Infosys Limited (INFY) 6-K Infosys crosses US$ 3 billion in revenues in the first nine months

EXHIBIT 99.11
Indian GAAP Standalone Statement, Notes and Report

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

We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at 31 December 2007, the Profit and Loss Account of the Company for the quarter and nine months ended on that date and the Cash Flow Statement of the Company for the nine months ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that:

(a)	we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
(b)	in our opinion, proper books of account have been kept by the Company so far as appears from our examination of those books;
(c)	the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d)	in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards prescribed by Companies (Accounting Standards) Rules, 2006, to the extent applicable; and
(e)	in our opinion and to the best of our information and according to the explanations given to us, the said accounts give a true and fair view in conformity with the accounting principles generally accepted in India:

(i)	in the case of the Balance Sheet, of the state of affairs of the Company as at 31 December 2007;
(ii)	in the case of the Profit and Loss Account, of the profit of the Company for the quarter and nine months ended on that date; and
(iii)	in the case of the Cash Flow Statement, of the cash flows of the Company for the nine months ended on that date.

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna
Partner
Membership No. 32815

Bangalore
11 January 2008

Auditor’s Report on Quarterly Financial Results and Year to Date Results of Infosys Technologies Limited Pursuant to the Clause 41 of the Listing Agreement

To
Board of Directors of Infosys Technologies Limited

We have audited the quarterly financial results of Infosys Technologies Limited (the Company) for the quarter ended 31 December 2007 and the year to date results for the period 1 April 2007 to 31 December 2007, attached herewith, being submitted by the Company pursuant to the requirement of Clause 41 of the Listing Agreement. These quarterly financial results as well as the year to date financial results have been prepared on the basis of the interim financial statements, which are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial results based on our audit of such interim financial statements, which have been prepared in accordance with the recognition and measurement principles laid down in Accounting Standard (AS) 25, Interim Financial Reporting, issued by the Institute of Chartered Accountants of India and other accounting principles generally accepted in India.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial results are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts disclosed as financial results. An audit also includes assessing the accounting principles used and significant estimates made by management. We believe that our audit provides a reasonable basis for our opinion.

In our opinion and to the best of our information and according to the explanations given to us these quarterly financial results as well as the year to date results:

(i)	are presented in accordance with the requirements of Clause 41 of the Listing Agreement in the regard; and
(ii)	give a true and fair view of the net profit and other financial information for the quarter ended 31 December 2007 as well as the year to date results for the period from 1 April 2007 to 31 December 2007.

Further, we also report that we have, on the basis of the books of account and other records and information and explanations given to us by the management, also verified the number of shares as well as percentage of shareholdings in respect of aggregate amount of public shareholding, as furnished by the Company in terms of Clause 35 of the Listing Agreement and found the same to be correct.

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna
Partner
Membership No. 32815

Bangalore
11 January 2008

INFOSYS TECHNOLOGIES LIMITED  

in Rs. crore

Balance Sheet as at	Schedule	December 31, 2007	March 31, 2007
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital	1	286	286
Reserves and surplus	2	13,788	10,876
		14,074	11,162
APPLICATION OF FUNDS
FIXED ASSETS	3
Original cost		4,559	3,889
Less: Accumulated depreciation		2,139	1,739
Net book value		2,420	2,150
Add: Capital work-in-progress		1,253	957
		3,673	3,107
INVESTMENTS	4	942	839
DEFERRED TAX ASSETS	5	97	79
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors	6	2,421	2,292
Cash and bank balances	7	6,334	5,507
Loans and advances	8	2,221	1,162
		10,976	8,961
LESS: CURRENT LIABILITIES AND PROVISIONS
Current liabilities	9	1,287	1,162
Provisions	10	327	662
NET CURRENT ASSETS		9,362	7,137
		14,074	11,162
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22

The schedules referred to above are an integral part of the balance sheet.

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan	S. D. Shibulal
Partner Membership No. 32815	Chairman and Chief Mentor	Co-Chairman	Chief Executive Officer and Managing Director	Chief Operating Officer
	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar	Claude Smadja
	Director	Director	Director	Director
	Sridar A. Iyengar	David L. Boyles	Jeffrey S. Lehman	K. Dinesh
	Director	Director	Director	Director
Bangalore	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan	Parvatheesam K.
January 11, 2008	Director	Director	Chief Financial Officer	Company Secretary

INFOSYS TECHNOLOGIES LIMITED

 in Rs. crore, except per share data

Profit and Loss Account for the	Schedule	Quarter ended  December 31,		Nine months ended  December 31,
		2007	2006	2007	2006
Income from software services and products		3,999	3,454	11,413	9,594
Software development expenses	11	2,219	1,888	6,504	5,299
GROSS PROFIT		1,780	1,566	4,909	4,295
Selling and marketing expenses	12	172	182	541	530
General and administration expenses	13	281	235	790	688
		453	417	1,331	1,218
OPERATING PROFIT BEFORE INTEREST AND DEPRECIATION		1,327	1,149	3,578	3,077
Interest		-	-	-	-
Depreciation		138	129	404	336
OPERATING PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS		1,189	1,020	3,174	2,741
Other income, net	14	152	60	550	255
Provision for investments		-	-	-	3
NET PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS		1,341	1,080	3,724	2,993
Provision for taxation (refer to note 22.2.12)	15	155	122	436	340
NET PROFIT AFTER TAX BEFORE EXCEPTIONAL ITEMS		1,186	958	3,288	2,653
Income on sale of Investments, net of taxes (refer to note 22.2.22)		-	-	-	6
NET PROFIT AFTER TAX AND EXCEPTIONAL ITEMS		1,186	958	3,288	2,659
Balance Brought Forward		6,545	3,574	4,844	2,195
Less: Residual dividend paid		-	-	-	4
Dividend tax on the above		-	-	-	1
		6,545	3,574	4,844	2,190
AMOUNT AVAILABLE FOR APPROPRIATION		7,731	4,532	8,132	4,849
Dividend
Interim		-	-	343	278
Final		-	-	-	-
Total dividend		-	-	343	278
Dividend tax		-	-	58	39
Amount transferred to general reserve		-	-	-	-
Balance in profit and loss account		7,731	4,532	7,731	4,532
		7,731	4,532	8,132	4,849
EARNINGS PER SHARE *
Equity shares of par value Rs. 5/- each
Before exceptional Items
Basic		20.77	17.20	57.58	47.82
Diluted		20.70	16.82	57.38	46.70
After exceptional Items
Basic		20.77	17.20	57.58	47.93
Diluted		20.70	16.82	57.38	46.81
Number of shares used in computing earnings per share
Basic		57,13,46,568	55,70,34,398	57,12,55,430	55,48,77,140
Diluted		57,32,85,874	56,97,17,084	57,32,10,538	56,81,73,059
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22

* Refer to note 22.2.20

The schedules referred to above are an integral part of the profit and loss account

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan	S. D. Shibulal
Partner Membership No. 32815	Chairman and Chief Mentor	Co-Chairman	Chief Executive Officer and Managing Director	Chief Operating Officer
	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar	Claude Smadja
	Director	Director	Director	Director
	Sridar A. Iyengar	David L. Boyles	Jeffrey S. Lehman	K. Dinesh
	Director	Director	Director	Director
Bangalore	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan	Parvatheesam K.
January 11, 2008	Director	Director	Chief Financial Officer	Company Secretary

INFOSYS TECHNOLOGIES LIMITED

in Rs. crore

Cash Flow Statement for the	Schedule	Nine months ended  December 31,
		2007	2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit before tax and exceptional items		3,724	2,993
Adjustments to reconcile net profit before tax to cash provided by operating activities
(Profit)/ loss on sale of fixed assets		-	-
Depreciation		404	336
Interest and dividend income		(480)	(183)
Profit on sale of liquid mutual funds		-	(8)
Provision for investments		-	3
Effect of exchange differences on translation of foreign currency cash and cash equivalents		(37)	(16)
Changes in current assets and liabilities
Sundry debtors		(129)	(568)
Loans and advances	16	(233)	(246)
Current liabilities and provisions	17	107	233
Income taxes paid	18	(227)	(290)
NET CASH GENERATED BY OPERATING ACTIVITIES		3,129	2,254
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets and change in capital work-in-progress	19	(970)	(818)
Payment for intellectual property rights		-	14
Investment in subsidiaries (refer to note 22.2.16)		(103)	(553)
Investments in securities (refer to note 22.2.16)	20	-	(1,359)
Interest and dividend income		480	183
Cash flow from investing activities before exceptional items		(593)	(2,533)
Proceeds on sale of Long Term Investments (Net of taxes) (refer to note 22.2.22)		-	6
NET CASH USED IN INVESTING ACTIVITIES		(593)	(2,527)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of share capital on exercise of stock options		25	421
Dividends paid during the period		(713)	(1,343)
Dividend Tax paid during the period		(121)	(189)
NET CASH USED IN FINANCING ACTIVITIES		(809)	(1,111)
Effect of exchange differences on translation of foreign currency cash and cash equivalents		37	16
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS		1,764	(1,368)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD		5,650	3,779
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	21	7,414	2,411
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS	22

The schedules referred to above are an integral part of the cash flow statement.

