The schedules referred to above are an integral part of the profit and loss account
Company overview
Infosys Technologies Limited ("Infosys" or "the company") along with its majority owned and controlled subsidiary, Infosys BPO Limited ("Infosys BPO") and wholly owned and controlled subsidiaries, Infosys Technologies (Australia) Pty. Limited ("Infosys Australia"), Infosys Technologies (China) Co. Limited ("Infosys China"), Infosys Consulting, Inc. ("Infosys Consulting"), Infosys Technologies S. DE R.L. de C.V. ("Infosys Mexico") and Infosys Technologies (Sweden) AB. ("Infosys Sweden") is a leading global technology services corporation. 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, package evaluation and implementation, testing and inf rastructure management services. In addition, the Company offers software products for the banking industry.
23.1 Significant accounting policies
23.1.1 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 except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. 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.
23.1.2 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 liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage-of-completion which requires the company to estimate the efforts expended to date as a proportion of the total efforts to be expended, 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.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use i.e. the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
23.1.3. Revenue recognition
Revenue is primarily derived from software development and related services and from the licensing of software products. Arrangements with customers for software development and related services are either on a fixed-price, fixed-timeframe or on a time-and-material basis.
Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last billing to the balance sheet date is recognized as unbilled revenues. Revenue from fixed-price, fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognized based upon the percentage-of-completion. When there is uncertainty as to measurement or ultimate collectability revenue recognition is postponed until such uncertainty is resolved. 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 ratably 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 case of multiple element contracts, which require significant implementation services, where revenue for the entire arrangement is recognized over the implementation period based upon the percentage-of-completion. Revenue from client training, support and other services arising due to the sale of software products is recognized as the related services are performed.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discount / incentive amount to each of the underlying revenue transactions that result in progress by the customer towards earning the discount / incentive. Also, when the level of discount varies with increases in levels of revenue transactions, the company recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts using a cumulative catch-up approach. The discounts are passed on to the customer either as direct payments or as a reduction of payments due from the customer.
The company presents revenues net of value-added taxes in its profit and loss account.
Profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sale price and 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.
23.1.4 Provisions and contingent liabilities
A provision is recognized if, as a result of a past event, the company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
23.1.4.a Post-sales client support and warranties
The company provides its clients with a fixed-period warranty for corrections of errors and telephone support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time related revenues are recorded and included in cost of sales. The company estimates such costs based on historical experience and the estimates are reviewed annually for any material changes in assumptions.
23.1.4.b Onerous contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating the contract and the expected net cost of fulfilling the contract.
23.1.5 Fixed assets, intangible assets and capital work-in-progress
Fixed assets are stated at cost, less accumulated depreciation and impairments, if any. 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 reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
23.1.6 Depreciation and amortization
Depreciation on fixed assets is provided on the straight-line method 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 over a period of one year from the date 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 |
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
23.1.7 Retirement benefits to employees
23.1.7.a Gratuity
In accordance with the Payment of Gratuity Act, 1972, the company provides for gratuity, a defined benefit retirement plan (the Gratuity Plan) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method. The company fully contributes all 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 the law. The company recognizes the net obligation of the gratuity plan in the balance sheet as an asset or liability, respectively in accordance with Accounting Standard (AS) 15, “Employee Benefits”. The company's overall expected long-term rate-of-return on assets has been determined based on consideration of available market information, current provisions of Indian law specifying the instruments in which investments can be made, and historical returns. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from expe rience adjustments and changes in actuarial assumptions are recognised in the profit and loss account in the period in which they arise.
23.1.7.b Superannuation
Certain employees of Infosys are also participants in the superannuation plan (the Plan) which is a defined contribution plan. Until March 2005, the company made contributions under the Plan to the Infosys Technologies Limited Employees' Superannuation Fund Trust (the Superannuation Trust). The company has no further obligations to the Plan beyond its monthly contributions. Effective April 1, 2005, a portion of the monthly contribution amount is paid directly to the employees as an allowance and the balance amount is contributed to the Superannuation Trust.
23.1.7.c Provident fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the 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 part of the contributions to the Infosys Technologies Limited Employees' Provident Fund Trust. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.
23.1.7.d Compensated absences
The employees of the Company are entitled to compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is measured based on the additional amount expected to be paid 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.
23.1.8. Research and development
Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the company has an intention and ability to complete and use or sell the software and the costs can be measured reliably .
23.1.9. Foreign currency transactions
Foreign-currency denominated monetary assets and liabilities are translated at exchange rates in effect at the balance sheet date. The gains or losses resulting from such translations are included in the profit or loss account. 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.
Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.
23.1.10. Forward and options contracts in foreign currencies
The company uses foreign exchange forward and options contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward and options contracts reduce the risk or cost to the company and the company does not use those for trading or speculation purposes.
Effective April 1, 2008, the company adopted AS 30, "Financial Instruments: Recognition and Measurement", to the extent that the adoption did not conflict with existing accounting standards and other authoritative pronouncements of Company Law and other regulatory requirements.
Forward and options contracts are fair valued at each reporting date. The resultant gain or loss from these transactions is recognized in the profit or loss account. The Company records the gain or loss on effective hedges, if any, 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 or options contract 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. Currently the hedges undertaken by the company are all ineffective in nature and the resultant gain or loss consequent to fair valuation is recognized in the profit and loss account at each reporting date.
23.1.11. Income taxes
Income 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 alternate tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the balance sheet if there is convincing evidence that the company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably. The company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.
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 of timing difference. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations. Deferred tax assets, other than those relating to unabsorbed depreciation and carry forward business loss, 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 reporting date. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to profit and loss account are credited to the share premium account.
23.1.12. Earnings per share
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon 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. Dilutive potential equity shares are determined independently for each period presented.
The number of 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.
23.1.13. 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 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 translated at the exchange rate prevalent at the date of investment. Long-term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.
23.1.14. Cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks and corporations. The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
23.1.15. 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 , any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
23.2 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 23.3. 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.
23.2.1. Aggregate expenses
The aggregate amounts incurred on certain specific expenses
in Rs. crore
| | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Salaries and bonus including overseas staff expenses* | 2,510 | 2,015 | 9,533 | 7,531 |
Contribution to provident and other funds | 55 | 49 | 227 | 184 |
Staff welfare | | | | |
Staff welfare | 9 | 15 | 64 | 52 |
Overseas group health insurance# | 35 | 36 | 145 | 41 |
Overseas travel expenses | 104 | 101 | 493 | 395 |
Visa charges and others | 16 | 31 | 121 | 137 |
Traveling and conveyance | 15 | 24 | 82 | 95 |
Technical sub-contractors - subsidiaries | 218 | 198 | 861 | 773 |
Technical sub-contractors - others | 71 | 35 | 305 | 202 |
Software packages | | | | |
For own use | 66 | 59 | 274 | 213 |
For service delivery to clients | 14 | 3 | 41 | 25 |
Professional charges | 51 | 53 | 228 | 185 |
Telephone charges | 37 | 32 | 153 | 125 |
Communication expenses | 16 | 16 | 58 | 57 |
Power and fuel | 28 | 27 | 125 | 106 |
Office maintenance | 38 | 34 | 138 | 120 |
Guest house maintenance** | 2 | – | 5 | 2 |
Commission and earnout charges | 5 | 4 | 21 | 14 |
Brand building | 7 | 14 | 62 | 55 |
Rent | 16 | 13 | 60 | 50 |
Insurance charges | 5 | 5 | 18 | 20 |
Computer maintenance | 5 | 9 | 23 | 24 |
Printing and stationery | 1 | 3 | 10 | 14 |
Consumables | 5 | 3 | 20 | 18 |
Donations | 2 | 5 | 21 | 20 |
Advertisements | 2 | 1 | 6 | 10 |
Marketing expenses | 2 | 2 | 15 | 15 |
Repairs to building | 9 | 8 | 31 | 22 |
Repairs to plant and machinery | 5 | 5 | 21 | 18 |
Rates and taxes | 8 | 8 | 29 | 34 |
Professional membership and seminar participation fees | 2 | 2 | 9 | 9 |
Postage and courier | 2 | 2 | 8 | 9 |
Provision for post-sales client support and warranties | 18 | 26 | 39 | 46 |
Books and periodicals | 1 | 1 | 3 | 4 |
Provision for bad and doubtful debts | 22 | 6 | 74 | 42 |
Provision for doubtful loans and advances | 1 | – | 1 | – |
Commission to non-whole time directors | 2 | 1 | 6 | 4 |
Sales promotion expenses | – | 1 | 1 | 3 |
Freight charges | – | – | 1 | 1 |
Bank charges and commission | 1 | – | 2 | 1 |
Auditor's remuneration | | | | |
Statutory audit fees | 1 | 1 | 1 | 1 |
Certification charges | – | – | – | – |
Others | – | – | – | – |
Out-of-pocket expenses | – | – | – | – |
Research grants | 16 | 1 | 19 | 5 |
Miscellaneous expenses | 2 | 1 | 4 | 3 |
| | 3,425 | 2,850 | 13,358 | 10,685 |
Fringe Benefit Tax (FBT) in India included in the above | 3 | 5 | 25 | 17 |
* During the year ended March 31, 2008, the company paid an amount of Rs.102 crore to the California Division of Labor Standards Enforcement (DLSE) towards settlement of possible overtime payment to certain employees.# The Company records health insurance liabilities based on the maximum individual claimable amounts by employees. During the year ended March 31, 2008, 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 purposes23.2.2. Capital commitments and contingent liabilities
in Rs. Crore
| Particulars | As at |
| | March 31, 2009 | March 31, 2008 |
Estimated amount of unexecuted capital contracts (net of advances and deposits) | | 344 | | 600 |
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 | | 3 | | 2 |
Claims against the company, not acknowledged as debts* | | 3 | | 3 |
(Net of Amount Rs.200 crore (Rs.101 crore) crore paid to statutory authorities) | | | | |
| | in million | in Rs. Crore | in million | in Rs. Crore |
Forward contracts outstanding | | | | |
In US$ | $245 | 1,243 | $521 | 2,085 |
In Euro | € 20 | 135 | € 10 | 63 |
In GBP | £15 | 109 | – | – |
Options contracts outstanding | | | | |
Range barrier options in US $ | $113 | 573 | $100 | 400 |
Seagull options in US $ | $60 | 304 | – | – |
Euro Accelerator in Euro | – | – | € 12 | 76 |
Euro Forward extra | – | – | € 5 | 32 |
* Claims against the company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rs.197 crore (Rs.98 crore), including interest of Rs.43 crore (Rs.18 crore) upon completion of their tax review for fiscal 2004 and fiscal 2005. 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 for fiscal 2004 and fiscal 2005 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's net foreign currency exposure that is not hedged by a derivative instrument or otherwise is Rs.1,136 crore (Nil as at March 31, 2008).
23.2.3 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.
23.2.4. Imports (valued on the cost, insurance and freight basis)
in Rs. Crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Capital goods | 56 | 68 | 207 | 296 |
Software packages | 5 | 1 | 8 | 8 |
| | 61 | 69 | 215 | 304 |
23.2.5. Activity in foreign currency
in Rs. Crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Earnings in foreign currency (on receipts basis) | | | | |
Income from software services and products | 5,106 | 3,524 | 19,812 | 14,468 |
Interest received from banks & others | 5 | 7 | 24 | 22 |
Expenditure in foreign currency (on payments basis) | | | | |
Travel expenses (including visa charges) | 101 | 97 | 480 | 400 |
Professional charges | 35 | 21 | 124 | 74 |
Technical sub-contractors - subsidiaries | 218 | 198 | 861 | 753 |
Other expenditure incurred overseas for software development | 1,761 | 1,348 | 6,578 | 5,257 |
Net earnings in foreign currency (on receipts and payments basis) | 2,996 | 1,867 | 11,793 | 8,006 |
23.2.6. 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 March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Lease rentals recognized during the period | 16 | 13 | 60 | 50 |
in Rs. Crore
| Lease obligations | As at |
| | March 31, 2009 | March 31, 2008 |
Within one year of the balance sheet date | 46 | 28 |
Due in a period between one year and five years | 154 | 88 |
Due after five years | 30 | 24 |
| | 230 | 140 |
The operating lease arrangements extend upto a maximum of ten years from their respective dates of inception and relates to rented overseas premises. Some of the lease agreements have a price escalation clause.
Fixed assets provided on operating lease to Infosys BPO, a subsidiary company, as at March 31, 2009 and March 31, 2008 :
In Rs. Crore
| Particulars | Cost | Accumulated
depreciation | Net book value |
Building | 59 | 17 | 42 |
| | 58 | 13 | 45 |
Plant and machinery | 18 | 12 | 6 |
| | 22 | 13 | 9 |
Computer equipment | 1 | 1 | – |
| | 2 | 2 | – |
Furniture & fixtures | 3 | 2 | 1 |
| | 10 | 8 | 2 |
Total | 81 | 32 | 49 |
| | 92 | 36 | 56 |
The aggregate depreciation charged on the above during the quarter and year ended March 31, 2009 amounted to Rs.2 crore and Rs.8 crore respectively (Rs.3 crore and Rs.9 crore respectively for the quarter and year ended March 31, 2008).
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 to note 23.2.7). Lease Rental commitments from Infosys BPO:
in Rs. Crore
| Lease rentals | As at |
| | March 31, 2009 | March 31, 2008 |
Within one year of the balance sheet date | – | 4 |
Due in a period between one year and five years | – | – |
Due after five years | – | – |
| | – | 4 |
The rental income from Infosys BPO for the quarter and year ended March 31, 2009 amounted to Rs.4 crore and Rs.16 crore respectively and Rs.5 crore and Rs.18 crore respectively for the quarter and year ended March 31, 2008.
23.2.7. Related party transactions
List of related parties:
| Name of subsidiaries | Country | Holding, as at |
| | | March 31, 2009 | March 31, 2008 |
Infosys BPO | India | 99.98% | 99.98% |
Infosys Australia | Australia | 100% | 100% |
Infosys China | China | 100% | 100% |
Infosys Consulting | USA | 100% | 100% |
Infosys Mexico | Mexico | 100% | 100% |
Infosys Sweden* | Sweden | – | – |
Infosys BPO s. r. o ** | Czech Republic | 99.98% | 99.98% |
Infosys BPO (Poland) Sp Z.o.o ** | Poland | 99.98% | – |
Infosys BPO (Thailand) Limited ** | Thailand | 99.98% | – |
P-Financial Services Holding B.V. Netherlands *** | Netherlands | – | 99.98% |
Mainstream Software Pty Limited**** | Australia | 100% | – |
* On March 5, 2009 the company incorporated a wholly owned subsidiary, Infosys Technologies (Sweden) AB which is yet to be capitalized.** Infosys BPO s.r.o, Infosys BPO (Poland) Sp Z.o.o and Infosys BPO (Thailand) Limited are wholly owned subsidiaries of Infosys BPO.*** During the year ended March 31, 2009, the investments held by P-Financial Services Holding B.V in its wholly owned subsidiaries Pan-Financial Shared Services India Private Limited, Infosys BPO (Poland) Sp. Z.o.o., and Infosys BPO (Thailand) Limited was transferred to Infosys BPO, consequent to which P-Financial Services Holding B.V was liquidated.During the quarter ended March 31, 2009, Infosys BPO merged its wholly owned subsidiary Pan-Financial Shared Services India Private Limited, retrospectively with effect from April 1,2008 vide a scheme of amalgamation sanctioned by the court.**** Mainstream Software Pty Limited is a wholly owned subsidiary of Infosys AustraliaInfosys guarantees the performance of certain contracts entered into by Infosys BPO.
