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Corporate Accounting Assignment on Share Capital

Tata Consultancy Services (TCS) is a global leader in IT services and consulting, with a vision to empower businesses through innovative solutions. The company has a straightforward equity share capital structure and recently executed a significant share buyback, enhancing shareholder value and financial metrics. TCS's management strategy focuses on long-term value creation while maintaining strong liquidity and operational efficiency.

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3 views11 pages

Corporate Accounting Assignment on Share Capital

Tata Consultancy Services (TCS) is a global leader in IT services and consulting, with a vision to empower businesses through innovative solutions. The company has a straightforward equity share capital structure and recently executed a significant share buyback, enhancing shareholder value and financial metrics. TCS's management strategy focuses on long-term value creation while maintaining strong liquidity and operational efficiency.

Uploaded by

mohdamin.sre786
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Hansraj College

University of Delhi
Assignmen
t
Name- Mohammad Amin
Course- B.Com (Honours)
Section- 1
Semester- 2
University Roll No.
24025504096
College Roll No. 245040048
Subject- Corporate Accounting
Tata Consultancy Services

Introduction:
Tata Consultancy Services (TCS) Limited is a globally
renowned leader in providing IT services, consulting,
and business solutions. With operations spanning
across 150 locations in over 46 countries, TCS has
established itself as a pioneer in the digital
transformation journey of some of the world’s largest
enterprises. As a part of the prestigious Tata Group, TCS
benefits from a rich legacy of trust, ethical business
practices, and a commitment to excellence.

Vision Statement:
“To be a global leader in providing innovative IT
solutions and services that empower businesses to
transform and thrive in a rapidly evolving digital
landscape.”
TCS's vision emphasizes its commitment to innovation,
technology leadership, and empowering businesses to
remain competitive and future-ready. The company
aims not just to serve customers, but to become a true
partner in their growth journeys.
Mission Statement:
“Our mission is to help customers achieve their
business objectives by providing innovative, best-in-
class consulting, IT solutions, and services. We aim to
make it a joy for all stakeholders to work with us.”
TCS's mission reflects its dedication to customer-
centricity, operational excellence, and creating value
for a diverse group of stakeholders including clients,
employees, shareholders, and society at large. By
aligning business goals with sustainable practices, TCS
strives to make a positive impact globally.

Products and Services:


TCS offers a wide range of services including consulting,
software development, IT infrastructure management,
enterprise solutions, cloud services, cybersecurity, and
emerging technology adoption like AI, Blockchain, and
IoT (Internet of Things). The company serves key
sectors like Banking and Financial Services, Retail,
Telecom, Manufacturing, and Healthcare.
Management (Board of Directors):

Natarajan Chandrasekaran – Chairman (also


Chairman of Tata Sons)
Rajesh Gopinathan – CEO & Managing Director (till
June 2023)
K. Krithivasan – CEO & Managing Director (from June
2023 onwards)
Hanne Birgitte Sorensen – Independent Director
Dr. Pradeep Kumar Khosla – Independent Director
Don Callahan – Independent Director
Dr. Ashok Sinha – Independent Director

TCS is managed by a highly


professional board combining
extensive industry experience and a
deep understanding of global
markets.
Competitors
TCS operates in a highly competitive global IT services
industry. In the domestic market, it faces stiff
competition from major Indian IT firms such as
Infosys, Wipro, HCL Technologies, and Tech
Mahindra, who also offer a broad range of IT
consulting and digital transformation services. On the
international front, TCS competes with Accenture,
IBM, Capgemini, Cognizant, and other multinational
technology companies that have a significant presence
in North America, Europe, and Asia-Pacific regions.
These competitors continuously challenge TCS across
service lines like cloud computing, artificial
intelligence, enterprise solutions, cybersecurity, and
data analytics. However, TCS distinguishes itself by
maintaining a reputation for quality service delivery,
long-term client relationships, strong brand equity,
large-scale digital capabilities, and its consulting-led
integrated IT approach. Its consistent investments in
innovation, research, and talent development have
helped it sustain a leadership position in an otherwise
fiercely contested marketplace.
Analysis of Share Capital and changes
within

Share Capital of Company


As per the Annual Report for FY 2023-24:
 Type of Share Capital:
TCS has issued only equity shares with a face value of ₹1
per share. The company has a very straightforward
capital structure that avoids complexities like multiple
share classes or hybrid instruments.
 Details of Equity Share Capital:
o Total Outstanding Equity Shares (March 31, 2024):
3,62,90,51,373 shares
o Total Paid-Up Share Capital: ₹362.91 crore
 Bonus Issues:
TCS last announced a 1:1 bonus issue in June 2018,
offering one additional share for each existing share
held. This move reflected the company’s consistent
strong financial performance and robust reserves.
 Rights Issues:
No rights issues were announced in the recent financial
years. TCS predominantly uses internal accruals to fund
its expansion and investments.
 Preference Shares:
The company has not issued any preference shares,
making its capital structure clean and easy to
understand.
 Thus, TCS maintains a conservative and stable equity-
based funding strategy focused on long-term value
creation.

The image given below shows changes in share capital to a


certain level.
Changes in Share Capital:
In FY 2023-24, TCS carried out a significant share buyback:
 Buyback Announcement Date: October 11, 2023
 Number of Shares Bought Back: 4,09,63,855 equity
shares
 Buyback Price: ₹4,150 per share
 Total Outlay: ₹17,000 crore
 Post-Buyback Impact: Approximately 1.12% reduction in
total paid-up equity capital.
By extinguishing a portion of the outstanding equity shares,
TCS effectively reduced its share capital, slightly increasing
each shareholder's ownership percentage.

Changes in Reserves and Surplus:


 The buyback was funded through accumulated free
reserves and securities premium accounts.
 A Capital Redemption Reserve of ₹4 crore was created
(equivalent to the nominal value of the extinguished
shares).
 The remaining ₹16,996 crore (buyback premium) was
adjusted from retained earnings and general reserves.
Despite the buyback expenditure, TCS’s reserves remained
very strong, showcasing the company's resilient business
model and consistent cash generation ability.
Impact on the Company:
 Increased Earnings Per Share (EPS): Fewer outstanding
shares mean higher earnings per share, enhancing
shareholder value.
 Strengthened Financial Ratios: Metrics like Return on
Equity (ROE) and Book Value per Share improved post-
buyback.
 Affirmed Management Confidence: Undertaking a
buyback of such magnitude reflects the management's
confidence in the company's long-term prospects and its
commitment to rewarding shareholders.
 Liquidity Management: Even after a ₹17,000 crore
outflow, TCS maintains healthy liquidity for future
investments, dividend distributions, and operational
needs.

An increase in EPS can be seen in image below


Overall, TCS’s share capital management
strategy reflects a balanced approach towards
shareholder wealth maximization while
maintaining financial prudence.

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