As per our report attached

for BSR & Co.
Chartered Accountants

Natrajan Ramkrishna	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan	S. D. Shibulal
Partner Membership No. 32815	Chairman and Chief Mentor	Co-Chairman	Chief Executive Officer and Managing Director	Chief Operating Officer
	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar	Claude Smadja
	Director	Director	Director	Director
	Sridar A. Iyengar	David L. Boyles	Jeffrey S. Lehman	K. Dinesh
	Director	Director	Director	Director
Bangalore	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan	Parvatheesam K.
January 11, 2008	Director	Director	Chief Financial Officer	Company Secretary

INFOSYS TECHNOLOGIES LIMITED

in Rs. crore, except as otherwise stated

Schedules to the Balance Sheet as at		December 31,2007	March 31, 2007
1	SHARE CAPITAL
	Authorized
	Equity shares, Rs. 5/- par value
	60,00,00,000 (60,00,00,000) equity shares	300	300
	Issued, Subscribed and Paid Up
	Equity shares, Rs. 5/- par value*	286	286
	57,15,53,937 ( 57,12,09,862) equity shares fully paid up
	[Of the above, 53,53,35,478 ( 53,53,35,478) equity shares, fully paid up have been issued as bonus shares by capitalization of the General reserve]
		286	286
	Forfeited shares amounted to Rs. 1,500/- (Rs. 1,500/-)
	* For details of options in respect of equity shares, refer to note 22.2.11
	* Also refer to note 22.2.20 for details of basic and diluted shares
2	RESERVES AND SURPLUS
	Capital reserve	6	6
	Share premium account - Opening balance	2,768	1,543
	Add: Receipts on exercise of employee stock options	25	1,206
	Income tax benefit arising from exercise of stock options	-	19
		2,793	2,768
	General reserve - Opening balance	3,258	3,015
	Less: Gratuity transitional liability (refer to note 22.2.23)	-	9
	Less: Capitalized on issue of bonus shares	-	138
	Add: Transferred from the Profit and Loss Account	-	378
	Add: Fair value of employee options issued in exchange of Infosys BPO options (refer to note 22.2.16)	-	12
		3,258	3,258
	Balance in Profit and Loss Account	7,731	4,844
		13,788	10,876

INFOSYS TECHNOLOGIES LIMITED

	in Rs. crore except as otherwise stated
Schedules to the Balance Sheet

3	FIXED ASSETS
		Original cost				Depreciation and amortization				Net book value
		As at	Additions	Deductions/	As at	As at	For the	Deductions/	As at	As at	As at
		April 1,	during the period	Retirement during	December 31,	April 1,	Period	Retirement during	December 31,	December 31,	March 31,
		2007		the period	2007	2007		the period	2007	2007	2007
	Land : free-hold	76	55	-	131	-	-	-	-	131	76
	leasehold	95	3	-	98	-	-	-	-	98	95
	Buildings*	1,471	298	-	1,769	266	80	-	346	1,423	1,205
	Plant and machinery*	760	108	-	868	414	95	-	509	359	346
	Computer equipment*	944	130	4	1,070	714	164	4	874	196	230
	Furniture and fixtures*	541	80	-	621	344	65	-	409	212	197
	Vehicles	2	-	-	2	1	-	-	1	1	1
		3,889	674	4	4,559	1,739	404	4	2,139	2,420	2,150
	Previous period	2,837	820	6	3,651	1,275	336	3	1,608	2,043	1,562
	Previous year	2,837	1,098	46	3,889	1,275	469	5	1,739	2,150

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

* Includes certain assets provided on operating lease to Infosys BPO , a subsidiary. Please refer to note 22.2.6 for details

INFOSYS TECHNOLOGIES LIMITED

in Rs. crore

Schedules to the Balance Sheet as at		December 31, 2007	March 31, 2007
4	INVESTMENTS
	Trade (unquoted) – at cost
	Long- term investments
	In subsidiaries
	Infosys BPO Ltd**
	3,34,61,902 (3,34,61,902) equity shares of Rs. 10/- each, fully paid	637	637
	Infosys Technologies (China) Co. Limited	46	46
	Infosys Technologies (Australia) Pty Limited
	1,01,08,869 (1,01,08,869) equity shares of A$ 0.11 par value, fully paid	66	66
	Infosys Consulting, Inc., USA
	4,00,00,000 (2,00,00,000) common stock of US $1.00 par value, fully paid	171	90
	Infosys Technologies, S. De R.L. De C.V., Mexico	22	-
		942	839
	In other investments*	11	11
	Less: Provision for investments	11	11
		-	-
	Non-trade (unquoted), current investments, at the lower of cost and fair value
	Liquid mutual fund units *	-	-
		942	839
	Aggregate amount of unquoted investments	942	839
	* Refer to note 22.2.16 for details of investments
	** Investments include 17,37,092 ( 17,37,092 ) options in Infosys BPO (refer note 22.2.16)
5	DEFERRED TAX ASSETS
	Fixed assets	85	69
	Sundry debtors	7	3
	Others	5	7
		97	79
6	SUNDRY DEBTORS*
	Debts outstanding for a period exceeding six months
	Unsecured
	considered doubtful	38	15
	Other debts
	Unsecured
	considered good**	2,421	2,292
	considered doubtful	6	7
		2,465	2,314
	Less: Provision for doubtful debts	44	22
		2,421	2,292
	* Includes dues from companies where directors are interested	-	7
	** Includes dues from subsidiaries (refer note 22.2.7)	1	2
7	CASH AND BANK BALANCES
	Cash on hand	-	-
	Balances with scheduled banks in Indian Rupees
	In current accounts *	129	302
	In deposit accounts	5,601	4,827
	Balances with non-scheduled banks in foreign currency **
	in deposit accounts	145	-
	In current accounts	459	378
		6,334	5,507
	*Includes balance in unclaimed dividend account (refer note 22.2.25a)	3	2
	**Refer to note 22.2.13 for details of balances in non-scheduled banks
8	LOANS AND ADVANCES
	Unsecured, considered good
	Loans to subsidiary (refer to note 22.2.7)	32	22
	Advances
	prepaid expenses	19	28
	for supply of goods and rendering of services*	4	3
	advance to gratuity and provident fund trust	28	-
	others	13	20
		96	73
	Unbilled revenues	527	312
	Advance income tax	147	352
	MAT credit entitlement	57	-
	Loans and advances to employees
	housing and other loans	39	42
	salary advances	50	63
	Electricity and other deposits	24	20
	Rental deposits	11	10
	Deposits with financial institution and body corporate (refer to note 22.2.14)	1,228	275
	Mark to Market on options/ forward contracts	42	15
		2,221	1,162
	Unsecured, considered doubtful
	Loans and advances to employees	1	1
		2,222	1,163
	Less: Provision for doubtful loans and advances to employees	1	1
		2,221	1,162
	* Includes advances to subsidiary company	-	-
9	CURRENT LIABILITIES
	Sundry creditors
	goods and services *	15	23
	accrued salaries and benefits
	salaries	27	28
	bonus and incentives	228	208
	unavailed leave	138	120
	for other liabilities
	provision for expenses	269	281
	retention monies	42	23
	withholding and other taxes payable	173	172
	due to option holders of Infosys BPO	-	2
	others	36	4
		928	861
	Advances received from clients	12	4
	Unearned revenue	344	295
	Unclaimed dividend	3	2
		1,287	1,162
	*Includes dues to subsidiary companies (refer to note22.2.7)	1	-
10	PROVISIONS
	Proposed dividend	-	371
	Provision for
	tax on dividend	-	63
	income taxes *	286	207
	post-sales client support and warranties	41	21
		327	662

* Refer to note 22.2.12

INFOSYS TECHNOLOGIES LIMITED

 in Rs. Crore

Schedules to Profit and Loss Account for the		Quarter ended  December 31,		Nine months ended December 31,
		2007	2006	2007	2006
11	SOFTWARE DEVELOPMENT EXPENSES
	Salaries and bonus including overseas staff expenses	1,743	1,393	4,987	3,936
	Overseas group health insurance	(43)	28	7	68
	Contribution to provident and other funds	42	37	125	105
	Staff welfare	15	11	35	29
	Technical sub-contractors - subsidiaries	192	159	575	446
	Technical sub-contractors - others	48	73	167	170
	Overseas travel expenses	75	70	221	206
	Visa charges and others	28	20	104	84
	Software packages
	for own use	65	57	154	140
	for service delivery to clients	8	5	22	20
	Communication expenses	15	14	40	40
	Computer maintenance	5	6	15	16
	Consumables	6	6	15	17
	Rent	6	4	17	11
	Provision for post-sales client support and warranties	14	5	20	11
		2,219	1,888	6,504	5,299
12	SELLING AND MARKETING EXPENSES
	Salaries and bonus including overseas staff expenses	117	111	367	329
	Overseas group health insurance	(2)	1	-	2
	Contribution to provident and other funds	-	1	1	2
	Staff welfare	1	1	2	2
	Overseas travel expenses	20	24	63	69
	Visa charges and others	1	-	2	1
	Traveling and conveyance	1	1	2	2
	Commission and earnout charges	3	4	10	23
	Brand building	14	17	41	44
	Professional charges	5	5	17	16
	Rent	3	4	9	12
	Marketing expenses	4	10	13	18
	Telephone charges	2	2	6	5
	Communication expenses	1	-	1	1
	Printing and stationery	-	1	1	1
	Advertisements	1	-	4	2
	Office maintenance	-	-	-	-
	Sales promotion expenses	1	-	2	1
	Consumables	-	-	-	-
	Software packages
	for own use	-	-	-	-
	Computer maintenance	-	-	-	-
	Power and fuel	-	-	-	-
	Insurance charges	-	-	-	-
	Rates and taxes	-	-	-	-
	Bank charges and commission	-	-	-	-
	Miscellaneous expenses	-	-	-	-
		172	182	541	530
13	GENERAL AND ADMINISTRATION EXPENSES
	Salaries and bonus including overseas staff expenses	57	45	162	127
	Overseas group health insurance	(2)	-	(2)	-
	Contribution to provident and other funds	3	3	9	8
	Professional charges	42	34	115	100
	Telephone charges	31	28	87	80
	Power and fuel	26	22	79	66
	Traveling and conveyance	27	21	69	61
	Overseas travel expenses	3	3	10	12
	Visa charges and others	-	-	-	1
	Office maintenance	32	23	86	70
	Guest house maintenance*	1	1	2	1
	Insurance charges	3	7	15	19
	Printing and stationery	3	4	10	10
	Donations	5	7	15	16
	Rent	3	4	11	13
	Advertisements	1	2	5	6
	Repairs to building	6	5	14	15
	Repairs to plant and machinery	4	4	13	10
	Rates and taxes	14	7	26	19
	Professional membership and seminar participation fees	2	3	7	7
	Postage and courier	2	2	7	6
	Books and periodicals	1	1	3	3
	Provision for bad and doubtful debts	15	5	36	24
	Provision for doubtful loans and advances	-	-	-	-
	Commission to non-whole time directors	1	1	3	1
	Freight charges	1	-	1	1
	Bank charges and commission	-	-	1	1
	Research grants	-	2	4	7
	Auditor’s remuneration
	statutory audit fees	-	-	-	-
	certification charges	-	-	-	-
	others	-	-	-	-
	out-of-pocket expenses	-	-	-	-
	Miscellaneous expenses	-	1	2	4
		281	235	790	688
	*For non training purposes
14	OTHER INCOME, NET
	Interest received on deposits with banks and others*	165	30	476	100
	Dividend received on investment in liquid mutual funds (non-trade unquoted)	-	36	4	83
	Profit on sale of liquid mutual funds	-	-	-	-
	Miscellaneous income (refer to note 22.2.15)	6	13	18	28
	Exchange (losses) / gains	(19)	(19)	52	44
		152	60	550	255
	*includes tax deducted at source	8	4	46	22
15	PROVISION FOR TAXATION
	Income taxes*	186	125	511	355
	MAT credit entitlement	(25)	-	(57)	-
	Deferred taxes	(6)	(3)	(18)	(15)
		155	122	436	340

