COMPARATIVE STUDY OF FINANCIAL STATEMENTS OFTATA

CONSULTANCY SERVICES AND INFOSYS

FOR THE YEAR 2012-2013

A PROJECT REPORT

Submitted to
University of Mumbai
In partial fulfillment of the requirement
For
M.Com. (Accountancy) Semester I
In the subject
Advanced Financial Accounting
By
NAIR RESHMI RADHAKRISHNAN.
13-6632
DOMBIVLI SHIKSHAN PRASARAK MANDALS
K.V.PENDHARKAR COLLEGE
OF ARTS, SCIENCE & COMMERCE
DOMBIVLI (E), 421203.
DISTRICT: THANE.

SEPTEMBER 2013

DECLARATION

I NAIR RESHMI RADHAKRISHNAN. Roll No:-13-6632, the student of

M.Com. (Accountancy) Semester I (2013), K.V.PENDHARKAR COLLEGE,
DOMBIVLI (E), Affiliated to University of Mumbai, hereby declare that the
project for the subject Advanced Financial Accounting titled COMPARATIVE
STUDY OF FINANCIAL STATEMENTS OF TATA CONSULTANCY
SERVICES AND INFOSYS FOR THE YEAR 2012-2013.submitted by me to
University of Mumbai, for semester I examination is based on actual work
carried by me.
I further state that this work is original and not submitted anywhere else for any
examination.

Place: -DOMBIVLI
Date: Signature of the Student
Name:-NAIR RESHMI RADHAKRISHNAN.
Roll No:-13-6632

certification

ACKNOWLEDGEMENT

It is a pleasure to thank all those who made this project work possible.
I Thank the Almighty God for his blessings in completing this task. The successful
completion of this project is possible only due to support and cooperation of my
teachers, relatives, friends and well-wishers. I would like to extend my sincere
gratitude to all of them.
I am highly indebted to Principal Dr.Mansi Phanse, Co-ordinator
Prof.P.V.Limaye.And my subject teacher Tejeshree Gawde for their encouragement,
guidance and support.
I also take this opportunity to express sense of gratitude to my parents for their
support and co-operation in completing this project.
Finally I would express my gratitude to all those who directly and indirectly helped
me in completing this project.

NAIR RESHMI RADHAKRISHNAN.

TABLE OF CONTENTS

Title of the project

Declaration
Certificate from the institution
Acknowledgement
Table of contents

PAGE NO.
1
2
3
4
5

CHAPTER 1
Introduction.

6
financial statement
Tata consultancy services
Infosys

9
11

CHAPTER 2
Meaning of vertical balance sheet
Format of balance sheet
Balance sheet of Tata consultancy services and Infosys.

14
15
17

CHAPTER 3
Meaning of vertical profit and loss.
Format of profit and loss.
Profit and loss of Tata consultancy services and Infosys.

19
20
21

CHAPTER 4
Comparative statement of balance sheet of TCS & INFOSYS.
23
Comparative statement of profit and loss account of TCS & 25
INFOSYS.
CHAPTER 5
Meaning of cash flow
Format of cash flow
Cash flow of Tata consultancy services.
Cash flow of Infosys.
CHAPTER 6

27
29
34
36

Notes to accounts
Tata consultancy services.
Infosys.
Comments regarding the prospectus of the company.
Conclusion.

37
51
60
61

COMPARATIVE STUDY OF FINANCIAL STATEMENTS OF

TATA CONSULTANCY SERVICES AND INFOSYS

FOR THE YEAR 2012-2013.

Chapter:1
INTRODUCTION:
Comparative financial statements are accounting reports that show more than just the

current-year activity or balances. The three major financial statements are the balance sheet,
the income (or profit and loss) statement and the cash flow statement. Comparative
statements are required in order to comply with generally accepted accounting principles.
They give readers a more complete view of the direction of the company over time.
Financial statements are a collection of reports about an organization's financial results and
condition. They are useful for the following reasons:

To determine the ability of a business to generate cash, and the sources and uses of
that cash.

To determine whether a business has the capability to pay back its debts.

To track financial results on a trend line to spot any looming profitability issues.

To derive financial ratios from the statements that can indicate the condition of the
business.

To investigate the details of certain business transactions, as outlined in the

disclosures that accompany the statements.
The standard contents of a set of financial statements are:

Balance sheet Shows the entity's assets, liabilities,andstockholders equity as of the

report date.

Income statement. Shows the results of the entity's operations and financial activities
for the reporting period.

Statement of cash flows. Shows changes in the entity's cash flow during the reporting
period.

Supplementary notes. Includes explanations of various activities, additional detail on

some accounts, and other items as mandated by GAAP or IFRS.
If a business plans to issue financial statements to outside users (such as investors or lenders),
the financial statements should be formatted in accordance with one of the major accounting
frameworks, such as GAAP or IFRS. These frameworks allow for some leeway in how
financial statements can be structured, so statements issued by different firms even in the
same industry are likely to have somewhat different appearances.
If financial statements are issued strictly for internal use, there are no guidelines, other than
common usage, for how the statements are to be presented.

