CMC AR 2003 04

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ContentsCorporate Information 2

Notice 3

Directors’ Report 8

Management Discussion and Analysis 17

Corporate Governance Report 22

Auditors’ Certificate on Corporate Governance 29

Company Secretary’s Responsibility Statement 30

Auditors’ Report 31

Balance Sheet 34

Profit & Loss Account 35

Cash Flow Statement 36

Schedules & Notes on Accounts 37

Balance Sheet Abstract 51

Details of Subsidiary Company 52

Auditors’ Report on the Consolidated Accounts 53

Consolidated Accounts 54

Proxy/Attendance Sheet 69

Payment of Dividend by Electronic Clearing Services 71

CMC LimitedTwenty eighth annual report 2003 - 2004

Annual General Meeting on

Monday, August 30, 2004 at

2.30 p.m. at Bhartiya Vidya Bhavan

Auditorium, BVB Hyderabad Kendra

No. 5-9-1105, Basheerbagh-King Koti

Road, Hyderabad-500 029This annual report can beaccessed at www.cmcltd.com

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CMC Limited

Twenty eighth annual report 2003 - 2004

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CORPORATE INFORMATION

BOARD OF DIRECTORS

ChairmanMr S Ramadorai

Managing Director & CEOMr R Ramanan

Directors

Mr Ishaat Hussain

Dr KRS Murthy

Mr Surendra Singh

Mr C B Bhave

Mr Shardul Shroff

Company SecretaryMr Vivek Agarwal

AuditorsM/s S.B. Billimoria & Co.

Registered OfficeCMC Centre

Old Mumbai Highway

Gachibowli

Hyderabad-500019 (A.P.)

Corporate OfficePTI Building, 5th Floor

4, Sansad Marg

New Delhi-110001

Principal BankersCanara Bank

State Bank of Bikaner & Jaipur

ICICI Bank

Audit CommitteeDr KRS Murthy

Mr Surendra Singh

Mr C B Bhave

Share Transfer-cum-ShareholdersGrievance CommitteeMr Surendra Singh

Mr R Ramanan

Mr Shardul Shroff

Mr Vivek Agarwal

Remuneration CommitteeDr KRS Murthy

Mr S Ramadorai

Mr C B Bhave

Ethics and Compliance CommitteeMr Surendra Singh

Mr R Ramanan

Mr Shardul Shroff

Mr Vivek Agarwal

Registrars & Share Transfer AgentsM/s MCS Limited

Sri Venkatesh Bhavan

W-40, Okhla Industrial Area, Phase II

New Delhi-110020

Stock Exchanges where Company’sSecurities are listedMadras Stock Exchange Ltd.

The Stock Exchange, Mumbai

National Stock Exchange of India Ltd.

The Calcutta Stock Exchange Asson. Ltd.

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NOTICE

Notice is hereby given that the 28th Annual General Meeting of the Members of CMC Limited will be held on Monday, August

30, 2004 at 2.30 P.M. at the Bhartiya Vidya Bhavan Auditorium, BVB Hyderabad Kendra No. 5-9-1105 Basheerbagh-King Koti

Road, Hyderabad –500 029, A.P. to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Profit and Loss Account for the year ended 31st March, 2004 and the Balance

Sheet as at that date and the Reports of the Board of Directors and the Auditors thereon.

2. To declare a dividend.

3. To appoint a Director in place of Mr Surendra Singh, who retires by rotation and, being eligible, offers himself for re-

appointment.

4. To appoint a Director in place of Mr C B Bhave, who retires by rotation and, being eligible, offers himself for re-appointment.

5. To appoint Statutory Auditors and to fix their remuneration.

SPECIAL BUSINESS:

6. To consider and, if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary

Resolution:

“RESOLVED that in accordance with Section 198, 269, 309, 310 Schedule XIII and other applicable provisions, if any, of the

Companies Act, 1956, or any amendment or modification thereof, the Company hereby approves the appointment and

terms of remuneration of Mr R Ramanan as Managing Director & CEO of the Company, with effect from 13th December,

2003 for a period of three years on the terms and conditions as set out in the Explanatory Statement and entered into an

Agreement between Mr. R. Ramanan and the Company with liberty to the Board of Directors to alter and vary the terms

and conditions of the said appointment and/or Agreement in such manner as may be agreed to between the Company

and Mr. R. Ramanan.”

“Further Resolved that the Board of Directors of the Company be and is hereby authorized to vary, alter, increase or

enhance from time to time terms and conditions of appointment of Mr. R. Ramanan subject to the limit laid down under

the applicable provisions of the Companies Act, 1956 and subject to the requisite approvals, if any, being obtained.

7. To consider and, if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution:

“RESOLVED that Pursuant to Section 31 and other applicable provisions, if any, of the Companies Act, 1956, the regulations

contained in the draft Articles of Association of the Company submitted to this meeting and for the purpose of

identification initialed by the Chairman be and are hereby approved and adopted as the new Articles of Association of

the Company in substitution for and to exclusion of all the existing Articles thereof.”

BY ORDER OF THE BOARD

For CMC LIMITED

Mumbai VIVEK AGARWAL

July 17, 2004 COMPANY SECRETARY

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Notes:

1. A Member entitled to attend and vote is entitled to appoint a Proxy to attend and vote at the meeting instead of

himself and the proxy need not be a Member of the Company. The Proxy Form must be deposited at the Registered

Office of the Company not later than 48 hours before the commencement of the meeting.

2. The relevant explanatory statement pursuant to Section 173(2) of the Companies Act, 1956 setting out the material facts

in respect of the business under item nos. 6 & 7 and the relevant details of item nos. 3 & 4 above pursuant to Clause 49 of

the listing agreement are annexed hereto.

3. Members who hold shares in dematerialised form are requested to bring their DP ID and Client ID numbers for easy

identification of attendance at the meeting.

4. For the convenience of the members, attendance slip is enclosed elsewhere in the Annual Report. Members/Proxy Holders/

Authorised Representatives are requested to fill in and affix their signatures at the space provided therein and surrender

the same at the venue. Proxy/Authorised Representatives of a member should state on the attendance slip as ‘Proxy’ or

‘Authorised Representative as the case may be.

5. The Register of Members and the Share Transfer Books of the Company will remain closed from Thursday August 26,

2004 to Monday, August 30, 2004 (both days inclusive).

6. The dividend as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid at par

after August 30, 2004 (i) to those shareholders whose names appear on the Company’s Register of Members after giving

effect to all valid share transfers in physical form lodged with the Company on or before August 25, 2004; (ii) in respect of

shares held in electronic form to those ‘deemed’ members whose names appear in the statements of beneficial ownership

furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at

the end of business hours on August 25, 2004.

7. In accordance with SEBI’s directions vide their Circular No. DCC/FITT/Cir-3/2001 dated October 15, 2001, arrangements have

been made to credit your dividend amount directly to your bank account through the Electronic Clearing Service (ECS).

In case you hold shares in physical form please furnish your bank details in the ECS Mandate Form enclosed separately

together with a xerox copy of your cheque leaf and return to our Registrars, MCS Limited on or before August 21, 2004.

The said details in respect of the shares held in electronic form should be sent to your respective Depository Participant and

not to the Registrar as the Registrar is obliged to use only the data provided by the Depository while making payment of

dividend.

8. Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, dividends which remain unclaimed for a period of

7 years from the date of transfer of the same to the company’s unpaid dividend account will be transferred to the Investor

Education and Protection Fund established by the Central Government. Shareholders who have not encashed their

dividend warrant(s) so far are requested to make their claim to the Registrar & Share Transfer Agents of the Company. The

Company has been periodically reminding the shareholders concerned to claim their dividend from the Company.

9. Pursuant to Section 109A of the Companies Act, 1956, shareholders are entitled to make nomination in respect of shares

held by them. Shareholders desirous of making nominations are requested to send their requests in Form No. 2B in

duplicate (which will be made available on request) to the Registrar & Share Transfer Agents of the Company.

10. As an austerity measure, copies of the Annual Report will not be distributed at the Annual General Meeting. Members are

requested to bring their copies to the meeting.

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Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956

Item No. 6:

Mr R Ramanan, age 45 years, has a Bachelor of Technology in Electrical Engineering from IIT, Mumbai with more than 21 yearsof rich working experience in Tata Consultancy Services (TCS). He held several key positions in TCS. Starting his career as aSoftware Engineer in TCS in July 1981, he has been a Project Leader, a Group Leader and an Overseas Regional Managerrepresenting TCS in the USA. He is also Chairman of CMC Americas Inc. He joined CMC as Dy. Managing Director & COO onOctober 16, 2001 and elevated to the post of Managing Director & CEO on December 13, 2003 on superannuation of Mr S SGhosh.

The Board of Directors passed a resolution on December 13, 2003 regarding elevation of Mr R Ramanan as Managing Director& CEO of the Company for a period of three years at a remuneration and upon the terms and conditions as set out in theagreement (Agreement) entered into by the Company with Mr R Ramanan (Mr Ramanan), the material terms of which are asunder:

1. Period:

From December 13, 2003 to December 12, 2006

2. Remuneration:

Basic Salary : Rs. 38040 per month with such revision as the Board may approve from time to time.

Perquisites:

Furnished accommodation, electricity, water, gas and soft furnishings, medical reimburesements and leave travelconcessions for self and family, profit linked incentive, club fees, medical insurance, personal accident insurance, leaveencashment, benefits of Provident Fund and Gratuity Fund, car and telephone etc. in accordance with the rules of theCompany.

In case no accommodation is provided to Mr Ramanan, he will be paid House Rent Allowance as per rules of the Company.

Provided that the total remuneration payable to him by way of salary and perquisites shall not exceed 5% of the netprofits of the Company calculated in accordance with Section 198 and 309 of the Companies Act, 1956 (the Act).

3. The terms and conditions of the said appointment may be altered and varied from time to time by the Board as it may, inits discretion, deem fit, within the maximum amount payable to Managing and Whole-Time Directors in accordance withSchedule XIII to the Act or any amendments made hereafter in this regard.

4. Mr Ramanan shall, subject to the supervision and control of the Board of Directors, carry out such duties as may beentrusted to him.

5. The Agreement may be terminated by either party giving the other party six months’ notice or the Company paying sixmonths’ remuneration in lieu thereof.

6. If at any time Mr Ramanan ceases to be a Director of the Company for any cause whatsoever, he shall cease to be theManaging Director. If at any time Mr Ramanan ceases to be in the employment of the Company for any cause whatsoever,he shall cease to be a Director of the Company.

7. Mr Ramanan is appointed by virtue of his employment in the Company and his appointment is subject to the provisionsof Section 283(1)(l) of the Act.

8. Mr Ramanan shall not be entitled to supplement his earnings with any buying or selling commission. He shall not also

become interested or otherwise concerned directly or through his wife and/ or minor children in any selling agency of

the Company without the prior approval of the Central Government.

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9. That Mr Ramanan shall not be paid any sitting fee for attending the meetings of the Board of Directors or Committees

thereof.

10. Mr Ramanan shall not have the following powers:

� The power to make calls on shareholders in respect of monies unpaid on shares in the Company.

� The power to issue debentures and

� The power to invest the funds of the Company in shares, stocks and securities.

The Resolution set out in item 6 of the convening notice has to be considered accordingly and the Board recommends

the same.

The Agreement made between the Company on the one part and Mr R. Ramanan on the other part, is available for

inspection by the Members of the Company at its Registered Office during usual business hours on any working day

upto the date of this Meeting.

None of the Directors of the Company except Mr R Ramanan is concerned or interested in the said Resolution.

Item No. 7:

At present, the Articles of Association of the Company consists of several restrictive Clauses, which have become redundant

due to sale of balance holding of Company’s shares by the Government of India to the general public.

Accordingly, the Board of Directors at its 144th Meeting held on April 26, 2004 has recommended to approve and adopt a new

set of Articles of Association of the Company.

Section 31 of the Companies Act, 1956 requires approval of Members of the Company by way of a Special Resolution for any

such changes. Hence the present Resolution.

A set of the new Articles of Association of the Company is available for inspection by the Members at the Registered Office of

the Company during usual working hours on all working days upto the date of this Meeting.

None of the Directors is interested or concerned in the said Resolution.


For CMC LIMITED



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DETAILS OF DIRECTORS RETIRING BY ROTATION AND SEEKING REAPPOINTMENT(In Pursuance of Clause 49 of the Listing Agreement)

Name

Date of Birth

Date of Appointment

Qualifications

Expertise in specific functional areas

Directorships inother Companies

Chairman/Member of Committeesof the Board of Companies ofwhich he is a Director

Mr Surendra Singh

21.07.1937

16.10.2001

Retd. I.A.S. Officer

Business and Finance Management

1. UTI Bank Limited

2. NIIT Limited

3. Jubilant Organosys Limited

4. BAG Films Limited

5. Andhra Pradesh Paper Mills Limited

CMC LimitedShare Transfer-cum-ShareholdersGrievance Committee – Chairman,Audit Committee

NIIT LimitedAudit Committee,Shareholders GrievanceCommittee – Chairman

UTI Bank LimitedRemuneration Committee – Chairman,Shareholders GrievanceCommittee – Chairman

Mr C B Bhave

28.08.1950

16.10.2001

B.E. (Electrical)

Business and Finance Management

1. National Securities DepositoryLimited, Mg. Director

2. Tata Telecom Limited

CMC LimitedAudit Committee,Remuneration Committee

Tata Telecom Limited Audit Committee


For CMC LIMITED



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CMC Limited


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1. FINANCIAL RESULTS

(Rs. in Crores)

Particulars 2003-04 2002-03

Income from Sales and Services 747.07 607.99

Other Income 16.60 6.74

Total Income 763.67 614.73

Operating Expenses 685.65 548.58

Profit before Depreciation, Interest and Tax 78.02 66.15

Depreciation 8.75 8.05

Interest 3.56 1.44

Profit before Tax 65.71 56.66

Provision for Taxation (incl. deferred Income Tax) 17.72 19.61

Profit after Tax 47.99 37.05

Add: Profit brought forward from previous year 97.14 70.63

Amount available for appropriations 145.13 107.68

Appropriations

Proposed Dividend 8.33 6.06

Tax on Proposed Dividend 1.07 0.78

Transfer to General Reserve 4.80 3.70

Balance carried to Balance Sheet 130.93 97.14

145.13 107.68

1.1 Operating Results

The Company’s total revenue for the year at Rs. 763.67 crores registered an increase of 24% over the previous

year. The profit before tax at Rs. 65.71crores registered an increase of 16% over the previous year. The profit

after tax stood at Rs. 47.99 crores registering an increase of 30% over the previous year.

DIRECTORS’ REPORT

TO THE MEMBERS OF CMC LIMITED

Your Directors have pleasure in presenting the Twenty-eighth Annual Report and the Audited Statement of Accounts

for the year ended 31st March, 2004.

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2. DIVIDEND

Your Directors recommend payment of dividend at 55% of paid-up equity share capital for the year ended

March 31, 2004.

3. CHANGE IN SHAREHOLDING OF PROMOTERS

Under disinvestment programme, the Government of India has divested its remaining holding of 39,76,374

shares representing 26.25% of issued and paid-up equity capital of the Company by way of offer for sale to

the general public through 100% book building process. The discovered price under the said process was

Rs. 485 per share and retail investors had been offered shares at a discount of 5% over the discovered price,

i.e. Rs. 460.75 per share. The offer got very good response and was over-subscribed 11 times. The shares

were transferred on March 15, 2004. As a result, the Government has ceased to be a shareholder of the

Company.

Further, on March 29, 2004, Tata Sons Limited transferred its entire shareholding of 51.12% to Tata Consultancy

Services Limited, a subsidiary of Tata Sons Limited.

4. BUSINESS OPERATIONS

4.1 Domestic Operations:

4.1.1 Customer Services (CS)

Customer services SBU undertakes activities of IT Infrastructure development and management, network

design, consultancy and management, storage management, security solutions, business continuity/disaster

recovery, third party maintenance and equipment supply and integration.

The revenue of CS SBU from domestic operations increased by 41.7% to Rs. 476.32 crores during the year.

The CS SBU has positioned the Company as a dominant provider of end-to-end solutions and

services, encompassing comprehensive services of IT infrastructure design, implementation and life cycle

support.

Total Revenue: Rs. 614.73 crores

2003-04

Total Revenue: Rs. 763.67 crores

2002-03

E&T2%

INTL18%

ITES4%

SI11%

OTHERS2%

CS63%

OTHERS1%

INTL20%

E&T4%

ITES5%

SI16%

CS54%

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The CS SBU enhanced its position in Banks and Financial Institutions segment. During the year under review,

the SBU implemented large and complex IT infrastructure projects for four of the biggest banks in India. The

SBU managed the front-end and back-end IT operations of the entire Afro Asian Games conducted at

Hyderabad. This SBU also bagged a prestigious order from one of the State Governments to computerize

excise and taxation department of the State.

The CS SBU undertook a major drive for skill enhancement of its engineers. A larger number of its employees

got certifications from various OEMs like CISCO, SUN, HP, IBM etc. during the year.

4.1.2 Systems Integration (SI)

SI SBU undertakes the activities of solution deployment that includes software development, software

maintenance and support, turnkey project implementation and systems consultancy. The revenue of SI SBU

from domestic operations declined by 11.5% to Rs. 85.24 crores. SI SBU continues to be dominant player in

general insurance sector. The SBU got its first order for implementation of its insurance solution in private

sector during the year. The SBU also leveraged its finger printing solution for first civilian application at the

largest depository company in India. SI SBU has won a prestigious order for implementation of state-of-the

art trading solution at one of the largest stock exchanges in the Middle East. The SBU also got a major order

from one of the State Police Departments to implement Intelligence System Police Administration, General

Administration and Public Interface System.

4.1.3 IT Enabled Services (ITES)

During the year, the Company has changed the name of Indonet SBU to ITES. ITES SBU is a value added

service provider providing OMR/ICR based forms processing services, document management services,

managed network services, Electronic Data Interchange (EDI) services, web design and hosting services,

facility management etc. The revenue of ITES SBU from domestic operations increased by 7.4% to Rs. 32.34

crores. The ITES SBU successfully completed the largest ever project of its kind – the digitization of India

Census 2001 six months ahead of schedule.

