Summer internship Report on

“Ratio analysis on tata consultancy services”

Prepared by
Tanaya bhavsar
Enrolment no-BBA22692
BBA Batch 2022-25

Under the Guidance of

PROF. A. GRACE JEMIMA

ACADEMIC YEAR

2024-2025

SUBMITTED TO

Shree Chanakya Education Society’s Indira Institute of Management-BBA, Pune Affiliated To An

Autonomous Institute affiliated to SPPU
 DECLARATION

I Ms. Tanaya Sagar Bhavsar hereby declare that this project is the record of authentic

work carried out by me during the academic year 2022-2025. This project is plagiarism

free and has not been submitted to any other University or Institute towards the award

of any degree.

Signature of the student

(TANAYA SAGAR BHAVSAR)

(Roll No – A54)
(BBA-BFS) (Batch
2022-2025)
1
COMPANY CERTIFICATE

0
 ACKNOWLEDGEMENT

I am very happy to express my deep sense of gratitude to all those who guided and supported
me throughout the course of this project.

It gives me immense pleasure to express my sincere and profound gratitude to the team at
Tata Consultancy Services, for their inspiring guidance, unwavering kindness, constant
encouragement, and constructive feedback during the course of my summer internship and
the preparation of this report.

I am also overjoyed to acknowledge my sincere thanks to my faculty guide, Prof. A. Grace

Jemima of Indira Institute of Management, Pune, for providing invaluable guidance
throughout my project. Without her help, this project would have been incomplete.

Lastly, I extend my heartfelt thanks to my colleagues at Tata Consultancy Services for their
continuous support and encouragement, as well as to all those who contributed directly or
indirectly in the preparation of this report.

Thank you

Tanaya Sagar Bhavsar

Signature of the student

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 TABLE OF CONTENT

CHAPTER No. CONTENT PAGE No.

List of Tables 1
List of Chart 2
Executive Summary 3
I Introduction to the Study 5-9
II Introduction of the company 10-17
III Research Methodology 18-27
IV Data Analysis and Interpretation 28-34
V Finding and Suggestions 35-37
VI Conclusion 38-40
Bibliography 41
Annexure 2-44

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 List of graphs

Table no. Title of graph Page no.

4.1 Graph showing current ratio 29

4.2 Graph showing quick ratio 30

4.3 Graph showing working capital ratio 32

4.5 Graph showing total assets turnover ratio 33

Table showing comparison between all the ratios

4.6 34

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 List of Graphs

Chart no. Topic Page no.

4.1 Graph showing current ratio 29

4.2 Graph showing quick ratio 30

4.3 Graph showing working capital ratio 31

4.4 Graph showing debt to equity ratio 32

4.5 Graph showing total assets turnover 33

ratio

4.6 Table showing comparison between all 34

the ratios

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EXECUTIVE SUMMARY

This report presents a detailed ratio analysis of Tata Consultancy Services (TCS), a global
leader in IT services, consulting, and business solutions. The analysis covers key financial
ratios over the past few years to evaluate the company’s financial health, operational
efficiency, profitability, liquidity, and long-term solvency.

Profitability Ratios:

TCS has demonstrated strong profitability, evident from its consistent rise in Net Profit
Margin and Return on Equity (ROE). The Net Profit Margin remains robust, reflecting the
company's ability to manage costs while maintaining a high level of operational efficiency.
The ROE highlights how effectively TCS utilizes shareholders' equity to generate profits.

Liquidity Ratios:

TCS maintains a healthy liquidity position as shown by its Current Ratio and Quick Ratio,
indicating that the company can comfortably meet its short-term liabilities. The company’s
conservative approach toward managing working capital ensures financial stability.

Efficiency Ratios:

The analysis of Asset Turnover and Receivables Turnover ratios shows TCS's efficient use of
its assets and effective management of accounts receivable. The stable asset turnover
indicates the company’s ability to generate revenue through the effective utilization of its
assets.

Leverage Ratios:

TCS has a low reliance on debt, as highlighted by its favourable

Debt-to-Equity Ratio. This conservative capital structure mitigates financial risk,

safeguarding the company against potential market downturns. The company’s interest
coverage ratio is high, indicating its ability to easily cover interest expenses from operating
earnings.

leverage and efficient asset management further bolster its reputation as a reliable and
financially healthy organization in the global IT sector.

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 Chapter I

INTRODUCTION TO THE STUDY

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 Chapter I

Introduction of the study

The financial performance of any business plays a crucial role in determining its
sustainability, growth potential, and overall market competitiveness. In today’s rapidly
evolving economic environment, stakeholders—ranging from management teams to
investors, lenders, and regulators—require a clear and accurate understanding of a company’s
financial health to make informed decisions. One of the most effective methods for gaining
these insights is through ratio analysis, a key aspect of financial analysis.

Ratio analysis involves the use of numerical values from financial statements to evaluate
various aspects of a company’s performance. It provides a way to quantify relationships
between different financial metrics, helping to paint a clear picture of a company’s
operational efficiency, profitability, liquidity, solvency, and market valuation. Whether used
to assess short-term financial obligations, gauge return on equity, or measure how efficiently
assets are utilized, ratio analysis delivers deep insights into the company’s financial standing.

In the context of Tata Consultancy Services (TCS)—a global leader in IT services,

consulting, and business solutions—ratio analysis holds particular importance. As a publicly
traded company in a highly competitive sector, TCS operates in an industry that demands
constant innovation, cost control, and robust financial performance. The ability to
consistently analyse its financial ratios provides TCS with valuable insights into its
operational strengths and weaknesses, while also enabling it to compare its financial
performance with industry benchmarks and global competitors like Infosys, Wipro, and
Cognizant.

Importance of Ratio Analysis

Ratio analysis is important for a company because it provides a clear and quantitative way to
understand a company's financial health and performance. It can help with a variety of tasks

Investor and Stakeholder Confidence:

Investors rely on ratio analysis to assess the financial risk associated with their investments.
Ratios such as the Price-to-Earnings (P/E) ratio or Return on Equity (ROE) allow investors to
evaluate whether a company is generating enough returns for its shareholders. A healthy set

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of ratios signals strong financial management, providing confidence to existing and potential
shareholders.

