Schedules to the Financial Statements for the quarter and year ended March 31, 2010
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"), Infosys Technologies (Sweden) AB. ("Infosys Sweden"), Infosys Tecnologia DO Brasil LTDA. ("Infosys Brasil") and Infosys Public Services, Inc, USA ("Infosys Public Services") is a leading global technology services corporation. The Company provides end-to-end business solutions that leverage cutting-edge technology, thereby enabling clients to enhance business performance. The Company provides solutions that span the entire software lifecycle 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
These interim 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 (SEBI). These financial statements should be read in conjunction with the annual financial statements for the year ended March 31, 2010. 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.
These financial statements are prepared in accordance with the principles and procedures required for the preparation and presentation of financial statements as laid down under the Accounting Standard (AS) 25, “Interim Financial Reporting”.
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 the 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.
The Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized 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, which means 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 and 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 catchup 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 when 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. The 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 adjustments and changes in actuarial assumptions are recognized 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 determined by actuarial valuation 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 the 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 are 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, the 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 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 that 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 in situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each reporting date. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full fiscal year. Tax benefits of deductions earned on exercise of employee 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 which is 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 of each investment individually. 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.
23.1.16. Leases
Lease under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in the profit and loss account over the lease term.
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 expenses are as follows
| in Rs. Crore |
| | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Salaries and bonus including overseas staff expenses | 2,592 | 2,510 | 9,913 | 9,533 |
| Contribution to provident and other funds | 66 | 55 | 265 | 227 |
| Staff welfare | 8 | 9 | 30 | 64 |
| Overseas group health insurance | 37 | 35 | 142 | 145 |
| Overseas travel expenses | 107 | 104 | 398 | 493 |
| Visa charges and others | 19 | 16 | 95 | 121 |
| Traveling and conveyance | 19 | 15 | 61 | 82 |
| Technical sub-contractors - subsidiaries | 346 | 218 | 1,210 | 861 |
| Technical sub-contractors - others | 96 | 71 | 269 | 305 |
| Software packages | | | | |
| For own use | 55 | 66 | 309 | 274 |
| For service delivery to clients | 1 | 14 | 17 | 41 |
| Professional charges | 72 | 51 | 242 | 228 |
| Telephone charges | 29 | 37 | 117 | 153 |
| Communication expenses | 10 | 16 | 46 | 58 |
| Power and fuel | 31 | 28 | 122 | 125 |
| Office maintenance | 31 | 38 | 132 | 138 |
| Guest house maintenance | 1 | 2 | 4 | 5 |
| Commission charges | 3 | 5 | 16 | 21 |
| Brand building | 14 | 7 | 55 | 62 |
| Rent | 15 | 16 | 62 | 60 |
| Insurance charges | 6 | 5 | 23 | 18 |
| Computer maintenance | 6 | 5 | 22 | 23 |
| Printing and stationery | 2 | 1 | 9 | 10 |
| Consumables | 6 | 5 | 22 | 20 |
| Donations | 9 | 2 | 43 | 21 |
| Advertisements | 1 | 2 | 3 | 6 |
| Marketing expenses | 3 | 2 | 11 | 15 |
| Repairs to building | 8 | 9 | 33 | 31 |
| Repairs to plant and machinery | 9 | 5 | 31 | 21 |
| Rates and taxes | 7 | 8 | 26 | 29 |
| Professional membership and seminar participation fees | 3 | 2 | 8 | 9 |
| Postage and courier | 2 | 2 | 8 | 8 |
| Provision for post-sales client support and warranties | 8 | 18 | (2) | 39 |
| Books and periodicals | – | 1 | 3 | 3 |
| Provision for bad and doubtful debts | (25) | 22 | (1) | 74 |
| Provision for doubtful loans and advances | – | 1 | – | 1 |
| Commission to non-whole time directors | 2 | 2 | 6 | 6 |
| Sales promotion expenses | 1 | – | 1 | 1 |
| Freight charges | – | – | 1 | 1 |
| Bank charges and commission | 1 | 1 | 2 | 2 |
| Auditor's remuneration | | | | |
| Statutory audit fees | – | 1 | 1 | 1 |
| Certification charges | – | – | – | – |
| Others | – | – | – | – |
| Out-of-pocket expenses | – | – | – | – |
| Research grants | 5 | 16 | 25 | 19 |
| Miscellaneous expenses | – | 2 | – | 4 |
| | 3,606 | 3,425 | 13,780 | 13,358 |
23.2.2. Capital commitments and contingent liabilities
| in Rs. crore |
| | As at March 31, |
| Particulars | 2010 | 2009 |
| Estimated amount of unexecuted capital contracts | | |
| (net of advances and deposits) | 267 | 344 |
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 | 3 |
| Claims against the Company, not acknowledged as debts* | 28 | 3 |
[Net of amount paid to statutory authorities Rs. 241 crore (Rs. 200 crore)] | | |
| | | |
| | in million | in Rs. crore | in million | in Rs. crore |
| Forward contracts outstanding | | | | |
| In USD | 228 | 1,024 | 245 | 1,243 |
| In Euro | 16 | 97 | 20 | 135 |
| In GBP | 7 | 48 | 15 | 109 |
| In AUD | 3 | 12 | – | – |
| Options contracts outstanding | | | | |
| In USD | 200 | 898 | 173 | 877 |
* Claims against the Company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rs. 214 crore (Rs. 197 crore), including interest of Rs. 39 crore (Rs. 43 crore) upon completion of their tax review for fiscal 2005 and fiscal 2006. The tax demands are 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 2005 and 2006 is pending before the Commissioner of Income tax (Appeals) Bangalore.
The Company is contesting the demands 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 position and results of operations.
As of the Balance Sheet date, the company's net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. 891 crore. (Rs. 1,136 crore as at March 31, 2009).
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, |
| | 2010 | 2009 | 2010 | 2009 |
| Capital goods | 33 | 56 | 91 | 207 |
| Software packages | 3 | 5 | 10 | 8 |
| | 36 | 61 | 101 | 215 |
23.2.5. Activity in foreign currency
| in Rs. crore |
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Earnings in foreign currency (on receipts basis) | | | | |
| Income from software services and products | 5,316 | 5,106 | 21,072 | 19,812 |
| Interest received from banks and others | 1 | 5 | 3 | 24 |
| Expenditure in foreign currency (on payments basis) | | | | |
| Travel expenses (including visa charges) | 115 | 101 | 404 | 480 |
| Professional charges | 47 | 35 | 150 | 124 |
| Technical sub-contractors - subsidiaries | 346 | 218 | 1,210 | 861 |
| Overseas salaries and incentives | 1,526 | 1,518 | 5,950 | 5,878 |
| Other expenditure incurred overseas for software development | 197 | 243 | 675 | 700 |
| Net earnings in foreign currency | 3,086 | 2,996 | 12,686 | 11,793 |
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 are as follows:
| in Rs. crore |
| | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Lease rentals recognized during the period | 15 | 16 | 62 | 60 |
| in Rs. crore |
| | As at March 31, |
| Lease obligations payable: | 2010 | 2009 |
| Within one year of the balance sheet date | 48 | 46 |
| Due in a period between one year and five years | 149 | 154 |
| Due after five years | 24 | 30 |
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, 2010 and March 31, 2009 :
| in Rs. crore |
| Particulars | Cost | Accumulated depreciation | Net book value |
| Buildings | 59 | 21 | 38 |
| | 59 | 17 | 42 |
| Plant and machinery | 18 | 15 | 3 |
| | 18 | 12 | 6 |
| Computer equipment | 1 | 1 | – |
| | 1 | 1 | – |
| Furniture and fixtures | 3 | 2 | 1 |
| | 3 | 2 | 1 |
| Total | 81 | 39 | 42 |
| | 81 | 32 | 49 |
The aggregate depreciation charged on the above assets during the quarter and year ended March 31, 2010 amounted to Rs. 2 crore and Rs. 7 crore, respectively (Rs. 2 crore and Rs. 8 crore for the quarter and year ended March 31, 2009, respectively).
