Exhibit 99.10
Ind AS Consolidated
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under Indian Accounting
Standards (Ind AS) for the three months and year ended March 31, 2023
| 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 |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Business Combinations |
| 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 |
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 March 31, 2023, the Condensed
Consolidated Statement of Profit and Loss (including Other Comprehensive Income) for the three months and year ended on that date, the
Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the year 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 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 March 31, 2023, and their consolidated profit, their consolidated
total comprehensive income for the three months and year ended on that date, consolidated changes in equity and the consolidated cash
flows for the year 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 Responsibility 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.
Responsibilities of Management and Those Charged
with Governance 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 the 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 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 intends to liquidate their own 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 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 such 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 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 consolidated financial
statements, including the disclosures, and whether the interim 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 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 consolidated financial statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements
in the interim consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim 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 consolidated financial statements.
We communicate with those
charged with governance of the Company and such other entities included in the interim 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.
|
Place: Bengaluru
Date: April 13, 2023 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 23039826BGXRYL4791 |
(In 
crore)
| Condensed Consolidated Balance Sheets as at |
Note No. |
March 31, 2023 |
March 31, 2022 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.2 |
13,346 |
13,075 |
| Right-of-use assets |
2.19 |
6,882 |
4,823 |
| Capital work-in-progress |
|
288 |
416 |
| Goodwill |
2.3 |
7,248 |
6,195 |
| Other intangible assets |
|
1,749 |
1,707 |
| Financial assets |
|
|
|
| Investments |
2.4 |
12,569 |
13,651 |
| Loans |
2.5 |
39 |
34 |
| Other financial assets |
2.6 |
2,798 |
1,460 |
| Deferred tax assets (net) |
|
1,245 |
1,212 |
| Income tax assets (net) |
|
6,453 |
6,098 |
| Other non-current assets |
2.9 |
2,318 |
2,029 |
| Total non-current assets |
|
54,935 |
50,700 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.4 |
6,909 |
6,673 |
| Trade receivables |
2.7 |
25,424 |
22,698 |
| Cash and cash equivalents |
2.8 |
12,173 |
17,472 |
| Loans |
2.5 |
289 |
248 |
| Other financial assets |
2.6 |
11,604 |
8,727 |
| Income tax assets (net) |
|
6 |
54 |
| Other current assets |
2.9 |
14,476 |
11,313 |
| Total current assets |
|
70,881 |
67,185 |
| Total assets |
|
125,816 |
117,885 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.11 |
2,069 |
2,098 |
| Other equity |
|
73,338 |
73,252 |
| Total equity attributable to equity holders of the Company |
|
75,407 |
75,350 |
| Non-controlling interests |
|
388 |
386 |
| Total equity |
|
75,795 |
75,736 |
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.19 |
7,057 |
4,602 |
| Other financial liabilities |
2.12 |
2,058 |
2,337 |
| Deferred tax liabilities (net) |
|
1,220 |
1,156 |
| Other non-current liabilities |
2.13 |
500 |
451 |
| Total non-current liabilities |
|
10,835 |
8,546 |
| Current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.19 |
1,242 |
872 |
| Trade payables |
|
3,865 |
4,134 |
| Other financial liabilities |
2.12 |
18,558 |
15,837 |
| Other current liabilities |
2.13 |
10,830 |
9,178 |
| Provisions |
2.14 |
1,307 |
975 |
| Income tax liabilities (net) |
|
3,384 |
2,607 |
| Total current liabilities |
|
39,186 |
33,603 |
| Total equity and liabilities |
|
125,816 |
117,885 |
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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
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 March 31, |
Year ended March 31, |
| |
|
2023 |
2022 |
2023 |
2022 |
| Revenue from operations |
2.16 |
37,441 |
32,276 |
146,767 |
121,641 |
| Other income, net |
2.17 |
671 |
637 |
2,701 |
2,295 |
| Total income |
|
38,112 |
32,913 |
149,468 |
123,936 |
| Expenses |
|
|
|
|
|
| Employee benefit expenses |
2.18 |
20,311 |
16,658 |
78,359 |
63,986 |
| Cost of technical sub-contractors |
|
3,116 |
3,588 |
14,062 |
12,606 |
| Travel expenses |
|
426 |
309 |
1,525 |
827 |
| Cost of software packages and others |
2.18 |
2,886 |
2,268 |
10,902 |
6,811 |
| Communication expenses |
|
171 |
170 |
713 |
611 |
| Consultancy and professional charges |
|
387 |
521 |
1,684 |
1,885 |
| Depreciation and amortization expenses |
|
1,121 |
890 |
4,225 |
3,476 |
| Finance cost |
|
82 |
50 |
284 |
200 |
| Other expenses |
2.18 |
1,146 |
916 |
4,392 |
3,424 |
| Total expenses |
|
29,646 |
25,370 |
116,146 |
93,826 |
| Profit before tax |
|
8,466 |
7,543 |
33,322 |
30,110 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.15 |
2,260 |
1,825 |
9,287 |
7,811 |
| Deferred tax |
2.15 |
72 |
23 |
(73) |
153 |
| Profit for the period |
|
6,134 |
5,695 |
24,108 |
22,146 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
25 |
(13) |
8 |
(85) |
| Equity instruments through other comprehensive income, net |
|
(15) |
55 |
(7) |
96 |
| |
|
10 |
42 |
1 |
11 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
36 |
(12) |
(7) |
(8) |
| Exchange differences on translation of foreign operations |
|
61 |
137 |
776 |
228 |
| Fair value changes on investments, net |
|
42 |
(65) |
(256) |
(49) |
| |
|
139 |
60 |
513 |
171 |
| Total other comprehensive income /(loss), net of tax |
|
149 |
102 |
514 |
182 |
| Total comprehensive income for the period |
|
6,283 |
5,797 |
24,622 |
22,328 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,128 |
5,686 |
24,095 |
22,110 |
| Non-controlling interests |
|
6 |
9 |
13 |
36 |
| |
|
6,134 |
5,695 |
24,108 |
22,146 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,276 |
5,787 |
24,598 |
22,293 |
| Non-controlling interests |
|
7 |
10 |
24 |
35 |
| |
|
6,283 |
5,797 |
24,622 |
22,328 |
| Earnings per equity share |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic () |
|
14.79 |
13.56 |
57.63 |
52.52 |
| Diluted () |
|
14.77 |
13.54 |
57.54 |
52.41 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
|
|
| Basic (in shares) |
2.20 |
4,144,013,195 |
4,191,743,339 |
4,180,897,857 |
4,209,546,724 |
| Diluted (in shares) |
2.20 |
4,149,555,426 |
4,199,791,086 |
4,187,731,070 |
4,218,525,134 |
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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
INFOSYS LIMITED AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
(In ₹ crore)
| Particulars |
Equity Share capital (1) |
OTHER EQUITY |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
|
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) |
|
|
|
| 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 year ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
22,110 |
– |
– |
– |
– |
– |
– |
– |
– |
22,110 |
36 |
22,146 |
Remeasurement of the net defined benefit liability/asset, net* (Refer to
Note 2.22) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(85) |
(85) |
– |
(85) |
| Equity instruments through other comprehensive income, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
96 |
– |
– |
– |
96 |
– |
96 |
| Fair value changes on derivatives designated as cash flow hedge, net* (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(8) |
– |
(8) |
– |
(8) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
229 |
– |
– |
229 |
(1) |
228 |
| Fair value changes on investments, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(49) |
(49) |
– |
(49) |
| Total Comprehensive income for the period |
– |
– |
– |
– |
22,110 |
– |
– |
– |
–
|
96 |
229 |
(8) |
(134) |
22,293 |
35 |
22,328 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
2 |
– |
– |
19 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
21 |
– |
21 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
393 |
– |
– |
– |
– |
– |
– |
393 |
– |
393 |
| Transfer on account of options not exercised |
– |
– |
– |
– |
– |
1 |
(1) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Buyback of equity shares (Refer to Note 2.12)** |
(28) |
– |
– |
(640) |
(8,822) |
(1,603) |
– |
– |
– |
– |
– |
– |
– |
(11,093) |
– |
(11,093) |
| Transaction costs relating to buyback* |
– |
– |
– |
– |
– |
(24) |
– |
– |
– |
– |
– |
– |
– |
(24) |
– |
(24) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
28 |
– |
– |
(28) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transfer to legal reserve |
– |
– |
– |
– |
(10) |
– |
– |
– |
10 |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to Note 2.12) |
– |
– |
– |
218 |
– |
– |
(218) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options (Refer to Note 2.12) |
– |
– |
– |
3 |
– |
– |
60 |
– |
– |
– |
– |
– |
– |
63 |
– |
63 |
| Changes in the controlling stake of the subsidiary |
– |
– |
– |
– |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
(1) |
– |
| Dividends (1) |
– |
– |
– |
– |
(12,655) |
– |
– |
– |
– |
– |
– |
– |
– |
(12,655) |
– |
(12,655) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(79) |
(79) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(3,054) |
– |
– |
3,054 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
1,100 |
– |
– |
(1,100) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at March 31, 2022 |
2,098 |
54 |
139 |
200 |
61,313 |
1,061 |
606 |
8,339 |
16
|
254 |
1,560 |
2 |
(292) |
75,350 |
386 |
75,736 |
Consolidated Statement of Changes in Equity (contd.)
(In ₹ crore)
| Particulars |
Equity Share capital (1) |
OTHER EQUITY |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| |
|
RESERVES & SURPLUS |
Other comprehensive income |
|
|
|
| |
|
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) |
|
|
|
| Balance as at April 1, 2022 |
2,098 |
54 |
139 |
200 |
61,313 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,350 |
386 |
75,736 |
| Impact on adoption of amendment to Ind AS 37# |
– |
– |
– |
– |
(19) |
– |
– |
– |
– |
– |
– |
– |
– |
(19) |
– |
(19) |
| |
2,098 |
54 |
139 |
200 |
61,294 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,331 |
386 |
75,717 |
| Changes in equity for the year ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
24,095 |
– |
– |
– |
– |
– |
– |
– |
– |
24,095 |
13 |
24,108 |
Remeasurement of the net defined benefit liability/asset, net* (Refer to
Note 2.22) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
8 |
8 |
– |
8 |
| Equity instruments through other comprehensive income, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(7) |
– |
– |
– |
(7) |
– |
(7) |
| Fair value changes on derivatives designated as cash flow hedge, net* (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(7) |
– |
(7) |
– |
(7) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
765 |
– |
– |
765 |
11 |
776 |
| Fair value changes on investments, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(256) |
(256) |
– |
(256) |
| Total Comprehensive income for the period |
– |
– |
– |
– |
24,095 |
– |
– |
– |
– |
(7) |
765 |
(7) |
(248) |
24,598 |
24 |
24,622 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
1 |
– |
– |
34 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
35 |
– |
35 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
514 |
– |
– |
– |
– |
– |
– |
514 |
– |
514 |
| Transferred to legal reserve |
– |
– |
– |
– |
(3) |
– |
– |
– |
3 |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of exercise of stock options |
– |
– |
– |
291 |
– |
– |
(291) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
2 |
(2) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Buyback of equity shares (Refer to Note 2.12)** |
(30) |
– |
– |
(340) |
(11,096) |
– |
– |
– |
– |
– |
– |
– |
– |
(11,466) |
– |
(11,466) |
| Transaction costs relating to buyback* |
– |
– |
– |
(19) |
(5) |
– |
– |
– |
– |
– |
– |
– |
– |
(24) |
– |
(24) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
30 |
– |
(21) |
(9) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
51 |
– |
– |
– |
– |
– |
– |
51 |
– |
51 |
| Dividends (1) |
– |
– |
– |
– |
(13,632) |
– |
– |
– |
– |
– |
– |
– |
– |
(13,632) |
– |
(13,632) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(22) |
(22) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(3,139) |
– |
– |
3,139 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
1,464 |
– |
– |
(1,464) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at March 31, 2023 |
2,069 |
54 |
169 |
166 |
58,957 |
1,054 |
878 |
10,014 |
19 |
247 |
2,325 |
(5) |
(540) |
75,407 |
388 |
75,795 |
| ** | | Including tax on buyback of 2,166
crore and 1,893 crore for the year ended March 31, 2023
and March 31, 2022 respectively. |
| # | | Impact on account of adoption of amendment to Ind AS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
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. |
Year ended March 31, |
| |
|
2023 |
2022 |
| Cash flow from operating activities |
|
|
|
| Profit for the year |
|
24,108 |
22,146 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Income tax expense |
2.15 |
9,214 |
7,964 |
| Depreciation and amortization |
|
4,225 |
3,476 |
| Interest and dividend income |
|
(1,817) |
(1,645) |
| Finance cost |
|
284 |
200 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
283 |
170 |
| Exchange differences on translation of assets and liabilities, net |
|
161 |
119 |
| Stock compensation expense |
|
519 |
415 |
| Other adjustments |
|
628 |
76 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(7,076) |
(7,937) |
| Loans, other financial assets and other assets |
|
(3,108) |
(1,914) |
| Trade payables |
|
(279) |
1,489 |
| Other financial liabilities, other liabilities and provisions |
|
4,119 |
6,938 |
| Cash generated from operations |
|
31,261 |
31,497 |
| Income taxes paid |
|
(8,794) |
(7,612) |
| Net cash generated by operating activities |
|
22,467 |
23,885 |
| Cash flows from investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(2,579) |
(2,161) |
| Deposits placed with corporation |
|
(996) |
(906) |
| Redemption of deposits placed with Corporation |
|
762 |
753 |
| Interest and dividend received |
|
1,525 |
1,898 |
| Payment towards acquisition of business, net of cash acquired |
2.1 |
(910) |
– |
| Payment of contingent consideration pertaining to acquisition of business |
|
(60) |
(53) |
| Escrow and other deposits pertaining to Buyback |
|
(483) |
(420) |
| Redemption of escrow and other deposits pertaining to Buyback |
|
483 |
420 |
| Other receipts |
|
71 |
67 |
| Other payments |
|
– |
(22) |
| Payments to acquire Investments |
|
|
|
| Tax free bonds and government bonds |
|
(27) |
– |
| Liquid mutual fund units |
|
(70,631) |
(54,064) |
| Target maturity fund |
|
(400) |
– |
| Certificates of deposit |
|
(10,348) |
(4,184) |
| Commercial Paper |
|
(3,003) |
– |
| Non-convertible debentures |
|
(249) |
(1,609) |
| Government securities |
|
(1,569) |
(4,254) |
| Others |
|
(20) |
(24) |
| Proceeds on sale of Investments |
|
|
|
| Tax free bonds and government bonds |
|
221 |
20 |
| Liquid mutual funds units |
|
71,851 |
53,669 |
| Certificates of deposit |
|
10,404 |
787 |
| Commercial Paper |
|
2,298 |
– |
| Non-convertible debentures |
|
470 |
2,201 |
| Government securities |
|
1,882 |
1,457 |
| Equity and preference securities |
|
99 |
– |
| Others |
|
– |
9 |
| Net cash (used in) / generated from investing activities |
|
(1,209) |
(6,416) |
| Cash flows from financing activities |
|
|
|
| Payment of lease liabilities |
|
(1,231) |
(915) |
| Payment of dividends |
|
(13,631) |
(12,652) |
| Payment of dividend to non-controlling interest of subsidiary |
|
(22) |
(79) |
| Shares issued on exercise of employee stock options |
|
35 |
21 |
| Payment towards purchase of non-controlling interest |
|
– |
(2) |
| Other receipts |
|
132 |
236 |
| Other payments |
|
(479) |
(126) |
| Buyback of equity shares including transaction cost and tax on buyback |
|
(11,499) |
(11,125) |
| Net cash used in financing activities |
|
(26,695) |
(24,642) |
| Net increase / (decrease) in cash and cash equivalents |
|
(5,437) |
(7,173) |
| Effect of exchange rate changes on cash and cash equivalents |
|
138 |
(69) |
| Cash and cash equivalents at the beginning of the period |
2.8 |
17,472 |
24,714 |
| Cash and cash equivalents at the end of the period |
2.8 |
12,173 |
17,472 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.8 |
362 |
471 |
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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
Overview and notes to the Interim 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 consolidated financial
statements are approved for issue by the Company’s Board of Directors on April 13, 2023.
1.2 Basis of preparation of financial statements
These interim 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 consolidated
financial statements do not include all the information required for a complete set of financial statements. These interim 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, 2022. 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 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 interim consolidated
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 consolidated 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. 1.5. 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.
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.
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.
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 United States, 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).
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 fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted
by external valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option
arrangements and intangible assets. 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 (Refer to Note 2.1).
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 2.3.1).
1.6 Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies
new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time.
On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
- This amendment 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 April 1, 2023. The Group has evaluated the amendment
and the impact of the amendment is insignificant in the Group’s financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors -This amendment has introduced a definition of ‘accounting estimates’ and included amendments to
Ind AS 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 April 1, 2023. The Group has evaluated the amendment and there is no impact
on its consolidated financial statements.
Ind AS 12 - Income Taxes - This amendment has
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 April 1, 2023. The Group
has evaluated the amendment and there is no impact on its consolidated financial statement.
2. Notes to the Interim Consolidated
Financial Statements
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 derecognized.
Acquisition
During the year ended March 31, 2023 the Group, completed
two business combinations to complement its digital offerings by acquiring 100% voting interests in:
| 1) | | oddity GmbH, oddity group services GmbH, oddity space GmbH, oddity jungle GmbH, oddity code
GmbH and oddity waves GmbH (collectively known as oddity), a Germany-based digital marketing, experience, and commerce agencies on April
20, 2022. |
| 2) | | BASE life science A/S, a consulting and technology firm in the life Science industry in Europe
on September 1, 2022. |
These acquisitions are expected to strengthen the Group’s
creative, branding and experience design capabilities and augment the Group’s life sciences expertise, scales its digital transformation
capabilities with cloud based industry solutions and expand its presence across Europe.
The purchase price is allocated to assets acquired
and liabilities assumed based upon determination of fair values at the dates of acquisition as follows:
(In crore)
| Component |
Acquiree’s carrying amount |
Fair value adjustments |
Purchase price allocated |
| Net Assets(1) |
103 |
– |
103 |
| Intangible assets – |
|
|
|
| Customer contracts and relationships# |
– |
274 |
274 |
| Vendor relationships# |
– |
30 |
30 |
| Brand# |
– |
24 |
24 |
| Deferred tax liabilities on intangible assets |
– |
(80) |
(80) |
| Total |
103 |
248 |
351 |
| Goodwill |
|
|
630 |
| Total purchase price |
|
|
981 |
| (1) | | Includes cash and cash equivalents acquired of
26 crore. |
| # | | Useful lives are estimated to be in the range of 1 to 6 years |
The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill. The primary items that generated this goodwill are the value of the
acquired assembled workforce and estimated synergies, neither of which qualify as an intangible asset.
Goodwill is not tax-deductible. Goodwill pertaining
to these business combinations is allocated to operating segments as more fully described in Note 2.3.1
The purchase consideration of 981 crore includes
cash of 936 crore and contingent consideration with an estimated fair value of 45 crore as on the date of acquisition.
At the acquisition date, the key inputs used in determination
of the fair value of contingent consideration are the probabilities assigned towards achievement of financial targets and discount rate
of 12.5%. The undiscounted value of contingent consideration as of March 31, 2023 was 58 crore.
Additionally, these acquisitions have shareholder and
employee retention bonus payable to the employees of the acquiree over three years, subject to their continuous employment with the Group
along with achievement of financial targets for the respective years. Performance and Retention Bonus is recognized in employee benefit
expenses in the Consolidated Statement of Profit and Loss over the period of service.
Fair value of trade receivables acquired, is 111
crore as of acquisition date and as of March 31, 2023 the amounts are substantially collected.
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. The transaction costs of 7 crore related to the acquisition have been included under administrative expenses
in the Consolidated Statement of Profit and Loss for the year ended March 31, 2023.
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 charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
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. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
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 March 31, 2023 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 January 1, 2023 |
1,431 |
11,530 |
3,368 |
1,466 |
8,895 |
2,450 |
1,353 |
44 |
30,537 |
| Additions - Business Combination (Refer to Note 2.1) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Additions |
2 |
29 |
109 |
55 |
494 |
162 |
103 |
1 |
955 |
| Deletions* |
(2) |
– |
(175) |
(40) |
(877) |
(311) |
(13) |
– |
(1,418) |
| Translation difference |
– |
3 |
– |
1 |
7 |
2 |
2 |
– |
15 |
| Gross carrying value as at March 31, 2023 |
1,431 |
11,562 |
3,302 |
1,482 |
8,519 |
2,303 |
1,445 |
45 |
30,089 |
| Accumulated depreciation as at January 1, 2023 |
– |
(4,425) |
(2,547) |
(1,206) |
(6,339) |
(1,922) |
(992) |
(39) |
(17,470) |
| Depreciation |
– |
(109) |
(65) |
(31) |
(354) |
(62) |
(48) |
(1) |
(670) |
| Accumulated depreciation on deletions* |
– |
– |
175 |
40 |
871 |
310 |
9 |
– |
1,405 |
| Translation difference |
– |
(1) |
– |
(1) |
(4) |
(1) |
(1) |
– |
(8) |
| Accumulated depreciation as at March 31, 2023 |
– |
(4,535) |
(2,437) |
(1,198) |
(5,826) |
(1,675) |
(1,032) |
(40) |
(16,743) |
| Carrying value as at January 1, 2023 |
1,431 |
7,105 |
821 |
260 |
2,556 |
528 |
361 |
5 |
13,067 |
| Carrying value as at March 31, 2023 |
1,431 |
7,027 |
865 |
284 |
2,693 |
628 |
413 |
5 |
13,346 |
The changes in the carrying value of property, plant
and equipment for the three months ended March 31, 2022 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 January 1, 2022 |
1,430 |
11,123 |
3,450 |
1,414 |
8,033 |
2,252 |
1,205 |
44 |
28,951 |
| Additions |
1 |
84 |
59 |
14 |
560 |
29 |
24 |
– |
771 |
| Deletions* |
– |
(1) |
(302) |
(2) |
(77) |
(5) |
(1) |
– |
(388) |
| Translation difference |
– |
18 |
3 |
1 |
11 |
2 |
6 |
– |
41 |
| Gross carrying value as at March 31, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Accumulated depreciation as at January 1, 2022 |
– |
(3,993) |
(2,578) |
(1,123) |
(5,830) |
(1,731) |
(811) |
(36) |
(16,102) |
| Depreciation |
– |
(106) |
(66) |
(30) |
(273) |
(51) |
(40) |
(1) |
(567) |
| Accumulated depreciation on deletions* |
– |
– |
302 |
2 |
76 |
5 |
1 |
– |
386 |
| Translation difference |
– |
(1) |
(2) |
1 |
(7) |
(2) |
(6) |
– |
(17) |
| Accumulated depreciation as at March 31, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Carrying value as at January 1, 2022 |
1,430 |
7,130 |
872 |
291 |
2,203 |
521 |
394 |
8 |
12,849 |
| Carrying value as at March 31, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
The changes in the carrying value of property, plant
and equipment for the year ended March 31, 2023 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, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Additions - Business Combination (Refer to Note 2.1) |
– |
– |
– |
5 |
6 |
1 |
2 |
– |
14 |
| Additions |
2 |
337 |
273 |
122 |
1,510 |
364 |
220 |
2 |
2,830 |
| Deletions* |
(2) |
– |
(182) |
(76) |
(1,563) |
(348) |
(25) |
(1) |
(2,197) |
| Translation difference |
– |
1 |
1 |
4 |
39 |
8 |
14 |
– |
67 |
| Gross carrying value as at March 31, 2023 |
1,431 |
11,562 |
3,302 |
1,482 |
8,519 |
2,303 |
1,445 |
45 |
30,089 |
| Accumulated depreciation as at April 1, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Depreciation |
– |
(434) |
(273) |
(121) |
(1,322) |
(236) |
(187) |
(4) |
(2,577) |
| Accumulated depreciation on deletions* |
– |
– |
181 |
76 |
1,556 |
347 |
21 |
1 |
2,182 |
| Translation difference |
– |
(1) |
(1) |
(3) |
(26) |
(7) |
(10) |
– |
(48) |
| Accumulated depreciation as at March 31, 2023 |
– |
(4,535) |
(2,437) |
(1,198) |
(5,826) |
(1,675) |
(1,032) |
(40) |
(16,743) |
| Carrying value as at April 1, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
| Carrying value as at March 31, 2023 |
1,431 |
7,027 |
865 |
284 |
2,693 |
628 |
413 |
5 |
13,346 |
| * | | During the three months and year ended March 31, 2023, certain assets which were not in use
having gross book value of 1,414 crore (net book value:
Nil) and 1,918 crore (net book value: Nil), respectively
were retired. |
The changes in the carrying value of property, plant
and equipment for the year ended March 31, 2022 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 |
32 |
599 |
256 |
68 |
1,542 |
140 |
79 |
– |
2,716 |
| Deletions* |
– |
(1) |
(349) |
(15) |
(672) |
(17) |
(46) |
– |
(1,100) |
| Translation difference |
– |
61 |
7 |
3 |
18 |
6 |
13 |
– |
108 |
| Gross carrying value as at March 31, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Accumulated depreciation as at April 1, 2021 |
– |
(3,675) |
(2,425) |
(1,043) |
(5,636) |
(1,580) |
(700) |
(32) |
(15,091) |
| Depreciation |
– |
(417) |
(245) |
(120) |
(1,055) |
(210) |
(181) |
(5) |
(2,233) |
| Accumulated depreciation on deletions* |
– |
– |
330 |
14 |
671 |
16 |
37 |
– |
1,068 |
| Translation difference |
– |
(8) |
(4) |
(1) |
(14) |
(5) |
(12) |
– |
(44) |
| Accumulated depreciation as at March 31, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Carrying value as at April 1, 2021 |
1,399 |
6,890 |
871 |
328 |
2,003 |
569 |
488 |
12 |
12,560 |
| Carrying value as at March 31, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
| * | | During the three months ended and year ended March 31, 2022, certain assets which were not
in use having gross book value of Nil (net book value: Nil) and 316
crore ( net book value: Nil) respectively, were retired. |
| (1) | | Buildings include 250/-
being the value of five shares of 50/- each in Mittal
Towers Premises Co-operative Society Limited. |
The aggregate depreciation has been included under
depreciation and amortization expense in the interim Consolidated Statement of Profit and Loss.
Repairs and maintenance costs are recognized in
the Consolidated Statement of Profit and Loss when incurred.