Comparative Analysis:

For large companies like TCS, maintaining a competitive edge in the global market is
critical. Ratio analysis allows for direct comparison with peers within the same industry. For
example, comparing the operating profit margin of TCS with competitors helps investors
determine which company is better at controlling operational costs relative to revenue.
Similarly, efficiency ratios like asset turnover can highlight whether TCS is utilizing its
resources more effectively compared to competitors.

Monitoring Financial Health and Stability:

Financial ratios, particularly solvency ratios such as the debt-to-equity ratio, are critical in
determining the long-term sustainability of the company. TCS, like any major corporation,
must carefully manage its capital structure to balance debt and equity financing. Ratio
analysis helps in assessing the level of financial risk and the company’s ability to survive
economic downturns or industry slowdowns.

Trend Identification and Forecasting:

Analysing trends in TCS’s ratios over multiple financial periods helps identify patterns that
can inform future financial strategies. For example, if the return on assets has steadily
declined over the years, it may indicate that TCS is not utilizing its assets effectively,
prompting an operational review. On the other hand, consistent improvement in ratios like the
net profit margin can highlight successful cost control initiatives and increasing profitability.

Regulatory and Compliance Aspects:

Regulatory authorities may use ratio analysis to evaluate whether a company like TCS is
adhering to financial guidelines and maintaining fiscal prudence. High levels of debt, for
instance, could raise red flags for regulatory bodies concerned with systemic risks in the
economy. Ratio analysis, therefore, also plays a role in ensuring that companies comply with
industry-specific regulations and standards.

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Impact of External Factors

Financial ratios don’t exist in a vacuum—they are influenced by a variety of external factors,
including:

 Economic Conditions: Inflation, interest rates, and overall economic health affect a
company's financial ratios. For instance, rising interest rates can negatively impact a
company's Interest Coverage Ratio, making debt more expensive to service.

 Market Fluctuations: Currency fluctuations and commodity prices (such as oil prices)
can have a direct impact on costs and revenues, altering profitability ratios like the
Gross Profit Margin.

 Regulatory Environment: Changes in government policies, tax laws, and

environmental regulations can increase costs and affect profitability, solvency, and
liquidity ratios.

 Industry Trends: A company’s financial performance may also be impacted by

technological shifts, competition, or consumer demand within its industry. For
example, TCS’s financial ratios could be influenced by the global demand for IT
services and the rise of AI and automation.

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Technological Integration in Financial Analysis

Modern financial analysis tools and technologies have significantly enhanced the process of
ratio analysis by making it more efficient, accurate, and actionable:

 Automation and Real-Time Analysis: Advanced software solutions like SAP, Oracle
Financials, and specialized financial analytics tools enable real-time tracking of
financial ratios. This gives management and stakeholders immediate insights without
waiting for quarterly or annual reports.

 Predictive Analytics: Using machine learning and AI, companies can now predict
future trends in their financial ratios based on historical data, market conditions, and
other inputs, enabling proactive decision-making.

 Dashboards and Data Visualization: Technology now allows for easy-to-understand

dashboards that visualize key financial ratios, making it simpler for both financial
experts and non-financial stakeholders to grasp a company’s performance quickly.

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 Chapter II

INTRODUCTION OF THE COMPANY

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 Chapter II

Introduction of the company

Transforming businesses through technology.

Building greater futures through innovation and collective knowledge

Tata Consultancy Services is an IT services, consulting and business solutions organization

that has been partnering with many of the world’s largest businesses for the past 50 years. We
believe innovation and collective knowledge can transform all our futures with greater
purpose.
TCS started its journey with a simple task—providing punched card services to clients—but
quickly evolved into a technology leader by entering the field of software development and
IT consulting. By the 1980s, TCS had already established itself as a prominent player in the
global IT services industry, expanding its footprint across various geographies, including the
U.S., Europe, and Asia.
As part of the Tata Group, one of India's most respected and diversified business
conglomerates, TCS benefited from the Group’s reputation for excellence, ethical conduct,
and commitment to innovation. It was one of the earliest Indian companies to enter
international markets, setting up offices in the United States, Canada, and Europe as early as
the 1970s and 1980s. TCS also played a pivotal role in helping India become a global IT
outsourcing hub.
The company went public in 2004 with an IPO, further cementing its place as a major force
in the global IT sector. Over the years, TCS has diversified its service offerings to include a
wide range of IT and business consulting services such as artificial intelligence (AI), cloud
computing, cybersecurity, and enterprise resource planning (ERP) solutions.
Today, TCS operates in over 50 countries, with a workforce of more than 600,000 employees,
making it one of the largest employers in the private sector. Its clientele includes some of the
world's most influential companies, spanning multiple industries such as banking, retail,
healthcare, and telecommunications. TCS continues to play a crucial role in shaping the

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digital transformation journeys of its clients, making it a key player in the global technology
landscape.

To be the most reliable global network for customers and suppliers, that delivers value
through products and services. To be a responsible value creator for all our stakeholders.

Values

Pioneering

We will be bold and agile, courageously taking on challenges, using deep customer insight to
develop innovative solutions.

Integrity

We will be fair, honest, transparent and ethical in our conduct; everything we do must stand
the test of public scrutiny.

Excellence

We will be passionate about achieving the highest standards of quality, always promoting
meritocracy.

Unity

We will invest in our people and partners, enable continuous learning, and build caring and
collaborative relationships based on trust and mutual respect.

Responsibility

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We will integrate environmental and social principles in our businesses, ensuring that what
comes from the people goes back to the people many times over.

The company's management is composed of experienced professionals from diverse fields,

bringing deep expertise to the table and ensuring TCS stays at the forefront of innovation and
operational excellence.

1. Rajesh Gopinathan – Chief Executive Officer (CEO) and Managing Director

Rajesh Gopinathan has been the CEO and Managing Director of TCS since 2017. Under his
leadership, TCS has strengthened its position as a global leader in digital services and
consulting.

