Exhibit 99.11
Ind AS Consolidated
INDEPENDENT AUDITOR'S REPORT
TO THE BOARD OF DIRECTORS OF
INFOSYS LIMITED
Report on the Interim Consolidated Financial Statements
We have audited the accompanying interim consolidated
financial statements of INFOSYS LIMITED ("the Company") and its subsidiaries (the Company and its subsidiaries
together referred to as "the Group"), which comprise the Consolidated Balance Sheet as at September 30, 2017, the Consolidated
Statement of Profit and Loss (including Other Comprehensive Income) for the three months and six months period ended on that date,
the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the six months period ended on
that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the
interim consolidated financial statements").
Management's Responsibility for the Interim
Consolidated Financial Statements
The Company's Board of Directors is responsible
for the preparation of these interim consolidated financial statements that give a true and fair view of the consolidated financial
position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in equity and consolidated
cash flows of the Group in accordance with Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind
AS 34”) prescribed under Section 133 of the Companies Act, 2013 (“the Act”), read with relevant rules issued
thereunder and other accounting principles generally accepted in India.
This responsibility also includes 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 controls,
that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation
and presentation of the interim consolidated financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion
on these interim consolidated financial statements based on our audit.
We conducted our audit of the interim consolidated
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 interim
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and the disclosures in the interim consolidated financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of material misstatement of the interim consolidated 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 and presentation of the interim consolidated 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 Company 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 the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Board of Directors, as well as evaluating the overall presentation of the interim
consolidated financial statements.
We believe that the audit evidence obtained
by us is sufficient and appropriate to provide a basis for our audit opinion on the interim consolidated financial statements.
Opinion
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim consolidated financial statements give a true and fair view
in conformity with Ind AS 34 and accounting principles generally accepted in India, of the consolidated state of affairs of the
Group as at September 30, 2017, the consolidated profit and consolidated total comprehensive income for the three months and six
months period ended on that date, consolidated changes in equity and the consolidated cash flows for the six months period ended
on that date.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
| Bengaluru, October 24, 2017 |
P. R. RAMESH
Partner
(Membership No.70928)
|
INFOSYS LIMITED AND SUBSIDIARIES
(In 
crore )
| Consolidated Balance Sheets as at |
Note No. |
September 30, 2017 |
March 31, 2017 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.2 |
9,507 |
9,751 |
| Capital work-in-progress |
|
1,849 |
1,365 |
| Goodwill |
2.3 |
3,788 |
3,652 |
| Other intangible assets |
2.3 |
700 |
776 |
| Investment in associate |
2.23 |
– |
71 |
| Financial assets: |
|
|
|
| Investments |
2.4 |
6,169 |
6,382 |
| Loans |
2.5 |
40 |
29 |
| Other financial assets |
2.6 |
307 |
309 |
| Deferred tax assets (net) |
2.15 |
724 |
540 |
| Income tax assets (net) |
2.15 |
6,239 |
5,716 |
| Other non-current assets |
2.9 |
920 |
1,059 |
| Total non-current assets |
|
30,243 |
29,650 |
| Current assets |
|
|
|
| Financial assets: |
|
|
|
| Investments |
2.4 |
12,122 |
9,970 |
| Trade receivables |
2.7 |
13,423 |
12,322 |
| Cash and cash equivalents |
2.8 |
23,339 |
22,625 |
| Loans |
2.5 |
245 |
272 |
| Other financial assets |
2.6 |
6,447 |
5,980 |
| Other current assets |
2.9 |
2,659 |
2,536 |
| Total current assets |
|
58,235 |
53,705 |
| Total assets |
|
88,478 |
83,355 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.11 |
1,144 |
1,144 |
| Other equity |
|
71,226 |
67,838 |
| Total equity attributable to equity holders of the Company |
|
72,370 |
68,982 |
| Non-controlling interests |
|
– |
– |
| Total equity |
|
72,370 |
68,982 |
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Other financial liabilities |
2.12 |
52 |
70 |
| Deferred tax liabilities (net) |
2.15 |
188 |
207 |
| Other non-current liabilities |
2.13 |
82 |
83 |
| Total non-current liabilities |
|
322 |
360 |
| Current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Trade payables |
|
538 |
367 |
| Other financial liabilities |
2.12 |
7,047 |
6,349 |
| Provisions |
2.14 |
417 |
405 |
| Income tax liabilities (net) |
2.15 |
4,570 |
3,885 |
| Other current liabilities |
2.13 |
3,214 |
3,007 |
| Total current liabilities |
|
15,786 |
14,013 |
| Total equity and liabilities |
|
88,478 |
83,355 |
The accompanying notes form an integral part
of the interim consolidated financial statements
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
|
|
Firm’s Registration No :
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
P. R. Ramesh
Partner
Membership No. 70928 |
Nandan M. Nilekani
Chairman |
U. B. Pravin Rao
Interim-Chief Executive Officer and
Managing Director |
D. Sundaram
Director |
| |
|
|
|
Bengaluru
October 24, 2017 |
M. D. Ranganath
Chief Financial Officer |
A. G. S. Manikantha
Company Secretary |
|
INFOSYS LIMITED AND SUBSIDIARIES
(in crore, except equity share
and per equity share data)
| Consolidated Statement of Profit and Loss |
Note No. |
Three months ended September 30, |
Six months ended September 30, |
| |
|
2017 |
2016 |
2017 |
2016 |
| Revenue from operations |
2.16 |
17,567 |
17,310 |
34,645 |
34,091 |
| Other income, net |
2.17 |
883 |
760 |
1,697 |
1,513 |
| Total income |
|
18,450 |
18,070 |
36,342 |
35,604 |
| Expenses |
|
|
|
|
|
| Employee benefit expenses |
2.18 |
9,604 |
9,648 |
18,970 |
18,930 |
| Cost of technical sub-contractors |
|
1,089 |
940 |
2,150 |
1,857 |
| Travel expenses |
|
480 |
520 |
1,008 |
1,260 |
| Cost of software packages and others |
2.18 |
492 |
381 |
932 |
657 |
| Communication expenses |
|
131 |
136 |
255 |
256 |
| Consultancy and professional charges |
|
269 |
165 |
515 |
340 |
| Depreciation and amortisation expenses |
2.2 and 2.3 |
456 |
424 |
906 |
824 |
| Other expenses |
2.18 |
800 |
787 |
1,552 |
1,612 |
| Total expenses |
|
13,321 |
13,001 |
26,288 |
25,736 |
| Profit before non-controlling interests/share in net profit/(loss) of associate |
|
5,129 |
5,069 |
10,054 |
9,868 |
| Share in net profit/(loss) of associate |
|
– |
(3) |
– |
(5) |
| Write-down of investment in associate |
2.23 |
– |
– |
(71) |
– |
| Profit before tax |
|
5,129 |
5,066 |
9,983 |
9,863 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.15 |
1,471 |
1,469 |
2,971 |
2,936 |
| Deferred tax |
2.15 |
(68) |
(9) |
(197) |
(114) |
| Profit for the period |
|
3,726 |
3,606 |
7,209 |
7,041 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset |
|
6 |
(40) |
3 |
(57) |
| Equity instruments through other comprehensive income, net |
|
– |
– |
– |
– |
| |
|
6 |
(40) |
3 |
(57) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
2.10 |
20 |
2 |
(46) |
2 |
| Exchange differences on translation of foreign operations |
|
100 |
(51) |
207 |
(13) |
| Fair value changes on investments, net |
|
12 |
– |
39 |
– |
| |
|
132 |
(49) |
200 |
(11) |
| Total other comprehensive income, net of tax |
|
138 |
(89) |
203 |
(68) |
| Total comprehensive income for the period |
|
3,864 |
3,517 |
7,412 |
6,973 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
3,726 |
3,606 |
7,209 |
7,041 |
| Non-controlling interests |
|
– |
– |
– |
– |
| |
|
3,726
|
3,606
|
7,209
|
7,041
|
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
3,864 |
3,517 |
7,412 |
6,973 |
| Non-controlling interests |
|
– |
– |
– |
– |
| |
|
3,864 |
3,517 |
7,412 |
6,973 |
| Earnings per Equity share |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic () |
|
16.30 |
15.77 |
31.54 |
30.81 |
| Diluted () |
|
16.29 |
15.77 |
31.51 |
30.80 |
| Weighted average equity shares used in computing earnings per equity share |
2.21 |
|
|
|
|
| Basic |
|
2,285,865,361 |
2,285,641,710 |
2,285,762,186 |
2,285,632,081 |
| Diluted |
|
2,287,526,183 |
2,285,949,303 |
2,287,882,534 |
2,285,875,988 |
The accompanying notes form an integral part
of the interim consolidated financial statements
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
|
|
Firm’s Registration No :
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
P. R. Ramesh
Partner
Membership No. 70928 |
Nandan M. Nilekani
Chairman |
U. B. Pravin Rao
Interim-Chief Executive Officer and Managing Director |
D. Sundaram
Director |
| |
|
|
|
Bengaluru
October 24, 2017 |
M. D. Ranganath
Chief Financial Officer |
A. G. S. Manikantha
Company Secretary |
|
INFOSYS LIMITED AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
(In crore )
| Particulars |
|
OTHER EQUITY |
|
| |
Equity Share capital (1) |
RESERVES & SURPLUS |
Other comprehensive income |
|
| |
|
Securities Premium
Account |
Retained earnings |
Capital reserve |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve(2) |
Other reserves(3) |
Equity instruments through other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
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 six months ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax benefit arising on exercise of stock options |
– |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
| Excersice of stock options (refer note no. 2.11) |
– |
3 |
|
|
|
(3) |
|
|
|
|
|
|
|
| Dividends (including corporate dividend tax) |
– |
– |
(3,923) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(3,923) |
| Transfer to general reserve |
– |
– |
(1,579) |
– |
1,579 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
(551) |
– |
– |
– |
551 |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
551 |
– |
– |
– |
(551) |
– |
– |
– |
– |
– |
– |
| Share based payments to employees (refer note no. 2.11) |
– |
– |
– |
– |
– |
30 |
– |
– |
– |
– |
– |
– |
30 |
| Remeasurement of the net defined benefit liability/asset, net of tax (refer note no. 2.20.1 and 2.15) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(57) |
(57) |
| Fair value changes on derivatives designated as cash flow hedge, net of tax (refer note no. 2.10) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
2 |
– |
2 |
| Profit for the period |
– |
– |
7,041 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
7,041 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(13) |
– |
– |
(13) |
| Balance as of September 30, 2016 |
1,144 |
2,217 |
48,602 |
54 |
12,132 |
35 |
– |
5 |
– |
702 |
2 |
(68) |
64,825 |
Consolidated Statement of Changes in Equity
(contd.)
(In crore)
| Particulars |
|
OTHER EQUITY |
|
| |
Equity Share capital (1) |
RESERVES & SURPLUS |
Other comprehensive income |
|
| |
|
Securities Premium
Account |
Retained earnings |
Capital reserve |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve(2) |
Other reserves(3) |
Equity instruments through Other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
Other items of other comprehensive income |
Total equity attributable to equity holders of the Company |
| Balance as of April 1, 2017 |
1,144 |
2,216 |
52,882 |
54 |
12,135 |
120 |
– |
5 |
(5) |
458 |
39 |
(66) |
68,982 |
| Changes in equity for the six months ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share based payments to employees (refer to note no. 2.11) |
– |
– |
– |
– |
– |
37 |
– |
– |
– |
– |
– |
– |
37 |
| Exercise of stock options (refer to note no. 2.11) |
– |
45 |
– |
– |
1 |
(46) |
– |
– |
– |
– |
– |
– |
– |
| Dividends (including corporate dividend tax) |
– |
– |
(4,061) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(4,061) |
| Transfer to general reserve |
– |
– |
(1,382) |
– |
1,382 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
(965) |
– |
– |
– |
965 |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
263 |
– |
– |
– |
(263) |
– |
– |
– |
– |
– |
– |
| Remeasurement of the net defined benefit liability/asset, net of tax (refer note no. 2.20.1 and 2.15) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
3 |
3 |
| Equity instruments through other comprehensive income |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Fair value changes on investments, net of tax |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
39 |
39 |
| Fair value changes on derivatives designated as cash flow hedge, net of tax (refer note no. 2.10) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(46) |
– |
(46) |
| Profit for the period |
– |
– |
7,209 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
7,209 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
207 |
– |
– |
207 |
| Balance as of September 30, 2017 |
1,144 |
2,261 |
53,946 |
54 |
13,518 |
111 |
702 |
5 |
(5) |
665 |
(7) |
(24) |
72,370 |
The non controlling interest for each of the
above periods is less than 1 crore
| (1) | Net of treasury shares |
| | |
| (2) | 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 |
| | |
| (3) | 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 interim consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
|
|
Firm’s Registration No :
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
P. R. Ramesh
Partner
Membership No. 70928 |
Nandan M. Nilekani
Chairman |
U. B. Pravin Rao
Interim-Chief Executive Officer and Managing Director |
D. Sundaram
Director |
| |
|
|
|
Bengaluru
October 24, 2017 |
M. D. Ranganath
Chief Financial Officer |
A. G. S. Manikantha
Company Secretary |
|
INFOSYS LIMITED AND SUBSIDIARIES
(In crore)
| Consolidated Statement of Cash Flows |
Six months ended September 30, |
| |
2017 |
2016 |
| Cash flow from operating activities |
|
|
| Profit for the period |
7,209 |
7,041 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
| Income tax expense |
2,774 |
2,822 |
| Depreciation and amortization |
906 |
824 |
| Interest and dividend income |
(1,237) |
(1,324) |
| Allowances for credit losses on financial assets |
36 |
40 |
| Impairment loss on financial assets |
– |
– |
| Exchange differences on translation of assets and liabilities |
(9) |
27 |
| Other adjustments |
– |
205 |
| Changes in assets and liabilities |
|
|
| Trade receivables and unbilled revenue |
(1,619) |
(1,145) |
| Loans, other financial assets and other assets |
124 |
95 |
| Trade payables |
162 |
(78) |
| Other financial liabilities, other liabilities and provisions |
858 |
223 |
| Cash generated from operations |
9,204 |
8,730 |
| Income taxes paid |
(2,810) |
(2,499) |
| Net cash generated by operating activities |
6,394 |
6,231 |
| Cash flows from investing activities |
|
|
| Expenditure on property, plant and equipment net of sale proceeds |
(959) |
(1,469) |
| Loans to employees |
16 |
38 |
| Deposits placed with corporation |
(20) |
(85) |
| Interest and dividend received |
810 |
585 |
| Payment of contingent consideration for acquisition of business |
(33) |
(36) |
| Payment for acquisition of business, net of cash acquired |
(27) |
– |
| Payments to acquire financial assets |
|
|
| Preference and equity securities |
(13) |
(54) |
| Tax free bonds and government bonds |
(1) |
(5) |
| Liquid mutual funds and fixed maturity plan securities |
(25,764) |
(20,217) |
| Non convertible debentures |
(104) |
(154) |
| Certificates of deposit |
(423) |
– |
| Others |
(14) |
(8) |
| Proceeds on sale of financial assets |
|
|
| Tax free bonds and government bonds |
4 |
4 |
| Redemption of certificates of deposit |
1,770 |
– |
| Liquid mutual funds and fixed maturity plan securities |
23,070 |
18,159 |
| Net cash used in investing activities |
(1,688) |
(3,242) |
| Cash flows from financing activities: |
|
|
| Payment of dividends (including corporate dividend tax) |
(4,061) |
(3,910) |
| Net cash used in financing activities |
(4,061) |
(3,910) |
| Net increase / (decrease) in cash and cash equivalents |
645 |
(921) |
| Cash and cash equivalents at the beginning of the period |
22,625 |
32,697 |
| Effect of exchange rate changes on cash and cash equivalents |
69 |
(44) |
| Cash and cash equivalents at the end of the period |
23,339 |
31,732 |
| Supplementary information: |
|
|
| Restricted cash balance |
554 |
522 |
The accompanying notes form an integral part
of the interim consolidated financial statements
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
|
|
Firm’s Registration No :
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
P. R. Ramesh
Partner
Membership No. 70928 |
Nandan M. Nilekani
Chairman |
U. B. Pravin Rao
Interim-Chief Executive Officer and Managing Director |
D. Sundaram
Director |
| |
|
|
|
Bengaluru
October 24, 2017 |
M. D. Ranganath
Chief Financial Officer |
A. G. S. Manikantha
Company Secretary |
|
INFOSYS LIMITED AND SUBSIDIARIES
Notes to the interim consolidated financial
statements
1. Company overview and significant accounting
policies
1.1 Company overview
Infosys Limited ('the Company' or Infosys) is
a leading provider of consulting, technology, outsourcing and next-generation services and software. 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. Its new offerings span areas like
digital, big data and analytics, cloud, data and mainframe modernization, cyber security, IoT engineering Services and API &
micro services.
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 Bengaluru, Karnataka, India. The Company has its primary listings on the
BSE Limited and National Stock Exchange of India Limited in India. The Company’s American Depositary Shares (ADSs) representing
equity shares are also listed on the New York Stock Exchange (NYSE), Euronext London and Euronext Paris.
The Group's interim consolidated financial statements
are approved for issue by the Company's Board of Directors on October 24, 2017.
1.2 Basis of preparation of financial statements
These interim 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 ('the 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.
