6-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington , D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended December 31, 2006

Commission File Number 000-25383

Infosys Technologies Limited

(Exact name of Registrant as specified in its charter)

Not Applicable.
(Translation of Registrant's name into English)

Bangalore, Karnataka, India
(Jurisdiction of incorporation or organization)

Electronics City, Hosur Road, Bangalore - 560 100, Karnataka, India. +91-80-2852-0261
(Address of principal executive offices)

Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F þ Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934.

Yes o Noþ

If "Yes" is marked, indicate below the file number assigned to registrant in connection with Rule 12g 3-2(b).

Not applicable.

TABLE OF CONTENTS

EXHIBIT 99.1

EXHIBIT 99.2

EXHIBIT 99.3

EXHIBIT 99.4

EXHIBIT 99.5

EXHIBIT 99.6

EXHIBIT 99.7

EXHIBIT 99.8

EXHIBIT 99.9

EXHIBIT 99.10

EXHIBIT 99.11

EXHIBIT 99.12

DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

We hereby furnish the United States Securities and Exchange Commission with copies of the following information concerning our public disclosures regarding our results of operations and financial condition for the quarter ended December 31, 2006. The following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On January 11, 2007, we announced our results of operations for the quarter ended December 31, 2006. We issued press releases announcing our results under U.S. Generally Accepted Accounting Principles ("GAAP") and Indian GAAP, copies of which are attached to this Form 6-K as Exhibits 99.1 and 99.2, respectively.

On January 11, 2007, we held a press conference to announce our results, which was followed by a question and answer session with those attending the press conference. The transcript of this press conference is attached to this Form 6-K as Exhibit 99.3.

In our press conference, we used a presentation entitled "Performance of the Infosys group for the Third Quarter ended December 31, 2006", which we have attached to this Form 6-K as Exhibit 99.4. We have also made available to the public on our web site, www.infosys.com, a fact sheet that provides details on our profit and loss account summary for the quarter and nine months ended December 31, 2006 and 2005 (as per Indian GAAP);revenue by geographical segment, service offering, project type, and industry classification; information regarding our client concentration; employee information and metrics; infrastructure information; consolidated IT services information; and reconciliation of accounts as per Indian GAAP and U.S. GAAP. We have attached this fact sheet to this Form 6-K as Exhibit 99.5.

On January 11, 2007, we also held two teleconferences with investors and analysts to discuss our results. Transcripts of those two teleconferences are attached to this Form 6-K as Exhibits 99.6 and 99.7, respectively.

Our officers held a question and answer session with analysts from CNBC India on January 11, 2007. The transcript of this question and answer session is attached to this Form 6-K as Exhibit 99.8. We placed advertisements in certain Indian newspapers concerning our results of operations for the quarter ended December 31, 2006, under Indian GAAP. A copy of the form of this advertisement is attached to this Form 6-K as Exhibit 99.9.

We have made available to the public on our web site, www.infosys.com, the following: U.S. GAAP Unaudited Consolidated Financial Information for the quarter and nine months ended December 31, 2006; Indian GAAP Balance Sheet, Profit & Loss Account, Cash Flow statement, Schedules, Notes on Accounts and Auditors Report for the quarter and nine months ended December 31, 2006; Indian GAAP Consolidated Balance Sheet, Consolidated Profit & Loss Account, Consolidated Cash Flow statement, Consolidated Schedules, Consolidated Notes on Accounts and Auditors Report for the quarter and nine months ended December 31, 2006

We have attached these documents to this Form 6-K as Exhibits 99.10, 99.11, and 99.12, respectively.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized.

Infosys Technologies Limited

/s/ Nandan M. Nilekani

Nandan M. Nilekani

Chief Executive Officer

Date: January 16, 2007

INDEX TO EXHIBITS

No.	Exhibits
99.1	U.S. GAAP Press Release
99.2	Indian GAAP Press Release
99.3	Transcript of January 11, 2007 Press Conference
99.4	Presentation: Performance of the Infosys group for the Third Quarter ended December 31, 2006
99.5	Fact Sheet regarding Registrant's Profit and Loss Account Summary for the quarter and nine months ended December 31, 2006 and 2005 (as per Indian GAAP); Revenue by Geographical Segment, Service Offering, Project Type, and Industry Classification; Information regarding Client Concentration; Employee Information and Metrics; Infrastructure Information; Consolidated IT Services Information; and Reconciliation of Accounts as per Indian GAAP and U.S. GAAP
99.6	Transcript of January 11, 2007 2:00 p.m. IST Earnings Call
99.7	Transcript of January 11, 2007 6:00 p.m. IST Earnings Call
99.8	Transcript of January 11, 2007 CNBC India Question and Answer session with Company's Officers
99.9	Form of Advertisement placed in Indian Newspapers
99.10	U.S. GAAP Unaudited Consolidated Financial Information for the quarter and nine months ended December 31, 2006
99.11	Indian GAAP Balance Sheet, Profit & Loss Account, Cash Flow statement, Schedules, Notes on Accounts and Auditors Report for the quarter and nine months ended December 31, 2006
99.12	Indian GAAP Consolidated Balance Sheet, Consolidated Profit & Loss Account, Consolidated Cash Flow statement, Consolidated Schedules, Consolidated Notes on Accounts and Auditors Report for the quarter and nine months ended December 31, 2006

EX-99.8

EXHIBIT 99.8
Transcrip CNBC QnA

INFOSYS TECHNOLOGIES LIMITED
CNBC BOARDROOM
JANUARY 11, 2007

CORPORATE PARTICIPANTS

Nandan Nilekani
Infosys Technologies - CEO and MD

Kris Gopalakrishnan
Infosys Technologies - COO, President and Joint MD

V. Balakrishnan
Infosys Technologies - CFO

Mohandas Pai
Infosys Technologies - Member of the Board

S.D. Shibulal
Infosys Technologies - Director and Head - Worldwide Delivery and Sales

T.P. Prasad
Infosys Technologies - Head - High-tech and Discrete Manufacturing

Naren Koduvatt
Infosys Technologies - Head - Resources, Energy and Utilities

Udayan
Welcome back. It is time for the Infosys Board Room for the quarter. This has been compared to Q1 and Q2, expectedly a quieter quarter and the stock is also flat, 1.5% down and the market too is pretty quiet after opening stable this morning. But let us hear it from the top management, Nandan Nilekani, S. Gopalakrishnan and V. Balakrishnan, all joined in and we will have other members of the management joining-in in a bit.

Gentlemen morning, and a Happy New Year to all of you.

Nandan Nilekani
Morning and same to you.


Udayan
Sum up the quarter Nandan, it has been a quieter quarter compared to Q1 and Q2, but there are good reasons for it.

Nandan Nilekani
I think it has been a very good quarter. We have grown at 10.1% in dollar terms making it the third quarter in a row where we have grown in double digits. Of course, in rupee terms we have grown only at 5.9% but that is because on an average, the rupee has appreciated at about 3.8% for the quarter and because of the rupee we lost about 145 crores of revenue and on the operating margin side in spite of a 200 basis points impact on the operating margin because of the rupee, actually the operating margin has gone up by 20 basis points because of the gain on revenue productivity, package sales, SG&A scale benefits and plus it was a quarter when there were holidays. So, when we took at the totality of it, I think it was a quarter that we are quite happy with.


Udayan
You have not changed your guidance too much for the full year. Last couple of quarters you upped your guidance quite significantly. Should one read anything into it?

Nandan Nilekani
No, I do not think so because typically the fourth quarter is also the first quarter in the US where people are doing the budgets and so forth, but fundamentally if you take an annual look, we are talking about growing at 43% in dollar terms and 46% in rupee terms. So, I think we are very much on target. We do not see any global slowdown as such. We think we have a strong position. We think our strategy of moving up the value chain is working out well. So, we have nothing to complain about.


Udayan
Last couple of quarters you did volume growth of close to 14% to 15%. Despite the holidays, is there any sign that the volume growth momentum is slowing down or is it just a quarterly aberration or expected quarterly aberration?

Nandan Nilekani
I think it is more of a quarterly thing. I think when you are growing at 10% a year for three quarters in a row, that means each quarter you are adding that much more to the volume. So you see this is all built on previous quarter's ending mark. So, I think we are very happy with the way the year has turned out.


Udayan
Bala, a quick word on the margins. How did you offset the 200 basis points squeezed because of the rupee?

V. Balakrishnan
Yes, I think this quarter the rupee has behaved adverse to us. The rupee appreciated by something around 3.8%. It had an impact of 200 basis points on the margins. Our per capita revenues on a blended basis went up by 1.4%. It contributed around 80 basis points positively to the margins and we have our product revenues growing sequentially at 27.5% during the quarter, that also contributed to another 70-80 basis points to the margin and we had a scale benefit coming under SG&A side of 50 basis points. So, all this helped us to lessen the impact due to the rupee appreciation during the quarter. We are able to maintain the margins. Infact the margins went up by 20 basis points during the quarter in spite of absorbing 200 basis points due to rupee on the operating side and another 60 basis points on the non-operating side. Overall, rupee-dollar impacted us around 2.6% on the net margin.

Mitali
How are you positioning yourself in that case Bala, for the next two quarters and do you expect this trend to continue in terms of the currency?

V. Balakrishnan
I think in the last one week the currency has moved the other way. It is around 44.53 or so now. Our guidance factors 44.11. That is the closing number as of December end. I think we have a cover of something around $360 million both in terms of forwards and options and we always have policies to cover for next one to two quarters. We have not changed our policy. We are keeping eye on the rupee-dollar rate and proactively covering in the market, trying to do more options, trying to do more hedging, and try to lessen the impact.

Mitali
Nandan, besides the volume growth, the market seems keen to understand what is happening with pricing trends? Are you seeing an uptake or are you at this point seeing just stabilization?

Nandan Nilekani
I think it is the same as what I have been saying before, which is stable with an upward bias. Some of that has been reflected in the improvement in revenue productivity which Bala talked about. So, I think there is nothing different from what we have been saying earlier.


Udayan
One of the analyst we spoke to, Kris, early in the morning said that there is one red flag. It is attrition having gone up in this quarter. Should one worry about that or is it just also a seasonal or a quarterly thing?

Kris Gopalakrishnan
See, in our attrition there is involuntary attrition because of people not performing either during training or during the course of the work which also has gone up with larger numbers and things like that. If I exclude that, it is just very very marginal, 0.2% only increase from the last quarter. So, it is not a cause for significant worry but the attrition always is something which we need to take up as an important thing. So we are looking at what needs to be done, which category, where the need is etc., and addressing that proactively.


Udayan
Sure. Of course in the US, you are entering a new year Nandan and that year has started. What are the initial signs that you are getting for this calendar in the US in terms of IT spending, IT budgets? Do you think, there is any let up in the volume momentum that you are seeing this year in calendar year?

Nandan Nilekani
At this point we do not see an overall slowdown. We do not think IT spending is going to go up dramatically, it will be a few percentage points but more importantly I think, with the global sourcing story becoming mainstream, I think increasingly more and more clients across the world are looking at this as a big way to do it. I think also the risk perception is going down in the sense that companies earlier who were willing to have just a couple of thousand people working for them in India, are now willing to say let us have ten thousand people working for us in India, across may be their own captive or across partners. So, I think the risk perception has gone down. So, I think all these boards well for our business and Infosys in particular being at the right brand at the right place, I think we are able to benefit from that.


Mitali
I was reading in your press release Nandan, that Europe has performed very well as a market. Tactically, are you looking at a change in terms of the geographical spread?

Nandan Nilekani
Well, I think, we have been saying this for some time that we want to improve our geographical spread. At one point, the US business was close to 80% of our revenues, it is down to the low 60%. So, I think that is actually part of overall goal, which is very clear that if you want to really buffet yourself against changing economic trends globally, then you need to have a diversified geographic portfolio. So, what is happening in Europe is very much part of that.


Mitali
Bala, how much of an uptake did you see in billing rates and what are you factoring-in in that stable to upward bias?

V. Balakrishnan
I think if you look at the guidance for the whole year, we are assuming the margins to be stable within a narrow band. The only factor we have to watch out is the rupee-dollar rate. I think the billing rates, we have seen slight uptake in the billing rates this quarter. We are continuously seeing in the last four quarters the billing rates going up. It may be due to change in business mix because even this quarter the contribution from package implementation has gone up from 17% to 17.9%, even the contribution from fixed-price projects has gone up. So, the billing rate increase what you are seeing on a blended basis, could be because of change in business mix also. We are seeing new customers coming at slightly higher price points, some of the existing customers giving slight price increase, but we are not calling it that there is a general trend towards increase in billing rates. There is change in billing rates, it may be due to business mix and it may be due to some of the new customers coming at higher price points.


Udayan
Kris, do you see or envisage more of a talent squeeze in the next calendar year because now some of the global guys are getting more aggressive, EDS, Oracle, with their own India acquisitions and plans. Will it become more of a thorny issue as you look forward into the next four quarters?

Kris Gopalakrishnan
See, at the entry level, I do not think we will see that immediately, probably three-five years down the line we may see that. It's really for the experienced resources, especially when you look at may be a particular technology, project management, etc. This is where the brand equity of Infosys is helpful. We have received almost 1.4 million applications in the last 12 months and we are recruiting aggressively. Last quarter alone we have recruited 1,676 experienced resources. So, we are able to attract the right kind of resources.


Udayan
Nandan, the stand out order for this quarter is Tech Mahindra billion dollars. How does the company like you who has leadership status in the industry look at a $1 billion relationship that goes to some other vendor?

Nandan Nilekani
Well, I think first of all, we think that the market is very large. We think that the Indian technology industry even now has relatively small part of the global market. I think there is room for everybody to grow. So, I think, everybody is happy.

Udayan
Are you saying that you would give your right arm for such an order because it is really large relationship, even by your standards?

Nandan Nilekani
Well, given our strategy, I think we are comfortable with what we are doing.


Mitali
Is it getting easier for a company like yours to get a foothold into those big one shot deals though Nandan?

Nandan Nilekani
I think definitely we have been called more and more at the head table for conversations. I think we are more and more seen as an equal partner in all these relationships. I think there are many many cases frankly where our clients after having made a large commitment to one of the legacy players, is now coming to us and saying help us out, because things are in a mess. So, I think every day every week, I think our position in the market is getting stronger and stronger and I think that is the trend which we have been working on for several years and I think you are seeing more and more of that.


Mitali
Kris, just to get back to that point about the manpower squeeze, what you do from here on? Do you increase your per campus job offers? Do you look making additional wage hikes perhaps within quarters? How do you deal with it?

Kris Gopalakrishnan
Actually, you have to create a pipeline. First of all campus hires have to increase but that is just not sufficient. You have to make sure that you have a very good training program, you need to have a training program on a continuous basis because you have to grow the people within the organization. There are not sufficient number of experienced resources outside the company. Infosys this year will be investing about $120 to $140 million on training alone. So you have to make a significant commitment to employee training, having a good facility for training, having the right teaching staff and things like that. So, we are doing that.


Udayan
Nandan, there has been some talk from the Finance Minister that may be tax exemptions need to be phased out from corporate India in this budget. Does that have any kind of potential ramifications for you for the IT sector as such you think?

Nandan Nilekani
Well I think, if you are already getting a tax benefit by virtue of being in a software technology park with a certain tax holiday, I am assuming that, that will not impact because such things will usually be prospective decisions. But having said that, the Infosys point of view on this is very clear. We support the move for reducing exemptions and lowering tax rates. In other words, much more simple system with less exemptions and lower rates. We are absolutely supporting such move of the government including for the software sector.

Udayan
But do you have a three-four year plan on how to deal with exemptions because you have taken a step in the SEZ direction as well. How you have planned out all your tax commitments depending on government policy for the next 3-4 years?

Nandan Nilekani
Well, I think first of all, the existing business is essentially in software technology parks. These software technology parks have been set up at different points in time. So, every year some of them are actually coming out of the tax exemption situation. By 2009, the STP program is supposed to end but there are now conversations happening about extending that. Some of our new locations are all in SEZ. At the end of the day, we should focus on our business. If the state expects us to pay taxes I think we should pay that, we do not have any problem with that and I think we have to focus on improving our quality, our productivity, our value and our brand. Similarly, even the rupee, if the rupee is going to appreciate, that is a reality, that is not in our control. What is in our control? Our control is our business, making our clients happier, improving the quality of what we do. So, generally we tend to focus on those activities over which we have a zone of influence.

Udayan
Finally, has the groundwork started for the 2008 guidance because you have got into January, a couple of months down the line you would have to give us the guidance?

Nandan Nilekani
Have we started? Absolutely. Are we going to tell you today? No.

Mitali
Absolutely not.

Udayan
But the trends.

Nandan Nilekani
Oh! Absolutely, we have actually have a strategic planning process which begins in October and it is a fairly elaborate 360-degree process. We poll all our stakeholders, we get data, and we just had our annual strategy conference in Mysore last week. We have one with the external board tomorrow. So, the strategic process is all happening, and of course I don't have an issue, I mean we also have to look at how the next three months pan out before we can put our stamp on the guidance for April.

Udayan
Good luck. Thanks very much Nandan for joining in.

Nandan Nilekani
Thank you.

Udayan

Okay, the rest of the team members, management members stay on and we will get a few more faces in when we come back after the break. Just about started with Infosys Board Room. The market has given up some of its gains. Infosys, well it is down about a couple of percentage points this morning, at Rs. 2,128. We will be back with the Board Room.

Udayan
Volatile morning of trade, we started down, then moved up more than a 100 points and now we are down into the red again. So, the market is swinging both ways and the Nifty is absolutely flat after holding about a 25-point gain early in the day. Infosys is still down about Rs. 49 at Rs. 2,116. So it has come off a bit, but the market breadth is not too bad. So, lots of stocks outside the index are performing pretty well. Yesterday's debutantes WWIL and Zee News, both have done very well. WWIL particularly which is up 8%. Shri Astavinayak which had a very good listing yesterday is up 5% this morning as well at Rs. 236. We have got Tanla Solutions not doing too badly. IDBI has done very well as indeed as IFCI for the third day running, it is up 5% at Rs. 16.90 and sugar as a sector has not done too badly at all on hopes that the sugar export ban will be lifted. S. Gopalakrishnan and V. Balakrishnan of Infosys have been talking to us and now S. D. Shibulal also joined in. Shibu morning.

S. D. Shibulal
Good morning

Udayan
From a delivery perspective how has this quarter been, because we note that some of your non-top five clients seem to have contributed quite significantly and grown significantly?

S. D. Shibulal
I think this quarter almost all the customers have grown. Our repeat business this quarter was 94.7%, usually our repeat business is 95% and above. Actually, the number of critical projects have come down, the high-risk projects. We have a category called critical and high-risk projects and they have drastically come down this quarter. So, overall delivery has done very well and the demand continues to be stable in the market.

Mitali
Shibu, particularly for the repeat business that you have got, have you been able to get it at significantly higher prices or have the prices held steadied?

S. D. Shibulal
Our pricing continues to be stable with an upward bias. For the new customers, new contracts, we are getting about 3 to 4% above our average on the new contracts. On the existing customers, when we renegotiate, we are getting about 2% to 3% above the average with the existing customer.

Mitali
Kris, will talk about in more detail of course, but what has the experience been with the subsidiaries both the consulting side and the BPO side?

Kris Gopalakrishnan
BPO has done extremely well and on the consulting side, it is going according to plan. We had said that overall we will have about 500 employees in the consulting space and within the Infosys, both on the subsidiary as well as the parent, we do have now that kind of employees in the consulting side.

Udayan
Bala, what is the outlook for margins? What you are assuming in Q4 and generally given what the rupee is doing, what is your estimate on where you can hold margins?

V. Balakrishnan
I think if we look the guidance, the guidance assumes stable margins even next quarter. The rupee closed at 44.11 or so. In December, we are assuming the same rate continuing for next quarter. We believe that we will be able to maintain the margins within a narrow band. The only factor we have to look for is the rupee-dollar rate. If the rupee-dollar rate behaves irrationally like what it has done this quarter, then it could have an impact. Except for rupee-dollar rate, we should be able to maintain the margins in the short term within a narrow band.

Udayan
When you say short term, what kind of visibility do you have for holding margins outside the rupee of course?

V. Balakrishnan
I am not going to give a guidance for next year; so short term now means next quarter.

Udayan
Around 32 to 32.5%?

V. Balakrishnan
Yes, within that range.

Udayan
Shibu, just talk a little bit about big deals because you spoke about two or three of them last quarter. Any significant steps you have taken towards that in this quarter?

S. D. Shibulal
Actually we continue to pursue a number of big deals. Last quarter, when I defined big deals, I said they are $50 million and above. If I use that criteria, we have actually closed a number of deals this quarter.

Udayan
Number being?

S. D. Shibulal
May be three to five. For example, we have closed a deal with one of the high-tech manufacturers and we have started work on a $100 million deal, the initial phase. Another software manufacturer, we have closed a deal about $75 million. A food manufacturer, we have closed a deal at around $73 million. So, in the definition which I used last quarter which is $50 million and above, we have closed a number of deals. At the same time, we are continuing to pursue deals that are $100 million and above, and we probably have about six or seven such deals being pursued and they are long incubation deals and it takes time to close.

Mitali
All these deals, if at all Shibu, would be consummated within this fourth quarter or it will take a bit longer?

S. D. Shibulal
It will take a bit longer. Some of them will get closed in Q4, some will take longer because usually these deals, the $100 million and above deals, are anywhere from six months to nine months in process to get it closed.

Mitali
We were speaking with Nandan about Tech Mahindra's big $1 billion contract that it won. Are those deal size is something that Infosys is gunning for as well?

S. D. Shibulal
Absolutely, we are gunning for those kinds of deals and we do participate deals closer to that size. We do get called into the table to discuss deals which are closer to that size.

Udayan
Kris, what about the top five clients that you have, what kind of visibility do you see from those? Are they growing at your average growth rates, lower, or higher?

Kris Gopalakrishnan
This quarter, the top five clients grew at 12.6% in dollar terms, higher than the company average. We have good visibility into our client's budgeting, etc and their budgets are being firmed up as we speak now, and once the budgets are firmed up those are typically shared with us also. That gives us good visibility. With almost 95% repeat business that gives us a lot of confidence when we look at the next year. Our philosophy always has been that have the utilization somewhere around 78% to 79% when we plan, look at your customer's budgets and things like that, based on that, we can do some planning and if the market improves and if there is let us say an opportunity which comes our way, we can actually take advantage of that. In our guidance, we also do not include large deals because we still do not have the predictability in large deals. I also want to add that, in large deals, we are more careful in not tying up our resources for the long term if possible at very lower rates. So, we have some thresholds, we have some parameters which we use in order to filter out these large deals.

Mitali
Bala, to hold or better those margins, on the SG&A side, what are you factoring in, both in terms of wage hikes, what you see as employee utilization rate, all of that?

V. Balakrishnan
On the employee utilization side, we said we are comfortable with a range some where between 76% to 80% excluding trainees. I think we will be within that range. We want to maintain it at the lower level so that if there is any growth opportunities, we do not miss on that. On the SG&A side, we will keep the costs under control. We will get some scale benefits when we grow bigger because they are not going to grow in proportion to revenues. That will give some offset against any impact on the margins, definitely.

Udayan
Shibu, do you think, from a delivery perspective, it could be getting important to have some major relationships with large, either companies or with service providers in the west, because a lot of people are excited about Mphasis when they speak about their EDS connection. A lot of people are excited about I-flex because of the Oracle connection. Do you think you need such a big toehold into a big client or a big company as such to crack some of these very large deals, $1 billion to $1.5 billion kind of deals?

S. D. Shibulal
If you look at our service footprint today, 42% of our revenue comes from non-ADM services; 2,000 consultants within the organization. We have deep strength in domain, we have rolled out a certification program which covers 65,000 people by which we are building capability on domain, on technology, on program management, on consulting skills. So as a strategy, over the last three to four years, we have built a true end-to-end capability. So, to get those kinds of capabilities, it does not make any sense for us to tie up with somebody at this point in time. There could be areas for example if you want to bid for a deal in a consortium manner, where somebody else is taking over the asset and you bid as a consortium, then you can tie up, but that will be a loosely coupled arrangement where it is done parallely. So, in our minds to create a capability of technology, domain, consulting, program management, at this point we do not think we need to tie up.

Mitali
And you do not think it will require any inorganic moves either to diversify as you would want to?

S. D. Shibulal
On the inorganic side, I think we continue to look at inorganic growth, makes sense for us to do some of them today, either it could be for deep penetration in the vertical or if it is a sizable one, deep penetration into a country like what we did in Australia. So, if you want to deep penetrate into one or the other countries, we could go in. So, those things make sense for us and we continue to look at them.

Mitali
If you had to gauze IT spent for clients Shibu for the rest of the year, even ballpark, how much more do you think they are willing to allocate?

S. D. Shibulal
I think, on a budget basis, the budgets are most probably going to remain stable with a slight, very slight, may be 1% to 2%, upward bias on the budgeting side, but the story is on the outsourcing and the offshoring side. I think this has become mainstream today. Customers are willing to put more and more of their money into this, it has become low risk, mainstream and high value. So, in that sense we expect that the outsourcing spend and the offshoring spend will continue to increase this year.

Udayan
Kris in the next calendar year, do you expect to see the need to be more aggressive on the compensation front, given all the factors, higher attrition, more MNC kind of competition? Could it be a possibility that wage inflation is higher next year?

Kris Gopalakrishnan
See we have increased wages around 13% to 15% in the last several years. The impact of that when you look at the total year, comes down significantly because there is a base effect, we continue to add people at the bottom and grow that way. So, on a month-to-month basis, on a same role, we may have to continue to increase at the same rate, around 13% to 15%. I do not see that significantly growing up at this point because this impacts the entire industry not just Infosys. And then because of our model, I think we will be able to manage this much better than anybody else and this is where the training etc., also helps.

Udayan
Bala you are confident or as a CFO that makes you apprehensive? Could that aside of the rupee-dollar which you have no control over, could that skew your projections a bit, the wage inflation?

V. Balakrishnan
I think wage is one of the largest cost for a service industry like us. In fact any significant increase will impact our margins. As Kris said, in the last several years, we have not seen the wages increasing beyond 13% to 15%. The MNC competition was there for several years, it is not something new and we have a pyramid structure which helps us because when we add some 25,000 to 30,000 people each year, around 60% to 70% of them are somewhere in the bottom of the pyramid. So, on the average per capita cost, the increase may be around 5% to 6%, which is manageable. So, as long as the wage increase is within that range, I think we will be able to maintain our margins.

Mitali
Shibu, in order to pitch for the deals that you are focusing on in the next few quarters, do you foresee a whole lot more hiring?

S. D. Shibulal
I think our hiring will be as per plans. For example, our utilization today is 77.7%. We are comfortable anywhere between 76% and 80%. That means that we have enough people in the system who can actually be raised to the point where they can take up some of these large deals as and when they are close, and as I said we have already closed multiple large deals, $50 million and above last quarter which is in flight. And they also have a ramp up time, it does not happen overnight. You close the deal, there is a certain period of time in which you have to ramp up. So, we have enough people in the system today to do it.

Udayan
Okay we will take a break on that note. The market slipped a bit. Both the Sensex and Nifty are in the red and Infosys is down about Rs. 60 odd which is nearly 3%, at Rs. 2,100, just above Rs. 2,100. Some of the other construction engineering stocks are under pressure. IVRCL is down about 3 odd percent and it is an important stock in that space. We will come back and talk to you and tell you more about how the market is shaping up, they have given up all their morning's gains one hour into trading.

Udayan
Welcome back. The markets are absolutely flat. Infosys has recovered a bit from the lows of the day, it was down about Rs. 60 odd, now it is down Rs. 46 rupees at 2,118 but it has been a volatile session of trade. We have been talking to the Infosys top management. S. D. Shibulal is still with us. Mohandas Pai joins in to talk about what is happening with the people's perspective and we have two other members of the top management, Prasad T., who heads High Tech and Manufacturing and Naren K. who heads Energy and Utilities also joins us now. But before we talk to these gentlemen, a quick word on the market from P.N. Vijay who joins us. Vijay, morning. What have you made of this morning of trade which has been quite volatile and how Infosys has moved post results?

P.N. Vijay
Well, as far as the markets are concerned, we talked about it a few days ago, we are seeing a bit of a dip as investors are cutting positions ahead of the results because people are curious to see if the results would be in line with expectations or so. I am not surprised that for these few days markets are edgy, but going forward I think with crude falling to $53 to $54, in the long-term that is very good for the Indian economy and interest rates and inflation. So, I do not see any great negatives in the macro. As far as Infosys is concerned, it was expected that the margins would take a hit because of the strong rupee, that sort of about 200 basis points hit. And apart from that I think it is sort of par for the course, I mean no great surprises, but they have delivered broadly what we expected.

Mitali
How deep do you think the shave off can get for the market though Vijay, because in the past six trading sessions we have already slipped about 500 to 600 points?

P.N. Vijay
Yeah, about 3-4%, true, we have been having these quite frequently now. We had one in December and one in October, sort of sharp sell off but this time it has been rather muted and I would guess this people are just holding back money. So I do not see this go beyond this week actually. I would imagine that next Friday close would be quite a bit better than this Friday close.

Udayan
Thanks Vijay very much for that. The breadth has declined a bit as well, and the midcap index is actually down in the red which is not very encouraging after what seemed like a positive start this morning. But back to Infosys. Mohan, we were just discussing with Nandan, attrition has gone up a bit, are there are any signs of worry on the personnel front?

Mohandas Pai
I do not think there are signs of worry because if you look at the attrition data it is 13.5% for the last 12 months, but if you remove involuntary attrition which primarily comes from the fact that some people do not get through our training course. We have improved the benchmark for them to pass; it is 12.2% as against 12%. And if you look at that total number of people who left, it is almost the same as the last quarter; there is hardly any change. So, overall I think there is some stability, but there is a very very big change in India. I think among younger people who join companies today, there is a sense of unease. People do not know what they want to do, they want to do many things, they want to grow very fast, they want to move, they are very anxious about their future, they ask about their careers, they are not as stable in their careers as people used to be may be 10 years earlier. So I think generally there is a sense of unease among young people who join companies and there are many more opportunities today than earlier. So, I guess at that 1-3 year band there will be attrition in the future also and I think many many companies in this country in the manufacturing and other sectors are going to have serious challenges getting people in. But as far as we are concerned, I think we are okay, par for the course.

Udayan
But, what could be ramifications of this kind of unease and the job market tightness, which could happen in the next four quarters, would you need to hike wages more than expected to hold people back?

Mohandas Pai
I think what we need to do is possibly make sure that we communicate with people better. We have got to make sure that we make increased investment in them, in terms of making them understand about their career prospects. As far as wages go for the freshers, we are already at the top in the industry compared to companies of our size and in the first five and next year too we are going to be there. We have about 13,000 offers outstanding for the next year. I think from the campuses for the next year we will be the largest hirers. We have been from day one 76% of the time. So we got a very good story going. So we are not concerned about that and we have started a very large scale Campus Connect project with 20,000 youngsters have either gone through the course or going through a 16 week course in the colleges itself through about 305 engineering colleges. All this is helping build the brand for Infosys. I think we are okay, but I worry about the rest of Indian industry, this is a major challenge.

Mitali
You did make the point though last quarter and we spoke Mohan that manpower scale is the biggest challenge for Infosys. Does that hold for you and do you have to look aside from the verticals you were looking at in terms of hiring more people?

Mohandas Pai
We have been hiring people from the B.Sc. stream and quantitative technique stream. We have 1,700 people inside the services firm. We will probably have an equal number next year from the colleges but that is not a very scalable model because they require more training and there are career challenges for them because as they go up the ladder and they come from a different background, and I think the key is to expand the pool of people in this country. We have about 525,000 seats in engineering with 460,000 people filling the bridge and the challenge is to make more of them employable. So I think our large scale investment in training in Mysore, we can probably train by the time we complete in the middle of next year, 50,000 people a year. It is going to be a great competitive challenge for us. The challenge is, there are people, they are ill trained, they are not fully finished. So you have got to invest an enormous amount in training and you have got to have the capability. If you do that you succeed. I think we are right there.

Udayan
Prasad morning, how has your vertical turned out this quarter, High Tech and Manufacturing?

Prasad T.
I think we did very well. We had good growth in some of the more transformational deals. We are involved with customers who are making investments and making them more competitive in this global world. So, we have won some good deals, which were related to transformation projects. So overall, it has been a very good quarter.

Udayan
Anything that Shibu would classify as big, which is $50 million plus?

Prasad T.
Yeah, one of them he spoke about, which is the electronics distribution company where we are helping the client transform in a global way implementing large enterprise solutions to manage customers and their supplies better.

Mitali
Naren same question to you, how has your vertical shaped up and what has been the biggest deal size that you have won this quarter?

Naren
Energy and Utilities has come up as a big growth engine for Infosys. If you look at it compared to 2004, where we contributed around 2.2% to the company revenues, we have come to 5.5% on an average today. So that is pretty good growth. In terms of large deals, yes, we are focusing on the client base first and the client base has increased to 20 plus today and in terms of the large deals, yes, we are winning the mid-size deals, I am talking about $ 10 million per annum kind of deals up to $ 50 million total value deals pretty often these days. And quite a lot of transformational deals like Prasad said, particularly helping companies to rewrite their business processes, do business process integration, mission-critical projects and so on. So doing very well right now.

Mitali
And average deal size is of?

Naren
Average, if it is a transformational kind of deal, recent deal size would be around $10+ million in our industry, all the way up to $50 million is the recent one we won this quarter. We are pursuing deals anywhere between 50-200 and above right now.

Udayan
Any significant changes in pricing you are seeing Prasad in your vertical at all.

Prasad T.
Not really, it remains stable with an upward bias, but we are seeing the business mix changing with my vertical actually has a very high percentage of enterprise solution and it is growing. It increased from about 19% to about 20+% and that gives us bigger boost in the revenue realized or the price realized and the consulting that goes before the package gets implemented. So we are seeing the business mix changing and therefore the realized price has actually increased.

Udayan
What about you Naren in terms of pricing?

Naren
Steady with an upward bias. In fact all the new accounts we are opening are with close to around 5% higher than what we are enjoying today, and just joining with what Prasad said, the business mix, the service mix has significantly changed. In fact if you look at my segment, close to 40% which is coming from the new services which we incubated in the last two years, particularly packaged services. The penetration of consulting and high-end architecture, advisory kind of services is very high, close to 6-7% today. So we are doing well actually.

Mitali
Mohan asides from the overall attrition what about the BPO side, where are attrition rates stood at this time?

Mohandas Pai
The BPO attrition rate has come down to about 26% which I think is very good because if you look at the way we calculate, we take everybody who joins the firm even when you are in training. Out of 26%, about 23-24% attrition is in the 0-3 month's time period when you join and people typically go through training and understand what the work is and some of them drop out, and above 12 months is when you finish your first 12 months and you want a promotion and not many get promotion. We have about 50% attrition at that point of time. So if you look in the data, 26% is very very good. I think amongst the best in the industry because we calculate in a very conservative basis. It has come down, and I think we are very happy about that.

Mitali
Aside from the entry level, are you having to relook at wage hikes in the middle level management as well?

Mohandas Pai
Yes in the middle level management, there has been considerable demand for people and particularly people coming from the BPO background, I think wages are going through the roof. There is a challenge. So what we have done is to make sure that we pick up people from the manufacturing sector. Now the BPO industry is going after middle level people from the manufacturing sector and of course we pay them well and they come with a process discipline. They come with a discipline which says, end of the day you got to finish all your work and go home. You got to have proper documentation. You got to have high quality standards. You got to have repeatable processes. Their mind set is totally different. I think they are very stable and they are very good. We are looking for mid level people from the financial sector, from banks and others, who have been doing processes and doing very well and we are also having people join us from the parent company. Because people from the parent company have extraordinarily talent in making sure they meet the numbers, they are very focused, they know how to operate and they are excellent people. So I think the mix of people that we have in the mid level is changing from more from manufacturing, financial services and from the parent company and I think that is helping us tremendously in terms of growth, because the BPO business grew 20% quarter-on-quarter this quarter.

Udayan
Okay let us take a break, when we come back our last shot with the Infosys management. The stock is stable, the markets are stable as well, so no great turbulence out there. We will come back and talk more about Infosys numbers for this quarter and of course the restlessness that Mohan is eluding to the younger in the organization.

Udayan
Welcome back. The markets pulled back a little once again, but the midcap index is still in the red, the Nifty and the Sensex have climbed back into the green, Infosys is down about Rs. 40 odd. It seems to be finding its feet just around that Rs. 2,100 mark. Capital goods and constructions is the weak spot. Curiously some of the other technology stocks around Infosys have not done too badly; Wipro, Satyam, they have had good mornings and TCS too is holding out. Infosys seems to be under a bit of pressure since morning. Last 5 minutes with the Infosys top management, we have four of them with us. Shibu just to get back to you and this is the question which every analyst asks you every quarter, when will you get meaningful uptakes in pricing and give us a different line from steady to with an upward bias?

S. D. Shibulal
I think, as we said the pricing continues to remain stable with 3% to 4%. The challenge here is that 95% of our business comes from repeat business, that means the new customers who get added even if we get 15%, even assume we get, to flow it into the system will take a very very long time. This quarter, our blended revenue productivity has marginally gone up. So it is going to be a steady thing rather than a step jump, because it is the simple reason that a large percentage of your revenue is coming from repeat businesses and the second reason which I also want to point out, as the customers becomes larger and larger, there is certain demand for discounting which comes into picture. So the rates may be going up but the discount might kick in. So these two factors will create a gradual growth, a gradual uptake rather than a step jump.

Udayan
Mohan, at some point will it start pinching the fact that the rates are not going up but the wages are continuously going up, or do you think volume growth will continue to keep offsetting this equation which seems to be a little lop-sided?

Mohandas Pai
Udayan, volume growth will obviously be the big thing which will help us offset this, as also increase in productivity, increase in the business mix of what we do. If you look at data from 1994 till 2006, salaries in India overall have gone up by only about 35%. Remember the rupee has depreciated, now the rupee is stable, so it is not in our favor. We have gone up the value change and mix of business has gone up and we have also seen small uptake in prices in the last 3 to 4 quarters and that has helped us out. So I think, going forward we have to increase efficiency, increase productivity and make sure you increase the mix to make sure that wage inflation does not hurt us and we have managed for the last 12 years and I think we have the capability to manage for a fairly long time. Let me say this that we will be the last kid in the block. So we will always have good stuff. We have the capability, we have a business model that is extremely robust and we have build a pyramid and we know how to fix things and if the external environment is not very good, then obviously we will be the ones who will the strongest amongst everybody.

Mitali
Naren, in terms of markets though, what is opening up for now as a market and is it getting more competitive to win these deals quarter after quarter?