4.1.4 Education & Training (E&T)

E&T SBU of the Company offers courses on information technology including professional courses, vendor

certified courses, career development courses, through its own and franchisee centers. The revenue of E&T SBU

from domestic operations declined by 28.3% to Rs.17.79 crores due to continued sluggishness in IT education

industry. In line with changed industry scenario, the SBU has started focusing on corporate training and training

in embedded systems. The Company entered into collaboration with Jadavpur University for high end courses

like bio-informatics and embedded system, National Technological University, Chhatisgarh for B.Sc (IT)

programme, University of Kolkata, Burdhaman University, Netaji Subhas Open University for MCA courses.

This SBU also tied up with Netg for content, e-learning, wave centres and has also started training of foreign

students under the scheme of Ministry of External Affairs. This SBU outsourced IT education for private

engineering colleges and has started giving training to teachers of different Polytechnics and also helping

in setting up prometric testing centres all over India.

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4.2 International Operations:

Increased focus on international markets is a part of the core strategy of the Company. The Company increased

its International revenue by 12.3% to Rs. 135.38 crores. The international market strategy of the Company

revolves around leveraging TCS’s international presence and CMC’s products and solutions.

The Company made further inroads in the hi-tech embedded systems space in the US market during the

year through TCS synergy. The Company also set up a dedicated Offshore Development Centre at its R&D

Centre, Hyderabad to develop Field Programmable Gate Arrays (FPGA) based solutions for one of the largest

suppliers of programmable logic solutions in the world.

The Company further consolidated its position in Middle East African region during the year by getting

orders in Biometric Solutions, e-Cops Solutions, Insurance and Education segment. Its Ports & Cargo Solutions

made further inroads in the European market. The ITES SBU of the Company made its entry in the international

BPO market by getting orders from North America. Your Company executes most of its export transactions

from two Software Technology Parks situated at Mumbai and Hyderabad.

5. ACTIVITIES AT CMC CENTRE, HYDERABAD

Activities of the various R&D and competency groups located in the CMC Center, Hyderabad are as under:

5.1 Real Time Systems (RTS) Group

The Real Time Systems Group activities continue to grow both in international and domestic markets. In the

International segment, the offshore business has grown up significantly during the year.

5.2 Finger Print Group

The Fingerprint Analysis and Criminal Tracing System (FACTS) was developed using our core competencies

in image processing and pattern recognition technology- a field in which your Company is one of the few IT

companies in the world conducting product development activities. This solution has been deployed in

various police departments in India and abroad. Your Company has extended its expertise to adopt this

solution for civilian applications.

5.3 Information Systems for Public Service (ISOPS) Group

Automatic Railway Ticketing System (ARTS) based ticketing machines have been upgraded significantly

and is being used for the Indian Railways unreserved ticketing system.

The group has also developed Centralised Ticketing System (CTS) comprising both reserved and unreserved

ticketing operations which can work both in stand-alone and in a network mode, currently under

implementation for one of the International Railways. The group has also developed a Point of Sale Terminal

for various applications in the retailing sector.

The other solutions developed by this group are Mobile Ticketing System (MTS), a total on-board ticketing

solution for checking authenticity of tickets.

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5.4 Visual Information Systems and Internet Commerce (VISIC) Group

The products developed by the group continued to be a vital component of solutions offered by the company

in the banking and financial services segment. The group also developed products and prototypes in areas

like e-Tendering, e-Voting, image based Cheque truncation and biometrics based authentication system for

access control applications.

5.5 Ports & Cargo Group

MACH and CALM are products addressing the need of ports to automate their container and other operations.

The products were customized and implemented in major ports in the country and five ports worldwide.

6. BUSINESS EXCELLENCE AND QUALITY INITIATIVES

In pursuit of implementation of Tata Business Excellence Model (TBEM) the company has put in place specific

process improvement initiatives in the area of project management, resource management, competency

management and improving internal communications. The company has initiated actions to further

strengthen the adoption and implementation of TBEM practices across the company. The Company is

targeting to achieve CMMI compliance in all delivery centers by 2004-05.

7. SUBSIDIARY COMPANY

During the year, your Subsidiary Company, CMC Americas Inc. has changed its financial year from December

to March in alignment with the parent Company.

In terms of the approval granted by the Central Government under section 212(8) of the Companies Act,

1956, a copy of the Balance Sheet, Profit & Loss Account, Reports of the Board and the Auditors of the

Subsidiary company has not been attached.

The related detailed information of the Annual Accounts of the Subsidiary Company will be made available

to the Holding and Subsidiary Company investors seeking such information at any point of time. The Annual

Accounts of the subsidiary company are also kept for inspection by any investors at the Registered Office of

your Company. However, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered

Accountants of India, the Consolidated Financial Statements presented by the Company include the financial

information of its Subsidiary.

8. FIXED DEPOSIT

During the year, the Company has not accepted any fixed deposits under Section 58A of the Companies

Act, 1956.

9. LISTING

Pursuant to the resolution passed by you at the 27th Annual General Meting held on July 31, 2003, your

Company had made applications to the Stock Exchanges at Delhi, Hyderabad, Chennai and Kolkata for

voluntary delisting of the Company’s shares. The Hyderabad and Delhi Stock Exchanges have since delisted

the shares of the Company. The equity shares will continue to be listed on The Stock Exchange, Mumbai and

National Stock Exchange.

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10. DIRECTORS

Mr S S Ghosh retired from the Board on December 12, 2003 on superannuation from the services of the

Company. He served the Company for more than 25 years in various positions.

Mr Y S Bhave resigned from the Board w.e.f. November 04, 2003. Mr R Chandrashekhar was nominated by the

Government of India as Director w.e.f. December 04, 2003. Consequent upon disinvestment of remaining

shares by the Government of India, Mr R Chandrashekhar and Dr U P Phadke resigned from the Board w.e.f

April 26, 2004.

The Board acknowledges the invaluable services rendered by Mr Ghosh, Mr Bhave, Mr Chandrashekhar and

Dr Phadke during their tenure.

Mr R Ramanan was elevated as Managing Director & CEO of the Company. A resolution seeking confirmation

of his appointment as Managing Director & CEO has been recommened for your approval.

Mr. Surendra Singh and C B Bhave are retiring from the Board by rotation at this Annual General Meeting

and, being eligible, offer themselves for re-election.

11. COMMUNITY DEVELOPMENT

It has been the Company’s endeavor to make a distinctive difference to the communities it serves. The

Company has identified students, economically and socially underprivileged, and physically and mentally

challenged people as the target community. The Company is focusing on IT education and health care in

target communities. The Company has undertaken SPICE (School Project – Initiative for Computer Education)

to spread computer literacy amongst school children in rural and backward areas. The Company organized

“Gift of sight” campaign under which Eye Donation Camps were organized by the Company at various

locations. A large number of employees bequeathed their eyes to the National Eye Bank after the death. The

Company also organized blood donation camps at various regions during the year. The Company participated

in the TATA Group initiative to join hands with the Government in cleanliness drive.

12. CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management

Discussion and Analysis, Corporate Governance as well as the Auditors’ Certificate regarding compliance of

conditions of Corporate Governance form part of this Annual Report.

13. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required under the Companies (Disclosure of particulars in the Report of Board of Directors)

Rules, 1988 in respect of energy conservation, technology absorption and foreign exchange earnings and

outgo is given in Annexure-I to this Report.

14. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors based on the

information and representations received from the operating management confirm that:

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i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed

with no material departures;

ii) The Directors had selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the

state of affairs of the Company as on 31st March, 2004 and of the profit of the Company for that

period;

iii) The Directors had taken proper and sufficient care to the best of their knowledge and ability for the

maintenance of adequate accounting records in accordance with the provisions of the Companies

Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and

other irregularities and

iv) The Directors had prepared the Annual Accounts on a ‘going concern’ basis.

15. AUDITORS

M/s S B Billimoria & Co., the Statutory Auditors of the Company, hold office until the ensuing Annual General

Meeting. The said Auditors have under Section 224(1) of the Companies Act, 1956, furnished the certificate

regarding their eligibility for re-appointment.

16. PARTICULARS OF STAFF

Information as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars

of Employees) Rules, 1975, as amended, regarding particulars of employees drawing remuneration of Rs. 24

lacs per annum and above is NIL.

17. ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to the Department of Information Technology and business

associates for their support and contribution during the year. The Directors would also like to thank the

employees, shareholders, customers, suppliers and bankers for the continued support given by them to the

Company and their confidence reposed in the management.

For and on behalf of the Board

Mumbai S. RAMADORAI

July 17, 2004 Chairman

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Annexure-I

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

FORM A

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY:

The Company has continued its endeavors for conservation and optimal use of energy. The Technical and Infrastructure DevelopmentService Groups at different locations have devised mechanisms to improve the conservation of energy in all its forms as utilized in theorganization.

CMCalso continues to carry out research to devise new mechanisms to apply Information Technology (IT) for achieving energy conservation.The major areas in which Research & Development is carried out this year include Automated Monitoring and Control of Electrical LoadDispatch and Distribution Automation in the power sector; Monitoring, Leak-Detection and Control in Oil and Gas pipelines and WaterResources Management and Monitoring and Control in Railway Traction.

CMC has provided energy-saving IT enabled solutions this year to Electricity Boards and Indian Railways thus making it possible for theseorganizations to effectively monitor, control and conserve energy resources.

FORM B

PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:

1. CMC’s project activities during the year derived major technology support from R&D in the following areas:

� Use of Java, XML and smart card Technologies to develop a host of e-Commerce products

� Application of Information Technology in ‘e-Governance’ projects

� On line unreserved ticketing system for Railways using embedded client technology

� Cost-effective PDA-based solutions for Health Care in rural India

� GPS based vehicle tracking systems solutions

2. Benefits derived from the above:

� Many new technologies developed at R&D Centre have been used in projects in India and abroad

� Developing Technologies to optimize the operations at the Generation, Distribution and Transmission of electricity

� Developing applications requiring tracking of vehicles can be used for tracking police vehicles, buses, ambulances, fire enginesetc.,

� Making forays into the e-Commerce arena with latest standards R&D and other Application Specific Development Centre (ASDC)activities have continued to commercialize the technologies developed in respective areas. All design, development, support andmaintenance activities at the R&D Centre are carried on under the ISO-9001:2000 certified processes and practices. Activities areinitiated towards CMM Level 5 assessment.

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3. Expenditure on R&D

(Rs. in crores)

Particulars 2003-04 2002-03

A Capital 0.68 0.14

B Recurring 10.86 7.81

C Total 11.54 7.95

D Total R&D Expenditure as a Percentage of Turnover 1.51 1.29

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

1. Efforts in brief, made towards technology absorption and innovation are as under:

� CMC through its R&D division proactively develops technology for its business needs. It also uses available state-of-the-art-technology in conceptualizing solutions. Technologies developed by R&D are used extensively by our Business Group for providingsolutions to our customers.

� CMC constantly gives training to its staff to enable them to adapt newer technologies and apply them to the problem domains.

� CMC is in the process of exchanging technological advances and developments with TCS – one of the oldest IT Companies inIndia.

2. Benefits derived as a result of the above:

� The work done at the R&D Centre forms the core of the most of the solutions provided by the Strategic Business Units (SBUs) andhence is directly responsible for the improved profitability of the Company

� Another significant benefit is the social benefits arising out of the use of IT in core sectors and ‘IT-enabling’ the Country-especiallyin Healthcare.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information of the foreign exchange earnings and outgo is contained in the Notes to the Accounts of the Annual Report.

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MANAGEMENT DISCUSSION & ANALYSIS

Overview

The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956 and Generally AcceptedAccounting Principles (GAAP) in India. There are no material departures from prescribed accounting standards in the adoption of theaccounting standards. The management of CMC Limited accepts responsibility for the integrity and objectivity of these financial statements,as well as for various estimates and judgements used therein. These estimates and judgements relating to the financial statements havebeen made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the form and substanceof transactions and the state of affairs and profits for the year.

Industry Structure and Development

The IT industry has shown signs of recovery during the year. As per Dataquest, after growing at an average of around 4% p.a. in previous twoyears, the Domestic IT spend has grown by almost 24% during 2003-04. As compared to this, CMC’s domestic revenue has increased by 26%thereby increasing its market share. The software exports from India are estimated to have grown by 24% during the year. Internationalsoftware services revenue of the Company increased by 19%.

The domestic growth has been driven by mainly increased IT spends by Banks, Financial Services & Insurance, Telecom, Government andBPO segments. However IT Education & Training segment has remained flat during the year. There is a distinct shift in Government spendingfrom automation of offices to such core governance applications like citizen services, fiscal management and also other governanceinfrastructure in general.

The deregulation of the financial sectors like Banking and Insurance has brought in a fresh wave of IT investments for upgrading theinfrastructure to meet the standards set by the new entrants thereby retaining their competitive advantage.

Software exports from India are clearly demonstrating increased offshore delivery model. Offshore revenue is estimated to have increasedits share from 57% to 60% as per NASSCOM. The Company’s offshore revenue also increased by 30% during the year and currently itaccounts for 44% of international revenue.

Opportunity and Threats

Opportunity

TThe company is strong in providing IT infrastructure setup, support and management as well as in the system integration business in thedomestic market, namely in verticals like insurance and banking etc. It also has built up capabilities in back office data conversion and datacenter applications.

The strong suite of IT assets and competency pools created by the company over the years is now mature to be scaled up to internationalstandards thereby unlocking the inherent value.

The company now has the extended reach and brand equity of the TATA group to market its products and services in unrepresentedgeographies and newer customer segments.

Services will continue to be a key business area and will be strengthened to improve price performance and market share. Appropriatebusiness alliance will be entered into to compliment internal efforts towards consolidation and growth.

Threats:

The emergence of international IT players as new entrants in the domestic solutions projects is a new factor in the competitive scenario inIndia.

The company has duality of relationship with its major suppliers. In specific instances the company partners with the suppliers to offer themost competitive products at optimal prices to its customers and there are many instances where the company ends up competing withthem. The company has in an effort to address the situation entered into alliances with major suppliers to lend some predictability to itsoperations.

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Segment-wise Review

Customer Services

The customer services earned revenue of Rs. 476.32 crores registering an increase of 41.7% over previous year. The revenues of CS SBUlargely are impacted by the level of domestic spend on IT hardware, peripherals, networking and hardware services, which has increased by25% during the year. The share of CS SBU in total revenue increased from 54.7% to 62.4%.

Systems Integration

The Systems Integration earned revenue of Rs. 85.24 crores registering a decline of 11.5% over previous year. The share of SI SBU in totalrevenue declined from 15.7% to 11.2%.

ITES

The ITES earned revenue of Rs. 32.34 crores registering an increase of 7.4% over previous year. The share of ITES SBU in total revenuedeclined from 4.9% to 4.2%.

Education & Training

The E&T SBU earned revenue of Rs. 17.79 crores registering a decline of 28.3% over previous year reflecting the continued sluggishness inthe industry. The share of E&T SBU in total revenue declined from 4.0% to 2.3%.

International

The Company earned International revenues of Rs. 135.38 crores registering an increase of 12.2% over previous year mainly on account ofnew businesses earned in Middle East and Africa Regions and projects being jointly executed by CMC and TCS especially in the areas ofPorts and Cargo and Embedded Systems. The international service revenue, however, increased by 19% from Rs. 113.47 crores to Rs. 135.38crores. The share of international revenue in total revenue declined from 20% to 18%. Of the total International Revenue, onsite revenueconstituted 56% whereas the balance was offshore. Offshore Revenue at Rs. 59.56 crores registered an increase of 30.5% over previous year.Onsite revenue at Rs. 75.82 Crores registered an increase of 1.1% over previous year.

Future OutlookThe Company believes that the domestic IT spends is likely to continue its current upward trend. The domestic IT spend is expected to bedriven by banks, financial institutions, telecom, oils and gas, power and government sectors. In addition mid and large size companies feelthe need of increased IT spends for process improvements and efficiency enhancement to face global competition. The Company has alsoexperienced increased acceptance of its solutions in the international market. The Company strategy revolves around leveraging itscompetencies/expertise and its strategic relationship with TCS to exploit these emerging market opportunities.

Financial Performance

Revenues:

During the year under review, the Company earned total revenue of Rs. 763.67 crores compared with Rs. 614.73 crores in the previous yearregistering a growth of 24%. The income from sales and services at Rs. 747.07 crores registered a growth of 23% compared with Rs. 607.99crores earned in the previous year mainly on account of 12.2% growth in international revenue and 44% growth in equipment supplybusiness. However revenue from Education and Training suffered further decline of 27.9% in line with continuing sluggishness in theindustry. The other income increased by 146.3% at Rs. 16.60 crores compared with Rs. 6.74 crores earned in the previous year mainly onaccount of provisions no longer required written back as under:

The segment-wise breakdown of total revenue is given below:(Rs. Crores)

Segment 2003-04 2002-03

Domestic- Customer Services 476.32 336.10- Systems Integration 85.24 96.34- ITES 32.34 30.10- Education & Training 17.79 24.81

International 135.38 120.64Other Income 16.60 6.74Total 763.67 614.73

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Expenditure:

During the year under review the operating expenses at Rs. 685.65 crores increased by 25% compared with Rs. 548.58 crores incurred lastyear mainly on account of increase in business. As a percentage of operating revenue, these expenses registered an increase from 90.2% to91.8% mainly on account of increase in purchase of equipments for resale. The cost of equipment purchase for resale as a percentage ofoperating revenue increased from 41.4% to 49.4% in line with increase in revenue from sale of purchased equipment. Manpower cost hasincreased by 9.4% from Rs. 120.37 crores to Rs. 131.72 crores mainly on account of impact of new salary structure implemented from 1st

October, 2003. However, manpower cost as a percentage of operating revenue has declined from 19.8% to 17.6% mainly on account ofincrease in revenue.

The interest cost increased from Rs. 1.44 crores to Rs. 3.56 crores during the year under review mainly on account of increase in borrowingsto finance working capital. Depreciation charge increased from Rs. 8.05 crores to Rs. 8.75 crores mainly on account of increase in gross fixedassets by Rs. 5.58 crores.