2. N. Ganapathy Subramaniam – Chief Operating Officer (COO)

N. Ganapathy Subramaniam, often referred to as NGS, serves as the COO of TCS and is also
an Executive Director.

3. Samir Seksaria – Chief Financial Officer (CFO)

Samir Seksaria is the CFO of TCS, responsible for overseeing the company’s financial
operations and guiding its long-term financial strategies.

4. Milind Lakkad – Chief Human Resources Officer (CHRO)

Milind Lakkad, the CHRO of TCS, is responsible for managing the company’s vast
workforce of over 600,000 employees.

5. K. Krithivasan – President, Banking, Financial Services & Insurance (BFSI)

K. Krithivasan oversees TCS’s largest business unit, the Banking, Financial Services, and
Insurance (BFSI) vertical.

Governance Structure

TCS follows a strong corporate governance framework aligned with global best practices.
The Board of Directors, composed of both executive and non-executive members, provides
strategic direction and oversight. The leadership's focus on ethical conduct, sustainability, and
operational excellence drives the company toward continued growth.

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1. TCS BaNCS

TCS BaNCS is a comprehensive suite of products designed for the banking, financial
services, and insurance (BFSI) sectors. It provides a wide range of functionalities covering
core banking, securities trading, treasury, and wealth management.

2. TCS MasterCraft

TCS Mastercraft is a suite of intelligent automation tools designed to enhance enterprise IT

efficiency.

3. TCS iON

TCS iON is a cloud-based solution aimed at small and medium-sized businesses (SMBs) as
well as educational institutions. It offers ERP-like capabilities, tailored specifically for
businesses and institutions to manage their day-to-day operations, human resources, learning
platforms, and assessments.

4. TCS Ignio

Ignio is TCS’s flagship AI and machine learning platform designed to bring cognitive
automation to enterprises.

5. TCS ADD (Advanced Drug Development)

TCS ADD is a product suite designed specifically for the life sciences industry. It streamlines
clinical trials, regulatory compliance, and drug development processes using digital
technologies like AI, cloud computing, and advanced analytics.

6. TCS HOBS (Hosted OSS/BSS)

TCS HOBS is a platform designed for the telecommunications industry to manage operations
support systems (OSS) and business support systems (BSS).

7. TCS Quartz (Blockchain Solutions)

TCS Quartz is a suite of blockchain-based products aimed at facilitating secure and efficient
business processes across industries like financial services, supply chain management, and
healthcare.

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8. TCS Optumera

TCS Optumera is a retail optimization suite that uses artificial intelligence and machine
learning to enhance retail operations, particularly in areas like inventory management,
pricing, and merchandising.

1. Business Segments by Industry

TCS divides its business across several key industry verticals, each contributing significantly
to its revenue and profitability.

a) Banking, Financial Services, and Insurance (BFSI)

BFSI is the largest business segment for TCS, accounting for around 30-40% of its total
revenue. TCS provides a range of services in this segment, including core banking, insurance
solutions, wealth management, risk management, and regulatory compliance solutions. BFSI
remains the most profitable segment due to long-term contracts and its crucial role in digital
transformation within financial institutions.

 Revenue Contribution: 30-40%

 Profitability: High due to recurring revenue from long-term contracts and mission-
critical services.

b) Retail and Consumer Packaged Goods (CPG)

Retail and CPG is another important segment, where TCS offers services like supply chain
management, inventory optimization, digital customer engagement, and e-commerce
solutions. Retailers are increasingly leveraging TCS’s AI-driven products like TCS Optumera
to enhance customer experience and streamline operations.

 Revenue Contribution: 15-18%

 Profitability: Moderate, with increasing demand for digital transformation in e-

commerce and customer experience solutions.

c) Manufacturing

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TCS serves global manufacturing clients with services ranging from product lifecycle
management (PLM) to supply chain optimization and Industry 4.0 solutions. TCS's digital
twin platform, TCS TwinX, is popular in this segment for real-time asset monitoring and
predictive maintenance.

 Revenue Contribution: 10-12%

 Profitability: Moderate, driven by ongoing digital transformation projects and demand

for automation in the manufacturing sector.

d) Telecommunications, Media, and Technology (TMT)

In the telecom and media sector, TCS helps clients with network management, 5G
implementations, digital customer engagement, and automation. TCS’s HOBS (Hosted
OSS/BSS) platform plays a key role in this segment by helping telecom operators optimize
their operations.

 Revenue Contribution: 10-12%

 Profitability: High, due to large-scale digital infrastructure and 5G rollouts.

e) Life Sciences and Healthcare

TCS’s ADD (Advanced Drug Development) suite helps pharmaceutical and life sciences
companies manage clinical trials, drug development, and regulatory compliance. This
segment is witnessing rapid growth due to the increasing adoption of digital solutions for
healthcare.

 Revenue Contribution: 8-10%

 Profitability: High, driven by demand for digital health solutions and cloud-based
services for clinical trials.

f) Energy, Resources, and Utilities

TCS assists energy and utility companies with solutions related to smart grids, renewable
energy management, and digital supply chains. The growing need for sustainability and
digital energy solutions is a driving force in this segment.

 Revenue Contribution: 6-8%

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  Profitability: Moderate, as energy companies increasingly adopt digital transformation
to achieve sustainability goals.

2. Business Segments by Geography

TCS operates globally, with its revenue generated across several regions, each contributing
differently to its total income and profitability.

a) North America

North America is the largest geographic segment, contributing approximately 50% of TCS's
total revenue. The region’s mature IT market and high demand for digital transformation
make it a key market for TCS’s services, particularly in BFSI and healthcare.

 Revenue Contribution: 50%

 Profitability: High, driven by large-scale IT outsourcing contracts and long-term

partnerships with Fortune 500 companies.

b) United Kingdom and Europe

Europe, particularly the UK, is the second-largest geographic segment for TCS, contributing
around 20-25% of its revenue. The company provides services to European banks, insurers,
and manufacturers. Digital transformation and regulatory changes in financial services (like
Brexit) have created additional demand for TCS services in this region.