Naren
See these markets are just realizing the potential of global delivery and companies like Infosys because they are so much used to the legacy firms and really looking at new relationships, new capabilities, global support and so on. So the market is really opening up there and the other side of it is the market potential is huge. We are talking about combined market worldwide spending close to $35 billion in IT and consulting services and so on and the core competency of Infosys, the sweet spot, has just started penetrating them. So we are in a very good spot there. In terms of competition, we are coming across the legacy firms more than the Indian firms, India-centered firms so to say. So that is a trend we are clearly seeing out there but it is pretty good for us right now. The outlook is very good. I told you about the client-based expansion. We started off with close to seven clients, and in the energy utility sector we have close to 20 active clients in the last 3 years. So that is the kind of growth we are seeing out there.

Mitali
Prasad, on a sequential basis what sort of volume growth do you think you vertical can post from now on?

Prasad
I think we are maintaining a growth which is more or less equivalent to the Infosys growth rate. We are seeing that our business comes in chunks and you should remember that high tech and manufacturing are very mature buyers of services from an offshore model. Now they are spending more and more money in transforming themselves to becoming more competitive because on one hand they are having to compete with the newer players like from the emerging markets, the Huaweis of the world and they have to get competitive. So they are investing a lot in enhancing their competitive. So there is a lot of spend which is on the discretionary side that comes in chunks. It is not sort of lot of annuity business, it kind of comes in chunks. So there could be quarters when we could definitely grow faster than Infosys, but on an average we will be at or above the Infosys growth rates.

Udayan
Shibu, it is getting a little bit more challenging as more and more MNCs get their back ends in placed in India from you to offer a proposition which is more competitive to them or is that market leveling up a little bit making it more difficult for you?

S. D. Shibulal
I think there are two or three factors. First one is that when the industry average of delivering projects today continues to be about 40 to 50%, whereas we deliver 90% plus of our projects within time and within budget. So we have a track record, an excellent track record, far superior to the industry. The Global Delivery Model is in our DNA and I still believe, they are yet to build it. Recruiting people is not enough to build that DNA, it is about having a completely aligned system from both sides. In fact if you look at some of the global majors, they are still treating India as a cost center rather than an integrated entity in the system. So in our case we have a true organizational DNA which is Global Delivery Model based. And the third factor is that the value which we provide to the customer today, as I said we have about 2,000+ consultants in our system today. So our consulting capability is almost similar to what they have or getting closer to it. So from a value perspective, we provide the same kind of value and there is a price advantage. So given that and as Naren said, in fact I believe, that they are seeing us a lot more because our deal sizes are going up. Our average deals size 5 years back was probably $5 million and today they have gone up about $10 million, $20 million and above, which was their spot and they are definitely seeing a lot more of us today than in the past.

Udayan
Mohan, do you worry about this that EDS will start hiring 10,000 to 15,000 people a quarter out of India and that will put a lot of pressure?

Mohandas Pai
I wish they come and hire more people because competition is always exciting. Remember we have been hiring over the last many years. We have built an engine to hire people from colleges, from the laterals and we have not lost too many people and we are in very good shape. The more the legacy players hire in India, the more their internal model will implode. If the Indian operation, the Global Delivery Model becomes a large part of their operations, obviously there will be pressure from the client side in terms of revenues. If you look at the per capita revenues what they do and what we do, there obviously the client is paying much much more for a similar kind of work. So the more they increase in India the more they will have challenges. I think it is good and there will be more people to hire. If you have many good companies hiring people there will be many more people in the market place to hire in the lateral basis and that is good for everybody.

Udayan
You do not fear that they will take away large part of your cream?

Mohandas Pai
No absolutely not. We have created a company which is an aspiration. We have created a company that is a dream, a company which is very open, transparent, and collegial and we have a fabulous culture and this culture is very difficult to replicate. It happens because we had a great set for founders, I mean that is not there in all the companies. The kind of freedom that you get in Infosys, to come go and talk to your superior and talk to them and argue with them and to dissent and the freedom that you get is not there. Now this is a very unique culture. We have many people who come from outside who are astonished at what we have here. Yes at the entry level when people join us directly, they think this is the world, this is for real what we have in Infosys. But this is not real, this is an exclusive enclave. When you go out and see other companies, the cultures are very different. For example, compared to a legacy player, our people talk with the clients directly, they can go engage with the client, they talk with the client, there are no gatekeepers. Most of them have gatekeepers outside and our people have full freedom to engage into business, most people don't. So like Shibu said, you are part of a cost center and they call you a low cost country. So obviously how you look at it, is very different. I think this is the strength of Infosys and this is what is taking us forward. So we are in a strong place. I think it is good. More competition is better.

Mitali
But if you had to look at your onsite offshore mix at this point Mohan, where would you say that you would have factor in more wage hike, to keep room for more wage hikes?

Mohandas Pai
I think there is need for some adjustment overseas because overseas hiring has gone up and adjustment in a particular band. We need to do something in particular one or two bands, other bands we are okay. Even in India like Kris said, we see a 13% to 15% hike in salaries, which has not changed but we have to focus more on certain bands where the demand is more. In other bands we are quite okay. So I think some streaking of adjustment has to be done. And we have this variable model and this quarter the variable model is paying out a very high variable and the variable model ensures that you can pay people more and I think it protects the company on the downturn. It also makes sure that we share in upturn and I think that it is very good, and is helping us a lot.

Udayan
Gentlemen, we will leave it there this quarter. Thanks very much all of you for joining, have a great year ahead. We are done with the Infosys Board Room for this quarter, Rs. 44 down Infosys, at Rs. 2,118 and the market pretty much flattish for this morning. See you next quarter with Infosys. On the other side of the grid, more focus on the markets which have had a very volatile session. Thanks for watching.

EX-99.1

EXHIBIT 99.1
US GAAP Press Release

Infosys Technologies Limited - Financial Release December 31, 2006

Infosys Technologies (NASDAQ: INFY) Announces Results for the Quarter ended December 31, 2006

Q3 revenues grew sequentially by 10.1%

Guidance revised upwards. Revenues expected to grow by 43.6% in fiscal 2007

Bangalore , India - January 11, 2007

Highlights

Consolidated results for the quarter ended December 31, 2006

• Third quarter revenues at $ 821 million, up 46.9% from the corresponding quarter last fiscal
• Earnings per American Depositary Share (ADS)* increased to $ 0.39 from $ 0.26 in the corresponding quarter last fiscal
• 43 new clients were added during the quarter by Infosys and subsidiaries
• Gross addition of 6,062 employees (net 3,282) for the quarter by Infosys and subsidiaries
• 69,432 employees as on December 31, 2006 for Infosys and subsidiaries

Outlook for the quarter and the fiscal year ending March 31, 2007

• Consolidated revenues expected to be between $ 859 million and $ 861 million for the quarter ending March 31, 2007 (YoY growth of 44.9% - 45.2%) and expected to be $ 3.09 billion for the fiscal year ending March 31, 2007 (YoY growth of 43.6%)
• Consolidated earnings per ADS* expected to be $ 0.40 for the quarter ending March 31, 2007; (YoY growth of 42.9%) and $ 1.47 for the fiscal year ending March 31, 2007; (YoY growth of 44.1%)

Infosys Technologies Limited ("Infosys" or "the company") today announced financial results for its third quarter ended December 31, 2006. Revenues for the quarter aggregated $ 821 million, up 46.9% from $ 559 million for the quarter ended December 31, 2005.

"Our investments in enriching and synergizing our portfolio of services have created compelling value propositions for our clients," said Nandan M. Nilekani, CEO and Managing Director. "As our clients focus on enhancing their competitiveness, they are leveraging our capability to drive their transformation programs."

Infosys is the preferred development partner for a worldwide leader in networking for its Customer Ordering Experience (COE) program, which is aimed at radically simplifying, improving and scaling the customer purchasing experience.

A leading US grocery chain selected Infosys to enhance its IT systems to support warehouse operations and improve business-IT alignment. A large distributor of paper products in the US is working with Infosys to re-engineer and re-architect its legacy Enterprise Resource Planning (ERP) system. Infosys will consolidate its multi-location systems while enabling substantial cost savings, ease of maintenance and deployment of new applications.

Infosys' Independent Validation Services (IVS) continued to gain traction with clients across industries. Infosys is working with a leading North American insurance company to provide consultancy and performance testing services of a key SOA-based application. Infosys is establishing Testing Centers of Excellence (CoE) for a leading manufacturer and marketer of skincare, fragrance and hair-care products and a leading North American bank. Infosys is also providing performance validation services for a leading utility in North America for a crucial outage communication systems application.

* Adjusted for stock split

Infosys Consulting Inc. continued to work with clients as a trusted partner to support their IT strategy for transformation. One of the world's largest travel agencies with lines of business that include credit cards and magazines is partnering with Infosys Consulting to streamline its governance practices by defining and implementing a flexible model to improve integration and transparency between IT and internal business partners.

"The rupee appreciated against all major currencies during the quarter, impacting our operating margins by 200 basis points," said V. Balakrishnan, Chief Financial Officer. "Despite this, we have maintained our margins."

About the company 
Infosys (NASDAQ: INFY) defines, designs and delivers IT-enabled business solutions. These provide our clients with strategic differentiation and operational superiority, thereby increasing their competitiveness. Each solution we provide is delivered with the industry-benchmark "Infosys Predictability" that gives our clients peace of mind. With Infosys, they are assured of a transparent business partner, business-IT alignment with flexibility, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. Infosys has over 69,000 employees in over 39 offices worldwide. Infosys is part of the NASDAQ-100 Index. For more information, visit www.infosys.com.

Safe Harbor
Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT, business process outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry.

Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2006, Quarterly Reports on Form 6-K for the quarters ended June 30, 2006 and September 30, 2006 and our other recent filings. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

Contact

Investor Relations	Shekar Narayanan , India +91 (80) 4116 7744 shekarn@infosys.com	Sandeep Mahindroo, USA +1 (646) 254 3133 sandeep_mahindroo@infosys.com
Media Relations	Bani Paintal Dhawan , India +91 (80) 2852 2408 Bani_Dhawan@infosys.com	Peter Mclaughlin, USA +1 (213) 268 9363 Peter_Mclaughlin@infosys.com

Infosys Technologies Limited and subsidiaries

Consolidated Balance Sheets

(Dollars in millions except per share data)
	As of
	March 31, 2006	December 31, 2006
	(1)	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$ 889	$ 589
Investments in liquid mutual fund units	170	498
Trade accounts receivable, net of allowances	361	502
Unbilled revenue	48	72
Prepaid expenses and other current assets	40	64
Deferred tax assets	1	2
Total current assets	1,509	1,727
Property, plant and equipment, net	491	609
Goodwill	8	106
Intangible assets, net	-	20
Deferred tax assets	13	15
Advance income taxes	18	9
Other assets	27	31
Total Assets	$ 2,066	$ 2,517
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$ 3	$ 4
Income taxes payable	-	2
Client deposits	2	3
Unearned revenue	44	76
Other accrued liabilities	160	210
Total current liabilities	209	295
Non-current liabilities
Other non-current liabilities	5	1
Minority interests	15	-
Stockholders' Equity
Common stock, $0.16 par value 600,000,000 equity shares authorized, Issued and outstanding -551,109,960 and 557,848,468 as of March 31, 2006 and December 31, 2006, respectively	31	62
Additional paid-in capital	410	512
Accumulated other comprehensive income	9	35
Retained earnings	1,387	1,612
Total stockholders' equity	1,837	2,221
Total Liabilities And Stockholders' Equity	$ 2,066	$ 2,517

(1) March 31, 2006 balances were obtained from audited financial statements

Infosys Technologies Limited and subsidiaries

Unaudited Consolidated Statements of Income

(Dollars in millions except per share data)
	Three months ended December 31,		Nine months ended December 31,
	2005	2006	2005	2006
Revenues	$ 559	$ 821	$ 1,559	$ 2,227
Cost of revenues	319	468	890	1,280
Gross profit	240	353	669	947
Operating Expenses:
Selling and marketing expenses	35	54	102	147
General and administrative expenses	41	64	124	183
Amortization of intangible assets	-	1	-	2
Total operating expenses	76	119	226	332
Operating income	164	234	443	615
Gain on sale of long term investment	-	-	-	1
Other income, net	(1)	13	15	55
Income before income taxes and minority interest	163	247	458	671
Provision for income taxes	18	29	52	78
Income before minority interest	145	218	406	593
Minority interest	2	-	3	2
Net income	143	218	403	591
Earnings per equity share*
Basic	$ 0.26	$ 0.39	$ 0.74	$ 1.07
Diluted	$ 0.26	$ 0.38	$ 0.72	$ 1.04
Weighted average equity shares used in computing earnings per equity share*
Basic	544,715,752	554,200,798	541,751,558	552,043,540
Diluted	559,825,844	566,883,484	556,868,762	564,849,610

* Adjusted for stock split

EX-99.2

EXHIBIT 99.2
Indian GAAP Press Release

Infosys Technologies Limited - Financial Release December 31, 2006

Q3 revenues grew sequentially by 5.9%

Guidance revised upwards. Revenues expected to grow between 46.1% - 46.2% in fiscal 2007  

Bangalore , India - January 11, 2007

Highlights
Consolidated results for the quarter ended December 31, 2006

• Income was Rs. 3,655 crore for the third quarter ended December 31, 2006; YoY growth was 44.4%
• Net profit after tax was Rs. 983 crore for the quarter ended December 31, 2006; YoY growth was 51.5%
• Earnings per share* increased to Rs. 17.64 from Rs. 11.85 for the corresponding quarter in the previous year; YoY growth was 48.9%

Others

• 43 new clients were added during the quarter by Infosys and subsidiaries
• Gross addition of 6,062 employees (net 3,282) for the quarter by Infosys and subsidiaries
• 69,432 employees as on December 31, 2006 for Infosys and subsidiaries

"Our investments in enriching and synergizing our portfolio of services have created compelling value propositions for our clients," said Nandan M. Nilekani, CEO and Managing Director. "As our clients focus on enhancing their competitiveness, they are leveraging our capability to drive their transformation programs."

Business outlook
The company's outlook (consolidated) for the quarter and the fiscal year ending March 31, 2007, under Indian GAAP and US GAAP, is as follows:

Outlook under Indian GAAP - consolidated

Quarter ending March 31, 2007**

• Income is expected to be in the range of Rs. 3,789 crore and Rs. 3,798 crore; YoY growth of 44.4% - 44.7%
• Earnings per share* are expected to be Rs. 17.88; YoY growth of 46.3%

Fiscal year ending March 31, 2007**

• Income is expected to be in the range of Rs. 13,910 crore and Rs. 13,919 crore; YoY growth of 46.1 % - 46.2%
• Earnings per share* before exceptional items are expected to be Rs. 66.63; YoY growth of 48.0%

Outlook under US GAAP

Quarter ending March 31, 2007

• Consolidated revenues are expected to be in the range of $ 859 million and $ 861 million; YoY growth of 44.9% - 45.2%
• Consolidated earnings per American Depositary Share* are expected to be $ 0.40; YoY growth of 42.9%

Fiscal year ending March 31, 2007

• Consolidated revenues are expected to be $ 3.09 billion; YoY growth of 43.6%
• Consolidated earnings per American Depositary Share* are expected to be $ 1.47; YoY growth of 44.1%

* Adjusted for the issue of bonus shares in the ratio of 1:1 allotted on July 15, 2006
** conversion 1 $ = Rs. 44.11

"We have delivered double-digit revenue growth in dollar terms for the third consecutive quarter during this fiscal," said S. Gopalakrishnan, COO, President and Joint Managing Director. "We have seen accelerated growth in Europe, which continues to be a key focus market for us."

Expansion of services and significant projects
Infosys continued to forge strategic relationships with leading global companies across major industry verticals, enabling them to shift their operational priorities in order to embrace new opportunities in an increasingly 'flat' business world.

Infosys is the preferred development partner for a worldwide leader in networking for its Customer Ordering Experience (COE) program, which is aimed at radically simplifying, improving and scaling the customer purchasing experience.

A leading US grocery chain selected Infosys to enhance its IT systems to support warehouse operations and improve business-IT alignment. A large distributor of paper products in the US is working with Infosys to re-engineer and re-architect its legacy Enterprise Resource Planning (ERP) system. Infosys will consolidate its multi-location systems while enabling substantial cost savings, ease of maintenance and deployment of new applications.

Infosys strengthened relationships in Europe, partnering with a top global retailer to implement infrastructure standards for better service levels and cost optimization.

In the UK, Infosys is transforming the customer service processes of a major energy and utilities company and providing maintenance support to two business-critical applications of a leading insurance provider.

In the Middle East, Infosys was instrumental in building a corporate website solution integrated with an online booking engine for a leading airline,which helped the client win the UAE Strategy Web Award.

Infosys' Independent Validation Services (IVS) continued to gain traction with clients across industries. Infosys is working with a leading North American insurance company to provide consultancy and performance testing services of a key SOA-based application. Infosys is establishing Testing Centers of Excellence (CoE) for a leading manufacturer and marketer of skincare, fragrance and hair-care products and a leading North American bank. Infosys is also providing performance validation services for a leading utility in North America for a crucial outage communication systems application.

A large European certification company went live on a customer relationship management (CRM) system implemented by Infosys that enables it to achieve end-to-end business process automation. Infosys is undertaking a strategic CRM implementation for a leading manufacturer of handhelds and is engaged in SAP CRM fitment analysis and defining the solution footprint for a global telecom player.

"Package Implementation, Business Process Management and Testing services grew faster during the quarter," said S. D. Shibulal, Member of the Board and Head - Worldwide Customer Sales & Delivery. "The pricing environment continues to be stable with an upward bias. We have seen a slight increase in per capita revenue during the quarter."

Finacle ®
Finacle ®, the universal banking solution from Infosys, registered a key win this quarter - a large nationalized bank in Indiawith about 1,200 branches. Finacle ® will power the bank's front- and back-office operations, enabling it to consolidate customer information, achieve better regulatory compliance and lower operational costs. Finacle ® will also facilitate mobile banking, helping the bank increase its reach and offer enhanced customer experience.

Two other banks , one each in Africa and India, went live with Finacle ® core banking. New versions were rolled out at ICICI Bank - UK operations, Bank of Rajasthan and ANZ Bank.

Finacle ® was named a leader in a study of retail banking platforms released by a leading analyst.

Liquidity and capital expenditure
Cash and cash equivalents, including investments in liquid mutual funds, as on December 31, 2006 was Rs. 4,791 crore (Rs. 4,348 crore as on December 31, 2005). During the quarter, Infosys incurred capital expenditure of Rs. 343 crore. Operating cash flows during the quarter ended December 31, 2006 were Rs. 981 crore (Rs. 771 crore for the quarter ended December 31, 2005).

"The rupee appreciated against all major currencies during the quarter, impacting our operating margins by 200 basis points," said V. Balakrishnan, Chief Financial Officer. "Despite this, we have maintained our margins."

Infosys BPO Limited
In a first-of-its-kind contract win in the Indian BPO industry, Infosys BPO has been engaged by one of the largest integrated oil companies in the world to deliver a wide range of indirect procurement services including third-party hiring, commodity sourcing, indirect services sourcing, and supplier performance management. Recent wins include one of the best known US media companies.

Expanding its delivery footprint, Infosys BPO inaugurated a 900-seat center in Jaipur and announced plans to increase its capacity significantly over a 3-5 year period. The company also opened a center in Delhi primarily for its knowledge process outsourcing (KPO) services.

During the quarter, Infosys BPO was ranked among the top 100 companies in the Deloitte Fast 500 Asia Pacific program.

On December 8, 2006, the shareholders of Infosys BPO approved a buy-back of up to 12,79,963 equity shares at a fair market value of Rs. 604/- per equity share. Pursuant to the buy-back offer, Infosys BPO bought back 11,39,469 equity shares which were subsequently cancelled on December 29, 2006. As of December 31, 2006 Infosys holds 99.91% of the outstanding equity shares of Infosys BPO.

"Infosys BPO has continued its growth momentum with 20% sequential growth," said T.V. Mohandas Pai, Chairman, Infosys BPO. "We opened significant new accounts in procurement and media, expanded our delivery capability and strengthened our existing relationships. We have moved forward considerably on our journey from process outsourcing to business transformation in a significant number of client engagements."

Infosys Consulting Inc.
Infosys Consulting Inc. continued to work with clients as a trusted partner to support their IT strategy for transformation. One of the world's largest travel agencies with lines of business that include credit cards and magazines is partnering with Infosys Consulting to streamline its governance practices by defining and implementing a flexible model to improve integration and transparency between IT and internal business partners.

For a largepharmaceutical company, Infosys Consulting is developing a master strategy for data management. One of North America's largest food retailers has sought expertise from Infosys Consulting to devise an e-commerce strategy for providing a comprehensive customer experience.

Infosys Consulting is designing finance and billing solution for a global provider of broadband network and services to accelerate growth in an increasingly competitive industry. Aglobal beverage and consumer products company is using the expertise of Infosys Consulting to undertake a major business transformation encompassing its entire North American organization and multiple business units.

Sponsored Secondary ADR Program
During the quarter, Infosys completed a sponsored secondary offering of 3,00,00,000 American Depositary Shares (ADS), representing 3,00,00,000 equity shares (one equity share represents one ADS) at a price of US$ 53.50 per ADS excluding underwriting discounts and commissions. The aggregate size of the offering exceeded US$ 1.6 billion, which was the largest international equity offering from India.

NASDAQ-100 Index
Infosys was added to the NASDAQ-100 Index effective with the market opening on December 18, 2006. The NASDAQ-100 Index is composed of the 100 largest non-financial stocks on the NASDAQ Stock Market in terms of market capitalization. Infosys is the first Indian company to be added to the NASDAQ-100 Index and is the only Indian company to be part of any of the major global indices.

About the company 
Infosys (NASDAQ: INFY) defines, designs and delivers IT-enabled business solutions. These provide our clients with strategic differentiation and operational superiority, thereby increasing their competitiveness. Each solution we provide is delivered with the industry-benchmark "Infosys Predictability" that gives our clients peace of mind. With Infosys, they are assured of a transparent business partner, business-IT alignment with flexibility, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. Infosys has over 69,000 employees in over 39 offices worldwide. Infosys is part of the NASDAQ-100 Index. For more information, visit www.infosys.com

Safe Harbor
Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT, business process outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry.

Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2006, our Quarterly Reports on Form 6-K for the quarters ended June 30, 2006 and September 30, 2006 and our other recent filings. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

Contact

Investor Relations	Shekar Narayanan, India +91 (80) 4116 7744 shekarn@infosys.com	Sandeep Mahindroo, USA +1 (646) 254 3133 sandeep_mahindroo@infosys.com
Media Relations	Bani Paintal Dhawan , India +91 (80) 2852 2408 Bani_Dhawan@infosys.com	Peter Mclaughlin, USA +1 (213) 268 9363 Peter_Mclaughlin@infosys.com

INFOSYS TECHNOLOGIES LIMITED

In Rs. crore
Balance Sheet as at	December 31, 2006	March 31, 2006
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital	279	138
Reserves and surplus	9,363	6,759
	9,642	6,897
APPLICATION OF FUNDS
FIXED ASSETS
Original cost	3,651	2,837
Less: Accumulated Depreciation	1,608	1,275
Net book value	2,043	1,562
Add: Capital work-in-progress	573	571
	2,616	2,133
INVESTMENTS	2,793	876
DEFERRED TAX ASSETS	71	56
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors	2,086	1,518
Cash and bank balances	1,668	3,279
Loans and advances	1,769	1,252
	5,523	6,049
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities	1,045	808
Provisions	316	1,409
NET CURRENT ASSETS	4,162	3,832
	9,642	6,897

NOTE:
The audited Balance Sheet as on December 31, 2006 and the Profit and Loss Account for the quarter and nine months ended December 31, 2006 have been taken on record at the board meeting held on January 11, 2007

INFOSYS TECHNOLOGIES LIMITED

In Rs. crore, except per share data
Profit and Loss Account for the	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
INCOME
Software services and products	3,454	2,398	9,594	6,535
Software development expenses	1,888	1,276	5,299	3,508
GROSS PROFIT	1,566	1,122	4,295	3,027
Selling and marketing expenses	182	129	530	374
General and administration expenses	235	160	688	469
	417	289	1,218	843
OPERATING PROFIT BEFORE INTEREST AND DEPRECIATION	1,149	833	3,077	2,184
Interest	-	-	-	-
Depreciation	129	109	336	274
OPERATING PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS	1,020	724	2,741	1,910
Other income	60	(2)	255	73
Provision for investments	-	-	3	-
NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS	1,080	722	2,993	1,983
Provision for taxation	122	80	340	226
NET PROFIT AFTER TAX AND BEFORE EXCEPTIONAL ITEMS	958	642	2,653	1,757
Income on sale of investments, net of taxes	-	-	6	-
NET PROFIT AFTER TAX AND EXCEPTIONAL ITEMS	958	642	2,659	1,757
BALANCE BROUGHT FORWARD	3,574	2,341	2,195	1,428
Less: Residual dividend paid	-	-	4	-
Additional dividend tax	-	-	1	-
	3,574	2,341	2,190	1,428
AMOUNT AVAILABLE FOR APPROPRIATION	4,532	2,983	4,849	3,185
DIVIDEND
Interim	-	-	278	177
Final	-	-	-	-
Total dividend	-	-	278	177
Dividend tax	-	-	39	25
Balance in Profit and Loss Account	4,532	2,983	4,532	2,983
	4,532	2,983	4,849	3,185
EARNINGS PER SHARE* (Equity shares, par value Rs. 5/- each)
Before Exceptional Items
Basic	17.20	11.72	47.82	32.27
Diluted	16.82	11.39	46.70	31.35
After Exceptional Items
Basic	17.20	11.72	47.93	32.27
Diluted	16.82	11.39	46.81	31.35
Number of shares used in computing earnings per share
Basic	55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Diluted	56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992

* Adjusted for issue of bonus shares in the ratio of 1:1 allotted on July 15, 2006.

 NOTE: A Fact Sheet providing the operating metrics of the company can be downloaded from www.infosys.com

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Consolidated Balance Sheet as at	December 31, 2006	March 31, 2006
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital	279	138
Reserves and surplus	9,436	6,828
	9,715	6,966
MINORITY INTERESTS	-	68
	9,715	7,034
APPLICATION OF FUNDS
FIXED ASSETS
Original cost	4,308	2,983
Less: Accumulated Depreciation	1,695	1,328
Net book value	2,613	1,655
Add: Capital work-in-progress	578	571
	3,191	2,226
INVESTMENTS	2,192	755
DEFERRED TAX ASSETS	83	65
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors	2,216	1,608
Cash and bank balances	1,848	3,429
Loans and advances	1,786	1,297
	5,850	6,334
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities	1,275	934
Provisions	326	1,412
NET CURRENT ASSETS	4,249	3,988
	9,715	7,034

NOTE:
The audited Balance Sheet as on December 31, 2006 and the Profit and Loss Account for the quarter and nine months ended December 31, 2006 have been taken on record at the board meeting held on January 11, 2007

Principles of consolidation: The financial statements are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as set out in the Accounting Standard on Consolidated Financial Statements prescribed by the Institute of Chartered Accountants of India. The financial statements of the parent company Infosys Technologies Limited ("Infosys" or "company") and its subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and transactions and resulting unrealized gains / losses.

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore, except per share data
Consolidated Profit and Loss Account for the	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
INCOME
Software services, products and business process management	3,655	2,532	10,121	6,897
Software development and business process management expenses	1,938	1,327	5,437	3,644
GROSS PROFIT	1,717	1,205	4,684	3,253
Selling and marketing expenses	236	158	661	448
General and administration expenses	285	186	829	547
	521	344	1,490	995
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND MINORITY INTEREST	1,196	861	3,194	2,258
Interest	-	-	-	-
Depreciation	141	117	369	293
OPERATING PROFIT BEFORE TAX , MINORITY INTEREST AND EXCEPTIONAL ITEMS	1,055	744	2,825	1,965
Other income, net	59	(5)	253	68
Provision for investments	-	-	3	1
NET PROFIT BEFORE TAX, MINORITY INTEREST AND EXCEPTIONAL ITEMS	1,114	739	3,075	2,032
Provision for taxation	130	83	359	233
NET PROFIT AFTER TAX AND BEFORE MINORITY INTEREST AND EXCEPTIONAL ITEMS	984	656	2,716	1,799
Income on sale of investments, net of taxes	-	-	6	-
NET PROFIT AFTER TAX, EXCEPTIONAL ITEMS AND BEFORE MINORITY INTEREST	984	656	2,722	1,799
Minority Interest	1	7	10	13
NET PROFIT AFTER TAX, EXCEPTIONAL ITEMS AND MINORITY INTEREST	983	649	2,712	1,786
BALANCE BROUGHT FORWARD	3,626	2,350	2,219	1,415
Less: Residual dividend paid	-	-	4	-
Additional dividend tax	-	-	1	-
	3,626	2,350	2,214	1,415
AMOUNT AVAILABLE FOR APPROPRIATION	4,609	2,999	4,926	3,201
DIVIDEND
Interim	-	-	278	177
Final	-	-	-	-
Total dividend	-	-	278	177
Dividend tax	-	-	39	25
Balance in Profit and Loss Account	4,609	2,999	4,609	2,999
	4,609	2,999	4,926	3,201
EARNINGS PER SHARE* (Equity shares, par value Rs. 5/- each)
Before Exceptional Items
Basic	17.64	11.85	48.75	32.80
Diluted	17.24	11.52	47.61	31.87
After Exceptional Items
Basic	17.64	11.85	48.88	32.80
Diluted	17.24	11.52	47.73	31.87
Number of shares used in computing earnings per share
Basic	55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Diluted	56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992

* Adjusted for issue of bonus shares in the ratio of 1:1 allotted on July 15, 2006.

EX-99.3

EXHIBIT 99.3
Press Conference Transcript

INFOSYS TECHNOLOGIES LIMITED
Q3 07 PRESS CONFERENCE
JANUARY 11, 2007

CORPORATE PARTICIPANTS

Nandan Nilekani
Infosys Technologies - CEO and MD

Kris Gopalakrishnan
Infosys Technologies - COO, President and Joint MD

Mohandas Pai
Infosys Technologies - Member of the Board

S.D. Shibulal
Infosys Technologies - Director and Head - Worldwide Delivery and Sales

Srinath Batni
Infosys Technologies - Member of the Board

V. Balakrishnan
Infosys Technologies - CFO

Amitabh Chaudhry
Infosys BPO - CEO

PRESS CONFERENCE PARTICIPANTS

Sumeet
Reuters

Rohit
Dow Jones

Gayathri
Doordarshan

Raghu
Times of India

Bajaji
Rediff

Moderator
Good afternoon everyone.  Welcome to Infosys Q3 result announcement.  It is our pleasure to see you this year. wishing you a great year ahead.  We will start the proceedings by a presentation by Nandan on the company's financial performance.  Kris will come on and present the company's operational performance.  Nandan will then come back to present the financial outlook.  The Q&A session will happen thereafter.  I would request you to press the red button in the panel in front of you, please release it after you have asked the question so that the next question can be taken up.  I would also request you to give your name and the name of your publication.  Thanks. Over to Nandan.

Nandan Nilekani
Thank you Bani and a Happy New Year to all of you and welcome to this press conference on our third quarter results.  This is the performance for the entire Infosys group.  This is the safe harbor clause. 

Let me briefly talk to you about the financial performance for this quarter.  This quarter on Indian GAAP on a year-to-year basis, we have grown at 44.4% and PAT from ordinary activities has grown at 50%.  On US GAAP, our revenue on a year-to-year basis has grown at 46.9% and our net income has grown at 52.4%.

This quarter we have added 43 new clients and we have added on a gross basis 6,062 people, and on a net basis 3,282, which is and therefore our headcount at the end of December 31st was 69,432.

The overall income was Rs. 3,655 crores for the quarter with a gross profit of Rs. 1,717 crores.  SG&A expense of Rs. 521 crores.  Our operating profit for this quarter was Rs. 1,196 crores.  The important point this quarter is that we had a 200 basis points impact on our operating margin because the rupee appreciated.  The rupee appreciated an average of about 3.8% for the quarter and inspite of having a 200 basis points impact on operating margin because of rupee appreciation, we have been able to offset that because of improvements of 80 basis points in revenue productivity, 80 basis points in license fees, 50 basis points in SG&A expense reduction, and therefore net-net in spite of the rupee appreciation, our operating margins actually improved by 20 basis points and that has reflected in this numbers and the PAT after tax and after minority interest was Rs. 983 crores.

The balance sheet size - total liability is Rs. 9,715 crores; we have a cash and cash equivalents of over a billion dollars at Rs. 4,791 crores, account receivable of Rs. 2,216 crores, and net current assets of Rs. 6,441 crores.

With that I will request Kris to speak about the company performance and I will come back for the summary.  Thank you.

Kris Gopalakrishnan
Thanks Nandan and Happy New Year from my side to all of you.  North America has come down a little bit and the growth in Europe has been very strong. As we can see Europe has gone from 25.8% of our business to 26.8% of our business.

Utilization excluding trainees is 75.8%.  We typically keep it around 76 to 80%, so this is within that range; including trainees it is almost the same, 67.5%.

Fixed price has gone up slightly from 26.2% to 27.7% and actually there has been a positive impact because of this also.

Onsite has come down.  In terms of the effort onsite is 32.7%, it has come down slightly, again that is a positive impact.

The top client is 6.9% of our business.  The top 25 clients sequentially grew 12.6% this quarter. If you look at growth of the company, it is about 10% and the top 25 clients grew faster than the company growth rate.  We have 256 million-dollar relationships.  We have 108 five-million-dollar relationships.  We have 11 fifty-million-dollar relationships and 2 hundred-million-dollar relationships.  We have seen growth across most of the segments here, overall 256 million-dollar relationships.

Some of the examples, I will not go into every one of them but in retail we added a leading US grocery chain as a client. They selected Infosys to enhance its IT systems to support warehouse operations and improve business IT alignment.  We are setting up testing Centers of Excellence for a leading manufacturer and marketer of skin care, fragrance and hair products.  Another top retailer, a global retailer in Europe, has started using Infosys for their infrastructure management services.  In UK, Infosys is helping a company in the energies and utility space to help them with customer service process and maintenance support for two business critical applications for a leading insurance provider.

Finacle continues to register growth.  Finacle won a large nationalized bank in India with about 1,200 branches.  Two other banks, one in Africa and India are live with Finacle core banking.  New versions were rolled out in ICICI Bank, UK operations, in Bank of Rajasthan and ANZ Bank.

Infosys BPO continues to grow; it grew sequentially about 20%.  Infosys Consulting had significant client wins this quarter.  For example, a large food retailer and also this is a combined Infosys Technologies-Infosys Consulting win, chose Infosys Consulting to devise an E-commerce strategy.

Infosys completed the Sponsored ADR offering of 30 million American Depository Shares. This was priced at 53.50 per ADS. Aggregate price is $1.6 billion, one of the largest equity offering from India and this helped Infosys join the select list of NASDAQ-100.  NASDAQ-100 as you know, is an index composed of 100 largest non-financial stocks in the NASDAQ stock markets in terms of market capitalization.  Infosys is the first Indian company to be added to the NASDAQ-100 index.

From a human resources perspective, we have added 6,062 employees of which 1,676 employees were at the experienced category; net addition of 3,282.

We have  spent Rs. 343 crores <towards Capex inaudible>. As of December 31st, the company had 11.5 million square feet of space capable of accommodating 58,000 professionals and another 9.3 - 9.4 million square feet under completion, capable of accommodating another 23,000 professionals.  Now let me hand it over back to Nandan.

Nandan Nilekani
Thanks Kris and let me share with you our outlook for the future.  Now for the quarter ended March 31st, we expect income between Rs. 3,789 crores to Rs. 3,798 crores which on a year-to-year basis is between 44.4% to 44.7% growth and we believe Earnings per share is going to be Rs. 17.88, which on a year-to-year basis is 46.3%.  For the full year, we expect income between Rs. 13,910 crores and Rs. 13,919 crores, which is a growth of 46.1% to 46.2%.  Earnings per share about 66.63, which is a growth of 48%.  On a sequential basis for Q4, we expect Q4 to grow over Q3 in dollar terms between 4.6 to 4.9%.

So to summarize, we believe that our investments over the last several years, we have built a portfolio of services, we have enriched them by creating more value, we have synergized them to create the whole One-Infy approach. We think all these things have led to creating a compelling value proposition for clients, which is reflected in the fact that we have had three consecutive quarters of double-digit growth in dollar terms. 

We believe that the pricing environment continues to be stable with an upward bias.  We have seen this quarter an uptake of 80 basis points of revenue productivity.  We also have, as we clarified, even though the rupee has had an impact of 200 basis points on the operating margin because of the appreciation, we have been able to maintain and in fact improve our margins from 28.3% to 28.5% because the loss of margin due to rupee appreciation was offset by the gain in margin in revenue productivity, in license fees and SG&A scale benefits. 

So, overall we believe this has been a good quarter.  We continue to believe that there is no sign of any slow down in the global economy and IT spending and in any case we think that because of the focus on the globalization of services, we think the whole offshoring story continues to be mainstream and Infosys being the premium brand in this space continues to attract customer benefit.  Thank you very much and now we will take questions.

Kris Gopalakrishnan
You can press the red button and then ask the question.


Lady speaker
What is the outlook for the China unit and for Consulting?  When do you expect them to be profitable?

Shibulal
China continues to be in an investment mode.  We have about 700 employees in China.  This quarter the revenue was about $4.9 million, out of that $1.9 million came from local, and $3 million from global customers including some cross-charge.  What we are seeing is that the global customers are slowly starting to accept China as a viable option for global delivery.  We have two customers from our financial services segment setting up OSDCs. They are starting this quarter.  The utilization is 33%, we expect it to go up in the coming quarters.

Kris Gopalakrishnan
In Consulting, if you look at the Consulting and Enterprise Solution space, our total revenue is about 20%, we have more than 3,000 people.  Consulting subsidiary per se has about 200 odd people, but overall business and management consulting is about 500 plus people right now, which is what we said it should be.

Male participant
<______in audible>

V. Balakrishnan
The average rupee dollar rate in last quarter, that is September quarter was 46.29, this quarter it was 44.53. So there is an appreciation of 3.8%.  It impacted the operating margin by 200 basis points.  On the non-operating side, we had certain hedges that gave a benefit of 1.1% because we had $373 million worth of hedges at the end of last quarter and we had a translation impact,  negative impact of 1.6%. So on the net-net basis on a non-operating side, we had a negative impact of 0.6%.  So overall the net margin we had 2% impact coming on the operating side, 0.6% coming on a non-operating side, overall it is 2.6% impact on the net margin because of the rupee. 

Last year, I think we closed the year at something around 45.4 or so, now the rupee is at 44.11, so we already have a impact of something around 3 to 3.5% because of the change in currency rates. 

