Exhibit 99.10
Indian GAAP Standalone
Independent Auditor’s Report
To the Board of Directors of Infosys Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Infosys Limited (“the Company”), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss for the quarter and year then ended and the cash flow statement of the Company for the year then ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Companies Act, 2013 (‘the Act’), read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of internal control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control systems over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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 2015; |
(ii) | in the case of the statement of profit and loss, of the profit for the quarter and year ended on that date; and |
(iii) | in the case of the cash flow statement, of the cash flows for the year ended on that date. |
forB S R & Co. LLP
Chartered Accountants
Firm’s Registration Number: 101248W/W-100022
Akhil Bansal
Partner
Membership Number: 090906
Chennai
24 April 2015
INFOSYS LIMITED
In crore
Balance Sheet as at | Note | March 31, 2015 | March 31, 2014 |
EQUITY AND LIABILITIES | |||
SHAREHOLDERS' FUNDS | |||
Share capital | 2.1 | 574 | 286 |
Reserves and surplus | 2.2 | 47,494 | 41,806 |
48,068 | 42,092 | ||
NON-CURRENT LIABILITIES | |||
Deferred tax liabilities (net) | 2.3 | – | – |
Other long-term liabilities | 2.4 | 30 | 364 |
30 | 364 | ||
CURRENT LIABILITIES | |||
Trade payables | 2.5 | 124 | 68 |
Other current liabilities | 2.6 | 5,546 | 4,071 |
Short-term provisions | 2.7 | 8,045 | 6,117 |
13,715 | 10,256 | ||
61,813 | 52,712 | ||
ASSETS | |||
NON-CURRENT ASSETS | |||
Fixed assets | |||
Tangible assets | 2.8 | 7,347 | 5,719 |
Intangible assets | 2.8 | – | 13 |
Capital work-in-progress | 769 | 954 | |
8,116 | 6,686 | ||
Non-current investments | 2.10 | 6,108 | 3,968 |
Deferred tax assets (net) | 2.3 | 433 | 542 |
Long-term loans and advances | 2.11 | 4,378 | 2,227 |
Other non-current assets | 2.12 | 26 | 52 |
19,061 | 13,475 | ||
CURRENT ASSETS | |||
Current investments | 2.10 | 749 | 2,749 |
Trade receivables | 2.13 | 8,627 | 7,336 |
Cash and cash equivalents | 2.14 | 27,722 | 24,100 |
Short-term loans and advances | 2.15 | 5,654 | 5,052 |
42,752 | 39,237 | ||
61,813 | 52,712 | ||
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the standalone interim financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal Partner Membership No. 090906 | K. V. Kamath Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | R. Seshasayee Director |
Chennai April 24, 2015 | Rajiv Bansal Chief Financial Officer |
INFOSYS LIMITED
In crore, except share and per equity share data
Statement of Profit and Loss for the | Note | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | ||
Income from software services and products | 2.16 | 11,926 | 11,366 | 47,300 | 44,341 |
Other income | 2.17 | 891 | 802 | 3,337 | 2,576 |
Total revenue | 12,817 | 12,168 | 50,637 | 46,917 | |
Expenses | |||||
Employee benefit expenses | 2.18 | 6,183 | 6,053 | 25,115 | 24,350 |
Deferred consideration pertaining to acquisition | 2.10.1 | 51 | 59 | 219 | 228 |
Cost of technical sub-contractors | 2.18 | 836 | 640 | 2,909 | 2,596 |
Travel expenses | 2.18 | 325 | 285 | 1,360 | 1,287 |
Cost of software packages and others | 2.18 | 223 | 305 | 979 | 920 |
Communication expenses | 2.18 | 90 | 85 | 384 | 329 |
Professional charges | 148 | 136 | 396 | 474 | |
Depreciation and amortisation expense | 2.8 | 241 | 309 | 913 | 1,101 |
Other expenses | 2.18 | 550 | 409 | 1,976 | 1,630 |
Total expenses | 8,647 | 8,281 | 34,251 | 32,915 | |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 4,170 | 3,887 | 16,386 | 14,002 | |
Profit on transfer of business | 2.10.2 | – | – | 412 | – |
PROFIT BEFORE TAX | 4,170 | 3,887 | 16,798 | 14,002 | |
Tax expense: | |||||
Current tax | 2.19 | 1,046 | 1,080 | 4,537 | 4,063 |
Deferred tax | 2.19 | 100 | (76) | 97 | (255) |
PROFIT FOR THE PERIOD | 3,024 | 2,883 | 12,164 | 10,194 | |
EARNINGS PER EQUITY SHARE | |||||
Equity shares of par value![]() | |||||
Before Exceptional item | |||||
Basic | 26.33 | 25.22 | 102.33 | 89.20 | |
Diluted | 26.33 | 25.22 | 102.33 | 89.20 | |
After Exceptional item | |||||
Basic | 26.33 | 25.22 | 105.91 | 89.20 | |
Diluted | 26.33 | 25.22 | 105.91 | 89.20 | |
Number of shares used in computing earnings per share | 2.33 | ||||
Basic | 114,84,72,332 | 114,28,05,132 | 114,84,72,332 | 114,28,05,132 | |
Diluted | 114,84,99,300 | 114,28,05,132 | 114,84,87,674 | 114,28,05,132 | |
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the standalone interim financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
INFOSYS LIMITED
In crore
Cash Flow Statement for the | Year ended March 31, | |
2015 | 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Profit before tax | 16,798 | 14,002 |
Adjustments to reconcile profit before tax to cash generated by operating activities | ||
Depreciation and amortisation expense | 913 | 1,101 |
Provision for bad and doubtful debts | 142 | 124 |
Deferred purchase price | 219 | 228 |
Interest and dividend income | (2,738) | (2,272) |
Profit on transfer of business(Refer note 2.10.2) | (412) | – |
Stock compensation expense | 2 | – |
Other adjustments | 52 | 35 |
Effect of exchange differences on translation of assets and liabilities | 52 | (8) |
Changes in assets and liabilities | ||
Trade receivables | (1,433) | (1,095) |
Loans and advances and other assets | (326) | (844) |
Liabilities and provisions | 1,175 | 1,506 |
14,444 | 12,777 | |
Income taxes paid( Refer Note 2.20) | (6,489) | (3,629) |
NET CASH GENERATED BY OPERATING ACTIVITIES | 7,955 | 9,148 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payment towards capital expenditure | (1,988) | (2,490) |
Proceeds on sale of fixed assets | 2 | 2 |
Investment in subsidiaries | (1,748) | (2) |
Investment in liquid mutual fund units | (23,184) | (21,262) |
Disposal of liquid mutual fund units | 24,296 | 20,986 |
Investment in fixed maturity plans | – | (100) |
Redemption of fixed maturity plans | 110 | – |
Investment in certificates of deposit | – | (1,233) |
Redemption of certificates of deposit | 783 | 450 |
Redemption in tax free bonds | – | (927) |
Interest and dividend received | 2,394 | 2,269 |
NET CASH USED IN INVESTING ACTIVITIES | 665 | (2,307) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Loan given to subsidiary | (73) | (33) |
Loan repaid by subsidiary | 47 | – |
Dividends paid (including corporate dividend tax) | (4,935) | (3,144) |
NET CASH USED IN FINANCING ACTIVITIES | (4,961) | (3,177) |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | (37) | 34 |
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 3,622 | 3,698 |
Add: Bank balances taken over from Infosys Consulting India Limited(Refer Note 2.27) | – | 1 |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 24,100 | 20,401 |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 27,722 | 24,100 |
SIGNIFICANT ACCOUNTING POLICIES |
The accompanying notes form an integral part of the standalone interim financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
Significant accounting policies
Company overview
Infosys is a global leader in consulting, technology, outsourcing and next-generation services. Along with its subsidiaries, Infosys provides Business IT services (comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management); Consulting and systems integration services (comprising consulting, enterprise solutions, systems integration and advanced technologies); Products, business platforms and solutions to accelerate intellectual property-led innovation including Finacle, our banking solution; and offerings in the areas of Analytics, Cloud, and Digital Transformation.
The company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The company has its primary listings on the BSE Limited and National Stock Exchange in India. The company’s American Depositary Shares representing equity shares are also listed on the New York Stock Exchange (NYSE), NYSE Euronext London and NYSE Euronext Paris.
1 Significant accounting policies
1.1 Basis of preparation of financial statements
These 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 under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.2 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 or costs expended to date as a proportion of the total efforts or costs 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 tangible 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.
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 method. 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 billings 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 method. 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 indirect taxes in its statement of profit and loss.
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.
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.
1.5 Post-sales client support and warranties
The Company provides its clients with a fixed-period warranty for corrections of errors and 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 statement of profit and loss. The Company estimates such costs based on historical experience and the estimates are reviewed annually for any material changes in assumptions.
1.6 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.
1.7 Tangible assets and capital work-in-progress
Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until such assets are ready for use. Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date.
1.8 Intangible assets
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
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.
1.9 Depreciation and amortization
Depreciation on tangible 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. 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(1) | 22-25 years |
Plant and machinery (1) | 5 years |
Office equipment | 5 years |
Computer equipment(1) | 3-5 years |
Furniture and fixtures(1) | 5 years |
Vehicles(1) | 5 years |
(1) | For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. |
Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end.(Refer note 2.8)
1.10 Impairment
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.
1.11 Retirement benefits to employees
a Gratuity
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, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by law of India. 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 statement of profit and loss in the period in which they arise.
b Superannuation
Certain employees are also participants in the superannuation plan ('the Plan') which is a defined contribution plan. The Company has no obligations to the Plan beyond its monthly contributions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
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 Limited Employees’ Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.
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 using projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
1.12 Share-based payments
The company accounts for equity settled stock options as per the accounting treatment prescribed by Securities and Exchange Board of India ( share based employee benefits) Regulations, 2014 and the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India using the intrinsic value method.
1.13 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 Statement of profit and loss. 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.
1.14 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 statement of profit and loss. 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 statement of profit and loss 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 and subsequently 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 statement of profit and loss. 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 statement of profit and loss at each reporting date.
1.15 Income taxes
Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax, 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. Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to statement of profit and loss are credited to the securities premium reserve.
1.16 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 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.
1.17 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. 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.
1.18 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.
1.19 Cash flow statement
Cash flows are reported using the indirect method, whereby 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.
1.20 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 statement of profit and loss over the lease term.
2 NOTES TO ACCOUNTS FOR THE QUARTER AND YEAR ENDED MARCH 31, 2015
Amounts in the financial statements are presented in crore, except for per share data and as otherwise stated. All exact amounts are stated with the suffix “/-”. One crore equals 10 million.
The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current period presentation.
2.1 SHARE CAPITAL
in crore, except as otherwise stated
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Authorized | ||
Equity shares,![]() | ||
120,00,00,000 (60,00,00,000) equity shares | 600 | 300 |
Issued, Subscribed and Paid-Up | ||
Equity shares,![]() | 574 | 286 |
114,84,72,332 (57,14,02,566) equity shares fully paid-up(2) | ||
574 | 286 |
Forfeited shares amounted to1,500/- (
1,500/-)
(1) | Refer note 2.33 for details of basic and diluted shares |
(2) | Net of treasury shares of 28,33,600 for the year ended March 31, 2014. |
Effective January 1, 2015, Infosys Limited Employees' Welfare trust (trust) has been deconsolidated consequent to SEBI (Share Based Employee Benefits) Regulations, 2014 issued on October 28, 2014.
The Company has only one class of shares referred to as equity shares having a par value of5/-. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the period of five years immediately preceding March 31, 2015:
The Company has allotted 57,42,36,166 fully paid up equity shares of face value5/- each during the quarter ended December 31, 2014 pursuant to a bonus issue approved by the shareholders through a postal ballot. The record date fixed by the Board of Directors was December 3, 2014. Bonus share of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, has been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted under the stock option plan have been adjusted for bonus shares.
During the year ended March 31, 2014, the amount of dividend per share recognized as distribution to equity shareholders was63/- (not adjusted for bonus issue). The dividend for the year ended March 31, 2014 includes
43/- per share of final dividend (not adjusted for bonus issue). The total dividend appropriation for the year ended March 31, 2014 amounted to
4,233 crore, including corporate dividend tax of
615 crore.
The Board of Directors, in their meeting on October 10, 2014, declared an interim dividend of30/- per equity share (not adjusted for bonus issue). Further the Board of Directors, in their meeting on April 24, 2015, have proposed a final dividend of
29.50/- per equity share (equivalent to
14.75 per share after 1:1 bonus issue, if approved by shareholders). The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on June 22, 2015. The total dividend appropriation for the year ended March 31, 2015 would amount to approximately
6,145 crore including corporate dividend tax of
1,034 crore.
The Board has decided to revise and increase dividend pay-out ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
The Board in its meeting held on April 24, 2015 has considered and approved and recommended a bonus issue of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, as on a record date to be determined. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder would remain unchanged. The bonus issue of equity shares and ADSs will be subject to approval by the shareholders, and any other applicable statutory and regulatory approvals. Accordingly, the record date for the bonus issues of equity shares and ADSs will be June 17, 2015, subject to shareholders’ approval. This date is proposed by the company and will be re-confirmed after shareholder approval.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held by the shareholders, after distribution of all preferential amounts.
The details of shareholder holding more than 5% shares as at March 31, 2015 and March 31, 2014 are set out below :
Name of the shareholder | As at March 31, 2015 | As at March 31, 2014 | ||
No. of shares | % held | No. of shares | % held | |
Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) | 18,60,73,981 | 16.20 | 9,24,70,660 | 16.10 |
The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2015 and March 31, 2014 is set out below:
Particulars | As at March 31, 2015 | As at March 31, 2014 | ||
Number of shares | Amount | Number of shares | Amount | |
Number of shares at the beginning of the period | 57,14,02,566 | 286 | 57,42,36,166 | 287 |
Add: Bonus shares issued (Including bonus on treasury shares) | 57,42,36,166 | 287 | – | – |
Add: Treasury shares on account of deconsolidation of trust | 2,833,600 | 1 | – | – |
Less: Treasury shares | – | – | 2,833,600 | 1 |
Number of shares at the end of the period | 114,84,72,332 | 574 | 57,14,02,566 | 286 |
Stock Option Plan:
2011 RSU Plan (the 2011 Plan): The Company has a 2011 RSU Plan which provides for the grant of restricted stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended establishment of the 2011 Plan to the shareholders on August 30, 2011 and the shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the Plan is 56,67,200 shares (currently held by the Infosys Limited Employees' Welfare Trust and adjusted for bonus shares issued) and the plan shall continue in effect for a term of 10 years from the date of initial grant under the plan. The RSUs will be issued at par value of the equity share. The 2011 Plan is administered by the Management Development and Compensation Committee (the Committee) and through the Infosys Limited Employees' Welfare Trust (the trust). The Committee is comprised of independent members of the Board of Directors.
During the year ended March 31, 2015 the company made a grant of 27,067 restricted stock units to Dr. Vishal Sikka, Chief Executive Officer and Managing Director. The RSUs will vest over a period of four years from the date of the grant in the proportions specified in the award agreement and expire seven days from the date of vesting. The RSUs will vest subject to achievement of certain key performance indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the excess of the closing market price on the grant date of the RSUs over the exercise price is amortised on a straight-line basis over the vesting period.
The activity in the 2011 Plan during the quarter and year ended March 31, 2015 is set out below:
Particulars | Quarter ended March 31, 2015 | Year ended March 31, 2015 | ||
Shares arising out of options | Weighted average exercise price | Shares arising out of options | Weighted average exercise price | |
2011 Plan: | ||||
Outstanding at the beginning | 54,134 | 5 | – | – |
Granted* | – | – | 54,134 | 5 |
Forfeited and expired | – | – | – | – |
Exercised | – | – | – | – |
Outstanding at the end | 54,134 | 5 | 54,134 | 5 |
Exercisable at the end | – | – | – | – |
* | adjusted for bonus issue |
The weighted average remaining contractual life of RSUs outstanding as of March 31, 2015 under the 2011 Plan was 2.39 years.
The differential on stock compensation expense if the ‘fair value’ of the RSU's on the date of the grant were considered instead of the ‘intrinsic value’ during the year ended March 31, 2015 is less than1 crore. Consequently, there is no impact on earnings per share.
The fair value for the above impact analysis is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
Particulars | Year ended March 31, 2015 |
Weighted average share price (![]() | 3,549 |
Exercise price (![]() | 5 |
Expected volatility (%) | 30 - 37 |
Expected life of the option (years) | 1 - 4 |
Expected dividends (%) | 1.84 |
Risk-free interest rate (%) | 8 - 9 |
The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the RSU. Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares during a period equivalent to the expected term of the RSU.
The weighted average fair value of RSUs on grant date was3,355/-
During the quarter and year ended March 31, 2015, the company recorded an employee compensation expense of1 crore and
2 crore in the statement of profit and loss.
2.2 RESERVES AND SURPLUS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Capital reserve - Opening balance | 54 | 54 |
Add: Transferred from Surplus | – | – |
54 | 54 | |
Securities premium reserve - Opening balance | 3,069 | 3,065 |
Add: Reserves on consolidation of trust | – | 4 |
Less: Deconsolidation of trust(Refer note 2.1) | 4 | – |
Less: Amount utilized for issuance of bonus shares(Refer note 2.1) | 287 | – |
2,778 | 3,069 | |
Stock Options Outstanding- Opening balance(Refer note 2.1) | – | – |
Additions during the period | 2 | – |
2 | – | |
General reserve - Opening balance | 8,291 | 7,270 |
Add: Transferred from Surplus | 1,217 | 1,021 |
9,508 | 8,291 | |
Surplus - Opening balance | 30,392 | 25,383 |
Add: Net profit after tax transferred from Statement of Profit and Loss | 12,164 | 10,194 |
Reserves on consolidation of trust | – | 50 |
Dividend eliminated on consolidation of trust | – | 13 |
Reserves on transfer of assets and liabilities of Infosys Consulting India Limited(refer note 2.27) | – | 6 |
Less: Deconsolidation of trust, net(Refer note 2.1) | 42 | – |
Amount available for appropriation | 42,514 | 35,646 |
Appropriations: | ||
Interim dividend | 1,723 | 1,149 |
Final dividend | 3,388 | 2,469 |
Total dividend | 5,111 | 3,618 |
Dividend tax | 1,034 | 615 |
Amount transferred to general reserve | 1,217 | 1,021 |
Surplus- Closing Balance | 35,152 | 30,392 |
47,494 | 41,806 |
2.3 DEFERRED TAXES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Deferred tax assets | ||
Fixed assets | 210 | 356 |
Trade receivables | 100 | 44 |
Unavailed leave | 280 | 249 |
Computer software | 51 | 50 |
Accrued compensation to employees | 29 | 31 |
Post sales client support | 72 | 98 |
Others | 7 | 17 |
749 | 845 | |
Deferred tax liabilities | ||
Branch profit tax | 316 | 303 |
316 | 303 | |
Deferred tax assets after set-off | 433 | 542 |
Deferred tax liabilities after set-off | – | – |
Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
As at March 31, 2015 and March 31, 2014, the Company has provided for branch profit tax of316 crore and
303 crore, respectively, for its overseas branches, as the Company estimates that these branch profits would be distributed in the foreseeable future. The change in provision for branch profit tax includes
13 crore movement on account of exchange rate during the year ended March 31, 2015.
2.4 OTHER LONG-TERM LIABILITIES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Others | ||
Gratuity obligation - unamortised amount relating to plan amendment(refer note 2.30) | 3 | 7 |
Payable for acquisition of business(refer note 2.10.1) | – | 330 |
Rental deposits received from subsidiary(refer note 2.26) | 27 | 27 |
30 | 364 |
2.5 TRADE PAYABLES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Trade payables | 124 | 68 |
124 | 68 | |
Includes dues to subsidiaries (refer note 2.26) | 102 | 30 |
2.6 OTHER CURRENT LIABILITIES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Accrued salaries and benefits | ||
Salaries and benefits | 1,144 | 503 |
Bonus and incentives | 575 | 669 |
Other liabilities | ||
Provision for expenses(1) | 1,582 | 1,296 |
Retention monies | 50 | 72 |
Withholding and other taxes payable | 733 | 834 |
Gratuity obligation - unamortised amount relating to plan amendment, current(refer note 2.30) | 4 | 4 |
Other payables(2) | 79 | 63 |
Advances received from clients | 20 | 21 |
Unearned revenue | 831 | 606 |
Unpaid dividends | 3 | 3 |
Payable for acquisition of business(refer note 2.10.1) | 525 | – |
5,546 | 4,071 | |
(1) Includes dues to subsidiaries (refer note 2.26) | 36 | 8 |
(2) Includes dues to subsidiaries (refer note 2.26) | 33 | 3 |
2.7 SHORT-TERM PROVISIONS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Provision for employee benefits | ||
Unavailed leave | 907 | 798 |
Others | ||
Proposed dividend | 3,388 | 2,469 |
Provision for | ||
Tax on dividend | 690 | 420 |
Income taxes (net of advance tax and TDS) | 2,678 | 2,105 |
Post-sales client support and warranties and other provisions | 382 | 325 |
Provision towards visa related matters(Refer note 2.37) | – | – |
8,045 | 6,117 |
Provision for post-sales client support and warranties and other provisions
The movement in the provision for post-sales client support and warranties and other provisions is as follows :in crore
Particulars | Quarter ended | Year ended | ||
March 31, 2015 | March 31, 2014 | March 31, 2015 | March 31, 2014 | |
Balance at the beginning | 374 | 260 | 325 | 199 |
Provision recognized/(reversed) | 44 | 78 | 134 | 124 |
Provision utilised | (32) | – | (78) | – |
Exchange difference during the period | (4) | (13) | 1 | 2 |
Balance at the end | 382 | 325 | 382 | 325 |
Provision for post-sales client support and other provisions are expected to be utilized over a period of 6 months to 1 year.
Provision towards visa related matters amounting to219 crore (including legal costs) was created and paid during the year ended March 31, 2014.
