EX-99.11 48 exv99w11.htm exv99w11
EXHIBIT 99.11
Indian GAAP Standalone
AUDITORS' REPORT TO THE MEMBERS OF INFOSYS TECHNOLOGIES LIMITED

We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at 30 September 2006, the Profit and Loss Account of the Company for the quarter and half year ended on that date and Cash Flow Statement of the Company for the half year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

We report that:

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

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

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

(d)   in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards issued by the Institute of Chartered Accountants of India,
        to the extent applicable; and

(e)   in our opinion and to the best of our information and according to the explanations given to us, the said accounts give a true and fair view in conformity with the accounting principles generally accepted in India:

(i)   in the case of the Balance Sheet, of the state of affairs of the Company as at 30 September 2006;
(ii)   in the case of the Profit and Loss Account, of the profit of the Company for the quarter and half year ended on that date; and
(iii)   in the case of the Cash Flow Statement, of the cash flows of the Company for the half year ended on that date.

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna
Partner
Membership No. 32815

Bangalore
11 October 2006

in Rs. crore

Balance Sheet as at

Schedule

September 30, 2006

March 31, 2006

SOURCES OF FUNDS

     

SHAREHOLDERS' FUNDS

      

    Share capital

1

278

138

    Reserves and surplus

2

8,273

6,759

 

  

8,551

6,897

APPLICATION OF FUNDS

     

FIXED ASSETS

3

    

    Original cost

  

3,417

2,837

    Less: Accumulated depreciation

  

1,481

1,275

    Net book value

  

1,936

1,562

    Add: Capital work-in-progress

  

481

571

 

  

2,417

2,133

INVESTMENTS

4

3,442

876

DEFERRED TAX ASSETS

5

68

56

CURRENT ASSETS, LOANS AND ADVANCES

  

 

 

    Sundry debtors

6

1,957

1,518

    Cash and bank balances

7

804

3,279

    Loans and advances

8

1,478

1,252

 

  

4,239

6,049

LESS: CURRENT LIABILITIES AND PROVISIONS

      

    Current liabilities

9

1,000

808

    Provisions

10

615

1,409

NET CURRENT ASSETS

  

2,624

3,832

 

  

8,551

6,897

 

  

 

  

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

22

  

 

The schedules referred to above are an integral part of the balance sheet.

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna N. R. Narayana Murthy Nandan M. Nilekani S. Gopalakrishnan Deepak M. Satwalekar
Partner Chairman Chief Executive Officer President, Director
Membership No. 32815 and Chief Mentor and Managing Director Chief Operating Officer and  
      Joint Managing Director  
 
  Marti G. Subrahmanyam Omkar Goswami Rama Bijapurkar Claude Smadja
  Director Director Director Director
         
  Sridar A. Iyengar David L Boyles Jeffrey Lehman S. D. Shibulal
  Director Director Director Director
 
  K. Dinesh T. V. Mohandas Pai Srinath Batni V. Balakrishnan
  Director Director Director Chief Financial Officer
 
Bangalore Parvatheesam K.      
October 11, 2006 Company Secretary      


in Rs. crore, except per share data

Profit and Loss Account for the

 

Quarter ended

Half-year ended

 

Schedule

September 30,

September 30,

 

 

2006

2005

2006

2005

Income from software services and products

 

3,273

2,170

6,140

4,137

Software development expenses

11

1,796

1,167

3,411

2,231

GROSS PROFIT

 

1,477

1,003

2,729

1,906

Selling and marketing expenses

12

180

125

348

244

General and administration expenses

13

243

173

453

310

 

  

423

298

801

554

OPERATING PROFIT BEFORE INTEREST AND DEPRECIATION

 

1,054

705

1,928

1,352

Interest

  

-

-

-

-

Depreciation

  

110

90

207

165

OPERATING PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS

 

944

615

1,721

1,187

Other income, net

14

66

45

195

76

Provision for investments

  

-

1

3

1

NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS

 

1,010

659

1,913

1,262

Provision for taxation

15

114

67

218

146

NET PROFIT AFTER TAX BEFORE EXCEPTIONAL ITEMS

 

896

592

1,695

1,116

Income on sale of Investments, net of taxes (refer to note 22.2.21)

  

-

-

6

-

NET PROFIT AFTER TAX AND EXCEPTIONAL ITEMS

 

896

592

1,701

1,116

Balance Brought Forward

 

2,995

1,952

2,195

1,428

Less: Residual dividend paid

  

-

-

4

-

          Dividend tax on the above

  

-

-

1

-

 

 

2,995

1,952

2,190

1,428

AMOUNT AVAILABLE FOR APPROPRIATION

 

3,891

2,544

3,891

2,544

Dividend

 

        

    Interim

 

278

177

278

177

    Final

 

-

-

-

-

Total dividend

 

278

177

278

177

Dividend tax

 

39

25

39

25

Amount transferred to general reserve

 

-

-

-

-

Balance in profit and loss account

 

3,574

2,342

3,574

2,342

 

 

3,891

2,544

3,891

2,544

EARNINGS PER SHARE *

 

        

Equity shares of par value Rs. 5/- each

 

        

Before exceptional Items

 

        

    Basic

 

16.15

10.87

30.61

20.54

    Diluted

 

15.79

10.57

29.90

19.96

After exceptional Items

 

        

    Basic

 

16.15

10.87

30.72

20.54

    Diluted

 

15.79

10.57

30.01

19.96

Number of shares used in computing earnings per share

 

 

 

 

 

    Basic

  

55,47,72,296

54,42,02,438

55,37,98,511

54,30,96,662

    Diluted

  

56,77,46,039

56,00,61,300

56,69,42,396

55,88,90,590

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

22

 

 

 

 
* Refer to note 22.2.20

The schedules referred to above are an integral part of the profit and loss account

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna N. R. Narayana Murthy Nandan M. Nilekani S. Gopalakrishnan Deepak M. Satwalekar
Partner Chairman Chief Executive Officer President, Director
Membership No. 32815 and Chief Mentor and Managing Director Chief Operating Officer and  
      Joint Managing Director  
 
  Marti G. Subrahmanyam Omkar Goswami Rama Bijapurkar Claude Smadja
  Director Director Director Director
 
  Sridar A. Iyengar David L Boyles Jeffrey Lehman S. D. Shibulal
  Director Director Director Director
 
  K. Dinesh T. V. Mohandas Pai Srinath Batni V. Balakrishnan
  Director Director Director Chief Financial Officer
 
Bangalore Parvatheesam K.      
October 11, 2006 Company Secretary      


in Rs. crore

Cash Flow Statement for the

 

Half-year ended

 

 

September 30,

 

Schedule

2006

2005

CASH FLOWS FROM OPERATING ACTIVITIES

     

Net profit before tax and exceptional items

  

1,913

1,262

Adjustments to reconcile net profit before tax to cash provided by operating activities

      

        (Profit)/ loss on sale of fixed assets

  

-

-

        Depreciation

  

207

165

        Interest and dividend income

  

(117)

(78)

        Profit on sale of liquid mutual funds

  

(6)

-

        Provision for investments

  

3

1

Effect of exchange differences on translation of foreign currency cash and cash equivalents

  

25

(7)

Changes in current assets and liabilities

      

        Sundry debtors

  

(439)

9

        Loans and advances

16

(211)

34

        Current liabilities and provisions

17

198

57

        Income taxes paid

18

(163)

(161)

NET CASH GENERATED BY OPERATING ACTIVITIES

 

1,410

1,282

CASH FLOWS FROM INVESTING ACTIVITIES

     

    Purchase of fixed assets and change in capital work-in-progress

19

(491)

(539)

    Proceeds on disposal of fixed assets

  

-

-

    Investment in subsidiaries (refer to note 22.2.16)

  

(553)

(22)

    Investments in securities (refer to note 22.2.16)

20

(2,010)

(1,088)

    Interest and dividend income

  

117

78

    Cash flow from investing activities before exceptional items

  

(2,937)

(1,571)

    Proceeds on sale of Long Term Investments (Net of taxes)

  

6

-

NET CASH USED IN INVESTING ACTIVITIES

 

(2,931)

(1,571)

CASH FLOWS FROM FINANCING ACTIVITIES

     

    Proceeds from issuance of share capital on exercise of stock options

  

288

249

    Dividends paid during the period

  

(1,065)

(176)

    Dividend Tax paid during the period

  

(150)

(25)

NET CASH USED IN FINANCING ACTIVITIES

 

(927)

48

Effect of exchange differences on translation of foreign currency cash and cash equivalents

  

(25)

7

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

(2,473)

(234)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

  

3,779

1,683

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

21

1,306

1,449

 

    

 

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

22

  

 

The schedules referred to above are an integral part of the cash flow statement.

