Exhibit 99.12
Ind AS Consolidated
Independent
Auditor’s Report
To
the Board of Directors of Infosys Limited
Report
on the Consolidated Interim Financial Statements
We
have audited the accompanying consolidated interim financial statements of Infosys Limited (“the Company”) and its
subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheet as at 31 December
2016, the consolidated statement of profit and loss (including other comprehensive income) for the three months and nine months
then ended, the consolidated statement of cash flows and the consolidated statement of changes in equity for the nine months then
ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “consolidated
interim financial statements”).
Management’s
Responsibility for the Consolidated Interim Financial Statements
The
Company’s Board of Directors is responsible for the preparation of these consolidated interim financial statements that
give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive
income, consolidated cash flows and consolidated changes in equity of the Group, in accordance with the accounting principles
generally accepted in India, including the Indian Accounting Standards (Ind AS) 34, Interim Financial Reporting as specified under
section 133 of the Companies Act, 2013 (‘the Act’) read with relevant rules issued thereunder.
The
respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds
and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating
effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation
of the consolidated interim financial statements that give a true and fair view and are free from material misstatement, whether
due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors
of the Company, as aforesaid.
Auditor’s
Responsibility
Our
responsibility is to express an opinion on these consolidated interim financial statements based on our audit.
We
conducted our audit of the consolidated interim financial statements in accordance with the Standards on Auditing specified under
section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated interim financial statements are free from material misstatement.
An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated interim financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the consolidated interim financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal financial control relevant to the Company’s preparation of the consolidated interim financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on whether the Group has in place an adequate internal financial controls system over
financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as
evaluating the overall presentation of the consolidated interim financial statements.
We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the
consolidated interim financial statements.
Opinion
In
our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated interim
financial statements give a true and fair view in conformity with the accounting principles generally accepted in India, including
Ind AS 34, Interim Financial Reporting, of the consolidated financial position of the Group as at 31 December 2016 and its consolidated
financial performance including other comprehensive income for the three months and nine months then ended, its consolidated cash
flows and the consolidated changes in equity for the nine months then ended.
for
B S R & Co. LLP
Chartered Accountants
Firm’s Registration Number: 101248W/W-100022
Supreet
Sachdev
Partner
Membership Number: 205385
Bangalore
13 January 2017
INFOSYS LIMITED AND SUBSIDIARIES
In 
crore
| Consolidated Balance Sheets as at |
Note |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| ASSETS |
|
|
|
|
| Non-current assets |
|
|
|
|
| Property, plant and equipment |
2.4 |
9,380 |
8,637 |
7,685 |
| Capital work-in-progress |
|
1,525 |
960 |
776 |
| Goodwill |
2.5 |
3,760 |
3,764 |
3,091 |
| Other intangible assets |
2.5 |
861 |
985 |
638 |
| Investment in associate |
2.25 |
100 |
103 |
93 |
| Financial Assets: |
|
|
|
|
| Investments |
2.6 |
5,405 |
1,714 |
1,305 |
| Loans |
2.7 |
29 |
25 |
31 |
| Other financial assets |
2.8 |
312 |
286 |
173 |
| Deferred tax assets (net) |
2.17 |
621 |
536 |
536 |
| Income tax assets (net) |
2.17 |
5,333 |
5,230 |
4,089 |
| Other non-current assets |
2.11 |
919 |
1,357 |
698 |
| Total non-current assets |
|
28,245 |
23,597 |
19,115 |
| Current assets |
|
|
|
|
| Financial Assets: |
|
|
|
|
| Investments |
2.6 |
4,367 |
75 |
874 |
| Trade receivables |
2.9 |
12,942 |
11,330 |
9,713 |
| Cash and cash equivalents |
2.10 |
26,113 |
32,697 |
30,367 |
| Loans |
2.7 |
243 |
303 |
222 |
| Other financial assets |
2.8 |
6,336 |
5,190 |
4,527 |
| Other Current Assets |
2.11 |
2,394 |
2,158 |
1,541 |
| Total current assets |
|
52,395 |
51,753 |
47,244 |
| Total assets |
|
80,640 |
75,350 |
66,359 |
| EQUITY AND LIABILITIES |
|
|
|
|
| Equity |
|
|
|
|
| Equity share capital |
2.13 |
1,144 |
1,144 |
572 |
| Other equity |
|
64,372 |
60,600 |
54,198 |
| Total equity attributable to equity holders of the Company |
|
65,516 |
61,744 |
54,770 |
| Non-controlling interests |
|
– |
– |
– |
| Total equity |
|
65,516 |
61,744 |
54,770 |
| Liabilities |
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Financial Liabilities |
|
|
|
|
| Other financial liabilities |
2.14 |
86 |
69 |
– |
| Deferred tax liabilities (net) |
2.17 |
225 |
252 |
159 |
| Other non-current liabilities |
2.15 |
89 |
46 |
47 |
| Total non-current liabilities |
|
400 |
367 |
206 |
| Current liabilities |
|
|
|
|
| Financial Liabilities |
|
|
|
|
| Trade payables |
|
335 |
386 |
140 |
| Other financial liabilities |
2.14 |
6,870 |
6,302 |
5,983 |
| Other current liabilities |
2.15 |
3,228 |
2,629 |
1,964 |
| Provisions |
2.16 |
412 |
512 |
478 |
| Income tax liabilities (net) |
2.17 |
3,879 |
3,410 |
2,818 |
| Total current liabilities |
|
14,724 |
13,239 |
11,383 |
| Total equity and liabilities |
|
80,640 |
75,350 |
66,359 |
| The accompanying notes form an integral part of the consolidated interim financial statements |
| As per our report of even date attached |
| for B S R & Co. LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No : 101248W/W-100022 |
| Supreet Sachdev |
R. Seshasayee |
Dr. Vishal Sikka |
U. B. Pravin Rao |
| Partner |
Chairman |
Chief Executive Officer and Managing Director |
Chief Operating Officer and Whole-time Director |
| Membership No. 205385 |
|
|
|
| Bangalore |
Roopa Kudva |
M. D. Ranganath |
A.G.S Manikantha |
| January 13, 2017 |
Director |
Chief Financial Officer |
Company Secretary |
INFOSYS LIMITED AND SUBSIDIARIES
in crore, except equity share and per equity
share data
| Consolidated Statement of Profit and Loss |
Note |
Three months ended December 31, |
Nine months ended December 31, |
| |
|
2016 |
2015 |
2016 |
2015 |
| Revenue from operations |
2.18 |
17,273 |
15,902 |
51,364 |
45,891 |
| Other income, net |
2.19 |
820 |
802 |
2,333 |
2,351 |
| Total income |
|
18,093 |
16,704 |
53,697 |
48,242 |
| Expenses |
|
|
|
|
|
| Employee benefit expenses |
2.20 |
9,420 |
8,772 |
28,349 |
25,383 |
| Deferred consideration pertaining to acquisition |
|
– |
25 |
– |
149 |
| Cost of technical sub-contractors |
|
975 |
998 |
2,833 |
2,606 |
| Travel expenses |
|
502 |
530 |
1,762 |
1,667 |
| Cost of software packages and others |
2.20 |
461 |
278 |
1,119 |
945 |
| Communication expenses |
|
145 |
109 |
400 |
331 |
| Consultancy and professional charges |
|
165 |
213 |
505 |
566 |
| Depreciation and amortisation expenses |
2.4 and 2.5 |
433 |
369 |
1,257 |
1,040 |
| Other expenses |
2.20 |
838 |
649 |
2,450 |
1,804 |
| Total expenses |
|
12,939 |
11,943 |
38,675 |
34,491 |
| PROFIT BEFORE NON-CONTROLLING INTERESTS / SHARE IN NET PROFIT / (LOSS) OF ASSOCIATE |
|
5,154 |
4,761 |
15,022 |
13,751 |
| Share in net profit/(loss) of associate |
|
– |
– |
(5) |
(2) |
| PROFIT BEFORE TAX |
|
5,154 |
4,761 |
15,017 |
13,749 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.17 |
1,468 |
1,319 |
4,404 |
3,892 |
| Deferred tax |
2.17 |
(22) |
(23) |
(136) |
(35) |
| PROFIT FOR THE PERIOD |
|
3,708 |
3,465 |
10,749 |
9,892 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset |
|
(8) |
5 |
(65) |
(9) |
| Equity instruments through other comprehensive income |
|
– |
– |
– |
– |
| |
|
(8) |
5 |
(65) |
(9) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
2.12 |
26 |
1 |
28 |
1 |
| Exchange differences on translation of foreign operations |
|
(47) |
1 |
(60) |
207 |
| |
|
(21) |
2 |
(32) |
208 |
| Total other comprehensive income, net of tax |
|
(29) |
7 |
(97) |
199 |
| Total comprehensive income for the period |
|
3,679 |
3,472 |
10,652 |
10,091 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the company |
|
3,708 |
3,465 |
10,749 |
9,892 |
| Non-controlling interests |
|
– |
– |
– |
– |
| |
|
3,708 |
3,465 |
10,749 |
9,892 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the company |
|
3,679 |
3,472 |
10,652 |
10,091 |
| Non-controlling interests |
|
– |
– |
– |
– |
| |
|
3,679 |
3,472 |
10,652 |
10,091 |
| EARNINGS PER EQUITY SHARE |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic () |
|
16.22 |
15.16 |
47.03 |
43.28 |
| Diluted () |
|
16.22 |
15.16 |
47.02 |
43.28 |
| Weighted average equity shares used in computing earnings per equity share |
2.23 |
|
|
|
|
| Basic |
|
228,56,51,730 |
228,56,19,380 |
228,56,38,678 |
228,56,14,573 |
| Diluted |
|
228,62,29,042 |
228,57,32,052 |
228,60,76,462 |
228,57,15,960 |
| The accompanying notes form an integral part of the consolidated interim financial statements |
| As per our report of even date attached |
| for B S R & Co. LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No : 101248W/W-100022 |
| Supreet Sachdev |
R. Seshasayee |
Dr. Vishal Sikka |
U. B. Pravin Rao |
| Partner |
Chairman |
Chief Executive Officer and Managing Director |
Chief Operating Officer and Whole-time Director |
| Membership No. 205385 |
|
|
|
| Bangalore |
Roopa Kudva |
M. D. Ranganath |
A.G.S Manikantha |
| January 13, 2017 |
Director |
Chief Financial Officer |
Company Secretary |
INFOSYS LIMITED AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
In crore
| Particulars |
|
OTHER EQUITY |
|
| |
|
RESERVES & SURPLUS |
Other comprehensive income |
|
| |
Equity Share capital # |
Securities premium
reserve |
Retained earnings |
Capital reserve |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
Other reserves(2) |
Equity instruments through Other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Cash flow hedge reserve |
Other items of other comprehensive income |
Total equity attributable to equity holders of the Company |
| Balance as of April 1, 2015 |
572 |
2,784 |
41,606 |
54 |
9,336 |
2 |
– |
4 |
– |
411 |
– |
1 |
54,770 |
| Changes in equity for the nine months December 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase in share capital on account of bonus issue# (refer to note 2.13) |
572 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
572 |
| Amounts utilized for bonus issue (refer note 2.13)# |
– |
(572) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(572) |
| Transfer to general reserve |
– |
– |
(1,217) |
– |
1,217 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transfer to other reserve |
|
|
(1) |
|
|
|
|
1 |
|
|
|
|
|
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
(397) |
– |
– |
– |
397 |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
397 |
– |
– |
– |
(397) |
– |
– |
– |
– |
– |
– |
| Share based payments to employees (refer to note 2.13) |
– |
– |
– |
– |
– |
5 |
– |
– |
– |
– |
– |
– |
5 |
| Remeasurement of the net defined benefit liability/asset, net of tax effect (refer note 2.22.1 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(9) |
(9) |
| Equity instruments through other comprehensive income |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Dividends (including corporate dividend tax) |
– |
– |
(6,814) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(6,814) |
| Fair value changes on derivatives designated as cash flow hedge (refer to note 2.12) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
– |
1 |
| Profit for the period |
– |
– |
9,892 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
9,892 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
207 |
– |
– |
207 |
| Balance as of December 31, 2015 |
1,144 |
2,212 |
43,466 |
54 |
10,553 |
7 |
– |
5 |
– |
618 |
1 |
(8) |
58,052 |
Consolidated Statements of Changes in Equity
(contd.)
In crore
| Particulars |
|
OTHER EQUITY |
|
| |
|
RESERVES & SURPLUS |
Other comprehensive income |
|
| |
Equity Share capital # |
Securities premium
reserve |
Retained earnings |
Capital reserve |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
Other reserves(2) |
Equity instruments through Other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Cash flow hedge reserve |
Other items of other comprehensive income |
Total equity attributable to equity holders of the Company |
| Balance as of April 1, 2016 |
1,144 |
2,213 |
47,063 |
54 |
10,553 |
8 |
– |
5 |
– |
715 |
– |
(11) |
61,744 |
| Changes in equity for the nine months December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share based payments to employees (refer to note 2.13) |
– |
– |
– |
– |
– |
71 |
– |
– |
– |
– |
– |
– |
71 |
| Income tax benefit arising on exercise of stock options |
– |
|
– |
– |
– |
1 |
– |
– |
– |
– |
– |
– |
1 |
| Excersice of stock options (refer to note 2.13) |
– |
3 |
– |
– |
– |
(3) |
– |
– |
– |
– |
– |
– |
– |
| Dividends (including corporate dividend tax) |
– |
– |
(6,952) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(6,952) |
| Transfer to general reserve |
– |
– |
(1,582) |
|
1,582 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
(821) |
– |
– |
– |
821 |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
821 |
– |
– |
– |
(821) |
– |
– |
– |
– |
– |
– |
| Remeasurement of the net defined benefit liability/asset, net of tax effect (refer note 2.22.1 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(65) |
(65) |
| Equity instruments through other comprehensive income |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Fair value changes on derivatives designated as cash flow hedge, net (refer to note 2.12) |
– |
– |
|
– |
– |
– |
– |
– |
– |
– |
28 |
– |
28 |
| Profit for the period |
– |
– |
10,749 |
– |
– |
– |
– |
– |
– |
|
– |
|
10,749 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(60) |
– |
– |
(60) |
| Balance as of December 31, 2016 |
1,144 |
2,216 |
49,278 |
54 |
12,135 |
77 |
– |
5 |
– |
655 |
28 |
(76) |
65,516 |
# net of treasury shares
The non controlling interest for each of
the above periods is less than 1 crore
| (1) | | The Special Economic Zone Re-investment Reserve has been created out of the profit
of eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by
the Company for acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income
Tax Act, 1961. |
| (2) | | Under the Swiss Code of Obligation, few subsidiaries of Infosys Lodestone are required
to appropriate a certain percentage of the annual profit to legal reserve which may be used only to cover losses or for measures
designed to sustain the company through difficult times, to prevent unemployment or to mitigate its consequences. |
| The accompanying notes form an integral part of the consolidated interim financial statements |
| As per our report of even date attached |
| for B S R & Co. LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No : 101248W/W-100022 |
| Supreet Sachdev |
R. Seshasayee |
Dr. Vishal Sikka |
U. B. Pravin Rao |
| Partner |
Chairman |
Chief Executive Officer and Managing Director |
Chief Operating Officer and Whole-time Director |
| Membership No. 205385 |
|
|
|
| Bangalore |
Roopa Kudva |
M. D. Ranganath |
A.G.S Manikantha |
| January 13, 2017 |
Director |
Chief Financial Officer |
Company Secretary |
INFOSYS LIMITED AND SUBSIDIARIES
In
crore
| Consolidated Statements of Cash Flows |
Nine months ended December
31, |
| |
2016 |
2015 |
| Cash flow from operating activities |
|
|
| Profit for the period |
10,749 |
9,892 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
| Income tax expense |
4,268 |
3,857 |
| Depreciation and amortization |
1,257 |
1,040 |
| Interest and dividend income |
(1,976) |
(2,048) |
| Allowances for credit losses on financial assets |
76 |
(25) |
| Exchange differences on translation of assets and liabilities |
46 |
57 |
| Deferred consideration pertaining to acquisition |
– |
149 |
| Other adjustments |
156 |
151 |
| Changes in assets and liabilities |
|
|
| Trade receivables and unbilled revenue |
(2,071) |
(1,156) |
| Loans, other financial assets and other assets |
(323) |
(942) |
| Trade payables |
(51) |
(13) |
| Other financial liabilities, other liabilities and provisions |
1,110 |
955 |
| Cash generated from operations |
13,241 |
11,917 |
| Income taxes paid |
(4,025) |
(4,390) |
| Net cash generated by operating activities |
9,216 |
7,527 |
| Cash flows from investing activities |
|
|
| Expenditure on property, plant and equipment net of sale proceeds, including changes in retention money and capital creditors |
(2,097) |
(1,943) |
| Loans to employees |
56 |
(47) |
| Deposits placed with corporation |
(147) |
(46) |
| Interest and dividend received on investments |
1,362 |
1,077 |
| Payment for acquisition of business, net of cash acquired |
– |
(747) |
| Payment of contingent consideration for acquisition of business |
(36) |
– |
| Payments to acquire financial assets |
|
|
| Preference securities |
(54) |
(55) |
| Tax free bonds and government bonds |
(5) |
(243) |
| Liquid mutual fund units |
(37,285) |
(19,493) |
| Non convertible debentures |
(3,597) |
– |
| Others |
(23) |
(18) |
| Proceeds on sale of financial assets |
|
|
| Tax free bonds and government bonds |
4 |
– |
| Liquid mutual fund units |
33,047 |
19,891 |
| Fixed maturity plan securities |
– |
33 |
| Net cash used in investing activities |
(8,775) |
(1,591) |
| Cash flows from financing activities: |
|
|
| Payment of dividends (including corporate dividend tax) |
(6,939) |
(6,814) |
| Net cash used in financing activities |
(6,939) |
(6,814) |
| Net decrease in cash and cash equivalents |
(6,498) |
(878) |
| Cash and cash equivalents at the beginning of the period |
32,697 |
30,367 |
| Effect of exchange rate changes on cash and cash equivalents |
(86) |
(13) |
| Cash and cash equivalents at the end of the period |
26,113 |
29,476 |
| Supplementary information: |
|
|
| Restricted cash balance |
517 |
438 |
| The accompanying notes form an integral part of the consolidated interim financial statements |
| As per our report of even date attached |
| for B S R & Co. LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No : 101248W/W-100022 |
| Supreet Sachdev |
R. Seshasayee |
Dr. Vishal Sikka |
U. B. Pravin Rao |
| Partner |
Chairman |
Chief Executive Officer and Managing Director |
Chief Operating Officer and Whole-time Director |
| Membership No. 205385 |
|
|
|
| Bangalore |
Roopa Kudva |
M. D. Ranganath |
A.G.S Manikantha |
| January 13, 2017 |
Director |
Chief Financial Officer |
Company Secretary |
INFOSYS LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
1. Company Overview and Significant Accounting
Policies
1.1 Company overview
Infosys is a leading provider in consulting,
technology, outsourcing and next-generation services. Along with its subsidiaries, Infosys provides Business IT services (comprising
application development and maintenance, independent validation, infrastructure management, engineering services comprising product
engineering and life cycle solutions and business process management); Consulting and systems integration services (comprising
consulting, enterprise solutions, systems integration and advanced technologies); Products, business platforms and solutions to
accelerate intellectual property-led innovation including Finacle, its banking solution; and offerings in the areas of Analytics,
Cloud, and Digital Transformation.
Infosys together with its subsidiaries and controlled
trusts is herein after referred to as the "Group".
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Bangalore, Karnataka, India. The Company has its primary listings on the
BSE Limited and National Stock Exchange in India. The Company’s American Depositary Shares representing equity shares are
also listed on the New York Stock Exchange (NYSE), Euronext London and Euronext Paris.
The Group's consolidated financial statements
are approved for issue by the Company's Board of Directors on January 13, 2017
1.2 Basis of preparation of financial statements
These consolidated financial statements are
prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except
for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 ('Act') (to the
extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section
133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016.
The Group has adopted all the Ind AS standards
and the adoption was carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. The transition
was carried out from Indian Accounting Principles generally accepted in India as prescribed under Sec 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and descriptions of the effect
of the transition has been summarized in Note 2.1 and 2.2
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.
As the quarter and year-to-date figures are
taken from the source and rounded to the nearest digits, the quarter figures in these financial statements added up to the figures
reported for the previous quarters might not always add up to the year-to-date figures reported in these financial statements.
1.3 Basis of consolidation
Infosys consolidates entities which it owns
or controls. The consolidated financial statements comprise the financial statements of the Company, its controlled trusts and
its subsidiaries as disclosed in Note 2.25. Control exists when the parent has power over the entity, is exposed, or has rights,
to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the
entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly
affect the entity's returns. Subsidiaries are consolidated from the date control commences until the date control ceases.
The financial statements of the Group companies
are consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions
are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the
Group. Non-controlling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly
or indirectly, owned or controlled by the company, are excluded.
Associates are entities over which the Group
has significant influence but not control. Investments in associates are accounted for using the equity method of accounting. The
investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s
share of the profit or loss of the investee after the acquisition date. The Group’s investment in associates includes goodwill
identified on acquisition.
1.4 Use of estimates
The preparation of the financial statements
in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions
affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period.
Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the
use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates could change from period
to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware
of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period
in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements.
1.5 Critical accounting estimates
a. Revenue recognition
The Group uses the percentage-of-completion
method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Group to estimate the
efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have
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
expected contract estimates at the reporting date.
b. Income taxes
The Company's two major tax jurisdictions are
India and the U.S., though the Company also files tax returns in other overseas jurisdictions. Significant judgments are involved
in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. Also
refer to Note 2.17.
c. Business combinations and intangible assets
Business combinations are accounted for using
Ind AS 103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair
valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree.
Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These
valuations are conducted by independent valuation experts.
d. Property, plant and equipment
Property, plant and equipment represent a significant
proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate
of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual
values of Group's assets are determined by management at the time the asset is acquired and reviewed periodically, including at
each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events,
which may impact their life, such as changes in technology.
e. Impairment of Goodwill
Goodwill is tested for impairment on an annual
basis and whenever there is an indication that the recoverable amount of a cash generating unit is less than its carrying amount
based on a number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable
amount of cash generating units is determined based on higher of value-in-use and fair value less cost to sell. The goodwill impairment
test is performed at the level of the cash-generating unit or groups of cash-generating units which are benefitting from the synergies
of the acquisition and which represents the lowest level at which goodwill is monitored for internal management purposes
Market related information
and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of
recoverable amount include estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Cash flow projections take into account past experience and represent management’s best estimate about future developments.
1.6 Revenue recognition
The Company derives revenues primarily from
software development and related services and from the licensing of software products. Arrangements with customers for software
related services are either on a fixed-price, fixed-timeframe or on a time-and-material basis.
Revenue on time-and-material contracts are 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, where there is no uncertainty as to measurement or collectability
of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate
collectability, revenue recognition is postponed until such uncertainty is resolved. Efforts or costs expended have 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. Deferred contract costs are amortized over the term of the contract. Maintenance revenue is
recognized ratably over the term of the underlying maintenance arrangement.
In arrangements for software development and
related services and maintenance services, the Company has applied the guidance in Ind AS 18, Revenue, by applying the revenue
recognition criteria for each separately identifiable component of a single transaction. The arrangements generally meet the criteria
for considering software development and related services as separately identifiable components. For allocating the consideration,
the Company has measured the revenue in respect of each separable component of a transaction at its fair value, in accordance with
principles given in Ind AS 18. The price that is regularly charged for an item when sold separately is the best evidence of its
fair value. In cases where the company is unable to establish objective and reliable evidence of fair value for the software development
and related services, the Company has used a residual method to allocate the arrangement consideration. In these cases the balance
of the consideration, after allocating the fair values of undelivered components of a transaction has been allocated to the delivered
components for which specific fair values do not exist.
License fee revenues are recognized when the
general revenue recognition criteria given in Ind AS 18 are met. Arrangements to deliver software products generally have three
elements: license, implementation and Annual Technical Services (ATS). The Company has applied the principles given in Ind AS 18
to account for revenues from these multiple element arrangements. Objective and reliable evidence of fair value has been established
for ATS. Objective and reliable evidence of fair value is the price charged when the element is sold separately. When other services
are provided in conjunction with the licensing arrangement and objective and reliable evidence of their fair values have been established,
the revenue from such contracts are allocated to each component of the contract in a manner, whereby revenue is deferred for the
undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of objective and
reliable evidence of fair value for implementation, the entire arrangement fee for license and implementation is recognized using
the percentage-of-completion method 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.