The rental income from Infosys BPO for the quarter and year ended March 31, 2010 amounted to Rs. 4 crore and Rs. 16 crore, respectively. (Rs. 4 crore and Rs. 16 crore for the quarter and year ended March 31, 2009, respectively.)
23.2.7. Related party transactions
List of related parties:
| | | |
| Name of subsidiaries | Country | Holding, as at March 31, |
| | | 2010 | 2009 |
| Infosys BPO | India | 99.98% | 99.98% |
| Infosys Australia | Australia | 100% | 100% |
| Infosys China | China | 100% | 100% |
| Infosys BPO s. r. o * | Czech Republic | 99.98% | 99.98% |
| Infosys BPO (Poland) Sp Z.o.o * | Poland | 99.98% | 99.98% |
| Infosys BPO (Thailand) Limited * | Thailand | 99.98% | 99.98% |
| Mainstream Software Pty Limited** | Australia | 100% | 100% |
| Infosys Sweden *** | Sweden | 100% | – |
| Infosys Brasil **** | Brazil | 100% | – |
| Infosys Consulting ***** | USA | 100% | 100% |
| Infosys Mexico # | Mexico | 100% | 100% |
Infosys Consulting India Limited ## | India | 100% | – |
Infosys Public Services, Inc. ### | USA | 100% | – |
McCamish Systems LLC #### | USA | 99.98% | – |
| * | Infosys BPO s.r.o, Infosys BPO (Poland) Sp Z.o.o and Infosys BPO (Thailand) Limited are wholly owned subsidiaries of Infosys BPO. |
| ** | Mainstream Software Pty Limited is a wholly owned subsidiary of Infosys Australia. |
| *** | During the year ended March 31, 2009, the Company incorporated wholly-owned subsidiary, Infosys Technologies (Sweden) AB, which was capitalized on July 8, 2009. |
| **** | On August 7, 2009 the Company incorporated wholly-owned subsidiary, Infosys Tecnologia DO Brasil LTDA. Additionally during the quarter ended March 31, 2010 the Company invested Rs. 11 crore (BRL 4 million) in the subsidiary. As of March 31,2010 the company has invested an aggregate of Rs. 28 crore (BRL 11 million) in the subsidiary |
| ***** | During the year ended March 31, 2010 the Company made an additional investment of Rs. 50 crore (USD 10 million) in Infosys Consulting, which is a wholly owned subsidiary. As of March 31, 2010 and March 31, 2009, the Company has invested an aggregate of Rs. 243 crore (USD 55 million) and Rs.193 crore (USD 45 million), respectively in the subsidiary. |
| | During the year ended March 31, 2010 the Company made an additional investment of Rs 18 crore (Mexican Peso 50 million) in Infosys Mexico, which is a wholly owned subsidiary. As of March 31, 2010 and March 31, 2009 the Company has invested an aggregate of Rs. 40 crore (Mexican Peso 110 million) and Rs. 22 crore (Mexican Peso 60 million), respectively in the subsidiary. |
| ## | On August 19, 2009 Infosys Consulting incorporated wholly-owned subsidiary, Infosys Consulting India Limited. As of March 31, 2010 Infosys Consulting has invested Rs. 1 crore in the subsidiary. |
| ### | On October 9, 2009 the Company incorporated wholly-owned subsidiary, Infosys Public Services, Inc. As of March 31, 2010 the company has invested Rs. 24 crore (USD 5 million) in the subsidiary. |
| #### | On December 4, 2009, Infosys BPO acquired 100% of the voting interests in McCamish Systems LLC (McCamish), a business process solutions provider based in Atlanta, Georgia, in the United States. The business acquisition was conducted by entering into Membership Interest Purchase Agreement for a cash consideration of Rs. 173 crore and a contingent consideration of Rs. 67 crore. The acquisition was completed during the year and accounted as a business combination which resulted in goodwill of Rs. 227 crore. |
Infosys guarantees the performance of certain contracts entered into by its subsidiaries
Details of amounts due to or due from as at March 31, 2010 and March 31, 2009 :
| in Rs. crore |
| Particulars | | As at March 31, |
| | | 2010 | 2009 |
| Loans and advances | | |
| | Infosys China | 46 | 51 |
| Sundry debtors | | |
| | Infosys China | 19 | – |
| | Infosys Australia | 7 | 4 |
| | Infosys Mexico | 1 | 1 |
| | Infosys Consulting | 26 | – |
| | Infosys Brazil | 1 | – |
| | Infosys BPO (Including subsidiaries) | 2 | – |
| Sundry creditors | | |
| | Infosys China | 18 | 4 |
| | Infosys Australia | 20 | 16 |
| | Infosys BPO (Including subsidiaries) | 7 | 1 |
| | Infosys Consulting | 43 | – |
| | Infosys Consulting India | 1 | – |
| | Infosys Mexico | 5 | – |
| | Infosys Sweden | 1 | – |
| Deposit taken for shared services | | |
| | Infosys BPO | 7 | 3 |
The details of the related party transactions entered into by the company and maximum dues from subsidiaries, in addition to the lease commitments described in note 23.2.6, for the quarter and year ended March 31, 2010 and March 31, 2009 are as follows:
| in Rs. crore |
| Particulars | | Year ended March 31, |
| | | 2010 | 2009 | 2010 | 2009 |
| Capital transactions: | | | | |
| Financing transactions | | | | |
| | Infosys Consulting | – | – | 50 | 22 |
| | Infosys China | – | 19 | – | 19 |
| | Infosys Mexico | – | – | 18 | – |
| | Infosys Brasil | 11 | – | 28 | – |
| | Infosys Public Services | – | – | 24 | – |
| Loans/Advances | | | | |
| | Infosys China | – | – | – | 10 |
| Revenue transactions: | | | | | |
| Purchase of services | | | | | |
| | Infosys Australia | 170 | 115 | 634 | 471 |
| | Infosys China | 45 | 24 | 134 | 81 |
| | Infosys Consulting | 111 | 69 | 378 | 275 |
| | Infosys Sweden | 3 | – | 11 | – |
| | Infosys BPO (Including subsidiaries) | 2 | – | 3 | 1 |
| | Infosys Brazil | 3 | – | 5 | – |
| | Infosys Mexico | 12 | 10 | 45 | 33 |
| Purchase of shared services including facilities and personnel | | | | |
| | Infosys BPO (Including subsidiaries) | 8 | 17 | 53 | 32 |
| Interest income | | | | | |
| | Infosys China | 1 | 1 | 3 | 3 |
| Sale of services | | | | | |
| | Infosys Australia | 7 | 7 | 25 | 10 |
| | Infosys China | 3 | – | 10 | 2 |
| | Infosys Consulting | 8 | – | 25 | 4 |
| | Infosys BPO (Including subsidiaries) | – | 1 | – | 1 |
| Sale of shared services including facilities and personnel | | | | |
| | Infosys BPO (Including subsidiaries) | 19 | 15 | 71 | 53 |
| | Infosys Consulting | 1 | 1 | 4 | 3 |
| Maximum balances of loans and advances | | | | |
| | Infosys Australia | 47 | 35 | 51 | 35 |
| | Infosys China | 48 | 51 | 48 | 51 |
| | Infosys BPO (Including subsidiaries) | – | – | 4 | – |
| | Infosys Mexico | – | 4 | 4 | 4 |
| | Infosys Consulting | 35 | 26 | 35 | 26 |
During the quarter and year ended March 31, 2010, an amount of Rs. 14 crore and Rs. 34 crore (Rs. 5 crore and Rs. 20 crore for the quarter and year ended March 31, 2009) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the Company are trustees.
