Annual Report - TCS - 2009-2010

TATA CONSULTANCY SERVICES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Members,

The Directors submit the Annual Report of the Company together with the
audited statement of accounts for the year ended March 31, 2010.


1. Financial Results
(Rs. in crore)
Unconsolidated Consolidated
2009-2010 2008-2009 2009-2010 2008-2009

(i) Income from Sales & Services 23044.45 22404.00 30028.92 27812.88

(ii) Other Income (net) 177.60 (456.24) 272.07 (426.99)

(iii) Total Income 23222.05 21947.76 30300.99 27385.89

(iv) Operating Expenditure 16372.78 16383.17 21334.37 20643.08

(v) Profit before Interest,
Depreciation and Tax 6849.27 5564.59 8966.62 6742.81

(vi) Interest 9.54 7.44 16.10 28.66

(vii) Depreciation 469.35 417.46 660.89 564.08

(viii) Profit before Taxes 6370.38 5139.69 8289.63 6150.07

(ix) Provision for Taxes 751.87 443.48 1196.97 838.95

(x) Minority Interest &
Share of Loss/(Profit)
of Associates - - 92.02 54.70

(xi) Net Profit for the Year 5618.51 4696.21 7000.64 5256.42

(xii) Balance Brought Forward
from Previous Year 9990.41 7374.89 11835.03 8688.21

(xiii) Amount Available for
Appropriation 15608.92 12071.10 18835.67 13944.63

Appropriations:

(a) Interim Dividends on
Equity Shares 1174.32 880.74 1174.32 880.74

(b) Proposed Final Dividend on
Equity Shares 782.89 489.31 782.89 489.31

(c) Proposed Special Dividend
on Equity Shares 1957.22 - 1957.22 -

(d) Total Dividend on
Equity shares 3914.43 1370.05 3914.43 1370.05

(e) Proposed Dividend on
Redeemable Preference Shares 17.00 7.00 17.00 7.00

(f) Tax on Dividends 657.51 234.02 663.18 235.99

(g) General Reserve 561.85 469.62 636.22 496.56

(h) Balance carried to
Balance Sheet 10458.13 9990.41 13604.84 11835.03
(1 crore = 10 million)
2. Dividend

Based on the Company's performance, the Directors are pleased to recommend
for approval of the members a final dividend of Rs.4/- per share and a
special dividend of Rs.10/- per share for 2009-10 on the enhanced capital
of 1,95,72,20,996 Equity Shares of Re.1/- each. The final dividend and the
special dividend on the Equity Shares, if approved by the members would
involve a cash outflow of Rs. 3195.21 crore including dividend tax. The
total cash outflow of dividend including dividend tax on Equity Shares of
the Company for the year 2009-10, including interim dividends already paid
would aggregate Rs. 4569.12 crore resulting in a payout of 81.60% of the
unconsolidated profits of the Company.

The Redeemable Preference Shares allotted on March 28, 2008 are entitled to
a fixed cumulative dividend of 1% per annum and a variable non-cumulative
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 the three years
preceding the year of issue of the said Redeemable Preference Shares.
Accordingly, the Directors have recommended, for approval of the Members, a
Dividend of Seventeen (17) paise per share on 100,00,00,000 Redeemable
Preference Shares of Re.1/- each for the financial year 2009-10.

3. Transfer to Reserves

The Company proposes to transfer Rs. 561.85 crore to the General Reserve
out of the amount available for appropriations and an amount of Rs.
10458.13 crore is proposed to be retained in the Profit and Loss Account.

4. Operating Results and Business

Overall, 2009-10 has been a very satisfying year. TCS emerged stronger out
of the global economic downturn as it stayed close to its customers and
helped them in the recovery process. The Company was aggressive in its
quest for new contracts, executed on its full services strategy and
maintained pricing discipline. This helped to deliver 8% revenue growth for
the year along with improvement in margin.

On an Unconsolidated basis, in 2009-10 TCS revenues were at Rs. 23044.45
crore, a growth of 2.86% over 2008-09. Operating margin (Profit before
taxes excluding other income) grew 189 basis points to 26.87% and net
margin grew 342 basis points to 24.38%.

On a Consolidated basis, in 2009-10 TCS revenues were at Rs.30,028.92
crore, a growth of 7.97% over 2008-09. Operating margin (Profit before
taxes excluding other income) grew 304 basis points to 26.70% and net
margin grew 441 basis points to 23.31%. This stellar performance was well
received by investors, with the market capitalisation increasing from
Rs.52,845 crore ($10.4 billion) in March 2009 to Rs.152,820 crore ($34
billion) in March 2010.

The Company's business grew even in those sectors affected by the economic
meltdown, mainly because the customers appreciated the Company's value
proposition. Banking, Financial Services, Retail, Life Sciences & Health
Care and Government sectors registered positive growth in FY10. However,
sectors like Manufacturing, Telecom, Hi-Tech and Insurance all declined on
an annual basis. The Company sees improvement in its order position in
these industry segments as well as growth in almost all geographical
markets.

TCS' full services strategy was validated with new service lines like BPO,
Infrastructure, Assurance and products all delivering double digit growth.

5. International Credit Rating

The Company continues to have an A3 investment-grade issuer rating from
Moody's Investors Services as well as an indicative foreign currency debt
rating of Baa1, with a stable outlook. The rating is not for any specific
debtissuance by the Company. Standard and Poor's Ratings Services has
assigned to the Company its BBB corporatecredit rating with outlook as
Positive.

The Company has also been rated by Dun & Bradstreet at 5A1 (Condition-
Strong). The rating is assigned on the basis of tangible networth and
composite appraisal of the Company.

6. Change in Leadership in TCS

Mr. S. Ramdorai retired as the Chief Executive Officer and Managing
Director of the Company on October 5, 2009 as per the Company's Policy. On
October 6, 2009, Mr. N. Chandrasekaran assumed the role of Chief Executive
Officer and Managing Director of the Company. Mr. Ramadorai continues to be
on the Board as the Non-Executive Vice Chairman of the Company. Mr.
Chandrasekaran has spent over 20 years in the Company performing various
roles and was the Chief Operating Officer and Executive Director. With this
seamless transition of the CEO role, the Company has continuity in its
strategic and managerial approach.

7. Strategic Acquisitions and Alliances

The Company has been making acquisitions either directly or indirectly
through its subsidiaries during the past few years in order to strengthen
its leadership position in terms of its industry and service lines.

TCS e-Serve Limited, TCS' acquisition of Citigroup's captive BPO operations
in India, posted a good performance in 2009-10. TCS e-Serve recorded
revenues of Rs.1517.78 crore on a consolidated basis, an increase of 19.31%
over previous year's revenues of Rs.1272.12 crore. Profit After Tax (PAT)
at Rs.659.38 crore, was significantly higher than previous year's PAT of
Rs.82.33 crore.

8. Human Resource Development

TCS is the largest private sector employer in India with a total employee
strength of 160,429 including those in its subsidiaries. This diverse and
global base of employees from 80 nationalities is central to sustaining
TCS' competitive edge.

The Company's recruitment strategy ensured that employee addition was
clearly aligned to business demand. During the year, there was a gross
addition of 38,063 employees (including in subsidiaries). The attrition
rate for this fiscal was 11.8%, which is amongst the lowest in the
industry. Utilization, excluding trainees, touched an all time high of
81.8% and including trainees it touched 74.3% at the end of March 2010.

TCS has 10,400 non-Indian nationals (including in subsidiaries) amongst its
employee base globally. The percentage of women working for the Company is
30%. Competency and career development continued to be thrust areas for the
Company. 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. The training program at the entry level as well as the
continuous learning programs have been enhanced to ensure that the Company
has the right competencies in its workforce.

A number of employee engagement initiatives were undertaken during the year
to understand the career issues and aspirations of high performers and
their career development. The Diversity and Women's Network (DAWN)
initiative that was launched to encourage diversity and inclusion in our
workforce has gained momentum within the organisation.

9. Interface with Academia

TCS continued its Academic Interface Program (AIP) with select institutes
across the globe to understand their needs and communicate the requirements
of the IT industry to them. During the fiscal year, 431 institutes across
India and 78 institutes abroad were benefited by TCS AIP. The 11th TCS
Annual Academic Meet-Sangam 2009 was held on November 27, 2009 at Hyderabad
which was attended by sixty academic leaders who contributed to various
collaboration opportunities between industry and academia.

10. Quality Initiatives

Reinforcing its commitment to high levels of quality, best-in-class service
management and robust information security practices, TCS attained a number
of milestones during the year. TCS was recommended for continuation of its
enterprise-wide certification for ISO 9001:2008 (Quality Management), ISO
27001:2005 (Security Management) and ISO 20000:2005 (Service Management).

11. Corporate Sustainability

Health, education and concern for the environment are the focus areas of
TCS' Corporate Sustainability (CS) activities. In addition to corporate
programs, TCS employees also undertake many initiatives by volunteering
their time and capabilities to enrich the lives of the community. The
programs focus on education and skill development, environmental
sustainability as well as economic empowerment through information
technology and health awareness. More than 22,000 volunteers took part and
spent over 70,000 hours over a period of two years in such activities.

Major Ongoing CS initiatives:

Computer based Functional Literacy:

The functional literacy offering of TCS has now covered more than 140,000
persons. A new initiative for development of a solution for the Moree
language spoken in Burkina Faso, West Africa has also begun. The National
Literacy Mission has now invited TCS as official partner in Saakshar
Bharat, a programme to cover 70 million illiterate persons.

Advanced Computer Training Center (ACTC) Initiative:

To address the need for advanced learning institutions for visually
impaired, TCS Maitree paved the way and pioneered an Advanced Computer
Training Centre for the visually impaired at M. N. Banajee Industrial Home
for the Blind at Mumbai. This centre offers vocational courses based on
industry requirements. More than 65 visually impaired persons have been
trained through this initiative in the last two years.

International CS initiatives:

UK & Ireland: TCS has over 30 champions and teams having an impact on
society in towns and cities, supporting over 45 charities through more than
250 initiatives. TCS has created the Tata UK flagship initiative called
TODAY ISA GOOD DAY, which is a health programme deployed across the 19 Tata
UK and mainland European companies with its 60,000 employees. TCS has also
developed a PASSPORT TO EMPLOYABILITY education programme which includes:
mentoring 160 boys in a deprived area of East London; being the education
partner to over 80 disaffected boys from Stepney Football Club; working
with Wings of Hope' encouraging 1,400 senior school entrepreneurs;
participation in the Prime Minister's Global Fellowship promoting global
talent awareness.

Chile: TCS had extensive discussions with the Chilean Government to
identify areas where TCS could contribute effectively after last year's
devastating earthquake in the region. Given the fact that the residents in
the affected areas were facing shortage of the basic amenities, TCS in
consultation with the Chile Government decided to provide Water
Desalination plants. These plants, which help in converting sea water into
pure drinking water and are adequate in meeting the drinking water
requirements of a small community, were also used extensively as part of
the Tsunami relief efforts in South India. TCS deputed engineers, who
installed these plants as well as trained local engineers in operating the
plants.

TCS is also working on procuring trucks which will help in delivering pure
water to locations which are at some distance from the plants. TCS has also
decided to provide 4000 units of Tata Swach Water Purifiers. These
indigenously built water purifying equipment do not require any electricity
and perfectly meet the drinking water requirements of individual affected
families. These water filters will be distributed to the families through
the Chilean Government agency involved in the relief and rehabilitation
efforts.

Mexico: Since 2006, TCS Mexico has collaborated in all events of the
'Asociation Con ganas de Vivir' (Eager to Live Association) for children
suffering from cancer.

Ecuador: Since August 2009, a Blood Donation Program in co-ordination with
the Ecuadorian Red Cross has been scheduled to take place every six months.
The last Campaign was directed towards support of the Haiti earthquake
victims.

North America: TCS has supported numerous health related causes such as the
Alzheimer's Association Memory Walk in which TCSers across 4 cities helped
raise awareness on this issue. In the area of education, TCS has created a
student technology summer camp and awareness program called goIT' that is
available to high school students in the Greater Cincinnati, Ohio region.
Volunteering comes naturally to TCSersin North America who, for example,
helped the less fortunate by working with Habitat for Humanity to build
houses and volunteered to clean up roads and parks to better the
environment. TCS North America contributed more than $280,000 to various
charitable initiatives and organisations during the year and actively
participated in more than 110 community activities.

Singapore: TCS has organized and contributed towards a Bone Marrow Donation
Awareness Programme and 20 TCSers have registered as Bone Marrow Donors.

Significant Recognition for TCS CS programs:

'Commendation certificate for Strong commitment' in CII-ITC Sustainability
Awards 2009.

Listed as top among 10 companies from India and overall 3rd our of 200
Asian companies for Corporate Sustainability by CSR Asia November 2009.

Achieved platinum Band (96%) in Corporate Responsibility Index 2009 of
Business in the Community UK, in the fifty year of participation.

Third Corporate Sustainability Report 2008-09, extemally assured by KPMG
and certified as A+ by Global Reporting Initiative.

12. Corporate Governance Report and Management Discussion and Analysis
Statement

A report on Corporate Governance is attached to this Report as also a
Management Discussion and Analysis statement.

13. Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956
('Act'), and based on the representations received from the operating
management, the Directors hereby confirm that:

(i) In the preparation of the Annual Accounts for the year 2009-10, the
applicable Accounting Standards have been followed and there are no
material departures;

(ii) They have selected such accounting policies in consultation with the
statutory auditors and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial
year and of the profit of the Company for the financial year;

(iii) They have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act, 1956. They confirm
that there are adequate systems and controls for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and

(iv) They have prepared the Annual Accounts on a going concern basis.

14. Subsidiary Companies and Consolidated Financial Statements As required
under the Listing Agreements with the Stock Exchanges, a Consolidated
Financial Statement of the Company and all its subsidiaries is attached.
The Consolidated Financial Statement has been prepared in accordance with
Accounting Standards 21 and 23 issued by The Institute of Chartered
Accountants of India and show the financial resources, assets, liabilities,
income, profits and other details of the Company, its associate companies
and its subsidiaries after elimination of minority interest, as a single
entity.

The Company has been granted exemption for the year ended March 31, 2010 by
the Ministry of Corporate Affairs from attaching to its Balance Sheet, the
individual Annual Reports of its subsidiary companies. As per the terms of
the Exemption Letter, a statement containing brief financial details of the
Company's subsidiaries for the year ended March 31, 2010 is included in the
Annual Report. The annual accounts of these subsidiaries and the related
detailed information will be made available to any Member of the
Company/its subsidiaries seeking such information at any point of time and
are also available for inspection by any Member of the Company/its
subsidiaries at the Registered Office of the Company and would be posted on
the website of the Company. The annual accounts of the said subsidiaries
will also be available for inspection, as above, at the Head Offices/
Registered Offices of the respective subsidiary companies.

The statement containing the list of subsidiaries alongwith brief financial
details of the subsidiaries is given on page numbers 172-173 of the Annual
Report.

15. Fixed Deposits

The Company has not accepted any public deposits and, as such, no amount on
account of principal or interest on public deposits was outstanding as on
the date of the Balance Sheet.

16. Directors

Mr. S. Ramadorai who was the Chief Executive Officer and Managing Director
retired on October 5, 2009 as per the Company's Policy and his terms of
appointment. Taking into consideration the contribution made by Mr.
Ramadorai during his tenure the Board decided to continue to avail his
services and appointed him as the Non-Executive Vice Chairman on the Board
of Directors of the Company with effect from October 6, 2009. As per the
provisions of Section 260 of the Companies Act, 1956, (Act) Mr. Ramadorai
holds office up to the date of the forthcoming Annual General Meeting of
the Company. The Company has received notice in writing from a Member under
Section 257 of the Act, in respect of Mr. Ramadorai proposing his
appointment as a Director of the Company.

Mr. N. Chandrasekaran, Executive Director and Chief Operating Officer has
been appointed as the Chief Executive Officer and Managing Director with
effect from October 6, 2009 for a period of five years. An abstract of the
terms and conditions of his appointment and memorandum of interest under
Section 302 of the Act have been sent to the Members of the Company in
September 2009.

Dr. Vijay Kelkar and Mr. Ishaat Hussain have been appointed as Additional
Directors on January 5, 2010. Dr. Vijay Kelkar is an Independent Director.
As per the provisions of Section 260 of the Companies Act, 1956, these
Directors hold office only up to the date of the forthcoming Annual General
Meeting of the Company, and are eligible for appointment as Directors. The
Company has received notices under Section 257 of the Act, in respect of
the above persons, proposing their appointment as Directors of the Company.
Resolutions seeking approval of the Members for the appointment of Dr.
Vijay Kelkar and Mr. Ishaat Hussain as Directors of the Company have been
incorporated in the Notice of the forthcoming Annual General Meeting along
with brief details about them.

Dr. Ron Sommer, Mrs. Laura M. Cha and Mr. R.N. Tata, Directors, retire by
rotation and being eligible have offered themselves for re-appointment.

17. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the statutory
auditors of the Company, hold office in accordance with the provisions of
the Act upto the conclusion of the forthcoming Annual General Meeting and
are eligible for re-appointment.

18. Particulars of employees

The information required under Section 217(2A) of the Act and the Rules
made thereunder, is provided in an Annexure forming part of this Report. In
terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are
being sent to the shareholders excluding the aforesaid Annexure. Any
Shareholder interested in obtaining a copy of the same may write to the
Company Secretary.

19. Conservation of energy, technology absorption, foreign exchange
earnings and outgo

The particulars as prescribed under section 217(1)(e) of the Act, read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are set out in an Annexure to this Report.

20. Acknowledgements

The Directors thank the Company's customers, vendors, investors, business
associates, bankers and academic institutions for their support to the
Company.

The Directors also thank the Government of India, the Governments of
various countries, the concerned State Governments, Government Departments
and Governmental Agencies for their co-operation.

The Directors appreciate and value the contributions made by every member
of the TCS family across the world.

On behalf of the Board of Directors,

Place: Mumbai R.N. Tata
Date : May 24, 2010 Chairman

ANNEXURE TO THE DIRECTOR'S REPORT

Particulars pursuant to Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988

CONSERVATION OF ENERGY

The operations of the Company involve low energy consumption. Adequate
measures have however been taken to conserve energy.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

The Company continues to use the latest technologies for improving the
productivity and quality of its services and products.

RESEARCH & DEVELOPMENT (R & D)

Specific areas in which R&D was carried out by the Company

TCS Corporate Technology Office (CTO) and TCS R&D continued to support TCS'
customers across verticals.

TCS R&D and TCS Co-Innovation Network (COINTM) provide key differentiators
across TCS' businesses and add value to customers across different domains.

TCS has stepped up patent filing and 87 patents were filed during the year
in several countries. Cumulatively, TCS has filed 295 patent application of
which 60 have been granted. The granted patents can be grouped into 47
patent families as per the internal classifications of TCS. During this
financial year, there were 6 patent grants.

A range of tools from the TCS Tools Group provided automation, process
efficiencies, improvements and innovation in current business areas. TCS
Innovation Labs created technologies like TCS Instant Apps and data masking
toolsenabling customers to improve agility and privacy. TCS' IT
Transformation Suite helped them reduce complexity. TCS labs and the COINTM
are also working on next generation platforms such as social networks for
enterprises, connected marketing and analytics solutions.

The TCS Home Infotainment Platform (HIP), a media and internet convergence
device, and Tata Swach, a cost effective water filter, were launched with
our partner ecosystem this year, exploring new business areas.

