TCS e-Serve International LimitedRegistered Office: Tower A, 2nd Floor, Building 6, W Block, DLF Phase III, Gurgaon – 122002
IT ServicesBusiness SolutionsOutsourcing
TCS e-Serve International Limited
Annual Report 2010-11
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The Board of Directors
Mr.Abid Ali Neemuchwala Chairman
Mr. Dinanath Kholkar Chief Executive Officer & Managing Director
Mr.Debashis Poddar Director
Mr.Bawa Grover Director
Mr.Prashid Gupta Director & Chief Financial Officer
Mr.Shirish Damle Director
Directors’ Report 03
Auditors’ Report 07
Accounts 10
Statement under Section 212 of the Companies Act, 1956 relating to subsidiary company 40
Directors’ Report of Subsidiary Company 41
Accounts of Subsidiary Company 44
Contents
3
To the Members,
The Directors have pleasure in presenting the fourth Annual Report of the Company together with the
audited statement of accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
Summary of the financial performance of the Company during the year is as follows –
(Rupees in lakh)
Year ended March 31,
2011
Year ended
March 31,
2010
Total Income for the year 26360.90 15040.09
Profit before Taxes 9736.39 4516.79
Profit after Taxes 9747.19 4495.64
Balance Brought forward from Previous Year 1777.49 (2718.15)
Amount Available for Appropriation 11524.68 1777.49
Balance carried to Balance Sheet 11524.68 1777.49
DIVIDEND
In order to conserve resources for the rapid growth, Your Directors do not recommend any dividend for the
financial year ended March 31, 2011.
OPERATIONS & BUSINESS REVIEW
During the year 2010-11, the Company recorded total income at ` 263.61 crore, which was higher by
75% as compared with previous year’s income of `150.40 crore. Of this, the operating income constituted
` 250.06 crore, which was higher by 67% over previous year figure of ` 149.29 crore. The Profit after Tax
for the year increased to ` 97.47 crore, as compared to ` 44.95 crore in the previous year, recording an
impressive increase of 117%.
The SEZ units of the Company have retained the status of “Net Foreign Exchange earner” within the meaning
of the Special Economic Zones, Act, 2005.
During the current year, the Company augmented capacity by further expanding its operations in Chennai
and setting up a new SEZ at Kolkata as a part of its overall strategy of offering services from multiple
locations.
SUBSIDIARY COMPANY
TCS e-Serve America, Inc.:
TCS e-Serve America, Inc., wholly-owned subsidiary of TCS e-Serve International Limited has reported a total
income of ` 18.96 Crore (USD 4252.06 thousand) in the second year of its operations, as compared to ` 8.82
crore (USD 1978 thousand) in the previous year and a net profit of ` 2.20 Crore (USD 493.77 thousand) as
against the previous year profit of ` 35.25 lakh (USD 79 thousand). The increased revenue and profits are
due to full year operations during the current year as compared to only part of the year in the previous year.
The Statement pursuant to Section 212 of the Companies Act, 1956 containing details of the subsidiary
company is attached. The financial statements of TCS e-Serve America, Inc. together with the Report of the
Directors and the Auditors thereon are also attached to this Annual Report.
DIRECTORS’ REPORT
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
DIRECTORS
Mr.Rajiv Vaid, Director of the Company resigned with effect from June 24, 2011. Your Directors place on record their appreciation of his valuable services to the Company.
Mr.Debashis Poddar was appointed as an Additional Director effective from July 28, 2011 and will hold office up to the conclusion of the forthcoming Annual General Meeting. As per the provisions of Section 260 of the Companies Act, 1956, he holds office up to the date of the forthcoming Annual General Meeting of the Company and is eligible for appointment as Director. The Company has received a notice under Section 257 of the Companies Act, 1956, proposing the candidature of Mr.Debashis Poddar for the office of Director. Resolution seeking his appointment has been incorporated in the Notice of the ensuing Annual General Meeting. Your Directors recommend his appointment.
Mr.Bawa Grover and Mr.AbidAli Neemuchwala, Directors retire by rotation and being eligible have offered themselves for re-appointment.
DIRECTORS’ RESPONSIBILITY STATEMENTIn accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors confirm that in preparation of financial statements for the year ended March 31, 2011, they have-
• followed the applicable accounting standards along with proper explanation relating to materialdepartures, wherever applicable;
• selectedsuchaccountingpoliciesandappliedthemconsistentlyandmadejudgmentsandestimatesthat are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the profit of the Company for that period;
• takenproperandsufficientcareforthemaintenanceofadequateaccountingrecords,inaccordancewith the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
• preparedtheannualaccountsonagoingconcernbasis.
PUBLIC DEPOSITS
Your Company has not accepted any deposits and no amount of principal or interest was outstanding on the date of the Balance Sheet.
AUDITORSM/s. Deloitte Haskins & Sells, Statutory Auditors of the Company, hold office up to the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Directors recommend their appointment.
DISCLOSURE OF PARTICULARSs
The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, are set out in an annexure – I tothisreport.TheinformationrequiredunderSection217(2A)oftheCompaniesAct,1956andtherulesmade there under are given in the annexure – II appended hereto and forms part of this report.
ACKNOWLEDGEMENTS
The Board takes this opportunity to thank its employees, shareholders, clients, bankers, vendors and others for the continued support.
On behalf of the Board of Directors, Abid Ali Neemuchwala
Chairman
Mumbai, August 22, 2011
5
ANNEXURE- I TO THE DIRECTORS’ REPORT
Particulars pursuant to the Companies (Disclosure of particulars in the report of Board of Directors) Rules,
1988, are furnished hereunder:
((a) Conservation of Energy: Continuous steps are taken to use the energy conservatively, by (i) installing
energysavingdeviceswherevernecessaryand(ii)preventiveupkeepofalltheequipment.
(b) Technology Absorption: Technology is an essential and integral part of delivery to your customers.
Your Company strives to remain abreast of state-of-the-art systems and has used tested, proven &
appropriate technology to minimize time to delivery and improve maintainability.
As an ongoing process, your Company is strengthening itself in getting appropriate tools for Information
& Network Management to ensure that it remains in the forefront of technology delivery.
(c) Foreign Exchange Earnings: ` 235.31 crore (previous year : `149.30 crore)
Foreign Exchange Outgo : ` 14.62 crore (previous year : ` 7.45 crore )
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
ANNEXURE- II TO THE DIRECTORS’ REPORTInformation as per Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees)
Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2011 is as under:
Statement showing the details of employees drawing remuneration @ ` 60 lakh per annum or ` 5 lakh per
month or more, where employed for part of the year
Name Educational
Qualification
Age Designation Total
Remuneration (Rs.)
Experience
(Years)
Date of
Joining
Last
Employer
Designation
Rajiv S
Gupta*
BE, MBA 47 Senior Vice
President
18,06,193 18 1-Apr-08 Citibank
N.A.
Vice
President
*indicates earnings for part of the year.
Notes:
1 Remuneration received includes salary, allowances, medical and leave travel expenses, monetary
value of perquisites as per Income-tax Rules and Company’s Contributions to Provident Fund and
Superannuation Fund.
2 None of the employee holds by himself or along with his spouse and dependent children more than
twopercentoftheEquitySharesoftheCompany.
3 The nature of employment in all cases is contractual.
On behalf of the Board of Directors,
Abid Ali Neemuchwala
Chairman
Mumbai, August 22, 2011
7
AUDITORS’ REPORT
TO THE MEMBERS OF TCS E-Serve International Limited
1. We have audited the attached Balance Sheet of TCS e-Serve International Limited (the “Company”) as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 (“CARO” / the “Order”) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; and
(e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2011 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
For DELOITTE HASKINS & SELLSChartered Accountants
(Registration No. 117366W)
Sanjiv V. PilgaonkarPartner
(Membership No. 39826)
Mumbai, 12th April, 2011
TCS e-Serve Limited Annual Report 2010 - 2011
Having regard to the nature of the Company’s business/activities paragraph 4 (xiii) of CARO is not applicable.
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the
fixed assets.
(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme
of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals.
According to the information and explanation given to us, no material discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of
the Company and such disposal has, in our opinion, not affected the going concern status of the Company.
(ii) The Company being a service company, engaged primarily in rendering transaction processing services, does not hold any
physical inventories. Accordingly, the provisions of paragraph 4 (ii) of CARO are not applicable to the Company.
(iii) According to the information and explanations given to us, the Company has not granted or taken secured or unsecured loans
to or from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act,
1956. Consequently, the provisions of paragraph 4 (iii) (a) to (iii) (g) of CARO are not applicable.
(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of
the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable
quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its
business with regard to purchases of fixed assets and the sale of services. The activities of the Company do not involve the
purchase of inventory and sale of goods. During the course of our audit, we have not observed any major weakness in such
internal control system.
(v) According to the information and explanations given to us, the Company has not entered into any contract or arrangement
with other parties, which needs to be entered in the register maintained under Section 301 of the Companies Act, 1956.
(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public and
no Order under sections 58A and 58AA of the Companies Act, 1956 has been passed by the Company Law Board or National
Company Law Tribunal or the Reserve Bank of India or any Court or other Tribunal in this respect in relation to the Company.
(vii) In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the
Management have been commensurate with the size of the Company and the nature of its business.
(viii) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of
cost records under Section 209 (1) (d) of the Companies Act, 1956, for any of the services to be rendered by the Company.
Accordingly, the provisions of paragraph 4 (viii) of CARO are not applicable.
(ix) According to the information and explanations given to us in respect of statutory dues:
(a) The Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including
Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Customs Duty, Service Tax, Cess and other material
statutory dues applicable to it. There were no dues payables during the year in respect of Investor Education and
Protection Fund, Wealth Tax and Excise Duty.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income Tax, Sales
Tax, Customs Duty, Service Tax and Cess and other material statutory dues in arrears, as at 31st March, 2011 for a period
of more than six months from the date they become payable.
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report)
9
ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report)
(c) There are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty and Cess which have not been
deposited with the appropriate authorities on account of any dispute.
(x) The Company has been incorporated on 10th September, 2007 and consequently, the Company has not been registered for
five years. Therefore, the provisions of paragraph 4 (x) of CARO are not applicable.
(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment
of dues to a bank. The Company has not borrowed any sum from financial institutions nor did the Company have outstanding
debentures during the year.