As a result, Profit before Tax (PBT) has increased by 16% from Rs. 56.66 crores to Rs. 65.71 crores. However, PBT as a percentage of totalrevenue has declined from 9.2% to 8.6%.

The provision for taxation (including deferred tax) declined from Rs.19.61 crores in 2002-03 to Rs.17.72 crores in 2003-04 resulting in areduction of 9.6% despite an increase of 16% in PBT, mainly due to higher income from exports eligible for concessional tax treatment. Asa result effective tax rate for the Company declined from 34.6% to 27%.

As a result, Profit after Tax (PAT) has increased from Rs. 37.05 crores to Rs. 47.99 crores, an increase of 29.5% over the previous year. PAT as apercentage of total revenue has increased from 6% to 6.3%.

Financial Position

Fixed assets

The gross fixed assets as at 31st March, 2004 was Rs. 131.05 crores as compared to Rs. 125.46 crores as at 31st March, 2003, resulting in anincrease of 4.5%, mainly on enhancement in IT and office infrastructure.

Working capital

Net current assets as at 31st March, 2004 increased to Rs. 168.02 crores compared with Rs. 115.72 crores as at 31st March, 2003 mainly onaccount of increase in current assets from Rs. 402.59 crores to Rs. 446.65 crores and decrease in current liabilities and provision from Rs.286.87 crores to Rs. 278.63 crores. Increase in current assets is attributable mainly to increase in inventory from Rs. 17.39 crores to Rs. 18.48crores, and increase in unbilled revenue from Rs. 61.32 crores to Rs. 114.93 Crores. However sundry debtors decreased from Rs. 207.91 croresto Rs. 179.82 crores despite 24% increase in total revenue as a result of focused and intense follow-up and monitoring of collections. As aresult, the level of debtors in terms of number of days has declined from 123 days sales to 88 days. The unbilled revenue increased from 38days sales to 56 days sales mainly on account income accrued on some long term projects being executed by the Company, where thebilling mile stones have not been reached. Decrease in current liabilities and provisions are attributable mainly to decrease in sundrycreditors from Rs. 131.69 crores to Rs. 106.51 crores due to more procurement from MNC vendors offering shorter credit.

Capital Structure

Net worth of the Company as at 31st March, 2004 was Rs. 160.64 crores compared with Rs. 122.43 crores as at 31st March, 2003 resulting in anincrease of 31.2% on account of retained income.

Loan funds as at 31st March, 2004 was Rs. 66.18 crores compared with Rs. 51.33 crores as at 31st March, 2003 resulting in an increase of 29%mainly to finance increase in working capital.

As a result the debt equity ratio decreased from 0.42:1 to 0.39:1.

Risk and Concerns

A comprehensive and integrated risk management framework forms the basis of all the de-risking efforts of the Company. Formal reportingand control mechanisms ensure timely information availability and facilitate proactive risk management. These mechanisms are designedto cascade down to the level of the line managers so that risks at the transactional level are identified and steps are taken towards mitigationin a decentralised fashion.

The Board of Directors is responsible for monitoring risk levels on various parameters and the Managing Director/Deputy Managing Directorensures implementation of mitigation measures. The Audit Committee provides the overall direction on the risk management policies.

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1. Business risks:

Excessive dependence on any single business segment increases risks and needs to be avoided. The Company has adopted prudentialnorms wherever required, to prevent undesirable concentration in any one vertical technology client or geographic area.

Excessive exposure to a few large clients has the potential to impact profitability and to increase credit risk. However, large clients andhigh repeat business lead to higher revenue growth and lower marketing cost. Therefore, the Company needs to strike a balance. CMCactively seeks new business opportunities and clients to reduce client concentration levels.

A high geographical concentration of business could lead to volatility because of political and economic factors in target markets.However, individual markets have distinct characteristics – growth, IT spends, willingness to outsource, costs of penetration, and pricepoints. Cultural issues such as language, work culture and ethics, and acceptance of global talent also come into play. Due to thesebusiness considerations, the company has decided not to impose any rigid limits on geographical concentration.

Proactively looking for business opportunities in new geographies and thereby increasing their contribution to total revenues helpsmanage this risk.

Vertical domains relate to the industries in which clients operate. CMC has chosen to focus on selected vertical segments with a viewto leverage accumulated domain expertise to deliver enhanced value to its clients.

Being a company exposed to rapid shifts in technology, an undue focus on any particular technology could adversely affect the riskprofile of the company. Given the rapid pace of technological change, CMC has chosen not to impose rigid concentration limits. Often,industry characteristics and market dynamics determine the choice of technology.

2. Financial risks

The debtor recovery cycle of the Company is long due to dominance of Government entities in its customer profile resulting in needto finance higher level of working capital. The Company is broad-basing its client profile in order to reduce debtor’s recovery cycle onone hand and to strengthen the collection efforts on the other hand. In the interim, the Company is confident to have adequatefunding to finance its working capital requirements.

3. Legal risks

Litigation regarding intellectual property rights, patents and copyrights is significantly high in the software industry. In addition, thereare other general corporate legal risks. The management has clearly charted out a review and documentation process for contracts.Legal compliance issues are an important factor in assessing all new business proposals.

4. Internal process risks

The key resource for CMC is its people. The company has been able to create a favorable work environment that encourages innovationand meritocracy. An employee-friendly work environment combined with challenging job opportunities, which ensures that CMC haslow employee attrition rates.

Risk management processes at the operational level are a key requirement for reducing uncertainty in delivering high-quality softwaresolutions to clients within budgeted time and cost. Adoption of quality models such as the Software Engineering Institute’s CapabilityMaturity Model (SEI-CMM) has ensured that risks are identified and measures are taken to mitigate these at the project plan stageitself.

The company evaluates technological obsolescence and the associated risks on a continuing basis and makes investments accordingly.

Internal control systems and their adequacy

The Company has an adequate system of internal controls implemented by the management towards achieving efficiency in operations,optimum utilisation of resources and effective monitoring thereof and compliance with applicable laws. The system is continuously reinforcedwith analysis of data to strengthen it to meet the changing requirements.

The system comprises well defined organisation structure, pre-identified authority levels and documented policy guidelines and manualsfor delegation of authority.

A qualified and independent Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy of internal

controls.

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Human Resources

The Company’s HR Policy aims to enable scalability of our business and process, simultaneously achieving a high level of ownership andinvolvement of employees. The Company’s HR policy is built around: Trust and Faith, Flexibility, Open Culture, Development of Employeesbeing prime responsibility, concern for individuals etc.

The Company’s initiatives, policies and procedures evolved through a consultative process with the employees helped in creating a non-hierarchical, flexible and informal work environment. Company gives importance at the time of recruitment and tries to attract the bestavailable talent and effectively deploy for the growth of business.

The Company revamped the employee compensation structure w.e.f. 1st October, 2004 to make it more flexible and tax effective to meetemployee expectation, and is structured on cost to company concept. The new employee friendly structure has two components – fixedand variable. The variable salary depends on company performance as well as performance of the individual employee and the concernedgroup/SBU.

The staff strength of the Company as on March 31, 2004 was 2985 as compared to 3368 as on March 31, 2003.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, expectations or predictions may be forwardlooking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in thestatement. Important factors that could influence the Company’s operations include change in Government regulations, tax laws, economicand political developments within and outside the country and such other factors.

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CORPORATE GOVERNANCE REPORT

Company’s philosophy on Corporate Governance

As part of the Tata Group, CMC’s philosophy on Corporate Governance is founded upon a rich legacy of fair and transparent governancepractices. The Corporate Governance philosophy has been further strengthened with the adoption of the Tata Business Excellence Modeland Tata Code of Conduct two years ago, and the adoption, of the requirements under Clause 49 of the Listing Agreement with the stockexchanges by the Company.

Board of Directors

(a) CompositionThe present Board consists of one executive Director and six non-executive Directors. Out of the non-executive Directors, four are IndependentDirectors and the other two represent the Promoters. The non-executive Directors with their diverse knowledge, experience and expertisebring in their independent judgment in the deliberations and decisions of the Board. Apart from the sitting fees paid for attending Board/Committee Meetings, the non-executive Directors did not have any material pecuniary relationship or transactions with the Companyduring the year 2003-04.

The Company has a non-executive Chairman and the number of Independent Directors is more than one-third of the total number ofDirectors. The number of non-executive Directors is more than 50% of the total number of Directors. The Company, therefore, meets withthe requirements relating to the composition of Board of Directors.

(b) Attendence of each Director at the Board Meetings/Annual General MeetingDuring the year 2003-04 five meetings of the Board of Directors were held on May 07, July 31, October 21, December 22 in 2003 and onJanuary 28 in 2004.

The 27th Annual General Meeting of your Company was held on July 31, 2003.

None of the Directors of the Board serve as Members of more than 10 Committees nor are they Chairman of more than 5 Committees, asper the requirements of the Listing Agreement.

A detailed explanation in the form of a table is given below:

Name Category Board Attendance No. of outside No. of outsideMeetings at the Directorships4 Committeeattended AGM held Positions held

during the on 31.07.2003 Indian Foreign Member Chairmanyear

Mr S Ramadorai Promoter 4 Yes 09 01 05 02 (Chairman) Non-executiveMr S S Ghosh1 Promoter 3 Yes _ 01 _ _

ExecutiveMr R Ramanan Promoter 5 Yes _ 01 _ _

ExecutiveMr Ishaat Hussain Promoter 5 Yes 13 1 09 04

Non-executiveMr Y S Bhave2 Govt. Nominee 1 No 03 - 03 -

Non-executiveMr R Chandrasekhar3 Govt. Nominee 2 N.A. - - - -

Non-executiveDr U P Phadke5 Govt. Nominee 3 No 02 _ 01 _

Non-executiveDr KRS Murthy Independent 5 Yes - _ - -

Non-executiveMr S Shroff Independent 1 No 05 _ 05 _

Non-executiveMr Surendra Singh Independent 5 Yes 06 _ 03 03

Non-executiveMr C B Bhave Independent 3 No 02 _ 01 -

Non-executive

1Mr SS Ghosh superannuated on December 12, 20032Mr YS Bhave resigned from the Board w.e.f. November 4, 20033Mr R Chandrashekhar has joined the Board w.e.f. December 4, 2003 as Government Nominee and resigned w.e.f. April 26, 2004.4This does not include directorships in Private Limited Companies.5Dr UP Phadke resigned from the Board w.e.f April 26, 2004.

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• Audit CommitteeThe Company complies with the provisions of Section 292A of the Companies Act, 1956, as well as per listing agreement pertaining to theAudit Committee and its functioning. The scope of the Committee includes:

• review of the Company’s financial reporting process, the financial statements and financial/risk management policies.• review of the adequacy of the internal control systems in the Company.• review of the internal audit report forwarded by the internal auditors.• discussions with the management and the external auditors, the audit plan for the financial year and a joint post-audit review of the

same.• Review the Annual financial statements before submission to the Board.• Review of the Statutory and Internal Auditors Remuneration.

During the year, 6 Audit Committee meetings were held on May 07, June 03, July 31, October 21, December 22 in 2003 and on January 28 in2004. The Audit Committee meetings are held both at Corporate Office and other locations and attended by the Chief Financial Officer, andthe representatives of Internal Auditors and Statutory Auditors are also invited. The Company Secretary acts as the Secretary to the AuditCommittee. The Chairman of the Audit Committee was also present at the last Annual General Meeting of the Company.

The Composition of the Audit Committee and number of meetings attended by the Members are given below:

Name of Member Composition of the Audit Committee Number of meetings attended

Dr KRS Murthy Chairman - Independent Director 6

Mr R Chandrashekhar1 Govt. Nominee - Non Executive 1

Mr YS Bhave2 Govt. Nominee - Non Executive 1

Mr CB Bhave Independent Director 4

Mr Surendra Singh Independent Director 6

1From December 4, 2003 to April 26, 20042Resigned w.e.f. November 04, 2003

Pursuant to Clause-49(II) of the Listing Agreement, Mr R Chandrashekhar is having requisite financial and accounting knowledge andhaving experience as I.A.S. Officer working in his capacity as Joint Secretary in the Ministry of Information Technology.

MANAGERIAL REMUNERATION

a. Remuneration CommitteeThe Company has constituted Remuneration Committee on December 22, 2003. The Remuneration Committee consists of non-executiveDirectors, with the Chairman being an independent Director. The members of the Remuneration Committee are as follows:

- Dr KRS Murthy .. Chairman- Mr S Ramadorai- Mr Surendra Singh- Mr CB Bhave

The scope and function of the Remuneration Committee is to review and fix the remuneration payable to executive Directors andother senior employees of the Company.

Mr R Ramanan has been promoted to Managing Director & Chief Executive Officer of the Company w.e.f December 13, 2003 onsuperannuation of Mr SS Ghosh.

Managing Director’s terms & conditions of appointment and payment of remuneration had been fixed by the Board subject toShareholders approval in the ensuing Annual General Meeting of the Company.

The Non-Executive Directors are entitled for sitting fee only for attending the Board/Committee Meetings.

b. Remuneration PolicyThe remuneration of the executive directors/ senior managers is decided by the remuneration committee based on criteria such asindustry benchmarks, the Company’s performance vis-à-vis the industry, performance track record of the executive director(s)/appointee(s). The Company pays remuneration by way of salary, perquisites and allowances (fixed component and variable). Annualincrements are decided by the Remuneration Committee within the salary scale approved by the Members and are effective April 1,annually.

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A sitting fee of Rs. 5,000 per meeting of the Board and Rs. 2,500 per meeting of the Audit Committee, Remuneration Committee, ShareTransfer-cum-Shareholders Grievance Committee and other committees was paid upto December, 2003 and Rs. 10,000 per meeting ofthe Board, Audit and Rs. 5,000 per meeting of the Remuneration, Share transfer cum shareholders grievance committee is paid forattendance at the meetings of the said Board/Committees to its members from January 2004.

c. Remuneration to Directors

• Non-Executive Directors

Name of Director Sitting Fee paid (Rs.)

Mr. S. Ramadorai 20,000Mr. Ishaat Hussain 30,000Mr. Y. S. Bhave 17,500Mr. R. Chandrashekhar 30,000Dr. U. P. Phadke 15,000Dr. K. R. S. Murthy 52,500Mr. Shardul Shroff 27,500Mr. Surendra Singh 95,000Mr. C. B. Bhave 37,500

• Executive Director

Salary and Perquisites paid to Mr. Ramanan, Managing Director & CEO during the year 2003-04, Rs. 572446 and Rs. 250686 respectively.

Share Transfer-cum-Shareholders Grievance CommitteeThe Share Transfer cum Shareholders Grievance Committee is constituted to consider and approve various requests for transfer, sub-division,consolidation, renewal, exchange, issue of new Certificates in replacement of old ones and redressal of the grievances of the Shareholdersas may be received from time to time.

The present composition of the Share Transfer cum Shareholders Grievance Committee is as under:

Name of Member Category

Mr Surendra Singh .. ChairmanMr S S Ghosh .. Member(upto Dec 12, 2003)Mr R Ramanan .. MemberMr Y S Bhave .. Member(upto Nov 11, 2003)Mr R Chandrashekhar .. Member(from 11.12.03-26.04.04)Mr S Shroff .. MemberMr Vivek Agarwal .. Member (Company Secretary)

The Committee has had 14 Meetings during the year ended March 31, 2004 on April 14, June 16, July 04, July 31, September 09, September26, October 10, November 17, December 08, December 22 in 2003 and January 12, January 28, February 19 and March 03 in 2004 and a totalof 126 Meetings till March 31, 2004 have taken place since its constitution.

Mr Vivek Agarwal, Company Secretary, is the Compliance Officer and can be contacted at:

CMC Limited Tel: 91-11-23736151PTI Building, 5th Floor Fax:91-11-237361594, Sansad Marg E-mail: [email protected] Delhi-110001

301 members’ complaints/queries were received during the period under review and there were no complaints/queries pending as onMarch 31, 2004.

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COMMITTEE OF DIRECTORS

In addition to the above Committees, the Board has constituted Ethics and Compliance Committee w.e.f from 28 January 2004 for thefollowing purpose:

– Set forth the policies relating to and oversee the implementation of the code of conduct for prevention of insider trading and code ofcorporate disclosure practices.

– Take on record the status reports prepared by the compliance officer dealing in securities by the specified persons on monthly basis.– Decide penal action in respect of violation of the SEBI Regulations/code by any specified person.

This committee consists of the following members:

Mr Surendra Singh .. ChairmanMr R RamananMr Shardul ShroffMr R Chandrashekhar(from 11.12.03-26.04.04)Mr Vivek Agarwal

No Committee meeting has been held during the year ended March 31, 2004.

GENERAL BODY MEETINGS

Location and time of General Meetings held in the last 3 years:

Year Type Date Venue Time

2001 AGM 28.09.2001 CMC Centre, Gachibowli 2.30 p.m.Old Mumbai Highway,

Hyderabad

2001 EGM 01.12.2001 - do - 12 Noon.

2002 AGM 29.08.2002 - do - 2.30 p.m.

2003 AGM 31.07.2003 - do - 2.30 p.m.

Whether Special Resolutions:

(a) Were put through postal ballot last year - NoDetails of voting pattern - N.A.Persons who conduct the postalballot exercise- - N.A.

(b) Are proposed to be conducted through - Nopostal ballot –

• Disclosures

i) During the year under review, there were no materially significant related party transactions with its promoters, directors, managementand subsidiaries that had a potential conflict with the interest of the Company at large.

ii) The Company has complied with all rules and regulations prescribed by the Stock Exchanges, Securities and Exchange Board of Indiaor any other Statutory Authority relating to the capital markets during the last three years. No penalties or strictures have been imposedby them on the Company.

• Means of Communication

Half-yearly report sent to each household : The results of the Company are published in theof shareholders newspapers.

Quarterly results and in which newspaper : Results are normaly published in Business Standardnormally published in. and in Eenadu (Telugu – Hyderabad edition).

Any website where displayed. : Yes, the results are displayed on the Company’s website www.cmcltd.com

Whether it also displays official news releases : Yes

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Whether the website displays the presentation : Yes. The Company holds an Analysts Meet after themade to the institutional investors and to quarterly, half yearly and Annual Accounts, have beenthe analysts. adopted by the Board of Directors, where information is disseminated and

analysed.

