Tata Consultancy Services : Q2 2023-24 IND AS Standalone

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Balance Sheet

	Note		(` crore)
	As at	As at
ASSETS		September 30, 2023	March 31, 2023
Non-current assets
Property, plant and equipment	8(a)	8,485	9,186
Capital work-in-progress	8(a)	1,277	1,103
Right-of-use assets	7	5,836	5,695
Intangible assets	8(b)	609	809
Financial assets
Investments	6(a)	2,405	2,405
Trade receivables
Billed	6(b)	126	125
Unbilled		48	196
Loans	6(e)	3	3
Other financial assets	6(f)	553	532
Income tax assets (net)		1,287	2,115
Deferred tax assets (net)		2,550	2,464
Other assets	8(c)	2,852	2,410
Total non-current assets		26,031	27,043
Current assets
Inventories	8(d)	27	27
Financial assets
Investments	6(a)	41,774	35,738
Trade receivables
Billed	6(b)	37,493	35,534
Unbilled		7,238	7,264
Cash and cash equivalents	6(c)	2,301	1,462
Other balances with banks	6(d)	5,382	3,081
Loans	6(e)	288	332
Other financial assets	6(f)	1,501	1,557
Income tax assets (net)		385	-
Other assets	8(c)	8,639	7,789
Total current assets		1,05,028	92,784
TOTAL ASSETS		1,31,059	1,19,827
EQUITY AND LIABILITIES
Equity
Share capital	6(k)	366	366
Other equity		83,560	74,172
Total equity		83,926	74,538
Liabilities
Non-current liabilities
Financial liabilities
Lease liabilities		4,800	4,698
Other financial liabilities	6(g)	325	340
Employee benefit obligations	11	147	95
Deferred tax liabilities (net)		236	190
Unearned and deferred revenue		220	642
Total non-current liabilities		5,728	5,965
Current liabilities
Financial liabilities
Lease liabilities		997	961
Trade payables
Dues of small enterprises and micro enterprises		102	-
Dues of creditors other than small enterprises and micro enterprises		14,230	13,768
Other financial liabilities	6(g)	5,560	6,948
Unearned and deferred revenue		2,593	2,962
Other liabilities	8(e)	4,709	3,113
Provisions	8(f)	284	279
Employee benefit obligations	11	3,278	3,022
Income tax liabilities (net)		9,652	8,271
Total current liabilities		41,405	39,324
TOTAL EQUITY AND LIABILITIES		1,31,059	1,19,827
NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS
As per our report of even date attached	For and on behalf of the Board

For B S R & Co. LLP	K Krithivasan	N Ganapathy Subramaniam
Chartered Accountants	CEO and Managing Director	COO and Executive Director
Firm's registration no: 101248W/W-100022

Amit Somani	Samir Seksaria	Pradeep Manohar Gaitonde
Partner	CFO	Company Secretary
Membership No: 060154
Mumbai, October 11, 2023	Mumbai, October 11, 2023

1

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Profit and Loss

	Note				(` crore)
	Three month	Three month	Six month	Six month
		period ended	period ended	period ended	period ended
		September 30,	September 30,	September 30,	September 30,
Revenue from operations	9	2023	2022	2023	2022
50,165	46,819	1,00,027	91,299
Other income	10	1,755	1,622	3,658	2,337
TOTAL INCOME		51,920	48,441	1,03,685	93,636
Expenses
Employee benefit expenses	11	26,018	23,511	51,997	46,482
Cost of equipment and software licences	12(a)	370	314	743	433
Finance costs	13	134	125	272	309
Depreciation and amortisation expense		979	976	1,948	1,936
Other expenses	12(b)	9,975	10,212	20,349	19,773
TOTAL EXPENSES		37,476	35,138	75,309	68,933
PROFIT BEFORE TAX		14,444	13,303	28,376	24,703
Tax expense
Current tax		3,501	3,171	6,990	6,049
Deferred tax		14	73	(27)	7
TOTAL TAX EXPENSE		3,515	3,244	6,963	6,056
PROFIT FOR THE PERIOD		10,929	10,059	21,413	18,647
OTHER COMPREHENSIVE INCOME (OCI)
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined employee benefit plans		22	88	(13)	1
Income tax on items that will not be reclassified subsequently to profit or loss		(5)	(20)	3	-
Items that will be reclassified subsequently to profit or loss
Net change in fair values of investments other than		(171)	(91)	(25)	(776)
equity shares carried at fair value through OCI
Net change in intrinsic value of derivatives designated as		64	81	74	120
cash flow hedges
Net change in time value of derivatives designated as		(11)	51	(2)	48
cash flow hedges
Income tax on items that will be reclassified subsequently to profit or loss		33	1	13	232
TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES)		(68)	110	50	(375)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		10,861	10,169	21,463	18,272
Earnings per equity share:- Basic and diluted (` )	15	29.87	27.49	58.52	50.96
Weighted average number of equity shares		365,90,51,373	365,90,51,373	365,90,51,373	365,90,51,373

NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached

For and on behalf of the Board

For B S R & Co. LLP	K Krithivasan	N Ganapathy Subramaniam
Chartered Accountants	CEO and Managing Director	COO and Executive Director
Firm's registration no: 101248W/W-100022

Amit Somani	Samir Seksaria	Pradeep Manohar Gaitonde
Partner	CFO	Company Secretary
Membership No: 060154
Mumbai, October 11, 2023	Mumbai, October 11, 2023

2

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Changes in Equity

A. EQUITY SHARE CAPITAL

				(` crore)
Balance as at	Changes in equity share capital due	Restated balance as at	Changes in equity share capital	Balance as at
April 1, 2023	to prior period errors	April 1, 2023	during the period	September 30, 2023
366	-	366	-	366
				(` crore)
Balance as at	Changes in equity share capital due	Restated balance as at	Changes in equity share capital	Balance as at
April 1, 2022	to prior period errors	April 1, 2022	during the period	September 30, 2022
366	-	366	-	366

3

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Changes in Equity

B. OTHER EQUITY								(` crore)
				Reserves and surplus		Items of other comprehensive	Total Equity
							income
		Capital		Capital	Special	Retained	Investment	Cash flow
		reserve*		redemption	Economic Zone	earnings	revaluation	hedging reserve
				reserve	re-investment		reserve	Intrinsic	Time
					reserve			value	value
Balance as at April 1, 2023		-	17	11,809	62,228	138	8	(28)	74,172
Profit for the period	-	-	-	21,413	-	-	-	21,413
Other comprehensive income / (losses)	-	-	-	(10)	5	57	(2)	50
Total comprehensive income		-	-	-	21,403	5	57	(2)	21,463
Dividend	-	-	-	(12,075)	-	-	-	(12,075)
Transfer to Special Economic Zone	-	-	4,848	(4,848)	-	-	-	-
re-investment reserve
Transfer from Special Economic Zone	-	-	(2,449)	2,449	-	-	-	-
re-investment reserve
Balance as at September 30, 2023		-	17	14,208	69,157	143	65	(30)	83,560
Balance as at April 1, 2022		-	17	7,287	68,949	580	27	(53)	76,807
Profit for the period	-	-	-	18,647	-	-	-	18,647
Other comprehensive income / (losses)	-	-	-	1	(505)	92	37	(375)
Total comprehensive income		-	-	-	18,648	(505)	92	37	18,272
Dividend	-	-	-	(10,977)	-	-	-	(10,977)
Transfer to Special Economic Zone	-	-	4,152	(4,152)	-	-	-	-
re-investment reserve
Transfer from Special Economic Zone	-	-	(2,736)	2,736	-	-	-	-
re-investment reserve
Balance as at September 30, 2022		-	17	8,703	75,204	75	119	(16)	84,102
*Represents values less than `0.50 crore.

Loss of `10 crore and gain of `1 crore on remeasurement of defined employee benefit plans (net of tax) is recognised as a part of retained earnings for six month periods ended September 30, 2023 and 2022, respectively.