During the quarter and year ended March 31, 2010, an amount of Rs. 4 crore and Rs. 23 crore (Nil and Rs. 15 crore for the quarter and year ended March 31, 2009) has been granted to Infosys Science Foundation, a not-for-profit foundation, in which certain directors and officers 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, 2010 and March 31, 2009 have been detailed in Schedule 23.4.
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, |
| | 2010 | 2009 |
| Whole-time directors | | |
| Salary | 2 | 2 |
| Contribution to provident and other funds | – | – |
| Perquisites and incentives | 7 | 6 |
| Total remuneration | 9 | 8 |
| | | |
| Non-Whole-time directors | | |
| Commission | 6 | 6 |
| Reimbursement of expenses | 1 | 1 |
| Total remuneration | 7 | 7 |
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, |
| | 2010 | 2009 |
| Net profit after tax before exceptional item | 5,755 | 5,819 |
| Add: | | |
| Whole-time directors' remuneration | 9 | 8 |
| Commission to non-whole time-directors | 6 | 6 |
| Provision for bad and doubtful debts | (1) | 74 |
| Provision for doubtful loans and advances | – | 1 |
| Depreciation as per books of accounts | 807 | 694 |
| Provision for taxation | 1,717 | 895 |
| | 8,293 | 7,497 |
| Less: | | |
| Depreciation as envisaged under Section 350 of the Companies Act* | 807 | 694 |
| Net profit on which commission is payable | 7,486 | 6,803 |
| | | |
| Commission payable to non-whole-directors: | | |
| Maximum allowed as per the Companies Act, 1956 at 1% | 75 | 68 |
| Maximum approved by the share holders at 1% (1%) | 75 | 68 |
| Commission approved by the Board | 6 | 6 |
* The company depreciates fixed assets based on estimated useful lives that are lower than those prescribed 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, 2010 and March 31, 2009 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, |
| | 2010 | 2009 | 2010 | 2009 |
| Capital | – | – | 3 | 31 |
| Revenue | 118 | 84 | 437 | 236 |
23.2.10. Stock option plans
The Company has two Stock Option Plans.
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.
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. The 1999 Plan lapsed on June 11, 2009, and consequently no further shares will be issued to employees under this plan.
The activity in the 1998 Plan and 1999 Plan during the quarter and year ended March 31, 2010 and March 31, 2009 are set out below.
| |
| | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| The 1998 Plan : | | | | |
| Options outstanding, beginning of period/year | 4,17,812 | 11,22,317 | 9,16,759 | 15,30,447 |
| Less: Exercised | 1,73,013 | 1,14,578 | 6,14,071 | 4,55,586 |
| Forfeited | 2,535 | 90,980 | 60,424 | 1,58,102 |
| Options outstanding, end of period/year | 2,42,264 | 9,16,759 | 2,42,264 | 9,16,759 |
| The 1999 Plan : | | | | |
| Options outstanding, beginning of period/year | 3,55,241 | 10,09,755 | 9,25,806 | 14,94,693 |
| Less: Exercised | 1,16,946 | 73,962 | 3,81,078 | 3,78,699 |
| Forfeited | 33,831 | 9,987 | 3,40,264 | 1,90,188 |
| Options outstanding, end of period/year | 2,04,464 | 9,25,806 | 2,04,464 | 9,25,806 |
The weighted average share price of options exercised under the 1998 Plan during the quarter ended March 31, 2010 and March 31, 2009 was Rs. 2,646 and Rs. 1,302, respectively. The weighted average share price of options exercised under the 1999 Plan during the quarter ended March 31, 2010 and March 31, 2009 was Rs. 2,609 and Rs. 1,266, respectively.
The weighted average share price of options exercised under the 1998 Plan during the year ended March 31, 2010 and March 31, 2009 was Rs. 2,266 and Rs. 1,683, respectively. The weighted average share price of options exercised under the 1999 Plan during the year ended March 31, 2010 and March 31, 2009 was Rs. 2,221 and Rs. 1,566, respectively.
The following tables summarize information about the 1998 and 1999 share options outstanding as of March 31, 2010 and March 31, 2009 :
| |
| Range of exercise prices per share (Rs.) | Year ended March 31, 2010 |
| | Number of shares arising out of options | Weighted average remaining contractual life | Weighted average exercise price |
| The 1998 Plan: | | | |
| 300-700 | 1,74,404 | 0.94 | 551 |
| 701-1,400 | 67,860 | 1.27 | 773 |
| | 2,42,264 | 1.03 | 613 |
| The 1999 Plan: | | | |
| 300-700 | 1,52,171 | 0.91 | 439 |
| 701-1,400 | – | – | – |
| 1,401-2,500 | 52,293 | 1.44 | 2,121 |
| | 2,04,464 | 1.05 | 869 |
| |
| Range of exercise prices per share (Rs.) | Year ended March 31, 2009 |
| | Number of shares arising out of options | Weighted average remaining contractual life | Weighted average exercise price |
| The 1998 Plan: | | | |
| 300-700 | 3,37,790 | 1.46 | 567 |
| 701-1,400 | 4,93,048 | 1.56 | 980 |
| 1,401-2,100 | 76,641 | 0.46 | 1,693 |
| 2,101-2,800 | 6,880 | 0.13 | 2,453 |
| 2,801-4,200 | 2,400 | 0.02 | 2,899 |
| | 9,16,759 | 1.41 | 904 |
| The 1999 Plan: | | | |
| 300-700 | 3,00,976 | 1.55 | 429 |
| 701-1,400 | 2,23,102 | 0.60 | 802 |
| 1,401-2,500 | 4,01,728 | 1.06 | 2,121 |
| | 9,25,806 | 1.11 | 1,253 |
The aggregate options considered for dilution are set out in note 23.2.19
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 profit and basic and diluted earnings per share as reported would have reduced to the proforma amounts as indicated :
| |
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| | | | | |
| Net profit after exceptional item | | | | |
| As reported | 1,430 | 1,569 | 5,803 | 5,819 |
| Less: Stock-based employee compensation expense | – | 2 | 1 | 7 |
| Adjusted proforma | 1,430 | 1,567 | 5,802 | 5,812 |
| Basic earnings per share as reported | 24.92 | 27.38 | 101.22 | 101.65 |
| Proforma basic earnings per share | 24.92 | 27.36 | 101.21 | 101.52 |
| Diluted earnings per share as reported | 24.90 | 27.35 | 101.10 | 101.48 |
| Proforma diluted earnings per share | 24.90 | 27.33 | 101.09 | 101.35 |
23.2.11. 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. Infosys' operations are conducted through Software Technology Parks ("STPs") and Special Economic Zones ("SEZs"). 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, 2011. 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. For Fiscal 2008 and 2009, the company had calculated its tax liability under Minimum Alternate Tax (MAT). The MAT credit can be carried forward and set off against the future tax payable. In the current year, the company has calculated its tax liability under normal provisions of the Income Tax Act and utilised the brought forward MAT Credit.
During the quarter and year ended March 31, 2010, the company has provided for branch profit tax of Rs. 232 crore for its overseas branches, as the company estimates that these branch profits would be distributed in the foreseeable future. Further, the tax provision for the quarter and year ended March 31, 2010, includes a net tax reversal of Rs. 316 crore relating to SEZ units, for provisions no longer required.
