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Tata Consultancy Services Ltd.

BSE: 532540 Sector: IT
NSE: TCS ISIN Code: INE467B01029
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P/E 31.58
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OPEN 3309.00
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VOLUME 137393
52-Week high 4045.50
52-Week low 3053.00
P/E 31.58
Mkt Cap.(Rs cr) 1,205,271
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tata Consultancy Services Ltd. (TCS) - Director Report

Company director report

To the Members

The Directors present the Integrated Annual Report of Tata Consultancy Services Limited(the Company or TCS) along with the audited financial statements for the financial yearended March 31 2021. The consolidated performance of the Company and its subsidiaries hasbeen referred to wherever required.

1. Financial results

Rs
Standalone Consolidated
Financial Year 2020-21 (FY 2021) Financial Year 2019-20 (FY 2020) Financial Year 2020-21 (FY 2021) Financial Year 2019-20 (FY 2020)
Revenue from operations 135963 131306 164177 156949
Other income 5400 8082 3134 4592
Total income 141363 139388 167311 161541
Expenses
Operating expenditure 95653 93953 117631 114840
Depreciation and amortisation expense 3053 2701 4065 3529
Total expenses 98706 96654 121696 118369
Profit before finance costs exceptional item and tax 42657 42734 45615 43172
Finance costs 537 743 637 924
Profit before exceptional item and tax 42120 41991 44978 42248
Exceptional item
Provision towards legal claim 1218 - 1218 -
Profit before tax 40902 41991 43760 42248
Tax expense 9942 8731 11198 9801
Profit for the year 30960 33260 32562 32447
Attributable to:
Shareholders of the Company 30960 33260 32430 32340
Non-controlling interests NA NA 132 107
Opening balance of retained earnings 71532 77159 78810 85520
Closing balance of retained earnings 70928 71532 79586 78810

2. COVID-19

The COVID-19 pandemic has emerged as a global challenge creating disruption across theworld. Global solutions are needed to overcome the challenges businesses & businessmodels have transformed to create a new work order. The swift transition to remote workingwas facilitated by the Secure Borderless Workspaces model adopted by the Company.

The physical and emotional wellbeing of employees continues to be a top priority forthe Company with several initiatives to support employees and their families during thepandemic. The Company has invested in setting up medical helplines ambulance services andfirst line Covid Care Centers within TCS premises and has also extended counselling andself-help services providing mental & emotional support to employees. The Company hasreimagined employee engagement which transcends geographic barriers by embracing virtualtechnologies and embraces our diverse workforce. Initiatives like the #OneTCS channeldesigned to reduce stress and the feeling of isolation hosted inspirational leadersmental health experts virtual town halls and a global talent hunt competition to boostmorale of employees.

*Excluding provision towards legal claim.

The SBWS model has been institutionalized and the Company has been able to seamlesslyadapt and extend it to prospect for new business sell contract and execute programs.This transformative model enables remote access for employees sets up a suitablecybersecurity framework and all project management practices and systems needed to ensurethat work allocation monitoring and reporting continues without disruption. In this waythe SBWS model ensured that neither the quality nor the timeliness of client deliverieswas ever compromised. SBWS is not a short-term response to a crisis but a new beginning.These new ways of working and managing businesses present a great opportunity to more thanjust ‘recover' from the consequences of the crisis but to accelerate transformation.

The revenue impact of the pandemic played out broadly along the lines that the Companyhad anticipated at the start and affected all verticals with the exception of LifeSciences and Healthcare with varying levels of impact.

3. Return of surplus funds to Shareholders

In line with the practice of returning 80 to 100 percent free cash flow to shareholdersand based on the Company's performance the Directors have declared interim dividends ofRs23 per equity share involving a cash outflow of Rs8598 crore. The Directors have alsorecommended a final dividend ofRs15 per equity share the final dividend on equity sharesif approved by the Members would involve a cash outflow ofRs5549 crore. The totaldividend for FY 2021 amounts to Rs38 per equity share and would involve a total cashoutflow of Rs14147 crore resulting in a dividend payout of 44.3 percent* of thestandalone profits of the Company.

