Annual Report - TCS - 2010-2011

TATA CONSULTANCY SERVICES LIMITED

ANNUAL REPORT 2010-2011

DIRECTOR'S REPORT

To
The Members,

The Directors submit the Annual Report of the Company along with the
audited statement of accounts for the financial year ended March 31, 2011.

1. Financial Results:

(Rs. crores)
Unconsolidated
2010-2011 2009-2010

(i) Income from Sales and Services 29275.41 23044.45

(ii) Other Income (net) 494.73 177.60

(iii) Total Income 29770.14 23222.05

(iv) Operating Expenditure 20511.88 16372.78

(v) Profit before Interest, Depreciation and Tax 9258.26 6849.27

(vi) Interest 20.01 9.54

(vii) Depreciation and Amortisation 537.82 469.35

(viii) Profit before Taxes 8700.43 6370.38

(ix) Provision for Taxes 1130.44 751.87

(x) Minority Interest and Share of Loss of
Associates - -

(xi) Net Profit for the Year 7569.99 5618.51

(xii) Balance Brought Forward from Previous Year 10458.13 9990.41

(xiii) Amount Available for Appropriation 18028.12 15608.92

Appropriations:

(a) Interim Dividends on Equity Shares 1174.32 1174.32

(b) Proposed Final Dividend on Equity Shares 1565.78 782.89

(c) Proposed Special Dividend on Equity Shares - 1957.22

(d) Proposed Total Dividend on Equity Shares 2740.10 3914.43

(e) Proposed Dividend on Redeemable Preference
Shares 11.00 17.00

(f) Tax on Dividends 450.82 657.51

(g) General Reserve 757.00 561.85

(h) Balance carried to Balance Sheet 14069.20 10458.13

(1 crore = 10 million)


Consolidated
2010-2011 2009-2010

(i) Income from Sales and Services 7324.51 30028.92

(ii) Other Income (net) 604.00 272.07

(iii) Total Income 37928.51 30300.99

(iv) Operating Expenditure 26146.15 21334.37

(v) Profit before Interest, Depreciation and Tax 11782.36 8966.62

(vi) Interest 26.48 16.10

(vii) Depreciation and Amortisation 735.26 660.89

(viii) Profit before Taxes 11020.62 8289.63

(ix) Provision for Taxes 1830.83 1196.97

(x) Minority Interest and Share of Loss of
Associates 121.75 92.02

(xi) Net Profit for the year 9068.04 7000.64

(xii) Balance Brought Forward from Previous Year 13604.84 11835.03

(xiii) Amount Available for Appropriation 22672.88 18835.67

Appropriations:

(a) Interim Dividends on Equity Shares 1174.32 1174.32

(b) Proposed Final Dividend on Equity Shares 1565.78 782.89

(c) Proposed Special Dividend on Equity Shares - 1957.22
(d) Proposed Total Dividend on Equity Shares 2740.10 3914.43

(e) Proposed Dividend on Redeemable Preference
Shares 11.00 17.00

(f) Tax on Dividends 459.15 663.18

(g) General Reserve 827.58 636.22

(h) Balance carried to Balance Sheet 18635.05 13604.84

(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. 8 per share for the
year 2010-11 taking the total dividend to Rs. 14 per share (previous year
Rs. 10 per share excluding special dividend of Rs. 10 per share) on the
capital of 195,72,20,996 Equity Shares of Rs. 1 each. The final dividend on
the Equity Shares, if approved by the members would involve a cash outflow
of Rs. 1,819.78 crores including dividend tax. The total cash outflow on
account of dividend including dividend tax for the year 2010-11 including
interim dividends already paid, would aggregate Rs. 3,189.14 crores
resulting in a payout of 42.13% 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 Eleven paise (Rs. 0.11) per share on 100,00,00,000 Redeemable
Preference Shares of Rs. 1 each for the financial year 2010-11.

3. Transfer to Reserves:

The Company proposes to transfer Rs. 757.00 crores to the General Reserve
out of the amount available for appropriations and an amount of
Rs.14,069.20 crores is proposed to be retained in the Profit and Loss
Account.

4. Company's Performance:

Financial Year 2010-11 marked a strong resurgence in volume and demand
growth post the financial crisis. This growth was led by developed markets
of the United States and Europe with strong contributions from Asia
Pacific, Middle East and Africa and was secular across all industries and
markets. The second half of the year also witnessed an uptick in pricing
for the first time since September 2008. The Company has registered a
strong broad based sequential growth across all key markets and customer
segments.

On consolidated basis for the year 2010-11, revenues at Rs. 37,324.51
crores were higher by 24.30% over the previous year's revenues of
Rs.30,028.92 crores. Operating profit (profit before taxes excluding other
income) at Rs. 10,416.62 crores was higher by 29.92% over the previous
year's operating profit of Rs. 8,017.56 crores. Net profit for the year at
Rs. 9,068.04 crores was higher by 29.53% over the previous year's net
profit of Rs. 7,000.64 crores.

On unconsolidated basis, revenues at Rs. 29,275.41 crores for the year
2010-11 were higher by 27.04% over the previous year's revenues of
Rs.23,044.45 crores. Operating profit (profit before taxes excluding other
income) at Rs. 8,205.70 crores was up 32.50% from the previous year's
operating profit of Rs. 6,192.78 crores. Net profit for the year at
Rs.7,569.99 crores was higher by 34.73% than the previous year's net profit
of Rs. 5,618.51 crores.

5. International Credit Rating:

The Company continues to have A3 investment-grade issuer rating as well as
an indicative foreign currency debt rating of Baa1, with a stable outlook
from Moody's Investors Services. The rating is not for any specific debt
issuance of the Company.

Standard and Poor's Ratings Services has assigned to the Company its BBB
positive corporate credit rating with outlook as stable.

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

6. Strategic Acquisitions and Alliances:

The strategic acquisitions and alliances during the year were as follows:

(i) MahaOnline Limited:

The Company has entered into an Agreement with the Government of
Maharashtra pursuant to which a new subsidiary company, MahaOnline Limited
(MahaOnline) has been setup on July 28, 2010 with equity participation from
TCS and Government of Maharashtra. MahaOnline provides online internet-
based citizen services to the residents in Maharashtra. This citizen
service portal is integrated with DigiGov - a state-of-the-art e-Governance
solution developed by TCS.

(ii) Diligenta 2 Limited (formerly known as Unisys Insurance Services
Limited):

On August 31, 2010, Diligenta Limited, a majority owned subsidiary,
acquired the entire share capital of Unisys Insurance Services Limited
(UISL), which provides life and pensions services to its clients in the UK.
On this acquisition UISL was renamed as Diligenta 2 Limited. This has
secured Diligenta's position as a leading service provider in the UK's life
and pensions BPO market. The number of policies now administered by
Diligenta has risen from 3.6 million to over 5 million.

(iii) MS CJV Investments Corporation:

On October 4, 2010, Tata America International Corporation - a wholly owned
subsidiary, acquired 100% share capital of MS CJV Investments Corporation.
Consequently, the group holding in Tata Consultancy Services (China) Co.,
Ltd. has increased from 65.94% to 74.63%.

(iv) Retail FullServe Limited (formerly known as SUPERVALU Services India
Private Limited):

On October 8, 2010, the Company acquired 100% equity share capital of
SUPERVALU Services India Private Limited from SUPERVALU Inc., one of the
largest grocery retailers in North America. Retail FullServe Limited
specialises in providing complete IT and IT-enabled services to the Retail
industry. TCS has signed a multi-year agreement with SUPERVALU Inc. for
full services engagement. This acquisition has strengthened the retail
industry segment of the Company through integration of IT, IT
infrastructure and BPO services of Retail FullServe Limited.

7. Human Resource Development:

TCS is the largest private sector employer in India with total employee
strength of 1,98,614 including its subsidiaries as at March 31, 2011.

A robust manpower planning process ensures that all steps from business
requirements to sourcing and staffing are seamlessly aligned. Our distinct
people integration model, not only ensures faster time-to-productivity, but
it also integrates culturally diverse professionals into the organisation
by fostering a behaviour based on a shared set of common values. This
enabled the organisation to assimilate a gross addition of 69,685 employees
(including subsidiaries).

The strategic initiatives for talent development through learning and
development programs and experiential learning ensured that the Company had
right competencies in its workforce to meet the business demand. High
utilisation rates were sustained throughout the year, 83.10% excluding
trainees and 76.20% including trainees as at March 31, 2011, helping to
deliver better financial results.

Continued focus on talent engagement, competency development, role and
career progression and benchmarked compensation and benefits for our
employees helped the Company to attract and retain the best talent across
the globe as well as build a pipeline of leaders to meet its future
requirements. The Company has been successful in building a performance
oriented culture with high levels of engagement and empowerment in an
environment of teamwork.

A well defined process to review its HR policies and processes ensured that
the Company complied with the regulatory requirements of the countries
where it operates. The strategy to have a diverse workforce catering to its
global business requirements saw a gross addition of 7,593 employees
outside India (including subsidiaries) taking the count of non-Indian
nationals (including subsidiaries) to 13,665 from 99 nationalities. The
percentage of women working for the Company is 30.30%.

8. Quality Initiatives:

TCS has been assessed enterprise-wide, at the highest maturity Level 5 of
the Capability Maturity Model Integration(R) for CMMI(R)-DEV (Development)
and CMMI(R)-SVC (Services) models. With this achievement, TCS has set a new
benchmark as the first publicly stated recipient to achieve a multiple
simultaneous appraisal against two constellations of the CMMI(R) model. TCS
is also the first organisation in the world, to be appraised at Level 5 of
the CMMI(R)-SVC model, which underscores the maturity of the firm's fast
growing Business Process Outsourcing (BPO) and Infrastructure Services
business.

Notes:

(R) - Registered

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). TCS also continues to
maintain domain specific quality certifications AS 9100 (for Aerospace
Industry), ISO 13485 (for Medical Devices) and TL 9000 (for Telecom
Industry) thus further reinforcing the industry domain focus within the
organisation.

TCS was certified enterprise-wide for ISO 14001:2004 (Environmental
Management) and OHSAS 18001:2007 (Occupational Health and Safety
Management) certifications. These certifications demonstrate TCS' strong
commitment to the environment and the occupational health and safety of its
associates and business partners; and helps convey this to all its
stakeholders, including customers.

The above certifications reaffirm TCS' commitment to achieve the highest
standards of quality while focusing on constantly improving quality and
processes in a dynamic environment. The cornerstone of these certifications
is the in-house developed integrated Quality Management System (iQMS) - a
vibrant, process-driven, people-oriented and customer-focused quality
management system which is continuously evolving to cater to the
requirements of TCS' varied business offerings and is the backbone
supporting the Global Network Delivery Model (GNDMTM).

9. Corporate Sustainability:

In keeping with the Tata tradition of giving back to the society, Corporate
Sustainability (CS) lies at the heart of TCS' corporate culture. The
guiding principle of TCS' CS programmes is 'Impact through Empowerment'
where empowerment is a process of strengthening the future today so that
risk is minimised, value created and certainty experienced. TCS focuses on
empowering the community, especially through work with youth, women and
children. Affirmative action directed to less privileged communities is one
of the highlight of TCS' activities under CS.

Education, Health and Environment are the core themes for TCS' CS programs.
Over 6,600 TCS volunteers and families provided education and skills
development to 10,225 children and partnered with 65 institutes in China,
Ecuador, India, South Africa and UK. Over 4,000 villagers across Delhi,
Maharashtra, Orissa and Tamil Nadu were benefited through rural development
initiatives.

Major CS Initiatives through Information Technology (IT):

* Med Mantra: An integrated Hospital Management System along with the
necessary IT infrastructure including a comprehensive and fully integrated,
web-based solution, 'Med Mantra' has been implemented free of cost for the
Cancer Institute at Chennai.

* Computer based Functional Literacy programme: TCS' Computer based
Functional Literacy programme that was first launched in the year 2000, has
by now made around 1,50,000 persons literate. TCS is partnering the
National Literacy Mission Authority to spread literacy under the Saakshar
Bharat programme.

International CS initiatives:

* North America: During the year, TCS North America has made donations in
excess of $500,000 for a variety of causes to organisations like the
American Cancer Society, Habitat for Humanity, Juvenile Diabetes Research
Foundation, Toys R Us Children's Fund, and the National Underground
Railroad Freedom Center. Approximately 10% of the associates participated
in the various initiatives across North America throughout the year.

TCS' 'goIT' program that has spread to 12 schools over 2 years, encourages
local students to engage in computer science education and a career path
through in-school workshops and a summer robotics camp hosted at the TCS
Seven Hills Park campus in Ohio. This program has received several
community and government awards including the 2010 Investing in People
Award by the Workforce One Investment Board of Southwest Ohio.

* UK and Ireland: TCS is working with the UK Government Department for
International Development to deploy its capabilities in development
activities. TCS UK and Ireland donated around Pounds 200,000 during the
year for influencing change in the marketplace, workplace and environment
as well as supporting more than 200 charities in the areas of health and
education.

Over the past 3 years, TCS has been working with the UK Government
Department for Education and the British Council to develop 300 Global
Fellows, who act as ambassadors to 3,000 UK secondary schools. Furthermore,
TCS partners the 'Wings of Hope' scheme to help UK students develop
business skills and gain an understanding of education in India and Malawi.
In addition, TCS has developed an IT entrepreneur scheme with the local
authority for Carlow University, Ireland.

* Europe: Activities to spread awareness and raise funds for treatment of
multiple sclerosis and breast cancer were carried out across Europe during
the year. For contributing to the Haiti earthquake relief fund, TCS
employees in Switzerland collaborated with the client of Swiss Re. TCS
Belgium employees engaged in 'Discover Your Talent' along with 6 other
companies to create employability for immigrant children.

* China: As part of 'Operation Smile', TCS China participated in a charity
auction and donated RMB 26,000 to help needy cleft lip and palate children
to undergo surgery.

* Australia: Following the 2011 floods in Queensland, TCS initiated a
collection drive to contribute AUD $30,000 towards the Queensland Flood
Disaster Fund.

* Chile: Subsequent to the earthquake in Chile in February 2010, TCS
donated 5 desalination plants and 2,000 water purifiers worth around one
million US Dollars.

Significant Recognition for CS Activities:

* Commendation certificate for 'Significant Achievement' in CII-ITC
Sustainability Awards 2010.

* TCS included in Dow Jones Sustainability World Index.2010 as one of the
three Indian companies.

10. Awards/Recognitions:

* TCS rated Level A+ for its Sustainability Report by Global Reporting
Initiative.

* TCS wins Certificate of Commendation for Significant Achievement for
Large Businesses at CII-ITC Sustainability Awards 2010.

* DataQuest Best Employer Award in India.

* 'Top Employer ICT Netherlands' with certification for Excellence in Human
Resources practices and 5 stars (highest in the industry) in three
categories.

* Britain's Top Employers for 2011 by the CRF Institute (formerly known as
Corporate Research Foundation).

* Recruiting and Staffing Best in Class Awards (RASBIC) in four categories
for the fourth year in a row.

11. Corporate Governance Report and Management Discussion and Analysis
Statement:

Corporate Governance Report and Management Discussion and Analysis
statement are attached to this Report.

12. 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 2010-11, the
applicable Accounting Standards have been followed and there are no
material departures;

(ii) they have selected such accounting policies 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;

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

13. Subsidiary Companies and Consolidated Financial Statements:

The Company had 55 subsidiaries at the beginning of the year.

Five subsidiaries namely, MahaOnline Limited, Diligenta 2 Limited, MS CJV
Investments Corporation, Retail FullServe Limited and CMC eBiz Inc. were
set up/acquired during the year.

The following subsidiaries were merged during the year with other
subsidiaries of the Company:

* Exegenix Research Inc. and ERI Holdings Corp. were merged with Tata
Consultancy Services Canada Inc.

* Custodia De Documentos Interes Limitada, Syscrom SA and Tata Consultancy
Services Chile SA were merged with Tata Consultancy Services BPO Chile SA
and subsequently the name of the merged entity was changed to Tata
Consultancy Services Chile SA.

Financial Network Services (H.K.) Limited was liquidated and de-registered
during the year.

Consequently, the total number of subsidiaries as on March 31, 2011 is 54.
There has been no material change in the nature of the business of the
subsidiaries. A statement containing brief financial details of the
subsidiaries is included in the Annual Report.

