EX-19.1 2 0002.txt INFOSYS QUARTERLY REPORT TO THE SHAREHOLDERS Exhibit 19.1 INFOSYS TECHNOLOGIES LIMITED Report for the half year ended September 30, 2000 [LOGO INFOSYS(R)]
At a glance - Indian GAAP ----------------------------------------------------------------------------------------------------------------------- Rs. in crores, except per share data ---------------------------------------------------------------------------------------------------------------------- Quarter ended Half year ended Year ended September 30 September 30 March 31,2000 ------------------------------------------------ 2000 1999 2000 1999 ---------------------------------------------------------------------------------------------------------------------- For the period Total revenue 465.67 217.88 836.32 401.94 921.46 Export revenue 441.26 205.07 792.32 373.69 869.70 Operating Profit (PBIDT) 196.00 85.93 348.75 163.86 378.88 Profit after tax (PAT) from ordinary activities 154.01 65.71 275.31 126.32 285.95 PBIDT as a percentage of total revenue 42.09% 39.44% 41.70% 40.77% 41.12% PAT (from ordinary activities) as a percentage of total 33.07% 30.16% 32.92% 31.43% 31.03% revenue Earnings per share (from Ordinary activities)* 23.28 9.93 41.62 19.10 43.23 Dividend per share NA NA 2.50 1.50 4.50 Dividend amount NA NA 16.54 9.92 29.76 Capital investment 114.01 38.56 199.85 59.76 159.87 At the end of the period Total assets 1094.04 687.68 833.30 Fixed assets-net 365.19 140.42 207.34 Cash and equivalents 535.90 453.80 508.37 Working capital 683.12 546.51 612.13 Total debt - - - Net worth 1094.04 687.68 833.30 Equity 33.08 33.07 33.08 Market capitalization 48695.68 23,589.06 59,338.17 ----------------------------------------------------------------------------------------------------------------------
Note: Market capitalization is calculated by considering the Indian market price for shares outstanding at the period / year end outstanding at the period / year end * EPS figures have been calculated for the period and have not been annualized. TOTAL REVENUE (Rs. in crores) Year ended March 31, 2000 921.46 Half year ended September 30, 1999 401.94 Half year ended September 30, 2000 836.32 Quarter ended September 30, 1999 217.88 Quarter ended September 30, 2000 465.67 EXPORTS (Rs. in crores) Year ended March 31, 2000 869.7 Half year ended September 30, 1999 373.69 Half year ended September 30, 2000 792.32 Quarter ended September 30, 1999 205.07 Quarter ended September 30, 2000 441.26 NET PROFIT (Rs. in crores) Year ended March 31, 2000 285.95 Half year ended September 30, 1999 126.32 Half year ended September 30, 2000 275.31 Quarter ended September 30, 1999 65.71 Quarter ended September 30, 2000 154.01 Letter to the shareholders -------------------------------------------------------------------------------- Dear shareholders: We are pleased to report on another strong quarter. Under Indian GAAP, revenues grew by 113.7% over Q2FY2000 while net profits witnessed an increase of 134.4%. Net of separations, we added nearly 1500 employees in the quarter --highlighting the continued vigorous growth in our business. A key driver of this performance is the de-risked nature of the Infosys business model. Prudent risk management policies, strong processes to monitor various risk factors, and a focus on diversification continue to guide our business strategy. Our strong relationships with Fortune 1000 corporations, our in-depth understanding of their decision cycles, and our track record of customer satisfaction enabled us to maintain topline predictability while ceaselessly improving overall revenue productivity. As transformation partners to traditional economy corporations, we help them build next-generation information infrastructure for the new economy. These engagements constitute the bulk of our e-business revenues, which, at 31.4% of total revenues, continue to be a high-growth segment of our business. Further, with a view to capitalizing on the unprecedented opportunities offered by the present day environment, we continued to build expertise in high-potential technology areas such as wireless, broadband and optical networking. The quarter saw a strategic alliance with Microsoft Corporation to jointly deliver e-business solutions to help companies migrate to the new economy. Our client base continues to increase -- we partnered with 27 new clients during the quarter. These included Eastman Chemicals, one of the top 10 global suppliers of custom-manufactured chemicals; Fritz companies, a specialist in global integrated logistics; ABB Alstom, global specialist in energy and transport infrastructure; Publix Supermarkets, one of the largest supermarket chains in the US; SignalSoft, a leading platform and applications developer of Wireless Location Services (R); Last Mile Solutions, a spread spectrum wireless solutions provider; NightFire Software, a leading e-infrastructure software provider for broadband service fulfilment; and Riverstone Networks, a leading manufacturer of switches and routers. We also continued to build long-term symbiotic partnerships -- evidenced by our repeat business rate of 84.5% in the quarter. Our endeavor to have access to cutting-edge technologies and business models led us to make three strategic investments in the quarter. We invested in Vienna- based Alpha Thinx Mobile Phone Services, which hosts interactive services for mobile users across Europe; in Singapore-based M-Commerce Ventures, a wireless- focussed fund promoted by the Economic Development Board, Singapore; and in Asia Net Media, which intends to build a synergistic network of companies that leverage under-exploited offline brands in media and entertainment by delivering them online. We continued to globalize our operations -- our software development center in London became operational during the quarter, as did our marketing offices in Hong Kong and Sydney. Our Infosys City facility in Bangalore is nearing completion and we continue to build capacity in our other development centers in India and abroad. We inducted Professor Jitendra Vir Singh, Vice Dean, International Academic Affairs, The Wharton School, University of Pennsylvania, onto the board of directors. On your behalf, we welcome him on board and also extend our appreciation to our fellow Infoscions who contributed to yet another successful quarter in our history. Sd. Sd. Bangalore Nandan M. Nilekani N. R. Narayana Murthy October 10, 2000 Managing Director, President Chairman and Chief and Chief Operating Officer Executive Officer Auditors' report to the members of Infosys Technologies Limited -------------------------------------------------------------------------------- We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at September 30, 2000 and the Profit and Loss Account of the Company for the half year and quarter ended on that date, annexed thereto, and report that: 1 As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1988, issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2 Further to our comments in the Annexure referred to in paragraph 1 above: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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 from our examination of these 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 are prepared in compliance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable; (e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2000; and (ii) in the case of the Profit and Loss Account, of the profit for the half year and quarter ended on that date. 3 We have also examined the attached Cash Flow Statement of the Company for the half year and quarter ended September 30, 2000. The Statement has been prepared by the Company in accordance with the requirements of Clause 32 of the listing agreements entered into with the Stock Exchanges. for Bharat S Raut & Co. Chartered Accountants Bangalore Balaji Swaminathan October 10, 2000 Partner
Balance Sheet as at ---------------------------------------------------------------------------------------------------------------- in Rs. ------------------------------------------------------------------------------------------------------------- September 30, 2000 September 30, 1999 March 31, 2000 ------------------------------------------------------------------------------------------------------------- SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share capital 33,07,58,335 33,06,95,500 33,07,55,000 Reserves and surplus 1060,95,95,077 654,61,29,197 800,22,73,248 ------------------------------------------------------------------------------------------------------------- 1094,03,53,412 687,68,24,697 833,30,28,248 ============================================================================================================= APPLICATION OF FUNDS FIXED ASSETS Gross block 435,74,18,072 201,20,83,575 284,03,05,143 Less: Depreciation 175,13,71,312 102,07,57,018 133,65,20,594 ------------------------------------------------------------------------------------------------------------- Net block 260,60,46,760 99,13,26,557 150,37,84,549 Add: Capital work-in-progress 104,58,25,080 41,28,99,285 56,96,03,505 ------------------------------------------------------------------------------------------------------------- 365,18,71,840 140,42,25,842 207,33,88,054 INVESTMENTS 45,73,06,737 75,48,469 13,83,48,469 CURRENT ASSETS, LOAN AND ADVANCES Sundry debtors 243,05,68,746 133,47,09,804 136,17,81,253 Cash and bank balances 424,28,92,315 377,68,71,030 431,79,35,730 Loans and advances 288,54,93,594 164,28,14,672 210,12,77,161 ------------------------------------------------------------------------------------------------------------- 955,89,54,655 675,43,95,506 778,09,94,144 Less: Current liabilities 150,82,14,077 58,78,14,181 67,15,06,459 Provisions 121,95,65,743 70,15,30,939 98,81,95,960 NET CURRENT ASSETS 683,11,74,835 546,50,50,386 612,12,91,725 ------------------------------------------------------------------------------------------------------------- 1094,03,53,412 687,68,24,697 833,30,28,248 ============================================================================================================= This is the Balance Sheet referred to in our report of even date. for Bharat S Raut & Co. Chartered Accountants Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Partner Chairman and Managing Director, President Satwalekar Chief Executive Officer and Chief Operating Officer Director Prof. Marti G. Subrahmanyam S. Gopalakrishnan K. Dinesh S. D. Shibulal Director Deputy Managing Director Director Director Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan October 10, 2000 Director and Director Director Company Secretary Chief Financial Officer
Profit and Loss Account --------------------------------------------------------------------------------
in Rs. --------------------------------------------------------------------------------------------------------------------------------- Quarter ended Half year ended Year ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, Mar 31, 2000 2000 1999 2000 1999 --------------------------------------------------------------------------------------------------------------------------------- INCOME Software development services and products Overseas 441,25,85,913 205,07,22,424 792,31,64,336 373,69,33,425 869,69,80,931 Domestic 4,83,71,864 3,22,64,605 9,30,93,590 4,87,60,599 12,62,56,042 Other income 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095 --------------------------------------------------------------------------------------------------------------------------------- 465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068 ================================================================================================================================= EXPENDITURE Software development expenses 226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578 Administration and other expenses 43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282 Provision for contingencies - - - 3,33,00,000 3,33,00,000 Provision for e-inventing the Company - 3,50,00,000 - 3,50,00,000 3,50,00,000 --------------------------------------------------------------------------------------------------------------------------------- 269,67,55,268 131,94,98,892 487,56,72,483 238,08,19,145 542,58,34,860 Operating profit (PBIDT) 195,99,90,126 85,93,06,572 348,74,80,592 163,86,06,559 378,88,13,208 Interest - - - - - Depreciation 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389 Profit before tax and extraordinary items 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819 Provision for tax - earlier periods - 17,00,000 1,40,00,000 17,00,000 24,00,000 - current period 17,75,00,000 9,33,00,000 30,06,00,000 17,33,00,000 39,46,00,000 Profit after tax before extraordinary items 154,01,22,579 65,70,82,803 275,31,41,328 126,31,64,641 285,94,85,819 Effect of extraordinary item - provision no longer - - - - 7,56,70,846 required Extraordinary income (net of tax) - - 5,49,44,000 - - Net profit after tax and extraordinary items 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665 --------------------------------------------------------------------------------------------------------------------------------- AMOUNT AVAILABLE FOR APPROPRIATION 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665 --------------------------------------------------------------------------------------------------------------------------------- Dividend Interim 16,53,78,418 9,92,08,200 16,53,78,418 9,92,08,200 9,92,08,200 Final - - - - 19,84,18,210 Dividend Tax 3,63,83,252 1,09,12,902 3,63,83,252 1,09,12,902 3,27,38,905 Amount transferred - general reserve - - - - 260,47,91,350 --------------------------------------------------------------------------------------------------------------------------------- Balance in Profit & Loss Account 133,83,60,909 54,69,61,701 260,63,23,658 115,30,43,539 - --------------------------------------------------------------------------------------------------------------------------------- 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665 =================================================================================================================================