2.8 FIXED ASSETS
Following are the changes in the carrying value of fixed assets for the year ended March 31, 2015:
in crore, except as otherwise stated
Tangible assets | Intangible assets | Total | ||||||||||
Particulars | Land-Freehold | Land- Leasehold | Buildings(1)(2) | Plant and equipment(2) | Office equipment(2) | Computer equipment(2) (3) | Furniture and fixtures(2) | Vehicles | Total | Intellectual property rights | Total | |
Original cost | ||||||||||||
As at April 1, 2014 | 781 | 349 | 4,878 | 1,090 | 393 | 2,178 | 679 | 13 | 10,361 | 59 | 59 | 10,420 |
Additions/ Adjustments during the year | 148 | 272 | 855 | 274 | 134 | 694 | 160 | 3 | 2,540 | – | – | 2,540 |
Deductions/ Retirement during the year | – | – | – | (3) | (2) | (60) | (7) | (2) | (74) | (17) | (17) | (91) |
As at March 31, 2015 | 929 | 621 | 5,733 | 1,361 | 525 | 2,812 | 832 | 14 | 12,827 | 42 | 42 | 12,869 |
Depreciation and amortization | ||||||||||||
As at April 1, 2014 | – | – | 1,754 | 671 | 215 | 1,554 | 441 | 7 | 4,642 | 46 | 46 | 4,688 |
For the period | – | 16 | 183 | 169 | 67 | 350 | 113 | 2 | 900 | 13 | 13 | 913 |
Deductions/ Adjustments during the year | – | – | – | (2) | (2) | (52) | (5) | (1) | (62) | (17) | (17) | (79) |
As at March 31, 2015 | – | 16 | 1,937 | 838 | 280 | 1,852 | 549 | 8 | 5,480 | 42 | 42 | 5,522 |
Net book value | ||||||||||||
As at March 31, 2015 | 929 | 605 | 3,796 | 523 | 245 | 960 | 283 | 6 | 7,347 | – | – | 7,347 |
Notes: | (1) | Buildings include![]() ![]() |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries | |
(3) | During the year ended March 31, 2015, computer equipment having net book value of![]() |
Following are the changes in the carrying value of fixed assets for the year ended March 31, 2014:
in crore, except as otherwise stated
Tangible assets | Intangible assets | Total | ||||||||||
Particulars | Land-Freehold | Land- Leasehold | Buildings(1)(2) | Plant and equipment(2) | Office equipment(2) | Computer equipment(3) | Furniture and fixtures(2) | Vehicles | Total | Intellectual property rights | Total | |
Original cost | ||||||||||||
As at April 1, 2013 | 492 | 348 | 4,053 | 779 | 276 | 1,525 | 518 | 10 | 8,001 | 59 | 59 | 8,060 |
Additions/ Adjustments during the year | 290 | 1 | 825 | 312 | 117 | 672 | 161 | 3 | 2,381 | – | – | 2,381 |
Deductions/ Retirement during the year | (1) | – | – | (1) | – | (19) | – | – | (21) | – | – | (21) |
As at March 31, 2014 | 781 | 349 | 4,878 | 1,090 | 393 | 2,178 | 679 | 13 | 10,361 | 59 | 59 | 10,420 |
Depreciation and amortization | ||||||||||||
As at April 1, 2013 | – | – | 1,467 | 547 | 159 | 1,053 | 345 | 5 | 3,576 | 31 | 31 | 3,607 |
For the period | – | – | 287 | 125 | 56 | 520 | 96 | 2 | 1,086 | 15 | 15 | 1,101 |
Deductions/ Adjustments during the year | – | – | – | (1) | – | (19) | – | – | (20) | – | – | (20) |
As at March 31, 2014 | – | – | 1,754 | 671 | 215 | 1,554 | 441 | 7 | 4,642 | 46 | 46 | 4,688 |
Net book value | ||||||||||||
As at March 31, 2014 | 781 | 349 | 3,124 | 419 | 178 | 624 | 238 | 6 | 5,719 | 13 | 13 | 5,732 |
Notes: | (1) | Buildings include![]() ![]() |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries | |
(3) | The opening Balance as of April 1, 2013 includes computer equipment having gross book value of![]() |
During the quarter ended June 30, 2014, the management based on internal and external technical evaluation reassessed the remaining useful life of assets primarily consisting of buildings and computers with effect from April 1, 2014. Accordingly the useful lives of certain assets required a change from the previous estimates.
The existing and revised useful lives are as below:
Category of assets | Earlier useful life (Years) | Current useful life (Years) |
Building | 15 | 22-25 |
Plant and machinery | 5 | 5 |
Computer equipment | 2-5 | 3-5 |
Furniture and fixtures | 5 | 5 |
Vehicles | 5 | 5 |
Had the Company continued with the previously assessed useful lives, charge for depreciation for the quarter and year ended March 31, 2015 would have been higher by73 crore and
404 crore respectively, for assets held at April 1, 2014. The revision of the useful lives will result in the following changes in the depreciation expense as compared to the original useful life of the assets.
in crore
Particulars | Fiscal 2016 | After Fiscal 2016 |
Increase /(decrease) in depreciation expense | (145) | 549 |
The Company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of some of these agreements, the Company has the option to purchase or renew the properties on expiry of the lease period.
Tangible assets provided on operating lease to subsidiaries as at March 31, 2015 andMarch 31, 2014 are as follows:
in crore
Particulars | Cost | Accumulated depreciation | Net book value |
Buildings | 98 | 35 | 63 |
49 | 32 | 17 | |
Plant and equipment | 12 | 3 | 9 |
1 | – | 1 | |
Furniture and fixtures | 11 | 2 | 9 |
– | – | – | |
Office equipment | 6 | 1 | 5 |
– | – | – |
The aggregate depreciation charged on the above assets during the quarter and year ended March 31, 2015 amounted to5 crore and
9 crore respectively (
1 crore and
3 crore for the quarter and year ended March 31, 2014, respectively).
The rental income from subsidiaries for the quarter and year ended March 31, 2015 amounted to11 crore and
40 crore respectively (
4 crore and
17 crore for the quarter and year ended March 31, 2014, respectively).
2.9 LEASES
Obligations on long-term, non-cancellable operating leases
The lease rentals charged during the period and the obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows:
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Lease rentals recognized during the period | 35 | 43 | 158 | 177 |
in crore
Lease obligations payable | As at, | |
March 31, 2015 | March 31, 2014 | |
Within one year of the balance sheet date | 101 | 125 |
Due in a period between one year and five years | 284 | 314 |
Due after five years | 158 | 218 |
The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of inception and relates to rented premises. Some of these lease agreements have price escalation clauses.
2.10 INVESTMENTS
in crore, except as otherwise stated
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Non-current investments | ||
Long term investments - at cost | ||
Trade (unquoted) | ||
Investments in equity instruments of subsidiaries | ||
Infosys BPO Limited | ||
3,38,22,319 (3,38,22,319) equity shares of![]() | 659 | 659 |
Infosys Technologies (China) Co. Limited | 169 | 107 |
Infosys Technologies (Australia) Pty Limited | ||
1,01,08,869 (1,01,08,869) equity shares of AUD 0.11 par value, fully paid | 66 | 66 |
Infosys Technologies, S. de R.L. de C.V., Mexico | ||
17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up | 65 | 65 |
Infosys Technologies (Sweden) AB | ||
1,000 (1,000) equity shares of SEK 100 par value, fully paid | – | – |
Infosys Technologia do Brasil Ltda | ||
5,91,24,348 (3,99,99,999) shares of BRL 1.00 par value, fully paid | 149 | 109 |
Infosys Technologies (Shanghai) Company Limited | 388 | 234 |
Infosys Consulting India Limited | ||
Nil (Nil) equity shares of![]() | – | – |
Infosys Public Services, Inc. | ||
3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid | 99 | 99 |
Lodestone Holding AG(refer note 2.10.1) | ||
23,350 (23,350) - Class A shares of CHF 1,000 each and 29,400 (29,400) - Class B Shares of CHF 100 each, fully paid up | 1,323 | 1,323 |
Infosys Americas Inc. | ||
10,000 (10,000) shares of USD 10 per share, fully paid up | 1 | 1 |
Edgeverve Systems Limited(refer note 2.10.2) | ||
46,18,39,994 (9,99,994) equity shares of![]() | 462 | 1 |
Panaya Inc.(refer note 2.10.3) | ||
2 (Nil) shares of USD 0.01 per share, fully paid up | 1,398 | – |
Infosys Nova Holdings LLC(refer note 2.10.4) | 94 | – |
4,873 | 2,664 | |
Others (unquoted)(refer note 2.10.5) | ||
Investments in equity instruments | 7 | 6 |
Less: Provision for investments | 6 | 2 |
1 | 4 | |
Others (quoted) | ||
Investments in tax free bonds(refer note 2.10.6) | 1,234 | 1,300 |
Investments in government bonds(refer note 2.10.6) | – | – |
1,234 | 1,300 | |
Total non-current investments | 6,108 | 3,968 |
Current portion of Long term investments | ||
Quoted | ||
Fixed Maturity Plans(refer note 2.10.7) | – | 100 |
– | 100 | |
Current investments – at the lower of cost and fair value | ||
Other current investments | ||
Unquoted | ||
Liquid mutual fund units(refer note 2.10.8) | 749 | 1,866 |
Certificates of deposit(refer note 2.10.9) | – | 783 |
749 | 2,649 | |
Total current investments | 749 | 2,749 |
Total investments | 6,857 | 6,717 |
Aggregate amount of quoted investments excluding interest accrued but not due of![]() ![]() | 1,234 | 1,400 |
Market value of quoted investments | 1,269 | 1,344 |
Aggregate amount of unquoted investments | 5,629 | 5,319 |
Aggregate amount of provision made for non-current unquoted investments | 6 | 2 |
Profit on sale of Investment is10 crore each for quarter and year ended March 31, 2015 (Nil for each quarter and year ended March 31, 2014).
2.10.1 Investment in Lodestone Holding AG
On October 22, 2012, Infosys acquired 100% of the outstanding share capital of Lodestone Holding AG, a global management consultancy firm headquartered in Zurich, Switzerland. The acquisition was executed through a share purchase agreement for an upfront cash consideration of1,187 crore and a deferred consideration of upto
608 crore.
The deferred consideration is payable to the selling shareholders of Lodestone on the third anniversary of the acquisition date and is contingent upon their continued employment for a period of three years. The investment in Lodestone has been recorded at the acquisition cost and the deferred consideration is being recognised on a proportionate basis over a period of three years from the date of acquisition. An amount of51crore and
59 crore, representing the proportionate charge of the deferred consideration has been recognised as an expense during the quarter ended March 31, 2015 and March 31, 2014 respectively and
219 crore and
228 crore during year ended March 31, 2015 and March 31, 2014 respectively.
2.10.2 Investment in Edgeverve Systems Limited
On February 14, 2014, a wholly owned subsidiary Edgeverve Systems Limited (Edgeverve) was incorporated. Edgeverve was created to focus on developing and selling products and platforms. On April 15, 2014, the Board of Directors (the Board) of Infosys authorized the Company to execute a Business Transfer Agreement and related documents with Edgeverve, subject to securing the requisite approval from shareholders in the Annual General Meeting. Subsequently, at the AGM held on June 14, 2014, the shareholders have authorized the Board to enter into a Business Transfer Agreement and related documents with Edgeverve, with effect from July 1, 2014 or such other date as may be decided by the Board. The company has undertaken an enterprise valuation by an independent valuer and accordingly the business has been transferred for a consideration of $70 million ( approximately421 crore) with effect from July 1, 2014. Net assets amounting to
9 crore have also been transferred and accordingly a gain of
412 crore has been recorded as an exceptional item. The consideration has been settled through the issue of fully paid up shares in Edgeverve.
2.10.3 Investment in Panaya Inc
On March 5, 2015, Infosys acquired 100% of the voting interests in Panaya Inc. (Panaya), a Delaware Corporation in the United States. Panaya is a leading provider of automation technology for large scale enterprise and software management. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of approximately1,398 crore.
2.10.4 Investment in DWA Nova LLC
During the year ended March 31, 2015, Infosys Nova Holdings LLC acquired 20% of the equity interests in DWA Nova LLC for a cash consideration of94 crore. The company invested
94 crore to form a new company alongwith Dream Works Animation (DWA). The new company, DWA Nova LLC, will develop and commercialize image generation technology in order to provide end-to-end digital manufacturing capabilities for companies involved in the design, manufacturing, marketing or distribution of physical consumer products.
Proposed Investment
On April 24, 2015, the company entered into a definitive agreement to acquire Kallidus Inc. (d.b.a Skava) and its affiliate, a leading provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients for a consideration of $120 million (approximately750 crore) including a deferred component and retention bonus.
2.10.5 Details of Investments
The details of non-current other investments in equity instruments as at March 31, 2015 and March 31, 2014 are as follows:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
OnMobile Systems Inc., (formerly Onscan Inc.) USA | ||
21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid, par value USD 0.001 each | 4 | 4 |
Merasport Technologies Private Limited | ||
2,420 (2,420) equity shares at![]() ![]() | 2 | 2 |
Global Innovation and Technology Alliance | ||
10,000 (5,000) equity shares at![]() ![]() | 1 | – |
7 | 6 | |
Less: Provision for investment | 6 | 2 |
1 | 4 |
2.10.6 Details of Investments in tax free bonds
The balances held in tax free bonds as at March 31, 2015 and March 31, 2014 is as follows:in crore
Particulars | Face Value![]() | As at March 31, 2015 | As at March 31, 2014 | ||
Units | Amount | Units | Amount | ||
7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023 | 1,000/- | 20,00,000 | 201 | 20,00,000 | 201 |
7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028 | 1,000/- | 21,00,000 | 211 | 21,00,000 | 211 |
7.93% Rural Electrification Corporation Limited Bonds 27MAR2022 | 1,000/- | 2,00,000 | 21 | 2,00,000 | 21 |
8.26% India Infrastructure Finance Company Limited Bonds 23AUG28 | 10,00,000/- | 1,000 | 100 | 1,000 | 100 |
8.30% National Highways Authority of India Bonds 25JAN2027 | 1,000/- | 5,00,000 | 53 | 5,00,000 | 53 |
8.35% National Highways Authority of India Bonds 22NOV2023 | 10,00,000/- | 1,500 | 150 | 1,500 | 150 |
8.46% India Infrastructure Finance Company Limited Bonds 30AUG2028 | 10,00,000/- | 2,000 | 200 | 2,000 | 200 |
8.46% Power Finance Corporation Limited Bonds 30AUG2028 | 10,00,000/- | 1,500 | 150 | 1,500 | 150 |
8.48% India Infrastructure Finance Company Limited Bonds 05SEP2028 | 10,00,000/- | 450 | 45 | 450 | 45 |
8.54% Power Finance Corporation Limited Bonds 16NOV2028 | 1,000/- | 5,00,000 | 50 | 5,00,000 | 50 |
8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027 | 1,000/- | 5,00,000 | 53 | 5,00,000 | 53 |
8.20% Power Finance Corporation Limited Bonds 2022 | 1,000/- | – | – | 5,00,000 | 51 |
8.00% Indian Railway Finance Corporation Limited Bonds 2022 | 1,000/- | – | – | 1,50,000 | 15 |
58,06,450 | 1,234 | 64,56,450 | 1,300 |
The balances held in government bonds as at March 31, 2015 and March 31, 2014 is as follows:
in crore
Particulars | Face Value![]() | As at March 31, 2015 | As at March 31, 2014 | ||
Units | Amount | Units | Amount | ||
FIXED RATE TREASURY NOTES 7.00 PCT PIBD0716A488 MAT DATE 27 JAN 2016 | 140 | 10,000 | – | – | – |
10,000 | – | – | – |
2.10.7 Details of Investments in Fixed Maturity Plans
The balances held in Fixed Maturity Plans as at March 31, 2014 is as follows:
in crore
Particulars | As at March 31, 2014 | |
Units | Amount | |
UTI - Fixed Term Income Fund Series - XVII –XIII | 2,50,00,000 | 25 |
HDFC Fixed Maturity Plans - Series 29 | 2,50,00,000 | 25 |
DSP BlackRock FMP Series 146 12M - Dir - Growth | 2,50,00,000 | 25 |
DSP Black Rock FMP Series 151 12M - Dir - Growth | 2,50,00,000 | 25 |
10,00,00,000 | 100 |
2.10.8 Details of Investments in liquid mutual fund units
The balances held in liquid mutual fund units as at March 31, 2015 is as follows:
in crore
Particulars | Units | Amount |
IDFC Cash Fund - Direct Plan Daily Dividend | 29,30,197 | 293 |
Reliance Liquid Fund - Treasury Plan - Direct Plan Daily Dividend Option | 9,81,551 | 150 |
SBI Premier Liquid Fund - Direct Plan Daily Dividend | 9,97,094 | 100 |
ICICI Liquid Plan - Direct Plan Daily Dividend | 2,05,44,807 | 206 |
2,54,53,649 | 749 |
The balances held in liquid mutual fund units as at March 31, 2014 is as follows:
incrore
Particulars | Units | Amount |
SBI Premier Liquid Fund - Direct Plan - Daily Dividend Reinvestment | 14,96,454 | 150 |
IDFC Cash Fund - Direct Plan Daily Dividend | 23,95,149 | 240 |
Tata Liquid Fund Direct Plan - Daily Dividend | 24,61,026 | 274 |
HDFC Liquid Fund-Direct Plan- Daily Dividend Reinvestment | 33,44,09,159 | 341 |
Religare Invesco Liquid Fund-Direct Plan Daily Dividend | 12,704 | 1 |
Reliance Liquidity Fund-Direct Plan Daily Dividend Reinvestment Option | 35,45,234 | 355 |
L & T Liquid Fund Direct Plan - Daily Dividend Reinvestment | 14,82,628 | 150 |
UTI Liquid Cash Plan - Institutional - Direct Plan - Daily Dividend Reinvestment | 11,78,546 | 120 |
Birla Sun Life Floating Rate Fund-STP-DD-Direct Reinvestment | 2,34,93,259 | 235 |
37,04,74,159 | 1,866 |
2.10.9 Details of Investments in certificate of deposits
The balances held in certificates of deposit as at March 31, 2014 is as follows:
in crore
Particulars | Face value![]() | Units | Amount |
Oriental Bank of Commerce | 100,000/- | 48,500 | 454 |
IDBI Bank Limited | 100,000/- | 10,000 | 93 |
Corporation Bank | 100,000/- | 8,000 | 75 |
Union Bank of India | 100,000/- | 5,000 | 46 |
Indian Overseas Bank | 100,000/- | 5,000 | 46 |
HDFC Bank | 100,000/- | 5,000 | 46 |
Vijaya Bank | 100,000/- | 2,500 | 23 |
84,000 | 783 |
2.11 LONG-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Unsecured, considered good | ||
Capital advances | 316 | 687 |
Security deposits | 65 | 59 |
Rental deposits(1) | 45 | 48 |
Other loans and advances | ||
Advance income taxes (net of provisions) | 3,941 | 1,417 |
Prepaid expenses | 7 | 10 |
Loans and advances to employees | ||
Housing and other loans | 4 | 6 |
4,378 | 2,227 | |
Unsecured, considered doubtful | ||
Loans and advances to employees | 10 | 6 |
4,388 | 2,233 | |
Less: Provision for doubtful loans and advances to employees | 10 | 6 |
4,378 | 2,227 | |
(1) Includes deposits with subsidiaries (refer note 2.26) | 21 | 21 |
2.12 OTHER NON-CURRENT ASSETS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Others | ||
Restricted deposits(refer note 2.34) | – | 43 |
Advance to gratuity trust(refer note 2.30) | 26 | 9 |
26 | 52 |
2.13 TRADE RECEIVABLES(1)
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Debts outstanding for a period exceeding six months | ||
Unsecured | ||
Considered doubtful | 162 | 135 |
Less: Provision for doubtful debts | 162 | 135 |
– | – | |
Other debts | ||
Unsecured | ||
Considered good(2) | 8,627 | 7,336 |
Considered doubtful | 160 | 61 |
8,787 | 7,397 | |
Less: Provision for doubtful debts | 160 | 61 |
8,627 | 7,336 | |
8,627 | 7,336 | |
(1)Includes dues from companies where directors are interested | 6 | 117 |
(2) Includes dues from subsidiaries (refer note 2.26) | 309 | 129 |
2.14 CASH AND CASH EQUIVALENTS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Cash on hand | – | – |
Balances with banks | ||
In current and deposit accounts | 23,722 | 20,600 |
Others | ||
Deposits with financial institution | 4,000 | 3,500 |
27,722 | 24,100 | |
Balances with banks in unpaid dividend accounts | 3 | 3 |
Deposit accounts with more than 12 months maturity | 182 | 182 |
Balances with banks held as margin money deposits against guarantees | 185 | 200 |
Cash and cash equivalents as of March 31, 2015 and March 31, 2014 include restricted cash and bank balances of188crore and
203 crore, respectively. The restrictions are primarily on account of cash and bank balances held as margin money deposits against guarantees and unpaid dividends.
The deposits maintained by the Company with banks and financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.