Whether Management Discussion and Analysis : Yes. Management Discussion and Analysis forms part ofis a part of Annual Report or not. Annual Report.

Compliance OfficerMr Vivek AgarwalCompany Secretary & Legal Head.

Address:CMC Limited,PTI Building, 5th Floor4, Sansad MargNew Delhi-110 001Phone: +91-11-23736151-58Ext 632

+91-11-23738075 (Direct)Fax : +91-11-23736159e-mail : [email protected]

General Shareholder InformationAnnual General Meeting:

Date and time : August 30, 2004 at 2.30 p.m.

Venue : Bhartiya Vidya Bhavan AuditoriumBasheerbaghHyderabad-500029

Financial Calendar : 1st April to 31st March

Financial reporting for

a) Quarter ending June, 30, 2004 : July, 2004

b) Quarter ending Sept. 30, 2004 : October, 2004

c) Quarter ending Dec. 31, 2004 : January, 2005

d) Quarter ending March, 31 2005 : April/May, 2005

Date of Book Closure : Thursday, August 26, 2004 to Monday, August 30, 2004(both days inclusive)

Dividend Payment Date: : The dividend warrants will be posted with in a week’stime of the A.G.M. on and after August 30, 2004.

Listing:The Stock Exchanges on which the Company’s shares are listed:

The Stock Exchange, The Calcutta Stock The National Stock ExchangeMumbai, Phiroze Association Ltd. Association of India Ltd.Jeejeebhoy Towers 7, Lyons Range Exchange Plaza, 5th FloorDalal Street Kolkata-700001 Plot No.C/1, G BlockMumbai-400001 Bandra-Kurla Complex

Bandra (E), Mumbai-400051

Madras Stock ExchangeAssociation Ltd.11, Second Line BeachChennai-600001

The Company, has already applied for delisting of its shares from Madras, and Kolkata Stock Exchanges and their communications areawaited.

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Listing Fees:The Company has paid annual listing fees for the year 2004-05.

Stock Code

The Stock Exchange, Mumbai : 517326The National Stock Exchange : CMC

• Market price informationThe reported high and low closing prices during the year ended March 31, 2004 on the National Stock Exchange and the Stock Exchange,Mumbai, where your Company’s shares are frequently traded, are given below:

National Stock Exchange The Stock Exchange, MumbaiMonth High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

April-03 543.40 445.25 543.00 445.00

May-03 532.80 417.00 532.00 420.00

June-03 499.00 441.50 499.00 446.00

July-04 524.70 412.25 523.00 427.10

Aug-03 464.00 422.00 467.00 417.60

Sept-03 534.50 357.90 533.80 438.50

Oct-03 549.80 453.00 534.50 452.00

Nov-03 526.00 453.60 529.80 454.00

Dec-03 725.00 490.00 730.00 516.00

Jan-04 679.90 553.35 680.00 565.00

Feb-04 604.90 455.80 604.00 491.00

March-04 648.00 460.00 601.25 461.50

• Performance in Comparison to BSE SensexThe performance of the Company’s scrip on the BSE as compared to the Sensex is as under:

Month BSE Sensex CMC LIMITED

High Low High (Rs.) Low (Rs.)

April 2003 3221.90 2904.44 543.00 445.00

May 2003 3200.48 2934.78 532.00 420.00

June 2003 3632.84 3170.38 499.00 446.00

July 2003 3835.75 3534.06 523.00 427.10

August 2003 4277.64 3722.08 467.00 417.60

September 2003 4473.57 4097.55 533.80 438.50

October 2003 4951.11 4432.93 534.50 452.00

November 2003 5135.00 4736.70 529.80 454.00

December 2003 5920.76 5082.82 730.00 516.00

January 2004 6249.60 5567.68 680.00 565.00

February 2004 6082.80 5550.17 604.00 491.00

March 2004 5951.03 5324.78 601.25 461.50

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• Registrars & Share Transfer Agents:Members are requested to correspond with the Company’s Registrars & Share Transfer Agents – MCS Limited quoting their folio number atthe following address:

MCS LimitedSrivenkatesh BhavanW-40, Okhla Industrial Area, Phase IINew Delhi-110020Tel: 011-51609386Fax: 011-26384907Email: [email protected]

• Share Transfer SystemShares lodged for transfer at the Registrar’s address are normally processed and approved by Share Transfer cum Shareholders GrievanceCommittee on a fortnight basis. All requests for dematerialisation of shares are processed and the confirmation is given to the Depositorieswithin 15 days. Grievances received from Members and other miscellaneous correspondence on change of address, mandates etc. areprocessed by the Registrars within 30 days.

• Distribution of shareholdingDistribution of shareholding as on March 31, 2004:

No. of shares No. of % of Total no. of % of holdingshareholders shareholders shares

1-500 112470 99.53 1642513 10.84501-1000 274 0.24 203762 1.341001-2000 82 0.07 124784 0.822001-3000 50 0.04 123344 0.813001-4000 24 0.02 86093 0.574001-5000 15 0.01 68160 0.455001-10000 27 0.02 199586 1.3210001 & above 59 0.07 12701758 83.85Total 113001 100.00 15150000 100.00Physical Mode 103 0.09 18911 0.12Electronic Mode 112898 99.91 15131089 99.88

• Shareholding patternShareholding pattern as on March 31, 2004:

Category No. of shares Percentage of issuedheld share capital

Tata Group of Companies 7774961 51.32Mutual Funds and UTI 1199663 7.91Banks 23600 0.16Financial Institutions/ Insurance Companies 1998794 13.19FIIs 1119771 7.40NRIs/Foreign Nationals 100452 0.66Bodies Corporates 808736 5.34Indian Public 2124023 14.02Total 15150000 100.00

• Dematerialisation of shares and liquidity99.88% of the equity shares have been dematerialised by about 99.91% of the total shareholders as on March 31, 2004. The Company’sshares can be traded only in dematerialised form as per SEBI notification. The Company has entered into Agreement with NSDL and CDSLwhereby shareholders have the option to dematerialise their shares with either of the depositories. Equity shares are actively traded in BSEand NSE.

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• Outstandings GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equityThe Company has not issued any GDRs/ADRs/Warrants or any convertible instruments.

Plant locationsYour Company is not a manufacturing unit and thus not having any Plant. However, our offices are located in almost all metropolitan citiesin India.

Address for correspondenceThe Company SecretaryCMC LimitedPTI Building, 5th Floor4, Sansad MargNew Delhi-110001Tel.: 91-11-23736151-58Fax : 91-11-23736159Email: [email protected]

• Electronic Clearing Service (ECS)The Company is availing of the ECS facility to distribute dividend to those Members who have opted for it, through the ECS facility inmetropolitan cities.

• Non-mandatory requirementsThe Company at present has not adopted the non-mandatory requirements in regard to maintenance of non-executive Chairman’s office,sending of half-yearly performance to the shareholders to their residence.

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF CMC LIMITED

1. We have examined the compliance of conditions of Corporate Governance by CMC Limited, for the year ended on31 March, 2004, as stipulated in clause 49 of the Listing Agreement of the said Company with the Stock Exchanges.

2. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination hasbeen limited to a review of the procedures and implementations thereof, adopted by the Company for ensuring compliancewith the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statementsof the Company.

3. In our opinion and to the best of our information and according to the explanations given to us, and the representationsmade by the Directors and the management, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in Clause 49 of the above mentioned Listing Agreement.

4. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that whilethe Share Transfer-cum-Shareholders Grievance Committee has not maintained records to show the investor grievancespending for a period of one month against the Company, the Registrars of the Company have certified that as of March31, 2004, there were no investor grievances remaining unattended/pending for more than 30 days.

5. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For S.B. Billimoria & Co.Chartered Accountants

Mumbai Jitendra AgarwalJuly 17, 2004 Partner

Membership No. 87104

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COMPANY SECRETARY’S RESPONSIBILITY STATEMENT

The Company Secretary confirms that the Company has:

i) maintained all the books of account and statutory registers required under the Companies Act, 1956 (“the Act”) andthe rules made thereunder;

ii) filed all the forms and returns and furnished all the necessary particulars to the Registrar of Companies and/orauthorities as required by the Act;

iii) registered all the particulars relating to charges in favour of Banks with the Registrar of Companies;

iv) issued all notices required to be given for convening of Board Meetings, Committee Meetings and Annual GeneralMeeting within the time limit prescribed by Law;

v) conducted the Board Meetings, Committee Meetings and Annual General Meetings as per the Act;

vi) complied with all the requirements relating to the Minutes of the proceedings of the Meetings of the Board ofDirectors, Committees and the Shareholders;

vii) made the disclosures required under the Act including those required in pursuance of the disclosures made by theDirectors;

viii) obtained all necessary approvals of the Directors, Shareholders and other Authorities as per the requirements;

ix) effected share transfers and despatched the certificates within the statutory time limits;

x) not exceeded its borrowing powers;

xi) paid dividend amounts to the shareholders within the time limit prescribed;

xii) complied with the requirements of the Listing Agreement entered into with the Stock Exchanges.

The Company has also complied with other statutory requirements under the Companies Act, 1956 and other related Statutes.

For CMC LIMITED

Mumbai Vivek AgarwalApril 26, 2004 Company Secretary

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AUDITORS’ REPORT

TO THE MEMBERS OFCMC LIMITED

1. We have audited the attached Balance Sheet of CMC Limited, as at 31 March 2004, the Profit and Loss Account and theCash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statementsare the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made byManagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to above, we report that:

a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears fromour examination of those books;

c) the Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) In our opinion and to the best of our information and according to the explanations given to us, the said accountsgive the information required by the Companies Act, 1956, in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2004;

ii. in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii. in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of written representations received from the directors, as on 31 March, 2004, and taken on record by theBoard of Directors, we report that none of the directors are disqualified as on 31 March, 2004, from being appointed as adirector in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;


Mumbai Jitendra Agarwal26 April, 2004 Partner

(Membership No. 87104 )

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ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report of even date)

1. The Company has maintained proper records showing full particulars, including quantitative details and situation offixed assets. The Company has a programme of physically verifying its fixed assets in a phased manner designed to coverall assets over a period of two years, which in our opinion is reasonable having regard to the size of the Company and thenature of its business. In accordance with this programme, the management had carried out a physical verification offixed assets at a few locations during the year and necessary adjustments were made for discrepancies arising out ofsuch verification.

2. The stocks of equipment and components/spares for maintenance and resale have been verified by the managementduring the year at reasonable intervals. For materials lying with third parties or at customers’ sites aggregating toRs. (000s) 60,411, in the absence of confirmations from such parties, we have relied on certification from the respectiveProject Managers. In our opinion the frequency of physical verification of equipment is reasonable.

3. In our opinion, the Company has maintained proper inventory records. The discrepancies noticed between the physicalstocks and book records were not material and the same have been properly dealt with in the books of account.

4. The Company has not taken or granted any loans, secured or unsecured, from/to companies, firms or other parties listedin the register maintained under Section 301 of the Companies Act, 1956.

5. Based on the examination of the books of account and related records and according to the information and explanationsprovided to us there are no transactions with companies, firms or other parties which need to be listed in the registermaintained under Section 301 of the Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and the nature of its business for the purchase of inventory andfixed assets and for the sale of goods.

7. The Company has not accepted any deposits from the public during the year.

8. In our opinion the Company has an adequate internal audit system commensurate with the size and nature of its business.

9. According to the information and explanations given to us, the Central Government has not prescribed the maintenanceof cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company.

10. According to the records of the Company examined by us:

a. the Company has generally deposited its statutory dues including provident fund, investor education and protectionfund, employees’ State insurance, income tax, wealth tax, sales tax, customs duty, within the prescribed time with theappropriate authorities during the year. There are no undisputed amounts payable in respect of income tax, wealthtax, sales tax and customs duty which have remained outstanding as at 31 March 2004 for a period of more than sixmonths from the date they became payable. The Company’s operations donot give rise to any excise duty or cess.

b. and as set out in note 23 of Schedule 16, dues of sales tax aggregating to Rs. (000s) 27,785 have not been depositedon account of various disputes. We have been further informed that there are no dues in respect of income tax,wealth tax and customs duty which have not been deposited on account of any dispute. The Company’s operationsdo not give rise to any excise duty or cess.

11. The Company does not have any accumulated losses and has not incurred any cash losses during the current financialyear and the immediately preceding financial period.

12. Based on the examination of the books of account and related records and according to the information and explanationsprovided to us, the Company has not defaulted in repayment of dues to the banks. The Company has not taken any loansfrom any of the Financial Institutions.

13. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures andother securities.

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14. According to the information and explanations given to us, the Company has not given any guarantee for loans taken byothers from bank or Financial Institutions.

15. Based on the examination of the books of account and related records and according to the information and explanationsprovided to us, the Company has not utilised funds raised on short-term basis for long term investment and vice versa.

16. The Company has not made any fresh allotment of equity shares during the year.

17. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reportedduring the year.

For S.B. BILLIMORIA & CO.Chartered Accountants


(Membership No. 87104)

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BALANCE SHEET AS AT MARCH 31, 2004

Schedule As at As atRef. 31.3.04 31.3.03

Rs./000s Rs./000s

SOURCES OF FUNDS

1. Shareholders’ Funds(a) Share Capital 1 151,500 151,500(b) Reserves & Surplus 2 1,454,899 1,072,832

1,606,399 1,224,332

2. Loan Funds(a) Secured Loans 3 174,239 125,743(b) Unsecured Loans 4 487,599 387,599

661,838 513,342

3. Deferred Tax Liabilities (See Note 15) 68,045 82,314

2,336,282 1,819,988

APPLICATION OF FUNDS

4. Fixed Assets 5(a) Gross Block 1,310,466 1,254,648(b) Less:Depreciation 736,186 673,709

(c) Net Block 574,280 580,939

5. Investments 6 81,801 81,801

6. Current Assets, Loans & Advances(a) Inventories 7 184,847 173,878(b) Sundry debtors 8 1,798,241 2,079,084(c) Unbilled revenues 1,149,277 613,155(d) Cash and bank balances 9 177,367 194,242(e) Loans and advances 10 1,156,802 965,587

4,466,534 4,025,946

7. Less : Current Liabilities and Provisions 11 2,786,333 2,868,698

8. Net Current Assets 1,680,201 1,157,248

2,336,282 1,819,988Notes forming part of the accounts 16

As per our report attached For and on behalf of the Board

For S B Billimoria & Co S Ramadorai R Ramanan Dr K R S Murthy I HussainChartered Accountants Chairman Managing Director Director Director

& CEO

Jitendra Agarwal C B Bhave S Singh R Chandrashekhar Dr U P PhadkePartner Director Director Director DirectorMembership No. 87104

S Shroff J K Gupta Vivek AgarwalDirector Chief Financial Officer Company Secretary

Mumbai Mumbai26 April, 2004 26 April, 2004

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004

Schedule Year ended Year endedRef. 31.3.04 31.3.03

Rs./000s Rs./000s

INCOME1. Sales and Services 12 7,470,740 6,079,8682. Other Income 13 165,983 67,445

7,636,723 6,147,313EXPENDITURE3. Operating and other expenses 14 6,856,472 5,485,8224. Depreciation 87,551 80,4805. Interest (Net) 15 35,597 14,371

6,979,620 5,580,673

Profit Before Tax 657,103 566,6406. Provision for taxes

– Current income tax 191,504 201,937– Deferred income tax (14,269) (5,833)

Profit After Tax 479,868 370,5367. Balance brought forward

from previous year 971,389 706,271

Amount available for appropriations 1,451,257 1,076,8078. Appropriations

(a) General Reserve 47,987 37,054(b) Proposed Dividend 83,325 60,600(c) Tax on Proposed Dividend 10,676 7,764

(d) Balance carried to Balance Sheet 1,309,269 971,389

Basic and diluted Earnings Per Share (Rupees) (See note 20) 31.67 24.46

Notes forming part of the accounts 16



& CEO




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CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2004Year ended Year ended

31.3.04 31.3.03

Rs./000s Rs./000s Rs./000sA. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax* 657,103 566,640Adjustments for :

Depreciation 87,551 80,480Interest paid 38,910 19,240(Profit) /Loss on sale of fixed assets 3 (197)Bad debts/advances written off (net) 16,691 39,165Unclaimed balances/provisions written back (101,372) (17,099)Provision for doubtful debts 8,084 —Foreign exchange loss/(gain) (78) 4,991Fixed assets written off 457 641Transfer from capital reserve (3,800) (5,666)

46,446 121,555

Operating profit before working capital changes 703,549 688,195Adjustments for :Trade and other receivables (320,532) (834,468)Inventories (10,969) (57,305)Trade payables and other liabilities (195,884) 282,972Cash generated from operations 176,164 79,394Direct taxes paid/deducted at source (153,485) (190,416)

NET CASH FROM/(USED) IN OPERATING ACTIVITIES (A) 22,679 (111,022)

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets (85,409) (52,637)Sale of fixed assets 4,057 951

NET CASH FROM/(USED) IN INVESTING ACTIVITIES (B) (81,352) (51,686)

C. CASH FLOW FROM FINANCING ACTIVITIESInterest paid (38,910) (43,913)Proceeds/(Payment) of short term borrowings 148,496 314,645Proceeds/(Payment) of long term borrowings — (45,125)Dividend paid (including dividend tax) (68,202) (60,427)

NET CASH FROM FINANCING ACTIVITIES (C) 41,384 165,180

NET INCREASE/(DECREASE) INCASH AND CASH EQUIVALENTS (A+B+C) (17,289) 2,472

CASH AND CASH EQUIVALENTS AS ON 1 APRIL, 2003 [Excluding unrealised exchange difference of Rs. (‘000s) 527] 193,715 191,243

CASH AND CASH EQUIVALENTS AS ON 31 MARCH, 2004[Excluding unrealised exchange difference of Rs. (‘000s) 928] 176,426 193,715

* includes project grants from Government of Rs. (‘000s) 13,795 (Previous year Rs. (‘000s) 13,060)



& CEO




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SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 1 : SHARE CAPITAL

Authorised35,000,000 (Previous year 35,000,000) equity sharesof Rs. 10 each. 350,000 350,000

Issued, Subscribed and Paid up15,150,000 (Previous year 15,150,000) equity sharesof Rs. 10 each fully paid up 151,500 151,500

Of the above:7,744,961 (Previous year Nil) equity shares are heldby Tata Consultancy Services Limited, the holding company.