 Revenue Contribution: 20-25%

 Profitability: High, due to strong demand in the BFSI and manufacturing sectors.

c) Asia-Pacific and India

TCS has a strong presence in the Asia-Pacific region, including India, where it provides
services across all industry verticals. India, while being a major contributor to its global
workforce, represents about 6-8% of TCS's revenue. The Asia-Pacific market is fast-growing,
particularly in telecommunications and retail sectors.

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 Chapter III

RESEARCH METHADOLOGY

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 Chapter III

Research Methodology

Introduction

This article introduces the research methodology used in the case study of Tata Consultancy
Services (TCS). Ratio analysis is an important financial tool used to measure the performance
of a company by analysing the relationship between various financial statements. The process
for this report involves analysing key financial statements to gain insight into the revenue,
performance, efficiency and solutions of TCS over a specific period of time. TCS audits
financial information such as Profit and Loss Account, Balance Sheet and Financial
Statements. The report aims to assess the financial position and performance of TCS by
calculating and interpreting various financial ratios including net income, net profit effects
and weighted results. Annual reports, financial statements and business reports ensure
accuracy. The research for this analysis adopts a quantitative approach, relying on data
extracted from TCS’s audited financial statements such as the income statement, balance
sheet, and cash flow statement. By calculating and interpreting various financial ratios—
including liquidity ratios, profitability ratios, and solvency ratios—the report aims to assess
the financial health and operational efficiency of TCS.

The data used in this research primarily comprises secondary data collected from publicly
available financial reports of TCS, including the annual reports, income statements, balance
sheets, and cash flow statements. The following sources were used for data collection:

 TCS Annual Reports (for the past 3-5 years)

 Stock Exchange Filings (BSE/NSE filings)

 Financial Databases (such as Bloomberg, Reuters, and Moneycontrol)

 Industry Reports for sectoral comparison and benchmarking

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Objective of the study

 To study the financial performance of Tata Consultancy Services (TCS) by

conducting a detailed ratio analysis over the past 3-5 years. This involves
evaluating key financial ratios such as liquidity, profitability, solvency, and
efficiency to gain insights into the company's financial health.
 To find and provide suggestions on areas where TCS can improve its financial
performance, based on the analysis, and offer recommendations for better
financial management and operational efficiency.

Significance of study

1. Comprehensive Evaluation of Financial Performance: This study provides an in-depth

analysis of TCS’s financial health by examining key financial ratios. It offers a clear
understanding of how the company performs in various areas such as profitability, liquidity,
solvency, and efficiency, which are critical for assessing its overall financial stability.

2. Operational Efficiency, Profitability, and Solvency Insights: By analysing ratios like return
on equity (ROE), current ratio, and debt-to-equity ratio, the study offers valuable insights into
how efficiently TCS manages its resources, how profitable its operations are, and how well it
is positioned to meet both short-term and long-term financial obligations.

3. Aids Stakeholders in Informed Decision-Making: The ratio analysis equips key

stakeholders—investors, shareholders, management, and analysts—with the information
needed to make sound financial decisions. Whether for investment purposes or internal
management strategies, the study provides a data-driven basis for assessing risk and potential
returns.

4. Identification of Financial Strengths and Weaknesses: The study helps pinpoint areas
where TCS excels financially, as well as areas that may require improvement. This
identification allows management to reinforce its strengths and address any financial
vulnerabilities that may impact future growth or stability.

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5. Assessment of Short-term and Long-term Financial Obligations: The analysis of liquidity
and solvency ratios ensures a better understanding of TCS’s ability to meet its financial
obligations. It highlights the company’s capacity to manage immediate liabilities and its long-
term financial commitments, which are crucial for assessing its sustainability and financial
risk.

6. Benchmarking Against Industry Standards and Competitors: By comparing TCS’s financial

ratios with industry averages and its key competitors, the study helps identify how the
company performs relative to its peers. This benchmarking process is essential for
understanding TCS’s position within the global IT services market and provides insights into
maintaining or enhancing its competitive edge

7. Strategic Decision-Making for Financial Health: The study aids TCS’s management in
developing strategies to improve financial performance. By providing detailed insights into
financial trends, the analysis supports management in making decisions related to cost
optimization, resource allocation, and long-term financial planning to sustain profitability and
growth.

8. Supporting Future Financial Forecasting: The ratio analysis serves as a foundation for
forecasting future performance based on historical financial trends. This helps in making
projections about TCS’s future financial stability, growth potential, and market positioning,
enabling more accurate business planning.

Scope of the study

Timeframe: The study focuses on a comprehensive analysis of Tata Consultancy Services

(TCS) over the past 3-5 years. This allows for the evaluation of financial trends, providing
insights into both short-term fluctuations and long-term performance.

Financial Ratios: The study covers an extensive range of financial ratios, including:

 Liquidity Ratios (e.g., Current Ratio, Quick Ratio) to assess short-term financial
stability.

 Profitability Ratios (e.g., Net Profit Margin, Return on Equity) to evaluate the
company’s ability to generate profit.

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  Solvency Ratios (e.g., Debt-to-Equity Ratio, Interest Coverage Ratio) to measure
long-term financial sustainability.

 Efficiency Ratios (e.g., Asset Turnover, Receivables Turnover) to assess operational

effectiveness

Comparative Analysis: The study includes a benchmarking process, where TCS’s financial
ratios are compared against:

 Industry standards to understand its position within the broader IT sector.

 Key competitors to assess its competitive advantage or areas for improvement.

Trend Analysis: This study identifies and interprets financial trends within TCS over the
study period, offering insights into its evolving financial health. This includes tracking
growth, profitability, and financial stability, which is crucial for predicting future
performance.

Geographical Scope: While the study predominantly focuses on TCS’s global financial
performance, it also takes into account its operations in key regions, such as North America,
Europe, and Asia, which significantly impact its revenue and profitability.

Research Design

The research design for this study on the ratio analysis of Tata Consultancy Services (TCS)
follows a structured and systematic approach. The primary goal is to analyze TCS's financial
health and performance over a defined period using various financial ratios. The research
design is based on a descriptive research methodology, which involves collecting,
processing, and interpreting quantitative data from secondary sources. Below are the key
components of the research design:

Data Collection Method

The research utilizes secondary data for the ratio analysis. The data is sourced from TCS’s
publicly available financial statements, including:

 Annual Reports: Detailed financial statements such as the balance sheet, income
statement, and cash flow statement.