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 Statements have been prepared in
accordance with the relevant Accounting Standards as prescribed under
Section 211(3C) of the Companies Act, 1956 ('Act'). These financial
statements disclose the assets, liabilities, income, expenses and other
details of the Company, its subsidiaries and associate companies.

Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the Balance Sheet, Profit and Loss Account
and other documents of the subsidiary companies with the Balance Sheet of
the Company. A statement containing brief financial details of the
Company's subsidiaries for the financial year ended March 31, 2011 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. 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 Company shall furnish a copy of details of annual accounts
of subsidiaries to any member on demand.

14. 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.

15. Directors:

Platform based BPO is one of the Company's strategic initiatives to drive
non-linear growth in the future. Diligenta Limited, the Company's
subsidiary in the United Kingdom addresses the life and pension business
segment by providing BPO services using the BaNCS platform built by the
Company and remains one of the key components of this strategy. Mr. Phiroz
Vandrevala has taken over as the Managing Director and Vice Chairman of
Diligenta Limited to drive this business and its execution globally.
Pursuant to his appointment in Diligenta Limited, he has ceased to be an
Executive Director of the Company. The Company will continue to avail the
services of Mr. Vandrevala as a Director on the Board of the Company in
Non-Executive, Non-Independent capacity with effect from May 13, 2011. As
per the provisions of Section 260 of the Companies Act, 1956, ('Act'), Mr.
Vandrevala 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. Vandrevala proposing
his appointment as a Director of the Company.

Mr. Aman Mehta, Mr. V. Thyagarajan and Mr. S. Mahalingam, Directors, retire
by rotation and being eligible have offered themselves for re-appointment.

16. 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.

17. Particulars of employees:

The information required under Section 217(2A) of the Companies Act, 1956
and the Rules made thereunder, is provided in Annexure forming part of the
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 copy of the same may
write to the Company Secretary.

18. 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.

19. Acknowledgements:

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

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

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

On behalf of the Board of Directors,

Place: Mumbai R.N. Tata
Dated: May 20, 2011 Chairman

Annexure to the Directors' 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' R&D organisation is focused on creating intellectual capital for the
Company and enabling innovation across the following three dimensions:

* Supporting the competitiveness of current business across industries and
service lines.

* Enabling the creation of new platforms for non-linear business growth.

* Exploring new areas and technologies for future new business
opportunities.

TCS has initiated 'Research Scholar' sponsorships to benefit research in
the IT disciplines in Indian Academia. This will increase the number of
PhDs in the Company's focus areas. This program will also build stronger
ties between the academic institutes and TCS Innovation Laboratories
through active mentorship. TCS Innovation Laboratories have started
operating out of the IIT Research Park in Chennai. Two major academic
alliances with University of California at Berkeley and Purdue University
of USA have been initiated.

To foster a culture of innovation in the Company, a number of innovation

platforms, contests and awards were launched. The Company also hosted
innovation forums in three continents and held over 40 innovation workshops
and symposia. TCS' researchers participated in more than 150 conferences
and published close to 200 papers in prestigious journals.

TCS increased its Intellectual Property Rights (IPR) significantly. 223
patents were filed in several countries in FY 2010-11. Until now,
cumulatively, TCS has filed 448 patent applications of which 68 have been
granted. In the current financial year 6 patents have been granted.

Future Plan of Action:

In the coming year R&D organisation will look at creating non-linear
solutions. The research areas under focus will be tools, performance and
agility, security and privacy, customer experience, ubiquity and health.

Expenditure on R&D:

(Rs. crores)
Year ended Year ended
31.3.2011 31.3.2010

(a) Capital 1.41 0.39

(b) Recurring 97.20 77.19

(c) Total 98.61 77.58

(d) Total R&D expenditure as percentage
of total income 0.33% 0.33%


Foreign exchange earnings and outgo:

(Rs. crores)
Year ended Year ended
31.3.2011 31.3.2010

(a) Foreign exchange earnings 26,665.83 21,289.57
(b) CIF Value of Imports 375.87 112.97
(c) Expenditure in foreign currency 8,890.64 7,339.16

On behalf of the Board of Directors

Place: Mumbai R.N. Tata
Dated: May 20, 2011 Chairman

Management Discussion and Analysis:

1. INDUSTRY OVERVIEW:

1.1 Market sizing, trends and potential(1):

World-wide spending on technology and related products and services is
estimated to have crossed US$ 1.6 trillion in 2010, a growth of 4.0% over
2009, with growth driven by emerging verticals and emerging geographies in
addition to USA.

Global IT services spend increased from US$ 566 billion in 2009 to US$ 574
billion in 2010. The geographic revenues break-up for IT services was as
follows:

- America's share 43.0% in 2010 (42.8% in 2009)

- Europe Middle-East and Africa revenues 39.7% in 2010 (40.2% in 2009)

- Asia-Pacific revenues 17.3% in 2010 (17.0% in 2009)

Global Business Process Outsourcing (BPO) services spend has increased from
US$ 152 billion in 2009 to US$ 158 billion in 2010. The geographic revenues
break-up for BPO spend was as follows:

- America's share at 55.3% in 2010 (55.8% in 2009)

- Europe Middle-East and Africa revenues 25.9% in 2010 (26.0% in 2009)

- Asia-Pacific revenues 18.8% in 2010 (18.2% in 2009)

Trends in global sourcing remained positive and showed a growth rate of
10.4% in 2010 over 2009 and the global sourcing market size was in the
range of US$ 102 to 106 billion in 2010. IT sourcing grew at 10.3% to a
market size of US$ 62 to 64 billion and BPO sourcing grew at 10.6% to a
market size of US$ 40 to 42 billion.

There is enough potential for growth. Estimate of the addressable global
sourcing market is in the range of US$ 500 billion (US$ 280 billion for IT
services and US$ 220 billion for BPO services). (Source: NASSCOM Strategic
Review 2008 - 2011)

One of the major beneficiary countries of the global sourcing trend
continues to be India whose expertise and capability in the area of
Information Technology (IT) and Information Technology Enabled Services
(ITES) has made it a leading destination for global corporations looking
for technology partners.

1.2 Growth forecasts for IT Services Industry(1)

IT services spend is expected to increase from US$ 566 billion in 2009 to
US$ 684 billion by 2014 at a CAGR(2) of 3.9%.

* IT outsourcing component is expected to grow from US$ 225 billion in 2009
to US$ 239 billion in 2014 at a CAGR of 1.1%.

Notes:

(1) (Source: NASSCOM Strategic Review 2011).
(2) Compounded Annual Growth Rate.

* IT services offshored are expected to grow from US$ 31.1 billion in 2009
to US$ 42.8 billion in 2014 at a CAGR of 6.6%.

BPO spend is expected to increase from US$ 152.1 billion in 2009 to US$
201.5 billion in 2014 at a CAGR of 5.8%.

IT spend forecasts by global technology analyst firms like Gartner,
Forrester, IDC and others indicate a growing market for IT and ITES for
industry verticals, service offerings and geographies of interest to the
Company and excellent prospects for growth in the future.

2. FOCUS AREAS OF THE COMPANY:

2.1 Mission and Values:

TCS has built a global reputation for its ability to help customers achieve
their business objectives - by providing innovative, best-in-class
consulting, IT and IT-enabled solutions and services. TCS' core set of
values underpin all activities in the Company and these include leadership
with trust, integrity, excellence, respect for the individual and
learning/sharing.

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

2.2 Strategy of the Company:

TCS' strategy is focused on using its full services capabilities and its
Global Network Delivery ModelTM to create business value for its customers
and help them optimise their operations and execute new growth initiatives.
The Company's ability to deliver an unparalleled quality of experience
allows customers to experience a high level of certainty in their IT
operations.

2.2.1 Customer-centricity:

The Company's strategy is to be a trusted business partner to large global
corporations. TCS has built a customer-centric organisation structure which
puts customers at the center of its operating units and teams. The
Company's promise of certainty resonates with customers as it offers them
real business results through optimal IT design and deployment. TCS'
ability to solve the customer's most challenging business problems is the
core business need around which our offerings and services evolve.

2.2.2 Global Network Delivery ModelTM:

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
GNDMT enables the Company's delivery centers to collaborate on projects and
leverage all its assets in order to ensure 'One Global Service Standard'.

2.2.3 Integrated Full Services Offerings:

TCS continues to build on its 'Full Services Play' that offers its 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) Infrastructure management
services 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, primarily in financial services area with its TCS
BaNCS suite of offerings and (7) Global Consulting capability that brings
strong skills in program management, change management, process management
and architecture.

This suite of integrated full services portfolio presents a compelling
value proposition for global corporations and continues to increase
traction in the market place, as customers look for opportunities and
partners who can bring transformation solutions which include innovation,
optimisation and time to market competitive advantage for their businesses.
This integrated full-services offering strategy captures the entire value
chain of IT - from consulting and design to products and solutions and from
implementation to support.

2.2.4 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.

2.2.5 Non-Linear Growth Strategies:

The Company is focused on a set of strategic growth business initiatives to
drive non-linear growth opportunities, in addition to its continuing focus
on improved productivity and process enablers for its current business
lines. TCS continues to invest in nonlinear growth initiatives that will
allow it to drive revenue growth without commensurate growth in the number
of people. TCS pursues three initiatives -Software Products, Platform based
BPO services, and iON - an IT-as-a-service solution for Small and Medium
Business. Cloud based software services, 'Managed Services' and
'Accelerated Solutions' bring non linearity to the mainstream IT and ITES
businesses of the Company.

2.2.5.1 TCS Financial Solutions:

TCS Financial Solutions is a strategic business unit that enhances the
competitive capability of global financial institutions in the banking,
capital markets and insurance industries using its portfolio of software
products. This is marketed under the TCS BaNCS brand globally. TCS BaNCS
solutions are servicing business operations in about 80 countries.

TCS Financial Solutions increased its customer base by adding 36 new
clients during fiscal 2011 to its active client base of 271 clients. In
addition, 20 clients went 'live' on BaNCS solutions during the year.

The product vision for TCS BaNCS is driven by 'Any place is a banking
place' paradigm. 'TCS BaNCS Securities Trading' went operational in India
with its mobile trading application with a leading financial services
provider in November 2010. TCS BaNCS consists of 27 modules and covers
multiple lines of businesses like Core Banking, Insurance, Payments,
Securities and Treasury.

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

* The 2010 'Gartner Magic Quadrant' rates TCS as a leader in International
Retail Core Banking.

* The 2010'Forrester Waves & Platform Deals' rates TCS as a leader for
Global Banking Platforms. TCS BaNCS scored highest in banking platform
functionality, deployment and operations, product and corporate strategy.

2.2.5.2 Platform-based BPO:

Platform based Business Process Outsourcing (BPO) or Process Clouds
represent a new business model. TCS manages and executes customers'
business processes using its own technology platform. This involves
combining Information Technology, Infrastructure and BPO services into a
bundled service offering that enables end-to-end execution of a business
process. The strategic driver behind this offering is to address a
customer's increasing need for more efficiency, superior business
performance and single point of accountability in the execution of many of
their business processes.

The Platform based Business Process Outsourcing strategic unit of TCS (TCS
P-BPO) offered four different solutions: Analytics, Finance and Accounts
(F&A), Human Resource Outsourcing (HRO) and Procurement. TCS' platform BPO
offerings continued to gain acceptance with customers, with key deals being
won in India and North America.

During fiscal 2011 TCS' P-BPO unit expanded its suite of offerings across
the four platforms.

2.2.5.3 iON:

iON is the 3rd Generation Service Delivery Model using Cloud Computing for
Small and Medium Business (SMB).

In fiscal 2011, TCS launched iON - the world's first fully integrated
information technology solution for SMBs. iON is pre-configured with
hardware, network and software bundled together and backed by business,
technical and consulting services. iON has been developed to deliver IT in
the 3rd generation service model to SMBs - deliver Technology-on-Tap. Using
the very latest in scalable cloud computing technology, iON removes the
need for SMBs to invest in IT assets or retain scarce IT talent. Using pay-
per-use business model, iON helps SMBs leverage world-class technology at
an affordable cost. Today, more than 150 SMBs across India are leveraging
the iON solution and have reduced their total cost of technology ownership
significantly.

To provide SMB customers with seamless service, iON has created an eco-
system of 90+ Cloud Service Partners across India.

3. Organisational Structure:

A key concern that sustained growth engenders, is the potential loss of
agility in an organisation that has outgrown its structure. Another concern
is around whether and how the organisation will be able to focus on the
right sectors for future growth.

Both these concerns were addressed by the customer-centric organisation
structure that the Company rolled out in 2008. This structure was designed
to not only enhance customer focus and accountability, but also to provide
agility by reorganising TCS into multiple, smaller operational units
consisting of 3,000-14,000 employees, each pursuing the best possible
growth in their individual domain.

Each of the market-facing business units owns its own resources and pursues
growth in its respective domain at the best possible pace that the domain
can support, with all the agility and focus of a smaller company. Further,
each business unit manages its own costs and is accountable for its
margins. This has turned out to be an important enabling mechanism for
better control of the various margin levers. The effectiveness of this
structure was evident over the last two years, when the Company had to
exercise various operational levers rapidly and streamline costs to expand
operating margin.

4. Industry Verticals:

In the section below, the Company's positioning in the various industry
verticals are discussed.

4.1 Banking, Financial Services and Insurance (BFSI):

Financial markets witnessed improved growth through the year, as equity
prices rose and credit spreads tightened in major advanced economies.
Authorities in major emerging market economies continued to take gradual
steps to tighten monetary policy as inflationary pressures there
intensified.

These evolving dynamics required financial institutions to establish and
continually enhance systems that effectively responded to increasing
governance, risk and compliance requirements. All of this needed to be
accomplished while achieving superior levels of customer experience and
successfully managing revenues and costs. The Company continues to work
with leading global clients in this industry, executing complex programmes
in these areas.

TCS has partnered globally with more than half of the world's top twenty
banking institutions and one fourth of the world's top hundred insurers.

4.2 Telecom:

The Company's differentiated domain offerings and continued customer focus
in the telecom industry have enabled it to grow with most of its existing
strategic clients. The Company also added a few new marquee customers with
potential for future growth.

The Company's core strategy in the Telecom industry continues to be IT
services-centered full services play for telecom service providers and
equipment vendors. The Company continues to invest in research to play the
innovator's role and be a catalyst for change in the emerging Telecom
landscape. TCS has been responsible for the deployment of mobile number
portability solutions and IT infrastructure for launch of 3G services in
India.

The continuing recovery of the global economy, despite its uneven nature,
will stimulate investments by telecom service-providers in networks and
launch of new services. The Company remains focused on expanding its global
footprint and expects to see increased investment in policy management,
analytics, and strengthening of the trend towards outsourcing and managed
services.

4.3 Manufacturing:

The Company is positioned as a partner of choice for its clients in
Automotive, Industrial Manufacturing and Components (IMC), Process and
Chemical and Aerospace sectors.

TCS enjoys a strong position in the manufacturing industry, by virtue of
its unique proposition of end-to-end business-focused IT and IT-enabled
solutions and services. These offerings cover the entire value chain, from
new product introduction to customer experience management and boardroom to
shopfloor connect. All the major customers in manufacturing have grown
moderately in the last one year.

4.4 Retail and Consumer Packaged Goods:

The Retail and Consumer Packaged Goods industry has been one of the fastest
growing verticals in TCS. The Company offers a complete portfolio of
services in this industry - Consulting, IT Infrastructure services, BPO,
Assurance and Enterprise solutions. This full services play has found
resonance amongst the clientele, making the Company the preferred service
provider for six of the top ten global retailers.

4.5 Other Industries:

The Company also services several other industries such as Life Sciences
and Healthcare, Hi-Tech, Energy, Resources and Utilities, Media and
Entertainment and Travel, Transportation and Hospitality.

The Company's growing domain expertise in these industries is reflected in
the higher than average growth that these verticals registered.

5. 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 its services
seamlessly. As on March 31, 2011, TCS had 145 offices in 42 countries as
well as 106 delivery centers in 20 countries.

5.1 Major Markets:

TCS continues to focus on serving large global clients in the major markets
of 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 is also
focused on winning new key accounts in these major markets by using its
integrated full services and GNDMTM offerings.

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

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

5.2 New Growth Markets:

The Company has been investing in emerging markets since 2002-03 and has
achieved scale. New growth markets include Latin America, Middle East and
Africa, Asia-Pacific and India.

TCS believes that these markets have the potential to be significant
revenues drivers over the long-term.

