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Tata Consultancy Services Ltd.

BSE: 532540 Sector: IT
NSE: TCS ISIN Code: INE467B01029
BSE 13:39 | 24 Sep 2172.15 68.35
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2104.00

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2191.80

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2098.30

NSE 13:29 | 24 Sep 2171.30 68.15
(3.24%)
OPEN

2115.00

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2192.00

LOW

2098.15

OPEN 2104.00
PREVIOUS CLOSE 2103.80
VOLUME 155394
52-Week high 2191.80
52-Week low 1210.33
P/E 32.35
Mkt Cap.(Rs cr) 831,629
Buy Price 2171.45
Buy Qty 1.00
Sell Price 2172.35
Sell Qty 44.00
OPEN 2104.00
CLOSE 2103.80
VOLUME 155394
52-Week high 2191.80
52-Week low 1210.33
P/E 32.35
Mkt Cap.(Rs cr) 831,629
Buy Price 2171.45
Buy Qty 1.00
Sell Price 2172.35
Sell Qty 44.00

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 2018. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.

1. Financial results

Unconsolidated Consolidated
Financial Year 2017-18 (FY18) Financial Year 2016-17 (FY17) Financial Year 2017-18 (FY18) Financial Year 2016-17 (FY17)
Revenue from operations 97356 92693 123104 117966
Other income (net) 5803 4568 3642 4221
Total income 103159 97261 126746 122187
Expenses
Operating expenditure 69551 65604 90588 85655
Depreciation and amortization expense 1647 1575 2014 1987
Total expenses 71198 67179 92602 87642
Profit before finance cost and tax 31961 30082 34144 34545
Finance costs 30 16 52 32
Profit before tax (PBT) 31931 30066 34092 34513
Tax expense 6690 6413 8212 8156
Profit for the year 25241 23653 25880 26357
Attributable to:
Shareholders of the Company 25241 23653 25826 26289
Non-controlling interests NA NA 54 68
Opening balance of retained earnings 65965 53576 71071 56113
Adjustment with other equity 184 59 208 25
Buy-back of equity shares (4999) - (4999) -
Amount available for appropriation 86391 77288 92106 82427
Appropriations
Dividend on equity shares (excluding tax) 9284 9162 9284 9162
Tax on dividends 1442 1785 1442 1785
Capital redemption reserve 6 - 6 -
General reserve - - - -
Statutory reserve - - 40 33
Special Economic Zone re-investment reserve 1579 376 1579 376
Closing balance of retained earnings 74080 65965 79755 71071

2. Issue of Bonus Shares

Considering the financial position the Board of Directors at its meeting held on April19 2018 recommended issue of Bonus Shares subject to approval of Members in the ratioof one new Equity Share of the Company of Rs.1 each as fully paid-up for every oneexisting Equity Share of the Company. The Bonus Shares will be issued by capitalizing apart of its retained earnings to those persons who are Members as on the record date.

3. Buyback of Equity Shares

56140350 equity shares were bought back during the year at a price of Rs.2850 perEquity Share for an aggregate consideration of Rs.16000 crore. The Offer Size of theBuyback was 21.89% of the aggregate paid-up equity share capital and free reserves of theCompany and represented 2.85% of the total issued and paid-up equity share capital of theCompany. The buyback process was completed and the shares were extinguished on June 72017.

4. Dividend

Based on the Company's performance the Directors are pleased to recommend for approvalof the members a final dividend of Rs.29 per share for FY18 taking the total dividend toRs.50 per share (previous year Rs.47 per share).

The final dividend on equity shares if approved by the members would involve a cashoutflow of Rs.6693 crore including dividend tax. The total dividend on equity sharesincluding dividend tax for FY18 would aggregate Rs.11377 crore resulting in apayout of 45.07% of the unconsolidated profits of the Company.

5. Transfer to reserves

The Directors have decided to retain the entire amount of Rs.74080 crore in theretained earnings.

6. Company's performance

On a consolidated basis the revenue from operations for FY18 at Rs.123104 crore washigher by 4.40% over the previous year (Rs.117966 crore in FY17). The profit after taxattributable to shareholders and non-controlling interests was Rs.25880 crore (Rs.26357crore in FY17). The profit after tax attributable to shareholders was Rs.25826 crore (Rs. 26289 crore in FY17). On an unconsolidated basis the revenue from operations forFY18 was at Rs.97356 crore (Rs.92693 crore in FY17).