The details of the related party transactions entered into by the company, in addition to the lease commitments described in note 23.2.6, for the quarter and year ended March 31, 2009 and 2008 are as follows:
in Rs. Crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Capital transactions: | | | | |
Financing transactions | | | | |
Infosys BPO | – | 22 | – | 22 |
Infosys Mexico | – | – | – | 22 |
Infosys China | 19 | – | 19 | – |
Infosys Consulting | – | – | 22 | 81 |
Loans/Advances |
Infosys China | – | – | 10 | 10 |
Revenue transactions: |
Purchase of services |
Infosys Australia | 115 | 121 | 471 | 482 |
Infosys China | 24 | 15 | 81 | 54 |
Infosys Consulting | 69 | 61 | 275 | 231 |
Infosys BPO | – | – | 1 | – |
Infosys Mexico | 10 | 2 | 33 | 3 |
Purchase of shared services including facilities and personnel |
Infosys BPO (Including subsidiaries) | 17 | 5 | 32 | 11 |
Interest Income | | | | |
Infosys China | 1 | – | 3 | – |
Sale of services | | | | |
Infosys Australia | 7 | 2 | 10 | 4 |
Infosys China | – | – | 2 | – |
Infosys Consulting | – | – | 4 | 1 |
Infosys BPO (Including subsidiaries) | 1 | – | 1 | – |
Sale of shared services including facilities and personnel | | | | |
Infosys BPO (Including subsidiaries) | 15 | 12 | 53 | 44 |
Infosys Consulting | 1 | 1 | 3 | 2 |
Details of amounts due to or due from and maximum dues from subsidiaries for the year ended March 31, 2009 and year ended March 31, 2008:
in Rs. Crore
| Particulars | As at |
| | March 31, 2009 | March 31, 2008 |
Loans and advances |
Infosys China | 51 | 32 |
Debtors |
Infosys China | – | 8 |
Infosys Australia | 4 | – |
Infosys Mexico | 1 | – |
Creditors |
Infosys China | 4 | 7 |
Infosys Australia | 16 | – |
Infosys BPO (Including subsidiaries) | 1 | – |
Maximum balances of loans and advances |
Infosys BPO (Including subsidiaries) | – | 2 |
Infosys Australia | 35 | 31 |
Infosys China | 51 | 32 |
Infosys Mexico | 4 | – |
Infosys Consulting | 26 | 16 |
During the quarter and year ended March 31, 2009, an amount of Rs.5 crore and Rs.20 crore respectively (Rs.5 crore and Rs.20 crore respectively for the quarter and year ended March 31, 2008) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.
During the year ended March 31,2009, an amount of Rs 15 crores (Rs. Nil for the year ended March 31,2008) has been granted to Infosys Science Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.
23.2.8. Transactions with key management personnel
Key Management personnel comprise directors and members of executive council.
Particulars of remuneration and other benefits paid to key management personnel during the quarter and year ended March 31, 2009 and March 31, 2008 have been detailed in Schedule 23.3 since the amounts are less than a crore.
The aggregate managerial remuneration under Section 198 of the Companies Act 1956, to the directors (including managing director) is:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Whole-time directors | | |
Salary | 2 | 2 |
Contribution to provident and other funds | – | – |
Perquisites and incentives | 6 | 4 |
Total remuneration | 8 | 6 |
Non-Whole-time directors | | |
Commission | 6 | 4 |
Sitting fees | – | – |
Reimbursement of expenses | 1 | 1 |
Total remuneration | 7 | 5 |
Computation of net profit in accordance with Section 349 of the Companies Act, 1956, and calculation of commission payable to non-whole-time directors:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Net profit after tax from ordinary activities | 5,819 | 4,470 |
Add: |
Whole-time directors' remuneration | 8 | 6 |
Directors' sitting fees | – | – |
Commission to non-whole time-directors | 6 | 4 |
Provision for bad and doubtful debts | 74 | 42 |
Provision for doubtul loans and advances | 1 | – |
Provision on investments | – | – |
Depreciation as per books of accounts | 694 | 546 |
Provision for taxation | 895 | 630 |
| | 7,497 | 5,698 |
Less: |
Depreciation as envisaged under Section 350 of the Companies Act* | 694 | 546 |
Profit of a capital nature
| – | – |
| Net profit on which commission is payable | 6,803 | 5,152 |
Commission payable to non-whole-directors: | | |
Maximum allowed as per the Companies Act, 1956 at 1% | 68 | 52 |
Maximum approved by the share holders at 1% (0.5%) | 68 | 26 |
Commission approved by the Board | 6 | 4 |
* The company depreciates fixed assets based on estimated useful lives that are lower than those implicit in Schedule XIV of the Companies Act, 1956. Accordingly, the rates of depreciation used by the company are higher than the minimum prescribed by the Schedule XIV.During the year ended March 31, 2009 and 2008, Infosys BPO has provided for commission of Rs. 0.12 crore and Rs 0.12 crore to a non-whole-time director of Infosys.
23.2.9. Research and development expenditure
in Rs. crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Capital | – | – | 31 | – |
Revenue | 84 | 47 | 236 | 201 |
23.2.10. Dues to micro and small enterprises
The company has no dues to micro and small enterprises during the quarter and year ended March 31, 2009 and March 31 ,2008 and as at March 31,2009 and March 31, 2008.
23.2.11. 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. 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. The 1998 Plan lapsed on January 6, 2008, and consequently no further shares will be issued to employees under this plan.
Number of options granted, exercised and forfeited during the | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Options outstanding, beginning of period | 11,22,317 | 19,21,491 | 15,30,447 | 20,84,124 |
Less: exercised | 1,14,578 | 3,37,832 | 4,55,586 | 5,00,465 |
forfeited | 90,980 | 53,212 | 1,58,102 | 53,212 |
Options outstanding, end of period | 9,16,759 | 15,30,447 | 9,16,759 | 15,30,447 |
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 September 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 March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Options outstanding, beginning of period | 10,09,755 | 16,45,299 | 14,94,693 | 18,97,840 |
Less: exercised | 73,962 | 1,03,989 | 3,78,699 | 2,85,431 |
forfeited | 15,717 | 46,617 | 1,95,918 | 1,17,716 |
Options outstanding, end of period | 9,20,076 | 14,94,693 | 9,20,076 | 14,94,693 |
The aggregate options considered for dilution are set out in note 23.2.20
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 ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Net Profit: | | | | |
As Reported | 1,569 | 1,182 | 5,819 | 4,470 |
Less: Stock-based employee compensation expense | 2 | 4 | 7 | 13 |
Adjusted Proforma | 1,567 | 1,178 | 5,812 | 4,457 |
Basic Earnings per share as reported | 27.38 | 20.66 | 101.65 | 78.24 |
Proforma Basic Earnings per share | 27.36 | 20.60 | 101.52 | 78.00 |
Diluted Earnings per share as reported | 27.35 | 20.60 | 101.48 | 77.98 |
Proforma Diluted Earnings per share | 27.33 | 20.55 | 101.35 | 77.74 |
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 year ended March 31, 2009, 1,14,578 and 73,962 equity shares, 4,55,586 and 3,78,699 equity shares were issued pursuant to the exercise of stock options by employees under the 1998 and 1999 stock option plans, respectively. FBT on exercise of stock options of Rs. 1 crore and Rs. 3 crore for the quarter and year ended March 31, 2009 has been paid by the company and subsequently recovered from the employees. Consequently, there is no impact on the profit and loss account.
23.2.12. 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, or March 31, 2010.
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 262 crores and Rs 169 crores was carried forward and shown under "Loans and Advances" in the balance sheet as of March 31, 2009 and March 31, 2008 respectively.
The tax provision for the year ended March 31, 2009 includes a net reversal of Rs. 108 crore pertaining to earlier periods, comprising of Rs.323 crore for provisions no longer required which is offset by a charge of Rs. 215 crore due to re-assessment of uncertain tax positions. The tax provision for the year ended March 31, 2008 includes a reversal of Rs. 121 crore relating to liabilities no longer required. Further, the tax provision for the quarter ended March 31,2009 and March 31,2008 include a net reversal of Rs. 15 crore (net) and Rs. 20 crore (net), respectively
23.2.13. 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 |
| | March 31, 2009 | March 31, 2008 |
In Current accounts | | |
ABN Amro Bank, Taiwan | 2 | – |
Bank of America, USA | 574 | 272 |
Citibank NA, Australia | 33 | 30 |
Citibank NA, Singapore | 7 | – |
Citibank NA, Thailand | 1 | – |
Citibank NA, Japan | 2 | 2 |
Deutsche Bank, Belgium | 6 | 5 |
Deutsche Bank, France | 1 | 2 |
Deutsche Bank, Germany | 5 | 5 |
Deutsche Bank, Netherlands | 1 | 3 |
Deutsche Bank, Spain | 1 | 2 |
Deutsche Bank, Zurich, Switzerland | – | 1 |
Deutsche Bank, UK | 58 | 76 |
HSBC Bank, UK | 7 | 2 |
Nordbanken, Stockholm, Sweden | – | 1 |
Royal Bank of Canada, Canada | 5 | 12 |
Svenska Handelsbanken, Sweden | – | 1 |
The Bank of Tokyo - Mitsunhishi UFJ,Ltd.,Japan | 1 | – |
| | 704 | 414 |
Details of balances as on balance sheet dates with scheduled banks:–
in Rs. crore
Balances with scheduled banks in India
| As at |
| | March 31, 2009 | March 31, 2008 |
In Current accounts | | |
Citibank-Unclaimed dividend account | 1 | 1 |
Deustche Bank | 11 | 39 |
Deustche Bank-EEFC account in Euro | 26 | 23 |
Deustche Bank-EEFC account in Swiss Franc | 3 | 10 |
Deustche Bank-EEFC account in United Kingdom Pound Sterling | – | 17 |
Deustche Bank-EEFC account in US dollar | 11 | 127 |
ICICI Bank | 14 | 20 |
ICICI Bank-EEFC account in US dollar | 34 | 5 |
ICICI bank-Unclaimed dividend account | 1 | 1 |
| | 101 | 243 |
In Deposit accounts |
Andhra Bank | 80 | – |
Axis Bank | – | 250 |
Bank of Baroda | 781 | 500 |
Bank of India | – | 500 |
Bank of Maharashtra | 493 | 362 |
Barclays Bank | 140 | 280 |
Canara Bank | 794 | 115 |
Corporation Bank | 335 | 440 |
DBS Bank | 25 | – |
HDFC Bank | – | 450 |
HSBC Bank | 258 | 250 |
ICICI Bank | 510 | 1,000 |
IDBI Bank | 500 | 475 |
ING Vysya Bank | 25 | – |
Punjab National Bank | 480 | – |
State Bank of Hyderabad | 200 | – |
State Bank of India | 2,083 | 1,000 |
State Bank of Mysore | 500 | – |
Syndicate Bank | 500 | – |
The Bank of Nova Scotia | 350 | 150 |
Union Bank of India | 85 | – |
Vijaya Bank | 95 | – |
| | 8,234 | 5,772 |
Total cash and bank balances as per balance sheet | 9,039 | 6,429 |
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 March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
In current accounts | | | | |
ABN Amro Bank , Taipei, Taiwan | 2 | 2 | 4 | 2 |
Bank of America, Palo Alto, USA | 671 | 559 | 956 | 637 |
Citibank NA, Melbourne, Australia | 192 | 126 | 192 | 126 |
Citibank NA, Singapore | 11 | – | 24 | – |
Citibank NA, Tokyo, Japan | 39 | 13 | 45 | 14 |
Citibank NA, Thailand | 1 | – | 1 | – |
Deutsche Bank, Brussels, Belgium | 23 | 27 | 33 | 38 |
Deutsche Bank, Frankfurt, Germany | 52 | 20 | 52 | 20 |
Deutsche Bank, Amsterdam, Netherlands | 25 | 3 | 41 | 3 |
Deutsche Bank, Paris, France | 8 | 5 | 9 | 5 |
Deutsche Bank, Spain | 2 | 2 | 2 | 2 |
Deutsche Bank, Zurich, Switzerland | 22 | 15 | 36 | 15 |
Deutsche Bank, Zurich, Switzerland US dollar | 9 | – | 31 | – |
Deutsche Bank, UK | 183 | 311 | 350 | 311 |
HSBC Bank PLC, Croydon, UK | 7 | 15 | 11 | 32 |
Morgan Stanley Bank,US | 3 | 9 | 3 | 9 |
Nordbanken, Stockholm, Sweden | 1 | 1 | 1 | 1 |
Royal Bank of Canada, Toronto, Canada | 27 | 17 | 42 | 17 |
Svenska Handels Bank, Stockholm, Sweden | 2 | 2 | 3 | 2 |
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan | 2 | 1 | 6 | 3 |
23.2.14. 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 |
| | March 31, 2009 | March 31, 2008 |
Deposits with financial institutions and body corporate: | | |
HDFC Limited | 1,250 | 1,000 |
GE Capital Services India | – | 260 |
Life Insurance Corporation of India (LIC) | 253 | 161 |
| | 1,503 | 1,421 |
Maximum balance (Including accrued Interest) held as deposits with financial institutions and body corporate:
in Rs. crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Deposits with financial institutions and body corporate: |
HDFC Limited | 1,250 | 1,031 | 1,250 | 1,031 |
GE Capital Services India | – | 312 | 271 | 312 |
Life Insurance Corporation of India | 253 | 161 | 253 | 161 |
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 obligations as and when they arise during the normal course of business. (refer to note 23.2.25.b.)
23.2.15. Fixed assets
Profit / (loss) on disposal of fixed assets during the quarter and year ended March 31, 2009 and 2008 is less than Rs. 1 crore and accordingly disclosed in note 23.3
Depreciation charged to the profit and loss account includes a charge relating to assets costing less than Rs. 5,000/- each and other low value assets.
in Rs. crore
| | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Charged during the period | 28 | 8 | 71 | 16 |
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 March 31, 2009.
23.2.16. Details of Investments
Rs. crore
| Particulars | As at |
| | March 31, 2009 | March 31, 2008 |
Long- term investments
| | |
| OnMobile Systems Inc., (formerly Onscan Inc.) USA | | |
| 53,85,251 (53,85,251) common stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each * | 9 | 9 |
M-Commerce Ventures Pte Ltd, Singapore | | |
| 563 (563) redeemable preference shares of Singapore $ 1, fully paid, at a premium of Singapore $1,110 per redeemable preferred stock # | – | 2 |
Merasport Technologies Private Limited ** | | |
2,420 equity shares at Rs. 8,052 each, fully paid, par value Rs. 10 each | 2 | – |
| | 11 | 11 |
Less: Provision for investment | 11 | 11 |
| | – | – |
* During the year ended March 31, 2008 all of the Preferred Stock investments in OnMobile Systems Inc., U.S.A had been converted to Common Stock.# During the year ended March 31, 2009 investments in M-Commerce Ventures Pte Ltd., Singapore were liquidated.** During the year ended March 31, 2009, Infosys received 2,420 shares of Mera Sport Technologies Private Limited valued at Rs. 2 crore in lieu of provision of usage rights to the software developed by Infosys. The Investment was fully provided for during this year based on dimunition other than temporary.Details of investments in and disposal of securities during the quarter and year ended March 31, 2009 and 2008:
in Rs. crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Investment in securities | | | | |
Subsidiaries | 19 | 22 | 41 | 125 |
Long-term investments | – | – | 2 | – |
Certificate of deposits | – | – | 193 | – |
Liquid Mutual funds | 608 | – | 608 | 1,518 |
| | 627 | 22 | 844 | 1,643 |
Redemption / Disposal of Investment in securities |
Long-term investments | – | – | – | – |
Certificate of deposits* | 200 | – | 200 | – |
Liquid Mutual funds | 608 | – | 608 | 1,518 |
| | 808 | – | 808 | 1,518 |
Net movement in investments | (181) | 22 | 36 | 125 |
* Represents redemption value inclusive of Rs. 7 crore interestInvestment purchased and sold during the year ended March 31, 2009 :in Rs. crore
| Name of the fund | Face Value Rs./- | Units | Cost |
Tata Floater Fund - Weekly Dividend Plan | 10 | 151,193,892 | 153 |
Kotak Floater Long-term - Weekly Dividend Plan | 10 | 175,574,233 | 177 |
Reliance Medium Term Fund - Weekly Dividend Plan | 10 | 32,132,737 | 55 |
Birla Sunlife Short-term Fund Institutional Fortnightly Dividend Payout | 10 | 105,880,534 | 107 |
ICICI Prudential Floating Rate Plan D - Weekly Dividend | 10 | 115,884,116 | 116 |
Certifiate of deposits purchased and sold during the year ended March 31, 2009 :
in Rs. crore
| Particulars | Face Value Rs./- | Units | Cost |
ICICI Bank | 1,00,000 | 10,000 | 97 |
Punjab National Bank | 1,00,000 | 10,000 | 96 |
Particulars of investments made during the quarter and year ended March 31, 2009 and 2008:
in Rs. crore
| Particulars of investee companies | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Infosys Consulting | – | – | 22 | 81 |
Infosys Mexico | – | – | – | 22 |
Infosys China | 19 | – | 19 | – |
Infosys BPO | – | 22 | – | 22 |
| 19 | 22 | 41 | 125 * |
* Excludes Rs 2 crore due to option holders of Infosys BPO relating to option purchases paid during the year ended March 31,2008Investment 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"). As of March 31, 2009, 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
During the year ended March 31, 2008 Infosys completed the purchase of 3,60,417 shares of Infosys BPO from its employee shareholders by paying an aggregrate consideration of Rs.22 crore consequent to the forward share purchase agreement entered with them in February 2007.
Investment in Infosys Consulting
During the year ended March 31, 2008, the company invested US$ 20 million (Rs. 81 crore) in its wholly owned subsidiary Infosys Consulting Inc. During the year ended March 31, 2009, the company made an additional investment of US$ 5 million (Rs. 22 crore) . As of March 31, 2009, the company has invested an aggregate of US$ 45 million (Rs.193 crore) in the subsidiary.