Effective April 1, 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, with April 1, 2015 as the transition date. 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.
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.
Amounts for the three months and six months
ended September 30, 2016 and year ended March 31, 2017 were audited by previous auditors - B S R & Co LLP.
As the quarter and year-to-date figures are
taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported
for the previous quarters might not always add up to the year-to-date figures reported in this statement
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, its
subsidiaries and associate, as disclosed in Note no. 2.23. 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 the management to make estimates, judgements and assumptions. These estimates, judgements 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 judgements
and the use of assumptions in these financial statements have been disclosed in Note no. 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 interim 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 judgements are involved
in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. Also
refer to Note no. 2.15.
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 (CGUs) 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 CGUs 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 CGU or groups of cash-generating units which are benefiting 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 rateably 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 rateably 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 rateable 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 increase 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 Group presents revenues net of indirect
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:
| Buildings (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 finder’s 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 in the statement of Profit and Loss.
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 amortized
cost
A financial asset is subsequently measured at
amortized 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(FVOCI)
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(OCI).
(iii) Financial assets at fair value through
profit or loss
A financial asset which is not classified in
any of the above categories is 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 as 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.
Refer to Note no. 2.10 for the disclosure on
carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing within one year
from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximates 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, ECLs 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 ECLs (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, Infosys Consulting Pte Ltd., 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 the Life Insurance Corporation of India as permitted by Indian law.
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 is 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.
Amendment to Ind AS 102:
Effective April 1, 2017, the Group adopted amendment
to Ind AS 102 which provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards
that include a net settlement feature in respect of withholding taxes. The adoption of amendment did not have any material effect
on the interim consolidated financial statements.
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.
Amendment to Ind AS 7:
Effective April 1, 2017, the Group adopted the
amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate
changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes,
suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising
from financing activities, to meet the disclosure requirement. The adoption of amendment did not have any material effect on the
interim consolidated financial statements.
1.21 Dividends
The final dividend on shares is 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, gain/loss on investment 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.
2.1 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. 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 ended December 31, 2016, the entire contingent consideration
has been 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 13 crore and 30 crore has
been recorded in the Statement of Profit and Loss for the three months ended September 30, 2017 and September 30, 2016, respectively
and 26 crore and 61 crore for the six months ended September 30, 2017 and September 30, 2016, respectively.
Proposed business transfer
On July 14, 2017, the Board of Directors of Infosys
authorized the Company to execute a Business Transfer Agreement and related documents with Noah Consulting LLC, a wholly owned
subsidiary, to transfer the business of Noah Consulting LLC to Infosys Limited, subject to securing the requisite regulatory approvals
for a consideration based on an independent valuation. Subsequently on October 17, 2017 , the company has entered into a business
transfer agreement to transfer the business for a consideration of $41 million (approximately 268 crore) with effect from October
25, 2017. The transfer of assets and liabilities between entities under common control will be accounted for at carrying values
and will 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).
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 six months ended September 30, 2017,
contingent consideration of 45 crore was paid to the sellers of Kallidus on the achievement of certain financial targets. The
balance contingent consideration as of September 30, 2017 and March 31, 2017 is 46 crore and 91 crore, respectively, on an undiscounted
basis.
Brilliant Basics Holdings Limited.
On September 8, 2017, Infosys acquired 100% of
the voting interests in Brilliant Basics Holdings Limited., UK, (Brilliant Basics) a product design and customer experience innovator
with experience in executing global programs. The business acquisition was conducted by entering into a share purchase agreement
for cash consideration 29 crore, a contingent consideration of up to 20 crore and an additional consideration of upto 13 crore,
referred to as retention bonus, payable to the employees of Brilliant Basics at each anniversary year over the next two years,
subject to their continuous employment with the group at each anniversary
The payment of contingent consideration to sellers
of Brilliant Basics is dependent upon the achievement of certain financial targets by Brilliant Basics over a period of 3 years
ending on March 2020.
The fair value of contingent consideration is determined
by discounting the estimated amount payable to the sellers of Brilliant Basics on achievement of certain financial targets. The
key inputs used in determination of the fair value of contingent consideration are the discount rate of 10% and the probabilities
of achievement of the financial targets.
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(*) |
1 |
– |
1 |
| Intangible assets - customer relationships |
– |
12 |
12 |
| Deferred tax liabilities on intangible assets |
– |
(2) |
(2) |
| |
1 |
10 |
11 |
| Goodwill |
|
|
35 |
| Total purchase price |
|
|
46 |
*Includes cash and cash equivalents acquired of
2 crore
The goodwill is not tax deductible.
The gross amount of trade receivables acquired
and its fair value is 3 crore and the amounts are expected to be fully recoverable
The acquisition date fair value of each major class
of consideration as of the acquisition date is as follows:
(In crore)
| Component |
Consideration settled |
| Cash paid |
29 |
| Fair value of contingent consideration |
17 |
| Total purchase price |
46 |
The transaction costs of 2 crore related to
the acquisition have been included under administrative expenses in the statement of profit and loss for the three months ended
September 30, 2017.
2.2 PROPERTY, PLANT AND EQUIPMENT
Following are the changes in the carrying value
of property, plant and equipment for the three months ended September 30, 2017:
(In crore)
| Particulars |
Land - Freehold |
Land - Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as of July 1, 2017 |
1,095 |
671 |
7,341 |
2,133 |
946 |
4,673 |
1,455 |
283 |
30 |
18,627 |
| Additions |
3 |
– |
50 |
49 |
14 |
72 |
29 |
6 |
2 |
225 |
| Deletions |
– |
– |
– |
(6) |
(5) |
(25) |
(13) |
– |
(1) |
(50) |
| Translation difference |
– |
– |
16 |
1 |
1 |
7 |
1 |
4 |
– |
30 |
| Gross carrying value as of September 30, 2017 |
1,098 |
671 |
7,407 |
2,177 |
956 |
4,727 |
1,472 |
293 |
31 |
18,832 |
| Accumulated depreciation as of July 1, 2017 |
– |
(28) |
(2,507) |
(1,421) |
(632) |
(3,195) |
(980) |
(176) |
(17) |
(8,956) |
| Depreciation |
– |
(2) |
(68) |
(68) |
(31) |
(175) |
(45) |
(17) |
(1) |
(407) |
| Accumulated depreciation on deletions |
– |
– |
– |
6 |
4 |
24 |
13 |
– |
1 |
48 |
| Translation difference |
– |
– |
(1) |
(1) |
– |
(5) |
(1) |
(2) |
– |
(10) |
| Accumulated depreciation as of September 30, 2017 |
– |
(30) |
(2,576) |
(1,484) |
(659) |
(3,351) |
(1,013) |
(195) |
(17) |
(9,325) |
| Carrying value as of September 30, 2017 |
1,098 |
641 |
4,831 |
693 |
297 |
1,376 |
459 |
98 |
14 |
9,507 |
| Carrying value as of July 1, 2017 |
1,095 |
643 |
4,834 |
712 |
314 |
1,478 |
475 |
107 |
13 |
9,671 |
Following are the changes in the carrying value
of property, plant and equipment for the three months ended September 30, 2016:
(In crore)
| |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as of July 1, 2016 |
976 |
655 |
6,361 |
1,872 |
885 |
4,240 |
1,258 |
236 |
31 |
16,514 |
| Additions |
9 |
– |
63 |
74 |
49 |
273 |
69 |
22 |
2 |
561 |
| Deletions |
– |
– |
– |
– |
(9) |
(20) |
(3) |
– |
(1) |
(33) |
| Translation difference |
– |
– |
– |
(1) |
(2) |
(4) |
(2) |
(2) |
– |
(11) |
| Gross carrying value as of September 30, 2016 |
985 |
655 |
6,424 |
1,945 |
923 |
4,489 |
1,322 |
256 |
32 |
17,031 |
| Accumulated depreciation as of July 1, 2016 |
– |
(23) |
(2,258) |
(1,161) |
(535) |
(2,767) |
(820) |
(209) |
(17) |
(7,790) |
| Depreciation |
– |
(1) |
(58) |
(64) |
(31) |
(179) |
(42) |
(6) |
(2) |
(383) |
| Accumulated depreciation on deletions |
– |
– |
– |
– |
9 |
20 |
3 |
– |
1 |
33 |
| Translation difference |
– |
– |
– |
1 |
1 |
4 |
1 |
3 |
– |
10 |
| Accumulated depreciation as of September 30, 2016 |
– |
(24) |
(2,316) |
(1,224) |
(556) |
(2,922) |
(858) |
(212) |
(18) |
(8,130) |
| Carrying value as of September 30, 2016 |
985 |
631 |
4,108 |
721 |
367 |
1,567 |
464 |
44 |
14 |
8,901 |
| Carrying value as of July 1, 2016 |
976 |
632 |
4,103 |
711 |
350 |
1,473 |
438 |
27 |
14 |
8,724 |
Following are the changes in the carrying value
of property, plant and equipment for the six months ended September 30, 2017:
(In crore)
| Particulars |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as of April 1, 2017 |
1,095 |
671 |
7,279 |
2,101 |
922 |
4,540 |
1,422 |
271 |
31 |
18,332 |
| Additions |
3 |
– |
102 |
81 |
38 |
231 |
62 |
15 |
3 |
535 |
| Deletions |
– |
– |
– |
(7) |
(6) |
(56) |
(14) |
(1) |
(3) |
(87) |
| Translation difference |
– |
– |
26 |
2 |
2 |
12 |
2 |
8 |
– |
52 |
| Gross carrying value as of September 30, 2017 |
1,098 |
671 |
7,407 |
2,177 |
956 |
4,727 |
1,472 |
293 |
31 |
18,832 |
| Accumulated depreciation as of April 1, 2017 |
– |
(27) |
(2,440) |
(1,353) |
(599) |
(3,053) |
(934) |
(158) |
(17) |
(8,581) |
| Depreciation |
– |
(3) |
(135) |
(136) |
(64) |
(344) |
(91) |
(33) |
(2) |
(808) |
| Accumulated depreciation on deletions |
– |
– |
– |
6 |
5 |
55 |
14 |
1 |
2 |
83 |
| Translation difference |
– |
– |
(1) |
(1) |
(1) |
(9) |
(2) |
(5) |
– |
(19) |
| Accumulated depreciation as of September 30, 2017 |
– |
(30) |
(2,576) |
(1,484) |
(659) |
(3,351) |
(1,013) |
(195) |
(17) |
(9,325) |
| Carrying value as of September 30, 2017 |
1,098 |
641 |
4,831 |
693 |
297 |
1,376 |
459 |
98 |
14 |
9,507 |
| Carrying value as of April 1, 2017 |
1,095 |
644 |
4,839 |
748 |
323 |
1,487 |
488 |
113 |
14 |
9,751 |
Following are the changes in the carrying value
of property, plant and equipment for the six months ended September 30, 2016:
(In crore)
| |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as of April 1, 2016 |
972 |
650 |
6,325 |
1,759 |
839 |
4,072 |
1,209 |
235 |
29 |
16,090 |
| Additions |
13 |
5 |
99 |
188 |
97 |
457 |
119 |
24 |
5 |
1,007 |
| Deletions |
– |
– |
– |
(1) |
(11) |
(35) |
(4) |
– |
(2) |
(53) |
| Translation difference |
– |
– |
– |
(1) |
(2) |
(5) |
(2) |
(3) |
– |
(13) |
| Gross carrying value as of September 30, 2016 |
985 |
655 |
6,424 |
1,945 |
923 |
4,489 |
1,322 |
256 |
32 |
17,031 |
| Accumulated depreciation as of April 1, 2016 |
– |
(22) |
(2,201) |
(1,100) |
(509) |
(2,618) |
(781) |
(205) |
(17) |
(7,453) |
| Depreciation |
– |
(2) |
(115) |
(126) |
(59) |
(343) |
(82) |
(11) |
(3) |
(741) |
| Accumulated depreciation on deletions |
– |
– |
– |
1 |
11 |
35 |
4 |
– |
2 |
53 |
| Translation difference |
– |
– |
– |
1 |
1 |
4 |
1 |
4 |
– |
11 |
| Accumulated depreciation as of September 30, 2016 |
– |
(24) |
(2,316) |
(1,224) |
(556) |
(2,922) |
(858) |
(212) |
(18) |
(8,130) |
| Carrying value as of September 30, 2016 |
985 |
631 |
4,108 |
721 |
367 |
1,567 |
464 |
44 |
14 |
8,901 |
| Carrying value as of April 1, 2016 |
972 |
628 |
4,124 |
659 |
330 |
1,454 |
428 |
30 |
12 |
8,637 |
Following are the changes in the carrying value
of property, plant and equipment for the year ended March 31, 2017
(In crore)
| |
Land- Freehold |
Land- Leasehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as of April 1, 2016 |
972 |
650 |
6,325 |
1,759 |
839 |
4,072 |
1,209 |
235 |
29 |
16,090 |
| Additions |
123 |
21 |
981 |
349 |
138 |
800 |
259 |
120 |
8 |
2,799 |
| Deletions |
– |
– |
– |
(4) |
(52) |
(315) |
(41) |
(72) |
(6) |
(490) |
| Translation difference |
– |
– |
(27) |
(3) |
(3) |
(17) |
(4) |
(13) |
– |
(67) |
| Gross carrying value as of March 31, 2017 |
1,095 |
671 |
7,279 |
2,101 |
922 |
4,540 |
1,423 |
270 |
31 |
18,332 |
| Accumulated depreciation as of April 1, 2016 |
– |
(22) |
(2,201) |
(1,100) |
(509) |
(2,618) |
(781) |
(205) |
(17) |
(7,453) |
| Depreciation |
– |
(5) |
(239) |
(261) |
(119) |
(678) |
(177) |
(33) |
(5) |
(1,517) |
| Accumulated depreciation on deletions |
– |
– |
– |
4 |
27 |
230 |
20 |
72 |
5 |
358 |
| Translation difference |
– |
– |
– |
4 |
2 |
13 |
3 |
9 |
– |
31 |
| Accumulated depreciation as of March 31, 2017 |
– |
(27) |
(2,440) |
(1,353) |
(599) |
(3,053) |
(935) |
(157) |
(17) |
(8,581) |
| Carrying value as of March 31, 2017 |
1,095 |
644 |
4,839 |
748 |
323 |
1,487 |
488 |
113 |
14 |
9,751 |
| Carrying value as of April 1, 2016 |
972 |
628 |
4,124 |
659 |
330 |
1,454 |
428 |
30 |
12 |
8,637 |
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.
2.3 GOODWILL AND OTHER INTANGIBLE ASSETS
Following is a summary of changes in the carrying
amount of goodwill:
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Carrying value at the beginning |
3,652 |
3,764 |
| Goodwill on Brilliant Basics acquisition (Refer note no. 2.1) |
35 |
– |
| Translation differences |
101 |
(112) |
| Carrying value at the end |
3,788 |
3,652 |
For the purpose of impairment testing, goodwill
acquired in a business combination is allocated to the CGU or groups of CGUs, 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 CGUs.
The goodwill has been allocated to the operating
segments as at March 31, 2017:
(In crore)
| Segment |
As at March 31, 2017 |
| Financial services |
826 |
| Manufacturing |
409 |
| Retail, Consumer packaged goods and Logistics |
556 |
| Life Sciences, Healthcare and Insurance |
638 |
| Energy & Utilities, Communication and Services |
765 |
| |
3,194 |
| Operating segments without significant goodwill |
458 |
| Total |
3,652 |
The entire goodwill relating to Infosys BPO’s
acquisition of McCamish has been allocated to the groups of CGUs which are represented by the Life Sciences, Healthcare and Insurance
segment.
The goodwill relating to Infosys BPO, Infosys
Lodestone, Portland, Panaya and Kallidus d.b.a Skava has been allocated to the groups of CGUs which are represented by a majority
of the entity’s operating segment.
The entire goodwill relating to Noah acquisition
has been allocated to the group of CGUs which is represented by the Energy & Utilities, Communication and Services segment.