2.3 GOODWILL AND OTHER 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 and which
represents the lowest level at which goodwill is monitored for internal management purposes. 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. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Carrying value at the beginning |
6,195 |
6,079 |
| Goodwill on acquisitions (Refer to Note 2.1) |
630 |
– |
| Translation differences |
423 |
116 |
| Carrying value at the end |
7,248 |
6,195 |
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) 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 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 labor, overhead costs that are directly attributable to prepare
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 |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
193 |
192 |
| Equity instruments |
3 |
2 |
| |
196 |
194 |
| Investments carried at fair value through profit or loss |
|
|
| Preference securities |
– |
24 |
| Compulsorily convertible debentures |
– |
7 |
| Target maturity fund units |
402 |
– |
| Others (1) |
169 |
152 |
| |
571 |
183 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
28 |
– |
| Tax free bonds |
1,742 |
1,901 |
| |
1,770 |
1,901 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
2,713 |
3,718 |
| Government securities |
7,319 |
7,655 |
| |
10,032 |
11,373 |
| Total non-current investments |
12,569 |
13,651 |
| Current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
975 |
2,012 |
| |
975 |
2,012 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Paper |
742 |
– |
| Certificates of deposit |
3,574 |
3,429 |
| |
4,316 |
3,429 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
– |
21 |
| Tax free bonds |
150 |
200 |
| |
150 |
221 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
1,155 |
495 |
| Government securities |
313 |
516 |
| |
1,468 |
1,011 |
| Total current investments |
6,909 |
6,673 |
| Total investments |
19,478 |
20,324 |
| Aggregate amount of quoted investments |
13,420 |
14,506 |
| Market value of quoted investments (including interest accrued), current |
1,637 |
1,247 |
| Market value of quoted investments (including interest accrued), non current |
12,042 |
13,612 |
| Aggregate amount of unquoted investments |
6,058 |
5,818 |
| Investments carried at amortized cost |
1,920 |
2,122 |
| Investments carried at fair value through other comprehensive income |
16,012 |
16,007 |
| Investments carried at fair value through profit or loss |
1,546 |
2,195 |
| (1) | | Uncalled capital commitments outstanding as at March 31, 2023 and March 31, 2022 was 92
crore and 28 crore, respectively. |
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 |
| |
|
March 31, 2023 |
March 31, 2022 |
| Liquid mutual fund units |
Quoted price |
975 |
2,012 |
| Target maturity fund units |
Quoted price |
402 |
– |
| Tax free bonds and government bonds |
Quoted price and market observable inputs |
2,148 |
2,447 |
| Non-convertible debentures |
Quoted price and market observable inputs |
3,868 |
4,213 |
| Government securities |
Quoted price and market observable inputs |
7,632 |
8,171 |
| Commercial Papers |
Market observable inputs |
742 |
– |
| Certificates of deposit |
Market observable inputs |
3,574 |
3,429 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
196 |
194 |
| Unquoted equity and preference securities - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
– |
24 |
| Unquoted compulsorily convertible debentures - carried at fair value through profit or loss |
Discounted cash flows method |
– |
7 |
| Others |
Discounted cash flows method, Market multiples method, Option pricing model |
169 |
152 |
| Total |
|
19,706 |
20,649 |
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 |
| |
March 31, 2023 |
March 31, 2022 |
| Non Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
39 |
34 |
| |
39 |
34 |
| Loans credit impaired - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
2 |
– |
| Less: Allowance for credit impairment |
(2) |
– |
| |
– |
– |
| Total non-current loans |
39 |
34 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
289 |
248 |
| Total current loans |
289 |
248 |
| Total loans |
328 |
282 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non Current |
|
|
| Security deposits (1) |
47 |
47 |
| Rental deposits (1) |
240 |
186 |
| Unbilled revenues (1)# |
1,185 |
695 |
| Net investment in sublease of right-of-use asset (1) |
305 |
322 |
| Net investment in lease (1) |
916 |
124 |
| Restricted deposits (1)* |
96 |
33 |
| Others (1) |
9 |
53 |
| Total non-current other financial assets |
2,798 |
1,460 |
| Current |
|
|
| Security deposits (1) |
10 |
7 |
| Rental deposits (1) |
32 |
58 |
| Restricted deposits (1)* |
2,348 |
2,177 |
| Unbilled revenues (1)# |
8,317 |
5,659 |
| Interest accrued but not due (1) |
488 |
362 |
| Foreign currency forward and options contracts (2) (3) |
101 |
143 |
| Net investment in sublease of right of-use-asset (1) |
53 |
50 |
| Net investment in lease (1) |
6 |
6 |
| Others (1) |
249 |
265 |
| Total current other financial assets |
11,604 |
8,727 |
| Total other financial assets |
14,402 |
10,187 |
| (1) Financial assets carried at amortized cost |
14,301 |
10,044 |
| (2) Financial assets carried at fair value through other comprehensive income |
32 |
20 |
| (3) Financial assets carried at fair value through profit or loss |
69 |
123 |
| * | | 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 |
| |
March 31, 2023 |
March 31, 2022 |
| Current |
|
|
| Trade Receivable considered good - Unsecured |
25,965 |
23,252 |
| Less: Allowance for expected credit loss |
541 |
554 |
| Trade Receivable considered good - Unsecured |
25,424 |
22,698 |
| Trade Receivable - credit impaired - Unsecured |
142 |
113 |
| Less: Allowance for credit impairment |
142 |
113 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables |
25,424 |
22,698 |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Balances with banks |
|
|
| In current and deposit accounts |
10,026 |
13,942 |
| Cash on hand |
– |
– |
| Others |
|
|
| Deposits with financial institutions |
2,147 |
3,530 |
| Total cash and cash equivalents |
12,173 |
17,472 |
| Balances with banks in unpaid dividend accounts |
37 |
36 |
| Deposit with more than 12 months maturity |
833 |
1,616 |
| Balances with banks held as margin money deposits against guarantees |
– |
1 |
Cash and cash equivalents as at March 31, 2023 and
March 31, 2022 include restricted cash and bank balances of 362 crore and 471 crore respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the company.
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 |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Capital advances |
159 |
88 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Withholding taxes and others |
684 |
674 |
| Unbilled revenues # |
264 |
246 |
| Defined benefit plan assets |
36 |
20 |
| Prepaid expenses |
332 |
99 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract * |
191 |
593 |
| Cost of fulfillment |
652 |
309 |
| Total non-current other assets |
2,318 |
2,029 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
202 |
193 |
| Others |
|
|
| Unbilled revenues # |
6,972 |
5,909 |
| Withholding taxes and others |
3,268 |
1,941 |
| Prepaid expenses |
2,745 |
1,996 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract * |
853 |
858 |
| Cost of fulfillment |
175 |
91 |
| Other receivables |
261 |
325 |
| Total current other assets |
14,476 |
11,313 |
| Total other assets |
16,794 |
13,342 |
| # | | 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 Group 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 Group 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. The Group has entered into financing arrangements with a third party for these
assets. As at March 31, 2023, the financial liability pertaining to such arrangements amounts to 731 crore. This includes, 118
crore was settled directly by the third party to the customer on behalf of the Group and accordingly considered as non-cash transaction
(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 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, 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 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
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.
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 such 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 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, option pricing model, market multiples, 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 Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (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 loss or
gain in Consolidated Statement of Profit and Loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 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) |
12,173 |
– |
– |
– |
– |
12,173 |
12,173 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
196 |
– |
196 |
196 |
| Tax free bonds and government |
1,920 |
– |
– |
– |
– |
1,920 |
2,148 (1) |
| Liquid mutual fund units |
– |
– |
975 |
– |
– |
975 |
975 |
| Target maturity fund units |
– |
– |
402 |
– |
– |
402 |
402 |
| Non convertible debentures |
– |
– |
– |
– |
3,868 |
3,868 |
3,868 |
| Government securities |
– |
– |
– |
– |
7,632 |
7,632 |
7,632 |
| Commercial Paper |
– |
– |
– |
– |
742 |
742 |
742 |
| Certificates of deposit |
– |
– |
– |
– |
3,574 |
3,574 |
3,574 |
| Other investments |
– |
– |
169 |
– |
– |
169 |
169 |
| Trade receivables (Refer to Note 2.7) |
25,424 |
– |
– |
– |
– |
25,424 |
25,424 |
| Loans (Refer to Note 2.5) |
328 |
– |
– |
– |
– |
328 |
328 |
| Other financials assets (Refer to Note 2.6) (3) |
14,301 |
– |
69 |
– |
32 |
14,402 |
14,318 (2) |
| Total |
54,146 |
– |
1,615 |
196 |
15,848 |
71,805 |
71,949 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,865 |
– |
– |
– |
– |
3,865 |
3,865 |
| Lease liabilities (Refer to Note 2.19) |
8,299 |
– |
– |
– |
– |
8,299 |
8,299 |
| Financial Liability under option arrangements (Refer to Note 2.12) |
– |
– |
600 |
– |
– |
600 |
600 |
| Other financial liabilities (Refer to Note 2.12) |
17,359 |
– |
161 |
– |
14 |
17,534 |
17,534 |
| Total |
29,523 |
– |
761 |
– |
14 |
30,298 |
30,298 |
| (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 84 crore |
| (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, 2022 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) |
17,472 |
– |
– |
– |
– |
17,472 |
17,472 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
24 |
194 |
– |
218 |
218 |
| Compulsorily convertible debentures |
– |
– |
7 |
– |
– |
7 |
7 |
| Tax free bonds and government bonds |
2,122 |
– |
– |
– |
– |
2,122 |
2,447 (1) |
| Liquid mutual fund units |
– |
– |
2,012 |
– |
– |
2,012 |
2,012 |
| Non convertible debentures |
– |
– |
– |
– |
4,213 |
4,213 |
4,213 |
| Government securities |
– |
– |
– |
– |
8,171 |
8,171 |
8,171 |
| Certificates of deposit |
– |
– |
– |
– |
3,429 |
3,429 |
3,429 |
| Other investments |
– |
– |
152 |
– |
– |
152 |
152 |
| Trade receivables (Refer to Note 2.7) |
22,698 |
– |
– |
– |
– |
22,698 |
22,698 |
| Loans (Refer to Note 2.5) |
282 |
– |
– |
– |
– |
282 |
282 |
| Other financials assets (Refer to Note 2.6)(3) |
10,044 |
– |
123 |
|
20 |
10,187 |
10,096 (2) |
| Total |
52,618 |
– |
2,318 |
194 |
15,833 |
70,963 |
71,197 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
4,134 |
– |
– |
– |
– |
4,134 |
4,134 |
| Lease liabilities (Refer to Note 2.19) |
5,474 |
– |
– |
– |
– |
5,474 |
5,474 |
| Financial Liability under option arrangements (Refer to Note 2.12) |
– |
– |
655 |
– |
– |
655 |
655 |
| Other financial liabilities (Refer to Note 2.12) |
15,061 |
– |
181 |
– |
3 |
15,245 |
15,245 |
| Total |
24,669 |
– |
836 |
– |
3 |
25,508 |
25,508 |
| (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 91 crore |
| (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 fair value hierarchy of assets and liabilities measured
at fair value on a recurring basis as at March 31, 2023 is as follows:
(In crore)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
975 |
975 |
– |
– |
| Investments in Target maturity fund units |
402 |
402 |
– |
– |
| Investments in tax free bonds |
2,120 |
1,331 |
789 |
– |
| Investments in government bonds |
28 |
28 |
– |
– |
| Investments in non convertible debentures |
3,868 |
1,793 |
2,075 |
– |
| Investment in government securities |
7,632 |
7,549 |
83 |
– |
| Investments in equity instruments |
3 |
– |
– |
3 |
| Investments in preference securities |
193 |
– |
– |
193 |
| Investments in commercial paper |
742 |
– |
742 |
– |
| Investments in certificates of deposit |
3,574 |
– |
3,574 |
– |
| Other investments |
169 |
– |
– |
169 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
101 |
– |
101 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) |
78 |
– |
78 |
– |
| Financial liability under option arrangements (Refer to Note 2.12)(1) |
600 |
– |
– |
600 |
| Liability towards contingent consideration (Refer to Note 2.12)(1) |
97 |
– |
– |
97 |
| (1) | | Discount rate ranges from 10% to 15% |
During the year ended March 31, 2023, government securities
and tax free bonds of 383 crore was transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price. Further, non-convertible debentures of 1,611 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 measured
at fair value on a recurring basis as at March 31, 2022 was as follows:
(In crore)
| Particulars |
As at March 31, 2022 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
2,012 |
2,012 |
– |
– |
| Investments in tax free bonds |
2,425 |
1,238 |
1,187 |
– |
| Investments in government bonds |
22 |
22 |
– |
– |
| Investments in non convertible debentures |
4,213 |
3,736 |
477 |
– |
| Investment in government securities |
8,171 |
8,046 |
125 |
– |
| Investments in equity instruments |
2 |
– |
– |
2 |
| Investments in preference securities |
216 |
– |
– |
216 |
| Investments in certificates of deposit |
3,429 |
– |
3,429 |
– |
| Investments in compulsorily convertible debentures |
7 |
– |
– |
7 |
| Other investments |
152 |
– |
– |
152 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
143 |
– |
143 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) |
61 |
– |
61 |
– |
| Financial liability under option arrangements (Refer to Note 2.12)(1) |
655 |
– |
– |
655 |
| Liability towards contingent consideration (Refer to Note 2.12)(1) |
123 |
– |
– |
123 |
| (1) | | Discount rate ranges from 8% to 14.5% |
During the year ended March 31, 2022, tax free bonds and
non-convertible debentures of 576 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 965 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, target maturity fund units,
tax free bonds, certificates of deposit, commercial paper, treasury bills, government securities, 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 Group’s 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.
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
Retained earnings represent the amount of accumulated
earnings of the Group.
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 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 interim condensed 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 |
| |
March 31, 2023 |
March 31, 2022 |
| Authorized |
|
|
| Equity shares, 5 par value |
|
|
| 480,00,00,000 (480,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5 par value(1) |
2,069 |
2,098 |
| 4,13,63,87,925 (4,19,30,12,929) equity shares fully paid-up(2) |
|
|
| |
2,069 |
2,098 |
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 1,21,72,119 (1,37,25,712) |
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 favor 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 March 31, 2023 and March 31, 2022 are as follows:
(In crore, except as stated otherwise)
| Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
419,30,12,929 |
2,098 |
424,51,46,114 |
2,124 |
| Add: Shares issued on exercise of employee stock options |
38,01,344 |
1 |
36,74,152 |
2 |
| Less: Shares bought back |
6,04,26,348 |
30 |
5,58,07,337 |
28 |
| As at the end of the period |
413,63,87,925 |
2,069 |
419,30,12,929 |
2,098 |
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.
Buyback completed in February 2023
In line with the capital allocation policy, the Board,
at its meeting held on October 13, 2022, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,300 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding 1,850 per share (Maximum
Buyback Price), subject to shareholders' approval by way of Postal Ballot.
The shareholders approved the proposal of buyback of
Equity Shares recommended by its Board of Directors by way of e-voting on the postal ballot, the results of which were declared on December
3, 2022. The buyback was offered to all 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 December 7, 2022 and was completed on February 13, 2023. During this buyback period the Company had purchased and extinguished
a total of 60,426,348 equity shares from the stock exchange at a volume weighted average buyback price of 1,539.06/- per equity
share comprising 1.44% of the pre buyback paid-up equity share capital of the Company. The buyback resulted in a cash outflow of 9,300
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 March 31, 2023, the Company has created ‘Capital Redemption Reserve’ of 30 crore equal to the nominal value
of the shares bought back as an appropriation from general reserve and retained earnings.
Buyback completed in September 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 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 March 31, 2022, 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 of March 31, 2023, 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 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 in accordance with Companies Act 2013 is as follows:
(in )
| Particulars |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Final dividend for fiscal 2021 |
– |
– |
– |
15.00 |
| Interim dividend for fiscal 2022 |
– |
– |
– |
15.00 |
| Final dividend for fiscal 2022 |
– |
– |
16.00 |
– |
| Interim dividend for fiscal 2023 |
– |
– |
16.50 |
– |
During the year ended March 31, 2023, on account of
the final dividend for fiscal 2022 and interim dividend for fiscal 2023, the Company has incurred a net cash outflow of 13,632
crore (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share for the financial year ended March 31, 2023. This payment is
subject to the approval of shareholders in the AGM of the Company to be held on June 28, 2023 and if approved, would result in a net cash
outflow of approximately 7,239 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 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 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 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). These
instruments will generally vest over a period of 4 years. The plan numbers mentioned above are further adjusted with 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 1,21,72,119 and 1,37,25,712
shares as at March 31, 2023 and March 31, 2022, 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 March 31, 2023 and March 31, 2022.
The following is the summary of grants made during
the three months and year ended March 31, 2023 and March 31, 2022:
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended March 31, |
Year ended March 31, |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
| Equity Settled RSUs |
|
|
|
|
|
|
|
|
| Key Managerial Personnel (KMP) |
33,750 |
74,800 |
210,643 |
148,762 |
80,154 |
182,846 |
367,479 |
284,543 |
| Employees other than KMP |
3,329,240 |
2,701,867 |
3,704,014 |
2,701,867 |
1,736,925 |
1,280,610 |
1,784,975 |
1,305,880 |
| |
3,362,990 |
2,776,667 |
3,914,657 |
2,850,629 |
1,817,079 |
1,463,456 |
2,152,454 |
1,590,423 |
| Cash settled RSU |
|
|
|
|
|
|
|
|
| Key Managerial Personnel (KMP) |
– |
– |
– |
– |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
– |
– |
92,400 |
49,960 |
92,400 |
49,960 |
| |
– |
– |
– |
– |
92,400 |
49,960 |
92,400 |
49,960 |
| Total Grants |
3,362,990 |
2,776,667 |
3,914,657 |
2,850,629 |
1,909,479 |
1,513,416 |
2,244,854 |
1,640,383 |
Notes on grants to KMP:
CEO & MD
Based on the recommendations of the Board and the approval
of the shareholders at the AGM held on June 25, 2022, Salil Parekh has been reappointed as the CEO and MD of the Company for a term commencing
on July 1, 2022 and ending on March 31, 2027. The remuneration is approved by the shareholders in the AGM. The revised employment agreement
is effective July 1, 2022.
Under the 2015 Plan:
The Board, on April 13, 2022, based on the recommendations
of the Nomination and Remuneration Committee, in accordance with the terms of his employment agreement effective till June 30, 2022, approved
the grant of performance-based RSUs of fair value of 13 crore for fiscal 2023 under the 2015 Plan. These RSUs will vest in line
with the employment agreement based on achievement of certain performance targets. Accordingly, 84,361 performance based RSU’s were
granted effective May 2, 2022.
Further, in line with the shareholders approval and
revised employment contract which is effective July 1, 2022, the Board, on July 24, 2022, based on the recommendations of the Nomination
and Remuneration Committee:
| • | | Approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 21.75 crore for fiscal 2023 under the 2015 Plan. These
RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly, 140,228 performance
based RSU’s were granted effective August 1, 2022. |
| • | | Approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2023 under the 2015 Plan.
These RSUs will vest in line with the employment agreement based on achievement of certain environment, social and governance milestones
as determined by the Board. Accordingly, 12,894 performance based RSU’s were granted effective August 1, 2022. |
| • | | Approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2023 under the 2015 Plan.
These RSUs will vest in line with the employment agreement based on Company’s performance on cumulative relative TSR over the years
and as determined by the Board. Accordingly, 32,236 performance based RSU’s were granted effective August 1, 2022. |
For the above RSUs, the grant date in accordance with
Ind AS 102, Share based payment is July 1, 2022
Further, 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 crore which
will vest overtime in three equal annual installments upon the completion of each year of service from the respective grant date. Accordingly,
annual time-based grant of 19,341 RSUs was made effective February 1, 2023 for fiscal 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of March 31, 2023, 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 payment.
Under the 2019 Plan:
The Board, on April 13, 2022, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2023 under
the 2019 Plan. These RSUs will vest in line with the employment agreement effective till June 30, 2022 based on achievement of certain
performance targets. Accordingly, 64,893 performance based RSU’s were granted effective May 2, 2022.
Other KMP
Under the 2015 Plan:
During the year ended March 31, 2023, based on recommendations
of Nomination and Remuneration Committee, the Board approved 66,872 time based RSUs and 11,547 performance based RSUs to other KMP under
the 2015 plan. Time based RSUs will vest over four years and performance based RSUs will vest over three years based on certain performance
targets.
Under the 2019 Plan:
During the year ended March 31, 2023, based on recommendations
of Nomination and Remuneration Committee, the Board approved performance based grants of 1,45,750 RSUs to other KMPs under the 2019 plan.
These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(in
crore)
| Particulars |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Granted to: |
|
|
|
|
| KMP# |
8 |
14 |
49 |
65 |
| Employees other than KMP |
125 |
99 |
470 |
350 |
| Total (1) |
133 |
113 |
519 |
415 |
| (1) Cash-settled stock compensation expense included in the above |
2 |
4 |
5 |
22 |
| # | | Includes reversal
of employee stock compensation expense on account of resignation/retirement of key managerial
personnel. |
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 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
Fiscal 2022-
Equity Shares-RSU |
Fiscal 2022-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,525 |
18.08 |
1,791 |
24.45 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-32 |
27-34 |
20-35 |
25-36 |
| 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 (%) |
5-7 |
2-5 |
4-6 |
1-3 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,210 |
13.69 |
1,548 |
20.82 |
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 |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Others |
|
|
| Accrued compensation to employees (1) |
5 |
8 |
| Accrued expenses (1) |
1,628 |
946 |
| Compensated absences |
83 |
92 |
| Financial liability under option arrangements (2) # |
– |
655 |
| Payable for acquisition of business - Contingent consideration (2) |
– |
56 |
| Other Payables (1)(4) |
342 |
580 |
| Total non-current other financial liabilities |
2,058 |
2,337 |
| Current |
|
|
| Unpaid dividends (1) |
37 |
36 |
| Others |
|
|
| Accrued compensation to employees (1) |
4,174 |
4,061 |
| Accrued expenses (1) |
7,802 |
7,476 |
| Retention monies (1) |
20 |
13 |
| Payable for acquisition of business - Contingent consideration (2) |
97 |
67 |
| Payable by controlled trusts (1) |
211 |
211 |
| Compensated absences |
2,399 |
2,182 |
| Financial liability under option arrangements (2) # |
600 |
– |
| Foreign currency forward and options contracts (2) (3) |
78 |
61 |
| Capital creditors (1) |
674 |
431 |
| Other payables (1)(4) |
2,466 |
1,299 |
| Total current other financial liabilities |
18,558 |
15,837 |
| Total other financial liabilities |
20,616 |
18,174 |
| (1) Financial liability carried at amortized cost |
17,359 |
15,061 |
| (2) Financial liability carried at fair value through profit or loss |
761 |
836 |
| (3) Financial liability carried at fair value through other comprehensive income |
14 |
3 |
| Contingent consideration on undiscounted basis |
101 |
132 |
| (4) | | Deferred contract cost (Refer to Note 2.9) includes technology assets taken over by the Group
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 Group 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. The Group has entered into financing
arrangements with a third party for these assets. As at March 31, 2023, the financial liability pertaining to such arrangements amounts
to 731 crore. During the year ended March 31, 2023, 118
crore was settled directly by the third party to the customer on behalf of the Group and accordingly considered as non-cash transaction. |
| # | | Represents liability related to options issued by the Group over the non-controlling interests
in its subsidiaries |
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.
2.13 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Others |
|
|
| Deferred income - government grants |
43 |
64 |
| Accrued defined benefit liability |
445 |
367 |
| Deferred income |
6 |
9 |
| Others |
6 |
11 |
| Total non-current other liabilities |
500 |
451 |
| Current |
|
|
| Unearned revenue |
7,163 |
6,324 |
| Others |
|
|
| Withholding taxes and others |
3,632 |
2,834 |
| Accrued defined benefit liability |
4 |
5 |
| Deferred income - government grants |
29 |
11 |
| Others |
2 |
4 |
| Total current other liabilities |
10,830 |
9,178 |
| Total other liabilities |
11,330 |
9,629 |
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. 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 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 |
| |
March 31, 2023 |
March 31, 2022 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,307 |
975 |
| Total provisions |
1,307 |
975 |
Provision for post sales client support and other provisions
majorly represents costs associated with providing 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 profit and loss.
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; deferred tax assets and deferred 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 March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Current taxes |
2,260 |
1,825 |
9,287 |
7,811 |
| Deferred taxes |
72 |
23 |
(73) |
153 |
| Income tax expense |
2,332 |
1,848 |
9,214 |
7,964 |
Income tax expense for the three months ended March
31, 2023 and March 31, 2022 includes reversal (net of provisions) of 71 crore and 242 crore, respectively. Income tax expense
for the year ended March 31, 2023 and March 31, 2022 includes reversal (net of provisions) of 106 crore and 268 crore, respectively.
These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed matters, upon filing of tax return
and completion of assessments, across various jurisdictions.
Deferred income tax for three months and year months
ended March 31, 2023 and March 31, 2022 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-timeframe basis.
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. 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 are 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 Group 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 Interim Condensed Consolidated Statement of Profit and Loss.
Revenue from operation for the three months and year
ended March 31, 2023 and March 31, 2022 are as follows:
(In crore)
| Particulars |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenue from software services |
35,199 |
30,111 |
137,575 |
113,536 |
| Revenue from products and platforms |
2,242 |
2,165 |
9,192 |
8,105 |
| Total revenue from operations |
37,441 |
32,276 |
146,767 |
121,641 |
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 March 31, 2023 and March
31, 2022:
(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 |
6,947 |
3,799 |
2,580 |
2,653 |
1,892 |
2,813 |
1,888 |
270 |
22,842 |
| |
6,431 |
3,128 |
2,395 |
1,948 |
1,648 |
2,458 |
1,574 |
243 |
19,825 |
| Europe |
1,848 |
1,470 |
1,007 |
1,778 |
3,028 |
71 |
745 |
141 |
10,088 |
| |
1,696 |
1,235 |
932 |
1,561 |
2,053 |
58 |
532 |
61 |
8,128 |
| India |
493 |
16 |
37 |
50 |
23 |
89 |
9 |
264 |
981 |
| |
570 |
17 |
50 |
51 |
17 |
117 |
6 |
212 |
1,040 |
| Rest of the world |
1,530 |
252 |
787 |
344 |
135 |
16 |
39 |
427 |
3,530 |
| |
1,399 |
237 |
755 |
312 |
98 |
16 |
28 |
438 |
3,283 |
| Total |
10,818 |
5,537 |
4,411 |
4,825 |
5,078 |
2,989 |
2,681 |
1,102 |
37,441 |
| |
10,096 |
4,617 |
4,132 |
3,872 |
3,816 |
2,649 |
2,140 |
954 |
32,276 |
| Revenue by offerings |
|
|
|
|
|
|
|
|
|
| Digital |
5,864 |
3,753 |
2,839 |
3,092 |
3,580 |
2,034 |
1,793 |
591 |
23,546 |
| |
5,330 |
2,924 |
2,722 |
2,317 |
2,508 |
1,589 |
1,268 |
443 |
19,101 |
| Core |
4,954 |
1,784 |
1,572 |
1,733 |
1,498 |
955 |
888 |
511 |
13,895 |
| |
4,766 |
1,693 |
1,410 |
1,555 |
1,308 |
1,060 |
872 |
511 |
13,175 |
| Total |
10,818 |
5,537 |
4,411 |
4,825 |
5,078 |
2,989 |
2,681 |
1,102 |
37,441 |
| |
10,096 |
4,617 |
4,132 |
3,872 |
3,816 |
2,649 |
2,140 |
954 |
32,276 |
For the year ended March 31, 2023 and March 31, 2022:
(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 |
28,086 |
14,700 |
10,903 |
9,953 |
7,560 |
11,101 |
7,334 |
1,087 |
90,724 |
| |
24,410 |
11,989 |
8,474 |
7,430 |
6,303 |
9,342 |
6,173 |
937 |
75,058 |
| Europe |
7,373 |
5,344 |
3,836 |
6,993 |
10,910 |
275 |
2,580 |
364 |
37,675 |
| |
6,746 |
4,759 |
3,598 |
5,766 |
6,606 |
224 |
2,203 |
227 |
30,129 |
| India |
1,909 |
72 |
164 |
213 |
84 |
423 |
28 |
968 |
3,861 |
| |
1,933 |
90 |
315 |
153 |
69 |
412 |
27 |
586 |
3,585 |
| Rest of the world |
6,395 |
1,088 |
3,183 |
1,380 |
481 |
68 |
143 |
1,769 |
14,507 |
| |
5,813 |
896 |
2,795 |
1,135 |
358 |
58 |
114 |
1,700 |
12,869 |
| Total |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| Revenue by offerings |
|
|
|
|
|
|
|
|
|
| Digital |
24,006 |
13,970 |
11,959 |
11,627 |
13,626 |
7,629 |
6,394 |
2,062 |
91,273 |
| |
20,391 |
10,857 |
9,310 |
8,412 |
8,240 |
5,817 |
4,925 |
1,452 |
69,404 |
| Core |
19,757 |
7,234 |
6,127 |
6,912 |
5,409 |
4,238 |
3,691 |
2,126 |
55,494 |
| |
18,511 |
6,877 |
5,872 |
6,072 |
5,096 |
4,219 |
3,592 |
1,998 |
52,237 |
| Total |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| (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 revenue 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, Panaya platform, Infosys Equinox, Infosys Helix,
Infosys Applied AI, Infosys Cortex, 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, EdgeVerve,
Skava and controlled trusts 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 interim condensed 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 year ended March
31, 2023 and March 31, 2022 is as follows:
(In crore)
| Particulars |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
|
|
|
|
| Tax free bonds and Government bonds |
36 |
37 |
149 |
152 |
| Deposit with Bank and others |
161 |
190 |
712 |
851 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
|
|
| Non-convertible debentures, commercial paper, certificates of deposit and government securities |
231 |
189 |
955 |
642 |
| Income on investments carried at fair value through profit or loss: |
|
|
|
|
| Gain / (loss) on liquid mutual funds and other investments |
61 |
77 |
148 |
177 |
| Income on investments carried at fair value through other comprehensive income |
– |
– |
1 |
1 |
| Exchange gains / (losses) on forward and options contracts |
142 |
(86) |
(647) |
88 |
| Exchange gains / (losses) on translation of other assets and liabilities |
(91) |
199 |
1,062 |
186 |
| Miscellaneous income, net |
131 |
31 |
321 |
198 |
| Total other income |
671 |
637 |
2,701 |
2,295 |
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. The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of
the respective employees
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, 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.