6. Service Offerings:

The Company's full services portfolio consists of Application Development
and Maintenance, Business Intelligence, Enterprise Solutions, Assurance,
Engineering and Industrial Services, IT Infrastructure services, Business
Process Outsourcing, Consulting and Asset leveraged solutions.

6.1 Application Development and Maintenance (ADM):

The Company's ADM service offering covers the entire range of services
around the software development lifecycle, including re-engineering and
migration. Key highlights related to the Company's positioning in this
space includes:

* Leadership position in 'Gartner Magic Quadrant' for North American and
European Offshore Application Services.

* Leadership position in '2010 Forrester Wave' for Europe Middle East
Africa (EMEA) Application Outsourcing.

* Leadership position in '2010 Forrester Wave' for North American
Applications Outsourcing.

6.2 Business Intelligence (BI):

Subsequent to the financial crisis, during the recovery phase, business
intelligence and analytics are becoming very important areas and the
Company is focused on this segment.

6.3 Assurance Services:

Growing adoption of independent and unbiased software testing and various
transformational initiatives undertaken by clients spurred strong demand
for the Company's Assurance Services.

TCS' in-depth knowledge of industry verticals, combined with its emphasis
on process and technology has created a strong value proposition for it's
customers. Also, astute investments in quality assurance and software
testing space, including solution accelerators and frameworks created by
the Company's in-house Research and Development (R&D) team, are paying
handsome dividends.

6.4 Enterprise Solutions:

The Company serves customers in the areas of Enterprise Resource Planning
(ERP), Customer Relationship Management (CRM), Supply Chain and Content
Management services with end-to-end offerings and solutions that address
their global market needs, from strategy to transformation, blue-printing
to implementation, as well as rollouts, upgrades and managed services.

In fiscal 2011, Enterprise Solutions returned to robust growth, witnessing
all round demand and it won deals across verticals, markets, platforms and
offerings. Key accolades received by the Company in this area were:

* Leadership position in '2010 Gartner Magic Quadrant' for Oracle ERP
implementation service providers, North America.

* Leadership position in'2010 Gartner Magic Quadrant' for SAP ERP
implementation service providers, North America.

6.5 IT Infrastructure Services (IT IS):

IT Infrastructure Services (IT IS) is a growth engine for TCS. The Company
offers end-to-end IT Infrastructure services by providing transparent
solutions and superior service delivery, aligned to business metrics. These
solutions are delivered by leveraging an analytics-led approach, remote
management, Centers of Excellence (CoE), automation, innovation frameworks
and continuous improvement processes.

During fiscal 2011, the unit bagged large end-to-end strategic managed
services deals, implemented transformation deals involving consolidation,
virtualisation and optimisation services, including provisioning of 'on
demand environment' for customers and leveraged new delivery models like
Cloud Services and Integrated Command Center (ICC).

The Company has been positioned as a leader in IT infrastructure services
in the 'Forrester Wave Report', with the highest overall customer reference
scores amongst all the vendors in the analysis.

6.6 Business Process Outsourcing (BPO):

TCS' BPO offers value-added transaction processing services to its
customers across multiple industry verticals. It also offers knowledge-
based services focused on areas of research and analytics, such as
biostatistics, customer insights, risk analytics and predictive analytics.

The Company has performed well in this service area due to its
differentiated position in the market backed by superior domain expertise
and innovative pricing models such as transaction and outcome based
pricing. TCS is the first BPO in the world to be assessed enterprise wide
at Level 5 in Capability Maturity Model Integration (CMMI) for services,
assuring delivery excellence to its clients.

In line with the GNDMTM strategy, during the current year, the Company
opened additional BPO sites in Manila, Philippines and Midland, Michigan,
USA. It also continued to invest in scaling up its BPO operations across
the globe.

6.7 Engineering and Industrial Services (EIS):

EIS offers full services across the engineering, product development and
R&D value stream of companies in multiple 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 and Services and Geospatial
Solutions.

6.8 Global Consulting Practice (GCP):

GCP is a key ingredient in TCS' full services strategy to deliver greater
value to clients. The Company's consulting-led, integrated portfolio of
services helps organisations increase alignment between business operations
and IT. GCP positions the Company for winning larger downstream deals by
working with clients worldwide in the early part of their transformation
lifecycle.

GCP operates as a single global unit focusing on the Company's existing
customers as well as supporting new customer acquisitions. Today, GCP has
breadth and depth in IT consulting, growing capability in business
consulting and increased ability to go to market with multi-competency
solutions. This has helped the Company gain strong traction for its
consulting services in fiscal 2011.

6.9 Asset Leveraged Solutions:

The Company's offerings in this area are primarily focused on the Banking,
Financial Services and Insurance industry. TCS has since been replicating
the model in other industry verticals. Examples include:

* Legal Management Solution in the Hi-Tech vertical.

* Customer loyalty (Rewardz) and Point of Sale (POS) solutions in the
Retail vertical.

The Asset Based Solutions business has registered a progressive growth and
the Company sees greater opportunities to productise these assets, working
collaboratively with its clients.

6.10 Eco-Sustainability Services:

It is estimated that the use of IT has the potential to reduce carbon
emissions by 15% by 2020. This could translate into an economic benefit of
Euro 600 billion for those businesses choosing to transition to an
environmentally friendly and ecologically sustainable lower carbon
footprint. To capture this sizable market opportunity, the Company set up a
separate Eco-Sustainability Service with the following offerings:

* Enterprise level - Green IT, Eco-footprinting, Sustainability performance
management, Eco-awareness and education, Compliance management.

* Business Process level - Sustainable supply chain, Green logistics, Green
product engineering.

* Consumption level - Demand side Energy management, Life cycle assessments
for environment.

7. Technology and Innovation:

TCS' R&D remained focused on twin objectives: meeting current customer
needs and innovating to meet their future business needs. The Company's
customer-focused R&D initiatives connected with key customers across
domains, along the themes of increasing productivity, agility,
simplification, compliance and understanding of consumer behavior.

The Company's innovation offerings for infrastructure simplification,
social collaboration, connected marketing and data privacy have been active
differentiators with new deals and given the Company an edge over global
competitors. TCS Tools have seen greater implementation in all phases of
the software lifecycle, ensuring efficient delivery and cost savings for
the customer. R&D initiatives in cloud computing and sustainability
solutions have helped clients reduce capital expenditure and carbon
footprint.

8. Intellectual Property (IP):

The Company has a long tradition of nurturing creativity and innovation. To
promote a strong culture of recognising inventions the Company formed a
dedicated Corporate IPR Cell in fiscal 2011, steered by the IP Management
Board. The Company's IP strategy seeks to build an effective portfolio of
Intellectual Property Assets for future monetisation, collaboration and
risk mitigation.

The total number of patents granted till March 31 2011 were 68. TCS had
over 448 patents filed in multiple jurisdictions till March 31, 2011.

9. Human Resources Strategy:

The Company continued to invest in developing its human capital, building
strong relationships with academia and establishing its brand in the market
to attract and retain the best talent.

The strategic initiatives include developing competencies, identifying and
nurturing a strong pipeline of leaders, continually engaging talent and
helping employees in their career aspirations. This has helped the Company
build a culture where people are respected, performance is rewarded and
where every employee can realise his or her potential.

TCS consolidated headcount fiscal 2011 summary:

India Overseas Total

Opening headcount (As of April 1, 2010) 1,49,410 11,019 1,60,429
Gross additions 62,092 7,593 69,685
Attrition 26,899 4,601 31,500
Net additions 35,193 2,992 38,185
Closing headcount (As of March 31, 2011) 1,84,603 14,011 1,98,614

During fiscal 2011, the Company's HR strategy helped it fulfill the demand
to generate value and provide the experience of certainty to all
stakeholders. TCS grew to 1,98,614 employees (including 23,241 employees
working for subsidiaries) as on March 31, 2011, compared to 1,60,429 as on
March 31, 2010.

Year Employee Base
Excluding Including
Subsidiaries Subsidiaries

2007-08 107698 111407
2008-09 126150 143761
2009-10 140619 160429
2010-11 175373 198614

9.1 Talent Acquisition:

A robust talent acquisition ecosystem and an evolved people transition
model helped the Company source, transition and effectively integrate new
recruits. Close collaboration between the 'Talent Acquisition' team,
'Learning and Development' teams and the business units has ensured that
the sourcing-to-deployment process supported business in fulfilling demand.
The Company set yet another benchmark with a gross addition (including
subsidiaries) of 69,685 employees and a net addition of 38,185 employees in
fiscal 2011 - the largest in the industry. This included over 1,626 people
insourced from customer organisations globally.

The Company continues to invest in talent development through a well
established Academic Interface Programme, providing internships, conducting
faculty development programmes, conducting student workshops to orient
students to the IT industry and sponsoring technical and research
programmes in various institutes. TCS also launched a programme in fiscal
2011 to support bright students to pursue doctoral programmes thus
contributing to national talent development.

The Company's Industry - Academia collaboration network with over 500 of
the foremost universities in India and overseas helps it source the best
engineering talent in the country. TCS got day one slots at over 99.4% of
the campuses visited in fiscal 2011, up from 98.4% in the previous year.

For fiscal 2012, the Company has made 37,396 campus offers, up from 20,050
made for fiscal 2011. These recruits will be inducted in a staggered
manner.

9.2 Learning and Development:

The Company continued its focus on talent development to build skills and
competencies in four dimensions namely Technology, Domain, Process and Soft
Skills including foreign language capability.

Regular classroom-based training, technology-enabled learning, external
certifications, on the job training and sponsorship for higher education
constituted the other key channels for competency development. Increased
focus on technology-enabled learning initiatives has enhanced the Company's
ability to provide these opportunities to its global workforce deployed
across 42 countries.

Initial Learning Program (ILP) content was revised and training
infrastructure was scaled to address business needs. During fiscal 2011,
28,170 trainees completed ILP programme and a total of 15,84,480 learning
days effort were spent on ILP.

Continuous Learning Programmes (CLP) addressed the business need of
building competencies in advance and helped fulfilling demand and improved
workforce productivity. TCS invested 6,67,683 learning days to build
competencies in niche technology and 24,656 certifications were completed
by its employees during fiscal 2011. The Company's web-based learning
platform was enhanced with richer content, additional programmes and
greater domain coverage.

9.3 Talent Management and Leadership Development:

Highly engaged employees are critical for sustaining the Company's growth.
A continuous focus on improving HR practices around talent engagement,
talent deployment, performance and career management, reward and
recognition for high performance and competitive compensation and benefits,
helped the Company to attract and retain the best talent.

Communication and engagement with employees, rotating talent across
projects, countries and roles, providing opportunities for upgrading
competencies and helping employees progress to higher level roles, provides
the necessary platform for employees to realise their potential.

Leadership Development Programmes (LDP) address the need for developing the
necessary leadership talent pool for the current growth as well as future
requirements. Candidates are identified and nominated for LDPs and provided
experiential learning to hone their skills and take up leadership
positions.

Programmes were offered in-house at the TCS Leadership Institute at
Trivandrum and the Tata Management Training Centre at Pune. Senior leaders
were sponsored for programmes at reputed institutes in India and abroad.

A number of employee engagement initiatives including fun events, wellness
programmes and talent shows were organised. Employees were encouraged to
volunteer for Corporate Social Responsibility (CSR) programmes. These
initiatives helped improve employee bonding, develop their personalities
and manage stress at work. The Company's culture of listening to employees,
taking their feedback and addressing their concerns swiftly has helped
improve employee satisfaction.

These practices have helped the Company win recognition and a number of
awards globally. TCS remains the industry benchmark for talent retention.
The Company's attrition rate including BPO went up to 14.4% in fiscal 2011
as compared to 11.8% in the previous year, due to higher demand in the
industry. However, this represents the lowest attrition figure in the
industry.

Year Attrition Rate

2007-08 12.6%
2008-09 11.4%
2009-10 11.8%
2010-11 14.4%

9.4 Talent Diversity:

The Company has improved its workforce diversity through an equal-
opportunity global recruitment program and as an outcome of strategic
initiatives like Mergers and Acquisitions (M&A) and insourcing. Avenues
have also been provided to integrate differently-abled people with the
mainstream workforce. The annual 'Talent Acquisition' plan includes an
optimal mix of fresh and experienced recruits with diverse educational and
cultural backgrounds.

As of March 31, 2011, women constituted 30.30% of the Company's workforce.
The Company employed persons from 99 different nationalities.

Year Gender Diversity- Non Indian Nationals
Women employees

2007-08 27.8% 10565
2008-09 30.1% 11238
2009-10 30.4% 9536
2010-11 30.3% 13665

TCS Global Workforce from 99 Nationalities:

American 13.9%
Meilcan 7.4%
Others 13.0%
British 18.7%
Chilean 9.7%
Hungarlan 4.4%
Ecuadorian 11.7%
Uruguayan 7.0%
Brazilian 4.4%
Chinese 9.8%

9.5 Giving back to society:

The Company encouraged employees to volunteer in a range of CSR activities
classified under three focus areas: Education/Skill Development,
Environmental Sustainability and Health Awareness. Employees participated
in issues of larger global impact through events like Earth Hour 2011,
World Water Day and Earth Day.

The Company's advanced computer training center trained visually impaired
youth, thereby opening new avenues for employment and further studies.
Adult literacy camps were organised in collaboration with the National
Literacy Mission using its computer-based functional literacy package.

The Company runs a programme to improve employability of underprivileged
graduates and those hailing from scheduled castes and scheduled tribes,
under which over 2,000 candidates were trained. As of March 31, 2011, over
1,000 were under training. Provisional employment offers were made to 428
candidates.

9.6 Compliance:

The Compliance Cell within HR continues to track development in
immigration, employment and labour laws globally and recommends changes in
policies and procedures to mitigate future risks arising out of changes in
the legal environment.

10. OPPORTUNITIES AND RISKS:

10.1 Opportunities:

TCS is the industry leader in India and amongst the Top 10 IT services
companies in the world in terms of revenues, profits, market capitalisation
and number of employees. Continuing investments in technology by its
clientele, a growing preference for global sourcing and the emergence of
newer technologies and business models offer many opportunities for TCS.

The Company's integrated full services capability, global delivery
footprint and scale have expanded its addressable market, strengthened its
reputation and ensured its inclusion in the top tier list of vendors
invited for the largest and most complex bids. These offer a sizable growth
opportunity for the Company.

10.2 Risks and Risk Mitigation:

The Company has put in place an Enterprise-wide Risk Management (ERM)
programme based on the Committee of Sponsoring Organisations of the
Treadway Commission (COSO) framework. Reports are placed before the Board
of Directors at regular intervals.

The risk management process is continuously improved and adapted to the
changing global risk scenario. The agility of the risk management process
is monitored and reviewed for appropriateness with the changing risk
landscape. The process of continuous evaluation of risks, includes taking
stock of the risk landscape on an event-driven as well as quarterly basis.
The risk categories covered under the ERM programme includes strategic,
operational and financial as well as compliance-related risks across
various levels of the organisation. This includes risk assessment and
mitigation at the company level, business / functional unit level,
relationship level and project level.

Some of the key strategic risks the Company faces, their impact and
corresponding risk mitigation actions undertaken by the Company are
discussed in the table:

Key risks:

Uncertainties in global economy

Impact on TCS:

Slow or uncertain recovery in the major markets or economic shocks
resulting from instability in the Middle East or sovereign defaults in
Southern Europe could lead to cuts in IT budgets and result in demand
compression, pricing pressure and / or increased credit risk from
vulnerable clients.

Approach to Mitigation:

* Diversification across geographies with focus on emerging markets.

* Diversification of product and services offerings.

* Building greater client intimacy by optimising operating metrics to lower
their costs.

* Broad-basing the number of key clients by gradually moving clients up the
revenues bands, so concentration risks are reduced.

Key risks:


Protectionism in major markets

Impact on TCS:

Restrictive legislations that impede the free flow of talent in key markets
could disrupt operations and hamper growth in those markets.

Approach to Mitigation:

* Leveraging the GNDMT where possible.

* Advance planning of visas.

* More local recruitment.

* Working through industry bodies to articulate the Company's point of view
to legislators and the public.

Key risks:

Commoditisation of offerings / value proposition

Impact on TCS:

Greater competition could result in pricing pressures and hurt the
Company's profitability.

Approach to Mitigation:

* Broadening the Company's service offerings to become an integrated full
services partner to its clients.

* Greater focus on larger, more complex deals that play to the Company's
strengths in programme management and domain expertise.

* Building greater brand awareness with the Company's Experience certainty
2.0 theme.

