores, supply chain, service squad to expand the customer value chain.
 Segment revenue for FY 2019 is Rs 25,164 (in Crores)
 Year on year revenue growth is at 19.5%.

4. Manufacturing:
 Manufacturers are adapting to Industry 4.0 by leveraging digital technologies like IoT, for
greater connectedness, customer experience, increased efficiency, safety, meeting compliance
requirements, predictive maintenance and product innovation. Additionally, customers are
undertaking enterprise wide business transformation programs to drive synergistic growth.
 Segment revenue for FY 2019 is Rs 15682 (in Crores)
 Year on year revenue growth is at 17.4%.
Some of the key risks:

1. Volatile global political and economic scenario.

2. Restrictions on global mobility, location strategies.
3. Business model changes.
4. Litigation risks.
5. Currency volatility
6. Breach of data privacy and protection.
7. Cyber-attacks
8. Intellectual Property (IP) infringement
Common Size Balance Sheet
 Property, plant and equipment
 Investments
 Trade receivables
 Loans receivables
 Cash and cash equivalents
 Other assets

Significant changes in asset structure during the year

 Other intangible assets : Has increased by 1400% due to purchase Rights under licensing agreement
and software licences
 Bank balance : Has increased by 140% due to short term deposits with the banks
 Other assets : Has increased by 130% due to contract assets and Indirect taxes recoverable
 Investments : Has decreased by 19% due to sale of mutual funds
 (crores)
 (A) Trade receivables - Non-current March 31, 2019 March 31, 2018
 (a) Considered good 569 460
 Less: Allowance for doubtful trade receivables (474) (366)
 95 94

 (B) Trade receivables – Current

 (a) Considered good 27,629 25,196
 Less: Allowance for doubtful trade receivables (340) (301)
 27,289 24,895
 (b) Credit impaired 263 211
 Less: Allowance for doubtful trade receivables (206) (163)
 57 48
 27,346 24,943
 Equity attributable to shareholders of the Company
 Borrowings
 Unearned and deferred revenue
 Income tax liabilities

Significant changes in Liability & equity structure during the year

 Share capital : Has increased by 96% due to full paid up shares

 Other financial liabilities : Has increased by 17.5% due to increase in accrued payroll
 Other liabilities : Has increased by 11% due to indirect taxes payable
 Borrowings : Has decreased by 81% due to repayment of overdraft
 The Company and its subsidiaries have ongoing disputes with income tax authorities in India and in
some of the jurisdictions where they operate.

 The disputes relate to tax treatment of certain expenses claimed as deductions, computation or
eligibility of tax incentives or allowances, and characterisation of fees for services received.

 The Company and its subsidiaries have contingent liability of ` 1,504 crore and ` 5,639 crore as at
March 31, 2019 and 2018, respectively,

 in respect of tax demands which are being contested by the Company and its subsidiaries based on
the management evaluation and advice of tax consultants.

 In respect of tax contingencies of ` 318 crore and ` 318 crore as at March 31, 2019 and 2018,
respectively, not included above, the Company is entitled to an indemnification from the seller of
TCS e-Serve Limited.
 Under the Income-tax Act, 1961, Tata Consultancy Services Limited is liable to pay Minimum
Alternate Tax in the tax holiday period.
 Accordingly, Tata Consultancy Services Limited has recognised a deferred tax asset of ` 1,170
crore.
 Deferred tax liability on temporary differences of ` 8,456 crore as at March 31, 2019,
associated with investments, in subsidiaries, has not been recognised, as it is the intention of
Tata Consultancy Services Limited to reinvest the earnings of these subsidiaries for the
foreseeable future.
 TCS's cash flow from operating activities (CFO) during FY19 stood at Rs 28593 Cr, an
improvement of 14.1% on a YoY basis.
 Cash flow from investing activities (CFI) during FY19 stood at Rs 1596 cr on a YoY basis.
 Cash flow from financial activities (CFF) during FY19 stood at Rs -27897 cr on a YoY basis.
 Overall, net cash flows for the company during FY19 stood at Rs 2341 cr from the Rs 1286 cr net
cash flows seen during FY18. (increase of 82.04%)
● Sales

● Net Profit
Between fiscals 2019 and 2024, CRISIL Research projects IT services' revenue to grow at 7-
8% CAGR. The five-year overall growth would, however, be slower than the 9% CAGR
posted over fiscals 2014 and 2019.
 Mar 2019 Mar 2018

Operating Profit Margin(%) 26.97 26.41

Gross Profit Margin(%) 25.56 24.77
Net Profit Margin(%) 21.48 20.97

Return On Net Worth(%) 35.18 30.33

Return on Assets(%) 27.45 24.35
Current Ratio 2.89 2.75
Quick Ratio 2.79 2.61
Debt Equity Ratio -- --
Long Term Debt Equity Ratio -- --
Interest Cover 210.91 656.62
Fixed Assets Turnover Ratio 5.97 5.42
Total Assets Turnover Ratio 1.66 1.47
Dividend Payout Ratio Net Profit 36.29 41.53
Earning Retention Ratio 63.81 58.56
 2019 2018
TCS HCL Infosys TCS HCL Infosys
 The current ratio of TCS is 2.89. A slight increase comparing last year which was 2.75.
 This indicates that the company is able to cover all of its short-term obligations.
 The best current ratio is between 1.2- 2.
 But TCS current ratio is above 2.
 Higher current ratios tend to be better than low current ratios, but having a figure that's too high can
indicate inefficient use of financial resources.
 There is no much difference in quick ratio. The quick ratio is 2.79.
 Mar 2019 Mar 2018
Total Assets Turnover Ratio 1.66 1.47
Avg collection period 65 days 70 days
Accounts Payable T/O 25.73 24.63
Fixed Assets Turnover Ratio 5.97 5.42

• A low average collection period indicates the organization collects payments

faster. There is a improvement in collection period from 70 days to 65 days.