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna N. R. Narayana Murthy Nandan M. Nilekani S. Gopalakrishnan Deepak M. Satwalekar
Partner Chairman Chief Executive Officer President, Director
Membership No. 32815 and Chief Mentor and Managing Director Chief Operating Officer and  
      Joint Managing Director  
 
  Marti G. Subrahmanyam Omkar Goswami Rama Bijapurkar Claude Smadja
  Director Director Director Director
 
  Sridar A. Iyengar David L Boyles Jeffrey Lehman S. D. Shibulal
  Director Director Director Director
 
  K. Dinesh T. V. Mohandas Pai Srinath Batni V. Balakrishnan
  Director Director Director Chief Financial Officer
 
Bangalore Parvatheesam K.      
October 11, 2006 Company Secretary      


in Rs. crore, except as otherwise stated

Schedules to the Balance Sheet as at

September 30, 2006

March 31, 2006

1

SHARE CAPITAL

 

 

 

Authorized

    

 

    Equity shares, Rs. 5/- par value

    

 

    60,00,00,000 (30,00,00,000) equity shares

300

150

 

Issued, Subscribed and Paid Up

    

 

    Equity shares, Rs. 5/- par value*

278

138

 

    55,57,85,001 ( 27,55,54,980) equity shares fully paid up

    

 

[Of the above, 53,53,35,478 ( 25,84,92,302) equity shares, fully paid up have been issued as bonus shares by capitalization of the general reserve]

    

 

 

278

138

 

Forfeited shares amounted to Rs.1,500 (Rs. 1,500/-)

    
 

 

* For details of options in respect of equity shares, refer to note 22.2.11

   

 

* Also refer to note 22.2.20 for details of basic and diluted shares

   
 

2

RESERVES AND SURPLUS

   

 

Capital reserve

6

6

 

Share premium account - As at April 1,

1,543

900

 

Add: Receipts on exercise of employee stock options

286

571

 

Income tax benefit arising from exercise of stock options

-

72

 

 

1,829

1,543

 

General reserve - As at April 1,

3,015

2,773

 

Less: Gratuity transitional liability (refer to note 22.2.22)

13

-

 

Less: Capitalized on issue of bonus shares

138

-

 

Add: Transferred from the Profit and Loss Account

-

242

 

 

2,864

3,015

 

Balance in Profit and Loss Account

3,574

2,195

 

 

8,273

6,759


3

FIXED ASSETS

   

Original cost

Depreciation and amortization

Net book value

 

  

As at

Additions

Deductions/

As at 

As at

For the

Deductions/

As at 

As at

As at

 

  

April 1,

  

Retirement

September 30, 

April 1,

Period

Retirement

September 30, 

September 30,

March 31,

 

  

2006

    

2006 

2006

    

2006 

2006

2006

 

Land : free-hold *

34

4

-

38 

-

-

-

- 

38

34

 

        leasehold

104

16

4

116 

-

-

-

- 

116

104

 

Buildings*

1,022

276

-

1,298 

179

38

-

217 

1,081

843

 

Plant and machinery*

559

106

-

665 

305

47

-

352 

313

254

 

Computer equipment*

700

121

1

820 

516

93

1

608 

212

184

 

Furniture and fixtures*

417

61

-

478 

275

28

-

303 

175

142

 

Vehicles

1

1

-

2 

-

1

-

1 

1

1

 

 

2,837

585

5

3,417 

1,275

207

1

1,481 

1,936

1,562

 

Previous Period

2,183

462

6

2,639 

1,006

165

6

1,165 

1,474

 

 

Previous year

2,183

799

145

2,837 

1,006

409

140

1,275 

1,562

 

Note: Buildings include Rs.250/- being the value of 5 shares of Rs.50/- each in Mittal Towers Premises Co-operative Society Limited.

* Includes certain assets provided on operating lease to Infosys BPO , a subsidiary. Please refer to note 22.2.6 for details


in Rs. crore

Schedules to the Balance Sheet as at

September 30, 2006

March 31, 2006

4

INVESTMENTS

   

 

Trade (unquoted) - at cost

   

 

    Long- term investments

   

 

        In subsidiaries

    

 

            Infosys BPO Ltd, India

    

 

            3,32,49,993 (2,44,99,993) equity shares of Rs. 10/- each, fully paid

555

25

 

            Infosys Technologies ( China) Co. Limited

32

23

 

            Infosys Technologies ( Australia) Pty Limited

    

 

            1,01,08,869 (1,01,08,869) equity shares of A$ 0.11 par value, fully paid

66

66

 

            Infosys Consulting, Inc., USA

    

 

            2,00,00,000 (1,70,00,000) common stock of US $1.00 par value, fully paid

90

76

 

 

743

190

 

In other investments*

11

16

 

Less: Provision for investments

11

14

 

 

-

2

 

Non-trade (unquoted), current investments, at the lower of cost and fair value

   

 

Liquid mutual fund units *

2,699

684

 

 

3,442

876

 

Aggregate amount of unquoted investments

3,442

876

 

* Refer to note 22.2.16 for details of investments

   
 

5

DEFERRED TAX ASSETS

   

 

Fixed assets

65

54

 

Sundry debtors

3

2

 

 

68

56

6

SUNDRY DEBTORS*

   

 

Debts outstanding for a period exceeding six months

    

 

    Unsecured

    

 

        considered doubtful

21

8

 

    Other debts

    

 

        Unsecured

    

 

            considered good

1,957

1,518

 

            considered doubtful

1

2

 

 

1,979

1,528

 

Less: Provision for doubtful debts

22

10

 

 

1,957

1,518

 

* Includes dues from companies where directors are interested

3

2
 

7

CASH AND BANK BALANCES

   

 

Cash on hand

-

-

 

Balances with scheduled banks in Indian Rupees

    

 

    In current accounts *

171

169

 

    In deposit accounts

348

2,735

 

Balances with non-scheduled banks in foreign currency **

    

 

    In current accounts

285

375

 

 

804

3,279

 

 *Includes balance in unclaimed dividend account

3

3

 

**Refer to note 22.2.13 for details of balances in non-scheduled banks

   
 

8

LOANS AND ADVANCES

   

 

Unsecured, considered good

    

 

Loans to subsidiary (refer to note 22.2.7)

24

14

 

Advances

    

 

    prepaid expenses

28

27

 

    for supply of goods and rendering of services *

16

9

 

    advance to gratuity trust

8

-

 

    others

24

14

 

 

100

64

 

Unbilled revenues

330

203

 

Advance income tax

293

267

 

Loans and advances to employees

    

 

    housing and other loans

43

49

 

    salary advances

55

61

 

Electricity and other deposits

18

16

 

Rental deposits

12

12

 

Deposits with financial institution and body corporate (refer to note 22.2.14)

623

580

 

Mark to Market on options/ forward contracts

4

-

 

 

1,478

1,252

 

Unsecured, considered doubtful

    

 

    Loans and advances to employees

1

-

 

 

1,479

1,252

 

Less: Provision for doubtful loans and advances to employees

1

-

 

 

1,478

1,252

 

* Includes advances to subsidiary company

2

6
 

9

CURRENT LIABILITIES

   

 

Sundry creditors

    

 

    goods and services

13

6

 

    accrued salaries and benefits

    

 

        salaries

13

6

 

        bonus and incentives

184

233

 

        unavailed leave

96

80

 

    for other liabilities

    

 

        provision for expenses

220

166

 

        retention monies

12

13

 

        withholding and other taxes payable

127

82

 

    for purchase of intellectual property rights

20

19

 

    Mark to market on options/ forward contracts

-

2

 

    others

4

3

 

 

689

610

 

Advances received from clients

8

7

 

Unearned revenue

300

188

 

Unclaimed dividend

3

3

 

 

1,000

808

10

PROVISIONS

   

 

Proposed dividend

278

1,061

 

Provision for

    

 

    tax on dividend

39

149

 

    income taxes *

280

187

 

    post-sales client support and warranties

18

12

 

 

615

1,409

 
* Refer to note 22.2.12


in Rs. crore

Schedules to Profit and Loss Account for the

Quarter ended

Half-year ended

 

 

September 30,

September 30,

   

2006

2005

2006

2005

11

SOFTWARE DEVELOPMENT EXPENSES

       

 

Salaries and bonus including overseas staff expenses

1,343

865

2,543

1,645

 

Overseas group health insurance

23

12

40

23

 

Contribution to provident and other funds

38

21

68

40

 

Staff welfare

10

6

18

11

 

Technical sub-contractors - subsidiaries

165

94

287

174

 

Technical sub-contractors - others

54

24

97

55

 

Overseas travel expenses

65

57

135

111

 

Visa charges and others

15

29

64

47

 

Software packages

        

 

    for own use

49

33

83

65

 

    for service delivery to clients

1

8

15

18

 

Communication expenses

13

12

26

25

 

Computer maintenance

5

3

10

7

 

Consumables

7

4

12

7

 

Rent

4

3

7

6

 

Provision for post-sales client support and warranties

4

(4)

6

(3)

 

 

1,796

1,167

3,411

2,231

12

SELLING AND MARKETING EXPENSES

       

 

Salaries and bonus including overseas staff expenses

111

68

217

135

 

Overseas group health insurance

1

1

1

2

 

Contribution to provident and other funds

-

-

1

-

 

Staff welfare

1

-

1

-

 

Overseas travel expenses

21

16

45

29

 

Visa charges and others

1

1

1

4

 

Traveling and conveyance

1

1

2

2

 

Commission and earnout charges

11

8

19

18

 

Brand building

15

12

27

22

 

Professional charges

6

10

11

15

 

Rent

4

3

8

7

 

Marketing expenses

5

3

8

6

 

Telephone charges

1

1

2

2

 

Communication expenses

-

-

-

-

 

Printing and stationery

-

1

1

1

 

Advertisements

1

-

2

1

 

Office maintenance

-

-

-

-

 

Sales promotion expenses

1

-

1

-

 

Consumables

-

-

-

-

 

Software packages

        

 

    for own use

-

-

1

-

 

Computer maintenance

-

-

-

-

 

Power and fuel

-

-

-

-

 

Insurance charges

-

-

-

-

 

Rates and taxes

-

-

-

-

 

Bank charges and commission

-

-

-

-

 

Miscellaneous expenses

-

-

-

-

 

 

180

125

348

244

13

GENERAL AND ADMINISTRATION EXPENSES

 

 