23.2.12. 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, |
| | 2010 | 2009 |
| In current accounts | | |
| ABN Amro Bank, Taiwan | 2 | 2 |
| Bank of America, USA | 644 | 574 |
| Citibank NA, Australia | 24 | 33 |
| Citibank NA, Singapore | – | 7 |
| Citibank NA, Thailand | 1 | 1 |
| Citibank NA, Japan | 2 | 2 |
| Deutsche Bank, Belgium | 18 | 6 |
| Deutsche Bank, Germany | 12 | 5 |
| Deutsche Bank, Moscow (U.S.dollar account) | 1 | – |
| Deutsche Bank, Netherlands | 7 | 1 |
| Deutsche Bank, France | 1 | 1 |
| Deutsche Bank, Switzerland | 10 | – |
| Deutsche Bank, Switzerland (U.S Dollar account) | 1 | – |
| Deutsche Bank, Singapore | 1 | – |
| Deutsche Bank, UK | 29 | 58 |
| Deutsche Bank, Spain | 2 | 1 |
| HSBC Bank, UK | 1 | 7 |
| Royal Bank of Canada, Canada | 20 | 5 |
| The Bank of Tokyo - Mitsubishi UFJ Ltd., Japan | – | 1 |
| | 776 | 704 |
Details of balances as on balance sheet dates with scheduled banks:-
| in Rs. crore |
| Balances with scheduled banks in India | As at March 31, |
| | 2010 | 2009 |
| In current accounts | | |
| Citibank-Unclaimed dividend account | – | 1 |
| Deustche Bank | 12 | 11 |
| Deustche Bank-EEFC (Euro account) | 3 | 26 |
| Deustche Bank-EEFC (Swiss Franc account) | – | 3 |
| Deustche Bank-EEFC (U.S. dollar account) | 8 | 11 |
| HDFC Bank - Unclaimed dividend account | 1 | – |
| ICICI Bank | 121 | 14 |
| ICICI Bank-EEFC (U.S. dollar account) | 7 | 34 |
| ICICI bank-Unclaimed dividend account | 1 | 1 |
| | 153 | 101 |
| in Rs. crore |
| Balances with scheduled banks in India | As at March 31, |
| | 2010 | 2009 |
| In deposit accounts | | |
| Allahabad Bank | 100 | – |
| Andhra Bank | 99 | 80 |
| Bank of Baroda | 299 | 781 |
| Bank of India | 881 | – |
| Bank of Maharashtra | 500 | 493 |
| Barclays Bank | 100 | 140 |
| Canara Bank | 958 | 794 |
| Central Bank of India | 100 | – |
| Corporation Bank | 276 | 335 |
| DBS Bank | 49 | 25 |
| HSBC Bank | 483 | 258 |
| ICICI Bank | 1,370 | 510 |
| IDBI Bank | 900 | 500 |
| ING Vysya Bank | 25 | 25 |
| Indian Overseas Bank | 131 | – |
| Jammu and Kashmir Bank | 10 | – |
| Kotak Mahindra Bank | 25 | – |
| Oriental Bank of commerce | 100 | – |
| Punjab National Bank | 994 | 480 |
| State Bank of Hyderabad | 200 | 200 |
| State Bank of India | 126 | 2,083 |
| State Bank of Mysore | 496 | 500 |
| Syndicate Bank | 458 | 500 |
| The Bank of Nova Scotia | – | 350 |
| Union Bank of India | 93 | 85 |
| Vijaya Bank | 95 | 95 |
| | 8,868 | 8,234 |
| Total cash and bank balances as per balance sheet | 9,797 | 9,039 |
Details of maximum balances during the period with non-scheduled banks:-
| |
| Maximum balance with non-scheduled banks during the period | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| In current accounts | | | | |
| ABN Amro Bank, Taiwan | 1 | 2 | 4 | 4 |
| Bank of America, USA | 694 | 671 | 694 | 956 |
| Citibank NA, Australia | 99 | 192 | 134 | 192 |
| Citibank NA, New Zealand | 3 | – | 5 | – |
| Citibank NA, Singapore | 27 | 11 | 45 | 24 |
| Citibank NA, Japan | 16 | 39 | 17 | 45 |
| Citibank NA, Thailand | 1 | 1 | 1 | 1 |
| Deutsche Bank, Belgium | 37 | 23 | 47 | 33 |
| Deutsche Bank, Germany | 16 | 52 | 31 | 52 |
| Deutsche Bank, Netherlands | 20 | 25 | 20 | 41 |
| Deutsche Bank, France | 4 | 8 | 6 | 9 |
| Deutsche Bank, Russia (U.S. dollar account) | – | – | 1 | – |
| Deutsche Bank, Spain | 5 | 2 | 5 | 2 |
| Deutsche Bank, Singapore | 7 | – | 15 | – |
| Deutsche Bank, Switzerland | 24 | 22 | 39 | 36 |
| Deutsche Bank, Switzerland (U.S. dollar account) | 6 | 9 | 14 | 31 |
| Deutsche Bank, UK | 120 | 183 | 183 | 350 |
| HSBC Bank, UK | 1 | 7 | 8 | 11 |
| Morgan Stanley Bank, USA | 8 | 3 | 8 | 3 |
| Nordbanken, Sweden | – | 1 | – | 1 |
| Royal Bank of Canada, Canada | 28 | 27 | 28 | 42 |
| Standard Chartered Bank, UAE | 4 | – | 4 | – |
| Svenska Handelsbanken, Sweden | 2 | 2 | 3 | 3 |
| The Bank of Tokyo - Mitsubishi UFJ Ltd., Japan | 2 | 2 | 2 | 6 |
23.2.13. Loans and advances
Deposits with financial institutions:
| in Rs. crore |
| Particulars | As at March 31, |
| | 2010 | 2009 |
| HDFC Limited | 1,500 | 1,250 |
| Life Insurance Corporation of India (LIC) | 281 | 253 |
| | 1,781 | 1,503 |
Maximum balance (including accrued interest) held as deposits with financial institutions:
| in Rs. crore |
| | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Deposits with financial institutions: | | | | |
| HDFC Limited* | 1,534 | 1,250 | 1,550 | 1,250 |
| GE Capital Services India | – | – | – | 271 |
| Life Insurance Corporation of India | 281 | 253 | 281 | 253 |
* 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 23.2.23.b.)
23.2.14. Fixed assets
Profit / (loss) on disposal of fixed assets during the quarter and year ended March 31, 2010 and March 31, 2009 is less than Rs. 1 crore and accordingly disclosed under 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, |
| | 2010 | 2009 | 2010 | 2009 |
| Depreciation charged during the period/year | 10 | 28 | 86 | 71 |
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 though the company has possession certificate, the sale deeds are yet to be executed as at March 31, 2010.
23.2.15. Details of Investments
| in Rs. crore |
| Particulars | As at March 31, |
| | 2010 | 2009 |
| Long- term investments | | |
| OnMobile Systems Inc., (formerly Onscan Inc.) USA | | |
| 21,54,100 (53,85,251) common stock at USD 0.4348 each, fully paid, par value USD 0.001 each | 4 | 9 |
| Merasport Technologies Private Limited * | | |
| 2,420 equity shares at Rs. 8,052 each, fully paid, par value Rs. 10 each | 2 | 2 |
| | 6 | 11 |
| Less: Provision for investment | 2 | 11 |
| | 4 | – |
* 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 the year ended March 31, 2009 based on dimunition other than temporary.