This quarter, the revenue loss because of the currency appreciation, it is Rs. 145 crores. 

Male participant
<______ inaudible>.

V. Balakrishnan
No, we don't have much hedging for the payables because we have a natural hedge.  We derive revenues in foreign currencies and we have expenses in foreign currency, which nets it out.  We are a net foreign exchange earner. So the hedges are mainly for receivables, not for payables.

Lady Speaker
What is your forecast for employee growth for the rest of the year and any outlook at all for the coming fiscal year?

Mohandas Pai
We plan to hire about 5,000 people for the rest of the year.  We hired 6,000 people this quarter.  With 5,000 people we will have a gross number of 30,000 people.  For next year, we will give the forecast along with our financial forecast.

Sumeet (Reuters)
If you could tell us something about your business in Infosys BPO, how is the margin growing there and how many people do you wish to add?

Amitabh Chaudhry
On the BPO side, as you are aware we grew by almost 20% quarter-on-quarter.  Our margins have been steady.  Actually our margins this quarter are slightly better than that of last quarter.  Our attrition rate which was 38.2% last quarter has come down to 26% this quarter, so we have done very well on that front.  As far as our pipeline and our growth matrix are concerned, I think we continue to see a lot of traction and we are quite confident about the future.

What portion do you want me to repeat?

Sorry, this quarter we had a margin of 22.3%. We continue to carry an impact of one time items including stock compensation charge and we had given a Silver Jubilee bonus to all our employees and we continue to carry that charge in our books.  If you take some of those items off, our margins are upward of 24% in the business. 

We have done and we have margins about 1% better than last quarter. 

Male participant <______in audible>

Amitabh Chaudhry <______in audible>

This particular client is also a client of Infosys but we cannot name the client. 

Male speaker <______in audible>

You are talking about Infosys BPO?  We have 29 clients in Infosys BPO as of end of this quarter, 29 clients.

Sumeet (Reuters)
Could you give us an idea where growth is coming in the European market, any specific industries?

Kris Gopalakrishnan
In Europe, we have growth in financial services, in manufacturing, in high tech, which includes telecom also and retail, so these are the four sectors where we are seeing good growth in Europe.

Rohit (Dow Jones)
I just wanted your outlook on the rupee for the fourth quarter?

V. Balakrishnan
Well, it is very difficult to predict.  I am not the Reserve Bank of India Governor but I think we closed the quarter at 44.11 and our guidance factors 44.11 for next quarter.  We continue to proactively hedge our risks and try to minimize the impact.  The currency market is very volatile.  It has got different macro-economic factors, which is driving the currency rate; one is the oil price, the other is the equitymarkets, another is inflow into a country. So I think they are various macro-economic factors, it is very difficult to predict, you can only manage by proactively taking some of the hedges. That is what we are doing. 

Male speaker <______in audible>

Last quarter end we have $373 million of hedges, end of December we have $360 million.

Sumeet (Reuters)
Mr. Pai if you could tell us something about the high attrition rates, it continues to be high in the December quarter as well and are the wage hikes in FY08 is likely to be the same as the previous year?

Mohandas Pai
We have an attrition of 13.5% on the last 12 months basis.  If you remove the involuntary attrition - attrition which happens because of the fact that people do not pass our training course with a particular range of marks, then the attrition has come down to 12.2%.  Last quarter, the attrition was 12.9% on LTM basis and 12% excluding involuntary attrition.  So if you check the normal attrition, it has gone up from 12% on LTM basis to 12.2%.  If you take the total number of people who left is almost the same like the last quarter, even though we have added on about 3,500 people net this quarter.  So on the attrition front, I think things are under control.  As far as the wages are concerned, we have said that the wages for the next year, we don't see any increase in the total quantum of wage hike compared to what we did this year of between 13 to 15%, at this point of time.

Gayathri
You have planned no capacity addition in Bangalore, but there is capacity addition happening elsewhere. Is it easier to acquire land in other places, is it far more difficult in Bangalore?  That is question #1.  Second is, many of your employees leave from what I hear, they leave even though they come from varied backgrounds studying different subjects, they all come here because financially they feel much more attracted to come to IT company, how can you make the work more interesting for them because I hear many of them say that after sometime they get tired of coding?

Mohandas Pai
Gayathri, you know the situation about lands in Bangalore. I think you know it as well as we do.  We have identified land and we have got the consent of people. I think we have put an application for acquisition with KIADB and it stands there at this point of time, it is still going on.  As of date we have no land.  Whatever we could we did. So the question of expanding in Bangalore is very tough because we don't have space.  Yeah, that is already included in the numbers, so that is one.  And two, as far as the second question about young people, I think the people who are joining in the last 1 to 2 years, have a feeling of restlessness amongst them, I mean we see a very qualitative change. Younger people who joined today are restless, they want to go up the ladder very fast, they want to see rapid change in the work that they do, they get easily bored.  It is a systemic change in society that we are seeing and I think if you look at you and us and people who j oined 7 years back, I think they were willing to work on a job and learn and grow but now people don't even want to learn. They just do one project, they get bored, they want something else without becoming experts. It is symbiotic of what is happening in society. So the way out is possibly better communication, more handholding, more investment in training and talking to them and making them understand, they have got a long working life of 30 years, they need to become masters of at least one or two technologies and for that they have to spend time and do a deep dive exercise.

Lady participant
Bala, margins this quarter was 28.9%, what is the outlook for the fourth quarter?

V. Balakrishnan
I think our guidance factors in a stable margin for next quarter because the average rupee rate this quarter was 44.53.  Our guidance assumes 44.11. It will have some impact on the margin but that will be offset by the scale benefit we will get on the SG&A. So our guidance factors in a stable margin environment for next quarter.

Lady participant
Do you expect improvement in utilization rates as well given that you are hiring fewer people in the second half of the year?

Kris Gopalakrishnan
We try to keep the utilization between a range of 76% to 80% and this is because we want to make sure that if there is an opportunity in the market and we need to respond fast, we have sufficient bench capacity to respond.  Right now it is 77.7 excluding trainees, so our range will be around the same.

Male participant
Can you give us an idea of per capita productivity, how much has it increased over the year-on-year?

Kris Gopalakrishnan
Quarter upon quarter, onsite has gone up by 1.9%, offshore has gone up by 1.7%, on a blended basis 1.4%. Annually that is the year to date last year versus year to date this year is 3.7% onsite, 2.1% offshore, and 4.3% blended.

Male participant
2.1% is it?

Kris Gopalakrishnan
3.7% onsite, 2.1% offshore and 4.3% blended, this is year to date from last year to this year.

Raghu (Times)
I would like to know your take on inorganic growth, I mean especially looking at your growing cash reserves at least what are the verticals that look promising for Infosys to invest in the coming year?  And secondly, I would also like to know what exactly are you planning to do about ..., and this is one question?

Kris Gopalakrishnan
When you look at inorganic growth, the first thing you need to know is that if you look at the last 5 to 7 years, we have had better performance than most companies in the IT services sector in terms of growth organically. So we believe that we have grown organically very well.  Having said that, we look at acquisitions in the area of new services, deepening our penetration into a particular industry vertical or may be even entering into a new vertical through an acquisition and lastly looking at platform based services and things like that. So there are various possibilities in the acquisition side.  For us the key is to make sure that the acquired entity brings in value to Infosys, we are able to integrate that well, and we pay the right price for the acquired entity.  Those are some of the parameters we look at when we look at acquisition.

Raghu (Times)
Secondly, I just wanted to know there are some of the engagements that you had in the retail side because that seems to have gotten into the double digit figure after Q2. So if you can sort of elaborate on the kind of engagements you had in Q2 in retail?

Shibulal
On the retail side actually we have some very strong solutions.  First one I would mention is the master data management solution which we have and the second one is multi-channel integration solution. So in the retail space and in the RFID area in the retail, also we have built deep expertise.  So the expertise which we have in the retail vertical plus the solutions which we have are allowing us to win very very strategic deals, transformational deals in the retail space.  For example, I think we are working with about 8 or 9 top US retailers on creating the multi-channel integration solutions for them. 8 or 9 of the major retailers in US are working with us on the multi -channel integration solutions.  Our RFID solution has been recently rolled out to one of the healthcare customers in US for tracking high value items. So the work which we are doing in retail is solution oriented as well as transformational oriented.

Raghu (Times)
Whatever happened to your Calcutta project?

Mohandas Pai
It remains where it was last quarter.

Gayathri
What is happening on the RFID?  You had an experiment going sometime ago. There were some initial forays into RFID.  I believe there is a big seminar coming up.

Shibulal
As I just mentioned, we have built expertise in the RFID in the retail space as well as we have created solutions around it.  The RFID tag price points are still very high for low value items.  So the cost of the tag is too high to be used with very low value items.  So that option is definitely slower in the retail industry but at the same time what we have done is to adopt that solution for high value items, not in retail, across other industries and as I said we have recently rolled out a solution for a healthcare instrument manufacturer to track high value items using our RFID solution.

Arun
I just wanted to clarify on this attrition in the BPO.  Mr. Chaudhry had said that it was 38.2% in Q2 and it went down to 26% in Q3, so what was the reason?  Is this kind of a one off incident or is this going to be something cyclical?  Can you throw some light on that?

Amitabh Chaudhry
Well, we have been working very hard at it, so I hope that is the reason why it has come down.  But this is one-quarter number.  We are obviously hoping that we will be able to sustain it.  It is a very significant drop in our attrition numbers and we have taken that as a big problem for the industry itself and for the company because we believe that the number has to be between 20-25% on a sustainable basis.  So, we are coming closer to our target.  It is not just one thing which we did, we did change our name to Infosys BPO last quarter as I am sure it has helped, but apart from that we have been working with our employees and trying to understand what are some of the issues they have and why are they leaving us and I think we are working on each of those individual issues from a communication perspective, from their career aspirations and some of the programs we have launched for them and so on and so forth.  I think it is having a positive impact in our ov erall attrition numbers.  We are also making each of our managers realize the importance of attrition and I think they are owning that problem in a much bigger way than before.  So, these are some of the reasons why we believe it has gone down but we have got it down for one quarter and we need to sustain it. So the story is not over as yet.  But we do believe that at this number if we really do an apple-to-apple comparison, I think we have demonstrated that the attrition number can be as low as this.  A lot of other people report numbers close to this but they do take out a number of people who attritted because they report it in a very different way.

Sumeet (Reuters)
January to March is the quarter when most of the US companies reallocate their budget for IT spending.  I just wanted to know if you are hearing any talks of cut in tech spending against the backdrop of the US slow down and how has the inclusion in NASDAQ-100 Index help in terms of bagging new deals?

Kris Gopalakrishnan
We poll our customers periodically and what we hear from them is that IT spending or budgets will go up slightly may be 2-6%, but more importantly for us as offshore has become mainstream today, offshore outsourcing will take significant share away from the traditional way of doing things.  That means offshore will continue to grow.  If you look at the NASSCOM-McKinsey study, it still says that over the next few years, the industry should continue to see a growth rate of about 30% and we are also seeing that the clients are willing to look at much larger size of teams or projects, etc, when it comes to offshore, looking at 1,000 or 2,000 people kind of offshore teams, etc. or project sizes.  So, clearly we are seeing that there is tremendous opportunity in the offshore outsourcing and it will continue to grow.  So, if you go back and look at our presence on NASDAQ itself way back in 1999, it was a watershed event, it increased our exposure and the brand equity. So clearly NASDAQ-100 also demonstrates that we are a global company.  We are a company which has arrived and clearly it is a demonstration of the brand equity of the company.  We feel that this will benefit us both from an investor perspective as well as client and a customer perspective from an awareness, brand equity, visibility, etc.

Lady participant
Kris to clarify, you said your clients are telling you that there will be a 2-6% increase in spending budgets in 2007?

Kris Gopalakrishnan
Yes, 2-6% increase in budgets.

Male participant
The period you mentioned for, if you could just clarify 2-6% over the next year, FY08 or fourth quarter of this year?

Kris Gopalakrishnan
In 2007 calendar year budget over calendar year 2006 budget.  You see the budgets are being firmed up as we speak, January is when the budgets get firmed up and we believe that the budgets will increase somewhere between 2-6%, more like 4-5%.

Male participant
It is related to the US companies, right?

Kris Gopalakrishnan
Global companies

Male participant
Mr. Gopalakrishnan, what specifically about European companies, you expect the IT spend budgets go up much higher than what is happening in the US or it will again fall in that 2-6% range?

Kris Gopalakrishnan
The difference when it comes to European companies is that except for UK, the continental Europe has been slightly slower in the adoption of the offshore model and they are in a catch up mode at this point and they are accelerating their move to offshore. So that is the difference when it comes to Europe and we are seeing that we are taking advantage of that and investing more and growing faster in Europe.

Nandan Nilekani
I think one thing we must remember that when we are talking about 2-6% increase in spending, it is the total IT spending, but we must also bear in mind that the complexion of that spending is changing and that there is a larger proportion of that spending going towards offshoring and the globalization of services.  That is how we have to look at it, that is, one is the total spend and then how the composition is changing towards the kinds of things that we do.

Male participant
Just one question, you have Infosys China and you are trying to use that as a base to talk to global customers based both in China as well as the rest of the Far East. When you are talking about this offshoring model, what is getting projected from Infosys side, is it the India story or is it the India plus China factor that you are trying to bring on the table?

Shibulal
What we are projecting is the true Global Delivery Model story, that is what we are projecting.  It is about the ability to take programs across the globe, deliver it from multiple locations seamlessly to a customer.  So, our China centre from a global delivery perspective just like another center like Bhubaneshwar or Mangalore or Chennai. It is not any different and the quality of delivery, the kind of people, the processes which we follow and every other aspect of the delivery will be exactly same as any other location in India.  We also have proximity development centers in other parts of the world. So what we are projecting is a unified, true Global Delivery Model.

Balaji
Nandan, could you elaborate on this?  How much of that would account for offshoring globalization, you said 2-6% spending or total tech spending. It is a very complex spending, but how much do you think is the pie there for offshore and globalization?

Nandan Nilekani
I think, it is difficult to say how much of that but I think the couple of metrics we should look at is that the total IT and BPO offshoring in India has gone up from something like $50 million in 1991 to about $24 billion today and if you go by the public estimates of NASSCOM, they are looking at total IT and BPO spend of around $50 to $60 billion by the turn of the decade.  So, that is some kind of proxy for how much money is getting spent here.  So, our point was that if you look at the last four to five years, while the IT spending in aggregate terms has not gone up, the fact is that firms like Infosys have grown in the past five years, at a compounded growth rate of 40%.  So, the point I am trying to make is that there is shift in the way people are spending their money on technology.

Male participant
Can you throw some light on Infosys Australia, what is the revenues and the......?

Srinath Batni
Infosys Australia has grown by 39% on a standalone basis from year on year and 51% based on the combined offshore delivery also.  Today, we have got about 350 local employees.  We have added about 40 employees this quarter. 

Balaji
Nandan now we come to my last question is how serious is this terror threat?  Your company has been in the news for wrong reasons recently. That is #1, and then, why do you think your company is being singled out by these kind of renegade elements and what measures you are taking to foil, if there is such presumptive attack, not necessarily here but anywhere?  How much are you spending on this?

Nandan Nilekani
I think you are asking us to take transparency to the next level here, how much we are spending and all.  I think there have been many locations that are being mentioned.  Just yesterday all the airports in the country were under some kind of an alert. So I think that is an ongoing thing and we have taken all the necessary measures, security measures to deal with this but unfortunately I cannot really say how much we are spending on it plus exactly what measures we have taken we really cannot share with you because that is part of the measure that they have to be confidential, but I think it suffices to say that we are taking all the necessary steps to deal with any such potential threat.

Balaji
From your company's perception, how serious and is the really the intelligence, the police information, does tell you that and do you have your own independent or any other kind of assessment made?

Nandan Nilekani
Well, I think we cannot really comment on that.  All I can say is that I think at different points in time, different places are mentioned in this space.

Gayathri
How strict is the surveillance over the employees themselves. There is such a turn over, so many people are working here, 63,000 plus?

Mohandas Pai
How strict is the surveillance over the employees?  Well, we do background checks for all laterals who join the corporation.  We make sure that we hire from the best colleges for the people who come in at the fresher level and we take whatever measures we deem necessary to make sure that we protect the enterprise.

Moderator
Thank you every one.  Rahul do you have a question?

Rahul
Sir, the other cities you are building in like Pune and Chandigarh, are they doing any thing better than places like Bangalore and Calcutta for example in terms of giving you the clearances or allotting land. Are they doing anything faster or better?

Mohandas Pai
Oh yeah, the government support is very very good in Andhra Pradesh, very good in Tamil Nadu.  It is good in Kerala, it is good in Chandigarh, very good in Pune, very very good in Bhubaneshwar and we come to Bangalore and you know the situation.  Bangalore is okay, but Bangalore is the biggest place in the country.  Obviously, a lot-lot more needs to be done in Bangalore.  Of course, Rajasthan is now the hotspot.  We see a golden triangle for IT in north India.  Delhi, Jaipur and Noida, there is a golden triangle happening. There is a big golden triangle in the south, Hyderabad, Bangalore, and Chennai.

Moderator
Thank you every one.  The spokespeople will be available for one-on-one comments.  We will break for lunch now.

EX-99.4

EXHIBIT 99.4
Presentation

EX-99.5

exv99w5

EX-99.6

EXHIBIT 99.6
Transcript Afternoon Earning Call

INFOSYS TECHNOLOGIES LIMITED
Q3 07 AFTERNOON EARNINGS CALL
JANUARY 11, 2007

CORPORATE PARTICIPANTS

Nandan Nilekani
Infosys Technologies - CEO and MD

Kris Gopalakrishnan
Infosys Technologies - COO, President and Joint MD

Mohandas Pai
Infosys Technologies - Member of the Board

S.D. Shibulal
Infosys Technologies - Director and Head - Worldwide Delivery and Sales

V. Balakrishnan
Infosys Technologies - CFO

Amitabh Chaudhry
 Infosys BPO - CEO

CONFERENCE CALL PARTICIPANTS

Anthony Miller
Arete Research

Alex
Nevski Capital

Nitin
Nomura Securities

Sameer Goyal
Alchemy Shares

Sandeep Shah
Motilal Oswal

Hitesh Zaveri
Edelweiss

Shekar Singh
ICICI Securities

Anantha Narayan
Morgan Stanley

Trideep Bhattacharya
UBS

Pankaj Kapoor
ABN Amro

Bhavin Shah
JP Morgan

Kinani
Macquarie Security

Utham Kumar
Brics Securities

Nimesh Mistry
Man Financials

Sudeep Parab
Bank of America Securities

Sumeet Poddar
Anand Rathi Securities

Amit Khurana
IL&FS

Chinmay Sathe
DSP Merrill Lynch

Moderator
Good afternoon ladies and gentlemen. I am Pratibha the moderator for this conference. Welcome to the Infosys third quarter earnings conference call. For the duration of the presentation, all participants' lines will be in the listen-only mode. After the presentation, the question and answer session will be conducted for participants connected to SingTel followed by question and answer session for participants at India. I would now like to hand over to Mr. Shekar Narayanan. Thank you and over to you sir.

Shekar Narayanan
Thanks Pratibha. Good afternoon ladies and gentleman. I am Shekar from the Investor Relations Team in Bangalore. We thank you all for joining us today to discuss the financial results for the quarter ended December 31, 2006. On behalf of the management, let me at the outset wish you all a very happy and prosperous 2007 and beyond. To take us through the earnings numbers and to answer your questions, we have with us today, CEO and Managing Director, Mr. Nandan Nilekani; President, COO and Joint Managing Director, Mr. Kris Gopalakrishnan and CFO, Mr. V. Balakrishnan along with other members of the senior management. We will start with a brief statement on the performance of the company during the quarter ended December 31, 2006, the outlook for the quarter and year ending 31st March 2007. After that, we will open up the discussion for questions and answers. Before I hand over to Infosys management, I would like to remind you that anything we say which refers to our outlook for the future is a forward-looking statement and must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available with our filings with the SEC, which can be found on www.sec.gov. I would now pass it on to the Infosys management.

Nandan Nilekani
Thank you and I would like to welcome all of you to this call which is the analyst call after the third quarter earnings update from Infosys after our Board meetings today. I am happy to note that this has been another very successful quarter for Infosys. I will just leave a few thoughts with you before I hand over to Kris. First of all, this quarter, we have seen double-digit growth. We have grown at 10.1% in dollar terms and what is interesting is this is the third quarter in a row where we have grown double digit in dollar terms. However, thanks to the appreciation of the rupee, our growth in rupee terms has not been commensurate, we have grown at 5.9%. We have estimated that the average appreciation of the rupee for us was about 3.8%. The other important point we want you to note is that in spite of the rupee appreciation which would normally have cost us about 200 basis points in operating margins, in fact we have ended the quarter at a positive improvement in operating margin of 20 basis points and that has happened because we had a 80 basis point improvement in our revenue productivity, 80 basis point improvement in our license revenue and 50 basis point improvement in our SG&A expense reduction. So I think, in spite of the rupee appreciation of close to 4%, this quarter, we were able to maintain and in fact improve our operating margins.

We have also set out the guidance for the year. We expect this quarter, our sequential revenue in dollar terms to grow between 4.6% and 4.9% and for the year we expect our revenue in dollar terms to grow at 43% and in rupee terms to grow at 46%. At this point, we do not see any evidence of a slowdown. We believe that IT spending will grow at 2% to 6% in the calendar 2007. At the same time, we think the trend where people are changing the mix of IT spending in a way that more and more will be driven offshore, we think that trend is a mega trend and it is a secular trend. We believe this trend will continue. We believe that risk perception of customers to the globalization of services is coming down. They are far more comfortable having a larger number of employees working for them remotely and we think Infosys being the strongest brand in this business, it is rightly well positioned in terms of relationships, brand, in terms of marquee clients and the engine to deliver, we believe that we are well placed to take advantage of this trend. With this I will pass over to my colleague, Kris Gopalakrishnan, President who will speak about the business performance in more detail.

Kris Gopalakrishnan
Thanks Nandan and wishing you all a Happy New Year. If you look at the revenue for the first nine months of this fiscal year, it exceeds full revenue for the last year. Last year, full revenue was $2.15 billion and the first nine months, we have clocked $2.23 billion dollars. We have crossed the full year revenue in nine months of this year.

We have 488 active clients. We added 43 new clients this quarter. The number of million-dollar clients have gone up from 230 to 256, number of five-million-dollar clients have gone from 97 to 108, and we still have two clients giving us more than $100 million of revenue. The top 25 clients grew 12.6% this quarter, compared to a company growth of 10.1%, that means the top 25 clients grew faster than company growth rate. Some of the sectors which have shown good performance are in the banking and capital market space, insurance, retail, services space etc. Banking and capital markets including insurance, has gone from 37.4% to 38.6%, retail has gone from 9% to 10.5%, service 7.7% to 8.3%.

From a services perspective, package implementation is 17.9% of revenues. Package implementation and consulting together are showing good traction and giving us a significant opportunity in the transformation type of projects.

From a geography perspective, Europe continues to be strong. Europe has grown from 25.8% of revenues to 26.8% of revenues. Finacle continues to do well and products have gone from 3.7% to 4.3% of revenues.

We had a utilization excluding trainees of 77.7% and our target utilization is somewhere between 76% and 80%, so it is comfortable in that range. We had added 6,062 employees of which about 1,676 employees have prior experience. Attrition has gone up to 13.5% but if we exclude involuntary attrition, it comes down to 12.2% and last quarter it was 12%. So it has only marginally gone up this quarter.

Our BPO operation has grown by about 20%. Infosys Australia is doing well. Infosys China is still in investment mode and Infosys Consulting is meeting its objectives but it is still in the investment mode though if we include the transfer pricing between the subsidiary and the parent, then there is a small positive number here. I will pass on to V. Balakrishnan, CFO, to give you more details on the financial performance.

V. Balakrishnan
Thank you Kris. I think this quarter we had a sequential growth of 10.1% in dollar terms. It is the third quarter in sequel where we are getting a double-digit growth. In rupee terms, the growth had been 5.9%. As you know, the rupee has appreciated by 3.8% during the quarter. The average rupee-dollar rate for the quarter was 44.53 as compared to 46.29 in the second quarter. It impacted the revenue by Rs. 145 crores. That is why the rupee growth is 5.9%.

If you look at the margins, the margins have been maintained despite the rupee. The impact of rupee on the operating margins was something around 200 basis points; on the non-operating side, it was 60 basis points. We had some hedges, the hedges gave a benefit of 1% point and the translation impact was negative 1.6%. So, net-net on the non-operating, we had an impact of 60 basis points. So at the net margin level, the rupee appreciation has impacted the margin by 2.6%.

The PBIDT was 32.1% last quarter, it went up to 32.7% this quarter. The impact due to rupee has been offset by multiple factors; number one is the per capita revenue increase. As you know, the blended per capita revenue went up by 1.4% sequentially, onsite rates went up by 1.9%, offshore went up by 1.7%, blended basis went up by 1.4%; that gave a benefit of 80 basis points on the margins.

SG&A scale benefit gave around 50 basis points and we have the product revenues growing by 27.5% sequentially. That gave a positive impact of 80 basis points on the margin. Net-net, the impact of rupee had been offset by the scale benefits, the product revenues going up and also the increase in billing rates. So, despite the impact of 2.6% on the net margin, we are able to maintain the margin at the same level as it was last quarter. Going forward, we have given a guidance of 3.7% to 3.9% growth in revenues for the next quarter. We have given the guidance based on the rupee-dollar rate of 44.11; that was the closing rate as of December end. The same rate we are using for the guidance. The EPS growth for the fourth quarter will be around 1.4%, it is mainly due to dilution in the stock because of ESOP. I think net-net this has been a good quarter. We have been able to absorb substantial impact because of rupee appreciation but still maintain the margins. Now, I will open the floor for questions.

Moderator
Thank you very much sir. At this moment, I would like to hand over the floor to Ayesha to conduct the Q&A session for participants at the International bridge. Thank you and over to Ayesha.

International Moderator
Thank you Pratibha. We will now begin the Q&A session for participants connected to the SingTel bridge. Please press 01 to ask a question.

The first question is from Mr. Anthony Miller of Arete Research, UK. Over to you sir.

Anthony Miller
Good afternoon gentlemen. I have got a few questions. I will just keep the key one coming through. If I get a chance, I will ask some more later on in conference call. My really big concern remains on attrition as this is the 7th consecutive quarter where your reported attrition numbers have increased. And I am concerned that each quarter you give reason as for why it is bad this quarter and it is not so bad as it looks but I think now I and investors would be looking for the specific actions that you are taking to get attrition to come under control. Can you explore little further the causes for the attrition and the actions that you are taking please?

Mohandas Pai
Before we get worried about attrition, I think it is important to get into data because data will tell us what actually is happening. We have an attrition LTM of 13.5%. The total number of people who quit the firm is the same as the previous quarter and we have increased in number; so to that extent on a quarter-on-quarter basis it is down. Out of 13.5%, the involuntary attrition is about 1.3%. The involuntary attrition has gone up from 0.9% to 1.3% this quarter. The involuntary attrition arises primarily from people who could not pass our training course at Mysore. In the last one year, what we have done is to qualitatively enhance the standard for people to get through the training course to make sure that we get the best people into delivery. We have put in a benchmark of 4 out of 5 CGPA to make sure that they are at a very high standard and this has led to an increase in the attrition in training from 2% to 5% and that is why 1.3% of this 13.5% is because of the trainees not completing the course and dropping off. If you look at the attrition over the last five quarters, Q3 of last year, it was 10.3% excluding involuntary attrition, 10.5%, 11.2%, 12%, and 12.2%. So, in the last three quarters, we have seen a bump-up of 1% in attrition and it is not something that worries us enormously because in the last two years, we have seen an increase in hiring and the impact on us has not been very high. Only about 46% of the people who leave us, go and join other companies. About 20% of the people who leave, go in for higher studies and they will go for higher studies irrespective of anything that you do. About 10% of people drop out of the workforce, they either get married or they retire or whatever. Retire in the sense not because of superannuation but because they do not want to work any more and the balance for whatever personal reason, like going back to their hometown, family reasons, family business, etc. And we have not seen any change in this for the last five to six quarters, except the number has gone up slightly and we do think that going forward the many steps that we have taken will keep attrition within a very reasonable, acceptable manner and the many steps that we have taken are, (1) improving communication with our employees to talk to them about the market place, the job opportunities and the career; (2) making sure the compensation structure reflects what they would get in the marketplace; (3) increasing the bonding between the employees and the corporation by ensuring that they understand what we are doing much better, it is a part of one; and (4) making sure that the managers are trained how to handle people reporting to them. So, an enormous amount of work has been done in the last three to four quarters and we will see some results of that over a period of time and if we look at all the technology majors, we probably have the best number in terms of attrition based upon a proper methodology to calculate the attrition.

Anthony Miller
Well, I pretty much agree with you on that point. Let me just have a followup from what you have said and then I will hand over to some one else for question. The second part that you said that the actions you were taking was to do with making sure your compensation was competitive. Does that mean that you foresee the need for extra wage hikes beyond the annual ones that you normally give in April. Will you have to raise wages again this fiscal year?

Mohandas Pai
No. It does not mean we got to do something extra from what we do. It just means, we got to prioritize and reallocate a larger part of the wage hike in that 3 to 5 year band of people who are very valuable and where the attrition is higher than the five-year plus because this band are the people who manage projects and they have worked in the firm for 3 years and they get promoted and there possibly we may have to give a higher increase when compared to other bands because with other bands we are very comfortable. And in the 1-3 year band, it is just a question of hanging on because people finish their training and they are foot-loose and they want to go somewhere else, there is nothing much can be done. But the 3 to 5 year band is where we are going to invest next year and make sure that they get the focus.

Anthony Miller
Okay. Thanks very much. I will see if I can ask some more questions later. Thank you.

International Moderator
Next in line, we have Mr. Alex Kwok of Nevski Capital. Over to you, sir.

Alex
Hi, good afternoon. My question is on the BPO business and I am wondering if you can give us any color on how the business is progressing and I am thinking specifically about any detail in terms of the billing rates, utilization effort and the breakdown within the BPO business.

Amitabh Chaudhry
The BPO business grew 20+% quarter-on-quarter. This was the third quarter of double-digit growth. So, we have done $41 million of revenue this quarter. Our margins for this quarter were slightly better than that of last quarter. So, if you look at net margins, they were 22% plus but if you take off one-off items from that particular margin, we have some stock compensation charge and we had given Silver Jubilee bonus and that continues to impact us. Our margins are in excess of 24%. We continue to get good traction from our clients which is obviously reflected in the revenue growth we have seen. We have seen a satisfactory reduction in our attrition rates which have gone down from 38.2% last quarter to 36% this quarter. As far as the growth of the business is concerned, our pipelines remain strong. We believe that our business will continue to track extremely well going forward in the future. The three areas from a vertical perspective have been large for us have been banking capital markets which is very similar to that of Infosys Technologies itself, CSP which is the telecom space and high tech and discrete manufacturing which is where we had won some of our first clients. As we have announced in the press release, we have started working with a Fortune 10 global oil major in the procurement space which is a very important win for us and I guess continues to demonstrate as to how we have gone into new areas and been able to win marquee clients and be able to demonstrate that we can execute the business. Thanks.

Alex
Thank you.

International Moderator
Next, we have Mr. Shailesh Jaitley of Nomura. Over to you, sir.

Nitin
Good afternoon. My name is Nitin. I am calling on behalf of Shailesh. I would like to seek a clarification on the margin impact that you listed out from the pricing, the scale benefit product revenue and billing rate. Could you please repeat that for me?

V. Balakrishnan
Sure. I think the rupee appreciated by 3.8% during the quarter. It had an impact of 2% on the operating margins. We had three or four factors which led to offset that impact. One is increase in product revenues; product revenues grew by 27.5% sequentially from around $28 million last quarter to $35 million. That had a positive impact of 80 basis points on the margins. We had a SG&A scale benefit of 50 basis points and the billing rates on a blended basis went up by 1.4%; it went up by 1.9% onsite, 1.7% offshore. On a blended basis it went up by 1.4%. So that had a positive impact of 80 basis points on the margin. So, net-net, you had 2% impact coming because of appreciation and 2.2% benefit; net-net we had 20 basis points impact in the margins.

Nitin
All right. The second question was regarding, is there any uptake on your total employee head count, the gross adds. In the last quarter, you had given gross adds to be at 28,300 as target, and given the current gross adds, it is almost at 24,954. So, do you think that it is only going to be around 3,500 next quarter or it is going to be more gross adds?

V. Balakrishnan
Our guidance is 5,100 gross addition next quarter, adding up to 30,000 gross additions for the whole year.

Nitin
Around 30,000 gross for the year. All right sir. Okay, right and that would be from me. Thank you very much.

Moderator
Thank you very much Ayesha. We will now move over to questions from India bridge. Participants connected to the India bridge, may please press *1 if they wish to ask a questions. On pressing *1, participants will get a chance to present questions on a first-in-basis basis. To ask a question, please press *1 now.

First question comes from the line of Mr. Sameer Goyal with Alchemy Shares.

Sameer Goyal
Yeah, hi. My question pertains to the performance of subsidiaries. Could you give us the break up in terms of revenues, profits, and human resource for all the three subsidiaries Progeon, HR, and Consulting?

Shibulal
This is Shibulal. I will start with China. China has about 700 employees. Last quarter, the revenue was $4.9 million; $1.9 million of that came from the local business, $3 million from global business including some cross charge. The global business is starting to show some positive signs. Last quarter two of our global financial customers have agreed to have their OSDCs in China. Local business, last quarter we have assembled a good sales team and put them in place.

Kris Gopalakrishnan
Infosys Consulting had a revenue of $12.12 million and had a loss of $6.56 which includes some provisions and things like that. It has about 200 odd employees. We saw significant addition of customers this quarter and it is still in investment phase. Infosys Australia had revenues of $23.86 million and a net income of $ 3.41. We have about 300 odd employees in Australia and then supported by larger teams in India.

Amitabh Chaudhry
In case of BPO, as we have said, we have done $41 million of revenue. Our margins, we have done 22.4% margin, $9 million. Our staff strength at the end of this quarter was 10,351 people. Net adds 575 people.

Sameer Goyal
Could you give us also the number of clients in BPO presently?

Amitabh Chaudhry
29 clients.

Sameer Goyal
Other question was on the sense of how do you see coming year in terms of technology spend and in terms of billing rates for the overall IT services?

Kris Gopalakrishnan
We see budgets moving up slightly, may be somewhere around 3% to 5% to 6%. More importantly, offshore has become mainstream and we see significant shift to offshore and offshore going up. Now NASSCOM in its recent study continues to reiterate that the offshore outsourcing especially to India would grow 25% to 30%. If you look at Infosys itself, we have some very strong segments of business. I will just give you some examples. For example, in the financial services space, BFSI space, we have crossed a billion dollars in revenue. As I said in my opening remarks, we have crossed last full fiscal year's revenue in nine months. Package implementation is now a $500 million business. Europe is showing significant growth. So, there are segments in the business which are actually having good traction today.

Sameer Goyal
Okay, fine. Thanks. Best of luck.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Sandeep Shah with Motilal Oswal.

Sandeep Shah
Based on the reported matrix, I am getting a revenue decline within the top two to top five clients while sequential de-growth is close to around 12%. Hello.

V. Balakrishnan
See the top five clients grew 8.1% sequentially in the third quarter; top ten clients grew by 9.5%; top 25 grew by 12.6%. Top 25 clients continue to grow double digits; as you remember, last quarter they grew by 12.7%, this quarter they are growing by 12.6%.

Sandeep Shah
Sir, actually, the contribution from top five has come down to 18.9% in this quarter from 21%. So, actually the decline in the revenue in the top five is around 5% which we are getting.

V. Balakrishnan
No, no. See, the top five also change because you have some other customer coming into the top five. If you take the sequential growth in top five on a like-to-like basis, it is 10.4% for the quarter as compared to 21% last quarter. The top 25 grew at 12.6% as compared to 12.7%.

Sandeep Shah
So, actually there is a change in the client mix.

V. Balakrishnan
Yes.

Sandeep Shah
Okay. And sir, what is your call in terms of the operating margin, because the utilization rate has remained stable at 67.5 including the trainees. So, (a) going forward in the coming quarter you expect the operating margin to improve; and (b) do you expect that to happen because of the increase in the utilization rate?

V. Balakrishnan
I think guidance of fourth quarter assumes stable margin. Utilization, we always said, we want to be within a band of 76% to 80% excluding trainees. This quarter it was 77.7%. We will try to keep it at the lower end of the band because it will give us room to grow faster if there are market opportunities. I think the margin will be stable for the fourth quarter. For next year, we will tell you in April.

Sandeep Shah
And sir, for fourth quarter, how much ESOP dilution has been counted?

V. Balakrishnan
We assumed another half a million shares.

Sandeep Shah
Okay. Thanks very much.

Moderator
Thank you very much sir. Participants are requested to kindly restrict to one question in the initial round of Q&A session. Next question comes from the line of Mr. Hitesh Zaveri with Edelweiss.

Hitesh Zaveri
Yes, hi. My question is about the performance of the Finacle group. The numbers there look pretty impressive. Could you give us some more color about what were the breakdowns within the license fee and the implementation fee, and what is the outlook there over the next four to six quarters? Thanks.

V. Balakrishnan
I think Finacle grew by 27.5% sequentially. Most of the incremental growth came because of the license fee; that is why it has a bigger impact on the operating margins. Going forward, I think Finacle will not grow at 27.5% every quarter but I think it will be somewhere between 5% to 20%.

Hitesh Zaveri
Sure, Bala, how much will be the license fee revenue in the current quarter in absolute terms?

V. Balakrishnan
I think license fee may be around 60% to 70%.

Hitesh Zaveri
Okay. Could you also share some outlook with regard to Finacle sales, what kind of pipeline you have and what kind of traction you see? I have seen some of the earlier Nandan's remarks that the international banking, the adoption of the Finacle has improved. So, if you could throw some more color here about the business matrix as well.

Mohandas Pai
Finacle has developed a very good pipeline. The pipeline has improved in the last quarter quite significantly. Many deals are there in the table in all parts of the world and we see some of the bigger banks opening up and trying to invite Finacle and others for the core banking outside their home market. Very few big banks are trying to change what they do in the home market but outside the home market they are looking at change and the pipeline has increased quite substantially in the last quarter. But when this pipeline will fructify into orders, when the revenues will come is difficult to say because it is a very long process and banks typically take between 9 months to 2 years to make a decision and you have to go through multiple rounds for them to evaluate and then come to a decision. So, the sale cycles are very long, but the pipeline is quite healthy.

Hitesh Zaveri
Sure, I appreciate it. One last question about the testing and infrastructure management services. Both these services have had fantastic run. I just wanted to check with you what is your sense about the sustainability of this much above average growth rates here?