*Refer to note 22.2.12

INFOSYS TECHNOLOGIES LIMITED

 in Rs. Crore

Schedules to Cash Flow Statements for the		Nine months ended December 31,
		2007	2006
16	CHANGE IN LOANS AND ADVANCES
	As per the Balance Sheet*	2,221	1,769
	Add: Gratutity negative plan amendment liability (refer to Note 22.2.23)	(37)	13
	Less: Deposits with financial institutions and body corporates
	included in cash and cash equivalents	(1,080)	(743)
	MAT credit entitlement	(57)	-
	Advance income taxes separately considered	(147)	(309)
		900	730
	Less: Opening balance considered	(667)	(484)
		233	246
	* includes loans to subsidiary and net of gratuity transitional liability
17	CHANGE IN CURRENT LIABILITIES AND PROVISIONS
	As per the Balance Sheet	1,614	1,361
	Add/ (Less): unclaimed dividend	(3)	(3)
	Due to option holders of Infosys BPO	-	-
	Gratuity negative plan amendment liability	(37)	-
	��   Provisions separately considered in the cash flow statement
	Income taxes	(286)	(294)
		1,288	1,064
	Less: Opening balance considered	(1,181)	(831)
		107	233
18	INCOME TAXES PAID
	Charge as per the Profit and Loss Account	436	340
	Add: Increase/(Decrease) in advance income taxes	(205)	42
	Increase/(Decrease) in deferred taxes	18	15
	Increase/(Decrease) in MAT entitlement credit	57	-
	Less : (Increase)/Decrease in income tax provision	(79)	(107)
		227	290
19	PURCHASE OF FIXED ASSETS AND CHANGE IN CAPITAL
	WORK-IN-PROGRESS
	As per the Balance Sheet*	674	816
	Less: Opening Capital work-in-progress	(957)	(571)
	Add: Closing Capital work-in-progress	1,253	573
		970	818
	* Excludes Rs. nil (Rs 4 crore) towards movement of land from Leasehold to Freehold
20	INVESTMENTS IN SECURITIES *
	As per the Balance Sheet	942	2,793
	Add: Provisions on investments	-	3
		942	2,796
	Less: Investment in subsidiaries	(103)	(553)
	Profit on sale of liquid mutual funds	-	(8)
	Opening balance considered	(839)	(876)
		-	1,359
	* Refer to note 22.2.16 for investment and redemptions
21	CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
	As per the Balance Sheet	6,334	1,668
	Add: Deposits with financial institutions, included herein	1,080	743
		7,414	2,411

Schedules to the Financial Statements for the quarter and nine months ended December 31, 2007

22 Significant accounting policies and notes on accounts

Company overview

Infosys Technologies Limited ("Infosys" or "the company") along with its majority owned and controlled subsidiary, Infosys BPO Limited, India ("Infosys BPO") formerly known as Progeon Limited, and wholly owned subsidiaries, Infosys Technologies (Australia) Pty. Limited ("Infosys Australia"), Infosys Technologies (China) Co. Limited ("Infosys China"), formerly known as Infosys Technologies (Shanghai) Co. Limited, Infosys Consulting, Inc., USA ("Infosys Consulting") and Infosys Technologies S. DE R.L. de C.V. ("Infosys Mexico") is a leading global technology services organisation. The Company provides end-to-end business solutions that leverage technology thereby enabling clients to enhance business performance. The Company provides solutions that span the entire software life cycle encompassing technical consulting, design, development, re-engineering, maintenance, systems integration and package evaluation and implementatio n, testing and infrastructure management services. In addition, the Company offers software products for the banking industry.

22.1 Significant accounting policies

22.1.1 Basis of preparation of financial statements

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. These financial statements should be read in conjunction with the annual financial statements for the year ended March 31, 2007. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Management evaluates all recently issued or revised accounting standards on an on-going basis.

22.1.2 Use of estimates

The preparation of the financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed assets and intangible assets.

Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset's net sales price or present value as determined above. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Where no reliable estimate can be made, a disclosure is made as contingent liability. Actual results could differ from those estimates.

22.1.3. Revenue recognition

Revenue from software development on fixed-price, fixed-time frame contracts, where there is no uncertainty as to measurement or collectability of consideration is recognized as per the percentage of completion method. On time-and-materials contracts, revenue is recognized as the related services are rendered. Cost and earnings in excess of billings are classified as unbilled revenue while billing in excess of cost and earnings is classified as unearned revenue. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current estimates. Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized proportionately over the period in which services are rendered. Revenue from the sale of user licenses for software applications is recognized on transfer of the title in the user license, except in multiple element contracts, w here revenue is recognized as per the percentage of completion method.

Profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sales price and the then carrying value of the investment. Lease rentals are recognized ratably on a straight line basis over the lease term. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized when the company’s right to receive dividend is established.

22.1.4 Expenditure

The cost of software purchased for use in software development and services is charged to cost of revenues in the year of acquisition. Charges relating to non-cancelable, long-term operating leases are computed primarily on the basis of the lease rentals, payable as per the relevant lease agreements. Post-sales customer support costs are estimated by management, determined on the basis of past experience. The costs provided for are carried until expiry of the related warranty period. Provisions are made for all known losses and liabilities. Leave encashment liability is determined on the basis of an actuarial valuation.

22.1.5 Fixed assets, intangible assets and capital work-in-progress

Fixed assets are stated at cost, less accumulated depreciation. Direct costs are capitalized until fixed assets are ready for use. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the balance sheet date. Intangible assets are recorded at the consideration paid for acquisition.

22.1.6 Depreciation and amortization

Depreciation on fixed assets is applied on the straight-line basis over the useful lives of assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged. Individual low cost assets (acquired for less than Rs. 5,000/-) are depreciated within a year of acquisition. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use. Management estimates the useful lives for the other fixed assets as follows:-

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

22.1.7 Retirement benefits to employees

22.1.7.a Gratuity

Infosys provides for gratuity, a defined benefit retirement plan (the “Gratuity Plan”) covering eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Infosys Technologies Limited Employees’ Gratuity Fund Trust (the “Trust”). Trustees administer contributions made to the Trust and contributions are invested in specific investments as permitted by law.

22.1.7.b Superannuation

Certain employees of Infosys are also participants in a defined contribution plan. Until March 2005, the company made contributions under the superannuation plan (the Plan) to the Infosys Technologies Limited Employees’ Superannuation Fund Trust. The company had no further obligations to the Plan beyond its monthly contributions. From April 1 2005, a portion of the monthly contribution amount was paid directly to the employees as an allowance and the balance amount was contributed to the trust.

22.1.7.c Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement, death, incapacitation or termination of employment. Both the employee and the company make monthly contributions to the Infosys Technologies Limited Employee's Provident Fund Trust equal to a specified percentage of the covered employee’s salary. Infosys also contributes to a government administered pension fund on behalf of its employees. The interest rate payable by the trust to the beneficiaries every year is being notified by the government. The company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

22.1.8. Research and development

Revenue expenditure incurred on research and development is expensed as incurred. Capital expenditure incurred on research and development is depreciated over the estimated useful lives of the related assets.

22.1.9. Foreign currency transactions

Revenue from overseas clients and collections deposited in foreign currency bank accounts are recorded at the exchange rate as of the date of the respective transactions. Expenditure in foreign currency is accounted at the exchange rate prevalent when such expenditure is incurred. Disbursements made out of foreign currency bank accounts are reported at the daily rates. Exchange differences are recorded when the amount actually received on sales or actually paid when expenditure is incurred, is converted into Indian Rupees. The exchange differences arising on foreign currency transactions are recognized as income or expense in the period in which they arise.

Fixed assets purchased at overseas offices are recorded at cost, based on the exchange rate as of the date of purchase. The charge for depreciation is determined as per the company’s accounting policy.

Monetary current assets and monetary current liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resulting difference is also recorded in the profit and loss account.

22.1.10 Forward contracts and options in foreign currencies

The company uses foreign exchange forward contracts and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts and options reduces the risk or cost to the company and the company does not use the foreign exchange forward contracts or options for trading or speculation purposes.

The company records the gain or loss on effective hedges in the foreign currency fluctuation reserve until the transactions are complete. On completion, the gain or loss is transferred to the profit and loss account of that period. To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. In the absence of a designation as effective hedge, a gain or loss is recognized in the profit and loss account.

