Exhibit 99.11
Indian GAAP Standalone
Independent Auditor’s Report
To the Board of Directors of Infosys Limited
Report on the Interim Financial Statements
We have audited the accompanying interim financial statements of Infosys Limited (“the Company”), which comprise the balance sheet as at 31 December 2015, the statement of profit and loss for the quarter and nine months then ended and the cash flow statement for the nine months then ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Interim Financial Statements
The Company’s Board of Directors is responsible for the preparation and presentation of these interim financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with Accounting Standards (AS) 25, Interim Financial Reporting as specified under section 133 of the Companies Act, 2013, 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 adequate internal control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the interim 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 interim 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 interim financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the interim 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 of the interim 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 accounting policies used and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the interim 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 interim financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the interim financial statements give a true and fair view in conformity with AS 25, Interim Financial Reporting:
(i) | in the case of the balance sheet, of the state of affairs of the Company as at 31 December 2015; |
(ii) | in the case of the statement of profit and loss, of the profit for the quarter and nine months ended on that date; and |
(iii) | in the case of the cash flow statement, of the cash flows for the nine months ended on that date. |
forB S R & Co. LLP
Chartered Accountants
Firm’s Registration Number: 101248W/W-100022
Supreet Sachdev
Partner
Membership Number: 205385
Bangalore
14 January 2016
INFOSYS LIMITED
In crore
Balance Sheet as at | Note | December 31, 2015 | March 31, 2015 |
EQUITY AND LIABILITIES | |||
SHAREHOLDERS' FUNDS | |||
Share capital | 2.1 | 1,148 | 574 |
Reserves and surplus | 2.2 | 56,548 | 47,494 |
57,696 | 48,068 | ||
NON-CURRENT LIABILITIES | |||
Deferred tax liabilities (net) | 2.3 | – | – |
Other long-term liabilities | 2.4 | 147 | 30 |
147 | 30 | ||
CURRENT LIABILITIES | |||
Trade payables | 2.5 | 384 | 124 |
Other current liabilities | 2.6 | 6,592 | 5,546 |
Short-term provisions | 2.7 | 4,365 | 8,045 |
11,341 | 13,715 | ||
69,184 | 61,813 | ||
ASSETS | |||
NON-CURRENT ASSETS | |||
Fixed assets | |||
Tangible assets | 2.8 | 7,955 | 7,347 |
Capital work-in-progress | 827 | 769 | |
8,782 | 8,116 | ||
Non-current investments | 2.10 | 11,027 | 6,108 |
Deferred tax assets (net) | 2.3 | 411 | 433 |
Long-term loans and advances | 2.11 | 5,495 | 4,378 |
Other non-current assets | 2.12 | 5 | 26 |
25,720 | 19,061 | ||
CURRENT ASSETS | |||
Current investments | 2.10 | 368 | 749 |
Trade receivables | 2.13 | 9,498 | 8,627 |
Cash and cash equivalents | 2.14 | 26,238 | 27,722 |
Short-term loans and advances | 2.15 | 7,360 | 5,654 |
43,464 | 42,752 | ||
69,184 | 61,813 | ||
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
forB S R & Co. LLP Chartered Accountants Firm’s Registration No : 101248W/W-100022 | for and on behalf of the Board of Directors of Infosys Limited
|
Supreet Sachdev Partner | R. Seshasayee Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | Roopa Kudva Director |
Membership No. 205385 | |||
Bangalore January 14, 2016 | M. D. Ranganath Chief Financial Officer and Executive Vice President | A.G.S Manikantha Company Secretary |
INFOSYS LIMITED
Incrore, except equity share and per equity share data
Statement of Profit and Loss for the | Note | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | ||
Income from software services and products
| 2.16 | 13,562 | 12,192 | 39,825 | 35,374 |
Other income | 2.17 | 737 | 823 | 2,230 | 2,446 |
Total revenue | 14,299 | 13,015 | 42,055 | 37,820 | |
Expenses | |||||
Employee benefit expenses | 2.18 | 7,103 | 6,358 | 20,905 | 18,932 |
Deferred consideration pertaining to acquisition | 2.10.1 | 18 | 55 | 110 | 168 |
Cost of technical sub-contractors | 2.18 | 1,226 | 777 | 3,225 | 2,073 |
Travel expenses | 2.18 | 360 | 329 | 1,217 | 1,035 |
Cost of software packages and others | 2.18 | 200 | 290 | 826 | 756 |
Communication expenses | 2.18 | 73 | 116 | 232 | 294 |
Consultancy and professional charges | 153 | 114 | 408 | 248 | |
Depreciation and amortization expense | 2.8 | 275 | 229 | 799 | 672 |
Other expenses | 2.18 | 515 | 495 | 1,388 | 1,426 |
Total expenses | 9,923 | 8,763 | 29,110 | 25,604 | |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 4,376 | 4,252 | 12,945 | 12,216 | |
Profit on transfer of business | 2.10.2 | – | – | 3,036 | 412 |
PROFIT BEFORE TAX | 4,376 | 4,252 | 15,981 | 12,628 | |
Tax expense: | |||||
Current tax | 2.19 | 1,207 | 1,172 | 3,590 | 3,491 |
Deferred tax | 2.19 | (14) | 25 | 4 | (3) |
PROFIT FOR THE PERIOD | 3,183 | 3,055 | 12,387 | 9,140 | |
EARNINGS PER EQUITY SHARE | |||||
Equity shares of par value5/- each | |||||
Before Exceptional item | |||||
Basic | 13.86 | 13.37 | 40.71 | 38.19 | |
Diluted | 13.86 | 13.37 | 40.71 | 38.19 | |
After Exceptional item | |||||
Basic | 13.86 | 13.37 | 53.93 | 39.99 | |
Diluted | 13.86 | 13.37 | 53.93 | 39.99 | |
Number of shares used in computing earnings per share | 2.32 | ||||
Basic | 229,69,44,664 | 228,56,10,264 | 229,69,44,664 | 228,56,10,264 | |
Diluted | 229,69,44,664 | 228,56,51,100 | 229,69,44,664 | 228,56,29,016 | |
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
forB S R & Co. LLP Chartered Accountants Firm’s Registration No : 101248W/W-100022 | for and on behalf of the Board of Directors of Infosys Limited
|
Supreet Sachdev Partner | R. Seshasayee Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | Roopa Kudva Director |
Membership No. 205385 | |||
Bangalore January 14, 2016 | M. D. Ranganath Chief Financial Officer and Executive Vice President | A.G.S Manikantha Company Secretary |
INFOSYS LIMITED
In crore
Cash Flow Statement for the | Note | Nine months ended December 31, | |
2015 | 2014 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Profit before tax | 15,981 | 12,628 | |
Adjustments to reconcile profit before tax to cash generated by operating activities | |||
Depreciation and amortization expense | 799 | 672 | |
Provision for bad and doubtful debts | (22) | 116 | |
Deferred purchase price | 110 | 168 | |
Interest and dividend income | (1,912) | (2,033) | |
Profit on transfer of business(Refer to Note 2.10.2) | (3,036) | (412) | |
Stock compensation expense | 6 | 1 | |
Other adjustments | 125 | 46 | |
Effect of exchange differences on translation of assets and liabilities | 29 | 38 | |
Changes in assets and liabilities | |||
Trade receivables | (849) | (776) | |
Loans and advances and other assets | (1,273) | (105) | |
Liabilities and provisions | 1,278 | 1,445 | |
11,236 | 11,788 | ||
Income taxes paid | (4,046) | (3,116) | |
NET CASH GENERATED BY OPERATING ACTIVITIES | 7,190 | 8,672 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Payment towards capital expenditure | (1,613) | (1,408) | |
Proceeds on sale of fixed assets | 2 | 2 | |
Investment in subsidiaries | (254) | (132) | |
Payment towards acquisition(refer note 2.10.5 & 2.10.6) | (794) | – | |
Payment arising out of business transfer | (286) | – | |
Investment in preferred stock | (55) | – | |
Investment in liquid mutual fund units | (18,698) | (16,304) | |
Disposal of liquid mutual fund units | 19,079 | 16,886 | |
Investment in tax free bond | (242) | – | |
Redemption of certificates of deposit | – | 783 | |
Interest and dividend received | 1,037 | 1,981 | |
NET CASH USED IN INVESTING ACTIVITIES | (1,824) | 1,808 | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Loan given to subsidiaries | (125) | (55) | |
Loan repaid by subsidiaries | 126 | – | |
Dividends paid (including corporate dividend tax) | (6,843) | (4,935) | |
NET CASH USED IN FINANCING ACTIVITIES | (6,842) | (4,990) | |
Effect of exchange differences on translation of foreign currency cash and cash equivalents | (8) | (24) | |
NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS | (1,484) | 5,466 | |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 2.14 | 27,722 | 24,100 |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 26,238 | 29,566 | |
SIGNIFICANT ACCOUNTING POLICIES | 1 |
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
forB S R & Co. LLP Chartered Accountants Firm’s Registration No : 101248W/W-100022 | for and on behalf of the Board of Directors of Infosys Limited
|
Supreet Sachdev Partner | R. Seshasayee Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | Roopa Kudva Director |
Membership No. 205385 | |||
Bangalore January 14, 2016 | M. D. Ranganath Chief Financial Officer and Executive Vice President | A.G.S Manikantha Company Secretary |
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), Euronext London and 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.
As the quarter and year-to-date figures are taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported for the previous quarters might not always add up to the year-to-date figures reported in this statement.