Kris Gopalakrishnan
Two things; one clearly these are mega opportunities, especially the infrastructure management services. Here we are proposing a new model where it is asset-light which means that we do not own or takeover the assets, more of remote network management, remote operations and things like that. With adoption of internet of course, testing has become a very very important service because most clients would like to get a third party to certify the application before they deploy it on to internet. So, we feel that these two especially the infrastructure management over the long term, will become a significant part of our portfolio of services. How fast this will grow will depend on how fast we can get the market to change to our way of thinking, which is in terms of asset-light infrastructure management.

Hitesh Zaveri
Sure, I appreciate. Thank you so much.

Moderator
Thank you very much sir. Participants are requested to kindly restrict to one question in the initial round of Q&A session. Next question comes from the line of Mr. Shekar Singh with ICICI Securities.

Mr. Singh, please go ahead with your question.

Shekar Singh
Hi, sir. Actually, I was looking at your billing rates on a year-on-year basis. Now the onsite rates are up almost like 5% and offshore rates are up 3.3% compared to 3Q of 2006. Earlier, you used to basically keep talking about 3% to 5% sort of billing rate increases that you are getting. So, does it mean that most of the billing rate increases that we were thinking of getting have they already started showing up in numbers? If not, then what percentage of the clients where we have got the billing rates started affecting in the reported numbers?

V. Balakrishnan
Okay, if you take the YTD numbers, the blended per capita revenue went up by 4.3%, onsite went up by 3.7%, offshore by 2.1%. It is a mix of everything. You have new customers coming at 3% to 4% higher billing rates. Existing customers, some of the cases where they came for renegotiation, we have seen some price increase and there was also a change in business mix, things like package implementation and consulting have grown faster. So, it is a blend of everything. What we are saying is the billing rates were stable with an upward bias. So the new customers who are coming at 3% to 4% higher price points, if they grow faster, you could see some incremental stuff, but what we say as blended is a mix of everything.

Shekar Singh
But, basically, see 3% to 5% increase was basically from some of your existing clients also and that has now started reflecting in the quoted numbers. I want to know like what percentage of your clients who have given you billing rate increases over the last 12 months, what percentage of that is already getting reflected in the numbers?

V. Balakrishnan
I think we are not saying that all customers are giving price increases when we went for renegotiation. There are few customers who have given price increase and that is already reflected in this average per capita revenue and it is difficult to put a number because the customers contract ends at different points of time. It is very difficult to put a number. But what you see at the blended basis, is a mix of everything.

Shekar Singh
Okay. Secondly sir, can you give a breakup of your forex losses in terms of translation loss and forward cover gain?

V. Balakrishnan
Yes. We had around $373 million of hedging position as of last quarter end and this quarter end we have $360 million. On the non-operating side, the translation impact was 1.6% negative. The hedging gave a benefit of 1.1%. So, net-net on a non-operating side, we had an impact of 60 basis points negative mainly due to translation.

Shekar Singh
Okay. Lastly like, possibly something is wrong, but my EBITDA margins for the quarter stand at 32.7% as compared to 32.1% in the previous quarter. So that is actually a margin expansion of 60 basis points, but in your initial presentation, you actually spoke about only 20 basis points margin expansion.

V. Balakrishnan
I think when we talk about operating margins, we talk about margins after depreciation.

Shekar Singh
Okay. Thanks a lot sir.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Anantha Narayan with JM Morgan Stanley.

Anantha Narayan
Good afternoon every one and wish you all a very Happy New Year. My question was for Mohan. Mohan are you in a position to comment on potential wage inflation for fiscal 2008?

Mohandas Pai
Kris answered that question in the TV interview in the morning. He said that next year we do not envisage any change from the 13% wage increase that we normally give save that, in some of the bands, we may have to give more to focus and we do not see any greater wage increase than that. When you bench mark us against the other top companies, we are in a very comfortable place. And the fact that we have a variable compensation plan which rewards people when there is an upswing as it happened this year, puts us in a very enviable situation.

Anantha Narayan
So, Mohan what you are saying is that the average wage inflation next year is likely to be the same as what we saw in fiscal 2007?

Mohandas Pai
At this point of time, that is our stand.

Anantha Narayan
Thank you.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Trideep Bhattacharya with UBS.

Trideep Bhattacharya
Good morning and wish you all a very Happy New Year. My first question is on this recent contract signing which we saw in the sector of British Telecom with one other vendor. British Telecom being one of our clients, do you think this could materially impact our prospects within the customer?

Kris Gopalakrishnan
I cannot comment on a particular customer. So, we have to let it go at this point. I cannot answer that question unfortunately.

Trideep Bhattacharya
I see. The second is, in the transportation and logistics vertical, we have seen on a year-on-year basis declining trend for some quarters. When can we see this getting arrested?

Kris Gopalakrishnan
You see, it will depend on which client is growing in a particular quarter and things like that. We have some sectors growing and some sectors declining but you have to look at from an overall perspective and we have had three quarters of sequential growth. Bala said, top 25 clients grew 12.6% above company average, etc. So, it depends on which phase in the relationship is the client, which clients are growing, etc.

Trideep Bhattacharya
Thanks. All the best.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Pankaj Kapoor with ABN Amro.

Pankaj Kapoor
Yeah, hi. Congratulation on the quarter. Just a clarification on the visa costs. There seems to be an increase on a quarter-on-quarter basis in this number, and typically in the quarter we do not see much activity here. So, how do I read this increase in the visa cost?

V. Balakrishnan
I think the visa cost will be much much higher in the first quarter. In the next three quarters, there will be close to $4 to $5 million of visa spending every quarter. It is mainly due to people going to non-US locations like Europe and also some of the L1 and H1 visas. Some of our H1 visas may come for renewal, we have to spend money and we have to spend some money on L1 visas also. It is a combination of all the three.

Pankaj Kapoor
Thanks a lot.

Moderator
Thank you very much sir. Next question comes from the line of Bhavin Shah with JP Morgan.

Bhavin Shah
Yeah, hi. I have a question. How much did you stretch the systems in the current year? In other words, do you feel there is more room to drive growth should the environment allow you to?

Kris Gopalakrishnan
We have given guidance for fourth quarter. Next quarter guidance, you will have to wait until April but generally we do not see any slowdown and as I said and if we look at NASSCOM's projections for the industry, they are saying that the industry can continue to grow around 25% to 30%. There are many other analysts, IDC, Gartner, all of them predict that the offshore services business should continue to grow substantially more than the overall IT services growth, which means that there is a shift from the traditional way of delivering IT services to a Global Delivery Model based delivery of IT services and the market share for the industry is also small. Hence, it is not a market share challenge and we should see continued growth. In this we are also seeing that the larger companies have a benefit because perception of lower risk, ability to scale up, financial stability, broad range of services so that you can cross-sell into existing clients, ability to handle large programs, global foot print, etc. So, the larger companies are benefiting more during this growth phase.

Bhavin Shah
I am not trying to squeeze the neck out from you. I am just reflecting on the current year. I believe you expected a very good environment in the beginning of the year. So, can I assume that you have maximized the opportunity or do you feel that you could have done even more?

Kris Gopalakrishnan
We believe that we are doing the best every quarter, working very hard, doing everything possible to take full advantage of the opportunities which come our way. We are maximizing the short term without sacrificing the long term.

Bhavin Shah
Right. And the environment that you found at the beginning of the year still remains pretty similar in terms of how you see based on what you have just seen so far?

Kris Gopalakrishnan
Well, we had three quarters of good growth.

Bhavin Shah
Okay. Thank you.

Moderator
Thank you very much sir. Next in line we have a question from Mr. Kinani with Macquarie Security.

Kinani
Hello folks. Congratulations on the following fronts of package implementation, testing, BPO Europe, and the products business. Here is my question. In terms of geographical spread of revenue, where do you see an optimal balance given Accenture derives equal revenues or almost equal revenues from Americas and EMEA?

Kris Gopalakrishnan
We have been proactively investing in EMEA and we have seen EMEA grow from about 14% of revenues about 4 years back to today 26.8% of revenues. Asia Pacific has shown slower growth during the same period though our investments in Australia have started yielding results. The largest market in APAC of course is Japan, which has maintained its percentage over the years rather than grow significantly faster. Now the philosophy of the company is to balance the geographical footprint, that means get more and more revenue from Europe and APAC and we are proactively investing in trying to make this happen. Europe is yielding results. APAC is slower in yielding results.

Kinani
Yes, I got that and you have done fairly well, but where do you see an optimal level? Do you see 50:50 spread between Europe and Americas given that is what like for Accenture derives 44% from Americas and 44% from Europe, and the balance from Asia. Do you see yourself reaching that level or where is your comfort zone? I do not mean next year, but eventually after few years.

Kris Gopalakrishnan
See the largest market for IT services and the best market for IT services continues to be North America. So given that, we feel that medium to long term, we should aim for a 50:30:20 spread. 50 for Americas, 30 for Europe and EMEA region and 20 for Asia Pacific and like you said, not next year but it is a medium to long term target for us.

Kinani
Thanks. A small question again. How are you dealing with SAS; what I mean is software as a service. How do you treat this phenomenon? Is it good for you, bad for you? What are you doing for it?

Kris Gopalakrishnan
It is good for us because it of course gives us an opportunity to look at new developments. Whenever a technology change happens, many clients will change their platform. It also gives us an opportunity to look at creating platform-based services along with our BPO subsidiary. It also gives us an opportunity to look at creating IP and we have strong consulting services in the architecture side for SAS. There are several opportunities in the SAS area for Infosys.

Kinani
Thank you and all the best.

Moderator
Thank you very much sir. Participants are requested to kindly restrict to one question in the initial round. Next in line, we have Mr. Uttam Kumar from Brics Securities

Uttam Kumar
Hello, hi. My questions have been answered. Thanks.

Moderator
Thank you very much sir. Next question comes from Mr. Nimesh Mistry with Man Financial.

Nimesh Mistry
Hi. Congratulations on the numbers. Actually, I just wanted to understand how your utilization is going to move up in terms of headcount you are adding and how much you have assumed in terms of trainees you are going to add in the next two quarters?

Kris Gopalakrishnan
Mohan already said that we will be adding about 5,000 gross number of people in Q4, and typically about 60% to 70% of our recruitment happens at the entry level. So, they are at the entry level means they are freshers. So they will have to go through training and things like that. For next year, we will give you guidance in April.

Nimesh Mistry
All right. In terms of training capacity how you have evolved? A year back you had about 4,500 seat capacity. Have you increased it or in terms of training hours, how have you improved? Can you say something on that?

Mohandas Pai
By September of this year, we will have a capacity to train 13,500 people in a single sitting at Mysore plus capacities in all other places. So, Mysore can train in a fully residential manner, 50,000 people a year, each one of whom undergoing a 14 to 16-week training program. It will have 10,000 residential rooms, a training place for 13,500 people. We are investing about Rs.1,600 crores in Mysore making it the largest single investment in education and training in India's history ever. About 7 million square feet of space will be there by July of this year both for their training and their residences and for their recreation.

Nimesh Mistry
All right. Out of the total trainees in one session, how much would be experienced people and how much would be entry-level people?

Mohandas Pai
All trainees are entry-level people. Then we have a separate kind of training for laterals. Like Kris said, laterals make up between 30% to 35% of all the people who join the corporation and they have a 15-day induction program separately because they do not need training in technology and then they go into the production part of the business.

Nimesh Mistry
All right, thanks a lot.

Moderator
Thank you very much sir. Next question comes from Mr. Sudeep Parab with Bank of America.

Sudeep Parab
Hello, good afternoon everyone and congratulations on a good set of numbers. My question is to Bala. Sir, you did explain the operating margin play on a sequential basis. It would be really helpful if you can spell out the factors that impacted your operating margin if I look at them on a year-on-year basis.

V. Balakrishnan
You want the quarter to quarter number or . . . ?

Sudeep Parab
The thing is, I want you to spell out the factors that impacted your operating margin if I look at them on a YoY basis.

V. Balakrishnan
On a year-on-year basis?

Sudeep Parab
Yes.

V. Balakrishnan
On a year-on-year basis, I think the main impact will be the rupee because last year the rupee has been in our favor. This year I think it has appreciated substantially. Even if you take the nine months, it may not be as dramatic as it was in the third quarter. I think the main impact will come because of rupee and also the scale benefits have come and offset the impact. So, mainly these may be the two major factors. There may be other small factors which will compensate each other.

Sudeep Parab
Thanks and good luck.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Sumit Poddar with Anand Rathi Securities.

Sumit Poddar
Hi. This is Sumit Poddar from Anand Rathi Securities and congratulations on a good set of numbers. Could you please throw some more light on the churn in top five clients, apart from the top client as such?

Kris Gopalakrishnan
We had just one client move out of the top five to below top five; so, consequently one new client has come into the top five. Other than that, four are the same and one new client.

Sumit Poddar
Okay, but could you throw some light as far as the reasons are concerned. Because, what I see is the new client which has come in is not at the same rate as the one which has left.

Kris Gopalakrishnan
See, quarter-upon-quarter, somebody may make an investment, may not make that investment. So, quarter-upon-quarter, you will have slowdowns and pick up of pace and things like that. There is nothing different or nothing dramatic, and there is nothing to read about it.

Sumit Poddar
Okay. Apart from that, could you please throw some light on the European business and how much of it is from UK and non-UK, or in fact non-English speaking region as such?

Kris Gopalakrishnan
Out of the 26.8% of revenue from Europe, about 18% is from UK, and the balance 8% is rest of Europe.

Sumit Poddar
Okay. And they would be English speaking countries or . . . ?

Kris Gopalakrishnan
No, no. Switzerland, Germany, Belgium, Sweden, many non-English speaking countries, almost all, when you look at the continental Europe it is almost all non-English speaking.

Sumit Poddar
Okay. That is good. Thanks.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Amit Khurana with IL&FS.

Amit Khurana
Thank you very much. You made an earlier comment in the presentation saying that the clients' perceptions on the risk side have gone down. Are there any specific parameters that you are observing which reflect that or something that one should be keeping a watch on?

Kris Gopalakrishnan
Multiple things. First is the size of the business itself with each client. If you have been following Infosys, you will see that the number of $1 million, number of $50 million and now two clients over $100 million, so that is one parameter. The second parameter is each project itself. We have now projects which have significant revenue with $25, $30, $40, $50 million projects, etc., with large multi-year transformational projects. The third is the client additions themselves; we have 43 clients added this quarter, about 45 last quarter, etc. Europe, which was slightly behind US, again has picked up and has adopted this model. There are many things you see happening at this point. Of course, the last thing is in almost all the renewals of the older type outsourcing contracts, offshore is now being considered especially for application development and maintenance and in almost all of them the top companies in India are invited, Infosys is invited, etc.

Amit Khurana
Has it also meant that the decision making cycle has gone down meaningfully Kris? Is that something part of . . .

Kris Gopalakrishnan
When the decision is strategic, when the decision involves multiple services, BPO, infrastructure management, etc., typically the decision is made at the CXO and sometimes at the CEO level and it takes anywhere between six to nine months, sometimes may be even beyond that.

Amit Khurana
Okay, all right. Thank you very much.

Moderator
Thank you very much sir. Next question comes from the line of Mr. Chinmaye Sathe with DSP Merrill Lynch.

Chinmaye Sathe
Sir a question on the big deals. You have maintained that you do not want to go aggressively on the big deals and not commit too much of resources in a fairly buoyant market. So, if you could give some sense on when do you see a shift in strategy there?

Kris Gopalakrishnan
No shift in strategy. What we are saying is that we do not want to get them at any price. We are saying aggressiveness in terms of pricing. We do not want to be locked in at very low prices; that is all we are saying. We are aggressive, we want to go after big deals, but not at any price, that is the difference.

Chinmaye Sathe
Would that also imply that if at all you were to see a softness in the market, overall may be at any point of time, you would be chasing some of those big deals more aggressively than you are doing today and get locked in kind of thing?

Kris Gopalakrishnan
In business you never say never, right? So, I will just leave it at that. Right now this is our stand.

Chinmaye Sathe
Okay. Thank you sir.

Moderator
Thank you very much sir. At this moment, I would like to hand over the floor back to Mr. Shekar Narayanan for final remarks.

Shekar Narayanan
Hi. This is Shekar from the Investor Relations team. I, on behalf of Infosys management, would like to thank you all for participating in the earnings call. Thanks very much.

Moderator
Ladies and gentlemen, thank you for choosing WebEx conferencing service. That concludes this conference call. Thank you for your participation. You may now disconnect your lines. Thank you.

EX-99.7

EXHIBIT 99.7
Transcript Evening Earning Call

INFOSYS TECHNOLOGIES LIMITED
Q3 07 EVENING EARNINGS CALL
JANUARY 11, 2007

CORPORATE PARTICIPANTS

Nandan Nilekani
Infosys Technologies - CEO and MD

Kris Gopalakrishnan
Infosys Technologies - COO, President and Joint MD

Mohandas Pai
Infosys Technologies - Member of the Board

S.D. Shibulal
Infosys Technologies - Director and Head - Worldwide Delivery and Sales

V. Balakrishnan
Infosys Technologies - CFO

Amitabh Chaudhry
Infosys BPO - CEO

CONFERENCE CALL PARTICIPANTS

Bryan Keane
Prudential

Moshe Katri
SG Cowen

Jamie Friedman
Susquehanna

Joseph Foresi
Janney Montgomery Scott

Rod Bourgeois
Bernstein

Julio Quinteros
Goldman Sachs

David Grossman
Thomsa Weisel

George Price
Stifel Nicolaus

Operator
Good morning. My name is Angela and I will be your conference operator today. At this time I would like to welcome everyone to the Infosys Technologies Q3 '07 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. If you would like to ask a question during this time, simply press star and then the number 1 on your telephone keypad. Thank you. Mr. Mahindroo you may begin your conference.


Sandeep Mahindroo
Thanks Angela. Good morning and welcome to this conference call to discuss Infosys financial results for the quarter ended December 31, 2006. I'm Sandeep from the investor relations team in New York. Let me start by wishing you all a very happy and prosperous 2007. Joining us today on this conference call is CEO and MD, Mr. Nandan Nilekani, President COO and Joint MD, Mr. Kris Gopalakrishnan and CFO Mr. V. Balakrishnan along with other members of the senior management. We'll start with a base statement on the performance of the company for the recently concluded quarter followed by the outlook for the quarter and year ended March 31, 2007. After that we'll open up the discussion for the Q and A. Before I pass it on to Mr. Nilekani I would like to remind you that anything we say which refers to our outlook for the future is a forward-looking statement and must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available at our filings with the SEC which can be found on www.sec.gov. I'd now like to pass it on to Mr. Nilekani.


Nandan Nilekani
Thank you Sandeep and I'd like to welcome all of you to this call this evening in Indian time and morning in the U. S. and happy New Year to all of you and let me give you a brief overview of the business and then Kris will continue and then Bala will talk from the finance side. I think we've had another good quarter. We had sequential growth as you will see of 10.1%. This happens to be the third consecutive quarter where we have delivered double digit revenue growth in dollar terms. So we believe that this is an endorsement and validation of our strategy of building the brand, building our transformation capability, and our investment in enriching and synergizing our portfolio of services, so that we can see its compelling value proposition for our clients.

While we have grown 10.1% this quarter, we have also given our guidance for the next quarter where we expect revenues to grow between 4.6% to 4.9% and for the year we expect revenues in dollar terms to grow at 43.6% in this fiscal year. The revenue for this quarter was at $821 million and our EPADS for the year has gone up to 39 cents from 26 cents in the previous quarter with an addition of 43 new clients.

While we have grown at double digits in dollar terms, in rupee terms our growth has been more modest. It has been at 5.9% essentially because the rupee appreciated at around 3.8% for the quarter and therefore we lost about Rs. 145 crores of revenue due to rupee appreciation. But even here I think given the fact that typically 1% appreciation of the rupee costs us 0.5% of operating margin, if nothing else had changed this rupee appreciation would have cost us about two percentage points of operation margin reduction. But thanks to an improvement in revenue productivity, thanks to improvement in license revenue in Finacle and thanks to scale benefits on SG&A, we have been able to offset the negative impact of operating margin of currency by a positive impact through essentially productivity, efficiency and value realization and therefore the net impact in fact of all this was positive and operating margin overall has gone up by 20 basis points in spite of the rupee appreciation. So we think that's a strong signal for the robustness of the business model.

We also believe that the story continues. We think that the outlook is strong, we think offshoring continues to be a strong secular trend. While we believe that IT spending will go up a few percentage points in this year, we believe that the trend of our clients to increase the proportion of the spend on offshore and global sourcing is going to go up which will play in our favor. We also believe that the risk perception of our clients about offshoring has reduced even further and now they're quite comfortable with having several thousand employees of theirs working in India through various partnerships or out of their own unit. So I think the risk perception in the mind of the Global CEO has come down and we think that's a positive sign for the future of the industry. With this I'll pass it on to my colleague Kris Gopalakrishnan, President, to delve into some more aspects of our business performance.

Kris Gopalakrishnan
Thank you Nandan and let me also wish you all a happy new year. In nine months of this fiscal, we have had a revenue of $2.23 billion which crossed the revenue for the full fiscal last year. Last year, full fiscal revenue was $ 2.15 billion and nine months revenue this time is $2.23 billion. Also in the BFSI space, we have crossed $ 1 billion in revenue. BFSI today is 38.6% of our revenues, up from 37.4% of revenues last quarter and we have crossed $ 1 billion in the BFSI space.

In BPO also in the first nine months of this fiscal, we have crossed $100 million. So there are several parts of the business, several segments to the business which have contributed to this growth. Just to highlight this Nandan talked about products doing well, products have gone to 4.3%, Europe has gone to 26.8% of revenue from 25.8, package implementation has gone to 17.9% from 17.0. In the BFSI space, the share of insurance has gone from 6.7% to 7.6%, Retail has gone to 10.5% from 9%, services companies have gone from 7.7% to 8.3%.

The top 25 clients have grown 12.6% compared to a company growth of 10.1% and if we include the holidays for this quarter, the growth would have been closer to about 13%. So good all around performance and good growth and in spite of the rupee appreciation as Nandan said we've been able to maintain the margins.

Infosys today has 488 active clients. We added 43 clients this quarter compared to 45 last quarter. So the client addition continues to be robust. We have 256 $1 million relationships, 67 $10 million relationships, 11 $50 million relationships and two $100 million relationships. We added 6,092 employees this quarter at the gross level of which 1,676 employees were with prior experience and came laterally. So we continue to add experienced employees to the work force.

Attrition is slightly up at 13.5% compared to 12.9% last quarter. Attrition, if I exclude involuntary separation especially at the entry level, it comes down to 12.2%. The corresponding number last quarter is 12%.

Top client contributed 6.9% to the revenues, repeat business continues to be very strong at 94.7%, accounts receivable 63 days. Again the story is that all around performance good performance and now let me pass it on to Bala, the CFO to continue the discussions.

V. Balakrishnan
Thank you Kris. Good morning everybody. We have seen strong growth in revenues this quarter. Sequentially the revenues grew by 10.1% to $821 million for the quarter. We have seen the margins improving. The gross margins this quarter was 43% as compared to 43.3% last quarter. We got some benefit on the SG&A side. SG&A is 14.3% of our revenues as compared to 14.8% last quarter. The profit before tax 30.1%. It was 30.2% last quarter, the effective tax rate continue to be minus 11.7% and we had a net margin of 26.5%. This quarter the currency behaved more erratically, the rupee appreciated by 3.8%. The average Rupee dollar rate last quarter was 46.29, this quarter it was 44.53, resulting in an appreciation of 3.8%. It impacted the operating margin by two percentage points.

We had some offsetting factors, the product revenues grew sequentially by 27.5% from $28 million in Q2 to $35 million in Q3. It impacted positively the margins by 80 basis points. We had blended per capita going up by 1.4%, 1.9% onsite, 1.7% offshore, that gave a positive impact of 80 basis points to the margin and we had the scale benefit on the agenda on the SG&A of 50 basis points. Net net, we had two percentage point impact on the margins because of the currency which was offset by 80 basis points due to billing rate increase, 80 basis points due to product revenues going up and 50 basis points due to SG&A scale benefits.

So we are able to maintain the margins in spite of substantial appreciation in rupee for the quarter. For the next quarter, we have given a guidance of increase in revenues, somewhere between 4.6% to 4.9%, with a EPS growth of 2.6. We are assuming the Rupee dollar rate to be at 44.11 for next quarter.

We take the Federal Reserve Bank noon buying rate for our currency purposes. It was 44.11 as of the Dec end. We are considering the same thing for next quarter guidance. So next quarter guidance, the EPS growth has been slower than the revenue growth mainly because of currency otherwise the margins are almost similar to what you have seen in the third quarter.

Coming to subsidiaries, we have four subsidiaries, Infosys BPO had a revenue of $40 million with a net profit of 22.4%. Last quarter they had a net profit margin of 21.3%. Infosys Australia - $24 million revenue with a 14% net income margin, last quarter they had revenue of $25 million. Infosys Consulting - $12 million of revenue, $6.5 million of losses, last quarter they had a loss of $3.2 million, they are still in the investment phase. They are growing, they may break even in the next few quarters but right now they are in the investment phase. Infosys China - $5 million revenue with a loss of $1 million, last quarter the loss was similar, $1 million. So net net, we had absorbed the impact of currency, we are able to maintain the margins. We were able to grow faster. For the third consecutive quarter we had double digit growth in revenues. I think it's very significant.

With this I conclude my opening remarks. Now we can open the floor for questions.

Operator
At this time if you would like to ask a question please press star 1 on your telephone keypad. We'll pause for just a moment to compile the Q and A roster. Your first question comes from Bryan Keane from Prudential.

Bryan Keane
Hi guys, very solid quarter. Can you just talk a little bit about pricing, the pricing environment; we hear a lot of different things. I guess and you can break it out between new deals and then what you're seeing on renewals.

Shibulal
Pricing continues to remain stable with an upward bias. For the new customers, we are getting about 3 to 4% above our average, for the existing customers when we renegotiate, we are getting probably close to that only, may be 2 to 4% above our average and our revenue productivity blended has gone up 1.4% this quarter. The onsite revenue productivity has gone up by 1.9%, the offshore revenue productivity has gone up around 1.7%. That is on a quarter to quarter basis. On the year to year basis, that is if you look at last year over this year, the onsite has gone up by 3.7%, offshore has gone up 2.1% and the blended has gone up by 4.3%. So the rate increase is actually showing up in our revenue productivity over a period of time and it is also showing in our margins.

Bryan Keane
Right and also the margins look like they were benefited by the amount of effort that continued to move toward the mix towards offshore. What can that mix continue to go, I don't know, to 75, 80% and that seemed to have a lot of leverage on the margin even though utilization fell, it looked like the effort moving more towards offshore, it was a key.

Kris Gopalakrishnan
Our target for onsite versus offshore is to keep onsite between 30 to 35% so right now it's around 32%. Actually 32.7% to be precise and last quarter it was 33.0%. So that is the range at which we will keep this. As we add new services, we look at services which have significant offshore content like infrastructure management, testing, etc. On the other side, consulting, package implementation, they are more onsite centric. But when we combine all these things, the ratio is still maintained again kind of retaining our operating margin.

Bryan Keane
Okay. And then just finally on the guidance, as you guys stated, you've grown double-digit sequentially for three consecutive quarters. But for the fourth quarter it looks like it's more, the midpoint of the range sequentially. It's like 4.7% or 4.6%, somewhere in there. What's the reason for the drop off? And is it some seasonality or what can explain that to go to mid single digits from the double digits you guys have been putting up sequentially?

Kris Gopalakrishnan
For our clients, this quarter is the quarter in which the budgets are finalized and frozen etc. So though we have, grown sequentially and we've said that for the year we would grow at about 43.5%, last quarter it was 10.1%, like we said, given the visibility we have right now and the budgets are being frozen, we have given a guidance of about 4.9% growth this quarter. And if you look back in the past three or four years, our guidance in Q4 typically has been lower. And given that our utilization today is about 77.7% we have the ability if really the opportunity comes our way to grow faster.

Bryan Keane
Okay great. Thanks a lot.

Operator
Your next question comes from the line of Moshe Katri of Cowen & Company.

Moshe Katri
Hey, thanks. And congratulations on the solid quarter. Can you talk a bit about the deceleration and sequential revenue growth rates from your top 5 and top 10 clients? And then in the same context, also by vertical we've seen a deceleration in manufacturing and telecom verticals. Thanks.

Kris Gopalakrishnan
The top 25 clients grew by 12.6% sequentially. The growth in the top 5 clients grew by 10.4%. The top 25 plans grew by 12.6%. That's on the client side. From an industry vertical perspective, we have seen growth in BFSI, banking and financial services, insurance, retail, services, etce. And there is a slowdown in especially the transportation sector for us. But see what happens is some clients stagnate for some time before they again continue to grow or sometimes they drop off. So I think the only sector I can see where that has impacted us really in the transportation and logistics sector.

Operator
Your next question comes from James Friedman of Susquehanna.

James Friedman
Thanks. It's Jamie Friedman at Susquehanna. I know some of this was covered on the prior call, but a couple of housekeeping details for Bala. Bala, did you say what the operating margin was at Infosys BPO?

V. Balakrishnan
Yeah. Infosys BPO, the net margin is 22.4%. Operating margin is 21.1%. Last quarter the net margin was 21.3% and operating was 19.5%.

James Friedman
Thank you. And then when you were describing earlier about the 80 basis points from billing to 80 basis points from products and the 50 basis point decline in G&A, I just wanted to ask about the products. When you say products, could give us some color on Finacle and how that may have impacted the product related improvement because is seemed like Finacle had quite a strong quarter.

V. Balakrishnan
Finacle is total bank automation product. We sell it to India and some of the Asian countries. Now we are getting into the western markets also. This quarter, the Finacle revenue was $35 million, as compared to $ 28 million last quarter. Product revenue is always a lumpy business. Some quarters it will be higher, some quarters it will be lower. And it's more of license revenue. So we had seen the Finacle revenues growing up sequentially, by 27.5%, an increase of $7 million. And that had impacted the margins positively by 80 bps because in the license revenue, most of the revenues flow into the margin.

James Friedman
Got it. And then the last thing, with regard to the billable headcount, if my calculation is right, that increased as a percentage of the total professionals. The billable headcount increased pretty significantly sequentially. I'm here. I'm just doing the numbers. But it was up - it looks like it was up about 7% or 8% sequentially. How should we think about the seasonality related to that? And what should we anticipate as billable as a percentage of total professionals going forward? Thank you.

V. Balakrishnan
Well I think the revenue grew at 10.1%. The volume growth was 7.4% this quarter. There was a pricing growth of 1.4%. What we believe is the pricing environment is stable. So most of the growth could come because of volume going forward. But due to change in business mix and if some of the new customers who joined us at a higher point, they grow faster, both could positively impact the bill rate increase. So I think the volume growth continues to be strong. It was 7.4% this quarter, last quarter it was 11.2%. That continues to be strong. But the revenue growth will depend on both the volume and price growth.

James Friedman
Thank you very much.

Operator
Your next question comes from Joseph Foresi of Janney Montgomery Scott.

Joseph Foresi
Hi, guys. And nice job this quarter. I was wondering if you would talk a little bit about the demand environment and sort of areas of growth looking at the fiscal '08. Is there any particular areas that you see accelerating? And are you seeing any trends in the size and the number of the deals?

Shibulal
The demand continues to be robust. We have been talking to our customers and doing some dipstick survey to our customers. The feedback that we get is that the budgets are going to remain stable or slightly up, maybe 2% to 3%. But at the same time, there is definite indication that their spent on outsourcing as well as offshoring is definitely on the rise. So we are not seeing any slowdown at this point from our customer base.

Now on the deal size, what has happened was that the size of the deals has constantly gone up. Just to give you a flavor of the deals that we had last quarter, we have signed a deal with one of the largest high tech manufacturers and started work on a $100 million deal, multi-year. We have signed a deal of $75 million with a software provider in US. With a food manufacturer, we have signed a deal $73 million, all three of them multi-year. So today we are winning deals, multiple deals of $50 million and above in the quarter. We are also being called to almost all of the large deals in the market. We are being called to deals at any size, close to even to $1 billion today in the market.

Joseph Foresi
Great. And sort of a second question here. I was wondering if you could talk about hiring this quarter. It usually tracks well with revenue but appeared to be a little bit lighter on the net basis sequentially. How should we look at the hiring this quarter, especially in reference to sort of future revenue growth? Is this an effect of having ramped up in the September quarter?

Kris Gopalakrishnan
So we hired 6,062 people at the gross level and net hires was 3,282. Our attrition, as I said, is 13.5% on a last 12-month basis for this quarter. We expect to hire another 5,000 people in the next quarter. That is quarter four for us, gross, which will make the total number of people recruited this year to about 30,000. Currently our headcount across the company group is 69,432 people. So that's where we are right now. And we are growing headcount at, for example, this quarter, the headcount grew by about 5-6%. Last quarter saw a significant jump in hiring because there is a seasonality to hiring. We had hired about 10,795 people last quarter. And this is because the people joining us from college, straight out of college join typically July, August, September timeframe. That's a time when the campus hires join the company.

Joseph Foresi
Okay. Thank you. And just two more quick ones. On the attrition side, can you guys give us any color on where you see that rate going? And any maybe overall views on the labor market and supply right now?

Mohandas Pai
Well attrition is happening mainly in the 1-5 year band, highest in the 1-3 year and second highest in the 3-5 year band. 46% of people leave us go to join other companies, 20% or higher studies, 10% drop out of the workforce. And this 46% has been constant for the last many quarters. What is happening is that people leave for various reasons, not necessarily because of other companies coming here and setting up shop. If we look at the attrition data, we have 1.3% involuntary attrition out of the 13.5% primarily driven by people who did not pass our training course at the end of the 14 or 16 weeks of training because we have toughened the entry norms to get into the delivery organization. And if you normalize that, the attrition is 12.2%. I think it was 12% the previous quarter. In terms of overall people who left us, the number of people is the same this quarter and also the last quarter despite having a higher number of people this quarter.

So overall I would say that attrition is a function of the market having more opportunities. We do note see any definite trend. It is a marginal increase in the attrition net of involuntary attrition. And we are fairly comfortable at this point.

Joseph Foresi
Sure. And just one last question here. The BPM side, maybe you can give us an overview of the market. Is your focus, is it primarily non-voice work? And if so, should we see margins improve and maybe attrition decrease? And thanks, guys.

Amitabh Chaudhry
On the BPO side, as far as the market is concerned we continue to see extremely good traction. Our pipeline looks strong. Our quarter-on-quarter growth has been in double digits for the last three quarters. And this quarter we grew by 20 plus percent. We have seen a margin expansion this quarter, as Bala pointed out. And if you take off some of the one-off items we are tracking 24 plus percent margin which we expect to continue to maintain as we move forward. Our attrition numbers quarter-on-quarter has moved positively. We were 38.2% attrition last quarter. This quarter we have 26% attrition. So we have made significant progress on the attrition side at least on the quarter-to-quarter basis. But this is only a one quarter decrease. We need to sustain it. We believe it is important for our business to sustain attrition at these kind of numbers or even lower. And we're working very hard towards moving in that direction.

Joseph Foresi
Great. Thank you.

Operator
Your next question comes from Rod Bourgeois of Bernstein.

Rod Bourgeois
Yes, it's Rod Bourgeois here. I wanted to ask about the Capex budget for the year. Has there been any change from your previous estimate of $360 to $400 million that you spoke about in the September quarter as being your full year Capex plan? I just would like some color on whether that Capex plan has been lowered.

V. Balakrishnan
I think the Capex plan for the whole year continues to be same. We said $360 to $400 million and there is no change in that.

Rod Bourgeois
Okay. Are you on plan or is the Capex spending going to be more back end loaded than you had originally planned?

V. Balakrishnan
The Capex plan includes some provision for purchasing land for the next campuses, particularly in Bangalore and Hyderabad. So the purchase of land may get delayed. It won't affect our overall construction schedules but if you remove that, the rest of the construction, whatever we envisage, is on schedule.

Rod Bourgeois
Okay got it. And you noted the increase in your involuntarily attrition. And I'm wondering if that could possibly be an indication that the quality of the incoming pool of labor might not be what it was in previous years.

Mohandas Pai
I think it is not the quality, just that our standards have been toughened in a dramatic manner. The quality remains the same because we picked among the top 20% of college grads. It is just the entry criteria has been stiffened up. For instance, we have a minimum requirement of 4 CGPA out of 5, which we did not have. And two, we give them only one opportunity after they finish the initial assessment to complete. If they don't complete, then they don't go through. Other years we had a more relaxed criteria. If they did not complete, we put them through a training program for another 30, 45 days, and that could take more time. Now we give them one more opportunity to complete in 15 days and that is it. So we toughened up the criteria to ensure that people take this much more seriously than earlier and if they don't, they do not continue. And that is the only thing. We have not seen any fall in the standards of the people coming in.

Rod Bourgeois
Got it. But can you specify what is driving your increased criteria? I mean is there a reason why you've taken your criteria up?

Mohandas Pai
We have taken the criteria up to make sure that as we spread our intake across many more colleges, people do not take our training program in an easy manner. What we found in the previous years was that people are not stretching themselves to learn as much as they could. They were just coasting through in the secure knowledge that it was okay to coast through and there were no strict penalties if they don't do very well because of lack of effort. So we put in a strict penalty to say that you need to have a minimum criteria to get through. If you don't, you may not continue. And that is the only reason to ensure that the training becomes very effective and people take it very, very seriously.

Rod Bourgeois
Okay, great. That makes perfect sense. And if I assume the license revenue spike that you received in the quarter, which also helps margins 80 basis points, if I assume that was a quote, unquote, lumpy event and is not going to be a recurring event, then you need other levers moving into next quarter, particularly if you have a surprise like the rupee moving against you I guess. So can you give us some specificity on what positive margin leverage you have remaining for the March quarter if you need to pull those levers more aggressively for an unexpected event?

V. Balakrishnan
I think we spoke about several levers in the past. One is onsite offshore mix, second is the utilization rate, third is the SG&A scale benefits and fourth is the increase in blended per capita revenue. So we have to use one of these levers or some of these levers at some point in time to make sure the margins are maintained. Our guidance factors in the stable margin except for the rupee for next quarter because we assume the currency rate of 44.11 for next quarter, whereas in December quarter, the average rate was 44.53. So we have to use some of these levers to make sure that the effect is minimal.

Rod Bourgeois
Okay, but I guess the question I would have on that if onsite mix and per capita revenues are levers, if you have an unexpected surprise, can you really affect off site mix? Is that a controllable lever that you can decide to pull in a given quarter, or is that something that is really just a function of demand that happens to be available and it's harder to control that? And I would assume onsite mix and per capita revenues are levers that are hard to control at your discretion. Is that accurate or not?

