| 1. Corporate information
CMC Limited ("the Company" / "CMC") is engaged in the design,
development and implementation of software technologies and
applications, providing professional services in India and overseas,
and procurement, installation, commissioning, warranty and maintenance
of imported/indigenous computer and networking systems, and in
education and training.
The Company was a Government of India (GoI) enterprise up to 15
October, 2001. Under the disinvestment process, GoI sold 7,726,500
shares representing 51 percent of the share capital to Tata Sons
Limited, on 16 October, 2001. The GoI further sold its entire remaining
shares representing 26.25 percent of the share capital, in March 2004
by an open offer to the public.
On 29 March, 2004, as per specific approval granted by SEBI, Tata Sons
Limited transferred its entire shareholding in the Company to Tata
Consultancy Services Limited (a subsidiary of Tata Sons Limited). As a
result, the Company has become a subsidiary of Tata Consultancy
Services Limited.
During the current year, the Board of Directors of CMC and Tata
Consultancy Services Limited approved the amalgamation of CMC as a
going concern with TCS pursuant to and subject to the provisions of
Section 391 to 394 of the Companies Act, 1956 and/or the Companies Act,
2013. As per the terms of the Scheme of Amalgamation, shareholders of
CMC will receive 79 equity shares of Rs. 1 each of TCS for 100 equity
shares of Rs. 10 each of CMC.
The Scheme is subject to approval of High Court of Judicature at
Hyderabad for the state of Telangana and the state of Andhra Pradesh
and other related regulatory approvals.
2. Additional information to the financial statements 28.1 Contingent
liabilities and commitments
Particulars As at 31 March, 2015 As at 31 March, 2014
Rs./lacs Rs./lacs
A. Contingent liabilities
i Contingent liabilities
- Pending litigation
- Claims against the Company
not acknowledged as debts*
- Underlitigation 2,511.63 1,976.22
- Demand from income tax
authorities 44.36 586.34
- Disputed demands raised
by sales tax authorities 341.69 417.11
- Demands raised by service
tax authorities 10,558.75 6,173.03
- Disputed demand towards
land use conversion fee 2,025.00 2,025.00
- Others 572.04 572.04
ii Contingent liabilities - Others
Unexpired letters of credit 844.39 709.74
*No provision is considered necessary since the Company expects
favorable decisions. The advance paid against the above is Rs. 158.02
lacs (Previous year Rs. 141.81 lacs).
B. Commitments
Estimated amount of contracts
remaining to be executed on
tangible 2,871,51 5,143,11
assets (net of advances) and
not provided
3. Disclosures under Accounting Standards 29.1 Employee benefit plans
a. Defined contribution plans
The Company makes provident fund and superannuation fund contributions
to defined contribution retirement benefit plans for eligible
employees. Under the schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits. The
contributions as specified under the law are paid to the provident fund
set up as a trust by the Company. The Company is generally liable for
annual contributions and any deficiency in interest cost compared to
interest computed based on the rate of interest declared by the Central
Government under the Employees' Provident Fund Scheme, 1952 are
recognizes, if any, as an expense in the year it is determined.
As of 31 March, 2015, the fair value of the assets of the fund and the
accumulated members' corpus is Rs. 33,569.59 lacs and Rs. 30,179.64 lacs
respectively. In accordance with an actuarial valuation, there is no
deficiency in the interest cost as the present value of the expected
future earnings on the fund is greater than the expected amount to be
credited to the individual members based on the expected guaranteed
rate of interest of 8.75%. The actuarial assumptions include discount
rate of 8.00% and an average expected future period of 19.87 years.
The Company recognised Rs. 1,749.85 lacs (Previous year Rs. 1,570.71 lacs)
for provident fund contributions and Rs. 9.32 lacs (Previous year Rs. 8.99
lacs) for superannuation fund in the Statement of Profit and Loss. The
contribution payable to the plan by the Company is at the rate
specified in rules to the scheme.
b. Defined benefit plans i. Gratuity plan
The Company makes annual contribution to the Employee's Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for eligible employees. The scheme
provides for lump sum payment to vested employees at retirement, death
while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months subject to a maximum of Rs. 10
lacs. Vesting occurs upon completion of 5 years of service.