1.2 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. Deferred contract costs are amortized over the term of the contract. 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 is reasonably estimable 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 eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee’s salary. The Company contributes a portion to the Infosys Limited Employees’ Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. 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 QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2015
Amounts in the financial statements are presented in crore, except for per equity 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 | |
December 31, 2015 | March 31, 2015 | |
Authorized | ||
Equity shares,5/- par value | ||
240,00,00,000 (120,00,00,000) equity shares | 1,200 | 600 |
Issued, Subscribed and Paid-Up | ||
Equity shares,5/- par value(1) | 1,148 | 574 |
229,69,44,664 (114,84,72,332) equity shares fully paid-up | ||
1,148 | 574 |
Forfeited shares amounted to1,500/- (1,500/-)
(1) | Refer note 2.32 for details of basic and diluted shares |
Effective January 1, 2015, Infosys Limited Employees' Welfare Trust ('The 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 December 31, 2015:
The Company has allotted 114,84,72,332 fully paid-up shares of face value 5/- each during the quarter ended June 30, 2015, pursuant to bonus issue approved by the shareholders through postal ballot. The book closure date fixed by the Board was June 17, 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.
For both the bonus issues, bonus share of one equity share for every equity share held, and 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 restricted stock unit plan have been adjusted for bonus shares.
The Board has increased dividend pay-out ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
During the year ended March 31, 2015, the amount of dividend per share recognised as distribution to equity shareholder includes29.50/- per share of final dividend (not adjusted for bonus shares on June 17, 2015) and30/- per share of interim dividend (not adjusted for bonus shares of June 17, 2015 and December 3, 2014). The total dividend appropriation for the year ended March 31, 2015 amounted to6,145 crore including corporate dividend tax of1,034 crore.
The Board of Directors, in their meeting on October 12, 2015, declared an interim dividend of10/- per equity share. The total dividend appropriation for the nine months ended December 31, 2015 amounted to2,765 crore including corporate dividend tax of468 crore.
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 December 31, 2015 and March 31, 2015 are set out below :
Name of the shareholder | As at December 31, 2015 | As at March 31, 2015 | ||
No. of shares | % held | No. of shares | % held | |
Deutsche Bank Trust Company Americas (Depository of ADR's - legal ownership) | 38,53,17,937 | 16.78 | 18,60,73,981 | 16.20 |
Life Insurance Corporation of India | 12,85,06,087 | 5.59 | 5,52,74,758 | 4.81 |
The reconciliation of the number of shares outstanding and the amount of share capital as at December 31, 2015 and March 31, 2015 is set out below:
Particulars | As at December 31, 2015 | As at March 31, 2015 | ||
Number of shares | Amount ( crore) | Number of shares | Amount ( crore) | |
Number of shares at the beginning of the period | 114,84,72,332 | 574 | 57,14,02,566 | 286 |
Add: Bonus shares issued (Including bonus on treasury shares) | 114,84,72,332 | 574 | 57,42,36,166 | 287 |
Add: Treasury shares on account of deconsolidation of trust | – | – | 28,33,600 | 1 |
Number of shares at the end of the period | 229,69,44,664 | 1,148 | 114,84,72,332 | 574 |
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 11,334,400 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. As on December 31, 2015, 1,11,02,071 shares are available for issue under the 2011 plan. The 2011 Plan is administered by the Management Development and Compensation Committee now known as the Nomination and Remuneration Committee (the Committee) and through 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 108,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Office and Managing Director. The Board in its meeting held on June 22, 2015, on recommendation of Nomination and Remuneration Committee, granted 1,24,061 RSUs to Dr. Vishal Sikka. The RSUs will vest over a period of four years from the date of the grant in the proportions specified in the award agreement. 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 quarter and nine months ended December 31, 2015 is set out below:
Particulars | Quarter ended December 31, 2015 | Nine months ended December 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* | 2,23,213 | 5 | 1,08,268 | 5 |
Granted | – | – | 1,24,061 | 5 |
Forfeited and expired | – | – | – | – |
Exercised* | – | – | 9,116 | 5 |
Outstanding at the end | 2,23,213 | 5 | 2,23,213 | 5 |
Exercisable at the end | – | – | – | – |
* | adjusted for bonus issues |
The weighted average share price of options exercised under the 2011 Plan on the date of exercise was1,092/-
The activity in the 2011 Plan during quarter and nine months ended December 31, 2014 is set out below:
Particulars | Quarter ended December 31, 2014 | Nine months ended December 31, 2014 | ||
Shares arising out of options | Weighted average exercise price () | Shares arising out of options | Weighted average exercise price () | |
2011 Plan: | ||||
Outstanding at the beginning | 1,08,268 | 5 | – | – |
Granted* | – | – | 1,08,268 | 5 |
Forfeited and expired | – | – | – | – |
Exercised | – | – | – | – |
Outstanding at the end | 1,08,268 | 5 | 1,08,268 | 5 |
Exercisable at the end | – | – | – | – |
* | Adjusted for bonus issue |
The weighted average remaining contractual life of RSUs outstanding as of December 31, 2015 and March 31, 2015 under the 2011 Plan was 2.21 years and 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’ is less than1 crore for each of the quarter and nine months ended December 31, 2015 and December 31, 2014. 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:
Options granted during | Fiscal 2016 | Fiscal 2015 |
Grant date | 22-Jun-15 | 21-Aug-14 |
Weighted average share price ()* | 1,024 | 3,549 |
Exercise price ()* | 5 | 5 |
Expected volatility (%) | 28-36 | 30 - 37 |
Expected life of the option (years) | 1 - 4 | 1 - 4 |
Expected dividends (%) | 2.43 | 1.84 |
Risk-free interest rate (%) | 7- 8 | 8 - 9 |
Weighted average fair value as on grant date ()* | 948 | 3,355 |
* | Data for Fiscal 2015 is not adjusted for bonus issues |
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.
During the quarter and nine months ended December 31, 2015, the Company recorded an employee compensation expense of2 crore and6 crore respectively in the statement of profit and loss (less than1 crore and1 crore during the quarter and nine months ended December 31, 2014)
2.2 RESERVES AND SURPLUS
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Capital reserve - Opening balance | 54 | 54 |
Add: Transferred from Surplus | – | – |
54 | 54 | |
Securities premium reserve - Opening balance | 2,778 | 3,069 |
Less: Deconsolidation of trust(Refer note 2.1) | – | 4 |
Less: Amount utilized for issuance of bonus shares(Refer note 2.1) | 574 | 287 |
Add: Exercise of stock options | 1 | – |
2,205 | 2,778 | |
Stock Options Outstanding- Opening balance(Refer note 2.1) | 2 | – |
Additions during the period | 6 | 2 |
Less: Exercise of stock options | 1 | – |
7 | 2 | |
General reserve - Opening balance | 9,508 | 8,291 |
Add: Transferred from Surplus | – | 1,217 |
9,508 | 9,508 | |
Special Economic Zone Re-investment Reserve- Opening balance(1) | – | – |
Add: Transferred from Surplus | 397 | – |
Less: Transferred to Surplus on utilization | 397 | – |
Special Economic Zone Re-investment Reserve- Closing balance | – | – |
Surplus - Opening balance | 35,152 | 30,392 |
Add: Net profit after tax transferred from Statement of Profit and Loss | 12,387 | 12,164 |
Less: Deconsolidation of trust, net(Refer note 2.1) | – | 42 |
Add: Transfer from Special Economic Zone Re-investment Reserve on utilization | 397 | – |
Amount available for appropriation | 47,936 | 42,514 |
Appropriations: | ||
Interim dividend | 2,297 | 1,723 |
Final dividend | – | 3,388 |
Total dividend | 2,297 | 5,111 |
Dividend tax | 468 | 1,034 |
Amount transferred to general reserve | – | 1,217 |
Amount transferred to Special Economic Zone Re-investment Reserve | 397 | – |
Surplus- Closing Balance | 44,774 | 35,152 |
56,548 | 47,494 |
(1) | The Special Economic Zone Re-investment Reserve has been created out of the profit of eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961. |
2.3 DEFERRED TAXES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Deferred tax assets | ||
Fixed assets | 160 | 210 |
Trade receivables | 95 | 100 |
Compensated absences | 341 | 280 |
Computer software | 49 | 51 |
Accrued compensation to employees | 25 | 29 |
Post sales client support | 69 | 72 |
Others | 21 | 7 |
760 | 749 | |
Deferred tax liabilities | ||
Branch profit tax | 334 | 316 |
Others | 15 | – |
349 | 316 | |
Deferred tax assets after set-off | 411 | 433 |
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 December 31, 2015 and March 31, 2015, the Company has provided for branch profit tax of 334 crore and316 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 includes18 crore movement on account of exchange rate during the nine months ended December 31, 2015.
2.4 OTHER LONG-TERM LIABILITIES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Others | ||
Gratuity obligation - unamortized amount relating to plan amendment (refer note 2.29) | 1 | 3 |
Payable for acquisition of business(refer note 2.10.5 & 2.10.6) | 119 | – |
Rental deposits received from subsidiary(refer note 2.26) | 27 | 27 |
147 | 30 |
2.5 TRADE PAYABLES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Trade payables* | 384 | 124 |
384 | 124 | |
*Includes dues to subsidiaries (refer note 2.26) | 366 | 102 |
2.6 OTHER CURRENT LIABILITIES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Accrued salaries and benefits | ||
Salaries and benefits | 1,091 | 1,144 |
Bonus and incentives | 571 | 575 |
Unearned revenue | 1,117 | 831 |
Unpaid dividends | 3 | 3 |
Other liabilities | ||
Provision for expenses(1) | 2,110 | 1,582 |
Retention monies | 59 | 50 |
Withholding and other taxes payable | 1,144 | 733 |
Gratuity obligation - unamortized amount relating to plan amendment, current(refer note 2.29) | 4 | 4 |
Other payables(2) | 428 | 79 |
Advances received from clients | 12 | 20 |
Mark-to-market forward and options contracts | 7 | – |
Payable for acquisition of business(refer note 2.10.5 and 2.10.6) | 46 | 525 |
6,592 | 5,546 | |
(1) Includes dues to subsidiaries (refer note 2.26) | – | 36 |
(2) Includes dues to subsidiaries (refer note 2.26) | 104 | 33 |
2.7 SHORT-TERM PROVISIONS
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Provision for employee benefits | ||
Compensated absences | 1,069 | 907 |
Other Provisions | ||
Proposed dividend | – | 3,388 |
Tax on dividend | – | 690 |
Income taxes (net of advance tax and Tax Deducted at Source) | 2,885 | 2,678 |
Post-sales client support and warranties and others | 411 | 382 |
4,365 | 8,045 |
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 | Nine months ended | Year ended | ||
December 31, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | March 31, 2015 | |
Balance at the beginning | 351 | 345 | 382 | 325 | 325 |
Provision recognized/(reversed) | 59 | 38 | 57 | 90 | 134 |
Provision utilised | (1) | (13) | (48) | (46) | (78) |
Exchange difference during the period | 2 | 4 | 20 | 5 | 1 |
Balance at the end | 411 | 374 | 411 | 374 | 382 |
Provision for post-sales client support and other provisions are expected to be utilized over a period of 6 months to 1 year.