Investment in Infosys China
During the year ended March 31, 2009 and year ended March 31, 2008, the company disbursed an amount of US$ 2 million (Rs. 9 crore) and US$ 3 million (Rs.10 crore) as loan to its wholly owned subsidiary, Infosys Technologies (China) Co. Limited. The loan is repayable within five years from the date of disbursement at the discretion of the subsidiary. Further, during the year ended March 31, 2009, an additional investment of US$ 4 million (Rs.19 crore) was made in Infosys China. As of March 31, 2009, the company has invested US$ 14 million (Rs.65 crore) as equity capital and US$ 10 million (Rs.51 crore) as loan in the subsidiary.
23.2.17. Segment reporting
The company'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 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 March 31, 2009 and 2008:
in Rs. crore
| | Financial services | Manufacturing | Telecom | Retail | Others | Total |
Revenues | 1,769 | 1,052 | 837 | 751 | 844 | 5,253 |
| | 1,467 | 684 | 910 | 532 | 642 | 4,235 |
Identifiable operating expenses | 759 | 464 | 359 | 293 | 343 | 2,218 |
| | 619 | 298 | 371 | 228 | 273 | 1,789 |
Allocated expenses | 406 | 242 | 192 | 173 | 194 | 1,207 |
| | 368 | 171 | 228 | 133 | 161 | 1,061 |
Segmental operating income | 604 | 346 | 286 | 285 | 307 | 1,828 |
| | 480 | 215 | 311 | 171 | 208 | 1,385 |
Unallocable expenses | | | | | | 209 |
| | | | | | | 142 |
Operating income | | | | | | 1,619 |
| | | | | | | 1,243 |
Other income (expense), net | | | | | | 248 |
| | | | | | | 133 |
Net profit before taxes | | | | | | 1,867 |
| | | | | | | 1,376 |
Income taxes | | | | | | 298 |
| | | | | | | 194 |
Net profit after taxes | | | | | | 1,569 |
| | | | | | | 1,182 |
Industry Segments
Year ended March 31, 2009 and 2008
in Rs. crore
| | Financial services | Manufacturing | Telecom | Retail | Others | Total |
Revenues | 7,020 | 3,876 | 3,450 | 2,699 | 3,219 | 20,264 |
| | 5,706 | 2,291 | 3,215 | 1,945 | 2,491 | 15,648 |
Identifiable operating expenses | 3,008 | 1,675 | 1,445 | 1,140 | 1,359 | 8,627 |
| | 2,426 | 1,028 | 1,401 | 836 | 1,085 | 6,776 |
Allocated expenses | 1,638 | 905 | 807 | 630 | 751 | 4,731 |
| | 1,424 | 572 | 804 | 485 | 624 | 3,909 |
Segmental operating income | 2,374 | 1,296 | 1,198 | 929 | 1,109 | 6,906 |
| | 1,856 | 691 | 1,010 | 624 | 782 | 4,963 |
Unallocable expenses | | | | | | 694 |
| | | | | | | 546 |
Operating income | | | | | | 6,212 |
| | | | | | | 4,417 |
Other income (expense), net | | | | | | 502 |
| | | | | | | 683 |
Net profit before taxes | | | | | | 6,714 |
| | | | | | | 5,100 |
Income taxes | | | | | | 895 |
| | | | | | | 630 |
Net profit after taxes | | | | | | 5,819 |
| | | | | | | 4,470 |
Geographic Segments
Quarter ended March 31, 2009 and 2008:
in Rs. crore
| | North America | Europe | India | Rest of the World | Total |
Revenues | 3,459 | 1,225 | 80 | 489 | 5,253 |
| | 2,643 | 1,170 | 58 | 364 | 4,235 |
Identifiable operating expenses | 1,463 | 518 | 18 | 219 | 2,218 |
| | 1,137 | 451 | 5 | 196 | 1,789 |
Allocated expenses | 794 | 281 | 19 | 113 | 1,207 |
| | 662 | 293 | 15 | 91 | 1,061 |
Segmental operating income | 1,202 | 426 | 43 | 157 | 1,828 |
| | 844 | 426 | 38 | 77 | 1,385 |
Unallocable expenses | | | | | 209 |
| | | | | | 142 |
Operating income | | | | | 1,619 |
| | | | | | 1,243 |
Other income (expense), net | | | | | 248 |
| | | | | | 133 |
Net profit before taxes | | | | | 1,867 |
| | | | | | 1,376 |
Income taxes | | | | | 298 |
| | | | | | 194 |
Net profit after taxes | | | | | 1,569 |
| | | | | | 1,182 |
Geographic Segments
Year ended March 31, 2009 and 2008:
in Rs. crore
| | North America | Europe | India | Rest of the World | Total |
Revenues | 13,123 | 5,060 | 260 | 1,821 | 20,264 |
| | 9,873 | 4,207 | 219 | 1,349 | 15,648 |
Identifiable operating expenses | 5,626 | 2,082 | 63 | 856 | 8,627 |
| | 4,308 | 1,668 | 46 | 754 | 6,776 |
Allocated expenses | 3,060 | 1,183 | 61 | 427 | 4,731 |
| | 2,466 | 1,050 | 56 | 337 | 3,909 |
Segmental operating income | 4,437 | 1,795 | 136 | 538 | 6,906 |
| | 3,099 | 1,489 | 117 | 258 | 4,963 |
Unallocable expenses | | | | | 694 |
| | | | | | 546 |
Operating income | | | | | 6,212 |
| | | | | | 4,417 |
Other income (expense), net | | | | | 502 |
| | | | | | 683 |
Net profit before taxes | | | | | 6,714 |
| | | | | | 5,100 |
Income taxes | | | | | 895 |
| | | | | | 630 |
Net profit after taxes | | | | | 5,819 |
| | | | | | 4,470 |
23.2.18. Provision for doubtful debts
Periodically, the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability 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 March 31, 2009 the company has provided for doubtful debts of Rs.66 crore (Rs. 20 crore as at March 31, 2008) 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.
23.2.19. 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 March 31, | Year ended March 31, |
| | | 2009 | 2008 | 2009 | 2008 |
Interim dividend for fiscal 2009 | 10,97,63,357 | – | – | 110 | – |
Interim dividend for fiscal 2008 | 10,92,19,011 | – | – | – | 66 |
Final dividend for fiscal 2007 | 10,92,18,536 | – | – | – | 71 |
Final dividend for fiscal 2008 | 10,95,11,049 | – | – | 79 | – |
Special dividend for fiscal 2008 | 10,95,11,049 | – | – | 219 | – |
23.2.20. Reconciliation of basic and diluted shares used in computing earnings per share
Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Number of shares considered as basic weighted average shares outstanding | 57,27,46,241 | 57,18,27,067 | 57,24,90,211 | 57,13,98,340 |
Add: Effect of dilutive issues of shares/stock options | 6,41,325 | 14,77,588 | 9,72,970 | 19,08,547 |
Number of shares considered as weighted average shares and potential shares outstanding | 57,33,87,566 | 57,33,04,655 | 57,34,63,181 | 57,33,06,887 |
23.2.21. Provision for Post-sales client support and warranties
The movement in the provision for post-sales client support and warranties is as follows:
in Rs. crore
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Balance at the beginning | 58 | 41 | 43 | 21 |
Provision recognized | 18 | 26 | 39 | 46 |
Provision utilized | (1) | (24) | (7) | (24) |
Balance at the end | 75 | 43 | 75 | 43 |
Provision for post sales client support is expected to be utilized over a period of 6 months to 1 year.
23.2.22. Gratuity Plan
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 | |
| | March 31, 2009 | March 31, 2008 | March 31, 2007 |
Obligations at period beginning | 217 | 221 | 180 |
Service Cost | 47 | 47 | 44 |
Interest cost | 15 | 16 | 14 |
Actuarial (gain)/ loss | – | (9) | – |
Benefits paid | (23) | (21) | (17) |
Amendment in benefit plans | – | (37) | – |
Obligations at period end | 256 | 217 | 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 | 229 | 221 | 167 |
Expected return on plan assets | 16 | 18 | 16 |
Actuarial gain | 5 | 2 | 3 |
Contributions | 29 | 9 | 52 |
Benefits paid | (23) | (21) | (17) |
Plans assets at period end, at fair value | 256 | 229 | 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 | 256 | 229 | 221 |
Present value of the defined benefit obligations at the end of the period | 256 | 217 | 221 |
Asset recognized in the balance sheet | – | 12 | – |
Assumptions | | | |
Interest rate | 7.01% | 7.92% | 7.99% |
Estimated rate of return on plan assets | 7.01% | 7.92% | 7.99% |
in Rs. Crore
| | Quarter ended March 31, | Year ended March 31, |
| | 2009 | 2008 | 2009 | 2008 |
Gratuity cost for the period | | | |
Service cost | 11 | 15 | 47 | 47 |
Interest cost | 7 | 4 | 15 | 16 |
Expected return on plan assets | (7) | (5) | (16) | (18) |
Actuarial (gain)/loss | (5) | (7) | (5) | (11) |
Plan amendment amortization | (1) | (1) | (4) | (4) |
Net gratuity cost | 5 | 6 | 37 | 30 |
Actual return on plan assets | 6 | 5 | 21 | 20 |
Gratuity cost, as disclosed above, is included under salaries and bonus and is segregated between software development expenses, selling and marketing expenses and general and administration expenses on the basis of number of employees.
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 is being amortised on a straight line basis to the net profit and loss account over 10 years representing the average future service period of the employees. The unamortized liability as at March 31, 2009 and March 31, 2008 amounted to Rs.29 crore and Rs.33 crore, respectively and disclosed under "Current Liabilities".
The company expects to contribute approximately Rs.40 crores to the gratuity trust during fiscal 2010.
23.2.23.a Provident Fund
The Guidance on Implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits 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.
The company contributed Rs.36 crore and Rs.29 crore to the provident fund during the quarter ended March 31, 2009 and 2008 and Rs.137 crore and Rs.110 crore during the year ended March 31, 2009 and 2008 respectively.
23.2.23.b Superannuation
The company contributed Rs.13 crore and Rs.11 crore to the superannuation plan during the three months ended March 31, 2009 and 2008 and Rs.52 crore and Rs.42 crore during the year ended March 31, 2009 and 2008 respectively.
23.2.24 Miscellaneous Income
Miscellaneous income of Rs. 36 crore during the year ended March 31, 2009 includes a net amount of Rs.18 crore consisting of Rs.33 crore received from Axon Group Plc, towards the inducement fee offset by Rs.15 crore towards expenses incurred in relation to this transaction.
23.2.25 Cashflow statement
23.2.25.a Unclaimed dividend
The balance of cash and cash equivalents includes Rs.2 crore as at March 31, 2009 (Rs. 2 crore as at March 31, 2008) set aside for payment of dividends.
23.2.25.b Restricted cash
Deposits with financial institutions and body corporate as at March 31, 2009 include an amount of Rs.253 crore (Rs. 161 crore as at March 31, 2008) deposited with Life Insurance Corporation of India to settle employee benefit 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".
23.3 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 |
| | | March 31, 2009 | March 31, 2008 |
3 | Fixed Assets | | | |
| Depreciation & Amortization for the period | | | |
| Vehicles | | 0.57 | 0.36 |
7 | Cash on Hand | | 0.01 | – |
23.2.7 | Related party transactions | | | |
| Debtors- Infosys BPO s.r.o. | | 0.02 | – |
| Debtors- Infosys China | | 0.16 | 8.00 |
| Debtors- Infosys Consulting | | 0.34 | – |
| Debtors- Infosys Thailand | | 0.01 | – |
| Creditors- Infosys Mexico | | (0.04) | – |
| Advances - Infosys Sweden | | 0.06 | – |
23.2.13 | Balances with scheduled banks | | | |
| - HDFC Bank - Unclaimed dividend account | | 0.46 | – |
| - Deutsche Bank - EEFC account in United Kingdom Pound Sterling | | 0.05 | 16.99 |
| Balances with non-scheduled banks | | | |
| – ABN Amro Bank, Copenhagen, Denmark | | 0.06 | 0.01 |
| – ABN Amro Bank, Taiwan | | 1.49 | 0.23 |
| – Citibank NA, Singapore | | 7.17 | 0.02 |
| – Citibank NA, Thailand | | 0.54 | 0.31 |
| – Nordbanken, Sweden | | 0.05 | 0.89 |
| – Svenska Handelsbanken, Sweden | | – | 1.23 |
| – Deutsche Bank, Zurich, Switzerland | | 0.22 | 1.34 |
| | – Deutsche Bank, Zurich, Switzerland US dollar | | 0.05 | – |
Profit & Loss Items
in Rs. crore
| Schedule | Description | Quarter ended March 31, | Year ended March 31, |
| | | | 2009 | 2008 | 2009 | 2008 |
Profit & Loss | Provision for investment | | 0.11 | – | 1.95 | (0.36) |
| | Additional Dividend tax | | – | | 0.12 | – |
12 | Selling and Marketing expenses | | | | | |
| Overseas group health insurance | | | – | | – |
| Contribution to provident and other funds | | 0.47 | – | 2.40 | – |
| Visa charges and others | | 0.34 | 0.53 | 2.16 | 2.17 |
| Travelling and Conveyance | | 0.45 | 1.00 | 2.89 | 3.00 |
| Printing & Stationery | | 0.22 | 0.31 | 0.99 | 1.16 |
| Office maintenance | | 0.04 | 0.08 | 0.34 | 0.39 |
| Computer Maintenance | | – | (0.09) | – | 0.02 |
| Software Packages for own use | | – | 0.03 | 0.04 | 0.12 |
| Communication Expenses | | 0.42 | 0.53 | 1.50 | 1.33 |
| Rates and Taxes | | – | – | 0.01 | 0.02 |
| Sales Promotion expenses | | 0.13 | – | 1.36 | – |
| Staff Welfare | | 0.34 | 1.00 | 4.11 | 3.00 |
| Consumables | | 0.02 | 0.05 | 0.15 | 0.23 |
| Insurance charges | | 0.01 | – | 0.03 | – |
| Advertisements | | 0.29 | 0.49 | 1.73 | 4.21 |
13 | General and Administrative expenses | | | | | |
| Provision for doubtful loans and advances | | 0.25 | 0.24 | 0.74 | 0.54 |
| Overseas group health insurance | | 0.25 | (0.02) | 0.48 | (2.30) |
| Visa charges others | | 0.25 | 0.47 | 2.72 | 0.59 |
| Auditor's remuneration : | | | | | |
| Statutory audit fees | | 0.16 | 0.16 | 0.62 | 0.64 |
| Others | | – | 0.11 | – | 0.11 |
| Certification Charges | | 0.01 | 0.01 | 0.05 | 0.05 |
| Out-of-pocket expenses | | 0.01 | 0.01 | 0.03 | 0.03 |
| Frieght Charges | | 0.40 | 0.13 | 1.07 | 0.76 |
| Advertisements | | 0.14 | – | 3.57 | – |
| Bank Charges and commission | | 0.53 | 0.24 | 1.71 | 1.08 |
23.2.1 | Aggregate expenses | | | | | |
| Provision for doubtful loans and advances | | 0.25 | 0.24 | 0.74 | 0.54 |
| Guest house maintenance | | 1.77 | 0.32 | 4.83 | 2.71 |
| Sales promotion expenses | | 0.13 | – | 1.36 | – |
| Auditor's remuneration | | | | | |
| Statutory audit fees | | 0.16 | 0.16 | 0.62 | 0.64 |
| Others | | – | 0.11 | – | 0.11 |
| Certification Charges | | 0.01 | 0.01 | 0.05 | 0.05 |
| Out-of-pocket expenses | | 0.01 | 0.01 | 0.03 | 0.03 |
| Bank Charges and commission | | 0.53 | 0.24 | 1.71 | 1.08 |
| Frieght charges | | 0.40 | 0.13 | 1.07 | 0.76 |
23.2.7 | Related party transactions | | | | | |
| Revenue transactions | | | | | |
| Purchase of services - Infosys BPO | | 0.09 | – | 1.10 | – |
| Sale of services - Infosys China | | 0.37 | – | 1.77 | – |
| Sale of services - Infosys Mexico | | – | – | 0.07 | – |
| Sale of services - Infosys conulting | | – | – | 4.37 | 0.36 |
| Interest income - Infosys China | | 0.73 | 0.48 | 2.68 | 0.96 |
| | | | | | |
23.2.15 | Profit on disposal of fixed assets, included in miscellaneous income | | 0.05 | 0.13 | 0.16 | 0.18 |
| (Loss) on disposal of fixed assets, included in miscellaneous expenses | | – | – | – | (0.01) |
| Profit/(loss) on disposal of fixed assets, net | | 0.05 | 0.13 | 0.16 | 0.17 |
23.2.13 | Maximum Balances with non-scheduled banks | | | | | |
| – ABN Amro Bank, Denmark | | 0.07 | 0.01 | 0.08 | 0.25 |
| – Citibank NA, Singapore | | 10.55 | 0.04 | 23.95 | 0.08 |
| | – Citibank NA, Thailand | | 0.01 | 0.33 | 0.54 | 0.33 |
Cash Flow Statement Items
in Rs. crore
| Schedule | Description | Year ended March 31, |
| | | | 2009 | 2008 |
Cash Flow | Profit/ loss on sale of fixed assets | | 0.16 | 0.17 |
Statement | Provisions for investments | | 1.95 | (0.36) |
| | Proceeds on disposal of fixed assets | | 0.21 | 0.38 |
Transactions with key management personnel
Key management personnel comprise directors and members of executive council.