This is the Profit & Loss Account referred to in our report of even date. for Bharat S Raut & Co. Chartered Accountants Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Partner Chairman and Managing Director, President and Satwalekar Chief Executive Officer Chief Operating Officer Director Prof. Marti G. Subrahmanyam S. Gopalakrishnan K. Dinesh S. D. Shibulal Director Deputy Managing Director Director Director Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan October 10, 2000 Director and Director Director Company Secretary Chief Financial Officer
Schedules to the Profit and Loss Account for the ----------------------------------------------------------------------------------------------------------------------------------- in Rs. ----------------------------------------------------------------------------------------------------------------------------------- Quarter ended Half year ended Year ended ----------------------------------------------------------- September 30, September 30, September 30, September 30, March 31, 2000 2000 1999 2000 1999 ----------------------------------------------------------------------------------------------------------------------------------- OTHER INCOME Interest received on deposits with banks and others 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106 (Tax deducted at source Rs. 42,26,973; Rs. 37,61,871; Rs. 1,11,29,180; Rs. 52,48,295; Rs. 1,67,51,195 respectively) Sale of special import licenses 6,77,431 1,29,96,393 6,77,431 1,29,96,393 2,02,31,549 Profit on sale of fixed assets - 4,16,230 - 4,63,777 8,73,015 Miscellaneous income 70,50,359 7,08,917 94,17,211 30,76,486 41,00,350 Exchange differences * 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075 ----------------------------------------------------------------------------------------------------------------------------------- 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095 =================================================================================================================================== * arising on translation of foreign currency deposits maintained abroad includes a realized gain of Rs. 3,53,92,000 during the quarter ended September 30, 2000. (Prior periods/ year: Rs. Nil) SOFTWARE DEVELOPMENT EXPENSES Salaries and bonus including overseas staff expenses 158,42,78,274 73,71,21,957 290,01,81,382 132,43,61,020 307,54,46,295 Staff welfare 1,73,06,377 1,01,02,147 3,24,11,865 1,97,02,371 4,93,07,308 Contribution to provident and other funds 7,43,79,574 4,04,04,539 16,93,51,595 6,09,67,314 22,08,36,923 Foreign travel expenses 35,90,06,400 19,44,34,563 66,11,53,479 37,35,69,658 84,09,02,293 Consumables 1,04,12,879 47,39,041 1,95,07,075 1,06,07,532 2,70,06,251 Cost of software packages for own use 12,25,78,520 6,00,62,634 19,79,84,826 9,28,54,660 16,53,57,382 for banking product 49,60,448 24,53,002 1,33,11,277 40,65,059 2,84,48,397 Computer maintenance 1,23,01,888 61,45,308 2,71,11,288 1,00,78,359 3,27,43,350 Communication expenses 5,24,77,651 5,64,28,375 9,94,83,388 9,47,60,089 17,31,23,718 Consultancy charges 1,85,64,421 79,52,464 2,98,55,683 1,40,86,504 2,85,50,034 Provision for post-sales client support 82,28,718 1,09,23,398 80,48,558 1,75,96,154 2,09,62,627 ----------------------------------------------------------------------------------------------------------------------------------- 226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578 =================================================================================================================================== ADMINISTRATION AND OTHER EXPENSES Travelling and conveyance 4,97,87,265 1,64,00,037 7,70,39,464 2,71,78,379 7,68,26,394 Rent 3,68,42,809 2,37,09,030 6,95,37,037 4,42,39,431 10,34,93,593 Telephone charges 3,59,58,729 1,07,93,680 6,50,89,763 2,45,99,217 5,93,95,252 Professional charges 3,86,42,679 1,69,66,773 6,42,07,750 2,94,93,829 7,55,68,079 Office maintenance 2,94,09,238 97,79,872 5,67,21,754 1,81,88,757 5,81,01,381 Brand building 3,92,19,123 - 5,01,77,269 - 99,17,816 Provision for bad and doubtful debts 4,51,07,005 70,23,453 4,91,94,461 1,90,43,237 94,03,099 Power and fuel 2,51,75,524 1,00,90,670 4,58,26,006 2,01,08,110 5,01,41,466 Printing and stationery 1,10,57,396 70,99,944 3,61,24,297 1,53,91,827 2,76,70,902 Donations 1,70,01,694 1,01,86,367 3,28,09,063 1,41,86,367 3,49,27,871 Advertisements 1,75,71,241 68,68,674 2,88,75,539 1,12,36,927 2,12,41,343 Marketing expenses 1,75,21,259 53,93,530 2,28,51,535 1,30,53,262 3,14,93,837 Repairs to building 58,28,166 13,87,841 1,40,82,937 40,04,836 1,13,44,232 Insurance charges 72,76,793 49,72,795 1,25,66,191 90,30,631 2,41,35,289 Rates and taxes 62,78,668 37,24,887 98,42,999 57,43,646 1,03,80,848 Postage and courier 47,28,893 25,29,800 96,06,851 61,99,736 1,37,56,638 Commission charges 67,61,132 - 90,25,721 34,84,800 64,70,454 Books and periodicals 50,60,324 8,34,026 89,14,545 21,48,750 77,13,886 Repairs to plant and machinery 39,97,679 27,39,781 73,83,941 41,49,262 84,12,905 Research grants 25,00,000 25,00,000 50,00,000 25,00,000 1,03,00,000 Managerial remuneration 24,00,000 6,00,000 48,00,000 12,00,000 48,17,800 Bad debts written off 27,70,254 - 27,70,254 - 1,59,20,938 Bank charges and commission 3,94,040 8,08,085 9,24,343 17,62,932 42,21,668 Bad loans and advances written off - 3,46,577 - 3,46,577 3,13,050 Auditor's remuneration - audit fees 4,47,000 4,67,500 8,93,250 8,92,500 17,85,000 - certification charges - - - - 2,00,000 - other services - - - - 4,50,000 - out-of-pocket expenses 50,000 50,000 1,00,000 1,00,000 2,00,000 Other miscellaneous expenses 2,04,73,207 84,58,142 3,29,07,097 1,15,87,412 1,62,46,541 ----------------------------------------------------------------------------------------------------------------------------------- 43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282 ===================================================================================================================================
Statement of Cash Flows ----------------------------------------------------------------------------------------------------------------------------------- in Rs. ----------------------------------------------------------------------------------------------------------------------------------- Quarter ended September 30, Half year ended September 30, Year ended ------------------------------------------------------------ 2000 1999 2000 1999 March 31, 2000 ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from operations Profit before tax 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819 Other Income (18,80,59,827) (8,16,96,895) (33,68,00,507) (21,71,95,024) (36,62,06,181) Loss (profit) on sale of fixed assets 8,720 (4,16,230) 53,829 (4,63,777) (8,73,015) Increase (decrease)in provision for contingencies - - - 3,33,00,000 (6,66,00,000) Increase (decrease) in provision for e-inventing the Company - 3,50,00,000 (39,00,977) 3,50,00,000 39,00,977 Depreciation, depletion and amortization 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389 Decrease (increase) in sundry debtors (14,65,76,914) (26,71,34,722) (106,87,87,493) (48,95,21,379) (51,65,92,828) Decrease (increase) in loans and advances (5,07,48,178) (8,30,09,030) (13,17,94,697) (17,73,97,884) (41,49,70,588) Increase (decrease) in current liabilities and provisions 34,84,56,392 4,17,59,020 76,19,16,176 17,70,67,854 42,26,37,450 Income taxes paid (23,58,99,316) (10,92,26,480) (32,25,31,791) (13,84,37,481) (35,53,53,877) ----------------------------------------------------------------------------------------------------------------------------------- Net cash from operations 168,71,71,003 39,45,82,235 238,56,35,132 86,09,58,868 249,47,55,146 ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing Proceeds from conversion of options - - 10,01,506 - 1,76,25,277 Expenses relating to issue of American Depositary Shares - (3,26,400) - (2,05,30,090) (2,35,06,514) Expenses relating to issue of ADS linked stock options - - - - (1,01,93,113) Dividends paid (including dividend tax) - - (22,02,44,213) (8,91,36,007) (19,92,57,109) ----------------------------------------------------------------------------------------------------------------------------------- Net cash used for financing - (3,26,400) (21,92,42,707) (10,96,66,097) (21,53,31,459) ----------------------------------------------------------------------------------------------------------------------------------- Cash flows from investing Income from investments 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106 Proceeds of sale of fixed assets 1,87,023 4,20,448 2,37,761 5,71,709 10,20,400 Purchase of fixed assets (114,01,44,667) (38,55,70,016) (199,85,14,640) (59,76,16,481) (159,87,03,617) Other long-term investments (9,56,09,608) - (22,96,18,268) - (13,08,00,000) ----------------------------------------------------------------------------------------------------------------------------------- Net cash used for investing (114,43,28,846) (31,99,08,996) (206,20,92,041) (47,76,08,449) (146,16,04,111) ----------------------------------------------------------------------------------------------------------------------------------- Effect of exchange differences on translation of foreign currency deposit maintained abroad 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075 Total increase (decrease) in cash and cash equivalents during the period 63,96,63,578 9,08,03,162 27,52,97,785 37,14,43,023 91,71,46,651 Cash and cash equivalents at the beginning of the period 471,93,71,802 444,72,30,805 508,37,37,595 416,65,90,944 416,65,90,944 ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of the period 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595 -----------------------------------------------------------------------------------------------------------------------------------
Note: During the half year ended September 30, 2000, the Company transferred intellectual property rights in Onscan - a web focussed wireless-enabled notification product, to Onscan Inc., USA, a company incubated by Infosys as part of its ongoing effort to encourage and promote entrepreneurs amongst its employees. The product was transferred for a gross consideration of Rs. 8.93 crore (US$ 2 million) received as equity, preferred voting and preferred non- voting securities in Onscan Inc. and accordingly, is not considered in this statement of cash flows. This is the Cash Flow Statement referred to in our report of even date. for Bharat S Raut & Co. Chartered Accountants Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Satwalekar Partner Chairman and Managing Director, President and Director Chief Executive Officer Chief Operating Officer Prof. Marti G. S. Gopalakrishnan K. Dinesh S. D. Shibulal Subrahmanyam Deputy Managing Director Director Director Director Place: Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan Date: October 10, 2000 Director and Director Director Company Secretary Chief Financial Officer