2.8 FIXED ASSETS
Following are the changes in the carrying value of fixed assets for the nine months ended December 31, 2015:
in crore, except as otherwise stated
Tangible assets | Intangible assets | Total | ||||||||||
Particulars | Land-Freehold | Land-Leasehold | Buildings(1)(2) | Plant and machinery(2) | Office equipment(2) | Computer equipment(2)(3) | Furniture and fixtures(2) | Vehicles | Total | Intellectual property rights | Total | |
Original cost | ||||||||||||
As at April 1, 2015 | 929 | 621 | 5,733 | 1,361 | 525 | 2,812 | 832 | 14 | 12,827 | 42 | 42 | 12,869 |
Additions/ Adjustments during the period | 29 | 17 | 357 | 253 | 105 | 658 | 133 | 3 | 1,555 | – | – | 1,555 |
Deductions/ Retirement during the period | – | – | – | (1) | – | (244) | (3) | – | (248) | (13) | (13) | (261) |
As at December 31, 2015 | 958 | 638 | 6,090 | 1,613 | 630 | 3,226 | 962 | 17 | 14,134 | 29 | 29 | 14,163 |
Depreciation and amortization | ||||||||||||
As at April 1, 2015 | – | 16 | 1,937 | 838 | 280 | 1,852 | 549 | 8 | 5,480 | 42 | 42 | 5,522 |
For the period | – | 4 | 158 | 149 | 65 | 332 | 89 | 2 | 799 | – | – | 799 |
Deductions/ Adjustments during the period | – | – | – | (1) | – | (96) | (3) | – | (100) | (13) | (13) | (113) |
As at December 31, 2015 | – | 20 | 2,095 | 986 | 345 | 2,088 | 635 | 10 | 6,179 | 29 | 29 | 6,208 |
Net book value | ||||||||||||
As at December 31, 2015 | 958 | 618 | 3,995 | 627 | 285 | 1,138 | 327 | 7 | 7,955 | – | – | 7,955 |
Notes: | (1) | Buildings include250/- being the value of 5 shares of50/- each in Mittal Towers Premises Co-operative Society Limited. |
(2) | Includes certain assets provided on cancellable operating lease to subsidiaries | |
(3) | During the nine months ended December 31, 2015, computer equipment having net book value of20 crore was transferred to EdgeVerve (Refer note 2.10.2) |
Following are the changes in the carrying value of fixed assets for the nine months ended December 31, 2014:
Tangible assets | Intangible assets | Total | ||||||||||
Particulars | Land-Freehold | Land-Leasehold | Buildings(1)(2) | Plant and machinery(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 period | 141 | 268 | 531 | 183 | 99 | 490 | 92 | 2 | 1,806 | – | – | 1,806 |
Deductions/ Retirement during the period | – | – | – | (3) | (1) | (38) | (7) | (2) | (51) | (17) | (17) | (68) |
As at December 31, 2014 | 922 | 617 | 5,409 | 1,270 | 491 | 2,630 | 764 | 13 | 12,116 | 42 | 42 | 12,158 |
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 | – | 15 | 135 | 127 | 48 | 247 | 85 | 2 | 659 | 13 | 13 | 672 |
Deductions/ Adjustments during the period | – | – | – | (2) | (1) | (30) | (5) | (1) | (39) | (17) | (17) | (56) |
As at December 31, 2014 | – | 15 | 1,889 | 796 | 262 | 1,771 | 521 | 8 | 5,262 | 42 | 42 | 5,304 |
Net book value | ||||||||||||
As at December 31, 2014 | 922 | 602 | 3,520 | 474 | 229 | 859 | 243 | 5 | 6,854 | – | – | 6,854 |
Notes: | (1) | Buildings include250/- being the value of 5 shares of50/- each in Mittal Towers Premises Co-operative Society Limited. |
(2) | Includes certain assets provided on cancellable operating lease to Infosys BPO, subsidiary | |
(3) | During the nine months ended December 31, 2014, computer equipment having book value of8 crore was transferred to EdgeVerve (Refer 2.10.2) |
Following are the changes in the carrying value of fixed assets for the year ended March 31, 2015:
Tangible assets | Intangible assets | Total | ||||||||||
Particulars | Land-Freehold | Land-Leasehold | Buildings(1)(2) | Plant and machinery(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 include250/- being the value of 5 shares of50/- each in Mittal Towers Premises Co-operative Society Limited. |
(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 of8 crore was transferred to EdgeVerve (Refer note 2.10.2) |
During the quarter ended June 30, 2014, the management based on internal and external technical evaluation had changed the useful life of certain assets primarily consisting of buildings and computers with effect from April 1, 2014. Accordingly, the useful lives of certain assets required a change from previous estimate.
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 December 31, 2015 andMarch 31, 2015 are as follows:
in crore
Particulars | Cost | Accumulated depreciation | Net book value |
Buildings | 82 | 41 | 41 |
98 | 35 | 63 | |
Plant and equipment | 197 | 57 | 140 |
12 | 3 | 9 | |
Furniture and fixtures | 33 | 6 | 27 |
11 | 2 | 9 | |
Computer Equipment | 19 | 8 | 11 |
– | – | – | |
Office equipment | 25 | 9 | 16 |
6 | 1 | 5 |
The aggregate depreciation charged on the above assets during the quarter and nine months ended December 31, 2015 amounted to 13 crore and 18 crore (3 crore and 4 crore for the quarter and nine months ended December 31, 2014).
The rental income from subsidiaries for the quarter and nine months ended December 31, 2015 amounted to 15 crore and 35 crore respectively (11 crore and 29 crore for the quarter and nine months ended December 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 December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Lease rentals recognized during the period | 44 | 41 | 128 | 123 |
in crore
As at | ||
Lease obligations payable | December 31, 2015 | March 31, 2015 |
Within one year of the balance sheet date | 142 | 101 |
Due in a period between one year and five years | 385 | 284 |
Due after five years | 302 | 158 |
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 | |
December 31, 2015 | March 31, 2015 | |
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 of10/- each, fully paid | 659 | 659 |
Infosys Technologies (China) Co. Limited | 169 | 169 |
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 (5,91,24,348) shares of BRL 1.00 par value, fully paid | 149 | 149 |
Infosys Technologies (Shanghai) Company Limited | 646 | 388 |
Infosys Public Services, Inc. | ||
3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid | 99 | 99 |
Infosys Consulting Holding AG (formerly Lodestone Holding AG)(refer note 2.10.1) | ||
23,350 (23,350) - Class A shares of CHF 1,000 each and 29,400 | 1,323 | 1,323 |
(29,400) - Class B Shares of CHF 100 each, fully paid up | ||
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) | ||
131,18,40,000 (46,18,39,994) equity shares of10/- each, fully paid | 1,312 | 462 |
Panaya Inc.(refer note 2.10.3) | ||
2 (2) shares of USD 0.01 per share, fully paid up | 1,398 | 1,398 |
Infosys Nova Holdings LLC(refer note 2.10.4) | 94 | 94 |
Kallidus Inc.(refer note 2.10.5) | ||
10,21,35,416 (Nil) shares | 647 | – |
Skava Systems Private Limited(refer note 2.10.5) | ||
25,000 (Nil) shares of10 per share, fully paid up | 59 | – |
Noah Consulting LLC( refer note 2.10.6) | 249 | – |
6,936 | 4,873 | |
Investment in debentures | ||
EdgeVerve Systems Limited(refer note 2.10.2) | 2,549 | – |
25,49,00,000 (Nil) Unsecured redeemable, non-convertible debentures of 100 each fully paid up | ||
9,485 | 4,873 | |
Others (unquoted)(refer note 2.10.7) | ||
Investments in preferred stock | 65 | – |
Investments in equity instruments | 7 | 7 |
Less: Provision for investments | 6 | 6 |
66 | 1 | |
Others (quoted) | ||
Investments in tax free bonds(refer note 2.10.8) | 1,476 | 1,234 |
1,476 | 1,234 | |
Total non-current investments | 11,027 | 6,108 |
Current investments – at the lower of cost and fair value | ||
Other current investments | ||
Unquoted | ||
Liquid mutual fund units(refer note 2.10.9) | 368 | 749 |
368 | 749 | |
Quoted | ||
Investments in government bonds(refer note 2.10.8) | – | – |
– | – | |
Total current investments | 368 | 749 |
Total investments | 11,395 | 6,857 |
Aggregate amount of quoted investments excluding interest accrued but not due of38 crore as at December 31, 2015 (46 crore as at March 31, 2015) included under Note 2.15 Short term Loans and advances. | 1,476 | 1,234 |
Market value of quoted investments | 1,530 | 1,269 |
Aggregate amount of unquoted investments | 9,925 | 5,629 |
Aggregate amount of provision made for non-current unquoted investments | 6 | 6 |
Profit on sale of Investment is less than 1 crore for quarter and nine months ended December 31, 2015 ( Less than1 crore each for quarter and nine months ended December 31, 2014).
