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Tata Consultancy Services Ltd.

BSE: 532540 Sector: IT
NSE: TCS ISIN Code: INE467B01029
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P/E 34.84
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OPEN 3039.00
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VOLUME 6661
52-Week high 3345.25
52-Week low 1504.40
P/E 34.84
Mkt Cap.(Rs cr) 1,111,931
Buy Price 3006.30
Buy Qty 72.00
Sell Price 3008.55
Sell Qty 9.00

Tata Consultancy Services Ltd. (TCS) - Director Report

Company director report

To the Members

The Directors present the Annual Report of Tata Consultancy Services Limited (theCompany or TCS) along with the audited financial statements for the financial year endedMarch 31 2020. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.

1. Financial results

(Rs. crore)

Unconsolidated

Consolidated

Financial Year Financial Year Financial Year Financial Year
2019-20 2018-19 2019-20 2018-19
(FY 2020) (FY 2019) (FY 2020) (FY 2019)
Revenue 131306 123170 156949 146463
Other income 8082 7627 4592 4311
Total income 139388 130797 161541 150774
Expenses
Operating expenditure 93953 88206 114840 106957
Depreciation and amortisation expense 2701 1716 3529 2056
Total expenses 96654 89922 118369 109013
Profit before finance costs and tax 42734 40875 43172 41761
Finance costs 743 170 924 198
Profit before tax (PBT) 41991 40705 42248 41563
Tax expense 8731 10640 9801 10001
Profit for the year 33260 30065 32447 31562
Attributable to:
Shareholders of the Company 33260 30065 32340 31472
Non-controlling interests NA NA 107 90
Opening balance of retained earnings 77159 74080 85520 79755
Closing balance of retained earnings 71532 77159 78810 85520

2. COVID-19

In the last month of FY 2020 the COVID-19 pandemic developed rapidly into a globalcrisis forcing governments to enforce lock-downs of all economic activity. For theCompany the focus immediately shifted to ensuring the health and well-being of allemployees and on minimizing disruption to services for all our customers globally. From ahighly centralized model consisting of work spaces set in large delivery campuses capableof accommodating thousands of employees the switch to work from home for employees allover extending all the elements of the Company's Open Agile Delivery model concept into anext-generation Secure Borderless Workspaces™ (SBWS) model was carried outseamlessly. As of March 31 2020 work from home was enabled to close to 90 percent of theemployees to work remotely and securely. This response has reinforced customer confidencein TCS and many of them have expressed their appreciation and gratitude for keeping theirbusinesses running under most challenging conditions. The SBWS model ensures high qualityand delivery certainty that the customers expect while addressing the issues around cybersecurity project management practices and systems. Going forward this locationindependent SBWS model could be a game changer due to its many advantages.

Although there are uncertainties due to the pandemic and reversal of the positivemomentum gained in the last quarter of FY2020 the strong balance sheet positionbest-in-class profitability and inherent resilience of the business model position theCompany well to navigate the challenges ahead and gain market share.

3. Dividend

For FY 2020 based on the Company's performance the Directors have declared interimdividends of Rs.27 per equity share and a special dividend of Rs.40 per equity share. TheDirectors have also recommended a final dividend of Rs.6 per equity share taking thetotal dividend to Rs.73 per equity share.

The final dividend on equity shares if approved by the Members would involve a cashoutflow of Rs.2251 crore. The total dividend on equity shares including dividend tax forFY 2020 would aggregate Rs.31895 crore resulting in a dividend payout of 95.9 percent ofthe unconsolidated profits of the Company.

For FY 2019 the Company paid a total dividend of Rs.30 per equity share. Further theCompany bought back 76190476 equity shares at a price of Rs.2100 per equity share foran aggregate consideration of Rs.16000 crore and also allotted 1914287591 equityshares as fully paid-up bonus shares in the ratio of 1:1. The total cash outflow for FY2019 including dividend dividend tax and buy-back consideration amounted to Rs.29148crore.

The Dividend Distribution Policy in terms of Regulation 43A of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulations") is disclosed in the Corporate GovernanceReport and is uploaded on the Company's website https://on.tcs.com/Dividend

4. Transfer to reserves

The closing balance of the retained earnings of the Company for FY 2020 after allappropriation and adjustments was Rs.71532 crore.