Nil (Previous year 7,744,961) equity shares are held by TataSons Limited, the ultimate holding company.(See note 1)

Schedule 2 : RESERVES & SURPLUS

(a) Capital Reserve(Grants from Govt of India)

(i) Opening balance 12,061 17,727(ii) Less:Transferred to Profit and Loss Account 3,800 5,666

(iii) Closing balance 8,261 12,061

(b) General Reserve(i) Opening balance 89,382 52,328(ii) Add:Transferred from Profit and Loss account 47,987 37,054


(c) Profit and Loss account 1,309,269 971,389

1,454,899 1,072,832

Schedule 3 : SECURED LOANS

From banksCash credit accounts 174,239 125,743

174,239 125,743

Note:Cash credits from banks are secured by hypothecation of inventories, debtors and other current assets.

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As at As at31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 4 : UNSECURED LOANS

a. Short Term Loans(i) From banks 100,000 —(ii) From others 100,000 100,000(iii) Commercial paper 200,000 200,000

400,000 300,000

b. Other Loans(i) From Government of India 67,400 67,400(ii) Interest accrued and due 20,199 20,199

487,599 387,599

Note:1. Loans repayable within one year Rs.(000s) 467,400 [Previous year Rs.(000s) 367,400]2. Loans from Government of India include interest free loans of Rs.(000s) 54,900 (Previous year Rs.(000s) 54,900)3. Maximum amount outstanding on commercial paper during the year Rs.(000s) 200,000 (Previous year Rs.(000s) 200,000)

Schedule 5 : FIXED ASSETS (See note 6)Rs./000s

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deductions/ As at As at For the Deductions/ As at As at As at1.4.03 Adjustments 31.3.04 1.4.03 year Adjustments 31.3.04 31.3.04 31.3.03

(a) Land(i) Leasehold 59,197 — — 59,197 6,595 781 — 7,376 51,821 52,602(ii) Freehold 1,656 — — 1,656 — — — — 1,656 1,656

(b) Buildings(i) Leasehold 8,593 4,812 — 13,405 1,267 2,920 — 4,187 9,218 7,326(ii) Freehold 320,141 6,940 — 327,081 52,493 5,335 — 57,828 269,253 267,648

(c) Plant & Machinery(i) Computers 558,968 51,493 17,739 592,722 405,094 60,900 14,897 451,097 141,625 153,874(ii) Office and

other equipment 43,455 1,793 1,754 43,494 23,622 2,104 1,090 24,636 18,858 19,833(iii) Others 162,564 7,370 7,081 162,853 140,556 7,958 6,784 141,730 21,123 22,008

(d) Furniture & Fittings 75,610 12,283 2,809 85,084 42,864 7,175 2,133 47,906 37,178 32,746

(e) Vehicles 4,444 — 208 4,236 1,218 378 170 1,426 2,810 3,226

TOTAL 1,234,628 84,691 29,591 1,289,728 673,709 87,551 25,074 736,186 553,542 560,919

(f) Capitalwork-in-progress 20,020 2,332 1,614 20,738 — — — — 20,738 20,020

GRAND TOTAL 1,254,648 87,023 31,205 1,310,466 673,709 87,551 25,074 736,186 574,280 580,939

Previous Year 1,215,271 55,053 15,676 1,254,648 605,094 80,480 11,865 673,709 580,939 —

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As at As at31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 6 : INVESTMENTS (At cost)

Long-term, trade investments (unquoted)

160,001,000 (Previous year 160,001,000)non-assessable shares of USD 0.01 each, fully paid upin CMC Americas Inc., USA(formerly known as Baton Rouge International Inc.),a wholly owned subsidiary. 81,801 81,801

Schedule 7 : INVENTORIES

(a) Finished goods - equipment for resale 134,418 116,969(b) Components/spares for maintenance and resale 44,143 37,053(c) Education and training material 5,821 6,332(d) Work-in-progress 465 13,524

184,847 173,878

Note: Finished goods include goods in transit Rs. (000s) 18,917 (Previous year Rs.(000s) 26,539)

Schedule 8 : SUNDRY DEBTORS

a. Over six months old (unsecured):Considered good 254,462 281,829Considered doubtful 26,833 21,695

281,295 303,524b. Others (unsecured):

Considered good 1,539,484 1,785,732

1,820,779 2,089,256Less: Provision for doubtful debts 26,833 21,695

1,793,946 2,067,561c. Future lease installments receivable (unsecured) (See note 16) 4,609 13,307

Less: Unearned finance and service charges 314 1,784

4,295 11,523

1,798,241 2,079,084

Notes:1. (i) Debtors include amounts due from a subsidiary company 72,963 172,407

(ii) Maximum balance outstanding 172,407 294,068

2. (i) Debtors include amounts due from the holding company 93,140 96,313(ii) Maximum balance outstanding 108,400 207,701

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As at As at31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 9 : CASH AND BANK BALANCES

(a) Cash on hand [including stamps on hand 2,442 1,356Rs.(000s) 64 (Previous year Rs. (000s) 30)]

(b) Cheques/demand drafts on hand 75,367 117,741(c) Balance with scheduled banks in:

(i) Current accounts 44,066 26,410(ii) Cash credit accounts 36,484 15,635(iii) Deposit accounts* 19,008 33,100

177,367 194,242

*includes Rs. (000s) 6,195 on account of fixed deposits pledged withcustomers as security (Previous year Rs.(000s) 6,379)

Schedule 10 : LOANS AND ADVANCES

(a) Advances recoverable in cash or in kind orfor value to be received* 245,708 207,964

(b) Advance income tax and tax deducted at source 920,482 766,997

1,166,190 974,961(c) Less: Advances considered doubtful 9,388 9,374

1,156,802 965,587(d) Of the above, amounts :

(i) Fully secured 42,963 23,045(ii) Unsecured, considered good 1,113,839 942,542(iii) Considered doubtful 9,388 9,374

1,166,190 974,961Notes:1. Amounts due from directors — 32. Maximum amounts due from directors during the year 46 2013. * includes deposits with Customs, Octroi, Electricity Boards etc. 10,334 8,816

Schedule 11 : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES(a) Sundry Creditors (See note 14) 1,065,087 1,316,904(b) Customers’ security deposits and credit balances

and advance against supplies and services to be rendered 267,602 330,776(c) Investor Education and Protection Fund shall be credited

by the following amounts, namely:- Unpaid dividend 505 344

(d) Unearned revenue 273,133 214,391(e) Other liabilities 58,338 73,730(f ) Interest accrued but not due on loans 2,701 1,677

1,667,366 1,937,822PROVISIONS(a) Provision for taxation 935,935 750,088(b) Proposed dividend 83,325 60,600(c) Provision for leave encashment 99,707 120,188

1,118,967 930,876

2,786,333 2,868,698

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41

Year ended Year ended31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 12 : SALES AND SERVICES

(a) Sale of purchased equipment 3,774,665 2,621,186(b) Services

(i) Software services 1,954,457 1,856,182(ii) Maintenance services 886,642 783,890(iii) Other services 669,642 561,947

(c) Education and training 177,861 246,732(d) Lease rentals 7,473 9,931

7,470,740 6,079,868

Note: Lease rentals include income Rs.(000s) 1,399 (Previous year Rs.(000s) 1,670) under finance leases.

Schedule 13 : OTHER INCOME

(a) Project Grants from Government 13,795 13,060(b) Gain on foreign exchange fluctuations (Net of loss) 4,010 —(c) Profit on sale of fixed assets (Net) — 197(d) Transfer from capital reserve - capital grants 3,800 5,666(e) Unclaimed balances/provisions written back 101,372 17,099(f ) Interest on refund of taxes 14,144 14,349(g) Miscellaneous income 28,862 17,074

165,983 67,445

Schedule 14 : OPERATING AND OTHER EXPENSES

1. Equipment Purchased for Resale 3,688,587 2,517,787

2. Payments to and Provisions for Employees(a) Salaries, allowances and incentives 1,124,084 998,003(b) Contribution to provident and other funds 94,069 99,504(c) Staff welfare expenses 99,079 106,228

Sub-Total 1,317,232 1,203,735

3. Operating and Administration Expenses(a) Components/spares for maintenance and resale 217,688 186,723(b) Sub-contracted/outsourced services 394,616 304,897(c) Purchased software 19,832 16,540(d) Freight, handling and packing expenses 18,468 11,480(e) Rental of P&T lines and leased equipment 9,445 9,017(f ) Rent and hire charges 48,314 50,004(g) Rates and taxes 14,308 10,283(h) Repairs and maintenance:

(i) Building 11,760 8,322(ii) Plant and machinery 9,056 7,704(iii) Other 21,647 20,727

(i) Electricity charges 49,068 51,168(j) Insurance 6,922 6,057

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(k) Travelling and conveyance 187,266 179,013(l) Printing, stationery and computer consumables 34,153 53,366(m) Postage, telephone and courier 51,540 46,914(n) Advertisement, publicity and business promotion 12,262 10,405(o) Directors’ fees 325 295(p) Professional and legal fees 13,786 9,680(q) Education and training :

(i) Payments to franchisees 69,889 125,908(ii) Other expenses 38,432 29,857

(r) Living expenses – overseas contracts 526,083 529,873(s) Bad debts/advances written off

[Net of bad debts recovered Rs.(000s) 1,063(Previous year Rs.(000s) 1,066)] 16,691 39,165

(t) Provision for doubtful debts 8,084 —(u) Fixed assets written off (Net) 457 641(v) Loss on sale of fixed assets (Net) 3 —(w) Loss on foreign exchange fluctuations (Net of gain) — 493(x) Other expenses (See note 17) 70,558 55,768

Sub-Total 1,850,653 1,764,300

Total 6,856,472 5,485,822


Rs./000s Rs./000s

Schedule 14 : OPERATING AND OTHER EXPENSES (Contd.)

Schedule 15 : INTEREST

1. Interest expense(a) On fixed loans

(i) Government of India loans 1,625 2,827(ii) Other term loans 18,267 8,354

(b) Cash credit accounts with banks 18,025 5,779(c) Others 993 2,280

38,910 19,2402. Less: Interest earned

(a) Loans and advances 551 760(b) Fixed deposits with banks [Tax deducted at source

Rs. (000s) 122 (Previous year Rs.(000s) 317)] 682 1,563(c) Others [Tax deducted at source Rs. (000s) 321 (Previous

year Rs. (000s) 511)] 2,080 2,546

3,313 4,869

35,597 14,371

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43

Schedule 16 : NOTES FORMING PART OF THE ACCOUNTS

1. Background

CMC Limited (“the Company”) 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 ofimported/ 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 7,726,500shares representing 51 percent of the share capital to Tata Sons Limited, on 16 October, 2001. The GoI further sold its entire remainingshares 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 toTata Consultancy Services Limited (a subsidiary of Tata Sons Limited). As a result, the Company has become a subsidiary of TataConsultancy Services Limited.

2. Significant Accounting Policies

a. Basis of accountingThe financial statements have been prepared under the historical cost convention and comply with the Accounting Standardsprescribed by the Institute of Chartered Accountants of India and referred to in Section 211(3)(c) of the Companies Act, 1956.

b. Fixed assets and depreciation

i. All fixed assets are stated at cost. Cost includes purchase price and all other attributable costs of bringing the assets toworking condition for intended use.

ii. Fixed assets acquired out of grants, the ownership of which rests with the grantor, are capitalised at cost.

iii. Depreciation on all assets is charged proportionately from the date of acquisition/installation on straight line basis at ratesprescribed in Schedule XIV of the Companies Act, 1956 except in respect of:

• Leasehold assets that are amortised over the period of lease.

• Computers, Plant and Machinery - (other items), that are depreciated over six financial years.

c. Revenue Recognition

i. Revenue relating to equipment supplied is recognised on delivery to the customer and acknowledgement thereof, inaccordance with the terms of the individual contracts.

ii. Revenue from software development on fixed price contracts is recognised according to the milestone achieved as specifiedin the contract, and is adjusted on the “proportionate completion” method based on the work completed.

iii. On time and material contracts, revenue is recognised based on time spent as per the terms of the specific contracts.

iv. Revenue from warranty and annual maintenance contracts is recognised over the life of the contracts. Maintenance revenueon expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt ofpayment.

v. Revenue from “Education and Training” is recognised on accrual basis over the course term.

vi. Dividend income is recognised when the Company’s right to receive dividend is established.

d. Grants

i. Grants received for capital expenditure incurred are included in “Capital Reserve”. Fixed assets received free of cost areconsidered as a grant and are capitalised at notional value with a corresponding credit to the Capital Reserve account.

An amount equivalent to the depreciation charge on such assets is appropriated from capital reserve and recognised asrevenue in the Profit and Loss Account.

ii. Grants received for execution of projects is recognised as revenue to the extent utilized.

iii. Unutilised grants are shown under other liabilities.

e. Inventories

Inventories include finished goods, stores and spares, work-in progress and education and training material.

i. Inventories of finished goods mainly comprising equipment for resale are valued at the lower of cost (net of provision forobsolescence) or net realisable value.

ii. Inventories of stores and spares are valued at cost, net of provision for diminution in the value. Cost is determined on weightedaverage cost basis.

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iii. Inventories of “Education and Training material” are valued at the lower of cost and net realisable value. Cost is determinedon the “First In first Out” basis.

iv. Work-in-progress comprises cost of infrastructural facilities in the process of installation at customers’ sites. These are valuedat cost paid/payable to sub-contractors.

f. Research and Development Expenses

Research and development costs of revenue nature are charged to the Profit and Loss account when incurred. Expenditure ofcapital nature is capitalised and depreciated.

g. Foreign exchange transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Monetary itemsdenominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on thatdate. Exchange differences on foreign exchange transactions other than those relating to fixed assets are recognised in the profitand loss account. Any gain/loss on exchange fluctuation on the date of payment of expenditure incurred for acquisition of fixedassets is treated as an adjustment to the carrying cost of such fixed assets. In case of forward contracts for foreign exchange, thedifference between the forward rate and the exchange rate at the date of the transaction are recognised over the life of thecontract.

h. Investments

Long-term investments are stated at cost, less any permanent diminution in value, if any.

i. Leases

Assets given under finance leases are recognised as receivables at an amount equal to the net investment in the lease and thefinance income is based on a constant rate of return on the outstanding net investment.

j. Retirement benefits

i. The Company’s contribution to the Employees’ Provident Fund is deposited in a trust formed by the Company under theEmployees’ Provident Fund and Miscellaneous Provisions Act, 1952 which is recognised by the Income-tax authorities. Suchcontributions are charged to the profit and loss account each year.

ii. Gratuity to employees is based on the Group Gratuity Scheme of the Life Insurance Corporation of India. Contributionsmade to the Scheme are expensed in the year.

iii. The balance of unavailed leave due to employees has been provided on the basis of actuarial valuation.

k. Provision for taxation

Income tax comprises of current tax and deferred tax. Deferred tax assets and liabilities are recognised for the future taxconsequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measuredusing the tax rates enacted or substantively enacted by the balance sheet date.

l. Earnings per Share

The earnings considered in ascertaining the Company’s’ EPS comprises the net profit after tax. The number of shares used incomputing Basic EPS is the weighted average number of shares outstanding during the year.

3. Segment Information

i. Business segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Companyhas structured its operations into the following segments:

Customer Services: Hardware supplies and maintenance, facilities management and provision of infrastructure facilities.

Systems Integration (SI): Systems study and consultancy, software design, development and implementation, softwaremaintenance and supply of computer hardware in accordance with customers’ requirements.

IT Enabled Services (ITES) - (Formerly Indonet): Value added services, data network, data center services, web design andhosting etc.

Education and Training (E&T): IT education and training service through its own centers and through franchisees.

Segment revenue and expenses include amounts, which are directly identifiable to the segment and allocable on a reasonablebasis. Segment assets include all operating assets used by the segment and consist primarily of debtors, inventory and fixedassets. Segment liabilities include all operating liabilities and consist primarily of creditors, advances/deposits from customersand statutory liabilities.

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ii. Geographic segments

The Company also provides services overseas, primarily in the United States of America, United Kingdom and Middle East Africa Region.

4. Research and Development Expenses

Expenditure includes “Research and Development” expenditure aggregating to Rs. (000s) 108,616 [Previous year Rs. (000s) 78,088].Amounts aggregating to Rs. 6,784 (000s) [Previous year Rs. (000s) 1,359] have been capitalised.

5. Contingent liabilities and commitments

At at As at31.03.04 31.03.03

Rs./000s Rs./000sa. Claims against the company not acknowledged as debts

� Liability on property tax — 623� Under litigation 97,346 119,684� ESI Demand 280 980� Disputed demands raised by Sales tax authorities for

which the Company has gone on appeal against the department * 34,568 30,470b. Unexpired Letters of Credit 454,733 450,292c. Guarantees issued by bankers against Company’s counter guarantee 1,098,735 729,930d. Others 1,390 250e. Sales tax on leased assets 3,726 3,726f. Estimated amount of contracts remaining to be executed on capital

account (net of advances) and not provided for 69,487 68,338

* No provision is considered necessary since the Company expects favourable decisions.

6. Fixed Assets

Gross Block as at 31 March, 2004 includes:

a. Assets acquired from Grants and aggregating to Rs. (000s) 41,865 [Previous year Rs. (000s) 41,865 being the property of Governmentof India. The depreciation for the year on such assets is Rs. (000s) 3,800 [Previous year Rs. (000s) 5,661] and the accumulateddepreciation at the year end is Rs. (000s) 33,676 [Previous year Rs. (000s) 29,876].

b. Assets aggregating to Rs. (000s) 7,210 [Previous year Rs. (000s) 7,210] received free of cost. The depreciation for the year on suchassets is Rs. Nil (Previous year Rs. Nil) and the accumulated depreciation thereon is Rs. (000s) 7,138 [Previous year Rs. (000s) 7,138].

c. Plant and machinery given on lease aggregating to Rs. (000s) 23,147 [Previous year Rs. (000s) 23,147]. The depreciation for theyear is Rs. (000s) 3,720 [Previous year Rs. (000s) 3,720], the accumulated depreciation thereon being Rs. (000s) 16,953 [Previousyear Rs. (000s) 13,233].