 

 

 

Salaries and bonus including overseas staff expenses

44

29

82

58

 

Overseas group health insurance

-

-

-

-

 

Contribution to provident and other funds

3

2

6

4

 

Professional charges

38

25

66

40

 

Telephone charges

28

21

53

36

 

Power and fuel

23

16

44

30

 

Traveling and conveyance

21

16

40

29

 

Overseas travel expenses

6

2

9

6

 

Visa charges and others

-

1

1

2

 

Office maintenance

25

16

46

29

 

Guest house maintenance*

-

-

1

1

 

Insurance charges

7

5

12

11

 

Printing and stationery

3

2

6

5

 

Donations

5

5

9

8

 

Rent

4

2

8

5

 

Advertisements

3

4

3

7

 

Repairs to building

7

5

10

8

 

Repairs to plant and machinery

3

3

6

5

 

Rates and taxes

3

3

12

5

 

Professional membership and seminar participation fees

3

2

4

4

 

Postage and courier

2

1

5

3

 

Books and periodicals

1

1

2

2

 

Provision for bad and doubtful debts

8

9

19

9

 

Provision for doubtful loans and advances

-

-

-

-

 

Commission to non-whole time directors

1

1

1

1

 

Freight charges

-

-

-

-

 

Bank charges and commission

1

1

1

1

 

Research grants

3

-

5

-

 

Auditor's remuneration

        

 

    statutory audit fees

-

-

-

-

 

    certification charges

-

-

-

-

 

    others

-

-

-

-

 

    out-of-pocket expenses

-

-

-

-

 

Miscellaneous expenses (refer to note 22.2.15)

1

1

2

1

 

 

243

173

453

310

 

*For non training purposes

       
 

14

OTHER INCOME, NET

 

 

 

 

 

Interest received on deposits with banks and others*

21

23

70

47

 

Dividend received on investment in liquid mutual funds (non-trade unquoted)

30

18

47

31

 

Miscellaneous income (refer to note 22.2.15)

4

4

14

7

 

Exchange differences

11

-

64

(9)

 

 

66

45

195

76

 

*Tax deducted at source

5

5

18

10

15

PROVISION FOR TAXATION

 

 

 

 

 

Income taxes*

119

70

230

152

 

Deferred taxes

(5)

(3)

(12)

(6)

 

 

114

67

218

146

 
*Refer to note 22.2.12
       


in Rs. crore

Schedules to Cash Flow Statements for the

Half-year ended

 

 

September 30,

 

 

2006

2005

16

CHANGE IN LOANS AND ADVANCES

 

 

 

As per the Balance Sheet*

1,478

1,007

 

Add: Gratutity transitional liability (refer to Note 22.2.22)

13

-

 

Less: Deposits with financial institutions and body corporates

    

 

    included in cash and cash equivalents

(502)

(157)

 

    Advance income taxes separately considered

(293)

(493)

 

 

696

357

 

Less: Opening balance considered

(485)

(391)

 

 

211

(34)

 

* includes loans to subsidiary

 

 
 

17

CHANGE IN CURRENT LIABILITIES AND PROVISIONS

   

 

As per the Balance Sheet

1,615

1,485

 

Less: Provisions separately considered in the cash flow statement

    

 

    Income taxes

(280)

(627)

 

    Dividends

(278)

(177)

 

    Dividend tax

(39)

(25)

 

 

1,018

656

 

Less: Opening balance considered

(820)

(599)

 

 

198

57

18

INCOME TAXES PAID

   

 

Charge as per the Profit and Loss Account

218

146

 

Add: Increase in advance income taxes

26

90

 

    Increase/(Decrease) in deferred taxes

12

6

 

Less: (Increase)/Decrease in income tax provision

(93)

(81)

 

 

163

161

19

PURCHASE OF FIXED ASSETS AND CHANGE IN CAPITAL

   

 

WORK-IN-PROGRESS

   

 

As per the Balance Sheet*

581

462

 

Less: Opening Capital work-in-progress

(571)

(318)

 

Add: Closing Capital work-in-progress

481

395

 

 

491

539

 

* Excludes Rs 4 crore (Rs 4 crore) towards movement of land from Leasehold to Freehold

    

20

INVESTMENTS IN SECURITIES *

    

 

As per the Balance Sheet

3,442

2,438

 

Add: Provisions on investments

3

1

 

 

3,445

2,439

 

Less: Investment in subsidiaries

(553)

(22)

 

    Profit on sale of liquid mutual funds

(6)

-

 

    Opening balance considered

(876)

(1,329)

 

 

2,010

1,088

 

* Refer to note 22.2.16 for investment and redemptions

 

 
       

21

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

   

 

As per the Balance Sheet

804

1,292

 

Add: Deposits with financial institutions, included herein

502

157

 

 

1,306

1,449


Schedules to the Financial Statements for the quarter and half-year ended September 30, 2006

22 Significant accounting policies and notes on accounts

Company overview
Infosys Technologies Limited ("Infosys" or "the company") along with its majority owned and controlled subsidiary, Infosys BPO Limited, India ("Infosys BPO") formerly known as Progeon Limited, and wholly owned subsidiaries, Infosys Technologies (Australia) Pty. Limited ("Infosys Australia"), Infosys Technologies (China) Co. Limited ("Infosys China"), formerly known as Infosys Technologies (Shanghai) Co. Limited and Infosys Consulting, Inc., USA ("Infosys Consulting"), is a leading global technology services organisation. The Company provides end-to-end business solutions that leverage technology thereby enabling clients to enhance business performance. The Company provides solutions that span the entire software life cycle encompassing technical consulting, design, development, re-engineering, maintenance, systems integration and package evaluation and implementation. In addition, the Company offers software products for the banking industry.


22.1 Significant accounting policies

22.1.1 Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under the historical cost convention on the accruals basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India ("ICAI"), the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. The interim financial statements are prepared to conform to the accounting standard on "Interim Financial Reporting". Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Management evaluates all recently issued or revised accounting standards on an on-going basis.

22.1.2 Use of estimates
The preparation of the financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset's net sales price or present value as determined above. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Where no reliable estimate can be made, a disclosure is made as contingent liability. Actual results could differ from those estimates.

22.1.3. Revenue recognition
Revenue from software development on fixed-price, fixed-time frame contracts, where there is no uncertainty as to measurement or collectability of consideration is recognized as per the percentage of completion method. On time-and-materials contracts, revenue is recognized as the related services are rendered. Cost and earnings in excess of billings are classified as unbilled revenue while billing in excess of cost and earnings is classified as unearned revenue. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current estimates. Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered. Revenue from the sale of user licenses for software applications is recognized on transfer of the title in the user license, except in multiple element contracts, where revenue is recognized as per the percentage of completion method.

Profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sales price and the then carrying value of the investment. Lease rentals are recognized ratably on a straight line basis over the lease term. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized when the company's right to receive dividend is established.

22.1.4 Expenditure
The cost of software purchased for use in software development and services is charged to cost of revenues in the year of acquisition. Charges relating to non-cancelable, long-term operating leases are computed primarily on the basis of the lease rentals, payable as per the relevant lease agreements. Post-sales customer support costs are estimated by management, determined on the basis of past experience. The costs provided for are carried until expiry of the related warranty period. Provisions are made for all known losses and liabilities. Leave encashment liability is determined on the basis of an actuarial valuation.

22.1.5 Fixed assets, intangible assets and capital work-in-progress
Fixed assets are stated at cost, less accumulated depreciation. Direct costs are capitalized until fixed assets are ready for use. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the balance sheet date. Intangible assets are recorded at the consideration paid for acquisition.

22.1.6 Depreciation and amortization
Depreciation on fixed assets is applied on the straight-line basis over the useful lives of assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged. Individual low cost assets (acquired for less than Rs.5,000/-) are depreciated within a year of acquisition. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use. Management estimates the useful lives for the other 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

22.1.7 Retirement benefits to employees

22.1.7.a Gratuity
Infosys provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Infosys Technologies Limited Employees' Gratuity Fund Trust (the "Trust). Trustees administer contributions made to the Trust and contributions are invested in specific investments as permitted by law.

22.1.7.b Superannuation
Certain employees of Infosys are also participants in a defined contribution plan. Until March 2005, the company made contributions under the superannuation plan (the Plan) to the Infosys Technologies Limited Employees' Superannuation Fund Trust. The company had no further obligations to the Plan beyond its monthly contributions. From April 1 2005, a portion of the monthly contribution amount was paid directly to the employees as an allowance and the balance amount was contributed to the trust.

22.1.7.c Provident fund
Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement, death, incapacitation or termination of employment. Both the employee and the company make monthly contributions to the Infosys Technologies Limited Employee's Provident Fund Trust equal to a specified percentage of the covered employee's salary. Infosys also contributes to a government administered pension fund on behalf of its employees. The interest rate payable by the trust to the beneficiaries every year is being notified by the government. The company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

22.1.8. Research and development
Revenue expenditure incurred on research and development is expensed as incurred. Capital expenditure incurred on research and development is depreciated over the estimated useful lives of the related assets.

22.1.9. Foreign currency transactions
Revenue from 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 the daily rates. Exchange differences are recorded when the amount actually received on sales or actually paid when expenditure is incurred, is converted into Indian Rupees. 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.

Monetary current assets and monetary current liabilities that are 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.

22.1.10 Forward contracts in foreign currencies
The company uses foreign exchange forward contracts and options to hedge its exposure to movements in foreign exchange rates.The use of these foreign exchange forward contracts and options reduces the risk or cost to the company and the company does not use the foreign exchange forward contracts or options for trading or speculation purposes.

