Significant Accounting Policies

a) Basis of consolidation
The consolidated financial statements relate to the Company, its subsidiary companies and joint venture. The Company, its subsidiaries and joint venture constitute the Group.

b) Basis of accounting
The financial statements are brpared under the historical cost convention, in accordance with Indian Generally Accepted Accounting Principles (GAAP). GAAP comprises the mandatory accounting standards notified under the Companies (Accounting Standards Rules, 2006). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements of the subsidiary companies and joint venture used in the consolidation are drawn up to the same reporting date as of the Company.

c) Principles of consolidation
The consolidated financial statements have been brpared on the following basis-
a) The consolidated financial statements are brpared in accordance with the principles and procedures required for the brparation and brsentation of consolidated financial statements as laid down under the Accounting Standard on Consolidated Financial Statements issued under Companies (Accounting Standards) Rules, 2006.
b) The financial statements of the Company and its subsidiary companies have been combined on a line by line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealized profits or losses have been fully eliminated. The consolidated financial statements are brpared by applying uniform accounting policies in use at the Group.
c) The excess of cost to the Company of its investments in the subsidiary companies over its share of equity of the subsidiary companies, at the dates on which the investments in the subsidiary companies are made, is recognized as ‘Goodwill’ being an asset in the consolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on the date of investment is in excess of cost of investment of the Company, it is recognized as ‘Capital Reserve’ and shown under the head ‘Reserves and Surplus’; in the consolidated financial statements.
d) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investments as stated above.
e) For the purpose of consolidation, the financial statements of foreign subsidiaries have been translated into its immediate parent companies currency and the same has been on the following basis:
- All income and expenses items are converted at the average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the balance sheet date. The resulting exchange differences on account of translation at the year end are transferred to translation reserve.
f) The financial statements of the joint venture company has been combined by using proportionate
consolidation method and accordingly, venturer’s share of each of the assets, liabilities, income and
expenses of jointly controlled entity is reported as separate line item in the consolidated financial
statements.

d) Subsidiary and joint venture Companies considered in the consolidated financial statements:
The following subsidiary companies are considered in the consolidated financial statements

Sr. No	Name of the Subsidiary Company	Country of Incorporation	% of holding either directly or through subsidiary as at
			31-Mar-13	31-Mar-12
	Direct Subsidiary
1	TATA Technologies Pte. Ltd.	Singapore	100	100
	Indirect Subsidiaries
2	Tata Technologies (Thailand) Limited	Thailand	100	100
3	INCAT International Plc.	UK	100	100
4	Tata Technologies Europe Limited	UK	100	100
5	INCAT GmbH	Germany	100	100
6	Tata Technologies Inc. **	USA	99.24	99.24
7	Tata Technologies (Canada) Inc. **	Canada	99.24	99.24
8	Tata Technologies de Mexico, S.A. de C.V **	Mexico	99.24	99.24

** For these subsidiaries though the holding is 99.24 %, the indirect voting power is 100%.

e) The following joint venture company is considered in the consolidated financial statements:

Sr. no	Name of the Joint Venture Company	Country of Incorporation	% of holding either directly or through subsidiary as at
			31-Mar-13	31-Mar-12
1	TATA HAL Technologies Limited	India	50	50

f) Conversion into Indian Rupees
For the purpose of consolidation, the financial statements of foreign subsidiaries have been translated into its immediate parent companies currency and the same has been on the following basis:
All income and expenses items are converted at the average rate of exchange applicable for the period. All assets and liabilities are translated at the closing rate as on the balance sheet date. The resulting exchange differences on account of translation at the period end are transferred to translation reserve. All assets and liabilities are translated at the closing rate as on the balance sheet date. The resulting exchange differences on account of translation at the period end are transferred to translation reserve.
g) Use of Estimates

The brparation of the financial statements in conformity with GAAP requires the management of the Company (Management) to make estimates and assumptions that affect the reported amounts of revenue and expenses during the year and balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements. Provisions are made for all known losses and liabilities, future unforeseeable factors that may affect the profit on fixed price service contracts and also towards likely expenses for providing post-sales client support on such contracts.

