UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the quarter ended September 30, 2021
Commission File Number 001-35754
Infosys Limited
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Electronics City, Hosur Road, Bangalore - 560 100, Karnataka, India. +91-80-2852-0261
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) : o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) : o
TABLE OF CONTENTS
DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Infosys Limited (“Infosys” or “the Company” or “we”) hereby furnishes the United States Securities and Exchange Commission with copies of the following information concerning our public disclosures regarding our results of operations and financial condition for the quarter and half year ended September 30, 2021.
The following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On October 13, 2021, we announced our results of operations for the quarter and half year ended September 30, 2021. We issued press releases announcing our results under International Financial Reporting Standards (“IFRS”) in U.S. dollars and Indian rupees, copies of which are attached to this Form 6-K as Exhibits 99.1 and 99.2, respectively.
On October 13, 2021, we held a press conference to announce our results, which was followed by a question and answer session. The transcript of this press conference is attached to this Form 6-K as Exhibit 99.3.
We have also made available to the public on our web site, www.infosys.com, a fact sheet that provides details on our profit and loss account summary for the quarters and half years ended September 30, 2021 and 2020 (as per IFRS); revenue by client geography offering, business segment; information regarding our client concentration; employee information and metrics; and consolidated IT services information. We have attached this fact sheet to this Form 6-K as Exhibit 99.4.
On October 13, 2021, we also held a teleconference with investors and analysts to discuss our results. The transcripts of the teleconference are attached to this Form 6-K as Exhibit 99.5.
We placed form of releases to stock exchanges and advertisements in certain Indian newspapers concerning our results of operations for the quarter and half year ended September 30, 2021, under Ind AS. A copy of the release to the stock exchanges and the advertisement is attached to this Form 6-K as Exhibit 99.6.
We have made available to the public on our web site, www.infosys.com, the following: Audited Interim Condensed Financial Statements in compliance with IFRS in US dollars and the Auditors Report; Audited Interim Condensed Financial Statements in compliance with IFRS in Indian Rupees and the Auditors Report; Audited Interim Ind AS Condensed Standalone Financial Statements and Auditors Report; Audited Interim Ind AS condensed Consolidated Financial Statements and Auditors Report for the quarter and half year ended September 30, 2021. We have attached these documents to this Form 6-K as Exhibits 99.7, 99.8,99.9 and 99.10 respectively.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
Infosys Limited /s/ Inderpreet Sawhney | |
Date: October 19, 2021 |
Inderpreet Sawhney General Counsel and Chief Compliance Officer |
Exhibit No. | Description of Document |
99.1 | IFRS USD press release |
99.2 | IFRS INR press release |
99.3 | Transcript of October 13, 2021 press conference |
99.4 | Fact Sheet regarding extract of Registrant's Statement of Profit and Loss for the quarter and half year ended September 30, 2021 and 2020 (as per IFRS); revenue by Business Segment, revenue by Offering, revenue by Client Geography, information regarding Client Concentration; Employee Information and Metrics, Consolidated IT Services Information and cash flow information |
99.5 | Transcript of October 13, 2021 Earnings Call |
99.6 | Form of release to stock exchanges and advertisement placed in Indian newspapers |
99.7 | Audited Interim Condensed Consolidated Financial Statements of Infosys Limited and its Subsidiaries in compliance with International Financial Reporting Standards (IFRS) in US Dollars and the Auditors Report thereon |
99.8 | Audited Interim Condensed Consolidated Financial Statements of Infosys Limited and its Subsidiaries in compliance with IFRS in Indian Rupees and the Auditors Report thereon |
99.9 | Audited Interim Condensed Financial Statements of Infosys Limited for the quarter and half year ended September 30, 2021 in compliance with Indian Accounting Standards (INDAS) and Auditors Report thereon. |
99.10 |
Audited Interim Condensed Consolidated Financial Statements of Infosys Limited and its subsidiaries in compliance with INDAS for the quarter and half year ended September 30, 2021 and Auditors Report thereon. |
Exhibit 99.2
IFRS USD Press Release
Growth accelerates in Q2 with resilient operating margins. Double digit growth across segments
Revenue guidance for FY22 revised upwards to 16.5%-17.5%. Margin guidance retained at 22%-24%
Bengaluru, India – October 13, 2021: Infosys
(NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, delivered a strong Q2 performance with YoY
growth increasing to 19.4% and sequential growth accelerating to 6.3% in constant currency. Growth was broad-based across geographies
and segments with the largest geography, North America growing at 23.1% and the largest segment, Financial Services growing at 20.5%,
YoY in constant currency. Large deal momentum continued with TCV of $2.15 billion in Q2. Operating margin for the quarter was resilient
at 23.6%. The Board has announced interim dividend of 15 per share for FY22.
"Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys CobaltTM, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market.”, said Salil Parekh, CEO and MD. “Given this continued momentum we have further increased our revenue growth guidance to 16.5%-17.5%”, he added.
1. | Key highlights |
For the quarter ended September 30, 2021 | For six months ended September 30, 2021 | |||
· | Revenues in CC terms grew by 19.4% YoY and 6.3% QoQ | · | Revenues in CC terms grew by 18.1% YoY | |
· | Reported revenues at $3,998 million, growth of 20.7% YoY | · | Reported revenues at $7,780 million, growth of 21.0% YoY | |
· | Digital revenues at 56.1% of total revenues, YoY CC growth of 42.4% | · | Digital revenues at 55.0% of total revenues, YoY CC growth of 42.2% | |
· | Operating margin at 23.6%, decline of 1.8% YoY and 0.1% QoQ | · | Operating margin at 23.6%, decline of 0.4% YoY | |
· | Basic EPS at $0.17, growth of 13.0% YoY | · | Basic EPS at $0.34, growth of 19.0% YoY | |
· | FCF at $712 million, YoY growth of 5.6%; FCF conversion at 97.1% of net profit | · | FCF at $1,575 million, YoY growth of 12.3%; FCF conversion at 109.5% of net profit |
“In order to harness the full potential of the market opportunity, we are expanding our college graduates hiring program to ~45,000 for the year. Simultaneously, we continue to strengthen employee value proposition including health and wellness measures, reskilling programs, appropriate compensation interventions and enhanced career growth opportunities”, said Pravin Rao, Chief Operating Officer. “With over 86% of Infoscions in India having received at least one dose of ‘vaccination’, we are now preparing to embrace the hybrid work model. We have equipped employees with the resources they need to be productive, cyber secure, stay connected, and maintain a work-life balance. Our talent strategy also factors in expanded hiring pools that include new communities and work locations”, he added.
“Our operating margins for Q2 were resilient;
the impact of enhanced employee value proposition initiatives was offset by strong operating parameters, cost optimization and operating
leverage. We will continue to invest in our employees to remain a preferred employer-of-choice and seamlessly fulfill client demand”,
said Nilanjan Roy, Chief Financial Officer. “Cash generation remained robust. We have executed the capital allocation policy
with the successful closure of share buyback and step up in interim dividend to 15 per share”, he added.
2. | Capital Allocation |
The company has completed the open market
share buyback on September 8 at an average price of ~1,649
per share (compared to maximum Buyback Price of
1,750 per share). Consequently, the share capital of the company has reduced
by 1.31%. With this, the company has returned ~82% of the free cash flow for FY20 and FY21 through dividends and buyback.
The Board has announced interim dividend
of 15 per share for FY22.
3. | Client wins & Testimonials |
· | Infosys recently launched Infosys Equinox to help enterprises securely deliver hyper-segmented, personalized omnichannel commerce experiences for B2B and B2C buyers. Eric Nelson, Chief Information Officer North America, The Kraft Heinz Company, said, “Infosys Equinox serves us as a digital hub powering over 250 of our global brand sites, B2B ecommerce and recipe sites, as well as direct-to-consumer (D2C) initiatives. We are able to launch new brand sites in as little as 3 to 5 days. The platform also supports our hyper-personalization initiatives and distills real-time insights for our marketing programs. With Infosys Equinox, we at Kraft Heinz are well set to offer richer, more personalized, and meaningful experiences to our consumers.” | |
· Infosys inaugurated its Automotive Digital Technology and Innovation Center in Stuttgart, Germany last quarter, furthering its strategic commitment to drive innovation and IT infrastructure transformation in the automotive sector. “As software becomes modular and IT infrastructure continues to scale, Daimler will take three simultaneous steps to transform its IT landscape: consolidation, scaling and modernization. Through establishing the Infosys Automotive and Mobility GmbH in Germany, Infosys is committed to grow with us in the automotive industry and provide exciting career opportunities for our employees. The center will also set new standards for cloud and infrastructure services in the automotive industry. We’re delighted that through this partnership, Daimler will strengthen its overall technology investment and partnership strategy,” said, Jan Brecht, Chief Information Officer, Daimler and Mercedes-Benz.
· | Infosys collaborated with Goldman Sachs to digitally transform their Client Services Helpdesk using ServiceNow Platform. “Infosys truly partnered with Goldman Sachs by providing best practices and guidance in our service management transformation journey. They collaboratively worked with us to understand our pain points and challenges. Based on their experience, Infosys ensured that the solution was aligned with our requirements and expectations, thus resulting in improved agent productivity and enhanced user experience.”, said, Robert Naccarella, Managing Director, Goldman Sachs. |
· | Frost Bank and Infosys recently launched a new mortgage loan product offering. “Offering mortgage loans along with our other consumer loan products is integral to meeting our customers’ evolving needs and bringing the Frost experience to more Texans,” said, Phil Green, Chairman and CEO at Frost Bank. “Working with a world-class company like Infosys will allow us to be involved in the entire process from start to finish and bring our industry-leading customer service experience to mortgages.” |
· | Infosys and The Economist Group announced a new strategic partnership around sustainability. Lara Boro, CEO, The Economist Group, said, “A sustainable future will depend on creative collaboration. This exciting partnership with Infosys shows how pooling strengths can accelerate innovation and amplify impact in the pursuit of progress.” |
· | BankDhofar, one of the leading banks in Oman, was able to successfully complete a three-phase modernization program leveraging the Finacle Digital Banking Suite. Abdul Hakeem Omar Al Ojaili, Chief Executive Officer, BankDhofar, said, “We are glad that BankDhofar Vision 2020 is today a reality with a new digital-first banking platform, powered by Infosys Finacle. We are glad that our transformation program covering technology upgrade, channels upliftment, process improvement, data restructuring, branch modernization, and culture transformation are well underway, allowing no room for disruption to the end customer. Post go-live, we believe BankDhofar ranks the highest in terms of technology leadership, and functional coverage. We are now well positioned to offer our customers a world-class banking facility with the new platform, either at the branch or through digital channels, as we strive to strengthen our leadership position in the Sultanate.” |
· | Universities and Colleges Admissions Service (UCAS), UK, recently announced a major core technology collaboration with Infosys. Sander Kristel, UCAS’ Chief Operations Officer, said, “I cannot emphasise enough the importance of this new agreement with Infosys, and the benefits to UCAS staff and customers. It represents a real shift in our partnership, and will focus extensively on automation, innovation, and efficiency across the business, which is key to delivering on our strategy for the future.” |
· | Infosys Living Labs partners with venture capital investment arms of global enterprises to mutually enrich portfolios of tech innovators. “We are excited to partner with Infosys to help our portfolio companies scale new heights by providing them access to Infosys’ global client base. Infosys brings its rich heritage of delivery excellence and global access to our portfolio companies. We are a growth investor in lighthouse technologies and Infosys Living Labs provides a great opportunity to bring best in class technology innovations to clients while de-risking the adoption of startup solutions for Infosys clients." said, Matthew Koertge, Managing Director, Telstra Ventures. |
· | Infosys Public Services recently launched a blockchain network to modernize public recordkeeping for County of Riverside in California. “As Riverside County’s Assessor-County Clerk-Recorder, our goal is to provide recordkeeping, record issuance, and property valuation in a timely, secure, and cost-effective manner,” said, Peter Aldana, Assessor-County Clerk-Recorder at County of Riverside. “Adoption of blockchain technology will greatly advance our digital transformation journey towards our goal.” |
4. | Recognitions |
· | Infosys won the 2021 Microsoft US Partner Award for demonstrating excellence in Azure AI capabilities |
· | Infosys won four Stevie® Awards for great employers 2021 |
· | Ranked #1 by HfS in the Banking and Financial Services Providers Top 10, 2021 |
· | Ranked as a leader in Gartner - Magic Quadrant for IT Services for Communications Service Providers, Worldwide |
· | Ranked as a leader in The Forrester Wave™ - Application Modernization and Migration Services, Q3 2021 |
· | Ranked as a leader in Everest - Data and Analytics (D&A) Services PEAK Matrix® Assessment 2021 |
· | Ranked as a leader in Everest - Envisioning the Connected Future: 5G Engineering Services PEAK Matrix Assessment 2021 |
· | Positioned as a leader in IDC - MarketScape Asia/Pacific Managed Cloud Services 2021 Vendor Assessment |
· | Positioned as a leader in IDC - MarketScape Worldwide Life Science R&D ITO Services Vendor Assessment |
· | Positioned as a leader in IDC MarketScape - European Smart Manufacturing Service Providers 2021 Vendor Assessment |
· | Positioned as a leader in NelsonHall - Wealth and Asset Management NEAT Evaluation 2021 |
· | Ranked as a leader in Constellation - Public Cloud Transformation Services: Global |
· | Positioned as a leader in Constellation - Customer Experience Operation Services: Global |
· | Positioned as a leader in Constellation - Campaign to Commerce: Best of Breed Commerce Platforms |
· | Positioned as a leader in Everest Microsoft Dynamics 365 Services PEAK Matrix® Assessment 2021 |
· | Infosys Finacle rated as a leader by Forrester in Forrester Wave™: Digital Banking Engagement Platforms, Q3 2021 report |
· | Infosys Finacle rated as a leader by Forrester in Forrester Wave™: Digital Banking Engagement Hubs, Q3 2021 report |
· | Positioned as a leader in IDC MarketScape: Worldwide B2B Commerce Services for Industrial Manufacturing 2021 Vendor Assessment |
· | Infosys positioned as a leader in the ISG Provider Lens™ Cybersecurity Services and Solutions 2021 for U.S. |
· | Infosys ranked as a North America Utilities leader in ISG Provider Lens™ 2021 Report |
· | Infosys rated as a leader in ISG Provider Lens™ SAP HANA Ecosystem Services in U.S. 2021 and Germany 2021 Quadrant Report |
· | Infosys rated as a ‘Global’ leader in ISG Provider Lens™ ‘Internet of Things – Services and Solutions 2021’ report. |
· | Infosys positioned as a leader in ‘Next-Gen Private/Hybrid Cloud - Data Center Services and Solutions 2021’ in ISG Provider Lens™ for U.S. |
· | Infosys positioned as a leader in ‘Network - Software Defined Solutions and Services 2021’ in ISG Provider Lens™ for Australia, U.K., and Nordics Region |
· | Infosys rated as a leader in ‘Avasant Digital Talent Capability 2021’ RadarView™ |
About Infosys
Infosys is a global leader in next-generation digital services and consulting. We enable clients in more than 50 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.
Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next. |
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Safe Harbor
“Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.”
Contact
Investor Relations |
Sandeep Mahindroo +91 80 3980 1018 Sandeep_Mahindroo@infosys.com |
|
Media Relations |
Rishi Basu Rajarshi.Basu@infosys.com |
Harini Babu Harini_Babu@infosys.com |
Infosys Limited and subsidiaries
Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:
(Dollars in millions)
September 30, 2021 | March 31, 2021 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 2,432 | 3,380 |
Current investments | 671 | 320 |
Trade receivables | 2,711 | 2,639 |
Unbilled revenue | 1,268 | 1,030 |
Other Current assets | 1,002 | 938 |
Total current assets | 8,084 | 8,307 |
Non-current assets | ||
Property, plant and equipment and Right-of-use assets | 2,429 | 2,519 |
Goodwill and other Intangible assets | 1,080 | 1,115 |
Non-current investments | 1,360 | 1,623 |
Unbilled revenue | 102 | 81 |
Other non-current assets | 1,240 | 1,180 |
Total non-current assets | 6,211 | 6,518 |
Total assets | 14,295 | 14,825 |
LIABILITIES AND EQUITY | ||
Current liabilities | ||
Trade payables | 428 | 362 |
Unearned revenue | 592 | 554 |
Employee benefit obligations | 301 | 276 |
Other current liabilities and provisions | 2,409 | 2,072 |
Total current liabilities | 3,730 | 3,264 |
Non-current liabilities | ||
Lease liabilities | 587 | 627 |
Other non-current liabilities | 501 | 432 |
Total non-current liabilities | 1,088 | 1,059 |
Total liabilities | 4,818 | 4,323 |
Total equity attributable to equity holders of the company | 9,420 | 10,442 |
Non-controlling interests | 57 | 60 |
Total equity | 9,477 | 10,502 |
Total liabilities and equity | 14,295 | 14,825 |
Extracted from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(Dollars in millions except per equity share data)
3 months ended September 30, 2021 | 3 months ended September 30, 2020 | 6 months ended September 30, 2021 | 6 months ended September 30, 2020 | |
Revenues | 3,998 | 3,312 | 7,780 | 6,433 |
Cost of sales | 2,675 | 2,125 | 5,184 | 4,196 |
Gross profit | 1,323 | 1,187 | 2,596 | 2,237 |
Operating expenses: | ||||
Selling and marketing expenses | 167 | 153 | 336 | 305 |
Administrative expenses | 215 | 194 | 423 | 385 |
Total operating expenses | 382 | 347 | 759 | 690 |
Operating profit | 941 | 840 | 1,837 | 1,547 |
Other income, net (3) | 65 | 70 | 142 | 128 |
Profit before income taxes | 1,006 | 910 | 1,979 | 1,675 |
Income tax expense | 272 | 255 | 540 | 456 |
Net profit (before minority interest) | 734 | 655 | 1,439 | 1,219 |
Net profit (after minority interest) | 733 | 653 | 1,437 | 1,212 |
Basic EPS ($) | 0.17 | 0.15 | 0.34 | 0.29 |
Diluted EPS ($) | 0.17 | 0.15 | 0.34 | 0.29 |
NOTES:
1. | The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and six months ended September 30, 2021 which have been taken on record at the Board meeting held on October 13, 2021. |
2. | A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com. |
3. | Other Income is net of Finance Cost. |
Exhibit 99.2
IFRS INR Press Release
Growth accelerates in Q2 with resilient operating margins. Double digit growth across segments
Revenue guidance for FY22 revised upwards to 16.5%-17.5%. Margin guidance retained at 22%-24%
Bengaluru,
India – October 13, 2021: Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, delivered
a strong Q2 performance with YoY growth increasing to 19.4% and sequential growth accelerating to 6.3% in constant currency. Growth was
broad-based across geographies and segments with the largest geography, North America growing at 23.1% and the largest segment, Financial
Services growing at 20.5%, YoY in constant currency. Large deal momentum continued with TCV of $2.15 billion in Q2. Operating margin for
the quarter was resilient at 23.6%. The Board has announced interim dividend of 15
per share for FY22.
"Our stellar performance and robust growth outlook continue to demonstrate our strategic focus and the strength of our digital offerings. As we witness a strong market opportunity with global enterprises rapidly accelerating their digital journeys, our sustained investments in expanding capabilities, including the differentiated cloud play, Infosys CobaltTM, has uniquely positioned us to continue serving our clients effectively, gain market share and emerge as the preferred cloud and digital transformation partner in the market.”, said Salil Parekh, CEO and MD. “Given this continued momentum we have further increased our revenue growth guidance to 16.5%-17.5%”, he added.
1. | Key highlights: |
For the quarter ended September 30, 2021 |
For six months ended September 30, 2021 | |||
· | Revenues in CC terms grew by 19.4% YoY and 6.3% QoQ |
· | Revenues in CC terms grew by 18.1% YoY | |
· | Reported revenues at |
· | Reported revenues at | |
· | Digital revenues at 56.1% of total revenues, YoY CC growth of 42.4% |
· | Digital revenues at 55.0% of total revenues, YoY CC growth of 42.2% | |
· | Operating margin at 23.6%, decline of 1.8% YoY and 0.1% QoQ |
· | Operating margin at 23.6%, decline of 0.4% YoY | |
· | Basic EPS at |
· | Basic EPS at | |
· | FCF at |
· | FCF at |
“In order to harness the full potential of the market opportunity, we are expanding our college graduates hiring program to ~45,000 for the year. Simultaneously, we continue to strengthen employee value proposition including health and wellness measures, reskilling programs, appropriate compensation interventions and enhanced career growth opportunities”, said Pravin Rao, Chief Operating Officer. “With over 86% of Infoscions in India having received at least one dose of ‘vaccination’, we are now preparing to embrace the hybrid work model. We have equipped employees with the resources they need to be productive, cyber secure, stay connected, and maintain a work-life balance. Our talent strategy also factors in expanded hiring pools that include new communities and work locations”, he added.
“Our
operating margins for Q2 were resilient; the impact of enhanced employee value proposition initiatives was offset by strong operating
parameters, cost optimization and operating leverage. We will continue to invest in our employees to remain a preferred employer-of-choice
and seamlessly fulfill client demand”, said Nilanjan Roy, Chief Financial Officer. “Cash generation remained robust.
We have executed the capital allocation policy with the successful closure of share buyback and step up in interim dividend to 15
per share”, he added.
1. | Capital Allocation | |
The company has completed the open market share buyback
on September 8 at an average price of ~1,649
per share (compared to maximum Buyback Price of
1,750 per share). Consequently, the share capital of the company has reduced
by 1.31%. With this, the company has returned ~82% of the free cash flow for FY20 and FY21 through dividends and buyback.
The
Board has announced interim dividend of 15
per share for FY22.
2. | Client wins & Testimonials |
· | Infosys recently launched Infosys Equinox to help enterprises securely deliver hyper-segmented, personalized omnichannel commerce experiences for B2B and B2C buyers. Eric Nelson, Chief Information Officer North America, The Kraft Heinz Company, said, “Infosys Equinox serves us as a digital hub powering over 250 of our global brand sites, B2B ecommerce and recipe sites, as well as direct-to-consumer (D2C) initiatives. We are able to launch new brand sites in as little as 3 to 5 days. The platform also supports our hyper-personalization initiatives and distills real-time insights for our marketing programs. With Infosys Equinox, we at Kraft Heinz are well set to offer richer, more personalized, and meaningful experiences to our consumers.” |
· | Infosys inaugurated its Automotive Digital Technology and Innovation Center in Stuttgart, Germany last quarter, furthering its strategic commitment to drive innovation and IT infrastructure transformation in the automotive sector. “As software becomes modular and IT infrastructure continues to scale, Daimler will take three simultaneous steps to transform its IT landscape: consolidation, scaling and modernization. Through establishing the Infosys Automotive and Mobility GmbH in Germany, Infosys is committed to grow with us in the automotive industry and provide exciting career opportunities for our employees. The center will also set new standards for cloud and infrastructure services in the automotive industry. We’re delighted that through this partnership, Daimler will strengthen its overall technology investment and partnership strategy,” said, Jan Brecht, Chief Information Officer, Daimler and Mercedes-Benz. |
· | Infosys collaborated with Goldman Sachs to digitally transform their Client Services Helpdesk using ServiceNow Platform. “Infosys truly partnered with Goldman Sachs by providing best practices and guidance in our service management transformation journey. They collaboratively worked with us to understand our pain points and challenges. Based on their experience, Infosys ensured that the solution was aligned with our requirements and expectations, thus resulting in improved agent productivity and enhanced user experience.”, said, Robert Naccarella, Managing Director, Goldman Sachs. |
· | Frost Bank and Infosys recently launched a new mortgage loan product offering. “Offering mortgage loans along with our other consumer loan products is integral to meeting our customers’ evolving needs and bringing the Frost experience to more Texans,” said, Phil Green, Chairman and CEO at Frost Bank. “Working with a world-class company like Infosys will allow us to be involved in the entire process from start to finish and bring our industry-leading customer service experience to mortgages.” |
· | Infosys and The Economist Group announced a new strategic partnership around sustainability. Lara Boro, CEO, The Economist Group, said, “A sustainable future will depend on creative collaboration. This exciting partnership with Infosys shows how pooling strengths can accelerate innovation and amplify impact in the pursuit of progress.” |
· | BankDhofar, one of the leading banks in Oman, was able to successfully complete a three-phase modernization program leveraging the Finacle Digital Banking Suite. Abdul Hakeem Omar Al Ojaili, Chief Executive Officer, BankDhofar, said, “We are glad that BankDhofar Vision 2020 is today a reality with a new digital-first banking platform, powered by Infosys Finacle. We are glad that our transformation program covering technology upgrade, channels upliftment, process improvement, data restructuring, branch modernization, and culture transformation are well underway, allowing no room for disruption to the end customer. Post go-live, we believe BankDhofar ranks the highest in terms of technology leadership, and functional coverage. We are now well positioned to offer our customers a world-class banking facility with the new platform, either at the branch or through digital channels, as we strive to strengthen our leadership position in the Sultanate.” |
· | Universities and Colleges Admissions Service (UCAS), UK, recently announced a major core technology collaboration with Infosys. Sander Kristel, UCAS’ Chief Operations Officer, said, “I cannot emphasise enough the importance of this new agreement with Infosys, and the benefits to UCAS staff and customers. It represents a real shift in our partnership, and will focus extensively on automation, innovation, and efficiency across the business, which is key to delivering on our strategy for the future.” |
· | Infosys Living Labs partners with venture capital investment arms of global enterprises to mutually enrich portfolios of tech innovators. “We are excited to partner with Infosys to help our portfolio companies scale new heights by providing them access to Infosys’ global client base. Infosys brings its rich heritage of delivery excellence and global access to our portfolio companies. We are a growth investor in lighthouse technologies and Infosys Living Labs provides a great opportunity to bring best in class technology innovations to clients while de-risking the adoption of startup solutions for Infosys clients." said, Matthew Koertge, Managing Director, Telstra Ventures. |
· | Infosys Public Services recently launched a blockchain network to modernize public recordkeeping for County of Riverside in California. “As Riverside County’s Assessor-County Clerk-Recorder, our goal is to provide recordkeeping, record issuance, and property valuation in a timely, secure, and cost-effective manner,” said, Peter Aldana, Assessor-County Clerk-Recorder at County of Riverside. “Adoption of blockchain technology will greatly advance our digital transformation journey towards our goal.” |
3. | Recognitions |
· | Infosys won the 2021 Microsoft US Partner Award for demonstrating excellence in Azure AI capabilities |
· | Infosys won four Stevie® Awards for great employers 2021 |
· | Ranked #1 by HfS in the Banking and Financial Services Providers Top 10, 2021 |
· | Ranked as a leader in Gartner - Magic Quadrant for IT Services for Communications Service Providers, Worldwide |
· | Ranked as a leader in The Forrester Wave™ - Application Modernization and Migration Services, Q3 2021 |
· | Ranked as a leader in Everest - Data and Analytics (D&A) Services PEAK Matrix® Assessment 2021 |
· | Ranked as a leader in Everest - Envisioning the Connected Future: 5G Engineering Services PEAK Matrix Assessment 2021 |
· | Positioned as a leader in IDC - MarketScape Asia/Pacific Managed Cloud Services 2021 Vendor Assessment |
· | Positioned as a leader in IDC - MarketScape Worldwide Life Science R&D ITO Services Vendor Assessment |
· | Positioned as a leader in IDC MarketScape - European Smart Manufacturing Service Providers 2021 Vendor Assessment |
· | Positioned as a leader in NelsonHall - Wealth and Asset Management NEAT Evaluation 2021 |
· | Ranked as a leader in Constellation - Public Cloud Transformation Services: Global |
· | Positioned as a leader in Constellation - Customer Experience Operation Services: Global |
· | Positioned as a leader in Constellation - Campaign to Commerce: Best of Breed Commerce Platforms |
· | Positioned as a leader in Everest Microsoft Dynamics 365 Services PEAK Matrix® Assessment 2021 |
· | Infosys Finacle rated as a leader by Forrester in Forrester Wave™: Digital Banking Engagement Platforms, Q3 2021 report |
· | Infosys Finacle rated as a leader by Forrester in Forrester Wave™: Digital Banking Engagement Hubs, Q3 2021 report |
· | Positioned as a leader in IDC MarketScape: Worldwide B2B Commerce Services for Industrial Manufacturing 2021 Vendor Assessment |
· | Infosys positioned as a leader in the ISG Provider Lens™ Cybersecurity Services and Solutions 2021 for U.S. |
· | Infosys ranked as a North America Utilities leader in ISG Provider Lens™ 2021 Report |
· | Infosys rated as a leader in ISG Provider Lens™ SAP HANA Ecosystem Services in U.S. 2021 and Germany 2021 Quadrant Report |
· | Infosys rated as a ‘Global’ leader in ISG Provider Lens™ ‘Internet of Things – Services and Solutions 2021’ report. |
· | Infosys positioned as a leader in ‘Next-Gen Private/Hybrid Cloud - Data Center Services and Solutions 2021’ in ISG Provider Lens™ for U.S. |
· | Infosys positioned as a leader in ‘Network - Software Defined Solutions and Services 2021’ in ISG Provider Lens™ for Australia, U.K., and Nordics Region |
· | Infosys rated as a leader in ‘Avasant Digital Talent Capability 2021’ RadarView™ |
About Infosys
Infosys is a global leader in next-generation digital services and consulting. We enable clients in more than 50 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.
Visit www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next. |
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Safe Harbor
“Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.”
Contact
Investor Relations |
Sandeep Mahindroo +91 80 3980 1018 Sandeep_Mahindroo@infosys.com |
|
Media Relations |
Rishi Basu Rajarshi.Basu@infosys.com |
Harini Babu Harini_Babu@infosys.com |
Infosys Limited and subsidiaries
Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:
(in
crore)
September 30, 2021 | March 31, 2021 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 18,056 | 24,714 |
Current investments | 4,983 | 2,342 |
Trade receivables | 20,121 | 19,294 |
Unbilled revenue | 9,413 | 7,527 |
Other Current assets | 7,435 | 6,856 |
Total current assets | 60,008 | 60,733 |
Non-current assets | ||
Property, plant and equipment and Right-of-use assets | 18,021 | 18,417 |
Goodwill and other Intangible assets | 8,017 | 8,151 |
Non-current investments | 10,096 | 11,863 |
Unbilled revenue | 758 | 594 |
Other non-current assets | 9,210 | 8,628 |
Total non-current assets | 46,102 | 47,653 |
Total assets | 106,110 | 108,386 |
LIABILITIES AND EQUITY | ||
Current liabilities | ||
Trade payables | 3,176 | 2,645 |
Unearned revenue | 4,394 | 4,050 |
Employee benefit obligations | 2,236 | 2,020 |
Other current liabilities and provisions | 17,882 | 15,150 |
Total current liabilities | 27,688 | 23,865 |
Non-current liabilities | ||
Lease liabilities | 4,356 | 4,587 |
Other non-current liabilities | 3,718 | 3,152 |
Total non-current liabilities | 8,074 | 7,739 |
Total liabilities | 35,762 | 31,604 |
Total equity attributable to equity holders of the company | 69,939 | 76,351 |
Non-controlling interests | 409 | 431 |
Total equity | 70,348 | 76,782 |
Total liabilities and equity | 106,110 | 108,386 |
Extracted from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(In
crore
except per equity share data)
3 months ended September 30, 2021 | 3 months ended September 30, 2020 | 6 months ended September 30, 2021 | 6 months ended September 30, 2020 | |
Revenues | 29,602 | 24,570 | 57,498 | 48,234 |
Cost of sales | 19,806 | 15,771 | 38,312 | 31,473 |
Gross profit | 9,796 | 8,799 | 19,186 | 16,761 |
Operating expenses: | ||||
Selling and marketing expenses | 1,235 | 1,136 | 2,483 | 2,283 |
Administrative expenses | 1,589 | 1,435 | 3,128 | 2,885 |
Total operating expenses | 2,824 | 2,571 | 5,611 | 5,168 |
Operating profit | 6,972 | 6,228 | 13,575 | 11,593 |
Other income, net (3) | 476 | 522 | 1,048 | 950 |
Profit before income taxes | 7,448 | 6,750 | 14,623 | 12,543 |
Income tax expense | 2,020 | 1,892 | 3,994 | 3,412 |
Net profit (before minority interest) | 5,428 | 4,858 | 10,629 | 9,131 |
Net profit (after minority interest) | 5,421 | 4,845 | 10,616 | 9,078 |
Basic EPS ($) | 12.88 | 11.42 | 25.11 | 21.40 |
Diluted EPS ($) | 12.85 | 11.40 | 25.06 | 21.37 |
NOTES:
1. | The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and six months ended September 30, 2021 which have been taken on record at the Board meeting held on October 13, 2021. |
2. | A Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com. |
3. | Other Income is net of Finance Cost. |
Exhibit 99.3
Press Conference
Infosys-Press Call
October 13, 2021
CORPORATE PARTICIPANTS:
Salil Parekh
Chief Executive Officer & Managing Director
Pravin Rao
Chief Operating Officer and Whole-time Director
Nilanjan Roy
Chief Financial Officer
Rishi Basu (Emcee)
Corporate Communications
JOURNALISTS
Vinnii Motiwala
ET Now
Mugdha Variyar
CNBC-TV18
Harshada Sawant
CNBC Awaaz
Sajeet Manghat
BloombergQuint
Kushal Gupta
Zee Business
Chandra Ranganathan
Moneycontrol
Saritha Rai
Bloomberg
BD Narayankar
UNI
Romita Majumdar
The Economic Times
Malvika Maloo
EnterpriseStory
Shilpa Phadnis
The Times of India
Shivani Shinde
Business Standard
Sankalp Phartiyal
Reuters
Sai Ishwar
The Informist
Bismah Malik
Business Today
Arun Kalyanasundaram
TV9
Rishi Basu
A very good evening everyone and thank you for joining Infosys’ second quarter financial results. My name is Rishi, and on behalf of Infosys, I’d like to welcome you to our press conference. In true essence of a hybrid model, we are delighted to host some of our friends from media at our Bangalore campus while some are joining us virtually. All participants on ground are vaccinated and we are adhering to all COVID-19 protocols. Before we begin, allow me a moment to go over a few house rules. Friends from media who are here with us physically, when we announce you during the Q&A kindly press the button below the mic to ask your question and release the button thereafter. Our friends from media joining us virtually, you will be on mute by default through the press conference once we announce you kindly remember to unmute yourself. Our photojournalist friends kindly remain seated since this is a hybrid model, and we have video feeds all around. As always, we request one question from each media house so that we can accommodate everyone over the next hour. For those joining virtually, in case you get disconnected, kindly rejoin using the same link. With that, let me invite our Chief Executive Officer, Mr. Salil Parekh for his opening remarks. Over to you Salil.
Salil Parekh
Thanks, Rishi. Good afternoon and welcome back to the campus. I am really delighted that so many of you have been able to join us here in person. We are thrilled to be here on the campus and to start this new hybrid approach that we are working on and also thank you to all who are joining us remotely.
I am delighted to share with you another exceptional quarter from us. We have increased market share gain. We have demonstrated more and more trust with our clients. We are really seeing the strength of our digital and cloud capabilities. Our growth was 19.4% YoY in constant currency, 6.3% QoQ but it is even more assuring, and reassuring for us is that this growth is organic, and we are seeing this coming with all of our client work.
I would like to thank the entire 280,000 employees of Infosys for their incredible dedication to our clients and making the impact with work that they are doing.
On a YoY basis our growth was the fastest in the 11 years and builds on the strong growth that we already had last year at this time. Our growth has been accompanied by resilient operating margins at 23.6%. We delivered these margins while keeping at the forefront all of our focus on the employees, the compensation increases and the expansion of the benefits.
Our digital business grew at 42% and now it is 56% of our overall revenue and within digital, our cloud is growing even faster. Our Cobalt capabilities are especially resonating with our clients. Some other highlights, we had broad-based growth across all of our sectors and service lines. Our Financial Services grew by 20.5%, Manufacturing over 42%, Retail over 17%, Life Sciences over 26%. In terms of geographies, North America grew at 23%, Europe over 19%. Our large deals were very strong at $2.15 bn and we had a net headcount increase of over 11000 people where we are attracting the leading talents from the market and we remain comfortable with our ability to support our clients in all of their digital transformation work. We are also expanding rapidly our global talent pool and we are going to increase our college hiring number to 45,000 for this financial year.
I am also delighted with our ESG focus - as many of you know we have already been carbon neutral since 2020. Our ambition for 2030 is well articulated and we are building on the momentum that we have created. We are accelerating our goals with launching Infosys Springboard to bring digital skills to millions of students.
With a strong start to the financial year and a good deal of momentum in Q2 and a good pipeline, we are increasing our growth guidance. It was 14% to 16% we are taking it to 16.5% to 17.5% in constant currency terms. Our operating margin guidance remains the same.
In addition, we have a really special moment this quarter. It will be Pravin’s last full quarter before he retires. It has been an incredible journey of 35 years that Pravin has been with Infosys where he has in so many ways shaped the company. His contributions are truly innumerable. We will miss, and I will personally miss the tremendous depth of knowledge that Pravin has of the business and his contagious sense of humor. My best wishes to Pravin. We will announce a new future structure in the coming weeks well before Pravin steps down and then we will communicate it externally. With that, I will pause and over to you Rishi for the questions from everyone here and virtually.
Rishi Basu
Thank you Salil. We will now open the floor for questions. Joining Salil are Mr. Pravin Rao, Chief Operating Officer, Infosys, and Mr. Nilanjan Roy, Chief Financial Officer, Infosys. We open with the first question which is from ET now. Vinnii Motiwala joins us on Video. Vinnii kindly unmute yourself and ask your question.
Vinnii Motiwala
Good evening gentlemen and congratulations on posting good earnings. My question is actually in three parts. The first one is for Salil, could you give us a color on the deal pipeline, and could you cross more than you bagged last year, and with the supply side issues are the new deals coming in at better pricing? My second part of the question is to Pravin, could you give us your sense on whether the high attrition is here to stay for a longer time, or do you see this transitory – basically how long can this pain be there for? And the last one again Salil, if you could give us a sense on what are the headwinds and the tailwinds in the medium term as well?
Salil Parekh
Thanks for your question. I think the pipeline looks strong and robust. Our deal wins have also been excellent for this quarter and for the half of the year and we have had a good momentum building up on what was in this environment a strong digital and cloud capability that our clients are looking at. There are two sets of areas where growth is coming from, one is from the wins that we see in the market, and one is from our existing client base, which is a very strong client base, which is looking to expand what they are doing with Infosys. So, keeping all of that in mind I am quite comfortable, we see a good outlook for this year. We continue to see with our increase in growth guidance a feeling that growth is looking strong going from 14% to 16% to 16.5% to 17.5%. I will come back on the third one. Go ahead, Pravin.
Pravin Rao
On the attrition front, the high attrition is a reflection of the huge demand that we are seeing as well as supply shortage and to some extent, it is also lack of mobility in some of the geographies that we are seeing. The high attrition is expected to continue for next few quarters till the supply situation eases. From our perspective we have been able to meet all our client commitments through aggressive hiring, reskilling as well as increased use of subcontractors.
Salil Parekh
On the pluses and minuses with what we see, we are really seeing a different kind of growth that is coming in today which is from our client-side. As Pravin shared, we are working in extremely focused way on expanding the capacity of our teams, we have increased the graduate hiring to up to 45,000 and we are doing several other actions to make sure that all of the work that our clients are giving us, we are able to work on. So really, we see a lot of that in terms of good demand in the market today.
Rishi Basu
Thank you. The next question is from Mugdha Variyar from CNBC TV18. Mugdha is here with us on ground. Mugdha kindly unmute yourself.
Mugdha Variyar
Thank you firstly for calling us here. It is great to be here, after more than five quarters, and congratulations on a strong quarter again. Salil my question to you is again about the deal environment. The big deal wins seem to have plateaued a little bit, is there some concern there or are you seeing now a mix of deals. If you can just highlight what the mix of deals is looking like. And also, I have to ask you because this is something that we see every day on Twitter and social media about the IT portal. You did put out a statement last month that 3 crores taxpayers have transacted but glitches are still remaining. What is the status update on that, and we had also seen taxpayers complain about glitches on the GST portal after four years of GST being live. So, what is the strategy to tackle these glitches, so that the taxpayers are not impacted, if you can throw some light on that?
Nilanjan, I want to ask you about how much was the boost in the revenues from the Daimler deal firstly and secondly, in your comments, you have said that you will look to continue to invest in your employees to remain a preferred employer of choice and seamlessly fulfill client demands and this is really a big concern right now, the high attrition, the supply shortage, etc. So, if you can elaborate on what you mean by how you look to invest in your employees?
Pravin, of course, attrition is a big challenge. You said it will continue for the next few quarters, how are you looking to tackle that and what will be the pressures then on margins given that subcontractor costs are rising and finally when it comes to hybrid model you had said in the last quarter that you expect to see 20% to 30% employees coming back to office, what is the hybrid policy going to be like and how many employees are you now seeing coming back to office daily?
Salil Parekh
Thanks for those questions and thanks for being here in person. It is good to see everyone here in person. First, on the large deals what we are seeing today is a very good pipeline for large deals for us. The number of deals that we are working on is solid, we feel comfortable with the pipeline and that gives us good traction into the market, of course, last year we also had some mega deals. When we look internally and we normalize for that because those are always difficult to predict and when those things happen, we have some of those in the pipeline. We feel that the deal pipeline looks strong today and that has given us the confidence in addition to what we have done in the past to increase the guidance. Overall, the type of deals that we are doing, the type of trusts that our clients are putting in us and a lot of that which is in this digital transformation areas which relate to cloud we are seeing good traction in that. For example, with Cobalt, we are starting to see a lot of work which is related to private cloud, hybrid cloud. We have strong partnerships with the ‘Infra as a Service’ players in the market and those are giving us good impact and we have very good traction with the SaaS players and those are giving us impact. So we see a nice set of pipelines in terms of what is going on with the overall large deals.
On the income tax project, I will make a couple of points and also on GST. Pravin may add to it when he responds to the other attrition questions. So first we are seeing a steady progress on the income tax system. As of yesterday, we had over 1.9 crore returns that have been filed using the new system. Today the income tax return forms 1 to 7 are all functional, most of the statutory or several other statutory forms are available on the system. Over the past month, the portal has been further bolstered, the system has seen a steady increase in usage over the past few weeks and the taxpayers’ concerns have been progressively addressed. Over 18 crore logins have been observed on the portal and approximately 3.8 crore unique users have successfully completed various transactions. The system has seen somewhere between 2-3 lakh returns being filed each day. There are some other stats which I also wanted to share. For example, from the previous assessment year, 96% of the returns have been processed. For the current assessment year, over 1 crore returns have already been processed which is part of the benefit of this new approach - integrated system with the filing and the processing. To ensure a smooth filing experience for the users, Infosys has continuously engaged with more than 1200 individual taxpayers over the last several months. We have also been working closely with the Chartered Accountant community to ensure that a comprehensive set of user scenarios are supported and thoroughly tested before deployment. We remain committed to making further progress and we are confident of ensuring a seamless experience for all the taxpayers. We take pride in partnering with the Government of India and continue to work closely with various departments to accelerate the digital evolution of the country’s technology capabilities. On the GST as well, we are working very closely with the department, with the agency to make sure all of those areas are addressed. It is actually a system that has been working extremely well for the last several years. There are situations which come up which we look at and address on an ongoing basis. With that let me pass it to Pravin for some of those other points.
Pravin Rao
From an employee attrition perspective, to contain attrition we have undertaken several initiatives. One of course is we have given a couple of compensation increases this year, one was effective January and another one was effective July. In addition, for high performers as well as people with niche skills we also rolled out a skill-based compensation increase recently. We have dramatically increased the number of promotions that we have been doing. We have come up with some elaborate retention plans as well and we are trying to execute on that.
There is a lot of focus on employee engagement, there is a lot of focus on career aspects, we are investing a lot in terms of employee training, reskilling, we have come up with new roles of digital specialists. We are also looking at Bridge program which helps people to move across different roles in the organization. Of course, there is a lot of focus even in terms of ensuring that when people are working remotely as well, we have an inclusive culture where they also get involved in the employee lifecycle process. So, there are multiple things we are doing, trying to contain the attrition as well and we are also at the same time looking at a long-term strategy, we are re-looking at the employee value proposition. It is not only about attrition, but it is also the fact in the new normal the whole employee value proposition has to be relooked at because the new normal will be fundamentally different from what we have seen in the past in the pre-COVID world, so that’s a more a long-term initiative that is something we have started taking a look at. So, these are some of the interventions we have done trying to contain attrition. On the return to work today globally, we have about 97% still working from home. On one hand, in China, we have 91% working in an office, on the other hand in India, US or in UK we have 98.5% working from home, in Continental Europe, it is probably in mid-90%, in South East Asia about 80% or so. Starting July both in the US as well as in India, we opened up in our offices across all the DCs where the employees were allowed to come into the office on a voluntary basis, of course, we follow strict protocols in terms of vaccination, etc. Starting October, we will probably now start looking at things in a much more formal manner. In October, in India, we are requesting all the senior leaders to come to the office at least once a week. We are also requesting them to have several interventions for employees at least once a month so that we have a larger population coming to the office and based on the feedback and outcome we will fine-tune the process and then we will figure out what will happen in the subsequent quarters. At the end of the day, everyone recognizes that this is going to be a huge change management. There is no one size fits all, so we have to keep in mind the client requirement as well as keep in mind the employee preferences as well. So, we are really working on a model which provides flexibility to employees, but also enables us to react with great speed and agility to whatever is happening. So, we are very comfortable with our current thinking on this and so far, we have been able to meet all the client requirements without any further issues.
Nilanjan Roy
You had a question on Daimler. Of course we can’t comment on a particular client. You can see the impact on the manufacturing segment which has grown handsomely, but across all segments, as Salil mentioned we have had very broad-based double-digit growth both on a year-on-year basis and sequentially as well all the segments have grown. I would say Daimler has been more like an icing on the cake and even without Daimler we are seeing strong growth.
Rishi Basu
Thank you Nilanjan. The next question is from CNBC Awaaz. We are joined by Harshada Sawant who is joining us on video.
Harshada Sawant
Good evening gentlemen. Congratulations on a good quarter. Salil, I would like to ask you a question. We have seen good growth in digital over the last three to four quarters, however, I have noticed that as a percentage of your revenue the number has plateaued between the range of 50% to 53%. In terms of new deals in digital, do you feel that those deals are less as compared to what we have seen over the last three to four quarters? Also, if the deals are coming, are they primarily related to cloud, AI, IoT, where do you see more demand? My question to Pravin - geographically we have seen North America and Europe face the second wave because of which there was a struggle in the last quarter, so what are the signs for now on ground and also if you give visibility of the onsite talent returning after travel restrictions start easing?
Salil Parekh
Thank you for the question. Let me try and address the first part. The digital capabilities are really resonating well with clients. We see tremendous growth with 42% growth of digital the percentage of our overall revenue is now 56% so that is constantly increasing from what we had in the last few quarters. That growth of 42%, we do not see that in today’s outlook plateauing. In terms of what we are seeing great traction for, within our digital pentagon, we see tremendous traction for the cloud area because of our cobalt capabilities, which are resonating well with clients. We have now 300 industry templates within Cobalt, about 30,000 different assets. Those are what clients are really gravitating to. We also see good traction on our data and analytics capabilities, there we see a very strong growth. We see good traction for our experience, our digital development, cloud-native work and we see good work again on cyber security and IoT, so all the elements of our digital capabilities are showing good traction today. Cloud of course being the most dominant in the marketplace today.
Pravin Rao
With respect to the geographies, with an increased pace of vaccination, we are seeing the market opening up both in the US and Europe as well, both are major markets for us. In fact, we had over 20% growth YoY on a constant currency basis in the US this quarter and close to 19.6% in Europe. So, from a growth perspective, things are looking good. With the market opening up and with travel easing, we expect a good deal of flexibility going forward as well probably sometime in November, December onwards. But at the same time, we have to also recognize that with exploding demand now the ease about talent availability, so wherever talent is available, clients are open to source the talent from wherever it is available. So, while markets may open up if most of the talents still are in India then we will continue to see a lot more opportunities in India as well, but the fact that the travel is opening up will give us some flexibility to move people around and have the mobility of talent.
Rishi Basu
Thank you. The next question is from Sajeet Manghat from BloombergQuint. Sajeet joins us on video.
Sajeet Manghat
Good evening gentlemen. Salil, I want your thoughts on the demand environment especially in the US and the European markets, and the fact that there is a lot of medium and small deals, which are around in the market, but large deals have largely either slowed down or is taking longer to close and that is visible from the fact that top three players are saying the same thing that medium and small deals are much more in the market today. So, are we are seeing a plateauing of these digital transformation deals happening in the market?
For Nilanjan, if you can give me some more color on the kind of supply side challenges, which you are going to face in the next couple of quarters even though we have increased the guidance and maintained operating margins, but you have increased the hiring from campus, what kind of supply-side challenges you are seeing there?
And for Pravin, if you can give us some idea of how BFSI and Retail are doing. We saw the contributions coming of marginally on a QoQ basis, but do you see some plateauing being there because these were the growth engines in the last three to four quarters and now there is some plateau coming in those segments?
Salil Parekh
So let me start first on the geography and the composition of the deals, large deals, and the medium deals. In North America and in Europe we are seeing very strong demand. As we had shared earlier over 23% growth in North America and over 19% growth in Europe. A good set of demand and good deals. Even if I look in the pipeline, we see good activity. Digital transformation is still very much part of what clients are driving. They are driving that change agenda through their businesses. We are interacting with them. We are working with them to see how that becomes a large part of all of the work that they want to put in place on a multi-year program. The mega-deals as I was sharing earlier will always not be predictable in which quarters they will come. Yes, there is a lot of deal flow, which is what we call medium and large deals. Our large deals values are based on all deals, which are above a threshold of $50 mn and hence we have various ways internally of looking at these things. But overall, my sense is the pipeline is strong. We see good growth and the way that clients are looking at it in each industry, the incumbents are going faster to transform themselves. The native cloud, the native digital players are scaling up massively. So, this is a good time in that sense for the demand and the real testament is we have increased our guidance for the full year with what we see in the pipeline and with what we have developed so far.
Nilanjan Roy
On the supply side like Salil mentioned, this is an exceptional demand scenario and frankly, nobody was prepared. Fresher, which is the main source of talent for this industry, really that had not filled into the pipeline and therefore you have been seeing the sequential increase even by us and the industry in terms of taking more and more freshers. At the end of the day, India generates a million freshers, engineering graduates each year who can come into this industry and really fuel the volume growth. Attrition is fundamentally rotational right, my attrition is somebody else’s lateral and somebody else’s attrition is my lateral. So, at the end of the day, I think once the freshers feed into the system they get reskilled and upskilled you will see the supply side easing off, but as I say I rather work in an industry where demand is chasing supply rather supply chasing demand, so I think, in a way, it’s a problem, but a better problem to have in the other way around. And, I think increasing our freshers to 45,000 this year is going to fuel some of that supply side to make sure we remain committed to our existing deliveries of our clients which are number one and number two, new volume growth which we can also sustain.
Sajeet Manghat
Is it a stabilization part of it? Do you expect two to three-quarters of stabilization requirement for this particular challenge?
Nilanjan Roy
I think, like even Pravin has said, I think within two quarters we will have a lot of freshers coming in and you will see some of this attrition and also the retention measures lot of us are doing whether it is promotion, whether it is terms of compensation, whether it is targeted retention, I think all that will come into play.
Pravin Rao
In terms of BFSI, we have had extremely good growth industry-leading growth of over 20% on a YoY constant currency basis, and probably several quarters in a row we have had this kind of growth in this segment. I am also happy to share that we were ranked #1 by HfS in their Banking and Financial Services —service providers ranking. We are seeing a lot of traction and great momentum across geographies both in Europe as well as North America. Our clients are investing in customer experience using advanced analytics and AI. We are also seeing a lot of focus on remote customer management like virtual banking, remote advisories, and so on. Of course, we are also seeing a lot of cloud-based transformation deals.
Our focus on building capabilities and platforms in some of the sub-verticals like regional banks, asset management, wealth management services, mortgages, etc, is paying a huge dividends and we are able to win lot more deals and gain market share. Today we are well-positioned as an end-to-end transformation player given our depth in domain, depth in IT, depth in ops as well as digital transformational capabilities. And we expect this momentum to continue.
In Retail as well we are seeing good double-digit growth this quarter. We have also seen decent sequential growth. With economies opening up we are seeing a lot of pent-up demand. Retailers have started aggressively investing in building new digital capabilities in marketing, in commerce, and in supply chain. We are seeing a lot of traction around the digital consumer. We are seeing a lot of traction around promotions, around personalization and so on. Our recent new launch of Equinox platform is also an added advantage for us in this space. We are seeing good traction both in existing clients as well as new clients. We expect steady growth in this segment in the coming quarters as well.
Rishi Basu
Thank you. The next question is from Kushal Gupta from Zee Business who joins us on video.
Kushal Gupta
Good evening gentlemen. I have two questions, Firstly, I am surprised with the business segments growth , specially Manufacturing sector with constant currency growth of about 42.5%, and if you speak about percentage share, we see levels of 10.9%, so by end of FY2022, can we expect Manufacturing to have the highest share after financial services, given the kind of growth we are seeing in constant currency terms? And my second question is particularly on the strategy of the company, as we are hiring freshers, so will our focus be on a smaller set of deals which would be of smaller value or will our focus be on the larger deals itself? Thank you.
Salil Parekh
Thank you! Let me start by answering the first one, Manufacturing is an extremely strong area for us, and we have seen very good growth which shows again good client traction for us. The step back, within the company we have a broad well-diversified focus on different industries. Of course, Financial Services is the largest for us. Consumer products and Retail is a very strong industry for us as well, as Pravin was sharing some of the statistics on that and Manufacturing has always been a strength, but we are now seeing further expansion with what we have been able to do over the last few years, so yes, those will be very important. But there are areas which are very strong for us – Utilities, Telecommunication, HiTech, Life Sciences – those will continue to play a big role, because we do have a well-diversified set of industries where we work exclusively with a lot of clients, large enterprises in those areas.
Kushal Gupta
My second question is, as the company is planning to hire 45,000 freshers, so strategy-wise going forward, are we focusing on small deals so that we have the quantity of deals or focusing on the large deals?
Salil Parekh
The approach we have put in place, as we have shared is a combination of things. We have a tremendous focus on large deals which are deals above $50 mn for us and we have had a good track record over the last 3 or 4 years of the way those deals have come about. And that continues, we have a good pipeline of those deals. But that does not mean that we do not work where there are smaller deals and that is also a very significant part. As you see the number of accounts, client relationships that we have which are for example over a $100 mn, over a $50 mn those keep expanding very well because we spend time to work with each of our clients to expand in all sizes of opportunities there. So that approach is not going to change. The idea of bringing in more people into the company with college hiring, is simply as Pravin and Nilanjan are sharing, is to expand the amount of people we have to serve all our clients, so both on large deals and on other deals within our client base, we will continue with that approach.
Rishi Basu
Thank you. The next question is from Chandra Ranganathan from Moneycontrol. Chandra is here with us. Chandra, kindly unmute.
Chandra Ranganathan
Hi, great to be back at the Infosys campus in Electronic City, Salil, I want to start by asking you in terms of the total deal wins. Initially post-pandemic the argument was cost optimization. Are you seeing the cycles getting longer, are there more discretionary projects now with companies emerging out of the pandemic, and if you can also give us the break-up between the net new deals and the renewals, out of the total TCV that you have won. Nilanjan, you have managed to kind of hold on to margins despite wage increases, despite attrition spiking. Was it also because your sales and marketing cost was a little flattish; do you expect this to change because you haven’t really changed your margin guidance, so how are you going to balance those levers? Pravin, you are sort of the veteran in the company, you have seen all the ups and downs, so tell us about your last day and what is the future structure going to look at, will you have a multiple COO structure are you guys planning to do away with it altogether and what are you going to do post-Infosys? Thank you.
Salil Parekh
Let me start off with a little bit of what we are doing in terms of what we are seeing with clients today. We are definitely seeing that activity with clients is giving us good traction. We think all of the work that is going on whether it is related to the cloud, whether it is related to digital, is still giving us good growth, good momentum in that area. Our focus will remain very much on making sure that we work both with existing large clients and also with new deals that are coming in. We do not see in that sense a distinction in any of those areas. Let me come back later and address some of the points that you have asked Pravin but let me pass it on to Nilanjan first.
Nilanjan Roy
From a margin perspective, as you know, we have dropped about 10 basis points quarter to quarter. Broad breakdown of this is - comp. hikes was about 110 basis points, about 50 basis points was the headwinds on subcon, because to meet the existing demand we had to actually go up and ramp up on subcons so actually there was a headwind of 1.6%. We have offset about 80 basis points of this from cost optimization and operating parameters like utilization. Another 50-basis point is the impact of SG&A which is the operating leverage and that is very core to our strategy as well and about 30 basis points remaining is coming from currency. So, it is not simply about SG&A. It is making sure that we are working on an aggressive cost optimization program as well to negate some of these headwinds and from the margin guidance that 22% to 24% we are comfortable with that and we do not see any reason to change it.