22.1.11. Income tax

Income taxes are computed using the tax effect accounting method, where taxes are accrued in the same period the related revenue and expenses arise. A provision is made for income tax annually based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. Minimum alternative tax (MAT) paid in accordance to the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the company will pay normal tax after the tax holiday period. Accordingly, it is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and the asset can be measured reliably.

The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Deferred tax assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full fiscal year. Tax benefits of deductions earned on exercise of employee stock options in exce ss of compensation charged to profit and loss account are credited to the share premium account.

22.1.12. Earnings per share

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of any extra-ordinary/exceptional item. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares iss ues effected prior to the approval of the financial statements by the board of directors.

22.1.13. Investments

Trade investments are the investments made to enhance the company’s business interests. Investments are either classified as current or long-term based on the Management’s intention at the time of purchase. Current investments are carried at the lower of cost and fair value. Cost for overseas investments comprises the Indian Rupee value of the consideration paid for the investment. Long-term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.

22.1.14. Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.

22.1.15 Onerous contracts

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event based on a reliable estimate of such obligation.

22.2 Notes on accounts

Amounts in the financial statements are presented in Rupees crore, except for per share data and as otherwise stated. Certain amounts do not appear due to rounding off, and are detailed in Note 22.3. All exact amounts are stated with the suffix “/-”. One crore equals 10 million.

The previous period/ year figures have been regrouped/reclassified, wherever necessary to conform to the current presentation.

22.2.1 Aggregate expenses

The aggregate amounts incurred on certain specific expenses

in Rs. crore

	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Salaries and bonus including overseas staff expenses#	1,917	1,549	5,516	4,392
Contribution to provident and other funds	45	41	135	115
Staff welfare
Staff welfare	16	12	37	31
Overseas group health insurance*	(47)	29	5	70
Overseas travel expenses	98	97	294	287
Visa charges and others	29	20	106	86
Traveling and conveyance	28	22	71	63
Technical sub-contractors - subsidiaries	192	159	575	446
Technical sub-contractors - others	48	73	167	170
Software packages	-	-	-	-
For own use	65	57	154	140
For service delivery to clients	8	5	22	20
Professional charges	47	39	132	116
Telephone charges	33	30	93	85
Communication expenses	16	14	41	41
Power and fuel	26	22	79	66
Office maintenance	32	23	86	70
Guest house maintenance**	1	1	2	1
Commission and earnout charges	3	4	10	23
Brand building	14	17	41	44
Rent	12	12	37	36
Insurance charges	3	7	15	19
Computer maintenance	5	6	15	16
Printing and stationery	3	5	11	11
Consumables	6	6	15	17
Donations	5	7	15	16
Advertisements	2	2	9	8
Marketing expenses	4	10	13	18
Repairs to building	6	5	14	15
Repairs to plant and machinery	4	4	13	10
Rates and taxes	14	7	26	19
Professional membership and seminar participation fees	2	3	7	7
Postage and courier	2	2	7	6
Provision for post-sales client support and warranties	14	5	20	11
Books and periodicals	1	1	3	3
Provision for bad and doubtful debts	15	5	36	24
Provision for doubtful loans and advances	-	-	-	-
Commission to non-whole time directors	1	1	3	1
Sales promotion expenses	1	-	2	1
Freight charges	1	-	1	1
Bank charges and commission	-	-	1	1
Auditor’s remuneration	-	-	-	-
Statutory audit fees	-	-	-	-
Certification charges	-	-	-	-
Others	-	-	-	-
Out-of-pocket expenses	-	-	-	-
Research grants	-	2	4	7
Miscellaneous expenses	-	1	2	4
	2,672	2,305	7,835	6,517
Fringe Benefit Tax (FBT) in India included in the above	4	5	12	12

^# The Company had voluntarily settled with the California Division of Labor standards enforcement (DLSE) towards possible overtime payment to certain employees in California for a total amount of Rs. 102 crore. The payment pertains to the last three years and such backwages would be paid to employees in due course.

* The Company records health insurance liabilities based on the maximum individual claimable amounts by employees. During the quarter, the Company completed its reconciliation of amounts actually claimed by employees to date, including past years, with the aggregate amount of recorded liability and the net excess provision of Rs. 71 crore was written back.

**for non-training purposes

22.2.2. Capital commitments and contingent liabilities

 in Rs. Crore

	As at
Particulars	December 31, 2007	March 31, 2007
Estimated amount of unexecuted capital contracts
(net of advances and deposits)	650	655
Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others	2	2
Claims against the company, not acknowledged as debts*	17	15
(Net of Amount Rs. 101 crore (Rs. 138 crore ) crore paid to statutory authorities)
Forward contracts outstanding
In US$	US $ 857,000,000	US $ 165,000,000
(Equivalent approximate in Rs. crore)	3,377	711
In Euro	€ 25,000,000	€ 2,000,000
(Equivalent approximate in Rs. crore)	144	12
In GBP	£15,000,000	£5,500,000
(Equivalent approximate in Rs. crore)	117	47
Options outstanding
Range barrier options in US $	US $ 100,000,000	US $ 205,000,000
(Equivalent approximate in Rs. crore)	394	884
Euro Accelerator in Euro	€ 15,000,000	€ 24,000,000
(Equivalent approximate in Rs. crore)	86	138
GBP Accelerator	£10,500,000	-
(Equivalent approximate in Rs. crore)	82	-
Target Redemption structure (GBP)	-	£16,000,000
(Equivalent approximate in Rs. crore)	-	136
USD-INR Plain Vanila Put option	US $ 5,000,000	-
(Equivalent approximate in Rs. crore)	20	-
Euro Forward extra	-	-
(Equivalent approximate in Rs. crore)	-	-
GBP Forward extra	£10,000,000	-
(Equivalent approximate in Rs. crore)	78	-

* Claims against the company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rs 98 crore ( Rs 234 crore), including interest of Rs 18 crore ( Rs 51 crore) upon completion of their tax review for fiscal 2004. The tax demand is mainly on account of disallowance of a portion of the deduction claimed by the company under Section 10A of the Income tax Act. The deductible amount is determined by the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover.The matter is pending before the Commissioner of Income tax ( Appeals) Bangalore.

The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial postion and results of operations.

As of the Balance Sheet date, the company has net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Nil (Rs. 995 crore as at March 31, 2007)

22.2.3 Quantitative details

The company is primarily engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

22.2.4. Imports (valued on the cost, insurance and freight basis)

in Rs. Crore

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Capital goods	59	61	228	209
Software packages	3	-	7	3
	62	61	235	212

22.2.5. Activity in foreign currency

in Rs. Crore

Particulars	Quarter endedDecember 31,		Nine months ended December 31,
	2007	2006	2007	2006
Earnings in foreign currency (on receipts basis)
Income from software services and products	3,826	3,321	10,944	8,896
Interest received on deposits with banks	5	3	14	10
Expenditure in foreign currency (on payments basis)
Travel expenses (including visa charges)	92	80	303	269
Professional charges	16	16	54	48
Technical sub-contractors - subsidiaries	192	156	556	431
Other expenditure incurred overseas for software development	1,319	1,224	3,909	3,094
Net earnings in foreign currency (on the receipts and payments basis)	2,212	1,848	6,136	5,064

22.2.6. Obligations on long-term, non-cancelable operating leases

The lease rentals charged during the period and maximum obligations on long-term non-cancelable operating leases payable as per the rentals stated in the respective agreements:

in Rs. Crore

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Lease rentals recognized during the period	12	12	37	36

in Rs. Crore

Lease obligations	As at
	December 31, 2007	March 31, 2007
Within one year of the balance sheet date	28	32
Due in a period between one year and five years	86	92
Due after five years	28	44
	142	168

The operating lease arrangements extend upto a maximum of ten years from their respective dates of inception and relates to rented overseas premises and car rentals. Some of the lease agreements have a price escalation clause.

Fixed assets provided on operating lease to Infosys BPO, a subsidiary company, as at December 31, 2007 and March 31, 2007 :

in Rs. Crore

Particulars	Cost	Accumulated depreciation	Net book value
Building	53	11	42
	46	9	37
Plant and machinery	22	14	8
	20	11	9
Computers	2	2	-
	2	2	-
Furniture & fixtures	13	11	2
	12	10	2
Total	90	38	52
	80	32	48

The aggregate depreciation charged on the above during the quarter and nine months ended December 31, 2007 amounted to Rs. 2 crore and Rs. 6 crore respectively. (Rs.2 crore and Rs.7 crore respectively for the quarter and nine months ended December 31, 2006.)