Details of liquid mutual fund units as on March 31, 2010:
| |
| Particulars | Number of units | Amount (in Rs. Crore) |
| Tata Floater Fund - Weekly Dividend | 27,28,06,768 | 275 |
| Kotak Floater Long Term Plan - Weekly Dividend | 20,93,66,402 | 211 |
| Reliance Medium Term Fund - Weekly Dividend Plan D | 13,68,30,703 | 234 |
| Birla Sunlife Savings Fund - Institutional - Weekly Dividend Payout | 26,71,60,366 | 267 |
| ICICI Prudential Flexible Income Plan Premium - Weekly Dividend Payout | 2,93,92,648 | 310 |
| IDFC Money Manager Fund - Treasury Plan - Super Institutional Plan C - Weekly Dividend | 38,95,22,783 | 390 |
| UTI Treasury Advantage Fund - Institutional Weekly Dividend Plan - Payout | 38,86,168 | 389 |
| HDFC Floating Rate Income Fund - Short Term Plan - Dividend Weekly | 12,03,96,040 | 122 |
| DWS Ultra Short Term Fund - Institutional Weekly Dividend | 3,96,85,983 | 40 |
| SBI - SHF - Ultra Short Term Fund - Institutional Plan - Weekly Dividend Payout | 3,47,73,535 | 35 |
| Franklin Templeton India Ultra Short Bond Fund Super Institutional Plan - Weekly Dividend Payout | 1,09,36,513 | 11 |
| DSP Blackrock Floating Rate Fund - Institutional - Weekly Dividend | 99,866 | 10 |
| Religare Ultra Short Term Fund - Institutional Weekly Dividend | 2,25,53,650 | 23 |
| | 153,74,11,425 | 2,317 |
| At cost | | 1,413 |
| At fair value | | 904 |
| | | 2,317 |
Balances held in Certificates of deposit as on March 31, 2010:
| |
| Particulars | Face Value Rs./- | Units | Amount (in Rs. Crore) |
| Punjab National Bank | 1,00,000 | 50,000 | 485 |
| Bank of Baroda | 1,00,000 | 27,500 | 266 |
| HDFC Bank | 1,00,000 | 25,000 | 238 |
| Corporation Bank | 1,00,000 | 20,000 | 191 |
| Jammu and Kashmir Bank | 1,00,000 | 1,000 | 10 |
| | | 1,23,500 | 1,190 |
Details of investments in and disposal of securities during the quarter and year ended March 31, 2010 and March 31, 2009:
| in Rs. crore |
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Investment in securities | | | | |
| Subsidiary- Infosys Consulting | – | – | 50 | 22 |
| Subsidiary- Infosys China | – | 19 | – | 19 |
| Subsidiary- Infosys Mexico | – | – | 18 | – |
| Subsidiary - Infosys Brasil | 11 | – | 28 | – |
| Subsidiary - Infosys Public Services | – | – | 24 | – |
| Long term investments | – | – | – | 2 |
| Certificates of deposits | 1,180 | – | 1,180 | 193 |
| Liquid mutual fund units | 1,142 | 608 | 9,016 | 608 |
| | 2,333 | 627 | 10,316 | 844 |
| Redemption / disposal of investment in securities | | | | |
| Long term investments | 5 | – | 5 | – |
| Certificates of deposit* | – | 200 | – | 200 |
| Liquid mutual fund units | 3,980 | 608 | 6,699 | 608 |
| | 3,985 | 808 | 6,704 | 808 |
| Net movement in investments | (1,652) | (181) | 3,612 | 36 |
* Represents redemption value inclusive of Rs. 7 crore interest
Investment purchased and sold during the year ended March 31, 2010 :
| |
| Name of the fund | Face Value Rs./- | Units | Cost (in Rs. Crore) |
| Birla Sunlife Short Term Fund - Institutional - Fortnightly Dividend | 10 | 30,69,30,245 | 312 |
| Birla Sunlife Savings Fund - Institutional - Weekly Dividend | 10 | 44,96,87,618 | 450 |
| DSP Blackrock Strategic Bond Fund - Institutional Plan - Monthly Dividend | 1,000 | 4,90,830 | 50 |
| DBS Chola Freedom Income - Short Term Plan - Weekly Dividend | 10 | 8,19,67,368 | 86 |
| HDFC Floating Rate Income Fund - Short Term | 10 | 50,78,57,424 | 515 |
| ICICI Prudential Floating Rate Plan - D - Weekly Dividend | 10 | 23,88,35,963 | 239 |
| ICICI Prudential Flexible Income Plan Premium - Weekly Dividend | 100 | 4,17,36,593 | 440 |
| IDFC Money Manager Fund - Treasury Plan - Super Institutional Plan C Weekly Dividend | 10 | 61,62,18,874 | 617 |
| Reliance Medium Term Fund - Weekly Dividend Plan - D | 10 | 30,23,62,955 | 517 |
| UTI Treasury Advantage Fund - Institutional Weekly Dividend Payout | 1,000 | 43,48,966 | 435 |
| HSBC Floating Rate Long Term Institutional Weekly Dividend Payout | 10 | 13,43,20,855 | 151 |
| DWS Ultra Short Term Fund - Institutional Weekly Dividend | 10 | 100,27,38,474 | 1,011 |
| Religare Ultra Short Term Fund - Institutional Weekly Dividend | 10 | 50,89,85,841 | 510 |
| Principal Floating Rate Fund FMP-Institutional Option - Dividend Payout Weekly | 10 | 11,11,37,088 | 111 |
| Tata Floater Fund - Weekly Dividend | 10 | 25,78,43,865 | 260 |
| Kotak Floater Long Term Plan - Weekly Dividend | 10 | 44,64,32,595 | 450 |
| SBI - SHF - Ultra Short Term Fund - Institutional Plan - Weekly Dividend Payout | 10 | 41,66,63,413 | 420 |
| Franklin Templeton India Ultra Short Bond Fund Super Institutional Plan - Weekly Dividend Payout | 10 | 12,37,59,926 | 125 |
Investment purchased and sold during the year ended March 31, 2009 :
| |
| Name of the fund | Face Value Rs./- | Units | Cost (in Rs. Crore) |
| 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 |
Certificates of deposit puchased and sold during the year ended March 31, 2009 :
| |
| Particulars | Face Value Rs./- | Units | Cost (in Rs. Crore) |
| ICICI Bank | 1,00,000 | 10,000 | 97 |
| Punjab National Bank | 1,00,000 | 10,000 | 96 |
23.2.16. 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, 2010 and March 31, 2009:
| in Rs. crore |
| | Financial services | Manufacturing | Telecom | Retail | Others | Total |
| Revenues | 1,965 | 1,058 | 802 | 754 | 921 | 5,500 |
| | 1,769 | 1,052 | 837 | 751 | 844 | 5,253 |
| Identifiable operating expenses | 831 | 492 | 359 | 323 | 442 | 2,447 |
| | 759 | 464 | 359 | 293 | 343 | 2,218 |
| Allocated expenses | 414 | 223 | 169 | 159 | 194 | 1,159 |
| | 406 | 242 | 192 | 173 | 194 | 1,207 |
| Segmental operating income | 720 | 343 | 274 | 272 | 285 | 1,894 |
| | 604 | 346 | 286 | 285 | 307 | 1,828 |
| Unallocable expenses | | | | | | 194 |
| | | | | | | 209 |
| Operating income | | | | | | 1,700 |
| | | | | | | 1,619 |
| Other income (expense), net | | | | | | 190 |
| | | | | | | 248 |
| Provision for investments | | | | | | (10) |
| | | | | | | – |
| Net profit before taxes and exceptional item | | | | | | 1,900 |
| | | | | | | 1,867 |
| Income taxes | | | | | | 518 |
| | | | | | | 298 |
| Net profit after taxes before exceptional item | | | | | | 1,382 |
| | | | | | | 1,569 |
| Income on sale of investments, net of taxes | | | | | | 48 |
| | | | | | | – |
| Net profit after taxes and exceptional items | | | | | | 1,430 |
| | | | | | | 1,569 |
Year ended March 31, 2010 and March 31, 2009:
| in Rs. crore |
| | Financial services | Manufacturing | Telecom | Retail | Others | Total |
| Revenues | 7,354 | 3,988 | 3,234 | 2,989 | 3,575 | 21,140 |
| | 7,020 | 3,876 | 3,450 | 2,699 | 3,219 | 20,264 |
| Identifiable operating expenses | 3,095 | 1,853 | 1,355 | 1,267 | 1,564 | 9,134 |
| | 3,008 | 1,675 | 1,445 | 1,140 | 1,359 | 8,627 |
| Allocated expenses | 1,615 | 877 | 712 | 657 | 785 | 4,646 |
| | 1,638 | 905 | 807 | 630 | 751 | 4,731 |
| Segmental operating income | 2,644 | 1,258 | 1,167 | 1,065 | 1,226 | 7,360 |