Salil Parekh
Pravin will certainly answer the points about what he is doing afterward. I will just take a couple of seconds to talk about what we are doing within the company. As I shared earlier, we have already put together what we are looking to do in terms of our structure. We will announce it internally in the coming weeks and then we will obviously communicate that outside. So very soon you will get to see what that is. We have a very strong set of leaders within the company so I am extremely confident that we will have a structure that will work for our clients and for our business.
Chandra Ranganathan
Salil, sorry just one follow-up. Considering Pravin has sort of been leading the delivery management based in Bengaluru and you are based in Bombay, so do you see some difficulty there because it is the first big top-level change that we will see after you came in, so any difficulties that you anticipate there, just want to understand.
Salil Parekh
No from our side, Pravin has built an incredible team over the years, and this will be an evolution. So, I am looking forward to having many of the new leaders step up and focus on the areas that Pravin was focused on. Of course, the company and I personally will miss Pravin tremendously.
Pravin Rao
I just wanted to add what Salil said. For all the functions I was handling, I had a strong set of leaders running those functions, so I really don’t anticipate any challenges in transition or any miss there. I am very confident about the transition and succession of the role. My last day is December 11, so I will still be around till then and at present there are no concrete plans of what I will do beyond.
Chandra Ranganathan
Pravin just one clarification - you have said you have handed out promotions in large numbers. Can you give a sense of previous years how much would it be, this year how much is it because of the unprecedented war for tech talent?
Pravin Rao
We normally do not give out those exact numbers, but it is significantly higher than what we have done in the past. I can just state that.
I also want to take a moment to thank all my media friends for their best wishes and support to Infosys over the years. I have enjoyed all my interactions and once again thank you very much.
Rishi Basu
Thank you. The next question is from Saritha Rai from Bloomberg. Saritha is here with us. Saritha, kindly unmute yourself.
Saritha Rai
Hello gentlemen. Sir, my question is about attrition, you are now competing against startups that are offering such sweeteners as BMW bikes, ten-day shutdowns, three-day work week. I wanted to ask you, what new creative measures is Infosys taking. You are a forty-year-old company, and you are now competing with two- or three-year-old startups so obviously this calls for some innovative thinking, that was my first question. My second question is about the whole travel is going to come back, the return to office, all of the costs involved, how is that going to affect your margins or how are you going to control cost and will that sort of revive the H1B visa issue that is been under control or has sort of receded into the background in the last few quarters and my last question is this is the kind of a time when a lot of shopping is going on in various sectors and I wondered whether Infosys is looking at any kind of acquisition big or small? Thank you.
Salil Parekh
Let me start off again. Thank you for being here in person. What we have in terms of the connects with our employees is incredible. We are a company as you mentioned a 40-year-old company, we have tremendous longevity and the strengths that come from that and very exciting projects that we work on because we are working on this digital transformation, cloud, data, analytics projects for large global enterprises and that is still very exciting. The statistics that we shared earlier – 45,000 college hires and for each of those we are probably going to look at 10-15 people for each person that joins us, and it is still a hugely competitive environment for someone to join Infosys, so we are very positive and confident. Of course, there are many people, and the startup ecosystem is fantastic everywhere around India, especially here in Bengaluru as well and there is all good success to have startup ecosystem. Of course, in startups there are different pros and cons. For a company like ours, we have tremendous training, a good long career, and exciting projects that our employees work with, in addition to all the benefits and a phenomenal campus environment that we have. So, we are very comfortable and confident that we can attract the talent and that we can develop and grow it over long periods of time.
I will address the third one that you mentioned, we are absolutely looking for acquisition opportunities on an ongoing basis, we have done several in the past two or three years that you are aware of on cloud, SaaS companies, on areas which are related to a customer relationship management, on areas that are related to technology, digital experience, digital design studios, so those are the things we are continuing to look for and look at. At this stage, there are also things which are active in the pipeline, but those things as we have discussed in the past happen when all the elements come together, the culture, the value, and what we can do on scaling it and as and when they do, we will continue with their parts to the acquisition.
Nilanjan Roy
I think the point you are making here is that yes, we will see some costs coming back like travel, for instance, some of the work from the office once some of the work resumes. But having said that, even during all this period we have seen a very active cost management program, cost take out, optimization program and whether this is the onsite-offshore, automation is a big part of this as well, bot factory, the pyramid. So, I think a number of initiatives we continue to take. Hiring graduates overseas for instance from the US as well and I think our college graduate program outside India now is at about 3000 to 3500 fresh graduates which earlier we would not have had as many. So, I think we have a lot of continuous work happening on this and we are quite confident in our margin guidance.
Rishi Basu
Thank you. The next question is from BD Narayankar from UNI who joins us on audio. Kindly unmute yourself.
BD Narayankar
Firstly, I would like to congratulate the Infosys team for beating the street estimates. I have only one question and that is what is the one big reason why Infosys has done better than TCS?
Salil Parekh
Let me try and address that and maybe Pravin, Nilanjan might have other things to add. I think our focus is absolutely on our clients today. We are very much building and have built a set of capabilities which are focused on digital and cloud and those are things that our clients are looking at. That is the main reason why we see a tremendous market share gain that you point out. We have seen this over the last several quarters, we are consistently making sure that we enhance our capabilities, so look at Cobalt today. Pravin mentioned Equinox. Equinox is the capability which is designed for a completely new world of e-commerce, and we have the leading capability in that sense, a platform which we can deploy and have deployed at many different client situations. So, things like Cobalt, Equinox, the reskilling that we have done with all our people. When clients work with us, they see that those capabilities are relevant and that is the reason why we are seeing all this traction. Of course, there is also a focus that we are put into all of our teams whether it is on the delivery side or the sales side, all of our BEF functions, which is working in a joined-up way in ‘One Infosys’ way to make sure that all of this is put together without looking internally, only looking externally. Those are the reasons working in this ‘One Infosys’ way, building the new capabilities that is helping us and the real resonance that you point out is what we see in terms of our growth and how the overall operating environment is working. We are really delighted to see the clients are looking to us more and more as a trusted partner.
Rishi Basu
Thank you. The next question is from Romita Majumdar from The Economic Times. Romita joins us on audio.
Romita Majumdar
Congratulations gentlemen on a very good set of numbers. My first query is with respect to the Retail business since you mentioned that there has been very good growth there and there is a lot of aggressive investment happening in this space, I would like to understand where the new deals are coming in Retail from, what kind of segments, what kind of client demand do you see, is it B2C, is it B2B, also what is the duration and value of such projects that you see on the Retail side. And I have another query with respect to the supply side issues, I want to understand because there is this attrition issue that we are talking about, what employee categories in terms of experience or roles do you see which are reporting maximum attrition and do you think that going slow on, onboarding talent when the pandemic hit, or letting go of people before the pandemic impacted your ability to deal with the kind of massive demand that you are seeing right now?
Pravin Rao
On the Retail front, as I said earlier most of the increased demand we are seeing is in the areas of new commerce, new ways of doing digital marketing, in the supply chain areas, and so on. So, there is a lot of focus on hyper-personalization, and this is across geographies, and this is also across different kinds of deals, and we are seeing this traction both with existing customers as well as with new prospects. In fact, out of 22 large deals that we won, three of the large deals were in the retail space. So, from that perspective I think it has been pretty broad-based and as I said earlier, we expect this traction to continue for several quarters given that the economy is picking up and there is a lot of pent-up demand. Again, from a space perspective it is, I mean, we predominantly work with B2B companies most of the things we are talking about is B2B perspective. But obviously, for our clients, the demand is coming from end consumers and so the moment there is an increase in demand then that translates into increased opportunities for us as well. So that is what we are seeing in the retail space.
On the supply side typically the attrition, irrespective of current situation or historically in the industry the attrition is normally high between three to five years or three to six years, I mean that is where people are still not emotionally connected with the organization and the attrition tends to be high. Even now in the current situation while the average for us this quarter we had about 20.1% average on LTM basis, the attrition at three to six years was probably higher than what we have seen at company level, and that is normal and typical to what we have seen.
Romita Majumdar
In terms of going slow on onboarding talent last year before the pandemic, during the pandemic, do you think that impacted your ability to address the demand that you see right now?
Pravin Rao
No, from an Infosys perspective we continued to recruit, we continued to onboard people but to some extent yes. I think many companies stopped recurring and suddenly when there was demand then the attrition picked up and there was a lot of cross-movement of people, but having said that the kind of demand we are seeing is probably unusually high and in fact, the last we have seen this kind of demand goes back to about 2010 or something like that, and several reports talk about the tech intensity increasing from 3% to 5% but historically total spend would be 3% of revenues and now it is increasing to 5% and this is going to be a multiyear demand. So, in that sense, I think the demand is significantly higher than what we have historically seen in these past few years. To some extent, in the short-term lack of hiring during pandemic may have caused this attrition but the supply challenges will persist till new freshers get deployed, a lot of reskilling will happen and as Nilanjan said and as I also talked about earlier the next few quarters, we expect the supply situation to ease, and the attrition comes back to normal levels.
Rishi Basu
Thank you. The next question is from Malvika Maloo from EnterpriseStory. Malvika is joining us on audio.
Malvika Maloo
Good evening gentlemen. My first question is on hiring. Could you give us some idea about the lateral hiring that you are doing and what kind of particular areas you are looking at in lateral hiring because you say you are seeing a lot of demand for Cloud, AI, so if you could shed some light on that? Secondly, if you could tell us more about how you are planning to deal with acquisitions, what areas, what companies you are looking at and how have the acquisitions in the past helped you deal with the demand that you are seeing right now?
Pravin Rao
In terms of talent, on the lateral hiring we are really looking at hiring people with digital skill but many times there is a shortage of digital skill, so we also look at adjacent areas and then re-skill them internally on digital skills. So that has been our approach. Our approach is also about reskilling of existing people as well so on an average in the last few quarters nearly 80% of our incremental demand on digital has been met with internal reskilling and that is something we will continue to focus on. We do not give specific numbers on number of hiring from a lateral perspective and but from a freshers perspective so far, we have hired about 25,000 people globally from campuses and we have increased the target to 45,000 through the year. Earlier we had talked about hiring about 35,000 campus graduates this year, now we have increased it to 45,000.
Salil Parekh
On the acquisitions, as you might have seen over the past few years, we have done acquisitions which are focused on the SaaS areas, with different partner capabilities we have tried to accelerate. We have done acquisitions which are focused on the public cloud area, we have done acquisitions which are focused on engineering services and on experience and digital design type of capabilities. All those areas are growing extremely well in the market. So, what we have learned is one with the careful work that the team has done to make sure operationally integrates well and then drive incremental impact to the client and to Infosys, those acquisitions are working quite well today, and they are part of what is helping us to further expand our capabilities in the digital and cloud area.
Rishi Basu
Thank you. The next question is from Shilpa Phadnis from the Times of India. Shilpa joins us on video.
Shilpa Phadnis
Good evening gentlemen. Attrition has gone up substantially to 20% how are you baking in the potential price increases in your client base, either through upfront cost or altering the pricing constructs towards outcome-based pricing. If you can tell us about the cost optimization levers to normalize the pyramid, because subcon expenses have gone up, so is backfilling expenses. Also, would you see yourself with the current threshold from an offshoring standpoint? Salil this question is to you, you’ve landed the firm in an acceleration phase, people are talking about how the tech intensity has gone up substantially, would you take a strategic refresh at this point in time, would your new strategy capture the new growth momentum. Pravin Rao Sir, many congratulations on a stellar career over three-plus decades with Infosys. Would we envisage a COO role which is location agnostic and individual agnostic, how will the structure look like?
Salil Parekh
Let me start with the point which is around what we are seeing with the acceleration and the demand, Shilpa. Yes, we have been fortunate to see a tremendous acceleration with 19% growth this quarter and an increase in guidance. Our focus which is really on digital capabilities, remains steady. As and when we are ready with the next phase of what we want to develop and think we will obviously communicate that. For now, we are seeing a lot of activity which is going on with the areas we have talked about today, the cloud areas, the cyber security areas, Artificial Intelligence, IoT and our building up of capability in that space has really helped us.
Shilpa Phadnis
So, I just wanted to understand how are you baking the potential price increases in your contracts especially either to upfront investments or its outcome-based pricing because all the other levers look healthy and also if you can talk about the cost optimization levers how do you plan to normalize the pyramid, with the subcon expenses and backfilling expenses also going up. Would you also see yourself at the current threshold from an offshoring standpoint?
Nilanjan Roy
Yes, so I think on a pricing perspective I think it is easier said than done to say that you can just walk up to our client and ask for a price increase. So that is not the way the world works. But I think what we are trying to work with many of sales folks is to focus on the value which we bring to our clients. Really the core of proposition we bring in our organization, speed to market, redundancy, customer service, net promoter score these are real tangible dollars which we can show our clients and that is the way we are leading the conversation. The net idea is that we cannot leave any cents and dollars on the table, and we of course have to be competitive but absolutely this is the right time to make sure that we really buckle down on this and continue to focus on looking at digital talent and saying that if clients are looking at that kind of talent they should consult paying for that price. But like I said this is going to be a long haul, this is not a short-term one-quarter exercise where you can flip it around. On cost optimization, I think we continue to show across the years around the levers that like I mentioned in terms of the pyramid onsite-offshore, setting up the hubs in the US that enabled us really uniquely as one of the companies to set up an onsite pyramid historically the pyramid was only looked at offshore whereas onsite used to be very steep. Now with our hubs we actually can broad-based the pyramid there, take in these college freshers, and really impact the cost structure of our onsite businesses as well. So, in that sense, we are quite confident on that. If you look at the onsite offshore mix whether there is threshold, the long run secular trend like I said there is no other country in the world which has a million engineering graduates coming out English speaking every year. At the end of the day, this global intensity of demand, it will have to come to India and in that sense we are best placed to take care of that. Secularly, I think there can be some one-offs in quarters, but in the long run, you should see this onsite-offshore continue to improve.
Pravin Rao
Shilpa, I just wanted to thank you for the kind words and for the wishes. I have always enjoyed all interactions with you. In terms of your specific question, I will pass it on to Salil.
Salil Parekh
I think what you mentioned was something about location independence or individual independence. I think those are more let us say theoretical constructs. We have had a very well organized, really practical approach to how we have run the business in terms of our organizational structure, and what we are now planning to do is to move to the new structure which we will share internally first, and then we will communicate it outside. We have an extremely strong set of leaders within Infosys, so I am looking forward to many of them stepping up in the years to come and of course, we will miss Pravin and his insights and real knowledge of the business, not just of the company, but on the business overall in the market as well.
Rishi Basu
Thank you. The next question is from Shivani Shinde from Business Standard. Shivaji joins us on audio.
Shivani Shinde
Good evening gentlemen. Congratulations on a strong set of numbers. Just a few follow on questions. Salil, on TCVs it does look slightly softer if I have to compare it sequentially on YoY and this is just not you, I think Accenture said the same almost when it came to outsourcing, TCS also showed the same thing. Can you give us some color on what is happening in the deal segment? Are large deals becoming smaller because as the market opens up, are clients recalibrating what they are looking at? Because if people are coming back to offices and things may be coming back to normal, so if you could just give some more color on the TCVs of the kind of deals that you see over the next two quarters?
Pravin Sir, for you, from 35,000 to 45,000, these are coming from campuses, how do you intend to make sure will they be joining over the next two quarters, or do you think this will be sufficient also for the kind of demand you are seeing, or we will see some more numbers coming over the next two quarters.
Nilanjan, one final word for you, you have said that you managed this quarter really well assuming you are going ahead as travel starts, are there enough levers in your hands to maintain this kind of margin momentum?
Salil Parekh
Thanks, Shivani. I think on the large deals the first point from our perspective is the pipeline is in very good shape. Our number at $2.15 bn we feel is extremely strong as Pravin mentioned 22 deals, it is a very large number of deals in terms of the actual number of deals. And, as we look back to last year or last quarter that we are continuing to see progression as we see the number of deals in addition to the value of the deals. What we did have within a mix in the year-ago quarter as Nilanjan mentioned earlier was one of our mega deals. Those sorts of deals as I was sharing, are not predictable in each quarter, so we look much more at the overall pipeline and the intensity that we are seeing in the market. There is a real interest in digital transformation, there is a real interest in working with us because we built these capabilities. We have seen good momentum in the last few quarters and the real test for us is we have increased our guidance for the full year that gives us a way to demonstrate that we are confident that the growth is looking good in the coming quarters as well.
Pravin Roy
In terms of number of employees, I think at this stage, we feel based on our own assessment of business demand at 45,000 would be adequate, but we are a very agile system, we keep on forecasting on a weekly basis. If we feel the need to change it, we will be more than happy to do that. If you recall our last quarter, we talked about overall 35,000 hiring and in the span of three months, we have increased this to 45,000. So, we will continue to monitor this situation and if there is a need, we will be more than happy and we will not hesitate to add more people if required.
Rishi Basu
Thank you. The next question is from Sankalp Phartiyal from Reuters. Sankalp has sent us his question on message. I will read it out for him. The question is for Pravin and Salil. Can you tell us if hiring is becoming difficult in the current demand environment? Has good talent become more expensive both among freshers and in lateral hiring and how does that affect margins?
Pravin Rao
Obviously, we have a very large talent base in India and today the ability to recruit in a remote manner also gives us that scalability and we have also been using InfyTQ and other online assessments and other things to get the right quality of people. So, from our perspective, I think we are able to get the kind of quality we need and there is an extensive focus on training as well because we have probably one of the most sought-after training. In Infosys, we train people over four to five months and we are probably the best finishing school in the industry. So, we are not too much worried about the quality of talent and we are able to manage.
Rishi Basu
Thank you. The next question is from Sai Ishwar from the Informist. Sai joins us on audio.
Sai Ishwar
Good evening. My first question is for Salil. Do you see any fundamental change in the way pricing is built up because right now do you see the element of gain sharing that is where the service provider is taking more gains instead of fixed pricing because in digital deals you are adding more value. And also in terms of cost-cutting you are actually reducing cost for the clients? So do you see a fundamental change in the pricing and where is the gain sharing element is becoming more and more prominent?
My next question is to Pravin Sir, firstly, all the best for your future endeavor, Sir. While talking about the third quarter, has now October November and December quarter historically said to be a weak quarter but this outsourcing, I mean onshoring becoming less and less relevant and also with work from home becoming more prominent can we say that this October, November December quarter becoming seasonally weak, is now a thing of the past? or how do you see the initial traction in this quarter?
Salil Parekh
Let me start with the view on gain sharing and different elements of pricing. Today in the market, we do not see that much difference let us say from the last few quarters in that specific area, there is always discussions with clients. A small percentage of clients which relate to gain sharing whether it is on value in the transformation or on cost in terms of reduction, but it is not a large percentage of our clients and usually these sort of things are range-bound because there is some possibility of upsides that is usually capped if we ever enter those sorts of things. But there has been no big change that we have seen suddenly it has increased the gain sharing or it has gone away, a small percentage we always have that discussion with.
Pravin Rao
In terms of Q3, in some sense you are absolutely right, it is probably not right to compare with what we have historically seen because of the pent-up demand and ramp-ups that are happening maybe this Q3 may be different from the previous historical Q3 that we have seen in the past. Having said that, there is this element of furlough, we have to wait and watch because in the past as well as that has less to do with demand and more to do with the holiday season. We do not have a view on that at this stage, there may be that element of it, but in general, I think you are right, maybe at least this year it will probably be fundamentally different from what we have seen in the past.
Rishi Basu
Thank you. The next question is from Bismah Malik from Business Today. Bishma joins us on audio.
Bismah Malik
Good evening gentlemen. Congratulations on a very good quarter. I wanted to ask Mr. Parekh on the large deal signings, it has been fairly a good quarter at over $2 bn value for the large deal signings, but from here wanted to understand whether the momentum for these kinds of deals is going to continue especially with markets opening up and digitization spends as per analysts may go down especially in the remote work set. The next few questions are on the hiring front whether the cost of talent acquisition has really gone up considering the kind of environment we are in right now and this has impacted your margins so far? Also, if you could give any indicative figures on what will be the percentage of lateral hires for the rest of the financial year? Again, one more important question on the return-to-work front, that some employees had reached out to us from the other organizations saying that they have been asked to report to their office locations from their hometowns, they have been asked to migrate back. So, what kind of targets has Infosys set, on return to work say by this year-end? And also, about your hiring plans in the global markets like Canada of course you have set up a digitization development center and another such market like the US. So, what are your plans there in the global markets on the hiring front? That would be it.
Salil Parekh
Thanks for the questions. Let me start on the large deals. The question you asked about what is the type of evolution of that. My own sense, which I have shared before is we see our pipeline of large deals very strong. We see the digital transformation work is still something that clients are looking at. We did, in this quarter sign 22 large deals, which is deals above $50 mn and we see that clients are looking at us because we are well-positioned in these areas and capabilities to help them with their digital transformation. Yes there is changes in the environment with the initial focus on work from home and so on globally, but there is still a tremendous amount of work that needs to be done for large enterprises as they become much more online and digital not just with their employees, but their own customers, the way they are connecting with their suppliers, the way they want to scale their business and there is also a tremendous amount of work on the cloud that many of these companies are driving through. So, at this stage, we see a good pipeline for that and good traction for the large deals.
Pravin Rao
On the return to work front, basically from our perspective, we are giving flexibility to people. Today more than 50% of the people are in Tier 2 and Tier 3 cities where we do not have any development centers and we are asking them to return to work. Obviously, we are giving them the flexibility to go to any nearest DCs where they are required to work, but as I said earlier at this stage it is purely voluntary. We are not really forcing anyone to come back to work. The situation will evolve, and one size does not fit all, there is a dependency on the nature of project, there is a dependency on client requirements, sometimes there is a regulatory requirement as well, so all these factors really come into play in terms of location where we are expecting people to work. So, from our perspective, the only thing that is clear is that future will be hybrid where there will be a lot of flexibility for people, but what percentage, who will have to be in office, what lifecycle stage of the project everything will depend on the nature of the project, client requirements and so on and this space is fast evolving. So, we have a very good framework. Our ability to react fast is pretty good. We are confident about it and the framework is very flexible. So, we are well prepared for whatever the eventuality is but the situation is still unfolding.
Rishi Basu
The last question this evening is from Arun Kalyanasundaram from TV9 who joins us on audio.
Arun Kalyanasundaram
Good evening, Sir. Just got three questions. Could we get some idea about what is happening as far as that particular project was concerned, the IT portal project, by when do you expect it to be formally completed? The second question is whether any payment has been received on that particular contract and there has been some speculations doing the round suggesting that there could be some kind of a penalty clause being imposed, so could you throw some light on that? And the last one is relating to these large deals. Recently, we did come across the situation where the market regulator, he clamped down because of certain unsavory incidents which took place where information relating to large client deals was shared with perhaps rivals, and that lead to a situation where it gave an indication that perhaps things were a little bit porous. So, what have you done in terms of stepping up the vigil and ensuring that matters in terms of pricing and how you put through your bids, etc., that does not go out and it is not shared, and people do not stand to make money out of that and bring some kind of a bad image or name for the institution? Thanks.
Pravin Rao
On the income tax project, as we have said earlier, we have seen significant progress. All the income tax return forms are already available. Majority of the critical forms are also available. We are continuously working on improving the user experience by working with the stakeholders. There are still some pending functionalities which are available in the earlier portals that we are working on to expeditiously deliver. There is also some new functionality which was not available in the earlier portal that will take after we have completed whatever is available on the current portal. So, this continues to be a top priority for us, and we will ensure that we are able to deliver and meet the expectations in a short period of time. In terms of payment or penalties, we typically do not comment on these matters on any specific client, so we would not like to comment on this.
Nilanjan Roy
Like I said, this was a matter against a former employee named by SEBI and the company is not party to the matter and we have a very strong code of conduct relating to all this and the investigation is in progress, as required.
Rishi Basu
Thank you. With that, we come to an end of this Q&A. We thank our friends from media for being part of this press conference. Thank you, Salil, Pravin, and Nilanjan for being here today.
Before we conclude, please note that the archived webcast of this press conference will be available on the Infosys website and on our YouTube channel later today. We request our on-ground friends from media to join us for some high tea outside. Thank you once again, have a lovely evening.
Exhibit 99.4
Fact Sheet
Exhibit 99.5
Earnings Call
Infosys Earnings Call
Q2 FY22
October 13, 2021
CORPORATE PARTICIPANTS:
Salil Parekh
Chief Executive Officer & Managing Director
Pravin Rao
Chief Operating Officer and Whole-time Director
Nilanjan Roy
Chief Financial Officer
Sandeep Mahindroo
Financial Controller & Head Investor Relations
ANALYSTS
Ankur Rudra
JP Morgan
Moshe Katri
Wedbush
Diviya Nagarajan
UBS
Sandip Agarwal
Edelweiss
Pankaj Kapoor
CLSA
James Friedman
Susquehanna
Sudheer Guntupalli
ICICI Securities
Keith Bachman
BMO Capital Markets
Kawaljeet Saluja
Kotak
Gaurav Rateria
Morgan Stanley
Moderator
Ladies and gentlemen good day and welcome to the Infosys Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you and over to you Sir!
Sandeep Mahindroo
Thanks Margreth. Hello everyone and welcome to Infosys Earnings Call to discuss Q2 FY22 Earnings Release. I am Sandeep from the investor relations team in Bengaluru.
Joining us today on this call is CEO and MD, Mr. Salil Parekh; COO, Mr. Pravin Rao; CFO, Mr. Nilanjan Roy, along with other members of the senior management team.
We will start the call with some color on the performance of the company by Salil, Pravin and Nilanjan, before we open the call for questions.
Please note that anything which we say, that refers to our outlook for the future, is a forward-looking statement, which must be read in conjunction with the risk that the company faces. A complete statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov.
I would now like to pass it on to Salil.
Salil Parekh
Thanks, Sandeep.
Good evening, good morning to everyone on the call. Thank you for joining us today. I trust each of you and your families are safe and healthy.
I am delighted to share with you that we had another exceptional quarter with increased market share gain and demonstrating more and more trust that our clients are placing with us and the strength of our digital and cloud capabilities. Our growth was 19.4% YoY and 6.3% QoQ in constant currency terms.
I would like to thank the entire 280,000 employees of Infosys for their incredible dedication and world class skills that made the work we do for our clients so impactful.
Our YoY growth was the fastest we have seen in 11 years and built on the quarter that was a growth quarter this time last year.
Our growth has been accompanied by resilient operating margins at 23.6%. We delivered these margins while we kept in the forefront our focus on employees with increased compensation and benefits.
Our digital business grew by 42% and is now 56% of our overall revenues. Within digital, our cloud work is growing even faster, and our Cobalt cloud capabilities are resonating tremendously with our clients.
We are working with a large global company, for example, on their private cloud deployment. We are working with a large bank on their public cloud expansion. We are working with several of our clients on SaaS transformations, and cloud-native developments.
Some of the other highlights of our results are,
- | Revenues were $3.998 bn, which is a growth of 19.4% YoY and 6.3% sequentially in constant currency |
- | Our digital business grew by 42.4% YoY and now constitutes 56.1% of our overall revenues. |
- | We had broad-based growth across all our sectors and service lines. All our sectors reported double-digit growth. |
- | Financial Services grew by 20.5%. This is our largest sector and growing exceptionally well. Manufacturing grew at 42.5%, Retail by 17.2%, Life Sciences by 26.1%. |
- | In terms of geography, North America grew by 23.1%, Europe by 19.6%. |
- | Our large deals were strong at $2.15 bn. |
- | Our onsite mix moved to 23.6% and our utilization to 89.3% |
- | Operating margins were resilient at 23.6%. |
- | Free cash flow was strong at $712 mn. |
- | Our attrition moved up to 20.1% and we will talk a little bit more about that later in the call with Pravin. |
- | We had a net headcount increase of 11,664, attracting leading talent from the market. We remain comfortable with our ability to support our clients in their digital transformation journeys. |
We are rapidly expanding our global talent pool and increased our college graduates hiring to 45,000 for this year. Last quarter, we had this number at 35,000 people.
I am also delighted with our increased focus on ESG. As many of you know, we have already been carbon-neutral since 2020. Our ambition for 2030 is well articulated and we are building on the momentum to create impact. We are accelerating our growth with the launch of Infosys Springboard, to bring digital skills to millions of students.
With a strong start to the financial year, good deal momentum in Q2, robust pipeline, we are increasing our annual revenue growth guidance which was at 14% to 16% previously, to 16.5% to 17.5% growth in constant currency. Our operating margin guidance remains the same at 22% to 24%.
We have a very special moment in this quarter, which will be Pravin's last full quarter before he retires, after an incredible journey of 35 years with Infosys. Pravin's contributions to the company are innumerable. We will, and in fact, I will personally miss his tremendous depth of knowledge of the business and his contagious sense of humor. My best wishes to Pravin in all his future plans. We will announce our future structure in the coming weeks, well before Pravin steps down.
With that note, let me hand it to Pravin for his updates.
Pravin Rao
Thank you, Salil. Hello, everyone. Hope you and your family are doing good, safe, and healthy.
Growth acceleration continued in Q2 with YoY constant currency growth at 19.4%. Q2 witnessed broad-based double-digit growth across all business segments and both North America and Europe.
Operating parameters continued to improve further:
- | Utilization improved to a new all-time high of 89.2% |
- | Onsite effort mix reduced further to a new low of 23.6% |
We won 22 large deals of over $50 mn totaling $2.2 bn TCV, 5 each in Financial Services and Energy, Utility, Resources and Services; 3 each in Retail and Manufacturing; 2 each in Communication and HiTech; and 1 each in Life Sciences and Others segments. Region wise 15 were from Americas, 6 were from Europe, and 1 from the Rest of the World. The share of the new deals in Q2 was 37%.
Client metrics improved with over $100 mn client count increasing to 35, an increase of 5 YoY. We added 117 new clients in the last quarter.
Voluntary last 12-months attrition increased to 20.1%. While attrition has increased on the back of high industry growth and supply tightness, especially in the niche skill areas, we continue to fulfill client commitments through increased hiring, talent reskilling and higher usage of subcons. We have stepped up our hiring program and have added more than 11,600 talent employees on a net basis, highest ever in a single quarter. In H1 we on-boarded over 25,000 college graduates and for the full year, we have increased the college graduate hiring target to 45,000 globally.
The vaccination drive for our employees and their dependents across locations continued unabated. Currently, over 86% Infoscions have received at least one dose of vaccine.
Moving to business segments:
Starting with Financial Services, I am happy to share that in the last quarter, Infosys was ranked #1 by HFS in the Banking and Financial Services Providers' top 10, 2021. As you are aware our YoY growth was over 20% on constant currency basis this quarter and this industry-leading growth has sustained over the past several quarters. We are seeing strong demand and momentum across all regions. North America, however, continues to lead growth as we execute on large transformation programs and win market share. Banks are increasingly focusing on virtual branches, improved customer experience through AI and analytics, and digital transformation led cost take out agenda. Our focused investments in building strong sub-vertical and platforms capabilities in regional banking, retirement services, mortgages, asset management, and payments are working as a differentiator in winning large deals and digital transformation programs. We are well positioned as full stack digital transformation player with combination of our domain plus technology plus operations plus digital transformation capabilities.
Performance of Retail segment remained strong as clients continue to make investments in new digital capabilities in commerce, marketing, and supply chain areas. We are seeing focus on areas like a digital consumer, analytics, digital promotion, personalization, cybersecurity, etc. Our recently launched Equinox platform is seeing significant traction from both our existing and prospective clients. We have a strong pipeline and expect steady performance for the segment in the coming quarters.
Communication segment performance improved meaningfully on both sequential and YoY basis on the back of ramp up earlier deal wins. We are witnessing increasing momentum for capex roll-out for 5G deployment across regions. Our 5G living labs, with its capabilities and the promise of future innovations, is a key differentiator in the 5G space for the CSPs and OEMs.
Energy, Utility, Resources and Services vertical growth accelerated further with continued large deal wins. Clients in various subsegments are seeing return to normalcy and are prioritizing projects around cloud transformation, customer experience, data analytics, automation, cybersecurity, etc. In Energy, we have made good progress in developing the integrated ‘energy as a service’ solution, which aims to enable clients to access reliable low-carbon energy, use energy more efficiently and to optimize supply and demand across multiple users and assets without having to invest in additional energy infrastructure.
Growth in the Manufacturing segment accelerated significantly, with the Daimler deal starting to ramp up. Growth in the last quarter was broad-based across Europe and the U.S., as well as across industrial, automotive, and aerospace industries. We are seeing traction in engineering, IoT, supply chain, cloud ERP, digital transformation, and cloud migration areas. The pipeline continues to be strong, and this provides the confidence that growth in manufacturing for Infosys will continue to be market-leading.
Infosys BPM performance remained stable as most of the geographies are witnessing a slow return to normalcy. We see a good deal pipeline with a healthy share of digital deals.
Share of digital to overall revenues, increased further to 56.1% in Q2, with a continued strong growth of 42.4% YoY in constant currency terms. We continue to see a big focus on digital transformation, especially around cloud, commerce, and employee experience as customers adjust to the permanent changes in both shopping habits and hybrid working. Cost takeouts has been surpassed by the improvement of digital experiences that increase sales and drive customer or employee loyalty.
In the last quarter, we have been ranked as leader in nine digital services-related capabilities in the areas of cloud services, experience and design, big data and analytics, IoT and engineering, modernization and artificial intelligence.
To conclude, I want to thank you for the wholehearted support and wishes that you have extended to Infosys over the years. Personally, I have thoroughly enjoyed the discussions with you and felt enriched from your insights. I wish you good health and success in your future endeavors.
With that, I will hand it over to Nilanjan.
Nilanjan Roy
Thanks, Pravin. Hello, everyone, and thank you for joining the call. Hope all of you and your families are safe and well.
Revenue growth accelerated further in Q2 on the back of a very strong Q1. We had strong double-digit growth in all the business segments led by Manufacturing and Financial Services, which grew at 42.5% and 20.5%, respectively YoY in constant currency. Our largest geography, North America, also grew YoY at 23.1% in constant currency. Consequently, constant currency YoY growth increased to 19.4%, which is the highest growth in any quarter in the last 11 years. Sequential growth in Q2 also saw an acceleration to 6.3% in constant currency, which is the highest sequential revenue growth in any quarter in the last 6 years.
Q2 margin remained resilient at 23.6% despite headwinds from salary increases for most of our employees, higher subcon costs and supply side challenges which were largely offset by improvements in operational parameters and scale benefits resulting from growth.
The major components of the sequential margin movement are as follows:
- | 1.1% impact to the comp hikes given, effective July, to most of our employee base; |
- | 0.5% increase in subcon costs, |
These were offset by:
- | 80 basis point benefit due to cost optimization and improvement in operating parameter, |
- | a 50 basis points due to SG&A scale benefits, and |
- | a 30 basis points benefit due to rupee and cross currency movement, |
Overall leading to a 10 basis points drop in sequential operating margins.
Q2 EPS grew by 13% in dollar terms and 12.7% in rupee terms on a YoY basis.
DSOs stood at 66 days, an improvement of four days versus the last quarter on the back of robust collection.
Free cash flow for the quarter was healthy at $712 mn and as a percentage of net profit, was 97.1% for Q2 and 109.5% for H1.
Yield on cash balance was 5.1% compared to 4.9% in Q1.
We have completed the buyback of Rs. 9,200 crores on September 8 at an average price of approximately Rs.1,649 per share compared to a maximum buyback price of Rs.1,750 per share, leading to a 1.31% reduction in share capital. With this, the company has returned approximately 82% of the free cash flow for FY20 and FY21 through dividends and buybacks, close to the 85% stated in our five-year capital allocation policy.
Even after the capital return, we continue to maintain a strong debt-free and liquid balance sheet. Consolidated cash and investments at the end of the last quarter was $4.42 bn.
Return on equity increased further to 29.8%, an improvement of 3.1% over Q2 last year, driven by consistent performance and increased capital returns.
The Board has also announced an interim dividend of Rs.15 per share, an increase of 25% over prior year interim dividend and equal to the final dividend of prior year.
We see a robust demand environment, coupled with tightness in the supply side, which will result in higher recruitment, compensation and retention costs in the near future, along with seasonal headwinds relating to furloughs. However, we remain confident of our ability to partially offset some of these cost headwinds through the structural cost efficiency improvement measures and deliver well within our margin guidance for the year.
With a strong H1 and a robust deal pipeline, we are increasing our revenue growth guidance for the year to 16.5% to 17.5% from 14% to 16% previously. We reiterate our operating margin guidance of 22% to 24% for the full year.
With that, we can open the call for questions.
Moderator
Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Ankur Rudra from JP Morgan. Please go ahead.
Ankur Rudra
Pravin best wishes for the future and congratulations on completing a great innings on a high. Overall, clearly, very good results, it is nice to see the margin execution and the guidance upgrade. To start off with Salil, if you could give us a sense about how you feel about demand visibility given where you see the increasing guidance, but we continue to see a drop in the large deals size. So how do we think about that?
Salil Parekh
Thanks, Ankur, this is Salil. In terms of demand, we continue to see a good pipeline in terms of large deals. We are participating more in areas which relate to digital transformation, which relate to cloud work, which relate to data and analytics work. We see this across all industries and we see that large enterprises are accelerating their spend. Their trust in us is strong because of the capabilities we have built.
So, the demand from that piece, which is the large deals, is looking good. Then there is the demand which is from our existing client base, where we are seeing a tremendous expansion in all of our large clients. Some of the stats on this are the number of clients over $100 mn and number of clients over $50 mn, both of which are expanding QoQ and as you look back to this time last year, YoY.
With that, we feel good today to increase the revenue growth guidance and that is the clearest indication that the demand is looking quite good right now. So overall, we are still in a good shape with the demand and feeling quite confident with the way we have increased the guidance.
Ankur Rudra
Just a one thing on the talent supply side, how do you feel about the ability to meet with this continued strong demand? Maybe a comment on the graduate on-boarding, for example, have you been, able to reduce the time taken to billing from on-boarding for that part of the supply?
Pravin Rao
If you remember last quarter we had talked about 35,000 campus hires this year, but based on the demand outlook and increased attrition, we were able to quickly ramp up to 45,000 for this year. In fact this quarter, we added about 15,000 campus recruits, which was probably the highest ever in Infosys history.
So today, we have the ability to recruit campus hires because of the investments we have made in assessment platforms, the InfyTQ and another thing which allows us to access talent anywhere in India or even globally for that matter and the turnaround time is much faster. So, we are pretty confident and if there is a need to revise it further based on our needs, we are more than equipped to deal with it.
Ankur Rudra
Understood and just a last question on margins, Nilanjan, clearly very good execution this time. In terms of the headwinds and the tailwinds you see for us now, would it be fair to assume the headwinds are behind us? And could you also comment about why not narrow the margin band, while the revenue band has been narrowed?
Nilanjan Roy
As we have talked about, we have done this compensation hike in Q2 and we will continue doing what is necessary, and in fact, Pravin also mentioned in Q3 we have also rolled out skill-based plans. Also, the cost of hiring is going up so we will see some headwinds along with the seasonal headwinds of furloughs and working days in the near future. But overall, I think for the margin guidance perspective, we are quite comfortable to stay within the 22% to 24%. And historically, as we have seen we have never changed the margin guidance. This is more of an operating band we are comfortable to be in. So, we do not narrow that down historically.
Moderator
Thank you. The next question is from the line of Moshe Katri from Wedbush. Please go ahead.
Moshe Katri
Congrats on strong results and Pravin, we are going to miss you. It has been a great experience working with you and best of luck. Two questions, one can you talk a bit about what we are doing to contain the attrition rates that have been pretty high. Maybe there is a way to also break down attrition by voluntary and involuntary? The other question is more broad-based. Salil, looking at the budget cycle for calendar 2022, maybe it is a bit too early, but are you getting any specific indications about budgets for next year? And in that context, the strong growth that we are seeing this year, do we feel that this is still part of that multi-year spending cycle that the entry has been talking about for a couple of quarters? Thanks a lot.
Pravin Rao
Thank you very much for the wishes. From a voluntary attrition perspective, as we mentioned on an LTM basis, it increased to 20.1%. Most of the attrition has been for people in lower JL’s between 3 to 6 years of experience and this has been the trend in this industry. Because in this experience levels, people are still not emotionally connected with the company and sometimes, it is easier to move around and that is what we are seeing this time around as well.
As I mentioned earlier that this is because of unprecedented demand, as well as the in some geographies we have also seen lack of talent mobility that has also fueled attrition in some of the countries. Obviously, we expect this to perhaps continue for a couple of quarters or so, but once we have more talent available in the system this should ease and get back to the earlier levels. But having said that, we have done significant interventions to contain this. We have had two rounds of compensation reviews, skill-based correction for high demand skills, targeted retention for new skills, a higher number of promotions, and so on. We are also focused a lot on mobility of people, we have hired a lot of IJPs, we have focused a lot on employee engagement, over close to 5,000 employee connect sessions, a lot of focus on career development, continuous learning. We have introduced new career paths like digital specialists, we have BITS programs, and we also launched several wellness initiatives as well. And as we talk, we are also ramping up our entry-level, hiring in an aggressive way so that we are able to meet some of the demands that are out there. In the long term, we are also taking a fresh look at the talent strategy approach. This is not only due to the current high attrition, but also our belief is that there will be fundamental shifts in employee thinking behavior in the post-COVID world. And that means you have to relook at the employee value proposition and fine-tune that. So that is something we have started taking a hard look at. That is from an attrition and talent perspective.
In terms of the budgets, I think in the current context, budgets are no longer relevant, in that sense, because there is a lot of pent-up demand; and at least this will continue for a few quarters, if not years. And there are various reports that talk about tech intensity increasing from 3 to 5 impact. One of the Gartner reports talked about the kind of spend in the next 2 to 3 years, one can probably go back to 2010 to see that kind of demand. In that context, my own sense is while budget, maybe, an operational thing that people will actually do that, but it may not have relevance because there is enough and more demand at least for the next few quarters.
Moderator
Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.
Diviya Nagarajan
Thanks for taking the questions and congrats on a strong execution in the quarter. Just a couple of questions from my end, could you talk about the puts and the takes that you had for margins this quarter, I believe there are some headwinds as well. So, run us through how you have managed to maintain margins in terms of the percentage, that is question number 1?
Nilanjan Roy
I think with my opening remarks it was quite straightforward in the margin walk. The compensation hike which was broad-based across, this is sequentially, that was 1.1%, impact, we had a 50 basis points hit on subcon, we have seen subcon cost going up due to higher fulfillment. These were offset by about 80 basis points due to cost optimization and other operating parameters, 50 basis points on scale benefits on SG&A and finally, a 30-basis points benefit on rupee and cross-currency movements. I think the comp-hikes and subcons were negated by cost optimization and scale benefits.
Diviya Nagarajan
I think, Pravin, you talked about the Daimler contract having started to ramp up this quarter. Could you give us some sense on how many months or weeks of revenue contribution came in from that, and was there any impact at all from that contract on margins? Were there any pass-through revenues or anything that is yet to come or how should we think about that going forward?
Nilanjan Roy
Of course, Daimler has kicked in during the quarter, and its impact like I said you can see in Manufacturing. But even if you strip that out – we cannot give the numbers – we can see broad-based growth across all sectors, both on a sequential and a YoY basis. So, like I said earlier, it is more than icing on the cake rather than impacting the underlying growth.
Diviya Nagarajan
My last question is, how should we think about seasonality going into December and March? Should we expect normal seasonality as your guidance seems to suggest that you are looking up a fair amount of seasonal slowdown coming in at the top end as well. Is that something that is driven by holidays or do you think that is a normalization of demand that is coming in as well?
Salil Parekh
There is always seasonality that you referenced, which I know you are aware of in Q3 and Q4. Especially in Q3, we will typically see some level of furloughs and typically, at least at Infosys, our Q4 trend down historically. Having said that, the demand environment today looks extremely strong. So, we have tried to balance those two things, in increasing our guidance significantly from 14%, 16% to 16.5% to 17.5%; yet making sure that we add everything that we know of today to deliver to that high level of growth. So, we will see some seasonality but there is a good overall demand outlook as well.
Diviya Nagarajan
Thanks for taking my question. Pravin, it has been a pleasure working with you. Hope to stay in touch. And I will come back in the queue if there is time. Thank you.
Moderator
Thank you, the next question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.
Sandip Agarwal
Good evening. Thanks for taking my question. Congratulation on a great set of numbers and best of luck Pravin for your great stint and ahead. I have only one question, now Salil, if you see our composition of business, we have more than half of the business coming in from digital and the way the growth is coming in, it looks like the next couple of years we will be probably three-fourth of digital. So my question is in the next couple of years does that not mean that structurally the industry is moving towards high-growth, if we see it from a longer-term perspective, or do you think that will be some saturation also in the digital growth, which we may see after a couple of years, any thought on that front?
Salil Parekh
In terms of what we are seeing with clients today, the capabilities that we have built out, for example, Cobalt, we have also launched and announced other capability called Equinox, which is relating more to everything which is online in the e-commerce space, other areas of digital where we have invested and scaled up over the past few years, in those areas we are seeing the demand very strong in today. It is difficult to say in that two-year horizon that you are mentioning. Our growth guidance really is for this year where we have expanded it, but everything would indicate to me that this scaling up, this digital work transformation is something which is ongoing. And many large enterprises are at the early stages of their digital and cloud journey. So, I do not get the sense that we are in the late stage, but in terms of really the guidance, we are focused on this year. But overall, I am quite optimistic that this is a good place to be in terms of the future.
Sandip Agarwal
Thanks a lot. That is all from my side and best of luck for the current quarter. Thank you.
Moderator
Thank you. The next question is from the line of Pankaj Kapoor from CLSA. Please go ahead.
Pankaj Kapoor
Thanks for the opportunity. Pravin, this increase in the fresher intake to 45,000 is this a one-time because of the current situation or you think there is a structural shift in the way we are going to hire? If you can give some sense of what kind of plans you have for offers in next year?
Pravin Rao
It is obviously based on the current demand outlook that we are seeing and high attrition. It is too early to comment whether this will be a structural shift. But if whatever we are seeing and hearing, if this demand continues for the next several quarters, then given the shortage of talent you will probably see a higher number of such fresher recruitment globally. It is a bit early to think about next year, but at this stage, we believe that it will be on similar lines that we have recruited this year but we will take a look at it on a QoQ basis. And as I mentioned earlier, to one of the questions, today, our ability to recruit on a dynamic basis is much higher, given the virtual ways, our investment in platform, ability to assess candidates all through the year through the online platform etc. So, we will take look at it. So, at this stage our sense is, next year also would be on similar lines, but it is difficult to comment beyond that.
Pankaj Kapoor
Salil my question was also on the renewal that we have been seeing which have been obviously pretty dominating in the last 2, 3 quarters. Our new deal wins seem to be just around less than 40% of the total large deal wins. Any sense in terms of what could be the reason behind it? Are you seeing fewer number of those mega contracts which were there, say 4 quarters back, are clients taking slightly longer-term in time to decide on them, or are you seeing them getting restructured more into smaller contracts?
Salil Parekh
The way we look at it, is first, where we have an existing relationship and long-term work, we are very clear that we want to make sure that the clients trust in us, gives us a longer stay, extension and typically some level of expansion. And that is why it is more critical for us to need to look at the renewals in absolute value because that is depending on when those contracts come up; we want to make sure that that continues.
In terms of the new work, what we are seeing, as Pravin shared earlier, we had 22 large deals. Large deals, for us being deals over $50 mn in the quarter and that number is robust when we compare the number for H1 versus last H1, that is very robust. The one distinction is a mega-deal that we had last year in this quarter. Those things in terms of mega-deals are things which are difficult to predict which quarter they will show up in.
In our pipeline, we have a good representation of those. Overall, the pipeline is quite strong. So, at this stage, given all of those things, we have chosen to increase our guidance and therefore remain quite positive on the outlook that is there for our businesses.
Pankaj Kapoor
Understood. Thank you and wish you all the best.
Moderator
Thank you. The next question is from the line of James Friedman from Susquehanna. Please go ahead.
James Friedman
Hi, and let me echo the congratulations Pravin, I have learned a lot from you over the years and I appreciate it. I know you keep getting asked about this, but we do too. Any sense at this point when or if you would see stabilization in the attrition at the industry level? And where is the industry losing the people to? Are they going to tech pure plays, to your customers, to captives, we are just wondering about that? Thank you.
Pravin Rao
I think at this stage, maybe in the next 2 to 3 quarters, perhaps the attrition will stabilize given such influx of talent. The demand is far outstripping talent supply that is available even globally, and that is why we are seeing this phenomenon not only with us, but across the industry, and we have seen this even in other industries as well. In terms of where they are going, it is a common thing, right? Typically, we lose people to competition and we also recruit from competition, so that is one part. But again, we are also losing people to captives, some of the hyperscalers have also started recruiting, and of course, in India startups now again have become very attractive with a lot of Unicorns and so on. That is a combination of things and I think the only way it can stabilize is to influx more talent into the mix, and that we believe probably in the next two to three quarters, will happen and with aggressive reskilling and we should be able to bring it back under control.
James Friedman
Thank you, Pravin, all the best.
Moderator
Thank you. The next question is from the line of Sudheer Guntupalli from ICICI Securities. Please go ahead.
Sudheer Guntupalli
Good evening gentlemen. Thanks for giving me this opportunity and congrats on a good quarter. Firstly, Nilanjan on the effort mix, onsite-offshore, I am curious as to why has the onsite share of effort come down in this quarter, despite the Daimler deal ramp up and in the initial phases I would have expected that the ramp-up would show us a higher share of onsite, that is number 1. And then a little bit of travel has also opened up but not completely. So, despite these two reasons I believe you are able to show a higher offshore effort, in this quarter. Any sense on what might be driving that?
Nilanjan Roy
Yes, like I said, Daimler is not just one contract we have. It is a large business which we run and we also had Daimler ramp-up in the last quarter, it is not suddenly that everybody is onsite on one day. So, you would see these blips on onsite-offshore mix and last quarter it was flatter but now you have seen movement. But I think more importantly to see secular trend, like I said, this demand is at a global level. I think where it is going to really sustain from? In the long run it is going to be from talent here, because that is quantity and scale, and digitally skilled talent is largely available in India. So, while we continue to hire locally in large numbers. In our localization, the U.S. has already reached 70%. We announced more than 10,000 additional hires over 2 years. But despite that, you will see the volume growth and the mix within that if you continue to technically move towards more offshore.
Sudheer Guntupalli
Pravin, my second question, if you actually look at the experience bucket you spoke about where we had seen the highest attrition, which is in the 2 to 6-year bucket. So, at this level or perhaps at the entry-level if we had seen, the last 10 years, industry has not seen much of salary revisions. On a real rupee basis, if you see, perhaps it would have been in the negative territory. I am not talking just about Infosys, but for the entire industry. Now given the kind of demand we are seeing for this experience bucket, can we expect some sort of a structural increase in the salary levels, which can have a longer-term impact on margins, let us say 1 or 2 years down the line, when the demand might not be as robust as it is today?
Pravin Rao
When companies recruit people at entry levels, we have to also invest a lot in training and enabling them. They take a while before they become productive, but as they move up the system, their salaries increase dramatically. So, for the people between 2-6 years of experience who are quitting, they would have got a good salary along the way as well. So, I do not see the entry-level salary dramatically changing in any way. There will be some corrections here and there. But at the same time, at least from our perspective we have also started differentiating at entry level itself. We have created two set of streams, one called Power Programmers and other one is called Digital Specialists; and in these streams, we are recruiting them at a much higher compensation. And there is a very stringent criteria for selecting these candidates based on their background as well as passing a couple of tests. If people are able to pass that then we recruit them in these two streams at a much higher compensation. Because at the entry-level, we are recruiting at scale, right? But within that we are trying to differentiate, and where we feel that people come with very strong skills capabilities and they can be deployed immediately, we are looking at the different compensation rates.
Sudheer Guntupalli
Thanks, Pravin. As always, interactions with you have always been very insightful. Congrats and all the best for your future endeavors.
Moderator
Thank you. The next question is from the line of Keith Bachman from BMO Capital Markets. Please go ahead.
Keith Bachman
Hi, thank you very much. I wanted to also ask about attrition. You did make the comment that you think attrition improves next year, and I do not disagree with you, but I wanted to understand your thinking and more specifically, is it because demand slows across the industry? And as you referenced, it is an industry issue. And that allows attrition to improve or there is some something fundamentally that you think demand can stay at these levels or maybe moderate a touch, but you can continue to hire more freshers to meet that. But it is an industry problem. Your numbers increased substantially QoQ on attrition. And so just wanted to understand a little bit more about, why you think attrition improves, because there is such a significant industry problem, not just an Infosys issue. And then I have a follow-up, please.
Pravin Rao
We are saying that the attrition will stabilize, primarily because of the influx of talent. The demand will continue. In the near future, we are not seeing demand coming down by any accounts. But today there is a shortage of talent and particularly in some of the geographies because of travel restrictions, we are not even able to deploy people from India in those geographies where there is a need. But over a period of time, not only Infosys, but almost every company, many of our peers have also started announcing, talking about aggressive hiring from campuses, right? So that will result in higher availability of talent. And once we can hire this talent and skill them appropriately, they will then be available to be deployed and to meet the demand and that is when we expect the attrition to come down. Right now, the demand far outstrips the supply and that is where the challenges is.
Keith Bachman
Okay. Do you think this suggests a different headcount management strategy? In other words, do you think you need to diversify? Because it sounds like the problem is much more significant in India versus other markets does this, you think, suggest a broadening of your reach in terms of supply capabilities, in Eastern Europe or otherwise? Does it suggest a different strategy on managing your headcount?
Pravin Rao
There are a couple of things. One is, of course, in terms of talent availability, in terms of scale and quantity I do not think any other country can match that. So, from that extent, most of the noise and other things you are hearing are in India only. So that is one part of it, because I do not see any other country being able to provide such kind of talent with scale. So that is why we are seeing higher number. And the second one is, this is an unusual phenomenon. We have not seen this kind of war for talent for a long period of time and as I myself have been in the industry for over 35 years, I cannot think of a time when we have seen this kind of situation. When we talk to people them when they are leaving, most of them are complimentary about Infosys, they talk highly about the culture, the kind of training, kind of opportunities they get and other things. But they are also saying, at the same time, the kind of compensation they are being offered is significantly higher. So today, despite all the HR interventions and other things, compensation seems to be a very big criteria and particularly for some of the companies who are just scaling up or who are setting up centers here, there are no options but to go aggressive on compensation to attract and get the talent. So, I would say that is the reason. And this is an unusual thing where some of your normal HR levers do not seem to work and people do acknowledge that they are happy otherwise, but the kind of offers they are getting is too attractive for them to refuse. These are all junior people, they are not emotionally fully connected with the company, whereas at the mid-level and senior-level, they are much more connected with the company. They understand the culture, they understand the industry and other things. So there, some of the HR practices work better. But at the junior level, while we try, what is out there is attractive and that becomes a challenge.
Keith Bachman
You mentioned a number of times that you do not see attrition improving over the next couple of quarters. But does your reported number get worse over the next couple of quarters just so we can manage investor expectations?
Pravin Rao
It will probably take a couple of quarters before attrition easing, because you have to onboard supply, you have to skill them, train them. So that will take some time before supply is available to be deployed in projects. So that is the time that will take before attrition eases. That is what I meant.
Keith Bachman
Does your reported attrition number get worse in, than the December and March quarters? Can attrition get worse before it gets better?
Pravin Rao
We hope that is not the case, but it is difficult to predict. But as I said earlier, so far we have been able to manage all the client expectations through hiring, through reskilling and through usage of subcontractors. So, at this stage, we are comfortable to meet all our planned commitments.
Keith Bachman
Many thanks and congratulations on solid results.
Moderator
Thank you. The next question is from the line of Kawaljeet Saluja from Kotak. Please go ahead.
Kawaljeet Saluja
Pravin, I have learnt a lot from you and let us hope you stay in touch. I have a couple of questions, one for Pravin and one for Nilanjan. Nilanjan, for you the question is that you mentioned that the impact of wage increase is approximately 110 basis points and if I just do the back of the envelope math, your offshore wages, that percentage of revenue is 20%. So that equates to just a 5% wage increase effectively. Is that sufficient in the current environment?
Nilanjan Roy
Couple of things, one is, of course, there were onsite and offshore both. There is a mix of that and it is only up to JL6’s. So, we planned for the senior and title holders in October. Also from October, we are rolling out more skill-based intervention compensation changes. So, as you know, this is something we did in January, then we have done something in July. And like I said, we are going to do something in October as well, not at the same level, but like I said, we need to do whatever is required to a) keep key talent back, and b) hire laterals as well, because as Pravin mentioned, even the cost of lateral goes up. I mean the churn is rotational in the industry. It is a zero-sum game; somebody else’s lateral is somebody else’s churn. So, we will do whatever is required to even onboard lateral and freshers. But at the end of the day, I think from an industry perspective, it is only once the freshers come in, can you really start seeing this thing really easing up. But we are quite comfortable in that sense in terms of our guidance, in terms of fulfilling what the clients are asking for and one of the ways is, of course, the subcon increase is not the best from a margin perspective, but you have seen our stats on subcon slightly going up just to fulfill that gap.
Kawaljeet Saluja
What will be the impact of wage revision, let us say, in December because that would be rolled out at a senior level? So, the impact of that would be a higher percentage offshore overall compensation number. So, what will be the impact of wage revision in December?