The profit for the year was Rs.25241 crore (Rs.23653 crore in FY17).

7. Human resource development

Recognising the imperatives of Business 4.0 era the Company is investing heavily intransforming the workforce at scale even while simplifying processes and making them moreagile to cater to the needs of a predominantly millennial workforce. In FY18 the Companyhired globally leveraging a completely digitised hiring and onboarding process thatharnesses next generation technologies. TCS' workforce of 394998 is dynamic and diversewith 35.3% women from 131 nationalities and over 85% belonging to Gen Y. TheCompany is using digital technologies to gain intelligent insights while designing HRstrategies to keep the young workforce engaged and motivated. The Company continuouslyexplores new approaches to learning and development to keep the workforce relevant in anevolving technology landscape. In addition the Company continues to invest in leadershipdevelopment programs at all levels to sustain the Company's growth while staying true tothe core values which underpin TCS' success over the last five decades.

The Company's culture promotes an environment that is transparent flexible fulfillingand purposeful. A host of customised initiatives based on a deep understanding ofindividual needs and aspirations backed by the power of data sciences have helped createan engaging workplace that enables individuals to realise their potential.

The Company is driven by passionate and highly engaged workforce. This is evident fromthe fact that the Company continues to remain the industry benchmark for talent retention.Attrition in FY18 was at 11% for IT Services and 11.8% on an overall basis.

8. Quality initiatives

The Company continues its commitment to the highest levels of quality superior servicemanagement robust information security practices and mature business continuitymanagement. In FY18 the Company retained its enterprise-wide ISO certification forQuality Management (ISO 9001:2015) IT Service Management (ISO 20000-1:2011)Information Security Management (ISO 27001:2013) and Business Continuity Management (ISO22301:2012). In addition the Company was certified under the new ISO Standard forBusiness Process Outsourcing (ISO 30105:2016). The Company's strong commitment to theenvironment and occupational health and safety of its employees and business partners isdemonstrated through its enterprise-wide Environmental Management (ISO 14001:2004)and Occupational Health and Safety Management (BS OHSAS 18001:2007) certifications. TheCompany also maintains domain-specific quality certifications including AS 9100(Aerospace) TL 9000 (Telecom) and ISO 13485 (Medical Devices).

The Company's Global Network Delivery Model (GNDMTM) built on a strongprocess-driven and customer-centric integrated Quality Management System (iQMSTM)continues to deliver outstanding value and experience to our customers. iQMSTMis continually enhanced for emerging service offerings new delivery methodologiesindustry best practices and latest technologies. The Company is committed to transformingitself into an agile enterprise. Towards this it invests in developing its agileworkforce creating agile offerings moving into agile workspaces and transforming itscustomer relationships into agile partnerships.

The Company continues to invest in knowledge management platforms for effectivecollaboration learning and sharing. The Company received the prestigious Most AdmiredKnowledge Enterprise (MAKE) award in the Global Independent Operating Unit (IOU) categoryfor the eighth time and in the Asian and Indian categories for the thirteenth time.Customer-centricity rigor in operations and focus on delivery excellence have resultedin consistent improvements in customer satisfaction levels recorded in the periodicsurveys conducted by the Company. This is validated by top rankings in third-party surveysas well.

9. Subsidiary companies

The Company has 50 subsidiaries as on March 31 2018 (58 subsidiaries as on March 312017). There are no associate companies or joint venture companies within the meaning ofSection 2(6) of the Companies Act 2013 ("Act").

There has been no material change in the nature of the business of the subsidiaries.

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 AOC-1 isattached to the financial statements of the Company. Further pursuant to the provisionsof Section 136 of the Act the financial statements of the Company consolidated financialstatements along with relevant documents and separate audited financial statements inrespect of subsidiaries are available on the website of the Company.