The goodwill relating to Brilliant Basics acquistion
will be allocated across segments
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 CGUs over a period of five years. An average of the range of each assumption used is mentioned below. As of March 31,
2017, 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 at |
| |
March 31, 2017 |
| Long term growth rate |
8-10 |
| Operating margins |
17-20 |
| Discount rate |
14.4 |
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 September 30, 2017:
(In crore)
| Particulars |
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 July 1, 2017 |
757 |
404 |
21 |
1 |
67 |
90 |
62 |
1,402 |
| Acquisition through business combination (Refer note no. 2.1) |
12 |
– |
– |
– |
– |
– |
– |
12 |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
6 |
4 |
– |
– |
2 |
1 |
– |
13 |
| Gross carrying value as of September 30, 2017 |
775 |
408 |
21 |
1 |
69 |
91 |
62 |
1,427 |
| Accumulated amortization as of July 1, 2017 |
(407) |
(140) |
(21) |
(1) |
(7) |
(54) |
(42) |
(672) |
| Amortization expense |
(22) |
(19) |
– |
– |
(1) |
(4) |
(3) |
(49) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
(3) |
(3) |
– |
– |
– |
1 |
(1) |
(6) |
| Accumulated amortization as of September 30, 2017 |
(432) |
(162) |
(21) |
(1) |
(8) |
(57) |
(46) |
(727) |
| Carrying value as of July 1, 2017 |
350 |
264 |
– |
– |
60 |
36 |
20 |
730 |
| Carrying value as of September 30, 2017 |
343 |
246 |
– |
– |
61 |
34 |
16 |
700 |
| Estimated Useful Life (in years) |
2-10 |
5-8 |
– |
– |
50 |
3-10 |
3-5 |
|
| Estimated Remaining Useful Life (in years) |
0-6 |
2-6 |
– |
– |
44 |
0-7 |
0-3 |
|
Following are the changes in the carrying value
of acquired intangible assets for the three months ended September 30, 2016:
(In crore)
| Particulars |
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 July 1, 2016 |
784 |
422 |
21 |
1 |
72 |
94 |
64 |
1,458 |
| Additions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
(9) |
(6) |
– |
– |
(1) |
(1) |
(1) |
(18) |
| Gross carrying value as of September 30, 2016 |
775 |
416 |
21 |
1 |
71 |
93 |
63 |
1,440 |
| Accumulated amortization as of July 1, 2016 |
(329) |
(74) |
(21) |
(1) |
(6) |
(42) |
(27) |
(500) |
| Amortization expense |
(22) |
(11) |
– |
– |
(1) |
(3) |
(4) |
(41) |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
3 |
2 |
– |
– |
– |
– |
– |
5 |
| Accumulated amortization as of September 30, 2016 |
(348) |
(83) |
(21) |
(1) |
(7) |
(45) |
(31) |
(536) |
| Carrying value as of July 1, 2016 |
455 |
348 |
– |
– |
66 |
52 |
37 |
958 |
| Carrying value as of September 30, 2016 |
427 |
333 |
– |
– |
64 |
48 |
32 |
904 |
| 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 |
|
Following are the changes in the carrying value
of acquired intangible assets for the six months ended September 30, 2017:
(In crore)
| Particulars |
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, 2017 |
750 |
405 |
21 |
1 |
66 |
90 |
62 |
1,395 |
| Acquisition through business combination (Refer note no. 2.1) |
12 |
– |
– |
– |
– |
– |
– |
12 |
| Deletions during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation difference |
13 |
3 |
– |
– |
3 |
1 |
– |
20 |
| Gross carrying value as of September 30, 2017 |
775 |
408 |
21 |
1 |
69 |
91 |
62 |
1,427 |
| Accumulated amortization as of April 1, 2017 |
(382) |
(121) |
(21) |
(1) |
(7) |
(49) |
(38) |
(619) |
| Amortization expense |
(44) |
(39) |
– |
– |
(1) |
(7) |
(7) |
(98) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
(6) |
(2) |
– |
– |
– |
(1) |
(1) |
(10) |
| Accumulated amortization as of September 30, 2017 |
(432) |
(162) |
(21) |
(1) |
(8) |
(57) |
(46) |
(727) |
| Carrying value as of April 1, 2017 |
368 |
284 |
– |
– |
59 |
41 |
24 |
776 |
| Carrying value as of September 30, 2017 |
343 |
246 |
– |
– |
61 |
34 |
16 |
700 |
| 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 |
1-3 |
|
Following are the changes in the carrying value
of acquired intangible assets for the six months ended September 30, 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 |
– |
– |
(1) |
– |
– |
1 |
| Gross carrying value as of September 30, 2016 |
775 |
416 |
21 |
1 |
71 |
93 |
63 |
1,440 |
| Accumulated amortization as of April 1, 2016 |
(303) |
(62) |
(21) |
(1) |
(6) |
(38) |
(23) |
(454) |
| Amortization expense |
(45) |
(22) |
– |
– |
(1) |
(7) |
(8) |
(83) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
– |
1 |
– |
– |
– |
– |
– |
1 |
| Accumulated amortization as of September 30, 2016 |
(348) |
(83) |
(21) |
(1) |
(7) |
(45) |
(31) |
(536) |
| Carrying value as of April 1, 2016 |
472 |
352 |
– |
– |
66 |
55 |
40 |
985 |
| Carrying value as of September 30, 2016 |
427 |
333 |
– |
– |
64 |
48 |
32 |
904 |
| 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 |
|
Following are the changes in the carrying value
of acquired intangible assets for the year ended March 31, 2017:
(In crore)
| Particulars |
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 |
(25) |
(9) |
– |
– |
(6) |
(3) |
(1) |
(44) |
| Gross carrying value as of March 31, 2017 |
750 |
405 |
21 |
1 |
66 |
90 |
62 |
1,395 |
| Accumulated amortization as of April 1, 2016 |
(303) |
(62) |
(21) |
(1) |
(6) |
(38) |
(23) |
(454) |
| Amortization expense |
(91) |
(63) |
– |
– |
(1) |
(14) |
(17) |
(186) |
| Deletion during the period |
– |
– |
– |
– |
– |
– |
– |
– |
| Translation differences |
12 |
4 |
– |
– |
– |
3 |
2 |
21 |
| Accumulated amortization as of March 31, 2017 |
(382) |
(121) |
(21) |
(1) |
(7) |
(49) |
(38) |
(619) |
| Carrying value as of April 1, 2016 |
472 |
352 |
– |
– |
66 |
55 |
40 |
985 |
| Carrying value as of March 31, 2017 |
368 |
284 |
– |
– |
59 |
41 |
24 |
776 |
| 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 year ended March 31, 2017, 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. Amortization
expense for the year ended March 31, 2017 is higher by 19 crore due to the revision.
The amortization expense has been included under
depreciation and amortization 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 ended September 30, 2017 and September 30,
2016 was 177 crore and 198 crore respectively, and for the six months ended September 30, 2017 and September 30, 2016 was 376
crore and 382 crore respectively.
2.4 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non-current |
|
|
| Unquoted |
|
|
| Investments carried at fair value through other comprehensive income(refer note no. 2.4.1) |
|
|
| Preference securities |
131 |
144 |
| Equity instruments |
17 |
15 |
| |
148 |
159 |
| Investments carried at fair value through profit and loss(refer note no. 2.4.1) |
|
|
| Convertible promissory note |
11 |
10 |
| Others |
52 |
35 |
| |
63 |
45 |
| Quoted |
|
|
| Investments carried at amortized cost(refer note no. 2.4.2) |
|
|
| Tax free bonds |
1,897 |
1,898 |
| |
1,897 |
1,898 |
| Investments carried at fair value through profit and loss(refer note no. 2.4.3) |
|
|
| Fixed maturity plan securities |
420 |
407 |
| |
420 |
407 |
| Investments carried at fair value through other comprehensive income(refer note no. 2.4.4) |
|
|
| Non convertible debentures |
3,641 |
3,873 |
| |
3,641 |
3,873 |
| Total non-current investments |
6,169 |
6,382 |
| Current |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss(refer note no. 2.4.3) |
|
|
| Liquid mutual fund units |
4,632 |
1,803 |
| |
4,632 |
1,803 |
| Investments carried at fair value through other comprehensive income |
|
|
| Certificates of deposit (refer note no. 2.4.4) |
6,815 |
7,905 |
| Preference Securities (refer note no. 2.4.1) |
27 |
– |
| |
6,842 |
7,905 |
| Quoted |
|
|
| Investment carried at amortized cost(refer note no.2.4.2) |
|
|
| Government Bonds |
6 |
9 |
| |
6 |
9 |
| Investments carried at fair value through profit or loss(refer note no. 2.4.3) |
|
|
| Fixed maturity plan securities |
157 |
151 |
| |
157 |
151 |
| Investments carried at fair value through other comprehensive income(refer note no. 2.4.4) |
|
|
| Non convertible debentures |
485 |
102 |
| |
485 |
102 |
| Total current investments |
12,122 |
9,970 |
| Total investments |
18,291 |
16,352 |
| Aggregate amount of quoted investments |
6,606 |
6,440 |
| Market value of quoted investments (including interest accrued) |
6,892 |
6,701 |
| Aggregate amount of unquoted investments (including investment in associate) |
11,685 |
9,983 |
| Aggregate amount of impairment made for non-current unquoted investments (including investment in associate) |
89 |
18 |
| Investments carried at amortized cost |
1,903 |
1,907 |
| Investments carried at fair value through other comprehensive income |
11,116 |
12,039 |
| Investments carried at fair value through profit or loss |
5,272 |
2,406 |
2.4.1 Details of investments
The details of investments in preference, equity
and other instruments at September 30, 2017 and March 31, 2017 are as follows:
(In crore, except otherwise stated)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Preference securities |
|
|
| Airviz Inc. |
9 |
9 |
| 2,82,279 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each |
|
|
| ANSR Consulting |
10 |
10 |
| 52,631 (52,631) Series A Preferred Stock, fully paid up, par value USD 0.001 each |
|
|
| Whoop Inc |
15 |
15 |
| 16,48,352 (16,48,352) Series B Preferred Stock, fully paid up, par value USD 0.0001 each |
|
|
| CloudEndure Ltd. |
37 |
37 |
| 25,59,290 (25,59,290) Series B Preferred 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 |
24 |
24 |
| 39,33,910 (39,33,910) Series B Preferred Shares, fully paid up, par value USD 0.00001 each |
|
|
| Trifacta Inc. |
26 |
26 |
| 11,80,358 (11,80,358) Series C-1 Preferred Stock |
|
|
| Cloudyn Software Ltd |
27 |
13 |
| 54,044 (27,022) Series B-3 Preferred shares, fully paid up, par value ILS 0.01 each |
|
|
| Equity Instruments |
|
|
| 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 |
|
|
| Unsilo A/S |
16 |
14 |
| 69,894 (69,894) Equity Shares, fully paid up, par value DKK 1 each |
|
|
| Others |
|
|
| Stellaris Venture Partners India I |
5 |
3 |
| Vertex Ventures US Fund L.L.P |
47 |
32 |
| Convertible promissory note |
|
|
| Tidalscale |
11 |
10 |
| |
238 |
204 |
2.4.2 Details of investments in tax free
bonds and government bonds
The balances held in tax free bonds as at September
30, 2017 and March 31, 2017 are as follows:
(In crore, except as otherwise stated)
| Particulars |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Face Value |
Units |
Amount |
Units |
Amount |
| 7.04% Indian Railway Finance Corporation Limited Bonds 03MAR2026 |
10,00,000/- |
470 |
50 |
470 |
50 |
| 7.16% Power Finance Corporation Ltd Bonds 17JUL2025 |
10,00,000/- |
1,000 |
106 |
1,000 |
107 |
| 7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023 |
1,000/- |
20,00,000 |
201 |
20,00,000 |
201 |
| 7.28% Indian Railway Finance Corporation Limited Bonds 21DEC2030 |
1,000/- |
4,22,800 |
42 |
4,22,800 |
42 |
| 7.28% National Highways Authority of India Bonds 18SEP2030 |
10,00,000/- |
3,300 |
343 |
3,300 |
343 |
| 7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028 |
1,000/- |
21,00,000 |
211 |
21,00,000 |
211 |
| 7.35% National Highways Authority of India Bonds 11JAN2031 |
1,000/- |
5,71,396 |
57 |
5,71,396 |
57 |
| 7.93% Rural Electrification Corporation Limited Bonds 27MAR2022 |
1,000/- |
2,00,000 |
21 |
2,00,000 |
21 |
| 8.00% Indian Railway Finance Corporation Limited Bonds 23FEB2022 |
1,000/- |
1,50,000 |
15 |
1,50,000 |
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 1FEB2022 |
1,000/- |
5,00,000 |
50 |
5,00,000 |
50 |
| 8.26% India Infrastructure Finance Company Limited Bonds 23AUG2028 |
10,00,000/- |
1,000 |
100 |
1,000 |
100 |
| 8.30% National Highways Authority of India Bonds 25JAN2027 |
1,000/- |
5,00,000 |
53 |
5,00,000 |
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 |
| |
|
74,55,416 |
1,897 |
74,55,416 |
1,898 |
The balances held in government bonds as at September
30, 2017 and March 31, 2017 are as follows:
(In crore, except as otherwise stated)
| Particulars |
Face Value PHP |
As at September 30, 2017 |
As at March 31, 2017 |
| |
|
Units |
Amount |
Units |
Amount |
| Treasury Notes PHY6972FWQ99 MAT DATE 07 Jun 2017 |
– |
– |
– |
3,40,000 |
4 |
| Treasury Notes PIBL1217E082 MAT DATE 09 May 2018 |
100 |
1,00,000 |
1 |
– |
– |
| Treasury Notes PIBL1217C056 MAT DATE 14 Mar 2018 |
100 |
4,00,000 |
5 |
4,00,000 |
5 |
| |
|
5,00,000 |
6 |
7,40,000 |
9 |
2.4.3 Details of investments in liquid
mutual fund units and fixed maturity plans
The balances held in liquid mutual fund units as
at September 30, 2017 and March 31, 2017 are as follows:
(In crore, except as otherwise
stated)
| Particulars |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Units |
Amount |
Units |
Amount |
| Birla Sun Life Cash Plus- Growth- Direct Plan |
– |
– |
1,45,22,491 |
380 |
| Birla Sun Life Savings Fund- Direct Plan- Growth |
2,31,37,308 |
770 |
– |
– |
| BSL Cash Manager- Growth |
3,09,419 |
13 |
2,66,264 |
11 |
| BSL Floating Rate Fund LT- Growth |
23,96,543 |
50 |
– |
– |
| DSP Blackrock Liquidity Fund- Direct Plan- Growth |
8,34,040 |
200 |
– |
– |
| DSP Blackrock Ultra Short Term Fund- Direct Plan- Growth |
7,56,79,678 |
93 |
– |
– |
| HDFC Cash Management Treasury Advance- Growth |
1,35,62,438 |
50 |
– |
– |
| HDFC Floating Rate Income Fund- Short Term Plan- Direct Plan- Wholesale Option |
16,48,27,478 |
485 |
– |
– |
| ICICI Prudential Flexible Income- Direct Plan- Growth |
1,53,45,261 |
498 |
– |
– |
| ICICI Prudential Liquid- Direct Plan- Growth |
– |
– |
1,03,88,743 |
250 |
| ICICI Prudential Savings- Growth |
18,70,207 |
49 |
– |
– |
| ICICI Prudential U.S.Term Income- Direct Plan- Growth |
2,82,70,191 |
50 |
– |
– |
| IDFC Cash Fund- Direct Plan- Growth |
8,87,919 |
181 |
12,65,679 |
250 |
| IDFC Corporate Bond Fund- Direct Plan |
34,52,33,422 |
403 |
– |
– |
| IDFC Ultra Short Term Fund- Direct Plan- Growth |
2,11,04,705 |
51 |
– |
– |
| Kotak Low Duration Fund- Direct Plan- Growth (Ulta Short Term) |
22,56,585 |
477 |
1,502,564 |
305 |
| L&T Ultra Short Term Fund- Direct Plan- Growth |
8,01,07,281 |
223 |
– |
– |
| L&T Liquid Fund- Direct Plan- Growth |
– |
– |
6,72,806 |
150 |
| Reliance Liquid Fund- Cash Plan |
28,305 |
8 |
28,305 |
7 |
| Reliance Liquid Fund- Treasury Plan- Direct Growth Plan- Growth Option |
5,21,497 |
214 |
8,82,465 |
350 |
| Reliance Medium Term Fund- Direct Growth Plan- Growth Option |
14,09,59,380 |
508 |
– |
– |
| SBI Magnum Insta Cash Fund- Direct Plan- Growth |
3,63,920 |