(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of paragraph 4 (xii) of CARO
are not applicable.
(xiii) In our opinion and according to the information and explanations given to us, the Company is not a dealer or a trader in shares,
securities, debentures and other investments. Therefore, the provisions of paragraph 4 (xiv) of CARO are not applicable.
(xiv) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others
from banks or financial institutions.
(xv) According to the information and explanations given to us, the Company did not avail any term loan during the year.
(xvi) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance
Sheet of the Company, we report that no funds raised on short-term basis have been used during the year for long-term
investment.
(xvii) According to the information and explanations given to us, the Company has not made preferential allotment of shares during
the period covered by our audit.
(xviii) The Company did not have outstanding debentures during the year. Accordingly, the provisions of paragraph 4 (xix) of CARO
are not applicable.
(xix) During the year covered by our audit report, the Company has not raised any money by way of public issue.
(xx) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and
no material fraud on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117366W)
Sanjiv V. Pilgaonkar
Partner
(Membership No. 39826)
Mumbai, 12th April, 2011
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
BALANCE SHEET
AS AT MARCH 31, 2011
(` in thousand)
Schedule As at March 31, 2011 As at March 31, 2010
SHAREHOLDERS' FUNDS
Share Capital A 100,000 100,000
Reserves and Surplus B 1,244,566 290,424
LOAN FUNDS
Unsecured Loans C 114,421 725,946
TOTAL FUNDS EMPLOYED 1,458,987 1,116,370
APPLICATION OF FUNDS:
FIXED ASSETS D
Gross Block 901,701 480,358
Less :- Accumulated Depreciation 320,719 135,880
Net Block 580,982 344,478
Capital Work-in-Progress 44,024 100,243
625,006 444,721
INVESTMENTS E 255,252 263,866
CURRENT ASSETS, LOANS AND ADVANCES
Unbilled Revenues 123,002 135,782
Sundry Debtors F 445,648 250,709
Cash and Bank Balances G 134,450 39,521
Other current assets - Interest accrued on fixed deposits 90 24
Loans and Advances H 373,307 274,822
1,076,497 700,858
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities I 464,638 273,532
Provisions J 33,130 19,543
497,768 293,075
NET CURRENT ASSETS 578,729 407,783
TOTAL ASSETS (NET) 1,458,987 1,116,370
NOTES TO THE ACCOUNTS N
In terms of our report attached
For Deloitte Haskins & Sells on behalf of Board of DirectorsChartered Accountants
Sanjiv V. Pilgaonkar Abid Ali Neemuchwala Dinanath Kholkar Partner Chairman CEO & Managing Director
Prashid Gupta Bawa Grover Director & Chief Financial Officer Director
M Vidya Mumbai, April 12, 2011 Company Secretary
11
TCS e-Serve International Limited
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2011
(` in thousand)
Schedules For year ended March 31, 2011
For year ended March 31, 2010
INCOME
Transaction processing and other services (Tax deducted at source ` 9,722 thousand; previous year ` NIL)
2,500,634 1,492,956
Other income (net) K 135,456 11,053
2,636,090 1,504,009
EXPENDITURE
Employee costs L 694,884 431,088
Operation and Other expenses M 745,973 453,747
1,440,857 884,835
PROFIT / (LOSS) BEFORE INTEREST, DEPRECIATION AND TAXES 1,195,233 619,174
Interest 36,580 66,896
Depreciation D 185,014 100,599
PROFIT / (LOSS) BEFORE TAXES 973,639 451,679
PROVISION FOR TAXES
Current tax (writeback for earlier years ` 1,080 thousand; previous year includes charge of ` 672 thousand)
(1,080) 1,752
Fringe benefit Tax (for earlier years ` NIL; previous year ` 363 thousand) - 363
NET PROFIT / (LOSS) FOR THE YEAR 974,719 449,564
Balance brought forward from previous year 177,749 (271,815)
AMOUNT AVAILABLE FOR APPROPRIATION 1,152,468 177,749
APPROPRIATIONS
Balance carried to Balance Sheet 1,152,468 177,749
1,152,468 177,749
NOTES TO THE ACCOUNTS N
Earnings per share
Basic and Diluted (Nominal value per equity share ` 100) (Refer Note 5 of Schedule N)
974.72 449.56
In terms of our report attached
For Deloitte Haskins & Sells on behalf of Board of DirectorsChartered Accountants
Sanjiv V. Pilgaonkar Abid Ali Neemuchwala Dinanath Kholkar Partner Chairman CEO & Managing Director
Prashid Gupta Bawa Grover Director & Chief Financial Officer Director
M Vidya Mumbai, April 12, 2011 Company Secretary
TCS e-Serve Limited Annual Report 2010 - 2011
(` in thousand)
For year ended March 31, 2011
For year ended March 31, 2010
Cash flow from operating activities:
Net Profit / (Loss) before tax 973,639 451,679
Adjusted for:
Depreciation 185,014 100,599
Profit on Redemption of Mutual Funds (9,878) (894)
Provision for doubtful advances 1,054 -
Interest expense 36,580 66,896
(Profit) / Loss on sale / discard of fixed assets (174) 38
Unrealised gain on Foreign exchange (14,292) 5,224
Provision for doubtful debts 337 -
Dividend from other investments (7,665) (3,033)
Interest income (467) (2,775)
Unclaimed balances written back (1,927) (4,351)
Operating profit before working capital changes 1,162,221 613,383
(Increase)/Decrease in trade and other receivables (229,359) (164,118)
Increase/(Decrease) in trade payables 110,191 99,121
Cash generated from operations 1,043,053 548,386
Income tax paid (including fringe benefit tax) (21,853) (2,737)
Net cash provided by operating activities (a) 1,021,200 545,649
Cash flow from investing activities:
Purchase of fixed assets (including capital work-in-progress) (270,041) (198,929)
Proceeds from sale of fixed assets 1,343 -
Loans to Subsidiary given (400) (45,638)
Investments in Subsidiary - (12,903)
Loans to Subsidiary recovered 9,374 -
Purchase of investments (2,324,510) (1,549,580)
Proceeds from sale of investments 2,343,002 1,299,563
Advance towards purchase of Mutual Funds (45,000) -
Dividend from other investments 7,665 3,033
Interest received on fixed deposits 1 2,771
Interest received on loan to subsidiary 400 (9)
Fixed deposits with banks (net) having maturity over three months
(60,000) -
Net cash used by investing activities (b) (338,166) (501,692)
TCS e-Serve International Limited
CASH FLOW STATEMENT
FOR THE YEAR ENDED MARCH 31, 2011
13
(` in thousand)
For year ended March 31, 2011
For year ended March 31, 2010
Cash flow from financing activities:
Inter Corporate Deposits received 139,925 44,410
Inter Corporate Deposits repaid (751,450) (103,103)
Interest paid (36,580) (66,896)
Deposit pledged under lien with Citibank - (262)
Net cash used by financing activities (c) (648,106) (125,851)
Net decrease in cash and cash equivalents ( a + b + c ) 34,929 (81,894)
Cash and cash equivalents at the beginning of the year:
Cash and cash equivelents at the beginning of the year 39,059 120,953
Cash and cash equivalents as at the end of the year:
Balances with scheduled banks on current accounts 73,988 39,059
In Deposit account 60,000 -
Add: Deposits pledged as collateral against cash credit facility 462 462
Total Cash and Bank Balance as per Schedule G 134,450 39,521
Note :
Figures in the brackets are outflows/deductions.
TCS e-Serve International Limited
CASH FLOW STATEMENT
FOR THE YEAR ENDED MARCH 31, 2011
In terms of our report attached
For Deloitte Haskins & Sells on behalf of Board of DirectorsChartered Accountants
Sanjiv V. Pilgaonkar Abid Ali Neemuchwala Dinanath Kholkar Partner Chairman CEO & Managing Director
Prashid Gupta Bawa Grover Director & Chief Financial Officer Director
M Vidya Mumbai, April 12, 2011 Company Secretary
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘A’
SHARE CAPITAL
Authorised :
Equity:
2,500,000 equity shares of ` 100 each 250,000 250,000
(Previous Year 2,500,000 equity shares of ` 100 each)
250,000 250,000
Issued, Subscribed and Paid up:
1,000,000 equity shares of ` 100 each 100,000 100,000
(Previous Year 1,000,000 equity shares of ` 100 each)
100,000 100,000
Note:
1,000,000 (Previous Year 1,000,000) equity shares of ` 100/- each are held by TCS e-Serve Limited, the holding company and its nominees.Tata Sons limited is the ultimate holding company.
15
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘B’
RESERVES AND SURPLUS
Balance in Profit & Loss Account 1,152,468 177,749
Hedging reserve account (Refer note 13 of schedule N)
92,098 112,675
Total 1,244,566 290,424
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘C’
UNSECURED LOANS
From entities other than Banks Other than short term loan
TCS e-Serve Limited, the holding company 114,421 725,946
(Repayable on demand on or before the end of 3 years from 31st March, 2011)
Total 114,421 725,946
TCS e-Serve Limited Annual Report 2010 - 2011
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1,67
9) 1
6,33
8 1
0,87
4
Tota
l 4
80,3
58
422
,687
(
1,34
4) 9
01,7
01
(13
5,88
0) (
185,
014)
175
(
320,
719)
580
,982
3
44,4
78
Prev
ious
Yea
r 2
59,2
23
221
,173
(3
8) 4
80,3
58
(35,
281)
(100
,599
) -
(1
35,8
80)
344
,478
Cap
ital W
ork-
in-p
rogr
ess
(Incl
udes
Cap
ital A
dvan
ces
of R
s. N
il; P
revi
osu
year
` N
il) 4
4,02
4 1
00,2
43
Gra
nd
To
tal
625
,006
4
44,7
21
17
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
(` in thousand)
As at March 31, 2011
As at March 31, 2010
SCHEDULE ‘E’
INVESTMENTS
(A) Long term investments (at cost)
Trade Investments (Unquoted)
Subsidiary Company
27,600 (Previous year 27,600) Equity shares of USD 10 each fully paid up of TCS e-Serve America Inc.