The company has non-cancelable operating leases on equipped premises leased to Infosys BPO. The leases extend for periods between 36 months and 58 months from the date of inception. The lease rentals received are included as a component of sale of shared services (Refer Note 22.2.7). Lease Rental commitments from Infosys BPO:

in Rs. Crore

Lease rentals	As at
	December 31, 2007	March 31, 2007
Within one year of the balance sheet date	7	12
Due in a period between one year and five years	-	4
Due after five years	-	-
	7	16

The rental income from Infosys BPO for the quarter and nine months ended December 31, 2007 amounted to Rs. 4 crore and Rs.13 crore (Rs. 5 crore and Rs. 12 crore for the quarter and nine months ended December 31, 2006)

22.2.7. Related party transactions

List of related parties:
Name of the related party	Country	Holding, as at
		December 31, 2007	March 31, 2007
Infosys BPO***	India	98.92% #	98.92% #
Infosys Australia	Australia	100%	100%
Infosys China	China	100%	100%
Infosys Consulting	USA	100%	100%
Infosys Mexico	Mexico	100%	-
Infosys BPO s. r. o *	Czech Republic	98.92%	98.92%
P-Financial Services Holding B.V. Netherlands **	Netherlands	98.92%	-

* Infosys BPO s.r.o is a wholly owned subsidiary of Infosys BPO.
**P-Financial Services Holding B.V. Netherlands is a wholly owned subsidiary of Infosys BPO
***On December 8, 2006, the shareholders of Infosys BPO approved a buy-back of upto 12,79,963 equity shares at a fair market value of Rs.604/- per equity share. The buy-back was in accordance with Section 77A of the Indian Companies Act, 1956. Pursuant to the buy-back offer Infosys BPO bought back 11,39,469 equity shares which were subsequently cancelled on December 29, 2006. Also refer to note 22.2.16
# Excludes deferred purchase of shares from shareholders of Infosys BPO of 3,60,417 shares

The details of the related party transactions entered into by the company, in addition to the lease commitments described in note 22.2.6, for the quarter and nine months ended December 31, 2007 and 2006 are as follows:

in Rs. Crore

Particulars	Quarter ended December 31		Nine months ended  December 31,
	2007	2006	2007	2006
Capital transactions:
Financing transactions
Infosys China	-	-	-	9
Infosys Mexico	18	-	22	-
Infosys Consulting	-	-	81	14
Loans
Infosys China	-	-	11	9
Revenue transactions:
Purchase of services
Infosys BPO (Including Infosys BPO s.r.o)	-	3	-	8
Infosys Australia	114	97	361	272
Infosys China	14	13	39	29
Infosys Consulting	61	47	170	136
Infosys Mexico	1	-	1	-
Purchase of shared services including facilities and personnel
Infosys BPO (Including Infosys BPO s.r.o)	4	1	6	2
Interest Income
Infosys China	-	-	-	1
Sale of services
Infosys Australia	1	1	2	2
Infosys China	-	1	-	2
Infosys Consulting	1	-	1	3
Sale of shared services including facilities and personnel
Infosys BPO (Including Infosys BPO s.r.o)	11	4	32	10
Infosys Consulting	1	1	1	2

Details of amounts due to or due from and maximum dues from subsidiaries for the nine months ended December 31, 2007 and year ended March 31, 2007:

 in Rs. Crore

Particulars	As at
	December 31, 2007	March 31, 2007
Loans and advances
Infosys China	32	22
Debtors
Infosys China	1	2
Infosys BPO (Including Infosys BPO s.r.o)	-	-
Creditors
Infosys BPO (Including Infosys BPO s.r.o)	-	-
Maximum balances of loans and advances
Infosys BPO (Including Infosys BPO s.r.o)	2	2
Infosys Australia	31	24
Infosys China	32	25
Infosys Consulting	16	14
Sundry Creditors
Infosys Mexico	1	-

During the quarter and nine months ended December 31, 2007, an amount of Rs.5 crore and Rs.15 crore (Rs. 5 crore and Rs.14 crore for the quarter and nine months ended December 31, 2006 ) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.

22.2.8. Transactions with key management personnel

Key Management personnel comprise directors and statutory officers. 

Particulars of remuneration and other benefits paid to key management personnel during the quarter and nine months ended December 31, 2007 and December 31, 2006 have been detailed in Schedule 22.3 since the amounts are less than a crore.

22.2.9. Research and development expenditure

in Rs. crore

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Revenue	45	43	154	116

22.2.10. Dues to small-scale industrial undertakings

As at December 31, 2007 and March 31, 2007, the company has no outstanding dues to small-scale industrial undertaking.

22.2.11. Stock option plans

The company has two stock option plans that are currently operational.

1998 Stock Option Plan (“the 1998 Plan”)

The 1998 Plan was approved by the board of directors in December 1997 and by the shareholders in January 1998, and is for issue of 1,17,60,000 ADSs representing 1,17,60,000 equity shares. The 1998 Plan automatically expires in January 2008, unless terminated earlier. All options under the 1998 Plan are exercisable for ADSs representing equity shares. A compensation committee comprising independent members of the Board of Directors administers the 1998 Plan. All options have been granted at 100% of fair market value.

Number of options granted, exercised and forfeited during the	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Options outstanding, beginning of period	20,84,124	37,33,549	20,84,124	45,46,480
Granted	-	-	-	-
Less: exercised	(162,633)	(346,993)	(162,633)	(1,022,564)
forfeited	-	(25,446)	-	(162,806)
Options outstanding, end of period	19,21,491	33,61,110	19,21,491	33,61,110

1999 Stock Option Plan (“the 1999 Plan”)

In fiscal 2000, the company instituted the 1999 Plan. The shareholders and the Board of Directors approved the plan in June 1999, which provides for the issue of 5,28,00,000 equity shares to the employees. The compensation committee administers the 1999 Plan. Options were issued to employees at an exercise price that is not less than the fair market value.

Number of options granted, exercised and forfeited during the	Quarter ended  December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Options outstanding, beginning of period	18,31,218	1,51,26,339	18,97,840	1,91,79,074
Granted	-	-	-	-
Less: exercised	(181,442)	(1,716,474)	(181,442)	(5,715,944)
forfeited	(4,477)	(23,875)	(71,099)	(77,140)
Options outstanding, end of period	16,45,299	1,33,85,990	16,45,299	1,33,85,990

In fiscal 2007, the company has accelerated the vesting of 5,72,000 outstanding unvested options which were due to be vested in the normal course by October, 2007.

The aggregate options considered for dilution are set out in note 22.2.20

Proforma Accounting for Stock Option Grants

Infosys applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using the fair value approach, the Company's net Income and basic and diluted earnings per share as reported would have reduced to the proforma amounts as indicated:-

in Rs. Crore

Particulars	Quarter endedDecember 31,		Nine months ended  December 31
	2007	2006	2007	2006
Net Profit:
As Reported	1,186	958	3,288	2,659
Less: Stock-based employee compensation expense	3	-	9	-
Adjusted Proforma	1,183	958	3,279	2,659
Basic Earnings per share as reported	20.77	17.20	57.58	47.93
Proforma Basic Earnings per share	20.71	17.20	57.40	47.93
Diluted Earnings per share as reported	20.70	16.82	57.38	46.81
Proforma Earnings per share as reported	20.64	16.82	57.20	46.81

The Finance Act, 2007 included Fringe Benefit Tax (“FBT”) on Employee Stock Option’s Plan (ESOPs). FBT liability crystallizes on the date of exercise of stock options. During the quarter and nine months ended December 31, 2007, 3,44,075 equity shares were issued pursuant to the exercise of stock options by employees under both the 1998 and 1999 stock option plans. FBT on exercise of stock options of Rs. 2 crore has been paid by the Company and subsequently recovered from the employees. Consequently, there is no impact on the Profit and loss account.

22.2.12. Income taxes

The provision for taxation includes tax liabilities in India on the company’s global income as reduced by exempt incomes and any tax liabilities arising overseas on income sourced from those countries. Most of Infosys’ operations are conducted through Software Technology Parks (“STPs”). Income from STPs are tax exempt for the earlier of 10 years commencing from the fiscal year in which the unit commences software development and March 31, 2009.

Infosys also has operations in a Special Economic Zone ("SEZ"). Income from SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions. Pursuant to the changes in the Indian Income Tax Act, the company has calculated its tax liability after considering Minimum Alternate Tax (MAT). The MAT liability can be carried forward and set off against the future tax liabilities. Accordingly a sum of Rs 57 crore was carried forward and shown under "Loans and advances" in the balance sheet as at December 31, 2007.

The tax provision for the nine months ended December 31, 2007 and for the year ending March 31, 2007 includes a reversal of Rs. 101 crore and Rs. 125 crore respectively relating to liabilities no longer required for taxes payable in various overseas jurisdictions on the expiry of the limitation period, conclusion of the Pre-Filing Agreement (PFA) with the Internal revenue Service (IRS) of the United States and the completion of the assessment by taxation authorities.

22.2.13. Cash and bank balances

Details of balances as on balance sheet dates with non-scheduled banks:-

in Rs. crore

Balances with non-scheduled banks	As at
	December 31, 2007	March 31, 2007
In current accounts
Bank of America, Palo Alto, USA	258	293
Citibank NA, Melbourne, Australia	28	36
Citibank NA, Tokyo, Japan	1	1
Deutsche Bank, Brussels, Belgium	7	13
Deutsche Bank, Frankfurt, Germany	6	4
Deutsche Bank, Amsterdam, Netherlands	1	2
Deutsche Bank, Paris, France	1	3
Deutsche Bank, Zurich, Switzerland	-	-
Deutsche Bank, UK	140	5
HSBC Bank PLC, Croydon, UK	11	11
Royal Bank of Canada, Toronto, Canada	3	7
ABN Amro Bank , Taipei, Taiwan	1	2
Deutsche Bank, Spain	2	1
ABN Amro Bank, Copenhagen, Denmark	-	-
Citibank NA, Singapore	-	-
Citibank NA, Thailand	-	-
Nordbanken, Stockholm, Sweden	-	-
Svenska Handelsbanken, Sweden	-	-
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan	-	-
	459	378

Details of maximum balances during the period with non-scheduled banks:-

in Rs. Crore

Maximum balance with non-scheduled banks during the period	Quarter ended  December 31,		Nine months ended December 31,
	2007	2006	2007	2006
In current accounts
ABN Amro Bank , Taipei, Taiwan	2	1	2	1
Bank of America, Palo Alto, USA	637	501	637	614
Citibank NA, Melbourne, Australia	98	199	117	199
Citibank NA, Tokyo, Japan	14	18	14	23
Deutsche Bank, Brussels, Belgium	37	65	38	65
Deutsche Bank, Frankfurt, Germany	17	40	17	62
Deutsche Bank, Amsterdam, Netherlands	1	6	2	10
Deutsche Bank, Paris, France	4	15	5	19
Deutsche Bank, Spain	2	1	2	1
Deutsche Bank, Zurich, Switzerland	6	11	15	30
Deutsche Bank, UK	146	-	169	-
HSBC Bank PLC, Croydon, UK	19	163	32	236
Nordbanken, Stockholm, Sweden	1	2	1	2
Royal Bank of Canada, Toronto, Canada	13	17	13	37
Svenska Handels Bank, Stockholm, Sweden	1	1	1	1
UFJ Bank, Tokyo, Japan	3	5	3	34
ABN Amro Bank, Copenhagen, Denmark	-	-	-	-
Citibank NA, Singapore	-	-	-	-
Citibank NA, Thailand	-	-	-	-

The cash and bank balances comprise their respective values as of the balance sheet date including accumulated interest of Rs 139 crore. (As at March 31, 2007 Rs 37 crore).