In addition to the above the Company bought back 53333333 equity shares at a priceof Rs3000 per equity share for an aggregate consideration of Rs16000 crore. The offersize of the buy-back was 19.96 percent and 18.11 percent of the aggregate paid-up equityshare capital and free reserves as per audited condensed standalone interim financialstatements and audited condensed consolidated interim financial statements of the Companyas on September 30 2020 respectively. The buy-back represented 1.42 percent of the totalissued and paid-up equity share capital of the Company. The buy-back process was completedand the shares were extinguished on January 6 2021.

The shareholder's payout with respect to dividend and buy-back including tax onbuy-back (excluding transaction costs other incidental and related expenses) aggregatedto Rs33873 crore resulting in a payout of 106.1 percent* of the standalone profits ofthe Company.

In FY 2020 the Company paid a total dividend of Rs73 per equity share including aspecial dividend of Rs40 per equity share which resulted in an outflow ofRs31895 croreand a dividend payout of 95.9 percent of the standalone profits of the Company.

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 available on the Company's website onhttps://on.tcs.com/ Dividend.

4. Transfer to reserves

The closing balance of the retained earnings of the Company for FY 2021 after allappropriation and adjustments was Rs70928 crore.

*Excluding provision towards legal claim.

5. Company's performance

On a consolidated basis the revenue for FY 2021 was Rs164177 crore higher by 4.6percent over the previous year's revenue of Rs156949 crore. The profit after tax (PAT)attributable to shareholders and non-controlling interests for FY 2021 and FY 2020 wasRs33520 crore* and Rs32447 crore respectively. The profit after tax (PAT) attributableto shareholders for FY 2021 and FY 2020 was Rs33388 crore* and Rs32340 crorerespectively.

On a standalone basis the revenue for FY 2021 was Rs135963 crore higher by 3.5percent over the previous year's revenue of Rs131306 crore in FY 2020. The profit aftertax (PAT) attributable to shareholders for FY 2021 and FY 2020 was Rs31918 crore* andRs33260 crore respectively.

6. Human resource development

In this extraordinary year TCS continued to stay focused on the health and wellbeingof its associates through multiple measures. Some of these included the setting up offirst line Covid Care Centres at TCS premises hospital admission assistance homehealthcare services availability of OHC doctors round the clock tele medicine andrepatriation of onsite associates and families through the Vande Bharat Mission. Inaddition TCS took various initiatives to keep employees productive and engaged withsecure access and the latest collaboration tools. Virtual HR days daily check-in calls toassociates increased connect sessions with leaders counselling services and otherinitiatives focused on improving the employees' resilience. TCS employees their familiesand other stakeholders highly appreciated these steps.

This year the Company's Learning Intensity has increased significantly by almost 37%.The Company launched TCS Elevate a merit-based talent framework to bring further tighterlinkage between learning and careers and to drive a culture of continuous learning andaspiration for accelerated career paths. Over 138000 associates have been on-boarded tothis program.

The Company continued its track record of pioneering industry-first practices byembracing online hiring conducting around 100000 virtual interviews and pivoting theTCS NQT completely to virtual mode. Over 368K students from 3100+ colleges attended theTCS NQT from the safety of their homes. The Company's investment in strategic leadershiphiring from top B-schools deepened with TCS being the highest internship hirer in thesetop campuses. The Company had a net addition of 40185 taking its total associate countto 488649.

A digital online onboarding model helped the Company to effectively integrateassociates hired across the globe. Its diverse workforce includes 154 nationalities across46 countries. The Company is one of the largest employers of women in the world. Sustainedefforts to improve gender diversity through focused hiring mentoring and coaching womenemployees have resulted in women currently accounting for 36.5 percent of the workforce.

TCS' commitment to its employees and its pioneering and innovative HR initiatives havewon it many awards and accolades from top Industry bodies such as ATD and Brandon Hall.The Company's internal associate satisfaction survey PULSE showed the highest associatesatisfaction and engagement scores in the last 13 years. This is also reflected in its LTMattrition rate of 7.2 percent which is an industry benchmark and its lowest ever.

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 by successfully completing annual re-certification/surveillanceaudits for various industry standards and models.

TCS' integrated Quality Management System (iQMS ) continues to enable outstanding valueand experience to its customers. iQMS is continually enhanced for emerging service eringsnew delivery methodologies off industry best practices and latest technologies. iQMS hasbeen updated with handbooks and guidelines for Agile methodology.