5. Company's performance

On a consolidated basis the revenue for FY 2020 was Rs.156949 crore higher by 7.2percent over the previous year's revenue of Rs.146463 crore. The profit after tax (PAT)attributable to shareholders and non-controlling interests for FY 2020 and FY 2019 wasRs.32447 crore and Rs.31562 crore respectively. The PAT attributable to shareholders forFY 2020 was Rs.32340 crore registering a growth of 2.8 percent over the PAT of Rs.31472crore for FY 2019. On an unconsolidated basis the revenue for FY 2020 was Rs.131306crore higher by 6.6 percent over the previous year's revenue of Rs.123170 crore in FY2019. The PAT attributable to shareholders for FY 2020 was Rs.33260 crore registering agrowth of 10.6 percent over the PAT of Rs.30065 crore for FY 2019.

6. Human resource development

Attracting enabling and retaining talent have been the cornerstone of the HumanResource function and the results underscore the important role that human capital playsin critical strategic activities such as growth.

A robust Talent Acquisition system enables the Company to balance unpredictablebusiness demands with a predictable resource supply through organic and inorganic growth.

The Company had a net addition of 24179 employees globally taking its total employeecount to 448464. Fueled by inclusive hiring and heavy investment made to mentor and coachwomen at all levels women currently account for 36.2 percent of the workforce making theCompany one of the largest employers of women in the world.

An evolved onboarding model helped the Company to effectively integrate associatesacquired through a strong localization focus. The diverse workforce represents 144nationalities across 46 countries.

The reimagined approach to learning and development has helped the Company train over335000 employees on digital technologies and over 417000 employees on Agilemethodologies.

The re-imagined focus on competency building of fresh recruits prior to joining throughunique digital Initial Learning Program approach has enabled faster release of freshers toprojects. Post-offer engagement activities have also witnessed increased focus.

Continual pursuit to connect with associates on a regular basis communicate in an openand transparent manner progressive HR policies and distinctive HR Business Partner modelguided by OneTCS culture are yielding desired results. This is evident from the highretention rates and improved engagement levels of the associates. Attrition in FY 2020 was12.1 percent for IT Services. The Company's internal employee satisfaction survey PULSEshowed the highest employee satisfaction and engagement scores in the last 12 years.

7. Quality initiatives

The Company continues to sustain its commitment to the highest levels of qualitysuperior service management robust information security practices and mature businesscontinuity management. In FY 2020 the Company successfully completed the surveillanceaudits for industry specific quality certifications viz. AS 9100 (Aerospace Industry)ISO 13485 (Medical Devices) and TL 9000 (Telecom Industry). The Company has alsosuccessfully completed the annual ISO surveillance audit. The Company is now amongst theworld's first organizations to be recommended for certification to ISO 22301:2019standard. The Company also successfully completed SSAE 18 and ISAE 3402 - SOC 1 & SOC2 annual assessment for Banking Financial Services and Insurance Cognitive BusinessOperations Life Sciences and Retail units covering 69 locations. The Company has beenappraised at Maturity Level 5 of the Capability Maturity Model Integration for Development(CMMI V2.0 DEV).

The Company was recognized as a ‘Benchmark Leader' a first of its kindachievement in the Tata Group as part of the Tata Business Excellence Model assessment.Three Industry Solutions Unit achieved the ‘Industry Leader' status while one of theunits crossed over to the ‘Benchmark Leader' band.

TCS' integrated Quality Management System (iQMSTM) continues to enableoutstanding value and experience to its customers. iQMSTM is continuallyenhanced for emerging service offerings new delivery methodologies industry bestpractices and latest technologies. iQMSTM has been updated with handbooks andguidelines for Agile methodology.

The Company has committed to become Enterprise Agile by 2020. To achieve this visionthe Company has created 417000 Agile ready workforce and 1000+ futuristic Agile DeliveryCentres. TCS Location Independent AgileTM is a Company proprietary methodologyconsisting of processes management structure and the technology that enables enterprisewide agile transformations without the location constraint. The Company has also drivenagility in TCS internal processes that enhance competitiveness. The Company has also beenidentified as a leader in Agile adoption offerings and services by several industryanalysts.