7. Investments

CMC Americas Inc. the Company’s wholly owned subsidiary, had accumulated losses aggregating to Rs. (000s) 65,014 [Previous yearRs. (000s) 42,485] as at 31 March, 2004 resulting in a diminution in its net worth.

Keeping in view the long term involvement of the Company with the subsidiary, no diminution in the value of the investment isconsidered necessary by the Management.


Rs./000s Rs./000s8. Earnings in foreign currency

a. Export (Services) 766,705 740,347b. Technical consultancy services & others 720 14,734

9. Expenditure in Foreign Currency

a. Living allowance 288,702 348,292b. Travel 16,602 5,165c. Overseas branch expenses and Others 23,763 34,758

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10. Remittances in foreign currencies for dividends

The particulars of dividend paid to non-resident shareholders during the year :

Units Year ended Year ended31.03.04 31.03.03

No. of non-resident shareholders Nos. 29 35No. of shares held by them Nos. 12,400 14,150Gross amount of dividend Rs. /000s 50 57

11. Value of imports (calculated on CIF basis)a. Equipment 822,552 521,852b. Stores and spares 17,506 14,965c. Capital equipment 20,449 4,807

12. Managerial Remuneration

a. Managerial Remuneration for Directors’(excluding provision for encashable leave and gratuityas separate figures for Whole-time Directors is not available). 1,989 1,733

b. The above is inclusive of:• Estimated expenditure on perquisites [includes Rs. (000s) 693

(Previous year Rs. Nil) paid toward retirement benefits] 1,016 516• Contribution to Provident and Superannuation Fund 95 110

c. Directors sitting fees 325 295

13. Information in regard to Purchases, Sales, Opening and Closing Stocks

Computer equipment and Peripherals


Nos. Rs./000s Nos. Rs./000sOpening stock 11,008 90,430 21,900 58,598Purchases 214,680 3,713,658 147,358 2,549,619Sales 217,947 3,774,665 158,250 2,621,186Closing stock* 7,741 115,501 11,008 90,430

* does not include goods in transit Rs. (000s) 18,917 (Previous year Rs. (000s) 26,539).

The quantitative details relate to quantities of main sub-systems whereas amounts include revenues relating to components as well,for which amounts can not be segregated.

14. Amounts due to Small Scale Industrial Undertakings (SSI)

As at the year end, the Company had dues aggregating to Rs. (000s) 19,359 (Previous year Rs. (000s) 14,045) payable to SSI of whichRs. (000s) 14,767 (Previous year Rs. (000s) 4,577) were outstanding for more than 30 days individually to the follwoing SSI:

• Cygnus Microsystem (P) Limited• Global Multimedia Limited• KLA Electronics (P) Limited• Uday Udyog• D B Devices Private Limited• Vistar Electronics Private Limited• Numeric Power Systems Limited• ECAD Technologies Limited• Venus Plastic Limited• Kadavi Engineering Company (P) Limited• CCS Infotech Limited

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15. Taxes

a. Current income tax includes taxes deducted in foreign jurisdiction Rs. (‘000s) 16,334 (Previous year Rs. (‘000s) 21,937).b. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.c. Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge:

Opening Charged/ Closing(Credited)

to P&LRs./000s Rs./000s Rs./000s

(i) Deferred Tax Liabilities:

Tax impact of difference between carrying amount offixed assets in the financial statements and the income tax return 113,359 (8,271) 105,088

(ii) Deferred Tax Assets:Tax impact of expenses charged in the financial statementsbut allowable as deductions in future years under income tax 31,045 5,998 37,043

Net Deferred Tax Liability (i-ii) 82,314 (14,269) 68,045

16. Disclosure in Respect of Finance Lease

The Company has purchased and given on lease computer equipment, peripherals and system software. The details are as follows:

As at As at31.03.04 31.03.03

Rs./000s Rs./000sa. Total gross investment 4,609 13,307b. Present value of Minimum Lease Payments receivable 4,295 11,523c. Total gross investment as for the period

• Not later than one year 4,609 8,345• Later than one year but not later than five years — 4,962

d. Present value of Minimum Lease Payments receivable• Not later than one year 4,295 6,879• Later than one year but not later than five years — 4,644

e. Unearned Finance Income 314 1,784

17. Auditors’ Remuneration

Other expenses includes Auditors’ remuneration as follows:Statutory Audit 900 600Tax audit 250 150Other services 754 319Reimbursement of service tax 148 53Reimbursement of out-of-pocket expenses 179 142

18. Pending RBI approval, certain anticipated losses from past international operations amounting to Rs. (000s) 8,089 (Previous yearRs. (000s) 8,089), which stands provided for, are not written off.

Sanction of Reserve Bank of India for expenditure incurred on overseas operations amounting to Rs. (000s) 3,287 (Previous yearRs. (000s) 3,089) during the year 1991-92 has not yet been received.

19. Related Party Disclosures

a. List of related partiesi. Company holding substantial interest in voting power of the Company

• Tata Sons Limited (the ultimate holding Company)• Tata Consultancy Services Limited (the holding Company)

ii. Fellow Subsidiaries• Tata Infotech Limited• Tata AIG General Insurance Company Limited• Tata AIG Life Insurance Company Limited• Tata Consultancy Services, Deutshland GmbH

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iii. Subsidiary• CMC Americas, Inc. (formerly Baton Rouge International, Inc.)

iv. Key Management Personnel• Mr. S. S. Ghosh – Managing Director & CEO (upto 12 December, 2003)• Mr. R. Ramanan – Deputy Managing Director & COO (upto 12 December, 2003) and Managing Director & CEO (w.e.f. 13

December, 2003)

b. Transactions /balances outstanding with Related Parties.Rs./ 000s

Transactions/ Holding Subsidiary Fellow Key TotalOutstanding Company Company Subsidiary ManagementBalances Personnel

Purchase of goods /services 286,159 234,068 1,580 — 521,807(19,813) — (2,328) — (22,141)

Sale of goods 166,869 — 13,980 — 180,759(43,094) — — — (43,094)

Service Income 646,504 446,309 1,230 — 1,094,043(496,362) (542,925) — — (1,039,287)

Managerial Remuneration — — — 1,989 1,989(1,733) (1,733)

Debtors/unbilled revenues 214,230 80,799 5,461 — 300,490outstandings at year end (96,313) (172,407) — — (268,720)Creditors / Advances at year end 17,650 — 307 — 17,957

(22,449) — — — (22,449)Loans/ advances at year end — — — — —

(499) — — (3) (502)Other transactions * 34,697 — 1,162 — 35,859

(36,125) — (484) — (36,609)

*Includes dividend paid to holding CompanyNote: Amounts in brackets represent previous year’s figures.

20. Earnings per share


Net profit attributable to shareholders Rs./000s 479,868 370,536Weighted average number of equity shares in issue Nos. 000s 15,150 15,150Basic earning per share of Rs.10 each Rs. 31.67 24.46

The Company does not have any outstanding dilutive potential equity shares.

21. Mr. R. Ramanan was appointed as Managing Director & CEO of the Company with effect from 13 December, 2003, in the Board Meetingheld on 22 December, 2003. His appointment and remuneration are subject to approval of the shareholders.


a. Financial information about the primary business segments is given below: Rs./000s

Customer Systems ITES Education TotalServices Integration and Training

i. SEGMENT REVENUE– Sales and Services 5,207,494 1,754,009 328,289 180,948 7,470,740

(3,823,414) (1,704,909) (302,541) (249,004) (6,079,868)– Other Income 37,187 35,703 10,248 3,860 86,998

(9,824) (6,606) (353) (833) (17,616)ii. SEGMENT RESULTS 491,624 402,869 50,741 (17,362) 927,872

(420,327) (318,022) (69,369) (-10,112) (797,606)iii. UNALLOCABLE EXPENSES 235,172

(net of unallocable income) (216,595)

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49

iv. OPERATING PROFIT 692,700(581,011)

v. INTEREST EXPENSE (NET) 35,597(14,371)

vi. PROVISION FOR TAX- Current income tax 191,504

(201,937)- Deferred income tax (14,269)

(-5,833)

vii. NET PROFIT 479,868(370,536)

viii. OTHER INFORMATIONSegment assets 2,212,625 937,465 198,647 58,287 3,407,024

(2,068,788) (704,501) (321,360) (66,837) (3,161,486)Unallocable assets 1,715,591

(1,527,200)

TOTAL ASSETS 5,122,615(4,688,686)

Segment liabilities 1,141,353 285,355 127,218 77,051 1,630,977(1,405,969) (267,147) (170,986) (63,053) (1,907,155)

Unallocable liabilities 1,885,239(1,557,199)

TOTAL LIABILITIES 3,516,216(3,464,354)

Capital Expenditure 15,575 39,620 3,113 1,289(8,534) (15,608) (6,524) (2,394)

Depreciation 22,940 40,614 4,955 6,731(18,611) (33,219) (3,790) (8,474)

Non-cash expenses other 8,812 10,293 8,173 1,607than depreciation (22,747) (9,477) (3,719) (936)

i. Unallocated assets include investments, advance tax and tax deducted at source.

ii. Unallocated liabilities include secured/unsecured loans, deferred tax/current tax liabilities, proposed dividend and tax on proposeddividend.

iii Amounts in brackets represent previous year’s figures.

b. Geographical SegmentRs./000s

India United Stated United Others Totalof America Kingdom

SEGMENT REVENUE- Sales and Services 6,699,454 462,578 108,484 200,224 7,470,740

(5,377,482) (549,134) (59,267) (93,985) (6,079,868)- Other Income 86,998 — — — 86,998

(17,616) — — — (17,616)TOTAL ASSETS 4,755,722 92,948 91,462 182,483 5,122,615

(4,437,698) (201,912) (25,770) (23,306) (4,688,686)TOTAL LIABILITIES 3,465,758 5,989 20,853 23,616 3,516,216

(3,456,496) — (5,125) (2,733) (3,464,354)Note: Amounts in brackets represent previous year’s figures.

Customer System Indonet Education TotalServices Integration and Training Rs./000s

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23. Information pursuant to clause 4(ix)(b) of Companies (Auditor’s Report) Order, 2003 in respect of dues disputed, not deposited withvarious authorities.

Nature of Dues Amount Financial Forum where the(Rs./000s) Year/Period dispute is pending

SALES TAXA. West Bengal

i. Tax on addition to taxable turnover 4,570 1996-97 Assistant Commissionerii. Tax demand on disallowance of credit for tax 1,978 1997-98 to Assistant Commissioner

deducted at source (TDS), concessional sales tax 2000-01forms and set off of amount of tax paid tosub-contractors 6,548

B. Bihari. Tax demand and penalty imposed on enhancement 7,853 1987-88 to Commercial Taxes Tribunal

of turnover during assessment and delay in filling return 1992-93

C. Madhya Pradeshi. Tax demand and penalty imposed on 438 1987-88 High Court

enhancement of turnoverii. Tax demand and penalty imposed on 662 1990-91 & Assistant Commissioner

enhancement of turnover 1991-921,100

D. Orissai. Tax demand on disallowance of claim for refund of 610 1994-95, Assistant Commissioner

sales tax deducted at source on service revenues 1999-2000 &2000-01

ii. Tax demand on disallowance of claim for refund of 249 1995-96 Sales Tax Tribunalsales tax deducted at source on service revenues

859

E. Uttar Pradeshi. Tax demand on inter state sales deemed as intra state sales 364 1994-95 Sales Tax Tribunalii. Tax demand on disallowance of non taxable turnover 38 1996-97 DC-Appeals

402

F. Central Sales/Tamil Nadu Generali. Tax demand on disallowance of concessional tax on sale 2,357 1993-94, Appellate Assistant

in transit and notional profit on cost of maintenance spares 1994-95, Commissioner1996-97 &

1997-98G. Kerala

Tax demand for dispute on tax rate 465 1996-97 & Assistant Commissioner1999-00

H. MumbaiTax demand on maintenance spares, 8,201 1990-91 to Sales Tax Tribunalset off of tax paid and lease tax 1992-93

Grand Total 27,785

24. Previous year’s figures have been presented for the purpose of comparison and have been regrouped where necessary.


S Ramadorai R Ramanan Dr K R S Murthy I HussainChairman Managing Director Director Director

& CEO

C B Bhave S Singh R Chandrashekhar Dr U P PhadkeDirector Director Director Director

Mumbai S Shroff J K Gupta Vivek Agarwal26 April, 2004 Director Chief Financial Officer Company Secretary

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51

I. Registration DetailsRegistration No. State Code

Balance Sheet DateDate Month Year

II. Capital raised during the year (Amount in Rs. ‘000)Public Issue Rights Issue

Bonus Issue Private Placement (includes Adv. against Equity)

III. Position of mobilisation and deployment of funds (Amount in Rs. ‘000)Total Liabilities Total Assets

Sources of Funds Paid-up Capital (including Advance against Equity) Reserves and Surplus

Secured Loans Unsecured Loans

Deferred Tax Liability

Application of FundsNet Fixed Assets Investments

Net Current Assets Miscellaneous Expenditure

Accumulated Loss

IV. Performance of Company (Amount in Rs. ‘000)Turnover Total Expenditure

Profit/(Loss) Before Tax Profit/(Loss) after Tax

Earning Per Share in Rs. Dividend Rate (%)

V. Generic Names of three Principal Products/Services of the Company (as per monetary terms)Item Code No.(ITC Code)ProductDescription AUTOMATIC DATA PROCESSING MACHINES

N I L

2 3 3 6 2 8 2

1 9 7 0

3 1 0 3 0 4

0 1

N I L

1 5 1 5 0 0

1 7 4 2 3 9

6 8 0 4 5

5 7 4 2 8 0

1 6 8 0 2 0 1

N I L

7 6 3 6 7 2 3

6 5 7 1 0 3

3 1 . 6 7

N I L

2 3 3 6 2 8 2

N I L

1 4 5 4 8 9 9

4 8 7 5 9 9

8 1 8 0 1

N I L

6 9 7 9 6 2 0

4 7 9 8 6 8

5 5

8 4 . 7 1

+/-+


S Ramadorai R Ramanan Dr K R S Murthy I HussainChairman Managing Director Director Director

& CEO



ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VITO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

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STATEMENT PURSUANT TO EXEMPTION UNDER SECTION 212 (8) OF THECOMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY

As on 31.12.2003 As on 31.3.2004

US $ INR US $ INR

a. Capital 1,600,010 72,544,453 1,600,010 69,344,433

b. Reserves (980,840) (44,471,286) (922,551) (39,983,360)

c. Total Assets 4,885,668 221,516,187 5,085,846 220,420,566

d. Total Liabilities 4,266,498 193,443,019 4,408,387 191,059,493

e. Investments — — — —

For twelve months ended 31.12.2003 For three months ended 31.3.2004

US $ INR US $ INR

f. Turnover 18,910,803 857,415,808 4,607,756 199,700,145

g. Profit/(Loss) before taxation (768,414) (34,839,891) 58,289 2,526,245

h. Provison for taxation 68,103 3,087,790 — —

i. Profit/(Loss) after taxation (836,517) (37,927,681) 58,289 2,526,245

j. Proposed Dividend — — — —

Note : US $ have been converted to INR at the exchange rate prevailing on 31.12.2003 (1 US $ = INR 45.34 and on 31.3.20041 US $ = INR 43.34)


Mumbai R Ramanan J K Gupta Vivek Agarwal

17 July, 2004 Managing Director & CEO Chief Financial Officer Company Secretary

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AUDITORS’ REPORT

TO THE BOARD OF DIRECTORSOF CMC LIMITED ON THE CONSOLIDATED FINANCIALSTATEMENTS OF CMC LIMITED AND ITS SUBSIDIARY

We have examined the attached Consolidated Balance Sheet of CMC Limited (“the Company”) and its subsidiary as at31 March, 2004 and the consolidated Profit and Loss Account for the year then ended and the Cash Flow Statement for theyear ended on that date.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditingstandards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance whether thefinancial statements are prepared, in all material respects, in accordance with an identified financial reporting framework andare free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonablebasis for our opinion.

We did not audit the financial statements of the Company’s subsidiary, whose financial statements reflect total assets ofRs. (000s) 220,420 as at 31 March, 2004 and total revenues of Rs. (000s) 827,064 for the year then ended. These financialstatements have been audited by other auditors whose reports have been furnished to us, and our opinion, insofar as itrelates to the amounts included in respect of the Company’s subsidiary, is based solely on the report of the other auditors.

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirementsof Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of Indiaand on the basis of the separate audited financial statements of the Company and its subsidiary included in the consolidatedfinancial statements.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports onindividual audited financial statements of the Company and its subsidiary, we are of the opinion that:

a. the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of the Company and itssubsidiary as at 31 March, 2004; and

b. the Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations of theCompany and its subsidiary for the year ended on that date.

c. the Consolidated Cash Flow Statement gives a true and fair view of the consolidated cash flows of the Company and itssubsidiary for the year ended on that date.