h) Revenue recognition
Revenue from services on time and materials contracts is recognized when services are rendered and related costs are incurred i.e. based on certification of time sheets and billed to clients as per the terms of specific contracts. In case of fixed price contracts, revenue is recognized over the life of the contract based on milestones achieved as specified in the contracts or by proportionate completion method on the basis of the work completed. Foreseeable losses on such contracts are recognized when probable.
Revenue from rendering Annual Maintenance Services (SAP-ERP) is recognized proportionately over the period in which services are rendered.
Revenue from third party software products and hardware sale is recognized upon delivery.
Income from interest and rent is recognized on time proportion basis.
Dividend from investments is recognized when the right to receive the payment is established and when no significant uncertainty as to measurability or collectability exists.
Commission Income on sale of PLM products is recognized upon delivery of products by the vendor to the end user.

i) Fixed assets
Tangible assets are stated at cost, less accumulated debrciation. Costs include all expenses incurred to bring the assets to its brsent location and condition. Direct costs are capitalized till the assets are ready for use and include financing costs relating to any borrowing attributable to the acquisition of qualifying fixed assets. Capital work in progress and Intangible assets in progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
Software not exceeding Rs. 25,000 is charged off to the Statement of Profit & Loss.

j) Debrciation/Amortisation
Debrciation/Amortisation is provided on Straight Line Method (SLM) over the estimated useful lives of the assets. Estimated useful lives of assets are as follows:

Type of Asset	Debrciation Percentage
Leasehold Land	Lease Period
Leasehold Improvements	Lease Period
Buildings	4% to 6.67%
Plant and Machinery	4.75% to 20%
Computer Equipments	25% to 50%
Vehicles	9.5% to 33.33%
Software Licenses	License Period 25% to 50%

Debrciation/Amortisation on additions to Fixed Assets is provided from the month of acquisition of the Asset. Debrciation/Amortisation on Assets sold / scraped during the period is provided for prior to the month of sale / scrap as the case may be.
The Company charges 100% debrciation/amortisation on assets individually costing less than Rs. 5,000 in the year of purchase.

k) Leases
Assets leased by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such lease are capitalised at the inception of the lease at lower of the fair value or the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor, are recognized as operating lease. Lease payments under operating leases are recognized in the Statement of Profit & Loss on a straight line basis.

l) Foreign Currency transactions and translations of foreign operations
Income and expenses in foreign currencies are recorded at the exchange rates brvailing on the date of the transaction.
Monetary current assets and current liabilities that are denominated in foreign currency translated at the exchange rates brvalent as at the Balance Sheet date and the profit / loss so determined and also the realized exchange gains / losses are recognized in the Statement of Profit & Loss.
All foreign operations have been identified as non-integral to the operations of the Company. The translations of functional currency into reporting currency is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for the revenue and expense accounts using appropriate average exchange rates for the respective periods. The gains or losses resulting from such translations are accumulated in a foreign currency translation reserve.
Premium or discount on forward contracts is amortised over the life of such contract and is recognized as income or expense in the Statement of Profit & Loss.

m) Investments
Investments are classified into current investments and long term investments.
Current investments are carried at lower of cost and market value. Any reduction in carrying amount and reversals of such reductions are charged or credited to the Statement of Profit and Loss.
Long term investments are stated at cost less provision for diminution in the value of such investments. Diminution in value is provided for where the management is of the opinion that the diminution is other than temporary in nature.

n) Impairment of Assets
At each balance sheet date, the Company reviews using internal resources the carrying amounts of its fixed assets to determine whether there is any indication that the assets suffered an impairment loss. If any such condition exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows expected from continuing use of the asset and from its disposal are discounted to their brsent value using a br tax rate that reflects the current market assessments of time value of money and the risks specific to the asset.