The details of balances as on Balance Sheet dates with banks are as follows:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
In current accounts | ||
ANZ Bank, Taiwan | 4 | 1 |
Bank of America, USA | 498 | 632 |
Citibank NA, Australia | 10 | 75 |
Citibank NA, India | 6 | 2 |
Citibank, Dubai | 1 | – |
Citibank NA, EEFC (U.S. Dollar account) | 2 | – |
Citibank NA, Japan | 20 | 11 |
Citibank NA, New Zealand | 3 | 2 |
Citibank NA, South Africa | 2 | 1 |
Citibank NA, Thailand | – | 1 |
Deutsche Bank, Philippines | 2 | – |
Deutsche Bank, India | 4 | 7 |
Deutsche Bank-EEFC (Euro account) | 2 | 8 |
Deutsche Bank-EEFC (GBP account) | 5 | 11 |
Deutsche Bank-EEFC (AUD account) | – | 8 |
Deutsche Bank-EEFC (U.S. Dollar account) | 7 | 63 |
Deutsche Bank-EEFC (CHF account) | 4 | 1 |
Deutsche Bank, Belgium | 13 | 12 |
Deutsche Bank, France | 2 | 5 |
Deutsche Bank, Germany | 8 | 33 |
Deutsche Bank, Netherlands | 1 | 16 |
Deutsche Bank, Russia | – | 1 |
Deutsche Bank, Russia (U.S. Dollar account) | – | 13 |
Deutsche Bank, Singapore | 5 | 10 |
Deutsche Bank, Spain | 1 | 3 |
Deutsche Bank, Switzerland | – | 3 |
Deutsche Bank, Switzerland (U.S. Dollar account) | – | 2 |
Deutsche Bank, UK | 24 | 73 |
HSBC, Hong Kong | 44 | 2 |
ICICI Bank, India | 18 | 31 |
ICICI Bank-EEFC (U.S. Dollar account) | 9 | 8 |
Nordbanken, Sweden | 1 | 13 |
Punjab National Bank, India | 7 | 3 |
Royal Bank of Canada, Canada | 11 | 22 |
State Bank of India | 1 | 9 |
715 | 1,082 |
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
In deposit accounts | ||
Allahabad Bank | 200 | 931 |
Andhra Bank | 97 | 753 |
Axis Bank | 1,415 | 1,000 |
Bank of Baroda | 2,314 | 2,125 |
Bank of India | 2,691 | 2,461 |
Canara Bank | 2,841 | 2,046 |
Central Bank of India | 1,303 | 1,500 |
Corporation Bank | 1,197 | 1,054 |
Development Bank of Singapore | 35 | – |
HDFC Bank | 2,017 | – |
ICICI Bank | 3,059 | 2,976 |
IDBI Bank | 706 | 1,650 |
Indusind Bank | 75 | 25 |
ING Vysya Bank | 100 | 200 |
Indian Overseas Bank | 573 | 700 |
Jammu and Kashmir Bank | – | 25 |
Kotak Mahindra Bank | – | 25 |
Oriental Bank of Commerce | 1,500 | 86 |
Punjab National Bank | 512 | – |
Syndicate Bank | 327 | 783 |
Union Bank of India | 971 | – |
Vijaya Bank | 386 | 775 |
Yes Bank | 500 | 200 |
22,819 | 19,315 | |
In unpaid dividend accounts | ||
HDFC Bank - Unpaid dividend account | 1 | 1 |
ICICI bank - Unpaid dividend account | 2 | 2 |
3 | 3 | |
In margin money deposits against guarantees | ||
Canara Bank | 128 | 142 |
State Bank of India | 57 | 58 |
185 | 200 | |
Deposits with financial institution | ||
HDFC Limited | 4,000 | 3,500 |
4,000 | 3,500 | |
Total cash and cash equivalents as per Balance Sheet | 27,722 | 24,100 |
2.15 SHORT-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Unsecured, considered good | ||
Loans to subsidiaries(refer note 2.26) | 24 | 36 |
Others | ||
Advances | ||
Prepaid expenses | 71 | 98 |
For supply of goods and rendering of services | 60 | 72 |
Withholding and other taxes receivable | 1,253 | 987 |
Others(1) | 49 | 20 |
1,457 | 1,213 | |
Restricted deposits(refer note 2.34) | 1,039 | 934 |
Unbilled revenues(2) | 2,423 | 2,392 |
Interest accrued but not due | 433 | 92 |
Loans and advances to employees | ||
Housing and other loans | 53 | 64 |
Salary advances | 148 | 127 |
Security deposits | 1 | 8 |
Mark-to-market forward and options contracts | 94 | 217 |
Rental deposits | 6 | 5 |
5,654 | 5,052 | |
(1) Includes dues from subsidiaries (refer note 2.26) | 43 | 13 |
(2) Includes dues from subsidiaries (refer note 2.26) | 6 | – |
2.16 INCOME FROM SOFTWARE SERVICES AND PRODUCTS
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Income from software services | 11,472 | 10,929 | 45,658 | 42,531 |
Income from software products | 454 | 437 | 1,642 | 1,810 |
11,926 | 11,366 | 47,300 | 44,341 |
2.17 OTHER INCOME
incrore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Interest received on deposits with banks and others | 680 | 581 | 2,592 | 2,135 |
Dividend received on investment in mutual fund units | 25 | 29 | 146 | 137 |
Gain on sale of investments | 10 | - | 10 | - |
Miscellaneous income, net | 15 | 6 | 64 | 26 |
Gains / (losses) on foreign currency, net | 161 | 186 | 525 | 278 |
891 | 802 | 3,337 | 2,576 |
2.18 EXPENSES
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Employee benefit expenses | ||||
Salaries and bonus including overseas staff expenses | 6,020 | 5,861 | 24,509 | 23,852 |
Contribution to provident and other funds | 140 | 168 | 519 | 432 |
Employee compensation expense(Refer note 2.1) | 1 | – | 2 | – |
Staff welfare | 22 | 24 | 85 | 66 |
6,183 | 6,053 | 25,115 | 24,350 | |
Cost of technical sub-contractors | ||||
Technical sub-contractors - subsidiaries | 383 | 383 | 1,385 | 1,451 |
Technical sub-contractors - others | 453 | 257 | 1,524 | 1,145 |
836 | 640 | 2,909 | 2,596 | |
Travel expenses | ||||
Overseas travel expenses | 290 | 257 | 1,235 | 1,186 |
Travelling and conveyance | 35 | 28 | 125 | 101 |
325 | 285 | 1,360 | 1,287 | |
Cost of software packages and others | ||||
For own use | 165 | 249 | 797 | 726 |
Third party items bought for service delivery to clients | 58 | 56 | 182 | 194 |
223 | 305 | 979 | 920 | |
Communication expenses | ||||
Telephone charges | 56 | 56 | 247 | 232 |
Communication expenses | 34 | 29 | 137 | 97 |
90 | 85 | 384 | 329 |
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Other expenses | ||||
Office maintenance | 98 | 80 | 361 | 315 |
Power and fuel | 40 | 39 | 185 | 181 |
Brand building | 24 | 13 | 94 | 77 |
Rent | 35 | 43 | 158 | 177 |
Rates and taxes, excluding taxes on income | 22 | 30 | 108 | 89 |
Repairs to building | 40 | 19 | 99 | 40 |
Repairs to plant and machinery | 23 | 15 | 70 | 41 |
Computer maintenance | 35 | 18 | 104 | 90 |
Consumables | 17 | 8 | 39 | 21 |
Insurance charges | 10 | 9 | 42 | 34 |
Provision for post-sales client support and warranties | (11) | 42 | 17 | 36 |
Commission to non-whole time directors | 2 | 1 | 8 | 8 |
Provision for bad and doubtful debts and advances | 29 | 34 | 145 | 126 |
Auditor's remuneration | ||||
Statutory audit fees | 1 | – | 2 | 1 |
Other services | – | – | – | – |
Reimbursement of expenses | – | – | – | – |
Bank charges and commission | 4 | 1 | 8 | 6 |
Contributions towards CSR(Refer Note 2.35) | 64 | – | 243 | – |
Others | 117 | 57 | 293 | 388 |
550 | 409 | 1,976 | 1,630 |
2.19 TAX EXPENSE
in crore
Quarter ended March 31, | Year ended March 31, | |||
2015 | 2014 | 2015 | 2014 | |
Current tax | ||||
Income tax | 1,046 | 1,080 | 4,537 | 4,063 |
Deferred tax | 100 | (76) | 97 | (255) |
1,146 | 1,004 | 4,634 | 3,808 |
During the quarter ended March 31, 2015 and March 31, 2014, the company had reversal (net of provisions) of48 crore and provisions (net of reversal)
18 crore, respectively, pertaining to tax relating to prior years.
During the year ended March 31, 2015 and March 31, 2014, the company had a reversal (net of provisions) of161 crore and
19 crore, respectively, pertaining to tax relating to prior years.
The revision in the useful life of assets held at April 1, 2014 has resulted in a decrease in deferred tax credit by42 crore and
165 crore for the quarter and year ended March 31, 2015 respectively(Refer note 2.8).
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 as per Indian Income Tax Act, 1961. Infosys' operations are conducted through Software Technology Parks('STPs') and Special Economic Zones ('SEZs'). Income from STPs were tax exempt for the first 10 years from the fiscal year in which the unit commences software development, or March 31, 2011 which ever is earlier. Income from SEZs Unit 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.
2.20 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Contingent liabilities : | ||
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 | 22 | 24 |
Claims against the Company, not acknowledged as debts(1) | 167 | 169 |
[Net of amount paid to statutory authorities![]() ![]() | ||
Commitments : | ||
Estimated amount of unexecuted capital contracts | 1,272 | 827 |
(net of advances and deposits) |
(1) | Claims against the company not acknowledged as debts include demand from the Indian Income tax authorities for payment of tax of![]() ![]() ![]() ![]() ![]() |
Demand for fiscal 2006, fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the Income Tax Act as determined by the ratio of export turnover to total turnover. This disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009 and fiscal 2010 also includes disallowance of portion of profit earned outside India from the STP units and disallowance of profits earned from SEZ units under section 10AA of the Income Tax Act. The matter for fiscal 2007, fiscal 2008 and fiscal 2009 are pending before the Commissioner of Income tax (Appeals) Bangalore. For matter of fiscal 2006, the Commissioner of Income tax (Appeals) has passed a partly favorable order. The order giving effect of said Commissioner Order is awaited. 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. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.
2.21 DERIVATIVE INSTRUMENTS
The following table gives details in respect of outstanding foreign exchange forward and option contracts:
As at | ||||
March 31, 2015 | March 31, 2014 | |||
in million | in![]() | in million | in![]() | |
Forward contracts outstanding | ||||
In USD | 664 | 4,150 | 724 | 4,338 |
In Euro | 59 | 396 | 49 | 405 |
In GBP | 68 | 632 | 73 | 732 |
In AUD | 95 | 452 | 75 | 415 |
In CAD | 12 | 59 | – | – |
In SGD | 25 | 114 | – | – |
Options outstanding | ||||
In USD | – | – | 20 | 120 |
5,803 | 6,010 |
As of the Balance Sheet date, the Company's net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Nil (Nil as at March 31, 2014).
The foreign exchange forward & option contracts mature within 12 months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Not later than one month | 1,382 | 1,137 |
Later than one month and not later than three months | 3,608 | 2,674 |
Later than three months and not later than one year | 813 | 2,199 |
5,803 | 6,010 |
The Company recognized a gain of289 crore and
294 crore on derivative instruments during the quarter ended March 31, 2015 and March 31, 2014, respectively, which is included in other income.
The Company recognized a gain of499 crore and
217 crore on derivative instruments during the year ended March 31, 2015 and March 31, 2014, respectively, which is included in other income.
2.22 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 5 (viii)(c) of general instructions for preparation of the statement of profit and loss as per Schedule III to the Companies Act, 2013.
2.23 IMPORTS (VALUED ON THE COST, INSURANCE AND FREIGHT BASIS)
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Capital goods | 113 | 68 | 415 | 374 |
Software packages | 3 | 3 | 3 | 3 |
116 | 71 | 418 | 377 |
2.24 ACTIVITY IN FOREIGN CURRENCY
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Earnings in foreign currency | ||||
Income from software services and products | 11,623 | 11,055 | 46,152 | 43,150 |
Interest received from banks and others | 1 | 1 | 5 | 7 |
11,624 | 11,056 | 46,157 | 43,157 | |
Expenditure in foreign currency | ||||
Overseas travel expenses (including visa charges) | 227 | 195 | 992 | 990 |
Professional charges | 231 | 46 | 363 | 513 |
Technical sub-contractors - subsidiaries | 319 | 345 | 1,168 | 1,299 |
Overseas salaries and incentives | 4,091 | 3,968 | 15,968 | 16,523 |
Other expenditure incurred overseas for software development | 972 | 288 | 3,276 | 2,075 |
5,840 | 4,842 | 21,767 | 21,400 | |
Net earnings in foreign currency | 5,784 | 6,214 | 24,390 | 21,757 |
2.25 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.
The particulars of dividends remitted are as follows:
in crore
Particulars | Number of Non-resident share holders | Number of shares to which the dividends relate | Year ended March 31, | |
2015 | 2014 | |||
Interim dividend for fiscal 2015 | 2 | 8,23,17,281 | 247 | – |
Final dividend for fiscal 2014 | 2 | 9,30,32,691 | 400 | – |
Interim dividend for fiscal 2014 | 2 | 8,76,42,560 | – | 175 |
Final dividend for fiscal 2013 | 2 | 7,19,18,545 | – | 194 |
2.26 RELATED PARTY TRANSACTIONS
List of related parties:
Name of subsidiaries | Country | Holding as at | |
March 31, 2015 | March 31, 2014 | ||
Infosys BPO Limited (Infosys BPO) | India | 99.98% | 99.98% |
Infosys Technologies (China) Co. Limited (Infosys China) | China | 100% | 100% |
Infosys Technologies S. de R. L. de C. V. (Infosys Mexico) | Mexico | 100% | 100% |
Infosys Technologies (Sweden) AB. (Infosys Sweden) | Sweden | 100% | 100% |
Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai) | China | 100% | 100% |
Infosys Tecnologia DO Brasil LTDA. (Infosys Brasil) | Brazil | 100% | 100% |
Infosys Public Services, Inc. USA (Infosys Public Services) | U.S. | 100% | 100% |
Infosys Consulting India Limited(1) | India | – | – |
Infosys Americas Inc., (Infosys Americas)(2) | U.S. | 100% | 100% |
Infosys BPO s. r. o(3) | Czech Republic | 99.98% | 99.98% |
Infosys BPO (Poland) Sp Z.o.o(3) | Poland | 99.98% | 99.98% |
Infosys BPO S.DE R.L. DE.C.V(3)(11) | Mexico | – | – |
Infosys McCamish Systems LLC(3) | U.S. | 99.98% | 99.98% |
Portland Group Pty Ltd(3) | Australia | 99.98% | 99.98% |
Portland Procurement Services Pty Ltd(7) | Australia | – | 99.98% |
Infosys Technologies (Australia) Pty. Limited (Infosys Australia)(4) | Australia | 100% | 100% |
Edgeverve Systems Limited (Edgeverve)(10) | India | 100% | 100% |
Lodestone Holding AG (Infosys Lodestone) | Switzerland | 100% | 100% |
Lodestone Management Consultants (Canada) Inc.(5)(9) | Canada | – | – |
Lodestone Management Consultants Inc.(5) | U.S. | 100% | 100% |
Lodestone Management Consultants Pty Limited(5) | Australia | 100% | 100% |
Lodestone Management Consultants AG(5) | Switzerland | 100% | 100% |
Lodestone Augmentis AG(8) | Switzerland | 100% | 100% |
Hafner Bauer & Ödman GmbH(5) | Switzerland | 100% | 100% |
Lodestone Management Consultants (Belgium) S.A.(6) | Belgium | 99.90% | 99.90% |
Lodestone Management Consultants GmbH (5) | Germany | 100% | 100% |
Lodestone Management Consultants Pte Ltd.(5) | Singapore | 100% | 100% |
Lodestone Management Consultants SAS(5) | France | 100% | 100% |
Lodestone Management Consultants s.r.o.(5) | Czech Republic | 100% | 100% |
Lodestone Management Consultants GmbH(5) | Austria | 100% | 100% |
Lodestone Management Consultants Co., Ltd.(5) | China | 100% | 100% |
Lodestone Management Consultants Ltd.(5) | UK | 100% | 100% |
Lodestone Management Consultants B.V.(5) | Netherlands | 100% | 100% |
Lodestone Management Consultants Ltda.(6) | Brazil | 99.99% | 99.99% |
Lodestone Management Consultants Sp. z.o.o.(5) | Poland | 100% | 100% |
Lodestone Management Consultants Portugal, Unipessoal, Lda.(5) | Portugal | 100% | 100% |
S.C. Lodestone Management Consultants S.R.L.(5) | Romania | 100% | 100% |
Lodestone Management Consultants S.R.L.(5) | Argentina | 100% | 100% |
Infosys Canada Public Services Ltd.(12)(13) | Canada | – | – |
Infosys Nova Holdings LLC. (Infosys Nova)(14) | U.S. | 100% | – |
Panaya Inc.(15) | U.S. | 100% | – |
Panaya Ltd.(16) | Israel | 100% | – |
Panaya Gmbh(16) | Germany | 100% | – |
Panaya Pty Ltd.(16) | Australia | – | – |
Panaya Japan Co. Ltd.(16) | Japan | 100% | – |
(1) | The Hon’ble High Court of Karnataka sanctioned the scheme of amalgamation of Infosys Consulting India Limited (ICIL) with Infosys Limited with an effective date of August 23, 2013 and an appointed date of January 12, 2012. |
(2) | Incorporated effective June 25, 2013 |
(3) | Wholly owned subsidiaries of Infosys BPO. |
(4) | Under liquidation |
(5 | Wholly owned subsidiaries of Lodestone Holding AG |
(6 | Majority owned and controlled subsidiaries of Lodestone Holding AG |
(7) | Wholly owned subsidiary of Portland Group Pty Ltd. Liquidated effective May 14, 2014. |
(8) | Wholly owned subsidiary of Lodestone Management Consultant AG |
(9) | Liquidated effective December 31, 2013 |
(10) | Incorporated effective February 14, 2014 (Refer note 2.10.2) |
(11) | Incorporated effective February 14, 2014 |
(12) | Wholly owned subsidiary of Infosys Public Services, Inc. |
(13) | Incorporated effective December 19, 2014 |
(14) | Incorporated effective January 23, 2015 |
(15) | On March 5, 2015, Infosys acquired 100% of the voting interest in Panaya Inc. (Refer note 2.10.3) |
(16) | Wholly owned subsidiary of Panaya Inc. |
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Name of Associates | Country | Holding as at | |
March 31, 2015 | March 31, 2014 | ||
DWA Nova LLC(1) | U.S. | 20% | – |
(1) | Associate of Infosys Nova Holdings LLC. |
List of other related party
Particulars | Country | Nature of relationship |
Infosys Limited Employees' Gratuity Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Limited Employees' Provident Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Limited Employees' Superannuation Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Science Foundation | India | Controlled trust |
Infosys Limited Employees' Welfare Trust | India | Controlled trust |
Refer Notes 2.30, 2.31 and 2.32 for information on transactions with post-employment benefit plans mentioned above.