135 |
– |
– |
| SBI Premier Liquid Fund- Direct Plan- Growth |
– |
– |
3,91,909 |
100 |
| SBI Ultra Short Term Debt Fund- Growth |
2,27,347 |
49 |
– |
– |
| UTI Liquid Cash Plan- Institutional- Direct Plan- Growth |
4,55,283 |
125 |
– |
– |
| |
91,83,78,207 |
4,632 |
2,99,21,226 |
1,803 |
The balances held in fixed maturity plans as at
September 30, 2017 and March 31, 2017 are as follows:
(In crore, except as otherwise stated)
| Particulars |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Units |
Amount |
Units |
Amount |
| Birla Sun Life Fixed Term Plan- Series OD 1145 Days- GR Direct |
6,00,00,000 |
62 |
6,00,00,000 |
61 |
| Birla Sun Life Fixed Term Plan- Series OE 1153 Days- GR Direct |
2,50,00,000 |
26 |
2,50,00,000 |
25 |
| HDFC FMP 1155D Feb 2017- Direct Growth- Series 37 |
3,80,00,000 |
40 |
3,80,00,000 |
38 |
| HDFC FMP 1169D Feb 2017- Direct- Quarterly Dividend- Series 37 |
4,50,00,000 |
45 |
4,50,00,000 |
45 |
| ICICI FMP Series 80-1194 D Plan F Div |
5,50,00,000 |
58 |
5,50,00,000 |
55 |
| ICICI Prudential Fixed Maturity Plan Series 80- 1187 Days Plan G Direct Plan |
4,20,00,000 |
44 |
4,20,00,000 |
42 |
| ICICI Prudential Fixed Maturity Plan Series 80- 1253 Days Plan J Direct Plan |
3,00,00,000 |
32 |
3,00,00,000 |
30 |
| IDFC Fixed Term Plan Series 129 Direct Plan- Growth 1147 Days |
1,00,00,000 |
10 |
1,00,00,000 |
10 |
| IDFC Fixed Term Plan Series 131 Direct Plan- Growth 1139 Days |
1,50,00,000 |
16 |
1,50,00,000 |
15 |
| Kotak FMP Series 199 Direct- Growth |
3,50,00,000 |
37 |
3,50,00,000 |
36 |
| Reliance Fixed Horizon Fund- XXXII Series 8- Dividend Plan |
5,00,00,000 |
50 |
5,00,00,000 |
50 |
| Reliance Yearly Interval Fund Series 1- Direct Plan- Growth Plan |
10,69,06,898 |
157 |
10,69,06,898 |
151 |
| |
51,19,06,898 |
577 |
51,19,06,898 |
558 |
2.4.4 Details of investments in non
convertible debentures and certificates of deposit
The balances held in non convertible debenture
units as at September 30, 2017 and March 31, 2017 is as follows:
(In crore, except as otherwise stated)
| Particulars |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Face Value |
Units |
Amount |
Units |
Amount |
| 7.48% Housing Development Finance Corporation Ltd 18NOV2019 |
1,00,00,000/- |
50 |
54 |
50 |
52 |
| 7.58% LIC Housing Finance Ltd 28FEB2020 |
10,00,000/- |
1,000 |
106 |
1,000 |
100 |
| 7.58% LIC Housing Finance Ltd 11JUN2020 |
10,00,000/- |
500 |
54 |
500 |
51 |
| 7.59% LIC Housing Finance Ltd 14OCT2021 |
10,00,000/- |
3,000 |
325 |
3,000 |
309 |
| 7.75% LIC Housing Finance Ltd 27AUG2021 |
10,00,000/- |
1,250 |
127 |
1,250 |
129 |
| 7.78% Housing Development Finance Corporation Ltd 24MAR2020 |
1,00,00,000/- |
100 |
105 |
– |
– |
| 7.79% LIC Housing Finance Ltd 19JUN2020 |
10,00,000/- |
500 |
52 |
500 |
52 |
| 7.80% Housing Development Finance Corporation Ltd 11NOV2019 |
1,00,00,000/- |
150 |
162 |
150 |
155 |
| 7.81% LIC Housing Finance Ltd 27APR2020 |
10,00,000/- |
2,000 |
210 |
2,000 |
208 |
| 7.95% Housing Development Finance Corporation Ltd 23SEP2019 |
1,00,00,000/- |
50 |
51 |
50 |
53 |
| 8.02% LIC Housing Finance Ltd 18FEB2020 |
10,00,000/- |
500 |
53 |
500 |
51 |
| 8.26% Housing Development Finance Corporation Ltd 12AUG2019 |
1,00,00,000/- |
100 |
103 |
100 |
106 |
| 8.34% Housing Development Finance Corporation Ltd 06MAR2019 |
1,00,00,000/- |
200 |
210 |
200 |
217 |
| 8.37% LIC Housing Finance Ltd 03OCT2019 |
10,00,000/- |
2,000 |
211 |
2,000 |
218 |
| 8.37% LIC Housing Finance Ltd 10MAY2021 |
10,00,000/- |
500 |
53 |
500 |
55 |
| 8.43% IDFC Bank Limited 30JAN2018 |
10,00,000/- |
1,000 |
106 |
1,000 |
102 |
| 8.46% Housing Development Finance Corporation Ltd 11MAR2019 |
1,00,00,000/- |
50 |
52 |
50 |
54 |
| 8.47% LIC Housing Finance Ltd 21JAN2020 |
10,00,000/- |
500 |
54 |
500 |
52 |
| 8.49% Housing Development Finance Corporation Ltd 27APR2020 |
5,00,000/- |
900 |
48 |
900 |
49 |
| 8.50% Housing Development Finance Corporation Ltd 31AUG2020 |
1,00,00,000/- |
100 |
104 |
100 |
108 |
| 8.54% IDFC Bank Limited 30MAY2018 |
10,00,000/- |
1,500 |
188 |
1,500 |
182 |
| 8.59% Housing Development Finance Corporation Ltd 14JUN2019 |
1,00,00,000/- |
50 |
54 |
50 |
51 |
| 8.60% LIC Housing Finance Ltd 22JUL2020 |
10,00,000/- |
1,000 |
104 |
1,000 |
108 |
| 8.60% LIC Housing Finance Ltd 29JUL2020 |
10,00,000/- |
1,750 |
183 |
1,750 |
190 |
| 8.61% LIC Housing Finance Ltd 11DEC2019 |
10,00,000/- |
1,000 |
110 |
1,000 |
104 |
| 8.66% IDFC Bank Limited 25JUN2018 |
10,00,000/- |
1,520 |
191 |
1,520 |
184 |
| 8.66% IDFC Bank Limited 27DEC2018 |
10,00,000/- |
400 |
51 |
400 |
49 |
| 8.72% Housing Development Finance Corporation Ltd 15APR2019 |
1,00,00,000/- |
75 |
80 |
75 |
77 |
| 8.75% Housing Development Finance Corporation Ltd 13JAN2020 |
5,00,000/- |
5,000 |
274 |
5,000 |
260 |
| 8.75% LIC Housing Finance Ltd 14JAN2020 |
10,00,000/- |
1,070 |
117 |
1,070 |
112 |
| 8.75% LIC Housing Finance Ltd 21DEC2020 |
10,00,000/- |
1,000 |
109 |
1,000 |
104 |
| 8.97% LIC Housing Finance Ltd 29OCT2019 |
10,00,000/- |
500 |
56 |
500 |
53 |
| 9.45% Housing Development Finance Corporation Ltd 21AUG2019 |
10,00,000/- |
3,000 |
314 |
3,000 |
327 |
| 9.65% Housing Development Finance Corporation Ltd 19JAN2019 |
10,00,000/- |
500 |
55 |
500 |
53 |
| |
|
32,815 |
4,126 |
32,715 |
3,975 |
The balances held in certificates of deposit as
at September 30, 2017 and March 31, 2017 are as follows:
(In crore, except as otherwise stated)
| Particulars |
|
As at September 30, 2017 |
As at March 31, 2017 |
| |
Face Value |
Units |
Amount |
Units |
Amount |
| Andhra Bank |
1,00,000/- |
– |
– |
35,000 |
344 |
| Axis Bank |
1,00,000/- |
2,73,100 |
2,684 |
3,05,600 |
2,914 |
| Corporation Bank |
1,00,000/- |
– |
– |
33,500 |
327 |
| DBS Bank |
1,00,000/- |
– |
– |
5,000 |
49 |
| HDFC Bank |
1,00,000/- |
15,000 |
143 |
– |
– |
| ICICI Bank |
1,00,000/- |
– |
– |
42,500 |
413 |
| IDFC Bank |
1,00,000/- |
1,40,000 |
1,373 |
1,40,000 |
1,328 |
| IndusInd Bank |
1,00,000/- |
95,900 |
940 |
1,06,400 |
1,011 |
| Kotak Bank |
1,00,000/- |
1,06,500 |
1,037 |
85,500 |
813 |
| Vijaya Bank |
1,00,000/- |
5,000 |
50 |
14,000 |
137 |
| Yes Bank |
1,00,000/- |
60,000 |
588 |
60,000 |
569 |
| |
|
6,95,500 |
6,815 |
8,27,500 |
7,905 |
2.5 LOANS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non Current |
|
|
| Unsecured, considered good |
|
|
| Other loans |
|
|
| Loans to employees |
40 |
29 |
| |
40 |
29 |
| Unsecured, considered doubtful |
|
|
| Loans to employees |
26 |
24 |
| |
66 |
53 |
| Less: Allowance for doubtful loans to employees |
26 |
24 |
| |
40 |
29 |
| Current |
|
|
| Unsecured, considered good |
|
|
| Other loans |
|
|
| Loans to employees |
245 |
272 |
| |
245 |
272 |
| Total loans |
285 |
301 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non Current |
|
|
| Security deposits (1) |
89 |
86 |
| Rental deposits (1) |
169 |
175 |
| Restricted deposits(1) |
49 |
48 |
| |
307 |
309 |
| Current |
|
|
| Security deposits (1) |
8 |
10 |
| Rental deposits (1) |
18 |
9 |
| Restricted deposits (1) |
1,435 |
1,416 |
| Unbilled revenues (1) |
4,136 |
3,648 |
| Interest accrued but not due (1) |
743 |
576 |
| Foreign currency forward and options contracts (2) (3) |
9 |
284 |
| Others (1) |
98 |
37 |
| |
6,447 |
5,980 |
| Total financial assets |
6,754 |
6,289 |
| (1) Financial assets carried at amortized cost |
6,745 |
6,005 |
| (2) Financial assets carried at fair value through other comprehensive income |
6 |
52 |
| (3) Financial assets carried at fair value through profit or loss |
3 |
232 |
Restricted deposits represent deposits with financial
institutions to settle employee-related obligations as and when they arise during the normal course of business. Security deposits
relate principally to leased telephone lines and electricity supplies.
2.7 TRADE RECEIVABLES (1)
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Current |
|
|
| Unsecured |
|
|
| Considered good |
13,423 |
12,322 |
| Considered doubtful |
355 |
318 |
| |
13,778 |
12,640 |
| Less: Allowances for credit loss |
355 |
318 |
| |
13,423 |
12,322 |
| (1) Includes dues from companies where directors are interested |
– |
1 |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Balances with banks |
|
|
| In current and deposit accounts |
14,573 |
14,889 |
| Cash on hand |
– |
– |
| Others |
|
|
| Deposits with financial institutions |
8,766 |
7,736 |
| |
23,339 |
22,625 |
| Balances with banks in unpaid dividend accounts |
18 |
17 |
| Deposit with more than 12 months maturity |
7,018 |
6,954 |
| Balances with banks held as margin money deposits against guarantees |
383 |
404 |
Cash and cash equivalents as of September 30,
2017 and March 31, 2017 include restricted cash and bank balances of 554 crore and 572 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 bank 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 |
| |
September 30, 2017 |
March 31, 2017 |
| Current accounts |
|
|
| ANZ Bank, Taiwan |
2 |
3 |
| Axis Bank, India |
1 |
1 |
| Banamex Bank, Mexico |
5 |
2 |
| Banamex Bank, Mexico (U.S. Dollar account) |
1 |
8 |
| Bank of America, Mexico |
81 |
54 |
| Bank of America, USA |
1,021 |
1,030 |
| Bank of Baroda, Mauritius |
1 |
- |
| Bank Zachodni WBK S.A, Poland |
13 |
4 |
| Bank of Tokyo-Mitsubishi UFJ Ltd., Japan |
3 |
– |
| Barclays Bank, UK |
3 |
1 |
| Bank Leumi, Israel (US Dollar account) |
7 |
2 |
| Bank Leumi, Israel |
5 |
11 |
| Bank Leumi, Israel (YEN account) |
1 |
– |
| BNP Paribas Bank, Norway |
96 |
17 |
| China Merchants Bank, China |
6 |
9 |
| Citibank N.A, China |
106 |
61 |
| Citibank N.A., China (U.S. Dollar account) |
32 |
11 |
| Citibank N.A., Costa Rica |
4 |
5 |
| Citibank N.A., Australia |
51 |
19 |
| Citibank N.A., Brazil |
21 |
30 |
| Citibank N.A., Dubai |
4 |
1 |
| Citibank N.A., Hungary |
3 |
3 |
| Citibank N.A., India |
3 |
3 |
| Citibank N.A., Japan |
20 |
12 |
| Citibank N.A., New Zealand |
18 |
10 |
| Citibank N.A., Portugal |
2 |
2 |
| Citibank N.A., Romania |
1 |
– |
| Citibank N.A., Singapore |
3 |
2 |
| Citibank N.A., South Korea |
1 |
1 |
| Citibank N.A., South Africa |
19 |
9 |
| Citibank N.A., South Africa (Euro account) |
1 |
1 |
| Citibank N.A., Philippines, (U.S. Dollar account) |
– |
1 |
| Citibank N.A., USA |
54 |
78 |
| Citibank N.A., EEFC (U.S. Dollar account) |
1 |
1 |
| Commerzbank, Germany |
49 |
18 |
| Danske Bank, Sweden |
6 |
– |
| Deutsche Bank, India |
20 |
12 |
| Deutsche Bank, Philippines |
18 |
5 |
| Deutsche Bank, Philippines (U.S. Dollar account) |
10 |
4 |
| Deutsche Bank, Poland |
86 |
12 |
| Deutsche Bank, Poland (Euro account) |
9 |
4 |
| Deutsche Bank, EEFC (Australian Dollar account) |
14 |
38 |
| Deutsche Bank, EEFC (Euro account) |
35 |
25 |
| Deutsche Bank, EEFC (Swiss Franc account) |
– |
2 |
| Deutsche Bank, EEFC (U.S. Dollar account) |
43 |
76 |
| Deutsche Bank, EEFC (United Kingdom Pound Sterling account) |
16 |
10 |
| Deutsche Bank, Belgium |
66 |
10 |
| Deutsche Bank, Malaysia |
7 |
7 |
| Deutsche Bank, Czech Republic |
33 |
8 |
| Deutsche Bank, Czech Republic (Euro account) |
7 |
7 |
| Deutsche Bank, Czech Republic (U.S. Dollar account) |
8 |
30 |
| Deutsche Bank, France |
11 |
8 |
| Deutsche Bank, Germany |
54 |
48 |
| Deutsche Bank, Netherlands |
27 |
2 |
| Deutsche Bank, Russia |
1 |
3 |
| Deutsche Bank, Russia (U.S. Dollar account) |
4 |
1 |
| Deutsche Bank, Singapore |
6 |
6 |
| Deutsche Bank, Spain |
1 |
– |
| Deutsche Bank, Switzerland |
44 |
9 |
| Deutsche Bank, Switzerland (U.S. Dollar account) |
– |
1 |
| Deutsche Bank, United Kingdom |
179 |
26 |
| Deutsche Bank, USA |
17 |
12 |
| HSBC Bank, Brazil |
– |
1 |
| HSBC Bank, Dubai |
2 |
– |
| HSBC Bank, Hong Kong |
1 |
1 |
| HSBC Bank, United Kingdom |
4 |
– |
| ICICI Bank, India |
160 |
53 |
| ICICI Bank, EEFC (Euro account) |
– |
1 |
| ICICI Bank, EEFC (U.S. Dollar account) |
105 |
5 |
| ICICI Bank, EEFC (United Kingdom Pound Sterling account) |
– |
1 |
| ING Bank, Belgium |
1 |
2 |
| Nordbanken, Sweden |
29 |
33 |
| Punjab National Bank, India |
14 |
6 |
| Raiffeisen Bank, Czech Republic |
5 |
4 |
| Raiffeisen Bank, Romania |
5 |
4 |
| Royal Bank of Canada, Canada |
155 |
83 |
| Santander Bank, Argentina |
2 |
1 |
| State Bank of India, India |
51 |
7 |
| Silicon Valley Bank, USA |
6 |
4 |
| Silicon Valley Bank (Euro account) |
29 |
19 |
| Silicon Valley Bank (United Kingdom Pound Sterling account) |
6 |
2 |
| Splitska Banka D.D., Société Générale Group, Croatia |
5 |
– |
| Union Bank of Switzerland AG |
– |
3 |
| Union Bank of Switzerland AG, (Euro account) |
– |
4 |
| Union Bank of Switzerland AG, (Hong Kong Dollar account) |
1 |
– |
| Wells Fargo Bank N.A., USA |
36 |
33 |
| Westpac, Australia |
– |
1 |
| Yes Bank, India |
11 |
– |
| |
2,989 |
2,044 |
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Deposit accounts |
|
|
| Axis Bank |
– |
1,175 |
| Bank BGZ BNP Paribas S.A |
134 |
183 |
| Barclays Bank |
825 |
825 |
| Canara Bank |
107 |
84 |
| Citibank |
166 |
165 |
| Deutsche Bank, Poland |
69 |
71 |
| HDFC Bank |
3,531 |
469 |
| HSBC Bank |
500 |
500 |
| ICICI Bank |
4,022 |
4,644 |
| IDBI Bank |
– |
1,750 |
| IDFC Bank |
200 |
200 |
| IndusInd Bank |
– |
191 |
| Kotak Mahindra Bank |
242 |
535 |
| South Indian Bank |
450 |
450 |
| Standard Chartered Bank |
265 |
500 |
| Syndicate Bank |
– |
49 |
| Yes Bank |
672 |
633 |
| |
11,183 |
12,424 |
| Unpaid dividend accounts |
|
|
| Axis Bank - Unpaid dividend account |
2 |
2 |
| HDFC Bank - Unpaid dividend account |
2 |
2 |
| ICICI Bank - Unpaid dividend account |
14 |
13 |
| |
18 |
17 |
| Margin money deposits against guarantees |
|
|
| Canara Bank |
153 |
177 |
| Citibank |
3 |
2 |
| ICICI Bank |
227 |
225 |
| |
383 |
404 |
| Deposits with financial institutions |
|
|
| HDFC Limited |
8,066 |
7,036 |
| LIC Housing Finance Limited |
700 |
700 |
| |
8,766 |
7,736 |
| Total cash and cash equivalents |
23,339 |
22,625 |
2.9 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non Current |
|
|
| Capital advances |
490 |
600 |
| Advances other than capital advances |
|
|
| Prepaid gratuity (refer note no. 2.20.1) |
34 |
79 |
| Others |
|
|
| Deferred Contract Cost |
269 |
284 |
| Prepaid expenses |
127 |
96 |
| |
920 |
1,059 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
110 |
131 |
| Others |
|
|
| Withholding taxes and others |
1,964 |
1,886 |
| Prepaid expenses |
513 |
441 |
| Deferred Contract Cost |
72 |
78 |
| |
2,659 |
2,536 |
| Total other assets |
3,579 |
3,595 |
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.