Advances received for services and products
are reported as client deposits until all conditions for revenue recognition are met.
The Group accounts for volume discounts and
pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discounts/ incentives amount to
each of the underlying revenue transaction that results in progress by the customer towards earning the discount/ incentive. 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 it is probable that the criteria for the discount will not be met, or if
the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can
be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in which
the change occurs. The discounts are passed on to the customer either as direct payments or as a reduction of payments due from
the customer.
The Company presents revenues net of value-added
taxes in its statement of profit and loss
1.7 Property, plant and equipment
Property, plant and equipment are stated at
cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the
property, plant and equipment are ready for use, as intended by management. The Group depreciates property, plant and equipment
over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
| Building (1) |
22–25 years |
| Plant and machinery (1) |
5 years |
| Office equipment |
5 years |
| Computer equipment (1) |
3–5 years |
| Furniture and fixtures (1) |
5 years |
| Vehicles(1) |
5 years |
| (1) | | Based on technical evaluation, the management believes that the useful lives as given
above best represent the period over which management expects to use these assets. Hence, the useful lives for these assets is
different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. |
Depreciation methods, useful lives and residual
values are reviewed periodically, including at each financial year end.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet date is classified as capital advances under
other non-current assets and the cost of assets not put to use before such date are disclosed under ‘Capital work-in-progress’.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic
benefits associated with these will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance
costs are recognized in net profit in the statement of profit and loss when incurred. The cost and related accumulated depreciation
are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized
in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value
less cost to sell.
1.8 Business combinations
Business combinations have been accounted for
using the acquisition method under the provisions of Ind AS 103, Business Combinations.
The cost of an acquisition is measured at the
fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition,
which is the date on which control is transferred to the Group. The cost of acquisition also includes the fair value of any contingent
consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair value on the date of acquisition.
Business combinations between entities under
common control is accounted for at carrying value.
Transaction costs that the Group incurs in connection
with a business combination such as finders’ fees, legal fees, due diligence fees, and other professional and consulting
fees are expensed as incurred.
1.9 Goodwill
Goodwill represents the cost of business acquisition
in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree.
When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the cost of business
acquisition, a gain is recognized immediately in net profit in the statement of profit and loss. Goodwill is measured at cost less
accumulated impairment losses.
1.10 Intangible assets
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. 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. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software
product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated,
future economic benefits are probable, the Company has an intention and ability to complete and use or sell the software and the
costs can be measured reliably. The costs which can be capitalized include the cost of material, direct labour, overhead costs
that are directly attributable to preparing the asset for its intended use. Research and development costs and software development
costs incurred under contractual arrangements with customers are accounted as cost of sales.
1.11 Financial instruments
1.11.1 Initial recognition
The Group recognizes financial assets and financial
liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at
fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial
assets are accounted for at trade date.
1.11.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortised
cost
A financial asset is subsequently measured at
amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
(ii) Financial assets at fair value through
other comprehensive income
A financial asset is subsequently measured at
fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the
Group has made an irrevocable election based on its business model, for its investments which are classified as equity instruments,
the subsequent changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through
profit or loss
A financial asset which is not classified in
any of the above categories are subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried
at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination
which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from
the balance sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
b. Derivative financial instruments
The Group holds derivative financial instruments
such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
The counterparty for these contracts is generally a bank
(i) Financial assets or financial liabilities,
at fair value through profit or loss.
This category has derivative financial assets
or liabilities which are not designated as hedges.
Although the group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments.
Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized
as a financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized
initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when
incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting
exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current
liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
(ii) Cash flow hedge
The Group designates certain foreign exchange
forward and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast
cash transactions. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair
value of the derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve. Any ineffective
portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and
loss. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively.
If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized
in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted
transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net
profit in the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction
is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the statement
of profit and loss.
c. Share capital and treasury shares
(i) Ordinary Shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity,
net of any tax effects.
(ii) Treasury Shares
When any entity within the Group purchases the
Company's ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction
from total equity, until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount
received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/ from
share premium.
1.11.3 Derecognition of financial instruments
The Group derecognizes a financial asset when
the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies
for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group's
balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
1.12 Fair value of financial instruments
In determining the fair value of its financial
instruments, the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each
reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices
and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
For all other financial instruments the carrying
amounts approximate fair value due to the short maturity of those instruments.
1.13 Impairment
a. Financial assets
The Group recognizes loss allowances using the
expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for
trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial
assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase
in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses
(or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised
is recognized as an impairment gain or loss in statement of profit or loss.
b. Non-financial assets
(i) Goodwill
Goodwill is tested for impairment on an annual
basis and whenever there is an indication that goodwill may be impaired, relying on a number of factors including operating results,
business plans and future cash flows. For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to the Group's cash generating units (CGU) or groups of CGU’s expected to benefit from the synergies arising from the business
combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows from other assets or group of assets. Impairment occurs when the carrying amount of a CGU including the goodwill,
exceeds the estimated recoverable amount of the CGU. The recoverable amount of a CGU is the higher of its fair value less cost
to sell and its value-in-use. Value-in-use is the present value of future cash flows expected to be derived from the CGU.
Total impairment loss of a CGU is allocated
first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis
of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognized in net profit in the statement of
profit and loss and is not reversed in the subsequent period.
(ii) Intangible assets and property,
plant and equipment
Intangible assets and property, plant and equipment
are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use)
is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired,
the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the
assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss
if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased
to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined
(net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
1.14 Provisions
A provision is recognized if, as a result of
a past event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an
outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support for corrections of errors and 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 sales. The Group 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.
b. Onerous contracts
Provisions for onerous contracts are recognized
when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future
obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating
the contract and the expected net cost of continuing with the contract. Before a provision is established the Group recognizes
any impairment loss on the assets associated with that contract.
1.15 Foreign currency
Functional currency
The functional currency of Infosys, Infosys
BPO, controlled trusts, EdgeVerve and Skava is the Indian rupee. The functional currencies for Infosys Australia, Infosys China,
Infosys Mexico, Infosys Sweden, Infosys Brasil, Infosys Public Services, Infosys Shanghai, Infosys Lodestone, Infosys Americas,
Infosys Nova, Panaya, Kallidus and Noah are the respective local currencies. These financial statements are presented in Indian
rupees (rounded off to crore; one crore equals ten million).
Transactions and translations
Foreign-currency denominated monetary assets
and liabilities are translated into the relevant functional currency at exchange rates in effect at the balance sheet date. The
gains or losses resulting from such translations are included in net profit in the statement of profit and loss. Non-monetary assets
and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent
at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in a foreign currency
and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue,
expense and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the
exchange rate in effect on the date of the transaction.
The translation of financial statements of the
foreign subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at
the balance sheet date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods.
The gains or losses resulting from such translation are included in currency translation reserves under other components of equity.
When a subsidiary is disposed off, in full, the relevant amount is transferred to net profit in the statement of profit and loss.
However when a change in the parent's ownership does not result in loss of control of a subsidiary, such changes are recorded through
equity.
Goodwill and fair value adjustments arising
on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange
rate in effect at the balance sheet date.
1.16 Earnings per equity share
Basic earnings per equity share is computed
by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding
during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders
of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also
the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair
value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as
of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for
each period presented.
The number of equity shares and potentially
dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including
for changes effected prior to the approval of the financial statements by the Board of Directors.
1.17 Income taxes
Income tax expense comprises current and deferred
income tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates
to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current
and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets and liabilities
are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the
time of the transaction. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are
measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are 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 income tax assets and liabilities is recognized as income or expense in the period that includes
the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that
future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred
income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected that the earnings
of the subsidiary or branch will not be distributed in the foreseeable future. The Group offsets current tax assets and current
tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle
on a net basis, or to realize the asset and settle the liability simultaneously. 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 financial year. Tax benefits
of deductions earned on exercise of employee share options in excess of compensation charged to income are credited to share premium.
1.18 Employee benefits
1.18.1 Gratuity
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees of Infosys and its Indian subsidiaries. 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 with the Group.
Liabilities with regard to the Gratuity Plan
are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit
credit method. The Company fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust
(the Trust). In case of Infosys BPO and EdgeVerve, contributions are made to the Infosys BPO's Employees' Gratuity Fund Trust and
EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts and
contributions are invested in a scheme with Life Insurance Corporation of India as permitted by law of India.
The Group recognizes the net obligation of a
defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined
benefit liability/(asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent
periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used
to measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments are recognized
in net profits in the statement of profit and loss.
1.18.2 Superannuation
Certain employees of Infosys, Infosys BPO and
EdgeVerve are participants in a defined contribution plan. The Group has no further obligations to the Plan beyond its monthly
contributions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation
of India.
1.18.3 Provident fund
Eligible employees of Infosys receive benefits
from a provident fund, which is a defined benefit plan. Both the eligible 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 portion to
the Infosys Limited Employees' Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian
law. 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 make good the
shortfall, if any, between the return from the investments of the Trust and the notified interest rate.
In respect of Indian subsidiaries, eligible
employees receive benefits from a provident fund, which is a defined contribution plan. Both the eligible employee and the respective
companies 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. The companies have no
further obligation to the plan beyond its monthly contributions.
1.18.4 Compensated absences
The Group has a policy on compensated absences
which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined
by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the
additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date.
Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
1.19 Share-based compensation
The Group recognizes compensation expense relating
to share-based payments in net profit using fair-value in accordance with Ind AS 102, Share-Based Payment. The estimated fair value
of awards is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of
the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding account.
1.20 Cash Flow Statement
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past
or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows.
The cash flows from operating, investing and financing activities of the Company are segregated.
1.21 Dividends
Final dividends on shares are recorded as a
liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration
by the company's Board of Directors.
1.22 Other income
Other income is comprised primarily of interest
income, dividend income and exchange gain/loss on forward and options contracts and on translation of other assets and liabilities.
Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment
is established.
1.23 Leases
Leases under which the group assumes substantially
all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value
or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating
leases are recognized as an expense on a straight line basis in net profit in the statement of profit and loss over the lease term.
1.24 Government grants
The Group recognizes government grants only
when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received.
Government grants related to assets are treated as deferred income and are recognized in net profit in the statement of profit
and loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized
on a systematic basis in net profit in the statement of profit and loss over the periods necessary to match them with the related
costs which they are intended to compensate.
INFOSYS LIMITED AND SUBSIDIARIES
| 2 | | Notes to the consolidated financial statements for the three months and nine months
ended December 31, 2016 |
2.1 First-time adoption of Ind-AS
These consolidated interim financial statements
of Infosys Limited and its subsidiaries for the three months and nine months ended December 31, 2016 have been prepared in accordance
with Ind AS. For the purposes of transition to Ind AS, the company has followed the guidance prescribed in Ind AS 101 - First Time
adoption of Indian Accounting Standard, with April 1, 2015 as the transition date and IGAAP as the previous GAAP.
The transition to Ind AS has resulted in changes
in the presentation of the consolidated financial statements, disclosures in the notes thereto and accounting policies and principles.
The accounting policies set out in note 1 have been applied in preparing the consolidated financial statements for the three months
and nine months ended December 31, 2016 and the comparative information. An explanation of how the transition from previous GAAP
to Ind AS has affected the Group’s Consolidated Balance sheet and Consolidated Statement of profit and loss, is set out in
note 2.2.1 and 2.2.2. Exemptions on first time adoption of Ind AS availed in accordance with Ind AS 101 have been set out in note
2.1.1
2.1.1 Exemptions availed on first time adoption
of Ind-AS 101
Ind-AS 101 allows first-time adopters certain
exemptions from the retrospective application of certain requirements under Ind AS. The Group has accordingly applied the following
exemptions
(a) Business Combination
The Group is allowed to choose any date in the
past from which it wants to account for the business combinations under Ind AS 103, without having to restate business combinations
prior to such date. Accordingly, the group has applied the standard for all acquisitions completed after April 1, 2007, which coincides
with the group's date of transition to IFRS.
For all such acquisitions,
-Intangible assets previously included within
goodwill under IGAAP have been recognized separately in the opening Balance Sheet in accordance with Ind AS 103
| - | | deferred taxes have been recorded on intangible assets, wherever applicable |
| - | | goodwill has been restated in accordance with Ind AS 21, with the corresponding impact
in the other comprehensive income in equity |
| - | | retained earnings has been adjusted to include the amortization on identified intangibles,
net of taxes, that would have been recorded from the date of acquisition till the transition date. |
(b) Share-based payment transaction
The group is allowed to apply Ind AS 102 Share-based
payment to equity instruments that remain unvested as of transition date. The group has elected to avail this exemption and apply
the requirements of Ind AS 102 to all such grants under the 2015 plan (Formerly 2011 plan). Accordingly, these options have been
measured at fair value as against intrinsic value, previously under IGAAP.
The excess of stock compensation expense measured
using fair value over the cost recognized under IGAAP using intrinsic value has been adjusted in 'Share Options Outstanding Account',
with the corresponding impact taken to the retained earnings as on the transition date.
(c) Designation of previously recognized
financial instruments
Under Ind AS 109, at initial recognition of
a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment
in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets,
as 'FVOCI' on the basis of the facts and circumstances that existed at the date of transition to Ind AS.
Accordingly, the Group has designated its investments
in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that
existed at the date of transition to Ind AS.
INFOSYS LIMITED AND SUBSIDIARIES
2.2 Reconciliations
The following reconciliations provides the effect
of transition to Ind AS from IGAAP in accordance with Ind AS 101
1. Equity as at April 1, 2015, December 31, 2015
and March 31, 2016
2. Net profit for the three months and nine months
ended December 31, 2015 and year ended March 31, 2016
2.2.1 Reconciliation of equity as previously
reported under IGAAP to Ind AS
In crore
| Particulars |
Note |
Opening Balance Sheet as at April 1, 2015 |
Balance Sheet as at December 31, 2015 |
Balance Sheet as at March 31, 2016 |
| |
|
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
7,685 |
– |
7,685 |
8,328 |
– |
8,328 |
8,637 |
– |
8,637 |
| Capital work-in-progress |
|
776 |
– |
776 |
831 |
– |
831 |
960 |
– |
960 |
| Goodwill |
(a) |
3,595 |
(504) |
3,091 |
4,475 |
(770) |
3,705 |
4,476 |
(712) |
3,764 |
| Other Intangible assets |
(a) |
66 |
572 |
638 |
66 |
974 |
1,040 |
67 |
918 |
985 |
| Investment in associate |
|
93 |
– |
93 |
104 |
– |
104 |
103 |
– |
103 |
| Financial Assets: |
|
|
|
|
|
|
– |
|
|
|
| Investments |
(b) |
1,305 |
– |
1,305 |
1,627 |
– |
1,627 |
1,714 |
– |
1,714 |
| Loans |
|
31 |
– |
31 |
25 |
– |
25 |
25 |
– |
25 |
| Other financial assets |
|
173 |
– |
173 |
223 |
– |
223 |
286 |
– |
286 |
| Deferred tax assets (net) |
(c) |
536 |
– |
536 |
517 |
2 |
519 |
533 |
3 |
536 |
| Income Tax assets (net) |
|
4,089 |
– |
4,089 |
4,750 |
– |
4,750 |
5,230 |
– |
5,230 |
| Other non-current assets |
|
698 |
– |
698 |
1,303 |
– |
1,303 |
1,357 |
– |
1,357 |
| Total non-current assets |
|
19,047 |
68 |
19,115 |
22,249 |
206 |
22,455 |
23,388 |
209 |
23,597 |
| Current assets |
|
|
|
|
|
|
|
|
|
|
| Financial Assets: |
|
|
|
|
|
|
|
|
|
|
| Investments |
(b) |
872 |
2 |
874 |
451 |
– |
451 |
75 |
– |
75 |
| Trade Receivables |
|
9,713 |
– |
9,713 |
10,857 |
– |
10,857 |
11,330 |
– |
11,330 |
| Cash and cash equivalents |
|
30,367 |
– |
30,367 |
29,476 |
– |
29,476 |
32,697 |
– |
32,697 |
| Loans |
|
222 |
– |
222 |
275 |
– |
275 |
303 |
– |
303 |
| Other financial assets |
|
4,527 |
– |
4,527 |
5,656 |
– |
5,656 |
5,190 |
– |
5,190 |
| Other Current Assets |
|
1,541 |
– |
1,541 |
2,076 |
– |
2,076 |
2,158 |
– |
2,158 |
| Total current assets |
|
47,242 |
2 |
47,244 |
48,791 |
– |
48,791 |
51,753 |
– |
51,753 |
| Total assets |
|
66,289 |
70 |
66,359 |
71,040 |
206 |
71,246 |
75,141 |
209 |
75,350 |
| EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
|
| Equity Share capital |
|
572 |
– |
572 |
1,144 |
– |
1,144 |
1,144 |
– |
1,144 |
| Other equity |
(g) |
50,164 |
4,034 |
54,198 |
56,937 |
(29) |
56,908 |
56,682 |
3,918 |
60,600 |
| Total equity attributable to equity holders of the Company |
|
50,736 |
4,034 |
54,770 |
58,081 |
(29) |
58,052 |
57,826 |
3,918 |
61,744 |
| Non-controlling interests |
|
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Total equity |
|
50,736 |
4,034 |
54,770 |
58,081 |
(29) |
58,052 |
57,826 |
3,918 |
61,744 |
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
| Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
| Other financial liabilities |
(d) |
– |
– |
– |
135 |
(25) |
110 |
80 |
(11) |
69 |
| Deferred tax liabilities (net) |
(c) |
– |
159 |
159 |
– |
266 |
266 |
– |
252 |
252 |
| Other non-current liabilities |
(e) |
50 |
(3) |
47 |
48 |
(1) |
47 |
46 |
– |
46 |
| Total non-current liabilities |
|
50 |
156 |
206 |
183 |
240 |
423 |
126 |
241 |
367 |
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
| Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
| Trade Payables |
|
140 |
– |
140 |
131 |
– |
131 |
386 |
– |
386 |
| Other financial liabilities |
(d) |
6,021 |
(38) |
5,983 |
6,402 |
(1) |
6,401 |
6,309 |
(7) |
6,302 |
| Other current liabilities |
(e) |
1,968 |
(4) |
1,964 |
2,794 |
(4) |
2,790 |
2,633 |
(4) |
2,629 |
| Provisions |
(f) |
4,556 |
(4,078) |
478 |
482 |
– |
482 |
4,451 |
(3,939) |
512 |
| Income tax liabilities (net) |
|
2,818 |
– |
2,818 |
2,967 |
– |
2,967 |
3,410 |
– |
3,410 |
| Total current liabilities |
|
15,503 |
(4,120) |
11,383 |
12,776 |
(5) |
12,771 |
17,189 |
(3,950) |
13,239 |
| Total equity and liabilities |
|
66,289 |
70 |
66,359 |
71,040 |
206 |
71,246 |
75,141 |
209 |
75,350 |
Explanations for reconciliation of Balance
Sheet as previously reported under IGAAP to IND AS
(a) Goodwill and Intangible assets
Intangible assets and deferred tax asset/liabilities
in relation to business combinations which were included within Goodwill under IGAAP, have been recognized separately under Ind-AS
with corresponding adjustments to retained earnings and other comprehensive income for giving effect of amortisation expenses and
exchange gains and losses.
(b) Investments
Tax free bonds are carried at amortised cost
both under Ind AS and IGAAP. Investment in equity instruments are carried at fair value through OCI in Ind AS compared to being
carried at cost under IGAAP.
(c) Deferred taxes
Deferred taxes in relation to business combinations
have been recognised under Ind-AS
(d) Other financial liabilities
Adjustments includes impact of discounting the
deferred and contingent consideration payable for acquisitions under Ind AS
(e) Other liabilities
Adjustments that reflect unamortised negative
past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 - Employee Benefits requires such
gains and losses to be adjusted to retained earnings. Also reflects adjustments for interim dividend (including corporate dividend
tax), declared and approved by the board, post reporting period.
(f) Provisions
Adjustments reflect final dividend (including
corporate dividend tax), declared and approved post reporting period.
(g) Other equity
| 1. | | Adjustments to retained earnings and other comprehensive income has been made in accordance
with Ind AS, for the above mentioned line items. |
| 2. | | In addition, as per Ind-AS 19, actuarial gains and losses are recognized in other
comprehensive income as compared to being recognized in the Statement of Profit and Loss under IGAAP. |
INFOSYS LIMITED AND SUBSIDIARIES
2.2.2 Reconciliation Statement of Profit and
loss as previously reported under IGAAP to IND AS
in crore
| Particulars |
Note |
Three months ended December 31, 2015 |
Nine months ended December 31, 2015 |
Year ended March 31, 2016 |
| |
|
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
IGAAP |
Effects of transition to Ind-AS |
Ind AS |
| Revenue from operations |
|
15,902 |
– |
15,902 |
45,891 |
– |
45,891 |
62,441 |
– |
62,441 |
| Other income, net |
|
802 |
– |
802 |
2,350 |
1 |
2,351 |
3,128 |
(5) |
3,123 |
| Total Income |
|
16,704 |
– |
16,704 |
48,241 |
1 |
48,242 |
65,569 |
(5) |
65,564 |
| Expenses |
|
|
|
|
|
|
|
|
|
|
| Employee benefit expenses |
(h) |
8,764 |
8 |
8,772 |
25,392 |
(9) |
25,383 |
34,418 |
(12) |
34,406 |
| Deferred consideration pertaining to acquisition |
(i) |
18 |
7 |
25 |
110 |
39 |
149 |
110 |
39 |
149 |
| Cost of technical sub–contractors |
|
998 |
– |
998 |
2,606 |
– |
2,606 |
3,531 |
– |
3,531 |
| Travel expenses |
|
530 |
– |
530 |
1,667 |
– |
1,667 |
2,263 |
– |
2,263 |
| Cost of software packages and others |
|
278 |
– |
278 |
945 |
– |
945 |
1,274 |
– |
1,274 |
| Communication expenses |
|
109 |
– |
109 |
331 |
– |
331 |
449 |
– |
449 |
| Consultancy and professional charges |
|
213 |
– |
213 |
566 |
– |
566 |
779 |
– |
779 |
| Depreciation and amortisation expenses |
(j) |
316 |
53 |
369 |
911 |
129 |
1,040 |
1,266 |
193 |
1,459 |
| Other expenses |
(i) |
644 |
5 |
649 |
1,794 |
10 |
1,804 |
2,497 |
14 |
2,511 |
| Total expenses |
|
11,870 |
73 |
11,943 |
34,322 |
169 |
34,491 |
46,587 |
234 |
46,821 |
| PROFIT BEFORE NON-CONTROLLING INTERESTS / SHARE IN NET PROFIT / (LOSS) OF ASSOCIATE |
|
4,834 |
(73) |
4,761 |
13,919 |
(168) |
13,751 |
18,982 |
(239) |
18,743 |
| Share in net profit/(loss) of associate |
|
– |
– |
– |
(2) |
– |
(2) |
(3) |
– |
(3) |
| PROFIT BEFORE TAX |
|
4,834 |
(73) |
4,761 |
13,917 |
(168) |
13,749 |
18,979 |
(239) |
18,740 |
| Tax expense: |
|
|
|
|
|
|
|
|
|
|
| Current tax |
(k) |
1,322 |
(3) |
1,319 |
3,890 |
2 |
3,892 |
5,315 |
3 |
5,318 |
| Deferred tax |
(l) |
(8) |
(15) |
(23) |
2 |
(37) |
(35) |
(14) |
(53) |
(67) |
| PROFIT FOR THE PERIOD |
|
3,520 |
(55) |
3,465 |
10,025 |
(133) |
9,892 |
13,678 |
(189) |
13,489 |
| Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset |
(h) |
– |
5 |
5 |
– |
(9) |
(9) |
– |
(12) |
(12) |
| Equity instruments through other comprehensive income |
|
– |
– |
– |
– |
– |
– |
– |
– |
– |
| |
|
– |
5 |
5 |
– |
(9) |
(9) |
– |
(12) |
(12) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
| Fair Value changes on cash flow hedges, net |
|
1 |
– |
1 |
1 |
– |
1 |
– |
– |
– |
| Exchange differences on translation of foreign operations |
(m) |
(8) |
9 |
1 |
49 |
158 |
207 |
81 |
222 |
303 |
| |
|
(7) |
9 |
2 |
50 |
158 |
208 |
81 |
222 |
303 |
| Total other comprehensive income, net of tax |
|
(7) |
14 |
7 |
50 |
149 |
199 |
81 |
210 |
291 |
| Total comprehensive income for the period |
|
3,513 |
(41) |
3,472 |
10,075 |
16 |
10,091 |
13,759 |
21 |
13,780 |
| Profit attributable to: |
|
|
|
|
|
|
|
|
|
|
| Owners of the company |
|
3,520 |
(55) |
3,465 |
10,025 |
(133) |
9,892 |
13,678 |
(189) |
13,489 |
| Non-controlling interests |
|
– |
– |
– |
– |
– |
– |
– |
– |
– |
| |
|
3,520 |
(55) |
3,465 |
10,025 |
(133) |
9,892 |
13,678 |
(189) |
13,489 |
| Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
|
| Owners of the company |
|
3,513 |
(41) |
3,472 |
10,075 |
16 |
10,091 |
13,759 |
21 |
13,780 |
| Non-controlling interests |
|
– |
– |
– |
– |
– |
– |
– |
– |
– |
| |
|
3,513 |
(41) |
3,472 |
10,075 |
16 |
10,091 |
13,759 |
21 |
13,780 |
Explanations for Reconciliation of Profit
and loss as previously reported under IGAAP to IND AS
| (h) | | 1. As per Ind-AS 19 - Employee Benefits, actuarial gains and losses are recognized in other comprehensive income and not reclassified to profit and loss in a subsequent period.