 Stock Exchange Filings: BSE/NSE filings providing updated financial information.

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  Financial Databases: Reputed financial data platforms such as Bloomberg, Reuters,
and Moneycontrol.

 Industry Reports: To benchmark TCS’s performance against industry averages and

competitors.

Variables Analysed

The key variables in the study are financial ratios. These ratios are calculated using the
figures from the company’s financial statements. The main categories of financial ratios
analysed are:

 Current ratio
 Quick ratio
 Working capital turnover ratio
 Debt to equity ratio
 Total assets turnover ratio

4. Research Period

The analysis covers a period of 4 years, allowing for the observation of financial trends over
time. This period is chosen to reflect both short-term performance fluctuations and longer-
term financial trends in TCS’s operations.

5. Tools and Techniques

The financial ratios are calculated using standard formulas for ratio analysis. Excel and other
financial software tools are used to compute ratios, generate charts, and present the findings
visually. The tools facilitate:

 Data organization

 Calculation of ratios

 Visualization through graphs and trend analysis

Tools of data collection

For this study, the primary tool of data collection is the financial statements of Tata
Consultancy Services (TCS). These statements provide the necessary quantitative data for

24
calculating and analysing key financial ratios. The financial statements used in this study
include:

1. Income Statement: Used to analyse profitability ratios such as Net Profit Margin and
Return on Equity by providing details on revenue, expenses, and net income.

2. Balance Sheet: Utilized to compute liquidity and solvency ratios such as the Current
Ratio, Quick Ratio, and Debt-to-Equity Ratio, by offering information on assets,
liabilities, and shareholders' equity.

3. Cash Flow Statement: Helps in assessing the cash position and operational
efficiency by providing data on cash inflows and outflows from operating, investing,
and financing activities.

Tools of data analysis

The analysis and interpretation od financial statement is used to determine the financial
position and results of operation as well, following tools are used for analysing the financial
position of the company.

The primary tool of data analysis employed in this study is ratio analysis. This technique is
widely used in financial analysis to evaluate a company’s performance and financial position
by calculating various financial ratios derived from its financial statements. Ratio analysis
provides a means to interpret the numbers in the financial statements, allowing stakeholders
to make informed decisions regarding the company's financial health, operational efficiency,
and overall performance.

The following are the key ratios analysed in this report, along with their formulas and
detailed explanations:

1. Current Ratio

o Formula: Current Ratio=Current Liabilities/Current Assets

o Definition: The Current Ratio measures a company’s ability to pay off its
short-term liabilities with its short-term assets. Current assets include cash,
accounts receivable, and inventory, while current liabilities comprise accounts
payable, short-term debt, and other obligations due within a year.

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 o Significance: A Current Ratio greater than 1 indicates that the company has
more current assets than current liabilities, suggesting good short-term
financial health. Conversely, a ratio below 1 may signal potential liquidity
problems, as it indicates the company may struggle to meet its short-term
obligations.

2. Quick Ratio

o Formula: Quick Ratio=Current Liabilities/Current Assets−Inventory

o Definition: The Quick Ratio, also known as the acid-test ratio, evaluates a
company’s ability to meet its short-term liabilities without relying on the sale
of inventory. This ratio subtracts inventory from current assets since inventory
may not be as easily liquidated as other assets.

o Significance: A Quick Ratio of greater than 1 indicates that the company can
cover its current liabilities with its most liquid assets. This is particularly
important in industries where inventory turnover is slow, as it highlights the
company’s immediate liquidity position.

3. Working Capital Turnover Ratio

o Formula: Working Capital Turnover Ratio=Working Capital/Net Sales

o Definition: This ratio measures how effectively a company uses its working
capital to generate sales. Working capital is defined as current assets minus
current liabilities.

o Significance: A high Working Capital Turnover Ratio indicates that the

company is using its working capital efficiently to drive sales. Conversely, a
low ratio may suggest inefficient use of resources or issues with inventory
management, potentially leading to cash flow problems.

4. Debt to Equity Ratio

o Formula: Debt to Equity Ratio=Shareholders’ Equity/Total Liabilities

o Definition: The Debt-to-Equity Ratio is a measure of a company’s financial

leverage, comparing its total liabilities to its shareholders' equity. This ratio

26
 indicates how much debt is used to finance the company’s assets relative to the
equity provided by shareholders.

o Significance: A higher Debt to Equity Ratio suggests that the company is

relying more on debt to finance its operations, which may increase financial
risk. Conversely, a lower ratio indicates a more conservative capital structure
with less reliance on borrowed funds, suggesting a lower risk of insolvency.

5. Total Assets Turnover Ratio

o Formula: Total Assets Turnover Ratio=Total Assets/Net Sales

o Definition: This ratio measures the efficiency of a company in using its total
assets to generate sales. It assesses how effectively the company is utilizing its
assets to produce revenue.

o Significance: A higher Total Assets Turnover Ratio indicates that the company
is using its assets efficiently to generate sales, reflecting operational
effectiveness. A lower ratio may suggest inefficiencies in asset utilization,
which could hinder profitability and growth.

Limitations

Limitations of the Study

1. Dependence on Historical Data: The study relies on historical financial statements of

TCS, which may not fully capture the current or future financial situation, especially
in a rapidly changing market environment.

2. Lack of Qualitative Factors: Ratio analysis focuses on quantitative financial data and
does not consider qualitative factors such as management quality, employee
efficiency, or customer satisfaction, which also affect company performance.

3. Limited External Factors Consideration: External influences like economic

downturns, political instability, technological changes, or regulatory shifts are not
directly analysed in this study, though they can significantly impact financial
performance.

27
 4. Industry-Specific Nature: The ratios used in this analysis may not be fully comparable
across different industries. TCS operates in the IT services sector, and certain ratios
might not reflect broader industry differences or business models.

5. Exclusion of Non-Financial Data: This study is solely based on financial ratios

derived from TCS's financial statements, excluding any non-financial performance
metrics, such as market share, brand value, or customer loyalty, that may offer further
insights.