To reduce the delivery risks the company has rolled out Guidelines for "ServiceDelivery under SBWS" and has been monitoring the 25000 projects across the globe ona daily basis through the digitized dashboards. The customer-centricity rigor inoperations and focus on delivery excellence have resulted in consistent improvements incustomer satisfaction levels in the periodic surveys conducted by the Company. This isvalidated by top rankings in third-party surveys as well.

8. Subsidiary companies

The Company has 50 subsidiaries as on March 31 2020. There are no associate or jointventure companies within the meaning of Section 2(6) of the Companies Act 2013("Act"). There has been no material change in the nature of the business of thesubsidiaries.

On June 26 2019 pursuant to exercise of put option by Mitsubishi Corporation TataConsultancy Services Asia Pacific Pte. Ltd. acquired additional 15 percent stake in itsjoint venture with Mitsubishi Corporation in Tata Consultancy Services Japan Ltd.

TCS Financial Solutions Australia Holdings Pty Limited was deregistered with effectfrom January 29 2020. Its holdings in TCS Financial Solutions Australia Pty Limited alongwith its other assets and liabilities were transferred to its holding company TCS FNS PtyLimited which is a wholly owned subsidiary of the Company. On March 9 2020 TataConsultancy Services Netherlands BV a direct subsidiary of the Company acquired TCSBusiness Services GmbH in Dusseldorf Germany to execute a certain special project.Pursuant to the provisions of Section 129(3) of the Act a statement containing thesalient features of financial statements of the Company's subsidiaries in Form No. AOC-1is attached to the financial statements of the Company. Further pursuant to theprovisions of Section 136 of the Act the financial statements of the Companyconsolidated financial statements along with relevant documents and separate auditedfinancial statements in respect of subsidiaries are available on the website of theCompany https://www.tcs.com/investor-relations.

9. Directors' responsibility statement

Pursuant to Section 134(5) of the Act the Board of Directors to the best of itsknowledge and ability confirm that: i. in the preparation of the annual accounts theapplicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors and external consultants including the audit of internalfinancial controls over financial reporting by the statutory auditors and the reviewsperformed by management and the relevant board committees including the audit committeethe Board is of the opinion that the Company's internal financial controls were adequateand effective during FY 2020.

10. Directors and key managerial personnel

O P Bhatt was re-appointed as an Independent Director at the twenty-fourth AnnualGeneral Meeting (AGM) held on June 13 2019 for a period of five years w.e.f. June 272019 up to June 26 2024. During the year Aman Mehta and Dr. Ron Sommer ceased to be theDirectors with effect from June 26 2019 upon completion of their term as IndependentDirectors. The Board places on record its appreciation for their invaluable contributionand guidance. Aarthi Subramanian retires by rotation and being eligible offers herselffor re-appointment. A resolution seeking shareholders' approval for her re-appointmentforms part of the Notice. Pursuant to the provisions of Section 149 of the Act theindependent directors have submitted declarations that each of them meet the criteria ofindependence as provided in Section 149(6) of the Act along with Rules framed thereunderand Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in thecircumstances affecting their status as independent directors of the Company.

During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting feescommission if any and reimbursement of expenses incurred by them for the purpose ofattending meetings of the Board / Committee of the Company.

Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2020 are: Rajesh Gopinathan Chief Executive Officer andManaging Director N Ganapathy Subramaniam Chief Operating Officer and ExecutiveDirector Ramakrishnan V Chief Financial Officer and Rajendra Moholkar CompanySecretary. The term of Ramakrishnan V as the Chief Financial Officer was extended up toApril 30 2021.

11. Number of meetings of the Board

Seven meetings of the Board were held during the year under review. For details ofmeetings of the Board please refer to the Corporate Governance Report which is a part ofthis report.

12. Board evaluation

The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Act and SEBIListing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued bythe Securities and Exchange Board of India on January 5 2017.

In a separate meeting of independent directors performance of non-independentdirectors the Board as a whole and the Chairman of the Company was evaluated taking intoaccount the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc. At theboard meeting that followed the meeting of the independent directors and meeting ofNomination and Remuneration Committee the performance of the Board its Committees andindividual directors was also discussed. Performance evaluation of Independent Directorswas done by the entire Board excluding the independent director being evaluated.

13. Policy on directors' appointment and remuneration and other details

The Company's policy on appointment of directors is available onhttps://on.tcs.com/ApptDirectors. The policy on remuneration and other matters provided inSection 178(3) of the Act has been disclosed in the Corporate Governance Report which isa part of this report and is also available on https://on.tcs.com/remuneration-policy.