Particulars of remuneration and other benefits paid to whole-time directors and members of executive council during the quarter and year ended March 31, 2009 and 2008 :
in Rs. crore
| Name | Salary | Contributions
to provident and
other funds | Perquisites
and incentives | Total
Remuneration |
Co-Chairman |
Nandan M Nilekani | 0.08 | 0.02 | 0.13 | 0.23 |
| | 0.06 | 0.01 | 0.18 | 0.25 |
| | 0.30 | 0.07 | 0.54 | 0.91 |
| | 0.21 | 0.05 | 0.56 | 0.82 |
Chief Executive Officer and Managing Director |
S Gopalakrishnan | 0.08 | 0.02 | 0.13 | 0.23 |
| | 0.06 | 0.01 | 0.18 | 0.25 |
| | 0.30 | 0.07 | 0.55 | 0.92 |
| | 0.21 | 0.05 | 0.55 | 0.81 |
Chief Operating Officer |
S D Shibulal | 0.06 | 0.02 | 0.12 | 0.20 |
| | 0.06 | 0.01 | 0.17 | 0.24 |
| | 0.28 | 0.07 | 0.52 | 0.87 |
| | 0.20 | 0.05 | 0.53 | 0.78 |
Whole-time Directors |
K Dinesh | 0.08 | 0.02 | 0.12 | 0.22 |
| | 0.06 | 0.01 | 0.18 | 0.25 |
| | 0.30 | 0.07 | 0.54 | 0.91 |
| | 0.21 | 0.05 | 0.56 | 0.82 |
| |
T V Mohandas Pai | 0.09 | 0.02 | 0.42 | 0.53 |
| | 0.09 | 0.03 | 0.44 | 0.56 |
| | 0.36 | 0.09 | 2.14 | 2.59 |
| | 0.33 | 0.11 | 1.36 | 1.80 |
| | | | | |
Srinath Batni | 0.09 | 0.03 | 0.25 | 0.37 |
| | 0.08 | 0.02 | 0.27 | 0.37 |
| | 0.35 | 0.09 | 1.43 | 1.87 |
| | 0.31 | 0.08 | 0.88 | 1.27 |
Chief Financial Officer |
V Balakrishnan | 0.08 | 0.02 | 0.06 | 0.16 |
| | 0.06 | 0.02 | 0.06 | 0.14 |
| | 0.29 | 0.07 | 2.00 | 2.36 |
| | 0.26 | 0.08 | 0.29 | 0.63 |
Executive Council Members |
Ashok Vemuri | 0.55 | – | 0.01 | 0.56 |
| | 0.40 | – | 0.01 | 0.41 |
| | 1.99 | – | 2.05 | 4.04 |
| | 1.57 | – | 1.24 | 2.81 |
| |
Chandra Shekar Kakal | 0.07 | 0.02 | 0.05 | 0.14 |
| | 0.05 | 0.02 | 0.05 | 0.12 |
| | 0.26 | 0.06 | 1.26 | 1.58 |
| | 0.23 | 0.06 | 0.49 | 0.78 |
| |
B.G. Srinivas | 0.42 | – | 0.06 | 0.48 |
| | 0.44 | – | 0.06 | 0.50 |
| | 1.82 | – | 2.85 | 4.67 |
| | 1.67 | – | 1.40 | 3.07 |
| |
Subhash B. Dhar | 0.06 | 0.02 | 0.05 | 0.13 |
| | 0.05 | 0.02 | 0.04 | 0.11 |
| | 0.23 | 0.06 | 0.98 | 1.27 |
| | 0.18 | 0.05 | 0.32 | 0.55 |
Particulars of remuneration and other benefits of non-executive/ independent directors for the quarter and year ended March 31, 2009 and 2008 :
Name | Commission | Sitting fees | Reimbursement
of expenses | Total remuneration |
Non-Whole time Directors | | | | |
Deepak M Satwalekar | 0.17 | – | 0.02 | 0.19 |
| | 0.15 | – | – | 0.15 |
| | 0.68 | – | 0.02 | 0.70 |
| | 0.56 | – | 0.01 | 0.57 |
| |
Prof.Marti G. Subrahmanyam | 0.19 | – | 0.01 | 0.20 |
| | 0.12 | – | 0.01 | 0.13 |
| | 0.71 | – | 0.25 | 0.96 |
| | 0.47 | – | 0.12 | 0.59 |
| |
Dr.Omkar Goswami | 0.16 | – | 0.01 | 0.17 |
| | 0.10 | – | – | 0.10 |
| | 0.58 | – | 0.03 | 0.61 |
| | 0.44 | – | 0.01 | 0.45 |
| |
Claude Smadja | 0.18 | – | 0.06 | 0.24 |
| | 0.10 | – | 0.08 | 0.18 |
| | 0.67 | – | 0.26 | 0.93 |
| | 0.42 | – | 0.20 | 0.62 |
| |
Rama Bijapurkar | 0.16 | – | – | 0.16 |
| | 0.10 | – | – | 0.10 |
| | 0.56 | – | 0.01 | 0.57 |
| | 0.44 | – | 0.01 | 0.45 |
| |
Sridar A Iyengar | 0.19 | – | 0.06 | 0.25 |
| | 0.12 | – | – | 0.12 |
| | 0.70 | – | 0.20 | 0.90 |
| | 0.46 | – | 0.09 | 0.55 |
| |
David L. Boyles | 0.20 | – | 0.03 | 0.23 |
| | 0.12 | – | – | 0.12 |
| | 0.69 | – | 0.21 | 0.90 |
| | 0.47 | – | – | 0.47 |
| |
Jeffrey S. Lehman | 0.14 | – | 0.05 | 0.19 |
| | 0.11 | – | 0.02 | 0.13 |
| | 0.63 | – | 0.22 | 0.85 |
| | 0.43 | – | 0.02 | 0.45 |
| |
N R Narayana Murthy * | 0.17 | – | – | 0.17 |
| | 0.13 | – | – | 0.13 |
| | 0.63 | – | – | 0.63 |
| | 0.50 | – | – | 0.50 |
* Non-executive chairman of the board and chief mentor.
AUDITORS' REPORT TO THE MEMBERS OF INFOSYS TECHNOLOGIES LIMITED
We have audited the attached Balance Sheet of Infosys Technologies Limited ('the Company') as at 31 March 2009, the Profit and Loss Account of the Company and the Cash Flow Statement of the Company for the year 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 misstatement. 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.
As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), as amended, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, 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 as required by law 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 referred to in sub-section (3C) of Section 211 of the Act; |
| (e) | on the basis of written representations received from the directors, as at 31 March 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as at
31 March 2009 from being appointed as a director in terms of Section 274(1)(g) of the Act; and |
| (f) | in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and 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 March 2009; |
| | (ii) | in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and |
| | (iii) | in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. |
for B S R & Co.
Chartered Accountants
Natrajan Ramkrishna
Partner
Membership No. 32815
Bangalore
15 April 2009
ANNEXURE TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of Infosys Technologies Limited (‘the Company’) for the year ended 31 March 2009. We report that:
| (i) | (a) | The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. |
| | (b) | The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. |
| | (c) | Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption. |
| (ii) | | The Company is a service company, primarily rendering information technology services. Accordingly, it does not hold any physical inventories. Thus, paragraph 4(ii) of the Order is not applicable. |
| (iii) | (a) | The Company has granted a loan to a body corporate covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year and the year-end balance of such loan amounted to Rs 514,703,775. |
| | (b) | In our opinion, the rate of interest and other terms and conditions on which the loan has been granted to the body corporate listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. |
| | (c) | In the case of loan granted to the body corporate listed in the register maintained under Section 301, the borrower has been regular in the payment of the interest as stipulated. The terms of arrangement do not stipulate any repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount. |
| | (d) | There is no overdue amount of more than rupees one lakh in respect of the loan granted to a body corporate listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii)(d) of the Order is not applicable. |
| | (e) | The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, paragraphs 4(iii)(e) to 4(iii)(g) of the Order are not applicable. |
| (iv) | | In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and sale of services. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any major weakness in the internal control system during the course of the audit. |
| (v) | (a) | In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. |
| | (b) | In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (v)(a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. |
| (vi) | | The Company has not accepted any deposits from the public. Accordingly, paragraph 4(vi) of the Order is not applicable. |
| (vii) | | In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business. |
| (vii) | | In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business. |
| (viii) | | The Central Government of India has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the services rendered by the Company. Accordingly, paragraph 4(viii) of the Order is not applicable. |
| (ix) | (a) | According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees’ State Insurance, Customs duty and Excise duty. There were no dues on account of cess under Section 441A of the Companies Act, 1956 since the aforesaid section has not yet been made effective by the Central Government of India. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and other material statutory dues were in arrears as at 31 March 2009 for a period of more than six months from the date they became payable. |
| | (b) | According to the information and explanations given to us, there are no material dues of Income tax, Sales tax, Wealth tax, Service tax and Cess which have not been deposited with the appropriate authorities on account of any dispute. |
| (x) | | The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year. Accordingly, paragraph 4(x) of the Order is not applicable. |
| (xi) | | The Company did not have any outstanding dues to any financial institution, banks or debentureholders during the year. Accordingly, paragraph 4(xi) of the Order is not applicable. |
| (xii) | | The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, paragraph 4(xii) of the Order is not applicable.
|
| (xiii) | | In our opinion and according to the information and explanations given to us, the Company is not a chit fund/ nidhi/ mutual benefit fund/ society. Accordingly, paragraph 4(xiii) of the Order is not applicable.
|
| (xiv) | | According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, paragraph 4(xiv) of the Order is not applicable. |
| (xv) | | According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, paragraph 4(xv) of the Order is not applicable. |
| (xvi) | | The Company did not have any term loans outstanding during the year. Accordingly, paragraph 4(xvi) of the Order is not applicable. |
| (xvii) | | The Company has not raised any funds on short-term basis. Accordingly, paragraph 4(xvii) of the Order is not applicable. |
| (xviii) | | The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(xviii) of the Order is not applicable. |
| (xix) | | The Company did not have any outstanding debentures during the year. Accordingly, paragraph 4(xix) of the Order is not applicable. |
| (xx) | | The Company has not raised any money by public issues during the year. Accordingly, paragraph 4(xx) of the Order is not applicable. |
| (xxi) | | According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit. |
for B S R & Co.
Chartered Accountants
Natrajan Ramkrishna
Partner
Membership No. 32815
Bangalore
15 April 2009
INFOSYS TECHNOLOGIES LIMITED
in Rs. crore
| Balance Sheet as at | Schedule | March 31, 2009 | March 31, 2008 |
SOURCES OF FUNDS | | | |
SHAREHOLDERS' FUNDS | | | |
Share capital | 1 | 286 | 286 |
Reserves and surplus | 2 | 17,523 | 13,204 |
| | | 17,809 | 13,490 |
APPLICATION OF FUNDS | | | |
FIXED ASSETS | 3 | | |
Original cost | | 5,986 | 4,508 |
Less: Accumulated depreciation | | 2,187 | 1,837 |
Net book value | | 3,799 | 2,671 |
Add: Capital work-in-progress | | 615 | 1,260 |
| | | 4,414 | 3,931 |
INVESTMENTS | 4 | 1,005 | 964 |
DEFERRED TAX ASSETS, NET | 5 | 102 | 99 |
CURRENT ASSETS, LOANS AND ADVANCES | | | |
Sundry debtors | 6 | 3,390 | 3,093 |
Cash and bank balances | 7 | 9,039 | 6,429 |
Loans and advances | 8 | 3,164 | 2,705 |
| | | 15,593 | 12,227 |
LESS: CURRENT LIABILITIES AND PROVISIONS | | | |
Current liabilities | 9 | 1,507 | 1,334 |
Provisions | 10 | 1,798 | 2,397 |
NET CURRENT ASSETS | | 12,288 | 8,496 |
| | | 17,809 | 13,490 |
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS | 23 | | |
The schedules referred to above are an integral part of the balance sheet.As per our report attached
for B S R & Co.
Chartered Accountants
Natrajan Ramkrishna
Partner
Membership No. 32815 | N. R. Narayana Murthy
Chairman and Chief Mentor | Nandan M. Nilekani
Co-Chairman | S. Gopalakrishnan
Chief Executive Officer
and Managing Director | S. D. Shibulal
Chief Operating Officer |
| | | | | |
| | Deepak M. Satwalekar
Director | Marti G. Subrahmanyam
Director | Omkar Goswami
Director | Rama Bijapurkar
Director |
| | | | | |
| | Claude Smadja
Director | Sridar A. Iyengar
Director | David L. Boyles
Director | Jeffrey S. Lehman
Director |
| | | | | |
| | K. Dinesh
Director | T. V. Mohandas Pai
Director | Srinath Batni
Director | V. Balakrishnan
Chief Financial Officer |
| | | |
Bangalore
April 15, 2009 | Parvatheesam K.
Company Secretary | |
in Rs. crore, except per share data
| Profit and Loss Account for the | Schedule | Year ended March 31, |
| | | 2009 | 2008 |
| Income from software services and products | | 20,264 | 15,648 |
| Software development expenses | 11 | 11,145 | 8,876 |
| GROSS PROFIT | | 9,119 | 6,772 |
| Selling and marketing expenses | 12 | 933 | 730 |
| General and administration expenses | 13 | 1,280 | 1,079 |
| | 2,213 | 1,809 |
| OPERATING PROFIT BEFORE DEPRECIATION | | 6,906 | 4,963 |
| Depreciation and amortisation | | 694 | 546 |
| OPERATING PROFIT BEFORE TAX | | 6,212 | 4,417 |
| Other income, net | 14 | 502 | 683 |
| NET PROFIT BEFORE TAX | | 6,714 | 5,100 |
| Provision for taxation (refer to note 23.2.12) | 15 | 895 | 630 |
| NET PROFIT AFTER TAX | | 5,819 | 4,470 |
| Balance Brought Forward | | 6,642 | 4,844 |
| Less: Residual dividend paid | | 1 | – |
| Dividend tax on the above | | – | – |
| | | 6,641 | 4,844 |
| AMOUNT AVAILABLE FOR APPROPRIATION | | 12,460 | 9,314 |
| Dividend | | | |
| Interim | | 572 | 343 |
| Final | | 773 | 415 |
| Special dividend | | – | 1,144 |
| Total dividend | | 1,345 | 1,902 |
| Dividend tax | | 228 | 323 |
| Amount transferred to general reserve | | 582 | 447 |
| Balance in profit and loss account | | 10,305 | 6,642 |
| | | 12,460 | 9,314 |
| EARNINGS PER SHARE * | | | |
| Equity shares of par value Rs. 5/- each | | | |
| Basic | | 101.65 | 78.24 |
| Diluted | | 101.48 | 77.98 |
| Number of shares used in computing earnings per share | | | |
| Basic | | 57,24,90,211 | 57,13,98,340 |
| Diluted | | 57,34,63,181 | 57,33,06,887 |
| SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS | 23 | | |
* Refer to note 23.2.20The schedules referred to above are an integral part of the profit and loss account.
As per our report attached
for B S R & Co.
Chartered Accountants
Natrajan Ramkrishna
Partner
Membership No. 32815 | N. R. Narayana Murthy
Chairman and Chief Mentor | Nandan M. Nilekani
Co-Chairman | S. Gopalakrishnan
Chief Executive Officer
and Managing Director | S. D. Shibulal
Chief Operating Officer |
| | | | | |
| | Deepak M. Satwalekar
Director | Marti G. Subrahmanyam
Director | Omkar Goswami
Director | Rama Bijapurkar
Director |
| | | | | |
| | Claude Smadja
Director | Sridar A. Iyengar
Director | David L. Boyles
Director | Jeffrey S. Lehman
Director |
| | | | | |
| | K. Dinesh
Director | T. V. Mohandas Pai
Director | Srinath Batni
Director | V. Balakrishnan
Chief Financial Officer |
| | | |
Bangalore
April 15, 2009 | Parvatheesam K.