22.2.14. Loans and advances

 “Advances” mainly comprises prepaid travel and per-diem expenses and advances to vendors.

Deposits with financial institutions and body corporate:

in Rs. Crore

Particulars	As at
	December 31, 2007	March 31, 2007
Deposits with financial institutions and body corporate:
HDFC Limited	1,030	-
GE Capital Services India	50	143
Life Insurance Corporation of India	148	132
	1,228	275
Interest accrued but not due (included above)	30	14

Maximum balance(Including accured Interest) held as deposits with financial institutions and body corporate:

in Rs. Crore

	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Deposits with financial institutions and body corporate:
HDFC Limited	1,030	502	1,030	502
GE Capital Services India	203	241	268	241
Life Insurance Corporation of India	148	121	148	130

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

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

22.2.15. Fixed assets

Profit / (loss) on disposal of fixed assets during the quarter and nine months ended December 31, 2007 and 2006 is less than Rs. 1 crore and accordingly disclosed in note 22.3

Depreciation charged to the profit and loss account relating to assets costing less than Rs. 5,000/- each and other low value assets.

in Rs. Crore

	Quarter ended  December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Charged during the period	5	8	8	14

The company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of these agreements, the company has the option to purchase the properties on expiry of the lease period. The company has already paid 99% of the value of the properties at the time of entering into the lease-cum-sale agreements. These amounts are disclosed as “Land - leasehold” under “Fixed assets” in the financial statements. Additionally, certain land has been purchased for which the company has possession certificate for which sale deeds are yet to be executed as at December 31, 2007.

22.2.16. Details of Investments

in Rs. crore

Particulars	As at
	December 31, 2007	March 31, 2007
Long- term investments
OnMobile Systems Inc., (formerly Onscan Inc.) USA
1,00,000 (1,00,000) common stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each	-	-
1,00,000 (1,00,000) Series A voting convertible preferred stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each	-	-
44,00,000 (44,00,000) Series A non-voting convertible preferred stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each	9	9
M-Commerce Ventures Pte Ltd, Singapore
100 (100) ordinary shares of Singapore $ 1 each, fully paid, par value Singapore $ 1 each	-	-
563 (684) redeemable preference shares of Singapore $ 1, fully paid, at a premium of Singapore $ 1,110 per redeemable preferred stock	2	2
216 (216) redeemable preference shares of Singapore $ 1, fully paid, par value Singapore $ 1 each	-	-
	11	11
Less: Provision for investment	11	11
	-	-

Details of investments in and disposal of securities during the quarter and nine months ended December 31, 2007 and 2006:

 in Rs. crore

Particulars	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Investment in securities
Subsidiaries	18	-	103	553
Long-term investments	-	-	-	-
Liquid Mutual funds	-	590	1,518	3,480
	18	590	1,621	4,033
Redemption / Disposal of Investment in securities
Long-term investments	-	-	-	6
Liquid Mutual funds	-	1,241	1,518	2,121
	-	1,241	1,518	2,127
Net movement in investments	18	(651)	103	1,906

Investment purchased and sold during the nine months ended December 31, 2007:

 in Rs. crore

Name of the fund	Face value Rs /-	Units	Cost
Reliance Liquidity Fund - Treasury Plan	10	24,20,31,906	242
Birla Cash Plus Fund- Institutional Plan	10	14,97,08,069	150
Tata Liquid Super High Investment Fund- Monthly Dividend	1000	9,75,757	110
Birla Liquid Plus Fund- Institutional Plan	10	9,99,96,063	100
Deutsche Insta Cash Plus Fund - Institutional Plan	10	9,98,32,115	100
Deutsche Money Plus Fund - Institutional Plan	10	9,88,84,670	100
DSP Merrill Lynch Liquid Fund - Institutional Plan	1000	4,49,824	45
DSP Liquid plus - Institutional Plan	1000	4,49,824	45
Franklin Floating Rate - Institutional Plan	10	7,47,75,059	75
Templeton India Treasury Mang Acct - Institutional Plan	1000	7,38,016	75
HSBC - Cash Fund Institutional Plan	10	9,99,56,442	100
HSBC Liquid Plus - Institutional Plan	10	9,91,02,655	100
ICICI Institutional Liquid Plus	10	9,50,63,038	100
Grindlays Cash Fund - Institutional Plan	1000	4,99,985	50
SCB-Grindlays Floating Rate Fund - Institutional Plan	10	4,98,93,280	50
Sundaram Liquid Plus Super - Institutional Plan	10	7,41,34,846	75

Particulars of investments made during the quarter and nine months ended December 31, 2007 and 2006:

 in Rs. crore

Particulars of investee companies	Quarter ended  December 31,		Nine months ended  December 31
	2007	2006	2007	2006
Infosys Consulting	-	-	81	14
Infosys Mexico	18	-	22	-
Infosys China	-	-	-	9
Infosys BPO	-	-	-	530
	18	-	103	553

Investment in Infosys Mexico

On June 20, 2007 the company incorporated a wholly owned subsidiary, Infosys Technologies S. DE R.L. de C.V. in Mexico ("Infosys Mexico"). During the quarter ended December 31, 2007, the company invested Mexican Peso 50 million (Rs. 18 crore) in the subsidiary. As of December 31, 2007, the Company has invested an aggregate of Mexican Peso 60 million (Rs. 22 crore) in the subsidiary.

Investment in Infosys BPO

Buyback of shares and options

In January 2007, the Company initiated the purchase of all the share and outstanding options in Infosys BPO from its shareholders and option holders comprising current and former employees of Infosys BPO. The share holders were given a choice to sell their shares at fair market value and the option-holders were given the choice to sell their options and/or swap Infosys BPO options for Infosys options at a swap ratio based on fair market value.

Consequent to this proposal Infosys paid an aggregate of Rs 71 crore for the purchase of shares and options and granted 1,51,933 Infosys options under the 1999 plan valued at fair value of Rs 12 crore. Accordingly, the investment in Infosys BPO increased by Rs 83 crore and reserves have increased by 12 crore.

Additionally, the Company has committed to a deferred share purchase with the shareholders of Infosys BPO. As per the agreement, Infosys will purchase 3,60,417 Infosys BPO shares for Rs 22 crore by February, 2008. The same will be accounted as investments on conclusion of the agreement along with the transfer of title in the shares. Upon conclusion Infosys holding in Infosys BPO would be 99.98%

Investment in Infosys Consulting

During the nine months ended December 31, 2007, the Company invested US$ 20 million (Rs. 81 crore) in its wholly owned subsidary Infosys Consulting, Inc. As of December 31, 2007, the Company has invested an aggregate of US$ 40 million (Rs. 171 crore) in the subsidiary.

Conversion of Cumulative Preference shares in Infosys BPO

Infosys BPO had issued an aggregate of 87,50,000 0.005% Cumulative Convertible Preference shares of par value Rs. 100 each to Citicorp International Finance Corporation ("CIFC") for an aggregate consideration of Rs. 94 crore as per the shareholder's agreement as of March 31, 2005. Each preference share was convertible to one equity share of par value Rs. 10/-. On June 30, 2005 CIFC exercised its rights under the shareholder's agreement and converted the preference shares to equity shares. Pursuant to the conversion, the equity share capital of Infosys BPO increased by Rs. 9 crore to Rs. 33 crore and the share premium increased by Rs. 79 crore to Rs. 85 crore. On June 30, 2006, the company completed the acquisition of the entire holdings (87,50,000 shares amounting to 23% of the equity on a fully diluted basis) of CIFC in Infosys BPO for a consideration amounting to Rs. 530 crore (US$ 115.13 million). The net consideration of Rs. 309 crore, after withholding taxes of Rs. 221 crore wa s remitted to CIFC on the same date.

Provisions for investments

The Company evaluates all investments for any diminution in their carrying values that is other than temporary. The amount of provision made on trade investments during the quarter and nine months ended December 31, 2007 amounted to Rs. Nil and Rs. Nil respectively. (Nil and Rs. 2 crore respectively for quarter and nine months ended December 31, 2006).

The company provided Nil during the quarter and nine months ended on December 31, 2007 (Nil and Rs 1 crore during the quarter and nine months ended December 31, 2006 ) on revision of the carrying amount of non-trade current investments to fair value.

Redemption of preference shares

On September 7, 2007 the company realised Rs. 0.36 crore on redemption of the preference shares in M-Commerce Ventures Pte. Limited, Singapore ("M-Commerce"), and their subsequent sale. There were no such transactions in the quarter or the nine months ended December 31, 2006. The entire investment in M-Commerce was fully provided for in earlier years. Accordingly, the realised gain was taken to the profit and loss account and the provision written back.

22.2.17. Segment reporting

The Group’s operations predominantly relate to providing end-to-end business solutions that leverage technology thereby enabling clients to enhance business performance, delivered to customers globally operating in various industry segments. Accordingly, revenues represented along industry classes comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments. These are as set out in the note on significant accounting policies.

Industry segments at the company are primarily financial services comprising customers providing banking, finance and insurance services; manufacturing companies; companies in the telecommunications and the retail industries; and others such as utilities, transportation and logistics companies.

Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the costs are categorized in relation to the associated turnover of the segment. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying services are used interchangeably. The company believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as “unallocated” and directly charged against total income.

Fixed assets used in the company’s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.

Customer relationships are driven based on the location of the respective client. North America comprises the United States of America, Canada and Mexico; Europe includes continental Europe (both the east and the west), Ireland and the United Kingdom; and the Rest of the World comprising all other places except, those mentioned above and India.

Geographical revenues are segregated based on the location of the customer who is invoiced or in relation to which the revenue is otherwise recognized.

Industry segments

Quarter ended December 31, 2007 and 2006:

in Rs. crore

	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	1,511	561	801	507	619	3,999
	1,344	455	592	379	684	3,454
Identifiable operating expenses	603	255	345	210	273	1,686
	555	198	257	149	282	1,441
Allocated expenses	373	139	197	125	152	986
	336	114	148	95	171	864
Segmental operating income	535	167	259	172	194	1,327
	453	143	187	135	231	1,149
Unallocable expenses						138
						129
Operating income						1,189
						1,020
Other income (expense), net						152
						60
Net profit before taxes and exceptional items						1,341
						1,080
Income taxes						155
						122
Net profit after taxes and before exceptional items						1,186
						958
Income on sale of investments (net of taxes)						-
						-
Net profit after taxes and exceptional items						1,186
						958

Industry Segments

Nine months ended December 31, 2007 and 2006:

 in Rs. crore

	Financial services	Manufacturing	Telecom	Retail	Others	Total
Revenues	4,239	1,607	2,305	1,413	1,849	11,413
	3,622	1,334	1,667	983	1,988	9,594
Identifiable operating expenses	1,807	729	1,030	608	813	4,987
	1,569	578	703	420	839	4,109
Allocated expenses	1,057	401	576	352	462	2,848
	909	335	418	247	499	2,408
Segmental operating income	1,375	477	699	453	574	3,578
	1,144	421	546	316	650	3,077
Unallocable expenses						404
						336
Operating income						3,174
						2,741
Other income (expense), net						550
						252
Net profit before taxes and exceptional items						3,724
						2,993
Income taxes						436
						340
Net profit after taxes and before exceptional items						3,288
						2,653
Income on sale of investments (net of taxes)						-
						6
Net profit after taxes and exceptional items						3,288
						2,659

Geographic Segments

Quarter ended December 31, 2007 and 2006:

 in Rs. crore

	North America	Europe	India	Rest of the World	Total
Revenues	2,545	1,081	53	320	3,999
	2,198	906	65	285	3,454
Identifiable operating expenses	1,076	409	17	184	1,686
	940	337	12	152	1,441
Allocated expenses	628	267	13	78	986
	550	227	16	71	864
Segmental operating income	841	405	23	58	1,327
	708	342	37	62	1,149
Unallocable expenses					138
					129
Operating income					1,189
					1,020
Other income (expense), net					152
					60
Net profit before taxes and exceptional items					1,341
					1,080
Income taxes					155
					122
Net profit after taxes and before exceptional items					1,186
					958
Income on sale of investments (net of taxes)					-
					-
Net profit after taxes and exceptional items					1,186
					958

Geographic Segments

Nine months ended December 31, 2007 and 2006:

in Rs. crore

	North America	Europe	India	Rest of the World	Total
Revenues	7,230	3,037	161	985	11,413
	6,151	2,472	159	812	9,594
Identifiable operating expenses	3,171	1,217	41	558	4,987
	2,670	960	44	435	4,109
Allocated expenses	1,804	757	41	246	2,848
	1,545	621	39	203	2,408
Segmental operating income	2,255	1,063	79	181	3,578
	1,936	891	76	174	3,077
Unallocable expenses					404
					336
Operating income					3,174
					2,741
Other income (expense), net					550
					252
Net profit before taxes and exceptional items					3,724
					2,993
Income taxes					436
					340
Net profit after taxes and before exceptional items					3,288
					2,653
Income on sale of investments (net of taxes)					-
					6
Net profit after taxes and exceptional items					3,288
					2,659

22.2.18. Provision for doubtful debts

Periodically, the company evaluates all customer dues to the company for collectibility. The need for provisions is assessed based on various factors including collectibility of specific dues, risk perceptions of the industry in which the customer operates, general economic factors, which could affect the customer’s ability to settle. The company normally provides for debtor dues outstanding for 180 days or longer as at the balance sheet date. As at December 31, 2007 the company has provided for doubtful debts of Rs.6 crore (Rs. 7 crore as at March 31, 2007) on dues from certain customers although the outstanding amounts were less than 180 days old, since the amounts were considered doubtful of recovery. The company pursues the recovery of the dues, in part or full.

22.2.19. Dividends remitted in foreign currencies

The company remits the equivalent of the dividends payable to the holders of ADS (“ADS holders”) in Indian Rupees to the depository bank, which is the registered shareholder on record for all owners of the company’s ADSs. The depositary bank purchases the foreign currencies and remits dividends to the ADS holders.

Particulars of dividends remitted:

in Rs. crore

Particulars	Number of shares to which the dividends relate	Quarter ended December 31,		Nine months ended December 31,
		2007	2006	2007	2006
Interim dividend for Fiscal 2008	10,92,19,011	66	-	66	-
Interim dividend for Fiscal 2007	7,76,06,280	-	39	-	39
Final dividend for Fiscal 2007	10,92,18,536	-	-	71	-
Silver Jubilee special dividend*	7,70,94,270	-	-	-	116
Final dividend for Fiscal 2006*	7,70,94,270	-	-	-	33

* Adjusted for bonus issue

22.2.20. Reconciliation of basic and diluted shares used in computing earnings per share

Particulars	Quarter ended December 31,		Nine months ended  December 31,
	2007	2006	2007	2006
Number of shares considered as basic weighted average shares outstanding	57,13,46,568	55,70,34,398	57,12,55,430	55,48,77,140
Add: Effect of dilutive issues of shares/stock options	19,39,306	1,26,82,686	19,55,108	1,32,95,919
Number of shares considered as weighted average shares and potential shares outstanding	57,32,85,874	56,97,17,084	57,32,10,538	56,81,73,059

22.2.21 Intellectual Property Rights

Infosys was liable to pay Aeronautical Development Agency (ADA) a maximum amount of Rs. 20 crores (US $4.4 million) by June 12, 2012 through a revenue sharing arrangement towards acquisition of Intellectual Property Rights in AUTOLAY, a commercial software application product used in designing high performance structural systems. During the quarter ended December 31, 2006, Infosys foreclosed the arrangement by paying the net present value of the future revenue share amounting to Rs. 13.5 crore (US$ 3 million). The remainder of the liability amounting to Rs. 6.5 crore (US$ 1.4 million) has been written back and disclosed in Other income.

22.2.22 Exceptional items

During the year ended March,31,2005 the company sold its entire investment in Yantra Corporation, USA (Yantra) for a total consideration of US $12.57 million. An amount of Rs. 49 crore representing 90% of the consideration was received by the company and the balance amount was deposited in Escrow to indemnify any contractual contingencies.During the nine months ended December 31, 2006, the company received the balance amount of Rs. 5 crore on fulfillment of the Escrow obligations. Since the carrying value of the investment is Nil, the entire proceeds of Rs. 5 crore (net of taxes, as applicable) has been recognized in the profit and loss account as an exceptional item

During the nine months ended December 31, 2006, the company received Rs. 1 crore from CiDRA Corporation towards redemption of shares on recapitalisation. The remainder of investment was written off against provision made earlier.

22.2.23 Gratuity Plan

Effective April 1, 2006 the company adopted the revised accounting standard on employee benefits. Pursuant to the adoption, the transitional obligations of the company amounted to Rs. 9 crore. As required by the standard, the obligation has been recorded with the transfer of Rs. 9 crore to general reserves.

The following table set out the status of the gratuity plan as required under AS 15.

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:     

in Rs. Crore

Particulars	As at
	December 31, 2007	March 31, 2007
Obligations at period beginning	221	180
Service Cost	32	44
Interest cost	12	14
Actuarial (gain)/loss	(2)	-
Benefits paid	(15)	(17)
Amendment in benifit plans	(37)	-
Obligations at period end	211	221
Defined benefit obligation liability as at the balance sheet is wholly funded by the company
Change in plan assets
Plans assets at period beginning, at fair value	221	167
Expected return on plan assets	13	16
Actuarial gain/(loss)	2	3
Contributions	9	52
Benefits paid	(15)	(17)
Plans assets at period end, at fair value	230	221
Reconciliation of present value of the obligation and the fair value of the plan assets:
Fair value of plan assets at the end of the period	230	221
Present value of the defined benefit obligations at the end of the period	211	221
Asset recognized in the balance sheet	19	-
Assumptions
Interest rate	7.78%	7.99%
Estimated rate of return on plan assets	7.78%	7.99%

in Rs. Crore

	Quarter ended December 31,		Nine months ended December 31,
	2007	2006	2007	2006
Gratuity cost for the period
Service cost	12	12	32	34
Interest cost	4	3	12	10
Expected return on plan assets	(4)	(5)	(13)	(12)
Actuarial (gain)/loss	(3)	(1)	(4)	(3)
Amortizations(Reduction in benefit)	(1)	-	(3)	-
Net gratuity cost	8	9	24	29
Assumptions
Interest rate			7.78%	7.60%
Estimated rate of return on plan assets			7.78%	7.60%

Investment details of plan assets

100% of the plan assets are invested in debt instruments.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Effective July 1, 2007, the company revised the employee death benefits provided under the gratuity plan, and included all eligible employees under a consolidated term insurance cover. Accordingly, the obligations under the gratuity plan reduced by Rs.37 crore, which has been amortized on a straight line basis to the net profit and loss account over 10 years representing the average future service period of employees.