* Investments in building intellectual property, in newer business models
and in tools that improve productivity.

Key risks:

Service model redundancy

Impact on TCS:

Newer models which change the manner of consumption of IT could result in
demand compression / pricing pressure on the existing model.

Approach to Mitigation:

* Continually scanning the environment and polling clients to detect
emerging trends early enough.

* Investing in building intellectual property.

* Investing in emerging business models that leverage cloud computing to
deliver software on a pay-per-use basis.

Key risks:

Reputational risks

Impact on TCS:

TCS has a track-record and reputation for quality and delivery certainty
and for integrity and ethical dealing as a corporation. Damage to that
reputation could lead to loss of market share.

Approach to Mitigation:

* Continued focus on quality rigour and process compliance through the
Company's integrated quality management systems.

* Strong Corporate Governance framework, adequate controls throughout the
organisation and strict adherence to the Tata Code of Conduct.

Key risks:

Innovation-related risks

Impact on TCS:

Innovational initiatives are often linked to strategic growth objectives,
so failures could not only lead to write-offs of the investments made and
potential reputational damage and / or service / product liabilities but
also imperil those strategic objectives.

Approach to Mitigation:

* Structured periodic reviews of all such programmes by senior management.

* Oversight by the Chief Technology Office (CTO) organisation for tracking
all technology-led innovation initiatives.

* Separate risk evaluation at a business unit level for the Company's
Strategic Growth Initiatives.

Key risks:

Integration risks in M&A

Impact on TCS:

Loss of value paid for the asset, distraction to management focus,
disruption to existing operations.

Approach to Mitigation:

* 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.

Key risks:

Regulatory non-compliance

Impact on TCS:

TCS has a global footprint and failure to comply with any of the relevant
regulations in any location could result in financial penalties and
reputational damage.

Approach to Mitigation:

* Establishment of a separate office of Chief Compliance Officer and an
institutionalised structure to ensure 100% regulatory and legal compliance
across the globe.

* The use of local managers as well as consultants, auditors, lawyers,
specialists and experts facilitates compliance.

* A security policy that complies with international information security
and data privacy laws, backed by rigourous processes and a robust
infrastructure assures physical and virtual security.

* Collection and processing of personal data takes place under highly
controlled conditions, minimising risk of breaches of private employee
information.

Key risks:

Supply-side risks

Impact on TCS:

TCS's is a people-centric business and any impairment in its ability to
attract and retain talent can impact demand fulfillment and by extension,
revenue growth.

Approach to Mitigation:

* Broadening the Comapny's catchment area and recruiting science graduates
to expand the available pool of fresh recruits.

* The Company's Academic Interface Programme continues to improve the
quality of graduates while strengthening its brand image on campuses and
getting it the coveted day one placement slot during recruitment season.

* Highly mature HR processes, competitive remuneration, growth
opportunities and an empowering, engaging workplace continue to help
attract and retain talent.

* Scaling up the Company's global footprint through Global Delivery
Centers.

Key risks:

Financial risks

Impact on TCS:

Wage inflation and other cost escalations could reduce the Company's
margins. An appreciating rupee can shrink revenues and squeeze earnings.

Approach to Mitigation:

* Decentralised controls backed by an institutionalised framework to keep
expenses under control.

* Focus on improving productivity and leveraging the employee pyramid.

* Use of currency forward contracts and options to hedge receivables and
revenues as per the Risk Management Board's assessment.

* Quarterly review of hedging strategies by the Risk Management Board.

PERFORMANCE TREND:

Over the years, TCS has built itself into an organisation that not only
partners with its customers, but also provides value addition, through a
repertoire of innovative solutions and superior quality of services. It has
thus emerged from being a trusted expert, to a trusted business advisor to
all its clients. Today, TCS has risen to eminence, as a leading Company in
the IT / ITES space in the globe.

In its journey of business success and excellence, TCS has created
significant wealth for all its stakeholders.

VALUE ADDITION SINCE FISCAL 2005:

Earnings per share:

Earnings per share (EPS), adjusted for two 1:1 bonus issues, went up from
Rs. 11.84 in FY 2005 to Rs. 46.27, in FY 2011 - almost a four-fold
increase.

Market Capitalisation:

Market capitalisation saw a phenomenal increase from Rs. 47,254 crores in
August 2005, to Rs. 2,31,713 crores in March 2011, a rise of almost five
times.

Increase in net worth:

The net worth of the Company has increased seven times in the last seven
years.

Economic Value Addition (EVA):

EVA in FY 2011 has increased more than four times from FY 2005. The chart
below shows the cumulative EVA in the last seven years, indicating a steady
and consistent increase in the value created.
SHARING OF CASH GENERATED SINCE FISCAL 2005

As much as 48% of the cash generated from FY 2005 to FY 2011 has been
distributed to the shareholders a dividend.

The Company's dividend payment record is one of the best in the industry.

OPERATIONAL EXCELLENCE:

Revenue trend:

Revenues grew to a record high of Rs. 37,325 crores ($ 8.2 billion) in
2010-11 - a rise of almost four times from 2004-05, with a compounded
annual growth rate (CAGR) of 21.14%.

Management of costs:

The company has been able to strengthen its cost management processes. The
operating costs, as percentage of revenues have come down.

Earnings trends:

Earnings before interest, depreciation, tax and amortisation (EBIDTA)
excluding other income have grown by four times from Rs. 2,814 crores in FY
2005 to Rs. 11,178 crores in FY 2011.

Profits after taxes (PAT) have grown by more than four times from Rs. 1,977
crores in FY 2005 to Rs. 9,068 crores in FY 2011.

Profitability has been one of the focus areas of the Company. In recent
times profitability has improved substantially.

GROWTH OF MANPOWER RESOURCE:

Headcount (including subsidiaries) has expanded by more than four times
from 45,714 in FY 2005 to 1,98,614 in FY 2011.

FINANCIAL PERFORMANCE - (CONSOLIDATED):

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 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 depicts 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)].

The following discussion and analysis should be read together with the
Consolidated Indian GAAP Financial Statements of Tata Consultancy Services
Limited (hereinafter referred to as TCS or the Company) for the financial
years ended March 31, 2011, 2010 and 2009.

Financial performance summary (consolidated):

The Global economy and the IT industry in particular have been going
through volatile times. The major markets in which the Company operates had
to navigate through a phase of one of the worst economic crisis the world
has ever faced. The period of crisis was used by the Company for revamping
its internal business processes, without losing focus on delivering value
to customers and growth with profitability for the company. Driven by the
passion for continuous improvement and diligent implementation of its
strategy, the Company has gone from strength to strength and is well
positioned for future growth.

In fiscal 2011, the global economic environment improved. The Company
remained focused on overall growth and management of costs. As compared to
fiscal 2010, there has been all round improvement in its financial
performance in fiscal 2011.

The trends in the financial performance of the Company can be seen in the
section 'Company's Performance Trend (Indian GAAP Consolidated)'.

In fiscal 2011, the consolidated revenues of the Company aggregated
Rs.37,324.51 crores (Rs. 30,028.92 crores in fiscal 2010), registering a
growth of 24.30%.

The consolidated profit before taxes (PBT) aggregated Rs. 11,020.62 crores
in fiscal 2011 (Rs. 8,289.63 crores in fiscal 2010) - a growth of 32.94%.
Pre-tax profit as a percentage of revenues improved from 27.61% in fiscal
2010 to 29.53% in fiscal 2011.

The consolidated net profit for the fiscal 2011 after taxes aggregated
Rs.9,068.04 crores (Rs. 7,000.64 crores in fiscal 2010) - a growth of
29.53%. Post-tax profit as a percentage of revenues improved from 23.31% in
fiscal 2010 to 24.30% in fiscal 2011.

In fiscal 2011, the Company's consolidated earnings per share were Rs.46.27
(Rs. 35.67 in fiscal 2010).

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' for the year ended March 31, 2011.

For the year ended
March 31, 2011
(Rs. crores) % of
Revenues


Revenues from operations:

Information technology and consultancy services 36046.13 96.57

Sale of equipment and software licenses 1278.38 3.43

Total revenues Expenditure 37324.51 100.00

Employee costs 13726.10 36.78

Overseas business expenses (employee allowances
paid overseas) 4986.69 13.36

Total employee costs 18712.79 50.14

Overseas business expenses (other than employee
allowances paid overseas) 542.52 1.45

Services rendered by business associates and
others 1836.55 4.92

Operation and other expenses 5054.29 13.54

Total expenditure 26146.15 70.05

Other income (net) 604.00 1.62

Profit before interest depreciation and
taxes 11782.36 31.57

Interest 26.48 0.07

Depreciation and amortisation 735.26 1.97

Profit before taxes 11020.62 29.53

Provision for taxes:

Income tax expense (Including deferred tax
fringe benefit tax and MAT credit entitlement) 1830.83 4.91

Net profit for the year before minority
interest and share of loss of associate 9189.79 24.62

Minority interest (121.45) (0.33)

Share of loss of associate (0.30) -

Net profit 9068.04 24.30

For the year ended
March 31, 2011
(Rs. crores) % of
Revenues


Revenues from operations:

Information technology and consultancy services 29085.21 96.86

Sale of equipment and software licenses 943.71 3.14

Total revenues Expenditure 30028.92 100.00

Employee costs 10879.57 36.23

Overseas business expenses (employee allowances
paid overseas) 4186.18 13.94

Total employee costs 15065.75 50.17

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

Services rendered by business associates and
others 1261.97 4.20

Operation and other expenses 4622.76 15.39

Total expenditure 21334.37 71.05

Other income (net) 272.07 0.91

Profit before interest depreciation and
taxes 8966.62 29.86

Interest 16.10 0.05

Depreciation and amortisation 660.89 2.20

Profit before taxes 8289.63 27.61

Provision for taxes:

Income tax expense (Including deferred tax
fringe benefit tax and MAT credit entitlement) 1196.97 3.99

Net profit for the year before minority
interest and share of loss of associate 7092.66 23.62

Minority interest (90.99) (0.31)

Share of loss of associate (1.03) -

Net profit 7000.64 23.31


FY 2011 vs.
FY 2010
% growth

Revenues from operations:

Information technology and consultancy services 23.93

Sale of equipment and software licenses 35.46

Total revenues Expenditure 24.30

Employee costs 26.16

Overseas business expenses (employee allowances
paid overseas) 19.12

Total employee costs 24.21

Overseas business expenses (other than employee
allowances paid overseas) 41.32

Services rendered by business associates and
others 45.53

Operation and other expenses 9.33

Total expenditure 22.55

Other income (net) 122.00

Profit before interest depreciation and
taxes 31.40

Interest 64.47

Depreciation and amortisation 11.25

Profit before taxes 32.94

Provision for taxes:

Income tax expense (Including deferred tax
fringe benefit tax and MAT credit entitlement) 52.96

Net profit for the year before minority
interest and share of loss of associate 29.57

Minority interest 33.48

Share of loss of associate -

Net profit 29.53

Revenues:

Revenues from operations:

The Company's consolidated revenues increased in fiscal 2011 to
Rs.37,324.51 crores from Rs. 30,028.92 crores in fiscal 2010, a growth of
24.30% (7.97% in fiscal 2010).

Revenues from information technology and consultancy services increased in
fiscal 2011 to Rs. 36,046.13 crores from Rs. 29,085.21 crores in fiscal
2010, a growth of 23.93%. Revenues from information technology and
consultancy services constituted 96.57% of the total revenues in fiscal
2011 (96.86%in fiscal 2010).

Consolidated revenues from sale of equipment and software licenses
increased by 35.46% to Rs. 1,278.38 crores in fiscal 2011 from Rs. 943.71
crores in fiscal 2010.

Analysis of revenue growth:

Fiscal 2011 Fiscal 2010 Fiscal 2009
% growth % growth % growth

Volume 29.65 17.37 19.33
Price (0.30) (3.32) (4.89)
Mix.(onsite/offshore) (0.85) (8.12) (2.27)
Exchange rate (4.20) 2.04 10.80
Total growth 24.30 7.97 22.97

The growth in volume in fiscal 2011 was 29.65%, significantly more than
that of fiscal 2010 (17.37%) and fiscal 2009 (19.33%). The growth in volume
is attributable to increased demand for services from existing and new
customers in fiscal 2011.

Unlike in earlier years, which witnessed pricing pressure (4.89% in fiscal
2009 and 3.32% in fiscal 2010), fiscal 2011 was more or less steady on the
pricing front.

Effort-wise, the relative position for India offshore deployment in fiscal
2011 and fiscal 2010 did not change. The onsite deployment increased while
Global Delivery Center (GDC) deployment declined in fiscal 2011.The effect
on revenue growth as a result of this onsite/offshore/GDC mix change - was
a negative 0.85%, primarily on account of shift of efforts - intra onsite/
GDC locations.

TCS is a global company and earns its revenues in multiple currencies.
During fiscal 2011, the volatility in exchange rates impacted growth. The
trend in average exchange rates of the Indian Rupee vis-a-vis some of the
major currencies in which TCS transacts its business is shown in the
following table:

Currency A B C D E

USD 45.60 47.36 46.30 (3.71) 2.30
GBP 71.00 75.54 78.33 (6.01) (3.56)
EUR 60.40 67.09 65.52 (9.97) 2.40
AUD 43.25 40.48 35.82 6.85 12.99
CAD 44.77 43.63 41.21 2.62 5.88

A = Fiscal 2011
B = Fiscal 2010
C = Fiscal 2009
D = Change FY11 Vs. FY10 (%)
E = Change FY10 Vs. FY09 (%)

In fiscal 2010, all significant currencies, except British Pound Sterling
(GBP), appreciated vis-a-vis Indian Rupee and the revenue growth
attributable to exchange rate variation for all currencies was 2.04%.

In fiscal 2011, US Dollar (USD), Euro (EUR) and British Pound Sterling
(GBP) weakened vis-a-vis Indian Rupee. Though the Australian Dollar (AUD)
and Canadian Dollar (CAD) continued to strengthen, the impact on the
Company's revenue was low because of their low weightage in the mix of the
Company's business. The significant negative movement in the major
currencies during fiscal 2011 resulted in degrowth of 4.20%.

Revenues by industry segment:

Industry segments:

Fiscal 2011 Fiscal 2010
% of % of
Revenues Revenues

Banking, Financial Services and Insurance (BFSI) 44.28 44.92
Telecom 14.18 14.54
Retail and Consumer Packaged Goods (CPG) 11.00 10.59
Manufacturing 7.37 8.10
Others 23.17 21.85
Total 100.00 100.00

The composition of major industry segments as a percentage of revenues is
shown in the table. During fiscal 2011, revenues for all industry segments
showed growth. Some details about the growth of various industry segments
are discussed below:

* BFSI was one of the most affected industry segments during the global
economic slowdown. In fiscal 2011, BFSI had a healthy growth (22.52% over
fiscal 2010) due to sustained demand.

* Industry segments which recorded high growth in fiscal 2011 vis-a-vis
fiscal 2010 were Retail and CPG (29.03%), Life Science and Healthcare
(26.80%), Hi-Tech (43.70%), Energy, Resources and Utilities (79.50%), Media
and Entertainment (39.80%) and Travel, Transportation and Hospitality
(33.30%).

* Industry segments which recorded growth lower than Company's average
revenues growth in fiscal 2011 vis-a-vis fiscal 2010 were Telecom (21.25%)
and Manufacturing (13.06%).

Revenues by geographic segments:

Geographic segments:

Fiscal 2011 Fiscal 2010
% of % of
Revenues Revenues


North America 53.87 52.80
UK 15.46 16.18
Europe 9.32 10.49
India 9.20 8.65
Asia Pacific 6.58 5.24
Iberoamerica 3.62 4.72
Middle East and Africa 1.95 1.92
Total 100.00 100.00

Despite the fact that in fiscal 2011 almost all the major currencies
depreciated vis-a-vis Indian Rupee, revenues from major markets showed
growth. Growth in North America was 26.82%, the United Kingdom was 18.74%
and Europe was 10.49%. New growth markets which witnessed significant
growth were Asia Pacific (56.10%), India (32.22%) and Middle East and
Africa (26.16%).