The company records the gain or loss on effective hedges in the foreign currency fluctuation reserve until the transactions are complete. On completion, the gain or loss is transferred to the profit and loss account of that period. To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. In the absence of a designation as effective hedge, a gain or loss is recognized in the profit and loss account.

22.1.11. Income tax
Income taxes are computed using the tax effect accounting method, where taxes are accrued in the same period the related revenue and expenses arise. A provision is made for income tax annually based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable.

The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full fiscal year. Tax benefits of deductions earned on exercise of employee stock options in excess of compensation charged to profit and loss account are credited to the share premium account.

22.1.12. Earnings per share
In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of any extra-ordinary/exceptional item. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares issues effected prior to the approval of the financial statements by the board of directors.

22.1.13. Investments
Trade investments are the investments made to enhance the company's business interests. Investments are either classified as current or long-term based on the Management's intention at the time of purchase. 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. Long-term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.

22.1.14. Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

22.2 Notes on accounts
Amounts in the financial statements are presented in Rupees crore, except for per share data and as otherwise stated. Certain amounts do not appear due to rounding off, and are detailed in Note 22.3. All exact amounts are stated with the suffix "/-". One crore equals 10 million.

The previous period figures have been regrouped / reclassified, wherever necessary to conform to the current presentation.

22.2.1. Aggregate expenses
The aggregate amounts incurred on certain specific expenses

in Rs. Crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

Salaries and bonus including overseas staff expenses

1,498

962

2,842

1,838

Contribution to provident and other funds

41

23

75

44

Staff welfare

 

 

 

 

   Staff welfare

11

6

19

11

   Group health insurance and others

-

-

-

-

   Overseas group health insurance

24

13

41

25

Overseas travel expenses

92

75

189

146

Visa charges and others

16

31

66

53

Traveling and conveyance

22

17

42

31

Technical sub-contractors - subsidiaries

165

94

287

174

Technical sub-contractors - others

54

24

97

55

Software packages

 

 

 

 

   for own use

49

33

84

65

   for service delivery to clients

1

8

15

18

Professional charges

44

35

77

55

Telephone charges

29

22

55

38

Communication expenses

13

12

26

25

Power and fuel

23

16

44

30

Office maintenance

25

16

46

29

Guest house maintenance*

-

-

1

1

Commission and earnout charges

11

8

19

18

Brand building

15

12

27

22

Rent

12

8

23

18

Insurance charges

7

5

12

11

Computer maintenance

5

3

10

7

Printing and stationery

3

3

7

6

Consumables

7

4

12

7

Donations

5

5

9

8

Advertisements

4

4

5

8

Marketing expenses

5

3

8

6

Other miscellaneous expenses

-

-

-

-

Repairs to building

7

5

10

8

Repairs to plant and machinery

3

3

6

5

Rates and taxes

3

3

12

5

Professional membership and seminar participation fees

3

2

4

4

Postage and courier

2

1

5

3

Provision for post-sales client support and warranties

4

(4)

6

(3)

Books and periodicals

1

1

2

2

Provision for bad and doubtful debts

8

9

19

9

Provision for doubtful loans and advances

-

-

-

-

Commission to non-whole time directors

1

1

1

1

Sales promotion expenses

1

-

1

-

Freight charges

-

-

-

-

Bank charges and commission

1

1

1

1

Auditor's remuneration

 

 

 

 

   statutory audit fees

-

-

-

-

   certification charges

-

-

-

-

   others

-

-

-

-

   out-of-pocket expenses

-

-

-

-

Research grants

3

-

5

-

Miscellaneous expenses (refer to note 22.2.15)

1

1

2

1

 

2,219

1,465

4,212

2,785

Fringe Benefit Tax (FBT) in India included in the above

4

3

8

6
 

*for non training purposes


22.2.2. Capital commitments and contingent liabilities

in Rs. Crore

 

As at

Particulars

September 30, 2006

March 31, 2006

Estimated amount of unexecuted capital contracts

 

 

(net of advances and deposits)

514

509

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others

25

20

Claims against the company, not acknowledged as debts*

19

14

(Net of Amount Rs. 138 (Rs. 138) crore paid to statutory authorities)

 

 

Forward contracts outstanding

 

 

In US$

US $ 80,000,000

US $ 100,000,000

(Equivalent approximate in Rs. crore)

368

445

Range barrier options in US $

US $ 240,000,000

US $ 210,000,000

(Equivalent approximate in Rs. crore)

1,103

934

Range barrier options in Euro

Euro 10,000,000

Euro 3,000,000

(Equivalent approximate in Rs. crore)

58

16

Range barrier options in GBP

GBP 10,000,000

GBP 3,000,000

(Equivalent approximate in Rs. crore)

86

23

* Claims against the Company not acknowledged as debts include demands from Indian tax authorities for payment of additional tax of Rs.135 crore (135 crore), including interest of Rs 33 crore (Rs 33 crore), upon completion of their tax review for fiscal 2002 and 2003. The tax demand is mainly on account of disallowance of a portion of the deduction claimed by the company under Section 10A of the Income-tax Act. The deductible amount is determined by the ratio of "Export Turnover" to "Total Turnover". The disallowance arose from certain expenses incurred in foreign currency being reduced from Export Turnover but not reduced from Total Turnover.

The company is contesting the demand and management, including its tax advisers, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the company's financial position and results of operations.

"The company received the order of the appellate authority, the Commissioner of Income Tax (Appeals), Bangalore for the demand pertaining to fiscal 2002 and fiscal 2003 in April 2006 and August 2006 respectively. The position of the company has been substantially upheld by the appellate authority. "

22.2.3 Quantitative details

The company is primarily 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.

22.2.4. Imports (valued on the cost, insurance and freight basis)

in Rs. Crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

 

Capital goods

95

70

148

116

Software packages

2

4

3

4

 

97

74

151

120

22.2.5. Activity in foreign currency

in Rs. Crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

Earnings in foreign currency (on receipts basis)

 

 

 

 

   Income from software services and products

3,037

2,079

5,575

4,125

   Interest received on deposits with banks

4

2

7

2

Expenditure in foreign currency (on payments basis)

 

 

 

 

   Travel expenses

86

83

189

156

   Professional charges

20

12

32

18

   Technical Sub-Contractors - Subsidiaries

160

87

275

158

   Other expenditure incurred overseas for software development

938

611

1,870

1,243

Net earnings in foreign currency (on the receipts and payments basis)

 

 

 

 

   Net earnings in foreign exchange

1,837

1,289

3,216

2,553

22.2.6.Obligations on long-term, non-cancelable operating leases

The lease rentals charged during the period and maximum obligations on long-term non-cancelable operating leases payable as per the rentals stated in the respective agreements:

in Rs. Crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

 

Lease rentals recognized during the period

12

8

23

18

 

in Rs. Crore

Lease obligations

 

As at

 

 

September 30, 2006

 

March 31, 2006

 

 

 

 

 

Within one year of the balance sheet date

 

33

 

24

Due in a period between one year and five years

 

103

 

100

Due after five years

 

57

 

61

 

 

193

 

185

The operating lease arrangements extend upto a maximum of ten years from their respective dates of inception and relates to rented overseas premises and car rentals. Some of the lease agreements have a price escalation clause.

Fixed assets provided on operating lease to Infosys BPO, a subsidiary company, as at September 30, 2006 and March 31, 2006 :

in Rs. Crore

Particulars

Cost

Accumulated depreciation

Net book
value

Building

40

7

33

 

33

5

28

Plant and machinery

19

9

10

 

16

7

9

Computers

2

2

-

 

2

2

-

Furniture & fixtures

11

9

2

 

11

8

3

Total

72

27

45

 

62

22

40

The aggregate depreciation charged on the above for the quarter and half year ended September 30, 2006 amounted to Rs. 2 crore and Rs. 5 crore respectively (Rs 1 crore and Rs 1 crore for the quarter and half year ended September 30, 2005 respectively).

The company has non-cancelable operating leases on equipped premises leased to Infosys BPO. The leases extend for periods between 36 months and 58 months from the date of inception. The lease rentals received are included as a component of sale of shared services (Refer Note 22.2.7). Lease Rental commitments from Infosys BPO:

in Rs. Crore

Lease rentals

As at

 

September 30, 2006

March 31, 2006

 

 

 

Within one year of the balance sheet date

12

11

Due in a period between one year and five years

10

17

Due after five years

-

-

 

22

28

The rental income from Infosys BPO for the quarter and half year ended September 30, 2006 amounted to Rs. 4 crore and Rs. 8 crore respectively (Rs 3 crore and Rs 5 crore for the quarter and half year ended September 30, 2005 respectively).

22.2.7. Related party transactions

List of related parties:

 

 

 

Name of the related party

Country

Holding, as at

 

 

September 30, 2006

March 31, 2006

Infosys BPO Ltd

India

96.70%

71.74%

Infosys Technologies ( Australia), Pty Limited

Australia

100%

100%

Infosys Technologies ( China) Co. Limited

China

100%

100%

Infosys Consulting, Inc.

USA

100%

100%

Progeon s. r. o *

Czech Republic

96.70%

71.74%

* Progeon s.r.o is a wholly owned subsidiary of Infosys BPO Ltd.

