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Tata Consultancy Services Ltd
Industry :  Computers - Software - Large
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As on: May 16, 2022 10:12 AM

To the Members,

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

1. Financial results

Standalone Consolidated
Financial Year 2020-21 (FY 2021) Financial Year 2019-20 (FY 2020) Financial Year 2020-21 (FY 2021) Financial Year 2019-20 (FY 2020)
Revenue from operations 135,963 131,306 164,177 156,949
Other income 5,400 8,082 3,134 4,592
Total income 141,363 139,388 167,311 161,541
Operating expenditure 95,653 93,953 117,631 114,840
Depreciation and amortisation expense 3,053 2,701 4,065 3,529
Total expenses 98,706 96,654 121,696 118,369
Profit before finance costs, exceptional item and tax 42,657 42,734 45,615 43,172
Finance costs 537 743 637 924
Profit before exceptional item and tax 42,120 41,991 44,978 42,248
Exceptional item
Provision towards legal claim 1,218 - 1,218 -
Profit before tax 40,902 41,991 43,760 42,248
Tax expense 9,942 8,731 11,198 9,801
Profit for the year 30,960 33,260 32,562 32,447
Attributable to:
Shareholders of the Company 30,960 33,260 32,430 32,340
Non-controlling interests NA NA 132 107
Opening balance of retained earnings 71,532 77,159 78,810 85,520
Closing balance of retained earnings 70,928 71,532 79,586 78,810

2. COVID-19

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

The physical and emotional wellbeing of employees continues to be a top priority for the Company, with several initiatives to support employees and their families during the pandemic. The Company has invested in setting up medical helplines, ambulance services and first line Covid Care Centers within TCS premises, and has also extended counselling and self-help services providing mental & emotional support to employees. The Company has reimagined employee engagement, which transcends geographic barriers by embracing virtual technologies and embraces our diverse workforce. Initiatives like the #OneTCS channel, designed to reduce stress and the feeling of isolation, hosted inspirational leaders, mental health experts, virtual town halls and a global talent hunt competition to boost morale of employees.

*Excluding provision towards legal claim.

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

The revenue impact of the pandemic played out broadly along the lines that the Company had anticipated at the start and affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact.

3. Return of surplus funds to Shareholders

In line with the practice of returning 80 to 100 percent free cash flow to shareholders and based on the Company's performance, the Directors have declared interim dividends of Rs23 per equity share involving a cash outflow of Rs8,598 crore. The Directors have also recommended a final dividend ofRs15 per equity share, the final dividend on equity shares, if approved by the Members, would involve a cash outflow ofRs5,549 crore. The total dividend for FY 2021 amounts to Rs38 per equity share and would involve a total cash outflow of Rs14,147 crore, resulting in a dividend payout of 44.3 percent* of the standalone profits of the Company.

In addition to the above, the Company bought back 5,33,33,333 equity shares at a price of Rs3,000 per equity share for an aggregate consideration of Rs16,000 crore. The offer size of the buy-back was 19.96 percent and 18.11 percent of the aggregate paid-up equity share capital and free reserves as per audited condensed standalone interim financial statements and audited condensed consolidated interim financial statements of the Company as on September 30, 2020, respectively. The buy-back represented 1.42 percent of the total issued and paid-up equity share capital of the Company. The buy-back process was completed and the shares were extinguished on January 6, 2021.

The shareholder's payout with respect to dividend and buy-back including tax on buy-back (excluding transaction costs, other incidental and related expenses) aggregated to Rs33,873 crore, resulting in a payout of 106.1 percent* of the standalone profits of the Company.

In FY 2020, the Company paid a total dividend of Rs73 per equity share, including a special dividend of Rs40 per equity share, which resulted in an outflow ofRs31,895 crore and a dividend payout of 95.9 percent of the standalone profits of the Company.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) is available on the Company's website on https://on.tcs.com/ Dividend.

4. Transfer to reserves

The closing balance of the retained earnings of the Company for FY 2021, after all appropriation and adjustments was Rs70,928 crore.

*Excluding provision towards legal claim.