12,955 12,955
(B) Current Investments (at lower of cost or market value)
Investment in Mutual Funds (Unquoted) 242,297 250,911
(Refer Schedule attached)
255,252 263,866
Book value of quoted investment 255,252 263,866
NAV of Mutual Funds 242,888 251,036
TCS e-Serve Limited Annual Report 2010 - 2011
TCS
e-Se
rve
Inte
rnat
ion
al L
imit
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SCH
EDU
LES
FOR
MIN
G P
AR
T O
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Sch
edu
le ‘E
’ (C
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t.)
(` in
tho
usan
d)
Mut
ual F
und
Face
Val
ue O
peni
ng B
alan
ce o
n A
pril
1, 2
010
Pur
chas
es /
Div
iden
d re
inve
sted
dur
ing
the
year
Red
empt
ion
duri
ng
the
year
C
losi
ng B
alan
ce a
s at
M
arch
31,
201
1
Am
ount
U
nits
A
mou
nt
Uni
ts
Am
ount
U
nits
A
mou
nt
Uni
ts
Birla
Sun
life
Ultr
a Sh
ort t
erm
fund
- In
stitu
tiona
l Dal
iy d
ivid
end
10.
00
100
,277
10
,022
,227
2
19,1
67
21,9
04,6
57
220
,000
21
,987
,907
9
9,44
4 9
,938
,977
Birla
Sun
life
- Fl
oatin
g Ra
te F
und
- Lon
g Te
rm -
Inst
itutio
nal -
Gro
wth
10.
00
50,
143
4,6
39,7
70
- -
50,
143
4,6
39,7
70
- -
Birla
Sun
life
- In
terv
al In
com
e Fu
nd -
Qua
rtly
- Se
ries
1 - G
row
th 1
0.00
1
00,4
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10,0
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00
- -
100
,491
10
,000
,000
-
-
Birla
Sun
Life
Cas
h M
anag
er-In
stitu
tiona
l Pla
n - G
row
th 1
0.00
-
- 5
95,0
88
37,5
85,3
67
580
,005
36
,643
,579
1
5,08
3 9
41,7
88
Birla
Sun
life
Sav
ings
Fun
d - I
nstl.
Gro
wth
10.
00
- -
80,
255
4,5
72,7
52
80,
255
4,5
72,7
52
- -
Birla
Su
nlife
C
ash
Man
ager
-
Inst
itutio
nal
Prem
ium
D
aily
di
vide
nd
rein
vest
emen
t 1
0.00
-
- 5
0,00
0 4
,998
,500
5
0,00
0 4
,998
,500
-
-
BSL
- Cas
h Pl
us In
stitu
tiona
l Pre
miu
m D
aily
div
iden
d re
inve
stem
ent
10.
00
- -
45,
000
4,4
91,2
42
45,
000
4,4
91,2
42
- -
BSL
- Cas
h Pl
us In
stitu
tiona
l Pre
miu
m G
row
th 1
0.00
-
- 1
,335
,000
86
,584
,017
1
,207
,230
78
,430
,547
1
27,7
70
8,1
53,4
70
Tota
l 2
50,9
11
2,3
24,5
10
2,3
33,1
24
242
,297
Part
icul
ars
Ope
ning
Bal
ance
on
1st
Apr
il 20
10
Pur
chas
es d
urin
g th
e ye
ar
Sol
d du
ring
the
yea
r C
losi
ng B
alan
ce a
s at
M
arch
31
2011
Am
ount
Sh
ares
Am
ount
S
hare
s A
mou
nt
Sha
res
Am
ount
S
hare
s
TCS
e-Se
rve
Am
eric
a In
c. 1
2,95
5 2
7,60
0 -
-
-
-
1
2,95
5 2
7,60
0
Tota
l 1
2,95
5 -
-
1
2,95
5
19
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘G’
CASH AND BANK BALANCES
Bank Balances
with Scheduled Banks
(i) In Current Account 13,403 38,276
(ii) In Deposit account (Refer note below) 120,462 462
with Foreign banks
In Current Account
Citibank NA, West Virginia 59 78
Citibank NA, Alaska 59 79
Citibank NA, Wisconsin 58 79
Citibank NA, New York 344 448
Citibank NA, Arizona 51 78
Common wealth Bank of Australia, Tasmania 14 21
134,450 39,521
Maximum amount outstanding during the year - Foreign Banks :
Citibank NA, West Virginia 78 78
Citibank NA, Alaska 79 79
Citibank NA, Wisconsin 79 79
Citibank NA, New York 448 448
Citibank NA, Arizona 88 78
Common wealth Bank of Australia, Tasmania 21 21
Note :
Deposit agregating to ` 462 thousand (previous year ` 462 thousand) kept under lien with a certain bank for guarantees issued.
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘F’
SUNDRY DEBTORS
Over six months (Unsecured)
(i) Considered good - -
(ii) Considered doubtful 337 -
337 -
Others (Unsecured)
(i) Considered good 445,648 250,709
(ii) Considered doubtful - -
445,648 250,709
Less: Provision for doubtful debts (337) -
445,648 250,709
TCS e-Serve Limited Annual Report 2010 - 2011
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘H’
LOANS AND ADVANCES (Unsecured)
Considered good
Loan given to subsidiary company (Refer Note below) 34,637 43,932
Loans and Advances to employees 658 223
Advances recoverable in cash or kind or for value to be received 27,690 2,885
Advance Tax (net) 32,297 9,363
Fringe Benefit Tax (net) 44 44
Foreign exchange forward and currency option contracts 105,194 114,471
Advance towards purchase of Mutual Funds 45,000 -
Deposits 127,787 103,904
373,307 274,822
Considered doubtful
Advances recoverable in cash or kind or for value to be received 1,054 -
1,054 -
Less: Provision for doubtful advances (1,054) -
373,307 274,822
Note:
Dues from the companies under Same Management
TCS e-Serve America Inc. 34,637 43,932
Maximum Balance outstanding during the year
TCS e-Serve America Inc. 46,221 45,753
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
21
TCS e-Serve International Limited
SCHEDULES FORMING PART OF BALANCE SHEET
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘I’
CURRENT LIABILITIES
Sundry Creditors (Refer note 16 of Schedule N)
Dues of Micro Enerprises and Small Enterprises - -
Dues of other creditors 427,034 261,260
Advances from customers 28 28
Others 37,576 12,244
464,638 273,532
(` in thousand)
As at March 31, 2011 As at March 31, 2010
SCHEDULE ‘J’
PROVISIONS
Employee Benefits 33,130 19,543
33,130 19,543
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
(` in thousand)
For year ended March 31, 2011
For year ended March 31, 2010
SCHEDULE ‘K’
OTHER INCOME
Interest from Fixed Deposit (Tax deducted at source ` Nil; previous year ` 278 thousand)
67 2,631
Interest on Loan to Subsidiary (Tax deducted at source ` 56 thousand; previous year ` 9 thousand)
400 144
Dividend from Mutual Funds 7,665 3,033
Profit on sale of fixed assets (net) 174 -
Profit on Redemption of Mutual Funds 9,878 894
Exchange Gain (net) (includes gain of ` 98,683 thousand : previous year ` Nil on foreign exchange forward contracts and currency option contracts which have been designated as Cash Flow Hedges)
115,345 -
Unclaimed balances written back 1,927 4,351
135,456 11,053
23
(` in thousand)
For year ended March 31, 2011
For year ended March 31, 2010
SCHEDULE ‘L’
EMPLOYEE COSTS (Refer note 17 of Schedule N)
Salaries and Incentives 623,367 388,094
Contribution to -
(i) Provident Fund and Superannuation 23,038 13,406
(ii) Group Gratuity 718 4,573
Staff welfare expenses 47,761 25,015
694,884 431,088
TCS e-Serve International Limited
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
TCS e-Serve International Limited
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
(` in thousand)
For year ended March 31, 2011
For year ended March 31, 2010
SCHEDULE ‘M’
OPERATION AND OTHER EXPENSES (Refer note 17 of Schedule N)
Overseas business expenses -Travel Related 2,502 6,620
Overseas business expenses -Employee 10,954 1,295
Overseas business expenses -Others 1,153 143
Services rendered by business associates and others 209,111 88,800
Cost of software licences 3,559 10,892
Communication expenses 59,885 43,062
Travelling and conveyance expenses 59,301 48,445
Rent 230,713 123,647
Legal and professional fees 5,310 10,818
Repairs & Maintenance - Buildings 85,015 41,139
Repairs & Maintenance - Others 492 2,541
Repairs & Maintenance - Plant & equipments 10,485 3,351
Electricity expenses 20,543 12,556
Bad Debts written off - 1,429
Provision for doubtful debts 337 (1,429)
Provision for doubtful advances 1,054 -
Recruitment and training expenses 9,313 7,564
Printing and stationery 6,585 7,017
Insurance 1,063 1,545
Rates and taxes 1,827 6,544
Entertainment 465 246
Payment to auditors (Refer note 8 of Schedule N) 3,849 1,002
Bank Charges 984 889
Periodicals & journals 16 -
Freight and carriage 279 -
Advertisement and Publicity 93 -
Tata Brand Equity contribution 241 3,738
Loss on sale / discard of assets - 38
Exchange Loss (Net) (includes gain of ` NIL : previous year ` 3,140 thousands on foreign exchange forward contracts and currency option contracts which have been designated as Cash Flow Hedges)
- 16,117
Other expenses 20,844 15,738
745,973 453,747
25
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
1. Background and principal activities
TCS e-Serve International Limited is engaged in the business of providing Information Technology - Enabled Services (ITES)/ Business Processing Outsourcing (BPO) services, primarily to Citigroup entities globally.
The Company’s operations broadly comprise of transaction processing and technical services. Transaction processing includes the broad spectrum of activities involving the processing, collections, customer care and payments in relation to the services offered by Citigroup to its corporate and retail clients. Technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities.
2. Significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention and the requirements of the Companies Act, 1956.
2.2 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods. Examples of such estimates include unbilled revenue, provision for doubtful debts, provision for income taxes and the useful life of depreciable fixed assets.
2.3 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated depreciation. Cost includes freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.