6. Static Analysis: Ratios provide a snapshot of financial performance at a particular

point in time or over a limited period, and they may not adequately reflect ongoing
changes or future trends in TCS’s financial position.

7. Accounting Policy Differences: Variations in accounting policies or standards

followed by TCS over time or in comparison with competitors may distort the
interpretation of certain ratios, limiting their comparability.

8. Lack of Predictive Power: While ratios are helpful in evaluating past and present
financial performance, they have limited ability to predict future outcomes, especially
in volatile or dynamic market conditions.

These limitations suggest that ratio analysis, while useful, should be complemented with
other methods or qualitative insights for a more comprehensive evaluation of TCS's financial
health.

28
 Chapter IV

DATA ANALYSIS AND INTERPRETATION

29
 Chapter IV

Data analysis and interpretation

Data analysis and interpretation form the core of this study, focusing on the examination of
Tata Consultancy Services' (TCS) financial performance through ratio analysis. The financial
data collected from TCS's income statements, balance sheets, and cash flow statements are
analysed to calculate key financial ratios. These ratios are then interpreted to evaluate the
company's liquidity, profitability, solvency, and operational efficiency. The analysis provides
insights into TCS's financial strengths and weaknesses, allowing for informed conclusions
and recommendations on its financial health.

Current ratio

Table no. 4.1

Table showing current ratio

financial year current assests current liabilities current ratio

2023 1,10,27,00,000.00 43,55,80,000.00 2.53
2022 1,08,31,00,000.00 42,35,10,000.00 2.56
2021 99,28,00,000.00 34,15,50,000.00 2.91
2020 90,23,70,000.00 27,06,00,000.00 3.33

Chart no. 4.1

Chart Title
1,200,000,000.00

1,000,000,000.00

800,000,000.00

600,000,000.00

400,000,000.00

200,000,000.00

0.00
2023 2022 2021 2020

current assests current liabilities current ratio

30
Interpretation Tata Consultancy Services (TCS) maintains a strong liquidity position, with
the current ratio consistently above 2 over the past four years.

Quick ratio

Table no. 4.2

Table showing quick ratio

financial year current assets- current liabilities quick ratio

inventory
2023 1,10,26,99,827.0 43,55,80,000.00 2.53
0
2022 1,08,30,99,689.0 42,35,10,000.00 2.56
0
2021 99,27,99,971.00 34,15,50,000.00 2.91
2020 90,23,69,971.00 27,06,00,000.00 3.33

Chart no. 4.2

1,200,000,000.00
Chart Title
1,000,000,000.00

800,000,000.00

600,000,000.00

400,000,000.00

200,000,000.00

0.00
2023 2022 2021 2020

current assets- inventory current liabilities

quick ratio

Interpretation

Tata Consultancy Services (TCS) has maintained a consistently strong quick ratio, remaining
above 2.5 over the last four years. Despite a slight decline from 3.33 in 2020 to 2.53 in 2023,
TCS’s ability to meet its short-term liabilities without relying on inventory remains robust.
This indicates that the company is well-positioned to cover its immediate obligations with
highly liquid assets, ensuring strong financial health and operational efficiency.

31
Working capital turnover ratio

Table no. 4.3

Table showing working capital turnover ratio

financial year net sales net working capital working capital turnover ratio
2023 2,25,45,80,000.00 66,71,20,000.00 3.38
2022 1,91,75,40,000.00 65,95,90,900.00 2.91
2021 1,64,17,70,000.00 65,12,50,000.00 2.52
2020 1,56,94,90,000.00 63,17,70,000.00 2.48

Chart no. 4.3 showing working capital turnover ratio

Interpretation

Tata Consultancy Services (TCS) has shown an improving working capital turnover ratio

Chart Title
2,500,000,000.00

2,000,000,000.00

1,500,000,000.00

1,000,000,000.00

500,000,000.00

0.00
2023 2022 2021 2020

net sales net working capital

working capital turnover ratio
from 2.48 in 2020 to 3.38 in 2023. This indicates that TCS has become more efficient in
utilizing its working capital to generate sales over the years. The steady increase suggests
enhanced operational efficiency and better management of resources to support revenue
growth, reflecting strong financial performance.

32
Debt to equity ratio

Table no. 4.4

Table showing debt to equity ratio

financial year total liabilities total equity debt to equity ratio

2023 53,22,70,000.00 1,43,65,10,000.00 0.37
2022 52,37,50,000.00 1,41,51,40,000.00 0.37
2021 44,32,60,000.00 1,30,75,90,000.00 0.34
2020 36,77,30,000.00 1,20,89,90,000.00 0.30

Chart no. 4.4 showing debt to equity ratio

Chart Title
1,600,000,000.00
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
0.00
2023 2022 2021 2020

total liabilities total equity debt to equity ratio

Interpretation

Tata Consultancy Services (TCS) has maintained a stable and low debt to equity ratio,
ranging from 0.30 in 2020 to 0.37 in 2023. This indicates that TCS relies more on equity than
debt to finance its operations, reflecting a conservative financial structure. The consistent
ratio suggests low financial risk and a strong capacity to meet obligations, showcasing the
company’s solid financial health and stability.

33
Total assets turnover ratio

Table no. 4.4

Table showing total assets turnover ratio

financial year net sales total assets total assets turnover ratio
2023 2,25,45,80,000.00 1,43,65,10,000.00 1.57
2022 1,91,75,40,000.00 1,41,51,40,000.00 1.36
2021 1,64,17,70,000.00 1,30,75,90,000.00 1.26
2020 1,56,94,90,000.00 1,20,89,90,000.00 1.30

Chart no. 4.5 showing assets turnover ratio

Chart Title
2,500,000,000.00
2,000,000,000.00
1,500,000,000.00
1,000,000,000.00
500,000,000.00
0.00
2023 2022 2021 2020

net sales total assets

total assets turnover ratio

Interpretation

Tata Consultancy Services (TCS) has shown a consistent improvement in its total assets
turnover ratio, increasing from 1.30 in 2020 to 1.57 in 2023. This indicates that TCS has
become more efficient in utilizing its assets to generate sales. The upward trend reflects
enhanced operational efficiency and better asset management, contributing positively to
overall financial performance.