Restructuring of following subsidiaries in Europe was completed during the year: a.Alti Switzerland S.A. merged with Tata Consultancy Services Switzerland Ltd effectiveMarch 29 2018. b. Alti NV merged with Tata Consultancy Services Belgium (formerly knownas Tata Consultancy Services Belgium S.A.) effective March 30 2018. c. Tata ConsultancyServices France S.A.S. Alti HR S.A.S. Alti Infrastructures Systemes & Reseaux S.A.S.and TESCOM (France) Software Systems Testing S.A.R.L. merged with Alti S.A. effectiveMarch 31 2018. d. Teamlink a wholly owned subsidiary of Alti NV was liquidatedeffective January 31 2018. e. Planaxis Technologies Inc. a wholly owned subsidiary ofAlti S.A. was liquidated effective March 31 2018. The name of Alti S.A. was changed toTata Consultancy Services France SA effective March 31 2018. 10. Directors'responsibility statement Pursuant to Section 134(5) of the Act the Board of Directors tothe best of its knowledge and ability confirm that: i. in the preparation of the annualaccounts the applicable accounting standards have been followed and there are no materialdepartures; ii. they have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period; iii. they have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities; iv. they have prepared the annual accounts on a going concernbasis; v. they have laid down internal financial controls to be followed by the Companyand such internal financial controls are adequate and operating effectively; vi. they havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat 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 FY18.

11. Directors and key managerial personnel

Dr. Vijay Kelkar Independent Director and Mr. Ishaat Hussain Non-Executive Directorretired with effect from May 14 2017 and September 3 2017 respectively inaccordance with the retirement age policy for Directors. The Board places on record itsappreciation for their invaluable contribution and guidance provided by them. Ms. AarthiSubramanian relinquished the office of Executive Director for taking up leadership role asGroup Chief Digital Officer at Tata Sons Limited and was appointed as Additional Directorin non-executive capacity with effect from August 17 2017. Dr. Pradeep KumarKhosla was appointed as an Additional and Independent Director with effect from January11 2018. Mr. N. Chandrasekaran retires by rotation and being eligible offered himselffor re-appointment.

Pursuant to the provisions of Section 149 of the Act Mr. Aman Mehta Mr. V.Thyagarajan Prof. Clayton M. Christensen Dr. Ron Sommer Mr. O. P. Bhatt and Dr. PradeepKumar Khosla are Independent Directors of the Company. They have submitted a declarationthat each of them meet the criteria of independence as provided in Section 149(6) of theAct and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("SEBI Listing Regulations"). There has been no change in thecircumstances affecting their status as an Independent Director during the year.

During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.

The Board appointed Mr. Rajendra Moholkar as the Company Secretary and ComplianceOfficer to take over from Mr. Suprakash Mukhopadhyay with effect from April 24 2017. TheBoard places on record its appreciation for the outstanding contribution of Mr. SuprakashMukhopadhyay as Global Treasury Head and Company Secretary. Pursuant to the provisions ofSection 203 of the Act the Key Managerial Personnel of the Company as on March 312018 are: Mr. Rajesh Gopinathan Chief Executive Officer and Managing Director Mr. N.Ganapathy Subramaniam Chief Operating Officer and Executive Director Mr. RamakrishnanV. Chief Financial Officer and Mr. Rajendra Moholkar Company Secretary. During the yearMs. Aarthi Subramanian ceased to be a Key Managerial Personnel of the Company with effectfrom August 17 2017.

12. Number of meetings of the Board

Six 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.

13. 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 SEBIListing Regulations and the Guidance Note on Board Evaluation issued by the Securities andExchange Board of India on January 5 2017.

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.

In a separate meeting of independent directors performance of non-independentdirectors the Chairman of the Company and the board as a whole 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. In 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.

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

The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which is a part of this report.

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

Pursuant to the provisions of Section 139 of the Act read with Companies (Audit andAuditors) Rules 2014 as amended from time to time B S R & Co. LLP CharteredAccountants (Firm Registration No. 101248W/W-100022) were appointed as statutory auditorsfrom the conclusion of the twenty-second Annual General Meeting (AGM) held on June 162017 till the conclusion of the twenty-seventh AGM of the Company in 2022 subject to theratification of their appointment at every AGM if required under law. Accordinglynecessary resolution for ratification of appointment of auditors is included in the Noticefor this AGM.

18. Auditor's report and secretarial audit report

The auditor's report and the secretarial audit report do not contain anyqualifications reservations or adverse remarks. Secretarial audit report is attached tothis report.

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 reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee has additional oversight in the area of financial risks and controls. Themajor risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis.

The development and implementation of risk management policy has been covered in theManagement Discussion and Analysis which forms part of this report.