2.10.1 Investment in Infosys Consulting Holding AG (Formerly Lodestone Holding AG)
On October 22, 2012, Infosys acquired 100% of the outstanding share capital of Infosys Consulting 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 upto608 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 of18 crore and 55 crore, representing the proportionate charge of the deferred consideration has been recognised as an expense during the quarter ended December 31, 2015 and December 31, 2014 respectively and110 and 168 crore during nine months ended December 31, 2015 and December 31, 2014 respectively. During the quarter ended December 31, 2015, the liability towards deferred consideration was settled
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. The Company has undertaken an enterprise valuation by an independent valuer and accordingly the business has been transferred for a consideration of421 crore with effect from July 1, 2014. Net assets amounting to9 crore have also been transferred and accordingly a gain of412 crore has been recorded as an exceptional item. The consideration has been settled through the issue of fully paid up equity shares in EdgeVerve.
On April 24, 2015, the Board of Directors of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders through postal ballot on June 4, 2015, a Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business with effect from August 1, 2015. The Company has undertaken an enterprise valuation by an independent valuer and accordingly the business were transferred for a consideration of3,222 crore and177 crore for Finacle and Edge Services, respectively. Net assets amounting to363 crore, (including working capital amounting to337 crore) have been transferred and accordingly a gain of3,036 crore has been recorded as an exceptional item. The consideration was settled through issue of 85,00,00,000 equity shares amounting to850 crore and 25,49,00,000 non-convertible redeemable debentures amounting to2,549 crore in EdgeVerve, post the requisite approval from shareholders on December 11, 2015.
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 of1,398 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 has made this investment to form a new company along with 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.
As of December 31, 2015, Infosys Nova Holdings holds 16% of the equity interest in DWA Nova LLC.
2.10.5 Investment in Kallidus Inc. & Skava Systems Pvt. Ltd.
On June 2, 2015, Infosys acquired 100% of the voting interests in Kallidus Inc., (d.b.a Skava) (Kallidus), a leading provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients and 100% of the voting interests of Skava Systems Private Limited, India, an affiliate of Kallidus. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of578 crore and a contingent consideration of upto $20 million (approximately128 crore on acquisition date), the payment of which is dependent upon the achievement of certain financial targets by Kallidus over a period of 3 years ending on December 31, 2017.
2.10.6 Investment in Noah Consulting LLC
On November 16, 2015, Infosys has acquired 100% membership interest in Noah Consulting , LLC , a leading provider of advanced information management consulting services for the oil and gas industry. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of $33 million ( approximately216 crore), contingent consideration up to $5 million (approximately33 crore on acquisition date) and retention bonus up to $32 million (approximately212 crore on acquisition date).
2.10.7 Details of Investments
The details of non-current other investments in preferred stock and equity instruments as at December 31, 2015 and March 31, 2015 are as follows:
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Preferred Stock | ||
Airviz Inc. | ||
2,82,279 (Nil) Series A Preferred Stock, fully paid up, par value USD 0.001 each | 13 | – |
ANSR Consulting | ||
52,631 (Nil) Series A Preferred Stock, fully paid up, par value USD 0.001 each | 9 | – |
Whoop Inc | ||
16,48,352 (Nil) Series B Preferred Stock, fully paid up, par value USD 0.0001 each | 20 | – |
CloudEndure Ltd. | ||
12,79,645 (Nil) Preferred Series B Shares, fully paid up, par value ILS 0.01 each | 13 | – |
Nivetti Systems Private Limited | ||
2,28,501 (Nil) Preferred Stock, fully paid up, par value1 each | 10 | – |
Equity Instrument | ||
OnMobile Systems Inc., USA | ||
21,54,100 (21,54,100) common stock, fully paid up, par value USD 0.001 each | 4 | 4 |
Merasport Technologies Private Limited | ||
2,420 (2,420) equity shares , fully paid up, par value10/- each | 2 | 2 |
Global Innovation and Technology Alliance | ||
15,000 (10,000) equity shares , fully paid up, par value1,000/- each | 1 | 1 |
72 | 7 | |
Less: Provision for investment | 6 | 6 |
66 | 1 |
2.10.8 Details of Investments in tax free bonds
The balances held in tax free bonds as at December 31, 2015 and March 31, 2015 is as follows:
in crore
Particulars | Face Value | As at December 31, 2015 | As at March 31, 2015 | ||
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 |
7.28% National Highways Authority of India Bonds 18SEP30 | 10,00,000/- | 2,000 | 200 | – | – |
8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027 | 1,000/- | 5,00,000 | 53 | 5,00,000 | 53 |
7.28% Indian Railway Finance Corporation Limited 21DEC30 | 4,22,800 | 1,000 | 42 | – | – |
58,09,450 | 1,476 | 58,06,450 | 1,234 |
The balances held in government bonds as at December 31, 2015 and March 31, 2015 is as follows:
incrore
Particulars | Face Value | As at December 31, 2015 | As at March 31, 2015 | ||
Units | Amount | Units | Amount | ||
Fixed Rate Treasury Notes 7.00 PCT PIBD0716A488 MAT Date 27 Jan 2016 | 140 | 10,000 | – | 10,000 | – |
10,000 | – | 10,000 | – |
2.10.9 Details of Investments in liquid mutual fund units
The balances held in liquid mutual fund units as at December 31, 2015 is as follows:
in crore
Particulars | Units | Amount |
IDFC Cash Fund –Daily Divided Direct Plan | 16,75,743 | 168 |
Reliance Liquid Fund- Treasury Plan - Direct Daily Dividend Option Reinvestment | 6,54,428 | 100 |
Birla Sun life Cash Plus – Daily Dividend Direct Plan Reinvestment | 1,00,10,320 | 100 |
12,340,491 | 368 |
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 |
2.11 LONG-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Unsecured, considered good | ||
Capital advances | 317 | 316 |
Security deposits | 73 | 65 |
Rental deposits(1) | 77 | 45 |
Interest accrued on debentures of subsidiary(Refer note 2.10 and note 2.26) | 4 | – |
Other loans and advances | ||
Advance income taxes (net of provisions) | 4,604 | 3,941 |
Prepaid expenses | 61 | 7 |
Deferred Contract Cost | 355 | – |
Loans and advances to employees | 4 | 4 |
5,495 | 4,378 | |
Unsecured, considered doubtful | ||
Loans and advances to employees | 12 | 10 |
5,507 | 4,388 | |
Less: Provision for doubtful loans and advances to employees | 12 | 10 |
5,495 | 4,378 | |
(1) Includes deposits with subsidiaries (refer note 2.26) | 21 | 21 |
2.12 OTHER NON-CURRENT ASSETS
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Others | ||
Advance to gratuity trust(refer note 2.29) | 5 | 26 |
5 | 26 |
2.13 TRADE RECEIVABLES(1)
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Debts outstanding for a period exceeding six months | ||
Unsecured | ||
Considered doubtful | 204 | 162 |
Less: Provision for doubtful debts | 204 | 162 |
– | – | |
Other debts | ||
Unsecured | ||
Considered good(2) | 9,498 | 8,627 |
Considered doubtful | 81 | 160 |
9,579 | 8,787 | |
Less: Provision for doubtful debts | 81 | 160 |
9,498 | 8,627 | |
9,498 | 8,627 | |
(1)Includes dues from companies where directors are interested | 22 | 6 |
(2) Includes dues from subsidiaries (refer note 2.26) | 290 | 309 |
2.14 CASH AND CASH EQUIVALENTS
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Cash on hand | – | – |
Balances with banks | ||
In current and deposit accounts | 21,338 | 23,722 |
Others | ||
Deposits with financial institution | 4,900 | 4,000 |
26,238 | 27,722 | |
Balances with banks in unpaid dividend accounts | 3 | 3 |
Deposit accounts with more than 12 months maturity | 253 | 182 |
Balances with banks held as margin money deposits against guarantees | 266 | 185 |
Cash and cash equivalents as of December 31, 2015 and March 31, 2015 include restricted cash and bank balances of269 crore and188 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 | |
December 31, 2015 | March 31, 2015 | |
In current accounts | ||
ANZ Bank, Taiwan | 9 | 4 |
Bank of America, USA | 696 | 498 |
BNP Paribas Bank, Norway | 1 | – |
Citibank N.A., Australia | 22 | 10 |
Citibank N.A., India | 2 | 6 |
Citibank N.A., Dubai | 1 | 1 |
Citibank N.A., EEFC (U.S. Dollar account) | – | 2 |
Citibank N.A., Japan | 45 | 20 |
Citibank N.A., New Zealand | – | 3 |