2.10 FINANCIAL INSTRUMENTS
Financial instruments by category
The carrying value and fair value of financial
instruments by categories as of September 30, 2017 are as follows:
(In crore)
| Particulars |
Amortized 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 no. 2.8) |
23,339 |
– |
– |
– |
– |
23,339 |
23,339 |
| Investments (Refer Note no. 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
175 |
– |
175 |
175 |
| Tax-free bonds and government bonds |
1,903 |
– |
– |
– |
– |
1,903 |
2,204* |
| Liquid mutual fund units |
– |
– |
4,632 |
– |
– |
4,632 |
4,632 |
| Non convertible debentures |
– |
– |
– |
– |
4,126 |
4,126 |
4,126 |
| Certificates of deposit |
– |
– |
– |
– |
6,815 |
6,815 |
6,815 |
| Convertible promissory note |
– |
– |
11 |
– |
– |
11 |
11 |
| Other investments |
– |
– |
52 |
– |
– |
52 |
52 |
| Fixed maturity plan securities |
– |
– |
577 |
– |
– |
577 |
577 |
| Trade receivables (Refer Note no. 2.7) |
13,423 |
– |
– |
– |
– |
13,423 |
13,423 |
| Loans (Refer Note no. 2.5) |
285 |
– |
– |
– |
– |
285 |
285 |
| Other financials assets (Refer Note no. 2.6) |
6,745 |
– |
3 |
– |
6 |
6,754 |
6,676** |
| Total |
45,695 |
– |
5,275 |
175 |
10,947 |
62,092 |
|
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
538 |
– |
– |
– |
– |
538 |
538 |
| Other financial liabilities (Refer Note no. 2.12) |
5,482 |
– |
116 |
– |
10 |
5,608 |
5,608 |
| Total |
6,020 |
– |
116 |
– |
10 |
6,146 |
|
* On account of fair value changes including
interest accrued
** Excludes interest accrued on tax free bonds
and government bonds
The carrying value and fair value of financial
instruments by categories as of March 31, 2017 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 no. 2.8) |
22,625 |
– |
– |
– |
– |
22,625 |
22,625 |
| Investments (Refer Note no. 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
159 |
– |
159 |
159 |
| Tax-free bonds and government bonds |
1,907 |
– |
– |
– |
– |
1,907 |
2,168* |
| Liquid mutual fund units |
– |
– |
1,803 |
– |
– |
1,803 |
1,803 |
| Non convertible debentures |
– |
– |
– |
– |
3,975 |
3,975 |
3,975 |
| Certificates of deposit |
– |
– |
– |
– |
7,905 |
7,905 |
7,905 |
| Convertible promissory note |
– |
– |
10 |
– |
– |
10 |
10 |
| Other investments |
– |
– |
35 |
– |
– |
35 |
35 |
| Fixed maturity plan securities |
– |
– |
558 |
– |
– |
558 |
558 |
| Trade receivables (Refer Note no. 2.7) |
12,322 |
– |
– |
– |
– |
12,322 |
12,322 |
| Loans (Refer Note no. 2.5) |
301 |
– |
– |
– |
– |
301 |
301 |
| Other financials assets (Refer Note no. 2.6) |
6,005 |
– |
232 |
– |
52 |
6,289 |
6,205** |
| Total |
43,160 |
– |
2,638 |
159 |
11,932 |
57,889 |
|
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
367 |
– |
– |
– |
– |
367 |
367 |
| Other financial liabilities (Refer Note no. 2.12) |
4,973 |
– |
87 |
– |
– |
5,060 |
5,060 |
| Total |
5,340 |
– |
87 |
– |
– |
5,427 |
|
* On account of fair value changes including
interest accrued
** Excludes interest accrued on tax free
bonds and government bonds
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 September 30, 2017:
(In crore)
| |
As of September 30, 2017 |
Fair value measurement at end of the reporting period/year using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments in liquid mutual funds (Refer Note no. 2.4) |
4,632 |
4,632 |
– |
– |
| Investments in tax-free bonds (Refer Note no. 2.4) |
2,198 |
2,089 |
109 |
– |
| Investments in government bonds (Refer Note no. 2.4) |
6 |
6 |
– |
– |
| Investments in equity instruments (Refer Note no. 2.4) |
17 |
– |
– |
17 |
| Investments in preference securities (Refer Note no. 2.4) |
158 |
– |
– |
158 |
| Investments in non convertible debentures (Refer Note no. 2.4) |
4,126 |
3,514 |
612 |
– |
| Investments in certificates of deposit (Refer Note no. 2.4) |
6,815 |
– |
6,815 |
– |
| Investments in fixed maturity plan securities (Refer Note no. 2.4) |
577 |
– |
577 |
– |
| Investments in convertible promissory note (Refer Note no. 2.4) |
11 |
– |
– |
11 |
| Other investments (Refer Note no. 2.4) |
52 |
– |
– |
52 |
| Derivative financial instruments - gain on outstanding foreign currency forward and option contracts (Refer Note no. 2.6) |
9 |
– |
9 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign currency forward and option contracts (Refer Note no. 2.12) |
65 |
– |
65 |
– |
| Liability towards contingent consideration (Refer note no. 2.12)* |
61 |
– |
– |
61 |
*Discounted 46
crore at 14.1% and 20 crore at 10%
During the six months ended September 30, 2017,
tax free bonds of 1,809 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price.
The following table presents fair value hierarchy
of assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:
(In crore)
| |
As of March 31, 2017 |
Fair value measurement at end of the reporting period/year using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments in liquid mutual funds (Refer Note no. 2.4) |
1,803 |
1,803 |
– |
– |
| Investments in tax free bonds (Refer Note no. 2.4) |
2,159 |
282 |
1,877 |
– |
| Investments in government bonds (Refer Note no. 2.4) |
9 |
9 |
– |
– |
| Investments in equity instruments (Refer Note no. 2.4) |
15 |
– |
– |
15 |
| Investments in preference securities (Refer Note no. 2.4) |
144 |
– |
– |
144 |
| Investments in non convertible debentures (Refer Note no. 2.4) |
3,975 |
3,371 |
604 |
– |
| Investments in certificates of deposit (Refer Note no. 2.4) |
7,905 |
– |
7,905 |
– |
| Investments in fixed maturity plan securities (Refer Note no. 2.4) |
558 |
– |
558 |
– |
| Investments in convertible promissory note (Refer Note no. 2.4) |
10 |
– |
– |
10 |
| Other investments (Refer Note no. 2.4) |
35 |
– |
– |
35 |
| Derivative financial instruments - gain on outstanding foreign currency forward and option contracts (Refer Note no. 2.6) |
284 |
– |
284 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign currency forward and option contracts (Refer Note no. 2.12) |
2 |
– |
2 |
– |
| Liability towards contingent consideration (Refer note no. 2.12)* |
85 |
– |
– |
85 |
*Discounted 91
crore at 14.2%
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 September 30, 2017 from March 31, 2017 is on account of settlement of contingent consideration of 45 crore pertaining to Kallidus
acquisiton, and change in discount rate and passage of time. Additionally during the three months ended September 30, 2017 contingent
consideration of 17 crore was included in relation to acquisition of Brilliant Basics Holdings Limited. (Refer note no. 2.1)
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. The fair value of fixed
maturity plan securities and certificates of deposit is based on 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. The fair value of investments in unquoted equity, preference and other securities is determined using Level
3 inputs like Discounted cash flows, Market multiple method, Option pricing model, etc.
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 primary 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 September 30, 2017:
(In crore)
| Particulars |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Cash and cash equivalents |
1,391 |
264 |
204 |
190 |
1,051 |
3,100 |
| Trade receivables |
8,955 |
1,463 |
796 |
718 |
769 |
12,701 |
| Other financial assets (including loans) |
2,564 |
574 |
359 |
192 |
455 |
4,144 |
| Trade payables |
(203) |
(54) |
(76) |
(18) |
(64) |
(415) |
| Other financial liabilities |
(2,576) |
(437) |
(272) |
(248) |
(544) |
(4,077) |
| Net assets / (liabilities) |
10,131 |
1,810 |
1,011 |
834 |
1,667 |
15,453 |
The following table analyzes foreign currency risk
from financial instruments as of March 31, 2017:
(In
crore)
| |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Cash and cash equivalents |
1,334 |
131 |
36 |
183 |
700 |
2,384 |
| Trade receivables |
8,345 |
1,244 |
775 |
561 |
702 |
11,627 |
| Other financial assets (including loans) |
2,862 |
535 |
372 |
159 |
403 |
4,331 |
| Trade payables |
(115) |
(32) |
(13) |
(5) |
(158) |
(323) |
| Other financial liabilities |
(2,129) |
(406) |
(211) |
(211) |
(547) |
(3,504) |
| Net assets / (liabilities) |
10,297 |
1,472 |
959 |
687 |
1,100 |
14,515 |
For the three months ended September 30, 2017
and September 30, 2016, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S.
dollar, has affected the Group's incremental operating margins by approximately 0.49% and 0.51%, respectively.
For the six months ended September 30, 2017
and September 30, 2016, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S.
dollar, has affected the Group's incremental operating margins by approximately 0.49% and 0.50%, respectively.
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 |
| |
September 30, 2017 |
March 31, 2017 |
| |
In million |
In crore |
In million |
In crore |
| Derivatives designated as cash flow hedges |
|
|
|
|
| Forward contracts |
|
|
|
|
| In Euro |
– |
– |
95 |
658 |
| In United Kingdom Pound Sterling |
15 |
131 |
40 |
324 |
| In Australian dollars |
– |
– |
130 |
644 |
| Option Contracts |
|
|
|
|
| In Euro |
45 |
347 |
40 |
277 |
| In United Kingdom Pound Sterling |
5 |
44 |
– |
– |
| In Australian dollars |
65 |
333 |
– |
– |
| Other derivatives |
|
|
|
|
| Forward contracts |
|
|
|
|
| In U.S. dollars |
695 |
4,534 |
526 |
3,411 |
| In Euro |
96 |
741 |
114 |
786 |
| In United Kingdom Pound Sterling |
81 |
703 |
75 |
609 |
| In Australian dollars |
23 |
118 |
35 |
174 |
| In Swiss Franc |
16 |
111 |
10 |
65 |
| In Singapore dollars |
5 |
24 |
5 |
23 |
| In Swedish Krona |
50 |
40 |
50 |
36 |
| In New Zealand dollars |
21 |
99 |
– |
– |
| In Canadian dollars |
19 |
98 |
– |
– |
| In Japanese Yen |
550 |
32 |
– |
– |
| In Norwegian Krone |
39 |
32 |
– |
– |
| Option Contracts |
|
|
|
|
| In U.S. dollars |
200 |
1,306 |
195 |
1,265 |
| In Euro |
50 |
385 |
25 |
173 |
| In United Kingdom Pound Sterling |
20 |
175 |
30 |
243 |
| In Canadian dollars |
– |
– |
13 |
65 |
| Total forwards and options |
|
9,253 |
|
8,753 |
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)
| Particulars |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Not later than one month |
3,412 |
2,303 |
| Later than one month and not later than three months |
4,119 |
4,316 |
| Later than three months and not later than one year |
1,722 |
2,134 |
| |
9,253 |
8,753 |
During the six months ended September 30, 2017,
the group has designated certain foreign exchange forward and option 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 hedges
are expected to occur and reclassified to revenue in 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 six months ended September 30, 2017:
(In crore)
| |
Three months ended |
Six months ended |
| |
September 30, 2017 |
September 30, 2016 |
September 30, 2017 |
September 30, 2016 |
| Balance at the beginning of the period |
(27) |
– |
39 |
– |
| Gain / (Loss) recognised in other comprehensive income during the period |
(51) |
2 |
(92) |
2 |
| Amount reclassified to revenue during the period |
78 |
– |
31 |
– |
| Tax impact on above |
(7) |
– |
15 |
– |
| Balance at the end of the period |
(7) |
2 |
(7) |
2 |
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 |
| |
September 30, 2017 |
March 31, 2017 |
| |
Derivative financial asset |
Derivative financial liability |
Derivative
financial
asset |
Derivative financial liability |
| Gross amount of recognized financial asset/liability |
15 |
(71) |
285 |
(3) |
| Amount set off |
(6) |
6 |
(1) |
1 |
| Net amount presented in Balance Sheet |
9 |
(65) |
284 |
(2) |
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 13,423 crore and 12,322 crore as of September 30, 2017 and March 31, 2017, respectively
and unbilled revenues amounting to 4,136 crore and 3,648 crore as of September 30, 2017 and March 31, 2017, respectively. Trade
receivables and unbilled revenues 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 ten customers:
(In %)
| |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Revenue from top customer |
3.4 |
3.5 |
3.4 |
3.5 |
| Revenue from top ten customers |
19.5 |
21.8 |
19.7 |
22.0 |
| |
|
|
|
|
Credit risk exposure
The allowance of lifetime expected credit loss
on customer balances for the three months and six months ended September 30, 2017 was 40 crore and 36 crore respectively and
was 25 crore and 40 crore for the three months and six months ended September 30, 2016.
(In crore)
| |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Balance at the beginning |
405 |
305 |
411 |
289 |
| Impairment loss recognized / (reversed) |
40 |
25 |
36 |
40 |
| Write-offs |
(1) |
(1) |
(4) |
(1) |
| Translation differences |
5 |
(3) |
6 |
(2) |
| Balance at the end |
449 |
326 |
449 |
326 |
The Company’s credit period generally ranges
from 30-60 days.
(In crore except otherwise stated)
| |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Trade receivables |
13,423 |
12,322 |
| Unbilled revenues |
4,136 |
3,648 |
| Days Sales Outstanding- DSO (days) |
71 |
68 |
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, fixed maturity plan
securities, certificates of deposit, 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.
As of September 30, 2017, the Group had a working
capital of 42,449 crore including cash and cash equivalents of 23,339 crore and current investments of 12,122 crore. As of March
31, 2017, the Group had a working capital of 39,692 crore including cash and cash equivalents of 22,625 crore and current investments
of 9,970 crore.
As of September 30, 2017 and March 31, 2017,
the outstanding compensated absences were 1,491 crore and 1,359 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 September 30, 2017:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
538 |
– |
– |
– |
538 |
| Other financial liabilities (excluding liability towards acquisition) (Refer Note no. 2.12) |
5,442 |
41 |
– |
– |
5,483 |
| Liability towards acquisitions on an undiscounted basis (including contingent consideration) (Refer Note no. 2.12) |
52 |
7 |
7 |
– |
66 |
The table below provides details regarding the
contractual maturities of significant financial liabilities as of March 31, 2017:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
367 |
– |
– |
– |
367 |
| Other financial liabilities (excluding liability towards acquisition) (Refer Note no. 2.12) |
4,943 |
31 |
– |
– |
4,974 |
| Liability towards acquisitions on an undiscounted basis (including contingent consideration) (Refer Note no. 2.12) |
45 |
46 |
– |
– |
91 |
2.11 EQUITY
SHARE CAPITAL
(In crore, except as otherwise
stated)
| Particulars |
As at |
|
September 30, 2017 |
March 31, 2017 |
| Authorized |
|
|
| Equity shares, 5 par value |
|
|
| 2,40,00,00,000 (2,40,00,00,000) equity shares |
1,200 |
1,200 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5 par value (1) |
1,144 |
1,144 |
| 2,28,60,87,194 (2,28,56,55,150) equity shares fully paid-up(2) |
|
|
| |
1,144 |
1,144 |
Forfeited shares amounted to 1,500 (1,500)
(1) Refer note no. 2.21 for details
of basic and diluted shares
(2) Net of treasury shares 1,09,01,258
(1,12,89,514)
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 (the Board) 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
September 30, 2017:
The Company has allotted 1,14,84,72,332 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 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 (RSU) have been adjusted for bonus shares.
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.
Dividends
The Company declares and pays dividends in Indian
rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution
taxes. Dividend distribution tax paid by subsidiaries may be reduced / available as credit against dividend distribution tax payable
by Infosys Limited.
The Board, 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 year ended March 31, 2017 and
the total appropriation was 3,923 crore (excluding dividend on treasury shares), including corporate dividend tax.
The amount of per share dividend recognized
as distributions to equity shareholders during the year ended March 31, 2016 was 29.50/- per equity share (not adjusted for June
17, 2015 bonus issue).
The Board of Directors, in its meeting on April
13, 2017, proposed a final dividend of 14.75/- per equity share for the financial year ended March 31, 2017 and the same was approved
by the shareholders at the Annual General Meeting held on June 24, 2017. The amount was recognized as distributions to equity shareholders
during the quarter ended June 30, 2017 and the total appropriation was 4,061 crore (excluding dividend on treasury shares), including
corporate dividend tax.
The Board of directors in their meeting on October
24, 2017 declared an interim dividend of 13/- per equity share which would result in a net cash outflow of approximately 3,408
crore, (excluding dividend paid on treasury shares) inclusive of corporate dividend tax.