Nilanjan Roy
So, we do not call out, but the overall wage impact of the senior level is definitely lower than I mean the headcount is a much, much smaller amount than what we have rolled out. But we cannot give a number of what is the margin impact.
Kawaljeet Saluja
The second question I had is for Pravin. Now, Pravin, we have been wired through your performance historically that whenever the attrition rates go up, your utilization rates go down. But this time around, they seem to be moving in the same direction, which is rather unusual. When do you think that this divergence really starts playing out the way, logically, it has done historically?
Pravin Rao
I am not sure about the correlation you are talking about because if attrition goes up the natural correlation would be utilization also improving, so there is a need to fulfillment, right? I mean you are talking about contrary, so I am not sure of the application.
Kawaljeet Saluja
But the logic is straightforward. Ultimately if the attrition is higher, normally you require greater project bench to fulfill customer demand and a high attrition environment also indicates a healthy growth environment, again which need a larger bench. So that was the logic behind that statement.
Pravin Rao
But anyway, in the current situation, there is no supply. As I said, you have to recruit people, train them and then deploy, that will take some time. You have to look at your existing people, re-skill them and deploy, that is the fastest thing for you to do. That means higher utilization and wherever there are gaps, we also look at subcons and we have seen increased subcons as well. So, the high utilization is definitely a function of lack of availability of talent, and we are recruiting as much as we can to meet the demands of our customers.
Kawaljeet Saluja
Okay, fantastic. Thanks, and congratulations to all of you for a great quarter.
Moderator
Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Gaurav Rateria
Hi, congratulations on a great performance and all the best to Pravin. Two questions, the first question is to Nilanjan on margins. We just wanted to understand the puts and takes on margins in the second half. When we look at the various headwinds, there are continued rising attrition rates, higher travel expenses potentially; wage hike for a section of employees, full impact of the large deal ramp up, which is likely to take place in 3Q as well. So just trying to understand what are the tailwinds that can help to offset some of these impacts and keep the margin within the bag?
Nilanjan Roy
We are going to have these headwinds, like you said on retention, on hiring, etc. But I think, like we demonstrated this quarter as well, we have a very strong cost optimization program also ongoing, automation, onsite offshore mix with broad basing of the pyramid, both onsite offshore. We are among the few companies who have these global DCs now in the West, where we can pump in freshers, right. So, I mean, we would not have had freshers in our onsite business, but now we are having more than 3,000-odd freshers a year in the onsite locations. So, this also helps in the pyramid. And as you know, 75% of our people cost is onsite. So, unless we really address onsite costs, you cannot really make an impact on the overall cost structure. So, all this is going on. We are also looking at pricing much more holistically at this time, although it is not easy to go and get price hikes just on the basis of a rate card. But basically, we are working with our sales force on how to sell on value, how to sell on more innovative commercial constructs and the idea is not to leave those cents and pennies on the table in this market, be a bit bolder in terms of pricing. But this is a long haul, if there is any time to start something on this, it is now.
Gaurav Rateria
My second question is to Salil with respect to visibility. As we enter calendar 2022, is it fair to say that when we entered calendar 2021, the visibility was higher than usual, given the large amount of the new deals already in the bag, which may not necessarily be the case as we get into the calendar 2022? So, is it fair to say that the visibility will be relatively lower than calendar 2021, which was at a high and elevated level? Thank you.
Salil Parekh
I think the way we see our business; we look at it from the financial year perspective. When we started this financial year, you will recall the COVID situation was in all the geographies and while we had a healthy pipeline because of the digital work, that was always something of an overhang that was there. Then you have seen that from our initial guidance, we increased the guidance last quarter. We have now further increased the guidance this quarter. So, we have extremely good visibility for this financial year with the guidance we have given. As we finish Q3 and start to get into Q4, we will start to have a good idea of what the following financial year will look like. My own sense is the demand that we have is quite comprehensive and that will certainly continue to help us as long as we build out the new capabilities well and be part of the clients’ digital and cloud journey. So, the increase in guidance gives us more confidence now for this financial year.
Moderator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Salil Parekh
Thank you, everyone. So, I will just spend a couple of minutes in closing.
First, we have had the best quarter in terms of growth, 19.4% highest that we have had in 11 years. So, we are extremely delighted with that outcome. The demand is strong. There are multiple components of demand. One is large deals, which is still looking good with the pipeline we have, including the $2 bn that we have secured in this quarter. There is a huge amount of existing client base that we have, where we see incredible demand. This does not always come into the large deals bucket. It will be in different sizes, some are large, and some are not. But a client that I talked to last week in a meeting with the CIO, we were looking at multiple thousand people expansion at a client where we already have an account base of over a $100 mn today. Then we see the capability set and the demand in digital and cloud. Clients are extremely thrilled with our capabilities and we see good traction in that.
Second, the operating efficiency is strong. The margin resilience that we talked about; we have done really well there. Of course, as Nilanjan mentioned, we do see some additional cost that will come; and we are comfortable with our margin guidance that we have given.
Third, we talked a lot, Pravin gave a lot of detail – we are expanding our supply capacity that we are taking in and that is the medium-term play that we have because the demand is long term; and we will make sure the supply – with our incredible brand and training will continue.
Fourth, we have increased our guidance. So, we are extremely optimistic and bullish with 16.5% to 17.5% on growth and overall, I personally remain positive about the future in our tech services business growing at 18% today.
So, thank you everyone for joining us and please stay safe and healthy.
Moderator
Thank you very much members of the management. Ladies and gentlemen on behalf of Infosys that concludes this conference. Thank you for joining us and may now disconnect your lines.
Exhibit 99.6
Form of Release to Stock Exchanges
INDEPENDENT Auditor’s Report ON THE AUDIT OF THE CONSOLIDATED FINANCIAL RESULTS
To The Board of Directors of INFOSYS Limited
Opinion
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, 2021, (the “Statement”) being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).
In our opinion and to the best of our information and according to the explanations given to us, the Statement:
i. | includes the results of the entities as given in the Annexure to this report; |
ii. | is presented in accordance with the requirements of Regulation 33 of the Listing Regulations; and |
iii. | gives a true and fair view in conformity with the recognition and measurement principles laid down in the 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 of the consolidated net profit and consolidated total comprehensive income and other financial information of the Group for the quarter and half year ended September 30, 2021. |
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (“SA”s) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in Auditor’s Responsibilities for audit of the consolidated financial results section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the consolidated financial results under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion.
Management’s Responsibilities for the Consolidated Financial Results
This Statement, which is the responsibility of the Company’s Management and approved by the Company’s Board of Directors, has been compiled from the audited interim condensed consolidated financial statements for the quarter and half year ended September 30, 2021. The Company’s Board of Directors is responsible for the preparation and presentation of these consolidated financial results that give a true and fair view of the consolidated net profit and consolidated other comprehensive income and other financial information of the Group in accordance with the recognition and measurement principles laid down in the Ind AS 34, prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations.
The respective Boards of Directors of the companies included in the Group are responsible for maintenance of the 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 the 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 respective financial results that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial results by the Directors of the Company, as aforesaid.
In preparing the consolidated financial results, the respective Boards of Directors of the companies included in the Group are responsible for assessing the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Boards of Directors either intends to liquidate their respective entities or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors of the companies included in the Group are responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for Audit of the Consolidated Financial Results
Our objectives are to obtain reasonable assurance about whether the consolidated financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial results.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
· | Identify and assess the risks of material misstatement of the consolidated financial results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
· | Obtain an understanding of internal control relevant to the audit 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 such controls. |
· | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
· | Evaluate the appropriateness and reasonableness of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing Regulations. |
· | Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
· | Evaluate the overall presentation, structure and content of the consolidated financial results, including the disclosures, and whether the consolidated financial results represent the underlying transactions and events in a manner that achieves fair presentation. |
· | Obtain sufficient appropriate audit evidence regarding the Financial Information of the entities within the Group to express an opinion on the consolidated financial results. We are responsible for the direction, supervision and performance of the audit of financial information of such entities included in the consolidated financial results of which we are the independent auditors. |
Materiality is the magnitude of misstatements in the consolidated financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the consolidated financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the consolidated financial results.
We communicate with those charged with governance of the Company and such other entities included in the consolidated financial results of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
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Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAG08733 |
Annexure to Auditor’s Report
List of Entities:
1. | Infosys Technologies (China) Co. Limited |
2. | Infosys Technologies S. de R. L. de C. V. |
3. | Infosys Technologies (Sweden) AB. |
4. | Infosys Technologies (Shanghai) Company Limited |
5. | Infosys Nova Holdings LLC. |
6. | EdgeVerve Systems Limited |
7. | Infosys Austria GmbH |
8. | Skava Systems Private Limited (under liquidation) |
9. | Kallidus Inc. (liquidated effective March 9, 2021) |
10. | Infosys Chile SpA |
11. | Infosys Arabia Limited |
12. | Infosys Consulting Ltda. |
13. | Infosys CIS LLC (liquidated effective January 28, 2021) |
14. | Infosys Luxembourg S.a.r.l |
15. | Infosys Americas Inc. |
16. | Infosys Public Services, Inc. |
17. | Infosys Canada Public Services Inc. |
18. | Infosys BPM Limited |
19. | Infosys (Czech Republic) Limited s.r.o. |
20. | Infosys Poland Sp Z.o.o |
21. | Infosys McCamish Systems LLC |
22. | Portland Group Pty Ltd |
23. | Infosys BPO Americas LLC. |
24. | Infosys Consulting Holding AG |
25. | Infosys Management Consulting Pty Limited |
26. | Infosys Consulting AG |
27. | Infosys Consulting GmbH |
28. | Infosys Consulting S.R.L (Romania) |
29. | Infosys Consulting SAS |
30. | Infosys Consulting s.r.o. (under liquidation) |
31. | Infosys Consulting (Shanghai) Co., Ltd. (liquidated effective September 01, 2021) |
32. | Infy Consulting Company Limited |
33. | Infy Consulting B.V. |
34. | Infosys Consulting Sp. Z.o.o (merged with Infosys Poland Sp Z.o.o effective October 21, 2020) |
35. | Lodestone Management Consultants Portugal, Unipessoal, Lda. (liquidated effective November 19, 2020) |
36. | Infosys Consulting S.R.L (Argentina) |
37. | Infosys Consulting (Belgium) NV |
38. | Panaya Inc. |
39. | Panaya GmbH |
40. | Panaya Limited. |
41. | Brilliant Basics Holdings Limited |
42. | Brilliant Basics Limited |
43. | Brilliant Basics (MENA) DMCC (liquidated effective July 17, 2020) |
44. | Infosys Consulting Pte Ltd. |
45. | Infosys Middle East FZ LLC |
46. | Fluido Oy |
47. | Fluido Sweden AB (Extero) |
48. | Fluido Norway A/S |
49. | Fluido Denmark A/S |
50. | Fluido Slovakia s.r.o |
51. | Fluido Newco AB (merged with Fluido Sweden AB effective December 18, 2020) |
52. | Infosys Compaz PTE. Ltd |
53. | Infosys South Africa (Pty) Ltd |
54. | WongDoody Holding Company Inc. |
55. | WDW Communications, Inc. |
56. | WongDoody, Inc |
57. | HIPUS Co., Ltd. |
58. | Stater N.V. |
59. | Stater Nederland B.V. |
60. | Stater Duitsland B.V. (merged with Stater N.V effective December 23, 2020) |
61. | Stater XXL B.V. |
62. | HypoCasso B.V. |
63. | Stater Participations B.V. |
64. | Stater Deutschland Verwaltungs-GmbH (merged with Stater Duitsland B.V. effective December 18, 2020) |
65. | Stater Deutschland GmbH & Co. KG (merged with Stater Duitsland B.V. effective December 18, 2020) |
66. | Stater Belgium N.V./S.A. |
67. | Outbox systems Inc. dba Simplus (US) |
68. | Simplus North America Inc. (liquidated effective April 27, 2021) |
69. | Simplus ANZ Pty Ltd. |
70. | Simplus Australia Pty Ltd |
71. | Sqware Peg Digital Pty Ltd (liquidated effective September 02, 2021) |
72. | Simplus Philippines, Inc. |
73. | Simplus Europe, Ltd. (liquidated effective July 20, 2021) |
74. | Infosys Fluido UK, Ltd. (formerly Simplus U.K, Ltd) |
75. | Infosys Fluido Ireland, Ltd. (formerly Simplus Ireland, Ltd) |
76. | Infosys Limited Bulgaria EOOD (incorporated effective September 11, 2020) |
77. | Infosys BPM UK Limited (incorporated effective December 09, 2020) |
78. | Blue Acorn LLC (acquired on October 27, 2020) |
79. | Beringer Commerce Inc renamed as Blue Acorn iCi Inc. (acquired on October 27, 2020) |
80. | Beringer Capital Digital Group Inc (acquired on October 27, 2020) |
81. | Mediotype LLC (acquired on October 27, 2020) |
82. | Beringer Commerce Holdings LLC (acquired on October 27, 2020) |
83. | SureSource LLC (acquired on October 27, 2020) |
84. | Simply Commerce LLC (acquired on October 27, 2020) |
85. | iCiDIGITAL LLC (acquired on October 27, 2020) |
86. | Kaleidoscope Animations, Inc; (acquired on October 09, 2020) |
87. | Kaleidoscope Prototyping LLC; (acquired on October 09, 2020) |
88. | GuideVision s.r.o (acquired on October 01, 2020) |
89. | GuideVision Deutschland GmbH (acquired on October 01, 2020) |
90. | GuideVision Suomi Oy (acquired on October 01, 2020) |
91. | GuideVision Magyarorszag Kft (acquired on October 01, 2020) |
92. | GuideVision Polska SP Z.O.O (acquired on October 01, 2020) |
93. | GuideVision UK Ltd (acquired on October 01, 2020) |
94. | Infosys Turkey Bilgi Teknolojikeri Sirketi (incorporated effective December 30, 2020) |
95. | Infosys Germany Holding Gmbh (incorporated on March 23, 2021) |
96. | Infosys Automotive and Mobility GmbH & Co. KG, a partnership firm (formed on March 28, 2021). |
97. | Stater GmbH (incorporated on August 4, 2021) |
98. | Infosys Green Forum (incorporated on August 31, 2021) |
99. | Infosys Employees Welfare Trust |
100. | Infosys Employee Benefits Trust |
101. | Infosys Science Foundation |
102. | Infosys Expanded Stock Ownership Trust |
INDEPENDENT AUDITOR’S REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL RESULTS
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Opinion
We have audited the accompanying Statement of Standalone Financial Results of INFOSYS LIMITED (the “Company”), for the quarter and half year ended September 30, 2021, (the “Statement”), being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).
In our opinion and to the best of our information and according to the explanations given to us, the Statement:
a. | is presented in accordance with the requirements of Regulation 33 of the Listing Regulations; and |
b. | gives a true and fair view in conformity with the recognition and measurement principles laid down in the 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 of the net profit and total comprehensive income, and other financial information of the Company for the quarter and half year ended September 30, 2021. |
Basis for Opinion
We conducted our audit of the Statement in accordance with the Standards on Auditing (“SA”s) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in Auditor’s Responsibilities for the Audit of the Standalone Financial Results section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the Standalone Financial Results under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion.
Management’s Responsibilities for the Standalone Financial Results
This Statement, which is the responsibility of the Company’s Management and approved by the Board of Directors, has been compiled from the related audited interim condensed standalone financial statements for the quarter and half year ended September 30, 2021. The Company’s Board of Directors is responsible for the preparation and presentation of the standalone financial results that give a true and fair view of the net profit and other comprehensive income and other financial information in accordance with the recognition and measurement principles laid down in Ind AS 34, prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company 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 the 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 standalone financial results that give a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the standalone financial results, the Board of Directors is responsible for assessing the Company’s ability, to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the financial reporting process of the Company.
Auditor’s Responsibilities for the Audit of the Standalone Financial Results
Our objectives are to obtain reasonable assurance about whether the standalone financial results as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial results.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• | Identify and assess the risks of material misstatement of the standalone financial results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
• | Obtain an understanding of internal control relevant to the audit 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 control. |
• | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
• | Evaluate the appropriateness and reasonableness of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing Regulations. |
• | Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
• | Evaluate the overall presentation, structure and content of the standalone financial results, including the disclosures, and whether the standalone financial results represent the underlying transactions and events in a manner that achieves fair presentation. |
• | Obtain sufficient appropriate audit evidence regarding the standalone financial results of the Company to express an opinion on the standalone financial results. |
Materiality is the magnitude of misstatements in the standalone financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial results.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
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Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAGQ4828 |
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Infosys Limited Regd. office: Electronics City, Hosur Road, |
CIN : L85110KA1981PLC013115 Website: www.infosys.com email: investors@infosys.com T: 91 80 2852 0261, F: 91 80 2852 0362 |
Statement of Consolidated Audited Results of Infosys Limited and its subsidiaries for the quarter and half-year ended September 30, 2021 prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore, except per equity share data)
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Audited | Audited | Audited | Audited | Audited | Audited | |
Revenue from operations | 29,602 | 27,896 | 24,570 | 57,498 | 48,234 | 1,00,472 |
Other income, net | 524 | 622 | 570 | 1,146 | 1,046 | 2,201 |
Total Income | 30,126 | 28,518 | 25,140 | 58,644 | 49,280 | 1,02,673 |
Expenses | ||||||
Employee benefit expenses | 15,743 | 15,230 | 13,400 | 30,973 | 27,004 | 55,541 |
Cost of technical sub-contractors | 3,054 | 2,454 | 1,634 | 5,508 | 3,260 | 7,084 |
Travel expenses | 163 | 133 | 151 | 296 | 267 | 554 |
Cost of software packages and others | 1,393 | 1,289 | 1,108 | 2,682 | 2,001 | 4,223 |
Communication expenses | 146 | 147 | 162 | 294 | 324 | 634 |
Consultancy and professional charges | 449 | 396 | 286 | 844 | 548 | 1,261 |
Depreciation and amortisation expenses | 859 | 829 | 855 | 1,687 | 1,611 | 3,267 |
Finance cost | 48 | 49 | 48 | 98 | 96 | 195 |
Other expenses | 823 | 815 | 746 | 1,639 | 1,626 | 3,286 |
Total expenses | 22,678 | 21,342 | 18,390 | 44,021 | 36,737 | 76,045 |
Profit before tax | 7,448 | 7,176 | 6,750 | 14,623 | 12,543 | 26,628 |
Tax expense: | ||||||
Current tax | 1,987 | 1,937 | 1,763 | 3,923 | 3,084 | 6,672 |
Deferred tax | 33 | 38 | 129 | 71 | 328 | 533 |
Profit for the period | 5,428 | 5,201 | 4,858 | 10,629 | 9,131 | 19,423 |
Other comprehensive income | ||||||
Items that will not be reclassified subsequently to profit or loss | ||||||
Remeasurement of the net defined benefit liability/asset, net | 14 | (33) | 7 | (19) | 154 | 134 |
Equity instruments through other comprehensive income, net | 40 | 1 | (5) | 41 | (6) | 119 |
Items that will be reclassified subsequently to profit or loss | ||||||
Fair value changes on derivatives designated as cash flow hedges, net | 6 | 5 | 27 | 11 | 21 | 25 |
Exchange differences on translation of foreign operations | (166) | 290 | 21 | 124 | 185 | 130 |
Fair value changes on investments, net | 55 | 38 | (45) | 93 | 9 | (102) |
Total other comprehensive income/(loss), net of tax | (51) | 301 | 5 | 250 | 363 | 306 |
Total comprehensive income for the period | 5,377 | 5,502 | 4,863 | 10,879 | 9,494 | 19,729 |
Profit attributable to: | ||||||
Owners of the company | 5,421 | 5,195 | 4,845 | 10,616 | 9,078 | 19,351 |
Non-controlling interest | 7 | 6 | 13 | 13 | 53 | 72 |
5,428 | 5,201 | 4,858 | 10,629 | 9,131 | 19,423 | |
Total comprehensive income attributable to: | ||||||
Owners of the company | 5,375 | 5,491 | 4,847 | 10,866 | 9,434 | 19,651 |
Non-controlling interest | 2 | 11 | 16 | 13 | 60 | 78 |
5,377 | 5,502 | 4,863 | 10,879 | 9,494 | 19,729 | |
Paid up share capital (par value ![]() |
2,097 | 2,122 | 2,123 | 2,097 | 2,123 | 2,124 |
Other equity *# | 74,227 | 74,227 | 63,328 | 74,227 | 63,328 | 74,227 |
Earnings per equity share (par value ![]() |
||||||
Basic (![]() |
12.88 | 12.24 | 11.42 | 25.11 | 21.40 | 45.61 |
Diluted (![]() |
12.85 | 12.21 | 11.40 | 25.06 | 21.37 | 45.52 |
* | Balances for the quarter and half year ended September 30, 2021 and quarter ended June 30, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter and half year ended September 30, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 |
** | EPS is not annualized for the quarter and half year ended September 30, 2021, quarter ended June 30, 2021 and quarter and half year ended September 30, 2020. |
# | Excludes non-controlling interest |
1. Notes pertaining to the current quarter
a) | The audited interim condensed consolidated financial statements for the quarter and half-year ended September 30, 2021 have been taken on record by the Board of Directors at its meeting held on October 13, 2021. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented above is extracted from the audited interim condensed consolidated financial statements. These interim condensed consolidated financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules thereafter. |
b) | Buyback of Equity shares | |
The shareholders approved the proposal of buyback of
Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19 , 2021. The buyback was offered to all
eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under
the open market route through the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and
was completed on September 8, 2021 and the Company bought back and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buyback price of |
c) | Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19): | |
The Group has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements. |
d) | Employee stock grants | |
On recommendation of the Nomination and Remuneration Committee, the Board on October 13, 2021 approved the grant of 25,270 RSUs to certain eligible employees under the 2015 Plan. The grant date for these RSUs is November 1, 2021. The RSUs would vest over a period of two to three years and the exercise price of RSUs will be equal to the par value of the share. |
2. Information on dividends for the quarter and half year ended September 30, 2021
The Board of Directors declared an interim dividend
of 15 /- per equity share. The record date for the payment is October 27, 2021.The interim dividend will be paid on November 10,
2021. The interim dividend declared in the previous year was
12/- per equity share.
(in )
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Dividend per share (par value ![]() |
||||||
Interim dividend | 15.00 | – | 12.00 | 15.00 | 12.00 | 12.00 |
Final dividend | – | – | – | – | – | 15.00 |
3. Audited Consolidated Balance Sheet
(in crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
ASSETS | ||
Non-current assets | ||
Property, plant and equipment | 12,913 | 12,560 |
Right of use assets | 4,599 | 4,794 |
Capital work-in-progress | 383 | 922 |
Goodwill | 6,122 | 6,079 |
Other Intangible assets | 1,895 | 2,072 |
Financial assets | ||
Investments | 10,096 | 11,863 |
Loans | 45 | 32 |
Other financial assets | 1,252 | 1,141 |
Deferred tax assets (net) | 976 | 1,098 |
Income tax assets (net) | 5,796 | 5,811 |
Other non-current assets | 2,025 | 1,281 |
Total non-current assets | 46,102 | 47,653 |
Current assets | ||
Financial assets | ||
Investments | 4,983 | 2,342 |
Trade receivables | 20,121 | 19,294 |
Cash and cash equivalents | 18,056 | 24,714 |
Loans | 191 | 159 |
Other financial assets | 7,385 | 6,410 |
Other current assets | 9,272 | 7,814 |
Total current assets | 60,008 | 60,733 |
Total Assets | 1,06,110 | 1,08,386 |
EQUITY AND LIABILITIES | ||
Equity | ||
Equity share capital | 2,097 | 2,124 |
Other equity | 67,842 | 74,227 |
Total equity attributable to equity holders of the Company | 69,939 | 76,351 |
Non-controlling interests | 409 | 431 |
Total equity | 70,348 | 76,782 |
Liabilities | ||
Non-current liabilities | ||
Financial liabilities | ||
Lease liabilities | 4,356 | 4,587 |
Other financial liabilities | 2,109 | 1,514 |
Deferred tax liabilities (net) | 858 | 875 |
Other non-current liabilities | 751 | 763 |
Total non-current liabilities | 8,074 | 7,739 |
Current liabilities | ||
Financial liabilities | ||
Lease liabilities | 788 | 738 |
Trade payables | 3,176 | 2,645 |
Other financial liabilities | 13,605 | 11,390 |
Other Current Liabilities | 6,802 | 6,233 |
Provisions | 862 | 713 |
Income tax liabilities (net) | 2,455 | 2,146 |
Total current liabilities | 27,688 | 23,865 |
Total equity and liabilities | 1,06,110 | 1,08,386 |
The disclosure is an extract of the audited Consolidated Balance Sheet as at September 30, 2021 and March 31, 2021 prepared in compliance with the Indian Accounting Standards (Ind-AS).
4. Audited Consolidated Statement of Cash Flows
(in crore)
Particulars | Half-year ended September 30, | |
2021 | 2020 | |
Cash flow from operating activities | ||
Profit for the period | 10,629 | 9,131 |
Adjustments to reconcile net profit to net cash provided by operating activities: | ||
Income tax expense | 3,994 | 3,412 |
Depreciation and amortization | 1,687 | 1,611 |
Interest and dividend income | (885) | (804) |
Finance cost | 98 | 96 |
Impairment loss recognized / (reversed) under expected credit loss model | 87 | 159 |
Exchange differences on translation of assets and liabilities, net | 54 | (7) |
Stock compensation expense | 209 | 174 |
Other adjustments | 36 | (60) |
Changes in assets and liabilities | ||
Trade receivables and unbilled revenue | (2,963) | (67) |
Loans, other financial assets and other assets | (406) | 415 |
Trade payables | 349 | (477) |
Other financial liabilities, other liabilities and provisions | 2,754 | 773 |
Cash generated from operations | 15,643 | 14,356 |
Income taxes paid | (3,574) | (2,987) |
Net cash generated by operating activities | 12,069 | 11,369 |
Cash flows from investing activities | ||
Expenditure on property, plant and equipment and intangibles | (1,030) | (1,306) |
Deposits placed with corporation | (516) | (495) |
Redemption of deposits placed with corporation | 343 | 362 |
Interest and dividend received | 1,017 | 708 |
Payment of contingent consideration pertaining to acquisition of business | (53) | (150) |
Escrow and other deposits pertaining to Buyback | (420) | – |
Redemption of escrow and other deposits pertaining to Buyback | 420 | – |
Other receipts | 35 | 25 |
Other payments | (22) | – |
Payments to acquire Investments | ||
Liquid mutual funds and fixed maturity plan securities | (25,411) | (11,960) |
Non convertible debentures | (154) | (829) |
Certificates of deposit | (498) | – |
Government securities | (653) | (4,664) |
Others | (13) | (1) |
Proceeds on sale of Investments | ||
Non-convertible debentures | 1,299 | 720 |
Government securities | 1,336 | 1,529 |
Certificates of deposit | 500 | 900 |
Liquid mutual funds and fixed maturity plan securities | 22,928 | 11,850 |
Others | 1 | 22 |
Net cash (used in) / from investing activities | (891) | (3,289) |
Cash flows from financing activities: | ||
Payment of lease liabilities | (421) | (351) |
Payment of dividends | (6,369) | (4,031) |
Payment of dividend to non-controlling interest of subsidiary | (2) | (20) |
Shares issued on exercise of employee stock options | 9 | 6 |
Other receipts | 117 | – |
Other payments | (15) | – |
Buyback of equity shares including transaction cost and tax on buyback | (11,125) | – |
Net cash used in financing activities | (17,806) | (4,396) |
Net increase / (decrease) in cash and cash equivalents | (6,628) | 3,684 |
Cash and cash equivalents at the beginning of the period | 24,714 | 18,649 |
Effect of exchange rate changes on cash and cash equivalents | (30) | 78 |
Cash and cash equivalents at the end of the period | 18,056 | 22,411 |
Supplementary information: | ||
Restricted cash balance | 526 | 404 |
The disclosure is an extract of the audited Consolidated Statement of Cash flows for the half year ended September 30, 2021 and September 30, 2020 prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting.
5. Segment reporting (Consolidated - Audited)
(in crore)
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Revenue by business segment | ||||||
Financial Services (1) | 9,566 | 9,217 | 7,871 | 18,783 | 15,328 | 32,583 |
Retail (2) | 4,330 | 4,175 | 3,651 | 8,505 | 7,043 | 14,745 |
Communication (3) | 3,668 | 3,403 | 3,093 | 7,071 | 6,257 | 12,628 |
Energy, Utilities, Resources and Services | 3,501 | 3,371 | 3,027 | 6,871 | 6,054 | 12,539 |
Manufacturing | 3,219 | 2,702 | 2,241 | 5,922 | 4,497 | 9,447 |
Hi-Tech | 2,511 | 2,310 | 2,244 | 4,821 | 4,307 | 8,560 |
Life Sciences (4) | 2,103 | 1,891 | 1,672 | 3,994 | 3,246 | 6,870 |
All other segments (5) | 704 | 827 | 771 | 1,531 | 1,502 | 3,100 |
Total | 29,602 | 27,896 | 24,570 | 57,498 | 48,234 | 1,00,472 |
Less: Inter-segment revenue | – | – | – | – | – | – |
Net revenue from operations | 29,602 | 27,896 | 24,570 | 57,498 | 48,234 | 1,00,472 |
Segment profit before tax, depreciation and non-controlling interests: | ||||||
Financial Services (1) | 2,644 | 2,358 | 2,360 | 5,002 | 4,361 | 8,946 |
Retail (2) | 1,503 | 1,482 | 1,300 | 2,985 | 2,349 | 5,117 |
Communication (3) | 816 | 707 | 663 | 1,523 | 1,284 | 2,795 |
Energy, Utilities , Resources and Services | 1,017 | 1,022 | 825 | 2,038 | 1,676 | 3,552 |
Manufacturing | 724 | 625 | 655 | 1,350 | 1,160 | 2,563 |
Hi-Tech | 619 | 567 | 669 | 1,186 | 1,268 | 2,454 |
Life Sciences (4) | 588 | 571 | 565 | 1,159 | 1,039 | 2,156 |
All other segments (5) | (80) | 100 | 46 | 19 | 67 | 306 |
Total | 7,831 | 7,432 | 7,083 | 15,262 | 13,204 | 27,889 |
Less: Other Unallocable expenditure | 859 | 829 | 855 | 1,687 | 1,611 | 3,267 |
Add: Unallocable other income | 524 | 622 | 570 | 1,146 | 1,046 | 2,201 |
Less: Finance cost | 48 | 49 | 48 | 98 | 96 | 195 |
Profit before tax and non-controlling interests | 7,448 | 7,176 | 6,750 | 14,623 | 12,543 | 26,628 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | All other segments include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
Notes on segment information
Business segments
Based on the "management approach" as defined in Ind-AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Group's performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along these business segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments.
Segmental capital employed
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 not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
6. Audited financial results of Infosys Limited (Standalone Information)
(in crore)
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Revenue from operations | 25,462 | 23,714 | 21,046 | 49,176 | 41,372 | 85,912 |
Profit before tax | 7,303 | 6,493 | 6,163 | 13,796 | 11,542 | 24,477 |
Profit for the period | 5,463 | 4,723 | 4,497 | 10,186 | 8,505 | 18,048 |
The audited results of Infosys Limited for the above mentioned periods are available on our website, www.infosys.com and on the Stock Exchange website www.nseindia.com and www.bseindia.com. The information above has been extracted from the audited interim standalone condensed financial statements as stated.
By order of the Board for Infosys Limited | |
Bengaluru, India October 13, 2021 |
Salil Parekh Chief Executive Officer and Managing Director |
The Board has also taken on record the condensed consolidated results of Infosys Limited and its subsidiaries for the quarter and half-year ended September 30, 2021, prepared as per International Financial Reporting Standards (IFRS) and reported in US dollars. A summary of the financial statements is as follows:
(in US$ million, except per equity share data)
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Audited | Audited | Audited | Audited | Audited | Audited | |
Revenues | 3,998 | 3,782 | 3,312 | 7,780 | 6,433 | 13,561 |
Cost of sales | 2,675 | 2,509 | 2,125 | 5,184 | 4,196 | 8,828 |
Gross profit | 1,323 | 1,273 | 1,187 | 2,596 | 2,237 | 4,733 |
Operating expenses | 382 | 377 | 347 | 759 | 690 | 1,408 |
Operating profit | 941 | 896 | 840 | 1,837 | 1,547 | 3,325 |
Other income, net | 71 | 84 | 76 | 155 | 140 | 297 |
Finance cost | 6 | 7 | 6 | 13 | 12 | 26 |
Profit before income taxes | 1,006 | 973 | 910 | 1,979 | 1,675 | 3,596 |
Income tax expense | 272 | 268 | 255 | 540 | 456 | 973 |
Net profit | 734 | 705 | 655 | 1,439 | 1,219 | 2,623 |
Earnings per equity share * | ||||||
Basic | 0.17 | 0.17 | 0.15 | 0.34 | 0.29 | 0.62 |
Diluted | 0.17 | 0.17 | 0.15 | 0.34 | 0.29 | 0.61 |
Total assets | 14,295 | 14,730 | 13,363 | 14,295 | 13,363 | 14,825 |
Cash and cash equivalents and current investments | 3,103 | 3,499 | 3,526 | 3,103 | 3,526 | 3,700 |
* | EPS is not annualized for the quarter and half year ended September 30, 2021, quarter ended June 30, 2021 and quarter and half year ended September 30, 2020. |
Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.
![]() |
Infosys Limited Regd. office: Electronics City, Hosur Road, |
CIN : L85110KA1981PLC013115 Website: www.infosys.com email: investors@infosys.com T: 91 80 2852 0261, F: 91 80 2852 0362 |
Statement of Audited results of Infosys Limited
for the quarter and half-year ended September 30, 2021
prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore, except per equity share data)
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Audited | Audited | Audited | Audited | Audited | Audited | |
Revenue from operations | 25,462 | 23,714 | 21,046 | 49,176 | 41,372 | 85,912 |
Other income, net | 1,052 | 570 | 582 | 1,622 | 1,060 | 2,467 |
Total income | 26,514 | 24,284 | 21,628 | 50,798 | 42,432 | 88,379 |
Expenses | ||||||
Employee benefit expenses | 12,734 | 12,191 | 11,053 | 24,925 | 22,275 | 45,179 |
Cost of technical sub-contractors | 3,934 | 3,316 | 2,125 | 7,251 | 4,220 | 9,528 |
Travel expenses | 143 | 115 | 136 | 258 | 228 | 484 |
Cost of software packages and others | 736 | 528 | 548 | 1,264 | 1,029 | 2,058 |
Communication expenses | 107 | 104 | 121 | 210 | 235 | 464 |
Consultancy and professional charges | 365 | 311 | 225 | 675 | 418 | 999 |
Depreciation and amortisation expense | 601 | 576 | 608 | 1,178 | 1,154 | 2,321 |
Finance cost | 32 | 32 | 31 | 64 | 62 | 126 |
Other expenses | 559 | 618 | 618 | 1,177 | 1,269 | 2,743 |
Total expenses | 19,211 | 17,791 | 15,465 | 37,002 | 30,890 | 63,902 |
Profit before tax | 7,303 | 6,493 | 6,163 | 13,796 | 11,542 | 24,477 |
Tax expense: | ||||||
Current tax | 1,805 | 1,697 | 1,526 | 3,502 | 2,752 | 6,013 |
Deferred tax | 35 | 73 | 140 | 108 | 285 | 416 |
Profit for the period | 5,463 | 4,723 | 4,497 | 10,186 | 8,505 | 18,048 |
Other comprehensive income | ||||||
Items that will not be reclassified subsequently to profit or loss | ||||||
Remeasurement of the net defined benefit liability / asset, net | 10 | (32) | 6 | (22) | 162 | 148 |
Equity instruments through other comprehensive income, net | 39 | 2 | (5) | 41 | (5) | 120 |
Items that will be reclassified subsequently to profit or loss | ||||||
Fair value changes on derivatives designated as cash flow hedges, net | 6 | 5 | 27 | 11 | 21 | 25 |
Fair value changes on investments, net | 52 | 38 | (45) | 90 | 4 | (102) |
Total other comprehensive income/ (loss), net of tax | 107 | 13 | (17) | 120 | 182 | 191 |
Total comprehensive income for the period | 5,570 | 4,736 | 4,480 | 10,306 | 8,687 | 18,239 |
Paid-up share capital (par value ![]() |
2,102 | 2,128 | 2,129 | 2,102 | 2,129 | 2,130 |
Other Equity* | 69,401 | 69,401 | 60,105 | 69,401 | 60,105 | 69,401 |
Earnings per equity share ( par value ![]() |
||||||
Basic (![]() |
12.93 | 11.08 | 10.56 | 24.01 | 19.97 | 42.37 |
Diluted (![]() |
12.92 | 11.07 | 10.55 | 23.98 | 19.96 | 42.33 |
* | Balances for the quarter and half year ended September 30, 2021 and quarter ended June 30, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter and half year ended September 30, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 |
** | EPS is not annualized for the quarter and half year ended September 30, 2021, quarter ended June 30, 2021 and quarter and half year ended September 30, 2020. |
1. | Notes pertaining to the current quarter |
a) | The audited interim condensed standalone financial statements for the quarter and half-year ended September 30, 2021 have been taken on record by the Board of Directors at its meeting held on October 13, 2021. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented above is extracted from the audited interim condensed standalone financial statements. These interim condensed standalone financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules thereafter. |
b) | Buyback of Equity shares | |
The shareholders approved the proposal of buyback of
Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19 , 2021. The buyback was offered to all
eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under
the open market route through the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and
was completed on September 8, 2021 and the Company bought back and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buyback price of |
c) | Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19): | |
The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed standalone financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company's financial statements may differ from that estimated as at the date of approval of these interim condensed standalone financial statements. |
d) | Employee stock grants | |
On recommendation of the Nomination and Remuneration Committee, the Board on October 13, 2021 approved the grant of 25,270 RSUs to certain eligible employees under the 2015 Plan. The grant date for these RSUs is November 1, 2021. The RSUs would vest over a period of two to three years and the exercise price of RSUs will be equal to the par value of the share. |
2. Notes pertaining to the previous quarter
Proposed transfer of Corporate Social Responsibility (CSR ) Asset
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company intends to transfer its CSR capital assets created prior to January 2021 to a wholly owned subsidiary, Infosys Green Forum (referred to as “ the Subsidiary” ) established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
The carrying amount of the capital asset
amounting to 283 crore has been impaired and included as CSR expense in the standalone financial
statements during the year ended March 31, 2021 because the Company will not be able to recover the carrying amount of the asset
from its Subsidiary on account of prohibition on payment of dividend by this Subsidiary.
3. Information on dividends for the quarter and half-year ended September 30, 2021
The Board of Directors declared an interim dividend
of 15 /- per equity share. The record date for the payment is October 27, 2021.The interim dividend will be paid on November 10,
2021. The interim dividend declared in the previous year was
12/- per equity share.
(in )
Particulars | Quarter ended September 30, |
Quarter ended June 30, |
Quarter ended September 30, |
Half-year ended September 30, |
Year ended March 31, | |
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | |
Dividend per share (par value ![]() |
||||||
Interim dividend | 15.00 | – | 12.00 | 15.00 | 12.00 | 12.00 |
Final dividend | – | – | – | – | – | 15.00 |
4. Audited Standalone Balance Sheet
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
ASSETS | ||
Non-current assets | ||
Property, plant and equipment | 11,238 | 10,930 |
Right of use assets | 3,306 | 3,435 |
Capital work-in-progress | 347 | 906 |
Goodwill | 167 | 167 |
Other Intangible assets | 49 | 67 |
Financial assets | ||
Investments | 19,423 | 22,118 |
Loans | 44 | 30 |
Other financial assets | 581 | 613 |
Deferred tax assets (net) | 823 | 955 |
Income tax assets (net) | 5,325 | 5,287 |
Other non-current assets | 1,305 | 1,149 |
Total non-current assets | 42,608 | 45,657 |
Current assets | ||
Financial assets | ||
Investments | 3,873 | 2,037 |
Trade receivables | 17,361 | 16,394 |
Cash and cash equivalents | 12,396 | 17,612 |
Loans | 163 | 229 |
Other financial assets | 5,533 | 5,226 |
Other current assets | 7,453 | 6,784 |
Total current assets | 46,779 | 48,282 |
Total assets | 89,387 | 93,939 |
EQUITY AND LIABILITIES | ||
Equity | ||
Equity share capital | 2,102 | 2,130 |
Other equity | 62,431 | 69,401 |
Total equity | 64,533 | 71,531 |
LIABILITIES | ||
Non-current liabilities | ||
Financial liabilities | ||
Lease liabilities | 3,198 | 3,367 |
Other financial liabilities | 363 | 259 |
Deferred tax liabilities (net) | 516 | 511 |
Other non-current liabilities | 634 | 649 |
Total non - current liabilities | 4,711 | 4,786 |
Current liabilities | ||
Financial liabilities | ||
Lease liabilities | 520 | 487 |
Trade payables | ||
Total outstanding dues of micro enterprises and small enterprises | – | – |
Total outstanding dues of creditors other than micro enterprises and small enterprises | 1,907 | 1,562 |
Other financial liabilities | 9,581 | 8,359 |
Other current liabilities | 5,147 | 4,816 |
Provisions | 818 | 661 |
Income tax liabilities (net) | 2,170 | 1,737 |
Total current liabilities | 20,143 | 17,622 |
Total equity and liabilities | 89,387 | 93,939 |
The disclosure is an extract of the audited Balance Sheet as at September 30, 2021 and March 31, 2021 prepared in compliance with the Indian Accounting Standards (Ind-AS).
5. Audited Standalone Statement of Cash flows
(In crore)
Particulars | Half-year ended September 30, | |
2021 | 2020 | |
Cash flow from operating activities: | ||
Profit for the period | 10,186 | 8,505 |
Adjustments to reconcile net profit to net cash provided by operating activities: | ||
Depreciation and amortization | 1,178 | 1,154 |
Income tax expense | 3,610 | 3,037 |
Impairment loss recognized / (reversed) under expected credit loss model | 66 | 123 |
Finance cost | 64 | 62 |
Interest and dividend income | (1,347) | (734) |
Stock compensation expense | 185 | 154 |
Other adjustments | 33 | 2 |
Exchange differences on translation of assets and liabilities | 46 | (20) |
Changes in assets and liabilities | ||
Trade receivables and unbilled revenue | (2,337) | (268) |
Loans, other financial assets and other assets | 190 | 457 |
Trade payables | 323 | (209) |
Other financial liabilities, other liabilities and provisions | 1,745 | 184 |
Cash generated from operations | 13,942 | 12,447 |
Income taxes paid | (3,092) | (2,692) |
Net cash generated by operating activities | 10,850 | 9,755 |
Cash flow from investing activities: | ||
Expenditure on property, plant and equipment | (793) | (1,105) |
Deposits placed with corporation | (409) | (425) |
Redemption of deposits placed with corporation | 275 | 295 |
Loan given to subsidiaries | – | (76) |
Loan repaid by subsidiaries | 73 | 267 |
Proceeds from redemption of debentures | 536 | 327 |
Investment in subsidiaries | (126) | (215) |
Payment towards business transfer | – | (66) |
Payment of contingent consideration pertaining to acquisition | – | (122) |
Escrow and other deposits pertaining to Buyback | (420) | – |
Redemption of Escrow and other deposits pertaining to Buyback | 420 | – |
Other receipts | 25 | 25 |
Payments to acquire investments | ||
Preference, equity securities and others | (3) | (1) |
Liquid mutual fund units and fixed maturity plan securities | (22,370) | (10,499) |
Certificates of deposit | (498) | – |
Government Securities | (83) | (4,664) |
Non Convertible debentures | – | (746) |
Proceeds on sale of investments | ||
Liquid mutual fund units and fixed maturity plan securities | 20,446 | 10,541 |
Non-convertible debentures | 1,299 | 535 |
Certificates of deposit | 500 | 900 |
Government Securities | 1,336 | 1,529 |
Interest and dividend received | 906 | 673 |
Dividend received from subsidiary | 592 | – |
Net cash (used in) / from investing activities | 1,706 | (2,827) |
Cash flow from financing activities: | ||
Payment of lease liabilities | (286) | (210) |
Buyback of equity shares including transaction cost and tax on buyback | (11,125) | – |
Other receipts | 62 | – |
Shares issued on exercise of employee stock options | 6 | 5 |
Payment of dividends | (6,392) | (4,048) |
Net cash used in financing activities | (17,735) | (4,253) |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | (37) | 10 |
Net increase / (decrease) in cash and cash equivalents | (5,179) | 2,675 |
Cash and cash equivalents at the beginning of the period | 17,612 | 13,562 |
Cash and cash equivalents at the end of the period | 12,396 | 16,247 |
Supplementary information: | ||
Restricted cash balance | 153 | 99 |
The disclosure is an extract of the audited Statement of Cash flows for the half year ended September 30, 2021 and September 30, 2020 prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting.
6. Segment Reporting
The Company publishes standalone financial statements along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the audited interim condensed consolidated financial statements. Accordingly, the segment information is given in the audited consolidated financial results of Infosys Limited and its subsidiaries for the quarter and half-year ended September 30, 2021.
By order of the Board for Infosys Limited | |
Bengaluru, India October 13, 2021 |
Salil Parekh Chief Executive Officer and Managing Director |
Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19
impact on our employees, clients and stakeholders are forward-looking statements intended to qualify for the 'safe harbor' under the
Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to
differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but
are not limited to, risks and uncertainties regarding COVID-19 and the effects of government and other measures seeking to contain its
spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes
in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage
growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our
ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client
concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced
demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully
complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which
Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional
conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property
and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional
risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission
filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. These filings are available at www.sec.gov.
Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking
statements that may be made from time to time by or on behalf of the Company unless it is required by law.
![]() |
Infosys Limited Regd. office: Electronics City, Hosur Road, |
CIN : L85110KA1981PLC013115 Website: www.infosys.com email: investors@infosys.com T: 91 80 2852 0261, F: 91 80 2852 0362 |
Extract of Consolidated Audited Financial Results of Infosys Limited and its subsidiaries for the quarter and half-year ended September 30, 2021 prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore except per equity share data)
Particulars | Quarter ended September 30, |
Half-year ended September 30, |
Quarter ended September 30, |
2021 | 2021 | 2020 | |
Revenue from operations | 29,602 | 57,498 | 24,570 |
Profit before tax | 7,448 | 14,623 | 6,750 |
Profit for the period | 5,428 | 10,629 | 4,858 |
Total comprehensive income for the period (comprising profit for the period after tax and other comprehensive income after tax) | 5,377 | 10,879 | 4,863 |
Profit attributable to: | |||
Owners of the company | 5,421 | 10,616 | 4,845 |
Non-controlling interest | 7 | 13 | 13 |
5,428 | 10,629 | 4,858 | |
Total comprehensive income attributable to: | |||
Owners of the company | 5,375 | 10,866 | 4,847 |
Non-controlling interest | 2 | 13 | 16 |
5,377 | 10,879 | 4,863 | |
Paid-up share capital (par value ![]() |
2,097 | 2,097 | 2,123 |
Other equity *# | 74,227 | 74,227 | 63,328 |
Earnings per equity share (par value ![]() |
|||
Basic (![]() |
12.88 | 25.11 | 11.42 |
Diluted (![]() |
12.85 | 25.06 | 11.40 |
* | Balances for the quarter and half year ended September 30, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter ended September 30, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 |
** | EPS is not annualized for the quarter and half year ended September 30, 2021 and quarter ended September 30, 2020. |
# | Excludes non-controlling interest |
1. | Notes pertaining to the current quarter |
a) | The audited interim condensed consolidated financial statements for the quarter and half-year ended September 30, 2021 have been taken on record by the Board of Directors at its meeting held on October 13, 2021. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented above is extracted from the audited interim condensed consolidated financial statements. These interim condensed consolidated financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules thereafter. |
b) | Buyback of Equity shares | |
The shareholders approved the proposal of buyback of
Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19 , 2021. The buyback was offered to all
eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under
the open market route through the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and
was completed on September 8, 2021 and the Company bought back and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buyback price of |
c) | Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19): | |
The Group has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements. |
d) | Employee stock grants | |
On recommendation of the Nomination and Remuneration Committee, the Board on October 13, 2021 approved the grant of 25,270 RSUs to certain eligible employees under the 2015 Plan. The grant date for these RSUs is November 1, 2021. The RSUs would vest over a period of two to three years and the exercise price of RSUs will be equal to the par value of the share. |
2. Information on dividends for the quarter and half-year ended September 30, 2021
The Board of Directors declared an interim
dividend of 15 /- per equity share. The record date for the payment is October 27, 2021. The
interim dividend will be paid on November 10, 2021. The interim dividend declared in the previous year was
12/-
per equity share.
(in )
Particulars | Quarter ended September 30, |
Half-year ended September 30, |
Quarter ended September 30, |
2021 | 2021 | 2020 | |
Dividend per share (par value ![]() |
|||
Interim dividend | 15.00 | 15.00 | 12.00 |
Final dividend | – | – | – |
3. Audited financial results of Infosys Limited (Standalone information)
(in crore)
Particulars | Quarter ended September 30, |
Half-year ended September 30, |
Quarter ended September 30, |
2021 | 2021 | 2020 | |
Revenue from operations | 25,462 | 49,176 | 21,046 |
Profit before tax | 7,303 | 13,796 | 6,163 |
Profit for the period | 5,463 | 10,186 | 4,497 |
The above is an extract of the detailed format of Quarterly audited financial results filed with Stock Exchanges under Regulation 33 of the SEBI (Listing and Other Disclosure Requirements) Regulations, 2015. The full format of the Quarterly Audited Financial Results are available on the Stock Exchange websites, www.nseindia.com and www.bseindia.com, and on the Company's website, www.infosys.com.
Certain statements in this release concerning our future growth prospects,
financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders are forward-looking statements
intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks
and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties
relating to these statements include, but are not limited to, risks and uncertainties regarding COVID-19 and the effects of government
and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other
countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign
exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage,
wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time
frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international
operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability
to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies
in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and
regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property
and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional
risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission
filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. These filings are available at www.sec.gov.
Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking
statements that may be made from time to time by or on behalf of the Company unless it is required by law.
By order of the Board for Infosys Limited | |
Bengaluru, India October 13, 2021 |
Salil Parekh Chief Executive Officer and Managing Director |
Exhibit 99.7
IFRS USD Earning Release
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed Consolidated Financial Statements
Opinion
We have audited the accompanying Interim condensed 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 Condensed Consolidated Balance Sheet as at September 30, 2021, the Condensed Consolidated Statement of Comprehensive Income for the three months and six months ended on that date, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the six months ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed consolidated financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair view in conformity with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”), of the consolidated state of affairs of the Group as at September 30, 2021, the consolidated profit and consolidated total comprehensive income for the three months and six months ended on that date, consolidated changes in equity and its consolidated cash flows for the six months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed consolidated financial statements in accordance with the Standards on Auditing (“SA”s) issued by the Institute of Chartered Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the interim condensed consolidated financial statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the ICAI and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed consolidated financial statements.
Management’s Responsibilities for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible for the preparation and presentation of these interim condensed 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 IAS 34 as issued by the IASB. The respective Boards of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records for safeguarding 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 respective interim financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the interim condensed consolidated financial statements by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated financial statements, the respective Boards of Directors of the companies included in the Group are responsible for assessing ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities or to cease operations, or has no realistic alternative but to do so.