Citibank N.A., South Africa | 3 | 2 |
Deutsche Bank, Philippines | 10 | 2 |
Deutsche Bank, India | 9 | 4 |
Deutsche Bank, EEFC (Euro account) | 5 | 2 |
Deutsche Bank, EEFC (GBP account) | 2 | 5 |
Deutsche Bank, EEFC (AUD account) | 1 | – |
Deutsche Bank, EEFC (U.S. Dollar account) | 26 | 7 |
Deutsche Bank, EEFC (CHF account) | – | 4 |
Deutsche Bank, Belgium | – | 13 |
Deutsche Bank, France | 6 | 2 |
Deutsche Bank, Germany | 10 | 8 |
Deutsche Bank, Netherlands | 2 | 1 |
Deutsche Bank, Russia (U.S. Dollar account) | 1 | – |
Deutsche Bank, Russia (Russian Ruble account) | 1 | – |
Deutsche Bank, Singapore | 3 | 5 |
Deutsche Bank, Spain | 1 | 1 |
Deutsche Bank, Switzerland | 2 | – |
Deutsche Bank, UK | 10 | 24 |
HSBC, Hong Kong | 6 | 44 |
ICICI Bank, India | 249 | 18 |
ICICI Bank, EEFC (U.S. Dollar account) | 7 | 9 |
Nordbanken, Sweden | 15 | 1 |
Punjab National Bank, India | 11 | 7 |
Royal Bank of Canada, Canada | 11 | 11 |
State Bank of India | 1 | 1 |
1,168 | 715 | |
In deposit accounts | ||
Allahabad Bank | 200 | 200 |
Andhra Bank | 808 | 97 |
Axis Bank | 1,438 | 1,415 |
Bank of Baroda | 2,314 | 2,314 |
Bank of India | 1,772 | 2,691 |
Canara Bank | 2,074 | 2,841 |
Central Bank of India | 702 | 1,303 |
Corporation Bank | 1,185 | 1,197 |
Development Bank of Singapore | – | 35 |
HDFC Bank | 2,500 | 2,017 |
ICICI Bank | 3,863 | 3,059 |
IDBI Bank | – | 706 |
Indusind Bank | 250 | 75 |
ING Vysya Bank | – | 100 |
Indian Overseas Bank | – | 573 |
Jammu & Kashmir Bank | 25 | – |
Kotak Mahindra Bank Limited | 492 | – |
Oriental Bank of Commerce | 100 | 1,500 |
Punjab National Bank | – | 512 |
Syndicate Bank | 500 | 327 |
Union Bank of India | 978 | 971 |
Vijaya Bank | – | 386 |
Yes Bank | 700 | 500 |
19,901 | 22,819 | |
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 | 141 | 128 |
ICICI Bank | 69 | – |
State Bank of India | 56 | 57 |
266 | 15 | |
Deposits with financial institution | ||
HDFC Limited | 4,900 | 4,000 |
4,900 | 4,000 | |
Total cash and cash equivalents as per Balance Sheet | 26,238 | 27,722 |
2.15 SHORT-TERM LOANS AND ADVANCES
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Unsecured, considered good | ||
Loans to subsidiaries(refer note 2.26) | 23 | 24 |
Others | ||
Advances | ||
Prepaid expenses(3) | 218 | 71 |
Deferred Contract Cost | 35 | – |
For supply of goods and rendering of services | 111 | 60 |
Withholding and other taxes receivable | 1,520 | 1,253 |
Others(1) | 201 | 49 |
2,108 | 1,457 | |
Restricted deposits(refer note 2.33) | 1,078 | 1,039 |
Unbilled revenues(2) | 2,583 | 2,423 |
Interest accrued but not due | 1,305 | 433 |
Loans and advances to employees | ||
Housing and other loans | 52 | 53 |
Salary advances | 182 | 148 |
Security deposits | 1 | 1 |
Mark-to-market forward and options contracts | 49 | 94 |
Rental deposits | 2 | 6 |
7,360 | 5,654 | |
(1) Includes dues from subsidiaries (refer note 2.26) | 174 | 43 |
(2) Includes dues from subsidiaries (refer note 2.26) | – | 6 |
(3) Includes dues from subsidiaries (refer note 2.26) | 43 | – |
2.16 INCOME FROM SOFTWARE SERVICES AND PRODUCTS
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Income from software services | 13,556 | 11,787 | 39,182 | 34,186 |
Income from software products | 6 | 405 | 643 | 1,188 |
13,562 | 12,192 | 39,825 | 35,374 |
2.17 OTHER INCOME
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Interest received on deposits with banks and others | 617 | 668 | 1,862 | 1,912 |
Dividend received on investment in mutual fund units | 9 | 32 | 50 | 121 |
Miscellaneous income, net | 48 | 25 | 209 | 49 |
Gains / (losses) on foreign currency, net | 63 | 98 | 109 | 364 |
737 | 823 | 2,230 | 2,446 |
2.18 EXPENSES
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Employee benefit expenses | ||||
Salaries and bonus including overseas staff expenses | 6,950 | 6,192 | 20,423 | 18,489 |
Contribution to provident and other funds | 125 | 132 | 407 | 379 |
Employee stock compensation expense(Refer note 2.1) | 2 | – | 6 | 1 |
Staff welfare | 26 | 34 | 69 | 63 |
7,103 | 6,358 | 20,905 | 18,932 | |
Cost of technical sub-contractors | ||||
Technical sub-contractors - subsidiaries | 489 | 344 | 1,252 | 1,002 |
Technical sub-contractors - others | 737 | 433 | 1,973 | 1,071 |
1,226 | 777 | 3,225 | 2,073 | |
Travel expenses | ||||
Overseas travel expenses | 326 | 296 | 1,110 | 945 |
Travelling and conveyance | 34 | 33 | 107 | 90 |
360 | 329 | 1,217 | 1,035 | |
Cost of software packages and others | ||||
For own use | 145 | 253 | 492 | 632 |
Third party items bought for service delivery to clients | 55 | 37 | 334 | 124 |
200 | 290 | 826 | 756 | |
Communication expenses | ||||
Telephone charges | 51 | 64 | 159 | 191 |
Communication expenses | 22 | 52 | 73 | 103 |
73 | 116 | 232 | 294 |
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Other expenses | ||||
Office maintenance | 133 | 94 | 357 | 263 |
Power and fuel | 43 | 48 | 138 | 145 |
Brand building | 42 | 26 | 136 | 70 |
Rent | 44 | 41 | 128 | 123 |
Rates and taxes, excluding taxes on income | 25 | 38 | 75 | 86 |
Repairs to building | 47 | 34 | 118 | 59 |
Repairs to plant and machinery | 19 | 25 | 56 | 47 |
Computer maintenance | 28 | 19 | 78 | 69 |
Consumables | 7 | 9 | 22 | 22 |
Insurance charges | 11 | 11 | 33 | 32 |
Provision for post-sales client support and warranties | 32 | 12 | – | 28 |
Commission to non-whole time directors | 2 | 2 | 6 | 6 |
Provision for bad and doubtful debts and advances | (9) | (42) | (22) | 116 |
Auditor's remuneration | ||||
Statutory audit fees | – | – | 1 | 1 |
Other services | – | – | – | – |
Reimbursement of expenses | – | – | – | – |
Bank charges and commission | 2 | 3 | 3 | 4 |
Contributions towards Corporate Social Responsibility | 61 | 59 | 162 | 179 |
Others | 28 | 116 | 97 | 176 |
515 | 495 | 1,388 | 1,426 |
2.19 TAX EXPENSE
in crore
Quarter ended December 31, | Nine months ended December 31, | |||
2015 | 2014 | 2015 | 2014 | |
Current tax | ||||
Income tax | 1,207 | 1,172 | 3,590 | 3,491 |
Deferred tax | (14) | 25 | 4 | (3) |
1,193 | 1,197 | 3,594 | 3,488 |
During the quarter ended December 31, 2015 and December 31, 2014, the Company had reversal (net of provisions) of148 crore and64 crore, respectively, pertaining to tax relating to prior years.
During the nine month ended December 31, 2015 and December 31, 2014, the Company had reversal (net of provisions) of264 crore and113 crore, respectively, pertaining to tax relating to prior years.
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 | |
December 31, 2015 | March 31, 2015 | |
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 | 29 | 22 |
Claims against the Company, not acknowledged as debts(1) | 190 | 167 |
[Net of amount paid to statutory authorities 3,454 crore (3,572 crore)] | ||
Commitments : | ||
Estimated amount of unexecuted capital contracts | 1,319 | 1,272 |
(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 additional tax of3,221 crore (3,337 crore), including interest of951 crore (964 crore) upon completion of their tax review for fiscal 2007, fiscal 2008, fiscal 2009 and fiscal 2010. |
These income tax demands are mainly on account of disallowance of 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. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover, 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. The matter for fiscal 2010 is pending before Hon’ble Income Tax Appellate Tribunal (ITAT) Bangalore. The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. 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.
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.
2.21 DERIVATIVE INSTRUMENTS
The following table gives details in respect of outstanding foreign exchange forward and option contracts:
As at | ||||
December 31, 2015 | March 31, 2015 | |||
in million | in crore | in million | in crore | |
Forward contracts outstanding | ||||
In USD | 462 | 3,057 | 664 | 4,150 |
In Euro | 84 | 606 | 59 | 396 |
In GBP | 60 | 588 | 68 | 632 |
In AUD | 60 | 290 | 95 | 452 |
In CAD | – | – | 12 | 59 |
In SGD | 10 | 47 | 25 | 114 |
In CHF | 20 | 134 | – | – |
Options Outstanding | ||||
In USD | 125 | 827 | – | – |
In Euro | 50 | 361 | – | – |
5,910 | 5,803 |
As of December 31, 2015 and March 31, 2015, there were no net foreign currency exposures that are not hedged by a derivative instrument or otherwise.
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 | |
December 31, 2015 | March 31, 2015 | |
Not later than one month | 1,556 | 1,382 |
Later than one month and not later than three months | 3,130 | 3,608 |
Later than three months and not later than one year | 1,224 | 813 |
5,910 | 5,803 |
The Company recognized a gain of 57 crore and 53 crore on derivative instruments during the quarter ended December 31, 2015 and December 31, 2014, respectively, which is included in other income.