Agile is a method to accelerate the speed of delivery in software development. TCS sawan opportunity to elevate Agile by applying it to everything an organization does spanningmarket research innovation product development sales delivery and support functionsallowing organization wide delivery and innovation at high speeds breaking departmentalbarriers and transcending location constraints. TCS calls this as Enterprise Agile. In2017 TCS declared ‘Enterprise Agile by 2020' as its vision with the goal oftransforming TCS along four dimensions: Workforce Workplace & Infrastructure ServiceDelivery and Internal Processes. Implementation was accomplished in three waves for (1)IT Services (2) Cognitive Business Operations and (3)

Enablement Functions such as HR Marketing Administration IT Infrastructure DeliveryExcellence Internal IT and Research.

While standard Agile pushes for collaboration within a physical setting TCS had toinvent a method to bring agility without the need for physical co-location of teams. TCScreated the Location Independent Agile providing comprehensive blueprints of teamconfigurations practices and technology for collaboration such as Open AgileCollaborative Workspace (OACW) so that team members from any part of the world can worktogether without location constraints.

By converting Agile into a strategic enterprise transformation lever TCS created manycapabilities including the world's largest Agile workforce. TCS has filed five patents inthe Agile space. Today industry Agile experts and analysts acknowledge TCS' leadership inAgile. TCS handles over 12000 Agile projects contributing to 85 percent of IT servicesrevenue. TCS has also added a key term to the worldwide agile vocabulary by introducingthe concept of Agility Debt - an index that uniquely measures an organization's agility.TCS saw customers who undertook holistic Agile Transformations growing faster than theirpeers and more than 90 percent of customers acknowledged increased speed-to-value fromtheir agile adoption.

The Company accomplished the Enterprise Agile 2020 vision by October 2020 satisfyingall the KPI's that were set which the Company believes is first of its kind in theindustry. The Company has 427000+ Agile Ready workforce with 86 percent of themfunctioning as Practitioners in client projects. The Company's AgiltyDebt stands below0.25 and more than 70 percent of new projects getting initiated are following agilemethods Technologies and Investments from ‘Enterprise Agile' initiative gave thefoundation for Secure Borderless Workspaces (SBWS ) which is the backbone for ourassociates to work remotely from wherever they feel safe.

To reduce the delivery risks during the pandemic the Company had rolled out Guidelinesfor “Service Delivery under SBWS and the SBWS Governance utility. It has beenmonitoring the 20000+ projects across the globe through digitized dashboards. Thecustomer-centricity rigor in operations and focus on delivery excellence have resulted inconsistent improvements in customer satisfaction levels in the periodic surveys conductedby the Company. This is validated by top rankings in third party surveys as well.

8. Subsidiary companies

The Company has 50 subsidiaries as on March 31 2021. There are no associates 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.

The Equity stake in Technology Outsourcing S.A.C. was sold to Banco Pichincha Peru onDecember 1 2020 at book value consequent to which Technology Outsourcing S.A.C. ceasedto be the subsidiary of the Company.

In November 2020 TCS entered into an agreement with Prudential Financial Inc.(PFI) toacquire over 1500 staff and select assets of Pramerica Systems Ireland Ltd. (Pramerica)PFI's subsidiary based in Letterkenny Ireland. The intent of the transaction was for TCSto establish a new global delivery centre in Ireland to provide PFI with a range ofbusiness and technology services while also expanding TCS nearshore capabilities toprovide the multifunctional digital services and solutions to other customers in Irelandthe UK Europe and the US. Accordingly on December 2 2020 Tata Consultancy

Services Ireland Limited was incorporated as a wholly owned subsidiary of the Companyin Ireland to provide the aforesaid services.

CMC Americas Inc. a US based subsidiary of the Company was voluntarily dissolved witheffect from December 16 2020 as CMC Americas Inc. and TCS both provide similar services.This would also enable rationalization of the number of entities in the US.

On January 1 2021 Tata Consultancy Services Netherlands B.V. a wholly ownedsubsidiary of the Company acquired 100 percent shares of Postbank Systems AG (PBS) asubsidiary of Deutsche Bank AG at an estimated transaction value at a symbolic 1 Euro. PBSis the full-range captive IT service provider that provides project managementapplication management and infrastructure support services to Postbank and othersubsidiaries of Deutsche Bank. As a part of transaction PBS and its around 1500employees become part of TCS which helped in deepening the relationship between the twoorganizations and add to TCS' scale in Germany and strengthen its growth outlook.