TCS R&D continues to attract top research talent from India and across the
world. The Company continues to support sabbaticals, internships and PhD
sponsorships in research areas relevant to the Company, in premier academic
institutions. Research based competencies have been introduced in the
Company's learning portal.

Benefits Derived

The R&D efforts of the Company have resulted in the creation of software
tools and usage of these licenses internally has yielded savings of $24.8
million.

Future plan of action

TCS CTO and TCS R&D will strive to build customer and market delight,
develop collaborative solutions and incubate disruptive solutions in the
coming year. Research themes will include (but not be limited to)
simplifying IT, understanding markets and customers to deliver enriched
user experiences, and personalising collaboration to optimise enterprise
knowledge.

Expenditure on R & D
(Rs. in crore)
Year ended Year ended
31.3.2010 31.3.2009

(a) Capital 0.39 1.61
(b) Recurring 77.19 42.31
(c) Total 77.58 43.92
(d) Total R&D expenditure as percentage 0.33% 0.20%
of total income

Foreign exchange earnings and outgo:
(Rs. in crore)
Year ended Year ended
31.3.2010 31.3.2009

(a) Foreign exchange earnings 21289.57 20836.65
(b) CIF Value of Imports 112.97 302.87
(c) Expenditure in foreign currency 7339.16 7867.52


On behalf of the Board of Directors,

Place: Mumbai R.N. Tata
Date : May 24, 2010 Chairman

MANAGEMENT DISCUSSION AND ANALYSIS

A. INDUSTRY OVERVIEW

World-wide technology and related products and services spend is estimated
to have crossed USD 1.5 trillion in 2009, a decline of 2.9% over 2008 as
per NASSCOM Strategic Review 2010. Due to the global economic slowdown,
considerable reductions were experienced in IT service spends across
categories as global corporations cut back on discretionary spends and
focused on leveraging IT spends to drive organisation-wide efficiencies,
business transformation and adoption of new business models.

Chart 1: World-wide IT spends

USD Billion 2008 2009 Growth (%)

IT Services 591 589 (0.3)
Business Process
Outsourcing (BPO) 110 112 1.8
Packaged Software 304 307 1.0
Hardware 600 550 (8.3)
Total 1605 1558 (2.9)
R&D and Engineering 1030 1100 6.8

Source: IDC-Nasscom Strategic Review 2010

The economic downturn contributed to reductions in spending in the first
half of 2009 and early signs of pick up in spending became visible in the
second half of 2009. Companies had reduced IT spending either by delaying
the decisions or by putting some discretionary spending on new IT projects
on hold in the first half of 2009. This led to both pricing and volume
pressures for IT service providers. In the second half of 2009 as economic
growth showed signs of revival and driven primarily by the need to manage
costs and increase operational efficiencies, as well as position themselves
for the anticipated economic growth, many global corporations focused on
(1) improvements in business processes (2) infrastructure consolidation (3)
re-engineering (4) virtualization (5) workload management and (6) cutting
down on cycle time and increasing speed to market.

The components of IT services and BPO spend by nature of spend and
geography and the growth in these markets for 2009 over 2008, which are of
interest to the Company are shown in the charts which follow:

Chart 2: Details of IT services spends

USD Billion 2008 2009 Growth(%)

IT Outsourcing 228 235 3.0
Project Based Services 210 204 (2.9)
Support And Training 153 150 (2.0)
Total 591 589 (0.3)

Source: IDC-Nasscom Strategic Review 2009

Chart 3: Details of BPO spends

Worldwide BPO related spend

USD Billion 2008 2009 Growth (%)

Customer care 57.6 58.7 1.9
Finance & Accounts 24.7 25.9 4.8
HR 17.6 18.4 4.5
Training 7.4 6.8 (8.1)
Procurement 2.3 2.5 8.7
BPO services 109.6 112.3 2.5

Source: IDC-Nasscom Strategic Review 2010

Chart 4: IT services spends by Geography:

Global IT 2008 Growth 2009 Growth
services % share (%) % share (%)
spend

Americas 41.6 5.3 42.1 1.3
Europe, Middle East
and Africa 42.7 8.8 41.9 (2.1)
Asia Pacific 15.7 13.1 16.0 2.1
Global IT services
spend 100.0 - 100.0 -

Source: IDC-Nasscom Strategic Review 2010

Chart 5: BPO spends by Geography

Global BPO spend 2008 Growth 2009 Growth
% share (%) % share (%)

Americas 63.0 5.4 62.6 1.6
Europe, Middle
East and Africa 19.7 9.8 19.4 1.0
Asia Pacific 17.3 14.1 18.0 7.0
Global BPO spend 100.0 - 100.0 -

Source: IDC-Nasscom Strategic Review 2010

Size and scope of global opportunity:

As per NASSCOM Strategic Review 2009 the analysis of the IT Services global
sourcing market by the level of penetration in the various components of IT
services reveals that there is significant headroom for growth.

Chart 6: Market sizing and long-term potential of global sourcing market is
an analysis of the market for the areasof interest to the Company based on
the NASSCOM Strategic Review 2009 and NASSCOM Strategic Review 2010.

Chart 6: Market sizing and long-term potential of global sourcing market:

USD Billion
Global sourcing market Current size-2009 Addressable % of
market market not
addressed

IT & Engineering Services 56-58 280 ~80%
BPO 36-38 220 ~84%
Total 92-96 500 ~82%

Source: IDC-Nasscom Strategic Review - 2009 & 2010

Industry performance and projections

Globally technology spending is expected to furtherincrease once the global
economic recovery process gathers speed and discretionary spending levels
increase. Information technology (IT) has become an integral part of
business operations across industries and is seen by organisations as a
primary driver of productivity improvement and business transformation that
lead to sustained competitive advantages in the market place.

Some of the future expected drivers for IT spending are the anticipated
levels of increased regulation especially in the Banking, Financial
Services and Insurance (BFSI) space, security and reporting requirements,
and new focus areas including green IT and mobility/ubiquity initiatives.

Global technology spend is expected to increase from USD 1.6 trillion in
2008 to USD 1.9 trillion by 2013 at a Compounded Annual Growth Rate (CAGR)
of 3.5%.

Chart 7: Global technology spend forecast

Worldwide technology related spend data

USD Billion 2008 2013 CAGR (%)

IT Services 591 695 3.3
BPO 110 148 6.2
Software 304 381 4.7
Hardware 600 680 2.5
Total 1,605 1,904 3.5
R&D and
Engineering 1030 1250 3.9

Source: IDC-Nasscom Strategic Review 2010

From the above Global Technology Spend, the IT Services and Business
Process Outsourcing Component is of interest to the Company.

The Charts below shows the forecasts of the size and future compounded
annual growth rates (CAGR) for the IT Outsourcing and BPO markets.

Chart 8: Global IT services spend forecast

Worldwide IT services related spend

USD Billion 2008 2013 CAGR (%)

Project Based 210 236 2.3
Outsourcing 228 292 5.1
Support/Training 153 167 1.8
IT Services 591 695 3.3

Source: IDC-Nasscom Strategic Review 2010

Chart 9: BPO spend forecast

Worldwide BPO related spend

USD Billion 2008 2013 CAGR (%)

Customer care 57.6 76.8 6.0
Finance and Accounts 24.7 34.5 6.9
Human Resources 17.6 24.2 6.6
Training 7.4 8.2 2.2
Procurement 2.3 3.9 11.5
BPO Services 109.6 147.6 6.2

Source: IDC-Nasscom Strategic Review 2010

Chart 10: Global outsourcing spend forecast

USD Billion 2008 2013 CAGR (%)

IT Outsourcing 228 292 5.1
BPO 110 148 6.2
Total 338 440 5.4

Source: IDC-Nasscom Strategic Review 2010

From the above Global Outsourcing spend forecast the amount of anticipated
spending for offshore IT services is of interest to the Company.

Chart 11: Global offshore IT spend forecast

USD Billion 2008 2013 CAGR (%)

Application Management 4.8 8.1 11.1
Custom Application Development 8.1 9.1 2.3
IT Consulting 1.4 1.7 3.9
Infrastructure Services,
Network and Desktop
Outsourcing 2.2 4.5 15.5
Systems Integration 6.4 8.4 5.6
Others Services Offshored 8.1 10.1 4.5
IT Services Offshored 31.0 41.9 6.2

Source: IDC-Nasscom Strategic Review 2010

The Company's primary segmentation is around Industry Verticals and TCS'
business units are organised around Industry verticals. The trends in
Global Technology spend by Industry verticals are of interest to TCS. The
spending expectations by Industry Verticals are shown below:

Chart 12: Trends in industry vertical global IT Services spending

Industry verticals 2008 2013 2008-2013
(USD Billion) CAGR

Banking and Financial Services 136 157 3.0
Energy & Utilities 33 39 3.8
Government 152 190 4.5
Healthcare 26 32 4.1
Hi-Tech 57 65 2.7
Hospitality 9 10 2.5
Insurance 52 59 2.7
Life Sciences & Pharmaceutical 11 13 3.3
Manufacturing & Process 100 107 1.5
Retail 58 67 3.0
Telecom, Media and Entertainment 76 92 4.0
Travel and Transportation 29 33 2.7
Others 35 43 2.7
Grand Total 774 907 3.2

Source: Gartner forecast: Worldwide IT spending, 2007-2013, October 2009

The Company's secondary segmentation is around Geographies. Trends in
expected IT services spends by Geography is of interest to TCS. These are
summarised below:

Chart 13: Trends in IT Services spending by Geography

Geography 2008 2013 CAGR (%)
(USD Billion)

Asia Pacific 147 166 2.5
Europe 170 189 2.1
Americas 316 380 3.8
India 6 11 14.5
Middle East & Africa 14 16 3.2
Iberoamerica 44 57 5.6
United Kingdom 77 88 2.3
Grand Total 774 907 3.2

Source: Gartner forecast: Worldwide IT spending, 2007- 2013, October 2009

The Company's major markets and clients are from the Americas, Europe and
UK. These markets are expected to grow at a CAGR of 3.8%, 2.1% and 2.3%
respectively. The Company has been investing in the faster growing markets
in Latin America, the Middle-East and Africa as well as in India and the
Asia Pacific Region. Future growth prospects from these regions are
expected to be better as per analyst forecasts.

B. FOCUS AREAS OF THE COMPANY

1. Vision, Mission and Values: In the last four decades, TCS has
established a global reputation for its ability to help customers achieve
their business objectives by providing innovative, best-in-class
consulting, IT solutions and services. TCS' values underpin all activities
in the Company and these include leadership with trust, integrity,
excellence and respect for the individual and learning & sharing.

At the beginning of this decade TCS had envisioned that it would be among
the global top ten IT services companies in the world by the end the
decade. Your Company has achieved its stated vision last year. On the basis
of parameters like revenues, profits, number of employees and market
capitalization, the Company is among the top ten IT services companies in
the world.

Your Company will continue to consolidate and strengthen its position in
the industry as an integrated full services player with a global footprint
in terms of innovation, operations and service delivery.

2. Strategy of the Company: The core of TCS' strategy is the focus on the
customer. It enables clients to experience a very high level of certainty
in their IT operations.

2.1 Customer-centricity to enable certainty of experience: Our strategy is
defined by our ability and experience to play the critical role of a
trusted business partner to large global corporations. We have built a
customer-centric organization based on the brand promise of Experience
certainty'. This promise of certainty resonates with customers as it offers
them real business results through optimal IT design and deployment. It
reflects our ability to solve the customer's most challenging business
problems.

2.2 Global Network Delivery Model: TCS has established a unique Global
Network Delivery ModelTM (GNDMTM) that allows the Company to deliver
services to customers from multiple global locations in India, China,
Europe, North America and Latin America. The GNDMTenables the Company's
delivery centers to collaborate on projects and leverage all its assets in
order to ensure One Global Service Standard'.

2.3 Integrated Full Services Offering: TCS continues to build on its Full
Services Offering' that offer global customers an integrated portfolio of
services. This includes a comprehensive range of (1) IT services
capabilities in the areas of Application Development, Application
Management and Enterprise Solutions (2) Business Process Outsourcing
Services (3) IT Infrastructure solutions with a strong focus on Remote
Infrastructure Management' and transformation (4) Engineering services with
a focus on Enterprise Asset Management, Industrial Embedded Systems, Plant
Automation Services and Product Engineering (5) Assurance and Validation
services (6) TCS' own product based solutions specifically in financial
services and (7) Global Consulting capability that brings strong skills in
program management, change management, process management and architecture.

This suite of integrated services continues to present a compelling value
proposition for global corporations and continues to gain traction in the
market place. The strategy captures the entire value chain of IT from
consulting to products and solutions and from implementation to support.

2.4 Strategic Acquisitions: In addition to sustaining strong organic
growth, the Company continues to closely look at acquisitions that are
strategic in nature. Through inorganic means the Company may look to
strengthen gaps in its services portfolio, enter new geographies or market
segments as well as in-source domain and technology expertise. The
strategic acquisitions done over the years have created new capabilities
within the Company and these acquisitions continue to yield synergistic
growth.

The Company has not made any major acquisitions in fiscal 2010.

2.5 Non-Linear Growth Strategies: As a long-term strategy, the Company
continues to invest in Non-Linear Growth initiatives that will allow it to
drive revenue growth without commensurate growth in the number of people.
The Company is focused on a set of Strategic Growth Business initiatives to
drive non-linear growth opportunities.

2.5.1 TCS Financial Solutions: TCS Financial Solutions enables
transformation in financial services through a superior and holistic suite
of solutions, under the brand name TCS BaNCS for banks, capital market
firms, insurance companies and diversified financial institutions. The
solution is designed to be modular with a state-of-the-art technology and a
robust architecture.

TCS Financial Solutions increased its customers by adding 53 new clients
during the financial year. In addition, 36 clients went 'live' on BaNCS
solutions during the year.

TCS BaNCS is increasingly gaining market recognition and industry analyst
endorsements as listed below:

* Celent's ABCD analysis for core banking systems ranked TCS BaNCS as the
leader

* TCS BaNCS was ranked as the 3rd best selling banking product by IBS
Intelligence 2009

* IDC ranked TCS BaNCS as the #1 solution in the China market

* Forrester, Gartner and Tower - all have favorable endorsements on TCS
BuNCS. In the recently published Forrester Global Banking Platform Deals
report for 2009, TCS BaNCS has moved from the 4th to the 3rd place since
last year

* 'Indian Bank' won the 2009 Celent Model Bank award. With this, for the
last three years in a row, TCS BaNCS clients have won this award globally
(2007:CACU-Australia, 2008:Taishin, Taiwan)

* Celent's Case Study on State Bank of India cited TCS BaNCS implementation
as one of the largest globally and as large as the three biggest US banks
combined

2.5.2 Platform-based BPO: Platform based Business Process Outsourcing
(BPO) is an outsourcing model in which TCS provides management and
execution of customer's business processes using its own technology
platform - built, owned and operated by it - on a utility-based model. This
involves combining Information Technology, Infrastructure and BPO
services into a bundled service offering that enables end-to-end execution
of customer's business processes. The strategic driver behind this offering
from the Company is to address organisations' increasing need for higher
cost savings, superior business performance and single point of
accountability in executing their business processes. TCS believes that its
ability to create and deliver value to customers will be superior when it
brings together ail aspects - people, process and technology - of such
business areas.

The platform BPO unit has achieved good traction in the market for its
offerings. It has won key deals with customers in India, US and UK and has
earned high recognition from analysts as being a pioneer in providing
platform-based BPO services. The Platform BPO unit is successfully
providing BPO services to customers from globally diverse delivery
locations on multi-tenant technology platform. As per analyst estimates,
Platform BPO is expected to constitute around 14% of overall BPO services
market (of -$170 billion) in 2010.

2.5.3 Small and Medium Business Initiative:

TCS launched the Small and Medium Business (SMB) Solutions Unit with the
objective of providing end-to-end Information and Communication Technology
(ICT) solutions to SMBs.

TCS has built the necessary solutions for a SMB to run their business. The
company created a new service delivery model for the SMBs, called 'IT-as-a-
Service'. This model leverages the cloud computing paradigm to activate and
manage ICT solutions. TCS charges monthly usage fees on a subscription
basis in this model.

The solution stack includes pre-integrated suite of hardware, network and
software solutions making TCS the single service provider for all the ICT
requirements of an SMB. This brings considerable total cost of ownership
savings to an SMB, helping them leverage technology to grow their business
and become more competitive.

The Company believes that the IT-as-a-Service model greatly simplifies IT
adoption amongst SMBs.

2.6 Organisational structure aligned for Agile Response: The organisational
structure has been aligned closely to the Company's business strategy and
operating imperatives. It consists of individual business units structured
as industry solution units for different industries with independent
business units for new growth markets like India, Asia Pacific, Latin
America and Middle-East & Africa. Non-linear growth initiatives are driven
under separate business units.

2.6.1. Industry Solution Units: In order to retain sharp customer focus on
key global accounts and enhance customer centricity across the
organization, the Company has established Industry Solution Units (ISUs)
along industry verticals. The list of Industry Solutions Unit includes:
Banking and Financial Services, Insurance, Telecom, Manufacturing, Retail
and Consumer Packaged Goods, Life Science and Healthcare, Media and
Information Services, Hi-tech, Government, Energy, Resources and Utilities
and Travel, Transportation and Hospitality.

2.6.1.1 Banking, Financial Services and Insurance (BFSI): The BFSI industry
across the world has always leveraged technology effectively for
addressing business challenges across different areas like globalisation,
consolidation, disintermediation, regulatory compliance, risk management,
evolving distribution channels etc. The events of 2008 and its
repercussions felt through 2009 swept the financial world into a corner,
primarily as a result of financial indiscipline and poor governance. The
rapidly changing business and economic environment requires BFSI
institutions to effectively respond to increasing Governance, Risk and
Compliance requirements while meeting superior levels of customer
experience and effectively managing revenues and costs.

Over the past four decades TCS has partnered with multiple clients in the
BFSI world and has executed a number of complex and time critical
assignments under challenging business and operating environments. Our end-
to-end offerings, comprehensive product suite, scalable processes and
innovative frameworks have enabled significant strategic value creation for
our clients by helping them optimize their IT investments, enhanced
operational efficiencies, minimized risk, and helped them to acquire
sustained cost leadership.

Approximately 45% of TCS' business emanates out of the BFSI vertical. TCS,
with expertise in consulting, technology and outsourcing has partnered
globally with -

* 12 of the 20 Top Banks

* 25 of the Top 100 Insurers Chart 14(a): Revenues BFSI

2.6.1.2 Telecom:

We serve many global clients and have long-standing relationships spanning
a decade or more with many of these clients. We are currently executing
several Transformational Projects which are in progress across North
America, Europe, Middle East, South Africa, Latin America and India.
Ourcustomers include:

* 5 of top 10 Communication Service Providers worldwide

* 4 of top 6 European Telecommunication Services Companies

* 8 of top 10 Tele com Equipment Manufacturers globally

* 5 of top 7 North American Communication service providers

* 4 of top 5 Communication equipment vendors

* Leading Indian telecom service providers

With the objective of differentiating our offerings we have a spread of
end-to-end offerings in Operations Support Systems (OSS), Business Support
Systems (BSS), and Communication and Network Solutions. Over 30% of the TCS
consultants engaged in Telecom programs are domain experts in the fields of
Networking, OSS and BSS areas. We have 12000+ man-years of domain expertise
available to service clients.