The Company recognized a loss of 28 crore and gain of 210 crore on derivative instruments during the nine months ended December 31, 2015 and December 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 December 31, | Nine months ended December 31, | ||||
2015 | 2014 | 2015 | 2014 | |||
Capital goods | 77 | 123 | 254 | 302 | ||
77 | 123 | 254 | 302 |
2.24 ACTIVITY IN FOREIGN CURRENCY
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Earnings in foreign currency | ||||
Income from software services and products | 13,290 | 11,880 | 39,024 | 34,529 |
Interest received from banks and others | 3 | 2 | 4 | 4 |
13,293 | 11,882 | 39,028 | 34,533 | |
Expenditure in foreign currency | ||||
Overseas travel expenses (including visa charges) | 291 | 238 | 963 | 765 |
Professional charges | 123 | 61 | 319 | 132 |
Technical sub-contractors - subsidiaries | 402 | 290 | 1,051 | 849 |
Overseas salaries and incentives | 4,866 | 4,067 | 13,932 | 11,877 |
Other expenditure incurred overseas for software development | 981 | 937 | 3,420 | 2,304 |
6,663 | 5,593 | 19,685 | 15,927 | |
Net earnings in foreign currency | 6,630 | 6,289 | 19,343 | 18,606 |
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 | Nine months ended December 31, | |
2015 | 2014 | |||
Interim dividend for fiscal 2016 | 2 | 38,53,33,537 | 385 | – |
Final dividend for fiscal 2015 | 2 | 19,22,58,436 | 567 | – |
Interim dividend for fiscal 2015 | 2 | 8,23,17,281 | – | 247 |
Final dividend for fiscal 2014 | 2 | 9,30,32,691 | – | 400 |
2.26 RELATED PARTY TRANSACTIONS
List of related parties:
Name of subsidiaries | Country | Holding as at | |
December 31, 2015 | March 31, 2015 | ||
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 Americas Inc., (Infosys Americas) | U.S. | 100% | 100% |
Infosys (Czech Republic) Limited s.r.o. (formerly Infosys BPO s. r. o)(1) | Czech Republic | 99.98% | 99.98% |
Infosys BPO (Poland) Sp Z.o.o(1) | Poland | 99.98% | 99.98% |
Infosys BPO S.DE R.L. DE.C.V(1)(2) | Mexico | – | – |
Infosys McCamish Systems LLC(1) | U.S. | 99.98% | 99.98% |
Portland Group Pty Ltd(1) | Australia | 99.98% | 99.98% |
Portland Procurement Services Pty Ltd(5) | Australia | – | – |
Infosys BPO Americas LLC.(1)(16) | U.S. | – | – |
Infosys Technologies (Australia) Pty. Limited (Infosys Australia)(2) | Australia | 100% | 100% |
EdgeVerve Systems Limited (EdgeVerve)(7) | India | 100% | 100% |
Infosys Consulting Holding AG (Infosys Lodestone) (formerly Lodestone Holding AG) | Switzerland | 100% | 100% |
Lodestone Management Consultants Inc.(3) | U.S. | 100% | 100% |
Lodestone Management Consultants Pty Limited(3) | Australia | 100% | 100% |
Infosys Consulting AG (formerly Lodestone Management Consultants AG)(3) | Switzerland | 100% | 100% |
Lodestone Augmentis AG(2)(6) | Switzerland | 100% | 100% |
Hafner Bauer & Ödman GmbH(2)(3) | Switzerland | 100% | 100% |
Lodestone Management Consultants (Belgium) S.A.(4) | Belgium | 99.90% | 99.90% |
Infosys Consulting GmbH (formerly Lodestone Management Consultants GmbH)(3) | Germany | 100% | 100% |
Infosys Consulting Pte Ltd. (formerly Lodestone Management Consultants Pte Ltd)(3) | Singapore | 100% | 100% |
Infosys Consulting SAS (formerly Lodestone Management Consultants SAS)(3) | France | 100% | 100% |
Infosys Consulting s.r.o.(formerly Lodestone Management Consultants s.r.o.)(3) | Czech Republic | 100% | 100% |
Lodestone Management Consultants GmbH(3) | Austria | 100% | 100% |
Lodestone Management Consultants Co., Ltd.(3) | China | 100% | 100% |
Infosys Consulting Ltd. (formerly Lodestone Management Consultants Ltd.)(3) | UK | 100% | 100% |
Lodestone Management Consultants B.V.(3) | Netherlands | 100% | 100% |
Lodestone Management Consultants Ltda.(4) | Brazil | 99.99% | 99.99% |
Lodestone Management Consultants Sp. z o.o.(3) | Poland | 100% | 100% |
Lodestone Management Consultants Portugal, Unipessoal, Lda.(3) | Portugal | 100% | 100% |
S.C. Infosys Consulting S.R.L.(formerly S.C. Lodestone Management Consultants S.R.L.)(3) | Romania | 100% | 100% |
Infosys Consulting S.R.L. (formerly Lodestone Management Consultants S.R.L.)(3) | Argentina | 100% | 100% |
Infosys Canada Public Services Ltd.(8) | Canada | – | – |
Infosys Nova Holdings LLC. (Infosys Nova)(9) | U.S. | 100% | 100% |
Panaya Inc. (Panaya)(10) | U.S. | 100% | 100% |
Panaya Ltd.(11) | Israel | 100% | 100% |
Panaya Gmbh(11) | Germany | 100% | 100% |
Panaya Pty Ltd.(11) | Australia | – | – |
Panaya Japan Co. Ltd.(11) | Japan | 100% | 100% |
Skava Systems Pvt. Ltd. (Skava Systems)(12) | India | 100% | – |
Kallidus Inc. (Kallidus)(13) | U.S. | 100% | – |
Noah Consulting LLC (Noah)(14) | U.S. | 100% | – |
Noah Information Management Consulting Inc (Noah Canada)(15) | Canada | 100% | – |
(1) | Wholly owned subsidiaries of Infosys BPO. |
(2) | Under liquidation |
(3) | Wholly owned subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG) |
(4) | Majority owned and controlled subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG) |
(5) | Wholly owned subsidiary of Portland Group Pty Ltd. Liquidated effective May 14, 2014. |
(6) | Wholly owned subsidiary of Infosys Consulting AG (formerly Lodestone Management Consultants AG) |
(7) | Incorporated effective February 14, 2014 (Refer note 2.10.2) |
(8) | Wholly owned subsidiary of Infosys Public Services, Inc. Incorporated effective December 19, 2014 |
(9) | Incorporated effective January 23, 2015 |
(10) | On March 5, 2015, Infosys acquired 100% of the voting interest in Panaya Inc. (Refer note 2.10.3) |
(11) | Wholly owned subsidiary of Panaya Inc. |
(12) | On June 2, 2015, Infosys acquired 100% of the voting interest in Skava Systems (Refer note 2.10.5) |
(13) | On June 2, 2015, Infosys acquired 100% of the voting interest in Kallidus Inc. (Refer note 2.10.5) |
(14) | On November 16, 2015, Infosys acquired 100% of the membership interests in Noah (Refer Note 2.10.6) |
(15) | Wholly owned subsidiary of Noah |
(16) | Incorporated effective November 20, 2015 |
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Name of Associates | Country | Holding as at | |
December 31, 2015 | March 31, 2015 | ||
DWA Nova LLC(1)
| U.S. | 16% | 20% |
(1) | Associate of Infosys Nova Holdings LLC. |
List of other related parties
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 |
Infosys Employee Welfare Trust | India | Controlled trust |
Refer Notes 2.29 and 2.30 for information on transactions with post-employment benefit plans mentioned above.
List of key management personnel
Whole time directors
S. D. Shibulal (resigned effective July 31, 2014)
Srinath Batni (resigned effective July 31, 2014)
B. G. Srinivas (resigned effective June 10, 2014)
U B Pravin Rao
Dr. Vishal Sikka (appointed effective June 14, 2014)
Non-whole-time directors
N. R. Narayana Murthy (resigned effective October 10, 2014)
S. Gopalakrishnan (resigned effective October 10, 2014)
K.V.Kamath ( resigned effective June 5, 2015)
Dr. Omkar Goswami (retired effective December 31, 2014)
Prof. Jeffrey S. Lehman
R. Seshasayee
Ann M. Fudge (retired effective June 14, 2014)
Ravi Venkatesan
Kiran Mazumdar Shaw
Carol M. Browner (resigned effective November 23, 2015)
Prof. John W. Etchemendy (appointed effective December 4, 2014)
Roopa Kudva (appointed effective February 4, 2015)
Executive Officers
Rajiv Bansal, Chief Financial Officer ( till October 12, 2015)
M. D. Ranganath, Chief Financial Officer and Executive Vice President (effective October 12, 2015)
Srikantan Moorthy, Group Head of Human Resource Development (till March 31, 2015)
Parvatheesam K, Company Secretary (resigned effective January 10, 2015)
David D. Kennedy, Executive Vice President, General Counsel and Chief Compliance Officer (effective November 1, 2014)
Company Secretary
A.G.S. Manikantha, (appointed effective June 22, 2015)
The details of amounts due to or due from related parties as at December 31, 2015 and March 31, 2015 are as follows:
in crore
Particulars | As at | |
December 31, 2015 | March 31, 2015 | |
Investment in Debentures | ||
EdgeVerve | 2,549 | – |
Trade Receivables | ||
Infosys China | 26 | 16 |
Infosys Mexico | 14 | 1 |
Infosys Brasil | 1 | 5 |
Infosys BPO | 6 | 1 |
Infosys Consulting Ltd. | 30 | 26 |
EdgeVerve | 5 | 14 |
Infosys Public Services | 181 | 246 |
Infosys Sweden | 22 | – |
Panaya Ltd | 5 | – |
290 | 309 | |
Loans | ||
Infosys Consulting Ltd. | – | 6 |
Infosys Sweden | 23 | – |
EdgeVerve | – | 18 |
23 | 24 | |
Other receivables | ||
Infosys BPO | 4 | 1 |
Infosys Public Services | – | 4 |
EdgeVerve | 147 | 14 |
Panaya | 43 | – |
Infosys Consulting SAS | 5 | 3 |
Infosys Consulting GmbH | 1 | 1 |
Infosys Consulting Ltd. | 21 | 20 |
221 | 43 | |
Unbilled revenues | ||
Infosys Consulting SAS | – | 1 |
McCamish Systems LLC | – | 5 |
– | 6 | |
Trade payables | ||
Infosys China | 11 | 10 |
Infosys BPO | 4 | – |
Infosys BPO s.r.o | 2 | – |
Portland Group Pty Ltd | – | 1 |
Infosys Mexico | 1 | 1 |
Infosys Sweden | 7 | 5 |
Lodestone Management Consultants Pty Limited | 18 | 10 |
Infosys Consulting Pte Ltd. | 13 | 8 |