14. Internal financial control systems and their adequacy

The details in respect of internal financial control and their adequacy are included inthe Management Discussion and Analysis which is a part of this report.

15. Audit committee

The details pertaining to the composition of the Audit Committee are included in theCorporate Governance Report which is a part of this report.

16. Auditors

At the twenty-second AGM held on June 16 2017 the Members approved appointment of B SR & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022) asStatutory Auditors of the Company to hold office for a period of five years from theconclusion of that AGM till the conclusion of the twenty-seventh AGM subject toratification of their appointment by Members at every AGM if so required under the Act.The requirement to place the matter relating to appointment of auditors for ratificationby Members at every AGM has been done away by the Companies (Amendment) Act 2017 witheffect from May 7 2018. Accordingly no resolution is being proposed for ratification ofappointment of statutory auditors at the ensuing AGM and a note in respect of same hasbeen included in the Notice for this AGM.

17. Auditor's report and Secretarial audit report

The statutory auditor's report and the secretarial audit report do not contain anyqualifications reservations or adverse remarks or disclaimer. Secretarial audit reportis attached to this report.

18. Risk management

The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The Committee isresponsible for monitoring and reviewing the risk management plan and ensuring itseffectiveness. The Audit Committee has additional oversight in the area of financial risksand controls. The major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis. The developmentand implementation of risk management policy has been covered in the Management Discussionand Analysis which forms part of this report.

19. Vigil Mechanism

The Company has a Whistle Blower Policy and has established the necessary vigilmechanism for directors and employees in confirmation with Section 177(9) of the Act andRegulation 22 of Listing Regulations to report concerns about unethical behavior. Thedetails of the policy have been disclosed in the Corporate Governance Report which is apart of this report and is also available on https://on.tcs.com/WhistleBP.

20. Particulars of loans guarantees and investments

The particulars of loans guarantees and investments as per Section 186 of the Act bythe Company have been disclosed in the financial statements.

21. Transactions with related parties

None of the transactions with related parties fall under the scope of Section 188(1) ofthe Act. The information on transactions with related parties pursuant to Section134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are givenin Annexure I in Form No. AOC-2 and the same forms part of this report.

22. Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company asadopted by the Board and the initiatives undertaken by the Company on CSR activitiesduring the year under review are set out in Annexure II of this report in theformat prescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014.For other details regarding the CSR Committee please refer to the Corporate GovernanceReport which is a part of this report. The CSR policy is available onhttps://on.tcs.com/Global-CSR-Policy.

23. Extract of annual return

As per the requirements of Section 92(3) of the Act and Rules framed thereunder theextract of the annual return for FY 2020 is given in Annexure III in the prescribedForm No. MGT-9 which is a part of this report. The same is available onhttps://on.tcs.com/annual-return-19-20.

24. Particulars of employees

The information required under Section 197 of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company and percentage increase in remuneration of each Director ChiefExecutive Officer Chief Financial Officer and Company Secretary in the financial year:

Name Ratio to median remuneration % increase in remuneration in the financial year
Non-executive directors
N Chandrasekaran@ - -
Aman Mehta* ^ ^
Dr Ron Sommer* ^ ^
O P Bhatt** 32.09 (6.98)#
Aarthi Subramanian@@ - -
Dr Pradeep Kumar Khosla 22.46 (6.67)#
Hanne Sorensen 22.46 ^^
Keki Mistry 22.46 ^^
Don Callahan 22.46 ^^
Executive directors
Rajesh Gopinathan 214.65 (16.53)#
N Ganapathy Subramaniam 162.31 (12.87)#
Chief Financial Officer
Ramakrishnan V - (3.54)#
Company Secretary
Rajendra Moholkar - (0.12)#

@ As a policy N Chandrasekaran Chairman has abstained from receiving commission fromthe Company and hence not stated.

@@ In line with the internal guidelines of the Company no payment is made towardscommission to the Non-Executive Directors of the Company who are in full time employmentwith any other Tata company and hence not stated.

* Ceased to be Directors w.e.f. June 26 2019 upon completion of their term asIndependent Directors.

** Re-appointed as a Independent Director for a second term w.e.f. June 27 2019.

^ Since the remuneration is only for part of the year the ratio of their remunerationto median remuneration and percentage increase in remuneration is not comparable andhence not stated.