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Statement of Cash Flows ------------------------------------------------------------------------------------------------------------------------- in Rs ------------------------------------------------------------------------------------------------------------------------------------ Quarter ended September 30, Half year ended September 30, Year ended -------------------------------------------------------------- 2000 1999 2000 1999 March 31, 2000 ------------------------------------------------------------------------------------------------------------------------------------ Reconciliation of Balance Sheet items with cash flow items 1. Loans and advances As per Balance sheet 288,54,93,594 164,28,14,672 288,54,93,594 164,28,14,672 210,12,77,161 Less: Deposits with financial institutions/body (111,61,43,065) (76,11,62,937) (111,61,43,065) (76,11,62,937) (76,58,01,865) corporate, included in cash equivalents Advance income taxes considered separately (84,61,76,889) (32,78,45,496) (84,61,76,889) (32,78,45,496) (54,40,96,353) --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 92,31,73,640 55,38,06,239 92,31,73,640 55,38,06,239 79,13,78,943 statement --------------------------------------------------------------------------------------------------------------------------------- 2. Additions to fixed assets As per Balance sheet 62,47,78,371 11,48,32,169 152,22,93,065 33,35,52,996 117,79,35,912 Add: Closing capital work-in-progress 104,58,25,080 41,28,99,285 104,58,25,080 41,28,99,285 56,96,03,505 Less: Opening capital work-in-progress (53,04,58,784) (14,21,61,438) (56,96,03,505) (14,88,35,800) (14,88,35,800) --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 114,01,44,667 38,55,70,016 199,85,14,640 59,76,16,481 159,87,03,617 statement --------------------------------------------------------------------------------------------------------------------------------- 3. Cash and cash equivalents As per Balance sheet 424,28,92,315 377,68,71,030 424,28,92,315 377,68,71,030 431,79,35,730 Add: Deposits with financial institutions/body 111,61,43,065 76,11,62,937 111,61,43,065 76,11,62,937 76,58,01,865 corporate (as per 1 above) --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595 statement --------------------------------------------------------------------------------------------------------------------------------- 4. Income taxes paid As per Profit and Loss Account 17,75,00,000 9,50,00,000 31,46,00,000 17,50,00,000 39,70,00,000 Add: Provision for tax on sale of intellectual - - 3,43,96,000 - property rights Decrease(increase) in balance in provision (15,70,48,745) (9,50,05,897) (32,85,44,745) (17,33,27,793) (39,46,62,254) for taxes account Increase(decrease) in balance in advance 21,54,48,061 10,92,32,377 30,20,80,536 13,67,65,274 35,30,16,131 income tax account --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 23,58,99,316 10,92,26,480 32,25,31,791 13,84,37,481 35,53,53,877 statement --------------------------------------------------------------------------------------------------------------------------------- 5. Other income As per Profit and Loss Account 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095 Less: Income from operating activities (77,27,790) (1,37,05,310) (1,00,94,642) (1,60,72,879) (2,43,31,899) Profit on sale of fixed asset considered - (4,16,230) - (4,63,777) (8,73,015) separately --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 18,80,59,827 8,16,96,895 33,68,00,507 21,71,95,024 36,62,06,181 statement --------------------------------------------------------------------------------------------------------------------------------- 6. Current liabilities and provisions As per Balance sheet 272,77,79,820 128,93,45,120 272,77,79,820 128,93,45,120 165,97,02,419 Less: Provision for taxation considered separately (95,45,64,487) (40,46,85,281) (95,45,64,487) (40,46,85,281) (62,60,19,742) Provision for dividend considered separately (16,53,78,418) (9,92,08,200) (16,53,78,418) (9,92,08,200) (19,84,18,210) Provision for dividend tax considered (363,83,252) (1,09,12,902) (363,83,252) (1,09,12,902) (2,18,26,003) separately Provision for contingencies - (9,99,00,000) - (9,99,00,000) Provision for e-inventing the company - (3,50,00,000) - (3,50,00,000) (39,00,977) --------------------------------------------------------------------------------------------------------------------------------- Balance considered for preparing the cash flow 157,14,53,663 63,96,38,737 157,14,53,663 63,96,38,737 80,95,37,487 statement --------------------------------------------------------------------------------------------------------------------------------- This is the Cash Flow Statement referred to in our report of even date. for Bharat S Raut & Co. Chartered Accountants Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Satwalekar Partner Chairman and Managing Director, President and Director Chief Executive Officer Chief Operating Officer Prof. Marti G. S. Gopalakrishnan K. Dinesh S. D. Shibulal Subrahmanyam Deputy Managing Director Director Director Director Place: Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan Date: October 10, 2000 Director and Director Director Company Secretary Chief Financial Officer
9 1. Significant accounting policies and notes on accounts ________________________________________________________________________________ Company overview Infosys Technologies Limited ("Infosys" or "the Company") is a publicly held company providing information technology ("IT") solutions principally to Fortune 1000 and emerging new economy companies. Infosys' range of services includes IT consulting, IT architecture, application development, e-commerce and Internet consulting, and software maintenance. In addition, the Company develops and markets certain software products. Headquartered in Bangalore, India, Infosys has 17 state-of-the-art offshore software development facilities located throughout India that enables it to provide high quality, cost-effective services to clients in a resource-constrained environment. The Company also maintains offices in North America, Europe and Asia. 1.1 Significant accounting policies 1.1.1 Basis of preparation of financial statements The financial statements are prepared under the historical cost convention, in accordance with Indian Generally Accepted Accounting Principles ("GAAP") comprising the accounting standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on the accrual basis. The preparation of the financial statements in conformity with GAAP requires that the management of the Company ("Management") make estimates and assumptions that affect the reported amounts of revenue and expenses of the period, reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as of the date of the financial statements. Examples of such estimates include expected contract costs to be incurred to complete software development, provision for doubtful debts, future obligations under employee retirement benefit plans and the useful lives of fixed assets. Actual results could differ from those estimates. 1.1.2 Revenue recognition Revenue from software development on time-and-materials contracts is recognized based on software developed and billed to clients as per the terms of specific contracts. On fixed-price contracts, revenue is recognized based on milestones achieved as specified in the contracts on the percentage-of-completion basis. Revenue from rendering Annual Technical Services ("ATS") is recognized proportionately over the period in which services are rendered. Revenue from the sale of licenses for the use of software applications is recognized on transfer of the title in the user license. Interest on deployment of surplus funds is recognized using the time-proportion method, based on interest rates implicit in the transaction. Dividend income is recognized when the right to receive dividend is established. Revenue from the sale of special import licences is recognized when the licences are transferred. 1.1.3 Expenditure The cost of software purchased for use in software development and services is charged to revenue in the year the software is acquired. Project costs in the nature of salaries, travel and other expenses incurred on fixed price contracts, where milestones are yet to be reached are classified as "Costs in excess of billings" in the balance sheet. Provisions are made for all known losses and liabilities. Provisions are made for future unforeseeable factors that may affect the profit on fixed-price software development contracts. The leave encashment liability of the Company is provided on the basis of an actuarial valuation. Provisions are made towards likely expenses for providing post-sales client support on fixed- price contracts. 1.1.4 Fixed assets Fixed assets are stated at cost, after reducing accumulated depreciation until the date of the balance sheet. Direct costs are capitalized until the assets are ready for use and include financing costs relating to any specific borrowing attributable to the acquisition of the fixed assets. 1.1.5 Capital work-in-progress Advances paid to acquire fixed assets and the cost of assets not put to use before the period-end, are disclosed under capital work-in-progress. 1.1.6 Depreciation Depreciation on fixed assets is determined using the straight-line method based on useful lives of assets as estimated by Management. Depreciation for assets purchased/ sold during the period is proportionately charged. Individual assets acquired for less than Rs. 5,000 are entirely depreciated in the year of acquisition. Management estimates the useful lives for the various fixed assets as follows: ________________________________________________ Buildings 15 years Plant and machinery 5 years Computer equipment 2-5 years Furniture and fixtures 5 years Vehicles 5 years ________________________________________________ 10 1.1.7 Retirement benefits to employees 1.1.7a Gratuity In accordance with the Payment of Gratuity Act, 1972, Infosys provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering all employees. The Gratuity plan provides a lump sum payment to vested employees at retirement, death or termination of employment, of an amount based on the respective employee's salary and the years of employment with the Company. The Company established the Infosys Technologies Limited Employees' Gratuity Fund Trust (the "Trust") in 1997, until which the Company made contributions to a gratuity plan managed by the Life Insurance Corporation of India. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, based upon which, the Company contributes to the Trust. Trustees administer the contributions made to the Trust. The funds contributed to the Trust are invested in specific designated securities as mandated by law and generally comprise central and state government bonds and debt instruments of government-owned corporations. 1.1.7b Superannuation Apart from being covered under the Gratuity Plan described above, the senior officers of Infosys are also participants of a defined contribution plan. The Company makes monthly contributions to the superannuation plan (the "plan") based on a specified percentage of each covered employee's salary. The Company has no further obligations under the Plan beyond its monthly contributions. 1.1.7c Provident fund In addition to the above benefits, all employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and the Company make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Infosys established a Provident Fund Trust in 1996 to which a part of the contributions are made each month. Prior thereto, the Company made contributions to the provident fund plan administered by the Government of India. The remainders of the contributions are made to the Government administered provident fund. The Company has no further obligations under the provident fund plan beyond its monthly contributions. 1.1.8 Research and development Revenue expenditure incurred on research and development is charged off as incurred. Capital expenditure incurred on research and development is depreciated over the estimated useful lives of the related assets. 1.1.9 Foreign currency transactions Sales made to overseas clients and collections deposited in foreign currency bank accounts are recorded at the exchange rate as of the date of the respective transactions. Expenditure in foreign currency is accounted at the exchange rate prevalent when such expenditure is incurred. Disbursements made out of foreign currency bank accounts are reported at a rate that approximates the actual monthly rate. Exchange differences are recorded when the amount actually received on sales or actually paid when expenditure is incurred is converted into Indian Rupee. The exchange differences arising on foreign currency transactions are recognized as income or expense in the period in which they arise. Fixed assets purchased at overseas offices are recorded at cost, based on the exchange rate as of the date of purchase. The charge for depreciation is determined as per the Company's accounting policy. Current assets and current liabilities denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the profit and loss account. In the case of forward contracts, the difference between the forward rate and the exchange rate on the date of the transaction is recognized as income or expense over the life of the contract. 