Capital allocation policy
The Board, in its meeting on April 13, 2017,
reviewed and approved a revised Capital Allocation Policy of the Company after taking into consideration the strategic and operational
cash requirements of the Company in the medium term:
The key aspects of the Capital Allocation Policy
are:
1. The Company’s current policy is to
pay dividends of up to 50% of post-tax profits of the Financial Year. Effective from Financial Year 2018, the Company expects to
payout up to 70% of the free cash flow of the corresponding Financial Year in such manner (including by way of dividend and/or
share buyback) as may be decided by the Board from time to time, subject to applicable laws and requisite approvals, if any. Free
cash flow is defined as net cash provided by operating activities less capital expenditure as per the consolidated statement of
cash flows prepared under IFRS. Dividend payout includes dividend distribution tax.
2. Additionally, the Board has identified an
amount of up to 13,000 crore ($2 billion) to be paid out to shareholders during Financial Year 2018, in such manner (including
by way of dividend and/ or share buyback), to be decided by the Board, subject to applicable laws and requisite approvals, if any.
The Board, at its meeting on August 19, 2017,
approved a proposal for the Company to buyback its fully paid-up equity shares of face value of 5 each from the eligible equity
shareholders of the Company for an amount not exceeding 13,000 crore. The Buyback offer comprises a purchase of upto 113,043,478
Equity Shares aggregating upto 4.92% of the paid-up equity share capital of the Company at a price of 1,150 per Equity share.
The buyback is proposed to be made from all eligible equity shareholders (including those who become equity shareholders as on
the Record date by cancelling American Depository Shares and withdrawing underlying Equity shares) of the Company as on the Record
Date (i.e November 1, 2017) on a proportionate basis through the "Tender offer" route. The shareholders approved the
said proposal of Buyback of Equity Shares through the postal ballot concluded on October 7, 2017. The Company has published a Public
Announcement on October 10, 2017 for the buyback of its shares through a tender offer and has submitted Draft Letter of Offer to
regulatory authorities for their comments.
The details of shareholder holding more than
5% shares as at September 30, 2017 and March 31, 2017 are set out below:
| Name of the shareholder |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Number of shares |
% held |
Number of shares |
% held |
| Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) |
38,33,41,725 |
16.69 |
38,33,17,937 |
16.69 |
| Life Insurance Corporation of India |
16,88,01,690 |
7.35 |
16,14,36,123 |
7.03 |
The reconciliation of the number of shares outstanding
and the amount of share capital as at September 30, 2017 and March 31, 2017 is as follows:
(In crore, except as stated otherwise)
| Particulars |
As at September 30, 2017 |
As at March 31, 2017 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| At the beginning of the period |
228,56,55,150 |
1,144 |
228,56,21,088 |
1,144 |
| Add: Shares issued on exercise of employee stock options |
432,044 |
– |
34,062 |
– |
| At the end of the period |
228,60,87,194 |
1,144 |
228,56,55,150 |
1,144 |
Employee Stock Option Plan (ESOP):
2015 Stock Incentive Compensation Plan (the
2015 Plan) (Formerly 2011 RSU Plan): On March 31, 2016, pursuant to the approval by the shareholders through postal ballot,
the Board has been authorized to introduce, offer, issue and allot share-based incentives to eligible employees of the Company
and its subsidiaries under the 2015 Stock Incentive Compensation Plan (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 are held by the trust towards the
2011 Plan as at March 31, 2016). Out of this 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 on the date of the grant. 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.
Controlled trust holds 1,09,01,258 and 1,12,89,514
shares as of September 30, 2017 and March 31, 2017, respectively under the 2015 plan, out of which 1,00,000 equity shares have
been earmarked for welfare activities of the employees.
Stock incentives granted to Dr. Vishal Sikka
Consequent to Dr. Vishal Sikka's resignation
from the company on August 24, 2017, the unvested stock incentives (time-based and performance based awards) granted to him were
forfeited during the three months ended September 30, 2017. Accordingly, the Company recorded a reversal of 35 crore to stock
compensation cost during the three months ended September 30, 2017.
Stock incentives granted to COO:
The Nomination and Remuneration Committee ('Committee')
in its meeting held on October 14, 2016 recommended a grant of 27,250 RSUs and 43,000 ESOPs amounting to 4 crore to U. B. Pravin
Rao, under the 2015 Plan and the same was approved by the shareholders through postal ballot on March 31, 2017. These RSUs and
ESOPs have been granted w.e.f May 2, 2017. These RSUs and stock options would vest over a period of 4 years and shall be exercisable
within the period as approved by the Committee. The exercise price of the RSU's will be equal to the par value of the shares and
the exercise price of the stock options would be the market price as on the date of grant, as approved by the shareholders.
Stock incentives granted to KMPs (other than
Dr. Vishal Sikka and COO)
On November 1, 2016, 2,47,250 RSUs and 5,02,550
stock options were granted under the 2015 plan, to key management personnel, other than Dr. Vishal Sikka and COO, based on fiscal
2016 performance. On August 1, 2017 58,150 RSUs and 44,450 ESOPs were granted to the General Counsel. These RSUs and stock options
will vest within a period of 4 years and shall be exercisable within the period as approved by the Committee. The exercise price
of the RSUs will be equal to the par value of the shares and the exercise price of the stock options would be the market price
as on the date of grant.
During the six months ended September 30, 2017, two of the KMPs have resigned (Refer note no. 2.23 Related party transactions for
further details) and hence the RSUs and stock options granted to them were forfeited.
KMP stock compensation expense
The Company has recorded a reversal of employee
stock compensation expense of 29 crore and 17 crore, respectively, towards KMPs during the three months and six months ended
September 30, 2017. The employee stock compensation expense recorded was 5 crore and 14 crore during the three months and six
months ended September 30, 2016, respectively.
Stock incentive granted to other employees:
During fiscal 2017, the company granted 25,06,740
RSUs, 7,03,300 ESOPs and 1,12,210 incentive units (cash settled) to certain eligible employees at mid and senior levels under
the 2015 plan. Further, on May 2, 2017, the company granted 37,090 RSUs (includes equity shares and equity shares represented by
ADS) at par value, 73,600 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. On August 1, 2017, 7,450 incentive units
(cash settled) were granted to employees at the senior management level. These instruments will vest over a period of 4 years and
are subject to continued service.
The Company has recorded an employee stock compensation
expense of 21 crore and 55 crore, respectively during the three months and six months ended September 30, 2017 towards employees
other than KMPs (employee stock compensation cost of 16 crore each for the three months and six months ended September 30, 2016)
Total stock compensation expense
The company recorded a reversal of employee
stock compensation expense of 8 crore in the statement of profit and loss for the three months ended September 30, 2017 and an
employee stock compensation cost of 38 crore, for the six months ended September 30, 2017. The company recorded an employee stock
compensation expense of 21 crore and 30 crore for the three months and six months ended September 30, 2016, respectively. This
comprises of expense pertaining to all employees including KMPs.
Further, the cash settled stock compensation
expense (included above) for the three months and six months ended September 30, 2017 was less than 1 crore and 1 crore, respectively
and less than 1 crore during each of the three months and six months ended September 30, 2016. As of September 30, 2017 and March
31, 2017 80,793 and 1,06,845 incentive units were outstanding (net of forfeitures).
The activity in the 2015 Plan (formerly 2011
RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2017 is
set out below:
| Particulars |
Three months ended
September 30, 2017 |
Six months ended
September 30, 2017 |
| |
Shares arising out of options |
Weighted average exercise price () |
Shares arising out of options |
Weighted average exercise price () |
| 2015 Plan: RSU |
|
|
|
|
| Outstanding at the beginning |
3,226,005 |
5 |
2,961,373 |
5 |
| Granted |
58,150 |
5 |
392,714 |
5 |
| Exercised |
407,232 |
5 |
432,044 |
5 |
| Forfeited and expired |
637,082 |
5 |
682,202 |
5 |
| Outstanding at the end |
2,239,841 |
5 |
2,239,841 |
5 |
| Exercisable at the end |
31,624 |
5 |
31,624 |
5 |
| 2015 Plan: Employee Stock Options (ESOPs) |
|
|
|
|
| Outstanding at the beginning |
1,644,775 |
974 |
1,197,650 |
992 |
| Granted |
44,450 |
1,017 |
491,575 |
942 |
| Exercised |
– |
– |
– |
– |
| Forfeited and expired |
498,275 |
952 |
498,275 |
952 |
| Outstanding at the end |
1,190,950 |
992 |
1,190,950 |
992 |
| 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 six months ended September 30, 2016 is
set out below:
| Particulars |
Three months ended
September 30, 2016 |
Six months ended
September 30, 2016 |
| |
Shares arising out of options |
Weighted average exercise price () |
Shares arising out of options |
Weighted average exercise price () |
| 2015 Plan: RSU |
|
|
|
|
| Outstanding at the beginning |
209,099 |
5 |
221,505 |
5 |
| Granted |
1,904,315 |
5 |
1,904,315 |
5 |
| Forfeited and expired |
22,770 |
5 |
22,770 |
5 |
| Exercised |
18,236 |
5 |
30,642 |
5 |
| Outstanding at the end |
2,072,408 |
5 |
2,072,408 |
5 |
| Exercisable at the end |
– |
– |
– |
– |
During the three months and six months ended
September 30, 2017, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 948
and 947 respectively.
During the three months and six months ended
September 30, 2016, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 1,021
and 1,096 respectively.
The following table summarizes information about
equity settled RSUs and ESOPs outstanding as of September 30, 2017:
| Range of exercise prices per share () |
Options outstanding |
| |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
| 2015 Plan: |
|
|
|
| 0 - 5 (RSU) |
2,239,841 |
1.74 |
5.00 |
| 900 - 1100 (ESOP) |
1,190,950 |
6.66 |
992.06 |
| |
3,430,791 |
3.47 |
350.83 |
The following table summarizes information about
equity settled RSUs and ESOPs outstanding as of March 31, 2017:
| Range of exercise prices per share () |
Options outstanding |
| |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
| 2015 Plan: |
|
|
|
| 0 - 5 (RSU) |
2,961,373 |
1.88 |
5.00 |
| 900 - 1100 (ESOP) |
1,197,650 |
7.09 |
1,026.50 |
| |
4,159,023 |
3.38 |
299.16 |
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 2018-
Equity Shares-RSU |
Fiscal 2018-
Equity shares ESOP |
Fiscal 2018-
ADS-RSU |
Fiscal 2018-
ADS- ESOP |
| Weighted average share price () / ($- ADS) |
923 |
923 |
14.73 |
14.65 |
| Exercise price ()/ ($- ADS) |
5.00 |
919 |
0.08 |
14.67 |
| Expected volatility (%) |
21-25 |
25-28 |
21-26 |
25-31 |
| Expected life of the option (years) |
1 - 4 |
3 - 7 |
1 - 4 |
3 - 7 |
| Expected dividends (%) |
2.78 |
2.78 |
2.74 |
2.74 |
| Risk-free interest rate (%) |
6 - 7 |
6 - 7 |
1 - 2 |
1 - 2 |
| Weighted average fair value as on grant date () / ($- ADS) |
857 |
254 |
13.73 |
2.93 |
| Particulars |
For options granted in |
| |
Fiscal 2017-
Equity Shares-RSU |
Fiscal 2017-
Equity shares ESOP |
Fiscal 2017-
ADS-RSU |
Fiscal 2017-
ADS- ESOP |
| Weighted average share price () / ($- ADS) |
1,067 |
989 |
15.77 |
15.26 |
| Exercise price ()/ ($- 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) |
1,002 |
285 |
14.84 |
3.46 |
The expected life 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.
2.12 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non-current |
|
|
| Others |
|
|
| Accrued compensation to employees (1) |
40 |
30 |
| Payable for acquisition of business (refer note no. 2.1) (2) |
|
|
| Contingent consideration |
12 |
40 |
| |
52 |
70 |
| Current |
|
|
| Unpaid dividends (1) |
18 |
17 |
| Others |
|
|
| Accrued compensation to employees (1) |
2,083 |
1,881 |
| Accrued expenses (1) |
2,953 |
2,585 |
| Retention monies (1) |
180 |
220 |
| Payable for acquisition of business |
|
|
| Contingent consideration (refer note no. 2.1) (2) |
49 |
45 |
| Client deposits (1) |
12 |
32 |
| Payable by controlled trusts (1) |
136 |
145 |
| Compensated absences |
1,491 |
1,359 |
| Foreign currency forward and options contracts (2)(3) |
65 |
2 |
| Capital creditors (1) |
33 |
48 |
| Other payables (1) |
27 |
15 |
| |
7,047 |
6,349 |
| Total financial liabilities |
7,099 |
6,419 |
| (1) Financial liability carried at amortized cost |
5,482 |
4,973 |
| (2) Financial liability carried at fair value through profit and loss |
116 |
87 |
| (3) Financial liability carried at fair value through other comprehensive income |
10 |
- |
| Contingent consideration on undiscounted basis |
66 |
91 |
2.13 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Non-current |
|
|
| Others |
|
|
| Deferred income - government grant on land use rights |
43 |
41 |
| Deferred income |
39 |
42 |
| |
82 |
83 |
| Current |
|
|
| Unearned revenue |
1,998 |
1,777 |
| Others |
|
|
| Withholding taxes and others |
1,202 |
1,226 |
| Accrued gratuity (refer note no. 2.20.1) |
2 |
1 |
| Deferred rent |
11 |
2 |
| Deferred income - government grant on land use rights |
1 |
1 |
| |
3,214 |
3,007 |
2.14 PROVISIONS
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and warranties and others |
417 |
405 |
| |
417 |
405 |
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 |
Six months ended |
| |
September 30, 2017 |
September 30, 2017 |
| Balance at the beginning |
404 |
405 |
| Provision recognized/(reversed) |
28 |
43 |
| Provision utilized |
(20) |
(35) |
| Exchange difference |
5 |
4 |
| Balance at the end |
417 |
417 |
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.
2.15 INCOME TAXES
Income tax expense in the consolidated Statement
of Profit and Loss comprises:
(In crore)
| |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Current taxes |
1,471 |
1,469 |
2,971 |
2,936 |
| Deferred taxes |
(68) |
(9) |
(197) |
(114) |
| Income tax expense |
1,403 |
1,460 |
2,774 |
2,822 |
Current tax expense for the three months ended
September 30, 2017 and September 30, 2016 includes reversals (net of provisions) of 134 crore and 17 crore respectively, pertaining
to prior periods.
Current tax expense for the six months ended
September 30, 2017 and September 30, 2016 includes reversals (net of provisions) of 149 crore and 9 crore respectively, pertaining
to prior periods.
Entire deferred income tax for the three months
and six months ended September 30, 2017 and September 30, 2016 relates to origination and reversal of temporary differences.
During the three months ended September 30,
2017 and September 30, 2016, a current tax charge of 2 crore and current tax credit 8 crore respectively have been recorded in
other comprehensive income pertaining to remeasurement of defined benefit plan asset.
During the three months ended September 30,
2017, a deferred tax charge of 7 crore and a deferred tax charge of 3 crore has been recorded in other comprehensive income pertaining
to unrealized gains on derivatives designated as cash flow hedges and unrealized gain on investment in non-convertible debentures
and certificates of deposit.
During the six months ended September 30, 2017
and September 30, 2016, a current tax charge of 1 crore and current tax credit 13 crore respectively have been recorded in other
comprehensive income pertaining to remeasurement of defined benefit plan asset.
During the six months ended September 30, 2017,
a deferred tax credit of 15 crore and a deferred tax charge of 6 crore has been recorded in other comprehensive income pertaining
to unrealized gains on derivatives designated as cash flow hedges and unrealized gain on investment in non-convertible debentures
and certificates of deposit.
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 September 30, |
Six months ended September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Profit before income taxes |
5,129 |
5,066 |
9,983 |
9,863 |
| Enacted tax rates in India |
34.61% |
34.61% |
34.61% |
34.61% |
| Computed expected tax expense |
1,775 |
1,753 |
3,455 |
3,414 |
| Tax effect due to non-taxable income for Indian tax purposes |
(527) |
(523) |
(1,124) |
(1007) |
| Overseas taxes |
206 |
225 |
429 |
415 |
| Tax provision (reversals), overseas and domestic |
(134) |
(17) |
(149) |
(9) |
| Effect of exempt non-operating income |
(14) |
(17) |
(31) |
(45) |
| Effect of unrecognized deferred tax assets |
37 |
56 |
109 |
53 |
| Effect of differential overseas tax rates |
(1) |
14 |
8 |
16 |
| Effect of non-deductible expenses |
40 |
(8) |
73 |
24 |
| Others |
21 |
(23) |
4 |
(39) |
| Income tax expense |
1,403 |
1,460 |
2,774 |
2,822 |
The applicable Indian statutory tax rates for
fiscal 2018 and fiscal 2017 is 34.61%, respectively.
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 (SEZs) Act, 2005. SEZ units
which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100% 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% 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, 2017, Infosys' U.S. branch
net assets amounted to approximately 5,995 crore. As of September 30, 2017, the Company has provided for branch profit tax of
329 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 of 2 crore is on account of exchange rate during the six months ended September
30, 2017.