| | 2,374 | 1,296 | 1,198 | 929 | 1,109 | 6,906 |
| Unallocable expenses | | | | | | 807 |
| | | | | | | 694 |
| Operating income | | | | | | 6,553 |
| | | | | | | 6,212 |
| Other income (expense), net | | | | | | 910 |
| | | | | | | 504 |
| Provision for investments | | | | | | (9) |
| | | | | | | 2 |
| Net profit before taxes and exceptional item | | | | | | 7,472 |
| | | | | | | 6,714 |
| Income taxes | | | | | | 1,717 |
| | | | | | | 895 |
| Net profit after taxes before exceptional item | | | | | | 5,755 |
| | | | | | | 5,819 |
| Income on sale of investments, net of taxes | | | | | | 48 |
| | | | | | | – |
| Net profit after taxes and exceptional items | | | | | | 5,803 |
| | | | | | | 5,819 |
Geographic Segments
Quarter ended March 31, 2010 and March 31, 2009:
| in Rs. crore |
| | North America | Europe | India | Rest of the World | Total |
| Revenues | 3,665 | 1,195 | 84 | 556 | 5,500 |
| | 3,459 | 1,225 | 80 | 489 | 5,253 |
| Identifiable operating expenses | 1,646 | 492 | 22 | 286 | 2,446 |
| | 1,463 | 518 | 18 | 219 | 2,218 |
| Allocated expenses | 773 | 252 | 18 | 117 | 1,160 |
| | 794 | 281 | 19 | 113 | 1,207 |
| Segmental operating income | 1,246 | 451 | 44 | 153 | 1,894 |
| | 1,202 | 426 | 43 | 157 | 1,828 |
| Unallocable expenses | | | | | 194 |
| | | | | | 209 |
| Operating income | | | | | 1,700 |
| | | | | | 1,619 |
| Other income (expense), net | | | | | 190 |
| | | | | | 248 |
| Provision for investments | | | | | (10) |
| | | | | | – |
| | | | | | 248 |
| Net profit before taxes and exceptional item | | | | | 1,900 |
| | | | | | 1,867 |
| Income taxes | | | | | 518 |
| | | | | | 298 |
| Net profit after taxes before exceptional item | | | | | 1,382 |
| | | | | | 1,569 |
| Income on sale of investments, net of taxes | | | | | 48 |
| | | | | | – |
| Net profit after taxes and exceptional items | | | | | 1,430 |
| | | | | | 1,569 |
Year ended March 31, 2010 and March 31, 2009:
| in Rs. crore |
| | North America | Europe | India | Rest of the World | Total |
| Revenues | 14,170 | 4,633 | 269 | 2,068 | 21,140 |
| | 13,123 | 5,060 | 260 | 1,821 | 20,264 |
| Identifiable operating expenses | 6,028 | 1,963 | 77 | 1,066 | 9,134 |
| | 5,626 | 2,082 | 63 | 856 | 8,627 |
| Allocated expenses | 3,114 | 1,020 | 59 | 453 | 4,646 |
| | 3,060 | 1,183 | 61 | 427 | 4,731 |
| Segmental operating income | 5,028 | 1,650 | 133 | 549 | 7,360 |
| | 4,437 | 1,795 | 136 | 538 | 6,906 |
| Unallocable expenses | | | | | 807 |
| | | | | | 694 |
| Operating income | | | | | 6,553 |
| | | | | | 6,212 |
| Other income (expense), net | | | | | 910 |
| | | | | | 504 |
| Provision for investments | | | | | (9) |
| | | | | | 2 |
| Net profit before taxes and exceptional item | | | | | 7,472 |
| | | | | | 6,714 |
| Income taxes | | | | | 1,717 |
| | | | | | 895 |
| Net profit after taxes before exceptional item | | | | | 5,755 |
| | | | | | 5,819 |
| Income on sale of investments, net of taxes | | | | | 48 |
| | | | | | – |
| Net profit after taxes and exceptional items | | | | | 5,803 |
| | | | | | 5,819 |
23.2.17. 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, 2010 the company has provided for doubtful debts of Rs. 21 crore (Rs. 66 crore as at March 31, 2009) 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.
23.2.18. Dividends remitted in foreign currencies
The Company remits the equivalent of the dividends payable to equity shareholders and holders of ADS. For ADS holders the dividend is remitted 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, |
| | | 2010 | 2009 | 2010 | 2009 |
| Interim dividend for fiscal 2010 | 10,70,15,201 | – | – | 107 | – |
| Interim dividend for fiscal 2009 | 10,97,63,357 | – | – | – | 110 |
| Final dividend for fiscal 2009 | 10,73,97,313 | – | – | 145 | – |
| Final dividend for fiscal 2008 | 10,95,11,049 | – | – | – | 79 |
| Special dividend for fiscal 2008 | 10,95,11,049 | – | – | – | 219 |
23.2.19. Reconciliation of basic and diluted shares used in computing earnings per share
| |
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Number of shares considered as basic weighted average shares outstanding | 57,36,75,913 | 57,27,46,241 | 57,33,09,523 | 57,24,90,211 |
| Add: Effect of dilutive issues of shares/stock options | 4,46,731 | 6,41,325 | 6,40,108 | 9,72,970 |
| Number of shares considered as weighted average shares and potential shares outstanding | 57,41,22,644 | 57,33,87,566 | 57,39,49,631 | 57,34,63,181 |
23.2.20 Provision for post-sales client support and warranties
The movement in the provision for post-sales client support and warranties is as follows :
| |
| Particulars | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Balance at the beginning | 65 | 58 | 75 | 43 |
| Provision recognized/(reversed) | 8 | 18 | (2) | 39 |
| Provision utilised | – | (1) | – | (7) |
| Balance at the end | 73 | 75 | 73 | 75 |
Provision for post-sales client support is expected to be utilized over a period of 6 months to 1 year.
23.2.21. 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 and plan assets :
| in Rs. crore |
| Particulars | As at March 31, |
| | 2010 | 2009 | 2008 | 2007 |
| Obligations at year beginning | 256 | 217 | 221 | 180 |
| Transfer of obligation | (2) | – | – | – |
| Service cost | 72 | 47 | 47 | 44 |
| Interest cost | 19 | 15 | 16 | 14 |
| Actuarial (gain)/ loss | (4) | – | (9) | – |
| Benefits paid | (33) | (23) | (21) | (17) |
| Amendment in benefit plans | – | – | (37) | – |
| Obligations at year end | 308 | 256 | 217 | 221 |
| Defined benefit obligation liability as at the balance sheet is fully funded by the Company | | | | |
| Change in plan assets | | | | |
| Plans assets at year beginning, at fair value | 256 | 229 | 221 | 167 |
| Expected return on plan assets | 24 | 16 | 18 | 16 |
| Actuarial gain/ (loss) | 1 | 5 | 2 | 3 |
| Contributions | 62 | 29 | 9 | 52 |
| Benefits paid | (33) | (23) | (21) | (17) |
| Plans assets at year end, at fair value | 310 | 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 year | 310 | 256 | 229 | 221 |
| Present value of the defined benefit obligations at the end of the year | 308 | 256 | 217 | 221 |
| Asset recognized in the balance sheet | 2 | – | 12 | – |
| Assumptions | | | | |
| Interest rate | 7.82% | 7.01% | 7.92% | 7.99% |
| Estimated rate of return on plan assets | 9.00% | 7.01% | 7.92% | 7.99% |
| Weighted expected rate of salary increase | 7.27% | 5.10% | 5.10% | 5.10% |
| |
| | Quarter ended March 31, | Year ended March 31, |
| | 2010 | 2009 | 2010 | 2009 |
| Gratuity cost for the period/year | | | | |
| Service cost | 15 | 11 | 72 | 47 |
| Interest cost | 4 | 7 | 19 | 15 |
| Expected return on plan assets | (6) | (7) | (24) | (16) |
| Actuarial (gain)/loss | – | (5) | (5) | (5) |
| Plan amendment amortization | – | (1) | (3) | (4) |
| Net gratuity cost | 13 | 5 | 59 | 37 |
| | | | | |
| Actual return on plan assets | 7 | 6 | 25 | 21 |
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.