1.1.10 Investments Investments are classified as current investments or long-term investments. Current investments are carried at the lower of cost and fair value. Cost for overseas investments comprises the Indian Rupee value of the consideration paid for the investment. Provisions are recorded for any decline in the carrying value as of the balance sheet date. Long-term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the carrying value of such investment. 1.1.11 Investment in subsidiary The investment in the subsidiary is accounted on the cost method, whereby, the investment is carried at cost and the Company recognizes only dividends received from the subsidiary as income in the profit and loss account. Provisions are recorded to recognize any decline, other than temporary, in the carrying value of the investment. 1.1.12 Income tax Provision is made for income tax annually based on the tax liability computed after considering tax allowances and exemptions. Provisions are recorded as considered appropriate for matters under appeal due to disallowances or for other reasons. 11 1.2 Notes on accounts The previous period's figures have been recast / restated, wherever to conform to the current period's classification. 1.2.1 Capital commitments and contingent liabilities a. The estimated amount of contracts remaining to be executed on capital account, and not provided for (net of advances) is Rs. 121,56,43,540 as at September 30, 2000. The amount of such contracts as at September 30, 1999 was Rs. 61,66,53,437 and as at March 31, 2000 was Rs. 80,31,29,007. b. The Company has outstanding guarantees and counter guarantees of Rs. 6,51,30,000 as at September 30, 2000, to various banks, in respect of the guarantees given by the banks in favor of various government authorities and a customer. The guarantees and counter guarantees outstanding as at September 30, 1999 were Rs.1,58,84,263 and as at March 31, 2000 were Rs. 5,26,30,000. c. Claims against the Company, not acknowledged as debts, amounted to Rs. 8,75,532 as at September 30, 2000. Such claims, as at September 30, 1999 were Rs. 17,91,814 and as at March 31, 2000 were Rs. 32,89,661. 1.2.2 Quantitative details The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956. 1.2.3 Managerial remuneration paid to the chairman, managing director and whole-time directors
in Rs. ------------------------------------------------------------------------------------------------------ Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------- 2000* 1999 2000* 1999 2000 ------------------------------------------------------------------------------------------------------ Salary 43,77,541 9,73,800 66,42,509 19,47,600 38,00,059 Contribution to provident fund and 4,87,061 3,09,780 8,70,466 6,19,560 12,08,855 other funds Perquisites 10,88,801 6,32,970 18,28,674 15,78,369 37,32,482 ------------------------------------------------------------------------------------------------------
* includes the remuneration paid to three directors who were co-opted into the board on May 27, 2000. 1.2.4 Managerial remuneration paid to non-whole-time directors
in Rs. ------------------------------------------------------------------------------------------------ Three months ended Six months ended Year ended September 30, September 30, March 31, ----------------------------------------------------------------- 2000 1999 2000 1999 2000 ------------------------------------------------------------------------------------------------ Commission - - - - 48,17,800 Sitting fees 25,000 4,000 1,37,000 44,000 92,000 Reimbursement of expenses 2,94,513 2,25,891 4,98,674 4,56,605 10,13,703 ------------------------------------------------------------------------------------------------
1.2.5 Imports on CIF basis
in Rs. ----------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, ------------------------------------------------------------------------ 2000 1999 2000 1999 2000 ----------------------------------------------------------------------------------------------- Capital goods 26,43,63,022 7,75,09,947 43,20,09,442 15,38,94,938 37,47,31,691 Software packages 30,54,632 1,67,09,821 92,38,916 2,08,06,798 2,54,95,652 -----------------------------------------------------------------------------------------------
1.2.6 Expenditure in foreign currency (on the payments basis)
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Travel expenses 27,94,50,302 14,18,36,600 45,64,90,402 31,35,70,860 70,29,13,532 Professional charges 3,08,42,822 58,93,140 3,80,49,742 1,20,76,246 4,51,95,637 Other expenditure incurred overseas for 116,22,63,533 58,00,33,181 197,01,42,528 92,16,15,097 221,74,57,133 software development ---------------------------------------------------------------------------------------------------------------------
1.2.7 Earnings in foreign exchange (on the receipts basis)
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Income from software development 431,24,42,409 182,51,55,780 735,52,73,359 348,81,42,974 833,29,73,465
12
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- services and products Interest received on deposits with banks 5,19,94,463 4,31,26,392 10,69,20,563 8,55,70,358 18,42,65,368 ---------------------------------------------------------------------------------------------------------------------
1.2.8 Depreciation on assets costing less than Rs. 5,000 each During the six months ended September 30, 2000, the Company charged depreciation at 100% in respect of assets costing less than Rs. 5,000 each, amounting to Rs. 10,04,17,795 (Rs. 2,27,08,905). For the three months ended September 30, 2000 the charge is Rs. 6,63,81,667 (Rs. 1,50,93,874) and for the previous year March 31, 2000 is Rs. 13,21,59,074. 1.2.9 Exchange differences
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Gains on the translation of Foreign 6,14,29,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075 currency deposits Net realized and unrealized exchange 13,21,48,664 5,24,43,677 17,31,28,032 8,86,41,299 8,76,31,024 gains - others Total net realized and unrealized gains 19,35,78,085 6,89,00,000 34,41,25,433 18,64,00,000 18,69,58,099 ---------------------------------------------------------------------------------------------------------------------
The gains on the translation of foreign currency deposits are separately disclosed under "Other income" in the financial statements. Net realized and unrealized exchange gains have been included in "Income from software development services and products -overseas", except for an amount of Rs. 3,53,92,000 relating to the translation gains realized on repatriation of certain ADS proceeds, which is also classified in the financial statements as "Other income". 1.2.10 Research and development expenditure
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended Six months ended Year ended September 30, September 30, March 31, --------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Capital 48,26,181 - 68,28,231 - 15,27,500 Revenue 4,00,76,886 2,26,17,590 7,16,59,376 3,88,51,990 8,07,35,940 Total research and development expenses 4,49,03,067 2,26,17,590 7,84,87,607 3,88,51,990 8,22,63,440 ---------------------------------------------------------------------------------------------------------------------
1.2.11 Provision for contingencies The Company had instituted a contingency plan effective October 1, 1998 and made a total provision of Rs. 9,99,00,000 to meet any possible disruption in client support due to the Year 2000 impact on the technology and communication infrastructure provided to the Company by its vendors. For the year ended March 31, 2000, Rs. 2,42,29,154 was spent towards the Year 2000 transition effort, which was set off against the provision and the remainder of Rs. 7,56,70,846 was written back to the profit and loss account. 1.2.12 Provision for e-inventing the Company The Company made a provision of Rs. 3,50,00,000 for the quarter ended September 30, 1999 towards e-inventing the Company. Until March 31, 2000 the Company had incurred Rs. 3,10,99,023 towards e-inventing Infosys, which was set-off against the provision earlier made. The remainder of Rs. 39,00,977 was incurred and set- off against this provision during the first quarter of the current year. 1.2.13 Unearned revenue Unearned revenue as of September 30, 2000 amounting to Rs. 73,48,39,451 (previous period Rs. 27,75,55,705 and previous year Rs. 17,56,71,963) primarily consists of client billings on fixed-price, fixed-time-frame contracts for which the related costs have not yet been incurred. 1.2.14 Dues to small-scale industrial undertakings As of September 30, 2000, the Company had no outstanding dues to small-scale industrial undertakings (previous period Rs. nil; previous year Rs. nil). 1.2.15 Balance of unutilized money raised by issue of American Depositary Shares During the year ended March 31, 1999, Infosys made an Initial Public Offering of American Depositary Shares ("ADS"), of US$ 70,380,000, equivalent to Rs. 296,86,00,000. The issue expenses amounted to Rs. 19,68,00,000 and the amount utilized for capital investments until date is Rs. 277,18,00,000. The unutilized money as on September 30, 1999 was Rs. 140,99,00,000, which was maintained in foreign currency deposit accounts with various banks outside India. 13 1.2.16 Stock option plans The Company currently has three stock option plans. These are summarized below. 1994 Stock Option Plan ("the 1994 Plan") As of September 30, 2000, 3,34,200 options to acquire 3,34,200 shares were outstanding with the employees under the 1994 Plan. These options were granted at an exercise price of Rs. 50 per option. In addition to the above, the number of shares earlier issued to employees subject to lock-in-period is 16,94,600 shares. 1998 Stock Option Plan ("the 1998 Plan") The Company's 1998 Stock Option Plan ("the 1998 Plan") provides for the grant of non-statutory stock options and incentive stock options to employees. The establishment of the 1998 Plan was approved by the Board of Directors in December 1997 and by the Company's shareholders in January 1998. The Government of India approved the 1998 Plan, subject to a limit of 14,70,000 equity shares representing 29,40,000 ADSs to be issued under the plan. A total of 16,00,000 equity shares corresponding to 32,00,000 ADSs are currently reserved for issue pursuant to the 1998 Plan. These options may be issued at an exercise price that is not less than 90% of the fair market value of the underlying equity share on the date of the grant. The 1998 Plan will terminate in January 2008, unless terminated earlier. All options under the 1998 Plan are exercisable for ADSs representing equity shares. A committee of the Board of Directors administers the 1998 Plan.
--------------------------------------------------------------------------------------------------------------------- Number of options granted, exercised and Three months ended Six months ended Year ended forfeited September 30, September 30, March 31, -------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Options outstanding, 8,23,366 4,19,000 6,89,500 4,19,000 4,19,000 Beginning of period/year Granted 85,300 - 2,32,000 - 2,94,300 Exercised Nil - 1,334 - 23,800 Forfeited 37,200 - 48,700 - - --------------------------------------------------------------------------------------------------------------------- Options outstanding, 8,71,466 4,19,000 8,71,466 4,19,000 6,89,500 end of period/year --------------------------------------------------------------------------------------------------------------------- Weighted average US$ 83.40 US$ 17.00 US$ 83.40 US$ 17.00 US$ 58.53 Exercise price (Rs. 3,837) (Rs. 741) (Rs. 3,837) (Rs. 741) (Rs. 2,552) ---------------------------------------------------------------------------------------------------------------------
1999 Stock Option Plan ("the 1999 Plan") In fiscal 2000, the Company instituted the 1999 Plan. The shareholders and the Board of Directors approved the 1999 Plan in June 1999. The 1999 Plan provides for the issue of 66,00,000 equity shares to the employees. The 1999 Plan is administered by a Compensation Committee comprising a maximum of seven members, the majority of whom are independent directors on the Board of Directors. Under the 1999 Plan, options will be issued to employees at an exercise price, which shall not be less than the Fair Market Value. Fair Market Value is the closing price of the Company's shares in the stock exchange where there is the highest trading volume on a given date and if the shares are not traded on that day, the closing price on the next trading day. Under the 1999 Plan, options may be issued to employees at exercise prices that are less than Fair Market Value only if specifically approved by the members of the Company in a general meeting.