List of key management personnel
Whole time directors | Executive council members (*) | |
S. D. Shibulal (resigned effective July 31, 2014) | U. Ramadas Kamath | |
Srinath Batni (resigned effective July 31, 2014) | Chandrashekar Kakal# | |
V. Balakrishnan (resigned effective December 31, 2013) | Nandita Gurjar | |
Ashok Vemuri (resigned effective September 12, 2013) | Stephen R. Pratt (resigned effective January 31, 2014) | |
B. G. Srinivas (resigned effective June 10, 2014) | Basab Pradhan (resigned effective July 12, 2013) | |
U B Pravin Rao (effective January 10, 2014) | Prasad Thrikutam# | |
Dr. Vishal Sikka (appointed effective June 14, 2014) | Rajiv Bansal | |
Srikantan Moorthy (effective April 1, 2013) | ||
Non-whole-time directors | Sanjay Purohit (effective April 1, 2013) | |
N. R. Narayana Murthy (resigned effective October 10, 2014) | Ranganath D Mavinakere (effective August 19, 2013) | |
S. Gopalakrishnan (resigned effective October 10, 2014) | Binod Hampapur Rangadore (effective August 19, 2013) | |
K.V.Kamath | Nithyanandan Radhakrishnan (effective August 19, 2013)# | |
Deepak M. Satwalekar (retired effective November 13, 2013) | V.G. Dheeshjith (effective November 1, 2013) | |
Dr. Omkar Goswami (retired effective December 31, 2014) | Ganesh Gopalakrishnan (effective November 1, 2013) | |
David L. Boyles (retired effective January 17, 2014) | Haragopal Mangipudi (effective November 1, 2013)# | |
Prof. Jeffrey S. Lehman | Manish Tandon (effective November 1, 2013) | |
R. Seshasayee | K. Muralikrishna (effective November 1, 2013)# | |
Ann M. Fudge (retired effective June 14, 2014) | S. Ravi Kumar (effective November 1, 2013) | |
Ravi Venkatesan | Sanjay Jalona (effective November 1, 2013) | |
Leo Puri (appointed effective April 11, 2013 and resigned effective August 14, 2013) | Jackie Korhonen (appointed effective November 1, 2013)# | |
Kiran Mazumdar Shaw (appointed effective January 10, 2014) | Subrahmanyam Goparaju (appointed effective November 1, 2013 and resigned effective December 27, 2013) | |
Carol M. Browner (appointed effective April 29, 2014) | ||
Prof. John W. Etchemendy (appointed effective December 4, 2014) | # since resigned | |
Ms Roopa Kudva (appointed effective February 4, 2015) | ||
(*) Executive council dissolved effective April 1, 2014 | ||
Executive Officers(effective April 1, 2014) | ||
Rajiv Bansal, Chief Financial Officer | ||
Srikantan Moorthy, Group Head of Human Resource Development (till March 31, 2015) | ||
Parvatheesam K, Company Secretary (resigned effective January 10, 2015) | ||
David D. Kennedy, General Counsel (effective November 1, 2014) |
The details of amounts due to or due from related parties as at March 31, 2015 and March 31, 2014 are as follows:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Trade Receivables | ||
Infosys China | 16 | 8 |
Infosys Mexico | 1 | 2 |
Infosys Brasil | 5 | 4 |
Infosys BPO (Including subsidiaries) | 1 | 1 |
Lodestone Holding AG (including subsidiaries) | 26 | 16 |
Edgeverve Systems Limited | 14 | – |
Infosys Public Services | 246 | 98 |
309 | 129 | |
Loans(1) | ||
Lodestone Holding AG (including subsidiaries) | 6 | – |
Edgeverve Systems Limited | 18 | – |
Infosys Brasil | – | 36 |
24 | 36 | |
Other receivables | ||
Infosys BPO (Including subsidiaries) | 1 | 2 |
Infosys Sweden | – | 5 |
Infosys Public Services | 4 | 2 |
Edgeverve Systems Limited | 14 | – |
Lodestone Holding AG (including subsidiaries) | 24 | 4 |
43 | 13 | |
Unbilled revenues | ||
Lodestone Holding AG (including subsidiaries) | 1 | – |
Infosys BPO (Including subsidiaries) | 5 | – |
6 | – | |
Trade payables | ||
Infosys China | 10 | 14 |
Infosys BPO (Including subsidiaries) | 1 | 4 |
Infosys Mexico | 1 | 1 |
Infosys Sweden | 5 | 6 |
Lodestone Holding AG (including subsidiaries) | 83 | 4 |
Infosys Brasil | 2 | 1 |
102 | 30 | |
Other payables | ||
Infosys BPO (Including subsidiaries) | 18 | 3 |
Infosys China | – | (12) |
Infosys Mexico | – | 2 |
Lodestone Holding AG (including subsidiaries) | 2 | 4 |
Infosys Brasil | – | 6 |
Edgeverve Systems Limited | 9 | – |
Infosys Public Services | 4 | – |
33 | 3 | |
Provision for expenses | ||
Infosys BPO (Including subsidiaries) | (1) | 2 |
Edgeverve Systems Limited | 37 | – |
Lodestone Holding AG (including subsidiaries) | – | 6 |
36 | 8 | |
Rental Deposit given for shared services | ||
Infosys BPO | 21 | 21 |
Rental Deposit taken for shared services | ||
Infosys BPO | 27 | 27 |
(1) | The above loans are given in accordance of terms and conditions of loan agreement and is repayable within a period of one year and carries an interest rate of 6% and 8.67% for Lodestone United Kingdom and Edgeverve Systems Limited respectively. |
in crore
Particulars | Maximum amount outstanding during | |
2015 | 2014 | |
Loans and advances in the nature of loans given to subsidiaries : | ||
Infosys Public Services | – | 71 |
Edgeverve Systems Limited(2) | 18 | – |
Infosys Brasil | 40 | 35 |
Lodestone Holding AG | 66 | 124 |
The details of the related party transactions entered into by the Company, in addition to the lease commitments described in note 2.8, for the quarter and year ended March 31, 2015 and March 31, 2014 are as follows:
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Capital transactions: | ||||
Financing transactions | ||||
Infosys Americas | – | – | – | 1 |
Infosys China | 62 | – | 62 | – |
Infosys Nova | 94 | – | 94 | – |
Infosys Shanghai | 62 | – | 154 | – |
Infosys Public Services | – | 75 | – | 75 |
Infosys Brasil(3) | 40 | – | 40 | – |
Lodestone Holding AG (including subsidiaries) | – | – | – | 136 |
Edgeverve Systems Limited | – | 1 | 461 | 1 |
258 | 76 | 811 | 213 | |
Loans (net of repayment) | ||||
Lodestone Holding AG (including subsidiaries)(1) | (49) | – | 6 | (136) |
Infosys Public Services | – | (75) | – | (75) |
Edgeverve Systems Limited(2) | 18 | – | 18 | – |
Infosys Brasil(3) | (40) | – | (40) | 33 |
(71) | (75) | (16) | (178) | |
Revenue transactions: | ||||
Purchase of services | ||||
Infosys China | 31 | 43 | 139 | 225 |
Lodestone Holding AG (including subsidiaries) | 212 | 285 | 819 | 1,020 |
Infosys BPO (Including subsidiaries) | 68 | 44 | 230 | 180 |
Infosys Sweden | 12 | 8 | 44 | 10 |
Infosys Mexico | 2 | 2 | 10 | 12 |
Edgeverve Systems limited | 56 | – | 136 | – |
Infosys Brasil | 2 | 1 | 7 | 4 |
383 | 383 | 1,385 | 1,451 | |
Purchase of shared services including facilities and personnel | ||||
Infosys BPO (including subsidiaries) | 9 | 19 | 68 | 74 |
9 | 19 | 68 | 74 | |
Interest income | ||||
Lodestone Holding AG (including subsidiaries) | – | – | 1 | 4 |
Infosys Public Services | – | 1 | – | 5 |
Infosys Brasil | 1 | – | 3 | 1 |
1 | 1 | 4 | 10 | |
Sale of services | ||||
Infosys China | 1 | 3 | 8 | 9 |
Infosys Mexico | 3 | 2 | 11 | 9 |
Lodestone Holding AG (including subsidiaries) | 5 | 6 | 23 | 16 |
Infosys Brasil | 2 | – | 8 | 4 |
Infosys BPO (including subsidiaries) | 19 | 17 | 86 | 71 |
Edgeverve Systems limited | 19 | – | 50 | – |
Infosys Public Services | 181 | 150 | 735 | 577 |
230 | 178 | 921 | 686 | |
Sale of shared services including facilities and personnel | ||||
Edgeverve Systems limited | 6 | – | 22 | – |
Infosys BPO (including subsidiaries) | 9 | 6 | 38 | 36 |
15 | 6 | 60 | 36 | |
Profit on transfer of business | ||||
Edgeverve Systems limited (Refer Note 2.10.2) | – | – | 412 | – |
– | – | 412 | – |
(1) | Additionally during the quarter ended December 31, 2014 loan of![]() |
(2) | Additionally during the quarter ended September 30, 2014 loan of![]() |
(3) | Loan outstanding (including accrued interest) given to Infosys Brazil is converted to equity during the quarter ended March 31, 2015. |
The table below describes the compensation to key managerial personnel which comprise directors and members of executive council:
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Salaries and other employee benefits to whole-time directors and members of executive council(1)(2) | 9 | 20 | 30 | 56 |
Commission and other benefits to non-executive/independent directors | 1 | 1 | 8 | 9 |
Total | 10 | 21 | 38 | 65 |
(1) | Executive Council dissolved effective April 1, 2014 and Executive officers have been appointed with effect from that date. |
(2) | Includes stock compensation expense of![]() ![]() |
2.27 Merger of Infosys Consulting India Limited
The Hon’ble High Court of Karnataka sanctioned the scheme of amalgamation of Infosys Consulting India Limited (ICIL) with Infosys Limited with an effective date of August 23, 2013 and an appointed date of January 12, 2012. ICIL was a wholly owned subsidiary of Infosys Limited and was engaged in software related consultancy services.The merger of ICIL into Infosys Limited has been accounted for under pooling of interest method referred to in Accounting Standard 14,Accounting for Amalgamation (AS-14).
All the assets and liabilities of ICIL on and after the appointed date and prior to the effective date have been transferred to Infosys Limited on a going concern basis. As ICIL was a wholly owned subsidiary of Infosys Limited, no shares have been allotted to the shareholders upon the scheme becoming effective.
2.28 RESEARCH AND DEVELOPMENT EXPENDITURE
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Expenditure at Department of Scientific and Industrial Research (DSIR) approved R&D centres (eligible for weighted deduction)(1) | ||||
Capital Expenditure | – | – | – | – |
Revenue Expenditure | 36 | 62 | 160 | 261 |
Other R&D Expenditure | ||||
Capital Expenditure | 2 | – | 15 | – |
Revenue Expenditure | 101 | 116 | 430 | 612 |
Total R&D Expenditure | ||||
Capital Expenditure | 2 | – | 15 | – |
Revenue Expenditure | 137 | 178 | 590 | 873 |
(1) During the year ended March 31, 2015, and March 31, 2014, the company has claimed weighted tax deduction on eligible research and development expenditures based on the approval received from Department of Scientific and Industrial Research (DSIR) on November 23, 2011 which has been renewed effective April 2014. The weighted tax deduction is equal to 200% of such expenditure incurred.
The eligible R&D revenue and capital expenditure are36 crore and Nil for the quarter ended March 31, 2015 and
62 crore and Nil towards revenue and capital expenditure for the quarter ended March 31, 2014.
The eligible R&D revenue and capital expenditure are160 crore and Nil for the year ended March 31, 2015 and
261 crore and Nil towards revenue and capital expenditure for the year ended March 31, 2014.
2.29 SEGMENT REPORTING
The Company's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. Effective quarter ended March 31, 2014, the Company reorganized its business to strengthen its focus on growing existing client relationships and increasing market share through service differentiation and operational agility. Consequent to the internal reorganization there were changes effected in the reportable industry segments based on the "management approach" as laid down in AS 17, Segment reporting and an additional segment, Life Sciences and Healthcare was identified. The Chief Executive Officer evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by industry classes and geographic segmentation of customers. Accordingly, segment information has been presented both along industry classes and geographic segmentation of customers, industry being the primary segment. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.
Industry segments for the Company are primarily enterprises in Financial Services and Insurance (FSI) , enterprises in Manufacturing (MFG), enterprises in the Energy & utilities, Communication and Services (ECS),enterprises in Retail, Consumer packaged goods and Logistics (RCL) and enterprises in Life Sciences and Healthcare (LSH). Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and off-shore. 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. Consequent to the above change in the composition of reportable industry segments, the prior year comparatives have been restated.
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Allocated expenses of segments include expenses incurred for rendering services from the company's offshore software development centres and on-site expenses, which 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 assets are used interchangeably. Management believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted against the total income of the Company.
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. Geographical information on revenue and industry revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Industry Segments
Quarter ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | FSI | MFG | ECS | RCL | LSH | Total |
Income from software services and products | 4,126 | 2,634 | 2,377 | 2,097 | 692 | 11,926 |
3,923 | 2,410 | 2,309 | 2,064 | 660 | 11,366 | |
Identifiable operating expenses | 1,969 | 1,338 | 1,105 | 963 | 362 | 5,737 |
1,839 | 1,212 | 1,064 | 992 | 346 | 5,453 | |
Allocated expenses | 889 | 601 | 539 | 478 | 158 | 2,665 |
845 | 542 | 519 | 465 | 148 | 2,519 | |
Segmental operating income | 1,268 | 695 | 733 | 656 | 172 | 3,524 |
1,239 | 656 | 726 | 607 | 166 | 3,394 | |
Unallocable expenses | 245 | |||||
309 | ||||||
Other income, net | 891 | |||||
802 | ||||||
Profit before exceptional item and tax | 4,170 | |||||
3,887 | ||||||
Exceptional item | - | |||||
- | ||||||
Profit before tax | 4,170 | |||||
3,887 | ||||||
Tax expense | 1,146 | |||||
1,004 | ||||||
Profit after taxes and exceptional item | 3,024 | |||||
2,883 |
Year ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | FSI | MFG | ECS | RCL | LSH | Total |
Income from software services and products | 16,175 | 10,230 | 9,756 | 8,369 | 2,770 | 47,300 |
15,374 | 9,434 | 8,862 | 8,106 | 2,565 | 44,341 | |
Identifiable operating expenses | 7,874 | 5,191 | 4,706 | 3,917 | 1,440 | 23,128 |
7,413 | 4,835 | 4,088 | 3,991 | 1,348 | 21,675 | |
Allocated expenses | 3,396 | 2,241 | 2,130 | 1,832 | 607 | 10,206 |
3,408 | 2,194 | 2,057 | 1,884 | 596 | 10,139 | |
Segmental operating income | 4,905 | 2,798 | 2,920 | 2,620 | 723 | 13,966 |
4,553 | 2,405 | 2,717 | 2,231 | 621 | 12,527 | |
Unallocable expenses | 917 | |||||
1,101 | ||||||
Other income, net | 3,337 | |||||
2,576 | ||||||
Profit before exceptional item and tax | 16,386 | |||||
14,002 | ||||||
Exceptional item | 412 | |||||
– | ||||||
Profit before tax | 16,798 | |||||
14,002 | ||||||
Tax expense | 4,634 | |||||
3,808 | ||||||
Profit after taxes and exceptional item | 12,164 | |||||
10,194 |
Geographic Segments
Quarter ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | North America | Europe | India | Rest of the World | Total | |
Income from software services and products | 7,733 | 2,526 | 341 | 1,326 | 11,926 | |
7,068 | 2,610 | 335 | 1,353 | 11,366 | ||
Identifiable operating expenses | 3,749 | 1,256 | 140 | 592 | 5,737 | |
3,320 | 1,380 | 170 | 583 | 5,453 | ||
Allocated expenses | 1,762 | 571 | 67 | 265 | 2,665 | |
1,590 | 583 | 66 | 280 | 2,519 | ||
Segmental operating income | 2,222 | 699 | 134 | 469 | 3,524 | |
2,158 | 647 | 99 | 490 | 3,394 | ||
Unallocable expenses | 245 | |||||
309 | ||||||
Other income, net | 891 | |||||
802 | ||||||
Profit before exceptional item and tax | 4,170 | |||||
3,887 | ||||||
Exceptional item | – | |||||
– | ||||||
Profit before tax | 4,170 | |||||
3,887 | ||||||
Tax expense | 1,146 | |||||
1,004 | ||||||
Profit after taxes and exceptional item | 3,024 | |||||
2,883 |
Year ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | North America | Europe | India | Rest of the World | Total | |
Income from software services and products | 30,273 | 10,300 | 1,307 | 5,420 | 47,300 | |
27,963 | 9,800 | 1,278 | 5,300 | 44,341 | ||
Identifiable operating expenses | 14,806 | 5,131 | 678 | 2,513 | 23,128 | |
13,624 | 5,021 | 621 | 2,409 | 21,675 | ||
Allocated expenses | 6,625 | 2,240 | 251 | 1,090 | 10,206 | |
6,577 | 2,210 | 249 | 1,103 | 10,139 | ||
Segmental operating income | 8,842 | 2,929 | 378 | 1,817 | 13,966 | |
7,762 | 2,569 | 408 | 1,788 | 12,527 | ||
Unallocable expenses | 917 | |||||
1,101 | ||||||
Other income, net | 3,337 | |||||
2,576 | ||||||
Profit before exceptional item and tax | 16,386 | |||||
14,002 | ||||||
Exceptional item | 412 | |||||
– | ||||||
Profit before tax | 16,798 | |||||
14,002 | ||||||
Tax expense | 4,634 | |||||
3,808 | ||||||
Profit after taxes and exceptional item | 12,164 | |||||
10,194 |
2.30 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 crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Obligations at year beginning | 668 | 612 |
Service cost | 89 | 94 |
Interest cost | 56 | 45 |
Transfer of obligation on amalgamation(refer note 2.27) | – | 3 |
Transfer of obligation(refer note 2.10.2) | (5) | – |
Actuarial (gain)/loss | 58 | 8 |
Benefits paid | (111) | (94) |
Obligations at year/ period end | 755 | 668 |
Defined benefit obligation liability as at the balance sheet date is fully funded by the Company. | ||
Change in plan assets | ||
Plan assets at year beginning, at fair value | 677 | 643 |
Expected return on plan assets | 65 | 59 |
Actuarial gain/(loss) | 5 | (3) |
Contributions | 145 | 70 |
Benefits paid | (111) | (94) |
Transfer of plan assets on amalgamation(refer note 2.27) | – | 2 |
Plan assets at year/ period end, at fair value | 781 | 677 |
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 | 781 | 677 |
Present value of the defined benefit obligations at the end of the year | 755 | 668 |
Re-imbursement (obligation)/asset* | (6) | – |
Asset recognized in the balance sheet | 20 | 9 |
Assumptions | ||
Interest rate | 7.80% | 9.20% |
Estimated rate of return on plan assets | 9.50% | 9.55% |
Weighted expected rate of salary increase | 8.00% | 8.00% |
* | pertains to transfer of assets to group companies. |
in crore
Particulars | As at | ||||
March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | March 31, 2011 | |
Obligations at year end | 755 | 668 | 612 | 569 | 459 |
Plan assets at year end, at fair value | 781 | 677 | 643 | 582 | 459 |
Funded Status | 26 | 9 | 31 | 13 | - |
Experience adjustments: | |||||
(Gain)/loss: | |||||
Experience adjustments on plan liabilities | 4 | 14 | (49) | 13 | 18 |
Experience adjustments on plan assets | (5) | 3 | - | - | 1 |
Net gratuity cost for the quarter and year ended March 31, 2015 and March 31, 2014 comprises of the following components:
in crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Gratuity cost for the period | ||||
Service cost | 22 | 23 | 89 | 94 |
Interest cost | 13 | 11 | 56 | 45 |
Expected return on plan assets | (17) | (15) | (65) | (59) |
Actuarial (gain)/loss | 17 | 63 | 53 | 11 |
Plan amendment amortization | (1) | (1) | (4) | (4) |
Net gratuity cost | 34 | 81 | 129 | 87 |
Actual return on plan assets | 21 | 14 | 70 | 56 |
As at March 31, 2015 and March 31, 2014, the plan assets have been primarily invested in insurer managed funds. 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. The Company expects to contribute145 crore to the gratuity trust during the fiscal 2016.
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 by37crore, which is being amortized on a straight line basis to the statement of profit and loss over 10 years representing the average future service period of the employees. The unamortized liability as at March 31, 2015 and March 31, 2014 amounts to
7crore and
11 crore, respectively and disclosed under 'Other long-term liabilities' and 'other current liabilities'.
2.31 PROVIDENT FUND
The Company contributed81crore and
295 crore towards provident fund during the quarter and year ended March 31, 2015, respectively (
66 crore and
262 crore during the quarter and year ended March 31, 2014, respectively).
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. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India during the quarter ended December 31, 2011 and based on the below provided assumptions there is no shortfall as at March 31, 2015, 2014, 2013, 2012 and 2011, respectively.
The details of fund and plan asset position are given below:
in crore
Particulars | As at | ||||
March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | March 31, 2011 | |
Plan assets at year end, at fair value | 2,912 | 2,817 | 2,399 | 1,816 | 1,579 |
Present value of benefit obligation at year end | 2,912 | 2,817 | 2,399 | 1,816 | 1,579 |
Asset recognized in balance sheet | – | – | – | – | – |
Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach:
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Government of India (GOI) bond yield | 7.80% | 9.20% |
Remaining term of maturity | 7 years | 8 years |
Expected guaranteed interest rate | 8.75% | 8.75% |
2.32 SUPERANNUATION
The Company contributed53crore and
213 crore to the Superannuation trust during the quarter and year ended March 31, 2015, respectively (
50 crore and
202 crore during the quarter and year ended March 31, 2014, respectively).
2.33 RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER SHARE
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Number of shares considered as basic weighted average shares outstanding*# | 114,84,72,332 | 114,28,05,132 | 114,84,72,332 | 114,28,05,132 |
Effect of dilutive common equivalent shares | 26,968 | – | 15,342 | – |
Number of shares considered as weighted average shares and potential shares outstanding | 114,84,99,300 | 114,28,05,132 | 114,84,87,674 | 114,28,05,132 |
* | adjusted for bonus issue.(refer Note 2.1) |
# | adjusted for deconsolidation of trust for the year ended March 31, 2015.(refer Note 2.1) |
2.34 RESTRICTED DEPOSITS
Restricted deposits as at March 31, 2015 comprises1,039crore (
977 crore as at March 31, 2014) deposited with financial institutions to settle employee-related obligations as and when they arise during the normal course of business.
2.35 CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the company. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation and rural development projects. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
2.36 DUES TO MICRO SMALL AND MEDIUM ENTERPRISES
As at March 31, 2015, less than1 crore is outstanding to micro and small enterprises (
1 crore as at March 31, 2014). There are no interests due or outstanding on the same.
2.37 LITIGATION
On May 23, 2011, the company received a subpoena from a grand jury in the United States District Court for the Eastern District of Texas. The subpoena required that the company provide to the grand jury certain documents and records related to its sponsorships for, and uses of, B1 business visas.
In addition, the U.S. Department of Homeland Security (“DHS”) has reviewed the company’s employer eligibility verifications on Form I-9 with respect to its employees working in the United States. In connection with this review, the company was advised that the DHS has found errors in a significant percentage of its Forms I-9 that the DHS has reviewed, and may impose fines and penalties on the company related to such alleged errors.
On October 30, 2013, the company settled the foregoing matters and entered into a Settlement Agreement (“Settlement Agreement”) with the U.S. Attorney, the DHS and the United States Department of State (“State,” and collectively with the U.S. Attorney and the DHS, the “United States”).
In the Settlement Agreement, the company denied and disputed all allegations made by the United States, except for the allegation that the company failed to maintain accurate Forms I-9 records for many of its foreign nationals in the United States in 2010 and 2011 as required by law, and that such failure constituted civil violations of certain laws.
During the year ended March 31, 2014 the Company recorded a charge related to the settlement agreement (including legal costs) of 219 crore related to the matters that were the subject of the Settlement agreement. The said amount was paid prior to December 31, 2013.
In addition, the company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the company’s results of operations or financial condition.
2.38 FINACLE AND EDGESERVICES
On April 24, 2015, the Board of Directors of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with Egdeverve, a wholly owned subsidiary,subject to securing the requisite approval from shareholders. The proposed transfer of the business of Finacle and EdgeServices to Edgeverve is at an estimated consideration of upto3,400 crore and upto
220 crore, respectively.