Deferred income tax liabilities have not been
recognized on temporary differences amounting to 5,736 crore and 5,309 crore as of September 30, 2017 and March 31, 2017, 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 September 30, 2017 and March 31, 2017:
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Income tax assets |
6,239 |
5,716 |
| Current income tax liabilities |
4,570 |
3,885 |
| Net current income tax asset/ (liability) at the end |
1,669 |
1,831 |
The gross movement in the current income tax asset/
(liability) for the three months and six months ended September 30, 2017 and September 30, 2016 is as follows:
(In crore)
| |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Net current income tax asset/ (liability) at the beginning |
1,537 |
1,102 |
1,831 |
1,820 |
| Translation differences |
– |
– |
– |
– |
| Income tax paid |
1,605 |
1,755 |
2,810 |
2,499 |
| Current income tax expense |
(1,471) |
(1,469) |
(2,971) |
(2,936) |
| Income tax benefit arising on exercise of stock options |
– |
1 |
– |
1 |
| Income tax on other comprehensive income |
(2) |
8 |
(1) |
13 |
| Net current income tax asset/ (liability) at the end |
1,669 |
1,397 |
1,669 |
1,397 |
The tax effects of significant temporary differences
that resulted in deferred income tax assets and liabilities are as follows:
(In crore)
| |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Deferred income tax assets |
|
|
| Property, plant and equipment |
168 |
138 |
| Computer software |
43 |
40 |
| Accrued compensation to employees |
75 |
57 |
| Trade receivables |
142 |
136 |
| Compensated absences |
390 |
374 |
| Post sales client support |
99 |
97 |
| Derivative financial instruments |
17 |
– |
| Intangibles |
26 |
22 |
| Others |
152 |
143 |
| Total deferred income tax assets |
1,112 |
1007 |
| Deferred income tax liabilities |
|
|
| Intangible asset |
(189) |
(206) |
| Temporary difference related to branch profits |
(329) |
(327) |
| Derivative financial instruments |
– |
(74) |
| Others |
(58) |
(67) |
| Total deferred income tax liabilities |
(576) |
(674) |
| Deferred income tax assets after set off |
724 |
540 |
| Deferred income tax liabilities after set off |
(188) |
(207) |
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.
In assessing the reliability of deferred income
tax assets, the 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. The 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 six months ended September 30, 2017 and September 30, 2016, is as follows:
(In crore)
| |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Net deferred income tax asset at the beginning |
482 |
378 |
333 |
284 |
| Addition through business combination (Refer note no. 2.1) |
(2) |
– |
(2) |
– |
| Translation differences |
(2) |
6 |
(1) |
(5) |
| Credits / (charge) relating to temporary differences |
68 |
9 |
197 |
114 |
| Temporary differences on other comprehensive income |
(10) |
– |
9 |
– |
| Net deferred income tax asset at the end |
536 |
393 |
536 |
393 |
The credit relating to temporary differences
during the six months ended September 30, 2017 are primarily on account of property plant and equipment, accrued compensation to
employees, compensated absences and fair value change in derivative financial instruments. The credits relating to temporary differences
during the six months ended September 30, 2016 are primarily on account of trade receivables, accrued compensation to employees,
compensated absences and post sales client support partially offset by property, plant and equipments.
2.16 REVENUE FROM OPERATIONS
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Revenue from software services |
17,044 |
16,784 |
33,594 |
33,062 |
| Revenue from software products |
523 |
526 |
1,051 |
1,029 |
| |
17,567 |
17,310 |
34,645 |
34,091 |
2.17 OTHER INCOME
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Interest income on financial assets carried at amortized cost: |
|
|
|
|
| Bonds and government bonds |
36 |
31 |
72 |
62 |
| Deposit with Bank and others |
370 |
614 |
761 |
1,234 |
| Interest income on financial assets carried at fair value through other comprehensive income: |
|
|
|
|
| Non-convertible debentures and certificates of deposit |
198 |
– |
401 |
– |
| Income on investments carried at fair value through profit or loss |
|
|
|
|
| Dividend income on liquid mutual funds |
2 |
8 |
3 |
27 |
| Gain / (loss) on liquid mutual funds |
84 |
– |
152 |
– |
| Exchange gains/ (losses) on foreign currency forward and options contracts |
(71) |
177 |
(50) |
224 |
| Exchange gains/ (losses) on translation of assets and liabilities |
133 |
(109) |
185 |
(100) |
| Others |
131 |
39 |
173 |
66 |
| |
|
883 |
760 |
1,697 |
1,513 |
2.18EXPENSES
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Employee benefit expenses |
|
|
|
|
| Salaries including bonus |
9,360 |
9,385 |
18,433 |
18,415 |
| Contribution to provident and other funds |
207 |
193 |
408 |
379 |
| Share based payments to employees (Refer note no. 2.11) |
(8) |
21 |
38 |
30 |
| Staff welfare |
45 |
49 |
91 |
106 |
| |
9,604 |
9,648 |
18,970 |
18,930 |
| Cost of software packages and others |
|
|
|
|
| For own use |
223 |
187 |
442 |
370 |
| Third party items bought for service delivery to clients |
269 |
194 |
490 |
287 |
| |
492 |
381 |
932 |
657 |
| Other expenses |
|
|
|
|
| Repairs and maintenance |
257 |
292 |
552 |
614 |
| Power and fuel |
54 |
61 |
103 |
124 |
| Brand and marketing |
67 |
81 |
160 |
198 |
| Operating lease payments |
141 |
121 |
270 |
231 |
| Rates and taxes |
76 |
40 |
125 |
80 |
| Consumables |
7 |
13 |
15 |
22 |
| Insurance |
13 |
11 |
28 |
25 |
| Provision for post-sales client support and warranties |
23 |
30 |
34 |
51 |
| Commission to non-whole time directors |
3 |
3 |
6 |
6 |
| Impairment loss recognized / (reversed) on financial assets |
42 |
27 |
39 |
44 |
| Auditor's remuneration |
|
|
|
|
| Statutory audit fees |
3 |
2 |
5 |
4 |
| Taxation matters |
1 |
– |
1 |
– |
| Other services |
– |
– |
– |
– |
| Reimbursement of expenses |
– |
– |
– |
– |
| Contributions towards Corporate Social responsibility |
56 |
53 |
103 |
102 |
| Others |
57 |
53 |
111 |
111 |
| |
|
800 |
787 |
1,552 |
1,612 |
2.19 LEASES
The lease rentals charged during the period is
as follows:
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
|
2017 |
2016 |
2017 |
2016 |
| Lease rentals recognized during the period |
141 |
121 |
270 |
231 |
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 |
September 30, 2017 |
March 31, 2017 |
| Not later than 1 year |
453 |
461 |
| Later than 1 year and not later than 5 years |
1,222 |
1,237 |
| Later than 5 years |
891 |
740 |
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.
2.20 EMPLOYEE BENEFITS
2.20.1 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 September 30, 2017 and March 31, 2017:
(In crore)
| Particulars |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Change in benefit obligations |
|
|
| Benefit obligations at the beginning |
1,117 |
944 |
| Service cost |
75 |
129 |
| Interest expense |
38 |
69 |
| Remeasurements - Actuarial (gains)/ losses |
2 |
67 |
| Curtailment gain |
– |
(3) |
| Benefits paid |
(57) |
(89) |
| Benefit obligations at the end |
1,175 |
1,117 |
| Change in plan assets |
|
|
| Fair value of plan assets at the beginning |
1,195 |
947 |
| Interest income |
40 |
79 |
| Remeasurements- Return on plan assets excluding amounts included in interest income |
7 |
12 |
| Contributions |
22 |
246 |
| Benefits paid |
(57) |
(89) |
| Fair value of plan assets at the end |
1,207 |
1,195 |
| Funded status |
32 |
78 |
| Prepaid gratuity benefit |
34 |
79 |
| Accrued gratuity |
(2) |
(1) |
Amount for the three months and six months ended
September 30, 2017 and September 30, 2016 recognized in the Statement of Profit and Loss under employee benefit expense:
(In crore)
| Particulars |
Three months ended September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Service cost |
37 |
32 |
75 |
64 |
| Net interest on the net defined benefit liability/asset |
– |
(1) |
(2) |
(1) |
| Curtailment gain |
– |
– |
– |
(3) |
| Net gratuity cost |
37 |
31 |
73 |
60 |
Amount for the three months and six months ended
September 30, 2017 and September 30, 2016 recognized in the statement of other comprehensive income:
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Remeasurements of the net defined benefit liability/ (asset) |
|
|
|
|
| Actuarial (gains) / losses |
(5) |
49 |
2 |
74 |
| (Return) / loss on plan assets excluding amounts included in the net interest on the net defined benefit liability/(asset) |
(4) |
(1) |
(7) |
(4) |
| |
(9) |
48 |
(5) |
70 |
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| (Gain)/loss from change in demographic assumptions |
– |
– |
– |
– |
| (Gain)/loss from change in financial assumptions |
(13) |
43 |
7 |
54 |
| (Gain)/loss from experience adjustment |
8 |
6 |
(5) |
20 |
| |
(5) |
49 |
2 |
74 |
The weighted-average assumptions used to determine
benefit obligations as of September 30, 2017 and March 31, 2017 are set out below:
| Particulars |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Discount rate |
6.8% |
6.9% |
| Weighted average rate of increase in compensation levels |
8% |
8% |
The weighted-average assumptions used to determine
net periodic benefit cost for the three months and six months ended September 30, 2017 and September 30, 2016 are set out below:
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Discount rate(%) |
6.9% |
7.8% |
6.9% |
7.8% |
| Weighted average rate of increase in compensation levels(%) |
8% |
8% |
8% |
8% |
| Weighted average duration of defined benefit obligation(years) |
6.1 years |
6.4 years |
6.1 years |
6.4 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 September 30, 2017, every percentage point
increase / decrease in discount rate will affect our gratuity benefit obligation by approximately 61 crore.
As of September 30, 2017, every percentage point
increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit obligation by
approximately 52 crore.
Sensitivity to 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 September 30, 2017 and March 31, 2017, the plan assets have been primarily
invested in insurer managed funds.
Actual return on assets for the three months
ended September 30, 2017, and September 30, 2016 were 23 crore and 20 crore, respectively.
Actual return on assets for the six months ended
September 30, 2017, and September 30, 2016 were 47 crore and 41 crore, respectively.
The Group expects to contribute 54 crore to
the gratuity trusts during the remainder of fiscal 2018.
Maturity profile of defined benefit obligation:
(In crore)
| Within 1 year |
166 |
| 1-2 year |
171 |
| 2-3 year |
182 |
| 3-4 year |
195 |
| 4-5 year |
204 |
| 5-10 years |
991 |
2.20.2 Superannuation
The group contributed 43 crore and 42 crore
to the superannuation plan during the three months ended September 30, 2017 and September 30, 2016, respectively 85 crore and
83 crore and same has been recognized in the Statement of profit and loss account under the head employee benefit expense.
2.20.3 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 assumptions provided below there is no shortfall as at September
30, 2017 and March 31, 2017, respectively.
The details of fund and plan asset position are
as follows:
(In crore)
| Particulars |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Plan assets at period end, at fair value |
4,610 |
4,459 |
| Present value of benefit obligation at period end |
4,610 |
4,459 |
| 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:
| Particulars |
As of |
| |
September 30, 2017 |
March 31, 2017 |
| Government of India (GOI) bond yield (%) |
6.80 |
6.90 |
| Remaining term to maturity of portfolio (years) |
6.1 |
6.0 |
| Expected guaranteed interest rate (%) - First year: |
8.60 |
8.60 |
| - Thereafter: |
8.60 |
8.60 |
The Group contributed 121 crore and 116 crore
to the provident fund during the three months ended September 30, 2017 and September 30, 2016, respectively. The Group contributed
236 crore and 230 crore to the provident fund during the six months ended September 30, 2017 and September 30, 2016, respectively.
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.
2.20.4 Employee benefit costs include:
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Salaries and bonus(1)(2) |
9,404 |
9,459 |
18,576 |
18,557 |
| Defined contribution plans |
64 |
63 |
127 |
125 |
| Defined benefit plans |
136 |
126 |
267 |
248 |
| |
9,604 |
9,648 |
18,970 |
18,930 |
| (1) | Includes a reversal of employee stock compensation expense of 8
crore for the three months ended September 30, 2017 and an employee stock compensation cost of 38
crore, for the six months ended September 30, 2017. Similarly, includes employee stock compensation expense of 21
crore and 30 crore for the three months and six months ended September 30, 2016. |
| | |
| (2) | Included in the above is a reversal of stock compensation
cost of 35 crore recorded during the three months
ended September 30, 2017 towards forfeiture of stock incentives granted to Dr. Vishal
Sikka upon his resignation. Refer note no. 2.11. |
2.21 RECONCILIATION OF BASIC AND DILUTED SHARES
USED IN COMPUTING EARNINGS PER SHARE
|
Particulars
|
Three months ended September 30, |
Six months ended September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Basic earnings per equity share - weighted average number of equity shares outstanding(1) |
228,58,65,361 |
228,56,41,710 |
228,57,62,186 |
228,56,32,081 |
| Effect of dilutive common equivalent shares - share options outstanding |
16,60,822 |
3,07,593 |
21,20,348 |
2,43,907 |
| Diluted earnings per equity share - weighted average number of equity shares and common equivalent shares outstanding |
228,75,26,183 |
228,59,49,303 |
228,78,82,534 |
228,58,75,988 |
(1)Excludes treasury shares
For the three and six months ended September
30, 2017, 190,454 and 187,880 number of options to purchase equity shares had an anti-dilutive effect respectively.
For the three months and six months ended September
30, 2016, no outstanding option to purchase equity shares had an anti-dilutive effect
2.22 CONTINGENT LIABILITIES AND COMMITMENTS
(TO THE EXTENT NOT PROVIDED FOR)
(In crore)
| Particulars |
As at |
| |
September 30, 2017 |
March 31, 2017 |
| Contingent liabilities : |
|
|
| Claims against the Company, not acknowledged as debts(1) |
1,816 |
1,997 |
| [Net of amount paid to statutory authorities 4,844 crore (4,717 crore)] |
|
|
| Commitments : |
|
|
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits) |
596 |
1,149 |
| Other commitments* |
89 |
114 |
* Uncalled capital pertaining to
investments
| (1) | Claims against the Company not acknowledged as debts as on September 30, 2017 include
demands from the Indian Income tax authorities for payment of tax including interest for fiscals 2007 to 2013. The tax demands
are mainly on account of disallowance of portion of deduction claimed u/s 10A in respect of export turnover, disallowance of portion
of profits earned from outside India and profits earned from SEZ units under section 10AA of the Income Tax Act. The above matters
are pending before various Appellate Authorities. |
The Company is contesting the demands and the
management including its tax advisors believe that its position will likely be upheld on ultimate resolution and 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.
2.23 RELATED PARTY TRANSACTIONS
List of related parties:
| Name of subsidiaries |
Country |
Holdings as at |
| |
|
September 30, 2017 |
March 31, 2017 |
| 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 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% |
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)(13) |
Switzerland |
– |
– |
| Lodestone GmbH (formerly Hafner Bauer & Ödman GmbH) (3)(15) |
Switzerland |
– |
– |
| Infosys Consulting (Belgium) NV (formerly 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) (16) |
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) |
The 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)(17) |
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.(7)(14) |
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% |
| Brilliant Basics Holdings Limited.(18) |
U.K. |
100% |
– |
| Brilliant Basics Limited (19) |
U.K. |
100% |
– |
| Brilliant Basics (MENA) DMCC (19) |
Dubai |
100% |
– |
| (1) | Wholly owned subsidiary
of Infosys BPO. |
| (2) | Under liquidation |
| (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 |
| (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 October 5, 2016 |
| (14) | Liquidated effective November 16, 2016 |
| (15) | Liquidated effective December 21, 2016 |
| (16) | Wholly owned subsidiary of Infosys |
| (17) | Liquidated effective May 9, 2017 |
| (18) | On September 8, 2017, Infosys acquired 100% of
the voting interests in Brilliant Basics Holdings Limited., UK. Refer note no. 2.1 |
| (19) | Wholly-owned subsidiary of Brilliant
Basics Holding Limited. |
Infosys has provided guarantee for performance
of certain contracts entered into by its subsidiaries.
| Name of Associates |
Country |
Holdings as at |
| |
|
September 30, 2017 |
March 31, 2017 |
| DWA Nova LLC(1) |
U.S. |
16% |
16% |
(1) Associate of Infosys Nova
Holding LLC
During the three months ended June 30, 2017, the
Company has written down the entire carrying value of the investment in its associate DWA Nova LLC amounting to 71 crore.
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 Employees Welfare Trust |
India |
Controlled trust |
| Infosys Employee Benefits Trust |
India |
Controlled trust |
| Infosys Science Foundation |
India |
Controlled trust |
Refer note no. 2.20 for information on transactions
with post-employment benefit plans mentioned above.