2. Adjustments reflect unamortised negative past service cost arising on
modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained
earnings. |
| (i) | | Adjustments reflect impact of discounting pertaining to deferred and contingent consideration
payable for business combinations |
| (j) | | Adjustment reflects impact of amortisation of intangible assets included within goodwill
under the IGAAP, separately recognized under Ind-AS |
| (k) | | Tax component on actuarial gains and losses which was transferred to other comprehensive
income under Ind AS |
| (l) | | The reduction in deferred tax expense is on account of reversal of deferred tax liabilities
recorded on intangible assets acquired in business combination. |
| (m) | | Under Ind-AS, exchange differences on translation of foreign operations are recorded
in other comprehensive income. |
2.2.3 Cash flow statement
There were no significant reconciliation items
between cash flows prepared under IGAAP and those prepared under Ind AS.
2.3 Business combinations
Noah Consulting LLC
On November 16, 2015, Infosys has acquired 100%
membership interest in Noah Consulting, LLC (Noah), a leading provider of advanced information management consulting services for
the oil and gas industry. The business acquisition was conducted by entering into a share purchase agreement for cash consideration
of $33 million (approximately 216 crore), contingent consideration of upto $5 million (approximately 33 crore on acquisition
date) and an additional consideration of upto $32 million (approximately 212 crore on acquisition date), referred to as retention
bonus, payable to the employees of Noah at each anniversary year following the acquisition date over the next three years, subject
to their continuous employment with the group at each anniversary.
This acquisition combines Noah’s industry
knowledge, information strategy planning, data governance and architecture capabilities with Infosys’ ability to provide
technology and outsourcing services on a global scale to oil and gas clients. The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill.
The purchase price has been allocated based
on management’s estimates and independent appraisal of fair values as follows:
(in crore)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price
allocated |
| Net assets(*) |
39 |
– |
39 |
| Intangible assets – technical know-how |
– |
27 |
27 |
| Intangible assets – trade name |
– |
27 |
27 |
| Intangible assets - customer contracts and relationships |
– |
119 |
119 |
| |
39 |
173 |
212 |
| Goodwill |
|
|
30 |
| Total purchase price |
|
|
242 |
* Includes cash and cash equivalents
acquired of 18 crore
Goodwill of 4 crore is tax deductible.
The gross amount of trade receivables acquired
and its fair value is 29 crore and the amounts have been largely collected.
The acquisition date fair value of each major
class of consideration as of the acquisition date is as follows:
(in crore)
| Component |
Consideration |
| Cash paid |
216 |
| Fair value of contingent consideration |
26 |
| Total purchase price |
242 |
The fair value of contingent consideration is
determined by discounting the estimated amount payable to the sellers of Noah on achievement of certain financial targets. At acquisition
date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 32% and the probabilities
of achievement of the financial targets. During the year ended March 31, 2016, based on an assessment of Noah achieving the targets
for the year ended December 31, 2015 and year ending December 31, 2016, the entire contingent consideration was reversed in the
statement of profit and loss.
The retention bonus is treated as a post-acquisition
employee remuneration expense as per Ind AS 103. Post-acquisition employee remuneration expense of 20 crore and 81 crore has
been recorded in the statement of profit and loss for the three months and nine months ended December 31, 2016, respectively.
The transaction costs of 11 crore related to
the acquisition was recognised under consultancy and professional charges and employee benefit costs in the statement of profit
and loss for the year ended March 31, 2016.
Finacle and Edge Services
On April 24, 2015, the Board of Directors of
Infosys authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, a wholly owned subsidiary,
to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders through postal ballot on June
4, 2015, a Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business with effect
from August 1, 2015. The company had undertaken an enterprise valuation by an independent valuer and accordingly the business were
transferred for a consideration of 3,222 crore and 177 crore for Finacle and Edge Services, respectively.
The consideration was settled through issue
of 85,00,00,000 equity shares amounting to 850 crore and 25,49,00,000 non-convertible redeemable debentures amounting to 2,549
crore in EdgeVerve, post the requisite approval from shareholders on December 11, 2015. During the nine months ended December 31,
2016, EdgeVerve had repaid 370 crore by redeeming proportionate number of debentures.
The transfer of assets and liabilities was accounted
for at carrying values and did not have any impact on the consolidated financial statements.
Kallidus Inc. (d.b.a Skava)
On June 2, 2015, Infosys acquired 100% of the
voting interests in Kallidus Inc., US (Kallidus), a leading provider of digital experience solutions, including mobile commerce
and in-store shopping experiences to large retail clients and 100% of the voting interests of Skava Systems Private Limited, India,
an affiliate of Kallidus. The business acquisition was conducted by entering into a share purchase agreement for cash consideration
of $91 million (approximately 578 crore) and a contingent consideration of up to $20 million (approximately 128 crore on acquisition
date).
Infosys expects to help its clients bring new
digital experiences to their customers through IP-led technology offerings, new automation tools and skill and expertise in these
new emerging areas. The excess of the purchase consideration paid over the fair value of assets acquired has been attributed to
goodwill.
The purchase price has been allocated based
on management’s estimates and independent appraisal of fair values as follows:
(in crore)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price
allocated |
| Net assets(*) |
35 |
– |
35 |
| Intangible assets – technology |
– |
130 |
130 |
| Intangible assets – trade name |
– |
14 |
14 |
| Intangible assets - customer contracts and relationships |
– |
175 |
175 |
| Deferred tax liabilities on intangible assets |
– |
(128) |
(128) |
| |
35 |
191 |
226 |
| Goodwill |
|
|
452 |
| Total purchase price |
|
|
678 |
* Includes cash and cash equivalents
acquired of 29 crore
The goodwill is not tax deductible.
The gross amount of trade receivables acquired
and its fair value is 57 crore and the amounts have been fully collected.
The acquisition date fair value of each major
class of consideration as of the acquisition date is as follows:
(in crore)
| Component |
Consideration |
| Cash paid |
578 |
| Fair value of contingent consideration |
100 |
| Total purchase price |
678 |
The payment of contingent consideration to sellers
of Kallidus is dependent upon the achievement of certain financial targets by Kallidus over a period of 3 years ending on December
31, 2017.
The fair value of contingent consideration is
determined by discounting the estimated amount payable to the sellers of Kallidus on achievement of certain financial targets.
At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of
14% and the probabilities of achievement of the financial targets.
During the nine months ended December 31, 2016
contingent consideration of 40 crore was paid to the sellers of Kallidus on the achievement of certain financial targets. The
balance contingent consideration as of December 31, 2016 and March 31, 2016 is 95 crore and 132 crore, respectively, on an undiscounted
basis.
The transaction costs of 12 crore related to
the acquisition have been included under consultancy and professional charges and employee benefit costs in the statement of profit
and loss for the year ended March 31, 2016.
Panaya
On March 5, 2015, Infosys acquired 100% of the
voting interests in Panaya Inc. (Panaya), a Delaware Corporation in the United States. Panaya is a leading provider of automation
technology for large scale enterprise and software management. The business acquisition was conducted by entering into a share
purchase agreement for cash consideration of 1,398 crore.
Panaya’s CloudQuality™ suite positions
Infosys to bring automation to several of its service lines via an agile SaaS model, and helps mitigate risk, reduce costs and
shorten time to market for clients. The excess of the purchase consideration paid over the fair value of net assets acquired has
been attributed to goodwill.
The purchase price has been allocated based
on Management’s estimates and independent appraisal of fair values as follows:
(In crore)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price allocated |
| Property, plant and equipment |
9 |
– |
9 |
| Net current assets * |
38 |
– |
38 |
| Intangible assets – technology |
– |
243 |
243 |
| Intangible assets – trade name |
– |
21 |
21 |
| Intangible assets - customer contracts and relationships |
– |
82 |
82 |
| Intangible assets – non compete agreements |
– |
26 |
26 |
| Deferred tax liabilities on intangible assets |
– |
(99) |
(99) |
| |
47 |
273 |
320 |
| Goodwill |
|
|
1,078 |
| Total purchase price |
|
|
1,398 |
* Includes cash and cash equivalents acquired
of 116 crore.
The goodwill is not tax deductible.
The gross amount of trade receivables acquired
and its fair value is 58 crore and the amounts have been largely collected.
The fair value of total cash consideration as
at the acquisition date was 1,398 crore.
The transaction costs of 22 crore related to
the acquisition have been included under consultancy and professional charges and employee benefit costs in the statement of profit
and loss for the year ended March 31, 2015.
Infosys Consulting Holding AG (formerly Lodestone
Holding AG)
On October 22, 2012, Infosys acquired 100% of
the voting interests in Lodestone Holding AG, a global management consultancy firm headquartered in Zurich. The business acquisition
was conducted by entering into a share purchase agreement for a cash consideration of 1,187 crore and an additional consideration
of upto 608 crore, which the company refers to as deferred purchase price, estimated on the date of acquisition, payable to the
selling shareholders of Lodestone Holding AG who are continuously employed or otherwise engaged by the Group during the three year
period following the date of the acquisition.
This transaction was treated as post acquisition
employee remuneration expense as per Ind AS 103. For the three months and nine months ended December 31, 2015, a post-acquisition
employee remuneration expense of 25 crore and 149 crore, respectively is recorded in the statement of profit and loss. The liability
towards post-acquisition employee remuneration expense was settled during the year ended March 31, 2016.
2.4 PROPERTY, PLANT AND EQUIPMENT
Following are the changes in the carrying value
of property, plant and equipment for the three months ended December 31, 2016:
In crore, except as otherwise stated
| |
Land-
Freehold |
Land-
Leasehold |
Buildings
(1) |
Plant
and machinery |
Office
Equipment |
Computer
equipment |
Furniture
and fixtures |
Vehicles |
Total |
| Gross carrying value as of October 1, 2016 |
985 |
655 |
6,424 |
1,945 |
923 |
4,489 |
1,578 |
32 |
17,031 |
| Additions |
28 |
16 |
483 |
86 |
29 |
199 |
150 |
2 |
993 |
| Deletions |
– |
– |
– |
(1) |
(36) |
(216) |
(35) |
(2) |
(290) |
| Translation difference |
– |
– |
– |
(1) |
– |
(6) |
(6) |
– |
(13) |
| Gross carrying value as of December 31, 2016 |
1,013 |
671 |
6,907 |
2,029 |
916 |
4,466 |
1,687 |
32 |
17,721 |
| Accumulated depreciation as of October 1, 2016 |
– |
(24) |
(2,316) |
(1,224) |
(556) |
(2,922) |
(1,070) |
(18) |
(8,130) |
| Depreciation |
– |
(2) |
(59) |
(66) |
(31) |
(168) |
(55) |
(1) |
(382) |
| Accumulated depreciation on deletions |
– |
– |
– |
– |
12 |
131 |
15 |
1 |
159 |
| Translation difference |
– |
– |
– |
1 |
1 |
4 |
6 |
– |
12 |
| Accumulated depreciation as of December 31, 2016 |
– |
(26) |
(2,375) |
(1,289) |
(574) |
(2,955) |
(1,104) |
(18) |
(8,341) |
| Carrying value as of December 31, 2016 |
1,013 |
645 |
4,532 |
740 |
342 |
1,511 |
583 |
14 |
9,380 |
| Carrying value as of October 1, 2016 |
985 |
631 |
4,108 |
721 |
367 |
1,567 |
508 |
14 |
8,901 |
Following are the changes in the carrying value
of property, plant and equipment for the three months ended December 31, 2015:
In crore, except as otherwise stated
| |
Land–
Freehold |
Land-
Leasehold |
Buildings
(1) |
Plant
and machinery |
Office
Equipment |
Computer
equipment |
Furniture
and fixtures |
Vehicles |
Total |
| Gross carrying value as of October 1, 2015 |
958 |
633 |
6,011 |
1,544 |
742 |
3,600 |
1,261 |
36 |
14,785 |
| Acquisition through Business Combination |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Additions |
1 |
17 |
230 |
147 |
45 |
281 |
69 |
1 |
791 |
| Deletions |
– |
– |
– |
(1) |
– |
(15) |
(4) |
(3) |
(23) |
| Translation difference |
– |
– |
– |
– |
(1) |
(1) |
(2) |
(1) |
(5) |
| Gross carrying value as of December 31, 2015 |
959 |
650 |
6,241 |
1,690 |
786 |
3,865 |
1,324 |
33 |
15,548 |
| Accumulated depreciation as of October 1, 2015 |
– |
(19) |
(2,089) |
(982) |
(457) |
(2,453) |
(903) |
(21) |
(6,924) |
| Accumuated Depreciation on acquired assets |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Depreciation |
– |
(1) |
(55) |
(58) |
(26) |
(136) |
(39) |
(1) |
(316) |
| Accumulated depreciation on deletions |
– |
– |
– |
– |
1 |
11 |
3 |
3 |
18 |
| Translation difference |
– |
– |
– |
– |
2 |
1 |
(1) |
– |
2 |
| Accumulated depreciation as of December 31, 2015 |
– |
(20) |
(2,144) |
(1,040) |
(480) |
(2,577) |
(940) |
(19) |
(7,220) |
| Carrying value as of December 31, 2015 |
959 |
630 |
4,097 |
650 |
306 |
1,288 |
384 |
14 |
8,328 |
| Carrying value as of October 1, 2015 |
958 |
614 |
3,922 |
562 |
285 |
1,147 |
358 |
15 |
7,861 |
Following are the changes in the carrying value
of property, plant and equipment for the nine months ended December 31, 2016:
In crore, except as otherwise stated
| |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as of April 1, 2016 |
972 |
650 |
6,325 |
1,759 |
839 |
4,072 |
1,444 |
29 |
16,090 |
| Additions |
41 |
21 |
582 |
274 |
126 |
656 |
293 |
7 |
2,000 |
| Deletions |
– |
– |
– |
(2) |
(47) |
(251) |
(39) |
(4) |
(343) |
| Translation difference |
– |
– |
– |
(2) |
(2) |
(11) |
(11) |
– |
(26) |
| Gross carrying value as of December 31, 2016 |
1,013 |
671 |
6,907 |
2,029 |
916 |
4,466 |
1,687 |
32 |
17,721 |
| Accumulated depreciation as of April 1, 2016 |
– |
(22) |
(2,201) |
(1,100) |
(509) |
(2,618) |
(986) |
(17) |
(7,453) |
| Depreciation |
– |
(4) |
(174) |
(192) |
(90) |
(511) |
(147) |
(4) |
(1,122) |
| Accumulated depreciation on deletions |
– |
– |
– |
1 |
23 |
166 |
19 |
3 |
212 |
| Translation difference |
– |
– |
– |
2 |
2 |
8 |
10 |
– |
22 |
| Accumulated depreciation as of December 31, 2016 |
– |
(26) |
(2,375) |
(1,289) |
(574) |
(2,955) |
(1,104) |
(18) |
(8,341) |
| Carrying value as of December 31, 2016 |
1,013 |
645 |
4,532 |
740 |
342 |
1,511 |
583 |
14 |
9,380 |
| Carrying value as of April 1, 2016 |
972 |
628 |
4,124 |
659 |
330 |
1,454 |
458 |
12 |
8,637 |
Following are the changes in the carying value
of property, plant and equipment for the nine months ended December 31, 2015:
In crore, except as otherwise stated
| |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as of April 1, 2015 |
931 |
633 |
5,881 |
1,427 |
676 |
3,347 |
1,179 |
34 |
14,108 |
| Acquisitions through business combinations (Refer note 2.3) |
– |
– |
– |
– |
1 |
2 |
1 |
– |
4 |
| Additions |
28 |
17 |
360 |
264 |
114 |
775 |
148 |
4 |
1,710 |
| Deletions |
– |
– |
– |
(1) |
(5) |
(269) |
(7) |
(5) |
(287) |
| Translation difference |
– |
– |
– |
– |
– |
10 |
3 |
– |
13 |
| Gross carrying value as of December 31, 2015 |
959 |
650 |
6,241 |
1,690 |
786 |
3,865 |
1,324 |
33 |
15,548 |
| Accumulated depreciation as of April 1, 2015 |
– |
(16) |
(1,982) |
(881) |
(412) |
(2,287) |
(826) |
(19) |
(6,423) |
| Acquisitions through business combinations |
– |
– |
– |
– |
(1) |
(1) |
– |
– |
(2) |
| Depreciation |
– |
(4) |
(162) |
(159) |
(73) |
(392) |
(116) |
(4) |
(910) |
| Accumulated depreciation on deletions |
– |
– |
– |
– |
5 |
111 |
4 |
4 |
124 |
| Translation difference |
– |
– |
– |
– |
1 |
(8) |
(2) |
– |
(9) |
| Accumulated depreciation as of December 31, 2015 |
– |
(20) |
(2,144) |
(1,040) |
(480) |
(2,577) |
(940) |
(19) |
(7,220) |
| Carrying value as of December 31, 2015 |
959 |
630 |
4,097 |
650 |
306 |
1,288 |
384 |
14 |
8,328 |
| Carrying value as of April 1, 2015 |
931 |
617 |
3,899 |
546 |
264 |
1,060 |
353 |
15 |
7,685 |
Following are the changes in the carrying value
of property, plant and equipment for the year ended March 31, 2016:
In crore, except as otherwise stated
| |
Land– Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as of April 1, 2015 |
931 |
633 |
5,881 |
1,427 |
676 |
3,347 |
1,179 |
34 |
14,108 |
| Acquisitions through business combinations (Refer note 2.3) |
– |
– |
– |
– |
1 |
2 |
1 |
– |
4 |
| Additions |
41 |
17 |
444 |
333 |
166 |
1,103 |
265 |
6 |
2,375 |
| Deletions |
– |
– |
– |
(1) |
(6) |
(396) |
(8) |
(12) |
(423) |
| Translation difference |
– |
– |
– |
– |
2 |
16 |
7 |
1 |
26 |
| Gross carrying value as of March 31, 2016 |
972 |
650 |
6,325 |
1,759 |
839 |
4,072 |
1,444 |
29 |
16,090 |
| Accumulated depreciation as of April 1, 2015 |
– |
(16) |
(1,982) |
(881) |
(412) |
(2,287) |
(826) |
(19) |
(6,423) |
| Acquisitions through business combinations |
– |
– |
– |
– |
(1) |
(1) |
– |
– |
(2) |
| Depreciation |
– |
(6) |
(219) |
(220) |
(100) |
(553) |
(161) |
(5) |
(1,264) |
| Accumulated depreciation on deletions |
– |
– |
– |
1 |
5 |
237 |
4 |
7 |
254 |
| Translation difference |
– |
– |
– |
– |
(1) |
(14) |
(3) |
– |
(18) |
| Accumulated depreciation as of March 31, 2016 |
– |
(22) |
(2,201) |
(1,100) |
(509) |
(2,618) |
(986) |
(17) |
(7,453) |
| Carrying value as of March 31, 2016 |
972 |
628 |
4,124 |
659 |
330 |
1,454 |
458 |
12 |
8,637 |
| Carrying value as of April 1, 2015 |
931 |
617 |
3,899 |
546 |
264 |
1,060 |
353 |
15 |
7,685 |
| Notes |
(1) |
Buildings include 250/- being the value of 5 shares of 50/- each in Mittal Towers
Premises Co-operative Society Limited. |
Gross carrying value of lease hold land represents
amounts paid under certain lease-cum-sale agreements to acquire land including agreements where the Company has an option to purchase
or renew the properties on expiry of the lease period.
The aggregate depreciation has been included
under depreciation and amortisation expense in the consolidated statement of profit and loss.
2.5 GOODWILL AND OTHER INTANGIBLE ASSETS
Following is a summary of changes in the carrying
amount of goodwill:
In crore
| |
As of |
| |
December 31, 2016 |
March 31, 2016 |
| Carrying value at the beginning |
3,764 |
3,091 |
| Goodwill on Kallidus d.b.a Skava acquisition (Refer note 2.3) |
– |
452 |
| Goodwill on Noah acquisition (Refer note 2.3) |
– |
30 |
| Translation differences |
(4) |
191 |
| Carrying value at the end |
3,760 |
3,764 |
For the purpose of impairment testing, goodwill
acquired in a business combination is allocated to the cash generate units (CGU) or groups of CGU’s, which benefit from the
synergies of the acquisition. The chief operating decision maker reviews the goodwill for any impairment at the operating segment
level, which is represented through groups of CGU’s.
The following table gives the break up of allocation
of goodwill to operating segments as at April 1, 2015
In crore
| Segment |
As at |
| |
April 1, 2015 |
| Financial services |
663 |
| Insurance |
367 |
| Manufacturing |
656 |
| Energy, Communication and Services |
318 |
| Resources and utilities |
141 |
| Retail, Consumer packaged goods and Logistics |
473 |
| Life Sciences and Healthcare |
193 |
| Growth Markets |
280 |
| Total |
3,091 |
During the year ended March 31, 2016, the Company
reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase management
oversight. Consequent to these internal reorganizations there were changes effected in the segments based on the “management
approach” as defined in Ind AS 108, Operating Segments. Accordingly the goodwill has been allocated to the new operating
segments as at March 31, 2016.
(In crore)
| Segment |
As of |
| |
March 31, 2016 |
| Financial services |
851 |
| Manufacturing |
423 |
| Retail, Consumer packaged goods and Logistics |
573 |
| Life Sciences, Healthcare and Insurance |
656 |
| Energy & Utilities, Communication and Services |
789 |
| |
3,292 |
| Operating segments without significant goodwill |
472 |
| Total |
3,764 |
The entire goodwill relating to Infosys BPO’s
acquisition of McCamish has been allocated to the groups of CGU’s which are represented by the Life Sciences, Healthcare
and Insurance segment.
The goodwill relating to Infosys Lodestone,
Portland, Panaya and Kallidus d.b.a Skava has been allocated to the groups of CGU’s which are represented by the entity’s
operating segment.
The entire goodwill relating to Noah acquisition
has been allocated to the group of CGU's which is represented by the Energy & Utilities, Communication and Services segment.
The recoverable amount of a CGU is the higher
of its fair value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization.
The value-in-use is determined based on specific calculations. These calculations use pre-tax cash flow projections for a CGU /
groups of CGU's over a period of five years. An average of the range of each assumption used is mentioned below. As of March 31,
2016 and April 1, 2015 the estimated recoverable amount of the CGU exceeded its carrying amount. The recoverable amount was computed
based on the fair value less cost to sell being higher than value-in-use. The carrying amount of the CGU was computed by allocating
the net assets to operating segments for the purpose of impairment testing. The key assumptions used for the calculations are as
follows:
(in %)
| |
As of |
| |
March 31, 2016 |
April 1, 2015 |
| Long term growth rate |
8-10 |
8-10 |
| Operating margins |
17-20 |
17-20 |
| Discount rate |
14.2 |
13.9 |
The above discount rate is based on the Weighted
Average Cost of Capital (WACC) of the Company. These estimates are likely to differ from future actual results of operations and
cash flows.
