TATA CONSULTANCY SERVICES LIMITED

Condensed Standalone Interim Balance Sheet

(` crore)
As at As at
Note December 31, 2020 March 31, 2020
ASSETS
Non-current assets
Property, pl a nt a nd equi pment 8(a ) 9,566 9,835
Ca pi ta l work-i n-progres s 994 781
Ri ght-of-us e a s s ets 7 5,866 6,048
Inta ngi bl e a s s ets 8(b) 319 239
Fi na nci a l a s s ets
Inves tments 6(a ) 2,405 2,189
Tra de recei va bl es 6(b) 43 74
Unbi l l ed recei va bl es 284 324
Loa ns recei va bl es 6(e) 2 2
Other fi na nci a l a s s ets 6(f) 651 624
Income ta x a s s ets (net) 1,514 2,020
Deferred ta x a s s ets (net) 2,701 2,219
Other a s s ets 8(c) 1,162 1,426
Total non-current assets 25,507 25,781
Current assets
Inventori es 8(d) 5 5
Fi na nci a l a s s ets
Inves tments 6(a ) 49,247 25,686
Tra de recei va bl es 6(b) 26,020 28,660
Unbi l l ed recei va bl es 4,549 4,763
Ca s h a nd ca s h equi va l ents 6(c) 1,813 3,852
Other ba l a nces wi th ba nks 6(d) 3,438 972
Loa ns recei va bl es 6(e) 3,228 7,270
Other fi na nci a l a s s ets 6(f) 1,212 1,448
Other a s s ets 8(c) 7,962 6,538
Total current assets 97,474 79,194
TOTAL ASSETS 122,981 104,975
EQUITY AND LIABILITIES
Equity
Sha re ca pi ta l 6(k) 375 375
Other equi ty 68,768 73,993
Total equity 69,143 74,368
Liabilities
Non-current liabilities
Fi na nci a l l i a bi l i ti es
Lea s e l i a bi l i ti es 5,095 5,262
Other fi na nci a l l i a bi l i ti es 6(g) 237 237
Unea rned a nd deferred revenue 221 644
Empl oyee benefi t obl i ga ti ons 11 103 91
Deferred ta x l i a bi l i ti es (net) 439 347
Total non-current liabilities 6,095 6,581
Current liabilities
Fi na nci a l l i a bi l i ti es
Lea s e l i a bi l i ti es 811 848
Tra de pa ya bl es
Dues of mi cro enterpri s es a nd s ma l l enterpri s es - -
Dues of credi tors other tha n mi cro enterpri s es a nd s ma l l enterpri s es 6,920 8,734
Other fi na nci a l l i a bi l i ti es 6(g) 20,784 4,694
Unea rned a nd deferred revenue 3,037 2,271
Other l i a bi l i ti es 8(e) 7,203 2,048
Provi s i ons 8(f) 1,334 235
Empl oyee benefi t obl i ga ti ons 11 2,760 2,057
Income ta x l i a bi l i ti es (net) 4,894 3,139
Total current liabilities 47,743 24,026
TOTAL EQUITY AND LIABILITIES 122,981 104,975
NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP

Chartered Accountants Rajesh Gopinathan V Ramakrishnan
Firm's registration no: 101248W/W-100022 CEO and Managing Director CFO

Yezdi Nagporewalla Keki M Mistry Rajendra Moholkar

Partner Director Company Secretary
Membership No: 049265

Mumbai, January 8, 2021

1
 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Profit and Loss
(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
Note 2020 2019 2020 2019
Revenue 9 34,957 33,040 99,946 98,084
Other i ncome 10 2,096 1,206 4,536 6,049
TOTAL INCOME 37,053 34,246 104,482 104,133
Expenses
Empl oyee benefi t expens es 11 17,779 16,333 51,627 48,263
Cos t of equi pment a nd s oftwa re l i cences 12(a ) 331 378 839 1,233
Depreci a ti on a nd a morti s a ti on expens e 771 677 2,265 1,977
Other expens es 12(b) 6,169 6,884 18,122 20,488
Fi na nce cos ts 13 159 200 426 532
TOTAL EXPENSES 25,209 24,472 73,279 72,493
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX 11,844 9,774 31,203 31,640
Exceptional item
Provi s i on towa rds l ega l cl a i m 17 - - 1,218 -
PROFIT BEFORE TAX 11,844 9,774 29,985 31,640
Tax expense
Current ta x 2,968 2,692 7,813 6,765
Deferred ta x (366) (601) (614) (158)
TOTAL TAX EXPENSE 2,602 2,091 7,199 6,607
PROFIT FOR THE PERIOD 9,242 7,683 22,786 25,033
OTHER COMPREHENSIVE INCOME (OCI)
Items that will not be reclassified subsequently to profit or loss
Remea s urement of defi ned empl oyee benefi t pl a ns (187) (225) (50) (276)
Income tax on items that will not be reclassified subsequently to 40 63 11 58
profit or loss
Items that will be reclassified subsequently to profit or loss
Net cha nge i n fa i r va l ues of i nves tments other tha n 326 (77) 693 480
equi ty s ha res ca rri ed a t fa i r va l ue through OCI
Net cha nge i n i ntri ns i c va l ue of deri va ti ves des i gna ted a s (101) (46) (42) (162)
ca s h fl ow hedges
Net cha nge i n ti me va l ue of deri va ti ves des i gna ted a s (99) (106) (43) (106)
ca s h fl ow hedges
Income tax on items that will be reclassified subsequently to (71) 44 (224) (137)
profit or loss
TOTAL OTHER COMPREHENSIVE INCOME / (LOSSES) (92) (347) 345 (143)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 9,150 7,336 23,131 24,890
Earnings per equity share:- Basic and diluted ( `) 15 24.63 20.47 60.72 66.71
Wei ghted a vera ge number of equi ty s ha res 375,23,84,706 375,23,84,706 375,23,84,706 375,23,84,706
NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP

Chartered Accountants Rajesh Gopinathan V Ramakrishnan
Firm's registration no: 101248W/W-100022 CEO and Managing Director CFO

Yezdi Nagporewalla Keki M Mistry Rajendra Moholkar

Partner Director Company Secretary
Membership No: 049265

Mumbai, January 8, 2021

2
 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Changes in Equity

A. EQUITY SHARE CAPITAL

(` crore)
Balance as at April 1, 2019 Changes in equity share capital Balance as at December 31, 2019
during the period
375 - 375

(` crore)
Balance as at April 1, 2020 Changes in equity share capital Balance as at December 31, 2020
during the period
375 - 375

3
 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Changes in Equity
B. OTHER EQUITY (` crore)
Reserves and surplus Items of other comprehensive Total Equity
income
Capital Capital Special Retained Investment Cash flow
reserve1 redemption Economic earnings revaluation hedging reserve
reserve Zone re- reserve Intrinsic Time
investment value value
reserve
Balance as at April 1, 2019 - 8 994 77,159 258 134 (30) 78,523
Tra ns i ti on i mpa ct of Ind AS 116, net of ta x - - - (330) - - - (330)
Restated balance as at April 1, 2019 - 8 994 76,829 258 134 (30) 78,193
Profi t for the peri od - - - 25,033 - - - 25,033
Other comprehens i ve i ncome / (l os s es ) - - - (216) 312 (144) (95) (143)
Total comprehensive income - - - 24,817 312 (144) (95) 24,890
Di vi dend (i ncl udi ng ta x on di vi dend of - - - (30,322) - - - (30,322)
`4,806 crore)
Tra ns fer to Speci a l Economi c Zone re- - - 2,184 (2,184) - - - -
i nves tment res erve
Tra ns fer from Speci a l Economi c Zone re- - - (1685) 1,685 - - - -
i nves tment res erve
Balance as at December 31, 2019 - 8 1,493 70,825 570 (10) (125) 72,761
Balance as at April 1, 2020 - 8 1,594 71,532 882 45 (68) 73,993
Profi t for the peri od - - - 22,786 - - - 22,786
Other comprehens i ve i ncome / (l os s es ) - - - (39) 451 (33) (34) 345
Total comprehensive income - - - 22,747 451 (33) (34) 23,131
Di vi dend - - - (8,630) - - - (8,630)
Li a bi l i ty towa rds buy-ba ck of equi ty - - - (16,000) - - - (16,000)
2
s ha res
Ta x on l i a bi l i ty towa rds buy-ba ck of equi ty - - - (3,726) - - - (3,726)
2
s ha res
Tra ns fer to Speci a l Economi c Zone - - 3,810 (3,810) - - - -
re-i nves tment res erve
Tra ns fer from Speci a l Economi c Zone - - (3,042) 3,042 - - - -
re-i nves tment res erve
Balance as at December 31, 2020 - 8 2,362 65,155 1,333 12 (102) 68,768
1
Repres ents va l ues l es s tha n `0.50 crore.
2
Refer Note 6(k)

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 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Changes in Equity

Nature and purpose of reserves

a. Capital reserve
The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company’s own equity instruments
to capital reserve.

b. Capital redemption reserve

As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free
reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital
redemption reserve. The reserve is utilised in accordance with the provisions of section 69 of the Companies Act, 2013.

c. Special Economic Zone re-investment reserve

The Special Economic Zone (SEZ) re-investment reserve is created out of the profit of eligible SEZ units in terms of the
provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve will be utilised by the Company for acquiring
new assets for the purpose of its business as per the terms of section 10AA(2) of Income-tax Act, 1961.

d. Investment revaluation reserve

This reserve represents the cumulative gains and losses arising on the revaluation of equity and debt instruments on the
balance sheet date measured at fair value through other comprehensive income. The reserves accumulated will be
reclassified to retained earnings and profit and loss respectively, when such instruments are disposed.

e. Cash flow hedging reserve

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair
value of designated portion of hedging instruments entered into for cash flow hedges. Such gains or losses will be
reclassified to statement of profit and loss in the period in which the underlying hedged transaction occurs.

NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP

Chartered Accountants Rajesh Gopinathan V Ramakrishnan
Firm's registration no: 101248W/W-100022 CEO and Managing Director CFO

Yezdi Nagporewalla Keki M Mistry Rajendra Moholkar

Partner Director Company Secretary
Membership No: 049265

Mumbai, January 8, 2021

5
 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Cash Flows
(` crore)
Nine month Nine month
period ended period ended
December 31, December 31,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period 22,786 25,033
Adjustments to reconcile profit and loss to net cash provided by operating activities
Depreci a ti on a nd a morti s a ti on expens e 2,265 1,977
Ba d debts a nd a dva nces wri tten off, a l l owa nce for doubtful tra de 150 84
recei va bl es a nd a dva nces (net)
Provi s i on towa rds l ega l cl a i m (Refer note 17) 1,218 -
Ta x expens e 7,199 6,607
Net (ga i n) / l os s on l ea s e modi fi ca ti on (53) 1
Unrea l i s ed forei gn excha nge ga i n (51) (68)
Net ga i n on di s pos a l of property, pl a nt a nd equi pment (10) (42)
Net ga i n on i nves tments (174) (162)
Interes t i ncome (1,815) (2,589)
Di vi dend i ncome (Incl udi ng excha nge i mpa ct) (2,161) (2,507)
Fi na nce cos ts 426 532
Rea l i s ed forei gn excha nge ga i n on proceeds from l i qui da ti on of whol l y (5) -
owned s ubs i di a ry*
Operating profit before working capital changes 29,775 28,866
Net change in
Inventori es - 3
Tra de recei va bl es 2,526 (1,655)
Unbi l l ed recei va bl es 254 (782)
Loa ns recei va bl es a nd other fi na nci a l a s s ets (94) 368
Other a s s ets (1,205) (3,085)
Tra de pa ya bl es (1,814) 2
Unea rned a nd deferred revenue 343 211
Other fi na nci a l l i a bi l i ti es (14) (260)
Other l i a bi l i ti es a nd provi s i ons 2,025 622
Cash generated from operations 31,796 24,290
Ta xes pa i d (net of refunds ) (5,541) (3,647)
Net cash generated from operating activities 26,255 20,643

CASH FLOWS FROM INVESTING ACTIVITIES

Ba nk depos i ts pl a ced (3,830) (6,212)
Inter-corpora te depos i ts pl a ced (10,348) (7,344)
Purcha s e of i nves tments (43,617) (57,550)
Pa yment for purcha s e of property, pl a nt a nd equi pment (1,328) (1,370)
Pa yment i ncl udi ng a dva nces for a cqui ri ng ri ght-of-us e a s s ets (4) (516)
Pa yment for purcha s e of i nta ngi bl e a s s ets (164) (116)
* (224) -
Pa yment towa rds s ubs cri pti on of s ha res i n whol l y owned s ubs i di a ry
Proceeds from ba nk depos i ts 1,522 5,980
Proceeds from i nter-corpora te depos i ts 14,392 9,000
Proceeds from di s pos a l / redempti on of i nves tments 20,850 61,289
Proceeds from di s pos a l of property, pl a nt a nd equi pment 22 120
Proceeds from l i qui da ti on of whol l y owned s ubs i di a ry* 12 -
Interes t recei ved 2,069 2,781
Di vi dend recei ved from s ubs i di a ri es 2,161 2,507
Net cash (used in) / generated from investing activities (18,487) 8,569

6
 TATA CONSULTANCY SERVICES LIMITED
Condensed Standalone Interim Statement of Cash Flows
(` crore)
Nine month Nine month
period ended period ended
December 31, December 31,
2020 2019
CASH FLOWS FROM FINANCING ACTIVITIES
Di vi dend pa i d (i ncl udi ng ta x on di vi dend i n previ ous peri od) (8,630) (30,322)
Ea rma rked ba l a nces wi th ba nk for buy-ba ck of equi ty s ha res (160) -
Repa yment of l ea s e l i a bi l i ti es (666) (502)
Interes t pa i d (426) (532)
Net cash used in financing activities (9,882) (31,356)
Net change in cash and cash equivalents (2,114) (2,144)
Ca s h a nd ca s h equi va l ents a t the begi nni ng of the peri od 3,852 3,327
Excha nge di fference on tra ns l a ti on of forei gn currency ca s h a nd ca s h 75 74
equi va l ents
Cash and cash equivalents at the end of the period (Refer note 6(c)) 1,813 1,257
NOTES FORMING PART OF CONDENSED STANDALONE INTERIM FINANCIAL STATEMENTS

*Refer note 6(a).

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP

Chartered Accountants Rajesh Gopinathan V Ramakrishnan
Firm's registration no: 101248W/W-100022 CEO and Managing Director CFO

Yezdi Nagporewalla Keki M Mistry Rajendra Moholkar

Partner Director Company Secretary
Membership No: 049265

Mumbai, January 8, 2021

7
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
1) Corporate information

Tata Consultancy Services Limited (referred to as “TCS Limited” or “the Company”) provides IT services, consulting and business
solutions and has been partnering with many of the world’s largest businesses in their transformation journeys. The Company
offers a consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions. This is
delivered through its unique Location-Independent Agile delivery model recognised as a benchmark of excellence in software
development.

The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is TCS House,
Raveline Street, Fort, Mumbai - 400001. As at December 31, 2020, Tata Sons Private Limited, the holding company owned
72.02% of the Company’s equity share capital.

The Board of Directors approved the condensed standalone interim financial statements for nine month period ended
December 31, 2020 and authorised for issue on January 8, 2021.

2) Statement of compliance

These condensed standalone interim financial statements have been prepared in accordance with the Indian Accounting
Standards (referred to as “Ind AS”) 34 Interim Financial Reporting prescribed under section 133 of the Companies Act, 2013
read with the Companies (Indian Accounting Standards) Rules as amended from time to time. However, selected explanatory
notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s
financial position and performance since the last annual financial statements, wherever applicable.

3) Basis of preparation

These condensed standalone interim financial statements have been prepared on historical cost basis except for certain
financial instruments and defined benefit plans which are measured at fair value or amortised cost at the end of each reporting
period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. All assets and liabilities have been classified as current and non-current as per the
Company’s normal operating cycle. Based on the nature of services rendered to customers and time elapsed between
deployment of resources and the realisation in cash and cash equivalents of the consideration for such services rendered, the
Company has considered an operating cycle of 12 months.

The statement of cash flows have been prepared under indirect method.

These condensed standalone interim financial statements have been prepared in Indian Rupee (`) which is the functional
currency of the Company. Foreign currency transactions are recorded at exchange rates prevailing on the date of the
transaction. Foreign currency denominated monetary assets and liabilities are retranslated at the exchange rate prevailing on
the balance sheet date and exchange gains and losses arising on settlement and restatement are recognised in the statement
of profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currencies are not
retranslated.

The significant accounting policies used in preparation of the condensed standalone interim financial statements have been
discussed in the respective notes.

4) Use of estimates and judgements

The preparation of the condensed standalone interim financial statements in conformity with the recognition and
measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect
the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the condensed standalone
interim financial statements and the reported amounts of income and expense for the periods presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and future periods are affected.