34
 Chart no. 4.6 showing all the years and their ratios.

Chart Title
2,500,000,000.00

2,000,000,000.00

1,500,000,000.00

1,000,000,000.00

500,000,000.00

0.00
23 21 23 21 23 21 23 21 23 21
20 20 20 20 20 20 20 20 20 20

current assests current liabilities current ratio

Chapter V

35
FINDINIGS AND SUGGESTIONS

36
 Chapter V

Findings and Suggestions

1. Current Ratio: TCS has maintained a strong liquidity position with a current ratio
consistently above 2. While the ratio has slightly declined from 3.33 in 2020 to 2.53
in 2023, it still indicates that TCS is comfortably able to meet its short-term liabilities
with current assets.
2. Quick Ratio: The quick ratio has remained stable and above 2.5 over the years,
signifying that TCS holds sufficient liquid assets (excluding inventory) to cover its
short-term obligations, highlighting its strong liquidity management.
3. Working Capital Turnover Ratio: TCS's working capital turnover ratio has improved
from 2.48 in 2020 to 3.38 in 2023. This demonstrates increased efficiency in using
working capital to generate sales, reflecting better management of operational
resources.
4. Debt to Equity Ratio: The debt-to-equity ratio has remained low and stable, increasing
slightly from 0.30 in 2020 to 0.37 in 2023. This suggests that TCS maintains a
conservative capital structure with low reliance on debt, reducing financial risk.
5. Total Assets Turnover Ratio: TCS’s total assets turnover ratio has improved from 1.30
in 2020 to 1.57 in 2023. This shows that the company has become more effective in
utilizing its assets to generate revenue, contributing positively to operational
performance.

Table no, 5.1

Table showing comparison between all the ratios.

Financial Current Quick Working Debt to Total

year ratio ratio capital equity assets
turnover ratio turnover
ratio ratio
2023 2.53 2.53 3.38 0.37 1.57
2022 2.56 2.56 2.91 0.37 1.36
2021 2.91 2.91 2.52 0.34 1.26
2020 3.33 3.33 2.48 0.30 1.30

37
Suggestions

1. Maintain Optimal Liquidity: While TCS has strong liquidity, the slight decline in the
current and quick ratios indicates room for maintaining or improving liquidity. The
company could focus on optimizing working capital by managing receivables and
payables more efficiently.

2. Enhance Asset Utilization: The improving trend in the total assets turnover ratio is
positive, but further efforts can be made to increase asset utilization by investing in
technology and process improvements that enhance operational efficiency.

3. Monitor Debt Levels: Although the debt-to-equity ratio is low, TCS should continue to
carefully manage its leverage, ensuring it balances debt with equity to keep financial risk
minimal while supporting growth initiatives.

4. Optimize Working Capital Management: Given the positive trend in the working capital
turnover ratio, TCS could further improve cash flow by fine-tuning its inventory,
receivables, and payables management to enhance operational efficiency.

5. Sustain Growth in Sales: TCS should continue to capitalize on its strong operational
performance to drive sales growth, ensuring that it sustains its upward trend in key
financial metrics and remains competitive in the market.

38
 Chapter VI

CONCLUSION

39
 Chapter VI

Conclusion

The ratio analysis of TCS over the financial years 2020 to 2023 highlights a strong and stable
financial performance. The current ratio, which measures liquidity, consistently remained
above 2.5, indicating that TCS has more than enough current assets to cover its current
liabilities. Specifically, the **current ratio** decreased from **3.33** in 2020 to **2.53** in
2023, suggesting a slight decline in liquidity, but still within a healthy range.

The quick ratio, which removes inventory from current assets for a more stringent liquidity
measure, mirrored the current ratio’s trend, with values of 3.33 in 2020 and 2.53 in 2023.
This shows that TCS can easily meet its short-term obligations even without relying on
inventory sales.

TCS's working capital turnover ratio improved from 2.48 in 2020 to 3.38 in 2023, indicating
the company has become more efficient at utilizing its working capital to generate revenue.
This is reflected in the growth of net sales, which increased from ₹1,56,94,90,000.00 in 2020
to ₹2,25,45,80,000.00 in 2023.

The debt-to-equity ratio remained low, ranging from 0.30 in 2020 to 0.37 in 2023. This
signifies that TCS relies minimally on debt financing, reducing financial risk and ensuring
stability.

Moreover, the total assets turnover ratio, which improved from 1.30 in 2020 to 1.57 in 2023,
highlights TCS’s increasing efficiency in utilizing its assets to generate sales.

In conclusion, TCS has demonstrated robust financial health with strong liquidity, minimal
debt, and growing asset efficiency. As the company continues its growth, it should maintain
its focus on optimizing capital allocation, asset utilization, and efficient working capital
management to ensure continued success and industry leadership.

40
Building on the strong financial performance demonstrated by TCS over the financial years
2020 to 2023, it's evident that the company’s management has effectively navigated a
competitive and evolving business landscape. Let’s explore other key ratios that further
emphasize TCS's financial resilience, profitability, and sustainability.

TCS’s financial performance from 2020 to 2023 highlights its ability to maintain stability
while simultaneously driving growth in a dynamic, highly competitive industry. The
company's strong liquidity, improved asset efficiency, conservative debt levels, and enhanced
profitability position it as a financially sound and operationally efficient organization.

Looking ahead, TCS is well-positioned to capitalize on opportunities in the digital economy,

particularly as global enterprises increasingly adopt cloud, AI, and automation technologies.
By maintaining its focus on capital efficiency, cost management, and strategic investments,
TCS can continue delivering value to its shareholders and sustain its leadership position in
the IT services sector for years to come.