22.2.24 Provident Fund

The Guidance on Implementing AS 15, Employee benefits (revised 2005) issued by Accounting Standards Board (ASB) states benefit involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Company’s actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly the company is unable to exhibit the related information.

22.2.25 Cashflow Statement

22.2.25.a

The balance of cash and cash equivalents includes Rs.3 crore as at December 31, 2007 (Rs. 2 crore as at March 31, 2007) set aside for payment of dividends.

22.2.25.b Restricted Cash

Deposits with financial institutions and body corporate as at December 31, 2007 include an amount of Rs.148 crore (Rs. 132 crore as at March 31, 2007) deposited with Life Insurance Corporation of India to settle employee benefit/ leave obligations as and when they arise during the normal course of business. This amount is considered as restricted cash and is hence not considered "cash and cash equivalents".

22.3 Details of rounded off amounts

The financial statements are represented in Rs. crore as per the approval received from Department of Company Affairs "DCA" earlier. Those items which were not represented in the financial statement due to rounding off to the nearest Rs. crore are given below.

Balance Sheet Items

in Rs. crore

Schedule	Description	As at
		December 31, 2007	March 31, 2007
3. Fixed assets
	Additions
	Vehicles	0.53	-
	Deductions/retirements
	Plant and Machinery	-	0.34
	Furniture and Fixtures	0.11	0.15
	Depreciation & Amortization for the period
	Furniture and Fixtures	0.10	-
	Vehicles	-	1.00
7. Cash in Hand		-	-
22.2.6. Computers on operating lease to Infosys BPO
	- Net Book Value	0.23	0.08
22.2.13. Balances with non-scheduled banks
	- ABN Amro Bank, Copenhagen, Denmark	0.01	0.04
	- Bank of China, Beijing China	-	-
	- Citibank NA, Singapore	0.03	0.03
	- Citibank NA, Thailand	0.33	0.16
	- Deutsche Bank, Paris, France	0.92	3.00
	- Nordbanken, Stockholm, Sweden	0.72	0.05
	- Svenska Handels Bank, Stockholm, Sweden	0.01	0.01
	- UFJ Bank, Tokyo, Japan	0.04	0.06
	- Deutsche Bank, Zurich, Switzerland	0.62	0.21
	- Nordbanken, Stockholm, Sweden	0.72	0.05
22.2.16. Long- term investments
	Onmobile (common stock)	-	0.19
	Onmobile (Series A - voting)	-	0.19

Profit & Loss Items

in Rs. crore

Schedule	Description	Quarter ended December 31,		Nine months ended  December 31,
		2007	2006	2007	2006
Profit & Loss	Provision for investments	-	0.20	(0.40)	2.98
	Additional Dividend tax	-	-	-	-
12. Selling and Marketing expenses
	Overseas group health insurance	-	-	0.43	-
	Contribution to provident and other funds	0.46	0.51	1.32	1.44
	Visa charges and others	-	-	1.13	-
	Staff Welfare	-	0.69	-	1.06
	Printing & Stationery	0.29	0.50	0.86	1.21
	Sales promotion expenses	-	0.39	0.94	1.30
	Office maintenance	0.15	0.10	0.30	0.22
	Computer maintenance	0.09	0.03	0.11	0.08
	Advertisement	-	0.34	-	2.36
	Software Packages for own use	0.01	-	0.08	0.42
	Communication Expenses	-	0.18	0.43	0.50
	Rates and Taxes	-	-	0.01	-
	Consumables	0.07	0.08	0.18	0.26
13. General and Administrative expenses
	Provision for doubtful loans and advances	0.12	0.05	0.30	0.12
	Overseas group health insurance	-	0.14	(0.17)	(0.04)
	Commission to non-whole time directors		0.47	-	1.45
	Visa charges others	(0.01)	0.21	0.22	1.36
	Auditor’s remuneration :
	Statutory audit fees	0.16	0.14	0.48	0.40
	Others	-	0.01	-	0.01
	Certification Charges	0.01	-	0.03	-
	Out-of-pocket expenses	0.01	-	0.03	0.04
	Research Grants	0.41	2.04	3.93	7.02
	Freight charges	0.24	0.18	0.63	0.63
	Bank charges and commission	0.25	0.13	0.85	0.99
	Miscellaneous expenses	0.47	-	-	-
22.2.1. Aggregate expenses
	Provision for doubtful loans and advances	0.12	0.05	0.30	0.12
	Commission to non whole time directors	-	0.47	-	1.45
	Sales promotion expenses	-	0.39	0.94	1.30
	Guest house maintenance	-	-	1.43	-
	Auditor’s remuneration
	Statutory audit fees	0.16	0.14	0.48	0.40
	Others	-	0.01	-	0.01
	Certification Charges	0.01	-	0.03	-
	Out-of-pocket expenses	0.01	-	0.03	0.04
	Bank charges and commission	0.25	0.13	0.85	0.99
	Freight charges	-	0.18	0.39	0.63
	Research Grants	0.41	2.04	3.93	7.02
	Miscellaneous expenses	0.47	-	-	-
22.2.7. Related Party Transactions
	Revenue Transactions
	Interest Income - Infosys China	0.48	-	0.48	-
	Sale of services - Infosys consulting	0.36	-	0.36	-
22.2.15. Profit on disposal of fixed assets, included in miscellaneous income		0.01	0.06	0.05	0.13
	Loss on disposal of fixed assets, included in miscellaneous expenses	-	(0.01)	(0.01)	(0.03)
	Profit/(loss) on disposal of fixed assets, net	0.01	0.05	0.04	0.10
22.2.13. Balances with non-scheduled banks
	- ABN Amro Bank, Copenhagen, Denmark	0.11	-	0.25	-
	- Citibank NA, Singapore	0.07	0.14	0.08	0.19
	- Citibank NA, Sharjah, UAE	-	0.14	-	0.18
	- Citibank NA, Thailand	0.33	0.15	0.33	0.15
	- Bank of china, Beijing, China	-	-	-	0.02

Cash Flow Statement Items

in Rs. crore

Schedule	Description	Nine months ended December 31,
		2007	2006
Cash Flow	Profit/ loss on sale of fixed assets	0.04	(0.05)
Statement	Proceeds on disposal of fixed assets	0.04	0.30

Transactions with key management personnel

Key management personnel comprise directors and statutory officers.

Particulars of remuneration and other benefits paid to key management personnel during the quarter and nine months ended December 31, 2007 and 2006 :

in Rs. crore

Name	Salary	Contributions to provident and other funds	Perquisites and incentives	Total Remuneration
Chairman and Chief Mentor
N R Narayana Murthy *	-	-	-	-
	-	-	-	-
	-	-	-	-
	0.06	0.02	0.21	0.29
Co-Chairman
Nandan M Nilekani	0.06	0.01	0.22	0.29
	0.04	0.01	0.05	0.10
	0.15	0.04	0.38	0.57
	0.12	0.03	0.24	0.39
Chief Executive Officer and Managing Director
S Gopalakrishnan	0.06	0.01	0.22	0.29
	0.04	0.01	0.05	0.10
	0.15	0.04	0.38	0.57
	0.12	0.03	0.25	0.40
Chief Operating Officer
S D Shibulal	0.05	0.01	0.22	0.28
	0.03	0.01	0.04	0.08
	0.14	0.04	0.36	0.54
	0.10	0.03	0.20	0.33
Whole-time Directors
K Dinesh	0.06	0.01	0.22	0.29
	0.04	0.01	0.05	0.10
	0.15	0.04	0.38	0.57
	0.10	0.03	0.24	0.37
T V Mohandas Pai	0.09	0.03	0.51	0.63
	0.06	0.02	0.09	0.17
	0.24	0.07	0.93	1.24
	0.18	0.06	0.44	0.68
Srinath Batni	0.08	0.02	0.33	0.43
	0.05	0.01	0.07	0.13
	0.22	0.06	0.61	0.89
	0.15	0.03	0.37	0.55
Chief Financial Officer
V Balakrishnan	0.07	0.02	0.45	0.54
	0.04	0.01	0.16	0.21
	0.20	0.06	0.64	0.90
	0.13	0.03	0.43	0.59

* Wholetime director till August 20, 2006

Name	Commission	Sitting fees	Reimbursement of expenses	Total remuneration
Non-Whole time Directors
Deepak M Satwalekar	0.14	-	-	0.14
	0.06	-	-	0.06
	0.41	-	0.01	0.42
	0.18	-	-	0.18
Prof.Marti G. Subrahmanyam	0.11	-	0.02	0.13
	0.05	-	-	0.05
	0.35	-	0.11	0.46
	0.17	-	0.05	0.22
David L. Boyles	0.11	-	-	0.11
	0.05	-	-	0.05
	0.35	-	-	0.35
	0.17	-	-	0.17
Dr.Omkar Goswami	0.11	-	-	0.11
	0.05	-	0.01	0.06
	0.34	-	0.01	0.35
	0.15	-	0.02	0.17
Sen. Larry Pressler	-	-	-	-
	-	-	-	-
	-	-	-	-
	0.03	-	0.03	0.06
Rama Bijapurkar	0.11	-	-	0.11
	0.05	-	-	0.05
	0.34	-	-	0.34
	0.17	-	0.01	0.18
Claude Smadja	0.11	-	-	0.11
	0.05	-	0.04	0.09
	0.32	-	0.12	0.44
	0.17	-	0.17	0.34
Sridar A Iyengar	0.11	-	0.03	0.14
	0.05	-	-	0.05
	0.33	-	0.10	0.43
	0.17	-	0.08	0.25
Jeffrey S. Lehman	0.10	-	-	0.10
	0.05	-	-	0.05
	0.32	-	-	0.32
	0.15	-	-	0.15
N R Narayana Murthy *	0.12	-	-	0.12
	0.06	-	-	0.06
	0.37	-	-	0.37
	0.09	-	-	0.09

* Appointed as Additional Director effective August 21, 2006