^^ Remuneration in FY 2020 is not comparable with remuneration received in FY 2019 andhence not stated.

# The remuneration for FY 2020 is lower than FY 2019 in view of the economic conditionsimpacted by the COVID-19 pandemic. The Directors have decided to moderate the remunerationfor this year to express solidarity and conserve resources.

b. The percentage increase in the median remuneration of employees in the financialyear: 2 percent

c. The number of permanent employees on the rolls of Company: 448464

d. Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was 6 percent in India. However during the course of theyear the total increase is approximately 7.7 percent after accounting for promotions andother event based compensation revisions. Employees outside India received a wage increasevarying from 2 percent to 6 percent. The increase in remuneration is in line with themarket trends in the respective countries.

The managerial remuneration for the year decreased by 15 percent. The executiveremuneration for FY 2020 is lower than FY 2019 in view of the economic conditions impactedby the COVID-19 pandemic. The Directors have decided to moderate the executiveremuneration for this year to express solidarity and conserve resources.

e. Afirmation that the remuneration is as per the remuneration policy of theCompany:

The Company afirms that the remuneration is as per the remuneration policy of theCompany. f. The statement containing names of top ten employees in terms of remunerationdrawn and the particulars of employees as required under Section 197(12) of the Act readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in a separate annexure forming part of this report.Further the report and the accounts are being sent to the Members excluding the aforesaidannexure. In terms of Section 136 of the Act the said annexure is open for inspection andAny Member interested in obtaining a copy of the same may write to the Company Secretary.

25. Integrated Report

The Company being one of the top companies in the country in terms of marketcapitalization has voluntarily provided Integrated Report which encompasses bothfinancial and non-financial information to enable the Members to take well informeddecisions and have a better understanding of the Company's long term perspective. TheReport also touches upon aspects such as organisation's strategy governance frameworkperformance and prospects of value creation based on the six forms of capital viz.financial capital manufactured capital intellectual capital human capital social andrelationship capital and natural capital.

26. Disclosure requirements

As per SEBI Listing Regulations the Corporate Governance Report with the Auditors'Certificate thereon and the integrated Management Discussion and Analysis including theBusiness Responsibility Report are attached which forms part of this report.

The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.

27. Deposits from public

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

28. Conservation of energy technology absorption foreign exchange earnings and outgo

Conservation of energy:

The eco-e_ciency journey at TCS revolves around infrastructure and operations. TCSstrategy to build green and operate optimally has led to year-on-year reduction inspecific energy footprint by 11.9 percent and specific carbon footprint by ~11.8 percenton per FTE basis.

In FY20 the Company added 2 MWp of rooftop solar across TCS campuses taking the totalto 7.6 MWp. Total renewable energy units generated from rooftop solar projects and sourcedthrough power purchase agreements is cumulatively 59.5 million units in FY19-20 which is10.9 percent of the total electricity consumption.

The shift to low carbon operations by switching over to energy efficient Light EmittingDiode (LED) technology has resulted in saving of 11 million units of electricity acrossTCS India operations.

The continued focus on Green IT and data center power management has helped to reducethe Power Utilization Efficiency (PUE) of the 23 data centers to 1.66 from 1.67 in thelast year. 22 of the 23 Data Centers have achieved the target PUE of 1.65. Data center /server room consolidation higher rack utilization UPS rationalization have been the keylevers. The Company has also reduced the distributed IT power use by reducing the wattsper seat from 200 to 85 over the last 3 years.

Technology absorption adaption and innovation:

Research & Development (R&D): Specific areas in which R&D was carried outby the Company

TCS Research and Innovation is strongly aligned with the Company's vision of Growth andTransformation underpinned by Enterprise-wide Agile and the AI-powered Machine FirstDelivery Model™.

TCS continues to expand its foundational research in core computing areas and theintersections with other sciences. New areas such as media and advertising metamaterials quantum computing and sensing have been added. TCS Research engages with itsecosystem in many areas including AI and 5G. TCS Researchers presented 200+ papers inpremier conferences and produced books and book chapters through the year. The Companyreleased its second book of essays entitled ‘Reimagining Research' describing severalof its key research projects.