20. Particulars of loans guarantees and investments

The particulars of loans guarantees and investments have been disclosed in thefinancial 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 Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure II of this report in the format prescribed in

the Companies (Corporate Social Responsibility Policy) Rules 2014. For other detailsregarding the CSR Committee please refer to the Corporate Governance Report which is apart of this report. The policy is available on https://www.tcs.com/investors.

23. Extract of annual return

As per the requirements of Section 92(3) of the Act the extract of the annual returnis given in Annexure III in the prescribed Form No. MGT-9 which is a part of thisreport.

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 the employeesof the Company and percentage increase in remuneration of each Director Chief ExecutiveOfficer 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:
Mr. N. Chandrasekaran - -
Mr. Aman Mehta 50.91 13.21
Mr. V. Thyagarajan 33.94 11.11
Prof. Clayton M. Christensen 25.45 11.11
Dr. Ron Sommer 35.64 10.53
Dr. Vijay Kelkar* ^ ^
Mr. Ishaat Hussain** ^ ^
Mr. O. P. Bhatt 33.94 17.65
Ms. Aarthi Subramanian*** - -
Dr. Pradeep Kumar Khosla**** ^ ^
Executive directors:
Mr. Rajesh Gopinathan 211.99 ^^
Mr. N. Ganapathy Subramaniam 157.78 ^^
Chief Financial Officer
Mr. Ramakrishnan V. - ^^
Company Secretary
Mr. Suprakash Mukhopadhyay @ - -
Mr. Rajendra Moholkar @@ - ^^

* Retired as Independent Director w.e.f. May 14 2017 in accordance with the retirementage policy for Directors.

** Retired as Director w.e.f. September 3 2017 in accordance with the retirement agepolicy for Directors.

*** Relinquished the office of Executive Director and appointed as an AdditionalDirector in non-executive capacity w.e.f. August 17 2017. The remuneration is for part ofthe year and is not comparable and hence not stated.

**** Appointed as an Additional and Independent Director w.e.f. January 11 2018.

@ Relinquished the office of Company Secretary and Compliance Officer w.e.f. April 242017.

@@ Appointed as Company Secretary and Compliance Officer w.e.f. April 24 2017.

^ Since the remuneration is only for part of the year the ratio of their remunerationto median remuneration and % increase in remuneration is not comparable and hence notstated.

^^ Remuneration received in FY18 is not comparable with remuneration received in FY17owing to change in role/designation and hence not stated. b. The percentage increase inthe median remuneration of employees in the financial year: 0.57% reflecting animprovement in the overall employee pyramid. c. The number of permanent employees on therolls of Company: 394998.

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: Theaverage annual increase was around 5-6% in India. However during the course of the yearthe total increase is approximately 7% after accounting for promotions and otherevent based compensation revisions. Employees outside India received a wage increasevarying from 2% to 5%. Increase in the managerial remuneration for FY18 is not comparablewith FY17 owing to change in role/designation and hence not stated.

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 of theCompany.

f. The statement containing names of top ten employees in terms of remuneration drawnand the particulars of employees as required under Section 197(12) of the Act read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in a separate annexure forming part of this report. Further the reportand the accounts are being sent to the members excluding the aforesaid annexure. In termsof Section 136 of the Act the said annexure is open for inspection at the RegisteredOffice of the Company. Any shareholder interested in obtaining a copy of the same maywrite to the Company Secretary.

25. Disclosure requirements

As per SEBI Listing Regulations the Corporate Governance Report with the Auditors'Certificate thereon and the Management Discussion and Analysis are attached which formspart of this report.

As per Regulation 34 of the SEBI Listing Regulations a Business Responsibility Reportis attached and is a part of this Annual Report.

As per Regulation 43A of the SEBI Listing Regulations the Dividend Distribution Policyis disclosed in the Corporate Governance Report and is uploaded on the Company's website.

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.

26. 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.

27. Conservation of energy technology absorption foreign exchange earnings and outgoConservation of energy:

Retaining the momentum on our energy and carbon management programs the Companyachieved its 2020 target to reduce the specific carbon footprint by 50% in FY18 – 2years ahead of the timeline. Green buildings efficient operations green IT and the useof renewable energy have been the key enablers in our journey of carbon and energyperformance improvement. As the Company grows it would add more green buildings to itscampuses.