At the most minimal level, a business is expected to issue an income statement and balance
sheet to document its monthly results and ending financial condition. The full set of financial
statements is expected when a business is reporting the results for a full fiscal year.
Comparative financial statements are the complete set of financial statement that an entity
issues, revealing information for more than one accounting period. The financial statements
that may be included in this package are:

The income statement (showing results for multiple periods)

The balance sheet (showing the financial position of the entity as of more than one
balance sheet date)

The statement of cash flow (showing the cash flows for more than one period)

Another variation on the comparative concept is to report information for each of the 12
preceding months on a rolling basis. Comparative financial statements are quite useful for the
following reasons:

Provides a comparison of an entity's financial performance over multiple periods, so

that you can determine trends. The statements may also reveal unusual spikes in the reported
information that can indicate the presence of accounting errors.

Provides a comparison of expenses to revenues and the proportions of various items

on the balance sheet over multiple periods. This information can be useful for cost
management purposes.

May be useful for predicting future performance, though you should rely more on
operational indicators and leading indicators than on historical performance for this type of
analysis.
It is customary to issue comparative financial statements with additional columns containing
the variance between periods, as well as the percentage change between periods.
The Securities and Exchange Commission requires that a publicly held company use
comparative financial statements when reporting to the public on the Form 10-K and Form
10-Q.

INTRODUCTION OF TATA CONSULTANCY SERVICE:

1968 to 2000
Tata Consultancy Services Limited (TCS) was founded in 1968 as a division of Tata Sons
Limited by JRD Tata. Its early contracts included providing punched card services to sister
company TISCO (now Tata Steel)working on an Inter-Branch Reconciliation System for the

Central Bank of India, and providing bureau services to Unit Trust of India.
In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore. The recruits
comprised 12 Indian Institutes of Technology graduates and three IISc graduates, who

became the first TCS employees to enter a formal graduate trainee programmer.
In 1979, TCS delivered an electronic depository and trading system called SECOM for the
Swiss company SIS Sega Inter Settle. TCS followed this up with System X for the Canadian
9

Depository System and automating the Johannesburg Stock Exchange. TCS associated with a

Swiss partner, TKS Techno soft, which it later acquired.

In 1981, TCS established India's first dedicated software research and development centre,
the Tata Research Development and Design Centre (TRDDC) in Pune. In 1985 TCS
established India's first client-dedicated offshore development centre, set up for client

Tandem.
In the early 1990s the Indian IT outsourcing industry grew rapidly due to the Y2K bug and
the launch of a unified European currency, Euro. TCS created the factory model for Y2K
conversion and developed software tools which automated the conversion process and
enabled third-party developer and client implementation.

2000 to present
By 2004, TCS's e-business activities were generating over US$500 million in annual

revenues.
On 25 August 2004 TCS became a publicly listed company.
In 2005 TCS became the first India-based IT services company to enter the bioin formatics

market.
In 2006 TCS designed an ERP system for the Indian Railway Catering and Tourism

Corporation.
In 2008 TCS undertook an internal restructuring exercise which aimed to increase the

company's agility.
TCS entered the small and medium enterprises market for the first time in 2011, with cloud
based offerings. On the last trading day of 2011, TCS overtook RIL to achieve the highest

market capitalization of any India-based company.

In the 2011/12 fiscal year TCS achieved annual revenues of over US$10 billion for the first

time.
In May 2013 TCS bagged a Six Year contract from DoP worth over 1100 crore Rupees.

10

 INTRODUCTION OF INFOSYS:
Infosys Ltd is a global technology services firm that defines designs and delivers
information technology (IT)-enabled business solutions to their clients. The company
provides end-to-end business solutions that leverage technology for their clients, including
technical consulting, design, development, product engineering, maintenance, systems
integration, package-enabled consulting, and implementation and infrastructure management
services. The company also provides software products to the banking industry. They have
developed finacle, a universal banking solution to large and medium size banks across India
and overseas. Infosys BPO is a majority owned subsidiary. Through Infosys BPO, the
company provides business process management services, such as offsite customer
relationship management, finance and accounting, and administration and sales order
processing. The company is having marketing and technical alliance with FileNet, IBM, Intel,
Microsoft, Oracle and System Application Products. Infosys Ltd is a public limited and
India's second largest software exporter company was incorporated in the year 1981 as
Infosys Consultants Pvt Ltd by Mr.N.R.Narayana Murthy at Karnataka. The company was
started by seven people with the investment of USD 250. The company became a public
limited company in the year 1992. The company was the first Indian company to be listed on
the NASDAQ at the year 1999. Infosys also forms a part of the NASDAQ-100 index.
Continuously in the year 2001, 2002 and 2003, the company wins the National award for
excellence in corporate governance conferred by the Government of India. In October 2,
11