Infosys Consulting Ltd. | 126 | 65 |
Infosys Brasil | 2 | 2 |
EdgeVerve | 180 | – |
Infosys Public Services | 2 | – |
366 | 102 | |
Other payables | ||
Infosys BPO | 27 | 16 |
McCamish Systems LLC | – | 2 |
Infosys Consulting AG | 1 | 1 |
Infosys Consulting Ltd. | 1 | 1 |
EdgeVerve | 56 | 9 |
Panaya Ltd. | 11 | – |
Infosys Public Services | – | 4 |
Infosys Sweden | 6 | – |
Infosys Mexico | 2 | – |
104 | 33 | |
Provision for expenses | ||
Infosys BPO | – | (1) |
EdgeVerve | – | 37 |
– | 36 | |
Rental Deposit given for shared services | ||
Infosys BPO | 21 | 21 |
Rental Deposit taken for shared services | ||
Infosys BPO | 27 | 27 |
The details of the related parties transactions entered into by the Company, in addition to the lease commitments described in note 2.9, for the quarter and nine months ended December 31, 2015 and December 31, 2014 are as follows:
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Capital transactions: | ||||
Financing transactions | ||||
Debetures | ||||
EdgeVerve | 2,549 | – | 2,549 | 461 |
Equity | ||||
EdgeVerve | 850 | – | 850 | – |
Infosys Shanghai | 67 | 92 | 258 | 92 |
3,466 | 92 | 3,657 | 553 | |
Loans (net of repayment) | ||||
Infosys Consulting Holding AG(1) | – | 55 | – | 55 |
Infosys Consulting Ltd. | – | – | (6) | – |
Infosys Sweden | 10 | – | 23 | – |
Kallidus | (10) | – | – | – |
EdgeVerve(2) | – | – | (18) | – |
– | 55 | (1) | 55 | |
Revenue transactions: | ||||
Purchase of services | ||||
Infosys China | 31 | 34 | 95 | 108 |
Lodestone Management Consultants Pty Limited | 38 | 34 | 92 | 94 |
Infosys Consulting Ltd. | 264 | 143 | 627 | 485 |
Infosys Consulting Pte Ltd. | 26 | 11 | 85 | 28 |
Portland Group Pty Ltd | – | 0 | 2 | 2 |
Infosys (Czech Republic) Limited s.r.o. | – | 2 | – | 7 |
Infosys BPO s.r.o | 5 | – | 11 | – |
Infosys BPO Ltd. | 90 | 54 | 248 | 153 |
Infosys Sweden | 21 | 10 | 57 | 32 |
Infosys Mexico | 2 | 3 | 8 | 8 |
EdgeVerve | – | 51 | – | 80 |
Infosys Public Services | 3 | – | 8 | – |
Panaya Ltd. | 6 | – | 11 | – |
Infosys Brasil | 3 | 2 | 8 | 5 |
489 | 344 | 1,252 | 1,002 | |
Purchase of shared services including facilities and personnel | ||||
Infosys BPO | 2 | 22 | 7 | 59 |
2 | 22 | 7 | 59 | |
Interest income | ||||
EdgeVerve | 5 | – | 7 | – |
Infosys Sweden | – | – | 1 | – |
Infosys Consulting Ltd. | – | 1 | – | 1 |
Infosys Brasil | – | 1 | – | 2 |
5 | 2 | 8 | 3 | |
Sale of services | ||||
Infosys China | 3 | 3 | 8 | 7 |
Infosys Mexico | 11 | 3 | 28 | 8 |
Infosys Consulting Ltd. | 8 | 7 | 19 | 18 |
Infosys Brasil | 1 | 3 | 5 | 6 |
Infosys BPO | 17 | 20 | 52 | 63 |
McCamish Systems LLC | 1 | 2 | 2 | 4 |
Infosys Sweden | 7 | – | 21 | – |
EdgeVerve | – | 15 | – | 31 |
Infosys Public Services | 232 | 191 | 666 | 554 |
280 | 244 | 801 | 691 | |
Sale of shared services including facilities and personnel | ||||
EdgeVerve | 21 | 7 | 40 | 16 |
Panaya Ltd. | 3 | – | 5 | – |
Infosys BPO | 5 | 10 | 15 | 29 |
29 | 17 | 60 | 45 | |
Profit on transfer of business | ||||
EdgeVerve | – | – | 3,036 | 412 |
– | – | 3,036 | 412 | |
Cash paid under business transfer | ||||
EdgeVerve | 36 | – | 286 | – |
36 | – | 286 | – |
(1) | During quarter ended December 31, 2014, loan of 10 crore was given and repaid. |
(2) | During nine months ended December 31, 2014, loan of 12 crore was given and repaid. |
The table below describes the compensation to key managerial personnel which comprise directors and executive officers:
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Salaries and other employee benefits to whole-time directors and executive officers(1)(2) | 32 | 7 | 60 | 21 |
Commission and other benefits to non-executive/independent directors | 2 | 3 | 7 | 7 |
Total | 34 | 10 | 67 | 28 |
(1) | Includes stock compensation expense of2 crore and1 crore, and6 crore and1 crore for the three months and nine months ended December 31, 2015 and December 31, 2014, respectively to CEO in line with the compensation plan approved by the shareholders |
(2) | Includes payables to CFO who stepped down w.e.f October 12, 2015 |
2.27 RESEARCH AND DEVELOPMENT EXPENDITURE
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Expenditure at Department of Scientific and Industrial Research (DSIR) approved R&D centers (eligible for weighted deduction)(1) | ||||
Capital Expenditure | – | – | – | – |
Revenue Expenditure | – | 39 | 54 | 124 |
Other R&D Expenditure | ||||
Capital Expenditure | 15 | 13 | 16 | 13 |
Revenue Expenditure | 70 | 121 | 239 | 329 |
Total R&D Expenditure | ||||
Capital Expenditure | 15 | 13 | 16 | 13 |
Revenue Expenditure | 70 | 160 | 293 | 453 |
(1) | During nine months ended December 31, 2015 the Company has claimed weighted tax deduction on eligible research and development till 31st July 2015 based on the approval received from Department of Scientific and Industrial Research (DSIR) on November 23, 2011 which has been renewed effective April 2014. With effect from 1st August 2015 the business of Finacle, including the R&D activities, is transferred to its wholly owned subsidiary Edgeverve Systems Limited, hence with effect from that date, Edgeverve Systems Limited will be claiming the weighted tax deduction on eligible research and development expenditures u/s 35(2AB) of the Income Tax Act 1961. The weighted tax deduction is equal to 200% of such expenditure incurred. |
The eligible R&D revenue and capital expenditure are Nil for the quarter ended December 31, 2015 and39 crore and Nil for the quarter ended December 31, 2014. The eligible R&D revenue and capital expenditure are 54 crore and Nil for the nine months ended December 31, 2015 and 124 crore and Nil towards revenue and capital expenditure for the nine months ended December 31, 2014
2.28 SEGMENT REPORTING
The Company's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. Effective April 1, 2015, the Company reorganized its segments to support its objective of delivery innovation. This structure will help deliver services that will reflect the way technology is consumed in layers by the client’s enterprise. However the reorganization did not have any impact in the reportable segments as per AS 17 'Segment reporting'. 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 locations. 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.
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 centers 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 December 31, 2015 and December 31, 2014:
in crore
Particulars | FSI | MFG | ECS | RCL | LSH | Total |
Income from software services and products | 4,468 | 2,990 | 2,803 | 2,379 | 922 | 13,562 |
4,161 | 2,620 | 2,556 | 2,113 | 742 | 12,192 | |
Identifiable operating expenses | 2,299 | 1,505 | 1,380 | 1,175 | 501 | 6,860 |
1,989 | 1,330 | 1,199 | 979 | 364 | 5,861 | |
Allocated expenses | 918 | 615 | 576 | 489 | 190 | 2,788 |
887 | 582 | 568 | 470 | 166 | 2,673 | |
Segmental operating income | 1,251 | 870 | 847 | 715 | 231 | 3,914 |
1,285 | 708 | 789 | 664 | 212 | 3,658 | |
Unallocable expenses | 275 | |||||
229 | ||||||
Other income, net | 737 | |||||
823 | ||||||
Profit before exceptional item and tax | 4,376 | |||||
4,252 | ||||||
Exceptional item | – | |||||
– | ||||||
Profit before tax | 4,376 | |||||
4,252 | ||||||
Tax expense | 1,193 | |||||
1,197 | ||||||
Profit after taxes and exceptional item | 3,183 | |||||
3,055 |
Nine months ended December 31, 2015 and December 31, 2014:
in crore
Particulars | FSI | MFG | ECS | RCL | LSH | Total |
Income from software services and products | 13,239 | 8,961 | 7,967 | 6,975 | 2,683 | 39,825 |
12,049 | 7,596 | 7,379 | 6,272 | 2,078 | 35,374 | |
Identifiable operating expenses | 6,696 | 4,576 | 3,880 | 3,436 | 1,397 | 19,985 |
5,905 | 3,853 | 3,601 | 2,954 | 1,078 | 17,391 | |
Allocated expenses | 2,740 | 1,883 | 1,673 | 1,466 | 564 | 8,326 |
2,507 | 1,640 | 1,591 | 1,354 | 449 | 7,541 | |
Segmental operating income | 3,803 | 2,502 | 2,414 | 2,073 | 722 | 11,514 |
3,637 | 2,103 | 2,187 | 1,964 | 551 | 10,442 | |
Unallocable expenses | 799 | |||||
672 | ||||||
Other income, net | 2,230 | |||||
2,446 | ||||||
Profit before exceptional item and tax | 12,945 | |||||
12,216 | ||||||
Exceptional item | 3,036 | |||||
412 | ||||||
Profit before tax | 15,981 | |||||
12,628 | ||||||
Tax expense | 3,594 | |||||
3,488 | ||||||
Profit after taxes and exceptional item | 12,387 | |||||
9,140 |
Geographic Segments
Quarter ended December 31, 2015 and December31, 2014:
in crore
Particulars | North America | Europe | India | Rest of the World | Total |
Income from software services and products | 9,013 | 3,015 | 306 | 1,228 | 13,562 |
7,829 | 2,625 | 358 | 1,380 | 12,192 | |
Identifiable operating expenses | 4,616 | 1,499 | 131 | 614 | 6,860 |
3,793 | 1,277 | 143 | 648 | 5,861 | |
Allocated expenses | 1,853 | 620 | 63 | 252 | 2,788 |
1,740 | 580 | 69 | 284 | 2,673 | |
Segmental operating income | 2,544 | 896 | 112 | 362 | 3,914 |
2,296 | 768 | 146 | 448 | 3,658 | |
Unallocable expenses | 275 | ||||
229 | |||||
Other income, net | 737 | ||||
823 | |||||
Profit before exceptional items and tax | 4,376 | ||||