Following are the changes in the carrying value
of acquired intangible assets for the three months ended December 31, 2016:
In crore
| |
Customer related |
Software related |
Sub-contracting rights related |
Intellectual property rights related |
Land use- rights related |
Brand or Trademark Related |
Others |
Total |
| Gross carrying value as of October 1, 2016 |
775 |
416 |
21 |
1 |
71 |
93 |
63 |
1,440 |
| Additions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
2 |
8 |
– |
– |
(2) |
1 |
1 |
10 |
| Gross carrying value as of December 31, 2016 |
777 |
424 |
21 |
1 |
69 |
94 |
64 |
1,450 |
| Accumulated amortization as of October 1, 2016 |
(348) |
(83) |
(21) |
(1) |
(7) |
(45) |
(31) |
(536) |
| Amortization expense |
(23) |
(21) |
– |
– |
– |
(3) |
(4) |
(51) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
– |
(2) |
– |
– |
– |
– |
– |
(2) |
| Accumulated amortization as of December 31, 2016 |
(371) |
(106) |
(21) |
(1) |
(7) |
(48) |
(35) |
(589) |
| Carrying value as of October 1, 2016 |
427 |
333 |
– |
– |
64 |
48 |
32 |
904 |
| Carrying value as of December 31, 2016 |
406 |
318 |
– |
– |
62 |
46 |
29 |
861 |
Following are the changes in the carrying value
of acquired intangible assets for the three months ended December 31, 2015:
In crore
| |
Customer related |
Software related |
Sub-contracting rights related |
Intellectual property rights related |
Land use- rights related |
Brand or Trademark Related |
Others |
Total |
| Gross carrying value as of October 1, 2015 |
644 |
408 |
21 |
1 |
73 |
65 |
36 |
1,248 |
| Addition through business combination (Refer note 2.3) |
119 |
– |
– |
– |
– |
27 |
27 |
173 |
| Additions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
1 |
3 |
– |
– |
(1) |
– |
– |
3 |
| Gross carrying value as of December 31, 2015 |
764 |
411 |
21 |
1 |
72 |
92 |
63 |
1,424 |
| Accumulated amortization as of October 1, 2015 |
(217) |
(40) |
(21) |
(1) |
(6) |
(31) |
(15) |
(331) |
| Amortization expense |
(35) |
(11) |
– |
– |
– |
(4) |
(3) |
(53) |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
(1) |
1 |
– |
– |
– |
1 |
(1) |
– |
| Accumulated amortization as of December 31, 2015 |
(253) |
(50) |
(21) |
(1) |
(6) |
(34) |
(19) |
(384) |
| Carrying value as of October 1, 2015 |
427 |
368 |
– |
– |
67 |
34 |
21 |
917 |
| Carrying value as of December 31, 2015 |
511 |
361 |
– |
– |
66 |
58 |
44 |
1,040 |
Following are the changes in the carrying value
of acquired intangible assets for the nine months ended December 31, 2016:
In crore
| |
Customer related |
Software related |
Sub-contracting rights related |
Intellectual property rights related |
Land use- rights related |
Brand or Trademark Related |
Others |
Total |
| Gross carrying value as of April 1, 2016 |
775 |
414 |
21 |
1 |
72 |
93 |
63 |
1,439 |
| Additions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
2 |
10 |
– |
– |
(3) |
1 |
1 |
11 |
| Gross carrying value as of December 31, 2016 |
777 |
424 |
21 |
1 |
69 |
94 |
64 |
1,450 |
| Accumulated amortization as of April 1, 2016 |
(303) |
(62) |
(21) |
(1) |
(6) |
(38) |
(23) |
(454) |
| Amortization expense |
(69) |
(43) |
– |
– |
(1) |
(10) |
(12) |
(135) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
1 |
(1) |
– |
– |
– |
– |
– |
– |
| Accumulated amortization as of December 31, 2016 |
(371) |
(106) |
(21) |
(1) |
(7) |
(48) |
(35) |
(589) |
| Carrying value as of April 1, 2016 |
472 |
352 |
– |
– |
66 |
55 |
40 |
985 |
| Carrying value as of December 31, 2016 |
406 |
318 |
– |
– |
62 |
46 |
29 |
861 |
| Estimated Useful Life (in years) |
3-10 |
5-8 |
– |
– |
50 |
3-10 |
3-5 |
|
| Estimated Remaining Useful Life (in years) |
1-6 |
3-6 |
– |
– |
44 |
1-8 |
1-4 |
|
During the quarter ended December 31, 2016,
the management based on an internal evaluation reassessed the remaining useful life of certain technology assets acquired as a
part of business combinations. Accordingly, the remaining useful life of the said asset which was 8 years has been revised to 3
years. Amortisation expense for the three months ended December 31, 2016 is higher by 10 crore and for the year ended March 31,
2017 will be higher by 19 crore due to the revision.
Following are the changes in the carrying value
of acquired intangible assets for the nine months ended December 31, 2015:
In crore
| |
Customer related |
Software related |
Sub-contracting rights related |
Intellectual property rights related |
Land use- rights related |
Brand or Trademark Related |
Others |
Total |
| Gross carrying value as of April 1, 2015 |
448 |
261 |
21 |
11 |
71 |
49 |
34 |
895 |
| Additions through business combinations (Refer Note 2.3) |
294 |
130 |
– |
– |
– |
41 |
27 |
492 |
| Deletions during the period |
– |
– |
– |
(10) |
– |
– |
– |
(10) |
| Translation difference |
22 |
20 |
– |
– |
1 |
2 |
2 |
47 |
| Gross carrying value as of December 31, 2015 |
764 |
411 |
21 |
1 |
72 |
92 |
63 |
1,424 |
| Accumulated amortization as of April 1, 2015 |
(162) |
(21) |
(21) |
(11) |
(5) |
(28) |
(9) |
(257) |
| Amortization expense |
(85) |
(29) |
– |
– |
(1) |
(6) |
(9) |
(130) |
| Deletions during the period |
– |
– |
– |
10 |
– |
– |
– |
10 |
| Translation differences |
(6) |
– |
– |
– |
– |
– |
(1) |
(7) |
| Accumulated amortization as of December 31, 2015 |
(253) |
(50) |
(21) |
(1) |
(6) |
(34) |
(19) |
(384) |
| Carrying value as of April 1, 2015 |
286 |
240 |
– |
– |
66 |
21 |
25 |
638 |
| Carrying value as of December 31, 2015 |
511 |
361 |
– |
– |
66 |
58 |
44 |
1,040 |
Following are the changes in the carrying value
of acquired intangible assets for the year ended March 31, 2016:
In crore
| |
Customer related |
Software related |
Sub-contracting rights related |
Intellectual property rights related |
Land use- rights related |
Brand or Trademark Related |
Others |
Total |
| Gross carrying value as of April 1, 2015 |
448 |
261 |
21 |
11 |
71 |
49 |
34 |
895 |
| Additions through business combinations (Refer Note 2.3) |
294 |
130 |
– |
– |
– |
41 |
27 |
492 |
| Additions |
– |
2 |
– |
– |
– |
– |
– |
2 |
| Deletions |
– |
– |
– |
(10) |
– |
– |
– |
(10) |
| Translation difference |
33 |
21 |
– |
– |
1 |
3 |
2 |
60 |
| Gross carrying value as of March 31, 2016 |
775 |
414 |
21 |
1 |
72 |
93 |
63 |
1,439 |
| Accumulated amortization as of April 1, 2015 |
(162) |
(21) |
(21) |
(11) |
(5) |
(28) |
(9) |
(257) |
| Amortization expense |
(132) |
(40) |
– |
– |
(1) |
(9) |
(13) |
(195) |
| Deletions during the period |
– |
– |
– |
10 |
– |
– |
– |
10 |
| Translation differences |
(9) |
(1) |
– |
– |
– |
(1) |
(1) |
(12) |
| Accumulated amortization as of March 31, 2016 |
(303) |
(62) |
(21) |
(1) |
(6) |
(38) |
(23) |
(454) |
| Carrying value as of April 1, 2015 |
286 |
240 |
– |
– |
66 |
21 |
25 |
638 |
| Carrying value as of March 31, 2016 |
472 |
352 |
– |
– |
66 |
55 |
40 |
985 |
| Estimated Useful Life (in years) |
3-10 |
8-10 |
– |
– |
50 |
3-10 |
3-5 |
|
| Estimated Remaining Useful Life (in years) |
1-7 |
7-9 |
– |
– |
45 |
2-9 |
2-5 |
|
The amortization expense has been included under
depreciation and amortisation expense in the consolidated statement of profit and loss.
Research and development expense recognized
in net profit in the consolidated statement of profit and loss for the three months and nine months ended December 31, 2016 and
December 31, 2015 is 215 crore and 177 crore and 597 crore and 510 crore, respectively .
2.6 INVESTMENTS
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non-current |
|
|
|
| Unquoted |
|
|
|
| Investments carried at fair value through other comprehensive income (refer note 2.6.1) |
|
|
|
| Preference securities |
146 |
92 |
– |
| Equity instruments |
1 |
1 |
1 |
| Others |
31 |
22 |
– |
| |
178 |
115 |
1 |
| Investments carried at fair value through profit and loss (refer note 2.6.1) |
|
|
|
| Convertible promissory note |
10 |
– |
– |
| |
10 |
– |
– |
| Quoted |
|
|
|
| Investment carried at amortized cost (refer note 2.6.2) |
|
|
|
| Tax free bonds |
1,599 |
1,599 |
1,300 |
| Government Bonds |
– |
– |
4 |
| |
1,599 |
1,599 |
1,304 |
| Investments carried at fair value through other comprehensive income (refer note 2.6.4) |
|
|
|
| Non convertible debentures |
3,618 |
– |
– |
| |
3,618 |
– |
– |
| Total non-current investments |
5,405 |
1,714 |
1,305 |
| Current |
|
|
|
| Unquoted |
|
|
|
| Investments carried at fair value through profit or loss (refer note 2.6.3) |
|
|
|
| Liquid mutual fund units |
4,360 |
68 |
842 |
| |
4,360 |
68 |
842 |
| Quoted |
|
|
|
| Investment carried at amortized cost (refer note 2.6.2) |
|
|
|
| Government Bonds |
7 |
7 |
– |
| |
7 |
7 |
– |
| Investments carried at fair value through profit or loss |
|
|
|
| Fixed maturity plans |
– |
– |
32 |
| |
– |
– |
32 |
| Total current investments |
4,367 |
75 |
874 |
| Total investments |
9,772 |
1,789 |
2,179 |
| Aggregate amount of quoted investments |
5,224 |
1,606 |
1,336 |
| Market value of quoted investments (including interest accrued) |
5,464 |
1,703 |
1,376 |
| Aggregate amount of unquoted investments (including investment in associates) |
4,648 |
286 |
936 |
| Aggregate amount of impairment made for non-current unquoted investments |
6 |
6 |
6 |
| Investment carried at amortized cost |
1,606 |
1,606 |
1,304 |
| Investments carried at fair value through other comprehensive income |
3,796 |
115 |
1 |
| Investments carried at fair value through profit or loss |
4,370 |
68 |
874 |
2.6.1 Details of Investments
The details of investments in preference, equity
and other instruments at December 31, 2016 and March 31, 2016 are as follows:
in crore, unless otherwise stated
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
| Preference securities |
|
|
| Airviz Inc. |
13 |
13 |
| 2,82,279 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each |
|
|
| ANSR Consulting |
9 |
9 |
| 52,631 (52,631) Series A Preferred Stock, fully paid up, par value USD 0.001 each |
|
|
| Whoop Inc |
20 |
20 |
| 16,48,352 (16,48,352) Series B Preferred Stock, fully paid up, par value USD 0.0001 each |
|
|
| CloudEndure Ltd. |
27 |
13 |
| 12,79,645 (12,79,645) Preferred Series B Shares, fully paid up, par value ILS 0.01 each |
|
|
| Nivetti Systems Private Limited |
10 |
10 |
| 2,28,501 (2,28,501) Preferred Stock, fully paid up, par value 1 each |
|
|
| Waterline Data Science, Inc |
27 |
27 |
| 39,33,910 (39,33,910) Preferred Series B Shares, fully paid up, par value USD 0.00001 each |
|
|
| Trifacta Inc. |
26 |
– |
| 11,80,358 (Nil) Preferred Stock |
|
|
| Cloudyn Software Ltd |
14 |
– |
| 27,022 (Nil) Preferred Series B-3 shares, fully paid up, par value ILS 0.01 each |
|
|
| Equity Instrument |
|
|
| OnMobile Systems Inc., USA |
– |
– |
| 21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid up, par value USD 0.001 each |
|
|
| Merasport Technologies Private Limited |
– |
– |
| 2,420 (2,420) equity shares at 8,052/- each, fully paid up, par value 10/- each |
|
|
| Global Innovation and Technology Alliance |
1 |
1 |
| 15,000 (15,000) equity shares at 1,000/- each, fully paid up, par value 1,000/- each |
|
|
| Others |
|
|
| Vertex Ventures US Fund L.L.P |
31 |
22 |
| Convertible promissory note |
|
|
| Tidalscale |
10 |
– |
| |
188 |
115 |
2.6.2 Details of Investments in tax
free bonds and government bonds
The balances held in tax free bonds as at December
31, 2016 and March 31, 2016 is as follows:
in crore, except as otherwise stated
| Particulars |
Face Value |
As at December 31, 2016 |
As at March 31, 2016 |
| |
|
Units |
Amount |
Units |
Amount |
| 7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023 |
1,000/– |
20,00,000 |
201 |
2,000,000 |
201 |
| 7.28% Indian Railway Finance Corporation Limited 21DEC30 |
1,000/– |
4,22,800 |
42 |
422,800 |
42 |
| 7.28% National Highways Authority of India Bonds 18SEP30 |
10,00,000/– |
2,000 |
200 |
2,000 |
200 |
| 7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028 |
1,000/– |
21,00,000 |
211 |
2,100,000 |
211 |
| 7.35% National Highways Authority of India Bonds 11JAN31 |
1,000/– |
5,71,396 |
57 |
571,396 |
57 |
| 7.93% Rural Electrification Corporation Limited Bonds 27MAR2022 |
1,000/– |
2,00,000 |
21 |
200,000 |
21 |
| 8.00% Indian Railway Finance Corporation Limited Bonds 2022 |
1,000/– |
1,50,000 |
15 |
150,000 |
15 |
| 8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027 |
1,000/– |
5,00,000 |
53 |
5,00,000 |
53 |
| 8.20% Power Finance Corporation Limited Bonds 2022 |
1,000/– |
5,00,000 |
51 |
500,000 |
51 |
| 8.26% India Infrastructure Finance Company Limited Bonds 23AUG28 |
10,00,000/– |
1,000 |
100 |
1,000 |
100 |
| 8.30% National Highways Authority of India Bonds 25JAN2027 |
1,000/– |
5,00,000 |
53 |
500,000 |
53 |
| 8.35% National Highways Authority of India Bonds 22NOV2023 |
10,00,000/– |
1,500 |
150 |
1,500 |
150 |
| 8.46% India Infrastructure Finance Company Limited Bonds 30AUG2028 |
10,00,000/– |
2,000 |
200 |
2,000 |
200 |
| 8.46% Power Finance Corporation Limited Bonds 30AUG2028 |
10,00,000/– |
1,500 |
150 |
1,500 |
150 |
| 8.48% India Infrastructure Finance Company Limited Bonds 05SEP2028 |
10,00,000/– |
450 |
45 |
450 |
45 |
| 8.54% Power Finance Corporation Limited Bonds 16NOV2028 |
1,000/– |
5,00,000 |
50 |
5,00,000 |
50 |
| |
|
74,52,646 |
1,599 |
74,52,646 |
1,599 |
The balances held in government bonds as at December
31, 2016 and March 31, 2016 is as follows:
in crore, except as otherwise stated
| Particulars |
Face Value PHP |
As at December 31, 2016 |
As at March 31, 2016 |
| |
|
Units |
Amount |
Units |
Amount |
| Fixed Rate Treasury Notes 1.62 PCT MAT DATE 7 SEPT 2016 |
100 |
– |
– |
50,000 |
1 |
| Fixed Rate Treasury Notes 2.20 PCT MAT DATE 25 APR 2016 |
100 |
– |
– |
60,000 |
1 |
| Fixed Rate Treasury Notes 1.00 PCT MAT DATE 25 APR 2016 |
100 |
– |
– |
200,000 |
3 |
| Treasury Notes PHY6972FWG18 MAT Date 22 Feb 2017 |
100 |
160,000 |
2 |
160,000 |
2 |
| Treasury Notes PHY6972FWQ99 MAT Date 07 June 2017 |
100 |
340,000 |
5 |
– |
– |
| |
|
500,000 |
7 |
470,000 |
7 |
2.6.3 Details of Investments in liquid
mutual fund units
The balances held in liquid mutual fund units
as at December 31, 2016 and March 31, 2016 is as follows
in crore, except as otherwise stated
| Particulars |
As at December 31, 2016 |
As at March 31, 2016 |
| |
Units |
Amount |
Units |
Amount |
| Baroda Pioneer Liquid Fund-Plan B Growth |
1,632,110 |
300 |
– |
– |
| Birla Sun Life Cash Plus Growth Direct Plan |
15,193,020 |
390 |
– |
– |
| Birla Sun Life Cash Manager - Growth |
373,070 |
15 |
– |
– |
| Birla Sun Life Cash Manager- Regular Plan |
– |
– |
389,089 |
14 |
| HDFC Liquid Fund - Direct Plan - Growth Option |
2,219,674 |
701 |
– |
– |
| ICICI Prudential Liquid - Direct Plan - Daily Dividend |
– |
– |
1,607,064 |
16 |
| ICICI Prudential Liquid Plan - Direct - Growth |
31,729,663 |
751 |
– |
– |
| IDFC Cash Fund - Growth - (Direct Plan) |
1,619,155 |
315 |
– |
– |
| Invesco India Liquid Fund Direct Plan Growth |
454,698 |
100 |
– |
– |
| Reliance Liquid Fund - Cash Plan |
– |
– |
2 |
– |
| Reliance Liquid Fund - Cash Plan - Direct Growth Plan |
28,305 |
7 |
– |
– |
| Reliance Liquid Fund - Treasury Plan - Direct Growth Plan |
2,019,185 |
788 |
207,283 |
31 |
| Reliance Money Manage Fund |
– |
– |
32,925 |
7 |
| SBI Premier Liquid Fund Direct Plan Growth |
1,269,250 |
319 |
– |
– |
| SBI Ultra Short Term Debt Fund Direct Growth Plan |
48,384 |
10 |
– |
– |
| Tata Liquid Fund Direct Plan Growth |
847,895 |
250 |
– |
– |
| UTI Liquid Cash Plan Institutional Direct Plan Growth |
1,579,208 |
414 |
– |
– |
| |
59,013,617 |
4,360 |
2,236,363 |
68 |
2.6.4 Details of Investments in Non
convertible debentures
The balances held in non convertible debenture
units as at December 31, 2016 is as follows
in crore, except as otherwise stated
| Particulars |
As at December 31, 2016 |
| |
Face Value |
Units |
Amount |
| 7.48 Housing Development Finance Corporation Ltd 18NOV2019 |
10,000,000/– |
50 |
51 |
| 7.59 LIC Housing Finance Ltd 14OCT2021 |
1,000,000/– |
3,000 |
304 |
| 7.75 LIC Housing Finance Ltd 27AUG2021 |
1,000,000/– |
1,250 |
128 |
| 7.79 LIC Housing Finance Ltd 19JUN2020 |
1,000,000/– |
500 |
51 |
| 7.80 Housing Development Finance Corporation Ltd 11NOV2019 |
10,000,000/– |
150 |
152 |
| 7.81 LIC Housing Finance Ltd 27APR2020 |
1,000,000/– |
2,000 |
205 |
| 7.95 Housing Development Finance Corporation Ltd 23SEP2019 |
10,000,000/– |
50 |
52 |
| 8.26 Housing Development Finance Corporation Ltd 12AUG2019 |
10,000,000/– |
100 |
105 |
| 8.34 Housing Development Finance Corporation Ltd 06MAR2019 |
10,000,000/– |
200 |
214 |
| 8.37 LIC Housing Finance Ltd 10MAY2021 |
1,000,000/– |
500 |
54 |
| 8.37 LIC Housing Finance Ltd 03OCT2019 |
1,000,000/– |
2,000 |
215 |
| 8.46 Housing Development Finance Corporation Ltd 11MAR2019 |
10,000,000/– |
50 |
53 |
| 8.47 LIC Housing Finance Ltd 21JAN2020 |
1,000,000/– |
500 |
55 |
| 8.49 Housing Development Finance Corporation Ltd 27APR2020 |
5,000/– |
900 |
49 |
| 8.50 Housing Development Finance Corporation Ltd 31AUG2020 |
10,000,000/– |
100 |
104 |
| 8.54 IDFC Bank Limited 30MAY2018 |
1,000,000/– |
1,500 |
177 |
| 8.59 Housing Development Finance Corporation Ltd 14JUN2019 |
10,000,000/– |
50 |
55 |
| 8.60 LIC Housing Finance Ltd 22JUL2020 |
1,000,000/– |
1,000 |
106 |
| 8.60 LIC Housing Finance Ltd 29JUL2020 |
1,000,000/– |
1,750 |
186 |
| 8.61 LIC Housing Finance Ltd 11DEC2019 |
1,000,000/– |
1,000 |
103 |
| 8.66 IDFC Bank Limited 25JUN2018 |
1,000,000/– |
1,520 |
179 |
| 8.72 Housing Development Finance Corporation Ltd 15APR2019 |
10,000,000/– |
75 |
82 |
| 8.75 Housing Development Finance Corporation Ltd 13JAN2020 |
500,000/– |
5,000 |
278 |
| 8.75 LIC Housing Finance Ltd 14JAN2020 |
1,000,000/– |
1,070 |
119 |
| 8.75 LIC Housing Finance Ltd 21DEC2020 |
1,000,000/– |
1,000 |
111 |
| 8.97 LIC Housing Finance Ltd 29OCT2019 |
1,000,000/– |
500 |
52 |
| 9.45 Housing Development Finance Corporation Ltd 21AUG2019 |
1,000,000/– |
3,000 |
322 |
| 9.65 Housing Development Finance Corporation Ltd 19JAN2019 |
1,000,000/– |
500 |
56 |
| |
|
29,315 |
3,618 |
2.7 LOANS
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non Current |
|
|
|
| Unsecured, considered good |
|
|
|
| Other loans |
|
|
|
| Loans to employees |
29 |
25 |
31 |
| |
29 |
25 |
31 |
| Unsecured, considered doubtful |
|
|
|
| Loans to employees |
23 |
19 |
12 |
| |
52 |
44 |
43 |
| Less: Allowance for doubtful loans to employees |
23 |
19 |
12 |
| |
29 |
25 |
31 |
| Current |
|
|
|
| Unsecured, considered good |
|
|
|
| Other loans |
|
|
|
| Loans to employees |
243 |
303 |
222 |
| |
243 |
303 |
222 |
| Total Loans |
272 |
328 |
253 |
2.8 OTHER FINANCIAL ASSETS
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non Current |
|
|
|
| Security deposits (1) |
82 |
78 |
68 |
| Rental deposits (1) |
175 |
146 |
47 |
| Restricted deposits(1) |
55 |
62 |
58 |
| Others (1) |
– |
– |
– |
| |
312 |
286 |
173 |
| Current |
|
|
|
| Security deposits (1) |
10 |
7 |
4 |
| Rental deposits (1) |
17 |
13 |
24 |
| Restricted deposits (1) |
1,392 |
1,238 |
1,100 |
| Unbilled revenues (1) |
3,413 |
3,029 |
2,845 |
| Interest accrued but not due (1) |
1,355 |
762 |
444 |
| Foreign currency forward and options contracts (2) (3) |
103 |
116 |
101 |
| Others (1) |
46 |
25 |
9 |
| |
6,336 |
5,190 |
4,527 |
| Total Financial Assets |
6,648 |
5,476 |
4,700 |
| (1) Financial assets carried at amortized cost |
6,545 |
5,360 |
4,599 |
| (2) Financial assets carried at fair value through other comprehensive
income |
38 |
– |
– |
| (3) Financial assets carried at fair value through
profit or loss |
65 |
116 |
101 |
Restricted deposits represents deposits with
financial institutions to settle employee-related obligations as and when they arise during the normal course of business.