The details of the related party transactions entered into by the company, in addition to the lease commitments described in note 22.2.6, for the quarter and half year ended September 30, 2006 and 2005 are as follows:

in Rs. Crore

Particulars

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

Capital transactions:

 

 

 

 

Financing transactions

 

 

 

 

   Infosys China

9

-

9

-

   Infosys Consulting

-

22

14

22

Rental deposit repaid

 

 

 

 

   Infosys BPO

-

2

-

2

Loans

 

 

 

 

   Infosys China

-

-

9

-

Revenue transactions:

 

 

 

 

   Purchase of services

 

 

 

 

      Infosys BPO (Including Progeon s.r.o)

3

-

5

1

      Infosys Australia

103

61

174

119

      Infosys China

10

2

16

3

      Infosys Consulting

47

30

89

51

   Interest Income

 

 

 

 

      Infosys China

-

-

1

-

   Sale of services

 

 

 

 

      Infosys Australia

1

1

2

3

      Infosys China

1

-

2

1

      Infosys Consulting

-

1

-

-

   Sale of shared services including facilities and personnel

 

 

 

 

      Infosys BPO (Including Progeon s.r.o)

7

4

15

9

      Infosys Consulting

1

1

2

2

Details of amounts due to or due from and maximum dues from subsidiaries for the quarter ended September 30, 2006 and year ended March 31,2006 :

in Rs. Crore

Particulars

As at

 

September 30, 2006

March 31, 2006

 

 

 

Loans and advances

 

 

   Infosys China

25

20

Maximum balances of loans and advances

 

 

   Infosys BPO (Including Progeon s.r.o)

1

3

   Infosys Australia

24

28

   Infosys China

25

20

   Infosys Consulting

14

-

During the quarter and half year ended September 30, 2006, an amount of Rs. 5 crore and Rs 9 crore respectively (Rs 4 crore and Rs 7 crore for the quarter and half year ended September 30, 2005 respectively ) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.

22.2.8. Transactions with key management personnel

Key Management personnel comprise directors and statutory officers.

Particulars of remuneration and other benefits paid to key management personnel during the quarter and half year ended September 30, 2006 and September 30, 2005 have been detailed in Schedule 22.3 since the amounts are less than a crore.

22.2.9. Research and development expenditure

in Rs. Crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

 

Revenue

41

25

73

51

 

41

25

73

51

22.2.10. Dues to small-scale industrial undertakings

As at September 30, 2006 and March 31, 2006, the company has no outstanding dues to small-scale industrial undertaking.

22.2.11. Stock option plans
The company has two stock option plans that are currently operational.

1998 Stock Option Plan ("the 1998 Plan)

The 1998 Plan was approved by the board of directors in December 1997 and by the shareholders in January 1998, and is for issue of 1,17,60,000 ADSs representing 1,17,60,000 equity shares. The 1998 Plan automatically expires in January 2008, unless terminated earlier. All options under the 1998 Plan are exercisable for ADSs representing equity shares. A compensation committee comprising independent members of the Board of Directors administers the 1998 Plan. All options have been granted at 100% of fair market value.

 

Number of options granted, exercised and forfeited during the

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

 

Options outstanding, beginning of period

42,49,610

59,08,936

45,46,480

61,08,580

Granted

-

-

-

-

Less: exercised

(495,021)

(376,496)

(675,571)

(547,460)

      forfeited

(21,040)

(38,976)

(137,360)

(67,656)

Options outstanding, end of period

37,33,549

54,93,464

37,33,549

54,93,464

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 plan in June 1999, which provides for the issue of 5,28,00,000 equity shares to the employees. The compensation committee administers the 1999 Plan. Options were issued to employees at an exercise price that is not less than the fair market value.

 

Number of options granted, exercised and forfeited during the

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

Options outstanding, beginning of period

1,67,52,788

2,64,62,242

1,91,79,074

2,81,09,874

Granted

-

-

-

-

Less: exercised

(1,603,628)

(2,096,794)

(3,999,470)

(3,630,466)

      forfeited

(22,821)

(117,072)

(53,265)

(231,032)

Options outstanding, end of period

1,51,26,339

2,42,48,376

1,51,26,339

2,42,48,376

The aggregate options considered for dilution are set out in note 22.2.20

22.2.12. Income taxes
The provision for taxation includes tax liabilities in India on the company's global income as reduced by exempt incomes and any tax liabilities arising overseas on income sourced from those countries.

Most of Infosys' operations are conducted through Software Technology Parks ("STPs). Income from STPs is tax exempt for the earlier of 10 years commencing from the fiscal year in which the unit commences software development, or March 31, 2009.

Infosys now also has operations in a Special Economic Zone ("SEZ"). Income from SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions.

22.2.13. Cash and bank balances

Details of balances as on balance sheet dates and the maximum balances during the period with non-scheduled banks:-

in Rs. crore

Balances with non-scheduled banks

As at

 

September 30, 2006

March 31, 2006

In current accounts

 

 

   ABN Amro Bank , Taipei, Taiwan

1

1

   Bank of America, Palo Alto, USA

139

229

   Bank of China, Beijing, China

-

-

   Citibank NA, Melbourne, Australia

52

39

   Citibank NA, Hongkong

-

-

   Citibank NA, Singapore

-

-

   Citibank NA, Tokyo, Japan

-

1

   Citibank NA, Sharjah, UAE

-

-

   Deutsche Bank, Brussels, Belgium

9

8

   Deutsche Bank, Frankfurt, Germany

4

21

   Deutsche Bank, Amsterdam, Netherlands

1

4

   Deutsche Bank, Paris, France

1

1

   Deutsche Bank, Spain

1

-

   Deutsche Bank, Zurich, Switzerland

1

6

   HSBC Bank PLC, Croydon, UK

69

60

   ICICI Bank UK Ltd., London, UK

-

-

   Nordbanken, Stockholm, Sweden

1

-

   Nova Scotia Bank, Toronto, Canada

-

-

   Royal Bank of Canada, Toronto, Canada

6

4

   Svenska Handels Bank, Stockholm, Sweden

-

1

   UFJ Bank, Tokyo, Japan

-

-

   ICICI Bank - Toronto, Canada

-

-

 

 

 

 

285

375


in Rs. crore

Maximum balance with non-scheduled banks during the period

Quarter ended

Half-year ended

September 30,

September 30,

 

2006

2005

2006

2005

In current accounts

 

 

 

 

   ABN Amro Bank , Taipei, Taiwan

1

1

1

1

   Bank of America, Palo Alto, USA

614

264

614

271

   Bank of China, Beijing, China

-

-

-

-

   Citibank NA, Melbourne, Australia

52

37

52

54

   Citibank NA, Hongkong

-

-

-

-

   Citibank NA, Singapore

-

-

-

-

   Citibank NA, Tokyo, Japan

9

36

13

36

   Citibank NA, Sharjah, UAE

-

-

-

-

   Deutsche Bank, Brussels, Belgium

23

22

24

31

   Deutsche Bank, Frankfurt, Germany

31

33

31

33

   Deutsche Bank, Amsterdam, Netherlands

4

1

5

1

   Deutsche Bank, Paris, France

5

5

6

5

   Deutsche Bank, Spain

1

-

1

-

   Deutsche Bank, Zurich, Switzerland

26

13

26

13

   HSBC Bank PLC, Croydon, UK

237

41

237

41

   ICICI Bank UK Ltd., London, UK

-

14

-

33

   Nordbanken, Stockholm, Sweden

1

-

1

-

   Nova Scotia Bank, Toronto, Canada

-

-

-

-

   Royal Bank of Canada, Toronto, Canada

37

9

37

13

   Svenska Handels Bank, Stockholm, Sweden

1

1

1

1

   UFJ Bank, Tokyo, Japan

34

28

34

28

   ICICI Bank - Toronto, Canada

-

5

-

7

The cash and bank balances include interest accrued but not due on fixed deposits amounting to Rs. 5 crore as at September 30, 2006 (as at March 31, 2006 Rs. 25 crore).

22.2.14. Loans and advances

"Advances mainly comprises prepaid travel and per-diem expenses and advances to vendors.

Deposits with financial institutions:-

in Rs. crore
Particulars
As at
 
September 30, 2006
March 31, 2006
Deposits with financial institutions:    
   Housing Development Finance Corporation Limited ("HDFC")
502
500
   Life Insurance Corporation of India
121
80
623
580
Interest accrued but not due (included above)
2
-

Maximum balance held as deposits with financial institutions:-

in Rs. crore

 

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

Deposits with financial institutions:

 

 

 

 

Housing Development Finance Corporation Limited ("HDFC")

502

201

502

201

Life Insurance Corporation of India

130

105

130

105

Mr. Deepak M. Satwalekar, Director, is also a Director of HDFC. Except as director in this financial institution, he has no direct interest in any transactions.

Deposit with LIC represents amount deposited to settle employee benefit/ leave obligations as and when they arise during the normal course of business.

22.2.15. Fixed assets
Profit / (loss) on disposal of fixed assets during the quarter and half year ended September 30, 2006 and September 30, 2005 are less than Rs. 1 crore and accordingly disclosed in note 22.3

Depreciation charged to the profit and loss account relating to assets costing less than Rs. 5,000/- each and other low value assets.

in Rs. crore

 

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

 

 

 

 

 

Charged during the period

5

8

6

9

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 on 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. Additionally, certain land has been purchased for which the company has possession certificate for which sale deeds are yet to be executed as at September 30, 2006.