Company Secretary | |
in Rs. crore
| Cash Flow Statement for the | Schedule | Year ended March 31, |
| | | 2009 | 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net profit before tax | | 6,714 | 5,100 |
Adjustments to reconcile net profit before tax to cash provided by operating activities | | | |
(Profit)/ loss on sale of fixed assets | | – | – |
Depreciation and amortisation | | 694 | 546 |
Interest and dividend income | | (838) | (654) |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | | (73) | (18) |
Changes in current assets and liabilities | | | |
Sundry debtors | | (297) | (801) |
Loans and advances | 16 | (512) | (186) |
Current liabilities and provisions | 17 | 304 | 312 |
Income taxes paid | 18 | (840) | (483) |
NET CASH GENERATED BY OPERATING ACTIVITIES | | 5,152 | 3,816 |
CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Purchase of fixed assets and change in capital work-in-progress | 19 | (1,177) | (1,370) |
Investments in subsidiaries | | (41) | (127) |
Investments in securities | 20 | – | – |
Interest and dividend received | 21 | 1,023 | 519 |
NET CASH USED IN INVESTING ACTIVITIES | | (195) | (978) |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Proceeds from issuance of share capital on exercise of stock options | | 64 | 58 |
Dividends paid during the period including residual dividend | | (2,132) | (714) |
Dividend tax paid during the period | | (362) | (121) |
NET CASH USED IN FINANCING ACTIVITIES | | (2,430) | (777) |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | | 73 | 18 |
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS | | 2,600 | 2,079 |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | | 7,689 | 5,610 |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 22 | 10,289 | 7,689 |
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS | 23 | | |
The schedules referred to above are an integral part of the cash flow statement.As per our report attached
for B S R & Co.
Chartered Accountants
Natrajan Ramkrishna
Partner
Membership No. 32815 | N. R. Narayana Murthy
Chairman and Chief Mentor | Nandan M. Nilekani
Co-Chairman | S. Gopalakrishnan
Chief Executive Officer
and Managing Director | S. D. Shibulal
Chief Operating Officer |
| | | | | |
| | Deepak M. Satwalekar
Director | Marti G. Subrahmanyam
Director | Omkar Goswami
Director | Rama Bijapurkar
Director |
| | | | | |
| | Claude Smadja
Director | Sridar A. Iyengar
Director | David L. Boyles
Director | Jeffrey S. Lehman
Director |
| | | | | |
| | K. Dinesh
Director | T. V. Mohandas Pai
Director | Srinath Batni
Director | V. Balakrishnan
Chief Financial Officer |
| | | |
Bangalore
April 15, 2009 | Parvatheesam K.
Company Secretary | |
in Rs. crore, except as otherwise stated
| Schedules to the Balance Sheet as at | March 31, 2009 | March 31, 2008 |
| 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 |
| | 57,28,30,043 (57,19,95,758) 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 23.2.11 | | |
| | * Also refer to note 23.2.20 for details of basic and diluted shares | | |
| 2 | RESERVES AND SURPLUS | | |
| | Capital reserve | 6 | 6 |
| | Share premium account - Opening balance | 2,851 | 2,768 |
| | Add: Receipts on exercise of employee stock options | 64 | 58 |
| | Income tax benefit arising from exercise of stock options | 10 | 25 |
| | | 2,925 | 2,851 |
| | General reserve - Opening balance | 3,705 | 3,258 |
| | Add: Transferred from Profit and Loss Account | 582 | 447 |
| | | 4,287 | 3,705 |
| | Balance in Profit and Loss Account | 10,305 | 6,642 |
| | | 17,523 | 13,204 |
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
April 1,
2008 | Additions
for the year | Deductions/
Retirement during
the year | As at
March 31,
2009 | As at
April 1,
2008 | For the
year | Deductions/
Retirement during
the year | As at
March 31,
2009 | As at
March 31,
2009 | As at
March 31,
2008 |
| | Land : free-hold | 131 | 41 | – | 172 | – | – | – | – | 172 | 131 |
| | leasehold | 98 | 3 | – | 101 | – | – | – | – | 101 | 98 |
| | Buildings* | 1,953 | 910 | – | 2,863 | 377 | 155 | – | 532 | 2,331 | 1,576 |
| | Plant and machinery *# | 823 | 370 | 93 | 1,100 | 397 | 183 | 93 | 487 | 613 | 426 |
| | Computer equipment *# | 961 | 273 | 158 | 1,076 | 760 | 231 | 158 | 833 | 243 | 201 |
| | Furniture and fixtures *# | 539 | 212 | 93 | 658 | 302 | 112 | 93 | 321 | 337 | 237 |
| | Vehicles | 3 | 1 | – | 4 | 1 | 1 | – | 2 | 2 | 2 |
| | Intangible Asset | – | 12 | – | 12 | – | 12 | – | 12 | – | – |
| | | 4,508 | 1,822 | 344 | 5,986 | 1,837 | 694 | 344 | 2,187 | 3,799 | 2,671 |
| | Previous year | 3,889 | 1,067 | 448 | 4,508 | 1,739 | 546 | 448 | 1,837 | 2,671 | |
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 23.2.6 for details # During the year ended March 31, 2009 and March 31, 2008, certain assets which were old and not in use having a gross book value of Rs.344 crore and Rs.448 Crore respectively (net book value Nil) were retired
in Rs. crore
| | Schedules to the Balance Sheet as at | March 31, 2009 | March 31, 2008 |
| 4 | INVESTMENTS* | | |
| | Trade (unquoted) – at cost | | |
| | Long- term investments | | |
| | Other investments | 11 | 11 |
| | Less: Provision for investments | 11 | 11 |
| | | – | - |
| | Non-trade (unquoted) | | |
| | Long- term investments– at cost | | |
| | Subsidiaries | | |
| | Infosys BPO Limited** | | |
| | 3,38,22,319 (3,38,22,319) equity shares of Rs. 10/- each, fully paid | 659 | 659 |
| | Infosys Technologies (China) Co. Limited | 65 | 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 | | |
| | 4,50,00,000 (4,00,00,000) common stock of US $1.00 par value, fully paid | 193 | 171 |
| | Infosys Technologies, S. De R.L. De C.V., Mexico | 22 | 22 |
| | | 1,005 | 964 |
| | Aggregate amount of unquoted investments | 1,005 | 964 |
| | * Refer to note 23.2.16 for details of investments | | |
| | ** Investments include 16,04,867 (17,37,092) options of Infosys BPO | | |
| 5 | DEFERRED TAX ASSETS / (LIABILITIES) | | |
| | Fixed assets | 118 | 85 |
| | Sundry debtors | 8 | 7 |
| | Other assets | 13 | 7 |
| | Less: Deferred Tax Liability for branch profit tax | (37) | – |
| | | 102 | 99 |
| 6 | SUNDRY DEBTORS* | | |
| | Debts outstanding for a period exceeding six months | | |
| | Unsecured | | |
| | considered doubtful | 39 | 20 |
| | Other debts | | |
| | Unsecured | | |
| | considered good** | 3,390 | 3,093 |
| | considered doubtful | 66 | 20 |
| | | 3,495 | 3,133 |
| | Less: Provision for doubtful debts | 105 | 40 |
| | | 3,390 | 3,093 |
| | * Includes dues from companies where directors are interested | 8 | 2 |
| | ** Includes dues from subsidiaries (refer to note 23.2.7) | 5 | 8 |
| 7 | CASH AND BANK BALANCES | | |
| | Cash on hand | – | – |
| | Balances with scheduled banks in Indian Rupees** | | |
| | In current accounts * | 101 | 243 |
| | In deposit accounts | 8,234 | 5,772 |
| | Balances with non-scheduled banks in foreign currencies ** | | |
| | In current accounts | 704 | 414 |
| | | 9,039 | 6,429 |
| | *Includes balance in unclaimed dividend account (refer to note 23.2.25a) | 2 | 2 |
| | **Refer to note 23.2.13 for details of balances in scheduled and non-scheduled banks | | |
| 8 | LOANS AND ADVANCES | | |
| | Unsecured, considered good | | |
| | Loans to subsidiary (refer to note 23.2.7) | 51 | 32 |
| | Advances | | |
| | prepaid expenses | 27 | 27 |
| | for supply of goods and rendering of services | 6 | 10 |
| | advance to gratuity fund trust | – | 12 |
| | interest accrued but not due | 1 | 186 |
| | withholding and other taxes receivable | 149 | 13 |
| | others | 4 | 7 |
| | | 238 | 287 |
| | Unbilled revenues | 738 | 472 |
| | Advance income taxes | 268 | 215 |
| | MAT credit entitlement (refer to note 23.2.12) | 262 | 169 |
| | Loans and advances to employees | | |
| | housing and other loans | 43 | 42 |
| | salary advances | 62 | 64 |
| | Electricity and other deposits | 37 | 24 |
| | Rental deposits | 13 | 11 |
| | Deposits with financial institution and body corporate (refer to note 23.2.14) | 1,503 | 1,421 |
| | | 3,164 | 2,705 |
| | |
| | Unsecured, considered doubtful | | |
| | Loans and advances to employees | 2 | 1 |
| | | 3,166 | 2,706 |
| | Less: Provision for doubtful loans and advances to employees | 2 | 1 |
| | | 3,164 | 2,705 |
9 | CURRENT LIABILITIES | | |
| | Sundry creditors | | |
| | goods and services * | 35 | 36 |
| | accrued salaries and benefits | | |
| | salaries | 38 | 46 |
| | bonus and incentives | 345 | 329 |
| | for other liabilities | | |
| | provision for expenses | 381 | 239 |
| | retention monies | 53 | 52 |
| | withholding and other taxes payable | 206 | 206 |
| | Mark to Market loss on forward and options contracts | 98 | 116 |
| | Gratuity obligation - unamortised amount relating to plan amendment | 29 | 33 |
| | Others | 3 | 3 |
| | | 1,188 | 1,060 |
| | Advances received from clients | 5 | 4 |
| | Unearned revenue | 312 | 268 |
| | Unclaimed dividend | 2 | 2 |
| | | 1,507 | 1,334 |
| | *Includes dues to subsidiaries (refer to note 23.2.7) | 21 | 7 |
| 10 | PROVISIONS | | |
| | Proposed dividend | 773 | 1,559 |
| | Provision for | | |
| | tax on dividend | 131 | 265 |
| | income taxes * | 575 | 381 |
| | unavailed leave | 244 | 149 |
| | post-sales client support and warranties** | 75 | 43 |
| | | 1,798 | 2,397 |
| | * Refer to note 23.2.12 | | |
| | ** Refer to note 23.2.21 | | |
in Rs. crore
| Schedules to Profit and Loss Account for the | Year ended March 31, |
| | | 2009 | 2008 |
| 11 | SOFTWARE DEVELOPMENT EXPENSES | | |
| | Salaries and bonus including overseas staff expenses | 8,583 | 6,805 |
| | Overseas group health insurance | 140 | 42 |
| | Contribution to provident and other funds | 212 | 170 |
| | Staff welfare | 60 | 49 |
| | Technical sub-contractors - subsidiaries | 861 | 773 |
| | Technical sub-contractors - others | 305 | 202 |
| | Overseas travel expenses | 390 | 298 |
| | Visa charges and others | 116 | 133 |
| | Software packages | | |
| | for own use | 274 | 213 |
| | for service delivery to clients | 41 | 25 |
| | Communication expenses | 56 | 55 |
| | Computer maintenance | 23 | 24 |
| | Consumables | 20 | 18 |
| | Rent | 25 | 23 |
| | Provision for post-sales client support and warranties | 39 | 46 |
| | | 11,145 | 8,876 |
| 12 | SELLING AND MARKETING EXPENSES | | |
| | Salaries and bonus including overseas staff expenses | 675 | 503 |
| | Overseas group health insurance | 5 | 1 |
| | Contribution to provident and other funds | 2 | 2 |
| | Staff welfare | 4 | 3 |
| | Overseas travel expenses | 90 | 83 |
| | Visa charges and others | 2 | 3 |
| | Traveling and conveyance | 3 | 3 |
| | Commission and earnout charges | 21 | 14 |
| | Brand building | 62 | 55 |
| | Professional charges | 21 | 18 |
| | Rent | 13 | 12 |
| | Marketing expenses | 15 | 15 |
| | Telephone charges | 14 | 8 |
| | Communication expenses | 2 | 2 |
| | Printing and stationery | 1 | 1 |
| | Advertisements | 2 | 4 |
| | Sales promotion expenses | 1 | 3 |
| | | 933 | 730 |
| 13 | GENERAL AND ADMINISTRATION EXPENSES | | |
| | Salaries and bonus including overseas staff expenses | 275 | 223 |
| | Overseas group health insurance | – | (2) |
| | Contribution to provident and other funds | 13 | 12 |
| | Professional charges | 207 | 167 |
| | Telephone charges | 139 | 117 |
| | Power and fuel | 125 | 106 |
| | Traveling and conveyance | 79 | 92 |
| | Overseas travel expenses | 13 | 14 |
| | Visa charges and others | 3 | 1 |
| | Office maintenance | 138 | 120 |
| | Guest house maintenance* | 5 | 2 |
| | Insurance charges | 18 | 20 |
| | Printing and stationery | 9 | 13 |
| | Donations | 21 | 20 |
| | Rent | 22 | 15 |
| | Advertisements | 4 | 6 |
| | Repairs to building | 31 | 22 |
| | Repairs to plant and machinery | 21 | 18 |
| | Rates and taxes | 29 | 34 |
| | Professional membership and seminar participation fees | 9 | 9 |
| | Postage and courier | 8 | 9 |
| | Books and periodicals | 3 | 4 |
| | Provision for bad and doubtful debts | 74 | 42 |
| | Provision for doubtful loans and advances | 1 | – |
| | Commission to non-whole time directors | 6 | 4 |
| | Freight charges | 1 | 1 |
| | Bank charges and commission | 2 | 1 |
| | Research grants | 19 | 5 |
| | Auditor's remuneration | | |
| | statutory audit fees | 1 | 1 |
| | certification charges | – | – |
| | others | – | – |
| | out of pocket expenses | – | – |
| | Miscellaneous expenses | 4 | 3 |
| | | 1,280 | 1,079 |
| | *For non training purposes | | |
| 14 | OTHER INCOME, NET | | |
| | Interest received on deposits with banks and others* | 836 | 650 |
| | Dividend received on Investment in liquid mutual funds (non-trade unquoted) | 2 | 4 |
| | Miscellaneous income, net** | 36 | 24 |
| | Gains / (losses) on foreign currency | (372) | 5 |
| | | 502 | 683 |
| | *includes tax deducted at source | 179 | 86 |
| | **refer to note 23.2.6, note 23.2.15 and note 23.2.24 | | |
| 15 | PROVISION FOR TAXATION | | |
| | Income taxes* | 991 | 819 |
| | MAT credit entitlement | (93) | (169) |
| | Deferred taxes | (3) | (20) |
| | | 895 | 630 |
| | *Refer to note 23.2.12 |
in Rs. crore
| Schedules to Cash Flow Statements for the | Year ended March 31, |
| | 2009 | 2008 |
16 | CHANGE IN LOANS AND ADVANCES | | |
| | As per the balance sheet* | 3,164 | 2,705 |
| | Add: Gratuity obligation - unamortised amount relating to plan amendment (refer to Note 23.2.22) | (29) | (33) |
| | Less: Deposits with financial institutions included in cash and cash equivalents** | (1,250) | (1,260) |
| | Interest accrued but not due | (1) | (186) |
| | MAT credit entitlement | (262) | (169) |
| | Advance income taxes separately considered | (268) | (215) |
| | | 1,354 | 842 |
| | Less: Opening balance considered | (842) | (656) |
| | | 512 | 186 |
| | * includes loans to subsidiary and net of gratuity transitional liability |
| | ** Excludes restricted deposits held with LIC of Rs. 253 crore (Rs.161 crore) for funding leave liability |
| 17 | CHANGE IN CURRENT LIABILITIES AND PROVISIONS |
| | As per the balance sheet | 3,305 | 3,731 |
| | Add/ (Less): Unclaimed dividend | (2) | (2) |
| | Gratuity obligation - unamortised amount relating to plan amendment | (29) | (33) |
| | Provisions separately considered in the cash flow statement | | |
| | Income taxes | (575) | (381) |
| | Dividends | (773) | (1,559) |
| | Dividend Taxes | (131) | (265) |
| | | 1,795 | 1,491 |
| | Less: Opening balance considered | (1,491) | (1,179) |
| | | 304 | 312 |
| 18 | INCOME TAXES PAID | | |
| | Charge as per the profit and loss account | 895 | 630 |
| | Add/(Less): Increase/(Decrease) in advance income taxes | 53 | (137) |
| | Increase/(Decrease) in deferred taxes | 3 | 20 |
| | Increase/(Decrease) in MAT credit entitlement | 93 | 169 |
| | Income tax benefit arising from exercise of stock options | (10) | (25) |
| | (Increase)/Decrease in income tax provision | (194) | (174) |
| | | 840 | 483 |
| 19 | PURCHASE OF FIXED ASSETS AND CHANGE IN CAPITAL WORK-IN-PROGRESS |
| | As per the balance sheet | 1,822 | 1,067 |
| | Less: Opening Capital work-in-progress | (1,260) | (957) |
| | Add: Closing Capital work-in-progress | 615 | 1,260 |
| | | 1,177 | 1,370 |
| 20 | INVESTMENTS IN SECURITIES * |
| | As per the balance sheet | 1,005 | 964 |
| | Less: Investment in subsidiaries | (41) | (125) |
| | Opening balance considered | (964) | (839) |
| | | - | - |
| | * Refer to note 23.2.16 for investment and redemptions |
| 21 | INTEREST AND DIVIDEND RECEIVED |
| | Interest accrued but not due opening balance | 186 | 51 |
| | Add: Interest and dividend income | 838 | 654 |
| | Less: Interest accrued but not due closing balance | (1) | (186) |
| | | 1,023 | 519 |
| 22 | CASH AND CASH EQUIVALENTS AT THE END |
| | As per the balance sheet | 9,039 | 6,429 |
| | Add: Deposits with financial institutions (excluding interest accrued but not due)** | 1,250 | 1,260 |
| | | 10,289 | 7,689 |
** Excludes restricted deposits held with LIC of Rs. 253 crore (Rs.161 crore) for funding leave liability (refer to note 23.2.25b)Schedules to the Financial Statements for the year ended March 31, 2009
23 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 ("Infosys BPO") and wholly owned and controlled subsidiaries, Infosys Technologies (Australia) Pty. Limited ("Infosys Australia"), Infosys Technologies (China) Co. Limited ("Infosys China"), Infosys Consulting, Inc. ("Infosys Consulting"), Infosys Technologies S. DE R.L. de C.V. ("Infosys Mexico") and Infosys Technologies (Sweden) AB. ("Infosys Sweden") is a leading global technology services corporation. 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, package evaluation and implementation, testing and infrastructure management services. In addition, the Company offers software products for the banking industry.