V. Balakrishnan
I think it depends on the service mix. For example if testing grows faster, most of it is offshore. BPO grows faster, most of it is offshore. So to some extent it is decided by the business mix. So if we were able to grow some of the high offshore revenue segments like testing or BPO, offshore could increase.

Rod Bourgeois
Right, but I guess as an example, if the rupee surprisingly appreciated in a material way tomorrow, do you have the ability to decide to increase your revenue content in segments that better leverage off site? Can you make that decision inter-quarter and act on it?

V. Balakrishnan
I think if the rupee behaves irrationally in the last week of the quarter, we can't do it. If it happens in the beginning of the quarter, probably could focus more on segments where we want to grow and try to change some of the mix. But it is not totally in our hands. It also depends on the market demand and the environment. But I think we also have the levers as I told you. We have the SG&A benefit, we have the utilization rate. So we can use some of the levers to offset that impact.

Rod Bourgeois
Okay, and one final question. This has been very helpful. Within G&A, I mean what are the specific things you could do inter-quarter on G&A? I mean guess cutting variable comp is a lever. Are there others besides that that are pretty big buckets of room for cutting if needed?

V. Balakrishnan
I think on the SG&A side, one is the variable salary and some of the costs are discretionary, that we can cut down. And also we keep strict vigil on the kind of SG&A expense we want to spend on. So even though the absolute numbers may increase slightly, it may not increase in proportion to revenues. That's where we get the scale benefit. So some of the discretionary costs may be around 30, 40 basis points, we can squeeze on the SG&A side.

Rod Bourgeois
Got it, very clear. All right. Thanks guys very much.

Operator
Your next question comes from Julio Quinteros of Goldman Sachs.

Julio Quinteros
Good morning guys. Just wanted to check on a couple of quick things. First of all, the kind of visibility that you guys have on the product side, can you talk a little bit about it? It sounds like it is going to be a much more lumpy business if it stays at this percentage of your business given the software nature of the sales. Is that correct?

Kris Gopalakrishnan
Product, yes is lumpy. Bala had indicated that it would be lumpy. But it is a small part of the business, about 4% of our business comes from product revenue. The lead times for closure are longer. And you have a smaller base to work on. So this quarter we had a positive benefit from that. But it is lumpy.

Julio Quinteros
Got it. And then I saw some comments overnight regarding appetite for acquisitions in Europe. Can you talk a little about what that was intended to be the reference?

Kris Gopalakrishnan
So we have always said that we are open for acquisitions. We will look at acquisitions to fill up gaps in our services mix, to grow faster in a market where organic growth will be challenging, for example in a non-English speaking market like Germany, France, Japan etc. So in that context, in Europe we can look at an acquisition. We also look at acquisitions to look at faster growth in a particular industry vertical or an entirely new vertical. Given that integration is the biggest challenge, making it work is the biggest challenge and the industry data shows that only maybe 15% to 20% of acquisitions give the value or the benefit which was intended to be given and you derive benefit from that.

We are careful in selecting the companies. We are careful in what we are willing to pay. And we are careful about the ability to integrate. We need to have clear plan for integration, roles and responsibilities, especially if the overlap is significant. We need to figure out, who stays, who does what and where the work gets done because our model requires a lot of people to be stationed in locations like India, offshore locations etc. So there are some challenges and that is the reason why we have been very careful about acquisitions. We have done one in Australia. We have done smaller ones for our product group where they needed certain modules for filling the portfolio for the product and we did some acquisitions there. But we are open at any point of time. We are in discussions with some companies, some investment banks etc. Only if it fructifies, we can of course talk about it, or show that we have done one more.

Julio Quinteros
Okay, great. And then finally for me on the wage increases. As we begin to look to fiscal year 2008, what are sort of the preliminary plans or viewpoints for affecting another wage increase as we head into the fiscal - the next fiscal year?

Kris Gopalakrishnan
In the last several years if you look at what has happened in India, wage increases have been in the area of 13% to 15%. At this point, we believe that is the range we are looking at for next year also. And that is something which we have factored into a model. About 70% of the recruitment happens today in the entry level at the bottom of the pyramid, the way we look at the distribution of people. And as the year goes, this 13% to 15% actually reduces to maybe about 5%, 6% because the pyramid starts broadening at the bottom as the year progresses. And so the total impact is actually much lower than the 13% to 15%.

Julie Quinteros
Okay, great. And is this a modest change for them? I thought last quarter you guys were talking about possibly even going as high as 20% on the off shore wage increases. Are you looking at a slightly reduced number now, or maybe I'm mistaking you guys with somebody else?

Kris Gopalakrishnan
The 13% to 15% is the average across the company. Now what we do is we do targeted increase where the attrition is high. Mohan talked about attrition being higher at the 2-5 year experience level. So we can do targeted increase at certain levels. And as I said, the entry level is much lower and that is how the pyramid effect comes in.

Julio Quinteros
Okay great. Thank you guys.

Operator
Your next question comes from David Grossman of Thomas Weisel partners.

David Grossman
Hi thanks. I'm looking at perhaps Bala you can or Kris break out the improvement realization between pricing and mix.

V. Balakrishnan
I think the volume growth has been 7.4% - 6.1% onsite, 8% offshore. So on a blended basis, volumes grew by 7.4%. Per capita revenue went up by 1.4% -- 1.9% onsite, 1.7% offshore. Overall revenue growth was 10.1%.

David Grossman
Right. I guess I was thinking more in terms of the per capita revenue, if you could, it looks like you grew like you said about a point and a half sequentially and 4% or 5% year-over-year. And I'm wondering, is there any way to isolate how much of that is pricing versus mix?

V. Balakrishnan
It is difficult. It is a mix of everything. You have some new customers coming at higher price points. The business mix is changing. Some of the high bill rate services like package implementation, consulting, they are growing faster. So it is a blend of everything, difficult to break it up.

David Grossman
Is there any way to say...

Kris Gopalakrishnan
David, I think it is quite complex actually, because you have to look at the year in which the customer was added and then you have to look at the different services. You have to look at onsite, offshore. It's fairly complicated because of that.

David Grossman
Okay, and I guess getting back to the unit growth number, I think Bala there were a couple fewer work days. Was it two in the quarter versus the prior quarter? And I guess I have two questions in that context. Is that essentially the change in sequential unit growth, from the past couple quarters to the December quarter? And then secondly can you give us an idea, do we face that same dynamic in the March quarter, or are you going to - are you flattish in terms of number of work days March versus December?

V. Balakrishnan
I think the number of working days in December quarter was 2 days less. That is one of the reasons why the growth has been slower. In March quarter the working days is slightly higher but March quarter is always a soft quarter for us because the customers finalize their budget and it takes time for them to spend. So that is the reason we are giving a guidance of 4.9% growth in March. Other than that I don't see any other reason.

David Grossman
Okay then talking a little bit just about the pipeline and I don't know if that was Shibu earlier on the call that was making some comments but if you look at the pipeline, the larger deals, are these characterized more by standalone deals? Or are these typically components of larger outsourcing deals which are segregating out components which can be done offshore?

Shibulal
These which I talked about, the ones which I mentioned in my remarks, they were all standalone deals. They were not segregation. We also pursue deals of size ranging from $100 to $1,000 million. And some of them we do end up getting part of the deal. And we probably have about five to six of those deals in progress. But they are long

incubation deals, take anywhere from nine months to a year for closure. But at the same time, the deals I mentioned and the deals I mentioned as happening every quarter, many of them are standalone deals.

David Grossman
Okay, and just one last question on the...

Shibulal
And for the guidance, we are not factoring what we consider as a megadeal which are $100 million and above

David Grossman
And how many are - fit that category?

Shibulal
At this point probably we have five to six in that category. But the point is these are long incubation deals. It takes anywhere from nine months to twelve months.

David Grossman
Okay. And then just getting back to the BPO business for a while, I mean that business, it's been growing in the kind of mid-single to low double-digit growth rates sequentially for several quarters. And it spiked up this year. Is there something fundamentally going on in the BPO business on a secular basis or your just recognition in the marketplace that this could be done or more focus by emphasis? Any color you can give us to the, I guess the acceleration of sequential growth over the last two quarters?

Amitabh Chaudhry
I'm sorry. The BPO market has been in terms of the overall demand has been quite good. So it is not that suddenly there is a big change in the BPO market which has led to this continued growth. We have been growing quite rapidly since we were set up 5 years back. But what you're definitely seeing is there are a number of clients, we are increasing the number of clients and as you see growth in each of those clients, you can track a much higher growth than before. So we continue to sign more clients. And each of those clients as they continue to add to the growth rate, you'll see that the double digit kind of growth rate is coming back. And our clients are seeing value in working with us. We are able to demonstrate to them how we are adding value on a year to year basis. And that's how you're seeing continued growth in each of our BPO clients we're working with. And as we sign more clients, normally if you sign a client this year, you'll see the real impact of the growth from that client coming only after 12 to 18 months.

David Grossman
Okay very good. Thank you.

Operator
Your next question comes from the line of George Price of Stifel Nicolaus.

George Price
Hi. Can you hear me? Hello? Can you hear me okay?

Operator
Yes sir. Your line is open.


George Price
Okay, apology. I had a little phone issue there. A lot of my questions have been answered but still do have a couple more. Just going back to the prior question on talking about the large deals, has there been any change to your view of what you will and won't be willing to pursue? I know Infosys historically seemed to be a little bit more hesitant in pursuing larger deals that may involve higher risk, particularly on the margin side, taking over a large amount of people, certainly taking over any meaningful assets. Can you just tell us where your views stand right now? What are the characteristics of the larger deals that you're looking at now?

Kris Gopalakrishnan
Not much change in our philosophy here. We want to take these deals at reasonable prices and at reasonable margins. We want to make sure that we are able to execute well. Under the Global Delivery Model, typically 70-80% of the effort is delivered offshore. So if we take over a significant number of employees, then we will be challenged to figure out what to do with them. So that's why we are reluctant to take over a significant number of employees. 20%, 30% of the employees we can take over. Beyond that, then we need to figure out what to do. It would be better if the client can do the restructuring given that they want to get the benefit of the Global Delivery Model. And then we can work with them to take over the work etc. So that's the philosophy and continues to be the philosophy.


George Price
To what extent are you willing to enter into longer term deals that are going to be margin dilutive and kind of over what timeframe? I mean if you get hit for a couple of quarters and to the extent you can elaborate on what magnitude might be tolerable versus - I mean how far will you go in that regard and what would you not take on?

Kris Gopalakrishnan
So what we do is when a large deal comes in, our finance department does a modeling exercise to figure out what would be the impact on our margin -- short term, long term etc. And if we are able to absorb that and sometimes we are able to absorb that because there are some other businesses coming at a higher margin etc, then we proceed. So that's something we do on a deal by deal basis and take decisions based on what is the current situation at that point.


George Price
Wage inflation, and just one more thing on the larger deals. You mentioned five to six deals that you're looking at right now that are fairly sizable. Can you talk about a timeframe that they may be decisioned? I'm assuming those would be likely fiscal '08 deals. But let us know if not and maybe where within the year early or later?

Kris Gopalakrishnan
We have not included these in our guidance precisely because it's a 1 or a 0. Timeframes are long. And we don't want to give you a calendar, these are the deals, these are when it is going to be potentially signed etc because we don't know. We have no control over this and that's why we have not included in our guidance also.

George Price
Okay. Going back also to some of the questions on wage inflation noting that you leveraged the pyramid to dilute the wage inflation that you experience on a blended basis, we did see or have started to see I guess, some wage inflation at the entry level, I guess actually those starting in fiscal '08. Do you think that you might need to do this again? Can you just talk about maybe the entry level environment from that perspective? Are there other, beyond even this industry, are there other industries or other players within the industry that might be influencing demand for people at the entry level that might cause you to have to up the entry level wages materially?

Mohandas Pai
Well I think the entry level wages in the country are being influenced by only two industries - the IT industry and the financial services industry. The financial services industry this year will hire, maybe about 75,000 to 100,000 people, the IT industry about 380,000 people. These two are driving up the demand for entry level people. And the IT industry is hiring the largest number of people. They get the best of the crop. And obviously competition is for the best of the best. And here the financial services could offer a slightly higher wage to grab them. And certainly the glamour quotient of the financial service industry is getting higher because of investment banking and the absurd incomes that they earn. As far as entry wages go, we raised them from Rs. 240,000 a year to Rs. 270,000 a year for the next year. And it could go up by maybe 10% a year after that. And this 10% is factored into that 13% to 15% compensation that we talk about for the entire band. So if you pay 10% increase at the entry level, the mid-level you could possibly afford to pay slightly more, the critical areas to make sure that you become more attractive. But definitely going forward for the rest of industry in this country, it is going to become very, very challenging to get more and more people in. Right now, the retail industry is hiring. They're not able to get people. The construction industry is not able to get people because all engineers want to join IT. And the manufacturing industry's going to find it more difficult. What will happen in India in the next 3 or 4 years is what we call right-skilling. Indian industry has traditionally been a place where we have taken over-qualified people to do more mundane work. I think in the next 2 or 3 years, most companies will start identifying people for the right job at the right time and not getting over-qualified people to do work. And that I think will help to stem this balance in a particular way. For instance, we have about 1,700 graduates within Infosys service business who do part of the work in one or two verticals. And that number is becoming slightly larger over the years. So in this way, right-skilling will be the solution for the whole industry. And as far as we are concerned, we are sure will be the top of the heap.

George Price
Okay. And so the 10% that you discussed, remind me, last year you made, what was it, a 20% bump for those entering in fiscal '08?

Mohandas Pai
No. I'm not saying that. What I'm saying is...

George Price
Oh no, no, no. I'm sorry. You gave that, the 240 to 270. I apologize. So the 10% bump that you just referenced that could come after that, that would be for those coming in in fiscal '09?

Mohandas Pai
Yes.

George Price
Okay. And last question, on just going back to Finacle, I've seen some articles and some comments that you've made and you've discussed it a little bit here that you're looking to expand your client base for the Finacle product outside of India with larger financial, global financial institutions. Can you talk a little bit more about where that stands in terms of opportunity pipeline and your plans in fiscal '08? I mean just maybe some more around the goals or what you might like this segment, small as it is. Obviously it does have, it can have a meaningful impact, what your goals for this segment might be, looking into fiscal '08?

I mean upper single digit as a percent of revenue or how many clients maybe, would you think would be a reasonable assumption by the end of fiscal '08 -- anything along those lines.

Mohandas Pai
Well we would like Finacle to grow faster than the rest of the business on a relative basis. That would be a very nice goal. And as far as the pipeline is concerned, we said earlier today that the pipeline is stronger in the last quarter, the December quarter than the previous quarter. We've seen openings in Europe. We've seen openings in Eastern Europe and in Southeast Asia. Southeast Asia has opened up large banks are now seeing a need for change the core banking. We already got a very large bank headquartered in Singapore. And we are seeing an increase in Russia and Eastern Europe and some traction in Western Europe. So we're seeing the first turnings of the need for the Western banks in Europe to open up and look at change.

As far as the US is concerned, the functionality that we have needs to be improved upon to meet the requirements with US. So we are not right there at this point of time.

Nandan Nilekani
Okay, I think with this, we have come to the end of our call. And I'd like to thank each and every one of you for coming on this call and asking us questions. We are always there to answer any questions. And if you have any further questions, we would be happy to have email from you to Shekar Narayanan, Sandeep Mahindroo and V. Bala, CFO who will be happy to answer any questions. And thank you everyone and see you same time next quarter. Thank you. Good night, good morning. Thank you.

Operator
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

EX-99.9

EXHIBIT 99.9
Form of Advertisement

	Infosys Technologies Limited
	Regd. Office: Electronics City, Hosur Road, Bangalore - 560 100, India.

Audited financial results for the quarter and nine months ended December 31, 2006

(in Rs. crore, except per share data)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006
Income from software services and products	3,454	2,398	9,594	6,535	9,028
Software development expenses	1,888	1,276	5,299	3,508	4,887
Gross profit	1,566	1,122	4,295	3,027	4,141
Selling and marketing expenses	182	129	530	374	499
General and administration expenses	235	160	688	469	653
Operating profit before interest and depreciation	1,149	833	3,077	2,184	2,989
Interest	-	-	-	-	-
Depreciation	129	109	336	274	409
Operating profit before tax and exceptional items	1,020	724	2,741	1,910	2,580
Other income (net)	60	(2)	255	73	144
Provision for investments	-	-	3	-	-
Net profit before tax and exceptional items	1,080	722	2,993	1,983	2,724
Provision for taxation	122	80	340	226	303
Net profit after tax and before exceptional items	958	642	2,653	1,757	2,421
Income from sale of Investments	-	-	6	-	-
Net profit after tax and exceptional items	958	642	2,659	1,757	2,421
Paid-up equity share capital (par value Rs. 5/- each, fully paid) (see note 2)	279	137	279	137	138
Reserves and surplus	9,363	7,113	9,363	7,113	6,759
Earnings per share (par value Rs. 5/- each)*
Before Exceptional items
Basic*	17.20	11.72	47.82	32.27	44.34
Diluted*	16.82	11.39	46.70	31.35	43.10
After Exceptional items
Basic*	17.20	11.72	47.93	32.27	44.34
Diluted*	16.82	11.39	46.81	31.35	43.10
Dividend per share (par value Rs. 5/- each)
Interim dividend*	-	-	5.00	3.25	3.25
Final dividend*	-	-	-	-	4.25
Silver Jubilee special dividend*	-	-	-	-	15.00
Total dividend*	-	-	5.00	3.25	22.50
Total dividend percentage (%)*	-	-	100.00	65.00	450.00
Total Public Shareholding (unaudited) #
Number of shares*	35,54,77,282	36,49,80,096	35,54,77,282	36,49,80,096	36,67,83,082
Percentage of shareholding	63.72	66.47	63.72	66.47	66.55

*Adjusted for the issue of bonus shares in the ratio of 1:1 allotted on July 15, 2006 as per Accounting Standard 20 (AS 20) on Earnings Per Share.

# Total public shareholding as defined under clause 40A of the listing agreement (excludes shares held by founders and American Depository Receipt holders).

(in Rs. crore)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006
Staff costs	1,631	1,140	4,608	3,061	4,273
Items exceeding 10% of aggregate expenditure	-	-	-	-	-
Details of other income:
Interest on deposits with banks and others	30	25	100	73	132
Dividends on investment in liquid mutual funds	36	24	83	54	71
Miscellaneous income	13	4	28	10	18
Exchange differences	(19)	(55)	44	(64)	(77)
Total	60	(2)	255	73	144

Audited consolidated financial results of Infosys Technologies Limited and its subsidiaries for the quarter and nine months ended December 31, 2006

(in Rs. crore, except per share data)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006
Income from software services, products and business process management	3,655	2,532	10,121	6,897	9,521
Software development and business process management expenses	1,938	1,327	5,437	3,644	5,066
Gross profit	1,717	1,205	4,684	3,253	4,455
Selling and marketing expenses	236	158	661	448	600
General and administration expenses	285	186	829	547	764
Operating profit before interest, depreciation, amortization and minority interest	1,196	861	3,194	2,258	3,091
Interest	-	-	-	-	-
Depreciation	141	117	369	293	437
Operating profit before tax, minority interest and exceptional items	1,055	744	2,825	1,965	2,654
Other income (net)	59	(5)	253	68	139
Provision for investments	-	-	3	1	1
Net profit before tax, minority interest and exceptional items	1,114	739	3,075	2,032	2,792
Provision for taxation	130	83	359	233	313
Net profit after tax, before minority interest and exceptional items	984	656	2,716	1,799	2,479
Income from sale of Investments	-	-	6	-	-
Net profit after tax, exceptional items and before minority interest	984	656	2,722	1,799	2,479
Minority interest	1	7	10	13	21
Net profit after tax, exceptional items and minority interest	983	649	2,712	1,786	2,458
Paid-up equity share capital (par value Rs. 5/- each, fully paid) (see note 2)	279	137	279	137	138
Reserves & surplus	9,436	7,175	9,436	7,175	6,828
Preference shares issued by subsidiary	-	-	-	-	-
Earnings per share (par value Rs. 5/- each) *
Before Exceptional items
Basic*	17.64	11.85	48.75	32.80	45.03
Diluted*	17.24	11.52	47.61	31.87	43.78
After Exceptional items
Basic*	17.64	11.85	48.88	32.80	45.03
Diluted*	17.24	11.52	47.73	31.87	43.78
Dividend per share (par value Rs. 5/- each)
Interim dividend*	-	-	5.00	3.25	3.25
Final dividend*	-	-	-	-	4.25
Silver Jubilee special dividend*	-	-	-	-	15.00
Total dividend*	-	-	5.00	3.25	22.50
Total dividend percentage (%)*	-	-	100.00	65.00	450.00
Total Public Shareholding (unaudited) #
Number of shares*	35,54,77,282	36,49,80,096	35,54,77,282	36,49,80,096	36,67,83,082
Percentage of shareholding	63.72	66.47	63.72	66.47	66.55

* Adjusted for the issue of bonus shares in the ratio of 1:1 allotted on July 15, 2006 as per Accounting Standard 20 (AS 20) on Earnings Per Share.
# Total public shareholding as defined under clause 40A of the listing agreement (excludes shares held by founders and American Depository Receipt holders).

Principles of consolidation: The financial statements are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as set out in the Accounting Standard on Consolidated Financial Statements prescribed by the Institute of Chartered Accountants of India. The financial statements of the parent company and its subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and transactions and resulting unrealized gains / losses. The consolidated financial statements are prepared by applying uniform accounting policies.

Note:

1.	The audited quarterly financials have been taken on record by the Board of Directors at its meeting held on January 11, 2007. There are no qualifications in the auditors' reports for these periods. The information presented above is extracted from the audited financial statements as stated.
2.	During the nine months ended December 31, 2006 and 2005 and the year ended March 31, 2006 the company issued 67,38,508; 79,09,228 and 99,68,862 equity shares respectively, pursuant to the exercise of stock options by certain employees under the 1998 and 1999 stock option plans.
3.	Information on investor complaints pursuant to Clause 41 of the Listing Agreement for the quarter ended December 31, 2006:

Nature of complaints received	Opening balance	Additions	Disposal	Closing balance
Dividend / Annual report related	-	264	264	-

4.	Infosys was liable to pay Aeronautical Development Agency (ADA) a maximum amount of Rs. 20 crore (US$ 4.4 million) by June 12, 2012 through a revenue sharing arrangement towards acquisition of Intellectual Property Rights in AUTOLAY, a commercial software application product used in designing high performance structural systems. During the quarter Infosys foreclosed the arrangement by paying the net present value of the future revenue share amounting to Rs. 13.5 crore (US$ 3 million). The remainder of the liability amounting to Rs. 6.5 crore (US$ 1.4 million) has been written back and disclosed in Other Income.
5.	Effective April 1, 2006 the company adopted the revised accounting standard on employee benefits. Pursuant to the adoption, the additional 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.
6.	Corporate actions: On October 12, 2006, the Board of Directors approved an interim dividend of Rs. 5 per share (100% on an equity share of par value of Rs. 5/-) which was subsequently paid.
7.	At the Annual General Meeting held on June 10, 2006, the shareholders approved 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 reserves. The bonus shares were subsequently issued.
8.	The final dividend of Rs. 4.25/- per share for fiscal 2006 and the Silver Jubilee special dividend of Rs. 15/- per share was approved by the shareholders at the Annual General Meeting held on June 10, 2006 and the same was paid subsequently.
9.	Matters relating to subsidiaries: On December 8, 2006, the shareholders of Infosys BPO approved a buy-back of up to 12,79,963 equity shares at a fair market value of Rs. 604/- per equity share. Pursuant to the buy-back offer, Infosys BPO bought back 11,39,469 equity shares which were subsequently cancelled on December 29, 2006. As of December 31, 2006 Infosys holds 99.91% of the outstanding equity shares of Infosys BPO Limited.
10.	On August 29, 2006, Progeon Limited was renamed Infosys BPO Ltd., India and on July 21, 2006, Infosys Technologies (Shanghai) Co. Limited was renamed Infosys Technologies (China) Co. Limited.
11.	During the nine months ended December 31, 2006, the company invested US$ 2 million (Rs. 9 crore) as capital and disbursed a loan of US$ 2 million (Rs. 9 crore) to its wholly owned subsidiary, Infosys Technologies (China) Co. Limited. The loan is repayable within five years from the date of disbursement at the discretion of the subsidiary. As of December 31, 2006 the company has invested US$ 7 million (Rs. 32 crore) as equity capital and US$ 5 million (Rs. 23 crore) as loan in the subsidiary.
12.	During the nine months ended December 31, 2006, the company invested US$ 3 million (Rs. 14 crore) in its wholly owned subsidiary, Infosys Consulting Inc. As of December 31, 2006 the company has invested an aggregate of US$ 20 million (Rs. 90 crore) in the subsidiary.
13.	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 Citicorp International Finance Corporation ("CIFC") in Infosys BPO Limited ("Infosys BPO") for a consideration amounting to Rs. 530 crore (US$ 115 million). The net consideration of Rs. 309 crore, after withholding taxes of Rs. 221 crore, was remitted to CIFC on the same date.
14.	Changes to Board of Directors: Sen. Larry Pressler retired by rotation as a director of the company at the Annual General Meeting held on June 10, 2006 and did not seek re-election.
15.	Mr. Jeffrey Lehman was appointed as an additional director of the company effective April 14, 2006. The appointment was approved by the shareholders of the company at the Annual General Meeting held on June 10, 2006.
16.	Mr. N. R. Narayana Murthy, Chairman and Chief Mentor, turned 60 on August 20, 2006 and as per the service rules of the company, he retired from the services of the company on that date. In this connection the Board, at its meeting held on July 12, 2006, appointed Mr. Murthy as an Additional Director of the company. Further the Board also appointed Mr. Murthy as the Non-Executive Chairman of the Board and Chief Mentor with effect from August 21, 2006.
17.	The Board, at its meeting held on July 12, 2006 re-designated Mr. Nandan M. Nilekani as the Chief Executive Officer and Managing Director and Mr. S. Gopalakrishnan as President, Chief Operating Officer and Joint Managing Director with effect from August 21, 2006.
18.	Investments: During the nine months ended December 31, 2006, the company received an amount of US$ 1 million (Rs. 5 crore) being the balance held in escrow account released on fulfillment of the escrow obligations on account of sale of investment in Yantra Corporation. The income is disclosed separately as an exceptional item in the profit and loss account.
19.	During the nine months ended December 31, 2006 the company received Rs. 1 crore from CiDRA Corporation towards redemption of shares on recapitalization. The remainder of investment was written off against the provision made earlier.
20.	Others: During the quarter, Infosys completed a sponsored secondary offering of 3,00,00,000 American Depositary Shares (ADSs), representing 3,00,00,000 equity shares (one equity share represents one ADS) at a price of US$ 53.50 per ADS excluding underwriting discounts and commissions. The aggregate size of the offering exceeded US$ 1.6 billion, which was the largest international equity offering from India.
21.	Infosys was added to the NASDAQ-100 Index effective with the market opening on December 18, 2006. The NASDAQ-100 Index is composed of the 100 largest non-financial stocks on the NASDAQ Stock Market in terms of market capitalization. Infosys is the first Indian company to be added to the NASDAQ-100 Index and is the only Indian company to be part of any of the major global indices.

Segment reporting (Consolidated - Audited)

(in Rs. crore)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006
Revenue by industry segment
Financial services	1,411	911	3,813	2,481	3,427
Manufacturing	469	357	1,390	942	1,324
Telecom	671	400	1,853	1,139	1,566
Retail	383	262	988	701	968
Others	721	602	2,077	1,634	2,236
Total	3,655	2,532	10,121	6,897	9,521
Less: Inter-segment revenue	-	-	-	-	-
Net revenue from operations	3,655	2,532	10,121	6,897	9,521
Segment profit before tax, interest, depreciation, amortization and minority interest:
Financial services	453	301	1,142	794	1,074
Manufacturing	141	112	420	286	402
Telecom	216	157	633	436	601
Retail	134	86	314	224	311
Others	252	205	685	518	703
Total	1,196	861	3,194	2,258	3,091
Less: Interest	-	-	-	-	-
Other un-allocable expenditure	141	117	369	293	437
(excluding un-allocable income)
Operating profit before tax, minority interest and exceptional items	1,055	744	2,825	1,965	2,654

Notes on segment information

Principal segments

The company's operations predominantly relate to providing technology services, delivered to clients globally, operating in various industry segments. Accordingly, revenues represented along industry verticals comprise the primary basis of the segmental information set out above.

Segmental capital employed

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 support services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities has been made.

By order of the Board for Infosys Technologies Limited
Bangalore , India	S. Gopalakrishnan	Nandan M. Nilekani
January 11, 2007	President, Chief Operating Officer and Joint Managing Director	Chief Executive Officer and Managing Director

The Board has also taken on record the unaudited consolidated results of Infosys Technologies Limited and its subsidiaries for the quarter and nine months ended December 31, 2006, prepared as per US GAAP. A summary of the financial statements is as follows:

(in US$ million, except per ADS data)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006 (Audited)
Revenues	821	559	2,227	1,559	2,152
Cost of revenues	468	319	1,280	890	1,244
Gross profit	353	240	947	669	908
Net income	218	143	591	403	555
Earnings per American Depositary Share (ADS)
Basic	0.39	0.26	1.07	0.74	1.02
Diluted	0.38	0.26	1.04	0.72	0.99
Total assets	2,517	1,862	2,517	1,862	2,066
Cash and cash equivalents	589	477	589	477	889
Liquid mutual funds	498	492	498	492	170

The reconciliation of net income as per Indian GAAP (audited) and US GAAP (unaudited) is as follows:

(in US$ million)
	Quarter ended December 31,		Nine months ended December 31,		Year ended March 31,
	2006	2005	2006	2005	2006
Consolidated net profit as per Indian GAAP	221	143	597	403	555
Stock compensation expenses (SFAS 123R)	(2)	-	(4)	-	-
Amortization of intangible assets	(1)	-	(2)	-	-
Consolidated net income as per US GAAP	218	143	591	403	555

Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT, business process outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry.

Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2006, our Quarterly Reports on Form 6-K for the quarters ended June 30, 2006 and September 30, 2006 and our other recent filings. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company's filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

EX-99.10

EXHIBIT 99.10
U.S. GAAP Unaudited

Infosys Technologies Limited and subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in millions except per share data)
	As of
	March 31, 2006	December 31, 2006
	(1)
ASSETS
Current Assets
Cash and cash equivalents	$889	$589
Investments in liquid mutual fund units	170	498
Trade accounts receivable, net of allowances	361	502
Unbilled revenue	48	72
Prepaid expenses and other current assets	40	64
Deferred tax assets	1	2
Total current assets	1,509	1,727
Property, plant and equipment, net	491	609
Goodwill	8	106
Intangible assets, net	-	20
Deferred tax assets	13	15
Advance income taxes	18	9
Other assets	27	31
Total Assets	$2,066	$2,517
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$3	$4
Income taxes payable	-	2
Client deposits	2	3
Unearned revenue	44	76
Other accrued liabilities	160	210
Total current liabilities	209	295
Non-current liabilities
Other non-current liabilities	5	1
Minority interests	15	-
Stockholders' Equity
Common stock, $0.16 par value  600,000,000 equity shares authorized,  Issued and outstanding -551,109,960 and 557,848,468 as of  March 31, 2006 and December 31, 2006, respectively	31	62
Additional paid-in capital	410	512
Accumulated other comprehensive income	9	35
Retained earnings	1,387	1,612
Total stockholders' equity	1,837	2,221
Total Liabilities And Stockholders' Equity	$2,066	$2,517

(1) March 31, 2006 balances were obtained from audited financial statements
See accompanying notes to the unaudited consolidated financial statements

Unaudited Consolidated Statements of Income

(Dollars in millions except per share data)
	Three months ended December 31,		Nine months ended December 31,
	2005	2006	2005	2006
Revenues	$559	$821	$1,559	$2,227
Cost of revenues	319	468	890	1,280
Gross profit	240	353	669	947
Operating Expenses:
Selling and marketing expenses	35	54	102	147
General and administrative expenses	41	64	124	183
Amortization of intangible assets	-	1	-	2
Total operating expenses	76	119	226	332
Operating income	164	234	443	615
Gain on sale of long term investment	-	-	-	1
Other income, net	(1)	13	15	55
Income before income taxes and minority interest	163	247	458	671
Provision for income taxes	18	29	52	78
Income before minority interest	145	218	406	593
Minority interest	2	-	3	2
Net income	$143	$218	$403	$591
Earnings per equity share
Basic	$0.26	$0.39	$0.74	$1.07
Diluted	$0.26	$0.38	$0.72	$1.04
Weighted average equity shares used in computing earnings per equity share
Basic	544,715,752	554,200,798	541,751,558	552,043,540
Diluted	559,825,844	566,883,484	556,868,762	564,849,610

See accompanying notes to the unaudited consolidated financial statements

Unaudited Consolidated Statements of Stockholders' Equity and Comprehensive Income

(Dollars in millions)
	Common stock Shares	Common stock Par value	Additional paid-in capital	Comprehensive income	Accumulated other comprehensive income	Retained earnings	Total stockholders' equity
Balance as of March 31, 2005	541,141,098	$31	$266		$33	$923	$1,253
Common stock issued	7,909,228	-	101		-	-	101
Cash dividends	-	-	-		-	(91)	(91)
Change in proportionate share of subsidiary resulting from issuance of stock by subsidiary	-	-	12	-	-	-	12
Comprehensive income
Net income	-	-	-	$403	-	403	403
Other comprehensive income
Unrealized gain on mutual fund investments, net of taxes				1	1		1
Translation adjustment	-	-	-	(40)	(40)	-	(40)
Comprehensive income				$364
Balance as of December 31, 2005	549,050,326	$31	$379		$(6)	$1,235	$1,639
Balance as of March 31, 2006	551,109,960	$31	$410		$9	$1,387	$1,837
Common stock issued	6,738,508	1	92	-	-	-	93
Cash dividends	-	-	-	-	-	(336)	(336)
Stock compensation expenses	-	-	4	-	-	-	4
Income tax benefit arising on exercise of stock options	-	-	6	-	-	-	6
Stock split effected in the form of a stock dividend	-	30			-	(30)	-
Comprehensive income
Net income	-	-	-	$591	-	591	591
Other comprehensive income
Unrealized gain on mutual fund investments, net of taxes				1	1		1
Translation adjustment	-	-	-	25	25		25
Comprehensive income	-	-	-	617
Balance as of December 31, 2006	557,848,468	$ 62	$ 512		$ 35	$ 1,612	$ 2,221

See accompanying notes to the unaudited consolidated financial statements

Unaudited Consolidated Statements of Cash Flows

(Dollars in millions)
	Nine months ended
	December 31, 2005	December 31,2006
OPERATING ACTIVITIES:
Net income	$403	$591
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	66	83
Minority interest	3	2
Stock compensation expenses	-	4
Deferred taxes	(2)	(4)
Income tax benefit arising on exercise of stock options	-	(3)
Others	-	(2)
Changes in assets and liabilities
Trade accounts receivable	(16)	(135)
Prepaid expenses and other current assets	(2)	(22)
Unbilled revenue	(4)	(23)
Accounts payable	2	1
Income taxes	(3)	15
Client deposits	(4)	2
Unearned revenue	23	31
Other accrued liabilities	20	46
Net cash provided by operating activities	486	586
Investing Activities:
Expenditure on property, plant and equipment	(184)	(191)
Payment towards intellectual property right	-	(3)
Loans to employees	(1)	3
Non-current deposits placed with corporations	(9)	(11)
Withdrawal of non-current deposits placed with corporations	1	2
Acquisition of minority interest in subsidiary	-	(132)
Investment in liquid mutual fund units	(418)	(1,017)
Redemption of liquid mutual fund units	193	700
Others	-	1
Net cash used in investing activities	(418)	(648)
Financing Activities:
Proceeds from issuance of common stock on exercise of employee stock options	101	93
Payment of dividends	(91)	(336)
Income tax benefit arising on exercise of stock options	-	3
Net cash provided by / (used in) financing activities	10	(240)
Effect of exchange rate changes on cash	(11)	2
Net increase/ (decrease) in cash and cash equivalents during the period	67	(300)
Cash and cash equivalents at the beginning of the period	410	889
Cash and cash equivalents at the end of the period	$477	$589
Supplementary information:
Cash paid towards taxes	$58	$67

See accompanying notes to the unaudited consolidated financial statements

Notes to the Unaudited Consolidated Financial Statements

1 Company overview and significant accounting policies

1.1 Company overview
Infosys Technologies Limited (Infosys), along with its majority owned and controlled subsidiary, Infosys BPO Limited (Infosys BPO), formerly Progeon limited and wholly-owned subsidiaries Infosys Technologies (Australia) Pty. Limited (Infosys Australia), Infosys Technologies (China) Co. Limited (Infosys China), formerly Infosys Technologies (Shanghai) Co. Limited and Infosys Consulting Inc. (Infosys Consulting) is a leading global technology services firm. The company provides end-to-end business solutions that leverage technology. The company provides solutions that span the entire software life cycle encompassing technical consulting, design, development, software re-engineering, maintenance, systems integration, package evaluation and implementation, testing and infrastructure management services. In addition, the company offers software products for the banking industry and business process management services.

1.2 Basis of preparation of financial statements and consolidation
The consolidated financial statements include Infosys and its subsidiaries (the company) and are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Infosys consolidates entities in which it owns or controls more than 50% of the voting shares. The results of acquired businesses are included in the consolidated financial statements from the date of acquisition. Inter-company balances and transactions are eliminated on consolidation.

Unaudited interim information presented in the consolidated financial statements has been prepared by the management without audit and, in the opinion of management, includes all adjustments of a normal recurring nature that are necessary for the fair presentation of the financial position, results of operations and cash flows for the periods shown, and is in accordance with GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the company's annual report on Form 20-F for the fiscal year ended March 31, 2006.

1.3 Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to, accounting for costs and efforts expected to be incurred to complete performance under software development arrangements, allowance for uncollectible accounts receivable, future obligations under employee benefit plans, provisions for post-sales customer support, the useful lives of property, plant, equipment and intangible assets and income tax valuation allowances. Actual results could differ from those estimates. Appropriate changes in estimates are made as management become aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financials statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements.

1.4 Revenue recognition
The company derives revenues primarily from software development and related services, licensing of software products and from business process management services. Arrangements with customers for software development and related services are either on a fixed price, fixed timeframe or on a time and material basis.

Revenue on time-and-material contracts is recognized as the related services are performed and revenue from the end of the last billing to the balance sheet date is recognized as unbilled revenues. Revenue from fixed-price, fixed-timeframe contracts is recognized as per the percentage-of-completion method. Guidance has been drawn from paragraph 95 of Statement of Position (SOP) 97-2, Software Revenue Recognition, to account for revenue from fixed price arrangements for software development and related services in conformity with SOP 81-1. The input (efforts expended) method has been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. Costs and earnings in excess of billings are classified as unbilled revenue while billings in excess of costs and earnings are classified as unearned revenue. Maintenance revenue is recognized ratably over the term of the underlying maintenance agreement.