(In crore)
| Particulars |
Three months ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit expenses |
|
|
|
|
| Salaries including bonus |
19,526 |
15,990 |
75,239 |
61,522 |
| Contribution to provident and other funds |
547 |
457 |
2,143 |
1,617 |
| Share based payments to employees (Refer to Note 2.11) |
133 |
113 |
519 |
415 |
| Staff welfare |
105 |
98 |
458 |
432 |
| |
20,311 |
16,658 |
78,359 |
63,986 |
| Cost of software packages and others |
|
|
|
|
| For own use |
496 |
407 |
1,937 |
1,417 |
| Third party items bought for service delivery to clients |
2,390 |
1,861 |
8,965 |
5,394 |
| |
2,886 |
2,268 |
10,902 |
6,811 |
| Other expenses |
|
|
|
|
| Repairs and maintenance |
331 |
268 |
1,208 |
1,066 |
| Power and fuel |
46 |
32 |
176 |
132 |
| Brand and marketing |
265 |
190 |
905 |
553 |
| Short-term leases |
25 |
15 |
92 |
61 |
| Rates and taxes |
78 |
85 |
299 |
265 |
| Consumables |
41 |
40 |
158 |
146 |
| Insurance |
43 |
44 |
174 |
164 |
| Provision for post-sales client support and others |
(80) |
3 |
120 |
78 |
| Commission to non-whole time directors |
4 |
4 |
15 |
11 |
| Impairment loss recognized / (reversed) under expected credit loss model |
86 |
29 |
283 |
170 |
| Contributions towards Corporate Social Responsibility |
151 |
78 |
471 |
426 |
| Others |
156 |
128 |
491 |
352 |
| |
1,146 |
916 |
4,392 |
3,424 |
During the year ended March 31, 2022, in accordance
with the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company transferred certain
assets to its controlled subsidiary ‘Infosys Green Forum’ a Company created under Section 8 of the Companies Act, 2013.
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.
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 Group’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.
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 March 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of January 1, 2023 |
624 |
3,847 |
15 |
1,994 |
6,480 |
| Additions |
– |
228 |
2 |
651 |
881 |
| Deletions |
– |
(33) |
– |
(124) |
(157) |
| Depreciation |
(2) |
(171) |
(3) |
(179) |
(355) |
| Translation difference |
1 |
25 |
1 |
6 |
33 |
| Balance as of March 31, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
Following are the changes in the carrying value of
right-of-use assets for the three months ended March 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of January 1, 2022 |
629 |
3,742 |
15 |
347 |
4,733 |
| Additions |
– |
147 |
3 |
170 |
320 |
| Deletions |
– |
(15) |
– |
(12) |
(27) |
| Depreciation |
(1) |
(171) |
(2) |
(41) |
(215) |
| Translation difference |
– |
8 |
– |
4 |
12 |
| Balance as of March 31, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
Following are the changes in the carrying value of
right-of-use assets for the year ended March 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
| Additions |
– |
847 |
8 |
2,646 |
3,501 |
| Deletions |
– |
(45) |
– |
(364) |
(409) |
| Depreciation |
(6) |
(671) |
(10) |
(499) |
(1,186) |
| Translation difference |
1 |
54 |
1 |
97 |
153 |
| Balance as of March 31, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
Following are the changes in the carrying value of
right-of-use assets for the year ended March 31, 2022:
(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 |
– |
449 |
6 |
459 |
914 |
| Deletions |
– |
(85) |
– |
(47) |
(132) |
| Depreciation |
(6) |
(657) |
(10) |
(108) |
(781) |
| Translation difference |
4 |
20 |
1 |
3 |
28 |
| Balance as of March 31, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
The aggregate depreciation expense on ROU assets is
included under depreciation and amortization expense in the interim condensed Consolidated Statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Current lease liabilities |
1,242 |
872 |
| Non-current lease liabilities |
7,057 |
4,602 |
| Total |
8,299 |
5,474 |
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 |
| |
March 31, 2023 |
March 31, 2022 |
| Contingent liabilities : |
|
|
| Claims against the Group, not acknowledged as debts(1) |
4,762 |
4,641 |
| [Amount paid to statutory authorities 6,539 crore (6,006 crore)] |
|
|
| Commitments : |
|
|
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(2) |
959 |
1,245 |
| Other commitments* |
92 |
28 |
| * | | Uncalled capital pertaining to investments |
| (1) | | As at March 31, 2023 and March 31, 2022, claims against the Group not acknowledged as debts
in respect of income tax matters amounted to 4,062 crore
and 4,001 crore, 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 Income Tax 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 6,528 crore and 5,996 crore as at March 31, 2023 and March 31, 2022, respectively.
| (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 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, 2022 for the full names and other details of the Company’s subsidiaries and controlled trusts.
Changes in Subsidiaries
During the year ended March 31, 2023, the following
are the changes in the subsidiaries:
| - | | On April 20, 2022, Infosys Germany GmbH (formerly Kristall 247. GmbH (“Kristall”))
(a wholly owned subsidiary of Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte. Ltd)) acquired 100% of voting interests in
oddity space GmbH, oddity jungle GmbH, oddity waves GmbH, oddity group services GmbH, oddity code GmbH along with its subsidiary oddity
code d.o.o., and oddity GmbH along with its two subsidiaries oddity (Shanghai) Co. Ltd., oddity Limited(Taipei). |
| - | | Infosys Consulting S.R.L. (Argentina) (formerly a Wholly-owned subsidiary of Infosys Consulting
Holding AG) became the majority owned and controlled subsidiary of Infosys Limited with effect from April 1, 2022. |
| - | | Panaya GmbH renamed as Infosys Financial Services GmbH. |
| - | | Infosys Arabia Limited, a majority owned and controlled subsidiary of Infosys Limited is
under liquidation. |
| - | | Infosys Public Services Canada Inc., a wholly owned subsidiary of Infosys Public Services
Inc. was incorporated on July 8, 2022. |
| - | | On September 1, 2022, Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte. Ltd)
(a Wholly-owned subsidiary of Infosys Limited) acquired 100% of voting interests in BASE life science A/S along with its seven subsidiaries
BASE life science AG, BASE life science GmbH, BASE life science Ltd., BASE life science S.A.S., BASE life science S.r.l., Innovisor Inc.
and BASE life science Inc. |
| - | | BASE life science SL., a wholly owned subsidiary of BASE life science A/S was incorporated
on September 6, 2022 |
| - | | Panaya Germany GmbH, a wholly owned subsidiary of Panaya Inc. was incorporated on December
15, 2022. |
| - | | GuideVision UK Ltd, a wholly-owned subsidiary of GuideVision s.r.o. is under liquidation. |
| - | | Infosys Norway, a wholly-owned subsidiary of Infosys Singapore Pte. Ltd. (formerly Infosys
Consulting Pte. Ltd.) was Incorporated on February 7, 2023. |
| - | | Infosys Consulting Pte. Ltd. renamed as Infosys Singapore Pte. Ltd. |
| - | | Infosys Financial Services GmbH. (formerly Panaya GmbH) became a wholly-owned subsidiary
of Infosys Singapore Pte. Ltd with effect from February 23, 2023. |
Change in key management personnel
The following are the changes in the key management
personnel:
Independent directors:
| - | | D. Sundaram (appointed as lead independent director effective March 23, 2023) |
| - | | Kiran Mazumdar-Shaw (retired as lead independent director effective March 22, 2023) |
| - | | Govind Iyer (appointed as independent director effective January 12, 2023) |
Executive Officers:
| - | | Shaji Mathew (appointed as a Group Head - Human Resources effective March 22, 2023) |
| - | | Krishnamurthy Shankar (retired as a Group Head - Human Resources effective March 21, 2023) |
| - | | Mohit Joshi (resigned as President effective March 11, 2023 and will be on leave till his
last date with the company which will be June 9, 2023) |
| - | | Ravi Kumar S (resigned as President effective October 11, 2022) |
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 March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Salaries and other short term employee benefits to whole-time directors and executive officers (1)(2) |
25 |
29 |
111 |
134 |
| Commission and other benefits to non-executive/independent directors |
4 |
4 |
16 |
11 |
| Total |
29 |
33 |
127 |
145 |
| (1) | | Total employee stock compensation expense for the three months ended March 31, 2023 and
March 31, 2022 includes a charge of 8 crore and 14
crore, respectively, towards key managerial personnel. For the year ended March 31, 2023 and March 31, 2022 includes a charge of 49
crore and 65 crore, respectively, towards key managerial
personnel (Refer to Note 2.11). Stock compensation expense for the three months and year ended March 31, 2023 include reversal of expense
on account of resignation/ retirement of key mangement personnel. |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are 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 March 31, 2023 and March 31, 2022:
(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 |
10,818 |
5,537 |
4,411 |
4,825 |
5,078 |
2,989 |
2,681 |
1,102 |
37,441 |
| |
10,096 |
4,617 |
4,132 |
3,872 |
3,816 |
2,649 |
2,140 |
954 |
32,276 |
| Identifiable operating expenses |
6,161 |
2,869 |
2,613 |
2,614 |
3,248 |
1,734 |
1,514 |
701 |
21,454 |
| |
5,801 |
2,299 |
2,532 |
2,041 |
2,691 |
1,543 |
1,220 |
642 |
18,769 |
| Allocated expenses |
2,057 |
1,034 |
840 |
909 |
928 |
505 |
462 |
254 |
6,989 |
| |
1,717 |
802 |
716 |
720 |
699 |
434 |
337 |
236 |
5,661 |
| Segment operating income |
2,600 |
1,634 |
958 |
1,302 |
902 |
750 |
705 |
147 |
8,998 |
| |
2,578 |
1,516 |
884 |
1,111 |
426 |
672 |
583 |
76 |
7,846 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
1,121 |
| |
|
|
|
|
|
|
|
|
890 |
| Other income, net (Refer to Note 2.17) |
|
|
|
|
|
|
|
|
671 |
| |
|
|
|
|
|
|
|
|
637 |
| Finance cost |
|
|
|
|
|
|
|
|
82 |
| |
|
|
|
|
|
|
|
|
50 |
| Profit before tax |
|
|
|
|
|
|
|
|
8,466 |
| |
|
|
|
|
|
|
|
|
7,543 |
| Income tax expense |
|
|
|
|
|
|
|
|
2,332 |
| |
|
|
|
|
|
|
|
|
1,848 |
| Net Profit |
|
|
|
|
|
|
|
|
6,134 |
| |
|
|
|
|
|
|
|
|
5,695 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
1,121 |
| |
|
|
|
|
|
|
|
|
890 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
– |
Year ended March 31, 2023 and March 31, 2022:
(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 |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| Identifiable operating expenses |
24,990 |
10,892 |
11,101 |
9,923 |
12,493 |
6,959 |
5,834 |
2,801 |
84,993 |
| |
22,119 |
8,632 |
9,179 |
7,673 |
8,457 |
5,952 |
4,840 |
2,357 |
69,209 |
| Allocated expenses |
7,930 |
3,916 |
3,226 |
3,461 |
3,429 |
1,949 |
1,685 |
1,048 |
26,644 |
| |
6,469 |
2,972 |
2,631 |
2,586 |
2,471 |
1,589 |
1,297 |
926 |
20,941 |
| Segment operating income |
10,843 |
6,396 |
3,759 |
5,155 |
3,113 |
2,959 |
2,566 |
339 |
35,130 |
| |
10,314 |
6,130 |
3,372 |
4,225 |
2,408 |
2,495 |
2,380 |
167 |
31,491 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
4,225 |
| |
|
|
|
|
|
|
|
|
3,476 |
| Other income, net (Refer to Note 2.17) |
|
|
|
|
|
|
|
|
2,701 |
| |
|
|
|
|
|
|
|
|
2,295 |
| Finance cost |
|
|
|
|
|
|
|
|
284 |
| |
|
|
|
|
|
|
|
|
200 |
| Profit before tax |
|
|
|
|
|
|
|
|
33,322 |
| |
|
|
|
|
|
|
|
|
30,110 |
| Income tax expense |
|
|
|
|
|
|
|
|
9,214 |
| |
|
|
|
|
|
|
|
|
7,964 |
| Net Profit |
|
|
|
|
|
|
|
|
24,108 |
| |
|
|
|
|
|
|
|
|
22,146 |
| Depreciation and amortization expense |
|
|
|
|
|
|
|
|
4,225 |
| |
|
|
|
|
|
|
|
|
3,476 |
| 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 year ended March 31, 2023 and March 31, 2022, respectively.
2.24 FUNCTION WISE CLASSIFICATION OF CONDENSED CONSOLIDATED
STATEMENT OF PROFIT AND LOSS
(In crore)
| Particulars |
Note No. |
Three months ended March 31, |
Year ended March 31, |
| |
|
2023 |
2022 |
2023 |
2022 |
| Revenue from operations |
2.16 |
37,441 |
32,276 |
146,767 |
121,641 |
| Cost of Sales |
|
26,011 |
22,272 |
102,353 |
81,998 |
| Gross profit |
|
11,430 |
10,004 |
44,414 |
39,643 |
| Operating expenses |
|
|
|
|
|
| Selling and marketing expenses |
|
1,659 |
1,347 |
6,249 |
5,156 |
| General and administration expenses |
|
1,894 |
1,701 |
7,260 |
6,472 |
| Total operating expenses |
|
3,553 |
3,048 |
13,509 |
11,628 |
| Operating profit |
|
7,877 |
6,956 |
30,905 |
28,015 |
| Other income, net |
2.17 |
671 |
637 |
2,701 |
2,295 |
| Finance cost |
|
82 |
50 |
284 |
200 |
| Profit before tax |
|
8,466 |
7,543 |
33,322 |
30,110 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.15 |
2,260 |
1,825 |
9,287 |
7,811 |
| Deferred tax |
2.15 |
72 |
23 |
(73) |
153 |
| Profit for the year |
|
6,134 |
5,695 |
24,108 |
22,146 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
25 |
(13) |
8 |
(85) |
| Equity instruments through other comprehensive income, net |
|
(15) |
55 |
(7) |
96 |
| |
|
10 |
42 |
1 |
11 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
36 |
(12) |
(7) |
(8) |
| Exchange differences on translation of foreign operations, net |
|
61 |
137 |
776 |
228 |
| Fair value changes on investments, net |
|
42 |
(65) |
(256) |
(49) |
| |
|
139 |
60 |
513 |
171 |
| |
|
|
|
|
|
| Total other comprehensive income / (loss), net of tax |
|
149 |
102 |
514 |
182 |
| Total comprehensive income for the period |
|
6,283 |
5,797 |
24,622 |
22,328 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,128 |
5,686 |
24,095 |
22,110 |
| Non-controlling interests |
|
6 |
9 |
13 |
36 |
| |
|
6,134 |
5,695 |
24,108 |
22,146 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,276 |
5,787 |
24,598 |
22,293 |
| Non-controlling interests |
|
7 |
10 |
24 |
35 |
| |
|
6,283 |
5,797 |
24,622 |
22,328 |
| |
|
|
|
|
|
for and on behalf of the Board of Directors of Infosys
Limited
|
D. Sundaram
Lead Independent Director |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
April 13, 2023 |
|
|
INFOSYS LIMITED AND SUBSIDIARIES
Consolidated Financial Statements under Indian Accounting
Standards (Ind AS) for the year ended March 31, 2023
| Index |
| Consolidated Balance Sheet |
| Consolidated Statement of Profit and Loss |
| Consolidated Statement of Changes in Equity |
| Consolidated Statement of Cash Flows |
| Overview and Notes to the 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 |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Consolidated Financial Statements |
| 2.1 Business Combinations |
| 2.2 Property, plant and equipment |
| 2.3 Capital work-in-progress |
| 2.4 Goodwill and other intangible assets |
| 2.5 Investments |
| 2.6 Loans |
| 2.7 Other financial assets |
| 2.8 Trade receivables |
| 2.9 Cash and cash equivalents |
| 2.10 Other assets |
| 2.11 Financial instruments |
| 2.12 Equity |
| 2.13 Other financial liabilities |
| 2.14 Trade Payables |
| 2.15 Other liabilities |
| 2.16 Provisions |
| 2.17 Income taxes |
| 2.18 Revenue from operations |
| 2.19 Other income, net |
| 2.20 Expenses |
| 2.21 Leases |
| 2.22 Employee benefits |
| 2.23 Reconciliation of basic and diluted shares used in computing earnings per share |
| 2.24 Contingent liabilities and commitments |
| 2.25 Related party transactions |
| 2.26 Segment reporting |
| 2.27 Function wise classification of Consolidated Statement of Profit and Loss |
| |
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INFOSYS LIMITED
Report on the Audit of the Consolidated Financial
Statements
Opinion
We have audited the accompanying consolidated financial
statements of INFOSYS LIMITED (the “Company”) and its subsidiaries (the Company and its subsidiaries together referred
to as the “Group”) which comprise the Consolidated Balance Sheet as at March 31, 2023, and the Consolidated Statement of Profit
and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash
Flows for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred
to as the “consolidated financial statements”).
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid consolidated financial statements, give the information required by the Companies
Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards
prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”)
and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March 31, 2023 and
their consolidated profit, their consolidated total comprehensive income, their consolidated changes in equity and their consolidated
cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the 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 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 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 consolidated financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in
our report.
| Sr. No. |
Key Audit Matter |
Auditor’s Response |
| 1 |
Revenue recognition
|
Principal
Audit Procedures Performed |
| |
The Group’s contracts with customers include
contracts with multiple products and services. The group derives revenues from IT services comprising software development and related
services, maintenance, consulting and package implementation, licensing of software products and platforms across the Group’s core
and digital offerings and business process management services. 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 involves significant judgement.
In certain integrated services arrangements, contracts
with customers include subcontractor services or third-party vendor equipment or software. 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 products 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 products or service and therefore,
is acting as a principal or an agent.
Fixed price maintenance revenue is recognized ratably
either on (1) a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period
or (2) 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. 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.
As certain contracts with customers involve management’s
judgment in (1) identifying distinct performance obligations, (2) determining whether the Group is acting as a principal or an agent and
(3) whether fixed price maintenance revenue is recognized on a straight-line basis or using the percentage of completion method, revenue
recognition from these judgments were identified as a key audit matter and required a higher extent of audit effort.
Refer Notes 1.5 and 2.18 to the consolidated financial
statements.
|
Our audit procedures related to the (1) identification
of distinct performance obligations, (2) determination of whether the Group is acting as a principal or agent and (3) whether fixed price
maintenance revenue is recognized on a straight-line basis or using the percentage of completion method included the following, among
others:
·
We tested the effectiveness of controls relating to the (a) identification of distinct performance
obligations, (b) determination of whether the Group is acting as a principal or an agent and (c) determination of whether fixed price
maintenance revenue for certain contracts is recognized on a straight-line basis or using the percentage of completion method.
·
We selected a sample of contracts with customers and performed the following procedures:
–
Obtained and read contract documents for each selection, including master service agreements, and other documents that were part
of the agreement.
–
Identified significant terms and deliverables in the contract to assess management’s conclusions regarding the (i) identification
of distinct performance obligations (ii) whether the Group is acting as a principal or an agent and (iii) whether fixed price maintenance
revenue is recognized on a straight-line basis or using the percentage of completion method |
| 2 |
Revenue recognition - Fixed price contracts using
the percentage of completion method
|
Principal Audit Procedures Performed
|
| |
Fixed price maintenance revenue is recognized ratably
either (1) on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period
or (2) using a percentage of completion method when the pattern of benefits from 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.
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 uncompleted contracts are recorded
in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
We identified the estimate of total efforts or costs
to complete fixed price contracts measured using the percentage of completion method as a key audit matter as 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. This estimate has a high inherent uncertainty and requires consideration of progress of the contract,
efforts or costs incurred to-date and estimates of efforts or costs required to complete the remaining contract performance obligations
over the term of the contracts.
This required a high degree of auditor judgment in
evaluating the audit evidence and a higher extent of audit effort to evaluate the reasonableness of the total estimated amount of revenue
recognized on fixed-price contracts.
Refer Notes 1.5 and 2.18 to the consolidated financial
statements.
|
Our audit procedures related to estimates of total
expected costs or efforts to complete for fixed-price contracts included the following, among others:
·
We tested the effectiveness of controls relating to (1) recording of efforts or costs incurred and estimation of efforts or costs
required to complete the remaining contract performance obligations and (2) access and application controls pertaining to time recording,
allocation and budgeting systems which prevents unauthorised changes to recording of efforts incurred.
·
We selected a sample of fixed price contracts with customers measured the using percentage-of-completion method and performed the
following:
–
Evaluated management’s ability to reasonably estimate the progress towards satisfying the performance obligation by comparing
actual efforts or costs incurred to prior year estimates of efforts or costs budgeted for performance obligations that have been fulfilled.
–
Compared efforts or costs incurred with Group’s estimate of efforts or costs incurred to date to identify significant variations
and evaluate whether those variations have been considered appropriately in estimating the remaining costs or efforts to complete the
contract.
–
Tested the estimate for consistency with the status of delivery of milestones and customer acceptances and sign off from customers
to identify possible delays in achieving milestones, which require changes in estimated costs or efforts to complete the remaining performance
obligations.
|
Information Other than the Financial Statements
and Auditor’s Report Thereon
The Company’s Board of Directors is responsible
for the preparation of the other information. The other information comprises the information included in the Management Discussion and
Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder’s
Information, but does not include the consolidated financial statements, standalone financial statements and our auditor’s report
thereon.
Our opinion on the consolidated financial statements
does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of Management and Those
Charged with Governance for the Consolidated Financial Statements
The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation
and presentation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated
financial performance including other comprehensive income, consolidated changes in equity and consolidated cash flows of the Group in
accordance with the Ind AS 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 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
financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have
been used for the purpose of preparation of the consolidated financial statements by the Directors of the Company,
as aforesaid.
In preparing the 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 Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the 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 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 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 control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company and its
subsidiary companies which are companies incorporated in India, has adequate internal financial controls with reference to consolidated
financial statements in place and the operating effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the 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 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 consolidated financial
statements, including the disclosures, and whether the 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 consolidated financial statements. |
Materiality is the magnitude of misstatements
in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the 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 consolidated financial statements.
We communicate with those
charged with governance of the Company and such other entities included in the 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.
From the matters communicated with those charged with
governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
| 1. | As required by Section 143(3) of the Act, based on our audit we report that: |
| a) | We have sought and obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements. |
| b) | In our opinion, proper books of account as required by law relating to preparation
of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books. |
| c) | The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss including
Other Comprehensive Income, Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows dealt with by this
Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements. |
| d) | In our opinion, the aforesaid consolidated financial statements comply with the
Ind AS specified under section 133 of the Act. |
| e) | On the basis of the written representations received from the directors of the
Company as on March 31, 2023 taken on record by the Board of Directors of the Company and the reports of the statutory auditors of its
subsidiary companies incorporated in India, none of the directors of the Group companies incorporated in India is disqualified as on March
31, 2023 from being appointed as a director in terms of Section 164 (2) of the Act. |
| f) | With respect to the adequacy of the internal financial controls with reference
to consolidated financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure
A” which is based on the auditors’ reports of the Company and its subsidiary companies incorporated in India. Our report expresses
an unmodified opinion on the adequacy and operating effectiveness of internal financial controls with reference to consolidated financial
statements of those companies. |
| g) | With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act. |
| h) | With respect to the other matters to be included in the Auditor’s Report
in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information
and according to the explanations given to us: |
| i) | The consolidated financial statements disclose the impact of pending litigations on the consolidated financial
position of the Group (refer Note 2.24 to the consolidated financial statements). |
| ii) | The Group has made provision as required under applicable law or accounting standards for material
foreseeable losses (refer Note 2.16 to the consolidated financial statements). The Group did not have any long-term derivative
contracts. |
| iii) | There has been no delay in transferring amounts, required to be transferred, to the Investor Education
and Protection Fund by the Company and its subsidiary companies incorporated in India. |
| iv) | (a) The respective Managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company or any of such subsidiaries to or in any other person or entity, outside the Group, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or any of such subsidiaries (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
|
| | | (b) The respective Managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company or any of such subsidiaries from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company or any of such subsidiaries shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
|
| | | (c) Based on the
audit procedures that have been considered reasonable and appropriate in the circumstances performed by us on the Company and its subsidiaries
which are companies incorporated in India whose financial statements have been audited under the Act, nothing has come to our notice that
has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain
any material misstatement. |
| v) | As stated in Note 2.12.3 to the consolidated financial statements |
| a. | The final dividend proposed in the previous year, declared and paid by the Company during the year is
in accordance with Section 123 of the Act, as applicable. |
| b. | The interim dividend declared and paid by the Company during the year and until the date of this report
is in compliance with Section 123 of the Act. |
| c. | The Board of Directors of the Company have proposed final dividend for the year which is subject to the
approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the
Act, as applicable. |
| vi) | Proviso to Rule 3(1) of the Companies (Accounts)
Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility
is applicable with effect from April 1, 2023 to the Company and its subsidiaries, which are companies incorporated in India, and accordingly,
reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023. |
| 2. | With respect to the matters specified in paragraphs 3(xxi) and 4 of the Companies (Auditor’s Report)
Order, 2020 (the “Order”/ “CARO”) issued by the Central Government in terms of Section 143(11) of the Act, to
be included in the Auditor’s report, according to the information and explanations given to us, and based on the CARO reports issued
by us for the Company and its subsidiaries included in the consolidated financial statements of the Company, to which reporting under
CARO is applicable, we report that there are no qualifications or adverse remarks in these CARO reports |
|
Place: Bengaluru
Date: April 13, 2023 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 23039826BGXRYQ2725 |
ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S
REPORT
(Referred to in paragraph 1(f) under ‘Report
on Other Legal and Regulatory Requirements’ section of our report to the Members of Infosys Limited of even date)
Report on the Internal Financial Controls with reference
to Consolidated Financial Statements under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (the “Act”)
In conjunction with our audit of the consolidated financial
statements of the Company as of and for the year ended March 31, 2023, we have audited the internal financial controls with reference
to Consolidated Financial Statements of Infosys Limited (hereinafter referred to as the “Company”) and its subsidiary
companies, which are companies incorporated in India, as of that date.
Management’s Responsibility for Internal Financial
Controls
The respective Boards of Directors of the Company and
its subsidiary companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial
controls based on the internal control over financial reporting criteria established by the respective Companies considering the essential
components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India (the “ICAI”). These responsibilities include the design, implementation and
maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of
its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection
of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information,
as required under the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the
internal financial controls with reference to Consolidated Financial Statements of the Company and its subsidiary companies, which are
companies incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal
Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India
(“ICAI”) and the Standards on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit
of internal financial controls with reference to Consolidated Financial Statements. Those Standards and the Guidance Note require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial
controls with reference to Consolidated Financial Statements was established and maintained and if such controls operated effectively
in all material respects.
Our audit involves performing procedures to obtain
audit evidence about the adequacy of the internal financial controls with reference to Consolidated Financial Statements and their operating
effectiveness. Our audit of internal financial controls with reference to Consolidated Financial Statements included obtaining an understanding
of internal financial controls with reference to Consolidated Financial Statements, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls with reference to Consolidated
Financial Statements of the Company and its subsidiary companies, which are companies incorporated in India.
Meaning of Internal Financial Controls with
reference to Consolidated Financial Statements
A company's internal financial control with reference
to Consolidated Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's
internal financial control with reference to Consolidated Financial Statements includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial
statements.