The respective Boards of Directors of the companies included in the Group are responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
· | Identify and assess the risks of material misstatement of the interim condensed consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
· | Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the Company’s internal financial controls. |
· | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
· | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
· | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
· | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the interim condensed consolidated financial statements of which we are independent auditors. |
Materiality is the magnitude of misstatements in the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAGT8240 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under International Financial Reporting Standards (IFRS) in US Dollars for the three months and six months ended September 30, 2021
Index
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Comprehensive Income
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Overview and Notes to the Interim Condensed Consolidated Financial Statements
1. Overview
1.1 Company overview
1.2 Basis of preparation of financial statements
1.3 Basis of consolidation
1.4 Use of estimates and judgments
1.5 Critical accounting estimates and judgements
1.6 Recent accounting pronouncements
2. Notes to the Interim Condensed Consolidated Financial Statements
2.1 Cash and cash equivalents
2.2 Investments
2.3 Financial instruments
2.4 Prepayments and other assets
2.5 Other liabilities
2.6 Provisions and other contingencies
2.7 Property, plant and equipment
2.8 Leases
2.9 Goodwill and intangible assets
2.10 Business combination
2.11 Employees' Stock Option Plans (ESOP)
2.12 Income taxes
2.13 Basic and diluted shares used in computing earnings per equity share
2.14 Related party transactions
2.15 Segment Reporting
2.16 Revenue from Operations
2.17 Unbilled revenue
2.18 Break-up of expenses and other income, net
2.19 Equity
(Dollars in millions except equity share data)
Condensed Consolidated Balance Sheet as at | Note | September 30, 2021 | March 31, 2021 |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 2.1 | 2,432 | 3,380 |
Current investments | 2.2 | 671 | 320 |
Trade receivables | 2,711 | 2,639 | |
Unbilled revenue | 2.17 | 1,268 | 1,030 |
Prepayments and other current assets | 2.4 | 986 | 912 |
Derivative financial instruments | 2.3 | 16 | 26 |
Total current assets | 8,084 | 8,307 | |
Non-current assets | |||
Property, plant and equipment | 2.7 | 1,809 | 1,863 |
Right-of-use assets | 2.8 | 620 | 656 |
Goodwill | 2.9 | 825 | 832 |
Intangible assets | 255 | 283 | |
Non-current investments | 2.2 | 1,360 | 1,623 |
Unbilled revenue | 2.17 | 102 | 81 |
Deferred income tax assets | 2.12 | 131 | 150 |
Income tax assets | 2.12 | 781 | 795 |
Other non-current assets | 2.4 | 328 | 235 |
Total Non-current assets | 6,211 | 6,518 | |
Total assets | 14,295 | 14,825 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Trade payables | 428 | 362 | |
Lease Liabilities | 2.8 | 106 | 101 |
Derivative financial instruments | 2.3 | 6 | 8 |
Current income tax liabilities | 2.12 | 331 | 294 |
Unearned revenue | 592 | 554 | |
Employee benefit obligations | 301 | 276 | |
Provisions | 2.6 | 116 | 97 |
Other current liabilities | 2.5 | 1,850 | 1,572 |
Total current liabilities | 3,730 | 3,264 | |
Non-current liabilities | |||
Lease liabilities | 2.8 | 587 | 627 |
Deferred income tax liabilities | 2.12 | 115 | 120 |
Employee benefit obligations | 14 | 13 | |
Other non-current liabilities | 2.5 | 372 | 299 |
Total liabilities | 4,818 | 4,323 | |
Equity | |||
Share capital - ![]() |
2.19 | 328 | 332 |
Share premium | 301 | 359 | |
Retained earnings | 11,100 | 12,087 | |
Cash flow hedge reserve | 3 | 2 | |
Other reserves | 1,054 | 908 | |
Capital redemption reserve | 21 | 17 | |
Other components of equity | (3,387) | (3,263) | |
Total equity attributable to equity holders of the company | 9,420 | 10,442 | |
Non-controlling interests | 57 | 60 | |
Total equity | 9,477 | 10,502 | |
Total liabilities and equity | 14,295 | 14,825 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
(Dollars in millions except equity share and per equity share data)
Condensed Consolidated Statement of Comprehensive Income | Note | Three months ended | Six months ended | ||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||
Revenues | 2.16 | 3,998 | 3,312 | 7,780 | 6,433 |
Cost of sales | 2.18 | 2,675 | 2,125 | 5,184 | 4,196 |
Gross profit | 1,323 | 1,187 | 2,596 | 2,237 | |
Operating expenses: | |||||
Selling and marketing expenses | 2.18 | 167 | 153 | 336 | 305 |
Administrative expenses | 2.18 | 215 | 194 | 423 | 385 |
Total operating expenses | 382 | 347 | 759 | 690 | |
Operating profit | 941 | 840 | 1,837 | 1,547 | |
Other income, net | 2.18 | 71 | 76 | 155 | 140 |
Finance cost | 6 | 6 | 13 | 12 | |
Profit before income taxes | 1,006 | 910 | 1,979 | 1,675 | |
Income tax expense | 2.12 | 272 | 255 | 540 | 456 |
Net profit | 734 | 655 | 1,439 | 1,219 | |
Other comprehensive income | |||||
Items that will not be reclassified subsequently to profit or loss: | |||||
Re-measurements of the net defined benefit liability/asset, net | 2 | 1 | (2) | 21 | |
Equity instrument through other comprehensive income, net | 5 | (1) | 5 | (1) | |
7 | – | 3 | 20 | ||
Items that will be reclassified subsequently to profit or loss: | |||||
Fair valuation of investments, net | 7 | (6) | 12 | 1 | |
Fair value changes on derivatives designated as cash flow hedge, net | 1 | 4 | 1 | 3 | |
Foreign currency translation | (7) | 213 | (139) | 254 | |
1 | 211 | (126) | 258 | ||
Total other comprehensive income/(loss), net of tax | 8 | 211 | (123) | 278 | |
Total comprehensive income | 742 | 866 | 1,316 | 1,497 | |
Profit attributable to: | |||||
Owners of the company | 733 | 653 | 1,437 | 1,212 | |
Non-controlling interests | 1 | 2 | 2 | 7 | |
734 | 655 | 1,439 | 1,219 | ||
Total comprehensive income attributable to: | |||||
Owners of the company | 741 | 864 | 1,314 | 1,489 | |
Non-controlling interests | 1 | 2 | 2 | 8 | |
742 | 866 | 1,316 | 1,497 | ||
Earnings per equity share | |||||
Basic ($) | 0.17 | 0.15 | 0.34 | 0.29 | |
Diluted ($) | 0.17 | 0.15 | 0.34 | 0.29 | |
Weighted average equity shares used in computing earnings per equity share | 2.13 | ||||
Basic | 4,210,064,823 | 4,241,908,471 | 4,227,694,034 | 4,241,506,966 | |
Diluted | 4,218,293,582 | 4,248,961,564 | 4,236,051,581 | 4,248,434,533 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Condensed Consolidated Statement of
Changes in Equity
(Dollars in millions except equity share data)
Number of Shares(1) | Share capital | Share premium | Retained earnings | Other reserves (2) | Capital redemption reserve | Cash flow hedge reserve | Other components of equity | Total equity attributable to equity holders of the company | Non-controlling interest | Total equity | |
Balance as at April 1, 2020 | 4,240,753,210 | 332 | 305 | 11,014 | 594 | 17 | (2) | (3,614) | 8,646 | 55 | 8,701 |
Changes in equity for six months ended September 30, 2020 | |||||||||||
Net profit | – | – | – | 1,212 | – | – | – | – | 1,212 | 7 | 1,219 |
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | 21 | 21 | – | 21 |
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | (1) | (1) | – | (1) |
Fair value changes on investments, net* | – | – | – | – | – | – | – | 1 | 1 | – | 1 |
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | 3 | – | 3 | – | 3 |
Foreign currency translation | – | – | – | – | – | – | – | 253 | 253 | 1 | 254 |
Total comprehensive income for the period | – | – | – | 1,212 | – | – | 3 | 274 | 1,489 | 8 | 1,497 |
Shares issued on exercise of employee stock options (Refer note 2.11) | 1,752,826 | – | 1 | – | – | – | – | – | 1 | – | 1 |
Transfer to other reserves | – | – | – | (198) | 198 | – | – | – | – | – | – |
Transfer from other reserves on utilization | – | – | – | 77 | (77) | – | – | – | – | – | – |
Employee stock compensation expense (Refer note 2.11) | – | – | 18 | – | – | – | – | – | 18 | – | 18 |
Income tax benefit arising on exercise of stock options | – | – | 1 | – | – | – | – | – | 1 | – | 1 |
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | (3) | (3) |
Dividends (including dividend distribution tax)# | – | – | – | (532) | – | – | – | – | (532) | - | (532) |
Balance as at September 30, 2020 | 4,242,506,036 | 332 | 325 | 11,573 | 715 | 17 | 1 | (3,340) | 9,623 | 60 | 9,683 |
(Dollars in millions except equity share data)
Number of Shares(1) | Share capital | Share premium | Retained earnings | Other reserves (2) | Capital redemption reserve | Cash flow hedge reserve | Other components of equity | Total equity attributable to equity holders of the company | Non-controlling interest | Total equity | |
Balance as at April 1, 2021 | 4,245,146,114 | 332 | 359 | 12,087 | 908 | 17 | 2 | (3,263) | 10,442 | 60 | 10,502 |
Changes in equity for six months ended September 30, 2021 | |||||||||||
Net profit | – | – | – | 1,437 | – | – | – | – | 1,437 | 2 | 1,439 |
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | (2) | (2) | – | (2) |
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | 5 | 5 | – | 5 |
Fair value changes on investments, net* | – | – | – | – | – | – | – | 12 | 12 | – | 12 |
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | 1 | – | 1 | – | 1 |
Foreign currency translation | – | – | – | – | – | – | – | (139) | (139) | – | (139) |
Total comprehensive income for the period | – | – | – | 1,437 | – | – | 1 | (124) | 1,314 | 2 | 1,316 |
Shares issued on exercise of employee stock options (Refer to note 2.11) | 1,285,064 | – | 1 | – | – | – | – | – | 1 | – | 1 |
Buyback of equity shares (Refer to note 2.19)** | (55,807,337) | (4) | (86) | (1,409) | – | – | – | – | (1,499) | – | (1,499) |
Transaction cost relating to buyback * | – | – | – | (4) | – | – | – | – | (4) | – | (4) |
Amount transferred to capital redemption reserve upon buyback | – | – | – | (4) | – | 4 | – | – | – | – | – |
Transfer from other reserves on utilization | – | – | – | 56 | (56) | – | – | – | – | – | – |
Transfer to other reserves | – | – | – | (202) | 202 | – | – | – | – | – | – |
Employee stock compensation expense (Refer to note 2.11) | – | – | 26 | – | – | – | – | – | 26 | – | 26 |
Income tax benefit arising on exercise of stock options | – | – | 1 | – | – | – | – | – | 1 | – | 1 |
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | (5) | (5) |
Dividends# | – | – | – | (861) | – | – | – | – | (861) | – | (861) |
Balance as at September 30, 2021 | 4,190,623,841 | 328 | 301 | 11,100 | 1,054 | 21 | 3 | (3,387) | 9,420 | 57 | 9,477 |
* | net of tax |
** | including tax on buyback of $256 million |
# | net of treasury shares |
(1) | excludes treasury shares of 14,840,585 as at September 30, 2021, 15,514,732 as at April 1, 2021, 16,905,562 as at September 30, 2020 and 18,239,356 as at April 1, 2020, held by consolidated trust. |
(2) | Represents the Special Economic Zone Re-investment reserve created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Group for acquiring new plant and machinery for the purpose of its business in terms of the provisions of the Sec 10AA(2) of the Income Tax Act, 1961. |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Condensed Consolidated Statement
of Cash Flows
Accounting Policy
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 Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
(Dollars in millions)
Particulars | Note | Six months ended | |
September 30, 2021 | September 30, 2020 | ||
Operating activities: | |||
Net Profit | 1,439 | 1,219 | |
Adjustments to reconcile net profit to net cash provided by operating activities: | |||
Depreciation and amortization | 2.18 | 228 | 215 |
Interest and dividend income | (54) | (35) | |
Finance Cost | 13 | 12 | |
Income tax expense | 2.12 | 540 | 456 |
Effect of exchange rate changes on assets and liabilities, net | 8 | (2) | |
Impairment loss under expected credit loss model | 12 | 21 | |
Stock compensation expense | 2.11 | 28 | 24 |
Other adjustments | 5 | (9) | |
Changes in working capital | |||
Trade receivables and unbilled revenue | (401) | (9) | |
Prepayments and other assets | (40) | 44 | |
Trade payables | 47 | (64) | |
Unearned revenue | 47 | 47 | |
Other liabilities and provisions | 326 | 56 | |
Cash generated from operations | 2,198 | 1,975 | |
Income taxes paid | (484) | (399) | |
Net cash generated by operating activities | 1,714 | 1,576 | |
Investing activities: | |||
Expenditure on property, plant and equipment and intangibles | (139) | (174) | |
Deposits placed with corporation | (69) | (66) | |
Redemption of deposits placed with corporations | 46 | 48 | |
Interest and dividend received | 57 | 34 | |
Payment of contingent consideration pertaining to acquisition of business | (7) | (20) | |
Escrow and other deposits pertaining to Buyback | (57) | – | |
Redemption of escrow and other deposits pertaining to Buyback | 57 | – | |
Payments to acquire Investments | |||
Liquid mutual funds and fixed maturity plan securities | (3,440) | (1,596) | |
Certificate of deposits | (67) | – | |
Quoted debt securities | (109) | (733) | |
Equity and preference securities | (2) | – | |
Proceeds on sale of Investments | |||
Quoted debt securities | 357 | 300 | |
Certificate of deposits | 67 | 120 | |
Liquid mutual funds and fixed maturity plan securities | 3,103 | 1,582 | |
Other Investments | – | 3 | |
Other payments | (3) | – | |
Other receipts | 4 | 3 | |
Net cash (used)/generated in investing activities | (202) | (499) | |
Financing activities: | |||
Payment of Lease Liabilities | 2.8 | (57) | (47) |
Payment of dividends | (861) | (539) | |
Payment of dividend to non controlling interests of subsidiary | – | (3) | |
Shares issued on exercise of employee stock options | 1 | 1 | |
Other payments | (2) | – | |
Other receipts | 16 | – | |
Buy back of equity shares including transaction costs and tax on buyback | 2.19.1 | (1,503) | – |
Net cash used in financing activities | (2,406) | (588) | |
Effect of exchange rate changes on cash and cash equivalents | (54) | 84 | |
Net increase / (decrease) in cash and cash equivalents | (894) | 489 | |
Cash and cash equivalents at the beginning of the period | 2.1 | 3,380 | 2,465 |
Cash and cash equivalents at the end of the period | 2.1 | 2,432 | 3,038 |
Supplementary information: | |||
Restricted cash balance | 2.1 | 71 | 55 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Overview and Notes to the Interim Condensed Consolidated Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation. Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as they ideate, plan and execute on their journey to a digital future.
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 Ltd. and National Stock Exchange of India Limited in India. The company’s American Depositary Shares (ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial statements are authorized for issue by the company's Board of Directors on October 13, 2021.
1.2 Basis of preparation of financial statements
The interim condensed consolidated financial statements have been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board, under the historical cost convention on the accrual basis except for certain financial instruments which have been measured at fair values. Accordingly, these interim condensed consolidated financial statements do not include all the information required for a complete set of financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the company’s Annual Report on Form 20-F for the year ended March 31, 2021. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
As the quarter and year-end 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-end figures reported in this statement.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls. The interim condensed consolidated financial statements comprise the financial statements of the company, its controlled trusts and its subsidiaries. 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. The 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.
1.4 Use of estimates and judgments
The preparation of the financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates and judgements 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 condensed consolidated financial statements.
Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19):
The Group has considered the possible effects that may result from the COVID-19 pandemic in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of the COVID-19 pandemic, the Group has, at the date of approval of these interim condensed consolidated financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of the COVID-19 pandemic on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgements
a. Revenue recognition
The Group’s contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of the contract because
the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment
and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on the latest available information.
Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based
on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and the U.S., though the company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the
provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income
tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable
income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred
income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical
taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management
believes that the group will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered
realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced
( refer to note 2.12).
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS 3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements and intangible assets. These valuations are conducted by external valuation experts. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management.(refer to note 2.10)
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 (Refer to note 2.7).
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 it’s carrying amount. For the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins. (Refer to note 2.9)
f. Leases
As a lessee, the Group determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Group has concluded that no material changes are required to lease period relating to the existing lease contracts (Refer to note 2.8).
g. Allowance for credit losses on receivables and unbilled revenue
The Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The group considered current and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19.
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not yet effective:
Amendments to IAS 16 Property, Plant and Equipment | Proceeds before Intended Use |
Amendments to IAS 37 Onerous Contracts | Cost of Fulfilling a Contract |
Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors | Definition of Accounting Estimates |
Amendments to IAS 1, Presentation of Financial Statements | Disclosure of Accounting Policies |
Amendments to IAS 12, Income taxes | Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
Amendments to IAS 16
On May 14, 2020 International Accounting Standards Board (IASB) has issued amendment to IAS 16 Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) which amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.
Amendments to IAS 37
On May 14, 2020 International Accounting Standards Board (IASB) has issued Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) which specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
Amendments to IAS 8
On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 8 Accounting Policies, Changes in Accounting estimates and Errors which introduced a definition of ‘accounting estimates’ and included amendments to IAS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.
Amendments to IAS 1
On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements which requires the entities to disclose their material accounting policies rather than their significant accounting policies.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
Amendments to IAS 12
On May 7,2021, International Accounting Standards Board (IASB) has issued amendment to IAS 12 Income Taxes which narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
2. Notes to the Interim Condensed Consolidated Financial Statements
2.1 Cash and cash equivalents
Cash and cash equivalents consist of the following:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Cash and bank deposits | 2,020 | 2,745 |
Deposits with financial institutions | 412 | 635 |
Total Cash and cash equivalents | 2,432 | 3,380 |
Cash and cash equivalents as at September 30, 2021 and March 31, 2021 include restricted cash and bank balances of $71 million and $69 million, respectively. The restrictions are primarily on account of bank balances held by irrevocable trusts controlled by the company and bank balances held as margin money deposits against guarantees.
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.
2.2 Investments
The carrying value of investments are as follows:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
(i) Current | ||
Amortized cost | ||
Quoted debt securities | 3 | – |
Fair value through profit or loss | ||
Liquid Mutual funds | 544 | 205 |
Fair Value through Other comprehensive income | ||
Quoted debt securities | 124 | 115 |
Total current investments | 671 | 320 |
(ii) Non-current | ||
Amortized cost | ||
Quoted debt securities | 287 | 294 |
Fair value through Other comprehensive income | ||
Quoted debt securities | 1,028 | 1,293 |
Unquoted equity and preference securities | 30 | 23 |
Fair value through profit or loss | ||
Unquoted Preference securities | 3 | 2 |
Unquoted Compulsorily convertible debentures | 1 | 1 |
Others(1) | 11 | 10 |
Total Non-current investments | 1,360 | 1,623 |
Total investments | 2,031 | 1,943 |
Investment carried at amortized cost | 290 | 294 |
Investments carried at fair value through other comprehensive income | 1,182 | 1,431 |
Investments carried at fair value through profit or loss | 559 | 218 |
(1) | Uncalled capital commitments outstanding as on September 30, 2021 and March 31, 2021 was $4 million and $6 million, respectively. |
Refer note 2.3 for accounting policies on financial instruments.
Method of fair valuation:
(Dollars in millions)
Class of investment | Method | Fair value | |||
As at September 30, 2021 | As at March 31, 2021 | ||||
Liquid mutual fund units | Quoted price | 544 | 205 | ||
Quoted debt securities- carried at amortized cost | Quoted price and market observable inputs | 340 | 347 | ||
Quoted debt securities- carried at Fair value through other comprehensive income | Quoted price and market observable inputs | 1,152 | 1,408 | ||
Unquoted equity and preference securities carried at fair value through other comprehensive income | Discounted cash flows method, Market multiples method, Option pricing model | 30 | 23 | ||
Unquoted equity and preference securities - carried at fair value through profit or loss | Discounted cash flows method, Market multiples method, Option pricing model | 3 | 2 | ||
Unquoted compulsorily convertible debentures - carried at fair value through profit and loss | Discounted cash flows method | 1 | 1 | ||
Others | Discounted cash flows method, Market multiples method, Option pricing model | 11 | 10 | ||
2,081 | 1,996 |
Certain quoted investments are classified as Level 2 in the absence of active market for such investments. |
2.3 Financial instruments
Accounting Policy
2.3.1 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.
2.3.2 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 carried 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. The Group has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
(iii) Financial assets carried at fair value through profit or loss (FVTPL)
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 and financial liability under option arrangements recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate 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 carried at fair value through profit or loss.
This category includes 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 IFRS 9, Financial Instruments. Any derivative that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, is categorized as a financial asset or financial liability carried 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 comprehensive income 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 transaction.
..
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 comprehensive income. 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 comprehensive income
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 condensed consolidated statement of comprehensive income.
2.3.3 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 IFRS 9. 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.
2.3.4 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 table ‘Financial instruments by category’ below 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 approximate fair value due to the short maturity of these instruments.
2.3.5 Impairment
The Group recognizes loss allowances using the expected credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment gain or loss in condensed consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments by categories as at September 30, 2021 were as follows:
(Dollars in millions)
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 2.1) | 2,432 | – | – | – | – | 2,432 | 2,432 |
Investments (Refer to Note 2.2) | |||||||
Liquid mutual fund units | – | – | 544 | – | – | 544 | 544 |
Quoted debt securities | 290 | – | – | – | 1,152 | 1,442 | 1,492(1) |
Unquoted equity and preference securities | – | – | 3 | 30 | – | 33 | 33 |
Unquoted Compulsorily convertible debentures | – | – | 1 | – | – | 1 | 1 |
Unquoted investment others | – | – | 11 | – | – | 11 | 11 |
Trade receivables | 2,711 | – | – | – | – | 2,711 | 2,711 |
Unbilled revenues (Refer note 2.17)(3) | 626 | – | – | – | – | 626 | 626 |
Prepayments and other assets (Refer to Note 2.4) | 552 | – | – | – | – | 552 | 542(2) |
Derivative financial instruments | – | – | 11 | – | 5 | 16 | 16 |
Total | 6,611 | – | 570 | 30 | 1,157 | 8,368 | 8,408 |
Liabilities: | |||||||
Trade payables | 428 | – | – | – | – | 428 | 428 |
Lease liabilities | 693 | – | – | – | 693 | 693 | |
Derivative financial instruments | – | – | 6 | – | – | 6 | 6 |
Financial liability under option arrangements (Refer to note 2.5) | – | – | 94 | – | – | 94 | 94 |
Other liabilities including contingent consideration (Refer to note 2.5) | 1,685 | – | 16 | – | – | 1,701 | 1,701 |
Total | 2,806 | – | 116 | – | – | 2,922 | 2,922 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on quoted debt securities carried at amortized cost of $10 million. |
(3) | Excludes unbilled revenue for contracts where the right to consideration is dependent on completion of contractual milestones |
The carrying value and fair value of financial instruments by categories as at March 31, 2021 were as follows:
(Dollars in millions)
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 to Note 2.1) | 3,380 | – | – | – | - | 3,380 | 3,380 |
Investments (Refer note 2.2) | |||||||
Liquid mutual fund units | – | – | 205 | – | – | 205 | 205 |
Quoted debt securities | 294 | – | – | – | 1,408 | 1,702 | 1,755(1) |
Certificate of deposits | – | – | – | – | – | – | – |
Unquoted Compulsorily convertible debentures | – | – | 1 | – | – | 1 | 1 |
Unquoted equity and preference securities | – | – | 2 | 23 | – | 25 | 25 |
Unquoted investment others | – | – | 10 | – | – | 10 | 10 |
Trade receivables | 2,639 | – | – | – | – | 2,639 | 2,639 |
Unbilled revenues(Refer note 2.17)(3) | 489 | – | – | – | – | 489 | 489 |
Prepayments and other assets (Refer to Note 2.4) | 544 | – | – | – | – | 544 | 531(2) |
Derivative financial instruments | – | – | 23 | – | 3 | 26 | 26 |
Total | 7,346 | – | 241 | 23 | 1,411 | 9,021 | 9,061 |
Liabilities: | |||||||
Trade payables | 362 | – | – | – | – | 362 | 362 |
Lease liabilities | 728 | – | – | – | – | 728 | 728 |
Derivative financial instruments | – | – | 8 | – | – | 8 | 8 |
Financial liability under option arrangements (Refer to note 2.5) | – | – | 95 | – | – | 95 | 95 |
Other liabilities including contingent consideration (Refer to note 2.5) | 1,351 | – | 22 | – | – | 1,373 | 1,373 |
Total | 2,441 | – | 125 | – | – | 2,566 | 2,566 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on quoted debt securities carried at amortized cost of $13 million. |
(3) | Excludes unbilled revenue for contracts where the right to consideration is dependent on completion of contractual milestones |
For trade receivables and trade payables and other assets and payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
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 as at September 30, 2021
(Dollars in millions)
Particulars | As at September 30, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual fund units (Refer to Note 2.2) | 544 | 544 | – | – |
Investments in quoted debt securities (Refer to Note 2.2) | 1,492 | 1,230 | 262 | – |
Investments in unquoted equity and preference securities (Refer to Note 2.2) | 33 | – | – | 33 |
Investments in unquoted compulsorily convertible debentures (Refer to Note 2.2) | 1 | – | – | 1 |
Investments in unquoted investments others (Refer to Note 2.2) | 11 | – | – | 11 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts | 16 | – | 16 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts | 6 | – | 6 | – |
Financial liability under option arrangements | 94 | – | – | 94 |
Liability towards contingent consideration (Refer to note 2.5)* | 16 | – | – | 16 |
* Discount rate pertaining to contingent consideration ranges from 8% to 14.5 %
During the six months ended September 30, 2021, quoted debt securities of $136 million were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and quoted debt securities of $212 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
The following table presents fair value hierarchy of assets and liabilities as at March 31, 2021
(Dollars in millions)
Particulars | As at March 31, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual fund units (Refer to Note 2.2) | 205 | 205 | – | – |
Investments in quoted debt securities (Refer to Note 2.2) | 1,755 | 1,556 | 199 | – |
Investments in unquoted equity and preference securities (Refer to Note 2.2) | 25 | – | – | 25 |
Investments in unquoted investments others (Refer to Note 2.2) | 10 | – | – | 10 |
Investments in unquoted compulsorily convertible debentures (Refer to Note 2.2) | 1 | – | – | 1 |
Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts | 26 | – | 26 | – |
Liabilities | ||||
Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts | 8 | – | 8 | – |
Financial liability under option arrangements (Refer to Note 2.5) | 95 | – | – | 95 |
Liability towards contingent consideration (Refer to Note 2.5)* | 22 | – | – | 22 |
* Discount rate pertaining to contingent consideration ranges from 8% to 14.5%
During the year ended March 31, 2021 quoted debt securities of $14 million were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and quoted debt securities of $161 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, fixed maturity plan securities, certificates of deposit, commercial papers, quoted bonds issued by government and quasi-government organizations and non convertible debentures. The Group invests after considering counterparty risks based on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per its risk management program.
2.4 Prepayments and other assets
Prepayments and other assets consist of the following:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Rental deposits | 8 | 4 |
Security deposits | 1 | 1 |
Loans to employees | 26 | 22 |
Prepaid expenses(1) | 183 | 159 |
Interest accrued and not due | 67 | 85 |
Withholding taxes and others(1) | 281 | 286 |
Advance payments to vendors for supply of goods(1) | 9 | 19 |
Deposit with corporations* | 292 | 276 |
Deferred contract cost(1)(#) | 57 | 9 |
Net investment in sublease of right of use asset | 6 | 5 |
Other non financial assets(1) | 3 | – |
Other financial assets | 53 | 46 |
Total Current prepayment and other assets | 986 | 912 |
Non-current | ||
Loans to employees | 6 | 4 |
Security deposits | 7 | 7 |
Deposit with corporations * | 9 | 6 |
Defined benefit plan assets(1) | 4 | 3 |
Prepaid expenses(1) | 12 | 11 |
Deferred contract cost(1)(#) | 121 | 20 |
Withholding taxes and others(1) | 92 | 96 |
Net investment in sublease of right of use asset | 45 | 48 |
Rental Deposits | 25 | 30 |
Other financial assets | 7 | 10 |
Total Non- current prepayment and other assets | 328 | 235 |
Total prepayment and other assets | 1,314 | 1,147 |
Financial assets in prepayments and other assets | 552 | 544 |
(1) | Non financial assets |
Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from Government of India.
* | Deposit with corporation represents amounts deposited to settle certain employee-related obligations as and when they arise during the normal course of business. |
# | Includes technology assets taken over by the Company from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing arrangement with a third party for these assets for $99 million which has been considered as financial liability. This includes $90 million settled directly by the third party to the customer on behalf of the Company and accordingly considered as non-cash transaction (Refer to note 2.5) |
2.5 Other liabilities
Other liabilities comprise the following:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Accrued compensation to employees | 542 | 550 |
Accrued defined benefit plan liability(1) | – | 1 |
Accrued expenses | 842 | 612 |
Withholding taxes and others (1) | 322 | 297 |
Retention money | 2 | 2 |
Liabilities of controlled trusts | 28 | 27 |
Deferred income - government grants(1) | 2 | – |
Liability towards contingent consideration | 9 | 10 |
Capital creditors | 32 | 51 |
Other non financial liabilities(1) | 1 | 1 |
Other financial liabilities# | 70 | 21 |
Total Current other liabilities | 1,850 | 1,572 |
Non-Current | ||
Liability towards contingent consideration | 7 | 12 |
Accrued compensation to employees | 1 | – |
Accrued expenses | 88 | 78 |
Accrued defined benefit plan liability(1) | 42 | 44 |
Deferred income - government grants(1) | 8 | 8 |
Deferred income (1) | 2 | 2 |
Financial liability under option arrangements | 94 | 95 |
Withholding taxes and others(1) | 50 | 50 |
Other financial liabilities# | 80 | 10 |
Total Non-current other liabilities | 372 | 299 |
Total other liabilities | 2,222 | 1,871 |
Financial liabilities included in other liabilities | 1,795 | 1,468 |
Financial liability towards contingent consideration on an undiscounted basis | 18 | 25 |
(1) | Non financial liabilities |
# | Deferred contract cost in note 2.4 includes technology assets taken over by the Company from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing arrangement with a third party for these assets for $99 million which has been considered as financial liability. This includes $90 million settled directly by the third party to the customer on behalf of the Company and accordingly considered as non-cash transaction. |
Accrued expenses primarily relate to cost of technical sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office maintenance.
2.6 Provisions and other contingencies
Accounting Policy
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.
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Post sales client support
The Group provides its clients with a fixed-period post sales support for 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.
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.
Provisions comprise the following:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Provision for post sales client support and other provisions | 116 | 97 |
116 | 97 |
Provision for post sales client support represents costs associated with providing post sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions is included in cost of sales in the condensed consolidated statement of comprehensive income.
As at September 30, 2021 and March 31, 2021, claims
against the Group, not acknowledged as debts, (excluding demands from income tax authorities- Refer to Note 2.12) amounted to $83 million
(614 crore) and $82 million (
599 crore), respectively.
Legal Proceedings
The Group is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Group’s management reasonably expects based on currently available information that these legal actions, when ultimately concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.7 Property, plant and equipment
Accounting Policy
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by management. The group depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
Building | 22-25 years |
Plant and machinery(1) | 5 years |
Computer equipment | 3-5 years |
Furniture and fixtures | 5 years |
Vehicles | 5 years |
Leasehold improvements | Lower of useful life of the asset or lease term |
(1) | includes solar plant with a useful life of 20 years |
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 and the cost of assets not ready 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 the statement of comprehensive income 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 net profit in the consolidated statement of comprehensive income.
Impairment
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 Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in net profit in the statement of comprehensive income 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 net profit in the statement of comprehensive income 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 depreciation) had no impairment loss been recognized for the asset in prior years.
Following are the changes in the carrying value of property, plant and equipment for three months ended September 30, 2021:
(Dollars in millions)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at July 1, 2021 | 188 | 1,446 | 675 | 1,068 | 416 | 6 | 3,799 |
Additions | 2 | 41 | 18 | 42 | 10 | – | 113 |
Deletions* | – | – | – | (55) | (1) | – | (56) |
Translation difference | – | 1 | – | – | – | – | 1 |
Gross carrying value as at September 30, 2021 | 190 | 1,488 | 693 | 1,055 | 425 | 6 | 3,857 |
Accumulated depreciation as at July 1, 2021 | – | (509) | (497) | (786) | (301) | (5) | (2,098) |
Depreciation | – | (14) | (13) | (36) | (12) | – | (75) |
Accumulated depreciation on deletions* | – | – | – | 55 | 1 | – | 56 |
Translation difference | – | – | – | – | – | (2) | (2) |
Accumulated depreciation as at September 30, 2021 | – | (523) | (510) | (767) | (312) | (5) | (2,117) |
Capital work-in progress as at September 30, 2021 | 69 | ||||||
Carrying value as at September 30, 2021 | 190 | 965 | 183 | 288 | 113 | 1 | 1,809 |
Capital work-in progress as at July 1, 2021 | 182 | ||||||
Carrying value as at July 1, 2021 | 188 | 937 | 178 | 282 | 115 | 1 | 1,883 |
Following are the changes in the carrying value of property, plant and equipment for three months ended September 30, 2020:
(Dollars in millions)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at July 1, 2020 | 183 | 1,332 | 626 | 930 | 384 | 6 | 3,461 |
Additions | – | 2 | 8 | 42 | 8 | – | 60 |
Deletions | – | – | (1) | (5) | (1) | – | (7) |
Translation difference | 5 | 33 | 15 | 22 | 11 | – | 86 |
Gross carrying value as at September 30, 2020 | 188 | 1,367 | 648 | 989 | 402 | 6 | 3,600 |
Accumulated depreciation as at July 1, 2020 | – | (448) | (434) | (674) | (254) | (4) | (1,814) |
Depreciation | – | (13) | (16) | (36) | (13) | – | (78) |
Accumulated depreciation on deletions | – | – | 1 | 5 | 1 | – | 7 |
Translation difference | – | (11) | (10) | (15) | (8) | – | (44) |
Accumulated depreciation as at September 30, 2020 | – | (472) | (459) | (720) | (274) | (4) | (1,929) |
Capital work-in progress as at September 30, 2020 | 198 | ||||||
Carrying value as at September 30, 2020 | 188 | 895 | 189 | 269 | 128 | 2 | 1,869 |
Capital work-in progress as at July 1, 2020 | 178 | ||||||
Carrying value as at July 1, 2020 | 183 | 884 | 192 | 256 | 130 | 2 | 1,825 |
Following are the changes in the carrying value of property, plant and equipment for six months ended September 30, 2021:
(Dollars in millions)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at April 1, 2021 | 191 | 1,445 | 679 | 1,045 | 416 | 6 | 3,782 |
Additions | 2 | 62 | 25 | 87 | 16 | - | 192 |
Additions- Business Combinations (Refer Note 2.10) | - | - | - | - | - | - | - |
Deletions* | - | - | (1) | (62) | (2) | - | (65) |
Translation difference | (3) | (19) | (10) | (15) | (5) | - | (52) |
Gross carrying value as at September 30, 2021 | 190 | 1,488 | 693 | 1,055 | 425 | 6 | 3,857 |
Accumulated depreciation as at April 1, 2021 | - | (503) | (492) | (771) | (294) | (4) | (2,064) |
Depreciation | - | (28) | (27) | (69) | (24) | - | (148) |
Accumulated depreciation on deletions* | - | - | 1 | 62 | 2 | - | 65 |
Translation difference | - | 8 | 8 | 11 | 4 | (1) | 30 |
Accumulated depreciation as at September 30, 2021 | - | (523) | (510) | (767) | (312) | (5) | (2,117) |
Capital work-in progress as at September 30, 2021 | 69 | ||||||
Carrying value as at September 30, 2021 | 190 | 965 | 183 | 288 | 113 | 1 | 1,809 |
Capital work-in progress as at April 1, 2021 | 145 | ||||||
Carrying value as at April 1, 2021 | 191 | 942 | 187 | 274 | 122 | 2 | 1,863 |
* | During each of the three months and six months ended September 30, 2021, certain assets which were old and not in use having gross book value of $35 million (net book value: Nil) were retired. |
Following are the changes in the carrying value of property, plant and equipment for six months ended September 30, 2020 :
(Dollars in millions)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at April 1, 2020 | 174 | 1,324 | 621 | 882 | 381 | 6 | 3,388 |
Additions | 9 | 7 | 12 | 88 | 11 | – | 127 |
Deletions | – | – | (2) | (6) | (2) | – | (10) |
Translation difference | 5 | 36 | 17 | 25 | 12 | – | 95 |
Gross carrying value as at September 30, 2020 | 188 | 1,367 | 648 | 989 | 402 | 6 | 3,600 |
Accumulated depreciation as at April 1, 2020 | – | (434) | (418) | (646) | (243) | (4) | (1,745) |
Depreciation | – | (26) | (32) | (63) | (24) | – | (145) |
Accumulated depreciation on deletions | – | – | 2 | 6 | 2 | – | 10 |
Translation difference | – | (12) | (11) | (17) | (9) | – | (49) |
Accumulated depreciation as at September 30, 2020 | – | (472) | (459) | (720) | (274) | (4) | (1,929) |
Capital work-in progress as at September 30, 2020 | 198 | ||||||
Carrying value as at September 30, 2020 | 188 | 895 | 189 | 269 | 128 | 2 | 1,869 |
Capital work-in progress as at April 1, 2020 | 167 | ||||||
Carrying value as at April 1, 2020 | 174 | 890 | 203 | 236 | 138 | 2 | 1,810 |
The aggregate depreciation expense is included in cost of sales in the consolidated statement of comprehensive income.
The contractual commitments for capital expenditure primarily comprise of commitments for infrastructure facilities and computer equipments aggregating to $133 million and $100 million as at September 30, 2021 and March 31, 2021, respectively.
2.8 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist of leases for land and buildings. The group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether: (1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. .
Right of use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the group changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2021
(Dollars in millions)
Particulars | Category of ROU asset | ||||
Land | Buildings | Vehicle | Computer | Total | |
Balance as of July 1, 2021 | 85 | 499 | 3 | 26 | 613 |
Additions* | – | 28 | – | 7 | 35 |
Deletions | – | – | – | (2) | (2) |
Depreciation | (22) | (1) | (2) | (25) | |
Translation difference | – | (1) | – | – | (1) |
Balance as of September 30, 2021 | 85 | 504 | 2 | 29 | 620 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2020
(Dollars in millions)
Particulars | Category of ROU asset | ||||
Land | Buildings | Vehicle | Computer | Total | |
Balance as of July 1, 2020 | 83 | 435 | 3 | 8 | 529 |
Additions | 1 | 51 | – | 1 | 53 |
Deletions | – | (4) | – | – | (4) |
Depreciation | – | (20) | – | (1) | (21) |
Translation difference | 2 | 10 | – | – | 12 |
Balance as of September 30, 2020 | 86 | 472 | 3 | 8 | 569 |
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2021
(Dollars in millions)
Particulars | Category of ROU asset | ||||
Land | Buildings | Vehicle | Computer | Total | |
Balance as of April 1, 2021 | 86 | 545 | 3 | 22 | 656 |
Additions* | – | 7 | – | 13 | 20 |
Deletions | – | – | – | (2) | (2) |
Depreciation | – | (43) | (1) | (4) | (48) |
Translation difference | (1) | (5) | – | – | (6) |
Balance as of September 30, 2021 | 85 | 504 | 2 | 29 | 620 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2020
(Dollars in millions)
Particulars | Category of ROU asset | ||||
Land | Buildings | Vehicle | Computer | Total | |
Balance as of April 1, 2020 | 83 | 461 | 2 | 5 | 551 |
Additions* | 1 | 49 | 1 | 4 | 55 |
Deletions | – | (12) | – | – | (12) |
Depreciation | – | (40) | – | (1) | (41) |
Translation difference | 2 | 14 | – | – | 16 |
Balance as of September 30, 2020 | 86 | 472 | 3 | 8 | 569 |
The aggregate depreciation expense on ROU assets is included in cost of sales in the condensed consolidated statement of comprehensive income.
The following is the break-up of current and non-current lease liabilities as of September 30, 2021 and March 31, 2021
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current lease liabilities | 106 | 101 |
Non-current lease liabilities | 587 | 627 |
Total | 693 | 728 |
2.9 Goodwill and intangible assets
2.9.1 Goodwill
Accounting Policy
Goodwill represents purchase consideration 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 purchase consideration, the fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition. 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 Comprehensive Income and is not reversed in the subsequent period.
Following is a summary of changes in the carrying amount of goodwill:
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Carrying value at the beginning | 832 | 699 |
Goodwill on acquisition | – | 102 |
Translation differences | (7) | 31 |
Carrying value at the end | 825 | 832 |
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.
2.9.2 Intangibles
Accounting policy
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.
Impairment
Intangible assets 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 net profit in the statement of comprehensive income 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 net profit in the statement of comprehensive income 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) had no impairment loss been recognized for the asset in prior years
2.10 Business combination
Accounting Policy
Business combinations have been accounted for using the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in 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 purchase price 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. Contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognized in the Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity of subsidiaries.
Business combinations between entities under common control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and liabilities assumed.
The payments related to options issued by the Group over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognised.
Transaction costs that the Group incurs in connection with a business combination such as finders’ fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.
2.11 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards is recognized as an expense in net profit in the consolidated statement of comprehensive 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 premium.
Infosys Expanded Stock Ownership Program 2019 (the 2019 Plan)
On June 22, 2019 pursuant to approval by the shareholders in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000 equity shares. To implement the 2019 Plan, upto 45,000,000 equity shares may be issued by way of secondary acquisition of shares by Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015 Plan) :
On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was 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 24,038,883 equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as at March 31, 2016). The Company expects to grant the instruments under the 2015 Plan over the period of 4 to 7 years. The plan numbers mentioned above would further be adjusted for the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee (NARC). 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.
Controlled trust holds 14,840,585 and 15,514,732 shares as at September 30, 2021 and March 31, 2021, respectively under the 2015 plan. Out of these shares, 2,00,000 equity shares each have been earmarked for welfare activities of the employees as at September 30, 2021 and March 31, 2021.
The following is the summary of grants during three months and six months ended September 30, 2021 and September 30, 2020
Particulars | 2019 Plan | 2015 Plan | ||
Six months ended September 30, | Six months ended September 30, | |||
2021 | 2020 | 2021 | 2020 | |
Equity settled RSU | ||||
KMPs | 73,962 | 207,808 | 101,697 | 204,097 |
Employees other than KMP | – | – | – | 24,600 |
Total grants | 73,962 | 207,808 | 101,697 | 228,697 |
Note: No grants were made during the three months ended September 30, 2021 and September 30, 2020
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
In accordance with the employee agreement which has
been approved by the shareholders, the CEO is eligible to receive an annual grant of RSUs of fair value 3.25 crore (approximately
$0.50 million) which will vest overtime in three equal annual installments upon the completion of each year of service from the respective
grant date. Though the annual time based grants for the remaining employment term ending on March 31, 2023 have not been granted as of
September 30, 2021, since the service commencement date precedes the grant date, the company has recorded employment stock compensation
expense in accordance with IFRS 2, Share based payments.
The Board, on April 14, 2021, based on the recommendations
of the nomination and remuneration committee, in accordance with the terms of his employment agreement, approved the grant of performance-based
RSUs of fair value of 13 crore for fiscal 2022 under the 2015 Plan. These RSUs will vest in line with the employment agreement
based on achievement of certain performance targets. Accordingly, 96,150 performance based RSU’s were granted effective May 2, 2021.
Under the 2019 plan:
The Board, on April 14, 2021, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2022 under
the 2019 Plan. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly,
73,962 performance based RSU’s were granted effective May 2, 2021.
Other KMP
Under the 2015 plan:
On April 14, 2021, based on the recommendations of the Nomination and Remuneration Committee, in accordance with employment agreement, the Board, approved performance-based grant of 5,547 RSUs to other KMP under the 2015 Plan. The grants were made effective May 2, 2021. The performance based RSUs will vest over three years based on certain performance targets.
Break-up of employee stock compensation expense: -
(Dollars in millions)
Particulars | Three months ended September 30, 2021 | Three months ended September 30, 2020 | Six months ended September 30, 2021 | Six months ended September 30, 2020 |
Granted to: | ||||
KMP | 3 | 3 | 5 | 5 |
Employees other than KMP | 10 | 9 | 23 | 19 |
Total (1) | 13 | 12 | 28 | 24 |
(1) Cash settled stock compensation expense included in the above | 1 | 3 | 2 | 6 |
The fair value of the awards are estimated using the Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility during the expected term of the options 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 options. Expected volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated on the date of grant using the following assumptions:
Particulars | For options granted in | |||
Fiscal 2022- Equity Shares-RSU |
Fiscal 2022- ADS-RSU |
Fiscal 2021- Equity Shares-RSU |
Fiscal 2021- ADS-RSU | |
Weighted average share price (![]() |
1,352 | 18.2 | 1,253 | 18.46 |
Exercise price (![]() |
5.00 | 0.07 | 5.00 | 0.07 |
Expected volatility (%) | 29-35 | 30-37 | 30-35 | 30-36 |
Expected life of the option (years) | 1-4 | 1-4 | 1-4 | 1-4 |
Expected dividends (%) | 2-3 | 2-3 | 2-3 | 2-3 |
Risk-free interest rate (%) | 4-5 | 0.1-0.6 | 4-5 | 0.1-0.3 |
Weighted average fair value as on grant date (![]() |
1,189 | 16.8 | 1,124 | 16.19 |
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 behavior of the employee who receives the RSU/ESOP.
2.12 Income taxes
Accounting policy
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the consolidated statement of comprehensive income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity or 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 equity.
Income tax expense in the consolidated statement of comprehensive income comprises:
(Dollars in millions)
Particulars | Three months ended September 30, 2021 | Three months ended September 30, 2020 | Six months ended September 30, 2021 | Six months ended September 30, 2020 |
Current taxes | ||||
Domestic taxes | 190 | 184 | 385 | 332 |
Foreign taxes | 78 | 54 | 145 | 80 |
268 | 238 | 530 | 412 | |
Deferred taxes | ||||
Domestic taxes | 14 | 23 | 30 | 48 |
Foreign taxes | (10) | (6) | (20) | (4) |
4 | 17 | 10 | 44 | |
Income tax expense | 272 | 255 | 540 | 456 |
Income tax expense for the three months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of $ 2 million and $ 14 million, respectively. Income tax expense for the six months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of $ 4 million and $31 million respectively. These reversals pertain to prior periods primarily on account of adjudication of certain disputed matters in favor of the Company and upon filing of tax return across various jurisdictions.
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:
(Dollars in millions)
Particulars | Three months ended September 30, 2021 | Three months ended September 30, 2020 | Six months ended September 30, 2021 | Six months ended September 30, 2020 |
Profit before income taxes | 1,006 | 910 | 1,979 | 1,675 |
Enacted tax rates in India | 34.94% | 34.94% | 34.94% | 34.94% |
Computed expected tax expense | 352 | 317 | 692 | 584 |
Tax effect due to non-taxable income for Indian tax purposes | (113) | (84) | (203) | (156) |
Overseas taxes | 32 | 24 | 59 | 46 |
Tax provision (reversals) | (2) | (14) | (4) | (31) |
Effect of differential tax rates | (6) | (6) | (10) | (10) |
Effect of exempt non operating income | (1) | (1) | (4) | (2) |
Effect of unrecognized deferred tax assets | - | 2 | - | 4 |
Effect of non-deductible expenses | 4 | 4 | 9 | 9 |
Impact of change in tax rate | (6) | - | (6) | - |
Others | 12 | 13 | 7 | 12 |
Income tax expense | 272 | 255 | 540 | 456 |
The applicable Indian corporate statutory tax rate for the three months ended and six months ended September 30, 2021 and September 30, 2020 is 34.94% each.
Deferred income tax for the three months ended and six months ended September 30, 2021 and September 30, 2020 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA) with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at September 30, 2021, claims against the Group
not acknowledged as debts from the Income tax authorities amounted to $508 million (3,771 crore).
As at March 31, 2021, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to $473 million (3,462 crore).
Amount paid to statutory authorities against the tax
claims amounted to $684 million (5,074 crore) and $834 million (
6,095 crore) as at September 30, 2021 and March 31, 2021
respectively.
The claims against the group primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding of taxes.
These matters are pending before various Appellate Authorities and the management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial position and results of operations.
2.13 Basic and diluted shares used in computing earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group 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 Group 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.
2.14 Related party transactions
Refer Note 2.20 "Related party transactions" in the Company’s 2021 Annual Report on Form 20-F for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During six months ended September 30, 2021, the following are the changes in the subsidiaries:
- | Simplus North America Inc., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective April 27, 2021. |
- | Simplus Europe, Ltd., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective July 20, 2021. |
- | Stater GmbH, a wholly-owned subsidiary of Stater N.V., was incorporated on August 4, 2021. |
- | Infosys Green Forum, a wholly-owned subsidiary of Infosys Limited, was incorporated on August 31, 2021. |
- | Infosys Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary of Infosys Consulting Holding AG, has been liquidated effective September 01, 2021. |
- | Sqware Peg Digital Pty Ltd, a wholly-owned subsidiary of Simplus Australia Pty Ltd, has been liquidated effective September 02, 2021. |
- | Beringer Commerce Inc. renamed as Blue Acorn iCi Inc. |
Transactions with key management personnel
The table below describes the compensation to key management personnel which comprise directors and executive officers:
(Dollars in millions)
Particulars | Three months ended September 30, 2021 | Three months ended September 30, 2020 | Six months ended September 30, 2021 | Six months ended September 30, 2020 |
Salaries and other employee benefits to whole-time directors and executive officers(1)(2) | 5 | 5 | 10 | 9 |
Commission and other benefits to non-executive/ independent directors | – | – | 1 | – |
Total | 5 | 5 | 11 | 9 |
(1) | Total employee stock compensation expense for the three months ended September 30, 2021 and September 30, 2020 includes a charge of $ 3 million and $3 million respectively, towards key managerial personnel. For the six months ended September 30, 2021 and September 30, 2020, includes a charge of $5 million and $5 million respectively, towards key managerial personnel. (Refer note 2.11) |
(2) | Does not include post-employment benefit based on actuarial valuation as this is done for the Company as a whole. |
2.15 Segment Reporting
IFRS 8 Operating Segments 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. 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. Accordingly, information has been presented along business 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 accounting policies.
Business segments of the Group are primarily enterprises in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services.
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 Infosys Public Services and revenue generated from customers located in India, Japan and China and other enterprises in public service. 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 efforts of the segment. Certain expenses such as depreciation and amortization, 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. 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.
Business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given in note 2.16 Revenue from operations
2.15.1 Business Segments
Three months ended September 30, 2021 and September 30, 2020
(Dollars in millions)
Particulars | Financial Services(1) | Retail(2) | Communication(3) | Energy, Utilities, resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | All Other Segments (5) | Total |
Revenues | 1,292 | 585 | 495 | 473 | 435 | 339 | 284 | 95 | 3,998 |
1,061 | 492 | 417 | 408 | 302 | 303 | 225 | 104 | 3,312 | |
Identifiable operating expenses | 722 | 284 | 299 | 252 | 255 | 204 | 162 | 77 | 2,255 |
546 | 234 | 246 | 209 | 155 | 170 | 112 | 69 | 1,741 | |
Allocated expenses | 213 | 98 | 86 | 83 | 82 | 52 | 43 | 29 | 686 |
196 | 83 | 81 | 88 | 58 | 43 | 38 | 29 | 616 | |
Segment operating income | 357 | 203 | 110 | 138 | 98 | 83 | 79 | (11) | 1,057 |
319 | 175 | 90 | 111 | 89 | 90 | 75 | 6 | 955 | |
Unallocable expenses | 116 | ||||||||
115 | |||||||||
Operating profit | 941 | ||||||||
840 | |||||||||
Other income, net (Refer Note 2.18) | 71 | ||||||||
76 | |||||||||
Finance cost | 6 | ||||||||
6 | |||||||||
Profit before Income taxes | 1,006 | ||||||||
910 | |||||||||
Income tax expense | 272 | ||||||||
255 | |||||||||
Net profit | 734 | ||||||||
655 | |||||||||
Depreciation and amortization | 116 | ||||||||
115 | |||||||||
Non-cash expenses other than depreciation and amortization | – | ||||||||
1 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | All Other segments include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
Six months ended September 30, 2021 and September 30, 2020
(Dollars in millions)
Particulars | Financial Services (1) | Retail(2) | Communication (3) | Energy, Utilities, resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | All Other Segments (5) | Total |
Revenues | 2,542 | 1,150 | 957 | 930 | 801 | 653 | 540 | 207 | 7,780 |
2,044 | 940 | 834 | 807 | 600 | 575 | 433 | 200 | 6,433 | |
Identifiable operating expenses | 1,442 | 555 | 581 | 490 | 463 | 391 | 300 | 142 | 4,364 |
1,061 | 444 | 497 | 414 | 325 | 319 | 217 | 130 | 3,407 | |
Allocated expenses | 423 | 192 | 170 | 164 | 155 | 101 | 84 | 62 | 1,351 |
401 | 182 | 166 | 170 | 120 | 87 | 77 | 61 | 1,264 | |
Segment operating income | 677 | 403 | 206 | 276 | 183 | 161 | 156 | 3 | 2,065 |
582 | 314 | 171 | 223 | 155 | 169 | 139 | 9 | 1,762 | |
Unallocable expenses | 228 | ||||||||
215 | |||||||||
Operating profit | 1,837 | ||||||||
1,547 | |||||||||
Other income, net (Refer Note 2.18) | 155 | ||||||||
140 | |||||||||
Finance cost | 13 | ||||||||
12 | |||||||||
Profit before Income taxes | 1,979 | ||||||||
1,675 | |||||||||
Income tax expense | 540 | ||||||||
456 | |||||||||
Net profit | 1,439 | ||||||||
1,219 | |||||||||
Depreciation and amortization | 228 | ||||||||
215 | |||||||||
Non-cash expenses other than depreciation and amortization | – | ||||||||
2 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | All Other segments include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
2.15.2 Significant clients
No client individually accounted for more than 10% of the revenues for the three months and six months ended September 30, 2021 and September 30, 2020, respectively.
2.16 Revenue from Operations
Accounting Policy:
The Group derives revenues primarily from IT services comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation, licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-timeframe basis.
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved by the parties, in writing, to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services.
The Group’s contracts may include variable consideration including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The billing schedules agreed with customers include periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements with customers generally meet the criteria for considering software development and related services as distinct performance obligations. For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS).When implementation services are provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e., costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover them.
Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover the carrying amount of the capitalized costs
The Group presents revenues net of indirect taxes in its condensed consolidated statement of comprehensive income.
Revenues for the three months ended and six months ended September 30, 2021 and September 30, 2020 is as follows
(Dollars in millions)
Particulars | Three months ended September 30, 2021 | Three months ended September 30, 2020 | Six months ended September 30, 2021 | Six months ended September 30, 2020 |
Revenue from software services | 3,756 | 3,063 | 7,261 | 5,967 |
Revenue from products and platforms | 242 | 249 | 519 | 466 |
Total revenue from operations | 3,998 | 3,312 | 7,780 | 6,433 |
The Group has evaluated the impact of the COVID–19 pandemic on (i) the possibility of constraints in our ability to render services which may require revision of estimations of costs to complete the contract because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service level agreements, and (iv) termination or deferment of contracts by customers. The Group has concluded that the impact of the COVID–19 pandemic is not significant based on these estimates. Due to the nature of the COVID-19 pandemic, the Group will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.
Disaggregated revenue information
The table below presents disaggregated revenues from contracts with customers by geography and offerings for each of our business segments. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by industry, market and other economic factors.
Three months ended September 30, 2021 and September 30, 2020
(Dollars in millions)
Particulars | Financial Services(1) | Retail(2) | Communication(3) | Energy, Utilities, resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | Others(5) | Total |
Revenues by Geography* | |||||||||
North America | 802 | 397 | 271 | 244 | 212 | 316 | 203 | 31 | 2,476 |
613 | 324 | 218 | 230 | 158 | 286 | 154 | 27 | 2,010 | |
Europe | 227 | 155 | 117 | 188 | 213 | 7 | 75 | 7 | 989 |
219 | 139 | 94 | 141 | 135 | 6 | 66 | 7 | 807 | |
India | 63 | 3 | 14 | 5 | 3 | 14 | 1 | 1 | 104 |
53 | 2 | 10 | 1 | 2 | 9 | 1 | 22 | 100 | |
Rest of the world | 200 | 30 | 93 | 36 | 7 | 2 | 5 | 56 | 429 |
176 | 27 | 95 | 36 | 7 | 2 | 4 | 48 | 395 | |
Total | 1,292 | 585 | 495 | 473 | 435 | 339 | 284 | 95 | 3,998 |
1,061 | 492 | 417 | 408 | 302 | 303 | 225 | 104 | 3,312 | |
Revenue by offerings | |||||||||
Digital | 673 | 357 | 300 | 274 | 250 | 196 | 161 | 32 | 2,243 |
501 | 254 | 204 | 194 | 135 | 150 | 93 | 37 | 1,568 | |
Core | 619 | 228 | 195 | 199 | 185 | 143 | 123 | 63 | 1,755 |
560 | 238 | 213 | 214 | 167 | 153 | 132 | 67 | 1,744 | |
Total | 1,292 | 585 | 495 | 473 | 435 | 339 | 284 | 95 | 3,998 |
1,061 | 492 | 417 | 408 | 302 | 303 | 225 | 104 | 3,312 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services | |
* | Geographical revenues is based on the domicile of customer |
Six months ended September 30, 2021 and September 30, 2020
(Dollars in millions)
Particulars | Financial Services(1) | Retail(2) | Communication(3) | Energy, Utilities, resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | Others(5) | Total |
Revenues by Geography* | |||||||||
North America | 1,579 | 774 | 512 | 478 | 407 | 608 | 389 | 62 | 4,809 |
1,190 | 612 | 457 | 456 | 330 | 543 | 292 | 49 | 3,929 | |
Europe | 450 | 311 | 229 | 369 | 374 | 15 | 141 | 14 | 1,903 |
420 | 273 | 178 | 277 | 251 | 9 | 131 | 14 | 1,553 | |
India | 118 | 7 | 29 | 9 | 4 | 26 | 2 | 20 | 215 |
102 | 3 | 17 | 1 | 4 | 19 | 2 | 43 | 191 | |
Rest of the world | 395 | 58 | 187 | 74 | 16 | 4 | 8 | 111 | 853 |
332 | 52 | 182 | 73 | 15 | 4 | 8 | 94 | 760 | |
Total | 2,542 | 1,150 | 957 | 930 | 801 | 653 | 540 | 207 | 7,780 |
2,044 | 940 | 834 | 807 | 600 | 575 | 433 | 200 | 6,433 | |
Revenue by offerings | |||||||||
Digital | 1,326 | 681 | 562 | 525 | 445 | 369 | 298 | 77 | 4,283 |
953 | 468 | 401 | 368 | 270 | 264 | 168 | 65 | 2,957 | |
Core | 1,216 | 469 | 395 | 405 | 356 | 284 | 242 | 130 | 3,497 |
1,091 | 472 | 433 | 439 | 330 | 311 | 265 | 135 | 3,476 | |
Total | 2,542 | 1,150 | 957 | 930 | 801 | 653 | 540 | 207 | 7,780 |
2,044 | 940 | 834 | 807 | 600 | 575 | 433 | 200 | 6,433 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services | |
* | Geographical revenues is based on the domicile of customer |
Digital Services
Digital Services comprise of service and solution offerings of the Group that enable our clients to transform their businesses. These include offerings that enhance customer experience, leverage AI-based analytics and big data, engineer digital products and IoT, modernize legacy technology systems, migrate to cloud applications and implement advanced cyber security systems.
Core Services
Core Services comprise traditional offerings of the Group that have scaled and industrialized over a number of years. These primarily include application management services, proprietary application development services, independent validation solutions, product engineering and management, infrastructure management services, traditional enterprise application implementation, support and integration services.
Products & platforms
The Group also derives revenues from the sale of products and platforms including Finacle – core banking solution, Edge Suite of products, Infosys Nia - Artificial Intelligence (AI) platform which applies next-generation AI and machine learning, Panaya platform, Skava platform, Stater digital platform and Infosys McCamish- insurance platform.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing to the customers. Therefore, unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned revenue.
Trade receivable and unbilled revenues are presented net of impairment in the consolidated financial position.
2.17 Unbilled revenue
(Dollars in millions)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Unbilled financial asset (1) | 626 | 489 |
Unbilled non financial asset (2) | 744 | 622 |
Total | 1,370 | 1,111 |
(1) | Right to consideration is unconditional and is due only after a passage of time. |
(2) | Right to consideration is dependent on completion of contractual milestones. |
2.18 Break-up of expenses and other income, net
Accounting Policy
2.18.1 Gratuity and Pensions
The Group provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 operates defined benefit pension plan in certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide for periodic payouts after retirement or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
Liabilities with regard to these defined benefit plans are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk.
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 condensed consolidated statement of comprehensive income.
2.18.2 Superannuation
Certain employees of Infosys, Infosys BPM 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.
2.18.3 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 of the contributions 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 of India. 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.
2.18.4 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.
The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
2.18.5 Other income, net
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 foreign currency assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.
2.18.6 Foreign Currency
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 recognized in the Consolidated Statement of Comprehensive Income and reported within exchange gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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. The related revenue and expense are recognised using the same exchange rate.
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 Comprehensive Income. 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.
Other Comprehensive Income, net of taxes includes translation differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments and measured at fair value through other comprehensive income (FVOCI).
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.