2.39 FUNCTION WISE CLASSIFICATION OF STATEMENT OF PROFIT AND LOSS
In crore
Particulars | Quarter ended March 31, | Year ended March 31, | ||
2015 | 2014 | 2015 | 2014 | |
Income from software services and products | 11,926 | 11,366 | 47,300 | 44,341 |
Software development expenses | 6,933 | 6,747 | 27,828 | 26,738 |
GROSS PROFIT | 4,993 | 4,619 | 19,472 | 17,603 |
Selling and marketing expenses | 633 | 567 | 2,549 | 2,390 |
General and administration expenses | 840 | 658 | 2,961 | 2,686 |
1,473 | 1,225 | 5,510 | 5,076 | |
OPERATING PROFIT BEFORE DEPRECIATION | 3,520 | 3,394 | 13,962 | 12,527 |
Depreciation and amortization | 241 | 309 | 913 | 1,101 |
OPERATING PROFIT | 3,279 | 3,085 | 13,049 | 11,426 |
Other income | 891 | 802 | 3,337 | 2,576 |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 4,170 | 3,887 | 16,386 | 14,002 |
Profit on transfer of business(refer note 2.10.2) | – | – | 412 | – |
PROFIT BEFORE TAX | 4,170 | 3,887 | 16,798 | 14,002 |
Tax expense: | ||||
Current tax | 1,046 | 1,080 | 4,537 | 4,063 |
Deferred tax | 100 | (76) | 97 | (255) |
PROFIT FOR THE PERIOD | 3,024 | 2,883 | 12,164 | 10,194 |
The accompanying notes form an integral part of the standalone interim financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
Auditor’s Report on Quarterly Financial Results and Year to Date Financial Results of Infosys Limited pursuant to the Clause 41 of the Listing Agreement
To,
The Board of Directors of Infosys Limited
We have audited the quarterly financial results of Infosys Limited (‘the Company’) for the quarter ended March 31, 2015 and the year to date financial results for the period from April 1, 2014 to March 31, 2015, attached herewith, being submitted by the Company pursuant to the requirement of Clause 41 of the Listing Agreement, except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’, which have been traced from disclosures made by the Management and have not been audited by us. 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, specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 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 misstatement. 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 financial results:
(i) | are presented in accordance with the requirements of Clause 41 of the Listing Agreement in this regard; and |
(ii) | give a true and fair view of the net profit and other financial information for the quarter ended March 31, 2015 as well as the year to date results for the period from April 1, 2014 to March 31, 2015. |
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.
forB S R & Co. LLP
Chartered Accountants
Firm’s registration number: 101248W/ W-100022
Akhil Bansal
Partner
Membership number: 090906
Chennai
24 April 2015
Independent Auditor’s Report
To the Members of Infosys Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Infosys Limited (‘the Company’), which comprise the balance sheet as at 31 March 2015, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Standalone Financial Statements
The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements 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, of the state of affairs of the Company as at 31 March 2015 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. | As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable. | ||
2. | As required by Section 143 (3) of the Act, we report that: | ||
(a) | we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. | ||
(b) | in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; | ||
(c) | the balance sheet, the statement of profit and loss and the cash flow statement dealt with by this Report are in agreement with the books of account; | ||
(d) | in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014; | ||
(e) | on the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and | ||
(f) | with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: | ||
i. | the Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 2.20 and 2.37 to the financial statements; | ||
ii. | the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer Note 2.7 to the financial statements; | ||
iii. | There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company. |
forB S R & Co.LLP
Chartered Accountants
Firm’s registration number: 101248W/W-100022
Akhil Bansal
Partner
Membership number: 090906
Chennai
24 April 2015
Annexure to the Independent Auditors’ Report
The Annexure referred to in our Independent Auditors’ Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015, 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. | |
(ii) | The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable. | |
(iii) | (a) | The Company has granted loans to three bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act’). |
(b) | In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the payment of the interest as stipulated. The terms of arrangements do not stipulate any repayment schedule and the loansarerepayable on demand. Accordingly, paragraph 4(iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount. | |
(c) | There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act. | |
(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) | The Company has not accepted any deposits from the public. | |
(vi) | The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company. | |
(vii) | (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, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues have 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 and duty of excise. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, wealth tax, service tax, duty of customs, value added tax, cess and other material statutory dues were in arrears as at 31 March 2015 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 wealth tax, duty of customs and cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, service tax and value added tax have not been deposited by the Company on account of disputes: |
Name of the statute | Nature of dues | Amount (in Rs.) | Period to which the amount relates | Forum where dispute is pending |
Service tax | Service tax and penalty | 57,563,973 # | July 2004 to October 2005 | CESTAT, Bangalore |
Service tax | Service tax | 25,784,864 # | January 2005 to March 2009 | CESTAT-Bangalore |
Service tax | Service tax and penalty | 231,521,178 # | February 2007 to March 2009 | CESTAT-Bangalore |
Service tax | Service tax | 41,972,658 # | April 2009 to March 2010 | CESTAT, Bangalore |
Service tax | Service tax | 64,654,051 # | April 2010 to March 2011 | CESTAT-Bangalore |
APVAT Act, 2005 | Sales tax | 3,112,450 *# | April 2007 to March 2008 | High Court of Andhra Pradesh |
MVAT Act, 2005 | Sales tax | 935,455 *# | April 2006 to December 2007 | Joint Commissioner (Appeals) |
MVAT Act, 2005 | Sales tax | 45,250,506 | September 2008 to October 2011 | Specified Officer of SEZ |
Central Excise Act, 1944 | Excise duty and penalty | 386,148,018 # | March 2006 to December 2009 | CESTAT, Bangalore |
Central Excise Act, 1944 | Excise duty and penalty | 26,746,497 # | January 2010 to December 2010 | CESTAT, Bangalore |
Central Excise Act, 1944 | Excise duty and penalty | 45,132,885 # | January 2011 to June 2011 | CESTAT, Bangalore |
Central Excise Act, 1944 | Excise duty and penalty | 32,344,749 # | July 2011 to December 2011 | CESTAT, Bangalore |
Central Excise Act, 1944 | Excise duty and penalty | 42,003,700 # | January 2012 to November 2012 | CESTAT, Bangalore |
KVAT Act, 2003 | Sales tax, interest and penalty demanded | 481,461,456 *# | April 2005 to March 2009 | High Court of Karnataka |
MVAT Act, 2005 | Sales tax, interest and penalty | 699,250 | January 2008 to March 2008 | Joint Commissioner (Commercial Taxes) |
MVAT Act, 2005 | Sales tax and interest | 2,276,534 | April 2008 to December 2009 | Joint Commissioner (Commercial Taxes) |
MVAT Act, 2005 | Sales tax and interest | 3,132,547 # | April 2009 to December 2010 | Joint Commissioner (Commercial Taxes) |
Central Excise Act, 1944 | Excise duty and penalty | 48,139,052 # | December 2012 to September 2013 | CESTAT, Bangalore
|
Central Excise Act, 1944 | Excise duty and penalty | 56,400,395 | October 2013 to September 2014 | ** |
* | net of amounts paid under protest. |
# | a stay order has been received against the amount disputed and not deposited. |
** | The Company is in the process of filing an appeal before the CESTAT, Bangalore |
(c) | According to the information and explanations given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time. | |
(viii) | 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. | |
(ix) | The Company did not have any outstanding dues to financial institutions, banks or debenture holders during the year. | |
(x) | In our opinion and according to the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.. | |
(xi) | The Company did not have any term loans outstanding during the year. | |
(xii) | According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit. |
forB S R & Co. LLP
Chartered Accountants
Firm’s registration number: 101248W/W-100022
Akhil Bansal
Partner
Membership number: 090906
Chennai
24 April 2015
INFOSYS LIMITED
In crore
Balance Sheet as at | Note | March 31, 2015 | March 31, 2014 |
EQUITY AND LIABILITIES | |||
SHAREHOLDERS' FUNDS | |||
Share capital | 2.1 | 574 | 286 |
Reserves and surplus | 2.2 | 47,494 | 41,806 |
48,068 | 42,092 | ||
NON-CURRENT LIABILITIES | |||
Deferred tax liabilities (net) | 2.3 | – | – |
Other long-term liabilities | 2.4 | 30 | 364 |
30 | 364 | ||
CURRENT LIABILITIES | |||
Trade payables | 2.5 | 124 | 68 |
Other current liabilities | 2.6 | 5,546 | 4,071 |
Short-term provisions | 2.7 | 8,045 | 6,117 |
13,715 | 10,256 | ||
61,813 | 52,712 | ||
ASSETS | |||
NON-CURRENT ASSETS | |||
Fixed assets | |||
Tangible assets | 2.8 | 7,347 | 5,719 |
Intangible assets | 2.8 | – | 13 |
Capital work-in-progress | 769 | 954 | |
8,116 | 6,686 | ||
Non-current investments | 2.10 | 6,108 | 3,968 |
Deferred tax assets (net) | 2.3 | 433 | 542 |
Long-term loans and advances | 2.11 | 4,378 | 2,227 |
Other non-current assets | 2.12 | 26 | 52 |
19,061 | 13,475 | ||
CURRENT ASSETS | |||
Current investments | 2.10 | 749 | 2,749 |
Trade receivables | 2.13 | 8,627 | 7,336 |
Cash and cash equivalents | 2.14 | 27,722 | 24,100 |
Short-term loans and advances | 2.15 | 5,654 | 5,052 |
42,752 | 39,237 | ||
61,813 | 52,712 | ||
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the standalone financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
INFOSYS LIMITED
Incrore, except share and per equity share data
Statement of Profit and Loss for the | Note | Year ended March 31, | |
2015 | 2014 | ||
Income from software services and products | 2.16 | 47,300 | 44,341 |
Other income | 2.17 | 3,337 | 2,576 |
Total revenue | 50,637 | 46,917 | |
Expenses | |||
Employee benefit expenses | 2.18 | 25,115 | 24,350 |
Deferred consideration pertaining to acquisition | 2.10.1 | 219 | 228 |
Cost of technical sub-contractors | 2.18 | 2,909 | 2,596 |
Travel expenses | 2.18 | 1,360 | 1,287 |
Cost of software packages and others | 2.18 | 979 | 920 |
Communication expenses | 2.18 | 384 | 329 |
Professional charges | 396 | 474 | |
Depreciation and amortisation expense | 2.8 | 913 | 1,101 |
Other expenses | 2.18 | 1,976 | 1,630 |
Total expenses | 34,251 | 32,915 | |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 16,386 | 14,002 | |
Profit on transfer of business | 2.10.2 | 412 | – |
PROFIT BEFORE TAX | 16,798 | 14,002 | |
Tax expense: | |||
Current tax | 2.19 | 4,537 | 4,063 |
Deferred tax | 2.19 | 97 | (255) |
PROFIT FOR THE PERIOD | 12,164 | 10,194 | |
EARNINGS PER EQUITY SHARE | |||
Equity shares of par value![]() | |||
Before Exceptional item | |||
Basic | 102.33 | 89.20 | |
Diluted | 102.33 | 89.20 | |
After Exceptional item | |||
Basic | 105.91 | 89.20 | |
Diluted | 105.91 | 89.20 | |
Number of shares used in computing earnings per share | 2.33 | ||
Basic | 114,84,72,332 | 114,28,05,132 | |
Diluted | 114,84,87,674 | 114,28,05,132 | |
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the standalone financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
INFOSYS LIMITED
In crore
Cash Flow Statement for the | Year ended March 31, | ||
2015 | 2014 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Profit before tax | 16,798 | 14,002 | |
Adjustments to reconcile profit before tax to cash generated by operating activities | |||
Depreciation and amortisation expense | 913 | 1,101 | |
Provision for bad and doubtful debts | 142 | 124 | |
Deferred purchase price | 219 | 228 | |
Interest and dividend income | (2,738) | (2,272) | |
Profit on transfer of business(Refer note 2.10.2) | (412) | – | |
Stock compensation expense | 2 | – | |
Other adjustments | 52 | 35 | |
Effect of exchange differences on translation of assets and liabilities | 52 | (8) | |
Changes in assets and liabilities | |||
Trade receivables | (1,433) | (1,095) | |
Loans and advances and other assets | (326) | (844) | |
Liabilities and provisions | 1,175 | 1,506 | |
14,444 | 12,777 | ||
Income taxes paid(Refer note 2.20) | (6,489) | (3,629) | |
NET CASH GENERATED BY OPERATING ACTIVITIES | 7,955 | 9,148 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Payment towards capital expenditure | (1,988) | (2,490) | |
Proceeds on sale of fixed assets | 2 | 2 | |
Investment in subsidiaries | (1,748) | (2) | |
Investment in liquid mutual fund units | (23,184) | (21,262) | |
Disposal of liquid mutual fund units | 24,296 | 20,986 | |
Investment in fixed maturity plans | – | (100) | |
Redemption of fixed maturity plans | 110 | – | |
Investment in certificates of deposit | – | (1,233) | |
Redemption of certificates of deposit | 783 | 450 | |
Redemption in tax free bonds | – | (927) | |
Interest and dividend received | 2,394 | 2,269 | |
NET CASH USED IN INVESTING ACTIVITIES | 66 | (2,307) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Loan given to subsidiary | (73) | (33) | |
Loan repaid by subsidiary | 47 | – | |
Dividends paid (including corporate dividend tax) | (4,935) | (3,144) | |
NET CASH USED IN FINANCING ACTIVITIES | (4,961) | (3,177) | |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | (37) | 34 | |
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 3,622 | 3,698 | |
Add: Bank balances taken over from Infosys Consulting India Limited(Refer Note 2.27) | – | 1 | |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 24,100 | 20,401 | |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 27,722 | 24,100 | |
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the standalone financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal | K.V. Kamath | Dr. Vishal Sikka | R.Seshasayee |
Partner | Chairman | Chief Executive Officer and | Director |
Membership No. 090906 | Managing Director | ||
Chennai | Rajiv Bansal | ||
April 24, 2015 | Chief Financial Officer |
Significant accounting policies
Company overview
Infosys is a global leader in consulting, technology, outsourcing and next-generation services. Along with its subsidiaries, Infosys provides Business IT services (comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management); Consulting and systems integration services (comprising consulting, enterprise solutions, systems integration and advanced technologies); Products, business platforms and solutions to accelerate intellectual property-led innovation including Finacle, our banking solution; and offerings in the areas of Analytics, Cloud, and Digital Transformation.
The company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The company has its primary listings on the BSE Limited and National Stock Exchange in India. The company’s American Depositary Shares representing equity shares are also listed on the New York Stock Exchange (NYSE), NYSE Euronext London and NYSE Euronext Paris.
1 Significant accounting policies
1.1 Basis of preparation of financial statements
These 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 under Section 133 of the Companies Act, 2013 (‘Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.2 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 or costs expended to date as a proportion of the total efforts or costs 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 tangible 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.
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 method. 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 billings 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 method. 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 indirect taxes in its statement of profit and loss.
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.
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.
1.5 Post-sales client support and warranties
The Company provides its clients with a fixed-period warranty for corrections of errors and 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 statement of profit and loss. The Company estimates such costs based on historical experience and the estimates are reviewed annually for any material changes in assumptions.
1.6 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.
1.7 Tangible assets and capital work-in-progress
Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until such assets are ready for use. Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use at the reporting date.
1.8 Intangible assets
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
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.
1.9 Depreciation and amortization
Depreciation on tangible 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. 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(1) | 22-25 years |
Plant and machinery (1) | 5 years |
Office equipment | 5 years |
Computer equipment(1) | 3-5 years |
Furniture and fixtures(1) | 5 years |
Vehicles(1) | 5 years |
(1) | For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. |
Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end.(Refer note 2.8)
1.10 Impairment
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.
1.11 Retirement benefits to employees
a Gratuity
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, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India, as permitted by law of India. 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 statement of profit and loss in the period in which they arise.
b Superannuation
Certain employees are also participants in the superannuation plan ('the Plan') which is a defined contribution plan. The Company has no obligations to the Plan beyond its monthly contributions, which are periodically contributed to a trust fund, the corpus of which is invested with Life Insurance Corporation of India.
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 Limited Employees’ Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.
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 using projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
1.12 Share-based payments
The company accounts for equity settled stock options as per the accounting treatment prescribed by Securities and Exchange Board of India ( share based employee benefits) Regulations, 2014 and the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India using the intrinsic value method.
1.13 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 Statement of profit and loss. 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.
1.14 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 statement of profit and loss. 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 statement of profit and loss 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 and subsequently 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 statement of profit and loss. 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 statement of profit and loss at each reporting date.
1.15 Income taxes
Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax, 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. Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to statement of profit and loss are credited to the securities premium reserve.
1.16 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 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.
1.17 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. 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.
1.18 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.
1.19 Cash flow statement
Cash flows are reported using the indirect method, whereby 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.
1.20 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 recognized as an expense on a straight line basis in the statement of profit and loss over the lease term.
2 NOTES TO ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2015
Amounts in the financial statements are presented in crore, except for per share data and as otherwise stated. All exact amounts are stated with the suffix “/-”. One crore equals 10 million.
The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current period presentation.
2.1 SHARE CAPITAL
in crore, except as otherwise stated
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Authorized | ||
Equity shares,![]() | ||
120,00,00,000 (60,00,00,000) equity shares | 600 | 300 |
Issued, Subscribed and Paid-Up | ||
Equity shares,![]() | 574 | 286 |
114,84,72,332 (57,14,02,566) equity shares fully paid-up(2) | ||
574 | 286 |
Forfeited shares amounted to1,500/- (
1,500/-)
(1) | Refer note 2.33 for details of basic and diluted shares |
(2) | Net of treasury shares of 28,33,600 for the year ended March 31, 2014. |
Effective January 1, 2015, Infosys Limited Employees' Welfare trust (trust) has been deconsolidated consequent to SEBI (Share Based Employee Benefits) Regulations, 2014 issued on October 28, 2014.
The Company has only one class of shares referred to as equity shares having a par value of5/-. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the period of five years immediately preceding March 31, 2015:
The Company has allotted 57,42,36,166 fully paid up equity shares of face value5/- each during the quarter ended December 31, 2014 pursuant to a bonus issue approved by the shareholders through a postal ballot. The record date fixed by the Board of Directors was December 3, 2014. Bonus share of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, has been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted under the stock option plan have been adjusted for bonus shares.
During the year ended March 31, 2014, the amount of dividend per share recognized as distribution to equity shareholders was63/- (not adjusted for bonus issue). The dividend for the year ended March 31, 2014 includes
43/- per share (not adjusted for bonus issue) of final dividend. The total dividend appropriation for the year ended March 31, 2014 amounted to
4,233 crore, including corporate dividend tax of
615 crore.
The Board of Directors, in their meeting on October 10, 2014, declared an interim dividend of30/- per equity share (not adjusted for bonus issue). Further the Board of Directors, in their meeting on April 24, 2015, have proposed a final dividend of
29.50/- per equity share (equivalent to
14.75 per share after 1:1 bonus issue, if approved by shareholders). The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on June 22, 2015. The total dividend appropriation for the year ended March 31, 2015 would amount to approximately
6,145 crore including corporate dividend tax of
1,034 crore.
The Board has decided to revise and increase dividend pay-out ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
The Board in its meeting held on April 24, 2015 has considered and approved and recommended a bonus issue of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one American Depositary Share (ADS) for every ADS held, respectively, as on a record date to be determined. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder would remain unchanged. The bonus issue of equity shares and ADSs will be subject to approval by the shareholders, and any other applicable statutory and regulatory approvals. Accordingly, the record date for the bonus issues of equity shares and ADSs will be June 17, 2015, subject to shareholders’ approval. This date is proposed by the company and will be re-confirmed after shareholder approval.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held by the shareholders, after distribution of all preferential amounts.
The details of shareholder holding more than 5% shares as at March 31, 2015 and March 31, 2014 are set out below :
Name of the shareholder | As at March 31, 2015 | As at March 31, 2014 | ||
No. of shares | % held | No. of shares | % held | |
Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) | 18,60,73,981 | 16.20 | 9,24,70,660 | 16.10 |
The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2015 and March 31, 2014 is set out below:
Particulars | As at March 31, 2015 | As at March 31, 2014 | ||
Number of shares | Amount | Number of shares | Amount | |
Number of shares at the beginning of the period | 57,14,02,566 | 286 | 57,42,36,166 | 287 |
Add: Bonus shares issued (Including bonus on treasury shares) | 57,42,36,166 | 287 | – | – |
Add: Treasury shares on account of deconsolidation of trust | 2,833,600 | 1 | – | – |
Less: Treasury shares | – | – | 2,833,600 | 1 |
Number of shares at the end of the period | 114,84,72,332 | 574 | 57,14,02,566 | 286 |
Stock Option Plan:
2011 RSU Plan (the 2011 Plan): The Company has a 2011 RSU Plan which provides for the grant of restricted stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended establishment of the 2011 Plan to the shareholders on August 30, 2011 and the shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the Plan is 56,67,200 shares (currently held by the Infosys Limited Employees' Welfare Trust and adjusted for bonus shares issued) and the plan shall continue in effect for a term of 10 years from the date of initial grant under the plan. The RSUs will be issued at par value of the equity share. The 2011 Plan is administered by the Management Development and Compensation Committee (the Committee) and through the Infosys Limited Employees' Welfare Trust (the trust). The Committee is comprised of independent members of the Board of Directors.
During the year ended March 31, 2015 the company made a grant of 27,067 restricted stock units to Dr. Vishal Sikka, Chief Executive Officer and Managing Director. The RSUs will vest over a period of four years from the date of the grant in the proportions specified in the award agreement and expire seven days from the date of vesting. The RSUs will vest subject to achievement of certain key performance indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the excess of the closing market price on the grant date of the RSUs over the exercise price is amortized on a straight-line basis over the vesting period.
The activity in the 2011 Plan during the year ended March 31, 2015 is set out below:
Particulars | Year ended March 31, 2015 | |
Shares arising out of options | Weighted average exercise price | |
2011 Plan: | ||
Outstanding at the beginning | – | – |
Granted* | 54,134 | 5 |
Forfeited and expired | – | – |
Exercised | – | – |
Outstanding at the end | 54,134 | 5 |
Exercisable at the end | – | – |
* | adjusted for bonus issue |
The weighted average remaining contractual life of RSUs outstanding as of March 31, 2015 under the 2011 Plan was 2.39 years.
The differential on stock compensation expense if the ‘fair value’ of the RSU's on the date of the grant were considered instead of the ‘intrinsic value’ during the year ended March 31, 2015 is less than1 crore. Consequently, there is no impact on earnings per share.
The fair value for the above impact analysis is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
Particulars | Year ended March 31, 2015 |
Weighted average share price (![]() | 3,549 |
Exercise price (![]() | 5 |
Expected volatility (%) | 30 - 37 |
Expected life of the option (years) | 1 - 4 |
Expected dividends (%) | 1.84 |
Risk-free interest rate (%) | 8 - 9 |
The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the RSU. Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares during a period equivalent to the expected term of the RSU.