Inherent Limitations of Internal Financial Controls
with reference to Consolidated Financial Statements
Because of the inherent limitations of internal financial
controls with reference to Consolidated Financial Statements, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal
financial controls with reference to Consolidated Financial Statements to future periods are subject to the risk that the internal financial
control with reference to Consolidated Financial Statements may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion and to the best of our information and
according to the explanations given to us, the Company and its subsidiary companies, which are companies incorporated in India, have,
in all material respects, an adequate internal financial controls with reference to Consolidated Financial Statements and such
internal financial controls with reference to Consolidated Financial Statements were operating effectively as at March 31, 2023, based
on the criteria for internal financial control with reference to Consolidated Financial Statements established by the respective companies
considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the ICAI.
|
Place: Bengaluru
Date: April 13, 2023 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 23039826BGXRYQ2725 |
INFOSYS LIMITED AND SUBSIDIARIES
(In crore)
| Consolidated Balance Sheets as at |
Note No. |
March 31, 2023 |
March 31, 2022 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.2 |
13,346 |
13,075 |
| Right-of-use assets |
2.21 |
6,882 |
4,823 |
| Capital work-in-progress |
2.3 |
288 |
416 |
| Goodwill |
2.4.1 and 2.1 |
7,248 |
6,195 |
| Other intangible assets |
2.4.2 |
1,749 |
1,707 |
| Financial assets |
|
|
|
| Investments |
2.5 |
12,569 |
13,651 |
| Loans |
2.6 |
39 |
34 |
| Other financial assets |
2.7 |
2,798 |
1,460 |
| Deferred tax assets (net) |
2.17 |
1,245 |
1,212 |
| Income tax assets (net) |
2.17 |
6,453 |
6,098 |
| Other non-current assets |
2.10 |
2,318 |
2,029 |
| Total non-current assets |
|
54,935 |
50,700 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.5 |
6,909 |
6,673 |
| Trade receivables |
2.8 |
25,424 |
22,698 |
| Cash and cash equivalents |
2.9 |
12,173 |
17,472 |
| Loans |
2.6 |
289 |
248 |
| Other financial assets |
2.7 |
11,604 |
8,727 |
| Income tax assets (net) |
2.17 |
6 |
54 |
| Other current assets |
2.10 |
14,476 |
11,313 |
| Total current assets |
|
70,881 |
67,185 |
| Total assets |
|
125,816 |
117,885 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.12 |
2,069 |
2,098 |
| Other equity |
|
73,338 |
73,252 |
| Total equity attributable to equity holders of the Company |
|
75,407 |
75,350 |
| Non-controlling interests |
|
388 |
386 |
| Total equity |
|
75,795 |
75,736 |
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.21 |
7,057 |
4,602 |
| Other financial liabilities |
2.13 |
2,058 |
2,337 |
| Deferred tax liabilities (net) |
2.17 |
1,220 |
1,156 |
| Other non-current liabilities |
2.15 |
500 |
451 |
| Total non-current liabilities |
|
10,835 |
8,546 |
| Current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.21 |
1,242 |
872 |
| Trade payables |
2.14 |
3,865 |
4,134 |
| Other financial liabilities |
2.13 |
18,558 |
15,837 |
| Other current liabilities |
2.15 |
10,830 |
9,178 |
| Provisions |
2.16 |
1,307 |
975 |
| Income tax liabilities (net) |
2.17 |
3,384 |
2,607 |
| Total current liabilities |
|
39,186 |
33,603 |
| Total equity and liabilities |
|
125,816 |
117,885 |
The accompanying notes form an integral part of
the 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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
INFOSYS LIMITED AND SUBSIDIARIES
(In
crore, except equity share and per equity share data)
| Consolidated Statement of Profit and Loss for the |
Note No. |
Year ended March 31, |
| |
|
2023 |
2022 |
| Revenue from operations |
2.18 |
146,767 |
121,641 |
| Other income, net |
2.19 |
2,701 |
2,295 |
| Total income |
|
149,468 |
123,936 |
| Expenses |
|
|
|
| Employee benefit expenses |
2.22 |
78,359 |
63,986 |
| Cost of technical sub-contractors |
|
14,062 |
12,606 |
| Travel expenses |
|
1,525 |
827 |
| Cost of software packages and others |
2.20 |
10,902 |
6,811 |
| Communication expenses |
|
713 |
611 |
| Consultancy and professional charges |
|
1,684 |
1,885 |
| Depreciation and amortization expenses |
2.2, 2.4.2 and 2.21 |
4,225 |
3,476 |
| Finance cost |
|
284 |
200 |
| Other expenses |
2.20 |
4,392 |
3,424 |
| Total expenses |
|
116,146 |
93,826 |
| Profit before tax |
|
33,322 |
30,110 |
| Tax expense: |
|
|
|
| Current tax |
2.17 |
9,287 |
7,811 |
| Deferred tax |
2.17 |
(73) |
153 |
| Profit for the period |
|
24,108 |
22,146 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
2.22 |
8 |
(85) |
| Equity instruments through other comprehensive income, net |
2.5 |
(7) |
96 |
| |
|
1 |
11 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
2.11 |
(7) |
(8) |
| Exchange differences on translation of foreign operations |
|
776 |
228 |
| Fair value changes on investments, net |
2.5 |
(256) |
(49) |
| |
|
513 |
171 |
| Total other comprehensive income /(loss), net of tax |
|
514 |
182 |
| Total comprehensive income for the period |
|
24,622 |
22,328 |
| Profit attributable to: |
|
|
|
| Owners of the Company |
|
24,095 |
22,110 |
| Non-controlling interests |
|
13 |
36 |
| |
|
24,108 |
22,146 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
24,598 |
22,293 |
| Non-controlling interests |
|
24 |
35 |
| |
|
24,622 |
22,328 |
| Earnings per Equity share |
|
|
|
| Equity shares of par value ₹5/- each |
|
|
|
| Basic (₹) |
|
57.63 |
52.52 |
| Diluted (₹) |
|
57.54 |
52.41 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
| Basic (in shares) |
2.23 |
418,08,97,857 |
420,95,46,724 |
| Diluted (in shares) |
2.23 |
418,77,31,070 |
421,85,25,134 |
The accompanying notes form an integral part of
the 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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
INFOSYS LIMITED AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
(In
crore)
| Particulars |
Equity Share capital (1) |
OTHER EQUITY |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
|
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) |
|
|
|
| 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 year ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
22,110 |
– |
– |
– |
– |
– |
– |
– |
– |
22,110 |
36 |
22,146 |
Remeasurement of the net defined benefit liability/asset, net* (Refer to
Note 2.22) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(85) |
(85) |
– |
(85) |
| Equity instruments through other comprehensive income, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
96 |
– |
– |
– |
96 |
– |
96 |
| Fair value changes on derivatives designated as cash flow hedge, net* (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(8) |
– |
(8) |
– |
(8) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
229 |
– |
– |
229 |
(1) |
228 |
| Fair value changes on investments, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(49) |
(49) |
– |
(49) |
| Total Comprehensive income for the period |
– |
– |
– |
– |
22,110 |
– |
– |
– |
–
|
96 |
229 |
(8) |
(134) |
22,293 |
35 |
22,328 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
2 |
– |
– |
19 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
21 |
– |
21 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
393 |
– |
– |
– |
– |
– |
– |
393 |
– |
393 |
| Transfer on account of options not exercised |
– |
– |
– |
– |
– |
1 |
(1) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Buyback of equity shares (Refer to Note 2.12)** |
(28) |
– |
– |
(640) |
(8,822) |
(1,603) |
– |
– |
– |
– |
– |
– |
– |
(11,093) |
– |
(11,093) |
| Transaction costs relating to buyback* |
– |
– |
– |
– |
– |
(24) |
– |
– |
– |
– |
– |
– |
– |
(24) |
– |
(24) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
28 |
– |
– |
(28) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transfer to legal reserve |
– |
– |
– |
– |
(10) |
– |
– |
– |
10 |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to Note 2.12) |
– |
– |
– |
218 |
– |
– |
(218) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options (Refer to Note 2.12) |
– |
– |
– |
3 |
– |
– |
60 |
– |
– |
– |
– |
– |
– |
63 |
– |
63 |
| Changes in the controlling stake of the subsidiary |
– |
– |
– |
– |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
(1) |
– |
| Dividends (1) |
– |
– |
– |
– |
(12,655) |
– |
– |
– |
– |
– |
– |
– |
– |
(12,655) |
– |
(12,655) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(79) |
(79) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(3,054) |
– |
– |
3,054 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
1,100 |
– |
– |
(1,100) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at March 31, 2022 |
2,098 |
54 |
139 |
200 |
61,313 |
1,061 |
606 |
8,339 |
16
|
254 |
1,560 |
2 |
(292) |
75,350 |
386 |
75,736 |
Consolidated Statement of Changes in Equity
(contd.)
(In crore)
| Particulars |
Equity Share capital (1) |
OTHER EQUITY |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| |
|
RESERVES & SURPLUS |
Other comprehensive income |
|
|
|
| |
|
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) |
|
|
|
| Balance as at April 1, 2022 |
2,098 |
54 |
139 |
200 |
61,313 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,350 |
386 |
75,736 |
| Impact on adoption of amendment to Ind AS 37# |
– |
– |
– |
– |
(19) |
– |
– |
– |
– |
– |
– |
– |
– |
(19) |
– |
(19) |
| |
2,098 |
54 |
139 |
200 |
61,294 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,331 |
386 |
75,717 |
| Changes in equity for the year ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
24,095 |
– |
– |
– |
– |
– |
– |
– |
– |
24,095 |
13 |
24,108 |
Remeasurement of the net defined benefit liability/asset, net* (Refer to
Note 2.22) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
8 |
8 |
– |
8 |
| Equity instruments through other comprehensive income, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(7) |
– |
– |
– |
(7) |
– |
(7) |
| Fair value changes on derivatives designated as cash flow hedge, net* (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(7) |
– |
(7) |
– |
(7) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
765 |
– |
– |
765 |
11 |
776 |
| Fair value changes on investments, net* (Refer to Notes 2.5 and 2.17) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(256) |
(256) |
– |
(256) |
| Total Comprehensive income for the period |
– |
– |
– |
– |
24,095 |
– |
– |
– |
– |
(7) |
765 |
(7) |
(248) |
24,598 |
24 |
24,622 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
1 |
– |
– |
34 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
35 |
– |
35 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
514 |
– |
– |
– |
– |
– |
– |
514 |
– |
514 |
| Transferred to legal reserve |
– |
– |
– |
– |
(3) |
– |
– |
– |
3 |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of exercise of stock options |
– |
– |
– |
291 |
– |
– |
(291) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
2 |
(2) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Buyback of equity shares (Refer to Note 2.12)** |
(30) |
– |
– |
(340) |
(11,096) |
– |
– |
– |
– |
– |
– |
– |
– |
(11,466) |
– |
(11,466) |
| Transaction costs relating to buyback* |
– |
– |
– |
(19) |
(5) |
– |
– |
– |
– |
– |
– |
– |
– |
(24) |
– |
(24) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
30 |
– |
(21) |
(9) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
51 |
– |
– |
– |
– |
– |
– |
51 |
– |
51 |
| Dividends (1) |
– |
– |
– |
– |
(13,632) |
– |
– |
– |
– |
– |
– |
– |
– |
(13,632) |
– |
(13,632) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(22) |
(22) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(3,139) |
– |
– |
3,139 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
1,464 |
– |
– |
(1,464) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at March 31, 2023 |
2,069 |
54 |
169 |
166 |
58,957 |
1,054 |
878 |
10,014 |
19 |
247 |
2,325 |
(5) |
(540) |
75,407 |
388 |
75,795 |
| ** | | Including tax on buyback of 2,166
crore and 1,893 crore for the year ended March 31, 2023
and March 31, 2022 respectively. |
| # | | Impact on account of adoption of amendment to Ind AS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (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 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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
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. |
Year ended March 31, |
| |
|
2023 |
2022 |
| Cash flow from operating activities |
|
|
|
| Profit for the year |
|
24,108 |
22,146 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Income tax expense |
2.17 |
9,214 |
7,964 |
| Depreciation and amortization |
2.2, 2.4.2 and 2.21 |
4,225 |
3,476 |
| Interest and dividend income |
2.19 |
(1,817) |
(1,645) |
| Finance cost |
|
284 |
200 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
283 |
170 |
| Exchange differences on translation of assets and liabilities, net |
|
161 |
119 |
| Stock compensation expense |
2.12 |
519 |
415 |
| Other adjustments |
|
628 |
76 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(7,076) |
(7,937) |
| Loans, other financial assets and other assets |
|
(3,108) |
(1,914) |
| Trade payables |
|
(279) |
1,489 |
| Other financial liabilities, other liabilities and provisions |
|
4,119 |
6,938 |
| Cash generated from operations |
|
31,261 |
31,497 |
| Income taxes paid |
|
(8,794) |
(7,612) |
| Net cash generated by operating activities |
|
22,467 |
23,885 |
| Cash flows from investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(2,579) |
(2,161) |
| Deposits placed with corporation |
|
(996) |
(906) |
| Redemption of deposits placed with Corporation |
|
762 |
753 |
| Interest and dividend received |
|
1,525 |
1,898 |
| Payment towards acquisition of business, net of cash acquired |
|
(910) |
|
| Payment of contingent consideration pertaining to acquisition of business |
|
(60) |
(53) |
| Escrow and other deposits pertaining to Buyback |
|
(483) |
(420) |
| Redemption of escrow and other deposits pertaining to Buyback |
|
483 |
420 |
| Other receipts |
|
71 |
67 |
| Other payments |
|
– |
(22) |
| Payments to acquire Investments |
|
|
|
| Tax free bonds and government bonds |
|
(27) |
– |
| Liquid mutual fund units |
|
(70,631) |
(54,064) |
| Target maturity fund |
|
(400) |
– |
| Certificates of deposit |
|
(10,348) |
(4,184) |
| Commercial Paper |
|
(3,003) |
– |
| Non-convertible debentures |
|
(249) |
(1,609) |
| Government securities |
|
(1,569) |
(4,254) |
| Others |
|
(20) |
(24) |
| Proceeds on sale of Investments |
|
|
|
| Tax free bonds and government bonds |
|
221 |
20 |
| Liquid mutual funds units |
|
71,851 |
53,669 |
| Certificates of deposit |
|
10,404 |
787 |
| Commercial Paper |
|
2,298 |
– |
| Non-convertible debentures |
|
470 |
2,201 |
| Government securities |
|
1,882 |
1,457 |
| Equity and preference securities |
|
99 |
– |
| Others |
|
– |
9 |
| Net cash (used in) / generated from investing activities |
|
(1,209) |
(6,416) |
| Cash flows from financing activities |
|
|
|
| Payment of lease liabilities |
|
(1,231) |
(915) |
| Payment of dividends |
|
(13,631) |
(12,652) |
| Payment of dividend to non-controlling interest of subsidiary |
|
(22) |
(79) |
| Shares issued on exercise of employee stock options |
|
35 |
21 |
| Payment towards purchase of non-controlling interest |
|
– |
(2) |
| Other receipts |
|
132 |
236 |
| Other payments |
|
(479) |
(126) |
| Buyback of equity shares including transaction cost and tax on buyback |
|
(11,499) |
(11,125) |
| Net cash used in financing activities |
|
(26,695) |
(24,642) |
| Net increase / (decrease) in cash and cash equivalents |
|
(5,437) |
(7,173) |
| Effect of exchange rate changes on cash and cash equivalents |
|
138 |
(69) |
| Cash and cash equivalents at the beginning of the period |
2.9 |
17,472 |
24,714 |
| Cash and cash equivalents at the end of the period |
2.9 |
12,173 |
17,472 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.9 |
362 |
471 |
The accompanying notes form an integral part of
the 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
|
D. Sundaram |
Salil Parekh |
Bobby Parikh |
| Lead Independent Director |
Chief Executive Officer |
Director |
| |
and Managing Director |
|
| |
|
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and
Deputy Chief Financial Officer |
Company Secretary |
|
Bengaluru
April 13, 2023 |
|
|
|
Overview and notes to the 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 consolidated financial statements are approved
for issue by the Company's Board of Directors on April 13, 2023.
1.2 Basis of preparation of financial statements
These consolidated financial statements are prepared
in accordance with Indian Accounting Standard (Ind AS), 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). 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 year-end 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-end figures reported
in this statement.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls.
The consolidated financial statements comprise the financial statements of the Company, its controlled trusts 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. 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. 1.5. 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 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.
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.
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 United States, 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 2.17).
c. Business combinations and intangible assets
Business combinations are accounted for using Ind AS
103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair valued in order
to ascertain the fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted
by external valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option
arrangements and intangible assets. 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 (Refer to Note 2.1 and 2.4.2).
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 2.4.1).
1.6 Recent accounting pronouncements
Ministry of Corporate Affairs (“MCA”) notifies
new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time.
On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
- This amendment 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 April 1, 2023. The Group has evaluated the amendment
and the impact of the amendment is insignificant in the Group’s financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors - This amendment has introduced a definition of ‘accounting estimates’ and included amendments to
Ind AS 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 April 1, 2023. The Group has evaluated the amendment and there is no impact
on its consolidated financial statements.
Ind AS 12 - Income Taxes - This amendment has
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 April 1, 2023. The Group
has evaluated the amendment and there is no impact on its consolidated financial statement.
2. Notes to the Consolidated Financial Statements
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 derecognized.
Acquisition
During the year ended March 31, 2023 the Group, completed
two business combinations to complement its digital offerings by acquiring 100% voting interests in:
| 1) | | oddity GmbH, oddity group services GmbH, oddity space GmbH, oddity jungle GmbH, oddity code
GmbH and oddity waves GmbH (collectively known as oddity), a Germany-based digital marketing, experience, and commerce agencies on April
20, 2022. |
| 2) | | BASE life science A/S, a consulting and technology firm in the life Science industry in Europe
on September 1, 2022. |
These acquisitions are expected to strengthen the Group’s
creative, branding and experience design capabilities and augment the Group’s life sciences expertise, scales its digital transformation
capabilities with cloud based industry solutions and expand its presence across Europe.
The purchase price is allocated to assets acquired
and liabilities assumed based upon determination of fair values at the dates of acquisition as follows:
(In crore)
| Component |
Acquiree’s carrying amount |
Fair value adjustments |
Purchase price allocated |
| Net Assets(1) |
103 |
– |
103 |
| Intangible assets – |
|
|
|
| Customer contracts and relationships |
– |
274 |
274 |
| Vendor relationships |
– |
30 |
30 |
| Brand |
– |
24 |
24 |
| Deferred tax liabilities on intangible assets |
– |
(80) |
(80) |
| Total |
103 |
248 |
351 |
| Goodwill |
|
|
630 |
| Total purchase price |
|
|
981 |
| (1) | | Includes cash and cash equivalents acquired of
26 crore. |
The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill. The primary items that generated this goodwill are the value of the
acquired assembled workforce and estimated synergies, neither of which qualify as an intangible asset.
Goodwill is not tax-deductible. Goodwill pertaining
to these business combinations is allocated to operating segments as more fully described in Note 2.3.1
The purchase consideration of 981 crore includes
cash of 936 crore and contingent consideration with an estimated fair value of 45 crore as on the date of acquisition.
At the acquisition date, the key inputs used in determination
of the fair value of contingent consideration are the probabilities assigned towards achievement of financial targets and discount rate
of 12.5%. The undiscounted value of contingent consideration as of March 31, 2023 was 58 crore.
Additionally, these acquisitions have shareholder and
employee retention bonus payable to the employees of the acquiree over three years, subject to their continuous employment with the Group
along with achievement of financial targets for the respective years. Performance and Retention Bonus is recognized in employee benefit
expenses in the Consolidated Statement of Profit and Loss over the period of service.
Fair value of trade receivables acquired, is 111
crore as of acquisition date and as of March 31, 2023 the amounts are substantially collected.
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. The transaction costs of 7 crore
related to the acquisition have been included under administrative expenses in the Consolidated Statement of Profit and Loss for the
year ended March 31, 2023.
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 charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
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. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
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 year ended March 31, 2023 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, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Additions - Business Combination (Refer to Note 2.1) |
– |
– |
– |
5 |
6 |
1 |
2 |
– |
14 |
| Additions |
2 |
337 |
273 |
122 |
1,510 |
364 |
220 |
2 |
2,830 |
| Deletions* |
(2) |
– |
(182) |
(76) |
(1,563) |
(348) |
(25) |
(1) |
(2,197) |
| Translation difference |
– |
1 |
1 |
4 |
39 |
8 |
14 |
– |
67 |
| Gross carrying value as at March 31, 2023 |
1,431 |
11,562 |
3,302 |
1,482 |
8,519 |
2,303 |
1,445 |
45 |
30,089 |
| Accumulated depreciation as at April 1, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Depreciation |
– |
(434) |
(273) |
(121) |
(1,322) |
(236) |
(187) |
(4) |
(2,577) |
| Accumulated depreciation on deletions* |
– |
– |
181 |
76 |
1,556 |
347 |
21 |
1 |
2,182 |
| Translation difference |
– |
(1) |
(1) |
(3) |
(26) |
(7) |
(10) |
– |
(48) |
| Accumulated depreciation as at March 31, 2023 |
– |
(4,535) |
(2,437) |
(1,198) |
(5,826) |
(1,675) |
(1,032) |
(40) |
(16,743) |
| Carrying value as at April 1, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
| Carrying value as at March 31, 2023 |
1,431 |
7,027 |
865 |
284 |
2,693 |
628 |
413 |
5 |
13,346 |
| * | | During the year ended March 31, 2023, certain assets which were not in use
having gross book value of 1,414 crore (net book value:
Nil) and 1,918 crore (net book value: Nil), respectively
were retired. |
The changes in the carrying value of property, plant
and equipment for the year ended March 31, 2022 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 |
32 |
599 |
256 |
68 |
1,542 |
140 |
79 |
– |
2,716 |
| Deletions* |
– |
(1) |
(349) |
(15) |
(672) |
(17) |
(46) |
– |
(1,100) |
| Translation difference |
– |
61 |
7 |
3 |
18 |
6 |
13 |
– |
108 |
| Gross carrying value as at March 31, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Accumulated depreciation as at April 1, 2021 |
– |
(3,675) |
(2,425) |
(1,043) |
(5,636) |
(1,580) |
(700) |
(32) |
(15,091) |
| Depreciation |
– |
(417) |
(245) |
(120) |
(1,055) |
(210) |
(181) |
(5) |
(2,233) |
| Accumulated depreciation on deletions* |
– |
– |
330 |
14 |
671 |
16 |
37 |
– |
1,068 |
| Translation difference |
– |
(8) |
(4) |
(1) |
(14) |
(5) |
(12) |
– |
(44) |
| Accumulated depreciation as at March 31, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Carrying value as at April 1, 2021 |
1,399 |
6,890 |
871 |
328 |
2,003 |
569 |
488 |
12 |
12,560 |
| Carrying value as at March 31, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
| * | | During the year ended March 31, 2022, certain assets which were not
in use having gross book value of 316
crore (net book value: Nil) respectively, were retired. |
| (1) | | Buildings include 250/-
being the value of five shares of 50/- each in Mittal
Towers Premises Co-operative Society Limited. |
The aggregate depreciation has been included under
depreciation and amortization expense in the Consolidated Statement of Profit and Loss.
Repairs and maintenance costs are recognized in
the Consolidated Statement of Profit and Loss when incurred.
2.3 CAPITAL WORK-IN-PROGRESS
(In ₹ crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Capital work-in-progress |
288 |
416 |
| Total Capital work-in-progress |
288 |
416 |
Capital work-in-progress ageing schedule for the year
ended March 31, 2023 and March 31, 2022:
(In ₹ crore)
| Particulars |
Amount in CWIP for a period of |
| |
Less than 1 year |
1-2 years |
2-3 years |
More than 3 years |
Total |
| Projects in progress |
235 |
21 |
12 |
20 |
288 |
| |
272 |
48 |
51 |
45 |
416 |
| Total Capital work-in-progress |
235 |
21 |
12 |
20 |
288 |
| |
272 |
48 |
51 |
45 |
416 |
For capital-work-in progress, whose completion is overdue
or has exceeded its cost compared to its original plan the project wise details of when the project is expected to be completed is given
below as of March 31, 2023 and March 31, 2022:
(In ₹ crore)
| Particulars |
To be completed in |
| |
Less than 1 year |
1-2 years |
2-3 years |
More than 3 years |
Total |
| Projects in progress |
|
|
|
|
|
| KL-SP-SDB1 |
114 |
– |
– |
– |
114 |
| |
– |
27 |
– |
– |
27 |
| BN-SP-MET |
20 |
– |
– |
– |
20 |
| |
|
– |
– |
– |
– |
– |
| NG-SZ-SDB1 |
– |
– |
– |
– |
– |
| |
89 |
– |
– |
– |
89 |
| BN-SP-RETRO |
– |
– |
– |
– |
– |
| |
30 |
– |
– |
– |
30 |
| BH-SZ-MLP |
– |
– |
– |
– |
– |
| |
116 |
– |
– |
– |
116 |
| Total Capital work-in-progress* |
134 |
– |
– |
– |
134 |
|
|
235 |
27 |
– |
– |
262 |
| * | | There are no subsidiaries in the group having more than 10% of the total capital work in
progress. |
2.4 GOODWILL AND OTHER INTANGIBLE ASSETS
2.4.1 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 and which
represents the lowest level at which goodwill is monitored for internal management purposes. 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. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Carrying value at the beginning |
6,195 |
6,079 |
| Goodwill on acquisitions (Refer to Note 2.1) |
630 |
– |
| Translation differences |
423 |
116 |
| Carrying value at the end |
7,248 |
6,195 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition. The Group internally
reviews the goodwill for impairment at the operating segment level, after allocation of the goodwill to CGUs or groups of CGUs.
The allocation of goodwill to operating segments as at
March 31, 2023 and March 31, 2022 is as follows:
(In ₹ crore)
| Segment |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Financial services |
1,465 |
1,366 |
| Retail |
929 |
817 |
| Communication |
668 |
619 |
| Energy, Utilities, Resources and Services |
1,152 |
1,070 |
| Manufacturing |
573 |
499 |
| Life Sciences |
943 |
407 |
| |
5,730 |
4,778 |
| Operating segments without significant goodwill |
559 |
531 |
| Total |
6,289 |
5,309 |
The goodwill pertaining to Panaya amounting to ₹959
crore and ₹886 crore as at March 31, 2023 and March 31, 2022, respectively is tested for impairment at the entity level.
The recoverable amount of a CGU is the higher of its fair
value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization. Value-in-use is
determined based on discounted future cash flows. The key assumptions used for the calculations are as follows:
(in %)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Long term growth rate |
8-10 |
8-10 |
| Operating margins |
19-21 |
19-21 |
| Discount rate |
13 |
12 |
The above discount rate is based on the Weighted Average
Cost of Capital (WACC) of the Company. As at March 31, 2023, the estimated recoverable amount of the CGU exceeded its carrying amount.
Reasonable sensitivities in key assumptions is unlikely to cause the carrying amount to exceed the recoverable amount of the cash generating
units.
2.4.2 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 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 labor, overhead costs that are directly attributable to prepare
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.
The changes in the carrying value of acquired intangible
assets for the year ended March 31, 2023 are as follows :
(In ₹ crore)
| Particulars |
Customer related |
Software related |
Intellectual property rights related |
Brand or Trademark Related |
Others* |
Total |
| Gross carrying value as at April 1, 2022 |
2,080 |
915 |
1 |
299 |
686 |
3,981 |
| Additions |
- |
62 |
– |
– |
– |
62 |
| Acquisition through business combination (Refer to Note 2.1) |
274 |
– |
– |
24 |
30 |
328 |
| Deletions |
– |
(4) |
– |
– |
– |
(4) |
| Translation difference |
153 |
58 |
– |
23 |
58 |
292 |
| Gross carrying value as at March 31, 2023 |
2,507 |
1,031 |
1 |
346 |
774 |
4,659 |
| Accumulated amortization as at April 1, 2022 |
(1,279) |
(569) |
(1) |
(141) |
(284) |
(2,274) |
| Amortization expense |
(236) |
(84) |
– |
(45) |
(119) |
(484) |
| Deletions |
– |
3 |
– |
– |
– |
3 |
| Translation differences |
(85) |
(38) |
– |
(9) |
(23) |
(155) |
| Accumulated amortization as at March 31, 2023 |
(1,600) |
(688) |
(1) |
(195) |
(426) |
(2,910) |
| Carrying value as at April 1, 2022 |
801 |
346 |
– |
158 |
402 |
1,707 |
| Carrying value as at March 31, 2023 |
907 |
343 |
– |
151 |
348 |
1,749 |
| Estimated Useful Life (in years) |
1-15 |
3-10 |
– |
3-10 |
3-7 |
|
| Estimated Remaining Useful Life (in years) |
1-11 |
1-6 |
– |
1-7 |
1-5 |
|
Following are the changes in the carrying value of acquired
intangible assets for the year ended March 31, 2022:
(In ₹ crore)
| Particulars |
Customer related |
Software related |
Intellectual property rights related |
Brand or Trademark Related |
Others* |
Total |
| Gross carrying value as at April 1, 2021 |
2,064 |
824 |
1 |
293 |
666 |
3,848 |
| Additions |
– |
85 |
– |
– |
– |
85 |
| Deletions |
– |
– |
– |
– |
– |
– |
| Translation difference |
16 |
6 |
– |
6 |
20 |
48 |
| Gross carrying value as at March 31, 2022 |
2,080 |
915 |
1 |
299 |
686 |
3,981 |
| Accumulated amortization as at April 1, 2021 |
(1,021) |
(492) |
(1) |
(99) |
(163) |
(1,776) |
| Amortization expense |
(238) |
(68) |
– |
(40) |
(118) |
(464) |
| Deletions |
– |
– |
– |
– |
– |
– |
| Translation differences |
(20) |
(9) |
– |
(2) |
(3) |
(34) |
| Accumulated amortization as at March 31, 2022 |
(1,279) |
(569) |
(1) |
(141) |
(284) |
(2,274) |
| Carrying value as at April 1, 2021 |
1,043 |
332 |
– |
194 |
503 |
2,072 |
| Carrying value as at March 31, 2022 |
801 |
346 |
– |
158 |
402 |
1,707 |
| Estimated Useful Life (in years) |
1-15 |
3-10 |
– |
3-10 |
3-7 |
|
| Estimated Remaining Useful Life (in years) |
1-12 |
1-7 |
– |
1-8 |
1-6 |
|
| * | | Majorly includes intangibles related to vendor relationships |
The amortization expense has been included under depreciation
and amortization expense in the Consolidated Statement of Profit and Loss.
Research and Development Expenditure
Research and development expense recognized in the Consolidated
Statement of Profit and Loss for the year ended March 31, 2023 and March 31, 2022 was ₹1,042 crore and ₹ 922 crore respectively.