23.1 Significant accounting policies
23.1.1 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 except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed by the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. 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.
23.1.2 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 liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage-of-completion which requires the company to estimate the efforts expended to date as a proportion of the total efforts to be expended, 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.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higher of the asset's net selling price and value in use i.e. the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
23.1.3. Revenue recognition
Revenue is primarily derived from software development and related services and from the licensing of software products. Arrangements with customers for software development and related services are either on a fixed-price, fixed-timeframe or on a time-and-material basis.
Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last billing to the balance sheet date is recognized as unbilled revenues. Revenue from fixed-price, fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognized based upon the percentage-of-completion. When there is uncertainty as to measurement or ultimate collectability revenue recognition is postponed until such uncertainty is resolved. 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 ratably 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 case of multiple element contracts, which require significant implementation services, where revenue for the entire arrangement is recognized over the implementation period based upon the percentage-of-completion. Revenue from client training, support and other services arising due to the sale of software products is recognized as the related services are performed.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discount / incentive amount to each of the underlying revenue transactions that result in progress by the customer towards earning the discount / incentive. Also, when the level of discount varies with increases in levels of revenue transactions, the company recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts using a cumulative catch-up approach. The discounts are passed on to the customer either as direct payments or as a reduction of payments due from the customer.
The company presents revenues net of value-added taxes in its profit and loss account.
Profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sale price and 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.
23.1.4 Provisions and contingent liabilities
A provision is recognized if, as a result of a past event, the company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
23.1.4.a Post-sales client support and warranties
The company provides its clients with a fixed-period warranty for corrections of errors and telephone support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time related revenues are recorded and included in cost of sales. The company estimates such costs based on historical experience and the estimates are reviewed annually for any material changes in assumptions.
23.1.4.b Onerous contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating the contract and the expected net cost of fulfilling the contract.
23.1.5 Fixed assets, intangible assets and capital work-in-progress
Fixed assets are stated at cost, less accumulated depreciation and impairments, if any. 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 reporting date. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
23.1.6 Depreciation and amortization
Depreciation on fixed assets is provided on the straight-line method 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 over a period of one year from the date 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 |
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
23.1.7 Retirement benefits to employees
23.1.7.a Gratuity
In accordance with the Payment of Gratuity Act, 1972, the company provides for gratuity, a defined benefit retirement plan (the Gratuity Plan) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method. The company fully contributes all 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 the law. The company recognizes the net obligation of the gratuity plan in the balance sheet as an asset or liability, respectively in accordance with Accounting Standard (AS) 15, “Employee Benefits”. The company's overall expected long-term rate-of-return on assets has been determined based on consideration of available market information, current provisions of Indian law specifying the instruments in which investments can be made, and historical returns. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from experience adj ustments and changes in actuarial assumptions are recognised in the profit and loss account in the period in which they arise.
23.1.7.b Superannuation
Certain employees of Infosys are also participants in the superannuation plan (the Plan) which is a defined contribution plan. Until March 2005, the company made contributions under the Plan to the Infosys Technologies Limited Employees' Superannuation Fund Trust (the Superannuation Trust). The company has no further obligations to the Plan beyond its monthly contributions. Effective April 1, 2005, a portion of the monthly contribution amount is paid directly to the employees as an allowance and the balance amount is contributed to the Superannuation Trust.
23.1.7.c Provident fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the 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 part of the contributions to the Infosys Technologies Limited Employees' Provident Fund Trust. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.
23.1.7.d Compensated absences
The employees of the Company are entitled to compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is measured based on the additional amount expected to be paid 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.
23.1.8. Research and development
Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the company has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
23.1.9. Foreign currency transactions
Foreign-currency denominated monetary assets and liabilities are translated at exchange rates in effect at the balance sheet date. The gains or losses resulting from such translations are included in the profit or loss account. 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.
Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.
23.1.10 Forward and options contracts in foreign currencies
The company uses foreign exchange forward and options contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward and options contracts reduce the risk or cost to the company and the company does not use those for trading or speculation purposes.
Effective April 1, 2008, the company adopted AS 30, "Financial Instruments: Recognition and Measurement", to the extent that the adoption did not conflict with existing accounting standards and other authoritative pronouncements of Company Law and other regulatory requirements.
Forward and options contracts are fair valued at each reporting date. The resultant gain or loss from these transactions is recognized in the profit or loss account. The Company records the gain or loss on effective hedges, if any, 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 or options contract 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. Currently the hedges undertaken by the company are all ineffective in nature and the resultant gain or loss consequent to fair valuation is recognized in the profit and loss account at each repo rting date.
23.1.11. Income taxes
Income 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 alternate tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the balance sheet if there is convincing evidence that the company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably. The company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.
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 of timing difference. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations. Deferred tax assets, other than those relating to unabsorbed depreciation and carry forward business loss, 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 reporting date. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to profit and loss account are credited to the share prem ium account.
23.1.12. Earnings per share
Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon 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. Dilutive potential equity shares are determined independently for each period presented.
The number of 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.
23.1.13. 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 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 translated at the exchange rate prevalent at the date of investment. Long-term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.
23.1.14. Cash and cash equivalents
Cash and cash equivalents comprise cash and cash on deposit with banks and corporations. The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
23.1.15. 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 , any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
23.2 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 23.3. 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.
23.2.1 Aggregate expenses
The aggregate amounts incurred on certain specific expenses
in Rs. crore
| | Year ended March 31, |
| | 2009 | 2008 |
Salaries and bonus including overseas staff expenses* | 9,533 | 7,531 |
Contribution to provident and other funds | 227 | 184 |
Staff welfare | | |
Staff welfare | 64 | 52 |
Overseas group health insurance# | 145 | 41 |
Overseas travel expenses | 493 | 395 |
Visa charges and others | 121 | 137 |
Traveling and conveyance | 82 | 95 |
Technical sub-contractors - subsidiaries | 861 | 773 |
Technical sub-contractors - others | 305 | 202 |
Software packages | | |
For own use | 274 | 213 |
For service delivery to clients | 41 | 25 |
Professional charges | 228 | 185 |
Telephone charges | 153 | 125 |
Communication expenses | 58 | 57 |
Power and fuel | 125 | 106 |
Office maintenance | 138 | 120 |
Guest house maintenance** | 5 | 2 |
Commission and earnout charges | 21 | 14 |
Brand building | 62 | 55 |
Rent | 60 | 50 |
Insurance charges | 18 | 20 |
Computer maintenance | 23 | 24 |
Printing and stationery | 10 | 14 |
Consumables | 20 | 18 |
Donations | 21 | 20 |
Advertisements | 6 | 10 |
Marketing expenses | 15 | 15 |
Repairs to building | 31 | 22 |
Repairs to plant and machinery | 21 | 18 |
Rates and taxes | 29 | 34 |
Professional membership and seminar participation fees | 9 | 9 |
Postage and courier | 8 | 9 |
Provision for post-sales client support and warranties | 39 | 46 |
Books and periodicals | 3 | 4 |
Provision for bad and doubtful debts | 74 | 42 |
Provision for doubtful loans and advances | 1 | – |
Commission to non-whole time directors | 6 | 4 |
Sales promotion expenses | 1 | 3 |
Freight charges | 1 | 1 |
Bank charges and commission | 2 | 1 |
Auditor's remuneration | | |
Statutory audit fees | 1 | 1 |
Certification charges | – | – |
Others | – | – |
Out-of-pocket expenses | – | – |
Research grants | 19 | 5 |
Miscellaneous expenses | 4 | 3 |
| | 13,358 | 10,685 |
Fringe Benefit Tax (FBT) in India included in the above | 25 | 17 |
* During the year ended March 31, 2008, the company paid an amount of Rs.102 crore to the California Division of Labor Standards Enforcement (DLSE) towards settlement of possible overtime payment to certain employees.# The Company records health insurance liabilities based on the maximum individual claimable amounts by employees. During the year ended March 31, 2008, 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 purposes23.2.2. Capital commitments and contingent liabilities
in Rs. crore
| | As at |
Particulars | March 31, 2009 | March 31, 2008 |
Estimated amount of unexecuted capital contracts | | | | |
(net of advances and deposits) | | 344 | | 600 |
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 | | 3 | | 2 |
Claims against the company, not acknowledged as debts* | | 3 | | 3 |
(Net of Amount Rs.200 crore (Rs.101 crore) crore paid to statutory authorities) | | | | |
| | in million | in Rs. Crore | in million | in Rs. Crore |
Forward contracts outstanding | | | | |
In US$ | $245 | 1,243 | $521 | 2,085 |
In Euro | € 20 | 135 | € 10 | 63 |
In GBP | £15 | 109 | – | – |
Options contracts outstanding | | | | |
Range barrier options in US $ | $113 | 573 | $100 | 400 |
Seagull options in US $ | $60 | 304 | – | – |
Euro Accelerator in Euro | – | – | € 12 | 76 |
Euro Forward extra | – | – | € 5 | 32 |
* Claims against the company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rs.197 crore (Rs.98 crore), including interest of Rs.43 crore (Rs.18 crore) upon completion of their tax review for fiscal 2004 and fiscal 2005. 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 for fiscal 2004 and fiscal 2005 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's net foreign currency exposure that is not hedged by a derivative instrument or otherwise is Rs.1,136 crore (Nil as at March 31, 2008).
23.2.3 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.
23.2.4. Imports (valued on the cost, insurance and freight basis)
in Rs. crore
Particulars | Year ended March 31, |
| | 2009 | 2008 |
Capital goods | 207 | 296 |
Software packages | 8 | 8 |
| | 215 | 304 |
23.2.5. Activity in foreign currency
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Earnings in foreign currency (on receipts basis) | | |
Income from software services and products | 19,812 | 14,468 |
Interest received from banks & others | 24 | 22 |
Expenditure in foreign currency (on payments basis) | | |
Travel expenses (including visa charges) | 480 | 400 |
Professional charges | 124 | 74 |
Technical sub-contractors - subsidiaries | 861 | 753 |
Other expenditure incurred overseas for software development | 6,578 | 5,257 |
Net earnings in foreign currency (on receipts and payments basis) | 11,793 | 8,006 |
23.2.6. Obligations on long-term, non-cancelable operating leases
The lease rentals charged during the year ended March 31, 2009 and March 31, 2008 and maximum obligations on long-term non-cancelable operating leases payable as per the rentals stated in the respective agreements:
in Rs. crore
Particulars | Year ended March 31, |
| | 2009 | 2008 |
Lease rentals recognized during the period | 60 | ��50 |
in Rs. Crore
| Lease obligations | As at |
| | March 31, 2009 | March 31, 2008 |
Within one year of the balance sheet date | 46 | 28 |
Due in a period between one year and five years | 154 | 88 |
Due after five years | 30 | 24 |
| | 230 | 140 |
The operating lease arrangements extend upto a maximum of ten years from their respective dates of inception and relates to rented overseas premises. Some of the lease agreements have a price escalation clause.
Fixed assets provided on operating lease to Infosys BPO, a subsidiary company, as at March 31, 2009 and March 31, 2008 :
in Rs. crore
| Particulars | Cost | Accumulated
depreciation | Net book value |
Building | 59 | 17 | 42 |
| | 58 | 13 | 45 |
Plant and machinery | 18 | 12 | 6 |
| | 22 | 13 | 9 |
Computer equipment | 1 | 1 | – |
| | 2 | 2 | – |
Furniture & fixtures | 3 | 2 | 1 |
| | 10 | 8 | 2 |
Total | 81 | 32 | 49 |
| | 92 | 36 | 56 |
The aggregate depreciation charged on the above during the year ended March 31, 2009 amounted to Rs. 8 crore (Rs.9 crore for the year ended March 31, 2008).
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 to note 23.2.7). Lease Rental commitments from Infosys BPO:
in Rs. crore
| Lease rentals | As at |
| | March 31, 2009 | March 31, 2008 |
Within one year of the balance sheet date | – | 4 |
Due in a period between one year and five years | – | – |
Due after five years | – | – |
| | – | 4 |
The rental income from Infosys BPO for the year ended March 31, 2009 amounted to Rs.16 crore and Rs.18 crore for the year ended March 31, 2008.
23.2.7. Related party transactions
List of related parties:
Name of subsidiaries | Country | Holding, as at |
| | | March 31, 2009 | March 31, 2008 |
Infosys BPO | India | 99.98% | 99.98% |
Infosys Australia | Australia | 100% | 100% |
Infosys China | China | 100% | 100% |
Infosys Consulting | USA | 100% | 100% |
Infosys Mexico | Mexico | 100% | 100% |
Infosys Sweden* | Sweden | – | – |
Infosys BPO s. r. o ** | Czech Republic | 99.98% | 99.98% |
Infosys BPO (Poland) Sp Z.o.o ** | Poland | 99.98% | – |
Infosys BPO (Thailand) Limited ** | Thailand | 99.98% | – |
P-Financial Services Holding B.V. Netherlands *** | Netherlands | – | 99.98% |
Mainstream Software Pty Limited**** | Australia | 100% | – |
* On March 5, 2009 the company incorporated a wholly owned subsidiary, Infosys Technologies (Sweden) AB which is yet to be capitalized.** Infosys BPO s.r.o, Infosys BPO (Poland) Sp Z.o.o and Infosys BPO (Thailand) Limited are wholly owned subsidiaries of Infosys BPO.*** During the year ended March 31, 2009, the investments held by P-Financial Services Holding B.V in its wholly owned subsidiaries Pan-Financial Shared Services India Private Limited, Infosys BPO (Poland) Sp. Z.o.o., and Infosys BPO (Thailand) Limited was transferred to Infosys BPO, consequent to which P-Financial Services Holding B.V was liquidated.During the quarter ended March 31, 2009, Infosys BPO merged its wholly owned subsidiary Pan-Financial Shared Services India Private Limited, retrospectively with effect from April 1,2008 vide a scheme of amalgamation sanctioned by the court.**** Mainstream Software Pty Limited is a wholly owned subsidiary of Infosys AustraliaInfosys guarantees the performance of certain contracts entered into by Infosys BPO.