4

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Changes in Equity

Nature and purpose of reserves

1. Capital reserve
   The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company's own equity instruments to capital reserve.
2. Capital redemption reserve
   As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013.
3. Special Economic Zone re-investment reserve
   The Special Economic Zone (SEZ) re-investment reserve is created out of the profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve will be utilised by the Company for acquiring new assets for the purpose of its business as per the terms of section 10AA(2) of Income-tax Act, 1961.
4. Retained earnings
   This reserve represents undistributed accumulated earnings of the Company as on the balance sheet date.
5. Investment revaluation reserve
   This reserve represents the cumulative gains and losses arising on the revaluation of equity and debt instruments on the balance sheet date measured at fair value through other comprehensive income. The reserves accumulated will be reclassified to retained earnings and profit and loss respectively, when such instruments are disposed.
6. Cash flow hedging reserve
   The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. Such gains or losses will be reclassified to statement of profit and loss in the period in which the underlying hedged transaction occurs.

NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached

For and on behalf of the Board

For B S R & Co. LLP	K Krithivasan	N Ganapathy Subramaniam
Chartered Accountants	CEO and Managing Director	COO and Executive Director
Firm's registration no: 101248W/W-100022

Amit Somani	Samir Seksaria	Pradeep Manohar Gaitonde
Partner	CFO	Company Secretary
Membership No: 060154
Mumbai, October 11, 2023	Mumbai, October 11, 2023

5

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Cash Flows

				(` crore)
			Six month	Six month
			period ended	period ended
			September 30,	September 30,
CASH FLOWS FROM OPERATING ACTIVITIES	2023	2022
Profit for the period	21,413	18,647
Adjustments for:
Depreciation and amortisation expense	1,948	1,936
Bad debts and advances written off, allowance for doubtful trade receivables and	38	22
advances (net)
Tax expense	6,963	6,056
Unrealised foreign exchange (gain) / loss	10	(18)
Net gain on disposal of property, plant and equipment	(2)	(7)
Net gain on disposal / fair valuation of investments	(125)	(77)
Interest income	(1,890)	(1,347)
Dividend income (including exchange impact)	(1,447)	(914)
Finance costs	272	309
Operating profit before working capital changes			27,180	24,607
Net change in
Inventories	-	(13)
Trade receivables
Billed	(1,994)	(2,935)
Unbilled	174	(1,032)
Loans and other financial assets	109	(169)
Other assets	(1,241)	44
Trade payables	564	3,103
Unearned and deferred revenue	(791)	(87)
Other financial liabilities	(1,494)	9
Other liabilities and provisions	1,907	(216)
Cash generated from operations		24,414	23,311
Taxes paid (net of refunds)	(4,793)	(5,101)
Net cash generated from operating activities		19,621	18,210
CASH FLOWS FROM INVESTING ACTIVITIES
Bank deposits placed	(3,577)	(700)
Inter-corporate deposits placed	-	(4,780)
Purchase of investments	(59,091)	(56,217)
Payment for purchase of property, plant and equipment	(599)	(1,094)
Payment including advances for acquiring right-of-use assets	(14)	(2)
Payment for purchase of intangible assets	(48)	(35)
Proceeds from bank deposits	1,277	5,330
Proceeds from inter-corporate deposits	-	2,886
Proceeds from disposal / redemption of investments	53,273	43,445
Proceeds from sub-lease receivable	5	2
Proceeds from disposal of property, plant and equipment	5	7
Interest received	1,173	1,204
Dividend received from subsidiaries	1,694	914
Net cash used in investing activities		(5,902)	(9,040)

6

TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Statement of Cash Flows

		(` crore)
	Six month	Six month
	period ended	period ended
	September 30,	September 30,
CASH FLOWS FROM FINANCING ACTIVITIES	2023	2022
Repayment of lease liabilities	(530)	(528)
Interest paid	(264)	(292)
Dividend paid	(12,075)	(10,977)
Transfer of funds from buy-back escrow account	-	18
Tax on buy-back of equity shares	-	(4,192)
Net cash used in financing activities	(12,869)	(15,971)
Net change in cash and cash equivalents	850	(6,801)
Cash and cash equivalents at the beginning of the period	1,462	8,197
Exchange difference on translation of foreign currency cash and cash equivalents	(11)	(16)
Cash and cash equivalents at the end of the period	2,301	1,380
Components of cash and cash equivalents
Balances with banks
In current accounts	999	710
In deposit accounts	1,302	670
Cheques on hand	-*	-*
Cash on hand	-*	-*
Remittances in transit	-	-*
	2,301	1,380

*Represents values less than `0.50 crore.

NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached

For and on behalf of the Board

For B S R & Co. LLP	K Krithivasan	N Ganapathy Subramaniam
Chartered Accountants	CEO and Managing Director	COO and Executive Director
Firm's registration no: 101248W/W-100022

Amit Somani	Samir Seksaria	Pradeep Manohar Gaitonde
Partner	CFO	Company Secretary
Membership No: 060154
Mumbai, October 11, 2023	Mumbai, October 11, 2023

7

TATA CONSULTANCY SERVICES LIMITED

Notes forming part of condensed standalone interim financial statements

1. Corporate information
   Tata Consultancy Services Limited (referred to as "TCS Limited" or "the Company") provides IT services, consulting and business solutions and has been partnering with many of the world's largest businesses in their transformation journeys. The Company offers a consulting- led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. This is delivered through its unique Location-Independent Agile delivery model recognised as a benchmark of excellence in software development.
   The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is TCS House, Raveline Street, Fort, Mumbai - 400001. As at September 30, 2023, Tata Sons Private Limited, the holding company owned 72.27% of the Company's equity share capital.
   The Board of Directors approved the condensed standalone interim financial statements for six month period ended September 30, 2023 and authorised for issue on October 11, 2023.
2. Statement of compliance
   These condensed standalone interim financial statements have been prepared in accordance with the Indian Accounting Standard (referred to as "Ind AS") 34 Interim Financial Reporting prescribed under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules as amended from time to time. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last annual financial statements, wherever applicable.
3. Basis of preparation
   These condensed standalone interim financial statements have been prepared on historical cost basis except for certain financial instruments and defined benefit plans which are measured at fair value or amortised cost at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle. Based on the nature of services rendered to customers and time elapsed between deployment of resources and the realisation in cash and cash equivalents of the consideration for such services rendered, the Company has considered an operating cycle of 12 months.
   The statement of cash flows has been prepared under indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value to be cash equivalents.
   These condensed standalone interim financial statements have been prepared in Indian Rupee (`) which is the functional currency of the Company. Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are retranslated at the exchange rate prevailing on the balance sheet dates and exchange gains and losses arising on settlement and restatement are recognised in the statement of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not retranslated.
   The material accounting policy information related to preparation of the condensed standalone interim financial statements have been discussed in the respective notes.
4. Use of estimates and judgements
   The preparation of condensed standalone interim financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and judgements that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of condensed standalone interim financial statements and the reported amounts of income and expenses for the periods presented.
   Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

8

TATA CONSULTANCY SERVICES LIMITED

Notes forming part of condensed standalone interim financial statements

The Company uses the following critical accounting estimates in preparation of its condensed standalone interim financial statements:

1. Revenue recognition
   Revenue for fixed-price contracts is recognised using percentage-of-completion method. The Company uses judgement to estimate the future cost-to-completion of the contracts which is used to determine degree of completion of the performance obligation.
2. Useful lives of property, plant and equipment
   The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
3. Impairment of investments in subsidiaries
   The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
4. Fair value measurement of financial instruments
   When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
5. Impairment of financial assets (other than at fair value)
   Measurement of impairment of financial assets require use of estimates and judgements, which have been explained in the note on financial assets, financial liabilities and equity instruments, under impairment of financial assets (other than at fair value).
6. Provision for income tax and deferred tax assets
   The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.
7. Provisions and contingent liabilities
   The Company estimates the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.
   The Company uses significant judgements to assess contingent liabilities. Contingent liabilities are recognised when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the condensed standalone interim financial statements.
8. Employee benefits
   The accounting of employee benefit plans in the nature of defined benefit, explained under employee benefits note, requires the Company to use estimates and judgements.

9

TATA CONSULTANCY SERVICES LIMITED

Notes forming part of condensed standalone interim financial statements

1. Leases
   The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
   The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.

1. Recent pronouncements
   Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During six month period ended September 30, 2023, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
2. Financial assets, financial liabilities and equity instruments
   Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
   The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired.
   Cash and cash equivalents
   The Company considers all highly liquid investments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
   Financial assets at amortised cost
   Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
   Financial assets at fair value through other comprehensive income
   Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.
   The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income.

10