Depreciation is provided on the straight-line method. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management’s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on management’s estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation on the fixed assets, has been provided at the following rates, which are higher than the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956:
Class of asset Rate of depreciation
Improvement to leasehold premises
- where lease period is less than 10 years At rates computed on the basis of the lease periods
- where lease period is 10 years or more 10 %
Office equipment 25 %
Computer equipment 33.33 %
Software licenses 50 %
Furniture and fixtures 20 %
Electrical fittings 20 %
Vehicles 20 %
All fixed assets individually costing less than ` 5,000 are fully depreciated in the year of purchase.
The Company provides pro-rata depreciation from the month the asset is put to use and for any asset sold, up to the month of sale.
TCS e-Serve Limited Annual Report 2010 - 2011
2.4 Impairment of assets:
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical costs and the reversal of impairment loss is recognised immediately as income in the profit and loss account.
2.5 Leases
Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor, are recognised as operating leases. The lease agreements contain rent escalation clause. Lease rental expenses including escalations for operating leases are recognised in the Profit and Loss Account on a straight-line basis over the minimum lease term.
2.6 Investments
Long-term investments are stated at cost, less provision for other than temporary diminution in value. Current investments comprising investments in mutual funds are stated at the lower of cost and market value, determined on a portfolio basis.
2.7 Cash and Cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term highly liquid investment, which have duration of up to three months from the date of acquisition.
2.8 Employee benefits
The Company has both defined contribution and defined benefit plans of which some have assets in special funds or similar securities. The plans are financed by the Company and in case of defined contribution plans, by the Company along with its employees.
Post-employment benefit plans
Gratuity
The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets, if any, is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.
Actuarial gains and losses are recognised immediately in the profit and loss account.
Provident fund, family pension fund and Superannuation fund
These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional funds. The Company’s contributions to these funds are reported as expenses during the period in which the employees perform services that the payment covers.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
27
Short-term benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employees renders the service. These benefits include compensated absences such as annual paid leave and performance incentives.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet date
2.9 Revenue recognition
Revenues from Business Process Outsourcing (BPO) services are recognised on time and material and unit priced contracts. Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred. Revenue on unit priced contracts is recognised as the related services are rendered. Reimbursement of out of pocket expenses are recognised as revenue.
Revenue in excess of billings is recognised as unbilled revenues in the balance sheet.
Interest income is recognised on time proportionate basis.
Dividend income is recognised when the right to receive the dividend is established.
2.10 Foreign currency transactions
Income and expenses in foreign currencies are converted at exchange rates prevailing on the date of the transaction.
Foreign currency monetary assets and liabilities other than net investments in non-integral foreign operations are translated at the exchange rate prevailing on the balance sheet date. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise’s net investments in a non-integral foreign operation is accumulated in a foreign currency translation reserve.
Premium or discount on forward exchange contracts are amortised and recognised in the profit and loss account over the period of the contract. Forward exchange contracts outstanding at the balance sheet date are stated at fair values and any gains or losses are recognised in the profit and loss account.
2.11 Taxation
Current income tax expense comprises taxes on income from operations in India. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.
Advance taxes and provisions for current income taxes are presented in the Balance sheet after off-setting advance taxes paid and income tax provisions arising in the same tax jurisdiction, provided the Company has a legally enforceable right to set off the recognised amounts.
The Company offsets deferred tax assets and deferred tax liabilities relating to taxes on income levied by the same governing taxation laws.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
2.12 Provision and contingencies
A provision is recognised when there is a present obligation as a result of a past event that and it is probable that an outflow of resources will be required to settle the obligation and the reliable estimate can be made. Present obligations which has a possibility of outflow of resources to settle the obligation are disclosed as contingent liability. Present obligation in respect of which the likely hood of outflow of resources is remote are neither provided nor disclosed as contingent liability.
Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate.
Contingent assets are neither recognised nor disclosed in the financial statements.
2.13 Earnings per share
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders by weighted average number of equity shares outstanding during the reporting year.
Number of equity shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also weighted average number of equity shares which would have been issued on the conversion of all dilutive potential shares. In computing diluted earnings per share only potential equity shares that are dilutive are included.
2.14 Derivative instruments and hedge accounting
The Company uses foreign currency forward contracts and currency options to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Company designates these hedging instruments as cash flow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 “Financial Instruments: Recognition and Measurement” (AS-30).
The use of hedging instruments is governed by the Company’s policies approved by the board of directors, which provide written principles on the use of such financial derivatives consistent with the Company’s risk management strategy.
Hedging instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognised directly in shareholder’s funds and the ineffective portion is recognised immediately in the Profit and Loss Account.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting is recognised in the Profit and Loss Account as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised or no longer qualifies for hedge accounting. At that time for forecasted transactions, any cumulative gain or loss on the hedging instrument recognised in shareholder’s funds is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholder’s funds is transferred to Profit and Loss Account for the period.
3. Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for as at March 31, 2011 is ` 33,219 thousand (Previous year ` 17,587 thousand).
4. Contingent Liabilities
(` in thousand)
Particulars As at March 31, 2011
As at March 31, 2010
Guarantees given by the company 61,693 412
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
29
5. Earnings per share
The computation of earnings per share is set out below:
(` in thousand)
Particulars Year ended March 31, 2011
Year ended March 31, 2010
Profit after tax (A) - ` in thousands 974,719 449,564
Number of equity shares (B)
Weighted average number of shares at ` 100/- paid up per share equivalent
1,000,000 1,000,000
Nominal value of the equity Shares - Rs per share 100 100
Basic and diluted earnings per share of face value of Rs.100 for the year (A) / (B) - `
974.72 449.56
6. Related party disclosures:
I. Names of related parties and nature of relationship:
Enterprises that directly, or indirectly through one or more intermediaries, control or are under common control with the Company:
(a) Holding Company
Name of the Enterprise Nature of relationship
TCS e-Serve Limited (TESL) Holding Company
Tata Consultancy Services Limited (TCSL) Holding Company of TESL
Tata Sons Limited Holding Company of TCSL
(b) Subsidiary
Name of the Enterprise
TCS e-Serve America Inc. (TEAI)
(c) Fellow Subsidiaries with whom the Company has transactions
Name of the Enterprise
TATA America International Corporation (TAIC)
Tata Consultancy Services Canada Inc.
Diligenta Ltd.
(d) Key managerial personnel -
Mr. Dinanath Kholkar (Managing Director and Chairman)
There are no amounts paid/ payable to the key management personnel during the year.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
II) Transactions with related parties: (` in thousand)
Nature of transactions Holding Company Subsidiary Company Fellow Subsidiaries / Associates
Year ended Year ended Year ended
March 31 2011
March 31 2010
March 31 2011
March 31 2010
March 31 2011
March 31 2010
Transaction processing services
Tata Consultancy Services Limited 135,686 - - - - -
TCS e-Serve Limited 12,239 - - - - -
TATA America International Corporation - - - - 553,672 107,274
Tata Consultancy Services Canada Inc. - - - - 5,026 -
Diligenta Ltd. - - - - 20,281 -
Interest Earned
TCS e-Serve America Inc. - - 400 144 - -
Interest expenses
TCS e-Serve Limited 36,256 66,454 - - - -
Services rendered by business Associates
TCS e-Serve Limited 79,130 63,989 - - - -
Tata Consultancy Services Limited 120,075 3,630 - - - -
Cost of Licences
Tata Consultancy Services Limited 10,503 1,950 - - - -
Travel Expense Reimbursed
TATA Consultancy Services Limited 3,592 - - - - -
TATA America International Corporation - - - - 745 -
TATA Brand Royalty
Tata Sons Limited 4,459 3,737 - - - -
TATA Consultancy Services Limited (4,218) - - - - -
Investment in subsidiary company
TCS e-Serve America Inc. - - - 12,903 - -
Unsecured Loans taken
TCS e-Serve Limited 139,925 44,410 - - - -
Unsecured Loans repaid
TCS e-Serve Limited 751,450 103,103 - - - -
Loans given
TCS e-Serve America Inc. - - 79 43,687 - -
Loans repaid
TCS e-Serve America Inc. - - 9,374 9 - -
Purchase of Fixed Assets
TCS e-Serve Limited 1,117 - - - - -
Sale of Fixed Assets
TCS e-Serve Limited 27 - - - - -
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
31
III) Balances with related parties:
Nature of transactions Holding Company Subsidiary Company Fellow Subsidiaries / Associates
As at As at As at
March 31 2011
March 31 2010
March 31 2011
March 31 2010
March 31 2011
March 31 2010
Sundry Debtors
Tata Consultancy Services Limited 735 - - - - -
TATA America International Corporation - - - - 41,729 34,579
TCS Canada Inc. - - - - 502 -
Diligenta Ltd. - - - - 19,898 -
Unbilled Revenues
Tata Consultancy Services Limited 50,181 - - - - -
TATA America International Corporation - - - - 29,138 -
Loans and advances
TCS e-Serve America Inc. - - 34,637 43,932 - -
Unsecured Loans
TCS e-Serve Limited (114,421) (725,946) - - - -
Sundry creditors and Other current Liabilities
Tata Consultancy Services Limited (107,992) (5,580) - - - -
Tata Sons Limited (4,459) (3,737) - - - -
7. Segment information
The Company is engaged in Business Process Outsourcing (transaction processing) services to the Banking & Financial Services Industry (BFSI) and Travel, Tourism and Hospitality (TTH), which are considered as industry segment. Geographic segments of the Company are Americas, Europe and others.
Revenue and expense directly attributable to segments are reported under each reportable segment. Expenses incurred on behalf of segments and not directly identifiable to each reportable segment have been allocated to each segment on a reasonable basis. All other expenses, which are not attributable or allocable to segments, have been disclosed as unallocable expenses.