The details of the related party transactions entered into by the company, in addition to the lease commitments described in note 23.2.6, for the year ended March 31, 2009 and 2008 are as follows:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Capital transactions: | | |
Financing transactions | | |
| | Infosys BPO | – | 22 |
| | Infosys Mexico | – | 22 |
| | Infosys China | 19 | – |
| | Infosys Consulting | 22 | 81 |
Loans/Advances | | |
| | Infosys China | 10 | 10 |
Revenue transactions: | | |
Purchase of services | | |
| | Infosys Australia | 471 | 482 |
| | Infosys China | 81 | 54 |
| | Infosys Consulting | 275 | 231 |
| | Infosys BPO | 1 | – |
| | Infosys Mexico | 33 | 3 |
Purchase of shared services including facilities and personnel | | |
| | Infosys BPO (Including subsidiaries) | 32 | 11 |
Interest Income | | |
| | Infosys China | 3 | – |
Sale of services | | |
| | Infosys Australia | 10 | 4 |
| | Infosys China | 2 | – |
| | Infosys Consulting | 4 | 1 |
| | Infosys BPO (Including subsidiaries) | 1 | – |
Sale of shared services including facilities and personnel | | |
| | Infosys BPO (Including subsidiaries) | 53 | 44 |
| | Infosys Consulting | 3 | 2 |
Details of amounts due to or due from and maximum dues from subsidiaries for the year ended March 31, 2009 and year ended March 31, 2008:
in Rs. Crore
| Particulars | As at |
| | March 31, 2009 | March 31, 2008 |
| | | |
Loans and advances | | |
| | Infosys China | 51 | 32 |
Debtors | | |
| | Infosys China | – | 8 |
| | Infosys Australia | 4 | – |
| | Infosys Mexico | 1 | – |
Creditors | | |
| | Infosys China | 4 | 7 |
| | Infosys Australia | 16 | – |
| | Infosys BPO (Including subsidiaries) | 1 | – |
Maximum balances of loans and advances | | |
| | Infosys BPO (Including subsidiaries) | – | 2 |
| | Infosys Australia | 35 | 31 |
| | Infosys China | 51 | 32 |
| | Infosys Mexico | 4 | – |
| | Infosys Consulting | 26 | 16 |
During the year ended March 31, 2009, an amount of Rs.20 crore (Rs.20 crore for the year ended March 31, 2008) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.
During the year ended March 31,2009, an amount of Rs 15 crores (Rs. Nil for the year ended March 31,2008) has been granted to Infosys Science Foundation, a not-for-profit foundation, in which certain directors of the company are trustees.
23.2.8. Transactions with key management personnel
Key Management personnel comprise directors and members of executive council.
Particulars of remuneration and other benefits paid to key management personnel during the year ended March 31, 2009 and March 31, 2008 have been detailed in Schedule 23.3 since the amounts are less than a crore.
The aggregate managerial remuneration under Section 198 of the Companies Act 1956, to the directors (including managing director) is:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Whole-time directors | | |
Salary | 2 | 2 |
Contribution to provident and other funds | – | – |
Perquisites and incentives | 6 | 4 |
Total remuneration | 8 | 6 |
Non-Whole-time directors | | |
Commission | 6 | 4 |
Sitting fees | – | – |
Reimbursement of expenses | 1 | 1 |
Total remuneration | 7 | 5 |
Computation of net profit in accordance with Section 349 of the Companies Act, 1956, and calculation of commission payable to non-whole-time directors:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Net profit after tax from ordinary activities | 5,819 | 4,470 |
Add: | | |
Whole-time directors' remuneration | 8 | 6 |
Directors' sitting fees | – | – |
Commission to non-whole time-directors | 6 | 4 |
Provision for bad and doubtful debts | 74 | 42 |
Provision for doubtul loans and advances | 1 | – |
Provision on investments | – | – |
Depreciation as per books of accounts | 694 | 546 |
Provision for taxation | 895 | 630 |
| | 7,497 | 5,698 |
Less: | | |
Depreciation as envisaged under Section 350 of the Companies Act* | 694 | 546 |
Profit of a capital nature | – | – |
Net profit on which commission is payable | 6,803 | 5,152 |
Commission payable to non-whole-directors: | | |
Maximum allowed as per the Companies Act, 1956 at 1% | 68 | 52 |
Maximum approved by the share holders at 1% (0.5%) | 68 | 26 |
Commission approved by the Board | 6 | 4 |
* The company depreciates fixed assets based on estimated useful lives that are lower than those implicit in Schedule XIV of the Companies Act, 1956. Accordingly, the rates of depreciation used by the company are higher than the minimum prescribed by the Schedule XIV.During the year ended March 31, 2009 and 2008, Infosys BPO has provided for commission of Rs. 0.12 crore and Rs 0.12 crore to a non-whole-time director of Infosys.
23.2.9. Research and development expenditure
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Capital | 31 | – |
Revenue | 236 | 201 |
23.2.10. Dues to micro and small enterprises
The company has no dues to micro and small enterprises during the year ended March 31, 2009 and March 31 ,2008 and as at March 31,2009 and March 31, 2008.
23.2.11. 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. 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. The 1998 Plan lapsed on January 6, 2008, and consequently no further shares will be issued to employees under this plan.
Number of options granted, exercised and forfeited during the | Year ended March 31, |
| | 2009 | 2008 |
Options outstanding, beginning of period | 15,30,447 | 20,84,124 |
Less: exercised | 4,55,586 | 5,00,465 |
forfeited | 1,58,102 | 53,212 |
Options outstanding, end of period | 9,16,759 | 15,30,447 |
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 September 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 | Year ended March 31, |
| | 2009 | 2008 |
Options outstanding, beginning of period | 14,94,693 | 18,97,840 |
Less: exercised | 3,78,699 | 2,85,431 |
forfeited | 1,95,918 | 1,17,716 |
Options outstanding, end of period | 9,20,076 | 14,94,693 |
The aggregate options considered for dilution are set out in note 23.2.20
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 | Year ended March 31, |
| | 2009 | 2008 |
Net Profit: | | |
As Reported | 5,819 | 4,470 |
Less: Stock-based employee compensation expense | 7 | 13 |
Adjusted Proforma | 5,812 | 4,457 |
Basic Earnings per share as reported | 101.65 | 78.24 |
Proforma Basic Earnings per share | 101.52 | 78.00 |
Diluted Earnings per share as reported | 101.48 | 77.98 |
Proforma Diluted Earnings per share | 101.35 | 77.74 |
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 year ended March 31, 2009, 4,55,586 and 3,78,699 equity shares were issued pursuant to the exercise of stock options by employees under the 1998 and 1999 stock option plans, respectively. FBT on exercise of stock options of Rs. 3 crore for the year ended March 31, 2009 has been paid by the company and subsequently recovered from the employees. Consequently, there is no impact on the profit and loss account.
23.2.12. 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, or March 31, 2010.
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 262 crores and Rs 169 crores was carried forward and shown under "Loans and Advances" in the balance sheet as of March 31, 2009 and March 31, 2008 respectively.
The tax provision for the year ended March 31, 2009 includes a net reversal of Rs. 108 crore pertaining to earlier periods, comprising of Rs.323 crore for provisions no longer required which is offset by a charge of Rs. 215 crore due to re-assessment of uncertain tax positions. The tax provision for the year ended March 31, 2008 includes a reversal of Rs. 121 crore relating to liabilities no longer required.
23.2.13. Cash and bank balances
Details of balances as on balance sheet dates with non-scheduled banks:-
in Rs. crore
| Balances with non-scheduled banks | March 31, 2009 | March 31, 2008 |
In Current accounts | | |
ABN Amro Bank, Taiwan | 2 | – |
Bank of America, USA | 574 | 272 |
Citibank NA, Australia | 33 | 30 |
Citibank NA, Singapore | 7 | – |
Citibank NA, Thailand | 1 | – |
Citibank NA, Japan | 2 | 2 |
Deutsche Bank, Belgium | 6 | 5 |
Deutsche Bank, Germany | 5 | 5 |
Deutsche Bank, Netherlands | 1 | 3 |
Deutsche Bank, France | 1 | 2 |
Deutsche Bank, Zurich, Switzerland | – | 1 |
Deutsche Bank, UK | 58 | 76 |
Deutsche Bank, Spain | 1 | 2 |
HSBC Bank, UK | 7 | 2 |
Nordbanken, Stockholm, Sweden | – | 1 |
Royal Bank of Canada, Canada | 5 | 12 |
Svenska Handelsbanken, Sweden | – | 1 |
The Bank of Tokyo - Mitsunhishi UFJ,Ltd.,Japan | 1 | – |
| | 704 | 414 |
Details of balances as on balance sheet dates with scheduled banks:-
in Rs. crore
| Balances with scheduled banks in India | March 31, 2009 | March 31, 2008 |
In Current accounts | | |
Citibank-Unclaimed dividend account | 1 | 1 |
Deustche Bank | 11 | 39 |
Deustche Bank-EEFC account in Euro | 26 | 23 |
Deustche Bank-EEFC account in Swiss Franc | 3 | 10 |
Deustche Bank-EEFC account in United Kingdom Pound Sterling | – | 17 |
Deustche Bank-EEFC account in US dollar | 11 | 127 |
ICICI Bank | 14 | 20 |
ICICI Bank-EEFC account in US dollar | 34 | 5 |
ICICI bank-Unclaimed dividend account | 1 | 1 |
| | 101 | 243 |
In Deposit accounts | | |
Andhra Bank | 80 | – |
Axis Bank | – | 250 |
Bank of Baroda | 781 | 500 |
Bank of India | – | 500 |
Bank of Maharashtra | 493 | 362 |
Barclays Bank | 140 | 280 |
Canara Bank | 794 | 115 |
Corporation Bank | 335 | 440 |
DBS Bank | 25 | – |
HDFC Bank | – | 450 |
HSBC Bank | 258 | 250 |
ICICI Bank | 510 | 1,000 |
IDBI Bank | 500 | 475 |
ING Vysya Bank | 25 | – |
Punjab National Bank | 480 | – |
State Bank of Hyderabad | 200 | |
State Bank of India | 2,083 | 1,000 |
State Bank of Mysore | 500 | – |
Syndicate Bank | 500 | – |
The Bank of Nova Scotia | 350 | 150 |
Union Bank of India | 85 | |
Vijaya Bank | 95 | |
| | 8,234 | 5,772 |
Total cash and bank balances as per balance sheet | 9,039 | 6,429 |
Details of maximum balances during the period with non-scheduled banks:-
in Rs. crore
| Maximum balance with non-scheduled banks during the period | Year ended March 31, |
| | 2009 | 2008 |
In current accounts | | |
ABN Amro Bank , Taipei, Taiwan | 4 | 2 |
Bank of America, Palo Alto, USA | 956 | 637 |
Citibank NA, Melbourne, Australia | 192 | 126 |
Citibank NA, Singapore | 24 | – |
Citibank NA, Tokyo, Japan | 45 | 14 |
Citibank NA, Thailand | 1 | – |
Deutsche Bank, Brussels, Belgium | 33 | 38 |
Deutsche Bank, Frankfurt, Germany | 52 | 20 |
Deutsche Bank, Amsterdam, Netherlands | 41 | 3 |
Deutsche Bank, Paris, France | 9 | 5 |
Deutsche Bank, Spain | 2 | 2 |
Deutsche Bank, Zurich, Switzerland | 36 | 15 |
Deutsche Bank, Zurich, Switzerland US dollar | 31 | – |
Deutsche Bank, UK | 350 | 311 |
HSBC Bank PLC, Croydon, UK | 11 | 32 |
Nordbanken, Stockholm, Sweden | 1 | 1 |
Royal Bank of Canada, Toronto, Canada | 42 | 17 |
Svenska Handels Bank, Stockholm, Sweden | 3 | 2 |
The Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan | 6 | 3 |
Morgan Stanley Bank,US-Account | 3 | 9 |
23.2.14. 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 |
| | March 31, 2009 | March 31, 2008 |
Deposits with financial institutions and body corporate: | | |
HDFC Limited | 1,250 | 1,000 |
GE Capital Services India | – | 260 |
Life Insurance Corporation of India (LIC) | 253 | 161 |
| | 1,503 | 1,421 |
Maximum balance (Including accrued Interest) held as deposits with financial institutions and body corporate:
in Rs. crore
| | Year ended March 31, |
| | 2009 | 2008 |
Deposits with financial institutions and body corporate: | | |
HDFC Limited | 1,250 | 1,031 |
GE Capital Services India | 271 | 312 |
Life Insurance Corporation of India | 253 | 161 |
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 obligations as and when they arise during the normal course of business. (refer to note 23.2.25.b.)
23.2.15. Fixed assets
Profit / (loss) on disposal of fixed assets during year ended March 31, 2009 and 2008 is less than Rs. 1 crore and accordingly disclosed in note 23.3
Depreciation charged to the profit and loss account includes a charge relating to assets costing less than Rs. 5,000/- each and other low value assets.
in Rs. crore
| | Year ended March 31, |
| | 2009 | 2008 |
Charged during the period | 71 | 16 |
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 March 31, 2009.
23.2.16. Details of Investments
in Rs. crore
| Particulars | As at |
| | March 31, 2009 | March 31, 2008 |
Long- term investments | | |
OnMobile Systems Inc., (formerly Onscan Inc.) USA | | |
53,85,251 (53,85,251) common stock at US$ 0.4348 each, fully paid, par value US$ 0.001 each * | 9 | 9 |
M-Commerce Ventures Pte Ltd, Singapore | | |
563 (563) redeemable preference shares of Singapore $ 1, fully paid, at a premium of Singapore $ 1,110 per redeemable preferred stock # | – | 2 |
Merasport Technologies Private Limited ** | | |
2,420 equity shares at Rs. 8,052 each, fully paid, par value Rs. 10 each | 2 | – |
| | 11 | 11 |
Less: Provision for investment | 11 | 11 |
| | – | – |
* During the year ended March 31, 2008 all of the Preferred Stock investments in OnMobile Systems Inc., U.S.A had been converted to Common Stock.
# During the year ended March 31, 2009 investments in M-Commerce Ventures Pte Ltd., Singapore were liquidated.
** During the year ended March 31, 2009, Infosys received 2,420 shares of Mera Sport Technologies Private Limited valued at Rs. 2 crore in lieu of provision of usage rights to the software developed by Infosys. The Investment was fully provided for during this year based on dimunition other than temporary.Details of investments in and disposal of securities during the year ended March 31, 2009 and 2008:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Investment in securities | | |
Subsidiaries | 41 | 125 |
Long-term investments | 2 | – |
Certificate of deposits | 193 | – |
Liquid Mutual funds | 608 | 1,518 |
| | 844 | 1,643 |
Redemption / Disposal of Investment in securities | | |
Long-term investments | – | – |
Certificate of deposits* | 200 | – |
Liquid Mutual funds | 608 | 1,518 |
| | 808 | 1,518 |
Net movement in investments | 36 | 125 |
* Represents redemption value inclusive of Rs 7 crore interestInvestment purchased and sold during the year ended March 31, 2009 :
in Rs. crore
| Name of the fund | Face Value Rs./- | Units | Cost |
Tata Floater Fund - Weekly Dividend Plan | 10 | 15,11,93,892 | 153 |
Kotak Floater Long-term - Weekly Dividend Plan | 10 | 17,55,74,233 | 177 |
Reliance Medium Term Fund - Weekly Dividend Plan | 10 | 3,21,32,737 | 55 |
Birla Sunlife Short-term Fund Institutional Fortnightly Dividend Payout | 10 | 10,58,80,534 | 107 |
ICICI Prudential Floating Rate Plan D - Weekly Dividend | 10 | 11,58,84,116 | 116 |
Certifiate of deposits purchased and sold during the year ended March 31, 2009 :
in Rs. crore
| Particulars | Face Value Rs./- | Units | Cost |
ICICI Bank | 1,00,000 | 10,000 | 97 |
Punjab National Bank | 1,00,000 | 10,000 | 96 |
Particulars of investments made during the year ended March 31, 2009 and 2008:
in Rs. crore
| Particulars of investee companies | Year ended March 31, |
| | 2009 | 2008 |
Infosys Consulting | 22 | 81 |
Infosys Mexico | – | 22 |
Infosys China | 19 | – |
Infosys BPO | – | 22 |
| | 41 | 125* |
* Excludes Rs 2 crore due to option holders of Infosys BPO relating to option purchases paid during the year ended March 31,2008Investment 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"). As of March 31, 2009, 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
During the year ended March 31, 2008 Infosys completed the purchase of 3,60,417 shares of Infosys BPO from its employee shareholders by paying an aggregrate consideration of Rs.22 crore consequent to the forward share purchase agreement entered with them in February 2007.
Investment in Infosys Consulting
During the year ended March 31, 2008, the company invested US$ 20 million (Rs. 81 crore) in its wholly owned subsidiary Infosys Consulting Inc. During the year ended March 31, 2009, the company made an additional investment of US$ 5 million (Rs. 22 crore) . As of March 31, 2009, the company has invested an aggregate of US$ 45 million (Rs.193 crore) in the subsidiary.