Our solutions expertise and focus areas in the Telecom Operator space
includes: Telecom end-to-end processes, Customer Relationship Management
(CRM), Billing, Inventory, Provisioning, Mediation, Legacy and Commercial
Off the Shelf (COTS) solutions, BPO for Operational processes, Managed
services, Hosted Delivery, IT Assurance and Infrastructure Services.

Our Productized offerings include:

* 'Telco in a Box' framework with readymade process definitions and
solution sets for different service provider business phases

* Service Oriented Architecture Framework for IT transformation of Service
Provider OSS/BSS

* IPTV (Internet Protocol TV) framework for accelerating launch and
deployment of IPTV Service

* Handset testing framework for rapid rollout of new applications

We have established Centers of Excellence (CoEsVLabs for Customer
Experience, OSS/BSS, IPTV, Value Added Services (VAS), Mobility Solutions
and Integrated Network Convergence.

The global economic slowdown affected this vertical during the year.

Chart 14(b): Revenues Telecom

2.6.1.3 Manufacturing Industry Solutions:

Manufacturing Industry Solutions Unit has been playing a significant role
as a strategic partner to its clients in Automotive, Industrial
Manufacturing & Components (IMC), Process & Chemical and Aerospace sectors.

One out of every three Fortune 500 Manufacturing companies works with your
Company to drive their next generation IT strategies.

The Global economic slowdown resulted in negative growth for this vertical
during this year. The discretionary IT spend of the automotive industry
shrank in fiscal 2010, while the IMC sector, impacted by the declining
order book position, cut back even on the 'IT to run business' expenditure.
We diversified our portfolio by embracing BPO and Infrastructure Management
Services to broaden this units growth horizon for the future. Significant
investments have been made to this effect in product development, supply
chain management and customer experience management area, through assets,
solutions and alliances.

Chart 14(c): Revenues Manufacturing

2.6.1.4 Retail and Consumer Packaged Goods:

The Retail vertical is one of the fastest growing verticals at TCS today.
It offers a complete portfolio of services - Consulting, IT Infrastructure
Services, BPO, Assurance and Enterprise Solutions to Retail and Consumer
Packaged Goods (CPG) companies globally. TCS Retail practice has been in
existence for the past 15+ years with over 14000+ consultants serving 6 of
the top 10 global retailers.

We have a number of solutions and frameworks that include Store Based
Loyalty, Point of Sale (POS) and Store Inventory Management, Web 2.0
enabled Ecommerce Components, Mobile Marketing and Commerce Solution, PLM
(Product Lifecycle Management), Retail Analytics Platform and Assortment
Analysis Tool.

We constantly develop new capabilities, forge alliances, and develop
proprietary solutions and assets to meet the changing demands of the
market. These solutions help our customers gain significant competitive
advantage.

To sustain competitive advantage in an industry characterized by intense
competition, expanding boundaries, changing trends, short life cycle
products, complex global supply chains and high customer churn,
retailers need to leverage technology and create winning strategies. From
high end consulting to integrated solution suites TCS provides end-to-end
technology and business solutions that help retailers win customers and
ensure success.

In addition to end-to-end IT and BPO services TCS has also invested in the
following proprietary solutions:

* TCS eCommerce platform

* Customer Program Management (CPM)

* Assortment Optimization

* Workforce management

* Platform based solutions for Finance & Accounts (F&A), Human Resources
(HR), Indirect Sourcing and Business Intelligence

* TCS Retail vertical also focuses on providing Business Process
Improvements for retailers leveraging its assets and Lean framework

At TCS, we continue to see Retailers focusing on improving their customer
centricity, increasing operational efficiencies, reducing working capital
and enabling multi-channel capabilities. The Business trends high on
priority for leading retailers are investments in e-commerce and web 2.0;
Inventory Optimization; mobile commerce and improved Customer Intimacy.

Chart 14(d): Revenues Retail and Consumer Packaged Goods

2.6.2 Focus on customer-centricity:

TCS has enabled an integrated global organisation structure built around
serving customer needs.

The integrated customer-centric business units help enhance customer focus,
drive operational agility and address new growth opportunities in the
market. The 'organisational structure' has provided customers with a single
view of the Company, encompassing project delivery and relationship
management and alsoenabled a sharper focus on the customer, enhancing the
customer-centricity of TCS operations.

This operating model continues to deliver value to the customers. The flat
structure enables closer collaboration among the leadership teams in each
operating unit which helps the Company remain agile and adapt to rapidly
changing market conditions across industries and markets.

It enables the Company to retain talent as it provides greater leadership
opportunities across the organisation and enables each business unit to
have the space and headroom to grow without losing the benefits derived
from TCS' scale, size and geographical reach. This organisational framework
ultimately provides a clear customer focus and enables TCS to be closer to
the customer as a virtual extension of the customer organization.

2.7 TCS' Global Footprint: The Company continues to invest in developing
and optimising its global presence, in order to pursue opportunities in
global markets on an ongoing basis and enable existing and potential
customers to access our services seamlessly.

2.7.1 Global Market Presence and Reach:

As on March 31, 2010, TCS had 142 offices in 42 countries as well as 105
delivery centers in 20 countries. As on March 31, 2010, TCS had:

18 offices in USA and Canada

12 offices in 7 countries in Latin America

11 offices in UK and Ireland

22 offices in 12 countries in Europe

18 offices in 12 countries in Asia Pacific 7 offices in Middle East and
Africa 54 offices in 13 locations in India

In terms of geographies the Company continues to be accessible to clients
and also continues to pursue localisation strategies.

In mature markets like North America the Company has further strengthened
its local presence by focusing on growing its investments in Cincinnati,
Ohio by recruiting local talent to support North American operations.

In Europe including the United Kingdom the Company has increased
its focus on the Western European markets like Germany, France, Benelux and
the Nordic region.

The Company continues to invest in emerging markets such as Latin America,
Middle East, Africa and Eastern Europe. TCS' geographical growth strategy
has a two pronged approach focused on major markets and new growth markets.

2.7.2 Major Markets:

TCS continues to focus on serving large global clients and growing its
business in the major markets, namely North America and Europe including
UK.

The Company's key focus in these mature markets is to grow its wallet share
in key customer accounts by increasing the scope of engagement. TCS also
focused on penetration of new key accounts in these major markets by using
its integrated full services and GNDM(TM) offerings.

This Industry domain and consulting led focus enabled the Company to push
for aggressive growth, using a client centric strategy. The Company
has numerous multi-year relationships established with global
multinationals in these markets and continues to provide them a multiple
range of services.

Chart 15(a): Revenues from Major Markets

2.7.3 New Growth Markets: The Company has been investing in emerging or new
growth markets since 2002-03 and has achieved scale in Latin American
markets like Brazil, Chile, Mexico, Argentina, Colombia and Ecuador, where
nearly 6,500 professionals are working with global, regional and national
corporations.

TCS has increased its presence in the Asia Pacific region including China
and the other Asean countries, as well as Eastern Europe, Middle-East and
Africa. The Company continues to remain committed to investing in these
fast developing markets and also in India. TCS believes that these new
growth markets have the potential to be significant revenue drivers over
the long-term.

Chart 15(b): Revenues from New Growth Markets

2.8 Services and Offerings: The details of the Company's Service Offerings
are discussed below.

The Company generates its revenues from both traditional IT Services
as well as growing its business from the demand for new services like IT

Infrastructure services, Business Process Outsourcing Services, Engineering
& Industrial Services, Global Consulting and Asset Leveraged Solutions.

2.8.1 Traditional IT Services Revenues:

Chart 16: Traditional IT Services Revenues

2.8.1.1 IT Solutions and Services:

These services include Application Development and Maintenance, Migration
and Re-engineering as well as Package Implementation services. The company
also offers Performance Management, Business Intelligence, Assurance
(Testing) and Systems Integration services. As global organisations explore
newer methods for improving efficiencies and competing, an increasing share
of these IT Services is being outsourced and executed from remote
development centers.

Chart 16(a): Application Development and Maintenance Revenues

* TCS is positioned as a leader in 'Gartner's Magic Quadrant' for
North American Offshore Application Services

* TCS is positioned as a leader in Gartner's Magic Quadrant for European
Offshore Application Services

Chart 16(b): Business Intelligence Revenues

* TCS is positioned as a leader in 'Gartner's Magic Quadrant' for Business
Intelligence & Performance Management Services, North America

* Customers postponed investments in Business Intelligence solutions in
fiscal 2010 as part of the cutbacks in IT Services

Chart 16(c): Assurance Services Revenues

* There is an increasing demand for Assurance (Software Testing) Services

* Customer's increased outsourcing of testing and assurance services as
part of cost containment initiatives in fiscal 2010

2.8.1.2 Enterprise Solutions: The Company provides services in the areas of
Enterprise Resource Management, Supply Chain Management, Customer
Relationship Management and Content Management Solutions to integrate
enterprise-wide functions with comprehensive solutions.

Chart 16(d): Enterprise solution Revenues

Revenues from enterprise solution services were affected in fiscal 2010 as
customers cut back on spending on enterprise software products around which
these services are offered

2.8.2 New Services: New services include Infrastructure, Business Process
Outsourcing (BPO), Engineering, Global Consulting Practice (GCP) and Asset
Leveraged services. The rate of growth of the new Services is faster than
growth in traditional IT Services. Details of TCS' performance in these
services are discussed below:

Chart 17: Revenues from New Services

2.8.2.1 IT Infrastructure Services (IT IS): This unit provides end-to-end
IT Infrastructure Services, which offers customers cost effective business
transformation solutions. The Unit provides services which are 'Application
Driven' thereby ensuring an Infrastructure eco-system which is available,
scalable, flexible and adaptable.

Over the last four years the unit has been growing at a CAGR of 46%. During
this financial year the unit bagged new deals in business transformation
solutions, new delivery models, RIM (Remote Infrastructure Management) and
end-to-end infrastructure services.

Chart 17(a): Revenues from IT IS

During the year, TCS' Infrastructure Management service offerings won and
received evaluations and accolades from industry analysts throughout the
year.

* Positioned as a Leader in The Forrester Wave(TM) Global IT Infrastructure
Outsourcing report of Q1 2009

* Positioned as a Leader in Gartner's Magic Quadrant for Help Desk
Outsourcing in North America

* Positioned as a Leader in Gartner's Magic Quadrant for Desktop
Outsourcing Services, North America

2.8.2.2 Business Process Outsourcing (BPO): TCS BPO is now ranked amongst
the top 2 BPO providers in India. TCS BPO offers value added transaction
processing services to its customers in industry verticals such as Banking
and Financial Services, Insurance, Telecom, Life Sciences and Healthcare,
Energy and Utilities, Travel, Transportation and Hospitality and Retail and
Consumer Packaged Goods, while Knowledge-based services are focused on
areas such as biostatistics, customer insights, risk analytics and
predictive analytics.

Due to its focus on domain-intensive transaction processing services and
knowledge services, as well as its high quality delivery, TCS BPO is
forging newer customer relationships every quarter while strengthening its
long-standing ties with key customers.

TCS' proprietary GNDM (Global Network Delivery Model) has been effectively
leveraged by TCS BPO Services, to facilitate a near-shore delivery for many
of its global customers. During the financial year, the company continued
to invest in scaling up its operations and delivering BPO Services from
Cincinnati (Ohio) and Midland (Michigan) in USA, Guadalajara (Mexico),
Montevideo (Uruguay) and Santiago (Chile) in Latin America, Hungary and UK
in Europe, China and also from its established sites in India.

Chart 17(b): Revenues from Business Process Outsourcing Services (BPO)

2.8.2.3 Engineering and Industrial Services (EIS):

The EIS business is an integral element of TCS' strategy to provide full
services across the engineering, product development and R&D value stream
of companies across all the industry verticals. The EIS portfolio provides
a wide range of solutions catering to individual customer needs focusing on
New Product Development Solutions, Product Lifecycle Management Solutions,
Plant Solutions & Services and Geospatial Solutions.

This vertical was impacted during the overall macroeconomic and
manufacturing industry slow down and has since shown signs of recovery.

Chart 17(c): Revenues from Engineering and Industrial Services (EIS)

2.8.2.4 Global Consulting Practice:

The Global Consulting Practice (GCP) uses consulting and IT services
capabilities to bring continuity and consistency to strategic programs and
help organisations manage current business requirements, while preparing
for the future. It is a key component of the Company's full services
strategy to deliver greater value to clients. Our consulting-led,
integrated portfolio of IT and IT-enabled services is designed to help
organizations increase alignment between Business Operations and IT.

Building on TCS' delivery excellence and proven technology expertise, GCP
leverages TCS' industry insight and consulting knowhow gained over the last
40 years to deliver trusted advice to client organisations globally.

GCP is instrumental in positioning TCS as a business advisor. It allows us
to develop closer, broad based relationships with leading organizations, as
they strive to optimize and transform their businesses using technology.
GCP partners with such clients across the transformation landscape and
lifecycle to create innovative business solutions, support implementation
and deliver measurable results.

Chart 17(d): Revenues from Global Consulting

2.8.2.5 Asset Based Solutions: Asset based solutions are critical for the
Company's non-linear growth strategy. These services are based on the
Company's intellectual property and domain expertise, which have been built
over the years.

Chart 17(e): Revenues from TCS Asset Leveraged Solutions

3. Technology and Innovation: Over the last three decades, innovation has
evolved in TCS in line with the environment and market. As on March 31,
2010, TCS had established a global network 19 R&D Innovation Labs with
specific focus on technologies and verticals. The Company had also
established 60 Centers of Excellence (CoEs) in all areas of information
technology and business services as well as on partner products. This
ensured that all our offerings incorporated the latest products and
services capabilities from the Company and its alliance partners and
allowed us to build new skill sets among the employee base to better serve
customers current and emerging needs.

TCS'Innovation Labs works on numerous research themes primarily in the
field of information technology. These themes include use of IT for
improving operational efficiency, business agility and simplification of
complex systems and customer driven research themes to improve customer
experience.

The TCS Co-Innovation Network (COIN(TM)) has a key role in leveraging an
external ecosystem to create leading edge solutions. During the current
fiscal we created two significant solutions, the Home Infotainment Platform
and Tata Swach for purifying water, in new business areas and at disruptive
price points, by collaborating with our partners.

4. Intellectual Property (IP): The Company has defined an IP strategy with
the objective of building an effective portfolio for future monetization,
collaboration and risk mitigation.

The total number of granted patents is 60. In addition, TCS has over 295
patents pending in multiple jurisdictions.

Chart 18: TCS Intellectual Property Strategy - Patents filed and granted

5. Human Resources Strategy:

The Company continues to invest in human resources development. The total
number of employees including subsidiaries as at March 31, 2010 was 160,429
(143,761 as at March 31, 2009).

The Company had a gross addition (including Indian subsidiaries) of 38,063
(previous year 48,595) employees and a net addition of 16,668 (previous
year 32,354) employees. Gross additions for last fiscal year included over
12,500 people as a result of the Citigroup BPO acquisition. The Company has
recruited 38,063 employees in fiscal 2010 as compared to 35,345 employees
in fiscal 2009 an increase in gross additions of 7.67% during the current
fiscal.

Chart 19: Growing talent Base: Gross and net employee addition in last 4
years

5.1 Talent Retention: The attrition rate of 11.8% in fiscal 2010 (previous
year 11.4%) is the lowest in the industry. This low attrition rate has been
achieved by continuously investing in learning and development programs for
employees, competitive compensation, creating a compelling work
environment, empowering employees at all levels, as well as a well-
structured reward and recognition mechanism.

Chart 20: Attrition rate for last twelve months-trends over last 4 years

5.2 Talent Diversity: The composition of the global workforce continues to
show increasing trends in the number of female employees and foreign
nationals from countries across the globe. As at March 31,2010, women
constituted 30.4% of the Company's workforce (30.1% as at March 31, 2009).
The Company employed persons from 80 different nationalities (previous year
67 different nationalities). The headcount of TCS Global non-Indian
nationals including the employees of its subsidiaries as on March 31, 2010
was 10,475 employees (includes the foreign nationals employed by Diligenta
our UK Subsidiary). TCS is focused on adding to its global knowledge
workforce and integrating these professionals into its workforce.

Chart 21: Diversity: Increase in women employees in last 4 years

Chart 22: Diversity: Trends in Non-Indian Nationals in last 4 years

Chart 23: Diversity: Global work force from 80 nationalities

5.3 Academic Program: Continuous interaction with universities and other
educational institutions remains a central plank of TCS' strategy to
attract the best scientific and engineering talent. TCS has also set-
up an Industry - Academia collaboration network with some of the foremost
Universities in India and rest of the world.

Chart 24: Academic interface program workshops conducted, faculty trained

5.4 Talent acquisition: The Company continues to invest in improving the
overall quality of engineering talent in India through a stringent academic
accreditation program that helps benchmark and improve the quality of
learning at colleges. The Company also provides training, internships and
projects to students. As a result of these initiatives, TCS continues to be
an employer of choice on engineering campuses across the country.

Chart 25: Academic Interface Program-Number of TCS accredited academic
institutes

5.5 Inclusive Talent Development-TCS Ignite:

Launched in 2007, Ignite demonstrates the Company's commitment to inclusive
growth. More than 60% of hiring done by the Company since inception under
this program is of first generation graduates. Recruitment takes place from
across 500 colleges in India, Nepal and Bhutan. More than 2,500 Ignite
recruits are deployed on customer projects. More than 1000 Ignite recruited
employees are pursuing higher education opportunities like Masters in
Computer Applications (MCA) in collaboration with its academic partners.
The top 1% of Ignite recruited employee's are pursuing the challenging MSc
Computer Science program at the Chennai Mathematical Institute.

Ignite continues to make significant strides in the areas of learning (new
advanced electives in Performance Engineering, Visual Excellence, and
Learning from Las Vegas), digitization (end-to-end, including newtechnology
enabled learning platforms), and innovation (two broad patents filed around
Touchstone, a secure and traceable HR supply chain solution).

Three ecosystem initiatives focusing on continuing education, schools and
adult employability were launched. The dedicated MCA program for Ignite
trainees is already among the country's largest corporate continuing
education program.

5.6 Learning and Development: More than 17,524 trainees completed the
Initial Learning Program (ILP). Our employees gained 9,151 new technology
and process certifications during 2009-10 as part of the Continuous
Learning Program (CLP). The e-Learning coverage was significantly enhanced.
Modules in Portuguese, Mandarin and Spanish rolled out last year are being
used. The new version of Competency Management System (iCALMS) and a
Learning Planning System have been deployed globally to enhance the
automation of L&D Processes.

Chart 26: Number of trainees who completed the initial learning program

C. OPPORTUNITIES AND RISKS

1. Opportunities: TCS is the largest Indian IT Services Company in terms
of revenues, profits and number of employees. In terms of opportunities,
the Company is in the privileged position of being in a growth industry
like technology, which is becoming central to the well being of all other
industries. Given the quickening pace of technology change, the amount of
work being done outside the corporations, often at remote locations is
increasing for a variety of reasons. These trends present many
opportunities for TCS. The Company that pioneered the concept of offshore
IT services is today an integrated full-services player with a global
footprint and scale and therefore has the opportunity to address a larger
section of the growing market for technology services.

This section of the management discussion and analysis also covers the
broad risks confronting TCS.

2. Risks and Risk Mitigation:

The Company has put in place an

Enterprise-wide

Risk Management (ERM) process.

Reports are placed before the Board of Directors at regular intervals.

The Company believes that it has robust and 'fit for purpose' risk
management processes in place. The process of continuous evolution of risk
identification includes taking stock of the risk landscape.