Revenues by significant services:

Fiscal 2011 Fiscal 2010
Service lines % of % of
Revenues Revenues

Application Development and Maintenance (ADM) 46.46 48.73
Business Process Outsourcing (BPO) 11.27 11.53
Enterprise Solutions (ES) 10.14 10.47
IT Infrastructure Services (ITIS) 9.42 8.36
Assurance Services 6.78 5.04
Business Intelligence (BI) 5.31 5.69
Engineering and Industrial Services (EIS) 4.80 4.98
Asset Leveraged Solution (Products) 3.65 3.29
Consulting 2.17 1.91
Total 100.00 100.00

The composition of major service lines as a percentage of revenues is shown
in the table above. During fiscal 2011 revenues from all service lines
showed growth. Details about the growth of service lines are shown below:

Service lines Growth % (Fiscal 2011
vs. Fiscal 2010)

Assurance Services 67.20
Consulting 41.37
IT Infrastructure Services 39.93
Asset leveraged solutions 37.86
Business Process Outsourcing 21.58
Enterprise Solutions 20.35
Engineering and Industrial Services 19.80
Application Development and Maintenance 18.51
Business Intelligence 15.91
Total 24.30

Revenues from fixed-price-fixed-time contracts:

Year Time & Fixed Price,
Material Fixed Time
basis

2008-09 55.21% 44.79%
2009-10 52.18% 47.82%
2010-11 50.65% 49.35%

As part of its strategy, the Company has been moving more towards fixed-
price-fixed-time contracts. TCS has aligned its capabilities and strategy
to deliver such fixed-price-fixed-time contracts and the trends over the
last three years are indicative of the success of the said strategy.

Revenues by location of service delivery:

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

Revenue mix onsite-offshore India GDC - Fiscal 2011:

Onsite-Offsite Revenue Mix (% of Revenues):

Fiscal Fiscal Fiscal
2011 2010 2009

Offshore India 50.96 50.97 44.22
Offsite GDC 5.02 5.72 4.59
Total offsite 55.98 56.69 48.81
Total onsite 44.02 43.31 51.19
Total 100.00 100.00 100.00

The revenues from onsite, offsite GDC and offshore services are aligned
with customer requirements. In fiscal 2011 the India offshore revenues as a
percentage of TCS' total revenues remained at 50.96% - almost same as
50.97% in fiscal 2010. There have been small intra onsite/ GDC movements as
reflected in the chart.

Expenditure:

Employee costs and overseas business expenses:

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

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

The table below summarises the employee costs:

For the year ended
March 31, 2011
(Rs. crores) % of
Revenues

Revenues from operations 37324.51 -

Expenditure:

Employee costs 13726.10 36.78

Overseas business expenses
(employee allowances paid
overseas) 4986.69 13.36

Total employee costs 18712.79 50.14


For the year ended
March 31, 2010

(Rs. crores) % of
Revenues

Revenues from operations 30028.92 -

Expenditure:

Employee costs 10879.57 36.23

Overseas business expenses (employee
allowances paid overseas) 4186.18 13.94

Total employee costs 15065.75 50.17

FY 2011 vs. FY 2010
% growth

Revenues from operations 24.30

Expenditure:

Employee costs 26.16

Overseas business expenses (employee
allowances paid overseas) 19.12

Total employee costs 24.21

Total employee costs have increased in fiscal 2011 over fiscal 2010 by
24.21%.

Total employee costs as a percentage of revenues has decreased marginally
by 0.03%, mainly attributable to:

* Increase in India employee costs 0.55% - primarily on account of increase
in India head count 0.40% and increase in staff welfare costs 0.13%.

* Decrease in employee costs in overseas locations was 0.58%. During fiscal
2011, the customer centric strategy adopted by the Company to service the
larger volume of business requirements of its customers, required increase
in the use of the services of business associates. In terms of percentage
of revenues the decrease in employee costs in overseas locations 0.58% is
more than compensated by an increase in costs for business associates
employed by the Company 0.72% of revenues.

Utilisation of manpower resources including trainees was 76.20% during
fiscal 2011 (74.00% during fiscal 2010). The utilisation excluding trainees
was 83.10% during fiscal 2011 (80.40% during fiscal 2010). The significant
improvement in utilisation also contributed to margin improvement.

Overseas business expenses (other than employee allowances paid overseas):

These expenses include travel, marketing and office expenses incurred
overseas.

Overseas business expenses (other than employee allowances paid overseas)
increased from Rs. 383.89 crores in fiscal 2010 to Rs. 542.52 crores in
fiscal 2011. As a percentage of revenues these expenses increased from
1.28% in fiscal 2010 to 1.45% in fiscal 2011. Overseas travel which
constituted the largest component, increased from Rs. 225.32 crores in
fiscal 2010 (0.75% of revenues) to Rs. 319.20 crores in fiscal 2011 (0.86%
of revenues). This increase of 0.11% was mainly attributable to increased
business travel in line with business growth.

Services rendered by business associates and others:

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

Expenditure on business associates increased from Rs. 1,261.97 crores in
fiscal 2010 to Rs. 1,836.55 crores in fiscal 2011. As a percentage of
revenues, the increase was from 4.20% in fiscal 2010 to 4.92% in fiscal
2011. The total increase of 0.72% was attributable mainly to higher
requirement of business associates at some overseas locations.

The analysis of services rendered by business associates is shown below:

For the year ended March 31,
2011 2010
(Rs. % of (Rs. % of
crores) Reve- crores) Reve-
nues nues

Fees to foreign business associates 982.45 2.63 559.00 1.86
Fees to Indian business associates 245.78 0.66 164.44 0.55
Others 608.32 1.63 538.53 1.79
Total 1836.55 4.92 1261.97 4.20

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.

Operation and other expenses:

Operation and other expenses include all other expenses affecting the
profit and loss statement, incurred to conduct the Company's operations.

Nature of expenses For the year ended March 31,
2011 2010
(Rs. % of (Rs. % of
crores) Reve- crores) Reve-
nues nues




Software and hardware 1,625.09 4.35 1,452.03 4.83
Communication 542.34 1.45 422.87 1.41
Travelling and conveyance 473.73 1.27 341.90 1.14
Rent 734.77 1.97 720.53 2.40
Legal and professional 222.43 0.60 206.00 0.69
Repairs and maintenance 256.69 0.69 212.77 0.71
Electricity 302.08 0.81 250.59 0.83
Recruitment and training 210.68 0.56 112.21 0.37
Others 686.48 1.84 903.86 3.01
Total 5,054.29 13.54 4,622.76 15.39

The reduction in other operating expenses as a percentage of revenues 1.85%
(from 15.39% in fiscal 2010 to 13.54% in fiscal 2011) was primarily due to:

* Decrease in software and hardware costs 0.48%.

* Decrease in rent 0.43%.

* Decrease in legal and professional fees 0.09%.

* Decrease in other items of expenditure 1.17% primarily on account of
write back of provision for bad debts 0.84%, lower insurance expenses 0.07%
and lower other expenses 0.23%

* Offset by an increase in communication expenses 0.04%, travelling and
conveyance expenses 0.13% and recruitment and training expenses 0.19%.

The leadership team continued to focus on cost management during fiscal
2011 as is evident from the reduction in costs in relation to the revenues.

Other income (net):

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

Other income in fiscal 2011 was Rs. 604.00 crores (Rs. 272.07 crores in
fiscal 2010), an increase of 0.71% as a percentage of revenues.

Net loss on account of foreign exchange fluctuations reduced in fiscal
2011. There was an increase in other income as a result of continuous
review of portfolio of investments in interest-bearing bank deposits,
mutual funds and inter-corporate deposits. Increase in other income (net)
was mainly attributable to:

* Increase in interest income 0.65%.

* Decrease in exchange loss (net) 0.54%.

* Offset by:

- Decrease in profit on redemption/sale of mutual funds and other
current investments (net) 0.30%.

- Decrease in miscellaneous income 0.17%.

Forward and option contracts:

The Company enters into various forward and option contracts to manage its
exposure to exchange rate fluctuations, in accordance with its risk
management policies and procedures. These contracts are generally entered
into with banks as counterparties. The Company designates some of its
hedges as 'cash flow hedges' on completion of the required documentation.
Hedge effectiveness testing is done periodically by applying the
recognition and measurement principles set out in the Indian Accounting
Standard 39 'Financial Instruments: Recognition and Measurement' (Ind AS
39). All such 'cash flow hedges' are measured at their respective fair
values at the reporting dates. Changes in the fair value of effective
hedges are recognised in the 'Shareholders' funds' and the ineffective

hedges are recognised as 'Other income' in the profit and loss account.

On sale or termination of any 'cash flow hedge' 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.

On sale or termination of hedges on maturity, the resultant gains or losses
are taken to 'Other income' in 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
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 2011 was Rs. 11,782.36 crores (Rs. 8,966.62 crores in
fiscal 2010). PBIDT as percentage of revenues was 31.57% in fiscal 2011
(29.86% in fiscal 2010). The increase in the PBIDT of 1.71% as percentage
of revenues in fiscal 2011 was mainly attributable to:

* Decrease in operation and other expenses 1.85%.

* Improvement in other income (net) 0.71%.

* Offset by an increase in overseas business expenses 0.17% and services
rendered by business associates 0.72%.

Interest costs:

Interest costs increased to Rs. 26.48 crores in fiscal 2011 (0.07% of
revenues) from Rs. 16.10 crores in fiscal 2010 (0.05% of revenues).

Depreciation and amortisation:

Depreciation/amortisation charge has increased from Rs. 660.89 crores
(2.20% of revenues) in fiscal 2010 to Rs. 735.26 crores (1.97% of revenues)
in fiscal 2011. The increase in depreciation/amortisation was primarily due
to additional capitalisation of computer equipment.

The decrease in terms of revenues 0.23% was primarily attributable to:

* Decrease on account of furniture and fixtures and office equipment 0.17%.

* Decrease on account of intangible assets 0.06%.

* Decrease on account of buildings and leasehold improvements 0.04%.

* Increase on account of computers 0.05%.

Profit before taxes:

Profit before taxes (PBT) in fiscal 2011 was Rs. 11,020.62 crores
(Rs.8,289.63 crores in fiscal 2010). As a percentage of revenues PBT
increased from 27.61% in fiscal 2010 to 29.53% in fiscal 2011. The
substantial increase of 1.92% can be attributed to higher PBIDT of 1.71%
and lower depreciation of 0.23% marginally offset by higher interest costs
0.02%.

Provision for taxation:

Income tax expense comprises current income tax and the net changes in the
deferred tax assets and liabilities 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 has been benefiting from certain tax incentives
under the Indian Income Tax Act, 1961 (IT Act), in respect of IT services
exported from designated 'Software Technology Park (STP)' units. The
benefits applicable to STP expired on March 31, 2011. The Company also
avails tax incentives applicable to Special Economic Zones (SEZ) under the
IT Act.

Till March 31, 2011, 'Minimum Alternative Tax' (MAT) was applicable to the
Company excluding its income from SEZ. With effect from April 1, 2011, MAT
would be applicable to income from SEZ also. MAT paid gives rise to
tax credit which according to the IT Act can be carried forward for
subsequent ten years and adjusted against future tax liabilities. In the
view of the Company, it would have sufficient tax liabilities to offset the
MAT credits during the prescribed carry forward period. Accordingly, MAT
was recognised as an asset in the balance sheet.

The Company's consolidated tax expense in fiscal 2011 increased to
Rs.1,830.83 crores from Rs. 1,196.97 crores in fiscal 2010. As a percentage
of revenues, it increased to 4.91% in fiscal 2011 from 3.99% in fiscal
2010. As a percentage of profit before taxes, the tax charge has gone up
from 14.44% in fiscal 2010 to 16.61% in fiscal 2011.

The increase in the effective tax rate from 14.44% in fiscal 2010 to 16.61%
in fiscal 2011 was primarily attributable to:

* Increase in effective tax rate for Tata Consultancy Services Ltd.
(unconsolidated) from 11.80% in fiscal 2010 to 12.99% in fiscal 2011
primarily on account of increase in other income and expiry of period of
tax holiday for certain STP units

* Increase in tax provision of one of the Company's subsidiaries in India
as a result of expiry of tax holiday of its STP Units.

* Increase in taxable profits of the overseas subsidiary companies.

Net profit before minority interest:

The Company's net profit before minority interest increased from
Rs.7,092.66 crores in fiscal 2010 to Rs. 9,189.79 crores in fiscal 2011.
Net profit margin on revenues increased from 23.62% in fiscal 2010 to
24.62% in fiscal 2011. The increase in net profit margin of 1.00% is
attributable to increase in PBT margin of 1.92% offset by higher net taxes
of 0.92% in fiscal 2011.

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. 90.99 crores in fiscal
2010 to Rs. 121.45 crores in fiscal 2011. This is primarily due to increase
of profits in two of its subsidiaries.

Share of loss of associate:

The Company's share of loss of associate as a result of such minority
shareholding was a loss of Rs. 0.30 crores in fiscal 2011 as compared to a
loss of Rs. 1.03 crores in fiscal 2010.

Net profit:

The Company's consolidated net profit was Rs. 9, 068.04 crores in fiscal
2011 (24.30% of revenues) against Rs. 7,000.64 crores in fiscal 2010
(23.31% of revenues). The Company's consolidated net profit has increased
29.53% in fiscal 2011 as compared to fiscal 2010.

Consolidated segment result:

The Company considers 'Industry' as its primary segment and 'Geography' as
its secondary segment.

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

The Company's industry segment results are summarised below:

Summary of segment result A B C D E

Revenues 37,324.51 - 30,028.92 - 24.30
Segment result 11,064.09 29.64 8,564.54 28.52 29.18
Unallocable expenses (net) 647.47 1.73 546.98 1.82 18.37
Operating income 10,416.62 27.91 8,017.56 26.70 29.92
Other income (net) 604.00 1.62 272.07 0.91 122.00
Profit before taxes 11,020.62 29.53 8,289.63 27.61 32.94

A = Fical 2011 (Rs. Crores)
B = % of Revenues in Fiscal 2011
C = Fical 2010 (Rs. Crores)
D = % of Revenues in Fiscal 2010
E = % Growth

The following table presents each industry segment's revenues as a
percentage of total industry revenues and each industry segment's result,
i.e., operating profit (excluding unallocated expenses) as a percentage of
total industry segment result.

Segment Revenues
Fiscal Fiscal
2011 2010 2011 2010
(Rs. crores) % of
Revenues

Banking Financial Services and Insurance 16526.60 13488.85 44.28 44.92
Manufacturing 2751.76 2433.80 7.37 8.10
Retail and Consumer Packaged Goods 4105.05 3181.43 11.00 10.59
Telecom 5292.45 4365.02 14.18 14.54
Others 8648.65 6559.82 23.17 21.85
Total 37324.51 30028.92 100.00 100.00

Segment Result
Fiscal Fiscal
2011 2010 2011 2010
(Rs. crores) % of
Segment Result

Banking Financial Services and Insurance 5170.84 3873.73 46.73 45.23
Manufacturing 704.30 743.01 6.37 8.68
Retail and Consumer Packaged Goods 1071.68 846.53 9.69 9.88
Telecom 1843.78 1350.94 16.66 15.77
Others 2273.49 1750.33 20.55 20.44
Total 11064.09 8564.54 100.00 100.00


Industry segment-wise performances are discussed below:

(Rs. crores)
Banking, A B C D E
Financial
Services and
Insurance
(BFSI)

Revenues 16,526.60 - 13,488.85 - 22.52
Segment result 5,170.84 31.29 3,873.73 28.72 33.48

A = Fiscal 2011
B = % of Segment Revenues in Fiscal 2011
C = Fiscal 2010
D = % of Segment Revenues in Fiscal 2010
E = % Growth

BFSI constitutes the Company's largest segment. This constituted 44.28% of
Company's revenues in fiscal 2011 (44.92% in fiscal 2010) and has
contributed 46.73% of total segment result in fiscal 2011 (45.23% in fiscal
2010).

BFSI has shown satisfactory growth in terms of revenues (22.52% over fiscal
2010) as well as segment result (33.48% over fiscal 2010). The result in
terms of revenues also has improved from 28.72% in fiscal 2010 to 31.29% in
fiscal 2011. The customers in this segment were adversely affected during
the global economic slowdown. However, fiscal 2011 witnessed economic
recovery and increased spending by customers. The change in the BFSI
landscape is reflected in the result for fiscal 2011. Other significant
developments in fiscal 2011 were (1) addition of new customers across
geographies, including marquee logos that hold good potential for future
growth, (2) establishing a group of 'Industry Principals' to advise
customers on high end business strategy and (3) filing application for
patenting 'Risk Assessment System', which is a component of the Company's
Mobile Telematic Solution.