2.18.7 Government grants
The Group recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income 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 the statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
2.18.8 Operating Profits
Operating profit of the Group is computed considering the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
The table below provides details of break-up of expenses:
Cost of sales
(Dollars in millions)
Particulars | Three months ended | Six months ended | ||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |
Employee benefit costs | 1,905 | 1,603 | 3,754 | 3,194 |
Depreciation and amortization | 116 | 115 | 228 | 215 |
Travelling costs | 19 | 17 | 35 | 30 |
Cost of technical sub-contractors | 412 | 220 | 745 | 435 |
Cost of software packages for own use | 47 | 40 | 92 | 78 |
Third party items bought for service delivery to clients | 139 | 108 | 267 | 187 |
Short term leases | 1 | 1 | 2 | 2 |
Consultancy and professional charges | 4 | 1 | 7 | 3 |
Communication costs | 10 | 11 | 20 | 23 |
Repairs and maintenance | 12 | 18 | 25 | 36 |
Provision for post-sales client support | 5 | (1) | 5 | – |
Others | 5 | (8) | 4 | (7) |
Total | 2,675 | 2,125 | 5,184 | 4,196 |
Selling and marketing expenses
(Dollars in millions)
Particulars | Three months ended | Six months ended | ||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |
Employee benefit costs | 145 | 134 | 288 | 271 |
Travelling costs | 2 | 1 | 2 | 1 |
Branding and marketing | 13 | 13 | 29 | 20 |
Consultancy and professional charges | 5 | 3 | 11 | 5 |
Communication costs | – | – | 1 | 1 |
Others | 2 | 2 | 5 | 7 |
Total | 167 | 153 | 336 | 305 |
Administrative expenses
(Dollars in millions)
Particulars | Three months ended | Six months ended | ||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |
Employee benefit costs | 76 | 68 | 149 | 134 |
Consultancy and professional charges | 52 | 34 | 96 | 66 |
Repairs and maintenance | 27 | 29 | 56 | 60 |
Power and fuel | 4 | 5 | 9 | 9 |
Communication costs | 10 | 10 | 19 | 20 |
Travelling costs | 1 | 2 | 3 | 4 |
Rates and taxes | 9 | 8 | 17 | 15 |
Short-term leases | 1 | 1 | 2 | 3 |
Insurance charges | 5 | 5 | 10 | 9 |
Commission to non-whole time directors | – | – | 1 | – |
Impairment loss recognized/(reversed) under expected credit loss model | 6 | 8 | 12 | 22 |
Contributions towards Corporate Social Responsibility | 16 | 19 | 35 | 35 |
Others | 8 | 5 | 14 | 8 |
Total | 215 | 194 | 423 | 385 |
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company intends to transfer its CSR capital assets created prior to January 2021 to a controlled subsidiary Infosys Green Forum established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
Other income, net
(Dollars in millions)
Particulars | Three months ended | Six months ended | ||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |
Interest income on financial assets carried at amortized cost | 33 | 42 | 77 | 81 |
Interest income on financial assets carried at fair value through other comprehensive income | 21 | 13 | 42 | 25 |
Dividend income on investments carried at fair value through profit or loss | – | 1 | – | 1 |
Gain/(loss) on investments carried at fair value through profit or loss | 6 | 1 | 9 | 5 |
Gain/(loss) on investments carried at fair value through other comprehensive income | – | 4 | – | 7 |
Exchange gains / (losses) on forward and options contracts | 18 | 41 | 8 | 47 |
Exchange gains / (losses) on translation of foreign currency assets and liabilities | (11) | (35) | 6 | (39) |
Others | 4 | 9 | 13 | 13 |
Total | 71 | 76 | 155 | 140 |
2.19 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.
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.
Description of reserves
Retained earnings
Retained earnings represent the amount of accumulated earnings of the Group.
Share premium
The amount received in excess of the par value has been classified as share premium. Additionally, share-based compensation recognized in net profit in the condensed consolidated statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has been created out of the profit of the eligible SEZ unit 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 terms of the provisions of the Sec 10AA (2) of the Income Tax Act, 1961.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from general reserve.
Other components of equity
Other components of equity include currency translation, re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive income, changes on fair valuation of investments, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
2.19.1 Capital Allocation Policy
Effective fiscal 2020, the company expects to return approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi annual dividends and/or share buyback and/or special dividends, 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 and buyback include applicable taxes.
Update on buyback announced in April 2021:
In line with the capital allocation policy, the Board,
at its meeting held on April 14, 2021, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,200 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding
1,750 per share (Maximum
Buyback Price), subject to shareholders' approval in the ensuing General Meeting.
The shareholders approved the proposal of buyback of Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19, 2021.
The buyback was offered to all eligible equity shareholders
of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through
the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and was completed on September
8, 2021. During this buyback period the Company had purchased and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buyback price of 1,648.53/- per equity share comprising 1.31% of the pre buyback paid up equity share
capital of the Company. The buyback resulted in a cash outflow of
9,200 crore (excluding transaction costs and tax on buyback).
The Company funded the buyback from its free reserves including Securities Premium as explained in Section 68 of the Companies Act, 2013.
In accordance with section 69 of the Companies Act, 2013, as at September 30, 2021, the Company has created ‘Capital Redemption
Reserve’ amounting to $4 million equal to the nominal value of the shares bought back as an appropriation from general reserve.
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or buy back issued shares. As of September 30, 2021, the Company has only one class of equity shares and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.19.2 Dividend
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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
Amount of per share dividend recognized as distribution to equity shareholders:
Particulars | Six months ended September 30, 2021 |
Six months ended September 30, 2020 | ||
in ![]() |
in US Dollars | in ![]() |
in US Dollars | |
Final dividend for fiscal 2021 | 15.00 | 0.20 | – | – |
Final dividend for fiscal 2020 | – | – | 9.50 | 0.13 |
The Board of Directors in their meeting held on April
14, 2021 recommended a final dividend of 15/- per equity share (approximately $0.20 per equity share) for the financial year ended
March 31, 2021. The same was approved by the shareholders in the Annual General Meeting (AGM) of the Company held on June 19, 2021 and
resulted in a net cash outflow of $861 million excluding dividend paid on treasury shares.
The Board of Directors in their meeting
held on October 13, 2021 declared an interim dividend of 15/- per equity share (approximately $0.20 per equity share) which would
result in a net cash outflow of approximately
6,286 crore ($847 million) excluding dividend paid on treasury shares.
2.19.3 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 14,840,585 shares and 15,514,732 shares were held by controlled trust, as at September
30, 2021 and March 31, 2021, respectively.
for and on behalf of the Board of Directors of Infosys Limited | ||
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Office |
A.G.S. Manikantha Company Secretary |
||
Bengaluru October 13, 2021 |
Exhibit 99.8
IFRS INR Earning Release
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed 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 Condensed Consolidated Balance Sheet as at September 30, 2021, the Condensed Consolidated Statement of Comprehensive Income for the three months and six months ended on that date, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the six months ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed consolidated financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair view in conformity with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”), of the consolidated state of affairs of the Group as at September 30, 2021, the consolidated profit and consolidated total comprehensive income for the three months and six months ended on that date, consolidated changes in equity and its consolidated cash flows for the six months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed consolidated financial statements in accordance with the Standards on Auditing (“SA”s) issued by the Institute of Chartered Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the ICAI, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed consolidated financial statements.
Management’s Responsibilities for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible for the preparation and presentation of these interim condensed 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 IAS 34 as issued by the IASB. The respective Boards of Directors of the companies included in the Group are responsible for maintenance of the adequate accounting records for safeguarding 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 respective interim financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the interim condensed consolidated financial statements by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated financial statements, the respective Boards of Directors of the companies included in the Group are responsible for assessing the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities or to cease operations, or has no realistic alternative but to do so.
The respective Boards of Directors of the companies included in the Group are responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
· | Identify and assess the risks of material misstatement of the interim condensed consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
· | Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the Company’s internal financial controls. |
· | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
· | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
· | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
· | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the interim condensed consolidated financial statements of which we are the independent auditors. |
Materiality is the magnitude of misstatements in the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAGS9202 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under International Financial Reporting Standards (IFRS) in Indian Rupee for the three months and six months ended September 30, 2021
Index | |
Condensed Consolidated Balance Sheet | |
Condensed Consolidated Statement of Comprehensive Income | |
Condensed Consolidated Statement of Changes in Equity | |
Condensed Consolidated Statement of Cash Flows | |
Overview and Notes to the Interim Condensed Consolidated Financial Statements | |
1. Overview | |
1.1 Company overview | |
1.2 Basis of preparation of financial statements | |
1.3 Basis of consolidation | |
1.4 Use of estimates and judgments | |
1.5 Critical accounting estimates | |
1.6 Recent accounting pronouncements | |
2. Notes to the Interim Condensed Consolidated Financial Statements | |
2.1 Cash and cash equivalents | |
2.2 Investments | |
2.3 Financial instruments | |
2.4 Prepayments and other assets | |
2.5 Other liabilities | |
2.6 Provisions and other contingencies | |
2.7 Property, plant and equipment | |
2.8 Leases | |
2.9 Goodwill and Intangible Assets | |
2.10 Business combinations | |
2.11 Employees' Stock Option Plans (ESOP) | |
2.12 Income Taxes | |
2.13 Basic and diluted shares used in computing earnings per equity share | |
2.14 Related party transactions | |
2.15 Segment reporting | |
2.16 Revenue from Operations | |
2.17 Unbilled Revenue | |
2.18 Break-up of expenses and other income, net | |
2.19 Equity |
Infosys Limited and subsidiaries
(In crore except equity share data)
Condensed Consolidated Balance Sheet as at | Note | September 30, 2021 | March 31, 2021 |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 2.1 | 18,056 | 24,714 |
Current investments | 2.2 | 4,983 | 2,342 |
Trade receivables | 20,121 | 19,294 | |
Unbilled revenue | 2.17 | 9,413 | 7,527 |
Prepayments and other current assets | 2.4 | 7,313 | 6,668 |
Derivative financial instruments | 2.3 | 122 | 188 |
Total current assets | 60,008 | 60,733 | |
Non-current assets | |||
Property, plant and equipment | 2.7 | 13,422 | 13,623 |
Right-of-use assets | 2.8 | 4,599 | 4,794 |
Goodwill | 2.9 | 6,122 | 6,079 |
Intangible assets | 1,895 | 2,072 | |
Non-current investments | 2.2 | 10,096 | 11,863 |
Unbilled revenue | 2.17 | 758 | 594 |
Deferred income tax assets | 2.12 | 976 | 1,098 |
Income tax assets | 2.12 | 5,796 | 5,811 |
Other non-current assets | 2.4 | 2,438 | 1,719 |
Total non-current assets | 46,102 | 47,653 | |
Total assets | 106,110 | 108,386 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Trade payables | 3,176 | 2,645 | |
Lease liabilities | 2.8 | 788 | 738 |
Derivative financial instruments | 2.3 | 44 | 56 |
Current income tax liabilities | 2.12 | 2,455 | 2,146 |
Unearned revenue | 4,394 | 4,050 | |
Employee benefit obligations | 2,236 | 2,020 | |
Provisions | 2.6 | 862 | 713 |
Other current liabilities | 2.5 | 13,733 | 11,497 |
Total current liabilities | 27,688 | 23,865 | |
Non-current liabilities | |||
Lease liabilities | 2.8 | 4,356 | 4,587 |
Deferred income tax liabilities | 2.12 | 858 | 875 |
Employee benefit obligations | 101 | 97 | |
Other non-current liabilities | 2.5 | 2,759 | 2,180 |
Total liabilities | 35,762 | 31,604 | |
Equity | |||
Share capital - ![]() |
2.19 | 2,097 | 2,124 |
Share premium | 564 | 993 | |
Retained earnings | 58,078 | 65,397 | |
Cash flow hedge reserves | 21 | 10 | |
Other reserves | 7,470 | 6,385 | |
Capital redemption reserve | 139 | 111 | |
Other components of equity | 1,570 | 1,331 | |
Total equity attributable to equity holders of the Company | 69,939 | 76,351 | |
Non-controlling interests | 409 | 431 | |
Total equity | 70,348 | 76,782 | |
Total liabilities and equity | 106,110 | 108,386 |
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
As per our report of even date attached
for Deloitte Haskins & Sells LLP Chartered Accountants Firm’s Registration No : 117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer |
U.B. Pravin Rao Chief Operating Officer and |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Infosys Limited and subsidiaries
(In crore except equity share and per equity
share data)
Condensed Consolidated Statement of Comprehensive Income for the | Three months ended September 30, | Six months ended September 30, | |||
Note | 2021 | 2020 | 2021 | 2020 | |
Revenues | 2.16 | 29,602 | 24,570 | 57,498 | 48,234 |
Cost of sales | 2.18 | 19,806 | 15,771 | 38,312 | 31,473 |
Gross profit | 9,796 | 8,799 | 19,186 | 16,761 | |
Operating expenses | |||||
Selling and marketing expenses | 2.18 | 1,235 | 1,136 | 2,483 | 2,283 |
Administrative expenses | 2.18 | 1,589 | 1,435 | 3,128 | 2,885 |
Total operating expenses | 2,824 | 2,571 | 5,611 | 5,168 | |
Operating profit | 6,972 | 6,228 | 13,575 | 11,593 | |
Other income, net | 2.18 | 524 | 570 | 1,146 | 1,046 |
Finance cost | 48 | 48 | 98 | 96 | |
Profit before income taxes | 7,448 | 6,750 | 14,623 | 12,543 | |
Income tax expense | 2.12 | 2,020 | 1,892 | 3,994 | 3,412 |
Net profit | 5,428 | 4,858 | 10,629 | 9,131 | |
Other comprehensive income | |||||
Items that will not be reclassified subsequently to profit or loss | |||||
Remeasurement of the net defined benefit liability/asset, net | 14 | 7 | (19) | 154 | |
Equity instruments through other comprehensive income, net | 40 | (5) | 41 | (6) | |
54 | 2 | 22 | 148 | ||
Items that will be reclassified subsequently to profit or loss | |||||
Fair value changes on derivatives designated as cash flow hedge, net | 6 | 27 | 11 | 21 | |
Exchange differences on translation of foreign operations | (166) | 21 | 124 | 185 | |
Fair value changes on investments, net | 55 | (45) | 93 | 9 | |
(105) | 3 | 228 | 215 | ||
Total other comprehensive income/(loss), net of tax | (51) | 5 | 250 | 363 | |
Total comprehensive income | 5,377 | 4,863 | 10,879 | 9,494 | |
Profit attributable to: | |||||
Owners of the Company | 5,421 | 4,845 | 10,616 | 9,078 | |
Non-controlling interests | 7 | 13 | 13 | 53 | |
5,428 | 4,858 | 10,629 | 9,131 | ||
Total comprehensive income attributable to: | |||||
Owners of the Company | 5,375 | 4,847 | 10,866 | 9,434 | |
Non-controlling interests | 2 | 16 | 13 | 60 | |
5,377 | 4,863 | 10,879 | 9,494 | ||
Earnings per equity share | |||||
Equity shares of par value ![]() |
|||||
Basic (![]() |
12.88 | 11.42 | 25.11 | 21.40 | |
Diluted (![]() |
12.85 | 11.40 | 25.06 | 21.37 | |
Weighted average equity shares used in computing earnings per equity share | 2.13 | ||||
Basic | 4,210,064,823 | 4,241,908,471 | 4,227,694,034 | 4,241,506,966 | |
Diluted | 4,218,293,582 | 4,248,961,564 | 4,236,051,581 | 4,248,434,533 |
The accompanying notes form an integral part of the interim condensed consolidated financial statements
As per our report of even date attached
for Deloitte Haskins & Sells LLP Chartered Accountants Firm’s Registration No : 117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer |
U.B. Pravin Rao Chief Operating Officer and |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Infosys Limited and subsidiaries
(In crore except equity share data)
Condensed Consolidated Statement of Changes in Equity
|
Number of Shares(1) | Share capital | Share premium | Retained earnings | Other reserves(2) | Capital redemption reserve | Other components of equity | Cash flow hedge reserve | Total equity attributable to equity holders of the Company | Non-controlling interest | Total equity |
Balance as at April 1, 2020
|
4,240,753,210 | 2,122 | 600 | 57,506 | 4,070 | 111 | 1,056 | (15) | 65,450 | 394 | 65,844 |
Changes in equity for the six months ended September 30, 2020 | |||||||||||
Net profit | – | – | – | 9,078 | – | – | – | – | 9,078 | 53 | 9,131 |
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | 154 | – | 154 | – | 154 |
Fair value changes on derivatives designated as Cash flow hedge, net* | – | – | – | – | – | – | – | 21 | 21 | – | 21 |
Exchange differences on translation of foreign operations | – | – | – | – | – | – | 178 | – | 178 | 7 | 185 |
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | (6) | – | (6) | – | (6) |
Fair value changes on investments, net* | – | – | – | – | – | – | 9 | – | 9 | – | 9 |
Total comprehensive income for the period | – | – | – | 9,078 | – | – | 335 | 21 | 9,434 | 60 | 9,494 |
Shares issued on exercise of employee stock options (Refer to note 2.11) | 1,752,826 | 1 | 5 | – | – | – | – | – | 6 | – | 6 |
Employee stock compensation expense (Refer to note 2.11) | – | – | 134 | – | – | – | – | – | 134 | – | 134 |
Transfer on account of options not exercised | – | – | 1 | (1) | – | – | – | – | – | – | – |
Income tax benefit arising on exercise of stock options | – | – | 5 | – | – | – | – | – | 5 | – | 5 |
Transferred to other reserves | – | – | – | (1,463) | 1,463 | – | – | – | – | – | – |
Transferred from other reserves on utilization | – | – | – | 561 | (561) | – | – | – | – | – | – |
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | (20) | (20) |
Dividends (including dividend distribution tax)# | – | – | – | (4,029) | – | – | – | – | (4,029) | – | (4,029) |
Balance as at September 30, 2020 | 4,242,506,036 | 2,123 | 745 | 61,652 | 4,972 | 111 | 1,391 | 6 | 71,000 | 434 | 71,434 |
Balance as at April 1, 2021
|
4,245,146,114 | 2,124 | 993 | 65,397 | 6,385 | 111 | 1,331 | 10 | 76,351 | 431 | 76,782 |
Changes in equity for the six months ended September 30, 2021 | |||||||||||
Net profit | – | – | – | 10,616 | – | – | – | – | 10,616 | 13 | 10,629 |
Remeasurement of the net defined benefit liability/asset* | – | – | – | – | – | – | (19) | – | (19) | – | (19) |
Equity instruments through other comprehensive income* | – | – | – | – | – | – | 41 | – | 41 | – | 41 |
Fair value changes on derivatives designated as cash flow hedge* | – | – | – | – | – | – | – | 11 | 11 | – | 11 |
Exchange differences on translation of foreign operations | – | – | – | – | – | – | 124 | – | 124 | – | 124 |
Fair value changes on investments, net* | – | – | – | – | – | – | 93 | – | 93 | – | 93 |
Total comprehensive income for the period | – | – | – | 10,616 | – | – | 239 | 11 | 10,866 | 13 | 10,879 |
Buyback of equity shares (Refer to note 2.19 )** | (55,807,337) | (28) | (640) | (10,425) | – | – | – | – | (11,093) | – | (11,093) |
Transaction cost relating to buyback* | – | – | – | (28) | – | – | – | – | (28) | – | (28) |
Amount transferred to capital redemption reserve upon buyback | – | – | – | (28) | – | 28 | – | – | – | – | – |
Shares issued on exercise of employee stock options (Refer to note 2.11) | 1,285,064 | 1 | 8 | – | – | – | – | – | 9 | – | 9 |
Employee stock compensation expense (Refer to note 2.11) | – | – | 196 | – | – | – | – | – | 196 | – | 196 |
Income tax benefit arising on exercise of stock options (Refer to note 2.12) | – | – | 7 | – | – | – | – | – | 7 | – | 7 |
Transferred to other reserves | – | – | – | (1,496) | 1,496 | – | – | – | – | – | – |
Transferred from other reserves on utilization | – | – | – | 411 | (411) | – | – | – | – | – | – |
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | (35) | (35) |
Dividends# | – | – | – | (6,369) | – | – | – | – | (6,369) | – | (6,369) |
Balance as at September 30, 2021 | 4,190,623,841 | 2,097 | 564 | 58,078 | 7,470 | 139 | 1,570 | 21 | 69,939 | 409 | 70,348 |
* | net of tax |
** | Including tax on buyback ![]() |
# | net of treasury shares |
(1) | excludes treasury shares of 14,840,585 as at September 30, 2021, 15,514,732 as at April 1, 2021, 16,905,562 as at September 30, 2020 and 18,239,356 as at April 1, 2020, held by consolidated trust. |
(2) | Represents the Special Economic Zone Re-investment reserve created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Group for acquiring new plant and machinery for the purpose of its business in terms of the provisions of the Sec 10AA(2) of the Income Tax Act, 1961. |
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
As per our report of even date attached
for Deloitte Haskins & Sells LLP Chartered Accountants Firm’s Registration No : 117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer |
U.B. Pravin Rao Chief Operating Officer and |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Infosys Limited and subsidiaries
Condensed Consolidated Statement of Cash Flows
Accounting Policy
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 Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
(In crore)
Particulars | Note | Six months ended September 30, | |
2021 | 2020 | ||
Operating activities: | |||
Net Profit | 10,629 | 9,131 | |
Adjustments to reconcile net profit to net cash provided by operating activities: | |||
Depreciation and amortization | 2.18 | 1,687 | 1,611 |
Income tax expense | 2.12 | 3,994 | 3,412 |
Finance cost | 98 | 96 | |
Interest and dividend income | (396) | (273) | |
Effect of exchange rate changes on assets and liabilities, net | 54 | (7) | |
Impairment loss under expected credit loss model | 87 | 159 | |
Stock compensation expense | 2.11 | 209 | 174 |
Other adjustments | 36 | (60) | |
Changes in working capital | |||
Trade receivables and unbilled revenue | (2,963) | (67) | |
Prepayments and other assets | (299) | 334 | |
Trade payables | 349 | (477) | |
Unearned revenue | 345 | 349 | |
Other liabilities and provisions | 2,409 | 424 | |
Cash generated from operations | 16,239 | 14,806 | |
Income taxes paid | (3,574) | (2,987) | |
Net cash generated by operating activities | 12,665 | 11,819 | |
Investing activities: | |||
Expenditure on property, plant and equipment and intangibles | (1,030) | (1,306) | |
Deposits placed with corporation | (516) | (495) | |
Redemption of deposits placed with Corporation | 343 | 362 | |
Interest and dividend received | 421 | 258 | |
Payment of contingent consideration pertaining to acquisition of business | (53) | (150) | |
Escrow and other deposits pertaining to Buyback | 2.4 | (420) | – |
Redemption of escrow and other deposits pertaining to Buyback | 420 | – | |
Payments to acquire Investments | |||
- Quoted debt securities | (807) | (5,493) | |
- Liquid mutual fund units and fixed maturity plan securities | (25,411) | (11,960) | |
- Certificates of deposit | (498) | – | |
- Other investments | (13) | (1) | |
Proceeds on sale of investments | |||
- Certificates of deposit | 500 | 900 | |
- Quoted debt securities | 2,635 | 2,249 | |
- Liquid mutual fund units and fixed maturity plan securities | 22,928 | 11,850 | |
- Other investments | 1 | 22 | |
Other payments | (22) | – | |
Other receipts | 35 | 25 | |
Net cash (used)/generated in investing activities | (1,487) | (3,739) | |
Financing activities: | |||
Payment of lease liabilities | 2.8 | (421) | (351) |
Payment of dividends | (6,369) | (4,031) | |
Payment of dividends to non-controlling interests of subsidiary | (2) | (20) | |
Other payments | (15) | – | |
Other receipts | 117 | – | |
Buyback of equity shares including transaction costs and tax on buyback | 2.19 | (11,125) | – |
Shares issued on exercise of employee stock options | 9 | 6 | |
Net cash used in financing activities | (17,806) | (4,396) | |
Effect of exchange rate changes on cash and cash equivalents | (30) | 78 | |
Net increase/(decrease) in cash and cash equivalents | (6,628) | 3,684 | |
Cash and cash equivalents at the beginning of the period | 2.1 | 24,714 | 18,649 |
Cash and cash equivalents at the end of the period | 2.1 | 18,056 | 22,411 |
Supplementary information: | |||
Restricted cash balance | 2.1 | 526 | 404 |
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
As per our report of even date attached
for Deloitte Haskins & Sells LLP Chartered Accountants Firm’s Registration No : 117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer |
U.B. Pravin Rao Chief Operating Officer and |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
Overview and Notes to the Interim Condensed Consolidated Financial Statements
1. Overview
1.1 | Company overview |
Infosys Limited ('the Company' or Infosys) provides consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation. Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as they ideate, plan and execute on their journey to a digital future.
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 Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares (ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial statements are authorized for issue by the Company's Board of Directors on October 13, 2021.
1.2 Basis of preparation of financial statements
These interim condensed consolidated financial statements have been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board, under the historical cost convention on accrual basis except for certain financial instruments which have been measured at fair values. Accordingly, these interim condensed consolidated financial statements do not include all the information required for a complete set of financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s consolidated financial statements under IFRS in indian rupee for the year ended March 31, 2021. 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.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls. The interim condensed consolidated financial statements comprise the financial statements of the Company, its controlled trusts and its subsidiaries. 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. The 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.
1.4 Use of estimates and judgments
The preparation of the financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in the financial statements have been disclosed in Note 1.5. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates and judgments 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 condensed consolidated financial statements.
Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID 19):
The Group has considered the possible effects that may result from the COVID-19 pandemic in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of the COVID-19 pandemic, the Group has, at the date of approval of these condensed consolidated financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 pandemic on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of the contract because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on the latest available information.
Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and the U.S., though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the group will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. (Refer to note 2.12)
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS 3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements and intangible assets. These valuations are conducted by external valuation experts. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management (Refer to note 2.10).
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. (Refer to note 2.7).
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. For the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins. (Refer to note 2.9)
f. Leases
As a lessee, the Group determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Group has concluded that no material changes are required to lease period relating to the existing lease contracts. (Refer to note 2.8)
g. Allowance for credit losses on receivables and unbilled revenue
The Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considered current and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19.
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not yet effective:
Amendments to IAS 16 Property, Plant and Equipment | Proceeds before Intended Use |
Amendments to IAS 37 Onerous Contracts | Cost of Fulfilling a Contract |
Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors | Definition of Accounting Estimates |
Amendments to IAS 1 Presentation of Financial Statements | Disclosure of Accounting Policies |
Amendments to IAS 12 Income Taxes | Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
Amendments to IAS 16
On May 14, 2020 International Accounting Standards Board (IASB) has issued amendment to IAS 16 Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) which amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.
Amendments to IAS 37
On May 14, 2020 International Accounting Standards Board (IASB) has issued Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) which specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
Amendments to IAS 8
On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 8 Accounting Policies, Changes in Accounting estimates and Errors which introduced a definition of ‘accounting estimates’ and included amendments to IAS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.
Amendments to IAS 1
On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements which requires the entities to disclose their material accounting policies rather than their significant accounting policies.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
Amendments to IAS 12
On May 7, 2021, International Accounting Standards Board (IASB) has issued amendment to IAS 12 Income Taxes which narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.
The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.
2. Notes to the Interim Condensed Consolidated Financial Statements
2.1 Cash and cash equivalents
Cash and cash equivalents consist of the following:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Cash and bank deposits | 14,994 | 20,069 |
Deposits with financial institutions | 3,062 | 4,645 |
Total Cash and cash equivalents | 18,056 | 24,714 |
Cash and cash equivalents as at September 30, 2021
and March 31, 2021 include restricted cash and bank balances of 526 crore and
504 crore, respectively. The restrictions
are primarily on account of bank balances held by irrevocable trusts controlled by the Company and bank balances held as margin money
deposits against guarantees.
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.
2.2 Investments
The carrying value of the investments are as follows:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
(i) Current | ||
Amortised Cost | ||
Quoted debt securities | 20 | – |
Fair Value through profit or loss | ||
Liquid mutual fund units | 4,042 | 1,500 |
Fair Value through other comprehensive income | ||
Quoted Debt Securities | 921 | 842 |
Total current investments | 4,983 | 2,342 |
(ii) Non-current | ||
Amortised Cost | ||
Quoted debt securities | 2,127 | 2,152 |
Fair Value through other comprehensive income | ||
Quoted debt securities | 7,635 | 9,452 |
Unquoted equity and preference securities | 220 | 167 |
Fair Value through profit or loss | ||
Unquoted Preference securities | 23 | 11 |
Unquoted compulsorily convertible debentures | 7 | 7 |
Others(1) | 84 | 74 |
Total non-current investments | 10,096 | 11,863 |
Total investments | 15,079 | 14,205 |
Investments carried at amortised cost | 2,147 | 2,152 |
Investments carried at fair value through other comprehensive income | 8,776 | 10,461 |
Investments carried at fair value through profit or loss | 4,156 | 1,592 |
(1) | Uncalled capital commitments outstanding as at September 30, 2021 and March 31, 2021 was
![]() ![]() |
Refer to note 2.3 for accounting policies on financial instruments.
Method of fair valuation:
(In crore)
Class of investment | Method | Fair value as at | |
September 30, 2021 | March 31, 2021 | ||
Liquid mutual fund units | Quoted price | 4,042 | 1,500 |
Quoted debt securities- carried at amortized cost | Quoted price and market observable inputs | 2,515 | 2,536 |
Quoted debt securities- carried at fair value through other comprehensive income | Quoted price and market observable inputs | 8,556 | 10,294 |
Unquoted equity and preference securities - carried at fair value through other comprehensive income | Discounted cash flows method, Market multiples method, Option pricing model | 220 | 167 |
Unquoted equity and preference securities - carried at fair value through profit or loss | Discounted cash flows method, Market multiples method, Option pricing model | 23 | 11 |
Unquoted compulsorily convertible debentures - carried at fair value through profit or loss | Discounted cash flows method | 7 | 7 |
Others | Discounted cash flows method, Market multiples method, Option pricing model | 84 | 74 |
Total | 15,447 | 14,589 |
Certain quoted investments are classified as Level 2 in the absence of active market for such investments.
2.3 Financial instruments
Accounting Policy
2.3.1 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.
2.3.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets carried 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. The Group has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
(iii) Financial assets carried at fair value through profit or loss (FVTPL)
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 and financial liability under option arrangements recognized in a business combination which is subsequently measured at fair value through profit or 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, carried at fair value through profit or loss
This category includes 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 IFRS 9, Financial Instruments. Any derivative that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, 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 comprehensive income 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 comprehensive income. 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 comprehensive income 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 consolidated statement of comprehensive income.
2.3.3 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 IFRS 9. 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.
2.3.4 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 table 'Financial instruments by category' below 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 approximate fair value due to the short maturity of these instruments.
2.3.5 Impairment
The Group recognizes loss allowances using the expected credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment gain or loss in consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments by categories as at September 30, 2021 were as follows:
(In crore)
Particulars | 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 to note 2.1) | 18,056 | – | – | – | – | 18,056 | 18,056 |
Investments (Refer to note 2.2) | |||||||
Liquid mutual fund units | – | – | 4,042 | – | – | 4,042 | 4,042 |
Quoted debt securities | 2,147 | – | – | – | 8,556 | 10,703 | 11,071 (1) |
Unquoted equity and preference securities | – | – | 23 | 220 | – | 243 | 243 |
Unquoted compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Unquoted investment others | – | – | 84 | – | – | 84 | 84 |
Trade receivables | 20,121 | – | – | – | – | 20,121 | 20,121 |
Unbilled revenues (Refer to note 2.17)(3) | 4,647 | – | – | – | – | 4,647 | 4,647 |
Prepayments and other assets (Refer to note 2.4) | 4,104 | – | – | – | – | 4,104 | 4,027 (2) |
Derivative financial instruments | – | – | 82 | – | 40 | 122 | 122 |
Total | 49,075 | – | 4,238 | 220 | 8,596 | 62,129 | 62,420 |
Liabilities: | |||||||
Trade payables | 3,176 | – | – | – | – | 3,176 | 3,176 |
Lease liabilities | 5,144 | – | – | – | – | 5,144 | 5,144 |
Derivative financial instruments | – | – | 43 | – | 1 | 44 | 44 |
Financial liability under option arrangements ( Refer to note 2.5) |
– | – | 695 | – | – | 695 | 695 |
Other liabilities including contingent consideration ( Refer to note 2.5) |
12,521 | – | 117 | – | – | 12,638 | 12,638 |
Total | 20,841 | – | 855 | – | 1 | 21,697 | 21,697 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on quoted debt securities carried at amortized cost of ![]() |
(3) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
The carrying value and fair value of financial instruments by categories as at March 31, 2021 were as follows:
(In crore)
Particulars | 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 to note 2.1) | 24,714 | – | – | – | – | 24,714 | 24,714 |
Investments (Refer to note 2.2) | |||||||
Liquid mutual fund units | – | – | 1,500 | – | – | 1,500 | 1,500 |
Quoted debt securities | 2,152 | – | – | – | 10,294 | 12,446 | 12,830 (1) |
Unquoted equity and preference securities | – | – | 11 | 167 | – | 178 | 178 |
Unquoted compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Unquoted investments others | – | – | 74 | – | – | 74 | 74 |
Trade receivables | 19,294 | – | – | – | – | 19,294 | 19,294 |
Unbilled revenue (Refer to note 2.17)(3) | 3,572 | – | – | – | – | 3,572 | 3,572 |
Prepayments and other assets (Refer to note 2.4) | 3,982 | – | – | – | – | 3,982 | 3,890 (2) |
Derivative financial instruments | – | – | 163 | – | 25 | 188 | 188 |
Total | 53,714 | – | 1,755 | 167 | 10,319 | 65,955 | 66,247 |
Liabilities: | |||||||
Trade payables | 2,645 | – | – | – | – | 2,645 | 2,645 |
Lease liabilities | 5,325 | – | – | – | – | 5,325 | 5,325 |
Derivative financial instruments | – | – | 56 | – | – | 56 | 56 |
Financial liability under option arrangements ( Refer to note 2.5) |
– | – | 693 | – | – | 693 | 693 |
Other liabilities including contingent consideration (Refer to note 2.5) | 9,877 | – | 161 | – | – | 10,038 | 10,038 |
Total | 17,847 | – | 910 | – | – | 18,757 | 18,757 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on quoted debt securities carried at amortized cost of ![]() |
(3) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
For trade receivables and trade payables and other assets and payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
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 as at September 30, 2021:
(In crore)
Particulars | As at September 30, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual fund units (Refer to note 2.2) | 4,042 | 4,042 | – | – |
Investments in quoted debt securities (Refer to note 2.2) | 11,071 | 9,126 | 1,945 | – |
Investments in unquoted equity and preference securities (Refer to note 2.2) | 243 | – | – | 243 |
Investments in unquoted compulsorily convertible debentures (Refer to note 2.2) | 7 | – | – | 7 |
Investments in unquoted investments others (Refer to note 2.2) | 84 | – | – | 84 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts | 122 | – | 122 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts | 44 | – | 44 | – |
Financial liability under option arrangements (Refer to note 2.5) | 695 | – | – | 695 |
Liability towards contingent consideration (Refer to note 2.5)* | 117 | – | – | 117 |
* Discount rate pertaining to contingent consideration ranges from 8% to 14.5%
During the six months ended September 30, 2021, quoted
debt securities of 1,010 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price and quoted debt securities of
1,579 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since
these were valued based on market observable inputs.
The following table presents fair value hierarchy of assets and liabilities as at March 31, 2021:
(In crore)
Particulars | As at March 31, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual fund units (Refer to note 2.2) | 1,500 | 1,500 | – | – |
Investments in quoted debt securities (Refer to note 2.2) | 12,830 | 11,374 | 1,456 | – |
Investments in unquoted equity and preference securities(Refer to note 2.2) | 178 | – | – | 178 |
Investments in unquoted compulsorily convertible debentures (Refer to note 2.2) | 7 | – | – | 7 |
Investments in unquoted investments others (Refer to note 2.2) | 74 | – | – | 74 |
Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts | 188 | – | 188 | – |
Liabilities | ||||
Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts | 56 | – | 56 | – |
Financial liability under option arrangements (Refer to note 2.5) | 693 | – | – | 693 |
Liability towards contingent consideration (Refer to note 2.5)* | 161 | – | – | 161 |
* Discount rate pertaining to contingent consideration ranges from 8% to 14.5%
During the year ended March 31, 2021, quoted debt securities
of 107 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and
quoted debt securities of
1,177 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
A one percentage point change in the unobservable inputs used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, fixed maturity plan securities, certificates of deposit, commercial papers, quoted bonds issued by government and quasi-government organizations and non convertible debentures. The Group invests after considering counterparty risks based on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per its risk management program.
2.4 Prepayments and other assets
Prepayments and other assets consist of the following:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Rental deposits | 62 | 30 |
Security deposits | 6 | 6 |
Loans to employees | 191 | 159 |
Prepaid expenses(1) | 1,361 | 1,160 |
Interest accrued and not due | 496 | 620 |
Withholding taxes and others(1) | 2,084 | 2,091 |
Advance payments to vendors for supply of goods(1) | 65 | 141 |
Deposit with corporations* | 2,167 | 2,016 |
Deferred contract cost(1)# | 422 | 65 |
Net investment in sublease of right of use asset | 41 | 38 |
Other non financial assets | 21 | 3 |
Other financial assets(1) | 397 | 339 |
Total Current prepayment and other assets | 7,313 | 6,668 |
Non-current | ||
Loans to employees | 45 | 32 |
Deposit with corporations* | 63 | 42 |
Rental deposits | 187 | 217 |
Security deposits | 49 | 49 |
Withholding taxes and others(1) | 682 | 705 |
Deferred contract cost(1)# | 896 | 143 |
Prepaid expenses(1) | 88 | 78 |
Net investment in sublease of right of use asset | 337 | 350 |
Defined benefit plan assets(1) | 28 | 19 |
Other financial assets | 63 | 84 |
Total Non- current prepayment and other assets | 2,438 | 1,719 |
Total prepayment and other assets | 9,751 | 8,387 |
Financial assets in prepayments and other assets | 4,104 | 3,982 |
(1) | Non financial assets |
Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from Government of India.
* | Deposit with corporations represents amounts deposited to settle certain employee-related obligations as and when they arise during the normal course of business. |
# | Includes technology assets taken over by the Company from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company
in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total
contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing arrangement
with a third party for these assets for ![]() ![]() |
2.5 Other liabilities
Other liabilities comprise the following :
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Accrued compensation to employees | 4,023 | 4,019 |
Accrued expenses | 6,252 | 4,475 |
Withholding taxes and others(1) | 2,386 | 2,170 |
Retention money | 13 | 13 |
Liabilities of controlled trusts | 211 | 199 |
Deferred income - government grants(1) | 14 | 3 |
Accrued defined benefit plan liability (1) | 4 | 6 |
Liability towards contingent consideration | 64 | 75 |
Capital Creditors | 236 | 371 |
Other non-financial liabilities (1) | 4 | 4 |
Other financial liabilities# | 526 | 162 |
Total current other liabilities | 13,733 | 11,497 |
Non-current | ||
Liability towards contingent consideration | 53 | 86 |
Accrued expenses | 651 | 569 |
Withholding taxes and others(1) | 370 | 364 |
Accrued defined benefit plan liability (1) | 311 | 324 |
Accrued compensation to employees | 8 | - |
Deferred income - government grants(1) | 56 | 57 |
Deferred income(1) | 13 | 17 |
Other financial liabilities# | 601 | 69 |
Other non-financial liabilities(1) | 1 | 1 |
Financial liability under option arrangements | 695 | 693 |
Total non-current other liabilities | 2,759 | 2,180 |
Total other liabilities | 16,492 | 13,677 |
Financial liabilities included in other liabilities | 13,333 | 10,731 |
Financial liability towards contingent consideration on an undiscounted basis | 131 | 181 |
(1) | Non financial liabilities |
# | Deferred contract cost in note 2.4 includes technology assets taken over by the Company from
a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets
is not transferred to the Company in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered
as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has
entered into a financing arrangement with a third party for these assets for ![]() ![]() |
Accrued expenses primarily relates to cost of technical sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office maintenance.
2.6 Provisions and other contingencies
Accounting Policy
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.
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Post sales client support
The Group provides its clients with a fixed-period post sales support on 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.
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.
Provisions comprise the following:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Provision for post sales client support and other provisions | 862 | 713 |
862 | 713 |
Provision for post sales client support represents cost associated with providing post sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions is included in cost of sales in the condensed consolidated statement of comprehensive income.
As at September 30, 2021 and March 31, 2021 claims
against the Group, not acknowledged as debts, (excluding demands from income tax authorities - Refer to note 2.12) amounted to 614
crore and
599 crore respectively.
Legal proceedings
The Group is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Group’s management reasonably expects based on currently available information, that these legal actions, when ultimately concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.7 Property, plant and equipment
Accounting Policy
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by management. The Group depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
Building | 22-25 years |
Plant and machinery(1) | 5 years |
Computer equipment | 3-5 years |
Furniture and fixtures | 5 years |
Vehicles | 5 years |
Leasehold improvements | Lower of useful life of the asset or lease term |
(1) | Includes solar plant with a useful life of 20 years |
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 and the cost of assets not ready 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 the consolidated statement of comprehensive income 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 net profit in the consolidated statement of comprehensive income.
Impairment
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 net profit in the statement of comprehensive income 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 net profit in the statement of comprehensive income 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 depreciation) had no impairment loss been recognized for the asset in prior years.
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2021:
(In crore)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at July 1, 2021 | 1,398 | 10,745 | 5,018 | 7,940 | 3,089 | 44 | 28,234 |
Additions | 12 | 303 | 132 | 308 | 78 | – | 833 |
Deletions* | – | – | (5) | (405) | (6) | – | (416) |
Translation difference | – | (1) | (3) | (9) | (6) | – | (19) |
Gross carrying value as at September 30, 2021 | 1,410 | 11,047 | 5,142 | 7,834 | 3,155 | 44 | 28,632 |
Accumulated depreciation as at July 1, 2021 | – | (3,780) | (3,699) | (5,844) | (2,237) | (33) | (15,593) |
Depreciation | – | (105) | (101) | (261) | (86) | (2) | (555) |
Accumulated depreciation on deletions* | – | – | 5 | 404 | 6 | – | 415 |
Translation difference | – | 1 | – | 8 | 5 | – | 14 |
Accumulated depreciation as at September 30, 2021 | – | (3,884) | (3,795) | (5,693) | (2,312) | (35) | (15,719) |
Capital work-in progress as at July 1, 2021 | 919 | ||||||
Carrying value as at July 1, 2021 | 1,398 | 6,965 | 1,319 | 2,096 | 852 | 11 | 13,560 |
Capital work-in progress as at September 30, 2021 | 509 | ||||||
Carrying value as at September 30, 2021 | 1,410 | 7,163 | 1,347 | 2,141 | 843 | 9 | 13,422 |
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2020:
(In crore)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at July 1, 2020 | 1,385 | 10,057 | 4,725 | 7,019 | 2,907 | 45 | 26,138 |
Additions | 1 | 14 | 61 | 317 | 57 | – | 450 |
Deletions | – | – | (5) | (34) | (6) | (1) | (46) |
Translation difference | – | 12 | 2 | 1 | 3 | – | 18 |
Gross carrying value as at September 30, 2020 | 1,386 | 10,083 | 4,783 | 7,303 | 2,961 | 44 | 26,560 |
Accumulated depreciation as at July 1, 2020 | – | (3,380) | (3,274) | (5,085) | (1,929) | (30) | (13,698) |
Depreciation | – | (96) | (119) | (265) | (89) | (1) | (570) |
Accumulated depreciation on deletions | – | – | 4 | 34 | 6 | 1 | 45 |
Translation difference | – | (1) | (1) | 1 | (4) | – | (5) |
Accumulated depreciation as at September 30, 2020 | – | (3,477) | (3,390) | (5,315) | (2,016) | (30) | (14,228) |
Capital work-in progress as at July 1, 2020 | 1,337 | ||||||
Carrying value as at July 1, 2020 | 1,385 | 6,677 | 1,451 | 1,934 | 978 | 15 | 13,777 |
Capital work-in progress as at September 30, 2020 | 1,459 | ||||||
Carrying value as at September 30, 2020 | 1,386 | 6,606 | 1,393 | 1,988 | 945 | 14 | 13,791 |
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2021:
(In crore)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at April 1, 2021 | 1,397 | 10,565 | 4,963 | 7,639 | 3,043 | 44 | 27,651 |
Additions | 13 | 455 | 186 | 644 | 121 | – | 1,419 |
Deletions* | – | – | (10) | (457) | (17) | – | (484) |
Translation difference | – | 27 | 3 | 8 | 8 | – | 46 |
Gross carrying value as at September 30, 2021 | 1,410 | 11,047 | 5,142 | 7,834 | 3,155 | 44 | 28,632 |
Accumulated depreciation as at April 1, 2021 | – | (3,675) | (3,599) | (5,636) | (2,149) | (32) | (15,091) |
Depreciation | – | (206) | (203) | (508) | (173) | (3) | (1,093) |
Accumulated depreciation on deletions* | – | – | 10 | 456 | 17 | – | 483 |
Translation difference | – | (3) | (3) | (5) | (7) | – | (18) |
Accumulated depreciation as at September 30, 2021 | – | (3,884) | (3,795) | (5,693) | (2,312) | (35) | (15,719) |
Capital work-in progress as at April 1, 2021 | 1,063 | ||||||
Carrying value as at April 1, 2021 | 1,397 | 6,890 | 1,364 | 2,003 | 894 | 12 | 13,623 |
Capital work-in progress as at September 30, 2021 | 509 | ||||||
Carrying value as at September 30, 2021 | 1,410 | 7,163 | 1,347 | 2,141 | 843 | 9 | 13,422 |
* | During each of the three months and six months ended September 30, 2021, certain assets which
were old and not in use having gross book value of ![]() |
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2020:
(In crore)
Particulars | Land | Buildings | Plant and machinery | Computer equipment | Furniture and fixtures | Vehicles | Total |
Gross carrying value as at April 1, 2020 | 1,316 | 10,016 | 4,701 | 6,676 | 2,887 | 45 | 25,641 |
Additions | 70 | 53 | 92 | 663 | 82 | – | 960 |
Deletions | – | – | (12) | (44) | (13) | (1) | (70) |
Translation difference | – | 14 | 2 | 8 | 5 | – | 29 |
Gross carrying value as at September 30, 2020 | 1,386 | 10,083 | 4,783 | 7,303 | 2,961 | 44 | 26,560 |
Accumulated depreciation as at April 1, 2020 | – | (3,284) | (3,161) | (4,885) | (1,848) | (28) | (13,206) |
Depreciation | – | (191) | (239) | (471) | (177) | (3) | (1,081) |
Accumulated depreciation on deletions | – | – | 11 | 44 | 13 | 1 | 69 |
Translation difference | – | (2) | (1) | (3) | (4) | – | (10) |
Accumulated depreciation as at September 30, 2020 | – | (3,477) | (3,390) | (5,315) | (2,016) | (30) | (14,228) |
Capital work-in progress as at April 1, 2020 | 1,264 | ||||||
Carrying value as at April 1, 2020 | 1,316 | 6,732 | 1,540 | 1,791 | 1,039 | 17 | 13,699 |
Capital work-in progress as at September 30, 2020 | 1,459 | ||||||
Carrying value as at September 30, 2020 | 1,386 | 6,606 | 1,393 | 1,988 | 945 | 14 | 13,791 |
The aggregate depreciation expense is included in cost of sales in the condensed consolidated statement of comprehensive income.
The contractual commitments for capital expenditure
primarily comprises of commitments for infrastructure facilities and computer equipment’s aggregating to 987 crore and
733
crore as at September 30, 2021 and March 31, 2021, respectively.
2.8 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist of leases for land and buildings. The group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether: (1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right of use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the group changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of July 1, 2021 | 631 | 3,716 | 19 | 194 | 4,560 |
Additions* | – | 205 | – | 54 | 259 |
Deletions | – | (2) | – | (18) | (20) |
Depreciation | (2) | (164) | (3) | (16) | (185) |
Translation difference | – | (17) | – | 2 | (15) |
Balance as of September 30, 2021 | 629 | 3,738 | 16 | 216 | 4,599 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of July 1, 2020 | 625 | 3,285 | 20 | 67 | 3,997 |
Additions | 7 | 377 | 1 | 2 | 387 |
Deletions | – | (32) | – | – | (32) |
Depreciation | (2) | (147) | (2) | (4) | (155) |
Translation difference | 1 | (4) | – | 1 | (2) |
Balance as of September 30, 2020 | 631 | 3,479 | 19 | 66 | 4,195 |
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of April 1, 2021 | 630 | 3,984 | 19 | 161 | 4,794 |
Additions* | – | 64 | 1 | 100 | 165 |
Deletions | – | (6) | – | (18) | (24) |
Depreciation | (4) | (319) | (5) | (29) | (357) |
Translation difference | 3 | 15 | 1 | 2 | 21 |
Balance as of September 30, 2021 | 629 | 3,738 | 16 | 216 | 4,599 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of April 1, 2020 | 626 | 3,485 | 15 | 42 | 4,168 |
Additions* | 7 | 360 | 9 | 32 | 408 |
Deletions | – | (90) | – | – | (90) |
Depreciation | (3) | (292) | (5) | (8) | (308) |
Translation difference | 1 | 16 | – | – | 17 |
Balance as of September 30, 2020 | 631 | 3,479 | 19 | 66 | 4,195 |
The aggregate depreciation expense on ROU assets is included in cost of sales in the condensed consolidated statement of comprehensive income.
The following is the break-up of current and non-current lease liabilities as of September 30, 2021 and March 31, 2021:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current lease liabilities | 788 | 738 |
Non-current lease liabilities | 4,356 | 4,587 |
Total | 5,144 | 5,325 |
2.9 Goodwill and intangible assets
2.9.1 Goodwill
Accounting Policy
Goodwill represents the purchase consideration in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the purchase consideration, the fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition. 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 Comprehensive Income and is not reversed in the subsequent period.
Following is a summary of changes in the carrying amount of goodwill:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Carrying value at the beginning | 6,079 | 5,286 |
Goodwill on acquisitions | – | 758 |
Translation differences | 43 | 35 |
Carrying value at the end | 6,122 | 6,079 |
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.
2.9.2 Other intangible assets
Accounting Policy
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.
Impairment
Intangible assets 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 net profit in the statement of comprehensive income 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 net profit in the statement of comprehensive income 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 amortisation) had no impairment loss been recognized for the asset in prior years.
2.10 BUSINESS COMBINATIONS
Accounting policy
Business combinations have been accounted for using the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in 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 purchase price 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. Contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognized in the Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity of subsidiaries.
Business combinations between entities under common control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and liabilities assumed.
The payments related to options issued by the Group over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognised.
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.
2.11 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards is recognized as an expense in net profit in the consolidated statement of comprehensive 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 premium.
Infosys Expanded Stock Ownership Program 2019 (the 2019 Plan)
On June 22, 2019 pursuant to the approval by the shareholders in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000 equity shares. To implement the 2019 Plan , up to 45,000,000 equity shares may be issued by way of secondary acquisition of shares by the Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015 Plan) :
On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was 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 24,038,883 equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as at March 31, 2016). The Company expects to grant the instruments under the 2015 Plan over the period of 4 to 7 years. The plan numbers mentioned above would further be adjusted for the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee (NARC) . 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.
Controlled trust holds 14,840,585 and 15,514,732 shares as at September 30, 2021 and March 31, 2021, respectively under the 2015 plan. Out of these shares 200,000 equity shares each have been earmarked for welfare activities of the employees as at September 30, 2021 and March 31, 2021.
The following is the summary of grants during the six months ended September 30, 2021 and September 30, 2020:
2019 Plan | 2015 Plan | |||
Particulars | Six months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Equity settled RSU | ||||
KMPs | 73,962 | 207,808 | 101,697 | 204,097 |
Employees other than KMP | – | – | – | 24,600 |
Total Grants | 73,962 | 207,808 | 101,697 | 228,697 |
Note: No grants were made during the three months ended September 30,2021 and September 30, 2020.
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
In accordance with the employee agreement which has
been approved by the shareholders, the CEO is eligible to receive an annual grant of RSUs of fair value 3.25 crore which will vest
overtime in three equal annual installments upon the completion of each year of service from the respective grant date. Though the annual
time based grants for the remaining employment term ending on March 31, 2023 have not been granted as of September 30, 2021, since the
service commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with IFRS
2, Share based payments.
The Board, on April 14, 2021, based on the recommendations
of the nomination and remuneration committee, in accordance with the terms of his employment agreement, approved the grant of performance-based
RSUs of fair value of 13 crore for fiscal 2022 under the 2015 Plan. These RSUs will vest in line with the employment agreement
based on achievement of certain performance targets. Accordingly, 96,150 performance based RSU’s were granted effective May 2, 2021.
Under the 2019 plan:
The Board, on April 14, 2021, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2022 under
the 2019 Plan. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly,
73,962 performance based RSU’s were granted effective May 2, 2021.
Other KMPs
Under the 2015 plan:
On April 14, 2021, based on the recommendations of the Nomination and Remuneration Committee, in accordance with employment agreement, the Board, approved performance-based grant of 5,547 RSUs to other KMP under the 2015 Plan. The grants were made effective May 2, 2021. The performance based RSUs will vest over three years based on certain performance targets.
Break-up of employee stock compensation expense
(in crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Granted to: | ||||
KMP | 17 | 19 | 34 | 36 |
Employees other than KMP | 82 | 79 | 175 | 138 |
Total (1) | 99 | 98 | 209 | 174 |
(1) Cash settled stock compensation expense included in the above | 6 | 27 | 13 | 40 |
The fair value of the awards are estimated using the Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility during the expected term of the options 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 options. Expected volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated on the date of grant using the following assumptions:
Particulars | For options granted in | |||
Fiscal 2022- Equity Shares-RSU | Fiscal 2022- ADS-RSU | Fiscal 2021- Equity Shares-RSU | Fiscal 2021- ADS-RSU | |
Weighted average share price (![]() |
1,352 | 18.20 | 1,253 | 18.46 |
Exercise price (![]() |
5.00 | 0.07 | 5.00 | 0.07 |
Expected volatility (%) | 29-35 | 30-37 | 30-35 | 30-36 |
Expected life of the option (years) | 1-4 | 1-4 | 1-4 | 1-4 |
Expected dividends (%) | 2-3 | 2-3 | 2-3 | 2-3 |
Risk-free interest rate (%) | 4-5 | 0.1-0.6 | 4-5 | 0.1-0.3 |
Weighted average fair value as on grant date (![]() |
1,189 | 16.80 | 1,124 | 16.19 |
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 behavior of the employee who receives the RSU/ESOP.
2.12 INCOME TAXES
Accounting policy
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Consolidated Statement of Comprehensive income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity or 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 equity.
Income tax expense in the consolidated statement of comprehensive income comprises:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Current taxes | ||||
Domestic taxes | 1,408 | 1,367 | 2,848 | 2,485 |
Foreign taxes | 579 | 396 | 1,075 | 599 |
1,987 | 1,763 | 3,923 | 3,084 | |
Deferred taxes | ||||
Domestic taxes | 108 | 174 | 222 | 355 |
Foreign taxes | (75) | (45) | (151) | (27) |
33 | 129 | 71 | 328 | |
Income tax expense | 2,020 | 1,892 | 3,994 | 3,412 |
Income tax expense for the three months ended September
30, 2021 and September 30, 2020 includes reversal (net of provisions) of 20 crore and
99 crore respectively. Income tax
expense for the six months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of
33 crore and
230 crore respectively.These reversals pertain to prior periods primarily on account of adjudication of certain disputed matters
in favor of the Company and upon filing of tax return across various jurisdictions.
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)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Profit before income taxes | 7,448 | 6,750 | 14,623 | 12,543 |
Enacted tax rates in India | 34.94% | 34.94% | 34.94% | 34.94% |
Computed expected tax expense | 2,603 | 2,359 | 5,110 | 4,383 |
Tax effect due to non-taxable income for Indian tax purposes | (833) | (622) | (1,499) | (1,169) |
Overseas taxes | 247 | 183 | 446 | 347 |
Tax provision (reversals) | (20) | (99) | (33) | (230) |
Effect of exempt non-operating income | (8) | (9) | (27) | (18) |
Effect of unrecognized deferred tax assets | (4) | 9 | (4) | 26 |
Effect of differential tax rates | (43) | (46) | (74) | (74) |
Effect of non-deductible expenses | 28 | 27 | 65 | 65 |
Impact of change in tax rate | (47) | – | (47) | – |
Others | 97 | 90 | 57 | 82 |
Income tax expense | 2,020 | 1,892 | 3,994 | 3,412 |
The applicable Indian corporate statutory tax rate for the three months and six months ended September 30, 2021 and September 30, 2020 is 34.94% each.
Deferred income tax for the three months and six months ended September 30, 2021 and September 30, 2020 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA) with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at September 30, 2021, claims against the Group
not acknowledged as debts from the Income tax authorities amounted to 3,771 crore.
As at March 31, 2021, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to 3,462 crore.
The amount paid to statutory authorities against the
tax claims amounted to 5,074 crore and
6,095 crore as at September 30, 2021 and March 31, 2021, respectively.
The claims against the group primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding of taxes.
These matters are pending before various Appellate Authorities and the management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial position and results of operations.
2.13 Basic and diluted shares used in computing earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group 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 Group 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 at 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.