Risks are categorized as:

(1) Strategic

(2) Operational

(3) Financial and

(4) Compliance related risks

Risks and risk mitigation actions undertaken by the Company are discussed
below.

2.1. Security Related Risks: TCS has adopted systems and processes to
safeguard its people and assets, as well as ensure business continuity.

The vision of the security team is to make TCS reliable, resilient and
immune to the existing and evolving volatile environment of constant
change.

TCS has a comprehensive security plan in place which is preventive in
nature and aims at protecting its facilities from the various risks
observed from time to time. The plan uses a blend of people, process and
technology to ensure that the security levels are maintained at all times
in line with the risk landscape.

2.1.1 Physical Security: Access to TCS premises is limited to those
authorized to enter the facilities and in possession of valid
identification.

The overall security deployment is governed by a Corporate Committee which
looks at the integrated global security requirements across the
organisation. Periodic audits are conducted by a group of experts, which
helps to validate the deployment strategy and the need to reinforce any of
the existing controls. Concerted efforts have been made to create greater
awareness amongst the associates.

2.1.2 Information Security: As part of this process the Company ensures
that information is shared on a need to know basis. Accessibility and
availability of such information is limited to authorized users.

2.1.3 Business Continuity Plans: To ensure business continuity in case of a
natural or man-made catastrophe, TCS has a comprehensive Business
Continuity Plan (BCP) in place which is tested every six months to ensure
it is up-to date and functional.

2.2 Financial Management Related Risks:

2.2.1 Foreign Exchange Volatility Related Risks:

In fiscal 2010, the impact of volatility of the Indian Rupee was both
positive and negative on the IT industry. This trend may continue in fiscal
2011.

The Company uses various types of foreign currency forward and options
contracts to hedge the risks associated with fluctuations in these
currencies. The contour of exchange risk exposure today is quite different
from what it was in previous years, as cross currency movements have added
an additional dimension of volatility.

The Company regularly reviews its existing policies and processes for the
use of financial derivative instruments and its hedging strategies. The
Company's hedging strategies are reviewed and approved by a Risk Management
Board on a quarterly basis. To better manage foreign exchange volatility,
the use of automated software to digitize, track and report all derivative
and hedging transactions on a daily basis has been implemented by the
treasury management team.

2.2.2 Counterparty Risk in Treasury Operations:

The treasury operations have to be conducted through banks authorized by
Reserve Bank of India (RBI) for the purpose of such transactions. In the
recent economic and banking turmoil, leading banks have been affected in
varying degrees. In order to protect itself against possible default by the
counterparties for these hedging transactions, TCS has been monitoring
counterparty health, diversifying the risk by having multiple banks with
whom such transactions are undertaken and also monitoring limits with each
of them dynamically.

2.3. Compliance Related Risks:

2.3.1 Regulatory & Compliance Related Risk:

The Company has a global footprint and as it increases its global reach and
operations, the risk of ensuring 100% compliance with the regulations and
laws in the various jurisdictions, where it has a presence, increases -
like that of any global organization.

To mitigate this risk, the Company has established a separate office under
the Chief Compliance Officer and has also put in place an institutionalized
structure to ensure 100% regulatory and legal compliance across the globe.
The Chief Compliance Officer has a team of senior persons from all relevant
functions as part of his team to ensure compliance with all laws and
statutory requirements in these countries. The use of local managers as
well as consultants, auditors, lawyer's, specialists and experts in these
countries where we have a presence is encouraged to ensure 100% compliance.

2.3.2. Process Non-Compliance Related Risk: TCS is a process-centric
organization and compliance with defined processes in the Company is de
rigueur.

In order to ensure strict process compliance TCS has established a world-
class integrated Quality Management System (iQMS) to ensure the quality of
its services which revolve around exceeding customer defined Service Level
Aggreements (SLAs).

2.4. Reputation Related Risks:

2.4.1 Branding, Brand name and Corporate Governance Related Risks: The
Company has recognized that its wide global presence has to be strengthened
by appropriate brand building. It has been investing in building the brand
of 'Experience certainty' through multiple means.

As TCS is a signatory to the Tata Brand Equity and Business Promotion
Agreement, it is governed by strict standards in its communications as well
as use of the Tata Brand and ensures compliance with the same.

Strong Corporate Governance practices and strict adherence to the Tata Code
of Conduct governs all actions and decisions made by the officers in the
Company. We believe that these practices minimize 'Reputation Risks'.

2.4.2. Fraud Related Risks: TCS is a global organisation with widespread
operations in all five continents. Though it has best in class controls and
built-in checks and balances for ensuring financial integrity in the
conduct of its business and has adopted world-class corporate governance
standards, because of the widespread nature of its business operations the
risk of fraud is always present.

In order to mitigate this risk, the Company uses the services of its
External Auditors (M/s. Deloitte Haskins & Sells) to annually administer a
detailed fraud questionnaire to its three designated statutory officers,
viz. the Chief Executive Officer, the Chief Financial Officer and
the Company Secretary. These questionnaires are administered in a face-to-
face meeting with these officers and the focus of these questions is to
determine if there are any indications, perceptions or instances of breach
of financial and business integrity by any member of the organisation. The
findings are cross-checked by the External Auditors (M/s. Deloitte Haskins
& Sells) with the Company's Internal Auditors (Ernst & Young Private
Limited). The final responses by the statutory designated officers to the
fraud questionnaire are prepared by the respective teams of these
designated officers. All such responses are placed on record.

2.5. Business Operational and Strategic Risks:

2.5.1 Addressing macro-economic risks in an uncertain growth environment:
During 2008, the global economy was subject to great turmoil. This crisis
which led to a global recession continued during the first half of 2009.
Since then, the global economy has shown a turnaround. The crisis in the
financial sector which had led to a lower confidence in financial markets
resulted in the global credit crunch in 2008. This appears to be receding
as the G20 economies initiated a set of rapid fiscal and monetary policy
responses. Responses included fiscal stimulus packages across these
economies, coordinated efforts by central banks worldwide to lower interest
rates, injection of liquidity into financial markets including quantitative
easing.

Global trade which had shrunk in 2008 started recovering from mid-2009.
Uncertainties in the currency markets are continuing to result in
volatility in exchange rates as well as commodity prices.

According to the'International Monatory Fund: World Economic Outlook 2009',
after a deep global recession, economic growth has turned positive, as
wide-ranging public intervention by governments across the globe has
supported demand and lowered uncertainty and systemic risk in financial
markets. The global economic recovery is expected to be slow, as financial
systems remain impaired, and support from public policies will gradually
have to be withdrawn, and households in economies that suffered asset price
busts will have to continue to rebuild savings while struggling with high
unemployment.

Advanced economies are projected to expand sluggishly through much of 2010,
with unemployment continuing to rise until later in the year. Annual growth
in 2010 is projected to be about 1.25 percent, following a contraction of
3.5 percent in 2009.

In emerging economies, real Gross Domestic Product (GDP) growth is forecast
to reach almost 5 percent in 2010, up from 1.75 percent in 2009. The
rebound is driven by China, India and a number of other emerging Asian
economies.

To address these risks of Global trade shrinkage, and strategic changes in
future market and customer segments, the Company which already has a wide
presence both in developed world and in emerging markets has taken the
following additional steps:

* Increased the breadth and depth of TCS' service offerings

* Increased the focus on penetration of new customer accounts

* Increased the focus on the identified future growth markets (Latin
America, Middle-East, Africa, Japan and China) where the Company has been
making investments over the last few years

2.5.2 Global Market Risks: With a slow economic recovery anticipated in the
developed markets in 2010 the contours for conducting business globally is
changing for TCS.

TCS has adapted its agile approach, customer reach and market presence, to
effectively create proactive opportunities in such emerging economic
scenarios. The Company believes that it will be a beneficiary of the
changing IT spending landscape, as its long-standing clients look for new
opportunities for improving operational efficiencies, innovation and time
to market.

The approach adopted by the Company involves effectively leveraging its
market/ product/customer relationships built over many years, to work
closely with its clients - to help them address their business problems and
to enable them to meet their business objectives. TCS does this by bringing
all the innovation, domain knowledge and technical expertise of the entire
organization to bear on customer requirements and needs, so that it can
provide clients with value-added solutions.

The Company has also increased its focus in the faster growing emerging
markets of Latin America, Asia, and Middle-East & Africa where future
growth in business opportunities are anticipated.

2.5.3 Service Model Redundancy Risks: Increased competition could result in
pressure on pricing and commoditization of some services.

TCS is focusing on addressing this risk by focusing on innovation.

2.5.4 Innovation Related Risks: The Company is focused on innovation.
Innovation initiatives are in multiple forms, but all of these are focused
on better productivity through continuous improvement in processes,
systems, methodologies and capabilities. Emphasis on innovation also helps
the Company in moving up the value chain.

Innovation in the Company is practiced by adopting 'derived' innovation
that seeks continuous improvement in every area and by 'platform'
innovation, whereby multiple capability and skill teams engage to develop
innovative ideas.

There are risks associated with translating all the investments that
the Company is making in Innovation into successful business
opportunities for its future growth.

These risks of investments in innovation projects are addressed by
structured periodic reviews of all such programs and investments - by
senior management.

2.5.5 Resource Risks: The movement of people between nations for providing
high-end technical and business services skills required by the global
customer organizations in the developed markets including USA, UK, Europe,
Australia, and Japan are governed by procedures and legislation in each
country and may result in delays in procuring visas and work permits.

In order to address this risk TCS has adopted a number of strategies:

1. Strengthened its efforts to identify and train local recruits in all
these markets.

2. Strengthened its Global Compliance Process for ensuring strict
compliance with Visa and work permit requirements and regulations.

3. Working closely with all its global customers monitoring and planning in
advance the need for such resources, to ensure smooth conduct of business.

2.5.6 Executing M&A Transaction's Risk: Ensuring successful integration of
the inorganic growth opportunities that the Company undertakes in line with
the goals and the underlying premise for these transactions is a risk in
terms of impairment of goodwill and effect on the Profit and Loss
Statements if these goals are not achieved.

Risk mitigation action includes well-laid out integration plans and close
monitoring and review of these transactions to ensure that the goals and
milestones related to the transactions are achieved.

FINANCIAL PERFORMANCE

Tata Consultancy Services Limited (TCS Limited) is a public company listed
on 'National Stock Exchange of India Limited (NSE)' and 'The Bombay Stock
Exchange Limited (BSE)' since August 25, 2004.

The financial statements of TCS Limited are prepared in compliance with the
Companies Act, 1956 and generally accepted accounting principles in India
(Indian GAAP).

TCS Limited has a number of subsidiary companies which are either wholly-
owned or partly-owned.

TCS Limited discloses audited financial results on a quarterly and annual
basis. The financial results of Tata Consultancy Services Limited (TCS
Limited) as per Indian GAAP are discussed hereunder in two parts:

(i) Tata Consultancy Services Limited (Consolidated) which includes
performance of subsidiaries of TCS Limited. Preparation and presentation of
such Consolidated Financial Statements brings out comprehensively the
performance of the TCS group of companies and is more relevant for
understanding the overall performance of TCS.

(ii) Tata Consultancy Services Limited (Unconsolidated) which excludes the
performance of subsidiaries of TCS Limited. [See Management Discussion and
Analysis (Unconsolidated)].

Financial Performance Summary (Consolidated)

In fiscal 2010, the global economic environment continued to be difficult.
The Company focused on delivering value to its customers while improving
its profitability. This has resulted in record levels of pre-tax and post-
tax profit, earnings per share and cash flow from operations. The financial
performance reflected the strength of the Company's leadership, strategy
and ability to navigate through challenging economic environment.

The overall improvement in the financial performance can be seen in the
section 'Company's Performance Trend'.

In fiscal 2010, the consolidated revenues of the Company aggregated
Rs.30,028.92 crore (Rs.27,812.88 crore in fiscal 2009), registering a
growth of 7.97%.

The consolidated profit before taxes (PBT) aggregated Rs.8,289.63 crore in
fiscal 2010 (Rs.6,150.07 crore in fiscal 2009) - a growth of 34.79%. Pre-
tax profit as a percentage of revenues improved from 22.11% in fiscal 2009
to 27.61% in fiscal 2010.

The consolidated profit after taxes aggregated Rs.7,000.64 crore
(Rs.5,256.42 crore in fiscal 2009) - a growth of 33.18%. Post-tax profit as
a percentage of revenues improved from 18.90% in fiscal 2009 to 23.31% in
fiscal 2010.

In fiscal 2010, the Company's consolidated earnings per share were Rs.35.67
(Rs.26.81 in fiscal 2009).

FINANCIAL PERFORMANCE - (CONSOLIDATED)

The Management Discussion and Analysis below relates to the consolidated
audited financial statements of TCS Limited and includes the results of its
subsidiaries. The discussion should be read in conjunction with the
consolidated financial statements and the related 'Notes to the
Consolidated Accounts' of TCS Limited for the yearended March 31, 2010.

The table below gives an overview of the financial results of TCS Limited
(consolidated):

For the year ended For the year ended Fiscal
March 31, 2010 March 31, 2009 2010 vs
2009

Revenues from Operations: % of % of %
Rs.Crore Revenues Rs.Crore Revenues Increase

Information 29085.21 96.86 26781.86 96.29 8.60
technology &
consultancy services

Sale of equipment and
software licenses 943.71 3.14 1031.02 3.71 (8.47)

Total Revenues 30028.92 100.00 27812.88 100.00 7.97

Expenditure
Employee costs 10879.57 36.23 9910.92 35.63 9.77

Overseas business 4186.18 13.94 4572.28 16.44 (8.44)
expenses (employee
allowances paid
overseas)

Total Employee Costs 15065.75 50.17 14483.20 52.07 4.02

Overseas business 383.89 1.28 460.07 1.65 (16.56)
expenses (other than
employee allowances
paid overseas)

Services rendered by
business associates &
others 1261.97 4.20 1114.57 4.01 13.22

Operation & other 4622.76 15.39 4585.24 16.49 0.82
expenses

Total Expenditure 21334.37 71.05 20643.08 74.22 3.35

Other Income, Net 272.07 0.91 (426.99) (1.54)

Profit before Interest,
Depreciation and Taxes 8966.62 29.86 6742.81 24.24 32.98

Interest 16.10 0.05 28.66 0.10 (43.82)

Depreciation 660.89 2.20 564.08 2.03 17.16

Profit before Taxes 8289.63 27.61 6150.07 22.11 34.79

Provision for Taxes 1196.97 3.99 838.95 3.02 42.67
Income tax expense
(Including deferred tax
benefit, fringe
benefit tax and MAT
credit entitlement)

Net Profit for the year 7092.66 23.62 5311.12 19.10 33.54
before Minority Interest
& share of loss of
associate

Minority Interest &
share of loss of associate (92.02) (0.31) (54.70) (0.20) -

Net Profit for the year 7000.64 23.31 5256.42 18.90 33.18

Revenues:

Revenues from Operations:

The Company's consolidated revenues increased in fiscal 2010 to
Rs.30,028.92 crore from Rs.27,812.88 crore in fiscal 2009, a growth of
7.97% (22.96% in fiscal 2009). Revenues from information technology and
consultancy services constituted 96.86% of the total revenues in fiscal
2010 (96.29%in fiscal 2009) an increase of 8.60% over the last fiscal.

Consolidated revenues from sale of equipment and software licenses
decreased by 8.47% to Rs. 943.71 crore in fiscal 2010 from Rs.1,031.02
crore in fiscal 2009.

Analysis of Revenue Growth

The analysis of revenue growth attributable to various factors for the last
two fiscal years is summarized in the table below:

Analysis of Growth % 2009-10 2008-09

Volume 17.37 19.33
Price (3.32) (4.89)
Mix (Onsite/Offshore) (8.12) (2.27)
Exchange rate 2.04 10.80
Total Growth 7.97 22.97

The second half of fiscal 2009 witnessed requests for price concessions and
more favourable contractterms. The trend continued to be felt in fiscal
2010. In this difficult environment, we exercised multiple levers to ensure
that the volume of work continued to increase. The Company focussed on
deeper customer relationships and improved its value proposition to the
customers, resulting in growth in volume of multiple customer accounts.

Shifting of resources to offshore delivery centres was a strategy used to
help customers in reducing their costs which also led to margin improvement
for the Company.

We are a global company and our revenues are earned in multiple currencies.
The trend in exchange rates of the Indian Rupee vis-a-vis some of the major
currencies in which we do business is shown in the table below:

Currency Fiscal 2010 Fiscal 2009 Fiscal 2008 Currency Currency
Change Change
FY10 Vs. FY09 Vs.
FY09 FY08

USD 47.36 46.30 40.14 2.30% 15.33%
GBP 75.54 78.33 80.63 (3.56%) (2.85%)
EUR 67.09 65.52 57.46 2.40% 14.02%
AUD 40.48 35.82 35.13 12.99% 1.98%
CAD 43.63 41.21 39.57 5.88% 4.14%

During the fiscal 2010, US Dollar and Euro strengthened vis-a-vis Indian
Rupee to a lesser extent compared to the last fiscal. British Pound
Sterling weakened in the last two fiscals. The impact of exchange rate
fluctuation on revenues in fiscal 2010 has been 2.04% compared to 10.80% in
fiscal 2009.

Revenues by Segment

The classification of revenues by industry segment (our primary segment)
and geography (our secondary segment) is more relevant when viewed on a
consolidated basis.

Revenues by Industry Segment:

Industry Segment Revenues 2009-10

Manufacturing & Process, 8.10%
Retail & Distribution, 10.59%
Telecom, Media and Entertainment, 14.54%
Others, 21.85%
BFSI, 44.92%

Industry Segment 2009-10 2008-09
% of % of
Revenues Revenues
Banking, Financial Services
& Insurance (BFSI) 44.92 42.89
Telecom, Media & Entertainment 14.54 16.17
Manufacturing 8.10 9.78
Retail and Consumer Packaged Goods 10.59 8.91
Others 21.85 22.25
Total 100.00 100.00

In spite of the financial difficulties faced by customers in fiscal 2010,
primarily in BFSI segment, the Company's revenues from this segment have
remained strong. Impressive improvement has been seen in Retail and
Consumer Packaged Goods and also in verticals like Life Science &
Healthcare, Energy & Utility included in Others' reported above.

Revenues by geographic segment:

Geography Revenue 2009-10

North America, 52.80%
Europe, 10.49%
India, 8.65%
UK, 16.18%
Ibero Americas, 4.72%
Asia Pacific, 5.24%
Africa, 0.77%
ME, 1.15%

Geographic segment 2009-10 2008-09
% of % of
Revenues Revenues

North America 52.80 51.38
United Kingdom 16.18 18.99
Europe 10.49 10.53
India 8.65 7.85
Asia Pacific 5.24 4.75
Iberoamerica 4.72 4.71
Middle East and Africa 1.92 1.79
Total 100.00 100.00

Although the economic conditions in North America were adversely affected,
our focus on customer needs has resulted in growth in volume of business in
this geography. The foreign exchange fluctuation was the key reason for
lower growth/decline in Europe and United Kingdom.