(Rs. crores)
Telecom A B C D E

Revenues 5,292.45 - 4,365.02 - 21.25
Segment result 1,843.78 34.84 1,350.94 30.95 36.48

A = Fiscal 2011
B = % of Segment Revenues in Fiscal 2011
C = Fiscal 2010
D = % of Segment Revenues in Fiscal 2010
E = % Growth

The second largest segment of the Company is Telecom (including Media and
Entertainment). This constituted 14.18% of Company's revenues in fiscal
2011 (14.54% in fiscal 2010) and has contributed 16.66% of total segment
result in fiscal 2011 (15.77% in fiscal 2010).

Media and Entertainment vertical did extremely well - the revenues
registered a growth of 39.80% over fiscal 2010. Some of the agile processes
and technologies put in place have made it possible for the Company to
position itself well in the industry.

In fiscal 2010, telecom faced some setbacks. Some of the major customers
cut down their IT budgets and the Company witnessed a reduction in revenues
compared to fiscal 2009. In fiscal 2011 telecom witnessed moderate growth
(18.47% over fiscal 2010), driven by recovery of business with some of the
strategic customers.

The segment result has shown significant improvement from 30.95% in fiscal
2010 to 34.84% in fiscal 2011.

In fiscal 2011 Telecom was able to (1) add new customers with annuity
business potential across geographies (2) deploy mobile number portability
solutions and IT infrastructure for launch of 3G services (3) commercially
deploy 'Telco in a Box' offering to large telecom companies and (4) create
a separate unit called 'Mobility Solutions Unit' to service all the
industry verticals of TCS.

In fiscal 2011 Media and Entertainment surged ahead by (1) exploiting the
Company's full service capability (2) deploying Platform Based Solutions
(3) pre-building a Social Web Monetisation Platform to enable its customers
to rapidly establish social media based presence on the web and (4)
acquiring significant experience and capability in broadcasting segment.

(Rs. crores)
Retail and A B C D E
Consumer
Packaged
Goods (CPG)

Revenues 4,105.05 - 3,181.43 - 29.03
Segment result 1,071.68 26.11 846.53 26.61 26.60

A = Fiscal 2011
B = % of Segment Revenues in Fiscal 2011
C = Fiscal 2010
D = % of Segment Revenues in Fiscal 2010
E = % Growth

The third largest segment for the Company is the Retail and CPG segment.
This constituted 11.00% of the Company's revenues in fiscal 2011 (10.59% in
fiscal 2010) and has contributed 9.69% of total segment result in fiscal
2011 (9.88% in fiscal 2010).

Capitalising on the increased spending by retailers on discretionary
programmes and making full use of its domain driven full services
offerings, the Retail and CPG segment did well in fiscal 2011. The segment
revenues have shown a healthy growth of 29.03% in fiscal 2011. Segment
result has also shown creditable growth of 26.60% in fiscal 2011.

During fiscal 2011, the segment has (1) won several transformational deals
using the Company's deep domain capabilities (2) offered non-linear
solutions using the Company's domain driven 'Full Services Offerings' for
certain mission critical programmes and (3) co-opted alliances and also
used the Company's rich repository of intellectual properties to bring best
practices to its customers.

(Rs. crores)
Manufacturing A B C D E

Revenues 2,751.76 - 2,433.80 - 13.06
Segment result 704.30 25.59 743.01 30.53 (5.21)

A = Fiscal 2011
B = % of Segment Revenues in Fiscal 2011
C = Fiscal 2010
D = % of Segment Revenues in Fiscal 2010
E = % Growth

The fourth largest segment for the Company is the Manufacturing segment.
This constituted 7.37% of Company's revenues in fiscal 2011 (8.10% in
fiscal 2010) and has contributed 6.37% of total segment result in fiscal
2011 (8.68% in fiscal 2010).

Manufacturing was one of the industries worst affected during the global
economic slowdown. Fiscal 2010 witnessed de-growth in revenues as well as
segment result. Aerospace and process engineering areas continued to face
strong headwinds in fiscal 2011. Automotive and Industrial Manufacturing
and Components improved marginally - the result was a moderate 13.06%
growth in revenues in fiscal 2011 over fiscal 2010. However, the segment
had to face pressure on margins, which resulted in decrease in segment
results from 30.53% in fiscal 2010 to 25.59% in fiscal 2011. The
manufacturing segment continued to invest in the expected growth areas,
namely, mobility, Knowledge Process Outsourcing (KPO) and green and
sustainability initiatives.

(Rs. crores)
Other Segments A B C D E

Revenues 8,648.65 - 6,559.82 - 31.84
Segment result 2,273.49 26.29 1,750.33 26.68 29.89

A = Fiscal 2011
B = % of Segment Revenues in Fiscal 2011
C = Fiscal 2010
D = % of Segment Revenues in Fiscal 2010
E = % Growth

Other segments include:

* Life Sciences and Healthcare.

* Energy, Resources and Utilities.

* Travel, Transportation and Hospitality.

* Third Party Products.

* Hi-Tech.

* s-Governance.

* Others.

The 'Other segments' constituted 23.17% of Company's revenues in fiscal
2011 (21.85% in fiscal 2010) and has contributed 20.55% of total segment
result in fiscal 2011 (20.44% in fiscal 2010).

The combined performance of 'Other segments' was an excellent growth in
revenues (31.84% in fiscal 2011 over fiscal 2010) and an impressive
improvement in segment result (29.89% in fiscal 2011 over fiscal 2010).
Segment result remained steady at 26.29%. Some of the star performers were
Life Sciences and Healthcare (revenue growth 26.80%), Energy, Resources and
Utilities (revenue growth 79.50%), Hi-Tech (revenue growth 43.70%) and
Travel, Transportation and Hospitality (revenue growth 33.30%) in fiscal
2011 over fiscal 2010.

(Rs. crores)
As at March 31,
2011 2010

Authorised:

225 crores equity shares of Rs.1 each 225.00 225.00

100 crores redeemable preference shares of
Rs.1 each 100.00 100.00

Total 325.00 325.00

Issued, subscribed and paid-up:

195.72 crores equity shares of Rs.1 each 195.72 195.72

100 crores redeemable preference shares of
Rs.1 each 100.00 100.00

Total 295.72 295.72

The authorised share capital remained at 225 crores equity shares of Rs.1
each and 100 crores redeemable preference shares of Rs. 1 each.

Reserves and surplus:

The balance in the Capital reserve (on consolidation) stood at Rs. 24.50
crores as at March 31, 2011 (Rs. 5.02 crores as at March 31, 2010). The
increase in the balance of Capital reserve during fiscal 2011 is on account
of the purchase accounting for the acquisition of Unisys Insurance Services
Limited (UISL) (renamed as Diligenta 2 Limited) where the net assets
acquired were higher as compared to the purchase consideration.

The balance in the Capital redemption reserve remained unchanged at Rs.0.40
crores as at the end of March 31, 2011.

Securities premium account stood unchanged at Rs. 1,918.47 crores as at
March 31, 2011.

The opening balance of General reserve as at April 1, 2010 was Rs. 2,539.59
crores. In fiscal 2011, Rs. 827.58 crores was transferred to the General
reserve from the profit and loss account. The closing balance in the
General reserve as at March 31, 2011 was Rs. 3,367.17 crores.

Balance in the profit and loss account as at March 31, 2011 was at
Rs.18,635.05 crores (Rs. 13,604.84 crores as at March 31, 2010).

Foreign currency translation reserve:

For purpose of consolidation of subsidiaries with the financial information
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 currency translation reserve was Rs. 200.77 crores as at March 31,
2011 (Rs. 108.75 crores as at March 31, 2010).

The closing balance of hedging reserve (arising out of cash flow hedges) as
at March 31, 2011 showed net accumulated gain of Rs. 62.73 crores (Rs. 6.07
crores net accumulated loss as at March 31, 2010).

Reserves and surplus at the end of fiscal 2011 was Rs. 24,209.09 crores, an
increase of 33.23% over Rs. 18,171.00 crores at the end of fiscal 2010.

Loans:

Secured loans as at March 31, 2011 were Rs. 38.44 crores (Rs. 31.21 crores
as at March 31, 2010).

Bank overdrafts as at March 31, 2011 aggregated Rs. 0.46 crores (Rs. 'Nil'
as at March 31, 2010) and were secured against domestic book debts.

The Company's obligations under finance lease (refer note 9 to schedule Q
in consolidated notes to accounts) was Rs. 37.98 crores as at March 31,
2011 (Rs. 31.21 crores as at March 31, 2010) - these are secured against
fixed assets obtained under finance lease arrangements.

Unsecured loans as at March 31, 2011 aggregated Rs. 36.36 crores (Rs. 72.04
crores as at March 31, 2010). Loans from banks as at March 31, 2011 were at
Rs. 31.11 crores (Rs. 58.31 crores as at March 31, 2010). Other unsecured
loans were Rs. 5.25 crores as at March 31, 2011 (Rs. 13.73 crores as at
March 31, 2010).

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

As stated in the accounting policies (see notes to consolidated accounts,
schedule Q1(I)), deferred tax assets and liabilities are offset,
tax jurisdiction-wise. Schedule 'E' of the balance sheet brings out details
of component-wise deferred tax balances where the net values result into
liabilities or assets, jurisdiction-wise.

Deferred tax liabilities are created against certain items such as foreign
branch profit and depreciation. The net deferred tax liability was
Rs.109.49 crores as at March 31, 2011 (Rs. 68.68 crores as at March 31,
2010). Deferred tax assets are created against certain items such as
employee benefits, depreciation and provision for doubtful debts. As at
March 31, 2011, the net deferred tax asset had a balance of Rs. 160.18
crores (Rs. 167.86 crores as at March 31, 2010). The Company assesses the
likelihood of deferred tax assets getting recovered from future taxable
income.

Fixed assets:

Additions to the gross block excluding Capital-Work-in -Progress (CWIP) in
fiscal 2011 amounted to Rs. 1,493.79 crores (Rs. 737.93 crores in fiscal
2010). The significant items of additions were:

* Land and buildings Rs. 299.11 crores in fiscal 2011 (Rs. 179.90 crores in
fiscal 2010).

* Leasehold improvements Rs. 140.88 crores in fiscal 2011(Rs. 62.90 crores
in fiscal 2010).

* Computers Rs. 587.16 crores in fiscal 2011 (Rs. 266.84 crores in fiscal
2010).

* Office equipment, electrical installations and furniture and fixtures
Rs.366.23 crores in fiscal 2011 (Rs. 214.30 crores in fiscal 2010).

The amount in CWIP was Rs. 1,469.18 crores as at March 31, 2011
(Rs.1,017.37 crores as at March 31, 2010) mostly related to construction /
improvement of facilities which are likely to be ready for use in fiscal
2012 and beyond. The CWIP included capital advances of Rs. 275.29 crores as
at March 31, 2011 (Rs. 219.73 crores as at March 31, 2010).

The Company entered into contractual commitments with vendors who are
executing various infrastructure projects. The estimated amount of such
contracts remaining to be executed on capital account was Rs. 1,208.27
crores as at March 31, 2011 (Rs. 1,172.62 crores as at March 31, 2010).

Goodwill on consolidation:

Goodwill on consolidation represents the excess of purchase consideration
over net asset value of acquired subsidiaries on the date of such
acquisition. Such goodwill is tested for impairment annually or more
frequently, if there are indications for impairment. The management does
not foresee any risk of impairment on the carrying value of goodwill as at
March 31, 2011.

Goodwill on consolidation as at March 31, 2011 stood at Rs. 3,232.00 crores
(Rs. 3,215.99 crores as at March 31, 2010).

The strategic acquisitions which have significant contribution to goodwill
on consolidation are:

(1) TCS e-Serve Ltd. - 59.68%
(2) TCS Switzerland Ltd. - 9.74%
(3) TCS FNS (Pty) Ltd. - 5.60% and
(4) Subsidiaries of TCS Iberoamerica S.A. - 9.18%.

Investments:

(Rs. crores)
As at March 31,
2011 2010

Investments in fully paid-up equity and
preference shares (unquoted) 30.33 11.67

Investments in bonds (quoted) 84.15 10.97

Investments in bonds and debentures
(unquoted) 1,305.99 1,200.00

Investments in mutual funds (unquoted) 343.24 2,459.44

Total investments 1,763.71 3,682.08

Less: provision for diminution in the
value of investments (1.04) -

Net investments 1,762.67 3,682.08

Investments in bonds and debentures (quoted and unquoted) as at March 31,
2011 was Rs. 1,390.14 crores (Rs. 1,210.97 crores). The additional
investments in bonds and debentures are attributable to investments made by
a subsidiary in India.

In order to achieve higher yield, the Company has increased its exposure in
fixed deposit with banks in India from Rs. 3,531.31 crores as at March 31,
2010 to Rs. 6,061.70 crores as at March 31, 2011 and consequently the
exposure in mutual funds has been reduced from Rs. 2,459.44 crores as at
March 31, 2010 to Rs. 343.24 crores as at March 31, 2011. This was in line
with the Company's strategy for optimum utilisation of surplus cash.

Mergers/Acquisitions/Liquidations during fiscal 2011 through subsidiaries:

Mergers:

Custodia De Documentos Interes Limitada, Syscrom SA and Tata Consultancy
Services Chile SA were merged with Tata Consultancy Services BPO Chile SA
and subsequently the name of the merged entity was changed to Tata
Consultancy Services Chile SA.

Exegenix Research Inc. and ERI Holdings Corp. were merged with Tata
Consultancy Services Canada Inc. The merged entity is a wholly owned
subsidiary of Tata Consultancy Services Limited.

Acquisitions:

Diligenta Limited, U.K., acquired 100% equity interest in Unisys Insurance
Services Limited (renamed as Diligenta 2 Limited).

CMC America Inc. subscribed to 100% share capital of CMC eBiz, Inc.

Tata America International Corporation acquired 100% equity share capital
of MS CJV Investments Corporation. Consequently, the group holding in Tata
Consultancy Services (China) Co. Ltd. has increased from 65.94% to 74.63%.

Liquidations:

Financial Network Services (H.K.) Limited (subsidiary of TCS Financial
Solutions Australia Holdings Pty Limited) has been voluntarily liquidated
and de-registered.

Current assets, loans and advances:

Unbilled revenues:

Unbilled revenues primarily comprise revenues recognised in relation to
efforts incurred on contracts, which are yet to be billed.

Unbilled revenues were Rs. 1,348.85 crores as at March 31, 2011
(Rs.1,201.14 crores as at March 31, 2010) representing 3.61% of the
revenues for fiscal 2011 (4.00% as at March 31, 2010).

Sundry debtors:

Sundry debtors as at March 31, 2011 aggregated Rs. 8,198.84 crores
(Rs.5,855.41 crores as at March 31, 2010). As a percentage of revenues,
sundry debtors were at 21.97% as at March 31, 2011 as compared to 19.50% as
at March 31, 2010.

Cash and bank balances:

(Rs. crores)
As at March 31,
2011 2010

Fixed deposit with banks in India 6,061.70 3,531.31

Deposits with banks overseas 527.22 538.61

Current bank accounts - India 108.73 116.34

Current bank accounts - Overseas 616.27 417.69

Cheques in hand, remittances in transit
and cash 64.17 114.64

Total 7,378.09 4,718.59

The amount held in fixed deposits with banks in India increased from
Rs.3,531.31 crores as at March 31, 2010 to Rs. 6,061.17 crores as at March
31, 2011 in line with the Company's cash management strategies. As a
result, the yield from deployment of surplus cash has increased in fiscal
2011.

Loans and advances:

Loans and advances include advances recoverable, advance tax net of
provision for taxes, loans and advances to employees and MAT credit.

Loans and advances as at March 31, 2011 were at Rs. 4,858.16 crores
(Rs.3,969.77 crores as at March 31,2010). The increase was primarily
attributable to:

* Advances recoverable Rs. 2,377.06 crores as at March 31, 2011
(Rs.1,938.44 crores as at March 31, 2010)

* Advance taRs.(net of provision for taxes) Rs. 1,249.72 crores as at March
31, 2011 (Rs. 771.12 crores as at March 31, 2010).

Current liabilities:

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

Current liabilities increased to Rs. 4,698.09 crores as at March 31, 2011
as compared to Rs. 4,093.79 crores as at March 31, 2010. The increase was
primarily due to:

* Sundry creditors Rs. 3,354.49 crores as at March, 31, 2011 (Rs. 2,977.73
crores at March 31, 2010).