Other assets primarily represent travel advances
and other recoverables.
2.9 TRADE RECEIVABLES
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Current |
|
|
|
| Unsecured |
|
|
|
| Considered good |
12,942 |
11,330 |
9,713 |
| Considered doubtful |
265 |
289 |
366 |
| |
13,207 |
11,619 |
10,079 |
| Less: Allowances for credit loss |
265 |
289 |
366 |
| |
12,942 |
11,330 |
9,713 |
2.10 CASH AND CASH EQUIVALENTS
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Balances with banks |
|
|
|
| In current and deposit accounts |
20,904 |
27,420 |
26,195 |
| Cash on hand |
– |
– |
– |
| Others |
|
|
|
| Deposits with financial institutions |
5,209 |
5,277 |
4,172 |
| |
26,113 |
32,697 |
30,367 |
| Balances with banks in unpaid dividend accounts |
17 |
5 |
3 |
| Deposit with more than 12 months maturity |
1,474 |
404 |
311 |
| Balances with banks held as margin money deposits against guarantees |
355 |
342 |
185 |
Cash and cash equivalents as of December 31,
2016, March 31, 2016 and April 1, 2015 include restricted cash and bank balances of 517 crore, 492
crore and 364 crore, respectively. The restrictions are primarily on account of cash and bank balances held by irrevocable
trusts controlled by the Company, bank balances held as margin money deposits against guarantees and balances held in unpaid dividend
accounts.
The deposits maintained by the Group with banks
and financial institutions comprise of time deposits, which can be withdrawn by the Group at any point without prior notice or
penalty on the principal.
The details of balances as on Balance Sheet
dates with banks are as follows:
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
| Current accounts |
|
|
| ANZ Bank, Taiwan |
19 |
13 |
| Axis Bank, India |
1 |
1 |
| Banamex Bank, Mexico |
4 |
5 |
| Banamex Bank, Mexico (U.S. Dollar account) |
8 |
3 |
| Bank of America, Mexico |
38 |
21 |
| Bank of America, USA |
904 |
681 |
| Bank Zachodni WBK S.A, Poland |
19 |
3 |
| Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan |
– |
1 |
| Barclays Bank, UK |
5 |
19 |
| Bank Leumi, Israel (US Dollar account) |
1 |
17 |
| Bank Leumi, Israel |
11 |
10 |
| BNP Paribas Bank, Norway |
2 |
– |
| China Merchants Bank, China |
1 |
8 |
| China Merchants Bank, China (U.S. Dollar account) |
11 |
– |
| Citibank N.A, China |
42 |
65 |
| Citibank N.A., China (U.S. Dollar account) |
39 |
72 |
| Citibank N.A., Costa Rica |
3 |
2 |
| Citibank N.A., Australia |
63 |
72 |
| Citibank N.A., Austria |
1 |
– |
| Citibank N.A., Brazil |
18 |
5 |
| Citibank N.A., Dubai |
3 |
1 |
| Citibank N.A., India |
3 |
1 |
| Citibank N.A., Japan |
31 |
15 |
| Citibank N.A., New Zealand |
7 |
6 |
| Citibank N.A., Portugal |
1 |
2 |
| Citibank N.A., Singapore |
2 |
3 |
| Citibank N.A., South Africa |
10 |
5 |
| Citibank N.A., South Africa (Euro account) |
1 |
1 |
| Citibank N.A., Philippines, (U.S. Dollar account) |
1 |
1 |
| Citibank N.A., USA |
99 |
60 |
| Citibank N.A., EEFC (U.S. Dollar account) |
3 |
– |
| Commerzbank, Germany |
57 |
19 |
| Crédit Industriel et Commercial Bank, France |
– |
4 |
| Danske Bank, Sweden |
1 |
– |
| Deutsche Bank, India |
3 |
8 |
| Deutsche Bank, Philippines |
8 |
13 |
| Deutsche Bank, Philippines (U.S. Dollar account) |
– |
1 |
| Deutsche Bank, Poland |
11 |
5 |
| Deutsche Bank, Poland (Euro account) |
2 |
– |
| Deutsche Bank, EEFC (Australian Dollar account) |
1 |
2 |
| Deutsche Bank, EEFC (Euro account) |
32 |
32 |
| Deutsche Bank, EEFC (Swiss Franc account) |
2 |
5 |
| Deutsche Bank, EEFC (U.S. Dollar account) |
85 |
96 |
| Deutsche Bank, EEFC (United Kingdom Pound Sterling account) |
7 |
9 |
| Deutsche Bank, Belgium |
12 |
59 |
| Deutsche Bank, Malaysia |
11 |
9 |
| Deutsche Bank, Czech Republic |
19 |
14 |
| Deutsche Bank, Czech Republic (Euro account) |
7 |
1 |
| Deutsche Bank, Czech Republic (U.S. Dollar account) |
33 |
28 |
| Deutsche Bank, France |
5 |
10 |
| Deutsche Bank, Germany |
12 |
17 |
| Deutsche Bank, Netherlands |
10 |
6 |
| Deutsche Bank, Russia |
4 |
2 |
| Deutsche Bank, Russia (U.S. Dollar account) |
3 |
1 |
| Deutsche Bank, Singapore |
8 |
4 |
| Deutsche Bank, Spain |
– |
1 |
| Deutsche Bank, Switzerland |
10 |
1 |
| Deutsche Bank, United Kingdom |
44 |
170 |
| Deutsche Bank, USA |
5 |
– |
| HSBC Bank, Brazil |
– |
5 |
| HSBC Bank, Hong Kong |
1 |
1 |
| ICICI Bank, India |
81 |
72 |
| ICICI Bank, EEFC (Euro account) |
6 |
– |
| ICICI Bank, EEFC (U.S. Dollar account) |
27 |
10 |
| ICICI Bank, EEFC (United Kingdom Pound Sterling account) |
3 |
– |
| ING Bank, Belgium |
2 |
3 |
| Nordbanken, Sweden |
35 |
15 |
| Punjab National Bank, India |
4 |
4 |
| Raiffeisen Bank, Czech Republic |
4 |
5 |
| Raiffeisen Bank, Romania |
5 |
4 |
| Royal Bank of Canada, Canada |
47 |
78 |
| Santander Bank, Argentina |
4 |
– |
| State Bank of India, India |
10 |
8 |
| Silicon Valley Bank, USA |
4 |
5 |
| Silicon Valley Bank, (Euro account) |
21 |
65 |
| Silicon Valley Bank, (United Kingdom Pound Sterling account) |
– |
19 |
| Union Bank of Switzerland AG |
2 |
15 |
| Union Bank of Switzerland AG, (Euro account) |
2 |
12 |
| Union Bank of Switzerland AG, (Australian Dollar account) |
– |
2 |
| Union Bank of Switzerland AG, (U.S. Dollar account) |
– |
28 |
| Union Bank of Switzerland AG, (United Kingdom Pound Sterling account) |
– |
4 |
| Wells Fargo Bank N.A., USA |
35 |
23 |
| Westpac, Australia |
2 |
6 |
| |
2,038 |
1,994 |
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
| Deposit accounts |
|
|
| Andhra Bank |
60 |
948 |
| Axis Bank |
1,624 |
1,340 |
| Bank BGZ BNP Paribas S.A |
180 |
– |
| Bank of India |
– |
77 |
| Canara Bank |
2,114 |
2,115 |
| Central Bank of India |
1,518 |
1,538 |
| Citibank |
147 |
125 |
| Corporation Bank |
100 |
1,285 |
| Deutsche Bank, Poland |
55 |
237 |
| HDFC Bank |
492 |
2,650 |
| ICICI Bank |
2,594 |
4,049 |
| IDBI Bank |
1,900 |
1,900 |
| Indian Overseas Bank |
1,250 |
1,250 |
| Indusind Bank |
191 |
250 |
| Jammu & Kashmir Bank |
25 |
25 |
| Kotak Mahindra Bank Limited |
373 |
537 |
| National Australia Bank Limited |
– |
1 |
| Oriental Bank of Commerce |
1,867 |
1,967 |
| Punjab National Bank |
– |
18 |
| South Indian Bank |
100 |
23 |
| State Bank of India |
2,311 |
2,310 |
| Syndicate Bank |
799 |
1,266 |
| Union Bank of India |
– |
140 |
| Vijaya Bank |
304 |
304 |
| Yes Bank |
490 |
724 |
| |
18,494 |
25,079 |
| Unpaid dividend accounts |
|
|
| Axis Bank - Unpaid dividend account |
2 |
2 |
| HDFC Bank - Unpaid dividend account |
2 |
1 |
| ICICI Bank - Unpaid dividend account |
13 |
2 |
| |
17 |
5 |
| Margin money deposits against guarantees |
|
|
| Canara Bank |
181 |
132 |
| Citibank |
2 |
3 |
| ICICI Bank |
133 |
150 |
| State Bank of India |
39 |
57 |
| |
355 |
342 |
| Deposits with financial institutions |
|
|
| HDFC Limited |
5,184 |
5,277 |
| Bajaj Finance Limited |
25 |
– |
| |
5,209 |
5,277 |
| Total cash and cash equivalents |
26,113 |
32,697 |
2.11 OTHER ASSETS
in crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non Current |
|
|
|
| Capital advances |
505 |
933 |
664 |
| Advances other than capital advances |
|
|
|
| Prepaid gratuity (refer note 2.22.1) |
19 |
4 |
27 |
| Deferred Contract Cost |
299 |
333 |
– |
| Prepaid expenses |
96 |
87 |
7 |
| |
919 |
1,357 |
698 |
| Current |
|
|
|
| Advances other than capital advances |
|
|
|
| Payment to vendors for supply of goods |
97 |
110 |
79 |
| Others |
|
|
|
| Withholding taxes and others |
1,799 |
1,799 |
1,364 |
| Prepaid expenses |
427 |
201 |
98 |
| Deferred Contract Cost |
71 |
48 |
– |
| |
2,394 |
2,158 |
1,541 |
| Total Other Assets |
3,313 |
3,515 |
2,239 |
Deferred contract costs are upfront costs incurred
for the contract and are amortized over the term of the contract. Withholding taxes and others primarily consist of input tax credits.
2.12 FINANCIAL INSTRUMENTS
Financial instruments by category
The carrying value and fair value of financial
instruments by categories as of December 31, 2016 were as follows
(In crore)
| |
Amortised cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer Note 2.10) |
26,113 |
– |
– |
– |
– |
26,113 |
26,113 |
| Investments (Refer Note 2.6) |
|
|
|
|
|
|
|
| Equity, preference and other securities |
– |
– |
– |
178 |
– |
178 |
178 |
| Tax free bonds and government bonds |
1,606 |
– |
– |
– |
– |
1,606 |
1,846 |
| Liquid mutual fund units |
– |
– |
4,360 |
– |
– |
4,360 |
4,360 |
| Non convertible debentures |
– |
– |
– |
– |
3,618 |
3,618 |
3,618 |
| Convertible promissory note |
– |
– |
10 |
– |
– |
10 |
10 |
| Trade receivables (Refer Note 2.9) |
12,942 |
– |
– |
– |
– |
12,942 |
12,942 |
| Loans (Refer Note 2.7) |
272 |
– |
– |
– |
– |
272 |
272 |
| Other financials assets (Refer Note 2.8) |
6,545 |
– |
65 |
– |
38 |
6,648 |
6,648 |
| Total |
47,478 |
– |
4,435 |
178 |
3,656 |
55,747 |
|
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
335 |
– |
– |
– |
– |
335 |
335 |
| Other financial liabilities (Refer Note 2.14) |
5,436 |
– |
92 |
– |
– |
5,528 |
5,528 |
| Total |
5,771 |
– |
92 |
– |
– |
5,863 |
|
The carrying value and fair value of financial
instruments by categories as of March 31, 2016 were as follows:
(In crore)
| |
Amortised cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer Note 2.10) |
32,697 |
– |
– |
– |
– |
32,697 |
32,697 |
| Investments (Refer Note 2.6) |
|
|
|
|
|
|
|
| Equity, preference and other securities |
– |
– |
– |
115 |
– |
115 |
115 |
| Tax free bonds and government bonds |
1,606 |
– |
– |
– |
– |
1,606 |
1,703* |
| Liquid mutual fund units |
– |
– |
68 |
– |
– |
68 |
68 |
| Trade receivables (Refer Note 2.9) |
11,330 |
– |
– |
– |
– |
11,330 |
11,330 |
| Loans (Refer Note 2.7) |
328 |
– |
– |
– |
– |
328 |
328 |
| Other financials assets (Refer Note 2.8) |
5,360 |
– |
116 |
– |
– |
5,476 |
5,476 |
| Total |
51,321 |
– |
184 |
115 |
– |
51,620 |
|
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
386 |
– |
– |
– |
– |
386 |
386 |
| Other financial liabilities (Refer Note 2.14) |
4,908 |
– |
122 |
– |
– |
5,030 |
5,030 |
| Total |
5,294 |
– |
122 |
– |
– |
5,416 |
|
The carrying value and fair value of financial
instruments by categories as of April 1, 2015 were as follows:
(In crore)
| |
Amortised cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer Note 2.10) |
30,367 |
– |
– |
– |
– |
30,367 |
30,367 |
| Investments (Refer Note 2.6) |
|
|
|
|
|
|
|
| Equity , preference and other securities |
– |
– |
– |
1 |
– |
1 |
1 |
| Tax free bonds and government bonds |
1,304 |
– |
– |
– |
– |
1,304 |
1,344* |
| Liquid mutual fund units |
– |
– |
842 |
– |
– |
842 |
842 |
| Fixed maturity plans |
– |
– |
32 |
– |
– |
32 |
32 |
| Trade receivables (Refer Note 2.9) |
9,713 |
– |
– |
– |
– |
9,713 |
9,713 |
| Loans (Refer Note 2.7) |
253 |
– |
– |
– |
– |
253 |
253 |
| Other financials assets (Refer Note 2.8) |
4,599 |
– |
101 |
– |
– |
4,700 |
4,700 |
| Total |
46,236 |
– |
975 |
1 |
– |
47,212 |
|
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
140 |
– |
– |
– |
– |
140 |
140 |
| Other financial liabilities (Refer Note 2.14) |
4,911 |
– |
3 |
– |
– |
4,914 |
4,914 |
| Total |
5,051 |
– |
3 |
– |
– |
5,054 |
|
* Changes in fair values including interest
accrued
Fair value hierarchy
Level 1 - Quoted prices (unadjusted)
in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted
prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The following table presents fair value hierarchy
of assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
(In crore)
| |
As of December 31, 2016 |
Fair value measurement at end of the reporting period/year using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments in liquid mutual fund units (Refer Note 2.6) |
4,360 |
4,360 |
– |
– |
| Investments in tax free bonds (Refer Note 2.6) |
1,839 |
280 |
1,559 |
– |
| Investments in government bonds (Refer Note 2.6) |
7 |
7 |
– |
– |
| Investments in equity instruments (Refer Note 2.6) |
1 |
– |
– |
1 |
| Investments in preference securities (Refer Note 2.6) |
146 |
– |
– |
146 |
| Investments in non convertible debentures (Refer Note 2.6) |
3,618 |
3,263 |
355 |
– |
| Investments in convertible promissory note (Refer Note 2.6) |
10 |
– |
– |
10 |
| Others (Refer Note 2.6) |
31 |
– |
– |
31 |
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8) |
103 |
– |
103 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14) |
6 |
– |
6 |
– |
| Liability towards contingent consideration (Refer note 2.14)* |
86 |
– |
– |
86 |
* Discounted $14 million (approximately
95 crore) at 14.2%
During the nine months ended December 31, 2016,
tax free bonds of 115 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on
market observable inputs
The following table presents fair value hierarchy
of assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:
(In crore)
| |
As of March 31, 2016 |
Fair value measurement at end of the reporting period/year using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments in liquid mutual fund units (Refer Note 2.6) |
68 |
68 |
– |
– |
| Investments in bonds (Refer Note 2.6) |
1,696 |
369 |
1,327 |
– |
| Investments in government bonds (Refer Note 2.6) |
7 |
7 |
– |
– |
| Investments in equity instruments (Refer Note 2.6) |
1 |
– |
– |
1 |
| Investments in preference securities (Refer Note 2.6) |
92 |
– |
– |
92 |
| Others (Refer Note 2.6) |
22 |
– |
– |
22 |
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8) |
116 |
– |
116 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14) |
5 |
– |
5 |
– |
| Liability towards contingent consideration (Refer note 2.14)* |
117 |
– |
– |
117 |
* Discounted $20 million (approximately
132 crore) at 13.7%
The following table presents fair value hierarchy
of assets and liabilities measured at fair value on a recurring basis as of April 1, 2015:
(In crore)
| |
As of April 1, 2015 |
Fair value measurement at end of the reporting period/year using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments in liquid mutual fund units (Refer Note 2.6) |
842 |
842 |
– |
– |
| Investments in fixed maturity plan securities (Refer Note 2.6) |
32 |
– |
32 |
– |
| Investments in bonds (Refer Note 2.6) |
1,340 |
604 |
736 |
– |
| Investments in government bonds (Refer Note 2.6) |
4 |
4 |
– |
– |
| Investments in equity instruments (Refer Note 2.6) |
1 |
– |
– |
1 |
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8) |
101 |
– |
101 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14) |
3 |
– |
3 |
– |
A one percentage point change in the unobservable
inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
The movement in contingent consideration as
of December 31, 2016 from March 31, 2016 is on account of settlement of contingent consideration of 40 crore and change in discount
rate and passage of time.
The fair value of liquid mutual funds is based
on quoted price. The fair value of tax free bonds and government bonds is based on quoted prices and market observable inputs.
The fair value is of non-convertible debentures is based on quoted prices and market observable inputs. Derivative financial instruments
are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly
observable in the marketplace.
Financial risk management
Financial risk factors
The Group's activities expose it to a variety
of financial risks: market risk, credit risk and liquidity risk. The Group's focus is to foresee the unpredictability of financial
markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Group is foreign
exchange risk. The Group uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Group's
exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from
the top few customers.
Market risk
The Group operates internationally and a major
portion of the business is transacted in several currencies and consequently the Group is exposed to foreign exchange risk through
its sales and services in the United States and elsewhere, and purchases from overseas suppliers in various foreign currencies.
The Group holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of
changes in exchange rates on foreign currency exposures. The exchange rate between the Indian rupee and foreign currencies has
changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Group’s
operations are adversely affected as the rupee appreciates/ depreciates against these currencies.
The following table analyzes foreign currency
risk from financial instruments as of December 31, 2016.
(In crore)
| |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Cash and cash equivalents |
1,299 |
149 |
59 |
167 |
646 |
2,320 |
| Trade receivables |
8,890 |
1,497 |
639 |
626 |
753 |
12,405 |
| Other financial assets (including loans) |
2,540 |
454 |
361 |
153 |
360 |
3,868 |
| Trade payables |
(52) |
(33) |
(36) |
(7) |
(158) |
(286) |
| Other financial liabilities |
(2448) |
(398) |
(215) |
(222) |
(617) |
(3,900) |
| Net assets / (liabilities) |
10,229 |
1,669 |
808 |
717 |
984 |
14,407 |
The following table analyzes foreign exchange
risk from financial instruments as of March 31, 2016:
(In crore)
| |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Cash and cash equivalents |
1,124 |
167 |
202 |
171 |
601 |
2,265 |
| Trade receivables |
7,558 |
1,280 |
721 |
598 |
696 |
10,853 |
| Other financial assets (including loans) |
1,967 |
405 |
216 |
124 |
337 |
3,049 |
| Trade payables |
(126) |
(75) |
(73) |
(4) |
(76) |
(354) |
| Other financial liabilities |
(2430) |
(369) |
(197) |
(243) |
(558) |
(3,797) |
| Net assets / (liabilities) |
8,093 |
1,408 |
869 |
646 |
1,000 |
12,016 |
For each of the three months ended December
31, 2016 and December 31, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee
and U.S. dollar, has affected the Company's incremental operating margins by approximately 0.50%. and 0.49%, respectively.
For each of the nine months ended December 31,
2016 and December 31, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and
U.S. dollar, has affected the Company's incremental operating margins by approximately 0.50%.
Sensitivity analysis is computed based on the
changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations
between the previous reporting period and the current reporting period.
Derivative financial instruments
The Group holds derivative financial instruments
such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices
for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.
The following table gives details in respect
of outstanding foreign currency forward and option contracts:
| |
As of |
As of |
| |
December 31, 2016 |
March 31, 2016 |
| |
In million |
In crore |
In million |
In crore |
| Derivatives designated as cash flow hedges |
|
|
|
|
| Forward contracts |
|
|
|
|
| In Euro |
65 |
465 |
– |
– |
| In Australian dollars |
35 |
172 |
– |
– |
| Option Contracts |
|
|
|
|
| In Euro |
40 |
287 |
– |
– |
| In United Kingdom Pound Sterling |
25 |
209 |
– |
– |
| In Australian dollars |
95 |
466 |
– |
– |
| Other derivatives |
|
|
|
|
| Forward contracts |
|
|
|
|
| In U.S. dollars |
496 |
3,369 |
510 |
3,379 |
| In Euro |
119 |
849 |
100 |
750 |
| In United Kingdom Pound Sterling |
75 |
628 |
65 |
623 |
| In Australian dollars |
45 |
221 |
55 |
281 |
| In Swiss Franc |
15 |
102 |
25 |
173 |
| In Singapore dollars |
10 |
47 |
– |
– |
| Option Contracts |
|
|
|
|
| In U.S. dollars |
165 |
1,121 |
125 |
828 |
| In Euro |
45 |
322 |
– |
– |
| Total forwards and options |
|
8,258 |
|
6,034 |
The foreign exchange forward and option contracts
mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based
on the remaining period as of the balance sheet date:
(In crore)
| |
As of |
| |
December 31, 2016 |
March 31, 2016 |
| Not later than one month |
2,291 |
1,577 |
| Later than one month and not later than three months |
3,789 |
3,420 |
| Later than three months and not later than one year |
2,178 |
1,037 |
| |
8,258 |
6,034 |
During the nine months ended December 31, 2016,
the group has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange
exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedging reserve
are expected to occur and reclassified to the statement of profit or loss within 3 months.
Hedge effectiveness is determined at the inception
of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists
between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash
flows of hedged items.
If the hedge ratio for risk management purposes
is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting,
the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged
item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and
accounted for in profit or loss at the time of the hedge relationship rebalancing.
The following table provides the reconciliation
of cash flow hedge reserve for the three months and nine months ended December 31, 2016:
(In crore)
| |
Three months ended December 31, 2016 |
Nine months ended December 31, 2016 |
| Balance at the beginning of the period |
2 |
– |
| Gain / (Loss) recognised in other comprehensive income during the period |
46 |
48 |
| Amount reclassified to profit or loss for the period |
(10) |
(10) |
| Tax impact on above |
(10) |
(10) |
| Balance at the end of the period |
28 |
28 |
The group offsets a financial asset and a financial
liability when it currently has a legally enforceable right to set off the recognized amounts and the group intends either to settle
on a net basis, or to realise the asset and settle the liability simultaneously.
The following table provides quantitative information
about offsetting of derivative financial assets and derivative financial liabilities:
(In crore)
| |
As of |
As of |
| |
December 31, 2016 |
March 31, 2016 |
| |
Derivative financial asset |
Derivative financial liability |
Derivative
financial
asset |
Derivative financial liability |
| Gross amount of recognized financial asset/liability |
106 |
(9) |
124 |
(13) |
| Amount set off |
(3) |
3 |
(8) |
8 |
| Net amount presented in balance sheet |
103 |
(6) |
116 |
(5) |
Credit risk
Credit risk refers to the risk of default on
its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date
is primarily from trade receivables amounting to 12,942 crore and 11,330 crore as of December 31, 2016 and March 31, 2016, respectively
and unbilled revenue amounting to 3,413,crore and 3,029 crore as of December 31, 2016 and March 31, 2016, respectively. Trade
receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in
the United States. Credit risk has always been managed by the group through credit approvals, establishing credit limits and continuously
monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. On account
of adoption of Ind AS 109, the group uses expected credit loss model to assess the impairment loss or gain. The group uses a provision
matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into
account available external and internal credit risk factors such as credit default swap quotes, credit ratings from international
credit rating agencies and the Group's historical experience for customers.