Revenues by significant services

ADM, 48.73%
BI, 5.69%
Enterprise Solutions, 10.47%
Testing, 5.04%
EIS, 4.98%
Infra, 8.36%
Consulting, 1.91%
Products, 3.29%
BPO, 11.53%
Other, 16.73%

Service Lines 2009-10 2008-09
% of % of
Revenues Revenues

IT Solutions and Services
Application Development & Maintanence 48.73 48.48
Business Intelligence 5.69 8.06
Enterprise Solutions 10.47 12.49
Assurance Services 5.04 4.22
Subtotal IT Solutions and Services 69.93 73.25
Enginnering & Industrial Services 4.98 5.96
Infratructure 8.36 7.98
Consulting 1.91 2.66
Products 3.29 2.90
Business Process Outsourcing 11.53 7.25
Total 100.00 100.00

The Company's newer service offerings such as Infrastructure Services,
Assurance Services and Business Process Outsourcing (BPO) have been showing
significant growth. The increase in revenues from BPO is mainly
attributable to the acquisition of Citi Global Services Limited in December
2008. The decline in Business Intelligence and Enterprise Solutions is
attributable to the general business conditions and reduction in
discretionary spending.

Revenues from fixed-price-fixed-time contracts

The Company generated 47.82% of its revenues in fiscal 2010 from fixed-
price-fixed-time contracts (44.79% in fiscal 2009).

Revenues by location of service delivery

The Company has been using a network of Global Delivery Centres (GDCs) to
service client requirements as part of its GNDMTM strategy. Onsite revenues
are for those services which are performed at our client locations. Offsite
revenues reflect the aggregation of revenues from services which are
performed at our delivery centres located in India (referred to as offshore
revenues) as well as GDCs in various countries. The composition of
Company's revenues from off-shore, ADM, 48.73% GDC and onsite are as
follows:

Revenue Mix Onsite-Offshore India-GDC 2009-10

Offshore Revenue, India, 51.00%
Offsite Revenue, GDC, 5.70%
Onsite Revenue, 43.30%

Revenue Mix Onsite-Offshore India-GDC 2008-09

Offshore Revenue, India, 44.20%
Offsite GDC Revenue, 4.60%
Onsite Revenue, 51.20%

Onsite-Offsite Revenue Mix (% of Revenues)

2009-10 2008-09

Offshore Revenues -India 51.00 44.20
Offsite Revenues - GDC 5.70 4.60
Revenues - Offsite 56.70 48.80
Revenues - Onsite 43.30 51.20
Total Revenues 100.00 100.00

The movement from onsite to offsite was the result of strategic action by
the Company to meet customer expectations for lower costs and also to
increase our margins. This has resulted in substantial increase in offsite
revenues (48.80% in fiscal 2009; 56.70% in fiscal 2010). The corresponding
decrease in onsite revenues was from 51.20% in fiscal 2009 to 43.30% in
fiscal 2010.

Expenditure

Employee costs and overseas business expenses

Employee costs include salaries which have fixed and variable components,
contribution to provident fund, superannuation fund, gratuity fund and the
employee insurance schemes. It also includes expenses incurred on staff
welfare.

Overseas business expenses primarily comprise living allowances paid to
employees in connection with overseas assignments. For purpose of this
Management Discussion and Analysis (MD&A), these costs grouped in overseas
business expenses' have been regrouped in employee costs' for aggregating
all costs related to employee compensations. In this MD&A, we refer to such
aggregated costs as Total employee costs'.

The table below summarises the employee costs:

2009-10 2008-09
Rs. Crore % of Rs. Crore % of
Revenues Revenues

Total Revenues 30,028.92 100.00 27,812.88 100.00
Employee costs 10,879.57 36.23 9,910.92 35.63
Employee allowances
paid overseas 4,186.18 13.94 4,572.28 16.44
Total Employee Costs 15,065.75 50.17 14,483.20 52.07

The total employee costs for fiscal 2010 was Rs.15,065.75 crore
(Rs.14,483.20 crore in fiscal 2009). Employee costs as a percentage of
revenues was 50.17% in fiscal 2010 (52.07% in fiscal 2009).

This decrease of 1.90% is attributable primarily to:

* Decrease in employee costs in overseas locations by 2.50% as a result of
the company's use of the offshore leverage.

* Increase in India employee costs by 0.60% - primarily on account of
increase in India head count

Utilisation of manpower resources including trainees was 74.00% as at March
31, 2010 (69.40% as at March 31, 2009). The utilisation excluding trainees
was 80.40% as at March 31, 2010 (79.70% as at March 31, 2009). The
significant improvement in utilisation also contributed to margin
improvement.

Overseas business expenses (other than employee allowances paid overseas)

This includes travel, marketing and office expenses incurred overseas.

Overseas business expenses (other than employee allowances paid overseas)
decreased from Rs.460.07 crore in fiscal 2009 to Rs. 383.89 crore in fiscal
2010. As a percentage of revenues these expenses decreased from 1.65% in
fiscal 2009 to 1.28% in fiscal 2010. Overseas travel which constituted the
largest component, decreased from Rs.303.87 crore in fiscal 2009 (1.09% of
revenues) to Rs.225.32 crore in fiscal 2010 (0.75% of revenues). This
reduction of 0.34% in travel related costs as a percentage of revenues is
due to:

* Change in mix of onsite/offshore

* Cost controls on travel put in place

* Increased use of video and audio conferencing

Services rendered by business associates and others:

Payments for services rendered by business associates orsub-contractors
engaged for software development and other IT services are included in this
head. The Company normally engages these consultants to bridge shortages in
certain skill-sets.

Expenditure on business associates increased from Rs.1,114.57 crore in
fiscal 2009 to Rs. 1,261.97 crore in fiscal 2010. As a percentage of
revenues, the increase was from 4.01% in fiscal 2009 to 4.20% in fiscal
2010. The increase of 0.19% is attributable mainly to higher requirement of
business associates in some overseas locations. The management conducts
periodic reviews of the need for such associates vis-a-vis availability of
the required skill sets within the Company and manages these costs
appropriately.

Operating and other expenses

Operating and other expenses include all other expenses affecting the
profit and loss statement related to the conduct of the Company's
operations.

Nature of Expenses For the year ended For the year ended
March 31, 2010 March 31, 2009
Rs. Crore % of Rs. Crore % of
Revenue Revenue

Total Revenues 30,028.92 100.00 27,812.88 100.00
Software, hardware
and material costs 987.79 3.29 1,031.22 3.71
Software licences 464.24 1.54 423.51 1.52
Communication 422.87 1.41 390.33 1.40
Travelling & conveyance 341.90 1.14 421.83 1.52
Rent 720.53 2.40 664.35 2.39
Legal & professional
fees 206.00 0.69 256.63 0.92
Repairs and maintenance 212.77 0.71 176.53 0.63
Electricity expenses 233.72 0.78 196.23 0.71
Recruitment & training 112.21 0.37 120.99 0.44
Other Expenses 920.73 3.06 903.62 3.25
Total Other Operating
Expenses 4,622.76 15.39 4,585.24 16.49

The reduction in operating and other expenses as a percentage of revenues
of 1.10% (from 16.49% in fiscal 2009 to 15.39% in fiscal 2010) is primarily
due to:

* Decrease in software, hardware and software licenses 0.39%

* Decrease in travelling and conveyance costs 0.38%

* Decrease in legal and professional fees 0.23% (legal costs were higher in
fiscal 2009 due to acquisition of a BPO unit)

* Decrase in recruitment and training costs 0.07%

* Decrease in other items of expenditure such as rates and taxes 0.06%,
commission and brokerage 0.09%, printing and stationary 0.03% and Insurance
0.03%

The Company took a number of measures to control costs in all areas of
operations, both in India and overseas. This initiative was widely deployed
with extensive employee participation. The result of these efforts was
reflected in multiple expense heads.

However, the Company had to increase its provision for doubtful debts from
Rs.63.09 crore (0.23% of revenues in fiscal 2009) to Rs.169.67 crore in
fiscal 2010 (0.57% of revenues in fiscal 2010). Some of these provisions
arose as a result of restructuring of customer organisations in financial
distress.

Other income

Other income comprises interest received on deposits with banks, dividends
received on investments in subsidiaries, dividends from mutual funds and
gains/losses due to exchange rate fluctuations.

Other income' in fiscal 2010 was a gain of Rs.272.07 crore (loss of
Rs.426.99 crore in fiscal 2009). The increase in other income has
contributed 2.45% to the improvement in net profit margin.

Net loss on account of foreign exchange fluctuations reduced in fiscal
2010. Also, there was an increase in other income as a result of continuous
review of portfolio of interest-bearing investments in mutual funds, bank
deposits and inter-company deposits. Increase in other income (net) is
attributable to:

* Decrease in exchange loss (net) of 2.17%

* Increase in interest income of 0.31%

* Increase in profit on redemption/sale of mutual funds and other current
investments (net) of 0.34%

Forward and option contracts accounting

TCS Limited enters into various forward and option contracts to manage its
exposure to exchange rates, in accordance with its risk management policies
and procedures. These contracts are generally entered into with banks as
counterparties. The Company designatesits hedging instruments as cash flow
hedges upon completion of the formal documentation and testing for
effectiveness which is done periodically, applying the recognition and
measurement principles set out in the 'Financial Instruments: Recognition
and Measurement' (Accounting Standard 30). All such hedging instruments are
measured at fair value, at the reporting dates. Changes in the fair value
between the reporting dates of such instruments designated as effective
hedge of future cash flows are recognised in the Shareholders' funds' and
the ineffective portion is recognised as other income' (net) in the profit
and loss account.

On sale or termination of any effective hedge instrument before maturity,
hedge accounting is discontinued and cumulative gains or losses on such
instruments are retained in the Shareholders' funds' until the maturity of
the instrument and thereafter transferred to the profit and loss account.
If a hedged transaction is no longer expected to occur, the net cumulative
gain or loss recognised in Shareholders' funds' is transferred to other
income' in the profit and loss account for the period. On sale or
termination of hedge instruments on maturity, the resultant gains or losses
are taken to the profit and loss account for the period.

Forward contracts and currency options outstanding at the reporting dates,
other than designated cash flow hedges, are stated at their fair values and
any gains or losses are recognised as other income' in the profit and loss
account for the period.

Note 18 to the consolidated accounts provides details of the Company's
Derivative Financial Instruments'.

Profit before interest, depreciation and taxes (PBIDT)

PBIDT in fiscal 2010 was Rs. 8,966.62 crore, (Rs.6,742.81 crore in fiscal
2009). The profit as a percentage of revenues was 29.86% in fiscal 2010
(24.24% in fiscal 2009). The increase in the PBIDT of 5.62% as percentage
of revenues in fiscal 2010 is mainly attributable to:

Interest costs

Interest costs decreased from Rs.28.66 crore in fiscal 2009 to Rs.16.10
crore in fiscal 2010. In terms of percentage of revenues, Interest costs
have decreased from 0.10% in fiscal 2010 to 0.05% in fiscal 2010. The
reason for the decrease in interest cost is attributable to repayment of
USD 100 million borrowed by our subsidiary in USA on December 31, 2009.

Depreciation

Depreciation charge has increased from Rs.564.08 crore in fiscal 2009 to
Rs. 660.89 crore in fiscal 2010. As a percentage of revenues the
depreciation charge was 2.03% in fiscal 2009 and 2.20% in fiscal 2010. The
increase in depreciation of 0.17% as a percentage of revenues is primarily
attributable to:

* Additional Computers installed 0.21.

* Derease in depreciation on furniture and fixtures 0.04%.

Profit before taxes

Profit before taxes in fiscal 2010 was Rs. 8,289.63 crore (Rs. 6,150.07
crore in fiscal 2009). As a percentage of revenues the profit increased
from 22.11% in fiscal 2009 to 27.61% in fiscal 2010. The increase in profit
before tax of 5.50% as a percentage of revenues can be attributed to higher
PBIDT of 5.62% and lower interest costs of 0.05%, partially offset by
higher depreciation of 0.17%.

Provision for taxation

Income tax expenses comprise current income tax and the net change in the
deferred tax assets and liabilities in the applicable fiscal period from
operations in India and foreign tax jurisdictions. The Company benefits in
India from certain tax incentives under Section 10A of the Income Tax Act,
1961, for the IT services exported from designated Software Technology
Parks (STP)'. In addition, benefit from tax incentives applicable to Free
Trade Zones are available to the Company in respect of some of the units
located in such zones. The benefits applicable to the Software Technology
Parks (STPs) are due to expire by March 31, 2011.

Minimum Alternative Tax (MAT) paid in accordance with the tax laws, gives
rise to tax credit which according to the Income Tax Act 1961, can be
carried forward for subsequent seven years. Post tax-holiday period for
STP, the Company would have sufficient tax liability to offset these tax
credits. Accordingly, MAT is recognised as an asset in the balance sheet.

Income tax expense comprises tax on income from operations in India and
foreign tax jurisdictions. Tax expenses relating to operations are
determined in accordance with tax laws applicable in countries where such
operations are carried out.

The Company's consolidated tax expense in fiscal 2010 increased to
Rs.1,196.97 crore from Rs. 838.95 crore in fiscal 2009. As a percentage of
revenues, it increased to 3.99% in fiscal 2010 from 3.02% in fiscal 2009.
As a percentage of profit before taxes, the tax charge has gone up from
13.64% in fiscal 2009 to 14.44% in fiscal 2010.

The increase in tax expense as percentage of revenues from 3.02% to 3.99%
is primarily attributable to:

* Increse in tax provision for Tata Consultancy Services Limited primarily
as a result of expiry of tax holiday for certain STP units (0.91%)

* Increasing the profit of our subsidiary in USA resulting in a higher tax
provision (0.07%)

* Increasing in profit of our subsidiaries in Latin America resulting in a
higher tax provision (0.11%)

* Increse in tax provision for our subsidiary in Canada (0.06%)

BPO subsidiary

Net profit before Minority Interest and share of loss of associate

The Company's net profit before minority interest and share of loss of
associate increased from Rs. 5,311.12 crore in fiscal 2009 to Rs. 7,092.66
crore in fiscal 2010. Net profit margin on revenues increased from 19.10%
in fiscal 2009 to 23.62% in fiscal 2010. The increase in net profit margin
of 4.52% is attributable to increase in PBT margin of 5.50% offset by
higher net taxes of 0.97% in fiscal 2010.

Minority Interest and share of loss of associate

Minority Interest

Minority interest represents the amount of net profit attributable to third
party ownership interests in the Company's subsidiaries.

Minority interest registered an increase from Rs. 54.00 crore in fiscal
2009 to Rs.90.99 crore in fiscal 2009. This is primarily due to impact of
TCS e-Serve Ltd. acquired on December 31, 2008 and increase in profit after
tax of CMC Ltd.

Share of loss of associate

Investments in companies in which TCS Limited or any of its subsidiaries
has significant influence by virtue of ownership of 20% to 50% in the
equity capital of the said companies are defined as investments in
associates'.

In its consolidated books of accounts the Company recognises its share of
income or loss in the investee companies on the principles of equity method
of accounting.

The Company's share of loss of associate as a result of such minority
shareholding was a loss of Rs.1.03 crore in fiscal 2010 as compared to a
loss of Rs.0.70 crore in fiscal 2009. Net profit

The Company's consolidated net profit was Rs.7,000.64 crore in fiscal 2010
(23.31% of revenues) against Rs.5,256.42 crore in fiscal 2009 (18.90% of
revenues).

Consolidated Segment Results

In order to manage the global operations more effectively, the organisation
was restructured and the internal review processes were realigned around
industry practices. Consequently, industry practice is considered as
primary segment and geography is considered as secondary segment.

Revenues and expenses directly attributable to segments are reported under
each reportable segment.

The Company's segment-wise operating performance are analysed in terms of
revenues, expenses directly attributable to the segments, allocable
expenses and segment results.

The summary of the Company's segment results is given below:

Amount in Rs. Crore
As at % of As at % of
March 31, Revenue March 31, Revenue
2010 2009
Segment Revenues

Banking, Financial 13,488.85 44.92 11,928.59 42.89
Services &
Insurance (BFSI)

Manufacturing 2,433.80 8.10 2,721.10 9.78
Retail & Distribution 3,181.43 10.59 2,479.13 8.91
Telecom 4,365.02 14.54 4,496.03 16.17
Others 6,559.82 21.85 6,188.03 22.25
Total Revenues 30,028.92 100.00 27,812.88 100.00
Segment Results
BFSI 4,190.08 13.95 3,361.88 12.09
Manufacturing 811.99 2.70 871.53 3.13
Retail & Distribution 949.02 3.16 614.79 2.21
Telecom 1,477.58 4.92 1,487.61 5.35
Others 1,931.70 6.43 1,683.31 6.05
Total Segment Results 9,360.37 31.17 8,019.12 28.83
Unallocable expenses, Net 1,342.81 4.47 1,442.06 5.18
Operating Income 8,017.56 26.70 6,577.06 23.65
Other Income, Net 272.07 0.91 (426.99) (1.54)
Profit before taxes 8,289.63 27.61 6,150.07 22.11
Tax Expense 1196.97 3.99 838.95 3.02

Profit before Minority 7,092.66 23.62 5,311.12 19.10
Interest and share of
profit of associate

Less: Minority Interest 92.02 0.31 54.70 0.20
and share of loss of
associate

Net Profit for the year 7,000.64 23.31 5,256.42 18.90

Amount in Rs. Crore
As at % of As at % of
March 31, Segment March 31, Segment
2010 Results 2009 Results
Segment Results

BFSI 4,190.08 44.76 3,361.88 41.92
Manufacturing 811.99 8.67 871.53 10.87
Retail & Distribution 949.02 10.14 614.79 7.67
Telecom 1,477.58 15.79 1,487.61 18.55
Others 1,931.70 20.64 1,683.31 20.99
Total Segment Results 9,360.37 100.00 8,019.12 100.00

Segment-wise performance are discussed below:

Amount in Rs. Crore
As at % of As at % of
BFSI March 31, Segment March 31, Segment
2010 Revenues 2009 Revenues

Revenues 13,488.85 - 11,928.59 -

Identified
operating
expenses 7,241.56 53.69 6,587.31 55.22

Contribution 6,247.29 46.31 5,341.28 44.78

Allocated
expenses 2,057.21 15.25 1,979.40 16.59

Segment
Result BFSI 4,190.08 31.06 3,361.88 28.18

The largest segment is the Banking, Financial Services and Insurance (BFSI)
Segment. This constituted 44.92% of our revenues in fiscal 2010 and has
contributed 44.76% of total segment results.

BFSI has shown satisfactory growth in terms of volume as well as
profitability, even though customers in this segment were affected
relatively more during the economic slowdown.

Amount in Rs. Crore
As at % of As at % of
Telecom March 31, Segment March 31, Segment
2010 Revenues 2009 Revenues

Revenues 4,365.02 - 4,496.03 -

Identified
operating
expenses 2,221.72 50.90 2,262.36 50.32

Contribution 2,143.30 49.10 2,233.67 49.68

Allocated
expenses 665.72 15.25 746.06 16.59

Segment
Result Telecom 1,477.58 33.85 1,487.61 33.09

The second largest segment for the Company is the Telecom segment. This
constituted 14.54% of Company's Revenues in fiscal 2010 and has contributed
15.79% of total segment results.

Telecom witnessed pull back in terms of volume. Some of the major customers
cut down their spending on outsourcing. However, we could put multiple
levers into play in order to manage operations more effectively and
improved the profitability.

Amount in Rs. Crore
As at % of As at % of
Retail and March 31, Segment March 31, Segment
consumer 2010 Revenues 2009 Revenues
packaged
goods

Revenues 3,181.43 - 2,479.13 -

Identified 1,747.20 54.92 1,452.96 58.61
operating
expenses

Contribution 1,434.23 45.08 1,026.17 41.39

Allocated
expenses 485.21 15.25 411.38 16.59
Segment

Result Retail & 949.02 29.83 614.79 24.80
CPG

The third largest segment for the Company is the Retail and Consumer
Packaged Goods (CPG) segment. This constituted 10.59% of the Company's
Revenues in fiscal 2010 and has contributed 10.14% of total segment
results.