22.2.16. Details of Investments

in Rs. crore

Particulars

As at

 

September 30, 2006

March 31, 2006

Long- term investments

 

 

CiDRA Corporation, USA

 

 

   Nil (14,124) Series D convertible preferred stock at US$ 90 each, fully paid, par value US$ 0.01 each

-

5

   Nil (72,539) Class A common stock, par value US$ 0.001 each

-

-

   Nil (2,139) Non voting redeemable preferred stock, par value US$ 0.01 each

-

-

CyVera Corporation, USA

 

 

   Nil (25,641) , Series A preferred stock par value US$0.001

-

-

OnMobile Systems Inc., (formerly Onscan Inc.) USA

 

 

   1,00,000 (1,00,000) common stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each

-

-

   1,00,000 (1,00,000) Series A voting convertible preferred stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each

-

-

   44,00,000 (44,00,000) Series A non-voting convertible preferred stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each

9

9

M-Commerce Ventures Pte Ltd, Singapore

 

 

   100 (100) ordinary shares of Singapore $ 1 each, fully paid, par value Singapore $ 1 each

-

-

   684 (684) redeemable preference shares of Singapore $ 1, fully paid, at a premium of Singapore $ 1,110 per redeemable preferred stock

2

2

   216 (216) redeemable preference shares of Singapore $ 1, fully paid, par value Singapore $ 1 each

-

-

Illumina Inc.

 

 

   Nil (758) common stock at USD 0.01 per share

-

-

 

11

16

Less: Provision for investment

11

14

 

-

2

Current investments - Liquid Mutual Funds

in Rs. crore

Particulars

Number of units as at

Amount as at

 

September 30, 2006

March 31, 2006

September 30, 2006

March 31, 2006

 

 

 

 

 

Birla Cash Plus - Institutional Premium - Fortnightly Dividend Payout

14,90,89,761

9,94,77,727

150

100

CanLiquid Fund - Institutional Weekly Dividend

14,43,13,867

5,97,28,831

145

60

DBS Chola Liquid Institutional Plus - Weekly Dividend

42,187,329

4,63,08,937

50

54

DWS Insta Cash Plus Fund - Institutional Plan - Monthly Dividend

10,94,19,305

-

110

-

DSP Merill Lynch Liquidity Fund Weekly - Institutional Plan - Dividend

14,98,166

-

150

-

HDFC Liquid Fund - Premium Plus Plan - Dividend

121,089,913

-

150

-

HSBC Cash Fund - Institutional Plus - Monthly Dividend

149,701,909

-

150

-

ING Vysya Liquid Fund Institutional - Weekly Dividend Option

148,276,228

7,88,74,225

149

79

Kotak Liquid (Institutional) - Weekly Dividend

149,384,077

-

150

-

Principal Cash Management Fund Liquid Option - Institutional Plan - Dividend Payout - Monthly

149,908,556

-

150

-

Prudential ICICI Institutional Liquid Plan - Super Institutional Monthly Dividend

-

-

-

-

Sundaram BNP Paribas Money Fund Super Institutional Monthly Dividend

49,260,113

2,96,83,287

50

30

UTI Liquid Cash Plan Institutional - Monthly Income Option - Payout

1,464,979

14,77,424

150

150

TATA Liquid Super High Investment Fund - Monthly Dividend

1,309,379

13,31,587

150

150

ABN Amro Cash Fund - Institutional Monthly Dividend

35,000,000

-

35

-

DWS Money Plus Fund Regular Plan Monthly Dividend

39,641,247

-

40

-

Templeton India Treasury Management Account Super Institutional Plan Weekly
Dividend Payout

1,475,293

-

150

-

Prudential ICICI Institutional Liquid Plan - Super Institutional Monthly Dividend

149,552,344

-

150

-

JM High Liquidity Fund - Super Institutional Plan - Weekly Dividend

24,776,516

-

25

-

Reliance Liquidity Fund - Monthly Dividend Option

140,952,815

-

150

-

SBI Mangnum Institutional Income - Savings - Weekly Dividend

137,238,413

-

145

-

Standard Chartered Liquidity Manager - Plus - Monthly Dividend

1,495,898

-

150

-

LICMF Liquid Fund - Dividend Plan

137,520,214

5,54,51,349

151

61

 

 

 

2,699

684

 

 

 

 

 

At cost

 

 

1,955

624

At fair value

 

 

744

60

 

 

 

2,699

684

 

Details of investments in and disposal of securities during the quarter and half year ended September 30, 2006 and 2005:-

in Rs. crore

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

Investment in securities

 

 

 

 

   Subsidiaries

9

22

553

22

   Long-term investments

-

-

-

-

   Liquid Mutual funds

1,240

1,320

2,890

1,558

 

1,249

1,342

3,443

1,580

Redemption / Disposal of Investment in securities

 

 

 

 

   Subsidiaries

-

-

-

-

   Long-term investments

-

-

6

-

   Liquid Mutual funds

75

330

880

470

  

75

330

886

470

Net movement in investments

1,174

1,012

2,557

1,110

Investment purchased and sold during the half year ended September 30, 2006:-

in Rs. crore

Name of the fund

Face value Rs /-

Units

Cost

 

 

 

 

Templeton India Treasury Management Fund, Super IP

1000

1,186,698

121

HSBC Cash Fund - Institutional Plus

10

95,103,550

95

Kotak Liquid - Institutional Premium

10

74,717,568

75

HDFC Liquid Fund - Premium Plus Plan

10

20,148,779

25

Reliance Liquidity Fund

10

142,248,023

150

Particulars of investments made during the quarter and half year ended September 30, 2006 and 2005:-

in Rs. crore

Particulars of investee companies

Quarter ended

Half-year ended

 

September 30,

September 30,

 

2006

2005

2006

2005

Infosys Consulting Inc., USA

-

22

14

22

Infosys China

9

-

9

-

Infosys BPO Ltd

-

-

530

-

 

9

22

553

22

 

Conversion of Cumulative Preference shares in Infosys BPO Ltd
Infosys BPO had issued an aggregate of 87,50,000 0.005% Cumulative Convertible Preference shares of par value Rs. 100 each to Citicorp International Finance Corporation ("CIFC") for an aggregate consideration of Rs. 94 crore as per the shareholder's agreement as of March 31, 2005. Each preference share was convertible to one equity share of par value Rs. 10/-. On June 30, 2005 CIFC exercised its rights under the shareholder's agreement and converted the preference shares to equity shares. Pursuant to the conversion, the equity share capital of Infosys BPO increased by Rs 9 crore to Rs 33 crore and the share premium increased by Rs. 79 crore to Rs. 85 crore. On June 30, 2006, the company completed the acquisition of the entire holdings (87,50,000 shares amounting to 23% of the equity on a fully diluted basis) of CIFC in Infosys BPO for a consideration amounting to Rs. 530 crore (US$ 115.13 million). The net consideration of Rs. 309 crore, after withholding taxes of Rs. 221 crore was remitted to CIFC on the same date.

Provisions for investments
The Company evaluates all investments for any diminution in their carrying values that is other than temporary. The amount of provision made on trade investments during the quarter and half year ended September 30, 2006 amounted to Rs. Nil and Rs. 2 crore respectively (for the quarter and half year ended September 30, 2005 Rs. Nil and Rs. Nil respectively).

The company provided Rs. 0.03 crore and Rs. 1 crore during the quarter and half year ended on September 30, 2006 (Rs. 1 crore and and Rs. 1 crore for the quarter and half year ended September 30, 2005) on revision of the carrying amount of non-trade current investments to fair value.

22.2.17. Segment reporting
The Group's operations predominantly relate to providing end-to-end business solutions that leverage technology thereby enabling clients to enhance business performance, delivered to customers globally operating in various industry segments. Accordingly, revenues represented along industry classes comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments. These are as set out in the note on significant accounting policies.

Industry segments at the company are primarily financial services comprising customers providing banking, finance and insurance services; manufacturing companies; companies in the telecommunications and the retail industries; and others such as utilities, transportation and logistics companies.

Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the costs are categorized in relation to the associated turnover of the segment. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying services are used interchangeably. The company believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated and directly charged against total income.

Fixed assets used in the company's business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.

Customer relationships are driven based on the location of the respective client. North America comprises the United States of America, Canada and Mexico; Europe includes continental Europe (both the east and the west), Ireland and the United Kingdom; and the Rest of the World comprising all other places except, those mentioned above and India.

Geographical revenues are segregated based on the location of the customer who is invoiced or in relation to which the revenue is otherwise recognized.

Industry segments

Quarter ended September 30, 2006 and 2005:-

in Rs. crore

 

Financial services

Manufacturing

Telecom

Retail

Others

Total

Revenues

1,230

465

592

312

674

3,273

 

762

303

345

238

522

2,170

Identifiable operating expenses

529

201

251

142

281

1,404

 

318

134

139

97

229

917

Allocated expenses

306

116

147

78

168

815

 

193

76

87

60

132

548

Segmental operating income

395

148

194

92

225

1,054

 

251

93

119

81

161

705

Unallocable expenses

 

 

 

 

 

110

 

 

 

 

 

 

90

Operating income

 

 

 

 

 

944

 

 

 

 

 

 

615

Other income (expense), net

 

 

 

 

 

66

 

 

 

 

 

 

44

Net profit before taxes and exceptional items

 

 

 

 

 

1,010

 

 

 

 

 

 

659

Income taxes

 

 

 

 

 

114

 

 

 

 

 

 

67

Net profit after taxes and before exceptional items

 

 

 

 

 

896

 

 

 

 

 

 

592

Income on sale of investments (net of taxes)

 

 

 

 

 

-

 

 

 

 

 

 

-

Net profit after taxes and exceptional items

 

 

 

 

 

896

 

 

 

 

 

 

592

Half-year ended September 30, 2006 and 2005:-

in Rs. crore

 

Financial services

Manufacturing

Telecom

Retail

Others

Total

Revenues

2,278

879

1,075

604

1,304

6,140

 