Membership No: 87104

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CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2004


Rs./000s Rs./000s

Sources of Funds

1. Shareholders’ Funds(a) Share Capital 1 151,500 151,500(b) Reserves & Surplus 2 1,406,564 1,060,355

1,558,064 1,211,855

2. Loan Funds(a) Secured Loans 3 174,239 125,743(b) Unsecured Loans 4 487,599 496,696

661,838 622,439

3. Deferred Tax Liabilities (See note 12) 68,045 82,314

2,287,947 1,916,608Application of Funds

4. Fixed Assets 5(a) Gross Block 1,355,016 1,299,198(b) Less: Depreciation 779,483 712,037

(c) Net Block 575,533 587,161

5. Goodwill 3,412 3,412

6. Current assets, loans & advances(a) Inventories 6 184,847 173,878(b) Sundry debtors 7 1,862,398 2,151,887(c) Unbilled revenues 1,141,444 613,154(d) Cash and bank balances 8 255,191 232,083(e) Loans and advances 9 1,161,714 1,165,363

4,605,594 4,336,365

7. Less : Current Liabilities and Provisions 10 2,896,592 3,010,330

8. Net Current Assets 1,709,002 1,326,035

2,287,947 1,916,608Notes forming part of the accounts 15



& CEO




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CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2004


Rs./000s Rs./000s

Income

1. Sales and services 11 7,851,497 6,723,502

2. Other Income 12 165,983 67,445

8,017,480 6,790,947

Expenditure

3. Operating and other expenses 13 7,262,274 6,132,319

4. Depreciation 92,520 88,858

5. Interest (Net) 14 33,520 16,049

7,388,314 6,237,226

PROFIT BEFORE TAX 629,166 553,721

6. PROVISION FOR TAXES (See note 11) 181,489 190,043

PROFIT AFTER TAX 447,677 363,678

Basic and diluted Earnings Per Share (Rupees) (See note 17) 29.55 24.00

Notes forming part of the accounts 15



& CEO




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CONSOLIDATED CASH FLOW FOR THE YEAR ENDED MARCH 31, 2004


Rs./000s Rs./000s Rs./000sA. Cash flow from Operating Activities

Net profit before tax* 629,166 553721Adjustments for :Depreciation 92,520 88,858Interest paid 39,435 23,521(Profit)/Loss on sale of fixed assets 3 (197)Bad debts/advances written off (net) 16,691 39,165Unclaimed balances/provisions written back (101,372) (17,099)Provision for doubtful debts 16,411 9,197Unrealised foreign exchange loss/(gain) (78) 4,991Fixed assets written off 457 641Transfer from capital reserve (3,800) (5,666)

60,267

Operating profit before working capital changes 689,433 697,132Adjustments for :Trade and other receivables (141,790) (1,007,678)Inventories (10,969) (57,305)Trade payables and other liabilities (231,510) 314,236

Cash generated from operations 305,164 (53,615)Direct taxes paid (129,213) (169,358)

Net Cash from/(used) in Operating Activities (A) 175,951 (222,973)

B. Cash Flow from Investing ActivitiesPurchase of fixed assets (85,409) (52,887)Sale of fixed assets 4,057 1,290Foreign exchange translation adjustment (arising on consolidation) (3,667) (1,550)

Net Cash used in Investing Activities (B) (85,019) (53,147)

C. Cash Flow from Financing ActivitiesInterest paid (39,435) (48,194)Proceeds/(Payment) of short term borrowings 39,399 314,645Proceeds/(Payment) of long term borrowings — 63,972Dividend paid (including dividend tax) (68,202) (60,427)

Net Cash from/(used) in Financing Activities (C) (68,238) 269,996

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 22,694 (6,124)

Cash and cash equivalents as on 1 April, 2003[Excludingunrealised exchange difference of Rs. (000s) 527] 231,556 237,680

Cash and cash equivalents as on 31 March, 2004[Excluding unrealised exchange difference of Rs. (000s) 928] 254,250 231,556

* includes project grants from Government of Rs. (‘000s) 13,795 (Previous year Rs. (‘000s) 13,060)



& CEO




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As at As at31.3.04 31.3.03

Rs./000s Rs./000sSchedule 1 : SHARE CAPITAL

Authorised35,000,000 (Previous year 35,000,000) equity shares of Rs.10 each 350,000 350,000

Issued, Subscribed and Paid up15,150,000 (Previous year 15,150,000) equity shares of Rs.10 each fully paid up 151,500 151,500

Of the above:7,744,961 (Previous year Nil) equity shares are held by Tata ConsultancyService Limited, the holding company.

Nil (Previous year 7,744,961) equity shares are held by Tata Sons Limited,the ultimate holding company. (See note 2)

Schedule 2 : RESERVES and SURPLUS

(a) Capital Reserve(Grants from Government of India)(i) Opening balance 12,061 17,727(ii) Less:Transferred to Profit and Loss Account 3,800 5,666


(b) General Reserve(i) Opening balance 89,382 52,328(ii) Add:Transferred from Profit and Loss account 47,987 37,054


(c) Foreign currency translation reserve 15,868 19,535(arising on consolidation)

(d) Profit and Loss account(i) Opening balance 939,377 681,117(ii) Add: Additions during the year 447,677 363,678

1,387,054 1,044,795

(iii) Less: Proposed dividend 83,325 60,600(iv) Less: Tax on Proposed dividend 10,676 7,764(v) Less: Transfer to General reserve 47,987 37,054

1,245,066 939,377

1,406,564 1,060,355

Schedule 3 : SECURED LOANS

From banksCash credit accounts 174,239 125,743

174,239 125,743

Note:

SCHEDULES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

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Schedule 5 : FIXED ASSETS (See note 7)Rs./000s

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Deductions/ As at As at For the Deductions/ As at As at As at1.4.03 Adjustments 31.3.04 1.4.03 year Adjustments 31.3.04 31.3.04 31.3.03

(a) Land(i) Leasehold 59,197 — — 59,197 6,595 781 — 7,376 51,821 52,602(ii) Freehold 1,656 — — 1,656 — — — — 1,656 1,656

(b) Buildings(i) Leasehold 8,593 4,812 — 13,405 1,267 2,920 — 4,187 9,218 7,326(ii) Freehold 320,141 6,940 — 327,081 52,493 5,335 — 57,828 269,253 267,648

(c) Plant & Machinery(i) Computers 593,771 51,493 17,739 627,525 434,386 65,402 14,897 484,891 142,634 159,385(ii) Office and

other equipment 53,203 1,793 1,754 53,242 32,658 2,572 1,090 34,140 19,102 20,545(iii) Others 162,563 7,370 7,081 162,852 140,556 7,958 6,784 141,730 21,122 22,007

(d) Furniture &Fittings 75,610 12,283 2,809 85,084 42,864 7,174 2,133 47,905 37,179 32,746

(e) Vehicles 4,444 — 208 4,236 1,218 378 170 1,426 2,810 3,226

TOTAL 1,279,178 84,691 29,591 1,334,278 712,037 92,520 25,074 779,483 554,795 567,141

(f) Capitalwork-in-progress 20,020 2,332 1,614 20,738 — — — — 20,738 20,020

GRAND TOTAL 1,299,198 87,023 31,205 1,355,016 712,037 92,520 25,074 779,483 575,533 587,161

Previous year 1,261,977 55,302 18,081 1,299,198 637,111 88,858 13,932 712,037 587,161 —

As at As at31.3.04 31.3.03

Rs./000s Rs./000sSchedule 4 : UNSECURED LOANS

a. Short Term Loans(i) From banks 100,000 –(ii) From others 100,000 100,000(iii) Commercial Paper 200,000 200,000

400,000 300,000b. Other Loans

(i) From Government of India 67,400 67,400(ii) Interest accrued and due 20,199 20,199(iii) Other term loans (See note 10) – 109,097

487,599 496,696Note:1. Loans repayable within one year Rs.(000s) 467,400 (Previous year Rs.(000s) 367,400)2. Loans from Government of India include interest free loans of Rs.(000s) 54,900

(Previous year Rs.(000s) 54,900)3. Maximum amount outstanding on commercial paper during the year Rs.(000s) 200,000

(Previous year Rs.(000s) 200,000)4. Maximum amount outstanding on other term loans during the year Rs. (000s) 109,097

(Previous year Rs. (000s) 118,250)

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As at As at31.3.04 31.3.03

Rs./000s Rs./000s

Schedule 6 : INVENTORIES

(a) Finished goods - equipment for resale 134,418 116,969(b) Components/spares for maintenance and resale 44,143 37,053(c) Education and training material 5,821 6,332(d) Work-in-progress 465 13,524

184,847 173,878

Note: Finished goods include goods in transit Rs. (000s) 18,917[Previous year Rs.(000s) 26,539]

Schedule 7 : SUNDRY DEBTORS

a. Over six months old (unsecured):Considered good 253,168 317,644Considered doubtful 51,606 57,535

304,774 375,179b. Others (unsecured):

Considered good 1,604,935 1,822,720

1,909,709 2,197,899Less: Provision for doubtful debts 51,606 57,535

1,858,103 2,140,364c. Future lease instalments receivable (unsecured) (See note 13) 4,609 13,307

Less:Unearned finance and service charges 314 1,784

4,295 11,523

1,862,398 2,151,887

Schedule 8 : CASH AND BANK BALANCES

(a) Cash on hand [including stamps on hand 2,442 1,356Rs.(000s) 64 (Previous year Rs. (000s) 30)]

(b) Cheques/demand drafts on hand 75,367 117,741

(c) Balance with scheduled banks in:(i) Current accounts 121,890 36,206(ii) Cash credit accounts 36,484 15,635(iii) Deposit accounts* 19,008 61,145

255,191 232,083

* includes Rs.(000s) 6,195 (Previous year Rs.(000s) 6,379)on account of fixed deposits pledged withcustomers as security

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As at As at31.3.04 31.3.03

Rs./000s Rs./000sSchedule 9 : LOANS AND ADVANCES

(a) Advances recoverable in cash or in kind orfor value to be received 250,620 383,468

(b) Advance income tax and tax deducted at source 920,482 791,269

1,171,102 1,174,737(c) Less: Advances considered doubtful 9,388 9,374

1,161,714 1,165,363

Schedule 10 : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES(a) Sundry Creditors 1,084,400 1,373,191(b) Customers’ security deposits and credit balances and advance

against supplies and services to be rendered 338,423 410,251(c) Investor Education and Protection Fund shall be credited by

the following amounts, namely:- Unpaid dividend 505 344

(d) Unearned revenue 277,945 220,261(e) Other liabilities 58,338 73,730(f ) Interest accrued but not due 2,701 1,677

1,762,312 2,079,454

PROVISIONS(a) Provision for taxation 935,935 750,088(b) Proposed dividend 83,325 60,600(c) Provision for leave encashment 115,020 120,188

1,134,280 930,876

2,896,592 3,010,330

Schedule 11 : SALES AND SERVICES

(a) Sale of purchased equipment 3,774,665 2,621,186(b) Services

(i) Software services 2,335,214 2,499,816(ii) Maintenance services 886,642 783,890(iii) Other services 669,642 561,947

(c) Education and training 177,861 246,732(d) Lease rentals 7,473 9,931

7,851,497 6,723,502

Note: Lease rentals include income Rs.(000s) 1,399(Previous year Rs.(000s) 1,670) under finance leases.

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Rs./000s Rs./000sSchedule 12 : OTHER INCOME

(a) Project Grants from Government 13,795 13,060(b) Gain on foreign exchange fluctuations (Net of loss) 4,010 —(c) Profit on sale of fixed assets — 197(d) Transfer from capital reserve - capital grants 3,800 5,666(e) Unclaimed balances/provisions written back 101,372 17,099(f ) Interest on refund of taxes 14,144 14,349(g) Miscellaneous income 28,862 17,074

165,983 67,445

Schedule 13 : OPERATING AND OTHER EXPENSES

1. Equipment Purchased for Resale 3,688,587 2,523,374

2. Payments to and Provisions for Employees(a) Salaries, allowances and incentives 1,552,641 1,715,733(b) Contribution to provident and other funds 96,983 99,542(c) Staff welfare expenses 99,076 109,684

Sub-Total 1,748,700 1,924,959

3. Operating and Administration Expenses(a) Components/spares for maintenance and resale 217,688 186,723(b) Sub-contracted/outsourced services 474,998 378,505(c) Purchased software 22,419 17,983(d) Freight, handling and packing expenses 19,898 13,851(e) Rental of P&T lines and leased equipment 9,445 9,017(f ) Rent and hire charges 57,394 75,809(g) Rates and taxes 14,308 10,283(h) Repairs and maintenance:

(i) Building 11,760 8,322(ii) Plant and machinery 9,347 7,704(iii) Other 21,647 21,277

(i) Electricity charges 49,068 51,168(j) Insurance 66,636 71,399(k) Travelling and conveyance 204,194 210,655(l) Printing, stationery and computer consumables 36,316 55,717(m) Postage, telephone and courier 60,247 57,430(n) Advertisement, publicity and business promotion 13,257 12,498(o) Directors’ fees 325 295(p) Professional and legal fees 24,676 26,326(q) Education and training :

(i) Payments to franchisees 69,889 125,908(ii) Other expenses 38,432 29,857

(r) Living Expenses - Overseas Contracts 292,015 191,861(s) Bad debts/advances written off (net)

[Net of bad debts recovered Rs.(000s) 1,063(Previous year Rs. (000s) 1,066)] 16,691 39,165

(t) Provision for doubtful debts 16,411 9,197(u) Fixed assets written off (Net) 457 641(v) Loss on foreign exchange fluctuations (Net of Gain) — 493(w) Loss on sale of fixed assets (Net of Gain) 3 —(x) Other expenses 77,466 71,902

Sub-Total 1,824,987 1,683,986

Total 7,262,274 6,132,319

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Rs./000s Rs./000sSchedule 14 : INTEREST

1. Interest expense(a) On fixed loans

(i) Government of India loans 1,625 2,827(ii) Other term loans 18,267 8,354

(b) On Cash credit accounts with banks 18,025 5,779(c) Others 1,518 6,561

39,435 23,5212. Less: Interest earned

(a) Loans and advances 551 760(b) Fixed deposits with banks [Tax deducted at source

Rs. (000s) 122 (Previous year Rs.(000s) 317)] 682 1,563(c) Others [Tax deducted at source Rs. (000s) 321 (Previous

year Rs. (000s) 511)] 4,682 5,149

5,915 7,472

33,520 16,049

SCHEDULE 15

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS

1. These accounts comprise a consolidation of the Balance Sheet, Profit and Loss Account and Cash Flow Statement of CMC Limited, acompany incorporated in India and its wholly owned subsidiary CMC Americas, Inc. (formerly known as Baton Rouge International,Inc.), which is incorporated in the United States of America.

2. Background

CMC Limited (the parent) 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 ofimported/ indigenous computer and networking systems, and in education and training.The Parent was a Government of India (GoI) enterprise up to 15 October, 2001. Under the disinvestment process, GoI sold 7,726,500shares representing 51 percent of the share capital to Tata Sons Limited, on 16 October, 2001. The Gol further sold its entire remainingbalance 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 toTata Consultancy Services Limited (a subsidiary of Tata Sons Limited). As a result, the Parent has become a subsidiary of Tata ConsultancyServices Limited.CMC Americas, Inc. (the Subsidiary) derives its revenue throughout the United States of America from two sources:a. Software integration and system services at customer sites for a contract fee.b. Auxillary services, such as maintenance contracts, systems upgrades, and training of customer personnel.

3. Significant Accounting Policies

a. Basis of accounting

The financial statements of the Parent have been prepared under the historical cost convention and comply with the AccountingStandards prescribed by the Institute of Chartered Accountants of India.

b. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent and its wholly owned subsidiary madeupto 31 March each year. All significant inter-company transactions and balances are eliminated on consolidation. Goodwillarising on consolidation represents the excess of the cost of acquisition over the book value of assets and liabilities at the date ofacquisition.

c. Fixed assets and depreciation

i. All fixed assets are stated at cost. Cost includes purchase price and all other costs attributable to bringing the assets toworking condition for intended use.

ii. Fixed assets acquired out of grants, the ownership of which rests with the grantor, are capitalised at cost.

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iii. Depreciation on all assets of the Parent is charged proportionately from the date of acquisition/installation on straight linebasis at rates prescribed in Schedule XIV of the Companies Act, 1956 except in respect of:� Leasehold assets that are amortised over the period of lease.� Computers, Plant and Machinery - (other items), that are depreciated over six financial years.

Depreciation on assets of the Subsidiary is charged based on the estimated useful life of the assets. Accordingly, depreciation ischarged as per the straight-line method over three financial years.

d. Revenue Recognition

i. Revenue relating to equipment supplied is recognised on delivery to the customer and acknowledgement thereof, inaccordance with the terms of the individual contracts.

ii. Revenue from software development on fixed price contracts is recognised according to the milestone achieved as specifiedin the contract, and is adjusted on the “proportionate completion” method based on the work completed.

iii. On time and material contracts, revenue is recognised based on time spent as per the terms of the specific contracts.iv. Revenue from warranty and annual maintenance contracts is recognised over the life of the contracts. Maintenance revenue

on expired contracts on which services have continued to be rendered is recognised on renewal of contract or on receipt ofpayment.

v. Revenue from “Education and Training” is recognised on accrual basis over the course term.

e. Grants

i. Grants received for capital expenditure incurred are included in “Capital Reserve”. Fixed assets received free of cost areconsidered as a grant and are capitalised at notional value with a corresponding credit to the Capital Reserve account.An amount equivalent to the depreciation charge on such assets is appropriated from capital reserve and recognised asrevenue in the Profit and Loss Account.

ii. Grants received for execution of projects is recognised as revenue to the extent utilized.iii. Unutilised grants are shown under other liabilities.

f. Inventories

Inventories include finished goods, stores and spares, work-in progress and education and training material.i. Inventories of finished goods mainly comprising of equipment for resale are valued at the lower of cost (net of provision for

obsolescence) or net realisable value.ii. Inventories of stores and spares are valued at cost, net of provision for diminution in the value. Cost is determined on weighted

average cost basis.iii. Inventories of “Education and Training material” are valued at the lower of cost and net realisable value. Cost is determined

on the “First In First Out” basis.iv. Work-in-progress comprises cost of infrastructural facilities in the process of installation at customers’ sites. These are valued

at cost paid/payable to sub-contractors.

g. Research and Development Expenses

Research and development costs of revenue nature are charged to the Profit and Loss account when incurred. Expenditure ofcapital nature is capitalised and depreciated.

h. Foreign exchange transactions

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Monetary itemsdenominated in foreign currency and outstanding at the Balance Sheet date are translated at the exchange rate ruling on thatdate. Exchange differences on foreign exchange transactions other than those relating to fixed assets are recognised in the profitand loss account. Any gain/loss on exchange fluctuation on the date of payment of expenditure incurred for acquisition of fixedassets is treated as an adjustment to the carrying cost of such fixed assets. In case of forward contracts for foreign exchange, thedifference between the forward rate and the exchange rate at the date of the transaction are recognised over the life of the contract.