The company provides its clients with a fixed-period warranty for corrections of errors and telephone support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time related revenues are recorded and included in cost of revenues. The company estimates such costs based on historical experience and estimates are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.

In accordance with SOP 97-2, license fee revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the license fee is fixed and determinable, and the collection of the fee is probable. Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS). The company has applied the principles in SOP 97-2 to account for revenue from these multiple element arrangements. Vendor specific objective evidence of fair value (VSOE) has been established for ATS. VSOE is the price charged when the element is sold separately. When other services are provided in conjunction with the licensing arrangement, the revenue from such contracts are allocated to each component of the contract using the residual method, whereby revenue is deferred for the undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of an established VSOE for implementation, the entire arrangement fee for license and implementation is recognized as the implementation is performed. Revenue from client training, support and other services arising due to the sale of software products is recognized as the services are performed. ATS revenue is recognized ratably over the period in which the services are rendered.

Revenues from business process management and other services are recognized on both, the time-and-material and fixed-price, fixed-timeframe basis. Revenue on time-and-material contracts is recognized as the related services are rendered. Revenue from fixed-price, fixed-timeframe contracts is recognized as per the proportional performance method using an output measure of performance.

When the company receives advances for services and products, such amounts are reported as client deposits until all conditions for revenue recognition are met.

The company accounts for volume discounts and pricing incentives to customers using the guidance in EITF Issue 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). The discount terms in the company's arrangements with customers generally entitle the customer to discounts if the customer completes a specified cumulative level of revenue transactions. In some arrangements, the level of discount varies with increases in the levels of revenue transactions. The discounts are passed on to the customer either as check payments or as a reduction of payments due from the customer. The company recognizes discount obligations as a reduction of revenue based on the ratable allocation of the discount to each of the underlying revenue transactions that result in progress by the customer toward earning the discount. The company recognizes the liability based on its estimate of the customer's future purchases. Also, when the level of discount varies with increases in levels of revenue transactions, the company recognizes the liability based on its estimate of the customer's future purchases. If the company cannot reasonably estimate the customer's future purchases, then the liability is recorded based on the maximum potential level of discount. The company recognizes changes in the estimated amount of obligations for discounts using a cumulative catch-up adjustment. Furthermore, the company does not recognize any revenue up front for breakages immediately on the inception of an arrangement.

1.5 Cash and cash equivalents
The company considers all highly liquid investments with a remaining maturity at the date of purchase / investment of three months or less and that are readily convertible to known amounts of cash to be cash equivalents. Cash and cash equivalents comprise cash and cash on deposit with banks, and corporations.

1.6 Investments
Investments in non-readily marketable equity securities of other entities where the company is unable to exercise significant influence and for which there are no readily determinable fair values are recorded at cost. Declines in value judged to be other than temporary are included in earnings.

Investment securities designated as 'available for sale' are carried at their fair value. Fair value is based on quoted market prices. Temporary unrealized gains and losses, net of the related tax effect are reported as a separate component of stockholders' equity until realized. Realized gains and losses and declines in value judged to be other than temporary on available for sale securities are included in earnings.

The cost of securities sold is based on the specific identification method. Interest and dividend income are recognized when earned.

1.7 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation. The company depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:

Buildings	15 years	Vehicles	5 years
Plant and equipment	5 years	Computer equipment	2-5 years
Furniture and fixtures	5 years

The cost of software purchased for internal use is accounted under SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. Deposits paid towards the acquisition of these long lived assets outstanding at each balance sheet date and the cost of assets not put to use before such date are disclosed under "Capital work-in-progress". Costs of improvements that substantially extend the useful life of particular assets are capitalized. Repairs and maintenance cost are charged to earnings when incurred. The cost and related accumulated depreciation are removed from the consolidated financial statements upon sale or disposition of the asset.

The company evaluates the recoverability of these assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. Assets to be disposed are reported at the lower of the carrying value or the fair value less the cost to sell.

1.8 Business combinations
Business combinations have been accounted using the purchase method under the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations. Cash and amounts of consideration that are determinable at the date of acquisition are included in determining the cost of the acquired business.

1.9 Goodwill
Goodwill represents the cost of the acquired businesses in excess of the fair value of identifiable tangible and intangible net assets purchased. Goodwill is tested for impairment on an annual basis, relying on a number of factors including operating results, business plans and future cash flows. Recoverability of goodwill is evaluated using a two-step process. The first step involves a comparison of the fair value of a reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds its fair value, the second step of the process involves a comparison of the fair value and carrying value of the goodwill of that reporting unit. If the carrying value of the goodwill of a reporting unit exceeds the fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess. Goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

1.10 Intangible assets
Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

Intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets.

1.11 Research and development
Research and development costs are expensed as incurred. Software product development costs are expensed as incurred until technological feasibility is achieved. Research and development costs and software development costs incurred under contractual arrangements with customers are accounted as cost of revenues.

1.12 Foreign currency
The functional currency of the company and Infosys BPO is the Indian rupee (Rs.). The functional currency for Infosys Australia, Infosys China and Infosys Consulting is the respective local currency. The consolidated financial statements are reported in U.S. dollars. The translation of Rs. to U.S. dollars is performed for balance sheet accounts using the exchange rate in effect at the balance sheet date and for revenue, expense and cash-flow items using a monthly average exchange rate for the respective periods. The gains or losses resulting from such translation are included in 'Other comprehensive income', a separate component of stockholders' equity. The translation of the financial statements of foreign subsidiaries from the local currency to the functional currency of the company is also performed on the same basis.

Foreign-currency denominated assets and liabilities are translated into the functional currency at exchange rates in effect at the balance sheet date. The gains or losses resulting from such translation are included in earnings. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net income for the period in which the transaction is settled. Revenue, expense and cash-flow items denominated in foreign currencies are translated into the functional currency using the exchange rate in effect on the date of the transaction.

1.13 Earnings per share
Basic earnings per share is computed by dividing net income for the period by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the diluted weighted average number of equity shares outstanding during the period. Diluted earnings per share reflect the potential dilution from equity shares issuable through employee stock options. The dilutive effect of employee stock options is reflected in diluted earnings per share by application of the treasury stock method. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the if-converted method. If securities have been issued by a subsidiary that enable their holders to obtain the subsidiary's common stock, the earnings of the subsidiary shall be included in the consolidated diluted earnings per share computations based on the consolidated group's holding of the subsidiary's securities.

If the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If such changes occur after the close of the reporting period but before issuance of the financial statements, the per-share computations for that period and any prior-period financial statements presented are based on the new number of shares.

1.14 Income taxes
Income taxes are accounted using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is not more likely than not. Changes in valuation allowance from period to period are reflected in the income statement of the period of change. Deferred taxes are not provided on the undistributed earnings of subsidiaries outside India where it is expected that the earnings of the foreign subsidiary will be permanently reinvested. Tax benefits of deductions earned on exercise of employee stock options in excess of compensation charged to earnings are credited to additional paid in capital. The income tax provision for the interim period is based on the best estimate of the effective tax rate expected to be applicable for the full fiscal year.

1.15 Fair value of financial instruments
In determining the fair value of its financial instruments, the company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. The methods used to determine fair value include discounted cash flow analysis and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.

1.16 Concentration of risk
Financial instruments that potentially subject the company to concentrations of credit risk consist principally of cash equivalents, trade accounts receivable, investment securities and hedging instruments. By nature, all such financial instruments involve risk, including the credit risk of non-performance by counterparties. In management's opinion, as of March 31, 2006 and December 31, 2006 there was no significant risk of loss in the event of non-performance of the counterparties to these financial instruments, other than the amounts already provided for in the financial statements, if any. Exposure to credit risk is managed through credit approvals, establishing credit limits and monitoring procedures. The factors which affect the fluctuations in the company's provisions for bad debts and write offs of uncollectible accounts include the financial health and economic environment of the clients. The company specifically identifies the credit loss and then makes the provision. The company's cash resources are invested with corporations, financial institutions and banks with high investment grade credit ratings. Limits are established by the company as to the maximum amount of cash that may be invested with any such single entity.

1.17 Derivative financial instruments
The company uses derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in foreign exchange rates on accounts receivable and forecasted cash flows denominated in certain foreign currencies. The counterparty for these contracts is generally a bank. Although the company believes that these financial instruments constitute hedges from an economic perspective, they do not qualify for hedge accounting under SFAS 133, as amended. Any derivative that is either not designated a hedge, or is so designated but is ineffective per SFAS 133, is marked to market and recognized in earnings immediately and included in other income, net.

1.18 Retirement benefits to employees

1.18.1 Gratuity
In accordance with the Payment of Gratuity Act, 1972, Infosys provides for gratuity, a defined benefit retirement plan (the Gratuity Plan) covering eligible employees. 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. The company fully contributes all ascertained liabilities to the Infosys Technologies Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPO, contributions are made to the Infosys BPO's Employees' Gratuity Fund Trust. Trustees administer contributions made to the Trusts and contributions are invested in specific designated instruments as permitted by law and investments are also made in mutual funds that invest in the specific designated instruments.

1.18.2 Superannuation
Certain employees of Infosys are also participants in a defined contribution plan. Until March 2005, the company made monthly contributions under the superannuation plan (the Plan) to the Infosys Technologies Limited Employees' Superannuation Fund Trust based on a specified percentage of each covered employee's salary. The company has no further obligations to the Plan beyond its monthly contributions. Certain employees of Infosys BPO Ltd are also eligible for superannuation benefit. Infosys BPO makes monthly provisions under the superannuation plan based on a specified percentage of each covered employee's salary. Infosys BPO has no further obligations to the superannuation plan beyond its monthly provisions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.

Effective 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 trusts.

1.18.3 Provident fund
Eligible employees of Infosys receive benefits from a provident fund, which is a defined contribution plan. Both the employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee's salary. The company contributes a part of the contributions to the Infosys Technologies Limited Employees' Provident Fund Trust. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The company has an obligation to fund any shortfall on the yield of the trust's investments over the administered interest rates.
 
In respect of Infosys BPO, eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and Infosys BPO make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected under the provident fund plan are deposited in a government administered provident fund.

1.19 Stock-based compensation
Until March 31, 2006, the company applied the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25, issued in March 2000, to account for its fixed stock option plans. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS 123, the Company elected to continue to apply the intrinsic value-based method of accounting described above, and adopted the disclosure requirements of SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123 until March 2006.

The following table illustrates the effect on net income and earnings per share for the nine months ended December 31, 2005 and if the company had applied the fair value recognition provisions of SFAS Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

(Dollars in millions except per share data)
	Nine months ended December 31, 2005
Net income, as reported	$403
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(9)
Pro forma net income	$394
Earnings per share:
Basic - as reported	$0.74
Basic - pro forma	$0.73
Diluted - as reported	$0.72
Diluted - pro forma	$0.71

From April 1, 2006, the company adopted FASB Statement No.123 (revised 2004), Share-Based Payment using the modified prospective approach. The company recorded stock compensation expense of $4 million during the nine months ended December 31, 2006.

1.20 Dividends
Final dividends on common stock are recorded as a liability on the date of declaration by the stockholders and interim dividends are recorded as a liability on the date of declaration by the board of directors.

1.21 Equity issued by subsidiaries
Changes in the proportionate share of Infosys in the equity of subsidiaries resulting from additional equity issued by the subsidiaries are accounted for as an equity transaction in consolidation.

2 Notes to the Unaudited consolidated financial statements

2.1 Trade accounts receivable
Trade accounts receivable as of March 31, 2006 and December 31, 2006, net of allowance for doubtful accounts of $2 million and $6 million, amounted to $361 million and $502 million. The age profile of trade accounts receivable, net of allowances, is given below.

In %
	As of
	March 31, 2006	December 31, 2006
Period (in days)
0 - 30	60.9	52.6
31 - 60	31.2	33.9
61 - 90	3.5	9.3
More than 90	4.4	4.2
	100.0	100.0

2.2 Loans to employees
The company provides loans to eligible employees in accordance with policy. No loans have been made to employees in connection with purchase of the company's equity securities by all employees. The employee loans are repayable over fixed periods ranging from 1 to 100 months. The annual rates of interest at which the loans have been made to employees vary between 0% through 4%. Loans aggregating $28 million and $25 million were outstanding as of March 31, 2006 and December 31, 2006.
The required repayments of employee loans outstanding as of December 31, 2006 are as detailed below.

(Dollars in millions)
Repayment in the 12 months ending December 31,	Repayment
2007	$21
2008	2
2009	1
2010	1
2011	-
	$25

The estimated fair values of the loan to employee's receivables amounted to $24 million as of March 31, 2006 and $23 million as of December 31, 2006. These amounts have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to develop these estimates of fair value. Consequently, these estimates are not necessarily indicative of the amounts that the company could realize in the market.

2.3 Non-Current liability
Infosys was liable to pay Aeronautical Development Agency (ADA) a maximum amount of $4 million by June 12, 2012 through a revenue sharing arrangement towards acquisition of Intellectual Property Rights in AUTOLAY, a commercial software application product used in designing high performance structural systems. During the quarter Infosys foreclosed the arrangement by paying the net present value of the future revenue share amounting to $3 million. The remainder of the liability in books has been written back and included in other income.

2.4 Stockholders' equity
Infosys has only one class of capital stock referred to as equity shares. On June 10, 2006, the members of the company approved a 1:1 bonus issue on the equity shares of the company. The bonus issue has the nature of a stock split effected in the form of a stock dividend with 1 additional share being issued for every share held. The computations of basic and diluted EPS have also been adjusted retroactively for all periods presented to reflect the change in capital structure. All references in these financial statements to number of shares, per share amounts and exercise price of stock option grants are retroactively restated to reflect stock splits made.

2.5 Non-Operating income
In fiscal 2005, the Company sold its investment in Yantra Corporation. The carrying value of the investment in Yantra Corporation was completely written down in fiscal 1999. Consideration received from the sale resulted in a gain of $11 million during fiscal 2005. Further consideration of $1 million was received during the nine months ended December 31, 2006 resulting in a gain of $1 million for the period.

Other income, net, for the nine months ended December 31, 2006 consists of the following:

(Dollars in millions)
	Nine months ended December 31,
	2005	2006
Interest income	$17	$24
Income from mutual fund investments	13	19
Foreign exchange gains/(losses), net	(15)	9
Others	-	3
	$15	$55

2.6 Income taxes
The provision for income taxes in the income statement comprises:

(Dollars in millions)
	Nine months ended December 31,
	2005	2006
Current taxes
Domestic taxes	$17	$24
Foreign taxes	37	58
	54	82
Deferred taxes
Domestic taxes	(1)	(2)
Foreign taxes	(1)	(2)
	(2)	(4)
Aggregate taxes	$52	$78

All components of the aggregate taxes of $52 million and $78 million for the nine months ended December 31, 2005 and 2006 are allocated to the continuing operations of the company. The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities, and a description of the financial statement items that created these differences are as follows:

(Dollars in millions)
	As of,
	March 31, 2006	December 31, 2006
Deferred tax assets
Property, plant and equipment	$13	$16
Investments	1	1
Compensated absences and other accruals	1	3
	15	20
Less: Valuation allowance	(1)	(1)
	14	19
Deferred tax liabilities
Intangible asset	-	(2)
	-	(2)
Net deferred tax assets	$14	$17

In assessing the realisability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that it is more likely than not the company will realize the benefits of those deductible differences, net of the existing valuation allowance at December 31, 2006. The valuation allowance relates to investments. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

The provision for foreign taxes is due to income taxes payable overseas, principally in the United States of America. The company benefits from certain significant tax incentives provided to software firms under Indian tax laws. These incentives presently include those for facilities set up under the Special Economic Zones Act, 2005 and an exemption from payment of Indian corporate income taxes for a period of ten consecutive years of operation of software development facilities designated as "Software Technology Parks" (the STP Tax Holiday). The Government of India has amended the tax incentives available to companies set up in designated STPs. The period of the STP Tax Holiday available to such companies is restricted to ten consecutive years, beginning from the financial year when the unit started producing computer software or April 1, 1999, whichever is earlier. The tax holidays on all facilities under STPs expire in stages by 2009. Under the Special Economic Zones Act, 2005 scheme, units in designated special economic zones which begin providing services on or after April 1, 2005 will be eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from commencement of provision of services and 50 percent of such profits or gains for a further five years. Certain tax benefits are also available for a further five years subject to the unit meeting defined conditions.

Infosys is subject to a 15% Branch Profit Tax (BPT) in the U.S. to the extent its U.S. branch's net profit during the year is greater than the increase in the net assets of the U.S. branch during the fiscal year, computed in accordance with the Internal Revenue Code. At March 31, 2006, Infosys' US branch net assets amounted to approximately $261 million. As of December 31, 2006, the company has not triggered the BPT and intends to maintain the current level of its net assets in the US, as it is consistent with its business plan. Accordingly, a BPT provision has not been recorded.

2.7 Earnings per share
The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:

	Nine months ended December 31,
	2005	2006
Basic earnings per equity share - weighted average  number of common shares outstanding excluding unallocated shares of ESOP	541,751,558	552,043,540
Effect of dilutive common equivalent shares - stock options outstanding	15,117,204	12,806,070
Diluted earnings per equity share - weighted average number of common shares and common equivalent shares outstanding	556,868,762	564,849,610

2.8 Derivative financial instruments
The company uses derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in foreign exchange rates on accounts receivable and forecasted cash flows denominated in certain foreign currencies. The counterparty for these contracts is generally a bank. Infosys held foreign exchange forward contracts of $119 million as of March 31, 2006. As of December 31, 2006, Infosys held foreign exchange forward contracts of $ 76 million. The foreign exchange forward contracts mature between 1 to 12 months. As of March 31, 2006, the company held put options of $4 million, call options of $8 million and range barrier options of $210 million, Euro 3 million and United Kingdom Pound Sterling 3 million. As of December 31, 2006, the company held range barrier options of $217 million, United Kingdom Pound Sterling 31 million and Euro 5 million.

2.9 Segment reporting
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. The company's operations predominantly relate to providing IT solutions, delivered to customers located globally, across various industry segments. The Chief Operating Decision Maker evaluates the company's performance and allocates resources based on an analysis of various performance indicators by industry classes and geographic segmentation of customers. Accordingly, revenues represented along industry classes comprise the principal 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 used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the summary of significant accounting policies.

Industry segments for the company are primarily financial services comprising enterprises providing banking, finance and insurance services, manufacturing enterprises, enterprises in the telecommunications (telecom) and retail industries, and others such as utilities, transportation and logistics companies. Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and off-shore. 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.

Revenue in relation to segments is categorized based on items that are individually identifiable to that segment, while expenditure is categorized in relation to the associated turnover of the segment. Allocated expenses of the geographic segments include expenses incurred for rendering services from the company's offshore software development centers and on-site expenses. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying assets are used interchangeably. Management 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 adjusted only against the total income of the company.

Fixed assets used in the company's business are not identified to any of the reportable segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
Geographical information on revenue and industry revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.

2.9.1 Industry segments

Nine months ended December 31, 2005 

(Dollars in millions)
	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	$561	$213	$257	$159	$369	$1,559
Identifiable operating expenses	236	94	97	65	148	640
Allocated expenses	147	54	61	43	106	411
Segmental operating income	178	65	99	51	115	508
Unallocable expenses						65
Operating income						443
Gain on sale of long term investment						-
Other income, net						15
Income before income taxes and minority interest						458
Provision for income taxes						52
Income before minority interest						406
Minority Interest						3
Net income						$403

Nine months ended December 31, 2006

	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	$837	$305	$409	$218	$458	$2,227
Identifiable operating expenses	358	130	159	90	181	918
Allocated expenses	229	84	111	59	126	609
Segmental operating income	250	91	139	69	151	700
Unallocable expenses						85
Operating income						615
Gain on sale of long term investment						1
Other income, net						55
Income before income taxes and minority interest						671
Provision for income taxes						78
Income before minority interest						593
Minority interest						2
Net income						$591

2.9.2 Geographic segments

Nine months ended December 31, 2005 

(Dollars in millions)
	North America	Europe	India	Rest of the World	Total
Revenues	$1,009	$377	$27	$146	$1,559
Identifiable operating expenses	422	150	13	55	640
Allocated expenses	259	91	7	54	411
Segmental operating income	328	136	7	37	508
Unallocable expenses					65
Operating income					443
Gain on sale of long term investment					-
Other income, net					15
Income before income taxes and minority interest					458
Provision for income taxes					52
Income before minority interest					406
Minority interest					3
Net income					$403

Nine months ended December 31, 2006

	North America	Europe	India	Rest of the World	Total
Revenues	$1,415	$586	$36	$190	$2,227
Identifiable operating expenses	611	229	10	68	918
Allocated expenses	388	160	9	52	609
Segmental operating income	416	197	17	70	700
Unallocable expenses					85
Operating income					615
Gain on sale of long term investment					1
Other income, net					55
Income before income taxes and minority interest					671
Provision for income taxes					78
Income before minority interest					593
Minority interest					2
Net income					$591

2.9.3 Significant clients
No client individually accounted for more than 10% of the revenues in the nine months ended December 31, 2005 and 2006.

2.10 Litigation
The company is subject to legal proceedings and claims which have arisen in the ordinary course of its business. Legal actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect on the results of operations or the financial position of the company.

2.11 Tax contingencies
During fiscal 2006, the company received a demand from the Indian tax authorities for payment of additional tax of $30 million, including interest of $7 million, upon completion of their tax review for fiscal 2002 and fiscal 2003. The tax demand is mainly on account of disallowance of a portion of the deduction to its taxable income under Indian law claimed by the company under Section 10A of the Income-tax Act. Deduction under Section 10A of the Income-tax Act 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 also.

The company is contesting the demand and management, including its tax advisers, believes 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. For the demand pertaining to fiscal 2002 and fiscal 2003, the position of the Company has been substantially upheld by the appellate authority.

 2.12 Acquisition of minority interest in Infosys BPO
On June 30, 2006, Infosys acquired 8,750,000 equity shares of Infosys BPO Limited from Citicorp International Finance Corporation for a consideration of $116 million.

The purchase price has been allocated based on management's estimates and independent appraisals of fair values as follows:

(Dollars in millions)
Component	Purchase price allocated
Property, plant and equipment	$2
Net current assets	13
Deferred tax liabilities	(2)
Customer contracts	19
Goodwill	84
Total purchase price	$116

The identified customer contracts intangible is being amortized over a period of four years, being management's estimate of the useful life of the asset.

2.13 Repurchase of equity shares by Infosys BPO
On December 29, 2006, Infosys BPO Limited repurchased 1,139,469 equity shares from minority shareholders for a consideration of $16 million. As of December 31, 2006 Infosys holds 99.91% of the outstanding equity shares of Infosys BPO Limited.

The purchase price has been allocated based on management's estimates and independent appraisals of fair values as follows:

(Dollars in millions)
Component	Purchase price allocated
Property, plant and equipment	$1
Net current assets	2
Deferred tax liabilities	-
Customer contracts	2
Goodwill	11
Total purchase price	$16

The identified customer contracts intangible is being amortized over a period of four years, being management's estimate of the useful life of the asset. The company believes that the acquisition resulted in recognition of goodwill primarily because of the acquired company's market position, skilled employees, management strength and potential to serve as a platform for enhancing business opportunities in the business process management area.

EX-99.11

EXHIBIT 99.1
Indian GAAP Standalone

INFOSYS TECHNOLOGIES LIMITED
in Rs. crore
Balance Sheet as at	Schedule	December 31, 2006	March 31, 2006
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital	1	279	138
Reserves and surplus	2	9,363	6,759
		9,642	6,897
APPLICATION OF FUNDS
FIXED ASSETS	3
Original cost		3,651	2,837
Less: Accumulated depreciation		1,608	1,275
Net book value		2,043	1,562
Add: Capital work-in-progress		573	571
		2,616	2,133
INVESTMENTS	4	2,793	876
DEFERRED TAX ASSETS	5	71	56
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors	6	2,086	1,518
Cash and bank balances	7	1,668	3,279
Loans and advances	8	1,769	1,252
		5,523	6,049
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities	9	1,045	808
Provisions	10	316	1,409
NET CURRENT ASSETS		4,162	3,832
		9,642	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 Partner Membership No. 32815	N. R. Narayana Murthy Chairman and Chief Mentor	Nandan M. Nilekani Chief Executive Officer and Managing Director	S. Gopalakrishnan President, Chief Operating Officer and Joint Managing Director	Deepak M. Satwalekar Director
	Marti G. Subrahmanyam Director	Omkar Goswami Director	Rama Bijapurkar Director	Claude Smadja Director
	Sridar A. Iyengar Director	David L Boyles Director	Jeffrey Lehman Director	S. D. Shibulal Director
	K. Dinesh Director	T. V. Mohandas Pai Director	Srinath Batni Director	V. Balakrishnan Chief Financial Officer
Bangalore January 11, 2007	Parvatheesam K. Company Secretary

in Rs. crore, except per share data
Profit and Loss Account for the	Schedule	Quarter ended December 31,		Nine months ended December 31,
		2006	2005	2006	2005
Income from software services and products		3,454	2,398	9,594	6,535
Software development expenses	11	1,888	1,276	5,299	3,508
GROSS PROFIT		1,566	1,122	4,295	3,027
Selling and marketing expenses	12	182	129	530	374
General and administration expenses	13	235	160	688	469
		417	289	1,218	843
OPERATING PROFIT BEFORE INTEREST AND DEPRECIATION		1,149	833	3,077	2,184
Interest		-	-	-	-
Depreciation		129	109	336	274
OPERATING PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS		1,020	724	2,741	1,910
Other income, net	14	60	(2)	255	73
Provision for investments		-	-	3	-
NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS		1,080	722	2,993	1,983
Provision for taxation	15	122	80	340	226
NET PROFIT AFTER TAX BEFORE EXCEPTIONAL ITEMS		958	642	2,653	1,757
Income on sale of Investments, net of taxes (refer to note 22.2.22)		-	-	6	-
NET PROFIT AFTER TAX AND EXCEPTIONAL ITEMS		958	642	2,659	1,757
Balance Brought Forward		3,574	2,341	2,195	1,428
Less: Residual dividend paid		-	-	4	-
Dividend tax on the above		-	-	1	-
		3,574	2,341	2,190	1,428

AMOUNT AVAILABLE FOR APPROPRIATION		4,532	2,983	4,849	3,185
Dividend
Interim		-	-	278	177
Final		-	-	-	-
Total dividend		-	-	278	177
Dividend tax		-	-	39	25
Amount transferred to general reserve		-	-	-	-
Balance in profit and loss account		4,532	2,983	4,532	2,983
		4,532	2,983	4,849	3,185
EARNINGS PER SHARE *
Equity shares of par value Rs. 5/- each
Before exceptional Items
Basic		17.20	11.72	47.82	32.27
Diluted		16.82	11.39	46.70	31.35
After exceptional Items
Basic		17.20	11.72	47.93	32.27
Diluted		16.82	11.39	46.81	31.35
Number of shares used in computing earnings per share
Basic		55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Diluted		56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992
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 Partner Membership No. 32815	N. R. Narayana Murthy Chairman and Chief Mentor	Nandan M. Nilekani Chief Executive Officer and Managing Director	S. Gopalakrishnan President, Chief Operating Officer and Joint Managing Director	Deepak M. Satwalekar Director
	Marti G. Subrahmanyam Director	Omkar Goswami Director	Rama Bijapurkar Director	Claude Smadja Director
	Sridar A. Iyengar Director	David L Boyles Director	Jeffrey Lehman Director	S. D. Shibulal Director
	K. Dinesh Director	T. V. Mohandas Pai Director	Srinath Batni Director	V. Balakrishnan Chief Financial Officer
Bangalore January 11, 2007	Parvatheesam K. Company Secretary

in Rs. crore
Cash Flow Statement for the		Nine months ended December 31,
	Schedule	2006	2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before tax and exceptional items		2,993	1,983
Adjustments to reconcile net profit before tax to cash provided by operating activities
(Profit)/ loss on sale of fixed assets		-	-
Depreciation		336	274
Interest and dividend income		(183)	(127)
Profit on sale of liquid mutual funds		(8)	-
Provision for investments		3	-
Effect of exchange differences on translation of foreign currency cash and cash equivalents		(16)	1
Changes in current assets and liabilities
Sundry debtors		(568)	(61)
Loans and advances	16	(246)	(56)
Current liabilities and provisions	17	233	139
Income taxes paid	18	(290)	(253)
NET CASH GENERATED BY OPERATING ACTIVITIES		2,254	1,900
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets and change in capital work-in-progress	19	(818)	(783)
Proceeds on disposal of fixed assets		-	-
Payment for intellectual property rights (refer to note 22.2.21)		14	-
Investment in subsidiaries (refer to note 22.2.16)		(553)	(22)
Investments in securities (refer to note 22.2.16)	20	(1,359)	(958)
Interest and dividend income		183	127
Cash flow from investing activities before exceptional items		(2,533)	(1,636)
Proceeds on sale of Long Term Investments (Net of taxes) (refer to note 22.2.16)		6	-
NET CASH USED IN INVESTING ACTIVITIES		(2,527)	(1,636)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital on exercise of stock options		421	453
Dividends paid during the period		(1,343)	(353)
Dividend Tax paid during the period		(189)	(50)
NET CASH USED IN FINANCING ACTIVITIES		(1,111)	50
Effect of exchange differences on translation of foreign currency cash and cash equivalents		16	(1)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(1,368)	313
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	2,411	1,996
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 Partner Membership No. 32815	N. R. Narayana Murthy Chairman and Chief Mentor	Nandan M. Nilekani Chief Executive Officer and Managing Director	S. Gopalakrishnan President, Chief Operating Officer and Joint Managing Director	Deepak M. Satwalekar Director
	Marti G. Subrahmanyam Director	Omkar Goswami Director	Rama Bijapurkar Director	Claude Smadja Director
	Sridar A. Iyengar Director	David L Boyles Director	Jeffrey Lehman Director	S. D. Shibulal Director
	K. Dinesh Director	T. V. Mohandas Pai Director	Srinath Batni Director	V. Balakrishnan Chief Financial Officer
Bangalore January 11, 2007	Parvatheesam K. Company Secretary

in Rs. crore, except as otherwise stated
Schedules to the Balance Sheet as at	December 31, 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*	279	138
55,78,48,468 ( 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]
	279	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	418	571
Income tax benefit arising from exercise of stock options	-	72
	1,961	1,543
General reserve - As at April 1,	3,015	2,773
Less: Gratuity transitional liability (refer to note 22.2.23)	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	4,532	2,195
	9,363	6,759

Schedules to the Balance Sheet
3. FIXED ASSETS
in Rs. crore except as otherwise stated
	Original cost				Depreciation and amortization				Net book value
	As at April 1, 2006	Additions	Deductions/ Retirement	As at December 31, 2006	As at April 1, 2006	For the Period	Deductions/ Retirement	As at December 31, 2006	As at December 31, 2006	As at March 31, 2006
Land : free-hold *	34	4	-	38	-	-	-	-	38	34
leasehold	104	20	4	120	-	-	-	-	120	104
Buildings*	1,022	355	-	1,377	179	62	-	241	1,136	843
Plant and machinery*	559	147	-	706	305	77	1	381	325	254
Computer equipment*	700	198	2	896	516	148	2	662	234	184
Furniture and fixtures*	417	95	-	512	275	48	-	323	189	142
Vehicles	1	1	-	2	-	1	-	1	1	1
	2,837	820	6	3,651	1,275	336	3	1,608	2,043	1,562
Previous Period	2,183	657	15	2,825	1,006	274	15	1,265	1,560
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 * Please refer to note 22.2.

		in Rs. crore
Schedules to the Balance Sheet as at	December 31, 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 *	2,050	684
	2,793	876
Aggregate amount of unquoted investments	2,793	876
* Refer to note 22.2.16 for details of investments
5. DEFERRED TAX ASSETS
Fixed assets	68	54
Sundry debtors	3	2
	71	56
6. SUNDRY DEBTORS*
Debts outstanding for a period exceeding six months
Unsecured
considered doubtful	23	8
Other debts
Unsecured
considered good**	2,086	1,518
considered doubtful	3	2
	2,112	1,528
Less: Provision for doubtful debts	26	10
	2,086	1,518
* Includes dues from companies where directors are interested	3	2
** Includes dues from subsidiaries	5	-
7. CASH AND BANK BALANCES
Cash on hand	-	-
Balances with scheduled banks in Indian Rupees
In current accounts *	149	169
In deposit accounts	1,216	2,735
Balances with non-scheduled banks in foreign currency **
In current accounts	303	375
	1,668	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)	23	14
Advances
prepaid expenses	22	27
for supply of goods and rendering of services *	8	9
advance to gratuity trust	-	-
others	24	14
	77	64
Unbilled revenues	309	203
Advance income tax	309	267
Loans and advances to employees
housing and other loans	40	49
salary advances	56	61
Electricity and other deposits	19	16
Rental deposits	11	12
Deposits with financial institution and body corporate (refer to note 22.2.14)	864	580
Mark to Market on options/ forward contracts	84	-
	1,769	1,252
Unsecured, considered doubtful
Loans and advances to employees	1	-
	1,770	1,252
Less: Provision for doubtful loans and advances to employees	1	-
	1,769	1,252
* Includes advances to subsidiary company	2	6
9. CURRENT LIABILITIES
Sundry creditors
goods and services	18	6
accrued salaries and benefits
salaries	28	6
bonus and incentives	145	233
unavailed leave	109	80
for other liabilities
provision for expenses	264	166
retention monies	9	13
withholding and other taxes payable	130	82
for purchase of intellectual property rights	-	19
Mark to market on options/ forward contracts	-	2
others	3	3
	706	610
Advances received from clients	15	7
Unearned revenue	321	188
Unclaimed dividend	3	3
	1,045	808
10. PROVISIONS
Proposed dividend	-	1,061
Provision for
tax on dividend	-	149
income taxes *	294	187
post-sales client support and warranties	22	12
	316	1,409
* Refer to note 22.2.12

in Rs. crore
Schedules to Profit and Loss Account for the	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
11. SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including overseas staff expenses	1,393	987	3,936	2,632
Overseas group health insurance	28	12	68	36
Contribution to provident and other funds	37	22	105	62
Staff welfare	11	9	29	20
Technical sub-contractors - subsidiaries	159	92	446	266
Technical sub-contractors - others	73	29	170	83
Overseas travel expenses	70	60	206	172
Visa charges and others	20	7	84	53
Software packages
for own use	57	34	140	98
for service delivery to clients	5	6	20	25
Communication expenses	14	10	40	35
Computer maintenance	6	7	16	14
Consumables	6	4	17	12
Rent	4	3	11	9
Provision for post-sales client support and warranties	5	(6)	11	(9)
	1,888	1,276	5,299	3,508
12. SELLING AND MARKETING EXPENSES
Salaries and bonus including overseas staff expenses	111	74	329	210
Overseas group health insurance	1	1	2	3
Contribution to provident and other funds	1	-	2	1
Staff welfare	1	-	2	1
Overseas travel expenses	24	14	69	42
Visa charges and others	-	2	1	7
Traveling and conveyance	1	1	2	2
Commission and earnout charges	4	10	23	27
Brand building	17	14	44	36
Professional charges	5	5	16	19
Rent	4	3	12	10
Marketing expenses	10	3	18	9
Telephone charges	2	2	5	4
Communication expenses	-	-	1	-
Printing and stationery	1	-	1	1
Advertisements	-	-	2	1
Office maintenance	-	-	-	-
Sales promotion expenses	-	-	1	1
Consumables	-	-	-	-
Software packages
for own use	-	-	-	-
Computer maintenance	-	-	-	-
Power and fuel	-	-	-	-
Insurance charges	-	-	-	-
Rates and taxes	-	-	-	-
Bank charges and commission	-	-	-	-
Miscellaneous expenses	-	-	-	-
	182	129	530	374
13. GENERAL AND ADMINISTRATION EXPENSES
Salaries and bonus including overseas staff expenses	45	33	127	90
Overseas group health insurance	-	-	-	1
Contribution to provident and other funds	3	2	8	5
Professional charges	34	25	100	65
Telephone charges	28	18	80	54
Power and fuel	22	16	66	45
Traveling and conveyance	21	17	61	45
Overseas travel expenses	3	3	12	9
Visa charges and others	-	1	1	3
Office maintenance	23	19	70	47
Guest house maintenance*	1	-	1	1
Insurance charges	7	5	19	16
Printing and stationery	4	2	10	7
Donations	7	4	16	13
Rent	4	2	13	7
Advertisements	2	3	6	10
Repairs to building	5	3	15	11
Repairs to plant and machinery	4	3	10	8
Rates and taxes	7	3	19	7
Professional membership and seminar participation fees	3	2	7	6
Postage and courier	2	1	6	4
Books and periodicals	1	1	3	3
Provision for bad and doubtful debts	5	(4)	24	6
Provision for doubtful loans and advances	-	-	-	-
Commission to non-whole time directors	1	-	1	1
Freight charges	-	-	1	1
Bank charges and commission	-	-	1	1
Research grants	2	-	7	1
Auditor's remuneration
statutory audit fees	-	-	-	-
certification charges	-	-	-	-
others	-	-	-	-
out-of-pocket expenses	-	-	-	-
Miscellaneous expenses (refer to note 22.2.15)	1	1	4	2
	235	160	688	469
*For non training purposes
14. OTHER INCOME, NET
Interest received on deposits with banks and others*	30	25	100	73
Dividend received on investment in liquid mutual funds (non-trade unquoted)	36	24	83	54
Miscellaneous income (refer to note 22.2.15)	13	4	28	10
Exchange differences	(19)	(55)	44	(64)
	60	(2)	255	73
*Tax deducted at source	4	4	22	14
15. PROVISION FOR TAXATION
Income taxes*	125	86	355	238
Deferred taxes	(3)	(6)	(15)	(12)
	122	80	340	226
*Refer to note 22.2.12

in Rs. crore
Schedules to Cash Flow Statements for the	Nine months ended December 31,
	2006	2005
16. CHANGE IN LOANS AND ADVANCES
As per the Balance Sheet*	1,769	1,451
Add: Gratutity transitional liability (refer to Note 22.2.23)	13	-
Less: Deposits with financial institutions and body corporates
included in cash and cash equivalents	(743)	(426)
Advance income taxes separately considered	(309)	(579)
	730	446
Less: Opening balance considered	(484)	(390)
	246	56
* includes loans to subsidiary
17. CHANGE IN CURRENT LIABILITIES AND PROVISIONS
As per the Balance Sheet	1,361	1,444
Less: Provisions separately considered in the cash flow statement
Income taxes	(294)	(707)
Dividends	-	-
Dividend tax	-	-
	1,067	737
Less: Opening balance considered*	(834)	(598)
	233	139
*Adjusted for liability towards intellectual property rights (Refer to note 22.2.21)
18. INCOME TAXES PAID
Charge as per the Profit and Loss Account	340	226
Add: Increase in advance income taxes	42	176
Increase/(Decrease) in deferred taxes	15	12
Less: (Increase)/Decrease in income tax provision	(107)	(161)
	290	253
19. PURCHASE OF FIXED ASSETS AND CHANGE IN CAPITAL
WORK-IN-PROGRESS
As per the Balance Sheet*	816	657
Less: Opening Capital work-in-progress	(571)	(318)
Add: Closing Capital work-in-progress	573	444
	818	783
* Excludes Rs 4 crore (Rs 4 crore) towards movement of land from Leasehold to Freehold
20. INVESTMENTS IN SECURITIES *
As per the Balance Sheet	2,793	2,309
Add: Provisions on investments	3	-
	2,796	2,309
Less: Investment in subsidiaries	(553)	(22)
Profit on sale of liquid mutual funds	(8)	-
Opening balance considered	(876)	(1,329)
	1,359	958
* 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	1,668	1,570
Add: Deposits with financial institutions, included herein	743	426
	2,411	1,996