Research and innovation teams worked with customers on several new ideas aligned withtheir business. Examples include: value addition through AI for a retailer's supply chain;robots to spot blast holes for a mining company; forklift damage detection using augmentedreality for a forklift rental business; collusion and spoofing prevention methods forclearinghouses; foreign particle detection in steel manufacture; customer lifecycle valueoptimization with a digital twin for a communication service provider; multiscalemodelling of digital skin for a pharma company.

The contribution to TCS' 3P vision of patents products and platforms continues.Ignio™ a cognitive automation solution was significantly enhanced this year. TCSMasterCraft™ products have 110+ active customers. New features added this yearinclude TransformPlus for application translation and cloud migration and DataPlus forpersonal data protection in India. Jile™ 4.0 a new version of the flexible agileplanning and delivery offering was launched. A healthy pipeline of assets moved throughthe New Products and Services Development governance framework.

TCS Pace Port™ delivers speedy collaborative innovation to customers by providingaccess to COIN accelerators and academic research in agile workspaces with innovationshowcases. TCS Pace Port™ New York located in the Tata Innovation Center at CornellTech campus was launched. It focuses on retail travel transportation hospitality andlife sciences industries. TCS Pace Port Tokyo completed a year in November 2019 andcontinues to grow in terms of customer visits and downstream innovation led engagements.

The Company leveraged both the academic research ecosystem and the emerging technologyecosystem for collaborative research as part of its Co-Innovation (TCS COINTM)Program. It has 50+ projects in emerging technologies with global academic institutes. Theemerging tech COIN program is embedding itself in customer projects.

The Company continued to foster the culture of innovation with one crowdsourcedinnovation event a week. The TCS Innovista competition attracted 6500+ entries acrossbusiness units.

TCS R&I remained closely connected to customers through events in differentgeographies. The TCS Innovation Forum was held in Tokyo New York City Sao Paulo andLondon attracted 700+ customers partners and technology experts. Innovation Days for anumber of customers were held through the year.

TCS won several awards related to intellectual property creation. TCS Advanced DrugDevelopment (ADD) TCS Optumera and the SMU-TCS iCity Lab's SHINESeniors project have wonprestigious awards.

As of March 31 2020 the Company has applied for 5216 patents cumulatively. TheCompany has been granted 1341 patents.

Future Plan of Action

TCS Research and Innovation will enable scaling of the Patents Products and Platformsstrategy across the organization and align with the Company's focus on growth andtransformation. Engagement with all business units with its Co-Innovation Network andwith society at large will continue.

Expenditure on R&D

TCS innovation Labs are located in India and other parts of the world. These R&Dcenters as certified by Department of Scientific & Industrial Research (DSIR)function from Pune Chennai Bengaluru Delhi- NCR Hyderabad Kolkata and Mumbai.

Expenditure incurred in the R&D centers and innovation centers of TCS during FY2020 and FY 2019 are given below:

(Rs. crore)

Expenditure on R&D and innovation

Unconsolidated

Consolidated

FY 2020 FY 2019 FY 2020 FY 2019
a. Capital 2 2 2 2
b. Recurring 300 303 304 306
c. Total R&D expenditure (a+b) 302 305 306 308
d. Innovation center expenditure 1458 1285 1561 1352
e. Total R&D and innovation expenditure (c+d) 1760 1590 1867 1660
f. R&D and innovation expenditure as a percentage of total turnover 1.3% 1.3% 1.2% 1.1%

Foreign exchange earnings and outgo

Export revenue constituted 93.4 percent of the total unconsolidated revenue in FY 2020(93.3 percent in FY 2019).

(Rs. crore)

Foreign exchange earnings and outgo FY 2020 FY 2019
a. Foreign exchange earnings 128501 119499
b. CIF Value of imports 569 447
c. Expenditure in foreign currency 51748 49336

29. Acknowledgments

The Directors thank the Company's employees customers vendors investors and academicpartners for their continuous support.

The Directors also thank the Government of India Governments of various states inIndia Governments of various countries and concerned Government departments and agenciesfor their co-operation.

The Directors regret the loss of life due to COVID-19 pandemic and are deeply gratefuland have immense respect for every person who risked their life and safety to fight thispandemic.

The Directors appreciate and value the contribution made by every member of the TCSfamily.

On behalf of the Board of Directors
N Chandrasekaran
Mumbai April 16 2020 Chairman

.