The TCS Remote Energy Management and Control program witnessed rapid scaling up andachieved further maturity during the year. Internet of Things (IoT) platform was leveragedto acquire asset (chillers air handling units etc.) level data and analysed to improveasset efficiency and operations. Renewable energy used in the Company's offices increasedto 8.5% as compared to 7.3% in the last year. During the year Company added 2.05 MW ofsolar rooftop system across four locations taking the total installed capacity to 3.55MW. On data center power management Company successfully reduced the Power UtilizationEfficiency (PUE) of 13 data centers to the target of 1.7. The average PUE across 23key data centers is at 1.7. These initiatives collectively resulted in the Company'senergy consumption reducing by 4.5% over the prior year on a per FTE basis.

Technology absorption adaption and innovation:

The Company continues to adopt and use the latest technologies to improve theproductivity and quality of its services and products. The Company's operations do notrequire significant import of technology.

Research and Development (R&D): Specific areas in which R&D was carried out bythe Company

TCS Research and Innovation (R&I) activities and outcomes were aligned to theCompany's focus areas (personalization new value creation models ecosystems leverage amindset to embrace risk and abundance) enabled by technologies and appropriate processes(Intelligence Agility Cloud and Automation). Teams in Research Incubation Innovationand the Co-Innovation Network have worked on the ‘Ideas to Execution' process anddelivered value to business and to social causes as well.

Some examples of such work are presented here.

The Conversational Systems that emerged from the Company's research enabled masspersonalisation for its associates. For instance the chatbot created for HR answersqueries from associates on leave policies; several bots enable personalisation in Fresco -our collaboration platform. Many research programs have enabled a step change in processescreating exponential value for customers.

The Physical Sciences research team was effective in building a "DigitalTwin" for thermal plants; Using the rich data such plants already have creatingmodels and simulation technologies our research enabled lowering risk in plant functionsincreasing agility and creating savings. The research team worked closely with the retailbusiness unit to build a dynamic pricing model for retailers taking into account millionsof Stock Keeping Units (SKUs) demand patterns and competitive pricing by e-commercechannels. This enabled to help retail customers cut costs and also forecast sales withaccuracy. The TCS Connected Universe Platform team along with the engineering andmanufacturing business units won prestigious engagements. The drones program createdinterest across business units and several projects are in progress.

Organisations today need intelligent and automated tools to manage risk. AutomatedCompliance to identify regulatory changes data privacy with fine-grained consentmanagement and lightweight encryption research projects made progress. The TCS Blockchainsolution has been integrated with the TCS BaNCS platform.

TCS MasterCraft Tools team launched a General Data Protection Regulations (GDPR)Compliant edition as part of its MasterCraft Data Plus suite. The TCS MasterCraft trialversion was tried by over 1000 customers in the last 6 months. MasterCraft added 30 newcustomers this year.

The Company leveraged both the Academic Research Ecosystem and the Emerging Techecosystem for collaborative research as part of its Co-Innovation (TCS COINTM)Program. Your Company has comprehensive Memorandum of

Understanding (MoU) for joint research projects with the Indian Institute of ScienceBangalore all five of the older IITs and Indian Statistical Institute Kolkata. Thereare focused projects also with other leading academic research institutes in India. TheCompany's R&I continues its collaboration with leading universities in North AmericaEurope and Asia Pacific in a number of areas including genomics materials digitalmanufacture data analytics cyber security smart cities intelligent infrastructure anddigital health. The Company also leveraged its internal ecosystem - the problem solvingcapability of its associates. Innovation events such as ideathons and hackathons happenedevery week. These put forth customer problems; associates offered ideas and createdprototypes to solve them. The response to these events was overwhelming. Internal teamsand customers gained immensely from them. The TCS Innovista competition attracted over1000 entries across the Company.

The Company remained closely connected to customers through events in differentgeographies. TCS Innovation Forum was held in New York City London Medellin and SaoPaulo attracting 700+ customers partners and technology experts. TCS hosted "TheTCS Slush Experience" a curated pitching session to connect customers to somebreakthrough technology companies (at "Slush" the biggest start-up event inEurope). TCS Innovation Days and workshops continue to be held for customers in variousgeographies. Several pilot and proofs of concept implementations resulted from theseconnects.