2004, they set up a wholly owned subsidiary in People's Republic of China named Infosys
Technologies (China) Co Ltd. In the year 2005, the company established Infosys Consulting
Inc, a wholly owned subsidiary in Texas, US to add high-end consulting capabilities to their
Global Delivery Model. The company was selected as 'Best Outsourcing Partner' by the
readers of Waters, a publication covering the needs of chief information officers in the capital
market firms. In the year 2007, the company increased the stake value in Progeon to 98.9%
after acquiring shares from Citicorp International Financial Company. Infosys had taken over
Philips' finance and administration business process outsourcing (BPO) centers spread across
India, Poland and Thailand for USD 28 million. Infosys Technologies has 47% of core
business assets stagnating. The company scanning the markets of Europe and Japan for
acquisitions in the price bands of USD 200 - USD 300 million to energies their non-linear
business strategy as well as to expand its geographic reach. Infosys set up various Special
Economic Zone that for the company has an additional tax benefit. They set up another
Special Economic Zone unit in Chandigarh which will be eligible for 100 % deduction of
profit from exports tax calculation for the first five years followed by 50% deduction for next
five years. Infosys has been pursuing their expansion plans over the past few years. The
future enhancement of the company is to emerge the developing economies changing the
business landscape with help of accessible talent pools and the adoption of non-linear growth
model, it is a long term strategy. In November 12, 2009, the company and NVIDIA Corp.
entered into a partnership to develop NvidiaCuda to compute unified device architecture and
technology-enabled software solutions. Also, the company signed a contract with GeorgiaPacific LLC (Georgia-Pacific), a forest and consumer products company, to implement its
Supply Chain Visibility and Collaboration Suite. In December 2009, the company has set up
a wholly owned unit in the U.S. to tap the multibillion dollar opportunities from government
projects. The subsidiary, called Infosys Technologies Inc, will be headquartered in Dallas,

12

Texas, where the company has most of their operations. In December 14, 2009, the company
launched Flypp, an application platform which will empower mobile service providers to
delight digital consumers through a host of ready-to-use experiential applications across the
universe of devices and in December 15, 2009, they launched Finacle Advisor, an integrated
platform which helps banks to deliver products and services through a fully assisted selfservice channel using existing Internet banking capabilities. Also, the company incorporated
a wholly owned Brazilian subsidiary, namely Infosys Techno logia Do Brasil Ltda. During
the year 2009-10, Infosys Consulting Inc incorporated a wholly-owned subsidiary, Infosys
Consulting India Ltd and invested Rs 1 crore in the subsidiary. SETLabs' IP Cell filed 31
patent applications in the United States Patent and Trademark Office (USPTO) and Indian
Patent Office. In December 2009, Infosys BPO acquired 100% voting interests in McCamish
Systems LLC (McCamish), a business process solutions provider based at Atlanta, US..
During the year 2010-11, the company formally launched their new corporate strategy,
Building Tomorrow's Enterprise to showcase our plan for leading the services industry into
the new era as the next generation global consulting and services company. The name of the
company was changed from Infosys Technologies Ltd to Infosys Ltd with effect from June
16, 2011. In November 2011, Atlas Copco AB entered into an agreement with the company to
handle parts of its financial processes, such as accounting to reporting and processing of
supplier invoices. The project will affect approximately 230 positions within Atlas Copco,
and of these Infosys will offer employment to around 70 staff working in the Czech Republic.
The transition of services to Infosys is planned to begin on November 16, 2011. In December
2011, the company signed a multi-year Transformation and Business IT services contract
with Syngenta AG. In a landmark contract that will provide consistency and predictability of
service delivery, Infosys will consolidate Syngenta's Global Business IT services landscape
under a single shared services engagement. In February 2012, Bharti Airtel choose the

13

company as its partner for Airtel Money, mobile wallet service by a mobile operator. Under
this partnership, Infosys WalletEdge, the mobile commerce platform will enable the
ubiquitous mobile wallet service to support cashless payments and settlements needs of
diverse customer segments.

Chapter:2
MEANING OF BALANCE SHEET
In financial accounting, a balance sheet or statement of financial position is a summary
of the financial balances of a sole proprietorship, a business partnership, a corporation or
other business organization, such as an LLC or an LLP. Assets, liabilities and ownership
equity are listed as of a specific date, such as the end of its financial year. A balance sheet is
often described as a "snapshot of a company's financial condition Of the four basic financial
statements, the balance sheet is the only statement which applies to a single point in time of a
business' calendar year.
A standard company balance sheet has three parts: assets, liabilities and ownership equity.
The main categories of assets are usually listed first, and typically in order of liquidity. Assets
are followed by the liabilities. The difference between the assets and the liabilities is known
as equity or the net assets or the net worth or capital of the company and according to the
accounting equation, net worth must equal assets minus liabilities.[
A business operating entirely in cash can measure its profits by withdrawing the entire bank
balance at the end of the period, plus any cash in hand. However, many businesses are not
paid immediately; they build up inventories of goods and they acquire buildings and
14

equipment. In other words: businesses have assets and so they cannot, even if they want to,
immediately turn these into cash at the end of each period. Often, these businesses owe
money to suppliers and to tax authorities, and the proprietors do not withdraw all their
original capital and profits at the end of each period. In other words businesses also have
liabilities