Investment in Infosys China
During the year ended March 31, 2009 and year ended March 31, 2008, the company disbursed an amount of US$ 2 million (Rs. 9 crore) and US$ 3 million (Rs.10 crore) as loan to its wholly owned subsidiary, Infosys Technologies (China) Co. Limited. The loan is repayable within five years from the date of disbursement at the discretion of the subsidiary. Further, during the year ended March 31, 2009, an additional investment of US$ 4 million (Rs.19 crore) was made in Infosys China. As of March 31, 2009, the company has invested US$ 14 million (Rs.65 crore) as equity capital and US$ 10 million (Rs.51 crore) as loan in the subsidiary.
23.2.17. Segment reporting
The company'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 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
Year ended March 31, 2009 and 2008:
in Rs. crore
| | Financial services | Manufacturing | Telecom | Retail | Others | Total |
Revenues | 7,020 | 3,876 | 3,450 | 2,699 | 3,219 | 20,264 |
| | 5,706 | 2,291 | 3,215 | 1,945 | 2,491 | 15,648 |
Identifiable operating expenses | 3,008 | 1,675 | 1,445 | 1,140 | 1,359 | 8,627 |
| | 2,426 | 1,028 | 1,401 | 836 | 1,085 | 6,776 |
Allocated expenses | 1,638 | 905 | 807 | 630 | 751 | 4,731 |
| | 1,424 | 572 | 804 | 485 | 624 | 3,909 |
Segmental operating income | 2,374 | 1,296 | 1,198 | 929 | 1,109 | 6,906 |
| | 1,856 | 691 | 1,010 | 624 | 782 | 4,963 |
Unallocable expenses | | | | | | 694 |
| | | | | | | 546 |
Operating income | | | | | | 6,212 |
| | | | | | | 4,417 |
Other income (expense), net | | | | | | 502 |
| | | | | | | 683 |
Net profit before taxes | | | | | | 6,714 |
| | | | | | | 5,100 |
Income taxes | | | | | | 895 |
| | | | | | | 630 |
Net profit after taxes | | | | | | 5,819 |
| | | | | | | 4,470 |
Geographic Segments
Year ended March 31, 2009 and 2008:
in Rs. crore
| | North America | Europe | India | Rest of the World | Total |
Revenues | 13,123 | 5,060 | 260 | 1,821 | 20,264 |
| | 9,873 | 4,207 | 219 | 1,349 | 15,648 |
Identifiable operating expenses | 5,626 | 2,082 | 63 | 856 | 8,627 |
| | 4,308 | 1,668 | 46 | 754 | 6,776 |
Allocated expenses | 3,060 | 1,183 | 61 | 427 | 4,731 |
| | 2,466 | 1,050 | 56 | 337 | 3,909 |
Segmental operating income | 4,437 | 1,795 | 136 | 538 | 6,906 |
| | 3,099 | 1,489 | 117 | 258 | 4,963 |
Unallocable expenses | | | | | 694 |
| | | | | | 546 |
Operating income | | | | | 6,212 |
| | | | | | 4,417 |
Other income (expense), net | | | | | 502 |
| | | | | | 683 |
Net profit before taxes | | | | | 6,714 |
| | | | | | 5,100 |
Income taxes | | | | | 895 |
| | | | | | 630 |
Net profit after taxes | | | | | 5,819 |
| | | | | | 4,470 |
23.2.18. Provision for doubtful debts
Periodically, the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability 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 March 31, 2009 the company has provided for doubtful debts of Rs. 66 crore (Rs. 20 crore as at March 31, 2008) 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.
23.2.19. 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 | Year ended March 31, |
| | | 2009 | 2008 |
Interim dividend for fiscal 2009 | 10,97,63,357 | 110 | – |
Interim dividend for fiscal 2008 | 10,92,19,011 | – | 66 |
Final dividend for fiscal 2007 | 10,92,18,536 | – | 71 |
Final dividend for fiscal 2008 | 10,95,11,049 | 79 | – |
Special dividend for fiscal 2008 | 10,95,11,049 | 219 | – |
23.2.20. Reconciliation of basic and diluted shares used in computing earnings per share
Particulars | Year ended March 31, |
| | 2009 | 2008 |
Number of shares considered as basic weighted average shares outstanding | 57,24,90,211 | 57,13,98,340 |
Add: Effect of dilutive issues of shares/stock options | 9,72,970 | 19,08,547 |
Number of shares considered as weighted average shares and potential shares outstanding | 57,34,63,181 | 57,33,06,887 |
23.2.21 Provision for Post-sales client support and warranties
The movement in the provision for post-sales client support and warranties is as follows:
in Rs. crore
| Particulars | Year ended March 31, |
| | 2009 | 2008 |
Balance at the beginning | 43 | 21 |
Provision recognized | 39 | 46 |
Provision utilized | (7) | (24) |
Balance at the end | 75 | 43 |
Provision for post sales client support is expected to be utilized over a period of 6 months to 1 year.
23.2.22 Gratuity Plan
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 | |
| | March 31, 2009 | March 31, 2008 | March 31, 2007 |
Obligations at period beginning | 217 | 221 | 180 |
Service Cost | 47 | 47 | 44 |
Interest cost | 15 | 16 | 14 |
Actuarial (gain)/ loss | – | (9) | – |
Benefits paid | (23) | (21) | (17) |
Amendment in benefit plans | – | (37) | – |
Obligations at period end | 256 | 217 | 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 | 229 | 221 | 167 |
Expected return on plan assets | 16 | 18 | 16 |
Actuarial gain | 5 | 2 | 3 |
Contributions | 29 | 9 | 52 |
Benefits paid | (23) | (21) | (17) |
Plans assets at period end, at fair value | 256 | 229 | 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 | 256 | 229 | 221 |
Present value of the defined benefit obligations at the end of the period | 256 | 217 | 221 |
Asset recognized in the balance sheet | – | 12 | – |
| | | | |
Assumptions | | | |
Interest rate | 7.01% | 7.92% | 7.99% |
Estimated rate of return on plan assets | 7.01% | 7.92% | 7.99% |
in Rs. Crore
| | Year ended March 31, |
| | 2009 | 2008 |
Gratuity cost for the period | | |
Service cost | 47 | 47 |
Interest cost | 15 | 16 |
Expected return on plan assets | (16) | (18) |
Actuarial (gain)/loss | (5) | (11) |
Plan amendment amortization | (4) | (4) |
Net gratuity cost | 37 | 30 |
Actual return on plan assets | 21 | 20 |
Gratuity cost, as disclosed above, is included under salaries and bonus and is segregated between software development expenses, selling and marketing expenses and general and administration expenses on the basis of number of employees.
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 is being amortised on a straight line basis to the net profit and loss account over 10 years representing the average future service period of the employees. The unamortized liability as at March 31, 2009 and March 31, 2008 amounted to Rs.29 crore and Rs.33 crore, respectively and disclosed under "Current Liabilities".
The company expects to contribute approximately Rs.40 crores to the gratuity trust during fiscal 2010.
23.2.23.a Provident Fund
The Guidance on Implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits 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.
The company contributed Rs.137 crore and Rs.110 crore during the year ended March 31, 2009 and 2008 respectively.
23.2.23.b Superannuation
The company contributed Rs.52 crore and Rs.42 crore during the year ended March 31, 2009 and 2008 respectively.
23.2.24 Miscellaneous Income
Miscellaneous income of Rs. 36 crore during the year ended March 31, 2009 includes a net amount of Rs. 18 crore consisting of Rs. 33 crore received from Axon Group Plc, towards the inducement fee offset by Rs. 15 crore towards expenses incurred in relation to this transaction.
23.2.25 Cashflow statement
23.2.25.a Unclaimed dividend
The balance of cash and cash equivalents includes Rs.2 crore as at March 31, 2009 (Rs. 2 crore as at March 31, 2008) set aside for payment of dividends.
23.2.25.b Restricted cash
Deposits with financial institutions and body corporate as at March 31, 2009 include an amount of Rs.253 crore (Rs.161 crore as at March 31, 2008) deposited with Life Insurance Corporation of India to settle employee benefit 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".
23.3 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 |
| | | | March 31, 2009 | March 31, 2008 |
| | | | | |
3 | Fixed assets | | | |
| | Depreciation & Amortization for the period | | | |
| | Vehicles | | 0.57 | 0.36 |
| | | | | |
7 | Cash on Hand | | 0.01 | – |
23.2.7 | Related party transactions | | | |
| | Debtors- Infosys BPO s.r.o. | | 0.02 | – |
| | Debtors- Infosys China | | 0.16 | 8.00 |
| | Debtors- Infosys Consulting | | 0.34 | – |
| | Debtors- Infosys Thailand | | 0.01 | – |
| | Creditors- Infosys Mexico | | (0.04) | – |
| | Advances - Infosys Sweden | | 0.06 | – |
23.2.13 | Balances with scheduled banks | | | |
| | - HDFC Bank - Unclaimed dividend account | | 0.46 | – |
| | - Deutsche Bank - EEFC account in United Kingdom Pound Sterling | | 0.05 | 16.99 |
| | Balances with non-scheduled banks | | | |
| | - ABN Amro Bank, Copenhagen, Denmark | | 0.06 | 0.01 |
| | - ABN Amro Bank, Taiwan | | 1.49 | 0.23 |
| | - Citibank NA, Singapore | | 7.17 | 0.02 |
| | - Citibank NA, Thailand | | 0.54 | 0.31 |
| | - Nordbanken, Sweden | | 0.05 | 0.89 |
| | - Svenska Handelsbanken, Sweden | | – | 1.23 |
| | - Deutsche Bank, Zurich, Switzerland | | 0.22 | 1.34 |
| | - Deutsche Bank, Zurich, Switzerland US Dollar | | 0.05 | – |
Profit & Loss Items
in Rs. crore
| Schedule | Description | | Year ended March 31, |
| | | | 2009 | 2008 |
| | | | | |
Profit & Loss | Provision for investment | | 1.95 | (0.36) |
12 | Selling and Marketing expenses | | | |
| | Printing & Stationery | | 0.99 | 1.16 |
| | Office maintenance | | 0.34 | 0.39 |
| | Computer maintenance | | – | 0.02 |
| | Software Packages for own use | | 0.04 | 0.12 |
| | Rates and Taxes | | 0.01 | 0.02 |
| | Sales Promotion expenses | | 1.36 | – |
| | Consumables | | 0.15 | 0.23 |
| | Insurance charges | | 0.03 | – |
13 | General and Administrative expenses | | | |
| | Provision for doubtful loans and advances | | 0.74 | 0.54 |
| | Overseas group health insurance | | 0.48 | (2.30) |
| | Visa charges others | | 2.72 | 0.59 |
| | Auditor's remuneration : | | | |
| | Statutory audit fees | | 0.62 | 0.64 |
| | Others | | – | 0.11 |
| | Certification Charges | | 0.05 | 0.05 |
| | Out-of-pocket expenses | | 0.03 | 0.03 |
| | Frieght Charges | | 1.07 | 0.76 |
23.2.1 | Aggregate expenses | | | |
| | Provision for doubtful loans and advances | | 0.74 | 0.54 |
| | Auditor's remuneration | | | |
| | Statutory audit fees | | 0.62 | 0.64 |
| | Others | | – | 0.11 |
| | Certification Charges | | 0.05 | 0.05 |
| | Out-of-pocket expenses | | 0.03 | 0.03 |
| | Frieght charges | | 1.07 | 0.76 |
23.2.7 | Related party transactions | | | |
| | Revenue transactions | | | |
| | Interest income - Infosys China | | 2.68 | 0.96 |
23.2.15 | Profit on disposal of fixed assets, included in miscellaneous income | | 0.16 | 0.18 |
| | (Loss) on disposal of fixed assets, included in miscellaneous expenses | | – | (0.01) |
| | Profit/(loss) on disposal of fixed assets, net | | 0.16 | 0.17 |
| | | | | |
23.2.13 | Maximum Balances with non-scheduled banks | | | |
| | - ABN Amro Bank, Copenhagen, Denmark | | 0.08 | 0.25 |
| | - Citibank NA, Singapore | | 23.95 | 0.08 |
| | - Citibank NA, Thailand | | 0.54 | 0.33 |
Cash Flow Statement Items
in Rs. crore
| Schedule | Description | | Year ended March 31, |
| | | | 2009 | 2008 |
Cash Flow | Profit/ loss on sale of fixed assets | | 0.16 | 0.17 |
Statement | Provisions for investments | | 1.95 | (0.36) |
| | Proceeds on disposal of fixed assets | | 0.21 | 0.38 |
Transactions with key management personnel
Key management personnel comprise directors and members of executive council.
Particulars of remuneration and other benefits paid to whole-time directors and members of executive council during the year ended March 31, 2009 and 2008 :
in Rs. crore
| Name | Salary | Contributions to
provident and
other funds | Perquisites and incentives | Total Remuneration |
Co-Chairman | | | | |
Nandan M Nilekani | 0.30 | 0.07 | 0.54 | 0.91 |
| | 0.21 | 0.05 | 0.56 | 0.82 |
Chief Executive Officer and Managing Director | | | | |
S Gopalakrishnan | 0.30 | 0.07 | 0.55 | 0.92 |
| | 0.21 | 0.05 | 0.55 | 0.81 |
Chief Operating Officer | | | | |
S D Shibulal | 0.28 | 0.07 | 0.52 | 0.87 |
| | 0.20 | 0.05 | 0.53 | 0.78 |
Whole-time Directors | | | | |
K Dinesh | 0.30 | 0.07 | 0.54 | 0.91 |
| | 0.21 | 0.05 | 0.56 | 0.82 |
| | | | | |
T V Mohandas Pai | 0.36 | 0.09 | 2.14 | 2.59 |
| | 0.33 | 0.11 | 1.36 | 1.80 |
| | | | | |
Srinath Batni | 0.35 | 0.09 | 1.43 | 1.87 |
| | 0.31 | 0.08 | 0.88 | 1.27 |
Chief Financial Officer | | | | |
V Balakrishnan | 0.29 | 0.07 | 2.00 | 2.36 |
| | 0.26 | 0.08 | 0.29 | 0.63 |
Executive Council Members | | | | |
Ashok Vemuri | 1.99 | – | 2.05 | 4.04 |
| | 1.57 | – | 1.24 | 2.81 |
| | | | | |
Chandra Shekar Kakal | 0.26 | 0.06 | 1.26 | 1.58 |
| | 0.23 | 0.06 | 0.49 | 0.78 |
| | | | | |
B.G. Srinivas | 1.82 | – | 2.85 | 4.67 |
| | 1.67 | – | 1.40 | 3.07 |
| | | | | |
Subhash B. Dhar | 0.23 | 0.06 | 0.98 | 1.27 |
| | 0.18 | 0.05 | 0.32 | 0.55 |
Particulars of remuneration and other benefits of non-executive/ independent directors for the year ended March 31, 2009 and 2008 :
Name | Commission | Sitting fees | Reimbursement
of expenses | Total remuneration |
Non-Whole time Directors | | | | |
Deepak M Satwalekar | 0.68 | – | 0.02 | 0.70 |
| | 0.56 | – | 0.01 | 0.57 |
| | | | | |
Prof.Marti G. Subrahmanyam | 0.71 | – | 0.25 | 0.96 |
| | 0.47 | – | 0.12 | 0.59 |
| | | | | |
Dr.Omkar Goswami | 0.58 | – | 0.03 | 0.61 |
| | 0.44 | – | 0.01 | 0.45 |
| | | | | |
Claude Smadja | 0.67 | – | 0.26 | 0.93 |
| | 0.42 | – | 0.20 | 0.62 |
| | | | | |
Rama Bijapurkar | 0.56 | – | 0.01 | 0.57 |
| | 0.44 | – | 0.01 | 0.45 |
| | | | | |
Sridar A Iyengar | 0.70 | – | 0.20 | 0.90 |
| | 0.46 | – | 0.09 | 0.55 |
| | | | | |
David L. Boyles | 0.69 | – | 0.21 | 0.90 |
| | 0.47 | – | – | 0.47 |
| | | | | |
Jeffrey S. Lehman | 0.63 | – | 0.22 | 0.85 |
| | 0.43 | – | 0.02 | 0.45 |
| | | | | |
N R Narayana Murthy * | 0.63 | – | – | 0.63 |
| | 0.50 | – | – | 0.50 |
* Non-executive chairman of the board and chief mentor.We have audited the quarterly financial results of Infosys Technologies Limited ('the Company') for the quarter ended 31 March 2009 and the year to date results for the period from 1 April 2008 to 31 March 2009, 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, prescribed by the Companies (Accounting Standards) Rules, 2006 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:
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 shareholdings, as furnished by the Company in terms of Clause 35 of the Listing Agreement and found the same to be correct.