--------------------------------------------------------------------------------------------------------------------- Number of options granted, exercised and Three months ended Six months ended Year ended forfeited September 30, September 30, March 31, -------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- Options outstanding, beginning of 16,41,850 - 10,06,800 - - period/year Granted 2,95,450 - 9,54,100 - 10,14,500 Exercised - - - - - Forfeited 54,300 - 77,900 - 7,700 --------------------------------------------------------------------------------------------------------------------- Options outstanding, end of period/year 18,83,000 - 18,83,000 - 10,06,800 --------------------------------------------------------------------------------------------------------------------- Weighted average exercise price Rs. 5,343 N.A. Rs. 5,343 N.A. Rs. 4,268 ---------------------------------------------------------------------------------------------------------------------
1.2.17 Pro-forma disclosures relating to the Employee Stock Option Plans ("ESOPs") The Securities and Exchange Board of India (SEBI) recently issued the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which is applicable to all stock option schemes established after June 19, 1999. In accordance with these guidelines, the excess of the market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the options, including up-front payments, if any is to be recognized and amortized on a straight line basis over the vesting period. All options under the 1998 and 1999 stock option plans have been issued at fair market value, hence there are no compensation costs. The Company's 1994 stock option plan was established prior to the SEBI guidelines on stock options. Had the stock compensation costs for this stock option plan been determined as per the guidelines issued by SEBI, the Company's reported net profit would have been reduced to the proforma amounts indicated below. 14
in Rs. ------------------------------------------------------------------------------------------------------------------ Three months ended Six months ended Year ended September 30, September 30, March 31, -------------------------------------------------------------------------------- 2000 1999 2000 1999 2000 ------------------------------------------------------------------------------------------------------------------ Net profit: - As reported 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665 - Adjusted pro forma 148,20,22,829 60,09,10,468 269,34,93,331 115,34,29,790 271,34,60,717 ------------------------------------------------------------------------------------------------------------------
1.2.18 Provision for taxation The Company's profits from export activities are deductible from taxable income. Moreover, most of Infosys' operations are conducted through 100% Export Oriented Units ("EOU"), which are entitled to a tax holiday for a period of ten years from the date of commencement of operations. The provision for taxation includes taxes payable in respect of domestic income and income arising from the Company's overseas operations. The Government of India has recently amended the tax incentive available to companies operating through export oriented units. The period of tax exemption available to such companies has been restricted to 10 consecutive years commencing from the fiscal year in which the unit commences software development or March 31, 2000, whichever is earlier. Additionally, export related tax deductions apart from the 100% EOU scheme earlier described are being phased out over a period of five years ending fiscal 2004. 1.2.19 Cash and bank balances The cash and bank balances include interest accrued but not due on fixed deposits amounting to Rs. 1,44,56,954 for the six month period ended September 30, 2000 (previous period Rs. 23,63,996 and previous year Rs. 94,92,514). 1.2.20 Loans and advances "Advances recoverable in cash or kind or for value to be received" mainly comprises prepaid travel and per-diem expenses and advances to vendors for current assets. Deposits with financial institutions and a body corporate comprise:
in Rs. ------------------------------------------------------------------------------------------------------------------ Six months ended September 30, Year ended March 31, ------------------------------------------------------------------ 2000 1999 2000 ------------------------------------------------------------------------------------------------------------------ Deposits with financial institutions: Housing Development Finance 10,16,06,063 25,47,68,334 25,50,19,994 Corporation Limited ICICI Limited 50,84,73,016 25,32,64,877 25,75,52,742 Deposits with body corporate: G E Capital Services India Limited 50,60,63,986 25,31,29,726 25,32,29,129 ----------------------------------------------------------------------------------------------------------------
The above amounts include interest accrued but not due amounting to Rs. 1,61,10,876 (corresponding previous period Rs. 1,11,30,744 and previous year Rs. 1,58,01,863). The financial institutions and the body corporate have AAA rating from Credit Rating and Information Services of India Limited ("CRISIL"). Mr. Deepak M Satwalekar, Director, is the Managing Director of HDFC. Mr. N R Narayana Murthy, Chairman and CEO, and Professor Marti G. Subrahmanyam, Director, are also directors in ICICI Limited. Except as directors in these financial institutions, these persons have no direct interest in these transactions. 1.2.21 Current liabilities Sundry creditors for other liabilities represent mainly the retention amounts payable to the vendors, and amounts accrued for various other operational expenses. 1.2.22 Fixed assets The Company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of these agreements, the Company has the option to purchase the properties outright at the expiry of the lease period. The Company has already paid 99% of the value of the properties at the time of entering into the lease-cum-sale agreements. These amounts are disclosed as "Land - leasehold" under "Fixed assets" in the financial statements. 1.2.23 Transfer of intellectual property rights During the first quarter of the current fiscal, the Company transferred its intellectual property rights in Onscan - a web-focussed wireless-enabled notification product, to Onscan Inc., USA, a company incubated by Infosys as part of its ongoing effort to encourage and promote budding entrepreneurs among its employees. The product was transferred for a gross consideration of Rs. 8,93,40,000 (US$ 2 million), received as equity, preferred voting and preferred non-voting securities in Onscan Inc. The income arising out of the transfer of Rs. 5,49,44,000 (net of tax) is disclosed as an extraordinary item. 15 1.2.24 Investments Alpha Thinx Mobile Phone Services AG, Austria During the current quarter, the Company invested Rs. 2,20,98,608 (equivalent to (Euro)555,800) and acquired 27,790 bearer shares of nominal value (Euro)1 each, at an issue price of (Euro)20 per share in Alpha Thinx Mobile Phone Services AG ("Alpha Thinx"), a Vienna-based company. Alpha Thinx operates in the wireless Internet space and plans to host interactive services for mobile users across Europe. Asia Net Media BVI Ltd., the British Virgin Islands During the current quarter, the Company invested Rs. 6,84,75,000 (equivalent to US$ 1,500,000) and acquired 3,00,00,000 Ordinary Shares of par value US$ 0.01 each, at an issue price of US$ 0.05 per Ordinary Share in Asia Net Media BVI Limited ("Asia Net"). Asia Net intends to leverage under-exploited offline brands in media and entertainment by delivering them through online channels and to establish a synergistic network of companies in this space. 16 CiDRA Corporation, USA During the first quarter of the current fiscal the Company made a strategic investment of Rs. 13,40,08,660 comprising 33,333 fully paid Series D Convertible Preferred Stock, par value of US$ 0.01 each, at US$ 90 each in CiDRA Corporation, USA. CiDRA Corporation is a developer of photonic devices for high- precision wavelength management and control for next-generation optical networks. M-Commerce Ventures Pte. Ltd., Singapore During the period, the Company agreed to invest Singapore $ ("S$") 1,000,000 in M-Commerce Ventures Pte. Ltd ("MCV"), a Singapore based venture fund. As at September 30, 2000, the Company made an investment of Rs. 50,36,000 (equivalent to S$ 200,000), and acquired 20 capital units in MCV. Each unit in MCV represents one ordinary share of S$ 1 each, issued at par, and nine redeemable preference shares at a par value of S$ 1 each, with a premium of S$ 1,110 per redeemable preference share. MCV is promoted by the Economic Development Board, Singapore and intends to focus on companies offering mobile portals, personal information management and messaging, bandwidth optimization and other key enablers of m-commerce. 1.2.25 Segment reporting The Company's operations predominantly relate to providing IT services, which is delivered to globally located customers. The accounting principles that have been consistently used to record revenue, expenditure, assets and liabilities in the individual segments are as set out in the note on significant accounting policies. While the primary segment reporting is already set out in detail in the Company's balance sheet, statement of profit and loss and the various schedules and notes thereto, the secondary disclosures are as follows:
in Rs. --------------------------------------------------------------------------------------------------------------------- Three months ended September 30, Six months ended September 30, Year ended March 31, ------------------------------------------------------------------------------------------- 2000 1999 2000 1999 2000 --------------------------------------------------------------------------------------------------------------------- North America 348,68,10,776 167,18,09,460 625,81,64,972 310,82,51,725 713,27,33,054 Europe 80,94,58,817 30,84,40,362 142,00,38,934 58,76,58,900 129,09,73,822 Rest of the world 25,97,02,570 11,09,73,267 51,21,11,714 19,98,18,838 52,40,04,100 India 10,07,73,231 8,75,82,375 17,28,37,455 12,36,96,241 26,69,37,092 --------------------------------------------------------------------------------------------------------------------- Total 465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068 ---------------------------------------------------------------------------------------------------------------------
Certain expenses such as personnel costs, communication, depreciation on plant and machinery, etc., which form a significant component of total expenses, are not specifically allocable to these geographical segments as the underlying services are used interchangeably between reportable segments. Management believes that it is not practicable to provide segment disclosures relating to segment costs and expenses, and consequently segment profits or losses, since a realistic allocation can not be made. Moreover the fixed assets used in the Company's business or the liabilities contracted are not identifiable to any particular reportable segment as the fixed assets and services can be used interchangeably among segments. Consequently, management believes that it is not practicable to provide segment disclosures relating to total assets since a meaningful analysis based on the available data among the various geographic segments is not possible. 1.2.26 Related party transactions The Company entered into related party transactions during the half year with Yantra Corporation, USA, the subsidiary of the Company and key management personnel. The transactions with Yantra comprise sales of Rs. 10,37,00,336 during the six months ended September 30, 2000. The corresponding amounts for the six months ended September 30, 1999 and the year ended March 31, 2000 were Rs. 4,80,87,782 and Rs. 11,40,18,372 respectively. The outstanding dues from the subsidiary as set out in schedule 5, Sundry Debtors, to the financial statements. Key management personnel are non-director officers of the Company, who have the authority and responsibility for planning, directing and controlling the activities of the Company. The loans and advances receivable from non-director officers is stated in schedule 7, Loans and advances, to the financial statements. 1.2.27 Provisions for doubtful debts The Company normally provides for all debtor dues outstanding for 180 days or longer after considering its historical experience, the individual creditworthiness of the debtors and the current economic environment. In the second quarter of fiscal 2001, the Company provided for doubtful debts of Rs. 3,64,00,351 for dues from two of its customers although these dues were less than 180 days old, as the amounts were considered doubtful of recovery. Management continues pursuing the parties for recovery of the dues, in part or full. 17