Schedules to the Financial Statements for the quarter and nine months ended December 31, 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, testing and infrastructure management serv ices. 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 and options 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 comp ensation 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 spl its 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
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Salaries and bonus including overseas staff expenses	1,549	1,094	4,392	2,932
Contribution to provident and other funds	41	24	115	68
Staff welfare
Staff welfare	12	9	31	21
Group health insurance and others	-	-	-	-
Overseas group health insurance	29	13	70	40
Overseas travel expenses	97	77	287	223
Visa charges and others	20	10	86	63
Traveling and conveyance	22	18	63	47
Technical sub-contractors - subsidiaries	159	92	446	266
Technical sub-contractors - others	73	29	170	83
Software packages
for own use	57	34	140	98
for service delivery to clients	5	6	20	25
Professional charges	39	30	116	84
Telephone charges	30	20	85	58
Communication expenses	14	10	41	35
Power and fuel	22	16	66	45
Office maintenance	23	19	70	47
Guest house maintenance*	1	-	1	1
Commission and earnout charges	4	10	23	27
Brand building	17	14	44	36
Rent	12	8	36	26
Insurance charges	7	5	19	16
Computer maintenance	6	7	16	14
Printing and stationery	5	2	11	8
Consumables	6	4	17	12
Donations	7	4	16	13
Advertisements	2	3	8	11
Marketing expenses	10	3	18	9
Other miscellaneous expenses	-	-	-	-
Repairs to building	5	3	15	11
Repairs to plant and machinery	4	3	10	8
Rates and taxes	7	3	19	7
Professional membership and seminar participation fees	3	2	7	6
Postage and courier	2	1	6	4
Provision for post-sales client support and warranties	5	(6)	11	(9)
Books and periodicals	1	1	3	3
Provision for bad and doubtful debts	5	(4)	24	6
Provision for doubtful loans and advances	-	-	-	-
Commission to non-whole time directors	1	-	1	1
Sales promotion expenses	-	-	1	1
Freight charges	-	-	1	1
Bank charges and commission	-	-	1	1
Auditor's remuneration
statutory audit fees	-	-	-	-
certification charges	-	-	-	-
others	-	-	-	-
out-of-pocket expenses	-	-	-	-
Research grants	2	-	7	1
Miscellaneous expenses (refer to note 22.2.15)	1	1	4	2
	2,305	1,565	6,517	4,351
Fringe Benefit Tax (FBT) in India included in the above	5	3	12	9
*for non training purposes

22.2.2. Capital commitments and contingent liabilities

in Rs. Crore
	As at
Particulars	December 31, 2006	March 31, 2006
Estimated amount of unexecuted capital contracts
(net of advances and deposits)	746	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 $ 75,000,000	US $ 100,000,000
(Equivalent approximate in Rs. crore)	341	445
Range barrier options in US $	US $ 215,000,000	US $ 210,000,000
(Equivalent approximate in Rs. crore)	948	934
Range barrier options in Euro	euro 5,000,000	euro 3,000,000
(Equivalent approximate in Rs. crore)	29	16
Range barrier options in GBP	£27,000,000	£3,000,000
(Equivalent approximate in Rs. crore)	233	23

* Claims against the Company not acknowledged as debts include demands from Indian tax authorities for payment of additional tax of Rs. 135 crore (Rs. 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
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Capital goods	61	40	209	156
Software packages	-	4	3	8
	61	44	212	164

22.2.5. Activity in foreign currency

in Rs. Crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Earnings in foreign currency (on receipts basis)
Income from software services and products	3,321	2,323	8,896	6,448
Interest received on deposits with banks	3	2	10	4
Expenditure in foreign currency (on payments basis)
Travel expenses	80	61	269	216
Professional charges	16	13	48	31
Technical sub-contractors - subsidiaries	156	91	431	248
Other expenditure incurred overseas for software development	1,224	652	3,094	1,895
Net earnings in foreign currency (on the receipts and payments basis)	1,848	1,508	5,064	4,062

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
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Lease rentals recognized during the period	12	8	36	26

in Rs. Crore
Lease obligations	As at
	December 31, 2006	March 31, 2006
Within one year of the balance sheet date	33	24
Due in a period between one year and five years	96	100
Due after five years	50	61
	179	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 December 31, 2006 and March 31, 2006 :

in Rs. Crore

Particulars	Cost	Accumulated depreciation	Net book value
Building	44	8	36
	33	5	28
Plant and machinery	20	10	10
	16	7	9
Computers	2	2	-
	2	2	-
Furniture & fixtures	11	9	2
	11	8	3
Total	77	29	48
	62	22	40

The aggregate depreciation charged on the above for the quarter and nine months ended December 31, 2006 amounted to Rs. 2 crore and Rs. 7 crore respectively (Rs. 2 crore and Rs. 3 crore for the quarter and nine months ended December 31, 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
	December 31, 2006	March 31, 2006
Within one year of the balance sheet date	12	11
Due in a period between one year and five years	7	17
Due after five years	-	-
	19	28

The rental income from Infosys BPO for the quarter and nine months ended December 31, 2006 amounted to Rs. 5 crore and Rs. 12 crore respectively (Rs 3 crore and Rs 8 crore for the quarter and nine months ended December 31, 2005 respectively).

22.2.7. Related party transactions

List of related parties:
Name of the related party	Country	Holding, as at
		December 31, 2006	March 31, 2006
Infosys BPO Limited**	India	99.91%	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	99.91%	71.74%

* Progeon s.r.o is a wholly owned subsidiary of Infosys BPO Ltd.  
**On December 8, 2006, the shareholders of Infosys BPO Limited (''Infosys BPO") approved a buy-back of upto 1,279,963 equity shares at a fair market value of Rs.604/- per equity share. The buy-back was in accordance with Section 77A of the Indian Companies Act, 1956. Pursuant to the buy-back offer Infosys BPO bought back 1,139,469 equity shares which were subsequently cancelled on December 29, 2006.

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 nine months ended December 31, 2006 and 2005 are as follows:

in Rs. Crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Capital transactions:
Financing transactions
Infosys China	-	9	9	9
Infosys Consulting	-	-	14	22
Rental deposit repaid
Infosys BPO	-	-	-	2
Loans
Infosys China	-	-	9	-
Revenue transactions:
Purchase of services
Infosys BPO (Including Progeon s.r.o)	3	1	8	2
Infosys Australia	97	58	272	177
Infosys China	13	3	29	6
Infosys Consulting	47	30	136	81
Purchase of shared services including facilities and personnel
Infosys BPO (Including Progeon s.r.o)	1	-	2	1
Interest Income
Infosys China	-	-	1	-
Sale of services
Infosys Australia	1	1	2	4
Infosys China	1	-	2	1
Infosys Consulting	-	1	3	2
Sale of shared services including facilities and personnel
Infosys BPO (Including Progeon s.r.o)	4	2	10	11
Infosys Consulting	1	2	2	4
Details of amounts due to or due from and maximum dues from subsidiaries for the quarter ended December 31, 2006 and year ended March 31,2006 :

in Rs. Crore
Particulars	As at
	December 31, 2006	March 31, 2006
Loans and advances
Infosys China	25	20
Maximum balances of loans and advances
Infosys BPO (Including Progeon s.r.o)	2	3
Infosys Australia	21	28
Infosys China	25	20
Infosys Consulting	13	-
During the quarter and nine months ended December 31, 2006, an amount of Rs. 5 crore and Rs. 14 crore respectively (Rs. 2 crore and Rs. 9 crore for the quarter and nine months ended December 31, 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 nine months ended December 31, 2006 and December 31, 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

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Revenue	43	25	116	77
	43	25	116	77

22.2.10. Dues to small-scale industrial undertakings

As at December 31, 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 December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Options outstanding, beginning of period	37,33,549	54,93,464	45,46,480	61,08,580
Granted	-	-	-	-
Less: exercised	(346,993)	(547,296)	(1,022,564)	(1,094,756)
forfeited	(25,446)	(50,840)	(162,806)	(118,496)
Options outstanding, end of period	33,61,110	48,95,328	33,61,110	48,95,328

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 December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Options outstanding, beginning of period	1,51,26,339	2,42,48,376	1,91,79,074	2,81,09,874
Granted	-	-	-	-
Less: exercised	(1,716,474)	(3,184,006)	(5,715,944)	(6,814,472)
forfeited	(23,875)	(63,180)	(77,140)	(294,212)
Options outstanding, end of period	1,33,85,990	2,10,01,190	1,33,85,990	2,10,01,190

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 are 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 also has operations in a Special Economic Zone ("SEZs"). Income from SEZs are 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
	December 31, 2006	March 31, 2006
In current accounts
ABN Amro Bank , Taipei, Taiwan	-	1
Bank of America, Palo Alto, USA	176	229
Bank of China, Beijing, China	-	-
Citibank NA, Melbourne, Australia	70	39
Citibank NA, Hongkong	-	-
Citibank NA, Singapore	-	-
Citibank NA, Tokyo, Japan	-	1
Citibank NA, Sharjah, UAE	-	-
Citibank NA, Thailand	-	-
Deutsche Bank, Brussels, Belgium	5	8
Deutsche Bank, Frankfurt, Germany	11	21
Deutsche Bank, Amsterdam, Netherlands	2	4
Deutsche Bank, Paris, France	6	1
Deutsche Bank, Spain	1	-
Deutsche Bank, Zurich, Switzerland	7	6
HSBC Bank PLC, Croydon, UK	20	60
ICICI Bank UK Ltd., London, UK	-	-
Nordbanken, Stockholm, Sweden	1	-
Nova Scotia Bank, Toronto, Canada	-	-
Royal Bank of Canada, Toronto, Canada	4	4
Svenska Handels Bank, Stockholm, Sweden	-	1
UFJ Bank, Tokyo, Japan	-	-
ICICI Bank - Toronto, Canada	-	-
	303	375

in Rs. crore
Maximum balance with non-scheduled banks during the period	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
In current accounts
ABN Amro Bank , Taipei, Taiwan	1	2	1	2
Bank of America, Palo Alto, USA	501	391	614	391
Bank of China, Beijing, China	-	-	-	-
Citibank NA, Melbourne, Australia	199	36	199	54
Citibank NA, Hongkong	-	-	-	-
Citibank NA, Singapore	-	-	-	-
Citibank NA, Tokyo, Japan	18	9	23	36
Citibank NA, Sharjah, UAE	-	-	-	-
Citibank NA, Thailand	-	-	-	-
Deutsche Bank, Brussels, Belgium	65	18	65	31
Deutsche Bank, Frankfurt, Germany	40	35	62	38
Deutsche Bank, Amsterdam, Netherlands	6	2	10	2
Deutsche Bank, Paris, France	15	5	19	5
Deutsche Bank, Spain	1	-	1	-
Deutsche Bank, Zurich, Switzerland	11	11	30	13
HSBC Bank PLC, Croydon, UK	163	78	236	78
ICICI Bank UK Ltd., London, UK	-	17	-	35
Nordbanken, Stockholm, Sweden	2	-	2	-
Nova Scotia Bank, Toronto, Canada	-	-	-	-
Royal Bank of Canada, Toronto, Canada	17	13	37	13
Svenska Handels Bank, Stockholm, Sweden	1	2	1	2
UFJ Bank, Tokyo, Japan	5	-	34	28
ICICI Bank - Toronto, Canada	-	8	-	11

The cash and bank balances include interest accrued but not due on fixed deposits amounting to Rs. 11 crore as at December 31, 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
	December 31, 2006	March 31, 2006
Deposits with financial institutions:
Housing Development Finance Corporation Limited ("HDFC")	502	500
GE Capital Services India Limited	241	-
Life Insurance Corporation of India	121	80
	864	580
Interest accrued but not due (included above)	3	-

Maximum balance held as deposits with financial institutions:-

in Rs. crore
	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Deposits with financial institutions:
Housing Development Finance Corporation Limited ("HDFC")	502	201	502	202
GE Capital Services India Limited	241	225	241	225
Life Insurance Corporation of India	121	103	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 nine months ended December 31, 2006 and December 31, 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 December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Charged during the period	8	17	14	27

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 December 31, 2006.

22.2.16. Details of Investments

in Rs. crore
Particulars	As at
	December 31, 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
	December 31, 2006	March 31, 2006	December 31, 2006	March 31, 2006
Birla Cash Plus - Institutional Premium	19,86,72,276	9,94,77,727	200	100
CanLiquid Fund - Institutional Plan	-	5,97,28,831	-	60
DBS Chola Liquid Institutional Plus	-	4,63,08,937	-	54
DWS Insta Cash Plus Fund - Institutional Plan	13,50,18,330	-	135	-
DSP Merill Lynch Liquidity Fund Weekly - Institutional Plan	7,48,316	-	75	-
DSP Merill Lynch Liquidity Plus Weekly - Institutional Plan	7,49,850		75
HSBC Cash Fund - Institutional Plus	14,97,01,909	-	150	-
HSBC Liquid Plus - Institutional Plus	4,98,28,590		50
ING Vysya Liquid Fund Institutional Plan	-	7,88,74,225	-	79
Kotak Liquid Institutional Plan	17,92,67,234	-	180	-
Principal Cash Management Fund Liquid Option-Institutional Plan	19,97,77,898	-	200	-
Prudential ICICI Institutional Liquid Plan - Super Institutional Plan	17,94,26,871	-	179	-
Sundaram BNP Paribas Money Fund Super Institutional Plan	-	2,96,83,287	-	30
UTI Liquid Cash Plan Institutional Plan	6,81,732	14,77,424	70	150
TATA Liquid Super High Investment Fund	13,09,379	13,31,587	150	150
ABN Amro Cash Fund - Institutional Plan	3,50,00,000	-	35	-
Reliance Liquidity Fund	18,78,00,878	-	200	-
Standard Chartered Liquidity Manager Plus	14,95,898	-	150	-
LICMF Liquid Fund	18,30,57,139	55,451,349	201	61
			2,050	684
At cost			1,521	624
At fair value			529	60
			2,050	684

Details of investments in and disposal of securities during the quarter and nine months ended December 31, 2006 and 2005:-

in Rs. crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Investment in securities
Subsidiaries	-	-	553	22
Long-term investments	-	-	-	-
Liquid Mutual funds	590	191	3,480	1,749
	590	191	4,033	1,771
Redemption / Disposal of Investment in securities
Long-term investments	-	-	6	-
Liquid Mutual funds	1,241	321	2,121	791
	1,241	321	2,127	791
Net movement in investments	(651)	(130)	1,906	980

Investment purchased and sold during the nine months ended ended December 31, 2006:-

in Rs. crore
Name of the fund	Face value Rs /-	Units	Cost
Reliance Liquidity Fund - Treasury Plan	10	14,22,48,023	150
Canliquid Fund - Institutional Plan	10	10,94,65,609	110
Chola Liquid Fund Institutional Plus	10	4,21,87,329	50
Deustsche Insta Cash Plus Fund	10	10,94,19,305	110
Deutsche Money Plus Fund - Monthly Dividend Options	10	3,96,41,247	40
DSP Merrill Lynch Liquid Fund	1,000	7,49,850	75
HDFC Liquid Fund - Premium Plus Plan	10	14,12,38,691	175
HSBC Liquid Fund	10	9,51,03,549	95
ING VYSYA Liquid Fund	10	6,94,02,003	70
JM High Liquidity Fund - Super institutional Plan	10	2,47,76,516	25
Kotak Liquid Institutional Premium	10	7,47,17,568	75
SBI -Magnum Institutional Income Saving	10	13,72,38,413	145
Sundaram Money Fund	10	4,92,60,113	50
Templeton India Treasury Mang Acct Inst Plan	1,000	26,61,991	270
UTI Liquid Cash Plan - Institutional Plan	1,000	14,64,979	150

Particulars of investments made during the quarter and nine months ended December 31, 2006 and 2005:-

in Rs. crore
Particulars of investee companies	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Infosys Consulting Inc., USA	-	-	14	22
Infosys China	-	-	9	-
Infosys BPO Ltd	-	-	530	-
	-	-	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 remitt ed 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 nine months ended December 31, 2006 amounted to Rs. Nil and Rs. 2 crore respectively (for the quarter and nine months ended December 31, 2005 Rs. Nil and Rs. Nil respectively).
The company provided Rs. 0.19 crore and Rs. 1 crore during the quarter and nine months ended on December 31, 2006 (Rs. Nil crore and and Rs. Nil crore for the quarter and nine months ended December 31, 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 December 31, 2006 and 2005:-

in Rs. crore
	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	1,344	455	592	379	684	3,454
	848	349	362	257	582	2,398
Identifiable operating expenses	555	198	257	149	282	1,441
	362	154	144	103	235	998
Allocated expenses	336	114	148	95	171	864
	201	82	85	61	138	567
Segmental operating income	453	143	187	135	231	1,149
	285	113	133	93	209	833
Unallocable expenses						129
						109
Operating income						1,020
						724
Other income (expense), net						60
						(2)
Net profit before tax and exceptional items						1,080
						722
Provision for taxation						122
						80
Net profit after tax and before exceptional items						958
						642
Income on sale of investments (net of taxes)						-
						-
Net profit after tax and exceptional items						958
						642
Nine months ended December 31, 2006 and 2005:-
in Rs. crore
	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	3,622	1,334	1,667	983	1,988	9,594
	2,313	924	1,028	692	1,578	6,535
Identifiable operating expenses	1,569	578	703	420	839	4,109
	979	414	421	285	666	2,765
Allocated expenses	909	335	418	247	499	2,408
	563	223	248	168	384	1,586
Segmental operating income	1,144	421	546	316	650	3,077
	771	287	359	239	528	2,184
Unallocable expenses						336
						274
Operating income						2,741
						1,910
Other income (expense), net						252
						73
Net profit before tax and exceptional items						2,993
						1,983
Provision for taxation						340
						226
Net profit after tax and before exceptional items						2,653
						1,757
Income on sale of investments (net of taxes)						6
						-
Net profit after tax and exceptional items						2,659
						1,757
Geographic segments
Quarter ended December 31, 2006 and 2005:-
in Rs. crore
		North America	Europe	India	Rest of the World	Total
Revenues		2,198	906	65	285	3,454
		1,577	590	35	196	2,398
Identifiable operating expenses		940	337	12	152	1,441
		663	223	18	94	998
Allocated expenses		550	227	16	71	864
		373	140	8	46	567
Segmental operating income		708	342	37	62	1,149
		541	227	9	56	833
Unallocable expenses						129
						109
Operating income						1,020
						724
Other income (expense), net						60
						(2)
Net profit before tax and exceptional items						1,080
						722
Provision for taxation						122
						80
Net profit after tax and before exceptional items						958
						642
Income on sale of investments (net of taxes)						-
						-
Net profit after tax and exceptional items						958
						642

Nine months ended December 31, 2006 and 2005:-

in Rs. crore
	North America	Europe	India	Rest of the World	Total
Revenues	6,151	2,472	159	812	9,594
	4,280	1,565	117	573	6,535
Identifiable operating expenses	2,670	960	44	435	4,109
	1,818	612	56	279	2,765
Allocated expenses	1,545	621	39	203	2,408
	1,039	380	28	139	1,586
Segmental operating income	1,936	891	76	174	3,077
	1,423	573	33	155	2,184
Unallocable expenses					336
					274
Operating income					2,741
					1,910
Other income (expense), net					252
					73
Net profit before tax and exceptional items					2,993
					1,983
Provision for taxation					340
					226
Net profit after tax and before exceptional items					2,653
					1,757
Income on sale of investments (net of taxes)					6
					-
Net profit after tax and exceptional items					2,659
					1,757

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 December 31, 2006 the company has provided for doubtful debts of Rs. 3 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 December 31,		Nine months ended December 31,
		2006	2005	2006	2005
Final dividend for Fiscal 2005*	7,55,32,654	-	-	-	25
Final dividend for Fiscal 2006*	7,70,94,270	-	-	33	-
Silver Jubilee special dividend*	7,70,94,270	-	-	116	-
Interim dividend for fiscal 2006*	7,61,02,422	-	25	-	25
Interim dividend for fiscal 2007	7,76,06,280	39	-	39	-
* Adjusted for bonus issue

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.

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Number of shares considered as basic weighted average shares outstanding	55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Add: Effect of dilutive issues of shares/stock options	1,26,82,686	1,56,66,954	1,32,95,919	1,59,08,234
Number of shares considered as weighted average shares and potential shares outstanding	56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992

22.2.21. Intellectual Property Rights

Infosys was liable to pay Aeronautical Development Agency (ADA) a maximum amount of Rs. 20 crore (US$ 4.4 million) by June 12, 2012 through a revenue sharing arrangement towards acquisition of Intellectual Property Rights in AUTOLAY, a commercial software application product used in designing high performance structural systems. During the quarter Infosys foreclosed the arrangement by paying the net present value of the future revenue share amounting to Rs. 13.5 crore (US$ 3 million). The remainder of the liability in books amounts to Rs. 6.5 crore (US$ 1.4 million) has been written back and disclosed in Other Income.

22.2.22. 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 nine months ended December 31, 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 nine months ended December 31, 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.

22.2.23. 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 December 31, 2006
Obligations at period beginning	180
Service Cost	34
Interest cost	10
Actuarial (gain)/loss	(1)
Benefits paid	(11)
Obligations at period end	212
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	12
Actuarial gain/(loss)	1
Contributions	43
Benefits paid	(11)
Plans assets at period end, at fair value	212
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	212
Present value of the defined benefit obligations at the end of the period	212
Asset recognized in the balance sheet	0
Gratuity cost for the period
Service cost	34
Interest cost	10
Expected return on plan assets	(12)
Actuarial (gain)/loss	(3)
Net gratuity cost	30
Investment details of plan assets
100% of the plan assets are invested in debt instruments.
Actual return on plan assets:	13
Assumptions
Interest rate	7.60%
Estimated rate of return on plan assets	7.60%
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.

22.2.24. Cash flow statement

22.2.24.a

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

22.2.24.b Restricted Cash

Deposits with financial institutions and body corporate as at December 31, 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
		December 31, 2006	March 31, 2006
3	Fixed assets
	Additions
	Vehicles	-	0.75
	Deductions/retirements
	Land - free-hold	-	0.01
	Plant and Machinery	0.33	-
	Furniture and fixtures	0.15	-
	Buildings	-	0.80
	Depreciation & Amortization
	For the period
	Vehicles	-	0.19
	Deductions/retirements
	Plant and Machinery	0.23	-
	Furniture and fixtures	0.11	-
8	Unsecured, considered doubtful
	Loans and advances to employees
	Provision for doubtful loans and advances to employees	-	0.44
22.2.6	Computers on operating lease to Infosys BPO
	- Net Book Value	0.11	0.17
22.2.13	Balances with non-scheduled banks
	- ABN Amro Bank, Taipei, Taiwan	0.31	0.94
	- Bank of China, Beijing China	-	0.02
	- Citibank NA, Singapore	0.10	0.19
	- Citibank NA, Thailand	0.14	-
	- Citibank NA, Tokyo, Japan	0.35	1.19
	- Citibank NA, Sharjah, UAE	0.08	0.04
	- Nordbanken, Stockholm, Sweden	-	0.09
	- Svenska Handels Bank, Stockholm, Sweden	0.06	0.51
	- UFJ Bank, Tokyo, Japan	0.07	0.09
22.2.14	Loans & Advances
	Interest accrued but not due - Deposits with Financial Institutions	-	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
Schedule	Description	Quarter ended December 31,		Nine months ended December 31,
		2006	2005	2006	2005
	Profit & Loss account
	Provision for investments	0.20	(0.27)	2.98	0.30
	Residual Dividend Paid	-	-	-	0.25
	Additional Dividend Tax	-	-	-	0.03

12	Selling & Marketing expenses
	Contribution to Provident and other funds	0.51	0.32	1.44	0.79
	Staff welfare	0.69	0.49	1.06	0.90
	Consumables	0.08	0.06	0.26	0.19
	Software packages for own use	-	-	0.42	0.06
	Communication expenses	0.18	0.20	0.50	0.46
	Printing and stationery	0.50	0.28	1.21	1.20
	Advertisements	0.34	0.30	2.36	1.10
	Office maintenance	0.10	0.03	0.22	0.32
	Computer Maintenance	0.03	-	0.08	-
	Insurance charges	-	0.02	-	0.02
	Sales promotion expenses	0.39	0.32	1.30	0.77
13	General and Administration expenses
	Provision for doubtful loans and advances	0.05	0.26	0.12	0.37
	Overseas group health insurance	0.14	-	(0.04)	-
	Visa Charges Others	0.21	-	1.36	-
	Commission to non-whole time directors	0.47	0.33	1.45	0.96
	Freight charges	0.18	0.15	0.63	0.56
	Bank charges and commission	0.13	0.28	0.99	0.84
	Research grants	2.04	0.35	7.02	0.56
	Auditor's remuneration
	Statutory audit fees	0.14	0.15	0.40	0.33
	Others	0.01	-	0.01	-
	Out of Pocket Expenses	-	0.01	0.04	0.02

22.2.1	Aggregate expenses
	Provision for doubtful loans and advances	0.05	0.26	0.12	0.37
	Commission to non-whole time directors	0.47	0.33	1.45	0.96
	Sales promotion expenses	0.39	0.32	1.30	0.77
	Freight charges	0.18	0.15	0.63	0.56
	Bank charges and commission	0.13	0.28	0.99	0.84
	Auditor's remuneration
	Statutory audit fees	0.14	0.15	0.40	0.33
	Others	0.01	-	0.01	-
	Out of Pocket Expenses	-	0.01	0.04	0.02
	Research grants	2.04	0.35	7.02	0.56
22.2.7	Related party transactions
	Revenue transactions:
	Purchase of shared services including facilities and personnel	0.81	0.47	1.79	1.23
22.2.9	Research and development expenditure
	Capital expenditure	-	0.16	-	0.16

22.2.13	Maximum balance with non-scheduled banks
	- Bank of China, Beijing China	-	0.04	0.02	0.07
	- Citibank NA, Hongkong	-	0.47	-	0.47
	- Citibank NA, Singapore	0.14	0.25	0.19	0.37
	- Citibank NA, Thailand	0.15	-	0.15	-
	- Citibank NA, Sharjah, UAE	0.14	0.16	0.18	0.16
	- Nordbanken, Stockholm, Sweden	-	0.12	-	0.12
	Profit / (loss) on disposal of fixed assets
	Profit on disposal of fixed assets, included in miscellaneous income	0.06	0.11	0.13	0.34
	Loss on disposal of fixed assets, included in miscellaneous expenses	(0.01)	(0.25)	(0.03)	(0.28)
	Profit/(Loss) on disposal of fixed assets,net	0.05	(0.14)	0.10	0.06
Cash Flow Statement Items

in Rs. crores
Schedule	Description	For the Period Ended
		December 31, 2006	December 31, 2005
Cash flow	(Profit)/ loss on sale of fixed assets	(0.05)	0.14
statement	Provision for investments	-	0.30
	Proceeds on disposal of fixed assets	0.30	(0.14)

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 nine months ended December 31, 2006 and December 31, 2005 (figures in italics are corresponding to the quarter and nine months ended December 31, 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 *	-	-	-	-
	0.03	0.01	0.06	0.10
	0.06	0.02	0.21	0.29
	0.09	0.03	0.17	0.29
Chief Executive Officer and Managing Director
Nandan M Nilekani	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.12	0.03	0.24	0.39
	0.09	0.03	0.16	0.28
President, Chief Operating Officer and Joint Managing Director
S Gopalakrishnan	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.12	0.03	0.25	0.40
	0.09	0.03	0.17	0.29
Whole-time Directors
K Dinesh	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.10	0.03	0.24	0.37
	0.09	0.03	0.15	0.27
S D Shibulal
	0.03	0.01	0.04	0.08
	0.23	-	0.07	0.30
	0.10	0.03	0.20	0.33
	0.68	-	0.21	0.89
T V Mohandas Pai
	0.06	0.02	0.09	0.17
	0.05	0.02	0.11	0.18
	0.18	0.06	0.44	0.68
	0.15	0.06	0.34	0.55
Srinath Batni
	0.05	0.01	0.07	0.13
	0.04	0.02	0.11	0.17
	0.15	0.03	0.37	0.55
	0.13	0.05	0.30	0.48
Chief Financial Officer
V Balakrishnan	0.04	0.01	0.16	0.21
	0.03	0.01	0.09	0.13
	0.13	0.03	0.43	0.59
	0.09	0.03	0.31	0.43
* 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
	0.18	-	-	0.18
	0.14	0.01	-	0.15
Prof.Marti G Subrahmanyam	0.05	-	-	0.05
	0.04	-	0.02	0.06
	0.17	-	0.05	0.22
	0.12	-	0.09	0.21
Philip Yeo	-	-	-	-
	-	-	-	-
	-	-	-	-
	0.03	-	-	0.03
David L Boyles	0.05	-	-	0.05
	0.03	-	-	0.03
	0.17	-	-	0.17
	0.06	-	-	0.06
Dr.Omkar Goswami	0.05	-	0.01	0.06
	0.04	-	-	0.04
	0.15	-	0.02	0.17
	0.13	0.02	0.02	0.17
Sen. Larry Pressler	-	-	-	-
	0.04	-	-	0.04
	0.03	-	0.03	0.06
	0.12	-	-	0.12
Rama Bijapurkar	0.05	-	-	0.05
	0.04	-	-	0.04
	0.17	-	0.01	0.18
	0.12	-	-	0.12
Claude Smadja	0.05	-	0.04	0.09
	0.04	-	-	0.04
	0.17	-	0.17	0.34
	0.12	-	0.08	0.20
Sridar A Iyengar	0.05	-	-	0.05
	0.04	-		0.04
	0.17	-	0.08	0.25
	0.12	-	0.11	0.23
Jeffrey Lehman	0.05	-	-	0.05
	-	-	-	-
	0.15	-	-	0.15
	-	-	-	-
N R Narayana Murthy *	0.06	-	-	0.06
	-	-	-	-
	0.09	-	-	0.09
	-	-	-	-
* Appointed as Additional Director effective August 21, 2006

AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF INFOSYS TECHNOLOGIES LIMITED

We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at 31 December 2006, the Profit and Loss Account of the Company for the quarter and nine months ended on that date and Cash Flow Statement of the Company for the nine months 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:

1. in the case of the Balance Sheet, of the state of affairs of the Company as at
   31 December 2006;
2. in the case of the Profit and Loss Account, of the profit of the Company for the quarter and nine months ended on that date; and
3. in the case of the Cash Flow Statement, of the cash flows of the Company for the nine months ended on that date.

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna
Partner
Membership No. 32815

Bangalore
11 January 2007

EX-99.12

EXHIBIT 99.12
Indian GAAP Consol

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Consolidated Balance Sheet as at	Schedule	December 31, 2006	March 31, 2006
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital	1	279	138
Reserves and surplus	2	9,436	6,828
		9,715	6,966
MINORITY INTEREST		-	68
		9,715	7,034
APPLICATION OF FUNDS
FIXED ASSETS	3
Original cost		4,308	2,983
Less: Accumulated depreciation and amortization		1,695	1,328
Net book value		2,613	1,655
Add: Capital work-in-progress		578	571
		3,191	2,226
INVESTMENTS	4	2,192	755
DEFERRED TAX ASSETS	5	83	65
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors	6	2,216	1,608
Cash and bank balances	7	1,848	3,429
Loans and advances	8	1,786	1,297
		5,850	6,334
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities	9	1,275	934
Provisions	10	326	1,412
NET CURRENT ASSETS		4,249	3,988
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22	9,715	7,034

The schedules referred to above are an integral part of the consolidated 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, Chief Operating Officer	Director
Membership No.32815	and Chief Mentor	and Managing Director	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.
January 11, 2007	Company Secretary

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore, except per share data
Consolidated Profit and Loss Account for the	Schedule	Quarter ended		Nine months ended
		December 31,		December 31,
		2006	2005	2006	2005
Income from software services, products and business process management		3,655	2,532	10,121	6,897
Software development and business process management expenses	11	1,938	1,327	5,437	3,644
GROSS PROFIT		1,717	1,205	4,684	3,253
Selling and marketing expenses	12	236	158	661	448
General and administration expenses	13	285	186	829	547
		521	344	1,490	995
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND MINORITY INTEREST		1,196	861	3,194	2,258
Interest		-	-	-	-
Depreciation		141	117	369	293
OPERATING PROFIT BEFORE TAX MINORITY INTEREST AND EXCEPTIONAL ITEMS		1,055	744	2,825	1,965
Other income, net	14	59	(5)	253	68
Provision for investments		-	-	3	1
NET PROFIT BEFORE TAX, MINORITY INTEREST AND EXCEPTIONAL ITEMS		1,114	739	3,075	2,032
Provision for taxation on the above	15	130	83	359	233
NET PROFIT AFTER TAX AND BEFORE MINORITY INTEREST AND EXCEPTIONAL ITEMS		984	656	2,716	1,799
Income on sale of investments, net of taxes (refer to note 22.2.20)		-	-	6	-
NET PROFIT AFTER TAX, EXCEPTIONAL ITEMS AND BEFORE MINORITY INTEREST		984	656	2,722	1,799
Minority interest		1	7	10	13
NET PROFIT AFTER TAX, EXCEPTIONAL ITEMS AND MINORITY INTEREST		983	649	2,712	1,786
Balance Brought Forward		3,626	2,350	2,219	1,415
Less: Residual dividend paid		-	-	4	-
Additional dividend tax		-	-	1	-
		3,626	2,350	2,214	1,415
AMOUNT AVAILABLE FOR APPROPRIATION		4,609	2,999	4,926	3,201
Dividend
Interim		-	-	278	177
Final		-	-	-	-
Total dividend		-	-	278	177
Dividend tax		-	-	39	25
Balance in profit and loss account		4,609	2,999	4,609	2,999
		4,609	2,999	4,926	3,201
EARNINGS PER SHARE *
Equity shares of par value Rs. 5/- each
Before Exceptional items
Basic		17.64	11.85	48.75	32.80
Diluted		17.24	11.52	47.61	31.87
After Exceptional items
Basic		17.64	11.85	48.88	32.80
Diluted		17.24	11.52	47.73	31.87
Number of shares used in computing earnings per share
Basic		55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Diluted		56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22

 * Refer to note 22.2.18

The schedules referred to above form an integral part of the consolidated 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, Chief Operating Officer	Director
Membership No.32815	and Chief Mentor	and Managing Director	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.
January 11, 2007	Company Secretary

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Consolidated Cash Flow Statement for the	Schedule	Nine months ended December 31,
		2006	2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before tax, minority interest and exceptional items		3,075	2,032
Adjustments to reconcile net profit before tax to cash provided by operating activities
(Profit)/ loss on sale of fixed assets		-	-
Depreciation		369	293
Interest and dividend income		(194)	(133)
Profit on sale of liquid mutual funds		(8)	-
Provisions for investments		3	1
Effect of exchange differences on translation of foreign currency cash and cash equivalents		(27)	(3)
Changes in current assets and liabilities
Sundry debtors		(608)	(72)
Loans and advances	16	(235)	(59)
Current liabilities and provisions	17	339	176
Income taxes paid	18	(306)	(257)
NET CASH GENERATED BY OPERATING ACTIVITIES		2,408	1,978
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress	19	(866)	(815)
Proceeds on disposal of fixed assets		-	-
Payment for intellectual property rights (refer to note 22.2.19)		14	-
Investments in securities	20	(1,432)	(995)
Acquisition of minority interest in subsidiary		(599)	-
Interest and dividend income		194	133
Cash flow from investing activities before exceptional items		(2,689)	(1,677)
Proceeds on sale of long term Investments (net of taxes)		6	-
NET CASH USED IN INVESTING ACTIVITIES		(2,683)	(1,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital on exercise of stock options		423	453
Dividends paid during the period, including dividend tax		(1,532)	(403)
NET CASH USED IN FINANCING ACTIVITIES		(1,109)	50
Effect of exchange differences on translation of foreign currency cash and cash equivalents		27	4
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(1,357)	355
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD		3,956	1,790
CASH AND CASH EQUIVALENTS AT THE END OF THEPERIOD	21	2,599	2,145
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22

The schedules referred to above are an integral part of the consolidated 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, Chief Operating Officer	Director
Membership No.32815	and Chief Mentor	and Managing Director	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.
January 11, 2007	Company Secretary

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore, except per share data
Schedules to the Consolidated Balance Sheet as at		December 31, 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*	279	138
	55,78,48,468 ( 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]
		279	138
	Forfeited shares amounted to Rs. 1,500/- (Rs 1,500/-)
	* For details of options in respect of equity shares, refer to note 22.2.7
	* Refer to note 22.2.18 for details of basic and diluted shares
2	RESERVES AND SURPLUS
	Capital reserve	5	5
	Capital reserve on consolidation	-	49
	Share premium account - As at April 1,	1,543	900
	Add: Receipts on exercise of employee stock options	418	571
	Income Tax benefit arising from exercise of stock options	-	72
		1,961	1,543
	General reserve - As at April 1,	3,012	2,770
	Less: Capitalized on issue of bonus shares	138	-
	Gratuity transitional liability (refer to note 22.2.21)	13	-
	Add: Transfer from the Profit and Loss Account	-	242
		2,861	3,012
	Balance in Profit and Loss Account	4,609	2,219
		9,436	6,828

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore except as otherwise stated