The present value of the defined benefit obligation and the related
current service cost were measured using the Projected Unit Credit
Method with actuarial valuations being carried out at each balance
sheet date.
ii Medical plan
The Medical plan liability arises on retirement of an employee. The
aforesaid liability for employees retired upto 31 March, 2010 is
calculated on the basis of fixed annual amount per employee (based on
the basic salary) for eligible employees. For employees retiring after
31 March, 2010, the Company has affected a Health Insurance plan for
coverage of Post Retirement Medical expenses. The liability on this
account has also been actuarially valued.
The most recent actuarial valuation of the present value of the defined
obligation was carried out on 31 March, 2015. The present value of the
defined obligation and the related current service cost and past
service cost, was measured using Projected Unit Credit Method.
3.1 Related party disclosures (a) List of related parties
i. Ultimate Holding Company
- Tata Sons Limited ii Holding Company
- Tata Consultancy Services Limited
iii. Subsidiary
- CMC Americas Inc., USA
iv. Step-down Subsidiary
- CMC eBiz, Inc. (wholly owned subsidiary of CMC Americas Inc.)
v. Fellow Subsidiaries
- Tata AIG General Insurance Company Limited
- Tata Consultancy Services, Netherlands BV
- Tata Consultancy Services Sverige AB
- Tata Business Support Services Limited (formerly E2E Serwiz
Solutions Limited)
- Infiniti Retail Limited
- Tata Consultancy Services, Asia Pacific Pte Limited
- Tata Housing Development Company Limited
- Tata Consultancy Services Deutschland Gmbh
- Tata International Limited
- Tata Realty and Infrastructure Limited
- Tata Value Homes Limited
- Tata Africa Holdings (Tanzania) Limited
- Tata Africa Services (Nigeria) Limited
- Tata Capital Forex Limited
- TCS Foundation
vi. Key Management Personnel
- Mr. R. Ramanan
3.2 Lease commitments
Obligations towards operating leases (As lessee)
The Company has entered into operating lease arrangements for certain
facilities and office premises. Rent expenses of Rs. 1,135.45 lacs
(Previous year Rs. 1,110.48 lacs) in respect of obligation under
non-cancellable operating leases have been recognised in the Statement
of Profit and Loss. Further a sum of Rs. 1,131.50 lacs (Previous year Rs.
1,045.86 lacs) has been charged to the Statement of Profit and Loss in
respect of cancellable operating leases.
4. During the financial year 2013-14, the Company had received a
favourable decision in a legal case against a customer which had
resulted in increase in profit before tax by Rs. 3,766.15 lacs for the
year ended 31 March, 2014. The increase was on account of increase in
income from operations and other income by Rs. 1,897.77 lacs and Rs. 594.19
lacs respectively, increase in purchase of stock in trade by Rs. 582.81
lacs and reduction in other expenses by Rs. 1,857.00 lacs.
5. The Company has revised its policy of providing depreciation on
fixed assets effective 1 April, 2014. Depreciation is now provided
based on the revised remaining useful life which has been revised based
on an evaluation. The carrying amount as on 1 April, 2014 is
depreciated over the revised remaining useful life. As a result of
these changes, the depreciation charge for the year ended 31 March,
2015 of Rs. 6,719.16 is higher by Rs. 3,756.87 lacs and the effect relating
to the period prior to 1 April, 2014 is Rs. 1,882.78 lacs (excluding
deferred tax credit of Rs. 639.96 lacs) which has been shown as an
'Exceptional Item' Accordingly, depreciation and amortisation expense
for the year ended 31 March, 2015 aggregates to Rs. 4,836.38 lacs.
6. Previous year's figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosures.
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