• Higher Asset turnover ratios mean the company is using its assets more
efficiently. Here we can say that the is an increase in Asset T/O to 1.66 from
1.47
Bonus Issue
 The Board of Directors of the Company at its meeting held on April 19, 2018, approved a proposal
to issue bonus
 shares in the ratio of one equity share of ` 1 each for every one equity share of ` 1 each held by the
shareholders of the
 The Company allotted 191,42,87,591 equity shares as fully paid up bonus shares by capitalisation
of profits transferred from retained earnings amounting to ` 86 crore and capital redemption reserve
amounting to` 106 crore.
Buy Back
• The Board of Directors of the Company at its meeting held on June 15, 2018, approved a proposal
to buyback of
• upto 7,61,90,476 equity shares of the Company for an aggregate amount not exceeding ` 16,000
crore being 1.99%
• of the total paid up equity share capital at ` 2,100 per equity share, which was approved by the
shareholders
• The Company bought back 7,61,90,476 equity shares out of the shares that were tendered by
eligible shareholders and extinguished the equity shares on September 26, 2018.
 Mar 2019 Mar 2018
Long Term Debt Equity Ratio -- --

Debt Equity Ratio -- --

Interest Cover 210.91 656.62

• The company's interest coverage ratio deteriorated and stood at 210.9x during FY18-19, from
656.6x during FY17-18.
 Profitability Analysis

 Operating income during the year rose 19.0% on a year-on-year (YoY) basis.
 The company's operating profit increased by 21.5% YoY during the fiscal. Operating profit margins
witnessed growth at 27.0% in FY19 as against 26.4% in FY18.
 Depreciation charges increase by 2.1% and finance costs increased by 280.8% YoY,
respectively.
 Other income grew by 18.4% YoY.
 Net profit for the year grew by 22.0% YoY.
 Net profit margins during the year grew from 20.4% in FY18 to 20.9% in FY19.

• Return on Equity (ROE):

The ROE for the company improved and stood at 35.3% during FY19, from 30.4%
during FY19.
The ROE measures the ability of a firm to generate profits from its shareholders capital
in the company.
• Return on Assets (ROA):
The ROA of the company improved and stood at 27.6% during FY19, from 24.4%
during FY18.
The ROA measures how efficiently the company uses its assets to generate earnings.
 The trailing twelve-month earnings per share (EPS) of the company stands at Rs 84.1, a decline from the
EPS of Rs 135.2 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 2,131.2, stands at 25.9 times its trailing twelve
months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 11.2 times, while the price to sales
ratio stands at 6.8 times.
Strengths

 Clients from diversified markets: TCS has clients from diversified industries such as Banking,

financial services, retail, telecom and media and entertainment etc. Exposure to diversified business
industries dilutes business risks of overdependence on a single market or industry.

 Geographic Footprint: TCS has strategically expanded to geographically diversified markets

throughout the globe which includes North America, the UK, Middle East Europe, Africa and Asia-
Pacific. Presence in geographically diversified markets reduces business risks and creates a strong
global image for TCS.
 Strategically established partnership network: TCS has established the strong partnership with

global companies around the world. It has partnered with some technology giants such
as Adobe, Amazon, Bosch, Dell and HP etc. These partnerships allow TCS to deliver
technologically sustainable and innovative business as well as strategic solutions.

 Strong portfolio of services offered: TCS has a strong and balanced portfolio of offered services

which includes, Business process services (BPS) application development and maintenance, IT
infrastructure, business intelligence and much more. Such a strong and diverse portfolio attracts
various business clients.
Weakness

 Legal battles: In 2014, TCS was involved in a legal battle against Epic Systems for alleged misuse

of Epic System’s confidential information. In 2016, TCS was found guilty and was ordered to pay
damages worth $940 million. TCS has opposed the judgment and challenging it to the higher
jurisdiction. Such incidents affect the image of the company.

 Decline in performance by Diligent: Diligenta, a subsidiary of TCS has continuously performed

below par. The company is not expected to improve on performance soon and thus affects TCS’s
bottom-line.
 The maximum promoter shareholding from the
current level of 75 per cent to 65 per cent.
 This means that the minimum public
shareholding for listed companies has to be
increased from current level of 25 per cent to
35 per cent.
Dividing the IT segments
 This is evident from the increase in employee additions for tier-I companies, which added over
80,000 employees in fiscal 2019 compared with ~10000 in fiscal 2018.
 There has been a change in entry level wages, where salary has increased from Rs 320,000-
330,000 to 350,000-360,000.
 Seeing the rapid and consistent growth of IT sector and Exports from India

 we can conclude that in another few years India will become a place for one of the largest IT

sector and one of the highest exporting country globally.

 Considering all the risk factors and opportunities available India is doing great and will be a

more sustainable market place, providing more and more opportunities to everyone around the
globe.

Thank You