The following table gives details in respect
of percentage of revenues generated from top customer and top five customers:
(In %)
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Revenue from top customer |
3.1 |
3.5 |
3.4 |
3.6 |
| Revenue from top five customers |
12.3 |
13.9 |
12.8 |
14.0 |
Credit risk exposure
The allowance for lifetime expected credit loss
on customer balances for the three months and nine months ended December 31, 2016 was 36 crore and 76 crore, respectively. The
reversal of provision of allowance for lifetime expected credit loss on customer balances for the three months and nine months
ended December 31, 2015 was 32 crore and 25 crore, respectively.
(In crore)
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Balance at the beginning |
326 |
380 |
289 |
366 |
| Impairment loss recognized / (reversed) |
36 |
(32) |
76 |
(25) |
| Amounts written off |
– |
(19) |
(1) |
(20) |
| Translation differences |
– |
(3) |
(2) |
5 |
| Balance at the end |
362 |
326 |
362 |
326 |
The Company’s credit period generally
ranges from 30-60 days.
(In crore except otherwise stated)
| |
As of |
| |
December 31, 2016 |
March 31, 2016 |
| Trade receivables |
12,942 |
11,330 |
| Unbilled revenues |
3,413 |
3,029 |
| Days Sales Outstanding- DSO (days) |
69 |
66 |
Credit risk on cash and cash equivalents is
limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international
and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued
by government and quasi government organizations and non convertible debentures.
Liquidity risk
The Group's principal sources of liquidity are
cash and cash equivalents and the cash flow that is generated from operations. The Group has no outstanding bank borrowings. The
Group believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of December 31, 2016, the Group had a working
capital of 37,671 crore including cash and cash equivalents of 26,113 crore and current investments of 4,367 crore. As of March
31, 2016, the Group had a working capital of 38,514 crore including cash and cash equivalents of 32,697 crore and current investments
of 75 crore.
As of December 31, 2016 and March 31, 2016,
the outstanding employee compensated absenses were 1,428,crore and 1,341 crore, respectively, which have been substantially funded.
Accordingly no liquidity risk is perceived.
The table below provides details regarding the
contractual maturities of significant financial liabilities as of December 31, 2016:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
335 |
– |
– |
– |
335 |
| Other financial liabilities (excluding liability towards acquisition) (Refer Note 2.14) |
5,391 |
47 |
– |
– |
5,438 |
| Liability towards acquisitions on an undiscounted basis (including contingent consideration) -Refer Note 2.14 |
48 |
47 |
– |
– |
95 |
The table below provides details regarding the
contractual maturities of significant financial liabilities as of March 31, 2016:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
386 |
– |
– |
– |
386 |
| Other financial liabilities (excluding liability towards acquisition) (Refer Note 2.14) |
4,875 |
25 |
9 |
– |
4,909 |
| Liability towards acquisitions on an undiscounted basis (including contingent consideration) -Refer Note 2.14 |
86 |
46 |
– |
– |
132 |
2.13 EQUITY
SHARE CAPITAL
In crore, except as otherwise stated
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Authorized |
|
|
|
| Equity shares, 5/- par value |
|
|
|
| 240,00,00,000 (240,00,00,000(3)) equity shares |
1,200 |
1,200 |
600 |
| Issued, Subscribed and Paid-Up |
|
|
|
| Equity shares, 5/- par value (1) |
1,144 |
1,144 |
572 |
| 228,56,51,730 (228,56,21,088(3)) equity shares fully paid-up(2) |
|
|
|
| |
1,144 |
1,144 |
572 |
Forfeited shares amounted to 1,500/- (1,500/-)
| (1) | | Refer note 2.23 for details of basic and diluted shares |
| (2) | | Net of treasury shares 112,92,934 (113,23,576) |
| (3) | | Represents number of shares as of March 31, 2016 |
The Company has only one class of shares referred
to as equity shares having a par value of 5/-. Each holder of equity shares is entitled to one vote per share. The equity shares
represented by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS
represents one underlying equity share.
The Company declares and pays dividends in Indian
rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General
Meeting. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution
taxes.
In the period of five years immediately preceding
December 31, 2016:
The Company has allotted 114,84,72,332 and 57,42,36,166
fully paid-up shares of face value 5/- each during the quarter ended June 30, 2015 and December 31, 2014, pursuant to bonus issue
approved by the shareholders through postal ballot. For both the bonus issues, bonus share of one equity share for every equity
share held, and a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, has been allotted. Consequently,
the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted
under the restricted stock unit plan have been adjusted for bonus shares.
The Board has increased dividend pay-out ratio
from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
The Board of Directors, in its meeting on April
15, 2016, proposed a final dividend of 14.25/- per equity share and the same was approved by the shareholders at the Annual General
Meeting held on June 18, 2016. The amount was recognized as distributions to equity shareholders during the nine months ended December
31, 2016 and the total appropriation was 3,923 crore (excluding dividend on treasury shares), including corporate dividend tax.
(Refer note 2.2.1 for impact on transition to Ind AS)
The amount of per share dividend recognized
as distributions to equity shareholders during the nine months ended December 31, 2015 was 29.50/- per equity share (not adjusted
for June 17, 2015 bonus issue).
The board of directors in their meeting on October
14, 2016 declared an interim dividend of 11/- per equity share, which resulted in cash outflow of 3,029 crore, (excluding dividend
paid on treasury shares) inclusive of corporate dividend tax
In the event of liquidation of the Company,
the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number
of equity shares held by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts
exist currently, other than the amounts held by irrevocable controlled trusts. For irrevocable controlled trusts, the corpus would
be settled in favour of the beneficiaries.
The details of shareholder holding more than
5% shares as at December 31, 2016 and March 31, 2016 are set out below :
| Name of the shareholder |
As at December 31, 2016 |
As at March 31, 2016 |
| |
Number of shares |
% held |
Number of shares |
% held |
| Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) |
38,53,17,937 |
16.78 |
38,53,17,937 |
16.78 |
| Life Insurance Corporation of India |
15,17,27,009 |
6.61 |
13,22,74,300 |
5.76 |
The reconciliation of the number of shares outstanding
and the amount of share capital as at December 31, 2016 and March 31, 2016 is set out below:
In crore, except as stated otherwise
| Particulars |
As at December 31, 2016 |
As at March 31, 2016 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| Number of shares at the beginning of the period |
2,285,621,088 |
1,144 |
1,142,805,132 |
572 |
| Add: Bonus shares issued (including bonus on treasury shares) |
– |
– |
1,148,472,332 |
574 |
| Add: Shares issued on exercise of employee stock options |
30,642 |
– |
10,824 |
– |
| Less: Increase in treasury shares consequent to bonus issue |
– |
– |
5,667,200 |
2 |
| Number of shares at the end of the period |
2,285,651,730 |
1,144 |
2,285,621,088 |
1,144 |
Employee Stock Option Plan (ESOP):
2015 Stock Incentive Compensation Plan (the
2015 Plan): SEBI issued the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 (‘SEBI
Regulations’) which replaced the SEBI ESOP Guidelines, 1999. The 2011 Plan (as explained below) was required to be amended
and restated in accordance with the SEBI Regulations. Consequently, to effect this change and to further introduce stock options/ADR’s
and other stock incentives, the Company put forth the 2015 Stock Incentive Compensation Plan (the 2015 Plan) for approval to the
shareholders of the Company. Pursuant to the approval by the shareholders through postal ballot which ended on March 31, 2016,
the Board of Directors have been authorised to introduce, offer, issue and allot share-based incentives to eligible employees of
the Company and its subsidiaries under the 2015 Plan. The maximum number of shares under the 2015 plan shall not exceed 2,40,38,883
equity shares (this includes 1,12,23,576 equity shares which were held by the Trust towards the 2011 Plan as at March 31, 2016).
1,70,38,883 equity shares will be issued as RSUs at par value and 70,00,000 equity shares will be issued as stock options at market
price. These instruments will vest over a period of 4 years and the Company expects to grant the instruments under the 2015 Plan
over the period of 4 to 7 years.
On August 1, 2016, the company granted 17,83,615
RSUs (includes equity shares and equity shares represented by ADS) at par value, to employees upto mid management (excluding grants
made to Dr. Vishal Sikka). Further, the company granted 73,020 Incentive Units (cash-settled) to eligible employees. These instruments
will vest equally over a period of 4 years and are subject to continued service.
Further on November 1, 2016, the company granted
9,70,375 RSUs (includes equity shares and equity shares represented by ADS) at par value, 12,05,850 employee stock options (ESOPs)
(including equity shares and equity shares represented by ADS) to be exercised at market price at the time of grant, to certain
employees at the senior management level. Further the company granted 20,640 incentive units (cash-settled) to certain employees
at the senior management level. These instruments will vest equally over a period of 4 years and are subject to continued service.
As of December 31, 2016, 1,12,92,934 shares
are held by the trust towards 2015 Plan. As of December 31, 2016, 91,980 incentive units were outstanding (net of forfeitures)
and the carrying value of the cash liability is 1 crore.
Pursuant to the approval from the shareholders
through postal ballot on March 31, 2016, Dr. Vishal Sikka is eligible to receive under the 2015 Plan, an annual grant of RSU's
of fair value $2,000,000 which vest over time, subject to continued service, and an annual grant of performance based equity and
stock options of $5,000,000 , subject to achievement of performance targets set by the Board or its committee, which vest over
time. $2,000,000 of fair value in RSUs for financial year 2017 was granted on August 1, 2016 amounting to 120,700 RSUs in equity
shares represented by ADS. The performance based RSU and Options pertaining to financial year 2017 has not yet been granted as
of December 31, 2016. Though the performance based RSU and Options for fiscal 2017 and time based RSU’s for the remaining
employment term have not been granted as of December 31, 2016, in accordance with IFRS 2 Share-based Payment, the company has recorded
employee stock based compensation expense. The company has recorded employee stock based compensation expense of 7 crore and 2
crore and 21 crore and 5 crore during the three months and nine months ended December 31, 2016 and December 31, 2015 respectively,
towards CEO compensation.
The Nomination and Remuneration Committee in
its meeting held on October 14, 2016 has recommended a grant of 27,250 RSUs and 43,000 ESOPs to U.B.Pravin Rao, Chief Operating
Officer, under the 2015 Plan. These RSUs and ESOPs will vest over time, subject to continued service. The grant is subject to the
approval of shareholders. Though these RSUs and ESOPs have not been granted as of December 31, 2016, in accordance with Ind AS
102 Share-based Payment, the company has recorded employee stock based compensation expense for the same.
2011 RSU Plan (the 2011 Plan) now called
2015 Stock Incentive Compensation Plan ( the 2015 Plan): The Company had a 2011 RSU Plan which provided for the grant of restricted
stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended the establishment of the 2011 Plan
to the shareholders on August 30, 2011 and the shareholders approved the recommendation of the Board of Directors on October 17,
2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the plan was 1,13,34,400 as on date
of approval of plan adjusted for bonus shares and the plan was expected to continue in effect for a term of 10 years from the date
of initial grant under the plan. Awards have been granted to Dr. Vishal Sikka under the 2011 RSU plan as detailed below. Further
the Company has earmarked 1,00,000 equity shares for welfare activities of the employees, approved by the shareholders vide postal
ballot which ended on March 31, 2016. The equity shares as of March 31, 2016 held under this plan, i.e. 1,12,23,576 equity shares
(this includes the aggregate number of equity shares that may be awarded under the 2011 Plan as reduced by 10,824 equity shares
already exercised by Dr. Vishal Sikka and 1,00,000 equity shares which have been earmarked for welfare activities of the employees)
have been subsumed under the 2015 Plan.
During the year ended March 31, 2015, the company
made a grant of 108,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Officer and Managing
Director. The Board in its meeting held on June 22, 2015, on recommendation of Nomination and Remuneration Committee, further granted
1,24,061 RSUs to Dr. Vishal Sikka. These RSUs are vesting over a period of four years from the date of the grant in the proportions
specified in the award agreement. The RSUs will vest subject to achievement of certain key performance indicators as set forth
in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
The award granted to Dr. Vishal Sikka on June
22, 2015 was modified by the Nomination and remuneration committee on April 14, 2016. There is no modification or change in the
total number of RSUs granted or the vesting period (which is four years). The modifications relate to the criteria of vesting for
each of the years. Based on the modification, the first tranche of the RSUs will vest subject to achievement of certain key performance
indicators for the year ended March 31, 2016. Subsequent vesting of RSU's for each of the remaining years would be subject to continued
employment.
The activity in the 2015 Plan (formerly 2011
RSU Plan) for equity-settled share based payment transactions during the three months and nine months ended December 31, 2016 is
set out below:
| Particulars |
Three months ended December 31, 2016 |
Nine months ended December 31, 2016 |
| |
Shares arising out of options |
Weighted average exercise price () |
Shares arising out of options |
Weighted average exercise price () |
| 2015 Plan (Formerly 2011 Plan): Indian equity shares (RSU - IES) |
|
|
|
|
| Outstanding at the beginning* |
1,691,108 |
5 |
221,505 |
5 |
| Granted |
365,130 |
5 |
1,878,025 |
5 |
| Forfeited and expired |
25,480 |
5 |
38,130 |
5 |
| Exercised |
– |
– |
30,642 |
5 |
| Outstanding at the end |
2,030,758 |
5 |
2,030,758 |
5 |
| Exercisable at the end |
– |
– |
– |
– |
| 2015 Plan (Formerly 2011 Plan): Employee Stock Options (ESOPs- IES) |
|
|
|
|
| Outstanding at the beginning |
– |
– |
– |
– |
| Granted |
309,650 |
998 |
309,650 |
998 |
| Forfeited and expired |
– |
– |
– |
– |
| Exercised |
– |
– |
– |
– |
| Outstanding at the end |
309,650 |
998 |
309,650 |
998 |
| Exercisable at the end |
– |
– |
– |
– |
* adjusted for bonus issues (Refer above
note 2.13)
| Particulars |
Three months ended December 31, 2016 |
Nine months ended December 31, 2016 |
| |
Shares arising out of options |
Weighted average exercise price ($) |
Shares arising out of options |
Weighted average exercise price ($) |
| 2015 Plan (Formerly 2011 Plan): American Depository Shares (RSU - ADS) |
|
|
|
|
| Outstanding at the beginning |
381,300 |
0.07 |
– |
– |
| Granted |
605,245 |
0.07 |
996,665 |
0.07 |
| Forfeited and expired |
11,415 |
0.07 |
21,535 |
0.07 |
| Exercised |
– |
– |
– |
– |
| Outstanding at the end |
975,130 |
0.07 |
975,130 |
0.07 |
| Exercisable at the end |
– |
– |
– |
– |
| 2015 Plan (Formerly 2011 Plan): Employee Stock Options (ESOPs- ADS) |
|
|
|
|
| Outstanding at the beginning |
– |
– |
– |
– |
| Granted |
896,200 |
15.26 |
896,200 |
15.26 |
| Forfeited and expired |
– |
– |
– |
– |
| Exercised |
– |
– |
– |
– |
| Outstanding at the end |
896,200 |
15.26 |
896,200 |
15.26 |
| Exercisable at the end |
– |
– |
– |
– |
The activity in the 2015 Plan (formerly 2011
RSU Plan) for equity-settled share based payment transactions during the three months and nine months ended December 31, 2015 is
set out below:
| Particulars |
Three months ended
December 31, 2015 |
Nine months ended
December 31, 2015 |
| |
Shares arising out of options |
Weighted average exercise price () |
Shares arising out of options |
Weighted average exercise price () |
| 2015 Plan (Formerly 2011 Plan): Indian equity shares (IES) |
|
|
|
|
| Outstanding at the beginning* |
223,213 |
5 |
108,268 |
5 |
| Granted |
– |
– |
124,061 |
5 |
| Forfeited and expired |
– |
– |
– |
– |
| Exercised* |
– |
– |
9,116 |
5 |
| Outstanding at the end |
223,213 |
5 |
223,213 |
5 |
| Exercisable at the end |
– |
– |
– |
– |
* adjusted for bonus issues (Refer above
note 2.13)
During the nine months ended December 31, 2016,
the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 1,096/-. During the three
months and nine months ended December 31, 2015, the weighted average share price of options exercised under the 2015 Plan on the
date of exercise was 1,092/-
The following table summarizes information about
equity settled RSUs and ESOPs outstanding as of December 31, 2016
|
|
Options outstanding |
| Range of exercise prices per share () |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
| 2015 Plan: ADS and IES |
|
|
|
| 0 - 5 (RSU) |
3,005,888 |
2.12 |
5.00 |
| 900 - 1100 (ESOP) |
1,205,850 |
7.34 |
1,026.57 |
|
|
4,211,738 |
3.61 |
297.48 |
The weighted average remaining contractual life
of RSUs outstanding as of March 31, 2016 under the 2015 Plan was 1.98 years.
The fair value of each equity settled RSU is
estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
| Particulars |
For options granted in |
|
|
Fiscal 2017-
Equity Shares |
Fiscal 2017-
ADS |
Fiscal 2016-
Equity Shares |
Fiscal 2015-
Equity Shares |
| Grant date |
1–Aug–16 |
1–Aug–16 |
22–Jun–15 |
21–Aug–14 |
| Weighted average share price () / ($- ADS)* |
1,085 |
16.57 |
1,024 |
3,549 |
| Exercise price ()/ ($- ADS)* |
5.00 |
0.07 |
5.00 |
5.00 |
| Expected volatility (%) |
25-29 |
26-30 |
28-36 |
30-37 |
| Expected life of the option (years) |
1 - 4 |
1 - 4 |
1 - 4 |
1 - 4 |
| Expected dividends (%) |
2.37 |
2.29 |
2.43 |
1.84 |
| Risk-free interest rate (%) |
6- 7 |
0.5 - 1 |
7- 8 |
8- 9 |
| Weighted average fair value as on grant date () / ($- ADS)* |
1,019 |
15.59 |
948 |
3,355 |
* Data for Fiscal 2015 is not adjusted for
bonus issues
| Particulars |
For options granted in |
|
|
Fiscal 2017-
Equity Shares-RSU |
Fiscal 2017-
Equity shares ESOP |
Fiscal 2017-
ADS-RSU |
Fiscal 2017-
ADS- ESOP |
| Grant date |
1–Nov–16 |
1–Nov–16 |
1–Nov–16 |
1–Nov–16 |
| Weighted average share price () / ($- ADS) |
989 |
989 |
15.26 |
15.26 |
| Exercise price ()/ ($- ADS) |
5.00 |
998 |
0.07 |
15.26 |
| Expected volatility (%) |
24-29 |
27-29 |
26-29 |
27-31 |
| Expected life of the option (years) |
1 - 4 |
3 - 7 |
1 - 4 |
3 - 7 |
| Expected dividends (%) |
2.37 |
2.37 |
2.29 |
2.29 |
| Risk-free interest rate (%) |
6- 7 |
6- 7 |
1 - 2 |
1 - 2 |
| Weighted average fair value as on grant date () / ($- ADS) |
929 |
285 |
14.35 |
3.46 |
The expected term of the RSU / ESOP is estimated
based on the vesting term and contractual term of the RSU / ESOP, as well as expected exercise behaviour of the employee who receives
the RSU / ESOP. Expected volatility during the expected term of the RSU / ESOP is based on historical volatility of the observed
market prices of the company's publicly traded equity shares during a period equivalent to the expected term of the RSU / ESOP.
During the three months and nine months ended
December 31, 2016 and December 31, 2015, the company recorded an employee stock compensation expense of 42 crore and 2 crore
and 72 crore and 5 crore, respectively in the statement of profit and loss. The cash settled stock compensation expense for each
of the three months and nine months ended December 31, 2016 was 1 crore.
2.14 OTHER FINANCIAL LIABILITIES
In crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non-current |
|
|
|
| Others |
|
|
|
| Accrued compensation to employees (1) |
46 |
33 |
– |
| Payable for acquisition of business (refer note 2.3) (2) |
|
|
|
| Contingent consideration |
40 |
36 |
– |
| |
86 |
69 |
– |
| Current |
|
|
|
| Unpaid dividends (1) |
17 |
5 |
3 |
| Others |
|
|
|
| Accrued compensation to employees (1) |
2,235 |
2,265 |
2,106 |
| Accrued expenses (1) |
2,725 |
2,189 |
1,984 |
| Retention monies (1) |
157 |
80 |
53 |
| Payable for acquisition of business |
|
|
|
| Deferred consideration (refer note 2.3) (1) |
– |
– |
487 |
| Contingent consideration (refer note 2.3) (2) |
46 |
81 |
– |
| Client deposits (1) |
27 |
28 |
27 |
| Payable by controlled trusts (1) |
144 |
167 |
177 |
| Compensated absences |
1,428 |
1,341 |
1,069 |
| Foreign currency forward and options contracts (2) |
6 |
5 |
3 |
| Capital creditors (1) |
61 |
81 |
43 |
| Other payables (1) |
24 |
60 |
31 |
| |
6,870 |
6,302 |
5,983 |
| Total Financial Liabilities |
6,956 |
6,371 |
5,983 |
| (1) Financial liability carried at amortized cost |
5,436 |
4,908 |
4,911 |
| (2) Financial liability carried at fair value through profit and loss |
92 |
122 |
3 |
| Contingent consideration on undiscounted basis |
95 |
132 |
– |
2.15 OTHER LIABILITIES
In crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Non-current |
|
|
|
| Others |
|
|
|
| Deferred income - government grant on land use rights |
43 |
46 |
47 |
| Deferred income |
46 |
– |
– |
| |
89 |
46 |
47 |
| Current |
|
|
|
| Unearned revenue |
1,819 |
1,332 |
1,052 |
| Other |
|
|
|
| Withholding taxes and others |
1,406 |
1,296 |
904 |
| Accrued gratuity (refer note 2.22.1) |
1 |
– |
7 |
| Tax on dividend |
– |
– |
– |
| Deferred rent |
1 |
– |
– |
| Deferred income - government grant on land use rights |
1 |
1 |
1 |
| |
3,228 |
2,629 |
1,964 |
2.16 PROVISIONS
In crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Current |
|
|
|
| Others |
|
|
|
| Post-sales client support and warranties and others |
412 |
512 |
478 |
| Total |
412 |
512 |
478 |
Provision for post-sales client support and
warranties and others
The movement in the provision for post-sales
client support and warranties and others is as follows :
In crore
| Particulars |
Three months ended December 31, 2016 |
Nine months ended December 31, 2016 |
| |
|
|
| Balance at the beginning |
621 |
512 |
| Provision recognized/(reversed) |
(75) |
71 |
| Provision utilized |
(144) |
(183) |
| Exchange difference |
10 |
12 |
| Balance at the end |
412 |
412 |
Provision for post-sales client support and
warranties and other provisions are expected to be utilized over a period of 6 months to 1 year.
2.17 INCOME TAXES
Income tax expense in the consolidated statement
of Profit and loss comprises:
In crore
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Current taxes |
1,468 |
1,319 |
4,404 |
3,892 |
| Deferred taxes |
(22) |
(23) |
(136) |
(35) |
| Income tax expense |
1,446 |
1,296 |
4,268 |
3,857 |
Income tax expense for the three months ended
December 31, 2016 and December 31, 2015 includes reversals (net of provisions) of 52 crore and 127 crore, respectively, pertaining
to prior periods.
Income tax expense for the nine months ended
December 31, 2016 and December 31, 2015 includes reversals (net of provisions) of 61 crore 240 crore, respectively, pertaining
to prior periods.
Entire deferred income tax for the three months
and nine months ended December 31, 2016 and December 31, 2015 relates to origination and reversal of temporary differences.
