Tata Consultancy treats $940mn fine as contingent liability

Mumbai: Tata Consultancy Services on Monday said the $940 million fine slapped by a US court has been addressed for the moment as a contingent liability on its books with a full disclosure, and that future accounting action would depend on how the case evolves. [caption id=“attachment_1098957” align=“alignleft” width=“380”]  Reuters[/caption] The remarks came during a press conference addressed by top executives of the IT bellwether, led by its chief executive and managing director N. Chandrasekaran, to announce the fourth quarter results for 2015-16, which, incidentally, beat expectations. A contingent liability in accounting norms is a potential financial obligation that may arise in the future due to certain developments – but may or may not result in an actual outgo of money, as and when the issue gets settled. A disclosure keeps the stakeholders informed. Last week, a US Federal Court in Wisconsin had slapped a $940 million fine on Tata Consultancy in an alleged case of stealing software information. The company said it intended to appeal against the verdict in higher courts and that it would have no bearing on the company’s 2015-16 results. Chandrasekaran said the company does not see the allegations holding against it in higher courts. The company also restated that the judge was already on record towards a favourable reduction in the penalty. “We have dealt with that (the $940 million fine in the legal battle with Epic Systems of the US) as a contingent liability with full disclosure,” said Rajesh Gopinathan, chief financial officer. “As the case develops and the situation warrants, we will act accordingly.” Later, in an interview to CNBC-TV, Chandrasekaran said “we have already stated that there is no violation,” adding that thecompany was in touch with all stakeholders. “We will do what is right.”