Reversal of impairment loss is recognized immediately as income in the Statement of Profit & Loss.

o) Inventories
Inventories are valued at lower of cost or net realizable value. Cost is ascertained on a moving weighted average basis.

p) Employee Benefits
(i) Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company makes annual contributions to gratuity fund established as trust. The Company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation as on the Balance Sheet date.
(ii) Superannuation
The Company has two superannuation plans, a defined benefit plan and a defined contribution plan. An eligible employee on April 1, 1996 could elect to be member of either plan.
Employees who are the members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn. The monthly pension benefits after retirement range from 0.75% to 2% of the annual basic salary for each year of service. The Company and the said subsidiaries account for superannuation benefits payable in future under the plan based on an estimated basis for the period end and on the independent actuarial valuation at the year end.
With effect from April 1, 2003, this plan was amended and benefits earned by covered employees have been protected as at March 31, 2003. Employees covered by this plan are prospectively entitled to benefits computed on a basis that ensures that the annual cost of providing the pension benefits would not exceed 15% of salary.
The Company maintains separate irrevocable trusts for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees’ salary to the trust every year. Such contributions are recognized as an expense when incurred. The Company has no further obligation beyond this contribution.
(iii) Bhavishya Kalyan Yojana (BKY)
Bhavishya Kalyan Yojana is an unfunded defined benefit plan. The benefits of the plan accrue to an eligible employee at the time of death or permanent disablement, while in service, either as a result of an injury or as certified by the appropriate authority. The monthly payment to dependents of the deceased /disabled employee under the plan equals 50% of the salary drawn at the time of death or accident or a specified amount, whichever is higher. The Company accounts for the liability for BKY benefits payable in future based on an independent actuarial valuation as on the Balance Sheet date.
(iv) Post-retirement Medicare Scheme
Under this Scheme employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. The Company account for the liability for post-retirement medical scheme based on an independent actuarial valuation as on the Balance Sheet date.
(v) Provident Fund
The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employees’ salary (currently 12% of employees’ salary). The provident fund contributions, as specified under the law, are paid to the provident fund set up as irrevocable trust by the Company and pension amount is paid to Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension Scheme. The contributions paid during the year are charged to Statement of Profit & Loss.
(vi) Compensated absences
The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation as on the Balance Sheet date. The subsidiaries of the company have no defined benefit schemes and the information mentioned above is with respect to Tata Technologies Limited on a standalone basis only.

q) Taxation
Current income tax expense comprises taxes on income from operations in India and foreign tax jurisdictions. Income tax payable in India is determined in accordance with the provisions of Income Tax Act, 1961. Tax expense relating to overseas operations is determined in accordance with tax laws applicable in countries where such operations are domiciled.
Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax assets in respect of unabsorbed debrciation and carry forward of losses are recognized to the extent that there is virtual certainty that taxable income will be available to realize these assets. All other deferred tax assets are recognized to the extent that there is reasonable certainty that future taxable income will be available to realize these assets.

r) Employee Stock Options
In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by Securities and Exchange Board of India (SEBI), the Company introduced Employee Stock Option Plan 2001 (TTESOP 2001) in 2000-01. As per the Plan, the options were granted at fair value as determined by an independent valuer as on the date of the grant and hence no compensation cost has been recognized.

s) Earnings per share
The earnings considered in ascertaining the Company's earnings per share comprise the net profit after tax and include the post-tax effect of any extra-ordinary items. The number of shares used in computing basic earnings per share, is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the shares considered for deriving basic earnings per share and also number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

t) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. Borrowing costs are capitalized as part of the cost of a qualifying asset when it is probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognized as an expense in the year in which they are incurred

u) Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has brsent obligation as a result of past event and its probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. The provisions (excluding retirement benefits) are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current best estimates. Contingent liabilities are not recognized in the financial statements. A contingent asset is neither recognized nor disclosed in the financial statements.

v) Change in functional Currency of the Subsidiary Company (Tata Technologies Pte. Limited)
During the current financial year, Tata Technologies Pte Limited, Singapore has changed its functional currency from Singapore Dollars (SGD) to United State Dollars (USD) with the view that the change in functional currency from SGD to USD will reflect the business operations of the Subsidiary Company more effectively.
In line with the change in functional currency, comparatives have been rebrsented. All monetary assets and liabilities, were translated to USD using the exchange rate as at April 1, 2012, profit and loss account at brvious year average rate and non-monetary assets and liabilities and equity at historical rates. The resultant exchange differences are recognised and adjusted against opening reserves.