2.14 Related party transactions
Refer to note 2.14 "Related party transactions" in the Company’s 2021 Consolidated financial statements under IFRS in Indian rupee for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the six months ended September 30, 2021, the following are the changes in the subsidiaries:
- | Simplus North America Inc., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective April 27, 2021. |
- | Simplus Europe, Ltd., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective July 20, 2021. |
- | Stater GmbH, a wholly-owned subsidiary of Stater N.V., was incorporated on August 4, 2021. |
- | Infosys Green Forum, a wholly-owned subsidiary of Infosys Limited, was incorporated on August 31, 2021. |
- | Infosys Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary of Infosys Consulting Holding AG, has been liquidated effective September 01, 2021. |
- | Sqware Peg Digital Pty Ltd, a wholly-owned subsidiary of Simplus Australia Pty Ltd, has been liquidated effective September 02, 2021. |
- | Beringer Commerce Inc. renamed as Blue Acorn iCi Inc. |
Transactions with key management personnel
The table below describes the compensation to key management personnel which comprise directors and executive officers:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Salaries and other employee benefits to whole-time directors and executive officers(1)(2) | 36 | 38 | 73 | 71 |
Commission and other benefits to non-executive/ independent directors | 3 | 2 | 5 | 3 |
Total | 39 | 40 | 78 | 74 |
(1) | For the three months ended September 30, 2021 and September 30, 2020, includes a charge
of ![]() ![]() ![]() ![]() |
(2) | Does not include post-employment benefit based on actuarial valuation as this is done for the Company as a whole. |
2.15 Segment reporting
IFRS 8 Operating Segments 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. 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. Accordingly, information has been presented along business 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 accounting policies.
Business segments of the Group are primarily enterprises in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other segments represents the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services.
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 Infosys Public services and revenue generated from customers located in India, Japan and China and other enterprises in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses such as depreciation and amortization, 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. 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.
Business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given in note 2.16 Revenue from operations.
2.15.1 Business segments
Three months ended September 30, 2021 and September 30, 2020
(In crore)
Particulars | Financial Services(1) | Retail(2) | Communication(3) | Energy, Utilities, Resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | All other segments(5) | Total |
Revenue | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 | |
Identifiable operating expenses | 5,346 | 2,102 | 2,213 | 1,866 | 1,886 | 1,507 | 1,196 | 571 | 16,687 |
4,055 | 1,733 | 1,828 | 1,553 | 1,153 | 1,260 | 827 | 512 | 12,921 | |
Allocated expenses | 1,576 | 725 | 639 | 618 | 609 | 385 | 319 | 213 | 5,084 |
1,456 | 618 | 602 | 649 | 433 | 315 | 280 | 213 | 4,566 | |
Segment operating income | 2,644 | 1,503 | 816 | 1,017 | 724 | 619 | 588 | (80) | 7,831 |
2,360 | 1,300 | 663 | 825 | 655 | 669 | 565 | 46 | 7,083 | |
Unallocable expenses | 859 | ||||||||
855 | |||||||||
Operating profit | 6,972 | ||||||||
6,228 | |||||||||
Other income, net (Refer to note 2.18) | 524 | ||||||||
570 | |||||||||
Finance Cost | 48 | ||||||||
48 | |||||||||
Profit before income taxes | 7,448 | ||||||||
6,750 | |||||||||
Income tax expense | 2,020 | ||||||||
1,892 | |||||||||
Net profit | 5,428 | ||||||||
4,858 | |||||||||
Depreciation and amortization | 859 | ||||||||
855 | |||||||||
Non-cash expenses other than depreciation and amortization | - |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
Six months ended September 30, 2021 and September 30, 2020
(In crore)
Particulars | Financial Services(1) | Retail(2) | Communication(3) | Energy, Utilities, Resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | All other segments(5) | Total |
Revenues | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 | |
Identifiable operating expenses | 10,659 | 4,099 | 4,293 | 3,620 | 3,424 | 2,888 | 2,213 | 1,053 | 32,249 |
7,959 | 3,326 | 3,730 | 3,106 | 2,436 | 2,388 | 1,626 | 979 | 25,550 | |
Allocated expenses | 3,122 | 1,421 | 1,255 | 1,213 | 1,148 | 747 | 622 | 459 | 9,987 |
3,008 | 1,368 | 1,243 | 1,272 | 901 | 651 | 581 | 456 | 9,480 | |
Segment operating income | 5,002 | 2,985 | 1,523 | 2,038 | 1,350 | 1,186 | 1,159 | 19 | 15,262 |
4,361 | 2,349 | 1,284 | 1,676 | 1,160 | 1,268 | 1,039 | 67 | 13,204 | |
Unallocable expenses | 1,687 | ||||||||
1,611 | |||||||||
Operating profit | 13,575 | ||||||||
11,593 | |||||||||
Other income, net (Refer to note 2.18) | 1,146 | ||||||||
1,046 | |||||||||
Finance Cost | 98 | ||||||||
96 | |||||||||
Profit before income taxes | 14,623 | ||||||||
12,543 | |||||||||
Income tax expense | 3,994 | ||||||||
3,412 | |||||||||
Net profit | 10,629 | ||||||||
9,131 | |||||||||
Depreciation and amortization expense | 1,687 | ||||||||
1,611 | |||||||||
Non-cash expenses other than depreciation and amortization | – | ||||||||
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
2.15.2 Significant clients
No client individually accounted for more than 10% of the revenues for the three months and six months ended September 30, 2021 and September 30, 2020, respectively.
2.16 Revenue from Operations
Accounting Policy:
The Group derives revenues primarily from IT services comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation, licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-timeframe basis.
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved by the parties, in writing, to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services.
The Group’s contracts may include variable consideration including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The billing schedules agreed with customers include periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements with customers generally meet the criteria for considering software development and related services as distinct performance obligations. For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS).When implementation services are provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e., costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover them.
Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in its consolidated statement of comprehensive income.
Revenues for the three months and six months ended September 30, 2021 and September 30, 2020 is as follows:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Revenue from software services | 27,813 | 22,728 | 53,659 | 44,747 |
Revenue from products and platforms | 1,789 | 1,842 | 3,839 | 3,487 |
Total revenue from operations | 29,602 | 24,570 | 57,498 | 48,234 |
The Group has evaluated the impact of COVID – 19 pandemic on (i) the possibility of constraints in our ability to render services which may require revision of estimations of costs to complete the contract because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service level agreements, and (iv) termination or deferment of contracts by customers. The Group has concluded that the impact of COVID – 19 pandemic is not significant based on these estimates. Due to the nature of the COVID – 19 pandemic, the Group will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.
Disaggregated revenue information
The table below presents disaggregated revenues from contracts with customers by geography and offerings for each of our business segments. The group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
Three months ended September 30, 2021 and September 30, 2020
(In crore)
Particulars | Financial Services (1) | Retail(2) | Communication (3) | Energy, Utilities, Resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | Others (5) | Total |
Revenues by Geography* | |||||||||
North America | 5,942 | 2,939 | 2,004 | 1,803 | 1,568 | 2,343 | 1,505 | 228 | 18,332 |
4,547 | 2,403 | 1,618 | 1,710 | 1,178 | 2,126 | 1,141 | 193 | 14,916 | |
Europe | 1,676 | 1,150 | 870 | 1,392 | 1,576 | 54 | 557 | 53 | 7,328 |
1,622 | 1,033 | 699 | 1,043 | 998 | 39 | 493 | 52 | 5,979 | |
India | 469 | 20 | 107 | 35 | 19 | 101 | 8 | 11 | 770 |
394 | 12 | 74 | 4 | 12 | 65 | 5 | 174 | 740 | |
Rest of the world | 1,479 | 221 | 687 | 271 | 56 | 13 | 33 | 412 | 3,172 |
1,308 | 203 | 702 | 270 | 53 | 14 | 33 | 352 | 2,935 | |
Total | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 | |
Revenue by offerings | |||||||||
Digital | 4,984 | 2,645 | 2,222 | 2,025 | 1,847 | 1,453 | 1,188 | 240 | 16,604 |
3,717 | 1,885 | 1,512 | 1,437 | 997 | 1,111 | 692 | 273 | 11,624 | |
Core | 4,582 | 1,685 | 1,446 | 1,476 | 1,372 | 1,058 | 915 | 464 | 12,998 |
4,154 | 1,766 | 1,581 | 1,590 | 1,244 | 1,133 | 980 | 498 | 12,946 | |
Total | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 |
Six months ended September 30, 2021 and September 30, 2020
(In crore)
Particulars | Financial Services (1) | Retail(2) | Communication (3) | Energy, Utilities, Resources and Services | Manufacturing | Hi Tech | Life Sciences(4) | Others (5) | Total |
Revenues by Geography* | |||||||||
North America | 11,669 | 5,725 | 3,779 | 3,530 | 3,009 | 4,496 | 2,873 | 456 | 35,537 |
8,921 | 4,579 | 3,433 | 3,422 | 2,476 | 4,071 | 2,189 | 365 | 29,456 | |
Europe | 3,327 | 2,300 | 1,693 | 2,727 | 2,759 | 106 | 1,044 | 109 | 14,065 |
3,158 | 2,051 | 1,328 | 2,079 | 1,883 | 70 | 988 | 107 | 11,664 | |
India | 871 | 49 | 216 | 67 | 33 | 191 | 16 | 148 | 1,591 |
762 | 22 | 130 | 8 | 27 | 137 | 12 | 325 | 1,423 | |
Rest of the world | 2,916 | 431 | 1,383 | 547 | 121 | 28 | 61 | 818 | 6,305 |
2,487 | 391 | 1,366 | 545 | 111 | 29 | 57 | 705 | 5,691 | |
Total | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 | |
Revenue by offerings | |||||||||
Digital | 9,797 | 5,038 | 4,152 | 3,883 | 3,291 | 2,725 | 2,200 | 565 | 31,651 |
7,143 | 3,499 | 3,007 | 2,757 | 2,026 | 1,978 | 1,257 | 489 | 22,156 | |
Core | 8,986 | 3,467 | 2,919 | 2,988 | 2,631 | 2,096 | 1,794 | 966 | 25,847 |
8,185 | 3,544 | 3,250 | 3,297 | 2,471 | 2,329 | 1,989 | 1,013 | 26,078 | |
Total | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
* | Geographical revenues is based on the domicile of customer. |
Digital Services
Digital Services comprise of service and solution offerings of the Group that enable our clients to transform their businesses. These include offerings that enhance customer experience, leverage AI-based analytics and big data, engineer digital products and IoT, modernize legacy technology systems, migrate to cloud applications and implement advanced cyber security systems.
Core Services
Core Services comprise traditional offerings of the Group that have scaled and industrialized over a number of years. These primarily include application management services, proprietary application development services, independent validation solutions, product engineering and management, infrastructure management services, traditional enterprise application implementation, support and integration services.
Products & platforms
The Group also derives revenues from the sale of products and platforms including Finacle – core banking solution, Edge Suite of products, Infosys Nia - Artificial Intelligence (AI) platform which applies next-generation AI and machine learning, Panaya platform, Skava platform, Stater digital platform and Infosys McCamish- insurance platform.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash collections results in Receivables, Unbilled Revenue, and Unearned Revenue on the Group’s Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.
The Group’s Receivables are rights to consideration that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned revenue.
Trade receivables and unbilled revenues are presented net of impairment in the consolidated financial position.
2.17 Unbilled Revenue
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Unbilled financial asset (1) | 4,647 | 3,572 |
Unbilled non financial asset (2) | 5,524 | 4,549 |
Total | 10,171 | 8,121 |
(1) | Right to consideration is unconditional and is due only after a passage of time. |
(2) | Right to consideration is dependent on completion of contractual milestones. |
2.18 Break-up of expenses and other income, net
a. Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 operates defined benefit pension plan in certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide for periodic payouts after retirement and/or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
Liabilities with regard to these defined benefit plans are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk.
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 profit in the Consolidated Statement of Comprehensive Income.
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 of India. 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.
Superannuation
Certain employees of Infosys, Infosys BPM 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.
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.
The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
Other income, net
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 foreign currency assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.
Foreign currency
Functional currency
The functional currency of Infosys, Infosys BPM, controlled trusts, EdgeVerve and Skava is the Indian rupee. The functional currencies for foreign subsidiaries are their 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 recognized in the Consolidated Statement of Comprehensive Income and reported within exchange gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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. The related revenue and expense are recognised using the same exchange rate.
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 comprehensive income. 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.
Other Comprehensive Income, net of taxes includes translation differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments and measured at fair value through other comprehensive income (FVOCI).
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.
Government grants
The Group recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income 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 the statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
Operating Profits
Operating profit of the Group is computed considering the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
b. The table below provides details of break-up of expenses:
Cost of sales
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Employee benefit costs | 14,110 | 11,902 | 27,747 | 23,965 |
Depreciation and amortization | 859 | 855 | 1,687 | 1,611 |
Travelling costs | 140 | 130 | 258 | 226 |
Cost of technical sub-contractors | 3,054 | 1,634 | 5,508 | 3,260 |
Cost of software packages for own use | 349 | 298 | 679 | 581 |
Third party items bought for service delivery to clients | 1,027 | 799 | 1,973 | 1,401 |
Short-term leases | 5 | 6 | 12 | 17 |
Consultancy and professional charges | 30 | 10 | 53 | 20 |
Communication costs | 73 | 82 | 149 | 169 |
Repairs and maintenance | 90 | 137 | 181 | 268 |
Provision for post-sales client support | 34 | (7) | 35 | (1) |
Others | 35 | (75) | 30 | (44) |
Total | 19,806 | 15,771 | 38,312 | 31,473 |
Selling and marketing expenses
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Employee benefit costs | 1,070 | 994 | 2,129 | 2,036 |
Travelling costs | 12 | 4 | 18 | 11 |
Branding and marketing | 101 | 92 | 214 | 150 |
Short-term leases | 1 | 1 | 2 | 2 |
Communication costs | 2 | 3 | 5 | 7 |
Consultancy and professional charges | 36 | 21 | 82 | 35 |
Others | 13 | 21 | 33 | 42 |
Total | 1,235 | 1,136 | 2,483 | 2,283 |
Administrative expenses
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Employee benefit costs | 563 | 504 | 1,097 | 1,003 |
Consultancy and professional charges | 383 | 255 | 709 | 493 |
Repairs and maintenance | 203 | 213 | 416 | 449 |
Power and fuel | 31 | 37 | 64 | 71 |
Communication costs | 71 | 77 | 140 | 148 |
Travelling costs | 11 | 17 | 20 | 30 |
Impairment loss recognized/(reversed) under expected credit loss model | 44 | 63 | 87 | 162 |
Rates and taxes | 65 | 59 | 128 | 114 |
Insurance charges | 34 | 35 | 75 | 65 |
Short-term leases | 9 | 7 | 18 | 20 |
Commission to non-whole time directors | 3 | 2 | 5 | 3 |
Contribution towards Corporate Social Responsibility | 115 | 140 | 260 | 260 |
Others | 57 | 26 | 109 | 67 |
Total | 1,589 | 1,435 | 3,128 | 2,885 |
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company intends to transfer its CSR capital assets created prior to January 2021 to a controlled subsidiary Infosys Green Forum established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
Other income consists of the following:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Interest income on financial assets carried at amortized cost | 244 | 315 | 572 | 607 |
Interest income on financial assets carried at fair value through other comprehensive income | 155 | 97 | 313 | 186 |
Dividend income on investments carried at fair value through profit or loss | – | 10 | – | 11 |
Gain/(loss) on investments carried at fair value through profit or loss | 41 | 9 | 66 | 33 |
Gain/(loss) on investments carried at fair value through other comprehensive income | – | 27 | – | 54 |
Exchange gains / (losses) on forward and options contracts | 133 | 307 | 56 | 354 |
Exchange gains / (losses) on translation of foreign currency assets and liabilities | (81) | (262) | 47 | (294) |
Others | 32 | 67 | 92 | 95 |
Total | 524 | 570 | 1,146 | 1,046 |
2.19 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.
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.
Description of reserves
Retained earnings
Retained earnings represent the amount of accumulated earnings of the Group.
Share premium
The amount received in excess of the par value has been classified as share premium. Additionally, share-based compensation recognized in net profit in the condensed consolidated statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has been created out of the profit of the eligible SEZ unit 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 terms of the provisions of the Sec 10AA (2) of the Income Tax Act, 1961.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from general reserve.
Other components of equity
Other components of equity include currency translation, re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive income, changes on fair valuation of investments, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
2.19.1 Dividend
The final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company's Board of Directors. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees. Companies are required to pay / distribute dividend after deducting applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
Amount of per share dividend recognized as distribution to equity shareholders:-
(In )
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Final dividend for fiscal 2020 | – | – | – | 9.50 |
Final dividend for fiscal 2021 | – | – | 15.00 | – |
The Board of Directors in their meeting held on April
14, 2021 recommended a final dividend of 15/- per equity share for the financial year ended March 31, 2021. The same was approved
by the shareholders in the Annual General Meeting (AGM) of the Company held on June 19, 2021 which resulted in a net cash outflow of
6,369
crore (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on October
13, 2021 declared a interim dividend of 15/- per equity share which would result in a net cash outflow of approximately
6,286
crore excluding dividend paid on treasury shares.
2.19.2 Capital allocation policy
Effective fiscal 2020, the company expects to return approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual dividends and/or share buyback and/or special dividends, 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 and buyback include applicable taxes.
Update on buyback announced in April 2021:
In line with the capital allocation policy, the Board,
at its meeting held on April 14, 2021, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,200 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding
1,750 per share (Maximum
Buyback Price), subject to shareholders' approval in the ensuing Annual General Meeting.
The shareholders approved the proposal of buyback of Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19, 2021.
The buyback was offered to all eligible equity shareholders
of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through
the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and was completed on September
8, 2021. During this buyback period, the Company had purchased and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buy back price of 1,648.53/- per equity share comprising 1.31% of the pre buyback paid-up equity share
capital of the Company. The buyback resulted in a cash outflow of
9,200 crore (excluding transaction costs and tax on buyback).
The Company funded the buyback from its free reserves including Securities Premium as explained in Section 68 of the Companies Act, 2013.
In accordance with section 69 of the Companies Act,
2013, as at September 30, 2021, the Company has created ‘Capital Redemption Reserve’ of 28 crore equal to the nominal
value of the shares bought back as an appropriation from general reserve.
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or buy back issued shares. As at September 30, 2021, the Company has only one class of equity shares and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.19.3 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 1,48,40,585 and 1,55,14,732 shares were held by controlled trust, as at September
30, 2021 and March 31, 2021, respectively.
for and on behalf of the Board of Directors of Infosys Limited
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer |
A.G.S. Manikantha Company Secretary |
||
Bengaluru October 13, 2021 |
Exhibit 99.9
Ind AS Standalone
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed Standalone Financial Statements
Opinion
We have audited the accompanying interim condensed standalone financial statements of INFOSYS LIMITED (the “Company”), which comprise the Condensed Balance Sheet as at September 30, 2021, the Condensed Statement of Profit and Loss (including Other Comprehensive Income) for the three months and six months ended on that date, the Condensed Statement of Changes in Equity and the Condensed Statement of Cash Flows for the six months ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed standalone financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid interim condensed standalone financial statements give a true and fair view in conformity 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, of the state of affairs of the Company as at September 30, 2021, the profit and total comprehensive income for the three months and six months ended on that date, changes in equity and its cash flows for the six months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed standalone financial statements in accordance with the Standards on Auditing (“SA”s) specified under section 143 (10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim Condensed Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the interim condensed standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed standalone financial statements.
Management’s Responsibilities for the Interim Condensed Standalone Financial Statements
The Company’s Board of Directors is responsible for the preparation and presentation of these interim condensed standalone financial statements that give a true and fair view of the financial position, financial performance, including total comprehensive income, changes in equity and cash flows of the Company in accordance with Ind AS 34 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 Company 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 condensed standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the interim condensed standalone financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Interim Condensed Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the interim condensed standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim condensed standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
· | Identify and assess the risks of material misstatement of the interim condensed standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
· | Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the Company’s internal financial controls. |
· | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
· | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the interim condensed standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
· | Evaluate the overall presentation, structure and content of the interim condensed standalone financial statements, including the disclosures, and whether the interim condensed standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
Materiality is the magnitude of misstatements in the interim condensed standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the interim condensed standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the interim condensed standalone financial statements.
We also communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAGR1906 |
INFOSYS LIMITED
Condensed Standalone Financial Statements under Indian Accounting Standards (Ind AS) for the three months and six months ended September 30, 2021
Index | |
Condensed Balance Sheet | |
Condensed Statement of Profit and Loss | |
Condensed Statement of Changes in Equity | |
Condensed Statement of Cash Flows | |
Overview and Notes to the Interim Condensed Financial Statements | |
1. Overview | |
1.1 Company overview | |
1.2 Basis of preparation of financial statements | |
1.3 Use of estimates and judgments | |
1.4 Critical accounting estimates | |
2. Notes to Interim Condensed Financial Statements | |
2.1 Property, plant and equipment | |
2.2 Goodwill and intangible assets | |
2.3 Leases | |
2.4 Investments | |
2.5 Loans | |
2.6 Other financial assets | |
2.7 Trade Receivables | |
2.8 Cash and cash equivalents | |
2.9 Other assets | |
2.10 Financial instruments | |
2.11 Equity | |
2.12 Other financial liabilities | |
2.13 Trade payables | |
2.14 Other liabilities | |
2.15 Provisions | |
2.16 Income taxes | |
2.17 Revenue from operations | |
2.18 Other income, net | |
2.19 Expenses | |
2.20 Basic and diluted shares used in computing earnings per equity share | |
2.21 Contingent liabilities and commitments | |
2.22 Related party transactions | |
2.23 Segment Reporting |
INFOSYS LIMITED
(In crore)
Condensed Balance Sheet as at | Note No. | September 30, 2021 | March 31, 2021 |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 2.1 | 11,238 | 10,930 |
Right-of-use assets | 2.3 | 3,306 | 3,435 |
Capital work-in-progress | 347 | 906 | |
Goodwill | 167 | 167 | |
Other intangible assets | 49 | 67 | |
Financial assets | |||
Investments | 2.4 | 19,423 | 22,118 |
Loans | 2.5 | 44 | 30 |
Other financial assets | 2.6 | 581 | 613 |
Deferred tax assets (net) | 823 | 955 | |
Income tax assets (net) | 5,325 | 5,287 | |
Other non-current assets | 2.9 | 1,305 | 1,149 |
Total non - current assets | 42,608 | 45,657 | |
Current assets | |||
Financial assets | |||
Investments | 2.4 | 3,873 | 2,037 |
Trade receivables | 2.7 | 17,361 | 16,394 |
Cash and cash equivalents | 2.8 | 12,396 | 17,612 |
Loans | 2.5 | 163 | 229 |
Other financial assets | 2.6 | 5,533 | 5,226 |
Other current assets | 2.9 | 7,453 | 6,784 |
Total current assets | 46,779 | 48,282 | |
Total assets | 89,387 | 93,939 | |
EQUITY AND LIABILITIES | |||
Equity | |||
Equity share capital | 2.11 | 2,102 | 2,130 |
Other equity | 62,431 | 69,401 | |
Total equity | 64,533 | 71,531 | |
LIABILITIES | |||
Non-current liabilities | |||
Financial liabilities | |||
Lease liabilities | 2.3 | 3,198 | 3,367 |
Other financial liabilities | 2.12 | 363 | 259 |
Deferred tax liabilities (net) | 516 | 511 | |
Other non-current liabilities | 2.14 | 634 | 649 |
Total non - current liabilities | 4,711 | 4,786 | |
Current liabilities | |||
Financial liabilities | |||
Lease liabilities | 2.3 | 520 | 487 |
Trade payables | 2.13 | ||
Total outstanding dues of micro enterprises and small enterprises | – | – | |
Total outstanding dues of creditors other than micro enterprises and small enterprises | 1,907 | 1,562 | |
Other financial liabilities | 2.12 | 9,581 | 8,359 |
Other current liabilities | 2.14 | 5,147 | 4,816 |
Provisions | 2.15 | 818 | 661 |
Income tax liabilities (net) | 2,170 | 1,737 | |
Total current liabilities | 20,143 | 17,622 | |
Total equity and liabilities | 89,387 | 93,939 |
The accompanying notes form an integral part of the interim condensed standalone 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED
(In crore except equity share and per equity
share data)
Condensed Statement of Profit and Loss for the | Note No. | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | ||
Revenue from operations | 2.17 | 25,462 | 21,046 | 49,176 | 41,372 |
Other income, net | 2.18 | 1,052 | 582 | 1,622 | 1,060 |
Total income | 26,514 | 21,628 | 50,798 | 42,432 | |
Expenses | |||||
Employee benefit expenses | 2.19 | 12,734 | 11,053 | 24,925 | 22,275 |
Cost of technical sub-contractors | 3,934 | 2,125 | 7,251 | 4,220 | |
Travel expenses | 143 | 136 | 258 | 228 | |
Cost of software packages and others | 2.19 | 736 | 548 | 1,264 | 1,029 |
Communication expenses | 107 | 121 | 210 | 235 | |
Consultancy and professional charges | 365 | 225 | 675 | 418 | |
Depreciation and amortization expense | 601 | 608 | 1,178 | 1,154 | |
Finance cost | 32 | 31 | 64 | 62 | |
Other expenses | 2.19 | 559 | 618 | 1,177 | 1,269 |
Total expenses | 19,211 | 15,465 | 37,002 | 30,890 | |
Profit before tax | 7,303 | 6,163 | 13,796 | 11,542 | |
Tax expense: | |||||
Current tax | 2.16 | 1,805 | 1,526 | 3,502 | 2,752 |
Deferred tax | 2.16 | 35 | 140 | 108 | 285 |
Profit for the period | 5,463 | 4,497 | 10,186 | 8,505 | |
Other comprehensive income | |||||
Items that will not be reclassified subsequently to profit or loss | |||||
Remeasurement of the net defined benefit liability/asset, net | 10 | 6 | (22) | 162 | |
Equity instruments through other comprehensive income, net | 39 | (5) | 41 | (5) | |
Items that will be reclassified subsequently to profit or loss | |||||
Fair value changes on derivatives designated as cash flow hedge, net | 6 | 27 | 11 | 21 | |
Fair value changes on investments, net | 2.4 | 52 | (45) | 90 | 4 |
Total other comprehensive income/ (loss), net of tax | 107 | (17) | 120 | 182 | |
Total comprehensive income for the period | 5,570 | 4,480 | 10,306 | 8,687 | |
Earnings per equity share | |||||
Equity shares of par value ![]() |
|||||
Basic (![]() |
12.93 | 10.56 | 24.01 | 19.97 | |
Diluted (![]() |
12.92 | 10.55 | 23.98 | 19.96 | |
Weighted average equity shares used in computing earnings per equity share | |||||
Basic | 2.20 | 4,22,50,67,582 | 4,25,93,28,154 | 4,24,28,49,248 | 4,25,91,94,980 |
Diluted | 2.20 | 4,22,97,66,160 | 4,26,19,11,389 | 4,24,75,94,685 | 4,26,16,77,462 |
The accompanying notes form an integral part of the interim condensed standalone 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED
Condensed Statement of Changes in Equity
(In crore)
Particulars | Other Equity | ||||||||||||
Reserves & Surplus | Other comprehensive income | ||||||||||||
Equity Share Capital | Capital reserve | Capital redemption reserve | Securities Premium | Retained earnings | General reserve | Share Options Outstanding Account | Special Economic Zone Re-investment reserve(1) | Equity Instruments through other comprehensive income | Effective portion of Cash flow hedges | Other items of other comprehensive income / (loss) | Total equity attributable to equity holders of the Company | ||
Capital reserve | Other reserves(2) | ||||||||||||
Balance as at April 1, 2020 | 2,129 | 54 | 3,082 | 111 | 268 | 52,419 | 106 | 297 | 3,907 | 49 | (15) | (173) | 62,234 |
Changes in equity for the six months ended September 30, 2020 | |||||||||||||
Profit for the period | – | – | – | – | – | 8,505 | – | – | – | – | – | – | 8,505 |
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | – | – | – | – | 162 | 162 |
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | – | – | (5) | – | – | (5) |
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | – | – | – | – | 21 | – | 21 |
Fair value changes on investments, net* | – | – | – | – | – | – | – | – | – | – | – | 4 | 4 |
Total comprehensive income for the period | – | – | – | – | – | 8,505 | – | – | – | (5) | 21 | 166 | 8,687 |
Transfer to general reserve | – | – | – | – | – | (1,554) | 1,554 | – | – | – | – | – | – |
Transferred to Special Economic Zone Re-investment reserve | – | – | – | – | – | (1,412) | – | – | 1,412 | – | – | – | – |
Transferred from Special Economic Zone Re-investment reserve on utilization | – | – | – | – | – | 530 | – | – | (530) | – | – | – | – |
Transfer on account of exercise of stock options (Refer to note 2.11) | – | – | – | – | 100 | – | – | (100) | – | – | – | – | – |
Transfer on account of options not exercised | – | – | – | – | – | – | 1 | (1) | – | – | – | – | – |
Shares issued on exercise of employee stock options(Refer to note 2.11) | – | – | – | – | 5 | – | – | – | – | – | – | – | 5 |
Share based payment to employees (Refer to note 2.11) | – | – | – | – | – | – | – | 134 | – | – | – | – | 134 |
Income tax benefit arising on exercise of stock options | – | – | – | – | 5 | – | – | – | – | – | – | – | 5 |
Reserves on common controlled transactions | – | – | (176) | – | – | – | – | – | – | – | – | – | (176) |
Dividends | – | – | – | – | – | (4,046) | – | – | – | – | – | – | (4,046) |
Balance as at September 30, 2020 | 2,129 | 54 | 2,906 | 111 | 378 | 54,442 | 1,661 | 330 | 4,789 | 44 | 6 | (7) | 66,843 |
INFOSYS LIMITED
Condensed Statement of Changes in Equity
(In crore)
Particulars | Other Equity | ||||||||||||
Reserves & Surplus | Other comprehensive income | ||||||||||||
Equity Share Capital | Capital reserve | Capital redemption reserve | Securities Premium | Retained earnings | General reserve | Share Options Outstanding Account | Special Economic Zone Re-investment reserve(1) | Equity Instruments through other comprehensive income | Effective portion of Cash flow hedges | Other items of other comprehensive income / (loss) | Total equity attributable to equity holders of the Company | ||
Capital reserve | Other reserves(2) | ||||||||||||
Balance as at April 1, 2021 | 2,130 | 54 | 2,906 | 111 | 581 | 57,518 | 1,663 | 372 | 6,144 | 169 | 10 | (127) | 71,531 |
Changes in equity for the six months ended September 30, 2021 | |||||||||||||
Profit for the period | – | – | – | – | – | 10,186 | – | – | – | – | – | – | 10,186 |
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | – | – | – | – | (22) | (22) |
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | – | – | 41 | – | – | 41 |
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | – | – | – | – | 11 | – | 11 |
Fair value changes on investments, net* | – | – | – | – | – | – | – | – | – | – | – | 90 | 90 |
Total comprehensive income for the period | – | – | – | – | – | 10,186 | – | – | – | 41 | 11 | 68 | 10,306 |
Buyback of equity shares (Refer to Note 2.11) ** | (28) | – | – | – | (640) | (8,822) | (1,603) | – | – | – | – | – | (11,093) |
Transaction cost relating to buyback* | – | – | – | – | – | – | (28) | – | – | – | – | – | (28) |
Amount transferred to capital redemption reserve upon buyback | – | – | – | 28 | – | – | (28) | – | – | – | – | – | – |
Transferred to Special Economic Zone Re-investment reserve | – | – | – | – | – | (1,391) | – | – | 1,391 | – | – | – | – |
Transferred from Special Economic Zone Re-investment reserve on utilization | – | – | – | – | – | 350 | – | – | (350) | – | – | – | – |
Transfer on account of exercise of stock options (Refer to note 2.11) | – | – | – | – | 69 | – | – | (69) | – | – | – | – | – |
Shares issued on exercise of employee stock options (Refer to note 2.11) | – | – | – | – | 6 | – | – | – | – | – | – | – | 6 |
Employee stock compensation expense (Refer to note 2.11) | – | – | – | – | – | – | – | 196 | – | – | – | – | 196 |
Income tax benefit arising on exercise of stock options | – | – | – | – | 3 | – | – | 4 | – | – | – | – | 7 |
Dividends | – | – | – | – | – | (6,392) | – | – | – | – | – | – | (6,392) |
Balance as at September 30, 2021 | 2,102 | 54 | 2,906 | 139 | 19 | 51,449 | 4 | 503 | 7,185 | 210 | 21 | (59) | 64,533 |
* | net of tax |
** | Including tax on buyback of ![]() |
(1) | The Special Economic Zone Re-investment Reserve has been created out of the profit of eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961. |
(2) | Profit / loss on transfer of business between entities under common control taken to reserve |
The accompanying notes form an integral part of the interim condensed standalone 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED
Condensed Statement of Cash Flows
Accounting Policy
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. The Company considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
(In crore)
Particulars | Note No. | Six months ended September 30, | |
2021 | 2020 | ||
Cash flow from operating activities: | |||
Profit for the period | 10,186 | 8,505 | |
Adjustments to reconcile net profit to net cash provided by operating activities: | |||
Depreciation and amortization | 2.1 & 2.2 & 2.3 | 1,178 | 1,154 |
Income tax expense | 2.16 | 3,610 | 3,037 |
Impairment loss recognized / (reversed) under expected credit loss model | 66 | 123 | |
Finance cost | 64 | 62 | |
Interest and dividend income | (1,347) | (734) | |
Stock compensation expense | 185 | 154 | |
Other adjustments | 33 | 2 | |
Exchange differences on translation of assets and liabilities, net | 46 | (20) | |
Changes in assets and liabilities | |||
Trade receivables and unbilled revenue | (2,337) | (268) | |
Loans, other financial assets and other assets | 190 | 457 | |
Trade payables | 323 | (209) | |
Other financial liabilities, other liabilities and provisions | 1,745 | 184 | |
Cash generated from operations | 13,942 | 12,447 | |
Income taxes paid | (3,092) | (2,692) | |
Net cash generated by operating activities | 10,850 | 9,755 | |
Cash flow from investing activities: | |||
Expenditure on property, plant and equipment | (793) | (1,105) | |
Deposits placed with corporation | (409) | (425) | |
Redemption of deposits placed with Corporation | 275 | 295 | |
Loan given to subsidiaries | – | (76) | |
Loan repaid by subsidiaries | 73 | 267 | |
Proceeds from redemption of debentures | 536 | 327 | |
Investment in subsidiaries | (126) | (215) | |
Payment towards business transfer | – | (66) | |
Payment of contingent consideration pertaining to acquisition | – | (122) | |
Escrow and other deposits pertaining to Buyback | (420) | – | |
Redemption of Escrow and other deposits pertaining to Buyback | 420 | – | |
Other receipts | 25 | 25 | |
Payments to acquire investments | |||
Preference, equity securities and others | (3) | (1) | |
Liquid mutual fund units and fixed maturity plan securities | (22,370) | (10,499) | |
Certificates of deposit | (498) | – | |
Government Securities | (83) | (4,664) | |
Non Convertible debentures | – | (746) | |
Proceeds on sale of investments | |||
Liquid mutual fund units and fixed maturity plan securities | 20,446 | 10,541 | |
Non-convertible debentures | 1,299 | 535 | |
Certificates of deposit | 500 | 900 | |
Government Securities | 1,336 | 1,529 | |
Interest received | 906 | 673 | |
Dividend received from subsidiary | 592 | – | |
Net cash (used in) / from investing activities | 1,706 | (2,827) | |
Cash flow from financing activities: | |||
Payment of lease liabilities | 2.3 | (286) | (210) |
Buyback of equity shares including transaction costs and tax on buyback | (11,125) | – | |
Other receipts | 62 | – | |
Shares issued on exercise of employee stock options | 6 | 5 | |
Payment of dividends | (6,392) | (4,048) | |
Net cash used in financing activities | (17,735) | (4,253) | |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | (37) | 10 | |
Net increase / (decrease) in cash and cash equivalents | (5,179) | 2,675 | |
Cash and cash equivalents at the beginning of the period | 2.8 | 17,612 | 13,562 |
Cash and cash equivalents at the end of the period | 12,396 | 16,247 | |
Supplementary information: | |||
Restricted cash balance | 2.8 | 153 | 99 |
The accompanying notes form an integral part of the interim condensed standalone 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED
Overview and Notes to the Interim Condensed Standalone Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation. Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as they ideate, plan and execute on their journey to a digital future.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Electronic city, Hosur Road, Bengaluru 560100, Karnataka, India. The company has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares (ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The interim condensed standalone financial statements are approved for issue by the Company's Board of Directors on October 13, 2021.
1.2 Basis of preparation of financial statements
These interim condensed standalone financial statements are prepared in accordance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting, under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 ('the Act') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed standalone financial statements do not include all the information required for a complete set of financial statements. These interim condensed standalone financial statements should be read in conjunction with the standalone financial statements and related notes included in the Company’s Annual Report for the year ended March 31, 2021. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued there after.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
As the quarter and year to date figures are taken from the source and rounded to the nearest digits, the figures reported for the previous quarters might not always add up to the year to date figures reported in this statement.
1.3 Use of estimates and judgments
The preparation of the interim condensed standalone financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the interim condensed standalone financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note no. 1.4. 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 condensed standalone financial statements.
Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19):
The Company has considered the possible effects that may result from COVID-19 pandemic in the preparation of these interim condensed standalone financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of the COVID-19 pandemic, the Company has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company's financial statements may differ from that estimated as at the date of approval of these interim condensed standalone financial statements.
1.4 Critical accounting estimates and judgments
a. Revenue recognition
The Company’s contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Company’s costs to fulfil the contract is not even through the period of the contract because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and nature of the deliverables.
The Company uses the percentage-of-completion method in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Company to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on the latest available information.
Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Company's two major tax jurisdictions are India and the U.S., though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the company 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.(Refer to note 2.16 and note 2.21)
c. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. 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 Company's assets are determined by the 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. (Refer to note 2.1)
d. Leases
As a lessee, the company determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the company has concluded that no material changes are required to lease period relating to the existing lease contracts. (Refer to note 2.3)
e. Allowance for credit losses on receivables and unbilled revenue
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19.
2.1 PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
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 the management. The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
Building(1) | 22-25 years |
Plant and machinery(1)(2) | 5 years |
Office equipment | 5 years |
Computer equipment(1) | 3-5 years |
Furniture and fixtures(1) | 5 years |
Vehicles(1) | 5 years |
Leasehold improvements | Lower of useful life of the asset or lease term |
(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. |
(2) | Includes Solar plant with a useful life of 20 years. |
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 ready 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 Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized 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.
Impairment
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 Cash Generating Unit (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 depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant and equipment for the three months ended September 30, 2021 are as follows:
(In crore)
Particulars | Land- Freehold | Buildings(1)(2) | Plant and machinery(2) | Office Equipment(2) | Computer equipment(2) | Furniture and fixtures(2) | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at July 1, 2021 | 1,398 | 9,698 | 3,164 | 1,211 | 6,756 | 1,964 | 815 | 44 | 25,050 |
Additions | 12 | 303 | 108 | 19 | 223 | 73 | 7 | – | 745 |
Deletions* | – | – | (1) | (3) | (351) | (5) | – | – | (360) |
Gross carrying value as at September 30, 2021 | 1,410 | 10,001 | 3,271 | 1,227 | 6,628 | 2,032 | 822 | 44 | 25,435 |
Accumulated depreciation as at July 1, 2021 | - | (3,551) | (2,652) | (918) | (5,030) | (1,479) | (416) | (33) | (14,079) |
Depreciation | – | (93) | (54) | (27) | (212) | (49) | (39) | (2) | (476) |
Accumulated depreciation on deletions* | – | – | 1 | 2 | 351 | 4 | – | – | 358 |
Accumulated depreciation as at September 30, 2021 | – | (3,644) | (2,705) | (943) | (4,891) | (1,524) | (455) | (35) | (14,197) |
Carrying value as at July 1, 2021 | 1,398 | 6,147 | 512 | 293 | 1,726 | 485 | 399 | 11 | 10,971 |
Carrying value as at September 30, 2021 | 1,410 | 6,357 | 566 | 284 | 1,737 | 508 | 367 | 9 | 11,238 |
The changes in the carrying value of property, plant and equipment for the three months ended September 30, 2020 are as follows:
(In crore)
Particulars | Land- Freehold | Buildings(1)(2) | Plant and machinery(2) | Office Equipment(2) | Computer equipment(2) | Furniture and fixtures(2) | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at July 1, 2020 | 1,385 | 9,077 | 3,050 | 1,103 | 5,989 | 1,885 | 663 | 43 | 23,195 |
Additions | 1 | 11 | 12 | 17 | 280 | 6 | 78 | – | 405 |
Additions through Business transfer | – | – | – | – | 6 | – | 2 | – | 8 |
Deletions | – | – | (1) | (1) | (27) | (3) | (3) | – | (35) |
Gross carrying value as at September 30, 2020 | 1,386 | 9,088 | 3,061 | 1,119 | 6,248 | 1,888 | 740 | 43 | 23,573 |
Accumulated depreciation as at July 1, 2020 | – | (3,200) | (2,124) | (814) | (4,362) | (1,296) | (272) | (28) | (12,096) |
Depreciation | – | (86) | (70) | (28) | (229) | (52) | (34) | (1) | (500) |
Accumulated depreciation on deletions | – | – | 1 | 1 | 27 | 2 | 3 | – | 34 |
Accumulated depreciation as at September 30, 2020 | – | (3,286) | (2,193) | (841) | (4,564) | (1,346) | (303) | (29) | (12,562) |
Carrying value as at July 1, 2020 | 1,385 | 5,877 | 926 | 289 | 1,627 | 589 | 391 | 15 | 11,099 |
Carrying value as at September 30, 2020 | 1,386 | 5,802 | 868 | 278 | 1,684 | 542 | 437 | 14 | 11,011 |
The changes in the carrying value of property, plant and equipment for the six months ended September 30, 2021 are as follows:
(In crore)
Particulars | Land- Freehold | Buildings(1)(2) | Plant and machinery(2) | Office Equipment(2) | Computer equipment(2) | Furniture and fixtures(2) | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at April 1, 2021 | 1,397 | 9,546 | 3,141 | 1,195 | 6,530 | 1,952 | 788 | 44 | 24,593 |
Additions | 13 | 455 | 132 | 36 | 491 | 86 | 34 | – | 1,247 |
Deletions* | – | – | (2) | (4) | (393) | (6) | – | – | (405) |
Gross carrying value as at September 30, 2021 | 1,410 | 10,001 | 3,271 | 1,227 | 6,628 | 2,032 | 822 | 44 | 25,435 |
Accumulated depreciation as at April 1, 2021 | – | (3,460) | (2,600) | (891) | (4,870) | (1,434) | (376) | (32) | (13,663) |
Depreciation | – | (184) | (107) | (55) | (414) | (95) | (79) | (3) | (937) |
Accumulated depreciation on deletions* | – | – | 2 | 3 | 393 | 5 | – | – | 403 |
Accumulated depreciation as at September 30, 2021 | – | (3,644) | (2,705) | (943) | (4,891) | (1,524) | (455) | (35) | (14,197) |
Carrying value as at April 1, 2021 | 1,397 | 6,086 | 541 | 304 | 1,660 | 518 | 412 | 12 | 10,930 |
Carrying value as at September 30, 2021 | 1,410 | 6,357 | 566 | 284 | 1,737 | 508 | 367 | 9 | 11,238 |
* | During each of the three months and six months ended September 30, 2021, certain assets which
were old and not in use having gross book value of ![]() |
The changes in the carrying value of property, plant and equipment for the six months ended September 30, 2020 are as follows:
(In crore)
Particulars | Land- Freehold | Buildings(1)(2) | Plant and machinery(2) | Office Equipment(2) | Computer equipment(2) | Furniture and fixtures(2) | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at April 1, 2020 | 1,316 | 9,038 | 3,038 | 1,094 | 5,690 | 1,875 | 669 | 43 | 22,763 |
Additions | 70 | 50 | 26 | 28 | 585 | 17 | 80 | – | 856 |
Additions through Business transfer | – | – | – | – | 6 | – | 2 | – | 8 |
Deletions | – | – | (3) | (3) | (33) | (4) | (11) | – | (54) |
Gross carrying value as at September 30, 2020 | 1,386 | 9,088 | 3,061 | 1,119 | 6,248 | 1,888 | 740 | 43 | 23,573 |
Accumulated depreciation as at April 1, 2020 | – | (3,114) | (2,053) | (787) | (4,197) | (1,246) | (248) | (26) | (11,671) |
Depreciation | – | (172) | (142) | (57) | (400) | (103) | (66) | (3) | (943) |
Accumulated depreciation on deletions | – | – | 2 | 3 | 33 | 3 | 11 | – | 52 |
Accumulated depreciation as at September 30, 2020 | – | (3,286) | (2,193) | (841) | (4,564) | (1,346) | (303) | (29) | (12,562) |
Carrying value as at April 1, 2020 | 1,316 | 5,924 | 985 | 307 | 1,493 | 629 | 421 | 17 | 11,092 |
Carrying value as at September 30, 2020 | 1,386 | 5,802 | 868 | 278 | 1,684 | 542 | 437 | 14 | 11,011 |
(1) | Buildings include ![]() ![]() |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries. |
The aggregate depreciation has been included under depreciation and amortization expense in the interim condensed statement of Profit and Loss.
2.2 GOODWILL AND OTHER INTANGIBLE ASSETS
2.2.1 Goodwill
Following is a summary of changes in the carrying amount of goodwill:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Carrying value at the beginning | 167 | 29 |
Goodwill on business transfer | – | 138 |
Translation differences | – | – |
Carrying value at the end | 167 | 167 |
2.2.2 Intangible Assets:
Accounting Policy
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.
2.3 LEASES
Accounting Policy
The Company as a lessee
The Company’s lease asset classes primarily consist of leases for land, buildings and computers. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | ||
Land | Buildings | Computers | ||
Balance as at July 1, 2021 | 555 | 2,556 | 106 | 3,217 |
Additions* | – | 205 | 1 | 206 |
Deletion | – | – | – | – |
Depreciation | (1) | (109) | (7) | (117) |
Balance as at September 30, 2021 | 554 | 2,652 | 100 | 3,306 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | ||
Land | Buildings | Computers | ||
Balance as at July 1, 2020 | 553 | 2,045 | 67 | 2,665 |
Additions | 7 | 356 | 2 | 365 |
Addition through business transfer | – | 8 | – | 8 |
Deletion | – | (11) | – | (11) |
Depreciation | (1) | (93) | (3) | (97) |
Balance as at September 30, 2020 | 559 | 2,305 | 66 | 2,930 |
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | ||
Land | Buildings | Computers | ||
Balance as at April 1, 2021 | 556 | 2,766 | 113 | 3,435 |
Additions* | – | 93 | 1 | 94 |
Deletion | – | – | – | – |
Depreciation | (2) | (207) | (14) | (223) |
Balance as at September 30, 2021 | 554 | 2,652 | 100 | 3,306 |
* Net of adjustments on account of modifications
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | ||
Land | Buildings | Computers | ||
Balance as at April 1, 2020 | 554 | 2,209 | 42 | 2,805 |
Additions | 7 | 316 | 32 | 355 |
Additions through business transfer | – | 8 | – | 8 |
Deletions | – | (46) | – | (46) |
Depreciation | (2) | (182) | (8) | (192) |
Balance as at September 30, 2020 | 559 | 2,305 | 66 | 2,930 |
The aggregate depreciation expense on ROU assets is included under depreciation and amortization expense in the interim condensed statement of Profit and Loss.
The following is the break-up of current and non-current lease liabilities as at September 30, 2021 and March 31, 2021:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current lease liabilities | 520 | 487 |
Non-current lease liabilities | 3,198 | 3,367 |
Total | 3,718 | 3,854 |
2.4 INVESTMENTS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current investments | ||
Equity instruments of subsidiaries | 9,059 | 8,933 |
Debentures of subsidiary | – | 536 |
Redeemable Preference shares of subsidiary | 1,318 | 1,318 |
Preference securities and equity instruments | 220 | 167 |
Compulsorily convertible debentures | 7 | 7 |
Others | 44 | 42 |
Tax free bonds | 2,106 | 2,131 |
Government bonds | 13 | 13 |
Non-convertible debentures | 2,613 | 3,669 |
Government Securities | 4,043 | 5,302 |
Total non-current investments | 19,423 | 22,118 |
Current investments | ||
Liquid mutual fund units | 3,302 | 1,326 |
Tax free bonds | 20 | – |
Government Securities | 52 | – |
Non-convertible debentures | 499 | 711 |
Total current investments | 3,873 | 2,037 |
Total carrying value | 23,296 | 24,155 |
(In crore, except as otherwise stated)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current investments | ||
Unquoted | ||
Investment carried at cost | ||
Investments in equity instruments of subsidiaries | ||
Infosys BPM Limited | 660 | 660 |
3,38,23,444 (3,38,23,444) equity shares of ![]() |
||
Infosys Technologies (China) Co. Limited | 369 | 369 |
Infosys Technologies, S. de R.L. de C.V., Mexico | 65 | 65 |
17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up | ||
Infosys Technologies (Sweden) AB | 76 | 76 |
1,000 (1,000) equity shares of SEK 100 par value, fully paid | ||
Infosys Technologies (Shanghai) Company Limited | 1,010 | 900 |
Infosys Public Services, Inc. | 99 | 99 |
3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid | ||
Infosys Consulting Holding AG | 1,323 | 1,323 |
23,350 (23,350) - Class A shares of CHF 1,000 each and | ||
26,460 (26,460) - Class B Shares of CHF 100 each, fully paid up | ||
Infosys Americas Inc. | 1 | 1 |
10,000 (10,000) shares of USD 10 per share, fully paid up | ||
EdgeVerve Systems Limited | 1,312 | 1,312 |
1,31,18,40,000 (1,31,18,40,000) equity shares of ![]() |
||
Infosys Nova Holdings LLC (1) | 2,637 | 2,637 |
Infosys Consulting Pte Ltd | 10 | 10 |
1,09,90,000 (1,09,90,000) shares of SGD 1.00 par value, fully paid | ||
Brilliant Basics Holding Limited | 59 | 59 |
1,346 (1,346) shares of GBP 0.005 each, fully paid up | ||
Infosys Arabia Limited | 2 | 2 |
70 (70) shares | ||
Skava Systems Private Limited | 59 | 59 |
25,000 (25,000) shares of ![]() |
||
Panaya Inc. | 582 | 582 |
2 (2) shares of USD 0.01 per share, fully paid up | ||
Infosys Chile SpA | 7 | 7 |
100 (100) shares | ||
WongDoody Holding Company Inc | 380 | 380 |
2,000 (2,000) shares | ||
Infosys Luxembourg S.a r.l. | 17 | 17 |
20,000 (20,000) shares | ||
Infosys Austria GmBH ( formerly known as Lodestone Management Consultants GmbH) | – | – |
80,000 (80,000) shares of EUR 1 par value, fully paid up | ||
Infosys Consulting Brazil | 337 | 337 |
27,50,71,070 (27,50,71,070) shares of BRL 1 per share, fully paid up | ||
Infosys Romania | 34 | 34 |
99,183 (99,183) shares of RON 100 per share, fully paid up | ||
Infosys Bulgaria | 2 | 2 |
4,58,000 (4,58,000) shares of BGN 1 per share, fully paid up | ||
Infosys Germany Holdings GmbH | 2 | 2 |
25,000 (25,000) shares EUR 1 per share, fully paid up | ||
Infosys Green Forum | 1 | – |
10,00,000 (NIL) shares ![]() |
||
Infosys Automotive and Mobility GmbH | 15 | – |
Investment in Redeemable Preference shares of subsidiary | ||
Infosys Consulting Pte Ltd | 1,318 | 1,318 |
24,92,00,000 (24,92,00,000) shares of SGD 1 per share, fully paid up | ||
10,377 | 10,251 | |
Investment carried at amortized cost | ||
Investment in debentures of subsidiary | ||
EdgeVerve Systems Limited | ||
Nil (5,36,00,000) Unsecured redeemable, non-convertible debentures of ![]() |
– | 536 |
– | 536 | |
Investments carried at fair value through profit or loss | ||
Compulsorily convertible debentures | 7 | 7 |
Others (2) | 44 | 42 |
51 | 49 | |
Investment carried at fair value through other comprehensive income | ||
Preference securities | 218 | 165 |
Equity instruments | 2 | 2 |
220 | 167 | |
Quoted | ||
Investments carried at amortized cost | ||
Tax free bonds | 2,106 | 2,131 |
Government bonds | 13 | 13 |
2,119 | 2,144 | |
Investments carried at fair value through other comprehensive income | ||
Non-convertible debentures | 2,613 | 3,669 |
Government Securities | 4,043 | 5,302 |
6,656 | 8,971 | |
Total non-current investments | 19,423 | 22,118 |
Current investments | ||
Unquoted | ||
Investments carried at fair value through profit or loss | ||
Liquid mutual fund units | 3,302 | 1,326 |
3,302 | 1,326 | |
Quoted | ||
Investments carried at amortized cost | ||
Tax free bonds | 20 | – |
20 | – | |
Investments carried at fair value through other comprehensive income | ||
Government Securities | 52 | – |
Non-convertible debentures | 499 | 711 |
551 | 711 | |
Total current investments | 3,873 | 2,037 |
Total investments | 23,296 | 24,155 |
Aggregate amount of quoted investments | 9,346 | 11,826 |
Market value of quoted investments (including interest accrued), current | 572 | 713 |
Market value of quoted investments (including interest accrued), non current | 9,145 | 11,507 |
Aggregate amount of unquoted investments | 13,950 | 12,329 |
(1) Aggregate amount of impairment in value of investments | 94 | 94 |
Reduction in the fair value of assets held for sale | 854 | 854 |
Investments carried at cost | 10,377 | 10,251 |
Investments carried at amortized cost | 2,139 | 2,680 |
Investments carried at fair value through other comprehensive income | 7,427 | 9,849 |
Investments carried at fair value through profit or loss | 3,353 | 1,375 |
(2) | Uncalled
capital commitments outstanding as of September 30, 2021 and March 31, 2021 was ![]() ![]() |
Refer to note 2.10 for accounting policies on financial instruments.
Method of fair valuation:
(In crore)
Class of investment | Method | Fair value as at | |
September 30, 2021 | March 31, 2021 | ||
Liquid mutual fund units | Quoted price | 3,302 | 1,326 |
Tax free bonds and government bonds | Quoted price and market observable inputs | 2,507 | 2,527 |
Non-convertible debentures | Quoted price and market observable inputs | 3,112 | 4,380 |
Government Securities | Quoted price | 4,095 | 5,302 |
Unquoted equity and preference securities | Discounted cash flows method, Market multiples method, Option pricing model | 220 | 167 |
Compulsorily convertible debentures | Discounted cash flows method | 7 | 7 |
Others | Discounted cash flows method, Market multiples method, Option pricing model | 44 | 42 |
Note: Certain quoted investments are classified as Level 2 in the absence of active market for such investments.
2.5 LOANS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non- Current | ||
Unsecured, considered good | ||
Other Loans | ||
Loans to employees | 44 | 30 |
44 | 30 | |
Unsecured, considered doubtful | ||
Other Loans | ||
Loans to employees | 27 | 23 |
71 | 53 | |
Less: Allowance for doubtful loans to employees | 27 | 23 |
Total non - current loans | 44 | 30 |
Current | ||
Unsecured, considered good | ||
Loans to subsidiaries | – | 96 |
Other Loans | ||
Loans to employees | 163 | 133 |
Total current loans | 163 | 229 |
Total Loans | 207 | 259 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Security deposits (1) | 44 | 45 |
Net investment in Sublease of right of use asset (1) | 334 | 348 |
Rental deposits (1) | 134 | 164 |
Unbilled revenues (1)(5)# | 69 | 11 |
Others (1) | – | 45 |
Total non-current other financial assets | 581 | 613 |
Current | ||
Security deposits (1) | 1 | 1 |
Rental deposits (1) | 36 | 10 |
Restricted deposits (1)* | 1,960 | 1,826 |
Unbilled revenues (1)(5)# | 2,475 | 2,139 |
Interest accrued but not due (1) | 443 | 553 |
Foreign currency forward and options contracts (2)(3) | 117 | 178 |
Net investment in Sublease of right of use asset (1) | 39 | 37 |
Others (1)(4) | 462 | 482 |
Total current other financial assets | 5,533 | 5,226 |
Total other financial assets | 6,114 | 5,839 |
(1) Financial assets carried at amortized cost | 5,997 | 5,661 |
(2) Financial assets carried at fair value through other comprehensive income | 40 | 25 |
(3) Financial assets carried at fair value through Profit or Loss | 77 | 153 |
(4) Includes dues from subsidiaries | 139 | 182 |
(5) Includes dues from subsidiaries | 76 | 82 |
* | Restricted deposits represent deposit with financial institutions to settle employee related obligations as and when they arise during the normal course of business. |
# | Classified as financial asset as right to consideration is unconditional and is due only after a passage of time. |
2.7 TRADE RECEIVABLES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Unsecured | ||
Considered good(2) | 17,361 | 16,394 |
Considered doubtful | 565 | 543 |
17,926 | 16,937 | |
Less: Allowances for credit losses | 565 | 543 |
Total trade receivables(1) | 17,361 | 16,394 |
(1) Includes dues from companies where directors are interested | – | – |
(2) Includes dues from subsidiaries | 232 | 203 |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Balances with banks | ||
In current and deposit accounts | 9,926 | 13,792 |
Cash on hand | – | – |
Others | ||
Deposits with financial institutions | 2,470 | 3,820 |
Total Cash and cash equivalents | 12,396 | 17,612 |
Balances with banks in unpaid dividend accounts | 33 | 33 |
Deposit with more than 12 months maturity | 8,247 | 11,948 |
Balances with banks held as margin money deposits against guarantees | 70 | 71 |
Cash and cash equivalents as at September 30, 2021
and March 31, 2021 include restricted cash and bank balances of 153 crore and
154 crore, respectively. The restrictions
are primarily on account of bank balances held as margin money deposits against guarantees.
