I was looking at the balance sheet of TCS on consolidated bases at that time one question came to my mind after observing something. by questioning this I am in no way questioning the integrity of a company like TCS. i am learning therefore just wanted to understand it.
Not going way beyond in time, blocks of 5 years are enough for me to understand following question. I have noticed that there was a significant growth in the reserves and surplus of TCS from March 2013 to 2017(during N Chandrasekaran sir’s tenure), However, since 2018 to 2022 there is almost no growth in reserves and surplus even after continuous growth in EPS? what could be the reason for this? I noticed that in 2018 a 1:1 bonus was declared by TCS, so does is it because of this bonus?
Because they realized that just adding reserve does not add any value to shareholders. Also, since they are not in very capital intensive industry there is no point of accumulating so much cash.
On other side Tata Sons was always in need of capital for their ever expanding investment.
Net result, TCS started giving cash back to shareholders instead of accumulating it as reserves. Apart from giving high dividends (in form of special dividends), they also did 4 buybacks to return lot of cash to shareholder