In respect of the subsidiary, income and expenses are translated into the reporting currency at the average rate. All assets andliabilities are translated at the closing rate. The resulting exchange differences are transferred to foreign currency translation reserve.

i. Leases

Assets given under finance leases are recognised as receivables at an amount equal to the net investment in the lease and thefinance income is based on a constant rate of return on the outstanding net investment.

j. Retirement benefits

i. The Parent’s contribution to the Employees’ Provident Fund is deposited in a trust formed by the Company under theEmployees’ Provident Fund and Miscellaneous Provisions Act, 1952 which is recognised by the Income-Tax authorities. Suchcontributions are charged to the Profit and Loss Account each year.

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ii. Gratuity to employees is based on the Group Gratuity Scheme of the Life Insurance Corporation of India. Contributionsmade to the Scheme are expensed in the year.

iii. The balance of unavailed leave due to employees has been provided on the basis of actuarial valuation.iv. The Subsidiary is the sponsor of a defined contribution 401 (K) Profit sharing Plan for its employees. Company contribution

to the plan for the year ended March 31, 2004 aggregating to Rs.(000s) 2,854 [Previous year Rs.(000s) 4,603]. The Companyalso sponsors a separate profit sharing plan for its employees. Benefits are paid upon retirement, total disability, death ortermination. The company did not make a contribution for the year ended March 31, 2004.

k. Provision for taxation

Income tax comprises of current tax and deferred tax. Deferred tax assets and liabilities are recognised for the future taxconsequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measuredusing the tax rates enacted or substantively enacted by the Balance Sheet date.

l. Earnings per Share

The earnings considered in ascertaining EPS comprises the net profit after tax. The number of shares used in computing Basic EPSis the weighted average number of shares outstanding during the year.


i. Business segments

Based on similarity of activities, risks and reward structure, organisation structure and internal reporting systems, the Parent hasstructured its operations into the following segments:Customer Services: Hardware supplies and maintenance, facilities management and provision of infrastructure facilities.Systems Integration (SI): Systems study and consultancy, software design, development and implementation, softwaremaintenance and supply of computer hardware in accordance with customers’ requirements. The operations of the Subsidiaryfall in this category.IT Enabled Services (ITES) - (Formerly Indonet): Value-added-services, data network, data center services, web design andhosting etc.Education and Training (E&T): IT education and training service through its own centers and through franchisees.Segment revenue and expenses include amounts, which are directly identifiable to the segment and allocable on a reasonablebasis. Segment assets include all operating assets used by the segment and consist primarily of debtors, inventory and fixedassets. Segment liabilities include all operating liabilities and consist primarily of creditors, advances/deposits from customersand statutory liabilities.

ii. Geographic segments

The Parent also provides services overseas, primarily in the United States of America and United Kingdom.

5. Research and Development Expenses

Expenditure includes “Research and Development” expenditure for the Parent aggregating to Rs. (000s) 108,616 [Previous yearRs. (000s) 78,088]. Amounts aggregating to Rs. (000s) 6,784 [Previous year Rs. (000s) 1,359] have been capitalised.

6. Contingent liabilities and commitments

For the Parent:

As at As at31.3.04 31.3.03

Rs./000s Rs./000sa. Claims against the Company not acknowledged as debts

� Liability on property tax — 623� Under litigation 97,346 119,684� ESI Demand 280 980� Disputed demands raised by Sales tax authorities for

which the Company has gone on appeal against the department * 34,568 30,470b. Unexpired Letters of Credit 454,733 450,292c. Guarantees issued by bankers against Company’s counter guarantee 1,098,735 729,930d. Others 1,390 250e. Sales tax on leased assets 3,726 3,726f. Estimated amount of contracts remaining to be executed on capital

account (net of advances) and not provided for 69,487 68,338

* No provision is considered necessary since the Company expects favourable decisions.

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7. Fixed Assets

Gross Block for the Parent as at 31 March, 2004 includes:

a. Assets acquired from Grants and aggregating to Rs. (000s) 41,865 [Previous year Rs. (000s) 41,865] being the property of Governmentof India. The depreciation for the year on such assets is Rs. (000s) 3,800 [Previous year Rs. (000s) 5,661] and the accumulateddepreciation at the year end was Rs. (000s) 33,676 [Previous year Rs. (000s) 29,876].

b. Assets aggregating to Rs. (000s) 7,210 [Previous year Rs. (000s) 7,210] received free of cost. The depreciation for the year on suchassets is Rs. Nil (Previous year Rs. Nil) and the accumulated depreciation thereon is Rs. (000s) 7,138 [Previous year Rs. (000s) 7,138].

c. Plant and machinery includes assets given on lease aggregating to Rs. (000s) 23,147 [Previous year Rs.(000s) 23,147]. Thedepreciation for the year is Rs. (000s) 3,720 [Previous year Rs. (000s) 3,720], the accumulated depreciation thereon being Rs. (000s)16,935 [Previous year Rs. (000s) 13,233].

8. Sundry DebtorsSundry debtors of the Subsidiary include Rs. Nil [Previous year Rs. (000s) 1,072 ] retained by a customer, which are expected to beremitted to the Subsidiary during 2005.

9. Other Liabilities

Other liabilities include a note payable dated 1 June, 1996, amounting to Rs.(000s) 49,841 [Previous year Rs.(000s) 54,395] due by theSubsidiary to a corporate entity under an agreement concerning the purpose, distribution and services related to fourth generation ofthe Total Concept Financial System, due on demand, bearing interest at 1% over the 1 year U.S. dollar LIBOR.

10. Other Term Loan

The subsidiary was advanced Rs. (000s) 108,350 [Previous year Rs. (000s) 118,250] from an affiliated entity to fund a Rs. (000s) 155,591[Previous year Rs. (000s) 169,807] cash escrow requirement. The Subsidiary was repaying the advance in 60 equal monthly installmentsof Rs. (000s) 932 [Previous year Rs. (000s) 1,017] plus the actual interest earned by the escrow account until June 2003. In august of2003, the escrow deposit was returned to the affiliate entity and the remaining balance of Rs. (000s) 97,168 was repaid to the affiliate.

11. Provision for Income Tax

The provision for taxes on income is as follows:


Rs./000s Rs./000sCurrent taxes

Domestic taxes* 191,504 201,937Foreign taxes 4,254 (8,574)

Deferred taxesDomestic taxes (14,269) (5,833)Foreign taxes – 2,513

Total 181,489 190,043

* includes taxes in foreign jurisdiction Rs. (000s)16,334 [Previous year Rs. (000s) 21,937]

12. Deferred Tax

a. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.The deferred tax assets of previous year pertains to the Subsidiary which is being utilized during the current year.

b. Break up of deferred tax assets/liabilities and reconciliation of current year deferred tax charge for the Patient:(All amounts in Rs./000s)

Opening Charged/ Closing(Credited)

to P&L

i. Deferred Tax Liabilities:Tax impact of difference between carrying amount offixed assets in the financial statements and the income tax return 113,359 (8,271) 105,088

ii. Deferred Tax Assets:Tax impact of expenses charged in the financial statements butallowable as deductions in future years under income tax 31,045 5,998 37,043

Net Deferred Tax Liability (i-ii) 82,314 (14,269) 68.045

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13. Disclosure in respect of finance lease

The Parent has purchased and given on lease computer equipment, peripherals and system software. The details are as follows:Year ended Year ended

31.3.04 31.3.03

Rs./000s Rs./000s

a. Total gross investment 4,609 13,307

b. Present value of Minimum Lease Payments receivable 4,295 11,523

c. Total gross investment for the period

� Not later than one year 4,609 8,345

� Later than one year but not later than five years 4,609 4,962

d. Present value of Minimum Lease Payments receivable

� Not later than one year 4,295 6,879

� Later than one year but not later than five years — 4,644

e. Unearned Finance Income 314 1,784

14. The Subsidiary leases three office facilities under operating lease, which expires at various dates through 2004. Scheduled minimumlease payments for the periods subsequent to 2004 are as follows:

Year ended 31.3.04 Year ended 31.3.03Rs./000s Rs./000s

2004 — 4,6612005 2,223 944

Total 2,223 5,605

15. Pending RBI approval, certain anticipated losses for the Parent amounting to Rs. (000s) 8,089 [Previous year Rs. (000s) 8,089], whichstands provided for, are not written off.

Sanction of Reserve Bank of India for the Parent for expenditure incurred on overseas operations amounting to Rs. (000s) 3,287 [Previousyear Rs. (000s) 3,089 ] during the year 1991-92 has not yet been received.

16. Related Party Disclosures

a. List of related partiesi. Company holding substantial interest in voting power of the Parent/Subsidiary

� Tata Sons Limited (the ultimate holding Company)� Tata Consultancy Services Limited (the holding Company)

ii. Fellow Subsidiaries

Parent� Tata Infotech Limited� Tata AIG General Insurance Company Limited� Tata AIG Life Insurance Company Limited� Tata Consultancy Services, Deutshland GmbH

Subsidiary

� TCS America International Corporation

iii. Key Management Personnel

Parent� Mr S S Ghosh – Managing Director & CEO (up to 12 December, 2003)� Mr R Ramanan – Deputy Managing Director & COO (upto 12 December, 2003) and Managing Director CEO (with effect

from 13 December, 2003)

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d. Transactions/Balances outstanding with Related Parties: Rs./000s

Transactions/ Holding Fellow Key TotalOutstanding Company Subsidiary ManagementBalances Personnel

Purchase of goods/services 286,159 61,719 — 347,878(19,813) (52,019) — (71,832)

Sale of goods 166,869 13,890 — 180,759(43,094) — — (43,094)

Service Income 805,554 1,230 — 806,784(600,486) — — (600,486)

Managerial Remuneration — — 1,989 1,989— — (1,733) (1,733)

Debtors/unbilled revenue as at year end 217,784 5,461 — 223,245(134,590) — — (134,590)

Creditors / Advances as at year end 17,650 5,378 — 23,028(22,449) (123,287) — (145,736)

Loans/ advances as at year end — — — —(499) — (3) (502)

Other transactions * 34,697 1,162 — 35,859(36,125) (484) — (36,609)

*Includes dividend paid to the holding CompanyNote: Amounts in brackets represent previous year’s figures.

17. Earnings per share


Net profit attributable to shareholders Rs./000s 447,677 363,678Weighted average number of equity shares in issue Nos. 000s 15,150 15,150Basic earning per share of Rs. 10 each Rs. 29.55 24.00

The Company does not have any outstanding dilutive potential equity shares.


a. Financial information about the primary business segments is given below: Rs./000s

Customer System ITES Education TotalServices Integration and Training

i. SEGMENT REVENUE

— Sales and Service 5,207,494 2,134,765 328,289 180,949 7,851,497(3,823,414) (2,348,543) (302,541) (249,004) (6,723,502)

— Other Income 37,187 35,703 10,248 3,860 86,998(9,824) (6,606) (353) (833) (17,616)

ii. SEGMENT RESULTS 491,624 372,855 50,741 (17,362) 897,858(420,327) (306,781) (69,369) (-10,112) (786,365)

iii. UNALLOCABLE EXPENSES 235,172(net of unallocable income) (216,595)

iv. OPERATING PROFIT 662,686(569,770)

v. INTEREST EXPENSE (NET) 33,520(16,049)

vi. PROVISION FOR TAX— Current Income Tax 195,758

(195,876)

— Deferred Income Tax (14,269)(-5,833)

vii. NET PROFIT 447,677(363,678)

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Segment Information (Contd.) Rs./000s

Customer System Indonet Education TotalServices Integration and Training

viii. OTHER INFORMATION

Segment assets 2,212,625 1,081,189 198,647 58,287 3,550,748(2,068,788) (1,000,285) (321,360) (66,837) (3,457,270)

Unallocable assets 1,633,791(1,469,668)

TOTAL ASSETS 5,184,539(4,926,938)

Segment liabilities 1,141,353 395,614 127,218 77,051 1,741,236(1,405,969) (517,876) (170,986) (63,053) (2,157,884)

Unallocable liabilities 1,885,239(1,557,199)

TOTAL LIABILITIES 3,626,475(3,715,083)

Capital Expenditure 15,575 39,620 3,113 1,289(8,534) (15,859) (6,524) (2,394)

Depreciation 22,940 45,583 4,955 6,731(18,611) (41,597) (3,790) (8,474)

Non-cash expenses other 8,812 19,490 8,173 1,607than depreciation (22,747) (45,317) (3,719) (936)

i. Unallocated assets include investments, advance tax and tax deducted at source.ii. Unallocated liabilities include secured/unsecured loans, deferred tax/current tax liabilities, proposed dividend and tax on proposed dividend.iii. Amounts in brackets represent previous year’s figures.

b. Geographical SegmentRs./000s

India United States United Others Totalof America Kingdom

SEGMENT REVENUE— Sales and Services 6,699,454 843,335 108,484 200,224 7,851,497

(5,377,482) (1,192,767) (59,267) (93,986) (6,723,502)

— Other Income 86,998 — — — 86,998(17,616) — — — (17,616)

TOTAL ASSETS 4,677,335 233,259 91,462 182,483 5,184,539(4,359,310) (518,552) (25,770) (23,306) (4,926,938)

TOTAL LIABILITIES 3,465,758 116,248 20,853 23,616 3,626,475(3,456,496) (250,729) (5,125) (2,733) (3,715,083)

Note : Amounts in brackets represent previous year’s figures.

19. Mr. R. Ramanan was appointed as Managing Director & CEO of the Company with effect from 13 December, 2003 in the Board Meetingheld on 22 December, 2003. His appointment and remuneration are subject to approval of the shareholders.

20. Previous year’s figures have been presented for the purpose of comparison and have been regrouped where necessary.

For and on behalf of the BoardS Ramadorai R Ramanan Dr K R S Murthy I HussainChairman Managing Director Director Director

& CEO



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�

Affix RevenueStamp

CMC Limited

Registered Office: CMC Centre, Old Mumbai Highway, Gachibowli, Hyderabad - 500019, A.P.

ATTENDANCE SLIP

Folio No.

I certify that I am a registered Shareholder/Proxy for registered Shareholder of the Company.

I hereby record my presence at the 28th Annual General Meeting of the Company at Bhartiya Vidya Bhavan Auditorium, BVB HyderabadKendra, No. 5-9–1105, Basheerbagh-King Koti Road, Hyderabad-500 019, A.P., on Monday August 30, 2004 at 2.30 p.m.

Note:Please sign this attendance slip and hand it over at the attendance counter at the ENTRANCE OF THE MEETING HALL.

I/We..........................................................................................................................................................................................................................................................................

of................................................................................................................................................................................................................................................................................(Write full address)

......................................................................................................................................................being a Member(s) of CMC LIMITED, hereby appoint

................................................................................................................ of ........................................................................................................................(Write full address)

...................................................................................................................................................................................................................................................................................

or failing him/her...............................................................................of...............................................................................................................................................................

....................................................................................as my/our proxy to attend and vote for me/us and on my/our behalf at the 28th Annual GeneralMeeting to be held on Monday August 30, 2004 at 2.30 p.m. and at any adjournment thereof.

AS WITNESS under my/our hands this day of , 2004

Folio No. .......................................................... DP/ID/No. .................................................................. Client ID No. .............................................................

Signature ......................................................... .............................

NOTES :1. The Proxy need NOT be a member.2. The Proxy Form must be deposited at the Registered Office not less than 48 hours before the scheduled time for holding the meeting.

DP IDClient ID

CMC Limited


PROXY FORM

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CMC Limited

Twenty seventh annual report 2003 - 2004

70

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CMC Limited

July 17, 2004

The Shareholders ofCMC Limited

Re: Payment of Dividend by Electronic Clearing Services (ECS)

Dear Shareholder,

We are pleased to inform you that the Board of Directors at their meeting held on April 26, 2004, have recommended payment of dividendfor the year ended March 31, 2004 @ Rs. 5.50 per equity share. This dividend will be paid after the same is declared at the 28th Annual GeneralMeeting scheduled to be held on August 30, 2004.

In accordance with SEBI’s directions vide their Circular No. DCC/FITT/Cir-3/2001 dated October 15, 2001, arrangements have been made tocredit your dividend amount directly to your bank account through the Electronic Clearing Service (ECS).

In case you hold shares in physical form, please furnish your bank details in the ECS Mandate Form printed overleaf together witha xerox copy of your cheque leaf to our Registrars, M/s MCS limited on or before August 21, 2004. The said details in respect of theshares held in electronic form should be sent to your respective Depository Participant and not to the Registrars.

In case of receiving your request after the due date, the mandate will not be considered for this dividend. However, the same will be used forfuture dividend payments, unless the same is amended or revoked by you.

In the absence of adequate response from the shareholders of any particular centre(s), the Company reserves its right of paying the dividendby dividend warrants.

Thanking you,

Yours faithfully,

For CMC Limited

VIVEK AGARWALCompany Secretary

�

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CMC Limited


MANDATE FORM

RE: PAYMENT OF DIVIDEND BY ELECTRONIC CLEARING SERVICES (ECS)

Shareholders authorization to receive dividend through Electronic Credit Service Mechanism

1. Name of the first/sole shareholder

2. Folio No./D.P. ID & Client ID Nos.

3. Name of the Bank in full

4. Branch, Address & Tel No.

5. 9-digit code number of the Bank and Branch

appearing on the MICR cheque

6. Account Number (as given on the cheque book)

7. Account type (Please tick)

(Please attach a photocopy of a cheque issued to you by your bank, for verification of the above particulars.)

I hereby declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for any reasons(s),

beyond the control of the Company, I will not hold the Company responsible. I agree to discharge the responsibility expected of me as a

participant under the scheme.

Date :

Place : Signature

Encl: Copy of the cheque leaf

NOTES

1. In case you held shares in physical form, please send the aforesaid form duly filled in and signed by all the shareholders to our Registrars

M/s MCS Limited, Sri Venktesh Bhawan, W-40, Okhla Industrial Area, Phase II, New Delhi - 110020.

2. In case you held shares in D’mat form, please furnish the aforesaid details to your depository participant and not to the Registrars.

Savings Bank Current Cash Credit

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CMC AR 2003 04

Economy & Finance

Transcript of CMC AR 2003 04