FORMAT OF VERTICAL BALANCE SHEET:

Vertical form of balance sheet does not demonstrate just financial position but it also shows
the flow of fund in one year. We can create our balance sheet in such shape for knowing the
exact position of our funds. If we include the previous figures of liabilities and assets, then
we need not to make fund flow statement because to show the comparison of two
period vertical balance sheets is just like fund flow statement. In short cut, it fulfills the
requirement of fund flow analysis. One more mystery can be analyzed with this form of
balance sheet. We can evaluate changes in working capital by comparing two vertical balance
sheets.
Moreover, most of the companies today use the vertical form for reporting because
with this balance sheet looks without any clutter.
Now, we tell you the structure of vertical balance sheet. Basic formula is of accounting
equation.
Capital + Liabilities = Assets

Shareholders fund + long term liabilities + short term liabilities = Fixed assets + current
assets

Shareholders fund + Long term liabilities = Final Assets + Current Assets Current
15

Liabilities

Source of Fund = Application of Fund

16

17

18

 BALANCESHEET OF TATA CONSULTANCY SERVICES

AND INFOSYS:
FOR THE YEAR 2012-2013
AMTS IN CRORES

PARTICULARS

TCS

INFOSYS

295.72
32266.53

287
35772

32562.25

36059

83.10
168.49
251.87
269.52
772.98

56
120
176

80.02
3528.04
2172.71
3896.14
9676.91

178
2827
3788
6793

43012.14

43028

5059.48
44.80
1763.85
6868.13

4425
28
1135
5588

1.EQUITY & LIABILITIES

SHAREHOLDERS FUNDS
a) Share capital.
b) Reserves and surplus
NON -CURRENT LIABILITIES
a)
b)
c)
d)

Long-term borrowings
Deferred tax liabilities(net)
Other long-term liabilities
Long term provisions

CURRENT LIABILITIES
a)
b)
c)
d)

Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions

TOTAL

2.ASSETS
NON-CURENT ASSETS
a) Fixed assets
i. Tangible assets
ii. Intangible assets
iii. capital work in progress

19

b)
c)
d)
e)

Non-current investments
Deferred tax assets
Long-term loans and advances
Other non-current assets

5975.73
148.23
4630.21
1881.20

2764
378
1529
31

19503.50

10290

348.65
6.34
2303.35
11202.32
4054.16
4911.48
682.34
23508.64

1580
6365
20401
4392
32738

43012.14

43028

CURRENT ASSETS
a)
b)
c)
d)
e)
f)
g)

Current investments
Inventories
Unbilled revenues
Trade receivables
Cash and cash balances
Short-term loans and advances
Other current assets

TOTAL

Chapter:3
MEANING OF PROFIT AND LOSS ACCOUNT

20

An official quarterly or annual financial document published by a public company,

showing earnings, expenses, and net profit. Net income is determined from this financial
report by subtracting total expenses from total revenue. The profit and loss statement and the
balance sheet are the two major financial reports that every public company publishes. The
difference between this statement and the balance sheet deals with the periods of time that
each one represents. The profit and loss statement shows transactions over a given period of
time (usually quarterly or annually), whereas the balance sheet gives a snapshot holdings on a
specific date. Also called income statement or earnings report
Profit and loss account is that part of final account is made for calculating the net
profit or net loss. In the debit side of this account, we show all indirect loss and expenses and
in the credit side of this account, we show all indirect incomes. After matching debit and
credit side of profit and loss account, we can find net profit or loss of business. If
organisation is company, we transfer this balance to profit and loss appropriation account;
otherwise, we transfer this balance to capital account.
Explanation of Profit and Loss Account
A) Debit Side of Profit and loss account
1. Gross loss transferred from trading account.
2. All indirect expenses like sale expenses, office expenses and legal expenses
3. If credit side is more than debit side, we show net profit in debit side
B) Credit Side of Profit and Loss account
1. Gross profit transferred from trading account
2. Indirect Incomes like rent, commission, and discount received
3. If debit side is more than credit side, we show net loss in credit side

FORMAT OF PROFIT & LOSS ACCOUNT

The accounting standards as well as the requirements of the Companies Act the
following summarized Profit and Loss Statement in vertical form is suggested for adoption.
21

However, each item in the profit and loss account should be accompanies by supporting
schedules which will give more details
Schedule

Current year

Previous year

Income
Sales
Other Income
Increase/Decrease in Work-in-progress/
Finished Stocks
Total
Expenditure
Cost of Raw material and Spars
Excise Duty
Employees Remuneration & Benefits
Other Expenses
Interest
Depreciation
Total
Profit Before Taxation & Extra ordinary
Items
Extraordinary Item
Profit for the Current Year
Prior Period Adjustments
Profit before Taxation
Provision for Taxation
Profit After Tax
Balance B/F from the Previous Year
Total available for Appropriations
Appropriations
Proposed Dividend
Corporate Dividend on Taxes (CDT)
Debenture Redemption Reserve
General Reserve
Any other statutory Reserves
Balance c/f to next year
Total of Appropriation & Balance c/f

PROFIT & LOSS ACCOUNT FOR TATA CONSULTANCY

SERVICES AND INFOSYS:
FOR THE YEAR 2012-2013
AMT IN CRORES

PARTICULARS

TCS

INFOSYS

22

I.
II.
III.

Revenue from operations

Other income(net)
TOTAL REVENUE

V.
a)
b)
c)

VII.