* Other liabilities Rs. 522.42 crores as at March 31, 2011 (Rs. 371.82
crores as at March 31, 2010). These other liabilities include fair values
of foreign exchange forward and currency option contracts Rs.57.70 crores
as at March 31, 2011 (Rs. 115.92 crores as at March 31, 2010).

Provisions:

Provisions include employee benefits, proposed final dividend on equity
shares, provisions for taxes (net of advance tax), proposed dividend on
redeemable preference shares, tax on dividend and provision for
contingencies and warranties.

Provisions aggregated Rs. 2,906.49 crores as at March 31, 2011 (Rs.4,300.07
crores as at March 31, 2010). The decrease was mainly attributable to:

* Proposed final dividends on equity shares Rs. 1,565.78 crores as at March
31, 2011 (Rs. 2,740.11 crores as at March 31, 2010).

* Tax on dividends Rs. 266.74 crores as at March 31, 2011 (Rs. 466.23
crores as at March 31, 2010).

CASH FLOW - CONSOLIDATED Cash Inflows:

Cash generated from operations 95.55%
Interest and Dividend from Investments 4.45%

Cash Outflows:

Dividend to shareholders 51.88%
Income Taxed paid 25.64%
Repayment of Borrowings 0.27%
Interest Paid 0.30%
Net Investments 1.28%
Capital Expenditure 20.63%

Cash flows are reported by adjusting net profit before tax for effect of
non-cash transactions, changes in working capital, income taxes paid, cash
transactions of capital nature, cash transactions relating to investing and
financing activities. Cash flows from operating, investing and financing
activities of the Company are identified and reported separately.

Summary of cash flow statement is given below:

(Rs. crores)
Fiscal Fiscal
2011 2010

Cash and cash equivalents at beginning
of the year 1,024.37 1,459.54

Net cash provided by operating activities 6,638.09 7,406.23

Net cash used in investing activities (1,485.25) (5,413.22)

Net cash used in financing activities (4,658.90) (2,381.35)

Net increase/(decrease) in cash and
cash equivalents 493.94 (388.34)

Exchange difference on translation
of foreign currency cash and cash
equivalents 30.28 (46.83)

Cash and cash equivalents at end of
the year 1,548.59 1,024.37

Deposits with original maturity over
three months 5,803.38 3,652.74

Restricted cash 26.12 41.48

Cash and bank balance at the end
of the year 7,378.09 4,718.59

Cash flow from operations:

Net cash of Rs. 6,638.09 crores was generated from operating activities by
the Company in fiscal 2011 (Rs. 7,406.23 crores in fiscal 2010).

(Rs. crores)
Fiscal 2011 Fiscal 2010

Operating profit before working capital
changes 11,042.75 8,834.02
Effect of working capital changes (2,127.66) 479.52
Cash generation from operations 8,915.09 9,313.54
Tax payments made (2,277.00) (1,907.31)
Net cash provided by operating activities 6,638.09 7,406.23

The operating profit in fiscal 2011 as compared to fiscal 2010 went up by
25.00%. However, requirement of additional working capital and increased
income tax payments 19.38% in fiscal 2011 resulted in reduction of net cash
inflow from operating activities. Additional working capital was driven by
business needs.

Cash flow from investing activities:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Purchase of fixed assets (1,850.32) (1,044.79)

Sale/(purchase) of investments 2,001.67 (1,914.80)

Purchase of fixed deposits with banks
(net) having maturity over three months (2,141.38) (2,421.99)

Others 504.78 (31.64)

Net cash used in investing activities (1,485.25) (5,413.22)

In fiscal 2011 the Company used Rs. 1,485.25 crores on investing activities
(Rs. 5,413.22 crores in fiscal 2010). The significant items of investing
activities were:

* Fixed deposits with banks (net) having maturity greater than 3 months of
Rs. 2,141.38 crores in fiscal 2011 ( Rs. 2,421.99 crores in fiscal 2010).

* Sale of investments (primarily mutual funds) Rs. 2,001.67 crores in
fiscal 2011 (purchase Rs. 1,914.80 crores in fiscal 2010).

* Interest on deposits received in fiscal 2011 of Rs. 398.75 crores
(Rs.92.81 crores in fiscal 2010) included in 'Others'.

Cash flow from financing activities:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Dividends paid (including tax) (4,592.69) (1,958.43)
Repayments of borrowings (net) (24.39) (400.57)
Others (41.82) (22.35)
Net cash used in financing activities (4,658.90) (2,381.35)

In fiscal 2011 the Company used Rs. 4,658.90 crores in financing activities
( Rs. 2,381.35 crores in fiscal 2010). In fiscal 2011, the significant
items of cash used in financing activities were:

* Payment of dividend including tax of Rs. 4,592.69 crores due to the
substantial increase attributable to a special one-time dividend of Rs. 10
per share declared in fiscal 2010 and paid in fiscal 2011 (Rs. 1,958.43
crores in fiscal 2010).

* Repayment of bank borrowings (net) of Rs. 24.39 crores in fiscal 2011
(Rs. 400.57 crores in fiscal 2010).

FINANCIAL PERFORMANCE UNCONSOLIDATED:

Summary:

The total revenues of TCS Limited aggregated Rs. 29,275.41 crores in fiscal
2011 as compared to Rs. 23,044.45 crores in fiscal 2010, registering a
growth of 27.04%.

Other financial performance parameters are shown below:

* Company's profit before taxes aggregated Rs. 8,700.43 crores in fiscal
2011 (Rs. 6,370.38 crores in fiscal 2010), registering a growth of 36.58%.

* Company's profit after taxes aggregated Rs. 7,569.99 crores in fiscal
2011 (Rs. 5,618.51 crores in fiscal 2010), registering a growth of 34.73%.

* Company's earnings per share (EPS) were Rs. 38.61 in fiscal 2011
(Rs.28.61 in fiscal 2010), registering a growth of 34.95%.

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 2011 the Company declared three interim dividends of Rs. 2 per
equity share. A final dividend of Rs. 8 per equity share has been
recommended by the Board of Directors at its meeting held on April 21,
2011.

On approval by the shareholders of the final dividend of Rs. 8 per equity
share, total dividend for fiscal 2011 would be Rs. 14 per equity share
(total dividend for fiscal 2010 was Rs. 20 per equity share which included
a special one-time dividend of Rs. 10 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 to
the financial statements for the years ended March 31, 2011 and March 31,
2010.

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


For the year ended
March 31, 2011
Revenues from operations (Rs. crores) % of
Revenues

Information technology and consultancy services 28171.26 96.23

Sale of equipment and software licenses 1104.15 3.77

Total revenues 29275.41 100.00

Expenditure:

Employee costs 10190.31 34.81

Overseas business expenses (employee allowances
paid overseas) 4533.29 15.48

Total employee costs 14723.60 50.29

Overseas business expenses (other than employee
allowance paid overseas) 446.65 1.53

Services rendered by business associates and
others 1735.72 5.93

Operation and other expenses 3605.91 12.32

Total expenditure 20511.88 70.07

Other income (net) 494.73 1.69

Profit before interest depreciation and taxes 9258.26 31.62

Interest 20.01 0.07

Depreciation and amortisation 537.82 1.83

Profit before taxes 8700.43 29.72

Provision for taxes:

Income tax expense (including deferred tax
fringe benefit tax and MAT credit entitlement) 1130.44 3.86

Net profit 7569.99 25.86


For the year ended
March 31, 2010
Revenues from operations (Rs. crores) % of
Revenues

Information technology and consultancy services 22232.93 96.48

Sale of equipment and software licenses 811.52 3.52

Total revenues 23044.45 100.00

Expenditure:

Employee costs 7882.43 34.21

Overseas business expenses (employee allowances
paid overseas) 3900.76 16.93

Total employee costs 11783.19 51.14

Overseas business expenses (other than employee
allowance paid overseas) 324.54 1.41

Services rendered by business associates and
others 992.02 4.30

Operation and other expenses 3273.03 14.20

Total expenditure 16372.78 71.05

Other income (net) 177.60 0.77

Profit before interest depreciation and taxes 6849.27 29.72

Interest 9.54 0.04

Depreciation and amortisation 469.35 2.04

Profit before taxes 6370.38 27.64

Provision for taxes:

Income tax expense (including deferred tax fringe
benefit tax and MAT credit entitlement) 751.87 3.26

Net profit 5618.51 24.38

FY 11 vs. FY 10
Revenues from operations % growth

Information technology and consultancy services 26.71

Sale of equipment and software licenses 36.06

Total revenues 27.04

Expenditure:

Employee costs 29.28

Overseas business expenses (employee allowances paid
overseas) 16.22

Total employee costs 24.95

Overseas business expenses (other than employee
allowance paid overseas) 37.63

Services rendered by business associates and others 74.97

Operation and other expenses 10.17

Total expenditure 25.28

Other income (net) 178.56

Profit before interest depreciation and taxes 35.17

Interest 109.75

Depreciation and amortisation 14.59

Profit before taxes 36.58

Provision for taxes:

Income tax expense (including deferred tax fringe
benefit tax and MAT credit entitlement) 50.35

Net profit 34.73

Revenues:

Revenues from operations:

The Company's revenues increased in fiscal 2011to Rs. 29,275.41 crores from
Rs. 23,044.45 crores in fiscal 2010, a growth of 27.04% (2.86% in fiscal
2010).

Revenues from information technology and consultancy services increased in
fiscal 2011 to Rs. 28,171.26 crores from Rs. 22,232.93 crores in fiscal
2010, a growth of 26.71%. Revenues from information technology and
consultancy services constituted 96.23% of total revenues in fiscal 2011
(96.48% in fiscal 2010).

Revenues from sale of equipment and software licenses increased in fiscal
2011 to Rs. 1,104.15 crores from Rs. 811.52 crores in fiscal 2010, an
increase of 36.06%. Sale of equipment and software licenses constituted
3.77% of total revenues in fiscal 2011 (3.52% in fiscal 2010).

Expenditure:

Total employee costs:

Total employee costs in fiscal 2011 increased to Rs. 14,723.60 crores from
Rs. 11,783.19 crores in fiscal 2010, a growth of 24.95%. Total employee
costs as a percentage of revenues was 50.29% in fiscal 2011 (51.14% in
fiscal 2010). The decrease in employee cost in fiscal 2011 over fiscal 2010
of 0.85% of revenues was primarily attributable to:

* Higher salaries and incentives to employees in India of 0.60%, due to
increase in the India headcount.

* Offset by lower employee allowances to overseas employees of 1.45%.
However, expenses for business associates were higher at 5.93% of revenues
in fiscal 2011 (4.30% of revenues in fiscal 2010).

Overseas business expenses (other than overseas employee allowances):

Expenses on this account went up from Rs. 324.54 crores in fiscal 2010 to
Rs. 446.65 crores in fiscal 2011 mainly due to increase in overseas travel
related costs 0.92% of revenues in fiscal 2011 (0.85% of revenues in fiscal
2010). As a percentage of revenues, overseas business expenses increased
from 1.41% in fiscal 2010 to 1.53% in fiscal 2011. Such increase was
necessitated by business needs in the changing market conditions.

Services rendered by business associates and others:

Expenditure on business associates increased from Rs. 992.02 crores in
fiscal 2010 to Rs. 1,735.72 crores in fiscal 2011. As a percentage of
revenues, these expenses increased from 4.30% in fiscal 2010 to 5.93% in
fiscal 2011. The increase of 1.63% in the fiscal 2011 is attributable to
increase in requirement of business associates globally to ensure meeting
of customer expectations.

Operation and other expenses:

The table below summarises the nature of expenses considered under Other
operating expenses:

Nature of Expenses For the year ended
March 31, 2011 March 31, 2010
(Rs. % (Rs. %
crores) Revenues crores) Revenues

Software and hardware 1,438.49 4.91 1,254.80 5.44
Communication 302.57 1.03 284.22 1.23
Travelling and conveyance 295.75 1.01 186.00 0.81
Rent 477.64 1.63 503.90 2.19
Legal and professional 122.10 0.42 93.76 0.41
Repairs and maintenance 180.47 0.62 141.41 0.61
Electricity 240.00 0.82 200.49 0.87
Recruitment and training 165.84 0.57 78.79 0.34
Other expenses 383.05 1.31 529.66 2.30
Total 3,605.91 12.32 3,273.03 14.20

Operation and other expenses increased to Rs. 3,605.91 crores in fiscal
2011from Rs. 3,273.03 crores in fiscal 2010. As a percentage of revenues,
these expenses decreased from 14.20% in fiscal 2010 to 12.32% in fiscal
2011. The decrease of 1.88% was primarily due to:

* Reduction in software and hardware purchased 0.53%.

* Reduction in communication costs 0.20%.

* Reduction in rent expenses 0.56%.

* Reduction in 'other expenses' 0.99% primarily on account of write back of
provision for doubtful debts 0.98%.

* Offset by an increase in travelling and conveyance expenses 0.20% and
recruitment and training expenses 0.23% on account of increased levels of
business activity.

Other income (net):

Other income (net) was a gain of Rs. 494.73 crores in fiscal 2011
(Rs.177.60 crores in fiscal 2010). Other income (net) was 1.69% of revenues
in fiscal 2011 (0.77% of revenues in fiscal 2010).

The primary reasons for the increase in other income were:

* Higher interest income Rs. 427.95 crores in fiscal 2011 (Rs. 196.69
crores in fiscal 2010).

* Higher dividend income Rs. 39.27 crores in fiscal 2011 (Rs. 15.99 crores
in fiscal 2010).

* Reduction in net exchange loss Rs. 53.04 crores in fiscal 2011 as
compared to Rs. 205.42 crores in fiscal 2010.

* Offset by lower profit on sale of mutual funds and other current
investments Rs. 73.61 crores in fiscal 2011 (TI48.41 crores in fiscal
2010).

Forward and options contracts:

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 2011 was Rs. 9,258.26 crores (Rs. 6,849.27 crores in

fiscal 2010). PBIDT as a percentage of revenues went up from 29.72% in
fiscal 2010 to 31.62% in fiscal 2011. The increase in the PBIDT of 1.90% as
a percentage of revenues during fiscal 2011 was attributable to:

* Decrease in operation and other expenses 1.88%.

* Decrease in total employee cost 0.85%.

* Increase in other income (net) 0.92%.

* Offset by an increase in the cost of services rendered by business
associates 1.63% and an increase in overseas business expenses other than
employee costs by 0.12%.

Interest costs:

Interest costs increased to Rs. 20.01 crores in fiscal 2011 from Rs. 9.54
crores in fiscal 2010.

Depreciation:

Depreciation charge increased to Rs. 537.82 crores in fiscal 2011from
Rs.469.35 crores in fiscal 2010.

In terms of percentage of revenues, depreciation charge was 1.83% in fiscal
2011 (2.04% in fiscal 2010).

The decrease of depreciation in terms of percentage of revenues 0.21% was
primarily attributable to lower depreciation charge for:

* Freehold building 0.04%.

* Office equipment and electrical installations 0.04%.

* Leasehold improvements 0.04%.

* Furniture and fixtures 0.15%.

* Offset by increase on account of computers 0.07%.

Profit before taxes (PBT):

The PBT in fiscal 2011 was Rs. 8,700.43 crores (Rs. 6,370.38 crores in
fiscal 2010). As a percentage of revenues, the PBT increased from 27.64% in
fiscal 2010 to 29.72% in fiscal 2011. The primary reasons for the increase
in the PBT of 2.08% was due to:

* Increase in PBIDT 1.90%.

* Decrease in depreciation charge 0.21%.

* Offset by increase in interest cost 0.03%.

Provision for taxation:

The tax expense increased from Rs. 751.87 crores in fiscal 2010 (3.26% of
revenues) to Rs. 1,130.44 crores in fiscal 2011 (3.86% of revenues). The
increase in net tax provision was primarily attributable to:

* Increase in tax provision as a result of expiry of tax holiday of certain
STP units.

* Increase in other income.

* Higher deferred tax expense arising out of reversal of provision for bad
and doubtful debts.

Net Profit:

The Company's net profit was Rs. 7,569.99 crores in fiscal 2011
(Rs.5,618.51 crores in fiscal 2010).

Net profit margin increased from 24.38% in fiscal 2010 to 25.86% in fiscal
2011. The improvement of 1.48% was attributable to:

* higher PBT 2.08%.

* offset by higher taxes 0.60%.

Dividends:

For fiscal 2011 the Company declared three interim dividends of Rs. 2 per
equity share. A final dividend of Rs. 8 per equity share has been
recommended.