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 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The Company uses the following critical accounting estimates in preparation of its condensed standalone interim financial
statements:

a. Revenue recognition
• The Company’s contracts with customers could include promises to transfer multiple products and services to a
customer. The Company assesses the products / services promised in a contract and identifies distinct performance
obligations in the contract. Identification of distinct performance obligation involves judgement to determine the
deliverables and the ability of the customer to benefit independently from such deliverables.
• Judgement is also required to determine the transaction price for the contract and to ascribe the transaction price
to each distinct performance obligation. The transaction price could be either a fixed amount of customer
consideration or variable consideration with elements such as volume discounts, service level credits, performance
bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of
money if the contract includes a significant financing component. Any consideration payable to the customer is
adjusted to the transaction price, unless it is a payment for a distinct product or service from the customer. The
estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed
at the end of each reporting period. The Company allocates the elements of variable considerations to all the
performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct
performance obligations.
• The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time
or over a period of time. The Company considers indicators such as how customer consumes benefits as services are
rendered or who controls the asset as it is being created or existence of enforceable right to payment for
performance to date and alternate use of such product or service, transfer of significant risks and rewards to the
customer, acceptance of delivery by the customer, etc.
• Revenue for fixed-price contract is recognised using percentage-of-completion method. The Company uses
judgement to estimate the future cost-to-completion of the contracts which is used to determine the degree of
completion of the performance obligation.

b. Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This
reassessment may result in change in depreciation expense in future periods.

c. Impairment of investments in subsidiaries

The Company reviews its carrying value of investments carried at cost (net of impairment, if any) annually, or more
frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the
impairment loss is accounted for in the statement of profit and loss.

d. Fair value measurement of financial instruments

When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based
on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash
Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible,
a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.

e. Provision for income tax and deferred tax assets

The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs,
allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is
recognised to the extent that it is probable that future taxable profit will be available against which the deductible
temporary differences and tax losses can be utilised. Accordingly, the Company exercises its judgement to reassess the
carrying amount of deferred tax assets at the end of each reporting period.

9
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
f. Provisions and contingent liabilities

The Company estimates the provisions that have present obligations as a result of past events and it is probable that
outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting
period and are adjusted to reflect the current best estimates.

The Company uses significant judgements to disclose contingent liabilities. Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation
that arises from past events where it is either not probable that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed
in the condensed standalone interim financial statements.

g. Employee benefits

The accounting of employee benefit plans in the nature of defined benefit requires the Company to use assumptions.
These assumptions have been explained under employee benefits note.

h. Leases

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of
a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate.

The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by
an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an
option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the
Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease,
it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option
to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a
change in the non-cancellable period of a lease.

The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.

Impact of COVID-19

The Company has taken into account the possible impacts of COVID-19 in preparation of the condensed standalone interim
financial statements, including but not limited to its assessment of liquidity and going concern assumption, recoverable values
of its financial and non-financial assets, impact on revenues and on cost budgets in respect of fixed price contracts, impact on
leases and impact on effectiveness of its hedging relationships. The Company has considered internal and certain external
sources of information including reliable credit reports, economic forecasts and industry reports upto the date of approval of
the condensed standalone interim financial statements and expects to recover the carrying amount of its assets. The impact
of COVID-19 on the condensed standalone interim financial statements may differ from that estimated as at the date of
approval of these condensed standalone interim financial statements.

5) Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as amended from time to time. There are no such recently issued standards or amendments to
the existing standards for which the impact on the financial statements is required to be disclosed.

6) Financial assets, financial liabilities and equity instruments

Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the
instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial

10
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
liability.

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The
Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have
expired.

Cash and cash equivalents

The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that
are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of
purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for
withdrawal and usage.

Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose
objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of
principal and interest on the principal amount outstanding and selling financial assets.

The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held
for trading in other comprehensive income.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value
through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of
financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss.

Investment in subsidiaries

Investment in subsidiaries are measured at cost less impairment loss, if any.

Financial liabilities

Financial liabilities are measured at amortised cost using the effective interest method.

Equity instruments

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its
liabilities. Equity instruments issued by the Company are recognised at the proceeds received net of direct issue cost.

Derivative accounting

• Instruments in hedging relationship

The Company designates certain foreign exchange forward, currency options and futures contracts as hedge instruments in
respect of foreign exchange risks. These hedges are accounted for as cash flow hedges.

The Company uses hedging instruments that are governed by the policies of the Company which are approved by the Board
of Directors. The policies provide written principles on the use of such financial derivatives consistent with the risk
management strategy of the Company.

11
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The hedge instruments are designated and documented as hedges at the inception of the contract. The Company determines
the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount
and timing of their respective cash flows. The effectiveness of hedge instruments to reduce the risk associated with the
exposure being hedged is assessed and measured at inception and on an ongoing basis. If the hedged future cash flows are
no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified in
net foreign exchange gains in the statement of profit and loss.

The effective portion of change in the fair value of the designated hedging instrument is recognised in the other
comprehensive income and accumulated under the heading cash flow hedging reserve.

The Company separates the intrinsic value and time value of an option and designates as hedging instruments only the
change in intrinsic value of the option. The change in fair value of the time value and intrinsic value of an option is recognised
in the statement of other comprehensive income and accounted as a separate component of equity. Such amounts are
reclassified into the statement of profit and loss when the related hedged items affect profit and loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or no longer qualifies for
hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time
remains and is recognised in statement of profit and loss when the forecasted transaction ultimately affects the profit and
loss. Any gain or loss is recognised immediately in statement of profit and loss when the hedge becomes ineffective.

• Instruments not in hedging relationship

The Company enters into contracts that are effective as hedges from an economic perspective, but they do not qualify for
hedge accounting. The change in the fair value of such instrument is recognised in statement of profit and loss.

Impairment of financial assets (other than at fair value)

The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected
losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. In determining the
allowances for doubtful trade receivables, the Company has used a practical expedient by computing the expected credit loss
allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss
experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the
receivables that are due and allowance rates used in the provision matrix. For all other financial assets, expected credit losses
are measured at an amount equal to the 12-months expected credit losses or at an amount equal to the life time expected
credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

(a) Investments

Investments consist of the following:

Investments – Non-current
(` crore)
As at As at
December 31, 2020 March 31, 2020
Investment in subsidiaries
Ful l y pa i d equi ty s ha res (unquoted) 2,405 2,189
Investments designated at fair value through OCI
Ful l y pa i d equi ty s ha res (unquoted)
Ta j Ai r Li mi ted 19 19
Les s : Impa i rment i n va l ue of i nves tments (19) (19)
2,405 2,189

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 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Investments – Current
(` crore)
As at As at
December 31, 2020 March 31, 2020
Investments carried at fair value through profit or loss
Mutua l fund uni ts (quoted) 24,147 1,264
Investments carried at fair value through OCI
Government bonds a nd s ecuri ti es (quoted) 24,335 24,290
Corpora te bonds (quoted) 265 132
Investments carried at amortised cost
Commerci a l pa pers (quoted) 500 -
49,247 25,686

Government bonds and securities includes bonds pledged with bank in lieu of escrow required for buyback and credit facility
amounting to `3,346 crore and NIL as at December 31, 2020 and March 31, 2020, respectively.

Aggregate value of quoted and unquoted investments is as follows:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Aggrega te va l ue of quoted i nves tments 49,247 25,686
Aggrega te va l ue of unquoted i nves tments (net of i mpa i rment) 2,405 2,189
Aggrega te ma rket va l ue of quoted i nves tments 49,247 25,686
Aggrega te va l ue of i mpa i rment of i nves tments 19 19

Market value of quoted investments carried at amortised cost is as follows:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Commerci a l Pa per 500 -

13
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Carrying value of investment in equity instruments is as follows:

(` crore)
In Numbers Currency Face value Investment in subsidiaries As at As at
per share December 31, 2020 March 31, 2020
Fully paid equity shares (unquoted)
212,27,83,424 UYU 1 TCS Iberoa meri ca SA 461 461
15,75,300 INR 10 APTOnl i ne Li mi ted - -
1,300 EUR - Ta ta Cons ul ta ncy Servi ces Bel gi um 1 1
66,000 EUR 1,000 Ta ta Cons ul ta ncy Servi ces Netherl a nds BV 403 403
1,000 SEK 100 Ta ta Cons ul ta ncy Servi ces Sveri ge AB 19 19
1 EUR - Ta ta Cons ul ta ncy Servi ces Deuts chl a nd GmbH 2 2
20,000 USD 10 Ta ta Ameri ca Interna ti ona l Corpora ti on 453 453
75,82,820 SGD 1 Ta ta Cons ul ta ncy Servi ces As i a Pa ci fi c Pte Ltd. 19 19
3,72,58,815 AUD 1 TCS FNS Pty Li mi ted 212 212
10,00,001 GBP 1 Di l i genta Li mi ted 429 429
1,000 USD - Ta ta Cons ul ta ncy Servi ces Ca na da Inc.* - -
100 CAD 70,653.61 Ta ta Cons ul ta ncy Servi ces Ca na da Inc. 31 31
51,00,000 INR 10 C-Edge Technol ogi es Li mi ted 5 5
8,90,000 INR 10 MP Onl i ne Li mi ted 1 1
1,40,00,000 ZAR 1 Ta ta Cons ul ta ncy Servi ces (Afri ca ) (PTY) Ltd. 66 66
18,89,005 INR 10 Ma ha Onl i ne Li mi ted 2 2
- QAR - Ta ta Cons ul ta ncy Servi ces Qa ta r S.S.C. 2 2
16,00,01,000 USD 0.01 CMC Ameri ca s , Inc.1 - 8
10,00,000 INR 100 TCS e-Serve Interna ti ona l Li mi ted 10 10
1,00,500 GBP 0.00001 W12 Studi os Li mi ted 66 66
2,50,00,000 EUR 1 Ta ta Cons ul ta ncy Servi ces Irel a nd Li mi ted 2 224 -
10,00,000 INR 10 TCS Founda ti on - -
2,405 2,189

(` crore)
In Numbers Currency Face value Equity instruments designated at fair value As at As at
per share through OCI December 31, 2020 March 31, 2020
Fully paid equity shares (unquoted)
1,90,00,000 INR 10 Ta j Ai r Li mi ted 19 19
Les s : Impa i rment i n va l ue of i nves tments (19) (19)
- -

*Represents value less than `0.50 crore.

