From Published Accounts

Section A: 

Disclosures in financial statements regarding Transition to IndAS

Tata Consultancy Services Ltd. (31-3-2017)

From  Notes  forming   part  of  financial statements (unconsolidated)

3. Explanation of Transition to Ind AS

The transition as at April 1, 2015 to Ind AS was carried out from Previous GAAP. The exemptions and exceptions applied by the Company in accordance with Ind AS 101- First-time Adoption of Indian Accounting Standards, the reconciliations of equity and total comprehensive income in accordance with Previous GAAP to Ind AS are explained below.

Exemptions from retrospective application:

The Company has applied the following exemptions:

(a) Investments in subsidiaries, joint ventures and      associates

      The Company has elected to adopt the carrying value under Previous GAAP as on the date of transition i.e. April 1, 2015 in its separate financial statements.

(b) Business combinations

   The Company has elected to apply Ind AS 103 – Business Combinations retrospectively to past business combinations from April 1, 2013.

Reconciliations between Previous GAAP and Ind AS    

(Rs. Crore)

(iii)   Reconciliation of Statement Cash Flow

       There are no material adjustments to the Statements of Cash Flow as reported under the Previous GAAP.

Notes to reconciliations between Previous GAAP and Ind AS

(a)    Dividend (including dividend tax)

        Under Ind AS, dividend to holders of equity instruments is recognised as a liability in the year in which the obligation to pay is established. Under Previous GAAP, dividend payable is recorded as a liability in the year to which it relates. This has resulted in an increase in equity by Rs. 6,403 crore and Rs. 5,724 crore (including dividend declared by CMC Limited) as at March 31, 2016 and April 1, 2015 respectively.

(b)    Depreciation        

        In April 2014, the Company revised its method of depreciation from written down value to straight-line basis. This change in method was retrospectively adjusted in accordance with the Previous GAAP. Under Ind AS, the Company has elected to apply Ind AS 16-Property, plant and equipment from the date of acquisition of property, plant and equipment and accordingly the change in method has been prospectively applied as a change in estimate. This has resulted in a decline in equity under Ind AS by Rs. 440 crore, and Rs. 537 crore as at March 31, 2016, and as at April, 2015 respectively, and increase in net profit by Rs. 97 crore for the year ended March 31, 2016.

(c)    Fair valuation of investments       

        Under Previous GAAP, current investments were measured at lower of cost or fair value  and long term investments were measured at cost less diminution in value which is other than temporary, under Ind AS Financial assets other than amortised cost are subsequently measured at fair value.

        The Company holds investment in government securities with the objective of both collecting contractual cash flows which give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and selling financial assets. The Company has also made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading. This has resulted in increase in investment revaluation reserve by Rs. 82 crore, and increase in investment revaluation reserve by Rs. 4 crore as at March 31, 2016 and April 1, 2015 respectively.

        Investment in mutual funds have been classified as fair value through statement of profit and loss and changes in fair value are recognised in statement of profit and loss. This has resulted in increase in retained earnings of Rs.1 crore, and Rs. 5 crore as at March 31, 2016 and April 1, 2015 respectively, increase in net profit by Rs. 3 crore for the year ended March 31,2016.

(d)    Tax adjustments

        Tax adjustments include deferred tax impact on account of difference between Previous GAAP and Ind AS. These adjustments have resulted in an increase in equity under Ind AS by Rs. 101 crore and Rs. 133 crore as at March 31, 2016, and April 1, 2015 respectively and decrease in net profit by Rs. 28 crore for the year ended March 31,2016.

(e)    Employee benefits

Under Previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of net defined benefit liability/asset which is recognised in other comprehensive income in the respective years. This difference has resulted in increase        in net profit of Rs.122 crore for the year ended March 31, 2016. However, the same does not result in difference in equity or total comprehensive income.