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 the provisions of Section 136 of the Act the financial statementsof the Company consolidated financial statements along with relevant documents andseparate audited financial statements in respect of subsidiaries are available on theCompany's website on 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 profit of the Company for thatperiod;

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 downinternal financial controls to be followed by the Company and such internal financialcontrols are adequate and operating effectively; vi. they have devised proper systems toensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively. Based on the framework of internal financial controlsand compliance systems established and maintained by the Company the work performed bythe internal statutory and secretarial auditors and external consultants including theaudit of internal financial controls over financial reporting by the statutory auditorsand the reviews performed by management and the relevant board committees including theaudit committee the Board is of the opinion that the Company's internal financialcontrols were adequate and effective during FY 2021.

10. Directors and key managerial personnel

N. Chandrasekaran retires by rotation and being eligible offers himself forre-appointment.

A resolution seeking shareholders' approval for his re-appointment along with otherrequired details forms part of the Notice.

Pursuant to the provisions of Section 149 of the Act the independent directors havesubmitted declarations that each of them meet the criteria of independence as provided inSection 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) ofthe SEBI Listing Regulations. There has been no change in the circumstances affectingtheir status as independent directors of the Company. During the year under review thenon-executive directors of the Company had no pecuniary relationship or transactions withthe Company other than sitting fees commission and reimbursement of expenses if any.Pursuant to the provisions of Section 203 of the Act Rajesh Gopinathan Chief ExecutiveOfficer and Managing Director N. Ganapathy Subramaniam Chief Operating Officer and

Executive Director Ramakrishnan V. Chief Financial Officer and Rajendra MoholkarCompany Secretary are the Key Managerial Personnel of the Company as on March 31 2021.

Ramakrishnan V. has been the Chief Financial Officer since February 21 2017. He willbe retiring from the services of the Company effective April 30 2021. The Board places onrecord its appreciation for his invaluable contribution and guidance during his tenurewith the Company.

During the year under review the Board at its meeting held on October 7 2020appointed Samir Seksaria as the Chief Financial Officer Designate of the Company to takeover from Ramakrishnan V. as Chief Financial Officer with effect from May 1 2021. SamirSeksaria has been with TCS since 1999 and has held various positions in businessconsulting and finance. He is a commerce graduate from Narsee Monjee College Mumbai and amember of the Institute of Chartered Accountants of India.

11. Number of meetings of the Board

Seven meetings of the Board were held during the year. For details of meetings of theBoard please refer to the Corporate Governance Report which is a part of this 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 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 the board meeting that followed the meeting of the independent directors and meetingof Nomination and Remuneration Committee the performance of the Board its Committeesand individual directors was also discussed. Performance evaluation of independentdirectors was done by the entire Board excluding the independent director beingevaluated.

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

The Company's policy on appointment of directors is available on the Company's websiteon https://on.tcs.com/ApptDirectors.

The policy on remuneration and other matters provided in Section 178(3) of the Act hasbeen disclosed in the Corporate Governance Report which is a part of this report and isalso available on the Company's website on https://on.tcs.com/remuneration-policy.

14. Corporate social responsibility

The brief outline of the corporate social responsibility (CSR) policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure I of this report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. For other details regarding the CSRCommittee please refer to the Corporate Governance Report which is a part of thisreport. This Policy is available on the Company's website onhttps://on.tcs.com/Global-CSR-Policy.

15. 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.

16. 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.

17. 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.

18. Auditor's report and Secretarial audit report

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

19. 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 atements. and reviewing the risk management plan and ensuringits effectiveness. The Audit Committee has additional oversight in the area of financialrisks and 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.

20. 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. ThisPolicy is available on the Company's website on https://on.tcs.com/ WhistleBP.

21. 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

22. Transactions with related parties

None of the transactions with related parties fall under the scope of Section 188(1) ofthe Act. Accordingly the disclosure of related party transactions as required underSection 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2020-21and hence does not form part of this report.

23. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act the Annual Return ason March 31 2021 is available on the Company's website on https://on.tcs.com/annual-return-20-21.