5. Company's performance

On a consolidated basis, the revenue for FY 2021 was Rs164,177 crore, higher by 4.6 percent over the previous year's revenue of Rs156,949 crore. The profit after tax (PAT) attributable to shareholders and non-controlling interests for FY 2021 and FY 2020 was Rs33,520 crore* and Rs32,447 crore, respectively. The profit after tax (PAT) attributable to shareholders for FY 2021 and FY 2020 was Rs33,388 crore* and Rs32,340 crore, respectively.

On a standalone basis, the revenue for FY 2021 was Rs135,963 crore, higher by 3.5 percent over the previous year's revenue of Rs131,306 crore in FY 2020. The profit after tax (PAT) attributable to shareholders for FY 2021 and FY 2020 was Rs31,918 crore* and Rs33,260 crore, respectively.

6. Human resource development

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

This year the Company's Learning Intensity has increased significantly, by almost 37%. The Company launched TCS Elevate, a merit-based talent framework to bring further tighter linkage between learning and careers, and to drive a culture of continuous learning and aspiration for accelerated career paths. Over 138,000 associates have been on-boarded to this program.

The Company continued its track record of pioneering industry-first practices by embracing online hiring, conducting around 100,000 virtual interviews, and pivoting the TCS NQT completely to virtual mode. Over 368K students from 3,100+ colleges attended the TCS NQT from the safety of their homes. The Company's investment in strategic leadership hiring from top B-schools deepened with TCS being the highest internship hirer in these top campuses. The Company had a net addition of 40,185, taking its total associate count to 488,649.

A digital online onboarding model helped the Company to effectively integrate associates hired across the globe. Its diverse workforce includes 154 nationalities across 46 countries. The Company is one of the largest employers of women in the world. Sustained efforts to improve gender diversity, through focused hiring, mentoring and coaching women employees, have resulted in women currently accounting for 36.5 percent of the workforce.

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

7. Quality initiatives

The Company continues to sustain its commitment to the highest levels of quality, superior service management, robust information security practices and mature business continuity management by successfully completing annual re-certification/surveillance audits for various industry standards and models.

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

Agile is a method to accelerate the speed of delivery in software development. TCS saw an opportunity to elevate Agile by applying it to everything an organization does spanning market research, innovation, product development, sales, delivery, and support functions, allowing organization wide delivery and innovation at high speeds, breaking departmental barriers and transcending location constraints. TCS calls this as Enterprise Agile. In 2017, TCS declared ‘Enterprise Agile by 2020' as its vision with the goal of transforming TCS along four dimensions: Workforce, Workplace & Infrastructure, Service Delivery, and Internal Processes. Implementation was accomplished in three waves for (1) IT Services, (2) Cognitive Business Operations and (3)

Enablement Functions such as HR, Marketing, Administration, IT Infrastructure, Delivery Excellence, Internal IT, and Research.

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

By converting Agile into a strategic enterprise transformation lever, TCS created many capabilities, including the world's largest Agile workforce. TCS has filed five patents in the Agile space. Today, industry Agile experts and analysts acknowledge TCS' leadership in Agile. TCS handles over 12,000 Agile projects contributing to 85 percent of IT services revenue. TCS has also added a key term to the worldwide agile vocabulary by introducing the concept of Agility Debt - an index that uniquely measures an organization's agility. TCS saw customers who undertook holistic Agile Transformations growing faster than their peers, and more than 90 percent of customers acknowledged increased speed-to-value from their agile adoption.

The Company accomplished the Enterprise Agile 2020 vision by October 2020 satisfying all the KPI's that were set, which the Company believes is first of its kind in the industry. The Company has 427,000+ Agile Ready workforce with 86 percent of them functioning as Practitioners in client projects. The Company's AgiltyDebt stands below 0.25 and more than 70 percent of new projects getting initiated are following agile methods Technologies and Investments from ‘Enterprise Agile' initiative gave the foundation for Secure Borderless Workspaces (SBWS ), which is the backbone for our associates to work remotely from wherever they feel safe.

To reduce the delivery risks during the pandemic, the Company had rolled out Guidelines for “Service Delivery under SBWS and the SBWS Governance utility. It has been monitoring the 20,000+ projects across the globe through digitized dashboards. The customer-centricity, rigor in operations and focus on delivery excellence have resulted in consistent improvements in customer satisfaction levels in the periodic surveys conducted by the Company. This is validated by top rankings in third party surveys as well.