Defined contribution plans :

The Company’s contribution to defined contribution plan aggregated Rs. 19.26 crore (2011-12 Rs. 16.05 crore) for the year ended March 31, 2013 has been recognised in the Statement of Profit and Loss.

Other benefits relating to the subsidiaries / JVs :

Compensated Absences and Gratuity - charged to Statement of Profit & Loss during the year - Rs. 0.26 crore (2011-12 Rs. -0.13 crore) liabilities outstanding as at the year end - Rs. 3.18 crore (2011-12 Rs. 2.89 crore)

Notes:

(a) The expected rate of return on plan assets is based on market expectation, at the beginning of the year, for returns over the entire life of the related obligation.

(b) The assumption of future salary increases, considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(c) Also refer note 2(p) for brief description of employee benefit schemes.

Company Overview
"TATA Technologies Limited ("TTL or the Company") was incorporated on August 22, 1994 as a Private Limited Company in the name of Core Software Systems Private Limited. The name of the Company was subsequently changed to Tata Technologies (India) Limited. On February 8, 2001, the Company changed its name from Tata Technologies (India) Limited to Tata Technologies Limited. The Company’s range of services includes IT Consultancy, SAP implementation and maintenance, providing networking solutions, CAD/CAM engineering & design consultancy. The Company is headquartered in Pune, India. The Company has five branches located at Mumbai, Lucknow, Jamshedpur, Bangalore, and Chennai that enables it to provide high quality, cost-effective services to clients.
During October 2005, the Company incorporated a wholly owned subsidiary in Thailand to cater the need of automotive companies in Thailand and South East Asian countries. Also during October 2005 the Company acquired, through its subsidiary, 100% equity of INCAT International Plc., UK which had various subsidiaries in US, Europe, Japan and Singapore. A reorganization of various entities under INCAT was undertaken, to have a single rebrsentative legal entity in each country in which the Company operates, to improve operational efficiency. The Company now has a global brsence, through its subsidiaries, in US, UK, Germany, Mexico, Canada, Singapore, South Korea, Netherlands and Thailand.
In December, 2005, the Company acquired 100% stake in Tata Technologies Pte Ltd. a Singapore based Company. In October 2006, the Company sold its 100% equity stake in Tata Technologies (Thailand) Ltd. to its wholly owned subsidiary viz. Tata Technologies Pte Ltd., Singapore at a value determined by an independent valuer. The Company provides Engineering and Design services (E&D) and Product Lifecycle Management (PLM) products and services, primarily to manufacturers and their suppliers in the international automotive, aerospace and engineering markets. The offshore capabilities of the Company in the field of engineering automation services combined with the high-end onshore strengths of subsidiaries are expected to offer a strong and seamless onshore/offshore delivery capability to the international customers in the automotive, aerospace and engineering industries.

Segment Reporting

Primary Segment

Segment Reporting is made on the basis of geographical location of the customer.

(Amount in Rs. Crore)

	India	UK	USA	Rest of Europe	Rest of the World	Total
Revenues	557.63	680.46	576.55	146.33	34.03	1,995.00
	489.21	457.22	549.24	127.96	18.98	1,642.61
Identifiable operating expenses	346.54	464.91	497.46	116.30	18.52	1,443.73
	307.47	311.67	488.29	100.34	12.44	1,220.21
Allocated expenses	19.35	47.58	6.25	27.38	5.49	106.05
	14.39	41.75	4.68	23.55	1.57	85.94
Segmental operating income	191.74	167.97	72.84	2.65	10.03	445.23
	167.35	103.80	56.27	4.07	4.97	336.46
Unallocable expenses						92.37
						88.74
Other Income						39.57
						24.11
Net profit before taxes						392.43
						271.83
Income taxes						91.70
						63.46
Net profit after taxes						300.73
						208.37

Fixed assets used in the Company's business or liabilities contracted have not been identified to any of the reported segments, as fixed assets and services are used interchangeably between reported segment.

Secondary Segment

The complete operations of the Company have been treated as single segment "Information technology services".