The deposits maintained by the Company with banks and financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.
2.9 OTHER ASSETS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Capital advances | 126 | 141 |
Advances other than capital advance | ||
Others | ||
Prepaid expenses | 67 | 64 |
Defined benefit assets | 10 | 9 |
Deferred contract cost(3) | 251 | 73 |
Unbilled revenues(2) | 186 | 175 |
Withholding taxes and others | 665 | 687 |
Total non-current other assets | 1,305 | 1,149 |
Current | ||
Advances other than capital advance | ||
Payment to vendors for supply of goods | 49 | 131 |
Others | ||
Prepaid expenses (1) | 872 | 874 |
Unbilled revenues(2) | 4,807 | 3,904 |
Deferred contract cost(3) | 75 | 40 |
Withholding taxes and others | 1,648 | 1,832 |
Other receivables | 2 | 3 |
Total current other assets | 7,453 | 6,784 |
Total other assets | 8,758 | 7,933 |
(1) Includes dues from subsidiaries | 219 | 237 |
(2) | Classified as non financial asset as the contractual right to consideration is dependent on completion of contractual milestones. |
(3) | Includes technology assets taken over by the Company from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company in accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing arrangement with a third party for these assets which has been considered as financial liability. (Refer to note 2.12) |
Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from Government of India.
2.10 FINANCIAL INSTRUMENTS
Accounting Policy
2.10.1 Initial recognition
The Company 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, which 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.
2.10.2 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. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss.
(v) Investment in subsidiaries
Investment in subsidiaries is carried at cost in the separate financial statements.
b. Derivative financial instruments
The Company 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 includes derivative financial assets or liabilities which are not designated as hedges.
Although the Company 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 Company 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 hedge 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 hedge 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 hedge reserve till the period the hedge was effective remains in cash flow hedge reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedge 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 hedge reserve is reclassified to net profit in the Statement of Profit and Loss.
2.10.3 Derecognition of financial instruments
The Company 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 Company's Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.10.4 Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each 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 table 'Financial instruments by category' below 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 approximate fair value due to the short maturity of these instruments.
2.10.5 Impairment
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets and unbilled revenues which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in statement of profit or loss.
Financial instruments by category
The carrying value and fair value of financial instruments by categories as at September 30, 2021 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 to note 2.8) | 12,396 | – | – | – | – | 12,396 | 12,396 |
Investments (Refer to note2.4) | |||||||
Preference securities, Equity instruments and others | – | – | 44 | 220 | – | 264 | 264 |
Compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Tax free bonds and government bonds | 2,139 | – | – | – | – | 2,139 | 2,507(1) |
Liquid mutual fund units | – | – | 3,302 | – | – | 3,302 | 3,302 |
Non convertible debentures | – | – | – | – | 3,112 | 3,112 | 3,112 |
Government Securities | – | – | – | – | 4,095 | 4,095 | 4,095 |
Trade receivables (Refer to note 2.7) | 17,361 | – | – | – | – | 17,361 | 17,361 |
Loans (Refer to note 2.5) | 207 | – | – | – | – | 207 | 207 |
Other financial assets (Refer to note 2.6) (3) | 5,997 | – | 77 | – | 40 | 6,114 | 6,037(2) |
Total | 38,100 | – | 3,430 | 220 | 7,247 | 48,997 | 49,288 |
Liabilities: | |||||||
Trade payables (Refer to note 2.13) | 1,907 | – | – | – | – | 1,907 | 1,907 |
Lease liabilities (Refer to note 2.3) | 3,718 | – | – | – | – | 3,718 | 3,718 |
Other financial liabilities (Refer to note 2.12) | 8,005 | – | 14 | – | 1 | 8,020 | 8,020 |
Total | 13,630 | – | 14 | – | 1 | 13,645 | 13,645 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of ![]() |
(3) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
The carrying value and fair value of financial instruments by categories as at March 31, 2021 were 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 to note 2.8) | 17,612 | – | – | – | – | 17,612 | 17,612 |
Investments (Refer to note 2.4) | |||||||
Preference securities, Equity instruments and others | – | – | 42 | 167 | – | 209 | 209 |
Compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Tax free bonds and government bonds | 2,144 | – | – | – | – | 2,144 | 2,527(2) |
Liquid mutual fund units | – | – | 1,326 | – | – | 1,326 | 1,326 |
Redeemable, non-convertible debentures (1) | 536 | – | – | – | – | 536 | 536 |
Non convertible debentures | – | – | – | – | 4,380 | 4,380 | 4,380 |
Government Securities | – | – | – | – | 5,302 | 5,302 | 5,302 |
Trade receivables (Refer to note 2.7) | 16,394 | – | – | – | – | 16,394 | 16,394 |
Loans (Refer to note 2.5) | 259 | – | – | – | – | 259 | 259 |
Other financial assets (Refer to note 2.6)(4) | 5,661 | – | 153 | – | 25 | 5,839 | 5,747(3) |
Total | 42,606 | – | 1,528 | 167 | 9,707 | 54,008 | 54,299 |
Liabilities: | |||||||
Trade payables (Refer to note 2.13) | 1,562 | – | – | – | – | 1,562 | 1,562 |
Lease Liabilities (Refer to note 2.3) | 3,854 | – | – | – | – | 3,854 | 3,854 |
Other financial liabilities (Refer to note 2.12) | 6,873 | – | 14 | – | – | 6,887 | 6,887 |
Total | 12,289 | – | 14 | – | – | 12,303 | 12,303 |
(1) | The carrying value of debentures approximates fair value as the instruments are at prevailing market rates |
(2) | On account of fair value changes including interest accrued |
(3) | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of ![]() |
(4) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
For trade receivables and trade payables and other assets and 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.
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 fair value hierarchy of assets and liabilities as at September 30, 2021 is as follows:
(In crore)
Particulars | As at September 30, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in tax free bonds (Refer to note 2.4) | 2,493 | 2,212 | 281 | – |
Investments in government bonds (Refer to note 2.4) | 14 | 14 | – | – |
Investments in liquid mutual fund units (Refer to note 2.4) | 3,302 | 3,302 | – | – |
Investments in non convertible debentures (Refer to note 2.4) | 3,112 | 1,670 | 1,442 | – |
Investments in government securities (Refer to note 2.4) | 4,095 | 4,090 | 5 | – |
Investments in equity instruments (Refer to note 2.4) | 2 | – | – | 2 |
Investments in preference securities (Refer to note 2.4) | 218 | – | – | 218 |
Investments in compulsorily convertible debentures (Refer to note 2.4) | 7 | – | – | 7 |
Other investments (Refer to note 2.4) | 44 | – | – | 44 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) | 117 | – | 117 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to note 2.12) | 15 | – | 15 | – |
During the six months ended September 30, 2021, tax
free bonds and non-convertible debentures of 1,010 crore were transferred from Level 2 to Level 1 of fair value hierarchy since
these were valued based on quoted price. Further non-convertible debentures of
1,442 crore were transferred from Level 1 to Level
2 of fair value hierarchy, since these were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities as at March 31, 2021 was as follows:
(In crore)
Particulars | As at March 31, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in tax free bonds (Refer to note 2.4) | 2,513 | 1,352 | 1,161 | – |
Investments in government bonds (Refer to note 2.4) | 14 | 14 | – | – |
Investments in liquid mutual fund units (Refer to note 2.4) | 1,326 | 1,326 | – | – |
Investments in non convertible debentures (Refer to note 2.4) | 4,380 | 4,085 | 295 | – |
Investments in government securities (Refer to note 2.4) | 5,302 | 5,302 | – | – |
Investments in equity instruments (Refer to note 2.4) | 2 | – | – | 2 |
Investments in preference securities (Refer to note 2.4) | 165 | – | – | 165 |
Investments in compulsorily convertible debentures (Refer to note 2.4) | 7 | – | – | 7 |
Other investments (Refer to note 2.4) | 42 | – | – | 42 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) | 178 | – | 178 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to note 2.12) | 9 | – | 9 | – |
Liability towards contingent consideration (Refer to note 2.12) | 5 | – | – | 5 |
During the year ended March 31, 2021, tax free bonds
and non-convertible debentures of 107 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were
valued based on Quoted price, and tax free bonds of
1,777 crore were transferred from Level 1 to Level 2 of fair value hierarchy,
since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Company are fair valued based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, fixed maturity plan securities, certificates of deposit, commercial papers, quoted bonds issued by government and quasi-government organizations and non-convertible debentures. The Company invests after considering counterparty risks based on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per its risk management program.
2.11 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity share capital. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.
Description of reserves
Capital redemption reserve
In accordance with section 69 of the Indian Companies Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from general reserve.
Retained earnings
Retained earnings represent the amount of accumulated earnings of the Company.
Securities premium
The amount received in excess of the par value of equity shares has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The Share options outstanding account is used to record the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has been created out of the profit of the eligible SEZ unit 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 terms of the provisions of the Sec 10AA (2) of the Income Tax Act, 1961.
Other components of equity
Other components of equity include remeasurement of net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on fair valuation of investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the statement of Profit and Loss upon the occurrence of the related forecasted transaction.
2.11.1 EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Authorized | ||
Equity shares, ![]() |
||
480,00,00,000 (480,00,00,000) equity shares | 2,400 | 2,400 |
Issued, Subscribed and Paid-Up | ||
Equity shares, ![]() |
2,102 | 2,130 |
4,20,54,64,426 (426,06,60,846) equity shares fully paid-up | ||
2,102 | 2,130 |
(1) Refer to note 2.20 for details of basic and diluted shares
Forfeited shares amounted to 1,500/- (
1,500/-)
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 Depository Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying
equity share.
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.
For details of shares reserved for issue under the employee stock option plan of the Company, refer to the note below.
The reconciliation of the number of shares outstanding and the amount of share capital as at September 30, 2021 and March 31, 2021 is set out below:
(in crore, except as stated otherwise)
Particulars | As at September 30, 2021 | As at March 31, 2021 | ||
Number of shares | Amount | Number of shares | Amount | |
As at the beginning of the period | 426,06,60,846 | 2,130 | 425,89,92,566 | 2,129 |
Add: Shares issued on exercise of employee stock options | 610,917 | – | 1,668,280 | 1 |
Less: Shares bought back | 55,807,337 | 28 | – | – |
As at the end of the period | 420,54,64,426 | 2,102 | 426,06,60,846 | 2,130 |
Capital allocation policy
Effective fiscal 2020, the company expects to return approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi annual dividends and/or share buyback and/or special dividends, 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 and buyback include applicable taxes.
Update on buyback announced in April 2021:
In line with the capital allocation policy, the Board,
at its meeting held on April 14, 2021, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,200 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding
1,750 per share (Maximum
Buyback Price), subject to shareholders' approval in the ensuing Annual General Meeting.
The shareholders approved the proposal of buyback of Equity Shares recommended by its Board of Directors in the Annual General meeting held on June 19, 2021.
The buyback was offered to all
eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under
the open market route through the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and
was completed on September 8, 2021. During this buyback period the Company had purchased and extinguished a total of 55,807,337 equity
shares from the stock exchange at a volume weighted average buyback price of 1,648.53/- per equity share comprising 1.31% of the
pre buyback paid up equity share capital of the Company. The buyback resulted in a cash outflow of
9,200 crore (excluding transaction
costs and tax on buyback). The Company funded the buyback from its free reserves including Securities Premium as explained in Section
68 of the Companies Act, 2013.
In accordance with section 69 of the Companies Act, 2013, as at September 30, 2021, the Company has created
‘Capital Redemption Reserve’ of 28 crore equal to the nominal value of the shares bought back as an appropriation from
general reserve.
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or buy back issued shares. As at September 30, 2021, the Company has only one class of equity shares and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.11.2 DIVIDEND
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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution to equity shareholders is as follows:
(in )
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Final dividend for fiscal 2021 | – | – | 15.00 | – |
Final dividend for fiscal 2020 | – | – | – | 9.50 |
The Board of Directors in their meeting held on April
14, 2021 recommended a final dividend of 15/- per equity share for the financial year ended March 31, 2021. The same was approved
by the shareholders in the Annual General Meeting (AGM) of the Company held on June 19, 2021 which resulted in a cash outflow of
6,392
crore.
The Board of Directors in their meeting held on October
13, 2021 declared an interim dividend of 15/- per equity share which would result in a net cash outflow of approximately
6,308
crore.
2.11.3 Employee Stock Option Plan (ESOP):
Accounting Policy
The Company recognizes compensation expense relating to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards is recognized as an expense in the statement of profit and loss 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.
Infosys Expanded Stock Ownership Program 2019 (the 2019 Plan) :
On June 22, 2019 pursuant to approval by the shareholders in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 5,00,00,000 equity shares. To implement the 2019 Plan , up to 4,50,00,000 equity shares may be issued by way of secondary acquisition of shares by Infosys Expanded Stock Ownership Trust. The restricted stock units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined annual performance parameters as determined by the administrator (Nomination and remuneration committee). The performance parameters will be based on a combination of relative total shareholders return (TSR) against selected industry peers and certain broader market domestic and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015 Plan) :
On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was 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). The Company expects to grant the instruments under the 2015 Plan over the period of 4 to 7 years. The plan numbers mentioned above would further be adjusted for the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee (NARC). 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.
Controlled trust holds 1,48,40,585 and 1,55,14,732 shares as at September 30, 2021 and March 31, 2021, respectively under the 2015 plan. Out of these shares, 2,00,000 equity shares each have been earmarked for welfare activities of the employees as at September 30, 2021 and March 31, 2021.
The following is the summary of grants during the three months and six months ended September 30, 2021 and September 30, 2020 :
Particulars | 2019 plan | 2015 plan | ||
Six months ended September 30, | Six months ended September 30, | |||
2021 | 2020 | 2021 | 2020 | |
Equity settled RSU | ||||
KMPs | 73,962 | 207,808 | 101,697 | 204,097 |
Employees other than KMPs | – | – | – | 24,600 |
Total Grants | 73,962 | 207,808 | 101,697 | 228,697 |
Note: No grants were made during the three months ended September 30,2021 and September 30, 2020
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
In accordance with the employee agreement which has
been approved by the shareholders, the CEO is eligible to receive an annual grant of RSUs of fair value 3.25 crore which will vest
overtime in three equal annual installments upon the completion of each year of service from the respective grant date. Though the annual
time based grants for the remaining employment term ending on March 31, 2023 have not been granted as of September 30, 2021, since the
service commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with Ind
AS 102, Share based payments
The Board, on April 14, 2021, based on the recommendations
of the nomination and remuneration committee, in accordance with the terms of his employment agreement, approved the grant of performance-based
RSUs of fair value of 13 crore for fiscal 2022 under the 2015 Plan. These RSUs will vest in line with the employment agreement
based on achievement of certain performance targets. Accordingly, 96,150 performance based RSU’s were granted effective May 2, 2021.
Under the 2019 plan:
The Board, on April 14, 2021, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2022 under
the 2019 Plan. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly,
73,962 performance based RSU’s were granted effective May 2, 2021.
Other KMPs
Under the 2015 plan:
On April 14, 2021, based on the recommendations of the Nomination and Remuneration Committee, in accordance with employment agreement, the Board, approved performance-based grant of 5,547 RSUs to other KMP under the 2015 Plan. The grants were made effective May 2, 2021. The performance based RSUs will vest over three years based on certain performance targets.
Break-up of employee stock compensation expense
(in crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Granted to: | ||||
KMP | 17 | 19 | 34 | 36 |
Employees other than KMP | 71 | 67 | 151 | 118 |
Total (1) | 88 | 86 | 185 | 154 |
(1) Cash settled stock compensation expense included in the above | 3 | 23 | 8 | 35 |
The fair value of the awards are estimated using the Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility during the expected term of the options 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 options. Expected volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated on the date of grant with the following assumptions:
Particulars | For options granted in | |||
Fiscal 2022- Equity Shares-RSU |
Fiscal 2022- ADS-RSU |
Fiscal 2021- Equity Shares-RSU |
Fiscal 2021- ADS-RSU | |
Weighted average share price (![]() |
1,352 | 18.20 | 1,253 | 18.46 |
Exercise price (![]() |
5.00 | 0.07 | 5.00 | 0.07 |
Expected volatility (%) | 29-35 | 30-37 | 30-35 | 30-36 |
Expected life of the option (years) | 1-4 | 1-4 | 1-4 | 1-4 |
Expected dividends (%) | 2-3 | 2-3 | 2-3 | 2-3 |
Risk-free interest rate (%) | 4-5 | 0.1-0.6 | 4-5 | 0.1-0.3 |
Weighted average fair value as on grant date (![]() |
1,189 | 16.80 | 1,124 | 16.19 |
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 behavior of the employee who receives the RSU/ESOP.
2.12 OTHER FINANCIAL LIABILITIES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Others | ||
Compensated absences | 94 | 91 |
Accrued compensation to employees (1) | 8 | – |
Accrued expenses (1)(4) | 216 | 163 |
Other payables (1)(6) | 45 | 5 |
Total non-current other financial liabilities | 363 | 259 |
Current | ||
Unpaid dividends (1) | 33 | 33 |
Others | ||
Accrued compensation to employees (1) | 2,973 | 2,915 |
Accrued expenses (1)(4) | 4,055 | 2,944 |
Retention monies (1) | 13 | 13 |
Payable for acquisition of business - Contingent consideration (2) | – | 5 |
Capital creditors (1) | 204 | 340 |
Compensated absences | 1,830 | 1,640 |
Other payables (1)(5)(6) | 458 | 460 |
Foreign currency forward and options contracts (2)(3) | 15 | 9 |
Total current other financial liabilities | 9,581 | 8,359 |
Total other financial liabilities | 9,944 | 8,618 |
(1) Financial liability carried at amortized cost | 8,005 | 6,873 |
(2) Financial liability carried at fair value through profit or loss | 14 | 14 |
(3) Financial liability carried at fair value through other comprehensive income | 1 | – |
(4) Includes dues to subsidiaries | 10 | 74 |
(5) Includes dues to subsidiaries | 319 | 174 |
Contingent consideration on undiscounted basis | – | 5 |
(6) | Deferred contract cost in note 2.9 includes technology assets taken over by the Company from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company in accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing arrangement with a third party for these assets which has been considered as financial liability. |
2.13 TRADE PAYABLES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Trade payables(1) | 1,907 | 1,562 |
Total trade payables | 1,907 | 1,562 |
(1)Includes dues to subsidiaries | 476 | 400 |
2.14 OTHER LIABILITIES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non current | ||
Accrued defined benefit plan liability | 258 | 274 |
Others | ||
Deferred income | 13 | 16 |
Deferred income - government grants | 13 | 14 |
Withholding taxes and others | 350 | 345 |
Total non - current other liabilities | 634 | 649 |
Current | ||
Accrued defined benefit plan liability | 1 | 3 |
Unearned revenue | 3,463 | 3,145 |
Others | ||
Deferred income - government grants | 12 | 2 |
Withholding taxes and others | 1,671 | 1,666 |
Total current other liabilities | 5,147 | 4,816 |
Total other liabilities | 5,781 | 5,465 |
2.15 PROVISIONS
Accounting Policy
A provision is recognized if, as a result of a past event, the Company 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 Company provides its clients with a fixed-period post sales support on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time related revenues are recorded in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and estimates are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company 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 Company recognizes any impairment loss on the assets associated with that contract.
Provision for post-sales client support and other provisions
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Others | ||
Post-sales client support and others | 818 | 661 |
Total provisions | 818 | 661 |
Provision for post sales client support represents cost associated with providing post sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 year.
2.16 INCOME TAXES
Accounting Policy
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. 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 Company 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 equity.
Income tax expense in the statement of profit and loss comprises:
(In crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Current taxes | 1,805 | 1,526 | 3,502 | 2,752 |
Deferred taxes | 35 | 140 | 108 | 285 |
Income tax expense | 1,840 | 1,666 | 3,610 | 3,037 |
Income tax expense for the three months ended September
30, 2021 and September 30, 2020 includes reversal (net of provisions) of 11 crore and
87 crore, respectively. Income tax
expense for the six months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of
32 crore and
225 crore, respectively. These reversals pertains to prior periods on account of adjudication of certain disputed matters in favor
of the Company and upon filing of return across various jurisdictions.
Deferred income tax for the three months and six months ended September 30, 2021 and September 30, 2020, substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA) with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.17 REVENUE FROM OPERATIONS
Accounting Policy
The Company derives revenues primarily from IT services comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation, licensing of software products and platforms across the Company’s core and digital offerings (together called as “software related services”). Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-timeframe basis.
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved by the parties, in writing, to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the consideration the Company has received or expects to receive in exchange for these products or services (“transaction price”). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract. The Company allocates the transaction price to each distinct performance obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Company estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services
The Company’s contracts may include variable consideration including rebates, volume discounts and penalties. The Company includes variable consideration as part of transaction price when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and Company’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The billing schedules agreed with customers include periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements with customers generally meet the criteria for considering software development and related services as distinct performance obligations. For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Company is unable to determine the standalone selling price, the Company uses the expected cost plus margin approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted in accordance with such specific accounting guidance. In such arrangements where the Company is able to determine that hardware and services are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling price basis. In the absence of standalone selling price, the Company uses the expected cost-plus margin approach in estimating the standalone selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure of progress is determined based on promise in the contract
Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Company uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it controls the good or service before it is transferred to the customer. The Company considers whether it has the primary obligation to fulfil the contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e., costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Company expects to recover them.
Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.
Such Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized to expenses over the respective contract life on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover the carrying amount of the capitalized costs.
The Company presents revenues net of indirect taxes in its statement of profit and loss.
Revenue from operations for the three months and six months ended September 30, 2021 and September 30, 2020 is as follows:
(In crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Revenue from software services | 25,404 | 20,978 | 49,000 | 41,264 |
Revenue from products and platforms | 58 | 68 | 176 | 108 |
Total revenue from operations | 25,462 | 21,046 | 49,176 | 41,372 |
The Company has evaluated the impact of COVID – 19 pandemic on (i) the possibility of constraints in our ability to render services which may require revision of estimations of costs to complete the contract because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service level agreements, and (iv) termination or deferment of contracts by customers. The company has concluded that the impact of COVID – 19 pandemic is not significant based on these estimates. Due to the nature of the COVID – 19 pandemic, the company will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.
Disaggregated revenue information
The table below presents disaggregated revenues from contracts with customers by offerings for the three months and six months ended September 30, 2021 and September 30, 2020 respectively. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
(In crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Revenue by offerings | ||||
Core | 10,755 | 10,988 | 21,492 | 22,191 |
Digital | 14,707 | 10,058 | 27,684 | 19,181 |
Total | 25,462 | 21,046 | 49,176 | 41,372 |
Digital Services
Digital Services comprise of service and solution offerings of the company that enable our clients to transform their businesses. These include offerings that enhance customer experience, leverage AI-based analytics and big data, engineer digital products and IoT, modernize legacy technology systems, migrate to cloud applications and implement advanced cyber security systems.
Core Services
Core Services comprise traditional offerings of the company that have scaled and industrialized over a number of years. These primarily include application management services, proprietary application development services, independent validation solutions, product engineering and management, infrastructure management services, traditional enterprise application implementation, support and integration services.
Products & platforms
The Company also derives revenues from the sale of products and platforms including Infosys Nia - Artificial Intelligence (AI) platform which applies next-generation AI and machine learning.
Trade receivables and Contract Balances
The timing of revenue recognition, billings and cash collections results in receivables, unbilled revenue, and unearned revenue on the Company’s Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.
The Company’s receivables are rights to consideration that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned revenue.
Trade receivables and unbilled revenues are presented net of impairment in the Balance Sheet.
2.18 OTHER INCOME, NET
2.18.1 Other income - Accounting Policy
Other income is comprised primarily of interest income, dividend income, gain / loss on investments and exchange gain/loss on forward and options contracts and on translation of foreign currency assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.
2.18.2 Foreign currency - Accounting Policy
Functional currency
The functional currency of the Company is the Indian rupee. 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 recognized in the Statement of Profit and Loss and reported within exchange gains/(losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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 the transaction. The related revenue and expense are recognized using the same exchange rate.
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.
Other Comprehensive Income, net of taxes includes translation differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments and measured at fair value through other comprehensive income (FVOCI).
Government grant
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in the 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 the 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.
Other income for the three months and six months ended September 30, 2021 and September 30, 2020 is as follows:
(In crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Interest income on financial assets carried at amortized cost | ||||
Tax free bonds and government bonds | 38 | 35 | 76 | 69 |
Deposit with Bank and others | 153 | 257 | 392 | 495 |
Interest income on financial assets fair valued through other comprehensive income | ||||
Non-convertible debentures, commercial paper, certificates of deposit and government securities | 140 | 86 | 287 | 162 |
Income on investments carried at fair value through other comprehensive income | – | 27 | – | 54 |
Income on investments carried at fair value through profit or loss | ||||
Dividend income on liquid mutual funds | – | 7 | – | 8 |
Gain / (loss) on liquid mutual funds and other investments | 29 | 10 | 52 | 32 |
Dividend received from subsidiary | 592 | – | 592 | – |
Exchange gains/(losses) on foreign currency forward and options contracts | 160 | 279 | 70 | 311 |
Exchange gains/(losses) on translation of assets and liabilities | (97) | (186) | 46 | (179) |
Miscellaneous income, net | 37 | 67 | 107 | 108 |
Total other income | 1,052 | 582 | 1,622 | 1,060 |
2.19 EXPENSES
Accounting Policy
2.19.1 Gratuity and Pension
The Company provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible Indian employees of Infosys. 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 Company. The Company contributes Gratuity liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). 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 Company operates defined benefit pension plan in certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide for periodic payouts after retirement or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
Liabilities with regard to these defined benefit plans are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. These defined benefit plans expose the Company to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk.
The Company 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 profit in the Statement of Profit and Loss.
2.19.2 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.
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. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India.
2.19.3 Superannuation
Certain employees of Infosys are participants in a defined contribution plan. The Company 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.
2.19.4 Compensated absences
The Company 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.
The Code on Social Security,2020 (‘Code’) relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Employee benefit expenses | ||||
Salaries including bonus | 12,234 | 10,715 | 23,952 | 21,614 |
Contribution to provident and other funds | 339 | 226 | 645 | 471 |
Share based payments to employees (Refer to note 2.11) | 88 | 86 | 185 | 154 |
Staff welfare | 73 | 26 | 143 | 36 |
12,734 | 11,053 | 24,925 | 22,275 | |
Cost of software packages and others | ||||
For own use | 283 | 253 | 546 | 474 |
Third party items bought for service delivery to clients | 453 | 295 | 718 | 555 |
736 | 548 | 1,264 | 1,029 | |
Other expenses | ||||
Power and fuel | 21 | 25 | 43 | 48 |
Brand and Marketing | 63 | 79 | 156 | 123 |
Short-term leases | 3 | 1 | 7 | 12 |
Rates and taxes | 54 | 41 | 105 | 84 |
Repairs and Maintenance | 197 | 259 | 409 | 537 |
Consumables | 7 | 4 | 14 | 11 |
Insurance | 28 | 29 | 61 | 53 |
Provision for post-sales client support and others | 27 | (1) | 32 | 10 |
Commission to non-whole time directors | 3 | 2 | 5 | 3 |
Impairment loss recognized / (reversed) under expected credit loss model | 30 | 40 | 66 | 126 |
Auditor's remuneration | ||||
Statutory audit fees | 2 | 1 | 3 | 2 |
Tax matters | – | – | – | – |
Other services | – | – | – | 1 |
Contributions towards Corporate Social Responsibility | 100 | 133 | 237 | 246 |
Others | 24 | 5 | 39 | 13 |
559 | 618 | 1,177 | 1,269 |
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company intends to transfer its CSR capital assets created prior to January 2021 to a controlled subsidiary Infosys Green Forum established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
2.20 BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER EQUITY SHARE
Accounting Policy
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 at 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.
2.21 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting Policy
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Contingent liabilities : | ||
Claims against the Company, not acknowledged as debts(1) | 4,048 | 3,753 |
[Amount paid to statutory authorities ![]() ![]() |
||
Commitments : | ||
Estimated amount of contracts remaining to be executed on capital contracts and not provided for | 910 | 609 |
(net of advances and deposits)(2) | ||
Other Commitments* | 8 | 10 |
* | Uncalled capital pertaining to investments |
(1) | As at September 30, 2021, claims against the Company not acknowledged as debts in respect of income tax matters amounted to
The claims against the Company primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding of taxes. These matters are pending before various Appellate Authorities and the management including its tax advisors expect 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.
Amount paid to statutory authorities against the above tax claims amounted to |
(2) | Capital contracts primarily comprises of commitments for infrastructure facilities and computer equipments. |
Legal Proceedings
The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company’s management reasonably expects that these legal actions, when ultimately concluded and determined, will not have a material and adverse effect on the Company’s results of operations or financial condition.
2.22 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended March 31, 2021 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the six months ended September 30, 2021, the following are the changes in the subsidiaries:
Simplus North America Inc., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective April 27, 2021.
Simplus Europe, Ltd., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective July 20, 2021.
Stater GmbH, a wholly-owned subsidiary of Stater N.V., was incorporated on August 4, 2021.
Infosys Green Forum, a wholly-owned subsidiary of Infosys Limited, was incorporated on August 31, 2021.
Infosys Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary of Infosys Consulting Holding AG, has been liquidated effective September 01, 2021.
Sqware Peg Digital Pty Ltd, a wholly-owned subsidiary of Simplus Australia Pty Ltd, has been liquidated effective September 02, 2021.
Beringer Commerce Inc. renamed as Blue Acorn iCi Inc.
The Company’s material related party transactions during the three months and six months ended September 30, 2021 and September 30, 2020 and outstanding balances as at September 30, 2021 and March 31, 2021 are with its subsidiaries with whom the Company generally enters into transactions which are at arms length and in the ordinary course of business.
Transactions 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, | ||
2021 | 2020 | 2021 | 2020 | |
Salaries and other employee benefits to whole-time directors and executive officers (1)(2) | 36 | 38 | 73 | 71 |
Commission and other benefits to non-executive / independent directors | 3 | 2 | 5 | 3 |
Total | 39 | 40 | 78 | 74 |
(1) | Total employee stock compensation expense for the three months ended September 30, 2021
and September 30, 2020 includes a charge of ![]() ![]() For the six months ended September 30, 2021 and September 30, 2020, includes a charge of ![]() ![]() |
(2) | Does not include post-employment benefit based on actuarial valuation as this is done for the Company as a whole. |
2.23 SEGMENT REPORTING
The Company publishes this financial statement along with the interim condensed consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the interim condensed consolidated financial statements.
for and on behalf of the Board of Directors of Infosys Limited | ||
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and |
A.G.S. Manikantha Company Secretary |
||
Bengaluru October 13, 2021 |
Exhibit 99.10
Ind AS Consolidated
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed 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 Condensed Consolidated Balance Sheet as at September 30, 2021, the Condensed Consolidated Statement of Profit and Loss (including Other Comprehensive Income) for the three months and six months ended on that date, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the six months ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed consolidated financial statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair view in conformity with the 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, of the consolidated state of affairs of the Group as at September 30, 2021, the consolidated profit and consolidated total comprehensive income for the three months and six months ended on that date, changes in equity and its cash flows for the six months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed consolidated financial statements in accordance with the Standards on Auditing (“SA”s) specified under section 143 (10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the interim condensed consolidated financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed consolidated financial statements.
Management’s Responsibilities for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible for the preparation and presentation of these interim condensed 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 Ind AS 34 and other accounting principles generally accepted in India. The respective Boards of Directors of the companies included in the Group are responsible for maintenance of the 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 respective interim financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the interim condensed consolidated financial statements by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated financial statements, the respective Boards of Directors of the companies included in the Group are responsible for assessing the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors of the companies included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
· | Identify and assess the risks of material misstatement of the interim condensed consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
· | Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the Company’s internal financial controls. |
· | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
· | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
· | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
· | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of financial statements of such entities included in the interim condensed consolidated financial statements of which we are independent auditors. |
Materiality is the magnitude of misstatements in the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018) | |
Place: Mumbai Date: October 13, 2021 |
Sanjiv V. Pilgaonkar Partner (Membership No.039826) UDIN: 21039826AAAAGP7322 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed
Consolidated Financial Statements under Indian Accounting Standards (Ind AS) for the three months and six months ended September 30,
2021
Index | |
Condensed Consolidated Balance Sheet | |
Condensed Consolidated Statement of Profit and Loss | |
Condensed Consolidated Statement of Changes in Equity | |
Condensed Consolidated Statement of Cash Flows | |
Overview and Notes to the Interim Condensed Consolidated Financial Statements | |
1. Overview | |
1.1 Company overview | |
1.2 Basis of preparation of financial statements | |
1.3 Basis of consolidation | |
1.4 Use of estimates and judgments | |
1.5 Critical accounting estimates and judgments | |
2. Notes to the Interim Condensed Consolidated Financial Statements | |
2.1 Business Combination | |
2.2 Property, plant and equipment | |
2.3 Goodwill and intangible assets | |
2.4 Investments | |
2.5 Loans | |
2.6 Other financial assets | |
2.7 Trade receivables | |
2.8 Cash and cash equivalents | |
2.9 Other assets | |
2.10 Financial instruments | |
2.11 Equity | |
2.12 Other financial liabilities | |
2.13 Other liabilities | |
2.14 Provisions | |
2.15 Income taxes | |
2.16 Revenue from operations | |
2.17 Other income, net | |
2.18 Expenses | |
2.19 Leases | |
2.20 Basic and diluted shares used in computing earnings per equity share | |
2.21 Contingent liabilities and commitments | |
2.22 Related party transactions | |
2.23 Segment reporting | |
2.24 Function wise classification of Condensed Consolidated Statement of Profit and Loss |
INFOSYS LIMITED AND SUBSIDIARIES
(In crore )
Condensed Consolidated Balance Sheets as at | Note No. | September 30, 2021 | March 31, 2021 |
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 2.2 | 12,913 | 12,560 |
Right-of-use assets | 2.19 | 4,599 | 4,794 |
Capital work-in-progress | 383 | 922 | |
Goodwill | 2.3 | 6,122 | 6,079 |
Other intangible assets | 1,895 | 2,072 | |
Financial assets: | |||
Investments | 2.4 | 10,096 | 11,863 |
Loans | 2.5 | 45 | 32 |
Other financial assets | 2.6 | 1,252 | 1,141 |
Deferred tax assets (net) | 976 | 1,098 | |
Income tax assets (net) | 5,796 | 5,811 | |
Other non-current assets | 2.9 | 2,025 | 1,281 |
Total non-current assets | 46,102 | 47,653 | |
Current assets | |||
Financial assets: | |||
Investments | 2.4 | 4,983 | 2,342 |
Trade receivables | 2.7 | 20,121 | 19,294 |
Cash and cash equivalents | 2.8 | 18,056 | 24,714 |
Loans | 2.5 | 191 | 159 |
Other financial assets | 2.6 | 7,385 | 6,410 |
Other Current assets | 2.9 | 9,272 | 7,814 |
Total current assets | 60,008 | 60,733 | |
Total assets | 106,110 | 108,386 | |
EQUITY AND LIABILITIES | |||
Equity | |||
Equity share capital | 2.11 | 2,097 | 2,124 |
Other equity | 67,842 | 74,227 | |
Total equity attributable to equity holders of the Company | 69,939 | 76,351 | |
Non-controlling interests | 409 | 431 | |
Total equity | 70,348 | 76,782 | |
Liabilities | |||
Non-current liabilities | |||
Financial Liabilities | |||
Lease liabilities | 2.19 | 4,356 | 4,587 |
Other financial liabilities | 2.12 | 2,109 | 1,514 |
Deferred tax liabilities (net) | 858 | 875 | |
Other non-current liabilities | 2.13 | 751 | 763 |
Total non-current liabilities | 8,074 | 7,739 | |
Current liabilities | |||
Financial Liabilities | |||
Lease liabilities | 2.19 | 788 | 738 |
Trade payables | 3,176 | 2,645 | |
Other financial liabilities | 2.12 | 13,605 | 11,390 |
Other current liabilities | 2.13 | 6,802 | 6,233 |
Provisions | 2.14 | 862 | 713 |
Income tax liabilities (net) | 2,455 | 2,146 | |
Total current liabilities | 27,688 | 23,865 | |
Total equity and liabilities | 106,110 | 108,386 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED AND SUBSIDIARIES
(In crore, except equity share and
per equity share data)
Condensed Consolidated Statement of Profit and Loss for the | Note No. | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | ||
Revenue from operations | 2.16 | 29,602 | 24,570 | 57,498 | 48,234 |
Other income, net | 2.17 | 524 | 570 | 1,146 | 1,046 |
Total income | 30,126 | 25,140 | 58,644 | 49,280 | |
Expenses | |||||
Employee benefit expenses | 2.18 | 15,743 | 13,400 | 30,973 | 27,004 |
Cost of technical sub-contractors | 3,054 | 1,634 | 5,508 | 3,260 | |
Travel expenses | 163 | 151 | 296 | 267 | |
Cost of software packages and others | 2.18 | 1,393 | 1,108 | 2,682 | 2,001 |
Communication expenses | 146 | 162 | 294 | 324 | |
Consultancy and professional charges | 449 | 286 | 844 | 548 | |
Depreciation and amortisation expenses | 859 | 855 | 1,687 | 1,611 | |
Finance cost | 48 | 48 | 98 | 96 | |
Other expenses | 2.18 | 823 | 746 | 1,639 | 1,626 |
Total expenses | 22,678 | 18,390 | 44,021 | 36,737 | |
Profit before tax | 7,448 | 6,750 | 14,623 | 12,543 | |
Tax expense: | |||||
Current tax | 2.15 | 1,987 | 1,763 | 3,923 | 3,084 |
Deferred tax | 2.15 | 33 | 129 | 71 | 328 |
Profit for the period | 5,428 | 4,858 | 10,629 | 9,131 | |
Other comprehensive income | |||||
Items that will not be reclassified subsequently to profit or loss | |||||
Remeasurement of the net defined benefit liability/asset, net | 14 | 7 | (19) | 154 | |
Equity instruments through other comprehensive income, net | 40 | (5) | 41 | (6) | |
54 | 2 | 22 | 148 | ||
Items that will be reclassified subsequently to profit or loss | |||||
Fair value changes on derivatives designated as cash flow hedge, net | 6 | 27 | 11 | 21 | |
Exchange differences on translation of foreign operations | (166) | 21 | 124 | 185 | |
Fair value changes on investments, net | 55 | (45) | 93 | 9 | |
(105) | 3 | 228 | 215 | ||
Total other comprehensive income /(loss), net of tax | (51) | 5 | 250 | 363 | |
Total comprehensive income for the period | 5,377 | 4,863 | 10,879 | 9,494 | |
Profit attributable to: | |||||
Owners of the Company | 5,421 | 4,845 | 10,616 | 9,078 | |
Non-controlling interests | 7 | 13 | 13 | 53 | |
5,428 | 4,858 | 10,629 | 9,131 | ||
Total comprehensive income attributable to: | |||||
Owners of the Company | 5,375 | 4,847 | 10,866 | 9,434 | |
Non-controlling interests | 2 | 16 | 13 | 60 | |
5,377 | 4,863 | 10,879 | 9,494 | ||
Earnings per Equity share | |||||
Equity shares of par value ![]() |
|||||
Basic (![]() |
12.88 | 11.42 | 25.11 | 21.40 | |
Diluted (![]() |
12.85 | 11.40 | 25.06 | 21.37 | |
Weighted average equity shares used in computing earnings per equity share | 2.20 | ||||
Basic | 4,210,064,823 | 4,241,908,471 | 4,227,694,034 | 4,241,506,966 | |
Diluted | 4,218,293,582 | 4,248,961,564 | 4,236,051,581 | 4,248,434,533 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Equity
(In crore )
Particulars | OTHER EQUITY | |||||||||||||||||
RESERVES & SURPLUS | Other comprehensive income | |||||||||||||||||
Equity Share capital (1) | Capital reserve | Capital redemption reserve | Securities Premium | Retained earnings | 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 / (loss) | Total equity attributable to equity holders of the Company | Non-controlling interest | Total equity | |||
Balance as at April 1, 2020 | 2,122 | 54 | 111 | 282 | 56,309 | 1,158 | 297 | 4,070 | 6 | 39 | 1,207 | (15) | (190) | 65,450 | 394 | 65,844 | ||
Changes in equity for the six months ended September 30, 2020 | ||||||||||||||||||
Profit for the period | – | – | – | – | 9,078 | – | – | – | – | – | – | – | – | 9,078 | 53 | 9,131 | ||
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | – | – | – | – | – | 154 | 154 | – | 154 | ||
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | – | – | (6) | – | – | – | (6) | – | (6) | ||
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | – | – | – | – | – | 21 | – | 21 | – | 21 | ||
Exchange differences on translation of foreign operations | – | – | – | – | – | – | – | – | – | – | 178 | – | – | 178 | 7 | 185 | ||
Fair value changes on investments, net* | – | – | – | – | – | – | – | – | – | – | – | – | 9 | 9 | – | 9 | ||
Total Comprehensive income for the period | – | – | – | – | 9,078 | – | – | – | – | (6) | 178 | 21 | 163 | 9,434 | 60 | 9,494 | ||
Shares issued on exercise of employee stock options (Refer to Note 2.11) | 1 | – | – | 5 | – | – | – | – | – | – | – | – | – | 6 | – | 6 | ||
Employee stock compensation expense (Refer to Note 2.11) | – | – | – | – | – | – | 134 | – | – | – | – | – | – | 134 | – | 134 | ||
Exercise of stock options | – | – | – | 100 | – | – | (100) | – | – | – | – | – | – | – | – | – | ||
Transfer on account of options not exercised | – | – | – | – | – | 1 | (1) | – | – | – | – | – | – | – | – | – | ||
Income tax benefit arising on exercise of stock options | – | – | – | 5 | – | – | – | – | – | – | – | – | – | 5 | – | 5 | ||
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (20) | (20) | ||
Dividends (1) | – | – | – | – | (4,029) | – | – | – | – | – | – | – | – | (4,029) | – | (4,029) | ||
Transfer to general reserve | – | – | – | – | (1,554) | 1,554 | – | – | – | – | – | – | – | – | – | – | ||
Transferred to Special Economic Zone Re-investment reserve | – | – | – | – | (1,463) | – | – | 1,463 | – | – | – | – | – | – | – | – | ||
Transferred from Special Economic Zone Re-investment reserve on utilization | – | – | – | – | 561 | – | – | (561) | – | – | – | – | – | – | – | – | ||
Balance as at September 30, 2020 | 2,123 | 54 | 111 | 392 | 58,902 | 2,713 | 330 | 4,972 | 6 | 33 | 1,385 | 6 | (27) | 71,000 | 434 | 71,434 |
Condensed Consolidated Statement of Changes in Equity
(In
crore )
Particulars | OTHER EQUITY | |||||||||||||||||
RESERVES & SURPLUS | Other comprehensive income | |||||||||||||||||
Equity Share capital (1) | Capital reserve | Capital redemption reserve | Securities Premium | Retained earnings | 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 / (loss) | Total equity attributable to equity holders of the Company | Non-controlling interest | Total equity | |||
Balance as at April 1, 2021 | 2,124 | 54 | 111 | 600 | 62,643 | 2,715 | 372 | 6,385 | 6 | 158 | 1,331 | 10 | (158) | 76,351 | 431 | 76,782 | ||
Changes in equity for the six months ended September 30, 2021 | ||||||||||||||||||
Profit for the period | – | – | – | – | 10,616 | – | – | – | – | – | – | – | – | 10,616 | 13 | 10,629 | ||
Remeasurement of the net defined benefit liability/asset, net* | – | – | – | – | – | – | – | – | – | – | – | – | (19) | (19) | – | (19) | ||
Equity instruments through other comprehensive income, net* | – | – | – | – | – | – | – | – | – | 41 | – | – | – | 41 | – | 41 | ||
Fair value changes on derivatives designated as cash flow hedge, net* | – | – | – | – | – | – | – | – | – | – | – | 11 | – | 11 | – | 11 | ||
Exchange differences on translation of foreign operations | – | – | – | – | – | – | – | – | – | – | 124 | – | – | 124 | – | 124 | ||
Fair value changes on investments, net* | – | – | – | – | – | – | – | – | – | – | – | – | 93 | 93 | – | 93 | ||
Total Comprehensive income for the period | – | – | – | – | 10,616 | – | – | – | – | 41 | 124 | 11 | 74 | 10,866 | 13 | 10,879 | ||
Shares issued on exercise of employee stock options (Refer to Note 2.11) | 1 | – | – | 8 | – | – | – | – | – | – | – | – | – | 9 | – | 9 | ||
Employee stock compensation expense (Refer to Note 2.11) | – | – | – | – | – | – | 196 | – | – | – | – | – | – | 196 | – | 196 | ||
Buyback of equity shares (Refer to Note 2.11)** | (28) | – | – | (640) | (8,822) | (1,603) | – | – | – | – | – | – | – | (11,093) | – | (11,093) | ||
Transaction costs relating to buyback* | – | – | – | – | – | (28) | – | – | – | – | – | – | – | (28) | – | (28) | ||
Amount transferred to capital redemption reserve upon buyback | – | – | 28 | – | – | (28) | – | – | – | – | – | – | – | – | – | – | ||
Transfer to legal reserve | – | – | – | – | (9) | – | – | – | 9 | – | – | – | – | – | – | – | ||
Transfer on account of exercise of stock options | – | – | – | 69 | – | – | (69) | – | – | – | – | – | – | – | – | – | ||
Income tax benefit arising on exercise of stock options | – | – | – | 3 | – | – | 4 | – | – | – | – | – | – | 7 | – | 7 | ||
Dividends (1) | – | – | – | – | (6,369) | – | – | – | – | – | – | – | – | (6,369) | – | (6,369) | ||
Dividends paid to non controlling interest of subsidiary | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (35) | (35) | ||
Transferred to Special Economic Zone Re-investment reserve | – | – | – | – | (1,496) | – | – | 1,496 | – | – | – | – | – | – | – | – | ||
Transferred from Special Economic Zone Re-investment reserve on utilization | – | – | – | – | 411 | – | – | (411) | – | – | – | – | – | – | – | – | ||
Balance as at September 30, 2021 | 2,097 | 54 | 139 | 40 | 56,974 | 1,056 | 503 | 7,470 | 15 | 199 | 1,455 | 21 | (84) | 69,939 | 409 | 70,348 |
* | Net of tax |
** | Including tax on buyback of ![]() |
(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 Group 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 condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Statement of Cash Flows
Accounting policy
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 Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
(In crore)
Particulars | Note No. | Six months ended September 30, | |
2021 | 2020 | ||
Cash flow from operating activities | |||
Profit for the period | 10,629 | 9,131 | |
Adjustments to reconcile net profit to net cash provided by operating activities: | |||
Income tax expense | 2.15 | 3,994 | 3,412 |
Depreciation and amortization | 1,687 | 1,611 | |
Interest and dividend income | 2.18 | (885) | (804) |
Finance cost | 98 | 96 | |
Impairment loss recognized / (reversed) under expected credit loss model | 87 | 159 | |
Exchange differences on translation of assets and liabilities, net | 54 | (7) | |
Stock compensation expense | 2.11 | 209 | 174 |
Other adjustments | 36 | (60) | |
Changes in assets and liabilities | |||
Trade receivables and unbilled revenue | (2,963) | (67) | |
Loans, other financial assets and other assets | (406) | 415 | |
Trade payables | 349 | (477) | |
Other financial liabilities, other liabilities and provisions | 2,754 | 773 | |
Cash generated from operations | 15,643 | 14,356 | |
Income taxes paid | (3,574) | (2,987) | |
Net cash generated by operating activities | 12,069 | 11,369 | |
Cash flows from investing activities | |||
Expenditure on property, plant and equipment and intangibles | (1,030) | (1,306) | |
Deposits placed with corporation | (516) | (495) | |
Redemption of deposits placed with Corporation | 343 | 362 | |
Interest and dividend received | 1,017 | 708 | |
Payment of contingent consideration pertaining to acquisition of business | (53) | (150) | |
Escrow and other deposits pertaining to Buyback | 2.6 | (420) | – |
Redemption of escrow and other deposits pertaining to Buyback | 2.6 | 420 | – |
Other receipts | 35 | 25 | |
Other payments | (22) | – | |
Payments to acquire Investments | |||
Liquid mutual funds and fixed maturity plan securities | (25,411) | (11,960) | |
Non convertible debentures | (154) | (829) | |
Certificates of deposit | (498) | – | |
Government securities | (653) | (4,664) | |
Others | (13) | (1) | |
Proceeds on sale of Investments | |||
Non-convertible debentures | 1,299 | 720 | |
Government securities | 1,336 | 1,529 | |
Certificates of deposit | 500 | 900 | |
Liquid mutual funds and fixed maturity plan securities | 22,928 | 11,850 | |
Others | 1 | 22 | |
Net cash (used in) / from investing activities | (891) | (3,289) | |
Cash flows from financing activities: | |||
Payment of lease liabilities | (421) | (351) | |
Payment of dividends | (6,369) | (4,031) | |
Payment of dividend to non-controlling interest of subsidiary | (2) | (20) | |
Shares issued on exercise of employee stock options | 9 | 6 | |
Other receipts | 117 | – | |
Other payments | (15) | – | |
Buyback of equity shares including transaction cost and tax on buyback | (11,125) | – | |
Net cash used in financing activities | (17,806) | (4,396) | |
Net increase / (decrease) in cash and cash equivalents | (6,628) | 3,684 | |
Cash and cash equivalents at the beginning of the period | 2.8 | 24,714 | 18,649 |
Effect of exchange rate changes on cash and cash equivalents | (30) | 78 | |
Cash and cash equivalents at the end of the period | 2.8 | 18,056 | 22,411 |
Supplementary information: | |||
Restricted cash balance | 2.8 | 526 | 404 |
The accompanying notes form an integral part of the interim condensed 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 |
|||
Sanjiv V. Pilgaonkar Partner Membership No. 039826 |
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Officer | |
A.G.S. Manikantha Company Secretary |
|||
Mumbai October 13, 2021 |
Bengaluru October 13, 2021 |
INFOSYS LIMITED AND SUBSIDIARIES
Overview and notes to the interim condensed Consolidated financial statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides consulting,
technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled trusts is hereinafter referred to as 'the Group'.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Electronics city, Hosur Road, Bengaluru 560100, Karnataka, India. The Company has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares (ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial statements are approved for issue by the Company's Board of Directors on October 13, 2021.
1.2 Basis of preparation of financial statements
These interim condensed consolidated financial statements
are prepared in accordance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting, under the historical cost convention
on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013
('the Act') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed consolidated
financial statements do not include all the information required for a complete set of financial statements. These interim condensed consolidated
financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s
Annual Report for the year ended March 31, 2021. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision
to an existing accounting standard requires a change in the accounting policy hitherto in use.
As the quarter and year-to-date figures are taken from the source and rounded to the nearest digits, the quarter figures in 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 interim condensed consolidated financial statements comprise the financial statements of the Company, its controlled trusts and its subsidiaries. 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.
1.4 Use of estimates and judgments
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 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 the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates and judgments 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 condensed consolidated financial statements.
Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19):
The Group has considered the possible effects that may result from COVID-19 pandemic in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of the COVID-19 pandemic, the Group has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 pandemic on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price to these distinct performance obligations involves significant judgment.
Fixed price maintenance revenue is recognized ratably on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of the contract because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the latest available information.
Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the U.S., though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid / recovered for
uncertain tax positions.
In assessing the realizability 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. 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, the 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 (Refer to Notes 2.15 and 2.21).
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. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements and intangible assets. These valuations are conducted by external valuation experts. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by the Management.
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 the 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 (Refer to Note 2.2).
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. For the
impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which represent
the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based on higher of value-in-use and fair value less cost to sell. Key assumptions in the
cash flow projections are prepared based on current economic conditions and comprises estimated long term growth rates, weighted average
cost of capital and estimated operating margins (Refer to Note 2.3).
f. Leases
As a lessee, the Group determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Group has concluded that no material changes are required to lease period relating to the existing lease contracts (Refer to Note 2.19).
g. Allowance for credit losses on receivables and unbilled revenue
The Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considered current and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19.
2.1 BUSINESS COMBINATIONS
Accounting policy
Business combinations have been accounted for using the acquisition method under the provisions of Ind AS 103, Business Combinations.
The purchase price in 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 purchase price 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. Contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognized in the Consolidated Statement of Profit and Loss.
The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity of subsidiaries.
Business combinations between entities under common control is accounted for at carrying value of the assets acquired and liabilities assumed in the Group's consolidated financial statements.
The payments related to options issued by the Group over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognised.
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.
2.2 PROPERTY, PLANT AND EQUIPMENT
Accounting policy
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 the 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)(2) | 5 years |
Office equipment | 5 years |
Computer equipment (1) | 3-5 years |
Furniture and fixtures (1) | 5 years |
Vehicles(1) | 5 years |
Leasehold improvements | Lower of useful life of the asset or lease term |
(1) | Based on technical evaluation, the Management believes that the useful lives as given above best represent the period over which the 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 |
(2) | Includes Solar plant with a useful life of 20 years |
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 ready 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 the Consolidated 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 Consolidated Statement of Profit and Loss.
Impairment
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 Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the Consolidated 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 Consolidated 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 depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant and equipment for the three months ended September 30, 2021 are as follows:
(In crore)
Particulars | Land - Freehold | Buildings (1) | Plant and machinery | Office Equipment | Computer equipment | Furniture and fixtures | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at July 1, 2021 | 1,400 | 10,745 | 3,324 | 1,387 | 7,940 | 2,168 | 1,226 | 44 | 28,234 |
Additions | 12 | 303 | 109 | 21 | 308 | 72 | 8 | – | 833 |
Deletions* | – | – | (1) | (4) | (405) | (5) | (1) | – | (416) |
Translation difference | – | (1) | (1) | (1) | (9) | (3) | (4) | – | (19) |
Gross carrying value as at September 30, 2021 | 1,412 | 11,047 | 3,431 | 1,403 | 7,834 | 2,232 | 1,229 | 44 | 28,632 |
Accumulated depreciation as at July 1, 2021 | – | (3,780) | (2,484) | (1,070) | (5,844) | (1,635) | (747) | (33) | (15,593) |
Depreciation | – | (105) | (58) | (31) | (261) | (52) | (46) | (2) | (555) |
Accumulated depreciation on deletions* | – | – | 1 | 4 | 404 | 5 | 1 | – | 415 |
Translation difference | – | 1 | 1 | 2 | 8 | 2 | – | – | 14 |
Accumulated depreciation as at September 30, 2021 | – | (3,884) | (2,540) | (1,095) | (5,693) | (1,680) | (792) | (35) | (15,719) |
Carrying value as at July 1, 2021 | 1,400 | 6,965 | 840 | 317 | 2,096 | 533 | 479 | 11 | 12,641 |
Carrying value as at September 30, 2021 | 1,412 | 7,163 | 891 | 308 | 2,141 | 552 | 437 | 9 | 12,913 |
The changes in the carrying value of property, plant and equipment for the three months ended September 30, 2020 are as follows:
(In crore)
Particulars | Land - Freehold | Buildings (1) | Plant and machinery | Office Equipment | Computer equipment | Furniture and fixtures | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at July 1, 2020 | 1,387 | 10,057 | 3,198 | 1,276 | 7,019 | 2,083 | 1,073 | 45 | 26,138 |
Additions | 1 | 14 | 12 | 18 | 317 | 7 | 81 | – | 450 |
Deletions | – | – | (2) | (2) | (34) | (3) | (4) | (1) | (46) |
Translation difference | – | 12 | 1 | 1 | 1 | 1 | 2 | – | 18 |
Gross carrying value as at September 30, 2020 | 1,388 | 10,083 | 3,209 | 1,293 | 7,303 | 2,088 | 1,152 | 44 | 26,560 |
Accumulated depreciation as at July 1, 2020 | – | (3,380) | (2,220) | (963) | (5,085) | (1,435) | (585) | (30) | (13,698) |
Depreciation | – | (96) | (75) | (31) | (265) | (58) | (44) | (1) | (570) |
Accumulated depreciation on deletions | – | – | 2 | 1 | 34 | 3 | 4 | 1 | 45 |
Translation difference | – | (1) | – | (1) | 1 | – | (4) | – | (5) |
Accumulated depreciation as at September 30, 2020 | – | (3,477) | (2,293) | (994) | (5,315) | (1,490) | (629) | (30) | (14,228) |
Carrying value as at July 1, 2020 | 1,387 | 6,677 | 978 | 313 | 1,934 | 648 | 488 | 15 | 12,440 |
Carrying value as at September 30, 2020 | 1,388 | 6,606 | 916 | 299 | 1,988 | 598 | 523 | 14 | 12,332 |
The changes in the carrying value of property, plant and equipment for the six months ended September 30, 2021 are as follows:
(In crore)
Particulars | Land - Freehold | Buildings (1) | Plant and machinery | Office Equipment | Computer equipment | Furniture and fixtures | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at April 1, 2021 | 1,399 | 10,565 | 3,296 | 1,371 | 7,639 | 2,149 | 1,188 | 44 | 27,651 |
Additions | 13 | 455 | 134 | 39 | 644 | 88 | 46 | – | 1,419 |
Deletions* | – | – | (2) | (8) | (457) | (7) | (10) | – | (484) |
Translation difference | – | 27 | 3 | 1 | 8 | 2 | 5 | – | 46 |
Gross carrying value as at September 30, 2021 | 1,412 | 11,047 | 3,431 | 1,403 | 7,834 | 2,232 | 1,229 | 44 | 28,632 |
Accumulated depreciation as at April 1, 2021 | – | (3,675) | (2,425) | (1,043) | (5,636) | (1,580) | (700) | (32) | (15,091) |
Depreciation | – | (206) | (115) | (60) | (508) | (105) | (96) | (3) | (1,093) |
Accumulated depreciation on deletions* | – | – | 2 | 8 | 456 | 7 | 10 | – | 483 |
Translation difference | – | (3) | (2) | – | (5) | (2) | (6) | – | (18) |
Accumulated depreciation as at September 30, 2021 | – | (3,884) | (2,540) | (1,095) | (5,693) | (1,680) | (792) | (35) | (15,719) |
Carrying value as at April 1, 2021 | 1,399 | 6,890 | 871 | 328 | 2,003 | 569 | 488 | 12 | 12,560 |
Carrying value as at September 30, 2021 | 1,412 | 7,163 | 891 | 308 | 2,141 | 552 | 437 | 9 | 12,913 |
*During each of the three months and six months ended
September 30, 2021, certain assets which were old and not in use having gross book value of 262 crore (net book value: Nil) were
retired.