Assets and liabilities that are directly attributable to segments are disclosed under each reportable segment. Other assets and liabilities incurred on behalf of segments and not directly identifiable to each reportable segment have been allocated to each segment on a reasonable basis. All other assets and liabilities, which are not allocable are to segments have been disclosed as unallocable.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
(` in thousand)
For the Year Ended March 31, 2011
Industry Segment
Particulars BFSI TTH Total
Revenue 2,311,663 188,970 2,500,634
1,385,682 107,274 1,492,956
Segment result 801,035 78,966 880,001
463,305 44,217 507,522
Unallocable expenses (net) 41,818
66,896
Operating Profit / (Loss) 838,183
440,626
Other income 135,456
11,053
Profit / (Loss) before income tax 973,639
451,679
Tax expense (1,080)
2,115
Net Profit / (Loss) 974,719
449,564
As of March 31, 2011
Industry Segment
Particulars BFSI TTH Total
Segment Assets 1,363,829 91,156 1,454,985
987,943 64,754 1,052,697
Unallocable Assets 501,770
356,748
Total Assets 1,956,755
1,409,445
Segment Liabilities 475,015 22,753 497,768
276,253 16,822 293,075
Unallocable Liabilities 114,421
725,946
Total Liabilities 612,189
1,019,021
Other Information
Other significant non-cash expenses 186,405
100,599
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
33
For the Year Ended March 31, 2011 Geographic Segment
Particulars Americas Europe Other Total
Revenue 1,957,442 373,514 169,678 2,500,634
1,215,494 239,298 38,164 1,492,956
As of March 31, 2011 Geographic Segment
Particulars Americas Europe Others Total
Segment Assets 417,150 95,588 55,912 568,650
311,389 66,021 9,081 386,491
Unallocable Assets 1,388,105
1,022,954
Total Assets 1,956,755
1,409,445
Figures in italics represent previous year numbers
8. Auditors’ remuneration
(` in thousand)
Particulars Year ended March 31, 2011
Year ended March 31, 2010
For services as auditors 3,200 600
For Tax Audit* 300 200
Other matters* 271 200
Reimbursement of out-of-pocket expenses 78 2
*includes Rs.253 thousand (Previous year Rs. NIL) being amounts paid to a firm in which some of the partners in the firm of statutory auditors are partners.
9. Value of imports calculated on C.I.F. basis
(` in thousand)
Particulars Year ended March 31, 2011
Year ended March 31, 2010
Capital goods 126,166 40,010
10. Expenditure, earnings and dividend remittances in foreign currency
(a) Expenditure in foreign currencies (on payment basis)
(` in thousand)
Particulars Year ended March 31, 2011
Year ended March 31, 2010
Travelling expenses 14,609 29,814
Legal and professional fees 5,456 4,684
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
(b) Earnings in foreign currency (on accrual basis)
(` In thousand)
Particulars Year ended March 31, 2011
Year ended March 31, 2010
Transaction processing charges 2,353,191 1,492,956
Interest Income 400 144
11. Transfer pricing
The Company has developed a system of maintaining of information and documents as required by the transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
12. The year end foreign currency exposures that were not hedged by derivative instruments or otherwise are given below.
Amounts receivable / payable in foreign currency on account of following:-
Particulars As at
As at March 31 2011 As at March 31 2010
` in thousand Fx in thousand ` in thousand Fx in thousand
Receivable
Rendering of services - - 7,143 GBP 105
Unbilled Revenue - - 6,112 GBP 90
74,166 USD 1,663 129,671 USD 2,887
784 AUD 17 - -
Loans to subsidiary 34,637 USD 777 43,932 USD 978
Investment in subsidiary 12,955 USD 276 12,955 USD 276
Payable
Annual Maintenance Charges payable - - 9,891 USD 220
Import of Goods 2,308 USD 52 - -
Note: Fx= Foreign Currency; USD= US Dollar; GBP= British Pound; CAD = Canadian Dollar
13. Derivative Financial Instruments
The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and currency option contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. The contracts are generally for a period ranging from one day and two years.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
35
The Company has following outstanding derivative instruments as on March 31, 2011:
i) The following are outstanding foreign exchange forward contracts, which have been designated as Cash Flow Hedges, as on:
Foreign Currency As at March 31, 2011 As at March 31, 2010
No. of Contracts
Notional amount of Currency Forward contracts
Fair Value Gain / (Loss)
`
No. of Contracts
Notional amount of Currency Forward contracts
Fair Value Gain / (Loss)
`
U.S.Dollar 26 35,960 67,790 16 21,620 43,947
Sterling Pound 19 2,920 1,726 - - -
ii) The following are outstanding Currency Option contracts, which have been designated as Cash Flow Hedges, as on:
Foreign Currency As at March 31, 2011 As at March 31, 2010
No. of Contracts
Notional amount of Currency Option
contracts
Fair Value Gain / (Loss)
`
No. of Contracts
Notional amount of Currency Option
contracts
Fair Value Gain / (Loss)
`
U.S.Dollar 20 27,900 28,348 17 30,820 68,728
Net Gain on derivative instruments of ` 75,533 thousand recognised in Hedging Reserve as at March 31, 2011, is expected to be reclassified to the profit and loss account by March 31, 2012.
The movement in Hedging Reserve during the period ended March 31, 2011, for derivatives designated as Cash Flow Hedges is as follows:
(` In thousand)
Year endedMarch 31, 2011
Year endedMarch 31, 2010
Balance at the beginning of the year 112,675 -
Gains/(losses) transferred to income statement on occurrence of forecasted hedge transaction
(86,249)
Changes in the fair value of effective portion of outstanding cash flow derivatives
65,672 112,675
Net derivative (losses) / gain related to a discontinued cash flow hedge
Balance at the end of the year 92,098 112,675
In addition to the above cash flow hedges, the Group has outstanding foreign exchange forward contracts and currency option contracts aggregating ` 375,182 thousands (March 31, 2010: ` 209,127 thousands) whose fair value showed a gain of ` 3,876 thousands as on March 31, 2011 (March 31, 2010 : ` 1,796 thousands). Although these contracts are effective as hedges from an economic perspective, they do not qualify for hedge accounting and accordingly these are accounted as derivatives instruments at fair value with changes in fair value recorded in the profit and loss account. Exchange gain of ` 28,205 (Previous year: ` 6,897 thousands) on foreign exchange forward and currency option contracts have been recognised in the year ended March 31, 2011.
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
14. Operating leases
The Company has taken office premises on operating lease under non-cancellable lease arrangements. Lease payments recognised in the profit and loss account for the year is ` 157,355 thousand (Previous year: ` 123,647 thousand). Future minimum lease payments under non-cancellable operating leases are as below:
(` in thousand)
Particulars As at March 31, 2011 As at March 31, 2010
Not later than one year 221,399 105,808
Later than one year and not later than five years 948,148 497,289
Later than five years 821,536 438,136
Total 1,991,083 1,041,233
15. Disclosure pursuant to Accounting Standard – 15 (Revised) ‘Employee Benefits’
A. Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Provident Fund scheme additionally requires the Company to guarantee payment of interest at rates notified by the Central Government from time to time, for which shortfall has been provided for as at the Balance Sheet date.
The Company recognised ` 23,038 thousand (Previous year: ` 13,283 thousand) for provident fund contributions and ` NIL (Previous year: NIL) for superannuation contributions in the profit and loss account. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
B. Defined benefit plans
The Company offers its employees defined benefit in the form of gratuity for which the plan is not funded.
The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary per year of completed service. Vesting occurs upon completion of 5 years of service. The present value of defined benefit obligation and the related current service cost were measured using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date.
The following table sets out the non-funded status of the gratuity plan and the amounts recognised in the Company’s financial statements as at March 31, 2011:
(` in thousand)
As at March 31, 2011 As at March 31, 2010
i) Change in benefit obligations:
Projected benefit obligation, beginning of the year 5,935 1,362
Service Cost 4,772 5,909
Interest Cost 804 545
Actuarial (gain)/ loss (4,858) (1,881)
Benefits paid - -
Projected benefit obligation, end of the year 6,653 5,935
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
37
As at March 31, 2011 As at March 31, 2010
ii) Change in plan assets:
Fair value of plan assets, beginning of the year - -
Expected return on plan assets - -
Employer’s contributions - -
Benefits paid - -
Actuarial gain/ (loss) - -
Fair value of plan assets, at the end of the year - -
Excess of obligation over plan assets 6,653 5,935
For the year ended March 31, 2011
For the year ended March 31, 2010
iii) Net Gratuity cost:
Service cost 4,772 5,909
Interest cost 804 545
Expected return on plan assets - -
Net actuarial gain/ (loss) recognised in the year (4,858) (1,881)
Net Gratuity cost 718 4,573
Actual Return on Plan Assets - -
Key assumptions used to determine the net periodic gratuity cost and leave encashment at the valuation date are as follows:
For the year ended March 31, 2011
For the year ended March 31, 2010
Rate of discounting 8.00% 7.50%
Discount rate: The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations. The rate is taken as per the deal rate as March 31, 2011 available on Reserve Bank of India website.
Attrition rate and Retirement Age
Attrition with employee age
Service Less than 5 years 26.00% 14.00%
Others 3.00% 3.00%
Retirement age 58 yrs 58 yrs
Salary escalation rate: The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.
For the year ended March 31, 2011
For the year ended March 31, 2010
Mortality table LIC(1994-96) ultimate LIC(1994-96) ultimate
Future salary rise
First 4 years 12.00% 12.00%
Next 5 years 11.00% 11.00%
Thereafter 10.00% 10.00%
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
TCS e-Serve Limited Annual Report 2010 - 2011
The Company has not determined the amount to be contributed in the period beginning after the balance sheet date.
(` in thousand)
Experience Adjustments For the year ended March 31, 2011
For the year ended March 31, 2010
Experience adjustment on liability (4,377) (1,614)
16. Dues to Micro and Small Enterprises
On the basis of the information and records available with the management, there are no dues to Micro and Small Enterprises, which have registered with the competent authorities.
17. Prior Period Item
During the financial year 2009-10, the company had charged ` 24,474 thousand (Net Debit) in profit and loss account in respect of certain items pertaining to the earlier financial years. These had been recorded under respective heads of expenditure as below:
(` in thousand)
Particulars For the year ended March 31, 2010
Bank Charges (177)
Communication 6
Entertainment 5
Insurance 1,344
Other Expenses (3,326)
Printing and stationery 2,405
Rates and taxes 445
Recruitment and training expenses 581
Rent 1,758
Repairs & Maintenance - Buildings (1,523)
Repairs & Maintenance - Others 794
Salaries, Wages and Bonus (4,733)
Services rendered by business associates and others 9,354
Staff welfare expenses 415
Travel Expense 17,126
Total 24,474
There are no such items in the current financial year.