At a glance - US GAAP --------------------------------------------------------------------------------------------------------------------------------- US$ in millions, except as otherwise stated --------------------------------------------------------------------------------------------------------------------------------- Three months ended September 30 Six months ended September 30 Year ended -------------------------------------------------------------------- 2000 1999 2000 1999 March 31, 2000 --------------------------------------------------------------------------------------------------------------------------------- For the period Revenues 97.94 47.94 178.20 87.67 203.44 Export revenues 96.87 47.20 176.12 86.53 200.54 Operating income 32.20 14.62 58.60 26.92 60.50 Net income 32.78 14.72 59.61 28.03 61.34 Operating income as a percentage of total revenues 32.88% 30.48% 32.89% 30.71% 29.74% Net income as a percentage of total 33.48% 30.70% 33.46% 31.97% 30.15% revenues Basic earnings per share $0.50 $0.22 $0.90 $0.42 $0.93 Dividend declared per equity share NA NA $0.05 $0.03 $0.10 Capital investments 22.99 8.72 41.14 12.97 35.93 At the end of the period Total assets 279.89 181.22 219.28 Property, plant and equipment - net 79.37 32.22 47.55 Cash and cash equivalents 116.48 104.13 116.60 Working capital 146.05 123.27 137.94 Total debt -- -- -- Stockholders' equity 243.38 162.25 198.14 Common stock 8.59 8.59 8.59 Market capitalization 10,583.72 5,412.82 13,609.67 ---------------------------------------------------------------------------------------------------------------------------------
Note: Market capitalization is calculated by considering the Indian market price for the shares outstanding at the period / year end. TOTAL REVENUE (US$ in millions) Year ended March 31, 2000 203.44 Half year ended September 30, 1999 87.67 Half year ended September 30, 2000 178.20 Quarter ended September 30, 1999 47.94 Quarter ended September 30, 2000 97.94 EXPORTS (US$ in millions) Year ended March 31, 2000 200.54 Half year ended September 30, 1999 86.53 Half year ended September 30, 2000 176.12 Quarter ended September 30, 1999 47.20 Quarter ended September 30, 2000 96.87 NET INCOME (US$ in millions) Year ended March 31, 2000 61.34 Half year ended September 30, 1999 28.03 Half year ended September 30, 2000 59.61 Quarter ended September 30, 1999 14.72 Quarter ended September 30, 2000 32.78 18 Shareholder information -------------------------------------------------------------------------------- 1. Listing on stock exchanges Bangalore Stock Exchange Ltd. in India at Stock Exchange Towers, No. 51, 1st Cross, J.C. Road, Bangalore - 560 027, India. Tel.: +91-80-299 5234, Fax: +91-80-299 5242 The Stock Exchange, Mumbai Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001, India. Tel.: +91-22-265 5581, Fax: +91-22-265 8121 National Stock Exchange of India Ltd. Trade World, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, India. Tel.: +91-22-497 2950, Fax: +91-22-491 4275 / 85 2. Listing fees Paid for all the above stock exchanges for 2000-2001. 3. Listing on stock exchanges NASDAQ National Market in the United outside India States 33 Whitehall Street, New York, NY-1004- 4087 Tel.: +1-212-709-2400, Fax: +1-212-709- 2496 4. Registered office Electronics City, Hosur Road, Bangalore - 561 229, India. Tel.: +91-80-852 0261, Fax: +91-80-852 0362 Homepage: www.infy.com ------------ 5. Stock market data relating to shares listed in India a. The company's market capitalization is included in the computation of the BSE-30 Sensitive Index (Sensex), the BSE Dollex and S&P CNX NIFTY Index. b. Monthly high and low quotations as well as the volume of shares traded at Mumbai, National and Bangalore Stock Exchanges for the three-month period ended September 30, 2000 are:
----------------------------------------------------------------------------------------------------------------------------- BSE NSE BgSE -------------------------------------------------------------------------------------------------------------- High Low Volume High Low Volume High Low Volume Rs. Rs. Nos. Rs. Rs. Nos. Rs. Rs. Nos. ----------------------------------------------------------------------------------------------------------------------------- July 8,815 6,401 91,78,299 8,812 6,355 88,47,755 8,790 6,400 44,147 August 8,617 6,255 1,00,98,169 8,603 6,256 1,26,23,716 8,500 6,230 64,163 September 8,930 6,950 1,40,65,483 8,949 6,975 1,33,52,783 8,998 6,985 74,460 ----------------------------------------------------------------------------------------------------------------------------- Total 3,33,41,951 3,48,24,254 1,82,770 % of volume traded to average shares outstanding for the period 52.04% ** 54.35% ** 0.29% ** -----------------------------------------------------------------------------------------------------------------------------
** The number of shares outstanding is 6,40,68,800. The equity shares underlying the American Depositary Shares (ADSs) have been excluded for the purpose of this calculation. 6. Par value of equity shares Rs. 5 each fully paid-up 7. Share transfers in physical form Karvy Consultants Limited and other communication regarding Registrars and Share Transfer Agents share certificates, dividends, T.K.N. Complex, No. 51/2, Vanivilas change of address, etc., in India Road, Opp. National College, may be addressed to Basavanagudi, Bangalore - 560 004, India. Tel.: +91-80-662 1184/92/93, Fax: +91-80-662 1169 E-mail: bangalore@karvy.com 8. Share transfer system Shares sent for physical transfer are generally registered and returned within a period of 15 days from the date of receipt, if the documents are clear in all respects. The share transfer committee of the company meets as often as required. The total number of shares transferred in physical form during the three- month period ended September 30, 2000 was 2,620 (previous year - 2,87,568). 100.00% of transfers (previous year - 99.79%) were completed within 15 days.
-------------------------------------------------------------------------------------------------------------------- Three-month period ended September 30, ------------------------------------------------------------------------------------------------------------------------------ 2000 1999 ------------------------------------------------------------------------------------------------------------------------------ Transfer No. of No. of No. of No. of period transferees (folios) shares % transferees (folios) shares % in days New Existing New Existing ------------------------------------------------------------------------------------------------------------------------------ 1 - 10 3 1 2,620 100.00 25 12 2,86,168 99.51 11 - 15 0 0 0 0.00 6 0 800 0.28 16 - 20 0 0 0 0.00 2 0 200 0.07 * 21 and above 0 0 0 0.00 1 2 400 0.14 ------------------------------------------------------------------------------------------------------------------------------ 3 1 2,620 100.00 34 14 2,87,568 100.00 ------------------------------------------------------------------------------------------------------------------------------
* Delays beyond 21 days were due to compliance with legal requirements 9. Investors' services - complaints received during
------------------------------------------------------------------------------------------------------------------------------ Three-month period ended September 30, ------------------------------------------------------------------------------------------------------------------------------ Nature of complaints 2000 1999 ------------------------------------------------------------------------------------------------------------------------------ Received Attended to Received Attended to ------------------------------------------------------------------------------------------------------------------------------ 1. Non-receipt of share certificates 0 0 0 0 2. Non-receipt of bonus shares 2 2 22 22 3. Letters from Stock Exchanges, SEBI, etc. 0 0 0 0 4. Non-receipt of dividend 22 22 16 16 ------------------------------------------------------------------------------------------------------------------------------ 24 24 38 38 ------------------------------------------------------------------------------------------------------------------------------
The company has attended to most of the investors' grievances/correspondence within a period of 10 days from the date of receipt of the same, during the three-month period ended September 30, 2000 except in cases of disputes or legal impediments. 10. Legal proceedings The company is responding to various petitions, relating to the title to its shares, filed by certain parties. These are unlikely to have a significant effect on the affairs of the company. 11. Distribution of shareholding as on September 30
------------------------------------------------------------------------------------------------------------------------------ 2000 1999 ------------------------------------------------------------------------------------------------------------------------------ No. of equity No. of % of No. of % of No. of % of No. of % of shares held share- share- shares share- share- share- shares share- holders holders holding holders holders # holding ------------------------------------------------------------------------------------------------------------------------------ 1 - 100 53,505 81.46 7,42,468 1.16 6,864 44.92 4,21,642 0.66 101 - 200 2,446 3.72 4,21,787 0.66 2,060 13.48 7,92,106 1.24 201 - 500 3,097 4.71 10,94,882 1.71 2,626 17.18 19,70,820 3.08 501 - 1000 2,701 4.11 20,06,191 3.13 2,051 13.42 31,02,220 4.84 1001 - 5000 3,032 4.62 64,39,382 10.05 1,297 8.49 52,52,610 8.20 5001 - 10000 363 0.55 25,97,345 4.05 153 1.00 22,01,626 3.44 10001 and above 542 0.83 5,01,18,322 78.23 231 1.51 4,97,09,866 77.58 Shares in transit in NSDL - - 6,48,423 1.01 - - 6,17,910 0.96 ------------------------------------------------------------------------------------------------------------------------------ 65,686 100.00 6,40,68,800 100.00 15,282 100.00 6,40,68,800 100.00 Equity shares underlying 1* 20,82,567 1* 20,70,000 American Depositary Shares ------------------------------------------------------------------------------------------------------------------------------ Total 65,687 6,61,51,367 15,283 6,61,38,800 ------------------------------------------------------------------------------------------------------------------------------
* Held by beneficial owners outside India. # Shares have been restated consequent to the 2-for-1 stock-split in February 2000. 12. Categories of shareholders as on September 30
------------------------------------------------------------------------------------------------------------------------------------ 2000 1999 ------------------------------------------------------------------------------------------------------------------------------------ Category No. of Voting No. of shares No. of Voting No. of shares shareholders strength (%) held shareholders strength (%) held # ------------------------------------------------------------------------------------------------------------------------------------ Individuals 61,943 25.55 1,69,02,158 14,272 25.18 1,66,54,480 Companies 2,679 2.30 15,18,671 646 1.37 9,08,042 FIIs 346 25.27 1,67,16,870 154 25.58 1,69,18,686 OCBs and NRIs 499 0.75 4,93,441 88 0.74 4,89,816 Founders and their families 23 29.24 1,93,45,960 18 29.58 1,95,64,200 Mutual Funds, Banks, FIs 196 12.76 84,43,277 104 13.48 89,15,666 Shares in transit in NSDL - 0.98 6,48,423 _ 0.94 6,17,910 Equity shares underlying 1* 3.15 20,82,567 1* 3.13 20,70,000 American Depositary Shares ------------------------------------------------------------------------------------------------------------------------------------ Total 65,687 100.00 6,61,51,367 15,283 100.00 6,61,38,800 ------------------------------------------------------------------------------------------------------------------------------------