2.5 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
193 |
192 |
| Equity instruments |
3 |
2 |
| |
196 |
194 |
| Investments carried at fair value through profit or loss |
|
|
| Preference securities |
– |
24 |
| Compulsorily convertible debentures |
– |
7 |
| Target maturity fund units |
402 |
– |
| Others (1) |
169 |
152 |
| |
571 |
183 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
28 |
– |
| Tax free bonds |
1,742 |
1,901 |
| |
1,770 |
1,901 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
2,713 |
3,718 |
| Government securities |
7,319 |
7,655 |
| |
10,032 |
11,373 |
| Total non-current investments |
12,569 |
13,651 |
| Current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
975 |
2,012 |
| |
975 |
2,012 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Paper |
742 |
– |
| Certificates of deposit |
3,574 |
3,429 |
| |
4,316 |
3,429 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
– |
21 |
| Tax free bonds |
150 |
200 |
| |
150 |
221 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
1,155 |
495 |
| Government securities |
313 |
516 |
| |
1,468 |
1,011 |
| Total current investments |
6,909 |
6,673 |
| Total investments |
19,478 |
20,324 |
| Aggregate amount of quoted investments |
13,420 |
14,506 |
| Market value of quoted investments (including interest accrued), current |
1,637 |
1,247 |
| Market value of quoted investments (including interest accrued), non current |
12,042 |
13,612 |
| Aggregate amount of unquoted investments |
6,058 |
5,818 |
| Investments carried at amortized cost |
1,920 |
2,122 |
| Investments carried at fair value through other comprehensive income |
16,012 |
16,007 |
| Investments carried at fair value through profit or loss |
1,546 |
2,195 |
| (1) | | Uncalled capital commitments outstanding as at March 31, 2023 and March 31, 2022 was 92
crore and 28 crore, respectively. |
Refer to Note 2.11 for Accounting policies on Financial
Instruments.
Details of amounts recorded in Other comprehensive
income :
(In ₹ crore)
| |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
| |
Gross |
Tax |
Net |
Gross |
Tax |
Net |
| Net Gain/(loss) on |
|
|
|
|
|
|
| Non-convertible debentures |
(100) |
(1) |
(101) |
(13) |
1 |
(12) |
| Certificates of deposit |
(1) |
– |
(1) |
2 |
(1) |
1 |
| Government securities |
(162) |
8 |
(154) |
(60) |
22 |
(38) |
| Equity and preference securities |
(8) |
1 |
(7) |
119 |
(23) |
96 |
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
March 31, 2023 |
March 31, 2022 |
| Liquid mutual fund units |
Quoted price |
975 |
2,012 |
| Target maturity fund units |
Quoted price |
402 |
– |
| Tax free bonds and government bonds |
Quoted price and market observable inputs |
2,148 |
2,447 |
| Non-convertible debentures |
Quoted price and market observable inputs |
3,868 |
4,213 |
| Government securities |
Quoted price and market observable inputs |
7,632 |
8,171 |
| Commercial Papers |
Market observable inputs |
742 |
– |
| Certificates of deposit |
Market observable inputs |
3,574 |
3,429 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
196 |
194 |
| Unquoted equity and preference securities - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
– |
24 |
| Unquoted compulsorily convertible debentures - carried at fair value through profit or loss |
Discounted cash flows method |
– |
7 |
| Others |
Discounted cash flows method, Market multiples method, Option pricing model |
169 |
152 |
| Total |
|
19,706 |
20,649 |
Note: Certain quoted
investments are classified as Level 2 in the absence of active market for such investments.
2.5.1 Details of investments
The details of investments in preference, equity and other
instruments at March 31, 2023 and March 31, 2022 are as follows:
(In ₹ crore, except otherwise stated)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Preference securities |
|
|
| Airviz, Inc. |
– |
– |
| 2,89,695 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each |
|
|
| Whoop, Inc. |
53 |
150 |
| 1,10,59,340 (11,05,9340) Series B Preferred Stock, fully paid up, par value USD 0.0001 each |
|
|
| Nivetti Systems Private Limited |
26 |
22 |
| 2,28,501 (2,28,501) Preferred Stock, fully paid up, par value ₹1/- each |
|
|
| Tidalscale, Inc. |
– |
23 |
| 36,74,269 (36,74,269) Series B Preferred Stock |
|
|
| Ideaforge Technology Limited (formerly Ideaforge Technology Private Limited) |
86 |
20 |
| 5,402 (5,402) Series A compulsorily convertible cumulative Preference shares of ₹10/- each, fully paid up |
|
|
| Ideaforge Technology Limited (formerly Ideaforge Technology Private Limited) |
28 |
– |
| 1,787 (Nil) Series B compulsorily convertible cumulative Preference shares of ₹10/- each, fully paid up |
|
|
| Total investment in preference securities |
193 |
215 |
| Equity Instruments |
|
|
| Merasport Technologies Private Limited |
– |
– |
| 2,420 (2,420) equity shares at ₹8,052/- each, fully paid up, par value ₹10/- each |
|
|
| Global Innovation and Technology Alliance |
2 |
2 |
| 15,000 (15,000) equity shares at ₹1,000/- each, fully paid up, par value ₹1,000/- each |
|
|
| Ideaforge Technology Limited (formerly Ideaforge Technology Private Limited) |
1 |
– |
| 22,600 (100) equity shares at ₹10/-, fully paid up |
|
|
| Total investment in equity instruments |
3 |
2 |
| Compulsorily convertible debentures |
|
|
| Ideaforge Technology Limited (formerly Ideaforge Technology Private Limited) |
– |
7 |
| Nil (3,886) compulsorily convertible debentures, fully paid up, par value ₹19,300/- each |
|
|
| Total investment in compulsorily convertible debentures |
– |
7 |
| Others |
|
|
| Stellaris Venture Partners India |
82 |
76 |
| The House Fund II, L.P. |
84 |
77 |
| The House Fund III, L.P. |
3 |
– |
| Total investment in others |
169 |
153 |
| Total |
365 |
377 |
2.6 LOANS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
39 |
34 |
| |
39 |
34 |
| Loans credit impaired - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
2 |
– |
| Less: Allowance for credit impairment |
(2) |
– |
| |
– |
– |
| Total non-current loans |
39 |
34 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
289 |
248 |
| Total current loans |
289 |
248 |
| Total loans |
328 |
282 |
2.7 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non Current |
|
|
| Security deposits (1) |
47 |
47 |
| Rental deposits (1) |
240 |
186 |
| Unbilled revenues (1)# |
1,185 |
695 |
| Net investment in sublease of right-of-use asset (1) |
305 |
322 |
| Net investment in lease (1) |
916 |
124 |
| Restricted deposits (1)* |
96 |
33 |
| Others (1) |
9 |
53 |
| Total non-current other financial assets |
2,798 |
1,460 |
| Current |
|
|
| Security deposits (1) |
10 |
7 |
| Rental deposits (1) |
32 |
58 |
| Restricted deposits (1)* |
2,348 |
2,177 |
| Unbilled revenues (1)# |
8,317 |
5,659 |
| Interest accrued but not due (1) |
488 |
362 |
| Foreign currency forward and options contracts (2) (3) |
101 |
143 |
| Net investment in sublease of right of-use-asset (1) |
53 |
50 |
| Net investment in lease (1) |
6 |
6 |
| Others (1) |
249 |
265 |
| Total current other financial assets |
11,604 |
8,727 |
| Total other financial assets |
14,402 |
10,187 |
| (1) Financial assets carried at amortized cost |
14,301 |
10,044 |
| (2) Financial assets carried at fair value through other comprehensive income |
32 |
20 |
| (3) Financial assets carried at fair value through profit or loss |
69 |
123 |
| * | | 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. |
2.8 TRADE RECEIVABLES
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Current |
|
|
| Trade Receivable considered good - Unsecured |
25,965 |
23,252 |
| Less: Allowance for expected credit loss |
541 |
554 |
| Trade Receivable considered good - Unsecured |
25,424 |
22,698 |
| Trade Receivable - credit impaired - Unsecured |
142 |
113 |
| Less: Allowance for credit impairment |
142 |
113 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables |
25,424 |
22,698 |
Trade receivables ageing schedule for the year ended as
on March 31, 2023 and March 31, 2022:
(In ₹ crore)
| Particulars |
Outstanding for following periods from due date of payment |
| |
Not Due |
Less than 6 months |
6 months to 1 year |
1-2 years |
2-3 years |
More than 3 years |
Total |
| Undisputed Trade receivables – considered good |
18,397 |
7,501 |
58 |
3 |
4 |
2 |
25,965 |
| |
17,394 |
5,561 |
230 |
11 |
35 |
21 |
23,252 |
| Undisputed Trade receivables – credit impaired |
14 |
7 |
2 |
4 |
69 |
38 |
134 |
| |
– |
1 |
3 |
62 |
34 |
4 |
104 |
| Disputed Trade receivables – considered good |
|
|
|
|
|
|
– |
| |
– |
– |
– |
– |
– |
– |
– |
| Disputed Trade receivables – credit impaired |
|
|
|
|
3 |
5 |
8 |
| |
– |
– |
– |
4 |
– |
5 |
9 |
| |
18,411 |
7,508 |
60 |
7 |
76 |
45 |
26,107 |
| |
17,394 |
5,562 |
233 |
77 |
69 |
30 |
23,365 |
| Less: Allowance for credit loss |
|
|
|
|
|
|
683 |
| |
|
|
|
|
|
|
667 |
| Total Trade Receivables |
|
|
|
|
|
|
25,424 |
| |
|
|
|
|
|
|
22,698 |
2.9 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Balances with banks |
|
|
| In current and deposit accounts |
10,026 |
13,942 |
| Cash on hand |
– |
– |
| Others |
|
|
| Deposits with financial institutions |
2,147 |
3,530 |
| Total cash and cash equivalents |
12,173 |
17,472 |
| Balances with banks in unpaid dividend accounts |
37 |
36 |
| Deposit with more than 12 months maturity |
833 |
1,616 |
| Balances with banks held as margin money deposits against guarantees |
– |
1 |
Cash and cash equivalents as at March 31, 2023 and
March 31, 2022 include restricted cash and bank balances of 362 crore and 471 crore respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the company.
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.
2.10 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Capital advances |
159 |
88 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Withholding taxes and others |
684 |
674 |
| Unbilled revenues # |
264 |
246 |
| Defined benefit plan assets |
36 |
20 |
| Prepaid expenses |
332 |
99 |
| Deferred Contract Cost |
– |
– |
| Cost of obtaining a contract * |
191 |
593 |
| Cost of fulfillment |
652 |
309 |
| Total non-current other assets |
2,318 |
2,029 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
202 |
193 |
| Others |
|
|
| Unbilled revenues # |
6,972 |
5,909 |
| Withholding taxes and others |
3,268 |
1,941 |
| Prepaid expenses |
2,745 |
1,996 |
| Deferred Contract Cost |
|
– |
| Cost of obtaining a contract * |
853 |
858 |
| Cost of fulfillment |
175 |
91 |
| Other receivables |
261 |
325 |
| Total current other assets |
14,476 |
11,313 |
| Total other assets |
16,794 |
13,342 |
| # | | 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 Group 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 Group 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. The Group has entered into financing arrangements with a third party for these
assets. As at March 31, 2023, the financial liability pertaining to such arrangements amounts to 731 crore. This includes, 118
crore was settled directly by the third party to the customer on behalf of the Group and accordingly considered as non-cash transaction
(Refer to Note 2.13). |
Withholding taxes and others primarily consist of input
tax credits and Cenvat recoverable from Government of India.
2.11 FINANCIAL INSTRUMENTS
Accounting policy
2.11.1 Initial recognition
The Group recognizes financial assets and financial liabilities
when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value
on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities, 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.
2.11.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets 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
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.
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 such 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 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.
2.11.3 Derecognition of financial instruments
The Group derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group's Balance Sheet when the obligation
specified in the contract is discharged or cancelled or expires.
2.11.4 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, option pricing model, market multiples, 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.
2.11.5 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 Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future
economic conditions. The Group considers current and anticipated future economic conditions relating to industries the Group deals with
and the countries where it operates.
The amount of ECL (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 loss or gain in Consolidated Statement of Profit and Loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 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 2.9) |
12,173 |
– |
– |
– |
– |
12,173 |
12,173 |
| Investments (Refer to Note 2.5) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
196 |
– |
196 |
196 |
| Tax free bonds and government |
1,920 |
– |
– |
– |
– |
1,920 |
2,148(1) |
| Liquid mutual fund units |
– |
– |
975 |
– |
– |
975 |
975 |
| Target maturity fund units |
– |
– |
402 |
– |
– |
402 |
402 |
| Non convertible debentures |
– |
– |
– |
– |
3,868 |
3,868 |
3,868 |
| Government securities |
– |
– |
– |
– |
7,632 |
7,632 |
7,632 |
| Commercial Paper |
– |
– |
– |
– |
742 |
742 |
742 |
| Certificates of deposit |
– |
– |
– |
– |
3,574 |
3,574 |
3,574 |
| Other investments |
– |
– |
169 |
– |
– |
169 |
169 |
| Trade receivables (Refer to Note 2.8) |
25,424 |
– |
– |
– |
– |
25,424 |
25,424 |
| Loans (Refer to Note 2.6) |
328 |
– |
– |
– |
– |
328 |
328 |
| Other financials assets (Refer to Note 2.7) (3) |
14,301 |
– |
69 |
– |
32 |
14,402 |
14,318(2) |
| Total |
54,146 |
– |
1,615 |
196 |
15,848 |
71,805 |
71,949 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,865 |
– |
– |
– |
– |
3,865 |
3,865 |
| Lease liabilities (Refer to Note 2.21) |
8,299 |
– |
– |
– |
– |
8,299 |
8,299 |
| Financial Liability under option arrangements (Refer to Note 2.13) |
– |
– |
600 |
– |
– |
600 |
600 |
| Other financial liabilities (Refer to Note 2.13) |
17,359 |
– |
161 |
– |
14 |
17,534 |
17,534 |
| Total |
29,523 |
– |
761 |
– |
14 |
30,298 |
30,298 |
| (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 84 crore |
| (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, 2022 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 2.9) |
17,472 |
– |
– |
– |
– |
17,472 |
17,472 |
| Investments (Refer to Note 2.5) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
24 |
194 |
– |
218 |
218 |
| Compulsorily convertible debentures |
– |
– |
7 |
– |
– |
7 |
7 |
| Tax free bonds and government bonds |
2,122 |
– |
– |
– |
– |
2,122 |
2,447(1) |
| Liquid mutual fund units |
– |
– |
2,012 |
– |
– |
2,012 |
2,012 |
| Non convertible debentures |
– |
– |
– |
– |
4,213 |
4,213 |
4,213 |
| Government securities |
– |
– |
– |
– |
8,171 |
8,171 |
8,171 |
| Certificates of deposit |
– |
– |
– |
– |
3,429 |
3,429 |
3,429 |
| Other investments |
– |
– |
152 |
– |
– |
152 |
152 |
| Trade receivables (Refer to Note 2.8) |
22,698 |
– |
– |
– |
– |
22,698 |
22,698 |
| Loans (Refer to Note 2.6) |
282 |
– |
– |
– |
– |
282 |
282 |
| Other financials assets (Refer to Note 2.7)(3) |
10,044 |
– |
123 |
|
20 |
10,187 |
10,096(2) |
| Total |
52,618 |
– |
2,318 |
194 |
15,833 |
70,963 |
71,197 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
4,134 |
– |
– |
– |
– |
4,134 |
4,134 |
| Lease liabilities (Refer to Note 2.21) |
5,474 |
– |
– |
– |
– |
5,474 |
5,474 |
| Financial Liability under option arrangements (Refer to Note 2.13) |
– |
– |
655 |
– |
– |
655 |
655 |
| Other financial liabilities (Refer to Note 2.13) |
15,061 |
– |
181 |
– |
3 |
15,245 |
15,245 |
| Total |
24,669 |
– |
836 |
– |
3 |
25,508 |
25,508 |
| (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 91 crore |
| (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 fair value hierarchy of assets and liabilities measured
at fair value on a recurring basis as at March 31, 2023 is as follows:
(In crore)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.5) |
|
|
|
|
| Investments in liquid mutual funds |
975 |
975 |
– |
– |
| Investments in Target maturity fund units |
402 |
402 |
– |
– |
| Investments in tax free bonds |
2,120 |
1,331 |
789 |
– |
| Investments in government bonds |
28 |
28 |
– |
– |
| Investments in non convertible debentures |
3,868 |
1,793 |
2,075 |
– |
| Investment in government securities |
7,632 |
7,549 |
83 |
– |
| Investments in equity instruments |
3 |
– |
– |
3 |
| Investments in preference securities |
193 |
– |
– |
193 |
| Investments in commercial paper |
742 |
– |
742 |
– |
| Investments in certificates of deposit |
3,574 |
– |
3,574 |
– |
| Other investments |
169 |
– |
– |
169 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts |
101 |
– |
101 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.13) |
78 |
– |
78 |
– |
| Financial liability under option arrangements (Refer to Note 2.13)(1) |
600 |
– |
– |
600 |
| Liability towards contingent consideration (Refer to Note 2.13)(1) |
97 |
– |
– |
97 |
| (1) | | Discount rate ranges from 10% to 15% |
During the year ended March 31, 2023, government securities
and tax free bonds of 383 crore was transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price. Further, non-convertible debentures of 1,611 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 measured
at fair value on a recurring basis as at March 31, 2022 was as follows:
(In crore)
| Particulars |
As at March 31, 2022 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.5) |
|
|
|
|
| Investments in liquid mutual funds |
2,012 |
2,012 |
– |
– |
| Investments in tax free bonds |
2,425 |
1,238 |
1,187 |
– |
| Investments in government bonds |
22 |
22 |
– |
– |
| Investments in non convertible debentures |
4,213 |
3,736 |
477 |
– |
| Investment in government securities |
8,171 |
8,046 |
125 |
– |
| Investments in equity instruments |
2 |
– |
– |
2 |
| Investments in preference securities |
216 |
– |
– |
216 |
| Investments in certificates of deposit |
3,429 |
– |
3,429 |
– |
| Investments in compulsorily convertible debentures |
7 |
– |
– |
7 |
| Other investments |
152 |
– |
– |
152 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.7) |
143 |
– |
143 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.13) |
61 |
– |
61 |
– |
| Financial liability under option arrangements (Refer to Note 2.13)(1) |
655 |
– |
– |
655 |
| Liability towards contingent consideration (Refer to Note 2.13)(1) |
123 |
– |
– |
123 |
| (1) | | Discount rate ranges from 8% to 14.5% |
During the year ended March 31, 2022, tax free bonds and
non-convertible debentures of 576 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 965 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.
Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The Group's primary focus is to foresee the unpredictability of financial markets
and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Group is foreign exchange
risk. The Group uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Group's exposure to credit
risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.
Market risk
The Group operates internationally and a major portion
of the business is transacted in several currencies and consequently the Group is exposed to foreign exchange risk through its sales and
services in the United States and elsewhere, and purchases from overseas suppliers in various foreign currencies. The Group holds derivative
financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign
currency exposures. The Group is also exposed to foreign exchange risk arising on intercompany transaction in foreign currencies. The
exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially
in the future. Consequently, the results of the Group’s operations are adversely affected as the rupee appreciates/ depreciates
against these currencies.
The following table analyses the foreign currency risk
from financial assets and liabilities as at March 31, 2023:
(In crore)
| Particulars |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Net financial assets |
20,777 |
7,459 |
1,816 |
1,809 |
2,604 |
34,465 |
| Net financial liabilities |
(12,148) |
(3,734) |
(737) |
(953) |
(2,208) |
(19,780) |
| Total |
8,629 |
3,725 |
1,079 |
856 |
396 |
14,685 |
The following table analyses the foreign currency risk
from financial assets and liabilities as at March 31, 2022:
(In crore)
| Particulars |
U.S. dollars |
Euro |
United Kingdom Pound Sterling |
Australian dollars |
Other currencies |
Total |
| Net financial assets |
18,224 |
4,976 |
1,510 |
1,350 |
2,115 |
28,175 |
| Net financial liabilities |
(9,205) |
(3,158) |
(666) |
(975) |
(1,806) |
(15,810) |
| Total |
9,019 |
1,818 |
844 |
375 |
309 |
12,365 |
Sensitivity analysis between Indian rupee and
U.S. Dollar
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Impact on the Group's incremental operating margins |
0.44% |
0.46% |
Sensitivity analysis is computed based on the changes
in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the
previous reporting period and the current reporting period.
Derivative financial instruments
The Group holds derivative financial instruments such
as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar
assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.
The details in respect of outstanding foreign currency
forward and option contracts are as follows:
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| |
In million |
In crore |
In million |
In crore |
| Derivatives designated as cash flow hedges |
|
|
|
|
| Forward contracts |
|
|
|
|
| In Euro |
– |
– |
8 |
67 |
| Option Contracts |
|
|
|
|
| In Australian dollars |
140 |
770 |
185 |
1,050 |
| In Euro |
325 |
2,907 |
280 |
2,358 |
| In United Kingdom Pound Sterling |
55 |
559 |
32 |
318 |
| Other derivatives |
|
|
|
|
| Forward contracts |
|
|
|
|
| In Australian dollars |
10 |
55 |
– |
– |
| In Brazilian Real |
– |
– |
6 |
8 |
| In Canadian dollars |
– |
– |
34 |
205 |
| In Chinese Yuan |
41 |
49 |
38 |
45 |
| In Czech Koruna |
364 |
134 |
296 |
101 |
| In Euro |
316 |
2,825 |
297 |
2,501 |
| In New Zealand dollars |
30 |
154 |
20 |
105 |
| In Norwegian Krone |
100 |
79 |
80 |
70 |
| In Singapore dollars |
204 |
1,245 |
252 |
1,366 |
| In Swiss Franc |
1 |
8 |
15 |
123 |
| In U.S. dollars |
1,670 |
13,726 |
1,166 |
8,853 |
| In United Kingdom Pound Sterling |
86 |
877 |
65 |
646 |
| In South African rand |
85 |
39 |
45 |
24 |
| Option Contracts |
|
|
|
|
| In Australian dollars |
30 |
165 |
– |
– |
| In Euro |
160 |
1,431 |
81 |
682 |
| In United Kingdom Pound Sterling |
15 |
153 |
– |
– |
| In U.S. dollars |
300 |
2,465 |
677 |
5,131 |
| Total forwards and options contracts |
|
27,641 |
|
23,653 |
The foreign exchange forward and option contracts mature
within 12 months. The table below analyses the derivative financial instruments into relevant maturity groupings based on the remaining
period as at the Balance Sheet date:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Not later than one month |
13,155 |
6,237 |
| Later than one month and not later than three months |
11,159 |
12,444 |
| Later than three months and not later than one year |
3,327 |
4,972 |
| Total |
27,641 |
23,653 |
During the year ended March 31, 2023 and March 31, 2022,
the Group has designated certain foreign exchange forward and option contracts as cash flow hedges to mitigate the risk of foreign exchange
exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedges as of March 31,
2023 are expected to occur and will be reclassified to the Consolidated Statement of Profit and Loss within 3 months.
The Group determines the existence of an economic relationship
between the hedging instrument and the hedged item based on the currency, amount and timing of its forecasted cash flows. Hedge effectiveness
is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an
economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset
changes in cash flows of hedged items.
If the hedge ratio for risk management purposes is no
longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge
relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the
hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in the
Consolidated Statement of Profit and Loss at the time of the hedge relationship rebalancing.
If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge
continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument
or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness
is calculated and accounted for in the Consolidated Statement of Profit and Loss at the time of the hedge relationship rebalancing.
The following table provides reconciliation of cash flow
hedge reserve for the year ended March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Gain/(Loss) |
|
|
| Balance at the beginning of the year |
2 |
10 |
| Gain / (Loss) recognised in other comprehensive income during the year |
90 |
102 |
| Amount reclassified to profit or loss during the year |
(99) |
(113) |
| Tax impact on above |
2 |
3 |
| Balance at the end of the period |
(5) |
2 |
The Group offsets a financial asset and a financial liability
when it currently has a legally enforceable right to set off the recognized amounts and the Group intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
The quantitative information about offsetting of derivative
financial assets and derivative financial liabilities is as follows:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
|
March 31, 2022 |
|
| |
Derivative financial asset |
Derivative financial liability |
Derivative financial asset |
Derivative financial liability |
| Gross amount of recognized financial asset/liability |
127 |
(104) |
179 |
(97) |
| Amount set off |
(26) |
26 |
(36) |
36 |
| Net amount presented in Balance Sheet |
101 |
(78) |
143 |
(61) |
Credit risk
Credit risk refers to the risk of default on its obligation
by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade
receivables amounting to 25,424 crore and 22,698 crore as at March 31, 2023 and March 31, 2022, respectively and unbilled
revenues amounting to 16,738 crore and 12,509 crore as at March 31, 2023 and March 31, 2022, respectively. Trade receivables
and unbilled revenues are typically unsecured and are derived from revenues from customers primarily located in the United States of America.
Credit risk has always been managed by the Group through credit approvals, establishing credit limits and continuously monitoring the
creditworthiness of customers to which the Group grants credit terms in the normal course of business. The Group uses the expected credit
loss model to assess any required allowances; and uses a provision matrix to compute the expected credit loss allowance for trade receivables
and unbilled revenues. This matrix takes into account credit reports and other related credit information to the extent available.
The Group's exposure to credit risk is influenced mainly
by the individual characteristic of each customer and the concentration of risk from the top few customers. Exposure to customers is diversified
and there is no single customer contributing more than 10% of outstanding trade receivables and unbilled revenues.
The following table gives details in respect of percentage
of revenues generated from top five customers and top ten customers:
(In %)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Revenue from five top customers |
12.7 |
11.4 |
| Revenue from top ten customers |
20.2 |
19.3 |
Credit risk exposure
The Group’s credit period generally ranges from
30-75 days.
The allowance for lifetime ECL on customer balances for
the year ended March 31, 2023 and March 31, 2022 was 228 crore and 143 crore, respectively.
The movement in credit loss allowance on customer balance
is as follows:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Balance at the beginning |
858 |
752 |
| Impairment loss recognized/ (reversed), net |
228 |
143 |
| Amounts written off |
(166) |
(62) |
| Translation differences |
41 |
25 |
| Balance at the end |
961 |
858 |
Credit exposure
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Trade receivables |
25,424 |
22,698 |
| Unbilled revenues |
16,738 |
12,509 |
Days sales outstanding was 62 days and 67 days as of March
31, 2023 and March 31, 2022, respectively.
Credit risk on cash and cash equivalents is limited as
the Group generally invest in deposits with banks and financial institutions with high ratings assigned by international and domestic
credit rating agencies. Ratings are monitored periodically and the Group has considered the latest available credit ratings as at the
date of approval of these Consolidated financial statements.
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, target maturity fund units,
tax free bonds, certificates of deposit, commercial paper, treasury bills, government securities, 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 Group's risk management program.
Liquidity risk
Liquidity risk is defined as the risk that the Group will
not be able to settle or meet its obligations on time.
The Group's principal sources of liquidity are cash and
cash equivalents and the cash flow that is generated from operations. The Group has no outstanding borrowings. The Group believes that
the working capital is sufficient to meet its current requirements.
As at March 31, 2023, the Group had a working capital
of 31,695 crore including cash and cash equivalents of 12,173 crore and current investments of 6,909 crore. As at
March 31, 2022, the Group had a working capital of 33,582 crore including cash and cash equivalents of 17,472 crore and
current investments of 6,673 crore.
As at March 31, 2023 and March 31, 2022, the outstanding
compensated absences were 2,482 crore and 2,274 crore, respectively, which have been substantially funded. Accordingly no
liquidity risk is perceived.
The table below provides details regarding the contractual
maturities of significant financial liabilities as at March 31, 2023:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
3,865 |
– |
– |
– |
3,865 |
| Other financial liabilities (excluding liability towards contingent consideration) on an undiscounted basis (Refer to Note 2.13) |
15,403 |
1,532 |
438 |
13 |
17,386 |
| Financial liability under option arrangements (Refer to Note 2.13) |
600 |
– |
– |
– |
600 |
| Liability towards contingent consideration on an undiscounted basis (Refer to Note 2.13) |
101 |
– |
– |
– |
101 |
The table below provides details regarding the contractual
maturities of significant financial liabilities as at March 31, 2022:
(In crore)
| Particulars |
Less than 1 year |
1-2 years |
2-4 years |
4-7 years |
Total |
| Trade payables |
4,134 |
– |
– |
– |
4,134 |
| Other financial liabilities (excluding liability towards contingent consideration) (Refer to Note 2.13) |
13,539 |
1,089 |
457 |
10 |
15,095 |
| Financial liability under option arrangements (Refer to Note 2.13) |
– |
72 |
80 |
503 |
655 |
| Liability towards contingent consideration on an undiscounted basis (Refer to Note 2.13) |
68 |
25 |
39 |
– |
132 |
2.12 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.
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
Retained earnings represent the amount of accumulated
earnings of the Group.
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 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.