3	FIXED ASSETS
	Particulars	Original cost				Depreciation and amortization				Net book value
		As at April 1, 2006	Additions	Deletions/ Retirement	As at December 31, 2006	As at April 1, 2006	For the period	Deletions/ Retirement	As at December 31, 2006	As at December 31, 2006	As at March 31, 2006
	Goodwill	41	468	-	509	-	-	-	-	509	41
	Land: free-hold	34	4	-	38	-	-	-	-	38	34
	leasehold	104	20	4	120	-	-	-	-	120	104
	Buildings	1,022	354	-	1,376	180	62	-	242	1,134	842
	Plant and machinery	569	159	-	728	309	80	-	389	339	260
	Computer equipment	757	222	2	977	552	165	2	715	262	205
	Furniture and fixtures	443	99	-	542	283	55	-	338	204	160
	Leasehold improvements	11	4	-	15	4	6	-	10	5	7
	Vehicles	2	1	-	3	-	1	-	1	2	2
		2,983	1,331	6	4,308	1,328	369	2	1,695	2,613	1,655
	Previous Period	2,287	686	15	2,958	1,031	293	15	1,309	1,649	1,256
	Previous year	2,287	841	145	2,983	1,031	437	140	1,328	1,655

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

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Schedules to the Consolidated Balance Sheet as at		December 31, 2006	March 31, 2006
4	INVESTMENTS
	Trade (unquoted) - at cost
	Long- term investments	12	17
	Less: Provision made for investments	12	15
		-	2
	Non-trade (unquoted), current investments, at the lower of cost and fair value
	Liquid mutual funds	2,192	753
		2,192	755
	Aggregate amount of unquoted investments	2,192	755
5	DEFERRED TAX ASSETS
	Fixed assets	73	57
	Sundry debtors	3	2
	Leave provisions and others	7	6
		83	65
6	SUNDRY DEBTORS
	Debts outstanding for a period exceeding six months
	Unsecured
	considered good	-	-
	considered doubtful	25	8
	Other debts
	Unsecured
	considered good*	2,216	1,608
	considered doubtful	3	2
		2,244	1,618
	Less: Provision for doubtful debts	28	10
		2,216	1,608
	* Includes dues from companies where directors are interested	3	2
7	CASH AND BANK BALANCES
	Cash on hand	-	-
	Balances with scheduled banks
	In current accounts *	288	224
	In deposit accounts in Indian Rupees	1,222	2,800
	Balances with non-scheduled banks
	In deposit accounts in foreign currency	-	-
	In current accounts in foreign currency	338	405
		1,848	3,429
	*Includes balance in unclaimed dividend account	3	3
8	LOANS AND ADVANCES
	Unsecured, considered good
	Advances	-	1
	prepaid expenses	27	32
	for supply of goods and rendering of services	7	10
	advance to gratuity trust	-	-
	others	25	14
		59	57
	Unbilled revenues	316	211
	Advance income tax	309	267
	Loans and advances to employees
	housing and other loans	40	49
	salary advances	69	63
	Electricity and other deposits	19	16
	Rental deposits	16	16
	Deposits with financial institution and body corporate (refer note 22.2.9)	872	607
	Deposits with government authorities	-	-
	Mark to Market forward contract & option - asset	84	-
	Other assets	2	11
		1,786	1,297
	Unsecured, considered doubtful
	Loans and advances to employees	1	1
		1,787	1,298
	Less: Provision for doubtful loans and advances to employees	1	1
		1,786	1,297
9	CURRENT LIABILITIES
	Sundry creditors
	capital goods	-	-
	goods and services	19	12
	accrued salaries and benefits
	salaries	36	9
	bonus and incentives	189	260
	unavailed leave	139	101
	for other liabilities
	accrual for expenses	383	218
	retention monies	9	13
	withholding and other taxes payable	143	89
	for purchase of intellectual property rights	-	20
	others	5	3
		923	725
	Advances received from clients	15	7
	Unearned revenue	334	194
	Unclaimed dividend	3	3
	Mark to Market on options/due on forward contracts	-	5
		1,275	934
10	PROVISIONS
	Proposed dividend	-	1,061
	Provision for
	tax on dividend	-	149
	income taxes*	303	190
	post-sales client support and warranties	23	12
		326	1,412

* Refer to note 22.2.8

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Schedules to Consolidated Profit and Loss Account for the		Quarter ended		Nine months ended
		December 31,		December 31,
		2006	2005	2006	2005
11	SOFTWARE DEVELOPMENT AND BUSINESS PROCESS MANAGEMENT EXPENSES
	Salaries and bonus including overseas staff expenses	1,572	1,105	4,416	2,963
	Contribution to provident and other funds	40	24	113	67
	Staff welfare	13	10	33	24
	Overseas travel expenses	107	78	342	258
	Technical sub-contractors	85	40	211	111
	Software packages
	for own use	60	35	147	102
	for service delivery to clients	5	6	20	25
	Communication expenses	18	14	53	46
	Rent	8	7	24	19
	Computer maintenance	7	7	17	15
	Consumables	6	4	18	12
	Provision for post-sales client support and warranties	5	(9)	11	(15)
	Miscellaneous expenses	12	6	32	17
		1,938	1,327	5,437	3,644
12	SELLING AND MARKETING EXPENSES
	Salaries and bonus including overseas staff expenses	136	96	411	271
	Contribution to provident and other funds	1	1	3	1
	Staff welfare	1	1	2	1
	Overseas travel expenses	27	18	77	56
	Traveling and conveyance	1	2	6	3
	Brand building	17	14	44	37
	Commission and earnout charges	27	11	54	28
	Professional charges	5	5	17	20
	Rent	5	4	14	12
	Marketing expenses	11	3	19	9
	Telephone charges	2	2	5	4
	Printing and stationery	1	-	1	1
	Advertisements	-	-	2	1
	Sales promotion expenses	1	-	2	1
	Office maintenance	-	-	1	-
	Communication Expenses	1	-	1	1
	Insurance charges	-	-	-	-
	Consumables	-	-	-	-
	Software packages
	for own use	-	-	-	-
	Computer maintenance	-	-	-	-
	Rates and taxes	-	-	-	-
	Miscellaneous expenses	-	1	2	2
		236	158	661	448
13	GENERAL AND ADMINISTRATION EXPENSES
	Salaries and bonus including overseas staff expenses	73	43	202	122
	Contribution to provident and other funds	3	2	9	6
	Staff welfare	-	1	-	1
	Telephone charges	31	20	90	60
	Professional charges	38	27	109	70
	Power and fuel	25	17	73	49
	Office maintenance	26	20	78	53
	Traveling and conveyance	23	17	68	47
	Overseas travel expenses	5	5	17	16
	Insurance charges	8	6	23	18
	Printing and stationery	5	3	12	9
	Rates and taxes	8	3	20	9
	Donations	7	4	16	13
	Rent	6	2	16	8
	Advertisements	2	3	6	10
	Professional membership and seminar participation fees	3	2	8	7
	Repairs to building	5	3	15	11
	Repairs to plant and machinery	4	3	10	8
	Postage and courier	1	1	6	4
	Books and periodicals	1	1	3	3
	Recruitment and training	1	2	6	5
	Provision for bad and doubtful debts	5	(4)	25	6
	Provision for doubtful loans and advances	-	-	-	-
	Commission to non-whole time directors	1	-	2	1
	Auditor's remuneration
	statutory audit fees	-	-	1	1
	certification charges	-	-	-	-
	others	-	-	-	-
	out-of-pocket expenses	-	-	-	-
	Bank charges and commission	-	1	1	1
	Freight charges	-	-	-	1
	Research grants	2	1	7	1
	Software packages
	for own use	-	1	-	1
	Miscellaneous expenses	2	2	6	6
		285	186	829	547
14	OTHER INCOME, NET
	Interest received on deposits with banks and others*	32	27	107	76
	Dividend received on investment in liquid mutual funds (non-trade unquoted)	38	25	87	57
	Miscellaneous income, net (Refer to note 22.2.10)	9	1	16	3
	Exchange differences	(20)	(58)	43	(68)
		59	(5)	253	68
	*Tax deducted at source	4	4	23	14
15	PROVISION FOR TAXATION
	Income taxes*	134	81	376	245
	Deferred taxes	(4)	2	(17)	(12)
		130	83	359	233

* Refer to note 22.2.8

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

in Rs. crore
Schedules to Consolidated Cashflow Statements for the		Nine months ended December 31,
		2006	2005
16	CHANGE IN LOANS AND ADVANCES
	As per the Balance Sheet	1,786	1,496
	Add: Gratuity transitional liability (Refer to note 22.2.21)	13	-
	Less: Deposits with financial institutions,
	included in cash and cash equivalents	(751)	(451)
	Advance income taxes separately considered	(309)	(579)
		739	466
	Less: Opening balance considered	(504)	(407)
		235	59
17	CHANGE IN CURRENT LIABILITIES AND PROVISIONS
	As per the Balance Sheet	1,601	1,570
	Add/ (Less): Provisions separately considered in the cash flow Statement
	Income taxes	(303)	(709)
	Dividends	-	-
	Dividend tax	-	-
		1,298	861
	Less: Opening balance considered*	(959)	(685)
		339	176
	*Adjusted for liability towards intellectual property rights (Refer to note 22.2.19)
18	INCOME TAXES PAID
	Charge as per the Profit and Loss Account	359	233
	Add: Increase/ decrease in advance income taxes	42	175
	Increase / decrease in deferred taxes	18	12
	Less: Increase in income tax provision	(113)	(163)
		306	257
19	PURCHASE OF FIXED ASSETS AND CHANGE IN CAPITAL WORK-IN-PROGRESS
	As per Balance Sheet*	859	686
	Less: Opening Capital work-in-progress	(571)	(318)
	Add: Closing Capital work-in-progress	578	447
		866	815
	* Excludes Rs 4 crore towards movement of land from Leasehold to Freehold
	* Excludes goodwill on buyback of Infosys BPO Ltd shares
20	INVESTMENTS IN / (DISPOSAL OF) SECURITIES *
	As per the Balance Sheet	2,192	2,205
	Add: Provisions made on investments	3	1
		2,195	2,206
	Less: Profit on sale of liquid mutual funds	(8)	-
	Opening balance considered	(755)	(1,211)
		1,432	995
	* Refer to note 22.2.11 for details of investments and redemptions
21	CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
	As per the Balance Sheet	1,848	1,694
	Add: Deposits with financial institutions, included herein	751	451
		2,599	2,145

CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

Schedules to the Consolidated Financial Statements for the quarter and nine months ended December 31, 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 group of companies ("the Group") provide end-to-end business solutions that leverage technology thereby enabling its clients to enhance business performance. The Group's operations are to provide solutions that span the entire software life cycle encompassing technical consulting, design, development, re-engineering, maintenance, systems integration and package evaluation and implementation, testing and infrastructure management services. In addition, the Group offers softwar e products for the banking industry, business consulting and business process management services.

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") 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.

The financial statements are prepared in accordance with the principles and procedures required for the preparation and presentation of consolidated financial statements as laid down under the accounting standard on Consolidated Financial Statements issued by the ICAI. The financial statements of Infosys -- the parent company, Infosys BPO, Infosys China, Infosys Australia and Infosys Consulting have been combined on a line-by-line basis by adding together book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and transactions and resulting unrealized gain/loss. The consolidated financial statements are prepared by applying uniform accounting policies in use at the Group.  Minority interests have been excluded.  Minority interests represent that part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly, owned or controlled by the company.

Goodwill has been recorded to the extent the cost of acquisition, comprising purchase consideration and transaction costs, exceeds the fair value of the net assets in the acquired company and will be tested for impairment on an annual basis. Exchange difference resulting from the difference due to translation of foreign currency assets and liabilities in subsidiaries is disclosed as foreign currency translation adjustment.

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.  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 method based on useful lives of assets as estimated by the Management. Depreciation for assets purchased/sold during the 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.  Leasehold improvements are written off over the lower of the remaining primary period of lease or the life of the asset. 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 at the company and Infosys BPO. 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 at the balance sheet date and as per gratuity regulations for Infosys and Infosys BPO respectively.  Infosys  fully contributes all ascertained liabilities to the Infosys Technologies Limited Employees' Gratuity Fund Trust (the "Trust"). Infosys BPO fully contributes all ascertained liabilities to the Infosys BPO Employees' Gratuity Fund 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.  Certain employees of Infosys BPO were also eligible for superannuation benefit. Infosys BPO made monthly provisions under the superannuation plan based on a specified percentage of each covered employee's salary. Infosys BPO had no further obligations to the superannuation plan beyond its monthly provisions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.  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. Both the employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee's salary. The company contributes a part of the contributions to the Infosys Technologies Limited Employees' Provident Fund Trust.  The remaining contributions are made to government administered provident fund. The interest rate payable by the trust to the beneficiaries every year is being administered by the government. The company has an obligation to make good the short fall, if any, between the return from its investments and the administered interest rate.

In respect of Infosys BPO, eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and Infosys BPO make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected under the provident fund plan are deposited in a government administered provident fund. Infosys BPO has no further obligations under the provident fund plan beyond its monthly contributions.

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 Group's accounting policy.

Monetary current assets and monetary 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.

22.1.10 Forward contracts and options 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 and 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 offered 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 for each of the consolidated entities. Tax benefits of deductions earn ed 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 Group 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 Group's business interests.  Investments are either classified as current or long-term based on 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 Group 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/ year figures have been regrouped / reclassified, wherever necessary to conform to the current period's presentation.

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

in Rs. Crore
	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Salaries and bonus including overseas staff expenses	1,781	1,244	5,029	3,356
Contribution to provident and other funds	44	27	125	74
Staff welfare	14	12	35	26
Overseas travel expenses	139	101	436	330
Traveling and conveyance	24	19	74	50
Technical sub-contractors	85	40	211	111
Software packages
for own use	60	36	147	103
for service delivery to clients	5	6	20	25
Professional charges	43	32	126	90
Telephone charges	33	22	95	64
Communication expenses	19	14	54	47
Power and fuel	25	17	73	49
Office maintenance	26	20	79	53
Rent	19	13	54	39
Brand building	17	14	44	37
Commission and earnout charges	27	11	54	28
Insurance charges	8	6	23	18
Printing and stationery	6	3	13	10
Computer maintenance	7	7	17	15
Consumables	6	4	18	12
Rates and taxes	8	3	20	9
Advertisements	2	3	8	11
Donations	7	4	16	13
Marketing expenses	11	3	19	9
Professional membership and seminar participation fees	3	2	8	7
Repairs to building	5	3	15	11
Repairs to plant and machinery	4	3	10	8
Postage and courier	1	1	6	4
Provision for post-sales client support and warranties	5	(9)	11	(15)
Books and periodicals	1	1	3	3
Recruitment and training	1	2	6	5
Provision for bad and doubtful debts	5	(4)	25	6
Provision for doubtful loans and advances	-	-	-	-
Commission to non-whole time directors	1	-	2	1
Sales promotion expenses	1	-	2	1
Auditor's remuneration		-		-
statutory audit fees	-	-	1	1
certification charges	-	-	-	-
others	-	-	-	-
out-of-pocket expenses	-	-	-	-
Bank charges and commission	-	1	1	1
Freight charges	-	-	-	1
Research grants	2	1	7	1
Miscellaneous expenses	14	9	40	25
	2,459	1,671	6,927	4,639
Fringe Benefit Tax (FBT) in India included in the above	6	4	15	11

22.2.2. Capital commitments and contingent liabilities

in Rs. Crore
Particulars	As at
	December 31, 2006	March 31, 2006
Estimated amount of unexecuted capital contracts
(net of advances and deposits)	767	519
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	31	26
Claims against the company, not acknowledged as debts
(Net of Amount paid to statutory authorities of Rs. 138 crore (Rs. 138 crore) *	19	14
Forward contracts outstanding
In US $	US$ 76,000,000	US$ 119,000,000
(Equivalent approximate in Rs. Crore)	346	529
Options contracts outstanding
Common Strike Ratio Option	-	US$ 8,000,000
(Equivalent approximate in Rs. Crore)	-	36
Range barrier options in US $	US$ 217,250,000	US$ 210,000,000
(Equivalent approximate in Rs. Crore)	958	934
Range barrier options in Euro	Euro 5,000,000	Euro 3,000,000
(Equivalent approximate in Rs. Crore)	29	16
Range barrier options in GBP	£ 30,750,000	£3,000,000
(Equivalent approximate in Rs. Crore)	266	23

* Claims against the Company not acknowledged as debts include demands from Indian tax authorities for payment of additional tax of Rs. 135 crore (Rs. 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, believes 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, Obligations on long-term, non-cancelable operating leases
The lease rentals charged during the quarter and nine months ended December 31, 2006 and 2005 and maximum obligations on long-term non-cancelable operating leases payable as per the rentals stated in the respective agreements:-

in Rs. Crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Lease rentals recognized during the period	19	13	54	39

in Rs. Crore
Lease obligations	As at
	December 31, 2006	March 31, 2006
Within one year of the balance sheet date	46	32
Due in a period between one year and five years	113	114
Due after five years	51	61
	210	207

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 these lease agreements have price escalation clause.

22.2.4 Related party transactions
During the quarter and nine months ended December 31, 2006, an amount of Rs. 5 crore and Rs. 14 crore respectively (Rs. 2 crore and Rs. 9 crore for the quarter and nine months ended December 31, 2005 respectively ) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.

22.2.5 Transactions with key management personnel
Particulars of remuneration and other benefits paid to key management personnel during the quarter and nine months ended December 31, 2006 and December 31, 2005 have been detailed in Schedule 22.3, since the amounts are less than a crore.

22.2.6 Research and development expenditure

in Rs. Crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Capital	-	-	-	-
Revenue	43	25	115	77
	43	25	115	77

22.2.7 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 December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Options outstanding, beginning of period	37,33,549	54,93,464	45,46,480	61,08,580
Granted	-	-	-	-
Less: exercised	(346,993)	(547,296)	(1,022,564)	(1,094,756)
forfeited	(25,446)	(50,840)	(162,806)	(118,496)
Options outstanding, end of period	33,61,110	48,95,328	33,61,110	48,95,328

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 will be 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 December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Options outstanding, beginning of period	1,51,26,339	2,42,48,376	1,91,79,074	2,81,09,874
Granted	-	-	-	-
Less: exercised	(1,716,474)	(3,184,006)	(5,715,944)	(6,814,472)
forfeited	(23,875)	(63,180)	(77,140)	(294,212)
Options outstanding, end of period	1,33,85,990	2,10,01,190	1,33,85,990	2,10,01,190

The aggregate options considered for dilution are set out in note 22.2.18

Infosys BPO's 2002 Plan
Infosys BPO's 2002 Plan provides for the grant of stock options to employees of Infosys BPO and was approved by the Board of Directors and stockholders in June 2002. All options under the 2002 Plan are exercisable for equity shares. The 2002 Plan is administered by a Compensation Committee comprising three members, all of whom are directors of Infosys BPO. The 2002 Plan provides for the issue of 52,50,000 equity shares to employees, at an exercise price, which shall not be less than the Fair Market Value ("FMV") on the date of grant. Options may also be issued to employees at exercise prices that are less than FMV only if specifically approved by the members of the company in general meeting. The options issued under the 2002 Plan vest in periods ranging between one through six years, although accelerated vesting based on performance conditions is provided in certain instances.

The activity in Infosys BPO's 2002 Plan during the quarter and nine months ended December 2006 and 2005 :-

Number of options granted, exercised and forfeited	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Options outstanding, beginning of period	25,69,739	32,68,100	24,52,330	31,16,518
Granted	-	1,85,820	593,300	9,94,120
Less: exercised	(34,467)	(85,773)	(430,329)	(640,975)
forfeited	(188,467)	(275,463)	(268,496)	(376,979)
Options outstanding, end of period	23,46,805	30,92,684	23,46,805	30,92,684

Proforma Accounting for Infosys BPO Stock Option Plan
Guidance note on "Accounting for employee share based payments" issued by Institute of Chartered Accountants of India establishes financial accounting and reporting principles for employee share based payment plans. The guidance note applies to employee share based payment plans, the grant date in respect of which falls on or after April 1, 2005.

As allowed by guidance note, Infosys BPO has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of guidance note "Accounting of employee share based premiums". Had the compensation cost for Infosys BPO's stock-based compensation plan been determined in a manner consistent with the fair value approach described in guidance note, the Company's net Income and basic and diluted earnings per share as reported would have reduced to the proforma amounts as indicated:-

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Net Profit:
As Reported	983	649	2,712	1,786
Less: Stock-based employee compensation expense	2	1	6	3
Adjusted Proforma	981	648	2,706	1,783
Basic Earnings per share as reported	17.64	11.85	48.88	32.80
Proforma Basic Earnings per share	17.60	11.83	48.78	32.75
Diluted Earnings per share as reported	17.24	11.52	47.73	31.87
Proforma Earnings per share as reported	17.21	11.50	47.64	31.82

The Fair value of each option is estimated on the date of grant using the Black-Scholes model with the following assumptions:

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006*	2005	2006	2005
Dividend yield %	-	0.00%	0.00%	0.00%
Expected life	-	1-6 years	1-6 years	1-6 years
Risk free interest rate	-	7.13%	8.11%	6.90%-7.13%
Volatility	-	50.00%	50.00%	50.00%

* No grants were made during the quarter

22.2.8 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 the company's and all of Infosys BPO's operations are conducted through Software Technology Parks ("STPs"). Income from STPs are 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's"). Income from SEZs are 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.

22.2.9 Loans and advances

in Rs. Crore
	As at
Particulars	December 31, 2006	March 31, 2006
Deposits with financial institutions and body corporate:
Housing Development Finance Corporation Limited ("HDFC")	502	511
GE Capital Services India Limited	249	16
Life Insurance Corporation of India	121	80
	872	607
Interest accrued but not due (included above)	3	-

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

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

22.2.10.   Fixed assets
Profit / loss on disposal of fixed assets during the quarter ended December 31, 2006 and December 31, 2005 are less than Rs.1 crore and accordingly disclosed in note 22.3

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 December 31, 2006.

22.2.11.   Details of Investments
Details of investments in and disposal of securities during the quarter and nine months ended December 31, 2006 and 2005:-

in Rs crore
Particulars	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Investment in securities
Liquid Mutual funds	633	228	3,630	1,850
	633	228	3,630	1,850
Redemption / Disposal of Investment in securities
Long-term investments	-	-	6	-
Liquid Mutual funds	1,262	352	2,192	855
	1,262	352	2,198	855
Net movement in investment	(629)	(124)	1,432	995

22.2.12.   Holding of Infosys in its subsidiaries

Name of the subsidiary	Country of	Holding as at
	incorporation	December 31, 2006	March 31, 2006
Infosys BPO Ltd	India	99.91%	71.74%
Infosys Technologies (Australia) Pty Ltd.	Australia	100%	100%
Infosys Technologies (China) Co. Ltd.	China	100%	100%
Infosys Consulting Inc.	USA	100%	100%
Progeon s.r.o.*	Czech Republic	99.91%	71.74%

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

On December 8, 2006, the shareholders of Infosys BPO Limited ("Infosys BPO") approved a buy-back of upto 12,79,963 equity shares at a fair market value of Rs.604/- per equity share. The buy-back was in accordance with Section 77A of the Indian Companies Act, 1956. Pursuant to the buy-back offer Infosys BPO bought back 11,39,469 equity shares which were subsequently cancelled on December 29, 2006. As of December 31, 2006 Infosys holds 99.91% of the outstanding equity shares of Infosys BPO Limited.

22.2.13. 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 effect 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 December 31, 2006,  the company has provided for doubtful debts of Rs. 3 crore (as at March 31, 2006 Rs. 2 crore) 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.

22.2.14 Segment reporting
The Group's operations predominantly relate to providing IT services and Business Process Management, 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 Group 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 Group 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 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 December 31, 2006 and 2005:

in Rs. Crore
	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	1,411	469	671	383	721	3,655
	911	357	400	262	602	2,532
Identifiable operating expenses	575	201	273	145	273	1,467
	384	156	150	103	231	1,024
Allocated expenses	383	127	182	104	196	992
	226	89	93	73	166	647
Segmental operating income	453	141	216	134	252	1,196
	301	112	157	86	205	861
Unallocable expenses						141
						117
Operating income						1,055
						744
Other income (expense), net						59
						(5)
Net profit before tax and exceptional items						1,114
						739
Provision for taxation						130
						83
Net profit after tax and before exceptional items						984
						656
Income on sale of investments (net of taxes)						-
						-
Net profit after taxes, exceptional items and before minority interest						984
						656

Nine months ended December 31, 2006 and 2005:

in Rs. Crore
	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	3,813	1,390	1,853	988	2,077	10,121
	2,481	942	1,139	701	1,634	6,897
Identifiable operating expenses	1,632	592	715	405	826	4,170
	1,045	418	429	286	648	2,826
Allocated expenses	1,039	378	505	269	566	2,757
	642	238	274	191	468	1,813
Segmental operating income	1,142	420	633	314	685	3,194
	794	286	436	224	518	2,258
Unallocable expenses						369
						293
Operating income						2,825
						1,965
Other income (expense), net						250
						67
Net profit before tax and exceptional items						3,075
						2,032
Provision for taxation						359
						233
Net profit after tax and before exceptional items						2,716
						1,799
Income on sale of investments (net of taxes)						6
						-
Net profit after taxes, exceptional items and before minority interest						2,722
						1,799

Geographic segments

Quarter ended December 31, 2006 and 2005:

in Rs. Crore
	North America	Europe	India	Rest of the World	Total
Revenues	2,309	980	65	301	3,655
	1,645	630	35	222	2,532
Identifiable operating expenses	977	372	14	104	1,467
	684	243	17	80	1,024
Allocated expenses	627	266	18	81	992
	413	147	8	79	647
Segmental operating income	705	342	33	116	1,196
	548	240	10	63	861
Unallocable expenses					141
					117
Operating income					1,055
					744
Other income (expense), net					59
					(5)
Net profit before tax and exceptional items					1,114
					739
Provision for taxation					130
					83
Net profit after tax and before exceptional items					984
					656
Income on sale of investments (net of taxes)					-
					-
Net profit after taxes, exceptional items and before minority interest					984
					656

Nine months ended December 31, 2006 and 2005:

in Rs. Crore
	North America	Europe	India	Rest of the World	Total
Revenues	6,440	2,661	159	861	10,121
	4,462	1,667	118	650	6,897
Identifiable operating expenses	2,771	1,045	46	308	4,170
	1,871	664	53	238	2,826
Allocated expenses	1,755	725	43	234	2,757
	1,143	399	28	243	1,813
Segmental operating income	1,914	891	70	319	3,194
	1,448	604	37	169	2,258
Unallocable expenses					369
					293
Operating income					2,825
					1,965
Other income (expense), net					250
					67
Net profit before tax and exceptional items					3,075
					2,032
Provision for taxation					359
					233
Net profit after tax and before exceptional items					2,716
					1,799
Income on sale of investments (net of taxes)					6
					-
Net profit after taxes, exceptional items and before minority interest					2,722
					1,799

22.2.15. Dividends remitted in foreign currencies
Infosys does not make any direct remittances of dividends in foreign currency. The company remits the equivalent of the dividends payable to the holders of ADS ("ADS holders") in Indian Rupees to the depositary 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 December 31,		Nine months ended December 31,
		2006	2005	2006	2005
Final dividend for Fiscal 2005*	7,55,32,654	-	-	-	25
Final dividend for Fiscal 2006*	7,70,94,270	-	-	33	-
Silver Jubilee special dividend*	7,70,94,270	-	-	116	-
Interim dividend for fiscal 2006*	7,61,02,422	-	25	-	25
Interim dividend for fiscal 2007	7,76,06,280	39	-	39	-

* Adjusted for bonus issue

22.2.16. Conversion of cumulative preference shares in Infosys BPO
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 shareholders' 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 of Rs 530 crore ( US $ 115.13 Mn). The net consideration of Rs 309 crore, after withholding taxes of Rs 221 crore was remitted to CIFC on the same date.

22.2.17. Provisions for investments
The Company evaluates all investments for any diminution in their carrying values that is other than temporary. The company made a provision of Rs. Nil and Rs. 2 crore during the quarter and nine months ended December 31, 2006 (Rs. Nil for the quarter and nine months ended December 31, 2005) on trade investments.

The company provided Rs. 0.19 and Rs. 1 crore during the quarter and nine months ended December 31, 2006 (for the quarter and nine months ended December 31, 2005 Rs. 1 crore and Rs. 1 crore respectively) on revision of the carrying amount of non-trade current investments to fair value.

22.2.18. 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.

in Rs. crore
	Quarter ended December 31,		Nine months ended December 31,
	2006	2005	2006	2005
Number of shares considered as basic weighted average shares outstanding	55,70,34,398	54,75,42,952	55,48,77,140	54,45,78,758
Add: Effect of dilutive issues of shares/stock options	1,26,82,686	1,56,66,954	1,32,95,919	1,59,08,234
Number of shares considered as weighted average shares and potential shares outstanding	56,97,17,084	56,32,09,906	56,81,73,059	56,04,86,992

22.2.19 Intellectual Property Rights
Infosys was liable to pay Aeronautical Development Agency (ADA) a maximum amount of Rs. 20 crore (US$ 4.4 million) by June 12, 2012 through a revenue sharing arrangement towards acquisition of Intellectual Property Rights in AUTOLAY, a commercial software application product used in designing high performance structural systems. During the quarter Infosys foreclosed the arrangement by paying the net present value of the future revenue share amounting to Rs. 13.5 crore (US$ 3 million). The remainder of the liability in books amounts to Rs. 6.5 crore (US$ 1.4 million) has been written back and disclosed in Other Income.

22.2.20 Exceptional item
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 nine months ended December 31, 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 nine months ended December 31, 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.

22.2.21 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. Crore
Particulars	Nine months ended
	December 31, 2006
Obligations at period beginning	182
Service Cost	35
Interest cost	10
Actuarial (gain)/loss	(2)
Benefits paid	(10)
Obligations at period end	215
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	170
Expected return on plan assets	12
Actuarial gain/(loss)	1
Contributions	44
Benefits paid	(12)
Plans assets at period end, at fair value	215
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	215
Present value of the defined benefit obligations at the end of the period	215
Asset recognized in the balance sheet	-
Gratuity cost for the period
Service cost	35
Interest cost	10
Expected return on plan assets	(12)
Actuarial (gain)/loss	(2)
Net gratuity cost	31
Investment details of plan assets
100% of the plan assets are invested in debt instruments.
Assumptions
Interest rate	7.60%
Estimated rate of return on plan assets	7.60%

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.

22.2.22 Cash flow statement

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

22.2.22.b Restricted Cash
Deposits with financial institutions and body corporate as at December 31, 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. Crore
Schedule	Description	As at
		December 31, 2006	March 31, 2006
Balance Sheet	Minority Interest	0.26	68.08
3	Fixed assets
	Deductions/retirements
	Land: free-hold	-	0.01
	Plant and machinery	0.33	-
	Furniture and fixtures	0.15	-
	Depreciation
	Plant and machinery	0.23	7.00
	Furniture and fixtures	0.11	18.00
	Vehicles	-	0.19
7	Cash on hand	0.03	0.04
8	Unsecured, considered doubtful
	Advance to gratuity trust	0.31	-
	Loans and advances to employees	0.68	0.50
	Provision for doubtful loans and advances to employees	0.68	0.50
22.2.9	Loans & Advances
	Interest accrued but not due - Deposits with Financial Institutions and Body Corporates	3.14	0.10

Profit & Loss Items

in Rs. Crore
Schedule	Description	Quarter ended December 31,		Nine months ended December 31,
		2006	2005	2006	2005
Profit & Loss	Provision for investments	0.20	(0.27)	3.21	0.29
12	Selling and Marketing expenses
	Contribution to provident and other funds	0.78	0.50	2.23	1.07
	Advertisements	0.36	0.30	2.39	0.80
	Printing & Stationery	0.57	0.31	1.40	0.86
	Sales promotion expenses	0.41	0.32	1.32	0.59
	Office maintenance	0.12	0.04	0.25	0.28
	Insurance charges	-	0.23	0.10	0.33
	Computer maintenance	0.03	-	0.08	-
	Staff welfare	0.87	0.54	2.25	0.97
	Software Packages
	for Own Use	-	-	0.42	0.06
	Communication Expenses	0.40	0.32	0.96	0.45
	Consumables	0.11	0.06	0.30	0.12
	Miscellaneous Expenses	0.10	1.00	1.96	2.00
13	General and Administrative expenses
	Staff Welfare	-	0.57	-	0.57
	Provision for doubtful loans and advances	0.07	0.26	0.16	0.33
	Commission to non-whole time directors	0.52	0.37	1.63	0.68
	Auditor's remuneration :
	Statutory audit fees	0.26	0.35	0.90	0.60
	Certification charges	0.01	0.01	0.01	0.01
	Out-of-pocket expenses	-	0.01	0.04	0.02
	Freight charges	0.20	0.18	0.65	0.36
	Research grants	2.04	0.35	7.02	0.44
	Software packages
	for own use	-	0.42	-	0.42
	Bank charges and commission	0.17	0.35	1.18	0.54
22.2.1	Aggregate expenses
	Provision for doubtful loans and advances	0.07	0.26	0.16	0.41
	Commission to non-whole time directors	0.52	0.38	1.63	1.06
	Sales promotion expenses	0.41	0.32	1.32	0.97
	Auditor's remuneration
	statutory audit fees	0.26	0.35	0.90	0.88
	certification charges	0.01	0.01	0.01	0.01
	out-of-pocket expenses	-	0.01	0.04	0.02
	Bank charges and commission	0.17	0.35	1.18	1.00
	Freight charges	0.20	0.18	0.65	0.58
	Research grants	2.04	0.36	7.02	0.57
22.2.10	Profit on disposal of fixed assets, included in miscellaneous income	0.06	0.11	0.13	0.34
	Loss on disposal of fixed assets, included in miscellaneous expenses	(0.01)	(0.25)	(0.03)	(0.28)
22.2.17	Provision for investments	0.20	(0.27)	3.21	0.29

Cash Flow Statement Items

Schedule	Description	For the nine months ended December 31,
		2006	2005
Cash Flow	Profit/ loss on sale of fixed assets	(0.05)	0.06
Statement	Provisions for investments	3.21	0.29
	Proceeds on disposal of fixed assets	0.30	0.25

Transactions with key management personnel

Key management personnel comprise our directors and statutory officers.

Particulars of remuneration and other benefits provided to key management personnel during the quarter and nine months ended December 31, 2006 and 2005 are as follows:

( figures in italics are corresponding to the quarter and nine months ended December 31, 2005)

Name	Salary	Contributions	Perquisites	Total
		to provident and other funds	and incentives	Remuneration
Chairman and Chief Mentor
N R Narayana Murthy*	-	-	-	-
	0.03	0.01	0.06	0.10
	0.06	0.02	0.21	0.29
	0.09	0.03	0.17	0.29
Chief Executive Officer and Managing Director
Nandan M Nilekani	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.12	0.03	0.24	0.39
	0.09	0.03	0.16	0.28
President , Chief Operating Officer and Joint Managing Director
S Gopalakrishnan	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.12	0.03	0.25	0.40
	0.09	0.03	0.17	0.29
Whole-time Directors
K Dinesh	0.04	0.01	0.05	0.10
	0.03	0.01	0.06	0.10
	0.10	0.03	0.24	0.37
	0.09	0.03	0.15	0.27
S D Shibulal	0.03	0.01	0.04	0.08
	0.23	-	0.07	0.30
	0.10	0.03	0.20	0.33
	0.68	-	0.21	0.89
T V Mohandas Pai	0.06	0.02	0.09	0.17
	0.05	0.02	0.11	0.18
	0.18	0.06	0.44	0.68
	0.15	0.06	0.34	0.55
Srinath Batni	0.05	0.01	0.07	0.13
	0.04	0.02	0.11	0.17
	0.15	0.03	0.37	0.55
	0.13	0.05	0.30	0.48
Chief Financial Officer
V Balakrishnan	0.04	0.01	0.16	0.21
	0.03	0.01	0.09	0.13
	0.13	0.03	0.43	0.59
	0.09	0.03	0.31	0.43

* Wholetime director till August 20, 2006

Particulars of remuneration and other benefits paid to key management personnel during the quarter ended December 31, 2006 and 2005:

Name	Commission	Sitting fees	Reimbursement of expenses	Total remuneration
Non-Whole time Directors
Deepak M Satwalekar	0.06	-	-	0.06
	0.05	-	-	0.05
	0.18	-	-	0.18
	0.14	0.01	-	0.15
Prof. Marti G Subrahmanyam	0.05	-	-	0.05
	0.04	-	0.02	0.06
	0.17	-	0.05	0.22
	0.12	-	0.09	0.21
Philip Yeo	-	-	-	-
	-	-	-	-
	-	-	-	-
	0.03	-	-	0.03
Dr. Omkar Goswami	0.05	-	0.01	0.06
	0.04	-	-	0.04
	0.15	-	0.02	0.17
	0.13	0.02	0.02	0.17
Sen.Larry Pressler	-	-	-	-
	0.04	-	-	0.04
	0.03	-	0.03	0.06
	0.12	-	-	0.12
Rama Bijapurkar	0.05	-	-	0.05
	0.04	-	-	0.04
	0.17	-	0.01	0.18
	0.12	-	-	0.12
Claude Smadja	0.05	-	0.04	0.09
	0.04	-	-	0.04
	0.17	-	0.17	0.34
	0.12	-	0.08	0.20
Sridar A Iyengar	0.05	-	-	0.05
	0.04	0.03	-	0.07
	0.17	-	0.08	0.25
	0.18	0.03	0.11	0.32
Jeffrey Lehman	0.05	-	-	0.05
	-	-	-	-
	0.15	-	-	0.15
	-	-	-	-
David Boyles	0.05	-	-	0.05
	0.03	-	-	0.03
	0.17	-	-	0.17
	0.06	-	-	0.06
N R Narayana Murthy*	0.06	-	-	0.06
	-	-	-	-
	0.09	-	-	0.09
	-	-	-	-

* Appointed as Additional Director effective August 21, 2006.

AUDITORS' REPORT TO THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENTS OF INFOSYS TECHNOLOGIES LIMITED AND SUBSIDIARIES

We have audited the attached consolidated Balance Sheet of Infosys Technologies Limited (the Company) and subsidiaries (collectively called the 'the Infosys Group') as at 31 December 2006, the consolidated Profit and Loss Account of the Infosys Group for the quarter and nine months ended on that date and the consolidated Cash Flow Statement of the Infosys Group for the nine months 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 the 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 misstatements.  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 the consolidated financial statements have been prepared by the Company's management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.

In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a)   in the case of the consolidated Balance Sheet, of the state of affairs of the Infosys Group as at 31 December 2006;
(b)   in the case of the consolidated Profit and Loss account, of the profit of the Infosys Group for the quarter and nine months ended on that date; and
(c)   in the case of the consolidated Cash Flow Statement, of the cash flows of the Infosys Group for the nine months ended on that date.

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna
Partner
Membership No. 32815

Bangalore
11 January 2007