Retail in all respects has shown substantial improvement over last fiscal.
Volume grew by 28.33% with an impressive improvement in profitability.


Amount in Rs. Crore
Manufacturing As at % of As at % of
March 31, Segment March 31, Segment
2010 Revenues 2009 Revenues

Revenues 2,433.80 - 2,721.10 -

Identified 1,250.63 51.39 1,398.04 51.38
Operating
Expenses

Contribution 1,183.17 48.61 1,323.06 48.62

Allocated
Expenses 371.18 15.25 451.53 16.59

Segment 811.99 33.36 871.53 32.03
Result
Manufacturing

The fourth largest segment for the Company is the Manufacturing segment.
This constituted 8.10% of the Company's revenues in fiscal 2010 and has
contributed 8.67% of total segment results.

Manufacturing lagged in terms of volume of business.

Major customers in this segment, primarily in automobile and aerospace
sectors were worst affected by the economic slowdown. However, even in this
segment, we could improve the profitability by superior cost management and
transformational initiatives undertaken for major customers.

Amount in Rs. Crore
As at % of As at % of
March 31, Segment March 31, Segment
Other 2010 Revenues 2009 Revenues
Segments

Revenues 6,559.82 - 6,188.03 -

Identified
Operating
Expenses 3,627.67 55.30 3,477.90 56.20
Contribution 2,932.15 44.70 2,710.13 43.80
Allocated
Exenses 1,000.45 15.25 1,026.82 16.59
Segment
Result-Other 1,931.70 29.45 1,683.31 27.20

Other segments includes:

* Life Science and Healthcare.
* Energy, Resourses and Utilities
* Travel, Transportation and Hospitality
* Third Party
* Hi-Tech
* S-Governance
* Others

The Other segment' constituted 21.85% of Company's revenues in fiscal 2010
and has contributed 20.64% of total segment results.

The combined performance of Other segments' is a moderate growth in volume
and yet again, an impressive improvement in profitability.

FINANCIAL POSITION-CONSOLIDATED

Share capital Amount in Rs. Crore

As at As at
March 31, 2010 March 31, 2009

Authorized Share Capital 225 120
225 crore equity shares of Re.1
each as at March 31, 2010 (120
crore equity share of Re. 1 each
as at March 31, 2009)

100 crore redeemable preference 100 100
shares of Re.1 each as at March
31, 2010 (100 crore redeemable
preference shares of Re. 1 each
as at March 31, 2009)

Authorized Share Capital 325.00 220.00

Issued, Subscribed and Paid-up
Share Capital

195.72 crore equity shares of Re.1 195.72 97.86
each as at March 31, 2010 (97.86
crore equity shares of Re.1 each
as at March 31, 2009)

100 crore redeemable preference 100.00 100.00
shares of Re.1 each as at March
31, 2010 (100 crore redeemable
preference shares of Re. 1 each
as at March 31, 2009)

Issued, Subscribed and 295.72 197.86
Paid-up Share Capital

The authorised share capital was increased from 120 crore equity shares of
Re.1 each to 225 crore equity shares of Re. 1 each.

The Company allotted 97.86 crore equity shares as fully paid-up bonus
shares to its shareholders on June 18, 2009 by utilisation of the
Securities Premium Account pursuant to a resolutions passed by the
shareholders by postal ballot on June 12, 2009. Consequently, the paid-up
equity capital of the Company increased to Rs.195.72 crore as at March 31,
2010 (Rs. 97.86 crore as at March 31, 2009).

Reserves and surplus

Securities Premium Account stood reduced at Rs.1,918.47 crore as at March
31, 2010 (Rs.2,016.33 crore as at March 31, 2009) as a result of allotment
of bonus shares in fiscal 2010.

The opening balance of general reserve as at April 1, 2009 was Rs.1,903.37
crore. In fiscal 2010, Rs. 636.22 crore was transferred to the general
reserve from the profit and loss account. The closing balance on the
general reserve as at March 31, 2010 was Rs. 2,539.59 crore.

Balance in the profit and loss account as at March 31, 2010 was at
Rs.13,604.84 crore (Rs.11,835.03 crore as at March 31, 2009).

Foreign Currency Translation Reserve

For purpose of consolidation of subsidiaries with financials of the holding
company, income and expenses are translated at average rates and the assets
and liabilities are stated at closing rate. Use of such different rates for
translation gives rise to exchange difference which is accumulated in
foreign currency translation reserve. Foreign exchange translation reserve
was Rs.108.75 crore as at March 31, 2010 (Rs.471.94 crore as at March 31,
2009).

The closing balance of hedging reserve account as at March 31, 2010 showed
a loss of Rs.6.07 crore (Rs.729.94 crore loss as at March 31, 2009). This
is in conformity with the provisions laid down in Accounting Standard 30
(AS 30). The details of derivative financial instruments and the movement
in Hedging Reserve during the year ended March 31, 2010, for derivatives
designated as Cash Flow Hedges is shown in note 18 to the Consolidated
Notes to Accounts.

Reserves and surplus at the end of fiscal 2010 was Rs.18,171.00 crore, an
increase of 17.22% over Rs.15,502.15 crore at the end of fiscal 2009.

Loans

Secured loans as at March 31, 2010 were Rs.31.21 crore (Rs.37.89 crore as
at March 31, 2009). Bank overdrafts as at March 31, 2009 aggregated
Rs.Nil' crore (Rs.1.45 crore as at March 31, 2009) and were secured
against domestic book debts, hypothecation of inventories and other current
assets.

The Company's obligations under finance lease (Refer Note 10 to Schedule Q)
was Rs. 31.21 crore as at March 31, 2010 (Rs.36.44 crore as at March 31,
2009) - these are secured against fixed assets obtained under finance lease
arrangements.

Unsecured loans as at March 31, 2010 were Rs.72.04 crore (Rs.525.99 crore
as at March 31, 2009). Loans from banks as at March 31, 2010 were at
Rs.58.31 crore (Rs.513.04 crore as at March 31, 2009). The reduction in
commercial borrowings in fiscal 2010 is attributable to the early repayment
of loans by one of our North American subsidiaries. Other unsecured loans
were Rs.13.73 crore as at March 31, 2010 (Rs.12.95 crore as at March 31,
2009).

Deferred tax liability (net) & deferred tax assets (net)

As stated in the accounting policies (see notes to accounts, schedule Q1
(l)), deferred tax assets and liabilities are offset, tax jurisdiction-
wise. Schedule E' brings out details of component-wise deferred tax
balances where the net values result into liabilities or assets,
jurisdiction-wise. A combined view of all deferred tax assets and
liabilities, across all tax jurisdictions is summarised below:

Amount in Rs. Crore
A B C D E F G
Foreign
Branch Profit 43.97 108.86 - - 43.97 108.86 (64.89)
Tax (net
liability)

Foreign
Branch Profit - - 0.62 0.53 0.62 0.53 0.09
Tax
(net asset)

Depreciation 2.43 61.62 - - 2.43 61.62 (59.19)
(net
liability)

Depreciation - - (61.56) (6.71) (61.56) (6.71) (54.85)
(net assets)

Employee Benefit (0.04) (31.13) - - (0.04) (31.13) 31.09
(net liability)

Employee - - 77.94 24.91 77.94 24.91 53.03
Benefit
(net asset)

Provision for (0.01) (19.46) - - (0.01) (19.46) 19.45
Doubtful Debts
(net liability)

Provision for - - 77.81 12.61 77.81 12.61 65.20
Doubtful
Debts
(net asset)

Others (net 22.33 8.66 - - 22.33 8.66 13.67
liability)

Others
(net assets) - - 73.05 28.70 73.05 28.70 44.35

68.68 128.55 167.86 60.04 236.54 188.59 47.95

A = Liability - As at March 31, 2010
B = Liability - As at March 31, 2009
C = Assets - As at March 31, 2010
D = Assets - As at March 31, 2009
E = Net - As at March 31, 2010
F = Net - As at March 31, 2009
G = Inc/(Dec)

Fixed assets

Additions to the gross block excluding Capital Work in Progress (CWIP) in
fiscal 2010 amounted to Rs.737.93 crore (Rs.1,659.63 crore in fiscal 2009).

The significant items of additions in fiscal 2010 were:

* Land and buildings of Rs. 179.90 crore in fiscal (Rs. 448.23 crore in
fiscal 2009)

* Leasehold improvements of Rs. 62.90 crore in fiscal 2010 (Rs.192.24 crore
in fiscal 2009).

* Computers of Rs. 266.84 crore in fiscal (Rs. 543.54 crore in fiscal 2009)

* Office equipment, electrical installations and furniture and fixtures of
Rs.214.30 crore in fiscal 2010 (Rs.442.39 crore in fiscal 2009)

The amount in CWIP was Rs.1,017.37 crore as at March 31, 2010 (Rs.705.49
crore as at March 31, 2009) mostly related to construction/improvement of
facilities which are likely to be ready for use in fiscal 2011 and beyond.
The CWIP included capital advances of Rs.219.73 crore as at March 31, 2010
(Rs.181.57 crore as at March 31, 2009).

The Company made contractual commitments to vendors who are executing
various infrastructure projects. The estimated amount of such contracts
remaining to be executed on capital account was Rs.1,172.62 crore as at
March 31, 2010 (Rs.664.59 crore as at March 31, 2009).

Goodwill on consolidation

Goodwill on consolidation as at March 31, 2010 was Rs. 3,215.99 crore
(Rs.3,261.40 crore as at March 31, 2009). Details of goodwill on
consolidation as at March 31, 2010 and March 31, 2009 are shown below:

Amount in Rs. Crore
As at As at Increase/
March March (Decrease)
31, 2010 31, 2009

Tata Consultancy Services
Netherlands BV 301.19 336.03 (34.84)
Tata Consultancy Services
Sverige AB 5.68 25.35 (19.67)
TCS Iberoamerica SA 286.36 305.55 (19.19)
TCS FNS Pty Limited 161.63 138.09 23.54
Tata Consultancy Services
Canada Inc. 0.70 - 0.70
TCS e-Serve Limited 1,956.23 1,952.18 4.05
Others 504.20 504.20 -
Total 3,215.99 3,261.40 (45.41)

Investments Amount in Rs. Crore
As at As at
March March
31, 2010 31, 2009
Investments in fully paid-up equity
shares of associates and others
(Unquoted) 6.67 8.68

Investments in fully paid-up
preference shares of associates and
others (Unquoted) 5.00 9.31

Investments in Bonds and
Debentures (Quoted) 10.97 11.99
Investments in Bonds and

Debentures (Unquoted) 1,200.00 -

Investments in Mutual Funds
(Unquoted) 2,459.44 1,584.43

Total Investments 3,682.08 1,614.41

During the fiscal 2010 the Company invested in unquoted debentures.
Investment in Mutual Fund increased substantially to Rs. 2,459.44 crore as
at March 31, 2010 from Rs. 1,584.43 crore as at March 31, 2009 in line with
the Company's policy for investment of free cash.

Trade Investments/Acquisitions/Liquidations during fiscal 2010 through
subsidiaries:

Acquisitions:

Acquisition of 100% equity interest in ERI Holdings Corp., consequently
increasing holding in Exegenix Research Inc. from 49.9% to 100%.

Details of Transaction:

On June 5, 2009, the Company, through its wholly owned subsidiary, Tata
Consultancy Services Canada Inc., acquired 100% equity interest in ERI
Holdings Corp. Consequently, the Company's interest in Exegenix Research
Inc. has increased to 100%.

Acquisitions:

Investment in 100% share capital of TCS Uruguay S.A.

Details of Transaction:

On January 1, 2010, the Company, through its wholly-owned subsidiary, TCS
Iberoamerica S.A., subscribed to 100 percent share capital of TCS Uruguay
S.A.

Acquisitions:

Acquisition of 100% share capital of MGDC S.C

Details of Transaction:

On January 1, 2010, the Company purchased 100 percent share of MGDC
S.C., Mexico, through its wholly-owned subsidiaries, TCS Uruguay S.A. (99%)
and TCS Argentina S.A. (1%).

Acquisitions:

Liquidations Details of Transaction Liquidation of TCS Financial
Management, LLC (subsidiary of Tata America International Corporation)

Details of Transaction:

On April 14, 2009, TCS Financial Management, LLC (subsidiary of Tata
America International Corporation) has been voluntarily liquidated.

Acquisitions:

Liquidation of Financial Network Services Malaysia Sdn Bhd (subsidiary of
TCS Financial Solutions Australia Pty Limited)

Details of Transaction:

On June 16, 2009, Financial Network Services Malaysia Sdn Bhd (subsidiary
of TCS Financial Solutions Australia Pty Limited) has been voluntarily
liquidated.

Acquisitions:

Liquidation of Financial Network Services (Africa) (Pty) Ltd. (subsidiary
of TCS Financial Solutions Australia Holdings Pty Limited)

Details of Transaction:

On March 5, 2010, Financial Network Services (Africa) (Pty) Ltd.
(subsidiary of TCS Financial Solutions Australia Holdings Pty Limited) has
been voluntarily liquidated.

Acquisitions:

Liquidation of Tata Infotech (Singapore) Pte. Limited

Details of Transaction:

On March 24, 2010, Tata Infotech (Singapore) Pte. Limited has been
voluntarily liquidated.

Inventories

The Company had inventories of Rs. 17.79 crore as at March 31, 2010 (Rs.
36.60 crore as at March 31, 2009). The inventory constitutes raw materials,
components, sub-assemblies and finished goods.

Current assets, loans and advances

Unbilled Revenues

Unbilled revenues were Rs.1,201.14 crore as at March 31, 2010 (Rs.1,481.38
crore as at March 31, 2009) representing 4.00% of the revenues for fiscal
2010 (5.33% as at March 31, 2009).

Sundry debtors

Sundry debtors as at March 31, 2010 aggregated Rs. 5,855.41 crore
(Rs.6,134.02 crore as at March 31, 2009). As a percentage of revenues,
sundry debtors were at 19.50% as at March 31, 2010 as compared to 22.05% as
at March 31, 2009.

Sundry debtors were 71 days (79 days as at March 31, 2009) in terms of Days
Sales Outstanding (DSO), as at March 31, 2010. Substantial management
attention was paid to bring down DSO. The Company took steps to improve the
billing and collection process and put in place a continuous monitoring
system. The improved DSO has given rise to substantial increase in
available funds.

Cash and bank balances
Amount in Rs. Crore
As at As at
March March
31, 2010 31, 2009

Fixed Deposit with
Scheduled Banks 3,531.31 1,351.83

Foreign Banks Current Account 417.69 777.73

Foreign Banks Deposit Account 538.61 424.34
Other 230.98 144.24
Total Cash & Bank 4,718.59 2,698.14

The Company had cash and bank balances of Rs. 4,718.59 crore as at March
31, 2010 (Rs.2,698.14 crore as at March 31, 2009). Of this, Rs.956.30 crore
was held in foreign bank accounts as at March 31, 2010 (Rs.1,202.07 crore
as at March 31, 2009). The amount held in fixed deposits with banks in
India increased from Rs.1,351.83 crore as at March 31, 2009 to Rs. 3,531.31
crore as at March 31, 2010 in line with our cash management policies.

Loans and advances

Loans and advances include loans and advances to employees, advances
recoverable in cash or kind or for value to be received, advance tax
(including refunds receivable) (net), and MAT credit entitlement.

Loans and advances as at March 31, 2010 were at Rs.3,969.77 crore
(Rs.3,160.91 crore as at March 31, 2009). The increase is primarily
attributable to:

* MAT credit entitlement of Rs. 1,095.88 crore as at March 31, 2010
(Rs.775.32 crore as at March 31, 2009)

* advances recoverable in cash or kind or for value to be received of
Rs.1,938.44 crore as at March 31, 2010 (Rs.1,656.69 crore as at March 31,
2009)

* Advance tax [including refunds receivabel (net)] of Rs.771.12 crore as at
March 31, 2010 (Rs.578.79 crore as at March 31, 2009)

Current liabilities:

Current liabilities include sundry creditors, advances from customers,
advance billings and deferred revenues and other liabilities.

Current liabilities decreased to Rs.4,093.79 crore as at March 31, 2010 as
compared to Rs.4,340.44 crore as at March 31, 2009. The decrease is
primarily due to:

* increase in sundry creditors to Rs.2977.45 crore as at March 31, 2010
(Rs.2,309.00 crore as at March 31, 2009)

* decrease in other liabilities to Rs. 371.82 crore as at March 31, 2010
(Rs.1,232.57 crore as at March 31, 2009). These other liabilities include
fair values of foreign exchange forward and currency option contracts of
Rs.115.92 crore as at March 31, 2010 (Rs.691.27 crore as at March 31, 2009)

Provisions:

These include provisions for current income taxes (net), fringe benefit
taxes (net), employee benefits, proposed final dividend on equity shares,
proposed dividend on redeemable preference shares, tax on dividend and
provision for contingencies & warranties.

Provisions aggregated Rs.4,300.07 crore as at March 31, 2010 (Rs.1,627.30
crore as at March 31, 2009).