2.12.1 EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Authorized |
|
|
| Equity shares, 5 par value |
|
|
| 480,00,00,000 (480,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5 par value(1) |
2,069 |
2,098 |
| 4,13,63,87,925 (4,19,30,12,929) equity shares fully paid-up(2) |
|
|
| |
2,069 |
2,098 |
Note: Forfeited shares amounted to 1,500 (1,500)
| (1) | | Refer to Note 2.23 for details of basic and diluted shares |
| (2) | | Net of treasury shares 1,21,72,119 (1,37,25,712) |
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 favor of the beneficiaries.
For details of shares reserved for issue under the employee
stock option plan of the Company refer to the note below.
In the period of five years immediately preceding March
31, 2023:
Bonus Issue
The Company has allotted 2,18,41,91,490 fully paid-up
shares of face value 5/- each during the quarter ended
September 30, 2018 pursuant to bonus issue approved by the shareholders through postal ballot. The bonus shares were issued by capitalization
of profits transferred from general reserve. Bonus share of one equity share for every equity share held, and a bonus issue, viz., a
stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, has been allotted. Consequently, the ratio of
equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted under the stock option
plan have been adjusted for bonus shares wherever appropriate.
The bonus shares once allotted shall rank pari passu in all respects and carry the same rights as the existing equity shareholders and
shall be entitled to participate in full, in any dividend and other corporate action, recommended and declared after the new equity shares
are allotted.
Buyback
In the period of five years immediately preceding March
31, 2023, including the buyback completed in February 2023 the Company had purchased and extinguished a total of 226,752,951 fully paid-up
equity shares of face value 5/- each from the stock exchange. The Company has only one class of equity shares.
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.
Buyback completed in February 2023
In line with the capital allocation policy, the Board,
at its meeting held on October 13, 2022, approved the buyback of equity shares, from the open market route through the Indian stock exchanges,
amounting to 9,300 crore (Maximum Buyback Size, excluding buyback tax) at a price not exceeding 1,850 per share (Maximum
Buyback Price), subject to shareholders' approval by way of Postal Ballot.
The shareholders approved the proposal of buyback of Equity
Shares recommended by its Board of Directors by way of e-voting on the postal ballot, the results of which were declared on December 3,
2022. The buyback was offered to all 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 December 7, 2022 and was completed on February 13, 2023. During this buyback period the Company had purchased and extinguished a total
of 60,426,348 equity shares from the stock exchange at a volume weighted average buyback price of 1,539.06/- per equity share comprising
1.44% of the pre buyback paid-up equity share capital of the Company. The buyback resulted in a cash outflow of 9,300 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 March 31, 2023, the Company has created ‘Capital Redemption Reserve’
of 30 crore equal to the nominal value of the shares bought back as an appropriation from general reserve and retained earnings.
Buyback completed in September 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 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 March 31, 2022, 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 of March 31, 2023, 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.
2.12.2 Shareholding of promoter
Shares held by promoters at March 31, 2023:
| Promoter name |
No. of shares |
% of total shares |
% Change during the year |
| Sudha Gopalakrishnan |
95,357,000 |
2.30% |
– |
| Rohan Murty |
60,812,892 |
1.47% |
– |
| S Gopalakrishnan |
41,853,808 |
1.01% |
– |
| Nandan M Nilekani |
40,783,162 |
0.98% |
– |
| Akshata Murty |
38,957,096 |
0.94% |
– |
| Asha Dinesh |
38,579,304 |
0.93% |
– |
| Sudha N Murty |
34,550,626 |
0.83% |
– |
| Rohini Nilekani |
34,335,092 |
0.83% |
– |
| Dinesh Krishnaswamy |
32,479,590 |
0.78% |
– |
| Shreyas Shibulal |
23,704,350 |
0.57% |
– |
| N R Narayana Murthy |
16,645,638 |
0.40% |
– |
| Nihar Nilekani |
12,677,752 |
0.31% |
– |
| Janhavi Nilekani |
8,589,721 |
0.21% |
– |
| Kumari Shibulal |
5,248,965 |
0.13% |
– |
| Deeksha Dinesh |
7,646,684 |
0.18% |
– |
| Divya Dinesh |
7,646,684 |
0.18% |
– |
| Meghana Gopalakrishnan |
4,834,928 |
0.12% |
– |
| Shruti Shibulal |
2,737,538 |
0.07% |
– |
| S D Shibulal |
5,814,733 |
0.14% |
– |
| Promoters Group |
|
|
|
| Gaurav Manchanda |
13,736,226 |
0.33% |
– |
| Milan Shibulal Manchanda |
6,967,934 |
0.17% |
– |
| Nikita Shibulal Manchanda |
6,967,934 |
0.17% |
– |
| Bhairavi Madhusudhan Shibulal |
6,679,240 |
0.16% |
– |
| Shray Chandra |
719,424 |
0.02% |
– |
| Tanush Nilekani Chandra |
3,356,017 |
0.08% |
– |
The percentage shareholding above has been computed considering
the outstanding number of shares of 414,85,60,044 as at March 31, 2023.
2.12.3 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 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 in accordance with Companies Act 2013 is as follows:
(in )
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Final dividend for fiscal 2021 |
– |
15.00 |
| Interim dividend for fiscal 2022 |
– |
15.00 |
| Final dividend for fiscal 2022 |
16.00 |
– |
| Interim dividend for fiscal 2023 |
16.50 |
– |
During the year ended March 31, 2023, on account of the
final dividend for fiscal 2022 and interim dividend for fiscal 2023, the Company has incurred a net cash outflow of 13,632 crore
(excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share for the financial year ended March 31, 2023. This payment is
subject to the approval of shareholders in the AGM of the Company to be held on June 28, 2023 and if approved, would result in a net cash
outflow of approximately 7,239 crore (excluding dividend paid on treasury shares).
The details of shareholders holding more than 5% shares
as at March 31, 2023 and March 31, 2022 are as follows:
| Name of the shareholder |
As at March 31, 2023 |
As at March 31, 2022 |
| |
Number of shares |
% held |
Number of shares |
% held |
| Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) |
50,57,90,851 |
12.19 |
66,63,70,669 |
15.84 |
| Life Insurance Corporation of India |
29,82,44,977 |
7.19 |
24,33,47,641 |
5.78 |
The reconciliation of the number of shares outstanding
and the amount of share capital as at March 31, 2023 and March 31, 2022 are as follows:
(In crore, except as stated otherwise)
| Particulars |
As at March 31, 2023 |
As at March 31, 2022 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
419,30,12,929 |
2,098 |
424,51,46,114 |
2,124 |
| Add: Shares issued on exercise of employee stock options |
38,01,344 |
1 |
36,74,152 |
2 |
| Less: Shares bought back |
60,426,348 |
30 |
55,807,337 |
28 |
| As at the end of the period |
4,136,387,925 |
2,069 |
419,30,12,929 |
2,098 |
2.12.4 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 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 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 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). These instruments will generally vest over a period of 4 years. The plan numbers mentioned
above are further adjusted with 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 1,21,72,119 and 1,37,25,712 shares
as at March 31, 2023 and March 31, 2022, 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 March 31, 2023 and March 31, 2022.
The following is the summary of grants made during year
ended March 31, 2023 and March 31, 2022:
| Particulars |
2019 Plan |
2015 Plan |
| |
Year ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Equity Settled RSUs |
|
|
|
|
| Key Managerial Personnel (KMP) |
210,643 |
148,762 |
367,479 |
284,543 |
| Employees other than KMP |
3,704,014 |
2,701,867 |
1,784,975 |
1,305,880 |
| |
3,914,657 |
2,850,629 |
2,152,454 |
1,590,423 |
| Cash settled RSUs |
|
|
|
|
| KMP |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
92,400 |
49,960 |
| |
– |
– |
92,400 |
49,960 |
| Total Grants |
3,914,657 |
2,850,629 |
2,244,854 |
1,640,383 |
Notes on grants to KMP:
CEO & MD
Based on the recommendations of the Board and the approval
of the shareholders at the AGM held on June 25, 2022, Salil Parekh has been reappointed as the CEO and MD of the Company for a term commencing
on July 1, 2022 and ending on March 31, 2027. The remuneration is approved by the shareholders in the AGM. The revised employment agreement
is effective July 1, 2022.
Under the 2015 Plan:
The Board, on April 13, 2022, based on the recommendations
of the Nomination and Remuneration Committee, in accordance with the terms of his employment agreement effective till June 30, 2022, approved
the grant of performance-based RSUs of fair value of 13 crore for fiscal 2023 under the 2015 Plan. These RSUs will vest in line
with the employment agreement based on achievement of certain performance targets. Accordingly, 84,361 performance based RSU’s were
granted effective May 2, 2022.
Further, in line with the shareholders approval and revised
employment contract which is effective July 1, 2022, the Board, on July 24, 2022, based on the recommendations of the Nomination and Remuneration
Committee:
| • | | Approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 21.75 crore for fiscal 2023 under the 2015 Plan. These
RSUs will vest in line with the employment agreement based on achievement of certain performance targets. Accordingly, 140,228 performance
based RSU’s were granted effective August 1, 2022. |
| • | | Approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2023 under the 2015 Plan.
These RSUs will vest in line with the employment agreement based on achievement of certain environment, social and governance milestones
as determined by the Board. Accordingly, 12,894 performance based RSU’s were granted effective August 1, 2022. |
| • | | Approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2023 under the 2015 Plan.
These RSUs will vest in line with the employment agreement based on Company’s performance on cumulative relative TSR over the years
and as determined by the Board. Accordingly, 32,236 performance based RSU’s were granted effective August 1, 2022. |
For the above RSUs, the grant date in accordance with
Ind AS 102, Share based payment is July 1, 2022
Further, 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 crore which will
vest overtime in three equal annual installments upon the completion of each year of service from the respective grant date. Accordingly,
annual time-based grant of 19,341 RSUs was made effective February 1, 2023 for fiscal 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of March 31, 2023, 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 payment.
Under the 2019 Plan:
The Board, on April 13, 2022, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2023 under
the 2019 Plan. These RSUs will vest in line with the employment agreement effective till June 30, 2022 based on achievement of certain
performance targets. Accordingly, 64,893 performance based RSU’s were granted effective May 2, 2022.
Other KMP
Under the 2015 Plan:
During the year ended March 31, 2023, based on recommendations
of Nomination and Remuneration Committee, the Board approved 66,872 time based RSUs and 11,547 performance based RSUs to other KMP under
the 2015 plan. Time based RSUs will vest over four years and performance based RSUs will vest over three years based on certain performance
targets.
Under the 2019 Plan:
During the year ended March 31, 2023, based on recommendations
of Nomination and Remuneration Committee, the Board approved performance based grants of 1,45,750 RSUs to other KMPs under the 2019 plan.
These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(in
crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Granted to: |
|
|
| KMP# |
49 |
65 |
| Employees other than KMP |
470 |
350 |
| Total (1) |
519 |
415 |
| (1) Cash-settled stock compensation expense included in the above |
5 |
22 |
| # | | Includes reversal of
employee stock compensation expense on account of resignation/retirement of key managerial
personnel. |
The activity in the 2015 and 2019 Plan for equity-settled
share based payment transactions during the year ended March 31, 2023 and March 31, 2022 is set out as follows:
| Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
| |
Shares arising out of options |
Weighted average exercise price () |
Shares arising out of options |
Weighted average exercise price () |
| 2015 Plan: RSU |
|
|
|
|
| Outstanding at the beginning |
62,32,975 |
4.82 |
8,047,240 |
4.52 |
| Granted |
21,52,454 |
5.00 |
1,590,423 |
5.00 |
| Exercised |
21,05,904 |
4.50 |
2,569,983 |
4.07 |
| Forfeited and expired |
8,71,507 |
4.93 |
834,705 |
4.63 |
| Outstanding at the end |
54,08,018 |
5.00 |
62,32,975 |
4.82 |
| Exercisable at the end |
7,87,976 |
4.97 |
6,53,775 |
4.51 |
| 2015 Plan: Employee Stock Options (ESOPs) |
|
|
|
|
| Outstanding at the beginning |
700,844 |
557 |
10,49,456 |
535 |
| Granted |
– |
– |
– |
– |
| Exercised |
5,66,814 |
596 |
3,48,612 |
529 |
| Forfeited and expired |
– |
– |
– |
– |
| Outstanding at the end |
1,34,030 |
529 |
7,00,844 |
557 |
| Exercisable at the end |
1,34,030 |
529 |
7,00,844 |
557 |
| 2019 Plan: RSU |
|
|
|
|
| Outstanding at the beginning |
49,58,938 |
5.00 |
30,50,573 |
5.00 |
| Granted |
39,14,657 |
5.00 |
28,50,629 |
5.00 |
| Exercised |
11,28,626 |
5.00 |
7,55,557 |
5.00 |
| Forfeited and expired |
5,22,931 |
5.00 |
1,86,707 |
5.00 |
| Outstanding at the end |
72,22,038 |
5.00 |
49,58,938 |
5.00 |
| Exercisable at the end |
13,52,150 |
5.00 |
6,92,638 |
5.00 |
During the year ended March 31, 2023 and March 31, 2022
the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 1,515 and 1,705 respectively.
During the year ended March 31, 2023 and March 31, 2022
the weighted average share price of options exercised under the 2019 Plan on the date of exercise was 1,485 and 1,560 respectively.
The summary of information about equity settled RSUs and
ESOPs outstanding as at March 31, 2023 is as follows:
| |
2019 Plan - Options outstanding |
2015 Plan - Options outstanding |
| Range of exercise prices per share () |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
| 0 - 5 (RSU) |
72,22,038 |
1.33 |
5.00 |
54,08,018 |
1.49 |
5.00 |
| 450 - 630 (ESOP) |
– |
– |
– |
1,34,030 |
1.77 |
529 |
The summary of information about equity settled RSUs and
ESOPs outstanding as at March 31, 2022 is as follows:
| |
2019 Plan - Options outstanding |
2015 Plan - Options outstanding |
| Range of exercise prices per share () |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
No. of shares arising out of options |
Weighted average remaining contractual life |
Weighted average exercise price () |
| 0 - 5 (RSU) |
49,58,938 |
1.43 |
5.00 |
62,32,975 |
1.47 |
4.82 |
| 450 - 600 (ESOP) |
– |
– |
– |
7,00,844 |
0.65 |
557 |
As at March 31, 2023 and March 31, 2022, 2,24,924 and
265,561 cash settled options were outstanding respectively. The carrying value of liability towards cash settled share based payments
was 4 crore and 13 crore as at March 31, 2023 and March 31, 2022 respectively.
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 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
Fiscal 2022-
Equity Shares-RSU |
Fiscal 2022-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,525 |
18.08 |
1,791 |
24.45 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-32 |
27-34 |
20-35 |
25-36 |
| 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 (%) |
5-7 |
2-5 |
4-6 |
1-3 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,210 |
13.69 |
1,548 |
20.82 |
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.
2.13 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Others |
|
|
| Accrued compensation to employees (1) |
5 |
8 |
| Accrued expenses (1) |
1,628 |
946 |
| Compensated absences |
83 |
92 |
| Financial liability under option arrangements (2) # |
– |
655 |
| Payable for acquisition of business - Contingent consideration (2) |
– |
56 |
| Other Payables (1)(4) |
342 |
580 |
| Total non-current other financial liabilities |
2,058 |
2,337 |
| Current |
|
|
| Unpaid dividends (1) |
37 |
36 |
| Others |
|
|
| Accrued compensation to employees (1) |
4,174 |
4,061 |
| Accrued expenses (1) |
7,802 |
7,476 |
| Retention monies (1) |
20 |
13 |
| Payable for acquisition of business - Contingent consideration (2) |
97 |
67 |
| Payable by controlled trusts (1) |
211 |
211 |
| Compensated absences |
2,399 |
2,182 |
| Financial liability under option arrangements (2) # |
600 |
– |
| Foreign currency forward and options contracts (2) (3) |
78 |
61 |
| Capital creditors (1) |
674 |
431 |
| Other payables (1)(4) |
2,466 |
1,299 |
| Total current other financial liabilities |
18,558 |
15,837 |
| Total other financial liabilities |
20,616 |
18,174 |
| (1) Financial liability carried at amortized cost |
17,359 |
15,061 |
| (2) Financial liability carried at fair value through profit or loss |
761 |
836 |
| (3) Financial liability carried at fair value through other comprehensive income |
14 |
3 |
| Contingent consideration on undiscounted basis |
101 |
132 |
| (4) | | Deferred contract cost (Refer to Note 2.10) includes technology assets taken over by the
Group 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 Group 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. The Group has entered into
financing arrangements with a third party for these assets. As at March 31, 2023, the financial liability pertaining to such arrangements
amounts to 731 crore. During the year ended March 31,
2023, 118 crore was settled directly by the third party
to the customer on behalf of the Group and accordingly considered as non-cash transaction. |
| # | | Represents liability related to options issued by the Group over the non-controlling interests
in its subsidiaries |
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.
2.14 TRADE PAYABLES
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Trade payables |
3,865 |
4,134 |
| Total trade payables |
3,865 |
4,134 |
Trade payables ageing schedule for the year ended as on
March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
|
Outstanding for following periods from due date of payment |
| |
Not Due |
Less than 1 year |
1-2 years |
2-3 years |
More than 3 years |
Total |
| Trade payables |
3,040 |
825 |
– |
– |
– |
3,865 |
| |
3,299 |
835 |
– |
– |
– |
4,134 |
| Total trade payables |
3,040 |
825 |
– |
– |
– |
3,865 |
| |
3,299 |
835 |
– |
– |
– |
4,134 |
Relationship with struck off companies for the year ending
March 31, 2022 is as follows:
| Name of Struck off Company |
Nature of transactions |
Transactions during the year ended March 31, 2022 |
Balance outstanding at the end of the year as at March 31, 2022 |
Relationship with the Struck off company, if any, to be disclosed |
| Compulease Networks Private Limited |
Payables |
–* |
– |
Vendor |
| Mysodet Private Limited |
Payables |
–* |
– |
Vendor |
| * | | Less than
1 crore |
There are no transactions with struck off companies for
the year ending March 31, 2023
2.15 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Non-current |
|
|
| Others |
|
|
| Deferred income - government grants |
43 |
64 |
| Accrued defined benefit liability |
445 |
367 |
| Deferred income |
6 |
9 |
| Others |
6 |
11 |
| Total non-current other liabilities |
500 |
451 |
| Current |
|
|
| Unearned revenue |
7,163 |
6,324 |
| Others |
|
|
| Withholding taxes and others |
3,632 |
2,834 |
| Accrued defined benefit liability |
4 |
5 |
| Deferred income - government grants |
29 |
11 |
| Others |
2 |
4 |
| Total current other liabilities |
10,830 |
9,178 |
| Total other liabilities |
11,330 |
9,629 |
2.16 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. 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 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 |
| |
March 31, 2023 |
March 31, 2022 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,307 |
975 |
| Total provisions |
1,307 |
975 |
The movement in the provision for post-sales client
support is as follows:
(In crore)
| Particulars |
Year ended |
| |
March 31, 2023 |
| Balance at the beginning |
935 |
| Impact on adoption of amendment to Ind AS 37 |
19 |
| Provision recognized / (reversed) |
456 |
| Provision utilized |
(142) |
| Translation difference |
39 |
| Balance at the end |
1,307 |
Provision for post sales client support and other provisions
majorly represents costs associated with providing 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 profit and loss.
2.17 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; deferred tax assets and deferred 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. 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 |
Year ended March 31, |
| |
2023 |
2022 |
| Current taxes |
9,287 |
7,811 |
| Deferred taxes |
(73) |
153 |
| Income tax expense |
9,214 |
7,964 |
Income tax expense for the year ended March 31, 2023 and
March 31, 2022 includes reversal (net of provisions) of 106 crore and 268 crore, respectively. These reversals pertaining
to prior periods are primarily on account of adjudication of certain disputed matters, upon filing of tax return and completion of assessments,
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 |
Year ended March 31, |
| |
2023 |
2022 |
| Profit before income taxes |
33,322 |
30,110 |
| Enacted tax rates in India |
34.94% |
34.94% |
| Computed expected tax expense |
11,644 |
10,522 |
| Tax effect due to non-taxable income for Indian tax purposes |
(2,916) |
(2,949) |
| Overseas taxes |
1,060 |
984 |
| Tax provision (reversals) |
(106) |
(268) |
| Effect of exempt non-operating income |
(52) |
(52) |
| Effect of unrecognized deferred tax assets |
109 |
72 |
| Effect of differential tax rates |
(329) |
(196) |
| Effect of non-deductible expenses |
153 |
162 |
| Impact of change in tax rate |
– |
(94) |
| Others |
(349) |
(217) |
| Income tax expense |
9,214 |
7,964 |
The applicable Indian corporate statutory tax rate for
the year ended March 31, 2023 and March 31, 2022 is 34.94% each
The foreign tax expense is due to income taxes payable
overseas principally in the United States. In India, the Group has benefited from certain tax incentives that the Government of India
had provided for export of software and services from the units registered under the Special Economic Zones (SEZs) Act, 2005. SEZ units
which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100% of profits or gains derived from
the export of services for the first five years from the financial year in which the unit commenced the provision of services and 50%
of such profits or gains for further five years. Up to 50% of such profits or gains is also available for a further five years subject
to creation of a Special Economic Zone re-Investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve
by the Group for acquiring new plant and machinery for the purpose of its business as per the provisions of the Income Tax Act, 1961.
Deferred income tax for the year ended March 31, 2023
and March 31, 2022 substantially relates to origination and reversal of temporary differences.
Infosys is subject to a 15% Branch Profit Tax (BPT) in
the U.S. to the extent its U.S. branch's net profit during the year is greater than the increase in the net assets of the U.S. branch
during the year, computed in accordance with the Internal Revenue Code. As at March 31, 2023, Infosys' U.S. branch net assets amounted
to approximately 6,948 crore. As at March 31, 2023, the Company has a deferred tax liability for Branch Profit Tax of 148
crore (net of credits), as the Company estimates that these branch profits are expected to be distributed in the foreseeable future
Deferred income tax liabilities have not been recognized
on temporary differences amounting to 10,948 crore and 9,618 crore as at March 31, 2023 and March 31, 2022, respectively,
associated with investments in subsidiaries and branches as the Company is able to control the timing of reversal of the temporary difference
and it is probable that the temporary differences will not reverse in the foreseeable future. The Group majorly intends to repatriate
earnings from subsidiaries and branches only to the extent these can be distributed in a tax free manner.
Deferred income tax assets have not been recognized on
accumulated losses of 4,423 crore and 4,487 crore as at March 31, 2023 and March 31, 2022, respectively, as it is probable
that future taxable profit will not be available against which the unused tax losses can be utilized in the foreseeable future.
The following table provides details of expiration of
unused tax losses as at March 31, 2023:
(In crore)
| Year |
As at |
| |
March 31, 2023 |
| 2024 |
122 |
| 2025 |
138 |
| 2026 |
146 |
| 2027 |
88 |
| 2028 |
494 |
| Thereafter |
3,435 |
| Total |
4,423 |
The following table provides details of expiration of
unused tax losses as at March 31, 2022:
(In crore)
| Year |
As at |
| |
March 31, 2022 |
| 2023 |
201 |
| 2024 |
154 |
| 2025 |
127 |
| 2026 |
153 |
| 2027 |
52 |
| Thereafter |
3,800 |
| Total |
4,487 |
The following table provides the details
of income tax assets and income tax liabilities as at March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Income tax assets |
6,459 |
6,152 |
| Current income tax liabilities |
3,384 |
2,607 |
| Net current income tax asset / (liability) at the end |
3,075 |
3,545 |
The gross movement in the current income tax assets /
(liabilities) for the year ended March 31, 2023 and March 31, 2022 is as follows:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Net current income tax asset / (liability) at the beginning |
3,545 |
3,665 |
| Translation differences |
1 |
(7) |
| Income tax paid |
8,794 |
7,612 |
| Current income tax expense |
(9,287) |
(7,811) |
| Income tax benefit arising on exercise of stock options |
51 |
63 |
| Additions through business combination |
(12) |
– |
| Tax impact on buyback expenses |
9 |
8 |
| Income tax on other comprehensive income |
(24) |
15 |
| Impact on account of Ind AS 37 adoption |
(2) |
– |
| Net current income tax asset / (liability) at the end |
3,075 |
3,545 |
The movement in gross deferred income tax assets / liabilities
(before set off) for the year ended March 31, 2023 is as follows:
(In crore)
| Particulars |
Carrying value as at April 1, 2022 |
Changes through profit and loss |
Addition through business combination |
Impact on account of Ind AS 37 adoption |
Changes through OCI |
Translation difference |
Carrying value as at March 31, 2023 |
| Deferred income tax assets/(liabilities) |
|
|
|
|
|
|
|
| Property, plant and equipment |
156 |
17 |
- |
– |
– |
(4) |
169 |
| Lease liabilities |
180 |
43 |
– |
– |
– |
– |
223 |
| Accrued compensation to employees |
51 |
15 |
– |
– |
– |
2 |
68 |
| Trade receivables |
213 |
48 |
– |
– |
– |
– |
261 |
| Compensated absences |
529 |
47 |
– |
– |
– |
– |
576 |
| Post sales client support |
131 |
114 |
– |
2 |
– |
1 |
248 |
| Credits related to branch profits |
676 |
(13) |
– |
– |
– |
55 |
718 |
| Derivative financial instruments |
(25) |
22 |
– |
– |
2 |
1 |
– |
| Intangible assets |
49 |
8 |
– |
– |
– |
5 |
62 |
| Intangibles arising on business combinations |
(308) |
70 |
(80) |
– |
– |
(26) |
(344) |
| Branch profit tax |
(834) |
35 |
– |
– |
– |
(67) |
(866) |
| SEZ reinvestment reserve |
(852) |
(499) |
– |
– |
– |
– |
(1,351) |
| Others |
90 |
166 |
(1) |
– |
– |
6 |
261 |
| Total deferred income tax assets/(liabilities) |
56 |
73 |
(81) |
2 |
2 |
(27) |
25 |
The movement in gross deferred income tax assets / liabilities
(before set off) for the year ended March 31, 2022 is as follows:
(In crore)
| Particulars |
Carrying value as at April 1, 2021 |
Changes through profit and loss |
Addition through business combination |
Impact on account of Ind AS 37 adoption |
Changes through OCI |
Translation difference |
Carrying value as at March 31, 2022 |
| Deferred income tax assets/(liabilities) |
|
|
|
|
|
|
|
| Property, plant and equipment |
255 |
(100) |
– |
– |
– |
1 |
156 |
| Lease liabilities |
166 |
14 |
– |
– |
– |
– |
180 |
| Accrued compensation to employees |
42 |
10 |
– |
– |
– |
(1) |
51 |
| Trade receivables |
217 |
(4) |
– |
– |
– |
– |
213 |
| Compensated absences |
497 |
32 |
– |
– |
– |
– |
529 |
| Post sales client support |
121 |
9 |
– |
– |
– |
1 |
131 |
| Credits related to branch profits |
355 |
308 |
– |
– |
– |
13 |
676 |
| Derivative financial instruments |
(57) |
29 |
– |
– |
3 |
– |
(25) |
| Intangible assets |
31 |
17 |
– |
– |
– |
1 |
49 |
| Intangibles arising on business combinations |
(368) |
62 |
– |
– |
– |
(2) |
(308) |
| Branch profit tax |
(500) |
(316) |
– |
– |
– |
(18) |
(834) |
| SEZ reinvestment reserve |
(613) |
(239) |
– |
– |
– |
– |
(852) |
| Others |
77 |
25 |
– |
– |
(12) |
– |
90 |
| Total deferred income tax assets/(liabilities) |
223 |
(153) |
– |
– |
(9) |
(5) |
56 |
The deferred income tax assets and liabilities are as
follows:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Deferred income tax assets after set off |
1,245 |
1,212 |
| Deferred income tax liabilities after set off |
(1,220) |
(1,156) |
In assessing the reliability of deferred income tax assets,
the management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. The management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, 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.
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.