18. Previous year figures have been regrouped / reclassified wherever necessary.
On behalf of Board of Directors
Abid Ali Neemuchwala Dinanath Kholkar Prashid GuptaChairman CEO & Managing Director Director & Chief Financial Officer
Bawa Grower M VidyaDirector Company Secretary
Mumbai, April 12, 2011
TCS e-Serve International Limited
SCHEDULE N - NOTES FORMING PART OF BALANCE SHEET & PROFIT AND LOSS ACCOUNT
39
I. Registration detailsRegistration number 0 5 - 3 7 2 0 5
State Code 0 5
Balance Sheet date 3 1 0 3 2 0 1 1
Date Month Year
II. Capital raised during the year (Amount in ` thousand)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private placement
N I L N I L
III. Position of mobilization and deployment of funds (Amount in ` thousand)
Total Liabilities Total Assets
1 4 5 8 9 8 7 1 4 5 8 9 8 7
Sources of funds
Paid-up capital Reserves & Surplus
1 0 0 0 0 0 1 2 4 4 5 6 6
Secured Loans Unsecured Loans
N I L 1 1 4 4 2 1
Application of funds
Net Fixed Assets Investments
6 2 5 0 0 6 2 5 5 2 5 2
Net Current Assets Miscellaneous expenditure
5 7 8 7 2 9 N I L
Accumulated losses Deferred tax asset
N I L N I L
IV. Performance of Company (Amount in ` thousand)
Turnover Total Expenditure
2 5 0 0 6 3 4 1 6 6 2 4 5 1
+ - Profit / (Loss) before Tax + - Profit / (Loss) after Tax
3 9 7 3 6 3 9 3 9 7 4 7 1 9
Earnings per share in ` Dividend Rate
9 7 4 . 7 2 N I L
V. Generic names of three principal products /services of Company (as per monetary terms)
Item Code No. (ITC code) NOT APPLICABLE
Product description TRANSACTION PROCESSING
Item Code No. (ITC code) NOT APPLICABLE
Product description CUSTOMER CARE
TCS e-Serve International Limited
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Information required vide Part IV of Schedule VI of the Companies Act, 1956
TCS e-Serve Limited Annual Report 2010 - 2011
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41
To the Members,
Your Directors have pleasure in presenting the Third Annual Report of the Corporation with the audited
statement of accounts for the accounting year ended March 31, 2011.
PERFORMANCE
Summary of the financial performance during the year ended March 31, 2011 is as follows –
(In thousands)
Year ended
March 31, 2011
Year ended
March 31, 2010
USD INR* USD INR*
Total Income 4252.06 189599.22 1977.82 88191.40
Profit / (Loss) Before Taxes 701.58 31283.59 128.94 5749.57
Profit / (Loss) after Taxes 493.77 22017.25 79.05 3524.97
Balance Brought forward from Previous Year 78.08 3481.63 (0.97) (43.34)
Amount Available for Appropriation 571.85 25498.88 78.08 3481.63
Balance carried to Balance Sheet 571.85 25498.88 78.08 3481.63
*converted
DIVIDEND
In order to conserve resources for future expansion, the Directors do not recommend any dividend for the
financial year ended March 31, 2011.
OPERATIONS & BUSINESS REVIEW
During the year, the Corporation has recorded total income of ` 18.96 crore (USD 4252.06 thousand) against
the previous year income of ` 8.82 crore (USD 1978 thousand) and a net profit of ` 2.20 crore (USD 493.77
thousand) as against the previous year profit of ` 35.25 lakh (USD 79.05 thousand). The increased revenue
and profits are due to full year operations during the current year as compared to only part of the year in
the previous year. The Corporation continues to evaluate business opportunities and pursue the process of
seeking necessary licenses from respective authorities to expand its scope of operations in United States of
America
DIRECTORS
Mr. Abid Ali Neemuchwala, Mr. Satyanarayan Hegde and Mr. Dharmesh Gandhi continue as the Directors of
the Corporation.
DIRECTORS’ RESPONSIBILITY STATEMENT
Your Directors confirm that in preparation of financial statements for the year ended March 31, 2011, they
have-
• followed the applicable accounting standards along with proper explanation relating to material
departures, wherever applicable;
DIRECTORS’ REPORT
TCS e-Serve America Inc. Annual Report 2010 - 2011
TCS e-SERVE AMERICA, INC.
• selectedsuchaccountingpoliciesandappliedthemconsistentlyandmadejudgmentsandestimates
that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the
Corporation at the end of the financial period and of the profit of the Corporation for that period;
• takenproperandsufficientcareforthemaintenanceofadequateaccountingrecords,forsafeguarding
the assets of the Corporation and for preventing and detecting fraud and other irregularities; and
• preparedtheannualaccountsonagoingconcernbasis.
AUDITORS
Messrs Deloitte Haskins & Sells, Chartered Accountants, have audited the attached financial statements of
the Corporation for the year ended March 31, 2011, to enable the Holding Company comply with the
provisions of the Companies Act, 1956 of the Republic of India.
DISCLOSURE OF PARTICULARS
The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956, read with
the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, are set out in an annexure
– I to this report. There were no employees drawing remuneration in excess of the limits prescribed under
Section 217(2A) of the Companies Act, 1956 and the rules made there under.
ACKNOWLEDGEMENTS
The Board takes this opportunity to thank all its stakeholders for their support.
On behalf of the Board of Directors
Abid Ali Neemuchwala Satyanarayan Hegde Dharmesh Gandhi
Director Director Director
Date : July 11, 2011
43
ANNEXURE-I TO THE DIRECTORS’ REPORT
Particulars pursuant to the Companies (Disclosure of particulars in the report of Board of Directors) Rules,
1988, are furnished hereunder:
(a) Conservation of Energy: Continuous steps are taken to use the energy conservatively, by (i) installing
energysavingdeviceswherevernecessaryand(ii)preventiveupkeepofalltheequipment.
(b) Technology Absorption: Technology is an essential and integral part of delivery to your customers.
Your Company strives to remain abreast of state-of-the-art systems and has used tested, proven &
appropriate technology to minimize time to delivery and improve maintainability.
As an ongoing process, your Company is strengthening itself in getting appropriate tools for Information
& Network Management to ensure that it remains in the forefront of technology delivery.
(c) Foreign Exchange Earnings: N.A.
Foreign Exchange Outgo : N.A.
TCS e-Serve America Inc. Annual Report 2010 - 2011
AUDITORS’ REPORT
TO THE MEMBERS OF TCS e-Serve America Inc.
1. We have audited the attached Balance Sheet of TCS e-Serve America Inc. (the “Company”) as at 31st March, 2011, the Profit
and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These
financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the
financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by
the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. Further to our comments we report as follows:
a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purposes of our audit;
b) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement
with the books of account;
c) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are
in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; and
d) in our opinion and to the best of our information and according to the explanations given to us, the said accounts
give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117366W)
Sanjiv V. Pilgaonkar
Partner
(Membership No.: 39826)
MUMBAI, 12th April ,2011
45
TCS e-SERVE AMERICA, INC.
BALANCE SHEET
AS AT MARCH 31, 2011
Schedule As at March 31, 2011
As at March 31, 2010
As at March 31, 2011
As at March 31, 2010
USD USD INR INR
SOURCES OF FUNDS:
SHAREHOLDERS' FUNDS
Share Capital A 276,000 276,000 12,306,840 12,306,840
Reserves and Surplus B 571,852 78,081 25,498,881 3,481,632
LOAN FUNDS
Unsecured Loans C 776,787 978,012 34,636,949 43,609,555
TOTAL FUNDS EMPLOYED 1,624,639 1,332,093 72,442,670 59,398,027
APPLICATION OF FUNDS:
FIXED ASSETS
Gross Block D 44,350 44,350 1,977,567 1,977,567
Less :- Accumulated Depreciation 22,155 7,371 987,892 328,673
Net Block 22,195 36,979 989,675 1,648,894
Capital Work-in-Progress - - - -
22,195 36,979 989,675 1,648,894
DEFERRED TAX ASSETS (Refer Note 7 of Schedule L) 20,205 6,810 900,941 303,658
CURRENT ASSETS, LOANS AND ADVANCES
Unbilled Revenues 353,223 346,682 15,750,215 15,458,549
Sundry Debtors E 689,334 708,084 30,737,403 31,573,466
Cash and Bank Balances F 769,916 558,664 34,330,554 24,910,828
Loans and Advances G 136,792 51,785 6,099,556 2,309,093
1,949,265 1,665,215 86,917,728 74,251,936
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities H 305,449 344,946 13,619,956 15,381,142
Provisions I 61,577 31,965 2,745,718 1,425,319
367,026 376,911 16,365,674 16,806,461
NET CURRENT ASSETS 1,582,239 1,288,304 70,552,054 57,445,475
TOTAL ASSETS (NET) 1,624,639 1,332,093 72,442,670 59,398,027
NOTES TO THE ACCOUNTS L
In terms of our report attached
For Deloitte Haskins & Sells On behalf of BoardChartered Accountants
Sanjiv V. Pilgaonkar Dharmesh Gandhi Abid Ali Neemuchwala Satyanarayan HegdePartner Treasurer President Sr. Vice President, Corporate Secretary &
General Counsel Mumbai, April 12, 2011
TCS e-Serve America Inc. Annual Report 2010 - 2011
TCS e-SERVE AMERICA, INC.