The weighted average fair value of RSUs on grant date was3,355/-
During the year ended March 31, 2015, the company recorded an employee compensation expense of2 crore in the statement of profit and loss.
2.2 RESERVES AND SURPLUS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Capital reserve - Opening balance | 54 | 54 |
Add: Transferred from Surplus | – | – |
54 | 54 | |
Securities premium reserve - Opening balance | 3,069 | 3,065 |
Add: Reserves on consolidation of trust | – | 4 |
Less: Deconsolidation of trust(Refer note 2.1) | 4 | – |
Less: Amount utilized for issuance of bonus shares(Refer note 2.1) | 287 | – |
2,778 | 3,069 | |
Stock Options Outstanding- Opening balance(Refer note 2.1) | – | – |
Additions during the period | 2 | – |
2 | – | |
General reserve - Opening balance | 8,291 | 7,270 |
Add: Transferred from Surplus | 1,217 | 1,021 |
9,508 | 8,291 | |
Surplus - Opening balance | 30,392 | 25,383 |
Add: Net profit after tax transferred from Statement of Profit and Loss | 12,164 | 10,194 |
Reserves on consolidation of trust | – | 50 |
Dividend eliminated on consolidation of trust | – | 13 |
Reserves on transfer of assets and liabilities of Infosys Consulting India Limited(refer note 2.27) | – | 6 |
Less: Deconsolidation of trust, net(Refer note 2.1) | 42 | – |
Amount available for appropriation | 42,514 | 35,646 |
Appropriations: | ||
Interim dividend | 1,723 | 1,149 |
Final dividend | 3,388 | 2,469 |
Total dividend | 5,111 | 3,618 |
Dividend tax | 1,034 | 615 |
Amount transferred to general reserve | 1,217 | 1,021 |
Surplus- Closing Balance | 35,152 | 30,392 |
47,494 | 41,806 |
2.3 DEFERRED TAXES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Deferred tax assets | ||
Fixed assets | 210 | 356 |
Trade receivables | 100 | 44 |
Unavailed leave | 280 | 249 |
Computer software | 51 | 50 |
Accrued compensation to employees | 29 | 31 |
Post sales client support | 72 | 98 |
Others | 7 | 17 |
749 | 845 | |
Deferred tax liabilities | ||
Branch profit tax | 316 | 303 |
316 | 303 | |
Deferred tax assets after set-off | 433 | 542 |
Deferred tax liabilities after set-off | – | – |
Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set-off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
As at March 31, 2015 and March 31, 2014, the Company has provided for branch profit tax of316 crore and
303 crore, respectively, for its overseas branches, as the Company estimates that these branch profits would be distributed in the foreseeable future. The change in provision for branch profit tax includes
13 crore movement on account of exchange rate during the year ended March 31, 2015.
2.4 OTHER LONG-TERM LIABILITIES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Others | ||
Gratuity obligation - unamortized amount relating to plan amendment(refer note 2.30) | 3 | 7 |
Payable for acquisition of business(refer note 2.10.1) | – | 330 |
Rental deposits received from subsidiary(refer note 2.26) | 27 | 27 |
30 | 364 |
2.5 TRADE PAYABLES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Trade payables | 124 | 68 |
124 | 68 | |
Includes dues to subsidiaries (refer note 2.26) | 102 | 30 |
2.6 OTHER CURRENT LIABILITIES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Accrued salaries and benefits | ||
Salaries and benefits | 1,144 | 503 |
Bonus and incentives | 575 | 669 |
Other liabilities | ||
Provision for expenses(1) | 1,582 | 1,296 |
Retention monies | 50 | 72 |
Withholding and other taxes payable | 733 | 834 |
Gratuity obligation - unamortized amount relating to plan amendment, current(refer note 2.30) | 4 | 4 |
Other payables(2) | 79 | 63 |
Advances received from clients | 20 | 21 |
Unearned revenue | 831 | 606 |
Unpaid dividends | 3 | 3 |
Payable for acquisition of business(refer note 2.10.1) | 525 | – |
5,546 | 4,071 | |
(1) Includes dues to subsidiaries (refer note 2.26) | 36 | 8 |
(2) Includes dues to subsidiaries (refer note 2.26) | 33 | 3 |
2.7 SHORT-TERM PROVISIONS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Provision for employee benefits | ||
Unavailed leave | 907 | 798 |
Others | ||
Proposed dividend | 3,388 | 2,469 |
Provision for | ||
Tax on dividend | 690 | 420 |
Income taxes (net of advance tax and TDS) | 2,678 | 2,105 |
Post-sales client support and warranties and other provisions | 382 | 325 |
Provision towards visa related matters(Refer note 2.37) | – | – |
8,045 | 6,117 |
Provision for post-sales client support and warranties and other provisions
The movement in the provision for post-sales client support and warranties and other provisions is as follows :
in crore
Particulars | Year ended | |
March 31, 2015 | March 31, 2014 | |
Balance at the beginning | 325 | 199 |
Provision recognized/(reversed) | 134 | 124 |
Provision utilized | (78) | – |
Exchange difference during the period | 1 | 2 |
Balance at the end | 382 | 325 |
Provision for post-sales client support and other provisions are expected to be utilized over a period of 6 months to 1 year.
Provision towards visa related matters amounting to219 crore (including legal costs) was created and paid during the year ended March 31, 2014.
2.8 FIXED ASSETS
Following are the changes in the carrying value of fixed assets for the year ended March 31, 2015:
in crore, except as otherwise stated
Particulars | Tangible assets | Intangible assets | Total | |||||||||
Land-Freehold | Land- Leasehold | Buildings(1)(2) | Plant and equipment(2) | Office equipment(2) | Computer equipment(2) (3) | Furniture and fixtures(2) | Vehicles | Total | Intellectual property rights | Total | ||
Original cost | ||||||||||||
As at April 1, 2014 | 781 | 349 | 4,878 | 1,090 | 393 | 2,178 | 679 | 13 | 10,361 | 59 | 59 | 10,420 |
Additions/ Adjustments during the year | 148 | 272 | 855 | 274 | 134 | 694 | 160 | 3 | 2,540 | – | – | 2,540 |
Deductions/ Retirement during the year | – | – | – | (3) | (2) | (60) | (7) | (2) | (74) | (17) | (17) | (91) |
As at March 31, 2015 | 929 | 621 | 5,733 | 1,361 | 525 | 2,812 | 832 | 14 | 12,827 | 42 | 42 | 12,869 |
Depreciation and amortization | ||||||||||||
As at April 1, 2014 | – | – | 1,754 | 671 | 215 | 1,554 | 441 | 7 | 4,642 | 46 | 46 | 4,688 |
For the period | – | 16 | 183 | 169 | 67 | 350 | 113 | 2 | 900 | 13 | 13 | 913 |
Deductions/ Adjustments during the year | – | – | – | (2) | (2) | (52) | (5) | (1) | (62) | (17) | (17) | (79) |
As at March 31, 2015 | – | 16 | 1,937 | 838 | 280 | 1,852 | 549 | 8 | 5,480 | 42 | 42 | 5,522 |
Net book value | ||||||||||||
As at March 31, 2015 | 929 | 605 | 3,796 | 523 | 245 | 960 | 283 | 6 | 7,347 | – | – | 7,347 |
Notes: | (1) | Buildings include![]() ![]() |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries | |
(3) | During the year ended March 31, 2015, computer equipment having net book value of![]() |
Following are the changes in the carrying value of fixed assets for the year ended March 31, 2014:
in crore, except as otherwise stated
Particulars | Tangible assets | Intangible assets | Total | |||||||||
Land–Freehold | Land– Leasehold | Buildings(1)(2) | Plant and equipment(2) | Office equipment(2) | Computer equipment(3) | Furniture and fixtures(2) | Vehicles | Total | Intellectual property rights | Total | ||
Original cost | ||||||||||||
As at April 1, 2013 | 492 | 348 | 4,053 | 779 | 276 | 1,525 | 518 | 10 | 8,001 | 59 | 59 | 8,060 |
Additions/ Adjustments during the year | 290 | 1 | 825 | 312 | 117 | 672 | 161 | 3 | 2,381 | – | – | 2,381 |
Deductions/ Retirement during the year | (1) | – | – | (1) | – | (19) | – | – | (21) | – | – | (21) |
As at March 31, 2014 | 781 | 349 | 4,878 | 1,090 | 393 | 2,178 | 679 | 13 | 10,361 | 59 | 59 | 10,420 |
Depreciation and amortization | ||||||||||||
As at April 1, 2013 | – | – | 1,467 | 547 | 159 | 1,053 | 345 | 5 | 3,576 | 31 | 31 | 3,607 |
For the period | – | – | 287 | 125 | 56 | 520 | 96 | 2 | 1,086 | 15 | 15 | 1,101 |
Deductions/ Adjustments during the year | – | – | – | (1) | – | (19) | – | – | (20) | – | – | (20) |
As at March 31, 2014 | – | – | 1,754 | 671 | 215 | 1,554 | 441 | 7 | 4,642 | 46 | 46 | 4,688 |
Net book value | ||||||||||||
As at March 31, 2014 | 781 | 349 | 3,124 | 419 | 178 | 624 | 238 | 6 | 5,719 | 13 | 13 | 5,732 |
Notes: | (1) | Buildings include![]() ![]() |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries | |
(3) | The opening Balance as of April 1, 2013 includes computer equipment having gross book value of![]() |
During the quarter ended June 30, 2014, the management based on internal and external technical evaluation reassessed the remaining useful life of assets primarily consisting of buildings and computers with effect from April 1, 2014. Accordingly the useful lives of certain assets required a change from the previous estimates.
The existing and revised useful lives are as below:
Category of assets | Earlier useful life (Years) | Current useful life (Years) |
Building | 15 | 22-25 |
Plant and machinery | 5 | 5 |
Computer equipment | 2-5 | 3-5 |
Furniture and fixtures | 5 | 5 |
Vehicles | 5 | 5 |
Had the Company continued with the previously assessed useful lives, charge for depreciation for the year ended March 31, 2015 would have been higher by404 crore for assets held at April 1, 2014. The revision of the useful lives will result in the following changes in the depreciation expense as compared to the original useful life of the assets.
in crore
Particulars | Fiscal 2016 | After Fiscal 2016 |
Increase /(decrease) in depreciation expense | (145) | 549 |
The Company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of some of these agreements, the Company has the option to purchase or renew the properties on expiry of the lease period.
Tangible assets provided on operating lease to subsidiaries as at March 31, 2015 andMarch 31, 2014 are as follows:
in crore
Particulars | Cost | Accumulated depreciation | Net book value |
Buildings | 98 | 35 | 63 |
49 | 32 | 17 | |
Plant and equipment | 12 | 3 | 9 |
1 | – | 1 | |
Furniture and fixtures | 11 | 2 | 9 |
– | – | – | |
Office equipment | 6 | 1 | 5 |
– | – | – |
The aggregate depreciation charged on the above assets during the year ended March 31, 2015 amounted to9 crore (
3 crore for the year ended March 31, 2014).
The rental income from subsidiaries for the year ended March 31, 2015 amounted to40 crore (
17 crore for the year ended March 31, 2014).
2.9 LEASES
Obligations on long-term, non-cancellable operating leases
The lease rentals charged during the period and the obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows:
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Lease rentals recognized during the period | 158 | 177 |
in crore
As at , | ||
Lease obligations payable | March 31, 2015 | March 31, 2014 |
Within one year of the balance sheet date | 101 | 125 |
Due in a period between one year and five years | 284 | 314 |
Due after five years | 158 | 218 |
The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of inception and relates to rented premises. Some of these lease agreements have price escalation clauses.
2.10 INVESTMENTS
in crore, except as otherwise stated
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Non-current investments | ||
Long term investments - at cost | ||
Trade (unquoted) | ||
Investments in equity instruments of subsidiaries | ||
Infosys BPO Limited | ||
3,38,22,319 (3,38,22,319) equity shares of![]() | 659 | 659 |
Infosys Technologies (China) Co. Limited | 169 | 107 |
Infosys Technologies (Australia) Pty Limited | ||
1,01,08,869 (1,01,08,869) equity shares of AUD 0.11 par value, fully paid | 66 | 66 |
Infosys Technologies, S. de R.L. de C.V., Mexico | ||
17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up | 65 | 65 |
Infosys Technologies (Sweden) AB | ||
1,000 (1,000) equity shares of SEK 100 par value, fully paid | – | – |
Infosys Technologia do Brasil Ltda | ||
5,91,24,348 (3,99,99,999) shares of BRL 1.00 par value, fully paid | 149 | 109 |
Infosys Technologies (Shanghai) Company Limited | 388 | 234 |
Infosys Consulting India Limited | ||
Nil (Nil) equity shares of![]() | – | – |
Infosys Public Services, Inc. | ||
3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid | 99 | 99 |
Lodestone Holding AG(refer note 2.10.1) | ||
23,350 (23,350) - Class A shares of CHF 1,000 each and 29,400 (29,400) - Class B Shares of CHF 100 each, fully paid up | 1,323 | 1,323 |
Infosys Americas Inc. | ||
10,000 (10,000) shares of USD 10 per share, fully paid up | 1 | 1 |
Edgeverve Systems Limited(refer note 2.10.2) | ||
46,18,39,994 (9,99,994) equity shares of![]() | 462 | 1 |
Panaya Inc.(refer note 2.10.3) | ||
2 (Nil) shares of USD 0.01 per share, fully paid up | 1,398 | – |
Infosys Nova Holdings LLC(refer note 2.10.4) | 94 | – |
4,873 | 2,664 | |
Others (unquoted)(refer note 2.10.5) | ||
Investments in equity instruments | 7 | 6 |
Less: Provision for investments | 6 | 2 |
1 | 4 | |
Others (quoted) | ||
Investments in tax free bonds(refer note 2.10.6) | 1,234 | 1,300 |
Investments in government bonds(refer note 2.10.6) | – | – |
1,234 | 1,300 | |
Total non-current investments | 6,108 | 3,968 |
Current portion of Long term investments | ||
Quoted | ||
Fixed Maturity Plans(refer note 2.10.7) | – | 100 |
– | 100 | |
Current investments – at the lower of cost and fair value | ||
Other current investments | ||
Unquoted | ||
Liquid mutual fund units(refer note 2.10.8) | 749 | 1,866 |
Certificates of deposit(refer note 2.10.9) | – | 783 |
749 | 2,649 | |
Total current investments | 749 | 2,749 |
Total investments | 6,857 | 6,717 |
Aggregate amount of quoted investments excluding interest accrued but not due of![]() ![]() | 1,234 | 1,400 |
Market value of quoted investments | 1,269 | 1,344 |
Aggregate amount of unquoted investments | 5,629 | 5,319 |
Aggregate amount of provision made for non-current unquoted investments | 6 | 2 |
Profit on sale of Investment is10 crore for year ended March 31, 2015 (Nil for the year ended March 31, 2014).
2.10.1 Investment in Lodestone Holding AG
On October 22, 2012, Infosys acquired 100% of the outstanding share capital of Lodestone Holding AG, a global management consultancy firm headquartered in Zurich, Switzerland. The acquisition was executed through a share purchase agreement for an upfront cash consideration of1,187 crore and a deferred consideration of upto
608 crore.
The deferred consideration is payable to the selling shareholders of Lodestone on the third anniversary of the acquisition date and is contingent upon their continued employment for a period of three years. The investment in Lodestone has been recorded at the acquisition cost and the deferred consideration is being recognised on a proportionate basis over a period of three years from the date of acquisition. An amount of219crore and
228 crore, representing the proportionate charge of the deferred consideration has been recognised as an expense during the year ended March 31, 2015 and March 31, 2014 respectively.
2.10.2 Investment in Edgeverve Systems Limited
On February 14, 2014, a wholly owned subsidiary Edgeverve Systems Limited (Edgeverve) was incorporated. Edgeverve was created to focus on developing and selling products and platforms. On April 15, 2014, the Board of Directors (the Board) of Infosys authorized the Company to execute a Business Transfer Agreement and related documents with Edgeverve, subject to securing the requisite approval from shareholders in the Annual General Meeting. Subsequently, at the AGM held on June 14, 2014, the shareholders have authorized the Board to enter into a Business Transfer Agreement and related documents with Edgeverve, with effect from July 1, 2014 or such other date as may be decided by the Board. The company has undertaken an enterprise valuation by an independent valuer and accordingly the business has been transferred for a consideration of $70 million ( approximately421 crore) with effect from July 1, 2014. Net assets amounting to
9 crore have also been transferred and accordingly a gain of
412 crore has been recorded as an exceptional item. The consideration has been settled through the issue of fully paid up shares in Edgeverve.
2.10.3 Investment in Panaya Inc
On March 5, 2015, Infosys acquired 100% of the voting interests in Panaya Inc. (Panaya), a Delaware Corporation in the United States. Panaya is a leading provider of automation technology for large scale enterprise and software management. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of approximately1,398 crore.
2.10.4 Investment in DWA Nova LLC
During the year ended March 31, 2015, Infosys Nova Holdings LLC acquired 20% of the equity interests in DWA Nova LLC for a cash consideration of94 crore. The company invested
94 crore to form a new company alongwith Dream Works Animation (DWA). The new company, DWA Nova LLC, will develop and commercialize image generation technology in order to provide end-to-end digital manufacturing capabilities for companies involved in the design, manufacturing, marketing or distribution of physical consumer products.
Proposed Investment
On April 24, 2015, the company entered into a definitive agreement to acquire Kallidus Inc. (d.b.a Skava) and its affiliate, a leading provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients for a consideration of $120 million (approximately750 crore) including a deferred component and retention bonus.
2.10.5 Details of Investments
The details of non-current other investments in equity instruments as at March 31, 2015 and March 31, 2014 are as follows:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
OnMobile Systems Inc., (formerly Onscan Inc.) USA | ||
21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid, par value USD 0.001 each | 4 | 4 |
Merasport Technologies Private Limited | ||
2,420 (2,420) equity shares at![]() ![]() | 2 | 2 |
Global Innovation and Technology Alliance | ||
10,000 (5,000) equity shares at![]() ![]() | 1 | – |
7 | 6 | |
Less: Provision for investment | 6 | 2 |
1 | 4 |
2.10.6 Details of Investments in tax free bonds
The balances held in tax free bonds as at March 31, 2015 and March 31, 2014 is as follows:
in crore
Particulars | Face Value![]() | As at March 31, 2015 | As at March 31, 2014 | ||
Units | Amount | Units | Amount | ||
7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023 | 1,000/- | 20,00,000 | 201 | 20,00,000 | 201 |
7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028 | 1,000/- | 21,00,000 | 211 | 21,00,000 | 211 |
7.93% Rural Electrification Corporation Limited Bonds 27MAR2022 | 1,000/- | 2,00,000 | 21 | 2,00,000 | 21 |
8.26% India Infrastructure Finance Company Limited Bonds 23AUG28 | 10,00,000/- | 1,000 | 100 | 1,000 | 100 |
8.30% National Highways Authority of India Bonds 25JAN2027 | 1,000/- | 5,00,000 | 53 | 5,00,000 | 53 |
8.35% National Highways Authority of India Bonds 22NOV2023 | 10,00,000/- | 1,500 | 150 | 1,500 | 150 |
8.46% India Infrastructure Finance Company Limited Bonds 30AUG2028 | 10,00,000/- | 2,000 | 200 | 2,000 | 200 |
8.46% Power Finance Corporation Limited Bonds 30AUG2028 | 10,00,000/- | 1,500 | 150 | 1,500 | 150 |
8.48% India Infrastructure Finance Company Limited Bonds 05SEP2028 | 10,00,000/- | 450 | 45 | 450 | 45 |
8.54% Power Finance Corporation Limited Bonds 16NOV2028 | 1,000/- | 5,00,000 | 50 | 5,00,000 | 50 |
8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027 | 1,000/- | 5,00,000 | 53 | 5,00,000 | 53 |
8.20% Power Finance Corporation Limited Bonds 2022 | 1,000/- | – | – | 5,00,000 | 51 |
8.00% Indian Railway Finance Corporation Limited Bonds 2022 | 1,000/- | – | – | 1,50,000 | 15 |
58,06,450 | 1,234 | 64,56,450 | 1,300 |
The balances held in government bonds as at March 31, 2015 and March 31, 2014 is as follows:
in crore
Particulars | Face Value![]() | As at March 31, 2015 | As at March 31, 2014 | ||
Units | Amount | Units | Amount | ||
FIXED RATE TREASURY NOTES 7.00 PCT PIBD0716A488 MAT DATE 27 JAN 2016 | 140 | 10,000 | – | – | – |
10,000 | – | – | – |
2.10.7 Details of Investments in Fixed Maturity Plans
The balances held in Fixed Maturity Plans as at March 31, 2014 is as follows:
in crore
Particulars | As at March 31, 2014 | |
Units | Amount | |
UTI - Fixed Term Income Fund Series - XVII –XIII | 2,50,00,000 | 25 |
HDFC Fixed Maturity Plans - Series 29 | 2,50,00,000 | 25 |
DSP BlackRock FMP Series 146 12M - Dir - Growth | 2,50,00,000 | 25 |
DSP Black Rock FMP Series 151 12M - Dir - Growth | 2,50,00,000 | 25 |
10,00,00,000 | 100 |
2.10.8 Details of Investments in liquid mutual fund units
The balances held in liquid mutual fund units as at March 31, 2015 is as follows:
in crore
Particulars | Units | Amount |
IDFC Cash Fund - Direct Plan Daily Dividend | 29,30,197 | 293 |
Reliance Liquid Fund - Treasury Plan - Direct Plan Daily Dividend Option | 9,81,551 | 150 |
SBI Premier Liquid Fund - Direct Plan Daily Dividend | 9,97,094 | 100 |
ICICI Liquid Plan - Direct Plan Daily Dividend | 2,05,44,807 | 206 |
2,54,53,649 | 749 |
The balances held in liquid mutual fund units as at March 31, 2014 is as follows:
in crore
Particulars | Units | Amount |
SBI Premier Liquid Fund - Direct Plan - Daily Dividend Reinvestment | 14,96,454 | 150 |
IDFC Cash Fund Daily Dividend - Direct Plan | 23,95,149 | 240 |
Tata Liquid Fund Direct Plan - Daily Dividend | 24,61,026 | 274 |
HDFC Liquid Fund-Direct Plan- Daily Dividend Reinvestment | 33,44,09,159 | 341 |
Religare Invesco Liquid Fund-Direct Plan Daily Dividend | 12,704 | 1 |
Reliance Liquidity Fund-Direct Plan Daily Dividend Reinvestment Option | 35,45,234 | 355 |
L & T Liquid Fund Direct Plan - Daily Dividend Reinvestment | 14,82,628 | 150 |
UTI Liquid Cash Plan - Institutional - Direct Plan - Daily Dividend Reinvestment | 11,78,546 | 120 |
Birla Sun Life Floating Rate Fund-STP-DD-Direct Reinvestment | 2,34,93,259 | 235 |
37,04,74,159 | 1,866 |
2.10.9 Details of Investments in certificate of deposits
The balances held in certificates of deposit as at March 31, 2014 is as follows:
in crore
Particulars | Face value![]() | Units | Amount |
Oriental Bank of Commerce | 100,000/- | 48,500 | 454 |
IDBI Bank Limited | 100,000/- | 10,000 | 93 |
Corporation Bank | 100,000/- | 8,000 | 75 |
Union Bank of India | 100,000/- | 5,000 | 46 |
Indian Overseas Bank | 100,000/- | 5,000 | 46 |
HDFC Bank | 100,000/- | 5,000 | 46 |
Vijaya Bank | 100,000/- | 2,500 | 23 |
84,000 | 783 |
2.11 LONG-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Unsecured, considered good | ||
Capital advances | 316 | 687 |
Security deposits | 65 | 59 |
Rental deposits(1) | 45 | 48 |
Other loans and advances | ||
Advance income taxes (net of provisions) | 3,941 | 1,417 |
Prepaid expenses | 7 | 10 |
Loans and advances to employees | ||
Housing and other loans | 4 | 6 |
4,378 | 2,227 | |
Unsecured, considered doubtful | ||
Loans and advances to employees | 10 | 6 |
4,388 | 2,233 | |
Less: Provision for doubtful loans and advances to employees | 10 | 6 |
4,378 | 2,227 | |
(1) Includes deposits with subsidiaries (refer note 2.26) | 21 | 21 |
2.12 OTHER NON-CURRENT ASSETS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Others | ||
Restricted deposits(refer note 2.34) | – | 43 |
Advance to gratuity trust(refer note 2.30) | 26 | 9 |
26 | 52 |
2.13 TRADE RECEIVABLES(1)
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Debts outstanding for a period exceeding six months | ||
Unsecured | ||
Considered doubtful | 162 | 135 |
Less: Provision for doubtful debts | 162 | 135 |
– | – | |
Other debts | ||
Unsecured | ||
Considered good(2) | 8,627 | 7,336 |
Considered doubtful | 160 | 61 |
8,787 | 7,397 | |
Less: Provision for doubtful debts | 160 | 61 |
8,627 | 7,336 | |
8,627 | 7,336 | |
(1)Includes dues from companies where directors are interested | 6 | 117 |
(2) Includes dues from subsidiaries (refer note 2.26) | 309 | 129 |
2.14 CASH AND CASH EQUIVALENTS
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Cash on hand | – | – |
Balances with banks | ||
In current and deposit accounts | 23,722 | 20,600 |
Others | ||
Deposits with financial institution | 4,000 | 3,500 |
27,722 | 24,100 | |
Balances with banks in unpaid dividend accounts | 3 | 3 |
Deposit accounts with more than 12 months maturity | 182 | 182 |
Balances with banks held as margin money deposits against guarantees | 185 | 200 |
Cash and cash equivalents as of March 31, 2015 and March 31, 2014 include restricted cash and bank balances of188crore and
203 crore, respectively. The restrictions are primarily on account of cash and bank balances held as margin money deposits against guarantees and unpaid dividends.