* Held by beneficial owners outside India. # Shares have been restated consequent to the 2-for-1 stock-split in February 2000. 13. Shares under lock-in Employees Stock Offer Plan (ESOP) 1994 Details of shares of par value of Rs. 5 each held by employees under the Employee Stock Offer Plan (ESOP) 1994 subject to lock-in are given below. These shares are also included in the categories of shareholders given in (12) above. No. of shares subject to lock-in as on September 30,
----------------------------------------------------------------------------------------------------------- 2000 1999 ----------------------------------------------------------------------------------------------------------- Period of lock-in No. of shares No. of employees No. of shares # No. of employees ----------------------------------------------------------------------------------------------------------- 4-5 years - - 7,90,400 1,052 3-4 years 7,63,000 1,006 5,04,800 342 2-3 years 4,89,200 335 2,06,400 152 1-2 years 1,95,200 147 2,61,200 106 0-1 years 2,47,200 103 2,14,200 75 -----------------------------------------------------------------------------------------------------------
# Shares have been restated consequent to the 2-for-1 stock-split in February 2000. As on September 30, 2000, 547 employees hold rights to 3,34,200 shares of par value of Rs. 5 each which are subject to a lock-in of 3-4 years. Currently, 1,573 employees hold shares under the 1994 Stock Offer Plan. Shares subject to lock-in held by the employees will be transferred back to the ITL Employees Welfare Trust if such employees leave the services of the company before the vesting period. As on September 30, 2000, the ITL Employees Welfare Trust holds 2,24,600 shares of par value of Rs. 5 each. The 1994 Stock Offer Plan has since been terminated. Employees Stock Offer Plan (ESOP) 1998 The company established the 1998 Stock Offer Plan which provides for the grant of non-statutory stock options and incentive stock options to the employees of the company. This plan was approved by the board of directors in December 1997 and by the shareholders in January 1998. The Government of India has approved the 1998 plan, subject to a limit of 14,70,000 equity shares of par value of Rs. 5 each representing 29,40,000 ADSs to be issued under the plan. During the three-month period ended September 30, 2000, options were granted to 52 employees to acquire 85,300 ADSs corresponding to 42,650 equity shares of par value of Rs. 5 each. During the three-month period ended September 30, 2000, there was no exercise of stock options. As on September 30, 2000, 170 employees hold options to acquire 8,71,466 ADSs corresponding to 4,35,733 equity shares of par value of Rs. 5 each. Details of the number of ADSs options granted and exercised are given below. No. of options granted and exercised
----------------------------------------------------------------------------------------------------------------------- Granted Exercised ---------------------------------------------------------- No. of ADSs Options No. of Balance ADSs Period employees (Net) employees ADSs options ----------------------------------------------------------------------------------------------------------------------- Year ended March 31, 1999 33 4,04,200 19 24,734 3,79,466 Year ended March 31, 2000 67 2,73,500 - - 2,73,500 Quarter ended June 30, 2000 56 1,33,200 - - 1,33,200 Quarter ended September 30, 2000 53 85,300 - - 85,300 ----------------------------------------------------------------------------------------------------------------------- Total 8,96,200 24,734 8,71,466 -----------------------------------------------------------------------------------------------------------------------
Employees Stock Offer Plan (ESOP) 1999 The 1999 plan was approved by the board of directors and the shareholders in June 1999 and was instituted in fiscal 2000. The plan provides for the issue of 66,00,000 equity shares of par value of Rs. 5 each to the employees. During the three-month period ended September 30, 2000, options were granted to 2,226 employees to acquire 2,95,450 equity shares of par value of Rs. 5 each. As on September 30, 2000, 7,107 employees hold options to acquire 18,83,000 shares of par value of Rs. 5 each. Details of options held by employees under the Employee Stock Offer Plan (ESOP) 1999 are given below. No. of options granted and forfeited
------------------------------------------------------------------------------------------------------------------ Period Granted Forfeited Balance ------------------------------------------------------- No. of No. of No. of No. of employees options employees options ------------------------------------------------------------------------------------------------------------------ Year ended March 31, 2000 1,228 10,14,500 52 40,600 9,73,900 Quarter ended June 30, 2000 4,227 6,58,650 258 39,850 6,18,800 Quarter ended September 30, 2000 2,226 2,95,450 23 5,150 2,90,300 ------------------------------------------------------------------------------------------------------------------ Total 19,68,600 85,600 18,83,000 ------------------------------------------------------------------------------------------------------------------
14. Dematerialization of shares and liquidity Your company was the first in India to pay a one-time custodial fee of Rs. 44.43 lakh to National Securities Depositary Limited (NSDL). Consequently, the company's shareholders do not have to pay depositary participants, the custodial fee charged by the NSDL on their holding. Over 97% of the company's shares are now held in electronic form. 15. Financial calendar (tentative and subject to change) Interim dividend payment November 2000 Financial reporting for the third quarter ending December 31, 2000 January 9, 2001 Financial results for the year ending March 31, 2001 April 11, 2001 Annual General Meeting for the year ending March 31, 2001 May 2001 16. Investors' correspondence in India Any queries relating to the financial statements may be addressed to: of the company may be addressed to: The Company Secretary, Mr. T. V. Mohandas Pai, Investors' Service Cell, Director (F&A) and CFO, Infosys Technologies Ltd., Electronics City, Infosys Technologies Ltd., Electronics City, Hosur Road, Bangalore - 561 229, India. Hosur Road, Bangalore - 561 229, India. Tel.: +91-80-852 1518, Fax: +91-80-852 0362 Tel.: +91-80-852 0396, Fax: +91-80-852 0362 (e-mail address: invest@infy.com) (e-mail address: mdpai@infy.com)
17. Reuters code - INFY.BO (BSE) Bridge code - IN;INF (BSE) Bloomberg code - INFO IN (BSE) - INFY.NS (NSE) - IN;INFN (NSE) - NINFO IN (NSE) - INFY.O (NASDAQ) - US;INFY (NASDAQ)
18. Stock market data relating to American Depositary Shares (ADSs) a. ADS listed at NASDAQ National Market in the United States b. Ratio of ADS to equity shares 2 ADS for one equity share c. ADS symbol INFY d. The American Depositary Shares issued under the ADS program of the company were listed on the NASDAQ National Market in the United States on March 11, 1999. The monthly high and low quotations as well as the volume of ADSs traded at the NASDAQ National Market for the three-month period ended September 30, 2000 are:
-------------------------------------------------------------------------------------------------------- High Low Volume ---------------------------------------------------------------------------------------- $ Rs. $ Rs. Nos. -------------------------------------------------------------------------------------------------------- July 186.94 16,776 120.00 10,769 25,33,000 August 169.13 15,475 96.50 8,830 37,00,100 September 164.00 15,091 121.00 11,134 20,45,300 -------------------------------------------------------------------------------------------------------- Total 82,78,400 -------------------------------------------------------------------------------------------------------- % of volume traded to total float 198.75%*
* 2 ADS = 1 equity share $ have been converted into Indian rupees at the monthly closing rates e. Premium of American Depositary Shares over the shares traded on the Indian stock exchanges The ADS price quoted below is in Indian rupees and has been converted into $ at the monthly closing rates. Price (INR) % Premium
07-Jul 14-Jul 21-Jul 28-Jul 04-Aug 11-Aug 18-Aug 25-Aug 30-Aug 08-Sep 15-Sep 22-Sep 29-Sep ----------------------------------------------------------------------------------------------------- Series2 16243 14493 13280 11666 10591 11678 13405 14457 13245 14367 13067 11687 12147 ----------------------------------------------------------------------------------------------------- Series1 8488 7770 7349 6845 6325 7236 7971 8156 7852 8583 8498 7041 7361 ----------------------------------------------------------------------------------------------------- Series3 91.36 86.53 80.71 70.43 67.45 61.38 68.17 77.26 68.68 67.38 53.76 65.98 65.01 -----------------------------------------------------------------------------------------------------
* 2 ADS = 1 equity share (Source: Bloomberg) f. Investor correspondence in P. R. Ganapathy the US may be addressed to Investor Relations Officer Infosys Technologies Limited 34760, Campus Drive, Fremont CA 94555, USA. Tel.: +1-510-742-3030, Mobile: +1-510-872-4412, Fax: +1-510-742-2930, E-mail: guns@infy.com ------------- g. Name and address of the Deutsche Bank A.G. depositary bank Corporate Trust and Agency Services 4 Albany Street New York, NY 10006, USA. Tel.: +1-212-250-8500, Fax: +1-212-250-5644. Corporate Trust and Agency Services Deutsche Bank A.G. 1 st Floor, Kodak House 222, Dr. D. N. Road. Fort, Mumbai - 400 001, India. Tel.: +91-22-207 3262, Fax: +91-22-207 9614 i. Name and address of the ICICI Limited custodian in India ICICI Towers Bandra Kurla Complex Mumbai - 400 051, India. Tel.: +91-22-653 1414, Fax: +91-22-653 1164/65. 23 Segment Information --------------------------------------------------------------------------------
Rs. in lakhs ------------------------------------------------------------------------------------------------------------------- Revenue by Quarter ended September 30, Half year ended September 30, Year ended ----------------------------------------------------------------------- 2000 1999 2000 1999 March 31, 2000 ------------------------------------------------------------------------------------------------------------------- Geographical segments North America 34,868.11 16,718.10 62,581.65 31,082.52 71,327.35 Europe 8,094.59 3,084.40 14,200.39 5,876.59 12,909.74 Rest of the world 2,597.03 1,109.73 5,121.12 1,998.19 5,240.03 India 1,007.72 875.82 1,728.37 1,236.95 2,669.36 ------------------------------------------------------------------------------------------------------------------- 46,567.45 21,788.05 83,631.53 40,194.25 92,146.48 ------------------------------------------------------------------------------------------------------------------- Business segments Branded services - 2,096.91 - 4,243.18 5,895.00 Products 1,205.70 875.41 2,063.27 1,132.33 2,290.12 Software development and maintenance 43,403.87 17,857.55 78,099.30 32,481.43 80,047.26 Treasury 1,957.88 958.18 3,468.96 2,337.31 3,914.10 ------------------------------------------------------------------------------------------------------------------- 46,567.45 21,788.05 83,631.53 40,194.25 92,146.48 -------------------------------------------------------------------------------------------------------------------
Note: Exchange differences arising on translation of foreign currency deposits kept abroad has been included under treasury.