Notes:

1. CMC Americas, Inc., a wholly owned subsidiary of the Company incorporated in USA, was liquidated w.e.f. December 16,
2020.
2. The Company incorporated a wholly owned subsidiary, Tata Consultancy Services Ireland Limited in Ireland on
December 2, 2020.

(b) Trade receivables

Trade receivables (unsecured) consist of the following:

Trade receivables – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Tra de recei va bl es 722 656
Les s : Al l owa nce for doubtful tra de recei va bl es (679) (582)
Considered good 43 74

14
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Trade receivables – Current
(` crore)
As at As at
December 31, 2020 March 31, 2020
Tra de recei va bl es 26,191 28,822
Les s : Al l owa nce for doubtful tra de recei va bl es (206) (227)
Considered good 25,985 28,595

Tra de recei va bl es 220 194

Les s : Al l owa nce for doubtful tra de recei va bl es (185) (129)
Credit impaired 35 65
26,020 28,660

(c) Cash and cash equivalents

Cash and cash equivalents consist of the following:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Balances with banks
In current a ccounts 1,577 3,848
In depos i t a ccounts 234 4
Cheques on ha nd* - -
Ca s h on ha nd* - -
Remi tta nces i n tra ns i t 2 -
1,813 3,852

*Represents value less than `0.50 crore.

(d) Other balances with banks

Other balances with banks consist of the following:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Ea rma rked ba l a nces wi th ba nks 343 185
Short-term ba nk depos i ts 3,095 787
3,438 972

Earmarked balances with banks primarily relate to balance in escrow account for buy-back of equity of equity shares, margin
money for purchase of investments, margin money for derivative contracts and unclaimed dividends.

15
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(e) Loans receivables

Loans receivables (unsecured) consist of the following:

Loans receivables – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Considered good
Loa ns a nd a dva nces to empl oyees 2 2
2 2

Loans receivables – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Considered good
Inter-corpora te depos i ts 3,000 7,044
Loa ns a nd a dva nces to empl oyees 228 226
Credit impaired
Loa ns a nd a dva nces to empl oyees 18 14
Les s : Al l owa nce on l oa ns a nd a dva nces to empl oyees (18) (14)
3,228 7,270

Inter-corporate deposits placed with financial institutions yield fixed interest rate.

(f) Other financial assets

Other financial assets consist of the following:

Other financial assets – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Securi ty depos i ts 646 617
Others 5 7
651 624

Other financial assets – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Securi ty depos i ts 142 148
Fa i r va l ue of forei gn excha nge deri va ti ve a s s ets 388 425
Interes t recei va bl e 511 691
Others 171 184
1,212 1,448

16
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(g) Other financial liabilities

Other financial liabilities consist of the following:

Other financial liabilities – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Ca pi ta l credi tors - 3
Others 237 234
237 237

Others include advance taxes paid of `226 crore and `226 crore as at December 31, 2020 and March 31, 2020, respectively,
by the seller of TCS e-Serve Limited (merged with the Company) which, on refund by the tax authorities is payable to the
seller.

Other financial liabilities – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Accrued pa yrol l 3,142 2,745
Uncl a i med di vi dends 52 53
Fa i r va l ue of forei gn excha nge deri va ti ve l i a bi l i ti es 301 693
Ca pi ta l credi tors 452 383
Li a bi l i ti es towa rds cus tomer contra cts 782 759
Li a bi l i ty towa rds buy-ba ck of equi ty s ha res * 16,000 -
Others 55 61
20,784 4,694

*Refer note 6(k).

(h) Financial instruments by category

The carrying value of financial instruments by categories as at December 31, 2020 is as follows:

(` crore)
Fair value Fair value Derivative Derivative Amortised Total
through through other instruments instruments cost carrying
profit or comprehensive in hedging not in value
loss income relationship hedging
relationship
Financial assets
Ca s h a nd ca s h equi va l ents - - - - 1,813 1,813
Ba nk depos i ts - - - - 3,095 3,095
Ea rma rked ba l a nces wi th ba nks - - - - 343 343
Inves tments (other tha n i n s ubs i di a ry) 24,147 24,600 - - 500 49,247
Tra de recei va bl es - - - - 26,063 26,063
Unbi l l ed recei va bl es - - - - 4,833 4,833
Loa ns recei va bl es - - - - 3,230 3,230
Other fi na nci a l a s s ets - - 83 305 1,475 1,863
Total 24,147 24,600 83 305 41,352 90,487
Financial liabilities
Tra de pa ya bl es - - - - 6,920 6,920
Lea s e l i a bi l i ti es - - - - 5,906 5,906
Other fi na nci a l l i a bi l i ti es - - 62 239 20,720 21,021
Total - - 62 239 33,546 33,847

17
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The carrying value of financial instruments by categories as at March 31, 2020 is as follows:

(` crore)
Fair value Fair value Derivative Derivative Amortised Total
through through other instruments instruments cost carrying
profit or comprehensive in hedging not in value
loss income relationship hedging
relationship
Financial assets
Ca s h a nd ca s h equi va l ents - - - - 3,852 3,852
Ba nk depos i ts - - - - 787 787
Ea rma rked ba l a nces wi th ba nks - - - - 185 185
Inves tments (other tha n i n s ubs i di a ry) 1,264 24,422 - - - 25,686
Tra de recei va bl es - - - - 28,734 28,734
Unbi l l ed recei va bl es - - - - 5,087 5,087
Loa ns recei va bl es - - - - 7,272 7,272
Other fi na nci a l a s s ets - - 146 279 1,647 2,072
Total 1,264 24,422 146 279 47,564 73,675
Financial liabilities
Tra de pa ya bl es - - - - 8,734 8,734
Lea s e l i a bi l i ti es - - - - 6,110 6,110
Other fi na nci a l l i a bi l i ti es - - 34 659 4,238 4,931
Total - - 34 659 19,082 19,775

Carrying amounts of cash and cash equivalents, trade receivables, unbilled receivables, loans receivables and trade payables
as at December 31, 2020 and March 31, 2020 approximate the fair value. Difference between carrying amounts and fair values
of bank deposits, earmarked balances with banks, other financial assets and other financial liabilities subsequently measured
at amortised cost is not significant in each of the periods presented. Fair value measurement of lease liabilities is not required.

(i) Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable
or unobservable and consists of the following three levels:
• Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or
in part using a valuation model based on assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.

The cost of unquoted investments included in Level 3 of fair value hierarchy approximate their fair value because there is a
wide range of possible fair value measurements and the cost represents estimate of fair value within that range.

18
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets
that are not measured at fair value on a recurring basis (but fair value disclosure are required):
(` crore)
As at December 31, 2020 Level 1 Level 2 Level 3 Total
Financial assets
Mutua l fund uni ts 24,147 - - 24,147
Equi ty s ha res - - - -
Government bonds a nd s ecuri ti es 24,335 - - 24,335
Corpora te bonds 265 - - 265
Commerci a l pa pers 500 - - 500
Deri va ti ve fi na nci a l a s s ets - 388 - 388
Total 49,247 388 - 49,635
Financial liabilities
Deri va ti ve fi na nci a l l i a bi l i ti es - 301 - 301
Total - 301 - 301

(` crore)
As at March 31, 2020 Level 1 Level 2 Level 3 Total
Financial assets
Mutua l fund uni ts 1,264 - - 1,264
Equi ty s ha res - - - -
Government bonds a nd s ecuri ti es 24,290 - - 24,290
Corpora te bonds 132 - - 132
Deri va ti ve fi na nci a l a s s ets - 425 - 425
Total 25,686 425 - 26,111
Financial liabilities
Deri va ti ve fi na nci a l l i a bi l i ti es - 693 - 693
Total - 693 - 693

(j) Derivative financial instruments and hedging activity

The Company’s revenue is denominated in various foreign currencies. Given the nature of the business, a large portion of the
costs are denominated in Indian Rupee. This exposes the Company to currency fluctuations.

The Board of Directors have constituted a Risk Management Committee (RMC) to frame, implement and monitor the risk
management plan of the Company which inter-alia covers risks arising out of exposure to foreign currency fluctuations. Under
the guidance and framework provided by the RMC, the Company uses various derivative instruments such as foreign exchange
forward, currency options and futures contracts in which the counter party is generally a bank.