The changes in the carrying value of property, plant and equipment for the six months ended September 30, 2020 are as follows:
(In crore)
Particulars | Land - Freehold | Buildings (1) | Plant and machinery | Office Equipment | Computer equipment | Furniture and fixtures | Leasehold Improvements | Vehicles | Total |
Gross carrying value as at April 1, 2020 | 1,318 | 10,016 | 3,185 | 1,265 | 6,676 | 2,073 | 1,063 | 45 | 25,641 |
Additions | 70 | 53 | 26 | 32 | 663 | 19 | 97 | – | 960 |
Deletions | – | – | (3) | (5) | (44) | (5) | (12) | (1) | (70) |
Translation difference | – | 14 | 1 | 1 | 8 | 1 | 4 | – | 29 |
Gross carrying value as at September 30, 2020 | 1,388 | 10,083 | 3,209 | 1,293 | 7,303 | 2,088 | 1,152 | 44 | 26,560 |
Accumulated depreciation as at April 1, 2020 | – | (3,284) | (2,145) | (934) | (4,885) | (1,380) | (550) | (28) | (13,206) |
Depreciation | – | (191) | (151) | (63) | (471) | (115) | (87) | (3) | (1,081) |
Accumulated depreciation on deletions | – | – | 3 | 4 | 44 | 5 | 12 | 1 | 69 |
Translation difference | – | (2) | – | (1) | (3) | – | (4) | – | (10) |
Accumulated depreciation as at September 30, 2020 | – | (3,477) | (2,293) | (994) | (5,315) | (1,490) | (629) | (30) | (14,228) |
Carrying value as at April 1, 2020 | 1,318 | 6,732 | 1,040 | 331 | 1,791 | 693 | 513 | 17 | 12,435 |
Carrying value as at September 30, 2020 | 1,388 | 6,606 | 916 | 299 | 1,988 | 598 | 523 | 14 | 12,332 |
(1) | Buildings include ![]() ![]() |
The aggregate depreciation has been included under depreciation and amortisation expense in the Consolidated Statement of Profit and Loss.
2.3 GOODWILL AND INTANGIBLE ASSETS
2.3.1 Goodwill
Accounting policy
Goodwill represents the purchase consideration in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds purchase consideration, the fair value of net assets acquired is reassessed and the bargain purchase gain is recognized in capital reserve. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition. 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 the Consolidated Statement of Profit and Loss and is not reversed in the subsequent period.
Following is a summary of changes in the carrying amount of goodwill:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Carrying value at the beginning | 6,079 | 5,286 |
Goodwill on acquisitions | – | 758 |
Translation differences | 43 | 35 |
Carrying value at the end | 6,122 | 6,079 |
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.
2.3.2 Intangible assets
Accounting policy
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). 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 Group 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.
Impairment
Intangible assets 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 Consolidated 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 Consolidated 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) had no impairment loss been recognized for the asset in prior years.
2.4 INVESTMENTS
(In
crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Unquoted | ||
Investments carried at fair value through other comprehensive income | ||
Preference securities | 218 | 165 |
Equity instruments | 2 | 2 |
220 | 167 | |
Investments carried at fair value through profit and loss | ||
Preference securities | 23 | 11 |
Compulsorily convertible debentures | 7 | 7 |
Others (1) | 84 | 74 |
114 | 92 | |
Quoted | ||
Investments carried at amortized cost | ||
Tax free bonds | 2,106 | 2,131 |
Government bonds | 21 | 21 |
2,127 | 2,152 | |
Investments carried at fair value through other comprehensive income | ||
Non convertible debentures | 3,012 | 3,985 |
Government securities | 4,623 | 5,467 |
7,635 | 9,452 | |
Total non-current investments | 10,096 | 11,863 |
Current | ||
Unquoted | ||
Investments carried at fair value through profit or loss | ||
Liquid mutual fund units | 4,042 | 1,500 |
4,042 | 1,500 | |
Quoted | ||
Investments carried at amortized cost | ||
Tax free bonds | 20 | – |
20 | – | |
Investments carried at fair value through other comprehensive income | ||
Non convertible debentures | 711 | 842 |
Government securities | 210 | – |
921 | 842 | |
Total current investments | 4,983 | 2,342 |
Total investments | 15,079 | 14,205 |
Aggregate amount of quoted investments | 10,703 | 12,446 |
Market value of quoted investments (including interest accrued), current | 942 | 843 |
Market value of quoted investments (including interest accrued), non current | 10,132 | 11,997 |
Aggregate amount of unquoted investments | 4,376 | 1,759 |
Investments carried at amortized cost | 2,147 | 2,152 |
Investments carried at fair value through other comprehensive income | 8,776 | 10,461 |
Investments carried at fair value through profit or loss | 4,156 | 1,592 |
(1) | Uncalled capital commitments outstanding as at September 30, 2021 and March 31, 2021 was
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Refer to Note 2.10 for Accounting policies on Financial Instruments.
Method of fair valuation:
(In crore)
Class of investment | Method | Fair value as at | |
September 30, 2021 | March 31, 2021 | ||
Liquid mutual fund units | Quoted price | 4,042 | 1,500 |
Tax free bonds and government bonds | Quoted price and market observable inputs | 2,515 | 2,536 |
Non-convertible debentures | Quoted price and market observable inputs | 3,723 | 4,827 |
Government securities | Quoted price | 4,833 | 5,467 |
Unquoted equity and preference securities - carried at fair value through other comprehensive income | Discounted cash flows method, Market multiples method, Option pricing model | 220 | 167 |
Unquoted equity and preference securities - carried at fair value through profit and loss | Discounted cash flows method, Market multiples method, Option pricing model | 23 | 11 |
Unquoted compulsorily convertible debentures - carried at fair value through profit and loss | Discounted cash flows method | 7 | 7 |
Others | Discounted cash flows method, Market multiples method, Option pricing model | 84 | 74 |
Total | 15,447 | 14,589 |
Note: Certain quoted investments are classified as Level 2 in the absence of active market for such investments.
2.5 LOANS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non Current | ||
Unsecured, considered good | ||
Other loans | ||
Loans to employees | 45 | 32 |
45 | 32 | |
Unsecured, considered doubtful | ||
Other loans | ||
Loans to employees | 32 | 28 |
77 | 60 | |
Less: Allowance for doubtful loans to employees | 32 | 28 |
Total non-current loans | 45 | 32 |
Current | ||
Unsecured, considered good | ||
Other loans | ||
Loans to employees | 191 | 159 |
Total current loans | 191 | 159 |
Total loans | 236 | 191 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non Current | ||
Security deposits (1) | 49 | 49 |
Rental deposits (1) | 187 | 217 |
Unbilled revenues (1)# | 553 | 399 |
Net investment in sublease of right of use asset (1) | 337 | 350 |
Restricted deposits (1)* | 63 | 42 |
Others (1) | 63 | 84 |
Total non-current other financial assets | 1,252 | 1,141 |
Current | ||
Security deposits (1) | 6 | 6 |
Rental deposits (1) | 62 | 30 |
Restricted deposits (1)* | 2,167 | 2,016 |
Unbilled revenues (1)# | 4,094 | 3,173 |
Interest accrued but not due (1) | 496 | 620 |
Foreign currency forward and options contracts (2) (3) | 122 | 188 |
Net investment in sublease of right of use asset (1) | 41 | 38 |
Others (1) | 397 | 339 |
Total current other financial assets | 7,385 | 6,410 |
Total other financial assets | 8,637 | 7,551 |
(1) Financial assets carried at amortized cost | 8,515 | 7,363 |
(2) Financial assets carried at fair value through other comprehensive income | 40 | 25 |
(3) Financial assets carried at fair value through profit or loss | 82 | 163 |
* | Restricted deposits represent deposits with financial institutions to settle employee-related obligations as and when they arise during the normal course of business. | |
# | Classified as financial asset as right to consideration is unconditional and is due only after a passage of time. |
2.7 TRADE RECEIVABLES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Unsecured | ||
Considered good | 20,121 | 19,294 |
Considered doubtful | 656 | 619 |
20,777 | 19,913 | |
Less: Allowance for credit loss | 656 | 619 |
Total trade receivables(1) | 20,121 | 19,294 |
(1) Includes dues from companies where directors are interested | – | – |
2.8 CASH AND CASH EQUIVALENTS
(In
crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Balances with banks | ||
In current and deposit accounts | 14,994 | 20,069 |
Cash on hand | – | – |
Others | ||
Deposits with financial institutions | 3,062 | 4,645 |
Total cash and cash equivalents | 18,056 | 24,714 |
Balances with banks in unpaid dividend accounts | 33 | 33 |
Deposit with more than 12 months maturity | 9,753 | 13,659 |
Balances with banks held as margin money deposits against guarantees | 70 | 71 |
Cash and cash equivalents as at September 30, 2021 and
March 31, 2021 include restricted cash and bank balances of 526 crore and
504 crore, respectively. The restrictions are
primarily on account of bank balances held by irrevocable trusts controlled by the company and bank balances held as margin money deposits
against guarantees.
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.
2.9 OTHER ASSETS
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non Current | ||
Capital advances | 126 | 141 |
Advances other than capital advances | ||
Others | ||
Withholding taxes and others | 682 | 705 |
Unbilled revenues # | 205 | 195 |
Defined benefit plan assets | 28 | 19 |
Prepaid expenses | 88 | 78 |
Deferred Contract Cost * | 896 | 143 |
Total Non-Current other assets | 2,025 | 1,281 |
Current | ||
Advances other than capital advances | ||
Payment to vendors for supply of goods | 65 | 141 |
Others | ||
Unbilled revenues # | 5,319 | 4,354 |
Withholding taxes and others | 2,084 | 2,091 |
Prepaid expenses | 1,361 | 1,160 |
Deferred Contract Cost * | 422 | 65 |
Other receivables | 21 | 3 |
Total Current other assets | 9,272 | 7,814 |
Total other assets | 11,297 | 9,095 |
# | Classified as non financial asset as the contractual right to consideration is dependent on completion of contractual milestones. |
* | Includes technology assets taken over by the Company from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company
in accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the
total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company has entered into a financing
arrangement with a third party for these assets for ![]() ![]() |
Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from Government of India.
2.10 FINANCIAL INSTRUMENTS
Accounting policy
2.10.1 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.
2.10.2 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. The Group has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
(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 and financial liability under option arrangements recognized in a business combination which is subsequently measured at fair value through profit or 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 includes 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 Consolidated 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 Consolidated 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 Consolidated 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 Consolidated Statement of Profit and Loss.
2.10.3 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.
2.10.4 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 table 'Financial instruments by category' below 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 these instruments.
2.10.5 Impairment
The Group recognizes loss allowances using the expected credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenues 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 recorded is recognized as an impairment gain or loss in Consolidated Statement of Profit and Loss.
Financial instruments by category
The carrying value and fair value of financial instruments by categories as at September 30, 2021 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 to Note 2.8) | 18,056 | – | – | – | – | 18,056 | 18,056 |
Investments (Refer to Note 2.4) | |||||||
Equity and preference securities | – | – | 23 | 220 | – | 243 | 243 |
Compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Tax-free bonds and government bonds | 2,147 | – | – | – | – | 2,147 | 2,515(1) |
Liquid mutual fund units | – | – | 4,042 | – | – | 4,042 | 4,042 |
Non convertible debentures | – | – | – | – | 3,723 | 3,723 | 3,723 |
Government securities | – | – | – | – | 4,833 | 4,833 | 4,833 |
Other investments | – | – | 84 | – | – | 84 | 84 |
Trade receivables (Refer to Note 2.7) | 20,121 | – | – | – | – | 20,121 | 20,121 |
Loans (Refer to Note 2.5) | 236 | – | – | – | – | 236 | 236 |
Other financials assets (Refer to Note 2.6)(3) | 8,515 | – | 82 | – | 40 | 8,637 | 8,560(2) |
Total | 49,075 | – | 4,238 | 220 | 8,596 | 62,129 | 62,420 |
Liabilities: | |||||||
Trade payables | 3,176 | – | – | – | – | 3,176 | 3,176 |
Lease liabilities (Refer to Note 2.19) | 5,144 | – | – | – | – | 5,144 | 5,144 |
Financial Liability under option arrangements (Refer to Note 2.12) | – | – | 695 | – | – | 695 | 695 |
Other financial liabilities (Refer to Note 2.12) | 12,521 | – | 160 | – | 1 | 12,682 | 12,682 |
Total | 20,841 | – | 855 | – | 1 | 21,697 | 21,697 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of ![]() |
(3) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
The carrying value and fair value of financial instruments by categories as at March 31, 2021 were as follows:
(In crore)
Particulars | 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 to Note 2.8) | 24,714 | – | – | – | – | 24,714 | 24,714 |
Investments (Refer to Note 2.4) | |||||||
Equity and preference securities | – | – | 11 | 167 | – | 178 | 178 |
Compulsorily convertible debentures | – | – | 7 | – | – | 7 | 7 |
Tax-free bonds and government bonds | 2,152 | – | – | – | – | 2,152 | 2,536(1) |
Liquid mutual fund units | – | – | 1,500 | – | – | 1,500 | 1,500 |
Non convertible debentures | – | – | – | – | 4,827 | 4,827 | 4,827 |
Government securities | – | – | – | – | 5,467 | 5,467 | 5,467 |
Other investments | – | – | 74 | – | – | 74 | 74 |
Trade receivables (Refer to Note 2.7) | 19,294 | – | – | – | – | 19,294 | 19,294 |
Loans (Refer to Note 2.5) | 191 | – | – | – | – | 191 | 191 |
Other financials assets (Refer to Note 2.6)(3) | 7,363 | – | 163 | – | 25 | 7,551 | 7,459(2) |
Total | 53,714 | – | 1,755 | 167 | 10,319 | 65,955 | 66,247 |
Liabilities: | |||||||
Trade payables | 2,645 | – | – | – | – | 2,645 | 2,645 |
Lease liabilities (Refer to Note 2.19) | 5,325 | – | – | – | – | 5,325 | 5,325 |
Financial Liability under option arrangements (Refer to Note 2.12) | – | – | 693 | – | – | 693 | 693 |
Other financial liabilities (Refer to Note 2.12) | 9,877 | – | 217 | – | – | 10,094 | 10,094 |
Total | 17,847 | – | 910 | – | – | 18,757 | 18,757 |
(1) | On account of fair value changes including interest accrued |
(2) | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of ![]() |
(3) | Excludes unbilled revenue on contracts where the right to consideration is dependent on completion of contractual milestones |
For trade receivables and trade payables and other assets and 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.
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 at September 30, 2021:
(In crore)
Particulars
|
As at September 30, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual funds (Refer to Note 2.4) | 4,042 | 4,042 | – | – |
Investments in tax-free bonds (Refer to Note 2.4) | 2,493 | 2,212 | 281 | – |
Investments in government bonds (Refer to Note 2.4) | 22 | 22 | – | – |
Investments in non convertible debentures (Refer to Note 2.4) | 3,723 | 2,144 | 1,579 | – |
Investment in government securities (Refer to Note 2.4) | 4,833 | 4,748 | 85 | – |
Investments in equity instruments (Refer to Note 2.4) | 2 | – | – | 2 |
Investments in preference securities (Refer to Note 2.4) | 241 | – | – | 241 |
Investments in compulsorily convertible debentures (Refer to Note 2.4) | 7 | – | – | 7 |
Other investments (Refer to Note 2.4) | 84 | – | – | 84 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) | 122 | – | 122 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) | 44 | – | 44 | – |
Financial liability under option arrangements (Refer to Note 2.12) | 695 | – | – | 695 |
Liability towards contingent consideration (Refer to Note 2.12)(1) | 117 | – | – | 117 |
(1) | Discount rate pertaining to contingent consideration ranges from 8% to 14.5% |
During the six months ended September 30, 2021, tax free
bonds and non-convertible debentures of 1,010 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since
these were valued based on quoted price. Further, tax free bonds and non-convertible debentures of
1,579 crore was transferred
from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities as at March 31, 2021 was as follows:
(In crore)
Particulars
|
As at March 31, 2021 | Fair value measurement at end of the reporting period using | ||
Level 1 | Level 2 | Level 3 | ||
Assets | ||||
Investments in liquid mutual funds (Refer to Note 2.4) | 1,500 | 1,500 | – | – |
Investments in tax free bonds (Refer to Note 2.4) | 2,513 | 1,352 | 1,161 | – |
Investments in government bonds (Refer to Note 2.4) | 23 | 23 | – | – |
Investments in non convertible debentures (Refer to Note 2.4) | 4,827 | 4,532 | 295 | – |
Investment in government securities (Refer to Note 2.4) | 5,467 | 5,467 | – | – |
Investments in equity instruments (Refer to Note 2.4) | 2 | – | – | 2 |
Investments in preference securities (Refer to Note 2.4) | 176 | – | – | 176 |
Investments in compulsorily convertible debentures (Refer to Note 2.4) | 7 | – | – | 7 |
Other investments (Refer to Note 2.4) | 74 | – | – | 74 |
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) | 188 | – | 188 | – |
Liabilities | ||||
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) | 56 | – | 56 | – |
Financial liability under option arrangements (Refer to Note 2.12) | 693 | – | – | 693 |
Liability towards contingent consideration (Refer to Note 2.12)(1) | 161 | – | – | 161 |
(1) | Discount rate pertaining to contingent consideration ranges from 8% to 14.5% |
During the year ended March 31, 2021, tax free
bonds and non-convertible debentures of 107 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these
were valued based on quoted price. Further, tax free bonds and non-convertible debentures of
1,177 crore was transferred from Level
1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, fixed maturity plan securities, certificates of deposit, commercial papers, quoted bonds issued by government and quasi-government organizations and non convertible debentures. The Group invests after considering counterparty risks based on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per its risk management program.
2.11 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.
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 securities premium.
Description of reserves
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from general reserve.
Retained earnings
Retained earnings represent the amount of accumulated earnings of the Group.
Securities premium
The amount received in excess of the par value has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The share options outstanding account is used to record the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has been created out of the profit of the eligible SEZ unit 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 terms of the provisions of the Sec 10AA (2) of the Income Tax Act, 1961.
Other components of equity
Other components of equity include currency translation, remeasurement of net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on fair valuation of investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Currency translation reserve
The exchange differences arising from the translation of financial statements of foreign subsidiaries with functional currency other than Indian rupees is recognized in other comprehensive income and is presented within equity.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the Consolidated Statement of Profit and Loss upon the occurrence of the related forecasted transaction.
EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Authorized | ||
Equity shares, ![]() |
||
480,00,00,000 (480,00,00,000) equity shares | 2,400 | 2,400 |
Issued, Subscribed and Paid-Up | ||
Equity shares, ![]() |
2,097 | 2,124 |
4,19,06,23,841 (424,51,46,114) equity shares fully paid-up(2) | ||
2,097 | 2,124 |
Note: Forfeited shares amounted to 1,500 (
1,500)
(1) | Refer to Note 2.20 for details of basic and diluted shares |
(2) | Net of treasury shares 1,48,40,585 (1,55,14,732) |
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.
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.
For details of shares reserved for issue under the employee stock option plan of the Company refer to the note below.
The reconciliation of the number of shares outstanding and the amount of share capital as at September 30, 2021 and March 31, 2021 are as follows:
(In
crore, except as stated otherwise)
Particulars | As at September 30, 2021 |
As at March 31, 2021 | ||
Shares | Amount | Shares | Amount | |
As at the beginning of the period | 4,245,146,114 | 2,124 | 4,240,753,210 | 2,122 |
Add: Shares issued on exercise of employee stock options | 1,285,064 | 1 | 4,392,904 | 2 |
Less: Shares bought back | 55,807,337 | 28 | – | – |
As at the end of the period | 4,190,623,841 | 2,097 | 4,245,146,114 | 2,124 |
Capital allocation policy
Effective fiscal 2020, the Company expects to return approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual dividends and/or share buyback and/or special dividends, 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 and buyback include applicable taxes.
Update on buyback announced in April 2021:
In line with the capital allocation policy, the Board,
at its meeting held on April 14, 2021, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,200 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding
1,750 per share (Maximum
Buyback Price), subject to shareholders' approval in the ensuing Annual General Meeting.
The shareholders approved the proposal of buyback of Equity
Shares recommended by its Board of Directors in the Annual General meeting held on June 19, 2021.
The buyback was offered to all eligible equity shareholders
of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through
the stock exchange. The buyback of equity shares through the stock exchange commenced on June 25, 2021 and was completed on September
8, 2021. During this buyback period, the Company had purchased and extinguished a total of 55,807,337 equity shares from the stock exchange
at a volume weighted average buy back price of 1,648.53/- per equity share comprising 1.31% of the pre buyback paid-up equity share
capital of the Company. The buyback resulted in a cash outflow of
9,200 crore (excluding transaction costs and tax on buyback).
The Company funded the buyback from its free reserves including Securities Premium as explained in Section 68 of the Companies Act, 2013.
In accordance with section 69 of the Companies Act, 2013, as at September 30, 2021, the Company has created ‘Capital Redemption
Reserve’ of 28 crore equal to the nominal value of the shares bought back as an appropriation from general reserve.
The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or buy back issued shares. As at September 30, 2021, the Company has only one class of equity shares and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
Dividend
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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees. Companies are required to pay/distribute dividend after deducting applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
Amount of per share dividend recognized as distribution to equity shareholders:
(in
)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Final dividend for fiscal 2020 | – | – | – | 9.50 |
Final dividend for fiscal 2021 | – | – | 15.00 | – |
The Board of Directors in their meeting held on April
14, 2021 recommended a final dividend of 15/- per equity share for the financial year ended March 31, 2021. The same was approved
by the shareholders in the Annual General Meeting (AGM) of the Company held on June 19, 2021 which resulted in a net cash outflow of
6,369
crore (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on October
13, 2021 declared a interim dividend of 15/- per equity share which would result in a net cash outflow of approximately
6,286
crore, excluding dividend paid on treasury shares.
Employee Stock Option Plan (ESOP):
Accounting policy
The Group recognizes compensation expense relating to share-based payments in net profit based on estimated fair values of the awards on the grant date. The estimated fair value of awards is recognized as an expense in the statement of profit and loss 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.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan) :
On June 22, 2019 pursuant to approval by the shareholders in the Annual General Meeting, the Board has been authorized to introduce, offer,
issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019 Plan. The maximum number
of shares under the 2019 Plan shall not exceed 50,000,000 equity shares. To implement the 2019 Plan, up to 45,000,000 equity shares may
be issued by way of secondary acquisition of shares by Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted
under the 2019 Plan shall vest based on the achievement of defined annual performance parameters as determined by the administrator (Nomination
and Remuneration Committee). The performance parameters will be based on a combination of relative Total Shareholder Return (TSR) against
selected industry peers and certain broader market domestic and global indices and operating performance metrics of the Company as decided
by administrator. Each of the above performance parameters will be distinct for the purposes of calculation of quantity of shares to vest
based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan
(the 2015 Plan) :
On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was 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 24,038,883 equity shares (this includes 11,223,576
equity shares which are held by the trust towards the 2011 Plan as at March 31, 2016). The Company expects to grant the instruments under
the 2015 Plan over the period of 4 to 7 years. The plan numbers mentioned above would further be adjusted for the September 2018 bonus
issue.
The equity settled and cash settled RSUs and stock options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee (NARC). 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.
Controlled trust holds 14,840,585 and 15,514,732 shares as at September 30, 2021 and March 31, 2021, respectively, under the 2015 Plan. Out of these shares, 200,000 equity shares each have been earmarked for welfare activities of the employees as at September 30, 2021 and March 31, 2021.
The following is the summary of grants during the six months ended September 30, 2021 and September 30, 2020:
Particulars | 2019 Plan | 2015 Plan | ||
Six months ended September 30, | Six months ended September 30, | |||
2021 | 2020 | 2021 | 2020 | |
Equity Settled RSU | ||||
KMPs | 73,962 | 207,808 | 101,697 | 204,097 |
Employees other than KMP | – | – | – | 24,600 |
Total Grants | 73,962 | 207,808 | 101,697 | 228,697 |
Note: No grants were made during the three months ended September 30, 2021 and September 30, 2020
Notes on grants to KMP:
CEO & MD
Under the 2015 Plan:
In accordance with the employee agreement which has been
approved by the shareholders, the CEO is eligible to receive an annual grant of RSUs of fair value 3.25 crore which will vest overtime
in three equal annual installments upon the completion of each year of service from the respective grant date. Though the annual time
based grants for the remaining employment term ending on March 31, 2023 have not been granted as of September 30, 2021, since the service
commencement date precedes the grant date, the Company has recorded employment stock compensation expense in accordance with Ind AS 102,
Share based payments.
The Board, on April 14, 2021, based on the recommendations
of the nomination and remuneration committee, in accordance with the terms of his employment agreement, approved the grant of performance-based
RSUs of fair value of 13 crore for fiscal 2022 under the 2015 Plan. These RSUs will vest in line with the employment agreement
based on achievement of certain performance targets. Accordingly, 96,150 performance based RSU’s were granted effective May 2, 2021.
Under the 2019 Plan:
The Board, on April 14, 2021, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2022 under
the 2019 Plan. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly,
73,962 performance based RSU’s were granted effective May 2, 2021.
Other KMPs
Under the 2015 Plan:
On April 14, 2021, based on the recommendations of the Nomination and Remuneration Committee, in accordance with employment agreement, the Board, approved performance-based grant of 5,547 RSUs to other KMP under the 2015 Plan. The grants were made effective May 2, 2021. The performance based RSUs will vest over three years based on certain performance targets.
Break-up of employee stock compensation expense:
(in crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Granted to: | ||||
KMP | 17 | 19 | 34 | 36 |
Employees other than KMP | 82 | 79 | 175 | 138 |
Total (1) | 99 | 98 | 209 | 174 |
(1) Cash-settled stock compensation expense included above | 6 | 27 | 13 | 40 |
The fair value of the awards are estimated using the Black-Scholes
Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term
and the risk free rate of interest. Expected volatility during the expected term of the options 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 options.
Expected volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly
traded equity shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each
peer entity and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated on the date of grant using the following assumptions:
Particulars | For options granted in | |||
Fiscal 2022- Equity Shares-RSU |
Fiscal 2022- ADS-RSU |
Fiscal 2021- Equity Shares-RSU |
Fiscal 2021- ADS-RSU | |
Weighted average share price (![]() |
1,352 | 18.20 | 1,253 | 18.46 |
Exercise price (![]() |
5.00 | 0.07 | 5.00 | 0.07 |
Expected volatility (%) | 29-35 | 30-37 | 30-35 | 30-36 |
Expected life of the option (years) | 1-4 | 1-4 | 1-4 | 1-4 |
Expected dividends (%) | 2-3 | 2-3 | 2-3 | 2-3 |
Risk-free interest rate (%) | 4-5 | 0.1-0.6 | 4-5 | 0.1-0.3 |
Weighted average fair value as on grant date (![]() |
1,189 | 16.80 | 1,124 | 16.19 |
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 behavior of the employee who receives the RSU/ESOP.
2.12 OTHER FINANCIAL LIABILITIES
(In crore
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Others | ||
Accrued compensation to employees (1) | 8 | – |
Accrued expenses (1) | 651 | 569 |
Compensated absences | 101 | 97 |
Financial liability under option arrangements (2) | 695 | 693 |
Payable for acquisition of business - Contingent consideration (2) | 53 | 86 |
Other Payables (1)(4) | 601 | 69 |
Total non-current other financial liabilities | 2,109 | 1,514 |
Current | ||
Unpaid dividends (1) | 33 | 33 |
Others | ||
Accrued compensation to employees (1) | 4,023 | 4,019 |
Accrued expenses (1) | 6,252 | 4,475 |
Retention monies (1) | 13 | 13 |
Payable for acquisition of business - Contingent consideration (2) | 64 | 75 |
Payable by controlled trusts (1) | 211 | 199 |
Compensated absences | 2,236 | 2,020 |
Foreign currency forward and options contracts (2) (3) | 44 | 56 |
Capital creditors (1) | 236 | 371 |
Other payables (1)(4) | 493 | 129 |
Total current other financial liabilities | 13,605 | 11,390 |
Total other financial liabilities | 15,714 | 12,904 |
(1) Financial liability carried at amortized cost | 12,521 | 9,877 |
(2) Financial liability carried at fair value through profit or loss | 855 | 910 |
(3) Financial liability carried at fair value through other comprehensive income | 1 | – |
Contingent consideration on undiscounted basis | 131 | 181 |
(4) | Deferred contract cost in note 2.9 includes technology assets taken over by the Company from
a customer as a part of transformation project which is not considered as distinct goods or services and the control related to the assets
is not transferred to the Company in accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been
considered as a reduction to the total contract value and accounted as Deferred contract cost. Further as at September 30, 2021 the Company
has entered into a financing arrangement with a third party for these assets for ![]() ![]() |
2.13 OTHER LIABILITIES
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Non-current | ||
Others | ||
Withholding taxes and others | 370 | 364 |
Deferred income - government grants | 56 | 57 |
Accrued defined benefit plan liability | 311 | 324 |
Deferred income | 13 | 17 |
Others | 1 | 1 |
Total non-current other liabilities | 751 | 763 |
Current | ||
Unearned revenue | 4,394 | 4,050 |
Others | ||
Withholding taxes and others | 2,386 | 2,170 |
Accrued defined benefit plan liability | 4 | 6 |
Deferred income - government grants | 14 | 3 |
Others | 4 | 4 |
Total current other liabilities | 6,802 | 6,233 |
Total other liabilities | 7,553 | 6,996 |
2.14 PROVISIONS
Accounting policy
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 on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time related revenues are recorded and included in Consolidated Statement of Profit and Loss. 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.
Provision for post-sales client support and other provisions:
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current | ||
Others | ||
Post-sales client support and other provisions | 862 | 713 |
Total provisions | 862 | 713 |
Provision for post sales client support represents cost associated with providing post sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 year.
2.15 INCOME TAXES
Accounting policy
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Consolidated 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 equity or 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 equity.
Income tax expense in the Consolidated Statement of Profit and Loss comprises:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Current taxes | 1,987 | 1,763 | 3,923 | 3,084 |
Deferred taxes | 33 | 129 | 71 | 328 |
Income tax expense | 2,020 | 1,892 | 3,994 | 3,412 |
Income tax expense for the three months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of 20 crore and
99 crore, respectively. Income tax expense for the six months ended September 30, 2021 and September 30, 2020 includes reversal (net of provisions) of
33 crore and
230 crore, respectively. These reversals pertain to prior periods primarily on account of adjudication of certain disputed matters in favor of the Company and upon filing of tax return across various jurisdictions.
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)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Profit before income taxes | 7,448 | 6,750 | 14,623 | 12,543 |
Enacted tax rates in India | 34.94% | 34.94% | 34.94% | 34.94% |
Computed expected tax expense | 2,603 | 2,359 | 5,110 | 4,383 |
Tax effect due to non-taxable income for Indian tax purposes | (833) | (622) | (1,499) | (1,169) |
Overseas taxes | 247 | 183 | 446 | 347 |
Tax provision (reversals) | (20) | (99) | (33) | (230) |
Effect of exempt non-operating income | (8) | (9) | (27) | (18) |
Effect of unrecognized deferred tax assets | (4) | 9 | (4) | 26 |
Effect of differential tax rates | (43) | (46) | (74) | (74) |
Effect of non-deductible expenses | 28 | 27 | 65 | 65 |
Impact of change in tax rate | (47) | – | (47) | – |
Others | 97 | 90 | 57 | 82 |
Income tax expense | 2,020 | 1,892 | 3,994 | 3,412 |
The applicable Indian corporate statutory tax rate for the three months and six months ended September 30, 2021 and September 30, 2020 is 34.94% each.
Deferred income tax for the three months and six months ended September 30, 2021 and September 30, 2020 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA) with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.16 REVENUE FROM OPERATIONS
Accounting policy
The Group derives revenues primarily from IT services comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation, licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-time frame basis.
Revenues from customer contracts are considered for recognition and measurement when the contract has been approved by the parties, in writing, to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”). When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds an appropriate margin based on similar services.
The Group’s contracts may include variable consideration including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage of completion method when the pattern of benefits from the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed) to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
The billing schedules agreed with customers include periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements with customers generally meet the criteria for considering software development and related services as distinct performance obligations. For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a “right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally have three elements: license, implementation and Annual Technical Services (ATS).When implementation services are provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e., costs
that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover them.
Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance
obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company
that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized
to expenses over the respective contract life on a systematic basis consistent with the transfer of goods or services to customer to which
the asset relates. Capitalized costs are monitored regularly for impairment. Impairment losses are recorded when present value of projected
remaining operating cash flows is not sufficient to recover the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in its Consolidated Statement of Profit and Loss.
Revenue from operation for the three months and six months ended September 30, 2021 and September 30, 2020 are as follows:
(In
crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Revenue from software services | 27,813 | 22,728 | 53,659 | 44,747 |
Revenue from products and platforms | 1,789 | 1,842 | 3,839 | 3,487 |
Total revenue from operations |
29,602 | 24,570 | 57,498 | 48,234 |
The Group has evaluated the impact of COVID – 19 pandemic on (i) the possibility of constraints in our ability to render services which may require revision of estimations of costs to complete the contract because of additional efforts; (ii) onerous obligations; (iii) penalties relating to breaches of service level agreements; and (iv) termination or deferment of contracts by customers. The Group has concluded that the impact of COVID – 19 pandemic is not significant based on these estimates. Due to the nature of the COVID – 19 pandemic, the Group will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.
Disaggregated revenue information
The table below presents disaggregated revenues from contracts with customers by geography and offerings for each of our business segments. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
For the three months ended September 30, 2021 and September 30, 2020:
(In
crore)
Particulars | Financial Services (1) | Retail(2) | Communication (3) | Energy , Utilities, Resources and Services | Manufacturing | Hi-Tech | Life Sciences(4) | Others (5) | Total |
Revenues by Geography* | |||||||||
North America | 5,942 | 2,939 | 2,004 | 1,803 | 1,568 | 2,343 | 1,505 | 228 | 18,332 |
4,547 | 2,403 | 1,618 | 1,710 | 1,178 | 2,126 | 1,141 | 193 | 14,916 | |
Europe | 1,676 | 1,150 | 870 | 1,392 | 1,576 | 54 | 557 | 53 | 7,328 |
1,622 | 1,033 | 699 | 1,043 | 998 | 39 | 493 | 52 | 5,979 | |
India | 469 | 20 | 107 | 35 | 19 | 101 | 8 | 11 | 770 |
394 | 12 | 74 | 4 | 12 | 65 | 5 | 174 | 740 | |
Rest of the world | 1,479 | 221 | 687 | 271 | 56 | 13 | 33 | 412 | 3,172 |
1,308 | 203 | 702 | 270 | 53 | 14 | 33 | 352 | 2,935 | |
Total | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 | |
Revenue by offerings | |||||||||
Digital | 4,984 | 2,645 | 2,222 | 2,025 | 1,847 | 1,453 | 1,188 | 240 | 16,604 |
3,717 | 1,885 | 1,512 | 1,437 | 997 | 1,111 | 692 | 273 | 11,624 | |
Core | 4,582 | 1,685 | 1,446 | 1,476 | 1,372 | 1,058 | 915 | 464 | 12,998 |
4,154 | 1,766 | 1,581 | 1,590 | 1,244 | 1,133 | 980 | 498 | 12,946 | |
Total | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 |
For the six months ended September 30, 2021 and September 30, 2020:
(In
crore)
Particulars | Financial Services (1) | Retail(2) | Communication (3) | Energy , Utilities, Resources and Services | Manufacturing | Hi-Tech | Life Sciences(4) | Others (5) | Total |
Revenues by Geography* | |||||||||
North America | 11,669 | 5,725 | 3,779 | 3,530 | 3,009 | 4,496 | 2,873 | 456 | 35,537 |
8,921 | 4,579 | 3,433 | 3,422 | 2,476 | 4,071 | 2,189 | 365 | 29,456 | |
Europe | 3,327 | 2,300 | 1,693 | 2,727 | 2,759 | 106 | 1,044 | 109 | 14,065 |
3,158 | 2,051 | 1,328 | 2,079 | 1,883 | 70 | 988 | 107 | 11,664 | |
India | 871 | 49 | 216 | 67 | 33 | 191 | 16 | 148 | 1,591 |
762 | 22 | 130 | 8 | 27 | 137 | 12 | 325 | 1,423 | |
Rest of the world | 2,916 | 431 | 1,383 | 547 | 121 | 28 | 61 | 818 | 6,305 |
2,487 | 391 | 1,366 | 545 | 111 | 29 | 57 | 705 | 5,691 | |
Total | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 | |
Revenue by offerings | |||||||||
Digital | 9,797 | 5,038 | 4,152 | 3,883 | 3,291 | 2,725 | 2,200 | 565 | 31,651 |
7,143 | 3,499 | 3,007 | 2,757 | 2,026 | 1,978 | 1,257 | 489 | 22,156 | |
Core | 8,986 | 3,467 | 2,919 | 2,988 | 2,631 | 2,096 | 1,794 | 966 | 25,847 |
8,185 | 3,544 | 3,250 | 3,297 | 2,471 | 2,329 | 1,989 | 1,013 | 26,078 | |
Total | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
* | Geographical revenues is based on the domicile of customer |
Digital Services
Digital Services comprise of service and solution offerings of the Group that enable our clients to transform their businesses. These include offerings that enhance customer experience, leverage AI-based analytics and big data, engineer digital products and IoT, modernize legacy technology systems, migrate to cloud applications and implement advanced cyber security systems.
Core Services
Core Services comprise traditional offerings of the Group that have scaled and industrialized over a number of years. These primarily include application management services, proprietary application development services, independent validation solutions, product engineering and management, infrastructure management services, traditional enterprise application implementation, support and integration services.
Products & platforms
The Group also derives revenues from the sale of products and platforms including Finacle – core banking solution, Edge Suite of products, Infosys Nia - Artificial Intelligence (AI) platform which applies next-generation AI and machine learning, Panaya platform, Skava platform, Stater digital platform and Infosys McCamish- insurance platform.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned revenue.
Trade receivables and unbilled revenues are presented net of impairment in the consolidated Balance Sheet.
2.17 OTHER INCOME, NET
Accounting policy
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 foreign currency assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.
Foreign currency
Accounting policy
Functional currency
The functional currency of Infosys, Infosys BPM, controlled trusts, EdgeVerve and Skava is the Indian rupee. The functional currencies for foreign subsidiaries are their 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 recognized in the Consolidated Statement of Profit and Loss and reported within exchange gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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. The related revenue and expense are recognized using the same exchange rate.
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 Consolidated 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.
Other Comprehensive Income, net of taxes includes translation differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments and measured at fair value through other comprehensive income (FVOCI).
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.
Government grant
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 Consolidated 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 interim condensed consolidated Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate.
Other income for the three months and six months September 30, 2021 and September 30, 2020 is as follows:
(In crore)
Particulars | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Interest income on financial assets carried at amortized cost: | ||||
Tax free bonds and Government bonds | 38 | 35 | 76 | 69 |
Deposit with Bank and others | 206 | 280 | 496 | 538 |
Interest income on financial assets carried at fair value through other comprehensive income: | ||||
Non-convertible debentures, certificates of deposit, and government securities | 155 | 97 | 313 | 186 |
Income on investments carried at fair value through profit or loss: | ||||
Dividend income on liquid mutual funds | – | 10 | – | 11 |
Gain / (loss) on liquid mutual funds and other investments | 41 | 9 | 66 | 33 |
Income on investments carried at fair value through other comprehensive income | – | 27 | – | 54 |
Exchange gains / (losses) on foreign currency forward and options contracts | 133 | 307 | 56 | 354 |
Exchange gains / (losses) on translation of foreign currency assets and liabilities | (81) | (262) | 47 | (294) |
Miscellaneous income, net | 32 | 67 | 92 | 95 |
Total other income | 524 | 570 | 1,146 | 1,046 |
2.18 EXPENSES
Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 operates defined benefit pension plan in certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide for periodic payouts after retirement and/or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
Liabilities with regard to these defined benefit plans are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk.
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 profit in the Consolidated Statement of Profit and Loss.
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 of India. 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.
Superannuation
Certain employees of Infosys, Infosys BPM 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.
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.
The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Employee benefit expenses | ||||
Salaries including bonus | 15,160 | 12,978 | 29,808 | 26,166 |
Contribution to provident and other funds | 385 | 270 | 734 | 559 |
Share based payments to employees (Refer to Note 2.11) | 99 | 98 | 209 | 174 |
Staff welfare | 99 | 54 | 222 | 105 |
15,743 | 13,400 | 30,973 | 27,004 | |
Cost of software packages and others | ||||
For own use | 366 | 309 | 709 | 600 |
Third party items bought for service delivery to clients | 1,027 | 799 | 1,973 | 1,401 |
1,393 | 1,108 | 2,682 | 2,001 | |
Other expenses | ||||
Repairs and maintenance | 259 | 324 | 533 | 669 |
Power and fuel | 31 | 37 | 64 | 71 |
Brand and marketing | 102 | 93 | 216 | 152 |
Short-term leases | 15 | 14 | 32 | 39 |
Rates and taxes | 65 | 59 | 128 | 114 |
Consumables | 36 | 26 | 68 | 50 |
Insurance | 34 | 36 | 76 | 66 |
Provision for post-sales client support and others | 34 | (7) | 35 | (1) |
Commission to non-whole time directors | 3 | 2 | 5 | 3 |
Impairment loss recognized / (reversed) under expected credit loss model | 44 | 63 | 87 | 162 |
Contributions towards Corporate Social responsibility | 115 | 140 | 260 | 260 |
Others | 85 | (41) | 135 | 41 |
823 | 746 | 1,639 | 1,626 |
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company intends to transfer its CSR capital assets created prior to January 2021 to a controlled subsidiary Infosys Green Forum established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
2.19 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist of leases for land, buildings and computers. The group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether: (1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right of use assets 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 Cash Generating Unit (CGU) to which the asset
belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing
cash flows.
The Group as a lessor
Leases for which the Group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of July 1, 2021 | 631 | 3,716 | 19 | 194 | 4,560 |
Additions* | – | 205 | – | 54 | 259 |
Deletions | – | (2) | – | (18) | (20) |
Depreciation | (2) | (164) | (3) | (16) | (185) |
Translation difference | – | (17) | – | 2 | (15) |
Balance as of September 30, 2021 | 629 | 3,738 | 16 | 216 | 4,599 |
* Net of adjustments on account of modification
Following are the changes in the carrying value of right of use assets for the three months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of July 1, 2020 | 625 | 3,285 | 20 | 67 | 3,997 |
Additions | 7 | 377 | 1 | 2 | 387 |
Deletions | – | (32) | – | – | (32) |
Depreciation | (2) | (147) | (2) | (4) | (155) |
Translation difference | 1 | (4) | – | 1 | (2) |
Balance as of September 30, 2020 | 631 | 3,479 | 19 | 66 | 4,195 |
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2021:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of April 1, 2021 | 630 | 3,984 | 19 | 161 | 4,794 |
Additions* | – | 64 | 1 | 100 | 165 |
Deletions | – | (6) | – | (18) | (24) |
Depreciation | (4) | (319) | (5) | (29) | (357) |
Translation difference | 3 | 15 | 1 | 2 | 21 |
Balance as of September 30, 2021 | 629 | 3,738 | 16 | 216 | 4,599 |
* Net of adjustments on account of modification
Following are the changes in the carrying value of right of use assets for the six months ended September 30, 2020:
(In crore)
Particulars | Category of ROU asset | Total | |||
Land | Buildings | Vehicles | Computers | ||
Balance as of April 1, 2020 | 626 | 3,485 | 15 | 42 | 4,168 |
Additions | 7 | 360 | 9 | 32 | 408 |
Deletions | – | (90) | – | – | (90) |
Depreciation | (3) | (292) | (5) | (8) | (308) |
Translation difference | 1 | 16 | – | – | 17 |
Balance as of September 30, 2020 | 631 | 3,479 | 19 | 66 | 4,195 |
The aggregate depreciation expense on ROU assets has been included under depreciation and amortisation expense in the Consolidated Statement of Profit and Loss.
The following is the break-up of current and non-current lease liabilities:
(In
crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Current lease liabilities | 788 | 738 |
Non-current lease liabilities | 4,356 | 4,587 |
Total | 5,144 | 5,325 |
2.20 BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER EQUITY SHARE
Accounting policy
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group 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 Group 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 at 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.
2.21 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting policy
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
(In crore)
Particulars | As at | |
September 30, 2021 | March 31, 2021 | |
Contingent liabilities : | ||
Claims against the Group, not acknowledged as debts(1) | 4,385 | 4,061 |
[Amount paid to statutory authorities ![]() ![]() |
||
Commitments : | ||
Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(2) | 987 | 733 |
Other commitments* | 33 | 42 |
* | Uncalled capital pertaining to investments |
(1) | As at September 30, 2021, claims against the Group not acknowledged as debts in respect of
income tax matters amounted to ![]() |
The claims against the Group primarily represent
demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues
of disallowances such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment
of new employees under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to
Associated Enterprises held as liable for withholding of taxes. These matters are pending before various Appellate Authorities and the
Management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material
adverse effect on the Group's financial position and results of operations.
Amount paid to statutory authorities against the tax claims amounted to 5,074 crore.
(2) | Capital contracts primarily comprises of commitments for infrastructure facilities and computer equipments. |
Legal Proceedings
The Group is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Group’s Management reasonably expects based on currently available information, that these legal actions, when ultimately concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.22 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended March 31, 2021 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the six months ended September 30, 2021, the following are the changes in the subsidiaries:
- | Simplus North America Inc., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective April 27, 2021. |
- | Simplus Europe, Ltd., a wholly-owned subsidiary of Outbox Systems Inc., has been liquidated effective July 20, 2021. |
- | Stater GmbH, a wholly-owned subsidiary of Stater N.V., was incorporated on August 4, 2021. |
- | Infosys Green Forum, a wholly-owned subsidiary of Infosys Limited, was incorporated on August 31, 2021. |
- | Infosys Consulting (Shanghai) Co., Ltd., a wholly-owned subsidiary of Infosys Consulting Holding AG, has been liquidated effective September 01, 2021. |
- | Sqware Peg Digital Pty Ltd, a wholly-owned subsidiary of Simplus Australia Pty Ltd, has been liquidated effective September 02, 2021. |
- | Beringer Commerce Inc. renamed as Blue Acorn iCi Inc. |
Transaction with key management personnel:
The table below describes the compensation to key management personnel which comprise directors and executive officers:
(In crore)
Particulars | Three months ended September 30, |
Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | |
Salaries and other employee benefits to whole-time directors and executive officers (1)(2) | 36 | 38 | 73 | 71 |
Commission and other benefits to non-executive/independent directors | 3 | 2 | 5 | 3 |
Total | 39 | 40 | 78 | 74 |
(1) | For the three months ended September 30, 2021 and September 30, 2020 includes a charge
of ![]() ![]() ![]() ![]() |
(2) | Does not include post-employment benefit based on actuarial valuation as this is done for the Company as a whole. |
2.23 SEGMENT REPORTING
Ind AS 108, Operating segments, 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. 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. Accordingly, information has been presented along business 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 accounting policies.
Business segments of the Group are primarily enterprises in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services.
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 Infosys Public services and revenue generated from customers located in India, Japan and China and other enterprises in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses such as depreciation and amortization, 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.
Business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given in note 2.16 Revenue from operations.
Business Segments
Three months ended September 30, 2021 and September 30, 2020:
(In
crore)
Particulars | Financial Services (1) | Retail (2) | Communication (3) | Energy, Utilities, Resources and Services | Manufacturing | Hi-Tech | Life Sciences (4) | All other segments (5) | Total |
Revenue from operations | 9,566 | 4,330 | 3,668 | 3,501 | 3,219 | 2,511 | 2,103 | 704 | 29,602 |
7,871 | 3,651 | 3,093 | 3,027 | 2,241 | 2,244 | 1,672 | 771 | 24,570 | |
Identifiable operating expenses | 5,346 | 2,102 | 2,213 | 1,866 | 1,886 | 1,507 | 1,196 | 571 | 16,687 |
4,055 | 1,733 | 1,828 | 1,553 | 1,153 | 1,260 | 827 | 512 | 12,921 | |
Allocated expenses | 1,576 | 725 | 639 | 618 | 609 | 385 | 319 | 213 | 5,084 |
1,456 | 618 | 602 | 649 | 433 | 315 | 280 | 213 | 4,566 | |
Segment operating income | 2,644 | 1,503 | 816 | 1,017 | 724 | 619 | 588 | (80) | 7,831 |
2,360 | 1,300 | 663 | 825 | 655 | 669 | 565 | 46 | 7,083 | |
Unallocable expenses | 859 | ||||||||
855 | |||||||||
Other income, net (Refer to Note 2.17) | 524 | ||||||||
570 | |||||||||
Finance cost | 48 | ||||||||
48 | |||||||||
Profit before tax | 7,448 | ||||||||
6,750 | |||||||||
Income tax expense | 2,020 | ||||||||
1,892 | |||||||||
Net Profit | 5,428 | ||||||||
4,858 | |||||||||
Depreciation and amortization | 859 | ||||||||
855 | |||||||||
Non-cash expenses other than depreciation and amortization | – | ||||||||
– |
Six months ended September 30, 2021 and September 30, 2020:
(In
crore)
Particulars | Financial Services (1) | Retail (2) | Communication (3) | Energy, Utilities, Resources and Services | Manufacturing | Hi-Tech | Life Sciences (4) | All other segments (5) | Total |
Revenue from operations | 18,783 | 8,505 | 7,071 | 6,871 | 5,922 | 4,821 | 3,994 | 1,531 | 57,498 |
15,328 | 7,043 | 6,257 | 6,054 | 4,497 | 4,307 | 3,246 | 1,502 | 48,234 | |
Identifiable operating expenses | 10,659 | 4,099 | 4,293 | 3,620 | 3,424 | 2,888 | 2,213 | 1,053 | 32,249 |
7,959 | 3,326 | 3,730 | 3,106 | 2,436 | 2,388 | 1,626 | 979 | 25,550 | |
Allocated expenses | 3,122 | 1,421 | 1,255 | 1,213 | 1,148 | 747 | 622 | 459 | 9,987 |
3,008 | 1,368 | 1,243 | 1,272 | 901 | 651 | 581 | 456 | 9,480 | |
Segment operating income | 5,002 | 2,985 | 1,523 | 2,038 | 1,350 | 1,186 | 1,159 | 19 | 15,262 |
4,361 | 2,349 | 1,284 | 1,676 | 1,160 | 1,268 | 1,039 | 67 | 13,204 | |
Unallocable expenses | 1,687 | ||||||||
1,611 | |||||||||
Other income, net (Refer to Note 2.17) | 1,146 | ||||||||
1,046 | |||||||||
Finance cost | 98 | ||||||||
96 | |||||||||
Profit before tax | 14,623 | ||||||||
12,543 | |||||||||
Income tax expense | 3,994 | ||||||||
3,412 | |||||||||
Net Profit | 10,629 | ||||||||
9,131 | |||||||||
Depreciation and amortization expense | 1,687 | ||||||||
1,611 | |||||||||
Non-cash expenses other than depreciation and amortization | – | ||||||||
– |
(1) | Financial Services include enterprises in Financial Services and Insurance |
(2) | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
(3) | Communication includes enterprises in Communication, Telecom OEM and Media |
(4) | Life Sciences includes enterprises in Life sciences and Health care |
(5) | Others include operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public Services |
Significant clients
No client individually accounted for more than 10% of the revenues for the three months and six months ended September 30, 2021 and September 30, 2020, respectively.
2.24 FUNCTION WISE CLASSIFICATION OF CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
(In crore)
Particulars | Note No. | Three months ended September 30, | Six months ended September 30, | ||
2021 | 2020 | 2021 | 2020 | ||
Revenue from operations | 2.16 | 29,602 | 24,570 | 57,498 | 48,234 |
Cost of Sales | 19,806 | 15,771 | 38,312 | 31,473 | |
Gross profit | 9,796 | 8,799 | 19,186 | 16,761 | |
Operating expenses | |||||
Selling and marketing expenses | 1,235 | 1,136 | 2,483 | 2,283 | |
General and administration expenses | 1,589 | 1,435 | 3,128 | 2,885 | |
Total operating expenses | 2,824 | 2,571 | 5,611 | 5,168 | |
Operating profit | 6,972 | 6,228 | 13,575 | 11,593 | |
Other income, net | 2.17 | 524 | 570 | 1,146 | 1,046 |
Finance cost | 48 | 48 | 98 | 96 | |
Profit before tax | 7,448 | 6,750 | 14,623 | 12,543 | |
Tax expense: | |||||
Current tax | 2.15 | 1,987 | 1,763 | 3,923 | 3,084 |
Deferred tax | 2.15 | 33 | 129 | 71 | 328 |
Profit for the period | 5,428 | 4,858 | 10,629 | 9,131 | |
Other comprehensive income | |||||
Items that will not be reclassified subsequently to profit or loss | |||||
Remeasurement of the net defined benefit liability/asset, net | 14 | 7 | (19) | 154 | |
Equity instruments through other comprehensive income, net | 40 | (5) | 41 | (6) | |
54 | 2 | 22 | 148 | ||
Items that will be reclassified subsequently to profit or loss | |||||
Fair value changes on derivatives designated as cash flow hedge, net | 6 | 27 | 11 | 21 | |
Exchange differences on translation of foreign operations, net | (166) | 21 | 124 | 185 | |
Fair value changes on investments, net | 55 | (45) | 93 | 9 | |
(105) | 3 | 228 | 215 | ||
Total other comprehensive income / (loss), net of tax | (51) | 5 | 250 | 363 | |
Total comprehensive income for the period | 5,377 | 4,863 | 10,879 | 9,494 | |
Profit attributable to: | |||||
Owners of the Company | 5,421 | 4,845 | 10,616 | 9,078 | |
Non-controlling interests | 7 | 13 | 13 | 53 | |
5,428 | 4,858 | 10,629 | 9,131 | ||
Total comprehensive income attributable to: | |||||
Owners of the Company | 5,375 | 4,847 | 10,866 | 9,434 | |
Non-controlling interests | 2 | 16 | 13 | 60 | |
5,377 | 4,863 | 10,879 | 9,494 |
for and on behalf of the Board of Directors of Infosys Limited | ||
Nandan M. Nilekani Chairman |
Salil Parekh Chief Executive Officer and Managing Director |
U.B. Pravin Rao Chief Operating Officer and Whole-time Director |
D. Sundaram Director |
Nilanjan Roy Chief Financial Officer |
Jayesh Sanghrajka Executive Vice President and Deputy Chief Financial Office |
A.G.S. Manikantha Company Secretary |
||
Bengaluru October 13, 2021 |
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