8. Subsidiary companies

The Company has 50 subsidiaries as on March 31, 2021. There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). There has been no material change in the nature of the business of the subsidiaries.

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

In November 2020, TCS entered into an agreement with Prudential Financial, Inc.(PFI) to acquire over 1,500 staff and select assets of Pramerica Systems Ireland Ltd. (Pramerica), PFI's subsidiary based in Letterkenny, Ireland. The intent of the transaction was for TCS to establish a new global delivery centre in Ireland to provide PFI with a range of business and technology services, while also expanding TCS nearshore capabilities to provide the multifunctional, digital services and solutions to other customers in Ireland, the UK, Europe and the US. Accordingly, on December 2, 2020, Tata Consultancy

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

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

On January 1, 2021, Tata Consultancy Services Netherlands B.V., a wholly owned subsidiary of the Company acquired 100 percent shares of Postbank Systems AG (PBS), a subsidiary of Deutsche Bank AG at an estimated transaction value at a symbolic 1 Euro. PBS is the full-range captive IT service provider that provides project management, application management and infrastructure support services to Postbank and other subsidiaries of Deutsche Bank. As a part of transaction, PBS and its around 1,500 employees become part of TCS which helped in deepening the relationship between the two organizations and add to TCS' scale in Germany and strengthen its growth outlook.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company's subsidiaries in Form No. AOC-1 is attached to the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Company's website on https://www.tcs.com/investor-relations.

9. Directors' responsibility statement

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

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. they have prepared the annual accounts on a going concern basis; v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY 2021.

10. Directors and key managerial personnel

N. Chandrasekaran retires by rotation and being eligible, offers himself for re-appointment.

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

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

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

Ramakrishnan V. has been the Chief Financial Officer since February 21, 2017. He will be retiring from the services of the Company effective April 30, 2021. The Board places on record its appreciation for his invaluable contribution and guidance during his tenure with the Company.

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

11. Number of meetings of the Board

Seven meetings of the Board were held during the year. For details of meetings of the Board, please refer to the Corporate Governance Report, which is a part of this report.

12. Board evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations.

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

The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

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

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

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.

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

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

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

14. Corporate social responsibility

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

15. Internal financial control systems and their adequacy

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

16. Audit committee

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

17. Auditors

At the twenty-second AGM held on June 16, 2017 the Members approved appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the twenty-seventh AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act.

18. Auditor's report and Secretarial audit report

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

19. Risk management

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring atements. and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.

20. Vigil Mechanism

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behavior. This Policy is available on the Company's website on https://on.tcs.com/ WhistleBP.

21. Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial

22. Transactions with related parties

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

23. Annual Return

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

24. Particulars of employees

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

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

Name Ratio to median remuneration % increase in remuneration in the financial year
Non-executive Directors:
N. Chandrasekaran* - -
O P Bhatt 36.91 15.00
Aarthi Subramanian# - -
Dr. Pradeep Kumar Khosla 29.69 32.14
Hanne Sorensen 29.69 32.14
Keki Mistry 32.09 42.86
Don Callahan 32.09 42.86
Executive Directors:
Rajesh Gopinathan 326.81 52.21
N. Ganapathy Subramaniam 258.43 59.18
Chief Financial Officer
Ramakrishnan V. - 60.30
Company Secretary
Rajendra Moholkar - 76.00

* As a policy, N. Chandrasekaran, Chairman, has abstained from receiving commission from the Company and hence not stated.

# In line with the internal guidelines of the Company, no payment is made towards commission to the Non-Executive Directors of the Company, who are in full time employment with any other Tata Company and hence not stated.

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

c. The number of permanent employees on the rolls of Company: 488,649

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

The average annual increase was 5.2 percent in India. However, during the course of the year, the total increase is approximately 6.4 percent, after accounting for promotions and other event based compensation revisions. Employees outside India received a wage increase varying from 2 percent to 6 percent. The increase in remuneration is in line with the market trends in the respective countries. Increase in the managerial remuneration for the year was 55.22 percent. Increase in the managerial remuneration for FY 2021 is not comparable with

FY 2020 owing to decrease in remuneration of 15 percent in FY 2020 in view of the economic conditions impacted by the COVID-19 pandemic wherein the Directors had decided to moderate the executive remuneration for FY 2020 to express solidarity and conserve resources. e. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that the remuneration is as per the remuneration policy of the Company. f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