The Company was honoured by the Fortune magazine as one of the 50 companies that"Changed the World" based on its digital farming Innovation"mKRISHI". The Company won the Physionet Challenge 2017 for ECG Analytics.Researchers from TCS and IIT Kanpur stood 4th in the Amazon Robotics Challenge. TCSAccessibility Practice won the International Federation for Information Processing (IFIP)Technical Committee on Human–Computer Interaction's Accessibility Award for 2017. TheCompany won four awards at the Tata Innovista 2017 competition. Several researchers wonindividual honours for presenting papers and by winning competitions. Three Researchersfrom the Company have been mentioned in JFG's Global AI Talent Report 2018. Researchersfrom the Company presented 250+ papers in premier conferences have written books and bookchapters. As of March 31 2018 the Company has applied for 3916 patents including 522applied during the year. Till date the Company has been granted 654 patents.

Future plan of action

Digital reimagination of industry and society and industrialistion of software andcomputing will both continue to be the focus of TCS R&I. Engagement with all itsbusinesses with its Co-Innovation Network and with society at large will continue.

Expenditure on R&D

TCS' Innovation Labs are located in India and other parts of the world. The R&Dcenters certified by Department of Scientific & Industrial Research (DSIR)Government of India function from Pune Chennai Bengaluru Delhi-NCR Hyderabad Kolkataand Mumbai. Expenditure incurred in the R&D centers and innovation centers during FY17and FY18 are given below:

( Rs. crore)
Expenditure on R&D and innovation Unconsolidated Consolidated
FY18 FY17 FY18 FY17
a. Capital - 1 - 1
b. Recurring 295 281 298 281
c. Total R&D expenditure (a+b) 295 282 298 282
d. Innovation center expenditure 1079 878 1202 996
e. Total R&D and innovation expenditure (c+d) 1374 1160 1500 1278
f. R&D and innovation expenditure as a percentage of total turnover 1.4% 1.2% 1.2% 1.1%

Foreign exchange earnings and outgo

Export revenue constituted 92.22% of the total unconsolidated revenue in FY18 (92.41%in FY17).

Foreign exchange earnings and outgo FY18 FY17
a. Foreign exchange earnings 92258 86370
b. CIF Value of imports 768 561
c. Expenditure in foreign currency 33014 31553

28. Acknowledgements

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

On behalf of the Board of Directors
N. Chandrasekaran
Mumbai April 19 2018 Chairman

Annexure I

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014)

Form for disclosure of particulars of contracts or arrangements entered into by theCompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto:

1. Details of contracts or arrangements or transactions not at arm's length basis: TataConsultancy Services Limited (the Company) has not entered into anycontract/arrangement/transaction with its related parties which is not in ordinary courseof business or at arm's length during FY18. The Company has laid down policies andprocesses/procedures so as to ensure compliance to the subject section in the CompaniesAct 2013 (Act) and the corresponding Rules. In addition the process goes throughinternal and external checking followed by quarterly reporting to the Audit Committee.

(a) Name(s) of the related party and nature of relationship: Not Applicable (b) Natureof contracts/arrangements/transactions: Not Applicable (c) Duration of thecontracts/arrangements/transactions: Not Applicable

(d) Salient terms of the contracts or arrangements or transactions including the valueif any: Not Applicable (e) Justification for entering into such contracts or arrangementsor transactions: Not Applicable (f) Date(s) of approval by the Board: Not Applicable (g)Amount paid as advances if any: Not Applicable (h) Date on which the special resolutionwas passed in general meeting as required under first proviso to Section 188: NotApplicable

2. Details of material contracts or arrangement or transactions at arm's lengthbasis: a. Name(s) of the related party and nature of relationship: Not Applicable b.Nature of contracts/arrangements/transactions: Not Applicable c. Duration of thecontracts/arrangements/transactions: Not Applicable d. Salient terms of the contracts orarrangements or transactions including the value if any: Not Applicable e. Date(s) ofapproval by the Board if any: Not Applicable f. Amount paid as advances if any: NoneNote: All related party transactions are benchmarked for arm's length approved by AuditCommittee and reviewed by Statutory Auditors. The above disclosures on materialtransactions are based on threshold of 10% of consolidated turnover and consideringwholly owned subsidiaries are exempt for the purpose of Section 188(1) of the Act.

On behalf of the Board of Directors
N. Chandrasekaran
Mumbai April 19 2018 Chairman