41
 Bibliography

Books and textbooks

1. "Financial Ratios for Executives: How to Assess Company Strength, Fix

Problems, and Make Better Decisions" (2013) (Michael Rist)
 This book simplifies ratio analysis for executives, providing a
practical guide to using financial ratios to make informed decisions,
solve business problems, and assess a company's financial health.
2. "Financial Statement Analysis and Security Valuation"
(2012) (Stephen H. Penman)
 Penman’s work integrates financial statement analysis with
valuation, making ratio analysis a central tool for assessing a
company’s value and its future performance.
3. "Financial Ratios: A Practical Guide to Assessing a Company’s Performance"
(2008) (Richard Bull)
 This book provides a step-by-step approach to understanding and
applying financial ratios to assess a company's performance, aimed
at both beginners and professionals in the field.

Annual Reports of Tata Consultancy Services

1. Tata Consultancy Services (2023). Annual Report 2022-2023. Tata Motors

Limited.
 Available at: [Link]
 Tata Consultancy Services’ annual report provide detailed financial
statements, which are used for ratio analysis.

Links:

 [Link]
 [Link]
 [Link]

Consolidated Balance Sheet

42
 Mar-23 Mar-22 Mar-21 Mar-20

12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 366 366 370 375
Total Share Capital 366 366 370 375
Reserves and Surplus 90,058.00 88,773.00 86,063.00 83,751.00
Total Reserves and Surplus 90,058.00 88,773.00 86,063.00 83,751.00
Total Shareholders Funds 90,424.00 89,139.00 86,433.00 84,126.00
Minority Interest 782 707 675 623
NON-CURRENT LIABILITIES
Deferred Tax Liabilities [Net] 792 590 767 779
Other Long Term Liabilities 8,095.00 8,727.00 8,729.00 8,311.00
Total Non-Current Liabilities 8,887.00 9,317.00 9,496.00 9,090.00
CURRENT LIABILITIES
Trade Payables 10,515.00 8,045.00 7,860.00 6,740.00
Other Current Liabilities 32,698.00 32,895.00 24,901.00 20,027.00
Short Term Provisions 345 1,411.00 1,394.00 293
Total Current Liabilities 43,558.00 42,351.00 34,155.00 27,060.00
Total Capital And Liabilities 1,43,651.00 1,41,514.00 1,30,759.00 1,20,899.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 17,790.00 18,410.00 18,743.00 18,935.00
Intangible Assets 867 1,101.00 480 283
Capital Work-In-Progress 1,234.00 1,205.00 926 906
Fixed Assets 19,891.00 20,716.00 20,149.00 20,124.00
Non-Current Investments 266 223 213 216
Deferred Tax Assets [Net] 3,307.00 3,708.00 3,931.00 2,828.00
Long Term Loans And Advances 173 311 29 29
Other Non-Current Assets 7,886.00 6,459.00 5,359.00 5,755.00
Total Non-Current Assets 33,381.00 33,204.00 31,479.00 30,662.00
CURRENT ASSETS
Current Investments 36,897.00 30,262.00 29,160.00 26,140.00
Inventories 28 20 8 5
Trade Receivables 49,954.00 34,074.00 30,079.00 30,532.00
Cash And Cash Equivalents 11,032.00 18,221.00 9,329.00 9,666.00
Short Term Loans And Advances 1,325.00 6,445.00 11,472.00 8,475.00
OtherCurrentAssets 11,034.00 19,288.00 19,232.00 15,419.00
Total Current Assets 1,10,270.00 1,08,310.00 99,280.00 90,237.00
Total Assets 1,43,651.00 1,41,514.00 1,30,759.00 1,20,899.00
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 2,388.00 2,298.00 1,821.00 2,124.00

43
BONUS DETAILS
Bonus Equity Share Capital 334.35 334.35 338.01 342.58
NON-CURRENT INVESTMENTS
Non-Current Investments Unquoted Book
Value 36 36 38 42
CURRENT INVESTMENTS
Current Investments Quoted Market
Value 37,121.00 30,455.00 29,356.00 26,336.00

44
Consolidated Profit & Loss account
Mar '23
Mar '22 Mar '21 Mar '20
12 mths
12 mths 12 mths 12 mths
Income
Sales Turnover 2,25,458.0
0
Net Sales 2,25,458.0 1,91,754.0 1,64,177.0 1,56,949.0
0 0 0 0
Other Income 1,91,754.0 1,64,177.0 1,56,949.0
3,724.00 0 0 0
Total Income 2,29,182.0
0 4,298.00 1,845.00 4,253.00
Expenditure 1,96,052.0 1,66,022.0 1,61,202.0
0 0 0
Employee Cost 1,27,522.0
0
Other Manufacturing Expenses 1,07,554.0
1,881.00 0 91,814.00 85,952.00
Miscellaneous Expenses 36,796.00 1,163.00 1,462.00 1,905.00
Total Expenses 1,66,199.0
0 29,980.00 24,355.00 26,983.00
1,38,697.0 1,17,631.0 1,14,840.0
Mar '23 0 0 0
Mar '22 Mar '21 Mar '20
12 mths
12 mths 12 mths 12 mths
Operating Profit 59,259.00
PBDIT 62,983.00 53,057.00 46,546.00 42,109.00
Interest 779 57,355.00 48,391.00 46,362.00
PBDT 62,204.00 784 637 924
Depreciation 5,022.00 56,571.00 47,754.00 45,438.00
Profit Before Tax 57,182.00 4,604.00 4,065.00 3,529.00
PBT (Post Extra-ord Items) 57,182.00 51,967.00 43,689.00 41,909.00
Tax 14,604.00 51,967.00 43,689.00 41,909.00
Reported Net Profit 42,147.00 13,238.00 11,198.00 9,801.00
Net P/L After Minority Interest & Share Of
Associates 42,303.00 38,327.00 32,430.00 32,340.00
Total Value Addition 1,66,199.0
0 38,449.00 33,780.00 32,447.00
Equity Dividend 1,38,697.0 1,17,631.0 1,14,840.0
41,347.00 0 0 0
Per share data (annualised) 13,317.00 10,850.00 37,634.00

45
Shares in issue (lakhs) 36,590.51
Earning Per Share (Rs) 115.19 36,590.51 36,990.51 37,523.85
Book Value (Rs) 247.12 104.75 87.67 86.19
243.61 233.66 224.19

46