List of key management personnel
Whole-time directors
U. B. Pravin Rao, Chief Operating officer (appointed
as Interim-Chief Executive Officer and Managing Director effective August 18, 2017)
Dr. Vishal Sikka (resigned as Chief Executive Officer
and Managing Director effective August 18, 2017 and as Executive Vice Chairman effective August 24, 2017)
Non-whole-time directors
Nandan M. Nilekani (appointed as Non-Executive,
Non-Independent Chairman effective August 24, 2017)
Ravi Venkatesan (resigned from his position
as Co-Chairman effective August 24, 2017)
Kiran Mazumdar-Shaw
Roopa Kudva
Dr. Punita Kumar-Sinha
D. N. Prahlad (appointed effective October 14,
2016)
D. Sundaram (appointed effective July 14, 2017)
Prof. Jeffrey Lehman, (resigned effective August
24, 2017)
R. Seshasayee (resigned effective August 24, 2017)
Prof. John Etchemendy (resigned effective August
24, 2017)
Executive Officers
M. D. Ranganath, Chief Financial Officer
David D. Kennedy, General Counsel and Chief Compliance
Officer (resigned effective December 31, 2016)
Mohit Joshi, President (effective October 13, 2016)
Rajesh K. Murthy, President (effective October
13, 2016)
Ravi Kumar S, President and Deputy Chief Operating
Officer (effective October 13, 2016)
Sandeep Dadlani, President (resigned effective
July 14, 2017)
Krishnamurthy Shankar, Group Head - Human Resources
(effective October 13, 2016)
Gopi Krishnan Radhakrishnan - Acting General Counsel
(resigned effective June 24, 2017)
Inderpreet Sawhney, Group General Counsel
and Chief Compliance Officer (appointed as executive officer effective July 14, 2017)
Company Secretary
A. G. S. Manikantha
Transaction with key management personnel:
The table below describes the compensation to key
managerial personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended
September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Salaries and other employee benefits to whole-time directors and executive officers (1)(2) |
(14) |
14 |
12 |
35 |
| Commission and other benefits to non-executive/independent directors |
5 |
3 |
8 |
6 |
| Total |
(9) |
17 |
20 |
41 |
| (1) | Includes a reversal of stock compensation cost of 35
crore recorded during the three months ended September 30, 2017 towards forfeiture of stock incentives granted to Dr. Vishal Sikka
upon his resignation. (Refer to note 2.11) |
| | |
| (2) | Total employee stock compensation expense
for the three months and six months ended September 30, 2017 includes a reversal of 29
crore and 17 crore, respectively towards key managerial
personnel. For the three months and six months ended September 30, 2016, an employee
stock compensation expense of 5 crore and 14
crore, respectively, was recorded towards key managerial personnel. (Refer to note 2.11) |
2.24 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 Ind AS 108, the Chief Operating
Decision Maker (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. The 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. The 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 September 30, 2017 and September
30, 2016:
(In crore)
|
Particulars
|
FS |
MFG |
ECS |
RCL |
HILIFE |
Hi-Tech |
All other segments |
Total |
| Revenue from operations |
4,718 |
1,916 |
4,122 |
2,742 |
2,301 |
1,254 |
514 |
17,567 |
| |
4,686 |
1,853 |
3,864 |
2,833 |
2,089 |
1,339 |
646 |
17,310 |
| Identifiable operating expenses |
2,383 |
1,031 |
2,077 |
1,324 |
1,172 |
656 |
318 |
8,961 |
| |
2,373 |
961 |
1,861 |
1,361 |
1,055 |
692 |
375 |
8,678 |
| Allocated expenses |
998 |
433 |
932 |
620 |
520 |
284 |
116 |
3,903 |
| |
1,018 |
423 |
881 |
646 |
476 |
305 |
148 |
3,897 |
| Segmental operating income |
1,337 |
452 |
1,113 |
798 |
609 |
314 |
80 |
4,703 |
| |
1,295 |
469 |
1,122 |
826 |
558 |
342 |
123 |
4,735 |
| Unallocable expenses |
|
|
|
|
|
|
|
457 |
| |
|
|
|
|
|
|
|
426 |
| Other income, net |
|
|
|
|
|
|
|
883 |
| |
|
|
|
|
|
|
|
760 |
| Share in net profit/(loss) of associate |
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
(3) |
| Write-down of investment in associate |
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
– |
| Profit before tax |
|
|
|
|
|
|
|
5,129 |
| |
|
|
|
|
|
|
|
5,066 |
| Tax expense |
|
|
|
|
|
|
|
1,403 |
| |
|
|
|
|
|
|
|
1,460 |
| Profit for the period |
|
|
|
|
|
|
|
3,726 |
| |
|
|
|
|
|
|
|
3,606 |
| Depreciation and amortization expense |
|
|
|
|
|
|
|
456 |
| |
|
|
|
|
|
|
|
424 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
1 |
| |
|
|
|
|
|
|
|
2 |
Six months ended September 30, 2017 and September
30, 2016:
(In crore)
|
Particulars
|
FS |
MFG |
ECS |
RCL |
HILIFE |
Hi-Tech |
All other segments |
Total |
| Revenue from operations |
9,312 |
3,779 |
8,079 |
5,437 |
4,471 |
2,489 |
1,078 |
34,645 |
| |
9,237 |
3,696 |
7,583 |
5,694 |
4,093 |
2,661 |
1,127 |
34,091 |
| Identifiable operating expenses |
4,684 |
2,038 |
4,044 |
2,620 |
2,240 |
1,332 |
627 |
17,585 |
| |
4,611 |
1,910 |
3,618 |
2,731 |
2,054 |
1,375 |
720 |
17,019 |
| Allocated expenses |
1,996 |
865 |
1,849 |
1,244 |
1,024 |
569 |
247 |
7,794 |
| |
2,065 |
866 |
1,776 |
1,335 |
959 |
624 |
263 |
7,888 |
| Segmental operating income |
2,632 |
876 |
2,186 |
1,573 |
1,207 |
588 |
204 |
9,266 |
| |
2,561 |
920 |
2,189 |
1,628 |
1,080 |
662 |
144 |
9,184 |
| Unallocable expenses |
|
|
|
|
|
|
|
909 |
| |
|
|
|
|
|
|
|
829 |
| Other income, net |
|
|
|
|
|
|
|
1,697 |
| |
|
|
|
|
|
|
|
1,513 |
| Share in net profit/(loss) of associate |
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
(5) |
| Write-down of investment in associate |
|
|
|
|
|
|
|
(71) |
| |
|
|
|
|
|
|
|
– |
| Profit before tax |
|
|
|
|
|
|
|
9,983 |
| |
|
|
|
|
|
|
|
9,863 |
| Tax expense |
|
|
|
|
|
|
|
2,774 |
| |
|
|
|
|
|
|
|
2,822 |
| Profit for the period |
|
|
|
|
|
|
|
7,209 |
| |
|
|
|
|
|
|
|
7,041 |
| Depreciation and amortization expense |
|
|
|
|
|
|
|
906 |
| |
|
|
|
|
|
|
|
824 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
3 |
| |
|
|
|
|
|
|
|
5 |
Geographic Segments
Three months ended September 30, 2017
and September 30, 2016:
(In crore)
| Particulars |
North America |
Europe |
India |
Rest of the World |
Total |
| Revenue from operations |
10,644 |
4,085 |
574 |
2,264 |
17,567 |
| |
|
10,641 |
3,896 |
587 |
2,186 |
17,310 |
| Identifiable operating expenses |
5,521 |
2,095 |
255 |
1,090 |
8,961 |
| |
|
5,444 |
1,956 |
250 |
1,028 |
8,678 |
| Allocated expenses |
2,401 |
920 |
109 |
473 |
3,903 |
| |
|
2,423 |
885 |
123 |
466 |
3,897 |
| Segmental operating income |
2,722 |
1,070 |
210 |
701 |
4,703 |
| |
|
2,774 |
1,055 |
214 |
692 |
4,735 |
| Unallocable expenses |
|
|
|
|
457 |
| |
|
|
|
|
|
426 |
| Other income net |
|
|
|
|
883 |
| |
|
|
|
|
|
760 |
| Share in net profit/(loss) of associate |
|
|
|
|
– |
| |
|
|
|
|
|
(3) |
| Write-down of investment in associate |
|
|
|
|
– |
| |
|
|
|
|
|
– |
| Profit before tax |
|
|
|
|
5,129 |
| |
|
|
|
|
|
5,066 |
| Tax expense |
|
|
|
|
1,403 |
| |
|
|
|
|
|
1,460 |
| Profit for the period |
|
|
|
|
3,726 |
| |
|
|
|
|
|
3,606 |
| Depreciation and amortization expense |
|
|
|
|
456 |
| |
|
|
|
|
|
424 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
1 |
| |
|
|
|
|
|
2 |
Six months ended September 30, 2017 and September
30, 2016:
(In crore)
| Particulars |
North America |
Europe |
India |
Rest of the World |
Total |
| Revenue from operations |
21,084 |
7,916 |
1,179 |
4,466 |
34,645 |
| |
|
21,041 |
7,764 |
1,045 |
4,241 |
34,091 |
| Identifiable operating expenses |
10,938 |
4,085 |
463 |
2,099 |
17,585 |
| |
|
10,780 |
3,801 |
498 |
1,940 |
17,019 |
| Allocated expenses |
4,816 |
1,804 |
228 |
946 |
7,794 |
| |
|
4,926 |
1,813 |
217 |
932 |
7,888 |
| Segmental operating income |
5,330 |
2,027 |
488 |
1,421 |
9,266 |
| |
|
5,335 |
2,150 |
330 |
1,369 |
9,184 |
| Unallocable expenses |
|
|
|
|
909 |
| |
|
|
|
|
|
829 |
| Other income net |
|
|
|
|
1,697 |
| |
|
|
|
|
|
1,513 |
| Share in net profit/(loss) of associate |
|
|
|
|
– |
| |
|
|
|
|
|
(5) |
| Write-down of investment in associate |
|
|
|
|
(71) |
| |
|
|
|
|
|
– |
| Profit before tax |
|
|
|
|
9,983 |
| |
|
|
|
|
|
9,863 |
| Tax expense |
|
|
|
|
2,774 |
| |
|
|
|
|
|
2,822 |
| Profit for the period |
|
|
|
|
7,209 |
| |
|
|
|
|
|
7,041 |
| Depreciation and amortization expense |
|
|
|
|
906 |
| |
|
|
|
|
|
824 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
3 |
| |
|
|
|
|
|
5 |
Significant clients
No client individually accounted for more than
10% of the revenues in the three months and six months ended September 30, 2017 and September 30, 2016.
2.25 FUNCTION WISE CLASSIFICATION OF CONSOLIDATED
STATEMENT OF PROFIT AND LOSS
(In crore)
| Particulars |
Three months ended September 30, |
Six months ended
September 30, |
| |
2017 |
2016 |
2017 |
2016 |
| Revenue from operations |
17,567 |
17,310 |
34,645 |
34,091 |
| Cost of Sales |
11,227 |
10,962 |
22,126 |
21,643 |
| Gross profit |
6,340 |
6,348 |
12,519 |
12,448 |
| Operating expenses |
|
|
|
|
| Selling and marketing expenses |
846 |
897 |
1,735 |
1,817 |
| General and administration expenses |
1,248 |
1,142 |
2,427 |
2,276 |
| Total operating expenses |
2,094 |
2,039 |
4,162 |
4,093 |
| Operating profit |
4,246 |
4,309 |
8,357 |
8,355 |
| Other income, net |
883 |
760 |
1,697 |
1,513 |
| Profit before non controlling interest / Share in net profit / (loss) of associate |
5,129 |
5,069 |
10,054 |
9,868 |
| Share in net profit/(loss) of associate |
– |
(3) |
– |
(5) |
| Write-down of investment in associate |
– |
– |
(71) |
– |
| Profit before tax |
5,129 |
5,066 |
9,983 |
9,863 |
| Tax expense: |
|
|
|
|
| Current tax |
1,471 |
1,469 |
2,971 |
2,936 |
| Deferred tax |
(68) |
(9) |
(197) |
(114) |
| Profit for the period |
3,726 |
3,606 |
7,209 |
7,041 |
| Other comprehensive income |
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
| Remeasurement of the net defined benefit liability/asset |
6 |
(40) |
3 |
(57) |
| Equity instruments through other comprehensive income, net |
– |
– |
– |
– |
| |
6 |
(40) |
3 |
(57) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
20 |
2 |
(46) |
2 |
| Exchange differences on translation of foreign operations |
100 |
(51) |
207 |
(13) |
| Fair value changes on investments, net |
12 |
– |
39 |
– |
| |
132 |
(49) |
200 |
(11) |
| Total other comprehensive income, net of tax |
138 |
(89) |
203 |
(68) |
| Total comprehensive income for the period |
3,864 |
3,517 |
7,412 |
6,973 |
| Profit attributable to: |
|
|
|
|
| Owners of the Company |
3,726 |
3,606 |
7,209 |
7,041 |
| Non-controlling interests |
– |
– |
– |
– |
| |
3,726 |
3,606 |
7,209 |
7,041 |
| Total comprehensive income attributable to: |
|
|
|
|
| Owners of the Company |
3,864 |
3,517 |
7,412 |
6,973 |
| Non-controlling interests |
– |
– |
– |
– |
| |
3,864 |
3,517 |
7,412 |
6,973 |
|
|
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
|
| |
Nandan M. Nilekani
Chairman |
U. B. Pravin Rao
Interim-Chief Executive Officer and
Managing
Director |
D. Sundaram
Director |
| |
|
|
|
|
Bengaluru
October 24, 2017 |
M. D. Ranganath
Chief Financial Officer |
A. G. S. Manikantha
Company Secretary |
|
INDEPENDENT Auditors’
Report on
audit of interim consolidated
financial results
To
The Board of Directors of Infosys Limited
| 1. |
We have audited the accompanying Statement of Consolidated Financial Results of INFOSYS Limited (“the Company”) and its subsidiaries (the Company and its subsidiaries together referred to as “the Group”) for the quarter and half-year ended September 30, 2017 (“the Statement”), being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as modified by Circular No. CIR/CFD/FAC/62/2016 dated July 5, 2016. |
| |
| |
| |
This Statement, which is the responsibility of the Company’s Management and approved by the Board of Directors, has been compiled from the related interim consolidated financial statements which has been prepared in accordance with Indian Accounting Standard 34 “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. Our responsibility is to express an opinion on the Statement based on our audit of such interim consolidated financial statements. |
| |
| |
| 2. |
We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Statement is free from material misstatement. |
| |
| |
| |
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Statement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation and fair presentation of the Statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal financial controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the Statement.
We believe that the audit evidence obtained by us, is sufficient and appropriate to provide a basis for our audit opinion.
|
| |
| |
| 3. |
In our opinion and to the best of our information and according to the explanations given to us, the Statement: |
| |
| |
| |
a. | includes the results of
the subsidiaries and an associate as given in the Annexure to this report; |
| |
| |
| |
b. | is presented in accordance
with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as modified by Circular No. CIR/CFD/FAC/62/2016
dated July 5, 2016; and |
| |
| |
| |
c. | gives a true and fair
view in conformity with the aforesaid Indian Accounting Standards and other accounting principles generally accepted in India of
the consolidated profit and total comprehensive income for the period and other financial information of the Group for the quarter
and half-year ended September 30, 2017. |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
| Bengaluru, October 24, 2017 | P. R. RAMESH
Partner
(Membership No.70928)
|
Annexure to Auditors’ Report
List of Subsidiaries;
| 2. | Infosys Technologies (China)
Co. Limited |
| 3. | Infosys Technologies S.
de R. L. de C. V. |
| 4. | Infosys Technologies (Sweden)
AB. |
| 5. | Infosys Technologies (Shanghai)
Company Limited |
| 6. | Infosys Tecnologia DO
Brasil LTDA. |
| 7. | Infosys Public Services,
Inc. |
| 9. | Infosys (Czech Republic)
Limited s.r.o. |
| 10. | Infosys Poland Sp z.o.o
|
| 11. | Infosys McCamish Systems
LLC |
| 12. | Portland Group Pty Ltd |
| 13. | Infosys BPO Americas LLC.
|
| 14. | Infosys Technologies (Australia)
Pty. Limited |
| 15. | EdgeVerve Systems Limited |
| 16. | Infosys Consulting Holding
AG |
| 17. | Lodestone Management Consultants
Inc. |
| 18. | Infosys Management Consulting
Pty Limited |
| 20. | Infosys Consulting (Belgium)
NV |
| 21. | Infosys Consulting GmbH |
| 22. | Infosys Consulting Pte
Ltd. |
| 23. | Infosys Consulting SAS |
| 24. | Infosys Consulting s.r.o. |
| 25. | Lodestone Management Consultants
GmbH |
| 26. | Lodestone Management Consultants
Co., Ltd. |
| 27. | Infy Consulting Company
Limited |
| 29. | Infosys Consulting Ltda. |
| 30. | Infosys Consulting Sp.
Z.o.o. |
| 31. | Lodestone Management Consultants
Portugal,Unipessoal, Lda |
| 32. | S.C. Infosys Consulting
S.R.L. |
| 33. | Infosys Consulting S.R.L. |
| 34. | Infosys Canada Public
Services Ltd. |
| 35. | Infosys Nova Holdings
LLC. |
| 40. | Skava Systems Pvt. Ltd.
|
| 43. | Noah Information Management
Consulting Inc. |
| 44. | Brilliant Basics Holdings
Limited |
| 45. | Brilliant Basics Limited |
| 46. | Brilliant Basics (MENA)
DMCC |
| 47. | Infosys Science Foundation |
| 48. | Infosys Employees’Welfare
Trust |
| 49. | Infosys Employee Benefits
Trust |
List of Associate;