2.18 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 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. 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 are 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 Group
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 operations for the year ended March 31, 2023
and March 31, 2022 is as follows:
(In
crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Revenue from software services |
137,575 |
113,536 |
| Revenue from products and platforms |
9,192 |
8,105 |
Total revenue from
operations |
146,767 |
121,641 |
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 year ended March 31, 2023 and March 31, 2022:
(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 |
28,086 |
14,700 |
10,903 |
9,953 |
7,560 |
11,101 |
7,334 |
1,087 |
90,724 |
| |
24,410 |
11,989 |
8,474 |
7,430 |
6,303 |
9,342 |
6,173 |
937 |
75,058 |
| Europe |
7,373 |
5,344 |
3,836 |
6,993 |
10,910 |
275 |
2,580 |
364 |
37,675 |
| |
6,746 |
4,759 |
3,598 |
5,766 |
6,606 |
224 |
2,203 |
227 |
30,129 |
| India |
1,909 |
72 |
164 |
213 |
84 |
423 |
28 |
968 |
3,861 |
| |
1,933 |
90 |
315 |
153 |
69 |
412 |
27 |
586 |
3,585 |
| Rest of the world |
6,395 |
1,088 |
3,183 |
1,380 |
481 |
68 |
143 |
1,769 |
14,507 |
| |
5,813 |
896 |
2,795 |
1,135 |
358 |
58 |
114 |
1,700 |
12,869 |
| Total |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| Revenue by offerings |
|
|
|
|
|
|
|
|
|
| Digital |
24,006 |
13,970 |
11,959 |
11,627 |
13,626 |
7,629 |
6,394 |
2,061 |
91,272 |
| |
20,391 |
10,857 |
9,310 |
8,412 |
8,240 |
5,817 |
4,925 |
1,452 |
69,404 |
| Core |
19,757 |
7,234 |
6,127 |
6,912 |
5,409 |
4,238 |
3,691 |
2,127 |
55,495 |
| |
18,511 |
6,877 |
5,872 |
6,072 |
5,096 |
4,219 |
3,592 |
1,998 |
52,237 |
| Total |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| (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 revenue 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, Panaya platform, Infosys Equinox, Infosys Helix,
Infosys Applied AI, Infosys Cortex, Stater digital platform and Infosys McCamish – insurance platform.
The percentage of revenue from fixed-price contracts for
each of the year ended March 31, 2023 and March 31, 2022 is approximately 52% and 53% respectively.
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.
During the year ended March 31, 2023 and March 31, 2022,
the Company recognized revenue of 5,387 crore and 3,551 crore arising from opening unearned revenue as of April
1, 2022 and April 1, 2021 respectively.
During the year ended March 31, 2023 and March 31, 2022,
5,950 crore and 4,047 crore of unbilled revenue pertaining to other fixed price and fixed time frame contracts as of
April 1, 2022 and April 1, 2021, respectively has been reclassified to Trade receivables upon billing to customers on completion of milestones.
Remaining performance obligation disclosure
The remaining performance obligation disclosure provides
the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when
the Group expects to recognize these amounts in revenue. Applying the practical expedient as given in Ind AS 115, the Group has not disclosed
the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value
to the customer of the entity's performance completed to date, typically those contracts where invoicing is on time and material and unit
of work based contracts. Remaining performance obligation estimates are subject to change and are affected by several factors, including
terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments
for currency fluctuations.
The aggregate value of performance obligations that are
completely or partially unsatisfied as at March 31, 2023, other than those meeting the exclusion criteria mentioned above, is 80,867
crore. Out of this, the Group expects to recognize revenue of around 57% within the next one year and the remaining thereafter. The aggregate
value of performance obligations that are completely or partially unsatisfied as at March 31, 2022 is 74,254 crore. The contracts
can generally be terminated by the customers and typically includes an enforceable termination penalty payable by them. Generally, customers
have not terminated contracts without cause.
2.19 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, EdgeVerve,
Skava and controlled trusts 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 will 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 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 year ended March 31, 2023 and March
31, 2022 is as follows:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
|
|
| Tax free bonds and Government bonds |
149 |
152 |
| Deposit with Bank and others |
712 |
851 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
| Non-convertible debentures, commercial paper, certificates of deposit and government securities |
955 |
642 |
| Income on investments carried at fair value through profit or loss: |
|
|
| Gain / (loss) on liquid mutual funds and other investments |
148 |
177 |
| Income on investments carried at fair value through other comprehensive income |
1 |
1 |
| Exchange gains / (losses) on forward and options contracts |
(647) |
88 |
| Exchange gains / (losses) on translation of other assets and liabilities |
1,062 |
186 |
| Miscellaneous income, net |
321 |
198 |
| Total other income |
2,701 |
2,295 |
2.20 EXPENSES
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Employee benefit expenses |
|
|
| Salaries including bonus |
75,239 |
61,522 |
| Contribution to provident and other funds |
2,143 |
1,617 |
| Share based payments to employees (Refer to Note 2.12) |
519 |
415 |
| Staff welfare |
458 |
432 |
| |
78,359 |
63,986 |
| Cost of software packages and others |
|
|
| For own use |
1,937 |
1,417 |
| Third party items bought for service delivery to clients |
8,965 |
5,394 |
| |
10,902 |
6,811 |
| Other expenses |
|
|
| Repairs and maintenance |
1,208 |
1,066 |
| Power and fuel |
176 |
132 |
| Brand and marketing |
905 |
553 |
| Short-term leases |
92 |
61 |
| Rates and taxes |
299 |
265 |
| Consumables |
158 |
146 |
| Insurance |
174 |
164 |
| Provision for post-sales client support and others |
120 |
78 |
| Commission to non-whole time directors |
15 |
11 |
| Impairment loss recognized / (reversed) under expected credit loss model |
283 |
170 |
| Contributions towards Corporate Social Responsibility |
471 |
426 |
| Others |
491 |
352 |
| |
4,392 |
3,424 |
During the year ended March 31, 2022, in accordance with
the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company transferred certain
assets to its controlled subsidiary ‘Infosys Green Forum’ a Company created under Section 8 of the Companies Act, 2013.
2.21 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.
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 Group’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.
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 year ended March 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
| Additions |
– |
847 |
8 |
2,646 |
3,501 |
| Deletions |
– |
(45) |
– |
(364) |
(409) |
| Depreciation |
(6) |
(671) |
(10) |
(499) |
(1,186) |
| Translation difference |
1 |
54 |
1 |
97 |
153 |
| Balance as of March 31, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
Following are the changes in the carrying value of right-of-use
assets for the year ended March 31, 2022:
(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 |
– |
449 |
6 |
459 |
914 |
| Deletions |
– |
(85) |
– |
(47) |
(132) |
| Depreciation |
(6) |
(657) |
(10) |
(108) |
(781) |
| Translation difference |
4 |
20 |
1 |
3 |
28 |
| Balance as of March 31, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
The aggregate depreciation expense on ROU assets is included
under depreciation and amortization expense in the Consolidated Statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Current lease liabilities |
1,242 |
872 |
| Non-current lease liabilities |
7,057 |
4,602 |
| Total |
8,299 |
5,474 |
The movement in lease liabilities during the year ended
March 31, 2023 and March 31, 2022 is as follows
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Balance at the beginning |
5,474 |
5,325 |
| Additions |
3,503 |
933 |
| Deletions |
(49) |
(134) |
| Finance cost accrued during the period |
245 |
175 |
| Payment of lease liabilities |
(1,241) |
(956) |
| Translation difference |
367 |
131 |
| Balance at the end |
8,299 |
5,474 |
The table below provides details regarding the contractual
maturities of lease liabilities as at March 31, 2023 and March 31, 2022 on an undiscounted basis:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Less than one year |
1,803 |
991 |
| One to five years |
5,452 |
3,244 |
| More than five years |
1,978 |
1,972 |
| Total |
9,233 |
6,207 |
The Group does not face a significant liquidity risk with
regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when
they fall due.
Rental expense recorded for short-term leases was 92
crore and 61 crore for the year ended March 31, 2023 and March 31, 2022, respectively
The following is the movement in the net investment in
sublease of ROU assets during the year ended March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
Year ended March 31 |
| |
2023 |
2022 |
| Balance at the beginning |
372 |
388 |
| Additions |
6 |
5 |
| Interest income accrued during the period |
13 |
13 |
| Lease receipts |
(63) |
(48) |
| Translation difference |
30 |
14 |
| Balance at the end |
358 |
372 |
The table below provides details regarding the contractual
maturities of net investment in sublease of ROU asset on an undiscounted basis:
(In crore)
| Particulars |
As At |
| |
March 31, 2023 |
March 31, 2022 |
| Less than one year |
63 |
55 |
| One to five years |
264 |
235 |
| More than five years |
69 |
126 |
| Total |
396 |
416 |
Leases not yet commenced to which Group is
committed is ₹172 crore for a lease term ranging from 3 years to 10 years
2.22 EMPLOYEE BENEFITS
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 a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees.
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, 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.
2.22.1 Gratuity and Pension
The following table sets out the details of the defined
benefit retirement plans and the amounts recognised in the Group's financial statements as at March 31, 2023 and March 31, 2022:
(In crore)
| Particulars |
Gratuity |
Pension |
| |
As at |
As at |
| |
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
| Change in benefit obligations |
|
|
|
|
| Benefit obligations at the beginning |
1,722 |
1,624 |
926 |
814 |
| Transfer |
– |
– |
19 |
55 |
| Service cost |
276 |
219 |
41 |
40 |
| Interest expense |
103 |
89 |
5 |
3 |
| Remeasurements - Actuarial (gains) / losses |
(72) |
81 |
(143) |
(14) |
| Past service cost - plan amendments |
(1) |
– |
– |
14 |
| Employee contribution |
– |
– |
27 |
27 |
| Benefits paid |
(268) |
(291) |
(46) |
(41) |
| Translation difference |
18 |
– |
88 |
28 |
| Benefit obligations at the end |
1,778 |
1,722 |
917 |
926 |
| Change in plan assets |
|
|
|
|
| Fair value of plan assets at the beginning |
1,711 |
1,610 |
846 |
690 |
| Transfer |
– |
– |
19 |
55 |
| Interest income |
105 |
96 |
4 |
3 |
| Remeasurements- Return on plan assets excluding amounts included in interest income |
24 |
24 |
(95) |
53 |
| Employer contribution |
175 |
267 |
37 |
37 |
| Employee contribution |
– |
– |
27 |
27 |
| Benefits paid |
(260) |
(286) |
(46) |
(41) |
| Translation difference |
– |
– |
78 |
22 |
| Fair value of plan assets at the end |
1,755 |
1,711 |
870 |
846 |
| Funded status |
(23) |
(11) |
(47) |
(80) |
| Defined benefit plan asset |
23 |
22 |
13 |
8 |
| Defined benefit plan liability |
(46) |
(33) |
(60) |
(88) |
Amount for the year ended March 31, 2023 and March 31,
2022 recognized in the Consolidated Statement of Profit and Loss under employee benefit expense:
(In crore)
| Particulars |
Gratuity |
Pension |
| |
Year ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Service cost |
276 |
219 |
41 |
40 |
| Net interest on the net defined benefit liability / (asset) |
(2) |
(7) |
1 |
– |
| Plan amendments |
(1) |
– |
– |
14 |
| Net cost |
273 |
212 |
42 |
54 |
Amount for the year ended March 31, 2023 and March 31,
2022 recognized in the Consolidated Statement of Other Comprehensive Income:
(In crore)
| Particulars |
Gratuity |
Pension |
| |
Year ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Remeasurements of the net defined benefit liability / (asset) |
|
|
|
|
| Actuarial (gains) / losses |
(72) |
81 |
(143) |
(14) |
| (Return) / loss on plan assets excluding amounts included in the net interest on the net defined benefit liability/(asset) |
(24) |
(24) |
95 |
(53) |
| |
(96) |
57 |
(48) |
(67) |
(In crore)
| Particulars |
Gratuity |
Pension |
| |
Year ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| (Gain) / loss from change in demographic assumptions |
– |
– |
– |
(1) |
| (Gain) / loss from change in financial assumptions |
(62) |
(46) |
(148) |
(22) |
| (Gain) / loss from experience adjustment |
(10) |
127 |
5 |
9 |
| |
(72) |
81 |
(143) |
(14) |
The weighted-average assumptions used to determine benefit
obligations as at March 31, 2023 and March 31, 2022 are set out below:
| Particulars |
Gratuity |
Pension |
| |
As at |
As at |
| |
March 31, 2023 |
March 31, 2022 |
March 31, 2023 |
March 31, 2022 |
| Discount rate (1) |
7.1% |
6.5% |
1.8%- 3.8% |
0.4%- 1.7% |
| Weighted average rate of increase in compensation levels (2) |
6% |
6% |
1%-3% |
1%- 3% |
| Weighted average duration of defined benefit obligation (3) |
5.9 years |
5.9 years |
12 years |
14 years |
The weighted-average assumptions used to determine net
periodic benefit cost for the year ended March 31, 2023 and March 31, 2022 are set out below:
| Particulars |
Gratuity |
|
Pension |
|
| |
Year ended March 31, |
Year ended March 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Discount rate |
6.5% |
6.1% |
0.4%-1.7% |
0.1%- 0.9% |
| Weighted average rate of increase in compensation levels |
6% |
6% |
1%-3% |
1%- 3% |
| (1) | | For domestic defined benefit plan in India, the market for high quality corporate bonds being
not developed, the yield of government bonds is considered as the discount rate. For most of our overseas defined benefit plan, given
that the market for high quality corporate bonds is not developed, the Government bond rate adjusted for corporate spreads is used. |
| (2) | | The average rate of increase in compensation levels is determined by the Company, considering
factors such as, the Company’s past compensation revision trends, inflation in respective markets and management’s estimate
of future salary increases. |
| (3) | | Attrition rate considered is the management’s estimate based on the past long-term
trend of employee turnover in the Company. The tenure has been considered taking into account the past long-term trend of employees'
average remaining service life which reflects the average estimated term of post-employment benefit obligation. |
For domestic defined benefit plan in India, assumptions
regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India.
For overseas defined benefit plan, the assumptions regarding future mortality experience are set with regard to the latest statistics
in life expectancy, plan experience and other relevant data.
The Group assesses all of the above assumptions with its
projected long-term plans of growth and prevalent industry standards.
The Company contributes all ascertained liabilities towards
gratuity to the Infosys Limited Employees' Gratuity Fund 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 trust as at March 31, 2023 and March 31, 2022, and contributions for gratuity are invested in a scheme with the Life Insurance
Corporation of India as permitted by Indian law. The plan assets of the overseas defined benefit plan have been primarily invested in
insurer managed funds and the asset allocation for plan assets is determined based on the investment criteria prescribed under the relevant
regulations applicable to pension funds and the insurer managers. The insurers' investment are well diversified and also provide for guaranteed
interest rates arrangements.
Actual return on assets (including remeasurements) of
the gratuity plan for the year ended March 31, 2023 and March 31, 2022 were 129 crore and 120 crore, respectively and for
the pension plan were (91) crore and 56 crore, respectively.
The contributions for gratuity are invested in a scheme
with the Life Insurance Corporation of India as permitted by Indian law. The table below sets out the details of major plan assets into
various categories as at March 31, 2023 and March 31, 2022:
| Particulars |
Pension |
| |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Equity |
34% |
34% |
| Bonds |
32% |
32% |
| Real Estate/Property |
26% |
26% |
| Cash and Cash Equivalents |
1% |
1% |
| Other |
7% |
7% |
These defined benefit plans expose the Group to actuarial
risk which are set out below:
Interest rate risk: The present value of the defined
benefit plan liability is generally calculated using a discount rate determined by reference to government bond yields and in certain
overseas jurisdictions, it is calculated in reference to government bond yield adjusted for a corporate spread. If bond yields fall,
the defined benefit obligation will tend to increase.
Life expectancy and investment risk: The pension
fund offers the choice between a lifelong pension and a cash lump sum upon retirement. The pension fund has defined rates for converting
the lump sum to a pension and there is the risk that the members live longer than implied by these conversion rates and that the pension
assets don’t achieve the investment return implied by these conversion rates.
Asset volatility: A proportion of the pension
fund is held in equities, which is expected to outperform corporate bonds in the long term but give exposure to volatility and risk in
the short term. The pension fund board of insurer is responsible for the investment strategy and equity allocation is justified given
the long-term investment horizon of the pension fund and the objective to provide a reasonable long term return on members’ account
balances.
Sensitivity of significant assumptions used for valuation
of defined benefit obligation:
(In crore)
| Impact from |
As at March 31, 2023 |
| |
Gratuity |
Pension |
| |
1% point increase / decrease |
0.5% point increase / decrease |
| Discount rate |
94 |
40 |
| Weighted average rate of increase in compensation levels |
85 |
5 |
Sensitivity to significant actuarial assumptions is computed
by varying one actuarial assumption used for the valuation of the defined benefit obligation and keeping all other actuarial assumptions
constant. In practice, this is not probable, and changes in some of the assumptions may be correlated.
The Group expects to contribute 219 crore to gratuity
and 40 crore to pension during the fiscal 2024.
The maturity profile of defined benefit obligation is
as follows:
(In crore)
| |
Gratuity |
Pension |
| Within 1 year |
274 |
58 |
| 1-2 year |
278 |
55 |
| 2-3 year |
277 |
61 |
| 3-4 year |
309 |
59 |
| 4-5 year |
389 |
64 |
| 5-10 years |
1,953 |
322 |
2.22.2 Provident fund
Infosys has an obligation to fund any shortfall on the
yield of the trust’s investments over the administered interest rates on an annual basis. These administered rates are determined
annually predominantly considering the social rather than economic factors. The actuary has provided a valuation for provident fund liabilities
on the basis of guidance issued by the Actuarial Society of India.
The following tables set out the funded status of the
defined benefit provident fund plan of Infosys Limited and the amounts recognized in the Group's financial statements as at March 31,
2023 and March 31, 2022:
(In crore)
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Change in benefit obligations |
|
|
| Benefit obligations at the beginning |
9,304 |
8,287 |
| Service cost |
814 |
656 |
| Employee contribution |
1,689 |
1,153 |
| Interest expense |
625 |
516 |
| Actuarial (gains) / loss |
(82) |
118 |
| Benefits paid |
(1,823) |
(1,426) |
| Benefit obligations at the end |
10,527 |
9,304 |
| Change in plan assets |
|
|
| Fair value of plan assets at the beginning |
9,058 |
8,140 |
| Interest income |
609 |
507 |
| Remeasurements- Return on plan assets excluding amounts included in interest income |
(186) |
18 |
| Employer contribution |
837 |
666 |
| Employee contribution |
1,689 |
1,153 |
| Benefits paid |
(1,823) |
(1,426) |
| Fair value of plan assets at the end |
10,184 |
9,058 |
| Net liability |
(343) |
(246) |
Amount for the year ended March 31, 2023 and March 31,
2022 recognized in the Consolidated Statement of Other Comprehensive Income:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Remeasurements of the net defined benefit liability / (asset) |
|
|
| Actuarial (gains) / losses |
(82) |
118 |
| (Return) / loss on plan assets excluding amounts included in the net interest on the net defined benefit liability / (asset) |
186 |
(18) |
| |
104 |
100 |
The assumptions used in determining the present value
obligation of the defined benefit plan under the Deterministic Approach are as follows:
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Government of India (GOI) bond yield (1) |
7.10% |
6.50% |
| Expected rate of return on plan assets |
8.15% |
7.70% |
| Remaining term to maturity of portfolio |
6 years |
6 years |
| Expected guaranteed interest rate |
8.15% |
8.10% |
| (1) | | In India, the market for high quality corporate bonds being not developed, the yield of government
bonds is considered as the discount rate. The tenure has been considered taking into account the past long-term trend of employees’
average remaining service life which reflects the average estimated term of the post- employment benefit obligations. |
The breakup of the plan assets into various categories
as at March 31, 2023 and March 31, 2022 are as follows:
| Particulars |
As at |
| |
March 31, 2023 |
March 31, 2022 |
| Central and State government bonds |
60% |
57% |
| Public sector undertakings and Private sector bonds |
33% |
37% |
| Others |
7% |
6% |
The asset allocation for plan assets is determined
based on the investment criteria prescribed under the relevant regulations.
The actuarial valuation of PF liability exposes the Group
to interest rate risk. The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall,
the defined benefit obligation will tend to increase.
As at March 31, 2023 the defined benefit obligation would
be affected by approximately 48 crore and 97 on account of a 0.25% increase / decrease in the expected rate of return on
plan assets.
The Group contributed 1,193 crore and 882
crore to the provident fund during the year ended March 31, 2023 and March 31, 2022, respectively. The same has been recognized in the
Consolidated Statement of Profit and Loss under the head employee benefit expense.
The provident plans are applicable only to employees drawing
a salary in Indian rupees.
2.22.3 Superannuation
The Group contributed 487 crore and 364
crore during the year ended March 31, 2023 and March 31, 2022, respectively and the same has been recognized in the Consolidated Statement
of Profit and Loss under the head employee benefit expense.
2.22.4 Employee benefit costs include:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Salaries and bonus(1) |
76,365 |
62,483 |
| Defined contribution plans |
627 |
478 |
| Defined benefit plans |
1,367 |
1,025 |
| |
78,359 |
63,986 |
| (1) | | Includes employee stock compensation expense of 519 crore and 415 crore
for the year ended March 31, 2023 and March 31, 2022 respectively. |
2.23 RECONCILIATION OF 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.
The following is a reconciliation of the equity shares
used in the computation of basic and diluted earnings per equity share:
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Basic earnings per equity share - weighted average number of equity shares outstanding (1) |
418,08,97,857 |
420,95,46,724 |
| Effect of dilutive common equivalent shares - share options outstanding |
68,33,213 |
89,78,410 |
| Diluted earnings per equity share - weighted
average number of equity shares and common equivalent shares outstanding |
418,77,31,070 |
421,85,25,134 |
| (1) | | excludes treasury shares |
For the years ended March 31, 2023 and March 31, 2022,
there were 9,960 and Nil options to purchase equity shares which had an anti-dilutive effect.
2.24 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 |
| |
March 31, 2023 |
March 31, 2022 |
| Contingent liabilities : |
|
|
| Claims against the Group, not acknowledged as debts(1) |
4,762 |
4,641 |
| [Amount paid to statutory authorities 6,539 crore (6,006 crore)] |
|
|
| Commitments : |
|
|
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(2) |
959 |
1,245 |
| Other commitments* |
92 |
28 |
| * | | Uncalled capital pertaining to investments |
| (1) | | As at March 31, 2023 and March 31, 2022, claims against the Group not acknowledged as debts
in respect of income tax matters amounted to 4,062 crore and 4,001 crore, 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 Income Tax 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 6,528 crore and 5,996 crore as at March 31, 2023
and March 31, 2022, respectively. |
| (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 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.
2.25 RELATED PARTY TRANSACTIONS
List of related parties:
| Name of subsidiaries |
Country |
Holdings as at |
| |
|
March 31, 2023 |
March 31, 2022 |
| Infosys Technologies (China) Co. Limited (Infosys China)(1) |
China |
100% |
100% |
| Infosys Technologies S. de R. L. de C. V. (Infosys Mexico)(1) |
Mexico |
100% |
100% |
| Infosys Technologies (Sweden) AB (Infosys Sweden)(1) |
Sweden |
100% |
100% |
| Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai)(1) |
China |
100% |
100% |
| Infosys Nova Holdings LLC. (Infosys Nova)(1) |
U.S. |
100% |
100% |
| EdgeVerve Systems Limited (EdgeVerve)(1) |
India |
100% |
100% |
| Infosys Austria GmbH(1) |
Austria |
100% |
100% |
| Skava Systems Private Limited (Skava Systems)(1)(26) |
India |
100% |
100% |
| Infosys Chile SpA(1) |
Chile |
100% |
100% |
| Infosys Arabia Limited(2)(26) |
Saudi Arabia |
70% |
70% |
| Infosys Consulting Ltda.(1) |
Brazil |
100% |
100% |
| Infosys Luxembourg S.a.r.l(1) |
Luxembourg |
100% |
100% |
| Infosys Americas Inc. (Infosys Americas)(1)(26) |
U.S. |
100% |
100% |
| Infosys Public Services, Inc. USA (Infosys Public Services)(1) |
U.S. |
100% |
100% |
| Infosys Canada Public Services Inc(19)(35) |
Canada |
- |
– |
| Infosys BPM Limited(1)(43) |
India |
100% |
100% |
| Infosys (Czech Republic) Limited s.r.o.(3) |
Czech Republic |
100% |
100% |
| Infosys Poland Sp z.o.o(3) |
Poland |
100% |
100% |
| Infosys McCamish Systems LLC(3) |
U.S. |
100% |
100% |
| Portland Group Pty Ltd(3) |
Australia |
100% |
100% |
| Infosys BPO Americas LLC.(3) |
U.S. |
100% |
100% |
| Infosys Consulting Holding AG (Infosys Lodestone)(1) |
Switzerland |
100% |
100% |
| Infosys Management Consulting Pty Limited(4) |
Australia |
100% |
100% |
| Infosys Consulting AG(4) |
Switzerland |
100% |
100% |
| Infosys Consulting GmbH(4) |
Germany |
100% |
100% |
| Infosys Consulting S.R.L.(1) |
Romania |
100% |
100% |
| Infosys Consulting SAS(4) |
France |
100% |
100% |
| Infosys Consulting s.r.o. v likvidaci (formerly Infosys Consulting s.r.o.)(4)(34) |
Czech Republic |
– |
– |
| Infosys Consulting (Shanghai) Co., Ltd.(4)(30) |
China |
– |
– |
| Infy Consulting Company Ltd(4) |
U.K. |
100% |
100% |
| Infy Consulting B.V.(4) |
The Netherlands |
100% |
100% |
| Infosys Consulting S.R.L.(45) |
Argentina |
100% |
100% |
| Infosys Consulting (Belgium) NV(4) |
Belgium |
100% |
100% |
| Panaya Inc. (Panaya)(1) |
U.S. |
100% |
100% |
| Panaya Ltd.(6) |
Israel |
100% |
100% |
| Infosys Financial Services GmbH. (formerly Panaya GmbH)(54) |
Germany |
100% |
100% |
| Brilliant Basics Holdings Limited (Brilliant Basics)(1)(26) |
U.K. |
100% |
100% |
| Brilliant Basics Limited(7)(26) |
U.K. |
100% |
100% |
| Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte. Ltd.)(1) |
Singapore |
100% |
100% |
| Infosys Middle East FZ LLC(8) |
Dubai |
100% |
100% |
| Fluido Oy(8) |
Finland |
100% |
100% |
| Fluido Sweden AB (Extero)(11) |
Sweden |
100% |
100% |
| Fluido Norway A/S(11) |
Norway |
100% |
100% |
| Fluido Denmark A/S(11) |
Denmark |
100% |
100% |
| Fluido Slovakia s.r.o(11) |
Slovakia |
100% |
100% |
| Infosys Compaz Pte. Ltd(9) |
Singapore |
60% |
60% |
| Infosys South Africa (Pty) Ltd(8) |
South Africa |
100% |
100% |
| WongDoody Holding Company Inc. (WongDoody)(1)(36) |
U.S. |
– |
– |
| WDW Communications, Inc(10)(37) |
U.S. |
– |
– |
| WongDoody, Inc(10)(38) |
U.S. |
100% |
100% |
| HIPUS Co., Ltd(9) |
Japan |
81% |
81% |
| Stater N.V.(9) |
The Netherlands |
75% |
75% |
| Stater Nederland B.V.(12) |
The Netherlands |
75% |
75% |
| Stater XXL B.V.(12) |
The Netherlands |
75% |
75% |
| HypoCasso B.V.(12) |
The Netherlands |
75% |
75% |
| Stater Participations B.V.(12) |
The Netherlands |
75% |
75% |
| Stater Belgium N.V./S.A.(13) |
Belgium |
75% |
75% |
| Stater Gmbh(12)(28) |
Germany |
75% |
75% |
| Outbox systems Inc. dba Simplus (US)(15) |
U.S. |
100% |
100% |
| Simplus North America Inc.(16)(27) |
Canada |
– |
– |
| Simplus ANZ Pty Ltd.(16) |
Australia |
100% |
100% |
| Simplus Australia Pty Ltd(17) |
Australia |
100% |
100% |
| Sqware Peg Digital Pty Ltd(18)(31) |
Australia |
– |
– |
| Simplus Philippines, Inc.(16) |
Philippines |
100% |
100% |
| Simplus Europe, Ltd.(16)(29) |
U.K. |
– |
– |
| Infosys Fluido UK, Ltd. (formerly Simplus U.K., Ltd)(11) |
U.K. |
100% |
100% |
| Infosys Fluido Ireland, Ltd.(formerly Simplus Ireland, Ltd)(20) |
Ireland |
100% |
100% |
| Infosys Limited Bulgaria EOOD(1) |
Bulgaria |
100% |
100% |
| Kaleidoscope Animations, Inc.(15) |
U.S. |
100% |
100% |
| Kaleidoscope Prototyping LLC(22) |
U.S. |
100% |
100% |
| GuideVision s.r.o.(14) |
Czech Republic |
100% |
100% |
| GuideVision Deutschland GmbH(21) |
Germany |
100% |
100% |
| GuideVision Suomi Oy(21) |
Finland |
100% |
100% |
| GuideVision Magyarország Kft(21) |
Hungary |
100% |
100% |
| GuideVision Polska Sp. z.o.o(21) |
Poland |
100% |
100% |
| GuideVision UK Ltd(21)(26) |
U.K. |
100% |
100% |
| Blue Acorn iCi Inc (formerly Beringer Commerce Inc)(15) |
U.S. |
100% |
100% |
| Beringer Capital Digital Group Inc(15)(41) |
U.S. |
– |
– |
| Mediotype LLC(23)(41) |
U.S. |
– |
– |
| Beringer Commerce Holdings LLC(23)(41) |
U.S. |
– |
– |
| SureSource LLC(24)(39) |
U.S. |
– |
– |
| Blue Acorn LLC(24)(39) |
U.S. |
– |
– |
| Simply Commerce LLC(24)(39) |
U.S. |
– |
– |
| iCiDIGITAL LLC(25)(40) |
U.S. |
– |
– |
| Infosys BPM UK Limited(3) |
U.K. |
100% |
– |
| Infosys Turkey Bilgi Teknolojikeri Limited Sirketi(1) |
Turkey |
100% |
100% |
| Infosys Germany Holding Gmbh(1) |
Germany |
100% |
100% |
| Infosys Automotive and Mobility GmbH & Co. KG(1) |
Germany |
100% |
100% |
| Infosys Green Forum(1)(32) |
India |
100% |
100% |
| Infosys (Malaysia) SDN. BHD. (formerly Global Enterprise International (Malaysia) Sdn. Bhd.)(33) |
Malaysia |
100% |
100% |
| Infosys Business Solutions LLC(1)(42) |
Qatar |
100% |
– |
| Infosys Germany GmbH (formerly Kristall 247. GmbH (“Kristall”))(44) |
Germany |
100% |
– |
| oddity GmbH (46) |
Germany |
100% |
– |
| oddity (Shanghai) Co., Ltd. (47) |
China |
100% |
– |
| oddity Limited (Taipei) (47) |
Taiwan |
100% |
– |
| oddity space GmbH (46) |
Germany |
100% |
– |
| oddity jungle GmbH (46) |
Germany |
100% |
– |
| oddity code GmbH (46) |
Germany |
100% |
– |
| oddity code d.o.o (48) |
Serbia |
100% |
– |
| oddity waves GmbH (46) |
Germany |
100% |
– |
| oddity group services GmbH (46) |
Germany |
100% |
– |
| Infosys Public Services Canada Inc. (19)(5) |
Canada |
100% |
– |
| BASE life science AG (50) |
Switzerland |
100% |
– |
| BASE life science GmbH (50) |
Germany |
100% |
– |
| BASE life science A/S (49) |
Denmark |
100% |
– |
| BASE life science S.A.S (50) |
France |
100% |
– |
| BASE life science Ltd. (50) |
U.K. |
100% |
– |
| BASE life science S.r.l. (50) |
Italy |
100% |
– |
| Innovisor Inc.(50) |
U.S. |
100% |
– |
| BASE life science Inc.(50) |
U.S. |
100% |
– |
| BASE life science S.L.(50)(51) |
Spain |
100% |
– |
| Panaya Germany GmbH (6)(52) |
Germany |
100% |
– |
| Infosys Norway (8)(53) |
Norway |
100% |
– |
| (1) | | Wholly-owned subsidiary of Infosys Limited |
| (2) | | Majority owned and controlled subsidiary of Infosys Limited |
| (3) | | Wholly-owned subsidiary of Infosys BPM Limited |
| (4) | | Wholly-owned subsidiary of Infosys Consulting Holding AG |
| (5) | | Incorporated on July 8, 2022 |
| (6) | | Wholly-owned subsidiary of Panaya Inc. |
| (7) | | Wholly-owned subsidiary of Brilliant Basics Holding Limited. |
| (8) | | Wholly-owned subsidiary of Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte.