On approval of the final dividend of Rs. 8 per equity share the total
dividend for fiscal 2011 would be Rs. 14 per equity share. The table below
provides summary of dividend payout in last three fiscal years:

First Second
Interim Interim
Dividend Dividend

2010-11:
Number of shares (crores) 195.72 195.72
Dividend per share (Rs.) 2.00 2.00
Dividend amount (Rs. crores) 391.44 391.44
Dividend tax (Rs. crores) 65.01 65.01
Total outflow (Rs. crores) 456.45 456.45
2009-10:
Number of shares (crores) 195.72 195.72
Dividend per share (Rs.) 2.00 2.00
Dividend amount (Rs. crores) 391.44 391.44
Dividend tax (Rs. crores) 66.53 66.53
Total outflow (Rs. crores) 457.97 457.97
2008-09:
Number of shares (crores) 97.86 97.86
Dividend per share (Rs.) 3.00 3.00
Dividend amount (Rs. crores) 293.58 293.58
Dividend tax (Rs. crores) 49.89 49.89
Total outflow (Rs. crores) 343.47 343.47

Third Final
Interim Dividend
Dividend

2010-11:
Number of shares (crores) 195.72 195.72
Dividend per share (Rs.) 2.00 8.00
Dividend amount (Rs. crores) 391.44 1565.78
Dividend tax (Rs. crores) 65.01 254.01
Total outflow (Rs. crores) 456.45 1819.79
2009-10:
Number of shares (crores) 195.72 195.72
Dividend per share (Rs.) 2.00 4.00
Dividend amount (Rs. crores) 391.44 782.89
Dividend tax (Rs. crores) 66.53 130.03
Total outflow (Rs. crores) 457.97 912.92
2008-09:
Number of shares (crores) 97.86 97.86
Dividend per share (Rs.) 3.00 5.00
Dividend amount (Rs. crores) 293.58 489.31
Dividend tax (Rs. crores) 49.89 83.15
Total outflow (Rs. crores) 343.47 572.46

Special Total
Dividend Dividend

2010-11:
Number of shares (crores) - 195.72
Dividend per share (Rs.) - 14.00
Dividend amount (Rs. crores) - 2740.10
Dividend tax (Rs. crores) - 449.04
Total outflow (Rs. crores) - 3189.14
2009-10:
Number of shares (crores) 195.72 195.72
Dividend per share (Rs.) 10.00 20.00
Dividend amount (Rs. crores) 1957.22 3914.43
Dividend tax (Rs. crores) 325.07 654.69
Total outflow (Rs. crores) 2282.29 4569.12
2008-09:
Number of shares (crores) - 97.86
Dividend per share (Rs.) - 14.00
Dividend amount (Rs. crores) - 1370.05
Dividend tax (Rs. crores) - 232.82
Total outflow (Rs. crores) - 1602.87

Proposed dividend on redeemable preference shares of Rs. 100.00 crores was
Rs. 11.00 crores and dividend tax Rs. 1.78 crores in fiscal 2011 (Rs.17.00
crores and dividend tax Rs. 2.82 crores in fiscal 2010). The dividend
payable on the preference shares is 1.00% fixed component and a variable
component linked to the dividends paid out to the equity shareholders.

FINANCIAL POSITION - UNCONSOLIDATED:

Share capital:

(Rs. crores)
As at March As at March
31, 2011 31, 2010

Authorised share capital 325.00 325.00

Issued, subscribed and
paid-up share capital 295.72 295.72

The issued, subscribed and paid-up share capital as at March 31, 2011
comprised 195.72 crores equity shares of Rs. 1/- each and 100.00 crores
cumulative redeemable preference shares of Rs. 1/- each , the same balances
stood as at the March 31, 2010.

Reserves and surplus:

The balance in the Securities premium account as at March 31, 2011 was
Rs.1,918.47 crores (Rs. 1,918.47 crores as at March 31, 2010).

General reserve as at March 31, 2010 was Rs. 2,426.14 crores. On transfer
of 10.00% of the profit after tax in fiscal 2011 amounting to Rs. 757.00
crores (Rs. 561.85 crores in fiscal 2010), the General reserve as at March
31, 2011 increased to Rs. 3,183.14 crores.

Balance in the profit and loss account as at March 31, 2011 was at
Rs.14,069.20 crores (Rs. 10,458.13 crores as at March 31, 2010).

Foreign currency translation reserve was Rs. 101.61 crores as at March 31,
2011 (Rs. 94.98 crores as at March 31, 2010).

The balance in hedging reserve account as at March 31, 2011 showed an
accumulated balance of Rs. 11.35 crores (accumulated loss of Rs. 76.82
crores as at March 31, 2010).

Reserves and surplus grew due to accretion of profits and as at March 31,
2011 was Rs.19,283.77 crores, an increase of 30.11% over Rs. 14,820.90
crores, as at March 31, 2010.

Loans:

Secured loans as at March 31, 2011 aggregated Rs. 35.87 crores (Rs. 29.25
crores as at March 31, 2010) due to finance lease obligations which are
secured against fixed assets. For details refer to obligation under finance
lease (note 7 to Schedule Q in unconsolidated notes to accounts).

Unsecured loans stood at Rs. 5.25 crores as at March 31, 2011 (Rs. 6.49
crores as at March 31, 2010). Out of the unsecured loans, Rs. 1.25 crores
is repayable within one year (Rs. 1.25 crores as at March 31, 2010).

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

As stated in the accounting policy (see notes to accounts (unconsolidated),
schedule Q1 (k)), deferred tax assets and liabilities are offset,
tax jurisdiction-wise. Schedule 'E' of the balance sheet brings out details
of component-wise deferred tax balances where the net values result into
liabilities or assets, jurisdiction-wise.

Deferred tax liabilities are created against certain items such as foreign
branch profit and depreciation. The net deferred tax liability was Rs.69.32
crores as at March 31, 2011(Rs. 40.10 crores as at March 31, 2010).
Deferred tax assets are created against certain items such as employee
benefits, depreciation and provision for doubtful debts. As at March 31,
2011, the net deferred tax asset had a balance of Rs. 52.03 crores (Rs.
53.13 crores as at March 31, 2010).

The Company assesses the likelihood of deferred tax assets getting
recovered from future taxable income.

Fixed assets:

Addition to the gross block excluding Capital-Work-in-Progress (CWIP) in
fiscal 2011 amounted to Rs. 1,202.72 crores (Rs. 571.42 crores in fiscal
2010). The significant additions in fiscal 2011 were:

* Land and buildings Rs. 280.69 crores in fiscal 2011 (Rs. 161.65 crores in
fiscal 2010).

* Leasehold improvements Rs. 98.54 crores in fiscal 2011 (Rs. 49.45 crores
in fiscal 2010).

* Computers Rs. 490.29 crores in fiscal 2011 (Rs. 179.37 crores in fiscal
2010).

* Office equipment, electrical installations, and furniture and fixtures
Rs. 269.39 crores in fiscal 2011 (Rs. 178.00 crores in fiscal 2010).

The amount of CWIP of Rs. 1,345.37 crores as at March 31, 2011 (Rs. 940.72
crores as at March 31, 2010) mostly relates to construction / improvement
of facilities which are expected to be ready for use during fiscal 2012 and
beyond.

The Company entered into contractual commitments with vendors who are
executing various infrastructure projects.

The estimated amount of such contracts remaining to be executed on capital
account was Rs. 1,132.27 crores as at March 31, 2011(Rs. 1,115.02 crores as
at March 31, 2010).

The Company has embarked on a large scale infrastructure development across
various locations in India to meet its growing business needs. The Company
has successfully put in place a state-of-the-art facility at Chennai for a
significant capacity of 25,000 seats. The Company has also initiated
construction of large delivery centers across 11 locations in India in
order to create additional 1,75,000 seats. Many of these locations are
notified as Special Economic Zones.

The number of seats available in India as at March 31, 2011 was 1,28,572
(1,09,105 seats as at March 31, 2010).

Investments:

(Rs. crores)
As at As at
Investments March 31, March 31,
2011 2010

Trade investments,
bonds and debentures 5,799.78 5,769.93

Investments in mutual
funds 4.00 2,123.46

Total investments 5,803.78 7,893.39

Less: Provision for
diminution in value of
investments (8.29) -

Net investments 5,795.49 7,893.39

The Company's trade investments made over the years till date shows a
balance of Rs. 5,795.49 crores. Investment in mutual funds decreased
substantially to Rs. 4.00 crores as at March 31, 2011 from Rs. 2,123.46
crores as at March 31, 2010. Correspondingly, fixed deposits with banks
registered substantial increase. This was in line with the Company's
strategy for optimum utilisation of surplus cash.

The Company's Investments in debentures, bonds, preference shares and trade
investments as at March 31, 2011 was Rs. 5,799.78 crores (Rs. 5,769.93
crores as at March 31, 2010). The amount of trade investments made during
fiscal 2011 aggregated to Rs. 57.06 crores.

The Company' trade related investments during fiscal 2011 are shown in the
table:

Investments:

TCS e-Serve Limited

Details:

During fiscal 2011, the Company received Rs. 27.33 crores against release
of an indemnification obligation. This amount has been adjusted against the
cost of the investment.

Investments:

Retail FullServe Limited

Details:

During fiscal 2011, the Company acquired 100% equity share capital of
SUPERVALU Services India Private Limited (renamed as Retail Full Serve
Limited) for a consideration of Rs. 36.17 crores.

Investments:

MahaOnline Limited


Details:

During fiscal 2011, the Company subscribed to 74.00% of the equity share
capital of Maha Online Limited for a consideration of Rs. 1.89 crores.

Investments:

Taj Air Limited

Details:

During fiscal 2011, the Company subscribed to 1,90,00,000 shares of Taj Air
Limited for a consideration of Rs. 19.00 crores.

Current assets, loans and advances:

Unbilled Revenues:

Unbilled revenues were Rs. 836.37 crores as at March 31, 2011 (Rs. 646.96
crores as at March 31, 2010) representing 2.86% of the revenues for fiscal
2011 (2.81% for fiscal 2010).

Sundry debtors:

Sundry debtors as at March 31, 2011 aggregated Rs. 4,806.67 crores
(Rs.3,332.30 crores as at March 31, 2010). As a percentage of revenues,
sundry debtors were at 16.42% as at March 31, 2011 compared to 14.46% as at
March 31, 2010.

Cash and bank balances:

The Company had cash and bank balances of Rs. 5,604.52 crores as at March
31, 2011 (Rs. 3,396.16 crores as at March 31, 2010). The balances with
scheduled banks (including bank deposits and remittances in transit) in
India aggregated Rs. 5,412.82 crores as at March 31, 2011 (Rs. 3,214.05
crores as at March 31, 2010). This increase in deposits with scheduled
banks was in line with the investment strategy adopted by the Company. The
balances with overseas banks were Rs. 190.94 crores as at March 31, 2011
(Rs. 181.39 crores as at March 31, 2010).

Loans and advances:

Loans and advances as at March 31, 2011 were Rs. 4, 110.41 crores

(Rs.3,385.11 crores as at March 31, 2010). Significant items of loans and
advances were:

* Advances recoverable in cash or kind or for value to be received
Rs.1,968.86 crores as at March 31, 2011 (Rs. 1,538.62 crores as at March
31, 2010).

* Advance tax (net of provision for taxes) Rs. 513.89 crores as at March
31, 2011 (Rs. 183.50 crores as at March 31, 2010).

Current liabilities:

Current liabilities increased to Rs. 3,863.07 crores as at March 31, 2011
(Rs. 3,312.64 crores as at March 31, 2010). The increase was primarily due
to:

* Sundry creditors Rs. 2,864.53 crores as at March 31, 2011(Rs. 2,426.32
crores as at March 31, 2010).

* Advance billings and deferred revenues Rs. 557.34 crores as at March 31,
2011 (Rs. 492.15 crores as at March 31, 2010).

* Other liabilities Rs. 317.37 crores as at March 31, 2011 (Rs. 278.75
crores as at March 31, 2010). Other liabilities include fair values of
foreign exchange forward and currency option contracts Rs. 54.69 crores as
at March 31, 2011 (Rs. 121.90 crores as at March 31, 2010).

Provisions:

Provisions aggregated Rs. 2,490.1 1 crores as at March 31, 2011
(Rs.3,926.61 crores as at March 31, 2010).

The decrease was mainly attributable to:

* Proposed final dividend on equity shares Rs. 1,565.78 crores as at March
31, 2011 (Rs. 2,740.11 crores as at March 31, 2010).

* Tax on dividend Rs. 255.79 crores as at March 31, 2011 (Rs. 457.92 crores
as at March 31, 2010).

* Current income taxes (net of advance tax) Rs. 182.09 crores as at March
31, 2011 (Rs. 263.45 crores as at March 31, 2010).

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.

Banking and financing arrangements:

As at March 31, 2011, the Company had available lines of credit with
multiple bankers aggregating Rs. 2,104.00 crores interchangeable between
fund-based and non-fund based limits (Rs. 1,920.00 crores as at March 31,
2010). As at March 31, 2011 the Company had utilised Rs. 1,182.73 crores of
these limits (Rs. 809.49 crores utilised as at March 31, 2010). The
available unutilised facility as at March 31, 2011 was Rs. 921.27 crores
(Rs. 1,110.51 crores as at March 31, 2010). In addition the Company had a
separate, additional one-off banking limit of GBP 98.1 million in UK, which
is fully utilised for bank guarantee issued in favour of our subsidiary
company in UK.

Summary of cash flow statement is given below:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Cash and cash equivalents at
beginning of the year 293.28 540.65

Net cash provided by
operating activities 5,741.28 6,264.74

Net cash used in
investing activities (863.16) (4,556.64)

Net cash used in
financing activities (4,605.61) (1,969.65)

Net increase /
(decrease) in cash and
cash equivalents 272.51 (261.55)

Exchange difference
on translation of
foreign currency cash
and cash equivalents 11.39 14.18

Cash and cash equivalents
at end of the year 577.18 293.28

Deposits with original
maturity over three
months 5,020.00 3,097.97

Restricted cash 7.34 4.91

Cash and bank
balances at the end
of the year 5,604.52 3,396.16

Cash flow from operations:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Operating profit before working
capital changes 8,587.85 6,629.21

Effect of working capital
changes (1,366.23) 807.93

Cash generated from
operations 7,221.62 7,437.14

Tax payments made (1,480.34) (1,172.40)

Net cash provided by
operating activities 5,741.28 6,264.74

In fiscal 2011, the Company generated net cash of Rs. 5,741.28 crores
(Rs.6,264.74 crores in fiscal 2010) from operating activities.

The primary reason for decrease in the operating cash flow in fiscal 2011
as compared to fiscal 2010 was on account of additional working capital
requirements.

Cash flow from investing activities:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Purchase of fixed assets (net) (1,584.08) (816.27)

Sale/(Purchase) of other
investments (net of mutual
fund dividends) 2,136.01 (1,759.83)

Purchase of fixed deposits
with banks having maturity
more than 3 months (1,922.03) (2,037.81)

Others 506.94 57.27

Net cash used in investing
activities (863.16) (4,556.64)

In fiscal 2011, the Company used Rs. 863.16 crores in investing activities
(Rs. 4, 556.64 crores in fiscal 2010).

The significant items of investing activities were:

* Purchase of fixed assets (net) Rs. 1,584.08 crores in fiscal 2011
(Rs.816.27 crores in fiscal 2010).

* Sale of investments (primarily mutual funds) Rs. 2,136.01 crores in
fiscal 2011 (purchase Rs. 1,759.83 crores in fiscal 2010).

* Interest on deposits received in fiscal 2011 of Rs. 349.42 crores
(Rs.91.21 crores in fiscal 2010) included in 'Others'.

Cash flow from financing activities:

(Rs. crores)
Fiscal 2011 Fiscal 2010

Dividend paid (including
dividend tax) (4,584.38) (1,954.57)

Repayments of borrowings (net) (1.24) (5.30)

Interest paid (19.99) (9.78)

Net cash used in financing
activities (4,605.61) (1,969.65)

In fiscal 2011, the Company used Rs. 4,605.61 crores in financing
activities (Rs. 1,969.65 crores in fiscal 2010).

In fiscal 2011, the significant item of cash used in financing activities
was payment of dividend Rs. 4,584.38 crores including dividend taRs.(Rs.
1,954.57 crores in fiscal 2010).

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 revenues 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,
consolidation 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.