The deposits maintained by the Company with banks and financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.
The details of balances as on Balance Sheet dates with banks are as follows:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
In current accounts | ||
ANZ Bank, Taiwan | 4 | 1 |
Bank of America, USA | 498 | 632 |
Citibank NA, Australia | 10 | 75 |
Citibank NA, India | 6 | 2 |
Citibank, Dubai | 1 | – |
Citibank NA, EEFC (U.S. Dollar account) | 2 | – |
Citibank NA, Japan | 20 | 11 |
Citibank NA, New Zealand | 3 | 2 |
Citibank NA, South Africa | 2 | 1 |
Citibank NA, Thailand | – | 1 |
Deutsche Bank, Philippines | 2 | – |
Deutsche Bank, India | 4 | 7 |
Deutsche Bank-EEFC (Euro account) | 2 | 8 |
Deutsche Bank-EEFC (GBP account) | 5 | 11 |
Deutsche Bank-EEFC (AUD account) | – | 8 |
Deutsche Bank-EEFC (U.S. Dollar account) | 7 | 63 |
Deutsche Bank-EEFC (CHF account) | 4 | 1 |
Deutsche Bank, Belgium | 13 | 12 |
Deutsche Bank, France | 2 | 5 |
Deutsche Bank, Germany | 8 | 33 |
Deutsche Bank, Netherlands | 1 | 16 |
Deutsche Bank, Russia | – | 1 |
Deutsche Bank, Russia (U.S. Dollar account) | – | 13 |
Deutsche Bank, Singapore | 5 | 10 |
Deutsche Bank, Spain | 1 | 3 |
Deutsche Bank, Switzerland | – | 3 |
Deutsche Bank, Switzerland (U.S. Dollar account) | – | 2 |
Deutsche Bank, UK | 24 | 73 |
HSBC, Hong Kong | 44 | 2 |
ICICI Bank, India | 18 | 31 |
ICICI Bank-EEFC (U.S. Dollar account) | 9 | 8 |
Nordbanken, Sweden | 1 | 13 |
Punjab National Bank, India | 7 | 3 |
Royal Bank of Canada, Canada | 11 | 22 |
State Bank of India | 1 | 9 |
715 | 1,082 |
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
In deposit accounts | ||
Allahabad Bank | 200 | 931 |
Andhra Bank | 97 | 753 |
Axis Bank | 1,415 | 1,000 |
Bank of Baroda | 2,314 | 2,125 |
Bank of India | 2,691 | 2,461 |
Canara Bank | 2,841 | 2,046 |
Central Bank of India | 1,303 | 1,500 |
Corporation Bank | 1,197 | 1,054 |
Development Bank of Singapore | 35 | – |
HDFC Bank | 2,017 | – |
ICICI Bank | 3,059 | 2,976 |
IDBI Bank | 706 | 1,650 |
Indusind Bank | 75 | 25 |
ING Vysya Bank | 100 | 200 |
Indian Overseas Bank | 573 | 700 |
Jammu and Kashmir Bank | – | 25 |
Kotak Mahindra Bank | – | 25 |
Oriental Bank of Commerce | 1,500 | 86 |
Punjab National Bank | 512 | – |
Syndicate Bank | 327 | 783 |
Vijaya Bank | 386 | 775 |
Union Bank of India | 971 | – |
Yes Bank | 500 | 200 |
22,819 | 19,315 | |
In unpaid dividend accounts | ||
HDFC Bank - Unpaid dividend account | 1 | 1 |
ICICI bank - Unpaid dividend account | 2 | 2 |
3 | 3 | |
In margin money deposits against guarantees | ||
Canara Bank | 128 | 142 |
State Bank of India | 57 | 58 |
185 | 200 | |
Deposits with financial institution | ||
HDFC Limited | 4,000 | 3,500 |
4,000 | 3,500 | |
Total cash and cash equivalents as per Balance Sheet | 27,722 | 24,100 |
2.15 SHORT-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Unsecured, considered good | ||
Loans to subsidiaries(refer note 2.26) | 24 | 36 |
Others | ||
Advances | ||
Prepaid expenses | 71 | 98 |
For supply of goods and rendering of services | 60 | 72 |
Withholding and other taxes receivable | 1,253 | 987 |
Others(1) | 49 | 20 |
1,457 | 1,213 | |
Restricted deposits(refer note 2.34) | 1,039 | 934 |
Unbilled revenues(2) | 2,423 | 2,392 |
Interest accrued but not due | 433 | 92 |
Loans and advances to employees | ||
Housing and other loans | 53 | 64 |
Salary advances | 148 | 127 |
Security deposits | 1 | 8 |
Mark-to-market forward and options contracts | 94 | 217 |
Rental deposits | 6 | 5 |
5,654 | 5,052 | |
(1) Includes dues from subsidiaries (refer note 2.26) | 43 | 13 |
(2) Includes dues from subsidiaries (refer note 2.26) | 6 | – |
2.16 INCOME FROM SOFTWARE SERVICES AND PRODUCTS
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Income from software services | 45,658 | 42,531 |
Income from software products | 1,642 | 1,810 |
47,300 | 44,341 |
2.17 OTHER INCOME
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Interest received on deposits with banks and others | 2,592 | 2,135 |
Dividend received on investment in mutual fund units | 146 | 137 |
Gain on sale of investments | 10 | – |
Miscellaneous income, net | 64 | 26 |
Gains / (losses) on foreign currency, net | 525 | 278 |
3,337 | 2,576 |
2.18 EXPENSES
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Employee benefit expenses | ||
Salaries and bonus including overseas staff expenses | 24,509 | 23,852 |
Contribution to provident and other funds | 519 | 432 |
Employee compensation expense(Refer note 2.1) | 2 | – |
Staff welfare | 85 | 66 |
25,115 | 24,350 | |
Cost of technical sub-contractors | ||
Technical sub-contractors - subsidiaries | 1,385 | 1,451 |
Technical sub-contractors - others | 1,524 | 1,145 |
2,909 | 2,596 | |
Travel expenses | ||
Overseas travel expenses | 1,235 | 1,186 |
Travelling and conveyance | 125 | 101 |
1,360 | 1,287 | |
Cost of software packages and others | ||
For own use | 797 | 726 |
Third party items bought for service delivery to clients | 182 | 194 |
979 | 920 | |
Communication expenses | ||
Telephone charges | 247 | 232 |
Communication expenses | 137 | 97 |
384 | 329 |
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Other expenses | ||
Office maintenance | 361 | 315 |
Power and fuel | 185 | 181 |
Brand building | 94 | 77 |
Rent | 158 | 177 |
Rates and taxes, excluding taxes on income | 108 | 89 |
Repairs to building | 99 | 40 |
Repairs to plant and machinery | 70 | 41 |
Computer maintenance | 104 | 90 |
Consumables | 39 | 21 |
Insurance charges | 42 | 34 |
Provision for post-sales client support and warranties | 17 | 36 |
Commission to non-whole time directors | 8 | 8 |
Provision for bad and doubtful debts and advances | 145 | 126 |
Auditor's remuneration | ||
Statutory audit fees | 2 | 1 |
Other services | – | – |
Reimbursement of expenses | – | – |
Bank charges and commission | 8 | 6 |
Contributions towards CSR(Refer Note 2.35) | 243 | – |
Others | 293 | 388 |
1,976 | 1,630 |
2.19 TAX EXPENSE
in crore
Year ended March 31, | ||
2015 | 2014 | |
Current tax | ||
Income tax | 4,537 | 4,063 |
Deferred tax | 97 | (255) |
4,634 | 3,808 |
During the year ended March 31, 2015 and March 31, 2014, the company had a reversal (net of provisions) of161 crore and
19 crore, respectively, pertaining to tax relating to prior years.
The revision in the useful life of assets held at April 1, 2014 has resulted in a decrease in deferred tax credit by165 crore for the year ended March 31, 2015(Refer note 2.8).
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 as per Indian Income Tax Act, 1961. Infosys' operations are conducted through Software Technology Parks('STPs') and Special Economic Zones ('SEZs'). Income from STPs were tax exempt for the first 10 years from the fiscal year in which the unit commences software development, or March 31, 2011 which ever is earlier. Income from SEZs Unit 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.
2.20 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Contingent liabilities : | ||
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 | 22 | 24 |
Claims against the Company, not acknowledged as debts(1) | 167 | 169 |
[Net of amount paid to statutory authorities![]() ![]() | ||
Commitments : | ||
Estimated amount of unexecuted capital contracts | 1,272 | 827 |
(net of advances and deposits) |
(1) | Claims against the company not acknowledged as debts include demand from the Indian Income tax authorities for payment of tax of![]() ![]() ![]() ![]() ![]() |
Demand for fiscal 2006, fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the Income Tax Act as determined by the ratio of export turnover to total turnover. This disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009 and fiscal 2010 also includes disallowance of portion of profit earned outside India from the STP units and disallowance of profits earned from SEZ units under section 10AA of the Income Tax Act. The matter for fiscal 2007, fiscal 2008 and fiscal 2009 are pending before the Commissioner of Income tax (Appeals) Bangalore. For matter of fiscal 2006, the Commissioner of Income tax (Appeals) has passed a partly favorable order. The order giving effect of said Commissioner Order is awaited. 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. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.
2.21 DERIVATIVE INSTRUMENTS
The following table gives details in respect of outstanding foreign exchange forward and option contracts:
As at | ||||
March 31, 2015 | March 31, 2014 | |||
in million | in![]() | in million | in![]() | |
Forward contracts outstanding | ||||
In USD | 664 | 4,150 | 724 | 4,338 |
In Euro | 59 | 396 | 49 | 405 |
In GBP | 68 | 632 | 73 | 732 |
In AUD | 95 | 452 | 75 | 415 |
In CAD | 12 | 59 | – | – |
In SGD | 25 | 114 | – | – |
Options outstanding | ||||
In USD | – | – | 20 | 120 |
5,803 | 6,010 |
As of the Balance Sheet date, the Company's net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Nil (Nil as at March 31, 2014).
The foreign exchange forward & option contracts mature within 12 months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date:
in crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Not later than one month | 1,382 | 1,137 |
Later than one month and not later than three months | 3,608 | 2,674 |
Later than three months and not later than one year | 813 | 2,199 |
5,803 | 6,010 |
The Company recognized a gain of499 crore and
217 crore on derivative instruments during the year ended March 31, 2015 and March 31, 2014, respectively, which is included in other income.
2.22 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 5 (viii)(c) of general instructions for preparation of the statement of profit and loss as per Schedule III to the Companies Act, 2013.
2.23 IMPORTS (VALUED ON THE COST, INSURANCE AND FREIGHT BASIS)
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Capital goods | 415 | 374 |
Software packages | 3 | 3 |
418 | 377 |
2.24 ACTIVITY IN FOREIGN CURRENCY
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Earnings in foreign currency | ||
Income from software services and products | 46,152 | 43,150 |
Interest received from banks and others | 5 | 7 |
46,157 | 43,157 | |
Expenditure in foreign currency | ||
Overseas travel expenses (including visa charges) | 992 | 990 |
Professional charges | 363 | 513 |
Technical sub-contractors - subsidiaries | 1,168 | 1,299 |
Overseas salaries and incentives | 15,968 | 16,523 |
Other expenditure incurred overseas for software development | 3,276 | 2,075 |
21,767 | 21,400 | |
Net earnings in foreign currency | 24,390 | 21,757 |
2.25 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.
The particulars of dividends remitted are as follows:
in crore
Particulars | Number of Non-resident share holders | Number of shares to which the dividends relate | Year ended March 31, | |
2015 | 2014 | |||
Interim dividend for fiscal 2015 | 2 | 8,23,17,281 | 247 | – |
Final dividend for fiscal 2014 | 2 | 9,30,32,691 | 400 | – |
Interim dividend for fiscal 2014 | 2 | 8,76,42,560 | – | 175 |
Final dividend for fiscal 2013 | 2 | 7,19,18,545 | – | 194 |
2.26 RELATED PARTY TRANSACTIONS
List of related parties:
Name of subsidiaries | Country | Holding as at | |
March 31, 2015 | March 31, 2014 | ||
Infosys BPO Limited (Infosys BPO) | India | 99.98% | 99.98% |
Infosys Technologies (China) Co Limited (Infosys China) | China | 100% | 100% |
Infosys Technologies S. de R. L. de C. V. (Infosys Mexico) | Mexico | 100% | 100% |
Infosys Technologies (Sweden) AB. (Infosys Sweden) | Sweden | 100% | 100% |
Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai) | China | 100% | 100% |
Infosys Tecnologia DO Brasil LTDA. (Infosys Brasil) | Brazil | 100% | 100% |
Infosys Public Services, Inc. USA ('Infosys Public Services) | U.S. | 100% | 100% |
Infosys Consulting India Limited(1) | India | – | – |
Infosys Americas Inc., (Infosys Americas)(2) | U.S. | 100% | 100% |
Infosys BPO s. r. o(3) | Czech Republic | 99.98% | 99.98% |
Infosys BPO (Poland) Sp Z.o.o(3) | Poland | 99.98% | 99.98% |
Infosys BPO S.DE R.L. DE.C.V(3)(11) | Mexico | – | – |
Infosys McCamish Systems LLC(3) | U.S. | 99.98% | 99.98% |
Portland Group Pty Ltd(3) | Australia | 99.98% | 99.98% |
Portland Procurement Services Pty Ltd(7) | Australia | – | 99.98% |
Infosys Technologies (Australia) Pty. Limited ('Infosys Australia')(4) | Australia | 100% | 100% |
Edgeverve Systems Limited (Edgeverve)(10) | India | 100% | 100% |
Lodestone Holding AG (Infosys Lodestone) | Switzerland | 100% | 100% |
Lodestone Management Consultants (Canada) Inc.(5)(9) | Canada | – | – |
Lodestone Management Consultants Inc.(5) | U.S. | 100% | 100% |
Lodestone Management Consultants Pty Limited(5) | Australia | 100% | 100% |
Lodestone Management Consultants AG(5) | Switzerland | 100% | 100% |
Lodestone Augmentis AG(8) | Switzerland | 100% | 100% |
Hafner Bauer & Ödman GmbH(5) | Switzerland | 100% | 100% |
Lodestone Management Consultants (Belgium) S.A.(6) | Belgium | 99.90% | 99.90% |
Lodestone Management Consultants GmbH(5) | Germany | 100% | 100% |
Lodestone Management Consultants Pte Ltd.(5) | Singapore | 100% | 100% |
Lodestone Management Consultants SAS(5) | France | 100% | 100% |
Lodestone Management Consultants s.r.o.(5) | Czech Republic | 100% | 100% |
Lodestone Management Consultants GmbH(5) | Austria | 100% | 100% |
Lodestone Management Consultants Co., Ltd.(5) | China | 100% | 100% |
Lodestone Management Consultants Ltd.(5) | UK | 100% | 100% |
Lodestone Management Consultants B.V.(5) | Netherlands | 100% | 100% |
Lodestone Management Consultants Ltda.(6) | Brazil | 99.99% | 99.99% |
Lodestone Management Consultants Sp. z.o.o.(5) | Poland | 100% | 100% |
Lodestone Management Consultants Portugal, Unipessoal, Lda.(5) | Portugal | 100% | 100% |
S.C. Lodestone Management Consultants S.R.L.(5) | Romania | 100% | 100% |
Lodestone Management Consultants S.R.L.(5) | Argentina | 100% | 100% |
Infosys Canada Public Services Ltd.(12)(13) | Canada | – | – |
Infosys Nova Holdings LLC (Infosys Nova)(14) | U.S. | 100% | – |
Panaya Inc. (Panaya)(15) | U.S. | 100% | – |
Panaya Ltd.(16) | Israel | 100% | – |
Panaya Gmbh(16) | Germany | 100% | – |
Panaya Pty Ltd.(16) | Australia | – | – |
Panaya Japan Co. Ltd.(16) | Japan | 100% | – |
(1) | The Hon’ble High Court of Karnataka sanctioned the scheme of amalgamation of Infosys Consulting India Limited (ICIL) with Infosys Limited with an effective date of August 23, 2013 and an appointed date of January 12, 2012. |
(2) | Incorporated effective June 25, 2013 |
(3) | Wholly owned subsidiary of Infosys BPO. |
(4) | Under liquidation |
(5) | Wholly owned subsidiary of Lodestone Holding AG |
(6) | Majority owned and controlled subsidiary of Lodestone Holding AG |
(7) | Wholly owned subsidiary of Portland Group Pty Ltd. Liquidated effective May 14, 2014. |
(8) | Wholly owned subsidiary of Lodestone Management Consultant AG |
(9) | Liquidated effective December 31, 2013 |
(10) | Incorporated effective February 14, 2014 (Refer note 2.10.2) |
(11) | Incorporated effective February 14, 2014 |
(12) | Wholly owned subsidiary of Infosys Public Services, Inc. |
(13) | Incorporated effective December 19, 2014 |
(14) | Incorporated effective January 23, 2015 |
(15) | On March 5, 2015, Infosys acquired 100% of the voting interest in Panaya Inc. (Refer note 2.10.3) |
(16) | Wholly owned subsidiary of Panaya Inc. |
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Name of Associates | Country | Holding as at | |
March 31, 2015 | March 31, 2014 | ||
DWA Nova LLC(1) | U.S. | 20% | – |
(1) | Associate of Infosys Nova Holdings LLC. |
List of other related party
Particulars | Country | Nature of relationship |
Infosys Limited Employees' Gratuity Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Limited Employees' Provident Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Limited Employees' Superannuation Fund Trust | India | Post-employment benefit plan of Infosys |
Infosys Science Foundation | India | Controlled trust |
Infosys Limited Employees' Welfare Trust | India | Controlled trust |
Refer Notes 2.30, 2.31 and 2.32 for information on transactions with post-employment benefit plans mentioned above.