A reconciliation of the income tax provision
to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized below:
In crore
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Profit before income taxes |
5,154 |
4,761 |
15,017 |
13,749 |
| Enacted tax rates in India |
34.61% |
34.61% |
34.61% |
34.61% |
| Computed expected tax expense |
1,783 |
1,648 |
5,197 |
4,759 |
| Tax effect due to non-taxable income for Indian tax purposes |
(542) |
(385) |
(1,549) |
(1,262) |
| Overseas taxes |
198 |
178 |
613 |
510 |
| Tax provision (reversals), overseas and domestic |
(52) |
(127) |
(61) |
(240) |
| Effect of exempt non-operating income |
(12) |
(17) |
(57) |
(51) |
| Effect of unrecognized deferred tax assets |
8 |
7 |
61 |
20 |
| Effect of differential overseas tax rates |
13 |
(6) |
29 |
2 |
| Effect of non-deductible expenses |
49 |
36 |
73 |
176 |
| Additional deduction on research and development expense |
(12) |
(27) |
(42) |
(53) |
| Others |
13 |
(11) |
4 |
(4) |
| Income tax expense |
1,446 |
1,296 |
4,268 |
3,857 |
The applicable Indian statutory tax rates for
fiscal 2017 and fiscal 2016 is 34.61%.
During the nine months ended December 31, 2016,
the Group has claimed weighted tax deduction on eligible research and development expenditure based on the approval received from
Department of Scientific and Industrial Research (DSIR) which is valid upto 31st March 2017. The weighted tax deduction is equal
to 200% of such expenditure incurred.
During nine months ended December 31, 2015 Infosys had claimed weighted tax deduction on eligible research and development till
July 31, 2015 based on the approval received from Department of Scientific and Industrial Research (DSIR) on November 23, 2011
which was renewed effective April 2014. With effect from August 1, 2015 the business of Finacle, including the R&D activities,
was transferred to its wholly owned subsidiary Edgeverve Systems Limited. However the approval for Edgeverve was effective April
2016.
The foreign expense is due to income taxes payable
overseas principally in the United States. In India, the company has benefited from certain tax incentives that the Government
of India had provided for export of software from the units registered under the Special Economic Zones Act, 2005 (SEZ). SEZ units
which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100 percent of profits or gains
derived from the export of services for the first five years from the financial year in which the unit commenced the provision
of services and 50 percent of such profits or gains for further five years. Up to 50% of such profits or gains is also available
for a further five years subject to creation of a Special Economic Zone re-Investment Reserve out of the profit of the eligible
SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business
as per the provisions of the Income Tax Act, 1961.
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 year, computed in accordance with the Internal Revenue Code. As of March 31, 2016, Infosys' U.S. branch
net assets amounted to approximately 5,109 crore. As of December 31, 2016, the Company has provided for branch profit tax of 343
crore for its U.S branch, as the Company estimates that these branch profits are expected to be distributed in the foreseeable
future. The change in provision for branch profit tax includes 9 crore movement on account of exchange rate during the nine months
ended December 31, 2016.
Deferred income tax liabilities have not been
recognized on temporary differences amounting to 5,226 crore and 4,195 crore as of December 31, 2016 and March 31, 2016, respectively,
associated with investments in subsidiaries and branches as it is probable that the temporary differences will not reverse in the
foreseeable future.
The following table provides the details of
income tax assets and income tax liabilities as of December 31, 2016, March 31, 2016 and April 1, 2015:
In crore
| |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Income tax assets |
5,333 |
5,230 |
4,089 |
| Current income tax liabilities |
3,879 |
3,410 |
2,818 |
| Net current income tax asset/ (liability) at the end |
1,454 |
1,820 |
1,271 |
The gross movement in the current income tax
asset/ (liability) for the three months and nine months ended December 31, 2016 and December 31, 2015 is as follows:
In crore
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Net current income tax asset/ (liability) at the beginning |
1,397 |
1,575 |
1,820 |
1,271 |
| Translation differences |
– |
2 |
– |
12 |
| Income tax paid |
1,526 |
1,528 |
4,025 |
4,390 |
| Current income tax expense (Refer Note 2.17) |
(1,468) |
(1,319) |
(4,404) |
(3,892) |
| Income tax benefit arising on exercise of stock options |
– |
– |
1 |
– |
| Income tax on other comprehensive income |
(1) |
(3) |
12 |
2 |
| Net current income tax asset/ (liability) at the end |
1,454 |
1,783 |
1,454 |
1,783 |
The tax effects of significant temporary differences
that resulted in deferred income tax assets and liabilities are as follows:
In crore
| |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Deferred income tax assets |
|
|
|
| Property, plant and equipment |
136 |
178 |
241 |
| Computer software |
54 |
50 |
51 |
| Accrued compensation to employees |
70 |
68 |
48 |
| Trade receivables |
119 |
89 |
111 |
| Compensated absences |
409 |
389 |
299 |
| Post sales client support |
98 |
77 |
74 |
| Intangibles |
9 |
4 |
– |
| Others |
132 |
55 |
31 |
| Total deferred income tax assets |
1,027 |
910 |
855 |
| Deferred income tax liabilities |
|
|
|
| Intangible asset |
(226) |
(252) |
(159) |
| Temporary difference related to branch profits |
(343) |
(334) |
(316) |
| Others |
(62) |
(40) |
(3) |
| Total deferred income tax liabilities |
(631) |
(626) |
(478) |
| Deferred income tax assets after set off |
621 |
536 |
536 |
| Deferred income tax liabilities after set off |
(225) |
(252) |
(159) |
Deferred tax assets and deferred tax liabilities
have been offset wherever the Group has a legally enforceable right to set off current tax assets against current tax liabilities
and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
The deferred income tax assets and deferred
income tax liabilities recoverable within and after 12 months are as follows:
In crore
|
|
As of |
|
|
December 31, 2016 |
March 31, 2016 |
| Deferred income tax assets to be recovered after 12 months |
542 |
409 |
| Deferred income tax assets to be recovered within 12 months |
485 |
501 |
| Total deferred income tax assets |
1,027 |
910 |
| Deferred income tax liabilities to be settled after 12 months |
(363) |
(446) |
| Deferred income tax liabilities to be settled within 12 months |
(268) |
(180) |
|
Total deferred income tax liabilities
|
(631) |
(626) |
In assessing the reliability of deferred income
tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate
realization of deferred income 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 income 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 income tax assets are deductible, management believes
that the Group will realize the benefits of those deductible differences. The amount of the deferred income 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 gross movement in the deferred income tax
account for the three months and nine months ended December 31, 2016 and December 31, 2015, is as follows:
In crore
| |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Net deferred income tax asset at the beginning |
393 |
234 |
284 |
377 |
| Addition through business combination (Refer note 2.3) |
– |
– |
– |
(128) |
| Translation differences |
(9) |
(5) |
(14) |
(30) |
| Credits / (charge) relating to temporary differences (Refer Note 2.17 above) |
22 |
23 |
136 |
35 |
| Temporary differences on other comprehensive income |
(10) |
(1) |
(10) |
(3) |
| Net deferred income tax asset at the end |
396 |
251 |
396 |
251 |
The credits relating to temporary differences
during the nine months ended December 31, 2016 are primarily on account of trade receivables, compensated absences and post sales
client support partially offset by property, plant and equipments. The credits relating to temporary differences during the nine
months ended December 31, 2015 are primarily on account of trade receivables, compensated absences, accrued compensation to employees,
partially offset by property, plant and equipment, computer software amortization and post sales customer support.
2.18 REVENUE FROM OPERATIONS
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
|
|
2016 |
2015 |
2016 |
2015 |
| Income from software services |
16,727 |
15,430 |
49,790 |
44,469 |
| Income from software products |
546 |
472 |
1,574 |
1,422 |
|
|
17,273 |
15,902 |
51,364 |
45,891 |
2.19 OTHER INCOME
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Interest received on financial assets carried at amortized cost: |
|
|
|
|
| Bonds and government bonds |
31 |
30 |
94 |
82 |
| Deposit with Bank and others |
590 |
634 |
1,823 |
1,914 |
| Interest received on financial assets carried at Fair Value through other comprehensive income: |
|
|
|
|
| Non convertible debentures |
30 |
– |
30 |
– |
| Income received on investment carried at Fair Value through Profit or Loss |
|
|
|
|
| Dividend received on liquid mutual fund units |
2 |
10 |
29 |
54 |
| Gains/(losses) on liquid mutual fund units |
32 |
– |
53 |
– |
| Exchange gains/ (losses) on foreign currency forward and options contracts |
77 |
62 |
301 |
(30) |
| Exchange gains/ (losses) on translation of other assets and liabilities |
3 |
4 |
(97) |
124 |
| Others |
55 |
62 |
100 |
207 |
| |
820 |
802 |
2,333 |
2,351 |
2.20 EXPENSES
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Employee benefit expenses |
|
|
|
|
| Salaries including bonus |
9,129 |
8,552 |
27,543 |
24,754 |
| Contribution to provident and other funds |
197 |
165 |
576 |
483 |
| Share based payments to employees (Refer note 2.13) |
42 |
2 |
72 |
6 |
| Staff welfare |
52 |
53 |
158 |
140 |
| |
9,420 |
8,772 |
28,349 |
25,383 |
| Cost of software packages and others |
|
|
|
|
| For own use |
206 |
165 |
576 |
545 |
| Third party items bought for service delivery to clients |
255 |
113 |
543 |
400 |
| |
461 |
278 |
1,119 |
945 |
| Other expenses |
|
|
|
|
| Repairs and maintenance |
297 |
263 |
911 |
712 |
| Power and fuel |
57 |
53 |
182 |
165 |
| Brand and marketing |
69 |
76 |
266 |
213 |
| Operating lease payments |
127 |
93 |
358 |
262 |
| Rates and taxes |
38 |
18 |
118 |
80 |
| Consumables |
9 |
11 |
31 |
31 |
| Insurance |
15 |
15 |
40 |
43 |
| Provision for post-sales client support and warranties |
13 |
30 |
64 |
(14) |
| Commission to non-whole time directors |
3 |
2 |
8 |
7 |
| Impairment loss recognized / (reversed) on financial assets |
38 |
(31) |
82 |
(21) |
| Auditor's remuneration |
|
|
|
|
| Statutory audit fees |
2 |
2 |
6 |
5 |
| Taxation matters |
– |
– |
– |
– |
| Other services |
– |
– |
– |
– |
| Reimbursement of expenses |
– |
– |
– |
– |
| Contributions towards Corporate Social responsibility |
85 |
67 |
187 |
171 |
| Others |
85 |
50 |
197 |
150 |
| |
838 |
649 |
2,450 |
1,804 |
2.21 LEASES
The lease rentals charged during the period
is as under:
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Lease rentals recognized during the period |
127 |
93 |
358 |
262 |
The obligations on long-term, non-cancellable
operating leases payable as per the rentals stated in the respective agreements are as follows:
In crore
|
|
As at |
| Future minimum lease payable |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Not later than 1 year |
427 |
372 |
168 |
| Later than 1 year and not later than 5 years |
1,158 |
873 |
395 |
| Later than 5 years |
885 |
442 |
168 |
The operating lease arrangements, are renewable
on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of inception and
relates to rented premises. Some of these lease agreements have price escalation clauses.
2.22 EMPLOYEE BENEFITS
2.22.1 Gratuity
The following tables set out the funded status
of the gratuity plans and the amounts recognized in the Group's financial statements as of December 31, 2016 and March 31, 2016:
(In crore)
| Particularss |
As of |
|
December 31, 2016 |
March 31, 2016 |
| Change in benefit obligations |
|
|
| Benefit obligations at the beginning |
944 |
816 |
| Service cost |
97 |
118 |
| Interest expense |
53 |
61 |
| Addition through business combination |
– |
1 |
| Remeasurements - Actuarial (gains)/ losses |
81 |
23 |
| Curtailment gain |
(3) |
– |
| Benefits paid |
(68) |
(75) |
| Benefit obligations at the end |
1,104 |
944 |
| Change in plan assets |
|
|
| Fair value of plan assets at the beginning |
947 |
836 |
| Interest income |
57 |
66 |
| Remeasurements- Return on plan assets excluding amounts included in interest income |
4 |
9 |
| Contributions |
182 |
111 |
| Benefits paid |
(68) |
(75) |
| Fair value of plan assets at the end |
1,122 |
947 |
| Funded status |
18 |
3 |
| Prepaid gratuity benefit |
19 |
4 |
| Accrued gratuity |
(1) |
(1) |
Amount for the three months and nine months
ended December 31, 2016 and December 31, 2015 recognized in the statement of profit and loss under employee benefit expense:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
|
2016 |
2015 |
2016 |
2015 |
| Service cost |
33 |
30 |
97 |
89 |
| Net interest on the net defined benefit liability/asset |
(3) |
(2) |
(4) |
(4) |
| Curtailment gain |
– |
– |
(3) |
– |
| Net gratuity cost |
30 |
28 |
90 |
85 |
Amount for the three months and nine months
ended December 31, 2016 and December 31, 2015 recognized in the statement of other comprehensive income:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
|
2016 |
2015 |
2016 |
2015 |
| Remeasurements of the net defined benefit liability/ (asset) |
|
|
|
|
| Actuarial (gains) / losses |
7 |
(6) |
81 |
17 |
| (Return) / loss on plan assets excluding amounts included in the net interest on the net defined benefit liability/(asset) |
– |
(2) |
(4) |
(6) |
| |
7 |
(8) |
77 |
11 |
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
|
2016 |
2015 |
2016 |
2015 |
| (Gain)/loss from change in demographic assumptions |
– |
– |
– |
– |
| (Gain)/loss from change in financial assumptions |
20 |
5 |
74 |
(5) |
| |
20 |
5 |
74 |
(5) |
The weighted-average assumptions used to determine
benefit obligations as of December 31, 2016, March 31, 2016 and April 1, 2015 are set out below:
| Particulars |
As of |
|
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Discount rate |
6.6% |
7.8% |
7.8% |
| Weighted average rate of increase in compensation levels |
8.0% |
8.0% |
8.0% |
The weighted-average assumptions used to determine
net periodic benefit cost for the three months and nine months ended December 31, 2016 and December 31, 2015 are set out below:
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
|
2016 |
2015 |
2016 |
2015 |
| Discount rate |
7.8% |
7.8% |
7.8% |
7.8% |
| Weighted average rate of increase in compensation levels |
8.0% |
8.0% |
8.0% |
8.0% |
| Weighted average duration of defined benefit obligation |
6.4 years |
6.5 years |
6.4 years |
6.5 years |
Assumptions regarding future mortality experience
are set in accordance with the published statistics by the Life Insurance Corporation of India.
The Company assesses these assumptions with
its projected long-term plans of growth and prevalent industry standards. The discount rate is based on the government securities
yield.
As of December 31, 2016, every percentage point
increase / decrease in discount rate will affect our gratuity benefit obligation by approximately 58 crore.
As of December 31, 2016, every percentage point
increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit obligation by
approximately 49 crore.
Sensitivity for significant actuarial assumptions
is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by one percentage, keeping
all other actuarial assumptions constant.
Gratuity is applicable only to employees drawing
a salary in Indian rupees and there are no other foreign defined benefit gratuity plans.
The Company contributes all ascertained liabilities
towards gratuity to the Infosys Limited Employees' Gratuity Fund Trust. In case of Infosys BPO and EdgeVerve, contributions are
made to the Infosys BPO Employees' Gratuity Fund Trust and EdgeVerve Systems Limited Employees Gratuity Fund Trust, respectively.
Trustees administer contributions made to the trust. As of December 31, 2016 and March 31, 2016, the plan assets have been primarily
invested in insurer managed funds.
Actual return on assets for the three months
and nine months ended December 31, 2016 and December 31, 2015 were 20 crore and 19 crore and 61 crore and 56 crore, respectively.
The Group expects to contribute 21 crore to
the gratuity trusts during the remainder of fiscal 2017.
Maturity profile of defined benefit obligation:
(in
crore)
| Within 1 year |
154 |
| 1-2 year |
160 |
| 2-3 year |
166 |
| 3-4 year |
180 |
| 4-5 year |
193 |
| 5-10 years |
947 |
2.22.2 Superannuation
The group contributed 42 crore and 59 crore and
125 crore and 174 crore to the superannuation plan during the three months and nine months ended December 31, 2016 and December
31, 2015, respectively and the same has been recognized in the Statement of profit and loss account under the head employee benefit
expense.
2.22.3 Provident fund
Infosys has an obligation to fund any shortfall
on the yield of the trust’s investments over the administered interest rates on an annual basis. These administered rates
are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned
by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis
of guidance issued by Actuarial Society of India and based on the below provided assumptions there is no shortfall as at December
31, 2016, March 31, 2016 and April 1, 2015, respectively.
The details of fund and plan asset position are
given below:
(in crore)
| |
As of |
| Particulars |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Plan assets at period end, at fair value |
4,042 |
3,808 |
2,912 |
| Present value of benefit obligation at period end |
4,042 |
3,808 |
2,912 |
| Asset recognized in balance sheet |
– |
– |
– |
The plan assets have been primarily invested
in government securities.
Assumptions used in determining the present
value obligation of the interest rate guarantee under the Deterministic Approach:
| |
As of |
| Particulars |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Government of India (GOI) bond yield |
6.60% |
7.80% |
7.80% |
| Remaining term to maturity of portfolio |
6 years |
7 years |
7 years |
| Expected guaranteed interest rate - First year: |
8.75% |
8.75% |
8.75% |
| - Thereafter: |
8.60% |
8.60% |
8.60% |
The Group contributed 115 crore and 105 crore
and 345 crore and 309 crore to the provident fund during the three months and nine months ended December 31, 2016 and December
31, 2015, respectively and the same has been recognized in the statement of profit and loss under the head employee benefit expense.
The provident plans are applicable only to employees
drawing a salary in Indian rupees and there are no other significant foreign defined benefit plans.
2.22.4 Employee benefit costs include:
(in crore)
| |
Three months ended December 31, |
Nine months ended December 31, |
| Particulars |
2016 |
2015 |
2016 |
2015 |
| Salaries and bonus* |
9,233 |
8,579 |
27,789 |
24,814 |
| Defined contribution plans |
63 |
77 |
187 |
225 |
| Defined benefit plans |
124 |
116 |
373 |
344 |
| |
9,420 |
8,772 |
28,349 |
25,383 |
| * | | Includes stock compensation expense of 42 crore and 2 crore and 72 crore and
5 crore for the three months and nine months ended December 31, 2016 and December 31, 2015, respectively. Refer note 2.13 |
2.23 RECONCILIATION OF BASIC AND DILUTED
SHARES USED IN COMPUTING EARNINGS PER SHARE
|
Particulars
|
Three months ended December 31, |
Nine months ended December 31, |
|
|
2016 |
2015 |
2016 |
2015 |
| Basic earnings per equity share - weighted average number of equity shares outstanding(1)(2) |
228,56,51,730 |
228,56,19,380 |
228,56,38,678 |
228,56,14,573 |
| Effect of dilutive common equivalent shares - share options outstanding |
577,312 |
112,672 |
437,784 |
101,387 |
| Diluted earnings per equity share - weighted average number of equity shares and common equivalent shares outstanding |
228,62,29,042 |
228,57,32,052 |
228,60,76,462 |
228,57,15,960 |
(1) Excludes treasury
shares
(2) adjusted for bonus issues.
Refer note 2.13
For the three months and nine months ended December
31, 2016, 216,477 and 72,422 number of options to purchase equity shares had an anti-dilutive effect. For the three months and
nine months ended December 31, 2015, no outstanding option to purchase equity shares had an anti-dilutive effect.
2.24 CONTINGENT LIABILITIES AND
COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
in
crore
| Particulars |
As at |
| |
December 31, 2016 |
March 31, 2016 |
April 1, 2015 |
| Contingent liabilities : |
|
|
|
| Claims against the Company, not acknowledged as debts(1) |
718 |
284 |
264 |
| [Net of amount paid to statutory authorities 4,413 crore (4,409 crore)] |
|
|
|
| Commitments : |
|
|
|
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for |
1,398 |
1,486 |
1,574 |
| (net of advances and deposits) |
|
|
|
| Other Commitment* |
138 |
79 |
- |
* Uncalled capital pertaining to
investments
Claims against the company not acknowledged as debts as on December 31, 2016 include demand from the Indian Income tax authorities
for payment of tax of 4,557 crore ( 4,135 crore), including interest of 1,355 crore ( 1,224 crore) upon completion of their
tax assessment for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010, fiscal 2011 and fiscal 2013.
Demand for fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company
under Section 10A of the income Tax Act as 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. Demand
for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010, fiscal 2011 also includes disallowance of portion of profit earned outside
India from the STP units under section 10A of the Income Tax Act and disallowance of profits earned from SEZ units under section
10AA of the Income Tax Act. Demand for fiscal 2013 includes disallowance of certain expenses incurred in foreign currency being
reduced from export turnover but not reduced from total turnover and disallowance of profits earned from SEZ units which commenced
operations before April 1, 2009 under section 10AA of the Income Tax Act and also others. The matters for fiscal 2007, fiscal 2008
and fiscal 2009 are pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscal 2010 and fiscal 2011
is pending before Hon’ble Income Tax Appellate Tribunal (ITAT) Bangalore. The Company is contesting the demand and the management
including its tax advisors believes that its position will likely be upheld in the appellate process. The management believes that
the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results
of operations.
The Company is subject to legal proceedings
and claims, which have arisen in the ordinary course of business. The Company’s management does not reasonably expect that
these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company’s results
of operations or financial condition.