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED MARCH 31, 2011
Schedules For year ended March
31, 2011
For year ended March
31, 2010
For year ended March
31, 2011
For year ended March
31, 2010
USD USD INR INR
INCOME
Transaction Processing Services 4,193,495 1,977,829 186,987,942 88,191,395
Miscellaneous income 58,562 - 2,611,280 -
4,252,057 1,977,829 189,599,222 88,191,395
EXPENDITURE
Employee costs J 2,422,267 1,189,333 108,008,886 53,032,358
Operation and Other expenses K 1,105,208 648,971 49,281,225 28,937,617
3,527,475 1,838,304 157,290,111 81,969,975
PROFIT / (LOSS) BEFORE INTEREST, DEPRECIATION AND TAXES 724,582 139,525 32,309,111 6,221,420
Interest 8,215 3,211 366,307 143,178
Depreciation D 14,784 7,371 659,219 328,673
PROFIT / (LOSS) BEFORE TAXES 701,583 128,943 31,283,585 5,749,569
PROVISION FOR TAXES
Federal Income Tax (Current year includes $ 1,567 (` 69, 873) for earlier years; previous year NIL) 221,207 51,600 9,863,620 2,300,844
State Income Tax - 5,100 - 227,409
Deferred tax expense / (benefit) (13,395) (6,810) (597,283) (303,658)
NET PROFIT / (LOSS) FOR THE YEAR 493,771 79,053 22,017,248 3,524,974
Balance brought forward from previous year 78,081 (972) 3,481,633 (43,341)
AMOUNT AVAILABLE FOR APPROPRIATION 571,852 78,081 25,498,881 3,481,633
APPROPRIATIONS
Balance carried to Balance Sheet 571,852 78,081 25,498,881 3,481,633
571,852 78,081 25,498,881 3,481,633
NOTES TO THE ACCOUNTS L
Earnings per share
Basic and Diluted (Nominal value per equity share of USD 10) (Refer Note 5 of Schedule L) 17.89 6.71 797.73 299.28
In terms of our report attached
For Deloitte Haskins & Sells On behalf of BoardChartered Accountants
Sanjiv V. Pilgaonkar Dharmesh Gandhi Abid Ali Neemuchwala Satyanarayan HegdePartner Treasurer President Sr. Vice President, Corporate Secretary &
General Counsel Mumbai, April 12, 2011
47
TCS e-SERVE AMERICA, INC.
CASH FLOW STATEMENT
FOR THE YEAR ENDED MARCH 31, 2011
For year ended March
31, 2011
For year ended March
31, 2010
For year ended March
31, 2011
For year ended March
31, 2010 USD USD INR INR
Cash flow from operating activities:
Net profit before tax 701,583 128,943 31,283,585 5,749,568
Adjusted for:
Depreciation 14,784 7,371 659,219 328,673
Finance charges 8,215 3,211 366,307 143,178
Operating profit before working capital changes 724,582 139,525 32,309,111 6,221,419
Increase in trade and other receivables (31,793) (1,071,151) (1,417,651) (47,762,622)
Increase in trade payables 39,565 327,351 1,764,204 14,596,581
Cash generated from operations 732,354 (604,275) 32,655,664 (26,944,622)
Income tax paid (267,312) (87,000) (11,919,442) (3,879,330)
Net cash provided by operating activities (a) 465,042 (691,275) 20,736,222 (30,823,952)Cash flow from investing activities:
Purchase of fixed assets (44,350) - (1,977,567) -
Net cash used by investing activities (b) (44,350) - (1,977,567) - Cash flow from financing activities:
Repayment of Borrowings (200,000) - (8,918,000) -
Interest paid (9,440) (199) (420,930) (8,873)
Proceeds from Borrowings - 970,000 - 43,252,300
Proceeds from issue of Shares - 275,000 - 12,262,250
Net cash used by financing activities (c) (209,440) 1,244,801 (9,338,930) 55,505,677 Net decrease in cash and cash equivalents (a + b + c) 211,252 553,526 9,419,725 24,681,725
Cash and cash equivalents at the beginning of the year:
Balances with scheduled banks on current accounts and fixed deposits 558,664 5,138 24,910,828 229,103
558,664 5,138 24,910,828 229,103
Cash and cash equivalents as at the end of the year:
Balances with scheduled banks on current accounts and fixed deposits 769,916 558,664 34,330,554 24,910,828
Total Cash and Bank Balance as per Schedule F 769,916 558,664 34,330,554 24,910,828 Notes :
Figures in the brackets are outflows/deductions.
Previous year's figures have been regrouped where necessary.
In terms of our report attached
For Deloitte Haskins & Sells On behalf of BoardChartered Accountants
Sanjiv V. Pilgaonkar Dharmesh Gandhi Abid Ali Neemuchwala Satyanarayan HegdePartner Treasurer President Sr. Vice President, Corporate Secretary &
General Counsel Mumbai, April 12, 2011
TCS e-Serve America Inc. Annual Report 2010 - 2011
TCS e-SERVE AMERICA, INC.
SCHEDULES FORMING PART OF BALANCE SHEET
As at March 31, 2011
As at March 31, 2010
As at March 31, 2011
As at March 31, 2010
USD USD INR INR
SCHEDULE 'A'
SHARE CAPITAL
Authorised :
Equity: 276,000 276,000 12,306,840 12,306,840
27,600 equity shares of USD 10 each(Previous year 27,600 equity shares of USD 10 each)
276,000 276,000 12,306,840 12,306,840
Issued, Subscribed and Paid up
27,600 equity shares of USD 10 each 276,000 276,000 12,306,840 12,306,840
(Previous year 27,600 equity shares of USD 10 each)
276,000 276,000 12,306,840 12,306,840
Note:
27,600 equity shares (Previous year : 27,600 equity shares) of USD 10/- each are held by TCS e-Serve International Limited, the holding company. Tata Sons Limited is the ultimate holding company.
SCHEDULE 'B'
RESERVES AND SURPLUS
Balance in Profit & Loss Account 571,852 78,081 25,498,881 3,481,632
Total 571,852 78,081 25,498,881 3,481,632
SCHEDULE 'C'
UNSECURED LOANS
Short Term loan from TCS e-Serve International Limited, the holding company 775,000 975,000 34,557,250 43,475,250
(Repayable on demand)
Interest accrued and due 1,787 3,012 79,699 134,305
776,787 978,012 34,636,949 43,609,555
49
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TCS e-Serve America Inc. Annual Report 2010 - 2011
TCS e-SERVE AMERICA, INC.
SCHEDULES FORMING PART OF BALANCE SHEET
As at March 31, 2011
As at March 31, 2010
As at March 31, 2011
As at March 31, 2010
USD USD INR INR
SCHEDULE 'E'
SUNDRY DEBTORS
Over six months (Unsecured)
(i) Considered good - - - -
(ii) Considered doubtful - - - -
- - - -
Others (Unsecured)
(i) Considered good 689,334 708,084 30,737,403 31,573,466
(ii) Considered doubtful - - - -
689,334 708,084 30,737,403 31,573,466
Less: Provision for doubtful debts - - - -
689,334 708,084 30,737,403 31,573,466
SCHEDULE 'F'
CASH AND BANK BALANCES
Bank Balances
with Foreign banks
In Current Account 769,916 558,664 34,330,554 24,910,828
769,916 558,664 34,330,554 24,910,828
Balance outstanding as at year end
Bank of America, N.A., Texas 769,916 558,390 34,330,554 24,898,610
Bank of America, N.A., Kansas - 274 - 12,218
Maximum balance balance outstanding at any time during the year
Bank of America, N.A., Texas 1,221,086 1,258,908 54,448,225 56,134,708
Bank of America, N.A., Kansas 614 500 27,378 22,295
51
TCS e-SERVE AMERICA, INC.
SCHEDULES FORMING PART OF BALANCE SHEET
As at March 31, 2011
As at March 31, 2010
As at March 31, 2011
As at March 31, 2010
USD USD INR INR
SCHEDULE 'G'
LOANS AND ADVANCES
Unsecured
Considered good
Loans and Advances to employees 1,825 16,385 81,377 730,607
Advances recoverable in cash or kind or for value to be received 58,562 - 2,611,280 -
Advance Tax - Fedral 76,405 35,400 3,406,899 1,578,486
136,792 51,785 6,099,556 2,309,093
SCHEDULE 'H'
CURRENT LIABILITIES
Sundry Creditors
Dues of Micro Enerprises and Small Enterprises - - - -
Dues of other creditors 300,950 344,946 13,419,346 15,381,142
Others 4,499 - 200,610 -
305,449 344,946 13,619,956 15,381,142
SCHEDULE 'I'
PROVISIONS
State Income Tax - 5,100 - 227,409
Employee benefits 61,577 26,865 2,745,718 1,197,910
61,577 31,965 2,745,718 1,425,319
TCS e-Serve America Inc. Annual Report 2010 - 2011
TCS e-SERVE AMERICA, INC.
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
For year ended March
31, 2011
For year ended March
31, 2010
For year ended March
31, 2011
For year ended March
31, 2010
USD USD INR INR
SCHEDULE 'J'
EMPLOYEE COSTS
Salaries and Incentives 1,977,361 974,092 88,170,527 43,434,762
Contribution to -
Social security and other benefit plans (overseas employees)" 191,827 115,125 8,553,566 5,133,424
Staff welfare expenses 253,079 100,116 11,284,793 4,464,172
2,422,267 1,189,333 108,008,886 53,032,358
SCHEDULE 'K'
OPERATION AND OTHER EXPENSES
Overseas business expenses -Employee Allowances 219,755 112,458 9,798,875 5,014,502
Overseas business expenses -Others 9,693 - 432,211 -
Services rendered by business associates and others 135,455 40,815 6,039,938 1,819,941
Cost of software licences 5,945 - 265,087 -
Communication expenses 74,018 - 3,300,463 -
Travelling and conveyance expenses 13,762 2,641 613,648 117,762
Rent 457,120 215,200 20,382,981 9,595,768
Legal and professional fees 71,719 29,292 3,197,950 1,306,130
Repairs & Maintenance - Others 219 84 9,765 3,746
Repairs & Maintenance - Plant & equipments 2,952 - 131,630 -
Recruitment and training expenses 1,619 209,056 72,191 9,321,807
Printing and stationery 1,710 219 76,249 9,765
Insurance 3,229 1,777 143,981 79,236
Rates and taxes 82,086 19,976 3,660,215 890,730
Entertainment 1,068 - 47,622 -
Payment to auditors (Refer Note 6 of Schedule L) 11,110 11,000 495,395 490,490
Bank Charges 2,996 1,339 133,592 59,706
Periodicals & journals - 164 - 7,313
Tata Brand Equity contribution 10,484 4,950 467,482 220,721
Other expenses 268 - 11,950 -
1,105,208 648,971 49,281,225 28,937,617
53
TCS e-SERVE AMERICA, INC.
SCHEDULE L - NOTES FORMING PART OF THEFINANCIAL STATEMENTS
1. Background and principal activities
TCS e-Serve America Inc (the “Company”) is engaged in the business of providing Information Technology- Enabled Services (ITES) / Business Processing Outsourcing (BPO) services, primarily to Citigroup entities globally. The Company is not a company registered under the Companies Act, 1956 or a foreign company within the meaning of Section 591 of the Companies Act, 1956.