List of key management personnel
Whole time directors | Executive council members (*) | |
S. D. Shibulal (resigned effective July 31, 2014) | U. Ramadas Kamath | |
Srinath Batni (resigned effective July 31, 2014) | Chandrashekar Kakal# | |
V. Balakrishnan (resigned effective December 31, 2013) | Nandita Gurjar | |
Ashok Vemuri (resigned effective September 12, 2013) | Stephen R. Pratt (resigned effective January 31, 2014) | |
B. G. Srinivas (resigned effective June 10, 2014) | Basab Pradhan (resigned effective July 12, 2013) | |
U B Pravin Rao (effective January 10, 2014) | Prasad Thrikutam# | |
Dr. Vishal Sikka (appointed effective June 14, 2014) | Rajiv Bansal | |
Srikantan Moorthy (effective April 1, 2013) | ||
Non-whole-time directors | Sanjay Purohit (effective April 1, 2013) | |
N. R. Narayana Murthy (resigned effective October 10, 2014) | Ranganath D Mavinakere (effective August 19, 2013) | |
S. Gopalakrishnan (resigned effective October 10, 2014) | Binod Hampapur Rangadore (effective August 19, 2013) | |
K.V.Kamath | Nithyanandan Radhakrishnan (effective August 19, 2013)# | |
Deepak M. Satwalekar (retired effective November 13, 2013) | V.G. Dheeshjith (effective November 1, 2013) | |
Dr. Omkar Goswami (retired effective December 31, 2014) | Ganesh Gopalakrishnan (effective November 1, 2013) | |
David L. Boyles (retired effective January 17, 2014) | Haragopal Mangipudi (effective November 1, 2013)# | |
Prof. Jeffrey S. Lehman | Manish Tandon (effective November 1, 2013) | |
R. Seshasayee | K. Muralikrishna (effective November 1, 2013)# | |
Ann M. Fudge (retired effective June 14, 2014) | S. Ravi Kumar (effective November 1, 2013) | |
Ravi Venkatesan | Sanjay Jalona (effective November 1, 2013) | |
Leo Puri (appointed effective April 11, 2013 and resigned effective August 14, 2013) | Jackie Korhonen (appointed effective November 1, 2013)# | |
Kiran Mazumdar Shaw (appointed effective January 10, 2014) | Subrahmanyam Goparaju (appointed effective November 1, 2013 and resigned effective December 27, 2013) | |
Carol M. Browner (appointed effective April 29, 2014) | ||
Prof. John W. Etchemendy (appointed effective December 4, 2014) | # since resigned | |
Ms Roopa Kudva (appointed effective February 4, 2015) | ||
(*) Executive council dissolved effective April 1, 2014 | ||
Executive Officers(effective April 1, 2014) | ||
Rajiv Bansal, Chief Financial Officer | ||
Srikantan Moorthy, Group Head of Human Resource Development (till March 31, 2015) | ||
Parvatheesam K, Company Secretary (resigned effective January 10, 2015) | ||
David D. Kennedy, General Counsel (effective November 1, 2014) |
The details of amounts due to or due from related parties as at March 31, 2015 and March 31, 2014 are as follows:
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Trade Receivables | ||
Infosys China | 16 | 8 |
Infosys Mexico | 1 | 2 |
Infosys Brasil | 5 | 4 |
Infosys BPO (Including subsidiaries) | 1 | 1 |
Lodestone Holding AG (including subsidiaries) | 26 | 16 |
Edgeverve Systems Limited | 14 | – |
Infosys Public Services | 246 | 98 |
309 | 129 | |
Loans(1) | ||
Lodestone Holding AG (including subsidiaries) | 6 | – |
Edgeverve Systems Limited | 18 | – |
Infosys Brasil | – | 36 |
24 | 36 | |
Other receivables | ||
Infosys BPO (Including subsidiaries) | 1 | 2 |
Infosys Sweden | – | 5 |
Infosys Public Services | 4 | 2 |
Edgeverve Systems Limited | 14 | – |
Lodestone Holding AG (including subsidiaries) | 24 | 4 |
43 | 13 | |
Unbilled revenues | ||
Lodestone Holding AG (including subsidiaries) | 1 | – |
Infosys BPO (Including subsidiaries) | 5 | – |
6 | – | |
Trade payables | ||
Infosys China | 10 | 14 |
Infosys BPO (Including subsidiaries) | 1 | 4 |
Infosys Mexico | 1 | 1 |
Infosys Sweden | 5 | 6 |
Lodestone Holding AG (including subsidiaries) | 83 | 4 |
Infosys Brasil | 2 | 1 |
102 | 30 | |
Other payables | ||
Infosys BPO (Including subsidiaries) | 18 | 3 |
Infosys China | – | (12) |
Infosys Mexico | – | 2 |
Lodestone Holding AG (including subsidiaries) | 2 | 4 |
Infosys Brasil | – | 6 |
Edgeverve Systems Limited | 9 | – |
Infosys Public Services | 4 | – |
33 | 3 | |
Provision for expenses | ||
Infosys BPO (Including subsidiaries) | (1) | 2 |
Edgeverve Systems Limited | 37 | – |
Lodestone Holding AG (including subsidiaries) | – | 6 |
36 | 8 | |
Rental Deposit given for shared services | ||
Infosys BPO | 21 | 21 |
Rental Deposit taken for shared services | ||
Infosys BPO | 27 | 27 |
(1) | The above loans are given in accordance of terms and conditions of loan agreement and is repayable within a period of one year and carries an interest rate of 6% and 8.67% for Lodestone United Kingdom and Edgeverve Systems Limited respectively. |
in crore
Particulars | Maximum amount outstanding during | |
2015 | 2014 | |
Loans and advances in the nature of loans given to subsidiaries : | ||
Infosys Public Services | – | 71 |
Edgeverve Systems Limited(2) | 18 | – |
Infosys Brasil | 40 | 35 |
Lodestone Holding AG | 66 | 124 |
The details of the related party transactions entered into by the Company, in addition to the lease commitments described in note 2.8, for the year ended March 31, 2015 and March 31, 2014 are as follows:
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Capital transactions: | ||
Financing transactions | ||
Infosys Americas | – | 1 |
Infosys China | 62 | – |
Infosys Nova | 94 | – |
Infosys Shanghai | 154 | – |
Infosys Public Services | – | 75 |
Infosys Brasil(3) | 40 | – |
Lodestone Holding AG (including subsidiaries) | – | 136 |
Edgeverve Systems Limited | 461 | 1 |
811 | 213 | |
Loans (net of repayment) | ||
Lodestone Holding AG (including subsidiaries) (1) | 6 | (136) |
Infosys Public Services | – | (75) |
Edgeverve Systems Limited(2) | 18 | – |
Infosys Brasil(3) | (40) | 33 |
(16) | (178) | |
Revenue transactions: | ||
Purchase of services | ||
Infosys China | 139 | 225 |
Lodestone Holding AG (including subsidiaries) | 819 | 1,020 |
Infosys BPO (Including subsidiaries) | 230 | 180 |
Infosys Sweden | 44 | 10 |
Infosys Mexico | 10 | 12 |
Edgeverve Systems limited | 136 | – |
Infosys Brasil | 7 | 4 |
1,385 | 1,451 | |
Purchase of shared services including facilities and personnel | ||
Infosys BPO (including subsidiaries) | 68 | 74 |
68 | 74 | |
Interest income | ||
Lodestone Holding AG (including subsidiaries) | 1 | 4 |
Infosys Public Services | – | 5 |
Infosys Brasil | 3 | 1 |
4 | 10 | |
Sale of services | ||
Infosys China | 8 | 9 |
Infosys Mexico | 11 | 9 |
Lodestone Holding AG (including subsidiaries) | 23 | 16 |
Infosys Brasil | 8 | 4 |
Infosys BPO (including subsidiaries) | 86 | 71 |
Edgeverve Systems limited | 50 | – |
Infosys Public Services | 735 | 577 |
921 | 686 | |
Sale of shared services including facilities and personnel | ||
Edgeverve Systems limited | 22 | – |
Infosys BPO (including subsidiaries) | 38 | 36 |
60 | 36 | |
Profit on transfer of business | ||
Edgeverve Systems limited (Refer Note 2.10.2) | 412 | – |
412 | – |
(1) | During the year ended March 31, 2015 a loan of![]() ![]() |
(2) | Additionally during the year ended March 31, 2015 loan of![]() |
(3) | Loan outstanding (including accrued interest) given to Infosys Brazil is converted to equity during the year ended March 31, 2015. |
The table below describes the compensation to key managerial personnel which comprise directors and members of executive council:
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Salaries and other employee benefits to whole-time directors and members of executive council(1)(2) | 30 | 56 |
Commission and other benefits to non-executive/independent directors | 8 | 9 |
Total | 38 | 65 |
(1) | Executive Council dissolved effective April 1, 2014 and Executive officers have been appointed with effect from that date. |
(2) | Includes stock compensation expense of![]() |
2.27 Merger of Infosys Consulting India Limited
The Hon’ble High Court of Karnataka sanctioned the scheme of amalgamation of Infosys Consulting India Limited (ICIL) with Infosys Limited with an effective date of August 23, 2013 and an appointed date of January 12, 2012. ICIL was a wholly owned subsidiary of Infosys Limited and was engaged in software related consultancy services.The merger of ICIL into Infosys Limited has been accounted for under pooling of interest method referred to in Accounting Standard 14,Accounting for Amalgamation (AS-14).
All the assets and liabilities of ICIL on and after the appointed date and prior to the effective date have been transferred to Infosys Limited on a going concern basis. As ICIL was a wholly owned subsidiary of Infosys Limited, no shares have been allotted to the shareholders upon the scheme becoming effective.
2.28 RESEARCH AND DEVELOPMENT EXPENDITURE
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Expenditure at Department of Scientific and Industrial Research (DSIR) approved R&D centres (eligible for weighted deduction)(1) | ||
Capital Expenditure | – | – |
Revenue Expenditure | 160 | 261 |
Other R&D Expenditure | ||
Capital Expenditure | 15 | – |
Revenue Expenditure | 430 | 612 |
Total R&D Expenditure | ||
Capital Expenditure | 15 | – |
Revenue Expenditure | 590 | 873 |
(1) | During the year ended March 31, 2015, and March 31, 2014, the company has claimed weighted tax deduction on eligible research and development expenditures based on the approval received from Department of Scientific and Industrial Research (DSIR) on November 23, 2011 which has been renewed effective April 2014. The weighted tax deduction is equal to 200% of such expenditure incurred. |
The eligible R&D revenue and capital expenditure are160 crore and Nil for the year ended March 31, 2015 and
261 crore and Nil towards revenue and capital expenditure for the year ended March 31, 2014.
2.29 SEGMENT REPORTING
The Company's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. Effective quarter ended March 31, 2014, the Company reorganized its business to strengthen its focus on growing existing client relationships and increasing market share through service differentiation and operational agility. Consequent to the internal reorganization there were changes effected in the reportable industry segments based on the "management approach" as laid down in AS 17, Segment reporting and an additional segment, Life Sciences and Healthcare was identified. The Chief Executive Officer evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by industry classes and geographic segmentation of customers. Accordingly, segment information has been presented both along industry classes and geographic segmentation of customers, industry being the primary segment. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.
Industry segments for the Company are primarily enterprises in Financial Services and Insurance (FSI) , enterprises in Manufacturing (MFG), enterprises in the Energy & utilities, Communication and Services (ECS),enterprises in Retail, Consumer packaged goods and Logistics (RCL) and enterprises in Life Sciences and Healthcare (LSH). Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and off-shore. 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. Consequent to the above change in the composition of reportable industry segments, the prior year comparatives have been restated.
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Allocated expenses of segments include expenses incurred for rendering services from the company's offshore software development centres and on-site expenses, which 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 assets are used interchangeably. Management believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted against the total income of the Company.
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. Geographical information on revenue and industry revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Industry Segments
Year ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | FSI | MFG | ECS | RCL | LSH | Total |
Income from software services and products | 16,175 | 10,230 | 9,756 | 8,369 | 2,770 | 47,300 |
15,374 | 9,434 | 8,862 | 8,106 | 2,565 | 44,341 | |
Identifiable operating expenses | 7,874 | 5,191 | 4,706 | 3,917 | 1,440 | 23,128 |
7,413 | 4,835 | 4,088 | 3,991 | 1,348 | 21,675 | |
Allocated expenses | 3,396 | 2,241 | 2,130 | 1,832 | 607 | 10,206 |
3,408 | 2,194 | 2,057 | 1,884 | 596 | 10,139 | |
Segmental operating income | 4,905 | 2,798 | 2,920 | 2,620 | 723 | 13,966 |
4,553 | 2,405 | 2,717 | 2,231 | 621 | 12,527 | |
Unallocable expenses | 917 | |||||
1,101 | ||||||
Other income, net | 3,337 | |||||
2,576 | ||||||
Profit before exceptional item and tax | 16,386 | |||||
14,002 | ||||||
Exceptional item | 412 | |||||
– | ||||||
Profit before tax | 16,798 | |||||
14,002 | ||||||
Tax expense | 4,634 | |||||
3,808 | ||||||
Profit after taxes and exceptional item | 12,164 | |||||
10,194 |
Geographic Segments
Year ended March 31, 2015 andMarch 31, 2014:
in crore
Particulars | North America | Europe | India | Rest of the World | Total |
Income from software services and products | 30,273 | 10,300 | 1,307 | 5,420 | 47,300 |
27,963 | 9,800 | 1,278 | 5,300 | 44,341 | |
Identifiable operating expenses | 14,806 | 5,131 | 678 | 2,513 | 23,128 |
13,624 | 5,021 | 621 | 2,409 | 21,675 | |
Allocated expenses | 6,625 | 2,240 | 251 | 1,090 | 10,206 |
6,577 | 2,210 | 249 | 1,103 | 10,139 | |
Segmental operating income | 8,842 | 2,929 | 378 | 1,817 | 13,966 |
7,762 | 2,569 | 408 | 1,788 | 12,527 | |
Unallocable expenses | 917 | ||||
1,101 | |||||
Other income, net | 3,337 | ||||
2,576 | |||||
Profit before exceptional item and tax | 16,386 | ||||
14,002 | |||||
Exceptional item | 412 | ||||
– | |||||
Profit before tax | 16,798 | ||||
14,002 | |||||
Tax expense | 4,634 | ||||
3,808 | |||||
Profit after taxes and exceptional item | 12,164 | ||||
10,194 |
2.30 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 crore
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Obligations at year beginning | 668 | 612 |
Service cost | 89 | 94 |
Interest cost | 56 | 45 |
Transfer of obligation on amalgamation(refer note 2.27) | – | 3 |
Transfer of obligation(refer note 2.10.2) | (5) | – |
Actuarial (gain)/loss | 58 | 8 |
Benefits paid | (111) | (94) |
Obligations at year end | 755 | 668 |
Defined benefit obligation liability as at the balance sheet date is fully funded by the Company. | ||
Change in plan assets | ||
Plan assets at year beginning, at fair value | 677 | 643 |
Expected return on plan assets | 65 | 59 |
Actuarial gain/(loss) | 5 | (3) |
Contributions | 145 | 70 |
Benefits paid | (111) | (94) |
Transfer of plan assets on amalgamation(refer note 2.27) | – | 2 |
Plan assets at year end, at fair value | 781 | 677 |
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/period | 781 | 677 |
Present value of the defined benefit obligations at the end of the year/period | 755 | 668 |
Re-imbursement (obligation)/asset* | (6) | – |
Asset recognized in the balance sheet | 20 | 9 |
Assumptions | ||
Interest rate | 7.80% | 9.20% |
Estimated rate of return on plan assets | 9.50% | 9.55% |
Weighted expected rate of salary increase | 8.00% | 8.00% |
* | pertains to transfer of assets to group companies. |
in crore
Particulars | As at | ||||
March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | March 31, 2011 | |
Obligations at year end | 755 | 668 | 612 | 569 | 459 |
Plan assets at year end, at fair value | 781 | 677 | 643 | 582 | 459 |
Funded Status | 26 | 9 | 31 | 13 | – |
Experience adjustments: | |||||
(Gain)/loss: | |||||
Experience adjustments on plan liabilities | 4 | 14 | (49) | 13 | 18 |
Experience adjustments on plan assets | (5) | 3 | – | – | 1 |
Net gratuity cost for the year ended March 31, 2015 and March 31, 2014 comprises of the following components:
in crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Gratuity cost for the period | ||
Service cost | 89 | 94 |
Interest cost | 56 | 45 |
Expected return on plan assets | (65) | (59) |
Actuarial (gain)/loss | 53 | 11 |
Plan amendment amortization | (4) | (4) |
Net gratuity cost | 129 | 87 |
Actual return on plan assets | 70 | 56 |
As at March 31, 2015 and March 31, 2014, the plan assets have been primarily invested in insurer managed funds. 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. The Company expects to contribute145 crore to the gratuity trust during the fiscal 2016.
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 by37crore, which is being amortized on a straight line basis to the statement of profit and loss over 10 years representing the average future service period of the employees. The unamortized liability as at March 31, 2015 and March 31, 2014 amounts to
7crore and
11 crore, respectively and disclosed under 'Other long-term liabilities' and 'other current liabilities'.
2.31 PROVIDENT FUND
The Company contributed295 crore towards provident fund during the year ended March 31, 2015 (
262 crore during the year ended March 31, 2014).
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. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India during the quarter ended December 31, 2011 and based on the below provided assumptions there is no shortfall as at March 31, 2015, 2014, 2013, 2012 and 2011, respectively.
The details of fund and plan asset position are given below:
in crore
Particulars | As at | ||||
March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | March 31, 2011 | |
Plan assets at year end, at fair value | 2,912 | 2,817 | 2,399 | 1,816 | 1,579 |
Present value of benefit obligation at year end | 2,912 | 2,817 | 2,399 | 1,816 | 1,579 |
Asset recognized in balance sheet | – | – | – | – | – |
Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach:
Particulars | As at | |
March 31, 2015 | March 31, 2014 | |
Government of India (GOI) bond yield | 7.80% | 9.20% |
Remaining term of maturity | 7 years | 8 years |
Expected guaranteed interest rate | 8.75% | 8.75% |
2.32 SUPERANNUATION
The Company contributed213 crore to the Superannuation trust during the year ended March 31, 2015 (
202 crore during the year ended March 31, 2014).
2.33 RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER SHARE
Particulars | Year ended March 31, | |
2015 | 2014 | |
Number of shares considered as basic weighted average shares outstanding*# | 114,84,72,332 | 114,28,05,132 |
Effect of dilutive common equivalent shares | 15,342 | – |
Number of shares considered as weighted average shares and potential shares outstanding | 114,84,87,674 | 114,28,05,132 |
* | adjusted for bonus issue.(refer Note 2.1) |
# | adjusted for deconsolidation of trust for the year ended March 31, 2015.(refer Note 2.1) |
2.34 RESTRICTED DEPOSITS
Restricted deposits as at March 31, 2015 comprises1,039crore (
977 crore as at March 31, 2014) deposited with financial institutions to settle employee-related obligations as and when they arise during the normal course of business.
2.35 CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the company. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation and rural development projects. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.
2.36 DUES TO MICRO SMALL AND MEDIUM ENTERPRISES
As at March 31, 2015, less than1 crore is outstanding to micro and small enterprises (
1 crore as at March 31, 2014). There are no interests due or outstanding on the same.
2.37 LITIGATION
On May 23, 2011, the company received a subpoena from a grand jury in the United States District Court for the Eastern District of Texas. The subpoena required that the company provide to the grand jury certain documents and records related to its sponsorships for, and uses of, B1 business visas.
In addition, the U.S. Department of Homeland Security (“DHS”) has reviewed the company’s employer eligibility verifications on Form I-9 with respect to its employees working in the United States. In connection with this review, the company was advised that the DHS has found errors in a significant percentage of its Forms I-9 that the DHS has reviewed, and may impose fines and penalties on the company related to such alleged errors.
On October 30, 2013, the company settled the foregoing matters and entered into a Settlement Agreement (“Settlement Agreement”) with the U.S. Attorney, the DHS and the United States Department of State (“State,” and collectively with the U.S. Attorney and the DHS, the “United States”).
In the Settlement Agreement, the company denied and disputed all allegations made by the United States, except for the allegation that the company failed to maintain accurate Forms I-9 records for many of its foreign nationals in the United States in 2010 and 2011 as required by law, and that such failure constituted civil violations of certain laws.
During the year ended March 31, 2014 the Company recorded a charge related to the settlement agreement (including legal costs) of 219 crore related to the matters that were the subject of the Settlement agreement. The said amount was paid prior to December 31, 2013.
In addition, the company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the company’s results of operations or financial condition.
2.38 FINACLE AND EDGESERVICES
On April 24, 2015, the Board of Directors of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with Egdeverve, a wholly owned subsidiary, subject to securing the requisite approval from shareholders. The proposed transfer of the business of Finacle and EdgeServices to Edgeverve is at an estimated consideration of upto3,400 crore and upto
220 crore, respectively.
2.39 FUNCTION WISE CLASSIFICATION OF STATEMENT OF PROFIT AND LOSS
In crore
Particulars | Year ended March 31, | |
2015 | 2014 | |
Income from software services and products | 47,300 | 44,341 |
Software development expenses | 27,828 | 26,738 |
GROSS PROFIT | 19,472 | 17,603 |
Selling and marketing expenses | 2,549 | 2,390 |
General and administration expenses | 2,961 | 2,686 |
5,510 | 5,076 | |
OPERATING PROFIT BEFORE DEPRECIATION | 13,962 | 12,527 |
Depreciation and amortization | 913 | 1,101 |
OPERATING PROFIT | 13,049 | 11,426 |
Other income | 3,337 | 2,576 |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 16,386 | 14,002 |
Profit on transfer of business(refer note 2.10.2) | 412 | – |
PROFIT BEFORE TAX | 16,798 | 14,002 |
Tax expense: | ||
Current tax | 4,537 | 4,063 |
Deferred tax | 97 | (255) |
PROFIT FOR THE PERIOD | 12,164 | 10,194 |
The accompanying notes form an integral part of the standalone financial statements
As per our report of even date attached
for B S R & Co. LLP | for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Akhil Bansal Partner Membership No. 090906 | K. V. Kamath Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | R. Seshasayee Director |
Chennai April 24, 2015 | Rajiv Bansal Chief Financial Officer |