During December 31, 2009, a reimbursement obligation of Rs. 2 crore has been recognized towards settlement of gratuity liability of Infosys Consulting India Limited.
As of March 31, 2010 and March 31, 2009, the plan assets have been primarily invested in government securities. 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, 2010 and March 31, 2009 amounted to Rs. 26 crore and Rs. 29 crore, respectively and disclosed under "Current Liabilities".
The company expects to contribute approximately Rs. 50 crore to the gratuity trust for fiscal 2011.
23.2.22.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 final 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. 40 crore and Rs. 150 crore to the Provident Fund during the quarter and year ended March 31, 2010, respectively. (Rs. 36 crore and Rs. 137 crore during the quarter and year ended March 31, 2009, respectively).
23.2.22.b Superannuation
The company contributed Rs. 14 crore and Rs. 54 crore to the Superannuation Trust during the quarter and year ended March 31, 2010, respectively (Rs. 13 crore and Rs. 52 crore during the quarter and year ended March 31, 2009, respectively).
23.2.23 Cashflow statement
23.2.23.a Unclaimed dividend
The balance of cash and cash equivalents includes Rs. 2 crore as at March 31, 2010 (Rs. 2 crore as at March 31, 2009) set aside for payment of dividends.
23.2.23.b Restricted cash
Deposits with financial institutions as at March 31, 2010 include Rs. 281 crore (Rs. 253 crore as at March 31, 2009) deposited with Life Insurance Corporation of India to settle employee-related 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".
23.2.24 Dues to micro and small enterprises
The company has no dues to micro and small enterprises during the quarter and year ended March 31, 2010 and March 31, 2009 and as at March 31, 2010 and March 31, 2009.
23.2.25 Miscellaneous income
Miscellaneous income of Rs. 38 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.
23.2.26 Exceptional item
During the quarter and year ended March 31, 2010, the company sold 32,31,151 shares of OnMobile Systems Inc, USA (OMSI) at a price of Rs. 166.58 per share amounting to a total consideration of Rs. 53 crore, net of taxes and transaction costs. The resultant income of Rs. 48 crore has been appropriated to capital reserve.
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 as follows :
Balance Sheet Items
| in Rs. crore |
| Schedule | Description | As at March 31, |
| | | 2010 | 2009 | |
| 3 | Fixed assets | | | |
| | Vehicles | | | |
| | Addition during the period | 0.04 | 0.50 | |
| | Depreciation and amortisation | – | 0.57 | |
| | Deletion during the period from depreciation | 0.04 | – | |
| 4 | Investments | | | |
| | Investment in Infosys Sweden | 0.06 | – | |
| 7 | Cash on Hand | – | 0.01 | |
| 23.2.7 | Related party transactions | | | |
| | Debtors | | | |
| | Infosys BPO s.r.o. | 0.04 | 0.02 | |
| | Infosys China | 19.18 | 0.16 | |
| | Infosys Consulting | 26.37 | 0.34 | |
| | Infosys Thailand | 0.04 | 0.01 | |
| | Infosys Sweden | 0.08 | 0.06 | |
| | Infosys Brasil | 0.62 | – | |
| | Creditors | | | |
| | Infosys BPO s.r.o. | 0.16 | 0.09 | |
| | Infosys Mexico | 4.97 | 0.04 | |
| | Infosys Thailand | 0.02 | – | |
| 23.2.12 | Balances with scheduled banks | | | |
| | - Citi Bank - Unclaimed dividend account | 0.49 | 0.58 | |
| | - HDFC Bank - Unclaimed dividend account | 1.00 | 0.46 | |
| | - Deutsche Bank - EEFC account in United Kingdom Pound Sterling | – | 0.05 | |
| | - Deutsche Bank - EEFC account in Swiss Franc | 0.33 | 3.35 | |
| | - State Bank of India | 0.04 | – | |
| | - Bank of Baroda | 0.02 | – | |
| | Balances with non-scheduled banks | | | |
| | - ABN Amro Bank, Copenhagen, Denmark | 0.21 | 0.06 | |
| | - Citibank N.A, New Zealand | 0.26 | – | |
| | - Deutsche Bank, Moscow | 0.34 | – | |
| | - Deutsche Bank, Zurich, Switzerland | 9.72 | 0.22 | |
| | - Deutsche Bank, Zurich, Switzerland U.S. dollars | 1.40 | 0.05 | |
| | - Deutsche Bank, Spain | 1.47 | 0.57 | |
| | -Bank of Baroda, Mauritius | – | 0.06 | |
| | -Bank of Baroda, Mauritius | 0.06 | 0.05 | |
| | - Standard Chartered Bank, UAE | 0.09 | – | |
| | - The Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan | 0.16 | 0.59 | |
| 23.2.12 | Maximum Balances with non-scheduled banks | | | |
| | - ABN Amro Bank, Denmark | 0.34 | 0.08 | |
| | - Deutsche Bank Russia | 0.37 | – | |
| | - Nordbanken, Sweden | 0.48 | 1.17 | |
| | - Deutsche Bank, Russia USD A/c | 0.21 | 1.24 | |
Profit & Loss Items
| in Rs. crore |
| Schedule | Description | Quarter ended March 31, | Year ended March 31, |
| | | 2010 | 2009 | 2010 | 2009 |
| Profit & Loss | Provision for Investment | 10.00 | 0.11 | 9.00 | 1.95 |
| | Additional dividend tax | – | – | 0.04 | 0.12 |
| 12 | Selling and Marketing expenses | | | | |
| | Contribution to provident and other funds | 1.25 | 0.47 | 4.16 | 2.40 |
| | Visa charges and others | 1.00 | 0.34 | 1.76 | 2.16 |
| | Travelling and conveyance | 0.98 | 0.45 | 3.25 | 2.89 |
| | Printing & Stationery | 0.25 | 0.22 | 0.80 | 0.99 |
| | Office maintenance | 0.02 | 0.04 | 0.19 | 0.34 |
| | Computer maintenance | – | – | 0.02 | – |
| | Software Packages for own use | – | – | – | 0.04 |
| | Sales Promotion expenses | 1.00 | 0.13 | 0.53 | 1.36 |
| | Staff welfare | 0.52 | 0.34 | 1.81 | 4.11 |
| | Consumables | 0.01 | 0.02 | 0.04 | 0.15 |
| | Advertisements | 0.07 | 1.00 | 0.01 | 1.73 |
| | Communication expenses | 0.34 | 1.00 | 1.07 | 1.50 |
| | Insurance charges | 0.01 | 0.01 | 0.02 | 0.03 |
| | Rates and taxes | – | – | 0.09 | 0.01 |