2. Significant accounting policies
2.1 Accounts are maintained by the Company in the reporting currency which is in US Dollars (USD). Financial Statements have also been reported in Indian Rupees (INR) using the closing spot rate of ` 44.59 as at March 31, 2011 for the convenience of reader.
2.2 Basis of preparation of financial statements
The financial statements are prepared in accordance with the generally accepted accounting principles in India (“Indian GAAP”) under the historical cost convention on an accrual basis of accounting to comply with the applicable Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 (the “Accounting Standards”).
2.3 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities on the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon the management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods. Examples of such estimates include unbilled revenue, provision for income taxes.
2.4 Fixed assets and depreciation
Fixed assets are carried at cost of acquisition less accumulated depreciation. Cost includes freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.
Depreciation is provided on the straight-line method based on the useful life of the assets, estimated at the time of acquisition or over the remaining useful life on a subsequent review is shorter than that envisaged, depreciation is provided at a higher rate based on management’s estimate of the useful life/remaining useful life.
Class of asset Rate of depreciation
Computer equipment 33.33 %
The Company provides pro-rata depreciation from the month the asset is put to use and for any asset sold, up to the month of sale.
2.5 Revenue recognition
Revenues from Business Process Outsourcing (BPO) services are recognised on time and material contracts. Revenues from contracts priced on a time and material basis are recognised when services are rendered and related costs are incurred.
Unbilled revenues represent revenue earned but not yet billed.
2.6 Compensated absences
The Company provides for the cost of vacation earned but not availed based on the number of days of carry forward entitlement at each balance sheet date.
TCS e-Serve America Inc. Annual Report 2010 - 2011
2.7 Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term highly liquid investment, which have duration of up to three months from the date of acquisition.
2.8 Taxation
Federal and State taxes are computed in accordance with the tax laws applicable in US where the Company is incorporated.
Deferred tax expense or benefit is recognised on timing differences being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient taxable income will be available to realise such assets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realise these assets.
2.9 Earnings per share
The basic earnings per share are computed by dividing the net profit attributable to the equity shareholders by weighted average number of equity shares outstanding during the reporting year.
3. Related party disclosures:
A. Names of related parties and nature of relationship:
Enterprises that directly, or indirectly through one or more intermediaries, control or are under common control with the Company:
Holding Company
Name of the Enterprise Nature of relationship
TCS e-Serve International Limited (TEIL) Holding Company
TCS e-Serve Limited (TESL) Holding Company of TEIL
Tata Consultancy Services Limited (TCSL) Holding Company of TESL
Tata Sons Limited Holding Company of TCSL
Fellow Subsidiary with whom the company has transactions
Name of the Enterprise
TATA America International Corporation
TCS e-SERVE AMERICA, INC.
SCHEDULE L - NOTES FORMING PART OF THEFINANCIAL STATEMENTS
55
B. Transactions with related parties:
Nature of transactions Holding Company
Fellow Subsidiary Company
Holding Company
Fellow Subsidiary Company
USD USD INR INR
Issue of share capital
TCS e-Serve International limited - - - -
275,000 - 12,262,250 -
Unsecured Loans
TCS e-Serve International limited 8,215 - 366,307 -
970,000 - 43,252,300 -
Unsecured Loans Repaid
TCS e-Serve International limited 209,440 - 9,338,913 -
- - - -
Interest Expenses
TCS e-Serve International Limited 8,215 - 366,307 -
3,211 - 143,178 -
Services rendered by business Associates
TCS e-Serve Limited 122,822 - 5,476,633 -
40,815 - 1,819,941 -
Rent
TATA America International Corporation - 457,120 - 20,382,981
- 215,200 - 9,595,768
Expenses Reimbursed:
TATA America International Corporation - 18,811 - 838,767
- 777 - 34,646
Tata Brand Equity contribution
Tata Sons Limited 10,484 - 467,482 -
4,950 - 220,721 -
Figures in italics are of previous year.
TCS e-SERVE AMERICA, INC.
SCHEDULE L - NOTES FORMING PART OF THEFINANCIAL STATEMENTS
TCS e-Serve America Inc. Annual Report 2010 - 2011
C. Balances with related parties:
Nature of transactions Holding Company
Fellow Subsidiary Company
Holding Company
Fellow Subsidiary Company
USD USD INR INR
Unsecured Loans
TCS e-Serve International limited (775,000) - (34,557,250) -
(975,000) - (43,475,250) -
Sundry Creditors
TATA America International Corporation (TAIC)
- (119,991) - (5,350,401)
- (215,977) - (9,630,414)
Tata Sons Limited (10,484) - (467,482) -
(4,950) - (220,721) -
Tata Consultancy Limited (17,148) - (764,646) -
- - - -
TCS e-Serve Limited - - - -
(40,815) - (1,819,941) -
Accrued Interest
TCS e-Serve International limited (1,787) - (79,699) -
(3,012) - (134,305) -
Figures in italics are of previous year.
4. Segment information
The Company has identified Industry segments as its primary segment and geographical segments as its secondary segment.
The Company is engaged in Business Process Outsourcing (transaction processing) services to the Banking & Financial Services Industry (BFSI), which is considered as a single segment.
The Company currently operates only in one Geographic segment i.e. Americas. Hence no disclosure is required under Accounting Standard 17 “Segment Reporting”.
5. Earnings per share
The computation of earnings per share is set out below:
Particulars For the year ended March
31, 2011
For the year ended March
31, 2010
For the year ended March
31, 2011
For the year ended March
31, 2010
USD USD INR INR
Profit /(Loss) After Tax (A) 493,771 79,053 22,017,248 3,524,974
Weighted Average number of Equity shares at USD 10/- paid up share equivalent (Nos.) (B)
27,600.00 11,778.08 27,600.00 11,778.08
Nominal and paid up value of the equity shares- USD per share
10 10 10 10
Basic and Diluted earnings per share of face value of USD 10 for the year (A)/(B)
17.89 6.71 797.73 299.28
TCS e-SERVE AMERICA, INC.
SCHEDULE L - NOTES FORMING PART OF THEFINANCIAL STATEMENTS
57
6. Auditors’ remuneration:
Particulars For the year ended March
31, 2011
For the year ended March
31, 2010
For the year ended March
31, 2011
For the year ended March
31, 2010
USD USD INR INR
Audit fees 6,790 6,680 302,766 297,861
Others 4,320 4,320 192,629 192,629
7. Deferred Tax
Components of deferred tax liabilities and deferred tax assets are as follows :
Particulars As at March 31, 2011
As at March 31, 2010
As at March 31, 2011
As at March 31, 2010
USD USD INR INR
Deferred Tax Liability
Fixed Assets (3,022) (2,594) (134,763) (115,666)
Deferred Tax Assets
Amount Disallowed in previous year on payment basis
2,291 - 102,143 -
Provision for Compensated absences 20,936 9,404 933,561 419,324
Net Deferred Tax Assets 20,205 6,810 900,941 303,658
8. Benefit Plan
The Company has a profit sharing plan with a 401(k) feature. Eligible employees may elect to defer up to 50% of their total compensation each year, not to exceed the annual limitations established by the Internal Revenue Code. Company contributions were USD 22,633 (INR 1,009,205) and USD 6,532 (INR 291,261) for the year ended March 31, 2011 and March 31, 2010 respectively. Contribution to other benefit plans were USD 169,194 (INR 7,544,361)and USD 108,593 (INR 4,842,161) for the year ended March 31, 2011 and March 31, 2010 respectively.
9. Dues to Micro and Small Enterprises
On the basis of the information and records available with the management, there are no dues to Micro and Small Enterprises, which have registered with the competent authorities.
10. Previous year figures have been regrouped / reclassified wherever necessary.
TCS e-SERVE AMERICA, INC.
SCHEDULE L - NOTES FORMING PART OF THEFINANCIAL STATEMENTS
On behalf of BoardFor TCS e-Serve America INC.
Dharmesh Gandhi Abid Ali Neemuchwala Satyanarayan HegdeTreasurer President Sr. Vice President, Corporate Secretary & General Counsel
Mumbai, April 12, 2011
TCS e-Serve America Inc. Annual Report 2010 - 2011
I. Registration details
Registration number N A
State Code N A
Balance Sheet date 3 1 0 3 2 0 1 1
Date Month Year
II. Capital raised during the year (Amount in `)
Public Issue Rights Issue
N I L N I L
Bonus Issue Preferential allotment
N I L N I L
III. Position of mobilization and deployment of funds (Amount in `)
Total Liabilities Total Assets
7 2 4 4 2 6 7 0 7 2 4 4 2 6 7 0
Sources of funds
Paid-up capital Reserves & Surplus
1 2 3 0 6 8 4 0 2 5 4 9 8 8 8 1
Secured Loans Unsecured Loans
N I L 3 4 6 3 6 9 4 9
Application of funds
Net Fixed Assets Investments
9 8 9 6 7 5 N I L
Net Current Assets Miscellaneous expenditure
7 0 5 5 2 0 5 4 N I L
Accumulated losses Deferred tax asset
N I L 9 0 0 9 4 1
IV. Performance of Company (Amount in `)
Turnover Total Expenditure
1 8 6 9 8 7 9 4 2 1 5 8 3 1 5 6 3 7
+ - Profit / (Loss) before Tax + - Profit / (Loss) after Tax
3 3 1 2 8 3 5 8 5 3 2 2 0 1 7 2 4 8Earnings per share in ` Dividend Rate
7 9 7 . 7 3 N I L
V. Generic names of three principal products /services of Company (as per monetary terms)
Item Code No. (ITC code) NOT APPLICABLE
Product description TRANSACTION PROCESSING
Item Code No. (ITC code) NOT APPLICABLE
Product description CUSTOMER CARE
TCS e-SERVE AMERICA, INC.
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Information required vide Part IV of Schedule VI of the Companies Act, 1956
59
NOTES
TCS e-Serve America Inc. Annual Report 2010 - 2011
NOTES
TCS e-Serve International LimitedRegistered Office: Tower A, 2nd Floor, Building 6, W Block, DLF Phase III, Gurgaon – 122002
IT ServicesBusiness SolutionsOutsourcing
TCS e-Serve International Limited
Annual Report 2010-11
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