40352
2365
42717

17081.72
-

22565
85

TOTAL EXPENSES

30.62
802.86
17038.15

1459
1509
777
361
506
1099
1557

PROFIT BEFORE TAX

34953.35

29918

15703.18

12799

3197.42
44.00
(324.58)
2916.84

3518
(148)
3370

Expenses:
a) Employee benefit expenses
b) Deferred consideration pertaining to
acquisition
c) Cost of technical sub contractors
d) Travel expenses
e) Cost of software packages and others
f) Communication expenses
g) Professional charges
h) Finance costs
i) Depreciation and a amortizations expense
j) Operation and other expenses

IV.

VI.

48426.14
2230.39
50656.53

TAX EXPENSE:
Current tax
Deferred tax
MAT entitlement

PROFIT FOR THE YEAR

EARNINGS PER EQUITY SHARE:

basic and diluted

12789.34

9429

weighted average number of equity shares

(Face value Rs 1 and 5 each.)

65.22

165.01

195722099
6

571400091

23

Chapter:4

COMPARATIVE STATEMENT OF VERTICAL

BALANCESHEET:

For the year 2011-12 & 2012-2013

PARTICULARS

TCS

INFOSYS

Increase/decrease Increase/decrease

24

Amt

Amt

1.EQUITY & LIABILITIES

SHAREHOLDERS FUNDS
a Share capital.
b Reserves and surplus

7705.62
7705.62

31.37
31.00

6662.00
6662.00

(13.13)
50.39
54.28
114.74
206.28

(13.64)
42.67
27.47
74.13
36.40

56
59
115

80.02
680.13
574.15
(492.87)
841.43
8753.33

23.88
35.92
(11.23)
9.52
25.55

166
882
149
1197
7974

21.46
21.26

NON -CURRENT LIABILITIES

a
b
c
d

Long-term borrowings
Deferred tax liabilities(net)
Other long-term liabilities
Long term provisions

CURRENT LIABILITIES
a
b
c
d

Short-term borrowings
Trade payables
Other current liabilities
Short-term provisions
TOTAL

47.97
93.50
721.74
28.83
3.90
17.34
20.79

2.ASSETS
NON-CURENT ASSETS
a

Fixed assets
i. Tangible assets
ii. Intangible assets
iii. capital work in progress

b Non-current investments
c Deferred tax assets
d Long-term
loans
and
advances

1047.32
(6.66)
364.03
1404.69

828.67
8.49
297.4
(755.68)

26.10
12.94
26.00
25.71

16.10
6.08
6.86

432
1152
550
2134

373
204
165

9.87
97.63
93.22
34.73

9325
76.98
9.90
106.67
25

Other non-current assets

CURRENT ASSETS
a
b
c
d
e
f
g

Current investments
Inventories
Unbilled revenues
Trade receivables
Cash and cash balances
Short-term
loans
and
advances
Other current assets

1783.57

(28.66)
10.07

(192.68)
2.2
735.88
2094.60
774.09
3261.74

(35.59)
53.14
46.95
23.00
19.09
197.71

293.93
6969.76
8753.33

75.68
29.65
25.55

TOTAL

16
2892

1371
1201
1241
1269
5082
7974

35.72

372.55
20.42
6.03
37.11
16.79
20.79

Year 2011-2012 & 2012-2013, taken 2011-2012 as base year.

COMPARATIVE STATEMENT OF PROFIT AND LOSS
ACCOUNT:
For the year 2011-2012&2012-2013
PARTICULARS

TCS

INFOSYS

Increase/decrease Increase/decrease

I.
II.

Revenue from operations

Other income(net)
TOTAL REVENUE

Amt

Amt

10321.91
(454.79)

27.09
(16.94)

6618
461

19.62
24.21
26

III.

Expenses:
a) Employee benefit
expenses
b) Deferred consideration
pertaining to acquisition
c) Cost of technical sub
contractors
d) Travel expenses
e) Cost of software
packages and others
f) Communication expenses
g) Professional charges
h) Finance costs
i) Depreciation and a
amortizations expense
j) Operation and other
expenses
TOTAL EXPENSES

IV.

V.
a)
b)
c)
VI.

9867.12

24.19

7079

19.86

3509.04

25.85

4225

23.04

85

682

87.77

387
123

34.49
18.81

14.22

86.71

87
23
-

31.75
4.76
-

114.69

16.67

171

18.43

3892.32

29.61

196

14.40

7530.27

27.50

5979

24.98

2336.85

17.48

1100

9.40

11.59
(213.02)
(25.57)
22.03

205
(202)
3

6.19
(374.07)
(367.88)

16.49

1097

13.17

PROFIT BEFORE TAX

TAX EXPENSE:
Current tax
Deferred tax
MAT entitlement
PROFIT FOR THE
YEAR

332.04
82.93
111.52
526.49
1810.36

VII.