24. Particulars of employees

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

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* - -
O P Bhatt 36.91 15.00
Aarthi Subramanian# - -
Dr. Pradeep Kumar Khosla 29.69 32.14
Hanne Sorensen 29.69 32.14
Keki Mistry 32.09 42.86
Don Callahan 32.09 42.86
Executive Directors:
Rajesh Gopinathan 326.81 52.21
N. Ganapathy Subramaniam 258.43 59.18
Chief Financial Officer
Ramakrishnan V. - 60.30
Company Secretary
Rajendra Moholkar - 76.00

* As a policy N. Chandrasekaran Chairman has abstained from receiving commissionfrom the 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.

b. The percentage increase in the median remuneration of employees in the financialyear: (0.03) percent

c. The number of permanent employees on the rolls of Company: 488649

d. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and point out if and there are any exceptionalcircumstances for increase in the managerial remuneration:

The average annual increase was 5.2 percent in India. However during the course of theyear the total increase is approximately 6.4 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. Increase in the managerial remuneration for theyear was 55.22 percent. Increase in the managerial remuneration for FY 2021 is notcomparable with

FY 2020 owing to decrease in remuneration of 15 percent in FY 2020 in view of theeconomic conditions impacted by the COVID-19 pandemic wherein the Directors had decided tomoderate the executive remuneration for FY 2020 to express solidarity and conserveresources. e. Affirmation that the remuneration is as per the remuneration policy of theCompany: The Company affirms that the remuneration is as per the remuneration policy ofthe Company. f. The statement containing names of top ten employees in terms ofremuneration drawn and the particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided in a separate annexure forming part of thisreport. Further the report and the accounts are being sent to the Members excluding theaforesaid annexure. In terms of Section 136 of the Act the said annexure is open forinspection and any Member interested in obtaining a copy of the same may write to theCompany 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 Company saw a year-on-year reduction in absolute energy use by 46.6 percent in MWhand an absolute carbon footprint reduction (across Scope 1 and Scope 2) by 48.8 percent(in tonnes of carbon dioxide equivalent). This reduction was not commensurate to theextremely low occupancy because some utilities had to be run to maintain theinfrastructure. TCS' specific greenhouse gas emissions (Scope 1 + Scope 2) comes to 0.54tCO2e/ FTE

(Full Time Equivalent)/Annum in the current reporting year a reduction of 53 percentY-O-Y. This is estimated with the actual carbon footprint and a notional FTE (working outof TCS offices) considering an increase of 8.23 percent in the FTE over the lastreporting year. This increase in FTE is in line with the TCS global headcount growth. Thespecific carbon footprint data is presented for the sake of continuity and is notcomparable with the earlier year.

The total rooftop solar energy generation across the campuses increased to 8.1 MWpcontributing to 2.5 percent of total electricity use in the reporting year. Totalrenewable energy used - from rooftop solar power plants and through power purchaseagreements was 45.5 million units amounting to 15.6 percent of the total electricityconsumption. The Company achieved the target power utilization efficiency (PUE) of 1.65across 21 of 23 target data centers. The Company has also taken up additional 44 datacenters for this initiative and reduced weighted average PUE of all DCs to 1.77 inreporting year from 2.4 in 2017. The Company has focused on temporary closure of ODCs andhub rooms as SBWSTM was approved by customers and all stakeholders leading to furtherreduction in energy consumption.

The investment in IoT based energy management system helped the Company to define a newnormal of consumption profile leveraging cognitive AI/ML algorithms and monitoringperformance against it to drive efficiency.

Technology absorption adaption and innovation Research & Development (R&D):Specific areas in which R & D was carried out by the Company

TCS Research and Innovation (R&I) commemorated the 40th year of its founding byadopting a new brand statement “Inventing for Impact”. In keeping with itspurpose-driven worldview TCS R&I teams were engaged in 72 COVID related initiativesaround the world working with local national and international bodies adopting multipleapproaches: leveraging TCS IP collaborating with partners and offering individualconsultative inputs across many areas such as drug candidate molecule discovery COVIDdata management diagnostic kits epidemiological study and management. TCS continues toexpand its foundational research in core computing areas and the intersections with othersciences. New areas of focus include DNA computing AI for protein design cognitiverobotics meta materials quantum computing and sensing. Research and Innovation teamsworked with cross-functional teams across the Company on strategic initiatives such asPatents Products & Platforms (3P) Technology Change Management 5G Cloud and CyberSecurity.