Geographical segment Business segment quarter ended September 30, 2000 quarter ended September 30, 2000 North America 74.9% Treasury 4.2% Europe 2.2% Products 2.6% India 17.3% Software development Rest of the world 5.6% and maintenance 93.2%
24
Ratio analysis ----------------------------------------------------------------------------------------------------------------------------------- Quarter ended Half year ended Year ended September 30, September 30, March 31, ------------------------------------------ 2000 1999 2000 1999 2000 ----------------------------------------------------------------------------------------------------------------------------------- Ratios - Financial performance Export revenue / total revenue (%) 94.76 94.12 94.74 92.97 94.38 Domestic revenue / total revenue (%) 1.04 1.48 1.11 1.21 1.37 Other income / total revenue (%) 4.20 4.40 4.15 5.82 4.25 Employee costs / total revenue (%) 35.99 36.15 37.09 34.96 36.31 Administration expenses / total revenue (%) 9.28 7.06 8.58 7.21 7.54 Operating expenses / total revenue (%) 57.91 60.56 58.30 59.23 58.88 Depreciation / total revenue (%) 5.20 4.92 5.02 4.99 5.78 Tax / total revenue (%) 3.81 4.36 3.76 4.35 4.31 Tax / PBT (%) 10.33 12.63 10.26 12.17 12.19 EBIDTA / total revenue (%) 42.09 39.44 41.70 40.77 41.12 PAT from ordinary activities / total revenue (%) 33.07 30.16 32.92 31.43 31.03 PAT from ordinary activities / average net worth (%) (LTM) 48.82 45.62 48.82 45.62 40.63 ROCE (PBIT/Average capital employed) (%) (LTM) 54.85 52.48 54.85 52.48 46.27 Return on invested capital (%) (LTM) 104.97 101.48 104.97 101.48 111.68 Capital output ratio (LTM) 1.47 1.48 1.47 1.48 1.31 Invested capital output ratio (LTM) 3.30 3.43 3.30 3.43 3.82 Ratios - Balance sheet Debt-Equity ratio -- - -- Debtors turnover (Days)* 55 64 55 64 56 Current ratio 3.50 5.24 3.50 5.24 4.69 Cash and equivalents / total assets (%) 48.98 65.99 48.98 65.99 61.00 Cash and equivalents / total revenue (%) (LTM) 39.53 65.22 39.53 65.22 55.17 Depreciation / average gross block (%) (LTM) 23.60 26.06 23.60 26.06 23.50 Technology investment / total revenue (%) (LTM) 6.17 6.71 6.17 6.71 5.86 Ratios - Growth** Export revenue (%) 115 74 112 74 74 Total revenue (%) 114 81 108 84 80 Operating expenses (%) 104 68 105 64 69 Operating profit (%) 128 104 113 122 98 Net profit (from ordinary activities) (%) 134 131 118 143 115 Per - share data (Period End) Earnings per share from ordinary activities (Rs.) 23.28 9.93 41.62 19.10 43.23 Earnings per share (including extraordinary items) (Rs.) 23.28 9.93 42.45 19.10 44.37 Cash earnings per share from ordinary activities (Rs.) 26.95 11.55 47.96 22.13 51.27 Cash earnings per share (including extraordinary items) (Rs.) 26.95 11.55 48.79 22.13 52.42 Book value (Rs.) 165.38 103.96 165.38 103.96 125.97 Price / earning (LTM) 111.96 113.89 111.96 113.89 207.50 Price / cash earnings (LTM) 95.46 94.09 95.46 94.09 174.96 Price / book value 44.51 34.31 44.51 34.31 71.21 EPS growth (%) 134.39 131.39 117.96 142.59 115.07 PE / EPS Growth 0.83 0.87 0.95 0.80 1.80 Dividend per share 2.50 1.50 2.50 1.50 4.50 ------------------------------------------------------------------------------------------------------------------------------------
* Annualized. ** Denotes growth compared with figures of the corresponding period in the previous year. Note: The ratio calculations are based on Indian GAAP and have been adjusted for Stock split. LTM- Last twelve months 25 Infosys Technologies Limited ---------------------------------------------- United States Addison 15305 Dallas Parkway Suite 210 Addison, TX 75001 Tel.: 972 770 0450 Fax: 972 770 0490 Bellevue 10900 NE 4th St, #2300 Bellevue, WA 98004 Tel.: 425 990 1028 Fax: 425 990 1029 Cranford 20 Commerce Drive Cranford, NJ 07016 Tel.: 908 497 1710 Fax: 908 497 1770 Fremont 34760 Campus Drive Fremont, CA 94555 Tel.: 510 742 3000 Fax: 510 742 3090 Marietta 1950 Spectrum Circle, #400 Marietta, GA 30067 Tel.: 770 857 4428 Fax: 770 857 2258 Newport Beach 4590 MacArthur Suite 500 Newport Beach, CA 92660 Tel.: 949 475 0196 Fax: 949 475 0198 Oakbrook Terrace One Tower Lane, #1700 Oakbrook Terrace, IL 60181 Tel.: 630 573 6050 Fax: 630 573 6051 Quincy Two Adams Place Quincy, MA 02169 Tel.: 781 356 3109 Fax: 781 356 3150 Troy 100 Liberty Center, #200 West Big Beaver Troy, MI 48084 Tel.: 248 524 0320 Fax: 248 524 0321 Australia Melbourne Level 7, 505 St. Kilda Road Melbourne, Victoria 3004 Tel.: 613 9868 1607 Fax: 613 9868 1652 Fax: 613 9820 0777 Sydney Level 4, 90 Mount Street, North Sydney, NSW 2060 Tel.: 612 9954 0036 Fax: 612 8904 1344 Belgium Dreve Richelle 161, Building N 1410 Waterloo, Brussels Tel.: 322 352 8743 Fax: 322 352 8844 Canada 5140 Yonge Street Suite 1400 Toronto, Ontario M2N 6L7 Tel.: 416 224 7420 Fax: 416 224 7449 Germany TOPAS 2 Mergenthalerallee, 79-81 65760 Eschborn/Frankfurt Tel.: 49 6196 920 2115 Fax: 49 6196 920 2320 Hong Kong 16F Cheung Kong Centre 2 Queen's Road Central Central, Hong Kong Tel.: 852 2297 2806 Fax: 852 2297 0066 Japan 4F Madre Matsuda Bldg. 4-13, Kioi-Cho, Chiyoda-Ku Tokyo 102-0094 Tel.: 813 3234 3597 Fax: 813 3239 3300 Sweden Stureplan 4C, 4tr, 114 35, Stockholm Tel.: 468 463 1112 Fax: 468 463 1114 UK 10/th/ Floor, Emerald House 7-15 Lansdowne Road Croydon, Surrey CR0 2BX Tel.: 44 20 8774 3329 Fax: 44 20 8686 6631 India Bangalore Electronics City Hosur Road, Bangalore 561 229 Tel.: 080 852 0261 Fax: 080 852 0362 Reddy Building K-310, 1st Main, 5th Block Koramangala, Bangalore 560 095 Tel.: 080 553 0392 Fax: 080 553 0391 Pavithra Complex, #1, 27th Main, 2nd Cross, 1st Stage BTM Layout, Bangalore 560 068 Tel.: 080 668 1755 Fax: 080 668 0181 Infosys Towers No. 27, Bannerghatta Road, 3rd Phase J. P. Nagar, Bangalore 560 076 Tel.: 080 6588668 Fax: 080 6588676 Bhubaneswar Plot #N-1/70, Nayapalli, Adjoining Planetarium on NH5, Post RRL, Bhubaneswar 751 013 Tel.: 0674 584068 - 71 Fax: 0674 583991 Plot No. E/4 Infosys City Chandaka Bhubaneswar 751 014 Tel.: 0674 442 194 Chennai 1st & 2nd Floor, Alexander Square, 35 Sardar Patel Road, Guindy, Chennai 600 032 Tel.: 044 2300031- 40 Fax: 044 2300091 No. 138 Sholinganallur Old Mahabalipuram Road Chennai 600 119 Tel.: 044 496 4304 Archbishop Arokia Swamy Building 145, Santhome High Road Mylapore (Santhome) Chennai 600 004 Tel.: 044 4612021 Fax: 044 4956958 Hyderabad #1Q3-A1, First Floor, Cyber Tower, Hitec City Madhapur, Hyderabad 500 033 Tel.: 040 3100242 Fax: 040 3100243 Mangalore #16/403 Star of Bombay Complex 3/rd/ Floor, Kankanady Mangalore 575 002 Tel.: 0824 439401-7 & 434401-06 Fax: 0824 439430 Kuloor Ferry Road, Kottara Cross, Mangalore 575 006 Tel.: 0824 451485-88 Fax: 0824 451504 Mohali (Chandigarh) B100, Phase VIII, Industrial Area, SAS Nagar Mohali 160 059 Tel.: 0172 254191/92/94 Fax: 0172 254193 Mumbai 85, 'C', Mittal Towers, 8th Floor Nariman Point, Mumbai 400 021 Tel.: 022 2846490 Fax: 022 2846489 Mysore Sree Jayachamarajendra College of Engineering - Science and Technology Entrepreneurs Park (SJCE- STEP), Manasagangothri Mysore 570 006 Tel.: 0821 500001-06 Fax: 0821 511614 New Delhi K30, Green Park Main, Behind Green Park Market New Delhi 110 066 Tel.: 0116514829/ 30 Fax: 011 6853366 Pune 3/rd/ Floor, 321/A/3 TPS III Shankar Seth Road MAhatma Phule Peth Pune 411 042 Tel.: 0212 647420/21 Fax: 0212 648226 Plot #1, Infotech Park MIDC Hijawadi, Taluka Mulshi, Pune 411 027 Tel.: 02139 32801 - 03 Fax: 02139 32832 ------------------------------------------------------------------------------ ------------------------------------------------------------------------- Bankers ICICI Bank Ltd. Visit Infosys at www.infy.com Hongkong and Shanghai Banking Corporation Ltd. Send e-mail to infosys@infy.com Bank of America Call us at: Company secretary within the U.S. V. Viswanathan 1-800-ITL INFO outside the U.S. Auditors 91-80-852 0261 Bharat S Raut and Co. Chartered Accountants Independent auditors (US GAAP) KPMG ------------------------------------------------------------------------ (C) 2000 Infosys Technologies Limited, Bangalore, India Infosys acknowledges the proprietary rights in the trademarks and product names of other companies mentioned in this document. ----------------------------------------------------------------------------- 26