EARNINGS PER
EQUITY SHARE:

basic and diluted

9.27
16.57

13.15
27

19.18

Year 2011-2012 & 2012-2013, taken 2011-2012 as base year.

Chapter:5
MEANING OF CASH FLOW:
Definition:
A financial statement that reflects the inflow of revenue vs. the outflow of expenses
resulting from operating, investing and financing activities during a specific time period
Cash flow statements and projections express a business's results or plans in terms of
cash in and out of the business, without adjusting for accrued revenues and expenses. The
cash flow statement doesn't show whether the business will be profitable, but it does show the
cash position of the business at any given point in time by measuring revenue against outlays.
The cash flow statement should be prepared on a monthly basis during the first year,
on a quarterly basis for the second year, and annually for the third year. The following 17
items are listed in the order they need to appear on your cash flow statement:
28

1.

Cash refers to cash on hand in the business.

2.

Cash sales are income from sales paid for by cash.

3.

Receivables are income from the collection of money owed to the business resulting
from sales.

4.

Other income is income from investments, interest on loans that have been extended,
and the liquidation of any assets.

5.

Total income is the sum of total cash, cash sales, receivables and other income.

6.

Material/merchandise is the raw material used in the manufacture of a product (for

manufacturing operations only), the cash outlay for merchandise inventory (for
merchandisers such as wholesalers and retailers), or the supplies used in the performance of a
service.

7.

Direct labor is the labor required to manufacture a product (for manufacturing

operations only) or to perform a service.

8.

Overhead is all fixed and variable expenses required for the operations of the
business.

9.

Marketing/sales is all salaries, commissions and other direct costs associated with the
marketing and sales departments.

10.

R&D is labor expenses required to support the research and development operations
of the business.

11.

G&A is labor expenses required to support the general and administrative functions
of the business.

12.

Taxes are all taxes, except payroll, paid to the appropriate government institutions.

13.

Capital represents the capital requirements to obtain any equipment needed to

generate income.

14.

Loan payments are the total of all payments made to reduce any long-term debts.

29

15.

Total expenses are the sum of material, direct labor, overhead expenses, marketing,
sales, R&D, G&A, taxes, capital and loan payments.

16.

Cash flow is the difference between total income and total expenses. This amount is
carried over to the next period as beginning cash.

17.

Cumulative cash flow is the difference between current cash flow and cash flow
from the previous period.

FORMAT OF CASH FLOW:

1. INDIRECT METHOD:-.
Particulars

Rs

30

(i) Cash flows from operating Activities:Net Profit as per Profit and Loss A/c or difference between
xxx

closing balance and opening balance of Profitand Loss A/c

Add : Transfer to reserve

xxx

Proposed dividend for current year

xxx

Interim dividend paid during the year

xxx

Provision for tax made during the current year

xxx

Extraordinary items, if any, debited to Profit and Loss A/c

xxx

xxx

Less: Extraordinary Items, if any, credited to Profit

and Loss A/c
Refund of Tax credited to Profit and Loss A/c

xxx
xxx

xxx

A. Net profit before taxation and Extra ordinary items Adjustment

for Non-Cash and Non-Operating Items.
B. Add:
Depreciation

xxx

Preliminary expenses

xxx

Discount on issue of shares and debentures written off

xxx

Interest on borrowings and debentures

xxx

Loss on sale of fixed assets

xxx
xxxxxx

31

C. Less:
Interest income/received

xxx

Dividend income received

xxx

Rental income received

xxx

Profit on sale of fixed asset

xxx

xxx
xxx

D. Operating profits before working capital changes

(A + B C)

xxx

E. Decrease in current assets and increase in current liabilities

xxx

F. Less: Increase in current assets and decrease in current liabilities

xxx

G. Cash generated from operations (D + E F)

xxx

H. Less: Income tax paid (Net tax refund received)

xxx

I. Cash flow from before extraordinary items.

xxx

Adjusted extraordinary items (+/)

xxx

Net cash from operating activities(i)

xxx

(ii) Cash from investing accounting:Add :

Proceeds from sale of fixed assets

xxx

Proceeds from sale of investments

xxx

Proceeds from sale of intangible assets

xxx

Interest and dividend received xxx

xxx
xxx

Less :
Rent income xxx
Purchase of fixed assets xxx

32

 Purchase of investment xxx

Purchase of intangible assets like goodwill

xxx
xxx

Advanced extraordinary items (+/)

xxx

Net cash from (or used in) investing activities(ii)

xxx
xxx

(iii) Cash flows from financing activities:Add:

Proceeds from issue of shares and debentures xxx
Proceeds from other long term borrowings xxx
xxx
Less :
Final dividend fund xxx
Interim dividend fund xxx
Interest on debentures and loans paid xxx
Repayment of loans xxx
Redemption of debenture preference shares

xxx

Adjust extraordinary items (+/)

xxx

Net cash from (or used in) financing activities..(iii)

xxx
xxx

(iv) Total cash flow from all the activities..(i+ii+iii)