The following are outstanding currency options contracts, which have been designated as cash flow hedges:

As at December 31, 2020 As at March 31, 2020

Foreign currency No. of Notional amount Fair value No. of Notional amount Fair value
contracts of contracts (` crore) contracts of contracts (` crore)
(In million) (In million)
US Dol l a r 35 894 71 55 1,420 20
Grea t Bri ta i n Pound 76 405 (21) 71 384 59
Euro 73 403 (3) 38 363 (31)
Aus tra l i a n Dol l a r 41 227 (26) 26 192 48
Ca na di a n Dol l a r 19 108 - 19 104 16

19
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The movement in cash flow hedging reserve for derivatives designated as cash flow hedges is as follows:

(` crore)
Nine month period ended Year ended
December 31, 2020 March 31, 2020
Intrinsic Time value Intrinsic Time value
value value
Balance at the beginning of the period 45 (68) 134 (30)
(Ga i n) / l os s tra ns ferred to profi t a nd l os s on occurrence of (214) 400 (449) 513
foreca s ted hedge tra ns a cti ons
Deferred ta x on (ga i n) / l os s tra ns ferred to profi t a nd l os s on 46 (97) 54 (38)
occurrence of foreca s ted hedge tra ns a cti ons
Cha nge i n the fa i r va l ue of effecti ve porti on of ca s h fl ow 172 (443) 355 (565)
hedges
Deferred ta x on fa i r va l ue of effecti ve porti on of ca s h fl ow (37) 106 (49) 52
hedges
Balance at the end of the period 12 (102) 45 (68)

The Company has entered into derivative instruments not in hedging relationship by way of foreign exchange forward, currency
options and futures contracts. As at December 31, 2020 and March 31, 2020, the notional amount of outstanding contracts
aggregated to `35,378 crore and `40,109 crore, respectively and the respective fair value of these contracts have a net gain of
`66 crore and net loss of `380 crore.

Exchange loss of `94 crore and `319 crore on foreign exchange forward, currency options and futures contracts that do not
qualify for hedge accounting have been recognised in the condensed standalone interim statement of profit and loss for three
month periods ended December 31, 2020 and 2019, respectively.

Exchange gain of `278 crore and `99 crore on foreign exchange forward, currency options and futures contracts that do not
qualify for hedge accounting have been recognised in the condensed standalone interim statement of profit and loss for nine
month periods ended December 31, 2020 and 2019, respectively.

Net foreign exchange gains include loss of `40 crore and `111 crore transferred from cash flow hedging reserve for three
month periods ended December 31, 2020 and 2019, respectively.

Net foreign exchange gains include loss of `186 crore and gain of `25 crore transferred from cash flow hedging reserve for
nine month periods ended December 31, 2020 and 2019, respectively.

Impact of COVID-19

Foreign currency exchange rate risk

The Company basis their assessment believes that the probability of the occurrence of their forecasted transactions is not
impacted by COVID‐19 pandemic. The Company has also considered the effect of changes, if any, in both counterparty credit
risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness. The Company continues to
believe that there is no impact on effectiveness of its hedges.

Other risks

Financial assets carried at fair value as at December 31, 2020 is `49,135 crore and financial assets carried at amortised cost as
at December 31, 2020 is `41,352 crore. A significant part of the financial assets carried at fair values are classified as Level 1
having fair values of `48,747 crore as at December 31, 2020. The fair value of these assets is marked to an active market which
factors the uncertainties arising out of COVID‐19. The financial assets carried at fair value by the Company are mainly
investments in liquid debt securities and accordingly, any material volatility is not expected.

20
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Financial assets of `5,251 crore as at December 31, 2020 carried at amortised cost is in the form of cash and cash equivalents,
bank deposits and earmarked balances with banks where the Company has assessed the counterparty credit risk. Trade
receivables of `26,063 crore as at December 31, 2020 forms a significant part of the financial assets carried at amortised cost
which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of
credit loss, we have considered the likelihood of delayed payments, increased credit risk and consequential default considering
emerging situations while arriving at the carrying value of these assets. This assessment is not based on any mathematical
model but an assessment considering the nature of verticals, impact immediately seen in the demand outlook of these verticals
and the financial strength of the customers. The Company has specifically evaluated the potential impact with respect to
customers in Retail, Travel, Transportation and Hospitality, Manufacturing and Energy verticals having an immediate impact
and the rest having an impact with a lag. The Company closely monitors its customers who are going through financial stress
and assesses actions such as change in payment terms, discounting of receivables with institutions on no‐recourse basis,
recognition of revenue on collection basis etc., depending on severity of each case. The collections pattern from the customers
in the current period does not indicate stress beyond what has been factored while computing the allowance for expected
credit losses. The same assessment is done in respect of unbilled receivables and contract assets of `7,506 crore as at
December 31, 2020 while arriving at the level of provision that is required. Basis this assessment, the expected credit loss
allowance for trade receivables of `1,070 crore as at December 31, 2020 is considered adequate.

(k) Equity instruments

The authorised, issued, subscribed and fully paid-up share capital consist of the following:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Authorised
460,05,00,000 equi ty s ha res of `1 ea ch 460 460
(Ma rch 31, 2020: 460,05,00,000 equi ty s ha res of `1 ea ch)
105,02,50,000 preference s ha res of `1 ea ch 105 105
(Ma rch 31, 2020: 105,02,50,000 preference s ha res of
`1 ea ch)
565 565
Issued, Subscribed and Fully paid up
375,23,84,706 equi ty s ha res of `1 ea ch 375 375
(Ma rch 31, 2020: 375,23,84,706 equi ty s ha res of `1 ea ch)
375 375

The Company’s objective for capital management is to maximise shareholder value, safeguard business continuity and support
the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term
and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated.
The Company is not subject to any externally imposed capital requirements.

The Board of Directors at its meeting held on October 7, 2020, approved a proposal to buy-back upto 5,33,33,333 equity shares
of the Company for an aggregate amount not exceeding `16,000 crore, being 1.42% of the total paid up equity share capital at
`3,000 per equity share. The shareholders approved the same on November 18, 2020, by way of a special resolution through
postal ballot. The period for tendering of shares for buy-back was from December 18, 2020 to January 1, 2021. The settlement
of all valid bids was completed on January 5, 2021, and the equity shares bought back were extinguished on January 6, 2021.
Pursuant to the issuance of Letter of Offer, the Company has recorded a liability towards buy‐back of equity shares of
`16,000 crore and the corresponding tax payable of `3,726 crore as at December 31, 2020 (Refer note 6(g) and note 8(e)).

The Company paid an amount of `9,998 crore to Tata Sons Private Limited, the holding company, towards the consideration
for buy-back of its equity shares on January 5, 2021.

21
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
7) Leases

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.

Company as a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the
contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price
of the lease component and the aggregate standalone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease
commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial
measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease
incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling
and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is
subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any
remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the
commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-
use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for
impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with
reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed
payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is
reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the
lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed
lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an
adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the
carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease
liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a
lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with
these leases are recognised as an expense on a straight-line basis over the lease term.

Company as a lessor

At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The
Company recognises lease payments received under operating leases as income on a straight- line basis over the lease term.
In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic
rate of return on the lessor’s net investment in the lease. When the Company is an intermediate lessor it accounts for its
interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the
right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease
to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with
customers to allocate the consideration in the contract.

22
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
The details of the right-of-use assets held by the Company is as follows:

(` crore)
Additions for nine Net carrying
month period ended amount as at
December 31, December 31,
2020 2020
Lea s ehol d l a nd - 684
Bui l di ngs 670 5,178
Lea s ehol d i mprovement 3 3
Vehi cl es - 1
673 5,866

(` crore)
Additions for the Net carrying
year ended amount as at
March 31, 2020 March 31, 2020
Lea s ehol d l a nd 474 690
Bui l di ngs 1,689 5,336
Lea s ehol d i mprovement - 20
Vehi cl es - 2
2,163 6,048

Depreciation on right-of-use assets is as follows:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Lea s ehol d l a nd 2 1 6 3
Bui l di ngs 245 209 754 605
Lea s ehol d i mprovement 1 1 3 4
Vehi cl es 1 - 1 1
249 211 764 613

Interest on lease liabilities is `110 crore and `104 crore for three month periods ended December 31, 2020 and 2019,
respectively.

Interest on lease liabilities is `340 crore and `296 crore for nine month periods ended December 31, 2020 and 2019,
respectively.

Impact of COVID-19

The Company does not foresee any large-scale contraction in demand which could result in significant down-sizing of our
employee base rendering the physical infrastructure redundant. The leases that the Company has entered with lessors towards
properties used as delivery centers / sales offices are long term in nature and no significant changes in the terms of those
leases are expected due to the COVID-19.

23
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
8) Non-financial assets and non-financial liabilities

(a) Property, plant and equipment

Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of
bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land)
and impairment loss, if any.