2.25 RELATED PARTY TRANSACTIONS
List of related parties:
| Name of subsidiaries |
Country |
Holdings as at |
| |
|
December 31, 2016 |
March 31, 2016 |
| Infosys BPO Limited (Infosys BPO) |
India |
99.98% |
99.98% |
| Infosys Technologies (China) Co. Limited (Infosys China) |
China |
100% |
100% |
| Infosys Technologies S. de R. L. de C. V. (Infosys Mexico) |
Mexico |
100% |
100% |
| Infosys Technologies (Sweden) AB. (Infosys Sweden) |
Sweden |
100% |
100% |
| Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai) |
China |
100% |
100% |
| Infosys Tecnologia DO Brasil LTDA. (Infosys Brasil) |
Brazil |
100% |
100% |
| Infosys Public Services, Inc. USA (Infosys Public Services) |
U.S. |
100% |
100% |
| Infosys Americas Inc., (Infosys Americas) |
U.S. |
100% |
100% |
| Infosys (Czech Republic) Limited s.r.o. (formerly Infosys BPO s. r. o) (1) |
Czech Republic |
99.98% |
99.98% |
| Infosys Poland, Sp z.o.o (formerly Infosys BPO Poland, Sp z.o.o)(1) |
Poland |
99.98% |
99.98% |
| Infosys BPO S.DE.R.L.DE.C.V(1)(13) |
Mexico |
– |
– |
| Infosys McCamish Systems LLC (1) |
U.S. |
99.98% |
99.98% |
| Portland Group Pty Ltd(1) |
Australia |
99.98% |
99.98% |
| Infosys BPO Americas LLC.(1)(12) |
U.S. |
99.98% |
– |
| Infosys Technologies (Australia) Pty. Limited (Infosys Australia) (2) |
Australia |
100% |
100% |
| EdgeVerve Systems Limited (EdgeVerve) |
India |
100% |
100% |
| Infosys Consulting Holding AG (Infosys Lodestone) (formerly Lodestone Holding AG) |
Switzerland |
100% |
100% |
| Lodestone Management Consultants Inc. (3) |
U.S. |
100% |
100% |
| Infosys Management Consulting Pty Limited (formerly Lodestone Management Consultants Pty Limited) (3) |
Australia |
100% |
100% |
| Infosys Consulting AG (formerly Lodestone Management Consultants AG) (3) |
Switzerland |
100% |
100% |
| Lodestone Augmentis AG (5)(14) |
Switzerland |
– |
100% |
| Lodestone GmbH (formerly Hafner Bauer & Ödman GmbH) (3)(16) |
Switzerland |
– |
100% |
| Lodestone Management Consultants (Belgium) S.A. (4) |
Belgium |
99.90% |
99.90% |
| Infosys Consulting GmbH (formerly Lodestone Management Consultants GmbH) (3) |
Germany |
100% |
100% |
| Infosys Consulting Pte Ltd. (formerly Lodestone Management Consultants Pte Ltd) (3) |
Singapore |
100% |
100% |
| Infosys Consulting SAS (formerly Lodestone Management Consultants SAS) (3) |
France |
100% |
100% |
| Infosys Consulting s.r.o.(formerly Lodestone Management Consultants s.r.o.) (3) |
Czech Republic |
100% |
100% |
| Lodestone Management Consultants GmbH (3) |
Austria |
100% |
100% |
| Lodestone Management Consultants Co., Ltd. (3) |
China |
100% |
100% |
| Infy Consulting Company Ltd. (formerly Lodestone Management Consultants Ltd.) (3) |
U.K. |
100% |
100% |
| Infy Consulting B.V. (Lodestone Management Consultants B.V.) (3) |
Netherlands |
100% |
100% |
| Infosys Consulting Ltda. (formerly Lodestone Management Consultants Ltda.) (4) |
Brazil |
99.99% |
99.99% |
| Infosys Consulting Sp. z.o.o (formerly Lodestone Management Consultants Sp. z o.o.) (3) |
Poland |
100% |
100% |
| Lodestone Management Consultants Portugal, Unipessoal, Lda. (3) |
Portugal |
100% |
100% |
| S.C. Infosys Consulting S.R.L.(formerly S.C. Lodestone Management Consultants S.R.L.) (3) |
Romania |
100% |
100% |
| Infosys Consulting S.R.L. (formerly Lodestone Management Consultants S.R.L.) (3) |
Argentina |
100% |
100% |
| Infosys Canada Public Services Ltd.(6) |
Canada |
– |
– |
| Infosys Nova Holdings LLC. (Infosys Nova) |
U.S. |
100% |
100% |
| Panaya Inc. (Panaya) |
U.S. |
100% |
100% |
| Panaya Ltd.(7) |
Israel |
100% |
100% |
| Panaya GmbH (7) |
Germany |
100% |
100% |
| Panaya Pty Ltd.(2)(7)(15) |
Australia |
– |
– |
| Panaya Japan Co. Ltd.(7) |
Japan |
100% |
100% |
| Skava Systems Pvt. Ltd. (Skava Systems) (8) |
India |
100% |
100% |
| Kallidus Inc. (Kallidus) (9) |
U.S. |
100% |
100% |
| Noah Consulting LLC (Noah) (10) |
U.S. |
100% |
100% |
| Noah Information Management Consulting Inc. (Noah Canada) (11) |
Canada |
100% |
100% |
| (1) | | Wholly owned subsidiary of Infosys BPO. |
| (3) | | Wholly owned subsidiaries of Infosys Consulting Holding AG (formerly Lodestone
Holding AG) |
| (4) | | Majority owned and controlled subsidiaries of Infosys Consulting Holding AG (formerly
Lodestone Holding AG) |
| (5) | | Wholly owned subsidiary of Infosys Consulting AG (formerly Lodestone Management
Consultants AG) |
| (6) | | Wholly owned subsidiary of Infosys Public Services, Inc. |
| (7) | | Wholly owned subsidiary of Panaya Inc. |
| (8) | | On June 2, 2015, Infosys acquired 100% of the voting interest in Skava Systems |
| (9) | | On June 2, 2015, Infosys acquired 100% of the voting interest in Kallidus Inc. |
| (10) | | On November 16, 2015, Infosys acquired 100% of the membership interests in Noah |
| (11) | | Wholly owned subsidiary of Noah |
| (12) | | Incorporated effective November 20, 2015 |
| (13) | | Liquidated effective March 15, 2016 |
| (14) | | Liquidated effective October 5, 2016 |
| (15) | | Liquidated effective November 16, 2016 |
| (16) | | Liquidated effective December 21, 2016 |
Infosys has provided guarantee for performance
of certain contracts entered into by its subsidiaries.
| Name of Associates |
Country |
Holdings as at |
| |
|
December 31, 2016 |
March 31, 2016 |
| DWA Nova LLC(1) |
U.S. |
16% |
16% |
(1) Associate of Infosys Nova
Holding LLC
List of other related party
| Particulars |
Country |
Nature of relationship
|
| Infosys Limited Employees' Gratuity Fund Trust |
India |
Post-employment benefit plan of Infosys |
| Infosys Limited Employees' Provident Fund Trust |
India |
Post-employment benefit plan of Infosys |
| Infosys Limited Employees' Superannuation Fund Trust |
India |
Post-employment benefit plan of Infosys |
| Infosys BPO Limited Employees' Superannuation Fund Trust |
India |
Post-employment benefit plan of Infosys BPO |
| Infosys BPO Limited Employees' Gratuity Fund Trust |
India |
Post-employment benefit plan of Infosys BPO |
| EdgeVerve Systems Limited Employees’ Gratuity Fund Trust |
India |
Post-employment benefit plan of EdgeVerve |
| EdgeVerve Systems Limited Employees’ Superannuation Fund Trust |
India |
Post-employment benefit plan of EdgeVerve |
| Infosys Limited Employees’ Welfare Trust |
India |
Controlled trust |
| Infosys Employee Benefits Trust |
India |
Controlled trust |
| Infosys Science Foundation |
India |
Controlled trust
|
Refer Notes 2.22 for information on transactions
with post-employment benefit plans mentioned above.
List of key management personnel
Whole time directors
U B Pravin Rao
Dr. Vishal Sikka
Non-whole-time directors
K.V.Kamath ( resigned effective June 5, 2015)
Prof. Jeffrey S. Lehman
R. Seshasayee
Ravi Venkatesan
Kiran Mazumdar Shaw
Carol M. Browner (resigned effective November 23,
2015)
Prof. John W. Etchemendy
Roopa Kudva
Dr. Punita Kumar-Sinha (appointed effective January
14, 2016)
D. N. Prahlad (appointed effective October 14,
2016)
Executive Officers
M. D. Ranganath, Chief Financial Officer (effective
October 12, 2015)
David D. Kennedy, General Counsel and Chief Compliance
Officer (till December 31, 2016)
Rajiv Bansal, Chief Financial Officer (till October
12, 2015)
Mohit Joshi , President (effective October 13,
2016)
Rajesh K. Murthy, President (effective October
13, 2016)
Ravi Kumar S, President (effective October 13,
2016)
Sandeep Dadlani, President (effective October 13,
2016)
Krishnamurthy Shankar, Group Head - Human Resources
(effective October 13, 2016)
Gopi Krishnan Radhakrishnan - Acting General Counsel
(effective December 31, 2016)
Company Secretary
A.G.S. Manikantha (appointed effective June 22,
2015)
Related party transactions:
Transaction with key management personnel:
The table below describes the compensation to key
managerial personnel which comprise directors and members of executive officers:
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Salaries and other employee benefits to whole-time directors and executive officers (1)(2)(3) |
31 |
32 |
66 |
60 |
| Commission and other benefits to non-executive/independent directors |
3 |
2 |
9 |
7 |
|
Total
|
34 |
34 |
75 |
67 |
| (1) | | Includes stock compensation expense of 10 crore and 2 crore and 24 crore and
5 crore for the three months and nine months ended December 31, 2016 and December 31, 2015, towards key managerial personnel.
Refer note 2.13 |
| (2) | | Includes 6 crore payable under severance agreement to General counsel and Chief
compliance officer during the three months ended December 31, 2016 |
| (3) | | Three months and nine months ended December 31, 2015 includes 17.38 crore payable
under severance agreement to Rajiv Bansal who stepped down as Chief Financial officer w.e.f October 12, 2015 |
2.26 SEGMENT REPORTING
Ind AS 108 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 group's operations predominantly relate to providing end-to-end business solutions to
enable clients to enhance business performance. Based on the "management approach" as defined in INDAS 108, the Chief
Operating Decision Marker (CODM) evaluates the group's performance and allocates resources based on an analysis of various performance
indicators by business segments and geographic segments. Accordingly, information has been presented both along business segments
and geographic segments. 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 significant accounting policies.
Business segments of the group are primarily
enterprises in Financial Services (FS), enterprises in Manufacturing (MFG), enterprises in Retail, Consumer packaged goods and
Logistics (RCL), enterprises in the Energy & utilities, Communication and Services (ECS), enterprises in Hi-tech (Hi-tech),
enterprises in Life Sciences, Healthcare and Insurance (HILIFE) and all other segments. The FS reportable segments has been aggregated
to include the Financial Services operating segment and the Finacle operating segment because of the similarity of the economic
characteristics. All other segments represents the operating segments of businesses in India, Japan and China and IPS. Geographic
segmentation is based on business sourced from that geographic region and delivered from both on-site and off-shore locations.
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 and identifiable operating expenses
in relation to segments are categorized based on items that are individually identifiable to that segment. Revenue for “all
other segments” represents revenue generated by IPS and revenue generated from customers located in India, Japan and China.
Allocated expenses of segments include expenses incurred for rendering services from the group's offshore software development
centres and on-site expenses, which 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 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 against
the total income of the group.
Assets and liabilities used in the group'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 business
segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise
recognized.
Business Segments
Three months ended December 31, 2016 and December
31, 2015:
in
crore
| Particulars |
FS |
MFG |
ECS |
RCL |
HILIFE |
Hi-Tech |
All other segments |
Total |
| Revenue from operations |
4,663 |
1,893 |
3,885 |
2,821 |
2,196 |
1,250 |
565 |
17,273 |
| |
4,377 |
1,756 |
3,410 |
2,576 |
2,102 |
1,198 |
483 |
15,902 |
| Identifiable operating expenses |
2,341 |
1,007 |
1,878 |
1,342 |
1,064 |
642 |
358 |
8,632 |
| |
2,106 |
902 |
1,608 |
1,248 |
1,007 |
591 |
270 |
7,732 |
| Allocated expenses |
1,002 |
431 |
884 |
642 |
500 |
284 |
129 |
3,872 |
| |
1,021 |
429 |
833 |
629 |
514 |
293 |
118 |
3,837 |
| Segmental profit |
1,320 |
455 |
1,123 |
837 |
632 |
324 |
78 |
4,769 |
| |
1,250 |
425 |
969 |
699 |
581 |
314 |
95 |
4,333 |
| Unallocable expenses |
|
|
|
|
|
|
|
435 |
| |
|
|
|
|
|
|
|
374 |
| Other income, net |
|
|
|
|
|
|
|
820 |
| |
|
|
|
|
|
|
|
802 |
| Share in net profit/(loss) of associate |
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
– |
| Profit before tax |
|
|
|
|
|
|
|
5,154 |
| |
|
|
|
|
|
|
|
4,761 |
| Tax expense |
|
|
|
|
|
|
|
1,446 |
| |
|
|
|
|
|
|
|
1,296 |
| Profit for the period |
|
|
|
|
|
|
|
3,708 |
| |
|
|
|
|
|
|
|
3,465 |
| Depreciation and amortization |
|
|
|
|
|
|
|
433 |
| |
|
|
|
|
|
|
|
369 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
2 |
| |
|
|
|
|
|
|
|
5 |
Nine months ended December 31, 2016 and December
31, 2015:
in
crore
| Particulars |
FS |
MFG |
ECS |
RCL |
HILIFE |
Hi-Tech |
All other segments |
Total |
| Revenue from operations |
13,900 |
5,589 |
11,468 |
8,515 |
6,289 |
3,911 |
1,692 |
51,364 |
| |
12,502 |
5,200 |
9,912 |
7,499 |
6,007 |
3,564 |
1,207 |
45,891 |
| Identifiable operating expenses |
6,952 |
2,916 |
5,496 |
4,072 |
3,119 |
2,017 |
1,079 |
25,651 |
| |
5,984 |
2,792 |
4,566 |
3,590 |
2,899 |
1,755 |
756 |
22,342 |
| Allocated expenses |
3,067 |
1,297 |
2,661 |
1,977 |
1,458 |
908 |
392 |
11,760 |
| |
2,928 |
1,273 |
2,426 |
1,836 |
1,470 |
872 |
295 |
11,100 |
| Segmental profit |
3,881 |
1,376 |
3,311 |
2,466 |
1,712 |
986 |
221 |
13,953 |
| |
3,590 |
1,135 |
2,920 |
2,073 |
1,638 |
937 |
156 |
12,449 |
| Unallocable expenses |
|
|
|
|
|
|
|
1,264 |
| |
|
|
|
|
|
|
|
1,049 |
| Other income, net |
|
|
|
|
|
|
|
2,333 |
| |
|
|
|
|
|
|
|
2,351 |
| Share in net profit/(loss) of associate |
|
|
|
|
|
|
|
(5) |
| |
|
|
|
|
|
|
|
(2) |
| Profit before tax |
|
|
|
|
|
|
|
15,017 |
| |
|
|
|
|
|
|
|
13,749 |
| Tax expense |
|
|
|
|
|
|
|
4,268 |
| |
|
|
|
|
|
|
|
3,857 |
| Profit for the period |
|
|
|
|
|
|
|
10,749 |
| |
|
|
|
|
|
|
|
9,892 |
| Depreciation and amortization |
|
|
|
|
|
|
|
1,257 |
| |
|
|
|
|
|
|
|
1,040 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
7 |
| |
|
|
|
|
|
|
|
9 |
Geographic Segments
Three months ended December 31, 2016 and December
31, 2015:
in crore
| Particulars |
North America |
Europe |
India |
Rest of the World |
Total |
| Revenue from operations |
10,701 |
3,844 |
589 |
2,139 |
17,273 |
| |
9,939 |
3,696 |
446 |
1,821 |
15,902 |
| Identifiable operating expenses |
5,374 |
1,976 |
270 |
1,012 |
8,632 |
| |
4,937 |
1,770 |
180 |
845 |
7,732 |
| Allocated expenses |
2,432 |
871 |
117 |
452 |
3,872 |
| |
2,427 |
899 |
93 |
418 |
3,837 |
| Segmental operating income |
2,895 |
997 |
202 |
675 |
4,769 |
| |
2,575 |
1,027 |
173 |
558 |
4,333 |
| Unallocable expenses |
|
|
|
|
435 |
| |
|
|
|
|
374 |
| Other income, net |
|
|
|
|
820 |
| |
|
|
|
|
802 |
| Share in net profit/(loss) of associate |
|
|
|
|
– |
| |
|
|
|
|
– |
| Profit before tax |
|
|
|
|
5,154 |
| |
|
|
|
|
4,761 |
| Tax expense |
|
|
|
|
1,446 |
| |
|
|
|
|
1,296 |
| Profit for the period |
|
|
|
|
3,708 |
| |
|
|
|
|
3,465 |
| Depreciation and amortization |
|
|
|
|
433 |
| |
|
|
|
|
369 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
2 |
|
|
|
|
|
|
5 |
Nine months ended December 31, 2016 and December
31, 2015:
in crore
| Particulars |
North America |
Europe |
India |
Rest of the World |
Total |
| Revenue from operations |
31,742 |
11,608 |
1,633 |
6,381 |
51,364 |
| |
28,904 |
10,495 |
1,125 |
5,367 |
45,891 |
| Identifiable operating expenses |
16,155 |
5,777 |
767 |
2,952 |
25,651 |
| |
14,329 |
5,121 |
504 |
2,388 |
22,342 |
| Allocated expenses |
7,357 |
2,684 |
335 |
1,384 |
11,760 |
| |
7,070 |
2,558 |
235 |
1,237 |
11,100 |
| Segmental operating income |
8,230 |
3,147 |
531 |
2,045 |
13,953 |
| |
7,505 |
2,816 |
386 |
1,742 |
12,449 |
| Unallocable expenses |
|
|
|
|
1,264 |
| |
|
|
|
|
1,049 |
| Other income, net |
|
|
|
|
2,333 |
| |
|
|
|
|
2,351 |
| Share in net profit/(loss) of associate |
|
|
|
|
(5) |
| |
|
|
|
|
(2) |
| Profit before tax |
|
|
|
|
15,017 |
| |
|
|
|
|
13,749 |
| Tax expense |
|
|
|
|
4,268 |
| |
|
|
|
|
3,857 |
| Profit for the period |
|
|
|
|
10,749 |
| |
|
|
|
|
9,892 |
| Depreciation and amortization |
|
|
|
|
1,257 |
| |
|
|
|
|
1,040 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
7 |
| |
|
|
|
|
9 |
Significant clients
No client individually accounted for more than
10% of the revenues for the three months and nine months ended December 31, 2016 and December 31, 2015.
2.27 FUNCTION WISE CLASSIFICATION OF CONSOLIDATED
STATEMENT OF PROFIT AND LOSS
in crore
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2016 |
2015 |
2016 |
2015 |
| Revenue from operations |
17,273 |
15,902 |
51,364 |
45,891 |
| Cost of Sales |
10,840 |
9,990 |
32,483 |
28,837 |
| GROSS PROFIT |
6,433 |
5,912 |
18,881 |
17,054 |
| Operating expenses |
|
|
|
|
| Selling and marketing expenses |
885 |
859 |
2,702 |
2,522 |
| General and administration expenses |
1,214 |
1,094 |
3,490 |
3,132 |
| Total operating expenses |
2,099 |
1,953 |
6,192 |
5,654 |
| OPERATING PROFIT |
4,334 |
3,959 |
12,689 |
11,400 |
| Other income |
820 |
802 |
2,333 |
2,351 |
| PROFIT BEFORE MINORITY INTEREST / SHARE IN NET PROFIT / (LOSS) OF ASSOCIATE |
5,154 |
4,761 |
15,022 |
13,751 |
| Share in net profit/(loss) of associate |
– |
– |
(5) |
(2) |
| PROFIT BEFORE TAX |
5,154 |
4,761 |
15,017 |
13,749 |
| Tax expense: |
|
|
|
|
| Current tax |
1,468 |
1,319 |
4,404 |
3,892 |
| Deferred tax |
(22) |
(23) |
(136) |
(35) |
| PROFIT FOR THE PERIOD |
3,708 |
3,465 |
10,749 |
9,892 |
| Other comprehensive income |
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
| Remeasurement of the net defined benefit liability/asset |
(8) |
5 |
(65) |
(9) |
| Equity instruments through other comprehensive income |
– |
– |
– |
– |
| |
(8) |
5 |
(65) |
(9) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
| Fair value changes on cash flow hedges, net |
26 |
1 |
28 |
1 |
| Exchange differences on translation of foreign operations |
(47) |
1 |
(60) |
207 |
| |
(21) |
2 |
(32) |
208 |
| |
|
|
|
|
| Total other comprehensive income, net of tax |
(29) |
7 |
(97) |
199 |
| Total comprehensive income for the period |
3,679 |
3,472 |
10,652 |
10,091 |
| Profit attributable to: |
|
|
|
|
| Owners of the company |
3,708 |
3,465 |
10,749 |
9,892 |
| Non-controlling interests |
– |
– |
– |
– |
| |
3,708 |
3,465 |
10,749 |
9,892 |
| Total comprehensive income attributable to: |
|
|
|
|
| Owners of the company |
3,679 |
3,472 |
10,652 |
10,091 |
| Non–controlling interests |
– |
– |
– |
– |
| |
3,679 |
3,472 |
10,652 |
10,091 |
| As per our report of even date attached |
| for B S R & Co. LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No : 101248W/W-100022 |
| Supreet Sachdev |
R. Seshasayee |
Dr. Vishal Sikka |
U. B. Pravin Rao |
| Partner |
Chairman |
Chief Executive Officer and Managing Director |
Chief Operating Officer and Whole-time Director |
| Membership No. 205385 |
|
|
|
| Bangalore |
Roopa Kudva |
M. D. Ranganath |
A.G.S Manikantha |
| January 13, 2017 |
Director |
Chief Financial Officer |
Company Secretary |
Auditor’s Report on Quarterly and Year
to Date Consolidated Financial Results of Infosys Limited Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
To
The Board of Directors of Infosys Limited
We have audited the quarterly consolidated financial
results of Infosys Limited (‘the Company’) and its subsidiaries (collectively referred to as ‘the Group’)
for the quarter ended 31 December 2016 and the year to date consolidated financial results for the period from 1 April 2016 to
31 December 2016, attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
These consolidated quarterly as well as year
to date financial results have been prepared from consolidated interim financial statements, which are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these consolidated financial results based on our audit
of such consolidated interim financial statements, which have been prepared in accordance with the recognition and measurement
principles laid down in Indian Accounting Standard, Interim Financial Reporting (Ind AS 34), prescribed under Section 133 of the
Companies Act, 2013 read with relevant rules issued thereunder and other accounting principles generally accepted in India.
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 results are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts disclosed as financial results. An audit also includes assessing the accounting principles used
and significant estimates made by management. We believe that our audit provides a reasonable basis for our opinion.
In our opinion and to the best of our information
and according to the explanations given to us, these quarterly and year to date consolidated financial results:
| (i) |
include the quarterly and year to date financial results of the following entities: |
| |
(a) |
Infosys Limited; |
| |
(b) |
Infosys BPO Limited; |
| |
(c) |
Infosys (Czech Republic) Limited s.r.o.; |
| |
(d) |
Infosys Technologia Do Brasil LTDA.; |
| |
(e) |
Infosys Technologies (Australia) Pty Limited; |
| |
(f) |
Infosys Technologies (China) Co. Limited; |
| |
(g) |
Infosys McCamish Systems, LLC.; |
| |
(h) |
Infosys Public Services, Inc.; |
| |
(i) |
Infosys Technologies S. de R.L.de C.V.; |
| |
(j) |
Infosys Technologies (Sweden) AB; |
| |
(k) |
Infosys Poland Sp z.o.o.; |
| |
(l) |
Infosys Technologies (Shanghai) Company Limited; |
| |
(m) |
Infosys Americas Inc.; |
| |
(n) |
Portland Group Pty Ltd.; |
| |
(o) |
Edgeverve Systems Limited; |
| |
(p) |
Infosys Consulting Holding AG; |
| |
(q) |
Lodestone Management Consultants Inc.; |
| |
(r) |
Infosys Management Consulting Pty Limited; |
| |
(s) |
Infosys Consulting AG; |
| |
(t) |
Lodestone Augmentis AG; |
| |
(u) |
Lodestone GmbH; |
| |
(v) |
Lodestone Management Consultants (Belgium) S.A.; |
| |
(w) |
Infosys Consulting GmbH; |
| |
(x) |
Infy Consulting Company Ltd.; |
| |
(y) |
Infy Consulting B.V.; |
| |
(z) |
Infosys Consulting Ltda.; |
| |
(aa) |
Infosys Consulting Sp. z.o.o.; |
| |
(ab) |
Lodestone Management Consultants Portugal, Unipessoal, Lda.; |
| |
(ac) |
S.C. Infosys Consulting S.R.L.; |
| |
(ad) |
Infosys Consulting Pte Ltd.; |
| |
(ae) |
Infosys Consulting SAS; |
| |
(af) |
Infosys Consulting s.r.o.; |
| |
(ag) |
Lodestone Management Consultants Co., Ltd.; |
| |
(ah) |
Lodestone Management Consultants GmbH; |
| |
(ai) |
Infosys Consulting S. R. L.; |
| |
(aj) |
Infosys BPO, S de R.L. de C.V.; |
| |
(ak) |
Infosys Limited Employees’ Welfare Trust; |
| |
(al) |
Infosys Science Foundation; |
| |
(am) |
Panaya Inc.; |
| |
(an) |
Panaya Ltd.; |
| |
(ao) |
Panaya GmbH; |
| |
(ap) |
Panaya Pty Ltd.; |
| |
(aq) |
Panaya Japan Co. Ltd.; |
| |
(ar) |
Infosys Nova Holdings LLC.; |
| |
(as) |
DWA Nova LLC.; |
| |
(at) |
Kallidus Inc.; |
| |
(au) |
Skava Systems Private Limited; |
| |
(av) |
Noah Consulting LLC; |
| |
(aw) |
Noah Information Management Consulting, Inc.; |
| |
(ax) |
Infosys Canada Public Services Ltd.; |
| |
(ay) |
Infosys Employee Benefits Trust; and |
| |
(az) |
Infosys BPO Americas LLC. |
| (ii) |
have been presented in accordance with the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI circular dated 5 July 2016 in this regard; and |
| (iii) |
give a true and fair view of the consolidated financial performance including other comprehensive income and other financial information for the quarter ended 31 December 2016 as well as the year to date results for the period from 1 April 2016 to 31 December 2016. |
for B S R & Co. LLP
Chartered Accountants
Firm’s registration number: 101248W/W-100022
Supreet Sachdev
Partner
Membership number: 205385
Bangalore
13 January 2017