XXX
(v) Add : cash and cash equivalents in the beginning of the year

cash in hand xxx

33

 cash at bank overdraft xxx

short term deposit xxx

marketable securities xxx
(vi) Less : cash and cash equivalents in the end of the year
cash in hand xxx
cash at Bank (by bank overdraft) xxx
short term deposits xxx
Cash flow from operationxxx

xxx
XXX

2. DIRECT METHOD:Particulars

Rs

34

(i) Cash flow from operating activities:A. Operating cash receipts

Cash sales xxx
Cash received from customers xxx
Trading commission received xxx
Royalties received xxx

xxx

B. Less : Operating cash payment

Cash purchase xxx
Cash paid to the supplier xxx
Cash paid for business expenses

xxx

xxx

C. Cash generated from operation ( A B)

xxx

D. Less Income tax paid (Net of tax refund received)

xxx

E. Cash flow before extraordinary items

xxx

F. Adjusted extraordinary items (+/)/Receipt/payment

xxx

G. Net cash flow from (or used in) operating activities

xxx

(ii)Cash flow from investing activities (calculation same as under indirect method)

xxx

(iii) Cash flow from financing activities (Calculation same as under indirect method)

xxx

(iv) Net increase/decrease in cash and cash equivalents (i + ii + iii)

xxx

(v) Add cash and cash equivalent in the beginning of the year (same as under indirect
method)

xxx

(vi) Less cash under cash equivalent in the end of the year

xxx
XXX

CASH FLOW OF TATA CONSULTANCY SERVICES:

35

36

 CASH FLOW OF INFOSYS:

37

Chapter:6
38

 NOTES TO ACCOUNTS:
TATA CONSULTANCY SERVICES:
1. SHARE CAPITAL
The Authorized, Issued, Subscribed and Fully paid-up share capital comprises of
equity shares and redeemable preference shares having a par value of ` 1 each as follows:

(b) Rights,
preferences
and
restrictions
attached to
shares
Equity
shares
The
Company
has
class

one
of

equity
shares having a par value of ` 1 each. Each shareholder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In
the event of liquidation, the equity shareholders are eligible to receive the remaining assets of
39

the Company after distribution of all preferential amounts, in proportion to their

shareholding.
Preference shares
Preference shares would be redeemable at par at the end of six years from the date of
allotment i.e. March 28, 2008, but may be redeemed at any time after 3 years from the date of
allotment at the option of shareholder. These shares would carry a fixed cumulative dividend
of 1% per annum and a variable non-cumulative dividend of 1% of the difference between the
rate of dividend declared during the year on the equity shares of the Company and the
average rate of dividend declared on the equity shares of the Company for three years
preceding the year of issue of the redeemable preference shares.
(c) Details of shares held by shareholders holding more than 5% of the aggregate shares
in the Company

(d) Shares allotted as fully paid up by way of bonus shares (during 5 years preceding
March 31, 2013)
The Company allotted 97,86,10,498 equity shares as fully paid up bonus shares by utilisation
of Securities premium reserve on June 18, 2009 pursuant to a shareholders resolution passed
by postal ballot on June 12, 2009.
2) RESERVES AND SURPLUS
Reserves and surplus consist of the following reserves

40

The Board of Directors at its meeting held on April 17, 2013 has recommended a final
dividend of ` 13 per equity share

3) LONG TERM BORROWINGS

Long - term borrowings consist of the following:

41

Obligations under finance lease are secured against fixed assets obtained under finance lease
arrangements.
4) DEFERRED TAX BALANCES
Major components of the deferred tax balances consist of the following

5) OTHER LONG - TERM LIABILITIES

Other long - term liabilities consist of the following:

42

Other liabilities comprise:

Fair value of foreign exchange forward and currency option
Contracts secured against trade receivables
Capital creditors 54.34
Others 197.53

6) LONG - TERM PROVISIONS

Long - term provisions consist of the following:

Provision for employee benefits includes provision for gratuity and other retirement benefits.
7) SHORT - TERM BORROWINGS
Short term borrowings consist of the following:

Ba
nk Overdrafts are secured against book debts .

8) OTHER CURRENT LIABILITIES

Other current liabilities consist of the following

43

Other payables comprises of:

Fai r value of foreign exchange forward and currency option
Contracts secured against trade receivables57.86
Statutory liabilities498.96
Capital creditors 226.35
Class action suit settlement consideration 161.63
Others
479.18
Obligations under finance lease are secured against fixed assets obtained under finance lease
arrangements.
9) SHORT - TERM PROVISIONS
Short - term provisions consist of the following:

Provisions for employee benefits include provision for compensated absences and other short
- term employee benefits.