25. Integrated Report

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

26. Disclosure requirements

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

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

27. Deposits from public

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

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

Conservation of energy

The Company saw a year-on-year reduction in absolute energy use by 46.6 percent in MWh and an absolute carbon footprint reduction (across Scope 1 and Scope 2) by 48.8 percent (in tonnes of carbon dioxide equivalent). This reduction was not commensurate to the extremely low occupancy because some utilities had to be run to maintain the infrastructure. TCS' specific greenhouse gas emissions (Scope 1 + Scope 2) comes to 0.54 tCO2e/ FTE

(Full Time Equivalent)/Annum in the current reporting year, a reduction of 53 percent Y-O-Y. This is estimated with the actual carbon footprint and a notional FTE (working out of TCS offices), considering an increase of 8.23 percent in the FTE over the last reporting year. This increase in FTE, is in line with the TCS global headcount growth. The specific carbon footprint data is presented for the sake of continuity and is not comparable with the earlier year.

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

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

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

TCS Research and Innovation (R&I) commemorated the 40th year of its founding by adopting a new brand statement “Inventing for Impact”. In keeping with its purpose-driven worldview, TCS R&I teams were engaged in 72 COVID related initiatives around the world, working with local, national and international bodies, adopting multiple approaches: leveraging TCS IP, collaborating with partners, and offering individual consultative inputs across many areas, such as drug candidate molecule discovery, COVID data management, diagnostic kits, epidemiological study and management. TCS continues to expand its foundational research, in core computing areas and the intersections with other sciences. New areas of focus include DNA computing, AI for protein design, cognitive robotics, meta materials, quantum computing and sensing. Research and Innovation teams worked with cross-functional teams across the Company on strategic initiatives such as Patents, Products & Platforms (3P), Technology Change Management, 5G, Cloud and Cyber Security.

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

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

TCS won CII's Industrial Intellectual Property Awards 2020. R&I won the Business Culture Award, and several of the Company's products and platforms won multiple awards across the world. The Company continued to contribute to standards bodies especially in ISO SC7 and Systems Engineering. As of March 31, 2021, the Company has applied for 5,879 patents cumulatively and has been granted 1,850 patents.

TCS continued to foster the culture of innovation, organizing one crowdsourced innovation a week. The TCS Innovista competition attracted over 10,290 entries from across the organization. The Company set up a community of Innovation Champions who serve as innovation ambassadors, helping customers leverage the best of TCS for their growth and transformation. Its Co-Innovation Network (TCS COIN ) initiative continued to expand, with 67 ongoing projects in emerging technologies with global academic partners, and with over 2,400 start-ups in its emerging technology ecosystem.

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

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

The first edition of TCS Sustainathon, a challenge that aims to inspire students to envision a sustainable future using technology to solve real world problems, focused on reducing food wastage. TCS and the Malaysian petroleum major PETRONAS launched a Social Enterprise Education Lab (SEEd.Lab), an end-to-end incubation program to encourage entrepreneurship and job creation. TCS and Auckland Business School partnered to develop an APAC-Focused Digital Sustainability Index.

Future Course of Action

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

Expenditure on R&D

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

Expenditure incurred in the R&D centers and innovation centers of TCS during FY 2021 and FY 2020 are given below:

Expenditure on R&D and innovation Standalone Consolidated
FY 2021 FY 2020 FY 2021 FY 2020
a. Capital 1 2 1 2
b. Recurring 298 300 302 304
c. Total R&D expenditure (a+b) 299 302 303 306
d. Innovation center expenditure 1,546 1,458 1,614 1,561
e. Total R&D and innovation expenditure (c+d) 1,845 1,760 1,917 1,867
f. R&D and innovation expenditure as a 1.4% 1.3% 1.2% 1.2%
percentage of total turnover

Foreign exchange earnings and outgo

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

(Rs crore)
Foreign exchange earnings and outgo FY 2021 FY 2020
a. Foreign exchange earnings 130,720 128,501
b. CIF Value of imports 241 569
c. Expenditure in foreign currency 54,800 51,748

29. Acknowledgements

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

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

The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.

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

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

On behalf of the Board of Directors
N. Chandrasekaran
Mumbai, April 12, 2021