Depreciation is provided for property, plant and equipment on a straight-line basis so as to expense the cost less residual
value over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual values are
reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective
basis.

The estimated useful lives are as mentioned below:

Type of asset Useful lives

Buildings 20 years
Leasehold improvements Lease term
Plant and equipment 10 years
Computer equipment 4 years
Vehicles 4 years
Office equipment 5 years
Electrical installations 4-10 years
Furniture and fixtures 5 years

Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is
ready for its intended use.

Property, plant and equipment with finite life are evaluated for recoverability whenever there is any indication that their
carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair
value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate
cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined
for the cash generating unit (CGU) to which the asset belongs.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of
the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and
loss.

24
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Property, plant and equipment consist of the following:

(` crore)
Freehold land Buildings Leasehold Plant and Computer Vehicles Office Electrical Furniture and Total
improvements equipment equipment equipment installations fixtures
Cost as at April 1, 2020 323 7,628 1,824 667 7,273 39 2,263 1,882 1,510 23,409
Addi ti ons - 50 16 36 975 1 47 16 19 1,160
Di s pos a l s - (10) (33) (1) (48) (5) (22) (16) (12) (147)
Cost as at December 31, 2020 323 7,668 1,807 702 8,200 35 2,288 1,882 1,517 24,422
Accumulated depreciation as at April 1, 2020 - (2,518) (1,042) (224) (5,536) (32) (1,868) (1,152) (1,202) (13,574)
Depreci a ti on - (292) (94) (52) (649) (3) (130) (108) (89) (1,417)
Di s pos a l s - 7 31 - 44 5 21 15 12 135
Accumulated depreciation as at December 31, 2020 - (2,803) (1,105) (276) (6,141) (30) (1,977) (1,245) (1,279) (14,856)
Net carrying amount as at December 31, 2020 323 4,865 702 426 2,059 5 311 637 238 9,566

(` crore)
Freehold land Buildings Leasehold Plant and Computer Vehicles Office Electrical Furniture and Total
improvements equipment equipment equipment installations fixtures
Cost as at April 1, 2019 323 7,348 1,820 539 6,273 36 2,164 1,802 1,420 21,725
Tra ns i ti on i mpa ct of Ind AS 116 - - (61) - - - - - - (61)
Restated cost as at April 1, 2019 323 7,348 1,759 539 6,273 36 2,164 1,802 1,420 21,664
Addi ti ons - 287 188 128 1,190 5 174 98 130 2,200
Di s pos a l s - (7) (123) - (190) (2) (75) (18) (40) (455)
Cost as at March 31, 2020 323 7,628 1,824 667 7,273 39 2,263 1,882 1,510 23,409
Accumulated depreciation as at April 1, 2019 - (2,150) (1,010) (166) (4,975) (29) (1,740) (1,029) (1,104) (12,203)
Tra ns i ti on i mpa ct of Ind AS 116 - - 36 - - - - - - 36
Restated accumulated depreciation as at April 1, 2019 - (2,150) (974) (166) (4,975) (29) (1,740) (1,029) (1,104) (12,167)
Depreci a ti on - (374) (115) (58) (750) (5) (203) (140) (137) (1,782)
Di s pos a l s - 6 47 - 189 2 75 17 39 375
Accumulated depreciation as at March 31, 2020 - (2,518) (1,042) (224) (5,536) (32) (1,868) (1,152) (1,202) (13,574)
Net carrying amount as at March 31, 2020 323 5,110 782 443 1,737 7 395 730 308 9,835

25
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(b) Intangible assets

Intangible assets purchased are measured at cost as at the date of acquisition, as applicable, less accumulated
amortisation and accumulated impairment, if any.

Intangible assets consist of rights under licensing agreement and software licences which are amortised over licence
period which equates the economic useful life ranging between 2-5 years on a straight line basis over the period of its
economic useful life.

Intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying
amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less
cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash
generating unit (CGU) to which the asset belongs.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of
the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and
loss.

Intangible assets consist of the following:

(` crore)
Rights under licensing
agreement and
software licences
Cost as at April 1, 2020 401
Addi ti ons 164
Di s pos a l s / Derecogni s ed (59)
Cost as at December 31, 2020 506
Accumulated amortisation as at April 1, 2020 (162)
Amorti s a ti on (84)
Di s pos a l s / Derecogni s ed 59
Accumulated amortisation as at December 31, 2020 (187)
Net carrying amount as at December 31, 2020 319

(` crore)
Rights under licensing
agreement and
software licences
Cost as at April 1, 2019 229
Addi ti ons 172
Cost as at March 31, 2020 401
Accumulated amortisation as at April 1, 2019 (90)
Amorti s a ti on (72)
Accumulated amortisation as at March 31, 2020 (162)
Net carrying amount as at March 31, 2020 239

26
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(c) Other assets

Other assets consist of the following:

Other assets – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Considered good
Contra ct a s s ets 92 145
Prepa i d expens es 565 737
Contra ct ful fi l l ment cos ts 139 186
Ca pi ta l a dva nces 58 50
Adva nces to rel a ted pa rti es 29 36
Others 279 272
1,162 1,426
Advances to related parties, considered good, comprise:
Vol ta s Li mi ted 2 3
Ta ta Rea l ty a nd Infra s tructure Ltd* - -
Ta ta Projects Li mi ted 27 33
Ti ta n Engi neeri ng a nd Automa ti on Li mi ted* - -

*Represents value less than `0.50 crore.

Other assets – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Considered good
Contra ct a s s ets 2,581 3,341
Prepa i d expens es 3,366 1,381
Prepa i d rent 6 4
Contra ct ful fi l l ment cos ts 516 396
Adva nce to s uppl i ers 79 75
Adva nce to rel a ted pa rti es 8 11
Indi rect ta xes recovera bl e 1,163 1,131
Other a dva nces 159 114
Others 84 85
Considered doubtful
Adva nce to s uppl i ers 3 3
Indi rect ta xes recovera bl e - 2
Other a dva nces 2 3
Les s : Al l owa nce on doubtful a s s ets (5) (8)
7,962 6,538
Advance to related parties, considered good comprise:
The Ti ta n Compa ny Li mi ted - 3
Ta ta AIA Li fe Ins ura nce Compa ny Li mi ted 1 1
Ta ta Sons Pri va te Li mi ted 7 7

Non-current – Others includes advance of `271 crore and `271 crore towards acquiring right-of-use of leasehold land as
at December 31, 2020 and March 31, 2020, respectively.

27
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(d) Inventories

Inventories consists of a) Raw materials, sub-assemblies and components, b) Work-in-progress, c) Stores and spare parts
and d) Finished goods. Inventories are carried at lower of cost and net realisable value. The cost of raw materials, sub-
assemblies and components is determined on a weighted average basis. Cost of finished goods produced or purchased by
the Company includes direct material and labour cost and a proportion of manufacturing overheads.

Inventories consist of the following:

(` crore)
As at As at
December 31, 2020 March 31, 2020
Ra w ma teri a l s , s ub-a s s embl i es a nd components 5 5
Fi ni s hed goods a nd work-i n-progres s * - -
5 5

*Represents value less than `0.50 crore.

(e) Other liabilities

Other liabilities consist of the following:

Other liabilities – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Adva nce recei ved from cus tomers 190 226
Indi rect ta xes pa ya bl e a nd other s ta tutory l i a bi l i ti es 3,232 1,762
Opera ti ng l ea s e l i a bi l i ti es - 2
Ta x on l i a bi l i ty towa rds buy-ba ck of equi ty s ha res * 3,726 -
Others 55 58
7,203 2,048

*Refer note 6(k).

(f) Provisions

Provisions consist of the following:

Provisions – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Provi s i on towa rds l ega l cl a i m (Refer note 17) 1,205 -
Provi s i on for fores eea bl e l os s 118 199
Other provi s i ons 11 36
1,334 235

9) Revenue recognition

The Company earns revenue primarily from providing IT services, consulting and business solutions. The Company offers a
consulting-led, cognitive powered, integrated portfolio of IT, business and engineering services and solutions.

Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the
consideration which the Company expects to receive in exchange for those products or services.

28
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
• Revenue from time and material and job contracts is recognised on output basis measured by units delivered, efforts
expended, number of transactions processed, etc.
• Revenue related to fixed price maintenance and support services contracts where the Company is standing ready to
provide services is recognised based on time elapsed mode and revenue is straight lined over the period of performance.
• In respect of other fixed-price contracts, revenue is recognised using percentage-of-completion method
(‘POC method’) of accounting with contract costs incurred determining the degree of completion of the performance
obligation. The contract costs used in computing the revenues include cost of fulfilling warranty obligations.
• Revenue from the sale of distinct internally developed software and manufactured systems and third party software is
recognised upfront at the point in time when the system / software is delivered to the customer. In cases where
implementation and / or customisation services rendered significantly modifies or customises the software, these services
and software are accounted for as a single performance obligation and revenue is recognised over time on a POC method.
• Revenue from the sale of distinct third party hardware is recognised at the point in time when control is transferred to
the customer.
• The solutions offered by the Company may include supply of third-party equipment or software. In such cases, revenue
for supply of such third party products are recorded at gross or net basis depending on whether the Company is acting as
the principal or as an agent of the customer. The Company recognises revenue in the gross amount of consideration when
it is acting as a principal and at net amount of consideration when it is acting as an agent.

Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, service level
credits, performance bonuses, price concessions and incentives, if any, as specified in the contract with the customer. Revenue
also excludes taxes collected from customers.

Revenue from subsidiaries is recognised based on transaction price which is at arm’s length.

Contract fulfilment costs are generally expensed as incurred except for certain software licence costs which meet the criteria
for capitalisation. Such costs are amortised over the contractual period or useful life of licence whichever is less. The
assessment of this criteria requires the application of judgement, in particular when considering if costs generate or enhance
resources to be used to satisfy future performance obligations and whether costs are expected to be recovered.

Contract assets are recognised when there is excess of revenue earned over billings on contracts. Contract assets are classified
as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of
time is required, as per contractual terms.

Unearned and deferred revenue (“contract liability”) is recognised when there is billings in excess of revenues.

The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress
payments. Invoices are payable within contractually agreed credit period.

In accordance with Ind AS 37, the Company recognises an onerous contract provision when the unavoidable costs of meeting
the obligations under a contract exceed the economic benefits to be received.

Contracts are subject to modification to account for changes in contract specification and requirements. The Company reviews
modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new
performance obligation, or transaction price of an existing obligation could undergo a change. In the event transaction price is
revised for existing obligation, a cumulative adjustment is accounted for.

The Company disaggregates revenue from contracts with customers by nature of services, industry verticals and geography.

Revenue disaggregation by nature of services is as follows:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Cons ul ta ncy s ervi ces 34,585 32,630 99,000 96,728
Sa l e of equi pment a nd s oftwa re l i cences 372 410 946 1,356
34,957 33,040 99,946 98,084

29
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Revenue disaggregation by industry vertical is as follows:
(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Ba nki ng, Fi na nci a l Servi ces a nd Ins ura nce 13,033 11,989 37,758 35,913
Ma nufa cturi ng 3,002 3,083 8,596 9,040
Reta i l a nd Cons umer Bus i nes s 5,678 5,836 16,323 17,115
Communi ca ti on, Medi a a nd Technol ogy 6,289 5,891 17,937 17,108
Others 6,955 6,241 19,332 18,908
34,957 33,040 99,946 98,084

Revenue disaggregation by geography is as follows:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Ameri ca s 19,451 18,885 56,909 55,867
Europe 9,925 8,960 27,900 26,807
Indi a 2,283 2,207 5,820 6,593
Others 3,298 2,988 9,317 8,817
34,957 33,040 99,946 98,084

Geographical revenue is allocated based on the location of the customers.

Impact of COVID-19

While the Company believes strongly that it has a rich portfolio of services to partner with customers, the impact on future
revenue streams could come from the inability of our customers to continue their businesses due to financial resource
constraints or their services no-longer being availed by their customers. The Company has assessed that customers in Retail,
Travel, Transportation and Hospitality, Energy and Manufacturing verticals are more prone to immediate impact due to
disruption in supply chain and drop in demand while customers in Banking, Financial Services to have a lag impact due to
dependence of revenues from the impacted verticals. The financial performance in the current quarter reflects the impact on
revenues from affected sectors and the Company has considered such impact to the extent known and available currently.
While entities are re-calibrating their approach to deal with the economic impact of the pandemic in their operations, the
assessment of impact on future revenues is a continuing process given the uncertainties associated with its nature and
duration.

The supply side disruptions due to ongoing pandemic, which could result in having impact on future cost budgets or delays in
meeting contractual commitments have largely been taken care of by deploying SBWSTM, approvals from the customer to
render services through SBWSTM. The Company has taken steps to assess the cost budgets required to complete its
performance obligations in respect of fixed price projects and incorporated the impact of likely delays / increased costs in
meetings its obligations. Such impact could be in the form of provision for onerous contracts or re-setting of revenue
recognition in fixed price contract where revenue is recognised on percentage-of-completion basis. The Company has also
assessed the impact of delays and inability to meet contractual commitments and has taken actions such as engaging with the
customer to agree on revised SLAs in light of current crisis, invoking of force-majeure clause etc. to ensure that revenue
recognition in such cases reflect realisable revenues.

30
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
10) Other income

Dividend income is recorded when the right to receive payment is established. Interest income is recognised using the effective
interest method.

Other income consist of the following:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Interes t i ncome 601 830 1,815 2,589
Di vi dend i ncome 1,300 388 2,161 2,507
Net ga i n on i nves tments ca rri ed a t fa i r va l ue through profi t or 88 19 174 147
l os s
Net ga i n on s a l e of i nves tments other tha n equi ty s ha res ca rri ed - 15 - 15
a t fa i r va l ue through OCI
Net ga i n on di s pos a l of property, pl a nt a nd equi pment 3 5 10 42
Net forei gn excha nge ga i n / (l os s ) 35 (40) 277 731
Rent i ncome 1 - 2 2
Other i ncome 68 (11) 97 16
2,096 1,206 4,536 6,049

Interest income comprise:

Interes t on ba nk ba l a nces a nd ba nk depos i ts 41 174 86 457
Interes t on fi na nci a l a s s ets ca rri ed a t a morti s ed cos t 115 96 398 384
Interes t on fi na nci a l a s s ets ca rri ed a t fa i r va l ue through OCI 445 447 1,331 1,438
Other i nteres t (i ncl udi ng i nteres t on ta x refunds ) - 113 - 310

Dividend income comprise:

Di vi dends from s ubs i di a ri es 1,300 388 2,161 2,507

11) Employee benefits

Defined benefit plans

For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial
valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses, the effect of
the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the balance sheet
with a charge or credit recognised in other comprehensive income in the period in which they occur. Past service cost, both
vested and unvested, is recognised as an expense at the earlier of (a) when the plan amendment or curtailment occurs; and
(b) when the entity recognises related restructuring costs or termination benefits.

The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit
obligations reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value
of available refunds and reductions in future contributions to the scheme.

The Company provides benefits such as gratuity, pension and provident fund (Company managed fund) to its employees which
are treated as defined benefit plans.

Defined contribution plans

Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them
to such benefits.

The Company provides benefits such as superannuation and foreign defined contribution plans to its employees which are
treated as defined contribution plans.

31
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
Short-term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee
benefits. Benefits such as salaries, wages etc. and the expected cost of ex-gratia are recognised in the period in which the
employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal
or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be
estimated reliably.

Compensated absences

Compensated absences which are expected to occur within twelve months after the end of the period in which the employee
renders the related services are recognised as undiscounted liability at the balance sheet date. 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 recognised as an actuarially determined liability at the present value of the defined benefit obligation at the balance sheet
date.

Employee benefit expenses consist of the following:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Sa l a ri es , i ncenti ves a nd a l l owa nces 16,259 14,925 47,234 44,076
Contri buti ons to provi dent a nd other funds 1,086 977 3,153 2,950
Sta ff wel fa re expens es 434 431 1,240 1,237
17,779 16,333 51,627 48,263

Employee benefit obligations consist of the following:

Employee benefit obligations – Non-current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Other empl oyee benefi t obl i ga ti ons 103 91
103 91

Employee benefit obligations – Current

(` crore)
As at As at
December 31, 2020 March 31, 2020
Compens a ted a bs ences 2,723 2,034
Other empl oyee benefi t obl i ga ti ons 37 23
2,760 2,057

12) Cost recognition

Costs and expenses are recognised when incurred and have been classified according to their nature.

The costs of the Company are broadly categorised in employee benefit expenses, cost of equipment and software licences,
depreciation and amortisation expense and other expenses. Other expenses mainly include fees to external consultants, facility
expenses, travel expenses, communication expenses, bad debts and advances written off, allowance for doubtful trade
receivables and advances (net) and other expenses. Other expenses is an aggregation of costs which are individually not
material such as commission and brokerage, recruitment and training, entertainment, etc.

32
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
(a) Cost of equipment and software licences

Cost of equipment and software licences consist of the following:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Ra w ma teri a l s , s ub-a s s embl i es a nd components cons umed 3 3 10 14
Equi pment a nd s oftwa re l i cences purcha s ed 328 375 828 1,219
331 378 838 1 233

Finished goods and work-in-progress

Openi ng s tock - - 1 -
Les s : Cl os i ng s tock* - - - -
- - 1 -
331 378 839 1,233

*Represents value less than `0.50 crore.