1,465

575

666

435

996

4,137

Identifiable operating expenses

1,014

380

446

271

557

2,668

 

617

260

277

182

431

1,767

Allocated expenses

573

221

270

152

328

1,544

 

361

141

163

107

246

1,018

Segmental operating income

691

278

359

181

419

1,928

 

487

174

226

146

319

1,352

Unallocable expenses

 

 

 

 

 

207

 

 

 

 

 

 

165

Operating income

 

 

 

 

 

1,721

 

 

 

 

 

 

1,187

Other income (expense), net

 

 

 

 

 

192

 

 

 

 

 

 

75

Net profit before taxes and exceptional items

 

 

 

 

 

1,913

 

 

 

 

 

 

1,262

Income taxes

 

 

 

 

 

218

 

 

 

 

 

 

146

Net profit after taxes and before exceptional items

 

 

 

 

 

1,695

 

 

 

 

 

 

1,116

Income on sale of investments (net of taxes)

 

 

 

 

 

6

 

 

 

 

 

 

-

Net profit after taxes and exceptional items

 

 

 

 

 

1,701

 

 

 

 

 

 

1,116

Geographic segments

Quarter ended September 30, 2006 and 2005:-

in Rs. crore
 
North America
Europe
India
Rest of the World
Total
Revenues
2,103
828
53
289
3,273
 
1,437
510
33
190
2,170
Identifiable operating expenses
908
327
9
160
1,404
 
602
201
18
96
917
Allocated expenses
524
206
13
72
815
 
363
129
8
48
548
Segmental operating income
671
295
31
57
1,054
 
472
180
7
46
705
Unallocable expenses        
110
         
90
Operating income        
944
         
615
Other income (expense), net        
66
         
44
Net profit before taxes and exceptional items        
1,010
         
659
Income taxes        
114
         
67
Net profit after taxes and before exceptional items        
896
         
592
Income on sale of investments (net of taxes)        
-
         
-
Net profit after taxes and exceptional items        
896
      
592

Half-year ended September 30, 2006 and 2005:-

in Rs. crore

 

North America

Europe

India

Rest of the World

Total

Revenues

3,953

1,566

94

527

6,140

 

2,703

975

82

377

4,137

Identifiable operating expenses

1,730

623

32

283

2,668

 

1,155

389

38

185

1,767

Allocated expenses

995

394

23

132

1,544

 

665

240

20

93

1,018

Segmental operating income

1,228

549

39

112

1,928

 

883

346

24

99

1,352

Unallocable expenses

 

 

 

 

207

 

 

 

 

 

165

Operating income

 

 

 

 

1,721

 

 

 

 

 

1,187

Other income (expense), net

 

 

 

 

192

 

 

 

 

 

75

Net profit before taxes and exceptional items

 

 

 

 

1,913

 

 

 

 

 

1,262

Income taxes

 

 

 

 

218

 

 

 

 

 

146

Net profit after taxes and before exceptional items

 

 

 

 

1,695

 

 

 

 

 

1,116

Income on sale of investments (net of taxes)

 

 

 

 

6

 

 

 

 

 

-

Net profit after taxes and exceptional items

 

 

 

 

1,701

 

 

 

 

 

1,116

22.2.18. Provision for doubtful debts
Periodically, the company evaluates all customer dues to the company for collectibility. The need for provisions is assessed based on various factors including collectibility of specific dues, risk perceptions of the industry in which the customer operates, general economic factors, which could affect the customer's ability to settle. The company normally provides for debtor dues outstanding for 180 days or longer as at the balance sheet date. As at September 30, 2006 the company has provided for doubtful debts of Rs. 1 crore ( Rs 2 crore as at March 31, 2006) on dues from certain customers although the outstanding amounts were less than 180 days old, since the amounts were considered doubtful of recovery. The company pursues the recovery of the dues, in part or full.

22.2.19. Dividends remitted in foreign currencies
The company remits the equivalent of the dividends payable to the holders of ADS ("ADS holders) in Indian Rupees to the depository bank, which is the registered shareholder on record for all owners of the company's ADSs. The depositary bank purchases the foreign currencies and remits dividends to the ADS holders.

Particulars of dividends remitted:-

in Rs. crore

Particulars

Number of shares to which the dividends relate

Quarter ended

Half-year ended

 

 

September 30,

September 30,

 

 

2006

2005

2006

2005

Final dividend for Fiscal 2005

3,77,66,327

-

-

-

25

Final dividend for Fiscal 2006

3,85,47,135

-

-

33

-

Silver Jubilee special dividend

3,85,47,135

-

-

116

-

22.2.20. Reconciliation of basic and diluted shares used in computing earnings per share
At the annual general meeting held on June 10, 2006, the shareholders approved a 1:1 bonus issue (stock dividend) for all shareholders including the ADR holders i.e. one additional equity share for every one existing share held by the members by capitalizing a part of the general reserves. The record date for the bonus issue was July 14, 2006 and shares were allotted on July 15, 2006. All basic and diluted shares used in determining earnings per share are after considering the effect of bonus issue.

 

 

Quarter ended

Half-year ended

Particulars

September 30,

September 30,

 

2006

2005

2006

2005

Number of shares considered as basic weighted average shares outstanding

55,47,72,296

54,42,02,438

55,37,98,511

54,30,96,662

Add: Effect of dilutive issues of shares/stock options

1,29,73,744

1,58,58,862

1,31,43,886

1,57,93,928

Number of shares considered as weighted average shares and potential shares outstanding

56,77,46,039

56,00,61,300

56,69,42,396

55,88,90,590

22.2.21 Exceptional items
During the year ended March 31, 2005 the company sold its entire investment in Yantra Corporation, USA (Yantra) for a total consideration of US $12.57 million. An amount of Rs. 49 crore representing 90% of the consideration was received by the company and the balance amount was deposited in Escrow to indemnify any contractual contingencies.

During the half year ended Sep 30, 2006, the company received the balance amount of Rs. 5 crore on fulfillment of the Escrow obligations. Since the carrying value of the investment is nil, the entire proceeds of Rs. 5 crore (net of taxes, as applicable) has been recognized in the profit and loss account as an exceptional item.

During the half year ended Sep 30, 2006, the company received Rs. 1 crore from CiDRA Corporation towards redemption of shares on recapitalisation. The remainder of investment was written off against provision made earlier.

22.2.22 Gratuity Plan
Effective April 1, 2006 the company adopted the revised accounting standard on employee benefits. Pursuant to the adoption, the transitional obligations of the company amounted to Rs. 13 crore. As required by the standard, the obligation has been recorded with the transfer of Rs.13 crore to general reserves.

The following table set out the status of the gratuity plan as required under AS 15.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

in Rs. crores

Particulars

As at

 

September 30, 2006

Obligations at period beginning

180

Service Cost

22

Interest cost

7

Actuarial (gain)/loss

(1)

Benefits paid

(6)

Obligations at period end

202

 

 

Defined benefit obligation liability as at the balance sheet is wholly funded by the company

 

 

 

Change in plan assets

 

Plans assets at period beginning, at fair value

167

Expected return on plan assets

7

Actuarial gain/(loss)

2

Contributions

40

Benefits paid

(6)

Plans assets at period end, at fair value

210

 

 

Reconciliation of present value of the obligation and the fair value of the plan assets:

 

Fair value of plan assets at the end of the year

210

Present value of the defined benefit obligations at the end of the period

202

Asset recognized in the balance sheet

8

 

 

Gratuity cost for the period

 

Service cost

22

Interest cost

7

Expected return on plan assets

(7)

Actuarial (gain)/loss

(2)

Net gratuity cost

19

 

 

Investment details of plan assets

 

100% of the plan assets are invested in debt instruments.

 

 

 

Actual return on plan assets:

9

 

 

Assumptions

 

Interest rate

7.62%

Estimated rate of return on plan assets

7.62%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

22.2.23 Cash flow statement

22.2.23.a
The balance of cash and cash equivalents includes Rs. 3 crore as at September 30, 2006 (Rs. 3 crore as at March 31, 2006) set aside for payment of dividends.

22.2.23.b Restricted Cash
Deposits with financial institutions and body corporate as at September 30, 2006 include an amount of Rs. 121 crore (Rs. 80 crore as at March 31, 2006) deposited with Life Insurance Corporation of India to settle employee benefit/ leave obligations as and when they arise during the normal course of business. This amount is considered as restricted cash and is hence not considered "cash and cash equivalents".

22.3 Details of rounded off amounts

The financial statements are represented in Rs. crore as per the approval received from Department of Company Affairs "DCA" earlier. Those items which were not represented in the financial statement due to rounding off to the nearest Rs. crore are given below.