TCS R&I continues to build its intellectual property; more than 240 papers werepresented at conferences or published in journals. The New Products and SolutionsDevelopment framework that governs the emerging pipeline of IP and IP-leveraged offeringscontinued to expand the Company's portfolio with new offerings like TCS Dynaport TCSConsent Management Solution and TCS Omnistore to support the next wave of growth.Numerous new technology use cases were piloted for customers in various industry segments.

The Company's existing portfolio of products and platforms continued to grow with newreleases in FY 2021 with additional features and functionality and expansion of the ignio TCS ADD and TCS BaNCS suites with new products covering adjacencies.

TCS won CII's Industrial Intellectual Property Awards 2020. R&I won the BusinessCulture Award and several of the Company's products and platforms won multiple awardsacross the world. The Company continued to contribute to standards bodies especially inISO SC7 and Systems Engineering. As of March 31 2021 the Company has applied for 5879patents cumulatively and has been granted 1850 patents.

TCS continued to foster the culture of innovation organizing one crowdsourcedinnovation a week. The TCS Innovista competition attracted over 10290 entries from acrossthe organization. The Company set up a community of Innovation Champions who serve asinnovation ambassadors helping customers leverage the best of TCS for their growth andtransformation. Its Co-Innovation Network (TCS COIN ) initiative continued to expand with67 ongoing projects in emerging technologies with global academic partners and with over2400 start-ups in its emerging technology ecosystem.

The Company's Pace Ports which are experiential spaces connecting customers to all ofTCS' organizational capabilities in innovation technology and industry expertise hostedseveral events and workshops. In FY 2021 three new PACE Ports in Pittsburgh Toronto andAmsterdam respectively commenced virtual operations. The PACE Internship Program waslaunched this year in Amsterdam with a batch of students pursuing Masters in Innovation& Digitalization from Nyenrode Business University.

In keeping with the Company's commitment to social responsibility and environmentalstewardship it launched several new initiatives.

The first edition of TCS Sustainathon a challenge that aims to inspire students toenvision a sustainable future using technology to solve real world problems focused onreducing food wastage. TCS and the Malaysian petroleum major PETRONAS launched a SocialEnterprise Education Lab (SEEd.Lab) an end-to-end incubation program to encourageentrepreneurship and job creation. TCS and Auckland Business School partnered to developan APAC-Focused Digital Sustainability Index.

Future Course of Action

TCS will continue to scale the Patents Products and Platforms strategy across theorganization harnessing the collective knowledge and creativity of internal teams and ofpartners to deliver innovative solutions in support of the Company's pursuit of the growthand transformation opportunity and longer term sustainability goals.

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 FY2021 and FY 2020 are given below:

Expenditure on R&D and innovation Standalone Consolidated
FY 2021 FY 2020 FY 2021 FY 2020
a. Capital 1 2 1 2
b. Recurring 298 300 302 304
c. Total R&D expenditure (a+b) 299 302 303 306
d. Innovation center expenditure 1546 1458 1614 1561
e. Total R&D and innovation expenditure (c+d) 1845 1760 1917 1867
f. R&D and innovation expenditure as a 1.4% 1.3% 1.2% 1.2%
percentage of total turnover

Foreign exchange earnings and outgo

Export revenue constituted 94.0 percent of the total standalone revenue in FY 2021(93.4 percent in FY 2020).

(Rs crore)
Foreign exchange earnings and outgo FY 2021 FY 2020
a. Foreign exchange earnings 130720 128501
b. CIF Value of imports 241 569
c. Expenditure in foreign currency 54800 51748

29. Acknowledgements

Padma Bhushan Shri. F. C. Kohli founder and the first CEO of TCS passed away onNovember 26 2020. The Directors place on record their deep appreciation of his visionleadership enormous contribution and monumental work in laying the foundation of theIndian IT Industry and express a deep gratitude to his indefatigable influential spiritfor shaping TCS and the fabric of TCS culture.

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 mourn 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
Chairman
Mumbai April 12 2021

.