The increase is mainly attributable to:

* proposed final dividends on equity shares of Rs. 2,740.11 crore as at
March 31, 2010 (Rs. 489.31 crore as at March 31, 2009)

* tax on dividends Rs.466.23 crore as at March 31, 2010 (Rs.88.21 crore as
at March 31, 2009)

CASH FLOW _ CONSOLIDATED

Cash Inflows

Interest and Dividend from Investments 1%
Operating Profit 90%
Released from Working Capital 9%

Cash Outflows:

Net Investments 47%
Capital Expenditure 11%
Dividend to shareholders 21%
Taxes paid 20%
Repayment of Borrowings 1%

Amount in Rs. Crore

Cash flow summary Fiscal 2010 Fiscal 2009
Cash and cash equivalents at
beginning of the year 1459.54 1067.40
Net cash provided by operating
activities 7406.23 5408.56
Net cash used in investing activities (5413.22) (3434.54)
Net cash used in financing activities (2381.35) (1671.67)
Net increase/(decrease) in cash
and cash equivalents (388.34) 302.35

Exchange difference on translation
of foreign currency cash and cash
equivalents (46.83) 89.79

Cash and cash equivalents at
end of the year 1024.37 1459.54

Cash flow from operations:

In fiscal 2010 the Company generated net cash from operating activities of
Rs.7,406.23 crore (Rs.5,408.56 crore in fiscal 2009), break up of which is
given below:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

Profit before taxes and exceptional items 8289.63 6150.07
Add: Depreciation 660.89 564.08
Others (116.50) (280.90)
Operating Profit before
Working Capital changes 8834.02 6433.25
Effect of Working Capital changes 479.52 187.23
Cash generation from Operations 9313.54 6620.48
Tax Payments made (1907.31) (1211.92)
Net cash provided by operating activities 7406.23 5408.56
CASH FLOW - CONSOLIDATED

Other significant items contributing in generation/use of cash from
operating activities relating to working capital are given in the table
below:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

(Increase)/Decrease in Inventories 18.81 5.83
(Increase)/Decrease in Unbilled Revenues 280.24 (64.73)
(Increase)/Decrease in Sundry Debtors 110.58 (531.77)
(Increase)/Decrease Loans and Advances (153.17) (222.49)
Increase / (Decrease) in Current
Liabilities and Provisions 579.73 471.84
Increase / (Decrease) in
Translation differences on
Working Capital (356.67) 528.55
Effect of Working Capital changes 479.52 187.23

Cash Flow from investing activities:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

(Purchase) of Fixed Assets (1044.79) (1147.30)
(Purchase) / sale of Other

Investments including
dividends reinvested (1914.80) 1041.52

Acquisitions (Net of cash acquired) (12.87) (2445.29)

(Purchase) of Fixed deposit with
banks (net) having maturity over
three months (2421.99) (1077.67)

Other (18.77) 194.20
Net cash used for investing activities (5413.22) (3434.54)

In fiscal 2010 the Company used Rs.5,413.22 crore on investing activities
(Rs.3,434.54 crore in fiscal 2009). The significant items in investing
activities in fiscal 2010 were:

* fixed deposits with banks (net) having maturity greater than three months
of Rs.2,421.99 crore in fiscal 2010 (Rs.1,077.67 crore in fiscal 2009)

* other investments of Rs. 1,914.80 crore in fiscal 2010 (sale of
investments Rs.1,041.52 crore in fiscal 2009) consisting of (a)
subscription to 1000, 4.50% non-convertible debentures for Rs.1000 crore
and (b) subscription to 2000, 4.75% non-convertible debentures for Rs. 200
crore in fiscal 2010

* Rs. 11.90 crore paid in connection with an earlier acquisition of a BPO
unit in Chile and Rs.0.97 crore paid towards acquisition of Exegenix
Research in Canada in fiscal 2010 (Rs.2,445.29 crore primarily for purchase
of shares in CitiGlobal Services Limited in fiscal 2009)

Cash flow from financing activities:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009
Proceeds from the issue of
shares by subsidiaries 5.39 3.93
Proceeds/(Repayments) from/of
Borrowings (net) (400.57) (28.75)
Dividends paid including
dividend tax (1958.42) (1605.99)
Dividends paid to a minority
shareholder of a subsidiary (11.11) (8.11)
Interest paid (16.64) (32.75)
Net cash used in financing activities (2381.35) (1671.67)

In fiscal 2010 the Company used Rs.2,381.35 crore on financing activities
(Rs.1,671.67 crore in fiscal 2009). In fiscal 2010, the significant item of
cash used in financing activities were:


* payment of dividend including tax Rs.1,958.42 crore (Rs.1,605.99 crore in
fiscal 2009)

* Repayment of bank borrowings of Rs.400.57 crore in fiscal 2010, (Rs.28.75
crore in fiscal 2009)

PERFORMANCE SUMMARY

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009 Fiscal 2008
Revenues
Total Revenue 30,028.92 27,812.88 22,619.52
International Revenue 27,431.02 25,630.76 20,573.90
Domestic Revenue 2,597.90 2,182.12 2,045.62
Revenue From Offshore Business 13,989.82 11,328.80 8,620.46

Revenue By Geographic segments:

Americas 17,272.93 15,600.21 12,394.05
Europe 8,009.57 8,212.22 6,603.02
India 2,597.90 2,182.12 2,045.62
Others 2,148.52 1,818.33 1,576.83

Cost

Employee Cost 15,065.75 14,483.20 11,411.05
Other Operating Cost 6,268.62 6,159.88 5,497.09
Total Cost (excluding interest
& depreciation) 21,334.37 20,643.08 16,908.14
Profitability
EBIDTA (before other income) 8,694.55 7,169.80 5,711.38
Profit before tax 8,289.63 6,150.07 5,845.95
Profit after tax 7,000.64 5,256.42 5,026.02

Capital Accounts (INR Crore):

Share Capital 295.72 197.86 197.86
Reserves And Surplus 18,171.00 15,502.15 12,102.26
Gross Block 6,419.51 5,843.86 4,291.80
Total Investments 3,682.08 1,614.41 2,606.16
Net Current Assets 7,395.02 7,544.12 5,553.32

Earnings per share in Rs.:

EPS - as reported 35.67 53.63 51.36
EPS - Adjusted for Bonus Issue 35.67 26.81 25.68

Headcount (number):

Headcount (including subsidiaries)
as on March 31 160,429 143,761 111,407


Amount in Rs. Crore
Fiscal 2007 Fiscal 2006 Fiscal 2005
Revenues
Total Revenue 18,685.21 13,263.99 9,748.47
International Revenue 17,003.22 11,607.08 8,560.90
Domestic Revenue 1,681.99 1,656.91 1,187.57
Revenue From Offshore Business 6,886.30 4,341.05 3,313.07

Revenue By Geographic segments:

Americas 10,514.81 7,831.28 5,771.41
Europe 5,320.48 2,975.34 2,250.17
India 1,681.99 1,656.91 1,187.57
Others 1,167.93 800.46 539.32

Cost

Employee Cost 9,001.39 6,111.52 4,384.52
Other Operating Cost 4,544.97 3,468.17 2,550.12
Total Cost (excluding interest
& depreciation) 13,546.36 9,579.69 6,934.64
Profitability
EBIDTA (before other income) 5,138.85 3,684.30 2,813.83
Profit before tax 4,918.28 3,506.62 2,633.69
Profit after tax 4,212.63 2,966.74 1,976.90

Capital Accounts (INR Crore):

Share Capital 97.86 48.93 48.01
Reserves And Surplus 8,752.24 5,949.88 3,429.53
Gross Block 3,197.71 1,951.04 1,170.65
Total Investments 1,256.87 704.62 421.54
Net Current Assets 4,331.11 2,867.18 1,797.09

Earnings per share in Rs.:

EPS - as reported 43.05 60.63 47.37
EPS - Adjusted for Bonus Issue 21.53 15.16 11.84

Headcount (number):

Headcount (including subsidiaries)
as on March 31 89,419 66,480 45,714


RATIO ANALYSIS

Unit Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
2010 2009 2008 2007 2006 2005

Ratios-Financial
Performance:

International
Revenue/Total Revenue % 91.35 92.15 90.96 91.00 87.51 87.82

Domestic Revenue/
Total Revenue % 8.65 7.85 9.04 9.00 12.49 12.18

Employee Cost/
Total Revenue % 50.17 52.07 50.45 48.17 46.08 44.98

Other Operating Cost/
Total Revenue % 20.88 22.15 24.30 24.32 26.15 26.16

Total Cost/Total Revenue % 71.05 74.22 74.75 72.50 72.22 71.14

EBIDTA (before other
income)/Total Revenue % 28.95 25.78 25.25 27.50 27.78 28.86

Profit before tax/
Total Revenue % 27.61 22.11 25.84 26.32 26.44 27.02

Tax/Total Revenue % 3.99 3.02 3.48 3.55 3.84 4.07

Effective Tax
Rate-Tax/PBT % 14.44 13.64 13.45 13.50 14.53 15.07

Profit after tax/
Total Revenue % 23.31 18.90 22.22 22.55 22.37 20.28

Ratios-growth:

International Revenue % 7.02 24.58 21.00 46.49 35.58 -

Total Revenue % 7.97 22.96 21.06 40.87 36.06 -

EBIDTA (before
other Income) % 21.27 25.54 11.14 39.48 30.94 -

Profit after tax % 33.18 4.58 19.31 42.00 50.07 -

Ratios-Balance Sheet:

Debt-Equity Ratio Nos. 0.01 0.04 0.04 0.06 0.02 0.06

Current Ratio Nos. 1.88 2.26 2.24 2.24 2.25 2.24

Days Sales Outstanding Days 71 79 87 84 90 77

Invested Funds/total
assets % 45.62 26.29 28.97 27.03 17.67 17.92

Invested Funds/
total revenue % 28.87 15.76 16.76 13.94 8.43 7.05

Capital expenditure/
total revenue % 3.43 3.95 5.58 6.64 4.69 3.72

Operating cash flows/
total revenue % 24.66 19.45 17.22 18.58 18.76 21.46

Free Cash Flow/Operating
Cash Flow Ratio % 86.07 79.70 67.60 64.25 74.97 82.64

Ratios - per share:

EPS - adjusted for Bonus Rs. 35.67 26.81 25.68 21.53 15.16 11.84

Price Earning Ratio,
end of year Nos. 21.89 10.07 15.79 28.97 31.57 -

Dividend Per Share Rs. 20.00 14.00 14.00 13.00 13.50 11.50

Dividend Per Share
- adjusted for Bonus Rs. 20.00 7.00 7.00 6.50 3.38 2.88

Dividend Payout % 65.45 30.54 31.89 30.74 25.07 27.55

Market Capitalization/
total revenue % 5.09 1.90 3.51 6.53 7.06 -

FINANCIAL PERFORMANCE-UNCONSOLIDATED

Summary:

The total revenues of TCS Limited aggregated Rs.23,044.45 crore in fiscal
2010 as compared to Rs.22,404.00 crore in fiscal 2009, registering a growth
of 2.86%.

In fiscal 2010, the Company's profit before taxes aggregated Rs.6,370.38
crore (Rs.5,139.69 crore in fiscal 2009).

In fiscal 2010, the Company's profit after taxes aggregated Rs.5,618.51
crore (Rs.4,696.21 crore in fiscal 2009).

In fiscal 2010, the Company's earnings per share were Rs.28.61 (Rs.23.95 in
fiscal 2009).

Dividends

Decision on dividend is based on Tata Consultancy Services Limited
(Unconsolidated) financials which excludes the performance of subsidiaries
of TCS Limited. The Board of Directors declares quarterly interim dividends
based on the performance of the Company.

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.

DISCUSSIONS ON FINANCIAL PERFORMANCE-UNCONSOLIDATED

The Management's Discussion and Analysis given below relates to the audited
financial statements of TCS Limited (Unconsolidated). The discussion should
be read in conjunction with the financial statements and related notes for
the year ended March 31, 2010.

The following table gives an overview of the financial results of TCS
Limited (unconsolidated):

For the year ended For the year ended FY 10 vs.
March 31, 2010 March 31, 2009 FY 09

Revenues from % of % of %
operations Rs.Crore Revenues Rs.Crore Revenues Growth

Information technology
and consultancy
services 22232.93 96.48 21,535.75 96.12 3.24

Sale of equipment &
software licences 811.52 3.52 868.25 3.88 (6.53)

Total Revenues 23,044.45 100.00 22,404.00 100.00 2.86

Expenditure:

Employee costs 7,882.43 34.21 7,370.09 32.90 6.95

Overseas business
expenses
(employee cost) 3,900.76 16.93 4,306.25 19.22 (9.42)

Total employee costs 11,783.19 51.13 11,676.34 52.12 0.92

Overseas business
expenses (other than
employee cost) 324.54 1.41 421.63 1.88 (23.03)

Services rendered by
business associates
and others 992.02 4.30 1,019.67 4.55 (2.71)

Operation &
other expenses 3,273.03 14.20 3,265.53 14.58 0.23

Total expenditure 16,372.78 71.05 16,383.17 73.13 (0.06)
Other Income (Net) 177.60 0.77 (456.24) (2.04) -

Profit before interest,
depreciation & taxes 6,849.27 29.72 5,564.59 24.84 23.09

Interest 9.54 0.04 7.44 0.03 28.23

Depreciation 469.35 2.04 417.46 1.86 12.43

Profit before taxes 6,370.38 27.64 5,139.69 22.94 23.94

Provision for taxes:

Income tax expense
(including deferred
tax benefit, fringe
benefit tax and MAT
credit entitlement) 751.87 3.26 443.48 1.98 69.54

Net profit from
operations after taxes 5618.51 24.38 4,696.21 20.96 19.64

Revenues:

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%. Sale of equipment and software licenses was at 3.52% of
revenues in fiscal 2010 (3.88% in fiscal 2009).

Expenditure

Employee costs and overseas business expenses Total employee costs' in
fiscal 2010 was Rs.11,783.19 crore, (Rs.11,676.34 crore in fiscal 2009).
Total employee costs' as percentage of revenues was 51.13% in fiscal 2010
(52.12% in fiscal 2009). This decrease of 0.99% in employee costs as a
percentage of revenues is attributable primarily to:

* higher salaries and incentives to employees in India of 1.09%, due to the
increase in the number of employees

* higher staff welfare expenses of 0.22%

* offset by lower employee allowances to overseas employees of 2.29%
primarily as a result of movement of onsite personnel to offshore projects
during the year

Overseas business expenses (other than employee allowances):

Expenses on this account went down from Rs.421.63 crore in fiscal 2009 to
Rs.324.54 crore in fiscal 2010 mainly due to decrease in travel related
costs by Rs. 85.63 crore primarily on account of lower costs for overseas
business travel. As a percentage of revenues, overseas business expenses
decreased from 1.88% in fiscal 2009 to 1.41% in fiscal 2010. These were
the result of a well laid out cost management process during fiscal 2010.

Services rendered by business associates and others:

These expenses decreased from Rs.1,019.67 crore in fiscal 2009 to Rs.992.02
crore in fiscal 2010. As a percentage of revenues, it went down from 4.55%
in fiscal 2009 to 4.30% in fiscal 2010. The decrease of 0.25% in the fiscal
2010 is attributable to decrease in requirement of business associates in
India.

Operating and other expenses:

Nature of Expenses For the year ended For the year ended
March 31, 2010 March 31, 2009
Rs Crore % of Revenue Rs Crore % of Revenue
Software, hardware and
material costs 888.78 3.86 918.17 4.10

Cost of software licences 366.02 1.59 337.28 1.51
Communication 284.22 1.23 292.77 1.31

Travelling and conveyance
expenses 186.00 0.81 265.35 1.18

Rent 503.90 2.19 492.94 2.20
Legal and professional 93.76 0.41 103.82 0.46
Repairs and Maintenance 141.41 0.61 122.16 0.55
Electricity 183.62 0.80 164.34 0.73

Recruitment &
training expense 78.79 0.34 98.89 0.44
All other expenses 546.53 2.36 469.81 2.10

Total Other Operating
Expenses 3,273.03 14.20 3,265.53 14.58

Operating and other expenses given above, have increased from Rs.3,265.53
crore in fiscal 2009 toRs.3,273.03 crore in fiscal 2010. As a percentage of
revenues, it has decreased from to 14.58% in fiscal 2009 to 14.20% in
fiscal 2010. The decrease of 0.37% in terms of percentage of revenues is
primarily due to:

* net reduction in software, hardware and material purchased & cost of
software licenses by 0.16% due to lower sale of equipment and software
licenses revenues

* reduction in communication costs by 0.08% as at result of increased usage
of Voice over Internet Protocol (VOIP)

* reduction in travelling and conveyance expensed by 0.37% as a result of
increased use of videoconferencing and controls on travel

* reduction in legal and professional fees by 0.05%

* offset by an increase in facility related repairs and maintenance and
electricity costs of 0.13%

* increase in 'other expenses' of 0.27% primarily on account of higher
provision of doubtful debts of 0.48% offset by lower bad debt & advances
provision of 0.08%, lower commission and brokerage charges of 0.07%, lower
printing and stationary costs of 0.03%, lower rates and taxes of 0.03%

Other income

Net other income was a gain of Rs.177.60 crore in fiscal 2010 (loss of
Rs.456.24 crore in fiscal 2009).

The primary reasons for the increase in other income are:

* reduction in the net exchange loss of Rs.205.42 crore in fiscal 2010 as
compared to net exchange loss of Rs.746.11 crore in fiscal 2009

* higher interest income of Rs.196.69 crore in fiscal 2010 (Rs.82.24 crore
in fiscal 2009)

* higher profit on sale of mutual funds and other current investments of
Rs.148.41 crore in fiscal 2010 (Rs.48.98 crore in fiscal 2009)

Forward and options contracts accounting:

Details of Derivative Financial Instruments' are available in Note 26 of
Notes to Accounts (Unconsolidated).

Profit before interest, depreciation and taxes (PBIDT)

The PBIDT in fiscal 2010 was Rs.6,849.27 crore (Rs.5,564.59 crore in fiscal
2009). The profit as a percentage of revenues went up from 24.84% in fiscal
2009 to 29.72% in fiscal 2010. The increase in the PBIDT of 4.88% as a
percentage of revenues during fiscal 2010 is attributable to:

* decrease in 'total employee cost' 0.99%

* decrease in the cost of services rendered by business associates 0.25%

* decrease in overseas business expense other than employee cost 0.47%

* decrease in operationg and other expenses 0.37%

* increase in 'other income'

Interest costs:

Interest costs increased from Rs.7.44 crore in fiscal 2009 to Rs.9.54 crore
in fiscal 2010.

Depreciation:

Depreciation charge increased from Rs.417.46 crore in fiscal 2009 to
Rs.469.35 crore in fiscal 2010.

Depreciation charge was 2.04% of revenues in fiscal 2010 (1.86% in fiscal

2009). The increase in depreciation 0.18% in terms of percentage of
revenues is primarily due to:

* addition to computers resulting in higher depreciation of 0.20%

* addition to freehold building resulting in higher depreciation charge of
0.04%

* addition to office equipment and electrical installation resulting in
higher depreciation charge of 0.04% offset by lower depreciation charge in
fiscal 2010 for:

- lower leasehold improvement resulting in lower depreciation charge of
0.07%

- lower motor cars and furniture and fixtures resulting in lower
depreciation charge of 0.04%

Profit before taxes (PBT):

The PBT in fiscal 2010 was Rs.6,370.38 crore (Rs.5,139.69 crore in fiscal
2009). As a percentage of revenues, the PBT increased from 22.94% in fiscal
2009 to 27.64% in fiscal 2010. The primary reason for the increase in the
PBT of 4.70% as a percentage of revenues is due to:

* increase in PBIDT by 4.88%

* offset by higher depreciation charges of 018%

Provision for taxation:

The tax expense increased from Rs.443.48 crore in fiscal 2009 to Rs.751.87
crore in fiscal 2010. This represented 3.26% of revenues in fiscal 2010
(1.98% in fiscal 2009). The increase in net tax provision of Rs.308.39
crore is primarily attributable to:

* increase in the provision for domestic taxes of Rs. 389.50 crore

* decrease in the provision for overseas taxes of Rs.81.11 crore

Domestic tax increase of Rs.389.50 crore is primarily on account of:

(a) higher current tax of Rs.490.81 crore primarily attributable to

a. expiry of tax holiday for certain STP units (Rs.304.14 crore)

b. increase in Non-STP income (Rs.68.41 crore)

c. increase in Short Term Capital Gain Tax (Rs.39.01 crore)

(b) lower deferred tax expense of Rs.78.30 crore arising primarily out of
higher depreciation of fixed assets Rs.46.95 crore and provision for
doubtful debts of Rs.34.31 crore.

(c) overseas taxes lower by Rs.81.11 crore mainly due to decrease in
overseas branch taxes

Net profit:

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. The improvement of 3.42% is attributable to:

* higher PBT of 4.70%

* offset by higher taxes of 1.28% and discontinuance of fringe benefit tax.

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.