4,252 | |||||
Exceptional item | – | ||||
– | |||||
Profit before tax | 4,376 | ||||
4,252 | |||||
Tax expense | 1,193 | ||||
1,197 | |||||
Profit after taxes and exceptional items | 3,183 | ||||
3,055 |
Nine months ended December 31, 2015 and December31, 2014:
in crore
Particulars | North America | Europe | India | Rest of the World | Total |
Income from software services and products | 26,380 | 8,559 | 914 | 3,972 | 39,825 |
22,540 | 7,774 | 966 | 4,094 | 35,374 | |
Identifiable operating expenses | 13,433 | 4,269 | 445 | 1,838 | 19,985 |
11,057 | 3,875 | 538 | 1,921 | 17,391 | |
Allocated expenses | 5,541 | 1,794 | 180 | 811 | 8,326 |
4,863 | 1,669 | 184 | 825 | 7,541 | |
Segmental operating income | 7,406 | 2,496 | 289 | 1,323 | 11,514 |
6,620 | 2,230 | 244 | 1,348 | 10,442 | |
Unallocable expenses | 799 | ||||
672 | |||||
Other income, net | 2,230 | ||||
2,446 | |||||
Profit before exceptional items and tax | 12,945 | ||||
12,216 | |||||
Exceptional item | 3,036 | ||||
412 | |||||
Profit before tax | 15,981 | ||||
12,628 | |||||
Tax expense | 3,594 | ||||
3,488 | |||||
Profit after taxes and exceptional items | 12,387 | ||||
9,140 |
2.29 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 | |
December 31, 2015 | March 31, 2015 | |
Obligations at year/ period beginning | 755 | 668 |
Service cost | 80 | 89 |
Interest cost | 41 | 56 |
Transfer of obligation* | (31) | (5) |
Actuarial (gain)/loss | 4 | 58 |
Benefits paid | (51) | (111) |
Obligations at year/ period end | 798 | 755 |
Defined benefit obligation liability as at the balance sheet date is fully funded by the Company. | ||
Change in plan assets | ||
Plan assets at year/ period beginning, at fair value | 781 | 677 |
Expected return on plan assets | 54 | 65 |
Transfer of assets* | (41) | – |
Actuarial gain/(loss) | (5) | 5 |
Contributions | 65 | 145 |
Benefits paid | (51) | (111) |
Plan assets at year/ period end, at fair value | 803 | 781 |
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 | 803 | 781 |
Present value of the defined benefit obligations at the end of the year/ period | 798 | 755 |
Re-imbursement (obligation)/asset* | – | (6) |
Asset recognized in the balance sheet | 5 | 20 |
Assumptions | ||
Interest rate | 7.90% | 7.80% |
Estimated rate of return on plan assets | 9.50% | 9.50% |
Weighted expected rate of salary increase | 8.00% | 8.00% |
* | from/to between group companies |
in crore
Particulars | As at | ||||
December 31, 2015 | March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | |
Obligations at year/ period end | 798 | 755 | 668 | 612 | 569 |
Plan assets at year/ period end, at fair value | 803 | 781 | 677 | 643 | 582 |
Funded Status | 5 | 26 | 9 | 31 | 13 |
Experience adjustments: | |||||
(Gain)/loss: | |||||
Experience adjustments on plan liabilities | 8 | 4 | 14 | (49) | 13 |
Experience adjustments on plan assets | 5 | (5) | 3 | – | – |
Net gratuity cost for the quarter and nine months ended December 31, 2015 and December 31, 2014 comprises of the following components:
in crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Gratuity cost for the period | ||||
Service cost | 26 | 22 | 80 | 67 |
Interest cost | 13 | 14 | 41 | 43 |
Expected return on plan assets | (18) | (16) | (54) | (48) |
Actuarial (gain)/loss | (7) | 12 | 9 | 36 |
Plan amendment amortization | (1) | (1) | (3) | (3) |
Net gratuity cost | 13 | 31 | 73 | 95 |
Actual return on plan assets | 17 | 15 | 49 | 49 |
As at December 31, 2015 and March 31, 2015, 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 contribute35 crore to the gratuity trust during the remainder of 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 by37 crore, 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 December 31, 2015 and March 31, 2015 amounts to5crore and7 crore, respectively and disclosed under 'Other long-term liabilities' and 'other current liabilities'.
2.30 PROVIDENT FUND
The Company contributed 87 crore and 258 crore during the quarter and nine months ended December 31, 2015 (75 crore and 214 crore during the quarter and nine months ended December 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 December 31, 2015, March 31, 2015, 2014, 2013 and 2012, respectively.
The details of fund and plan asset position are given below:
in crore
Particulars | As at | ||||
December 31, 2015 | March 31, 2015 | March 31, 2014 | March 31, 2013 | March 31, 2012 | |
Plan assets at period end, at fair value | 3,411 | 2,912 | 2,817 | 2,399 | 1,816 |
Present value of benefit obligation at period end | 3,411 | 2,912 | 2,817 | 2,399 | 1,816 |
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 | |
December 31, 2015 | March 31, 2015 | |
Government of India (GOI) bond yield | 7.90% | 7.80% |
Remaining term of maturity of portfolio | 7 years | 7 years |
Expected guaranteed interest rate - First year | 8.75% | 8.75% |
- Thereafter | 8.60% | 8.60% |
2.31 SUPERANNUATION
The Company contributed57 crore and169 crore to the Superannuation trust during the quarter and nine months ended December 31, 2015 (55 crore and160 crore during the quarter and nine months ended December 31, 2014).
2.32RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER SHARE
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Number of shares considered as basic weighted average shares outstanding*# | 229,69,44,664 | 228,56,10,264 | 229,69,44,664 | 228,56,10,264 |
Effect of dilutive common equivalent shares | – | 40,836 | – | 18,752 |
Number of shares considered as weighted average shares and potential shares outstanding | 229,69,44,664 | 228,56,51,100 | 229,69,44,664 | 228,56,29,016 |
* | adjusted for bonus issue.(refer Note 2.1) |
# | balance during the quarter and nine months ended December 31, 2014 was net of treasury shares |
2.33 RESTRICTED DEPOSITS
Restricted deposits as at December 31, 2015 comprises1,078 crore (1,039 crore as at March 31, 2015) deposited with financial institutions to settle employee-related obligations as and when they arise during the normal course of business.
2.34 FUNCTION WISE CLASSIFICATION OF STATEMENT OF PROFIT AND LOSS
In crore
Particulars | Quarter ended December 31, | Nine months ended December 31, | ||
2015 | 2014 | 2015 | 2014 | |
Income from software services and products | 13,562 | 12,192 | 39,825 | 35,374 |
Software development expenses | 8,157 | 7,149 | 23,901 | 20,895 |
GROSS PROFIT | 5,405 | 5,043 | 15,924 | 14,479 |
Selling and marketing expenses | 659 | 674 | 2,006 | 1,916 |
General and administration expenses | 832 | 711 | 2,404 | 2,121 |
1,491 | 1,385 | 4,410 | 4,037 | |
OPERATING PROFIT BEFORE DEPRECIATION | 3,914 | 3,658 | 11,514 | 10,442 |
Depreciation and amortization | 275 | 229 | 799 | 672 |
OPERATING PROFIT | 3,639 | 3,429 | 10,715 | 9,770 |
Other income | 737 | 823 | 2,230 | 2,446 |
PROFIT BEFORE EXCEPTIONAL ITEM AND TAX | 4,376 | 4,252 | 12,945 | 12,216 |
Profit on transfer on business(refer to note 2.10.2) | – | – | 3,036 | 412 |
PROFIT BEFORE TAX | 4,376 | 4,252 | 15,981 | 12,628 |
Tax expense: | ||||
Current tax | 1,207 | 1,172 | 3,590 | 3,491 |
Deferred tax | (14) | 25 | 4 | (3) |
PROFIT FOR THE PERIOD | 3,183 | 3,055 | 12,387 | 9,140 |
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
forB S R & Co. LLP Chartered Accountants Firm’s Registration No : 101248W/W-100022 | for and on behalf of the Board of Directors of Infosys Limited
|
Supreet Sachdev Partner | R. Seshasayee Chairman | Dr. Vishal Sikka Chief Executive Officer and Managing Director | Roopa Kudva Director |
Membership No. 205385 | |||
Bangalore January 14, 2016 | M. D. Ranganath Chief Financial Officer and Executive Vice President | A.G.S Manikantha Company Secretary |
Auditor’s Report on Quarterly Financial Results and Year to Date Results of Infosys Limited Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
To
The Board of Directors of Infosys Limited
We have audited the quarterly financial results of Infosys Limited (‘the Company’) for the quarter ended December 31, 2015 and the year to date financial results for the period from April 1, 2015 to December 31, 2015, attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These quarterly financial results as well as 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 for Interim Financial Reporting (AS) 25, prescribed under Section 133 of the Companies Act, 2013 read with relevant rules issued thereunder 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 the 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 and year to date financial results:
(i) | have been presented in accordance with the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in this regard; and |
(ii) | give a true and fair view of the net profit and other financial information for the quarter ended December 31, 2015 as well as the year to date results for the period from April 1, 2015 to December 31, 2015. |
forB S R & Co. LLP
Chartered Accountants
Firm’s registration number: 101248W/ W-100022
Supreet Sachdev
Partner
Membership number: 205385
Bangalore
January 14, 2016