  Balance Sheet Items
in Rs. crores
Schedule
 Description
As at
   
September 30, 2006
March 31, 2006
       
3
 Fixed assets    
  Additions    
     Vehicles
-
0.75
  Deductions/retirements    
     Land - free-hold
-
0.01
     Plant and Machinery
0.06
-
     Furniture and fixtures
0.05
-
     Buildings
-
0.80
  Depreciation & Amortization    
  For the period    
     Vehicles
-
0.19
  Deductions/retirements    
     Plant and Machinery
0.04
-
     Furniture and fixtures
0.05
-
8
 Unsecured, considered doubtful    
  Loans and advances to employees    
     Provision for doubtful loans and advances to employees
0.53
0.44
22.2.6    
 Computers on operating lease to Infosys BPO    
        - Net Book Value
0.17
0.17
22.2.13
 Balances with non-scheduled banks    
        - Bank of China, Beijing, China
-
0.02
        - Citibank NA, Singapore
0.14
0.19
        - Citibank NA, Tokyo, Japan
0.07
1.19
        - Citibank NA, Sharjah, UAE
0.08
0.04
        - Nordbanken, Stockholm, Sweden
0.60
0.09
        - Svenska Handels Bank, Stockholm, Sweden
0.18
0.51
        - UFJ Bank, Tokyo, Japan
0.26
0.09
22.2.14
 Loans & Advances    
  Interest accrued but not due - Deposits with Financial Institutions
1.75
0.10
22.2.16
 Long- term investments    
        Onmobile (common stock)
0.19
0.19
        Onmobile (Series A - voting)
0.19
0.19
       

 

Profit & Loss Items

in Rs. crores

 

 

Quarter ended

Half-year ended

Schedule

Description

September 30,

September 30,

 

 

2006

2005

2006

2005

 

 

 

 

 

 

 

Profit & Loss account

 

 

 

 

 

Provision for investments

0.02

0.57

2.79

0.63

 

Residual Dividend Paid

-

-

4.23

0.25

 

Additional Dividend Tax

-

-

0.60

0.03

12

Selling & Marketing expenses

 

 

 

 

 

Contribution to Provident and other funds

0.48

0.35

0.93

0.47

 

Staff welfare

-

0.31

-

0.41

 

Consumables

0.09

0.07

0.18

0.13

 

Software packages for own use

0.42

-

0.42

0.06

 

Communication expenses

0.17

0.20

0.32

0.26

 

Printing and stationery

0.30

0.44

0.70

0.92

 

Advertisements

1.22

0.32

2.02

0.80

 

Office maintenance

0.01

0.06

0.12

0.29

 

Computer Maintenance

0.05

-

0.05

-

 

Sales promotion expenses

0.61

0.22

0.91

0.45

13

General and Administration expenses

 

 

 

 

 

Provision for doubtful loans and advances

(0.08)

0.07

0.07

0.11

 

Overseas group health insurance

(0.05)

0.06

(0.18)

0.19

 

Visa Charges Others

0.49

30.23

1.15

52.87

 

Guest house maintenance

0.43

0.49

1.02

0.99

 

Commission to non-whole time directors

0.51

0.32

0.98

0.63

 

Freight charges

0.23

0.23

0.45

0.41

 

Bank charges and commission

0.58

0.40

0.87

0.56

 

Research grants

3.29

0.12

4.98

0.21

 

Auditor's remuneration

 

 

 

 

 

      Statutory audit fees

0.16

0.09

0.26

0.18

 

      Others

-

0.84

-

1.22

 

      Out of Pocket Expenses

0.02

-

0.04

0.01

 

 

 

 

 

 

14

Other Income, Net

 

 

 

 

 

      Exchange differences

10.71

0.46

63.72

(8.99)

22.2.1

Aggregate expenses

 

 

 

 

 

Provision for doubtful loans and advances

(0.08)

0.07

0.07

0.11

 

Commission to non-whole time directors

0.51

0.32

0.98

0.63

 

Sales promotion expenses

0.61

0.22

0.91

0.45

 

Guesthouse maintenance

0.43

0.49

1.02

0.99

 

Freight charges

0.23

0.23

0.45

0.41

 

Bank charges and commission

0.58

0.40

0.87

0.56

 

Auditor's remuneration

 

 

 

 

 

      Statutory audit fees

0.16

0.09

0.26

0.18

 

      Others

-

0.84

-

1.22

 

      Out of Pocket Expenses

0.02

-

0.04

0.01

 

Research grants

3.29

0.12

4.98

0.21

22.2.7
 Related party transactions
  Revenue transactions:
  Interest Income -Infosys China
0.33
-
0.60
-
  Sale of services - Infosys Consulting
(0.25)
-
0.22
-
22.2.13.
 Maximum balance with non-scheduled banks
        - Bank of China, Beijing China
0.02
0.04
0.02
0.08
        - Citibank NA, Hong Kong
-
0.30
-
0.30
        - Citibank NA, Singapore
0.17
0.30
0.19
0.37
        - Citibank NA, Sharjah, UAE      
0.12
0.14
0.18
0.15
        - Deutsche Bank, Amsterdam, Netherlands
3.77
1.30
5.20
1.30
        - Nordbanken, Stockholm, Sweden
0.64
0.10
0.64
0.12
        -Nova Scotia Bank, Canada
0.01
0.01
0.02
0.02
        - UFJ Bank, Tokyo, Japan
33.79
28.15
33.79
28.15
22.2.15.
 Profit / (loss) on disposal of fixed assets
  Profit on disposal of fixed assets, included in miscellaneous income
0.04
0.18
0.07
0.23
  Loss on disposal of fixed assets, included in miscellaneous expenses
(0.01)
(0.03)
(0.02)
(0.03)
 Profit/(Loss) on disposal of fixed assets,net
0.03
0.15
0.05
0.20

Cash Flow Statment Items

in Rs. crores

Schedule

Description

For the Period Ended

 

 

September 30, 2006

September 30, 2005

 

 

 

 

Cash flow

(Profit)/ loss on sale of fixed assets

(0.05)

(0.02)

statement

Provision for investments

2.79

0.63

 

Proceeds on disposal of fixed assets

0.16

0.25


Transactions with key management personnel

Key management personnel comprise our directors and statutory officers.

Particulars of remuneration and other benefits paid to key management personnel during the quarter and half year ended September 30, 2006 and September 30,2005 ( figures in italics are corresponding to the quarter and half year ended September 30, 2005) :

in Rs. crores

Name

Salary

Contributions to provident and other funds

Perquisites and incentives

Total Remuneration

Chairman and Chief Mentor

 

 

 

 

N R Narayana Murthy *

0.02

0.01

0.10

0.13

 

0.03

0.01

0.05

0.09

 

0.06

0.02

0.21

0.29

 

0.06

0.02

0.11

0.19

Chief Executive Officer and Managing Director

 

 

 

 

Nandan M Nilekani

0.04

0.01

0.08

0.13

 

0.03

0.01

0.05

0.09

 

0.08

0.02

0.19

0.29

 

0.06

0.02

0.11

0.19

President, Chief Operating Officer and Joint Managing Director

 

 

 

 

S Gopalakrishnan

0.04

0.01

0.08

0.13

 

0.03

0.01

0.05

0.09

 

0.08

0.02

0.20

0.30

 

0.06

0.02

0.12

0.20

Whole-time Directors

 

 

 

 

K Dinesh

0.03

0.01

0.08

0.12

 

0.03

0.01

0.05

0.09

 

0.06

0.02

0.19

0.27

 

0.06

0.02

0.10

0.18

S D Shibulal

 

 

 

 

 

0.04

0.01

0.08

0.13

 

0.23

-

0.14

0.37

 

0.07

0.02

0.16

0.25

 

0.45

-

0.14

0.59

T V Mohandas Pai

 

 

 

 

 

0.06

0.01

0.14

0.21

 

0.05

0.02

0.11

0.18

 

0.12

0.04

0.35

0.51

 

0.10

0.04

0.22

0.36

Srinath Batni

 

 

 

 

 

0.05

0.01

0.12

0.18

 

0.04

0.02

0.10

0.16

 

0.10

0.02

0.30

0.42

 

0.08

0.03

0.19

0.30

Chief Financial Officer

V Balakrishnan

0.05

0.01

0.09

0.15

 

0.03

0.01

0.08

0.12

 

0.09

0.02

0.27

0.38

 

0.06

0.02

0.22

0.30

* Wholetime director till August 20, 2006

 

 

 

 


 

Name

Commission

Sitting fees

Reimbursement of expenses

Total remuneration

Non-Whole time Directors

 

 

 

 

Deepak M Satwalekar

0.06

-

-

0.06

 

0.05

-

-

0.05

 

0.12

-

-

0.12

 

0.09

0.01

-

0.10

Prof.Marti G Subrahmanyam

0.06

-

0.02

0.08

 

0.04

-

0.02

0.06

 

0.12

-

0.05

0.17

 

0.08

-

0.07

0.15

Philip Yeo

-

-

-

-

 

-

-

-

-

 

-

-

-

-

 

0.03

-

-

0.03

David L Boyles

0.06

-

-

0.06

 

0.03

-

-

0.03

 

0.12

-

-

0.12

 

0.03

-

-

0.03

Dr.Omkar Goswami

0.05

-

0.01

0.06

 

0.04

0.01

0.01

0.06

 

0.10

-

0.01

0.11

 

0.08

0.01

0.02

0.11

Sen. Larry Pressler

0.02

-

-

0.02

 

0.04

-

-

0.04

 

0.03

-

0.03

0.06

 

0.08

-

-

0.08

Rama Bijapurkar

0.06

-

-

0.06

 

0.04

-

-

0.04

 

0.12

-

0.01

0.13

 

0.08

-

-

0.08

Claude Smadja

0.06

-

0.04

0.10

 

0.04

-

0.05

0.09

 

0.12

-

0.13

0.25

 

0.08

-

0.08

0.16

Sridar A Iyengar

0.06

-

0.01

0.07

 

0.04

-

0.04

0.08

 

0.12

-

0.08

0.20

 

0.08

-

0.11

0.19

Jeffrey Lehman

0.05

-

-

0.05

 

-

-

-

-

 

0.10

-

-

0.10

 

-

-

-

-

N R Narayana Murthy *

0.03

-

-

0.03

 

-

-

-

-

 

0.03

-

-

0.03

 

-

-

-

-

* Appointed as Additional Director effective August 21, 2006