The details of dividends are given below:

2009-10
Number of Dividend Dividend Dividend Total
shares per share Amount Tax Outflow
(Rs.) (Rs.Crore) (Rs. (Rs.
Crore) Crore)

First Interim Dividend 95,72,20,996 2.00 391.44 66.53 457.97

Second Interim
Dividend 1,95,72,20,996 2.00 391.44 66.53 457.97

Third Interim
Dividend 1,95,72,20,996 2.00 391.44 66.53 457.97

Sub-total - - 1174.32 199.59 1373.91

Final Dividend 1,95,72,20,996 4.00 782.89 130.03 912.92

Special Dividend 1,95,72,20,996 10.00 1957.22 325.07 2282.29

Total 1,95,72,20,996 20.00 3914.43 654.69 4569.12


2008-09
Number of Dividend Total
shares per share Outflow
(Rs.) (Rs. Crore)

First Interim Dividend 97,86,10,498 3.00 343.47

Second Interim Dividend 97,86,10,498 3.00 343.47

Third Interim Dividend 97,86,10,498 3.00 343.47
Sub-total - - 1030.41
Final Dividend 97,86,10,498 5.00 572.49
Special Dividend 97,86,10,498 - -
Total 97,86,10,498 14.00 1602.90

Proposed dividend on redeemable preference shares of Rs.100 crore is Rs.17
crore. The dividend payable on the preference shares is 1% fixed component
and a variable component linked to the dividends paid out to the equity
shareholders.

FINANCIAL POSITION - UNCONSOLIDATED

Share capital
Amount in Rs. Crore
As at March 31, 2010 As at March 31, 2009

Authorised Share Capital 325.00 220.00

Issued, Subscribed and
Paid-up Share Capital 295.72 197.86

The issued, subscribed and paid-up share capital as at March 31, 2009
comprised Rs.97.86 crore of equity shares of face value of Re. 1/- each and
Rs.100.00 crore of cumulative redeemable preference shares of face value of
Re.1/- each.

The Company increased the authorised share capital to Rs.325.00 crore in
fiscal 2010 to enable the issue of bonus shares in the ratio of 1:1. The
bonus share recommendation of the Board of Directors was approved by the
shareholders through postal ballot on June 12, 2009. Post bonus issue, the
issued, subscribed and paidup share capital has gone up to Rs.295.72 crore.

Reserves and surplus

As at March 31, 2010 the balance in the securities premium account was
Rs.1,918.47 crore, post transfer of Rs.97.86 crore to share capital account
consequent to issue of bonus shares (Rs.2,016.33 crore as at March 31,
2009).

General Reserve as at March 31, 2009 was Rs.1,864.29 crore. On transfer of
10% of the profit after tax for fiscal 2010 amounting to Rs.561.85 crore
(previous fiscal Rs.469.62 crore), the general reserve as at March 31, 2010
increased to Rs.2,426.14 crore.

Balance in the profit and loss account as at March 31, 2010 was at
Rs.10,458.13 crore (Rs.9,990.41 crore as at March 31, 2009).

Foreign currency translation reserve was Rs.94.98 crore as at March 31,
2010 (Rs.99.22 crore as at March 31, 2009).

Balance in hedging reserve account as at March 31, 2010 showed a loss of
Rs.76.82 crore (loss of Rs.721.86 crore as at March 31, 2009). This is in
conformity with the provisions laid down in Accounting Standard 30 (AS 30).

Reserves and surplus as at March 31, 2010 was Rs.14,820.90 crore, an
increase of 11.87% over Rs.13,248.39 crore as at March 31, 2009 due to
accretion of profits for fiscal 2010.

Loans:

Secured loans as at March 31, 2010 aggregated Rs.29.25 crore (Rs.32.63
crore as at March 31, 2009).

This decrease is primarily due to:

* reduction in flnance lease obligations of Rs.29.25 crore undertaken as at
March 31, 2010 (Rs.31.18 crore as at March 31, 2009) which are

* (Rs.31.18 crore as at March 31, 2009) which are secured against fixed
assets

* bank overdrafts as at March 31, 2010 aggregating Rs. Nil' crore (Rs.1.45
crore as at March 31, 2009) which were secured against domestic book debts

Unsecured loans stood at Rs.6.49 crore as at March 31, 2010 (Rs.8.41 crore
as at March 31, 2009). Out of the unsecured loans, Rs.1.25 crore is
repayable within one year (Rs.1.91 crore as at March 31, 2009).

Deferred tax liability (net) & deferred tax assets (net):

As stated in the accounting policy (see notes to accounts, schedule Q1
(k)), deferred tax assets and liabilities are offset, tax jurisdiction-
wise. Schedule E' brings out details of component-wise deferred tax
balances where the net values result into liabilities or assets,
jurisdiction-wise. A combined view of all deferred tax assets and
liabilities, across all tax jurisdictions is summarised below.

Amount in Rs. Crore
Liability Asset Increase/
Decrease

As at As at As at As at
March March March March
31, 2010 31, 2009 31, 2010 31, 2009

Foreign branch
profit tax (net
liability) 43.97 108.86 - - (64.89)

Depreciation
(net liability) 2.24 61.54 - - (59.30)

Depreciation
(net asset) - - (64.82) 0.86 (65.68)

Employee
benefit (net
liability) - (31.13) - - 31.13

Employee
benefit (net asset) - - 36.00 - 36.00

Provision for
doubtful debts
(net liability) - (19.46) - - 19.46

Provision for
doubtful debts
(net asset) - - 63.34 - 63.34

Others (net
liability) (6.11) (16.76) - - 10.65

Others
(net asset) - - 18.61 2.79 15.82

Total asset/
(liability) 40.10 103.05 53.13 3.65 (13.47)

Fixed assets:

Addition to the gross block (excluding CWIP) in fiscal 2010 amounted to
Rs.571.42 crore (Rs.1,183.19 crore in fiscal 2009). The significant
additions in fiscal 2010 were:

* land and bulldings of Rs.161.65 crore in fiscal 2010 (Rs.430.91 crore in
fiscal 2009)

* leasehold improvements of Rs.49.45 crore in fiscal 2010 (Rs.140.78 crore
in fiscal 2009)

* office equipment, electrical installations and (Rs.329.51 crore in fiscal
2009)

* office equipment, electrical Installations and furniture and fixtures of
Rs.178.00 crore in fiscal 2010 (Rs.278.87 crore in fiscal 2009)

The additional square footage of space developed by the Company during
fiscal 2010 is shown in the table below:

Location Area in Sq. Ft.

FY 2010
Chennai 266,043
Hyderabad 244,657
Mumbai 660,859
Noida 64,000
Total 1,235,559

The amount of CWIP of Rs.940.72 crore as at March 31, 2010 (Rs.685.13 crore
as at March 31, 2009) mostly relates to construction/improvement of
facilities which are expected to be ready for use during fiscal 2011 and
beyond.

The Company made contractual commitments to vendors who are executing
various infrastructure projects. The estimated amount of such contracts
remaining to be executed on capital account was Rs.1,115.02 crore as at
March 31, 2010 (Rs.637.87 crore as at March 31, 2009).

The number of seats available in India as at March 31, 2010 was 109,105
(101,623 seats as at March 31, 2009).

Investments:

Summary of the Company's investments:

Amount in Rs. Crore

As at As at
March March
31, 2010 31, 2009
Trade Investments, Bonds
and Debentures 5,769.93 4,530.11
Investments in Mutual
Funds 2,123.46 1,410.42
Total Investments 7,893.39 5,940.53

Less: Provision for
Dimunition in value of
Investments - 4.50

Net Investments 7,893.39 5,936.03

The Company had been investing in various mutual funds. These are typically
investments in short term debt funds to gainfully use the excess cash
balances with the Company.

Investments in mutual funds aggregated Rs.2,123.46 crore as at March 31,
2010 (Rs.1,410.42 crore as at March 31, 2009), an increase of Rs.713.04
crore. While investing in short term instruments, the Company balances tax
efficient returns with risks involved in such investments. Consequently,
there has been an increase in investments in bank fixed deposits of
duration greater than three months by Rs.1972.77 crore during the current
fiscal. The balance in deposits with scheduled banks stood at Rs.3,098.10
crore as at March 31, 2010 (Rs.1,125.33 crore as at March 31, 2009).

During the fiscal 2010 the Company invested in unquoted debentures and has
made the following trade related investments/liquidations:

Investments/Divestitures Details

Investment in Tata Additional investment in
Consultancy Services Canada Inc. equity - Rs.31.25 crore

Investment in Tata Conversion of existing
Consultancy Services, term loan into equity -
Morocco SARL AU Rs.8.17 crore

Additional investment in Additional investment -
TCS e-Serve Rs.4.05 crore

Liquidation of Tata The Company was
Infotech (Singapore) Pte. voluntarily liquidated
Limited

Inventories:

The Company had inventories of Rs.6.78 crore as at March 31, 2010 (Rs.16.95
crore as at March 31, 2009) at its Goa manufacturing plant. The inventory
constitutes raw materials, components, sub assemblies and finished goods.

Current assets, loans and advances:

Unbilled Revenues:

Unbilled revenues comprise revenues recognised in relation to efforts
incurred on fixed-price-fixed-time contracts and time and material
contracts not billed as of the year-end.

Unbilled revenues were at Rs.646.96 crore as at March 31, 2010 (Rs.817.06
crore as at March 31, 2009) representing 2.81% of the revenues for fiscal
2010 (3.65% for fiscal 2009).

Sundry debtors:

Sundry debtors as at March 31, 2010 aggregated Rs.3,332.20 crore
(Rs.3,732.78 crore as at March 31, 2009).

Provision for bad and doubtful debts in fiscal 2010 was Rs.258.04 crore
(Rs.110.08 crore in fiscal 2009). The amounts considered bad and doubtful
as a percentage of total revenues was 1.12% as at March 31, 2010 (0.49% as
at March 31, 2009).

Sundry debtors as at March 31, 2010 were 14.46 % of revenues (16.66 % as at
March 31, 2009).

Days Sales Outstanding (DSO) improved by 8 days, from 61 days as at March
31, 2009 to 53 days as at March 31, 2010.

Cash and bank balances:

The Company had cash and bank balances of Rs.3,396.16 crore as at March 31,
2010 (Rs.1,605.26 crore as at March 31, 2009). The balances with scheduled
banks (including bank deposits and cash in transit) in India aggregated
Rs.3,214.05 crore as at March 31, 2010 (Rs.1,205.58 crore as at March 31,
2009). This increasein deposits with scheduled banks is in line with the
investment strategy adopted by the Company. The balances with foreign banks
were Rs.181.39 crore as at March 31, 2010 (Rs.398.55 crore as at March 31,
2009).

Loans and advances:

Loans and advances as at March 31, 2010 were Rs.3,385.11 crore (Rs.2,966.98
crore as at March 31, 2009).

Significant items of loans and advances are:

* advances recoverable in cash or kind or for value to be received of
Rs.1,538.62 crore as at March 31, 2010 (Rs.1,314.90 crore as at March 31,
2009).

* MAT credit entitlement of Rs.1,039.03 crore as at March 31, 2010
(Rs.775.14 crore as at March 31, 2009)

* loans and advances to subsidiary companies of Rs.490.88 crore as at March
31, 2010 (Rs.536.79 crore as at March 31, 2009)

* loans and advances to employees of Rs.133.08 crore as at March 31, 2010
(Rs.123.52 crore as at March 31, 2009)

* advance tax [including refunds receivable (net)], of Rs.183.50 crore as
at March 31, 2010 (Rs.216.63 crore as at March 31, 2009)

Current liabilities:

Current liabilities went down to Rs.3,312.64 crore as at March 31, 2010 as
compared Rs.3,513.88 crore as at March 31, 2009. This decrease is primarily
due to:

* higher sundry creditors of Rs.2,028.27 crore as at March 31, 2010
(Rs.1,498.19 crore as at March 31, 2009)

* lower advance billings and deferred revenues of Rs.492.15 crore as at
March 31, 2010 (Rs.521.74 crore as at March 31, 2009)

* lower other liabilities of Rs.278.75 crore (Rs.1,081.67 crore as at March
31, 2009). Other liabilities include fair values of foreign exchange
forward and currency option contracts of Rs.115.92 crore as at March 31,
2010 (Rs.638.18 crore as at March 31, 2009)

Provisions:

Provisions made towards taxes, employee retirement benefits, proposed
dividend, tax on dividend and warranties aggregated Rs.3,926.61 crore as at
March 31, 2010 (Rs.1,328.99 crore as at March 31, 2009).

The increase is mainly attributable to:

* higher proposed final dividend on equity shares of Rs.2,740.11 crore as
at March 31, 2010 (Rs.489.31 crore as at March 31, 2009)

* higher tax on dividend of Rs. 457.92 crore as at March 31, 2010 (Rs.84.35
crore as at March 31, 2009)

* lower current income taxes (net) of Rs. 262.39 crore as at March 31, 2010
(Rs.339.73 crore as at March 31, 2009)

CASH FLOW - UNCONSOLIDATED

The Company's growth has been financed largely by cash generated from
operations. The Company has sufficient cash generated from operations for
meeting its working capital requirements as well as the requirements for
capital expenditure. In addition, the Company has short-term working
capital facilities with various banks.

Banking and financing arrangements:

As at March 31, 2010, the Company had available lines of credit with
multiple bankers aggregating Rs.1,920.00 crore interchangeable between
fund-based and non-fund based limits (Rs.2,080.00 crore as at March 31,
2009). As at March 31, 2010 the Company had utilised Rs.809.49 crore of
these limits (Rs.584.42 crore utilized as at March 31, 2009). The
available unutilised facility as at March 31, 2010 was Rs.1,110.51 crore
(March 31, 2009 was Rs.1,495.58 crore). In addition the Company had a
separate, additional one-off banking limit of GBP 75 million.

Cash flow summary:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

Cash and cash equivalents
at beginning of the year 540.65 398.79
Net cash provided by
operating activities 6,264.74 4913.48
Net cash used in investing
activities (4,556.64) (3,185.34)
Net cash used in financing
activities (1,969.65) (1,604.49)
Net increase/(decrease) in
cash and cash equivalents (261.55) 123.65

Exchange difference on
translation of foreign
currency cash and cash
equivalents 14.18 18.21

Cash and cash equivalents
at end of the year 293.28 540.65

Deposits with original
maturity over three months 3,097.97 1,060.16

Restricted Cash 4.91 4.45

Cash and Bank balance at
the end of the year as per
Schedule J' 3,396.16 1,605.26

Cash flow from operations:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009
Profit before taxes and
exceptional items 6,370.38 5,139.69
Add: Depreciation 469.35 417.46
Others (210.52) (243.35)
Operating Profit before
Working Capital Changes 6,629.21 5,313.80
Effect of Working Capital Changes 807.93 399.10
Cash Generated from Operations 7,437.14 5,712.90
Tax Payments Made (1,172.40) (799.42)
Net Cash Provided by Operations 6,264.74 4913.48

In fiscal 2010 the Company generated net cash of Rs.6,264.74 crore
(Rs.4,913.48 crore in fiscal 2009) from operating activities. Items
contributing to generation/ use of cash from operating activities relating
to working capital changes are given in the table below:

Amount in Rs. Crore

Fiscal 2010 Fiscal 2009

(Increase)/Decrease in Inventories 10.17 0.24

(Increase)/Decrease in
Unbilled revenues 164.15 53.12

(Increase)/Decrease in
Sundry debtors 169.79 68.08

(Increase)/Decrease in Loans
and advances (144.51) (198.73)

Increase/(Decrease) in
Current liabilities and
provisions 608.33 476.39

Effect of Working Capital
Changes 807.93 399.10

Cash flow from investing activities:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

(Purchase) of Fixed Assets (816.27) (956.25)

(Purchase) of Debentures/
Trade Investments (1200.00) (2451.98)

(Loans) given to Subsidiaries (Net) 89.40 (29.28)

(Purchase) / sale of Other
Investments including
dividends reinvested (564.63) 1074.26

(Purchase) of Fixed Deposits
with Banks having maturity
more than 3 months (2037.81) (935.00)

Other (27.33) 112.91

Net cash used for
investing activities (4556.64) (3185.34)

In fiscal 2009 the Company used Rs.4,556.64 crore on investing activities
(Rs.3,185.34 crore in fiscal 2009).

The significant items in fiscal 2010 were:

* purchase of fixed assets Rs.816.27 crore (Rs.956.25 crore in fiscal 2009)

* purchase of (a) 1000 4.50% non-convertible debentures for Rs. 1000 crore
and (b) 2000 4.75% non-convertible debentures for Rs. 200 crore in fiscal
2010 (Rs.2,451.98 crore primarily for the acquisition of shares in
CitiGlobal Services Limited in fiscal 2009)

* purchase of mutual fund Investments of Rs. 564.63 crore (Rs.1,074.26
crore redeemed in fiscal 2009) Rs.89.40 crore (Rs.29.28 crore given to
subsidiaries in fiscal 2009)

* investments in bank fixed deposits of maturity greater than three months
Rs.2,037.81 crore (Rs.935.00 crore in fiscal 2009)

* other cash outflows related to investing activities like proceeds from
sale/transfer of trade investments, inter-corporate deposits
placed/refunded, dividends received fromsubsidiaries and from other
investments and interest received aggregated to cash use of Rs.27.33 in
fiscal 2009)

Cash flow from financing activities:

Amount in Rs. Crore
Fiscal 2010 Fiscal 2009

Proceeds/(Repayments) from/of Borrowings (net) (5.30) 5.88

Dividend paid (including
dividend distribution tax) (1954.57) (1602.88)

Interest paid (9.78) (7.49)

Net Cash used in Financing Activities (1969.65) (1604.49)

In fiscal 2010 the significant item of cash used in financing activities
was payment of dividend Rs.1,954.57 crore including dividend tax
(Rs.1,602.88 crore in fiscal 2009).

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate systems of internal control commensurate
with its size and the nature of its operations. These have been designed to
provide reasonable assurance with regard to recording and providing
reliable financial and operational information, complying with applicable
statutes, safeguarding assets from unauthorised use or losses, executing
transactions with proper authorisation and ensuring compliance of corporate
policies.

The Company has a well defined delegation of power with authority limits
for approving revenue as well as expenditure. Processes for formulating and
reviewing annual and long term business plans have been laid down. The
Company uses a state-of-the-art ERP system to record data for accounting
and management information purposes and connects to different locations for
efficient exchange of information. It has continued its efforts to align
all its processes and controls with global best practices.

The Company has appointed Ernst and Young Private Limited to oversee and
carry out internal audit of the Company's activities. The audit is based on
an Internal Audit Plan, which is reviewed each year in consultation with
the Statutory Auditors (M/s. Deloitte Haskins & Sells) and the Audit
Committee. In line with international practice, the planning and conduct of
internal audit is oriented towards the review of controls in the management
of risks and opportunities in the Company's activities. The Internal Audit
process is designed to review the adequacy of internal control checks in
the system and covers all significant areas of the Company's operations
such as software delivery, accounting and finance, procurement, employee
engagement, travel, insurance, IT processes in the Company, including
significant subsidiaries and selected foreign branches. Safeguarding of
assets and their protection against unauthorised use are also a part of
these exercises.

The Company has an Audit Committee, the details of which have been provided
in the Corporate Governance Report. The Audit Committee reviews Audit
Reports submitted by the Internal Auditors. Suggestions for improvement
are considered and the Audit Committee follows up on the implementation of
corrective actions. The Committee also meets the Company's statutory
auditors to ascertain, inter alia, their views on the adequacy of internal
control systems in the Company and keeps the Board of Directors informed of
its major observations from time to time.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report
relating to the Company's objectives, projections, outlook, expectations,
estimates and others may constitute forward looking statements' within the
meaning of applicable laws and regulations. Actual results may differ from
such expectations, projections and so on whether express or implied.
Several factors could make significant difference to the Company's
operations. These include climatic conditions and economic conditions
affecting demand and supply, government regulations and taxation, natural
calamities and so on over which the Company does not have any direct
control.