(b) Other expenses

Other expenses consist of the following:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Fees to externa l cons ul ta nts 3,548 3,484 10,339 10,404
Fa ci l i ty expens es 440 517 1,253 1,618
Tra vel expens es 211 637 695 1,996
Communi ca ti on expens es 315 217 945 712
Ba d debts a nd a dva nces wri tten off, a l l owa nce for doubtful 33 (2) 150 84
tra de recei va bl es a nd a dva nces (net)
Other expens es 1,622 2,031 4,740 5,674
6,169 6,884 18,122 20,488

Other expenses include `686 crore and `851 crore for three month periods ended December 31, 2020 and 2019,
respectively, towards sales, marketing and advertisement expenses.

Other expenses include `2,052 crore and `2,657 crore for nine month periods ended December 31, 2020 and 2019,
respectively, towards sales, marketing and advertisement expenses.

13) Finance costs

Finance costs consist of the following:

(` crore)
Three month Three month Nine month Nine month
period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Interes t on l ea s e l i a bi l i ti es 110 104 340 296
Interes t on ta x ma tters 49 27 85 165
Other i nteres t cos ts - 69 1 71
159 200 426 532

14) Income taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.
Current and deferred taxes are recognised in statement of profit and loss, except when they relate to items that are recognised
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity, respectively.

33
 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements

Current income taxes

The current income tax expense includes income taxes payable by the Company and its branches in India and overseas. The
current tax payable by the Company in India is Indian income tax payable on worldwide income after taking credit for tax relief
available for export operations in Special Economic Zones (SEZs).

Current income tax payable by overseas branches of the Company is computed in accordance with the tax laws applicable in
the jurisdiction in which the respective branch operates. The taxes paid are generally available for set off against the Indian
income tax liability of the Company’s worldwide income.

Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid
and income tax provision arising in the same tax jurisdiction and where the relevant tax paying unit intends to settle the asset
and liability on a net basis.

Deferred income taxes

Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised
for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying
amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in
the years in which the temporary differences are expected to be received or settled.

For operations carried out in SEZs, deferred tax assets or liabilities, if any, have been established for the tax consequences of
those temporary differences between the carrying values of assets and liabilities and their respective tax bases that reverse
after the tax holiday ends.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
relevant entity intends to settle its current tax assets and liabilities on a net basis.

Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, to the extent it would
be available for set off against future current income tax liability. Accordingly, MAT is recognised as deferred tax asset in the
balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the
asset will be realised.

Direct tax contingencies

The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. The disputes relate
to tax treatment of certain expenses claimed as deductions, computation or eligibility of tax incentives or allowances, and
characterisation of fees for services received. The Company has contingent liability in respect of demands from direct tax
authorities in India and other jurisdictions, which are being contested by the Company on appeal amounting `1,453 crore and
`1,453 crore as at December 31, 2020 and March 31, 2020 respectively. In respect of tax contingencies of `318 crore and `318
crore as at December 31, 2020 and March 31, 2020, respectively, not included above, the Company is entitled to an
indemnification from the seller of TCS e-Serve Limited.

The Company periodically receives notices and inquiries from income tax authorities related to the Company’s operations in
the jurisdictions it operates in. The Company has evaluated these notices and inquiries and has concluded that any consequent
income tax claims or demands by the income tax authorities will not succeed on ultimate resolution.

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 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
15) Earnings per share

Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the
weighted average number of equity shares outstanding during the period. The Company did not have any potentially dilutive
securities in any of the periods presented.

Three month Three month Nine month Nine month

period ended period ended period ended period ended
December 31, December 31, December 31, December 31,
2020 2019 2020 2019
Profi t for the peri od ( ` crore) 9,242 7,683 22,786 25,033
Wei ghted a vera ge number of equi ty s ha res 375,23,84,706 375,23,84,706 375,23,84,706 375,23,84,706
Ba s i c a nd di l uted ea rni ngs per s ha re ( `) 24.63 20.47 60.72 66.71
Fa ce va l ue per equi ty s ha re ( `) 1 1 1 1

16) Segment information

The Company publishes the condensed standalone interim financial statements of the Company along with the condensed
consolidated interim financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the
segment information in the condensed consolidated interim financial statements.

17) Commitments and Contingencies

Capital commitments

The Company has contractually committed (net of advances) `1,073 crore and `1,272 crore as at December 31, 2020 and
March 31, 2020, respectively, for purchase of property, plant and equipment.

Contingencies

• Direct tax matters

Refer note 14.

• Indirect tax matters

The Company has ongoing disputes with tax authorities mainly relating to treatment of characterisation and classification
of certain items. The Company has demands amounting to `467 crore and `464 crore as at December 31, 2020 and
March 31, 2020, respectively from various indirect tax authorities which are being contested by the Company based on
the management evaluation and advice of tax consultants.

• Other claims

Claims aggregating `106 crore and `133 crore as at December 31, 2020 and March 31, 2020, respectively, against the
Company have not been acknowledged as debts.

In addition to above, in October 2014, Epic Systems Corporation (referred to as Epic) filed a legal claim against the
Company in the Court of Western District Madison, Wisconsin alleging unauthorised access to and download of their
confidential information and use thereof in the development of the Company's product MedMantra. In April 2016, the
Company received an unfavourable jury verdict awarding damages of `6,867 crore (US $940 million) to Epic which was
thereafter reduced by the Trial Court to `3,068 crore (US $420 million). Pursuant to reaffirmation of the District Court
order in March 2019, the Company filed an appeal in the Appeals Court to fully set aside the Order. Epic also filed a cross
appeal challenging the reduction by the District Court judge of `731 crore (US $100 million) award and `1,461 crore
(US $200 million) in punitive damages. On August 20, 2020, the Appeals Court vacated the award of `2,045 crore
(US $280 million) in punitive damages considering the award to be constitutionally excessive and remanded the case back
to District Court with instructions to reassess and reduce the punitive damages award to at most `1,023 crore
(US $140 million), affirmed the District Court’s decision vacating the jury’s award of `731 crore (US $100 million) in
compensatory damages for alleged use of “other confidential information” by the Company, and affirmed the District
Court’s decision upholding the jury’s award of `1,023 crore (US $140 million) in compensatory damages for use of the

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 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements
comparative analysis by the Company. The Company filed a petition for re-hearing of compensatory and punitive damages
at the Appeals Court on September 3, 2020. Epic also filed for re-hearing that portion of the Appeals Court’s decision that
invalidated award of punitive damages. Considering all the facts and various legal precedence, on a conservative and
prudent basis, the Company has provided `1,218 crore (US $165 million) towards this legal claim in its statement of profit
and loss for the three month period ended September 30, 2020. This has been presented as an “exceptional item” in the
condensed standalone interim statement of profit and loss. In November 2020, the petitions for re-hearing filed by the
Company and Epic, respectively, were denied by the Appeals Court. The proceedings for assessing punitive damages have
been remanded back to the District Court. The Company will continue to pursue all legal options available in the matter.

Pursuant to US Court procedures, a Letter of Credit has been made available to Epic for `3,214 crore (US $440 million) as
financial security in order to stay execution of the judgment pending post-appeal proceedings and conclusion.

• Bank guarantees and letter of comfort

The Company has given letter of comfort to banks for credit facilities availed by its subsidiaries. As per the terms of letter
of comfort, the Company undertakes not to divest its ownership interest directly or indirectly in the subsidiary and provide
such managerial, technical and financial assistance to ensure continued successful operations of the subsidiary.

The Company has provided guarantees to third parties on behalf of its subsidiaries. The Company does not expect any
outflow of resources in respect of the above.

The amounts assessed as contingent liability do not include interest that could be claimed by counter parties.

18) The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company
towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social
Security, 2020 on November 13, 2020, and has invited suggestions from stakeholders which are under active consideration by
the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified and will give appropriate
impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the
financial impact are published.

19) Related party transactions

The Company paid an amount of `1,621 crore to Tata Sons Private Limited, the holding company, towards final dividend for
the year ended March 31, 2020, as approved by the shareholders in the Annual General Meeting. Additionally, the Company
also paid an amount of `4,594 crore towards interim dividend for the year ending March 31, 2021 as approved by the Board
of Directors at its meeting.

The Company paid `224 crore towards subscription of shares in wholly owned subsidiary Tata Consultancy Services Ireland
Limited incorporated on December 2, 2020.

Other than above, the Company’s material related party transactions during the period and outstanding balances as on date
are with its subsidiaries with whom the Company routinely enters into transactions in the ordinary course of business.

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 TATA CONSULTANCY SERVICES LIMITED
Notes forming part of Condensed Standalone Interim Financial Statements

20) Subsequent event

The Board of Directors at its meeting held on January 8, 2021, has declared an interim dividend of `6 per equity share.

As per our report of even date attached For and on behalf of the Board

For B S R & Co. LLP

Chartered Accountants Rajesh Gopinathan V Ramakrishnan
Firm's registration no: 101248W/W-100022 CEO and Managing Director CFO

Yezdi Nagporewalla Keki M Mistry Rajendra Moholkar

Partner Director Company Secretary
Membership No: 049265

Mumbai, January 8, 2021

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