Ltd.) |
| (9) | | Majority owned and controlled subsidiary of Infosys Singapore Pte. Ltd. (formerly Infosys
Consulting Pte. Ltd.) |
| (10) | | Wholly-owned subsidiary of WongDoody Holding Company Inc. (WongDoody) |
| (11) | | Wholly-owned subsidiary of Fluido Oy |
| (12) | | Wholly-owned subsidiary of Stater N.V |
| (13) | | Majority owned and controlled subsidiary of Stater Participations B.V. |
| (14) | | Wholly-owned subsidiary of Infy Consulting Company Limited |
| (15) | | Wholly-owned subsidiary of Infosys Nova Holdings LLC |
| (16) | | Wholly-owned subsidiary of Outbox Systems Inc. |
| (17) | | Wholly-owned subsidiary of Simplus ANZ Pty Ltd |
| (18) | | Wholly-owned subsidiary of Simplus Australia Pty Ltd |
| (19) | | Wholly-owned subsidiary of Infosys Public Services, Inc. |
| (20) | | Wholly-owned subsidiary of Infosys Fluido UK, Ltd. (formerly Simplus U.K., Ltd) |
| (21) | | Wholly-owned subsidiary of GuideVision s.r.o. |
| (22) | | Wholly-owned subsidiary of Kaleidoscope Animations, Inc. |
| (23) | | Wholly-owned subsidiary of Blue Acorn iCi Inc |
| (24) | | Wholly-owned subsidiary of Beringer Commerce Holdings LLC |
| (25) | | Wholly-owned subsidiary of Beringer Capital Digital Group Inc. |
| (27) | | Liquidated effective April 27,2021 |
| (28) | | Incorporated on August 4, 2021 |
| (29) | | Liquidated effective July 20, 2021 |
| (30) | | Liquidated effective September 1, 2021 |
| (31) | | Liquidated effective September 2, 2021 |
| (32) | | Incorporated on August 31, 2021 |
| (33) | | On December 14, 2021, Infosys Singapore Pte. Ltd (formerly Infosys Consulting Pte. Ltd.),
a wholly-owned subsidiary of Infosys Limited acquired 100% of voting interests in Infosys (Malaysia) SDN. BHD. (formerly Global Enterprise
International (Malaysia) Sdn. Bhd.) |
| (34) | | Liquidated effective December 16, 2021 |
| (35) | | Liquidated effective November 23, 2021 |
| (36) | | Wholly-owned subsidiary of Infosys Limited, merged with WongDoody Inc, effective December
31, 2021 |
| (37) | | Wholly-owned subsidiary of WongDoody Holding Company Inc. (WongDoody), merged with WongDoody
Inc, effective December 31, 2021 |
| (38) | | Wholly-owned subsidiary of Infosys Limited, effective December 31, 2021 |
| (39) | | Merged with Beringer Commerce Holdings LLC, effective January 1, 2022 |
| (40) | | Merged with Beringer Capital Digital Group Inc, effective January 1, 2022 |
| (41) | | Merged with Blue Acorn iCi Inc, effective January 1, 2022 |
| (42) | | Incorporated on February 20, 2022 |
| (43) | | On March 17, 2022, Infosys Limited acquired non-controlling interest of 0.01% of the voting
interests in Infosys BPM Limited. |
| (44) | | On March 22, 2022, Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte. Ltd.), a
wholly-owned subsidiary of Infosys Limited acquired 100% of voting interests in Infosys Germany GmbH (formerly Kristall 247. GmbH (“Kristall”)
). |
| (45) | | Infosys Consulting S.R.L. (Argentina) (formerly a Wholly-owned subsidiary of Infosys Consulting
Holding AG) became the majority owned and controlled subsidiary of Infosys Limited with effect from April 1, 2022 |
| (46) | | On April 20, 2022, Infosys Germany GmbH (formerly Kristall 247. GmbH (“Kristall”))
(a wholly owned subsidiary of Infosys Singapore Pte. Ltd (formerly Infosys Consulting Pte. Ltd.)) acquired 100% of voting interests in
oddity space GmbH, oddity jungle GmbH, oddity waves GmbH, oddity group services GmbH, oddity code GmbH and oddity GmbH. |
| (47) | | Wholly-owned subsidiary of oddity GmbH |
| (48) | | Wholly-owned subsidiary of oddity code GmbH. |
| (49) | | On September 1, 2022, Infosys Singapore Pte. Ltd. (formerly Infosys Consulting Pte. Ltd.)
(a Wholly-owned subsidiary of Infosys Limited) acquired 100% of voting interests in BASE life science A/S. |
| (50) | | Wholly-owned subsidiary of BASE life science A/S |
| (51) | | Incorporated on September 6, 2022 |
| (52) | | Incorporated effective December 15, 2022 |
| (53) | | Incorporated effective February 7, 2023. |
| (54) | | Infosys Financial Services GmbH. (formerly Panaya GmbH) became a wholly-owned subsidiary
of Infosys Singapore Pte. Ltd (formerly Infosys Consulting Pte. Ltd.) with effect from February 23, 2023. |
Infosys has provided guarantee for performance
of certain contracts entered into by its subsidiaries.
List of other related party
|
Particulars
|
Country |
Nature of relationship
|
| Infosys Limited Employees' Gratuity Fund Trust |
India |
Post-employment benefit plan of Infosys Limited |
| Infosys Limited Employees' Provident Fund Trust |
India |
Post-employment benefit plan of Infosys Limited |
| Infosys Limited Employees' Superannuation Fund Trust |
India |
Post-employment benefit plan of Infosys Limited |
| Infosys BPM Limited Employees' Superannuation Fund Trust |
India |
Post-employment benefit plan of Infosys BPM Limited |
| Infosys BPM Limited Employees' Gratuity Fund Trust |
India |
Post-employment benefit plan of Infosys BPM Limited |
| EdgeVerve Systems Limited Employees' Gratuity Fund Trust |
India |
Post-employment benefit plan of EdgeVerve Systems Limited |
| EdgeVerve Systems Limited Employees' Superannuation Fund Trust |
India |
Post-employment benefit plan of EdgeVerve Systems Limited |
| Infosys Employees Welfare Trust |
India |
Controlled trust |
|
|
| Infosys Employee Benefits Trust |
India |
Controlled trust |
| Infosys Science Foundation |
India |
Controlled trust |
| Infosys Foundation(1) (2) |
India |
Trust jointly controlled by KMPs |
| Infosys Expanded Stock Ownership Trust |
India |
Controlled trust |
Refer to Note 2.20 for information on transactions with
post-employment benefit plans mentioned above.
| (1) | | Effective January 1, 2022 |
| (2) | | During the year ended March 31, 2023 the Group contributed 321 crore towards
CSR. During the quarter ended March 31, 2022, the Group contributed 2 crore towards CSR. |
List of key management personnel
Whole-time Directors
Salil Parekh, Chief Executive Officer and Managing Director
U.B. Pravin Rao, Chief Operating Officer (retired as a
Chief Operating Officer and Whole-time director effective December 12, 2021)
Non-whole-time Directors
Nandan M. Nilekani
D. Sundaram (appointed as lead independent director effective
March 23, 2023)
Kiran Mazumdar-Shaw (retired as lead independent director
effective March 22, 2023)
Micheal Gibbs
Uri Levine
Bobby Parikh
Chitra Nayak
Govind Iyer (appointed as an independent director effective
January 12, 2023)
Executive Officers
Nilanjan Roy, Chief Financial Officer
Inderpreet Sawhney, Group General Counsel and Chief Compliance
Officer
Shaji Mathew (appointed as Group Head - Human Resources
effective March 22, 2023)
Krishnamurthy Shankar (retired as Group Head - Human Resources
effective March 21, 2023)
Mohit Joshi (resigned as President effective March 11,
2023 and will be on leave till his last date with the company which will be June 9, 2023)
Ravi Kumar S (resigned as President effective October
11, 2022)
Company Secretary
A.G.S. Manikantha
Transaction with key management personnel:
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Year ended March 31, |
| |
2023 |
2022 |
| Salaries and other employee benefits to whole-time directors and executive officers (1)(2) |
111 |
134 |
| Commission and other benefits to non-executive/independent directors |
16 |
11 |
| Total |
127 |
145 |
| (1) | | Total employee stock compensation expense for the year ended March 31, 2023 and March
31, 2022 includes a charge of 49 crore and 65 crore respectively, towards key managerial personnel. (Refer to Note 2.12).
Stock compensation expense for the year ended March 31, 2023 includes reversal of expense on account of resignation/ retirement of key
mangement personnel. |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
Additional information pursuant to para 2 of general
instructions for the preparation of Consolidated Financial Statements
(In crore)
| Name of entity |
Net Assets |
|
Share in profit or loss |
Share in other comprehensive income |
Share in total comprehensive income |
| |
as % age of consolidated net assets |
Amount |
as % age of consolidated profit or loss |
Amount |
as % age of consolidated other comprehensive income |
Amount |
as % age of consolidated total comprehensive income |
Amount |
| Infosys Ltd. |
80.97% |
67,745 |
88.92% |
23,268 |
101.90% |
(268) |
88.55% |
23,000 |
| Indian Subsidiaries |
|
|
|
|
|
|
|
|
| Infosys BPM Limited |
5.30% |
4,438 |
3.23% |
846 |
7.98% |
(20) |
3.18% |
826 |
| EdgeVerve Systems Limited |
1.75% |
1,467 |
3.55% |
930 |
(2.28%) |
6 |
3.60% |
936 |
| Skava Systems Pvt. Ltd. |
0.10% |
81 |
0.02% |
5 |
– |
– |
0.02% |
5 |
| Infosys Green Forum |
0.35% |
293 |
0.02% |
5 |
– |
– |
0.02% |
5 |
| Foreign Subsidiaries |
|
|
|
|
|
|
|
|
| Brilliant Basics Holdings Limited |
0.08% |
63 |
– |
– |
– |
– |
– |
– |
| Brilliant Basics Limited |
– |
1 |
– |
– |
– |
– |
– |
– |
| Blue Acorn iCi Inc |
0.22% |
187 |
0.20% |
54 |
– |
– |
0.21% |
54 |
| Infosys BPO Americas LLC |
0.05% |
37 |
0.09% |
24 |
– |
– |
0.09% |
24 |
| Portland Group Pty Ltd |
0.11% |
92 |
0.11% |
29 |
– |
– |
0.11% |
29 |
| Fluido Denmark A/S |
– |
– |
(0.02%) |
(6) |
– |
– |
(0.02%) |
(6) |
| Fluido Oy |
0.17% |
138 |
0.06% |
18 |
– |
– |
0.07% |
18 |
| Fluido Norway A/S |
0.05% |
42 |
0.07% |
18 |
– |
– |
0.07% |
18 |
| Fluido Slovakia s.r.o. |
0.01% |
6 |
– |
– |
– |
– |
– |
– |
| Fluido Sweden AB |
0.03% |
25 |
0.08% |
20 |
– |
– |
0.08% |
20 |
| Infosys Fluido Ireland, Ltd. |
– |
3 |
0.01% |
3 |
– |
– |
0.01% |
3 |
| Infosys Fluido U.K., Ltd. |
(0.03%) |
(24) |
(0.04%) |
(10) |
– |
– |
(0.04%) |
(10) |
| GuideVision s.r.o. |
0.09% |
71 |
0.06% |
16 |
– |
– |
0.06% |
16 |
| GuideVision Deutschland GmbH |
– |
(2) |
(0.02%) |
(6) |
– |
– |
(0.02%) |
(6) |
| GuideVision Suomi Oy |
– |
2 |
– |
1 |
– |
– |
– |
1 |
| GuideVision Magyarország Kft |
– |
2 |
– |
– |
– |
– |
– |
– |
| GuideVision Polska SP.z.o.o |
– |
– |
– |
– |
– |
– |
– |
– |
| GuideVision UK Ltd |
– |
2 |
– |
– |
– |
– |
– |
– |
| Infosys Germany Holding GmbH |
– |
2 |
– |
– |
– |
– |
– |
– |
| Infosys Chile SpA |
0.03% |
21 |
0.02% |
5 |
– |
– |
0.02% |
5 |
| Infosys Americas Inc., |
– |
1 |
– |
– |
– |
– |
– |
– |
| Infosys Austria GmbH |
– |
1 |
(0.01%) |
(3) |
– |
– |
(0.01%) |
(3) |
| Infosys (Czech Republic) Limited s.r.o. |
0.13% |
110 |
(0.03%) |
(7) |
– |
– |
(0.03%) |
(7) |
| Infosys Limited Bulgaria |
– |
2 |
– |
1 |
– |
– |
– |
1 |
| Infosys Technologies (China) Co. Limited |
0.54% |
449 |
0.45% |
117 |
– |
– |
0.45% |
117 |
| Infosys Technologies (Shanghai) Company Limited |
0.68% |
565 |
(0.37%) |
(98) |
– |
– |
(0.38%) |
(98) |
| HIPUS Co., Ltd. |
0.14% |
112 |
0.11% |
31 |
– |
– |
0.12% |
31 |
| Infosys Public Services, Inc. USA |
1.20% |
1,008 |
0.57% |
153 |
– |
– |
0.59% |
153 |
| Infosys Consulting S.R.L. (Argentina) |
(0.04%) |
(33) |
(0.15%) |
(40) |
– |
– |
(0.15%) |
(40) |
| Infosys Management Consulting Pty Limited |
0.05% |
37 |
0.03% |
10 |
– |
– |
0.04% |
10 |
| Infosys Consulting (Belgium) NV |
(0.01%) |
(7) |
(0.01%) |
(3) |
– |
– |
(0.01%) |
(3) |
| Infosys Consulting Ltda. |
0.14% |
117 |
0.06% |
15 |
– |
– |
0.06% |
15 |
| Infosys Consulting AG |
0.16% |
133 |
0.21% |
62 |
(4.56%) |
12 |
0.28% |
74 |
| Innovisor Inc. |
– |
– |
– |
– |
– |
– |
– |
– |
| Infosys Consulting GmbH |
0.10% |
89 |
0.06% |
17 |
– |
– |
0.07% |
17 |
| Infosys Consulting SAS |
0.02% |
18 |
0.02% |
4 |
– |
– |
0.02% |
4 |
| Infy Consulting Company Ltd. |
0.28% |
231 |
0.15% |
40 |
– |
– |
0.15% |
40 |
| Infosys Consulting Holding AG |
0.61% |
507 |
0.21% |
57 |
– |
– |
0.22% |
57 |
| Infy Consulting B.V. |
0.05% |
44 |
0.01% |
5 |
– |
– |
0.02% |
5 |
| BASE life science Inc. |
– |
– |
– |
– |
– |
– |
– |
– |
| Infosys Consulting S.R.L. (Romania) |
0.09% |
76 |
0.06% |
17 |
– |
– |
0.07% |
17 |
| Infosys Singapore Pte Limited |
(0.61%) |
(514) |
0.60% |
161 |
– |
– |
0.62% |
161 |
| Infosys Luxembourg S.a.r.l. |
0.02% |
14 |
0.03% |
8 |
– |
– |
0.03% |
8 |
| Infosys Technologies S. de R. L. de C. V. |
0.55% |
463 |
0.14% |
37 |
– |
– |
0.14% |
37 |
| Infosys Nova Holdings LLC |
3.32% |
2,773 |
0.10% |
25 |
– |
– |
0.10% |
25 |
| Infosys Poland Sp Z.o.o. |
0.96% |
803 |
0.30% |
84 |
– |
– |
0.32% |
84 |
| Infosys South Africa (Pty) Ltd |
– |
4 |
– |
– |
– |
– |
– |
– |
| Infosys Arabia Limited |
– |
4 |
– |
– |
– |
– |
– |
– |
| Infosys Technologies (Sweden) AB. |
0.15% |
124 |
0.12% |
31 |
– |
– |
0.12% |
31 |
| Infosys Compaz Pte. Ltd |
0.28% |
236 |
0.12% |
37 |
– |
– |
0.14% |
37 |
| Infosys Middle East FZ LLC |
(0.02%) |
(17) |
(0.01%) |
(2) |
(1.14%) |
3 |
0.00 |
1 |
| WongDoody, Inc. |
0.38% |
317 |
0.41% |
120 |
– |
– |
0.46% |
120 |
| Kaleidoscope Animations |
0.13% |
105 |
0.06% |
22 |
– |
– |
0.08% |
22 |
| Kaleidoscope Prototyping |
0.03% |
20 |
0.03% |
7 |
– |
– |
0.03% |
7 |
| Infosys Financial Services GmbH |
– |
2 |
– |
– |
– |
– |
– |
– |
| Panaya Inc. |
0.19% |
163 |
0.02% |
5 |
– |
– |
0.02% |
5 |
| Panaya Ltd. |
(0.44%) |
(370) |
0.10% |
27 |
– |
– |
0.10% |
27 |
| Infosys McCamish Systems LLC |
1.40% |
1,171 |
0.95% |
255 |
– |
– |
0.98% |
255 |
| Simplus Philippines, Inc. |
0.02% |
12 |
0.01% |
3 |
– |
– |
0.01% |
3 |
| Simplus Australia Pty Ltd |
(0.02%) |
(18) |
0.04% |
11 |
– |
– |
0.04% |
11 |
| Outbox systems Inc. dba Simplus (US) |
0.11% |
89 |
0.13% |
33 |
– |
– |
0.13% |
33 |
| Stater Belgium N.V./S.A. |
0.11% |
91 |
0.02% |
6 |
– |
– |
0.02% |
6 |
| HypoCasso B.V. |
0.02% |
20 |
0.03% |
9 |
– |
– |
0.03% |
9 |
| Stater Nederland B.V. |
0.20% |
169 |
0.15% |
38 |
– |
– |
0.15% |
38 |
| Stater N.V. |
0.77% |
641 |
0.32% |
83 |
– |
– |
0.32% |
83 |
| Stater Participations B.V. |
(0.32%) |
(265) |
– |
– |
– |
– |
– |
– |
| Stater XXL B.V. |
– |
– |
– |
– |
– |
– |
– |
– |
| Infosys Automotive and Mobility GmbH & Co. KG |
(0.64%) |
(535) |
(0.84%) |
(219) |
(1.90%) |
5 |
(0.82%) |
(214) |
| Infosys Turkey Bilgi Tekn |
(0.06%) |
(51) |
(0.22%) |
(58) |
– |
– |
(0.22%) |
(58) |
| Infosys (Malaysia) SDN. BHD. |
– |
3 |
(0.12%) |
(31) |
– |
– |
(0.12%) |
(31) |
| Simplus ANZ Pty Ltd. |
– |
– |
– |
– |
– |
– |
– |
– |
| Stater GMBH |
(0.01%) |
(10) |
(0.03%) |
(7) |
– |
– |
(0.03%) |
(7) |
| Infosys Germany GmbH |
(0.08%) |
(67) |
(0.16%) |
(43) |
– |
– |
(0.17%) |
(43) |
| oddity GmbH |
0.02% |
20 |
– |
– |
– |
– |
– |
– |
| oddity (Shanghai) Co., Ltd. |
– |
4 |
– |
1 |
– |
– |
– |
1 |
| oddity Limited(Taipei) |
– |
1 |
– |
1 |
– |
– |
– |
1 |
| oddity space GmbH |
0.01% |
5 |
– |
(1) |
– |
– |
– |
(1) |
| oddity jungle GmbH |
0.01% |
10 |
(0.02%) |
(5) |
– |
– |
(0.02%) |
(5) |
| oddity code GmbH |
– |
2 |
– |
– |
– |
– |
– |
– |
| oddity code d.o.o |
– |
2 |
– |
1 |
– |
– |
– |
1 |
| oddity waves GmbH |
0.02% |
20 |
0.03% |
12 |
– |
– |
0.05% |
12 |
| oddity group services GmbH |
– |
1 |
– |
(1) |
– |
– |
– |
(1) |
| Infosys BPM UK Limited |
– |
1 |
– |
– |
– |
– |
– |
– |
| Infosys Business Solutions LLC |
0.02% |
14 |
0.02% |
5 |
– |
– |
0.02% |
5 |
| Infosys Public Services Canada Inc. |
0.01% |
12 |
– |
(1) |
– |
– |
– |
(1) |
| BASE life science AG |
0.02% |
16 |
– |
1 |
– |
– |
– |
1 |
| BASE life science GmbH |
– |
– |
– |
(1) |
– |
– |
– |
(1) |
| BASE life science A/S |
0.03% |
26 |
(0.06%) |
(17) |
– |
– |
(0.06%) |
(17) |
| BASE life science S.A.S |
– |
1 |
– |
1 |
– |
– |
– |
1 |
| BASE life science Ltd. |
– |
1 |
– |
(1) |
– |
– |
– |
(1) |
| BASE life science S.r.l. |
– |
– |
– |
– |
– |
– |
– |
– |
| BASE life science S.L. |
– |
1 |
– |
1 |
– |
– |
– |
1 |
| Panaya Germany GmbH |
– |
(3) |
– |
– |
– |
– |
– |
– |
| Infosys Norway |
– |
– |
– |
– |
– |
– |
– |
– |
| Subtotal |
100% |
83,663 |
100.00% |
26,236 |
100.00% |
(262) |
100.00% |
25,974 |
| Adjustment arising out of consolidation |
|
(8,420) |
|
(2,073) |
|
765 |
|
(1,308) |
| Controlled Trusts |
|
164 |
|
(68) |
|
– |
|
(68) |
| |
|
75,407 |
|
24,095 |
|
503 |
|
24,598 |
| Non-controlling Interests |
|
388 |
|
13 |
|
11 |
|
24 |
| Total |
|
75,795 |
|
24,108 |
|
514 |
|
24,622 |
2.26 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 2.18 Revenue from operations.
Business Segments
Year ended March 31, 2023 and March 31, 2022
(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 |
43,763 |
21,204 |
18,086 |
18,539 |
19,035 |
11,867 |
10,085 |
4,188 |
146,767 |
| |
38,902 |
17,734 |
15,182 |
14,484 |
13,336 |
10,036 |
8,517 |
3,450 |
121,641 |
| Identifiable operating expenses |
24,990 |
10,892 |
11,101 |
9,923 |
12,493 |
6,959 |
5,834 |
2,801 |
84,993 |
| |
22,119 |
8,632 |
9,179 |
7,673 |
8,457 |
5,952 |
4,840 |
2,357 |
69,209 |
| Allocated expenses |
7,930 |
3,916 |
3,226 |
3,461 |
3,429 |
1,949 |
1,685 |
1,048 |
26,644 |
| |
6,469 |
2,972 |
2,631 |
2,586 |
2,471 |
1,589 |
1,297 |
926 |
20,941 |
| Segment operating income |
10,843 |
6,396 |
3,759 |
5,155 |
3,113 |
2,959 |
2,566 |
339 |
35,130 |
| |
10,314 |
6,130 |
3,372 |
4,225 |
2,408 |
2,495 |
2,380 |
167 |
31,491 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
4,225 |
| |
|
|
|
|
|
|
|
|
3,476 |
| Other income, net (Refer to Note 2.17) |
|
|
|
|
|
|
|
|
2,701 |
| |
|
|
|
|
|
|
|
|
2,295 |
| Finance cost |
|
|
|
|
|
|
|
|
284 |
| |
|
|
|
|
|
|
|
|
200 |
| Profit before tax |
|
|
|
|
|
|
|
|
33,322 |
| |
|
|
|
|
|
|
|
|
30,110 |
| Income tax expense |
|
|
|
|
|
|
|
|
9,214 |
| |
|
|
|
|
|
|
|
|
7,964 |
| Net Profit |
|
|
|
|
|
|
|
|
24,108 |
| |
|
|
|
|
|
|
|
|
22,146 |
| Depreciation and amortization expense |
|
|
|
|
|
|
|
|
4,225 |
| |
|
|
|
|
|
|
|
|
3,476 |
| 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 year ended March 31, 2023 and March 31, 2022, respectively.
2.27 FUNCTION WISE CLASSIFICATION OF CONSOLIDATED STATEMENT
OF PROFIT AND LOSS
(In crore)
| Particulars |
Note No. |
Year ended March 31, |
| |
|
2023 |
2022 |
| Revenue from operations |
2.18 |
146,767 |
121,641 |
| Cost of Sales |
|
102,353 |
81,998 |
| Gross profit |
|
44,414 |
39,643 |
| Operating expenses |
|
|
|
| Selling and marketing expenses |
|
6,249 |
5,156 |
| General and administration expenses |
|
7,260 |
6,472 |
| Total operating expenses |
|
13,509 |
11,628 |
| Operating profit |
|
30,905 |
28,015 |
| Other income, net |
2.19 |
2,701 |
2,295 |
| Finance cost |
|
284 |
200 |
| Profit before tax |
|
33,322 |
30,110 |
| Tax expense: |
|
|
|
| Current tax |
2.17 |
9,287 |
7,811 |
| Deferred tax |
2.17 |
(73) |
153 |
| Profit for the year |
|
24,108 |
22,146 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
2.22 |
8 |
(85) |
| Equity instruments through other comprehensive income, net |
2.5 |
(7) |
96 |
| |
|
1 |
11 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
2.11 |
(7) |
(8) |
| Exchange differences on translation of foreign operations, net |
|
776 |
228 |
| Fair value changes on investments, net |
2.5 |
(256) |
(49) |
| |
|
513 |
171 |
| Total other comprehensive income / (loss), net of tax |
|
514 |
182 |
| Total comprehensive income for the year |
|
24,622 |
22,328 |
| Profit attributable to: |
|
|
|
| Owners of the Company |
|
24,095 |
22,110 |
| Non-controlling interests |
|
13 |
36 |
| |
|
24,108 |
22,146 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
24,598 |
22,293 |
| Non-controlling interests |
|
24 |
35 |
| |
|
24,622 |
22,328 |
for and on behalf of the Board of Directors of Infosys
Limited
|
D. Sundaram
Lead Independent Director |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
April 13, 2023 |
|
|