| 13 | General and Administrative expenses | | | | |
| | Provision for doubtful loans and advances | 0.04 | 0.25 | 0.28 | 0.74 |
| | Overseas group health insurance | 0.24 | 0.25 | 0.88 | 0.48 |
| | Visa charges and others | 0.21 | 1.00 | 0.82 | 2.72 |
| | Auditor’s remuneration : | | | | |
| | Statutory audit fees | 0.17 | 1.00 | 0.69 | 0.62 |
| | Certification charges | 0.01 | 0.01 | 0.05 | 0.05 |
| | Out-of-pocket expenses | 0.01 | 0.01 | 0.03 | 0.03 |
| | Freight charges | 0.18 | 0.40 | 1.01 | 1.07 |
| | Bank charges and commission | 1.00 | 0.53 | 1.75 | 1.71 |
| | Miscellaneous expenses | 0.05 | 2.00 | 0.15 | 4.00 |
| 23.2.1 | Aggregate expenses | | | | |
| | Provision for doubtful loans and advances | 0.04 | 0.25 | 0.28 | 0.74 |
| | Sales promotion expenses | 0.18 | 0.13 | 0.53 | 1.36 |
| | Auditor’s remuneration | | | | |
| | Statutory audit fees | 0.17 | 0.16 | 0.69 | 0.62 |
| | Certification Charges | 0.01 | 0.01 | 0.05 | 0.05 |
| | Out-of-pocket expenses | 0.01 | 0.01 | 0.03 | 0.03 |
| | Freight charges | 0.18 | 0.40 | 1.01 | 1.07 |
| | Bank charges and commission | 0.41 | 0.53 | 1.75 | 1.71 |
| 23.2.7 | Related party transactions | | | | |
| | Revenue transactions | | | | |
| | Purchase of services - Infosys BPO s.r.o. | 0.12 | 0.09 | 0.44 | 1.10 |
| | Purchase of services - Infosys BPO (Poland) | 0.03 | – | 0.03 | – |
| | Sale of services - Infosys China | 2.90 | 0.37 | 10.08 | 1.77 |
| | Sale of services - Infosys Mexico | – | – | – | 0.07 |
| | Sale of services - Infosys Consulting | 7.87 | – | 24.50 | 4.37 |
| 23.2.14 | Profit on disposal of fixed assets, included in miscellaneous income | – | 0.05 | – | 0.16 |
Cash Flow Statement Items
| in Rs. crore |
| Schedule | Description | Year ended March 31, |
| | | 2010 | 2009 |
| Cash flow statement | Profit / (loss) on sale of fixed assets | – | 0.16 |
| Proceeds on disposal of fixed assets | – | 0.21 |
| Provision for investments | – | 1.95 |
23.4 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, 2010 and March 31, 2009 :
| 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 |
| | 0.09 | 0.02 | 0.23 | 0.34 |
| | 0.30 | 0.07 | 0.54 | 0.91 |
| Chief Executive Officer and Managing Director | | | | |
| S. Gopalakrishnan | 0.08 | 0.02 | 0.28 | 0.38 |
| | 0.08 | 0.02 | 0.13 | 0.23 |
| | 0.32 | 0.08 | 0.61 | 1.01 |
| | 0.30 | 0.07 | 0.55 | 0.92 |
| Chief Operating Officer and Director | | | | |
| S. D. Shibulal | 0.07 | 0.02 | 0.27 | 0.36 |
| | 0.06 | 0.02 | 0.12 | 0.20 |
| | 0.31 | 0.08 | 0.56 | 0.95 |
| | 0.28 | 0.07 | 0.52 | 0.87 |
| Whole-time Directors | | | | |
| K. Dinesh | 0.08 | 0.02 | 0.28 | 0.38 |
| | 0.08 | 0.02 | 0.12 | 0.22 |
| | 0.32 | 0.08 | 0.61 | 1.01 |
| | 0.30 | 0.07 | 0.54 | 0.91 |
| T. V. Mohandas Pai | 0.09 | 0.02 | 0.79 | 0.90 |
| | 0.09 | 0.02 | 0.42 | 0.53 |
| | 0.36 | 0.08 | 2.69 | 3.13 |
| | 0.36 | 0.09 | 2.14 | 2.59 |
| Srinath Batni | 0.09 | 0.02 | 0.51 | 0.62 |
| | 0.09 | 0.03 | 0.25 | 0.37 |
| | 0.36 | 0.07 | 1.98 | 2.41 |
| | 0.35 | 0.09 | 1.43 | 1.87 |
| Chief Financial Officer | | | | |
| V. Balakrishnan | 0.08 | 0.02 | 0.07 | 0.17 |
| | 0.08 | 0.02 | 0.06 | 0.16 |
| | 0.30 | 0.08 | 2.06 | 2.44 |
| | 0.29 | 0.07 | 2.00 | 2.36 |
| Executive Council Members | | | | |
| Ashok Vemuri | 0.51 | – | 0.01 | 0.52 |
| | 0.55 | – | 0.01 | 0.56 |
| | 2.09 | – | 2.79 | 4.88 |
| | 1.99 | – | 2.05 | 4.04 |
| Chandra Shekar Kakal | 0.07 | 0.02 | 0.06 | 0.15 |
| | 0.07 | 0.02 | 0.05 | 0.14 |
| | 0.28 | 0.06 | 1.73 | 2.07 |
| | 0.26 | 0.06 | 1.26 | 1.58 |
| B.G. Srinivas | 0.43 | – | 0.82 | 1.25 |
| | 0.42 | – | 0.06 | 0.48 |
| | 1.81 | – | 2.75 | 4.56 |
| | 1.82 | – | 2.85 | 4.67 |
| Subhash B. Dhar | 0.06 | 0.02 | 0.06 | 0.14 |
| | 0.06 | 0.02 | 0.05 | 0.13 |
| | 0.24 | 0.07 | 1.42 | 1.73 |
| | 0.23 | 0.06 | 0.98 | 1.27 |
*Effective July 9, 2009, Mr. Nandan M Nilekani has relinquished the positions of Co-Chairman, Member of the Board and employee of Infosys.
Particulars of remuneration and other benefits of non-executive/ independent directors for the quarter and year ended March 31, 2010 and March 31, 2009 :
| |
| Name | Commission | Sitting fees | Reimbursement of expenses | Total remuneration |
| Non-Whole time Directors | | | | |
| Deepak M Satwalekar | 0.12 | – | – | 0.12 |
| | 0.17 | – | 0.02 | 0.19 |
| | 0.60 | – | – | 0.60 |
| | 0.68 | – | 0.02 | 0.70 |
| Prof.Marti G. Subrahmanyam | 0.16 | – | 0.03 | 0.19 |
| | 0.19 | – | 0.01 | 0.20 |
| | 0.65 | – | 0.20 | 0.85 |
| | 0.71 | – | 0.25 | 0.96 |
| Dr.Omkar Goswami | 0.12 | – | 0.01 | 0.13 |
| | 0.16 | – | 0.01 | 0.17 |
| | 0.52 | – | 0.03 | 0.55 |
| | 0.58 | – | 0.03 | 0.61 |
| Claude Smadja | 0.13 | – | 0.05 | 0.18 |
| | 0.18 | – | 0.06 | 0.24 |
| | 0.59 | – | 0.25 | 0.84 |
| | 0.67 | – | 0.26 | 0.93 |
| Rama Bijapurkar | 0.11 | – | – | 0.11 |
| | 0.16 | – | – | 0.16 |
| | 0.49 | – | 0.02 | 0.51 |
| | 0.56 | – | 0.01 | 0.57 |
| Sridar A. Iyengar | 0.14 | – | 0.06 | 0.20 |
| | 0.19 | – | 0.06 | 0.25 |
| | 0.62 | – | 0.21 | 0.83 |
| | 0.70 | – | 0.20 | 0.90 |
| David L. Boyles | 0.13 | – | 0.04 | 0.17 |
| | 0.20 | – | 0.03 | 0.23 |
| | 0.59 | – | 0.15 | 0.74 |
| | 0.69 | – | 0.21 | 0.90 |
| Prof. Jeffrey S. Lehman | 0.15 | – | 0.06 | 0.21 |
| | 0.14 | – | 0.05 | 0.19 |
| | 0.61 | – | 0.24 | 0.85 |
| | 0.63 | – | 0.22 | 0.85 |
| K.V.Kamath** | 0.05 | – | 0.01 | 0.06 |
| | – | – | – | – |
| | 0.39 | – | 0.02 | 0.41 |
| | – | – | – | – |
| N. R. Narayana Murthy * | 0.13 | – | – | 0.13 |
| | 0.17 | – | – | 0.17 |
| | 0.57 | – | – | 0.57 |
| | 0.63 | – | – | 0.63 |
* Non-executive chairman of the board and chief mentor.
** Joined the board effective May 02, 2009