10) NON - CURRENT INVESTMENTS

Non - current investments consist of the following:

44

45

11) LONG - TERM LOANS AND ADVANCES (Unsecured)

46

Long - term loans and advances (unsecured) consist of the following:

12) OTHER NON - CURRENT ASSETS

Other non - current assets consist of the following:
47

13) CURRENT INVESTMENTS

Current investments consist of the following:

14) INVENTORIES
Inventories consist of the following:

48

Inventories are carried at the lower of cost and net realizable value.

15) UNBILLED REVENUES

Unbilled revenue as at March 31, 2013 amounting to ` 2303.35 crores (March 31, 2012: `
1567.47 crores) primarily comprises of the revenue recognised in relation to efforts incurred
on turnkey contracts priced on a fixed time, fixed price basis of ` 1509.25 crores (March 31,
2012: ` 1208.10 crores).
16) TRADE RECEIVABLES
Trade receivables (Unsecured) consist of the following

17) CASH AND BANK BALANCES

Cash and bank balances consist of the following:

49

Balances with banks in current accounts do not include fourteen bank accounts having a
balance of ` 1.35 crores (March 31, 2012: ` 0.31 crore) operated by the Company on behalf of
a third party.
18) SHORT - TERM LOANS AND ADVANCES
Short term loans and advances (Unsecured) consist of the following:

19) OTHER CURRENT ASSETS

Other current assets consist of the following:

50

20) REVENUE FROM OPERATIONS

Revenue from operations consist of revenues from:

21) OTHER INCOME (NET)

Other income (net) consists of the following:

22) OPERATION AND OTHER EXPENSES

Operation and other expenses consist of the following:

51

23) FINANCE COSTS

Finance costs consist of the following:

INFOSYS:
1. SHARE CAPITAL:

52

DuringtheyearendedMarch31,2012,theamountofpersharedividendrecognizedasdistributionstoequity
shareholderswas`47.ThedividendfortheyearendedMarch31,2012includes`22pershareoffinaldividend
,`15pershareofinterimdividendand`10pershareofspecialdividend-10yearsofInfosys BPO operations.
The Board of Directors, in their meeting on October 12, 2012, declared an interim dividend of `15
per equity share. Further the Board of Directors, in their meeting on April 12, 2013, proposed a
final dividend of `27 per equity share. The proposal is subject to the approval of shareholders at the
Annual General Meeting to be held on June 15, 2013. The total dividend appropriation for the year
ended March 31, 2013 amounted to `2,815 crore including corporate dividend tax of `403 crore

2.RESEVES AND SURPLUS:

53

3. DEFERRED TAXES
54

4. OTHER LONG TERM LIABILITIES:

5. OTHER CURRENT LIABILITIES.

55

6. SHORT TERM PROVISIONS:

7. INVESTMENTS:

56

8. LONG TERM LOANS AND ADVANCES:

9. OTHER NON CURRENT ASSETS:

10. TRADE RECEIVEBALES:

57

11. CASH AND CASH EQUIVALENTS:

12. SHORT TERM LOANS AND ADVANCES:

58

13. OTHER INCOME:

14. EXPENSES:

59

15. TAX EXPENSES:

16.RESEARCH AND DEVELOPMENT EXPENDITURE:

17. SUPERANNUATION:
The Group contributed `176 crore to the superannuation trust during the year ended March
31, 2013 respectively.

60

18.

RECONCILIATION OF BASIC AND DILUTED SHARES USED IN

COMPUTING EARNINGS PER SHARE.

COMMENTS REGARDING THE PROSPECTUS OF THE

COMPANY:
(RS IN CRORES)
1. Reserves of TCS have been increased drastically by 31.37% in 2013 and of INFOSYS is
21.46%.
2. Borrowings have been made in TCS less by 13.64%in the year 2012-13.
3. Long term provisions of TCS are 74.13% have comparatively in the year 2012-13.
4. Total current liabilities have increased by 9.52% in TCS in 2013 and in INFOSYS by
17.34% in 2013.
5. Fixed assets of TCS are 25.71% and of INFOSYS is 34.73%.
6. Other noncurrent assets in TCS amounted Rs.(755.68) and in INFOSYS is Rs.16.
7. Current investment in TCS is (35.59%) and in INFOSYS is 372.55%
61

8. Total current assets in TCS amounted Rs. 6969.76 and in INFOSYS amounted Rs. 5082.
9. Net profit before tax in cash flow in TCS is Rs.15703.18, net cash flow for the operating
activity Rs. 9156.95.
10. Net increase in cash and cash equivalent of TCS is Rs.18.17.
11. Net profit before tax in cash flow of INFOSYS is Rs.12799, net cash flow for the
investing activity Rs.(3020).
12. Net increase in cash and cash equivalent in INFOSYS is Rs.1241.
13. Closing cash and cash equivalent in INFOSYS is Rs.21832.

CONCLUSION:TCS also one of the successful private sector company in India.

It is the company that has pioneered many services first time in India. TCS was the first to
offer a product called one view by which customers are able to view their accounts in six
branches on one page on their website.
Infosys earlier known as Imperial Company has proved its
existence through introducing various innovative schemes and that also are considered as
competitive in present market.At the same time we can conclude that they need to focus on
their human resources in order to achieve the maximum market share.

62